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https://www.courtlistener.com/api/rest/v3/opinions/8491587/ | OPINION
DONALD R. SHARP, Bankruptcy Judge.
Comes now before this Court the Motion of Griffin Oil Company, Inc., to Compel pursuant to a regularly scheduled hearing. This opinion constitutes findings of fact and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052 and disposes of all the issues before the Court.
FACTUAL AND PROCEDURAL BACKGROUND
Griffin Oil Company, Inc., hereinafter referred to as (“Griffin” or “Debtor”), filed for relief under Chapter 11 of the Bankruptcy Code on September 21, 1988. On May 10, 1990, the Internal Revenue Service, hereinafter referred to as (“IRS”), filed a proof of claim for unpaid excise taxes in the amount of $280,464.00. No objection was filed to the IRS’s proof of claim. Griffin’s plan of reorganization went through several modifications before it was ready for confirmation. On November 14, 1990, Griffin’s fourth modified plan of reorganization was confirmed by this Court. The order approving the plan provided for the payment in full of the IRS’s claim; however, due to tax payments which Griffin maintained had been made throughout the pendency of Griffin’s Chapter 11, the order further provided that Griffin was allowed various offsets and credits in the amount of $278,289.78. Due to the excess of payments over liabilities, Griffin’s order of confirmation additionally required the IRS to refund the overage in the amount of $56,929.75.1 The IRS did not file an objection to Griffin’s fourth modified plan of reorganization nor was the IRS present at the confirmation hearing.
Following the confirmation of its plan Griffin attempted to obtain the refund of its overage payments to the IRS. The IRS acknowledges that it received service of Griffin’s order of confirmation on or about *421mid-March, 1991, service being delivered to the following addresses:
Internal Revenue Service Special Procedure 1100 Commerce Street Dallas, Texas 75242;
Internal Revenue Service 919 Smith Street Special Procedures Houston, Texas 77002;
Internal Revenue Service Judson Road, Suite 182 Longview, Texas 75601.
However, Griffin’s attempts to enforce its order of confirmation against the IRS has not met with success and as a result Griffin filed this Motion to Compel.
The IRS’s objection to Griffin’s Motion to Compel is one of procedure. Due to the immense size of the IRS bureaucracy, the IRS has instituted a system whereby all IRS tax disputes emanating from the cases tried in the Beaumont division of the Eastern District of Texas are routed to a special sub-department of the IRS located in Houston, Texas. The address of this sub-department is:
District Director, IRS Special Procedure Staff Stop 5022H-BP P.O. Box 42837 Houston, Texas 77242-2837.
To insure consistency in the noticing of disputes involving the IRS as well as other claims involving federal agencies, this Court’s local rules provide that in all cases in which the IRS is a creditor and in all Chapter 11 cases and Chapter 13 cases the IRS is to be served at the beforementioned address in addition to service being effected on the United States Attorney for the Eastern District of Texas at 700 North Street, Suite 102, Beaumont, Texas 77701.2 L.R.Bankr.P. 11(A)(5) (App. A).
Griffin does not dispute that it failed to notice the IRS of the date of plan confirmation in conformity with this Court’s local rules. However, Griffin argues that to the extent the IRS was not noticed in conformity with this Court’s local rules, the IRS received adequate notice on numerous previous occasions. Additionally, Griffin argues that even if the pre-confirmation notice to the IRS was inadequate, the IRS’s admitted knowledge of the order of confirmation within six months of its entry and the IRS’s concurrent failure to move for revocation of that order pursuant to 11 U.S.C.A. § 1144 (West 1979 and Supp.1992) acts as a bar to the IRS’s complaint. The matter was taken under advisement. Necessary to this Court’s ruling is a chronological examination of the events in this case.
DISCUSSION OF LAW
Were we discussing a private creditor rather than the IRS the question would be analyzed as a “due process” argument. Due process would require that in order for this Court to hold that Griffin’s order confirming plan of reorganization is binding on the IRS, that the IRS have received adequate notice of the reorganization process, specifically the hearing on plan confirmation such as to allow the IRS to protect its property interests. Reliable Elec. Co., Inc. v. Olson Const. Co., 726 F.2d 620, 623 (10th Cir.1984) (a fundamental right guaranteed by the Constitution is the opportunity to be heard when a property interest is at stake); In re Rideout, 86 B.R. 523 (Bankr.N.D.Ohio 1988). The Supreme Court, in an oft-quoted phrase, has held that:
[A]n elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. The notice must be of such nature as reasonably to convey the required information and it must afford a reasonable time for those interested to *422make their appearance ... (emphasis added).
Mullane v. Central Hanover Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed. 865 (1950). Furthermore “[when] notice is a person’s due, process which is a mere gesture is not due process. The means employed must be such as one desirous of actually informing the [opposing party] might reasonably adopt to accomplish it.” Id., U.S. at 315, 70 S.Ct. at 657. The-ultimate burden of demonstrating reasonableness of notice will always be on the noticing party. Id. (“The reasonableness and hence the constitutional validity of any chosen method [of notice] may be defended on the ground that it is itself reasonably certain to inform those affected.”). Based on the facts of this case, this Court must hold that the IRS has not received adequate notice of the hearing on Debtor’s plan of reorganization and accordingly the IRS is not bound by the plan provisions. See United States Small Business Admin, v. Bridges, 894 F.2d 108, 111 (5th Cir.1990) for a complete discussion of what constitutes adequacy of notice to a governmental agency.
Surprisingly, Griffin started off on the right foot in terms of providing adequate notice to the IRS. As early as November 15, 1989, Griffin’s comptroller had directed a letter to the IRS, Special Procedures office in Houston, Texas. The letter was addressed to:
Charlotte Gates Attention: Special Procedures Stop 5022 HOU P.O. Box 525557 Houston, Texas 77052.3
This letter informed Ms. Gates of the transfer of this case to the Beaumont divisional office of this Court and requested further contact from the IRS. Later, on March 2, 1990, Griffin’s attorney directed a letter to Ms. Gates at the beforementioned address for the purpose of, inter alia, sending the IRS a copy of Griffin’s plan of reorganization and disclosure statement and a copy of the order and notice for hearing on the disclosure statement. The IRS does not dispute receipt of this letter. Given that Debtor’s plan of reorganization at this time provided for the payment in full of the IRS’s claim, the IRS did not find Griffin’s proposed disclosure statement and plan objectionable. This was the last time until after confirmation that Special Procedures was notified of the events transpiring in Griffin’s case.4
Beginning in early March of 1990, Griffin began directing all correspondence to the IRS to an IRS satellite office in Longview, Texas, at the following address:
Internal Revenue Service 1125 Judson Road, Suite 182 Longview, Texas 75601.
Accordingly, this satellite branch office was sent the March 2, 1990, certificate of notice for hearing on disclosure statement, the April 16, 1990, notice of resetting of hearing on the debtor’s disclosure statement, the July 17, 1990, order approving disclosure statement, the August 10, 1990, mailing of a ballot for accepting or rejecting Griffin’s plan of reorganization and the September 3, 1990, order rescheduling the hearing on the confirmation of Griffin’s plan of reorganization. There is no evidence to suggest that this satellite office ever acted upon these various notices. It is clear that this office did not play any role in Griffin’s reorganization.
On August 11, 1990, Griffin’s comptroller directed a letter addressed to:
J. Barnard — Excise Tax Group Dallas District Internal Revenue Service 1100 Commerce Street Dallas, Texas 75242.
The purpose of this letter was to initiate a dialogue for the purpose of seeking rein*423statement of Griffin’s previously revoked status as a tax free purchaser of diesel fuel. The letter announced that Griffin was in the process of finalizing its plan of reorganization. The letter further stated that Griffin had paid to the IRS amounts in excess of the IRS’s claim and was seeking refund of the overpayments.
On October 18, 1990, Griffin disseminated to creditors its third modified plan of reorganization. The IRS was served at the Longview, Texas office, through Mr. J. Barnard with the excise tax group in the Dallas District office and through a Houston, Texas, excise tax officer at the following address:
Mr. John Jackson Internal Revenue Service 8701 South Gessner Box 48
Houston, Texas 77074.
Finally, notice of the hearing for the November 14, 1990, confirmation hearing was sent to the IRS at the preceding three addresses. At this point, it was clear that Debtor’s plan maintained that not only had the IRS claim been paid through the operation of Griffin’s business but that Griffin was maintaining that it was entitled to a refund which at this time was in the amount of $39,305.69. As previously stated, no IRS objection was forthcoming and Griffin’s plan of reorganization was approved on November 14, 1990. It was not until mid-March of 1991 that the Special Procedures office in Houston was notified of the confirmation of Griffin’s plan.
For the purpose of this opinion, the only notice of relevance is the notice to the IRS pertaining to the distribution of Griffin’s plan of reorganization and the notice pertaining to the hearing thereon. All previous notices are redundant (this Court is concerned with the quality of notice rather than the quantity of notice).5 In this regard, this Court must find that the notice to the IRS is deficient.
The IRS is an extremely large, multifaceted federal agency. The Fifth Circuit Court of Appeals has recognized that when a debtor is dealing with a large government agency composed of various offices throughout the United States “a debtor should give special attention to ensure timely and meaningful notice to the correct agency.” United States Small Business Admin, v. Bridges, 894 F.2d 108, 111 (5th Cir.1990). Griffin’s noticing of the IRS in this case can only be described as haphazard. As previously stated, Griffin’s initial service on the IRS at the Special Procedures address in Houston was appropriate. Given that both Griffin’s comptroller and counsel had earlier in the case addressed correspondence to this address reinforces this Court’s view that Griffin, as a whole, was aware that this office was primarily responsible for resolution of Griffin’s claims vis-a-vis the IRS. Why Griffin substituted the Longview, Texas, general satellite office for the Houston, Texas,- Special Procedures office is not known. While it is not only in violation of this Court’s local rules, it is almost certainly “not reasonably calculated, under all the circumstances, to apprise [the IRS] of the pendency of the action ...” (quoting Mullane).6
Griffin’s noticing of. the excise tax groups of the Internal Revenue Service at the Dallas and Houston, Texas, offices similarly is deficient. It seems very clear that Griffin’s dealings with these parties was for the purpose of obtaining a reinstatement of Griffin’s tax free status. Griffin has not introduced any evidence to indicate that these individuals had any authority to negotiate the IRS’s claim in Griffin’s bank*424ruptcy. Finally, the fact that following plan confirmation, Griffin “saw the light” and served the IRS at its Special Procedure addresses in Houston and Dallas (the latter of which was redundant) causes this Court to question Griffin’s good faith and fair dealings with the IRS. If Griffin was trying to gain some advantage through the means of questionable noticing, Griffin has done so to its own detriment.7
Beyond the fatal defects in Griffin’s noticing, this Court would deny Griffin’s Motion to Compel on at least two other grounds. First, Griffin has never objected to the IRS’s proof of claim in an amount in excess of $230,000.00. A proof of claim, once filed, is prima facia evidence of the claim. Fed.R.Bankr.P. 3001(f), 11 U.S.C.A. (West 1979 and Supp.1992). Once filed, the proof of claim is deemed allowed unless a party in interest objects. 11 U.S.C.A. § 502(a) (West 1979 and Supp.1992). Because Griffin failed to file an objection to the IRS’s proof of claim and successfully rebut its prima facia validity, the claim is allowed. Griffin can not accomplish an end run around his process through the means of reworking the IRS’s claim in the context of a plan of reorganization. See In re Simmons, 765 F.2d 547, 553 (5th Cir.1985). As such, the claim of the IRS as originally filed continues to be valid.
The second additional reason why this Court would deny Griffin’s Motion to Compel also rests on procedural grounds. Griffin’s plan of reorganization and the present Motion to Compel seek turnover of in excess of $50,000.00 from the IRS. Turnover of property is an adversary proceeding governed pursuant to Fed. R.Bankr.P. 7001 et seq., 11 U.S.C.A. (West 1979 and Supp.1992). As an adversary proceeding, Griffin would be required under Fed.R.Bankr.R. 7004(b)(4), (5), 11 U.S.C.A. (West 1979 and Supp.1992) to effect service of summons on the IRS, the Attorney General of the United States as well as the United States Attorney for the Eastern District of Texas. See 4A Wright & Miller, Federal Practice and Procedure, § 1107 at pp. 164-165 (2nd ed. 1987) (“a suit against a federal officer in the officer’s official capacity is in effect a suit against the United States. For example, a suit against the District Director of Internal Revenue to recover a tax refund is a suit against that person, not as an individual but as an officer of the United States and process must be served under Rules 4(d)(4) and (5).”) Thus, even if this Court were to ignore the previously stated procedural irregularities, this Court would still be constrained to find that Griffin has failed to take the procedural steps necessary to recover a turnover from the IRS.
Even if all previous notice was defective, Griffin argues that the IRS’s admitted subsequent knowledge of the terms of the order of confirmation and the IRS’s failure to move for revocation of that order of confirmation within six months of confirmation acts to bar the IRS’s protest as untimely. For its proposition, Griffin cites the Court to 11 U.S.C.A. § 1144.8 However, this Court’s ruling does not have the effect of revoking Griffin’s order of confirmation. This Court simply holds that because the IRS has failed to receive adequate notice to sufficiently protect its property interest that it has been denied due process and as such a confirmation of Debtor’s plan of reorganization can not and does not have the effect of discharging the IRS’s claim. See Reliable Elec., supra at 623; In re Rideout, 86 B.R. 523, 530 (Bankr.N.D.Ohio 1988). Therefore, Griffin’s reliance on § 1144 is misplaced.
*425For these reasons, the Motion of Griffin Oil to Compel is DENIED.
. The difference between Griffin’s claimed credits and offsets [$278,289.78] and the IRS’s claim for taxes [$230,464.00] is $47,825.78. How Griffin arrived at the figure of $56,929.75 is unknown.
. The current address for the United States Attorney for the Eastern District of Texas is 350 Magnolia, Suite 150, Beaumont, Texas 77701.
. Although this address is somewhat different from the Special Procedures address specified in the local rules the evidence is clear that the IRS received mail directed to this address. For the purposes of this opinion the Court finds Griffin’s noticing of this address to be proper.
. On July 23, 1990, Griffin’s comptroller again directed a letter to Ms. Gates at the Special Procedures address in Houston, Texas, but the letter simply requested that Ms. Gates contact Griffin’s comptroller.
. Furthermore, the IRS’s knowledge of Griffin’s pending bankruptcy does not place an investigative burden on the IRS to ascertain when dis-positive hearings affecting the IRS’s interest take place. The IRS “has a "right to assume” that [it] will receive all of the notices required by statute ...” Reliable Elec. Co. v. Olson Const. Co., 726 F.2d 620, 622 (10th Cir.1984). This assumption presumes that the notice will be adequate.
. The Court’s conclusion that Griffin's notice to the IRS of the hearing on plan confirmation is defective is particularly fact specific. Had Griffin not had actual knowledge of the appropriate sub-department of the IRS with which to deal (through the initial contact with Special Procedures) or constructive knowledge of the proper address for notice purposes (the Court’s published local rules) Griffin’s noticing might have been reasonable under the circumstances.
. On request of a party in interest at any time before 180 days after the date of the entry of the order of confirmation, and after notice and a hearing, the court may revoke such order if and only if such order was procured by fraud ...
11 U.S.C.A. § 1144 (West 1979 and Supp.1992).
. See United States Small Business Admin, v. Bridges, 894 F.2d 108, 113 (5th Cir.1990) (“Even within an individual agency, given the formidable infrastructure of many of these government entities, automatic imputation of notice or actual knowledge from one branch office to another is seldom a viable concept). | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491589/ | *452OPINION AND ORDER GRANTING AMERICAN NATIONAL BANK’S MOTION FOR SUMMARY JUDGMENT ON ALL SUBSTANTIVE ISSUES
RICHARD S. SCHMIDT, Bankruptcy Judge.
Before the Court is the Motion for Summary Judgment on all Substantive Issues filed by American National Bank (the “Bank”). After hearing and argument the Court finds as follows:
FACTS
In June 1983, Debtor John Mills Hawn (“Hawn”) obtained a loan in the principal amount of $1,250,000 from Independence Bank, a California banking corporation. Hawn granted Independence Bank a security interest on certain of his oil and gas properties located in Refugio County, Texas. A single document creating this security interest was executed between Hawn and Independence Bank, and was entitled “Mortgage, Deed of Trust, Security Agreement, Assignment and Financing Statement” (hereinafter referred to as the “Security Agreement”) and perfected as both a real property mortgage and a Uniform Commercial Code Article 9 security interest. Pursuant to Article III of the Security Agreement, Hawn also assigned his monthly oil and gas production to Independence Bank to be credited against the amount then due and owing on the loan, with any balance to be returned to Hawn. The assignment was effective immediately upon execution of the Security Agreement and was not conditioned upon Hawn’s default. The assignment was recorded in Refugio County, Texas, on June 24, 1983.
In December 1985, American National Bank South (the “Bank”) acquired Hawn’s indebtedness from Independence Bank for $684,687, the then outstanding balance of the indebtedness. Independence Bank transferred to the Bank all of its rights arising under the 1983 Security Agreement. The transfer was properly recorded in Refugio County, Texas, on December 18, 1985.
In conjunction with its acquisition of Hawn’s indebtedness, the Bank advanced Hawn an additional $100,000 and received a security interest on additional oil and gas properties owned by Hawn in Refugio County which were not covered by the original Security Agreement. Hawn granted the Bank a security interest in the minerals, which the Bank perfected both as a real property deed of trust and a UCC security interest, plus a present assignment of monthly production to offset against the debt. (The first and second Security Agreements will be referred to collectively as the “Security Agreements.”)
On March 20, 1986, Hawn and the Bank executed a Transfer Order directing Hewit & Dougherty, the operator of Hawn’s oil and gas properties, to remit all proceeds from the sale of Hawn’s production to the Bank until further notice.
On September 2,1987, the Internal Revenue Service (“IRS”) filed a Notice of Federal Tax Lien in Nueces County, Texas, with respect to a 100 percent penalty for 1983 and personal income tax for 1984 allegedly owed by John Mills Hawn.
On September 2, 1987, the IRS served a Notice of Levy on Hewit & Dougherty. Hewit & Dougherty responded to the IRS that all funds due Hawn were being remitted to the Bank. During the three-year period following the issuance of that levy, Hewit & Dougherty continued to remit the proceeds from Hawn’s oil and gas production to the Bank pursuant to the assignment of production clauses in the Security Agreements and the Transfer Order.
On September 18, 1987, the IRS served a Notice of Levy (Form 668-A) on the Bank. The Notice of Levy demanded the Bank pay to the IRS “all property, rights to property, money, credits, and bank deposits now in your possession and belonging to [Hawn] (or for which you are obligated) and all money or other obligations you owe this taxpayer ...” The Notice of Levy referred to the two tax liabilities for which the IRS had previously filed a Notice of Tax Lien, plus additional interest and penalties as follows:
*453Assessment Additions Total
Civil Penally (1983) $117,468.33 $ 7,560.51 $125,028.84
Personal Income Tax (1984) 23,844.02 3,340.46 27.184.48
TOTAL $152,213.32
At the time of receipt of the levy the Bank held no funds belonging to Hawn.
The IRS served additional Notices of Levy on Hewit & Dougherty and the Bank in September 1990. On October 31, 1990, Hawn filed bankruptcy. An agreement was reached with the IRS under which all proceeds from Hawn’s oil and gas production since his bankruptcy filing have been paid into this Court.
From September 18, 1987, the date the Bank received the first Notice of Levy, through October 31, 1990, the date of Hawn’s bankruptcy filing, the Bank received a total of $708,567.62 from Hewit & Dougherty on account of Hawn’s oil and gas production. Of this amount, $576,-888.71 was applied by the Bank against principal and interest on Hawn’s outstanding loan indebtedness, $109,057.92 was remitted to Sheila Roach (Hawn’s ex-wife) in accordance with a Subordination Agreement pre-existing the Notice of Tax Lien filing, $8,275.00 was applied against a debt due a third party, $8,906.14 was applied against legal fees, $55.18 was applied against miscellaneous charges, and $5,384.72 was paid to John Mills Hawn.
Shortly after it issued the 1990 Notices of Levy, the IRS first raised the argument that it was entitled to receive, under the Notices of Levy issued to the Bank and Hewit & Dougherty in 1987, all of Hawn’s oil and gas production, beginning at least 45 days after the filing of the Notice of Tax Lien (i.e., October 18, 1987), and continuing to October 31, 1990, the date of Hawn’s bankruptcy filing.
After being advised by the IRS that it intended to bring actions against the Bank with respect to the oil and gas production, the Bank initiated this adversary proceeding. In its Complaint, the Bank, requested inter alia that the Court determine the relative priorities of the Bank and the IRS to the oil and gas production.
The IRS filed a Counterclaim against the Bank in which it sought to enforce the September 18, 1987 levy issued against the Bank. The IRS asserted that from January 1, 1988 through September 30, 1990, the Bank received oil and gas production payments totalling $650,549.05. The IRS requested that the Court order the Bank to turn over the amount of Hawn’s production payments which passed through the hands of the Bank, up to the amount levied upon.
DISCUSSION
The dispute between the Bank and the IRS consists of two contentions. First, the IRS contends that, despite the Bank’s perfected security interests in Hawn's mineral property and production, its subsequently filed IRS lien has a superior claim to the mineral production. Second, the IRS contends that after it issued Notices of Levy to the Bank, the Bank was obligated to turn over to the IRS all payments for subsequently generated mineral production from Hawn’s property.
The IRS’s contention that its subsequently filed lien is entitled to priority over the Bank’s security interest, if accepted, would undermine the long established practices of lending based on mineral interests as security, would undermine the specific expectations of all the parties to the transactions, and would grant the IRS a windfall. The IRS’s Counterclaim to enforce the levy on the Bank likewise violates long established legal principles, including the IRS’s own regulations.
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is proper when the pleadings, discovery and summary judgment affidavits or declarations establish that there is not a genuine *454issue as to any material fact and the moving party is entitled to judgment as a matter of law. In ruling on a motion for summary judgment, the Court will draw all reasonable inferences of fact against the moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970).
I.
The priority of competitive liens on property over which there is a federal tax lien is determined by federal law. Aquilino v. United States, 363 U.S. 509, 80 S.Ct. 1277, 4 L.Ed.2d 1365 (1960). In order for a state lien to prime a federal tax lien, it must be perfected first under state law, and it must be choate as determined by federal law as of the date of the filing of the notice of the federal tax lien. United States v. Pioneer American Insurance Co., 374 U.S. 84, 83 S.Ct. 1651, 10 L.Ed.2d 770 (1963); United States v. New Britain, 347 U.S. 81, 74 S.Ct. 367, 98 L.Ed. 520 (1954).
In Texas, oil and gas, while in the ground, is real property, but when produced becomes personal property. Here, long before any Notice of IRS Lien was filed, Hawn gave the Bank a security interest in the oil and gas both in the ground and as it is produced. The document creating the security interest was entitled “Mortgage, Deed of Trust, Security Agreement, Assignment and Financing Statement”, and gave Independence Bank both a mortgage and deed of trust lien on the oil and gas while in the ground and a security interest, protected under the UCC, in the oil and gas when produced. That Security Agreement was duly filed in Refugio County on June 24, 1983. Independence Bank transferred its security interest to American Bank by a document captioned “Transfer of Lien”, which was also filed in the Deed Records of Refugio County on December 18, 1985. A similar Security Agreement was executed and filed with respect to the additional $100,000.00 lent to John Mills Hawn.
The Security Agreements gave the Bank a perfected, first priority security interest in the oil and gas while in the ground. Those documents also gave the Bank a perfected first priority security interest in any oil and gas produced from that property. See UCC § 9.401(a)(2), providing that a security interest in minerals, including oil and gas, is to be perfected by filing the security agreement in the office of the County Clerk in the county where a mortgage on the real estate would be filed or recorded.
The IRS concedes that the Bank held a first priority security interest in the oil and gas while it was in the ground. The IRS, however, contends that by virtue of its subsequently filed Notice of Tax Lien, it had a first priority security interest in the oil and gas as produced.
Internal Revenue Code Section 6323(a) provides that a federal tax lien is not valid against a previously existing “security interest.” Under Texas law a mineral owner has absolute title to the oil and gas in place beneath his land. Elliff v. Texon Drilling Co., 146 Tex. 575, 210 S.W.2d 558 (1948). As the Texas Supreme Court stated in Elliff, “Each owner of land owns separately, distinctly and exclusively all the oil and gas under his land....” 210 S.W.2d at 561. See also 55 Tex.Jur.3d, Oil and Gas (1987) § 9 at 32. Oil and gas in the ground thus is precisely the same property as oil and gas after extraction. The property is merely in a different location. The oil and gas underlying Hawn’s property was therefore in existence and was owned by Hawn as of the dates the Security Agreements were executed, and before the IRS's Notice of Tax Lien was filed. The rule of capture in no way undermines this conclusion. Under the rule of capture, an adjoining landowner may appropriate the oil and gas which flows from underneath a neighbor’s land without incurring liability. Until appropriation by drainage occurs, however, the landowner remains the absolute owner of the oil and gas under his property. See Stephens County v. Mid-Kansas Oil & Gas Co., 113 Tex. 160, 254 S.W. 290, 292 (Tex.1923), expressly rejecting the contention that the possibility of capture negates ownership of oil and gas in place.
*455Hawn thus had full vested title to the oil and gas in the ground. The fact that Hawn’s title to that oil and gas might possibly be divested by capture in no way changes that fact. Indeed, it is true that one could be divested of title to many types of property one owns. For example, cash could be stolen from someone and title passed to an innocent holder, property could be condemned by the state or lost by adverse possession, personal property entrusted to a dealer in such property could be sold to innocent purchasers (see UCC § 2.403(b)), or land may be lost to an adjacent land owner by erosion. The fact that Hawn might conceivably lose title to some of the oil and gas in the ground under the rule of capture in no way alters the fact that he had a vested ownership interest in that oil and gas in place. Stephens County v. Mid-Kansas Oil & Gas Co., supra.
Under I.R.C. § 6323(a) a holder of a "security interest” takes priority over a federal tax lien if the security interest is in existence prior to the time that the tax lien is perfected by a Notice of Tax Lien filing. Section 6323(h) defines a security interest as “any interest in property acquired by contract for the purpose of securing payment or performance of an obligation ...” Section 6323(h) contains no reference whatsoever to the word “attachment”, and does not make the existence or validity of a security interest dependent on “attachment”. Rather, that section imposes the following requirements for a security interest to exist:
a. The property must be in existence;
b. The interest must be protected under local law against a subsequent judgment lien arising out of an unsecured obligation; and
c. The holder of the security interest must have parted with money or money’s worth.
All of the requirements of § 6323(h) were met in this case prior to the IRS’s Notice of Tax Lien filing. The Bank accordingly has priority to the proceeds of the production under § 6323(a).
Under Texas law where a creditor has a security interest which is perfected both as a deed of trust on the minerals in the ground and perfected under Article 9 after extraction, as here, the resulting interest is a single continuous security interest that attaches while the minerals are in the ground and continues after extraction. See In re Hess, 61 B.R. 977 (Bankr. N.D.Tex.1986). Accordingly, the Bank’s Security Agreements, which were properly filed and which cover the oil wherever it may be, each created a single, continuous lien which attached while the minerals were in the ground and persisted through their production. The Bank’s security interest consequently is superior to the IRS’ tax lien.
The principle set forth in In re Hess is well established. See Vagts, “The Uniform Commercial Code and the Oil and Gas Mortgage”, in 1C Matthew Bender’s Uniform Commercial Code, Ch. 16B. There, the author notes that in jurisdictions such as Texas, which treat oil and gas in place as real property, “there is a real estate lien on the oil and gas up to the moment when it is extracted — then it is converted into a Code security interest.” Id., § 16.15[8] at page 1746, emphasis added.
Moreover, the Texas Legislature has confirmed this in an amendment to UCC § 9.203(c). As revised, that section provides that “[i]f a secured party holds a security interest which applies under this chapter to minerals (including oil and gas) upon their extraction and the security interest also qualifies under applicable law as a lien on such minerals before their extraction, the security interest before and after production shall constitute a single continuous and uninterrupted lien on the property.” UCC § 9.203(c). Although this provision was enacted in 1991, the statute expressly provides that it “[i]s declaratory of the law of the state as it has heretofore existed and shall apply with respect to oil, gas and other minerals heretofore and hereafter produced.” Id.
Several federal courts, including the Fifth Circuit, have rejected the security interest interruption theory in cases involving insurance proceeds. In PPG Industries, Inc. v. Hartford Fire Ins. Co., 531 *456F.2d 58 (2d Cir.1976), the Second Circuit held that a security interest in insured property, which under state law also attached to insurance proceeds on that property, was valid over a federal tax lien filed after the security interest, but before the proceeds were generated. The IRS conceded, as here, that the creditor’s lien would be good against other private claimants, but contended that the lien could not attach until those proceeds came into existence, at which time the IRS had already on file a prior tax lien. The court, however, rejected this “attachment” argument. Looking to state law, the Second Circuit concluded that “the proceeds of the insurance are merely the collateral in another form”, and consequently held that the creditor’s security interest was superior to the federal tax lien. Id. at 62.
The Fifth Circuit, in Paskow v. Calvert Fire Ins. Co., 579 F.2d 949 (5th Cir.1978), has adopted the Second Circuit’s holding in PPG Industries, Inc. Accord, Aetna Ins. Co. v. Thermal Industries, Inc., 591 F.2d 1035 (5th Cir.1979). In Paskow the government argued that the creditor’s lien could not “attach” until the proceeds came into existence. Following the Second Circuit’s opinion in PPG Industries, however, the Fifth Circuit held “we regard the insurance fund and the original collateral as one and the same property for the purpose of determining when the property came into existence.” 579 F.2d at 954. Accordingly, the Fifth Circuit held that the creditor’s security interest on the insured property and the proceeds of that property was superior to the federal tax lien.
The Bank's position here is even stronger than the creditor’s position was in Paskow. Paskow involved insurance proceeds, which differ from the underlying insured collateral, yet the Fifth Circuit held they would be treated as one and the same property for purposes of determining the priority of the creditor’s lien. In the subject case, while the character of the property may change from real to personal, the minerals are the same minerals. Oil in the ground and oil produced is one and the same property. In re Hess and Elliff v. Texon Drilling Co., supra.
II.
In its Counterclaim against the Bank, the IRS asserts that the Bank failed to honor the levy served on it on September 18, 1987 in an amount of $152,213.32. The IRS asserts that from January 1, 1988 through September 30,1990, $650,549.05 of royalty payments were received by the Bank representing mineral production on Hawn’s property. The IRS contends, therefore, that under Section 6332(d)(1) of the Internal Revenue Code, the Bank should have paid over to the Government all royalties received from Hawn’s property following the notice of levy in 1987 up to the amount of that levy.
Under Section 6331(a) of the Internal Revenue Code, the IRS is authorized to levy upon all property and rights to property (except property exempt by statute) belonging to a delinquent taxpayer. The notice of levy served on the Bank directed the Bank to turn over to the IRS “all property, rights to property, money, credits and bank deposits now in your possession and belonging to [Hawn] (or for which you are obligated) and all money or other obligations you owe this taxpayer).”
An IRS levy, however, reaches only property which exists on the date of the levy. Thus, the Treasury Regulations provide that, except with respect to levies on salary or wages (as to which the Internal Revenue Code specifically authorizes a continuing levy), “[a] levy extends only to property possessed or obligations which exist at the time of the levy.” Reg. § 301.-6331(a)(1), emphasis added.
Under the Regulations, an IRS levy also will reach a vested, accrued right to receive money in the future. The Regulations then provide that an IRS levy will reach property “when the liability of the obligor is fixed and determinable although the right to receive payment thereof may be deferred until a later date.” Id., emphasis added. This would cover, for example, a note providing for specific payments on fixed future dates.
*457In contrast, an IRS levy will not reach a taxpayer’s claim io receive payments in the future where the taxpayer does not, at the time of the levy, have a fixed and determinable right to those payments. For example, the IRS has ruled that a levy will not reach unvested, contingent rights to future payments. See Rev.Rul. 75-554, 1975-2 C.B. 478. There, the IRS considered a levy served on a corporation after it had declared a dividend, but before the record date for payment of that dividend. The IRS noted that, although the stockholder as of the dividend declaration date “may become a creditor of the corporation”, he does “not acquire a vested property right to the dividend” until the record date. Accordingly, the IRS ruled that a levy served on the corporation on the dividend declaration date and prior to the record date would not reach the dividend, since the stockholder did not have a vested right to the dividend.
Similarly, the example in the Regulations stating that an IRS levy will reach future payments due under completed sales of personal property implies that an IRS levy will not reach amounts to be received in the future for sales of personal property that have not yet occurred.
Finally, prior to a statutory amendment expressly authorizing a continuing levy on wages (now I.R.C. § 6331(e)), the courts had uniformly held that a levy will not reach a taxpayer’s right to payment for services to be rendered after service of the levy, since the taxpayer had no presently vested right to such payments. See United States v. Long Island Drug Co., 115 F.2d 983, 986 (2d Cir.1940) (IRS levy cannot reach taxpayers’ future earnings, since they “are contingent upon performance of a contract of service and represent no existing rights of property.”); United States v. Penn, 266 F.Supp. 655 (Ariz.1967) (same); United States v. Newhard, 128 F.Supp. 805 (W.D.Pa.1955) (same). See also Wagner v. United States, 573 F.2d 447, 454 (7th Cir.1978) (“Haughton’s future wages and commissions were contingent on his continued employment and thus did not represent an existing property right to which a lien could attach. Haughton had no present right to the wages and commissions.”)
Here, Hawn, by means of the Transfer Order, had directed the operating company to pay any future revenues that might be generated from mineral production to the Bank. The right to receive revenues that might be generated from future production from Hawn’s property was not a vested, fixed or determinable right to future income existing at the time of the levy. Rather, that income stream represented a purely contingent right to receive certain income in the future. That right was contingent, among other things, on (1) whether minerals were produced, (2) the amount of such production, (3) whether and when the minerals were sold, (4) the sale price for the minerals, and (5) the expenses incurred in generating such production.
Since the right to receive future income from production and sale of oil thus was a contingent, non-vested and non-determinable right, the IRS levy could not reach it. See United States v. Long Island Drug Co., supra.; Rev.Rul. 77-554, supra.1
CONCLUSION
There are no genuine issues of material fact and the Bank is entitled to summary judgment as a matter of law on the substantive issues presented in this case. The IRS’s Counterclaim against the Bank should be dismissed.
Accordingly, IT IS HEREBY ORDERED that the Motion for Summary Judgment of the American National Bank is hereby GRANTED.
It is FURTHER ORDERED that the Motion of the United States is DENIED.
. The IRS contends that it is inconsistent to argue that the lien is choate but the right to income from production is contingent. The lien is not contingent because it does not depend upon any further action. The Bank’s right to receive income is, however, contingent in that it depends upon production and sale of the minerals. Obviously the lien is not the same as the right to income. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491590/ | MEMORANDUM OPINION
DAVID H. COAR, Bankruptcy Judge.
This matter came to be heard on the Motions of the Debtor, GARRY WINER, and the Trustee, LEONARD GROUPE, for a Rule to Show Cause why E F & G, LTD. should not be held in Contempt of Court.
Findings of Fact
In 1983, Garry Winer [Winer] formed Challenger Corporation [Challenger] and was Challenger’s sole shareholder and president. Challenger’s Articles of Incorporation authorized 30,000 shares of stock. One thousand shares of stock were actually issued, all to Winer.
To obtain more capital, Challenger entered into a “preliminary understanding” with Daniel M. Benzaquen [Benzaquen], Joel H. Cohen [Cohen] and Patrick A. Hor-an [Horan] on April 20, 1989. In the document memorializing the arrangement, Ben-zaquen, Cohen and Horan [the Partners] agreed to invest $50,000 in Challenger in exchange for receiving a 25% equity position in Challenger. The Partners would receive the right to buy additional equity for incremental costs of $25,000 per 7.5% of Challenger, with the total investment by the Partners not to exceed 40% of Challenger’s equity. The Partners would receive dividends if Challenger was profitable but they would not have voting rights. The “preliminary understanding” also stated that it would be replaced by an official stock transfer agreement. No stock transfer agreement was ever executed and there was never an issuance or transfer of any stock to the Partners.
In a transaction apparently related to the “preliminary understanding”, a note was executed between Winer and the Partners, dated April 21,1989, whereby Winer promised to pay the Partners $50,000 within one year at 0% interest. Winer also promised the partners a 25% equity position in Challenger per the “preliminary understanding.” Apparently, the Partners transferred $50,000 to Winer or Challenger. It is unclear whether the 25% equity position was to come from Winer’s 1,000 shares or from additional shares of Challenger to be issued at some future date. It is also unclear whether the 30,000 shares authorized by the Articles of Incorporation include a class of non-voting shares.
While Challenger was in operation, it developed a desktop publishing program known as the Zeus Program [Zeus] for the Macintosh operating system. Zeus was never marketed due to a dispute with its distributor. As a result, Challenger was unable to generate revenue and ceased operating. On July 2,1990, the Illinois Secretary of State involuntarily dissolved Challenger, citing Challenger’s failure to file an annual report and failure to pay the required Illinois annual franchise taxes. Challenger has not taken any formal steps to become reinstated or to “wind up” its business and affairs.
On October 19, 1990, Winer filed an individual voluntary Chapter 13 petition in the United States Bankruptcy Court for the Northern District of Illinois. On November 28, 1990, the case was converted to a Chapter 7 proceeding and Leonard M. Groupe was appointed trustee [Trustee].
On February 15, 1991, the Trustee conducted a first meeting of creditors pursu*541ant to 11 U.S.C. § 341. At that meeting, the Trustee examined Winer about his assets. Winer listed as his sole ásset his 1,000 shares of Challenger stock. The Trustee then examined Winer about what Challenger owned. Winer stated that Challenger had a potential copyright infringement claim against Quark, Inc. [Quark] for infringement of the Zeus program. In spite of that fact, the Trustee filed a “No Asset” report which stated that the Trustee believed there were no assets in this estate. On April 16, 1991, after the Trustee filed his no-asset report, Winer entered in a Letter of Agreement and granted a license in the Zeus program to Zeus, Inc. In doing so, Winer purportedly acted on behalf of Challenger as its President. Pursuant to the licensing agreement, Zeus, Inc. was to pay Challenger a royalty of one-third of all net income earned by Zeus, Inc. from distributing the Zeus program. Win-er did not seek nor obtain permission from the Trustee or the Bankruptcy Court to enter into this agreement. Moreover, the Zeus Program was not listed as property of the estate in schedules filed in his bankruptcy case. On October 22, 1991, Zeus, Inc. filed a suit alleging copyright infringement and other actions against Quark in the United States District Court for the Northern District of California [the California case]. After that suit was filed, the principals of Quark, Fred Eberhimi and Timothy Gill formed a new company known as E F & G, Ltd. [E F & G], which purchased the claims of the Partners against Winer for $20,000. Thereafter, E F & G asserted a claim to 25% of the equity in Challenger with the right to buy an additional 15% pursuant to the “preliminary understanding” between the Partners and Winer.
On February 18, 1992, E F & G presented a motion in this Court seeking to reopen Winer’s bankruptcy case. In that motion, E F & G asserted standing in the bankruptcy case “as assignee of the claims of Joel H. Cohen, Daniel M. Benzaquen and Patrick Horan, who were listed as unsecured creditors by the debtor.” The Court granted the motion to reopen when it became clear that the rights in and to the Zeus Program had value to the estate.
For openers, E F & G initially offered to buy the Trustee’s rights in the Zeus Program for $150,000 if the Trustee could successfully avoid the post-petition transfer of the Zeus Program by Winer to Zeus, Inc. or for $75,000.00 if the transfer was not avoided. That offer was rejected. E F & G eventually increased its offer to approximately $1,300,000.00 for the purchase of the estate’s interest in the Challenger stock.*
Attempting to invoke the “preliminary understanding”, E F & G delivered a cashier’s check in the amount of $50,000.00 and a letter to the Trustee for the purchase of 15% of Challenger’s stock. In that letter, E F & G requested that the Trustee, as representative of Winer’s estate, issue or transfer stock certificates to E F & G representing 40% of the Challenger equity. By letter dated July 2, 1992, the Trustee refused the cashier’s check and the rest of the E F & G “request.” By letter dated July 2, 1992, E F & G made a similar request to Winer personally. This request was likewise refused.
For its part, Zeus, Inc. threatened the estate with a large claim if the licensing agreement was terminated by the Trustee (or, perhaps, byEF&GifEF&G acquired the Winer stock). Zeus later presented its own offer which proposed to drop any claims that Zeus, Inc. might have against the estate and, if the Trustee would ratify the licensing agreement and join the copyright infringement suit against Quark as an additional party-plaintiff. To sweet*542en the pot and meet the E F & G offer, Zeus, Inc. also offered to modify the royalty provisions of the licensing agreement in a way which would pay to the estate amounts sufficient to satisfy the claims of the creditors of the Winer estate and leave money available for the equity holders in the event of a recovery in the California case.
After weighing the competing offers, the Trustee decided to accept the Zeus, Inc. offer. A motion seeking approval of this arrangement was filed. E F & G opposed the motion arguing that the Trustee should be ordered to accept its offer. On July 27, 1992, this Court approved the Trustee’s settlement with Zeus, Inc. and overruled the objections of E F & G. In doing so, this Court determined that acceptance of the Zeus, Inc. offer was in the best interests of Winer’s bankruptcy estate and of the Debtor. This Court’s Order of July 27, 1992 was appealed to the United States District Court for the Northern District of Illinois and, as far as this Court is aware, that appeal is currently pending.
During the hearing on the Trustee’s motion to compromise and settle his dispute with Zeus, Inc., E F & G challenged the Trustee’s legal authority to enter into an arrangement in which the Trustee purported to bargain with the assets of Challenger. E F & G maintained that the Trustee had no rights in the Challenger assets generally (and in the Zeus Program in particular) because the estate’s interest was limited to rights in Winer’s shares of Challenger stock. This Court concluded that for purposes of the hearing to compromise only, that the Trustee, as representative of the estate of a shareholder in possession of the assets of a dissolved corporation, held those assets for creditors and equity holders of that corporation.
Having failed to outflank Zeus, Inc. in the California case by actions taken in this Court, on August 28, 1992, E F & G filed a Complaint in and Motion for Preliminary Injunction in the United States District Court of Illinois [the District Court Action]. In that proceeding, E F & G named Challenger, but not the Debtor or the Trustee as defendants. E F & G sought to compel the issuance of stock pursuant to the “preliminary understanding” and to enjoin Challenger from transferring legal or beneficial interest in its assets (including the Zeus Program) to any person or entity without further court order. E F & G alleged that any such transfer would prejudice its rights as a “shareholder” of Challenger. One of the events precipitating the District Court Action was the Trustee’s demand to Winer that the Challenger program be “transferred” to the Trustee so that the provisions of the settlement with Zeus, Inc. could be carried out.
The Trustee and the Debtor responded to the District Court Action by filing in this Court, applications for a Rule to Show Cause against E F & G. Both Trustee and the Debtor contend that E F & G’s actions in the District Court Action violate the automatic stay in Winer’s bankruptcy case by attempting to interfere with the Trustee’s ability to transfer interests in the Zeus Program, necessarily seeking to exert control of property of Winer’s bankruptcy estate.
Discussion and Conclusions of Law
It is helpful to begin by stating the obvious. E F & G’s efforts in the District Court Action and its efforts in this Court have been motivated by a desire to gain advantage in the California case. Counsel for E F & G took umbrage when this Court said as much in these proceedings. He should not have. Indeed, E F & G has been forthright about its relationship to Quark, the defendant in the California action. There is nothing illegal or immoral about what E F & G is doing, but it is important to square assertions made on behalf of E F & G with its deeds. During the hearing on the Trustee’s motion to settle with Zeus, Inc., Timothy Gill, Chairman of the Board of Quark and Secretary, Treasurer of E F & G, testified that E F & G’s attempts to purchase Winer’s stock in Challenger were an attempt to hedge against possible outcomes in the California litigation. If that was true, then it does not follow that Challenger’s assets should not be disposed of by the Trustee except to the extent that E F & G disagrees with this *543Court’s prior disposition of the Trustee’s motion to compromise with Zeus, Inc. E F & G’s injunction action in the District Court is consistent only with its attempts to undermine the Plaintiff’s position in the California case. But that does not end the inquiry in this Court — it only provides backlighting for the real issues presented.
The essential issue here is whether E F & G’s actions in the District Court violate the automatic stay. Both the Trustee and the Debtor rely heavily on 11 U.S.C. § 362(a)(3) which stays, “any act to obtain possession of property of the estate or property from the estate or to exercise control over property of the estate.” The only asset of the Winer estate is whatever interest Winer has in Challenger and Challenger’s assets. It appears that the only asset that Challenger has is its interest in the Zeus Program. Count I of the E F & G action in the District Court seeks to enforce the “preliminary agreement” between Challenger and the Partners.
The Trustee contends that the following interests are property of the estate:
(1) Winer’s shares of Challenger stock;
(2) Winer’s rights to distributions from Challenger on account of those shares; and
(3) Winer’s right to wind up the affairs of Challenger, at least insofar as those rights affect the estate’s rights to distributions on account of Winer’s stock.
Count I of the District Court Action sounds in breach of contract and seeks to specifically enforce the “preliminary agreement” and to enjoin the transfer of the assets of Challenger, especially Zeus Program. Count II of that Action seeks a preliminary and permanent injunction accomplishing the same thing.
All of the parties (the Trustee, the Debt- or, and E F & G) have made much of whether the “preliminary understanding” reaches the status of an enforceable contract and whether a dissolved corporation is authorized to issue new shares. These are interesting questions, especially the latter; so interesting that this Court may have encouraged the flurry of citations and argument over these issues. These are matters that go to the merits of the case pending in the District Court and their resolution is probably not essential to resolution of issues pending before this Court. The only qualification of that view is necessitated by the fact that the “preliminary understanding” does not make clear, whether the shares to be issued to the Partners were to come from authorized, but unissued, shares of Challenger, or whether they were to come from shares already being held by Winer. E F & G’s actions in first seeking the additional 15% from the Trustee and then Winer suggests that it, too, is unclear as to what was to be the source from which the Partners’ shares were to come.
There can be no serious question but that the shares Winer held on the day the petition was filed constitute property of the estate. If E F & G is seeking to assert possession of, control over, or an interest in those shares, then its actions in so doing violate § 362. See, In re Dublin Properties, 20 B.R.,616 (Bankr.E.D.Pa.1982). If, on the other hand, the “preliminary understanding” contemplated that the shares to be issued were to come from authorized but unissued shares of Challenger, then this Court sees no reason why the automatic stay should be implicated under the facts of this case.
The second interest which the Trustee claims as estate property is Winer’s right to distributions from Challenger on account of his shares of Challenger stock. In the District Court Action, E F & G asserts that unless’ that Court enjoins the transfer of rights in and to the Zeus Program, Challenger’s creditors and equity holders will be hurt. Even if it were to obtain specific performance of the agreement, E F & G and Winer would be the only shareholders of Challenger. But Quark/E F & G stand to gain more if the California action is terminated than if Challenger and Zeus, Inc. prevail in that action. The Zeus Program never made money in the hands of Challenger or Zeus, Inc. and no one has suggested that it will ever make money independent of the copyright action in California in which Quark is the defendant. Mr. Gill of Quark/E F & G testified that *544the California litigation cost approximately $100,000 in the month of June alone and “is incredibly costly.” One of the attorneys for E F & G before this Court is also an attorney for Quark in the California action. The first offer that E F & G made to the Trustee was $150,000. The original objections to E F & G’s low-ball offers to buy the estate’s interest and end the California litigation came from Winer because the offers would leave nothing for him as debt- or and shareholder in Challenger. E F & G has no incentive, as shareholder of Challenger, to pursue the interests of Challenger’s creditors and shareholders. Indeed, its real interests are directly at odds with the interests of the creditors and shareholders of Challenger. Any recovery in the Zeus litigation would come from Quark, E F & G’s first cousin, and though E F & G would share in this recovery, as a Challenger shareholder, Quark/E F & G’s best outcome would be if the Zeus litigation was dropped and the Challenger shareholders recovered nothing. A review of the schedules suggests that many of the creditors listed in Winer’s schedules are actually creditors of Challenger. E F & G has not alleged either in this Court or the District Court that there are additional creditors of Challenger who are not listed in the bankruptcy case. Indeed, Challenger’s creditors may have contingent claims in Winer’s bankruptcy case with respect to any liability that Winer, as an officer, has for maladministration of Challenger and the Challenger assets. It is doubtful whether E F & G is really interested in protecting the interests of the Challenger creditors and shareholders or in seeking to shore up Quark’s position in the California litigation. It is further doubtful that the interests of the Challenger creditors and shareholders (other than E F & G) are served by E F & G’s actions in the District Court Action.
With that background in mind, the Trustee’s contention that Winer’s right to distributions from Challenger on account of his shares are affected by E F & G’s actions in the District Court take on a different and more complex texture. In response, E F & G parades a horrible. E F & G says that if the Trustee’s position is correct, then any time the debtor is a shareholder of a corporation and that corporation takes action or is acted upon in a way which diminishes (or threatens to diminish) the value of the debtor shareholder’s stock, then that action by or against the non-debtor corporation would be stayed. Stated more generally, actions taken against a non-debtor which will affect the value of property of the estate are stayed. That overstates the proposition necessary to reach the result sought by the Trustee, and even though there are cases that seem to endorse that proposition (see, e.g., In re 48th Street Steakhouse, Inc., 835 F.2d 427 (2d Cir. 1987), the concern raised by E F & G is troublesome and its adoption is unnecessary to resolution of this proceeding.
Instead, the Court will focus on the third interest cited by the Trustee. Under the terms of the “preliminary understanding”, the shares to be issued to the Partners were to be non-voting shares. Thus, even if specific performance is granted, E F & G would have rights to 40% of any dividends from Challenger, 40% of its assets upon distribution and no right to participate in the wind-up process. Corporate officers have the authority to wind up the affairs of a dissolved corporation. Price v. Illinois, 79 Ill.App.3d 143, 34 Ill.Dec. 690, 398 N.E.2d 365 (1979). Winer is the officer with the authority to wind-up Challenger’s affairs. As long as Winer is in a bankruptcy proceeding, that authority must be exercised in a way which maximizes the recovery to the estate. Wabash Valley Power Ass’n v. Rural Electrification Admin. 903 F.2d 445 (7th Cir.1990) (A debtor in bankruptcy is to maximize the value of the estate ...); Estes v. Dinzole et al., 1989 WL 68392, 1989 U.S.Dist. LEXIS 7697 (N.D.Ill. June 13, 1989) ([T]rustee’s duty is to maximize the value of the estate ...); In re L & S Industries, Inc., 122 B.R. 987 (Bankr.N.D.Ill.1991) (The trustee’s responsibility is to preserve and maximize the value of the estate ...). The relief sought by E F & G in the District Court Action directly impairs the Debtor’s and the Trustee’s ability to wind up the affairs of Challenger and realize a return on the Challeng*545er stock — for all who have an interest in Challenger including the estate. E F & G litigated in the bankruptcy court and lost on the issue of which action would maximize the return to the Debtor and Challenger. That is now on appeal, but E F & G seeks either another bite of the apple or a cheap way to stay proceedings pending that appeal.
Courts have interpreted the § 541(a)(1) definitions of property of the estate broadly. See, United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S.Ct. 2309, 76 L.Ed.2d 515 (1983), There is no question but that on the date and time of filing the bankruptcy petition, Winer possessed the power and authority to wind up the affairs of Challenger. The question presented here is whether that power to “wind up” became property of the estate.
Colliers on Bankruptcy says the following about the history and sweep of § 541(a):
Section 70(a)(3) of the [former Bankruptcy] Act which had remained unchanged since the Act of 1898 had been characterized as manifesting a purpose to make the assets of the estate broadly inclusive (citing Board of Trade v. Johnson, 264 U.S. 1 [44 S.Ct. 232, 68 L.Ed. 533] (1923)).
4 Collier on Bankruptcy IT 541.21 pp. 106-107 (15th ed. 1992).
Collier’s then goes on to list examples of cases in which courts under the Act held that powers of the bankrupt were deemed vested in the trustee. Two of those cases are illustrative.
In In re Newfoundland Syndicate, 196 F. 443 (D.C.N.J.1912), the debtor was a corporation. Prepetition, several shareholders received stock for a price less than the aggregate par value of the shares received. State law allowed the directors of the corporation to assess the shareholders for the difference between what they actually paid and what they should have paid. The trustee caused the assessment to issue and the court upheld the right of the trustee to do so. In Moore v. Herrink, 77 F.2d 96 (4th Cir.1935), just prior to the bankruptcy of a corporation, the board voted to pay past due salary to the corporate president. Of the total to be paid, $20,000 was unrecoverable by the president because recovery was barred by the statute of limitations. After the bankruptcy case was filed, the trustee voided the transactions. The Third Circuit approved the trustee’s action, saying that, “§ 70(a) of the Act provides in substance that the trustee of the estate of a bankrupt shall, as of the effective date of adjudication, be vested, by operation of law, with all the powers which the bankrupt might have exercised for his own benefit.” 77 F.2d at 97.
In Newfoundland Syndicate, the trustee was deemed vested with the power that state law gave to the directors of a corporation to assess shareholders. In Moore v. Herrink, the trustee was vested with the board’s power to nullify an invalid act. Thus, bankruptcy law has long recognized that a power (as opposed to an interest in specific property) deriving from a statute or otherwise, may become property of the estate.
To be sure, the cases cited involve situations in which the debtor was a corporation and the power at issue was a power given to the board of that corporation. E F & G argues that where the debtor is merely the shareholder/officer of a non-debtor corporation, the power to wind up the corporation’s assets does not become property of the estate. E F & G asserts two essential reasons in support of this position and they will be addressed in turn.
First, E F & G says that under non-bankruptcy law (and presumably under bankruptcy law) the shareholders’ right to participate in the corporation’s assets comes after the claims of the corporate creditors have been satisfied. Therefore, Winer’s (and the Trustee’s) right to Challenger’s assets comes after the claims of Challenger’s creditors are satisfied. So far, so good. But E F & G then leaps to the conclusion that the claims of the Challenger creditors must be addressed by only the entity that state law authorizes to wind up the corporation’s affairs (the corporate officer) and that this must be done in a proceeding other than one involving the bankruptcy of that officer.
*546It is not clear why that should be so. There are only two possibilities: (1) the value of Challenger’s assets is equal to or less than the amount of the claims of its creditors; or (2) the value of Challenger’s assets is greater than the amount of the claims of creditors. If the first possibility is true, then either the trustee will agree to abandon the power pursuant to 11 U.S.C. § 554(a) or be ordered to do so pursuant to § 554(b). If the second possibility is true, then the trustee will liquidate the corporation’s assets and distribute the proceeds according to the priorities established by law. The Trustee and Winer will not receive anything on account of Winer’s shares of Challenger until Challenger’s creditors have been paid. The prospect of having a trustee administer property as to which entities other than the debtor have an interest is not alien to the Bankruptcy Code. § 363(h), for example, permits the trustee to sell property in which the estate and another entity have an interest. There is nothing in § 363(h) which conditions the trustee’s power to deal with jointly-owned property only if the co-owner does not have creditors.
The second reason proffered by E F & G as to why the power to wind up does not become property of the estate is that the right to wind up is “personal” and therefore not susceptible of becoming property of the estate. To be sure, there are cases in which courts have drawn exactly the dichotomy that E F & G asserts. Unfortunately for E F & G, many of those cases involve rights that would clearly be property of the estate under § 541(a). See, e.g., In re Nabors, 280 F. 943 (D.C.Ala.1922). More importantly, most of those cases are woefully short of analysis as to how “personal” rights are defined. This Court is informed by the analysis of the District Court of Wisconsin in In re Grant, 21 F.2d 88 (D.C.Wis.1927). A life insurance policy gave the insured the right to change the beneficiary and surrender the policy and collect the cash surrender value. The trustee attempted to exercise those rights and the debtor objected. The court had this to say:
The fact that this privilege or power is deemed personal to the insured is stressed somewhat by counsel for the bankrupt as bearing upon his claim that the right does not pass to the trustee. But this is not thought sound in view of the provisions of subdivision 3 of section 70(a) of the bankruptcy law. Grant, 21 F.2d at 90.
As Collier’s says, “The same reasoning should apply under § 541(b)(1) of the Code” which excludes from property of the estate only those powers which may be exercised by the debtor, “solely for the benefit of an entity other than the debtor.”
E F & G argues that the power to wind up Challenger’s affairs is a “power that the debtor may only exercise solely for the benefit of an entity other than the debtor” and, therefore, excludable from the definition of property of the estate § 541(b)(1). Not so. Winer holds the Challenger assets in two capacities, first as president of Challenger with the corresponding responsibility to dispose of those assets in a manner consistent with the rights of all those who have an interest in those assets. But Win-er also has a substantial interest in those assets separate and apart from his obligations as President. At best, Winer is sole shareholder of Challenger — at worst, he will be holder of 60% of its shares. As such, he and the Trustee have an undisputed interest in the assets of Challenger upon distribution. It is therefore inaccurate to suggest that Winer holds Challenger’s assets and the power to wind up “solely for the benefit of an entity and other than the debtor” [emphasis added]. Surely, Winer could not refuse to wind up Challenger’s affairs so as to defeat the Trustee’s ability to realize on the value of the shares. The Bankruptcy Code recognizes the possibility of the estate having an interest in property together with other interest holders.
E F & G argues that the Trustee has no legal or equitable interest in the Challenger assets by virtue of succeeding to Winer’s stock interest, yet E F & G is claiming an interest in the assets of Challenger by virtue of an agreement to receive stock in the future. E F & G cannot have it both ways. *547The bankruptcy estate has a direct and undeniable interest in the Challenger assets because of the dual capacity in which Winer possesses those assets.
For the foregoing reasons, this Court concludes that the relief sought by E F & G in the District Court Action violates the automatic stay imposed by § 362(a)(3) in the following particulars:
(1) to the extent that it seeks to compel the transfer of any stock held by Win-er on the day of filing of bankruptcy petition to E F & G;
(2) to the extent that E F & G seeks an injunction against the transfer of Challenger assets to the Trustee for the purpose of winding up Challenger’s affairs and distributing any assets or proceeds after satisfaction of claims of Challenger’s creditors, to its equity holders.
Contempt and Sanctions
, These proceedings arise as a result of a Motion for Rule to Show Cause. There is a split in authority as to whether a bankruptcy court possesses civil contempt power. Cf In re Sequoia Auto Brokers, Ltd., 827 F.2d 1281 (9th Cir.1987) with, In re Miller, 81 B.R. 669 (Bkrtcy.M.D.Fla.1988).
The Bankruptcy Code provides in § 362(h) that “[a]n individual injured by any willful -violation of a stay provided by this section shall recover actual damages, including costs and attorneys fees, and, in appropriate circumstances, may recover punitive damages.” Because § 362(h) provides ample power to address the violation here involved, this Court will not need to resort to the civil contempt power and will provide relief pursuant to the specific provision of § 362(h).
That E F & G’s actions were willful is beyond dispute. It was aware of the bankruptcy case, the automatic stay and this Court's prior orders. Accordingly, costs and attorneys’ fees of the Debtor and Trustee in connection with the Rule to Show Cause and proceedings in the District Court Action will be assessed against E F & G. ,
Because the issues involved here are obscure, no punitive damages will be imposed. Instead, E F & G will be given an opportunity to amend its Complaint and Motion for Injunctive Relief in the District Court in accordance with the views expressed herein. If E F & G fails to do so within a reasonable time, this Court will consider further relief (including punitive damages) against E F & G.
Trustee and Debtor shall file with this Court and serve on E F & G an itemized statements of fees and costs incurred in connection with these motions and in the District Court Action on or before January 29,1993. If E F & G objects to any portion of these itemized statements, written objections thereto shall be filed with the Court and served upon the Trustee and the Debt- or on or before February 10, 1993. If no objections are filed within the time provided, then the totals contained in the statements) shall become the final damages assessed pursuant to § 362(h) and an order to that effect will be entered without further notice. If objections are timely filed, a hearing on the objections will be held on February 19, 1993 at 10:00 a.m.
Because it is not necessary in order to decide the issues currently presented, this Court will only note, without additional comment, the issues arising out of E F & G’s purchase of the Cohen, Benzaquen and Horan claims scheduled at $50,-000 and 25% of the equity of Challenger for $20,000 at a time when E F & G was apparently prepared to offer amounts sufficient to pay 100% of the claims against the estate. See, C.J. Fortgang & T.M. Mayer, Trading Claims and Taking Control of Corporations in Chapter 11, 12 Cardozo L.Rev. 1 (1990). See also, In re Chicago, Milwaukee, St. Paul & Pacific RR. Co., 840 F.2d 1308 (7th Cir.1988) and other cases involving trading in claims of bankruptcy estates. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491591/ | SUMMARY ORDER
ALFRED C. HAGAN, Chief Judge.
This matter is before the Court on the motion of Shirley Simpson, the defendant in this case (“Simpson”), to set aside a default judgment against her. The judgment was granted in favor of L.D. Fitzgerald, (“Trustee”) the Chapter 7 trustee for Joseph L. Williams, II, as a result of Simpson’s failure to appear at the trial of *623the trustee’s action against Simpson for a fraudulent transfer.
FACTS
Trial of this action was scheduled for July 13, 1992. The trustee’s motion for a default judgment was granted on that date when Simpson failed to appear. (Simpson was at the time appearing pro se.) The default judgment was entered on August 20, 1992. Plaintiff then applied to the Court for an award of attorney’s fees and costs. The application for attorney’s fees was filed on August 18, 1992; the bill of costs was filed on August 20, 1992. Simpson filed a written objection to allowance of the attorney’s fees and costs. At the hearing on fees held on September 14, 1992, Simpson failed to appear and the trustee was tentatively awarded the requested fees. The order awarding the fees was entered on September 17, 1992, and the judgment was amended on October 13, 1992, to reflect the award. Simpson’s motion to set aside the default judgment was filed on November 20, 1992.
Simpson argues the judgment should be set aside for excusable neglect under Rule 60(b). She presents an affidavit stating she “was ill with flu-like symptoms and unable to attend the hearing” at which the default judgment was granted. She also presents the affidavit of Joseph L. Williams II, the debtor in the related case (“debtor”), who states that Simpson “was very ill, and had been for three (3) days, and could not attend the trial.” The affidavits also state the debtor called the court clerk on behalf of Simpson, leaving a message on the morning scheduled for trial to the effect Simpson would not appear due to illness. The Clerk’s Office received a message from the debtor to the effect that Simpson would not appear that morning, which was stated for the record. Neither Simpson nor debt- or requested a continuance in the phone message. The Court notes that, while Simpson has appeared pro se, the debtor, who is an attorney, has aided her in these proceedings.
LEGAL STANDARDS
This motion is brought pursuant to Rule 55(c) of the Federal Rules of Civil Procedure, made applicable here by Fed. R.Bankr.P. 7055. Default judgments granted in accordance with that rule may be set aside under the standards set forth in Fed.R.Civ.P. 60(b), applicable to this proceeding under Fed.R.Bankr.P. 9024.
There are three considerations to be evaluated in a Rule 60(b) motion.
First, since Rule 60(b) is remedial in nature, it must be liberally applied.... Second, default judgments are generally disfavored, and “ ‘[w]henever it is reasonably possible, cases should be decided upon their merits.’ ” ... Third, where a defendant seeks timely relief from the judgment and has a meritorious defense, doubt, if any, should be resolved in favor of the motion to set aside the judgment.
Hammer v. Drago (In re Hammer), 940 F.2d 524, 525 (9th Cir.1991) (citations omitted).
“In this circuit, a trial court has discretion to deny a Rule 60(b) motion to vacate a default judgment if (1) the plaintiff would be prejudiced if the judgment is set aside, (2) defendant has no meritorious defense, or (3) the defendant’s culpable conduct led to the default.” Hammer, supra, 940 F.2d at 525-26. This test is disjunctive. Hammer, supra, 940 F.2d at 526. If the defendant’s culpable conduct caused the default, there is no need to consider the other two elements. Hammer, supra, 940 F.2d at 526; Benny v. Pipes, 799 F.2d 489, 494 (9th Cir.1986), amended on other grounds, 807 F.2d 1514 (1987), cert. denied, 484 U.S. 870, 108 S.Ct. 198, 98 L.Ed.2d 149 (1987). A motion to set aside a default judgment must be filed within “a reasonable time.” Fed.R.Civ.P. 60(b).
DISCUSSION
It is found the defendant has not shown excusable neglect sufficient to set aside the default judgment. In addition to the trial, there have been three other hearings in this case: Simpson’s motion to dismiss, debtor’s motion to intervene, and the trustee’s motion for attorney’s fees. *624Simpson has yet to appear before this Court, having even failed to attend the hearing upon her own motion. Simpson has never attempted to excuse her absence at those hearings. Simpson’s complaint of “flu-like symptoms” over three days is unsupported by any indication that this illness was even sufficient to require a visit to the doctor. In leaving word that she would not attend, Simpson did not call herself, nor did she even request a continuance. I am not so credulous as to believe that Simpson was so ill that she could not attend, or that Simpson’s pattern of neglecting court dates would have been broken if only she had not gotten ill.
This lack of excusable neglect is only further exacerbated by the delay in filing the motion to set aside the default judgment. A period of three months elapsed between the entry of the judgment and Simpson’s motion to set aside. During this time, the trustee filed his motion to allow attorney’s fees; Simpson objected to such motion; a hearing on the issue was held (which Simpson failed to attend); an order allowing attorney’s fees was entered; and the judgment was amended to reflect this award. Simpson did argue in one paragraph of her objection to attorney's fees that the default judgment should not have been entered since she was unable to attend. However, she did not appear in support of her allegations.
Failure to attend due to illness normally constitutes excusable neglect upon which a default judgment may be set aside. See Ken-Mar Airpark, Inc. v. Toth Aircraft & Accessories Co., 12 F.R.D. 399, 400 (W.D.Mo.1952). Here, however, Simpson has demonstrated a pattern of inexcusable neglect. She has uniformly failed to appear in support of her position in this case, whether she was the moving party or the opposing party. She failed to attend the trial without requesting a continuance. Once the default judgment was entered, she halfheartedly suggested the default was improper, but again refused to appear either to attack the default judgment or defend against additional sums being added to the judgment. Even the grant of a default judgment against Simpson has been insufficient to prompt her to appear before the Court. Having stood by until this case was brought to a virtual close, Simpson now wishes to go back and reopen the entire matter. The Court concludes the defendant’s culpable conduct, and not excusable neglect, was the reason for entry of the default judgment.
For these same reasons, the Court concludes Simpson failed to file her motion to set aside the default judgment within a reasonable time, as required by Rule 60(b). Simpson knew of the default judgment by August 24, 1992 at the latest (the date she signed her objection to attorney’s fees that mentioned the default). Her motion to set aside the default was not filed until almost exactly 3 months later. A hearing was scheduled in September, but Simpson was unwilling to use this opportunity to set aside the default, and failed to make an appearance. Given that the proffered reason for her nonappearance at trial was a temporary illness, and in light of her other actions, Simpson’s delay in seeking to avoid the default for three months is inexcusable, and does not meet the requirement that the motion be filed within a reasonable time. See Sony Corp. v. S.W.I. Trading, Inc., 104 F.R.D. 535, 541-42 (S.D.N.Y.1985) (Rule 60(b) motion filed on October 30,1984 was not filed within a reasonable time in light of defendant’s other actions when default judgment was entered in June, 1984, and defendants knew of the judgment by early September at the latest). The actions of the debtor and Simpson in this case have been designed to frustrate the record and delay the process other than on the merits of the plaintiff’s cause of action and any legitimate defense thereto.
CONCLUSION
Simpson permitted the default judgment to be entered against her through culpable conduct, not excusable neglect. Once the judgment was entered, she delayed moving to set aside the default judgment until an unreasonable time had passed. Under these circumstances, Simpson is not entitled to have the default judgment set aside.
*625Accordingly, it is
ORDERED that Simpson’s motion to set aside the default judgment is DENIED. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491592/ | ORDER
JOHN L. PETERSON, Bankruptcy Judge.
At Butte in said District this 20th day of October, 1992.
In this Adversary Proceeding the Debtors/Plaintiffs filed a motion for summary judgment on September 14,1992. The parties have filed briefs, and submitted stipulated facts on September 3, 1992. This matter is deemed submitted and ripe for decision.
At issue is whether the Debtors’ homestead exemption is entitled to priority over the Defendant’s subsequently filed tax lien in light of 11 U.S.C. § 522(c)(2)(B).1 Under the reasoning of Isom v. United States, (In re Isom), 901 F.2d 744 (9th Cir.1990), this Court holds that it is not, and denies Debtors’ motion for summary judgment.
This Court most recently addressed summary judgment as follows in Hellwitz v. Black (In re Black), 11 Mont. B.R. 24, 26-27 (Bankr.Mont.1992):
This Court recently summarized the standard for summary judgment as follows in Martinson v. Towe, (In re Towe), 10 Mont. B.R. 380, 382-383 (Bankr.Mont. 1992):
At the outset, the Court finds it instructive to review the standards generally applicable to Motions for Summary Judgment, most recently set forth in In re Skywalker, Inc., 10 Mont. B.R. 87, 93-94 (Bankr.Mont. 1991):
Bankruptcy Rule 7056, incorporating Rule 56(c), Fed.R.Civ.P., states that summary judgment “shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”
*638The parties have stipulated to the following facts:
1. Plaintiffs/Debtors Braddock filed the above-referenced bankruptcy on or about March 8, 1992, as Case No. 91-30371.
2. The claim for relief in the adversary proceeding is one arising in, under and related to the above-described matter, of which the United States District Court for the District of Montana has jurisdiction pursuant to 28 U.S.C. § 1334.
3. The proceeding arising in, under and related to the above-described matter has been referred to the United States Bankruptcy Court by general order of reference promulgated by the District Court of this federal jurisdiction and venue. The parties agree that this is a core proceeding, but if the Court determines it is a non-core proceeding, the parties, and both of them consent to entry of Final Order and Judgment by the Court herein.
4. Defendant is the Internal Revenue Service (IRS), an agency of the United States Government, Department of Treasury. Defendant has been served by service on the United States Attorney and the United States Attorney General.
5. Plaintiffs are the owners of certain real property located in Missoula County, Montana, which property is their homestead, and was at the time of filing of the instant bankruptcy, their homestead.
6. Prior to filing of bankruptcy, on or about February 28,1985, Plaintiffs granted a Trust Indenture to First Bank (N.A.) Western and the Small Business Administration against said property.
7. Debtors properly filed a homestead exemption on February 12, 1990.
8. On or about March 21, 1990, the Internal Revenue Service filed a Notice of Lien against said real property.
9. Subsequent to the filing of the instant bankruptcy in March of 1991, the Internal Revenue Service filed Proof of Claim in the amount of Thirty-Nine Thousand, Two Hundred Fifty-Nine and 60/100 Dollars ($39,259.60) as a secured claim in the Debtors’ above-referenced properly as well as a non-secured priority claim in the amount of Twelve Thousand, Three Hundred Seventy-Seven and 84/100 Dollars ($12,377.84).
10. On or about March 21, 1991, Debtors filed their bankruptcy schedules, and claimed the above-referenced homestead as exempt property.
11. Debtors’ creditor meeting occurred on or about May 7, 1991.
12. No objection to Debtors’ homestead has been filed by the Trustee or the Internal Revenue Service as to Debtors’ homestead exemption. Creditor, C.H. Robinson, objected to Debtors’ homestead on June 5, 1991, on P.A.C.A. grounds, but withdrew the objection on June 14, 1991.
Based upon the above stipulated facts, this Court finds that there are no genuine issues of material fact. The issue is solely one of law, i.e., whether the Debtors may void or take priority over the Defendant’s tax lien by means of their homestead exemption.
The Debtors advance several arguments in support of their position that their homestead exemption should take priority over and void the Defendant’s tax lien, except to the extent of proceeds remaining from the sale of the homestead property after satisfying the secured creditors and the Debtors’ homestead exemption. First, the Debtors argue that the Trustee’s and Defendant’s failure to timely object to the Debtors’ claimed homestead exemption resulted in the property being exempt even when there is no valid statutory basis to the exemption, citing Taylor v. Freeland & Kronz, — U.S.-, 112 S.Ct. 1644, 118 L.Ed.2d 280 (1992).
In Taylor, the United States Supreme Court provided the following summary of the procedure for claiming exemptions:
When a debtor files a bankruptcy petition, all of his property becomes property of a bankruptcy estate. See 11 U.S.C. § 541. The Code, however, allows the *639debtor to prevent the distribution of certain property by claiming it as exempt. Section 522(b) allowed Davis to choose the exemptions afforded by state law or the federal exemptions listed in § 522(d). Section 522(1) states the procedure for claiming exemptions and objecting to claimed exemptions as follows:
“The debtor shall file a list of property that the debtor claims as exempt under subsection (b) of this section.... Unless a parly in interest objects, the property claimed as exempt on such list is exempt.”
Although § 522(1) itself does not specify the time for objecting to a claimed exemption, Bankruptcy Rule 4003(b) provides in part:
"The trustee or any creditor may file objections to the list of property claimed as exempt within 30 days after the conclusion of the meeting of creditors held pursuant to Rule 2003(a) ... unless, within such period, further time is granted by the court.”
Taylor, — U.S. at-, 112 S.Ct. at 1647.
The Debtors claim that under Taylor, because the Trustee and the Defendant failed to timely object, the Debtors are entitled to the full homestead exemption of $40,000 in their homestead or the proceeds from the sale thereof. However, the Defendant does not contest the validity of the Debtors’ homestead exemption. Instead, the Defendant points out that under 11 U.S.C. § 522(c)(2)(B), tax liens which are properly filed are excepted from the general rule that exempt property is not liable during or after the case for any debt that arose before the commencement of the case.
This Court agrees that the Debtors have a valid homestead exemption. However, we reject the Debtors’ argument that Taylor stands for the proposition that the holder of a properly filed tax lien must also file an objection to a homestead exemption in order to hold the homestead liable. Such a tax lien is specifically excepted from the general rule by the language of § 522(c)(2)(B). Debtors’ argument based upon Taylor would render § 522(c)(2)(B) superfluous by requiring holders of tax liens to file objections like other creditors. Courts should disfavor interpretations of statutes that render language superfluous. Connecticut National Bank v. Germain, — U.S. -, 112 S.Ct. 1146, 1149, 117 L.Ed.2d 391 (1992). This Court declines to strip the statute of its effect by adopting Debtors’ first argument. Because there is no issue of whether the Debtors’ homestead exemption is valid, the holding of Taylor is inapposite to the facts of this case, and the Debtors’ first argument is without merit.
The Ninth Circuit wrote the following on the relationship between exempt property and tax liens on that property:
Finally, the debtors argue, and the BAP dissenting judge agreed, that allowing the liens to remain defeats the fresh start policy underlying the bankruptcy code. We disagree. 11 U.S.C. § 522 allows debtors to exempt stated property from the bankrupt estate so that they may have a fresh start. It also provides for the survival of tax liens on that property. 11 U.S.C. § 522(c)(2)(B). In defining fresh start, Congress took cognizance of the fact that tax liens would survive.
In re Isom, 901 F.2d 744, 746 (9th Cir. 1990).
Unlike in Taylor, in Isom § 522(c)(2)(B) was addressed and was construed to provide for the survival of tax liens on exempt property. 901 F.2d at 746.
Debtors second argument is that the Debtors’ homestead exemption was filed before the Defendant’s tax lien, and by the general rule of priorities that “first in time is first in right” the Debtors’ homestead has priority. Debtors cite Crow v. Long, 107 B.R. 184, 187 (E.D.Mo.1989) in support of their second argument, and argue in their brief that the Crow court gave priority to the IRS’s "tax lien as against the debtor’s homestead exemption only upon the finding that the debtor’s homestead exemption was subsequent to the [IRS’s] claim.” Upon review of Crow, this Court finds that the Debtors mischaracterize that opinion, as shown by the following *640quote: “As her claim to the interpleaded fund is both inferior and subsequent to the federal tax liens here, the entire inter-pleaded fund must be awarded to the United States.” Id. at 187 (Emphasis added). Thus it was not only the fact that the tax lien was filed before the homestead exemption which governed the decision in Crow, as the Debtors claim, but also the fact that the homestead was inferior to the tax lien.
The court in Crow recognized that § 522(c) makes exempt property subject to tax liens:
Although the automatic stay imposed by Section 362(a) of the Bankruptcy Code prevents the enforced collection of federal taxes during the period between the filing of the petition in bankruptcy and the granting of a discharge in bankruptcy, non-dischargeable tax claims may be collected after bankruptcy from property which is exempt under the Bankruptcy Code. 11 U.S.C. §§ 522(c)(1), 522(c)(2)(C) [sic].
Section 522(c)(2)(C) [sic] specifically makes otherwise exempt property (such as the homestead exemption at issue here) subject to tax claims which are secured by a properly filed federal tax lien.
107 B.R. at 188.
Thus, Debtors’ reliance on Crow in support of their “first in time” argument is undermined by the reasoning in Crow construing § 522(c)(2). The “first in time” argument does not apply to tax liens, and Debtors’ second argument is without merit.
The Ninth Circuit went further than Crow and held that even tax liens based upon dischargeable tax debt survive bankruptcy:
The debtors argue that the liability becomes legally unenforceable upon the discharge of taxes in bankruptcy, so the liens must be released. We disagree. The liability for the amount assessed remains legally enforceable even where the underlying tax debt is discharged in the bankruptcy proceeding. A discharge in bankruptcy prevents the I.R.S. from taking any action to collect the debt as a personal liability of the debtor. The debtors concede, however, that their property remains liable for a debt secured by a valid lien, including a tax lien. See Long v. Bullard, 117 U.S. 617, 6 S.Ct. 917, 29 L.Ed. 1004 (1886); see also Southtrust Bank v. Thomas (In re Thomas), 883 F.2d 991, 997 (11th Cir. 1989) (discussing Congressional intent to codify the rule of Long v. Bullard), H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 361, reprinted in 1978 U.S.Code Cong. & Admin.News 5787, 5862; S.Rep. No. 95-989, 95th Cong., 2d Sess. 76, reprinted in 1978 U.S.Code Cong. & Admin.News 5787, 5862 (indicating Congressional intent that the rule of Long v. Bullard survive).
We hold that 26 U.S.C. § 6325(a)(1) does not require the I.R.S. to release valid tax liens when the underlying tax debt is discharged in bankruptcy.
The debtors argue that although liability is not defined in the tax code, “liability for the amount assessed” refers only to personal liability. We reject that strained reading of § 6325. That provision is designed to protect taxpayers by requiring the I.R.S. to release liens when the tax debt has become satisfied or is no longer legally enforceable. Allowing these liens to remain alive does not defeat the purpose of § 6325 because Congress intended for valid tax liens to survive bankruptcy.
In re Isom, 901 F.2d at 745-746.
Based upon the foregoing, this Court holds that Debtor Elmer J. Braddock is not entitled to summary judgment as a matter of law, and Debtors’ motion for summary judgment with respect to Elmer J. Braddock is denied.
The motion with respect to Debtor Betty Ann Braddock is more troublesome. This Court has previously held that Betty Braddock is has no ownership interest in 2J’s Produce, and is therefore not liable for any tax debts of 2J’s Produce. This Court shall not revisit that issue here. The Notice of Federal Tax Lien filed by the Defendant lists the taxpayer’s name as “E. John Braddock DBA 2J’s Produce Supply.” Betty Ann Braddock is not listed on the Notice of *641Federal Tax Lien. The Defendant’s Proof of Claim describes the taxes as primarily FICA taxes. As such, it would appear that the Defendant’s tax lien reaches only Elmer J. Braddock’s property, including the homestead exemption, and not Betty Ann Braddock’s homestead exemption.
The stipulated facts do not describe whether the Debtors own the homestead property as joint tenants, although the Declaration of Homestead attached to the stipulated facts declares that the Debtors own the property as joint tenants. Debtors argue that the Defendant implicitly concedes that its lien reaches only Elmer J. Braddock’s property. It is true that the Defendant’s brief fails to address the Debtors’ third argument relative to Betty Ann Braddock’s right to a homestead exemption. Since the motion for summary judgment is denied with respect to Elmer J. Braddock, and the terms of the IRS Notice of Federal Tax Lien do not apply to Betty Ann Braddock, nothing remains to be done in this adversary proceeding. The secured portion of the Defendant’s tax lien has priority over Elmer J. Braddock’s homestead exemption.
By reason of the foregoing, a separate Judgment shall be entered for the Defendant dismissed this adversary proceeding.
IT IS ORDERED the Debtors’ motion for summary judgment, filed September 14, 1992, is denied.
IT IS FURTHER ORDERED a separate Judgment shall be entered for the Defendant dismissing this adversary proceeding.
. (c) Unless the case is dismissed, property exempted under this section is not liable during or after the case for any debt of the debtor that arose, or that is determined under section 502 of this title as if such debt had arisen, before the commencement of the case, except—
******
(2) a debt secured by a lien that is—
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(B) a tax lien, notice of which is properly filed; | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491593/ | ORDER ON PRELIMINARY INJUNCTION AND DECLARATORY RELIEF
THOMAS E. BAYNES, Jr., Bankruptcy Judge.
THIS CAUSE came on to be heard upon the stipulated facts of the parties in an adversary proceeding brought by the Chapter 7 Trustee for a temporary restraining order, preliminary injunction, and declaratory relief. This Court has jurisdiction over this core proceeding pursuant to 28 U.S.C. §§ 1334 and 157.
On November 10, 1989, Debtor filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (11 U.S.C.). Debtor ran a rent-a-car business in Florida and had various subsidiaries, most of which are currently in bankruptcy.1 On May 6, 1991, this Court appointed a Chapter 11 Trustee. After various attempts to present a confirmable plan, on September 2, 1992, the Chapter 11 case was dismissed in open court. On September 4, 1992, the Court entered two orders: one dismissing the Chapter 11 case, the other granting the U.S. Trustee’s motion for reconsideration and setting a hearing. At the hearing on *697September 14, 1992, the Court vacated the order of dismissal and converted the case to Chapter 7. Plaintiff was appointed the Chapter 7 Trustee.
After the ruling in open court that the Chapter 11 case would be dismissed, Daniel G. Brandano, Debtor’s principal, closed Debtor’s bank accounts and transferred the funds to Defendant Sun Bank of Tampa Bay. On September 10, 1992, Brandano caused Sun Bank to issue four cashier’s checks payable to the Internal Revenue Service (IRS).2 All of the payments made to the IRS were for Brandano’s tax liabilities under Section 6672 of the Internal Revenue Code (26 U.S.C.).3
On an emergency basis, this Court considered, ex parte, Plaintiff-Trustee’s motion for a temporary restraining order against the IRS and Sun Bank and on September 16, 1992, entered an order enjoining the IRS from presenting the cashier’s checks and Sun Bank from honoring any such cashier’s checks payable to the IRS. At a subsequent hearing all parties agreed that the Court would consider the entire matter on stipulated facts.
The parties agree that the money utilized by Brandano to obtain the cashier’s checks payable to the IRS was money of the Chapter 11 Debtor controlled by the Chapter 11 Trustee. Further, the parties agree the cashier’s checks payable to the IRS were prevented from being presented to Sun Bank by the IRS because of the temporary restraining order.
Moreover, it is undisputed that Brandano had no authority to obtain funds which were property of the estate, transfer those funds to Sun Bank, and procure cashier’s checks from Sun Bank since the Chapter 11 case had not been dismissed by any written order of this Court and this Court’s immediate grant of reconsideration once the order of dismissal was entered. Brandano had no authority to act due to the presence of the Chapter 11 Trustee and the absence of Court approval.
Nonetheless, the issue here concerns the effect of these attempted transfers to the IRS under the Bankruptcy Code and under the law of negotiable instruments in general. The initial inquiry is whether the Bankruptcy Court can enjoin the IRS from presenting the cashier’s checks.
In United States v. Nordic Village, Inc., — U.S. -, 112 S.Ct. 1011, 117 L.Ed.2d 181 (1992), the Supreme Court dealt with similar facts. The major distinction between Nordic Village and the instant case is that the cashier’s check in Nordic Village had been presented and the funds applied to the principal’s tax liability. Thus the Chapter 7 Trustee in Nordic Village sought to have money returned rather than seeking injunctive or declaratory relief as the instant proceeding does. Here, the IRS has been prevented from presenting the cashier’s checks due to the temporary restraining order prohibiting those checks from being honored by the bank. Although the Supreme Court in Nordic Village held that Section 106(c) of the Bankruptcy Code is not an unequivocal waiver of sovereign immunity from the Trustee’s claims for monetary relief, the Supreme Court did note that injunctive or declaratory relief against the United States may be authorized by Section 106(c) (Nordic Village, — U.S. at-, 112 S.Ct. at 1015):
*698... § 106(c) [of the Bankruptcy Code] permits the bankruptcy court to issue “declaratory and injunctive” — though not monetary — relief against the Government ... The distinction ... between suits for monetary claims and suits for other relief ... is a familiar one ...
It is the holding of this Court that the Bankruptcy Court does have jurisdiction to issue an injunction to prevent the IRS from presenting, and Sun Bank from honoring, the cashier’s checks in this case.4 Since the cash used to purchase the cashier’s checks is property of Debtor’s estate, the cashier’s checks themselves are property of Debtor’s estate. Plaintiff-Trustee may avoid the transfer of the cashier’s checks under Section 549 of the Bankruptcy Code and recover possession of the cashier’s checks from any party currently holding them under Section 550 of the Bankruptcy Code.5
Notwithstanding the enjoining of the IRS, this Court is also required to ascertain the legal effect of the acquisition of the cashier’s checks by the IRS. A cashier’s check is an independent, unconditional, primary obligation of the issuing bank. Warren Finance v. Barnett Bank, 552 So.2d 194, 196 (Fla.1989). Because the issuing bank is personally liable, rather than the purchaser, a cashier’s check generally acts as a cash substitute and generally removes all doubt as to whether the instrument will be returned to the holder unpaid due to insufficient funds, a stop payment order, or insolvency. Warren Finance, 552 So.2d at 195-196. However, a cashier’s check is not cash. An issuing bank may assert narrowly limited defenses to the dishonor of a cashier’s check. Warren Finance, 552 So.2d at 201.6 Thus the actual possession of the cashier’s checks by the IRS is of no consequence. Therefore, despite the IRS’s receipt of the cashier’s checks, the IRS does not have any greater rights against the claims of Plaintiff-Trustee which would cut off Plaintiff-Trustee’s rights to regain the cashier’s checks.
Accordingly, it is
ORDERED, ADJUDGED AND DECREED that a preliminary injunction is imposed under which the IRS is prohibited from presenting the cashier’s checks for payment and Sun Bank is prohibited from honoring those cashier’s checks should the IRS present them for payment. It is further
ORDERED, ADJUDGED AND DECREED that the funds represented by the four cashier’s checks are property of Debt- or’s estate. It is further
ORDERED, ADJUDGED AND DECREED that any party currently in possession of any of the four cashier’s checks shall immediately provide those cashier’s checks to Plaintiff-Trustee. It is further
*699ORDERED, ADJUDGED AND DECREED that upon receipt of the cashier’s checks from Plaintiff-Trustee, the funds being held by Sun Bank to honor the four cashier’s checks shall be relinquished to Plaintiff-Trustee for distribution in accordance with the priorities established by the Bankruptcy Code and Sun Bank shall have no liability to any entity for refusing to honor the four cashier’s checks payable to the IRS.
DONE AND ORDERED.
. TPA Airport Travel, Inc. (Case No. 89-8746-8B1); FLL Investors, Inc. (Case No. 89-8747-8B1); and MCO Rent A Car, Inc. (Case No. 89-8748-8B1), were substantively consolidated with Debtor's case on January 30, 1990. These substantively consolidated cases were subsequently converted to Chapter 7 cases on September 14, 1992. MSY Airport Investors, Inc. (Case No. 89-8744-8B1), and STL Airport Investors, Inc. (Case No. 89-8745-8B1), were converted to Chapter 7 cases on the Court’s own motion on January 8, 1990.
. On September 14, 1992, Brandano obtained an additional cashier’s check from Sim Bank in the amount of $1,763.37 payable to Budget Rent-A-Car, Inc. Although Budget was originally a defendant in this action, Budget has since been dropped as a party to this action.
. Check No. 722710 in the amount of $2,430.24 was presented to the IRS to satisfy Brandano’s responsible person penalty attributable to the unpaid employment and withholding tax obligations of MSY Airport Investors, Inc; Check No. 722711 in the amount of $59,672.27 was presented to the IRS to satisfy Brandano’s responsible person penalty attributable to the unpaid employment and withholding tax obligations of MCO Rent-A-Car, Inc.; Check No. 722712 in the amount of $6,511.50 was presented to the IRS to satisfy Brandano’s responsible person penalty attributable to the unpaid employment and withholding tax obligations of STL Airport Investors, Inc.; and Check No. 722713 in the amount of $7,628.15 was presented to the IRS to satisfy Brandano’s responsible person penalty attributable to the unpaid employment and withholding tax obligations of Debtor.
. Today’s holding does not in any way implicate the Anti-Injunction Act (26 U.S.C. § 7421(a)). The Anti-Injunction Act provides "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.” Here, Plaintiff-Trustee is not seeking to restrain the assessment or collection of any tax. Plaintiff-Trustee is merely seeking to maintain the integrity of Debtor’s estate from unauthorized diminution. The IRS is certainly free to continue its efforts to collect the responsible person penalty from Brandano.
. Assuming, arguendo, the cashier’s checks had been presented and honored, Plaintiff-Trustee may not be prohibited from seeking a monetary judgment against the IRS. On December 17, 1990, the IRS filed a proof of claim in this case in the amount of $ 123,934.49 for the pre-petition employment and withholding tax obligations of Debtor and MCO Rent-A-Car, Inc. A substantial portion of the tax liability to be satisfied from the cashier’s checks was attributable to the unpaid employment and withholding tax obligations of MCO Rent-A-Car, Inc., and Debtor. Thus, Plaintiff-Trustee may be able to seek a monetary judgment under Section 106(a) or setoff under Section 106(b). See In re Fernandez, 125 B.R. 317, 320 (Bankr.M.D.Fla.), aff'd in part, 132 B.R. 775 (M.D.Fla.1991).
.Under circumstances such as those in the instant case, the Uniform Commercial Code would permit the issuing bank an additional defense for dishonoring a cashier’s check. The issuer of a cashier’s check is not liable for any expenses or consequential damages for refusing to honor a cashier's check if the payment of the check is prohibited by law. U.C.C. § 3-411(c)(iv). Florida has not yet adopted this particular provision of the Uniform Commercial Code, but on January 1, 1993, shall do so. See Fla.Stat. § 673.41 ll(3)(d) (1992). | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491594/ | ORDER TO SHOW CAUSE
MARY D. SCOTT, Bankruptcy Judge.
This cause came before the Court upon the trial on the Complaint to Object to Dischargeability of Debt Pursuant to 11 U.S.C. § 523, filed on August 19, 1991. The defendant answered with a general denial. Trial was held on July 28, 1992, Jeffrey Hance appearing for the plaintiffs and Loyd Harper appearing for the defendants.
During trial of this matter; on three separate occasions, the testimony of the defendants was in direct conflict with information given in Interrogatories during the discovery process. In each instance, the defendants declared that they had not given that answer in an interrogatory or that they had never seen the interrogatories.
1. On page 74 of the transcript, the following examination of Ms. McMillon appears:
Q I’m going to show you copies — it’s styled “Supplemental — ” it has the heading of the case, and it says “Supplemental Response to Interrogatories.”
A Uh-huh.
Q And I’ll tell you that was provided by your attorney.
A Uh-huh.
Q And it shows certain payments, and it’s a copy, an unsigned copy. Did you sign the original of that?
A No, I didn’t.
Q So you don’t know whether the information provided in those answers to interrogatories is correct or not?
A I don’t think I’ve ever seen this before.
2. On page 80 of the transcript, the following examination of Mr. Narciso appears:
Q But you could write checks on it—
A Yes.
Q And you were vice-president and a shareholder?
*915A Well, on many occasions Kathleen was out of town, and like the accountant and rent and people had to be paid, and I was authorized to write checks to them.
Q Okay. I am going to show you a response to interrogatories which was forwarded to me by your attorney.
A Uh-huh.
Q And would you please look at Interrogatory Number 25, sir?
A Yes.
Q Okay. That shows an insurance marketing account, asked about who the signatory was on it?
A Uh-huh.
Q And who does it say the signatory on that account is?
A Kathleen McMillon.
Q Does it list you?
A No, but I signed the signature card with the bank.
Q Okay. So that information, those response to interrogatories are just incorrect?
A I guess.
3. On page 86-87 of the Transcript, the following examination of Mr. Narciso appears:
Q In the responses to interrogatories that you previously provided me, it first indicated that there were no payments made to Mrs. Eckel and then there were payments made to Ms.—
A There were three — I never said there were no payments made. There were three payments made. I didn’t cite this. I don’t know how to cite it.
Q Mr. Eckel [sic], I’m going to show you responses to interrogatories that were supplied to you pursuant to the rules of discovery, and in there in the first question — one of the questions is were there payments made to Mrs. Eck-el, and the response is, “No, no payments.”
Are you telling me that was not true, you never said that?
A I would not say that. I know I made three payments to the lady.
Q So responses to interrogatories that you supplied me were just totally untrue. You weren’t the signatory — you were the signatory and now the response that say, “No payments were not [sic] made” was not true. You never said that?
A No, I’m not saying anything was not true. You are. I did have all the authority in the world to sign checks through that account, and I have no recollection whatsoever of this statement. I know I made her three payments.
Q That’s what I’m saying, so you never made the statement—
A I would say I did not make it.
Q It was placed in the answer to interrogatories?
A I’ve never seen this. I’ve never read that.
During these colloquies, it was clear to the Court that counsel for the plaintiff was surprised that the testimony conflicted with the information in the discovery responses. The points plaintiff attempted to make were material to his case. Indeed, in a situation such as this, where plaintiff must prove fraud by circumstantial evidence, without a non-adversarial witness,1 obtaining truthful information is critical.
The questions asked in the interrogatories, as described above, were not matters which were subject to confusion or misinterpretation. For example, a question regarding the identity of persons authorized to use a bank account is extremely simple and easily subject to verification by the responding party. An incorrect answer to such a question raises very serious questions regarding the party’s and counsel’s compliance with the discovery rules.
Compliance with the discovery rules is crucial to the fair conduct of civil litigation. As noted by the Fifth Circuit:
Our system of civil litigation cannot function if parties, in violation of court orders, suppress information called for upon discovery. “Mutual knowledge of all the relevant facts gathered by both parties is essential to proper litiga-tion_ The aim of [the] liberal discov*916ery rules is to “make a trial less a game of blind man’s bluff and more a fair contest with the basic issues and facts disclosed to the fullest practicable extent.” ... It is axiomatic that “[discovery by interrogatory requires candor in responding.”
Rozier v. Ford Motor Co., 573 F.2d 1332, 1345-46 (5th Cir.1978). The failure to truthfully answer interrogatories sabotages the concept of “fair trial,” undermining the judicial system. The discovery rules are meant to serve as a vehicle for ascertainment of the truth; false answers subvert truth and truth seeking.
Rule 26, Federal Rules of Civil Procedure provides for sanctions upon discovery abuse:
Every request for discovery or response or objection thereto made by a party represented by an attorney shall be signed by at least one attorney of record in the attorney’s individual name, whose address shall be stated_ The signature of the attorney or party constitutes a certification that the signer has read the request, response, or objection, and that to the best of the signer’s knowledge, information, and belief formed after reasonable inquiry it is: (1) consistent with these rules....
If a certification is made in violation of the rule, the court, upon motion or upon its own initiative, shall impose upon the person who made the certification, the party on whose behalf the request, response, or objection is made, or both, an appropriate sanction, which may include an order to pay the amount of the reasonable expenses incurred because of the violation, including a reasonable attorney’s fee.
The fact that plaintiff was successful in spite of the false discovery answers does not diminish the harm to the conduct of a fair trial in this instance or to the judicial system in general. Plaintiff’s success in proving his case does not obviate imposition of sanctions for violating the Federal Rules of Civil Procedure. When a party fails to answer, or incorrect answers are discovered prior to trial, the remedies may be tailored to the conduct and the harm to the opposing party. For example, unanswered requests for admissions are deemed admitted, or pleadings may be stricken. In this instance the manner in which the Court may address the false interrogatories is limited because plaintiff has been successful. However, this Court will not tolerate wilful misconduct during the course of litigation or trial. In the event that the misconduct of defendants’ counsel or the defendants proves to have been wilful, this Court believes sanctions should be imposed as “an invaluable penalty and deterrent to be employed ... to thwart discovery abuse.” First American State Bank v. Continental Insurance Company, 897 F.2d 319, 331 (8th Cir.1990).
During the course of trial three separate instances were brought to the Court’s attention of incorrect interrogatory answers, indicating that the false interrogatory responses may have been wilful or made with reckless disregard. It further appeared from the testimony that defendants’ counsel had failed to even consult with his clients regarding truthful answers. Accordingly, it is
ORDERED that the defendants shall personally appear and the attorney for the defendants’ Loyd Harper shall personally appear on October 27, 1992, at 10:00 at the United States Courthouse, located at 615 S. Main St., Jonesboro, Arkansas and show cause why sanctions should not be imposed upon them2 for failure to comply with Rule 26, Federal Rules of Civil Procedure, as outlined in this Order. It is
FURTHER ORDERED that counsel for Plaintiff/Jeffrey Hance, shall appear and submit to the Court any proof of damages related to the incorrect interrogatories:
IT IS SO ORDERED.
. The victim of the defendant’s fraud died prior to the institution of suit.
. Sanctions may be imposed upon the individual defendants. "It is of no consequence that the discovery abuse perpetrated was by counsel rather than the [client]. A litigant chooses counsel at his peril. Counsel’s disregard of his professional responsibilities can lead to extinction of his client's claims." Boogaerts v. Bank of Bradley, 961 F.2d 765, 768 (8th Cir.1992). | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491595/ | MEMORANDUM OPINION
JOHN T. FLANNAGAN, Bankruptcy Judge.
The Farm Credit Bank of Wichita (the “Bank”) obtained judgment of foreclosure against Verlin Eugene Bland, the family farm debtor in this case, but did not conduct a sale of the land before the debtor filed his petition for Chapter 12 relief. The question is whether the doctrine of merger (of the mortgage into the judgment) as expressed in In re McKinney, 84 B.R. 748 (Bkrtcy.D.Kan.1987), appeal dismissed, 84 B.R. 751 (D.Kan.1988), prevents the debt- or’s plan of rehabilitation from restructuring the Farm Credit Bank’s judgment debt.
Procedurally, the question is presented by the Bank’s objection to confirmation of the debtor’s plan and motion for relief from the automatic stay. This proceeding is core under 28 U.S.C. § 157; the Court has jurisdiction under 28 U.S.C. § 1334 and the general reference order of the District Court effective July 10, 1984.
Verlin Eugene Bland appears by his attorney, Terry D. Criss of Hampton, Royce, Engleman & Nelson, Salina, Kansas. The Bank appears by its attorney, Charles F. Harris of Kaplan, McMillan and Harris, Wichita, Kansas. The trustee appears by Edward J. Nazar of Redmond, Redmond & Nazar, Wichita, Kansas.
The Farm Credit Bank lent money to the debtor and took a mortgage on his Osborne County, Kansas, farm land in 1979. The debtor defaulted, and the Bank filed a mortgage foreclosure action in Osborne County. After a hearing held May 6, 1992, a Journal Entry of Judgment and Foreclosure in favor of the Bank was filed on May 27, 1992. The debtor then filed a voluntary petition for Chapter 12 relief on June 3, 1992. The filing of the Chapter 12 stayed the post-judgment foreclosure procedures and prevented the Bank from going forward with a foreclosure sale of the real property. 11 U.S.C. § 362.
For purposes of this proceeding, the parties do not dispute that the Bank is overse-cured by approximately $40,000.00, the value of the real property being $154,250.00 *979while the amount of the Bank’s claim is $113,902.56.
The Farm Credit Bank contends that under the doctrine of In re McKinney, 84 B.R. 748 (Bkrtcy.D.Kan.1987), appeal dismissed, 84 B.R. 751 (D.Kan.1988), following Kansas mortgage law, its mortgage debt was merged into the judgment that it obtained at the recording of the journal entry on May 27, 1992. McKinney held that the merger prevents the plan from curing the mortgage default, reinstating the debt according to the original contract terms, and repaying the debt by installments.
The debtor denies that the rule of the McKinney case applies. Additionally, he maintains that the judgment obtained in the state court was non-final so that any merger of the mortgage claim into the judgment that may have occurred by state law and the doctrine of McKinney is reversible, a position this opinion will not address.
Section 1222 of the Code deals with the contents of a Chapter 12 plan. Subsection (a) of § 1222 sets forth what a Chapter 12 plan shall contain, and subsection (b) lists what it may contain. We are concerned with subsection (b) only, which reads:
§ 1222. Contents of plan
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(b) Subject to subsections (a) and (c) of this section, the plan may—
(1) designate a class or classes of unsecured claims, as provided in section 1122 of this title, but may not discriminate unfairly against any class so designated; however, such plan may treat claims for a consumer debt of the debtor if an individual is liable on such consumer debt with the debtor differently than other unsecured claims;
(2) modify the rights of holders of secured claims, or of holders of unsecured claims, or leave unaffected the rights of holders of any class of claims;
(3) provide for the curing or waiving of any default;
(4) provide for payments on any unsecured claim to be made concurrently with payments on any secured claim or any other unsecured claim;
(5) provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending on any unsecured claim or secured claim on which the last payment is due after the date on which the final payment under the plan is due;
(6) subject to section 365 of this title, provide for the assumption, rejection, or assignment of any executory contract or unexpired lease of the debtor not previously rejected under such section;
(7) provide for the payment of all or part of a claim against the debtor from property of the estate or property of the debtor;
(8) provide for the sale of all or any part of the property of the estate or the distribution of all or any part of the property of the estate among those having an interest in such property;
(9) provide for payment of allowed secured claims consistent with section 1225(a)(5) of this title, over a period exceeding the period permitted under section 1222(c);
(10) provide for the vesting of property of the estate, on confirmation of the plan or at a later time, in the debtor or in any other entity; and
(11) include any other appropriate provision not inconsistent with this title, (emphasis added)
The meaning of this statute is apparent. Through paragraphs (2) and (9), the plan is permitted to “modify” secured claims and pay them over a period beyond the allowable plan period of three to five years. By paragraphs (3) and (5), the plan may “cure” contract defaults by paying them within a reasonable time, reinstate the contract payments, and pay them over the original life of the contract, even though the payments may extend beyond the plan term. None of the granted powers are mutually exclusive. If the plan uses one power, it is not prohibited from using any other. Rather, it is clear from the use of the word “and” at the end of paragraph (10) that the plan *980can use all of the listed powers at the same time. It can “cure” default on one secured claim, reinstate the installment payments, and pay out the debt by the terms of the original contract. And, at the same time, the plan can “modify” another secured claim according to the powers granted in paragraphs (2) and (9). Paragraph (9) empowers the plan to pay a secured claim consistent with § 1225(a)(5). This statute permits confirmation of a plan that deals with secured claims as follows:
§ 1225. Confirmation of plan
(а) Except as provided in subsection (b),
the court shall confirm a plan if—
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(5) with respect to each allowed secured claim provided for by the plan—
(A) the holder of such claim has accepted the plan;
(B)(i) the plan provides that the holder of such claim retain the lien securing such claim; and
(ii) the value, as of the effective date of the plan, of property to be distributed by the trustee or the debtor under the plan on account of such claim is not less than the allowed amount of such claim; or
(C) the debtor surrenders the property securing such claim to such holder; and
(б) the debtor will be able to make all payments under the plan and to comply with the plan, (emphasis added)
The Farm Credit Bank suggests that In re McKinney, 84 B.R. 748 (Bkrtcy.D.Kan. 1987), appeal dismissed, 84 B.R. 751 (D.Kan.1988), prevents the debtor from restructuring his debt as proposed in the plan. In the McKinney case, the mortgagee had obtained a foreclosure judgment and had successfully bid at the foreclosure sale when, on the last day of the redemption period, the debtor filed for Chapter 12 relief. Stating the issue, the bankruptcy court said, “The question of law is whether a debtor may reinstate a foreclosed mortgage after the foreclosure sale is held and reamortize the indebtedness under § 1222(b).” Id. at 749 (emphasis added). On appeal the district court rephrased the issue saying, “At issue is whether a Chapter 12 debtor can reinstate a promissory note and mortgage once the state court foreclosure action has proceeded to judgment and the mortgaged real estate has been sold.” In re McKinney, 84 B.R. 751, 752 (D.Kan.1988) (emphasis added.)
The essential operative fact in McKinney was that there had been a foreclosure sale before the bankruptcy petition was filed. That is not the case here, since no sale was completed and no Sheriff’s Deed was delivered before the filing of the debtor’s Chapter 12 petition and imposition of the automatic stay of creditor action.
While the operative facts in McKinney relating to judgment and sale are straightforward, what is not clear is how the court viewed what McKinney was proposing to do in his plan with the mortgagee’s judgment claim. The following findings from the bankruptcy court’s opinion reveals some confusion:
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13. In the plan the debtors propose to reinstate the FLB’s note and mortgage and to make regular payments over thirty years.
14. No curing of arrearages is proposed. Instead of curing the default, the debtors propose to reamortize their indebtedness to FLB over a thirty-year period at a fixed interest rate of nine and one half percent per annum.
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In re McKinney, 84 B.R. 748, 749 (Bkrtcy. D.Kan.1987) (emphasis added).
Paragraph 13 speaks of a proposal to “reinstate” the note, an idea consistent with cure. But, paragraph 14 says no curing is proposed. Both paragraphs talk of paying the debt over 30 years, and paragraph 14 uses the word “reamortize.”
Taken together, these two paragraphs make it appear that the debtor was proposing to “modify” the mortgagee’s claim under 11 U.S.C. § 1222(b)(2), (9), and 11 U.S.C. § 1225(a)(5), rather than to “cure” the mortgage default and continue payments according to the contract terms under § 1222(b)(3) and (5). The district court *981opinion bolsters the view that McKinney was proposing “modification” by pointing out that “... debtors proposed to reinstate the promissory note and mortgage and rea-mortize what they claimed to be the present value of the real estate ($145,440.00) over a thirty-year period at a fixed rate of interest.” In re McKinney, 84 B.R. 751, 753 (D.Kan.1988). Yet, the original FLB note “... provided for payment in 20 consecutive annual installments to FLB.” Id. at 752. Perhaps when the district court used the phrase “reinstate the promissory note and mortgage” in the above statement, it was speaking in the general sense, i.e., in the sense that the note and mortgage were to be restructured rather than reinstated. Extending a 20-year note and mortgage to a 30-year obligation is certainly more in the nature of modification or reamortization than it is in the nature of cure of default and reinstatement of the debt according to its original contract terms.
While it seems that McKinney’s plan was attempting, at least in part, to “modify” the FLB’s claim under authority of § 1222(b)(2) and (9), and stretch it out under § 1225(b)(5), both the bankruptcy court and the district court opinions rule as if the debtor was attempting only to cure the default on the note, reinstate its terms, and pay it accordingly, as if proceeding under 11 U.S.C. § 1222(b)(3) and (5). While both the bankruptcy and district court opinions use the word “modify” in discussing the plan proposal, they do so without any reference to the Code sections granting the debtor the power to make a “modification,” i.e., §§ 1222(b)(2), (9), and 1225(a)(5).
Accordingly, the bankruptcy court in McKinney denied confirmation of the Chapter 12, ostensibly because the doctrine of merger under Kansas mortgage law merged the debt secured by the mortgage into the judgment, thereby making it impossible to decelerate the debt by cure under § 1222(b)(3) and (5). By the reasoning advanced, since the debt no longer existed after it merged into the judgment, it could not be “cured” and paid by its contract terms under the plan. On appeal to the district court, Judge Kelly dismissed the appeal with a discussion echoing Judge Pearson’s comments.
This Court need not address the question of whether after judgment, but before sale, the merger doctrine of Kansas mortgage law bars the Chapter 12 debtor from using 11 U.S.C. § 1222(b)(3) and (5) to cure and reinstate a mortgage debt according to contract terms where it has become a judgment.1 Rather, the question presented here is whether the debtor’s plan, which seeks to “modify” the Farm Credit Bank’s secured claim, should be denied confirmation for lack of statutory authority to do so under the Code where there has been no pre-petition sale.
The following excerpt from the debtor’s plan shows that what he proposes is a “modification” of the claim under 11 U.S.C. § 1222(b)(2), (9), and 11 U.S.C. § 1225(a)(5), not “cure” of the defaulted debt and repayment according to the terms of the note and mortgage contracts under § 1222(b)(3) and (5).
5.3(a) The first segment of Farm Credit Bank’s claim is that portion of its claim which is secured by a first real estate mortgage on NEV4 26-10-11, Osborne County, which is valued at $47,750.00. On the Effective Date, Debtor shall execute a note in the amount of $47,750.00. Farm Credit Bank shall retain its mortgage lien on NEV4 26-10-11, Osborne County, to secure said $47,750.00, until Debtor has paid Farm Credit Bank the full amount of the indebtedness, plus interest. The reamortized indebtedness shall be payable to Farm Credit Bank on the basis of a 30 year amortization with *982interest accruing thereon at the rate of 8.0%. Annual payments will be made on the thirty-first day of July of each year in the amount of $4,256.36 commencing on July 31, 1993, and continuing until paid in full... .2
The Bankruptcy Code defines a “lien” as a “charge against or interest in property to secure payment of a debt or performance of an obligation.” 11 U.S.C. § 101(37). It then recognizes three types of liens: a “statutory lien,” not relevant here; a “security interest” which is defined as a “lien created by an agreement,” 11 U.S.C. § 101(51); and a “judicial lien” which is a “lien obtained by judgment, levy, sequestration, or other legal or equitable process or proceeding.” 11 U.S.C. § 101(36).
Under the Code, “debt” means “liability on a claim.” 11 U.S.C. § 101(12). A “claim” is a “right to payment_” 11 U.S.C. § 101(5). Under these definitions, the mortgagee Bank’s judgment debt is a right to payment and, therefore, a claim.
Allowed claims are further broken down by 11 U.S.C. § 506(a) into secured and unsecured claims:
An allowed claim of a creditor secured by a lien on property in which the estate has an interest ... is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property ... and is an unsecured claim to the extent that the value of such creditor’s interest ... is less than the amount of such allowed claim.
11 U.S.C. § 506(a) (emphasis added). Since the real property is worth more than the debt owed the Bank, if the Bank has a secured claim, it is for the full amount of its debt in this case. We have seen that the Bank holds a “claim,” but is the Bank’s claim a “secured claim”? This depends on whether the estate has an interest in the real estate and the extent of that interest.
Unlike In re McKinney, there has been no foreclosure sale in tics case. Upon the filing of the debtor’s Chapter 12 petition, the bankruptcy estate succeeded to all of the mortgagor’s interest in the property before foreclosure sale. At that point in time, the mortgagor was the fee owner of the property, subject to the lien of the mortgagee’s judgment entered by the court at the filing of the journal entry of foreclosure.
While it may be correct that the mortgage debt merged into the judgment, its entry did not divest the debtor of his ownership rights in the real property. Since the state court plaintiff already held a mortgage lien, the entry of a judgment in its favor was not a “transfer” of debtor’s fee title in the land.3 Rather, it was simply a change in form of the Bank’s lien against the realty. Upon the entry of the mortgage foreclosure judgment and the merger of the debt into the judgment, the only real change of status of the Farm Credit Bank was that it became the holder of a judicial lien on the real property, rather than the holder of a mortgage lien or “security interest,” as such a “lien created by agreement” is called by the Bankruptcy Code. 11 U.S.C. § 101(51). The debtor was still the fee owner of the property, subject to a judicial lien equivalent in amount to the obligation that had been secured by the mortgage lien. The judgment creditor still had to bid at the foreclosure sale to protect its lien. Until it bid successfully, it was not entitled to a Sheriff’s Deed. Since there was no transfer of title at the time judgment was entered, the ownership of the real property remained in the mortgagor until it passed into the bankruptcy estate upon the filing of the Chapter 12 petition.
*983Since the Farm Credit Bank is a judicial creditor with a lien on the land in which the bankruptcy estate has an interest, it is the holder of a secured claim. 11 U.S.C. § 506. Sections 1222(b)(2), (9), and 1225(a)(5) permit confirmation of a plan that proposes to modify such a secured claim.
Since the debtor’s plan proposing to modify the Farm Credit Bank’s secured claim cannot be denied confirmation on the grounds advanced by the Farm Credit Bank in this proceeding, its motions objecting to the plan and seeking stay relief are hereby denied.
The foregoing discussion shall constitute findings of fact and conclusions of law under Bankruptcy Rule 7052 and Rule 52(a) of the Federal Rules of Civil Procedure.
IT IS SO ORDERED.
. Other interesting questions are whether an individual mortgagee who bids successfully at a pre-bankruptcy foreclosure sale holds a secured claim that a Chapter 12 plan can modify under §§ 1222(b)(2), (9), and 1225(a)(5) when there is a sale before the bankruptcy petition is filed and the redemption period has not expired, but (1) there has been no delivery of the Sheriffs Deed, or (2) there has been such a delivery before or after the filing. Compare In Re Thompson, 894 F.2d 1227 (10th Cir.1990) (federal law held controlling in determining point at which cure of default is prohibited under § 1322(b)(3) and (5) with dissent urging adherence to state law).
. Since the Court took this proceeding under advisement, the debtor has filed an amended plan that changes the treatment of the Farm Credit Bank’s claims but still constitutes an attempt to "modify" its secured claim under §§ 1222(b)(2), (9), and 1225(a)(5).
. When there is a transfer by foreclosure sale, the question becomes whether it can be set aside under § 548 or § 544 as a fraudulent transfer. If the transfer occurred within one year of the bankruptcy filing, or perhaps two years if state law is applied through § 544, and the consideration given is found to be insufficient, the transfer may be avoidable. Durrett v. Washington Nat'l Insurance Co., 621 F.2d 201 (5th Cir.1980) (non-judicial sale held to be avoidable transfer for lack of fair consideration under § 67(d) of the Bankruptcy Act of 1898). | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491596/ | ORDER ON MOTIONS FOR PARTIAL SUMMARY JUDGMENT
THOMAS E. BAYNES, Jr., Bankruptcy Judge.
THIS CAUSE came on for hearing upon the Insurance Company’s1 Motion for Partial Summary Judgment as to Count One Regarding Debtor’s Claim for Insurance Outside of the “Products Hazard” for Asbestos-in-Building Claims and Debtor’s Motion for Partial Summary Judgment that the Definition of “Products Liability” Claims Does Not Include Alleged Negligent Failure to Provide Warnings in Connection with the Sale of Products Containing Asbestos. The Court, having heard the argument of counsel and having reviewed the record, finds as follows:
Debtor seeks a declaration that the definition of “products liability” or “products hazard” does not encompass liability for asbestos-related property damage2 resulting from Debtor’s alleged negligent failure to warn of the potential hazards arising from Debtor’s asbestos-containing products and Debtor’s insurance coverage is therefore not subject to the limits of liability imposed by the products hazard provisions.3 Debtor asserts a distinction must be made between those claims founded in strict liability, which requires a showing of a defective product, and those claims alleging mere negligent failure to warn, which does not require a showing of a defect in *1000the product involved in the injury. Debtor maintains the claims for negligent failure to warn only involve Debtor’s alleged negligent failure to warn of the potential harm that could result from using asbestos-containing products, rather than a failure to warn of actual defects in those products. Thus, Debtor argues the claims are not directly related to products liability. Debt- or’s Motion further asserts that its asbestos-containing products were not defective since they complied with existing government regulations as to permissible levels for exposure to asbestos at the time the products were supplied and the products performed as specified.
Debtor goes on to state since 1972 courts have widely recognized the term “products liability” in standard form insurance policies does not include liability where the product was not defective or where no faulty manufacture was involved. Debtor states that despite the existence of these cases, the Insurance Company did not alter its policies to provide a specific inclusion of failure to warn claims in the definition of products liability.
The Insurance Company’s Motion seeks a determination that the asbestos-related property damage claims are covered, if at all, under the products hazard provisions of the relevant policies and are therefore subject to the applicable limits of liability for products hazard coverage. The Insurance Company contends the property damage claims, which generally seek recovery for costs associated with inspection of buildings for asbestos-related problems and the costs of encapsulation and removal of asbestos from the buildings, are directly related to Debtor’s products regardless of the theory upon which recovery is based (e.g., negligence, strict liability, breach of warranty, conspiracy, intentional conduct). The Insurance Company cites various cases to support its theory that as long as the claims arise out of Debtor’s products, they are covered exclusively by the products hazard policy provisions. The Insurance Company goes on to argue that permitting coverage to Debtor under the general liability provisions of the policies would mean Debtor would be able to avoid the restrictions of the products hazard provisions in every case in which the underlying claimant alleged wrongdoing on Debtor’s part beyond the mere production of a defective product. Consequently, the Insurance Company asserts, under Debtor’s theory, the more reprehensible Debtor’s conduct, the more insurance coverage available.
The Insurance Company also points to the following language as illustrative of the relevant policies’ definition of products hazard:4
“Products hazard” includes bodily injury and property damage arising out of the named insured’s products ..., but only if the ... property damage occurs away from the premises owned by ... the named insured and after physical possession of such products has been relinquished to others.
Thus, the Insurance Company urges the relevant inquiry is not necessarily the theory of liability pursued by an injured party, but the manner in which the victim was injured. If the injury arose out of Debtor’s products, occurred away from Debtor’s premises and occurred after physical possession of the product had been transferred, the claim is covered solely as products liability.5
DISCUSSION
This Court finds the clear language of the relevant insurance policies and the *1001case law support the conclusion that damages resulting from negligent failure to warn of the risks of use of asbestos-containing products in buildings are intimately related to the products themselves and should be covered exclusively by the products liability provisions of the insurance policies. The key language in the definition of products hazard or products liability claims, as stated above, is “property damage arising out of the named insured’s products.” The primary issue here is what claims do or do not arise out of Debtor’s products.
Debtor has cited several cases involving negligent actions on the part of an insured that were sufficiently separate from the nature of the products so as to avoid the products liability provisions of the insured’s policies. Scarborough v. Northern Assur. Co. of America, 718 F.2d 130 (5th Cir.1983) (injury resulting from use of sand in sandblasting operations is not within products liability provision of policy where there was no defect in the product, merely negligent failure to warn of dangers in using and inhaling product); Florida Farm Bureau Mut. Ins. Co. v. Gaskins, 405 So.2d 1013 (Fla. 1st DCA 1981) (product merely an instrumentality of the injury, and therefore not within products hazard provision of policy, where chemical supplier negligently supplied herbicide rather than insecticide to customer); Hartford Mut. Ins. Co. v. Moorhead, 396 Pa.Super. 234, 578 A.2d 492 (1990), appeal denied, 527 Pa. 617, 590 A.2d 757 (1991) (injury from explosion resulting from improper utilization of sulfur strips to fumigate used whiskey barrel not covered by products hazard provision). Debtor claims its own liability for alleged negligent failure to warn is sufficiently removed from the nature of its asbestos-containing products to warrant classification as something other than products liability. Debtor asserts that unless the claim of failure to warn necessarily involves an allegation of the existence of a defective product, the products liability exclusions are not implicated.
In this case, however, the Court finds the alleged damages resulting from the failure to warn of the dangers involved in the use of the asbestos-containing products are sufficiently tied to the nature of Debtor’s products to warrant denominating the liability as products hazard. The damages are not alleged to have resulted from the misuse of a product which is ordinarily not dangerous. The underlying complaints allege asbestos is a dangerous, defective product whether used properly or improperly. Any liability based upon negligent failure to warn of those innate dangers is directly associated with the product. Debt- or’s attempt to analogize asbestos-containing products to products such as sand or sulfur strips is not valid. Clearly, in some instances the act of negligently failing to warn may be sufficiently removed from the nature of the product to warrant classifying the liability as something other than products liability. However, that is not the case here.
These conclusions are supported by the relevant case law. The Supreme Court of Illinois in Cobbins v. General Accident Fire & Life Assur. Corp., 53 Ill.2d 285, 290 N.E.2d 873 (1972), took an expansive view of the interpretation of products hazard for insurance coverage purposes and stated:
[t]he definition of the “products” hazard does not permit the interpretation that it applies only to the typical product-liability or defective-product case. It is not so limited. The hazard applies to all product related injuries, including the sale of the wrong product or the wrongful sale of a product to a customer so long as the other requisites [of the policy] ... are present.
Cobbins, 290 N.E.2d at 877. Given the broad view taken by the Illinois Supreme Court, it is clear that under Illinois law Debtor’s liability at issue here is product related.
Although not as expansive in the interpretation of the definition of products liability or hazard, the relevant Florida case law also supports placing Debtor's negligent failure to warn liability within the confines of products liability. In K-C Mfg. Co. v. Shelby Mut. Ins. Co., 434 So.2d 1004 (Fla. 1st DCA 1983), the victims were injured due to defects in the design of a go-*1002cart in which they were riding. The First District Court of Appeals, in finding the products hazard provisions applicable, was careful to distinguish the case before it from those in which the wrong product was sold or the injury resulted from failure to warn of misuse of a non-defective, non-dangerous product. K-C, 434 So.2d at 1006-07. The Court. focused primarily upon the relationship of the product to the injury and stated the product was made dangerous by the defect, and it was that danger that created the relationship of the product to the injury. K-C, 434 So.2d at 1007. Although Debtor attempts to distinguish its liability situation from that of the insured in K-C, such a distinction is untenable. Like the insured in K-C, Debtor’s liability is predicated upon its failure to warn of the dangerous condition of its products, not upon the negligent sale of the wrong product or the failure to warn of dangers associated with misuse of Debtor’s products.
The case law in Ohio also supports this Court’s conclusions. In Buckeye Union Ins. Co. v. Liberty Solvents and Chems. Co., 17 Ohio App.3d 127, 477 N.E.2d 1227 (1984), the court held as follows:
The effect of a product hazard exclusion in a policy of liability insurance is to relieve the insurer of the duty to defend and indemnify its insureds in actions charging strict liability, negligence or breach of warranty. [Tjhere must be a defective condition in the product itself which proximately causes the damage before the product hazard exclusion will preclude coverage. This defective condition may be ... [,] in the case of an inherently dangerous or unavoidably unsafe product, a failure to provide adequate warnings.
Buckeye, 477 N.E.2d at 1236. The Buckeye court looked specifically to the nature of the product involved in the damage. Debtor’s liability falls squarely within this definition. The underlying complaints allege damage due to the negligent failure to warn of the inherently dangerous characteristics of asbestos-containing products, and according to the court in Buckeye, it is the failure to warn of those inherent dangers that makes the product defective and implicates the products hazard or products liability provisions of the policies.
Finally, the Court notes that aside from countering the clear language of the policies at issue here, Debtor’s theory would create certain logical inconsistencies in interpreting the policies as a whole. Under Debtor’s theory, if Debtor is found liable under both strict liability and negligence theories, it would have the benefit of coverage under the general liability and the products liability provisions. The happenstance that an injured party raises a theory of liability which does not require a showing of a defective or inherently dangerous product should not permit Debtor to circumvent the clear limitations placed upon coverage for product-related injuries. Such a windfall certainly was not contemplated by the parties when the contract was executed, nor is it supported by the case law.
This Court has considered all arguments and evidence consistent with a ruling on a motion for summary judgment. See Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Since there is no genuine issue as to any material fact and the Insurance Company is entitled to judgment as a matter of law, the Court finds in those situations where Debtor’s liability is based upon property damage arising out of Debt- or’s products, including those situations where liability is predicated upon Debtor’s alleged negligent failure to warn of the dangers related to Debtor’s asbestos-containing products, insurance coverage is provided, if at all, solely under the products hazard or products liability provisions of the relevant policies.
Accordingly, it is
ORDERED, ADJUDGED AND DECREED that Defendants’ Motion for Partial Summary Judgment as to Count One Regarding Debtor’s Claim for Insurance *1003Outside of the “Products Hazard” for Asbestos-in-Building Claims is granted. It is further
ORDERED, ADJUDGED AND DECREED that the Motion of California Union Insurance Company for Summary Judgment is granted. It is. further
ORDERED, ADJUDGED AND DECREED that Debtor’s Motion for Partial Summary Judgment that the Definition of “Products Liability” Claims Does Not Include Alleged Negligent Failure to Provide Warnings in Connection with the Sale of Products Containing Asbestos is denied.
DONE AND ORDERED.
.The Celotex Corporation and Carey Canada Inc. (collectively referred to as "Debtor”) brought this adversary proceeding against numerous insurance companies and insurance syndicates (collectively referred to as "the Insurance Companjr”).
The Insurance Company’s Motion for Partial Summary Judgment was filed by AIU Insurance Company; American Home Assurance Company; American Motorists Insurance Company; Citadel General Assurance Company; Columbia Casualty Company; The Continental Insurance Company; Employers Mutual Casualty Company; Eric Reinsurance Company; Federal Insurance Company; First State Insurance Company; Florida Insurance Guaranty Association, Inc.; Gibraltar Casualty Company; Granite State Insurance Company; Hartford Accident & Indemnity Company; Highlands Insurance Company; Hudson Insurance Company; Lexington Insurance Company; Lumbermens Mutual Casualty Company; National Surety Corporation; National Union Fire Insurance Company of Pittsburgh, Pennsylvania; Old Republic Insurance Company; The Protective National Insurance Company of Omaha; Royal Indemnity Company; Twin City Fire Insurance Company; and Zurich Insurance Company. Lloyds of London is also a movant. It appears that "Lloyds of London" is in actuality Certain Underwriters at Lloyd’s, London, and London Market Companies (the Plaisted group). In addition, Columbia General Assurance Company is listed as a movant although no such company has ever been a party to this adversary proceeding. It appears the inclusion of Columbia General Assurance Company as a moving party was merely a scrivener's error.
The American Insurance Company; Certain Underwriters at Lloyd's, London, and London Market Companies (the Barrett group); Continental Casualty Company; International Insurance Company; Transportation Insurance Company; and United States Fire Insurance Company joined in the above-described Motion for Partial Summary Judgment.
California Union Insurance Company filed a separate Motion for Summary Judgment on the same issue.
. The Insurance Company disputes the use of the term “asbestos-related property damage” by Debtor and asserts the term "asbestos-in-building” claims is more appropriate. The term "property damage” is used in this Order for convenience only and should not be construed as a determination by this Court that the disputed claims actually involve property damage as defined in the relevant insurance policies.
. The limits on liability for claims under the products hazard provisions of the relevant policies vary depending on the type of policy (i.e., primary, umbrella, or excess insurance). According to the Insurance Company, the various clauses, when taken together, limit liability for products hazard to the aggregate limit stated under each policy.
. According to the Insurance Company, all of the policies involved in this proceeding contain . this definition of products hazard or products liability.
. The Insurance Company’s Memorandum filed in support of its Motion for Partial Summary Judgment also sets forth its position with regard to which state’s choice of law rules should apply in deciding whether insurance coverage should be afforded Debtor. Under the Court’s order granting motion for partial summary judgment on choice of law, entered November 24, 1992, lex loci contractus (the law of the jurisdiction where the contract is executed) is the appropriate choice of law in contract interpretation actions. Following this rule, it appears initially the laws of the states of Florida, Illinois and Ohio are relevant to the instant decision. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491597/ | ORDER ON “MOTION TO DISMISS AND FOR AWARD OF SANCTIONS UNDER F.R.B.P. 9011” (sic)
ALEXANDER L. PASKAY, Chief Judge.
THIS IS a dismissed Chapter 11 case and the matter under consideration is a “Motion To Dismiss And For Award Of Sanctions Under F.R.B.P. 9011” (sic). At the duly noticed hearing, this Court having considered the record and heard statement of counsel now finds and concludes as follows:
*71The voluntary Petition for Relief on behalf of Zaragosa Properties, Inc. (Debtor) was filed on July 20, 1992. The Petition was signed by Albert Ballard (Ballard) who declared under penalty of perjury that the filing of the Petition on behalf of the Debt- or had been authorized. The Petition identified Larry M. Foyle (Foyle) as counsel of record for the Debtor. On July 22, 1992, the United States Trustee (Trustee) filed a Motion and sought dismissal or, in the alternative, conversion of this Chapter 11 case. The Motion filed by the Trustee alleged that, according to the testimony of Ballard at the meeting of creditors, Ballard is not an officer of this corporation, although he claims he was authorized to file the Petition on behalf of the Debtor. In addition, the U.S. Trustee alleges that the Debtor-in-Possession failed to comply with the requirements of this Court in that it failed to: file monthly operating reports; provide proof of establishment of a Debtor-in-Possession bank account; provide proof that post-petition taxes had been paid; provide proof of insurance, and furnish copies of certain tax reports. The Motion further alleges that Ballard appeared at the original meeting of creditors and testified that he was not an officer of the Debtor corporation. The meeting was continued, and only one creditor, Stephen Jorgensen (Jor-gensen), appeared to testify while no one appeared on behalf of the corporate Debt- or. It is further alleged in the Motion that Mr. Jorgensen testified that the filing was a sham. Based on the foregoing, the Trustee moved and sought a dismissal of this Chapter 11 case for cause, and in the alternative, sought conversion to a Chapter 7 liquidation case. On November 13, 1992, this Court entered an Order and granted the Motion of the Trustee and dismissed this Chapter 11 case. The Order of Dismissal reserved jurisdiction to consider any request for the imposition of sanctions.
On November 4, 1992, or prior to the entry of the Order of Dismissal, Angela S. Cudlipp and Cudlipp Construction and Development Company (Cudlipps) filed the present Motion under consideration, in which they sought the dismissal of the Chapter 11 case and an award of sanctions against Ballard and Foyle pursuant to F.R.B.P. 9011. Cudlipps sought dismissal of the Chapter 11 case on the basis that the Petition was not signed by an authorized corporate officer and in fact, was not signed by any corporate officer. In their Motion, Cudlipps alleged that Ballard represented, under penalty of perjury, that he had the authority to file a Petition on behalf of the Debtor when, in fact, he did not. In making this allegation, Cudlipps relied on an exhibit to the Motion of September 21, 1992, a letter written by one Eduardo de Alba addressed to Jorgensen, an attorney in Santa Monica, California. The Motion fails to allege any facts which would warrant any proceedings against Foyle, but the record clearly contains sufficient facts which warrant further inquiry into this matter to determine whether or not Ballard violated F.R.B.P. 9011.
In opposing the Motion, counsel for Ballard urges that creditors have no standing to challenge the voluntary Petition for Relief under the Bankruptcy Code on the basis that the person who signed the Petition had no authority to do so. In support of this proposition, counsel for Ballard cites In re Jack Kardow Plumbing, Inc., 451 F.2d 123 (11th Cir.1971), and In re Professional Success Seminars International, Inc., 18 B.R. 75 (Bankr.S.D.Fla.1982). In Jack Kardow, the Eleventh Circuit, speaking through Judge Wilkey, held that creditors have no standing to oppose the adjudication in an involuntary bankruptcy case. Jack Kardow can be distinguished from the case presently before this Court. First, the case was filed under the Bankruptcy Act of 1898; and second, it was an involuntary case and did not involve the lack of authority to commence a bankruptcy case. This Court is in full agreement with the well-established proposition that creditors do not have standing to challenge an involuntary petition, see In re Jack Kardow, supra. It equally makes sense that creditors do not have a standing to seek a dismissal of a voluntary petition of a Debtor who is otherwise eligible for relief under the Code. Be that as it may, inasmuch as this case already has been dismissed, it is unnecessary to discuss the *72standing, vel non, of creditors who seek a dismissal of a voluntary case. This leaves for consideration the sole issue whether or not it is appropriate to proceed further and consider the alternative relief sought by the creditors, which is the imposition of sanctions pursuant to F.R.B.P. 9011.
There is no question Ballard signed the Petition and certified that he had the authority to do so. There are sufficient facts in this record to indicate that Ballard was neither an officer, director nor stockholder of this corporation, and it appears that the facts, certified by Ballard by his signature to be true, in fact, are false. Based on the foregoing, this Court is satisfied that it is unnecessary to decide whether or not creditors do or do not have standing to initiate the imposition of sanctions. This matter, however, is appropriate for further inquiry by the Court based on F.R.B.P. 9011, which provides that when it appears that a document is in violation of F.R.B.P. 9011, the Court on motion or on its own initiative (emphasis supplied) shall impose sanctions on the person who signed it.
Based on the foregoing, it is
ORDERED, ADJUDGED AND DECREED that the Motion To Dismiss is denied as moot. It is further
ORDERED, ADJUDGED’ AND DECREED that a ruling on the “Motion For Award Of Sanctions Under F.R.B.P. 9011” (sic) is deferred, and Albert Ballard is ordered to appear before the undersigned on February 22, 1993 at 11:00 a.m. in Courtroom A, 4921 Memorial Highway, Tampa, Florida 33634, to show cause, if he has any, why sanctions should not be imposed against him for violation of F.R.B.P. 9011. It is further
ORDERED, ADJUDGED AND DECREED that service by certified mail of a copy of this Order on Ballard and counsel for Ballard shall be deemed to be good and sufficient service.
DONE AND ORDERED. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491599/ | ORDER ON TORCISE’S FIFTH AMENDMENT OBJECTION
A. JAY CRISTOL, Bankruptcy Judge.
THIS CAUSE came before the Court for hearing on December 9, 1992. The hearing was scheduled by the Court in its previous order on Torcise’s Fifth Amendment Objections to determine, question by question, the validity of Torcise’s objections to deposition questions based on his Fifth Amendment privilege against self-incrimination. At the hearing, the parties raised the issue of whether Torcise, individually, waived his *83right to claim the privilege. Subsequent to the hearing, Torcise filed an emergency motion to reinstate his discharge, which motion shall be dealt with herein.
The Fifth Amendment’s provision against self-incrimination “must be accorded liberal construction in favor of the right it was intended to secure.” Hoffman v. United States, 341 U.S. 479, 486, 71 S.Ct. 814, 818, 95 L.Ed. 1118 (1951). The privilege against self-incrimination protects against compelled disclosure of testimony which might or tends to incriminate. See Hoffman, 341 U.S. at 486-87, 71 S.Ct. at 818; Emspak v. United States, 349 U.S. 190, 197, 75 S.Ct. 687, 692, 99 L.Ed. 997 (1955); Minnesota v. Murphy, 465 U.S. 420, 426, 104 S.Ct. 1136, 1141, 79 L.Ed.2d 409 (1984). The privilege protects against disclosure when a witness has a reasonable apprehension, not merely an imaginary possibility, of disclosing incriminating testimony. Hoffman, 341 U.S. at 486, 71 S.Ct. at 818 (reasonable apprehension); Rogers v. United States, 340 U.S. 367, 375, 71 S.Ct. 438, 443, 95 L.Ed. 344 (1951) (imaginary possibility).
“Waiver of constitutional rights is not lightly ... inferred [and does not occur based] upon vague and uncertain evidence. [C]ourts must indulge every reasonable presumption against waiver of fundamental constitutional rights.” 1 Emspak, 349 U.S. at 196, 198, 75 S.Ct. at 691, 692. The leading case on the issue of losing the benefit of the privilege against self-inerimi-nation held:
Since the privilege against self-incrimination presupposes a real danger of legal detriment arising from the disclosure, [a witness] cannot invoke the privilege where response to the specific question in issue here would not further incriminate her. Disclosure of a fact waives the privilege as to details. Thus, if the witness himself elects to waive his privilege ... and discloses his criminal connections, he is not permitted to stop, but must go on and make a full disclosure. As to each question to which a claim of privilege is directed, the court must determine whether the answer to that particular question would subject the witness to a “real danger” of further incrimination.
Rogers, 340 U.S. at 372-74, 71 S.Ct. at 441-42. These principles will guide the Court in determining whether Torcise has properly asserted his Fifth Amendment’s privilege against self-incrimination and whether he has lost the benefit of it.
A brief history of the situation will be recited. Special counsel for the bankruptcy estate and defendants in the above-specified adversary cases began a deposition of the Debtor, Torcise. The deposition ceased upon Torcise claiming the privilege of the Fifth Amendment. The parties then came before the Court for a determination as to whether Torcise’s testimony can and should be compelled and as to whether Torcise waived his right to claim the privilege.
Initially, the Court felt that the Debtor had the constitutional right to claim the Fifth Amendment privilege but did not have the constitutional right to a discharge. By claiming the privilege, the Court determined the Debtor to have sought to obtain the benefits of a discharge without bearing the obligations and burdens required to obtain a discharge.
However, to preserve and effectuate the Fifth Amendment privilege, it appears the Debtor’s assertion of the privilege should not be the sole ground for denial of his discharge. To hold otherwise would dilute the privilege by allowing the drawing of adverse inferences from the Debtor’s failure to respond to evidence against him.
The Court directs the parties to proceed in the following fashion. The parties shall resume the deposition and present discrete deposition questions to Torcise, as opposed to “set[ting] forth in general terms the areas that they [wish] to explore. ...” The Debtor must listen to the *84specific questions and only then, if he believes it appropriate, assert his Fifth Amendment privilege. Once all of the questions are asked, the parties will come back before the Court and, as to those questions to which the Debtor objects, it will be his burden to establish that his testimony would raise a threat of incrimination, consistent with this Court’s foregoing,analysis. The Court will then conclude, on a question by question basis, whether the privilege is properly asserted or whether it simply does not apply. Moreover, on a question by question basis, the parties may argue waiver and the Court will determine whether Debtor has lost his privilege. To protect Toreise’s Fifth Amendment privilege, the Court will first attempt to rule on each objection without requiring an in camera response. See Hoffman, 341 U.S. at 486-87, 71 S.Ct. at 818; In re U.S. Hoffman Can Corp., 373 F.2d 622, 628-29 (3rd Cir.1967). However, if is not apparent that the question calls for an incriminating response, Torcise will have to respond, in camera, in order for the Court to rule on the objection.
If the privilege is properly asserted, the Court will then determine whether it will call the U.S. Attorney, who can decide whether to apply for federal immunity. If immunity is not afforded the Debtor, he may continue to refuse to testify on Fifth Amendment grounds. If the Debtor is granted immunity and continues to refuse to testify, or incorrectly asserts the Fifth Amendment privilege, the Court may deny Debtor his discharge.
It is hereupon
ORDERED that Joseph A. Torcise’s Emergency Motion to Reinstate Discharge is GRANTED. The Clerk of the Court shall reissue the discharge of Joseph A. Torcise and give notice thereof to all creditors and interested parties. It is
FURTHER ORDERED that the parties proceed in the foregoing manner and schedule a hearing at the conclusion of the Debt- or’s deposition to have the Court determine the validity of any Fifth Amendment objections raised and to determine whether Debtor should be ordered discharged.
DONE AND ORDERED.
. The word "waiver" is no longer used in the context of the privilege against self-incrimination. A witness is now said to “lose the benefit” of the privilege against self-incrimination. See, e.g., Minnesota v. Murphy, 465 U.S. 420, 427-28, 104 S.Ct. 1136, 1142, 79 L.Ed.2d 409 (1984); Garner v. United States, 424 U.S. 648, 653-54, 96 S.Ct. 1178, 1181-82, 47 L.Ed.2d 370 (1976). | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491600/ | OPINION
EDWARD R. GAINES, Bankruptcy Judge.
Lolita Malone Newland filed an Adversary Complaint to Determine Tax Liabilities and for Order Authorizing the Trustee to Pay Tax Obligations of the Estate. Currently before the Court is the Motion by Defendants, United States of America and the Department of Treasury, Internal Revenue Service, to Dismiss the Adversary Proceeding. The Court concludes that the Defendants’ Motion to Dismiss is well taken and should be granted.
I.FACTS1
1. Malone Properties, Inc. filed a petition for relief under Chapter 11 of the United States Code on March 11, 1986. The proceeding was subsequently converted to Chapter 7 on January 25, 1990.
2. The United States filed a claim against the debtor’s estate for unpaid employment taxes for periods in 1985 through 1989 in the amount of $296,932.81.
3. Lolita Malone Newland, a former officer of the debtor-corporation, filed this adversary proceeding in August of 1992 stating that Malone Properties, Inc. owes trust fund taxes for which civil penalties and interest have been assessed against the Plaintiff in the amount of $140,000.06.
4. Lolita Malone Newland is not a debt- or in bankruptcy.
5. The Plaintiff claims that the assessment of penalties is inaccurate and improper because the debtor-in-possession made payments for trust fund taxes after the Plaintiff disassociated herself from the debtor. The Plaintiff urges that the IRS should be compelled to apply credit for such payments to the periods which give rise to the assessment of 100% penalties against the Plaintiff. The Plaintiff further argues that she was not the “responsible” person, officer or employee during all the *161periods set forth. Additionally, she claims that sufficient assets exist within the estate to satisfy the trust fund tax obligations which give rise to the assessment of penalties against her.
6. Lolita Malone Newland requests the Court to adjudicate the following: (1) the proper 941 tax obligations for which Plaintiff may be responsible, (2) the proper amounts of 941 trust fund taxes which were not paid by the debtor-in-possession during the periods for which the Plaintiff has been assessed a penalty, (3) that all trust fund tax payments made by the debt- or subsequent to the Plaintiffs departure from her office or employment should be applied and credited to the periods for which Plaintiff has been assessed with civil penalties, thereby abrogating the basis for such assessments, (4) that the Trustee should pay as an administrative priority expense, all trust fund taxes which remain unpaid after application of debtor’s payments subsequent to Plaintiff’s disassociation with the debtor, (5) that all of the Plaintiff’s penalties resulting from debtor’s failure to pay taxes during periods of time the Plaintiff was an active officer/employee for the debtor should be dismissed, (6) that the Plaintiff should be granted an administrative expense priority claim for any tax obligations which she may ultimately be required to pay and which are found to be the responsibility of the debtor or estate in bankruptcy.
7. The Motion to Dismiss filed by the United States claims that this Court lacks jurisdiction to determine the 100% penalty liability of an individual, Lolita Malone Newland, in the pending Chapter 7 bankruptcy proceeding of a separate taxable entity, Malone Properties, Inc. The Motion also claims failure to state a claim upon which relief can be granted.
8. The issues were briefed by the parties and submitted to the Court for determination.
II. CONCLUSIONS
Section 6672 of Title 26 of the United States Code provides the following:
§ 6672. Failure to collect and pay over tax, or attempt to evade or defeat tax
(a) General rule — Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over....
16 U.S.C. § 6672. Lolita Newland Malone was assessed $140,000.06 by the Internal Revenue Service as a former officer of the debtor, Malone Properties, pursuant to § 6672 for unpaid taxes. She now requests this Court to make determinations regarding her tax liability and to direct the Internal Revenue Service on how to apply amounts paid by the trustee in bankruptcy.
The major issues raised by the parties in this proceeding were discussed by the Second Circuit in In re Brandt-Airflex Corporation, 848 F.2d 90 (2d Cir.1988):
The question of whether bankruptcy courts may determine a nondebtor’s tax liability arises most frequently in situations where both the debtor and a non-debtor may be jointly liable for a particular tax obligation. Most of the cases have involved 26 U.S.C. § 6672, pursuant to which those employees with responsibility for paying over the employer’s withholding taxes may be held personally liable for the taxes.
In one decision which several other courts found persuasive, a bankruptcy court in California held that under appropriate circumstances, jurisdiction could be exercised under § 505(a) to determine the tax liability of a nondebtor. See, In re Major Dynamics, Inc., 14 B.R. 969 (Bankr.S.D.Calif.1981). In Major Dynamics, a creditors committee filed a motion in bankruptcy court, seeking to stay IRS audits, assessments and collections directed at the creditors. The court held:
*162[T]he jurisdictional grant to this court could extend to tax disputes of third parties other than the debtor provided, however, that the IRS activity to be enjoined directly affected the debtor or the estate, and that the exercise of such jurisdiction was necessary to the rehabilitation of the debtor or the orderly and efficient administration of the debtor’s estate.
Id. at 972.
Several subsequent cases followed the Major Dynamics holding, see, e.g., In re H & R Ice Co., Inc., 24 B.R. 28 (Bankr.W.D.Mo.1982); In re Jon Co., 30 B.R. 831 (D.Colo.1983); In re Original Wild West Foods, Inc., 45 B.R. 202 (Bankr.W.D.Tex.1984). In all the foregoing cases, the courts were asked to determine the § 6672 tax liability of the debtors’ employees, and concluded that they had jurisdiction to do so under 11 U.S.C. § 505(a).
Major Dynamics, and the cases which adopted its rationale, relied on a literal interpretation of the clause which states that a bankruptcy court “may determine the amount or legality of any tax ...” 11 U.S.C. § 505(a)(1) (emphasis added). If the bankruptcy court could pass on the legality of any tax, the cases reasoned, then the court could certainly exercise jurisdiction over third parties whose tax liability was somehow related to that of the debtor.
In the last few years, however, the consensus has shifted, and virtually all the courts which have considered the issue most recently concluded that § 505(a) does not extend the bankruptcy court’s jurisdiction to parties other than the debtor. See, e.g., United States v. Huckabee Auto Co., 783 F.2d 1546 (11th Cir.1986); In re Success Tool and Manufacturing Co., 62 B.R. 221 (N.D.Ill.1986); In re East Wind Industries, Inc., 61 B.R. 408 (D.N.J.1986); In re Booth Tow Services, Inc., 53 B.R. 1014 (W.D.Mo.1985); In re Interstate Motor Freight System, 62 B.R. 805 (Bankr.W.D.Mich.1986); In re Educators Investment Corp., 59 B.R. 910 (Bankr.D.Nev.1986); but see In re Campbell Enterprises, Inc., 66 B.R. 200 (Bankr.D.N.J.1986) (finding jurisdiction to determine tax liability of nondebtor without citing recent decision by District Court of New Jersey to the contrary). Most of these recent cases arose under 26 U.S.C. § 6672 and involved challenges by both debtors and their “responsible” employees to IRS assessments against the employees for withholding taxes ...
Section 505(a) was certainly not intended to allow bankruptcy courts to determine the validity of literally any tax, no matter who owes it. Moreover, the statute itself says nothing about which classes of non-debtors, if any, could permissibly invoke the bankruptcy court’s jurisdiction under § 505(a). A literal reading of the statute, therefore, leads either to unintended results or great uncertainty ...
It is notable that the only appellate court to have considered the issue so far has aligned itself with the cases holding that § 505(a) does not confer bankruptcy court jurisdiction over non-debtors. See Huckabee, 783 F.2d 1546 ...
We agree with the Eleventh Circuit and with the more recent bankruptcy and district court decisions, and hold that the bankruptcy court in this case did not have jurisdiction to determine the § 3505 liability of LITC, a nondebtor. In the words of Booth Tow Services, 53 B.R. 1014, “[sjimply because the debtor corporation is also liable for the taxes is no reason for the bankruptcy court to assume jurisdiction over the [liability of] the non-debtor.” See id. at 1017-18. This is particularly true in the present case because even if LITC were liable for the withholding taxes, the mere fact of its liability could have no practical impact on Brandt’s reorganization plan. We have already observed that the taxing authorities are free to collect the back taxes from whomsoever they choose, and that Brandt cannot compel the authorities to collect from LITC. Because Brandt remains liable for the taxes whether or not LITC is also liable, there was no reason, even if there had been *163jurisdiction, for the bankruptcy court to adjudicate LITC’s tax liability_
843 F.2d at 96-96. See, Quattrone Accountants, Inc. v. I.R.S., 895 F.2d 921 (3d Cir.1990) (although holding that § 505 does not limit jurisdiction to determine tax liability to only debtors, the court concluded that bankruptcy court had no jurisdiction over action between individual and IRS to determine § 6672 liability). See also, G.M. Buechlein, Annotation, Jurisdiction of Bankruptcy Court to Determine Tax Liability of Individuals or Entities Other Than Debtor Under 11 U.S. C.S. § 505(a), 97 A.L.R.Fed. 160 (1990).
Courts concluding that bankruptcy courts may exercise jurisdiction over such non-debtor disputes with the IRS have generally done so on the basis of determining that the assessment of § 6672 taxes against an officer or director would affect the debtor corporation and the effectiveness or success of the chapter 11 reorganization. See, In re Original Wild West Foods, Inc., 45 B.R. 202 (Bankr.W.D.Tex.1984); In re Herbie K’s, Inc., 57 B.R. 468 (Bankr.W.D.La.1985).
Malone Properties, Inc. is not a chapter 11 reorganization but has been converted to a chapter 7. There is no reorganization that will be affected as contemplated by the various cases utilizing this logic. On the facts of this chapter 7 proceeding, this Court agrees with those Courts which have held that disputes between the IRS and non-debtors regarding § 6672 taxes should not be heard by the bankruptcy court exercising jurisdiction over the bankruptcy proceeding of a separate taxable entity. Based on the foregoing, the motion to dismiss by the Internal Revenue Service is granted.2
A judgment will be entered consistent with these findings and conclusions pursuant to Federal Rule of Bankruptcy Procedure 9021 and Federal Rule of Civil Procedure 58. This opinion shall constitute findings and conclusions pursuant to Federal Rule of Bankruptcy Procedure 7052 and Federal Rule of Civil Procedure 52.
. Facts are taken from the pleadings and briefs on file.
. Any issues raised by the complaint that are related to the main issue discussed in this opinion are considered moot, or premature at this point. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491601/ | MEMORANDUM OF DECISION
JAMES H. WILLIAMS, Chief Judge.
The court comes now to consider whether interests of the debtor, Michael Joseph Carey (Debtor), in two employee benefit plans are included in his bankruptcy estate and, if so, whether those interests may be claimed as exempt. The Chapter 7 Trustee, Josiah L. Mason (Trustee), and Debtor stipulated to certain facts and the admission of relevant documents, and submitted briefs in support of their respective positions.
The court has jurisdiction in this matter by virtue of 28 U.S.C. § 1334(b) and General Order No. 84 entered in this district on July 16, 1984. This is a core proceeding under 28 U.S.C. § 157(b)(2)(A)(B) and (E). This Memorandum of Decision constitutes the court’s findings of fact and conclusions of law pursuant to Fed.R.Bankr.P. 7052.
FACTS
Debtor filed his Chapter 7 bankruptcy case on May 28, 1991. Debtor has been employed for several years as a Merrill Lynch account executive and continues in that position today. Debtor’s position entitles him to certain benefits provided by Merrill Lynch. The first of these is a Savings and Investment Plan (401(k) Plan) which the parties agree is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq.
The second benefit plan is the Capital Accumulation Award Plan (CAA Plan). The CAA Plan rewards Merrill Lynch sales executives who meet certain minimum production levels each year. The awards are given in the form of Merrill Lynch common stock and are entitled to any increase generated by the appreciation in share value of said stock. The account amount may also increase when plan awards are forfeited by participants, which can occur in a variety of ways. Forfeited amounts are credited equally among the CAA Plan participants. The CAA Plan is not ERISA-qualified, nor *198does it establish any trust or fiduciary relationship on the part of Merrill Lynch. The right of the employee to receive payments is akin to that of a general unsecured creditor.
CAA Plan awards do not begin to vest until the fifth year after the award accrues. At that time 50% of the award vests, with a 10% increase in each successive year until the tenth year, when the award is 100% vested and payable to the employee. If the employee dies or retires prior to the tenth year, the awards vest immediately at 100%. If the employee is terminated, the award is distributed only as to the percentage amounts which are then vested. Terminated employees also do not receive the value of share appreciation.
DISCUSSION
The Trustee concedes that the case of In re Lucas, 924 F.2d 597 (6th Cir.1991) is controlling precedent with respect to the 401(k) Plan as property of the estate. In Lucas, the court concluded that ERISA falls under the definition of “applicable nonbankruptcy law” referenced by 11 U.S.C. § 541(c)(2), which states:
A restriction on the transfer of a beneficial interest of the debtor in a trust that is enforceable under applicable nonbank-ruptcy law is enforceable in a case under this title.
ERISA has certain restrictions on qualified plans which prevent assignment or alienation of benefits. 29 U.S.C. § 1056(d)(1). The Sixth Circuit held that interests in an ERISA-qualified pension plan are not property of the estate because of the exception in Section 541(c)(2). The court notes that the Lucas opinion acknowledges its position as “a minority.” 924 F.2d at 600. However, the rationale of Lucas was just affirmed by the Supreme Court in an appeal from the Fourth Circuit, Patterson v. Shumate, — U.S. —, 112 S.Ct. 2242, 119 L.Ed.2d 519 (1992). This court, therefore, finds the Debtor’s interest in the 401(k) Plan is not property of the bankruptcy estate which can be recovered by the Trustee.
The CAA Plan is not ERISA-quali-fied and derives no benefit from Section 541(c)(2). The court must determine whether Debtor’s interest falls within the Code definition of “property of the estate”:
(a) The commencement of a case under section 801, 302 or 303 of this title creates an estate. Such estate is comprised of all the following property, wherever located, and by whomever held:
(1) ... all legal or equitable interests of the debtor in property as of the commencement of the case.
11 U.S.C. § 541(a).
It is helpful, at the outset, to define the parameters of the Trustee’s attempted recovery. His claim is composed of all CAA Plan awards which had accrued in Debtor’s account as of the filing date, May 28, 1991, in both vested and nonvested amounts, and including all accumulated and future appreciation. The vested awards, as of the filing date, were 60% of the 1984 award and 50% of the 1985 award, plus appreciation, for a total vested amount of $17,008.66. (Joint Exhibit A) The CAA Plan account contained a total amount of $107,677.64.
Debtor has cited three cases in support of his position that his interest in the CAA Plan account is not estate property. In re Harter, 10 B.R. 272 (Bankr.N.D.Ind.1981) involved a turnover proceeding to recover military retirement benefits. These benefits were paid monthly so long as the debt- or was alive on the first day of each month. The court properly noted that the only interest the debtor had on the filing date was the contingent right to receive future payments, not the payments themselves. It then held that the payments were akin to future wages, which would not be property of the estate. The court also noted that the debtor’s fresh start would be impeded if the trustee could compel payment in full by applying the monthly checks. Subsequent cases have based similar holdings on the fact that certain obligations are imposed on military retirees to receive this pay, and the funds are actually payment for postpetition services which are excepted under Section 541(a)(6). Matter of Haynes, 679 F.2d 718 (7th Cir.), cert. de*199nied sub nom. Miller v. Haynes, 459 U.S. 970, 103 S.Ct. 299, 74 L.Ed.2d 281 (1982).
The Trustee is not seeking payments for postpetition services. All he is requesting are awards which accrued prepetition, plus appreciation thereon. Section 541(a)(6) does include “proceeds, products, offspring, rents or profits of or from property of the estate.” The services for which Debtor earned the CAA Plan awards were all rendered and completed prior to his bankruptcy filing. The appreciation of value on those awards would be proceeds or profits thereof. Harter is therefore inapplicable to this situation.
In re Selner, 18 B.R. 420 (Bankr.S.D.Fla.1982) is also factually distinguishable. In Seiner, the debtor’s receipt of insurance commissions for prepetition policy sales was contingent on his remaining the agent of record on the policy, collecting future premiums and continuing to service the policy. The court held that the funds were “sufficiently rooted in postpetition events so as to constitute after acquired property which would not pass to the trustee as property of the estate.” Id. at 421-22. Here, Debtor need not perform any further services to be entitled to payment of at least some of these funds. Even if he voluntarily chose to leave Merrill Lynch tomorrow, he would be entitled to the vested portion of his account on the filing date, less accrued appreciation. While the contingencies as to Debtor’s receipt of his CAA Plan funds may reduce their present value, his right to receive the funds is something that exists in the present.
The Debtor’s strongest support is found in In re Hammond, 35 B.R. 219 (Bankr.W.D.Okl.1983). Hammond was paid a base price for his shares of stock in a corporate buyout. He was also to be paid additional sums over a six-year period if he abided by a non-competition covenant. If Hammond was in compliance on the payment date, he would receive the funds. Any breach would forfeit all future payments. The court held it could not compel Hammond to comply with the agreement, and his right to receive payments depended on his future compliance or “services.” This removed the right from estate property.
In Hammond, the debtor had an obligation to refrain from competition for a period of time, which was consideration for his receipt of the funds. The Debtor here is not so constricted. As stated previously, he has an immediate right to receive a portion of the funds if he leaves Merrill Lynch’s employ. The entire amount of the CAA Plan account is vested if the Debtor dies or retires. Debtor remains entitled to all or part of the funds if he becomes disabled, takes an approved leave of absence or transfers to another position within Merrill Lynch. In Hammond, the very right to the funds was contingent upon noncompetition. Here, Debtor had a right to CAA Plan funds on the day of his bankruptcy petition. The amount he could receive is all that is affected by his continued employment.
The difference is illustrated by the case of In re Ryerson, 739 F.2d 1423 (9th Cir.1984). The debtor’s employment was terminated some nine months after his bankruptcy filing. After the debtor had worked for one year, he had become entitled to certain payments in the event of termination. Debtor had worked in the position four years as of the petition date. While the court acknowledged that the interest in the termination payments was contingent and unvested, it was included in the estate to the extent the payment resulted from years of service prior to bankruptcy.
By including all legal interests without exception, Congress indicated its intention to include all legally recognizable interests although they may be contingent and not subject to possession until some future time.
Id. at 1425.
The court therefore finds that Debtor’s right to receive CAA Plan funds was property of the estate on the filing date. However, the funds will not fully vest until 1996 at the earliest (for the 1984 and 1985 awards) and the 1990 award will not fully vest until the year 2001. The Trustee suggests closing the case and reopening it at the appropriate time to collect *200payment. The case can only be closed if the Trustee has filed a final report and account and has certified that the case has been fully administered. 11 U.S.C. § 350(a) and Fed.R.Bankr.P. 5009. The court queries whether administration can be complete with outstanding uncollected assets. The more expeditious process for Debtor, creditors and the Trustee would be to determine the present value of the Debt- or’s right to the CAA Plan funds and act to collect that amount accordingly.
The parties briefly discussed the application of exemption laws to the funds if they are found to be estate property. This argument is premature in that Debtor did not claim the CAA Plan as exempt on his Schedule B-4, although he did claim the 401(k) Plan, and has not amended his schedules. The court refrains from examining this issue as it is not properly before it.
In sum, the court finds that the 401(k) Plan is not property of the estate. The CAA Plan is estate property and the Trustee may recover the present value thereof, unless a claim of exemption is properly asserted and allowed. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491602/ | MEMORANDUM OPINION ON ORDER OF DISTRICT COURT FOR THE APPOINTMENT OF A SPECIAL MASTER
JACK B. SCHMETTERER, Bankruptcy Judge.
Mariluz Rosario and others initiated a class action lawsuit (case no. 87 C 1224) *225against Debtor Tom Livaditis and two schools, D’Or Beauty College, Inc. and D’Or School of Cosmetology (collectively, the “Schools”) in United States District Court for the Northern District of Illinois. The class plaintiffs alleged breach of contract and violations of the Illinois Consumer Fraud Act, Ill.Rev.Stat. ch. 12U/2, 11262 (now cited as 815 ILCS 505/2) and the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(a), (c).
The jury found in favor of Debtor on all counts except the consumer fraud claim. Issues factually related to the consumer fraud claim are before this Court.1 The jury found the Schools liable on the RICO claims, but awarded zero damages against them. The class plaintiffs appealed the jury’s verdict on the RICO claims, and the Seventh Circuit reversed this award of no damages stating that, “[i]n order to find the appellant beauty schools liable on the RICO counts, the jury must have found that the class sustained some injury to business or property.” Rosario v. Livaditis, 963 F.2d 1013, 1015 (7th Cir.1992). Accordingly, the case was remanded to the District Court for “a hearing on damages as to the RICO counts on which the beauty schools were found liable.” Id.
On remand, on motion of one of the parties, and because there was some factual relation to other matters pending here, the District Court entered this order:
Pursuant to Federal Rule of Civil Procedure 53(a) and 28 U.S.C. § 636(b)(2), Bankruptcy Judge Jack B. Schmetterer is appointed Master to conduct all proceedings connected with the new trial on damages on Counts I and II of the fourth amended complaint [the RICO claims] in this action, and to issue a report and recommendations to this Court in connection therewith.
Rosario v. Livaditis, 87 C 1224, 1989 WL 153352 (N.D.Ill. Nov. 24, 1992). Upon receiving that order, the parties were asked to submit briefs on the question of a bankruptcy judge’s jurisdiction to serve as Master. Having considered the record in that case (No. 87 C 1224) and the submissions of counsel, the Court finds that it must decline to act under the order because it has no judicial authority to act as a Master in the hearing on damages as to Counts I and II in the District Court case (No. 87 C 1224).
A bankruptcy judge’s subject matter jurisdiction is limited by 28 U.S.C. § 1334. In re Pettibone Corp., 135 B.R. 847 (Bankr.N.D.Ill.1992), and authorities cited. Under § 1334, bankruptcy courts have jurisdiction over all proceedings “arising under title 11, or arising in or related to cases under title 11.” |Í8 U.S.C. § 1334(b). Any hearing to determine RICO damages in Counts I and II of the District Court case would not arise under Title 11 U.S.C. Moreover, it would not arise in a case under Title 11 since those two counts pose a dispute between two non-debtor entities not involved in this bankruptcy. Therefore, a bankruptcy judge lacks “arising in” or “arising under” jurisdiction to preside over any hearing as to those issues.
“Related to” jurisdiction may exist over a dispute between two non-debtor entities, but only when the resolution of the dispute “affects the amount of property available for distribution or the allocation of property among the creditors.” Home Insurance Co. v. Cooper & Cooper, Ltd., 889 F.2d 746, 749 (7th Cir.1989). The resolution of the subject counts of the District Court case would merely settle a dispute between the class plaintiffs and the Schools; it cannot affect the amount of the Debtor’s property or his bankruptcy estate in any way. Therefore, this Court also lacks “related to” jurisdiction to preside over the assigned hearing.
The class plaintiffs suggest that, notwithstanding lack of subject matter jurisdiction, a bankruptcy judge can still preside as special master pursuant to 28 U.S.C. § 636(b)(2) and Fed.R.Civ.P. 53(a). Section 636 is the provision in the United *226States Code which confers jurisdiction upon federal magistrate judges. Section 636(b)(2) provides,
A judge may designate a magistrate to serve as a special master pursuant to the applicable provisions of this title and the Federal Rules of Civil Procedure for the United States district courts. A judge may designate a magistrate to serve as a special master in any civil case, upon consent of the parties, without regard to the provisions of rule 53(b) of the Federal Rules of Civil Procedure for the United States district courts.
By its terms, this section is limited to designation of magistrate judges and provides no basis for designation of bankruptcy judges.
Rule 53(a) provides that “[t]he court in which any action is pending may appoint a special master therein. As used in these rules the word ‘master’ includes a referee, an auditor, an examiner, and an assessor.” The class plaintiffs incorrectly argue that the second sentence confers authority upon bankruptcy judges where no subject matter jurisdiction exists. This sentence merely means that any form of officer appointed by a court to decide an issue will be treated as a master under Rule 53. That rule is not a grant of jurisdiction. This becomes especially clear when Rule 53(a) is read in conjunction with Fed.R.Civ.P. 82 which provides that the Rules of Civil Procedure “shall not be construed to extend or limit the jurisdiction of the United States district courts or the venue of actions therein.” Therefore, this Court must conclude that the cited statute and rule do not apply to bankruptcy judges; there is no authority under 28 U.S.C. § 636(b)(2) or Fed.R.Civ.P. 53(a) for a bankruptcy judge to preside over any hearing. Since jurisdiction is otherwise clearly lacking under 28 U.S.C. § 1334, which limits the authority of bankruptcy judges, it would be improper for a bankruptcy judge to attempt to exercise any judicial authority to carry out the order of the District Court.
The Court inquired of counsel in the Adversary case pending here to see if pleadings that might give jurisdiction over the District Court issues might be filed here. The answer was negative. This Court also offered to mediate the issues if all parties wished, but not all parties so wished.
Accordingly, by order entered separately this day, this Court respectfully declines to act as Master over the hearing on damages in Counts I and II of case No. 87 C 1224 before the District Court because it lacks judicial authority to do so.
. Debtor’s liability under that claim is now the subject of a class dischargeability complaint. See In re Livaditis, 122 B.R. 330 (Bankr.N.D.Ill.1990) (discussing the class proof of claim), and In re Livaditis, 132 B.R. 897 (Bankr.N.D.Ill.1991) (discussing the dischargeability complaint). | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483849/ | NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
STATE OF ARIZONA, Respondent,
v.
THOMAS JESUS QUIROZ, Petitioner.
No. 1 CA-CR 22-0167 PRPC
FILED 11-15-2022
Petition for Review from the Superior Court in Maricopa County
No. CR2016-001766-001
The Honorable Christopher A. Coury, Judge
REVIEW GRANTED; RELIEF DENIED
COUNSEL
Maricopa County Attorney’s Office, Phoenix
By Robert E. Prather
Counsel for Respondent
Thomas Jesus Quiroz, San Luis
Petitioner
STATE v. QUIROZ
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Maria Elena Cruz, Judge Angela K. Paton, and Judge Peter
B. Swann delivered the decision of the Court.
PER CURIAM:
¶1 Petitioner Thomas Jesus Quiroz seeks review of the superior
court’s order denying his petition for post-conviction relief. This is
petitioner’s first petition.
¶2 Absent an abuse of discretion or error of law, this court will
not disturb a superior court’s ruling on a petition for post-conviction relief.
State v. Gutierrez, 229 Ariz. 573, 577, ¶ 19 (2012). It is petitioner’s burden to
show that the superior court abused its discretion by denying the petition
for post-conviction relief. See State v. Poblete, 227 Ariz. 537, 538, ¶ 1 (App.
2011) (petitioner has burden of establishing abuse of discretion on review).
¶3 We have reviewed the record in this matter, the superior
court’s order denying the petition for post-conviction relief, and the petition
for review. We find that petitioner has not established an abuse of
discretion.
¶4 We grant review and deny relief.
AMY M. WOOD • Clerk of the Court
FILED: AA
2 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483851/ | NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
STATE OF ARIZONA, Respondent,
v.
AMMED HASSAN, Petitioner.
No. 1 CA-CR 21-0094 PRPC
FILED 11-15-2022
Petition for Review from the Superior Court in Maricopa County
No. CR2011-154825-001
The Honorable Shellie F. Smith, Judge Pro Tempore
REVIEW GRANTED; RELIEF DENIED
COUNSEL
Maricopa County Attorney’s Office, Phoenix
By Krista Wood
Counsel for Respondent
Ammed Hassan, Florence
Petitioner
STATE v. HASSAN
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Maria Elena Cruz, Judge Angela K. Paton, and Judge Peter
B. Swann delivered the decision of the Court.
PER CURIAM:
¶1 Petitioner Ammed Hassan seeks review of the superior
court’s order denying his petition for post-conviction relief. This is
petitioner’s second successive petition.
¶2 Absent an abuse of discretion or error of law, this court will
not disturb a superior court’s ruling on a petition for post-conviction relief.
State v. Gutierrez, 229 Ariz. 573, 577, ¶ 19 (2012). It is petitioner’s burden to
show that the superior court abused its discretion by denying the petition
for post-conviction relief. See State v. Poblete, 227 Ariz. 537, 538, ¶ 1 (App.
2011) (petitioner has burden of establishing abuse of discretion on review).
¶3 We have reviewed the record in this matter, the superior
court’s order denying the petition for post-conviction relief, and the petition
for review. We find that petitioner has not established an abuse of
discretion.
¶4 We grant review and deny relief.
AMY M. WOOD • Clerk of the Court
FILED: AA
2 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483852/ | NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
STATE OF ARIZONA, Respondent,
v.
JOE CERVANTES, JR., Petitioner.
No. 1 CA-CR 22-0178 PRPC
FILED 11-15-2022
Petition for Review from the Superior Court in Yavapai County
No. P1300CR20081426
The Honorable Michael R. Bluff, Judge
REVIEW GRANTED; RELIEF DENIED
COUNSEL
Yavapai County Attorney’s Office, Prescott
By Dana E. Owens
Counsel for Respondent
Joe Cervantes, Jr., Florence
Petitioner
STATE v. CERVANTES
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Maria Elena Cruz, Judge Angela K. Paton, and Judge Peter
B. Swann delivered the decision of the Court.
PER CURIAM:
¶1 Petitioner Joe Cervantes, Jr. seeks review of the superior
court’s order denying his petition for post-conviction relief. This is
petitioner’s fifth successive petition.
¶2 Absent an abuse of discretion or error of law, this court will
not disturb a superior court’s ruling on a petition for post-conviction relief.
State v. Gutierrez, 229 Ariz. 573, 577, ¶ 19 (2012). It is petitioner’s burden to
show that the superior court abused its discretion by denying the petition
for post-conviction relief. See State v. Poblete, 227 Ariz. 537, 538, ¶ 1 (App.
2011) (petitioner has burden of establishing abuse of discretion on review).
¶3 We have reviewed the record in this matter, the superior
court’s order denying the petition for post-conviction relief, and the petition
for review. We find that petitioner has not established an abuse of
discretion.
¶4 We grant review and deny relief.
AMY M. WOOD • Clerk of the Court
FILED: AA
2 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491603/ | FINDINGS OF FACT AND CONCLUSIONS OF LAW
LEWIS M. KILLIAN, Jr., Bankruptcy Judge.
THIS CAUSE came before the Court upon Plaintiff’s, Fleetwood Credit Corpora*278tion (“Fleetwood”), Complaint to Determine Dischargeability of Debt. Fleetwood asserts the debtor intentionally sold a trailer subject to its lien without either obtaining its permission or repaying the debt in full, and therefore, the debt should be excepted from discharge pursuant to 11 U.S.C. § 523(a)(6). For the following reasons, the Court finds Fleetwood has demonstrated by a preponderance of the evidence that the debtor’s actions constitute willful and malicious conversion of Fleetwood’s funds, and therefore, the debtor is not entitled to a discharge of the debt.
FINDINGS OF FACT
This dispute involves a 1989 Wilderness fifth wheel trailer purchased in October 1989 by the debtor while residing in California. The purchase was financed with a loan from Fleetwood which required monthly payments over a ten (10) year term, secured by a lien on the trailer. The title certificate on the trailer issued by California on December 20, 1989 clearly reflects the lien of Fleetwood.
While living in California, the Debtor constructed a homemade trailer. At some point, he obtained a California title certificate on this trailer which reflected that it was unencumbered. Following the Debt- or’s move to Nevada in early 1990, he applied for a Nevada title on the fifth wheel trailer which was still subject to Fleet-wood’s lien. In applying for the new title certificate from the state of Nevada, the Debtor presented the title to the homemade trailer which properly reflected the absence of liens on that trailer. Through some sort of administrative oversight, the nature of which remains a total mystery, the state of Nevada issued to the Debtor a new title certificate on the fifth wheel trailer which failed to reflect the lien of Fleetwood. That the identity of the trailers was switched in the transaction is clear from the fact that Fleetwood has at all times maintained possession of the original California title certificate to the fifth wheel trailer while the only title received by Nevada was on the homemade trailer. While the Debtor, in his testimony, maintains that he received a California title certificate on the fifth wheel trailer, free and clear of liens, which he used to obtain the Nevada title, the evidence clearly establishes otherwise.
Nevada has since made several attempts to notify the debtor that the title, as issued without the Fleetwood lien, is void because it had been issued against “fraudulent documents.” The debtor then moved to Florida where the fifth wheel trailer was sold on a consignment basis through Leisure Tyme RV, Inc., a Florida recreational vehicle dealer in January 1991. A appraisal introduced at trial without objection indicated the trailer had a market value of $13,025 at the time it was placed for sale with Leisure Tyme. Debtor received approximately $9,600 after paying an undetermined consignment fee which he used to assist his children in moving to Florida and to construct a garage on his home. Debtor continued to make payments to Fleetwood until May 1991 when he filed a joint bankruptcy petition with his wife.
Fleetwood was not informed, nor was its consent obtained prior to the debtor’s removal of the trailer from California or the sale of the trailer in Florida. Fleetwood had no reason to believe that it needed to take any action to protect its interests until it was notified of the cancellation of insurance on the trailer by the carrier in January 1991.
CONCLUSIONS OF LAW
Section 523(a)(6) of the Bankruptcy Code excepts from discharge any debt “for willful and malicious injury by the debtor to another entity or to the property of another entity”. The Eleventh Circuit Court of Appeals interprets “willful” to mean intentional and voluntary. Chrysler Credit Corp. v. Rebhan, 842 F.2d 1257, 1262 (11th Cir.1988). Due to the difficulty in proving a debtor’s actual intent to harm, the Circuit adopted the majority view that malice may be established by a finding of either implied or constructive malice. Rebhan, 842 F.2d at 1263. Constructive or implied malice can be found if the nature of the act itself implies a sufficient degree of *279malice. In re Ikner, 883 F.2d 986, 991 (11th Cir.1989). Thus, one need not prove the debtor acted with “personal hatred, spite or illwill” to successfully use § 523(a)(6). Id. Following the Supreme Court’s decision in Grogan v. Garner, 498 U.S. 279, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991), a movant need only demonstrate the elements of a § 523 exception to discharge by a preponderance of the evidence.
The Court finds the debtor’s actions constitute a willful and malicious conversion of Fleetwood’s property. The evidence adduced at trial clearly establishes the debtor intentionally and voluntarily sold the trailer on a consignment basis through the Florida RV dealer. No evidence was presented which would suggest that the debtor was unaware of the nature of consignment sales or that the debtor was coerced into the sale of the unit by any outside party. Thus, the debtor’s action to sell the trailer on consignment was willful.
Debtor argues that the current dispute is the result of the unilateral mistake of the Nevada Department of Motor Vehicles, and therefore, he lacked the intent to harm Fleetwood. However, a creditor need not demonstrate actual malicious intent to invoke the protection of § 523(a)(6). Rebhan, 842 F.2d at 1263. It is well settled that the sale of collateral without the consent of the creditor constitutes willful and malicious injury. E.g., In re Muto, 124 B.R. 610, 611 (Bankr.M.D.Fla.1991); In re Ogden, 119 B.R. 277, 279 (Bankr.M.D.Fla.1990). Debtor’s assertions that he believed the title to the trailer to be free and clear of encumbrances at the time of its sale are unavailing. Debtor was aware of the indebtedness against the trailer, understood the nature of buying goods with credit secured by the purchased item, and continued to make payments on the debt following the sale of the trailer. Moreover, there is no credible evidence that there was ever clear title to the trailer. The Code simply does not condone a debtor who takes advantage of a clerical error in a state agency for personal' gain.
The debtor having sold collateral without the knowledge or consent of the creditor, it is
ORDERED AND ADJUDGED that debt- or shall be liable to Fleetwood for the trailer’s wholesale value of $13,025 at the time of its conversion. This debt shall be non-dischargeable under § 523(a)(6). A final judgement will be entered in accordance with these findings of fact and conclusions of law.
DONE AND ORDERED. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491604/ | ORDER
MARY D. SCOTT, Bankruptcy Judge.
THIS CAUSE is before the Court upon several motions filed by the parties. A review of the Court file in this Adversary Proceeding and of the main case file reveals the following facts. The voluntary Chapter 7 petition in bankruptcy was filed on July 8, 1992. The deadline for filing objections to discharge and complaints to determine dischargeability was October 12, 1992. On August 17, 1992, an agreed Order was submitted to the Court which granted the creditor plaintiff Modicon, Inc. (“Modicon”) an extension of time to object to discharge. On November 9, 1992, Modi-con filed a Complaint to Determine Dis-chargeability under section 523(a)(2)(A), (a)(2)(B), (a)(4), based upon allegedly fraudulent conduct of the debtor Joe Shelnutt.
The Answer was filed on December 4, 1992, and asserted one affirmative defense, namely a failure to state a claim for which relief may be granted. On the same date the plaintiff filed a motion to dismiss for failure to plead fraud with particularity and a motion for summary judgment asserting that no fraud existed.
On December 11, 1992, the debtor defendant filed a Motion to Strike Complaint For Lack of Timeliness, asserting that the Order of August 17, 1992, permitted an extension to object to discharge only; no request was made to extend the time to object to dischargeability of a particular debt. Accordingly, asserts the debtor, the complaint to determine dischargeability is untimely.
On December 9, 1992, the plaintiff Modi-con filed a Motion for Leave to Amend Complaint requesting that it be permitted to file an Amended complaint adding section 523(a)(6) as grounds for objecting to dischargeability. The original complaint and the proposed amended complaint are virtually identical. The factual allegations are identical. The only difference in the complaints is the assertion that section 523(a)(6) excepts the debt from discharge. The debtor objected to this motion, stating in full:
Comes now the Defendant, Joe C. Shel-nutt, and does object to the Motion of the Plaintiff to amend its Complaint objecting to dischargeability of the debt owed by the Debtor to the Plaintiff because the Motion to add a count to Complaint pursuant to Section 523(a)(6) raises a new matter and theory for objecting to discharge, and it has been filed after the extended date for objections to discharge.
(Emphasis added.)
The Motion to Dismiss
The Motion to dismiss is one paragraph in length and simply states that the complaint “does not state the circumstances constituting fraud with particularity as is required by Rule 7009 of the Bankruptcy Rules arid Rule 9(b) of the Federal Rules of Civil Procedure.” The Court has reviewed the complaint and finds that it does plead fraud with sufficient particularity to withstand the motion to dismiss. That sufficient facts are pleaded is confirmed by the ability of the defendant to answer the complaint and file a motion for summary judgment on the same date. Accordingly, the Motion to Dismiss for Failure to Plead Fraud with Particularity, filed on December 4, 1992, will be denied.
The Motion for Summary Judgment
The motion for summary judgment, filed on the same date as the answer and before conduct of discovery, asserts no fraud occurred. The motion must be denied for two reasons. First, the plaintiff should be permitted a period of time in which to conduct discovery. Granting summary judgment on a fraud issue in this particular case prior to a discovery period is manifestly inappropriate. See Fed.R.Civ. Proc. 56(f); Palmer v. Tracor, Inc., 856 F.2d 1131, 1133-34 (8th Cir.1988); Snook v. Trust Co. of Georgia Bank of Savannah, N.A., 859 F.2d 865, 870-71 (11th Cir.1988).
*438Secondly, fraud is not generally susceptible to summary judgment. While the Supreme Court has stated that “summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole,” Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986), questions involving a person’s state of mind “are generally factual issues inappropriate for resolution by summary judgment.” Braxton-Secret v. A.H. Robins Co., 769 F.2d 528, 531 (9th Cir.1985). Further, the trial judge must accept as true the nonmovant’s evidence, must draw all legitimate inferences in the nonmovant’s favor, and must not weigh the evidence on the credibility of witnesses. Windon Third Oil and Gas v. Federal Deposit Insurance Corporation, 805 F.2d 342, 346 (10th Cir.1986). Were the Court simply to accept the assertions in the defendant’s affidavit, that he committed no fraud, the Court would be improperly weighing the credibility of the witness. Accordingly, the motion for summary judgment will be denied.
The Motion to Amend and Motion to Strike
Rule 15(a), Federal Rules of Civil Procedure provides that leave of court to amend “shall be freely given when justice so requires.” In the Eighth Circuit, the rule is a liberal one:
As explained by the Supreme Court, absent a good reason for denial — such as undue delay, bad faith or dilatory motive, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the non-moving party, or futility of amendment — leave to amend should be granted. Foman v. Davis, 371 U.S. 178, 182 [83 S.Ct. 227, 230, 9 L.Ed.2d 222] ... (1962). Amendment of pleadings is to be liberally allowed, but the trial court’s decision whether to allow amendment will be reviewed only for an abuse of discretion.
Thompson-El v. Jones, 876 F.2d 66, 67 (8th Cir.1989). In the instant case, the motion to amend was filed early in the litigation, only five days after the answer was filed. Most importantly, the proposed amended complaint asserts no new facts, but only seeks to assert an additional fraud theory. Accordingly, the defendant was on notice of all factual grounds upon which the complaint was based. There is no prejudice to the defendant by the amendment.
The assertion by the plaintiff, however, that “Amendment of the Complaint will have no prejudicial effect on the Defendant because he has had prior notice of the misconduct stated in the original Complaint and is fully aware that Modicon is seeking an exception to discharge based upon provision of Section 523 of the Bankruptcy Code,” must be addressed. The lack of prejudice does not stem from the fact that the defendant had notice that section 523 was pleaded, but stems from the factual allegations specifically pleaded and thereby noticed to the defendant. Section 523 contains numerous grounds for nondischarge-ability. The fact that the factual allegations of this particular complaint supports several of these grounds does not necessarily mean that pleading one paragraph of section 523 places a defendant on notice of any other grounds under section 523.
The fact that the amendment should be permitted under Rule 7015, however, does not dispose of the issue in this particular case. The defendant asserts that in any event, the complaint itself is untimely and must be stricken because plaintiff obtained only an extension of time to object to discharge, not an extension of time to object to dischargeability of a debt. First, it appears that is an affirmative defense which should have been pleaded in the answer or asserted in a motion to dismiss. The failure to do so, or to seek to amend the answer to assert such a defense, in effect waives that defense.
The Court finds that there is confusion by both parties as to the distinction between discharge and dischargeability. This is demonstrated by the defendant’s motion to strike in which he asserts that the amendment “raises a new matter and theory for objecting to discharge.” Given the confusion of both parties, this Court deems *439it appropriate to permit the complaint objecting to dischargeability to stand.
ORDERED as follows:
1. The Motion to Dismiss for Failure to Plead Fraud with Particularity, filed on December 4, 1992, is be DENIED.
2. Shelnutt’s Motion for Summary Judgment, filed on December 4, 1992, is DENIED without prejudice to refiling at a more appropriate juncture in the adversary proceeding.
3. The Motion for Leave to Amend Complaint, filed December 9, 1992, is GRANTED. The plaintiff shall file and serve an amended complaint within ten (10) days of entry of this Order. The defendant shall file and serve its answer to the amended complaint within ten (10) days of service of the amended complaint.
4. The Motion to Strike Complaint for Lack of Timeliness, filed December 11, 1992, is DENIED.
IT IS SO ORDERED. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491605/ | ORDER DENYING MOTION FOR STAY PENDING APPEAL
MARY D. SCOTT, Bankruptcy Judge.
THIS CAUSE is before the Court upon the debtor’s “Motion for Stay of Proceeding in Bankruptcy Court Pending Resolution of Appeal and Extension of Time to Amend Disclosure Statement” filed on February 2, 1993. The debtor requests two forms of relief in this motion: (1) a stay of the bankruptcy proceedings pending appeal of the contested matter in which the creditor PAS, Inc. sought relief from stay; and (2) an extension of time to file an amended disclosure statement.
The Court entered an Order approving the disclosure statement on January 13, 1993. Since there is no date by which the debtor is required to submit an amended disclosure statement, a request for an extension to do so is unnecessary.1 Accordingly, the request for an extension of time must be denied as failing to present a justi-ciable issue.
The request for a stay of the proceeding must also be denied because the debtor has failed to present any grounds for which the proceeding should be stayed. A brief history of this case and preceding litigation is as follows. On September 6, 1989, PAS, Inc. filed a complaint against PRN Pharmacy Systems, Inc., its principals, and other individuals, in the U.S. District Court for *443the Eastern District of Arkansas. The Complaint sounded in copyright infringement, requesting both monetary and in-junctive relief against the defendants. The case was tried to a jury for over one week in April of 1992, after which the jury returned a verdict in favor of the plaintiff, PAS, Inc., finding that PAS, Inc. was the owner of a valid copyright of the subject computer software. The district court entered judgment on June 5, 1992, for damages. The district court also found that the request for permanent injunction was meritorious and would be issued. On June 26, 1992, prior to entry of a judgment for injunctive relief against it, PRN Pharmacy Systems, Inc. filed its Chapter 11 Petition in bankruptcy, precluding further action by the district court. 11 U.S.C. § 362. The debtor, however, continued to file documents with the district court, including a notice of appeal and a requesting that the proceedings be stayed. The request for stay was denied by the district court. The plaintiff, however, was unable to continue litigation due to the automatic stay in bankruptcy.
PAS, Inc., on October 22, 1992, filed a motion for relief from stay in the Bankruptcy Court, requesting that it be permitted to continue the pending district court litigation, which litigation had been concluded but for entry of a judgment for injunctive relief. The debtor responded, asserting that a copyright injunction against it would be unfair, and that it had entered into a settlement agreement with the receiver appointed for PAS, Inc.2 The Court issued its pretrial Order directing the parties to submit pretrial filings and setting trial for January 13, 1993.
On the eve of trial, a flurry of discovery motions were filed, including a motion by PAS, Inc. to quash a subpoena, filed on January 4, 1993. The motion alleged that on December 30, 1992, the debtor served the employer PAS, Inc. with a subpoena directed to the president of PAS, Inc. The debtor was given an opportunity to respond to the motion, and did so on January 11, 1993. The Court issued its Order quashing the subpoena on January 13, 1993. The matter was called for trial and proceeded on the issue of whether there existed cause for relief from stay. The crux of debtor’s defense was stated in its opening line of its opening statement:
Your Honor, we’re going to put on testimony simply to the fact that the proceedings has been a conspiracy to limit competition. And—
Transcript of Proceedings 6 (Jan. 13, 1993). Throughout the trial, debtor attempted to introduce evidence regarding the merits of the proceedings in district court. While the Court admitted some of the information as “background material,” the Court refused to permit debtor to retry the district court case. At the conclusion of the hearing the Court made lengthy findings and concluded that the pending bankruptcy was nothing more than an attempt to circumvent the district court’s valid judgment and gain even more time to unlawfully use PAS, Inc.’s property. Relief from stay was granted.
The debtor appealed two Orders of the Bankruptcy Court, articulating the following issues:
The findings of the Bankruptcy Court that a subpoena for deposition issued to a company to produce it’s president when the name of that officer is not known is not the correct procedure is erroneous.3 The limiting of issues to defeat Movant’s Motion for Relief from Stay was erroneous.
*444The debtor now seeks a stay of the bankruptcy proceeding pending appeal of the Court’s Orders relating to these issues.
The bankruptcy court has discretion to grant a stay on such terms as are just, pursuant to Rule 8005, Federal Rules of Bankruptcy Procedure. However, the moving party must make a particular showing in order for a stay to be imposed. Specifically, the movant must demonstrate:
(1) he is likely to prevail on the merits of the appeal;
(2) he will suffer irreparable injury if the stay is denied;
(3) the other party will not be substantially harmed by the stay; and
(4) the public interest will be served by the granting of the stay.
Community Federal Savings and Loan Assoc. v. Stratford Hotel Company (In re Stratford Hotel Company), 120 B.R. 515, 516-17 (E.D.Mo.1990) (affirming bankruptcy court’s determination that stay pending appeal of order lifting stay was not merited). The factual determinations of the bankruptcy court will be upheld unless they are clearly erroneous. In re Apex Oil Company, 884 F.2d 343 (8th Cir.1989).
In the instant case, the debtor has failed to even assert grounds for a stay of the proceeding; it neither raises nor addresses any of the four elements to be shown. Debtor’s motion states only that, “Federal Rule of Bankruptcy Procedure 8005 authorizes this Court to stay, on such terms and conditions as are proper, this contested matter pending disposition of the appeal.” The failure to even address the elements for the relief requested is sufficient reason to deny the motion for stay.
Even were the issues addressed, no grounds exist for a stay of the proceeding since there is little likelihood that debtor will prevail on the merits. For example, since the debtor failed to serve the individual it wished to depose with a subpoena, there was no duty on the part of that individual to appear at the deposition. Further, debtor failed to comply with the express requirements of the discovery rules regarding depositions in Part YII of the Federal Rules of Bankruptcy Procedure such that there was no duty of the corporation to produce an employee to testify. Accordingly, the first issue raised on appeal is without merit such that stay is inappropriate.
Secondly, as to the evidentiary issue, there are no legal or equitable grounds which would permit the debtor to retry a matter which has already been tried before a court of competent jurisdiction. Indeed, law and equity require this Court to give effect to the previous proceedings. See generally Lane v. Peterson, 899 F.2d 737 (8th Cir.1990) (discussion of res judicata and collateral estoppel principals). It is noteworthy that the district court previously denied a motion by the debtor to stay the district court proceedings. It thus appears that this Court is not the first to find PRN Pharmacy Inc.’s motions for stay to be without merit.
Since the debtor has failed to even address, much less carry, its burden regarding any of the required elements for relief, the motion must be denied. It is
ORDERED that the debtor’s Motion for Stay of Proceeding in Bankruptcy Court Pending Resolution of Appeal and Extension of Time to Amend Disclosure Statement, filed on February 2, 1993, is DENIED.
IT IS SO ORDERED.
. The confirmation hearing is set for February 9, 1993. If the debtor believes that its disclosure statement must be amended, a proper request to continue the confirmation hearing may be appropriate.
. The settlement referred to receivership proceedings long pending in the Arkansas Chancery Court. However, since the Chancery Court did not approve the settlement, no binding agreement existed. Further, the receiver indicated that it did not have the authority, under Arkansas law, to enter into the particular settlement the debtor claims existed.
. Apparently, the debtor conducted no discovery to ascertain the names of persons it may wish to depose. The Court records disclose, however, that the debtor was aware of the name of the president of PAS, Inc. Twelve days prior to serving the subpoena, the debtor filed its witness list, naming Mr. Rex Akers, as president of PAS, Inc., as a witness to be called at trial. Witness and Exhibit Lists at 3 (filed Dec. 18, 1992). | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491606/ | ORDER ON SECOND MOTION FOR SUMMARY JUDGMENT
ALEXANDER L. PASKAY, Chief Judge.
This is a Chapter 11 case, and the matter under consideration is a Motion for Summary Judgment filed in the above-captioned adversary proceeding instituted by Richard B. Flammer (Debtor), against his former wife, Courtney Ann Jay, (Defendant-Coun-terclaimant). The claim asserted by the Plaintiff is based upon 11 U.S.C. § 523(a)(5) and seeks a determination that certain provisions of the Final Judgment of Dissolution of marriage dealing with transfer of *475real estate are dischargeable as being in the nature of a property settlement. The Defendant in her Counterclaim seeks a determination that title to the properties in question passed to her as a matter of law when the Judgment of Dissolution was recorded prior to the filing of the petition in bankruptcy. It is the contention of both parties that there is no genuine issue of material fact and, therefore, this adversary proceeding may be resolved as a matter of law.
The Court has considered the Motions, together with the record, and finds the undisputed facts relevant to a resolution of this matter to be as follows:
On March 24, 1992, the Circuit Court for Pinellas County, Florida, entered an Amended Final Judgment of Dissolution of Marriage. One provision of the judgment is particularly relevant to the present controversy. The Judgment awarded the wife four parcels of property, described in Paragraph 5a as follows:
1) the marital home located at 1016 Woodruff Avenue, Clearwater, Florida;
2) duplex located at 1148 LaSalle Street, Clearwater, Florida;
3) house located at 11690 129th Avenue North, Largo, Florida; and
4) vacant lot located in Oldsmar, Florida.
Paragraph 6 of the Judgment directed Mr. Flammer to “effectuate the appropriate transfers by executing all documents necessary to transfer title on each parcel of real property awarded to” his former wife. Furthermore, the Judgment required that the title transfers be carried out within thirty days from the date of the Judgment. The Judgment entered by the Circuit Court was recorded on March 24, 1992.
On April 24, 1992, thirty-one days after the Judgment was entered and recorded, the Debtor filed his voluntary petition in bankruptcy. On May 21, 1992, this adversary proceeding was commenced upon the Debtor’s filing of a Complaint to Determine Dischargeability under 11 U.S.C. § 523(a)(5). On June 19, 1992, the Defendant filed her answer and on August 21, 1992, she filed a Motion for Summary Judgment. This initial motion was ultimately denied by the Court without prejudice with leave to file a counterclaim for declaratory relief. The counterclaim, filed on October 15, 1992, was accompanied with a second Motion for Summary Judgment. It is this motion that is now under consideration.
Based on these uncontroverted facts, it is the Defendant’s contention that the entry of the final judgment by the Circuit Court had the effect of transferring legal or, in the alternative, equitable title to the previously mentioned real properties to her by virtue of Florida Statutes § 61.075(4) which provides:
“The judgment distributing assets shall have the effect of a duly executed instrument of conveyance, transfer, release, or acquisition which is recorded in the county where the property is located when the judgment, or a certified copy of the judgment, is recorded in the official records of the county in which the property is located.” F.S. §§ 61.075(4).
As an alternative, the Defendant contends that Florida Rule of Civil Procedure 1.570 mandates that title to the four properties is vested in her. Specifically, the Rule states at subsection (d) as follows:
“If the judgment is for a conveyance, transfer, release or acquittance of real or personal property, the judgment shall have the effect of a duly executed conveyance, transfer, release or acquittance that is recorded in the county where the judgment is recorded.”
The Debtor does not disagree with the relevance of the Statute relied on by the Defendant, but contends that because the Final Judgment of Dissolution of Marriage fails to supply an appropriate legal description to the real properties awarded, the judgment may not act as a duly executed conveyance. Thus, the issue presented is whether a legal description is required to effect a transfer of real property through the action of Florida Statutes § 61.075(4) or through the action of Rule 1.570(d), Florida Rules of Civil Procedure.
In making his assertion, the Debtor relies primarily on the case of Williams v. *476Shuler, 551 So.2d 585 (Fla. 1st DCA1989). In Williams, the parties obtained a divorce decree which incorporated a Stipulation that the parties entered into. The Stipulation contained a provision that each party “shall be entitled to one-half of the remaining property in Gadsen County, or one half of the proceeds from the sale of the same in the event they can not reach an equitable division.” The court held that, within the context of Rule 1.570, Florida Rules of Civil Procedure, the provision was incapable of vesting title because it did not contain or make reference to a legal description of the property and interests involved. (Note that F.S. § 61.075 went into effect on October 1, 1988, well after the filing of the Williams decree.) The Debtor asserts that this rule would be appropriately applied in the instant situation because inadequate descriptions of real property do not provide notice as to what property is being conveyed.
A better rule is found within Paterson v. Brafman, 530 So.2d 499 (Fla. 3rd DCA1988). In Paterson, a former wife executed a mortgage on property that she was required to deed to her former husband as required by the final judgment of dissolution. The judgment described the property by street address and was recorded prior to the mortgage. The court held that the equitable title effectively transferred by a duly recorded final judgment of dissolution had priority over the subsequent interest holder. Therefore, upon recording a final judgment of dissolution, an equitable transfer of title occurs. Under Paterson, this equitable title has priority over subsequent interest holders who would otherwise take from the holder of legal title.
The appellee in Paterson, as in this proceeding, argued that a legal description is required for valid transfer. The court dismissed this argument, stating that property described by street address rather than legal description provides sufficient constructive notice by way of the recording statute. See Baker v. Baker, 271 So.2d 796 (Fla. 3rd DCA1973), cert. denied, 278 So.2d 285 (Fla.1973). In the instant situation, it necessarily follows as a matter of law that equitable title to the three properties described by street address and awarded to the wife passed to her upon the recording of the Amended Final Judgment of Dissolution of Marriage.
However, the property identified as the “vacant lot located in Oldsmar” is clearly insufficiently described and the decree does not operate as an effective conveyance. The record presented for summary judgment supplies insufficient facts to determine its disposition as a matter of law. There remains a genuine issue as to the specific piece of property referred to as the “vacant lot”. Facts not in evidence are required to clarify the ambiguity. See Bajranji v. Magnethel Enterprises, Inc., 589 So.2d 416 (Fla. 5th DCA1991).
Accordingly, it is
ORDERED, ADJUDGED AND DECREED that the Defendant’s Motion for Summary Judgment be, and the same is hereby, granted with respect to the disputed properties described in the Amended Final Judgment of Dissolution of Marriage by street address, and denied with respect to the disputed property described in the Amended Final Judgment of Dissolution of Marriage as the “vacant lot”.
DONE AND ORDERED. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491607/ | *752ORDER
WILLIAM A. HILL, Bankruptcy Judge.
The matter before the court is a motion filed on December 21, 1992, by the Debtor, Classic Roadsters, Ltd., acting as debtor in possession, seeking authority to employ a law firm to represent it as local counsel in its Chapter 11 proceedings. Objections have been raised by the U.S. Trustee, Creditor’s Committee, and Gary Rutherford (Rutherford), the major secured creditor of the bankruptcy estate. The U.S. Trustee also requests a hearing on the matter. After reviewing the issues raised in the pleadings, the court is satisfied that the issue may be resolved without a hearing. Accordingly, the U.S. Trustee’s request is denied.
The Chapter 11 case commenced September 22, 1992. On December 21, 1992, Classic Roadsters filed its Application to Employ Attorneys requesting the law firm of Solberg, Stewart, Boulger, Miller & Johnson (Solberg law firm). The employment application states that the Solberg law firm is owed attorney fees for pre-petition and post-petition nonbankruptcy work on behalf of the Debtor in the amounts of $10,918.23 and $5,246.23 respectively. The application further notes that John Boulger (Boulger), a partner in the Solberg law firm, acts as the escrow agent for the Stock Purchase Agreement between Rutherford and the Debtor. The Solberg law firm continues to represent Rutherford in matters unrelated to the bankruptcy case.
The applicable statutes governing the issues at hand are 11 U.S.C. § 327(a) and 11 U.S.C. § 101(14). Section 327(a) provides:
... [T]he Trustee [or debtor in possession], with the court’s approval, may employ one or more attorneys ... [who] do not hold or represent an interest adverse to the estate, and [who] are disinterested persons....
Section 101(14) states:
“disinterested person” means person who:
(A) is not a creditor ...
******
(E) does not have an interest materially adverse to the interest of the estate or any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the debtor ..., or for any other reasons[.]
Hence, because of the attorney fees owing to the Solberg law firm, the law firm is, strictly speaking, a creditor of the estate. Despite the unambiguous language of section 101(14), some courts take the position that attorney’s claim for pre-bankruptcy fees for work not related to the bankruptcy is not sufficient to disqualifying the attorney from representing the debtor. See, e.g., In re Microwave Products of America, Inc., 94 B.R. 971 (Bankr.W.D.Tenn.1989); In re Viking Ranches, Inc., 89 B.R. 113 (Bankr.C.D.Cal.1988). However, our own circuit has taken an opposite interpretation of section 101(14). In re Pierce, 809 F.2d 1356 (8th Cir.1987); see also, In re Watervliet Paper Co., Inc., 111 B.R. 131 (W.D.Mich.1989); In re Flying E. Ranch Co., 81 B.R. 633 (Bankr.D.Colo.1988); In re Anver Corp., 44 B.R. 615 (Bankr.D.Mass.1984). In the Pierce case, an attorney, a pre-petition creditor with a security interest in the debtor’s assets for payment of fees for pre-petition work, urged the court to not apply section 101(14) strictly.1 He argued that the test for disinterestedness should be whether the attorney possesses an interest that would impair his independent judgment and impartiality, and not whether he is a creditor. Although the court recognized the attorney’s argument to have merit, it nevertheless rejected the argument holding that “the intent of the statute is clear, if a professional is a creditor, then that person is not disinterested.” Id. 809 F.2d at 1362. Ergo, by virtue of the attorney fees incurred for work performed on behalf of the Debtor, the Sol-berg law firm is a creditor under section 101(14), and thereby is precluded from representing the Debtor.
Moreover, the Solberg law firm is not a disinterested person within the parameters of section 327(a) because it holds *753an interest adverse to the estate. Boulger, a partner in the Solberg law firm, is the escrow agent in a transaction between his former client, Rutherford, and the Debtor. As the escrow agent, Boulger owes a fiduciary duty to both the Debtor and Rutherford. In that capacity, Boulger holds an adverse interest to the interest of the estate and cannot be considered a disinterested individual.
Furthermore, section 327(c) of the Bankruptcy Code states that a professional, who has been employed by or represented a creditor, may be disqualified from employment by the trustee or debtor in possession if, upon objection by a creditor or the U.S. Trustee, the court finds that the professional’s employment presents a conflict of interest. The nature of the work associated with escrow agents necessitates that Boulger remain neutral to both parties. However, if Boulger acts as attorney in the bankruptcy case, it would be difficult, if not impossible, for him to represent the estate with the undivided allegiance that is required of an advocate to the estate. See, In re W.F. Dev. Corp., 905 F.2d 883 (5th Cir.1990) (conflict from representations of both limited and general partners in bankruptcy will always exist warranting disqualification of attorney); In re Georgetown of Kettering, Ltd., 750 F.2d 536 (6th Cir.1984) (attorney will be denied compensation where he represented inherently conflicting interests of unsecured creditor and debtor in possession). Boulger’s dual representation as an escrow agent will inherently create conflicting interests between the Debtor and Rutherford. This conflict has been raised by the U.S. Trustee and the Creditor’s Committee pursuant to section 327(c), and accordingly, this court concludes that the Solberg law firm is disqualified from representing the Debtor.
Accordingly, for the foregoing reasons, Classic Roadster Ltd.’s application for the approval of the Solberg law firm as counsel is DENIED.
SO ORDERED.
. Section 101(14) was designated as section 101(13) at the time Pierce was decided. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491610/ | ORDER ON LETTER FROM JOHN C. VIVIAN DATED DECEMBER 3, 1992 AND MARKED “IMPORTANT” AND DETERMINING ROGUE COMPUTER IN CIVIL CONTEMPT
A. JAY CRISTOL, Bankruptcy Judge.
On December 7, 1992, the court received a letter from John C. Vivian referring to the Bankruptcy Case of John Coffey Vivian and Margaret Vivian, as above numbered. The court will treat the letter as a motion to determine the NationsBank computer in contempt of this court.
Following the entry of discharge in bankruptcy to John Coffey Vivian and Margaret Vivian, NationsBank sent them a dunning letter on a debt which had been discharged. The court set the matter on an order to show cause and the court’s order was taken quite seriously by NationsBank. The bank went to the expense of flying a high executive from North Carolina to Miami to appear and testify that the letter was sent in error and the court was satisfied that no intentional violation of the injunction had occurred. The NationsBank computer had generated the notice and NationsBank wrote a letter of apology to the Vivians and proceeded to appropriately chastise their computer and directed it not to send anymore notices to the Vivians.
Only a month went by and the Vivians received a computer generated document from the bank which contained the words, “Please make checks payable to Nations-Bank and remit with top part of this statement to”. Never mind that the document also showed no balance due and no payment due date, the Vivians were annoyed. It appearing to the court that this was not an intentional act of any human at Nations-Bank but rather the rampage of a rogue computer, the court entered an order on December 3, 1992, docketed December 4, *8331992 (C.P. No. 18) suggesting that counsel for the bank communicate with the bank and the Vivians and try and make clear that this was not an intentional violation and it would not happen again.
Lo and behold, another month rolled around and that rogue computer did it again. The account statement showing no balance due and no date to make payment was mailed on NationsBank’s red, white and blue stationery (also containing some shades of gray and black print) to Mr. and Mrs. Vivian.
It is this final document that has truly established, beyond any reasonable doubt, that Mr. and Mrs. Vivian have no sense of humor and no gratitude whatsoever for the court’s prior efforts on their behalf. They have, in their letter of December 3, queried “May I ask a question? Why can’t you or your Court get these continuing and very annoying letters STOPPED.” (The question mark was omitted by the Vivians, not by the court but the court understood what they meant.) The Vivians were so annoyed that they went on to threaten that perhaps they should write to their family friend, a very well known, renowned and respected federal judge, about this serious matter. They then went on to say “May I hear from you or your secretary by return mail?”. It is apparent that the Vivians are mad as you know what and they are not going to take it anymore. Likewise, this court is mad as you know what and is not going to take it anymore. Accordingly, and pursuant to Federal Rule of Bankruptcy Procedure 9020, the court determines the Nations-Bank computer to be in civil contempt of this court. Upon consideration, it is
ORDERED that the NationsBank computer, having been determined in civil contempt, is fined 50 megabytes of hard drive memory and 10 megabytes random access memory. The computer may purge itself of this contempt by ceasing the production and mailing of documents to Mr. and Mrs. Vivian.
DONE and ORDERED. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491613/ | MEMORANDUM OPINION AND ORDER
RICHARD L. SPEER, Bankruptcy Judge.
This cause comes before the Court upon Teresa Lynn Rose aka Sweringen’s (hereafter “Creditor”) Motion to Terminate Purchase Option. A Hearing was convened and the parties were afforded the opportunity to present evidence and arguments they wished the Court to consider in reaching its decision. The Court has reviewed the entire record in this case. Based upon that review, and for the following reasons, this Court finds that this ease is a non-core unrelated proceeding and consequently this Court is without jurisdiction to hear or decide this matter. Creditor’s Motion to Terminate Purchase Option should therefore be Dismissed.
FACTS
Debtor, Alfred Rose, divorced Creditor on June 1, 1981 in Marion County, Ohio. The parties entered into an agreement whereby Debtor was awarded all right, title and interest in the marital real estate located at 475 South Broadway, New Bloomington, Ohio. Debtor agreed to assume the mortgage and pay Creditor One Thousand and 00/100 Dollars ($1,000.00) for her interest in the real estate. Upon completion of all • payments, Creditor was ordered to quitclaim her interest in the real estate to Debtor.
Pursuant to the Decree of Divorce, Debt- or paid Creditor the sum of Thirty and 00/100 Dollars ($30.00). Apparently, Creditor filed a cause of action seeking to partition the real estate. The trial court denied Creditor’s request and Creditor sought appellate review. The Third District Court of Appeals held that the partition action is the proper mechanism to enforce Creditor’s rights in the property.
The Debtors in the instant case filed their petition for relief pursuant to Chapter 7 of the Bankruptcy Code on May 16, 1988. Alfred Rose’s counsel represented that pri- or to discharge, Debtor did reaffirm the mortgage on the New Bloomington, Ohio real estate. Creditor’s claim for Nine Hundred Seventy and 00/100 Dollars ($970.00) was listed on the attendant schedules as an unsecured claim, without priority. The First Meeting of Creditors was scheduled for July 8, 1988 and Debtors were released of all dischargeable debts on December 19, 1988. Notice of Discharge was forwarded to Creditor on December 23, 1988 and the estate was closed on January 5, 1989. John Hunter, Trustee, administered the estate and was relieved of his duties on January 8, 1993.
Creditor filed a Motion to Reopen the Case on September 14, 1992. The Motion was granted after Hearing on October 16, 1992. Creditor filed a Motion to Terminate Purchase Option on December 27, 1992 and this matter was scheduled to be heard on January 25, 1993. Both counsel appeared and presented oral argument.
LAW
28 U.S.C. § 157 reads as follows:
§ 157. Procedures.
(a) Each district court may provide that any or all cases under title 11 and *130any or all proceedings arising under title 11 or arising in or related to a case under title 11 shall be referred to the bankruptcy judges for the district.
(b)(1) Bankruptcy judges may hear and determine all cases under title 11 and all core proceedings arising under title 11, or arising in a case under title 11, referred under subsection (a) of this section, and may enter appropriate orders and judgments, subject to review under section 158 of this title.
DISCUSSION
Creditor’s rationale for initiating this cause of action is to recover damages incurred as a result of Debtor’s failure to disclose the true nature of his indebtedness. As a result of Debtor’s misrepresentations, Debtor is personally relieved of all liability to Creditor relating to the subject real estate. Creditor argues that equity demands that Debtor's option to purchase the real property be terminated since Creditor has been deprived of payment from Debtor for her interest in the real estate. Creditor admits that a forced sale of the real estate will serve to compensate her for her loss; however, it will provide little, if any, benefit to the estate.
Debtor argues that although Creditor is prohibited from pursuing Debtor personally on the indebtedness, she may pursue her cause of action in rem. Debtor also argues that Creditor has remedies under Rule 70 of the Federal Rules of Civil Procedure and Rules 4004 and 4007 of the Bankruptcy Rules.
Jurisdiction must be conferred upon a bankruptcy court by statute. Pursuant to 28 U.S.C. § 157, there exist three categories of proceedings in bankruptcy: core proceedings; non-core and related proceedings; and non-core and unrelated proceedings. In re Edwards, 100 B.R. 973 (Bankr.E.D.Tenn.1989). Bankruptcy courts are empowered to enter final judgments in core proceedings. If the proceeding is designated as a non-core and related proceeding, the bankruptcy court may not issue a final order absent the consent of the parties. 28 U.S.C. § 157(c). Instead, the bankruptcy court must submit proposed findings of fact and conclusions of law to the district court which may then issue a final judgment. The bankruptcy court lacks jurisdiction over any non-core and unrelated proceeding. 28 U.S.C. § 157(c).
Section 157 provides that bankruptcy judges may hear and determine all cases under Title 11 and all core proceedings arising in or related to Title 11 or arising in a case under Title 11, referred by district court. The burden to prove that an issue is a core proceeding rests on the party seeking the bankruptcy court to assert jurisdiction. In re Edwards, id., at 977. In the case at bar, Creditor’s claim does not invoke substantive rights provided under the Bankruptcy Code or proceedings which could arise only in the context of the bankruptcy proceedings. Accordingly, Creditor’s claims are not core in nature. This Court’s jurisdiction will be invoked only upon proof by Creditor that the issues raised in her Motion are related or unrelated to the bankruptcy case.
The usual test for determining whether an action is “related” to bankruptcy is whether the outcome could alter the debtor’s rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankrupt’s estate. Pacor, Inc., v. Higgins, 743 F.2d 984, at 994 (3d Cir.1984)). After examination of the evidence, this Court finds that Creditor has not met the burden of establishing that there is any impact upon the bankruptcy estate. Debtor reaffirmed the mortgage and the recovery by the Trustee would not affect the amount of property available to the estates’ creditors. Despite the common issues between the bankruptcy and divorce cases, this matter does not rise to the scope of a “related” case as defined in Pacor. Under this two pronged test, the instant case should be classified as a non-core and unrelated proceeding.
Although Creditor is foreclosed from seeking payment from Debtor personally, she is not without recourse. According to both counsel, the Third District Court of *131Appeals has decided that Creditor’s remedy for enforcement of the parties’ agreement is best suited for judicial partitioning under state law. The partition action will affect the Debtor’s rights to the subject real estate however, Creditor will obtain the relief requested in this matter. The partition action will have no impact upon the administration or handling of the bankruptcy case.
Creditor’s Motion to Terminate Purchase Option constitutes a non-core and unrelated proceeding. It neither arises under or relates to Title 11; nor can it be classified as a core proceeding. Since bankruptcy courts lack jurisdiction over non-core and unrelated proceedings, Creditor’s Motion to Terminate Purchase Option should be Dismissed.
In reaching the conclusion found herein, the Court has considered all of the evidence, exhibits and arguments of counsel, regardless of whether or not they are specifically referred to in this opinion.
Accordingly, it is
ORDERED that Creditor’s Motion to Terminate Purchase Option be, and hereby is, DISMISSED for lack of subject matter jurisdiction. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491614/ | ORDER DENYING MOTION FOR SANCTIONS
MARY D. SCOTT, Bankruptcy Judge.
THIS CAUSE is before the Court upon the debtor’s Motion for Sanctions filed on December 3, 1992. The Chapter 7 petition in bankruptcy was filed on September 2, 1992. The schedules were filed on September 17, 1992, in which the debtor claimed his marital residence as exempt under the homestead provisions of the Arkansas Constitution. At the first meeting of creditors, held on October 15, 1992, the debtor confirmed that he did not then reside at the marital property, nor did he reside there at the time of the filing of the petition. Indeed, a decree of divorce awarded the debt- or’s ex-spouse the right to live in the residence.
Based upon this information, the trustee filed an objection to the claim of homestead exemption, on November 4, 1992. Hearing on the matter is set for February 4, 1993. On December 3, 1992, the debtor filed a Motion for Sanctions, asserting that the trustee’s objection was without factual or legal basis. The trustee responded and each party has filed a brief in support of his position. This Court finds that there is a well founded basis for the objection to claim of exemption.
The debtor is correct in his statements of the basic precepts of Arkansas homestead law, that a divorce or absence from the residence does not necessarily deprive an individual of his homestead rights. In re Inmon, 137 B.R. 757 (Bankr.E.D.Ark.1992). However, the facts as presented by the debtor do not clearly support his reliance solely upon such precepts. For example, the cases, even those cited by debtor, indicate that divorce does not deprive one of homestead rights “if he still resides” on the property. Butt v. Walker, 177 Ark. 371, 6 S.W.2d 301 (1928).
The debtor appears to assert that his absence from the residence is merely temporary and that he has a right to reoccupy the homestead whenever his ex-spouse vacates the premises or remarries. This assertion is not strictly true since the decree provides for sale of the property when the ex-spouse marries or vacates the property. While each party “should have the right to purchase the equity of the other party prior to the sale of the property” it is not clear as a matter of fact or law that the debtor has an absolute right to return to the property if it is vacated. The factual situation appears to be novel because of the language in the decree: the ex-wife conceivably could live in the house for the duration of her lifetime, calling into question the “temporary” nature of debt- or’s absence from the home.
The speculative nature of the debtor’s rights and the question of intent, being particularly factual, raises sufficient question regarding the exemption that the trustee’s objection is not without basis in fact or law. This is particularly true in *217light of the nature of the trustee’s duties under the Bankruptcy Code which he must execute with, initially, limited information. The trustee, as “a third party outsider to the debtor’s transaction, is required to plead limited and, often, • second hand knowledge for the benefit of the estate and all its creditors. See Davidson v. Bank of New England (In re Hollis and Company), 86 B.R. 152, 156 (Bankr.E.D.Ark.1988). Further, the limited time frame in which the trustee must act with regard to exemptions, see Taylor v. Freeland & Kronz, — U.S. -, 112 S.Ct. 1644, 118 L.Ed.2d 280 (1992), may require the trustee to act without opportunity to fully develop all facts by discovery.
The trustee clearly has a position well grounded in fact and law to contest the claim of exemption. A hearing is necessary and appropriate to determine the contested matter such that a motion for sanctions is itself inappropriate. The nature of the trustee’s duties further supports the conclusions that such a motion for sanctions is without legal or factual basis.
ORDERED that the Motion for Sanctions filed by the debtor on December 3, 1992, is DENIED. This matter will proceed to hearing on the trustee’s objection to claim of exemptions.
IT IS SO ORDERED. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483853/ | NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
STATE OF ARIZONA, Respondent,
v.
JOSHUA ASTON, Petitioner.
No. 1 CA-CR 22-0143 PRPC
FILED 11-15-2022
Petition for Review from the Superior Court in Maricopa County
No. CR2004-006474-001
The Honorable Suzanne E. Cohen, Judge
REVIEW GRANTED; RELIEF DENIED
COUNSEL
Maricopa County Attorney’s Office, Phoenix
By Krista Wood
Counsel for Respondent
Joshua Aston, Eloy
Petitioner
STATE v. ASTON
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Maria Elena Cruz, Judge Angela K. Paton, and Judge Peter
B. Swann delivered the decision of the Court.
PER CURIAM:
¶1 Petitioner Joshua Aston seeks review of the superior court’s
order denying his petition for post-conviction relief. This is petitioner’s
fourth successive petition.
¶2 Absent an abuse of discretion or error of law, this court will
not disturb a superior court’s ruling on a petition for post-conviction relief.
State v. Gutierrez, 229 Ariz. 573, 577, ¶ 19 (2012). It is petitioner’s burden to
show that the superior court abused its discretion by denying the petition
for post-conviction relief. See State v. Poblete, 227 Ariz. 537, 538, ¶ 1 (App.
2011) (petitioner has burden of establishing abuse of discretion on review).
¶3 We have reviewed the record in this matter, the superior
court’s order denying the petition for post-conviction relief, and the petition
for review. We find that petitioner has not established an abuse of
discretion.
¶4 We grant review and deny relief.
AMY M. WOOD • Clerk of the Court
FILED: AA
2 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483855/ | Notice: This opinion is subject to formal revision before publication in the
Atlantic and Maryland Reporters. Users are requested to notify the Clerk of the
Court of any formal errors so that corrections may be made before the bound
volumes go to press.
DISTRICT OF COLUMBIA COURT OF APPEALS
No. 22-BG-670
IN RE CELIO YOUNG
DDN2021-D070
A Member of the Bar of the
District of Columbia Court of Appeals
Bar Registration No. 421672
BEFORE: Deahl and AliKhan, Associate Judges, and Washington, Senior Judge.
ORDER
(FILED— November 10, 2022)
On consideration of the opinion and certified copy of the order from the state
of Maryland disbarring respondent from the practice of law; this court’s September
2, 2022, order suspending respondent pending resolution of this matter and directing
him to show cause why reciprocal discipline should not be imposed; and the
statement of Disciplinary Counsel; and it appearing that respondent has not filed a
response or his D.C. Bar R. XI, § 14(g) affidavit, it is
ORDERED that Celio Young is hereby disbarred from the practice of law in
the District of Columbia. See In re Sibley, 990 A.2d 483, 487-88 (D.C. 2010)
(explaining that there is a rebuttable presumption in favor of imposition of identical
discipline and exceptions to this presumption should be rare); In re Fuller, 930 A.2d
194, 198 (D.C. 2007) (stating that a rebuttable presumption of identical reciprocal
discipline applies unless one of the exceptions is established). It is
FURTHER ORDERED that, for purposes of reinstatement, respondent’s
disbarment will not begin to run until such time as he files an affidavit that fully
complies with the requirements of D.C. Bar R. XI, § 14(g).
PER CURIAM | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483846/ | Case: 22-1072 Document: 42 Page: 1 Filed: 11/15/2022
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
STEPHEN DURR,
Petitioner
v.
MERIT SYSTEMS PROTECTION BOARD,
Respondent
UNITED STATES POSTAL SERVICE,
Intervenor
______________________
2022-1072
______________________
Petition for review of the Merit Systems Protection
Board in No. CH-4324-17-0324-M-1.
______________________
Decided: November 15, 2022
______________________
STEPHEN DURR, Chicago, IL, pro se.
JEFFREY GAUGER, Office of the General Counsel,
United States Merit Systems Protection Board, Washing-
ton, DC, for respondent. Also represented by TRISTAN L.
LEAVITT, KATHERINE MICHELLE SMITH.
KELLY A. KRYSTYNIAK, Commercial Litigation Branch,
Case: 22-1072 Document: 42 Page: 2 Filed: 11/15/2022
2 DURR v. MSPB
Civil Division, United States Department of Justice, Wash-
ington, DC, for intervenor. Also represented by BRIAN M.
BOYNTON, PATRICIA M. MCCARTHY, DOUGLAS K. MICKLE.
______________________
Before CHEN, CLEVENGER, and CUNNINGHAM, Circuit
Judges.
PER CURIAM.
Mr. Stephen Durr appeals a final decision of the Merit
Systems Protection Board (Board or MSPB) dismissing his
appeal alleging violations of the Uniformed Services Em-
ployment and Reemployment Rights Act of 1994
(USERRA) by his former employer, the United States
Postal Service (USPS). See Durr v. U.S. Postal Serv., No.
CH-4324-17-0324-M-1, 2021 WL 3287973 (M.S.P.B. July
30, 2021) (Board Decision) (SAppx. 1–19). 1 Because the
Board did not abuse its discretion in finding the doctrine of
laches applies, we affirm.
BACKGROUND
Mr. Durr was honorably discharged from the U.S.
Army in January 1993 and hired by USPS in March 1994.
SAppx. 2, 32. On January 16, 1996, USPS recorded Mr.
Durr as being absent without official leave (AWOL).
SAppx. 2, 27. Mr. Durr continued to fail to report to work,
and on April 24, 1996, USPS notified him of a proposal for
his removal. Id. The notice gave Mr. Durr fourteen days
to respond, but he did not respond. SAppx. 2, 28. On May
16, 1996, USPS sent Mr. Durr a letter noting his non-
1 “SAppx.” citations herein refer to the appendix
filed concurrently with Respondent’s brief. Additionally,
because the reported version of the Board’s decision is not
paginated, citations herein are to the version of the Board
decision included in the appendix—e.g., Board Decision at
1 can be found at SAppx. 1.
Case: 22-1072 Document: 42 Page: 3 Filed: 11/15/2022
DURR v. MSPB 3
response to the removal proposal and informing him that
he would be removed from service, effective June 1, 1996.
SAppx. 29–30. The letter also notified Mr. Durr of his right
to appeal “[the] decision . . . within 30 days from the effec-
tive date of [the] decision.” SAppx. 29. Mr. Durr did not
timely challenge his removal.
On May 14, 2015, nearly 20 years after his removal,
Mr. Durr filed an appeal to the Board challenging his 1996
AWOL charge and his subsequent removal. SAppx. 2. An
administrative judge dismissed that appeal, the Board af-
firmed, and we dismissed Mr. Durr’s appeal of the Board’s
affirmance for failure to prosecute. Durr v. Merit Sys. Prot.
Bd., No. 2016-1700 (Fed. Cir. May 5, 2016).
Mr. Durr subsequently filed another appeal to the
Board on April 10, 2017 requesting remedial action under
USERRA. SAppx. 4. The administrative judge dismissed
for lack of jurisdiction, which the Board made final. SAppx.
34. Mr. Durr subsequently appealed to this court, and we
reversed the dismissal on the basis that Mr. Durr “raised
allegations sufficient to establish the MSPB’s jurisdiction
over his appeal under USERRA” and remanded the case
back to the Board. Durr v. Merit Sys. Prot. Bd., 844 F.
App’x 329, 331–32 (Fed. Cir. 2021).
On remand, USPS moved for dismissal based on the
doctrine of laches. SAppx. 44–46. USPS contended Mr.
Durr waited over twenty years to bring his USERRA claim
and that he did not provide any explanation for the delay.
SAppx. 44–45. USPS further asserted that the employees
who had personal knowledge regarding Mr. Durr’s removal
were either retired or deceased. SAppx. 45. USPS also
submitted a declaration by Tim Markland, Manager of La-
bor Relations for the Central Illinois District of USPS, ex-
plaining that the agency attempted, but was unable, to
locate electronic or hardcopy records related to Mr. Durr’s
removal. SAppx. 45, 47–51. Mr. Markland’s declaration
explained he was unsurprised with the lack of
Case: 22-1072 Document: 42 Page: 4 Filed: 11/15/2022
4 DURR v. MSPB
documentation because of a USPS policy stating retention
of documents relating to disciplinary or adverse actions
may not exceed 10 years beyond the employee’s separation
date. SAppx. 50 ¶ 9. USPS also averred it faced excessive
back pay liability. SAppx. 46.
The administrative judge issued a show cause order
asking why the appeal should not be dismissed based on
the laches doctrine. SAppx. 56–58. Mr. Durr responded
that USPS’s inability to locate the documents related to his
removal was due to inadequate recordkeeping. SAppx. 60.
Mr. Durr further averred that he did not intentionally de-
lay filing his appeal and that any delay was caused by men-
tal incapacitation. SAppx. 64. Mr. Durr also contended
that he did not discover he was wrongfully removed until
May 2015. Id.
The administrative judge dismissed Mr. Durr’s
USERRA claim as barred by laches. Board Decision at 1–
12. The administrative judge found Mr. Durr’s twenty-one
year delay in bringing his USERRA claim unreasonable
and prejudicial to USPS’s ability to respond. Id. at 11–12.
While the administrative judge acknowledged Mr. Durr’s
medical diagnoses for various mental disorders, the judge
found Mr. Durr was competent enough to stand trial on
multiple occasions. Id. at 10–11. The administrative judge
also found the medical evidence (1) showed that Mr. Durr
could control his conditions through use of medication but
that he refused medication on occasion and (2) did not show
sufficient severity and duration of a mental disorder while
Mr. Durr was taking medication. Id. at 9–11. The admin-
istrative judge’s decision became the Board’s final decision
when Mr. Durr did not petition for Board review within 35
days. See 5 C.F.R. § 1201.113; Board Decision at 12–13.
Mr. Durr timely appealed to this court. We have juris-
diction pursuant to 28 U.S.C. § 1295(a)(9).
DISCUSSION
Case: 22-1072 Document: 42 Page: 5 Filed: 11/15/2022
DURR v. MSPB 5
A party claiming a laches defense must show “unrea-
sonable delay by the petitioner, and prejudice to the re-
spondent because of the delay.” Hoover v. Dep’t of Navy,
957 F.2d 861, 863 (Fed. Cir. 1992). We do not set aside a
Board decision unless it is “(1) arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with
law; (2) obtained without procedures required by law, rule,
or regulation having been followed; or (3) unsupported by
substantial evidence[.]” 5 U.S.C. § 7703(c); see also Bridge-
stone/Firestone Rsch., Inc. v. Auto. Club de l’Ouest de la
France, 245 F.3d 1359, 1361 (Fed. Cir. 2001).
Mr. Durr’s arguments do not persuade us that the
Board abused its discretion in dismissing Mr. Durr’s ap-
peal. Substantial evidence supports the Board’s finding
that Mr. Durr’s delay in bringing his USERRA claim was
both unreasonable and prejudicial. USPS notified Mr.
Durr of his removal and his right to appeal to the Board in
1996, yet he waited over twenty years after his removal to
bring his USERRA claim to the Board. SAppx. 6. Mr.
Durr’s period of delay is considerably longer than in Sleevi,
where we affirmed the Board’s dismissal of an USERRA
appeal based on the doctrine of laches because petitioner
delayed thirteen years to file his claim. Sleevi v. Merit Sys.
Prot. Bd., No. 2021-1447, 2021 WL 2879045, at *1 (Fed.
Cir. July 9, 2021). Moreover, Mr. Durr does not allege the
Board incorrectly decided or failed to account for any facts,
applied the wrong law, or failed to consider important
grounds. See Pet. Informal Br. 2.
To the extent that Mr. Durr argues his delay was rea-
sonable in light of his mental incapacitation, see Pet. Reply
Br. ¶¶ 5–6, substantial evidence supports the Board’s find-
ing that Mr. Durr’s mental conditions were not of such se-
verity and duration to cause Mr. Durr’s twenty-one-year
delay in bringing his USERRA claim to be reasonable. Spe-
cifically, the Board relied on medical records showing Mr.
Durr’s mental conditions were controllable, such that he
was competent to stand trial on various occasions during
Case: 22-1072 Document: 42 Page: 6 Filed: 11/15/2022
6 DURR v. MSPB
the delay period, and that he would refuse medication. See
Board Decision at 9–11. We do not discern any abuse of
discretion in the Board’s reasoning, which is supported by
substantial evidence.
We also find substantial evidence supports the Board’s
determination that Mr. Durr’s unreasonable delay preju-
diced the USPS. Because of the long period between Mr.
Durr’s removal and his USERRA claim, documentation
pertaining to Mr. Durr’s removal no longer exists. SAppx.
7–8. Moreover, relevant personnel with knowledge of Mr.
Durr’s removal have retired or passed away. SAppx. 8–9.
Mr. Durr makes no arguments to the contrary.
CONCLUSION
We have considered Mr. Durr’s remaining arguments
and find them unpersuasive. For the foregoing reasons, we
affirm the Board’s dismissal of Mr. Durr’s appeal based on
the doctrine of laches.
AFFIRMED
COSTS
No costs. | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483842/ | United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
No. 21-3002 September Term, 2022
FILED ON: NOVEMBER 15, 2022
UNITED STATES OF AMERICA,
APPELLEE
v.
AURELIO CANO-FLORES, ALSO KNOWN AS YANKEE, ALSO KNOWN AS YEYO,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 1:08-cr-00057-16)
Before: KATSAS, Circuit Judge, and RANDOLPH and ROGERS, Senior Circuit Judges
JUDGMENT
This case was considered on the record from the United States District Court for the District
of Columbia and the briefs and arguments of the parties. The Court has accorded the issues full
consideration and has determined that they do not warrant a published opinion. See D.C. CIR. R.
36(d). It is
ORDERED and ADJUDGED that the judgment of the District Court be affirmed for the
reasons stated in its Order of January 5, 2021, Declining to Adopt Report and Recommendation
and Denying Motion to Vacate Sentence pursuant to 28 U.S.C. § 2255.
Pursuant to D.C. Circuit Rule 36, this disposition will not be published. The Clerk is
directed to withhold issuance of the mandate herein until seven days after resolution of any timely
petition for rehearing or petition for rehearing en banc. See FED. R. APP. P. 41(b); D.C. CIR. R. 41.
FOR THE COURT:
Mark J. Langer, Clerk
BY: /s/
Daniel J. Reidy
Deputy Clerk | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483862/ | NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued November 7, 2022
Decided November 15, 2022
Before
JOEL M. FLAUM, Circuit Judge
FRANK H. EASTERBROOK, Circuit Judge
AMY J. ST. EVE, Circuit Judge
Nos. 21-2619, 21-2650, 21-2671 & 21-3211
Appeals from the United
UNITED STATES OF AMERICA, States District Court for the
Plaintiff-Appellee, Northern District of Indiana,
Fort Wayne Division.
v.
KYOMBE BOLDEN, et al., No. 1:17-cr-07 DRL-SLC
Defendants-Appellants.
Damon R. Leichty, Judge.
ORDER
All four appellants—Kyombe Bolden, William Beamon, Ronnie Burrus, and De-
metri Beachem—belonged to the 2500 gang in Indiana. An indictment charged them
with attacking three people (two members of a rival gang plus an innocent bystander).
All four pleaded guilty to three counts of violent assault in aid of racketeering, 18 U.S.C.
§1959(a), and three counts of using a firearm during that offense, 18 U.S.C. §924(c). The
firearms crime provides a minimum sentence of 120 months, consecutive to the sen-
tence on the substantive offense in which the firearm was used, but sentences on multi-
ple §924 convictions may run concurrently to each other. When negotiating the guilty
pleas, the four defendants, their lawyers, and the prosecutor all assumed that the dis-
trict court would impose concurrent sentences on the §1959 crimes and concurrent
Nos. 21-2619, 21-2650, 21-2671 & 21-3211 Page 2
sentences on the §924 crimes, but run the racketeering and firearms sentences consecu-
tively.
That is exactly what happened. Each defendant was sentenced to 120 months’
imprisonment on each firearms count. The firearms sentences run concurrently with
each other but consecutively to the racketeering sentences. The upshot is a total of 360
months for Beamon, 360 months for Burrus, 324 months for Bolden, and 288 months for
Beachem. All four defendants moved to withdraw their pleas, objecting to the district
court’s decision to calculate the advisory range by starting with the attempted-murder
Guideline rather than the assault Guideline. The judge denied these motions, observing
that the plea agreements left sentencing in the court’s hands and that the nature of the
charges (violent assault in aid of racketeering) did not determine the way cross-refer-
ences work in the Guidelines, which incorporate significant real-offense (as opposed to
charge-offense) principles.
Come the appeal, all four defendants have presented an argument never men-
tioned in the district court: instead of running the §924 convictions concurrently, the
judge should have merged them into a single §924 conviction for each defendant, so
that each would have a total of four convictions rather than six. This argument would
not affect the time to be spent in prison, but it would reduce each defendant’s special
assessment from $600 (six counts of conviction at $100 per count) to $400. The prosecu-
tor has conceded that merger is required by this circuit’s precedent. See United States v.
Cureton, 739 F.3d 1032, 1039–45 (7th Cir. 2014); United States v. Bloch, 718 F.3d 638, 643–
44 (7th Cir. 2013).
Defendants are not satisfied by the prospect of a remand whose only practical ef-
fect will be to shave $200 off of each one’s special assessment. Instead all four defend-
ants contend that they are entitled to have their pleas set aside—in other words, to ob-
tain the relief that they initially sought on the ground that the Guideline range was too
high. The prosecutor, though consenting to merger of the §924 counts, opposes any or-
der vacating the guilty pleas and convictions on the other four counts.
Appellate review proceeds under the plain-error standard, because the current
argument was not presented to the district judge. Error has been conceded, but it is not
clear, materially harmful error. (The difference between concurrent and merged sen-
tences is so slight that no one caught it in the district court.) And the final step of plain-
error review, finding that failure to correct the error would seriously undermine the
fairness or public reputation of judicial proceedings, see United States v. Olano, 507 U.S.
725, 735–37 (1993), has not been established. Defendants say that the district judge
should have told them about the way the federal unit of prosecution works when multi-
ple gun counts are based on temporally overlapping conduct. Maybe so, though “unit
Nos. 21-2619, 21-2650, 21-2671 & 21-3211 Page 3
of prosecution” is an esoteric concept even for many lawyers. But defendants care about
consequences rather than terminology. For each of these four defendants, the only prac-
tical difference between concurrent and merged §924 sentences is the $200 reduction in
special assessments. We do not think it remotely likely that, if the judge had told each
defendant that he would owe $200 less than his lawyer had informed him, any of the
four would have balked at entering the plea and insisted on a trial. Vacating these pleas,
not enforcing them, is what would bring the judicial system into disrepute.
All four defendants’ plea agreements contain waivers of any right to contest the
sentence on appeal. But two of the four (Burrus and Beachem) nonetheless contest their
sentences, arguing on both constitutional and Guidelines grounds that the district judge
should not have used the attempted-murder Guideline as a starting place. Their consti-
tutional argument, which Beamon joins, is incompatible with United States v. Watts, 519
U.S. 148 (1997), and we do not address the Guidelines argument given the waiver.
Burrus and Beachem invoke United States v. Litos, 847 F.3d 906, 910–11 (7th Cir.
2017), for the proposition that substantial arguments may be considered notwithstand-
ing waivers. That is not what Litos holds, and it would effectively prevent defendants
from negotiating for benefits in exchange for waivers. If a waiver can be enforced only
when the district judge is right, then the waiver has no effect; the court of appeals al-
ways would reach the merits and try to classify some errors as worse than others. The
waiver blocks the whole effort. (Most appellate waivers allow defendants to contend
that a sentence is illegal, in the sense that it exceeds the statutory maximum, but none of
our four defendants makes such an argument.)
Litos dealt with a different problem. Four defendants were sentenced to pay resti-
tution. One of the four negotiated an appellate waiver. Litos first held that the award of
restitution was erroneously large and then asked what to do about the fourth defend-
ant, who had waived this argument on appeal. The court observed that the award was
joint and several, which meant that it could be collected in full of any of the defendants.
If only three defendants benefitted from a reduction, the fourth would remain liable for
the whole amount. Enforcing the appellate waiver in that circumstance, we observed,
would make the defendant worse off (his effective restitution obligation would be
quadrupled on appeal). The function of an appellate waiver is to commit factual and le-
gal questions to a single judge (the district judge) rather than to four (one district judge
plus three circuit judges), not to expose any defendant to the possibility that a compo-
nent of the sentence would become more onerous on appeal. That’s why we reviewed
the fourth defendant’s restitution obligation in Litos. Nothing remotely similar occurred
in this appeal. Defendants agreed to accept a single district judge’s resolution of all dis-
putes about their sentences, and we hold them to that bargain.
Nos. 21-2619, 21-2650, 21-2671 & 21-3211 Page 4
The sentences are vacated to the extent that we remand with instructions to
merge the §924 sentences into a single conviction for each of the four appellants. The
judgments are otherwise affirmed. | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483863/ | United States Court of Appeals
For the Eighth Circuit
___________________________
No. 21-3414
___________________________
Pocket Plus, LLC
Plaintiff - Appellant
v.
Pike Brands, LLC, formerly known as Runner’s High, LLC, doing business as
Running Buddy
Defendant - Appellee
___________________________
No. 22-1304
___________________________
Pocket Plus, LLC
Plaintiff - Appellant
v.
Pike Brands, LLC, formerly known as Runner’s High, LLC, doing business as
Running Buddy
Defendant - Appellee
___________________________
No. 22-1396
___________________________
Pocket Plus, LLC
Plaintiff - Appellee
v.
Pike Brands, LLC, formerly known as Runner’s High, LLC, doing business as
Running Buddy
Defendant - Appellant
____________
Appeal from United States District Court
for the Northern District of Iowa - Cedar Rapids
____________
Submitted: September 20, 2022
Filed: November 15, 2022
____________
Before GRUENDER, MELLOY, and ERICKSON, Circuit Judges.
____________
GRUENDER, Circuit Judge.
Pocket Plus, LLC, sued Pike Brands, LLC (“Running Buddy”) for trade-dress
infringement of Pocket Plus’s portable pouch. The district court 1 granted summary
judgment to Running Buddy and awarded it a portion of its requested attorney fees.
Pocket Plus appeals the summary judgment, and both parties appeal the attorney-
fees award. We affirm.
I.
Pocket Plus sells a portable pouch under the trademarked name POCKET
PLUS. The pouch is used for carrying small objects and comes in several sizes, all
rectangular in shape and all having a vertical profile (i.e., the pouch is taller than it
is wide). Attached to its rear is a narrow magnetic flap that allows the pouch to be
1
The Honorable C.J. Williams, United States District Judge for the Northern
District of Iowa.
-2-
worn on a waistband, around a belt, or hung on handlebars. See Figure 1. Near the
pouch’s top edge is a small rectangular tag that includes Pocket Plus’s logo. The tag
serves partly as a pull tab to help open the pouch, which can be secured by a Velcro
closure.
Figure 1.
Pocket Plus’s owner created the POCKET PLUS because she wanted the
ability to carry her belongings even when her clothes did not have pockets. She
brought her product to market in 2009 with trade-show appearances, advertising, and
promotional materials emphasizing the pouch’s ability to hold beverage bottles,
cellphones, and other small items. In her deposition, she testified that the pouch’s
vertical design is beneficial for carrying items like tools or beverage bottles. She
also testified that the pouch is worn over the waistband “[f]or easy comfort without
having a belt” and that “nobody would want to put a lot of bulk inside of their pants.”
Pocket Plus is not alone in the portable-pouch market. Since 2012, Running
Buddy has marketed and sold its own pouches under the trademark BUDDY
POUCH and related names. Like the POCKET PLUS, Running Buddy’s pouches
have magnetic flaps that can be used to attach the pouch to a waistband. The pouches
also come with an illustrative “header card” showing how to use the pouch. Since
2015, Running Buddy has offered a vertical version, the BUDDY POUCH MINI
“PLUS,” which is the model at issue here. See Figure 2. Like Pocket Plus’s owner,
Running Buddy’s managing partner stated that a vertical orientation is useful for
-3-
carrying beverage bottles without spilling and that “[a] horizontal orientation would
defeat these purposes.”
Figure 2.
In 2021, after a series of cease-and-desist letters, Pocket Plus sued Running
Buddy for trade-dress infringement under Iowa common law and § 43(a) of the
Trademark Act of 1946 (Lanham Act), 60 Stat. 441, as amended, 15 U.S.C.
§ 1125(a). Running Buddy moved for summary judgment, arguing that the trade
dress failed to satisfy two elements of an infringement claim—nonfunctionality and
distinctiveness. See Gateway, Inc. v. Companion Prod., Inc., 384 F.3d 503, 507 (8th
Cir. 2004). A month later, and within only a few weeks of deposing Pocket Plus’s
owner, Running Buddy threatened to file for Rule 11 sanctions against Pocket Plus
for its weak case. See Fed. R. Civ. P. 11. The threat came in a letter to Pocket Plus’s
counsel with an attached draft motion that sought attorney fees either as a sanction
under Rule 11 or as a remedy under the Lanham Act. Running Buddy then moved
for leave to file supplemental briefing for summary judgment, asserting that
testimony from Pocket Plus’s owner “makes abundantly clear that Plaintiff knew the
product design was functional and lacked secondary meaning before the Complaint
was even filed.” Ultimately, Running Buddy did not pursue Rule 11 sanctions.
The district court granted summary judgment for Running Buddy on
functionality and distinctiveness grounds. Running Buddy then moved to recover
attorney fees, arguing that this was an “exceptional case” under the Lanham Act.
-4-
See 15 U.S.C. § 1117(a). The district court found for Running Buddy but awarded
only one-fourth of the requested fees. Both parties appeal the attorney-fees award.
Pocket Plus objects to any award; Running Buddy wants more.
II.
Pocket Plus appeals summary judgment. We review a district court’s grant of
summary judgment de novo. Ehlers v. Univ. of Minn., 34 F.4th 655, 659 (8th Cir.
2022). “Summary judgment is appropriate ‘if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.’” Id. (quoting Fed. R. Civ. P. 56(a)).
Section 43(a) of the Lanham Act creates a federal cause of action for trade-
dress infringement. Gateway, 384 F.3d at 507. Trade dress typically refers to a
product’s design or packaging. See Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S.
205, 209-10 (2000). To prevail on a trade-dress infringement claim, a plaintiff must
show that its trade dress is distinctive and nonfunctional and that the trade dress’s
imitation would result in a likelihood of confusion to consumers regarding its source.
Gateway, 384 F.3d at 507.2 Pocket Plus’s trade dress is unregistered, so it enjoys no
presumption of nonfunctionality. See 15 U.S.C. § 1125(a)(3). Because we find that
there is no genuine dispute that the trade dress is functional, we need not address
Pocket Plus’s arguments that its pouch is distinctive.
A.
As a preliminary matter, the parties dispute which features make up Pocket
Plus’s trade dress. Pocket Plus’s definition evolved throughout the litigation, with
each iteration more detailed and specific than the one before. The district court
evaluated the trade dress as defined in Pocket Plus’s summary-judgment opposition
brief: a portable pocket that (1) is worn externally on a person’s clothing, over the
waistband on the hip; (2) has a vertical profile with a length at least 1.75 inches
2
Running Buddy did not challenge the likelihood-of-confusion element.
-5-
longer than its width; (3) includes a label smaller than one square inch; and (4) is
accompanied by an illustration and photographs that emphasize its vertical profile
and use on one’s hip.
Running Buddy challenges this definition. It argues that two aspects of the
asserted trade dress—how the pocket is worn and its range of sizes—cannot be
considered part of Pocket Plus’s trade dress. Running Buddy is likely correct on
both fronts. How a product is worn or used is not part of the “tangible features of
[that] product.” Cf. Home Builders Ass’n of Greater St. Louis v. L&L Exhibition
Mgmt., Inc., 226 F.3d 944, 948 (8th Cir. 2000) (holding that the locations and times
of trade shows were not trade dress). As for the asserted size ranges, trade-dress
protection arises from actual “use[] in commerce,” not potential use. See 15 U.S.C.
§ 1125(a)(1). The asserted ranges encompass more than what Pocket Plus has used
in commerce. Nonetheless, we need not resolve whether these aspects are generally
cognizable as trade-dress features because Pocket Plus’s trade dress is functional
with or without them.
B.
To be protectable, trade dress must be nonfunctional. Gateway, 384 F.3d at
508. The traditional rule is that a product feature is functional if “it is essential to
the use or purpose of the device or when it affects the cost or quality of the device.”
TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 33 (2001). Conversely,
a feature is nonfunctional “if it is an arbitrary embellishment primarily adopted for
purposes of identification and individuality.” Gateway, 384 F.3d at 508. The
boundary between arbitrary embellishment and functionality is not always clear.
See, e.g., Jay Franco & Sons, Inc. v. Franek, 615 F.3d 855, 860 (7th Cir. 2010)
(noting the “chief difficulty [of] distinguishing between designs that are fashionable
enough to be functional and those that are merely pleasing”). Aesthetic product
features, for instance, may be critical to survival in the marketplace and therefore
functional if their protection would put competitors at a “significant non-reputation-
related disadvantage.” TrafFix, 532 U.S. at 33; see also Gateway, 384 F.3d at 508
-6-
(“[I]f the trade dress is an important ingredient in the commercial success of the
product, it is clearly functional.”). But where a feature is functional under the
traditional rule, “there is no need to proceed further to consider if there is a
competitive necessity for the feature.” TrafFix, 532 U.S. at 33.
Also informing the functionality analysis is whether the trade dress constitutes
product design or product packaging. See Wal-Mart, 529 U.S. at 213. Product
design, unlike product packaging, “almost invariably serves purposes other than
source identification.” Id. These other purposes are often utilitarian and aesthetic.
See id. Such product designs generally are “subject to copying” absent a patent or
copyright. See TrafFix, 532 U.S. at 29. Relatedly, some product designs may be
too generic or basic to deserve protection because they would “impoverish[] other
designers’ palettes.” See Franek, 615 F.3d at 860 (holding that a round beach
towel’s design was functional); see also Landscape Forms, Inc. v. Columbia
Cascade Co., 113 F.3d 373, 380 (2d Cir. 1997) (“[G]ranting trade dress protection
to an ordinary product design would create a monopoly in the goods themselves.”).
Finally, the functionality analysis focuses on “the collection of design
elements, taken as a whole,” rather than on “whether individual elements of the trade
dress could be categorized as [functional].” Insty*Bit, Inc. v. Poly-Tech Indus., Inc.,
95 F.3d 663, 673 (8th Cir. 1996); see also Stuart Hall Co. v. Ampad Corp., 51 F.3d
780, 790 (8th Cir. 1995). We emphasize, however, that this approach remains
consistent with the notion that trademark law does not protect individual features of
a trade dress that are functional. See TrafFix, 532 U.S. at 31-34 (analyzing the
functionality of the trade dress’s “essential feature”). In other words, it is possible
for a trade dress to comprise some functional elements and some arbitrary elements
so that the trade dress as a whole is nonfunctional and eligible for protection, while
competitors remain free to copy the functional elements in their own designs. See
Stuart Hall, 51 F.3d at 790; see also Antioch Co. v. W. Trimming Corp., 347 F.3d
150, 158 (6th Cir. 2003) (“[I]n order to receive trade dress protection for the overall
combination of functional features, those features must be configured in an arbitrary,
fanciful, or distinctive way.”).
-7-
Taken as a whole, there is no genuine dispute of material fact that Pocket
Plus’s trade dress is functional. The pouch’s purpose is to carry objects, including
beverage bottles and cellphones. A pouch’s shape (vertical or horizontal), the ability
to open the pouch (pull-tab size and positioning), and how the pouch is worn (around
the waist or attached to clothing) all combine to affect its suitability for carrying
objects. None of these features are “arbitrary flourish[es].” See TrafFix, 532 U.S.
at 34. Varying any one affects the usefulness of the pocket in critical ways. See
CTB, Inc. v. Hog Slat, Inc., 954 F.3d 647, 665 (4th Cir. 2020) (concluding that a
feeder pan for chickens was functional because it was the combination of “wholly-
functional components”).
Pocket Plus argues that the vertical orientation of its pouches is not functional
because some competitors make horizontal pouches capable of holding bottles.
Similarly, Pocket Plus argues that some competitors make pouches that are worn
inside clothing rather than outside. But the question is not whether it is possible for
alternatives to serve similar purposes. Rather, it is whether that orientation is
“essential to the use or purpose of the device” or “affects the cost or quality of the
device.” See TrafFix, 532 U.S. at 33. If it is, then competitors need not explore
other design possibilities. See id. at 33-34. Pocket Plus’s chosen vertical orientation
and over-the-hip design undoubtedly affect the quality of a portable pouch and are
essential to its purpose.
As for the illustrations and photographs accompanying the packaging, we see
no reason why their inclusion in Pocket Plus’s trade-dress definition changes the
conclusion that its trade dress is functional. Pocket Plus has not pointed to anything
unique, unusual, or nonfunctional about the fact that it uses product depictions to
inform consumers about its product. See Abercrombie & Fitch Stores, Inc. v. Am.
Eagle Outfitters, Inc., 280 F.3d 619, 644-45 (6th Cir. 2002) (noting the unique
features in Abercrombie’s catalog). Instead, Pocket Plus has simply pointed to a
generic marketing idea or concept. Tellingly, its trade-dress definition emphasizes
what the depictions do rather than what they look like. According to Pocket Plus,
the depictions “emphasize[] the vertical profile and use on one’s hip.” That is
-8-
functional. See Fun-Damental Too, Ltd. v. Gemmy Indus. Corp., 111 F.3d 993, 1002
(2d Cir. 1997) (noting the usefulness of “displaying the actual product to the
consumer”); see also Woodsmith Publ’g Co. v. Meredith Corp., 904 F.2d 1244, 1248
(8th Cir. 1990) (holding that a woodworking magazine’s easy-to-follow instructions,
materials lists, and cutting diagrams are functional and not protectable as trade
dress). Further, the record shows that the practice of using product depictions to
inform consumers is quite common. See Woodsmith, 904 F.2d at 1248 (noting
common practices in the magazine industry). Numerous competitors employ
depictions to show how to use a pouch and what it might look like when worn.
Trademark law “does not protect one from a competitor’s imitation of one’s
marketing concept.” Aromatique, Inc. v. Gold Seal, Inc., 28 F.3d 863, 868 (8th Cir.
1994).
In sum, there is no genuine dispute that Pocket Plus’s trade dress is functional
and thus not protected by trademark law. To grant trade-dress protection for Pocket
Plus would be to hand it a monopoly over the “best” portable-pouch design.
Trademark law precludes that. See Qualitex Co. v. Jacobson Products Co., Inc., 514
U.S. 159, 164 (1995) (“The functionality doctrine prevents trademark law, which
seeks to promote competition by protecting a firm’s reputation, from instead
inhibiting legitimate competition by allowing a producer to control a useful product
feature.”).
III.
Both parties dispute the attorney-fees award. We review a district court’s
award of attorney fees under the Lanham Act for abuse of discretion. Safeway
Transit LLC v. Discount Party Bus, Inc., 954 F.3d 1171, 1183 (8th Cir. 2020). An
abuse of discretion occurs “when a relevant factor that should have been given
significant weight is not considered; when an irrelevant or improper factor is
considered and given significant weight; and when all proper factors, and no
improper ones, are considered, but the court, in weighing those factors, commits a
-9-
clear error of judgment.” Fair Isaac Corp. v. Experian Info. Sols., Inc., 650 F.3d
1139, 1152 (8th Cir. 2011).
Pocket Plus argues that the district court abused its discretion in finding that
this was an exceptional case under the Lanham Act warranting an award of attorney
fees. Running Buddy argues that the district court abused its discretion in awarding
only a portion of the requested fees. We find no abuse of discretion in either
decision.
A.
In “exceptional cases,” a district court “may award reasonable attorney fees
to the prevailing party.” 15 U.S.C. § 1117(a). Whether a case is exceptional is for
the district court’s discretion, considering the totality of the circumstances. Octane
Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014) (interpreting
a similar provision in patent statutes); Safeway, 954 F.3d at 1182-83 (applying
Octane Fitness in the trademark context).
“[A]n ‘exceptional’ case is simply one that stands out from others with respect
to the substantive strength of a party’s litigating position (considering both the
governing law and the facts of the case) or the unreasonable manner in which the
case was litigated.” Octane Fitness, 572 U.S. at 554. In other words, the case is
“uncommon, not run-of-the-mill.” Safeway, 954 F.3d at 1182. Relevant factors for
a district court to consider include “frivolousness, motivation, objective
unreasonableness (both in the factual and legal components of the case) and the need
in particular circumstances to advance considerations of compensation and
deterrence.” Id. (quoting Octane Fitness, 572 U.S. at 555). A party’s unreasonable
conduct need not be independently sanctionable for the case to be exceptional. Id.
Finally, courts may also consider the prevailing party’s behavior in declining to
award attorney fees in exceptional cases. Id. at 1183.
-10-
After briefing and a hearing on the attorney-fees motion, the district court
concluded that this was an “exceptional” case due to Pocket Plus’s “unreasonable
behavior” and the weakness of its litigating position in view of the facts of the case.
It found that Pocket Plus’s cease-and-desist letters sent before the litigation
“unreasonably demanded” action from Running Buddy because the letters did not
specify what the trade dress was and instead provided “unreasonably broad”
definitions. Considering this context, the district court further found that Pocket Plus
acted unreasonably when it changed its trade-dress definition in its opposition to
summary judgment, five months after its amended complaint. This change required
Running Buddy to undertake additional time, argument, and analysis.
As for Pocket Plus’s litigating position, the district court determined that it
was “objectively unreasonable on the facts.” For support, the district court again
noted Pocket Plus’s shifting trade-dress definition as well as Pocket Plus’s factual
assertions that were directly contradicted in the record. Specifically, the district
court found that Pocket Plus’s arguments for exclusivity were directly contradicted
by the several-years’ existence of another competitor’s pouch. Finally, the district
court found that Pocket Plus’s assertion that it was entitled to a presumption of
distinctiveness was clearly contradicted by evidence in the record regarding another
competitor’s sales during Pocket Plus’s early years.
On this record, the district court did not abuse its discretion in finding that this
was an exceptional case. It considered the appropriate law, reviewed the litigation
history, held a hearing, and explained its decision.
B.
After finding that this was an exceptional case, the district court declined to
award Running Buddy’s requested fees for two reasons. First, it reasoned that
Pocket Plus’s definitional change at summary judgment impacted only part of the
litigation, not the whole case. Second, it found that Running Buddy’s conduct in
threatening to move for sanctions was unreasonable. The district court disapproved
-11-
of Running Buddy’s “unfulfilled threat of Rule 11 sanctions,” which it regarded as
“meritless and intended to harass.” After conducting a lodestar analysis and
reducing the requested hourly billing rate and number of hours, the district court
awarded Running Buddy $25,103.75, a quarter of its requested fees.
Running Buddy argues that the district court erred in reducing the fees by
relying on Running Buddy’s letter threatening to file for Rule 11 sanctions and its
subsequent decision not to file. Running Buddy cautions that the district court’s
logic would have a chilling effect on future Rule 11 motions because a party must
provide twenty-one days’ notice before filing for sanctions and yet might decide
during that period not to file. See Fed. R. Civ. P. 11(c)(2); see also Thermolife Int’l
LLC v. GNC Corp., 922 F.3d 1347, 1357 (Fed. Cir. 2019) (“[O]ne consideration that
can and often should be important to an exceptional-case determination is whether
the party seeking fees provide[d] early, focused, and supported notice of its belief
that it was being subjected to exceptional litigation behavior.” (internal quotation
marks omitted and second alteration in original)).
Although we are inclined to agree with Running Buddy that merely not
following through on a notice to file Rule 11 sanctions is an insufficient reason to
conclude that the threat was meritless, we disagree that the district court abused its
discretion in considering that fact along with Running Buddy’s letter and draft
motion to reduce the fee award. “[A]ll Lanham Act remedies are equitable in
nature.” Safeway, 954 F.3d at 1178. The district court was free to consider both
parties’ conduct. Although the district court’s explanation for why it regarded the
threat as meritless and intended to harass could have been more thorough, we find
no abuse of discretion.
Running Buddy also challenges the district court’s determination of a
reasonable billing rate and hours worked. For billing rates, a district court has “great
latitude to determine a reasonable hourly rate because it is intimately familiar with
its local bar.” Childress v. Fox Assocs., LLC, 932 F.3d 1165, 1172 (8th Cir. 2019).
“The burden is on the moving party to provide evidence supporting the rate
-12-
claimed.” Wheeler v. Mo. Highway & Transp. Comm’n, 348 F.3d 744, 754 (8th Cir.
2003). The district court discounted Running Buddy’s national-survey evidence
because it was not sufficiently probative of reasonable rates in Iowa. Instead, it
analyzed a 2008 federal case from the same state and considered defense counsel’s
experience to reduce the hourly rates from $400, $425, and $480 to $350, which it
regarded as “the highest reasonable rate available in the record.” Finally, the district
court also reviewed the 295.10 hours that Running Buddy billed during the relevant
timeframe and reduced the total by less than ten hours for attending a hearing and
for time spent on the Rule 11 threat. Neither reduction was an abuse of discretion.
IV.
For the foregoing reasons, we affirm the district court’s grant of summary
judgment and award of attorney fees to Running Buddy.
______________________________
-13- | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491617/ | OPINION
DAVID W. HOUSTON, III, Bankruptcy Judge.
On consideration before the court is a motion to amend the complaint and request for a jury trial filed by the plaintiffs, Wayne and Nadara Johnston; response having been filed by the defendant, Commodity Credit Corporation; and the court having considered same, hereby finds as follows, to-wit:
I.
The court has jurisdiction of the subject matter of and the parties to this proceeding pursuant to 28 U.S.C. § 1334 and 28 U.S.C. § 157. This is a core proceeding as defined in 28 U.S.C. § 157(b)(2)(0).
II.
In the pretrial order filed with the court, the parties stipulated to the following pertinent facts:
1. Plaintiff filed for relief under Chapter 11 of the U.S. Bankruptcy Code on February 17, 1982. An order of confirmation was entered on August 10, 1983, by Judge T. Glover Roberts.
2. The Confirmation Order entered on August 10, 1983, stated that “until entry of the Final Decree, the automatic stay of § 362, Title II, United States Code, remains in full force and effect ...”
3. The confirmed plan as amended by order dated August 8, 1983, provided the following:
Commodity Credit Corporation having filed Objections to the Confirmation of the Debtors’ Plan of Reorganization on April 28, 1983, and Commodity Credit Corporation being the only Creditor of the Debtors to so file a written objection to the Plan, and hearing pursuant to the objection of Commodity Credit Corporation having been set by the Court for July 29, 1983. The hearing was held in Oxford, Mississippi, on July 29, 1983, with Debtors and their attorney of record, Jackie Tatum, present and with Commodity Credit Corporation being represented at the hearing by the Assistant United States Attorney, Faltón 0. Mason, Jr.
It appears to the satisfaction of the Court that the Debtors and the Creditor, Commodity Credit Corporation, have reached an agreement that the *369Creditor will withdraw its objections to the Plan and that the debtors shall amend the Plan of Reorganization as follows:
That Article III. B. Specific Treatment of Claims. 6. Class 6. be amended to read as follows:
The only creditor in this Class is Commodity Credit Corporation, A.S.C.S., which is owed approximately $28,976.00 secured by chattel mortgage on approximately 2,496 bushels of soybeans and two (2) grain bins. That the creditor will retain its lien on the grain bins; that the soybeans will be sold within a reasonable time after Plan Confirmation, and that application of the proceeds of the sale of the beans will be applied as follows: Immediate payment of claims in classes 1, 2, and 10 in full; payment immediately of one-third (Vs) of proceeds of sale of beans or $5,000.00, whichever is less, to Commodity Credit Corporation to be applied to the indebtedness. Within ten days of Confirmation of Plan, payment to John Deere of $700.00 as described in Class 5. above and within thirty (30) days of Confirmation of Plan, payment to Peoples Bank of Note # 02909 as aforedescribed in Class 4.
The Creditor, Commodity Credit Corporation, will retain its lien on the total amount of $28,976.00 plus interest at 10% from the date February 17, 1982, less any proceeds from the sale of the beans applied thereto.
After application of the one-third (Vis) of the bean proceeds or $5,000.00, whichever is less, to the indebtedness, the remaining indebtedness shall be amortized at 10% over a ten-year period from the date of Plan Confirmation, with annual payback over a five-year period, the first four payments being equal and the last payment being a balloon payment equivalent to the remaining principal and all accrued interest to date of fifth payment. The first payment will be payable on the first anniversary date of the Confirmation of Plan and the subsequent payments will be due on the same day each succeeding year as aforedescribed.
Upon Confirmation of Plan, the Debtors shall execute a Deed of Trust to Commodity Credit Corporation, giving them a mortgage, second to FmHA, on approximately five (5) acres, more or less of real property located and situated in Section 34, Township 4 of Range 3 East of Tippah County, Mississippi, and being all that property lying north of the public road known as Booker and Ratliff Public Road, being a portion only of that property described in Deed Book 103 at 567, Tippah County Land Records.
That the Deed of Trust executed by the Debtors to Commodity Credit Corporation shall serve as a replacement lien for the soybeans sold and shall be the indubitable equivalent thereof.
4. A Motion to Clarify Court’s Order of August 8, 1983 was made by Commodity Credit Corporation on September 20, 1985.
5. Neither attorney for the debtor, nor attorney for the creditor were attorneys of record when the confirmation order was entered. Neither attorney was consciously aware until May 29, 1990 of that portion of the confirmation order which provided that the automatic stay would remain in effect until entry of the final decree.
6. A deed of trust was signed on August 31, 1983, for $23,976.00 with interest to accrue at 10% per annum from August 20, 1983. The deed of trust was recorded on August 21, 1986.
7. The deed of trust stated “In trust for the following purposes: as a substitute lien for the soybeans sold and the indubitable equivalent thereof”
8. A promissory note was executed on December 5, 1985 for $23,976.00 with interest to accrue from August 23, 1983.
9. On August 21, 1984 and on August 20, 1985, debtors made the first and second payments in the amount of $3,901.98 each as provided for by the promissory note.
*37010. On October 2, 1987, $2,600.57 in 1986 final corn deficiency payments were setoff and applied to the outstanding principal and accrued interest on the note.
11. On February 2, 1990, $5,131.00 in 1989 soybean disaster payments were setoff and applied to the outstanding principal and accrued interest on the note.
12. On March 23, 1990, $438.00 in 1989 final corn deficiency payments were setoff and applied to the outstanding principal and accrued interest on the note.
13. On May 8, 1990, $264.00 in 1989 soybean disaster payments were setoff and applied to the outstanding principal and accrued interest on the note.
14. The following CCC payments were not offset, but were paid to the debtor.
1984 — $1,662.97
1986 — $3,155.10
15. The total amount offset by CCC was $8,433.57.
16. The amount owed to CCC under the note by the debtor as of 2/24/92 is $30,374.04 with interest continuing to accrue at the rate of 10% per annum.
III.
The plaintiffs allege in their complaint that the setoffs of the deficiency and disaster payments by Commodity Credit Corporation violated the automatic stay found in 11 U.S.C. § 362(a). They contend that because of the setoffs they could not continue their farming operations and became unable to pay Commodity Credit Corporation pursuant to their confirmed plan of reorganization. They have demanded the return of the monies withheld plus interest, costs, attorney’s fees, and punitive damages.
The plaintiffs recently filed a motion seeking to amend the complaint to demand additional damages for personal injuries to Nadara Johnston allegedly caused by the setoffs. In this motion they requested a jury trial for the first time.
(Hereinafter, all Code sections will be considered as Title 11, U.S. Code, unless specifically noted otherwise.)
IV.
Section 362(c) specifies the time of effectiveness of the automatic stay in a bankruptcy case as to actions against property of the estate and other actions against the debtor, to-wit:
(c) Except as provided in subsections (d), (e), and (f) of this section—
(1) the stay of an act against property of the estate under subsection (a) of this section continues until such property is no longer property of the estate; and
(2) the stay of any other act under subsection (a) of this section continues until the earliest of—
(A) the time the case is closed;
(B) the time the case is dismissed; or
(C) if the case is a case under chapter 7 of this title concerning an individual or a case under chapter 9, 11, 12, or 13 of this title, the time a discharge is granted or denied.
When a Chapter 11 plan is confirmed, several significant things occur. First, pursuant to § 1141(b), all property of the bankruptcy estate vests in the debtor. This essentially means that there is no longer a bankruptcy estate. Second, pursuant to § 1141(d), the debtor receives a discharge. The occurrence of these two events effectively eliminates the automatic stay in keeping with the aforesaid provisions of § 362(c).
But for the language in the confirmation order entered in this case, i.e., “until entry of the Final Decree, the automatic stay of § 362, Title 11, United States Code, remains in full force and effect,” there would have been no automatic stay in effect at any of the times when Commodity Credit Corporation setoff the deficiency and disaster payments. Retaining the effectiveness of the automatic stay in a confirmation order is certainly not commonplace. Had this language been omitted, the plaintiffs *371would have no cause of action whatsoever against Commodity Credit Corporation.
V.
Commodity Credit Corporation, in responding to the motion to amend and request for a jury trial, for the first time raised the issue of sovereign immunity. Commodity Credit Corporation, an entity affiliated with the United States Department of Agriculture, would be entitled to invoke the defense of sovereign immunity as an agency of the federal government unless it has been waived. In adopting the Bankruptcy Code, Congress provided a limited waiver of immunity in § 106 which reads as follows:
(a) A government unit is deemed to have waived sovereign immunity with respect to any claim against such governmental unit that is property of the estate and that arose out of the same transaction or occurrence out of which such governmental unit’s claim arose.
(b) There shall be offset .against an allowed claim or interest of a governmental unit any claim against such governmental unit that is property of the estate.
(c) Except as provided in subsections (a) and (b) of this section and notwithstanding any assertion of sovereign immunity—
(1) a provision of this title that contains “creditor”, “entity”, or “governmental unit” applies to governmental units; and
(2) a determination by the court of an issue arising under such a provision binds governmental units.
The parties have indicated in their memoranda that perhaps immunity has been waived in this proceeding pursuant to either § 106(a) or § 106(b). However, they have overlooked one significant factor which was discussed earlier. Both § 106(a) and § 106(b) provide that the claim against the governmental unit must be property of the estate. Since the plaintiffs’ Chapter 11 plan was confirmed, there is no longer a bankruptcy estate and, as such, there is no longer any “property of the estate.” Even so, under the present factual scenario, the alleged claims of the plaintiffs against Commodity Credit Corporation were never property of the estate because they arose long after the estate ceased to exist. The conclusion, therefore, becomes inescapable that § 106(a) and § 106(b) are inapplicable. The retention of the effectiveness of the automatic stay in the confirmation order cannot preserve the bankruptcy estate.
The court next looks to § 106(c), which is also a waiver of immunity, but as considered in United States v. Nordic Village, Inc., — U.S. -, 112 S.Ct. 1011, 117 L.Ed.2d 181 (1992), a very narrow waiver. There, Justice Scalia, writing for the majority, discussed the court’s previous decision examining § 106, Hoffman v. Connecticut Dept. of Income Maintenance, 492 U.S. 96, 109 S.Ct. 2818, 106 L.Ed.2d 76 (1989), which held that § 106(c) does not permit a bankruptcy court to award monetary damages against a state.
In Nordic Village, the court observed, that for immunity purposes, state and federal sovereigns are to be treated the same. Noted as the primary reason for this conclusion was the definition of “governmental unit” found in § 101(27).
In construing § 106(c), Justice Scalia commented as follows:
Under one interpretation, § 106(c) permits the bankruptcy court to issue “declaratory and injunctive” — though not monetary — relief against the Government. Hoffman, 492 U.S., at 102, 106 L.Ed.2d 76, 109 S.Ct. 2818. This conclusion is reached by reading the two paragraphs of subsection (c) as complementary rather than independent: the first paragraph identifies the subject matter of disputes that courts may entertain under the subsection and the second paragraph describes the relief that courts may grant in such disputes. That is to say, the second paragraph specifies the manner in which there shall be applied to governmental units the provisions identified by the first paragraph, i.e., a manner that permits declaratory or injunctive relief but not an affirmative monetary recovery.
*372Several factors favor this construction. The distinction it establishes — between suits for monetary claims and suits for other relief — is a familiar one, and is suggested by the contrasting language used in subsections (a) and ' (b) (“claim[s]”) and in subsection (c) (“determination[s]” of “issue[s]”), Hoffman, 492 U.S., at 102, 106 L.Ed.2d 76, 109 S.Ct. 2818. It also avoids eclipsing the carefully drawn limitations placed on the waivers in subsections (a) and (b). The principal provision of the Code permitting the assertion of claims against persons other than the estate itself is § 542(b), which provides that “an entity that owes a debt that is property of the estate and that is matured, payable on demand, or payable on order, shall pay such debt to, or on the order of, the trustee,” 11 U.S.C. § 542(b). If the first paragraph of § 106(c) means that, by reason of use of the trigger-word “entity,” this provision applies in all respects to governmental units, then the Government may be sued on all alleged debts, despite the prior specification in subsections (a) and (b) that claims against the Government will lie only when the Government has filed a proof of claim, and even then only as a setoff unless the claim is a compulsory counterclaim. Those earlier limitations are reduced to trivial application if paragraph (c)(1) stands on its own. See Hoffman, supra, at 101-102, 106 L.Ed.2d 76, 109 S.Ct. 2818. This construction also attaches practical consequences to paragraph (c)(2), whereas respondent’s interpretation violates the settled rule that a statute must, if possible, be construed in such fashion that every word has some operative effect. See Hoffman, supra, at 103, 106 L.Ed.2d 76, 109 S.Ct. 2818; United States v. Menasche, 348 U.S. 528, 538-539, 99 L.Ed. 615, 75 S.Ct. 513 [519-520] (1955). Respondent has suggested no function to be performed by paragraph (2) if paragraph (1) operates to treat the Government like any other “entity” or “creditor,” regardless of the type of relief authorized by an applicable Code provision.
Under this interpretation, § 106(c), though not authorizing claims for monetary relief, would nevertheless perform a significant function. It would permit a bankruptcy court to determine the amount and dischargeability of an estate’s liability to the Government, such as unpaid federal taxes, see 11 U.S.C. § 505(a)(1) (permitting the court to “determine the amount or legality of any tax”) (emphases added), whether or not the Government filed a proof of claim. See 492 U.S., at 102-103, 106 L.Ed.2d 76, 109 S.Ct. 2818. Cf. Neavear v. Schweiker, 674 F.2d 1201, 1203-1204 (CA7 1982) (holding that under § 106(c) a bankruptcy court could discharge a debt owed to the Social Security Administration). The Government had repeatedly objected, on grounds of sovereign immunity, to being bound by such determinations before § 106(c) was enacted in 1978. See, e.g. McKenzie v. United States, 536 F.2d 726, 728-729 (CA7 1976); Bostwick v. United States, 521 F.2d 741, 742-744 (CA8 1975); Gwilliam v. United States, 519 F.2d 407, 410 (CA9 1975); In re Durensky, 377 F.Supp. 798, 799-800 (ND Tex.1974), appeal dism’d, 519 F.2d 1024 (CA5 1975).
Subsection (c) is also susceptible of another construction that would not permit recovery here. If the two paragraphs of § 106(c) are read as being independent, rather than the second as limiting the first, then, pursuant to the first paragraph, Code provisions using the triggering words enumerated in paragraph (c)(1) would apply fully to governmental units. But that application of those provisions would be limited by the requirements of subsections (a) and (b), in accordance with the phrase that introduces subsection (c) (“Except as provided in subsections (a) and (b) of this section”). This exception, in other words, could be read to mean that the rules established in subsections (a) and (b) for waiver of Government “claim[s]” that are “property of the estate” are exclusive, and preclude any resort to subsection (c) for that purpose. That reading would bar the present suit, since the *373right to recover a post-petition transfer under § 550 is clearly a “claim” (defined in § 101(4)(A)) and is “property of the estate” (defined in § 541(a)(3)). (The dissent appears to read paragraphs (c)(1) and (c)(2) as being independent but provides no explanation of what the textual exception could mean under that reading.)
The foregoing are assuredly not the only readings of subsection (c), but they are plausible ones — which is enough to establish that a reading imposing monetary liability on the Government is not “unambiguous” and therefore should not be adopted. Contrary to respondent’s suggestion, legislative history has no bearing on the ambiguity point. As in the Eleventh Amendment context, see Hoffman, 492 U.S., at 104, 106 L.Ed.2d 76, 109 S.Ct. 2818, the “unequivocal expression” of elimination of sovereign immunity that we insist upon is an expression in statutory text. If clarity does not exist there, it cannot be supplied by a committee report. Cf. Dellmuth v. Muth, 491 U.S. 223, 228-229, 105 L.Ed.2d 181, 109 S.Ct. 2397 [2400-2401] (1989).
The holding of Nordic Village, is clear. Section 106(c) does provide a waiver of sovereign immunity, but that waiver is not so broad as to permit an award of monetary damages against a governmental unit in a bankruptcy adversary proceeding. The waiver is limited to declaratory and injunctive relief, i.e., the determination of issues. As such, the plaintiffs’ claims for damages against Commodity Credit Corporation, for personal injuries or otherwise, cannot be permitted. The motion to amend the complaint has become meaningless, so, therefore, it will be denied. Because of this conclusion, the request for the jury trial is considered untimely and will also be denied. See, Rule 38(b), Fed.Rules Civ. Proc.
VI.
In summary, the court finds that § 106(a) and § 106(b) are inapplicable to this proceeding. Section 106(c) is applicable, but not to the extent that monetary damages can be awarded against Commodity Credit Corporation. The court is of the opinion that if there are no issues to be determined that this proceeding should be dismissed without prejudice. However, at this time, there is no pleading before the court to accomplish this result.
An order will be entered overruling the motion to amend and denying the request for the jury trial. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491618/ | OPINION
DAVID W. HOUSTON, III, Bankruptcy Judge.
On consideration before the court is a complaint seeking to deny the discharge-ability of debts filed by the plaintiff, Industrial Design Associates, against the debtor, Wendell Glenn Blount, as well as, a complaint for damages filed by Mississippi Durable Medical Equipment, Inc., and Wendell Glenn Blount against Industrial Design Associates (the latter complaint having initially been filed in the Circuit Court of Calhoun County, Mississippi, then removed to the United States' District Court for the Northern District of Mississippi, and then ultimately transferred to this court for adjudication); responsive pleadings and affirmative defenses having been filed to both complaints, including a counterclaim filed by Industrial Design Associates against Blount, all of which were consolidated for hearing; and the court having considered same, hereby finds as follows, to-wit:
I.
The court has jurisdiction of the parties to and the subject matter of these proceedings pursuant to 28 U.S.C. § 1334 and 28 U.S.C. § 157. These are core proceedings as defined in 28 U.S.C. § 157(b)(2)(A), (B), (I), and (0).
II.
FACTUAL BACKGROUND
In August, 1988, Industrial Design Associates, hereinafter IDA, proposed to develop and build a three wheeled scooter prototype for use by marginally disabled individuals. The proposal was submitted to “Mississippi Medical” which could either be Mississippi Medical, Inc., its successor, Mississippi Durable Medical Equipment, Inc., or Medical Concepts, Inc., a third corporation formed specifically to produce the aforesaid scooter. All three of these corporations were owned by Blount. Because the *380corporate structures of these entities were somewhat amorphous, they will be referred to in this opinion collectively as “Mississippi Medical” or “Mississippi Medical” entities.
Pursuant to the proposal, the prototype was delivered on schedule on November 2, 1988. Each phase of the proposal was invoiced monthly. IDA received payment for the services provided under the proposal with the exception of the last invoice, dated November 25, 1988, in the amount of $6,663.69.
After the delivery of the prototype, pursuant to verbal arrangements, IDA performed additional services relative to the development of the scooter for production. A second prototype was assembled in December, 1988, and three more prototypes were assembled in January, 1989. This work was also invoiced monthly. It was not disputed that the total of all of the unpaid invoices, including the earlier unpaid $6,663.69 invoice, amounted to $94,-270.75.
Significantly, according to Mike Yardley, the former chief executive officer for IDA, the services performed under the original proposal, as well as, the subsequent work, which comprises the major portion of the outstanding indebtedness, were all invoiced to “Mississippi Medical.” In addition, he indicated that the subsequent services were requested primarily by Ronald Mostich and Dave Kimbro, both employees of the “Mississippi Medical” entities. Sam Crosby, IDA’s president, testified that there was no formal program between IDA and the “Mississippi Medical” entities after November 2, 1988.
After the formation of Medical Concepts, negotiations were undertaken to market the scooters through American Mobility, Inc., an Ohio corporation, whose principal owner was Saul Fesman. Although some scooters were sold through this arrangement, it apparently was terminated sometime in May, 1989.
After the prototype was unveiled, problems began to develop with the scooter when general production was attempted. IDA contended that the initial prototype was not intended to be used for production and was not to be considered as a production model. On top of this, IDA contended that the quality control measures utilized by “Mississippi Medical” were grossly deficient. IDA also indicated that some of the component parts being manufactured by third parties were substandard.
The testimony of two former employees of the “Mississippi Medical” entities, however, reveals several significant problems that were being encountered with the scooter. Excerpts are set forth as follows:
Clyde W. Henderson, formerly responsible for quality control at Medical Concepts, testified that several of the scooters shipped to American Mobility were returned because they were faulty. He indicated that the throttle control would stick, that there was slack in the handlebars which created steering problems, and that the seat was unstable. He indicated that the scooter needed thicker bolts to hold the main parts together, and that the battery slipped out of the battery box if the scooter were jarred. He stated that the plastic components did not fit well together, and that the tire clearance was too low.
Bedford Forrest “Buzz” Peoples, a former member of the management team at Mississippi Durable Medical Equipment, testified that the scooters initially were sold to American Mobility which, in turn, sold them to theme parks such as Disney World and Dollywood. Peoples said that the scooter finish was easily scratched, and that the component parts would not fit securely together. He recalled the following additional problems: the armrest would easily collapse; the handlebars were bent; the potentiometer, the scooter direction device and/or throttle, had an extremely short life span and would frequently stick; a paddle had to be redesigned so that it could not be wrenched off the scooter; there was difficulty in gluing the floor mats to the polyethylene floor pans; the seat would not stay in a stable and locked position; the material that was used for the battery boxes would fade in the sunlight and was not durable enough to withstand the battery acidity. Peoples testified that *381scooters were manufactured until the Fall of 1989, but that production was very sporadic. He recalled having to make numerous modifications to the scooter, and said that most of the scooters that were sold in the first six months were returned. Significantly, he indicated that IDA was being furnished weekly reports which detailed the problems that were being encountered.
During this same period of time, IDA began to make requests for the payment of the outstanding invoices. In response to these collection efforts, on May 10, 1989, Attorney Henry Lackey, who was representing Blount and the “Mississippi Medical” entities, prepared and telefaxed to Mike Yardley at IDA the following:
Mike:
I have spoken with Wendell and he assured me that you would be paid in full on or before June 30, 1989. He is out of town today but said he had financing arranged and that it could be consummated next week and if so you would be paid next week, but if not, no later than June 30, 1989.
Please advise by return Fax if you can release the documents as previously requested.
Sincerely,
Henry L. Lackey
On receipt of this faxed letter from Lackey, IDA released certain patent documents, applicable to the scooters, that it had been holding. The value of the patent documents, however, was never disclosed. This presents a problematic evidentiary question for the court.
Based on the faxed letter, IDA contends that Blount personally guaranteed the obligations that had been incurred by the “Mississippi Medical” entities. At this time, according to the invoices, all of the $94,-270.75 indebtedness was past due. In the excerpt from his deposition, read into the record, Lackey indicated that Blount had told him to advise IDA that the debt would be paid. He also confirmed that the faxed letter was sent on Blount’s instructions and that its contents were accurate.
When the June 30, 1989, deadline passed without the promised payment being made, IDA continued negotiations with Lackey, but with no success. On August 21, 1989, IDA made a formal written demand for payment by certified mail. This letter also demanded attorney’s fees pursuant to § 11-53-81, Miss.Code Ann. (1972) (Cum. Supp.1992). Immediately after receipt of the demand letter, on August 23, 1989, Blount and Mississippi Durable Medical Equipment, Inc., filed suit against IDA in the Circuit Court of Calhoun County, Mississippi, alleging that the IDA invoices should not be paid because IDA had negligently designed the scooter. This lawsuit was removed to the United States District Court for the Northern District of Mississippi where IDA filed a counterclaim against Blount, seeking payment for the past due invoices, as well as, for compensatory and punitive damages, based on the contention that Blount’s complaint was totally without merit and frivolous. Blount’s complaint against IDA was subsequently dismissed with prejudice by United States District Court Judge Glen H. Davidson. On May 20, 1991, coincidentally, the date that the trial on IDA’s counterclaim was scheduled to begin in the district court, Blount filed his emergency bankruptcy petition. Thereafter, IDA’s counterclaim, which still remained viable, was transferred by Judge Davidson to this court for adjudication.
To finalize the chronicle of Blount’s involvement with the scooters, the court notes that in December, 1989, Blount sold three of the corporations that he owned to Wespac Medical Products, Inc., a Texas entity. The companies were Mississippi Durable Medical Equipment, which manufactured lift chairs, B-Mec Inc., which also manufactured lift chairs, and Medical Concepts, which had been organized to produce the scooters. Wespac returned Mississippi Durable Medical Equipment and B-Mec to Blount in March, 1990, but retained ownership of Medical Concepts. Wespac changed its corporate name to Medical Resources Company of America and entered into a transaction for the marketing of the scooters with Odyssey Mobility Systems, Inc. The scooters have now been sold in theme *382parks across the United States under the brand name Med Con I. The total extent to which these scooters were modified from the IDA design is unknown to the court although some relatively minor modifications were mentioned during the trial testimony.
Mississippi Durable Medical Equipment and B-Mec ceased business operations, primarily because Medicare, beginning in December, 1989, terminated its program which paid for lift chairs for eligible customers. Blount testified that this Medicare policy change also caused Saul Fesman to abandon his lift chair business which he operated under the name of Queen City Home Health Care, Inc. This occurred at a time when Fesman allegedly owed Blount substantial sums of money.
Blount indicated that the Wespac transaction was financially disastrous for him because Wespac failed to honor several material contractual obligations.
There was a substantial amount of testimony regarding Blount’s efforts to shield assets from the reach of his creditors. The evidence also indicated that Blount and his wife, Julia, transferred practically all of the assets held in their names to two Louisiana corporations on the eve of filing bankruptcy. Although this testimony is significant in revealing Blount’s motivation and adversely affecting his credibility, it has little impact on the outcome of the adversary proceedings currently before the court.
III.
STATEMENT OF THE ISSUES
After hearing the testimony and reviewing the documentary evidence, the court concludes that there are essentially two issues in these adversary proceedings. They are set forth as follows:
A. Whether the debt in the sum of $94,-270.75, admittedly owed to IDA by either Mississippi Medical, Inc., Mississippi Durable Medical Equipment, Inc., or Medical Concepts, Inc., and allegedly guaranteed by Blount, causing IDA to release the scooter patent rights, is a nondisehargeable debt pursuant to 11 U.S.C. § 523(a)(2)(A). This section reads as follows:
(a) A discharge under section 727, 1141, [,] 1228[a] 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt—
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained, by—
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition;
B. Whether IDA is entitled to damages because of the allegedly frivolous lawsuit filed and prosecuted by Blount and Mississippi Durable Medical Equipment against IDA in the Circuit Court of Calhoun County, Mississippi, the United States District Court for the Northern District of Mississippi, and this court, as well as, whether these damages are nondisehargeable in this bankruptcy case pursuant to 11 U.S.C. § 523(a)(6), which reads as follows:
(a) A discharge under section 727, 1141, [,] 1228[a] 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt—
(6) for willful and malicious injury by the debtor to another entity or to the property of another entity;
IV.
CONCLUSIONS OF LAW
A. DISCHARGEABILITY OF THE DEBT OWED TO IDA •
In order to resolve the question of whether Blount, in fact, defrauded IDA as contemplated by 11 U.S.C. § 523(a)(2)(A), several factors must be restated:
1. From the court’s perception, the only possible evidence of fraud against Blount centered on his authorizing Henry Lackey to fax the letter to Mike Yardley at IDA on May 10, 1989. As a result of this letter, IDA voluntarily transferred certain patent documents to Lackey for Blount’s benefit. The value of these documents was never introduced into evidence, so the court cannot even begin to evaluate what IDA *383gave up as consideration for the letter. If the letter could be construed as a fraudulent representation, the value of the patent documents to IDA would be the appropriate measure of damages, not the amount of the preexisting debt already owed to IDA.
In this context, the court also recalls testimony to the effect that IDA had questionable justification legally to refuse to release the patent documents to Lackey and/or Blount.
2. IDA contends that the faxed letter from Lackey was a personal guarantee offered by Blount. The letter simply said that “.... you (IDA) would be paid in full on or before June 30, 1989.” There is no language in the letter to indicate that Blount, individually, was promising to make the payment. The letter could easily be interpreted to mean that the payment would be forthcoming from “Mississippi Medical,” the entity that had been billed for all of the work performed by IDA. In the opinion of the court, the letter is legally insufficient to be considered as a personal guarantee of a corporate debt.
3. The letter is clearly a promise to perform an act in the future. A promise of this nature cannot amount to fraud unless there is a present undisclosed intent not to perform at the time that the promise is made. See, In re Posey, 57 B.R. 858 (Bankr.N.D.Miss.1985). There was no proof of any description offered that either Blount or the “Mississippi Medical” entities had any present undisclosed intent not to perform when Lackey faxed the letter to IDA. As such, this letter amounts to nothing more than a promise to pay a past due debt approximately six weeks in the future; absent additional evidence, it cannot be construed by this court as an act of fraud.
4. 11 U.S.C. § 523(a)(2)(A) states, inter alia, that an individual debtor is not discharged from any debt for services .to the extent obtained by false pretenses, a false representation, or actual fraud. As to the $94,270.75, clearly owed by “Mississippi Medical” to IDA, the invoices reveal that this entire sum was due to IDA in full long before Lackey sent the faxed letter on May 10, 1989. As such, neither the $94,-270.75 debt nor the services which underpin the debt were obtained by false pretenses, false representation, or actual fraud. The debt had been incurred and the services obtained before the letter was ever submitted.
For the above and foregoing reasons, the court must conclude that the debt owed to IDA in the sum of $94,270.75, is a dis-chargeable debt in Blount’s bankruptcy case.
B. WILLFUL AND MALICIOUS PROSECUTION OF THE LAWSUIT AGAINST IDA
The next issue concerns whether IDA is entitled to damages because of the allegedly frivolous lawsuit filed and prosecuted by Blount arid Mississippi Durable Medical Equipment against IDA in the Circuit Court of Calhoun County, Mississippi, the United States District Court for the Northern District of Mississippi, and this court, as well as, whether such damages, if allowed, are nondischargeable debts in Blount’s bankruptcy case pursuant to 11 U.S.C. § 523(a)(6).
In order to find that the damages claimed by IDA are nondischargeable under the aforementioned Code section, the court must conclude that the actions by Blount were both willful and malicious. The Fifth Circuit Court of Appeals has adopted the definition of “willful and malicious” as set forth in Collier on Bankruptcy. See Vickers v. Home Indemnity Company, Inc., 546 F.2d 1149 (5th Cir.1977); In re Dardar, 620 F.2d 39 (5th Cir.1980); Seven Elves, Inc. v. Eskenazi, 704 F.2d 241 (5th Cir.1983); In re Quezada, 718 F.2d 121 (5th Cir.1983). See also, In re Cecchini, 780 F.2d 1440 (9th Cir.1986). Collier provides:
In order to fall within the exception of section 523(a)(6), the injury to an entity or property must have been willful and malicious. An injury to an entity or property may be a malicious injury within this provision if it was wrongful and without just cause or excuse, even in the absence of personal hatred, spite or ill-*384will. The word “willful” means “deliberate or intentional,” a deliberate and intentional act which necessarily leads to injury. Therefore, a wrongful act done intentionally, which necessarily produces harm and is without just cause or excuse, may constitute a willful and malicious injury.
3 Collier on Bankruptcy, 523.16 at 523-129 (15th ed. 1992).
See also, In re Lefeve, 131 B.R. 588 (Bankr.S.D.Miss.1991)
There is no question that the filing of the lawsuit by Blount was intentional. However, whether it was malicious, i.e., wrongful and without just cause or excuse, is another question.
The court heard a great amount of testimony concerning problems that were encountered with, the scooters. Excerpts from the testimony of Clyde W. Henderson and Bedford Forest “Buzz” Peoples were set forth earlier in this opinion. Added to this is the testimony of Attorney Hale Freeland, who represented Blount and Mississippi Durable Medical Equipment in the lawsuit. Freeland corroborated that complaints about the scooter had indeed been voiced by Henderson, Peoples, and Ronald Mostich. He outlined the following issues which he considered to be viable elements of the complaint against IDA, to-wit:
A. IDA was not qualified to design such a scooter.
B. IDA had negligently designed the scooter.
C. IDA had contractually agreed to prepare final production drawings which went beyond the delivery of the initial scooter prototype.
Candidly, Freeland stated that the lawsuit was not a “clear cut winner,” but, in his mind, it had a sound basis in fact and in law.
Although the filing of the lawsuit only two days after receipt of the demand letter from IDA was obviously a “forum shopping” technique, there is nothing inherently wrong with this if the underlying cause of action is legitimate.
Problems were obviously encountered with the scooters when production was commenced. IDA had designed the scooter and then attempted to correct a number of problems as they arose. This evidences an awareness by all of the parties that the project was not proceeding smoothly. This also should have put the parties on notice that if mutually satisfactory arrangements could not be negotiated as to the extent of IDA’s services and responsibilities, as well as, the payment for same, that litigation was a distinct possibility.
After carefully reviewing all of the testimony, the court concurs with the comment of Attorney Freeland. The lawsuit may not have been a “clear cut winner,” but it was not filed wrongfully nor without just cause or excuse. The testimony certainly does not indicate that the lawsuit was frivolous.
Therefore, for the reasons cited above, the court is of the opinion that the complaint filed by IDA seeking a determination that the alleged damages, resulting from the lawsuit filed by Blount, are nondis-chargeable debts is not well taken. Because of this ruling, IDA’s counterclaim for damages is rendered moot. A separate order will be entered consistent with this opinion. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491619/ | OPINION
DAVID W. HOUSTON, III, Bankruptcy Judge.
On consideration before the court is a complaint filed by the plaintiff, Jacob C. Pongetti, Trustee for the estate of Larson C. Locklin; answer and affirmative defenses having been filed by the defendant, General Motors Acceptance Corporation; and the court having considered same hereby finds as follows, to-wit:
I.
The court has jurisdiction of the subject matter of and the parties to this proceeding pursuant to 28 U.S.C. § 1334 and 28 U.S.C. § 157. This is a core proceeding as defined in 28 U.S.C. § 157(b)(2)(F).
II.
The trustee has filed his complaint to avoid a lien existing in favor of the defendant, General Motors Acceptance Corporation, hereinafter GMAC, in a 1990 GMC Safari Van formerly owned by the debtor. The trustee contends that the perfection of the said lien constitutes a preferential transfer as contemplated by 11 U.S.C. § 547(b). The facts which give rise to this cause of action are not in dispute and have been stipulated as follows:
(a) On May 23, 1990, Larson C. Locklin filed his Chapter 7 debtor’s petition in the Bankruptcy Court for the Northern District of Mississippi, giving Lowndes County, Mississippi, as his place of residence.
(b) On May 4, 1990, only nineteen (19) days before filing his petition, Mitchell Buick, Pontiac, GMC Truck, Inc. of West Point, Mississippi, sold and delivered to the debtor a new 1990 GMC Safari Van for $18,300.00, plus finance charges of $4,945.44, payable in 48 equal installments.
(c) On May 4, 1990, Larson C. Locklin and Mitchell Buick executed a retail installment contract, granting the seller a security interest in the vehicle, in which the debt- or gave Tuscaloosa, Alabama, as his address. The retail installment contract and security interest was immediately assigned to GMAC.
(d) On May 4, 1990, the seller delivered to the debtor the vehicle and all necessary documents including the Manufacturer’s Certificate of Origin for purposes of obtaining a title certificate in the State of Alabama, relying upon the debtor to perfect *386the security interest due to the fact that the seller was not a “designated agent” in the State of Alabama.
(e) On May 9, 1990, five (5) days after the purchase and delivery, the debtor made application for an Alabama certificate of title with the License Commissioner in Tuscaloosa, Alabama. On May 18, 1990, the License Commissioner prepared his title remittance advice and mailed it with the required documents to the Alabama Department of Revenue in Montgomery, Alabama, which received it on May 21, 1990, seventeen (17) days after the purchase and delivery of the vehicle.
(f) Jacob C. Pongetti is the appointed trustee, duly qualified and acting for the Estate of Larson C. Locklin.
(g) The certificate of title for the vehicle was issued on June 6, 1990, by the Alabama Department of Revenue showing Larson C. Locklin as owner, and GMAC as the lien holder.
(h) The Tuscaloosa License Commissioner is a “designated agent” of the Department of Revenue of the State of Alabama.
(i) The sale .of the vehicle to the debtor was a credit transaction and not a cash transaction.
(j) The sale of the vehicle, execution of the security agreement, and the submission of the application for an Alabama certificate of title, as well as, its perfection all occurred within ninety (90) days of the filing of debtor’s petition.
(k) The debtor was insolvent on the date of the transfer.
(Z) The debt to Mitchell Buick was incurred by the debtor on May 4, 1990.
(m) The transfer was made for the benefit of GMAC on account of the debt owed by the debtor on May 4, 1990.
(Hereinafter all Code sections will be considered as Title 11, United States Code, unless specifically noted otherwise.)
III.
In order to avoid a preferential transfer, i.e., in this proceeding the perfection of the lien in favor of GMAC, the trustee must establish each of the following requirements set forth in § 547(b):
(b) Except as provided in subsection (c) of this section, the trustee may avoid any transfer of an interest of the debtor in property—
(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the debtor before such transfer was made;
(3) made while the debtor was insolvent;
(4) made—
(A) on or within 90 days before the date of the filing of the petition; or
(B) between ninety days and one year before the date of the filing of the petition, if such creditor at the time of such transfer was an insider; and
(5) that enables such creditor to receive more than such creditor would receive if—
(A) the case were a case under chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by the provisions of this title.
There are seven exceptions to the trustee’s ability to avoid a preferential transfer enumerated in § 547(c). One exception pertinent to this proceeding is found in § 547(c)(3), which reads as follows:
(c) The trustee may not avoid under this section a transfer—
(3) that creates a security interest in property acquired by the debtor—
(A) to the extent such security interest secures new value that was—
(i) given at or after the signing of a security agreement that contains a description of such property as collateral;
(ii) given by or on behalf of the secured party under such agreement;
(iii) given to enable the debtor to acquire such property; and
(iv) in fact used by the debtor to acquire such property; and
*387(B) that is perfected on or before 10 days after the debtor receives possession of such property;
Since all of the requirements of § 547(c)(3)(A) have admittedly been established, the principal question in this proceeding is whether the security interest in the subject vehicle was perfected on or before 10 days after the debtor received possession as required by § 547(c)(3)(B).
IV.
GMAC contends that its security interest was perfected according to § 32-8-61 of the Alabama Code which reads as follows:
A secured interest is perfected by the delivery to the department o/the existing certificate of title, if any, an application for a certificate of title containing the name and address of the lien holder and the date of his security agreement and the required fee. It is perfected as of the time of its creation if the delivery is completed within twenty (20) days thereafter, otherwise, as of the time of the delivery, (emphasis supplied)
The trustee takes the position that the operative date of perfection is June 6, 1990, the date that the certificate of title for the vehicle was actually issued by the Alabama Department of Revenue.
V.
The Bankruptcy Code does not specify the manner in which a security interest in an automobile or motor vehicle is to be perfected. As indicated in McKenzie v. Irving Trust Co., 323 U.S. 365, 65 S.Ct. 405, 89 L.Ed. 305 (1945), that is governed by state law.
Section 32-8-35 of the Alabama Code directs that an application for a certificate of title of a vehicle shall be made by the owner to a designated agent on the form prescribed by the Department of Revenue. As set forth above, § 32-8-61 states that the security interest is perfected “by the delivery to the department of ... an appli-cation_” Pursuant to § 32-8-4, the Tuscaloosa License Commissioner is a “designated agent” of the Department of Revenue.
VI.
Significantly, the parties have stipulated that the debtor made application with the License Commissioner in Tuscaloosa, Alabama, a “designated agent” of the Department of Revenue, for a certificate of title on May 9, 1990, five days after the purchase and delivery date. It is the opinion of this court that perfection of GMAC’s security interest in the vehicle was achieved at this time. This, of course, is a date on or before ten days after the debtor received possession of the vehicle as required by § 547(c)(3)(B). The unambiguous language of the Alabama statute provides that perfection is achieved by the delivery of the application for the certificate of title to the department, not by the department’s actual issuance of the certificate of title. Common sense and equity dictate that no creditor should have to depend on a bureaucratic agency to promptly issue a certificate of title even when the underlying application was timely delivered in proper form.
For the above and foregoing reasons, this court is of the opinion that the trustee’s complaint is not well taken. The facts of this case clearly reveal an exception, pursuant to § 547(c)(3), to the trustee’s power to avoid a preferential transfer. The complaint will, therefore, be dismissed with prejudice.
VII.
Because of the reasoning underpinning the above decision, the court is of the opinion that a discussion of the Fifth Circuit Court of Appeals holding in Matter of Hamilton, 892 F.2d 1230 (5th Cir.1990), is unnecessary.
VIII.
This court recognizes that the use of § 547(c)(1), the “contemporaneous exchange” exception to preference avoidance, has diminished in recent years in enabling loan transactions. However, this exception could easily be applied to the facts of this case since both the debtor and GMAC acted *388reasonably and promptly to fully consummate the secured transaction. It was obviously their intent that a security interest would be given and perfected when the vehicle was purchased. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491620/ | OPINION AND ORDER DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT, GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND DETERMINING TAX LIABILITY
WALTER J. KRASNIEWSKI, Bankruptcy Judge.
This matter is before the court upon the motion of Debtor/plaintiff and the cross motion of defendant for summary judgment of plaintiff’s complaint to determine tax liability. Upon consideration of the record herein, the court finds that defendant’s motion is well taken and should be granted and that plaintiff is liable for the taxes imposed.
FACTS
On June 20, 1991, plaintiff Richard J. Geise filed, with his wife Barbara J. Geise, a voluntary joint petition under chapter 7 of title 11. On September 30, 1991, plaintiff filed a complaint to determine tax liability. Plaintiff states that, on May 13, 1991, he was notified of a certain civil penalty charged by defendant under IRC § 6672, the 100% penalty provision imposed upon a responsible person for failure to pay over payroll taxes, in the amount of $19,665.69. Plaintiff contends that this charge was improper, illegal and without a factual basis.
Specifically, plaintiff asserts that he is not a responsible person as he was employed as a production manager by Dura-Weld, Inc. (hereinafter referred to as “Dura”). Rather, he executed payroll checks as an accommodation to Dura’s president, in the absence of the president. Pretrial Brief of Plaintiff at 3 (May 20, 1992). Furthermore, plaintiff asserts that he did not willfully fail to pay over payroll taxes on behalf of Dura.
Defendant asserts that the tax in issue may be imposed against an individual who has significant control over a company’s business affairs and who participates in decisions concerning payments and disbursements of funds; plaintiff was an officer, director, co-owner and shareholder of Dura and had significant control over the dispersal of funds; he has admitted that he signed numerous checks. Furthermore, plaintiff’s willfulness in failing to pay over the taxes is evident as he was aware the taxes were unpaid and failed to pay them.
On October 30, 1992, defendant filed a motion for summary judgment stating that Dura was a family run business; its principals were all related. Defendant states that Dura’s 1988 business plan reflected Dura’s need for funds, to pay certain liabilities, including past due payroll taxes. United States’ Memorandum of Law in Support of Motion for Summary Judgment at 5. Additionally, that business plan reflected that business operations were maintained through non-payment of payroll taxes. Id. Defendant contends that plaintiff read Dura’s business plan and was aware of the past due payroll taxes. Id. As a result, defendant requests summary judgment on the issues of whether plaintiff was “responsible” and “willful.”
Plaintiff, on November 16, 1992, filed a motion for summary judgment admitting his liability for the second quarter of 1990 *434and the third quarter of 1990 totaling $2,199.47; defendant, however, disputes liability for the first quarter of 1989 through the first quarter of 1990, claiming he was not a responsible person who acted willfully under the terms of the IRC. Memorandum in Support of Motion for Summary Judgment of Plaintiff and in Opposition of the Defendant’s Motion for Summary Judgment at 2. Defendant asserts that he was not an authorized signatory to Dura’s account and that he executed checks, periodically, for the convenience of others, when Dura’s president was absent. When he became aware of the nonpayment of trust fund taxes, he joined another shareholder in removing the president.
DISCUSSION
Plaintiff's complaint is brought pursuant to 11 U.S.C. § 505(a) which permits this court to “determine the amount or legality of any tax”; defendant admits to this court’s jurisdiction. Answer of the United States at 1 (Nov. 25, 1991). The tax in issue was imposed pursuant to 26 U.S.C. § 6672 which provides:
Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over.
Liability will be imposed upon plaintiff, then, if he is a “responsible person” and he “willfully failed to carry out the responsibilities that the tax code imposes on him.” Bowlen v. U.S. 956 F.2d 723, 727 (7th Cir.1992) (citations omitted). Additionally,
[t]he burden of proof is on the taxpayer as to all issues; the IRS assessment is presumed to be correct unless it can be shown to be without rational foundation.
In re Bernard, 130 B.R. 740, 745 (Bkrtcy.W.D.La.1991) (citations omitted). See also In re Summers, 32 B.R. 861, 866 (Bkrtcy. N.D.Ohio 1983) (Debtor, as the person seeking to avoid the penalty, bears the burden of proving by a preponderance of the evidence that he was not a “responsible”, person or that his failure to pay the taxes was not “willful” (citations omitted)).
Initially, then, the court notes that defendant’s assessment is presumed correct; plaintiff must convince this court that he was not responsible or that he did not act willfully. Defendant admits liability for $2,199.47, representing the nonpayment of trust fund taxes for the second and third quarters of 1990. Memorandum in Support of Motion for Summary Judgment of Plaintiff and in Opposition of the Defendant’s Motion for Summary Judgment at 2. Thus, the issue remaining is whether plaintiff is liable for the nonpayment of trust funds taxes for the first quarter of 1989 through the first quarter of 1990, totaling $17,466.22 ($19,665.69 - $2,199.47 = $17,-466.22).
Both parties request summary judgment pursuant to Bankruptcy Rule 7056 which permits the court to grant summary judgment if it appears there is no genuine issue as to any material fact and movant is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c).
Defendant’s tax assessment represents the 100% penalty, imposed upon a responsible person for nonpayment of trust fund taxes. Although defendant asserts that plaintiff is liable as he had significant control over the dispersals of funds, plaintiff maintains that he was the shop manager who executed checks as a convenience to others.
A “responsible” person may include any person with significant, though not exclusive, authority to decide what bills are to be paid. An officer of a corporation may be found to be a responsible person, even if others in the corporation also have the duty to collect and pay over taxes.
Summers, 32 B.R. at 866 (citations omitted). See also Bowlen, 956 F.2d at 728 (to be responsible, a person need not necessarily have exclusive control over the disper-sals of funds or have the final word as to *435which creditors should be paid so long as he has significant control).
Courts have recognized several indicia of responsible person status including ownership of stock or holding of an entrepreneurial stake in a corporation and authority to sign checks on corporate accounts or prevent their issuance by denying a necessary signature.
Bowlen, 956 F.2d at 728 (citations omitted). See also Bernard, 130 B.R. at 746 (factors considered by the Fifth Circuit on a case by case basis to determine responsible person include: (1) holding an office or owning stock in a corporation; (2) managing the day-to-day operations of the business; (3) making decisions as to the disbursement of funds and the payment of creditors; and (4) check signing authority (citation omitted)).
Plaintiff “was an officer and 30% shareholder of Dura.” Memorandum in Support of Motion for Summary Judgment of Plaintiff and in Opposition of the Defendant’s Motion for Summary Judgment at 1 (Nov. 16, 1992). Plaintiffs sole defense, on this issue, appears to be that he “did periodically sign checks of [Dura] only for the purpose of convenience when [Dura’s president] was not around to sign such checks.” Id. at 2. Based upon this assertion, the court finds that plaintiff has failed to carry his burden of proof, rebutting the presumed correctness of the tax imposed. Plaintiff owned stock in the company, he was involved in the day-to-day operations of the business, he was involved in disbursing funds to creditors and he had check signing authority. Thus, despite plaintiff’s assertion that he was not a signatory on the account, he, obviously, had that authority as he “periodically sign[ed] checks” in the absence of Dura’s president. Based upon the record, then, the court finds that plaintiff has failed to demonstrate that he was not a responsible person.
The court must also determine whether plaintiff’s conduct was willful.
Willful conduct has been defined as “intentional, knowing and voluntary acts. It may also indicate a reckless disregard for obvious or known risks.”
Willfulness is shown by a decision to pay other creditors when taxes are known to be unpaid....
.... Liability has been imposed where a taxpayer knows of problems in paying taxes and in corporate management, and fails to investigate to insure payment of taxes or take steps to correct mismanagement.
Summers, 32 B.R. at 866 (citations omitted). See also Davis v. U.S., 961 F.2d 867, 871 (9th Cir.1992) (willful has been defined as a “voluntary, conscious and intentional act to prefer other creditors over the United States”; taxpayer’s deliberate decision to use corporate revenues to pay commercial creditors rather than to diminish its tax' debt falls within the literal terms of willfulness), petition for cert. filed, Oct. 13,1992; Bowlen, 956 F.2d at 729 (responsible person’s use of funds or his knowledge of the use of funds for payments to other creditors after he is aware of the failure to pay the withholding tax is willful conduct).
After plaintiff’s awareness of the nonpayment of trust funds taxes, as reflected in Dura’s 1988 business plan, plaintiff should have, then, investigated to insure payment of taxes. Plaintiff states that he “lent his personal guarantee to the two loans” presumably used to pay the payroll taxes. Memorandum in Support of Motion for Summary Judgment of Plaintiff at 2. Once on notice of any “mismanagement”, plaintiff had a duty to investigate payment of taxes. Although plaintiff maintains that he took steps, by causing Dura’s president to resign, these steps do not relieve him of liability for the taxes imposed. Furthermore, other creditors were paid, including employees and, presumably, plaintiff. Such conduct rises to, minimally, a “reckless disregard for obvious or known risks.” Summers, 32 B.R. at 866. As a result, plaintiff is liable for the nonpayment of trust fund taxes for the first quarter of 1989 through the first quarter of 1990.
Finally, Debtor’s assertion that he was unaware of the tax arrearage until March, 1990, is not persuasive. See Memorandum in Support of Motion for Summary Judg*436ment of Plaintiff at 2. Debtor’s familial relationship (Dura was a family run business, see United States’ Memorandum of Law in Support of its Motion for Summary Judgment at 2) further supports this court’s conclusion that plaintiff was aware of the nonpayment. See Bernard, 130 B.R. at 742 (Debtor was too close to his father not to know that there were unpaid trust fund taxes and Debtor was involved in too many aspects of the business not to know). Also, plaintiff’s liability extends to taxes accruing before he became aware “provided that there were funds that could later be used to pay them.” Bernard, 130 B.R. at 747. Thus, plaintiff must demonstrate that no creditors, other than defendant, were paid after he became aware of the withholding problem. Id, at 747. Plaintiff has failed to carry his burden of proof on the issue of willfulness, also; as a result, plaintiff is liable for the tax imposed.
In light of the foregoing, it is therefore
ORDERED that motion of plaintiff Richard J. Geise for summary judgment be, and hereby is, denied. It is further
ORDERED that motion of defendant United States of America, Internal Revenue Service for summary judgment be, and hereby is, granted and plaintiff Richard J. Geise be, and hereby is, liable for the tax imposed pursuant to 26 U.S.C. § 6672. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491621/ | MEMORANDUM OPINION
JAMES G. MIXON, Bankruptcy Judge.
On October 10, 1989, U.S.A. Inns of Eureka Springs, Arkansas, Inc., (U.S.A. Inns), filed a voluntary petition for relief under the provisions of chapter 11 of the United States Bankruptcy'Code. On November 24, 1989, the debtor-in-possession filed this adversary proceeding against United Savings & Loan Association (United) and others to recover certain preferential transfers pursuant to 11 U.S.C. § 547(b) (1988). United raised the affirmative defense that the transfers it received were made in the ordinary course of business and according to ordinary business terms pursuant to 11 U.S.C. § 547(c)(2) (1988).
On April 10, 1990, this case was converted to a proceeding under the provisions of chapter 7. Claude R. Jones, Esq., was appointed trustee and was subsequently substituted as party plaintiff. On November 11, 1991, a trial was held and the matter was taken under advisement. On December 17, 1991, an order was entered dismissing the complaint as to all defendants except United.
The proceeding before the Court is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(F) (1988), and the Court has jurisdiction to enter a final judgment in the case. The following shall constitute the Court’s findings of fact and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052.
The essential facts are not in dispute. The original promissory note dated July 31, 1985, was made by Eureka Motel (Eureka) in the original principal sum of $2,700,-000.00. The note provided for repayment in equal monthly installments of $27,-940.00, due on the 30th day of each month. The entire unpaid principal was due July 29, 1992, and the parties contemplated that the note would be renewed and the interest rate adjusted at that time. The note was secured by a first lien on the Eureka Motel located in Eureka Springs, Arkansas, and a first security interest in all its furniture, fixtures, equipment and inventory.
On August 10, 1988, Eureka sold the Eureka Motel to the debtor. This transaction violated a due-on-sale clause contained in the deed of trust. The debtor assumed Eureka’s note payable to United; however, United was not aware of the assumption until after the sale was completed. Soon *489after United discovered the sale, United met with the debtor’s representatives to discuss the loan. Mr. J.C. Benage (Be-nage), the chairman of the board, president and chief executive officer of United, testified that “after much discussion, and somewhat reluctantly] ... we did agree then to allow an assumption of our loan.” Record at 11.
On October 10, 1989, when the debtor filed bankruptcy, United’s claim against the debtor totaled $2,815,037.65 and was secured by collateral with a fair market value of $2,620,000.00. The parties stipulated that during the ninety-day period pri- or to the filing of the petition, the debtor made the following payments to United:
Date Amount
7/14/89 $ 6,538.45
7/21/89 6,461.55
7/26/89 7,000.00
8/01/89 1,845.37
8/01/89 11,154.63
8/08/89 2,642.19
8/17/89 7,357.81
8/18/89 966.30
8/18/89 5,233.70
8/25/89 3,800.00
9/01/89 10,000.00
Total $63,000.00
The following is a list of all other payments made by the debtor to United:
Date Amount
1/04/89 3,000.00
1/05/89 23,508.34
1/31/89 15,000.00
2/17/89 6,000.00
3/24/89 5,000.00
4/04/89 5,000.00
4/18/89 5,000.00
4/26/89 4,000.00
5/02/89 5,000.00
5/09/89 8,500.00
5/18/89 2,000.00
5/19/89 2,000.00
5/23/89 3,500.00
5/30/89 6,000.00
6/01/89 1,000.00
6/13/89 5,000.00
6/16/89 2,500.00
6/23/89 10,000.00
7/05/89 10,000.00
7/10/89 7,000.00
The parties stipulated that all the elements are present to constitute a preference under 11 U.S.C. § 547(b) (1988). However, United asserts the affirmative defense allowed under 11 U.S.C. § 547(c) (1988), which provides:
(c) The trustee may not avoid under this section a transfer—
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(2) to the extent that such transfer was
(A) in payment of a debt incurred by the debtor in the ordinary course of business or financial affairs of the debtor and the transferee;
(B) made in the ordinary course of business or financial affairs of the debtor and the transferee; and
(C) made according to ordinary business terms[.]
11 U.S.C. § 547(c)(2) (1988).
The legislative history of section 547(c)(2) suggests that the purpose of the ordinary course of business exception is to leave undisturbed normal financial relations between the debtor and the creditor. Ordinary course of business transactions do not detract from the general purpose of the preference section which is to discourage unusual action by either the debtor or his creditors immediately prior to bankruptcy. H.R.Rep. No. 95-595, 95th Cong. 1st Sess. 373, reprinted in 1978 U.S.C.C.A.N. 5787, 5963, and 6329.
A creditor asserting the provisions of section 547(c)(2) as a defense to a preference action has the burden of proof to establish the applicability of the section. 11 U.S.C. § 547(g) (1988). See First Software Corp. v. Curtis Mfg. Co. (In re First Software Corp.), 81 B.R. 211, 212 (Bankr.D.Mass.1988); 4 Collier on Bankruptcy U 547.21[5] (15th ed. 1990). United must prove that the loan payments were 1) payments of a debt incurred in the ordinary course of business, 2) made in the ordinary course of business of the debtor and United, and 3) made according to ordinary business terms. 11 U.S.C. § 547(c)(2). The creditor must prove the three elements of section 547(c)(2) by a preponderance of the evidence to escape a preference avoidance. Logan v. Basic Distribution Corp. (In re *490Fred Hawes Org.), 957 F.2d 239, 242 (6th Cir.1992). The term “ordinary course of business” is not defined in the Bankruptcy Code; therefore, its determination is a factual issue. First Software Corp., 81 B.R. at 213.
The first element United must prove is that the debt was incurred by the debtor in the ordinary course of business or financial affairs of the debtor and United. See section 547(c)(2)(A). The debt was incurred by an assumption of an existing debt secured by a mortgage and security interest on the debtor’s place of business. Payment on long-term debt may qualify for the ordinary course of business exception to the trustee’s power to avoid preferential transfers. Union Bank v. Wolas, — U.S. -, 112 S.Ct. 527, 116 L.Ed.2d 514 (1991). Assumption of a note and mortgage is a typical business transaction. The debt was incurred for the purpose of financing business property. United is in the business of loaning money for such purposes. Therefore, the debt was incurred by the debtor in the ordinary course of business or financial affairs of the debtor and United.
The second element of section 547(e)(2) requires proof that the transfers to United were made in the ordinary course of business or financial affairs of the debt- or and United. See section 547(c)(2)(B). In determining whether a payment is made in the ordinary course of business, the facts and circumstances surrounding the payments must be considered. The factors include the prior course of dealing between the parties, the timing and amount of the payment, and whether , the payment resulted from pressure or any unusual activity by the creditor. Xtra, Inc. v. Seawinds Ltd. (In re Seawinds Ltd.), 888 F.2d 640, 641 (9th Cir.1989); Newton v. Ed’s Supply Co. (In re White), 58 B.R. 266, 269 (Bankr.E.D.Tenn.1986). See 4 Collier on Bankruptcy If 547.10 (15th ed. 1992).
The conduct of the parties involved must be considered to determine what is ordinary with the respect to those parties. Howison v. Adkin Plumbing & Heating Supply Co. (In re Websco, Inc.), 92 B.R. 1, 2 (Bankr.D.Me.1988); First Software Corp., 81 B.R. at 213. Even if the debtor’s business transactions were irregular, they may be considered “ordinary” for purposes of section 547(c)(2) if the transactions were consistent with the course of dealing between the particular parties. Yurika Foods Corp. v. United Parcel Services (In re Yurika Foods Corp.), 888 F.2d 42, 44 (6th Cir.1989); Waldschmidt v. Ranier (In re Fulghum Constr. Corp.), 872 F.2d 739, 743 (6th Cir.1989).
Benage testified that the debtor made sporadic and untimely payments on the loan during the entire course of the business relationship. He stated that this pattern of payments was in the ordinary course of business between United and the debtor. Although the assumption agreement provided that United had the right to call the loan if the payments were not made on a timely basis, United was regulated by both state and federal agencies that encourage institutions to work with delinquent customers. Benage explained that “it was in [United’s] best interest and the motel’s interest to continue in accepting payments of this nature.” Record at 17.
On cross-examination, the following questions were elicited from Benage:
Q: All right. If any of the payments that were made during the time period when [the debtor] was paying on this indebtedness, was there ever an ordinary, once-every-month $27,000 monthly payment made?
A: No, sir.
Q: All right. And again, are you here to tell this Court that that schedule where the monthly payment is $27,-000 represents the ordinary business terms of repaying a long-term debt in the savings and loan industry?
A: This is the manner in which Mr. Thompson paid us.
Q: Are you saying that’s ordinary for United Savings’ business, to have a debtor that pays monthly payments of $27,000 on that kind of pay schedule?
A: Well, it .could be ordinary on those accounts that where there’s default, *491delinquency, and there’s a workout process, yes, sir.
Q: Is it ordinary for all of your accounts?
A: Well, I think, Counselor, we all know that a good many of our people are fortunate enough to pay every payment and every amount due as established by the contract. But we’re talking about an exception here, and some others are exceptions.
Q: How many of those accounts do you have out of your total portfolio? What percentage of your accounts do you have that pay on that kind of pay schedule?
A: Probably eight to ten percent.
Q: Now, you have already testified that the operation of this business was seasonal.
A: That is correct.
Q: And, in fact, what United did, as any good creditor would do, was try to collect the maximum amount that you could during the maximum season for the motel operations, and that was during the summer?
A: We later, I think, restructured the loan so that it would be a seasonal pay loan. Initially, I’m not sure that it was that way with Mr. Drake. So that when the cash is there, when the income is there,'that’s when they want to make their payments and should make their payments.
Q: Even insofar as these irregular payments reflected on your Defendant’s Exhibit Number One, those, in fact, were made during the height of the tourist season in Eureka Springs, weren’t they?
A: No, sir. Some of these were made in January and February and March.
Q: And then you collected payments during the summer months?
A: That is correct.
Q: And the, according to your stipulation, you waited until October 4, 1989 to file your foreclosure case in State Court in Eureka Springs; is that correct?
A: When the checks bounced, we assumed that he was finished and had given up and couldn’t pay, yes, sir.
Q: And now, you did continue to collect these payments even though your attorney had accelerated the indebtedness in June of 1989?
A: I don’t recall if it was accelerated or not, sir. It may well have been. I don’t—
Q: It’s in the deposition.
A: Okay, that’s fine. I understand. And if that’s the case, yes, we did go ahead and collect payments.
Record at 25-27.
The Eighth Circuit Court of Appeals construed the provisions of section 547(c) in the recent case of Lovett v. Johnsbury Trucking, 931 F.2d 494 (8th Cir.1991). In Lovett, the Court found that payments of trade invoices, even though consistently late according to the printed due date on the invoice, still met the ordinary course of business exception of section 547(c)(2) because late payments were the established practice between the parties.
The facts in this case are indistinguishable from Lovett in regard to whether the transfers were made in the ordinary course of business between the parties. The record establishes that the debtor’s late payments, and United’s acceptance of those late payments, was the ordinary course of business or financial affairs between the two parties. This policy continued from the inception of the relationship until the debtor’s checks were returned as insufficient. Only at that time did United bring foreclosure proceedings.
The third element of section 547(c)(2) requires United to prove that the payments were made according to ordinary business terms. See section 547(c)(2)(C). This subsection requires an objective determination whether the payments are ordinary in relation to the standards prevailing in the relevant industry. Logan v. Basic Distribution Corp. (In re Hawes Org.), 957 F.2d 239, 244 (6th Cir.1992); Rieser v. Bruch Plastics Co. (In re Trinity Plastics, *492Inc.), 138 B.R. 203, 209 (Bankr.S.D.Ohio 1992).
Benage testified that the Office of Thrift Supervision directed United to work with delinquent customers during the “so-called real estate crisis_” Record at 17. He stated that it is regular practice in the savings and loan industry to work with delinquent customers as long as some type of payment is forthcoming. Although United confirmed that this practice may be the general industry standard as to delinquent customers, United introduced no evidence regarding “ordinary business terms” of the industry in general.
In Lovett, the Eighth Circuit contrasted the debtor’s payment with the industry as a whole. 931 F.2d at 499. There, the evidence established that late payments were so common in the entire trucking industry, the practice was considered “ordinary business.” Id. Here, United presents no evidence that late note payments are so common within the savings and loan industry that it is considered an ordinary business practice. In fact, Benage testified that at least 90% of United s customers remain current on their note payments. Record at 26. Therefore, United failed to prove that the payments were made according to ordinary business terms.
United has failed to prove one of the three essential elements needed to establish the applicability of 11 U.S.C. § 547(c)(2) (1988). Therefore, pursuant to 11 U.S.C. § 547(b) (1988), the trustee is entitled to a judgment against United for $63,000.00..
IT IS SO ORDERED. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491622/ | *591ORDER GRANTING IN PART
“TRUSTEE’S MOTION FOR SUMMARY JUDGMENT” AND DENYING DEFENDANTS’ “MOTION FOR SUMMARY JUDGMENT ...”
MICKEY DAN WILSON, Chief Judge.
In this adversary proceeding under 11 U.S.C. § 547, both plaintiff and defendants move for summary judgment. Upon consideration of the record herein, the Court determines, concludes and orders as follows.
Plaintiff is the Trustee of the above-styled case under 11 U.S.C. Chapter 7, hereinafter referred to as “the Trustee”. Defendants are seven individuals, some of whom are surnamed Pugliese, and all of whom are hereinafter referred to collectively as “Pugliese.”
The record in this case is complicated by Pugliese’s second amended answer. Said document denies certain matters which were admitted in Pugliese’s previous answers, on the strength of which admissions the Trustee rested his motion for summary judgment; and also denies certain matters, which Pugliese now admits in his own motion for summary judgment. Despite these complications, the Court believes that the following facts are not seriously disputed, and finds them to be substantially uneon-troverted pursuant to F.R.Civ.P. 56(d) adopted by F.R.B.P. 7056. The Court states separately therefrom its conclusions of law.
SPECIFICATION OF UNDISPUTED FACTS
On April 16, 1991, Pugliese sued Joseph T. Sevitski, Jr. (“Sevitski”), Sevitski and Associates, Inc. (“Sevitski Inc.”), Sevitski and Associates Ltd. (“Sevitski Ltd.”), Welcome Oil Corporation (“Welcome”), Tall-grass Petroleum Corporation (“Tallgrass”), Charles Dugger (“Dugger”) and Mik Chester (“Chester”) in the United States District Court for the Northern District of Oklahoma (“the District Court”). Sevitski was an officer of Sevitski Inc. and Tallgrass. This lawsuit is hereinafter referred to as “the District Court action;" and defendants therein are hereinafter sometimes referred to as “the District Court defendants.” Pugliese sued all of the District Court defendants for securities fraud and common law fraud. Pugliese also sued two of them, Sevitski and Sevitski Inc., for breach of contract.
On August 2, 1991, the District Court granted judgment by default on Pugliese’s counts for securities fraud and common law fraud against Sevitski, Sevitski Inc., Sevitski Ltd., and Dugger. The District Court did not grant such judgment against Tallgrass, because Tallgrass was then in bankruptcy. On the same date, the District Court also granted judgment by default on Pugliese’s count for breach of contract against Sevitski and Sevitski Inc. The District Court granted its “... judgment ... [a]gainst all ... defendants, jointly and severally, and in favor of the several plaintiffs ...,” Trustee’s motion ex. B. The judgment specified monetary amounts which need not be recited here, save to note that the awards for the securities fraud count and the fraud count were identical as to all plaintiffs.
Between August 6 and August 12, 1991, Pugliese filed Affidavits of Judgment in the counties of Coal, Washington, Okmul-gee, Rogers, and Mayes, all in the State of Oklahoma. By so doing, Pugliese perfected judgment liens upon any real property of the District Court defendants located in those counties.
One of Pugliese’s judgment liens attached to Sevitski’s previously unencumbered real property in Mayes County, near Pryor, Oklahoma (“the Pryor property”). For purposes of this opinion, the Court presumes that another lien attached to Sev-itski Inc.’s previously unencumbered interest in the Chastain-Hissom Leasehold and Gas Tap in Okmulgee County, Oklahoma (“the Gas Tap”).
Although Pugliese did perfect these judgment liens, Pugliese has never been paid any money or received any other prop*592erty of value in satisfaction of the judgment in the District Court action.
On February 14, 1992, a petition for involuntary relief against Sevitski under 11 U.S.C. Chapter 7 was filed in this Court. An order for relief was entered on March 5, 1992; and the Trustee was appointed to take charge of this bankruptcy estate.
With permission of this Court, the Trustee sold the Pryor property for $40,000.00, and sold the Gas Tap for $65,000.00, both free and clear of liens or other interests, but without prejudice to any rights Pug-liese might have in and to the proceeds. The Trustee now holds those proceeds in escrow, pending the outcome of this adversary proceeding.
Any conclusions of law which ought more properly to be specifications of undisputed facts are adopted and incorporated herein by reference.
CONCLUSIONS OF LAW
This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(F), 11 U.S.C. §§ 547, 550.
The Trustee brings this complaint under 11 U.S.C. § 547(b), which provides for the avoidance of preferential transfers, and § 550(a), which provides for the recovery of avoided transfers. § 547(b) provides as follows:
Except as provided in subsection (c) of this section, the trustee may avoid any transfer of an interest of the debtor in property—
(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the debtor before such transfer was made;
(3) made while the debtor was insolvent;
(4) made—
(A) on or within 90 days before the date of the filing of the petition; or
(B) between ninety days and one year before the date of the filing of the petition, if such creditor at the time of such transfer was an insider; and
(5) that enables such creditor to receive more than such creditor would receive if—
(A) the case were a case under chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by the provisions of this title.
§ 550(a) provides as follows:
Except as otherwise provided in this section, to the extent that a transfer is avoided under section .,. 547 ... of this title, the trustee may recover, for the benefit of the estate, the property transferred, or, if the court so orders, the value of such property, from—
(1) the initial transferee of such transfer or the entity for whose benefit such transfer was made; or
(2) any immediate or mediate transferee of such initial transferee.
No affirmative defenses are raised under § 547(c), nor any exceptions under other subdivisions of § 550(b). This dispute concerns the terms of §§ 547(b), 550(a) alone.
§ 547(b)(4)(B) refers to an “insider.” This term is defined by 11 U.S.C. § 101(31). Pugliese’s second amended answer denies that any of the District Court defendants are insiders of Sevitski, ans. ¶ 2. But in moving for summary judgment, Pugliese admits that “One or more of the [District Court] Defendants are insiders of Sevitski, as defined by 11 U.S.C. § 101(3[1]),” Pug-liese’s brief p. 3 ¶ 5. The Court accepts Pugliese’s admission, and determines that one or more of the District Court defendants are insiders of Sevitski.
§ 547(b)(3) requires that a debtor be insolvent. § 547(f) provides that “the debtor is presumed to have been insolvent on and during the 90 days immediately preceding” bankruptcy. The present action concerns events which occurred more than 90 days before bankruptcy; so the presumption of § 547(f) does not apply here. The Trustee did move for summary judgment on insolvency among other elements of § 547(b); but when the Trustee drew his motion for summary judgment, Pugliese admitted insolvency. In his latest amended answer, Pugliese for the first time denies insolven*593cy. The Trustee concedes that he cannot now expect summary judgment on insolvency under § 547(b)(3); but he asks the Court to grant him summary judgment on all the other elements of § 547(b).
§ 547(b)(1) requires that a transfer be “to or for the benefit of a creditor.” There is no doubt that Pugliese received a benefit, and is a creditor. The Trustee proposes that the Sevitski insiders received a benefit, because Pugliese’s lien on Sevit-ski’s property will tend to cause the joint and several liability of all the District Court defendants to be satisfied by Sevitski alone, letting Sevitski’s insiders “off the hook.” The Trustee proposes that the Sev-itski insiders are creditors, because if they were forced to satisfy Pugliese’s judgment themselves, they would have claims for contribution over against Sevitski’s estate. Pugliese responds that Sevitski’s insiders received no benefit and are not creditors of Sevitski, because one of Pugliese’s counts against the District Court defendants was based on the common-law tort of fraud; and under Oklahoma law, specifically 12 O.S. § 832(C), the joint perpetrators of intentional torts have no rights of contribution against each other. The Trustee replies that only one of Pugliese’s three counts was based on common-law fraud; the others were based on statutory securities fraud and breach of contract; Pugliese got judgment on all three counts; the judgment for common-law fraud was duplicated by the judgment for securities fraud, and supplemented by the judgment for breach of contract; and there are rights of contribution under securities fraud and breach of contract, even if not under common-law fraud. The Court finds the Trustee’s argument persuasive. Rights of contribution exist, even if not under all counts of Pug-liese’s action. Hence the Sevitski insiders did receive a benefit, and are creditors of Sevitski and of Sevitski’s bankruptcy estate.
With these preliminary matters disposed of, the Court proceeds to the main issue. This involves, not just one or another technical detail within § 547(b), but the interpretation and application of the statute as a whole, with special regard for said statute’s fundamental purpose and intent.
Bankruptcy’s fundamental purpose has always been to achieve greater equality of treatment among creditors of an insolvent debtor than could be managed under ordinary non-bankruptcy law. Relieving debtors from creditors is merely a recent addition to the ancient objective of relieving creditors from each other. In its efforts to achieve equal treatment among creditors, bankruptcy faces two main antagonists: the secured creditor, whose security interest gives him a prior legal claim on assets of the bankruptcy estate; and the preferred creditor, who takes advantage of circumstances to get his debt paid while other creditors, of equal legal right, go unpaid.
This Court has previously reviewed the history and policy of preference-avoidance actions in In re Hancock, 137 B.R. 835, 837-838 (B.C., N.D.Okl.1992). A restatement is in order here.
The preference-avoidance problem arises because debtors often enter economic insolvency some time before they enter formal legal bankruptcy. During this interval, a debtor’s available assets may be used up to pay some debts in full, while other debts are left unpaid and (because assets have been depleted) unpayable. Some of these transfers may be voluntary, by debtor to his favorite creditors, e.g. relatives, officers, and other “insiders.” Other transfers may be forced by creditors who “race to the courthouse” to legally dismember the debtor, at the expense of other creditors who are less diligent or more tolerant or simply unlucky. By undoing such transfers, the insolvent estate is in some degree replenished; and its reconstituted value is re-distributed among creditors as a whole. Thus creditor gains and losses are spread evenly instead of preferentially; and the harmful effect of insolvency on creditors as a group is in some degree mitigated.
This process is not widely understood, and has not been well administered.
The one dominant historical ritual in twentieth century American preference law has been for Congress to enact a *594new and supposedly clear and broad preference rule, and for judges then to ignore or shamelessly manipulate statutory rules to preserve transactions against a preference attack.
Robert Weisberg, Commercial Morality, the Merchant Character, and the History of the Voidable Preference, 39 STANFORD L.REV. 3, 11 (No. 3, Nov. 1986). Some courts misperceive preference actions as windfalls for debtors, and fail to realize that the beneficiaries of preference actions are not debtors, but other creditors. See e.g. In re Busenlehner, 918 F.2d 928, 931 (11th Cir.1990, reh. den. 1991), refusing to avoid a transfer because “Debtors should not be given the ability to surprise and upset established commercial practices by filing for bankruptcy and avoiding this otherwise acceptable security interest” (emphasis added). Other courts permit avoidance only of those transfers which were created by deliberate overreaching, and fail to realize that the goal of preference law is equality of treatment, not purity of heart. See e.g. In re Busenlehner, supra, refusing to “surprise and upset established commercial practices [by] avoiding this otherwise acceptable security interest;” and see Weisberg, supra, for extended treatment of this point. Still other courts balk at the harsh operation of preference laws, which may inflict a severe loss on one preferred creditor in order “to eke out only a small dividend to general creditors”, McLaughlin, Defining a Preference in Bankruptcy, 60 HARV.L.REV. 233, 235 (1946). However, the judiciary are not alone to blame. Congress itself has passed preference laws whose practical details do not comport with the grand theory of the action.
A “perfect” preference-avoidance law would avoid all preferential transfers made while debtor was actually insolvent, no matter how long before formal bankruptcy such transfers occurred, Weisberg, supra, pp. 134-136, citing Bruce R. Kraus, Preferential Transfers and the Value of the Insolvent Firm, 87 YALE L.J. 1449 (1978) (student author). No American preference-avoidance law has yet reached this level of ruthless efficiency. Rather, preference laws have permitted avoidance only of transfers made within some arbitrary period before bankruptcy — the so-called “reach-back period.” The Bankruptcy Act of 1898 (“the Act”) adopted a reach-back period of four months before the date of bankruptcy, Act § 60a(l). The Bankruptcy Code of 1978 (“the Code”) reduced this period to only 90 days before the date of bankruptcy, Code § 547(b)(4)(A). Such time limits are absolute and inflexible, Gates v. First Nat’l Bank of Richmond, 1 F.2d 820, 822 (E.D.Va.1924). Because of their simple clarity and rigidity, such time limits facilitate commercial calculations. By the same token, they reduce what should be an exercise in equity to an arbitrary “sporting proposition,” 2 G. GLENN, FRAUDULENT CONVEYANCES AND PREFERENCES § 384 p. 664 (1940), which may actually encourage creditor misbehavior, Kraus, 87 YALE L.J. pp. 1457-1458.
However, the net effect of the new Code was to enlarge, rather than reduce, the scope of preference avoidance. Act § 60 had permitted avoidance only where a preferred creditor had reason to believe that debtor was insolvent (hereinafter “intent to prefer”), 3 (Pt. 2) Collier on Bankruptcy (14th ed. 1977) ¶¶ 60.52ff. But Code § 547 allowed preferences to be avoided within the 90-day reach-back period, regardless of intent. And § 547(b)(4)(B) added an exception to the “normal” reach-back period of only 90 days: it created a “special” reach-back period of up to one year before the date of bankruptcy, for transfers involving insiders. As enacted in 1978, § 547(b)(4)(B) permitted this greatly-increased reach-back period to be invoked only where there was proof of intent to prefer. But in 1984, Congress deleted this last remnant of the old requirement of intent, 4 Collier on Bankruptcy (15th ed. 1992) ¶ 547.01 pp. 547-10, -11. Now, insider preferences may be avoided up to one year before bankruptcy, regardless of intent. By these provisions, among others, the Code establishes “preference-avoidance powers of unprecedented scope,” In re Hancock, 137 B.R. p. 838.
This adversary proceeding tests the limits of these broad new powers. Just how broad are they?
*595According to the Trustee, Pugliese is both secured and preferred: Pugliese managed to promote his general unsecured claim for damages into a lien claim with right of prior payment, in a manner which is unfair to other general unsecured creditors of Sevitslci’s estate. The Trustee wants to use bankruptcy’s preference-avoidance laws to cancel Pugliese’s lien creditor status, and return him to the level of his erstwhile fellows, the other general unsecured creditors. The fixing of a lien on debtor’s property is a “transfer" which might be avoidable, 11 U.S.C. § 101(54), and see former Bankruptcy Act § 1(30), 1 Collier on Bankruptcy (14th ed. 1974) 111.30, 3 (Pt. 2) Collier on Bankruptcy (14th ed. 1977) MI 60.11, 60.12, 60.13. However, Pugliese acquired lien creditor status more than 90 days before Sevitski entered bankruptcy; so the transfer, even if preferential in some sense, cannot be attacked under the “normal” 90-day time limits of 11 U.S.C. § 547(b)(4)(A). The Trustee asserts the right to attack this transfer under the “special” one-year time limit of § 547(b)(4)(B), applicable to insider transfers — even though Pugliese is admittedly not an insider! The Trustee asks this Court to apply the one-year insider period against this non-insider creditor, according to the so-called "Deprizio doctrine.”
The “Deprizio doctrine” first appeared in the case of In re Big Three Transportation, Inc., 41 B.R. 16 (B.C., W.D.Ark.1983). But it is named after a now-famous series of opinions in In re V.N. Deprizio Construction Company — see In re V.N. Deprizio Construction Co.: Levit v. Melrose Park Nat’l Bank, 58 B.R. 478 (B.C., N.D.Ill.1986), rev’d by In re V.N. Deprizio Construction Co.: Levit v. Ingersoll Rand Financial Corp., 86 B.R. 545 (N.D.Ill.1988), aff’d in part by Levit v. Ingersoll Rand Financial Corporation, 874 F.2d 1186 (7th Circ.1989). V.N. Deprizio Construction Company (“Deprizio Co.”) borrowed money from various lenders; the loans were guaranteed by Richard, Robert and Edward Deprizio, who were insiders of Deprizio Co. Deprizio Co. also incurred debts to employee funds (“the Funds”), which were guaranteed by Richard Depri-zio; and tax debts for which Deprizio Co.’s officers might be liable under 26 U.S.C. § 7501. In 1982-1983, Deprizio Co. paid large amounts of cash to its commercial lenders, to the Funds, and to Internal Revenue Service (“IRS”), and then filed bankruptcy. Deprizio Co.’s bankruptcy Trustee sued the lenders, the Funds, and the IRS to recover the cash payments as preferential transfers under 11 U.S.C. § 547. The Trustee argued that the payments were made by Deprizio Co. at the instigation of its insiders, the individual Deprizios, for the purpose or with the effect of relieving these individuals of their own obligations as guarantors or co-debtors; and that accordingly the transfers should be avoidable up to one year before bankruptcy, even though the defendant lenders, Funds, and IRS were not themselves insiders. The Bankruptcy Court refused to avoid the transfers, on the grounds that (1) the transaction involved two transfers, one “to and for the benefit of” the non-insider creditors and one “for the benefit of” the insider creditors, and only the latter was subject to the one-year reach-back period; (2) the transfer “for the benefit of” insiders was recoverable only from such insiders; and (3) in any event, the court should “ ‘use its equitable powers’ ” to prevent recovery from “ ‘a party who is innocent of wrongdoing,’ ” 58 B.R. p. 481 quoting a passage from Collier on Bankruptcy (without detailed citation). The District Court reversed and avoided the transfers, on the grounds that (1) there was only one transfer, although there were two different benefits; (2) § 547(b)(1), (4)(B) expressly permits avoidance of a transfer, if it is made “for the benefit of” an insider, whether or not it is made “to” such insider; (3) § 550(a)(1) expressly permits recovery of an avoided transfer from “the initial transferee,” whether or not such transferee was the same insider who benefited from the transfer; and (4) neither equity nor policy call for a different result, since this rule merely causes the guarantees to be enforced against the guarantors according to their terms. The 7th Circuit Court of Appeals approved the reasoning and affirmed the ruling of the District Court. (The *596Court of Appeals reversed the District Court in part, on other matters which are not pertinent here, regarding treatment of the Funds and IRS.)
The Trustee herein asks this Court to follow Deprizio and apply its rule to the facts in this case. The Trustee proposes that there was a transfer of property of the debtor, satisfying the first clause of § 547(b); that such transfer was not only to and for the benefit of Pugliese, but was also for the benefit of Sevitski’s insiders, who are contingent creditors of Sevitski, satisfying § 547(b)(1); that such transfer was for and on account of an antecedent debt, satisfying § 547(b)(2); that such transfer was made between 90 days and one year before bankruptcy, for the benefit of insiders, satisfying § 547(b)(4)(B); and that such transfer improved the position of both Pugliese and Sevitski’s insiders, satisfying § 547(b)(5). Hence, says the Trustee, he is entitled to summary judgment on all these elements of § 547.
The Trustee matches the facts in this matter to the words of the statute. But “[m]ore than language lies behind this approach,” Levit v. Ingersoll Rand Financial Corp., 874 F.2d p. 1194. The Trustee achieves the purpose of preference laws, by eliminating the advantage Pugliese gained over other creditors in the pre-bankruptcy “race to the courthouse.” The Trustee does this in a relatively gentle manner, without requiring Pugliese to pay any money or return any property to Sevitski’s estate. The Trustee would merely cancel Pugliese’s judgment lien, reducing him to a level of equality with other creditors like himself.
Pugliese counters that there was no transfer “to or for the benefit of” insiders, because Pugliese had no “intent to benefit any insider,” Pugliese's brief p. 7; that Pugliese is not an insider, even though Sevitski’s co-debtors were; that the transfer to Pugliese was made more than 90 days before Sevitski entered bankruptcy; that under such circumstances, the “meaning and ... intent” of § 547(b) is that a transfer “to” Pugliese should not .be avoided, whether or not it is also “for the benefit of” insiders; that the Deprizio case is distinguishable, in that it involved payments made voluntarily by a corporate debtor at the direction of insider-principals, while the present case involves the involuntary fixing of a lien by the action of hostile outsiders, whose “unintended beneficiaries” were Sevitski’s insiders, Pugliese’s brief p. 7; that the Deprizio case is further distinguishable, in that it caused the non-insiders who received the transfer to resort to bargained-for guarantees, while in this case Pugliese did not bargain and there are no guarantors; and that it is “inequitable” to punish Pugliese for his own diligence in redressing the fraud which Sevitski and Sevitski’s insiders perpetrated on him.
Some of Pugliese’s arguments miss the point. There were no “bargained-for guarantees” here in the manner of Depri-zio; but this is a distinction without a difference. There are co-obligors here, as in Deprizio, even though the obligations here happen to be involuntary. Pugliese does not need guarantees; he can attack the insiders along with Sevitski on the strength of his judgment for joint and several liability. Pugliese’s “intent” and “innocence” are immaterial. Modern preference law deals with effects, not with intentions — with objective inequality, not with malicious motives. Pugliese is not punished for his diligence; and those who wronged him are not excused. Preference laws are not punitive; they are distributive. They confer no benefit on Sevitski and his insiders, who defrauded Pugliese. Pug-liese himself has unwittingly conferred a benefit on Sevitski’s insiders, who are equally guilty with Sevitski, at the expense of other creditors of Sevitski who are just as innocent as Pugliese. The Trustee seeks to undo the wrong Pugliese has done to his fellow creditors. In this sense, it is the Trustee, not Pugliese, who has the better claim to equity.
But Pugliese’s position has some merit. Pugliese asserts that Congress never intended § 547(b)(4)(B) to work as the Trustee would use it. If “Congressional intent” means “those situations which Congress definitely contemplated and expected, and *597none others,” then Pugliese is probably correct. The “Deprizio doctrine” can be made to fit the words of the statute; yet it is a strikingly ingenious extension of the ordinary sense of those words — it is not by any means an obvious application of the statute. There is no indication that Congress anticipated any such application of § 547’s terms. This Court knows of no floor statements, committee reports, or other legislative history of §§ 547, 550 which specifically mention application of the insider preference period to non-insider creditors in the manner of Deprizio. It is said that “[t]here is no helpful legislative history,” Levit v. Ingersoll Rand Financial Corp., 874 F.2d p. 1196. This Court has not exhaustively searched the hearings and other minutiae of legislative history, for reasons that will appear below. But for purposes of this opinion, this Court presumes that no one in Congress expressly proposed or specifically contemplated that § 547 would be applied according to the “Deprizio doctrine.” And the “Deprizio doctrine” has at least one untoward effect: it subjects non-insider creditors like Pug-liese to the potentially harsh operation of preference-avoidance laws, not in a systematic manner, but according to the fortuitous circumstance of whether or not a particular debtor in bankruptcy happens to have insider-creditors. In the Deprizio case itself, at least, the transfers to be avoided were motivated by insider-principals for their own benefit. Here, there is no connection between Pugliese and the insiders — indeed, they are enemies. Another creditor, like Pugliese, who did what Pugliese did, with the same preferential effect, to a debtor in bankruptcy who happened to have no insiders, would be immune from attack under § 547. The Trustee’s application of § 547 is potentially uneven. In this sense, Pugliese is unfairly treated, as compared with other preferred creditors in other possible cases.
The Trustee asks this Court to construe §§ 547, 550 “strictly,” i.e. literally, which here would result in broad application of the statutes to many different situations. Pugliese asks this Court to construe §§ 547, 550 “liberally,” i.e. in light of circumstances and result, which here could result in narrow application of the statutes to situations of a standard type. See In re McKaskle, 117 B.R. 671, 674 (B.C., N.D.Okl.1990).
The problem has been addressed in this Circuit in the case of In re Robinson Brothers Drilling, Inc.: Lowrey v. First Nat’l Bank of Bethany, 97 B.R. 77 (W.D.Okl.1988), aff'd and adopted by In re Robinson Brothers Drilling, Inc.: Manufacturers Hanover Leasing Corp. v. Lowry, 892 F.2d 850 (10th Circ.1989). The facts were much like those in Deprizio. So was the result. The Bankruptcy Court “us[ed] its equitable powers to overcome what it perceived as ambiguities in the statutes,” 97 B.R. p. 82. The District Court reversed; and its opinion was affirmed and adopted by the Court of Appeals. The District Court cited Deprizio with approval; but the District Court based its decision on its own interpretation of §§ 547, 550, and not merely on Deprizio’s example. The District Court held that there were no “ambiguities in the statutes;” and rejected the two-transfer theory as a circumvention of “the express language of the statutes,” 97 B.R. p. 79. The District Court adopted a “strict construction of the plain meaning of the statutes in question ... a literal interpretation of the ... Code as enacted by Congress,” 97 B.R. pp. 79, 82. So read, §§ 547, 550 plainly permit avoidance and recovery of a transfer made within one year of bankruptcy “for the benefit of” an insider, whether or not said insider is the same creditor who received the transfer and is sued for its recovery. The District Court eschewed a “result-oriented approach,” 97 B.R. p. 82; and quoted with approval a remark by the 7th Circuit Court that “ ‘[bankruptcy statutes are not special cases,’ ” 97 B.R. p. 81 quoting Bonded Financial Services, Inc. v. European American Bank, 838 F.2d 890, 894 (7th Circ.1988). The District Court stated that its ruling was equitable— but that, in any event, equity in the sense of “ ‘free-floating discretion’ ” was restrained by express statutory command, 97 B.R. p. 82 quoting In re Chicago, Milwau*598kee, St. Paul & Pacific R.R., 791 F.2d 524, 528 (7th Circ.1986), cert. den. 481 U.S. 1068, 107 S.Ct. 2460, 95 L.Ed.2d 869.
With plain language, Congress developed this hard and fast rule to help prevent litigation over the issue of bad faith preferential payments by debtors. Unfortunately, this rule does not necessarily have a just result in all cases. Under the present case, for example, there is no evidence of bad faith associated with the payments by the debtor. However, because the transfer ... serves to benefit ... an insider, the transfer is covered by the statutes, and is thus avoidable and recoverable.
97 B.R. p. 83.
Like Deprizio, the Robinson Brothers case differs somewhat from the case before this Court. The main difference is that the transfers in Deprizio and Robinson Brothers were insider-motivated, while the transfer in the present case was not. But there is also an important similarity— namely, that transfers in all three cases were insider-beneficial. The statute requires insider benefit; it does not require insider motivation. And “ ‘[bankruptcy statutes are not special cases.’ ” Robinson Brothers tells this Court to look to the words of the statute, not to this or that set of circumstances. This Court is bound to follow Robinson Brothers where it applies; and it applies to cases under § 547 in which a transfer is made for the benefit of insiders — like the case now before this Court. Robinson Brothers commits this Court to a “strict ... literal ... hard and fast” interpretation and application of §§ 547, 550, even if it “does not necessarily have a just result.” This Court is unable to make its own choice between the competing policies and equities argued by the Trustee and Pugliese. Robinson Brothers compels this Court to hold for the Trustee and against Pugliese.
For once, statutory rules are “manipulated,” not “to preserve transactions against a preference attack,” but rather to facilitate a preference attack. The usual “ritual [of] twentieth century American preference law” takes an unusual turn.
Accordingly, the Trustee’s motion for summary judgment is hereby granted as to all elements of 11 U.S.C. § 547(b) except subsection (b)(3); defendants’ motion for summary judgment is denied; and further proceedings will be had on the sole remaining issue, namely insolvency under 11 U.S.C. § 547(b)(3).
AND IT IS SO ORDERED. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491623/ | MEMORANDUM OF DECISION TWELFTH APPLICATION FOR COMPENSATION AND REIMBURSEMENT PAYMENTS
JAMES H. WILLIAMS, Chief Judge.
On July 15, 1992, Brouse & McDowell (Applicant or Brouse), counsel for The Gibbons-Grable Company Assets Disposition Trust (Trust) filed its Twelfth Application for Compensation and Reimbursement Payments. The period covered by the application is from February 1, 1992 through May 31, 1992. The amount of compensation requested is $22,868.00 and expenses for which reimbursement is sought total $1,130.16. Objections were duly filed by several unsecured creditors, a hearing was conducted and, with further submissions ordered from both the Applicant and one of the objectors, the matter was taken under advisement.
The court has jurisdiction in this matter by virtue of 28 U.S.C. § 1334(b) and General Order No. 84 entered in this district on July 16, 1984. This is a core proceeding under 28 U.S.C. § 157(b)(2)(A). This Memorandum of Decision constitutes the court’s findings of fact and conclusions of law pursuant to Fed.R.Bankr.P. 7052.
BACKGROUND
The factual and procedural history pertinent to the disposition of the current controversy was summarized in the court’s opinion dealing with Brouse’s Eleventh Application for compensation, issued June 12, 1992 and reported at 141 B.R. 614. The gist of the court’s decision on the Eleventh Application was that, to the extent Brouse invested time and effort in pursuing insider preference actions ultimately found to be barred by the applicable statute of limitations, it was entitled to an award of only 50% of the charges it asserted:
What has resulted is the expenditure of hundreds of hours on a task which produced utterly no benefit to the estate and the creditors, in reliance upon legal theories which were unclear at best. While the court does not wish to entirely condemn Brouse for its efforts, neither can it agree that the prior and current fees are “reasonable” in view of the fact that to grant Brouse’s request would deplete the estate by over $46,000.00 without producing any corresponding positives.
The court therefore will sustain the Objection to the Eleventh Application, and grant the Motion with respect to its request that Brouse refund portions of the Fifth through the Tenth Applications. The Phase II Actions fees will be reduced by 50%, or by $23,097.25.
Id. at 619.
Newmarket Hotel, Ltd. (Newmarket), one of the objecting unsecured creditors here had also objected to the Eleventh Application. Confronted with that objection, Applicant says in its current application, that it “prepared for and attended a hearing regarding the Application and the objection which had been interposed. The Applicant devoted time to assemble information required of it by this Court. In addition, the Applicant fully briefed this matter and replied to briefs of opposing counsel.” (Twelfth Application, p. 3)
In response to the court’s request, Brouse has identified a total of $8,935.00 in charges by personnel ranging from a law clerk to partners on its defense of its Eleventh Application. Newmarket has performed its own analysis and suggests that the charges for the work in question amount to at least $10,244.50 and urges that such sum should be disallowed.
*816ISSUE
The question before the court is, simply put, whether legal counsel, whose charges for services rendered are challenged, may be paid for responding to that challenge and defending the asserted fees, particularly when the defense has only been partially successful?
DISCUSSION
This court has generally adhered to the view quoted above from its decision on Brouse’s Eleventh Application: That a key component of the reasonableness by which a request for compensation is to be judged under 11 U.S.C. § 330(a)1 is the benefit to the estate from the efforts put forth.
While keeping in mind that benefit to the estate is of extreme importance, we shy away from the rigid approach urged by counsel for the objecting creditors that the court’s proper course of action is to deny compensation for unproductive work entirely. Faced with such an arbitrary stance, counsel would likely pursue only certain results, thereby depriving the estate of the benefits of untried but yet reasonable approaches to problems. Our previous award of 50% of the amount requested for ultimately unsuccessful work was an attempt to strike a balance between a stifling, totally result-oriented approach and one which gives unfettered freedom to try anything and get paid for it.
Having concluded that counsel should be neither totally penalized nor completely rewarded for non-productive work, the court is now asked either to compensate counsel fully for urging, over determined opposition, that full payment, regardless of results, would have been appropriate, or at least to compensate counsel for its efforts in defending its fee bill in the same proportion as the fees were allowed — here, 50%.
Astonishing as that proposition appeared to have been to Newmarket’s counsel, there is some support for it in the cases the court has examined. See, e.g., Matter of Hutter, 126 B.R. 1005 (Bankr.E.D.Wis.1991) (debtor’s attorneys entitled to proportional fee award for time spent in defending their fee applications); In re Churchfield Management & Investment Corporation, 98 B.R. 838 (Bankr.N.D.Ill.1989) (3% of total hours charged allowed for “litigating” the attorney fee applications); In re CF & I Fabricators of Utah, Inc., 131 B.R. 474 (Bankr.D.Utah 1991) (time spent reviewing objections and appearing in court to present application is compensable).
It is important to note, however, that “fee-defense” awards in the cases found on the point occur in jurisdictions where the underlying proposition that professionals are entitled to compensation for preparing their fee applications is accepted. In the Ninth Circuit, for example, In re Nucorp Energy, Inc., 764 F.2d 655 (9th Cir.1985) provides that bankruptcy counsel are entitled to reasonable compensation for services rendered in connection with the preparation and presentation of fee applications.
Such does not appear to be the law of the Sixth Circuit and, in fact, the bankruptcy judges of this District, on October 6, 1988, issued a Memorandum containing certain guidelines, paragraph 12 of which reads:
Absent unusual circumstances, time spent preparing the application for compensation is non-compensable. This time is not properly a service rendered on behalf of the debtor estate, but is a necessary expense of doing business.2
Even in the Ninth Circuit, however, there appear to be limitations on compensation for defending against attacks on fee applications. In re Riverside-Linden Investment Co., Ill B.R. 298 (9th Cir. BAP 1990), aff’d., 945 F.2d 320 (9th Cir.1991) involved an attempt by counsel to be compensated for unsuccessfully litigating its fee application. The Bankruptcy Appellate Panel said, at pp. 301-02:
Nucorp does not authorize recovery of fees incurred when attorneys fail to sup*817port the propriety of their fee requests. A contrary ruling could encourage attorneys to assert meritless fee requests. Regardless of whether or not they were awarded the requested fees, the attorneys could recover fees incurred in opposing objections to the meritless request. Such a result is not contemplated by Nucorp.
This court is of the view that, at bottom, the efforts of counsel or any other professional to obtain payment for work performed is largely a cost of doing business, incorporated, one is compelled to believe, in the hourly rates charged. Surely, when a private client objects, or raises questions about a statement from counsel, that client does not receive a further bill for having protested!
As this court has said too often to require citation, it will look to the benefit the estate obtains from the efforts for which compensation is sought. Here, there was none. (There was none, either, the court found, from the work which engendered the fee application to which New-market and others objected; still, the court recognized and rewarded, in part, the effort of counsel in pursuing an avenue that might have benefitted the estate.)
The court will disallow those charges Brouse asserts for the defense of its earlier fee request. Our review of the entries on the time sheets Brouse has submitted in support of its application indicates a total of 60.1 hours listed in activities fairly attributable to the defense of the fee application. The time has been charged by individuals with hourly rates ranging from $25.00 to $195.00. A total of $9,477.00, in the court’s analysis, was charged and this sum will be disallowed. The balance of charges making up the Twelfth Application will be allowed and Brouse is therefore awarded $13,391.00 in compensation and reimbursement of its expenses in the full amount requested, $1,130.16.
An order in accordance herewith shall issue.
. "... the court may award ... to a professional person ... (1) reasonable compensation for actual, necessary services ... based on the ... value of such services ...”
. There can be no claim that Applicant is unaware of these guidelines, for they are referred to for another purpose in the instant application. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491624/ | OPINION
JONES, Bankruptcy Judge:
BACKGROUND
Debtors Thomas and Lynne Mantz (“the Mantzes”) filed their Chapter 7 petition on December 28, 1988 without listing the Internal Revenue Service (“IRS”) on their schedules or providing other notice to the IRS.1 The Mantzes had failed to file tax returns for the years 1986 and 1987. The § 3412 meeting of creditors was scheduled for January 26,1989. The IRS had 90 days from that date to file a claim pursuant to Federal Rule of Bankruptcy Procedure 3002(c).
On June 18, 1990, more than a year after the bar date, the IRS filed a proof of claim for $186,579.05 for the years 1986 through 1988. The IRS argued that its untimely claim should be allowed as a matter of equity because the Mantzes had failed to give the IRS any notice of their bankruptcy filing. On December 10, 1991, the Trustee filed an objection to the IRS’s claim as untimely, and the bankruptcy court disallowed the claim in its entirety. The IRS appeals. We REVERSE and REMAND.
ISSUE AND STANDARD OF REVIEW
Whether the bankruptcy court erred in disallowing the IRS claim is a question of bankruptcy law. We review questions of law de novo. In re Wade, 115 B.R. 222, 225 (9th Cir.BAP 1990), aff'd, 948 F.2d 1122 (9th Cir.1991).
DISCUSSION
The IRS’s proof of claim was filed pursuant to § 501(a). Bankruptcy Rule 3002(c) requires that such claims be filed within 90 days after the first date set for the meeting of creditors, with certain exceptions not applicable here. See Federal Rule of Bankruptcy Procedure 9006(b)(3). The IRS’s claim was not timely filed under Rule 3002(c). The bankruptcy court, using a strict interpretation, denied the IRS’s claim in its entirety. See, e.g., In re Coastal Alaska Lines, Inc.; 920 F.2d 1428, 1433 (9th Cir.1990) (cases allowing late filed claims when creditor received no notice not reconcilable with Rule 3002(c)).
But the IRS argues that Rule 3002(c) conflicts with § 726(a)(2)(C) of the *930Code, and that where the two conflict, the latter must prevail.3 Section 726 prioritizes distribution of property of the estate into several categories. Had the IRS filed a timely claim, it would have received payment under § 726(a)(1),4 the first category. The IRS argues that it should not lose its priority position simply because of the debtors’ failure to provide adequate notice, and that § 726 provides for the late filing of claims under these circumstances.
1. Exclusion from § 7265 Purview
The late-filing provision referred to by the IRS is found in category two, § 726(a)(2)(C), which provides for payment of any allowed unsecured claim, other than a claim such as that specified in § 726(a)(1):
(C) tardily filed under section 501(a) of this title, if—
(i) the creditor that holds such claim did not have notice or actual knowledge of the case in time for timely filing of a proof of such claim under section 501(a) of this title; and
(ii) proof of such claim is filed in time to permit payment of such claim; ...
11 U.S.C. § 726(a)(2).
The bankruptcy court interpreted the first quoted sentence, the “exclusionary language,” as excluding category one claimants from the late-filing provision of category two. This resulted in the IRS’s claim being excluded from the purview of § 726 altogether. The bankruptcy court reasoned that this result was equitable because the IRS could pursue its non-dis-chargeable claim after the close of the bankruptcy case. While this argument may have a certain intellectual appeal, as a practical matter it may mean that the IRS’s claim is worthless. This appears to be contrary to the legislative intent of § 726 which set forth an order of priorities.
2. Inclusion in Category One
The IRS argues that it should receive distribution under category one of § 726, citing United States v. Cardinal Mine Supply, Inc., 916 F.2d 1087, 1089 (6th Cir.1990). In Cardinal Mine, under facts substantially identical to the instant appeal, the bankruptcy court held that the IRS was excluded by the language of § 726(a)(2), and concluded that the IRS belonged in the third category of payment pursuant to § 726(a)(3).6 The Sixth Circuit reversed, holding that the IRS retained, in essence, its first priority status under § 726(a)(1).
The inclusion of a late-filing provision in § 726(a)(2)(C) indicates that Congress knew how to protect claimants who filed late claims due to lack of notice. The omission of such a provision in § 726(a)(1) indicates that Congress did not intend for late-filing priority claimants, even those without notice, to take their distribution with other timely-filed category one claimants. Consequently we disagree with Car*931dinal Mine, first because that court ignored the exclusionary language of § 726(a)(2), contrary to basic principles of statutory interpretation, and second, because such a holding omits the § 726(a)(2)(C)(ii) protection which provides a cutoff date for the filing of late claims. Under Cardinal Mine, the IRS could bring its claim even after distribution, undermining the finality of § 726 distributions.
3. Middle Ground
The exclusionary language from § 726(a)(2) states that the second category of distribution is to go to “any allowed unsecured claim, other than a claim of a kind specified in paragraph (1).” Both parties agree that the IRS has an allowed unsecured claim, and that but for the exclusionary language, the IRS would be able to recover under category two.
We conclude that the exclusionary language was designed to preclude double recovery by those who had already been paid under category one, and therefore does not apply to the IRS’s claim in the instant appeal. Moreover, the IRS’s claim, because it was untimely filed, is not technically “a claim of a kind specified in paragraph (1).” Claims from category one are, pursuant to the complicated interplay between §§ 501, 507, 726 and Rule 3002, timely filed — by definition. If they are not timely filed they do not fall under category one. Hence, the exclusionary language from category two does not apply to them. This result is consistent with the language of the Code and with the intent of Congress.
4. General Unsecured Claim of IRS
The IRS claim for $186,579.05 consists of $154,870.75 as an unsecured priority claim (including interest of $15,193.75) and $31,708.30 as an unsecured general claim for penalties. The IRS argues that the bankruptcy court erred in not allowing the penalty claim under § 726(a)(2)(C). However, the IRS’s penalty claim does not appear to be compensation for actual pecuniary loss pursuant to § 507(a)(7)(G), but rather is a penalty claim subordinated under the provisions of § 726(a)(4). Such claims are precluded from § 726(a)(2)(C) by that section’s exclusionary language.
CONCLUSION
We cannot accept the IRS’s argument that it should receive first priority distribution under § 726(a)(1). Although the IRS’s argument that it should not be penalized because of the debtors’ failure to give it proper notice of the bankruptcy is not unreasonable, Congress by enacting § 726 has provided otherwise.
On the other hand, we conclude that the bankruptcy court erred in denying the IRS any § 726 distribution. Accordingly, we REVERSE and REMAND with instructions to allow the IRS’s $154,870.75 unsecured priority claim under § 726(a)(2)(C) and its $31,708.30 as an unsecured general claim for penalties under § 726(a)(4).
. Schedule A.l shows $0.00 owed to the United States for income taxes.
. Unless otherwise specified, all statutory citations refer to the Bankruptcy Code, 11 U.S.C. §§ 101 to 1330 (1992), and all citations of rules refer to the Federal Rules of Bankruptcy Procedure.
. Basic principles of statutory construction require that apparently contradictory statutory provisions be read to be consistent when possible. See In re Hobdy, 130 B.R. 318, 321 (9th Cir.BAP 1991) (Perris, J., concurring) (citing In re Caster, 77 B.R. 8, 13 (Bankr.E.D.Pa.1987)).
. Section 507(a)(7)(A) provides for priority tax payments.
. § 726. Distribution of property of the estate.
(a) Except as provided in section 510 of this title, property of the estate shall be distributed—
(1) first, in payment of claims of the kind specified in, and in the order specified in, section 507 of this title;
(2) second, in payment of any allowed unsecured claim, other than a claim of a kind specified in paragraph (1), (3), or (4) of this subsection, proof of which is—
(A) timely filed under section 501(a) of this title;
(B) timely filed under section 501(b) or 501(c) of this title; or
(C) tardily filed under section 501(a) of this title, if—
(i) the creditor that holds such claim did not have notice or actual knowledge of the case in time for timely filing of a proof of such claim under section 501(a) of this title; and
(ii) proof of such claim is filed in time to permit payment of such claim.
.The bankruptcy court's decision was clearly an error. The third category is reserved for late-filed § 501(a) allowed unsecured claims where the creditor had notice or knowledge of the case but failed to act. 4 Collier on Bankruptcy ¶ 726.02 at 726-7 (15th ed. 1993). The IRS did not knowingly fail to act. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483872/ | DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
J.J., the Mother,
Appellant,
v.
STATE OF FLORIDA, DEPARTMENT OF CHILDREN AND FAMILIES,
Appellee.
No. 4D22-1714
[November 15, 2022]
Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Stacey Schulman, Judge; L.T. Case No. 20-226 CJ-DP.
Antony P. Ryan, Director, and Paul O'Neil, Assistant Regional Counsel,
Office of Criminal Conflict and Civil Regional Counsel, West Palm Beach,
for appellant.
Carolyn Schwarz, Children's Legal Services, Fort Lauderdale, for
appellee.
Sara Elizabeth Goldfarb, Statewide Director of Appeals, and Krystle
Cacci, Certified Legal Intern, Statewide Guardian Ad Litem Office,
Tallahassee, for Guardian Ad Litem Program.
PER CURIAM.
Affirmed.
CIKLIN, LEVINE and KUNTZ, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing. | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483875/ | 11/15/2022
IN THE SUPREME COURT OF THE STATE OF MONTANA Case Number: DA 22-0555
No. DA 22-0555
STATE OF MONTANA,
Plaintiff and Appellee,
v.
STEPHANIE LYNN LEDOUX,
Defendant and Appellant.
GRANT
Pursuant to authority granted under Mont. R. App. P. 26(1), the
Appellant is given an extension of time until December 21, 2022, to
prepare, file, and serve the Appellant's opening brief.
--r
L | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483882/ | J-S23018-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
CHRISTY L. SMITH :
:
Appellant : No. 73 MDA 2022
Appeal from the PCRA Order Entered December 21, 2021
In the Court of Common Pleas of Lancaster County Criminal Division at
No(s): CP-36-CR-0005216-2010
BEFORE: STABILE, J., McLAUGHLIN, J., and COLINS, J.*
MEMORANDUM BY McLAUGHLIN, J.: FILED: NOVEMBER 15, 2022
Smith appeals from the order denying her Post Conviction Relief Act
(“PCRA”) petition. Smith asserts her trial counsel (“Counsel”) provided
ineffective assistance. We affirm.
The police charged Smith, a high-school teacher, with multiple sex
crimes against a 15-year-old student in Smith’s 10th-grade English class. At
Smith’s jury trial,1 two other employees of the school—teacher Kimberly Walls
and social worker Ruby Taylor—testified regarding the alleged relationship
between Smith and the victim. Counsel did not object to their testimony but
____________________________________________
* Retired Senior Judge assigned to the Superior Court.
1 Smith was initially tried and convicted in 2012. This Court vacated those
convictions after concluding the trial court erred by denying Smith’s motion to
sever the charges from those relating to another student. See
Commonwealth v. Smith, No. 2055 MDA 2012, 2013 WL 11253420
(Pa.Super. 2013) (unpublished memorandum).
J-S23018-22
cross-examined each witness regarding her basis of knowledge and extent of
her observations.
The victim also testified. Counsel cross-examined him and introduced
evidence that he had previously been convicted of two crimen falsi crimes:
burglary and theft. After the evidence was introduced, the court instructed the
jury that it could consider that evidence for the purpose of deciding whether
the victim’s testimony had been truthful. The court gave a similar instruction
prior to deliberation. Counsel did not ask the court to instruct the jury as to
the definitions of theft or burglary.
The jury found Smith guilty of one count of statutory sexual assault, two
counts of involuntary deviate sexual intercourse with a person less than 16
years of age, one count of unlawful contact with a minor, and one count of
corruption of minors.2 The court sentenced Smith in 2019 to an aggregate of
14 to 28 years’ incarceration.3 We affirmed the judgment of sentence. See
____________________________________________
2 Respectively, 18 Pa.C.S.A. §§ 3122.1(a), 3123(a)(7), 6318(a)(1), and
6301(a)(1).
3 The court initially sentenced Smith for these convictions in 2014, and this
Court affirmed the judgment of sentence in 2015. See Commonwealth v.
Smith, No. 1012 MDA 2014, 2015 WL 6166608 (Pa.Super. 2015)
(unpublished memorandum). Smith filed a timely PCRA petition, and the PCRA
court granted relief in the form of resentencing and dismissed Smith’s other
PCRA claims without prejudice. The court resentenced Smith in 2017. Smith
appealed, and this Court remanded the matter for the trial court to determine
the applicability of registration requirements. See Commonwealth v. Smith,
No. 1315 MDA 2017, 2018 WL 4560325 (Pa.Super. 2018) (unpublished
memorandum). This resulted in the 2019 sentencing.
-2-
J-S23018-22
Commonwealth v. Smith, No. 1268 MDA 2019, 2020 WL 5535685
(Pa.Super. 2020) (unpublished memorandum).
Smith timely filed the instant PCRA petition in 2021. The court appointed
PCRA counsel, who amended the petition. Smith advanced two claims of
ineffective assistance of trial counsel.4 Smith first posited that Counsel had
been ineffective for failing to object to the testimony of Walls and Taylor,
arguing the testimony had been irrelevant and prejudicial. Second, Smith
claimed that Counsel had been ineffective for failing to request a jury
instruction explaining the elements of the crimes of the victim’s crimen falsi
convictions.
At an evidentiary hearing, Counsel testified that she had not objected
to Walls’ or Taylor’s testimony based on relevancy because she “didn’t feel
that an objection would be beneficial,” and that she “could accomplish the
result [she] wanted to accomplish, which was basically to dilute their
credibility and I could do that through cross-examination.” N.T., 8/20/21, at
8-9. Counsel stated her “strategy was to just utilize cross-examination to
minimize the impact of testimony.” Id at 9. Counsel also testified she did not
object because she “didn’t think that what they said was necessarily harmful
and in some cases could have actually been helpful to our position that there
was nothing untoward between [Smith] and [the victim].” Id.
____________________________________________
4 Because in the first PCRA proceeding, the court dismissed Smith’s non-
sentencing claims – including the claims that are the subject of this appeal –
without prejudice, see note 3, Smith permissibly re-raised the instant claims
in the instant PCRA proceeding following resentencing.
-3-
J-S23018-22
Regarding the crimen falsi convictions, Counsel testified that she could
not think of a reason why she would not have requested the court instruct the
jury on the elements of burglary and theft. Id. at 7. However, Counsel testified
that “most people know what theft and burglary are.” Id. at 11.
The court denied the petition. Smith appealed, raising two issues:
A. Whether trial counsel was ineffective when she failed to object to
the irrelevant and highly prejudicial testimony of Kimberly Walls
and Ruby Taylor?
B. Whether trial counsel was ineffective when she failed to request
that the court instruct the jury concerning the elements of the
offenses of burglary and theft which were admitted into evidence
in order to impeach the credibility of the alleged victim?
Smith’s Br. at 4.
We review the denial of PCRA relief to ensure “the PCRA court’s
determination is supported by the evidence of record and . . . free of legal
error.” Commonwealth v. Ligon, 206 A.3d 515, 518 (Pa.Super. 2019)
(quoting Commonwealth v. Ousley, 21 A.3d 1238, 1242 (Pa.Super. 2011)).
Smith presents two claims of ineffective assistance of counsel. A PCRA
petitioner bears the burden to plead and prove that counsel was ineffective.
Id. at 519; 42 Pa.C.S.A. § 9543(a)(2)(ii). The petitioner must establish: “(1)
the underlying legal claim is of arguable merit; (2) counsel’s action or inaction
lacked any objectively reasonable basis designed to effectuate the client’s
interest; and (3) prejudice, to the effect that there was a reasonable
probability of a different outcome if not for counsel’s error.” Ligon, 206 A.3d
at 519 (quoting Commonwealth v. Grove, 170 A.3d 1127, 1138 (Pa.Super.
-4-
J-S23018-22
2017)). An ineffectiveness claim will not succeed unless the petitioner proves
all three prongs. Id. A petitioner proves counsel lacked a reasonable basis
only if she proves an alternative strategy offered a substantially greater
protentional for success. Commonwealth v. Elliott, 80 A.3d 415, 427 (Pa.
2013). Whether prejudice resulted from counsel’s actions is determined in
light of the overall trial strategy. Commonwealth v. Hull, 982 A.2d 1020,
1026 (Pa.Super. 2009).
Smith first argues the PCRA court erred in denying her claim that
Counsel was ineffective for failing to object to Walls’ and Taylor’s testimony.
Smith asserts Walls testified Smith “was too familiar with certain students and
allowed [the victim] and other students to sit on the wrong side of her desk.”
Smith’s Br. at 12-13. Smith claims Taylor “testified about certain hearsay
declarations” and that the victim told her “a certain male teacher may have
been jealous of his relationship with [Smith] and that he and [Smith] were
friends.” Id. at 13.
Smith argues this testimony “added nothing to the search for truth” and
“was introduced solely to show that [Smith] in the most general terms wasn’t
acting as a proper high school teach should.” Id. at 14. According to Smith,
“this evidence had nothing to do with whether [Smith] had sex with the victim
and the Commonwealth sought to have the jury draw the unfair inference that
since [Smith] did not do what [Taylor] and [Walls] thought was appropriate
that she must have been a sex offender.” Id. Smith further argues that the
testimony was not relevant as res gestae evidence, because “there was no
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J-S23018-22
temporal or other connection” between the testimony and the alleged criminal
acts. Id.
Smith further argues that Counsel had no reasonable strategic basis for
failing to object to the testimony, because a successful objection would have
obviated any need for cross-examination. Smith also argues Counsel’s
extensive cross-examination of the witnesses indicates how prejudicial the
direct testimony was to Smith’s defense.
“Evidence is relevant if: (a) it has any tendency to make a fact more or
less probable than it would be without the evidence; and (b) the fact is of
consequence in determining the action.” Pa.R.E. 401. Irrelevant evidence is
inadmissible. Pa.R.E. 402. Relevant evidence is admissible if its probative
value is not outweighed by a danger of unfair prejudice. Pa.R.E. 403. “‘Unfair
prejudice’ means a tendency to suggest decision on an improper basis or to
divert the jury’s attention away from its duty of weighing the evidence
impartially.” Id., Comment.
The PCRA court concluded that the challenged testimony was relevant.
The court noted “both witnesses within their duties of employment had the
opportunity to observe the interactions and relationship of [Smith] and the
victim” and “testified as to their observations of the interactions between the
[Smith] and the victim, as well as information surrounding the investigation
conducted by the school district regarding the relationship.” Id. Order,
12/20/21, at 5-6. The court found “[t]he information they provided the jury
broadened the scope as to the events occurring during the relevant time
-6-
J-S23018-22
period that directly relate to the charges in this matter” and “provided insight
as to how both parties interacted publicly as the nefarious nature of their
relationship was kept secret behind closed doors.” Id. at 6. The court further
found that the probative nature of the testimony was not outweighed by the
danger of unfair prejudice “because both witnesses independently provided
information surrounding [Smith’s] behavior that had a potentially innocent
explanation.” Id. at 5.
We agree that the witnesses’ testimony was relevant. Observations of
public interactions between a teacher and student can be probative of whether
a romantic relationship is occurring behind closed doors. The victim’s own
statements to Taylor about his relationship with Smith were certainly
probative of the nature of their relationship. We additionally agree that this
evidence was not outweighed by the potential for unfair prejudice, as vague
accusations that Smith and the victim were “too familiar” or sat on the “wrong”
side of the desk together is not evidence of the sort that would prevent the
jury from weighing the evidence impartially. As far as the relevance of “certain
hearsay declarations” to which Taylor testified, Smith has failed to explain
what that testimony entailed, or why it would be inadmissible on the basis of
relevance.
Even assuming an objection to Walls’ and Taylor’s testimony on the
basis of relevance had arguable merit, Smith has failed to prove that counsel
lacked a reasonable basis for allowing the testimony, or that there is a
reasonable probability that the jury would not have convicted her without
-7-
J-S23018-22
hearing the testimony. The PCRA court explained that neither Walls nor Taylor
testified that she observed any illegal or inappropriate behavior between
Smith and the victim. Order at 8-9. Walls vaguely testified she believed that
the two were too close, but admitted that Smith was tutoring the victim and
that she observed them doing schoolwork together when the victim went to
Smith’s classroom at the end of the school day. Id. at 6-7. The PCRA court
observed that Taylor even testified that the victim had denied meeting with
Smith in the evenings. Id. at 9. Smith has failed to prove Counsel was
ineffective for failing to object.
In her second issue, Smith argues the court erred in finding Counsel was
not ineffective for failing to request the court instruct the jury on the
definitions of burglary and theft, the victim’s crimen falsi convictions. Smith
argues that while the court instructed the jury that it could “consider the type
of crime committed, how long ago it was committed, and how it may affect
the likelihood that the witness has testified truthfully in this case,” the jury
could not have considered the “type of crime” without an explanation of the
elements of that crime. Smith’s Br. at 18-19. Smith contends that while “many
jurors may understand that theft is synonymous with stealing, it does not
necessarily follow that all jurors understand the elements of burglary.” Id. at
18. Smith argues Counsel should have requested an instruction on the
definition of burglary so “that the jury could understand the particular gravity
of the actions for which the victim was convicted” and that the burglary
conviction “was not akin to a less serious offense such as shoplifting or theft.”
-8-
J-S23018-22
Id. at 18, 19. Smith also argues Counsel failed to testify to a reasonable
strategic basis for failing to request the instruction, and that the absence of
the instruction caused prejudice, as the jury’s acceptance of the victim’s
testimony as truthful was crucial to her conviction.
Evidence of a prior conviction is admissible to attack the witness’s
credibility if the conviction involves a crimen falsi offense, i.e., a crime
involving dishonesty or a false statement. Pa.R.E. 609(a). Burglary and theft
are crimen falsi. Commonwealth v. Cole, 227 A.3d 336, 340 (Pa.Super.
2020). A defendant is entitled to a jury instruction on the use of a crimen falsi
conviction in assessing a witness’s credibility. Id.
The PCRA court observed that the trial court gave the proper crimen
falsi instruction, and held counsel was not ineffective for failing to request an
additional jury instruction explaining the elements of the crimes. The court
additionally concluded that an instruction on the elements of the victim’s prior
convictions would have been confusing for the jury, which was tasked with
identifying the elements of the crimes with which Smith had been charged,
not the victim. Order at 12.
We agree that Smith’s claim lacks arguable merit. As the PCRA court
stated, the jury received a crimen falsi instruction telling it the victim had been
convicted of crimes involving “an element of dishonesty” and to consider that
when assessing his credibility. See PCRA Court Op. 12/20/21, at 11 (quoting
N.T. 7/18/12, at 995). That was sufficient to inform the jury of the purpose
for which it could consider the convictions. Smith presented no evidence that
-9-
J-S23018-22
laypersons lack understanding of burglary and theft such that they do not
understand it is indicative of deceitfulness. The only testimony on this point
was Counsel’s uncontradicted assertion that most laypersons are familiar with
the crimes. Smith has likewise failed to prove prejudice.
In addition, we agree with the PCRA court that an instruction as to the
elements may have confused the jury. This Court previously ruled that “the
details pertaining to [the victim’s] burglary convictions were largely
immaterial to [the victim’s] character trait of being stealthy” and that further
explanation of the victim’s burglary convictions would have created a high risk
of unfair prejudice by diverting the jury’s attention from the issues in the case.
See Smith, 2015 WL 6166608 at *6. We therefore conclude that counsel
cannot be found ineffective for having failed to request this instruction.
Order affirmed.
Judge Stabile joins the memorandum.
Judge Colins notes dissent.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/15/2022
- 10 - | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483877/ | J-A18040-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
IN RE: ESTATE OF GEORGE SISAK, : IN THE SUPERIOR COURT OF
DECEASED : PENNSYLVANIA
:
:
APPEAL OF: STEPHEN G. SISAK :
:
:
:
: No. 120 WDA 2022
Appeal from the Order Entered December 22, 2021
In the Court of Common Pleas of Erie County Orphans' Court at No(s):
No. 40-2019
BEFORE: STABILE, J., MURRAY, J., and McLAUGHLIN, J.
MEMORANDUM BY McLAUGHLIN, J.: FILED: November 15, 2022
Stephen G. Sisak appeals from the order denying his motion to compel
distribution and surcharge, and granting the petition to amend decree of
distribution filed by Schellart H. Joyce (“Administrator”), administrator of the
estate of George Sisak (“the Estate”). We affirm.
The pertinent facts, as gleaned from the trial court’s opinion and from
the certified record are as follows. George Sisak died testate on September 9,
2013. He was survived by his son, Stephen Sisak, and daughter, Suzanne R.
Keller, who are each a beneficiary under his Will. Initially, Sisak served as the
executor of the Estate, but the orphans’ court ultimately removed him in
February 2020 due to his inaction. Thereafter, Keller briefly served as
executrix before resigning in favor of the current Administrator. Keller
subsequently filed a Chapter 7 bankruptcy petition in the United States
Bankruptcy Court for the District of Massachusetts.
J-A18040-22
In October 2020, the Administrator filed a first and final account,
petition for adjudication and statement of proposed distribution (“Account”).
Schedule D of the Account listed a debt of $75,000 as: “Suzanne Keller-
Payment of Debt by Way of Deduction From Gift Due To the Debtor
Beneficiary.” As a result of Keller’s outstanding debt to the Estate, the Account
called for distributions to Keller in the amount of $11,326.34 and to Sisak in
the amount of $86,326.35. The orphans’ court issued an order in January
2020, confirming the Account. Proper notice was sent to all required parties,
including to the bankruptcy trustee from Keller’s Massachusetts bankruptcy
(“Bankruptcy Trustee”). No objections were filed.
Shortly thereafter, the Administrator sent Sisak a check for $86,326.25.
However, the Administrator quickly stopped payment on the check after the
Bankruptcy Trustee contacted her to indicate that the distribution would
violate the bankruptcy stay. Sisak also agreed not to cash the check. The
Administrator reports that at this point she sought advice from a bankruptcy
attorney who advised her that she could either engage in litigation in
Bankruptcy Court in Massachusetts or pursue the more advantageous course
of seeking a settlement with the interested parties. The Administrator chose
the latter option and was able to get all parties, including Sisak, to agree to a
settlement of $9,000 to satisfy the Bankruptcy Trustee’s interest in the Estate.
However, within 10 days, Sisak advised he would not support the
settlement agreement. Meanwhile, the Bankruptcy Trustee pursued approval
of the agreement in Bankruptcy Court, over Sisak’s objection. Ultimately, the
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J-A18040-22
Bankruptcy Court approved the agreement as a fair resolution for the
Bankruptcy Trustee. Thereafter, in September 2021, the Administrator paid
Sisak a distribution of $77,326.25, which reflected the $9,000 settlement
payment to the Bankruptcy Trustee.
Sisak filed the instant petition in October 2021, seeking to compel
distribution and for surcharge against the Administrator. The Administrator
filed an answer and a petition to amend the Account. After a hearing, the
orphans’ court denied Sisak’s petition but granted the Administrator’s request
to amend the Account to reflect the $9,000 compromise, as approved by the
Bankruptcy Court. Sisak filed the instant timely appeal, and both he and the
orphans’ court complied with Pa.R.A.P. 1925.
Sisak raises the following issues on appeal:
1. Was it error for the court to allow the Administrator’s
payment of a claim not listed within the proposed
distribution that was approved by the court?
2. Was it error for the court to grant Administrator’s Petition
to Amend Decree of Distribution, thereby confirming an
Account that provides for payment of a claim that was
not timely submitted, pursuant to 20 Pa.C.S.A. § 3386?
3. Is surcharge the appropriate remedy where a Personal
Representative pays a disputable claim to a claimant that
is not set forth in a confirmed Schedule of Distribution
and no reference to that claim has been filed and the
potential claimant was given proper notice that an
account would be confirmed if they did not timely submit
a claim?
Sisak’s Br. at 6.
-3-
J-A18040-22
Sisak’s first two issues are interrelated and therefore we will discuss
them in tandem. In his first issue, Sisak contends that the orphans’ court erred
by not concluding that the Administrator acted improperly by failing to
distribute $86,326.25 to him as specified in the court approved Account. He
points out that the Bankruptcy Trustee never filed objections to the Account,
despite having notice. Thus, according to Sisak, the court abused its discretion
by retroactively permitting the Administrator to satisfy a $9,000 claim that
the Bankruptcy Trustee never presented to the court as required pursuant to
Section 3386 of the Probate, Estates and Fiduciaries Code (“PEF Code”).1
Second, Sisak argues that the orphans’ court erroneously agreed to
grant the Administrator’s petition to retroactively amend the Account pursuant
to 20 Pa.C.S.A. § 3521, which permits the review of court confirmed final
accounts under limited circumstances. To this end, Sisak claims that the
Bankruptcy Trustee’s claim did not constitute a “new matter” that could not
have been discovered with due diligence. All parties knew about Keller’s
bankruptcy in Massachusetts and the Bankruptcy Trustee had notice of the
Account. Further, Sisak avers that the court erred by finding that “justice and
equity” required review pursuant to Section 3521 of the PEF Code. He
____________________________________________
1 20 Pa.C.S.A. § 3386 states:
If any claimant whose claim is not reported to the court by the
personal representative as an admitted claim shall fail to present
it at the call for audit or confirmation, he shall not be entitled to
receive any share of the real and personal estate distributed
pursuant to such audit or confirmation, whether the estate of the
decedent be solvent or insolvent.
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J-A18040-22
maintains that the Administrator failed to plead sufficient facts to support the
need for equitable review of the Account and that further review would, in
fact, be detrimental to his interests. Sisak also asserts that justice and equity
do not require review of the Account because the Administrator and the
Bankruptcy Trustee failed to exercise their rights with “due care.” Sisak’s Br.
at 21.
“The findings of a judge of the orphans’ court division, sitting without a
jury, must be accorded the same weight and effect as the verdict of a jury,
and will not be reversed by an appellate court in the absence of an abuse of
discretion or a lack of evidentiary support.” In re Jackson, 174 A.3d 14, 23
(Pa.Super. 2017) (citation omitted). This Court’s “task is to ensure that the
record is free from legal error and to determine if the [o]rphans’ [c]ourt’s
findings are supported by competent and adequate evidence and are not
predicated upon capricious disbelief of competent and credible evidence.” Id.
(citation omitted). Regarding questions of law, this Court’s standard of review
is de novo, and the scope of review is plenary. In re Fiedler, 132 A.3d 1010,
1018 (Pa.Super. 2016) (citations and quotation marks omitted).
Sisak challenges the orphans’ court’s decision to amend the Account. It
is well settled that the orphans’ court retains broad equitable powers regarding
an estate, even after final distributions have been made. See Horner v. First
Pa. Banking & Trust Co., 194 A.2d 335, 339 (Pa. 1963) (“powers of the
[o]rphans’ [c]ourt did not terminate upon final distribution”). Indeed, it is well
recognized that orphans’ courts have the inherent power to review decrees
-5-
J-A18040-22
and this power should be “liberally exercised.” Estate of Turnbull, 88 Pa.
Super. 482, 494 (1926).
In general, “an “order confirming an account and ordering distribution
of an estate becomes final when no appeal is timely filed therefrom.” In re
Estate of Karschner, 919 A.2d 252, 256 (Pa.Super. 2007). Further, “[t]he
failure to appeal from a final order renders the doctrine of res judicata
applicable.” Id. (citation omitted). However, Section 3521 of the PEF Code
provides an exception. It reads:
If any party in interest shall, within five years after the final
confirmation of any account of a personal representative,
file a petition to review any part of the account or of an
auditor’s report, or of the adjudication, or of any decree of
distribution, setting forth specifically alleged errors therein,
the court shall give such relief as equity and justice shall
require: Provided, That no such review shall impose liability
on the personal representative as to any property which was
distributed by him in accordance with a decree of court
before the filing of the petition. The court or master
considering the petition may include in his adjudication or
report, findings of fact and of law as to the entire
controversy, in pursuance of which a final order may be
made.
20 Pa.C.S.A. § 3521
Pennsylvania courts have interpreted Section 3521 as permitting review
only in three instances: “(1) where there are errors of law appearing on the
face of the record; (2) [when] new matters have arisen since the confirmation
of the account; or (3) where justice and equity require a review and no person
will suffer thereby.” Karschner, 919 A.2d at 256 (citation omitted). Newly
discovered evidence “must have been discovered since the original
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J-A18040-22
adjudication, must be such that it was not previously obtainable by reasonable
diligence, and must be likely to have compelled a different result.” Id.
Moreover, pursuant to Rule 1.2 of the Pennsylvania Supreme Court’s
Orphans’ Court Rules, “[t]he court at every stage of any action or proceeding
may disregard any error or defect of procedure which does not affect the
substantial rights of the parties in interest.” Pa.O.C. Rule 1.2(a).
In this case, the orphans’ court determined that justice and equity
required it to amend the Account in light of the bankruptcy considerations at
issue in this case. See Karschner, 919 A.2d at 256. We discern no abuse of
discretion.2 As the lower court notes, the Administrator found herself in quite
a quandary when she discovered that the Bankruptcy Trustee considered
Keller’s $75,000 debt to the Estate as an asset to be included within Keller’s
Bankruptcy Estate and thereby subject to the bankruptcy stay. The
Administrator’s bankruptcy counsel informed her that to fight the debt’s
designation as the bankruptcy estate’s asset would require significant
resources. The Administrator therefore worked to secure a compromise,
initially with Sisak’s agreement, of a $9,000 payment to the Bankruptcy Estate
to discharge the Bankruptcy Trustee’s claim. This compromise, as approved
by the federal Bankruptcy Court, likely saved the Estate, and thereby Sisak,
considerable time and resources. Accordingly, the orphans’ court acted within
____________________________________________
2 Because we have concluded that the orphans’ court permissibly determined
that review of the Account was indicated, we need not address Sisak’s
argument that the Bankruptcy Trustee’s involvement in the case did not
constitute a “new matter.” See Karschner, 919 A.2d at 256.
-7-
J-A18040-22
its discretion when finding that amendment of the Account was appropriate to
reflect the $9,000 compromise payment to the Bankruptcy Trustee and Sisak’s
adjusted distribution of $77,326.25.
Sisak also asserts that the orphans’ court’s retroactive approval of the
Administrator’s actions denied him the opportunity to argue his case. We
disagree. Sisak had ample opportunity to present his opposition during the
orphans’ court’s consideration of his instant petition to compel distribution
according to the Account and the Administrator’s response requesting
amendment of the Account pursuant to Section 3521. Thus, the orphans’
court’s retroactive review did not impinge upon Sisak’s substantial rights, and
the court’s review was not precluded. See Pa.O.C.R. 1.2(a). The orphans’
court properly exercised its discretion to amend the Account under Section
3521 of the PEF Code. See Horner, 194 A.2d at 339; Turnbull, 88 Pa.Super.
at 494. Sisak’s first two issues merit no relief.
In his third issue, Sisak contends that the Administrator should be
subject to surcharge due to her action of paying the $9,000 compromised
amount to the Bankruptcy Trustee without first obtaining court approval. Sisak
claims that a person of ordinary prudence, particularly an attorney, would
have sought court approval of the payment before agreeing to and making
payment to the Bankruptcy Trustee. Thus, he argues that the Administrator,
who is an attorney, should be subject to surcharge for both the $9,000
payment and for Sisak’s expenses in regard to this case.
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J-A18040-22
“A surcharge is a penalty imposed to compensate the beneficiaries for
loss of estate assets due to the fiduciary’s failure to meet his duty of care;
however, a surcharge cannot be imposed merely for an error in judgment.”
In re Estate of Westin, 874 A.2d 139, 144 (Pa.Super. 2005) (citation
omitted). A finding of negligence is necessary when imposing a surcharge. Id.
Further, where a fiduciary possesses skills greater than “a person of ordinary
prudence, then the fiduciary’s standard of care must be judged according to
the standard of one having this special skill.” Estate of Pew, 655 A.2d 521,
542 (Pa.Super. 1994).
Here, the orphans’ court found that the Administrator acted in
accordance with her fiduciary duties and therefore would not be subject to
surcharge. Once again, we discern no error. Although an attorney herself, the
Administrator sought counsel from a bankruptcy attorney to ascertain how to
best contend with the Bankruptcy Trustee’s claim. She then worked diligently
to obtain a compromise to avoid considerable expense and delay for the
Estate. Hence, we conclude that the orphans’ court properly determined that
the Administrator aptly executed her fiduciary duties and was not subject to
surcharge. See Westin, 874 A.2d at 144; Pew, 655 A.2d at 542. Therefore,
Sisak’s third issue is also devoid of merit. Accordingly, we affirm the order
denying Sisak’s petition to compel distribution and surcharge and granting the
Administrator’s petition to amend the Account.
Order affirmed.
-9-
J-A18040-22
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/15/2022
- 10 - | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483883/ | J-S25040-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellee :
:
v. :
:
GEORGE SCHMIDT :
:
Appellant : No. 260 WDA 2022
Appeal from the Judgment of Sentence Entered October 20, 2021
In the Court of Common Pleas of Washington County
Criminal Division at No(s): CP-63-CR-0001090-2020
BEFORE: BENDER, P.J.E., DUBOW, J., and KING, J.
MEMORANDUM BY KING, J.: FILED: November 15, 2022
Appellant, George Schmidt, appeals from the judgment of sentence1
entered in the Washington County Court of Common Pleas, following his jury
trial conviction for simple assault.2 We affirm.
The relevant facts and procedural history of this case are as follows. On
May 3, 2020, Appellant had an argument with James Brett. The two men did
not know each other well prior to this incident; however, they lived in the
same apartment building and Mr. Brett had once complained to the landlord
about noise from Appellant’s apartment. On the day of the incident, Mr. Brett
____________________________________________
1 The trial court originally imposed the judgment of sentence on October 6,
2021; however, it issued an amended sentence on October 20, 2021,
correcting the subsection of simple assault under which Appellant was
sentenced. We have amended the caption accordingly.
2 18 Pa.C.S.A. § 2701(a)(1).
J-S25040-22
was seated outside the building drinking beer with Wayne Reedy. As Appellant
walked by the men on the way up the stairs to his apartment, Mr. Brett said
something to him. When he reached the top of the stairs, Appellant called Mr.
Brett a “fucking cocksucker and a faggot.” (N.T. Trial, 7/13/21, at 60). Mr.
Brett then followed Appellant up the stairs. When Mr. Brett reached the top
of the stairs, Appellant kicked him in the chest, sending Mr. Brett falling down
the stairs where he landed headfirst at the bottom. Mr. Reedy called 911, and
Mr. Brett was transported to the hospital, where he was treated for fractures
to several vertebrae.
The Commonwealth charged Appellant with both aggravated and simple
assault. Appellant’s trial took place on July 13–14, 2021, after which the jury
found him not guilty of aggravated assault, but guilty of simple assault. On
October 6, 2021, the court sentenced Appellant to one to two years of
imprisonment. Appellant timely filed post-sentence motions on Monday,
October 18, 2021, challenging the weight and sufficiency of the evidence. The
court denied the post-sentence motions on January 31, 2022.3 Appellant filed
a timely notice of appeal on February 25, 2022. Pursuant to the court’s order,
Appellant filed a timely concise statement of errors complained of on appeal
____________________________________________
3 As previously mentioned, on October 20, 2021, the trial court issued an
amended sentencing order. Because this amendment did not affect the
sentence from which Appellant filed his post-sentence motion, the post-
sentence motion tolled the appeal period and Appellant’s notice of appeal was
timely filed. Commonwealth v. Wenzel, 248 A.3d 540, 545 (Pa.Super.
2021), appeal denied, ___ Pa. ___, 264 A.3d 753 (2021).
-2-
J-S25040-22
per Pa.R.A.P. 1925(b) on March 18, 2022.
Appellant raises the following issues on appeal:
1. Whether the trial court erred in denying Appellant’s Post-
Sentence Motions for Vacating the Verdict and Motion for
New Trial.
2. Whether the Commonwealth presented sufficient
evidence, as a matter of law, to support the following
counts:
a. Count 2: Simple Assault (Misdemeanor of the
Second Degree).
3. Does the Weight of the evidence require that the verdicts
on said counts be reversed and stricken?
(Appellant’s Brief at 5).
Preliminarily, we observe several deficiencies with Appellant’s brief that
have impacted our review. In his statement of questions presented, Appellant
appears to challenge both the weight and the sufficiency of the evidence to
support his conviction; however, his brief sets forth only the standard of
review for a challenge to the sufficiency of the evidence. (Id. at 4). See also
Pa.R.A.P. 2111(3). Furthermore, Appellant does not separate his argument
into different sections for each issue raised, but rather combines his weight
and sufficiency arguments, citing only one boilerplate case in support, and
making no references to the certified record. (Appellant’s Brief at 7-10). See
also Pa.R.A.P. 2119 (a)-(c); Commonwealth v. Garland, 63 A.3d 339, 344
(Pa.Super. 2013) (holding sufficiency claim was waived where appellant failed
to specify which elements of crime he was challenging); Commonwealth v.
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J-S25040-22
Birdseye, 637 A.2d 1036, 1039-40 (Pa.Super. 1994), cert. denied, 518 U.S.
1019, 116 S.Ct. 2552, 135 L.Ed.2d 1071 (1996) (holding that appellants
“failed to distinguish between their sufficiency and weight of the evidence
claims and presented no argument regarding the weight of the evidence, [and]
we deem their weight of the evidence issue waived.”). Based on these defects
in Appellant’s brief, we are compelled to conclude that Appellant has waived
his claims on appeal.
Moreover, even if Appellant had not waived his claims, he would not be
entitled to relief. In his brief, Appellant argues that because the jury found
him not guilty of aggravated assault, the jury must have found the victim, Mr.
Brett, incredible, such that there was insufficient evidence to support his guilt
of simple assault. (Appellant’s Brief at 7-10). We disagree.
“The standard we apply in reviewing sufficiency of the evidence is
whether in viewing all the evidence admitted at trial in light most favorable to
the verdict winner, there is sufficient evidence to enable the fact-finder to find
every element of the crime beyond a reasonable doubt.” Garland, supra at
344 (citation omitted). “The trier of fact while passing upon credibility of
witnesses...is free to believe all, part or none of the evidence.” Id. at 345
(citation omitted).
Here, the jury convicted Appellant of simple assault—causing bodily
injury, which is defined as attempting to cause or intentionally, knowingly or
recklessly causing bodily injury to another. 18 Pa.C.S.A. § 2701(a)(1). At
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trial, the Commonwealth introduced evidence that Appellant and Mr. Brett had
a verbal altercation, after which Appellant kicked Mr. Brett in the chest,
causing him to fall down a flight of stairs and break several vertebrae in his
neck. Viewing the evidence in the light most favorable to the Commonwealth
as verdict winner, the evidence at trial was sufficient to establish that
Appellant intentionally, knowingly or recklessly caused bodily injury to Mr.
Brett. Garland, supra. Therefore, the evidence supports Appellant’s simple
assault conviction, and his challenge to the sufficiency of the evidence would
not merit relief.
In addition, Appellant’s challenge to the weight of the evidence would
also not merit relief.4 When examining a challenge to the weight of the
evidence, our standard of review is as follows:
The weight of the evidence is exclusively for the finder
of fact who is free to believe all, part, or none of the
evidence and to determine the credibility of the
witnesses. An appellate court cannot substitute its
judgment for that of the finder of fact. Thus, we may
only reverse the...verdict if it is so contrary to the
evidence as to shock one’s sense of justice.
Moreover, where the trial court has ruled on the weight
claim below, an appellate court’s role is not to consider the
underlying question of whether the verdict is against the
weight of the evidence. Rather, appellate review is limited
to whether the trial court palpably abused its discretion in
ruling on the weight claim.
____________________________________________
4 As discussed above in our waiver analysis, Appellant does not present a
separate argument with respect to his weight of the evidence claim. (See
Appellant’s Brief at 7-10).
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Commonwealth v. Champney, 574 Pa. 435, 444, 832 A.2d 403, 408
(2003), cert. denied, 542 U.S. 939, 124 S.Ct. 2906, 159 L.Ed.2d 816 (2004)
(internal citations omitted). A “trial court’s denial of a motion for a new trial
based on a weight of the evidence claim is the least assailable of its rulings.”
Commonwealth v. Rivera, 603 Pa. 340, 363, 983 A.2d 1211, 1225 (2009),
cert. denied, 560 U.S. 909, 130 S.Ct. 3282, 176 L.Ed.2d 1191 (2010).
Here, the trial court observed:
Appellant’s primary contention is essentially that the
testimony of the victim was the sole basis for conviction.
However, at trial, there was more than just testimony by
the victim himself from which one could conclude that the
crime took place, and the jury was entitled to make a
credibility assessment of each witness. There was
testimony by eyewitnesses and medical personnel about the
nature and extent of the victim’s injuries, which served to
corroborate the victim’s own testimony about the incident.
The victim did not accidentally fall down the stairs, nor was
it a mere coincidence that the victim was injured after he
attempted to confront Appellant. Thus, the [c]ourt in its
discretion determined that the verdict was not against the
weight of the evidence. The verdict does not shock the
conscience or one’s sense of justice.
(Trial Court Opinion, 4/11/22, at 7-8) (record citation omitted). We see no
reason to disrupt the court’s analysis. See Champney, supra. Thus, even
if Appellant had not waived his weight claim, it would have merited no relief.
Accordingly, we affirm.
Judgment of sentence affirmed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/15/2022
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https://www.courtlistener.com/api/rest/v3/opinions/8483871/ | IN THE SUPREME COURT OF THE STATE OF DELAWARE
ANEL HUBBARD, §
§ No. 240, 2022
Defendant Below, §
Appellant, §
§ Court Below–Superior Court
v. § of the State of Delaware
§
STATE OF DELAWARE, §
§ Cr. ID No. 0906021444 (N)
Appellee. §
§
Submitted: September 13, 2022
Decided: November 14, 2022
Before SEITZ, Chief Justice; VALIHURA and VAUGHN, Justices.
ORDER
After consideration of the appellant’s opening brief, the State’s motion to
affirm, and the record on appeal, it appears to the Court that:
(1) The appellant, Anel Hubbard, filed this appeal from the Superior
Court’s denial of his motion for correction of illegal sentence. The State has filed a
motion to affirm the judgment below on the ground that it is manifest on the face of
Hubbard’s opening brief that his appeal is without merit. We agree and affirm.
(2) Following a six-day trial in early 2010, a Superior Court jury found
Hubbard guilty of one count of attempted first-degree murder, five counts of
possession of a firearm during the commission of a felony, two counts of first-degree
robbery, one count of first-degree carjacking, one count of first-degree reckless
endangering, and one count of second-degree conspiracy. Hubbard was also found
guilty of one count of a possession of a deadly weapon by a person prohibited, which
was severed from the other counts and heard simultaneously as a bench trial.
(3) Prior to sentencing, the State filed a motion to declare Hubbard a
habitual offender under 11 Del. C. § 4214(a), alleging that four prior felony
convictions qualified Hubbard to be sentenced as a habitual offender—a 1998 first-
degree-robbery conviction, a 2003 second-degree-escape conviction, a 2005 second-
degree-escape conviction, and a 2007 possession-of-a-controlled-substance-within-
1000-feet-of-a-school conviction. Hubbard did not dispute the validity of his prior
convictions but argued that he had not been given a meaningful opportunity to
rehabilitate between his conviction for robbery and his convictions for escape
because he was held at either Level V or Level IV continuously after the 1998
robbery conviction. Over Hubbard’s objection, the Superior Court granted the
State’s motion and sentenced Hubbard, as a habitual offender, to twelve life terms
of incarceration. We affirmed Hubbard’s convictions and sentence on appeal.1
(4) In October 2011, Hubbard filed a timely motion for postconviction
relief, and the Superior Court appointed counsel to assist him in connection with the
1
Hubbard v. State, 16 A.3d 912 (Del. 2011).
2
proceedings. On January 25, 2017, the Superior Court denied the motion,2 and we
affirmed its denial on appeal.3 In March 2018, Hubbard filed a second motion for
postconviction relief. The Superior Court summarily dismissed the motion as
procedurally barred, and we affirmed its summary dismissal on appeal.4
(5) In February 2019, Hubbard filed a motion for correction of illegal
sentence under Superior Court Criminal Rule 35(a), reviving his argument that he
had not been given a meaningful opportunity to rehabilitate between his convictions
because he was held continuously at Level IV or Level V on his 1998 sentence for
robbery when he was convicted of escape. On May 17, 2019, the Superior Court
denied the motion, finding that a defendant could rehabilitate in either a Level V or
Level IV setting. Hubbard appealed, but his appeal was dismissed when he failed to
file an opening brief.5
(6) In March 2022, Hubbard filed another motion for correction of illegal
sentence, again arguing that his escape convictions could not be used as predicate
felonies for habitual-offender purposes because they overlapped with his robbery
conviction. The Superior Court denied the motion, finding that it was an
impermissible repetitive Rule 35(b) motion, that no additional information had been
2
State v. Hubbard, 2017 WL 480567 (Del. Super. Ct. Jan. 25, 2017).
3
Hubbard v. State, 2018 WL 526597 (Del. Jan. 23, 2018).
4
Hubbard v. State, 2018 WL 4212139 (Del. Sept. 4, 2018).
5
Hubbard v. State, 2019 WL 4180410 (Del. Sept. 3, 2019).
3
provided to the court that would warrant a reduction or modification of sentence,
and that Hubbard’s sentence remained appropriate for the reasons stated at
sentencing. This appeal followed.
(7) We review the denial of a motion for correction of sentence for abuse
of discretion.6 To the extent a claim involves a question of law, we review the claim
de novo.7 A motion to correct an illegal sentence may be filed at any time.8 A
sentence is illegal if it exceeds statutory limits, violates the Double Jeopardy Clause,
is ambiguous with respect to the time and manner in which it is to be served, is
internally contradictory, omits a term required to be imposed by statute, is uncertain
as to its substance, or is a sentence that the judgment of conviction did not authorize.9
(8) On appeal, Hubbard argues as he did below that he was not given the
chance to rehabilitate between his robbery conviction and his subsequent escape
convictions because he had not completed the “quasi-institutional” Level IV portion
of his 1998 sentence for robbery when he was convicted of escape. Hubbard’s
argument is unavailing.
(9) As a preliminary matter, although it appears that the Superior Court
mistakenly treated Hubbard’s motion for correction of sentence as a motion for
6
Fountain v. State, 2014 WL 4102069, at *1 (Del. Aug. 19, 2014).
7
Id.
8
Del. Super. Ct. Crim. R. 35(a).
9
Brittingham v. State, 705 A.2d 577, 578 (Del. 1998).
4
modification of sentence under Rule 35(b), we nonetheless affirm the Superior
Court’s denial of Hubbard’s motion on the independent and alternative ground that
it lacked merit under Rule 35(a).10
(10) As Hubbard correctly observes, to be sentenced as a habitual offender
under Section 4214(a), “three separate convictions are required, each successive to
the other, with some chance of rehabilitation after each sentencing….”11 To the
extent that Hubbard argues that he could not rehabilitate in a “quasi-institutional”
setting, we implicitly recognized that one can rehabilitate while incarcerated when
we explicitly rejected the argument that one must be incarcerated to have a chance
to rehabilitate.12 Indeed, as the Superior Court recognized in its May 17, 2019 order
denying Hubbard’s earlier motion for correction of illegal sentence, rehabilitation is
one of the fundamental objectives of incarceration, and “[t]o say that Level V
incarceration and Level IV partial confinement are not rehabilitative defies this basic
understanding.”13 And, to the extent that Hubbard argues that one must be given a
chance to rehabilitate after completing his first sentence—here, Hubbard’s 1998
10
See Unitrin, Inc. v. American Gen. Corp., 651 A.2d 1361, 1390 (Del. 1995) (noting that the
Delaware Supreme Court may affirm a trial court’s judgment on the basis of a different rationale
than that articulated by the trial court).
11
Buckingham v. State, 482 A.2d 327, 330 (Del. 1984).
12
See Wehde v. State, 983 A.2d 82, 85-86 (Del. 2009) (rejecting the defendant’s argument that “a
person on probation cannot be rehabilitated, but only one who is imprisoned can”).
13
State’s Mot. to Affirm, Ex. E at p. 4.
5
sentence for robbery—he is mistaken. We have held that “some chance of
rehabilitation” means only that “some period of time must have elapsed between
sentencing on an earlier conviction and the commission of the offense resulting in
the later felony conviction.”14 Hubbard does not dispute that his predicate
convictions arose out of separate events and were separated by a period of time.
Accordingly, Hubbard’s convictions did not overlap, and Hubbard had some chance
for rehabilitation between each of the convictions. We therefore affirm the Superior
Court’s denial of his motion for correction of illegal sentence.
NOW, THEREFORE, IT IS ORDERED that the motion to affirm is
GRANTED and the judgment of the Superior Court is AFFIRMED.
BY THE COURT:
/s/ Karen L. Valihura
Justice
14
Eaddy v. State, 1996 WL 313499, at * 2 (Del. May 30, 1996).
6 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483886/ | J-S35044-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
IAN FRANCIS MITCHELL :
:
Appellant : No. 333 MDA 2022
Appeal from the PCRA Order Entered January 28, 2022
In the Court of Common Pleas of Tioga County Criminal Division at
No(s): CP-59-CR-0000163-2017
BEFORE: BENDER, P.J.E., McLAUGHLIN, J., and STEVENS, P.J.E.*
MEMORANDUM BY STEVENS, P.J.E.: FILED: NOVEMBER 15, 2022
Appellant, Ian Francis Mitchell, appeals from the order entered in the
Court of Common Pleas of Tioga County, which denied his first petition filed
under the Post-Conviction Relief Act (“PCRA”), 42 Pa.C.S.A. §§ 9541-9546,
following an evidentiary hearing. After a careful review, we affirm.
The relevant facts and procedural history have been previously
summarized by this Court, in relevant part, as follows:
The following factual summary is based on the transcripts
of testimony from Appellant’s [jury] trial, [at which Appellant was
represented by counsel]. On March 8, 2017, the victim
(hereinafter “I.D.”) was ten years old. I.D. testified that on the
night of March 8, 2017, her stepfather, Appellant, entered her
bedroom and was not wearing any clothes. I.D. testified that
Appellant got into bed with her and removed her clothing.
Appellant then touched the outside of I.D.’s vagina with his hand,
mouth, and penis. She testified that he tried to put his hand,
____________________________________________
* Former Justice specially assigned to the Superior Court.
J-S35044-22
mouth, and erect penis inside of her, but she managed to get him
away by “kicking and punching, and yelling.” N.T., 1/25/2018, at
76. I.D. indicated that Appellant left the room and came back a
couple of times and tried the same thing each time. Finally, when
Appellant left the room, I.D. left the house. At first, she hid
outside, then she returned to the house to get a pair of boots.
Then, wearing small pajamas and large boots, I.D. walked a
quarter of a mile to a neighbor’s house—the home of a girl with
whom she went to school. It was 48 degrees and windy that night.
One of the neighbors testified that I.D. appeared on her doorstep
crying hysterically and that she said, “help, my stepdad is trying
to rape me.” N.T., 1/24/2018, at 174. [The neighbor’s husband
testified that I.D. said, “Can you please help me, my stepfather
tried to rape me again?” Id. at 185.] The neighbors called the
police and an investigation followed.
During the investigation, I.D. took part in a forensic
interview in which she described what happened to her. In the
interview, I.D. used childish words such as “pee pee” when
referring to her stepfather’s penis. At trial, the defense introduced
I.D.’s diary into evidence. The diary contains entries that include
vulgar words and descriptions of sexual scenarios. At trial, I.D.
testified that she did not write all of the entries in the diary. She
testified, “me and my friends write in it.” N.T., 1/25/2018, at 122.
I.D. also testified that March 8, 2017, was not the first time that
Appellant assaulted her. She indicated that Appellant assaulted
her regularly, at least five or more times.
Commonwealth v. Mitchell, No. 1360 MDA 2018, 2019 WL 2598178, at *1
(Pa.Super. filed 6/25/19) (unpublished memorandum).
At the conclusion of the trial, the jury convicted Appellant of four counts
each of criminal attempt rape of a child, indecent assault of a person less than
13 years of age, and simple assault. The trial court found Appellant guilty of
one count of harassment. The trial court sentenced Appellant to 84 months
to 180 months in prison on each criminal attempt rape conviction, with the
sentences to run consecutively, for an aggregate sentence of 336 months to
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720 months in prison. The trial court also sentenced Appellant to 12 months
to 84 months in prison on the first three convictions of indecent assault of a
person less than 13 years of age and ran each of those sentences concurrently
with the fourth count of criminal attempt rape. On the fourth indecent assault
conviction, the trial court sentenced Appellant to a probationary term of five
years and ran that sentence consecutively with the fourth criminal attempt
rape conviction and the first three indecent assault convictions. In addition,
the trial court sentenced Appellant to 9 months to 24 months in prison on each
of the simple assault convictions and ran them each concurrently with the
fourth criminal attempt rape conviction and the first three indecent assault
convictions. Finally, the trial court also ordered Appellant be subjected to the
registration requirements pursuant to the Sexual Offender Registration
Notification Act as a Tier Three Offender for each of the criminal attempt rape
and indecent assault convictions.
Appellant filed a post-sentence motion, and the trial court denied the
motion. Appellant filed a timely, counseled direct appeal to this Court.
Therein, Appellant presented challenges to the sufficiency and weight of the
evidence supporting his convictions; he contended the trial court erred in not
granting a new trial based on after-discovered evidence from a handwriting
expert and I.D.’s mother showing that the victim wrote the diary entries; he
alleged the prosecutor committed misconduct by asserting I.D. did not write
the diary entries but her friend wrote the entries; he alleged trial counsel was
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J-S35044-22
ineffective in introducing unrelated prior bad conduct of Appellant; he
presented discretionary aspects of sentencing claims; and, he averred the trial
court erred in not permitting the defense to have a psychiatric examination of
I.D. since there were clearly issues as to competency and truthfulness.
This Court concluded Appellant was not entitled to relief on his claims,
and accordingly, we affirmed his judgment of sentence. 1 Appellant filed a
petition for allowance of appeal, which our Supreme Court denied on March 3,
2020.
On or about April 12, 2021, Appellant filed a timely pro se PCRA petition,
and the PCRA court appointed counsel, who filed an amended PCRA petition.
On September 14, 2021, the PCRA court held an evidentiary hearing, and by
order entered on January 28, 2022, the PCRA court denied Appellant’s
petition. This timely, counseled appeal followed, and all Pa.R.A.P. 1925
requirements have been met.
On appeal, Appellant sets forth the following issues in his “Statement of
Questions Involved” (verbatim):
1. Did the court err and abuse its discretion in denying Appellant’s
PCRA [petition] when trial counsel was ineffective for failing to
adequately challenge a juror for cause after trial counsel was
informed that the juror openly displayed bias?
2. Did the court err and abuse its discretion in denying Appellant’s
PCRA [petition] when his previous attorneys were ineffective in
failing to argue the complaining witness’s testimony was
____________________________________________
1 We did not address the merits of Appellant’s ineffective assistance of counsel
clam on direct appeal; but rather, we deferred the issue for Appellant to raise
the claim in a timely PCRA petition.
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J-S35044-22
insufficient evidence to sustain Appellant’s multiple
convictions?
3. Did the court err and abuse its discretion in denying Appellant’s
PCRA [petition] when his trial counsel was ineffective for failing
to object and request a curative instruction after the
Commonwealth elicited prior bad acts evidence?
4. Did the court err and abuse its discretion in denying Appellant’s
PCRA [petition] when appellate counsel was ineffective for
failing to litigate the denial of Appellant’s pretrial motion
regarding an “agreement to preserve the right to challenge the
prima facie case at a time later in the criminal prosecution”
filed on August 29th, 2017, and denied on January 23rd, 2018?
5. Did the court err and abuse its discretion in denying Appellant’s
PCRA [petition] when trial counsel was ineffective for failing to
object to one or all of the improper remarks made by the
prosecutor during closing argument?
6. Did the court err and abuse its discretion in denying Appellant’s
PCRA [petition] when trial counsel was ineffective for failing to
impeach and cross examine the complaining witness regarding
whether Appellant was inside during the aftermath of the
attack?
Appellant’s Brief at 8-9 (unnecessary capitalization and suggested answers
omitted).
Initially, we note our standard of review for an order denying PCRA relief
is limited to whether the record supports the PCRA court’s determination, and
whether that decision is free of legal error. Commonwealth v. Sattazahn,
597 Pa. 648, 952 A.2d 640, 652 (2008). “We must accord great deference to
the findings of the PCRA court, and such findings will not be disturbed unless
they have no support in the record.” Commonwealth v. Scassera, 965 A.2d
247, 249 (Pa.Super. 2009) (citation omitted).
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As relevant here, a PCRA petitioner will be granted relief only when he
proves, by a preponderance of the evidence, that his conviction or sentence
resulted from the “[i]neffective assistance of counsel which, in the
circumstances of the particular case, so undermined the truth-determining
process that no reliable adjudication of guilt or innocence could have taken
place.” 42 Pa.C.S.A. § 9543(a)(2)(ii). In reviewing Appellant’s ineffective
assistance of counsel claims, we are mindful that, since there is a presumption
counsel provided effective representation, the defendant bears the burden of
proving ineffectiveness. Commonwealth v. Ali, 608 Pa. 71, 10 A.3d 282
(2010).
To prevail on an ineffective assistance claim, a defendant must establish
“(1) [the] underlying claim is of arguable merit; (2) the particular course of
conduct pursued by counsel did not have some reasonable basis designed to
effectuate his [client’s] interests; and (3) but for counsel’s ineffectiveness,
there is a reasonable probability that the outcome of the proceedings would
have been different.” Id., supra, 10 A.3d at 291 (citations omitted).
We need not analyze the prongs of an ineffectiveness claim
in any particular order. Rather, we may discuss first any prong
that an appellant cannot satisfy under the prevailing law and the
applicable facts and circumstances of the case. [C]ounsel cannot
be deemed ineffective for failing to raise a meritless claim.
Commonwealth v. Johnson, 635 Pa. 665, 139 A.3d 1257, 1272 (2016)
(citations omitted). See Commonwealth v. Daniels, 600 Pa. 1, 963 A.2d
409, 419 (2009) (“A failure to satisfy any prong of the ineffectiveness test
-6-
J-S35044-22
requires rejection of the claim of ineffectiveness.”) (citation omitted)). “A
claim has arguable merit where the factual averments, if accurate, could
establish cause for relief.” Commonwealth v. Stewart, 84 A.3d 701, 707
(Pa.Super. 2013) (en banc) (citation omitted).
Regarding the reasonable basis prong of the ineffective assistance of
counsel test, our Supreme Court has relevantly stated the following:
When assessing whether counsel had a reasonable basis for his
act or omission, the question is not whether there were other
courses of action that counsel could have taken, but whether
counsel’s decision had any basis reasonably designed to effectuate
his client’s interest….[T]his cannot be a hindsight evaluation of
counsel’s performance, but requires an examination of “whether
counsel made an informed choice, which at the time the decision
was made reasonably could have been considered to advance and
protect [the] defendant’s interests.” Our evaluation of counsel’s
performance is “highly deferential.”
Commonwealth v. Williams, 636 Pa. 105, 141 A.3d 440, 463 (2016)
(citations and quotations omitted).
Further,
To demonstrate prejudice, the petitioner must show that
there is a reasonable probability that, but for counsel’s
unprofessional errors, the result of the proceedings would have
been different. [A] reasonable probability is a probability that is
sufficient to undermine confidence in the outcome of the
proceeding.
Commonwealth v. Spotz, 624 Pa. 4, 84 A.3d 294, 311-12 (2014) (citations,
quotation marks, and quotations omitted). See Commonwealth v. Gribble,
580 Pa. 647, 863 A.2d 455, 472 (2004) (“[A] defendant [raising a claim of
ineffective assistance of counsel] is required to show actual prejudice; that is,
-7-
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that counsel’s ineffectiveness was of such magnitude that it could have
reasonably had an adverse effect on the outcome of the proceedings.”)
(quotation omitted)).
In his first issue, Appellant claims trial counsel was ineffective in failing
to challenge a potential juror for cause after trial counsel was informed that
the juror openly displayed bias. Specifically, Appellant claims that Katherine
Marie Morvay, who was a member of Appellant’s church, sat in the courtroom
while “at least eighty” potential jurors were seated awaiting voir dire.
Appellant’s Brief at 15. He asserts:
[A potential] juror specifically expressed to Ms. Morvay his
animosity towards those who would hurt a child and that he would
want to send whoever [commits such a crime] to prison for life
because his niece had been assaulted. This [juror] was seated on
the jury for Appellant’s trial. Ms. Morvay gave this information to
Appellant’s trial counsel, William Korey, [Esquire]….During his
direct examination at the [PCRA] evidentiary hearing, Attorney
[Korey] admitted that he was confronted with Ms. Morvay’s
concerns regarding the juror[’]s comments[,] and he did nothing
about it.
The very purpose of voir dire is for counsel to question
potential jurors to uncover bias and prejudice harbored by
members of the jury pool. Trial counsel, in this case[,] failed to
voir dire the[] biased juror or bring [his] bias to the attention of
the Court.
Id. at 15-16 (citations omitted). Appellant contends his right to an impartial
jury was violated by trial counsel’s failure to challenge the juror for cause
and/or bring the juror’s statements to the attention of the trial court during
voir dire.
-8-
J-S35044-22
It is well-settled that “[a] defendant has a right to an impartial jury
pursuant to the Sixth and Fourteenth Amendments to the United States
Constitution and Article 1, § 9 of the Pennsylvania Constitution. Appellant
carries the burden of showing that his jury was not impartial.”
Commonwealth v. Chmiel, 585 Pa. 547, 889 A.2d 501, 519 (2005)
(citations omitted).
Further, as our Supreme Court has held:
The purpose of voir dire is to ensure the empaneling of a fair and
impartial jury capable of following the instructions of the trial
court. See Commonwealth v. Smith, 518 Pa. 15, 540 A.2d 246,
256 (1988) (“The purpose of the voir dire examination is not to
provide a better basis upon which a defendant can exercise his
peremptory challenges, but to determine whether any venireman
has formed a fixed opinion as to the accused’s guilt or
innocence.”). Even exposure to outside information does not
ineluctably mean that a jury is unfair and partial.
Commonwealth v. Tedford, 598 Pa. 639, 960 A.2d 1, 20 (2008) (quotation
and quotation marks omitted).
The test for determining whether a prospective juror should
be disqualified is whether he or she is willing and able to eliminate
the influence of any scruples and render a verdict according to the
evidence. This decision rests within the sound discretion of the
trial court, must be based upon the juror’s answers and demeanor,
and will not be reversed in the absence of a palpable abuse of this
discretion.
Jurors should be disqualified for cause when they do not
have the ability or willingness to eliminate the influences under
which they are operating and therefore cannot render a verdict
according to the evidence.
Commonwealth v. Robinson, 581 Pa. 154, 864 A.2d 460, 489-90 (2004)
(citations, quotation marks, and quotations omitted).
-9-
J-S35044-22
During the PCRA hearing, Ms. Morvay testified she was friends with
Appellant’s mother. N.T., 9/14/21, at 4. She testified she attended the same
church as Appellant’s family, as well as Appellant’s trial counsel, Mr. Korey.
Id. During church, Appellant’s trial counsel “ask[ed] people to come and pray
for justice and fairness during [Appellant’s] upcoming case.” Id. Ms. Morvay
testified she discussed Appellant’s case with trial counsel during church, as
well as “the details of what [was] involved” for her to attend the jury trial. Id.
at 5. Ms. Morvay confirmed she attended Appellant’s trial and was seated in
the courtroom with potential jurors prior to jury selection. Id.
Ms. Morvay testified that, while she was sitting in the courtroom with
the prospective jurors, one of them engaged her in conversation. Id. at 9.
Specifically, a prospective juror “expressed his animosity toward anybody who
might hurt a child.” Id. at 10. She testified he said: “[I]f this is the case, I
would want to send whoever it is to prison for life. And he explained that in
his family, there had been a young lady—I think it might have been a niece of
his—that had been assaulted, and nothing came of it.” Id. Ms. Morvay
indicated this person was subsequently chosen as a juror for Appellant’s trial.
Id. She testified she told Appellant’s trial counsel about the conversation. Id.
at 11. On cross-examination, Ms. Morvay admitted she was “hard of hearing.”
Id. at 12.
Appellant’s trial counsel, Attorney Korey, explained he was Appellant’s
counsel during pre-trial motions, as well as during the jury trial. After the jury
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trial, Attorney Korey and Samuel C. Stretton, Esquire, represented Appellant
during post-trial motions. Thereafter, Attorney Korey filed a notice of appeal
to protect Appellant’s rights; however, Attorney Stretton represented
Appellant on direct appeal.
Attorney Korey confirmed he knew Ms. Morvay prior to Appellant’s trial.
Id. at 33. Specifically, he testified he was a minister at the church, which Ms.
Morvay attended. Id. He confirmed he asked the congregation to pray for
Appellant. Id. Further, he admitted that, after he was no longer representing
Appellant, he began a romantic relationship with Appellant’s mother, who also
attended the same church where he was a minister, and he later married her.
Id. at 23, 33-34.
Attorney Korey confirmed Ms. Morvay was in the courtroom during jury
selection for Appellant’s trial. Id. at 34. He indicated Ms. Morvay approached
him before jury selection and told him about her concerns regarding the juror.
Id. at 35. He testified he did nothing in response to her concerns. Id.
In addressing Appellant’s claim of ineffectiveness, and explaining the
reasons it denied the claim, the PCRA court relevantly indicated the following:
[Appellant] argues that trial counsel failed to ask for
additional voir dire in light of alleged comments made by a
prospective juror to a spectator, Ms. Katherine Morvay, who was
present in the courtroom during voir dire of the venire that
reflected [a] prospective juror’s bias. The alleged juror…was
ultimately selected onto the jury panel. Thereafter, [Appellant]
argues he was “prejudiced by [Attorney] Korey’s omission which
allowed a biased juror to deliberate and taint the rest of the jury
pool and participate in his conviction.” [Appellant] relies upon the
Affidavit of Ms. Morvay and her testimony presented at the [PCRA]
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evidentiary hearing, as well as Attorney Korey’s testimony
presented at the [PCRA] evidentiary hearing.
The Commonwealth responds that the jury was not tainted.
The Commonwealth relies upon the oath administered to the
prospective jurors by the Prothonotary and Clerk of Courts, and
the subsequent answers given by the prospective jurors in
response to questions posed by both the Commonwealth and
[Appellant’s] trial counsel in order to determine whether any
prospective jurors were biased. Additionally, the Commonwealth
relies upon the jury panel’s individual responses upon being
polled.
The Court determines [Appellant] has not established by a
preponderance of the evidence that [Appellant’s] trial counsel was
ineffective for failing to voir dire and challenge a prospective juror
for cause. The Court finds the testimony of both Ms. Morvay and
Attorney Korey—the only evidence presented by [Appellant]
regarding this claim—to be incredible.
Specifically, although [Appellant’s] Amended PCRA Petition
filed by [counsel] and incorporated by references states “Ms.
Morvay has identified the juror as being Jeffery Osgood,” this
identification is not included within her Affidavit nor did she
identify the juror as Mr. Osgood at the [PCRA] evidentiary hearing.
Instead, Ms. Morvay’s Affidavit and her testimony reflect only, in
the general sense, that a male prospective juror allegedly stated
to her words to the effect that because someone in his family had
been assaulted and nothing became of it, if he were required to
serve on the jury, he would send the defendant to jail for life.
Therefore, having failed to sufficiently identify the juror as
Mr. Osgood, or any other individual who was ultimately seated on
the jury, there is no evidence presented that the alleged biased
juror, in fact, served on the jury such that he would have been
able to somehow taint the rest of the jury.
Critically, even if Ms. Morvay sufficiently identified the
alleged biased juror as Mr. Osgood, or any other individual who
was ultimately seated on the jury, Ms. Morvay failed to relay to
Attorney Korey her knowledge of the alleged conversation.
Although Ms. Morvay testified at the [PCRA] evidentiary hearing
that she told Attorney Korey of the alleged conversation, that
testimony was inconsistent with her Affidavit—executed nearly a
year and a half prior to her testimony and closer in time to the
event—that contained no mention of her relaying the information
to Attorney Korey. Based upon that glaring inconsistency, let
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along Ms. Morvay’s personal relationship with Attorney Korey,
[Appellant’s mother], and her own motivation to testify, the Court
finds Ms. Morvay’s testimony to be incredible. Likewise, based
upon the personal relationship and clear bias between Attorney
Korey, [Appellant’s mother], and Ms. Morvay, the Court finds
Attorney Korey’s testimony at the PCRA hearing, [i.e.,] that Ms.
Morvay told him of the conversation, to be incredible.
Therefore, there being no sufficient evidence presented that
Attorney Korey was aware of the alleged conversation, then he
cannot be ineffective for failing to conduct any further voir dire.
This is true even if Ms. Morvay sufficiently identified the allegedly
biased juror as Mr. Osgood or any other individual ultimately
seated on the jury.
Consequently, [Appellant] has not shown, by a
preponderance of the evidence, a claim of arguable merit for two
reasons: First, there is no credible evidence that Mr. Osgood, or
any other individual ultimately seated on the jury, was, in fact,
the alleged biased juror; and second, there is no credible evidence
that Attorney Korey was made aware of the alleged conversation,
a necessary condition for him to voir dire and ultimately challenge
for cause Mr. Osgood or any other individual ultimately seated on
the jury regarding the alleged conversation.
PCRA Court Opinion, filed 1/28/22, at 35-38 (footnotes omitted) (emphasis in
original).
We find no abuse of discretion or error of law. Sattazahn, supra.
Here, following an evidentiary hearing, the PCRA court made detailed findings
based on its credibility determinations. We conclude the PCRA court’s
credibility determinations are supported by the record, and thus, we are bound
by such determinations. See Commonwealth v. Johnson, 600 Pa. 329, 966
A.2d 523, 532 (2009) (“The findings of a post-conviction court, which hears
evidence and passes on the credibility of witnesses, should be given great
deference.”); Commonwealth v. White, 557 Pa. 408, 734 A.2d 374, 381
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(1999) (holding an appellate court is bound by credibility determinations of
PCRA court where determinations are supported by the record). Thus, we
agree with the PCRA court that Appellant failed to demonstrate his claim has
arguable merit. See Johnson, supra (holding PCRA court’s factual
determinations are entitled to deference, but its legal determinations are
subject to plenary review). Accordingly, Appellant is not entitled to relief on
his first claim.
Appellant next contends his appellate attorney, Attorney Stretton, was
ineffective in failing to argue that I.D.’s testimony was insufficient evidence to
sustain Appellant’s multiple convictions. Appellant admits his appellate
counsel challenged the sufficiency of the evidence on direct appeal; however,
Appellant claims appellate counsel improperly “focused [his] arguments on
the credibility and capacity of the complaining witness and not on her
statements, which, even if taken as true, did not sustain four convictions for
each charge.” Appellant’s Brief at 18.
We have examined the appellate brief, which Attorney Stretton filed in
this Court on direct appeal. Therein, appellate counsel presented numerous
sufficiency claims, including the sufficiency claim Appellant now asserts. That
is, in the brief on direct appeal, appellate counsel relevantly averred the
evidence was insufficient to prove four counts of the charges alleged based on
I.D.’s testimony. In this vein, appellate counsel argued:
I.D. also testified [Appellant] sexually assaulted her other
times. During the trial, she said it happened five or six times
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before, and then she said it happened regularly. But, there were
no descriptions or details or dates given by I.D. for any other
times. That was the essence of the case. There were no
eyewitnesses. There was no corroborating physical evidence.
There was not even a doctor’s examination. Even the
Commonwealth witness, I.D.'s mother, confirmed that she and
[Appellant] were together after I.D. was sent to bed at 8:00 p.m.,
they watched a movie or television together, and then had sexual
relations, and both went to sleep. Both were sleeping together
when the police arrived, somewhere around 1:00 a.m. or 2:00
a.m. The testimony was extremely contradictory. There was no
real police investigation or work to confirm some of these
allegations.
***
None of the above elements of the crimes have been met.
As for I.D.’s testimony stating there were many other times of
sexual assault, there is nothing other than I.D. stating something
happened, and her testimony was conflicting and contradictory.
Other than the child saying [Appellant] put his mouth on her
vagina during her trial testimony and she had to fight him off,
there was no other evidence.
Appellant’s Direct Appeal Brief, filed 1/30/19, at 51-52, 55.
Moreover, on direct appeal, in finding no merit to Appellant’s challenge
to the sufficiency of the evidence, this Court relied on the trial court’s opinion,
wherein the trial court specifically addressed whether the evidence was
sufficient to prove the four counts of each charge that Appellant was convicted
of based on I.D.’s testimony. Specifically, the trial court explained:
At trial, the only evidence the Commonwealth presented
regarding the alleged assaults was the victim, I.D.’s testimony.
I.D. testified that on the night of March 8, 2017, she was lying in
her bedroom in the home she shared with her mother, stepfather
(Appellant), and brothers…when [Appellant] entered the bedroom
naked. She testified [Appellant] climbed into bed with her and
took off some of her clothes. After taking off some of her clothes,
I.D. testified Appellant touched her vagina with his hand, tongue,
and penis and attempted to insert all those body parts into her
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vagina but was unsuccessful. I.D. testified she was able to get
[Appellant] off of her by kicking him, punching him, and
screaming. According to I.D., [Appellant] left and reentered the
bedroom multiple times that night, and when he reentered, he
would perform the same actions.
Later in her direct examination, I.D. testified [Appellant]
touched her vagina five (5) or more times prior to the night of
March 8, 2017, while the family lived at the Millerton house. She
stated that during those five (5) or more previous incidents
[Appellant] touched her vagina with his mouth and penis.
I.D. also testified to her age and date of birth, and,
therefore, the age requirements for the Criminal Attempt Rape
and Indecent Assault, as charged, were met.
I.D.’s testimony that on March 8, 2017, [Appellant] entered
her room, disrobed her, touched her vagina with his hand, mouth,
and penis, and attempted to insert each body part into her vagina
was sufficient for the Jury to find him guilty of one count each of
Criminal Attempt Rape, Indecent Assault, and Simple Assault.
***
[Appellant’s] actions on March 8th were also sufficient for the
jury to find him guilty of an additional count each of Criminal
Attempt Rape, Indecent Assault, and Simple Assault. I.D. testified
that after [Appellant] assaulted her the first time that night he
exited and reentered the room on multiple occasions. Upon his
reentry, [Appellant] assaulted I.D. in the same manner he did
during the initial assault. While I.D. did not testify as to how many
times [Appellant] exited and reentered the room that night, the
jury, based on I.D.’s testimony, could have reasonably inferred
that at least one additional assault took place subsequent to the
initial one. Thus, the evidence was sufficient to sustain a second
conviction on each charge based on [Appellant’s] actions on the
night of March 8, 2017.
In addition to the assault on March 8th, I.D. testified
[Appellant] assaulted her on five (5) or more previous occasions
by touching her vagina with his mouth and penis. The jury could
have reasonably found that by touching I.D.’s vagina with his
penis, [Appellant] took a substantial step towards having sexual
intercourse with her. They also could reasonably infer that by
touching I.D.’s vagina with his penis, [Appellant] manifested the
intent to have sexual intercourse with I.D. These are the two
requirements to sustain a conviction for Criminal Attempt Rape
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and the jury’s finding of both of them is supported by I.D.’s
testimony….I.D.’s testimony of these previous assaults also
provides sufficient evidence to support convictions of Indecent
Assault and Simple Assault. The evidence is thus sufficient to
support the jury’s convictions of [Appellant] for two or more sets
of counts of Criminal Attempt Rape, Indecent Assault, and Simple
Assault.
Trial Court Opinion, filed 8/18/18, at 6-7.
Based on the aforementioned, the PCRA court found no arguable merit
to Appellant’s ineffective assistance of appellate counsel claim. That is, the
PCRA court concluded that, contrary to Appellant’s claim in his PCRA petition,
appellate counsel raised on direct appeal the specific sufficiency theory at
issue. PCRA Court Opinion, filed 1/23/22, at 9-10.
Moreover, as the PCRA court noted, this Court concluded on direct
appeal that I.D.’s testimony was sufficient to sustain Appellant’s convictions
on four counts each of criminal attempt rape of a child, indecent assault of a
person less than 13 years of age, and simple assault. See id. Thus, as the
PCRA court notes, Appellant has not met the prejudice prong, and he is not
entitled to relief on his ineffective assistance of counsel claim. Id.
In his next issue, Appellant claims trial counsel was ineffective in failing
to object and request a curative instruction after the Commonwealth elicited
prior bad acts evidence from I.D.’s mother, who was Appellant’s wife.
Specifically, he contends I.D.’s mother offered prejudicial “bad acts” evidence
when she testified Appellant used marijuana and that their relationship
became “abusive and volatile.” We find no relief is due.
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We review rulings on the admission of evidence for an abuse of
discretion. See Commonwealth v. Elliott, 622 Pa. 236, 80 A.3d 415, 446
(2013). To be admissible, evidence must be relevant. Pa.R.E. 402. This
means that “it logically tends to establish a material fact in the case, tends to
make a fact at issue more or less probable, or tends to support a reasonable
inference or presumption regarding a material fact.” Commonwealth v.
Danzey, 210 A.3d 333, 342 (Pa.Super. 2019) (citation omitted).
Nonetheless, “[e]vidence of any other crime, wrong, or act is not
admissible to prove a person’s character in order to show that on a particular
occasion the person acted in accordance with the character.” Pa.R.E.
404(b)(1). This type of evidence is commonly known as “bad acts” evidence.
See Commonwealth v. Hicks, 638 Pa. 444, 156 A.3d 1114, 1125 (2017).
Bad acts evidence may be admissible if it is offered for another, proper
purpose, such as “proving motive, opportunity, intent, preparation, plan,
knowledge, identity, absence of mistake, or lack of accident.” Pa.R.E.
404(b)(2). Where bad acts evidence is offered for a proper purpose in a
criminal case, the probative value of the evidence must outweigh its potential
for unfair prejudice. Id.
Bad acts evidence may also be admissible under the res
gestae exception. This exception permits the admission of evidence of other
crimes or bad acts to tell “the complete story.” See Commonwealth v.
Hairston, 624 Pa. 143, 84 A.3d 657, 665 (2014). It applies where the other
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crimes or bad acts “were part of a chain or sequence of events which formed
the history of the case and were part of its natural development.”
Commonwealth v. Brown, 52 A.3d 320, 326 (Pa.Super. 2012) (citation
omitted).
Here, the Commonwealth asked I.D.’s mother about her and Appellant’s
use of substances during March of 2017, and the time prior thereto (i.e, the
time period in which I.D. was assaulted). Specifically, the following relevant
exchange occurred between I.D.’s mother and the prosecutor on direct
examination:
Q: Okay; can you tell me what you were using?
A: We were smoking marijuana and drinking alcohol.
Q: Okay; both of you smoked marijuana and both of you drank
alcohol?
A: Yes.
Q: Okay; did you have a particular alcohol of choice?
A: No.
Q: Okay. How about [Appellant], do you feel like he had a
particular substance of choice between the drinking and the
smoking?
A: Definitely, the marijuana over the alcohol, sure.
N.T., 1/26/18, at 7.
The PCRA court determined the evidence of Appellant’s marijuana use
was not offered to prove his character on a particular occasion to show he
acted in accordance with the character. Rather, the PCRA court held the
Commonwealth had a legitimate reason for asking I.D.’s mother about
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Appellant’s marijuana use during the time of I.D.’s assaults. Specifically, the
PCRA court indicated:
Regarding [Appellant’s] marijuana use,…in context, the
evidence was elicited to explain the events of the night in
question, and in particular, to test [Appellant’s] ability to perceive
the events on the night in question. Additionally, the evidence
was elicited to illuminate on [I.D.’s mother’s] motive for testifying,
which is intertwined with the abusive and volatile [relationship
that developed between Appellant and I.D.’s mother.]
PCRA Court Opinion, filed 1/28/22, at 11.
Additionally, the PCRA court held that, since the Commonwealth did not
“dwell” on Appellant’s use of marijuana, the probative value of the evidence
outweighed its potential for unfair prejudice. See id.
We agree with the PCRA court’s analysis in this regard, and thus, we
conclude Appellant has failed to demonstrate there is arguable merit to his
underlying ineffective assistance of counsel claim. See Stewart, supra.
Further, the Commonwealth asked I.D.’s mother whether she was in a
relationship with Appellant at the time of his trial, and she responded she was
no longer in a relationship with him. N.T., 1/26/18, at 16. She explained she
remained in the relationship after she heard about I.D.’s accusations since
Appellant was her “husband of nine years;” however, she left him before his
trial. Id. at 15. When the Commonwealth asked her “what triggered” the
ending of the relationship, I.D.’s mother testified their “relationship slowly,
but surely, over the years, got more and more abusive and volatile.” Id.
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The PCRA court determined the evidence of the parties’ relationship
becoming “more abusive and volatile” was not offered to prove Appellant’s
character on a particular occasion to show he acted in accordance with the
character. Rather, the PCRA court held the Commonwealth had a legitimate
reason for asking I.D.’s mother about her relationship with Appellant as of the
time of trial. Specifically, the PCRA court indicated:
Regarding [Appellant’s] “abusive and volatile” conduct
toward [I.D.’s mother], the [PCRA] court agrees with the
Commonwealth that the testimony was introduced for a legitimate
reason[.] Upon reviewing [I.D.’s mother’s] testimony in context
rather than in isolation, the prosecutor’s specific purpose in
eliciting the testimony was to show her motive for testifying;
specifically, that there were no outside sources pressuring her to
leave [Appellant] and to testify against him after initially deciding
to stay with him after the allegations were made [by I.D.].
PCRA Court Opinion, filed 1/28/22, at 11 (footnote omitted).
Additionally, the PCRA court held that, since the Commonwealth did not
“dwell” on the “abusive and volatile” relationship, the probative value of the
evidence outweighed its potential for unfair prejudice. See id.
We agree with the PCRA court’s analysis in this regard, and thus, we
conclude Appellant has failed to demonstrate there is arguable merit to his
underlying ineffective assistance of counsel claim. See Stewart, supra.
Moreover, we note that, given I.D.’s extensive and detailed testimony
about Appellant’s sexual abuse of her, we conclude that Appellant has failed
to demonstrate that, “but for counsel’s ineffectiveness, there is a reasonable
probability that the outcome of the proceedings would have been different.”
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Ali, supra, 10 A.3d at 291 (citations omitted). Thus, Appellant has also failed
to prove he was prejudiced by trial counsel’s failure to object to I.D.’s mother’s
testimony at issue. Id.
In his next issue, Appellant contends appellate counsel was ineffective
in failing to litigate on direct appeal the issue of whether Appellant was
deprived of this “bargain,” which he made with the Commonwealth prior to
trial. Specifically, Appellant avers he waived his right to a preliminary hearing
while preserving his right to have a pre-trial hearing to challenge the
Commonwealth’s ability to establish a prima facie case. He contends he was
deprived of this bargain, and thus, appellate counsel was ineffective in failing
to raise this issue on direct appeal.
In finding there is no arguable merit to Appellant’s claim, the PCRA court
indicated the following:
[Appellant] relies upon an agreement entered between the
Commonwealth and Appellant’s prior trial counsel, Attorney
Jeffrey S. Loomis, to preserve [Appellant’s] right to challenge the
Commonwealth’s prima facie case. [Appellant] alleges that
because these negotiations were ignored, he did not receive the
“benefit of the bargain,” and appellate counsel was, therefore,
ineffective in failing to litigate the issue.
***
[T]he record belies the underlying claim, [and, therefore,]
it has no arguable merit. PCRA counsel’s argument that
[Appellant] failed to receive the “benefit of the bargain” is factually
incorrect. The bargain was only for [Appellant] to have the right
to challenge the Commonwealth’s prima facie case. [Appellant]
was afforded this right when, based upon [Appellant’s] motion to
challenge the Commonwealth’s prima facie case, which
[Appellant] filed on August 29, 2017, the [trial court] held a
habeas hearing on the matter on September 28, 2017. Moreover,
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in his testimony at the PCRA [evidentiary] hearing, [trial counsel]
admitted such when he stated, “We ha[d] a habeas proceeding,
which really was a redo on the prelim.” Although the [trial court]
denied [Appellant’s] motion to challenge the Commonwealth’s
prima facie case [on the basis the Commonwealth had established
a prima facie case on the charges], this does not somehow mean
that [Appellant’s] negotiations were ignored and that he did not
receive the “benefit of the bargain.” This is true since the [trial
court’s] order was a merits-based decision. Thus, because
[Appellant] received the benefit of his bargain, any further
litigation regarding the denial would have been fruitless.
PCRA Court Opinion, filed 1/28/22, at 13-14 (emphasis omitted).
We conclude the record supports the PCRA court’s factual findings, and
we agree with the PCRA court’s sound reasoning. See Scassera, supra.
Thus, Appellant is not entitled to relief on his claim of ineffective assistance of
counsel.
In his next issue, Appellant contends trial counsel was ineffective in
failing to object to various remarks made by the prosecutor during closing
arguments.
Our Supreme Court has held:
[A] claim of ineffective assistance grounded in trial counsel’s
failure to object to a prosecutor’s conduct may succeed when the
petitioner demonstrates that the prosecutor’s actions violated a
constitutionally or statutorily protected right, such as the Fifth
Amendment privilege against compulsory self-incrimination or the
Sixth Amendment right to a fair trial, or a constitutional interest
such as due process. To constitute a due process violation, the
prosecutorial misconduct must be of sufficient significance to
result in the denial of the defendant’s right to a fair trial. The
touchstone is fairness of the trial, not the culpability of the
prosecutor. Finally, not every intemperate or improper remark
mandates the granting of a new trial; reversible error occurs only
when the unavoidable effect of the challenged comments would
prejudice the jurors and form in their minds a fixed bias and
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hostility toward the defendant such that the jurors could not weigh
the evidence and render a true verdict.
***
[Our Supreme Court] has recognized that counsel [is] not
constitutionally required to forward any and all possible objections
at trial, and the decision of when to interrupt oftentimes is a
function of overall defense strategy being brought to bear upon
issues which arise unexpectedly at trial and require split-second
decision-making by counsel. Under some circumstances, trial
counsel may forgo objecting to an objectionable remark or seeking
a cautionary instruction on a particular point because objections
sometimes highlight the issue for the jury, and curative
instructions always do.
Commonwealth v. Koehler, 614 Pa. 159, 36 A.3d 121, 144-46 (2012)
(citations, quotations, and original brackets omitted). Furthermore, “[a]
prosecutor does not engage in misconduct when his statements are based on
the evidence or made with oratorical flair.” Commonwealth v. Carson, 590
Pa. 501, 913 A.2d 220, 237 (citation omitted). “Additionally, a prosecutor
must be permitted to respond to arguments made by the defense.” Id.
(citation omitted). Finally, it is well settled that “[i]n reviewing prosecutorial
remarks to determine their prejudicial quality, comments cannot be viewed in
isolation but, rather, must be considered in the context in which they were
made.” Commonwealth v. Sampson, 900 A.2d 887, 890 (Pa.Super. 2006)
(citation omitted).
Here, Appellant challenges the following excerpts from the prosecutor’s
closing argument:
[I.D.] had every motivation to tell the truth. Contrary to
that, the Defendant could have a motivation to lie. If he did the
things that she said he did, why wouldn’t he lie about it? There
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would be no reason to tell the truth, he could have every reason
to lie. And I submit to you, that’s what happened here.
N.T., 1/26/18, at 149-50.
And when [trial counsel] asked [Appellant] if he did this, he
was originally quite adamant that he didn’t; then [trial counsel]
asked a follow-up question about the specific night and whether
he did it then, and he was quite adamant that he didn’t. And then
[trial counsel] asked him about the times in the past. How about
all the times in the past, and his answers changed: he had no
recollection ever. He used that phrase: no recollection ever. Let
me tell you, if you asked me if I did the things he was charged
with, I wouldn’t be telling you I didn’t recall, because it wouldn’t
have happened, and I would know that. I would not have to use
the phrase, no recollection ever, because I’d know darn well I
didn’t do it. And I think that was a very telling statement.
Id. at 167-68.
Appellant contends these portions of the prosecutor’s closing argument
were highly inflammatory, and, thus, trial counsel was ineffective in failing to
object. We find no arguable merit to this claim. See Stewart, supra.
Our review of the record reveals the prosecutor’s comments were a fair
response to statements made by Appellant’s trial counsel during his closing
argument. See Carson, supra. Specifically, Appellant’s trial counsel argued:
And [the police] come back and they talk to the Mitchells.
And you’ve heard their testimony. Can you imagine—now, I want
you to bear with me here for a moment. Imagine someone
accuses you of this offense, would you have a powerful reaction
to that? I tell yah, I would. [Appellant] did, okay? He was very
distraught over this, okay? Emotionally upset. Didn’t have his
lawyer there. Didn’t have a lawyer there. His integrity was
challenged. He was in shock. He knows it didn’t happen!
***
Now, the police ask him if he did it. Nah, he’s denying it.
They ask [I.D.’s mother]—she’s there—she’s shocked—like he
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didn’t do it. We’re all here. We’ve been here. There’s—like
nothing happened.
***
The kids are right across the hallway. NOTHIN’! FOUR
TIMES—FOUR TIMES THAT SIZE! This incredibly powerful little
girl throws him out. You’re supposed to believe that, right? She
gets a guy off her that size. And, by the way, he doesn’t have a
scratch on him. Nothin’. No evidence.
***
I had to hold back on my cross-examination. But I’ve
learned a lot about [I.D.]. She’s an amazing actress, and she’s
got her way, and we’ll come back to that in a second; she wanted
out and boy she got out. She concocted a plan and she’s doing a
good job.
***
Do you think [I.D.] was truthful? She told you yah she LIES!
Not single lies; lies. And then when I followed up with her—each
time I would catch her in something, her story would change;
multiple times.
***
If you’re sexually assaulted, you’re going to speak up,
you’re going to say something at home, school, friends, relatives.
Are you likely to? Not absolutely guaranteed, you’re likely to.
There are many instances here for [I.D.]. She had a phone in her
room….She’s a bit of an actress and got some strengths. So, if
you’re sexually assaulted, isn’t there likely to be evidence of it?
***
Her testimony was he tried to rape me. And it’s her
incredible ingenuity and strength that stopped all this; if you
believe it. Look at the demeanor of her father, okay? He’s broken.
He loves the kids. He took them in. He’s not the kind of guy—he
cooks—he’s there; does that give you the impression of a guy
that’s abusive?
N.T., 1/26/18, at 121-22, 126-27, 133, 141-42, 143 (emphasis in original).
Here, the record reflects the prosecutor’s statements regarding I.D.’s
motives to tell the truth, Appellant’s motives to lie, and Appellant’s lack of
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recollection about prior assaults, were based on the record, as well as
constituted fair responses to defense counsel’s statements regarding I.D.’s
motives to lie and Appellant’s motives to tell the truth. See Carson, supra.
Thus, we find no basis for Appellant’s trial counsel to have objected to the
prosecutors’ closing argument, and thus, there is no arguable merit to
Appellant’s underlying ineffectiveness claim. See Stewart, supra.
Moreover, we note that, during the instructions to the jury, the trial
court specifically informed the jury that “[t]he speeches of Counsel are not
part of evidence, and you should not consider them as such.” N.T., 1/26/18,
at 197. The trial court indicated to the jury “you are not required to accept
the arguments of either lawyer. It is for you, and you alone, to decide this
case, based on the evidence, as it was presented from the witness stand, and
in accordance with the instructions I am now giving you.” Id.
It is well settled that the jury is presumed to follow the instructions given
to it by the trial court. Commonwealth v. Jones, 542 Pa. 464, 668 A.2d
491 (1995). Thus, Appellant has failed to demonstrate that he was prejudiced
by trial counsel’s failure to object to the excerpts of the prosecutor’s closing
argument set forth supra. Ali, supra, 10 A.3d at 291 (holding to show
prejudice, the petitioner must demonstrate “but for counsel’s ineffectiveness,
there is a reasonable probability that the outcome of the proceedings would
have been different”) (citations omitted)).
- 27 -
J-S35044-22
In his final issue, Appellant contends trial counsel was ineffective in
failing to impeach I.D. on cross-examination regarding an out-of-court
statement she made to the police, which was inconsistent with her trial
testimony. Specifically, Appellant contends:
At trial, [I.D.] testified that after the alleged incident she
stayed outside [the house] because she thought Appellant was
inside the house. However, according to the Affidavit of Probable
Cause, [I.D.] told the police that that [sic] she knew Appellant had
been outside the house looking for her and she went back into the
residence to retrieve a pair of boots. These two statements
directly contradict each other.
Appellant’s Brief at 27 (citation omitted).
At trial, the relevant exchange occurred during the Commonwealth’s
direct examination of I.D.:
Q: So, you said you ran outside [after the assault], did [Appellant]
follow you outside?
A: No, not that I know of.
Q: Okay. All right; did you know where you went when you went
outside?
A: Where I went?
Q: Yeah.
A: I went to a building behind the house, then after that, I went
to a tree; and I think after that, I went back inside to grab boots,
and back outside to the tree; and back and forth between the tree
and the building next to my house.
Q: Okay; and were you seeing [Appellant] at all while you were
out there—
A: No.
Q: Okay. And why were you staying outside?
A: Why was I staying outside?
Q: Yeah.
- 28 -
J-S35044-22
A: Because I thought he was inside, and I didn’t want to go back
inside.
Q: Okay, so you talked about a tree and some boots, and a
building; tell me about the boots? Where did you get boots from?
A: When you come inside [the house], there’s a bench next to the
door and they were right there.
***
Q: Okay. What did you do after you did this thing that you’re
saying where you were by a tree and by a building and you got
boots; what did you do next?
A: I walked along the road to my friend’s house.
N.T., 1/25/18, at 79-80.
Appellant asserts that I.D. made out-of-court statements to the police
indicating she went inside to get the boots because she thought Appellant was
outside; however, her trial testimony suggests she went inside to get the
boots despite knowing Appellant was inside the house. Appellant contends
trial counsel was ineffective in failing to impeach I.D. about this inconsistency
regarding where she thought Appellant was when she went inside to get the
boots.
In finding Appellant was not entitled to relief, the PCRA court concluded
Appellant was not prejudiced by any omission on trial counsel’s part in this
regard. Specifically, the PCRA court explained:
The Commonwealth argues almost the entirety of trial
counsel’s cross-examination was centered around attempting to
find inconsistencies in the minor victim’s testimony. Additionally,
trial counsel’s failure to attempt to impeach the minor victim
based on a small inconsistency in what she did after the incident
[did not prejudice Appellant].
- 29 -
J-S35044-22
The [PCRA] court agrees with the Commonwealth and
determines [Appellant] was not prejudiced by the testimony[.]
***
[Appellant’s] trial counsel made considerable efforts
attempting to impeach the minor victim in this case regarding the
actual events and her motivation for testifying. Therefore, there
is no reasonable probability of acquittal but for the allegedly
ineffective conduct by trial counsel pertaining to—relative to those
attempts—a minor inconsistency regarding what the minor victim
did after the incident as articulated in the police report.
PCRA Court Opinion, filed 1/28/22, at 18-19.
We agree with the PCRA court’s sound reasoning. Any inconsistency
between I.D.’s testimony as to whether she went inside to retrieve boots
believing Appellant was inside the residence or believing he was outside the
residence was far too minor for this Court to conclude Appellant was
prejudiced by trial counsel’s failure to vigorously impeach I.D. on this point.
See Commonwealth v. Begley, 566 Pa. 239, 780 A.2d 605 (2001) (holding
the appellant was not entitled to relief on ineffectiveness claim related to
counsel’s failure to impeach witnesses on minor inconsistencies). That is,
Appellant has failed to demonstrate that, but for counsel’s omission, there is
a reasonable probability that the result of the proceedings would have been
different. See Spotz, supra. Thus, he is not entitled to relief.
For all of the foregoing reasons, we affirm.
Affirmed.
- 30 -
J-S35044-22
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/15/2022
- 31 - | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483891/ | J-S23045-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
PEDRO LUIS GAVILAN-CRUZ :
:
Appellant : No. 388 MDA 2022
Appeal from the PCRA Order Entered January 27, 2022
In the Court of Common Pleas of Lancaster County
Criminal Division at No(s): CP-36-CR-0001911-2014
BEFORE: STABILE, J., McLAUGHLIN, J., and COLINS, J.
MEMORANDUM BY COLINS, J.: FILED: NOVEMBER 15, 2022
Pedro Luis Gavilan-Cruz, pro se, appeals from the order dismissing as
untimely his serial petition filed pursuant to the Post Conviction Relief Act
(“PCRA”). See 42 Pa.C.S.A. §§ 9541-9546. We affirm.
As background, Gavilan-Cruz was found guilty by a jury of rape and
eight related charges stemming from a 2014 incident wherein he held his ex-
girlfriend hostage under the threat of death, sexually abusing her in the
process. Ultimately, Gavilan-Cruz received an aggregate sentence of sixteen
to thirty-two years of incarceration, reflective, too, of the fact that he used a
deadly weapon during the commission of those crimes. In addition, Gavilan-
Cruz was required to pay restitution, costs, and fees and thereafter had
lifetime registration obligations as a sexual offender.
____________________________________________
Retired Senior Judge assigned to the Superior Court.
J-S23045-22
After sentencing, although Gavilan-Cruz filed no post-sentence motions,
he did file a timely notice of appeal to this Court. However, eventually, we
dismissed this appeal due to counsel’s failure to file a brief on Gavilan-Cruz’s
behalf.
On July 14, 2016, Gavilan-Cruz filed his first PCRA petition, asserting
that because no brief was filed in his direct appeal, he received ineffective
assistance of counsel. The lower court granted relief, allowing Gavilan-Cruz to
file an appeal with this Court nunc pro tunc challenging his judgment of
sentence. In the corresponding unpublished memorandum, we did not find
any validity to the additional ineffective assistance claims raised in his appeal
and affirmed. See Commonwealth v. Gavilan-Cruz, 2016 WL 7048829 (Pa.
Super., filed December 5, 2016) (unpublished memorandum) (concluding that
Gavilan-Cruz’s ineffective assistance assertions were not ripe for direct review,
but were potentially appropriate for collateral review).
On December 13, 2016, Gavilan-Cruz filed his second PCRA petition,
which again averred that Gavilan-Cruz had received ineffective assistance of
counsel throughout various phases of his pre-trial and trial continuum. The
lower court held an evidentiary hearing on these allegations, but denied him
relief and dismissed his petition. Subsequently, Gavilan-Cruz filed a notice of
appeal with this Court. Via unpublished memorandum, we affirmed the lower
court’s decision. See Commonwealth v. Gavilan-Cruz, 2018 WL 1887121
(Pa. Super., filed April 20, 2018) (unpublished memorandum). After that, our
Supreme Court, on October 11, 2018, denied Gavilan-Cruz’s petition for
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J-S23045-22
allowance of appeal from our determination. Following our Supreme Court’s
denial, Gavilan-Cruz filed a federal habeas petition, pro se, pursuant to 28
U.S.C. § 2254, but that petition, too, was eventually dismissed on August 19,
2021.
The present PCRA petition, his third, features a date of August 30, 2021.
In that document, Gavilan-Cruz’s makes a wide variety of claims, ranging from
allegations of ineffective assistance of counsel to having been affected by
judicial and prosecutorial misconduct. After the lower court reviewed his
submission, it found the petition to be untimely and without exception,
resulting in its dismissal. Gavilan-Cruz has appealed from this determination.
Preliminarily, we note that Gavilan-Cruz’s brief is woefully deficient in
many respects. Inter alia, his brief does not contain “separately and distinctly
entitled” sections, in violation of Pa.R.A.P. 2111(a). Specifically, Gavilan-Cruz
has omitted a statement of jurisdiction, statement of questions involved,
statement of the case, summary of argument, or argument section. See
Pa.R.A.P. 2111(a). Instead, the brief contains a one-sentence introduction,
twenty-one numbered paragraphs, and a conclusion seeking relief. See
Appellant’s Brief.
We recognize that Gavilan-Cruz has elected to proceed pro se in this
matter. Despite this fact, we emphasize that his status as a pro se litigant
does not confer any sort of special benefits on him. See Commonwealth v.
Adams, 882 A.2d 496, 498 (Pa. Super. 2005). More particularly, “[a]lthough
the courts may liberally construe materials filed by a pro se litigant … a court
-3-
J-S23045-22
cannot be expected to become a litigant’s counsel or find more in a written
pro se submission than is fairly conveyed in the pleading.” Commonwealth
v. Blakeney, 108 A.3d 739, 766 (Pa. 2014). Given the infirmities of Gavilan-
Cruz’s brief, we could very well find waiver; however, because resolution of
this appeal is clear, we choose not to dismiss on that basis.
Despite there being no attempt to identify, with any particularity, the
question or questions Gavilan-Cruz desires to present to this Court, we glean
from his brief that he contends his trial, direct appellate, and post-conviction
counsel were all ineffective.1
When reviewing the denial of a PCRA petition, we dually consider
whether the lower court's determination is supported by the record and free
of legal error. See Commonwealth v. Ford, 947 A.2d 1251, 1252 (Pa.
Super. 2008). Only in cases where is no support in the certified record will we
entertain disturbing the lower court’s findings. See Commonwealth v. Carr,
768 A.2d 1164, 1166 (Pa. Super. 2001).
Any PCRA petition, “including a second or subsequent petition[ must] be
filed within one year of the date [a] judgment [of sentence] becomes final[.]”
42 Pa.C.S.A. § 9545(b)(1). “[A] judgment becomes final at the conclusion of
direct review, including discretionary review in the Supreme Court of the
____________________________________________
1 To the extent that his PCRA petition contains assertions of prosecutorial and
judicial misconduct, there is no reference to either in his brief. As such, we
consider those issues waived. See Commonwealth v. Woodard, 129 A.3d
480, 509 (Pa. 2015) (stating that “where an appellate brief fails to … develop
an issue in any … meaningful fashion capable of review, that claim is
waived[]”) (citation omitted).
-4-
J-S23045-22
United States and the Supreme Court of Pennsylvania, or at the expiration of
time for seeking the review.” Id., at § 9545(b)(3). The PCRA’s timeliness
requirements are jurisdictional, and as such, courts cannot address the merits
of an untimely petition. See Commonwealth v. Moore, 247 A.3d 990, 998
(Pa. 2021).
With our Supreme Court denying his petition for allowance of appeal,
which sought review of his judgment of sentence, in October 2018, Gavilan-
Cruz filed his current PCRA petition in 2021, well over one year after his
judgment of sentence became final. See U.S. Sup.Ct. Rule 13(1) (allowing for
the filing of a writ of certiorari with the United States Supreme Court within
ninety days after entry of an order denying discretionary review from the state
court of last resort; here, Gavilan-Cruz would have had until January 2019 to
submit this filing). As his petition is therefore untimely, to overcome the
PCRA’s one-year jurisdictional time-bar, Gavilan-Cruz must plead and prove
one of its three exceptions:
(i) the failure to raise the claim previously was the result of
interference by government officials with the presentation of the
claim in violation of the Constitution or laws of this Commonwealth
or the Constitution or laws of the United States;
(ii) the facts upon which the claim is predicated were unknown to
the petitioner and could not have been ascertained by the exercise
of due diligence; or
(iii) the right asserted is a constitutional right that was recognized
by the Supreme Court of the United States or the Supreme Court
of Pennsylvania after the time period provided in this section and
has been held by that court to apply retroactively.
-5-
J-S23045-22
42 Pa.C.S.A. § 9545(b)(1)(i)-(iii). In addition, to invoke one of these
exceptions, the petition must be filed “within one year of the date the claim
could have been presented.” Id., at § 9545(b)(2).
Gavilan-Cruz’s brief provides no basis to conclude that he has met any
of the PCRA exceptions.2 In fact, even through the most generous reading
possible, Gavilan-Cruz provides no reference to the three exceptions, and
despite it being his burden to demonstrate, the brief fails to show that he has
pleaded and proved even one of them. While Gavilan-Cruz makes several
averments that point to discrete examples of his trial, appellate, and post-
conviction counsel providing him with ineffective assistance, he in no way has
tethered those allegations to anything that could arguably serve as a basis to
overcome the PCRA’s time-bar.
As Gavilan-Cruz’s petition is untimely and, too, because he has failed to
establish an exception to the PCRA’s time-bar, we are without jurisdiction to
____________________________________________
2 The record reflects that Gavilan-Cruz filed, still pro se, an amended PCRA
petition dated October 27, 2021. In that petition, Gavilan-Cruz implicitly
attempts to circumvent the PCRA’s time-bar, contending that he became
aware of “[a]fter-[d]iscover[ed] evidence [that] would show that the
[p]etitioner is not guilty of said charges.” Amended PCRA Petition, dated
10/27/21, ¶ 10. In particular, Gavilan-Cruz cursorily contends that “records
and telephone calls” demonstrate that the charges against him “were brought
[forth] out of ill-feelings from his child’s mother.” Id., at ¶ 11. However,
Gavilan-Cruz has written nothing about this supposition in his brief before this
Court. Moreover, the relevant portions of this amended PCRA petition are
replete with bald assertions that in no way “prove” that he has met an
exception to the time-bar. For example, there is no reference to any date in
which he became aware of the so-called records or telephone calls. Also,
Gavilan-Cruz does not discuss how those facts underpin the issues he is now
bringing forth on appeal, i.e., ineffective assistance of various counsel.
-6-
J-S23045-22
consider the merits of his claims. Accordingly, we affirm the lower court’s
order dismissing his PCRA petition.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/15/2022
-7- | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483893/ | J-S28007-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
ALIEK QUASIM CARR :
:
Appellant : No. 646 MDA 2022
Appeal from the Judgment of Sentence Entered April 23, 2021
In the Court of Common Pleas of Lycoming County Criminal Division at
No(s): CP-41-CR-0002119-2017
BEFORE: OLSON, J., McLAUGHLIN, J., and KING, J.
MEMORANDUM BY OLSON, J.: FILED: NOVEMBER 15, 2022
Appellant, Aliek Quasim Carr, appeals from the April 23, 2021 judgment
of sentence that imposed an aggregate term of incarceration of 6 to 24
months’ (minus 1 day) after the trial court convicted Appellant, in a non-jury
trial, of manufacture, delivery, or possession with the intent to manufacture
or deliver a controlled substance and criminal use of a communication facility.1
We affirm.
The trial court summarized the factual history as follows:
____________________________________________
1 35 P.S. § 780-113(a)(30) and 18 Pa.C.S.A. § 7512(a), respectively.
Appellant’s sentencing order was dated April 23, 2021, but was not entered
on the trial court docket until May 7, 2021. The trial court imposed a sentence
of 6 to 24 months’ (minus 1 day) incarceration for Appellant’s conviction of
manufacture, delivery, or possession with the intent to manufacture or deliver
a controlled substance and the same sentence to run concurrently for his
conviction of criminal use of a communication facility. Trial Court Order,
5/7/21.
J-S28007-22
Officer Clinton Gardner [(“Officer Gardner”)] of the Williamsport
Bureau of Police and Detective Devin Thompson [(“Detective
Thompson”)] of the South Williamsport Police Department
testified on behalf of the Commonwealth. The Commonwealth
also submitted a copy of the application for [a] search warrant for
[Appellant’s] black [“flip” cellular telephone]. The evidence
established the following. On October 21, 2017, [Officer] Gardner
was working alone in full uniform in a marked police vehicle in the
area of High Street and Sixth Avenue near [a gas station and
convenience store in Williamsport, Pennsylvania. Officer] Gardner
knew the area to be a high crime area, where he had conducted
multiple narcotics related arrests. When [Officer] Gardner [drove
his police vehicle] into the parking lot[,] he noticed a heavier[-]set
black male with a noticeable limp, later identified as [Appellant],
pumping gas into a vehicle with [an] Illinois [license plate.
Appellant] looked over at [Officer] Gardner multiple times, and
walked over to a nearby vehicle [(a white van)] and began talking
to an individual[ in the white van]. [Officer] Gardner knew that a
heavier[-]set black male with a limp matching [Appellant’s]
description [] recently fled from a narcotics[-]related stop with a
fellow officer. [Officer Gardner interpreted Appellant’s movement
toward the white van as an effort by Appellant to separate himself
from the vehicle bearing the Illinois license plate. Officer] Gardner
then parked his [police] vehicle, so as to not block [Appellant’s
vehicle], and walked over to [Appellant. Officer] Gardner asked
[Appellant] "what was going on and what he was doing in the
area." [Appellant] responded he was in town for court and to see
friends. Upon [Officer] Gardner asking [Appellant] what his name
was, [Appellant] provided [Officer] Gardner with his Pennsylvania
identification [card], which had a Philadelphia[, Pennsylvania]
address. [Officer Gardner returned to his police vehicle with
Appellant’s identification card and, using the police vehicle’s
on-board computer system, searched for any outstanding
warrants issued against Appellant. After Officer Gardner returned
Appellant’s identification card to him (as discussed in more detail
infra), Appellant] then walked back to his vehicle and finished
pumping gas as [Officer] Gardner spoke with him and continued
to ask him questions. [Appellant] confirmed that the vehicle was
a rental. During the interaction, [Officer] Gardner did not indicate
to [Appellant] that he was not free to leave, he did not brandish
his firearm, and he did not restrict [Appellant’s] movements in any
way. [Officer] Gardner then asked if [Appellant] had anything
illegal on his person. [Appellant] began digging through his
pockets, which [Officer] Gardner asked him not to do. While
-2-
J-S28007-22
[Appellant] was digging through his pockets, [Officer] Gardner
observed a [pocketknife], a second cell[ular tele]phone [(the
black “flip” telephone)], and an unknown amount of [United
States] currency. [Officer] Gardner [then] asked [Appellant] why
he had two cell[ular tele]phones and asked if there was anything
illegal in the [vehicle].
[Officer] Gardner then asked if he could search the [vehicle]. At
first, [Appellant] gave [Officer] Gardner permission to search the
driver[’s] side [of the vehicle], but then withdrew consent prior to
[Officer] Gardner starting his search. [Officer] Gardner then
informed [Appellant] he would be calling a [narcotics] canine to
the scene based on his observations. [Officer] Gardner's purpose
for calling a canine [officer] was: [Appellant’s] presence in [a]
high narcotics trafficking area, [Appellant] matching the
description of an individual that fled during a narcotics[-]related
stop, [Appellant] having a Philadelphia address, which in [Officer]
Gardner's experience is common for drug traffickers in [the
Williamsport] area, the possession of two cell[ular tele]phones,
the bundle of [United States] currency on [Appellant’s] person,
and [Appellant’s] use of a rental vehicle, which in [Officer]
Gardner's experience was common among narcotics traffickers
because [rental vehicles] cannot be forfeited. [Officer] Gardner
[testified that he] believed[,] at that point[, Appellant] was
detained and would have to wait for a canine [officer] to arrive.
After being informed that a canine would be called, [Appellant]
offered consent to search [his vehicle,] and [Officer] Gardner
explained that [Appellant] did not have to provide consent and
that he was not forcing [Appellant] to [permit a] search [of] the
vehicle. [Appellant] still agreed to grant [Officer] Gardner
consent[. D]uring the search, [Officer] Gardner found small
rubber bands, [which in Officer Gardner’s experience were]
commonly used in the packaging of heroin[,] in the sunglass visor
[of the vehicle]. When asked why he had the bands, [Appellant]
stated [the bands were] for his hair, but [Officer Gardner observed
that Appellant] had a shaved head at the time.
[After Officer Gardner searched Appellant’s vehicle, but before the
arrival of the narcotics canine, Officer] Gardner searched
[Appellant’s] person. The search of [Appellant’s person] yielded
two cell[ular tele]phones and ninety-five dollars in mostly
twenty[-]dollar denominations in two separate bundles. [Officer]
Gardner testified that the use of two cell[ular tele]phones,
twenty[-]dollar denominations, and separate bundles of
[currency] were all factors consistent with narcotics trafficking.
-3-
J-S28007-22
[Detective] Thompson then arrived with his canine [officer] and
was informed of the ongoing situation. The [narcotics] canine
alerted several times to the rear portion of the middle console [of
the vehicle]. [Police] officers then [removed] the rear portion of
the console to find a grey[-]colored satchel that contained a worn
prescription bottle containing fifty oxycodone pills with
[Appellant’s] name on [the bottle]. Based on [Officer] Gardner's
training and experience and because of the location [where the
prescription] bottle was stored, [its] worn condition[,] and the pills
having different insignias/stamps, [Officer Gardner concluded] the
pills were for illegal sale. [Appellant] was then taken into custody
and searched further.
[Officer] Gardner then obtained a search warrant for [Appellant’s]
black [“flip” cellular tele]phone. The search warrant [described]
the items to be searched as "any electronically stored information
and records, including all call logs, [short message service
(“SMS”)] and [multimedia messaging service (“MMS”)] messages,
[electronic mail messages (“emails”)], contacts list, photographs,
videos, or any other electronic storage devices contained within
the above mentioned [cellular tele]phone. In relation to 10/14/17
to 10/21/17 as described below[.] CG#74 [(Officer Gardner’s
initials and police badge number)]." The items to be seized were
"any and all information relating to violations of the Controlled
Substance, Drug, Device and Cosmetic Act[, 35 P.S. §§ 780-101
to 780-144,] and [18] Pa.C.S.A [§ 7512] (criminal use of a
communication facility) from 10/14/2017 to 10/21/2017." From
the search[, police] officers took twenty[-]six photographs of
incoming/outgoing messages.
Trial Court Opinion, 12/31/19, at 1-4 (extraneous capitalization, original
brackets, and record citations omitted).
On November 3, 2017, law enforcement personnel filed a criminal
complaint against Appellant, charging him with the aforementioned crimes.
Appellant waived his right to arraignment on December 19, 2017, and
requested that the matter be scheduled for trial. On January 4, 2018, the
Commonwealth filed a criminal information against Appellant setting forth the
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J-S28007-22
aforementioned criminal charges. The trial court subsequently placed
Appellant’s case on the March 2018 trial list. Upon Appellant’s request, and
without objection from the Commonwealth, Appellant’s trial was continued to
October 2018, due to Appellant having undergone a medical procedure. Due
to Appellant’s travel restrictions, which were the result of his medical
rehabilitation, Appellant’s trial was continued three additional times. On May
31, 2019, the trial court, having been notified by Appellant’s counsel that plea
negotiations were unsuccessful, and the matter should be set for trial, granted
Appellant’s continuance and scheduled the matter to proceed to a pre-trial
conference on July 9, 2019.
On June 27, 2019, Appellant filed a motion seeking permission to file an
omnibus pre-trial motion to suppress evidence nunc pro tunc.2 The trial court
scheduled argument on Appellant’s request for leave to file a suppression
motion nunc pro tunc for July 9, 2019, as part of the previously scheduled
pre-trial conference. The trial court granted Appellant’s request, and on July
11, 2019, Appellant filed an omnibus pre-trial motion to suppress evidence
____________________________________________
2 Pennsylvania Rule of Criminal Procedure 579 states that an omnibus pre-trial
motion “shall be filed and served within 30 days after arraignment, unless
opportunity therefor did not exist, or the defendant or defense attorney, or
the attorney for the Commonwealth, was not aware of the grounds for the
motion, or unless the time for filing has been extended by the court for cause
shown.” Pa.R.Crim.P. 579(A). Appellant was required to seek the trial court’s
permission to file an omnibus motion nunc pro tunc in July 2019, because it
was more than 30 days after Appellant waived his arraignment on December
29, 2017.
-5-
J-S28007-22
nunc pro tunc (“omnibus motion”).3 On October 14, 2019, the trial court
entertained substantive argument on Appellant’s omnibus motion, and
thereafter granted the parties’ requests to submit briefs on the matter.
Appellant submitted a brief in support of his omnibus motion on November 7,
2019, and the Commonwealth submitted a brief in opposition to the omnibus
motion on November 26, 2019. On December 31, 2019, the trial court denied
Appellant’s omnibus motion.
The trial court conducted a pre-trial conference on July 14, 2020.4 On
October 2, 2020, Appellant pleaded not guilty to the aforementioned charges
and waived his right to a trial-by-jury. Appellant subsequently filed a motion
seeking the return of property seized by law enforcement. The trial court
granted that motion on January 27, 2021, having been notified that the
Commonwealth no longer contested the return of the seized property.5
On January 27, 2021, the trial court, in a non-jury trial, convicted
Appellant of the two aforementioned criminal charges. On April 23, 2021,
Appellant was sentenced to an aggregate term of incarceration of 6 to 24
____________________________________________
3 The trial court granted Appellant’s motion to file an omnibus motion nunc
pro tunc in an order that was dated July 9, 2019, but was not entered on the
trial court docket until July 26, 2019.
4Appellant’s pre-trial conference was delayed until July 14, 2020, due to the
COVID-19 global pandemic.
5 The seized property included $6,400.00 in United States currency, two
prescription bottles, and two cellular telephones. Appellant’s Motion for
Return of Property, 10/15/20, at ¶2.
-6-
J-S28007-22
months, less one day, and was ordered to pay all costs of prosecution and
perform 100 hours of community service.6 Trial Court Order, 5/7/21. On April
28, 2021, Appellant filed a post-sentence motion. The trial court denied
Appellant’s post-sentence motion on July 2, 2021. Appellant filed a notice of
appeal on July 26, 2021.
This Court docketed Appellant’s notice of appeal at 1063 MDA 2021. In
a September 22, 2021 per curiam order, this Court directed Appellant to file
a Pa.R.A.P. 3517 docketing statement by October 4, 2021, and advised
Appellant that if a docketing statement were not filed, his appeal would be
dismissed. In an October 29, 2021 per curiam order, this Court dismissed
Appellant’s appeal for failure to file a Rule 3517 docketing statement, and the
certified record was returned to the trial court. On January 6, 2022, Appellant
filed a motion with this Court to reinstate his appeal on the grounds that notice
of this Court’s aforementioned per curiam orders had not been provided to
Appellant’s counsel.7 In a January 18, 2022 per curiam order, we denied
Appellant’s request because this Court no longer had jurisdiction to reinstate
____________________________________________
6 Appellant received credit for time served from November 17, 2017, to
December 19, 2017. Trial Court Order, 5/7/21. The trial court also ordered
that Appellant remain released on bail pending his appeal, and directed that
Appellant not travel outside the Commonwealth of Pennsylvania without court
approval. Id.
7 The service list attached to each of this Court’s aforementioned per curiam
orders reflects that notice of each order was forwarded to Appellant’s counsel
via the PaCFile system.
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Appellant’s appeal pursuant to 42 Pa.C.S.A. § 5505, which states that courts
may only modify dispositional orders within 30 days.
On remand, the Commonwealth filed a motion to revoke Appellant’s bail
because his “appeal was no longer pending.” Commonwealth’s Motion to
Revoke Bail, 3/25/22, at ¶7. On March 25, 2022, Appellant filed a petition
pursuant to the Post Conviction Relief Act (“PCRA”), 42 Pa.C.S.A.
§§ 9541-9546. In his PCRA petition, Appellant asked the PCRA court to
reinstate his direct appeal rights. PCRA Petition, 3/25/22, at ¶9. On April 25,
2022, the trial court granted the Commonwealth’s motion to revoke
Appellant’s bail and directed Appellant to begin serving his sentence, effective
that same day. Trial Court Order, 4/25/22. In that same order, the PCRA
court granted Appellant’s petition for collateral relief and ordered that
Appellant could file a notice of appeal nunc pro tunc within 30 days of said
order. In so doing, the court stated,
[O]n March 25, 2022, counsel for [Appellant] filed a [PCRA
petition] seeking relief in the form of permission to appeal nunc
pro tunc. This matter is currently scheduled for a
conference/argument on June 6, 2022. However, in order for
[Appellant] to be eligible for PCRA relief, he must actually be
serving a sentence.
At the time of the hearing on today’s date, counsel for the
Commonwealth indicated that he had no objection to the [PCRA
court] addressing [Appellant’s] PCRA petition at this time, and
that [the Commonwealth was] agreeable to the requested relief
being granted, so that [Appellant] may file his [direct] appeal nunc
pro tunc. Additionally, the Commonwealth indicated that [it did]
not object to [Appellant’s] bail being modified to make him
[s]upervised [b]ail [e]ligible pending determination of his appeal.
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Id. at 1-2. Thereafter, Appellant filed a notice of appeal on April 28, 2022.
On May 4, 2022, Appellant was directed to file a concise statement of errors
complained of on appeal pursuant to Pa.R.A.P. 1925(b). Appellant filed his
Rule 1925(b) statement on May 9, 2022. On May 13, 2022, the trial court
filed its Rule 1925(a) opinion, relying on its July 2, 2021, and December 31,
2019 opinions.
Appellant raises the following issue for our review: “Whether the trial
court erred in denying Appellant’s [omnibus] motion to suppress evidence
seized from his person and from a vehicle he was operating?” Appellant’s
Brief at 5 (extraneous capitalization omitted).8
Preliminarily we must discuss the procedural posture of this case as the
question of whether the PCRA court had judicial power to permit Appellant to
file a direct appeal nunc pro tunc implicates our jurisdiction. Commonwealth
v. Gaines, 127 A.3d 15, 17 (Pa. Super. 2015) (en banc). In the case sub
judice, Appellant filed a PCRA petition requesting permission to file a direct
appeal nunc pro tunc. Section 9543 of the PCRA states, inter alia, that in
order to be eligible for relief, a petitioner must plead and prove by a
preponderance of the evidence that he or she is “currently serving a sentence
of imprisonment, probation[,] or parole for the crime” for which he or she was
convicted. 42 Pa.C.S.A. § 9543(a)(1)(i). This eligibility requirement – that
____________________________________________
8 In a letter filed with this Court on July 27, 2022, the Commonwealth stated
that it would not file a brief in this matter.
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the petitioner is currently serving a sentence of imprisonment, probation, or
parole – “implicates only the petitioner’s ability to obtain a remedy through
[PCRA] proceedings, not the jurisdiction of the PCRA court to act on a
petition.” Commonwealth v. Fields, 197 A.3d 1217, 1222 (Pa. Super.
2018) (en banc). Thus, in the case sub judice, if the PCRA court lacked
statutory authority to grant Appellant relief in the form of permission to file
an appeal nunc pro tunc, Appellant’s subsequent notice of appeal was void ab
initio, and we are without jurisdiction to address the underlying merits of this
appeal.
Here, prior to filing his PCRA petition, Appellant was released on bail
pending the outcome of his direct appeal (1063 MDA 2021), which this Court
dismissed on October 29, 2021. Thus, at the time Appellant filed his PCRA
petition, Appellant was not yet serving his term of incarceration but was still
subject to a form of punishment and supervision by the judicial system as his
sentence had not yet been completed. See Commonwealth v. Orman, 408
A.2d 518, 520 (Pa. Super. 1979) (stating that, a petitioner, who is released
on bail, is still “in custody” for purposes of filing a writ of habeas corpus); see
also Commonwealth v. Fisher, 703 A.2d 714, 717 (Pa. Super. 1997)
(stating that, “the PCRA’s requirement of ‘currently serving’ is consistent with
the federal habeas corpus provision[] requiring that a petitioner be ‘in custody’
in order to obtain [] relief”); compare with Commonwealth v. Hart, 911
A.2d 939, 942 (Pa. Super. 2006) (stating, “[a]s soon as his sentence is
completed, the petitioner becomes ineligible for relief, regardless of whether
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he was serving his sentence when he filed the petition” (emphasis added)).
Therefore, within the procedural posture of the case sub judice, Appellant
satisfied the Section 9543(a)(1)(i) eligibility requirement - petitioner is
currently serving a sentence of imprisonment, probation, or parole - for
purposes of seeking collateral relief under the PCRA. Consequently, the PCRA
court had the judicial power to reinstate Appellant’s direct appeal rights. Thus,
we have jurisdiction to reach the merits of this appeal.
Appellant’s issue challenges the trial court’s denial of his omnibus
motion, which sought to suppress physical evidence uncovered during a
search of Appellant’s person and vehicle. Appellant’s Brief at 11-20.
An appellate court’s standard and scope of review of a challenge to the
denial of a suppression motion is well-settled.
An appellate court's standard of review in addressing a
challenge to the denial of a suppression motion is limited to
determining whether the suppression court's factual
findings are supported by the record and whether the legal
conclusions drawn from those facts are correct. [When] the
Commonwealth prevailed before the suppression court, we
may consider only the evidence of the Commonwealth and
so much of the evidence for the defense as remains
uncontradicted when read in the context of the record as a
whole. Where the suppression court's factual findings are
supported by the record, the appellate court is bound by
those findings and may reverse only if the [suppression]
court's legal conclusions are erroneous. Where the appeal
of the determination of the suppression court turns on
allegations of legal error, the suppression court's legal
conclusions are not binding on the appellate court, whose
duty it is to determine if the suppression court properly
applied the law to the facts. Thus, the conclusions of law of
the [suppression] court are subject to plenary review.
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Commonwealth v. Hoppert, 39 A.3d 358, 361-[3]62
(Pa. Super. 2012)[, appeal denied, 57 A.3d 68 (Pa. 2012)].
Moreover, “appellate courts are limited to reviewing only the
evidence presented at the suppression hearing when examining a
ruling on a pre-trial motion to suppress.” Commonwealth v.
Stilo, 138 A.3d 33, 35-36 (Pa. Super. 2016)[.]
Commonwealth v. Wright, 224 A.3d 1104, 1108 (Pa. Super. 2019) (original
brackets and ellipsis omitted), appeal denied, 237 A.3d 393 (Pa. 2020).
Police Interaction
At the foundation of his challenge, Appellant contends he was subjected
to an investigative detention when “he was interrogated by Officer Gardner”
and that this investigative detention was not supported by reasonable
suspicion. Appellant’s Brief at 12.
The Fourth Amendment to the United States Constitution, made
applicable to the states through the Fourteenth Amendment, and Article I,
Section 8 of the Pennsylvania Constitution protects individuals from unlawful
searches and seizures.9 Our Supreme Court has long held that although the
____________________________________________
9 The Fourth Amendment provides,
The right of the people to be secure in their persons, houses,
papers, and effects, against unreasonable searches and seizures,
shall not be violated, and no Warrants shall issue, but upon
probable cause, supported by Oath or affirmation, and particularly
describing the place to be searched, and the persons or things to
be seized.
U.S. CONST. amend. IV. The Pennsylvania Constitution provides,
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Pennsylvania Constitution provides broader protection from unreasonable
searches and seizures than the United States Constitution, the Terry doctrine,
announced in the seminal case of Terry v. Ohio, 392 U.S. 1 (1968), “sets
forth the reasonableness standard for Article I, [Section] 8 of the
Pennsylvania Constitution.” Commonwealth v. Hicks, 208 A.3d 916, 925
and 940 (Pa. 2019) (stating, “the Terry doctrine unequivocally requires
something suggestive of criminal activity before an investigative detention
may occur” (emphasis omitted)).
The Hicks Court explained the distinction between a mere encounter
and an investigative detention as follows:
[W]arrantless interactions between citizens and police officers fall
into three categories, distinguished one from another by
consideration of whether the citizen has been “seized” within the
meaning of the Fourth Amendment, the intrusiveness and extent
of the seizure, and the justification therefor. The first type of
interaction - a mere encounter - does not constitute a seizure. It
generally involves a request for information and requires no
particular suspicion of criminality because it carries no official
compulsion to stop or to respond. During a mere encounter, as
long as the person to whom questions are put remains free to
disregard the questions and walk away, there has been no
intrusion upon that person's liberty or privacy as would under the
____________________________________________
The people shall be secure in their persons, houses, papers and
possessions from unreasonable searches and seizures, and no
warrant to search any place or to seize any person or things shall
issue without describing them as nearly as may be, nor without
probable cause, supported by oath or affirmation subscribed to by
the affiant.
PA CONST. art. I, § 8.
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Constitution require some particularized and objective
justification.
We recognize only two types of lawful, warrantless seizures of the
person, both of which require an appropriate showing of
antecedent justification: first, an arrest based upon probable
cause; second, a[n investigative detention] based upon
reasonable suspicion. Here, we are concerned with this latter type
of seizure - interchangeably labeled an “investigative detention,”
a “Terry stop,” or, when coupled with a brief pat-down search for
weapons on the suspect's person, a “stop and frisk.”
To maintain constitutional validity, an investigative detention
must be supported by a reasonable and articulable suspicion that
the person seized is engaged in criminal activity and may continue
only so long as is necessary to confirm or dispel such suspicion.
The asserted grounds for an investigative detention must be
evaluated under the totality of the circumstances. So long as the
initial detention is lawful, nothing precludes a police officer from
acting upon the fortuitous discovery of evidence suggesting a
different crime than that initially suspected[.] However, an
unjustified seizure immediately violates the Fourth Amendment
rights of the suspect, taints the evidence recovered thereby, and
subjects that evidence to the exclusionary rule.
Hicks, 208 A.3d at 927-928 (citations, original quotation marks, and original
brackets omitted). The reasonable suspicion standard allows “a police officer
to stop an individual based upon [‘]specific and articulable facts[’] and
[‘]rational inferences from those facts[’] that warrant a belief that the
individual is involved in criminal activity.” Id. at 932 (citation and original
quotation marks omitted).
For purposes of the Fourth Amendment, a person is “seized”
when, “in view of all the circumstances surrounding the incident,
a reasonable person would have believed that he was not free to
leave.” United States v. Mendenhall, 446 U.S. 544, 554 []
(1980). When a police officer “accosts an individual and restrains
his freedom to walk away, he has ‘seized’ that person.” Brown[
v. Texas], 443 U.S. [47,] 50 [(1979),] quoting Terry, 392 U.S.
at 16[.] In assessing the impression that would be given to a
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reasonable person, a court must determine “whether, taking into
account all of the circumstances surrounding the encounter, the
police conduct would ‘have communicated to a reasonable person
that he was not at liberty to ignore the police presence and go
about his business.’” Florida v. Bostick, 501 U.S. 429, 437 []
(1991)[,] quoting Michigan v. Chesternut, 486 U.S. 567, 569 []
(1988)[.]
Hicks, 208 A.3d at 926-927.
The question of whether a seizure occurred presents a pure question of
law and, thus, is subject to plenary review. Commonwealth v. Lyles, 97
A.3d 298, 302 (Pa. 2014). “In evaluating the level of interaction, courts
conduct an objective examination of the totality of the surrounding
circumstances.” Id. “The pivotal inquiry is whether, in light of the facts and
circumstances[,] a reasonable [citizen], innocent of any crime, would have
thought he[, or she,] was being restrained had he[, or she,] been in the
defendant's shoes.” Commonwealth v. Hampton, 204 A.3d 452, 458
(Pa. Super. 2019). Factors considered in the totality-of-the-circumstances
analysis include: (1) demeanor of the police officer and tone of voice; (2)
manner of expression used by the police officer in addressing the citizen; (3)
whether the police officer informs the citizen that he or she is suspected of
criminal activity; (4) the location and time of the interaction; (5) the visible
presence of weapons on the police officer’s person; and (6) the content of the
questions asked or statements made by the police officer. Commonwealth
v. Parker, 161 A.3d 557, 363 (Pa. Super. 2017)
“[A] seizure does not occur where [police] officers merely approach a
person in public and question the individual or request to see identification.”
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Lyles, 97 A.3d at 303; see also Commonwealth v. Cost, 224 A.3d 641,
650 (Pa. 2020) (stating, a police “officer's mere request for identification does
not, by itself, transform what would otherwise be a mere encounter into an
investigatory detention”). Police officers “may request identification or
question an individual so long as the [police] officers do not convey a message
that compliance with their requests is required[ and the] individual still
maintains the right to ignore the police [officers] and go about his[, or her,]
business.” Lyles, 97 A.3d at 303 (citations and original quotation marks
omitted). Within the totality of the circumstances assessment, “the retention
by [a] police [officer] of an identification card to conduct a warrant check will
generally be a material and substantial escalating factor” that in certain
instances may transform a mere encounter into an investigative detention.
Cost, 224 A.3d at 651; see also Commonwealth v. Anderson, 276 A.3d
282, 299 (Pa. Super. 2022) (en banc).
Here, Appellant asserts that he was “subjected to an investigative
detention when he was interrogated by Officer Gardner concerning who he
was, where he was from[,] and what he was doing in Williamsport.”
Appellant’s Brief at 12. The trial court found,
[Appellant] was subjected to an investigatory detention when
[Officer] Gardner informed him a [narcotics] canine would be
brought to the scene. At that moment, a reasonable person would
not believe he was free to leave, which in fact [Officer] Gardner
testified [Appellant] was not permitted to leave at that point.
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Trial Court Opinion, 12/31/19, at 6 (record citation omitted).10
The record demonstrates that on October 21, 2017, while in police
uniform and driving a marked patrol vehicle, Officer Gardner observed
Appellant, who he described as a black male having a slight limp when he
walked, as Officer Gardner drove his police vehicle into the parking lot of a
gas station and convenience store. N.T., 10/14/19, at 4-5. Officer Gardner
described the parking lot as located in “a high-narcotics trafficking area” based
upon his experience and the number of narcotics-related arrests he conducted
in that area. Id. at 4. Officer Gardner’s observation of Appellant matched
the description of a “black male, heavier set[,] with a limp” who fled a
narcotics-related traffic stop, according to information a fellow police officer
communicated to Officer Gardner prior to October 21, 2017. Id. at 5-6.
Officer Gardner testified that when he first observed Appellant, he was
pumping gas into his vehicle at a filling station in the parking lot of the gas
station. Id. at 5. After looking at Officer Gardner multiple times, Appellant
walked to another vehicle that was parked near-by in the same parking lot
and appeared to be talking with someone in the near-by vehicle. Id. Without
activating his police vehicle lights or sirens, Officer Gardner parked his vehicle
in such a way as to not block the movement of Appellant’s vehicle. Id. at 6.
____________________________________________
10 The Commonwealth conceded that Appellant was subjected to an
investigative detention when Officer Gardner informed Appellant that he was
calling a narcotics canine to the scene. See Commonwealth’s Brief in
Opposition to Appellant’s Motion to Suppress, 11/26/19, at unnumbered page
8.
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Upon exiting his police vehicle, Officer Gardner, in full uniform and armed,
approached Appellant. Id. at 6, 18. Officer Gardner, upon approach, asked
Appellant his purpose for being in Williamsport, to which Appellant indicated
that he was in Williamsport to visit friends and “for court.” Id. Officer Gardner
“explained to [Appellant] that [a fellow police officer] had a male run from him
recently” and then asked Appellant his name. Id. at 6. Appellant provided
Officer Gardner with a Pennsylvania identification card. Id. at 6, 18. Upon
receiving Appellant’s identification card, Officer Gardner noted that Appellant
had a Philadelphia, Pennsylvania address. Id. at 6. Officer Gardner returned
to his police vehicle with Appellant’s identification card and, using the vehicle’s
on-board computer system, searched for outstanding warrants issued against
Appellant. Id. at 19. Officer Gardner then walked back to Appellant and
returned his identification card to him.11 Id.
At this point, Appellant walked back to his vehicle, located near a gas
pump, and Officer Gardner followed him. Id. at 7, 19. Noticing that
Appellant’s vehicle had an out-of-state license plate, Officer Gardner asked
Appellant if the vehicle was rented, and Appellant confirmed that the vehicle
was, in fact, a rental vehicle. Id. at 7. Officer Gardner then asked Appellant
____________________________________________
11 Although Officer Gardner testified that he “assumed” he returned
Appellant’s identification card to him, he did not recall specifically doing so.
Because we view the evidence in the light most favorable to the
Commonwealth, as the prevailing party, it may be inferred that Officer
Gardner returned Appellant’s identification card to him. N.T., 10/14/19, at
19.
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if “he had anything illegal on his person” because he noticed that Appellant
had “a [pocketknife] clipped to his front right pant[s] pocket.” Id. Appellant
“began digging through his pockets” and continued to do so despite Officer
Gardner’s request that he stop. Id. Officer Gardner testified that, as
Appellant was “digging through his pockets,” he observed a second cellular
telephone (a black “flip” cellular telephone), in Appellant’s possession, in
addition to a different cellular telephone seen in Appellant’s possession earlier.
Id. at 7, 20-21. When asked why he had a second cellular telephone,
Appellant did not provide an answer. Id. at 7-8. It was at this point that
Officer Gardner asked Appellant if he had anything illegal in his vehicle and
whether Appellant would consent to a search of the vehicle. Id. at 8. Officer
Gardner testified that Appellant initially provided consent to search the driver’s
side of the vehicle but then withdrew his consent. Id. at 8-9, 21. Officer
Gardner, thereupon, informed Appellant that he would be requesting a canine
officer to the scene that was trained to detect, inter alia, the presence of
narcotics. Id. at 8, 21. Officer Gardner considered Appellant “detained” at
this point. Id. at 21 (stating, “[a]t that point he was, in my mind, detained”).
Officer Gardner testified that Appellant then stated there was nothing illegal
in the vehicle and consented to a search of the vehicle. Id. at 8, 21-22.
Officer Gardner, upon conducting a human search of Appellant’s vehicle,
found “heroin packing bands and a clear plastic bag” in the sunglass
compartment located above the front windshield of the vehicle. Id. at 11, 22.
When asked why he possessed these small, black rubber bands, Appellant
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informed him they were for use in his hair, which Officer Gardner noted
Appellant did not have any hair. Id. at 11-12. Officer Gardner then conducted
a search of Appellant’s person, recovering two cellular telephones and two
bundles of United States currency.12 Id. at 12, 22.
Thereafter, the narcotics canine arrived with his handler, Detective
Thompson. Id. at 12, 25. Officer Gardner informed Detective Thompson that
Appellant initially consented to a search of his vehicle, withdrew that consent,
and upon learning that a narcotics canine was requested to the scene,
consented to a search of the vehicle. Id. at 26-27; see also id. at 12-13
(setting forth similar testimony by Officer Gardner). The narcotics canine
alerted the police officers to the possible presence of narcotics in the “rear
portion of the center console[.]”13 Id. at 13. Upon further search, the police
officers found a “gray-colored satchel” containing a prescription bottle, having
____________________________________________
12Officer Gardner retrieved a total of $95.00 in United States currency, the
majority of which was in $20.00 denominations. The two bundles were
comprised of $60.00 and $35.00, respectively. N.T., 10/14/19, at 12.
13 Detective Thompson described the canine search of the vehicle as follows,
“I typically do [a search] twice. [The canine officer] was first
deployed on an on-lead search of the [vehicle. The canine officer]
quickly alerted to the rear area of the center console towards the
back seats. I brought [the canine officer] back out of the car,
unhooked him from the lead, let him do a second interior search
not connected to me as the handler and he, again, quickly alerted
to the same location.
N.T., 10/14/19, at 27.
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a well-worn label indicating the bottle belonged to Appellant, with 50
oxycodone tablets in the bottle. Id. at 13, 23. Thereupon, Appellant was
taken into custody and transported to the police station for further
questioning. Id. at 14. A search warrant was subsequently obtained for the
search of Appellant’s black “flip” cellular telephone. Id. at 14-15.
Upon review, we concur with the trial court, and the record supports,
that Officer Gardner had reasonable suspicion to subject Appellant to an
investigatory detention. We conclude as a matter of law, however, that based
upon the individual circumstances of the case sub judice, the investigative
detention of Appellant began when Officer Gardner obtained Appellant’s
identification card and returned to his police vehicle with the identification card
to conduct an inquiry after informing Appellant that a fellow police officer “had
a male run from him recently[.]”
The record demonstrates that Officer Gardner, armed with the
knowledge that a male matching Appellant’s description recently fled a
narcotics-related traffic stop, approached Appellant and inquired about his
presence in Williamsport. Officer Gardner was in full police uniform, which
included a visible firearm. Upon hearing Appellant’s explanation, Officer
Gardner informed Appellant that a fellow police officer “had a male run from
him recently[,]” objectively implying that the male was a person-of-interest
to the fellow police officer. Officer Gardner then asked Appellant his name, to
which Appellant responded by providing Officer Gardner an identification card.
Noting that Appellant lived in Philadelphia, Officer Gardner took the
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identification card and returned to his police vehicle to conduct an inquiry
using the police vehicle’s on-board computer system. There is no evidence,
however, that, prior to returning to his police vehicle with the identification
card, Officer Gardner explained to Appellant why he retained Appellant’s
identification card and what he intended to do with it upon his return to the
police vehicle.
An objective assessment of the totality of the circumstances in the case
sub judice demonstrates that Appellant was not free to terminate his
encounter with Officer Gardner once the police officer retained Appellant’s
identification card and returned to the police vehicle to conduct a warrant
search and further inquiries. It was at this moment that Appellant’s mere
encounter with Officer Gardner was transformed into an investigative
detention. See Lyles, 97 A.3d at 304 (stating, a mere “encounter involving
a request for identification could rise to a detention when coupled with
circumstances of restraint of liberty, physical force, show of authority, or some
level of coercion beyond the [police] officer's mere employment, conveying a
demand for compliance or that there will be tangible consequences from a
refusal”); see also Cost, 224 A.3d at 651 (noting that, “[o]nce the
identification is handed over to police and they have had a reasonable
opportunity to review it, if the identification is not returned to the detainee it
is difficult to imagine that any reasonable person would feel free to leave
without it” (original brackets omitted)); Anderson, 276 A.3d at 300 (finding
that, a police officer’s request for identification coupled with investigatory
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questions, i.e., whether the person was on parole or had anything illegal on
his person, “clearly demonstrated a ‘substantial escalating factor’ within the
totality assessment that [the person] was, indeed subjected to an
investigative detention”); Parker, 161 A.3d at 364 n.9 (recognizing that an
investigatory detention occurs when a police officer informs a citizen that he
is talking to the citizen because he fits the description of a suspect in a nearby
criminal incident and immediately asks for identification).
Although, as a matter of law, Appellant’s mere encounter with Officer
Gardner, based upon the facts as supported by the record, transformed into
an investigative detention earlier in time than originally determined by the
trial court (or conceded to by the Commonwealth), we concur that Officer
Gardner had reasonable suspicion of criminal activity when he initiated this
investigative detention. Officer Gardner articulated that the area in which he
encountered Appellant was a “high-narcotics trafficking area” in which he
previously conducted a number of narcotics-related arrests. Appellant’s
appearance, according to Officer Gardner, matched that of a “black male,
heavier[-]set with a limp” that recently fled a narcotics-related traffic stop
conducted by a fellow police officer. In particular, Officer Gardner observed
Appellant walking in the parking lot with a limp. Officer Gardner further stated
that, while he was driving his police vehicle into the gas station parking lot,
he noticed that Appellant demonstrated suspicious behavior in that he “looked
over at [Officer Gardner] multiple times” before walking away from his vehicle
in an effort, as it appeared to Officer Gardner, to distance himself from his
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vehicle. Finally, upon reviewing Appellant’s identification card, Officer
Gardner noted that Appellant resided in Philadelphia. Officer Gardner knew
from his law enforcement experience that individuals from Philadelphia came
to Williamsport “for the sole purpose of narcotics trafficking.” In viewing the
totality of the circumstances, Officer Gardner’s investigative detention of
Appellant was based upon specific and articulable facts, and rational
inferences from those facts, which warranted a belief that Appellant may have
been involved in criminal activity. Therefore, we discern no error in the trial
court’s conclusion that reasonable suspicion supported the investigative
detention of Appellant.
Consent to Search Vehicle
Next, Appellant asserts that his consent to search his vehicle was not
given voluntarily, knowingly, and intelligently and, therefore, any items seized
as a result of this search should have been suppressed.14 Appellant’s Brief at
13-14.
It is well-settled that,
[a] search conducted without a warrant is deemed to be
unreasonable and therefore constitutionally impermissible, unless
an established exception applies. One such exception is consent,
voluntarily given. The central Fourth Amendment inquiries in
consent cases entail assessment of the constitutional validity of
____________________________________________
14 To the extent that Appellant asserts that the evidence seized from a search
of his vehicle was the product of an illegal investigatory detention unsupported
by reasonable suspicion (see Appellant’s Brief at 13-14), we find this
argument moot in light in of our discussion supra.
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the citizen[-]police encounter giving rise to the consent; and,
ultimately, the voluntariness of consent.
Commonwealth v. Strickler, 757 A.2d 884, 888 (Pa. 2000) (citations
omitted). When “a lawful interaction precede[s] an alleged consent, the court
must then determine whether the [Commonwealth] has adequately proven
that the consent was made voluntarily and was not the product of duress or
coercion.” Commonwealth v. Reid, 811 A.2d 530, 545 (Pa. 2002), cert.
denied, 540 U.S. 850 (2003). A “court must review the totality of
circumstances surrounding a consent to determine whether it was made
voluntarily” and in so doing “should evaluate the characteristics of the accused
[(i.e., the accused’s age, education, and prior criminal history)], the
interaction between the accused and the police, and assess how a reasonable
person in the accused's shoes would have reacted to that interaction.” Reid,
811 A.2d at 546 (footnote omitted).
[T]he following factors [] are pertinent to a determination of
whether consent to search is voluntarily given: 1) the presence or
absence of police excesses; 2) whether there was physical
contact; 3) whether police directed the citizen's movements; 4)
police demeanor and manner of expression; 5) the location of the
interdiction; 6) the content of the questions and statements; 7)
the existence and character of the initial investigative detention,
including its degree of coerciveness; 8) whether the person has
been told that he is free to leave; and 9) whether the citizen has
been informed that he is not required to consent to the search.
Commonwealth v. Kemp, 961 A.2d 1247, 1261 (Pa. Super. 2008), relying
on Strickler, 757 A.2d at 898-899. Ultimately, the “Commonwealth bears
the burden of establishing that a consent is the product of an essentially free
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and unconstrained choice - not the result of duress or coercion, express or
implied, or a will overborne - under the totality of the circumstances.”
Strickler, 757 A.2d at 901.
We concluded supra that Officer Gardner possessed reasonable
suspicion to support the investigative detention he initiated by securing
Appellant’s identification card and returning with it to his police vehicle to
undertake informational searches. When asked by Officer Gardner,
thereafter, Appellant denied the presence of contraband in his vehicle. N.T.,
10/14/19, at 8. Officer Gardner then asked Appellant if he would consent to
a search of the vehicle. Id. Appellant initially consented to a search of the
driver’s side of the vehicle but then withdrew his consent. Id. Officer Gardner
then informed Appellant that he intended to request a narcotics canine to
conduct a search of the vehicle. Id. at 8-9. Appellant then provided consent
to search the vehicle. Id. at 8-10. Officer Gardner explained to Appellant
“multiple times he did not have to provide consent, [and that] I was not forcing
him to [consent to a] search [of] the vehicle.” Id. at 8. Specifically, Officer
Gardner testified that,
Once he learned that I was calling a [canine officer,] or that I was
requesting a [canine officer,] is when he said you can go ahead
and search [the vehicle]. Officer Minnier was also on scene at that
point. I reiterated to [Appellant], like I said, multiple times I said,
you know, you already said no [to a search of the] driver’s side
[of the vehicle]. I said you don’t have to provide consent, I’m not
forcing you to provide consent, it’s up to you and he, again, stated
that he understood and that I may search [the vehicle].
Id. at 10.
- 26 -
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Based upon the totality of the circumstances, we concur with the trial
court that Appellant’s “consent was part of a lawful police interaction and was
voluntarily given to [Officer] Gardner despite [Officer] Gardner informing him
multiple times that he did not have to consent.” See Trial Court Opinion,
12/31/19, at 10. Importantly, it may be inferred that, because Appellant
initially provided limited consent, but subsequently withdrew his consent, he
understood (1) he did not need to consent to a search of the vehicle, and (2)
he was able to withdraw or limit the scope of the consent to search the vehicle
even after providing it. In viewing the evidence presented in the light most
favorable to the Commonwealth as the prevailing party at the suppression
hearing, Officer Gardner informed Appellant multiple times that he was not
compelled to give consent. Moreover, while Appellant agreed to permit a
search of the vehicle after Officer Gardner advised that he intended to
summon a narcotics canine to the scene, we do not find Officer Gardner’s
reference to the canine officer to be so coercive that it vitiates the voluntary
nature of Appellant’s consent. Rather, Appellant’s knowledge that a narcotics
canine would be brought to the scene provided Appellant with a full
understanding of the scope and method of the ensuing search to which he
would be subjected. Ultimately, Appellant consented to the canine search
without limitation, either in terms of the area of the vehicle to be searched or
the method by which the search would be conducted, i.e., human search
verses canine search. As such, we conclude that Officer Gardner’s statements
informing Appellant of an impending canine search did not diminish the
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voluntary nature of Appellant’s consent. See Commonwealth v. Valdivia,
195 A.3d 855, 862-870 (Pa. 2018) (holding that, a police officer’s failure to
inform a defendant that a search was to be conducted by a canine officer,
rather than by a human police officer, goes to the scope of the permitted
search and does not invalidate the voluntariness of the consent absent
additional evidence that the police officer acted stealthily, secretly, or
deceitfully). Moreover, because Appellant provided consent for the police
officers to conduct a human search of his vehicle, the recovery of the “heroin
packing bands,” together with the clear plastic bag, from the vehicle’s
sunglass compartment was constitutionally sound.
Appellant argues, alternatively, that, even if his consent to search the
vehicle is deemed voluntary, he did not authorize the use of a narcotics canine
to search the interior of the vehicle. Appellant’s Brief at 17 (stating, “Appellant
never gave consent to a [canine] search at all[, rather his] consent was limited
to the driver[’s] side of the vehicle”).
As our Supreme Court in Valdivia, supra, explained,
a determination of the scope of consent given for police to conduct
a search requires consideration of what a reasonable person in the
position of the defendant would have believed he or she was
allowing, based on the exchange that occurred between police and
the individual. The scope of a search, in turn, is limited by the
terms of its authorization. To be justified by consent, the scope
of the search actually made should be no broader than the scope
of consent given.
Valdivia, 195 A.3d at 865 (citations and quotation marks omitted). As the
Valdivia Court recognized, “a search by a trained narcotics [canine] is itself
- 28 -
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a search [that] is distinct from a search conducted by a human [police]
officer.” Id. at 866.
In the instant case, as discussed supra, Appellant initially provided
consent but limited the search to the driver’s side of the vehicle. Appellant
then withdrew this consent. Officer Gardner next informed Appellant that a
narcotics canine would be requested. Thereafter, Appellant provided consent
to search his vehicle without limitation as to the area to be searched or the
method by which the search would be conducted. We concur with the trial
court, and the record supports, that at the time Appellant provided consent to
search his vehicle, a reasonable person in Appellant’s position would have
been aware that a narcotics canine may be employed in a search of the
vehicle. See Trial Court Opinion, 12/31/19, at 10-11. Therefore, the canine
search of the interior of Appellant’s car was within the scope of consent
voluntarily provided, and Appellant’s challenge is without merit. See cf.
Valdivia, 195 A.3d at 867 (concluding that, a reasonable person in Valdivia’s
position would not have understood that the search was to be conducted by a
narcotics canine when the canine officer, or its handler, was not present prior
to consent and the interaction between Valdivia and the police officer did not
“suggest that a canine was going to be used to conduct the search”
(emphasis added)). Because a canine search of Appellant’s vehicle fell within
the scope of the consent provided, the discovery of, and seizure of, the
prescription bottle, which bore a label indicating Appellant’s name and
contained a controlled substance, was constitutionally sound.
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Search of Appellant’s Person
Next, Appellant argues that the warrantless search of his person, which
he contends occurred incident to his arrest,15 was illegal because “the arrest
was conducted without probable cause to believe that Appellant was guilty of
an offense.” Appellant’s Brief at 14. As such, Appellant asserts that the
seizure of two cellular telephones and $95.00 in United States currency was
illegal and the trial court erred by not suppressing this evidence. Id.
In denying Appellant’s request to suppress the evidence seized from his
person, the trial court stated,
The doctrine of inevitable discovery applies here. The testimony
is clear that [Officer] Gardner seized [Appellant’s cellular
telephones] and currency prior to finding the [prescription bottle]
in the vehicle. Therefore, based on [this Court’s decision in
Commonwealth v. Van Winkle, 880 A.2d 1280 (Pa. Super.
2005),] as long as the [prescription] bottle in [Appellant’s] vehicle
was validly seized pursuant to a proper search, seizure of
[Appellant’s cellular telephones] and currency should not be
suppressed under the doctrine of inevitable discovery.
Additionally, factoring into [the trial court’s] decision are the facts
that [Officer] Gardner was already aware of the [cellular
telephones] and currency, due to [Appellant] taking the items out
of his pants pocket and displaying them voluntarily and the
____________________________________________
15 Appellant’s assertion that he was taken into police custody at the time of
the search of his person is misplaced. The record demonstrates, as discussed
infra, that when Officer Gardner searched Appellant’s person, Appellant was
only detained as part of an on-going investigatory detention. See
Commonwealth v. Dix, 207 A.3d 383, 388 (Pa. Super. 2019) (stating that,
“[a] custodial detention occurs when the nature, duration and conditions of an
investigative detention become so coercive as to be, practically speaking, the
functional equivalent of an arrest” (citation and brackets omitted)), appeal
denied, 217 A.3d 790 (Pa. 2019).
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information seized from within the [cellular “flip” telephone] was
not taken until after a search warrant was obtained.
Trial Court Opinion, 12/31/19, at 8. For the reasons that follow, we agree
with the trial court that the items recovered from the search of Appellant’s
person were not subject to exclusion under doctrine of inevitable discovery.
A search conducted without a warrant is deemed to be
unreasonable and[,] therefore[,] constitutionally impermissible,
unless an established exception applies. Exceptions to the
warrant requirement include the consent exception, the plain view
exception, the inventory search exception, the exigent
circumstances exception, the automobile exception[,] the stop
and frisk exception, and the search incident to arrest exception.
Commonwealth v. Simonson, 148 A.3d 792, 797 (Pa. Super. 2016)
(quotation marks and citations omitted), appeal denied, 169 A.3d 33 (Pa.
2017).
We first address the nature of the challenged search of Appellant’s
person and whether that search falls within one of the recognized exceptions
to the warrant requirement. Officer Gardner searched Appellant’s person
sometime after the investigative detention commenced but before the canine
search of Appellant’s vehicle occurred. At this time, Officer Gardner
considered Appellant “detained” but not subject to custodial arrest. Even
though Officer Gardner observed a knife clipped to Appellant’s pocket when
this citizen-police encounter began, Officer Gardner did not conduct an
immediate search for weapons, nor does it appear from the record that Officer
Gardner perceived an immediate threat from a weapon concealed on
Appellant’s person. In view of these circumstances, we conclude that
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Appellant was subjected to an evidentiary search and not a brief “pat-down”
or “weapons frisk” aimed at protecting a police officer during an investigative
detention.
We also exclude application of the remaining exceptions to the warrant
requirement. The plain view or plain feel doctrine does not support the search
of Appellant’s person. Cellular telephones and United States currency have
lawful uses, and their connection to criminal activity is not immediately
ascertainable through brief visual observation or tactile manipulation. See
Commonwealth v. Luczki, 212 A.3d 530, 547 (Pa. Super. 2019) (stating
that, the “plain view doctrine permits the warrantless seizure of an object
when: (1) a[ police] officer views the object from a lawful vantage point; (2)
it is immediately apparent [from the surrounding circumstances] that the
object is incriminating; and (3) the [police] officer has a lawful right of access
to the object” (citation and original quotation marks omitted)). Moreover, the
facts surrounding the search of Appellant’s person do not implicate the
inventory search exception, the exigent circumstances exception, or the
automobile exception. Lastly, as the record demonstrates, Officer Gardner
searched Appellant before the canine search of Appellant’s vehicle yielded the
prescription bottle and during a point in the encounter when Officer Gardner
considered Appellant “detained,” but not subject to custodial arrest. Thus, the
search incident to arrest exception does not justify Officer Gardner’s conduct.
See Commonwealth v. Wright, 742 A.2d 661, 665 (Pa. 1999) (stating that,
“[a] warrantless search incident to an arrest is valid ‘only if it is substantially
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contemporaneous with the arrest and confined to the immediate vicinity of
the arrest.’”), quoting Shipley v. California, 395 U.S. 881 (1969).
Therefore, as the trial court concluded, the Commonwealth, in the case sub
judice, can only avoid suppression through application of the inevitable
discovery doctrine.
The inevitable discovery doctrine, in limited instances, permits the
admissibility of evidence that was illegally obtained (i.e., obtained via a
warrantless search without exception) if the Commonwealth “can establish by
a preponderance of the evidence that the illegally obtained evidence ultimately
or inevitably would have been discovered by lawful means[.16]”
Commonwealth v. King, 259 A.3d 511, 522 (Pa. Super. 2021) (emphasis
added); see also Commonwealth v. Perel, 107 A.3d 185, 194 (Pa. Super.
2014), appeal denied, 124 A.3d 309 (Pa. 2015). This Court has cautioned,
however, that “the inevitable discovery doctrine is not a substitute for the
warrant requirement[, and the Commonwealth] must demonstrate that the
evidence would have been discovered absent the police misconduct not
simply that [law enforcement] somehow could have lawfully discovered it.”
Perel, 107 A.3d at 196 (emphasis in original). The Perel Court reiterated
that when law enforcement officers obtain evidence through apparent
misconduct, “the Commonwealth only can avoid suppression by
____________________________________________
16 Black’s Law Dictionary defines the term “inevitable” as, inter alia, that which
is “incapable of being avoided.” BLACK’S LAW DICTIONARY 698 (5th ed. 1979).
- 33 -
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demonstrating a source truly independent from both the tainted evidence and
the police or investigative team which engaged in the misconduct.” Id. at 195
(citation and original quotation marks omitted); see also Commonwealth v.
Foy, 248 A.3d 485, at *4 (Pa. Super. filed Jan. 15, 2021) (unpublished
memorandum) (stating, the inevitable discovery doctrine “does not apply if
the [police] officers who would have allegedly inevitably discovered the
evidence were the same [police] officers who obtained it through improper
actions”). Simply stated, the inevitable discovery doctrine requires a showing
of a truly independent, lawful path to discovery of the evidence that was
actually undertaken.
In the case sub judice, after informing Appellant that he was requesting
a narcotics canine to the scene, Officer Gardner considered Appellant to be
“detained” at this point.17 N.T., 10/14/19, at 21 (indicating that Appellant
would have to wait there until the narcotics canine arrived and was not free
to leave). Appellant then provided voluntary consent to search his vehicle,
and upon doing do, Officer Gardner discovered small black rubber bands,
which he described as “heroin packaging bands” based upon his narcotics
investigation experience. Id. at 11, 22. When asked about the rubber bands,
Appellant informed Officer Gardner that the bands were for use in his hair.
____________________________________________
17 Because Officer Gardner only further detained Appellant as part of an
on-going investigatory detention and did not arrest Appellant, it may be
inferred, and the record supports, that Officer Gardner did not have probable
cause to arrest Appellant at this point in time.
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Id. at 12. Officer Gardner remarked that Appellant did not have hair on which
to use the bands and stated that Appellant did not provide an answer to Officer
Gardner’s observation. Id. The Commonwealth presented no further
evidence that Officer Gardner discovered additional items during his search of
the vehicle that suggested Appellant was engaged in narcotics trafficking.
Officer Gardner then conducted a search of Appellant’s person, discovering
two cellular telephones and $95.00 in United States currency on his person.
Id. Officer Gardner previously observed these seized items when Appellant,
while reaching into his pockets, displayed the second cellular telephone and
an unknown amount of currency to Officer Gardner voluntarily. Id. at 7.
Approximately 10 to 20 minutes after the search of Appellant’s person, a
canine search of the vehicle occurred and a prescription bottle having a label
bearing Appellant’s name was discovered. Id. at 12-13. The prescription
bottle contained 50 oxycodone tablets, having different insignias and stamps
on them. Id. at 13, 16. Appellant was then taken into police custody. Id. at
14 (stating, Appellant “was taken into custody and transported to City Hall to
be searched further”).
Appellant’s cellular telephones and currency were admissible pursuant
to the inevitable discovery doctrine. Appellant consented to a search of his
vehicle, and we have rejected his challenge to the voluntary nature of his
consent. As such, law enforcement possessed valid grounds to search
Appellant’s vehicle and discover the prescription bottle. This discovery gave
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Officer Gardner sufficient probable cause to formally arrest Appellant. 18 As
such, Officer Gardner was permitted to conduct a search of Appellant’s person
incident to this arrest. Under these circumstances, as in Van Winkle, law
enforcement officials would have ultimately and inevitably discovered the
cellular telephones and currency on Appellant’s person and lawfully seized
these items through procedures independent from and untainted by the prior
unsupported search of Appellant’s person. See Van Winkle, 880 A.2d at
1285 (holding that, the inevitable discovery exception allowed admission of
currency discovered on Van Winkle’s person where contraband was validly
seized during an ensuing, and constitutionally justified, vehicle search and
discovery of the contraband would have led to a search of Van Winkel’s person
incident to his arrest); see also Perel, 107 A.3d at 196. Therefore, the trial
court did not err in denying Appellant’s request to suppress these items.
Search Warrant for Cellular Telephone
____________________________________________
18
Probable cause is made out when the facts and circumstances
which are within the knowledge of the officer at the time of the
stop, and of which he has reasonably trustworthy information, are
sufficient to warrant a man of reasonable caution in the belief that
the suspect has committed or is committing a crime. The question
we ask is not whether the officer's belief was correct or more likely
true than false. Rather, we require only a probability, and not a
prima facie showing, of criminal activity. In determining whether
probable cause exists, we apply a totality of the circumstances
test.
Commonwealth v. Calabrese, 184 A.3d 164, 166-167 (Pa. Super. 2018),
citing Commonwealth v. Martin, 101 A.3d 706, 721 (Pa. 2014).
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Finally, Appellant contends that the seizure of information obtained from
a search of his cellular “flip” telephone pursuant to a warrant was illegal
because the search warrant was invalid.19 Appellant’s Brief at 19-20.
Appellant asserts that “the items to be searched for and seized [from his
cellular telephone] are not identified [in the search warrant] with sufficient
specificity.” Id. at 20. Appellant argues that,
[t]he problem with the description of the items to be seized in the
case at bar is that [the search warrant] allows the searching
[police] officer to rummage through Appellant’s data on his
[cellular telephone] between October 14, 2017[,] and October 21,
2017[,] to determine what conversations or other information
relate to violations of the Controlled Substance, Drug, Device and
Cosmetic Act or the Pennsylvania Crimes Code[ (specifically,
criminal use of a communication facility, 18 Pa.C.S.A. § 7512(a))].
Appellant’s Brief at 20.
In denying Appellant’s omnibus motion on this ground, the trial court
explained,
The search warrant at issue lists the items to be searched as: "Any
electronically stored information and records, including all call
logs, [SMS] and [MMS] messages, emails, contacts list,
photographs, videos, or any other electronic storage devices
contained within the [black “flip” cellular tele]phone. In relation
to 10/14/17 to 10/21/17 as described below[.] CG#74."
Commonwealth's Exhibit [] 1[,] 10/26/17, at 4. The portion
[handwritten] stating “[i]n relation to 10/14/[17] to 10/21/17 as
____________________________________________
19 To the extent that Appellant argues that the evidence seized from
Appellant’s cellular telephone was illegal because the search of his cellular
telephone was the product of: (1) an illegal investigative detention; (2) an
illegal search of his vehicle; and (3) the illegal seizure of the prescription
bottle, we find this argument moot for the reasons discussed supra. See
Appellant’s Brief at 19.
- 37 -
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described below[.] CG#74" refers to the items to be seized, which
states "[a]ny and all information relating to violations of the
Controlled Substance, Drug Device and Cosmetic Act and [the
Pennsylvania Crimes Code] (criminal use of a communication
facility[, 18 Pa.C.S.A. § 7512]) from 10/14/2017 to 10/21/2017."
The accompanying affidavit is clear that based on [Officer]
Gardner's observations and evidence seized[,] the search warrant
is for believed narcotics trafficking. The items to be searched and
seized are [specifically limited] to only information related to the
"violation of the Controlled Substances, Drug, Device and
Cosmetic Act and [the Pennsylvania Crimes Code] (criminal use of
a communication facility[, 18 Pa.C.S.A. § 7512])." This specificity
is sufficient and narrowly tailored. Additionally, the search
warrant is contained within a distinct set of dates to keep [police]
officers from conducting a fishing expedition. Therefore [the trial
court] finds the search warrant was appropriately specific in what
information could be looked at, what information was being looked
for, and what information could be subsequently seized.
Trial Court Opinion, 12/31/19, at 14-15 (caselaw citations and extraneous
capitalization omitted).
Recently, our Supreme Court reiterated that,
[the Pennsylvania] Constitution requires that all warrants,
including warrants to search a digital space, [such as a cellular
telephone,] (1) describe the place to be searched and the items
to be seized with specificity and (2) be supported by probable
cause to believe that the items sought will provide evidence of a
crime.
Commonwealth v. Green, 265 A.3d 541, 553 (Pa. 2021).20 As the Green
Court held, a warrant for the search of a cellular telephone must describe
____________________________________________
20Appellant challenges only the first requirement for a valid warrant to search
a cellular telephone. See Appellant’s Brief at 19-20. Therefore, we limit our
review to whether the trial court erred in finding that the search warrant
described the place to be searched and the items to be seized with specificity.
Green, 265 A.3d at 553.
- 38 -
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nearly as may be, i.e., as specifically and as reasonably possible, those items
to be searched. Id.; see also PA. CONST. art. I, § 8 (stating, “no warrant to
search any place or to seize any person or things shall issue without describing
them as nearly as may be, nor without probable cause, supported by oath or
affirmation subscribed to by the affiant”). It is well-established that,
in any assessment of the validity of the description contained in a
warrant, a court must initially determine for what items probable
cause existed. The sufficiency of the description must then be
measured against those items for which there was probable cause.
Any unreasonable discrepancy between the items for which there
was probable cause and the description in the warrant requires
suppression. An unreasonable discrepancy reveals that the
description was not as specific as was reasonably possible.
Commonwealth v. Grossman, 555 A.2d 896, 900 (Pa. 1989).
In the case sub judice, Appellant does not challenge the search of his
cellular telephone on the grounds that Officer Gardner lacked probable cause
to believe Appellant utilized his cellular telephone for the purpose of trafficking
narcotics.21 Rather, Appellant asserts that the warrant did not specifically
detail what information could be obtained from a search of his cellular
telephone based on the suspicion that Appellant was using this cellular
telephone for purpose of trafficking narcotics. The search warrant specifically
____________________________________________
21 In addition to the numerous factors supporting a belief that Appellant was
trafficking narcotics, as discussed supra, Officer Gardner testified that, based
upon his experience and training in narcotics interdiction, a narcotics trafficker
commonly possessed two cellular telephones, one for personal use and one
for use in trafficking narcotics. N.T., 10/14/19, at 9. Appellant was found to
be in possession of two cellular telephones at the time of his arrest.
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identified that the search was being requested for a black “flip” cellular
telephone found on Appellant’s person on October 21, 2017. The search
warrant described that the search was for all call logs, SMS and MMS
messages, emails, contract lists, photographs, videos, and any other
information stored on the cellular telephone that may be related to a violation
of the Controlled Substance, Drug, Device, and Cosmetic Act or 18 Pa.C.S.A.
§ 7512. The search was specifically limited to obtaining the aforementioned
evidence for the eight days prior to and including the date of the incident,
namely October 14, 2017, through October 21, 2017. We concur with the
trial court, and the record supports, that the description of the item to be
searched and the possible information to be seized was sufficiently specific
and narrowly tailored. See Grossman, 555 A.2d at 900; see also Green,
265 A.3d at 553.
For the reasons set forth herein, we discern no error of law or abuse of
discretion in the trial court order denying Appellant’s omnibus motion to
suppress evidence uncovered during a search of Appellant’s person and
vehicle.
Judgment of sentence affirmed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/15/2022
- 41 - | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483889/ | J-A19031-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
ALOIS AARON KUDLACH :
:
Appellant : No. 340 MDA 2021
Appeal from the Judgment of Sentence Entered August 20, 2016
In the Court of Common Pleas of Centre County Criminal Division at
No(s): CP-14-CR-0001396-2015
BEFORE: BOWES, J., KING, J., and STEVENS, P.J.E.*
MEMORANDUM BY STEVENS, P.J.E.: FILED: NOVEMBER 15, 2022
Alois Aaron Kudlach appeals from the August 20, 2016 aggregate
judgment of sentence of life imprisonment imposed after a jury found him
guilty of first-degree murder, third-degree murder, aggravated assault,
interception, disclosure or use of wire, electronic or oral communications
(“IDUC”), and possessing instruments of crime (“PIC”).1 After careful review,
we affirm the judgment of sentence.
The relevant facts and procedural history of this case, as gleaned from
the certified record, are as follows: On the morning of August 30, 2015,
____________________________________________
* Former Justice specially assigned to the Superior Court.
1 18 Pa.C.S.A. §§ 2502(a), 2502(c), 2702(a)(1), 5703(1), and 907(B),
respectively.
J-A19031-22
Appellant fatally shot his wife, Nuria Kudlach (“Decedent”), three times in the
kitchen of their residence, following a lengthy argument. The parties had an
extensive history of marital discord and were both considering a divorce. The
parties’ then-minor son was in an adjacent room of the residence at the time
of the shooting.
Appellant was subsequently arrested in connection with this incident and
proceeded to a jury trial on August 15, 2016. At trial, Commonwealth
presented testimony from 30 witnesses, and Appellant presented testimony
from four witnesses. Testimony from several expert witnesses, including
forensic pathologists for both parties, was presented to the jury, and over 250
exhibits were admitted into evidence. Appellant asserted during his testimony
that Decedent had a history of violent tendencies and that on the morning in
question, he acted in self-defense after Decedent attempted to stab him with
a butcher knife.
Following a six-day jury trial, Appellant was found guilty of first-degree
murder, third-degree murder, aggravated assault, IDUC, and PIC. On August
20, 2016, the trial court sentenced Appellant to an aggregate term of life
imprisonment.
On September 19, 2016, Appellant filed a timely notice of appeal.
Following an extension, Appellant filed a concise statement of errors
complained of on appeal, in accordance with Pa.R.A.P. 1925(b), on December
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J-A19031-22
14, 2016. On January 3, 2017, the trial court filed a Rule 1925(a) opinion,
addressing all 11 issues raised by Appellant therein.
Thereafter, on May 24, 2017, a panel of this Court dismissed Appellant’s
appeal for failure to file an appellate brief. Appellant subsequently filed a
PCRA2 petition, requesting the reinstatement of his direct appeal rights. On
February 24, 2021, Appellant’s direct appeal rights were reinstated nunc pro
tunc.
On March 16, 2021, Appellant filed a timely notice of appeal. On March
24, 2021, the trial court ordered Appellant to file a concise statement in
accordance with Rule 1925(b). Following an extension, Appellant filed a timely
concise statement on May 4, 2021. On June 16, 2021, the trial court filed a
comprehensive Rule 1925(a) opinion.
Appellant raises the following issues for our review:
I. WAS THE EVIDENCE INSUFFICIENT TO
SUSTAIN THE VERDICT?
II. DID THE TRIAL COURT COMMIT REVERSIBLE
ERROR IN DENYING THE DEFENSE MOTION FOR
A CONTINUANCE?
III. DID THE TRIAL COURT COMMIT REVERSIBLE
ERROR BY PRECLUDING THE DEFENSE FROM
INTRODUCING RELEVANT MENTAL HEALTH
ISSUES OF THE DECEDENT?
IV. DID THE TRIAL COURT COMMIT REVERSIBLE
ERROR BY PRECLUDING [] APPELLANT FROM
TESTIFYING TO INCIDENTS OR STATEMENTS
____________________________________________
2 Post-Conviction Relief Act, 42 Pa.C.S.A. §§ 9541-9546.
-3-
J-A19031-22
MADE BY THE DECEDENT THAT FURTHER
CORROBORATES HIS KNOWLEDGE OF THE
DECEDENT’S ESCALATING VIOLENT
TENDANCIES REGARDING APPELLANT AND
ESTABLISHING THE DECEDENT AS THE
AGGRESSOR?
V. DID THE TRIAL COURT COMMIT REVERSIBLE
ERROR BY PERMITTING THE COMMONWEALTH
TO ADMIT EVIDENCE OF COMPUTER-
GENERATED ANIMATION?
VI. WHETHER [] APPELLANT WAS DEPRIVED OF A
FAIR TRIAL BASED UPON THE PROSECUTOR’S
REPEATED ACTS OF PROSECUTORIAL
MISCONDUCT?
VII. DID THE TRIAL COURT COMMIT REVERSIBLE
ERROR BY INSTRUCTING THE JURY WITH THE
“CONSCIOUSNESS OF GUILT” CHARGE?
VIII. DID THE TRIAL COURT COMMIT REVERSIBLE
ERROR BY ALLOWING HEARSAY FROM THE
DECEDENT TO BE INTRODUCED IN THE
COMMONWEALTH'S CASE-IN-CHIEF?
IX. DID THE TRIAL COURT COMMIT REVERSIBLE
ERROR BY PERMITTING DETECTIVE ALSTON TO
TESTIFY AS AN EXPERT WITHOUT HE BEING
QUALIFIED AS AN EXPERT?
X. DID THE TRIAL COURT COMMIT REVERSIBLE
ERROR BY PRECLUDING THE DEFENSE’S
FORENSIC PATHOLOGY EXPERT TO TESTIFY TO
THE SEQUENCE OF THE DISCHARGE OF THE
FIREARM IN FAIR RESPONSE TO THE
COMMONWEALTH’S EXPERT TESTIMONY?
Appellant’s brief at 9-11.
I. Sufficiency of the Evidence
-4-
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Appellant first argues that there was insufficient evidence to sustain his
conviction for first-degree murder. Id. at 20-21. In support of this
contention, Appellant contends that the Commonwealth failed “to prove that
he was not acting out of self-defense when he shot the [D]ecedent[;]” and
that he “possessed the requisite specific intent to kill.” Id. at 23, 28.
In reviewing the sufficiency of the evidence, we must
determine whether the evidence admitted at trial and
all reasonable inferences drawn therefrom, viewed in
the light most favorable to the Commonwealth as
verdict winner, is sufficient to prove every element of
the offense beyond a reasonable doubt. As an
appellate court, we may not re-weigh the evidence
and substitute our judgment for that of the fact-
finder. Any question of doubt is for the fact-finder
unless the evidence is so weak and inconclusive that
as a matter of law no probability of fact can be drawn
from the combined circumstances.
Commonwealth v. Thomas, 988 A.2d 669, 670 (Pa.Super. 2009) (citations
omitted), appeal denied, 4 A.3d 1054 (Pa. 2010).
II. Motion for Continuance
Appellant next argues that the trial court abused its discretion in denying
his August 8, 2016 motion for continuance, seven days before the
commencement of trial. Appellant’s brief at 30.
The grant or denial of a motion for a continuance is
within the sound discretion of the trial court and will
be reversed only upon a showing of an abuse of
discretion. As we have consistently stated, an abuse
of discretion is not merely an error of judgment.
Rather, discretion is abused when the law is
overridden or misapplied, or the judgment exercised
is manifestly unreasonable, or the result of partiality,
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prejudice, bias, or ill-will, as shown by the evidence or
the record[.]
Commonwealth v. Norton, 144 A.3d 139, 143 (Pa.Super. 2016) (citation
omitted).
III-IV. Admissibility of Evidence
Appellant next argues that the trial court abused its discretion “by
precluding [him] from introducing relevant mental health issues of Decedent”
into evidence. Appellant’s brief at 34. Appellant also contends that the trial
court erred by precluding him from testifying to incidents or statements which
would have “corroborat[ed] his knowledge of Decedent’s escalating violent
tendencies….” Id. at 39.
“[T]he admission of evidence is within the sound discretion of the trial
court and will be reversed only upon a showing that the trial court clearly
abused its discretion.” Commonwealth v. Fransen, 42 A.3d 1100, 1106
(Pa.Super. 2012) (citation omitted), appeal denied, 76 A.3d 538 (Pa. 2013).
The threshold inquiry with admission of evidence is
whether the evidence is relevant. Evidence is relevant
if it logically tends to establish a material fact in the
case, tends to make a fact at issue more or less
probable, or supports a reasonable inference or
presumption regarding the existence of a material
fact. In addition, evidence is only admissible where
the probative value of the evidence outweighs its
prejudicial impact.
Commonwealth v. Antidormi, 84 A.3d 736, 750 (Pa.Super. 2014) (citations
and internal quotation marks omitted), appeal denied, 95 A.3d 275 (Pa.
2014); see also Pa.R.E. 401(a), (b).
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V. Demonstrative Evidence
Appellant next argues that the trial court abused its discretion in
permitting the Commonwealth to introduce a Computer-Generated-Animation
(“CGA”) as demonstrative evidence. Appellant’s brief at 42.
Our Supreme Court has long recognized that,
a CGA should be deemed admissible as demonstrative
evidence if it: (1) is properly authenticated pursuant
to Pa.R.E. 901 as a fair and accurate representation
of the evidence it purports to portray; (2) is relevant
pursuant to Pa.R.E. 401 and 402; and (3) has a
probative value that is not outweighed by the danger
of unfair prejudice pursuant to Pa.R.E. 403. However,
new factors must be considered when evaluating a
CGA. In particular, in determining the admissibility of
a CGA the courts must address the additional dangers
and benefits this particular type of demonstrative
evidence presents as compared with more traditional
demonstrative evidence. As a result, the court must,
as discussed infra, issue limiting instructions to the
jury explaining the nature of the specific CGA.
Commonwealth v. Serge, 896 A.2d 1170, 1178–1179 (Pa. 2006) (footnote
omitted), cert. denied, 549 U.S. 920 (2006).
VI. Prosecutorial Misconduct
Appellant next argues that “the Prosecutor committed repeated acts of
prosecutorial misconduct during cross-examination of [Appellant] which
deprived [him] of a fair trial[.]” Appellant’s brief at 48.
“Our standard of review for a claim of prosecutorial misconduct is limited
to whether the trial court abused its discretion.” Commonwealth v. Harris,
884 A.2d 920, 927 (Pa.Super. 2005) (citations omitted), appeal denied, 928
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A.2d 1289 (Pa. 2007). Not every unwise remark on a prosecutor’s part,
however, constitutes reversible error. Id. “Prosecutorial misconduct occurs
when the effect of the prosecutor’s comments would be to prejudice the trier
of fact, forming in its mind fixed bias and hostility toward the defendant so
that it could not weigh the evidence objectively and render a true verdict.”
Commonwealth v. Duffy, 832 A.2d 1132, 1137 (Pa.Super. 2003), appeal
denied, 845 A.2d 816 (Pa. 2004).
Counsel[’s] remarks to the jury may contain fair
deductions and legitimate inferences from the
evidence presented during the testimony. The
prosecutor may always argue to the jury that the
evidence establishes the defendant’s guilt, although a
prosecutor may not offer his personal opinion as to
the guilt of the accused either in argument or in
testimony from the witness stand. Nor may he or she
express a personal belief and opinion as to the truth
or falsity of evidence of defendant’s guilt, including
the credibility of a witness.
Commonwealth v. Chmiel, 777 A.2d 459, 466 (Pa.Super. 2001), appeal
denied, 788 A.2d 372 (Pa. 2001), cert. denied, 535 U.S. 1059 (2002).
VII. Jury Instructions
Appellant next argues that “the trial court erred in instructing the jury
with the ‘consciousness of guilt’ instruction over [his] objection as the
proffered evidence does not rise to the level of evidence contemplated by the
standard jury instruction because … it is not evidence reflective of
consciousness of guilt.” Appellant’s brief at 52.
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“[A] trial court has broad discretion in phrasing its instructions, and may
choose its own wording so long as the law is clearly, adequately, and
accurately presented to the jury for its consideration.” Commonwealth v.
Charleston, 94 A.3d 1012, 1021 (Pa.Super. 2014), appeal denied, 104 A.3d
523 (Pa. 2014) (citation omitted). “A jury charge will be deemed erroneous
only if the charge as a whole is inadequate, not clear or has a tendency to
mislead or confuse, rather than clarify, a material issue.” Commonwealth
v. Sandusky, 77 A.3d 663, 667 (Pa.Super. 2013).
VIII. Hearsay Testimony
Appellant next argues that the trial court abused its discretion in
allowing the Commonwealth to introduce hearsay testimony from Decedent
based upon the theory that they were admitted to demonstrate her state of
mind during the marriage. Appellant’s brief at 55.
Hearsay is defined as “a statement that the declarant does not make
while testifying at the current trial or hearing[, offered] in evidence to prove
the truth of the matter asserted in the statement.” Pa.R.E. 801(c)
(numeration omitted). Hearsay is generally inadmissible at trial unless it falls
into an exception to the hearsay rule. See Pa.R.E. 802. Rule 803 contains
several recognized exceptions to the hearsay rule, including the state of mind
exception:
The following are not excluded by the rule against
hearsay, regardless of whether the declarant is
available as a witness:
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....
(3) Then-Existing Mental, Emotional, or
Physical Condition. A statement of the
declarant’s then-existing state of mind
(such as motive, intent or plan) or emotional,
sensory, or physical condition (such as mental
feeling, pain, or bodily health), but not including
a statement of memory or belief to prove the
fact remembered or believed unless it relates to
the validity or terms of the declarant’s will.
Pa.R.E. 803(3) (emphasis added).
“Where the declarant’s out-of-court statements demonstrate h[er] state
of mind, are made in a natural manner, and are material and relevant, they
are admissible pursuant to the exception.” Commonwealth v. Johnson,
107 A.3d 52, 84 (Pa. 2014) (citations and emphasis omitted), cert.
denied, U.S. , 136 S.Ct. 43 (2015).
IX-X. Expert Testimony and Opinion Testimony by Lay Witnesses
Appellant next argues that the trial court abused its discretion in
allowing Detective John Aston to testify as an expert “without qualifying [him]
as an expert in the field of ballistics[.]” Appellant’s brief at 60. Appellant
further argues that “the trial court erred in precluding [Appellant’s] forensic
pathology expert[, Dr. Cyril Wecht,] to testify to the sequence of the discharge
of the firearm in fair response to the Commonwealth’s expert testimony[.]”
Id. at 63.
Expert testimony is admissible if it concerns a subject beyond the
knowledge, information, or skill possessed by the average layperson, as
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phenomena and situations that are matters of common knowledge may not
be the subject of expert testimony. Pa.R.E. 702.
[I]n cases involving the admission of expert testimony
. . . the admission of expert testimony is a matter left
largely to the discretion of the trial court, and its
rulings thereon will not be reversed absent an abuse
of discretion. An expert’s testimony is admissible
when it is based on facts of record and will not cause
confusion or prejudice.
Commonwealth v. Huggins, 68 A.3d 962, 966 (Pa.Super. 2013) (citation
omitted), appeal denied, 80 A.3d 775 (2013).
Rule 701, on the contrary, provides as follows:
If the witness is not testifying as an expert, the
witness' testimony in the form of opinions or
inferences is limited to those opinions or inferences
which are rationally based on the perception of the
witness, helpful to a clear understanding of the
witness' testimony or the determination of a fact in
issue, and not based on scientific, technical, or other
specialized knowledge within the scope of Rule 702.
Pa.R.E. 701. Thus, “Rule 701 permits a layperson to testify in the form of an
opinion, however, such testimony must be rationally based on that witness'
perceptions.” Huggins, 68 A.3d at 967.
Following a thorough review of the record, including the briefs of the
parties, the applicable law, and the well-reasoned opinions of the trial court,
it is our determination that Appellant’s claims warrant no relief. In two
separate opinions spanning a total of 26 pages in length, the trial court
comprehensively discussed each of Appellant’s ten allegations of error and
concluded that they are without merit. We find that the trial court’s
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conclusions are supported by competent evidence and are clearly free of legal
error.
Specifically, we agree with the trial court that the Commonwealth met
its burden to disprove Appellant’s assertion that he acted in justifiable self-
defense, as his claim that Decedent was armed with a butcher knife
immediately before the killing lacked merit. On the contrary, the
Commonwealth’s evidence demonstrated that the third, fatal shot to Decedent
struck her in the face as she cowered near the floor. The trial court also
properly noted that Appellant’s use of a deadly weapon on a vital part of
Decedent’s body was sufficient to establish a specific intent to kill and malice.
Trial Court Rule 1925(a) Opinion, 6/16/21 (“2021 Opinion”) at 2-4.
We also agree that the trial court’s denial of Appellant’s motion for
continuance, for additional time to review the Commonwealth’s blood stain
pattern analysis, was not improper. The trial court properly notes that
Appellant failed to provide a justifiable request for the delay, as he was in
possession of the evidence underlying the Commonwealth’s blood stain
analysis for 10 months preceding trial. Trial Court Rule 1925(a) Opinion,
1/3/17 (“2017 Opinion”) at 2-4.
We further agree that Appellant’s claim that the trial court erred in
precluding references to Decedent’s mental health at trial is baseless. The
record reflects that Appellant did, in fact, testify with regard to Decedent’s
suicide attempt and hospitalization, and thus, the Commonwealth withdrew
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J-A19031-22
its objection to the introduction of references to Decedent’s mental health.
See id. at 11-14; 2021 Opinion at 10.
We also agree with the trial court that there is no merit to Appellant’s
claim that it erred in precluding him from testifying as to incidents which would
have corroborated his knowledge of Decedent’s escalating violent tendencies.
On the contrary, the record establishes that this testimony was largely
permitted at trial. 2021 Opinion at 7.
We further agree with the trial court that the admission of a CGA as
demonstrative evidence was proper, as Appellant was not unduly hampered
in his ability to challenge the authenticity of the CGA evidence at the in limine
hearing; and the probative value of this evidence outweighed its prejudicial
impact. Id. at 4-6.
We next agree with the trial court that the prosecutor’s argumentative
statements and behavior during her cross-examination of Appellant, when
taken as a whole, did not have the effect of prejudicing the jury. Id. at 7-8.
We also agree with the trial court that, contrary to Appellant’s objection,
its “consciousness of guilt” instruction to the jury was properly supported by
the evidence presented at trial. Id. at 9-10.
We further agree with the trial court that Appellant’s hearsay challenge
to Decedent’s statements that she felt “ganged up on” by Appellant and their
son, and that she “had the divorce talk again with [her] husband,” were
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properly admitted to demonstrate her mental state during the marriage and
her view of the relationship. 2017 Opinion at 10-11.
We next agree with the trial court that Appellant’s objection to Detective
Aston being offered as a “firearms or weapons expert” is meritless, as the
record reflects that his testimony that “a shell casing ejected from a firearm
will bounce when it hits a linoleum floor” constituted a mere lay opinion, and
not expert testimony. Id. at 5, 7-9.
Lastly, we find that the trial court properly precluded Appellant’s forensic
pathology expert from testifying as to the sequence of the shooting, because
it was beyond the scope of his expert report. Id. at 5, 9-10.
Accordingly, we adopt those relevant portions of the trial court’s
comprehensive January 3, 2017 and June 16, 2021 opinions as our own for
purposes of this appellate review.
Judgment of sentence affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/15/2022
- 14 -
Parks Miller
Muir 1Y
III
IN I
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1 11 I
9 oMUE90 ccaarto mieoe
IN THE COURT OF COMMON PLEAS OF CENTRE COUNTY, PENNSYLVANIA
CRIMINAL ACTION - LAW
COMMONWEALTH OF PENNSYLVANIA
V. No. CP-14-CR-1396-2015
ALOIS A. KUDLACH
Attorneyfor Commonwealth: Stacy Parks Miller,.,Fsquire
Attorney for Defendant: Karen G. Muir, Esquire
OPINION IN RESPONSE TO MATTERS COMPLAINED OF ON APPEAL
Presently before the Court is an appeal filed by Alois A. Kudlach ("Appellant").
Appellant filed aStatement of Matters Complained of on Appeal (" Statement' 3)
-on December 14,
2016. Appellant's Statement contains the following eleven ( 11) issues:
1. Whether the lower court erred in denying the only continuance request by the
Appellant after the Commonwealth continued the case for almost ayear and
continued to provide discovery days before the trial began in aFirst Degree
Murder case.
2. Whether the lower court erred in granting the Commonwealth's Motion to Compel
and Ordering Appellant to provide copies of Appellant's expert reports prior to the
close of the Commonwealth's case-in-chief.
3. Whether the lower court properly permitted the Commonwealth's pathologist to
testify as aforensic pathologist and offer opinions consistent with forensic
pathology.
4. Whether the lower court erred in denying Appellant's expert to testify in response
to the Commonwealth's expert on the basis that the proposed testimony was
beyond the scope of the Appellant's expert report.
5. Whether the lower court erred in allowing hearsay from the victim to be
introduced during the Commonwealth's case-in-chief.
6. Whether the lower erred in granting the Commonwealth's Motion in Limine to
exclude references to incidents regarding the victim's mental health.
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7. Whether the lower court erred in ruling that the audio-taped interviews and
conversations were not played in their entirety during the Commonwealth's case-
in-chief, but rather directed the Appellant to play the rest of the audiotapes.
8. Whether the lower court erred in not allowing Appellant to testify as to exhibits
that had been identified by Commonwealth witnesses during the Commonwealth's
case-in-chief.
9. Whether the lower court erred in ruling that the Commonwealth did not have to
introduce the entire Facebook conversations during the Commonwealth case-in-
chief, but rather, directed that the Appellant could inquire as to the complete
conversations.
10. Whether the lower court erred in allowing Appellant's civil attorney to testify
regarding matters that the civil attorney would only have known through attorney-
client privilege.
11. Whether the lower court erred in allowing apolice officer to testify as an expert in
ballistics without prior notice to Appellant and then denying Appellant's request
for acontinuance to obtain an expert to refute the Commonwealth's witness.
The Court disagrees with Appellant's Statement for the reasons set forth below.
DISCUSSION
Due to the interrelated nature of several of the issues in Appellant's Statement, the Court
has arranged said issues in amanner which will aid in its analysis.
I. Issues Regarding Discovery
a. Appellant's Continuance Request
Pennsylvania Rule of Criminal Procedure 573 provides, in pertinent part, as follows:
B) Disclosure by the Commonwealth.
1) Mandatory. In all court cases, on request by the defendant, and subject to any
protective order which the Commonwealth might obtain under this rule, the
Commonwealth shall disclose to the defendant's attorney all of the following
requested items or information, provided they are material to the instant case.
The Commonwealth shall, when applicable, permit the defendant's attorney to
inspect and copy or photograph such items.
e) any results or reports of scientific tests, expert opinions, and
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written or recorded reports of polygraph examinations or
other physical or mental examinations of the defendant that
are within the possession or control of the attorney for the
Commonwealth;
(D) Continuing Duty to Disclose. If, prior to or during trial, either party discovers
additional evidence or material previously requested or ordered to be disclosed by
it, which is subject to discovery or inspection under this rule, or the identity of an
additional witness or witnesses, such party shall promptly notify the opposing
party or the court of the additional evidence, material, or witness.
Pa.R.Crim.P. 573(B)(1)(e), (D). The Commonwealth does not violate Rule 573 when it fails to
disclose to the defense evidence that it does not possess and of which it is unaware.
Commonwealth v. Boczkowski, 846 A.2d 75, 97 (Pa. 2004) (citing Commonwealth v. Gribble,
703 A.2d 426 (Pa. 1997)). When the evidence is exclusively in the custody of police, possession
is not attributed to the Commonwealth for purposes of Rule 573. Commonwealth v. Collins. 957
A.2d 237, 253-54 (Pa. 2008) (trial court did not abuse its discretion in failing to preclude
inculpatory lab test results not disclosed until second day of trial, where Commonwealth
disclosed evidence on day it obtained it and there was no evidence that it had results earlier);
Commonwealth v. Burke, 781 A.2d 1136, 1142 (Pa. 2001).
The grant or denial of amotion for acontinuance is within the sound discretion of the
trial court and will be reversed only upon ashowing of an abuse of discretion. Commonwealth v.
Antidormi, 84 A.3d 736, 745-46 (Pa. Super. 2014), appeal denied, 95 A.3d 275 (Pa. 2014);
Commonwealth v. Boxlev, 948 A.2d 742, 746 (Pa. 2008). An abuse of discretion is not merely
an error of judgment; rather discretion is abused when the law is overridden or misapplied, or the
judgment exercised is manifestly unreasonable, or the result of partiality, prejudice, bias, or ill
will, as shown by the evidence or the record. Id. Moreover, "[a] bald allegation of an insufficient
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amount of time to prepare will not provide abasis for reversal of the denial of acontinuance
motion." Commonwealth v. Ross, 57 A.3d 85, 91 (Pa. Super. 2012). An appellant must be able
to show specifically in what manner he was unable to prepare for his defense or how he would
have prepared differently had he been given more time, because adenial of amotion for
continuance will not be reversed in the absence of prejudice.'" Id.; see also Commonwealth v.
Sandusky, 77 A.3d 663, 672 (Pa. Super. 2013) ( court's denial of defense continuance requests
was not an abuse of discretion where over twelve thousand ( 12,000) pages of supplemental
discovery were received by defense counsel through the four (4) months preceding trial and
continuing throughout trial).
In the case at bar, Appellant contends "the lower court erred in denying the only
continuance request by the Appellant after the Commonwealth continued the case for almost a
year and continued to provide discovery days before the trial began in aFirst Degree Murder
case."
The Court denied Appellant's August 8, 2016 Motion to Continue Trial due to the
grounds for the motion becoming moot by the Commonwealth providing Appellant's counsel
with acopy of the blood stain pattern analysis. See 8/9/16 Trial Court Order. Appellant filed a
subsequent Motion to Continue Trial on August 10, 2016. In said motion, Appellant contended a
continuance was necessary because he needed additional time to review the blood stain pattern
analysis, to have an expert review the blood stain pattern analysis, and to review the
approximately one hundred ( 100) pages of discovery disclosed to him between August 4, 2016
and August 9, 2016. See 8/10/16 Motion to Continue Trial. The Court denied Appellant's August
10, 2016 Motion to Continue Trial due to Appellant having been in possession of the evidence
underlying the Commonwealth's blood stain pattern analysis during the ten ( 10) months
preceding trial and Appellant's choice not to pursue the avenue of having ablood stain pattern
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analysis done during that time. Further, the Court found the disclosure of one hundred ( 100)
pages of supplemental discovery five (5) days before the start of trial is not avoluminous
disclosure which would cause prejudice to Appellant. Therefore, the Court did not err in denying
Appellant's continuance requests.
b. Commonwealth's Motion to Compel Appellant's Expert Reports
Pennsylvania Rule of Criminal Procedure 573(C)(2) states the following in regards to
pretrial disclosure of adefendant's expert report:
If an expert whom the defendant intends to call in any proceeding has not
prepared areport of examination or tests, the court, upon motion, may order that
the expert-prepare and the defendant disclose areport stating the subject matter
on which the expert is expected to testify; the substance of the facts to which the
expert is expected to testify; and asummary of the expert's opinions and the
grounds for each opinion.
Pa.R.Crim.P. 573(C)(2) (emphasis added).
In the case at bar, Appellant contends "the lower court erred in granting the
Commonwealth's Motion to Compel and Ordering Appellant to provide copies of Appellant's
expert reports prior to the close of the Commonwealth's case- in-chief."
On its face, Rule 573(C)(2) is clear that if amotion to compel an expert report is filed by
the Commonwealth, the court may order adefendant's expert to prepare and disclose an expert
report to the Commonwealth. Therefore, the Court properly followed the procedure set forth in
Rule 573(C)(2) when it granted the Commonwealth's Motion to Compel the expert report of
Appellant's expert.
II. Issues Regarding Expert Testimonv
Pennsylvania Rule of Evidence 702 provides as follows:
A witness who is qualified as an expert by knowledge, skill, experience, training,
or education may testify in the form of an opinion or otherwise if:
a) the expert's scientific, technical, or other specialized knowledge is beyond
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that possessed by the average layperson;
b) the expert's scientific, technical, or other specialized knowledge will help
the trier of fact to understand the evidence or to determine afact in issue;
and
c) the expert's methodology is generally accepted in the relevant field.
Pa.R.E. 702.
a. Expert Testimony of Commonwealth's Pathologist
The admission of expert testimony is within the trial court's discretion and will not be
remanded, overruled, or disturbed absent aclear abuse of discretion. A.J.B. v. M.P.B., 945 A.2d
744, 749 (Pa. Super. 2008). The standard for qualification of an expert witness is aliberal one.
Rauch v. Mike—Maver, 783 A.2d 815 (Pa. Super. 2001). When determining whether awitness is
qualified as an expert, the court is to examine whether the witness has any reasonable pretension
to specialized knowledge on the subject under investigation. Miller v. Brass Rail Tavern, 664
A.2d 525 ( Pa. 1995). The court is to ascertain whether the proposed witness has sufficient skill,
knowledge, or experience in the field at issue as to make it appear that the opinion or inference
offered will probably aid the trier of fact in the search for truth. Bergman v. United Servs. Auto.
Ass'n, 742 A.2d 1101 (Pa. Super. 1999).
In the field of medicine, specialties sometimes overlap and apractitioner may be
knowledgeable in more than one field. RettQer v. UPMC Shadvside, 991 A.2d 915, 930 (Pa.
Super. 2010) (citing Bindschusz v. Phillivs, 771 A.2d 803 (Pa. Super. 2001)). Doctors will have
different qualifications and some doctors will be more qualified than others to provide evidence
about specific medical practices. Id. However, it is for the jury to determine the weight to be
given to expert testimony in light of the qualifications presented by the witness. Georp-e v. Ellis,
820 A.2d 815, 817 (Pa. Super. 2003).
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In the case at bar, Appellant contends the lower court improperly permitted the
Commonwealth's pathologist to testify as aforensic pathologist and offer opinions consistent
with forensic pathology.
The Commonwealth's forensic pathologist testified, as to his qualifications, as follows:
he has been apracticing pathologist for twenty-six ( 26) years (N.T. 8/16/16, p. 4); he practiced
forensic pathology (Id. at p. 5); he performs forensic autopsies on homicide victims (Id. at 6); he
performs approximately fifteen ( 15) forensic autopsies on homicide victims each year ( Id. at 8);
he has performed approximately fifteen hundred ( 1,500) to two thousand (2,000) autopsies
throughout his career (Id. at p. 11); he is board certified in anatomic pathology, clinical
pathology, and cytopathology (Id. at p. 10); he participates in continuing medical education
programs for forensic pathology (
Id. at p. 11); and he has been accepted and testified as an expert
in forensic pathology in six (6) Pennsylvania counties (Id. at pp. 11-12). Additionally, his
curriculum vitae delineates an appropriate educational background for his experience as a
forensic pathologist. See Commonwealth Ex. 229. After reviewing the aforementioned testimony
and curriculum vitae, the Court properly permitted the Commonwealth's forensic pathologist to
testify and offer opinions consistent with forensic pathology.
b. Police Officer Testimony Regarding the Operation of Firearms
Expert opinion testimony is proper only where formation of an opinion on asubject
requires knowledge, information, or skill beyond what is possessed by the ordinary juror.
Ovitskv v. Capital City Econ. Dev. Corp., 846 A.2d 124, 126 (Pa. Super.2004) (citing
Commonwealth v. Carter, 589 A.2d 1133, 1134 (Pa. Super. 1991)). Testimony is not admissible
as expert testimony where it is not something that is beyond the grasp of the average layperson.
Commonwealth v. Williams, 141 A.3d 440, 462-63 (Pa. 2016) (testimony amounting to the
conclusion that aperson thrown onto the sidewalk from afast moving van would likely sustain
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injuries and damage to their clothing is within the grasp of the average layperson); see also
Commonwealth v. Kennedv, — A.3d —, 2016 WL 7103942, * 7 (Pa. Super. Dec. 6, 2016) (court
did not abuse discretion in admitting lay opinion testimony from crime scene investigator
regarding bullet trajectory).
In the case at bar, Appellant contends "the lower court erred in allowing apolice officer
to testify as an expert in ballistics without prior notice to Appellant and then denying Appellant's
request for acontinuance to obtain an expert to refute the Commonwealth's witness."
At trial, the following exchange between the Commonwealth and adetective who was
present at the crime scene:
Q• Now, before Itake you any further, as adetective, you told us that you
have experience investigating homicides. But as apolice officer as well as
adetective, do you have training in firearms?
A. Yes.
Q. Are you able to use them safely and effectively?
A. Yes.
Q. Okay. And are you aware of how firearms generally work in the sense
that they dislodge acasing?
N.T. 8/15/16, pp. 224-25. Appellant's counsel objected to the detective being offered as " a
firearms instructor" or to the detective "giving any expert opinion with respect to weapons." Id.
at p. 225. The Commonwealth stated the detective would only testify as to "the fact that shell
casings can bounce when they hit alinoleum floor." Id. at p. 226. Appellant's counsel then
moved for acontinuance to retain an expert to "talk about how they [ shell casings] bounce, the
direction they bounce and so forth." Id. Said continuance was denied by the Court. Id.
The fact that ashell casing ejected from afirearm will bounce when it falls upon a
linoleum floor is not something that is beyond the grasp of the average layperson, and thus does
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not constitute expert testimony. See Williams, supra; Kennedy, supra. Therefore, the Court
properly admitted said testimony as lay testimony and did not err by denying Appellant's
counsel's continuance request.
c. Appellant's Expert's Testimony
Trial courts may preclude experts from testifying beyond the fair scope of their pre-trial
reports. Whitaker v. Frankford Hosv. of Citv of Philadelphia, 984 A.2d 512, 523 (Pa. Super.
2009); Brodowski v. Rvave, 885 A.2d 1045 (Pa. Super. 2005) (trial court properly precludes
expert testimony on an issue where opinions would be beyond the fair scope of the expert
report); I3licha v. Jacks, 864 A.2d 1214 (Pa. Super. 2004).
In the case at bar, Appellant contends the lower court erred in not allowing Appellant's
expert to testify in response to the Commonwealth's expert on the basis that the proposed
testimony was beyond the scope of the Appellant's expert's report.
At trial, the following exchange between Appellant's counsel and Appellant's expert took
place:
Q: You are aware also then of Dr. Kamerow's opinion with respect to the
sequence of the shooting, when things happened, left arm, right arm,
breast, and so forth?
A. Yes.
Q. Do you have an opinion with respect to his opinion on the sequence of that
discharge of the firearm?
N.T. August 19, 2016 at p.56-57. The Commonwealth objected to Appellant's expert providing
an opinion on the Commonwealth's expert's opinion as to the sequence of the shooting because
Appellant's expert did not opine in his expert report on said issue. Id. The Commonwealth's
expert did not testify outside of the conclusions drawn in his expert report. Id. at p. 58.
Appellant's counsel admitted to the Court that Appellant's expert did not provide information on
9
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the sequence of the shooting in his expert report. Id. Therefore, the Court properly precluded
Appellant's expert from testifying as to information which was absent from his expert report.
III. Introduction of Victim's Hearsay
Pennsylvania Courts have consistently held that the out-court- statements of ahomicide
victim, where probative of the victim's view of his or her relationship with the defendant, are
relevant and admissible to show the presence of ill will, malice, or motive for the killing. See
Commonwealth v. Fletcher, 750 A.2d 261, 276 ( Pa. 2000), cert. denied, 531 U.S. 1035 (2000)
(victim's statement was relevant to his state of mind regarding relationship with defendant and,
therefore, admissible to prove presence of ill will, malice, or motive for killing); Commonwealth
v. Puksar, 740 A.2d 219, 225 n. 6 (Pa. 1999), cert. denied, 531 U.S. 829 (2000) (victim's
statement that he did not trust defendant and that victim and defendant were involved in dispute
admissible under state of mind exception to prove presence of ill will, malice, or motive for
killing); Commonwealth v. Chandler, 721 A.2d 1040, 1045 (Pa. 1998) (victim's statements
concerning
.̀ her negative feelings about Appellant and her relationship with him" admissible
under state of mind exception because victim's "opinion of Appellant and her marriage to him
went to the presence of ill will, malice, or motive for the killing"); Commonwealth v. Collins,
703 A.2d 418, 424-25 (Pa. 1997), cert. denied, 525 U.S. 1015 ( 1998) (statements relevant under
state of mind exception to prove, inter alia, motive).
In the case at bar, Appellant contends "the lower court erred in allowing hearsay from the
victim to be introduced during the Commonwealth's case-in-chief."
At trial, the Commonwealth elicited from the victim's son statements which had been
made by the victim regarding how she felt she was consistently ostracized and disrespected by
Appellant and her son. N.T. 8/16/16, p. 78. Said statements are admissible under the state of
mind exception to hearsay because they are probative of the victim's view of her relationship
10
210 ❑ RD ❑ S
with Appellant and thus are relevant and admissible to show the presence of ill will, malice, or
motive for the killing. See Fletcher, supra. Therefore, the Court properly permitted said
statements to be introduced.
IV. Exclusion of References to Victim's Mental Health
Appellant contends the lower court erred in granting the Commonwealth's Motion in
Limine to exclude references to incidents regarding the victim's mental health.
The Court's Motion in Limine Order states, in pertinent part, as follows:
2) The Commonwealth's Motion in Limine to Preclude Reference to Incidents
Regarding Victim's Mental Health is GRANTED in regards to the September
28, 2014 and June 20, 2015 incidents, and any records thereof.
8/4/16 Trial Court Order. When Appellant took the stand at trial, he testified in violation of said
Order by referencing the victim's September 28, 2014 suicide attempt and hospitalization and his
attempt to obtain guardianship of the victim as aresult thereof. N.T. 8/19/16, pp. 130-31. After
Appellant's violation of said Order, the Commonwealth withdrew its objection to the
introduction of references to the victim's mental health due to the Commonwealth's intent to
cross-examine Appellant on the subjects. Id. at p. 132. After the Commonwealth's withdrawal of
its objection, Appellant testified as to the June 20, 2015 incident regarding the victim's mental
health. Id. at pp. 145-54.
Appellant's argument on this issue has been mooted by Appellant's violation of said
Order while testifying at trial, the Commonwealth's withdrawal of its objection to the
introduction of references to the victim's mental health after said violation, and Appellant's
testimony referencing the victim's mental health after the Commonwealth's withdrawal of its
objection.
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00 ❑ RD ❑ S
V. Issues Regarding Pa.R.E. 106
Pennsylvania Rule of Evidence 106 (Remainder of or Related Writings or Recorded
Statements) provides as follows:
If aparty introduces all or part of awriting or recorded statement, an adverse
party may require the introduction, at that time, of any other part—or any other
writing or recorded statement—that in fairness ought to be considered at the same
time.
Pa.R.E. 106. The comment to the rule states:
The purpose of Pa.R.E. 106 is to give the adverse party an opportunity to correct a
misleading impression that may be created by the use of apart of awriting or
recorded statement that may be taken out of context. This rule gives the adverse
party the opportunity to correct the misleading impression at the time that the
evidence is introduced. The trial court has discretion to decide whether other
parts, or other writings or recorded statements, ought in fairness to be considered
contemporaneously with the proffered part.
Id. (Comment). See Commonwealth v. McClure, 144 A.3d 970, 978 (Pa. Super. 2016). The rule
does not mandate ablanket admission of all related writings or recorded statements; rather, its
purpose is only to correct misleading or impartial evidence. Commonwealth v. Passmore. 857
A.2d 697 (Pa. Super. 2004), appeal denied, 868 A.2d 1199 ( Pa. 2005); see also Commonwealth
v. Bryant, 57 A.3d 191 (Pa. Super. 2012) (following introduction of single page of diary
describing sexual assault, the defendant's vague assertion that victim's diary contained "fantasy"
was insufficient to establish relevancy of entirety of such diary as required to warrant admission
of entirety of diary, especially in absence of any specific reference to any fact or statement in
diary relevant to case or of assistance to jury, or which would contradict or otherwise
contextualize single entry describing sexual assault).
The admissibility of evidence "depends on relevance and probative value."
Commonwealth v. Stallworth, 781 A.2d 110, 117 (Pa. 2001). Evidence is only considered
relevant if it " logically tends to establish amaterial fact in the case, tends to make afact at issue
12
910 ❑ RD ❑ S
more or less probable or supports areasonable inference or presumption regarding amaterial
fact." id. at 117-18 (citing Commonwealth v. Crews, 640 A.2d 395 (Pa. 1994)).
a. Audio-Taped Interviews and Conversations
Appellant contends the lower court erred in ruling that the audio-taped interviews and
conversations would not be played in their entirety during the Commonwealth's case-in-chief,
but rather directed the Appellant to play the rest of the audiotapes.
At trial, the Commonwealth sought to introduce audio-taped interviews and
conversations involving Appellant. N.T. 8/16/16, p. 194. The Court performed an in camera
review of the transcripts of said interviews and permitted the Commonwealth to introduce the
audio recording of pages thirty-eight (38) through sixty-five (65) of the 4:25 p.m. interview of
Appellant on August 30, 2015. N.T. 8/17/16, p. 3. The Court permitted introduction of said
portion because it included Appellant's account of the shooting of the victim, and was thus
admissible as relevant and probative. See StalIworth, supra. The remainder of the audio-taped
interviews of Appellant were either cumulative evidence, irrelevant, or included material which
was barred from admission by the Court's August 4, 2016 Motion in Limine Order. The portion
which the Court permitted the Commonwealth to introduce did not create amisleading
impression of Appellant's account of the shooting and did not turn Appellant's statement into an
admission of guilt. See Commonwealth's Ex. 227.
Therefore, the Court did not err by permitting the Commonwealth to play relevant
portions of audio-taped recordings of Appellant at trial.
b. Facebook Conversations
Appellant contends the lower court erred in ruling that the Commonwealth did not have
to introduce entire Facebook conversations during the Commonwealth case-in-chief, but rather,
directed that the Appellant could inquire as to the complete conversations.
13
2
10 ❑ RD ❑ S
At trial, the Commonwealth introduced apost from the victim's Facebook page, which
included aconversation through comments on said post. N.T. 8/17/16, pp. 17, 36.-
Commonwealth's Ex. 136. Appellant's counsel argued the Commonwealth did not introduce the
entire conversation, and in response the Commonwealth stated it introduced the complete
conversation of the relevant post. Id. at p. 18. The Court ruled that Appellant's counsel could
inquire as to the completeness of the conversation on cross-examination. Id.
A review of the Facebook post and comments which were published to the jury shows
that the complete conversation was introduced at trial. See Commonwealth's Ex. 136. Therefore,
the Court did not err because the entirety of the relevant Facebook conversation was introduced.
VI. Appellant's Testimonv Regarding Commonwealth's Exhibits
Appellant contends the lower court erred in not allowing Appellant to testify as to
exhibits that had been identified by Commonwealth witnesses during the Commonwealth's case-
in-chief.
At trial, Appellant began to testify as to the victim's pain medication use. N.T. 8/19/16, p.
160. The Commonwealth objected to Appellant testifying about the victim's pain medication
use, due to its irrelevance. Id. at pp. 160-61. Appellant's counsel argued that because evidence
was entered during the Commonwealth's case- in-chief which included reference to pain
medications taken by the victim, said testimony was permitted. Id. at p.161-62. The Court ruled
that Appellant could testify as to how the victim's use of the pain medication caused her to
become violent or placed him in fear of her. Id. at p.163.
The Court properly barred Appellant from testifying as to any irrelevant and inadmissible
material included in the Commonwealth's evidence. The admission of the Commonwealth's
evidence for the relevant portion of said evidence does not grant Appellant carte blanche to
testify as to any and all irrelevant and inadmissible portions of said evidence. Therefore, the
14
❑X O ❑ RD ❑ S
Court properly barred Appellant from testifying as to irrelevant and inadmissible portions of the
Commonwealth's exhibits.
VII. Testimonv of Appellant's Civil Attorney
The attorney- client privilege provides as follows:
In acivil matter counsel shall not be competent or permitted to testify to
confidential communications made to him by his client, nor shall the client be
compelled to disclose the same, unless in either case this privilege is waived upon
trial by the client.
42 Pa.C.S. § 5928. The attorney- client privilege is intended to foster candid communications
between legal counsel and the client so that counsel can provide legal advice based upon the
most complete information possible from the client. Commonwealth v. Chmiel, 738 A.2d 406
(Pa. 1999); Joe v. Prison Health Sens.. Inc., 782 A.2d 24, 31 (Pa. Cmwlth. 2001). Application of
the privilege requires confidential communications made in connection with providing legal
services. Commonwealth v. duPont, 730 A.2d 970 (Pa. Super. 1999), appeal denied, 749 A.2d
466 ( Pa. 2000). Once the attorney-client communications have been disclosed to athird party,
the privilege is deemed waived. Joe. supra. The party asserting the privilege has the initial
burden to prove that it is properly invoked, and the party seeking to overcome the privilege has
the burden to prove an applicable exception to the privilege. Jovner v. Southeastern Pennsvlvania
Transportation Authoritv. 736 A.2d 35 (Pa. Cmwlth. 1999).
In the case at bar, Appellant contends the lower court erred in allowing Appellant's civil
attorney to testify regarding matters that the civil attorney would only have known through
attorney- client privilege.
At trial, the Commonwealth called to the stand the estate planning attorney of Appellant
and the victim. The Court ruled that the attorney could only testify as to documents which had
been filed as apublic record. N.T. 8/17/16, p. 179. Further, the Court instructed the attorney to
15
00 ❑ RD ❑ S
raise the attorney-client privilege if he felt he had an ethical obligation to do so. Id. Appellant's
counsel argued attorney-client privilege still attached to the publically filed documents because
the information contained in said documents was garnered through the attorney's conversations
with Appellant. Id. at p. 166-67.
Appellant failed to properly invoke the attorney- client privilege. Specifically, Appellant
failed to establish how awaiver of attorney-client privilege would not occur in relation to
documents which were filed as apublic record. See Joe, supra (disclosure to third party waives
privilege). Therefore, the Court properly permitted the estate planning attorney to testify in
regards to documents which were filed as apublic record.
For the foregoing reasons, the Court respectfully requests that its rulings remain
undisturbed.
Date: January 3, 2017
Jonathan D. Grine, Judge
16
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https://www.courtlistener.com/api/rest/v3/opinions/8483890/ | J-S37012-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
RICHARD HAWKINS :
:
Appellant : No. 908 EDA 2022
Appeal from the PCRA Order Entered March 15, 2022
In the Court of Common Pleas of Delaware County Criminal Division at
No(s): CP-23-CR-0000604-2009
BEFORE: BOWES, J., LAZARUS, J., and OLSON, J.
MEMORANDUM BY BOWES, J.: FILED NOVEMBER 15, 2022
Richard Hawkins appeals from the order dismissing his fourth petition
filed pursuant to the Post Conviction Relief Act (“PCRA”) as untimely. We
affirm.
On October 22, 2008, Appellant and Demetrius Oglesby committed an
armed robbery of the employee working the “Silver & Gold” kiosk at the
Springfield Mall in Delaware County, Pennsylvania. Police officers reviewed
the mall security footage and recognized Mr. Oglesby. Once apprehended, he
identified Appellant as his co-conspirator. Appellant was arrested and charged
with robbery and related offenses.
On July 29, 2009, Appellant entered a negotiated guilty plea to robbery
and criminal conspiracy. The trial court accepted the plea and sentenced
Appellant, in accordance with the negotiated terms, to an aggregate term of
J-S37012-22
seventeen and one half to forty years of incarceration.1 Appellant did not file
a post-sentence motion or direct appeal.
In 2016, Appellant filed his first pro se PCRA petition, claiming he was
serving an illegal sentence because the crimes of criminal conspiracy and
robbery were invalid.2 Appointed counsel filed a petition to withdraw and “no
merit letter” pursuant to Commonwealth v. Turner, 544 A.2d 927 (Pa.
1988) and Commonwealth v. Finley, 550 A.2d 213 (Pa.Super. 1988) (en
banc). The PCRA court reviewed the submission, agreed with counsel that the
claims Appellant wished to raise were meritless, and issued Pa.R.Crim.P. 907
notice of its intent to dismiss Appellant’s petition without a hearing. On June
30, 2017, the PCRA court dismissed the petition. Appellant did not appeal this
decision.
In 2019, Appellant filed his second pro se PCRA petition alleging that
the trial court erred by not merging his robbery and conspiracy to commit
robbery convictions and requesting that the court reconsider his sentence.
See Second PCRA Petition, 3/4/19, at 1-5. The Commonwealth filed an
answer arguing that the petition was untimely and should be dismissed
____________________________________________
1The parties agreed that Appellant would receive a sentence of ten to twenty
years for the robbery and a consecutive seven and one half to twenty years
of incarceration for conspiracy to commit robbery. See N.T. Guilty Plea &
Sentencing Hearing, 7/29/09, at 5-7.
2 This document does not appear in the certified record. However, the PCRA
court clarifies that this is because the petition was mistakenly filed in the civil
division of the Delaware County Court of Common Pleas and was not
immediately transferred to the criminal division. See Order, 9/8/16, at 1 n.1.
-2-
J-S37012-22
without a hearing since the court lacked jurisdiction to address the merits of
the issues raised. See Commonwealth’s Answer, 4/30/19, at 2-3. The PCRA
court agreed with the Commonwealth and issued Rule 907 notice of its intent
to dismiss the petition as untimely. Having received no response from
Appellant, on June 11, 2019, the PCRA court dismissed the petition. See
Order, 6/11/19, at 1. Appellant did not appeal this decision.
On July 2, 2020, Appellant filed a “Writ of Errors Coram Nobis”
challenging the legality of his sentence, which the court properly treated as a
third PCRA petition and issued Rule 907 notice of its intent to dismiss the
petition as untimely. See Commonwealth v. Taylor, 65 A.3d 462, 465
(Pa.Super. 2013) (reiterating the well-established principle that the PCRA is
intended to be the sole means of achieving post-conviction relief for all
cognizable issues). Appellant submitted a response, arguing that his petition
should not be dismissed as he had discovered new facts that the sentence was
unconstitutional. In the response, Appellant did not detail the alleged new
facts. On September 10, 2020, the PCRA court dismissed Appellant’s third
PCRA petition. Appellant did not appeal that decision.
Over one year later, on December 21, 2021, Appellant filed documents
entitled “memorandum of law and [argumentative] summation,” “motion for
reinstatement of PCRA for amendments thereto,” and a “motion for
resentence consideration.” In the motions, Appellant repeated earlier
arguments regarding illegal sentencing issues, requested reconsideration of
his sentence, and sought reinstatement of his appellate rights from the
-3-
J-S37012-22
dismissal of his third PCRA petition. Appellant alleged that reinstatement was
needed because the COVID-19 pandemic prevented him from submitting a
timely amended petition and notice of appeal. The PCRA court construed
these three motions collectively as a fourth PCRA petition. On March 14, 2022,
the PCRA court issued an order denying the petition. This timely appeal
followed. The PCRA court did not request that Appellant file a Pa.R.A.P.
1925(b) concise statement, but did advance a Rule 1925(a) opinion.
Appellant raises the following issues for our review:
1. Was the trial court in error for neglecting to specify its reasons for
(1) reducing the minimum term of conspiracy and not the
minimum term for robbery, (2) conspiracy and robbery terms and
(3) for not justifying its reasons for not imposing both sentences
to run concurrently?
2. Was trial counsel in error for not pursuing a direct appeal, to
challenge the issues raised in numeration 1 above?
3. Was the PCRA court in error for not allowing Appellant to have his
PCRA reinstated, following [COVID-19] by relying upon
regulations which doesn’t allow for delays to have a petition
reactivated and allow for amendments based upon the inactions
of the court to justify its sentences; during the sentencing phase,
the ineffectiveness of counsel, and a deprivation of access to the
courts due to no fault of Appellant during a crises; in contrast to
case law and a constitutionality challenge of statutory law
application(s) enforcements?
Appellant’s brief at 3.
Before we may consider the merits of Appellant’s claims, we must first
determine whether the petition was timely filed. “Our standard of review of a
PCRA court’s dismissal of a PCRA petition is limited to examining whether the
PCRA court’s determination is supported by the record evidence and free of
-4-
J-S37012-22
legal error.” Commonwealth v. Whitehawk, 146 A.3d 266, 269 (Pa.Super.
2016). For a petition to be timely under the PCRA, it must be filed within one
year of the date that a petitioner’s judgment of sentence became final. See
42 Pa.C.S. § 9545(b)(1). Appellant’s petition, filed more than twelve years
after his judgment of sentence became final, is patently untimely. Thus,
unless Appellant pled and proved one of the three exceptions to the PCRA
time-bar outlined in 42 Pa.C.S. § 9545(b)(1)(i-iii),3 we cannot address the
claims he asserted therein.
Appellant’s petition is facially untimely and he did not allege below or in
this appeal any exceptions to the time-bar. Therefore, the PCRA court did not
err when it found that his petition was untimely filed. See, e.g.,
Commonwealth v. Miller, 102 A.3d 988, 995 Pa.Super. 2014) (“[A]lthough
____________________________________________
3 These exceptions are:
(i) The failure to raise the claim previously was the result of
interference by government officials with the presentation of the
claim in violation of the Constitution or laws of this Commonwealth
or the Constitution or laws of the United States;
(ii) the facts upon which the claim is predicated were unknown to
the petitioner and could not have been ascertained by the exercise
of due diligence; or
(iii) the right asserted is a constitutional right that was recognized
by the Supreme Court of the United States or the Supreme Court
of Pennsylvania after the time period provided in this section and
has been held by that court to apply retroactively.
42 Pa.C.S. § 9545(b)(1)(i)-(iii).
-5-
J-S37012-22
not technically waivable, a legality of sentence claim may nevertheless be lost
should it be raised in an untimely PCRA petition for which no time-bar
exception applies, thus depriving the court of jurisdiction over the claim.”
(cleaned up)).4
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/15/2022
____________________________________________
4 To the extent Appellant claims that the PCRA court erred when it construed
his motions as PCRA petitions no relief is due. It is well-settled that the PCRA
is intended to be the sole means of achieving post-conviction relief. See 42
Pa.C.S. § 9542; see also Commonwealth v. Fantauzzi, 275 A.3d 986, 995
(Pa.Super. 2022). Therefore, a collateral petition that raises an issue that the
PCRA statute could remedy is to be considered a PCRA petition. Id. Stated
differently, a defendant cannot escape the PCRA time-bar by simply altering
the title of his petition or motion. See Commonwealth v. Taylor, 65 A.3d
462, 466 (Pa.Super. 2013). Herein, Appellant’s various claims of sentence
illegality are cognizable under the PCRA. Id. Accordingly, we find that the
PCRA court did not err when it treated his filings as PCRA petitions.
-6- | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483884/ | J-A19029-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellee :
:
v. :
:
MICHAEL DAVID RICHARDSON :
:
Appellant : No. 1074 MDA 2021
Appeal from the Judgment of Sentence Entered July 13, 2021
In the Court of Common Pleas of Berks County
Criminal Division at No(s): CP-06-CR-0005335-2018
BEFORE: BOWES, J., KING, J., and STEVENS, P.J.E.*
MEMORANDUM BY KING, J.: FILED: NOVEMBER 15, 2022
Appellant, Michael David Richardson, appeals from the judgment of
sentence entered in the Berks County Court of Common Pleas, following his
jury trial convictions for three (3) counts of conspiracy, two (2) counts of
aggravated assault, and one (1) count each of first-degree murder and
stalking.1 We affirm.
The trial court opinion set forth the relevant facts of this appeal as
follows:
On the night of July 23, 2018, Julissa Torres was celebrating
her birthday at Nick’s Cafe at 11th and Chestnut Streets in
the City of Reading, Berks County, Pennsylvania. She and
Dawud Felton left the bar at approximately 2:20 a.m. on the
____________________________________________
* Former Justice specially assigned to the Superior Court.
1 18 Pa.C.S.A. §§ 903, 2702(a)(1), (4), 2502(a), and 2709.1(a)(1),
respectively.
J-A19029-22
morning of the 24th and walked to her apartment at 338
South 10th Street. Along the way, they encountered Carlos
Herrera and a companion of his named Eddie.
Ms. Torres and her friends entered her second-floor
apartment, where her three children and their babysitter
were also present. Ms. Torres and the others were inside
the apartment for five to ten minutes before they heard
gunshots outside her door. Ms. Torres testified that she and
the others ran upstairs, but she eventually realized that
Carlos Herrera was not upstairs with them. Dawud Felton
went downstairs to look for Carlos and then called to Ms.
Torres. Ms. Torres walked downstairs and found Carlos in
the kitchen holding his neck, where he had been struck by
a bullet. Carlos Herrera died at the scene and his body was
transported to the Reading Hospital by Deputy Coroner
Melissa Spuhler. Dr. Neil Hoffman, a forensic pathologist,
testified that the cause of death was a gunshot wound to
the chest.
Julissa Torres testified that leading up to that night, she had
been having problems with [Appellant]. Ms. Torres went to
school with [Appellant] and they kept in touch through
Facebook. [Appellant’s] Facebook account was named
“Desperado Hitta,” and Ms. Torres’s Facebook account was
named “Ju Staymentioned.” Ms. Torres testified that they
communicated on Facebook by sending both written and
audio messages. The Commonwealth admitted messages
sent between the two accounts from July 12, 2018 to July
28, 2018 into evidence. Many of the messages are
threatening in nature.
Ms. Torres also testified that she was in the area of 11th and
Cotton Streets one day in July when [Appellant], who was
in a car with Jeremy Collazo, pointed a gun out the window
at her. Ms. Torres messaged [Appellant] on Facebook on
July 21, 2018 asking why he pulled his gun out and
[Appellant] replied, “Because I was going to shoot you.”
[Appellant] further explained that he was going to shoot her
because her daughter’s father, Robert, shot at him. Ms.
Torres testified that Robert shot at [Appellant] in response
to [Appellant] shooting at her uncle’s house.
Following the murder of Carlos Herrera, Officer Christopher
-2-
J-A19029-22
Bucklin of the Reading Police Department obtained video
surveillance footage from Nick’s Cafe at 1050 Chestnut
Street, from 401 South 9th Street, and from 420 Orange
Street in the City of Reading. The video from 401 South 9th
Street depicts two males walking north on 9th Street and
then east onto Muhlenberg Street near the time of the
murder. The video from 420 Orange Street depicts two
individuals running along Culvert Street near the time of the
murder. The location of the cameras relative to the scene
of the homicide is depicted in Commonwealth Exhibit 85.
The video from 401 South 9th Street shows that one of the
men is wearing a black, hooded sweatshirt with wide, white
drawstrings. [Appellant] was wearing a similar sweatshirt
when he was taken into custody by the police on July 28,
2018.
Officer Josiah Fisher of the Reading Police Department saw
[Appellant] discard a firearm while he was chasing him.
Officer Timothy Morris recovered the firearm and a gold cell
phone near the location where [Appellant] was
apprehended. The Pennsylvania State Police determined
that shell casings recovered from the scene of the homicide
and from the scene of the shooting at Julissa Torres’s uncle’s
house were fired from the .22 caliber firearm that
[Appellant] discarded while being chased by the police prior
to his arrest.
(Trial Court Opinion, filed 10/5/21, at 1-3) (internal record citations omitted).
On December 17, 2018, the Commonwealth filed a criminal information
charging Appellant with offenses related to the shooting. Appellant proceeded
to trial, and a jury found him guilty of first-degree murder and related
offenses. On July 13, 2021, the court sentenced Appellant to life
imprisonment for the murder conviction. Appellant timely filed a post-
sentence motion on July 21, 2021, which included a challenge to the weight
of the evidence demonstrating the perpetrator’s identity. On July 26, 2021,
the court denied Appellant’s post-sentence motion.
-3-
J-A19029-22
Appellant timely filed a notice of appeal on August 13, 2021. On August
19, 2021, the court ordered Appellant to file a Pa.R.A.P. 1925(b) concise
statement of errors complained of on appeal. Appellant timely filed his Rule
1925(b) statement on September 7, 2021.
Appellant now raises one issue for our review:
Whether the trial court reversibly erred in denying
[Appellant’s] post-sentence challenge to the weight of the
evidence with regard to all charges against him.
(Appellant’s Brief at 7).
On appeal, Appellant challenges “the weight of the evidence as it
pertains to his identity as one of the two perpetrators of the murder.” (Id. at
39). Appellant emphasizes that there was no eyewitness testimony placing
him at the crime scene, and “the evidence of identification is tenuous, vague
and uncertain to such an extent that it should have shocked the conscience of
the trial court.” (Id. at 41). Regarding the trial court’s emphasis on the
threatening messages Appellant sent to Ms. Torres, Appellant insists that
“these supposed threats were communicated in the context of other, non-
threatening situations such as needing a ride home from work or asking where
a birthday celebration was being held.” (Id.) Appellant also maintains that
he and Ms. Torres “were drug dealers and the way they conducted themselves
and communicated about ordinary activities was in itself shocking to people
of ordinary sensibilities.” (Id.)
Additionally, Appellant argues he was not the only person to have issues
-4-
J-A19029-22
with Ms. Torres, and Ms. Torres “continued to be targeted in shootings even
after Appellant was arrested and jailed….” (Id. at 44). Relying on testimony
from Ms. Torres and police witnesses, Appellant posits that an individual
named Luis Sanabria was involved with the instant shooting. Appellant claims
that Mr. Sanabria: 1) was present when Appellant was arrested; 2) he
possessed one of Appellant’s cell phones; and 3) Ms. Torres had complained
about Mr. Sanabria on prior occasions. Based upon the foregoing, Appellant
contends that “the evidence established that the second shooter [acting with
Mr. Collazo] could have been Luis Sanabria or any one of the multiple persons
entangled in the extended family and business feuds” of Ms. Torres. (Id. at
44-45). Appellant concludes that his convictions are against the weight of the
evidence, and this Court must vacate his judgment of sentence and remand
the matter for a new trial. We disagree.
In reviewing a challenge to the weight of the evidence, our standard of
review is as follows:
The weight of the evidence is exclusively for the finder
of fact who is free to believe all, part, or none of the
evidence and to determine the credibility of the
witnesses. An appellate court cannot substitute its
judgment for that of the finder of fact. Thus, we may
only reverse the…verdict if it is so contrary to the
evidence as to shock one’s sense of justice.
Commonwealth v. Small, 559 Pa. 423, [435,] 741 A.2d
666, 672-73 (1999). Moreover, where the trial court has
ruled on the weight claim below, an appellate court’s role is
not to consider the underlying question of whether the
verdict is against the weight of the evidence. Rather,
appellate review is limited to whether the trial court palpably
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abused its discretion in ruling on the weight claim.
Commonwealth v. Champney, 574 Pa. 435, 444, 832 A.2d 403, 408
(2003), cert. denied, 542 U.S. 939, 124 S.Ct. 2906, 159 L.Ed.2d 816 (2004)
(most internal citations omitted).
Additionally, the Crimes Code defines the offense of criminal conspiracy
as follows:
§ 903. Criminal conspiracy
(a) Definition of conspiracy.—A person is guilty of
conspiracy with another person or persons to commit a
crime if with the intent of promoting or facilitating its
commission he:
(1) agrees with such other person or persons that they
or one or more of them will engage in conduct which
constitutes such crime or an attempt or solicitation to
commit such crime; or
(2) agrees to aid such other person or persons in the
planning or commission of such crime or of an attempt
or solicitation to commit such crime.
* * *
(c) Conspiracy with multiple criminal
objectives.—If a person conspires to commit a number of
crimes, he is guilty of only one conspiracy so long as such
multiple crimes are the object of the same agreement or
continuous conspiratorial relationship.
18 Pa.C.S.A. § 903(a), (c).
“To sustain a conviction for criminal conspiracy, the Commonwealth
must establish that the defendant (1) entered into an agreement to commit
or aid in an unlawful act with another person or persons, (2) with a shared
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J-A19029-22
criminal intent, and (3) an overt act was done in furtherance of the
conspiracy.” Commonwealth v. Melvin, 103 A.3d 1, 42 (Pa.Super. 2014)
(citation omitted).
The essence of a criminal conspiracy is a common
understanding, no matter how it came into being, that a
particular criminal objective be accomplished. Therefore, a
conviction for conspiracy requires proof of the existence of
a shared criminal intent. An explicit or formal agreement to
commit crimes can seldom, if ever, be proved and it need
not be, for proof of a criminal partnership is almost
invariably extracted from the circumstances that attend its
activities. Thus, a conspiracy may be inferred where it is
demonstrated that the relation, conduct, or circumstances
of the parties, and the overt acts of the co-conspirators
sufficiently prove the formation of a criminal confederation.
The conduct of the parties and the circumstances
surrounding their conduct may create a web of evidence
linking the accused to the alleged conspiracy beyond a
reasonable doubt.
Id. at 42-43. “Once the trier of fact finds that there was an agreement and
the defendant intentionally entered into the agreement, that defendant may
be liable for the overt acts committed in furtherance of the conspiracy
regardless of which co-conspirator committed the act.” Commonwealth v.
Barnes, 871 A.2d 812, 820 (Pa.Super. 2005), aff’d, 592 Pa. 301, 924 A.2d
1202 (2007).
The Crimes Codes defines aggravated assault in relevant part as follows:
§ 2702. Aggravated assault
(a) Offense defined.—A person is guilty of
aggravated assault if he:
(1) attempts to cause serious bodily injury to
another, or causes such injury intentionally, knowingly or
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recklessly under circumstances manifesting extreme
indifference to the value of human life;
* * *
(4) attempts to cause or intentionally or
knowingly causes bodily injury to another with a deadly
weapon[.]
18 Pa.C.S.A. § 2702(a)(1), (4).
The Crimes Code defines first-degree murder as follows:
§ 2502. Murder
(a) Murder of the first degree.―A criminal homicide
constitutes murder of the first degree when it is committed
by an intentional killing.
18 Pa.C.S.A. § 2502(a).
To find a defendant guilty of first-degree murder a jury must
find that the Commonwealth has proven that he or she
unlawfully killed a human being and did so in an intentional,
deliberate and premeditated manner.
It is the element of a willful, premeditated and
deliberate intent to kill that distinguishes first-degree
murder from all other criminal homicide. …
The mens rea required for first-degree murder, specific
intent to kill, may be established solely from circumstantial
evidence.
Commonwealth v. Schoff, 911 A.2d 147, 159-60 (Pa.Super. 2006) (internal
citations and quotation marks omitted). “Specific intent to kill can be
established though circumstantial evidence, such as the use of a deadly
weapon on a vital part of the victim’s body.” Commonwealth v. Montalvo,
598 Pa. 263, 274, 956 A.2d 926, 932 (2008), cert denied, 556 U.S. 1186, 129
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S.Ct. 1989, 173 L.Ed.2d 1091 (2009).
Further, the Crimes Code defines stalking as follows:
§ 2709.1. Stalking
(a) Offense defined—A person commits the crime of
stalking when the person either:
(1) engages in a course of conduct or repeatedly
commits acts toward another person, including following
the person without proper authority, under
circumstances which demonstrate either an intent to
place such other person in reasonable fear of bodily
injury or to cause substantial emotional distress to such
other person[.]
18 Pa.C.S.A. § 2709.1(a)(1).
Instantly, the trial court evaluated the evidence and concluded that
“[t]here was nothing shocking about the jury’s verdict.” (Trial Court Opinion
at 6). On this record, we cannot say that the court palpably abused its
discretion in ruling on the weight claim. See Champney, supra. Contrary
to Appellant’s argument, significant evidence linked him to the shooting. The
Commonwealth demonstrated that: 1) Appellant had communicated threats
to Ms. Torres in the days before the shooting; 2) surveillance video recorded
a suspect near the crime scene at the time of the shooting who was wearing
a distinctive sweatshirt that matched the one worn by Appellant at the time
of his arrest; and 3) Appellant discarded a firearm during his flight from police,
and subsequent testing linked this firearm to the shell casings at the crime
scene. We will not substitute our judgment for that of the jury, and we
conclude that Appellant is not entitled to relief on his weight claim.
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Accordingly, we affirm the judgment of sentence.
Judgment of sentence affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/15/2022
- 10 - | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483887/ | J-S37014-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
EFRAIN MIRANDA III :
:
Appellant : No. 913 EDA 2022
Appeal from the Order Entered February 22, 2022
In the Court of Common Pleas of Lehigh County Criminal Division at
No(s): CP-39-CR-0004165-2011
BEFORE: BOWES, J., LAZARUS, J., and OLSON, J.
MEMORANDUM BY BOWES, J.: FILED NOVEMBER 15, 2022
Efrain Miranda III appeals from the February 22, 2022 order denying his
motion to clarify / correct sentence nunc pro tunc. Ultimately, we conclude
that this submission constituted a serial petition governed by the Post-
Conviction Relief Act (“PCRA”) and, consequently, was subject to the
timeliness requirements at 42 Pa.C.S. § 9545(b)(1)(i)-(iii). Since Appellant’s
petition was facially untimely by several years and he has not established the
applicability of any relevant timeliness exception, we affirm.
The instant case “arises from a lengthy investigation of drug sales in
Allentown, Pennsylvania.” Commonwealth v. Miranda, 116 A.3d 697
(Pa.Super. 2014) (unpublished memorandum at 1) (“Miranda I”). On
July 18, 2012, Appellant entered a negotiated guilty plea to ten counts each
of possession with intent to deliver a controlled substance (“PWID”), criminal
conspiracy to commit PWID, and corrupt organizations. At Appellant’s
J-S37014-22
sentencing on September 6, 2012, the trial court expressed its intent to
impose an aggregate sentence of twelve to twenty-nine years of incarceration.
See N.T. Sentencing, 9/6/12, at 25. The same day, the trial court filed orders
that purported to impose the contemplated sentence but, due to the
structuring of the various sentences, actually imposed an aggregate sentence
of nine to twenty-one years of imprisonment. See Sentencing Orders, 9/6/12,
at 1-13. Thereafter, the trial court sua sponte filed amended sentencing
orders on November 28, 2012, and December 27, 2012, respectively. These
orders altered the structure of several of Appellant’s consecutive terms of
imprisonment, which yielded the court’s intended aggregate sentence of
twelve to twenty-nine years of imprisonment. See Amended Sentencing
Orders, 11/28/12, at 1-4; Amended Sentencing Orders, 12/27/12, at 1-3.
Appellant did not file a direct appeal and his time in which to do so
expired on January 28, 2013.1 Thereafter, he filed a succession of three
unsuccessful PCRA petitions between July 2013 and August 2020. See
Commonwealth v. Miranda, 266 A.3d 641 (Pa.Super. 2021) (non-
precedential decision at 1-5) (“Miranda III”); Commonwealth v. Miranda,
201 A.3d 862 (Pa.Super. 2018) (unpublished memorandum at 1-2)
(“Miranda II”); Miranda I, supra at 1-2. The substance of these previous
PCRA proceedings is not relevant to the instant controversy.
____________________________________________
1 The last day of Appellant’s time to file a direct appeal following amendment
of his sentence fell on Saturday, January 26, 2013. Pursuant to 1 Pa.C.S.
§ 1908, it and the next day are properly excluded from this computation.
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On February 4, 2022, Appellant submitted a pro se filing styled as a
“Motion to Clarify/Correct Sentence Nunc Pro Tunc,” which alleged the trial
court had erred by amending its original sentencing orders without providing
Appellant with prior notice or an opportunity to be heard pursuant to 42
Pa.C.S. § 5505 (“Modification of orders”).2 Consequently, Appellant argued
the amended orders were legal nullities. See Motion to Clarify, 2/4/22, at 5-
6. Appellant also characterized the amended sentencing orders as “patent
errors” and requested the trial court exercise its “inherent authority” under
§ 5505 to correct it, i.e., vacate the amended orders and remand for
resentencing. Id. at 6-8. Thus, Appellant’s petition alleged that the trial court
had violated § 5505 and requested further action under § 5505 as a remedy.
No mention of the PCRA or its requirements appears in this filing.
On February 22, 2022, the trial court filed an order denying Appellant’s
motion on its merits. Appellant filed a timely pro se notice of appeal to this
____________________________________________
2 This statute provides, in its entirety, as follows: “Except as otherwise
provided or prescribed by law, a court upon notice to the parties may modify
or rescind any order within [thirty] days after its entry, notwithstanding the
prior termination of any term of court, if no appeal from such order has been
taken or allowed.” 42 Pa.C.S. § 5505. Pursuant to § 5505, “a trial court is
empowered to modify a sentence only if it notifies the defendant and the
district attorney of its intention to do so” and provides an opportunity for
response. Commonwealth v. Blair, 230 A.3d 1274, 1277 (Pa.Super. 2020).
A sentence modified without fulfilling these requirements is “without effect.”
Id. Furthermore, a trial court “retains the inherent jurisdiction to correct
obvious or patent errors in its orders, even if it is outside the standard [thirty]-
day paradigm, when warranted.” Id. However, “[e]ven if there is a clear
mistake, that does not relieve the court of its obligation to give notice.” Id.
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Court.3 On March 29, 2022, the court directed Appellant to file a concise
statement of errors pursuant to Pa.R.A.P. 1925(b) within twenty-one days.
Appellant filed a timely concise statement.4 Thereafter, the trial court filed a
Rule 1925(a) opinion.
Appellant has raised the following issues for our consideration:
I. Did the [trial court] err as a matter of law by amending
Appellant’s sentence on November 28, 2012[,] and on
December 27, 2012[,] without notice and without Appellant
or his attorney present, violating [42 Pa.C.S. § 5505] of the
Judicial Code and due process?
II. Did the [trial court] err by failing to sua sponte correct a
patent error in Appellant’s sentence?
Appellant’s brief at 2. Although stated as different questions and addressed
separately in Appellant’s brief, we discern that Appellant’s arguments are
____________________________________________
3 Appellant’s notice of appeal was filed in this Court on March 29, 2022,
rendering it facially untimely. See Pa.R.A.P. 903(a). This Court issued a rule
to show cause upon Appellant as to why the instant appeal should not be
quashed. See Rule to Show Cause, 5/6/22, at 1. At the time of these
proceedings, Appellant was incarcerated at SCI Waymart. He responded to
this Court’s rule to show cause by submitting an approved cash slip evincing
that he delivered his notice of appeal to prison officials for mailing on March
22, 2022. See Response to Rule to Show Cause, 5/17/22, at 3 (unpaginated).
The Pennsylvania Rules of Appellate Procedure provide that “[a] pro se filing
submitted by a person incarcerated in a correctional facility is deemed filed as
of the date . . . the filing was delivered to the prison authorities for purposes
of mailing as documented by a properly executed prisoner cash slip[.]”
Pa.R.A.P. 121(f). Accordingly, we will deem Appellant’s pro se notice of appeal
to have been timely filed on March 22, 2022.
4 While Appellant’s Rule 1925(b) statement was not filed in the Superior Court
until April 27, 2022, the certified record indicates that Appellant handed over
the statement for filing to prison authorities on April 17, 2022. Thus, we will
deem the statement to be timely filed. See Pa.R.A.P. 121(f).
-4-
J-S37014-22
inextricably linked, i.e., he seeks to vacate the amended sentencing orders of
the trial court pursuant to the inherent authority afforded by § 5505. Thus,
we will address these claims collectively in this writing.
Before proceeding further, we must first properly characterize the
nature of Appellant’s underlying petition. As discussed further infra, this
question has implications regarding the subject matter jurisdiction of this
Court and the trial court. Therefore, we may raise this matter sua sponte.
See Commonwealth v. Beatty, 207 A.3d 957, 961 (Pa.Super. 2019)
(“Whether a court has subject matter jurisdiction is a question of law . . . . It
is not waivable, even by consent, and may be raised by any party or by the
court, sua sponte, at any stage of the proceeding.”). Specifically, our review
has raised a significant question as to whether Appellant’s petition is
subsumed under the aegis of the PCRA. As this Court has explained, “[a]ny
collateral petition raising issues with respect to remedies offered under the
PCRA will be considered a PCRA petition.” Commonwealth v. Deaner, 779
A.2d 578, 580 (Pa.Super. 2001); see also Commonwealth v. Taylor, 65
A.3d 462, 465-66 (Pa.Super. 2013) (“Issues that are cognizable under the
PCRA must be raised in a timely PCRA petition[.]”).
We are particularly mindful that the PCRA provides the exclusive means
of obtaining collateral relief in Pennsylvania for criminal defendants alleging
that they are, inter alia, serving an illegal sentence. See 42 Pa.C.S. § 9542
(“This subchapter provides for an action by which . . . persons serving illegal
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J-S37014-22
sentences may obtain collateral relief. The action established in this
subchapter shall be the sole means of obtaining collateral relief and
encompasses all other common law and statutory remedies. . . .”). Our
Supreme Court’s jurisprudence has defined the scope of illegal sentencing
claims to include challenges implicating a court’s authority to impose the
underlying sentence. See Commonwealth v. Prinkey, 277 A.3d 554, 561
(Pa. 2022) (“Put simply, . . . an illegal sentence is one that was imposed
without authority.”); Commonwealth v. Moore, 247 A.3d 990, 997 (Pa.
2021) (holding claim addressing the legality of a defendant’s sentence is
“always subject to review within the PCRA where . . . the petition is timely”).
Appellant’s petition argued that the trial court did not have the authority
to amend his sentence without providing him with notice and an opportunity
to respond pursuant to § 5505. See Motion to Clarify, 2/4/22, at 3 (“[T]he
trial court modified [Appellant’s] sentence twice without him being present
during the resentencing proceedings, and because the trial court err[ed],
[Appellant] avers that his new sentencing orders are a legal nullity, and
without effect.” (cleaned up)). This argument unambiguously implicates the
trial court’s authority to impose the amended sentence, which is the textbook
definition of a legality of sentence issue under current law. See Prinkey,
supra at 561; Moore, supra at 997. Furthermore, our Supreme Court has
identified “allegations that a sentence was imposed without the fulfillment of
statutory preconditions to the court’s sentencing authority” as falling within a
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J-S37014-22
specific category of recognized illegal sentences. Prinkey, supra at 562.
This specific definition also fairly describes Appellant’s overall claim for relief,
which concerns a statutory precondition to modifying a criminal sentence, i.e.,
notice and an opportunity be heard under § 5505.
Based on the foregoing, we readily conclude that Appellant’s claims for
relief were cognizable under the PCRA as a challenge to an allegedly illegal
sentence. As such, this claim is subject to the limitations of the PCRA,
including timeliness. See Commonwealth v. Wyatt, 115 A.3d 876, 879
(Pa.Super. 2015) (“[I]f the PCRA offers a remedy for an appellant’s claim, it
is the sole avenue of relief and the PCRA time limitations apply.”). Moreover,
[a]lthough legality of sentence is always subject to review within
the PCRA, claims must still first satisfy the PCRA’s time limits or
one of the exceptions thereto. . . . Thus, a collateral claim
regarding the legality of a sentence can be lost for failure to raise
it in a timely manner under the PCRA.
Commonwealth v. Infante, 63 A.3d 358, 365 (Pa.Super. 2013). Finally, it
is well-established that “the PCRA time limitations implicate our jurisdiction
and may not be altered or disregarded in order to address the merits of a
petition.” Commonwealth v. Laird, 201 A.3d 160, 162 (Pa.Super. 2018).
These timeliness requirements are defined at statute as follows:
(b) Time for filing petition.—
(1) Any petition under this subchapter, including a second or
subsequent petition, shall be filed within one year of the date the
judgment becomes final, unless the petition alleges and the
petitioner proves that:
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J-S37014-22
(i) the failure to raise the claim previously was the result of
interference by government officials with the presentation
of the claim of the Constitution or laws of this
Commonwealth or the Constitution or laws of the United
States;
(ii) the facts upon which the claim is predicated were
unknown to the petitioner and could not have been
ascertained by the exercise of due diligence; or
(iii) the right asserted is a constitutional right that was
recognized by the Supreme Court of the United States or
the Supreme Court of Pennsylvania after the time period
provided in this section and has been held by that court to
apply retroactively.
....
(3) For purposes of this subchapter, a judgment becomes final at
the conclusion of direct review, including discretionary review in
the Supreme Court of the United States and the Supreme Court
of Pennsylvania, or at the expiration of time for seeking the
review.
42 Pa.C.S. § 9545(b)(1), (3). This Court has summarized these statutory
provisions as providing that “[a] PCRA petition, including a second or
subsequent petition, must be filed within one year of the date the judgment
becomes final, unless appellant can plead and prove one of three exceptions
set forth under 42 Pa.C.S. § 9545(b)(1), . . . .” Commonwealth v.
Smallwood, 155 A.3d 1054, 1059 (Pa.Super. 2017).
Applying these requirements to the case at bar, Appellant’s judgement
of sentence became final at the expiration of his time to seek direct appellate
review on January 28, 2013. Thereafter, Appellant had until January 28,
2014, to file a timely petition pursuant to the PCRA. The instant petition,
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J-S37014-22
however, was filed on February 4, 2022, rendering it facially untimely by more
than eight years. Given his failure to properly raise these matters in a PCRA
petition, Appellant has made no attempt to discuss the timeliness
requirements of the PCRA, let alone plead the applicability of any of the
statutory exceptions thereto. See 42 Pa.C.S. § 9545(b)(1)(i)-(iii). However,
it is clear from our review of the certified record that Appellant cannot
establish the applicability of any of the timeliness exceptions given that his
claims concerning his amended sentence have been evident from the face of
the record since December 2012. Furthermore, this Court has held that a trial
court’s inherent authority to correct a sentence under § 5505 does not
supplant the timeliness requirements of the PCRA. See Commonwealth v.
Whiteman, 204 A.3d 448, 451 (Pa.Super. 2019).
Since Appellant did not file a timely PCRA petition or establish the
applicability of any timeliness exception, the court below was without
jurisdiction to entertain its merits. We, therefore, affirm the trial court’s
dismissal of Appellant’s serial PCRA petition on this alternate basis.5
____________________________________________
5 The trial court erred by failing to treat Appellant’s motion as a PCRA petition
and, thereby, ignoring the jurisdictional timeliness requirements to consider
the merits of Appellant’s arguments. However, we may affirm the trial court
on any valid basis that appears of record. See Commonwealth v. Radecki,
180 A.3d 441, 451 (Pa.Super. 2018) (“[A]n appellate court may affirm a valid
judgment based on any reason appears as of record[.]”). Additionally, while
the trial court did not provide Appellant with the notice required by
Pa.R.Crim.P. 907(1), the mere “failure to issue Rule 907 notice is not
reversible error where the record is clear that the petition is untimely.”
Commonwealth v. Zeigler, 148 A.3d 849, 851 n.2 (Pa.Super. 2016).
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Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/15/2022
- 10 - | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483892/ | J-A23033-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
CHAD EARL FRANTZ :
:
Appellant : No. 1572 MDA 2021
Appeal from the PCRA Order Entered November 15, 2021
In the Court of Common Pleas of Lancaster County Criminal Division at
No(s): CP-36-CR-0002297-2015
BEFORE: BOWES, J., McCAFFERY, J., and STEVENS, P.J.E.*
MEMORANDUM BY STEVENS, P.J.E.: FILED: NOVEMBER 15, 2022
Appellant Chad Earl Frantz files this appeal from the order of the Court
of Common Pleas of Lancaster County denying his petition pursuant to the
Post-Conviction Relief Act (PCRA).1 Appellant claims his trial counsel was
ineffective in pursuing a line of questioning of the victim on cross-examination.
After careful review, we affirm.
On December 2, 2015, a jury convicted Appellant of Rape of a Child,
Involuntary Deviate Sexual Intercourse with a Child (IDSI), Aggravated
Indecent Assault of a Child, Indecent Assault of a Child, Unlawful Restraint,
Corruption of Minors and Unlawful Contact with a Minor in connection with
claims that Appellant sexually abused his minor stepdaughter over a six-year
period when the victim was between the ages of four and ten.
____________________________________________
* Former Justice specially assigned to the Superior Court.
1 42 Pa.C.S.A. §§ 9541-9546.
J-A23033-22
After reviewing a pre-sentence investigation, on March 9, 2016, the trial
court held a hearing at which it determined that Appellant was a sexually
violent predator and sentenced him to an aggregate term of 30½ to 61 years’
imprisonment.
On appeal, on April 24, 2017, this Court reversed Appellant’s conviction
for indecent assault, affirmed the judgment of sentence in all other respects,
and determined resentencing was not necessary. Commonwealth v. Frantz,
702 MDA 2016, 2017 WL 1437530, at *1 (Pa.Super. Apr. 24, 2017)
(unpublished memorandum).
On August 23, 2017, Appellant filed a timely pro se PCRA petition. The
PCRA court appointed Appellant counsel who subsequently sought to withdraw
his representation and filed a no-merit brief. On March 27, 2018, the PCRA
court dismissed the petition. On July 19, 2019, this Court vacated the order
dismissing the petition and remanded for the appointment of counsel to file a
new petition as Appellant had been denied the right of earnest review of his
PCRA claims with the assistance of counsel. Commonwealth v. Frantz, 703
MDA 2018, 2019 WL 3229750, at *4 (Pa.Super. July 17, 2019) (unpublished
memorandum).
Upon remand, the PCRA court appointed new counsel, who filed an
amended PCRA petition on November 1, 2019. After Appellant filed a pro se
petition on November 18, 2019, counsel filed a second amended petition on
October 2, 2020.
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Appellant’s petition alleged that trial counsel was ineffective in asking
the victim a series of questions on cross-examination about whether she had
reported certain details about the abuse to the investigating detective. When
the victim indicated that she had not told the officer some of the details that
she shared at trial, the prosecution was permitted to play a recording of the
victim’s prior forensic interview with caseworkers where she had made a prior
consistent statement.
On July 20, 2021, the PCRA court held an evidentiary hearing at which
Appellant presented trial counsel as a witness. On November 12, 2021, the
PCRA court dismissed Appellant’s petition. This timely appeal followed.
Appellant presents the following issues for review on appeal:
I. Trial counsel testified that his reasonable strategic basis for
opening the door to the victim’s prior consistent statement
was an attempt to discredit her. He incorrectly accused her
of recently fabricating details of two incidents during cross-
examination. Did the PCRA court err when it held that trial
counsel had a reasonable basis for his questions?
II. The PCRA court found that the prosecutor’s admission of a
prior consistent statement – specifically, a recording of the
victim’s forensic interview – was not prejudicial. It reached
that conclusion on two bases: The recording was
cumulative of (i.e., consistent with) other evidence, and
other evidence, although created by the victim, supported
[Appellant’s] guilt. Did the PCRA court err when it held that
the admission of the recorded interview was not
prejudicial?
Appellant’s Brief, at 4.
In reviewing the denial of a PCRA petition, our standard of review is
well-established:
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[o]ur review of the grant or denial of PCRA relief is limited to
examining whether the PCRA court's findings of fact are supported
by the record, and whether its conclusions of law are free from
legal error. Commonwealth v. Cox, 636 Pa. 603, 146 A.3d 221,
226 n.9 (2016). The PCRA court's credibility determinations, when
supported by the record, are binding on this Court; however, we
apply a de novo standard of review to the PCRA court's legal
conclusions. Commonwealth v. Burton, 638 Pa. 687, 158 A.3d
618, 627 n.13 (2017).
Commonwealth v. Small, 647 Pa. 423, 440–41, 189 A.3d 961, 971
(2018).
Appellant’s petition raises claims of trial counsel’s ineffectiveness. Our
review of an ineffectiveness claim is guided by the following principles:
[a]s originally established by the United States Supreme
Court in Strickland v. Washington, 466 U.S. 668, [104
S.Ct. 2052, 80 L.Ed.2d 674] (1984), and adopted by
Pennsylvania appellate courts, counsel is presumed to have
provided effective representation unless a PCRA petitioner
pleads and proves all of the following: (1) the underlying
legal claim is of arguable merit; (2) counsel's action or
inaction lacked any objectively reasonable basis designed to
effectuate his client's interest; and (3) prejudice, to the
effect that there was a reasonable probability of a different
outcome at trial if not for counsel's error.
Commonwealth v. Wantz, 84 A.3d 324, 331 (Pa.Super. 2014)
(citations omitted). “A failure to satisfy any prong of the
ineffectiveness test requires rejection of the claim of
ineffectiveness.” Commonwealth v. Daniels, 600 Pa. 1, 963
A.2d 409, 419 (2009).
Commonwealth v. Selenski, 228 A.3d 8, 15 (Pa.Super. 2020).
With respect to the reasonable basis prong, “[g]enerally, where matters
of strategy and tactics are concerned, counsel's assistance is deemed
constitutionally effective if he chose a particular course that had some
reasonable basis designed to effectuate his client's interests.”
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Commonwealth v. Koehler, 614 Pa. 159, 36 A.3d 121, 132 (2012)
(quotations and citation omitted). “In making this assessment we are not to
employ a hindsight evaluation to determine whether other alternatives may
have been more reasonable, but whether there was a reasonable basis for the
course of action actually selected.” Commonwealth v. Charleston, 94 A.3d
1012, 1027 (Pa.Super. 2014) (citation omitted). To show counsel’s strategy
lacked a reasonable basis, Appellant must prove that the strategy employed
by trial counsel “was so unreasonable that no competent lawyer would have
chosen that course of conduct.” Commonwealth v. Rega, 593 Pa. 659, 696,
933 A.2d 997, 1018–19 (2007) (citation omitted).
Further, to satisfy the prejudice prong, “the petitioner must show that
there is a reasonable probability that, but for counsel's unprofessional errors,
the result of the proceedings would have been different. [A] reasonable
probability is a probability that is sufficient to undermine confidence in the
outcome of the proceeding.” Selenski, 228 A.3d at 16 (quoting
Commonwealth v. Spotz, 624 Pa. 4, 84 A.3d 294, 311-12 (2014) (citations,
quotation marks, and quotations omitted)).
As noted above, Appellant asserts that trial counsel had no reasonable
basis to suggest on cross-examination that the minor victim was making up
details about her sexual abuse during her trial testimony. Appellant claims
that trial counsel’s questioning opened the door for the prosecution to
rehabilitate the victim’s credibility pursuant to Pa.R.E. 613(c) with the
admission of prior consistent statements.
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It is well established that:
Evidence of a witness's prior consistent statement is admissible to
rehabilitate the witness when the statement is offered to rebut a
charge of recent fabrication, bias, or improper motive.
Commonwealth v. Counterman, 553 Pa. 370, 719 A.2d 284,
301 (1998); Pa.R.E. 613(c). … “[A] prior consistent statement is
always received for rehabilitation purposes only and not as
substantive evidence.” Commonwealth v. Baumhammers, 599
Pa. 1, 960 A.2d 59, 89 (2008) (citing Pa.R.E. 613 cmt).
Commonwealth v. Busanet, 618 Pa. 1, 53, 54 A.3d 35, 66–67 (2012).
In this case, Appellant points to two portions of the victim’s trial
testimony. In the first instance, the victim testified that Appellant had dumped
a bottle of water on her on one of the occasions in which he sexually abused
her. Notes of Testimony (N.T.), Trial, 11/30/15, at 163. In the second
instance, the victim recalled that Appellant concocted a “game” in which he
blindfolded her, placed objects in her hand, and asked her to guess what the
objects were. N.T., 11/30/15, at 164.
With respect to both incidents, trial counsel was able to get the victim
to admit on cross-examination that she had not shared some of these specific
details with investigators. The victim explained that she had not remembered
the details when speaking with the detective. N.T., 11/30/15, at 164.
In response to defense counsel’s allegation that the victim failed to
report these specific details to the police, the trial court permitted the
Commonwealth to play a recording of the victim’s forensic interview at the
Lancaster County Children’s Alliance in which the victim gave prior consistent
statements reporting these specific allegations of abuse to caseworkers.
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At the hearing, trial counsel indicated that his strategy was to discredit
the minor victim by showing that her testimony should not be believed as she
was suggestible to the coaching of her mother who was in the midst of
separating from Appellant. Notes of Testimony (N.T.), PCRA hearing, 7/20/21,
at 9-10, 26. Trial counsel claimed the defense had no possibility of winning
the case without attacking the victim’s credibility. N.T., 7/20/21, at 43-44.
Trial counsel indicated that he noticed that the victim was embellishing
her testimony on the witness stand with details she had not told investigators.
Trial counsel was able to successfully impeach the victim’s credibility in
compelling her to agree that she was testifying to allegations she had not
shared with the police. This admission by the victim allowed trial counsel to
suggest that the victim was fabricating her testimony and that the abuse had
in fact, never occurred. As such, trial counsel had a reasonable basis for asking
these questions that was designed to effectuate the interest of the defense.
We also agree with the PCRA court’s assessment that Appellant did not
show the admission of the forensic interview was so prejudicial that it resulted
in a different outcome in this case. After trial counsel effectively impeached
the victim’s credibility, trial counsel did open the door to the admission of the
forensic interview; however, the recording did not reveal any new information
to the jury, but simply offered cumulative evidence already in the record.
The trial court also took precautionary measures to ensure the jury knew
of the limited purpose for which the forensic interview was offered. Before
the recording of the interview was played for the jury, the trial court
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specifically instructed the jury that the recording was being offered solely for
the purpose of assessing the credibility of the victim, and not as substantive
evidence of Appellant’s guilt. N.T., 12/1/15, at 364-66.
Moreover, the prosecution presented other evidence to corroborate the
victim’s testimony such as her prior disclosures of the abuse to her family
members and friends, including her mother, sister, and friend. In addition,
the prosecution pointed to the victim’s writings referring to the abuse as well
as the circumstantial evidence which supported Appellant’s opportunity to
commit the abuse.
Based on the foregoing reasons, we conclude that the PCRA court
correctly found trial counsel was not ineffective in seeking impeach the
victim’s credibility by highlighting that she was testifying to particular
allegations that she had not presented to investigators. Accordingly, we affirm
the PCRA court’s decision to deny Appellant’s petition.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/15/2022
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https://www.courtlistener.com/api/rest/v3/opinions/8483888/ | J-A18032-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
JOHNATHAN BLAIR MAINES :
:
Appellant : No. 894 WDA 2021
Appeal from the Judgment of Sentence Entered March 25, 2019
In the Court of Common Pleas of Clearfield County Criminal Division at
No(s): CP-17-CR-0000345-2018
BEFORE: STABILE, J., MURRAY, J., and McLAUGHLIN, J.
MEMORANDUM BY McLAUGHLIN, J.: FILED: November 15, 2022
Jonathan Blair Maines was convicted and sentenced for one count each
of third-degree murder and recklessly endangering another person (“REAP”),
and two counts each of aggravated assault and simple assault.1 Maines
appealed and challenges the sufficiency and weight of the evidence. He also
challenges the admission of evidence and the denial of his motion for a new
trial. We affirm.
The Commonwealth presented evidence of the following at trial. Ashley
Storm testified that on March 20, 2018, she lived at a residence with Maines,
Rick Weatherholtz, Jesse Breeden, and Keith Pinter. N.T., Trial, 1/28/19, at
54, 57-58. At the time, Storm and Maines were romantically involved. Id. at
58. She testified that the night before, they all were ingesting
____________________________________________
118 Pa.C.S.A. §§ 2502(c), 2705, 2702(a)(1), 2702(a)(4), 2701(a)(1), and
2701(a)(4), respectively.
J-A18032-22
methamphetamine and marijuana, along with the victim, Joshua Sahm. Id.
at 59, 60. She testified that Weatherholtz and Breeden left the house that
morning. Id. at 66. Pinter remained downstairs while she, Maines, and the
victim were in her bedroom. Id. at 67. Storm left to go to the bathroom and
Maines followed her to the bathroom and asked what she was doing. Id. at
70. After telling him that she needed to use the bathroom, Maines left the
bathroom. Id.
While Storm was in the bathroom she heard someone in the bedroom
say, “So you’re going to kill me, huh?” Id. at 70, 71. When she left the
bathroom, she saw Maines holding a knife. Id. at 73. Maines ran out of the
bedroom, towards her, and said, “Go, go, baby, we got to go.” Id. She testified
that Maines pushed her downstairs and “[h]e was jumping around, flailing his
hands.” Id. at 74. She asked Maines what he did, and he replied that “he
didn’t know.” Id. While downstairs they encountered Pinter. All three ran
outside, and Pinter said that he was leaving since Storm intended to call 911.
Id. at 75. She testified that she intended to call 911 because the victim had
been stabbed. Id. Storm and Maines eventually ran back into the house. Id.
at 77. Storm testified that when she entered the house, she saw “a lot of
blood” in the hallway upstairs and the victim lying in a puddle of blood at the
bottom of the steps. Id. at 78, 79.
She also testified that Maines asked her “if [the victim] was dead” and
she replied that it looked like it. Id. at 78. Maines washed his hands and
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changed his clothes. Id. at 80. Before he changed, he was wearing camouflage
pants. He hid those clothes “downstairs, on the back stairs.” Id. at 79, 80.
Storm also said that the day before, someone gave her a “double bladed
knife.” Id. at 81, 186. Storm stated that Maines had the knife the night before
and “was just throwing it down and trying to get it to stick into the floor.” Id.
at 187. When she saw the victim on the floor, she noticed what she believed
to be her knife in the victim’s shoulder blade. Id. at 180. However, Storm’s
knife was recovered at the bottom of the stairwell. Id. at 103, 104. She asked
Maines if that was her knife and he said, “Actually there was two.” Id. at 81.
Storm testified that she asked Maines for his phone, but he told her that he
did not have it. He then told her to hide his phone if she found it and left the
house. Storm went back to her bedroom to look for the phone. Id. at 82. In
her room, she noticed “a lot of blood” in the chair where the victim had been
sitting before she left to use the bathroom. Id. at 82, 184. She testified that
Maines’ phone “ended up lighting up in a puddle of blood[.]” Id. She used the
phone to call 911. Id. at 83.
Pinter testified that on the morning of the incident, he was sleeping
downstairs and was suddenly awakened by a “garbled scream.” N.T., Trial,
1/29/19, at 108. He testified that it sounded “like their air, was like, being
choked off, kind of like a weak scream.” Id. He heard the screaming coming
from upstairs and heard, “Kill me, will you.” Id. at 109. He thought that it was
his imagination but then he heard the screaming again and a scuffle. Id. at
110. He again heard, “Kill me, will you.” Id. Pinter walked towards the
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staircase and saw Maines backing out of Storm’s bedroom. Id. He then saw
the victim come out of the bedroom while leaning against the wall. Id. at 111.
At this point, Storm exited the bathroom and she and Maines ran downstairs.
Id. at 111, 112. The three of them exited the house and Pinter saw blood
spatter on Maines’ camouflage pants. Id. at 114. Storm and Maines told Pinter
that the victim had a knife sticking out of him. Id. at 113. Pinter left the
residence and went to a friend’s house. Id. at 115.
Dr. Harry Nachlas Kamerow performed an autopsy of the victim. Id. at
7. He testified that the victim had a stab wound in his back and two stab
wounds to his neck. Id. at 16, 17. At the time of the autopsy, a knife was still
in the victim’s back. Id. at 16. Dr. Kamerow determined that the knife was
inserted with such force that it broke the victim’s ribs. Id. at 22. Dr. Kamerow
testified that the lacerations in the victim’s neck were consistent with the knife
removed from his body. Id. at 32, 33.
During Dr. Kamerow’s testimony, defense counsel objected to the
admission of a photo taken during the autopsy. Id. at 31. He argued that it
was prejudicial and that the jury did not need to see the photograph. Id. He
suggested that it would be enough for Dr. Kamerow to testify about the
victim’s injuries. Id. The court overruled the objection. Id. at 32. Dr. Kamerow
proceeded to describe the victim’s injuries using the photograph. He testified
that the victim’s cause of death was a result of the stab wounds to his neck
and back and that the manner of death was a homicide. Id. at 42.
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Joseph Kukosky of the Pennsylvania State Police testified as a forensic
DNA expert. Id. at 71. He testified that Maines’ DNA was found on the
camouflage pants and the blood stain on the pants contained the victim’s DNA.
Id. at 91, 92. He also testified that two other unknown DNA profiles were
recovered from the waistband, zipper pull, and button of Maines’ pants. Id. at
100.
The Commonwealth also presented testimony from Gregory Collins, a
warden at the Clearfield County Jail. N.T., Trial, 1/30/19, at 4. Collins
explained that Maines was currently an inmate at the jail. Id. at 6. Counsel
did not object to this testimony. Id. Collins testified about the contents of
recorded phone calls from Maines. Id. at 7-10. Before the Commonwealth
played the first call for the jury, counsel objected. Id. at 7-8. He argued that
the recording identified Maines as an inmate and that it would be prejudicial.
Id. at 8. The court overruled the objection.
After a four-day trial, the jury returned guilty verdicts for the above-
referenced offenses. The trial court sentenced Maines to 20 to 40 years’
incarceration. Maines filed a post-sentence motion, and the court held a
hearing.2 Maines challenged the sufficiency and weight of the evidence. He
also raised issues with the court’s admission of the autopsy photograph and
the prison phone calls. The court denied the motion. See Order, filed 9/10/19.
____________________________________________
2 The court granted Maines an extension to file his post-sentence motion.
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On August 27, 2019, Maines filed a post-sentence motion for a new trial
pursuant to Rule 720(C) of the Pennsylvania Rules of Criminal Procedure. He
alleged that eight days beforehand, on August 19, he had received
“information from a known witness, not previously known by [Maines].” Post
Sentence Motion for New Trial, filed 8/27/19, at ¶ 9. The witness, Catherine
Anderson, claimed that after Pinter left the scene of the crime, he went to her
house. She alleged that Pinter had blood on his shirt and pants and that she
told Pinter that he could not stay at the house. Id. at ¶ 10(a)-(c). Anderson
also claimed that she spoke with Storm who told her that she and Pinter were
in the bedroom when the victim was stabbed and that they both had knives
in their hands. Id. at ¶ 10(e)(i)-(iv). Storm allegedly told Anderson that an
argument ensued, and the victim was stabbed. Id. at ¶ 10(e)(v). Anderson
also claimed that Maines was not involved in the stabbing. Id. at ¶ 10(e)(vi).
At a hearing on the motion,3 defense counsel explained that even though
he had served Anderson with a subpoena the day before, she had failed to
appear at the hearing. Counsel stated that he had received a message from
her that “she was having difficulty getting transportation.” N.T., Post Sentence
Motion 720(C), 7/6/21, at 3.4 Counsel noted his efforts to track her down
included contacting “ten different people, probably visited I don’t know how
____________________________________________
3 The hearing was scheduled for September 24, 2019. For unknown reasons,
the hearing was continued multiple times until July 6, 2021.
4Before the hearing, Maines filed a direct appeal with this Court. However,
upon his request, we remanded the case to allow the court to dispose of the
Rule 720(C) motion.
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many different residences throughout the southern part of the county.” Id. at
5.
Based on Anderson’s failure to appear, counsel requested a continuance.
The court denied the request noting that “there is no guarantee that your
witness will show up at that time.” Id. at 4. It also stated that the case had
been scheduled “for a considerable period of time[,]” considering the motion
was filed two years prior. Id. at 8, 9. Maines filed a motion for reconsideration
alleging that Anderson had failed to appear at the hearing due to “various
difficulties,” including “the passing of her grandmother within the past week,
her son being life-flighted for a head injury from an accident with a hammer
just two (2) days prior to said hearing, and lack of transportation.” Motion for
Reconsideration, filed 7/7/21, at ¶ 13. Counsel maintained that Anderson
remained willing to testify. Id. at ¶ 14. The court denied the motion and this
timely appeal followed.
Maines raises the following issues before this Court:
I. Whether sufficient evidence was presented at trial to
support convictions for murder of the third degree,
aggravated assault, simple assault and recklessly
endangering another person.
a. Whether sufficient evidence was presented at trial
to support a conviction for murder of the third
degree.
b. Whether sufficient evidence was presented at trial
to support a conviction for aggravated assault.
c. Whether sufficient evidence was presented at trial
to support a conviction for simple assault.
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d. Whether sufficient evidence was presented at trial
to support a conviction for recklessly endangering
another person.
II. Whether [Maines’] convictions for murder of the third
degree, aggravated assault, simple assault and
recklessly endangering another person were against
the weight of the evidence.
III. Whether the lower court erred by allowing the
Commonwealth to, over defense counsel’s objection,
admit into evidence and publish to the jury an
inflammatory photograph from the victim’s autopsy.
IV. Whether the lower court erred by allowing the
Commonwealth to present inflammatory evidence of
[Maines’] incarceration.
V. Whether the lower court erred by denying [Maines’]
request for a continuance and in turn denying
[Maines’] post sentence motion pursuant to
P.R.Crim.P. 720(c).
Maines’ Br. at 6-7 (answers of trial court omitted).
Sufficiency of the Evidence
Maines’ first issue addresses the sufficiency of the evidence for each of
his convictions. When presented with a challenge to the sufficiency of the
evidence we must determine whether the evidence when viewed in the light
most favorable to the Commonwealth, with “all reasonable inferences drawn
therefrom,” demonstrates that the Commonwealth has proven each element
of the crime beyond a reasonable doubt. Commonwealth v. Murray, 83 A.3d
137, 150-51 (Pa. 2013). “The Commonwealth may sustain its burden of
proving every element beyond a reasonable doubt by means of wholly
circumstantial evidence.” Commonwealth v. Wanner, 158 A.3d 714, 718
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(Pa.Super. 2017) (citation omitted). “Any doubts regarding a defendant’s guilt
may be resolved by the fact-finder unless the evidence is so weak and
inconclusive that as a matter of law no probability of fact may be drawn from
the combined circumstances.” Commonwealth v. Gause, 164 A.3d 532, 540
(Pa.Super. 2017) (citations omitted). We now address each conviction
separately.
Third-Degree Murder
Maines argues that the evidence was too weak and inconclusive to prove
that it was he who killed the victim and that the killing was with malice. He
claims that even considering the standard of review, “no eye-witnesses
observed [Maines] in the same room with the victim at the time of the alleged
stabbing.” Maines’ Br. at 30. He also maintains that despite evidence of blood
splatter throughout Storm’s bedroom and the stairwell, there was only “a little
blood splatter on one pant-leg of [Maines’] camouflage pants.” Id. at 32. He
contends that even considering the Commonwealth’s evidence, the scuffling
between the victim and Maines “would have surely caused the aggressor’s
hands, arms, and shirt to come into contact with the victim’s blood.” Id. He
further emphasizes that Kukosky testified that Maines’ DNA was not found on
the handle of the murder weapon and that three unidentified DNA profiles
were found on the zipper of Maines’ pants. He argues that this evidence shows
“that someone other than [Maines] had been wearing the pants, and could
have been wearing the pants at the time of the incident.” Id. at 34.
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The Commonwealth presents sufficient evidence of third-degree murder
where it proves “the killing of an individual with malice.” Commonwealth v.
Jones, 271 A.3d 452, 458 (Pa.Super. 2021) (citation omitted). “Malice
includes not only particular ill will toward the victim, but also wickedness of
disposition, hardness of heart, wantonness, and cruelty, recklessness of
consequences, and conscious disregard by the defendant of an unjustified and
extremely high risk that his actions may cause serious bodily harm.” Id. Malice
is inferred “from the use of a deadly weapon on a vital part of the body.”
Commonwealth v. Seibert, 622 A.2d 361, 364 (Pa.Super. 1993); see also
Commonwealth v. Blakeney, 946 A.2d 645, 652 (Pa. 2008) (noting neck is
a vital part of the body).
Here, the trial court determined that the evidence sufficiently
established the crime of third-degree murder. It explained:
Multiple witnesses testified that they saw [Maines] and the
victim near each other around the time of the stabbing. They
also testified that they saw no one else in the house at that
time other than the victim, [Maines], Ms. Storm, and Mr.
Pinter. Both Ms. Storm and Mr. Pinter said they heard
[Maines] say they needed to go. Ms. Storm testified that
[Maines] asked her to lie and say he was not at the scene
and hide his cell phone if she found it. DNA evidence was
also presented, which showed that a pair of pants [Maines]
was wearing at the time of the incident had both his DNA
and blood from the victim. Those are the same pair of pants
Ms. Storm testified that she saw [Maines] change out of and
hide before he ran from the scene. The doctor testified that
the victim died from stab wounds caused by a knife that the
witnesses saw [Maines] playing with earlier that day and the
prior night.
Opinion and Order, filed 2/5/20, at 5. We agree with the court.
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Viewing the evidence in the light most favorable to the Commonwealth
as verdict-winner, the evidence was sufficient to sustain third-degree murder.
Though no one saw Maines stab the victim, the evidence established that
Maines was last seen in Storm’s bedroom with the victim. Both Storm and
Pinter testified to hearing the victim yelling out something about “kill me, will
you” or “so you’re going to kill me huh.” The evidence also showed that Maines
washed his hands and changed his clothes before leaving the residence,
establishing a consciousness of guilt. Additionally, the victim’s blood was
found on Maines’ pants and Maines was seen the night before with one of the
knives used to stab the victim. Additionally, as noted above, the use of a
deadly weapon on a vital part of the body may provide an inference of a
defendant’s malice. Here, the Commonwealth presented evidence that the
victim was stabbed twice in his neck, a vital part of his body. Furthermore,
Dr. Kamerow testified that the victim was stabbed with such force that the
knife broke the victim’s ribs.
Maines’ suggestions of how the evidence could have been interpreted
ignore our standard of review for sufficiency challenges, i.e., viewing the
evidence in the light most favorable to the Commonwealth, not to Maines.
Therefore, we are unpersuaded by his speculative claims that someone else
could have been wearing his pants or that more blood should have been on
his person and/or his clothes based on the testimony of the Commonwealth’s
witnesses. The evidence was sufficient.
Aggravated Assault and Simple Assault
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As it relates to the crime of aggravated assault, Maines alleges that the
Commonwealth failed to present sufficient evidence that he caused serious
bodily injury to the victim. He also argues that the Commonwealth did not
present sufficient evidence that he caused bodily injury to the victim to
support the crime of simple assault.
The Crimes Code defines aggravated assault in relevant part as:
A person is guilty of aggravated assault if he:
(1) attempts to cause serious bodily injury to another, or
causes such injury intentionally, knowingly or
recklessly under circumstances manifesting extreme
indifference to the value of human life[.]
18 Pa.C.S.A. § 2702(a)(1). Serious bodily injury includes “[b]odily injury
which creates a substantial risk of death or which causes serious, permanent
disfigurement, or protracted loss or impairment of the function of any bodily
member or organ.” 18 Pa.C.S.A. § 2301 (“Serious bodily injury”). A person
may be convicted of simple assault where the evidence shows that the
individual attempted to cause or intentionally, knowingly, or recklessly caused
bodily injury to another. 18 Pa.C.S.A. § 2701(a)(1). Bodily injury is the
“[i]mpairment of physical condition or substantial pain.” 18 Pa.C.S.A. § 2301
(“Bodily Injury”).
While the Commonwealth did not present direct evidence that Maines
stabbed the victim with two knives, the Commonwealth presented
circumstantial evidence of such. See Wanner, 158 A.3d at 718. The evidence
established that the victim was stabbed three times with two separate knives,
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once in the back and twice in the neck. Maines had one of these knives the
night before the murder and was also seen running from the bedroom with a
knife in his hand. This evidence sufficiently established that Maines caused
bodily injury. It was also sufficient to establish the lesser-included offense of
simple assault, which requires bodily injury. See Commonwealth v. Walls,
950 A.2d 1028, 1032 (Pa.Super. 2008) (finding sufficient evidence of
aggravated assault where defendant stabbed victim multiple times with a
screwdriver in the back, torso, neck, and head).
Recklessly Endangering Another Person
To prove REAP, the Commonwealth must show that the defendant “(1)
possessed ‘a mens rea [of] recklessness,’ (2) committed a wrongful deed or
guilty act (‘actus reus’), and (3) created by such wrongful deed the danger of
death or serious bodily injury to another person.” Commonwealth v. Emler,
903 A.2d 1273, 1278 (Pa.Super. 2006) (citation omitted). Recklessness is
defined as “a conscious disregard of a known risk of death or great bodily
harm to another person.” Id. (citation omitted). REAP “requires the creation
of danger, so the Commonwealth must prove the existence of an actual
present ability to inflict harm to another.” Commonwealth v. Shaw, 203
A.3d 281, 284 (Pa.Super. 2019).
Maines argues that the Commonwealth did not present sufficient
evidence of his mens rea. He claims the prosecution failed to show that he
“recklessly did something that placed or may have placed the victim in danger
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of death or serious bodily injury.” Maines’ Br. at 36. This argument is
meritless.
Like his arguments for his other offenses, Maines relies heavily on the
fact that no one saw him stab the victim. However, as noted above, the
Commonwealth may meet its burden by wholly circumstantial evidence. The
circumstantial evidence here, viewed in the light most favorable to the
Commonwealth, was sufficient to sustain the verdict of REAP. There was ample
testimony and other evidence, as recited above, that Maines stabbed the
victim in his neck and back. This raised a strong inference of a conscious
disregard of an obvious risk of great bodily harm to or death of the victim.
That was enough to prove mens rea beyond a reasonable doubt. No relief is
due.
Weight of the Evidence
Maines’ next issue challenges the weight of the evidence for all his
convictions. He maintains that due to the lack of DNA evidence, lack of
significant blood spatter found on his pants or his person, and lack of
credibility of the Commonwealth’s witnesses, the verdict here shocks the
conscience. Maines notes that Storm changed her story multiple times,
admitted to being high the night before and the morning of the incident, and
owned one of the knives used to stab the victim. He also points out that Pinter
testified that he also was high the morning of the incident and that his
testimony was inconsistent with Storm’s testimony. He notes the testimony of
Breeden who testified that he had knives sticking to his bedroom walls and
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ceiling. He also argues that the video surveillance shows a person who is not
Maines and that he was not with Storm and Pinter as the witnesses testified.
Our standard of review for a challenge to the weight of the evidence is
well settled:
A claim alleging the verdict was against the weight of the
evidence is addressed to the discretion of the trial court.
Accordingly, an appellate court reviews the exercise of the
trial court's discretion; it does not answer for itself whether
the verdict was against the weight of the evidence. It is well
settled that the jury is free to believe all, part, or none of
the evidence and to determine the credibility of the
witnesses, and a new trial based on a weight of the evidence
claim is only warranted where the jury's verdict is so
contrary to the evidence that it shocks one's sense of
justice. In determining whether this standard has been met,
appellate review is limited to whether the trial judge's
discretion was properly exercised, and relief will only be
granted where the facts and inferences of record disclose a
palpable abuse of discretion.
Commonwealth v. Houser, 18 A.3d 1128, 1135-36 (Pa. 2011) (citations
and internal quotation marks omitted).
Here, the trial court determined that “looking at the record as a whole,
the jury’s verdict is not so shocking as to cause a miscarriage of justice.”
Opinion and Order (“February Order”), filed 2/5/20, at 8 (unpaginated).
Even if the jury had given more weight to one witness or
another, it is not contradictory to the verdict. Not only did
the Commonwealth present multiple witnesses that placed
[Maines] near the victim at the time of the stabbing, there
was also DNA evidence of both the victim’s and [Maines’]
DNA on the same clothes [Maines] was wearing at the time
of the incident. [Maines] also argues that because they
presented a witness who stated [Maines] was not wearing
shoes later in the evening, it should disprove all other
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testimony that [Maines] was in the video. However, it is not
unreasonable for the jury to draw reasonable inferences
since that particular witness was not present at the scene or
time of the incident.
Id. at 8-9 (unpaginated). The court incorporated this reasoning for each
conviction challenged by Maines. See id. at 9.
We see no basis to disturb the trial court’s finding. Despite other
inconsistencies in their testimony, both Pinter and Storm testified that Maines
was near the victim before the stabbing. As factfinder, the jury was tasked
with the responsibility of reconciling inconsistencies and assessing the
credibility of witnesses and evidence. We cannot, on this record, say the trial
court abused its discretion in rejecting his weight claim. No relief is due.
Admission of Evidence
Next Maines alleges that the trial court erred by publishing a photograph
from the victim’s autopsy. He alleges that the photograph was inflammatory
because it “inflamed the minds of the jurors and sought undue emotional
appeal.” Maines’ Br. at 52. He argues that even if it was reasonable for the
photograph to be shown to Dr. Kamerow, publishing the photograph to the
jury was a step too far because it lacked probative value and was highly
inflammatory. He further argues that because the court failed to give a
cautionary instruction, it left the potential for the jury’s minds to be inflamed.
We review a challenge to the admission of evidence for an abuse of
discretion. In this Commonwealth, a two-step process is employed for trial
courts when considering the admission of photographs of homicide victims,
- 16 -
J-A18032-22
“which by their very nature can be unpleasant, disturbing, and even brutal[.]”
Commonwealth v. Johnson, 42 A.3d 1017, 1033 (Pa. 2012) (citation
omitted). First, the “court must determine whether the photograph is
inflammatory.” Id. (citation omitted). Second, if the photograph is not
inflammatory, the court must determine its relevance and whether it would
“assist the jury’s understanding of the facts.” Id. at 1034 (citation omitted).
“If the photograph is inflammatory, the trial court must decide whether or not
the photographs are of such essential evidentiary value that their need clearly
outweighs the likelihood of inflaming the minds and passions of the jurors.”
Id. (citation omitted). Where a witness can testify about the victim’s injuries
without photographs, “a witness’s ability to testify as to the condition of the
body does not render photographs per se inadmissible.” Id.; see
Commonwealth v. Rush, 646 A.2d 557, 560 (Pa. 1994) (“[E]ven where the
body’s condition can be described through testimony from a medical
examiner, such testimony does not obviate the admissibility of photographs”).
Here, the court determined that the photograph was not inflammatory
because it “did not show the victim’s face, and it was a cleaned up picture of
the wounds.” February Order, at 10. The court found that even if the picture
could be considered inflammatory, it had extreme evidentiary value. It also
concluded that because the Commonwealth alleged that Maines stabbed the
victim, the jury needed to determine whether Maines caused the victim’s
death. The court stated that without the photograph, “there was no way a jury
could have considered the charge of criminal homicide.” Id. at 11.
- 17 -
J-A18032-22
The trial court permissibly published to the jury the photograph of the
victim. The photograph was necessary to aid Dr. Kamerow in his testimony of
the nature and extent of the victim’s injuries, which was relevant to show
Maines’ intent. See Commonwealth v. Pruitt, 951 A.2d 307, 319 (Pa. 2008)
(stating “photographic images of a homicide victim are often relevant to the
intent element of the crime of first-degree murder”). Importantly, Maines was
on trial for first-degree murder (although the jury ultimately found him guilty
of third-degree murder), such that the photo was relevant to intent. Thus, the
photograph was not merely cumulative of Dr. Kamerow’s prior testimony.
Furthermore, even if Dr. Kamerow could have testified to the victim’s injuries
without the photographs, this did not make the photographs per se
inadmissible. Having reviewed the photograph, it is as the court described and
was not inflammatory. The photograph only displayed the victim’s neck and
the injuries to his neck. While the victim’s head is visible in the photograph,
his face was covered with a towel.
Maines also argues that the court erred by admitting two audio
recordings of Maines’ telephone conversations while incarcerated. He argues
that the recordings were inflammatory because they “prejudicially drew
attention to [Maines’] incarceration.” Maines’ Br. at 60. He alleges that any
probative value from the recordings was outweighed by the prejudice of
“casting [Maines] as a prison inmate.” Id.
“[G]enerally no reference may be made at trial in a criminal case to a
defendant’s arrest or incarceration for a previous crime[.]” Commonwealth
- 18 -
J-A18032-22
v. Johnson, 838 A.2d 663, 680 (Pa. 2003) (emphasis added). However,
“there is no rule in Pennsylvania which prohibits reference to a defendant’s
incarceration awaiting trial or arrest for the crimes charged.” Id. Our courts
have admonished “constant reminder[s]” of the defendant’s incarcerated
status such as the defendant’s prison attire since it could “affect a juror’s
judgment.” See Estelle v. Williams, 425 U.S. 501, 504-05 (1976);
Johnson, 838 A.2d at 680-81 (concluding that witness’s passing reference to
incarcerated status of defendant did not rise to the level of constant reminder
of incarcerated status).
Here, the court determined that the reference to Maines’ incarceration
was brief and was not prejudicial. We discern no error in this conclusion.
Maines’ incarcerated status was a passing reference and not of the nature of
a “constant reminder” of which our Courts have disapproved. Additionally,
before the prison calls were played for the jury, Maines’ incarcerated status
had been mentioned to the jury, without any objection from counsel. See
N.T., Trial, 1/30/19, at 6. Moreover, the mention of Maines’ incarceration was
based on crimes for which he was on trial, and therefore the reference was
not prohibited. See Johnson, 838 A.2d at 681.
Denial of Continuance
Maines also alleges that the trial court erred in denying his motion for a
continuance. He maintains that the court abused its discretion since he served
a subpoena on the witness who failed to appear. He notes that the witness
failed to appear at the hearing due to transportation issues. He also maintains
- 19 -
J-A18032-22
that because it appeared that the witness remained willing to testify and the
nature of her testimony, the court should have granted the continuance
request.
It is within the court’s discretion to grant or deny a continuance request.
See Commonwealth v. Ross, 57 A.3d 85, 91 (Pa.Super. 2012);
Pa.R.Crim.P. 106(A). Here, the court explained that it denied the motion for a
continuance because there was no guarantee that the witness would show
“even if the request for a continuance was granted.” Opinion and Order
(“September Order”), filed 9/2/21, at 7. It referenced the many efforts that
counsel made to reach the witness and determined that “[i]f Anderson was
willing to cooperate with [Maines], as counsel asserted, she could have made
her whereabouts known to counsel, instead of requiring him to track her down
through numerous people all over the county.” Id.
We discern no abuse of discretion. Despite counsel’s efforts to locate
Anderson and his eventual success in serving a subpoena on her, she failed to
appear at the hearing. As the court concluded, counsel could not make any
guarantees that the witness would appear if the case were continued.
Additionally, at the time of the hearing, more than two years had passed from
the initial filing of the motion. The court did not abuse its discretion in denying
the request.
After-Discovered Evidence
- 20 -
J-A18032-22
Maines also claims that the trial court erred by denying his Rule 720(C)
motion. He alleges that the after-discovered evidence was probative and not
offered simply to challenge the credibility of the Commonwealth’s witnesses.
We review the court’s denial of a post-sentence motion for a new trial
for an abuse of discretion. See Commonwealth v. Brooker, 103 A.3d 325,
332 (Pa.Super. 2014). Rule 720 provides that a defendant may file a post-
sentence motion “for a new trial on the ground of after-discovered
evidence[.]” Pa.R.Crim.P. 720(C). Before the motion may be granted the
defendant must show the evidence: “1) has been discovered after the trial
and could not have been obtained at, or prior to, the conclusion of the trial by
the exercise of reasonable diligence; 2) is not merely corroborative or
cumulative; 3) will not be used solely for impeaching credibility of a witness;
[and] 4) is of such nature and character that a different verdict will likely result
if a new trial is granted.” Commonwealth v. Brosnick, 607 A.2d 725, 727
(Pa. 1992) (citation omitted). “[T]he proposed new evidence must be
producible and admissible.” Id. (citation omitted).
The trial court determined that Anderson’s testimony would be mere
impeachment evidence and would not be likely to result in a different verdict.
The statements made by [the witness] are intended to
undermine the credibility of Storm and Pinter and provide a
new theory of the events. Even more, the jury would not be
required to believe the testimony of [the witness] over
Storm and Pinter. Likewise, [the witness’s] testimony does
not negate the additional forensic evidence or the testimony
of other numerous witnesses presented by the
Commonwealth. Therefore, [Maines] cannot establish that
- 21 -
J-A18032-22
the evidence is more than impeachment evidence, nor can
he establish that it would likely result in a different verdict.
September Order, at 7. The court did not abuse its discretion.
Here, the proffered testimony of the witness directly contradicts the
testimony of Storm and Pinter who testified that Maines was last seen in the
room alone with the victim. Anderson claims that Storm told her that she,
Pinter, and the victim were in the room together and that Maines was not
involved. The witness also suggested that Pinter arrived at her home with
bloody clothes and that she turned him away. While this evidence does not
directly impeach Pinter’s testimony, it does impeach his testimony that he was
not in the room when the victim was stabbed. Thus, as the court concluded,
Maines “cannot establish that the evidence is more than impeachment
evidence, nor can he establish that it would likely result in a different verdict.”
Id.
Judgment of sentence affirmed.
- 22 -
J-A18032-22
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/15/2022
- 23 - | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483896/ | ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of - )
)
Fluid Filtration Manufacturing Corp. ) ASBCA No. 63241
)
Under Contract No. SPMYM4-19-P-0423 )
APPEARANCES FOR THE APPELLANT: Christopher S. Young, Esq.
Erin D. Brooks, Esq.
Business & Technology Law Group
Columbia, MD
APPEARANCES FOR THE GOVERNMENT: Daniel K. Poling, Esq.
DLA Chief Trial Attorney
Julie K. Phillips, Esq.
Trial Attorney
DLA Land and Maritime
Columbus, OH
ORDER OF DISMISSAL
The dispute has been settled. The appeal is dismissed with prejudice.
Dated: October 27, 2022
CHRISTOPHER M. MCNULTY
Administrative Judge
Armed Services Board
of Contract Appeals
I certify that the foregoing is a true copy of the Order of Dismissal of the Armed
Services Board of Contract Appeals in ASBCA No. 63241, Appeal of Fluid Filtration
Manufacturing Corp., rendered in conformance with the Board’s Charter.
Dated: October 28, 2022
PAULLA K. GATES-LEWIS
Recorder, Armed Services
Board of Contract Appeals | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483977/ | Filed 11/15/22 In re E.A. CA2/6
NOT TO BE PUBLISHED IN THE 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
SECOND APPELLATE DISTRICT
DIVISION SIX
In re E.A., a Person Coming 2d Juv. No. B315127
Under the Juvenile Court (Super. Ct. No. FJ56399)
Law. (Los Angeles County)
THE PEOPLE,
Plaintiff and Respondent,
v.
E.A.,
Defendant and Appellant.
E.A. appeals the juvenile court’s order sustaining a
wardship petition alleging possession of a firearm by minor.
(Welf. & Inst. Code, § 602;1 Pen. Code, § 29610.) He contends the
All further statutory references are to the Welfare and
1
Institutions Code, unless otherwise stated.
juvenile court erroneously denied his suppression motion
pursuant to section 700.1. We affirm.
FACTS AND PROCEDURAL HISTORY
At about 6:00 p.m., June 2021, two Los Angeles police
officers were on patrol when they noticed a group of
approximately eight males standing in the middle of the street
near the intersection of 17th and Oak Street. The officers also
observed a vehicle in the westbound driving lane of 17th Street
that appeared to be attempting to cross Oak Street but was
blocked by the group standing in the street. The officers stopped
their patrol car to detain the individuals for violating the Vehicle
Code regarding pedestrians on the roadway. (Veh. Code, §
21954.)
Upon exiting the patrol car, Officer Barrera ordered the
group to the sidewalk. All of the individuals complied except
appellant. Instead, he turned and walked down the street toward
his parked vehicle and attempted to enter it. Meanwhile, as
Officer Yahcamara exited the patrol car, he observed a “bulge” at
appellant’s waistband, which he believed to be the handle of a
firearm. Officer Yahcamara physically detained appellant,
performed a pat search, and recovered a firearm.
After the group was moved from the street to the sidewalk,
the officers determined the vehicle that they initially believed
was attempting to cross Oak Street was in fact unoccupied and
illegally parked in the driving lane of the street.
In denying the motion to suppress, the juvenile court
indicated that it had listened to Officer Yahcamara’s testimony
and watched the body-worn camera video of both officers. It
further stated, “I believe that [appellant] was part of the
collective group that was blocking the roadway . . . . ¶ I think it
2
was a lawful detention and a lawful pat down . . . the fruit of
which was a gun. So, the motion is denied.” Thereafter, the
juvenile court sustained the section 602 petition and ordered
appellant to continue as a ward of the court.
DISCUSSION
Appellant erroneously contends the juvenile court erred in
denying his motion to suppress because both the initial detention
and subsequent search were unlawful.
In reviewing the denial of the suppression motion, we defer
to the juvenile court’s factual findings if supported by substantial
evidence, but independently review its application of the law to
those findings. (In re H.M. (2008) 167 Cal.App.4th 136, 142.)
The Fourth Amendment guarantees the right to be free of
unreasonable searches and seizures by law enforcement
personnel. (U.S. Const., 4th Amend.; Terry v. Ohio (1968) 392
U.S. 1, 8-9 (Terry).) However, an officer may conduct a brief,
investigative stop when the officer has reasonable suspicion,
supported by articulable facts, that criminal activity may be
afoot. (United States v. Sokolow (1989) 490 U.S. 1, 7; Terry, at p.
22.) An ordinary traffic stop is treated as an investigatory
detention and is justified if it is based on at least reasonable
suspicion that an individual has violated the Vehicle Code or
some other law. (People v. Durazo (2004) 124 Cal.App.4th 728,
734-735.) The reasonable suspicion standard is not based on the
officer’s subjective state of mind, rather it is objective in nature
and determined based on the totality of the circumstances. (In re
Edgerrin J. (2020) 57 Cal.App.5th 752, 762; People v. Letner and
Tobin (2010) 50 Cal.4th 99, 145 (Letner and Tobin); Sokolow, at
p. 8.)
3
Here, appellant’s initial detention was justified based on
the officers’ observations that appellant, along with seven other
individuals, was unlawfully standing in the middle of the street
blocking a vehicle on the roadway. Vehicle Code section 21954,
subdivision (a) provides: “Every pedestrian upon a roadway at
any point other than within a marked crosswalk or within an
unmarked crosswalk at an intersection shall yield the right-of-
way to all vehicles upon the roadway so near as to constitute an
immediate hazard.”
Appellant cites People v. Ramirez (2006) 140 Cal.App.4th
849, and contends the stop was “nothing more than a subterfuge”
to detain Hispanic males “for which there was no legal basis.”
This argument lacks merit for the following reasons. First, there
is no evidence in the record to support appellant’s contention that
the officers impermissibly detained him because he is Hispanic.
Second, Ramirez is distinguishable and does not support a
finding that the detention in this case was unlawful. In Ramirez,
the officer witnessed an individual crossing an intersection
diagonally who was already three-quarters of the way from the
other side of the street. The only visible vehicle was the officer’s
patrol car. (Id. at pp. 853-854.) In reversing the trial court’s
denial of the suppression motion, the Court of Appeal concluded
there was no violation of Vehicle Code section 21954 because the
defendant had not impeded anyone on the roadway and the
officer’s patrol car did not pose an “immediate hazard.” (Id. at
pp. 852-854.)
Appellant contends, like Ramirez, he could not have
violated Vehicle Code section 21954 because there was no
“traffic” at the time of the detention. But appellant’s contention
ignores the officer’s testimony that he observed a vehicle located
4
in the driving lane of 17th Street that appeared to be crossing, or
about to cross, Oak Street. It is irrelevant that the vehicle was
later determined to be unoccupied and parked in the middle of
the street. Rather, the relevant consideration is what
“circumstances [were] known or apparent to the officer” at the
time of the investigative stop. (In re Tony C. (1978) 21 Cal.3d
888, 893.) “‘[W]e cannot reasonably demand scientific certainty
from . . . law enforcement officers where none exists. . . .’” (Letner
and Tobin, supra, 50 Cal.4th at p. 146.) Based on the foregoing
reasons, the initial detention was lawful.
The detention and pat search of appellant were also lawful.
Officer Yahcamara testified that as he exited his patrol car, he
observed a “bulge” in appellant’s waistband area, which based on
his training and experience, was consistent with the handle of a
firearm. Where, as here, an officer “reasonably suspects that an
individual whose suspicious behavior he or she is investigating is
armed and dangerous to the officer or others, [the officer] may
perform a pat search for weapons.” (In re H.M., supra, 167
Cal.App.4th at p. 143; Terry, supra, 392 U.S. at pp. 24, 30.) In
light of the officer’s suspicion that appellant had a firearm, and
given appellant’s suspicious behavior during the detention,
including his refusal to follow commands, it would be
unreasonable to deny the officer the power to “neutralize the
threat of physical harm.” (See Terry, at p. 24; In re Jeremiah S.
(2019) 41 Cal.App.5th 299, 305; Illinois v. Wardlow (2000) 528
U.S. 119, 124.)
Finally, appellant’s contention that evidence of the firearm
should be suppressed as fruit of the poisonous tree is meritless.
There was no poisonous tree.
5
DISPOSITION
The judgment (orders denying motion to suppress and
sustaining section 602 petition) is affirmed.
NOT TO BE PUBLISHED.
YEGAN, J.
We concur:
GILBERT, P. J.
BALTODANO, J.
6
Christina L. Hill, Judge
Superior Court County of Los Angeles
______________________________
Richard L. Fitzer, under appointment by the Court of
Appeal, for Defendant and Appellant.
Rob Bonta, Attorney General, Lance E. Winters, Chief
Assistant Attorney General, Susan Sullivan Pithey, Senior
Assistant Attorney General, Noah P. Hill, Supervising Deputy
Attorney General, and Stephanie A. Miyoshi, Deputy Attorney
General, for Plaintiff and Respondent. | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483978/ | THE SUPERIOR COURT OF THE STATE OF DELAWARE
STATE OF DELAWARE, )
)
v. ) ID No. 2105007121
)
LOUIS KENT )
)
Defendant. )
Submitted: October 21, 2022
Decided: November 15, 2022
MEMORANDUM ORDER
On this 15th day of November 2022, upon consideration of Defendant, Louis
Kent’s (“Defendant”) Motion for Re-argument (“Motion”),1 the State’s Response,2
and the record in this case, IT IS HEREBY ORDERED that Defendant’s Motion
is DENIED for the following reasons:
1. This matter arises out of a traffic stop and subsequent arrest of Defendant
that occurred on May 14, 2021.3 On May 31, 2022, Defendant filed a motion to
suppress evidence, 4 seeking to exclude all evidence obtained from the allegedly
illegal stop and frisk. After a two-day suppression hearing and full briefing by the
1
D.I. 36.
2
D.I. 38.
3
For a detailed factual background of this case, please refer to this Court’s October 7, 2022
memorandum order that denied Defendant’s motion to suppress evidence.
4
D.I. 14.
parties, the Court denied the motion to suppress on October 7, 2022. 5 On October
17, 2022, Defendant filed this Motion, seeking re-argument of the previously denied
motion to suppress. The State filed a response6 on October 21, 2022. The Motion
is ripe for the Court’s consideration and decision.
2. Defendant raised two issues in this Motion. First, Defendant contends that
7
the manner by which Officer Crumlish searched Defendant exceeded the
permissible scope of a Terry stop and frisk and amounts to a custodial search.
Defendant argues that, because the officers lacked probable cause to arrest
Defendant under the circumstances, the custodial search was illegal and all evidence
obtained from that search should be excluded. Second, Defendant argues that the
officers lacked probable cause to search his vehicle, and relies upon a case not
previously referenced in Defendant’s motion to suppress or supplemental briefing.
3. As to the first issue, Defendant cited to relevant portions of Officer
Crumlish’s testimony during the suppression hearing. 8 Specifically, Officer
Crumlish testified that he “immediately felt for [Defendant’s] waistband” when he
5
D.I. 35.
6
D.I. 38.
7
Two Wilmington Police Department officers, Justin Wilkers and Logan Crumlish, were involved
in the investigation and arrest of Defendant. Officer Crumlish was the one who conducted the
frisk that was at issue here.
8
The Court held a two-day suppression hearing on June 24 and July 13, 2022. Only portions of
the July 13 testimony are relevant in deciding this Motion, to which this Order will cite as “July
13 Hr’g. Tr. at [page number].”
2
started the pat-down search. 9 Officer Crumlish also testified that his thumb
“crossed” Defendant’s waistband and was “probably” inside the waistband when he
recognized the handgun magazine. 10 Defendant argues that the intrusion into
Defendant’s clothing amounts to a custodial search that could not have been
conducted without probable cause.
4. The Court agrees that the record shows that Officer Crumlish’s thumb went
across Defendant’s waistband while he engaged in a pat-down search for weapons
on Defendant’s person. However, that single fact does not mean the search exceeded
the limits of a legitimate Terry search. While the Court acknowledges that Terry
pat-downs are generally limited to the outer clothing, what the United States
Supreme Court stated in Terry v. Ohio is that the search must be “confined in scope
to an intrusion reasonably designed to discover guns, knives, clubs, or other hidden
instruments for the assault of the police officer.”11
5. Defendant contends that a single finger that crossed his waistband exceeds
the permissible limit of a Terry frisk without citing any cases to support this position.
9
July 13 Hr’g. Tr. at 76.
10
Id.
11
Terry v. Ohio, 392 U.S. 1, 30 (1968). See also U.S. v. Hawkins, 830 F.3d 742, 745 (8th Cir.
2016) (recognizing that, although a pat-down is often the least intrusive way to search for a hidden
firearm, it is not the only permissible way to conduct a Terry frisk and “concern for officer safety
may justify lifting clothing or even reaching directly for a weapon in a waistband”) (internal
citations omitted).
3
The Court’s independent research shows that, in numerous instances, searches that
arguably went beyond the outer clothing of the suspect were still found to be valid
Terry searches.12 Here, it is one of Officer Crumlish’s fingers, to wit: his thumb,
that went slightly across Defendant’s waistband. Officer Crumlish did not insert his
whole hand into Defendant’s waistband or pants to feel around. Nor did he reach
into Defendant’s pockets or in any way expose Defendant’s skin or undergarments
to the air. The Court finds that Officer Crumlish’s search was limited to an intrusion
reasonably designed for its intended purpose and did not exceed the scope of a valid
Terry search.
6. As to the second issue raised by Defendant in this Motion, Defendant
attempts to rehash an argument already decided by the Court in its October 7, 2022
12
See Adams v. Williams, 407 U.S. 143, 148 (1972) (holding a police officer’s direct reach to the
suspect’s waistband for a fully loaded revolver, when the officer was previously informed that the
suspect carried a gun at his waist, constituted a reasonable, limited intrusion designed to insure his
safety under Terry); see also U.S. v. Wright, 712 Fed. Appx. 868, 871 (11th Cir. 2017) (finding it
within the boundary of a Terry search when the officer “raised the back of the defendant’s long,
baggy shirt no higher than necessary to view his waistband and pat down his back pockets because
the intrusion was “designed to discover a gun” and was “balanced against the necessity of the
search”); U.S. v. Estrella Moreno, 2019 WL 1792302, at *7-8 (D. Neb. Apr. 24, 2019) (finding
the officer’s targeted frisk not overly intrusive when he “reach[ed] his hand slightly inside the left
edge of [the defendant’s open] blanket to touch the bulge through [the defendant’s] shirt”).
4
order.13 Defendant cites to a recent case decided by this Court, State v. Jernigan,14
which was not referenced in Defendant’s prior court filings. The Jernigan case,
however, does not dictate the outcome of this Motion. Defendant appears to argue
that the Court has misapprehended the applicable law, as articulated in Jernigan,
which should change the outcome of its decision. Defendant’s argument is
misplaced as Jernigan is readily distinguishable from the instant case.
7. In Jernigan, this Court held that the police officers lacked probable cause
to search the defendant’s vehicle, after smelling the odor of raw marijuana. There,
the court’s ruling was based on the fact that the defendant was a registered qualifying
patient under Delaware’s Medical Marijuana Act (“DMMA”) in possession of a
valid DMMA card, and such information was readily available to the police officers
through a DELJIS search.15 Defendant argues that the officers in the instant case
should have also determined whether Defendant held a medical marijuana card
before searching his vehicle.
13
A motion for re-argument in a criminal case is governed by Superior Court Civil Rule 59(e).
State v. Brinkley, 132 A.3d 839, 842 (Del. Super. 2016). “A motion for reargument is not an
opportunity for a party to rehash arguments already decided by the Court or to present new
arguments not previously raised.” Id. (internal citations omitted). “A motion for reargument
pursuant to Rule 59(e) will be granted only if ‘the Court has overlooked a controlling precedent or
legal principles, or the Court has misapprehended the law or facts such as would have changed the
outcome of the underlying decision.” Id. (internal citations omitted).
14
2019 WL 2480808 (Del. Super. June 13, 2019).
15
Id. at *3-9.
5
8. Defendant’s argument is without merit. In its October 7, 2022 order, the
Court relied upon a Delaware Supreme Court case, Valentine v. State, 16 for the
position that the smell of marijuana, raw or burnt, is still relevant to determining
probable cause for a valid vehicle search, even with the DMMA in place.17 Indeed,
in Jernigan, the court acknowledged that Valentine “stands for the principle that [the
DMMA] do[es] not change well-established search and seizure law.” 18 The
Jernigan court, however, stated that the defendant’s situation in that case presented
a different issue than the Valentine defendant’s “generic reference to the [DMMA].”
The Jernigan court noted that, rather than a case “where defendant claims a
sweeping abrogation of search and seizure law,” the defendant there possessed a
valid DMMA card at the time of the search and was statutorily immune from arrest
or prosecution.19 The Jernigan court further stated that “[t]o give DMMA effect,
when one possesses a valid registry identification card, and an officer knows that he
or she does, that person's status must factor into the totality of the circumstances.”20
16
207 A.3d 166 (TABLE), 2019 WL 1178765 (Del. Mar. 12, 2019).
17
October 7, 2022 Order, at 16-17. The Valentine court held that the totality of the circumstances
in that case, including vehicle speed, time of day, and the odor of marijuana, were sufficient to
establish probable cause to search the defendant’s vehicle. Valentine, at *2. Defendant did not
argue that the Court’s reliance upon Valentine is incorrect.
18
Jernigan, at *6.
19
Id.
20
Id.
6
9. As discussed above, the Jernigan court, in distinguishing that case from
Valentine, put a fair amount of emphasis on the fact that the defendant there actually
held a valid DMMA card.21 That distinct fact is clearly not present in the instant
case. Therefore, the Court finds Jernigan distinguishable and again holds, under the
guidance of Valentine, that the totality of the circumstances in this case supports a
finding of probable cause that justifies the search of Defendant’s vehicle.
For the reasons stated above, Defendant’s Motion for Re-argument is hereby
DENIED.
IT IS SO ORDERED.
Sheldon K. Rennie, Judge
Original to Prothonotary
Cc: Karin M. Volker, DAG
Joseph W. Benson, Esquire
21
Jernigan found that the police officer, although unaware of that fact at the time of the search,
should have verified the defendant’s status as the information was readily available through a
DELJIS query. Id. at *9.
7 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483976/ | Filed 11/15/22 In re N.C. CA2/6
NOT TO BE PUBLISHED IN THE 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
SECOND APPELLATE DISTRICT
DIVISION SIX
In re N.C., a Person Coming 2d Juv. No. B320724
Under the Juvenile Court Law. (Super. Ct. No. 21JV00319)
(Santa Barbara County)
SANTA BARBARA COUNTY
CHILD WELFARE SERVICES,
Plaintiff and Respondent,
v.
A.C.,
Defendant and Appellant.
A.C. (Mother) appeals from the juvenile court order
terminating her parental rights as to her daughter, N.C., and
selecting adoption as the permanent plan. (Welf. & Inst. Code,
§ 366.26.)1 She contends the court erred when it found
1 Subsequent
undesignated statutory references are to the
Welfare and Institutions Code.
inapplicable (1) the parental-benefit exception, and (2) the Indian
Child Welfare Act of 1978 (25 U.S.C. § 1901 et seq.) (ICWA).2 We
affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Mother and Father3 exposed N.C. to violence and abusive
behavior when she was six years old. Mother had untreated
mental health issues. Father reported that as a result, Mother
was unable to recognize N.C. as her daughter and thought she
was Father’s sister. Mother and Father had a long history of
domestic violence and substance abuse and continued to use
methamphetamine. In 2012, the parents lost custody of their two
older children due to parental neglect.
The juvenile court found the petition to be true (§ 300,
subds. (b)(1), (j)), declared N.C. a dependent, and bypassed
reunification services for both parents (§ 361.5, subd. (b)(10), (11),
(13)). N.C. was placed with her maternal grandparents, who had
custody of her siblings.
At the selection and implementation hearing (§ 366.26), the
juvenile court found ICWA did not apply. After hearing evidence,
the court found the parental-benefit exception did not apply.
(§ 366.26, subd. (c)(1)(B)(i).) The court terminated the parental
rights of both parents and selected adoption as the permanent
plan.
Parental-benefit exception
2 We use ICWA to refer to both the federal statute and the
California law that implements it.
3 Father was a party in the juvenile court proceedings but
is not a party in this appeal.
2
The juvenile court considered reports from the Department
of Social Services (the department) and the court appointed
special advocate (CASA), heard testimony of the social worker
and both parents, and heard an unsworn statement from the
CASA.
The department’s report included a summary of Mother’s
visits with N.C. Mother visited N.C. regularly. At one visit,
Mother appeared to be under the influence of marijuana and had
difficulty focusing. During visits, they played together, hugged,
kissed, and said “I love you.” They also spoke on the phone
between visits.
N.C. reported that when she lived with her parents, she
was scared because they constantly fought and cussed at each
other. Being adopted would make her sad because she would not
be able to live with her parents or see them every day. The
custodial grandparents had previously adopted and had legal
guardianship over N.C.’s siblings. They wanted to adopt N.C.
because she would be raised with her siblings in a safe, stable,
and nurturing home. The department recommended adoption
and termination of parental rights.
The CASA report stated that N.C. was doing well in school.
She “mentions her parents far less frequently.” She was “happy
and loving and . . . adjusting remarkably well to the rules and
new structure in her life.”
The social worker testified N.C. originally said she did not
want to be adopted but later said she did. N.C. expressed an
“internal conflict” because she did not want either her parents or
her grandparents to be sad. She felt safe in her grandparents’
house. She loved sharing a bedroom with her older sister and
continued to build her relationship with her brother. N.C.
3
enjoyed being together with her adoptive family and saw that as
her home.
Mother testified N.C. lived with her from birth until
juvenile proceedings began. As her daily caregiver, Mother fed
her, changed her diapers, put her to bed, and woke her each
morning. Mother and N.C. were “very close” and had an
“unbreakable” connection. During visits, they were excited to see
each other, ran to each other, and hugged and kissed. Mother
continued to be in a relationship with Father. Father testified
about his role in raising N.C. and admitted recent relapses on
methamphetamine.
The CASA told the court that although N.C. “loves her
parents dearly,” she viewed her grandparents’ home as her family
home and described her future with them.
ICWA
When the case was initiated, both Mother and Father told
the department about possible Native American heritage on their
respective parental sides, but they “did not know of any tribal
affiliation.” In a form attached to the dependency petition, the
department’s social services worker stated, “This inquiry . . . gave
me reason to believe the child is or may be an Indian child.”
At the detention hearing, Mother said she may have
Cherokee ancestry on her father’s side but wasn’t sure. Father
said, “We do have Indian in our background, but . . . we don’t
belong to a tribe or anything like that, no.” The court ordered the
parents to submit ICWA forms. The department sent Mother an
ICWA questionnaire, but she did not return it.
The department received ancestry information from several
databases. The department spoke to Father a month after the
detention hearing. He said N.C. did not have any relevant
4
ancestry because “nobody in the family has ever been registered
in any tribe.” He said his mother (N.C.’s paternal grandmother),
D.G., was adopted and did not know her biological family. He
said his father (N.C.’s paternal grandfather, who died in 1989)
“was never registered in any tribe and the family doesn’t know
which tribe his ancestors could have been related to.”
The department spoke with the maternal grandmother,
P.D. She did not know if Father had any Native American
ancestry. She declined to provide contact information for “the
other grandmother” (D.G.) but agreed to call her for further
information and call the department back. When P.D. failed to
call, the department left P.D. a voicemail that was not returned.
The department spoke to the maternal step-grandfather,
D.D., but there is no indication they discussed ICWA. The record
does not identify the biological maternal grandfather.
Attached to the department’s jurisdiction and disposition
report was ICWA information from the 2011 case regarding
N.C.’s siblings. At that time, the paternal grandmother, D.G.,
said any Native American ancestry was through her deceased
husband, T.C., on his mother’s side, and is “very, very remote.”
She said “the best way to get info” was through T.C.’s sister
(minor’s great aunt), I.H. The department called the number for
I.H. that D.G. provided, but the phone was disconnected. The
department called D.G. back and left a voicemail message that
was not returned. The department also spoke in 2011 to T.C.’s
mother (N.C.’s paternal great-grandmother), J.C. She said both
her family and her husband’s family were from Mexico and did
not have Native American heritage.
In N.C.’s case, the department sent an ICWA inquiry with
a family tree to the Bureau of Indian Affairs (BIA). It responded,
5
“The notice contains insufficient information to determine Tribal
affiliation.”
The section 366.26 hearing was continued at the request of
the department so it could make ICWA inquiries to Cherokee
tribes. The department then received a response from the
Cherokee Nation stating that N.C. was not an Indian Child in
relation to the Cherokee Nation, and neither she nor the parents
were registered as tribal citizens. Responses from the United
Keetoowah Band of Cherokee Indians and the Eastern Band of
Cherokee Indians said N.C. was not eligible and was not
recognized as a member. The court found ICWA did not apply.
DISCUSSION
Parental-benefit exception
Mother contends the juvenile court erred when it failed to
apply the parental-benefit exception to bar adoption as the
permanent plan. We disagree.
After reunification services have been terminated, the court
sets a section 366.26 hearing “‘to select and implement a
permanent plan for the child.’” (In re Caden C. (2021) 11 Cal.5th
614, 630.) The statutory preference is termination of parental
rights and placing the child for adoption. (§ 366.26, subd. (b)(1).)
The parental-benefit exception allows the court to choose an
option other than adoption “‘in exceptional circumstances.’” (In
re Caden C., at p. 631.)
The parental-benefit exception has three elements: “(1)
regular visitation and contact, and (2) a relationship, the
continuation of which would benefit the child such that (3) the
termination of parental rights would be detrimental to the child.”
(In re Caden C., supra, 11 Cal.5th at p. 631; § 366.26, subd.
(c)(1)(B)(i).) The parent must establish these three elements by a
6
preponderance of the evidence. (In re Caden C., at p. 629.)
We review for substantial evidence the first two elements—
consistent visitation and benefit from continuing the relationship.
(In re Caden C., supra, 11 Cal.5th at pp. 639-640.) For the third
element—detriment to the child if the relationship is terminated
—we review for substantial evidence factual determinations such
as “specific features of the child’s relationship with the parent,”
“the harm that would come from losing those specific features,”
and “the benefit of adoption.” (Id. at p. 640.) In so doing, we do
“‘not reweigh the evidence, evaluate the credibility of witnesses,
or resolve evidentiary conflicts.’” (Ibid.) We review for abuse of
discretion the “delicate balancing” of “the harm of losing the
relationship against the benefits of placement in a new, adoptive
home.” (Ibid.) “A court abuses its discretion only when ‘“‘the
trial court has exceeded the limits of legal discretion by making
an arbitrary, capricious, or patently absurd determination’”’”
such that “‘“‘no judge could reasonably have made the order.’”’”
(Id. at p. 641.)
The juvenile court here discussed In re Caden C. and
applied its standards. The court was not required to make
factual findings or describe the evidence that supported its
decision. (In re A.L. (2022) 73 Cal.App.5th 1131, 1156.) We
presume the judgment is correct; Mother has the burden to
affirmatively demonstrate error. (Id. at p. 1161.)
The first and second elements of the exception—regular
visitation and benefit from continuing the relationship—were
established. But “[a] showing the child derives some benefit from
the relationship is not a sufficient ground to depart from the
statutory preference for adoption.” (In re Breanna S. (2017) 8
Cal.App.5th 636, 646, disapproved on another ground in In re
7
Caden C., supra, 11 Cal.5th at p. 637, fn. 6, italics added.) The
parent bears the burden of proving that termination of parental
rights would be detrimental to the child. (Ibid.) “Friendly or
affectionate visits are not enough.” (In re G.H. (2022) 84
Cal.App.5th 15, 25.) “‘To overcome the preference for adoption
and avoid termination of the natural parent’s [parental] rights,
the parent must show that severing the natural parent-child
relationship would deprive the child of a substantial, positive
emotional attachment such that the child would be greatly
harmed.” (Id. at p. 25.)
The juvenile court did not abuse its discretion when it
determined that termination would not be detrimental to the
child. At the time of the selection and implementation hearing,
N.C. had been living with her grandparents for over eight
months. N.C. was happy living with her grandparents and
siblings and was doing well in school. The court stated, “The
child sees her current home as her home. It’s the very stability
that we hope to offer in a permanent home for the child . . . .”
The juvenile court acted within its discretion when it determined
that N.C.’s best interest was served by severing parental rights to
provide a safe and stable home through adoption.
Mother compares the department’s report with the
“inexplicably terse and analytically uninformative” bonding
evaluation in In re M.G. (2022) 80 Cal.App.5th 836, 850. There,
the trial court found the parental-benefit exception was not
shown based solely on the bonding evaluation, which confused the
relevant issue of emotional bond with the irrelevant issue of the
parents’ ability to manage the child’s developmental and medical
needs. (Id. at p. 851.) Here, the juvenile court’s finding was
based not only on the reports from the department and CASA,
8
but on the testimony of both parents and the social worker and
the CASA’s verbal statement. The thoroughness of the report is
not determinative because Mother, not the department, had the
burden to establish the parental-benefit exception. (Id. at p.
846.)
Mother testified her relationship with N.C. was
“unbreakable.” Father testified about his role in raising N.C. and
his struggles with addiction. The social worker testified N.C. felt
safe in her grandparents’ house and viewed it as her home.
Although N.C. previously told the social worker she did not want
to be adopted, she more recently said she did. The CASA told the
court that N.C. viewed her grandparents’ home as her home. The
CASA felt strongly it was in N.C.’s best interest to remain with
the grandparents.
The trial court did not abuse its discretion when it found
the social worker and the CASA more credible and determined
that Mother had not met her burden to establish the parental-
benefit exception to adoption.
ICWA
Mother contends the juvenile court erred when it found
ICWA did not apply because the department failed to interview
N.C.’s maternal and paternal grandparents. We disagree
because the department’s inquiry was reasonable.
ICWA serves “to protect the best interests of Indian
children and to promote the stability and security of Indian tribes
and families by the establishment of minimum Federal standards
for the removal of Indian children from their families.” (25
U.S.C. § 1902; Welf. & Inst. Code, § 224. subds. (a) & (b).) When
the facts are undisputed, we independently review compliance
with ICWA. (In re A.M. (2020) 47 Cal.App.5th 303, 314.) We
9
review the juvenile court’s determination that ICWA does not
apply for substantial evidence. (In re A.M., at p. 314; § 224.2,
subd. (i)(2).)
“‘Indian child’ means any unmarried person who is under
age eighteen and is either (a) a member of an Indian tribe or (b)
is eligible for membership in an Indian tribe and is the biological
child of a member of an Indian tribe.” (25 U.S.C. § 1903(4); Welf.
& Inst. Code, § 224.1, subd. (a).) Whether a child is a member or
eligible for membership is conclusively determined by the tribe.
(§ 224.2, subd. (h).)
The court and the department have “an affirmative and
continuing duty to inquire whether a child . . . is or may be an
Indian child.” (§ 224.2, subd. (a).) The process is divided into
three phases: an initial duty to inquire in all cases, a duty of
further inquiry when there is reason to believe the child may be a
tribal member or eligible for membership, and a duty to provide
formal notice when there is reason to know the child is a member
or eligible for membership. (In re D.F. (2020) 55 Cal.App.5th 558,
566-567.) If the initial inquiry is deficient, that issue becomes
moot once the department makes reasonable inquiry before the
juvenile proceedings are concluded. (See In re Baby Girl M.
(2022) 83 Cal.App.5th 635, 638-639 & fn. 2.)
None of the circumstances constituting “reason to know”
apply here: (1) “[a] person having an interest in the child . . .
informs the court that the child is an Indian child,” (2) the child,
parent, or Indian custodian lives on a reservation, (3) a
designated person “informs the court that it has discovered
information indicating that the child is an Indian child,” (4) “[t]he
child . . . gives the court reason to know that the child is an
Indian child,” (5) the child has been a ward of a tribal court, or (6)
10
the parent or child has a tribal membership identification card.
(§ 224.2, subd. (d), italics added.)
The department initially stated there was reason to believe
N.C. might be an Indian child. This determination was based on
“information suggesting that either the parent of the child or the
child is a member or may be eligible for membership in an Indian
tribe.” (§ 224.2, subd. (e)(1).) As detailed below, the department
made “further inquiry” into N.C.’s status “as soon as practicable,”
including interviewing extended family members,4 contacting the
BIA, and contacting tribes and other persons who might have
information. (§ 224.2, subd. (e); Cal. Rules of Court, rule
5.481(a)(4).)
The law does not require the department to contact every
extended family member including every aunt, uncle, and first
and second cousin. (See In re Ezequiel G. (2022) 81 Cal.App.5th
984, 1006-1007.) All that is required is a reasonable inquiry. (In
re J.K. (2022) 83 Cal.App.5th 498, 508, fn. 7.) Other than the
parents, the maternal and paternal grandmothers, and the
paternal great-grandmother, the record does not show that
extended family members were “readily available” to the
department. (In re Ricky R. (2022) 82 Cal.App.5th 671, 682; In re
Josiah T. (2021) 71 Cal.App.5th 388, 403.)
The department made a reasonable inquiry here. The
department interviewed Mother, Father, and the maternal
grandmother. All had only vague information about possible
Native American ancestors. The maternal grandmother would
4 “‘[E]xtended family member’” is defined as the “child’s
grandparent, aunt or uncle, brother or sister, brother-in-law or
sister-in-law, niece or nephew, first or second cousin, or
stepparent.” (§ 224.1, subd. (c); 25 U.S.C. § 1903(2).)
11
not provide contact information for the paternal grandmother
and did not return a call to determine if she had contacted her.
But in 2011, the paternal grandmother said any Native American
ancestry was through her deceased husband and was “very, very
remote.” The department could not contact the paternal
grandfather because he died in 1989. The record contains no
information whether the identity of the biological maternal
grandfather was known.
The paternal great-grandmother, great aunt, and maternal
step-grandfather all fall outside the definition of “extended family
member.” Nevertheless, the department spoke to the paternal
great-grandmother in 2011, who said her family and her
husband’s family were from Mexico and did not have Native
American heritage. The department attempted to contact N.C.’s
great aunt in 2011 but the phone was disconnected. In addition
to interviewing several relatives, the department also contacted
the BIA and the Cherokee bands, who stated N.C. was not a
member and not eligible for membership.
Mother has not shown the existence of “any other person
that may reasonably be expected to have information regarding
the child’s membership, citizenship status, or eligibility.”
(§ 224.2, subd. (e)(2)(C).) Following the department’s “‘“proper
and adequate further inquiry and due diligence”’” (In re Josiah
T., supra, 71 Cal.App.5th at p. 408), the court properly concluded
that ICWA did not apply.
Mother also contends the department failed to file required
documents. “The petitioner must on an ongoing basis include in
its filings a detailed description of all inquiries, and further
inquiries it has undertaken, and all information received
pertaining to the child’s Indian status, as well as evidence of how
12
and when this information was provided to the relevant tribes.”
(Cal. Rules of Court, rule 5.481(a)(5).) The department’s reports
described its ICWA inquiries. Mother has not shown the
information was incomplete. The department was not required to
file copies of the actual inquires because there was no “reason to
know” N.C. was an Indian Child. (§ 224.3, subds. (a), (b), (c); 25
C.F.R. § 23.111(a) (2021); In re J.C. (2022) 77 Cal.App.5th 70, 78.)
In summary, because Mother has not shown the
department or the juvenile court failed to comply with their
duties to inquire into Indian heritage, the court properly
concluded that ICWA did not apply.
DISPOSITION
The order is affirmed.
NOT TO BE PUBLISHED.
BALTODANO, J.
We concur:
GILBERT, P. J.
YEGAN, J.
13
Arthur A. Garcia, Judge
Superior Court County of Santa Barbara
______________________________
Christopher R. Booth, under appointment by the Court of
Appeal, for Defendant and Appellant.
Rachel Van Mullem, County Counsel, Lisa A. Rothstein,
Deputy County Counsel, for Plaintiff and Respondent. | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491625/ | ORDER ON MOTION TO COMPEL COMPLIANCE AND RENEWED MOTION FOR AUTHORITY TO PAY CONSUMER CLAIMS
ALEXANDER L. PASKAY, Chief Judge.
THESE are converted Chapter 7 liquidation cases and the matters before the Court are as follows: (1) a Motion to Compel National Bank of Royal Oak to Comply with 11 U.S.C. § 345(b) filed by the Office of U.S. Trustee; (2) a Renewed Motion for Authority to Pay Consumer Claims from Reserve Account filed by National Bank of Royal Oak; and (3) a Motion for Rehearing of the Order on Motion for Authority to Pay Consumer Claims from Reserve Account filed by First Interstate Bank of Arizona. All three motions relate to funds held in two bank accounts totalling approximately $736,451.63. The facts relevant to resolution of these controversies, as established by the record and argued at the duly noticed hearing, are as follows.
Florida C.A.R.D.S. and Shore Travel (Debtors) originally filed their Petitions for Relief under Chapter 11 of the Bankruptcy Code on May 27, 1992. The Debtors were involved in selling travel packages to the public through a telemarketing program. The Debtors were authorized to operate their businesses as Debtors-in-Possession by Order dated June 5, 1992. As part of the business operation, the Debtors maintained Visa and Mastercard accounts through Merchant Agreements (Agreement) with the National Bank of Royal Oak (Royal Oak). The Agreement provided for the establishment and maintenance of a reserve account (Reserve Account). Twenty-five (25) percent of all credit card vouchers presented to Royal Oak were held in the Reserve Account under the name Florida C.A.R.D.S., Inc. d/b/a Shore Travel, Inc.
On May 14, 1992, prior to the commencement of this case, the Department of Legal Affairs, State of Florida, obtained an Order Granting Temporary Injunction Without Notice by the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida, enjoining the Debtors from continuing to operate their respective busi*961nesses. On May 20,1992, the Circuit Court entered a Stipulated Temporary Injunction which allowed the Debtors to resume operations under certain terms and conditions. One of the conditions required the Debtors to establish an interest-bearing account at the National Bank of Royal Oak in the amount of $150,000 and to designate Joseph Perlman, Esquire, as trustee, and the sole signatory on the account. These • funds were to be used for the benefit of Debtors’ customers who had not received the travel and hotel services for which they had paid in full.
The Bank transferred the funds held in the Reserve Account into two separate accounts. The sum of $150,000.00 was placed into an account titled “Office of Attorney General, J. Perlman” (Perlman Account). The balance of the funds was placed into an account titled “NBRO Contingent Liability” (NBRO Account).
On July 1, 1992, Royal Bank filed a Motion for Authority to Pay Consumer Claims from Reserve Account. In due course, the matter was heard before this Court, and this Court entered an Order on August 26, 1992, granting the Motion with the proviso that Royal Oak submit a schedule of chargebacks to the Debtor in order that the Debtor may determine which of the charge-backs were disputed. The Order provided that if the Debtor did not file an objection to a chargeback within twenty days after service of the scheduled chargeback, Royal Oak would be authorized to use the funds in the two reserve accounts to the charge-back.
Thereafter, Royal Oak complied with the August 26, 1992, Order and submitted a schedule of the claimed chargebacks. The Debtor filed a Response to the schedule of chargebacks, but did not set forth specific chargebacks to which the Debtor objected. On August 31, 1992, shortly after the entry of the Order, this Court converted these cases to Chapter 7 cases, upon the Motion of the U.S. Trustee. At this time, Royal Oak had not paid any of the chargebacks from the reserve account, and as of July 31, 1992, the two reserve accounts contained $585,633.29. According to Royal Oak, chargeback demands made on Royal Oak exceed $1.2 million.
Based upon these facts, the U.S. Trustee has filed a Motion to Compel Royal Oak to Comply with § 345(b) of the Bankruptcy Code. In addition, Royal Oak has filed a Renewed Motion for Authority to Pay Consumer Claims , from the Reserve Account, and First Interstate of Arizona has filed a Motion for Reconsideration of the August 26, 1992, Order granting Royal Oak the authority to pay the chargeback demands.
Taking the Motions in turn, the Trustee’s Motion contends that the money held in the reserve accounts is property of the estate, and as such must be protected pursuant to § 345(b) of the Bankruptcy Code by the posting of a bond by Royal Oak. Section 345(b) of the Bankruptcy Code provides, in pertinent part, as follows:
§ 345. Money of estates
(a) A trustee in a case under this title may make such deposit or investment of the money of the estate for which such trustee serves as will yield maximum reasonable net return on such money, taking into account the safety of such deposit or investment.
(b) Except with respect to a deposit or investment that is insured or guaranteed by the United States or by a department, agency, or instrumentality of the United States or backed by the full faith and credit of. the United States, the trustee shall require from an entity with which such money is deposited or invested—
(1) a bond—
(A) in favor of the United States;
(B) secured by the undertaking of a corporate surety approved by the United States trustee for the district in which the case is pending; and
(C) conditioned on—
(i) a proper accounting for all money so deposited or invested and for any return on such money;
(ii) prompt repayment of such money and return; and
(iii) faithful performance of duties as a depository; or
(2) the deposit of securities of the kind specified in section 933 of title 31.
*962Section 345 provides protection for monies which are held by the Trustee of an estate, and which are deposited by the Trustee in a bank account, or invested for a return. It is clear § 345 was not intended to apply to monies held by a bank in a bank account which is not titled in the Debtor’s name. Since the accounts are not titled in the Debtors’ name, but instead, “NBRO Contingent Liability,” and “Office of Attorney General, J. Perlman, Trustee,” and this Court has already preliminarily approved Royal Oak’s ability to pay consumer claims out of the reserve funds, this Court is satisfied that Royal Oak is not required to post a security for the funds held in the reserve accounts. This leaves for consideration Royal Oak’s Renewed Motion to Pay Consumer Claims.
As noted above, this Court’s Order of August 26, 1992, set forth a procedure which allowed the Debtors’ to dispute the validity of chargebacks received by Royal Oak. Royal Oak could not pay consumer claims which the Debtors disputed. On August 27, 1992, the Debtors’ filed a response setting forth objections to Royal Oak’s Schedule of Chargebacks. This response does not indicate specific charge-backs to which the Debtors have an objection. On October 5, 1992, Royal Oak filed a Supplemental Schedule of Chargebacks. No response has been filed to this Supplement. In view of the nonspecific response filed by the Debtors, and the failure by the Chapter 7 Trustee to object to any of the chargebacks listed on the Supplemental Schedule, this Court is satisfied that it is appropriate to authorize Royal Oak to pay all valid chargeback claims from the funds held. Inasmuch as the funds which were placed in the Perlman account by the State Attorney were reserved to pay all claimants, this Court is satisfied that Royal Oak may pay all valid chargeback claims from the funds held in the NBRO account on a prorata basis. Such payment must be made in compliance with nonbankruptcy consumer protection statutes, including the Uniform Consumer Credit Code.
Finally, First Interstate Bank of Arizona filed a Motion for Reconsideration of this Court’s Order authorizing Royal Oak to pay consumer claims from the reserve account. Inasmuch as this Court’s order was entered on August 26,1992, and the Motion for Reconsideration was filed on September 8, 1992, this Court is satisfied that the Motion for Reconsideration was filed outside of the ten day period provided by the Bankruptcy Rules, and is untimely. Therefore, the Motion should be denied.
Accordingly, it is
ORDERED, ADJUDGED AND DECREED that the Motion to Compel National Bank of Royal Oak to Comply with 11 U.S.C. § 345(b) filed by the Office of U.S. Trustee is hereby denied. It is further
ORDERED, ADJUDGED AND DECREED that the Renewed Motion for Authority to Pay Consumer Claims from Reserve Account filed by National Bank of Royal Oak is hereby granted, and Royal Oak is authorized to pay all valid claims with the funds held in the NBRO Contingent Liability account in the manner set forth above. It is further
ORDERED, ADJUDGED AND DECREED that the Motion for Rehearing of the Order on Motion for Authority to Pay Consumer Claims from Reserve Account filed by First Interstate Bank of Arizona is hereby denied.
DONE AND ORDERED. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8492678/ | MEMORANDUM OPINION AND ORDER
STEVEN A. FELSENTHAL, Bankruptcy Judge.
Southmark Corporation moves the court for a summary judgment under 11 U.S.C. §§ 547 and 550 against Schulte, Roth & Zabel for $1,000,000 plus interest. Schulte, Roth cross-moves for partial summary judgment. The court conducted a hearing on the motions on December 17,1996.
Summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, and other matters presented to the court show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law. Celotex v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Washington v. Armstrong World Indus., 839 F.2d 1121, 1122 (5th Cir.1988). On a summary judgment motion the inferences to be drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion. Anderson, 477 U.S. at 255, 106 S.Ct. at 2513-14. A factual dispute bars summary judgment only when the disputed fact is determinative under governing law. Anderson, 477 U.S. at 250, 106 S.Ct. at 2511.
The movant bears the initial burden of articulating the basis for its motion and identifying evidence which shows that there is no genuine issue of material fact. Celotex, 477 U.S. at 322, 106 S.Ct. at 2552. The respondent may not rest on the mere allegations or denials in its pleadings but must set forth specific facts showing that there is a genuine issue for trial. Matsushita v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). The court applies the same standards to the cross motion for partial summary judgment.
Southmark contends that it may recover $1,000,000 from Schulte, Roth resulting from payments to the Parks Group to settle a proxy contest and related litigation. South-mark reimbursed the Parks Group $3.3 million for its costs and expenses, including legal fees, incurred in conducting the proxy contest and related litigation. Southmark Corp. v. Schulte Roth & Zabel (In re Southmark), 88 F.3d 311, 313-314 (5th Cir.1996), cert. denied, — U.S. -, 117 S.Ct. 686, 136 L.Ed.2d 611 (1997). This court had dismissed the complaint, holding that before the settlement, Southmark had no enforceable liability to pay the Parks Group costs and expenses, and, therefore, did not make the transfer for or on account of an antecedent debt owed by the debtor before the transfer was made. The District Court affirmed, 88 F.3d at 314, but the Fifth Circuit reversed. While recognizing that the case “presents a rare if not unique fact situation,” the Circuit held that a bright line broad statutory standard should be applied. 88 F.3d at 318. The Supreme Court has denied Schulte, Roth’s petition for a writ of certiorari. Schulte Roth & Zabel v. Southmark Corp. (In re Southmark Corp.), — U.S. -, 117 S.Ct. 686, 136 L.Ed.2d 611 (1997). As a result, both Southmark and Schulte, Roth recognize that the Fifth Circuit has established the law of this case. In its motion, Southmark requests a determination that with the Fifth Circuit’s holding, there are no genuine issues of material fact concerning the elements of 11 U.S.C. § 547(b). Without waiving its position con*184cerning transfer on account of an antecedent debt owed, Schulte, Roth concedes that Southmark is entitled to a determination that it has established the elements of § 547(b).
Schulte, Roth counters, however, that the transfer had been made in the ordinary course of business, 11 U.S.C. § 547(c)(2), or had been contemporaneously made in exchange for new value, 11 U.S.C. § 547(e)(1). Southmark moves for summary judgment on both defenses. Schulte, Roth moves for summary judgment on the contemporaneous exchange defense but otherwise requests that the court set the defenses for trial. On both defenses, Schulte, Roth recognizes that at trial it has the burden of proof, 11 U.S.C. § 547(g), but contends that it has presented summary judgment evidence demonstrating genuine issues of material fact requiring a trial. With regard to the ordinary course of business defense, the court agrees with Schulte, Roth that there are genuine issues of material fact requiring a trial. With regard to the contemporaneous exchange defense, however, Southmark is entitled to a partial summary judgment based on the statutory definition of “new value.”
Under § 547(c)(2), a trustee may not avoid a preferential transfer “(2) to the extent that such transfer was (A) in payment of a debt incurred by the debtor in the ordinary course of business or financial affairs of the debtor and the transferee; (B) made in the ordinary course of business or financial affairs of the debtor and the transferee; and (C) made according to ordinary business terms.” 11 U.S.C. § 547(c)(2). The purpose of the ordinary business course defense is to “leave undisturbed normal financial relations, because it does not detract from the general policy of the preference section to discourage unusual action by either the debtor or his creditors during the debt- or’s slide into bankruptcy.” H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 373 (1977), cited in In re SPW, 96 B.R. 683, 685 (Bankr.N.D.Tex.1989). The court must determine, using an objective and a subjective standard, whether the transfer was made in the ordinary course. 96 B.R. at 687. This court must look to the parties’ course of dealing and the industry’s course of dealing.
Southmark contends that it does not ordinarily incur obligations to compensate shareholders for their expenses in connection with a proxy context. Southmark presents summary judgment evidence suggesting that incurring the debt is extraordinary. South-mark relies on a line of eases holding that settlement of litigation is outside the ordinary course of business. In re Florence Tanners, Inc., 184 B.R. 520, 521-522 (E.D.Mich.1995); Hickey v. Nightingale Roofing, Inc., 83 B.R. 180, 184-185 (D.Mass.1988).
Schulte, Roth contends that complex publicly traded companies often face proxy contests, arguing that corporate governance matters constitute an ordinary course of business for publicly traded companies. Schulte, Roth presents summary judgment evidence suggesting that the Parks Group proxy contest had been resolved in the ordinary course of Southmark’s business, consistent with the ordinary course resolution for publicly traded companies.
Schulte, Roth faces a difficult hurdle at trial. However, the court recognizes that in the spring of 1989, Southmark was a vast and complex publicly traded holding company, characterized as a diversified real estate-based financial services company. While its subsidiaries principally engaged in the purchase, management, development and sale of real estate and the creation and sales of real estate related investment products, South-mark also owned all the common stock of San Jacinto Savings Association, a federally insured Texas-chartered savings and loan association, and two insurance companies. Southmark had over 800 affiliates and subsidiaries and connections with numerous public and private partnerships. In re Southmark, 113 B.R. 280, 283 (Bankr.N.D.Tex.1990). The summary judgment evidence establishes genuine issues of material facts concerning whether diversified publicly traded companies respond to or encounter proxy contests in the ordinary course of their corporate governance and affairs, and, if so, whether this proxy contest was resolved within the standards of § 547(c)(2). The case law relied on by Southmark does not address § 547(c)(2) in the context of corpo*185rate governance of a publicly traded company.
Under § 547(c)(1), a trustee may not avoid a preferential transfer — “(1) to the extent that such transfer was — (A) intended by the debtor and the creditor to or for whose benefit such transfer was made to' be a contemporaneous exchange for new value given to the debtor; and (B) in fact a substantially contemporaneous exchange.” 11 U.S.C. § 547(c)(1).
While the parties have engaged in an interesting legal argument over “contemporaneous exchange,” in light of the Fifth Circuit’s holding on “antecedent debt owed,” this court need not decide that issue. Even if Schulte, Roth established a “contemporaneous exchange,” the exchange was not for “new value.” The Bankruptcy Code defines “new value” for purposes of this defense as:
money or money’s worth in goods, services, or new credit, or release by a transferee of property previously transferred to such transferee in a transaction that is neither void nor voidable by the debtor or the trustee under any applicable law, including proceeds of such property, but does not include an obligation substituted for an existing obligation. 11 U.S.C. § 547(a)(2).
The summary judgment evidence establishes that the Parks Group did not provide Southmark money or money’s worth in goods or new credit in exchange for the $8.3 million transfer. The Parks Group did not release property or the proceeds of property. The Parks Group obtained seats on the South-mark Board of Directors, agreed to vote its shares in support of Southmark’s nominees to the board and not use those votes to nominate additional representatives of the Parks Group, and agreed not to engage in another proxy contest or any other form of corporate takeover. As a result of these agreements, Schulte, Roth contends that the Parks Group provided new value to South-mark by its contribution to Southmark’s corporate governance.
The agreement itself does not result in the provision of services to Southmark. The Parks Group nominees took their seats as board members. The Parks Group honored its agreements regarding the easting of ballots and the exercise of its corporate governance authority. Southmark compensated the Parks Group board members by the payment of fees and expenses in exchange for the rendering of their corporate governance services. There is no genuine issue of material fact that the Parks Group did not render services in exchange for the transfer. Furthermore, even if the agreement could be construed to result in the rendering of services, there is no genuine issue of material fact that the “services” could be measured in “money” or “money’s worth,” especially since Southmark separately compensated each board member $50,000 on June 25,1989, plus $4,166.67 per month beginning on June 25, 1989. Southmark is therefore entitled to a partial summary judgment dismissing this defense.
Assuming Southmark prevails at trial on the remaining defense of ordinary course of business, Southmark requests a money judgment under 11 U.S.C. § 550. Schulte, Roth contends that it was not a subsequent transferee of $1,000,000 of the $3.3 million transferred to the Parks Group, 11 U.S.C. § 550(a)(2), but, if it was, it took it in good faith, for value and without knowledge of the voidability of the transfer. 11 U.S.C. § 550(b); Both parties move for summary judgment on these issues.
The summary judgment evidence regarding payment of Schulte, Roth fees by the Parks Group after the $3.3 million transfer by Southmark involves transactions of at least three entities with three financial institutions. The court concludes that there are genuine issues of material fact regarding the series of transactions requiring resolution at trial.
This court has analyzed the elements of § 550(b)(1) in CCEC Asset Management Corp. v. Chemical Bank (In re Consolidated Capital Equities Corp.), 175 B.R. 629 (Bankr.N.D.Tex.1994). The court must determine good faith on a case by case basis. 175 B.R. at 637. The parties have presented substantial summary judgment evidence regarding Southmark’s financial condition, corporate governance and transactions from March 1989 to the Parks Group settlement in May *1861989. Southmark contends that the court can draw only one reasonable Inference from this summary judgment evidence. But the court must analyze the evidence based on the circumstances in May 1989, not on what the parties learned after the Southmark bankruptcy petition. On that test, there are genuine issues of material fact warranting trial.
This court presided over hours of hearings in the underlying Southmark bankruptcy case addressing Southmark’s financial condition, financial reporting and transactions in the spring of 1989. Even after the filing of the bankruptcy petition, many of South-mark’s equity holders questioned the value of Southmark’s assets, and its financial statements and transactions that occurred in the spring of 1989. This court recognized the legitimacy of the equity holders inquiry by authorizing the Official Committee of Equity Holders to investigate the matter and by compensating the examiner for also reporting on the circumstances that resulted in the bankruptcy petition. Southmark, 113 B.R. at 283-284.
The court concludes that there are genuine issues of material fact regarding each of the elements of § 550(b)(1) requiring trial.
Assuming the court enters a money judgment for Southmark under § 550, South-mark contends that it should be awarded prejudgment interest. Bankruptcy courts have equitable discretion to award prejudgment interest on avoided preferential payments. Sigmon v. Royal Cake Co. (In re Cybermech), 13 F.3d 818, 822 (4th Cir.1994); Wilson v. First Nat’l (In re Missionary Baptist), 69 B.R. 536, 538 (Bankr.N.D.Tex.1987).
In exercising its discretion, the court should consider the facts and circumstances of each case. Southmark filed its complaint on June 19, 1991, seeking $3.3 million from Schulte, Roth. The Codé’s definitions of right to payment and liability for that right to payment turn on non-bankruptcy law. Grogan v. Garner, 498 U.S. 279, 283, 111 S.Ct. 654, 657, 112 L.Ed.2d 755 (1991); See, also, Butner v. United States, 440 U.S. 48, 55, 99 S.Ct. 914, 918, 59 L.Ed.2d 136 (1979). Schulte, Roth had no reason to believe that a non-bankruptcy court would find Southmark hable for the Parks Group costs and expenses prior to the settlement until the Fifth Circuit’s ruling. Southmark did not narrow its demand on Schulte, Roth to $1,000,000 until September 11, 1996. Since that time the parties have moved aggressively to resolve this litigation. Under the facts and circumstances of this ease, prejudgment interest should be awarded but only from September 11,1996.
Assuming Southmark obtains a money judgment that Schulte, Roth satisfies, Schulte, Roth contends that it should receive a claim in Southmark’s bankruptcy case. Indeed, 11 U.S.C. § 502(h) recognizes that Schulte, Roth could assert a claim.
Southmark moves for a partial summary judgment on the ground that Schulte, Roth would not have an allowable claim against Southmark. While Schulte, Roth cross-moves for summary judgment on this issue, Schulte, Roth’s brief recognizes that the resolution of its claim is better addressed at trial.
As the law of this case, the Parks Group had a claim against Southmark. The claim was resolved by the settlement of May 24, 1989. The settlement agreement provided that Southmark will reimburse the Parks Group for its costs and expenses, including legal fees, incurred in conducting the proxy contest and related litigation. Southmark negotiated the settlement agreement with the knowledge that Schulte, Roth provided the legal services to the Parks Group.
Schulte, Roth contends that the settlement agreement resulted in Schulte, Roth becoming a third party beneficiary that could assert a right to payment under non-bankruptcy law. At the hearing on the summary judgment motions, Schulte, Roth also contended that it could assert a right to payment under non-bankruptcy subrogation rights. In the event of a payment of $1,000,000 by Schulte, Roth to Southmark, Southmark would not have fulfilled its settlement obligations to the Parks Group, which could also result in the transfer or assignment of a claim by the Parks Group to Schulte, Roth. Should Southmark prevail at trial on the § 550(a)(2) issue, one or more of these con*187tentions would necessarily ripen for adjudication.
Furthermore, it is axiomatic that when a defendant pays a money judgment under 11 U.S.C. §§ 547 and 550, the defendant obtains a claim in the bankruptcy case. One of the purposes of the recovery is to facilitate the equitable distribution of a bankruptcy estate to all entities who have allowable rights to payments. See In re Criswell, 102 F.3d 1411 (5th Cir.1997). To require repayment of a preference under §§ 547 and 550 without the ability to receive a dividend appears to frustrate the statutory purpose. A money judgment for an avoided preference does not implicate the intent or motive of the parties. Rather, it implicates a Congressionally mandated redistribution of otherwise properly distributed property. The defendant who satisfies the money judgment should, in the statutory scheme, share in the redistribution. But should a defendant who satisfies a money judgment under § 550 not hold, as a result, an allowable claim, the statute itself affords a remedy to honor the statutory scheme. Section 550(a) provides that to the extent a transfer is avoided under § 547, “the trustee may recover, for the benefit of the estate, the property transferred, or, if the court so orders, the value of such property.” Congress has thereby provided the court with discretion in the awarding of a. money judgment to address the circumstances of an adversary proceeding. If Southmark prevails at trial on the claim issue, the “rare if not unique fact situation” of this case may compel the court, in the exercise of its discretion, to consider the amount of recovery by creditors on their claims in the Southmark bankruptcy case, in determining the amount of a money judgment.
Finally, Southmark moves for summary judgment to dismiss the Schulte, Roth counterclaim for a declaration that a Schulte, Roth claim would not be dischargeable. In response, Schulte, Roth moves to withdraw the non-dischargeability counterclaim. The court grants that request.
ORDER
Based on the foregoing,
’ IT IS ORDERED that Southmark’s motion for a partial summary judgment establishing the elements of 11 U.S.C. § 547(b) is GRANTED.
IT IS FURTHER ORDERED that South-mark’s motion for partial summary judgment dismissing Schulte, Roth’s defense of 11 U.S.C. § 547(c)(1) is GRANTED, and that Schulte, Roth’s cross-motion for summary judgment is DENIED.
IT IS FURTHER ORDERED that South-mark’s motion for partial summary judgment dismissing Schulte, Roth’s defense of 11 U.S.C. § 547(c)(2) is DENIED and the issue shall be set for trial.
IT IS FURTHER ORDERED that South-mark’s motion for partial summary judgment concerning 11 U.S.C. §§ 550(a)(2) and 550(b) and Schulte, Roth’s cross-motion for partial summary judgment are DENIED and the issues shall be set for trial.
IT IS FURTHER ORDERED that South-mark’s motion for partial summary judgment on the issue of prejudgment interest is GRANTED in part, and Schulte, Roth’s cross-motion for partial summary judgment is DENIED in part. In the event of the entry of a money judgment against Schulte, Roth, the judgment shall bear prejudgment interest from September 11,1996.
IT IS FURTHER ORDERED that South-mark’s motion for partial summary judgment on the allowance of a claim for Schulte, Roth in the event of the payment of a money judgment, and Schulte, Roth’s cross-motion for summary judgment on this issue are DENIED and the issue shall be set for trial.
IT IS FURTHER ORDERED that Schulte, Roth’s motion to withdraw its counterclaim for a declaration that a Schulte, Roth claim would not be dischargeable is GRANTED.
IT IS THEREFORE FURTHER ORDERED that Southmark’s motion for partial summary judgment dismissing the non-disehargeability counterclaim is DENIED as moot.
*188These orders shall be included in the final judgment ultimately entered in this matter. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8492679/ | MEMORANDUM OPINION AND ORDER RE HALLMARK CREDIT’S MOTION TO DISMISS WITH PREJUDICE
G. HARVEY BOSWELL, Bankruptcy Judge.
This Court conducted a hearing on Hallmark Credit’s motion to dismiss with prejudice on January 8, 1998, pursuant to FED. R.BANKR.P. 9014. This is a core proceeding. 28 U.S.C. § 157(b)(2). After reviewing the testimony from the hearing and the record as a whole, the following oral bench ruling shall serve as the Court’s findings of facts and conclusions of law. FED. R.BANKR.P. 7052.
The instant case was filed on October 15,1997, and is the debtor’s third bankruptcy filing in this district. The debtor’s first bankruptcy case, case number 96-12893, was filed on September 6, 1996, and was dismissed on August 1, 1997, for failure to pay properly. The debtor’s second bankruptcy case, case number 97-13044, was filed on August 15, 1997. This second case was dismissed prior to confirmation on October 1, 1997, for failure to make a payment within thirty days of filing the proposed chapter 13 plan. As a result of these previous dismissals, Hallmark Credit filed a motion to dismiss with prejudice in the instant case. In this motion, Hallmark alleges that the debtor, William Nix, is not a person entitled to bankruptcy relief under 11 U.S.C. § 109(g)(1). For the following reasons, the Court denies Hallmark’s motion and finds that the debtor was not barred from filing the instant ease under § 109(g)(1) of the Bankruptcy Code.
Section 109(g)(1) reads as follows:
Notwithstanding any other provision of this section, no individual or family farmer may be a debtor under this title who has been a debtor in a case pending under this title at any time in the preceding 180 days if—
(1) the case was dismissed by the court for willful failure of the debtor to abide by orders of the court, or to appear before the court in proper prosecution of the case.
At the hearing on their motion, Hallmark alleged that the debtor’s failure to make timely payments to the trustee’s office in his two previous cases constituted “willful failure of the debtor to abide by orders of the court.” The relevant case law concerning § 109(g)(1) uniformly acknowledges, or at least necessarily implies, that the failure to pay under a confirmed plan does act as a failure to abide by an order of the court. In re Huerta, 137 B.R. 356 (Bankr.C.D.Cal.1992); In re Herrera, 194 B.R. 178 (Bankr.N.D.Ill.1996); In re Howard, 134 B.R. 225 (Bankr.E.D.Ky.1991); In re Morris, 49 B.R. 123 (Bankr.W.D.Ky.1985). It is, however, a closer question whether the pre-confirmation failure to commence making payments within thirty days of filing a proposed plan constitutes failure to abide by an order of the court under § 109(g). No courts have squarely addressed this precise issue. Because both 11 U.S.C. § 1326(a)(1) and the Western District of Tennessee’s Standing Order number 97-0001 require these pre-confirmation payments to commence within thirty days this Court finds that failure to commence making payments within the thirty day time period does indeed qualify as a failure to abide by an order of the court under § 109(g)(1).
Despite this finding that failure to pay qualifies as failure to abide by an order of the court, the inquiry as to whether or not the debtor, William Nix, was barred from filing the instant case under § 109(g) is not complete. The Court must still decide if such failure to make payments in his previous cases was “willful,” for it is only after this finding that a court has the authority to dismiss a case with prejudice under § 109(g). Although “willfulness” is not defined by the Bankruptcy Code, a number of courts have addressed the issue and have consistently held “willful” to mean “deliberate,” “intern*239tional disregard,” or “plain indifference.’ In re King, 126 B.R. 777 (Bankr.N.D.Ill.1991); In re Howard, 134 B.R. 225 (Bankr.E.D.Ky.1991). Several courts have additionally stated that -willfulness can be implied from repeated conduct of the debtor, e.g. failure to pay under each of several serial filings. In re Herrera, 194 B.R. 178 (Bankr.N.D.Ill.1996); In re Fulton, 52 B.R. 627 (Bankr.D.Utah 1985). At least one court has prudently noted, however, that “[c]ourts have understandably been reluctant to attribute willfulness to a mere failure of a debtor to make payments____” In re Madison, 184 B.R. 686 (Bankr.E.D.Pa.1995). Rather, willfulness must be independently established.
In the instant case, no proof was presented by the movant that the debtor’s failure to pay in his previous cases was willful, intentional, deliberate, or otherwise. In fact, no proof was introduced at the hearing at all. The only allegations Hallmark Credit made as to the applicability of § 109(g)(1) was in their motion. These allegations rested on the mere fact that the debtor’s previous cases had been dismissed for failure to pay. There was no assertion, however, that these failures were willful. Without this proof, this Court is hesitant to impart a deceitful intent to a debtor and disqualify him from seeking bankruptcy relief for 180 days. To those persons who find themselves trapped in financial straits, this six-month ban can mean the difference between financial annihilation and survival. This court refuses to place debtors who have not been proven to have unllfully failed to abide by an order of the court in this position. Doing so would only serve to east them adrift on a sea of financial uncertainty without a lifeboat or a compass. As a result of this holding, the Court, has no choice today but to deny Hallmark’s motion to dismiss with prejudice.
ORDER
It is therefore ORDERED that Hallmark Credit’s Motion to Dismiss with Prejudice is DENIED.
IT IS SO ORDERED. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8492681/ | MEMORANDUM OPINION
MARK W. VAUGHN, Bankruptcy Judge.
The Court has before it an Objection to Claimed Exemption filed by Norma Jean Simpson (“Plaintiff”), an unsecured creditor. The Plaintiff objects to Arthur N. Drewes’ (“Defendant”) claimed exemption of $4,000 on a 1978 Harley Davidson motorcycle on Schedule C of his petition pursuant to section 511:2(XVI) of the New Hampshire Revised Statutes Annotated. See N.H. REV. STAT. ANN. § 511:2(XVI) (1996 & Supp.1997). For the reasons set out below, the Court sustains the Plaintiff’s objection, and finds that a motorcycle is not an automobile under N.H. RSA § 511:2(XVI).
This Court has jurisdiction of the subject matter and the parties pursuant to 28 U.S.C. §§ 1334 and 157(a) and the “Standing Order of Referral of Title 11 Proceedings to the United States Bankruptcy Court for the District of New Hampshire,” dated January 18, 1994 (DiClerico, C.J.). This is a core proceeding in accordance with 28 U.S.C. § 157(b).
*979DISCUSSION
The Defendant listed and claimed a $4,000 exemption under N.H. RSA § 511:2(XVI) on a 1978 Harley Davidson motorcycle on Schedule C of his petition. The motorcycle is listed on Schedules B and C with a value of $7,000. In addition, the Debt- or listed a 1986 Dodge Charger with 144,000 miles, and a 1986 Ford F150 with 195,000 miles on Schedule B, both to which the Debt- or assigned a nominal value.1
The Plaintiff objected to the Defendant’s claimed $4,000 exemption,2 asserting that a motorcycle is not an automobile for the purposes of New Hampshire law. See N.H. Rev. Stat. Ann. §§ 511:2, 259:60(1), 259:63, 259:80, and 259:81 (1996 & Supp.1997). She claimed that if the legislature intended for motorcycles to be included under section 511:2, the statute would read to exempt a “motor vehicle” rather than an “automobile.” For the reasons stated below, this Court agrees with the Plaintiff, and finds that a motorcycle is not an automobile .under section 511:2(XVI).
Section 511:2 of the New Hampshire Revised Statutes Annotated states, in pertinent part:
[t]he following goods and property are exempted from attachment and execution:
XVI. One automobile to the value of $4,000.
§ 511:2(XVI) (emphasis added). This statute was amended once. In 1994, the legislature raised the $1,000 exemption to $4,000.
Section 511:2, as with all other statutes, must be read its plain meaning. Summit Inv. and Dev. Corp. v. Curran, 69 F.3d 608 (1st Cir.1995). See In re Ron Pair Enters., Inc., 489 U.S. 235, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989) (statute’s plain meaning controls). The “plainness of discrete statutory language is to be gleaned from the statute as a whole, including its overall policy and purpose.” Summit Inv., and Dev. Corp., 69 F.3d at 610 (internal citations and quotations omitted). However, the First Circuit has stated that the plain readings of statutes should not yield “absurd results.” Summit Inv. and Dev. Corp., 69 F.3d at 610; In re Ron Pair Enters, Inc., 489 U.S. at 242, 109 S.Ct. at 1031 (“The plain meaning of legislation should be conclusive, except in the rare cases in which the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters. In such cases, the intention of the drafters, rather than the strict language, controls.”) (internal citations and quotations omitted).
Further, as this Court stated in Schachter v. Fall, where the Court held that a boat was not a motor vehicle under section 523(a)(9) of the Bankruptcy Code,3 exemption statutes are to be liberally construed in favor of the Debtor. Schachter v. Fall (In re Fall), 192 B.R. 16 (Bankr.D.N.H.1995) (citing Willison v. Race (In re Race), 159 B.R. 857 (Bankr.W.D.Mo.1993)); Caron v. Farmington Nat’l Bank (In re Caron), 82 F.3d 7 (1st Cir.1996); In re Vale, 110 B.R. 396, 400 (Bankr.N.D.Ind.1989) (citing In re Coleman, 5 B.R. 76, 78 (Bankr.M.D.Tenn.1980) (citing 31 Am. Jur. 2d Exemptions §§ 3, 8 (1967)). The general purpose behind the Bankruptcy Code exemption statutes is to provide the debtor with a fresh start:
The historical purpose of [ ] exemption laws has been to protect a debtor from his creditors, to provide him with the basic necessities of life so that even if his credi*980tors levy on all of his nonexempt property the debtor will not be left destitute and a public charge.- [This] purpose has not changed____
H.R. Rep. No. 595 (1977), reprinted in 1978 U.S.C.C.AN. 5787, 5963, 6087.
However, liberal statutory construction and the well-accepted fresh start policy cannot overpower unambiguous statutory terms. The dictionary defines “automobile” as “a passenger vehicle designed for operation on ordinary roads and typically having four wheels4 and a gasoline or diesel internal-combustion engine,” Random House Unabridged Dictionary 141 (2d ed.1993), and “motor vehicle” as “an automobile, truck, bus, or similar motor-driven conveyance.” Random House Unabridged Dictionary 1255 (2d ed.1993). See 7A Am. Jur. Auto § 1 (1980 & Supp.1997) (“[T]o the average person and to the public mind it is common knowledge that the word ‘automobile’ indicates a motor-driven vehicle mounted on four wheels as distinguished from one mounted on two or three wheels, such as a motorcycle or bicycle.”); also Honorable Margaret Dee McGarity, The Basics; Debtor’s Duties, Exemptions, Discharge and Dischargeability, in Basics of Bankruptcy and Reorganization 1993 (PLI Comm. Law and Practice Court Handbook Series No. A4-4426, Aug.-Nov. 1993) (“An automobile, truck or motorcycle or other vehicle may qualify [as a motor vehicle].”).
Thus, the logical question is whether it is true that all automobiles are motor vehicles, but not all motor vehicles are automobiles. Some courts have answered this in the affirmative, holding that the term “motor vehicle” is broader, and different from, the term “automobile.” Jernigan v. Hanover Fire Ins. Co., 235 N.C. 334, 69 S.E.2d 847 (1952); State v. Ridinger, 364 Mo. 684, 266 S.W.2d 626 (1954). In addition, in insurance law, the common approach is to follow common parlance: motorcycles usually are excepted from the definition of “motor vehicle.” 8D John Alan Appleman and Jean Appleman, Ins. L. & P. § 5169.45 (1981 & Supp.1997) (citing Glosson Motor Lines, Inc. v. Platt, 363 N.Y.S.2d 445 (N.Y.Sup.Ct.1974); Underhill v. Safeco Ins. Co., 284 N.W.2d 463 (Mich.1979)); Phillips v. Midwest Mut. Ins. Co., 329 F.Supp. 853 (W.D.Ark.1971); Safeco Ins. Co. v. Vieth, 109 Cal.Rptr. 493 (Cal.Ct.App.1973); Home Indem. Co. v. Hunter, 288 N.E.2d 879 (Ill.App.Ct.1972).
Other courts, too, have held that the term “motor vehicle” does not encompass the term “motorcycle.” The District Court for the Southern District of West Virginia, in deciding whether a truck violated odometer disclosure requirements, referred to 15 U.S.C. § 1901, the “Motor Vehicle Information and Cost Savings Act.” Davis v. Dils Motor Co., 566 F.Supp. 1360 n. 7 (S.D.W.Va.1983). That statute states that a “passenger motor vehicle” means “a motor vehicle with motive power, designed for carrying twelve persons or less, except (A) a motorcycle ____” 15 U.S.C.A. § 1901(1) (1982) (repealed 1994). Also, in Marshall v. Champion Cycle Ctr., Inc., 443 F.Supp. 406 (N.D.Ill.1978), where mechanics claimed wage exemptions for overtime sales and service work on automobiles, the District Court for the Northern District of Illinois- held that motorcycles were not included in the definition of “automobile.”
Finally, other states’ exemption statutes would allow for motorcycles to be exempted. Unlike New Hampshire RSA § 511:2, the scopes of those statutes are broader. See Kan. Civ. Proc. Code Ann. § 60-2304(c) (1996) (exempting “one means of conveyance regularly used for the transportation of the person”); Mont. Rev. Code Ann. § 25-13-609(2) (1996) (allowing the exemption of “one motor vehicle”); Tex. Prop. Code Ann. § 42.002(9) (1997) (“[A] two-wheeled, three-wheeled, or four-wheeled motor vehicle for each member of a family or single adult who holds a driver’s license or who does not hold a driver’s license but who relies on another *981person to operate the vehiele for the benefit of the unlicensed person” is exempt).
The broader term “motor vehiele,” however, does appear in other sections of the New Hampshire Revised Statutes Annotated. For example, N.H. RSA § 259:60 defines “motor vehiele” as follows:
I. Except where otherwise specified in this title, any self-propelled vehicle not operated exclusively on stationary tracks, including ski area vehicles;
II. As used in RSA 261:148 relative to municipal permits for registration, includes all trailers and semi-trailers as defined herein and travel trailers as determined by the commissioner of revenue administration; however, snow traveling vehicles as defined herein, mobile homes, house trailers and mopeds shall not be so included;
III. For purposes of the financial responsibility statutes, any self-propelled vehicle not operated exclusively upon stationary tracks, except farm tractors, crawler-type tractors, and mopeds;
IV. For purposes of the road toll statutes, all vehicles, engines, machines or mechanical contrivances which are propelled on the public highways by internal combustion engines, electric motors, steam engines, or other alternate sources of energy except human or animal power.
N.H. Rev. Stat. Ann. § 259:60 (1993) (emphasis added). New Hampshire RSA § 259:63 defines “motorcycle” as “every motor vehicle having a seat or saddle for the use of the rider and designed to travel on not more than 3 wheels in contact with the ground____” N.H. Rev. Stat. Ann. § 259:63 (1993) (emphasis added). Thus, the legislature has made it clear that motorcycles are to be included in the definition of motor vehiele. Yet, the definition of automobile limits the meaning of motor vehicle: New Hampshire RSA § 259:80 defines “automobile” as “[a] motor vehicle of the private passenger or station wagon type ... or [a]ny other b-wheel motor vehiele.... ” N.H. Rev. Stat. Ann. § 259:80 (1993) (emphasis added).
With all this in mind, the Court cannot disobey the plain meaning of the word “automobile” in N.H. RSA § 511:2(XVI). Had the legislature intended to allow exemptions for motorcycles, the statute would read “motor vehicles” rather than “automobiles.” The legislature amended the statute once, but chose only to raise the exemption allowance, not change the type of vehicle for which the exemption may be claimed. In the face of such a clear directive, there is no need to go beyond the plain meaning of the word, and this Court cannot, and will not,5 legislate the word “automobile” to mean “motor vehicle” for the purposes of N.H. RSA § 511:2(XVI).
Therefore, for all of the foregoing reasons, the Plaintiffs objection is sustained. This opinion constitutes the Court’s findings of facts and conclusions of law in accordance with Federal Rule of Procedure 7052. The Court will issue a final judgment consistent with this opinion.
. This opinion considers only whether a motorcycle is an automobile under N.H. RSA § 511:2(XVI), not whether, and to what extent, the Defendant has other available modes of transportation.
. At the time the Defendant filed bankruptcy, September 1996, N.H. RSA § 511:2 did not contain subsection XVIII, the wildcard exemption, which became effective on January 1, 1997, the same date that section 511:2-a, Nonavailability of Federal Bankruptcy Exemptions, was repealed. The Court notes, however, that debtors who currently wish to exempt motorcycles may do so under this subsection, or may elect to exempt a motorcycle under section 522(d)(2) of the Bankruptcy Code, which provides an exemption up to $2,400 for "one motor vehicle.” § 522(d)(2).
.This section has been amended to add "watercraft, or aircraft” after "motor vehicle.” H.R. Rep. No. 105-324, 105th Cong. (1997) (Bankruptcy Amendment Act of 1997).
. Sidecars, often used to carry passengers, may be attached to motorcycles and would increase the wheel base from two wheels to three.
. This Court has held that the “meaning of ‘motor vehicle’ is clear under both federal and state law____” Schachter, 192 B.R. at 22. It would be disingenuous to hold now that the meaning of “automobile,” however, is not. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8492682/ | OPINION AND ORDER ON TRUSTEE’S OBJECTION TO DEBTORS’ CLAIM OF EXEMPTION
BARBARA J. SELLERS, Bankruptcy Judge.
This matter came on for hearing April 18, 1997, on the objection of Thomas McK. Hazlett, the chapter 7 trustee, to the debtors’ claim of exemption in the aggregate amount of $20,000 in them residence. The debtors seek to utilize the exemptions set forth in both Ohio Revised Code § 2329.66(A)(1)(a) and (A)(1)(b). The trustee contends that these provisions may not be combined, and that the total homestead exemption which the debtors may claim is, therefore, $10,000.
This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and the General Order of Reference entered in this district. This is a core matter under 28 U.S.C. § 157(b)(1)(B).
Ohio Revised Code, Section 2329.66 provides in relevant part:
(A) Every person who is domiciled in this state may hold property exempt from execution, garnishment, attachment, or sale to satisfy a judgment or order, as follows: (l)(a) In the case of a judgment or order regarding money owed for health care services rendered or health care supplies provided to the person or a dependent of the person, one parcel or item of real or personal property that the person or a dependent of the person uses as a residence. Division (A)(1)(a) of this section does not preclude, affect, or invalidate the creation under this chapter of a judgment lien upon the exempted property, but only delays the enforcement of the lien until the property is sold or otherwise transferred by the owner or in accordance with other applicable laws to a person or entity other than the surviving spouse or surviving minor children of the judgment debtor. Every person who is domiciled in this state may hold exempt from a judgment lien created pursuant to division (A)(1)(a) of this section the person’s interest, not to exceed five thousand dollars, in the exempted property-
(b) In the case of all other judgments and orders, the person’s interest, not to exceed five thousand dollars, in one parcel or item of real or personal property that the person or a dependent of the person uses as a residence.
Ohio Revised Code § 2329.66(A)(1) (Anderson 1997).
At the Court’s direction, the trustee filed a notice for creditors to file claims following the April 18,1997 hearing. The bar date for the filing of claims was July 28, 1997. Five creditors filed proofs of claim, including Belmont Savings Bank, Christopher Marquart M.D., Anesthesiologists of Wheeling, Ben-wood Medical Clinic, and Ohio Valley Medical Center. With the exception of Belmont Savings Bank, the holder of a fully secured mortgage, all claimants appear to be providers of health care services and/or supplies.
The debtors valued their residence at the time they filed their petition as $41,500. The residence is subject to a mortgage in favor of Belmont Savings Bank. The bank has filed an amended claim stating that the balance owed on the mortgage as of the petition date was $18,877.38. Benwood Medical Clinic, Inc. also apparently holds a judgment lien against the residence in the amount of $849.20. Accepting the debtors’ valuation, and considering the costs associated with any sale of the property, the equity existing in the residence is approximately $17,623.80. From this amount, it is clear that’ if the debtors are entitled to claim a total homestead exemption *1002of $20,000, no equity would exist for the benefit of unsecured creditors. If, on the other hand, their exemption is limited to $10,000, as the trustee maintains, some $7,623.80 would remain.
With the exception of equal protection challenges brought by providers of health care services and supplies, see e.g., St. Ann’s Hospital v. Arnold, 109 Ohio App.3d 562, 672 N.E.2d 743 (1996), it does not appear that Ohio courts have addressed the provisions found in § 2329.66(A)(1)(a) and related statutes. Thus, this Court is left with little guidance as to whether the legislature intended debtors to be able to “stack” the two homestead exemptions.
If the trustee in bankruptcy sells the debtors’ residence, which he is entitled to do pursuant to 11 U.S.C. § 363 without regard to the character of the scheduled creditors, the debtors each will be entitled to assert an exemption in any proceeds of sale remaining after costs of sale and the mortgage have been paid. The Court believes each debtor’s homestead exemption, however, is limited to a total of $5,000.
The Court’s determination that each debtor’s homestead exemption is limited to $5,000 arises from the Court’s reading of § 2329.66(A)(1)(a) to create a delay in the execution remedy only. If the creditor has a “health care” judgment, as that is defined under the statute, the creditor’s execution remedy is delayed until the property is sold by the judgment debtor or under the execution rights of a non “health care” creditor. When that sale occurs, and despite the delay in remedy, the debtor retains the right to exempt $5,000 in net proceeds not subject to otherwise valid consensual or statutory liens from the claims of the “health care” creditors. Subsection (b) of § 2329.66(A)(1) also gives each debtor the right to assert a $5,000 exemption against non “health care” creditors. If each debtor’s interest in the net proceeds exceeds the $5,000 exemption, “health care” and non “health eare” judgment creditors would have rights to those proceeds in accordance with the perfection and priority provisions of state law. This Court does not, therefore, conclude that the addition of § 2329.66(A)(1)(a) was intended to create an additional exemption, but merely to limit an execution remedy. Further, all creditors sharing in these proceeds after the mortgage and costs of sale are paid are “health care” creditors.
Based on the foregoing the trustee’s objection to the debtors’ claim of exemption is sustained to the extent either debtor is attempting to assert an exemption in excess of $5,000 under the provisions of Ohio Revised Code § 2329.66(A)(1).
IT IS SO ORDERED. | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8492684/ | MEMORANDUM OPINION
PETER J. WALSH, Bankruptcy Judge.
Before the Court are the cross-motions for summary judgment filed by Anchor Resolution Corp. (fyk/a Anchor Glass Container Corp.) (the “Debtor”), the Glass, Molders, Pottery, Plastics & Allied Workers International Union (“GMP”), and the American Flint Glass Workers Union, AFL — CIO (“AFGWU”) with respect to Debtor’s objections to claims filed by GMP and AFGWU (collectively, the “Unions”). GMP’s and AF-GWU’s respective claims arise out of-certain collective bargaining agreements (each, a “CBA”; collectively, the “CBAs”), which Debtor assumed and assigned pursuant to an asset sale transaction.
The Court shall grant a motion for summary judgment filed pursuant to Federal Rule of Bankruptcy Procedure 7056 where “there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). There is no genuine issue of material fact. (See Debtor’s Mem. at 12; GMP’s Br. at 6; AFGWU’s Mem. at 3.)
The CBAs contain provisions that require payments to union employees; those payment obligations arose following the Court-approved assumption and assignment. Debt- or asserts that Code § 365(k)1 precludes the assertion of a claim against Debtor for post-assignment obligations under the CBAs. The Unions counter that by allowing the assignment they did not waive any executory-con-tractual rights as against Debtor; that Code § 1113, not Code § 365(k), governs the assumption and assignment of the CBAs; and that, since Debtor did not comply with the provisions of Code § 1113, certain liabilities under the CBAs remain with Debtor.
For the reasons stated below, I will grant Debtor’s motion, and deny the respective motions of GMP and AFGWU.
JURISDICTION
The Court has jurisdiction over this proceeding under 28 U.S.C. § 1334(b) as a matter arising under Code § 365. Furthermore, this proceeding is a core proceeding that concerns the “allowance or disallowance of claims against the estate.” See 28 U.S.C. § 157(b)(2)(B). The case is before the Court pursuant to the Omnibus Order of the United States District Court for the District of Delaware, dated July 23, 1984, referring bankruptcy matters to this Court for hearing and determination.
FACTS
In March 1996, Debtor and GMP negotiated two CBAs to cover the three-year period of April 1, 1996, through March 31, 1999.2 Under the CBAs, GMP agreed to accept the following wage terms: no increase in the basic hourly wage rate for the first year of the contract; an increase in the second year of the contract that would leave GMP members at a rate below the industry standard as reflected in contracts between GMP and Owens-Broekway Glass Container Co. (“Owens”) and between GMP and Ball-Foster Glass Container Co., L.L.C. (“Ball-Foster”); *332and a further increase in the third year of the contract that would align the basic hourly wage rate of Debtor’s GMP workers with the rate of GMP workers elsewhere.
In exchange, Debtor obligated itself to make three supplemental payments during the course of the three-year term. First, “[e]mployees working in plants that are sold, merged and/or transferred to another company shall be paid retroactively any general increases forfeited in the 1st and/or 2nd year of the contract and their rates of pay will reflect full 1st, 2nd and 3rd year general increases.” (AMD CBA at 95; P & M CBA at 77-78.) Second, Debtor agreed to pay AMD members, but not P & M members, on the payroll as of April 1, 1996, a one-time payment of $700 by separate cheek on the earlier of April 1, 1997, or the date of retirement or termination. Third, Debtor agreed to a single payment of $300 in stock of Debt- or’s parent Vitro, S.A., (the “GMP $300 Bonus”) to both P & M and AMD members who were on the payroll as of April 1,1996, on the earlier of April 1,1997, or the date of retirement or termination. GMP asserts a claim in the aggregate amount of $6,284,896 arising out of these three payment obligations.
Effective September 1, 1996, Debtor entered into two three-year labor contracts with AFGWU, one covering members at the Zanesville, Ohio, plant and one covering members at all other plants operated by Debtor. These CBAs limited AFGWU members to below-industry-rate wages for the first two years of the contract. In exchange, Debtor agreed to pay a $300 sign-on bonus on September 1, 1997, (the “AFGWU $300 Bonus”) to members on the payroll as of September 1, 1996, and AFGWU members employed as of September 1,1997, the beginning of the second year of the contract, would be entitled to receive a single bonus of $450, $550, or $650, depending on job category (the “$450-$650 Bonus”). AFGWU asserts a $323,000 claim arising out of these two payment obligations.
Debtor filed its voluntary petition under Chapter 11 of the Code on September 13, 1996.
On or about October 4,1996, Debtor filed a motion for an order approving a certain asset purchase agreement, involving the sale of substantially all of Debtor’s assets to Ball-Foster, and for authority to assume and assign certain executory contracts in connection with the sale. After a hearing, in an order dated October 15, 1996, this Court, among other things, denied the motion, scheduled a hearing on the sale of Debtor’s assets, and approved bidding procedures related to the sale.
On or about November 1, 1996, Debtor served a notice of assumption and assignment of certain executory contracts and unexpired leases. This notice announced the hearing date of November 22, 1996, for the purposes of approving an asset purchase agreement and granting the assumption and assignment of executory contracts:
Pursuant to the Scheduling Order, you are hereby advised of the Debtor’s current intention to assume and assign to Purchaser the Executory Contract(s) listed on the information sheet affixed hereto ... and the pre-petition amount owing on each of such Executory Contracts to be cured....
(Nov. 1 Notice at 1.) The CBAs were listed on the information sheet. The Unions received this notice and did not object to the cure amounts — zero—or the assumptions and assignments.
On December 2,1996, Owens and Consumers Packaging Inc. (“Consumers”) submitted a joint bid to purchase Debtor’s assets. Following a hearing on notice, this Court issued an order on December 20, 1996, (the “Sale Order”) approving the bid as documented in an asset purchase agreement dated December 18, 1996 (the “APA”). The Unions received notice of the proposed sale and did not object to the sale transaction. The Sale Order recited that a “reasonable opportunity to object or be heard regarding the relief requested in the Motion has been afforded to all interested parties and entities, including ... all parties to Executory Contracts to be assumed and assigned to Consumers or Owens, as applicable, who have received Assumption Notices from the Debtor....” (Sale Order ¶7, at 6.) Moreover, the Sale Order went on to state that
*333[e]aeh non-Debtor party to an Executory Contract which was served with an Assumption Notice is hereby barred and enjoined from asserting against the Debtor, or the Debtor’s estate ... any objection to the assumption and assignment of such non-Debtor party’s Executory Contract or the Cure Amount, as the latter may have been amended, of which the non-Debtor party was given notice prior to the Hearing. The assignment of each Executory Contract to the applicable Purchaser will not cause a default or otherwise allow the non-Debtor party thereto to terminate or adversely affect such Purchaser’s rights thereunder. In no event shall Purchasers be liable for any Cure Amounts or pre-Closing Date liabilities arising from or related to the Executory Contracts with the exception of any Assumed Liabilities.
(Id. ¶ 21, at 23-24.) Prior to the closing on the transaction, Consumers assigned its rights and obligations under the APA to Anchor Glass Acquisition Corp., Consumers’ wholly owned subsidiary that was formed for this purpose, which subsequently changed its name to Anchor Glass Container Corp. (“New Anchor”).
On January 31,1997, this Court entered an order pursuant to Code § 365 approving the assumption and assignment of the executory contracts (the “Jan. 31 Order”). The Jan. 31 Order included the finding that other than the cure amounts, there were no other amounts due under the contracts other than certain post-petition, pre-elosing-date amounts payable in the ordinary course of business. (See Jan. 31 Order ¶ 3, at 5.) The Jan. 31 Order further stated that assumption and assignment would relieve Debtor from any further liability with respect to any post-assignment breach of the subject executory contracts, including the CBAs:
Each Executory Contract on the Second List of Contracts shall, upon assignment to the applicable Purchaser, be deemed to be valid and binding on the Purchaser to whom such Executory Contract is assigned and in full force and effect and enforceable in accordance with its terms, and following such assignment, except for the payment of the Cure Amount, the Debtor shall be relieved pursuant to section 365(k) of the Bankruptcy Code, of any further liability with respect to any breach of such Execu-tory Contract after such assignment.
(Id. ¶ 4, at 5-6.)
On or about February 5, 1997, Debtor closed on the sale of substantially all of its assets to Owens and New Anchor pursuant to the terms of the APA Owens and New Anchor assumed all rights and obligations arising from and after the closing date under the CBAs pursuant to APA § 9.05, which provides in part:
Effective as of the Closing, [Owens] shall and Consumers shall cause New Anchor to, subject to Section 10.01(h), (i) assume all of the currently existing collective bargaining .agreements with respect to the Purchased Assets to be acquired by each such Buyer and (ii) employ all of the Business Union Employees under said collective bargaining agreements.
(APA § 9.05, at 56.)
Section 10.01(h) of the APA, as to which the above-stated assumption obligation is subject, is found in Article 10 of the APA, which sets forth numerous conditions to the buyers’ obligation to close on the contract. The § 10.01(h) condition reads as follows:
(h)(i) The provisions of the master and local collective bargaining agreements covering employees of Seller and its subsidiaries relating to work rules shall have been amended to reflect prevailing industry standards and (ii) any retroactive (but not prospective) payments of wage increases forfeited in prior periods under such agreements as a result of the consummation of the transactions contemplated hereby shall have been waived or the Bankruptcy Court shall have issued an order, not subject to stay, that Seller may assign and the applicable Buyer may assume such collective bargaining agreements without any acceleration of the deferred wage increases negotiated under the current agreements.
(APA § 10.01(h), at 59.)
Before the closing date, GMP, Debtor, and New Anchor engaged in discussions directed at accomplishing some type of waiver of the *334retroactive wage adjustment. Debtor was not successful in reaching an agreement with GMP on this matter. However, GMP and New Anchor entered into an agreement (the “Agreement”), which addressed the retroactive wage adjustment and a number of other matters covered by the CBAs. In contemplation of the closing and the assumption of the CBAs, the Agreement recited that it was “contingent upon [New Anchor] successfully completing the purchase of [Debtor’s] assets.” (Agreement at 1.) In recognition of the assignments to be effective at closing, the Agreement recited that New Anchor will be adopting GMP’s CBAs, including “the assumption of liabilities arising under the pension plan for hourly employees, and the recognition of past service of hourly employees covered by the [CBAs].” (Id.) However, the Agreement modified the CBAs by eliminat-. ing the retroactive wage increase provision: “The language in the [CBAs] regarding the retroactivity in the event of a sale of a plant shall not be paid by [New Anchor] as a result of this Agreement.” (Id. at 2.) The GMP $300 Bonus was also eliminated: “The language in the [CBAs] regarding $300 in Vitro stock to be tendered on April 1, 1997 shall not be paid by [New Anchor] as a result of the Agreement.” (Id.)
With respect to AFGWU’s CBAs, Debtor, Owens, New Anchor, and AFGWU had discussions and circulated draft agreements before the closing date regarding waivers of the two bonus obligations. (See AFGWU’s Resp. at 4-5.) AFGWU agreed, as between itself and Consumers and Owens respectively, that it would waive the AFGWU $300 Bonus, contingent on the closing. (See id. at 5.) Nothing indicates that AFGWU waived the $450-$650 Bonus. (See id. at 6.) No agreement was made between Debtor and AF-GWU. (See id. at 5-6.)
By a letter dated February 5,1997, GMP’s counsel advised Debtor’s counsel that GMP had not waived the right to file a claim against the Debtor for the retroactive wage increases and the GMP $300 bonus, and announced that a claim would be filed accordingly. That letter was in response to a January 31, 1997, letter from Debtor’s counsel to GMP’s counsel' indicating that, even without a waiver, Debtor would be free from liability for retroactive wage increases and the GMP $300 Bonus. In other words, Debtor asserted that, following the closing, it would have no liability to GMP with respect to the CBA obligations that GMP waived as to New Anchor pursuant to the Agreement, while GMP asserted that those liabilities remained with Debtor and GMP would file a claim with respect thereto.
AFGWU has echoed GMP’s disagreement with Debtor as to Debtor’s post-assignment liabilities on the CBAs. (Compare AFGWU’s Resp. at 5-6 with Letter from Stanger to Wittner of 2/5/97, at 1.)
DISCUSSION
Although the Unions and Debtor agree that there is no issue of material fact, they disagree as to whether Code § 365(k)3 serves to reheve Debtor of the payment obligations contained in the CBAs.
Debtor, in reliance on Code § 365(k), as referenced in and implemented by the terms of the APA, the Sale Order, and the Jan. 31 Order, argues that it has been relieved of liability for the obligations under the CBAs, which it assigned to New Anchor.
GMP presents three arguments in support of its view that it has a claim against Debtor: (1) unlike its relationship with New Anchor, as to Debtor GMP did not waive its right to pursue any claim for retroactive pay or bonuses; (2) the zero cure amounts listed in the Sale Order and the Jan. 31 Order do not absolve Debtor because the defaults took place after the Closing Date and therefore there were no cure amounts on the assumption and assignment date; and (3) Debtor’s objection to post-petition payment of retroactive wage increases required by the CBAs, if successful, would constitute a unilateral mod*335ification of the CBAs in violation of Code § 1113.4
AFGWU’s arguments boil down to this: Although AFGWU agreed with Owens and New Anchor to forego its right as against those two companies to the AFGWU $300 Bonus in exchange for the advancement of wage increases, AFGWU did not waive its right to proceed against Debtor for the AF-GWU $300 Bonus and the $450-$650 Bonus.
1. Waiver and Cure Amounts
I agree with Debtor that Code § 365(k) controls this proceeding and moots the issues of waiver and cure amounts. “Assignment by the trustee [or debtor in possession] to an entity of a contract or lease assumed under [Code § 365] relieves the trustee and the estate from any liability for any breach of such contract or lease occurring after such assignment.” Code § 365(k) *336(emphasis added). At the closing, Debtor assumed and assigned the CBAs to New Anchor and Owens pursuant to the APA, the Sale Order, and the Jan. 31 Order. The Unions have not alleged that any breach occurred before the assignment; rather, no party disputes that every one of the payment obligations arose afterward.5 Thus, the plain language of Code § 365(k) frees Debtor from those liabilities, the absence of a waiver notwithstanding. Although Debtor attempted to obtain waiver documents from the Unions and neither GMP nor AFGWU agreed to waivers as to Debtor, it in no manner conceded that the absence of such a waiver exposed it to liability. To the contrary, in its January 31 letter to GMP, Debtor expressly rejected the position that a waiver was needed for it to avoid liability. Debtor’s attempt to obtain a written waiver was apparently a “belt and suspenders” approach to this matter.
It is a fundamental tenet of bankruptcy law that, with respect to the retention of liability upon assignment of executory contracts, the Code changes the common law rule:
A party subject to a contractually created obligation ordinarily cannot divest itself of liability by substituting another in its place without the consent of the party owed the duty. While the assignee may be entitled to perform for the original obligor, the original obligor remains ultimately liable until discharged by performance or otherwise. Section 365(k) changes this common law rule and relieves- the estate from all liability under the [executory contract] following assignment.
In re Washington Capital Aviation & Leasing, 156 B.R. 167, 175 n. 3 (Bankr.E.D.Va.1993) (citation omitted). Thus, Debtor did not need to take action, such as obtaining a waiver, to divest itself of post-assignment liability.
Assumption and assignment under Code § 365 is analogous to a novation, as it involves the substitution of a new obligor, the assignee, for the old one. See Wainer v. A.J. Equities, Ltd., 984 F.2d 679, 683 (5th Cir. 1993). The assignee becomes fully liable under the assigned contract and the debtor/assignor is relieved of any liability for post-assignment breaches. See In re Lafayette Radio Electronics Corp., 9 B.R. 993, 1009 (Bankr.E.D.N.Y.1981) (citing Code § 365(k)). The Jan. 31 Order makes clear that, upon assignment of the CBAs to New Anchor and Owens, Debtor retained no liability except cure amounts, which were zero. New Anchor and Owens thus became Debtor’s substitute obligors for all liabilities occurring post assignment under the CBAs.
2. No Violation of Code § 1113
GMP contends that, if the Court finds that Debtor does not have to pay for the retroactive wage increases, the Debtor will have succeeded in unilaterally modifying the provisions of the CBAs in violation of Code § 1113. “The debtor in possession ... may assume or reject a collective bargaining agreement only in accordance with the provisions of this section.” Code § 1113(a). In GMP’s eyes, since Debtor assumed the CBAs but effectively avoided liabilities in the process it has run afoul of Code § 1113 by not following the procedures mandated by that section.
While Code § 1113(a) plainly states that either an assumption or a rejection of a collective bargaining agreement may only be effected “in accordance with the provisions of section,” the balance of Code § 1113 deals exclusively with procedures the debtor must follow to reject or modify collective bargaining agreements. The balance does not mention assumption, and it sets forth terms and provisions neither having a relationship to, nor making any sense if applied to, an assumption. As the court in Mass. Air Conditioning & Heating Corp. v. McCoy, 196 B.R. 659, 663 (D.Mass.1996), observed, the inclusion of the word “assumption” in subsection (a) reflects congressional carelessness, and Code § 365 still governs the assumption of a collective bargaining agreement.
Thus, given the plain language of § 1113(b)-(f) (directed in operation solely *337to termination or alteration of collective bargaining agreements), and the remedial purpose behind its enactment (directed to securing special procedures before a collective bargaining agreement may be rejected or modified), I find that the use of the term assumption in § 1113(a) was at most sloppy legislative drafting. The reference to assumption appears simply to call out the character of rejection by identifying it with its opposite. Otherwise, assumption plays no part in the purpose or operation of § 1113. Section 1113 is designed to provide additional procedural requirements for rejection or modification of collective bargaining agreements, and only to that degree supersedes and supplements the provisions in § 365.
By contrast, assumption of collective bargaining agreements continues to be governed by the provisions for executory contracts under § 365. Nothing in § 1113’s plain language or legislative history indicates that Congress intended to alter Bildisco’s holding that collective bargaining agreements are executory contracts. Because § 1113 speaks only to rejection, assumption of a collective bargaining agreement — like any other execu-tory contract — remains within the province of § 365.
Id. (citations omitted). Because this proceeding deals with an assumption and assignment, not a rejection or modification, Debtor enjoys the benefits of Code § 365(k).
GMP seeks to twist the assumption and assignment into a modification, so that Code § 1113 would displace Code § 365 nonetheless. In support of this position, GMP points to the language of APA § 10.01(h)(ii), which made it a condition to New Anchor’s obligation to close that either the retroactive wage adjustment be waived or this Court issue an order providing for the assumption and assignment without the acceleration of the deferred wage increases. According to GMP, the APA posits a modification to the CBAs, and therefore Code § 1113 comes into play. I am not persuaded by GMP’s argument.
First, it is undisputed that the waiver is one element of a multi-provision Agreement entered into between GMP and New Anchor. It cannot be said that the Agreement in any fashion constituted an amendment or a modification of the CBAs that would implicate Code § 1113 because the Debtor is not a party to the Agreement and the Agreement states explicitly that its terms become effective only upon the occurrence of the closing, i.e., following the assumption and the assignment, when Debtor is no longer a party to the CBAs. In effect, the Agreement is a post-assignment modification to the CBAs, obvi-dusly not involving Debtor and therefore not implicating Code § 1113.
Second, with respect to the alternative condition of having this Court issue an order allowing the assumption and assignment without an acceleration of the deferred wage increases, the short answer is that no such order was ever entered, or even sought by Debtor. Had Debtor sought such an order, then, presumably, Code § 1113 would have been brought into play. However, the fact that it might have been implicated had the Debtor sought such relief does not make Code § 1113 applicable here.
; Third, it is important to note that the condition set forth in APA § 10.01(h)(ii) is one of numerous conditions to Owens’ and New Anchor’s obligation to close; as provided by APA § 10.01, any one or all of those conditions could have been waived by Owens or New Anchor. The closing conditions set forth in APA § 10.01 were obviously intended to benefit Owens and New Anchor because, among other things, they were assuming contractual liabilities on a going forward basis. If, as GMP argues, certain of the CBAs’ obligations that matured post assignment were intended to be Debtor’s liabilities, one would have to ask why, pursuant to APA § 10.01, Owens and New Anchor, not Debtor, had the right to waive the required removal of such liabilities. This wording of the APA is entirely consistent with the plain language and effect of Code § 365(k). The APA provisions make it clear that, absent an agreement providing otherwise, New Anchor became fully subject to all the terms of the CBAs and no liability remained with Debtor. Had New Anchor elected to waive this condition, it would have been obligated to satisfy the very *338claim that GMP now asserts against Debtor. Surely, GMP could not recover the same claim from both Debtor and New Anchor.
Also consistent with the effect of Code § 365(k) is the provision of the Agreement between GMP and New Anchor whereby New Anchor specifically “adopted” the CBAs, including “the recognition of past service of hourly employees covered by the [CBAs].” (Agreement at 1.) Although the parties to the Agreement then went on to carve out two elements of the liability for past service, the Agreement makes clear, consistent with Code § 365(k), that, absent an understanding otherwise between the two parties, New Anchor as assignee became the substitute obligor as to all liabilities arising post assignment under the CBAs.
GMP was not obligated to enter into the Agreement with New Anchor and thereby release rights which it had under the CBAs. It could have refused to make any concessions to New Anchor. If New Anchor did not elect to waive the APA § 10.01(h) condition to closing, then presumably the transaction would have aborted. Given the undisputed fact of Debtor’s precarious financial condition at the time, GMP apparently saw the advantage of making the concessions in order to ensure the continued operation of the facilities, and the employment of its members, by a viable entity.
GMP relies on language from In re Continental Airlines, 125 F.3d 120 (3rd Cir.1997), cert. denied, — U.S. -, 118 S.Ct. 1049, 140 L.Ed.2d 113 (1997), in support of its position that Debtor has modified the CBAs in defiance of Code § 1113:
The intent behind section 1113 is to preclude debtors or trustees in bankruptcy from unilaterally terminating, altering, or modifying the terms of a collective bargaining agreement without following its strict mandate. Moreover, the provision operates to preclude the application of other bankruptcy code provisions to the advantage of debtors and trustees to permit them to escape the terms of a collective bargaining agreement without complying with the requirements of section 1113.
Id. at 137 (citing In re Ionosphere Clubs, Inc., 922 F.2d 984, 989-90 (2d Cir.1990)). In In re Continental Airlines the court of appeals held that the bankruptcy court order entered pursuant to Code § 524 enjoining the union from pursuing certain collective bargaining rights ran afoul of Code § 1113 because the injunction effectively modified the collective bargaining agreement between the union and the debtor. See 125 F.3d at 138. That is not the situation here. The Debtor has not sought and this Court has not ordered any modification of the CBAs. Pursuant to Code § 365, New Anchor has assumed full liability for all the terms of the CBAs. The post-assignment modification of the CBAs was effected in an arm’s-length Agreement between GMP and New Anchor. Since Debtor is not a party to the Agreement and this Court did not order the Agreement, it cannot be said that Debtor has circumvented the requirements of Code § 1113. Code § 1113 gives unions specific protection against modifications sought by debtors. Debtor sought no such modification here.
Based upon the foregoing, I will enter an order disallowing the claim of GMP and the claim of AFGWU.
. 11 U.S.C. § 101 et seq. are herein referred to as "Code §_"
. GMP represents two groups of hourly employees: Production and Maintenance Department ("P & M”) and Automatic Machine Department ("AMD”). There were two separate CBAs: one for P & M (approximately 2,960 members) and one for AMD (approximately 1,240 members).
. Code § 365(k) provides:
Assignment by the trustee to an entity of a contract or lease assumed under this section relieves the trustee and the estate from any liability for any breach of such contract or lease occurring after such assignment.
. Code § 1113 provides:
(a) The debtor in possession, or the trustee if one has been appointed under the provisions of this chapter, other than a trustee in a case covered by subchapter IV of this chapter and by title I of the Railway Labor Act, may assume or reject a collective bargaining agreement only in accordance with the provisions of this section.
(b)(1) Subsequent to filing a petition and prior to filing an application seeking rejection of a collective bargaining agreement, the debt- or in possession or trustee (hereinafter in this section, “trustee" shall include a debtor in possession), shall—
(A) make a proposal to the authorized representative of the employees covered by such agreement, based on the most complete and reliable information available at the time of such proposal, which provides for those necessary modifications in the employees benefits and protections that are necessary to permit the reorganization of the debtor and assures that all creditors, the debtor and all of the affected parties are treated fairly and equitably; and
(B) provide, subject to subsection (d)(3), the representative of the employees with such relevant information as is necessary to evaluate the proposal.
(2) During the period beginning on the date of the making of a proposal provided for in paragraph (1) and ending on the date of the hearing provided for in subsection (d)(1), the trustee shall meet, at reasonable times, with the authorized representative to confer in good faith in attempting to reach mutually satisfactory modifications of such agreement.
(c) The court shall approve an application for rejection of a collective bargaining agreement only if the court finds that—
(1) the trustee has, prior to the hearing, made a proposal that fulfills the requirements of subsection (b)(1);
(2) the authorized representative of the employees has refused to accept such proposal without a good cause; and
(3) the balance of the equities clearly favors rejection of such agreement.
(d)(1) Upon the filing of an application for rejection the court shall schedule a hearing to be held not later than fourteen days after the date of the filing of such application. All interested parties may appear and be heard at such hearing. Adequate notice shall be provided to such parties at least ten days before the date of such hearing. The court may extend the time for the commencement of such hearing for a period not exceeding seven days where the circumstances of the case, and the interests of justice require such extension,, or for additional periods of time to which the trustee and representative agree.
(2) The court shall rule on such application for rejection within thirty days after the date of the commencement of the hearing. In the interests of justice, the court may extend such time for ruling for such additional period as the trustee and the employees’ representative may agree to. If the court does not rule on such application within thirty days after the date of the commencement of the hearing, or within such additional time as the trustee and the employees’ representative may agree to, the trustee may terminate or alter any provisions of the collective bargaining agreement pending the ruling of the court on such application.
(3) The court may enter such protective orders, consistent with the need of the authorized representative of the employee to evaluate the trustee’s proposal and the application for rejection, as may be necessary to prevent disclosure of information provided to such representative where such disclosure could compromise the position Of the debtor with respect to its competitors in the industry in which it is engaged.
(e) If during a period when the collective bargaining agreement continues in effect, and if essential to the continuation of the debtor’s business, or in order to avoid irreparable damage to the estate, the court, after notice and a hearing, may authorize the trustee to implement interim changes in the terms, conditions, wages, benefits, or work rules provided by a collective bargaining agreement. Any hearing under this paragraph shall be scheduled in accordance with the needs of the trustee. The implementation of such interim changes shall not render the application for rejection moot.
(f) No provision of this title shall be construed to permit a trustee to unilaterally terminate or alter any provisions of a collective bargaining agreement prior to compliance with the provisions of this section. '
. GMP asserts that "the right to the retroactive wages did not arise until after the Debtor's assets were sold to Consumers and Owens.” (GMP Br. at 28.) | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483897/ | ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeals of - )
)
Assist Consultants Inc. ) ASBCA Nos. 61525, 61613, 62090
)
Under Contract No. W912ER-18-C-0009 )
APPEARANCES FOR THE APPELLANT: Lee-Ann C. Brown, Esq.
Douglas L. Patin, Esq.
Sabah K. Petrov, Esq.
Bradley Arant Boult Cummings LLP
Washington, DC
APPEARANCES FOR THE GOVERNMENT: Michael P. Goodman, Esq.
Engineer Chief Trial Attorney
Rebecca L. Bockmann, Esq.
Matthew Tilghman, Esq.
Engineer Trial Attorneys
U.S. Army Engineer District, Middle East
Winchester, VA
ORDER OF DISMISSAL
The dispute has been settled. The appeals are dismissed with prejudice.
Dated: October 25, 2022
DAVID D’ALESSANDRIS
Administrative Judge
Armed Services Board
of Contract Appeals
I certify that the foregoing is a true copy of the Order of Dismissal of the Armed
Services Board of Contract Appeals in ASBCA Nos. 61525, 61613, 62090, Appeals of
Assist Consultants Inc., rendered in conformance with the Board’s Charter.
Dated: October 26, 2022
PAULLA K. GATES-LEWIS
Recorder, Armed Services
Board of Contract Appeals
2 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483899/ | NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 18-3812
______
UNITED STATES OF AMERICA
v.
ROMEL ANTHONY
a/k/a “DAME”
Appellant
____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-15-cr-00180-014)
District Judge: Honorable Mitchell S. Goldberg
____________
Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
December 15, 2021
____________
Before: GREENAWAY, JR., KRAUSE, and PHIPPS, Circuit Judges.
(Opinion filed: November 15, 2022)
___________
OPINION *
___________
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
PHIPPS, Circuit Judge.
Romel Anthony appeals his conviction for attempted possession with the intent to
distribute cocaine and his resulting 125-month prison sentence. In contesting his
conviction, he challenges the sufficiency of the government’s evidence at trial as well as
two evidentiary rulings related to cell phone records. He also contends that the District
Court erred in its determination of the quantity of cocaine that Anthony and others
attempted to steal and distribute. Although the government correctly concedes error as to
one of the evidentiary rulings, it was harmless, and Anthony’s other arguments do not
succeed. Thus, for the reasons elaborated below, we will affirm Anthony’s conviction
and sentence.
BACKGROUND
Six men hatched a plan to steal several kilograms of cocaine from the home of a
suspected North Philadelphia drug dealer. Three of them would enter from a roof
skylight, while three others would simultaneously serve as lookouts, using police
scanners, walkie-talkies, and cell phones to alert the intruders if the police arrived. In
addition to stealing the cocaine, the men aspired to resell it and divide the proceeds.
That brazen plot failed. While on the roof, the intruders received warnings from
the lookouts that the police were coming. The intruders fled the roof but were quickly
apprehended a few blocks away. The lookouts escaped.
But the police eventually tracked down the missing lookouts – one by one. After
one of the lookouts was identified, he along with one of the intruders identified then
thirty-nine-year-old Romel Anthony as another lookout. For his role in that scheme, a
grand jury indicted Anthony for attempted possession with the intent to distribute
cocaine. See 21 U.S.C. §§ 841(b)(1)(C), 846; see also 18 U.S.C. § 3231 (providing
2
federal district courts with jurisdiction over cases involving offenses against the laws of
the United States). Following a trial, a jury convicted Anthony of attempted possession
with the intent to distribute cocaine, 1 and the District Court imposed a prison sentence of
125 months. Anthony timely appealed that conviction and sentence, bringing this matter
within this Court’s appellate jurisdiction. See 28 U.S.C. § 1291; 18 U.S.C. § 3742(a).
DISCUSSION
On appeal, Anthony raises four issues. He challenges the sufficiency of the
government’s evidence of his guilt, and he also contends that the District Court erred in
two evidentiary rulings at trial. Finally, he disputes the District Court’s finding of the
quantity of cocaine used to calculate the Guidelines Range for his 125-month prison
sentence. Anthony cannot prevail on any of those arguments.
A. Sufficient Evidence Supports Anthony’s Conviction.
Anthony attacks the overall sufficiency of the evidence used to convict him. In
evaluating a challenge to the sufficiency of the evidence, a reviewing court assesses the
record “in the light most favorable to the prosecution,” to determine if “any rational trier
of fact could have found proof of guilt[] beyond a reasonable doubt.” United States v.
Caraballo-Rodriguez, 726 F.3d 418, 430 (3d Cir. 2013) (en banc) (alteration in original)
(internal citation and quotation marks omitted); Jackson v. Virginia, 443 U.S. 307, 318–
19 (1979) (articulating same legal standard). The reviewing court does not sit “as a
thirteenth juror,” and the verdict “must be upheld as long as it does not ‘fall below the
threshold of bare rationality.’” Caraballo-Rodriguez, 726 F.3d at 431 (quoting Coleman
1
The government also charged Anthony with aiding and abetting the use or carry of a
firearm during a crime of violence, see 18 U.S.C. §§ 2, 924(c)(1)(A), but the jury
acquitted Anthony of that count.
3
v. Johnson, 566 U.S. 650, 656 (2012) (per curiam)). The jury’s verdict in this case clears
that standard by a wide margin.
A rational juror could rely on testimony from either cooperating witness to convict
Anthony. See United States v. Perez, 280 F.3d 318, 344 (3d Cir. 2002) (explaining that
accomplice testimony, standing alone, is sufficient to sustain a conviction); United States
v. De Larosa, 450 F.2d 1057, 1060 (3d Cir. 1971) (same). Those two witnesses
implicated Anthony directly and in no uncertain terms. The first cooperating witness
testified that Anthony, armed with a police scanner, acted as a lookout, ready to alert the
others if the police arrived. The second cooperating witness testified similarly; he said
that Anthony remained in constant contact with his accomplices, prepared to alert them if
the police arrived. Both witnesses further testified that Anthony attended the prior
planning meetings and thus knew that the group aimed to steal and resell drugs.
In addition, records of cell phone communications bolstered the case against
Anthony. For the communications between cell phones to be probative, the government
had to associate certain cell phones with specific individuals. The government was able
to do this in part because law enforcement seized three of the six men’s cell phones – but
not Anthony’s – as part of a related investigation. And the contact information on those
phones associated certain phone numbers with specific persons, including Anthony.
Having associated a cell phone with its user, the call records indicated not only frequent
contact between Anthony and the intruders in the hours before the break-in, but also a
call from Anthony – who had a police scanner – to an intruder 26 seconds after the police
dispatched to the scene. This evidence too, if construed in the light most favorable to the
government, would allow a rational juror to conclude that Anthony violated the federal
drug laws.
4
In sum, the testimony of the two cooperating witnesses and the records of cell
phone communications – either in combination or in isolation – provided a basis for a
rational jury to find that Anthony acted as a lookout and is guilty of the attempted drug
offense. See, e.g., United States v. Powell, 113 F.3d 464, 467 (3d Cir. 1997) (affirming
conviction of defendant who served as a lookout to a drug transaction).
B. The Non-Percipient Testimony From a Lay Witness Was Harmless.
Anthony’s first evidentiary challenge is his strongest argument. He objected at
trial because the officer who testified that certain cell phones belonged to specific persons
did not personally seize the cell phones; instead, that officer learned who the cell phones
belonged to from another officer. As the government now concedes, Anthony was
correct. The officer’s non-percipient testimony should not have been permitted: a lay
witness cannot testify to the truth of information learned from a third party. Compare
Fed. R. Evid. 602 (requiring personal knowledge for lay witness testimony), and Fed. R.
Evid. 701(a) (limiting lay witness opinion testimony to opinions “rationally based on the
witness’s perception”), with Fed. R. Evid. 703 (permitting expert witnesses to testify
based on learned facts or data as long as “experts in the particular field would reasonably
rely on those kinds of facts or data in forming an opinion on the subject”); 2 Kenneth S.
Broun et al., McCormick on Evidence § 247 (8th ed. 2022) (explaining where the witness
could “only have spoken from conjecture or report of other persons, the proper objection
is not hearsay but want of personal knowledge”).
But under the harmless error doctrine, not all evidentiary errors warrant reversal.
See Delaware v. Van Arsdall, 475 U.S. 673, 681 (1986) (explaining that error is
“virtually inevitable” and that “the central purpose of a criminal trial is to decide the
factual question of the defendant’s guilt or innocence”); Gov’t of the V.I. v. Toto,
5
529 F.2d 278, 284 (3d Cir. 1976) (adopting the “middle ground” approach to harmless
error set forth in Roger J. Traynor, The Riddle of Harmless Error 35 (1970)); see also
Traynor, supra, at ix (“The well-being of the law encompasses a tolerance for harmless
errors adrift in an imperfect world.”). For an evidentiary error to be harmless, it must be
“highly probable that the improperly admitted evidence did not contribute to the jury’s
judgment of conviction.” United States v. Lopez, 340 F.3d 169, 177 (3d Cir. 2003)
(internal citation and quotation marks omitted); United States v. Vosburgh, 602 F.3d 512,
539–40 (3d Cir. 2010) (applying this same harmless error standard to evaluate the
erroneous admission of hearsay).
Here, the government has met its burden to establish that the error did not
contribute to the jury’s judgment of conviction. See United States v. Vazquez, 271 F.3d
93, 100 (3d Cir. 1993) (citing United States v. Olano, 507 U.S. 725, 734–35 (1993))
(explaining that the government has the burden of proving harmless error). As explained
above, the government’s case at trial relied chiefly on the testimony of two cooperating
witnesses, who directly implicated Anthony. And the now-conceded evidentiary error
has no bearing on the cooperators’ testimony, which provided an independent and
sufficient ground for Anthony’s conviction. In addition, other record evidence would
allow a jury to conclude which cell phone belonged to each person. Specifically, the
seized cell phones contained an email address and contact lists that allowed the jury to
identify specific phone numbers as belonging to Anthony’s co-defendants. This other
evidence – the direct testimony regarding Anthony’s guilt and the alternative basis of
associating certain cell phones with specific users – renders any evidentiary error
harmless as it is “highly probable that the improperly admitted evidence did not
contribute to the jury’s judgment of conviction.” Lopez, 340 F.3d at 177 (internal citation
6
and quotation marks omitted); see also United States v. McGlory, 968 F.2d 309, 337 (3d
Cir. 1992) (explaining that “other evidence” presented to the jury may establish the
erroneously admitted fact, thus rendering the error harmless); Vosburgh, 602 F.3d at 540
(same); United States v. Straker, 800 F.3d 570, 602, 607 (D.C. Cir. 2015) (holding that
conceded Bruton error was harmless where two cooperators and cell phone evidence
provided “overwhelming evidence” of the defendant’s guilt). 2
C. Admission of Summary Charts and Related Testimony Associating a Phone
Number with Anthony Do Not Provide a Basis for Overturning the Jury’s
Verdict.
Anthony’s other evidentiary objection also relates to the admission of evidence
associating Anthony with a certain cell phone number. A federal agent prepared two
summary charts that diagrammed cell phone communications on the day of the break-in.
Each chart included the name and photograph of each person associated with a phone
number, and Anthony’s name and photo appeared next to one phone number. The agent
also testified that she believed the cell phone number on the chart belonged to Anthony.
Anthony objected to this attribution. 3
In response, the District Court ensured that a basis existed in the record evidence
for associating the cell phone number with Anthony. Satisfied that the attribution could
be proved by evidence in the record, the District Court overruled that objection, permitted
the testimony, and admitted the summary chart into evidence. It also instructed the jury
that it could disregard the agent’s attribution and the summary charts.
2
As a related contention, Anthony argues that the government failed to authenticate the
cell phone evidence, as the testifying officer did not have firsthand knowledge of the
seizure. See Fed. R. Evid. 901. But other trial evidence provided a basis for
authenticating the cell phone evidence, see generally Fed. R. Evid. 901(b) (discussing the
various ways to authenticate evidence), and for the same reasons as the underlying
objection, even if there were an authentication error, it would be harmless.
3
Anthony did not object to the agent’s attribution of phone numbers to other defendants.
7
A district court has a great deal of discretion over the use of summary charts and
associated testimony. Under the Federal Rules of Evidence, a trial judge “should
exercise reasonable control over the mode and order of examining witnesses and
presenting evidence so as to . . . make those procedures effective for determining the truth
[and] avoid wasting time.” Fed. R. Evid. 611(a). Consistent with that standard, this
Court has approved the use of summary charts and corresponding explanatory testimony.
See, e.g., United States v. Jarmon, 14 F.4th 268, 273 (3d Cir. 2021) (permitting testimony
describing an organizational “chart prepared by the prosecution showing the
Government’s theory” of a criminal enterprise). Here, after confirming a factual basis for
the attribution of the cell phone number to Anthony, the District Court instructed the jury
that it did not have to believe the attribution on the summary chart. See Trial Tr. at
120:12–16 (June 8, 2018) (App. 925) (“The charts themselves are not evidence or proof.
If the charts do not correctly reflect the evidence in the case, you should disregard them
and determine the facts from the underlying evidence.”). Allowing the summary chart
under these circumstances was not an abuse of discretion.
But also over Anthony’s objection, the District Court permitted the agent to
provide her opinion that the cell phone number on the chart belonged to Anthony.
Because that lay opinion was not “rationally based on the witness’s perception,” it should
not have been permitted. Fed. R. Evid. 701(a). Nonetheless, that error was harmless. As
the District Court determined before allowing the summary chart, other evidence in the
record supported the conclusion that the cell phone number belonged to Anthony. Also,
as with his first evidentiary objection, the case against Anthony did not depend solely
upon the cell phone records – two cooperating witnesses testified to his involvement in
the plot to steal and redistribute cocaine. See United States v. Mitchell, 816 F.3d 865,
8
877 (D.C. Cir. 2016) (holding that error regarding summary testimony connecting a
phone number to the defendants was harmless); United States v. Dukagjini, 326 F.3d 45,
62 (2d Cir. 2003) (holding that error regarding case agent testimony was harmless where
multiple cooperating witnesses “testified extensively” as to defendant’s guilt); United
States v. Garcia, 413 F.3d 201, 217–19 (2d Cir. 2005) (same). Accordingly, as an error
that did not, to a high probability, contribute to the jury’s verdict, the admission of the
agent’s improper lay opinion does not justify setting aside Anthony’s conviction.
D. Anthony’s Base Offense Level Was Not Clearly Erroneous.
Anthony also challenges the calculation of the base offense level for his sentence.
The District Court assigned him a base offense level of 24 on the finding that he
attempted to possess with the intent to distribute at least 500 grams of cocaine. See
U.S.S.G. § 2D1.1(c)(8). Anthony objected, claiming that the amount of cocaine was
speculative because the police never recovered any cocaine.
On clear error review, the District Court’s finding must be upheld. See United
States v. Rodriguez, 40 F.4th 117, 120 (3d Cir. 2022). At sentencing, a district judge may
estimate drug quantities if in doing so, he or she relies on information that has “sufficient
indicia of reliability to support its probable accuracy.” United States v. Paulino, 996 F.2d
1541, 1547 (3d Cir. 1993) (quoting U.S.S.G. § 6A1.3(a)). And here, both cooperating
witnesses testified that the group planned to steal multiple kilograms of cocaine. That
suffices, and the District Court did not clearly err in finding that the quantity of cocaine
was at least 500 grams.
***
For the foregoing reasons, we will affirm the judgments for Anthony’s conviction
and sentence.
9 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483898/ | ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of - )
)
Heartland Energy Partners LLC ) ASBCA No. 62979
)
Under Contract No. W912HQ-18-D-0010 )
APPEARANCE FOR THE APPELLANT: William A. Shook, Esq.
The Law Offices of William A. Shook PLLC
Seattle, WA
APPEARANCES FOR THE GOVERNMENT: Michael P. Goodman, Esq.
Engineer Chief Trial Attorney
Jesse C. Lee, Esq.
Siobhan Fabio, Esq.
Engineer Trial Attorneys
ORDER OF DISMISSAL
The dispute has been settled. The appeal is dismissed with prejudice.
Dated: October 24, 2022
DAVID D’ALESSANDRIS
Administrative Judge
Armed Services Board
of Contract Appeals
I certify that the foregoing is a true copy of the Order of Dismissal of the Armed
Services Board of Contract Appeals in ASBCA No. 62979, Appeal of Heartland Energy
Partners LLC, rendered in conformance with the Board’s Charter.
Dated: October 24, 2022
PAULLA K. GATES-LEWIS
Recorder, Armed Services
Board of Contract Appeals | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483894/ | ARMED SERVICES BOARD OF CONTRACT APPEALS
Appeal of - )
)
US Pan American Solutions, LLC ) ASBCA No. 63361
)
Under Contract No. W9133L-20-C-4001 )
APPEARANCE FOR THE APPELLANT: Mr. Jorge DelPino
Vice President
APPEARANCES FOR THE GOVERNMENT: Scott N. Flesch, Esq.
Army Chief Trial Attorney
MAJ Benjamin W. Hogan, JA
Trial Attorney
ORDER OF DISMISSAL
Appellant was ordered, within 21 days, to either file a complaint or show cause
why the appeal should not be dismissed for failure to prosecute. Appellant received the
Show Cause Order on September 28, 2022 but has not responded. Appellant likewise
had failed to respond to repeated Board telephone calls and an earlier Board Order.
Accordingly, the above appeal is dismissed with prejudice under Board Rule 17.
Dated: October 27, 2022
JOHN J. THRASHER
Administrative Judge
Chairman
Armed Services Board
of Contract Appeals
I certify that the foregoing is a true copy of the Order of Dismissal of the Armed
Services Board of Contract Appeals in ASBCA No. 63361, Appeal of US Pan American
Solutions, LLC, rendered in conformance with the Board’s Charter.
Dated: October 28, 2022
PAULLA K. GATES-LEWIS
Recorder, Armed Services
Board of Contract Appeals | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483910/ | Filed 11/14/22 P. v. Bermudez CA3
NOT TO BE PUBLISHED
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
THIRD APPELLATE DISTRICT
(Yolo)
----
THE PEOPLE, C095577
Plaintiff and Respondent, (Super. Ct. Nos. CRF2013605,
CRF2014612)
v.
ADOLFO BERMUDEZ,
Defendant and Appellant.
In 2014, a jury found defendant Adolfo Bermudez guilty of two counts of assault
with a deadly weapon (Pen. Code, § 245, subd. (a)(1))1 and found true enhancement
allegations that the assaults were committed for the benefit of, at the direction of, or in
association with a criminal street gang (§ 186.22, subd. (b).) Defendant appealed, and in
2020 a different panel of this court struck a one-year enhancement that the trial court had
1 Further undesignated statutory references are to the Penal Code.
1
imposed due to defendant’s prior prison term (§ 667.5, subd. (b)), and remanded the
matter to the trial court for consideration of whether to exercise discretion conferred by
Senate Bill No. 1393 (2017-2018 Reg. Sess.) (Senate Bill No. 1393) to strike a five-year
enhancement that the court had imposed due to defendant’s prior serious felony
conviction (§ 667.5, subd. (a)). (People v. Bermudez (2020) 45 Cal.App.5th 358
(Bermudez I), disapproved of on other grounds by People v. Valencia (2021) 11 Cal.5th
818). On remand, the trial court denied defendant’s motion to strike the five-year
enhancement.
Defendant appeals from his second sentencing , claiming (1) the trial court abused
its discretion when it denied his motion to strike the five-year prior serious felony
enhancement because it applied the incorrect standard; (2) recently enacted Assembly
Bill No. 333 (2021-2022 Reg. Sess.) (Assembly Bill No. 333) requires reversal of the
gang enhancements because the new law increased the proof requirements under the gang
statute (§ 186.22); (3) remand is required for a new sentencing hearing pursuant to Senate
Bill No. 567 (2021-2022 Reg. Sess.) (Senate Bill No. 567), which changed the trial
court’s sentencing discretion; (4) the trial court erred by failing to provide him with a full
resentencing on remand; and (5) we must strike a restitution collection fee pursuant to
Assembly Bill No. 177 (2021-2022 Reg. Sess.) (Assembly Bill No. 177).
We agree with defendant that the trial court abused its discretion when it denied
his motion to strike the five-year prior serious felony enhancement; we also agree that we
must vacate the gang enhancements. We will remand for reconsideration of defendant’s
motion to strike the five-year enhancement and to provide the prosecution with the
opportunity to retry the gang enhancement allegations in a manner consistent with the
law as amended by Assembly Bill No. 333. Further, we will strike the restitution fee.
Because we have stricken part of the sentence, we direct the trial court to conduct
a full resentencing as to all counts, so it can exercise its sentencing discretion in light of
the changed circumstances. (People v. Buycks (2018) 5 Cal.5th 857, 893.) Defendant
2
will be able to raise his arguments related to Senate Bill No. 567 and any other new law
that applies to him at resentencing. Based on our disposition, we need not and do not
address defendant’s argument that the trial court erred by not conducting a full
resentencing on remand from his initial appeal.
FACTS AND PROCEEDINGS
Assault Case2
The following facts are quoted from the opinion issued on defendant’s direct
appeal from his conviction. (Bermudez I, supra, 45 Cal.App.5th at pp. 364-365.) On
April 4, 2013, the “victim was driving in Woodland, with his son in the car, when he saw
a black Honda parked on the side of the road. As he drove by, the Honda suddenly
accelerated, hitting him.
“Thinking he had been in an accident, the victim pulled over. The Honda collided
into him a second time. The second impact was a ‘T-bone,’ taking off the front and back
doors and breaking windows.
“The victim recognized defendant as the driver, testifying at trial: ‘he looked at
me when he crashed and then he flossed his tattoo on his head and . . . I recognized him.’
Defendant had turned, pointed to the back of his head, and yelled ‘EST,’ which the victim
took to mean defendant’s gang, Eastside Trece. Defendant then drove away. The victim
drove to the next block and called 911. In the 911 call, the victim told the operator he
knew defendant’s wife and where she live[d].
2 Defendant was convicted in another case for concealing a dirk, and that case was
consolidated on appeal with the assault with a deadly weapon case, as we will discuss
post. We do not discuss the facts of the concealed dirk case, as that case is not relevant to
the issues in this appeal.
3
“Shortly after the incident, the victim spoke with a responding officer. He told the
officer he recognized defendant and thought the crash had something to do with an earlier
altercation, involving the victim, defendant, and other Sureño gang members.
“A couple of months before the assault with a vehicle, the victim was dropping off
his cousin, who associates with Norteños, when a car pulled up and a group of what
looked to be gang members, including defendant, got out of the car and ‘started talking
gang shit.’ The group hurled insults related to Northerners at both the victim and his
cousin. At some point, a security guard showed up and ‘kicked everyone out.’
“The victim had previously associated with southern gangs, but because his family
members are Northerners, he now associates with Northerners. The victim testified,
‘[S]ince they seen me with him, . . . they thought I was affiliating with Northerners now,
too.’ He also testified that he thought defendant felt disrespected.
“The victim testified about other altercations. In 2006, he was present when a
group of Southerners he associated with were in a fight with a Northerner — though he
claimed he was not part of the fight. In 2010, the victim was in a fight with an Eastside
Trece member. He explained that several Eastside Trece members had approached him,
and he defended himself. An officer who responded to the 2010 incident testified the
victim had been in a fight with several Eastside Trece members and hit one of them with
a tire iron.
“An officer who was also involved in the concealed dirk case testified about
contacts he personally had with defendant in 2005, 2007, and 2009. During the first two
contacts, defendant admitted his involvement in the Sureño gang. The officer had also
found ‘gang music’ during a search of defendant’s bedroom and, in 2007, defendant had
a ‘EST’ tattoo on his head.” (Footnotes omitted.)
Trial Court Proceedings
On May 9, 2014, the jury found defendant guilty of two counts of assault with a
deadly weapon (a car) (§ 245, subd. (a)(1); counts 1 and 2) and found both were done for
4
the benefit of, at the direction of, or in association with a criminal street gang (§ 186.22,
subd. (b).) It also found defendant guilty of driving on a suspended license. (Veh. Code,
§ 14601.2, subd. (a); count 4). (Bermudez I, supra, 45 Cal.App.5th at p. 365.)
On October 3, 2014, the trial court sentenced defendant on count 1 in the assault
case to the upper term of four years, doubled for the prior strike, plus five years for the
gang enhancement (§ 186.22, subd. (b)(1)). It also imposed a five-year prior serious
felony enhancement (§ 667, subd. (a)) and a two-year on-bail enhancement (§ 12022.1,
subd. (b)). A one-year prior prison term enhancement was stayed pursuant to section
654. Concurrent terms of eight years for the other assault count, plus five years for the
gang enhancement, and 180 days for driving on a suspended license, were also imposed.
(Bermudez I, supra, 45 Cal.App.5th at p. 365.)
Consolidated Appeal
In 2014, we consolidated appeals from defendant’s assault case and his concealed
dirk case. We modified the judgment to strike the one-year prior prison term
enhancement (§ 667.5, subd. (b)), and remanded the matter to the trial court for
consideration of whether to exercise its discretion under Senate Bill No. 1393 to strike
the five-year prior prison term enhancement. (Bermudez I, supra, 45 Cal.App.5th at p.
378.)
Proceedings Following Remand
On January 4, 2022, the trial court held a hearing on defendant’s request to strike
the five-year prior prison term enhancement. Following briefing and defendant’s
testimony on his current situation, the trial court declined to strike the prior prison term
enhancement. We will discuss that ruling in greater detail, post.
The trial court sentenced defendant in the assault case to the upper term of four
years, doubled for the prior strike, on count 1, plus five years for the gang enhancement.
It sentenced defendant to an identical sentence on count 2 to be served concurrently, and
5
consecutive terms of two years for the on-bail enhancements and five years for the prior
serious felony enhancement.
Defendant timely filed a notice of appeal. The case was fully briefed in August
2022, and assigned to this panel on August 31, 2022. The parties waived argument and
the case was deemed submitted on November 1, 2022.
DISCUSSION
I
Senate Bill No. 1393
Defendant contends the trial court abused its discretion by applying the wrong
standard when declining to strike the five-year prior serious felony enhancement (§ 667,
subd. (a)) on remand. As we next explain, we agree.
A. Procedural Background
In 2014, at defendant’s original sentencing, the trial court imposed a five-year
enhancement based on his prior serious felony conviction. That conviction stemmed
from defendant’s 2005 conviction for possession of a billy club (former § 12020, subd.
(a)(1)), which was rendered a serious felony by virtue of defendant’s admission that he
carried the club due to a fear of conflict with rival gang members (§ 1192.7, subd.
(c)(28), 186.22, subd. (b)(1)). At the time of defendant’s sentencing, the trial court
denied his request to strike the prior strike pursuant to People v. Superior Court (Romero)
(1996) 13 Cal.4th 497, and lacked discretion to separately consider whether to decline to
impose the additional five-year term.
In denying defendant’s Romero motion, the trial court recognized that neither
passenger of the victim’s car had been injured, but observed that using a car to commit an
assault has the potential to cause serious injury. The court then noted that defendant had
previously performed poorly on probation and had violated the terms of his parole on
multiple occasions. Finally, the court credited defendant for working, although it
recognized that his work history was sporadic, and it declined to ascribe significant
6
weight to the fact that defendant is a father because there was no mention of his
participation in the lives of his children.
Following remand from his initial appeal, defendant filed a motion to dismiss the
five-year enhancement pursuant to section 1385, as amended by Senate Bill No. 1393,
citing the nature and circumstances of the present felony and his behavior postconviction
as reasons to grant the motion. The prosecution opposed the motion, citing the nature
and circumstances of the present felony, defendant’s criminal history, and defendant’s
behavior in prison as reasons to deny the motion.
On January 4, 2022, defendant testified at a hearing on his motion to dismiss the
five-year enhancement. Defendant testified about his postconviction conduct, including
answering questions from the court. Before going to prison, defendant was certified in
welding (RT 49), and he obtained his GED while incarcerated. He worked in the prison
kitchen and was taking college courses with the goal of getting a business degree. He
took multiple self-study classes, including Narcotics Anonymous, Alcoholics
Anonymous, GOGI (“Getting Out by Going In”), and parenting programs. Since 2018,
defendant was on the waitlist for rehabilitative programs for people with prior gang
history. Defendant acknowledged he had not dropped out of the gang, but testified he
was not “associated” with any criminal gangs in prison.
The prosecutor argued that defendant had repeatedly been denied release by the
Board of Parole Hearings (BPH), in part because of his “very limited” progress with self-
help and education. She noted that there appeared to be multiple classes available to
defendant, but that he had failed to avail himself of those. She also observed that
defendant had two rules violations in prison for possessing cellphones and may have had
other violations, although that information was confidential. She recognized that the
California Department of Corrections and Rehabilitation (CDCR) had not requested
reduction of his sentence. Finally, she argued that the facts of the instant case were
7
serious, defendant was on probation at the time of the crime, he was a longstanding gang
member, and he had not disassociated from the gang.
Defendant acknowledged that cellphone rules violations were serious, but noted he
had no violent rules violations while incarcerated. He observed that while the BPH had
denied him release, its decisions characterized his criminal record to be mitigating and
fairly minimal and remote in time. He asserted that he had been participating in
educational and rehabilitative classes and had been working since he went to prison. He
further argued that the instant crime involved a car striking another car (as opposed a
bicycle or pedestrian), no one was injured, and he had not been aware of the presence of a
young child in the car at the time of the crime.
The trial court denied defendant’s request to strike the five-year enhancement. It
ruled: “[T]he higher courts and the [L]egislature have permitted the Court to use
discretion in deciding whether a five-year prior should be imposed under 667[, subd.]
(a)(1) of the Penal Code and whether failure to exercise discretion at a time when it was
not allowed should be reconsidered upon remand -- upon remittitur, and that’s where we
are today.
“I’ve had a number of cases with similarities to this since that authority has been
granted to the Court, and I’ve heard a wide range of accounts of things that inmates have
done or haven’t done while they’ve been in custody. In my mind, it’s important that
inmates seek out and participate in as many educational opportunities as they can to help
them be better prepared to return to society in a way that they’re not as likely to engage in
criminal conduct or make bad decisions in the future.
“If there’s vocational training available, it’s helpful or important to participate in
that to obtain skills that are translatable into employment when one leaves prison. It’s
important to participate in programs.
“The -- what I’ve heard in this case is nowhere near the top of the spectrum of
people I’ve seen doing things positively in prison. I’m -- I’m -- I commend [defendant]
8
for doing what he’s done, but for seven-plus years in prison, I can’t say your list of
achievements is all that impressive. I hope you’re really serious about wanting to pursue
these things and you make an effort to do that.
“I -- I believe that it’s true to a certain extent that there are limitations about what
is available at what times of sentences, but I’ve seen a number of people who have done
remarkably many things -- many more things than what I heard about what you’ve done
in seven years -- that is far more impressive than what I’ve heard from you.
“Again, I commend you for the efforts you’re making, but I urge you to work even
harder. I’ve had a number of cases where [CDCR] has said, ‘Look at what this person
has been doing. We think you ought to exercise discretion. We think you ought to
reduce their sentence.’ And they do have a list of what they’ve been doing.
“That didn’t happen with you, and I expect, seeing what I’ve seen and hearing
what I’ve heard, there’s a reason they didn’t do that, because you don’t -- you haven’t
risen to the top of those seeking to get those beneficial breaks. I do not find it would be
an appropriate exercise of my discretion to strike the five-year prior, and I will not do
that.”
The trial court concluded: “I really hope that you -- you do more -- you push
yourself to do more, and that we do hear from [CDCR] within a year or two or several
saying, ‘[defendant] has done so well, we think he should get a break from the Court.’
[¶] But I don’t think you’ve earned that yet, and so I -- your -- your request to strike the
five-year enhancement is denied.”
C. Legal Background
Senate Bill No. 1393 amended sections 667, subdivision (a) and 1385, subdivision
(b) to allow trial courts to exercise their discretion to strike or dismiss a five-year
enhancement for a prior serious felony conviction “in furtherance of justice.” (Stats.
2018, ch. 1013, § 2.) Case law and legislative history indicate that courts “must evaluate
the nature of the offense and the offender” in deciding whether to strike a five-year
9
enhancement, and we review the trial court’s decision for abuse of discretion. (People v.
Shaw (2020) 56 Cal.App.5th 582, 586 (Shaw); People v. Brugman (2021) 62 Cal.App.5th
608, 638-639.) “Section 1385 allows courts to ensure ‘that persons are sentenced based
on the particular facts of the offense and all the circumstances. It enables the punishment
to fit the crime as well as the perpetrator.’ ” (Shaw, at p. 587.) “No error occurs if the
trial court evaluates all relevant circumstances to ensure that the punishment fits the
offense and the offender.” (Ibid.) The trial court must evaluate “the nature and
circumstances of [the defendant’s] present felonies and prior serious and/or violent felony
convictions, and the particulars of his background, character, and prospects.” (People v.
Williams (1998) 17 Cal.4th 148, 161; see Shaw, at p. 587 [finding additional support for
interpretation of scope of discretion under § 1385, subd. (b) from cases interpreting
identical “ ‘in furtherance of justice’ ” language in § 1385, subd. (a)].)
“The trial court’s sentencing discretion must be exercised in a manner that is not
arbitrary and capricious, that is consistent with the letter and spirit of the law, and that is
based upon an ‘individualized consideration of the offense, the offender, and the public
interest.’ ” (People v. Sandoval (2007) 41 Cal.4th 825, 847.)
D. Analysis
Defendant contends the trial court abused its discretion by failing to evaluate the
nature of the offense and the offender (Shaw, supra, 56 Cal.App.5th at p. 586; People v.
Brugman, supra, 62 Cal.App.5th at pp. 638-639), and instead basing its decision on its
conclusion that defendant had not yet “earned” a reduction in his sentence. He asserts
the court’s ruling demonstrates that it treated his motion as a request to reduce a sentence
after a recommendation by CDCR under former section 1170.03, which authorized the
trial court to resentence a defendant in several circumstances, including “[w]hen an
inmate demonstrate[d] exceptional conduct as defined in subsection (b)(1).” (Cal. Code
10
Regs., tit. 15, § 3076.1, subd. (a)(1).)3 Title 15, section 3076.1, subsection (b)(1), in turn,
provides that an inmate may be considered for recommendation for resentencing where
the inmate has not been found guilty of a serious or violent rules restriction within the
previous five years, and where the inmate has participated in rehabilitative programming.
(Tit. 15, § 3076.1, subd. (b)(1), (2)(C).) Under former section 1170.03 the court may
“reduce” a defendant’s term of imprisonment where circumstances have changed since
the original sentencing, such that the original sentence is no longer in the interest of
justice. (Former § 1170.03, subd. (a)(3).) In making that determination, the court is
permitted to consider postconviction factors, including the inmate’s disciplinary record
and record of rehabilitation while incarcerated. (Id., subd. (a)(4).)
Disagreeing, the Attorney General observes that both defendant’s motion and the
prosecution’s opposition discussed the relevant standard, the nature and circumstances of
the present felonies, and defendant’s postconviction performance in prison, and the
prosecution addressed defendant’s prior criminal history. The Attorney General further
notes that the trial court stated that it had read and considered defendant’s motion and the
prosecution’s opposition and that the court is presumed to have acted to achieve
legitimate sentencing objectives.
Although we do not disagree regarding the relevant presumption (see People v.
Myers (1999) 69 Cal.App.4th 305, 310 [“The court is presumed to have considered all of
3 Further undesignated regulation references are to title 15 of the California Code of
Regulations (Title 15).
On June 30, 2022, the Legislature passed Assembly Bill No. 200 (2021-2022 Reg.
Sess.) which, among other things, renumbered section 1170.03 as section 1172.1, with no
change in the text. (Stats. 2022, ch. 58, § 9.) Title 15, section 3076.1’s title continues to
refer to section 1170.03. For purposes of clarity and for consistency with the law at the
time the trial court rendered its decision, we will continue to refer to former section
1170.03.
11
the relevant factors in the absence of an affirmative record to the contrary”]), we next
examine whether it has been rebutted here. At the outset, we acknowledge that the trial
court noted that it had read the parties’ briefing and that it listened to the parties’
arguments; we must therefore presume the court considered the relevant factors. We
further acknowledge that the court expressly recognized that it had discretion “in
deciding whether a five-year prior should be imposed,” and it ultimately denied
defendant’s “request to strike the five-year enhancement.” However, the substance of the
trial court’s ruling clearly demonstrates it did not expressly state or apply any of the
relevant factors on the record. (See People v. Williams, supra, 17 Cal.4th at p. 161;
Shaw, supra, 56 Cal.App.5th at p. 587.) Unlike the trial court’s ruling on defendant’s
Romero motion at the original sentencing, here the court did not discuss or even
acknowledge the nature and circumstances of the present felonies, the prior serious
felony conviction, or the particulars of defendant’s background or character. To the
extent the court addressed defendant’s prospects, it was only in the context of what
defendant had accomplished while incarcerated. Indeed, the court’s entire focus was on
the need to increase achievements during incarceration to “rise[] to the top” of those
prisoners seeking “breaks.”
The trial court began by observing that it had considered “a number” of similar
cases, and it emphasized the importance of inmates’ seeking out educational and
vocational training. The court asserted that defendant’s achievements in prison were
“nowhere near the top of the spectrum” of inmates’ achievements in prison and stated
that defendant’s achievements were not “all that impressive.” It then encouraged
defendant to “work even harder,” apparently to convince CDCR to recommend that the
court “reduce” his sentence. (See former § 1170.03, subd. (a)(1) [upon recommendation
of CDCR, the court may recall and resentence defendant], id., subd. (a)(3)(A) [The
resentencing court may, in the interest of justice, “[r]educe a defendant’s term of
imprisonment by modifying the sentence”].) The court opined that defendant had not
12
“risen to the top of those seeking to get those beneficial breaks,” and noted that it hoped
CDCR would tell the court in one, two, or several years that defendant “should get a
break from the court.” As it stood, the court concluded, defendant had not yet “earned”
that “break.”
We recognize that our task is not to reweigh the factors considered by the trial
court. However, the court’s ruling had little, if anything, to do with the relevant inquiry
under section 1385. Aside from our presumption that the court understood and correctly
applied the law, there is nothing in the trial court’s ruling that suggests the court knew
and applied the correct standard. Indeed, the court’s own statements, which strongly
indicate that it was ruling on a motion not before it, rebut the presumption.4 Accordingly,
we agree with defendant that the trial court abused its discretion by failing to apply the
correct standard for determining whether to exercise its discretion to strike the five-year
prior serious felony enhancement. We reverse the trial court’s order denying defendant’s
motion, and remand the matter for reconsideration. We take no position on whether
defendant is entitled to relief.
II
Assembly Bill No. 333
Defendant asserts that Assembly Bill No. 333 should be applied retroactively to
his case and that, under the law as amended, there is insufficient evidence to support
imposition of the gang enhancements under section 186.22, subdivision (b). He asks us
4 We further note that the trial court’s denial of defendant’s Romero motion does not
necessarily indicate that he is not entitled to relief under Senate Bill No. 1393. The
inquiry in Romero is whether defendant fell outside the spirit of the three strikes law.
(People v. Dryden (2021) 60 Cal.App.5th 1007, 1033.) The inquiry here is different:
whether, in the interest of justice, the five-year prior serious felony enhancement should
be stricken. (Ibid.)
13
to strike the true findings on these enhancements and remand the matter to the trial court
for possible retrial.
The Attorney General concedes that defendant is entitled to the ameliorative
effects of Assembly Bill No. 333’s amendments to section 186.22 because his judgment
was not final when the new legislation took effect. But the Attorney General contends
remand is unnecessary because it is clear beyond a reasonable doubt that the jury would
have found true the gang enhancement allegations under the statute as amended by
Assembly Bill No. 333.
At the outset, our Supreme Court recently concluded that the ameliorative benefit
of Assembly Bill No. 333 applies to all cases not yet final on appeal. (People v. Tran
(2022) 13 Cal.5th 1169, 1238.) This includes defendant’s case.
As we next explain, we agree with defendant that remand is required.
A. Statutory Framework
Section 186.22 provides for enhanced punishment when a person is convicted of
an enumerated felony committed “for the benefit of, at the direction of, or in association
with a criminal street gang, with the specific intent to promote, further, or assist in
criminal conduct by gang members.” (§ 186.22, subd. (b)(1).) Prior to the enactment of
Assembly Bill No. 333, a “ ‘criminal street gang’ ” was defined as “any ongoing
organization, association, or group of three or more persons . . . whose members
individually or collectively engage in, or have engaged in, a pattern of criminal gang
activity.” (§ 186.22, former subd. (f), italics added.) Effective January 1, 2022,
Assembly Bill No. 333 narrowed the definition of “ ‘criminal street gang’ ” to be “an
ongoing, organized association or group of three or more persons . . . whose members
collectively engage in, or have engaged in, a pattern of criminal gang activity.”
(§ 186.22, subd. (f), as amended by Stats. 2021, ch. 699, § 3, eff. Jan. 1, 2022, italics
added.)
14
Assembly Bill No. 333 also altered the requirements for proving the “pattern of
criminal gang activity” necessary to establish the existence of a criminal street gang.
Before Assembly Bill No. 333 was enacted, former section 186.22, subdivision (e) only
required the prosecution to prove “ ‘that those associated with the gang had committed at
least two offenses from a list of predicate crimes on separate occasions within three years
of one another.’ ” (People v. E.H. (2022) 75 Cal.App.5th 467, 477 (E.H.).) “Assembly
Bill [No.] 333 made several changes to this definition. First, the predicate offenses now
must have been committed by two or more ‘members’ of the gang (as opposed to any
persons). (§ 186.22, subd. (e)(1).) Second, the predicate offenses must be proven to have
‘commonly benefited a criminal street gang.’ (Ibid., italics added.) Third, the last
predicate offense must have occurred within three years of the date of the currently
charged offense. (Ibid.) Fourth, the list of qualifying predicate offenses has been
reduced. (Ibid.) And fifth, the currently charged offense no longer counts as a predicate
offense. (§ 186.22, subd. (e)(2).)” (E.H., at pp. 477-478.)
Assembly Bill No. 333 further requires that the prosecution must prove the benefit
the gang derives from the predicate offenses is “more than reputational.” (§ 186.22,
subd. (g); Stats. 2021, ch. 699, § 3.) Section 186.22, subdivision (g) now explains: “[T]o
benefit, promote, further, or assist means to provide a common benefit to members of a
gang where the common benefit is more than reputational. Examples of a common
benefit that are more than reputational may include, but are not limited to, financial gain
or motivation, retaliation, targeting a perceived or actual gang rival, or intimidation or
silencing of a potential current or previous witness or informant.”
C. Gang Expert Testimony
1. Eastside Trece Gang Background
Detective Dana Tello testified as both an investigating officer and as an expert on
gangs and gang culture. She was familiar with the Eastside Trece gang, one of the
predominant Southern gangs in Yolo County. Eastside Trece originated in Los Angeles
15
and is a “set” of the Sureños. It had about 30 validated members in Yolo County. The
majority of Eastside Trece members lived in the Yolano/Donnerly area, and some in
Woodland. Sureños fight with Norteños and with other Sureño sets. Southerners have
associates, who associate with gang members but typically do not commit crimes with the
gang, and active and non-active gang members, both of whom have been validated.
Eastside Trece members wear the color blue and the number 13, and have tattoos
representing the number 13. A large “EST” tattoo on the back of the head indicates that
the member is a high-ranking member of the gang and has earned the tattoo by
committing crimes for the gang; defendant is one of the only three Sureños in Yolo
County with that tattoo. Tello considered defendant to be a decisionmaker for the
Eastside Trece gang, and someone other individuals would follow.
Tello testified that respect is one of the most important aspects of gang life.
Respect is really fear or intimidation, and any disrespect is handled, often with violence.
Gangs created fear and intimidation in their communities by committing violent crimes,
which paralyzes the community and allows the gang to commit crimes without law
enforcement involvement. Snitching on anybody, even on rival gang members, is dealt
with.
2. Predicate Offenses
Detective Tello testified that one of Eastside Trece’s primary activities is the
commission of criminal offenses. The gang commits assaults, burglaries, robberies, drug
and weapon offenses, and grand theft. Tello identified five predicate offenses committed
by members of Eastside Trece based on incidents with which she became familiar by
reviewing prior reports and talking to other detectives.
The first predicate offense was committed by Gonzalo Valencia, who was
convicted of “assault to commit mayhem as well as a gang enhancement” related to a
drive-by shooting committed in on September 10, 2008. Valencia drove a vehicle that
distracted the victims in a park, and the passenger of a second vehicle shot at a rival in
16
the park. Valencia and the driver of the other car were active participants in the Eastside
Trece gang.
The second predicate offense occurred on December 8, 2011, when Alex Iberra
and Aldo Valeriano were convicted of burglary, conspiracy, and a gang enhancement.
The facts behind the case involved a burglary and attempted sale of two stolen rifles.
Iberra and Valeriano were validated members or associates of the Eastside Trece gang.
The third predicate offense involved Philipe Reyes, who was convicted of
possessing stolen property and a gang enhancement. Reyes, who was an active member
of Eastside Trece, and four other Sureños confronted the victim, pulled a knife, and
robbed him of a cell phone and cash.5
The fourth predicate offense occurred on September 28, 2011, when officers
searching a vehicle driven by Eastside Trece member Efring Gonzalez found two
handguns, one of which had been stolen from a burglary. Gonzalez was convicted of
possession of a concealed weapon and a gang enhancement.
Finally, Eastside Trece member Francisco Nava was convicted of attempted
murder and discharge of a firearm related to conduct occurring on August 8, 2012. A
Norteño gang member was suspected of throwing a brick through Nava’s window, and
Nava later shot the man with birdshot from a shotgun.
3. Charged Felonies
Detective Tello testified as to her opinion that defendant’s conduct was a gang-
related activity. She testified: “My opinion is that it was done in retaliation of the
disrespect that [defendant] received during a contact between [the victim] months prior to
this actual crime that occurred. [¶] As well as my opinion is that because [the victim]
was -- had disrespected another gang member in a fight, altercation, that happened [with
5 Tello did not testify as to the date of this offense, and she did not testify that these other
Sureños were Eastside Trece members.
17
another validated Eastside Trece member], I believe that that’s my opinion and reasoning
why it was a gang-related crime.”
Tello also testified as to her opinion that defendant’s crimes were committed with
the specific intent to benefit the Eastside Trece gang. She testified: “Since this crime
was done in broad daylight, and [defendant] yelling EST as well as pointing to it, that
was obviously visible at that time. [¶] It just, again, puts that fear into the community
once again. If anybody from that intersection saw that and heard what [defendant] had
stated, I think it just reiterates that fear, intimidation, in that respect that [Eastside Trece]
will receive from anybody who saw that.”
The detective reiterated that it is “[a]bsolutely” important to the gang to maintain
respect in the community. She continued: “Again, the fear and intimidation results to
respect that these individuals get, the more violent they are in front of the community, the
community sees this, the more fear they place into the community, paralyzing them to do
anything about crimes that are committed. [¶] So when individuals, communities, see
crimes that occur that these [Eastside Trece] gang members are committing, they’re not
likely to contact law enforcement in fear of retaliation. So they don’t contact us.”
D. Analysis
The Attorney General acknowledges that the jury was not instructed on the
elements required to prove a gang enhancement as required following the enactment of
Assembly Bill No. 333, but he argues that remand is unnecessary because it is clear
beyond a reasonable doubt that the jury would have found (beyond a reasonable doubt)
that the gang enhancement allegations as amended by Assembly Bill No. 333 were
satisfied. We disagree.
When a jury does not determine all elements of a charged offense because the
instructions omitted an element of the charged offense, the resulting prejudice is assessed
under the standard set forth in Chapman v. California (1967) 386 U.S. 18, 24 (Chapman).
(People v. Flood (1998) 18 Cal.4th 470, 491 (Flood).) We apply this same standard of
18
review when the jury was not instructed on an element because trial occurred before the
effective date of the amendment adding the element. (See People v. Wright (2006) 40
Cal.4th 81, 98-99.) The inquiry under this standard “ ‘is not whether, in a trial that
occurred without the error, a guilty verdict would surely have been rendered, but whether
the guilty verdict actually rendered in this trial was surely unattributable to the error.’
[Citation.] This standard is much higher than substantial evidence review. For example,
courts have found harmless error under the Chapman standard where the missing element
from an instruction was uncontested or proved as a matter of law.” (E.H., supra, 75
Cal.App.5th at p. 479-480.) But where “ ‘the basis of the jury’s verdict is not so clear,’ ”
such as where “the prosecution presented evidence of both financial and reputational
benefit, ‘we cannot rule out the possibility that the jury relied on reputational benefit to
the gang as its basis for finding the enhancements true.’ ” (Id. at p. 480.)
On this record, we conclude the omission from the jury instructions was not
harmless beyond a reasonable doubt. Although there was some evidence supporting the
requirement that the predicates were committed for the common benefit of the gang, this
element was not proved as a matter of law. (See E.H., supra, 75 Cal.App.5th at p. 479
[where the prosecution presented evidence of both financial and reputational benefit, the
omission was not harmless error].) First, the jurors were permitted to consider the current
offenses in determining whether the prosecution had proven a pattern of criminal gang
activity, and they were not required to find the predicate offenses benefitted the gang in a
way that was not reputational. Second, the prosecution was not required to prove, and the
jury was not asked to find, that the predicate offenses commonly benefitted Eastside
Trece in a way that was more than reputational. Third, the jury was not asked to find that
the most recent predicate crime was committed within three years of the charged
offenses.
We understand the Attorney General’s argument that there was evidence presented
that would have permitted the jury, were it asked to do so, to find the prosecution had
19
satisfied the standard of proof under section 186.22 as amended by Assembly Bill No.
333. However, “To rule that the existence of evidence in the record that would permit a
jury to make a particular finding means that the jury need not actually be asked to make
that finding would usurp the jury’s role and violate [defendant’s] right to a jury trial on
all the elements of the charged allegations.” (People v. Lopez (2021) 73 Cal.App.5th
327, 346; see People v. Sek (2022) 74 Cal.App.5th 657, 668-669 [presentation of
evidence that benefit to the gang was more than reputational does not rule out possibility
that jury relied on reputational benefit as the basis for finding gang enhancements true].)
As we have discussed, our inquiry is not whether there is sufficient evidence to satisfy the
standard of proof under the law as amended, but rather whether it is clear beyond a
reasonable doubt that the verdict was not attributable to the error. We cannot say on this
record that the jury did not reach its verdict in part based on evidence that would no
longer support a conviction under the law as amended.
Because we are unable to rule out the possibility that the jury relied on the
reputational benefit to the gang as the basis for finding the requirement to show predicate
offenses was satisfied, or that it considered the currently charged offense in determining
that the pattern of criminal gang activity requirement was satisfied, we vacate the gang
enhancement and remand to the trial court to provide the prosecution with the
opportunity to prove the gang enhancement under the law as amended, should it choose
to attempt to do so. (See E.H., supra, 75 Cal.App.5th at p. 480 [“The proper remedy for
this type of failure of proof–where newly required elements were ‘never tried’ to the
jury–is to remand and give the People an opportunity to retry the affected charges”].) 6
6 Because reversal of the gang enhancements and remand for their potential retrial is
required, we need not decide whether any of the other new elements of section 186.22
were, or were not, met and whether other aspects of the instruction given were erroneous.
Specifically, we note that the parties have pointed out a split of authority regarding
whether predicate offenses may be committed solely by an individual gang member.
20
IV
Restitution Collection Fee
Defendant requests that we strike a $30 restitution collection fee, or 10 percent of
the restitution fee, that was imposed by the trial court in 2014. He initially contends that
Senate Bill No. 425 (2007-2008 Reg. Sess.) clarified that penalty assessment and
surcharge provisions do not apply to restitution fines, although he acknowledges in his
reply brief that position is incorrect. Instead, in his reply brief, defendant contends that
the restitution collection fee must be stricken because it is no longer authorized by section
1202.4.
The Legislature enacted Assembly Bill No. 177, which eliminated a range of
administrative fees that agencies and courts were authorized to impose in addition to
eliminating outstanding debt incurred as a result of the administrative fees. (Stats. 2021,
ch. 257, § 2, eff. Sept. 23, 2021.) Under this legislation, the balance of court-imposed
costs pursuant to section 1202.4 “shall be unenforceable and uncollectible” on or after
January 1, 2022. (Stats. 2021, ch. 257, § 35; § 1465.9, subd. (b).) We strike the balance
of this fee.
DISPOSITION
The gang enhancements as to counts 1 and 2 are stricken and the trial court’s
denial of defendant’s motion to strike the five-year prior serious felony enhancement is
(Compare People v. Delgado (2022) 74 Cal.App.5th 1067, 1089 [“[T]he prosecution
could meet [the requirement to show that two predicate offenses were committed on
separate occasions or by two or more members] by proving two gang members
individually committed the predicate offenses on two separate occasions or two gang
members collectively committed two predicate offenses on the same date”] with
People v. Clark (2022) 81 Cal.App.5th 133, 145-146, review granted Oct. 19, 2022,
S275746 [pattern of gang activity may be established by “(1) two gang members who
separately committed crimes on different occasions, or (2) two gang members who
committed a crime together on a single occasion”].) Recently, our Supreme Court
expressly declined to resolve this split. (People v. Tran, supra, 13 Cal.5th at p. 1239.)
21
reversed. We remand to the trial court to reconsider defendant’s motion to strike the five-
year prior serious felony enhancement and to provide the prosecution with the
opportunity to retry defendant on the gang enhancement allegations. Because we have
stricken part of the sentence, following retrial on the gang enhancement or after the
prosecution has declined to retry the allegations, in addition to reconsidering its ruling on
the five-year prior serious felony enhancement, we direct the trial court to conduct a full
resentencing as to all counts, so that it may exercise its sentencing discretion in light of
any changed circumstances. (People v. Buycks, supra, 5 Cal.5th at p. 893.) During
resentencing, the trial court shall exercise its discretion in light of any legislative changes
and may “revisit all prior sentencing decisions when resentencing” defendant, including
recent changes to the law under Senate Bill No. 567. (People v. Valenzuela (2019) 7
Cal.5th 415, 424-425.) The court has a “duty . . . to ensure that all components of [a]
sentence are authorized by the law and the facts at the time any new sentence is
imposed.” (People v. Walker (2021) 67 Cal.App.5th 198, 206).
Finally, we strike the unpaid balance of the 10 percent collection fee, as of
January 1, 2022, which had been imposed under former section 1202.4, subdivision (l).
The judgment is otherwise affirmed.
/s/
Duarte, Acting P. J.
We concur:
/s/
Hoch, J.
/s/
Renner, J.
22 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483902/ | Appellate Case: 20-2176 Document: 010110768886 Date Filed: 11/15/2022 Page: 1
FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT November 15, 2022
_________________________________
Christopher M. Wolpert
Clerk of Court
CLARISSA HERNANDEZ; ROBERT
HERNANDEZ; SHANNON
WOODWORTH; DAVID GALLEGOS,
Plaintiffs – Appellants,
v. No. 20-2176
(D.C. No. 2:20-CV-00942-JB-GBW)
MICHELLE LUJAN GRISHAM; RYAN (D. N.M.)
STEWART,
Defendants – Appellees.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before HOLMES, Chief Judge, BALDOCK, and MATHESON, Circuit Judges.
_________________________________
Plaintiffs-Appellants Clarissa and Robert Hernandez and Shannon Woodworth,
the parents of school-age children from New Mexico, and New Mexico State Senator
David Gallegos brought suit against New Mexico Governor Michelle Lujan Grisham
and New Mexico Secretary of Education Ryan Stewart (“Defendants-Appellees”)
regarding New Mexico’s remote-learning policies in response to the COVID-19
* This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir.
R. 32.1.
Appellate Case: 20-2176 Document: 010110768886 Date Filed: 11/15/2022 Page: 2
pandemic. Specifically, Plaintiffs-Appellants alleged that the state’s remote-learning
policies in counties with high rates of COVID-19 violated students’ substantive and
procedural due process and equal protection rights under the United States
Constitution and, for those students with disabilities, such as Ms. Woodworth’s
daughter, that remote learning violated guarantees of the Individuals with Disabilities
Education Act (the “IDEA”), 20 U.S.C. §§ 1400–1482, to provide a free appropriate
public education (“FAPE”).
The district court dismissed all of Plaintiffs-Appellants’ claims. In its
comprehensive, 167-page order, the district court systematically addressed each of
the issues and ultimately denied Plaintiffs-Appellants’ motion for a preliminary
injunction and the court granted Defendants-Appellees’ motion for summary
judgment. Plaintiffs-Appellants appealed the district court’s order. However, during
the pendency of this appeal, New Mexico has continued to reassess its remote-
learning policies and as of March 8, 2021, all New Mexico public schools have been
allowed to resume full, in-person learning. As a result, Defendants-Appellees argue
that this appeal is now moot.
Though the mootness issue that Defendants-Appellees raise does implicate our
subject-matter jurisdiction, we need not reach that issue. That is because Plaintiffs-
Appellants’ appeal is fatally infirm on another threshold ground: specifically,
Plaintiffs-Appellants’ appellate briefing is so woefully inadequate—especially in
light of the complicated constitutional issues at issue here and the district court’s
extensive analysis of them—that they have waived appellate review. Therefore, we
2
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affirm—without any necessity of reaching the merits—the district court’s grant of
summary judgment to Defendants-Appellees.
To begin our analysis, however, we note that one significant deficiency of
Plaintiffs-Appellants’ briefing relates to their misguided attempt to challenge the
district court’s denial of their motion for a preliminary injunction. Taking this
challenge at face value, we lack jurisdiction to consider it: Plaintiffs-Appellants’
challenge to the district court’s denial of their motion for a preliminary injunction is
moot because, in the same order denying that motion, the court resolved the lawsuit
against them with finality by granting Defendants-Appellees’ motion for summary
judgment. Therefore, we dismiss Plaintiffs-Appellants’ appeal insofar as it
challenges the district court’s denial of their motion for a preliminary injunction.
I
This appeal stems from Plaintiffs-Appellants’ challenges to Governor Lujan
Grisham’s closure of New Mexico public schools during the COVID-19 pandemic
and the issuance by the New Mexico Public Education Department (the “PED”) of
Reentry Guidance providing for a phased school reopening based on local rates of
COVID-19.
A
In response to the COVID-19 pandemic, on March 11, 2020, Governor Lujan
Grisham declared a public health emergency in the State of New Mexico, invoking
the full measure of her authority under the All Hazard Emergency Act, NMSA 1978,
§§ 12-10-1 to -10, and the Public Health Emergency Response Act, NMSA 1978,
3
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§§ 12-10A-1 to -19. Pursuant to this authority, on March 13, 2020, Governor Lujan
Grisham ordered all New Mexico public schools to close from March 16 to April 6,
2020, and when COVID-19 cases in New Mexico continued to increase, she extended
the closure, ordering all public schools to close for the remainder of the 2019–2020
school year.
In the lead up to the 2020–2021 academic year, the PED worked with the
Office of the Governor and the New Mexico Department of Health to develop a plan
for a phased reopening of schools. Using certain criteria, including daily cases and
test positivity rates, to assess the spread of COVID-19 in New Mexico, the PED
issued its official Reentry Guidance on July 24, 2020, requiring that school districts
in New Mexico with higher rates of COVID-19 provide either fully remote or hybrid
learning, while permitting full in-person learning for schools in districts with lower
rates.1 The Reentry Guidance also allowed, but did not require, school districts in the
fully remote category to provide in-person education to children with disabilities in
groups of five children or fewer.
Applying the Reentry Guidance across the state, the PED required schools in
several counties to begin the 2020 school year operating in a fully remote capacity,
while other schools were permitted to resume in-person learning through either the
hybrid or full reentry categories.
1
Though the PED issued the first Reentry Guidance on July 24, 2020, the
district court in its order and judgment relied on the then-most updated version of the
Reentry Guidance issued on November 24, 2020.
4
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B
On September 16, 2020, Plaintiffs-Appellants brought this suit pursuant to 42
U.S.C. § 1983.2 Plaintiffs-Appellants are Clarissa and Robert Hernandez, the parents
of four school-age children who live in a county in the remote-learning category;
Shannon Woodworth, the parent of a school-age daughter with special needs in a
county also in the remote-learning category; and David Gallegos, a member of the
Board of Education for Eunice Public Schools, a remote-learning only county.
Plaintiffs-Appellants sued Governor Lujan Grisham and Secretary of Education Ryan
Stewart in their individual and official capacities,3 alleging that in the ten New
Mexico counties prohibited from resuming any form of in-person learning, the 2020
Reentry Guidance violated students’ due process and equal protection rights.4
Additionally, Plaintiffs-Appellants alleged a violation of the IDEA, arguing
that remote schooling prevented students with disabilities, such as Ms. Woodworth’s
daughter, from socializing with non-disabled students and thus prevented such
2
On September 17, 2020, Plaintiffs-Appellants filed an amended
complaint to correct the caption—specifically, to correct the names of two of the
parties.
3
Plaintiffs-Appellants voluntarily dismissed the State of New Mexico
and Secretary of Health Kathyleen Kunkel from their suit.
4
Plaintiffs-Appellants sought class certification for similarly situated
students, students with disabilities, and teachers and administrators in Chaves, Curry,
Doña Ana, Eddy, Hidalgo, Lea, Luna, McKinley, Quay, and Roosevelt Counties.
The district court concluded however that it likely would not grant class certification,
and so this appeal relates only to the individual, named Plaintiffs-Appellants.
5
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students from receiving a FAPE. See, e.g., Fry v. Napoleon Cmty. Sch., 580 U.S.
154, 137 S. Ct. 743, 748–49 (2017) (explaining that the IDEA offers federal funds to
states in exchange for the commitment to provide a FAPE to children with certain
disabilities, and that under the IDEA, a FAPE comprises “special education and
related services,” including “both ‘instruction’ tailored to meet a child’s ‘unique
needs’ and sufficient ‘supportive services’ to permit the child to benefit from that
instruction” (quoting 20 U.S.C. §§ 1401(9), (26), (29))); see also Bd. of Ed. of
Hendrick Hudson Cent. Sch. Dist., Westchester Cnty. v. Rowley, 458 U.S. 176, 203
(1982) (holding that the IDEA establishes a substantive right to a FAPE for children
with certain disabilities).
Plaintiffs-Appellants sought declaratory relief, a temporary restraining order,
and preliminary and permanent injunctions “enjoining Defendants from prohibiting
in-person instruction.” Aplees.’ Supp. App., Vol. 1, at 28 (Pls.’ Am. Compl. and
Req. for TRO, filed Sept. 17, 2020). Plaintiffs-Appellants also filed a separate
Motion for a Temporary Restraining Order, Preliminary Injunction, and Permanent
Injunctive Relief on September 21, 2020.
On October 14, 2020, in Hernandez v. Grisham (Hernandez I), 494 F. Supp.
3d 1044 (D.N.M. 2020), the district court issued an order on Plaintiffs-Appellants’
September 21, 2020, motion for preliminary injunction and temporary restraining
order, granting it in part and denying it in part. Specifically, the court denied
virtually all of the Plaintiffs-Appellants’ requested relief—finding Plaintiffs-
Appellants unlikely to succeed on the merits—but granted a narrow TRO under the
6
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IDEA to correct Ms. Woodworth’s daughter’s individualized education plan (“IEP”)
to allow for in-person instruction because the local education agency had
misinterpreted the Reentry Guidance as prohibiting in-person learning for students
with special needs.5 See, e.g., Endrew F. ex rel. Joseph F. v. Douglas Cnty. Sch.
Dist. RE-1, 580 U.S. 386, 137 S. Ct. 988, 994 (2017) (“The IEP is the means by
which special education and related services are tailored to the unique needs of a
particular child.” (quotation omitted)). Plaintiffs-Appellants did not interlocutorily
appeal the district court’s denial of their requested preliminary injunction in
Hernandez I. See, e.g., 28 U.S.C. 1292(a)(1) (providing jurisdiction to hear appeals
from “[i]nterlocutory orders . . . refusing . . . injunctions”).
Following Hernandez I, on October 26, 2020, Defendants-Appellees filed their
(second) motion to dismiss.6 They argued that the district court should dismiss
5
Specifically, the district court found that Ms. Woodworth was not
required to first exhaust her administrative remedies under the IDEA before bringing
her IDEA claim in federal court because her claim presented a purely legal question.
Addressing Ms. Woodworth’s IDEA claim, the district court concluded that because
Ms. Woodworth’s daughter was not progressing appropriately with remote
instruction, “it is likely that she could demonstrate on the merits that she is not
receiving a FAPE in violation of the IDEA”; so, the court ordered Secretary Stewart
to direct the local education agency to amend Ms. Woodworth’s daughter’s IEP to
allow for in-person instruction. See Hernandez I, 494 F. Supp. 3d at 1148–50.
6
On October 5, 2020, Governor Lujan Grisham and Secretaries Kunkel
and Stewart filed their first motion to dismiss the claims against them arguing that
Plaintiffs-Appellants lacked Article III standing and failed to state a § 1983 claim.
The district court agreed that Plaintiffs-Appellants lacked standing as to Secretary
Kunkel and—consistent with Plaintiffs-Appellants’ own stipulations of dismissal—
the court dismissed Secretary Kunkel and the State of New Mexico from the case.
See Hernandez v. Grisham (Hernandez II), 499 F. Supp. 3d 1013, 1018 (D.N.M.
2020).
7
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Plaintiffs-Appellants’ constitutional claims because the Reentry Guidance is subject
to and survives rational-basis scrutiny. More specifically, they argued that the
suspension of in-person learning is rationally related to the legitimate state interest of
stopping the spread of COVID-19. Defendants-Appellees also argued that the district
court should dismiss Plaintiffs-Appellants’ IDEA claim because the IDEA does not
require in-person learning for students to receive a FAPE, and, moreover, the 2020
Reentry Guidance does not actually prohibit in-person education for special needs
students and instead provides such students with the same opportunity as non-
disabled students to participate in remote instruction.
After converting—with the parties’ consent—Defendants-Appellees’ motion to
dismiss to a motion for summary judgment7 and holding hearings on Plaintiffs-
Appellants’ motion for a preliminary injunction,8 on December 18, 2020, the district
court issued its order and judgment dismissing all of Plaintiffs-Appellants’ claims. In
its 167-page order at issue here, the district court identified 12 separate issues and
addressed each in turn, ultimately granting Defendants-Appellees’ motion for
7
The district court asked the parties whether they would object to
converting the second motion to dismiss into a motion for summary judgment
pursuant to Federal Rule of Civil Procedure 12(d). Plaintiffs-Appellants and
Defendants-Appellees both filed notices of non-objection, and the motion to dismiss
was accordingly converted.
8
The district court held three days of hearings on Plaintiffs-Appellants’
September 21, 2020, motion for a temporary restraining order, preliminary
injunction, and permanent injunctive relief (the same motion addressed in Hernandez
I) on November 19, November 20, and November 23, 2020.
8
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summary judgment and again denying Plaintiffs-Appellants’ motion for a preliminary
injunction.
Specifically, on the constitutional claims, the district court concluded that
Defendants-Appellees did not violate Plaintiffs-Appellants’ procedural due process,
substantive due process, or equal protection rights and granted summary judgment in
favor of Defendants-Appellees. The district court first explained that under Jacobson
v. Commonwealth of Massachusetts, 197 U.S. 11 (1905), tiered scrutiny applies to
constitutional claims during a national emergency situation, and if there is neither a
fundamental right nor a suspect class at issue, courts will uphold governmental action
that rationally relates to the government’s public health objectives.
Turning specifically to Plaintiffs-Appellants’ procedural due process claim, the
district court reasoned that—even though New Mexico children possess a property
right in their public education and deprivation of an in-person education has more
than a de minimis effect on this property interest—“summary administrative action”
is justified in emergency situations where the deprivation of property serves to
protect public health and safety. See Hernandez v. Grisham (Hernandez III), 508 F.
Supp. 3d 893, 976–79 (D.N.M. 2020) (quoting Hodel v. Va. Surface Mining &
Reclamation Ass’n, Inc., 452 U.S. 264, 300 (1981)). The district court further
explained that, even if COVID-19 is no longer an emergency, because the 2020
Reentry Guidance is a quasi-legislative document affecting the entirety of New
Mexico, Plaintiffs-Appellants were not entitled to any additional due process such as
individualized notice or hearings; the “general notice as provided by law” was
9
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instead sufficient. Id. at 979–81 (quoting Halverson v. Skagit Cnty., 42 F.3d 1257,
1261 (9th Cir. 1994)).
Next, the district court granted summary judgment on Plaintiffs-Appellants’
substantive due process claim, declining to find that there is a fundamental right to an
in-person education under the Constitution and instead concluding that the phased
reopening of public schools satisfied rational-basis review and did not deprive
Plaintiffs-Appellants of life, liberty, or property in such a manner that shocks the
judicial conscience. In rejecting Plaintiffs-Appellants’ argument that there is a
fundamental right to an in-person education, the district court explained that
Plaintiffs-Appellants offered no more than “vague and conclusory explanations,” and
“because [Plaintiffs-Appellants] do not explain how remote instruction deprives the
Plaintiffs of a basic education and do not address how in-person instruction is ‘deeply
rooted in this Nation’s history and tradition,’” they did not satisfy the requirement
under Washington v. Glucksberg, 521 U.S. 702, 720–22 (1997), that they must
provide the court with a “careful description of the asserted fundamental liberty
interest.” Hernandez III, 508 F. Supp. 3d at 986 (quoting Glucksberg, 521 U.S. at
720–21).
Thus, applying rational-basis review because the Reentry Guidance affects
neither a suspect class nor a fundamental right, the district court concluded that “even
if the Defendants seem more concerned about the spread to adults than the effective
education of children,” the prohibition on in-person schooling in certain counties is
nonetheless still rationally related to the legitimate governmental purpose of
10
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preventing the spread of the COVID-19 virus. Id. at 989–91. On the final
constitutional claim, the district court found that Defendants-Appellees did not
violate Plaintiffs-Appellants’ equal protection rights because the Reentry Guidance is
neutral on its face, and Plaintiffs-Appellants failed to show that the policy was
discriminatory to either the disabled or non-disabled citizens of the New Mexico
counties prohibited from providing in-person education.
Finally, turning to the IDEA claim, the district court concluded “Plaintiffs’
IDEA claims cannot proceed, because [Ms.] Woodworth’s IDEA claims are moot.”
Id. at 973. As the district court explained, because Ms. Woodworth’s daughter’s IEP
team had already remedied the purely legal error that the court had directed the local
education agency to correct in Hernandez I, 494 F. Supp. 3d at 1148–50, Ms.
Woodworth would need to follow the administrative process to address any
remaining issues; because she did not do so, the court lacked jurisdiction over her
IDEA claim.9
9
Although the district court concluded that the IDEA claim was not
properly before it because Ms. Woodworth’s claim was no longer purely legal, and,
therefore, was subject to the requirement of administrative exhaustion, the court went
on to consider merits-based reasons for why the claim should be dismissed. For
example, the district court concluded that Ms. Woodworth could not bring “claims
pursuant to § 1983, because the IDEA includes a comprehensive enforcement
scheme.” Hernandez III, 508 F. Supp. 3d at 916, 994–95. Further, the district court
determined that even though the IDEA may contemplate social and emotional goals,
because of the individualized nature of IEPs, disabled students may still receive a
FAPE even if they do not participate in in-person learning “because remote learning
still allows these students to progress towards goals detailed in their IEPs.” Id. at
916, 995–97; see also Fry, 137 S. Ct. at 749 (explaining that the IEP “serves as the
‘primary vehicle’ for providing each child with the promised FAPE” and is crafted
for each individual child by a “team” of school officials, teachers, and parents to
11
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Ultimately, after considering several additional issues that are not the subject
of this appeal, the district court denied Plaintiffs-Appellants’ motion for preliminary
injunction and granted Defendants-Appellees’ converted motion for summary
judgment and dismissed the case. This appeal followed.
C
Factual developments following the district court’s order are also relevant to
this appeal. In January 2021—before the parties submitted their merits briefs in this
appeal—Governor Lujan Grisham announced that, on February 8, 2021, in-person
learning could resume in every school district in New Mexico and the PED
accordingly revised the Reentry Guidance to permit hybrid in-person learning across
the state. This announcement was followed by a further revision announced by the
PED on March 8, 2021, that all school districts could return to full-time, in-person
learning with the goal that all schools would fully reopen by April 5, 2021. Based on
this change in policy, Defendants-Appellees contend that this appeal is now moot.
“spell[] out a personalized plan to meet all of the child’s ‘educational needs’”
(quoting 20 U.S.C. §§ 1414(d)(1)(A)(i)(II)(bb), (d)(1)(B))). Finally, the district court
ruled that remote schooling satisfies the IDEA’s “least restrictive environment”
mandate that disabled students be educated “[t]o the maximum extent appropriate . . .
with children who are not disabled,” in a “regular educational environment,” 20
U.S.C. § 1412(a)(5)(A), because “a regular educational environment or regular
classroom is any learning environment where a child with disabilities has not been
separated from his or her classmates without disabilities” and, here, both disabled and
non-disabled children were being offered the same remote instruction, Hernandez III,
508 F. Supp. 3d at 916, 997–1005.
12
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II
“We review the denial of a motion for summary judgment de novo and apply
the same standards as the district court.” Kelley v. City of Albuquerque, 542 F.3d
802, 820 (10th Cir. 2008). “Summary judgment is appropriate if ‘there is no genuine
issue as to any material fact and . . . the [movant] is entitled to a judgment as a matter
of law.’” Id. (quoting Yaffe Cos., Inc. v. Great Am. Ins. Co., 499 F.3d 1182, 1185
(10th Cir. 2007)).
“We review [a] district court’s decision to deny a preliminary injunction for
abuse of discretion.” Heideman v. S. Salt Lake City, 348 F.3d 1182, 1188 (10th Cir.
2003). “Four factors must be shown by the movant to obtain a preliminary
injunction: (1) the movant ‘is substantially likely to succeed on the merits; (2) [the
movant] will suffer irreparable injury if the injunction is denied; (3) [the movant’s]
threatened injury outweighs the injury the opposing party will suffer under the
injunction; and (4) the injunction would not be adverse to the public interest.’” Fish
v. Kobach, 840 F.3d 710, 723 (10th Cir. 2016) (quoting Beltronics USA, Inc. v.
Midwest Inventory Distrib., LLC, 562 F.3d 1067, 1070 (10th Cir. 2009)).
III
At the outset, we dismiss a portion of this appeal insofar as Plaintiffs-
Appellants seek to challenge the district court’s order denying their motion for a
preliminary injunction because any such challenge is moot, and we accordingly lack
jurisdiction to consider it. We otherwise affirm the district court’s judgment.
However, in doing so, we do not reach the merits. Instead, we conclude that the
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major deficiencies of Plaintiffs-Appellants’ briefing render meaningful review
infeasible. More specifically, we conclude that, due to these deficiencies, Plaintiffs-
Appellants have waived any arguments challenging the district court’s order granting
summary judgment. It is on that basis that we affirm.
A
On appeal, Plaintiffs-Appellants train much of their fire on the district court’s
order denying their motion for a preliminary injunction. Insofar as Plaintiffs-
Appellants’ appeal relates to that injunctive order, however, we lack jurisdiction to
consider it; that portion of Plaintiffs-Appellants’ appeal is moot.
Specifically, Plaintiffs-Appellants purport to target the district court’s denial
of their motion for a preliminary injunction. They argue that they made a sufficient
showing before the district court of the likelihood of success on the merits, the threat
of irreparable harm, the absence of harm to the opposing parties, and the absence of
any risk of harm to the public interest. Their Opening Brief has only one argument
section, and it is captioned in a manner consistent with the operative standard for
review of an order regarding a preliminary injunction. See Aplts.’ Opening Br. at 10
(“Appellants Were Likely to Prevail on the Merits . . .” (bold removed)). Plaintiffs-
Appellants contend that there is no rational basis for the prohibition on in-person
learning and, consequently, the 2020 Reentry Guidance violates the due process and
equal protection clauses of the Constitution and additionally violates the IDEA by
prohibiting disabled students from receiving a FAPE.
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Thus, Plaintiffs-Appellants frame the lion’s share of their arguments to address
the court’s denial of their motion for a preliminary injunction. Indeed, the argument
section of their Opening Brief is bereft of any discussion about why the district court
erred in entering an order granting summary judgment to Defendants-Appellees—the
order that resolved this case with finality on the merits. Indeed, the term “summary
judgment” does not appear in their Opening Brief.
Taking this misguided line of argument at face value, we conclude that any
such challenge is moot, and we do not have jurisdiction to consider it. Under Article
III of the United States Constitution, our jurisdiction is limited to “cases” or
“controversies.” U.S. Const. art. III, § 2, cl. 1. When a case or controversy no longer
exists, the appeal becomes moot, and we lose jurisdiction. This mootness analysis
turns on whether we can afford meaningful relief and applies to our review of actions
seeking declaratory or injunctive relief. See Rio Grande Silvery Minnow v. Bureau of
Reclamation, 601 F.3d 1096, 1109 (10th Cir. 2010) (“Declaratory judgment actions
must be sustainable under the same mootness criteria that apply to any other
lawsuit.”); Baker v. Bray, 701 F.2d 119, 122 (10th Cir. 1983) (“[T]he claim upon
which the request for a preliminary injunction was based . . . was dismissed by the
district court, and this action certainly mooted the issue raised herein.”).
Here, because the district court’s grant of summary judgment was a final order
resolving the merits of Plaintiffs-Appellants’ claims, we can no longer grant
preliminary relief. See United States ex rel. Bergen v. Lawrence, 848 F.2d 1502,
1512 (10th Cir. 1988) (explaining that a preliminary injunction is by its nature a
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temporary measure intended to furnish provisional protection while awaiting a final
judgment on the merits and so holding that the district court’s entry of final judgment
“superseded the preliminary injunction” and mooted an appeal as to it); see also Rose
v. Utah State Bar, 444 F. App’x 298, 299 (10th Cir. 2011) (unpublished)10
(dismissing appeal from the denial of a preliminary injunction “[b]ecause the
underlying claims have been finally adjudicated by the district court’s dismissal, [so]
we can no longer grant preliminary relief”). Even if we reversed the district court’s
denial of the Plaintiffs-Appellants’ motion for a preliminary injunction, “it would
have no effect in the real world because [Plaintiffs-Appellant’s grievances regarding
that denial] have been superseded” by the district court’s final order dismissing
Plaintiffs-Appellants’ claims on the merits. Rio Grande Silvery Minnow, 601 F.3d at
1112.
In sum, we do not have jurisdiction to consider Plaintiffs-Appellants’ appeal,
insofar as they purport to challenge the district court’s denial of their motion for a
preliminary injunction. Therefore, we dismiss that portion of the appeal.
B
Not distracted by Plaintiffs-Appellants’ arguments regarding the court’s denial
of the motion for a preliminary injunction, Defendants-Appellees focus their response
10
We acknowledge that the unpublished decisions cited herein are not
controlling authority or otherwise binding on us. We only cite them as persuasive
aids in resolving the material issues before us. See, e.g., Bear Creek Trail, LLC v.
BOKF, N.A., 35 F.4th 1277, 1282 n.8 (10th Cir. 2022); United States v. Engles, 779
F.3d 1161, 1162 n.1 (10th Cir. 2015).
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on the correct order: the district court’s order granting them summary judgment. Yet
in addition to defending the court’s order on the merits, Defendants-Appellees
contend that any challenge to that order by Plaintiffs-Appellants is moot.
Specifically, they contend that this is so due to the policy change following the
district court’s December 18, 2020, order that in-person learning could resume in all
New Mexico school districts.
In support of their mootness argument, Defendants-Appellees argue that the
recognized mootness exceptions do not apply—that is, neither the capable-of-
repetition-yet-evading-review exception nor the voluntary-cessation exception—
because “there is no reasonable expectation that Plaintiffs will be subject to the same
challenged action again,” especially given that there is no history of Governor Lujan
Grisham “reimposing in-person learning restrictions on public schools,” and there is
no evidence she would do so in the future. Aplees.’ Resp. Br. at 23–25 (emphasis in
original). In reply, Plaintiffs-Appellants cursorily contend that the capable-of-
repetition-yet-evading-review exception applies—without providing any support for
this assertion or explaining how there remains a threat that in-person learning
restrictions may be reimposed in New Mexico schools.
It is axiomatic that before reaching the merits of any case, federal courts must
first establish their subject-matter jurisdiction. See Steel Co. v. Citizens for a Better
Env’t, 523 U.S. 83, 94 (1998). However, they need not definitively opine on the
existence of such jurisdiction when they are able to dispose of the case on another,
non-merits threshold ground. See Sinochem Int’l Co. v. Malaysia Int’l Shipping
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Corp., 549 U.S. 422, 431 (2007) (noting that “jurisdiction is vital only if the court
proposes to issue a judgment on the merits” (quoting Intec USA, LLC v. Engle, 467
F.3d 1038, 1041 (7th Cir. 2006))).
The Supreme Court has recognized that “[i]t is hardly novel for a federal court
to choose among threshold grounds for denying audience to a case on the merits.”
Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 585 (1999). This is because a “court
that dismisses on . . . non-merits grounds . . . before finding subject-matter
jurisdiction, makes no assumption of law-declaring power.” Id. at 584 (emphasis
added) (quoting In re Papandreou, 139 F.3d 247, 255 (D.C. Cir. 1998)).
Accordingly, when presented with multiple, non-merits potential grounds for
dismissal, “a federal court has leeway ‘to choose among [them] for denying audience
to a case on the merits’”—without deciding the question of its subject-matter
jurisdiction. Sinochem, 549 U.S. at 431 (quoting Ruhrgas, 526 U.S. at 585); see also
Levin v. Com. Energy, Inc., 560 U.S. 413, 432 (2010) (citing Sinochem for the
proposition that a “federal court has flexibility to choose among threshold grounds
for dismissal”).
When choosing between jurisdictional and non-jurisdictional non-merits,
threshold grounds, considerations of “convenience, fairness, and judicial economy”
may counsel in favor of sidestepping a jurisdictional issue and instead reaching a
disposition on a non-merits, non-jurisdictional threshold ground. Sinochem, 549 U.S.
at 423; cf. Chegup v. Ute Indian Tribe of Uintah and Ouray Rsrv., 28 F.4th 1051,
1069 (10th Cir. 2022) (reversing the district court and holding that it should have
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first considered the non-jurisdictional, threshold ground of tribal exhaustion because,
even though a “court generally has discretion to choose among multiple threshold
grounds for dismissing a case,” “not all grounds for dismissal are created equal, and
some matters are properly resolved before others”).
Here, we resolve this case on a non-merits, threshold ground, exercising our
discretion under Sinochem and its progeny to do so without opining on the propriety
of our subject-matter jurisdiction. Specifically, consistent with our precedent, we
conclude that the deficiencies of Plaintiffs-Appellants’ briefing are so pervasive and
serious that they have waived our review of their challenges. Therefore, even though
we have no occasion to speak concerning the legal propriety of the district court’s
comprehensive and thorough order, we affirm.
We repeatedly have declined to consider appellants’ claims on the merits
based on inadequate briefing in their opening brief. See, e.g., Bronson v. Swensen,
500 F.3d 1099, 1104 (10th Cir. 2007) (noting that “we routinely have declined to
consider arguments that are not raised, or are inadequately presented, in an
appellant’s opening brief”). And, as directly relevant here, we have done so in lieu
of determining whether we lacked jurisdiction over a challenged claim due to alleged
mootness. See United States v. Fisher, 805 F.3d 982, 990 n.2 (10th Cir. 2015)
(acknowledging that “[w]e ordinarily decide subject matter jurisdiction questions
such as mootness before addressing other issues,” but pursuant to Sinochem, the
challenged claim could be resolved on the non-merits ground of “inadequate
briefing”); cf. Bishop v. Smith, 760 F.3d 1070, 1096 n.19 (10th Cir. 2014) (“Because
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the plaintiffs’ . . . theory is forfeited, there is no need to consider [the defendant’s]
arguments [that the theory] is foreclosed by the plaintiffs’ lack of standing to
challenge that provision.”). We follow a similar path here—eliding, as we may, the
question of mootness—and determining that Plaintiffs-Appellants have waived our
merits review of their claims through inadequate briefing.
In particular, we conclude that, under the circumstances here, considerations of
convenience and judicial economy counsel in favor of resolving this appeal on the
non-jurisdictional ground of waiver through inadequate briefing, and we sidestep the
jurisdictional, mootness issue. For reasons detailed below, this case may be readily
disposed of on the ground of waiver through inadequate briefing and so this non-
jurisdictional, threshold ground “weigh[s] heavily in favor of dismissal.” Sinochem,
549 U.S. at 436. To be sure, the Supreme Court has suggested that jurisdictional
questions frequently involve “no arduous inquiry” such that, at least in certain cases,
considerations of convenience and judicial economy may lead a court to favor
resolving the jurisdictional question, rather than the threshold, non-jurisdictional one.
Sinochem, 549 U.S. at 436 (quoting Ruhrgas, 526 U.S. at 587). Yet we are not
obliged to definitively opine on whether the jurisdictional mootness issue here can be
reasonably characterized as “arduous” before following an alternate, non-merits path,
and we see no need to do so. What can be safely said, however, is that the task of
resolving the jurisdictional question before us would not be entirely free of travail
and complexity.
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Specifically, we would need to consider facts outside of the district-court
record that have evolved and continue to evolve with the peaks and valleys in the
spread of the COVID-19 virus. Further, we recognize that courts have reached
different and (at least on the surface) conflicting outcomes on similar mootness
questions. Compare Danville Christian Acad., Inc. v. Beshear, --- U.S. ----, 141 S.
Ct. 527, 527–28 (2020) (holding that the case was moot where “[t]he Governor’s
school-closing Order effectively expires this week or shortly thereafter, and there is
no indication that it will be renewed”), and Eden, LLC v. Justice, 36 F.4th 166, 171–
72 (4th Cir. 2022) (dismissing the plaintiffs’ appeal as moot and holding that the
voluntary-cessation doctrine did not apply, even though West Virginia remained in a
state of emergency, because the COVID-19 executive orders at issue had already
been terminated, no new restrictions had been imposed, and there was no evidence
that the governor would reimpose any COVID-19 restrictions in the future), with
Tandon v. Newsom, --- U.S. ----, 141 S. Ct. 1294, 1297 (2021) (per curiam) (holding
that applicants were entitled to an injunction and their claims were not moot even
though the California officials had changed the policy at issue because “officials with
a track record of ‘moving the goalposts’ retain authority to reinstate those heightened
restrictions at any time” (quoting S. Bay Pentecostal Church v. Newsom, --- U.S. ----,
141 S. Ct. 716, 720 (2021) (statement of Gorsuch, J.))), and Roman Cath. Diocese v.
Cuomo, --- U.S. ----, 141 S. Ct. 63, 68 (2020) (per curiam) (holding that the case was
not moot and injunctive relief was still appropriate even though the New York
governor had relaxed the restrictions on attendance at religious services in certain
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areas because the challenged order was still in effect and the governor “regularly
chang[ed] the classification of particular areas without prior notice,” and,
consequently, “the applicants remain[ed] under a constant threat that the area in
question will be reclassified”).
When the foregoing circumstances are considered and weighed against our
assessment that the inadequate-briefing rationale provides a ready basis for disposing
of this case, we conclude that considerations of convenience and judicial economy in
this instance militate in favor of that non-jurisdictional, non-merits resolution. Cf.
Sinochem, 549 U.S. at 436 (“[W]here subject-matter jurisdiction . . . is difficult to
determine, and [the threshold non-jurisdictional issue] weigh[s] heavily in favor of
dismissal, the court properly takes the less burdensome course.”). We turn now to
explain the basis for our conclusion regarding the inadequacy of Plaintiffs-
Appellants’ briefing.
C
Plaintiffs-Appellants’ briefing is inadequate to support our merits review.
Accordingly, we deem any challenges that Plaintiffs-Appellants may have to the
district court’s December 18, 2020, final order granting the Defendants-Appellees’
converted motion for summary judgment to be waived. The ineluctable consequence
of that ruling is that we affirm the court’s judgment without reaching the merits.
1
As we have discussed, Plaintiffs-Appellants spend a great deal of their
briefing—and, most relevantly, their Opening Brief—attacking the district court’s
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denial of their motion for a preliminary injunction. Yet for reasons we have
explicated, any challenge to that order is moot, and, consequently, we lack
jurisdiction over it. To the extent that Plaintiffs-Appellants seek to attack the court’s
final resolution of the merits of their claims, we have jurisdiction over their
arguments. But that fact will not avail them because their arguments are so
inadequate that we properly decline to review them.
To begin, Plaintiffs-Appellants expressly purport to challenge the court’s
ruling on what, in effect, is a superseded and non-operative motion—Defendants-
Appellees’ motion to dismiss. And the consequences of this error are grave for the
adequacy of Plaintiffs-Appellants’ merits arguments: that is because Plaintiffs-
Appellants’ confusion regarding the motion appealed from results in Plaintiffs-
Appellants invoking the wrong standard for considering their challenge—one focused
on the sufficiency of the factual averments of their complaint, rather than correctly
on the sufficiency of their evidence—and Plaintiffs-Appellants framing their
arguments under that wrong standard.
Specifically, besides noting in their Opening Brief’s Statement of Issues their
moot challenge—i.e., “[d]id the lower court err in denying Plaintiffs’ Motion for
Preliminary Injunction?”—Plaintiffs-Appellants state one, and only one, additional
challenge. Aplts.’ Opening Br. at 1. They expressly raise the following issue: “[d]id
the lower court err in granting Defendants’ Motion to Dismiss for failure to state a
claim . . . ?” Id. (emphasis added). But recall that Defendants-Appellants’ motion to
dismiss actually had been superseded when the district court entered the December
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18 order and judgment appealed from here. That is, with the parties’ consent, the
court converted the motion to dismiss into a motion for summary judgment. It was
the court’s ruling on this converted motion for summary judgment, on December 18,
that finally resolved the merits of Plaintiffs-Appellants’ claims. Therefore, at the
outset of their briefing, Plaintiffs-Appellants critically misfire—attacking the court’s
supposed ruling on a motion that actually had been eliminated from consideration.11
As a consequence, Plaintiffs-Appellants invoke the wrong standard for our
consideration of their merits challenges—focusing on factual averments of the
complaint rather than evidence in the summary judgment record. In this regard,
Plaintiffs-Appellants purport to advise us in resolving their challenges that “appellate
11
To be sure, at the end of its December 18, 2020, Memorandum Opinion
and Order, the district court stated that “Defendants’ Motion to Dismiss, filed
October 26, 2020 (Doc. 43) is granted.” Hernandez III, 508 F. Supp. 3d at 1011; see
also Aplts.’ Supp. Br. at 1. But the district court did so after explaining that it had
converted the motion to dismiss into a motion for summary judgment pursuant to the
parties’ consent, and critically, after describing the undisputed material facts, laying
out the standard governing motions for summary judgment in detail, and analyzing
Plaintiffs-Appellants’ claims under the summary judgment standard. Contrary to
Plaintiffs-Appellants’ assertion, see Aplts.’ Supp. Br. at 4, the district court explicitly
granted summary judgment to Defendants-Appellees on the constitutional and IDEA
claims because it found no dispute as to any material fact and concluded that
Defendants-Appellees were entitled to judgment as a matter of law. See Hernandez
III, 508 F. Supp. 3d at 973 (holding “Defendants did not violate the Plaintiffs’
procedural due process, substantive due process, or equal protection rights,” and
“grant[ing] summary judgment on the Plaintiffs’ constitutional claims, because there
is no genuine issue of material fact, and the Defendants are entitled to judgment as a
matter of law”); id. (holding “Plaintiffs’ IDEA claims cannot proceed” in part
“because [Ms.] Woodworth’s IDEA claims are moot” and that “summary judgment in
favor of the Defendants is appropriate”). Thus, on appeal, Plaintiffs-Appellants
needed to address the court’s ruling on Defendants-Appellees’ motion for summary
judgment, not the superseded motion to dismiss.
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court[s] must ‘accept all the well-pleaded allegations . . . as true and construe them in
the light most favorable to the non-movant.’” Id. at 2 (quoting Nixon v. City & Cnty.
of Denver, 784 F.3d 1364, 1368 (10th Cir. 2015)). Instead, Plaintiffs-Appellants
should have informed us that the determinative question is whether the record
evidence supported Defendants-Appellees’ contention that “there is no genuine
dispute of material fact” and that they are “entitled to judgment as a matter of law.”
FED. R. CIV. P. 56(a).
This is not a hyper-technical matter. Presumably operating under a
misapprehension concerning the type of motion at issue here, Plaintiffs-Appellants do
not present arguments in their Opening Brief related to why the district court erred in
granting summary judgment. Indeed, as we have noted, Plaintiffs-Appellants’
Opening Brief is devoid of the words “summary judgment.” Yet it is beyond
peradventure that “[t]he first task of an appellant is to explain to us why the district
court’s decision was wrong.” Nixon, 784 F.3d at 1366.
“We cannot rule on those issues the appellant does not bring to our attention.”
Fisher, 805 F.3d at 991; see also Bronson, 500 F.3d at 1104. In order for us to
address the dispositive district-court order that is actually at issue here, we would
have to fill in the gaps of Plaintiffs-Appellants’ arguments and construct the logical
links—under the proper substantive standards—tying those arguments to the district
court’s order granting Defendants-Appellees’ converted motion for summary
judgment. But “[w]e aren’t required to fill in the blanks of a litigant’s inadequate
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brief,” and we discern no reason to do so here. United States v. Banks, 884 F.3d 998,
1024 (10th Cir. 2018).
More specifically, we are not inclined to construe Plaintiffs-Appellants’
Opening Brief as raising a challenge to the district court’s grant of summary
judgment. By framing their brief and the issues on appeal as challenging the grant of
a motion to dismiss, Plaintiffs-Appellants have waived any arguments about the
district court’s grant of summary judgment—that is, they have waived any arguments
challenging the district-court order at the heart of this appeal. See Reedy v. Werholtz,
660 F.3d 1270, 1275 (10th Cir. 2011) (“The argument section of Plaintiffs’ opening
brief does not challenge the court’s reasoning on this point. We therefore do not
address the matter.”). Accordingly, on this independent threshold basis, we uphold
the district court’s judgment—without reaching the underlying merits.
2
Nevertheless, lest there be any doubt concerning the outcome were we to
exercise our discretion in this way, we note that, even if we were to construe
Plaintiffs-Appellants’ appeal as a challenge to the district court’s grant of summary
judgment, we would conclude that they have waived our review of the merits. That
is, Plaintiffs-Appellants fail to adequately raise arguments for why the grant of any
form of dismissal should be reversed.12 To be sure, Plaintiffs-Appellants do mention
12
After the parties filed their merits briefs, we directed the parties to file
supplemental briefing addressing, among other things, the following question: “why
this appeal should not be dismissed because of Plaintiffs-Appellants’ failure to
adequately address the district court’s grant of summary judgment in their opening
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the dismissal of their claims in their Opening Brief’s Statement of Issues, Standard of
Review, Statement of the Case, Statement of Relevant Facts, and Summary of the
Argument. But they do so only in cursory fashion. And, importantly, they do not
even mention in the Argument of their Opening Brief the court’s grant of a
dispositive motion regarding their claims. That is not good enough. See FED. R.
APP. P. 28(a)(8)(A) (noting that “the argument” section “must contain” “appellant’s
contentions and the reasons for them, with citations to the authorities and parts of the
record on which the appellant relies”); accord Burke v. Regalado, 935 F.3d 960, 1014
(10th Cir. 2019).
More generally, Plaintiffs-Appellants’ briefing fails to meaningfully explain
why the district court’s dismissal was supposedly erroneous. Indeed, the Opening
Brief is bereft of sufficient factual or legal arguments engaging with the district
court’s thorough analysis that would allow this court to appropriately review the
court’s order. For instance, as to their procedural due process claim, Plaintiffs-
Appellants do not mention the state’s power to act through “summary administrative
brief?” Order, No. 20-2176, at *1 (10th Cir., Sept. 8, 2021). In response, Plaintiffs-
Appellants argue that “while the phrase ‘summary judgment’ is not used in
Appellants’ briefing, Appellants’ arguments are all geared towards discussing the
evidence presented.” Aplts.’ Suppl. Br. at 1. Plaintiffs-Appellants thus request that
this court construe their Opening Brief as a challenge to the district court’s grant of
summary judgment and further argue that they still satisfy the requirements to prevail
in their appeal because their Opening Brief cited to evidence indicating a genuine
dispute of material fact and addressed the legal errors in the district court’s summary-
judgment order. But Plaintiffs-Appellants do not actually identify where they made
such factual or legal arguments in their Opening Brief. And, thus, we are
unpersuaded.
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action” during an emergency or, absent an emergency situation, the sufficiency of
general notice as provided by law to satisfy procedural due process for a quasi-
legislative action; yet both of these rationales were central to the district court’s
conclusion that Plaintiffs-Appellants were not entitled to any additional due process.
Similarly, on their substantive due process claim, Plaintiffs-Appellants argue
that there is a fundamental right to a basic education, but they do not make any
specific arguments in support of a fundamental right to an in-person education.
However, whether there is a fundamental right to an in-person education is the
question on appeal. In particular, Plaintiffs-Appellants do not offer any arguments in
their Opening Brief to negate the district court’s reasoning that “(i) the Plaintiffs
have not demonstrated the historical importance of an in-person education rather than
remote instruction; (ii) the Plaintiffs have not demonstrated that a temporary pause on
in-person learning will make it impossible for the Plaintiffs to access other
fundamental liberties; [and] (iii) the Plaintiffs have not sufficiently defined the
contours of their proposed right.” Hernandez III, 508 F. Supp. 3d at 983. Therefore,
Plaintiffs-Appellants’ Opening Brief does not provide any basis to review whether
the district court’s application of rational-basis scrutiny was erroneous.
As for their IDEA claim, Plaintiffs-Appellants argue that nearly all disabled
students require in-person teaching in order to receive a FAPE, and so the Reentry
Guidance violates Ms. Woodworth’s daughter’s rights under the IDEA by having her
participate through a virtual classroom. But these arguments ignore the district
court’s prior finding in Hernandez I that the Reentry Guidance does not prohibit in-
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person education for students with disabilities and that Ms. Woodworth’s daughter’s
IEP needed to be re-evaluated to provide her with such an in-person education. See
494 F. Supp. 3d at 1148–50. Plaintiffs-Appellants further ignore the district court’s
procedural and jurisdictional reasons for dismissing the IDEA claims—that is, that
Ms. Woodworth’s IDEA claims are now moot because of the court’s rulings in
Hernandez I, and the court lacked jurisdiction to consider any remaining challenge
because Plaintiffs-Appellants did not demonstrate that the administrative process had
been exhausted. Therefore, as with their constitutional claims, because Plaintiffs-
Appellants do not meaningfully engage with the district court’s reasoning, they
provide us with no basis to review any ostensible challenge to the court’s disposition
of their IDEA claim.
In sum, because Plaintiffs-Appellants do not provide us with arguments
addressing the district court’s analysis of the underlying issues in this case, there is
no opportunity for meaningful appellate review. See Utah Env’t Cong. v. Bosworth,
439 F.3d 1184, 1194 n.2 (10th Cir. 2006) (“An issue mentioned in a brief on appeal,
but not addressed, is waived.”); Phillips v. Calhoun, 956 F.2d 949, 954 (10th Cir.
1992) (“[I]ssues designated for review are lost if they are not actually argued in the
party’s brief.”); see also Legacy Church, Inc. v. Collins, 853 F. App’x 316, 317 (10th
Cir. 2021) (unpublished) (stating that “[t]hough Legacy Church briefly acknowledges
the district court’s dismissal of the action in its opening brief’s jurisdictional
statement, it is never mentioned again,” and concluding that “[a]rguments not
included in the opening brief are waived”).
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We have explained that “bald assertions,” Adler v. Wal-Mart Stores, Inc., 144
F.3d 664, 679 (10th Cir. 1998), and “[s]cattered statements in the appellant’s brief,”
Exum v. United States Olympic Comm., 389 F.3d 1130, 1133 n.4 (10th Cir. 2004),
that would “compel us to scavenge through [the] brief for traces of argument,”
Fisher, 805 F.3d at 991, do not adequately raise issues for appellate review. We are
not in the business of making arguments on behalf of parties. See United States v.
Yelloweagle, 643 F.3d 1275, 1284 (10th Cir. 2011) (noting that we will not “make
arguments for” a litigant). Yet at the end of the day that is what Plaintiffs-Appellants
would effectively call on us to do here—based on their repeated failure to make
arguments explaining why the district court’s dispositive motion was erroneous or
otherwise engaging with the district court’s reasoning.
Their briefing failure is especially problematic given the complexity of the
substantive issues raised by this appeal and the extensive and thorough nature of the
district court’s analysis. Plaintiffs-Appellants’ arguments give us no principled basis
to delve into those complicated issues, much less second-guess the propriety of the
district court’s reasoning. Cf. United States v. Lamirand, 669 F.3d 1091, 1098 n.7
(10th Cir. 2012) (“[T]he argument is not adequately presented to us. [The defendant]
does not even identify this distinct argument in his statement of appellate issues,
much less elaborate in the brief on its substantive premises. Instead, [the defendant]
puts forward only a couple of stray sentences in his briefs and does not cite to any
authority that even remotely supports the argument. Given the apparent complexity of
30
Appellate Case: 20-2176 Document: 010110768886 Date Filed: 11/15/2022 Page: 31
this issue of statutory interpretation . . . we are reluctant to definitively opine on its
merits without a full adversarial framing of the relevant considerations.”).
Therefore, even if we were to overlook Plaintiffs-Appellants’ error in
misconceiving the dispositive order under review here—i.e., the court’s grant of
Defendants-Appellees’ converted motion for summary judgment—we would still
conclude that Plaintiffs-Appellants have waived appellate review through their
failure to make meaningful arguments—backed by citations to the record and legal
authority—challenging the district court’s analysis.
IV
For the foregoing reasons, we DISMISS Plaintiffs-Appellants’ appeal insofar
as it challenges the district court’s denial of their motion for a preliminary injunction
and otherwise AFFIRM—without reaching the merits—concluding that Plaintiffs-
Appellants have waived any arguments for reversing the district court’s grant of
summary judgment through their woefully inadequate briefing.
ENTERED FOR THE COURT
Jerome A. Holmes
Chief Judge
31 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483917/ | CENAT 11/15/2022
IN THE SUPREME COURT OF THE STATE OF MONTANA Case Number: DA 21-0615
No. DA 21-0615
STATE OF MONTANA,
Plaintiff and Appellee,
v.
RICKY JOE BRENDT,
Defendant and Appellant.
ORDER
Upon consideration of Appellant's motion for extension of time, and
good cause appearing,
IT IS HEREBY ORDERED that Appellant is granted an extension
of time to and including December 14, 2022, within which to prepare,
file, and serve Appellant's opening brief on appeal.
Electronically signed by:
Mike McGrath
Chief Justice, Montana Supreme Court
November 15 2022 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483918/ | 11/15/2022
IN THE SUPREME COURT OF THE STATE OF MONTANA Case Number: DA 21-0571
No. DA 21-0571
STATE OF MONTANA,
Plaintiff and Appellee,
v.
JEFFERY ALLEN WESTFALL,
Defendant and Appellant.
ORDER
Upon consideration of Appellant’s motion for extension of time,
and good cause appearing,
IT IS HEREBY ORDERED that Appellant is granted an extension
of time to and including December 23, 2022, within which to prepare,
file, and serve Appellant’s opening brief on appeal.
Electronically signed by:
Mike McGrath
Chief Justice, Montana Supreme Court
November 15 2022 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483916/ | IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
MILLARD E. PRICE, )
)
Plaintiff, )
)
v. ) C.A. No. N21C-05-160 FWW
)
CENTURION OF DELAWARE, LLC, )
CHRISTINE CLAUDIO, ANDREW )
ABRAHAMSON, JASKIR KAUR and )
AMBEGO TAFFA, )
)
Defendants. )
Submitted: October 31, 2022
Decided: November 15, 2022
Upon Defendants’ Motion for Summary Judgment
GRANTED.
Millard E. Price, SBI No. 441452, Howard R. Young Correctional Institution, P.O. Box
9561, Wilmington, DE 19809, pro se.
Scott G. Wilcox, Esquire, MOORE & RUTT, P.A., The Mill, 1007 North Orange Street,
Suite 437, Wilmington, DE 19801, Wilmington, Delaware 19801, Attorney for Defendants.
WHARTON, J.
This 15th day of November, 2022, upon consideration the Motion for Summary
Judgment1 (“Motion”) of Defendants Centurion of Delaware, LLC (“Centurion”), Christine
Claudio (“Claudio”), Andrew Abrahamson (“Abrahamson”), Jaskir Kaur (“Kaur”), and
Ambego Taffa (“Taffa”) (collectively “Defendants”), Plaintiff Millard E. Price’s (“Price”)
Answer to Defendants’ Motion for Summary Judgment,2 and the record in this matter, it
appears to the Court:
1. In his pro se Complaint Price alleges two claims for relief – Deliberate
Indifference and Reckless and Emotional Infliction of Pain and Emotional Distress.3 A third
claim of Negligence and Malpractice was dismissed by the Court upon initial review for lack
of the required affidavit of merit.4 The claims are based on alleged mistreatment of Price by
the individual defendants as employees of Centurion of Delaware, LLC (“Centurion”), a
health care provider which provides services to inmates at correctional facilities such as the
one where Price is incarcerated.5
2. It appears from his Complaint that Price has undergone two spinal surgeries,
the second of which was performed on June 29, 2020 by neurosurgeon Tim [sic] Boulos,
M.D. through prison medical provider Centurion.6 Post-surgery, Price was prescribed
1
Defs.’ Op. Br. in Support of Mot. for Summ. J., D.I. 110.
2
Pl.’s Answer to Defs.’ Mot. for Summ. J., D.I. 112., D.I. 26.
3
Compl., D.I. 1.
4
D.I. 5.
5
Compl., D.I. 1.
6
Id., at ⁋ 11.
2
Tramadol for pain, but was discontinued after approximately six months.7 When Price
complained, Tramadol was renewed, but only at half strength.8 What followed was a series
of administrative grievances filed by Price, along with 31 sick call requests due to pain, and
meetings with the individual defendants including a meeting with non-party Dr. Boulos.9
According to the Complaint, none of the foregoing resulted in a resumption of his Tramadol
prescription or a referral to a pain management specialist.10
3. The remaining counts of the Complaint are Count 1 – “Deliberate Indifference”
and Count 2 – “Reckless and Emotional Infliction of Pain and Emotional Duress.” Count 1
alleges that the Defendants have “treated Plaintiff with deliberate indifference to his pain
stemming from a serious medical condition and thereby failed to provide him with adequate
medical care as mandated by Delaware Statutory Law and the Delaware and U.S.
Constitutions.11 Count 2 alleges that “Defendants have subjected Plaintiff to reckless and
intentional infliction of physical pain and emotional duress, an intentional tort, by the gross
and outrageous misconduct of refusing to prescribe pain medication for a serious medical
condition.”12 He seeks “general, compensatory, special, and punitive damages, Court costs,
post-judgment interest, pre-judgment interest, and such reasonable attorney fees should
7
Id., at ⁋ 13.
8
Id.
9
Id., at ⁋⁋ 14-27.
10
Id., at ⁋ 26.
11
Id., at ⁋ 29.
12
Id., at ⁋ 32.
3
Plaintiff elect to solicit an attorney…”13
4. The Defendants make three arguments in support of summary judgment.
First, as to Count 1, Price cannot demonstrate deliberate indifference to support his claim of
an Eighth Amendment violation against the individual defendants.14 Further, there is no
evidence that Defendant Centurion of Delaware, LLC (“Centurion”) adopted a policy or
procedure that caused Price’s Eighth Amendment claims.15 As to Count 2, there is no
evidence that the Defendants’ treatment of Price’s medical conditions was extreme or
outrageous.16
5. Specifically, as to Count 1, the individual defendants maintain they were not
deliberately indifferent to Price’s medical condition, specifically his pain symptoms, when
they declined to continue prescribing Tramadol at the levels he requested. In fact, Price’s
medical records show that they saw him continually after his second surgery and treated him
reasonably for his pain.17 The individual defendants’ concern in continuing Price on
Tramadol was that long term use of that narcotic drug can cause harm to the kidneys, and
Price’s elevated creatinine levels demonstrated acute kidney injury.18 Their plan was to wean
Price off of narcotics gradually and to prescribe medications which were less harmful to his
13
Id., at 19.
14
Defs.’ Op. Br., at 5-8, D.I. 110.
15
Id., at 8-10.
16
Id., at 10-12.
17
Id., at 6-8.
18
Id., at 7.
4
kidneys directed to his areas of pain.19 Moreover, the individual defendants, citing Third
Circuit precedent, argue that Price cannot meet his burden so show that he has a serious
medical need in the absence of expert medical testimony.20 The corporate defendant,
Centurion, contends that settled law precludes it from being held liable for the constitutional
violations of its employees under a respondeat superior or vicarious liability theories unless
those violations were the result of a policy or custom, where that practice reasonably can be
said to amount to deliberate indifference to the plaintiff’s serious medical need.21 Here, Price
has identified no such policy or custom.22
6. Turning to Count 2, the Defendants argue that Price has not met his burden of
producing evidence to establish extreme and outrageous conduct which intentionally caused
him severe emotional distress.23 Rather, the record only supports the conclusion that the care
Price was provided was anything but extreme and outrageous.24
7. Price opposes the Motion and has submitted his own affidavit in support of his
opposition.25 As to Count 1, he contends that his two back surgeries and the prospect of a
third constitute a sufficiently serious medical condition to warrant Eighth Amendment
19
Id.
20
Id., at 6, (citing Heath v. Shannon, 442 Fed. Appx. 712, 716 (3d. Cir. Aug. 25,
2011)(citing Boring v. Kozakiewicz, 833 F. 468, 473 (3d. Cir. 1987)).
21
Id., at 8-9.
22
Id., at 9.
23
Id., at 10-11.
24
Id., at 11.
25
Pl.’s Ans. to Defs.’ Mot. for Summ. J., D. I. 112.
5
protections.26 Further, whether the Defendants had the requisite mental state for an Eighth
Amendment violation – deliberate indifference – is a genuine issue of material fact not
susceptible to a determination on summary judgment.27 With regard to Centurion, Price
argues that it, along with the Department of Corrections (“DOC”), are jointly tasked with
developing policies in compliance with the “National Correctional Association (NCCHA),
ACA and Bureau of Prisons (BOP), and all state and federal laws.”28 According to Price,
this policy, known as the “Pain Management Initiative,” was introduced at Howard R. Young
Correctional Institution pursuant to DOC Policy No. A-02 and implemented by Health
Services Administrator, Defendant Claudio.29 The policy eschews banning opioids – they
should be considered with caution after weighing other treatment options.30 He alleges that,
despite the absence of a ban on opioids, Centurion has a practice of systematically refusing
to prescribe them to treat chronic pain and other health issues without regard to a patient’s
individualized needs.31
8. Regarding Count 2, he states that Defendant Toffa “made an extreme and
outrageous racial comment in the administration of his duties as a health care provider” and
“made outrageous conclusory statements that plaintiff suffers ‘acute kidney injury’ which is
26
Id., at 2.
27
Id.
28
Id., at 4.
29
Id.
30
Id., at 4-5.
31
Id., at 5.
6
totally contradicted by laboratory tests…” for the sole purpose of denying him pain relief.32
In sum, he argues that he has provided evidence through exhibits attached to his Answer to
the Motion that demonstrate: (1) many medical experts consider his condition a serious one
requiring treatment; (2) Defendants, who are not experts, caused excessive delays in his
treatment and circumvented treatment recommended by the Pain Management Initiative;
and (3) he has been suffering for two years due to the Defendants’ policy of non-compliance
with the Pain Management Initiative.33
9. Superior Court Civil Rule 56 provides that summary judgment is appropriate
when “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.”34 The moving party initially bears the burden of
demonstrating that the undisputed facts support its claims or defenses.35 If the moving party
meets its burden, the burden shifts to the non-moving party to show that there are material
issues of fact to be resolved by the ultimate fact-finder.36 When considering a motion for
summary judgment, the Court’s function is to examine the record, including “the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the affidavits, if
any,” in the light most favorable to the non-moving party to determine whether genuine issues
32
Id.
33
Id.
34
Super. Ct. Civ. R. 56(c); Buckley v. State Farm Mut. Auto. Ins. Co., 139 A.3d 845, 847 (Del.
Super. Ct. 2015), aff'd, 140 A.3d 431 (Del. 2016) (quoting Moore v. Sizemore, 405 A.2d 679,
680 (Del.1979).
35
Sizemore, 405 A.2d at 681.
36
Brzoska v. Olson, 668 A.2d 1355, 1364 (Del. 1995).
7
of material fact exist “but not to decide such issues.”37 Summary judgment will only be
appropriate if the Court finds there is no genuine issue of material fact. When material facts
are in dispute, or “it seems desirable to inquire more thoroughly into the facts, to clarify the
application of the law to the circumstances,” summary judgment will not be appropriate.”38
However, when the facts permit a reasonable person to draw but one inference, the question
becomes one for decision as a matter of law.39
10. In Estelle v. Gamble the United States Supreme Court held that the Eighth
Amendment to the United States Constitution’s ban on cruel and unusual punishment
requires state prison officials to provide inmates with adequate medical care.40 “Deliberate
indifference to serious medical needs of prisoners constitutes the ‘unnecessary and wanton
infliction of pain’ proscribed by the Eighth Amendment.”41 In order to establish a violation
of that ban related to medical care, an inmate plaintiff must establish; (1) a serious medical
need; and (2) acts or omissions by prison officials that show a deliberate indifference to that
need.42 The Delaware Supreme Court explained in Johnson v. Connections Community
Support Programs, Inc. that “a medical need is sufficiently serious if a physician has
diagnosed it as requiring treatment or if it is one that is so obvious that a layperson could
37
Super. Ct. Civ. R. 56(c); Merrill v. Crothall-Am., Inc., 606 A.2d 96, 99-100 (Del. 1992).
38
Ebersole v. Lowengrub, 180 A.2d 467, 468-60, (Del. 1962) (citing Knapp v. Kinsey, 249
F.2d 797 (6th Cir. 1957)).
39
Wooten v. Kiger, 226 A.2d 238, 239 (Del. 1967).
40
429 U.S. 97, 103-105 (1976); Farmer v. Brennan, 511 U.S. 825 (1994).
41
Estelle, at 104.
42
Id.
8
easily recognize the need for a physician’s attention.”43 Deliberate indifference occurs when
a state actor knows that a prisoner faces a substantial risk of serious harm and fails to take
reasonable steps to avoid the harm.44
11. Here, Price maintains that the seriousness of his medical need is manifest due
to his two surgeries and the prospect of a third. But, that argument misidentifies Price’s
medical need. It is not Price’s surgical needs to which he claims Defendants were
deliberately indifferent that are at issue here. It is his pain management needs. Relying on
Heath v. Shannon,45 Defendants contend that Price must present expert testimony to meet
his burden under Estelle to establish a serious medical need. The Court disagrees. Consistent
with Johnson, Price had already been diagnosed by a physician as needing pain management
treatment.46
12. The Court turns next to the question of whether there is a genuine issue of
material fact as to whether the Defendants were deliberately indifferent to Price’s medical
need. Before doing so, however, it is important to recognize that a disagreement about the
appropriate treatment for a medical need is not the same thing as deliberate indifference to
it, even if that treatment later proves not to have been the better option. Nor is medical
43
2018 WL 50443331, at *2 (Del. Oct. 16, 2018) (citing Monmouth Cnty. Corr. Inst.
Inmates v. Lanzaro, 834 F.2d 326 (3d. Cir. 1987).
44
Farmer v. Brennan, at 837.
45
442 Fed.Appx., 712, 714 (3d. Cir. 2011) (citing Boring v. Kozakiewicz, 833 F.2d 468, 473
(3d. Cir. 1987).
46
See, Johnson, at *2.
9
negligence necessarily deliberate indifference to a patient’s medical needs. The United
States District Court for the District of Delaware has recognized in Blackston v. Correctional
Medical Services, Inc. that:
An inmate’s claims against members of a prison medical
department are not viable under § 1983 where the inmate
receives continuing care but believes that more should be done
by way of diagnosis and treatment and maintains that options
available to medical personnel were not pursued on the inmate’s
behalf.47
13. Price maintains that the deliberate indifference element of his Eighth
Amendment claim implicates the Defendants’ culpable state of mind and, thus, is inherently
subjective and incapable of resolution by summary judgment.48 The Court disagrees. The
record before the Court includes Prices’ medical records. Those records detail the actions
taken by the Defendants in response to Price’s pain complaints. They allow the Court to
determine objectively whether a genuine issue of material fact exists as to whether the
Defendants were deliberately indifferent to Price’s medical needs.
14. The dispute here centers on the Defendants’ refusal to prescribe Tramadol at
the strength Price desired. As described by Defendant P.A. Toffa in the sick call notes from
January 5, 2021:
Patient is seen today in the office as he has been unhappy with
his pain medication regimen. Patient has been getting Tramadol
100 mg BID for the longest (months , even prior to surgery), and
now 6 months post op he still wants high dose of Tramadol. The
47
499 F.Supp. 2d 601, 605 (D. Del. 2007).
48
Pl.’s Ans. to Defs.’ Mot. for Summ. J., at 2, D.I. 112.
10
plan is to wean patient off narcotics gradually so his Tramadol
dose has been lowered from 100 mg to 50 mg BID. Patient
reports that pain is more manageable now but he still
experiences numbness and tingling mainly in left lower
extremity. I explained to patient that we need to check labs first
to assess his kidney function as chronic Tramadol use is harmful
for the kidneys, but patient insists on me increasing Tramadol
dose. Most recent labs from June 2020 with Creatinene of 1.23
(acute kidney injury) – which even justifies cautious use of
Tramadol in this patient.49
On January 25, 2021, Price was seen by Defendant Dr. Abrahamson.50 During that visit, Dr.
Abrahamson discussed with Price “how tramadol and narcotics are more used for acute
issues, such as an acute injury or perioperatively” and “how Tylenol <3gm/day would be
safe for his kidney in someone who is already on HCTZ and lisinopril with a creat >1.2 and
should not be harmful for his liver.”51 Dr. Abrahamson submitted a memorandum requesting
that price be given a bottom bunk and that his use of stairs be minimized.52 On February 8,
2021, when Price reported that his symptoms had not improved with Tylenol, Dr.
Abrahamson restarted him on Tramadol at the lower dosage of 50 mg in addition to
Tylenol.53 Price was seen again on February 22, 2021 by Defendant N.P Kaur.54 As a result
of that visit, Price was referred for physical therapy and would be referred for pain
49
Pl.’s Ans. to Defs.’ Mot. for Summ. J., at Ex. G, D.I. 112.
50
Id., at Ex. I.
51
Id.
52
Defs.’ Op. Br. in Support of Mot. for Summ. J., at Ex. A., D.I. 110.
53
Pl.’s Ans. to Defs.’ Mot. for Summ., D.I. 112.
54
Id., at Ex. J.
11
management if there was no improvement in his pain level.55 Defendant N.P. Kaur
discussed the risks and benefits of Tramadol with Price who refused to taper his current
dosage.56 Price also was encouraged to continue his weight loss and exercise.57 Ultimately,
Price was sent to Uday Uthaman, M.D. a pain management specialist, on June 28, 2021.58
15. The facts do not present a genuine issue as to whether the Defendants were
deliberately indifferent to Price’s medical needs. They were not. The record establishes that
the Defendants provided Price with consistent medical care, the basis for which they
explained to him repeatedly. Price strongly disagrees with the Defendants’ decision to wean
him off of the narcotic Tramadol.59 He also believes that the Defendants were medically
negligent in the course of treatment they followed for him.60 But, Price “has no right to
choose a specific form of medical treatment, so long as the treatment is reasonable.”61 The
reasonableness of the treatment provided to Price is an issue that can be raised only through
expert medical testimony. Such testimony is absent here. Because here was no Eighth
Amendment violation on the part of the individual defendants, there can be no derivative
55
Id.
56
Id.
57
Id.
58
Id., at Ex. N.
59
Price disputes that his creatinine levels were high enough to warrant concern that he was at
risk of kidney damage. Ans. to Defs.’ Mot. for Summ. J. at 2 (citing Ex. H). Whether they
were or were not may be relevant to the propriety of Price’s treatment, but it not evidence of
intentional disregard of his medical needs.
60
See, Complaint, Count 3, Negligence and Malpractice, D.I. Dismissed for lack of an
Affidavit of Merit, D.I. 5.
61
Blackston, at 605.
12
violation by Centurion on a theory of either respondeat superior or vicarious liability.
Accordingly, Defendants’ Motion for Summary Judgment as to Count 1 is GRANTED.
16. In order to establish a claim for intentional infliction of emotional distress, a
plaintiff must establish that a defendant “by extreme and outrageous conduct intentionally or
recklessly causes severe emotional distress to another.”62 If bodily harm results from the
conduct, the defendant is liable for that as well.63 “Extreme and outrageous conduct is that
which “exceeds the bounds of decency and is regarded as intolerable in a civilized
community.”64 Here, Price has not produced competent expert medical testimony that the
care provided him was unreasonable, much less that it “exceeds the bounds of decency and
is regarded as intolerable in a civilized community.” The Motion for Summary Judgment is
GRANTED as to Count 2.
THEREFORE, the Motion for Summary Judgment of Defendants Centurion of
Delaware, LLC, Christine Claudio, Andrew Abrahamson, Jaskir Kaur, and Amegbo Taffa is
GRANTED.
IT IS SO ORDERED.
/s/ Ferris W. Wharton
Ferris W. Wharton, J.
74
Spence v. Cherian, 135 A. 3d 1282, 1288, 89 (Del. Super. Ct. 2016) (quoting the
Restatement (Second) of Torts, § 46).
63
Fanean v. Rite Aid Corp. of Delaware, 984 A. 2d 812, 818 (Del. Super. Ct. 2007).
64
Thomas v. Hartford Mut. Ins. Co., 2004 WL 1102362, at *3 (Del. Super. CT. Apr. 7, 2004).
13 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483905/ | Filed 11/15/22
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
ATLANTIC RICHFIELD COMPANY, C093124
Plaintiff and Appellant, (Super. Ct. No. 34-2014-
80001875-CU-WM-GDS)
v.
CALIFORNIA REGIONAL WATER QUALITY
CONTROL BOARD, CENTRAL VALLEY
REGION,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Sacramento County, Steven
M. Gevercer, Judge. Affirmed.
Farella Braun + Martel, James H. Colopy, John M. Ugai, Tori Timmons; Davis
Graham & Stubbs, Benjamin B. Strawn; Arnold & Porter Kaye Scholer and Kirk Jenkins
for Plaintiff and Appellant.
Rob Bonta, Attorney General, Robert W. Byrne, Assistant Attorney General,
Tracy L. Winsor, Russell B. Hildreth and Jeffrey P. Reusch, Deputy Attorneys General,
for Defendant and Respondent.
1
This case returns to us for a second time. In Atlantic Richfield Co. v. Central
Valley Regional Water Quality Control Bd. (2019) 41 Cal.App.5th 91 (Atlantic
Richfield), we reversed the trial court’s judgment overturning a cleanup order issued by
the California Regional Water Quality Control Board, Central Valley Region (Regional
Board). (Id. at p. 100.) As the name suggests, the cleanup order directed Atlantic
Richfield Company (ARCO) to remediate hazardous waste associated with an abandoned
mine in Plumas County. The mine was owned by the Walker Mining Company, a
subsidiary of ARCO’s predecessors in interest, International Smelting and Refining
Company and Anaconda Copper Mining Company (International/Anaconda). (Id. at
pp. 93-95.) We held the trial court improperly applied the test articulated in United
States v. Bestfoods (1998) 524 U.S. 51 (Bestfoods) for determining whether a parent
company is directly liable for pollution as an operator of a polluting facility owned by a
subsidiary.
Imposition of direct liability under Bestfoods requires the parent company to have
managed, directed, or conducted operations related to leakage or disposal of pollution at
the facility in question; “[t]he critical question is whether, in degree and detail, actions
directed to the facility by an agent of the parent alone are eccentric under accepted norms
of parental oversight of a subsidiary’s facility.” (Bestfoods, supra, 524 U.S. at p. 72.)
The trial court improperly limited its review of the evidence to International/Anaconda’s
participation in waste disposal activities at the mine, concluding the Bestfoods standard is
met only where the parent company participated in or directed activities directly
involving waste disposal or compliance with environmental regulations. (Atlantic
Richfield, supra, 41 Cal.App.5th at p. 96.) As we explained, however, “[i]f a parent
corporation had its fingerprints all over the activities of a facility that resulted in the
spewing of hazardous waste, it does not make sense to insulate it from liability because it
eschewed the direction of any efforts the subsidiary might have made otherwise to
dispose of hazardous waste.” (Id. at p. 97.) We remanded the matter to the trial court for
2
“a determination of ARCO’s liability under the proper standard of eccentric control over
any category of mining activity resulting in toxic discharge, including the [Regional]
Board’s claim that the activity itself of disturbing the rock strata can generate toxic
waste.” (Id. at p. 100.)
On remand, the trial court entered judgment in favor of the Regional Board,
concluding “[t]he record supports a determination of eccentric control of mining
‘operations specifically related to pollution, that is, operations having to do with the
leakage or disposal of hazardous waste.’ ” ARCO appeals, contending: (1) the trial court
improperly applied Bestfoods to the facts of this case, resulting in a finding of liability
that is unsupported by substantial evidence; (2) the Regional Board abused its discretion
by failing to exclude certain expert testimony as speculative; (3) the Regional Board’s
actual financial bias in this matter requires invalidation of the cleanup order for violation
of due process; and (4) the cleanup order erroneously imposed joint and several liability
on ARCO.
We affirm. As we explain, the evidence in the record is more than sufficient to
support the trial court’s conclusion that agents of International/Anaconda, wearing no hat
other than that of the parent company, exercised eccentric control over mining operations
at the Walker Mine, resulting in the discharge of toxic waste.1 ARCO’s evidentiary
claim also lacks merit. The Regional Board did not abuse its discretion in considering the
challenged expert testimony because that testimony was not “based on a leap of logic or
conjecture”; nor was it “ ‘clearly invalid and unreliable’ expert opinion.” (Sargon
Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 772
(Sargon).) We also reject ARCO’s assertion that its due process rights were violated
because the Regional Board was not a fair and neutral arbiter of whether or not a cleanup
1 In addressing this claim, we also reject ARCO’s related claim that the trial court
erroneously denied its request for a statement of decision.
3
order should issue in the first instance. ARCO has not carried its appellate burden of
showing the Regional Board possessed a financial interest in issuing the order. Finally,
nothing in the statutory scheme prevents the Regional Board from ordering ARCO, and
ARCO alone, to clean up the site contaminated by its predecessors.
BACKGROUND
We previously provided an overview of the historical facts and summary of the
Regional Board’s cleanup order in Atlantic Richfield, supra, 41 Cal.App.5th 91:
“J. R. Walker began developing the Walker Mine in 1909, located to the north of
Quincy and Portola in Plumas County. It is within the drainage of a watershed feeding
ultimately into the north fork of the Feather River.
“The Walker Mining Company took title in 1915 and commenced mining in 1916.
At one point in the 1930s, this was the largest copper mine in California.
“International Smelting and Refining Company was a wholly owned subsidiary of
the Anaconda Copper Mining Company, which later swallowed International in a merger.
International/Anaconda acquired a controlling interest in the Walker Mining Company in
1918. Ultimately, ARCO became a successor through Anaconda’s merger with an
ARCO subsidiary in 1977 and the subsidiary’s merger with ARCO in 1981. [Citation.]
“The mine ceased production in 1941 and ceased all operations in 1943, after
producing six million tons of ore. The assets of the Walker Mining Company were sold
in bankruptcy proceedings in 1945 and transferred to subsequent owners over the
decades; the [Regional] Board reached a settlement with the current owner of the
property in 2004, which at present appears to be an inactive and insolvent corporation.
By virtue of this and an earlier settlement against a previous owner, the [Regional] Board
has a right of access to the property under which it can authorize ARCO to conduct
remediation activities.
“The mine has 13 miles of flooded underground workings, comprising a total void
volume estimated at 543 million gallons. The mine openings and tailings on the site
4
discharge soluble copper and acidic mine drainage into surface waters, at times
eliminating aquatic life 10 miles downstream from the mine. In 1987, the [Regional]
Board installed a concrete plug at a mine opening that was a primary source of mine
leakage, which has eliminated most of the direct discharge but is causing a buildup of
contaminated water inside the mine that is leaching into groundwater, and the mining
waste on the surface also continues to be a source of water pollution.
“The [Regional] Board concluded that the mine and its tailings ‘have discharged
metals and acid mine drainage’ into the watershed ‘from at least the time production
ceased in 1941, if not earlier.’ The ARCO predecessors ‘concurrently managed, directed,
or conducted operations specifically related to the leakage or disposal of waste’ in
tandem with the Walker Mining Company. The activities ‘included exploration, ore
location, mine development work . . . , and removal of ore, all of which directly resulted
in the condition of discharge . . . at the mine and tailings.’ This involvement ‘went well
beyond what is normally expected of a . . . corporate parent.’ The [Regional] Board also
concluded that the ARCO predecessors directly discharged waste from their own mining
activities from 1916 to 1918. It therefore ordered ARCO to investigate and remediate the
hazardous waste associated with the Walker Mine.” (Atlantic Richfield, supra, 41
Cal.App.5th at pp. 94-95.)
The Regional Board’s cleanup order was issued in March 2014. ARCO petitioned
the trial court to overturn the order. The trial court granted the petition in January 2018.
(Atlantic Richfield, supra, 41 Cal.App.5th at pp. 93-94.) As stated previously, in Atlantic
Richfield, we reversed and remanded the matter to the trial court to determine “ARCO’s
liability under the proper standard of eccentric control over any category of mining
activity resulting in toxic discharge,” not just activity involving waste disposal or
environmental regulation compliance. (Id. at p. 100.)
On remand, the Regional Board relied on the following evidence in the
administrative record to support its conclusion that International/Anaconda exercised
5
eccentric control over ore extraction at the Walker Mine, resulting in the toxic pollution
described above:
In a September 1923 letter from Paul Billingsley, a geologist at Anaconda, to J. O.
Elton, who served both as general manager of International’s smelter in Utah and as vice
president of the Walker Mining Company, Billingsley expressed concern that the Walker
Mining Company’s manager, V. A. Hart, was not following the “recommendations” of
Anaconda’s geological department. As the Regional Board’s industrial historian, Fredric
L. Quivik, Ph.D., explained, “the office of vice president of a subsidiary is often key in
giving the parent a conduit for directing the subsidiary’s manager of operations.”
In a letter from Anaconda’s chief geologist, Reno Sales, to Billingsley, dated six
days after the letter from Billingsley to Elton, Sales referred to these recommendations as
“instructions” and more forcefully stated the problem from the perspective of Anaconda’s
geological department: “I don’t see how things will be any better unless Hart is made to
follow instructions. . . . I get rather provoked at the frequent request that you . . . go there
and as far as I can see the developments at the mine are carried on just about as Hart
wants them.” The letter continued: “Hart insists upon being his own geologist and
apparently doesn’t want to take any advice or instructions from this office. I insist that if
we are to be held responsible, Mr. Hart is going to do things the way we want him to, he
is going to keep us informed of developments so that we can watch what is going on from
our department rather than waiting for these difficulties to come up through Elton. It
should not be necessary for Elton to be bothered with matters of this sort and he can be
relieved of it if he will make certain that Hart obeys instructions as to prospecting and
development given by this department.”
The following month, Billingsley wrote to Hart with specific “recommendations”
for excavating the mine in search of ore, e.g., “Continue exploration of shear zone at
North end of 600 level by means of straight drift with cross-cuts in both directions at
6
intervals of 100 feet.” Billingsley also stated: “You may consider this letter as your
authorization to start the above work.”
Additional recommendations from the Anaconda geological department were
provided both to Elton and to Walker Mining Company’s new manager, I. L. Greninger,
in 1924. In November of that year, Sales wrote to William Wraith, who was both an
executive at Anaconda (in charge of overseeing various mining projects) and also a vice
president of the Walker Mining Company (along with Elton). A portion of this letter
reads: “I know the Geological Department will not be held responsible for mining
operations at the Walker. I do not want you to feel that I am criticizing the mining end. I
may differ from you in opinion as to the proper method of prospecting certain areas, but
in the final say so as to how it will be done I certainly am always glad and willing to
leave it to the mine management. But the Geological Department has in the past been
held responsible, to some degree at least, for prospecting and development work, and
whenever I see drifts run in waste when they should be in ore, or at least should be in the
vein; and crosscuts run that are useless, I am going to kick, anyhow as long as this
department has anything to do wit[h ]it.”
In May 1925, Sales wrote to Tom Lyon, a geologist at International, asking Lyon
to write a letter to the Walker Mining Company’s new manager, Herbert R. Tunnell,
adding: “I want Tunnell to see your letter so that he may fully understand and agree with
the recommendations made.” A series of August 1925 letters between Lyon and Tunnell
indicate that Lyon, on behalf of International, was now approving recommendations
made by Tunnell with respect to specific mining activity at the Walker Mine.
For example, an August 25 letter from Lyon indicates that he received a previous
letter from Tunnell “regarding the proposed development work” and then provides
detailed instructions regarding crosscutting at various ends and depths of the mine,
adding: “The location for winzes that you have selected are satisfactory. I think,
however, that the work should all be done in the vein. The water problem should not be
7
worse in the vein than in the schist as one is as porous as the other and the only water that
should be expected would come from cracks or faults which are liable to occur in either
the vein or the schist.” In response, Tunnel wrote to Lyon: “Regarding the proposed
shaft and winze, I believe we should do the preliminary work at once and as you approve
the locations suggested in my letter we will get the hoists installed as soon as possible.”
The following day, apparently before receiving the previous letter, Lyon wrote to
Tunnell, stating: “By this time you have my letter of August 25th regarding the
development work proposed by you. I think that letter will give you authority to proceed
with the winzes as you are able. Crosscutting east and west at the north end of the
property may proceed when the north drift on the six hundred [level] has advanced far
enough to be beneath the central portion of the large mineralized area exposed on the
surface.”
The following month, Lyon wrote to Tunnell: “Mr. Billingsley is now back and
will visit the Walker mine next week and will take up the matter of development work at
that time. [¶] During the interval you are authorized to drift north and south on the ore
disclosed by crosscut 647 S.” Tunnell thereafter acknowledged receipt of this
authorization.
In February 1926, Tunnell wrote to Billingsley, now International’s chief
geologist, providing an update on work being done at the Walker Mine. Tunnell
explained that the work was being done with the approval of William Daly, Anaconda’s
top mining engineer, and closed the letter with: “I hope the work outlined above meets
with your approval . . . .”
The next piece of correspondence relied upon by the Regional Board in support of
International/Anaconda exercising eccentric control over mining operations at the Walker
Mine is from more than a decade later, March 1937. In the interim, the Great Depression
weakened the market for copper, resulting in suspension of operations at the Walker
8
Mine from 1932 to 1935. The mine operated intermittently thereafter until it ceased
production in 1941.
In March 1937, Seth Droubay, the Walker Mining Company’s chief engineer and
geologist, wrote to Lyon, now International’s chief geologist, presenting a “proposed
development program” for the Walker Mine. Ten days later, Lyon indicated Droubay’s
“recommendations” were approved in a letter to John F. Dugan, International’s
superintendent of mines.
In a December 1938 letter from Sales to Lyon, Sales informed Lyon that a certain
specific proposal from Droubay, i.e., “the hanging wall crosscut on the 1000 foot level to
be driven from 1017 Drift at a point just to the north of coordinate 15800,” was approved,
but “we do not approve of the work on or from the 1100 foot level as outlined by
Droubay.” Two days later, Dugan wrote a letter to Clyde E. Weed, Anaconda’s general
manager of mines, indicating that he had received this approval, but seeking clarification
with respect to “whether or not you intended to do any drilling” once the crosscut was
cut.
In January 1939, Droubay submitted additional recommendations regarding
specific mining activities to Lyon and indicated he would also send them to Dugan, “and
tell him they are subject to your approval.” That April, Droubay wrote to Lyon
confirming three of these recommendations were completed.
In May 1941, Dugan wrote to Sales asking whether further development, “either
by drifting, crosscutting or diamond drilling,” would be occurring on the 1,200-foot level
of the mine. In response, Sales informed Dugan that he would discuss the matter with
Weed and “advise you of our decision.” In July, having not yet received a decision,
Dugan again wrote to Sales seeking “your early decision as to development work, for if
no further work is contemplated on the 1200, we will salvage the equipment . . . .”
Dugan also attached a copy of a letter he received from Henry Hartmann, the Walker
Mining Company’s new manager, which apparently also inquired about abandonment of
9
the 1,200-foot level. Sales responded: “I have talked with Weed about the 1200 Walker.
We concur in the opinion of yourself and Hartmann, that this level should be temporarily
abandoned. This means that you may pull out such tracks, pipes, etc., as is deemed
advisable, and also stop pumping from that level.”
As Dr. Quivik explained, neither Sales, Lyon, nor Weed had any official role at
the Walker Mining Company.
The Regional Board argued below: “These documents show active direction of
mining activity, leading to leakage or disposal of waste, going far beyond mere
monitoring of a financial investment. International and Anaconda employees were
making critical decisions about where to mine, how to mine, and when to stop mining,
demonstrating total control of the mining enterprise and day-to-day operations.”
The trial court agreed with the Regional Board and rejected ARCO’s specific
argument that International/Anaconda merely offered solicited “advice” to the Walker
Mining Company concerning the first two phases of mining activity, “development and
exploration,” which “did not result in the pollution at issue” in this case. The trial court
explained: “While ARCO repeatedly argues any eccentric control merely concerned
exploration and development, the Court finds ARCO’s use of the term ‘development’ is
too broad and actually encompasses activities that constituted ore extraction.
International/Anaconda clearly took a role in the day to day happenings at Walker mine
that exceeded a traditional parent corporation role such that they managed, directed, or
conducted operations on behalf of Walker Mining Company. (See Bestfoods, supra, 524
U.S. at pp. 66-67.) The Court finds that this control occurred in phase three of mining,
ore extraction, which activities resulted, at least in part, in the toxic discharge at issue in
the [cleanup order].”
Additional relevant portions of the trial court’s ruling, as well as evidence adduced
by ARCO during the hearing before the Regional Board, will be set forth in the
discussion portion of this opinion, to which we now turn.
10
DISCUSSION
I
ARCO’s Direct Liability for the Pollution
ARCO’s central contention in this appeal is that the judgment must be reversed
because the trial court incorrectly applied Bestfoods, supra, 524 U.S. 51, to the facts of
this case, resulting in a finding of liability that is unsupported by substantial evidence.
ARCO is mistaken.
A.
Standard of Review
A trial court reviews a cleanup order issued under Water Code2 section 13304
using the independent judgment standard of review. (Sweeney v. California Regional
Water Quality Control Bd. (2021) 61 Cal.App.5th 1093, 1111-1112 (Sweeney).) “ ‘In
exercising its independent judgment, a trial court must afford a strong presumption of
correctness concerning the administrative findings, and the party challenging the
administrative decision bears the burden of convincing the court that the administrative
findings are contrary to the weight of the evidence.’ [Citation.]” (Building Industry
Assn. of San Diego County v. State Water Resources Control Bd. (2004) 124 Cal.App.4th
866, 879 (Building Industry).) Unlike substantial evidence review, the trial court “ ‘does
not defer to the fact finder below and accept its findings whenever substantial evidence
supports them. Instead, it must weigh all the evidence for itself and make its own
decision about which party’s position is supported by a preponderance. [Citation.] The
question is not whether any rational fact finder could make the finding below, but
whether the reviewing court believed the finding actually was correct.’ [Citation.]”
2 Undesignated statutory references are to the Water Code.
11
(Coastal Environmental Rights Foundation v. California Regional Water Quality Control
Bd. (2017) 12 Cal.App.5th 178, 188.)
On appeal, “this court reviews the trial court’s decision on the [cleanup order] for
substantial evidence supporting the trial court’s findings.” (Sweeney, supra, 61
Cal.App.5th at p. 1112; Barclay Hollander Corp. v. California Regional Water Quality
Control Bd. (2019) 38 Cal.App.5th 479, 498 (Barclay Hollander).) “In substantial
evidence review, the reviewing court defers to the factual findings made below. It does
not weigh the evidence presented by both parties to determine whose position is favored
by a preponderance. Instead, it determines whether the evidence the prevailing party
presented was substantial—or, as it is often put, whether any rational finder of fact could
have made the finding that was made below. If so, the decision must stand.” (Alberda v.
Board of Retirement of Fresno County Employees’ Retirement Assn. (2013) 214
Cal.App.4th 426, 435.)
Questions of law, of course, are reviewed de novo. “[W]e are not bound by the
legal determinations made by the state or regional agencies or by the trial court.
[Citation.] But we must give appropriate consideration to an administrative agency’s
expertise underlying its interpretation of an applicable statute.” (Building Industry,
supra, 124 Cal.App.4th at p. 879, fn. omitted.)
With these standards in mind, we shall elucidate the Bestfoods standard and then
determine whether or not substantial evidence supports the trial court’s dispositive
findings, specifically that ARCO’s predecessors, International/Anaconda, “managed,
directed, or conducted operations” at the Walker Mine that “occurred in phase three of
mining, ore extraction, which activities resulted, at least in part, in the toxic discharge at
issue in the [cleanup order].”
12
B.
ARCO’s Request for a Statement of Decision
ARCO claims the trial court erroneously denied its request for a statement of
decision, and therefore, “Code of Civil Procedure section 634 does not permit [this court]
to imply any findings in the [Regional] Board’s favor.”3 We disagree.
“The time for requesting a statement of decision is governed by Code of Civil
Procedure section 632 . . . , which provides in pertinent part as follows: ‘The request
must be made within 10 days after the court announces a tentative decision unless the
trial is concluded within one calendar day or in less than eight hours over more than one
day in which event the request must be made prior to the submission of the matter for
decision.’ ” (In re Marriage of Gray (2002) 103 Cal.App.4th 974, 977 (Marriage of
Gray).) “A hearing on a petition for writ of mandamus is a ‘trial of a question of fact’ for
purposes of [this section].” (Kearl v. Board of Medical Quality Assurance (1986) 189
Cal.App.3d 1040, 1050 (Kearl); see also Bevli v. Brisco (1985) 165 Cal.App.3d 812, 820
(Bevli).)
The hearing before the trial court following our remand of the matter occurred on
August 21, 2020, and lasted 79 minutes. An 18-page ruling was filed on September 4.
On September 23, ARCO filed a request for a statement of decision, seeking “the factual
and legal bases” for 46 specific “controverted issues” covering seven topics, from
3 The Regional Board asserts this argument is “waived,” or more accurately,
forfeited (see People v. Williams (1999) 21 Cal.4th 335, 340, fn. 1), because ARCO did
not properly raise this claim in its opening brief. The argument that ARCO’s request for
a statement of decision was improperly denied was made in the section of the brief
detailing the procedural background, not in the argument section of the brief, and the
subsection raising this claim does not inform this court what relief ARCO is seeking for
this purported error. That information is provided in a footnote in the standard of review
section. In ARCO’s reply brief, however, the argument is presented under a separate
heading, as are each of the other arguments. While the opening brief’s organizational
structure is less than ideal, we do not consider the argument forfeited.
13
Bestfoods liability to the admissibility of Dr. Quivik’s expert testimony to the doctrine of
laches. Two days later, the trial court denied the request as untimely, explaining:
“Because the trial (a hearing on the merits) in this matter concluded within one calendar
day, the request needed to be made prior to the submission of the matter for decision.
[Citations.] Here, the request was made 33 days after the Court took this matter under
submission and 15 days after the Court served its final ruling. Accordingly, [ARCO’s]
request is denied as untimely.” ARCO then filed a motion for new trial based solely on
the trial court’s denial of its request for a statement of decision. The trial court denied
this motion as well.
Relying on Bevli, supra, 165 Cal.App.3d 812, ARCO argues its request for a
statement of decision was timely. In Bevli, the trial judge stated on the record that he had
spent 13 hours reading the administrative record and the Court of Appeal concluded that
the time spent reviewing the record must be considered “trial time for the purposes of
findings under Code of Civil Procedure section 632.” (Id. at p. 822.) Similarly, ARCO
argues, it would be “impossible” for the trial in this case to have lasted only one day
because the hearing itself lasted 79 minutes, “[p]reparation of the 18-page ruling surely
required several hours,” and “[e]ven with an improbable assumption that the Court
needed only four hours to prepare its ruling, that would leave two hours and 41 minutes
to review the 11,672-page record, which would mean reading 4,349 pages per hour, or 72
pages per minute, or less than one second per page‒a physical and mental impossibility.”
ARCO’s reliance on Bevli is misplaced for two reasons. First, Code of Civil
Procedure section 632 was amended in 1987, after Bevli was decided, to include within
its ambit “a trial taking eight hours over more than one calendar day,” thereby making
clear that “an eight-hour trial is considered a one-day trial.” (Gorman v. Tassajara
Development Corp. (2009) 178 Cal.App.4th 44, 63.) The Gorman court explained: “The
reality is that trial judges spend additional time off the bench preparing for hearings,
researching the law, and reading motions and briefs, but the statute indicates an intent not
14
to count that time as trial time. Otherwise the trial judge would have to submit
timesheets to the parties in a case so they would know when to request a statement of
decision. The parties may be expected to know and add up the time they have spent in
court hearings on a case, but not how long the judge has considered the case outside of
the courtroom.” (Ibid.)
In Marriage of Gray, supra, 103 Cal.App.4th 974, after noting that Bevli was
decided before the 1987 amendment to Code of Civil Procedure section 632, this court
distinguished Bevli because it involved an administrative mandamus proceeding and
“decline[d] to extend Bevli’s timing rule to other civil proceedings . . . in light of the 1987
amendment,” explaining: “We cannot realistically expect trial judges to keep
stopwatches to record time spent off the bench in chambers, a home office, or at the
kitchen table studying the law and evidence. Rather, the eight-hour rule in section 632
requires a simple and obvious mode of timekeeping that everyone, including attorneys,
can keep track of. This means that, for purposes of keeping time of trial under section
632 in civil proceedings other than administrative mandamus (an issue not before us), the
time of trial means the time that the court is in session, in open court, and also includes
ordinary morning and afternoon recesses when the parties remain at the courthouse. It
does not include time spent by the judge off the bench without the parties present—lunch,
for example—except for such routine recesses as occur during the day. Measured by this
test, appellant has not shown the trial court erred in its finding that the instant trial lasted
less than eight hours over more than one day.” (Marriage of Gray, at pp. 979-980.)
Unlike Gorman and Marriage of Gray, this case arises out of a petition for writ of
mandate seeking to overturn an order issued by an administrative agency. However,
because we are in agreement with everything those decisions had to say about the 1987
amendment to Code of Civil Procedure section 632, we must question the continuing
validity of Bevli, even where a trial court must review relevant portions of a lengthy
administrative record.
15
In any event, even assuming Bevli remains good law, and “trial [time] included not
only the hearing but the time spent in reviewing the administrative record,” in this case,
as was also the case in Kearl, supra, 189 Cal.App.3d 1040, “the record does not reflect
the amount of time expended by the trial court in this regard.” (Id. at p. 1051.) The
Kearl court explained: “It is fundamental that an appellant ‘must affirmatively show
error by an adequate record. . . . Error is never presumed. . . . “A judgment or order of
the lower court is presumed correct. All intendments and presumptions are indulged to
support it on matters as to which the record is silent . . . .” (Orig. italics.)’ [Citation.] . . .
This court cannot speculate as to the amount of time spent. [Citation.] [¶] Inasmuch as
petitioner has not met his burden of affirmatively showing error on the record, this court
must presume the lower court’s ruling was correct, i.e., that the trial lasted less than one
day and petitioner’s request for a statement of decision was untimely.” (Id. at pp. 1051-
1052.)
ARCO similarly asks this court to speculate about the amount of time the trial
court spent reviewing the admittedly lengthy administrative record in this case. To be
sure, reading each of nearly 12,000 pages of administrative record in less than eight hours
would have been an impossible feat, but we cannot speculate that the trial court read each
and every page. We must be realistic. Each page of an administrative record is not
created equal. It would not have been impossible to read the portions of administrative
record that we have found to be important to our decision in this appeal in that amount of
time. Because it would require sheer speculation on our part to divine the amount of time
the trial court actually spent reviewing the administrative record, we must presume the
“trial” in this case lasted less than eight hours. ARCO has not carried its appellate burden
of demonstrating its request for a statement of decision was timely.
16
C.
The Bestfoods Standard
In Bestfoods, supra, 524 U.S. 51, the United States Supreme Court held a
corporate parent of a subsidiary that operates a polluting facility may not be held liable
for the pollution solely because it actively participated in and exercised control over the
subsidiary; such indirect liability may not be imposed unless the corporate veil may be
pierced. (Id. at p. 55.) However, “a corporate parent that actively participated in, and
exercised control over, the operations of the facility itself may be held directly liable in
its own right as an operator of the facility.” (Ibid.) With respect to direct operator
liability, the court clarified, “an operator must manage, direct, or conduct operations
specifically related to pollution, that is, operations having to do with the leakage or
disposal of hazardous waste, or decisions about compliance with environmental
regulations.” (Id. at pp. 66-67.)
Thus, where the alleged operator is a corporate parent, “ ‘[t]he question is not
whether the parent operates the subsidiary, but rather whether it operates the facility, and
that operation is evidenced by participation in the activities of the facility, not the
subsidiary. . . .’ [Citations.]” (Bestfoods, supra, 524 U.S. 51 at p. 68, italics added.)
Operating a facility, the court further clarified, “obviously mean[s] something more than
mere mechanical activation of pumps and valves, and . . . includ[es] the exercise of
direction over the facility’s activities.” (Id. at p. 71.) However, it is not enough that a
corporate parent places its own high-level officials in key positions at the subsidiary, and
those individuals conducted operations at the facility. This is because “ ‘directors and
officers holding positions with a parent and its subsidiary can and do “change hats” to
represent the two corporations separately . . . .’ [Citations.]” (Id. at p. 69.) At the same
time, parental operation of the facility occurs where “the parent operates the facility in
the stead of its subsidiary or alongside the subsidiary in some sort of a joint venture,” or
where “a dual officer or director . . . depart[s] so far from the norms of parental
17
influence” over the subsidiary that his or her actions in operating the facility actually
“serve the parent, even [though] ostensibly acting on behalf of the subsidiary,” or where
“an agent of the parent with no hat to wear but the parent’s hat . . . manage[s] or direct[s]
activities at the facility.” (Id. at p. 71.)
The court concluded its explication of the proper standard for imposing direct
operator liability by explaining: “ ‘Activities that involve the facility but which are
consistent with the parent’s investor status, such as monitoring of the subsidiary’s
performance, supervision of the subsidiary’s finance and capital budget decisions, and
articulation of general policies and procedures, should not give rise to direct liability.’
[Citation.] The critical question is whether, in degree and detail, actions directed to the
facility by an agent of the parent alone are eccentric under accepted norms of parental
oversight of a subsidiary’s facility.” (Bestfoods, supra, 524 U.S. 51 at p. 72.)
Applying this standard, the court noted the district court’s decision “speaks of an
agent of [the parent corporation] alone who played a conspicuous part in dealing with the
toxic risks emanating from the operation of the plant.” (Bestfoods, supra, 524 U.S. 51 at
p. 72.) This agent, Williams, the parent corporation’s governmental and environmental
affairs director, “worked only for [the parent corporation]; he was not an employee,
officer, or director of [the subsidiary], [citation], and thus, his actions were of necessity
taken only on behalf of [the parent]. The District Court found that ‘[the parent
corporation] became directly involved in environmental and regulatory matters through
the work of . . . Williams, . . . [who] became heavily involved in environmental issues at
[the subsidiary].’ [Citation.] He ‘actively participated in and exerted control over a
variety of [the subsidiary’s] environmental matters,’ [citation] and he ‘issued directives
regarding [the subsidiary’s] responses to regulatory inquiries,’ [citation].” (Ibid.) The
court concluded “these findings are enough to raise an issue of [the parent’s] operation of
the facility through Williams’s actions” and remanded the matter with instructions to
return it to the District Court “for reevaluation of Williams’s role, and of the role of any
18
other [parent corporation] agent who might be said to have had a part in operating the
[polluting] facility.” (Id. at pp. 72-73.)
D.
Analysis
The evidence presented below is sufficient to support the trial court’s conclusion
that International/Anaconda directed operations at the Walker Mine specifically related to
pollution. We decline to recapitulate the correspondence recounted previously. The
following outline of its contents will suffice. While the correspondence from late 1923 to
the middle of 1925 is somewhat ambiguous with respect to whether “recommendations”
made by agents of International/Anaconda were in fact “instructions,” it appears that
managers at the Walker Mining Company were not following them regardless of what we
call them. However, beginning in August 1925, after the Walker Mining Company’s
manager position transitioned from Hart to Greninger to Tunnell, an agent of
International, Lyon, with no position at the Walker Mining Company, began approving
recommendations made by Tunnell with respect to specific mining activity at the Walker
Mine. Agents of International/Anaconda continued approving specific mining
recommendations made by agents of the Walker Mining Company after the mine
temporarily closed during the Great Depression. Hartmann and Droubay, the Walker
Mining Company’s manager and chief engineer/geologist, respectively, received
approvals and disapprovals of specific mining activity from Lyon, Sales, and/or Weed,
none of whom had any official role at the Walker Mining Company. The correspondence
makes clear that mining activity at the Walker Mine was being conducted at the direction
of these agents of International/Anaconda. This is precisely the sort of eccentric control
that was at issue in Bestfoods.
Nevertheless, ARCO argues that this evidence merely establishes the “typical
parent-shareholder advice, consultation and financial oversight that cannot constitute
eccentric control.” In making this argument, ARCO relies primarily on Trinity
19
Industries, Inc. v. Greenlease Holding Co. (3d Cir. 2018) 903 F.3d 333 (Trinity
Industries) and Atlanta Gas Light Co. v. UGI Utilities, Inc. (11th Cir. 2006) 463 F.3d
1201 (Atlanta Gas Light). Such reliance is misplaced.
In Trinity Industries, the Third Circuit Court of Appeals affirmed the district
court’s determination, on summary judgment, that parent corporation Ampco-Pittsburgh
Corporation (Ampco) was not directly liable for lead contamination at its subsidiary
Greenlease Holding Co.’s (Greenlease) North Plant. (Trinity Industries, supra, 903 F.3d
at p. 360.) The court explained: “The District Court rightly determined that the record
here would not permit a reasonable fact-finder to conclude that Ampco’s involvement in
the day-to-day operations of the North Plant exceeded ‘the normal relationship between
parent and subsidiary,’ [citation], in a manner that would support holding Ampco directly
liable for Greenlease’s conduct. The undisputed facts establish, rather, that ‘[Greenlease]
employees were responsible for all day-to-day operations at the North Plant, including
any waste disposal, waste handling, painting, abrasive blasting, welding, and fabrication
operations.’ [Citation.] Greenlease employees, not Ampco employees, coordinated
disposal with outside contractors and communicated with [state regulators] on
environmental matters. In fact, Ampco ‘did not employ any engineers or persons with
technical experience in manufacturing that could make decisions for [Greenlease] with
respect to environmental compliance or waste management.’ [Citation.] Instead,
‘Ampco employed only a professional staff, such as accountants, actuaries, and
lawyers[.]’ [Citation.] Helping with administrative work is consistent with a typical
parent-subsidiary relationship, and certainly does not establish Ampco’s direct
involvement with the North Plant, which Bestfoods demands to hold a parent directly
liable for environmental cleanup costs.” (Id. at p. 364.) The court also rejected the
argument that Ampco “crossed the line into operating the North Plant” (id. at p. 364) by
providing Greenlease with advice regarding the laws and regulations related to
Greenlease’s waste generation, monitoring that waste generation, and also becoming
20
involved in plans to increase production capacity and modernize the North Plant. (Id. at
pp. 343, 364.) The court viewed such activities as “ ‘consistent with the parent’s investor
status . . . .’ ” (Id. at p. 364, quoting Bestfoods, supra, 524 U.S. at p. 72, fn. omitted.)
Here, International/Anaconda did more than provide administrative assistance,
offer financial and legal advice, and monitor the activities of their investment, the Walker
Mining Company. Unlike Ampco, International/Anaconda did employ persons with
technical experience in copper mining. As we have explained, these individuals directed
specific mining activities at the Walker Mine, and they did so wearing only the hat of
their employer, International and Anaconda, respectively. Trinity Industries is therefore
inapposite.
In Atlanta Gas Light, the Eleventh Circuit Court of Appeals affirmed the district
court’s determination, also on summary judgment, that parent corporation CenterPoint
Energy Resources Corporation (CenterPoint) was not directly liable for pollution at its
subsidiary St. Augustine Gas and Electric Light Company’s (St. Augustine Gas)
manufactured gas plant. (Atlanta Gas Light, supra, 463 F.3d at p. 1208.) The court was
not persuaded by the argument that CenterPoint’s actions of replacing St. Augustine Gas
officers and directors with CenterPoint senior executives and entering into engineering
and management contracts with St. Augustine Gas rendered CenterPoint an operator of
the plant within the meaning of Bestfoods. (Id. at p. 1206.) With respect to the
overlapping officers and directors, the court explained this was “not inconsistent with
corporate norms.” (Id. at p. 1207.) Turning to the engineering and management
contracts, the court explained the former contemplated “general engineering advice and
assistance,” as well as “design, supervision and construction on substantial additions,
extensions and alterations,” but did not contemplate “operation of the plant.” (Ibid.) The
latter contract, although “labeled a ‘management’ contract,” was rather “in the nature of
advice and consultation.” (Ibid.) Moreover, while a CenterPoint officer, Traver, with no
apparent official role at St. Augustine Gas, described himself as “the ‘sponsor’ and
21
‘engineer’ for the St. Augustine Gas plant,” the court viewed his testimony delineating
his role as being “consistent with the above description of the contracts,” i.e., “he
consulted by telephone with the local management . . . 3-4 times per week” and “made an
on-site visit . . . 6-7 times a year,” but “did not operate the St. Augustine facility” on
behalf of CenterPoint. (Id. at pp. 1207-1208.)
Here, again, Lyon, Sales, and Weed did more than consult with Walker Mining
Company management and offer their advice with respect to exploration and
development at the Walker Mine. That may have been how the relationship began. As
stated previously, from late 1923 to the middle of 1925, it appears that managers at the
Walker Mining Company were not following the “recommendations” or “instructions” of
International/Anaconda, to the great consternation of the parent companies. By August
of 1925, however, agents of International/Anaconda were actively directing specific
mining activities at the mine.
ARCO further argues that even if International/Anaconda can be said to have
directed operations at the Walker Mine, they did so only with respect to “the exploration
and development phases of mining,” and these phases did not result in pollution. We are
not persuaded.
ARCO relies on testimony from its mining and geological experts, Terry McNulty
and Marc Lombardi. Their relevant testimony, as summarized by ARCO in the opening
brief, was as follows: “[T]he exploration phase constitutes the extraction of core samples
to ‘delineat[e] the three dimensional geometry and grade of the ore’ [citation], followed
by the development phase ‘to create a path through the country rock adjacent to the vein.’
[Citation.] Development can include sinking ‘vertical shafts’ from the ground surface
[citation], or driving horizontal openings referred to as ‘drifts or crosscuts,’ ‘inclines or
declines’ or ‘raises or winzes’ off of ‘a haulage tunnel to a location near or in
mineralization.’ [Citation.] [¶] Ore extraction, however, as Dr. McNulty explained,
refers to ‘breaking and removing ore from the mine workings.’ [Citation.] Miners drill
22
holes into the mineralized rock, blast the mineralized rock and load the broken
mineralized rock into rail cars to tram to the surface.”
The structure of ARCO’s argument is threefold. First, ARCO argues the trial
court “erroneously combined the development and ore extraction phases” when it found
that International/Anaconda “managed, directed, or conducted operations” at the Walker
Mine that “occurred in phase three of mining, ore extraction, which activities resulted, at
least in part, in the toxic discharge at issue in the [cleanup order].” ARCO then observes
that all of the evidence relied upon by the trial court in support of that finding involves
what ARCO’s experts have labeled exploration and development, not ore extraction.
Finally, ARCO argues there is no evidence in the record that agents of
International/Anaconda told Walker Mining Company managers how to extract the ore
once their “development” activities exposed that ore for extraction. From these points,
ARCO concludes it cannot be held directly liable for the pollution.
This line of argument rests, however, on a faulty premise, that ore extraction, as
defined by ARCO’s experts, is the first phase of mining activity that can be considered
“specifically related to” (Bestfoods, supra, 524 U.S. at p. 66) the pollution at issue in this
case, i.e., acid mine drainage. Acid mine drainage is “acidic water that is created when
sulfide minerals are exposed to air and water, producing sulfuric acid,” which then drains
from the mine into surface waters or seeps into the groundwater. Thus, it is not the
extraction of ore that causes acid mine drainage, but rather the exposure of mineralized
rock to air and water. Indeed, the extracted ore that is conveyed to the surface and
carried away to be refined is necessarily no longer in the mine and cannot result in acid
mine drainage. It is the exposed mineralized rock that is left behind that causes this
pollution. We must therefore conclude that any activity that exposes such mineralized
rock to air and water is specifically related to the pollution at issue in this case. This
includes the “development” activities directed by International/Anaconda in this case.
23
In reaching this conclusion, we accept expert Lombardi’s testimony that the
“country rock” surrounding the ore and mineralized vein “has minimal sulfides” and
therefore “doesn’t weather to produce acid mine drainage.” Thus, if the evidence was
such that agents of International/Anaconda directed the Walker Mining Company to cut
the various drifts, crosscuts, winzes, et cetera, in the country rock, close to the
mineralized vein, but without exposing ore or mineralized rock within the vein, we might
well agree with ARCO’s position. But the very point of this “development” work was to
expose the ore for extraction. A few examples from the correspondence in this case will
make this clear. In his November 1924 letter to Wraith, Sales referred to this country
rock as “waste” and complained that “drifts run in waste . . . should be in ore, or at least
should be in the vein . . . .” (Italics added.) Thereafter, in August 1925, Lyon approved
Tunnell’s proposed “development work” with the caveat that “the work should all be
done in the vein.” (Italics added.) The following month, Lyon authorized Tunnell to
“drift north and south on the ore disclosed by crosscut 647 S.” (Italics added.)
Simply put, the entire point of the “development” work directed by agents of
International/Anaconda was to expose ore for extraction. These same agents made the
decision to abandon the mine once extracting that ore was no longer profitable, and
further directed removal of the pumps that had previously kept water out of the mine.
Acid mine drainage resulted.
For the foregoing reasons, we conclude the evidence is sufficient to support direct
liability under Bestfoods.
II
Expert Testimony
ARCO also claims the Regional Board abused its discretion by failing to exclude
certain expert testimony from Dr. Quivik under Sargon, supra, 55 Cal.4th 747, and
therefore these improperly admitted opinions “cannot support the trial court’s liability
finding.” Not so.
24
A.
Additional Background
Before the Regional Board, ARCO moved to exclude the following opinion
testimony of Dr. Quivik: (1) “Anaconda . . . developed a tightly-managed corporate
structure that allowed top managers of the parent corporation to direct the operations of
several of its several subsidiaries and far-flung operations,” including the Walker Mining
Company; (2) “Although the Walker Mining Company had its own board of directors,
corporate officers, and local managers, management of the Walker Mine was fully
integrated into the Anaconda . . . enterprise and its management system, so that
[Anaconda’s] top managers in charge of geology, mining, and metallurgy directed
activities at those area [sic] at the Walker Mine”; and (3) “[Anaconda] and its subsidiary
International managed the Walker mine concurrently with the Walker Mining Company
from 1918 to 1941.” ARCO argued these opinions should be excluded under Sargon
because they are speculative and rely on leaps of logic. ARCO also challenged testimony
from Dr. Quivik about “other cases,” including analogies Dr. Quivik drew between this
case and “the Newmont Mining case,” because unrelated cases “are completely
irrelevant” to whether International/Anaconda directed operations at the Walker Mine.4
The Regional Board’s legal counsel recommended denying the motion, explaining
that Dr. Quivik’s opinion testimony was “based on hundreds of individual documents in
4 ARCO’s position at the hearing was that it could not be held liable for the
pollution at the Walker Mine unless its predecessors, International/Anaconda, managed
or directed operations at the Walker Mine specifically related to waste disposal. With
this as the focus, ARCO argued at the hearing that Dr. Quivik’s testimony concerning
“the control of waste” and “waste disposal activities” at the Walker Mine was “pure
speculation” and assumed International/Anaconda controlled waste disposal “based on
activities [involving] other spheres of mining.” However, as we have explained, parental
direction of activities in these other spheres of mining can support liability under
Bestfoods as long as they are sufficiently related to the pollution at issue. In any event,
these arguments are not renewed on appeal and shall be mentioned no further.
25
the record that were generated either by Anaconda’s employees or Walker’s employees”
and was “also based in part on published [treatises] on the mining industry that were
published contemporaneously with the activities in this case.” Counsel also pointed out
that “use of the historical method” employed by Dr. Quivik “has been applied in other
federal environmental litigation lawsuits involving the very type of parent subsidiary
relationships in the mining industry.”
The Regional Board agreed with counsel’s analysis and denied the motion, adding,
“in addition to that, we have a very considerable body of evidence so to speak of -- I
don’t know how many letters are in this record of correspondence back and forth, which
speaks to itself, even without Dr. Quivik’s testimony.”
ARCO renewed its challenge to Dr. Quivik’s testimony before the trial court, both
in its opening brief in support of its petition for writ of mandate and in its opening brief
following our remand of the matter. The trial court rejected ARCO’s renewed argument
that Dr. Quivik’s testimony should have been excluded because it “ ‘relied on unrelated
cases and was speculative,’ ” explaining: “The Court has reviewed Dr. Quivik’s report
and testimony and finds the [Regional] Board did not err in denying the motion to
exclude Dr. Quivik’s opinion.”
B.
Analysis
As a preliminary matter, we note that this contention is made by ARCO under a
subheading of its first main argument that the trial court improperly applied Bestfoods,
resulting in a liability finding that is unsupported by substantial evidence. However, even
if we were to agree that the challenged opinion testimony should have been excluded, this
would not mean the trial court’s ultimate finding is unsupported by substantial evidence.
For reasons already explained, even without this challenged opinion testimony, the
evidence was sufficient to support the trial court’s finding of liability under Bestfoods.
And while our conclusion in that regard was based in part on Dr. Quivik’s testimony that
26
Lyon, Sales, and Weed had no official role at the Walker Mining Company, that portion
of Dr. Quivik’s testimony was not objected to by ARCO, either before the Regional
Board or before the trial court. Thus, even if that portion of Dr. Quivik’s testimony was
inadmissible, the general rule is that “inadmissible evidence . . . admitted without
objection, is sufficient to sustain a judgment.” (Greenfield v. Insurance Inc. (1971) 19
Cal.App.3d 803, 811; Prentice v. Miller (1890) 82 Cal. 570, 572-573.)
We therefore address this contention separately, solely as a claim of evidentiary
error. We may reverse only if we conclude there was an abuse of discretion in admitting
the challenged evidence and a corresponding reasonable probability of a more favorable
outcome had the evidence not been considered by the trier of fact. (Twenty-Nine Palms
Enterprises Corp. v. Bardos (2012) 210 Cal.App.4th 1435, 1447, 1449.) We conclude
there was no abuse of discretion.
As ARCO accurately observes, our Supreme Court has held “that the trial court
has the duty to act as a ‘gatekeeper’ to exclude speculative expert testimony.” (Sargon,
supra, 55 Cal.4th at p. 753.) This gatekeeping duty arises out of Evidence Code sections
801 and 802, which require the trial court “to exclude expert opinion testimony that is
(1) based on matter of a type on which an expert may not reasonably rely, (2) based on
reasons unsupported by the material on which the expert relies, or (3) speculative.”
(Sargon, at pp. 771-772.) However, the court also cautioned that trial courts must be
careful not to “choos[e] between competing expert opinions” under the guise of
excluding unreliable or speculative opinion testimony: “The trial court’s preliminary
determination whether the expert opinion is founded on sound logic is not a decision on
its persuasiveness. The court must not weigh an opinion’s probative value or substitute
its own opinion for the expert’s opinion. Rather, the court must simply determine
whether the matter relied on can provide a reasonable basis for the opinion or whether
that opinion is based on a leap of logic or conjecture. The court does not resolve
scientific controversies. Rather, it conducts a ‘circumscribed inquiry’ to ‘determine
27
whether, as a matter of logic, the studies and other information cited by experts
adequately support the conclusion that the expert’s general theory or technique is valid.’
[Citation.] The goal of trial court gatekeeping is simply to exclude ‘clearly invalid and
unreliable’ expert opinion. [Citation.] In short, the gatekeeper’s role ‘is to make certain
that an expert, whether basing testimony upon professional studies or personal
experience, employs in the courtroom the same level of intellectual rigor that
characterizes the practice of an expert in the relevant field.’ [Citation.]” (Id. at p. 772.)
Here, Dr. Quivik, an industrial historian, relied on hundreds of primary historical
sources, including correspondence from the relevant actors at Anaconda, International,
and the Walker Mining Company, as well as reputable secondary sources, including the
Engineering and Mining Journal, the principal trade journal for the mining industry in the
United States, in order to develop general histories of these companies from the 1910’s
through the 1940’s and also to form opinions regarding the relationship between them,
specifically related to operation of the Walker Mine. ARCO has not persuaded this court
that these sources cannot provide a reasonable basis for the challenged opinions in this
case.
Nor are we persuaded that the challenged opinions are based on a leap of logic.
The testimony in this case is not like the speculative testimony at issue in Sargon. There,
on behalf of a small dental implant company suing a university for breach of contract, an
expert sought to testify that the company would have become a worldwide leader in the
dental implant industry but for the university’s breach of contract, justifying damages for
lost profits in excess of $200 million. (Sargon, supra, 55 Cal.4th at p. 753.) The trial
court excluded the evidence as speculative. Our Supreme Court agreed, explaining: “An
expert might be able to make reasonably certain lost profit estimates based on a
company’s share of the overall market. But [the expert] did not base his lost profit
estimates on a market share [the company] had ever actually achieved. Instead, he
opined that Sargon’s market share would have increased spectacularly over time to levels
28
far above anything it had ever reached. He based his lost profit estimates on that
hypothetical increased share.” (Id. at p. 776.) And while the expert justified his
assumption of increased market share based on the “ ‘ “innovativeness” ’ ” of the
company, the court adopted the trial court’s reasoning that “ ‘there is no evidentiary basis
that equates the degree of innovativeness with the degree of difference in market share,’ ”
and therefore, the expert’s opinion in this regard “ ‘has no rational basis.’ ” (Id. at
p. 778.) Thus, while an expert may properly estimate lost profits based on market share,
the leap in logic was that a high degree of innovativeness equates with a dramatically
increased market share.
Here, Dr. Quivik did not engage in a similar leap in logic in concluding that
Anaconda’s corporate structure allowed its top managers to direct the operations of the
Walker Mining Company, or that Anaconda’s top managers in charge of geology,
mining, and metallurgy directed activities in those areas at the Walker Mine, or that
Anaconda and its subsidiary, International, managed the Walker Mine concurrently with
the Walker Mining Company during the relevant time period. These opinions were
directly based on Dr. Quivik’s review of the primary and secondary sources indicated
above. It was for the trier of fact to determine whether to credit them or not, but we
cannot conclude it was an abuse of discretion to allow the testimony.
Nevertheless, ARCO argues Dr. Quivik’s “reliance upon an unrelated contract
between two unrelated companies‒Newmont Mining Corporation and Dawn Mining
Company‒renders inadmissible his opinion about the relationship between [the Walker
Mining Company] and Anaconda.” Not so. Dr. Quivik noted that one of the primary
sources he examined, a newspaper article from 1920, indicated there was a management
contract between Anaconda and the Walker Mining Company under which Anaconda
operated the Walker Mine during that time period. Dr. Quivik also noted that he had not
seen the contract mentioned in the article, but indicated he had seen “such contracts in
other episodes of U.S. mining history, most notably in the relationship between Newmont
29
Mining Corporation and its subsidiary, Dawn Mining Company.” Dr. Quivik then moved
on to other contemporaneous evidence of “Anaconda’s management role” at the Walker
Mine, occasionally comparing this role to Newmont’s role in managing its subsidiary’s
mining operation. Dr. Quivik also discussed Newmont, as well as other mining
companies, more generally in a section of his report titled “The Historical Context for
Understanding Twentieth-Century Management of Large-Scale Mining Enterprises.”
Thus, Dr. Quivik did not speculatively assume, based on an unrelated contract between
Newmont and Dawn, that Anaconda managed the Walker Mine. He instead came to this
conclusion based on the various primary and secondary sources noted above and
indicated this was consistent with what other mining companies were doing at the time.
Reference to the Newmont-Dawn contract does not render Dr. Quivik’s testimony
speculative.5
Finally, ARCO claims that Dr. Quivik, “as a historian and not a geologist with
first-hand mining experience, . . . lacks the necessary qualifications to offer opinions
about the particulars of mine management.” This claim is forfeited for failure to support
it with reasoned argument and citation to relevant authority. (See Benach v. County of
Los Angeles (2007) 149 Cal.App.4th 836, 852; Badie v. Bank of America (1998) 67
Cal.App.4th 779, 784-785.) The entirety of the “argument” is the conclusory statement
that Dr. Quivik’s lack of firsthand mining experience makes his opinion regarding the
relationship between International/Anaconda and the Walker Mining Company
“necessarily speculative and inadmissible under Sargon.”
5 ARCO also asserts that Dr. Quivik’s “reliance” on the Newmont-Dawn contract
amounts to an admission that “he did not follow his own methodology,” which “requires
that unrelated material not be relied upon,” and therefore, “his opinion [should have
been] excluded as unreliable speculation.” However, as we have explained, Dr. Quivik
did not rely on this unrelated contract so much as reference it as part of the historical
context of mining operations.
30
There was no abuse of discretion in allowing the admission of the challenged
aspects of Dr. Quivik’s expert testimony.
III
Due Process Claim
ARCO further asserts the Regional Board’s actual financial bias in this matter
requires invalidation of the cleanup order for violation of due process. We are not
persuaded.
Our Supreme Court set forth the applicable due process principles in Today’s
Fresh Start, Inc. v. Los Angeles County Office of Education (2013) 57 Cal.4th 197
(Today’s Fresh Start): “Both the federal and state Constitutions compel the government
to afford persons due process before depriving them of any property interest. [Citations.]
In light of the virtually identical language of the federal and state guarantees, we have
looked to the United States Supreme Court’s precedents for guidance in interpreting the
contours of our own due process clause and have treated the state clause’s prescriptions
as substantially overlapping those of the federal Constitution. [Citation.] [¶] ‘The
essence of due process is the requirement that “a person in jeopardy of serious loss [be
given] notice of the case against him and opportunity to meet it.” ’ [Citations.] The
opportunity to be heard must be afforded ‘at a meaningful time and in a meaningful
manner.’ [Citations.] To ensure that the opportunity is meaningful, the United States
Supreme Court and this court have identified some aspects of due process as irreducible
minimums. For example, whenever ‘due process requires a hearing, the adjudicator must
be impartial.’ [Citations.]” (Id. at p. 212.)
“The requirements of due process extend to administrative adjudications.”
(Today’s Fresh Start, supra, 57 Cal.4th at p. 214.) “ ‘When, as here, an administrative
agency conducts adjudicative proceedings, the constitutional guarantee of due process of
law requires a fair tribunal. [Citation.] A fair tribunal is one in which the judge or other
decision maker is free of bias for or against a party.’ [Citation.] ‘Of all the types of bias
31
that can affect adjudication, pecuniary interest has long received the most unequivocal
condemnation and the least forgiving scrutiny.’ [Citation.] The state and federal
Constitutions forbid the deprivation of property by a judge with a ‘ “direct, personal,
substantial, pecuniary interest in reaching a conclusion against” ’ a party. [Citations.]”
(Id. at p. 215.)
For example, in Ward v. Village of Monroeville (1972) 409 U.S. 57, a mayor,
authorized by state statute to sit as judge in cases of certain traffic offenses, convicted the
defendant of two such offenses and fined him a total of $100. (Id. at p. 57.) Revenue
from the “ ‘mayor’s court’ ” was conceded to provide “ ‘a substantial portion of the
municipality’s funds.’ ” (Id. at p. 59.) As the United States Supreme Court explained,
whether this violated the defendant’s right to due process depended on “whether the
mayor’s situation is one ‘which would offer a possible temptation to the average [person]
as a judge to forget the burden of proof required to convict the defendant, or which might
lead him [or her] not to hold the balance nice, clear and true between the state and the
accused . . . .’ ” (Id. at p. 60.) The court held that possible temptation plainly existed
because “the mayor’s executive responsibilities for village finances may make him
partisan to maintain the high level of contribution from the mayor’s court.” (Ibid.; see
also Tumey v. Ohio (1927) 273 U.S. 510, 521, 532 [mayor not impartial adjudicator of
violations of prohibition laws where fines imposed for such violations made up
substantial portion of the village treasury].)
Similarly, in Haas v. County of San Bernardino (2002) 27 Cal.4th 1017, our
Supreme Court held that the practice, adopted by some county governments, of selecting
and paying temporary administrative hearing officers on an ad hoc basis violated due
process because it created the risk that decisions favorable to the government would be
rewarded with future work. (Id. at pp. 1020-1021.) The court explained that while “due
process allows more flexibility in administrative process than judicial process, even in the
matter of selecting hearing officers[,] . . . the rule disqualifying adjudicators with
32
pecuniary interests applies with full force.” (Id. at p. 1027.) Thus, whereas an assertion
of bias based on “the combination of investigative and adjudicative functions in
administrative proceedings,” must “ ‘overcome a presumption of honesty and integrity in
those serving as adjudicators[,]’ . . . the adjudicator’s financial interest in the outcome
presents a ‘situation[ ] . . . in which experience teaches that the probability of actual bias
on the part of the judge or decisionmaker is too high to be constitutionally tolerable.’
[Citation.]” (Ibid.)
An example of an administrative board with a disqualifying financial bias can be
found in Esso Standard Oil Co. v. López-Freytes (1st Cir. 2008) 522 F.3d 136. There,
Puerto Rico’s Environmental Quality Board (EQB) issued a show cause order proposing
a $76 million fine that would go “directly into an account administered by the EQB.” (Id.
at p. 145.) Relying on Ward and Tumey, the court held that a disqualifying financial bias
arose from “the potential financial benefit to the EQB’s budget as a result of an imposed
fine,” and explained: “This is not a situation in which the EQB Governing Board is so
removed from the financial policy of the Special Account that such a presumption of bias
is inapplicable. [Citation.] Rather, this is a case in which the EQB has complete
discretion over the usage of those funds which are supplied, at least in part, by fines
which it imposes. In this particular case, the possibility of temptation is undeniable and
evident in the fact that the size of the proposed fine in this case is so unprecedented and
extraordinarily large. The $76 million proposed fine—a sum twice the EQB’s annual
operating budget and 5,000 times greater than the largest fine ever imposed by the
EQB—only intensifies the appearance of bias infecting the proceedings.” (Id. at pp. 146-
147.)
In contrast, in Lent v. California Coastal Com. (2021) 62 Cal.App.5th 812 (Lent),
our colleagues at the Second Appellate District held the appellants, oceanfront
landowners, did not carry their burden of demonstrating the California Coastal
Commission (Coastal Commission) had such a disqualifying financial bias when it
33
imposed a penalty of more than $4 million for obstructing public access to the beach. (Id.
at p. 853.) The court first noted that revenue generated from such a penalty was not
collected by the Coastal Commission and was deposited in a Coastal Conservancy Fund
account. (Id. at p. 851.) However, the California Coastal Act of 1976 (Pub. Resources
Code, § 30000 et seq.) requires the coastal conservancy to expend funds for carrying out
the provisions of that act, and the Coastal Commission has primary responsibility for
implementing the act. (Lent, at p. 851.) Thus, the statutory scheme allows the Coastal
Commission, “with both executive and adjudicative functions,” to “raise revenue by
imposing penalties in adjudicative proceedings.” (Ibid.) That alone was not enough to
violate due process, however.
After discussing the relevant caselaw, including Ward and Tumey, as well as
Alpha Epsilon Phi Tau Chapter Housing Assn. v. City of Berkeley (9th Cir. 1997) 114
F.3d 840, in which the Ninth Circuit “held a city’s rent stabilization board that decided
appeals over whether units were subject to the city’s rent control ordinance was an
impartial adjudicator, even though the board could impose fees and penalties to raise
revenue,” (Lent, supra, 62 Cal.App.5th at p. 852) the court explained: “The Coastal Act
places some check on the Commission’s ability to use revenue derived from penalties . . .
by requiring that the Legislature appropriate and the Conservancy expend the funds.
[Citations.] More importantly, the [appellants] submitted no evidence in the trial court of
how much money the Legislature generally appropriates or the Conservancy spends from
the Violation Remediation Account to carry out the provisions of the Coastal Act. Nor
did the [appellants] submit evidence of the Commission’s annual budget or of how much
of its budget (if any) the Commission generally receives from expenditures from the
Violation Remediation Account. The Coastal Act may give the commissioners at least
some incentive to impose substantial fines . . . , just as the budgetary system in Alpha
Epsilon gave the board some incentive to recover registration fees and impose late
payment penalties on landlords. [Citation.] But absent some additional evidence
34
showing how much the commissioners rely on the penalties to carry out their executive
duty to implement the Coastal Act, we cannot determine whether the commissioners’
motives are strong enough to reasonably warrant a ‘fear of partisan influence’ on the
Commission’s judgment or to cause the commissioners ‘ “not to hold the balance nice,
clear, and true between the state and the accused.” ’ [Citations.]” (Id. at p. 853.)
Here, the asserted financial bias does not stem from the Regional Board imposing
fines or penalties to fund its own executive functions. Indeed, a cleanup order issued
under section 13304 does not impose a fine or penalty at all. Instead, as relevant here, it
orders a “person who has . . . caused or permitted . . . any waste to be discharged or
deposited . . . into the waters of the state,” creating “a condition of pollution or nuisance,”
to “clean up the waste or abate the effects of the waste . . . .” (§ 13304, subd. (a).)
Nevertheless, ARCO argues the abatement activities undertaken by the Regional Board at
the Walker Mine, before issuing the cleanup order in this case, gave it a strong financial
incentive “to shed liability” for its own pollution-causing activities by ordering ARCO to
clean up the pollution.6
ARCO argues the Regional Board is partially responsible for the pollution for two
reasons: (1) the Regional Board “assumed control of the mine decades ago and installed
an adit plug that has exacerbated the contamination and is causing the pollution to impact
groundwater and surface water”; and (2) the Regional Board “assumed additional liability
6 ARCO misleadingly states that the trial court “correctly found that the [Regional]
Board is liable for its portion of contamination at the [Walker Mine].” The trial court
made no such finding. After finding eccentric control, and noting in a footnote that
“ARCO raises the issue of bias and adjudication by an improper tribunal,” the trial court
noted “prospectively the [Regional] Board appears to be an improper adjudicator of
apportionment because the [Regional] Board would not stand in a neutral position
sufficient to provide a fair and impartial hearing” on the issue of apportioning cleanup
costs due to its “possible financial exposure.” The trial court did not conclude any actual
exposure existed. In any event, as ARCO correctly observes, “[t]his court’s review on
this issue is de novo; therefore, no deference is owed to the trial court’s [determination].”
35
when settling with and agreeing to hold harmless other parties,” specifically, intervening
owners of the Walker Mine. We disagree.
The Regional Board authorized remediation work at the Walker Mine in 1986
pursuant to section 13305, which “provides a mechanism under which a [regional water
board] may abate water pollution emanating from nonoperating industrial or business
locations.” (People ex rel. Cal. Regional Wat. Quality Control Bd. v. Barry (1987) 194
Cal.App.3d 158, 161.) Since at least 1991, the State Water Resources Control Board
(State Water Board) has funded the Regional Board’s remediation activities at the Walker
Mine, including installation and maintenance of the adit plug, from the State Water
Pollution Cleanup and Abatement Account in the State Water Quality Control Fund.
(See §§ 13440, 13442.) To be sure, requiring ARCO to clean up the pollution at the
Walker Mine will benefit this account by stopping expenditures for purposes of
remediation work at the mine, but this account is administered by the State Water Board,
not the Regional Board. Thus, unlike Ward, Tumey, Lopez-Freytes, and even Lent, there
is no evidence the cleanup order benefits any fund or budget over which the Regional
Board exercises any amount of discretion.
With respect to the assertion that the Regional Board exacerbated the pollution at
the Walker Mine by installing the adit plug, and therefore had a financial interest in
shifting the costs of cleaning up its own pollution, we conclude ARCO has not carried its
appellate burden of demonstrating this to be the case. Our review of the record reveals
that the adit plug “successfully eliminated most or all of the direct discharge of [acid
mine drainage] and metals through the 700 level adit” and “dramatically reduced” the
levels of copper in nearby waterways. And while ARCO’s expert, Lombardi, testified at
the hearing that the adit plug increased acid mine drainage into groundwater, which
ultimately reached the surface streams, he also noted in his report that this is subject to
dispute, pointing out that an independent study commissioned by the Regional Board,
included as an addendum to the final feasibility study and design report for sealing the
36
mine, “suggests that the acid drainage that accumulates behind the plug would migrate
out into the country rock where it would be neutralized and the copper precipitate out of
solution prior to discharging to surface water.” Indeed, about 60 percent of the inflow to
the mine had already been discharging into bedrock since the mine closed in 1941, but
there was “no evidence of a stream of copper-laden water egressing from the
groundwater system to the surface water system.” Moreover, while Lombardi disagreed
with this assessment, his own report indicated “insufficient data have been collected for
proper evaluation” of the issue. We conclude this showing is insufficient to demonstrate
a disqualifying financial bias on the part of the Regional Board.
Finally, while the Regional Board also entered into two settlement agreements
with Walker Mine property owners, in neither agreement does the Regional Board
assume responsibility for any pollution caused by these settling property owners.
ARCO’s assertion of financial bias based on these agreements must therefore also fail.
ARCO has not persuaded this court that its due process rights were violated due to
financial bias on the part of the Regional Board.7
7 This conclusion makes it unnecessary to address ARCO’s related argument that
the Regional Board’s financial liability for the pollution at the Walker Mine limits its
remedy against ARCO to an action for contribution under section 13350. However, we
do note the subdivision ARCO relies on for this proposition applies to “[a] person who
incurs any liability established under this section” (§ 13350, subd. (i)) and section 13350
authorizes courts, regional water boards, and the State Water Board to impose monetary
liability for various activities, such as violating a cleanup order. (§ 13350, subds. (a), (b),
(d), (e).) Where such liability is incurred, subdivision (i) allows the person who incurred
it to seek contribution “from a third party, in an action in the superior court and upon
proof that the discharge was caused in whole or in part by an act or omission of the third
party, to the extent that the discharge is caused by the act or omission of the third party,
in accordance with the principles of comparative fault.” (§ 13350, subd. (i).) No such
liability has been incurred in this case. Section 13350 is therefore inapposite.
37
IV
Joint and Several Liability
Finally, we also reject ARCO’s contention that the cleanup order erroneously
imposed joint and several liability. ARCO argues section 13304, subdivision (a) “does
not authorize making one party jointly and severally liable for all liabilities of all
potentially responsible parties . . . .” The State Water Board has consistently disagreed
with this assertion, explaining: “When releases from two or more different sources
commingle, the State Water Board generally considers all responsible parties of the
separate releases as jointly and severally liable for the commingled release. [Citation.]
This is true where the releases originate from different properties or where the releases
originate from the same property but at different times. All parties that contributed to the
commingled release are generally considered liable until the entire commingled release
requires no further action.” (Matter of the Petition of James Salvatore (State Water
Resources Control Bd., Nov. 5, 2013, Order No. WQ 2013-0109) pp. 10-11 [2013
Cal.Env Lexis 148]; see also Matter of the Petition of Union Oil Company of California
(State Water Resources Control Bd., Apr. 19, 1990, Order No. WQ 90-2) p. 8 [1990
Cal.Env Lexis 23].) While “we are not bound by the legal determinations made by the
state or regional agencies[,] . . . we must give appropriate consideration to an
administrative agency’s expertise underlying its interpretation of an applicable statute.”
(Building Industry, supra, 124 Cal.App.4th at p. 879, fn. omitted.)
We agree with the State Water Board’s assessment of section 13304. As stated
previously, subdivision (a) of this section provides in relevant part: “A person who has
. . . caused or permitted . . . any waste to be discharged or deposited . . . into the waters of
the state and creates . . . a condition of pollution or nuisance, shall, upon order of the
regional board, clean up the waste or abate the effects of the waste . . . .” (§ 13304, subd.
(a).) Thus, two elements are required: (1) causing or permitting the discharge; and (2)
creating a condition of pollution or nuisance. (San Diego Gas & Electric Co. v. San
38
Diego Regional Water Quality Control Bd. (2019) 36 Cal.App.5th 427, 431 (SDG&E).)
We have already held ARCO’s predecessors, International/Anaconda, exercised eccentric
control over the Walker Mine causing the discharge of acid mine drainage. The second
element, pollution or nuisance creation, does “not require proof that the defendant’s act
was a ‘substantial factor’ or ‘but for’ cause of the resulting [pollution or] nuisance.” (Id.
at pp. 438-439.) Instead, all that is required is that the pollution or nuisance was “the
aggregate result” of all waste discharges. (Hillman v. Newington (1880) 57 Cal. 56, 59;
People v. Gold Run Ditch & Mining Co. (1884) 66 Cal. 138, 148-149; SDG&E, supra, 36
Cal.App.5th at pp. 437-439.)
Where, as here, both elements are satisfied, the entity that caused or permitted the
discharge may be ordered to clean up the waste or abate its effects. Nowhere in the
statutory language does section 13304 say the polluting entity must clean up or abate only
its proportionate contribution to that waste. To the extent ARCO cleans up more than its
proportionate share of the acid mine drainage at the Walker Mine, it can seek
contribution from other parties it believes also contributed to the pollution. (See, e.g.,
Standun, Inc. v. Fireman’s Fund Ins. Co. (1998) 62 Cal.App.4th 882, 886 [businesses
that paid cleanup costs imposed by the U.S. Environmental Protection Agency sued
another business for contribution of its proportionate share of those costs].)
All that is required for this court to affirm the trial court’s judgment upholding the
Regional Board’s cleanup order is for there to be substantial evidence of both elements of
section 13304, subdivision (a). (See Barclay Hollander, supra, 38 Cal.App.5th at p. 498;
SDG&E, supra, 36 Cal.App.5th at p. 431.) That standard is met.
The Regional Board was not required to apportion responsibility for the pollution
in the cleanup order.
39
DISPOSITION
The judgment is affirmed. The stay of the cleanup order issued by this court on
December 24, 2020, is hereby vacated. The Regional Board is entitled to costs on appeal.
(Cal. Rules of Court, rule 8.278(a)(1), (2).)
/s/
HOCH, J.
We concur:
/s/
DUARTE, Acting P. J.
/s/
EARL, J.
40 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483903/ | UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
FREDERICO DIMAS, JR.,
Plaintiff,
v.
MERRICK GARLAND, in his official Civil Action No. 21-2792 (CKK)
capacity as Attorney General of the United
States,
Defendant.
MEMORANUDM OPINION
(November 15, 2022)
In this Title VII discrimination case, Plaintiff Frederico Dimas, Jr. (“Plaintiff”) claims
that his employer, the United States Drug Enforcement Agency (“DEA”) discriminated against
him on the basis on race. Defendant moves to dismiss for improper venue and failure to state a
claim or, in the alternative, to transfer this matter to the United States District Court for the
Eastern District of Virginia (“EDVA”). Because the alleged discriminatory actions occurred
entirely within the Commonwealth of Virginia, Defendant’s [9] Motion to Dismiss is
GRANTED as it relates to transfer, and the Court ORDERS this case TRANSFERRED to the
United States District Court for the Eastern District of Virginia. Because the Court does not
address whether Plaintiff’s complaint states a claim, the Court shall HOLD IN ABEYANCE
that portion of Defendant’s [9] Motion, to be addressed after transfer.
I. BACKGROUND
For the purposes of resolving the present motion, the Court takes the complaint’s facts as
true and states only those facts here as is necessary. Plaintiff has worked in Sterling, Virginia as
an information technology specialist for the DEA since 1999. Compl. ¶ 8. Plaintiff alleges that
the DEA has discriminated against him by failing to promote him and failing to award him
different jobs upon application. Id. ¶¶ 22-26, 43-45. The DEA also suspended him from work
for eleven days in 2016, in connection with his then-wife visiting his workplace to complain
about Plaintiff to his supervisors and coworkers, among other punitive actions. See id. ¶¶ 67-74;
103-04.
On June 30, 2017, Plaintiff filed an EEO complaint. Id. ¶ 14. The United States
Department of Justice, of which the DEA is a component agency, notified Plaintiff on July 22,
2021 that it rejected his EEO complaint. Id. Ex. A. On October 21, 2021, Plaintiff filed his
instant complaint. Id. (docketed Oct. 21, 2022).
II. DISCUSSION
Because venue does not lie, the Court shall transfer this matter. Doing so, the Court does
not reach whether Plaintiff’s complaint states a claim upon which relief may be granted.
Pursuant to 42 U.S.C. § 2000e-5(f)(3), a Title VII suit may be brought:
[1] in an judicial district in the State in which the unlawful employment practice is
alleged to have been committed, [2] in the judicial district in which the employment
records relevant to such practice are maintained and administered, or [3] in the judicial
district in which the aggrieved person would have worked but for the alleged unlawful
employment practice, but [4] if the respondent is not found within any such district, such
an action may be brought within the judicial district in which the respondent has his
principal office.
In other words, if one of the first three apply here, venue is improper in the District of Columbia.
See Valerino v. Holder, 20 F. Supp. 3d 203, 205 (D.D.C. 2013). Plaintiff concedes that the
alleged “unlawful employment practice” occurred within EDVA and that he worked within
EDVA. See Opp. at 7. He argues, however, that the “records relevant to” Plaintiff’s
employment reside in the District of Columbia. Id. In support of this position, Plaintiff relies
mainly on the fact that his electronic Official Personnel Folder (“eOPF”), i.e., his employment
records, are located within the District of Columbia because the agency responsible for his eOPF,
the United States Office of Personnel Management (“OPM”), is resident in the District of
Columbia. Id. As a factual and legal matter, this argument fails.
Although his eOPF file is accessible in the District of Columbia, the physical files
themselves reside at a DEA office in Arlington, Virginia. ECF No. 13-1, Decl. of John Christie
¶ 3. This is the beginning and end of the inquiry. See Kruise v. Fanning, Civ. A. No. 15-1213
(ABJ), 2016 WL 11672724, at *4 (D.D.C. June 14, 2016). The salient question for section
2000e-5(f)(3) is where the responsible agency––here, the DEA––“maintain[s]” and
“administer[s]” the records pertaining to the plaintiff. See id. (“the Court must identify the
district in which the responsible agency ‘maintains and administers’ those records”); cf. also
Valerino, 20 F. Supp. 3d at 206 (transferring employment discrimination case where Justice
Department component qua employer maintained physical records outside of the District of
Columbia, notwithstanding eOPF files are generally managed by OPM in the District of
Columbia). As such, venue is improper under section 2000e-5(f)(3).
In addition to section 2000e-5(f)(3), the Court also considers the general venue statute, 28
U.S.C. § 1404. Pursuant to subsection 1404(a), “[f]or the convenience of the parties and
witnesses, in the interest of justice, a district court may transfer any civil action to any other
district or division where it may have been brought.” Because this action should have been
brought in the Eastern District of Virginia, and so as not to prejudice Plaintiff, the Court shall
transfer this matter pursuant to 18 U.S.C. § 1404.
III. CONCLUSION AND ORDER
For the foregoing reasons, the Court GRANTS IN PART AND HOLDS IN
ABEYANCE IN PART Defendant’s [9] Motion to Dismiss and TRANSFERS this matter to
the United States District Court for the Eastern District of Virginia. An appropriate order
accompanies this Memorandum Opinion.
Dated: November 15, 2022
/s/
COLLEEN KOLLAR-KOTELLY
United States District Judge | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483907/ | Filed 11/15/22 P. v. Perrotte 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 Appellant, E077776
v. (Super.Ct.No. BPR2100621)
JEFFREY PERROTTE, OPINION
Defendant and Respondent.
APPEAL from the Superior Court of Riverside County. Jorge C. Hernandez,
Judge. Affirmed in part; reversed in part with directions.
Michael A. Hestrin, District Attorney, and Jesse Male, Deputy District Attorney,
for Plaintiff and Appellant.
Laura R. Sheppard for Defendant and Respondent.
1
I. INTRODUCTION
The People appeal an order dismissing a parole revocation petition filed by the
Department of Corrections and Rehabilitation’s Division of Adult Parole Operations
(Department). The petition sought to revoke defendant and respondent Jeffrey Perrotte’s
parole in response to three alleged violations of his parole conditions. The trial court
overruled a demurrer to the petition. However, Perrotte subsequently filed a motion to
dismiss pursuant to Penal Code1 section 1385. The motion was heard by a different
judge who (1) purported to dismiss one allegation in the interest of justice pursuant to
section 1385; (2) construed the remainder of the motion as a motion for reconsideration
of the demurrer; and (3) sustained the demurrer with respect to the remaining allegations.
The trial court further ordered one of the conditions of Perrotte’s parole stricken as
invalid. The People challenge each of these orders on appeal.
We conclude that: (1) the People forfeited their challenge to the trial court’s order
striking a condition of parole; (2) even in the absence of forfeiture, the trial court did not
err in concluding the challenged condition was invalid; and (3) because the underlying
condition was invalid, any order dismissing the alleged violation of this cond ition could
not have been prejudicial. However, we agree with the People that the trial court erred in
reconsidering a prior ruling by a different judge and sustaining the demurrer to the
remaining allegations in the parole revocation petition.
1 Undesignated statutory references are to the Penal Code.
2
II. FACTS AND PROCEDURAL HISTORY
A. Perrotte’s Underlying Conviction and Parole
Perrotte was involved in a motor vehicle accident that resulted in the death of
another individual. He was driving under the influence at the time, fled the scene of the
accident, and attempted to manufacture an alibi to avoid responsibility. As a result of this
incident, Perrotte was convicted of second degree murder (§ 187) and sentenced to 15
years to life in state prison. He was released on parole, returned to prison in 2016 for
violating his terms of parole, and released on parole again in 2020.
The conditions of Perrotte’s parole included the following: (1) “You shall not
contact or associate with any person you know or reasonably should know to be a
member or associate of a prison gang, disruptive group, or street gang” (condition
No. 38); (2) “You shall contact your parole agent within 24 hours of any type of law
enforcement contact (e.g. traffic stop, identification check, suspect, witness, etc.)”
(condition No. 62); and (3) “You shall not drive or operate a motor vehicle, with the
exception of driving to and from work and as required to perform any duties of
employment” (condition No. 64).
B. Petition to Revoke Parole
On May 19, 2021, the Department filed a petition to revoke Perrotte’s parole. The
petition alleged Perrotte had engaged in three violations of his parole conditions.
According to the petition, a confidential witness had accused Perrotte of being involved
in a coordinated operation to smuggle cellular phones into prison for inmate use. Upon
investigation of these allegations by the California Department of Corrections and
3
Rehabilitation (CDCR), CDCR discovered that Perrotte had accepted a collect call from a
validated prison gang member in violation of condition No. 38. In the recorded call, the
validated gang member referenced favors he had provided to Perrotte while Perrotte was
in prison; Perrotte mentioned the possibility of sending money to the gang member; and
the gang member used the phrase, “O.G. brother,” to refer to Perrotte.
The petition also alleged that during a routine search of Perrotte’s residence in
May 2021, a parole officer discovered a traffic citation issued to Perrotte by the City of
Lake Tahoe for speeding in February 2021. According to the petition, Perrotte had
requested and been given permission to travel to the City of Lake Tahoe to participate in
a family vacation during this time period. Additionally, the Department had no record of
any contact from Perrotte notifying the Department of the citation. Based upon these
facts, the Department alleged Perrotte also violated condition No. 62 (reporting
condition) and condition No. 64 (driving limitation condition).
Finally, the petition reported that the Department’s parole violation decision
making instrument (PVDMI)’s recommended response was: “Least to Most Intensive:
Continue on Parole with Remedial Sanctions.” However, the Department explained that,
after consideration, it deemed intermediate sanctions “not appropriate at this time.” The
Department then listed a series of facts, including: (1) that Perrotte’s underlying
conviction involved the reckless operation of a motor vehicle; (2) Perrotte’s parole had
already been revoked on one prior occasion; (3) the violations alleged occurred only five
months after Perrotte’s release; and (4) Perrotte’s attempt to conceal his traffic citation.
After listing these facts, the Department expressed the view that remedial sanctions were
4
inappropriate “[d]ue to the seriousness of . . . Perrotte’s commitment offense, coupled
with his recently discovered behavior and attempt to hide his traffic violation . . . .”
C. Intermediate Proceedings
On May 24, 2021, the Hon. Helios J. Hernandez heard and overruled a demurrer to
the petition. As the result of an ambiguous record regarding this hearing,2 the parties
agreed to have the Hon. Donal B. Donnelly rehear the demurrer and arraign Perrotte, if
necessary, following the ruling on demurrer. After hearing oral argument on the
demurrer, Judge Donnelly overruled the demurrer and arraigned Perrotte.
On June 23, 2021, the parties appeared for a hearing on a motion to quash a
subpoena issued by Perrotte to the CDCR seeking documents from Perrotte’s prison file
that might contain reports of gang-related activity. A deputy attorney general appeared
on behalf of the custodian of records for the CDCR at this hearing and made an offer of
proof that Perrotte’s prison file contained “no allegations of a gang validation or gang
classification” and that nothing had been done by CDCR “to establish [Perrotte] as a gang
member or associate.” In response, the deputy district attorney represented that he would
not use any portion of Perrotte’s CDCR file in the revocation proceedings, and Perrotte’s
counsel declined to contest the motion to quash, and the matter proceeded without further
reference to the documents.
2 At the time, the minutes from the May 24, 2021 hearing reflected that Perrotte
was arraigned and had entered denials after Judge Helios J. Hernandez overruled the
demurrer. However, both Perrotte’s counsel and court staff believed the minutes were
inaccurate on this point. As such, Judge Donnelly made a finding that a formal
arraignment had not occurred, and the parties agreed to reconduct the proceedings.
5
D. Motion to Dismiss
On July 29, 2021, Perrotte filed a motion to dismiss the parole revocation petition
in the interests of justice pursuant to section 1385. In support of his motion, Perrotte
attached multiple documents obtained in the course of discovery, including a printed
version of the computer-based PVDMI form completed by Perrotte’s parole officer in this
case. The motion was reviewed by the Hon. Jorge C. Hernandez and set for hearing on
August 3, 2021.
When the matter was called for hearing, the trial court, with Judge Jorge C.
Hernandez presiding, stated, “My thoughts are that this is more akin to a motion for
reconsideration of the demurrer,” and requested permission from Perrotte’s counsel to
hear the matter as a reconsideration. The court did not seek the People’s consent to
proceed as a motion for reconsideration but, instead, asked if the People had any oral
argument “in response to the P’s and A’s filed” by Perrotte. The deputy district attorney
objected to the entire hearing arguing that Perrotte’s motion was untimely and that the
People did not have adequate time to prepare a response. However, the trial court
proceeded with hearing the motion over the People’s objection.
After reciting general rules pertaining to a demurrer, the trial court conducted an
extensive analysis of the printed PVDMI form attached to Perrotte’s motion to dismiss
and concluded that “Perrotte’s PVDMI came up short.” Based on this conclusion, the
trial court dismissed the allegation related to the violation of condition No. 38 (gang
association condition) pursuant to section 1385 and sustained the demurrer to the
remaining allegations of the petition.
6
Perrotte’s counsel then orally requested the trial court modify the conditions of
Perrotte’s parole to strike condition No. 38 as invalid. When asked to provide a response
to the request, the deputy district attorney stated: “After hearing the attorney general
provide information to the Court . . . , [the] People would submit.” As a result, the trial
court granted the request to modify Perrotte’s conditions of parole to strike condition No.
38.
The People appeal from the orders issued on August 3, 2021.
III. DISCUSSION
On appeal, the People contend that (1) the trial court erred in dismissing an
allegation of the petition because section 1385 does not apply to parole revocation
proceedings; (2) the trial court erred in reconsidering the demurrer because one trial
judge is not permitted to reconsider a ruling made by a different judge; (3) the trial court
erred in sustaining the demurrer because section 1004 does not apply to parole revocation
proceedings; (4) the trial court erred in sustaining the demurrer because the allegations of
the petition were sufficient to justify revocation of parole; (5) even if deficient, the trial
court abused its discretion in denying leave to amend the petition; (6) the trial court erred
in modifying Perrotte’s conditions of parole because condition No. 38 was valid; and (7)
the trial court deprived the People of due process by proceeding with hearing Perrotte’s
motion without sufficient notice.
We conclude that the trial court lacked authority to dismiss an allegation of the
petition pursuant to section 1385, but any error in doing so was harmless because the
underlying condition was properly found invalid. However, we agree with the People
7
that the trial court improperly reconsidered a ruling made by a prior judge and that, upon
reconsideration, erred in sustaining the demurrer to the remaining allegations of the
petition requiring reversal. Given this conclusion, we need not reach the remaining
issues asserted by the People.
A. Trial Court Did Not Err in Modifying the Conditions of Parole
We first turn to the question of whether the trial court erred by modifying the
conditions of Perrote’s parole by striking condition No. 38. The only argument advanced
by the People on appeal is that condition No. 38 was valid because it was reasonably
related to future criminality in furtherance of Perrotte’s rehabilitation. We conclude that
the argument is forfeited for failure to raise the issue in the trial court and , even in the
absence of forfeiture, the trial court did not err.
Generally, a parolee may challenge a condition of parole by filing a writ of habeas
corpus. (In re Taylor (2015) 60 Cal.4th 1019, 1035.) However, when a parolee has been
rearrested for a parole violation or a petition to revoke parole has been filed, section
1203.2 authorizes the trial court to examine and modify the conditions of parole. (People
v. Wilson (2021) 66 Cal.App.5th 874, 885-886; § 1203.2, subd. (b)(1).) “ ‘The validity
and reasonableness of parole conditions is analyzed under the same standard as that
developed for probation conditions.’ ” (People v. Relkin (2016) 6 Cal.App.5th 1188,
1194; People v. Austin (2019) 35 Cal.App.5th 778, 787.) Under this standard, probation
and parole conditions are reviewed for abuse of discretion (People v. Navarro (2016)
244 Cal.App.4th 1294, 1299; People v. Appleton (2016) 245 Cal.App.4th 717, 723), but
8
constitutional challenges to such conditions are reviewed de novo (Appleton, at p. 723;
People v. Brand (2021) 59 Cal.App.5th 861, 867).
Courts apply a “three-part standard” to test the validity of a parole or probation
condition. (In re Ricardo P. (2019) 7 Cal.5th 1113, 1118-1119.) A condition will be
held invalid if it “ ‘ “(1) has no relationship to the crime of which the offender was
convicted, (2) relates to conduct which is not in itself criminal, and (3) requires or forbids
conduct which is not reasonably related to future criminality.” ’ ” (Id. at p. 1132; see
People v. Malago (2017) 8 Cal.App.5th 1301, 1306; see also People v. Brandão (2012)
210 Cal.App.4th 568, 573.) Here, the record does not suggest that Perrotte’s underlying
conviction is in any way related to gang activity, and the condition relates to conduct that
is not itself criminal.3 Thus, the only justification advanced by the People for upholding
condition No. 38 is that the condition is reasonably related to future criminality in
furtherance of Perrotte’s rehabilitation.
However, the People did not argue that condition No. 38 was reasonably related to
future criminality in the trial court, did not present any evidence to support this argument,
and did not make an offer of proof that any evidence existed to support such a claim.
Further, unlike the motion to dismiss, the People did not object to the trial court’s
consideration of Perrotte’s oral request to modify the conditions of his parole or assert
that it needed more time to prepare a response. Instead, when asked by the trial court to
3 Indeed, the conduct is generally considered protected under both the United
States and California Constitutions. (U.S. Const., 1st. Amend. [freedom of association];
Cal. Const., art. I, § 1 [same]; People v. Garcia (1993) 19 Cal.App.4th 97, 102.)
9
respond to Perrotte’s request, the deputy district attorney stated: “After hearing the
attorney general provide information to the Court . . . , the People would submit.” The
failure to raise an argument in the trial court forfeits the issue on appeal. (People v.
Parker (2022) 13 Cal.5th 1, 35, fn. 8 [party “failed to raise this argument before the trial
court, forfeiting it on appeal”]; People v. Valdez (2012) 55 Cal.4th 82, 118 [same].)
Even in the absence of forfeiture, we find no error in the trial court’s
determination that condition No. 38 was invalid. The “third prong requires more than
just an abstract or hypothetical relationship between the . . . condition and preventing
future criminality.” (In re Ricardo P., supra, 7 Cal.5th at p. 1121; see In re Martinez
(1978) 86 Cal.App.3d 577, 583 [A condition is not reasonably related to future
criminality simply because it “could abstractly be related to preventing future crime.”].)
Instead, “[t]here must be a factual ‘nexus’ between the crime, defendant’s manifested
propensities, and the . . . condition. . . . There must be some rational factual basis for
projecting the possibility that defendant may commit a particular type of crime in the
future, in order for such projection to serve as a basis for a particular condition . . . .”
(Martinez, at p. 583; see In re Edward B. (2017) 10 Cal.App.5th 1228, 1236 [“Without a
reasonable factual nexus, there is no reasonable connection and therefore ‘no reasonable
basis for sustaining a condition.’ ”].) Additionally, the requirement that a “condition
must be ‘ “reasonably related to future criminality” ’ contemplates a degree of
proportionality between the burden imposed by a . . . condition and the legitimate
interests served by the condition.” (In re Ricardo P., at p. 1122.) The condition is
invalid where such proportionality is lacking. (Ibid.)
10
We believe the evidence, in this case, was simply too attenuated to support a
finding that condition No. 38 was valid. There was no evidence that Perrotte ever
committed a gang-related crime prior to his conviction; no evidence that Perrotte
committed a gang-related crime or engaged in gang-related prohibited conduct while in
prison; and no evidence that Perrotte ever held himself out as a gang member. The only
evidence cited by the People in support of upholding the condition is the substance of a
single recorded phone call between Perrotte and a validated prison gang member.4
However, the trial court was not required to view this evidence in a vacuum. The
recorded phone call was obtained as part of a larger CDCR investigation into allegations
of possible criminal activity by Perrotte. The attorney general subsequently appeared on
behalf of the CDCR in the trial court proceedings and represented that Perrotte’s prison
file contained “no allegations of a gang validation or gang classification,” and that CDCR
had not been able to “establish [Perrotte] as a gang member or associate.” Thus, even
assuming that the statements made in this phone call should be interpreted in the manner
suggested by the People, a broad prohibition against any contact or association with any
4 Specifically, the People cite to the fact that Perrotte referred to the validated
gang member as a “mentor”; the validated gang member referred to Perrotte as an “O.G.
brother”; and the two made references that could be interpreted as a “gang protection
arrangement.” We note that the People cite to this evidence on the appeal
notwithstanding the fact that the district attorney represented to the trial court that he did
not intend to rely on information contained within Perrotte’s CDCR file.
11
known gang member based solely on this one conversation would appear incredibly
disproportionate to any risk of future criminality presented by the facts of this case.5
The evidence here was insufficient to provide a rational factual basis to project the
possibility that Perrotte would commit a gang-related crime in the future. As such, the
trial court did not err in modifying the conditions of Perrotte’s parole to strike condition
No. 38.
B. The Dismissal of an Allegation Pursuant to Section 1385 Was Not Prejudicial
The People also argue that the trial court erred when it dismissed the allegation
based upon a violation of condition No. 38 pursuant to section 1385. While we agree
with the People that the trial court had no authority to dismiss the allegation pursuant to
this statute, we conclude the People could not have suffered prejudice from this error.
While a parole revocation hearing is governed by provisions in the Penal Code, it
is not a criminal action but a special proceeding established by statute. (People v. Perlas
(2020) 47 Cal.App.5th 826, 831-832 (Perlas).) As such, several published decisions by
the Courts of Appeal have recognized that section 1385, which refers to the dismissal of
“actions,” does not apply to such proceedings. (People v. Wiley (2019) 36 Cal.App.5th
1063, 1065 [§ 1385 does not authorize a trial court to dismiss a parole revocation
petition]; People v. Williams (2021) 71 Cal.App.5th 1029, 1044 [“[A] revocation petition
5 Notably, Perrotte’s conditions of parole still include less intrusive prohibitions
designed to discourage future gang-related criminality. Specifically, the conditions of
parole continue to prohibit Perrotte from violating gang abatement injunctions,
ordinances, or court orders; prohibit Perrotte from wearing or displaying any clothing,
items, or paraphernalia associated with gang affiliation; and prohibit Perrotte from
coming within 300 feet of any location known for gang activity.
12
cannot be dismissed in the interest of justice under section 1385.”].) Thus, it was error
for the trial court to rely on the authority of section 1385 to dismiss an allegation of a
parole revocation petition.
Nevertheless, the dismissed allegation related to Perrotte’s violation of condition
No. 38. The trial court subsequently found this condition invalid and, as we explained
ante, we have found no error in the trial court’s determination. Thus, even if the trial
court had not erred and instead proceeded to conduct a hearing on the merits of the
allegation, the alleged violation of condition No. 38 could not have served as a proper
basis for revocation of Perrotte’s parole; and any error in prematurely dismissing the
allegation could not have been prejudicial.
C. The Trial Court Erred in Reconsidering the Demurrer
We also agree with the People that the trial court erred in reconsidering the prior
ruling on demurrer made by a different judge. “The rule that one superior court judge
may not reconsider the previous ruling of another superior court judge applies in a variety
of settings, in both criminal and civil cases.” (People v. Goodwillie (2007)
147 Cal.App.4th 695, 713; see In re Alberto (2002) 102 Cal.App.4th 421, 427-428.) “A
trial court ‘generally has the authority to correct its own prejudgment errors.’ [Citation.]
‘Different policy considerations, however, are operative if the reconsideration is
accomplished by a different judge,’ ” and “ ‘the general rule is just the opposite: the
power of one judge to vacate an order made by another judge is limited.’ [Citation.] ‘For
one superior court judge, no matter how well intended, even if correct as a matter of law,
to nullify a duly made, erroneous ruling of another superior court judge [improperly]
13
places the second judge in the role of a one-judge appellate court,’ and thus ‘an order
“ ‘ “ ‘made in one department during the progress of a cause can neither be ignored nor
overlooked in another department . . . .’ ” ’ ” ’ ” (People v. Saez (2015) 237 Cal.App.4th
1177, 1184-1185.) “Such review would violate the California Constitution.” (People v.
Barros (2012) 209 Cal.App.4th 1581, 1598.)
In this case, Judge Jorge C. Hernandez explicitly stated his intent to reconsider the
prior ruling on demurrer made by a different judge. Thus, there is no question that the
trial court engaged in an improper reconsideration. Upon realizing that Perrotte’s motion
to dismiss was, in substance, a motion seeking reconsideration of the issues already
decided in the prior demurrer hearing, Judge Jorge C. Hernandez should have directed the
moving party to the judge who originally ruled on the demurrer. (Ziller Electronics Lab
Gmbh v. Superior Court (1988) 206 Cal.App.3d 1222, 1232 [“The proper procedure upon
a motion for reconsideration or a renewed motion is for the second judge to direct the
moving party to the judge who ruled on the first motion.”]; see Board of Medical Quality
Assurance v. Superior Court (1988) 203 Cal.App.3d 691, 703-704 [The “correct
procedure was to transfer the entire application . . . to [the original judge] to permit the
court to exercise its authority to reconsider . . . .”].) Thus, to the extent Judge Jorge
Hernandez took it upon himself to vacate Judge Donnelly’s ruling by reconsidering the
demurrer, it was error.6
6 The record is insufficient for us to evaluate the merits of Perrotte’s suggestion
that it was proper to reconsider the demurrer because Judge Donnelly was unavailable.
While the unavailability of the first judge is a recognized exception to the rule against
[footnote continued on next page]
14
Despite this error, “ ‘an appellate court cannot reverse a trial court’s ruling which
correctly follows the law merely because it disagrees with an earlier, incorrect ruling.’ ”
(In re Alberto, supra, 102 Cal.App.4th at p. 431; People v. Goodwillie, supra,
147 Cal.App.4th at p. 714 [error in reversing first judge’s order does not require reversal
absent prejudice as a result of error]; People v. Edward D. Jones & Co. (2007)
154 Cal.App.4th 627, 634 [even if second judge should not have effectively overruled a
first judge’s order on demurrer by ruling on a motion for judgment on the pleadings, the
error must still be analyzed on the merits for prejudice]; Prickett v. Bonnier Corp. (2020)
55 Cal.App.5th 891, 896-897 [“[A]ny error in rehearing the motion resulted in the correct
result, making it ineluctably harmless.”].) Thus, we proceed to analyze the merits of
Judge Jorge C. Hernandez’s ruling sustaining the demurrer upon reconsideration.
However, as we explain, we conclude that it was also error to sustain the demurrer.
reconsideration by a different judge, “unavailability” generally refers to the judge’s
absence of authority to rule, not a temporary physical absence from a specific courtroom.
(Geddes v. Superior Court (2005) 126 Cal.App.4th 417, 426 [original judge had been
disqualified and “having no authority to rule, [was] ‘unavailable’ ” for purpose of
reconsideration]; Alvarez v. Superior Court (2004) 117 Cal.App.4th 1107, 1111 [original
judge unavailable to reconsider after being appointed to federal court].) The record
shows that Judge Donnelly was a retired judge sitting on assignment; but the demurrer
and motion to dismiss were heard in different departments, and nothing in the record
suggests Judge Donnelly was no longer sitting on assignment for the Riverside County
Superior Court system at the time Judge Jorge C. Hernandez construed and heard the
motion to dismiss as a motion for reconsideration. Further, nothing showed that Judge
Donnelly was unavailable to hear the case on that date or any future date, although he
may have been assigned to a different court location.
15
D. The Trial Court Erred in Sustaining the Demurrer Upon Reconsideration
1. A Parole Revocation Petition Is Subject to Demurrer
As an initial matter, the People argue that a demurrer is not available in a parole
revocation proceeding because section 1004 applies only to a complaint, indictment, or
information involving the violation of a public offense. We disagree.
By its very terms, section 1004 permits a defendant to demur to an “accusatory
pleading.” (§ 1004.) While we recognize that the statutes do not specifically reference
parole revocation petitions, this omission is understandable in light of the fact that
“[h]istorically, [the Board of Parole Hearings] was responsible for conducting parole
revocation hearings.” (People v. DeLeon (2017) 3 Cal.5th 640, 647.) Only “[u]nder the
Realignment Act” did “jurisdiction over most petitions to revoke parole shif[t] to the
superior courts.” (Ibid.) This revised statutory framework now requires the parole
agency to file a petition in the superior court containing the allegations supporting
revocation of parole. (§§ 1203.2, subd. (b), 3000.08, subd. (f).) Unquestionably, such a
petition constitutes an accusatory pleading.7
Additionally, it appears that a demurrer is available in parole revocation
proceedings, as numerous Courts of Appeal have reached the merits of such demurrers
without questioning the validity of the procedure. (People v. Osorio (2015) 235
7 For this reason, we are unpersuaded by the People’s argument that the reasons
for finding section 1385 inapplicable to revocation petitions should equally apply to
section 1004. By its very terms, section 1385 is limited only to “action[s]” (§ 1385,
subd. (a)), whereas section 1004 applies more broadly to “accusatory pleadings”
(§ 1004).
16
Cal.App.4th 1408, 1415 (Osorio) [demurrer to parole revocation petition erroneously
overruled]; People v. Zamudio (2017) 12 Cal.App.5th 8, 17 [demurrer to parole
revocation petition properly overruled]; People v. Castel (2017) 12 Cal.App.5th 1321,
1325 [demurrer to parole revocation petition properly overruled]; Perlas, supra,
47 Cal.App.5th at p. 837 [error to sustain demurrer to parole revocation petition].) We
are thus unpersuaded by the People’s argument that a demurrer is unavailable in parole
revocation proceedings.
It appears entirely appropriate to permit a demurrer to a petition to revoke parole
(which acts as an accusatory pleading) as a means of testing the sufficiency of such a
pleading as would occur with respect to a complaint, information, or indictment. The
suggestion that there is no means to challenge the sufficiency of an accusatory pleading is
untenable and may result in a denial of due process by allowing the case to proceed on a
defective petition. (See Morrisey v. Brewer (1972) 408 U.S. 471, 487 [explaining the
parolee’s due process rights and specifically holding that “[t]he [petition] should state
what parole violations have been alleged”]; see also Williams v. Superior Court (2014)
230 Cal.App.4th 636, 647.) Such a rule would leave an accused parole violator with no
means of challenging a facially defective petition and necessitate a full hearing to
challenge the accusation when such time and expense may be completely unnecessary.
2. The Allegations of the Petition Were Sufficient
“ ‘ “[A] demurrer raises an issue of law as to the sufficiency of the accusatory
pleading, and it tests only those defects appearing on the face of that pleading.”
[Citation.]’ . . . On appeal, we review the order overruling [a] defendant’s demurrer de
17
novo.” (Perlas, supra, 47 Cal.App.5th at p. 832.) Thus, in the context of a parole
revocation proceeding, “ ‘[w]e exercise our independent judgment as to whether, as a
matter of law, the petition alleged sufficient facts to justify revocation of [a] defendant’s
parole.’ ” (Ibid.) In our view, the allegations of the petition in this case were sufficient
to withstand a demurrer.
When a parole agency files a petition to revoke parole, “[t]he petition must include
a written report detailing the terms and conditions of parole and how they were violated,
the parolee’s background, and the parole agency’s recommendation to the court.”
(Perlas, supra, 47 Cal.App.5th at p. 833; People v. Williams, supra, 71 Cal.App.5th at
p. 1039; Cal. Rules of Court, rule 4.541.) “In addition, the report ‘must include the
reasons for that agency’s determination that intermediate sanctions without court
intervention as authorized by Penal Code section[n] 3000.08(f) . . . are inappropriate
responses to the alleged violations.’ ” (Williams, at p. 1039.) “The explanation of why
intermediate sanctions are inappropriate must ‘be “individualized to the particular
parolee, as opposed to a generic statement.” ’ ” (Ibid.)
The petition in this case attached a written report that detailed the terms and
conditions of Perrotte’s parole, contained allegations of how the Department believed
Perrotte violated specific conditions, contained information on Perrotte’s background,
and included the Department’s recommendation to the trial court. The report disclosed
that the PVDMI recommended a sanction less severe than revocation. Nevertheless,
under the heading of “Evaluation,” the report stated “Intermediate sanctions have been
considered. However, they have been deemed not appropriate at this time.” It then listed
18
a series of facts, including: (1) Perrotte’s underlying conviction involved the reckless
operation of a motor vehicle; (2) Perrotte’s parole had already been revoked on one prior
occasion; (3) the violations alleged occurred only five months after Perrotte’s release; and
(4) Perrotte’s attempt to conceal his traffic citation.
These facts alleged in support of the Department’s determination that intermediate
sanctions were deemed not appropriate are all individual to Perrotte and, if true, could
support the exercise of discretion to override a PVDMI recommendation. A parole
violation directly related to the conduct involved in the commitment offense,8 a repeated
violation of parole conditions, and an attempt to conceal known violations from parole
officers are all factors that could suggest a more severe response is warranted than
compared to a parolee who engaged in the same violation without such factors. In light
of these allegations, we find no deficiency in the allegations of the petition.
3. The PVDMI Document Was Not a Proper Matter to Consider on Demurrer
In order to conclude that the allegations of the petition were insufficient in this
case, the trial court undertook an extensive examination of the printed PVDMI form,
analyzed the document under the principles set forth in Osorio, concluded that “Perrotte’s
PVDMI came up short,” and sustained the demurrer on this basis. On appeal, Perrotte
argues that we should take this same approach and analyze the adequacy of the PVDMI
process under the “Four-Question Osorio Test.” We decline to do so.
8
As recognized in Osorio, the fact that a violation is directly related to the
commitment offense is one destabilizing factor that can justify overriding a PVDMI
recommendation. (Osorio, supra, 235 Cal.App.4th at p. 1414.)
19
Even if we were persuaded by the reasoning set forth in Osorio, supra,
235 Cal.App.4th 1408,9 Perrotte’s argument fails for a more fundamental reason. “[A]
demurrer is only authorized if the defect about which the demurring party complains
‘appears upon the face’ of the pleading.” (Hudson v. Superior Court (2017)
7 Cal.App.5th 999, 1011.) Thus, “ ‘ “[t]he defendant cannot strengthen his demurrer by
bringing in evidentiary material which discloses a defect in the (pleading). . . .”
[Citation.] The sole question raised by demurrer is whether the pleading is facially—not
factually—deficient.’ ” (People v. Chaides (2014) 229 Cal.App.4th 1157, 1163.) The
printed PVDMI form in this case was not part of the Department’s petition or the
required report accompanying the petition. Nor was it the subject of a request for judicial
notice. Instead, it was attached as an exhibit to Perrotte’s motion to dismiss. A party is
not permitted to introduce material outside of the pleadings in order to show a purported
9 In our view, the analysis set forth in Osorio cannot be readily applied to other
cases because the opinion fails to set forth a clear picture of the procedural posture of the
case. The Court of Appeal conducted a detailed analysis of the PVDMI process without a
clear explanation of how the PVDMI became part of the appellate record. (Osorio,
supra, 235 Cal.App.4th at pp. 1413-1415.) The Court of Appeal further concluded that
“it was error for the [parole] agent to select” revocation as the appropriate sanction,
without any explanation of why the parole agent’s actions were within the proper scope
of appellate review when it was the trial court’s order on demurrer that was purportedly
the order on appeal. (Id. at p. 1415.) Finally, it is well settled that even where a pleading
is defective on its face, any error in overruling a demurrer is not prejudicial where the
allegations are subsequently fully proved at trial or a hearing on the merits. (People v.
Beesly (1931) 119 Cal.App.82, 87; People v. Schoeller (1950) 96 Cal.App.2d 61, 64-65;
People v. Boston (1958) 164 Cal.App.2d 66, 69.) Despite the fact that the parole
revocation proceeding in Osorio resulted in a full hearing on the merits, the Court of
Appeal reversed the order revoking parole based upon its conclusion that the interim
order overruling a demurrer was erroneous, without any discussion of prejudice. (Osorio,
at pp. 1415-1416.) Because the procedural posture of Osorio is unclear on many points,
we decline to use it as a guidepost in this case.
20
defect on demurrer. The trial court offered no explanation for why it believed it was
proper to consider this document in the context of a demurrer, and Perrotte has offered no
basis for this court to do so now on appeal.
Nothing in the relevant statutes or California Rules of Court requires that the
PVDMI documents be included as part of a petition for revocation or accompanying
report (§§ 1203.2, subd.(b), 3000.08, subd. (f); Cal. Rules of Court, rule 4.451), and the
Department did not include the printed PVDMI form as part of its petition or report in
this case. While it may be true that the Department failed to follow the proper procedures
in utilizing the PVDMI, in this case, when the PVDMI is not made part of the accusatory
pleading, the issue cannot be resolved on demurrer. (People v. Biane (2013) 58 Cal.4th
381, 388 [“A demurrer is not a proper means of testing the sufficiency of the evidence
supporting an accusatory pleading.”].) Thus, it was improper to consider the printed
PVDMI form in order to test the sufficiency of the revocation petition, and the trial court
erred in doing so.
E. We Need Not Resolve Other Issues Raised by the People
The People also argue the trial court abused its discretion in denying leave to
amend and deprived the People of due process by hearing Perrotte’s motion without
adequate notice. However, we need not address these arguments in light of our
conclusion that the trial court erred in entertaining the motion for reconsideration and
further erred in sustaining the demurrer upon reconsideration. Because the order
sustaining the demurrer upon reconsideration must be reversed, these issues are not
relevant to the disposition of this appeal.
21
IV. DISPOSITION
The order modifying Perrotte’s conditions of parole to strike condition No. 38 and
the order dismissing the allegation of the revocation petition based upon an alleged
violation of condition No. 38 are affirmed. The order sustaining the demurrer to the
remaining allegations of the petition for revocation is reversed. Upon remand, the trial
court is directed to enter a new order denying the motion for reconsideration.10
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
FIELDS
J.
We concur:
CODRINGTON
Acting P. J.
RAPHAEL
J.
10 While we have concluded it was error for the trial court to reconsider a ruling
made by a prior judge, instructing the trial court to refer the parties to the prior judge
upon remand would serve no purpose in this case. A demurrer raises only issues of law
(People v. Biane, supra, 58 Cal.4th at p. 388), and we have already determined based
upon our independent review that the allegations of the petition were sufficient to
withstand a demurrer.
22 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483900/ | NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 21-2904
____________
PAVAN MAHESH VASWANI,
Petitioner
v.
ATTORNEY GENERAL OF THE UNITED STATES OF AMERICA
____________
On Petition for Review of a Decision of the
Board of Immigration Appeals
(A089-640-309)
Immigration Judge: Emily Farrar-Crockett
____________
Submitted Under Third Circuit L.A.R. 34.1(a)
(November 14, 2022)
Before: HARDIMAN, RESTREPO, and PORTER, Circuit Judges.
(Filed: November 15, 2022)
____________
OPINION *
____________
HARDIMAN, Circuit Judge.
Pavan Vaswani petitions for review of a final order of removal issued by the
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
Board of Immigration Appeals. Vaswani contends the Board erred when it concluded that
he failed to prove his removal would cause “extreme hardship” to his U.S.-citizen
relatives. Because he challenges only factual and discretionary determinations, we lack
jurisdiction under 8 U.S.C. § 1252(a)(2)(B)(i). We will dismiss Vaswani’s petition.
I
A native and citizen of India, Vaswani entered the United States on a student visa
in 1998 and became a lawful permanent resident in 2007. In 2019, he was convicted of
wire fraud and conspiracy, sentenced to 18 months’ imprisonment, and ordered to pay
$5.8 million in restitution. The Department of Homeland Security charged Vaswani with
removability under 8 U.S.C. § 1227(a)(2)(A)(iii) because his convictions were for
aggravated felonies, and an Immigration Judge found him removable.
Vaswani later applied for adjustment of status under 8 U.S.C. § 1255(a) and
sought a waiver of inadmissibility under 8 U.S.C. § 1182(h), arguing that his removal
would cause extreme hardship to his wife, two children, and mother—all U.S. citizens.
An IJ conducted a hearing to evaluate the extreme-hardship claim, at which Vaswani and
his wife testified. They testified that Vaswani’s wife and children would not relocate to
India if he were removed, though his mother might. They also detailed the risks
Vaswani’s removal would pose to the physical and mental health of his four qualifying
relatives based on his wife’s and mother’s preexisting medical conditions and his two
school-aged children’s anxiety.
The IJ determined that this testimony failed to show hardships that, even when
combined, rise to the level of “extreme hardship.” So Vaswani was statutorily ineligible
2
for adjustment of status. Vaswani appealed to the Board of Immigration Appeals. After
reviewing the hardships Vaswani’s wife, children, and mother would face, the Board
dismissed the appeal, agreeing with the IJ that “the evidentiary record does not
demonstrate that the hardships to [Vaswani’s relatives], when considered individually
and in the aggregate, rise to the level of extreme hardship.” AR 9. Vaswani timely
petitioned for review.
II
Our jurisdiction over petitions for review of Board decisions is governed by 8
U.S.C. § 1252. We lack jurisdiction here because Vaswani challenges the Board’s
discretionary hardship determination without raising any colorable constitutional or legal
claim. See 8 U.S.C. § 1252(a)(2)(B)(i), (D); Cospito v. Att’y Gen., 539 F.3d 166, 170–71
(3d Cir. 2008) (per curiam).
Vaswani challenges only one finding by the Board: that he failed to demonstrate
his removal will result in extreme hardship to his qualifying relatives. Vaswani sought
relief under 8 U.S.C. § 1182(h)(1)(B), which provides the Attorney General discretion to
waive the application of certain criminal inadmissibility grounds if an alien’s removal
“would result in extreme hardship to the [alien’s] United States citizen or lawfully
resident spouse, parent, son, or daughter.” We lack jurisdiction to review challenges to
factual or discretionary decisions regarding § 1182(h) extreme-hardship determinations, 8
U.S.C. § 1252(a)(2)(B)(i); Patel v. Garland, 142 S. Ct. 1614, 1627 (2022), and retain
only the “narrowly circumscribed” jurisdiction under § 1252(a)(2)(D) to review
“colorable constitutional claims or questions of law,” Cospito, 539 F.3d at 170 (internal
3
quotation marks and citation omitted).
Vaswani raises no colorable constitutional or legal claim; he challenges only the
Agency’s factfinding and exercise of discretion. This challenge fails for the same reasons
we explained in Cospito. See 539 F.3d at 170–71. There, we held that we lacked
jurisdiction over a petition that argued the Agency gave insufficient weight to certain
evidence, ignored other evidence, failed to adequately consider the emotional impact of
removal, and evaluated hardships individually rather than jointly. Cospito, 539 F.3d at
170. Vaswani’s arguments that the Agency failed to “aggregate the ordinary hardships to
determine if they equal a determination of extreme hardship,” Vaswani Br. 10, and
“grossly misapplied the applicable legal standard,” Vaswani Br. 22, are indistinguishable
from those in Cospito.
Vaswani’s framing on appeal—purporting to dispute the Board’s “statutory
interpretation of the standard for extreme hardship” and alleging that the Board’s
“misapplication of the legal standard in question also constitutes a violation of due
process,” Vaswani Br. 1—cannot save his petition. Vaswani “may not dress up a claim
with legal clothing to invoke this Court’s jurisdiction.” Hernandez-Morales v. Att’y Gen.,
977 F.3d 247, 249 (3d Cir. 2020) (internal quotation marks and citation omitted); see also
Cospito, 539 F.3d at 170 (“A party cannot confer jurisdiction on this Court where none
exists simply by attaching a particular label to the claim raised in a petition for review.”).
Here, both the Board and IJ invoked the correct rule in concluding that he failed to show
the hardships, “when considered individually and in the aggregate, rise to the level of
extreme hardship.” See AR 9 (emphasis added); AR 79. Vaswani faults the Agency for
4
failing to properly apply the asserted aggregation rule, which calls into question only the
Agency’s factfinding and discretion.
For these reasons, we will dismiss the petition for review.
5 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483915/ | Filed 11/15/22 Caron v. Cal. State Board of Pharmacy CA4/1
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.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
CRAYA C. CARON, D079386
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2019-
00022267-CU-WM-NC)
CALIFORNIA STATE BOARD OF
PHARMACY,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of San Diego County,
Earl H. Maas, III, Judge. Affirmed.
Craya C. Caron, in pro. per. for Plaintiff and Appellant.
Rob Bonta, Attorney General, Carl W. Sonne, Assistant Attorney
General, Gregory J. Salute and Stephen A. Aronis, Deputy Attorneys
General, for Defendant and Respondent.
I
INTRODUCTION
Proceeding in propria persona, Craya Caron filed a petition for writ of
administrative mandamus to compel the California State Board of Pharmacy
(hereafter, the Board) to vacate its decision revoking Caron’s pharmacist
license. In response, the Board moved to declare Caron a vexatious litigant
and require her to furnish $15,000 security (Code Civ. Proc., §§ 391,
subd. (b)(1), 391.1).1 The trial court issued a minute order granting the
Board’s motion and ordering Caron to furnish $15,000 security. It also issued
a prefiling order prohibiting Caron from filing new litigation in propria
person without prior judicial approval (§ 391.7)—an order we affirmed in
Caron v. Cal. State Bd. of Pharmacy (Sept. 18, 2020, D076660) [nonpub. opn.]
(Caron). Ultimately, Caron did not furnish $15,000 security. Therefore, the
trial court entered a judgment of dismissal in favor of the Board.
Caron appeals the judgment of dismissal and challenges the minute
order requiring her to furnish $15,000 security. In particular, she attacks the
trial court’s finding that she is a vexatious litigant, its finding that there is
not a reasonable probability she will prevail in her mandamus action, the
amount of the security requirement, and the constitutionality of the
vexatious litigant statutes. Further, she challenges a trial court order
denying her request to set aside the minute order and the prefiling order
under section 473, subdivision (b).
We reject Caron’s arguments and affirm the judgment of dismissal.
1 Further undesignated statutory references are to the Code of Civil
Procedure.
2
II
BACKGROUND2
A. Background to the Prior Appeal
The following factual background is taken from this court’s prior
opinion in Caron, supra, D076660.
“The Board issued Caron a pharmacist license in 1976. In 2017, the
Board ordered Caron to submit to a psychological examination, which she
did. The psychotherapist who performed the examination ‘diagnosed [Caron]
with a delusional disorder,’ which the therapist opined ‘seriously impacts
[Caron’s] ability to practice pharmacy in a safe manner.’
“Based on the results of the psychological examination, the Board’s
executive officer commenced a proceeding before the Board seeking to
suspend or revoke Caron’s license. A state administrative law judge (ALJ)
conducted a two-day hearing in October and November 2018 (in Riverside
and Orange Counties, respectively). In December 2018, the ALJ issued a
proposed decision revoking Caron’s license. The Board adopted the ALJ’s
proposed decision, and later denied Caron’s petition for reconsideration. The
Board’s decision became effective March 17, 2019.
2 Caron includes a statement of the case in her opening brief, but does
not provide citations to the record for the facts discussed therein. “ ‘Any
statement in a brief concerning matters in the appellate record—whether
factual or procedural and no matter where in the brief the reference to the
record occurs—must be supported by a citation to the record.’ [Citation.] We
have the discretion to disregard contentions unsupported by proper page cites
to the record.” (Professional Collection Consultants v. Lauron (2017) 8
Cal.App.5th 958, 970; see also Cal. Rules of Court, rule 8.204(a)(1)(C).)
Although Caron is a self-represented litigant, she is not exempt from these
rules. (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246–1247.) We exercise
our discretion to disregard Caron’s unsupported statement of the case.
3
“About six weeks later, Caron filed in propria persona a petition for
writ of administrative mandamus in the San Diego County Superior Court
seeking to compel the Board to vacate its decision.
“The Board responded to Caron’s petition by moving to (1) declare her a
vexatious litigant, (2) require her to furnish $15,000 security as a condition of
proceeding with her petition, and (3) dismiss the petition if Caron failed to
furnish the required security. The Board did not seek a prefiling order
prohibiting Caron from filing any new litigation without first obtaining leave
of court. The Board’s notice of motion specified a hearing date of July 26,
2019.
“The Board argued in its motion that Caron was a vexatious litigant
because she had ‘filed five or more lawsuits that have been finally determined
adversely against [her] within the last seven years.’ (§ 391, subd. (b)(1)
[defining a vexatious litigant to include a person who ‘[i]n the immediately
preceding seven-year period has commenced, prosecuted, or maintained in
propria persona at least five litigations ... that have been ... finally
determined adversely to the person’].) The Board requested that the trial
court take judicial notice of the final orders or opinions in the following 21
legal matters commenced by Caron in propria persona:
‘1. September 5, 2013, California Court of Appeal, Fourth
Appellate District—Petition for writ of mandate from Case
No. 30-2012-00544810 DENIED, Caron v. Orange County
Superior Court: Select Portfolio Inc., Real Party in Interest,
Case No. G048679;
‘2. December 9, 2013, California Court of Appeal, Fourth
Appellate District—Appeal from Case No. 30-2012-
00544810 DISMISSED, Caron v. Select Portfolio Servicing,
Inc., Case No. G048754;
‘3. January 16, 2014, Orange County Superior Court—case
DISMISSED based on plaintiff’s request for voluntary
4
dismissal, Caron v. CVS Pharmacy, Beach Garfield LLC,
Case No. 30-2013-00658577 (voluntary dismissals count—
see Tokerud v. Capitol Bank Sacramento (1995) 38
Cal.App.4th 775, 779);
‘4. November 12, 2014, Ninth Circuit Court of Appeals—
petition for writ of mandamus DENIED, Caron v. United
States District Court, Central District, CVS Pharmacy,
Real Party in Interest, Case No. 14-72765;
‘5. April 10, 2015, California Court of Appeal, Fourth
Appellate District—Petition for writ of mandate/prohibition
from Case No. 30-2012-00544810 DENIED, Caron v.
Orange County Superior Court; TD Service Company, Real
Party in Interest, Case No. G051714;
‘6. May 12, 2015, Ninth Circuit Court of Appeals, appeal
DENIED, Caron v. CVS Pharmacy, Inc., and CVS Rx
Services, Inc., Case No. 15-55632;
‘7. May 29, 2015, Orange County Superior Court, Judgment
of Dismissal in favor of Defendant TD Service Company,
without leave to amend, Caron v. Select Portfolio Servicing,
Inc., et al., Case No. 30-2012-00544810;
‘8. June 26, 2015, Orange County Superior Court,
Judgment of Dismissal in favor of Defendant PNC Bank,
without leave to amend, Caron v. PNC Bank., Case No. 30-
2015-00775577;
‘9. May 10, 2016, California Court of Appeal, Fourth
Appellate District—Appeal from Case No. 30-2015-
00775577 DISMISSED, Caron v. PNC Bank, Case No.
G053268;
‘10. May 31, 2016, California Court of Appeal, Fourth
Appellate District—Motion to vacate the dismissal and
reinstate the appeal DENIED, Caron v. PNC Bank, Case
No. G053268;
‘11. July 15, 2016, California Court of Appeal, Fourth
Appellate District—Appeal from Case No. 30-2012-
00544810 DISMISSED, Caron v. TD Service Company,
Case No. G053257;
‘12. August 8, 2016, California Court of Appeal, Fourth
Appellate District—petition for writ of mandate DENIED,
5
Caron v. Superior Court, Lonnie Tiner, Real Party in
Interest, Case No. E066516;
‘13. April 3, 2017, California Court of Appeal, Fourth
Appellate District—Order Dismissing Appeal, Caron v.
Fletcher Jones Motor Cars Inc., Case No. G054648;
‘14. May 10, 2017, [ ] San Bernardino Superior Court—
Notice of Entry of Judgment in favor of Defendants, Caron
v. Lonnie W. Tiner, DDS, et. al., Case No. CIVDS1518292;
‘15. June 1, 2017, [ ] California Court of Appeal, Fourth
Appellate District—Order Dismissing Petition for writ of
mandate, Caron v. Fletcher Jones Motor Cars Inc., Case
No. G055017;
‘16. June 9, 2017, United States District Court, Central
District of California—Dismissal granted in favor of
defendant Fletcher Jones as to all federal law claims, with
prejudice, and as to all state-law claims, without prejudice
to Caron advancing those in state court, Caron v. Fletcher
Jones Motor Cars, Inc., et. al., Case No. 8:17-cv-565 JLS
JDE;
‘17. June 22, 2017, California Court of Appeal, Fourth
Appellate District—petition for writ of mandate DENIED,
Caron v. Superior Court, Lonnie Tiner, Real Party in
Interest, Case No. E068367;
‘18. September 18, 2017, Orange County Superior Court,
Judgments of Dismissal in favor of defendants Fletcher
Jones, and Mercedes-Benz USA, LLC, with prejudice and
without leave to amend, Caron v. Fletcher Jones Motor
Cars Inc., Case No. 30-2016-00840325;
‘19. March 23, 2018, Ninth Circuit Court of Appeals, Appeal
from Case No. 8:17-cv-565 JLS JDE—Memorandum
affirming dismissal on behalf of Fletcher Jones, Caron v.
Fletcher Jones Motor Cars. Inc., et. al., Case No. 17-55963;
‘20. June 18, 2018 docket entry indicating the case was
deemed closed on June 7, 2018, United States District
Court, Central District of California—Order[s] denying IFP
status[,] ... dismissing proposed class-action lawsuit, and
dismissing a lawsuit without prejudice, Caron v. Virginia
H[e]rold, Case No. EDVC 18-1194-R (KK);
6
‘21. October 15, 2018, California Court of Appeal, Fourth
Appellate District, both appeals from Case No.
CIVDS1518292, and consolidated—Judgment for
defendants affirmed, Caron v. Christopher K. Tiner, et. al.,
Case No. E066128[;] Caron v. Estate of Lonnie W. Tiner, et.
al., Case No. E086673.” (Bolding omitted.)
“Caron opposed the Board’s motion on several grounds. Most relevant
here, she argued the record showed she had ‘filed only three litigations since
2012, NOT “21” ’ (underlining omitted), because multiple entries on the
Board’s request for judicial notice arose within a single lawsuit, or were not
‘ “current litigation” ’ because they were ‘filed and adjudicated many years
prior to 2012.’
“The Board argued in reply that all 21 matters identified on the request
for judicial notice qualified Caron as a vexatious litigant because each was a
separate ‘litigation’ that was determined adversely to her during the relevant
seven-year window.
“On July 25, 2019, the day before the noticed hearing on the Board’s
motion, the trial court issued a one-sentence tentative ruling stating: ‘The
parties are ordered to show cause as to why this case should not be
transferred to the Riverside Superior Court.’
“On July 26, the Board appeared at the hearing and filed a response to
the trial court’s venue inquiry. The Board argued venue was proper in San
Diego because the underlying Board action originated there, the ALJ who
heard the case was from the San Diego branch of the Office of Administrative
Hearings, and the Board’s counsel worked in the San Diego branch of the
Attorney General’s office. The Board submitted emails exchanged between
its counsel and Caron indicating Caron selected San Diego as the venue.
“The July 26 hearing was not reported. The trial court’s minute order
indicates the Board appeared through counsel, and ‘Caron, self-represented
7
Petitioner, is not present.’ After hearing argument from the Board’s counsel,
the court stated in the minute order that it was ‘satisfied [that] the case
should not be transferred.’
“As to the merits, the court granted the Board’s motion. As stated in
the minute order, the court found the requirement of five adverse
determinations in the preceding seven years was satisfied because ‘[m]ultiple
separate appeals or writs arising out of multiple orders or judgments within
the same case qualify as separate litigations’ for vexatious-litigant purposes.
Although the court found the threshold satisfied, the court concluded the
Board had established that only 13 of the 21 litigations qualified because
eight of them appeared to be summary denials of writ petitions, which do not
necessarily constitute final adverse determinations.
“As to the qualifying matters, the minute order states:
‘The following litigations, at a minimum, constitute
litigations that have been finally determined adversely to
Petitioner:
‘1. Caron v. Select Portfolio Servicing, Inc. et al., Fourth
District Court of Appeal, Division 3 case no. G048754.
Appeal dismissed as of December 9, 2013 for failure to pay
statutory filing fee and deposit costs for preparation of
record, remittitur issued February 10, 2014.
‘2. Caron v. CVS Pharmacy, Beach Garfield LLC, Orange
County Superior Court case no. 30-2013-00658577-CL JR-
CJC. Request for voluntary dismissal of complaint granted
as of January 16, 2014.
‘3. Caron v. Select Portfolio Servicing, Inc. et al., Orange
County Superior Court case no. 30-2012-00544810.
Defendant’s demurrer to complaint sustained without leave
to amend and judgment of dismissal in favor of TD Service
Company entered on May 29, 2015.
‘4. Caron v. PNC Bank, Orange County Superior Court case
no. 30-2015-00775577-CU-OR-CJC. Defendant’s demurrer
to complaint sustained without leave to amend and
8
judgment of dismissal in favor of PNC Bank National
Association entered on June 26, 2015.
‘5. Caron v. PNC Bank National Association, Fourth
District Court of Appeal, Division 3 case no. G053268.
Appeal dismissed as of May 10, 2016 as untimely,
remittitur issued July 12, 2016.
‘6. Caron v. TD Service Company, Fourth District Court of
Appeal, Division 3 case no. G053257. Appeal dismissed as
of July 15, 2016 for failure to file brief, remittitur issued
September 21, 2016.
‘7. Caron v. Fletcher Jones Motors Cars Inc. et al., Fourth
District Court of Appeal, Division 3 case No. G054648.
Appeal dismissed as of April 3, 2017 due to nonappealable
order.
‘8. Caron v. Tiner et al., San Bernardino Superior Court
case No. CIVDS1518292. Defendants’ motion for summary
judgment granted and judgment in favor of Defendants
entered on April 21, 2017.
‘9. Caron v. Fletcher Jones Motor Cars, Inc. et al., United
States District Court, Central District case No. 8:17-cv-565-
JLS-JDEx. Federal law claims dismissed with prejudice in
favor of Defendant Fletcher Jones on June 9, 2017.
‘10. Caron v. Fletcher Jones Motor Cars, Inc., Orange
County Superior Court case No. 30-2016-00840325.
Defendant’s demurrer to complaint sustained without leave
to amend and judgment of dismissal in favor of Defendant
Fletcher Jones Motor Cars, Inc. entered on September 18,
2017.
‘11. Caron v. Fletcher Jones Motor Cars, Inc. et al., Ninth
Circuit Court of Appeals case No. 8:17-cv-00565-JLS-JDE.
Appeal denied March 23, 2018.
‘12. Caron v. H[e]rold, United States District Court,
Central District case No. EDVC 18-1194-R (KK).
Complaint dismissed on June 7, 2018.
‘13. Caron v. Tiner et al., Fourth District Court of Appeal,
Division 2 case Nos. E066128 and E086673. Appeals denied
on October 15, 2018.’
9
“The trial court also found the Board had ‘met its initial burden of
establishing that there is not a reasonable probability that [Caron] will
prevail in this writ proceeding.’
“Accordingly, the court in its July 26 minute order declared Caron a
vexatious litigant and ordered her to furnish $15,000 security by August 15,
2019.
“The same day it entered its minute order, the trial court—apparently
on its own motion—also entered a ‘prefiling order’ prohibiting Caron ‘from
filing any new litigation’ in propria persona ‘in the courts of California
without approval of the presiding justice or presiding judge of the court in
which the action is to be filed.’ The court directed the clerk to provide a copy
of the prefiling order to the Judicial Council.
“The Board sent Caron a notice of ruling attaching both the minute
order and the prefiling order.
“On August 1, Caron filed a response to the trial court’s July 25 inquiry
regarding venue. Caron stated that although she had elected to file her
petition in San Diego County, she had no objection to the case being
transferred to Riverside County.
“On August 20, the Board’s counsel sent a letter to the trial court
requesting that the court dismiss the action because Caron had failed to
furnish the required security by the August 15 deadline. Before the court
could act on the Board’s request, Caron filed a notice of appeal identifying
and attaching the minute order, but also attaching (though not identifying)
the prefiling order. The trial court thereafter responded to the Board that
the court was ‘unable to act as requested’ because the ‘case is on [a]ppeal.’ ”
(Caron, supra, D076660, footnotes omitted.)
10
B. The Prior Appeal
On appeal from the minute order and the prefiling order, the Board
moved our court to limit the scope of the parties’ appellate briefing. The
Board argued briefing should be limited to the prefiling order, since it was an
appealable injunction. According to the Board, the minute order was not
properly before us and should not be briefed because it was not an appealable
order and judgment had not been entered. For the most part, we accepted
these arguments. Therefore, we directed the parties to limit their briefing to
the prefiling order and the single underlying finding upon which the prefiling
order was based—the finding that Caron was a vexatious litigant.
On September 18, 2020, we affirmed the prefiling order. (Caron, supra,
D076660.) In our opinion affirming the prefiling order, we rejected numerous
procedural, substantive, and constitutional challenges to the prefiling order
and the trial court’s finding that Caron is a vexatious litigant. (Ibid.)
C. Proceedings Following the Prior Appeal
On December 29, 2020, Caron moved the trial court to set aside the
prefiling order and the minute order under section 473, subdivision (b). She
argued the prefiling order and the minute order should be set aside based on
her mistaken failure to appear at the noticed hearing on July 26, 2019. She
stated she did not appear at the hearing because: (1) she calendared the
hearing for the wrong date; and (2) the trial court’s issuance of an order to
show cause on July 25 caused her to mistakenly believe it had deferred
consideration of the Board’s vexatious litigant motion until it determined the
venue for the case.
The Board opposed Caron’s set-aside motion. It argued the motion
should be denied because: (1) it was untimely, as it was not filed within 60
days of the issuance of the minute order or the pretrial order (see § 473,
11
subd. (b)); and (2) Caron was estopped from relitigating issues that were
previously decided in Caron, supra, D076660, including the trial court’s
finding that she is a vexatious litigant, the constitutionality of the vexatious
litigant statutes, and the validity of the prefiling order.
The parties presented oral argument concerning Caron’s set-aside
motion on April 28. The Board appeared telephonically through counsel and
Caron made a self-represented telephonic appearance. The April 28 hearing
was not reported.
On June 16, the trial court denied Caron’s set-aside motion. It ruled
Caron was “barred from challenging [the] court’s finding” that she is a
vexatious litigant because, in Caron, supra, D076660, our court “reviewed the
vexatious finding, and found it was proper.”
The trial court found Caron’s motion was untimely insofar as it sought
to set aside the $15,000 security requirement, given that the motion was not
filed within six months of the issuance of the minute order imposing the
$15,000 security requirement.
Finally, the court found the motion failed on the merits. It reasoned a
party’s “failure to adequately oppose a motion or appear for oral argument
does not warrant discretionary relief” under section 473. Further, the court
stated it had considered Caron’s written opposition to the Board’s vexatious
litigant motion. According to the court, it granted the Board’s motion “on its
merits, after opposition was filed”—not based on Caron’s failure to appear at
the hearing.
After denying Caron’s motion to set aside the prefiling order and the
minute order, the court dismissed her petition for writ of administrative
mandamus for failure to furnish $15,000 security. The court entered a
judgment of dismissal for the Board.
12
On August 13, 2021, Caron filed her notice of appeal from the judgment
of dismissal.3 Because Caron was found to be a vexatious litigant subject to
a prefiling order, she was required to apply—and did apply—for permission
to file the present appeal. (§ 391.7, subd. (c).) The undersigned granted
Caron’s application. (Id., subd. (b).)
III
DISCUSSION
A. Vexatious Litigant Statutes
“The vexatious litigant statutes (§§ 391–391.7) are designed to curb
misuse of the court system by those persistent and obsessive litigants who,
repeatedly litigating the same issues through groundless actions, waste the
time and resources of the court system and other litigants.” (Shalant v.
Girardi (2011) 51 Cal.4th 1164, 1169 (Shalant); see Bravo v. Ismaj (2002) 99
Cal.App.4th 211, 220–221 [the vexatious litigant statutes curb the misuse of
the court system by litigants who proceed in propria persona and repeatedly
relitigate the same issues, which “ ‘not only wastes court time and resources,
but also prejudices other parties waiting their turn before the courts’ ”].)
A “vexatious litigant” refers to a “person who has, while acting in
propria persona, initiated or prosecuted numerous meritless litigations,
relitigated or attempted to relitigate matters previously determined against
3 Five months after entry of the judgment of dismissal, and four months
after Caron filed her notice of appeal, Caron applied for a waiver of court fees
to prepare transcripts from the administrative proceedings that culminated
in the revocation of her pharmacist license. The trial court denied the fee
waiver application. In her opening brief, Caron “objects” to the order denying
her fee waiver application. However, Caron’s August 13, 2021 notice of
appeal predated the fee waiver order and Caron did not file a separate notice
of appeal from the fee waiver order. Thus, the order denying Caron’s fee
waiver application falls outside the scope of this appeal.
13
him or her, repeatedly pursued unmeritorious or frivolous tactics in
litigation, or who has previously been declared a vexatious litigant in a
related action.” (Shalant, supra, 51 Cal.4th at pp. 1169–1170.) Under the
first of these criteria, a person may be deemed vexatious if, in the
immediately preceding seven-year period, he or she “has commenced,
prosecuted, or maintained in propria persona at least five litigations other
than in a small claims court that have been (i) finally determined adversely
to the person or (ii) unjustifiably permitted to remain pending at least two
years without having been brought to trial or hearing.” (§ 391, subd. (b)(1).)
The vexatious litigant statutes grant courts and nonvexatious litigants
“two distinct and complementary sets of remedies” to address the pernicious
problem of vexatious litigants. (Shalant, supra, 51 Cal.4th at p. 1171.) First,
a defendant may move the court to require the plaintiff to furnish security on
grounds that the plaintiff: (1) is a vexatious litigant, and (2) has no
reasonable probability of prevailing against the moving defendant. (§ 391.1;
Shalant, supra, 51 Cal.4th at p. 1170.) “If, after a hearing, the court finds for
the defendant on these points, it must order the plaintiff to furnish security
‘in such amount and within such time as the court shall fix.’ (§ 391.3.)”
(Shalant, at p. 1170.) For purposes of the vexatious litigant statutes,
“ ‘[s]ecurity’ means an undertaking to assure payment, to the party for whose
benefit the undertaking is required to be furnished, of the party’s reasonable
expenses, including attorney’s fees and not limited to taxable costs, incurred
in or in connection with a litigation instituted, caused to be instituted, or
maintained or caused to be maintained by a vexatious litigant.” (§ 391,
subd. (c).) “The plaintiff’s failure to furnish [the] security is grounds for
dismissal. (§ 391.4.)” (Shalant, at p. 1170; see Luckett v. Keylee (2007) 147
14
Cal.App.4th 919, 924 [“If the security is not posted, the action will be
dismissed.”].)
Second, “the court may, on its own motion or the motion of any party,
enter a prefiling order which prohibits a vexatious litigant from filing any
new litigation in the courts of this state in propria persona without first
obtaining leave of the presiding justice or presiding judge of the court where
the litigation is proposed to be filed.”4 (§ 391.7, subd. (a).) Unlike the
security requirement, a court may issue a prefiling order irrespective of
whether the vexatious litigant has a reasonable probability of prevailing in
the case presently before the court. (In re Marriage of Rifkin & Carty (2015)
234 Cal.App.4th 1339, 1348.) A prefiling order is a “powerful … tool designed
‘to preclude the initiation of meritless lawsuits and their attendant
expenditures of time and costs.’ ” (Shalant, supra, 51 Cal.4th at p. 1170.)
B. The Trial Court Properly Required Caron to Furnish $15,000 Security
and Dismissed Her Case for Failure to Furnish Security
As noted, the trial court issued a minute order requiring Caron to
furnish $15,000 security. It imposed the security requirement after finding:
(1) Caron is a vexatious litigant, as defined by section 391, subdivision (b)(1);
and (2) there was not a reasonable probability she would prevail on her
petition for writ of administrative mandamus. Caron challenges the security
requirement on several grounds.
1. Caron Waived Her Challenge to the Vexatious Litigant Finding
At the outset, Caron challenges the security requirement—and the
dismissal of her case for failure to furnish security—on grounds that she is
not a vexatious litigant. She claims the court erred in declaring her a
4 “The presiding justice or presiding judge shall permit the filing of [the
proposed] litigation only if it appears that the litigation has merit and has
not been filed for the purposes of harassment or delay.” (§ 391.7, subd. (b).)
15
vexatious litigant because she was not properly served in this case with
“detailed documents” pertaining to all of the lawsuits that were resolved
against her within the last seven years (§ 391, subd. (b)(1)). According to
Caron, these service defects precluded her from adequately opposing the
Board’s motion to declare her a vexatious litigant.
We can quickly dispose of Caron’s argument. It is Caron’s burden, as
the appellant, to “present meaningful legal analysis supported by citations to
authority and citations to facts in the record that support the claim of error.”
(In re S.C. (2006) 138 Cal.App.4th 396, 408.) Caron has not satisfied her
burden. She has not supported her generalized claims of insufficient service
with pertinent legal authorities or proper citations to the record, nor has she
specifically identified the “detailed documents” she purportedly failed to
receive. Given the absence of any cogent legal argument, supporting legal
authorities, or proper citations to the record, we deem Caron’s claim of error
based on insufficient service waived.5 (In re Marriage of Falcone & Fyke
(2008) 164 Cal.App.4th 814, 830 [“The absence of cogent legal argument or
citation to authority allows this court to treat the contentions as waived.”].)
2. The Trial Court Did Not Err When It Found There Was No
Reasonable Probability Caron Would Prevail
Caron also challenges the trial court’s finding that there was no
reasonable probability she would prevail in her mandamus proceeding. She
claims the court erred in two respects: (1) it did not articulate why she lacked
a reasonable probability of prevailing; and (2) it did not identify the legal
standard it used to assess her likelihood of prevailing.
5 Because we deem Caron’s claim of error waived, it is unnecessary for us
to determine whether our affirmance of the prefiling order in Caron precludes
her from challenging the trial court’s vexatious litigant finding under the law
of the case doctrine (discussed more fully infra).
16
With respect to the first claim of error, Caron has not established that
the court was under a duty to expound upon its finding that she had no
reasonable probability of success. “There are instances where the Legislature
has mandated that a trial court express its reasons or factual determinations
on the record. However, these situations are rare …. [They] are the
exceptions to the general rule that findings of fact are not required in
connection with law and motion matters.” (Laabs v. City of Victorville (2008)
163 Cal.App.4th 1242, 1272; see also Beckett v. Kaynar Mfg. Co. (1958) 49
Cal.2d 695, 699 [“There is no necessity to make findings on an order made
after a motion has been ruled upon.”]; Weil & Brown, Cal. Practice Guide:
Civil Procedure Before Trial (The Rutter Group 2022) ¶ 9:251, p. 9(I)-145
[“With a few exceptions [citation], findings of fact are not required in
connection with law and motion rulings.”].) Caron provides no legal authority
or cogent argument indicating a vexatious litigant proceeding is one of the
uncommon situations in which a court must identify the reasons or factual
findings supporting its law and motion ruling. Thus, she has failed to
demonstrate that the absence of detailed factual findings or determinations
was erroneous.
Caron’s second claim of error fares no better. “[A] court’s ‘failure to
“discuss” a particular standard does not imply it applied an incorrect
standard. Error on appeal must be affirmatively shown by the record, and
“[w]e presume the trial court knew and properly applied the law absent
evidence to the contrary.” ’ ” (People v. Johnson & Johnson (2022) 77
Cal.App.5th 295, 322, quoting J.H. v. G.H. (2021) 63 Cal.App.5th 633, 644;
see Committee for Responsible Planning v. City of Indian Wells (1989) 209
Cal.App.3d 1005, 1011 [appellant did not show that the trial court applied
wrong legal standard where minute order did “not state the court’s reasons”
17
for its ruling].) Caron makes no showing that the court applied the wrong
legal standard. In the absence of such a showing, we apply the presumption
of correctness and assume the court applied the correct legal standard.
In addition to raising these two claims of error, Caron argues—without
further analysis or legal authority—that our court, “[a]t minimum … needs to
review the entirety” of her petition for writ of administrative mandamus and
determine—presumably by reference to the administrative record—whether
the trial court erred in finding that there was no reasonable probability she
would prevail. She is mistaken. “ ‘It is neither practical nor appropriate for
[a reviewing court] to comb the record on [an appellant’s] behalf.’ ” (City of
Lomita v. City of Torrance (1983) 148 Cal.App.3d 1062, 1069; see Howard v.
American National Fire Ins. Co. (2010) 187 Cal.App.4th 498, 534 [“It is not
our place to comb the record seeking support for assertions parties fail to
substantiate.”].) Thus, we decline Caron’s invitation to scour the appellate
record on her behalf in search of reversible error.
3. The Trial Court Properly Set the Security Amount at $15,000
Next, Caron challenges the amount of the $15,000 security
requirement. Although her argument is somewhat difficult to discern, she
appears to argue that a security of any amount would be improper because
the Board has not incurred, or cannot incur, reasonable expenses defending
itself in the mandamus proceeding she initiated. According to Caron, the
Board has no reasonable or readily-identifiable defense expenses because it is
represented by the Office of the Attorney General, a taxpayer-supported
government agency. Caron’s argument is without merit.
Together with the Board’s motion to declare Caron a vexatious litigant
and require her to post $15,000 security, the Board filed a declaration from
the deputy attorney general who represents the Board in this proceeding. He
18
averred the Office of the Attorney General bills the Board $170 per hour for
his legal services.6 He described the legal services rendered and estimated
he needed to spend 100 hours working on the case. Multiplying his hourly
rate by the number of hours spent performing legal services, he estimated the
Board would incur $17,000 in attorney fees alone, a figure that did not
include costs for the preparation of the administrative record. In light of this
showing, the court did not err in requiring Caron to furnish $15,000
security—an amount lower than the Board’s estimated legal defense
expenses—to assure payment of the Board’s reasonable expenses. (See
Angelier v. State Bd. of Pharmacy (1997) 58 Cal.App.4th 592, 599–602
[affirming award of attorney fees and other reasonable costs to Board in
proceeding to revoke pharmacy license].)
4. The Vexatious Litigant Statutes are Constitutional
Caron asserts a scattershot of constitutional challenges to the vexatious
litigant statutes, including the provision permitting a court to require a
vexatious litigant to furnish security. She claims the vexatious litigant
statutes: (1) impermissibly burden indigent plaintiffs’ access to the court
system and their ability to obtain redress from the government; (2) violate
6 Government Code section 11044 contemplates that the Attorney
General may charge state agencies for legal services rendered. It provides:
“For state agencies, departments, or programs that are charged for the costs
of legal services rendered by the Attorney General, the Attorney General
shall charge an amount sufficient to recover the costs incurred in providing
the legal services. These funds shall be deposited into the Legal Services
Revolving Fund.” (Gov. Code, § 11044, subd. (b).)
19
equal protection by discriminating against self-represented litigants; and
(3) violate due process because they are unconstitutionally vague.7
In her prior appeal from the prefiling order, Caron argued that the
vexatious litigant statutes unconstitutionally burden indigent litigants’
access to the court system and their ability to petition the government for
redress. We rejected this assertion in Caron, supra, D076660. Under the law
of the case doctrine, “ ‘ “the decision of an appellate court, stating a rule of
law necessary to the decision of the case, conclusively establishes that rule
and makes it determinative of the rights of the same parties in any
subsequent retrial or appeal in the same case.” ’ ” (Sargon Enterprises, Inc. v.
University of Southern California (2013) 215 Cal.App.4th 1495, 1505.) “The
doctrine promotes finality by preventing relitigation of issues previously
decided.” (Ibid.) Under the law of the case doctrine, Caron cannot use this
appeal to litigate the same question of constitutional law again.
Law of the case doctrine aside, there is no merit to Caron’s contention
that the vexatious litigation statutes impermissibly burden indigent litigants’
access to the court system or their right to petition the government for
redress. (See Wolfgram v. Wells Fargo Bank (1997) 53 Cal.App.4th 43, 59
[“the vexatious litigant statute does not impermissibly ‘chill’ the right to
petition”]; Taliaferro v. Hoogs (1965) 236 Cal.App.2d 521, 527 (Taliaferro)
[“Nor can appellant successfully argue that the [vexatious litigant] statute
unconstitutionally discriminates against a group of litigants who are too poor
to afford attorneys.”]; see also Wolfe v. George (9th Cir. 2007) 486 F.3d 1120,
1126 [“the California vexatious litigant statute does not deprive [a litigant] of
7 On the issue of vagueness, Caron argues the statutory definition of a
“vexatious litigant” does “not provide … any form of notice … that a pro se
litigant might be in danger of violating the standard.”
20
the opportunity to vindicate a fundamental right in court”] (Wolfe); accord
Moran v. Murtaugh Miller Meyer & Nelson, LLP (2007) 40 Cal.4th 780, 786
[rejecting argument that vexatious litigant statute discriminates against
litigants of “modest means”].)
We are not convinced by Caron’s claim that the vexatious litigant
statutes violate equal protection principles either. “Frequent pro se litigants
are not a suspect class meriting strict scrutiny. A state can rationally
distinguish litigants who sue and lose often, sue the same people for the same
thing after they have lost, and so on, from other litigants.” (Wolfe, supra, 486
F.3d at p. 1126, fn. omitted; see Muller v. Tanner (1969) 2 Cal.App.3d 445,
453 (Muller) [“the classification of persons to whom the [vexatious litigant]
statute applies, and the terms imposed are reasonable”]; Taliaferro, supra,
236 Cal.App.2d at p. 527 [“The restriction of section 391, subdivisions (b)(1)
[&] (2), to persons proceeding in propria persona is not arbitrary or
unreasonable.”].)
Finally, the vexatious litigant statutes, including their definition of the
term “vexatious litigant,” are sufficiently definite to survive Caron’s due
process-based vagueness challenge. (Muller, supra, 2 Cal.App.3d at p. 451
[rejecting claim that statutory definition of “vexatious litigant” in section 391,
subdivision (b)(1) was “uncertain, ambiguous, vague, indefinite, unintelligible
and too broad” in 45 different ways]; see Wolfe, supra, 486 F.3d at p. 1125
[“The California vexatious litigant statute is not unconstitutionally vague,
because it ‘give[s] “fair notice to those who might violate the statute.” ’ ”].)
In short, we reach the same conclusion numerous courts before us have
reached: “[t]he vexatious litigant statutes are constitutional.” (Childs v.
PaineWebber Inc. (1994) 29 Cal.App.4th 982, 993; see Fink v. Shemtov (2010)
180 Cal.App.4th 1160, 1170 [“The vexatious litigant statutes … have been
21
upheld as constitutional.”]; Wolfe, supra, 486 F.3d at p. 1125 [“A long line of
California decisions upholds [the vexatious litigant] statutory scheme against
constitutional challenges …. [¶] We see no reason to disagree with them.”].)
C. The Trial Court Properly Denied Caron’s Set-Aside Motion
After we issued Caron, supra, D076660, Caron moved the trial court to
set aside the minute order and the prefiling order under section 473,
subdivision (b). She argued the orders should be set aside because the trial
court supposedly issued them based on her inadvertent failure to appear at
the noticed hearing on July 26, 2019.
The trial court denied Caron’s set-aside motion for three reasons:
(1) our court’s affirmance of the vexatious litigant finding in Caron, supra,
D076660 precluded relitigation of the same finding on remand; (2) Caron’s
request to set aside the security requirement was untimely because she did
not file her request until more than six months after the minute order was
issued (see § 473, subd. (b)); and (3) the court granted the Board’s vexatious
litigant motion on the merits after considering Caron’s arguments in
opposition—not based on Caron’s failure to appear at the July 26 hearing.
Section 473, subdivision (b) provides in relevant part as follows: “The
court may, upon any terms as may be just, relieve a party or his or her legal
representative from a judgment, dismissal, order, or other proceeding taken
against him or her through his or her mistake, inadvertence, surprise, or
excusable neglect.” “A motion to vacate under section 473[,] [subdivision] (b)
‘ “ ‘is addressed to the sound discretion of the trial court, and in the absence
of a clear showing of abuse ... the exercise of that discretion will not be
disturbed on appeal.’ ” ’ ” (Austin v. Los Angeles Unified School Dist. (2016)
244 Cal.App.4th 918, 929.) “Where ‘ “a party fails to show that a judgment
[or order] has been taken against him through his mistake, inadvertence,
22
surprise or excusable neglect the court may not grant relief. It has no
discretion.” ’ ” (Huh v. Wang (2007) 158 Cal.App.4th 1406, 1423 (Huh).)
We accept the trial court’s third stated reason for denying the set-aside
motion and therefore discern no abuse of discretion.8 In short, Caron did not
establish that the minute order and the prefiling order were taken against
her based on any mistake, inadvertence, surprise or excusable neglect on her
part. Rather, as the trial court explained, it granted the Board’s vexatious
litigant motion and issued the challenged orders after considering Caron’s
timely-filed opposition brief—i.e., it made its rulings on the merits. Indeed,
the minute order adjudicates several substantive legal issues discussed in the
Board’s vexatious litigant motion without ascribing any apparent significance
to Caron’s failure to appear at the July 26 hearing.
Because the orders at issue were not taken against Caron based on
mistake, inadvertence, surprise, or excusable neglect, the trial court properly
denied Caron’s motion for relief. (See Garcia v. Hejmadi (1997) 58
Cal.App.4th 674, 684 [relief unwarranted under section 473, subdivision (b),
because there was “not a default but rather a motion lost, on its merits, after
opposition was filed”]; see also Hopkins & Carley v. Gens (2011) 200
Cal.App.4th 1401, 1413 [“ ‘any alleged ignorance of legal matters or failure to
properly represent himself can hardly constitute “mistake, inadvertence,
surprise or excusable neglect” as those terms are used in section 473’ ”];
accord Huh, supra, 158 Cal.App.4th at p. 1424 [“Discretionary relief [under
section 473] need not be granted for ‘errors by [counsel] ... in failing to
calendar and appear’ at a hearing.”].)
8 Given our conclusion, we need not address the court’s other two stated
reasons for denying Caron’s motion for relief under section 473.
23
IV
DISPOSITION
The judgment of dismissal is affirmed. Respondent is entitled to its
costs on appeal.
McCONNELL, P. J.
WE CONCUR:
O’ROURKE, J.
IRION, J.
24 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483913/ | Filed 11/15/22 Gibson v. Sacramento County Public Administrator CA3
NOT TO BE PUBLISHED
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
THIRD APPELLATE DISTRICT
(Sacramento)
----
DANIEL E. GIBSON, as Successor Trustee, etc.,
Plaintiff and Respondent, C095197
v. (Super. Ct. No. 34-2021-
00294152-PR-TR-FRC)
SACRAMENTO COUNTY PUBLIC
ADMINISTRATOR,
Defendant and Appellant.
The trust document for the Elizabeth E. Gibson Family Trust (the trust) provided
that upon Elizabeth’s death,1 the trustee could pay trust funds to Elizabeth’s long-time
partner Sheila Thornton during Sheila’s lifetime for Sheila’s support, and that upon
Sheila’s death, the balance of the trust, if any, would be distributed to Elizabeth’s heirs.
An amendment specified that upon Elizabeth’s death, the trust’s interest in a Sacramento
house Elizabeth shared with Sheila would be distributed to Sheila. The trust and Sheila
each owned a half interest in the house.
1 We refer to individuals by their first names for clarity.
1
Sheila was the successor trustee upon Elizabeth’s death, but she never transferred
the trust’s half interest in the house to herself. After Sheila died, Elizabeth’s brother
Daniel, who had become the successor trustee, petitioned the probate court to distribute
the trust’s interest in the sale of the house to Elizabeth’s heirs. The Sacramento County
Public Administrator (the Public Administrator), acting as administrator of Sheila’s
estate, objected, arguing the trust’s half interest in the sale proceeds should go to Sheila’s
estate.
The probate court concluded the trust’s interest in the house should be distributed
to Elizabeth’s heirs, and the Public Administrator appeals that determination. Finding no
error, we will affirm the probate court’s order.
BACKGROUND
The trust provided that Sheila would serve as successor trustee of the trust upon
Elizabeth’s death and that Daniel would be the successor trustee if Sheila was unable to
serve.
Elizabeth died in 2013. Sheila recorded an affidavit of successor trustee,
certifying that she was the successor trustee of the trust and that upon Elizabeth’s death
the trust’s title to the house was now held by Sheila as successor trustee. Sheila also
executed a quitclaim deed regarding a Calaveras County property held by the trust,
transferring title (as provided by the trust) to Daniel as trustee of the David W. Gibson
Irrevocable Trust. But Sheila did not transfer title of the trust’s interest in the Sacramento
house to herself.
Sheila died in 2019. Her half interest in the Sacramento house is part of her estate.
Acting as successor trustee of the trust, Daniel filed a petition pursuant to Probate
Code section 17200.2 The petition asked the probate court to instruct that proceeds from
2 Undesignated statutory references are to the Probate Code.
2
the sale of the trust’s interest in the Sacramento house be distributed to Elizabeth’s heirs
(her brothers Daniel and John).
The petition alleged the following: Elizabeth and Sheila considered each other
spouses but were not married. They purchased and lived in the Sacramento property
together. Sheila indicated by her actions and discussions with Daniel over the years that
she did not intend to transfer the trust’s interest in the Sacramento house to herself and
instead intended to give the trust’s interest in the property to Elizabeth’s brothers. For
example, Sheila never made distributions from the trust to herself. And she distributed
$193,000 from Elizabeth’s IRA to Elizabeth’s brothers even though she was not
obligated to do so.
The Public Administrator countered that pursuant to the terms of the amendment
to the trust, the trust’s interest in the Sacramento house should go the Sheila’s estate.
According to the Public Administrator, there was no evidence Sheila intended to give the
trust’s interest in the house to Elizabeth’s brothers; Sheila failed to transfer the interest to
herself because of her cognitive decline.
The probate court granted Daniel’s petition. According to the probate court,
although the relevant trust document said its interest in the house was to be distributed to
Sheila, and there was no direct evidence Sheila intentionally chose not to transfer the
house to herself, Sheila nevertheless did not transfer the trust’s interest in the house to
herself and thus the trust retained the interest in the house at the time of Sheila’s death.
Under the circumstances, the probate court ruled that the trust’s interest in the house
should be distributed as a trust asset, i.e., to Elizabeth’s brothers.
DISCUSSION
The Public Administrator contends the probate court erred because it did not
discuss Elizabeth’s intent. According to the Public Administrator, Elizabeth clearly
intended to give the trust’s interest in the house to Sheila; she did not intend to give it to
her brothers.
3
The interpretation of a trust is a question of law we review de novo, unless the
interpretation turns on a conflict in, or the credibility of, extrinsic evidence, which the
parties do not contend exists here. (Estate of Dodge (1971) 6 Cal.3d 311, 318;
Ammerman v. Callender (2016) 245 Cal.App.4th 1058, 1072.) “ ‘The paramount rule in
construing [a trust] instrument is to determine intent from the instrument itself and in
accordance with applicable law. [Citations.]’ [Citations.] ‘ “ ‘In construing a trust
instrument, the intent of the trustor prevails and it must be ascertained from the whole of
the trust instrument, not just separate parts of it.’ ” ’ [Citation.]” (Ammerman, at p. 1073;
see §§ 21101, 21102, subds. (a) & (b), 21121.)
Paragraph 3.4 of the amendment to the trust made a special distribution to Sheila.
That paragraph clearly stated Elizabeth’s intent to give the trust’s interest in the
Sacramento house to Sheila outright. However, the special distribution was not effective
because Sheila never transferred the trust’s title in the house to herself. It is undisputed
that the trust’s title in the house remained in the trust on the date of Sheila’s death.
Section 21111, part of the rules for interpreting trusts and other instruments,
addresses the treatment of a failed transfer. (Estate of Stockird (2018) 30 Cal.App.5th
558, 565.) Subdivision (a)(2) states that except in circumstances inapplicable here, if the
transferring instrument provides for the transfer of a residue and another transfer fails for
any reason, the property becomes part of the residue transferred under the instrument.
(§21111, subd. (a)(2).) Here, the trust provides for the transfer of a residue. Paragraph
4.2 of the trust states that upon Sheila’s death, the balance of the trust, if any, shall be
distributed to Elizabeth’s heirs, “their identities and respective shares to be determined
according to the laws of California then in effect.” Because the transfer to Sheila of the
trust’s interest in the Sacramento house did not occur, the trust interest in the house
became part of the trust residue. (§ 21111; see O’Connor v. Murphy (1905) 147 Cal. 148,
153 [intent to include all ineffectual bequests in the residuary clause is presumed; an
intent to exclude must be express or shown by clear implication; residuary clauses shall
4
receive broad and liberal interpretation]; Estate of Anderson (1958) 166 Cal.App.2d 39,
41-42.) The trust clearly stated that the trust residue would be distributed to Elizabeth’s
heirs, i.e., her brothers, upon Sheila’s death. The trust did not mention Sheila’s heirs.
The Public Administrator argues in its appellate reply brief that a failed transfer
within the meaning of section 21111 is limited to situations where a transferee
predeceases the transferor and where the transferee is legally disqualified from taking
from the transferor. But the Public Administrator does not cite authority supporting such
a limitation. (Okasaki v. City of Elk Grove (2012) 203 Cal.App.4th 1043, 1045, fn. 1.)
Section 21111 provides that “if a transfer fails for any reason, the property is transferred
as follows . . . .” The distribution in the challenged order is consistent with section
21111, subdivision (a)(2).
DISPOSITION
The order of the probate court is affirmed. The parties shall bear their own costs
on appeal. (Cal. Rules of Court, 8.278(a)(4), (a)(5).)
/S/
MAURO, J.
We concur:
/S/
HULL, Acting P. J.
/S/
HOCH, J.
5 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483912/ | Filed 11/15/22 In re L.O. 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
In re L.O., a Person Coming Under the
Juvenile Court Law.
SAN BERNARDINO COUNTY
CHILDREN AND E079087
FAMILY SERVICES,
(Super.Ct.No. J280519)
Plaintiff and Respondent,
OPINION
v.
W.R. et al.,
Defendants and Appellants.
APPEAL from the Superior Court of San Bernardino County. Steven A. Mapes,
Judge. Reversed with directions.
Jamie A. Moran, under appointment by the Court of Appeal, for Defendant and
Appellant W.R.
1
Matthew I. Thue, under appointment by the Court of Appeal, for Defendant and
Appellant K.O.
Tom Bunton, County Counsel, Dawn M. Martin, Deputy County Counsel for
Plaintiff and Respondent.
The juvenile court terminated the parental rights of defendants and appellants
K.O. (Mother) and W.R. (Father; collectively, Parents) to their son, L.O. (Minor).
Father contends the juvenile court erred by not applying the parent-child bond exception
to termination (Welf. & Inst. Code, § 366.26, subd. (c)(1)(B)(i)). 1 Parents contend the
juvenile court erred by finding that the Indian Child Welfare Act of 1978 (25 U.S.C. §
1901 et seq.) (ICWA) does not apply because the Department failed to ask Minor’s
available relatives about Minor’s possible Indian ancestry. We conditionally reverse the
judgment with directions.
FACTUAL AND PROCEDURAL HISTORY
A. BACKGROUND
Father was born in January 1998. Mother was born in August 2003. Father
began dating Mother in 2016, when Mother was 13 years old, and Father was 18 years
old. At that time, Mother was in the care of her mother (Maternal Grandmother). In
June 2017, Father kicked Mother and dragged her by the back of her neck to force her
into a vehicle. A person witnessed the altercation and contacted authorities. Father was
1All subsequent statutory references will be to the Welfare and Institutions
Code unless otherwise indicated.
2
arrested for domestic violence and the statutory rape of Mother. Father was granted
probation with the condition that he could only be in the company of minors to whom
he is related. Despite the probation condition, Father continued to date Mother. As a
result, Father was found to be in violation of his probation. Mother was removed from
the care of Maternal Grandmother in September 2017 and became a dependent of the
juvenile court.
B. DETENTION
Minor was born in late March 2019, when Mother was 15 years old, and Father
was 21 years old. Plaintiff and respondent San Bernardino County Children and Family
Services (the Department) took custody of Minor in April 2019 because Mother was
detained in juvenile hall and no other caretaker could be located. Minor was placed in
foster care.
Mother denied having Indian ancestry when speaking with the Department’s
social worker. On the Department’s ICWA form, Mother provided names and
telephone numbers for her grandmother (Great-Grandmother) and her stepfather, and
Mother again denied having Indian ancestry.
C. JURISDICTION AND DISPOSITION
Father was present at the jurisdiction and disposition hearing on April 30, 2019,
at which the court referred the matter to mediation. In court, on April 30th, Father
denied having Indian ancestry. On the Department’s ICWA form, Father denied having
Indian ancestry and provided the name, but no contact information, for his mother
(Paternal Grandmother). Maternal Grandmother also completed the Department’s
3
ICWA form and denied having Indian ancestry. Maternal Grandmother provided
names, telephone numbers, and an address for Great-Grandmother, Minor’s great-aunt
(Great-Aunt), and Minor’s grandfather.
The Department spoke with Great-Grandmother, Great-Aunt, Step-Grandfather,
and a maternal uncle about whether they would want to care for Minor but did not ask
about Indian ancestry. Father resided with his family, but the Department did not ask
them about Indian ancestry. At the jurisdiction and disposition hearing, held on October
7, 2019, the juvenile court found ICWA did not apply.
D. SIX-MONTH TO 24-MONTH STATUS REVIEWS
During the six-month review period, Father had supervised visits with Minor
once a week for two hours. During the visits, “[F]ather was observed to be caring,
interactive, and affectionate to the child.” During the 18-month review period, Father
had unsupervised visits with Minor at the Department’s office once a week for two
hours. Minor was comfortable with Father and there were no issues during the visits.
During the 24-month review period, Father had unsupervised visits with Minor twice a
week for four hours. Father’s visits took place at a park and a friend’s apartment. The
Department had no concerns regarding Father’s interactions with Minor
Minor had been in the same foster home since May 2019, when he was seven
weeks old, and was bonded to his foster family. Minor identified his foster parents as
his parental figures and they were willing to adopt Minor.
4
E. 30-MONTH REVIEW HEARING
During the 30-month review period, the Department reported the following:
Minor “struggle[ed] with tantrums and significant aggression due to not wanting to visit
with [Parents]. [Minor] bites, kicks, and hits [Parents] as well as the foster mother when
she attempts to take the child out of the car for [F]ather’s visits. For [Mother’s] visits,
modifications have had to be made in order for [Minor] to transition out of the visit with
less aggression as he has shown significant aggression towards [Mother] during visits
that [Mother] handles inappropriately. For [F]ather, the meeting point [with the foster
parent] used to be a Starbucks and now when they pass by the Starbucks on non-visit
days, [Minor] gets upset because he thinks he is going to a visit.”
F. TERMINATION OF PARENTAL RIGHTS
After the 30-month review period, Father had supervised visits with Minor once
a month for two hours at the Department’s offices. In February 2022, the Department
social worker wrote, “At times, [Minor] has difficulties transitioning away from the
[foster parent] into [Parents’] visitations however, usually does fine once redirected. . . .
Since the visitations have been reduced to once per month, [Minor’s] aggression during
visitations has improved. Although [Minor] overall appears comfortable with [Parents]
during visitations, he is not significantly bonded to either parent. [Minor] has displayed
that he is bonded and identifies with his [foster parents] as his parents.”
In late March 2022, the Department social worker reported, “Since the visits
were reduced from once per week to once per month, [Minor] has fared significantly[]
better. [Minor’s] behaviors have improved and his willingness to visit with [Parents]
5
has improved since the visits were reduced. The reduction of visits has allowed for
[Minor] to further bond with his prospective adoptive parents and family. [Minor]
appears to be very happy and is doing exceptionally well. [¶] [Parents] have been
consistent with their monthly visits and no concerns have been reported. . . . [Minor]
does well in the visits and is comfortable with [Parents] . . . however, he identifies with
the [foster parents] as his parents and is bonded to them as his parents and not [Parents].
[Minor] is affectionate with [Parents] . . . however, only if prompted . . . . [Minor] does
not run to [Parents] . . . upon seeing them, he only runs to the [foster parents] when he
sees them following visits. . . . [Minor] does not ask for [Parents] . . . in between visits.
In addition, although [Parents] . . . spend small parts of their visits playing with [Minor]
and reading him books, most of the visits are spent silently watching movies and not
interacting with [Minor]. [Minor] does not display much of an interest in interacting
with [Parents] . . . besides watching movies.”
On June 1, 2022, the juvenile court held the hearing regarding terminating
Parents’ parental rights. Father testified that Minor runs to him at visits and tries to
leave with Father when the visits end. Father’s attorney argued in favor of the parent-
child bond exception to terminating parental rights. Father’s attorney contended,
“There does appear to be a bond between [Minor] and [Father] in that he has constantly
expressed himself as being upset at the end of the visits. He looks forward to playing
the various games and watching Paw Patrol with [Father]. I think there is a bond there.”
Minor’s attorney argued, “The visits are fine. That’s not the same thing as
actually having a bond that would be detrimental to sever at this point.” Minor’s
6
attorney argued that Minor would suffer detriment if the case persisted because Minor
“would always be in a position of somebody trying to take him away from the parents,
at this point, he knows.”
The juvenile court said, “I’m not going to deny that there is some sort of
relationship [Minor] may have with his parents, but it’s not to the extent that it would
cause great detriment if I were to terminate that relationship. And the benefits of
adoption here do outweigh the detriment the child would suffer by severing the parental
relationship. I will terminate parental rights.”
DISCUSSION
A. PARENT-CHILD BOND EXCEPTION
Father contends the juvenile court erred by not applying the parent-child bond
exception (§ 366.26, subd. (c)(1)(B)(i)).
When reunification efforts have failed, there is a statutory preference for
adoption. However, in exceptional circumstances, the juvenile court will not terminate
parental rights when doing so would be detrimental to the child. (In re A.L. (2022) 73
Cal.App.5th 1131, 1150; § 366.26, subd. (c)(1).) The parent-child bond exception
requires a parent to establish, by a preponderance of the evidence, that the parent
regularly visited the child, “that the child would benefit from continuing the
relationship, and that terminating the relationship would be detrimental to the child.”
(In re Caden C. (2021) 11 Cal.5th 614, 629-630); § 366.26, subd. (c)(1)(B)(i).)
When deciding whether to terminate parental rights, the juvenile court is tasked
with weighing the potential harm to the child that would be caused by the loss of the
7
relationship with the biological parent “against the [potential] benefits of placement in a
new, adoptive home.” (In re Caden C., supra, 11 Cal.5th at p. 640.) “[T]he ultimate
decision—whether termination of parental rights would be detrimental to the child due
to the child’s relationship with his parent—is discretionary and properly reviewed for
abuse of discretion.” (Ibid.)
The evidence reflects that when Minor visited Father on a weekly basis, Minor
was aggressive—biting, kicking, and hitting Father. Minor became upset at the sight of
the Starbucks where Father picked-up Minor because Minor thought he was going to
see Father. Minor’s behavior improved when his visits with Father were reduced to
once per month. This evidence reflects Minor is less aggressive and under less stress
the less he sees Father. Such evidence supports a finding that severing the relationship
between Father and Minor would not be detrimental to Minor. Accordingly, the
juvenile court did not abuse its discretion in not applying the parent-child bond
exception.
B. ICWA
Parents contend the juvenile court erred by concluding that ICWA does not apply
because the Department failed to ask Minor’s available relatives about Minor’s possible
Indian ancestry.
When a child welfare agency takes a child into its custody, the agency has an
initial “duty to inquire whether that child is an Indian child. Inquiry includes, but is not
limited to, asking the child, parents, . . . [and] extended family members . . . whether the
8
child is, or may be, an Indian child.” (§ 224.2, subd. (b); see also In re Benjamin M.
(2021) 70 Cal.App.5th 735, 742 (Benjamin M.).)
The record reflects that the Department was in contact with and/or had contact
information for many of Minor’s maternal and paternal relatives. However, the
Department only gathered ancestry information from Mother, Father, and Maternal
Grandmother. The Department erred by failing to inquire of all the relatives with whom
it was in contact and for whom the Department had contact information. The juvenile
court erred by finding that ICWA did not apply when the Department’s inquiry was
incomplete.
The Department contends its ICWA inquiry was adequate because inquiring of
every available relative “ ‘is absurd at best and impossible at worst.’ ” (In re Ezequiel
G. (2022) 81 Cal.App.5th 984, 1006.) In Ezequiel G., the appellate court explained that
there are situations in which it is difficult or nearly impossible to contact extended
family members due to incomplete contact information, or situations in which a family
is so large that it is not useful to contact all the relatives. (Ibid.) Neither scenario is
present in this case. The Department was in contact with Minor’s extended family to
ask about possible placement. Asking the relatives, with whom the Department was
already in contact, an additional question about Indian ancestry would not have been
absurd or nearly impossible. Thus, the Department’s ICWA inquiry was inadequate.
The courts of appeal are divided on how to handle the issue of harmless error in
relation to an inadequate ICWA inquiry. Currently, the divided courts have created four
different approaches for deciding whether an initial inquiry error is prejudicial. (In re
9
Dezi C. (2022) 79 Cal.App.5th 769, 777, 779 (Dezi C.).) The four different approaches
reflect the appellate courts’ struggle with how to handle the lack of information in the
record. (Id. at p. 778.)
We apply the approach known as the readily obtainable information rule because
that was the approach set forth by this court in Benjamin M., supra, 70 Cal.App.5th at
page 744. “If the Department’s initial inquiry is deficient, that defect is harmless unless
‘the record indicates that there was readily obtainable information that was likely to
bear meaningfully upon whether the child is an Indian child’ and that ‘the probability of
obtaining meaningful information is reasonable’ (‘the readily obtainable information
rule’).” (Dezi C., supra, 79 Cal.App.5th at p. 778.)
The Department had the name, telephone number, and address for Great-
Grandmother, and a Department social worker spoke with Great-Grandmother about
whether she would be willing to care for Minor. Given that the social worker
communicated with Great-Grandmother, information from Great-Grandmother is
readily obtainable. The Department social worker spoke with Minor’s maternal aunt
and uncle about taking custody of Minor, so information is readily obtainable from
them. The Department also has names, telephone numbers, and addresses for Great-
Aunt and Minor’s grandfather, which means information from them is readily
obtainable.
Additionally, the Department had an address for Father’s home where he resided
with his relatives. The Department communicated with the relatives through a San
Diego County sheriff’s deputy. They communicated about Mother, and Father’s
10
relatives provided helpful information to the Department, such as a description of
Father’s vehicle. Thus, information from those paternal relatives is readily obtainable.
When Father moved out of his relatives’ home, he moved into a home with his brother.
The Department was in contact with Father’s brother because the Department gave him
Live Scan paperwork. Thus, information from Father’s brother is readily obtainable.
Further, Father reported to the Department that he took a trip to visit his father in Texas,
which means information from Father’s father should be readily obtainable. Moreover,
Paternal Grandmother participated in visits with Minor and spoke with a Department
social worker about taking custody of Minor. Given that the Department was in contact
with Paternal Grandmother, information from her is readily obtainable.
If Minor’s relatives have knowledge about Minor having or not having Indian
ancestry, then that would be meaningful information in an ICWA inquiry. Therefore, it
is possible that there is meaningful information which is readily obtainable. As a result,
the error is prejudicial, and we will conditionally reverse the order terminating parental
rights so a proper ICWA inquiry may be conducted.
DISPOSITION
The order terminating parental rights under section 366.26 is conditionally
reversed. The juvenile court shall order, pursuant to ICWA and California Rules of
Court rules 5.481 and 5.482, that within 30 days of the remittitur being issued that the
Department perform a diligent inquiry into Minor’s possible Indian ancestry by
contacting or attempting to contact the relatives discussed in this opinion and any other
relatives for whom it may have contact information. If adequate additional
11
investigation is performed but yields no further information that could assist the Bureau
of Indian Affairs or a specific tribe or tribes in determining whether Minor is an Indian
child, then the juvenile court shall reinstate its section 366.26 order. If, as a result of
that inquiry, new information is obtained that may assist the Bureau of Indian Affairs or
a tribe in determining whether Minor is an Indian child, then the juvenile court shall
order the Department to provide the relevant tribe(s) and the Bureau of Indian Affairs
with proper notice of the pending proceedings.
In the event no tribe responds indicating Minor is an Indian child, or if no tribe
seeks to intervene, then the juvenile court shall reinstate its section 366.26 orders. If a
tribe determines that Minor is an Indian child and seeks to intervene in the proceedings,
then the juvenile court shall vacate its prior orders and conduct all proceedings in
accordance with ICWA and related California laws. (In re Josiah T. (2021) 71
Cal.App.5th 388, 409.)
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
MILLER
Acting P. J.
We concur:
SLOUGH
J.
RAPHAEL
J.
12 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483914/ | Filed 11/15/22 Counts v. Chadwick CA1/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION ONE
CALEB COUNTS et al.,
Plaintiffs and Respondents,
A163282
v.
RHONDA CHADWICK, (Solano County
Super. Ct. No. FCS048235)
Defendant and Appellant.
This litigation centers on a contract between defendant Rhonda
Chadwick and plaintiffs Caleb Counts and Nathan Coleman (collectively,
plaintiffs), under which Chadwick was to transfer control of a cannabis
dispensary to plaintiffs. She appeals from a judgment entered in plaintiffs’
favor after a bench trial, claiming that reversal is required because she was
improperly denied a continuance, the contract at issue was illegal and
unenforceable, and the trial court erred by finding that plaintiffs were
entitled to be placed on the dispensary’s board of directors. She also claims
that the court abused its discretion in awarding attorney fees to plaintiffs.
We affirm in full.1
Plaintiffs filed a motion for sanctions against Chadwick and her
1
appellate attorney on the basis that this appeal is frivolous. The motion is
denied. Although we ultimately reject Chadwick’s claims, they are not so
clearly lacking in merit or made solely for the purpose of delay that sanctions
1
I.
FACTUAL AND PROCEDURAL
BACKGROUND2
Chadwick operated a small cannabis dispensary in Vallejo, Homegrown
Holistic Collective, Inc. (H2C), which was organized as a nonprofit mutual
benefit corporation. In November 2015, she and plaintiffs entered a contract
entitled Agreement for Transfer of Control (Agreement). Under the
Agreement, plaintiffs promised to pay Chadwick a $20,000 deposit, and she
promised to transfer control of H2C to them by November 15, 2015.
Specifically, she promised to (1) “take all actions necessary” to replace H2C’s
board of directors with herself and plaintiffs and (2) amend H2C’s bylaws to
ensure plaintiffs held the majority of seats on the board of directors with “full
authority to manage and operate [H2C].” Plaintiffs timely paid the deposit,
but Chadwick did not replace the board of directors or amend the bylaws.
Under the Agreement, Chadwick also promised to “ensure that [H2C]
submit[ted] to the City of Vallejo all required documentation, in accordance
with the laws and ordinances of the City of Vallejo, to receive a Final Letter
of Limited Immunity . . . from the City of Vallejo.” In turn, plaintiffs were
required to pay $150,000 to Chadwick within five days of H2C’s receiving a
limited immunity letter (an aspect of how Vallejo regulated marijuana
businesses at the time), and an additional $300,000 “[u]pon the first
anniversary” of the letter’s receipt. Plaintiffs also promised to pay Chadwick
$310,0000 upon H2C’s receiving “from the City of Vallejo a certificate of
occupancy” for the dispensary’s planned new location. These additional
are justified. (See Applied Business Software, Inc. v. Pacific Mortgage
Exchange, Inc. (2008) 164 Cal.App.4th 1108, 1119.)
2The underlying facts are primarily drawn from the trial court’s two
statements of decision.
2
payments were also conditioned on Chadwick’s having “timely performed all
of [her other] obligations” under the Agreement.
H2C received a limited immunity letter from Vallejo in October 2015,
but the letter conditioned H2C’s good standing on its “compliance with the
Building Code, Fire Code[,] and ventilation requirement” at the new location
by December 31, 2015. The building at the new location did not fully comply
with these requirements until the following June, and plaintiffs did not make
the additional payments required under the Agreement.
For several months after the Agreement was entered, “[p]laintiffs
continued to act in good faith to perform [it] and expended significant sums to
complete renovation of the building at the new location [for the dispensary],
to purchase inventory, and to market and operate the business of H2C.”
During this time period, H2C “operated at a net loss.” In October 2016,
Chadwick and her husband “seized physical control of the H2C business
building, inventory, assets[,] and business records, and excluded [p]laintiffs
from operation and management of the business.”
The following January, plaintiffs brought suit against Chadwick, her
husband, and H2C (collectively, Chadwick defendants).3 The operative
complaint alleged claims for breach of contract, breach of the covenant of
good faith and fair dealing, unfair business practices, declaratory relief,
fraudulent transfer, and quantum meruit, as well as a cause of action under
Corporations Code section 709 (section 709) to determine H2C’s directors.
Chadwick filed a cross-complaint against plaintiffs for declaratory relief.
3 Vallejo Creative Solutions, LLC, a company associated with Counts,
was also a plaintiff, but the parties’ appellate briefing does not mention this
entity. In addition, other defendants were named in the suit, but they are
not parties to this appeal.
3
The trial court conducted a bifurcated bench trial in which the
section 709 claim was tried first. In May 2020, the court issued a statement
of decision on that claim, concluding that Chadwick breached the Agreement
by failing to place plaintiffs on H2C’s board of directors and amend the
bylaws, and plaintiffs did not breach the covenant of good faith and fair
dealing or waive any of Chadwick’s breaches. Accordingly, the court ordered
that H2C’s board of directors now consisted of Chadwick and plaintiffs and
that H2C’s bylaws be amended to provide that plaintiffs had a majority of
seats on the board and that the board “ha[d] the full authority to manage and
operate the corporation.”4
In April 2021, after the remaining causes of action were tried, the trial
court issued a second statement of decision addressing them. The court ruled
that Chadwick breached the Agreement but rejected plaintiffs’ claims of
fraudulent transfer and declaratory relief, as well as Chadwick’s declaratory-
relief claim. After accounting for plaintiffs’ payment of the $20,000 deposit
and other credits, the court awarded $720,039.68 to Chadwick, “conditioned
upon [her] curing her breach by placement of [p]laintiffs on the [b]oard of
[d]irectors of H2C and amendment of the [b]ylaws of H2C.”5 The court
awarded plaintiffs $1,198,073.29 in attorney’s fees and $223,533.83 in costs
as the prevailing parties, resulting in a net monetary judgment of
4 Chadwick and her husband filed a petition for a writ of mandate in
this court to challenge the May 2020 decision and a preliminary injunction
effectuating the decision. We denied the petition for “fail[ure] to demonstrate
that petitioners lack[ed] an adequate remedy at law and that [they would]
suffer irreparable harm absent writ review.” (Chadwick v. Superior Court,
A160467.)
5Based on another provision of the Agreement, Chadwick was also
awarded “one hundred twenty (120) pounds of ‘sugar trim,’ ” and plaintiffs
were ordered to donate $10 to her charity organization, House of Broken
Dolly.
4
$701,567.44 against Chadwick. After unsuccessfully moving for a new trial,
Chadwick appealed.
II.
DISCUSSION
A. The Trial Court Did Not Abuse Its Discretion by Denying
Chadwick’s Request for a Six-month Continuance.
Chadwick contends that the trial court abused its discretion by denying
her a continuance to “substitute in her chosen attorney after she was
abandoned by her first attorney on the eve of trial.” The claim lacks merit.
1. Additional facts
In early 2019, counsel for the Chadwick defendants moved to be
relieved as counsel based on a conflict of interest, and the motion was
calendared for that April. In March, the trial court held a hearing to consider
the Chadwick defendants’ ex parte motions to move up consideration of
counsel’s motion and to continue trial on the section 709 claim, which was
also set for April.
At the March hearing, Chadwick indicated she would sign a
substitution of attorneys, mooting her counsel’s motion to be relieved, if the
trial court would continue the trial for at least 90 days. One of the attorneys
she proposed to retain, Mark Pappas, then stated that he and his partner
were willing to become attorneys of record only if “the trial date [was]
vacated, and no new trial [was] set at [that] particular time.” Pappas
explained that he was “booked up until at least October or November” on
other cases.
The trial court responded that if it “grant[ed] a continuance, [it was]
not going to be until October.” The court subsequently vacated the trial date,
indicating it would re-set it at a future hearing, and directed Chadwick and
her husband “to not delay in obtaining new counsel to represent [them] in
5
this case.” Our record reflects no further discussion of the issue, but within
three weeks, a different attorney not affiliated with Pappas was representing
the Chadwick defendants. Trial on the section 709 claim ultimately began in
late October 2019.
2. Analysis
“To ensure the prompt disposition of civil cases, the dates assigned for a
trial are firm. All parties and their counsel must regard the date set for trial
as certain.” (Cal. Rules of Court, rule 3.1332(a).) “[C]ontinuances of trials
are disfavored” and cannot be granted except upon “an affirmative showing of
good cause.” (Id., rule 3.1332(c).) Substitution of trial counsel may constitute
good cause, “but only where there is an affirmative showing that the
substitution is required in the interests of justice.” (Id., rule 3.1332(c)(4).) In
determining whether to grant a continuance, a trial court “must consider all
the facts and circumstances that are relevant to the determination,”
including the length of the requested continuance. (Id., rule 3.1332(d).)
We review the denial of a continuance for an abuse of discretion.
(Forthmann v. Boyer (2002) 97 Cal.App.4th 977, 984.) Under this standard,
we affirm the trial court’s ruling if it “is based on a reasoned judgment and
complies with legal principles and policies appropriate to the case before the
court” and does not constitute a clear abuse of discretion. (Id. at pp. 984–
985.) An appellant bears the burden “to demonstrate from the record that
such an abuse has occurred.” (Id. at p. 985.)
Chadwick claims the trial court abused its discretion by denying her a
continuance so that she could obtain her chosen counsel. But as plaintiffs
observe, the trial court vacated the trial date in response to her request,
effectively continuing the trial. Thus, the complained-of ruling is more
6
accurately characterized not as the denial of a continuance but the refusal to
continue the trial for six months, from April to October 2019.
Although this refusal meant that Pappas was unwilling to represent
Chadwick, she cites no authority suggesting that the denial of a continuance
to enable a party to retain a particular attorney constitutes an abuse of
discretion. The decisions on which she relies found in favor of parties who
were forced to represent themselves at trial after being denied a continuance
of any length. (Oliveros v. County of Los Angeles (2004) 120 Cal.App.4th
1389, 1395; Vann v. Shilleh (1975) 54 Cal.App.3d 192, 197–198.) Chadwick,
in contrast, quickly retained new counsel, who represented her during the
rest of the proceedings below. As she offers no other reason that the trial
court abused its discretion, we conclude it did not err by refusing to continue
the trial for six months.
B. Chadwick Fails to Demonstrate that the Agreement Was
Unenforceable as an Illegal Contract.
Chadwick claims that the Agreement was illegal and unenforceable
because it violated various state and local laws. We disagree.
1. Additional facts
Before the second phase of the trial, the Chadwick defendants filed a
bench brief arguing that the Agreement was illegal because it violated Vallejo
city ordinances in effect when it was entered that “prohibit[ed] the sale or
transfer of a medical marijuana dispensary within [that] jurisdiction.” The
Chadwick defendants also argued that the Agreement was illegal because it
violated the Compassionate Use Act of 1996 (CUA) (Health & Saf. Code,
§ 11362.5) and the Medical Marijuana Program Act (MMP) (Health & Saf.
Code, § 11362.7 et seq.), in that “it was meant to generate a profit from
operating a cannabis business.”
7
After hearing argument from the parties, the trial court ruled that the
Agreement was not an illegal contract. The court concluded that “nothing in
the [state] statutes or the Vallejo ordinances . . . prohibit[ed] a transaction of
this type,” namely, “a contract to replace members on a board of directors.”
The court also held that even if the contract was illegal, it was nonetheless
enforceable because the equities weighed in plaintiffs’ favor.
2. Analysis
When the Agreement was entered in 2015, “[f]ederal law prohibit[ed]
the use, possession, manufacture[,] and sale of marijuana,” and California
voters had not yet approved Proposition 64, which legalized recreational use
of the drug. (City of Vallejo v. NCORP4, Inc. (2017) 15 Cal.App.5th 1078,
1081.) The CUA and MMP permitted medicinal use of marijuana, but the
steps these statutes took to enable that use “were limited and specific.” (City
of Riverside v. Inland Empire Patients Health & Wellness Center, Inc. (2013)
56 Cal.4th 729, 744–745.)
At the time, cannabis dispensaries were not a permitted land use in
Vallejo. (See City of Vallejo v. NCORP4, Inc., supra, 15 Cal.App.5th at
p. 1082.) Earlier in 2015, Vallejo adopted an ordinance conveying “ ‘[l]imited
civil immunity’ ” on “ ‘existing medical marijuana dispensary operators that
have obtained tax certificates and paid their quarterly taxes’ to operate.” (Id.
at p. 1084.) Thus, at the time the Agreement was entered, the Vallejo
Municipal Code provided, “It is unlawful for any person to cause, permit or
engage in the cultivation, possession, distribution, exchange or giving away of
marijuana or products containing marijuana in any form, for medical or non-
medical purposes except as provided in this chapter, and pursuant to any and
all other applicable local and state law. The prohibition includes renting,
leasing, or otherwise permitting a medical marijuana dispensary to occupy or
8
use a location, vehicle, or other mode of transportation.” (Former Vallejo
Mun. Code, § 7.100.030(B).) Notwithstanding this prohibition, the ordinance
provided that “a limited immunity shall be available and may be asserted as
an affirmative defense” in any action by Vallejo to enjoin such activity. (Id.,
§ 7.100.050.) The ordinance also provided that “[n]o medical marijuana
dispensary that is sold or transferred will receive limited immunity. Transfer
is a change in principals, assignment of lease or sale of business asset other
than a marijuana product.” (Id., § 7.100.100(A).)
A contract is illegal if it is “[c]ontrary to an express provision of law,”
including a local ordinance, or “[c]ontrary to the policy of express law, though
not expressly prohibited.” (Civ. Code, § 1667; see Espinoza v. Calva (2008)
169 Cal.App.4th 1393, 1400.)6 As a “general rule[,] . . . the courts will not
grant relief under the terms of an illegal contract.” (Wong v. Tenneco (1985)
39 Cal.3d 126, 138.) “In determining whether the subject of a given contract
violates public policy, courts must rely on the state of the law as it existed at
the time the contract was made.” (Moran v. Harris (1982) 131 Cal.App.3d
913, 918.) Whether a contract is illegal is a question of law reviewed de novo.
(Timney v. Lin (2003) 106 Cal.App.4th 1121, 1126.)
Several exceptions exist to the rule that illegal contracts will not be
enforced. (Asdourian v. Araj (1985) 38 Cal.3d 276, 291.) As relevant here,
“[i]n compelling cases, illegal contracts will be enforced in order to ‘avoid
unjust enrichment to a defendant [i.e., the party seeking to avoid the
contract] and a disproportionately harsh penalty upon the plaintiff [i.e., the
party seeking to enforce the contract].’ [Citation.] ‘ “In each case, the extent
of enforceability and the kind of remedy granted depend upon a variety of
6 All further statutory references are to the Civil Code unless otherwise
noted.
9
factors, including the policy of the transgressed law, the kind of illegality[,]
and the particular facts.” ’ ” (Id. at p. 292.) Factors commonly considered
include whether the defendant is part of “the group primarily in need of the
[law’s] protection,” whether the contract is inherently immoral or inequitable,
the relative sophistication of the parties, and which party is more at fault.
(Id. at pp. 292–293.)
We need not decide whether the Agreement was illegal, because even if
it was, Chadwick fails to demonstrate that the trial court erred by concluding
it was nonetheless enforceable. She focuses most of her appellate briefing on
the Agreement’s purported illegality, discussing the alternative ground for
the court’s ruling only in passing. As to that ground, she claims that “[i]n
applying the illegality of contract doctrine as a defense, courts do not consider
whether its application results in unjust enrichment in favor of the party
opposing enforcement of the contract” because the doctrine prioritizes the
public interest over avoiding potential injustice between the parties. True,
the rationale for refusing to enforce illegal contracts is that “ ‘the public
importance of discouraging such prohibited transactions outweighs equitable
considerations of possible injustice between the parties.’ ” (Asdourian v. Araj,
supra, 38 Cal.3d at p. 291.) But as Asdourian and other cases make clear,
despite this general principle the equities between the parties sometimes
justify enforcing an illegal contract. (Asdourian, at p. 292; e.g., Corrie v.
Soloway (2013) 216 Cal.App.4th 436, 449; California Physicians’ Service v.
Aoki Diabetes Research Institute (2008) 163 Cal.App.4th 1506, 1516.)
Chadwick also argues that the trial court improperly relied on cases
applying this exception because they “are inapplicable and distinguishable
from the case at bar.” She does not explain why they are inapposite,
however, except to say that since plaintiffs “operated H2C at a loss[,] . . . no
10
benefit was conferred on [her].” In fact, Chadwick received $20,000 from
plaintiffs, and when she took back control of H2C, they had invested a
significant amount of money in the entity.
Moreover, in addition to the monetary benefit Chadwick realized,
several other factors are relevant and weigh against her. These include
whether the defendant has acted wrongfully, whether the defendant is part of
the class of persons the law is meant to protect, and whether the contract was
“malum in se (‘immoral in character, inherently inequitable or designed to
further a crime or obstruct justice’)” or merely “malum prohibitum (‘only
voidable depending on the factual context and the public policies involved’).”
(California Physicians’ Service v. Aoki Diabetes Research Institute, supra,
163 Cal.App.4th at pp. 1516–1517.) On the latter point, the trial court
observed that California’s public policy against marijuana “has been eroded
significantly over the years, commencing virtually at the time that this
contract was entered into,” and that “contracts relating to marijuana and the
sale of businesses [are] becoming very acceptable.” Chadwick does not
explain why the court’s balancing of this and other factors was erroneous. As
a result, we conclude she is not entitled to relief on this claim.
C. Chadwick Fails to Show that the Agreement Was Unenforceable
for Other Reasons.
Next, Chadwick argues that the Agreement was also unenforceable
because it was (1) unauthorized under H2C’s bylaws, (2) not ratified by H2C’s
board of directors, and (3) the product of undue influence. We reject these
claims.
In making her first argument, Chadwick relies on two “Defendants’
Trial Exhibits” that include H2C’s bylaws and articles of incorporation. We
agree with plaintiffs that we cannot consider these documents because there
is no indication they were admitted into evidence. Chadwick responds that
11
they were lodged and “before the Trial Court in [her] new trial motion and by
law are part of the record on appeal.” But whether a document is part of the
record on appeal is not the same issue as whether we may consider it as
evidence of the Agreement’s invalidity. Moreover, not only does Chadwick
fail to show that these exhibits were ever admitted at trial, she also fails to
show that they were submitted or considered in connection with her motion
for a new trial. In fact, the exhibits and the motion for a new trial appear
nowhere near each other in her appellant’s appendix, which purports to be in
chronological order. Nor is there a file stamp on the exhibits, and the
appendix’s table of contents lists their date as “NA.” In short, it is unclear
whether these exhibits were ever properly presented to the trial court, and
we thus reject Chadwick’s argument based upon them.
For the same reason, we also reject Chadwick’s contention that the
Agreement was invalid because it was not ratified by H2C’s board of
directors. Chadwick claims that because “the bylaws and articles of H2C are
largely silent on board and member powers,” it must be true that “[t]he
business affairs of H2C are . . . the sole province of the board and the
members.” Since we decline to consider H2C’s bylaws and articles of
incorporation for the reasons given above, the premise of this argument is
unsupported. Accordingly, the argument fails.
Finally, Chadwick argues that the Agreement was a product of undue
influence upon her by plaintiffs’ “agent,” a person she claims introduced her
to plaintiffs and participated in the contract negotiations. She did not clearly
raise this claim until her motion for a new trial, which the trial court
summarily denied. But even assuming that she preserved the issue, she fails
to show entitlement to relief.
12
“Undue influence is a contract defense based on the notion of coercive
persuasion,” and the party raising the defense generally has the burden of
proof. (In re Marriage of Starr (2010) 189 Cal.App.4th 277, 284; § 1575; see
Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 911.) Whether
a contract is the product of undue influence is a question of fact. (See
Gomez v. Smith (2020) 54 Cal.App.5th 1016, 1033.) “ ‘In the case where the
trier of fact has expressly or implicitly concluded that the party with the
burden of proof did not carry the burden and that party appeals, it is
misleading to characterize the failure-of-proof issue as whether substantial
evidence supports the judgment.’ ” (Dreyer’s Grand Ice Cream, Inc. v. County
of Kern (2013) 218 Cal.App.4th 828, 838.) Rather, the question is more
properly characterized as “ ‘whether the appellant’s evidence was
(1) “uncontradicted and unimpeached” and (2) “of such a character and
weight as to leave no room for a judicial determination that it was
insufficient to support a finding.” ’ ” (Ibid.)
Thus, even if we assume that the trial court rejected the undue-
influence claim on its merits, to succeed on appeal Chadwick would have to
demonstrate that the evidence compelled a finding in her favor. She utterly
fails to do so, citing only evidence purportedly favorable to her without
addressing any evidence that would support the court’s implicit finding. As a
result, we reject this claim as well.
D. The Trial Court Did Not Err by Concluding that Plaintiffs Were
Entitled to Be Placed on H2C’s Board of Directors.
Chadwick contends that the trial court erred by granting plaintiffs
relief on their section 709 claim and placing them on H2C’s board of directors.
Specifically, she claims that the court erred by concluding that (1) the
October 2015 letter from Vallejo did not qualify as a “Final Letter of Limited
Immunity” under the Agreement’s terms, meaning that plaintiffs’ obligation
13
to pay her $150,000 was not triggered, and (2) plaintiffs were not obligated to
make payments under the Agreement “despite receiving the benefit of their
bargain in operating the business.” (Some capitalization omitted.) We are
not persuaded.
As the trial court found, “[d]uring the pendency of this action, H2C was
converted to a for-profit corporation to which . . . [section] 709 applies to
rights of directorship.” That provision authorizes an equitable cause of action
“to determine the validity of an election of corporate directors.” (Morrical v.
Rogers (2013) 220 Cal.App.4th 438, 442, 451.) In a section 709 proceeding, a
trial court may “ ‘determine all questions which may affect the validity of a
contested election,’ ” including the meaning of an underlying contract. (Id. at
pp. 455–456, italics omitted.) We review issues of contract interpretation de
novo. (City of Petaluma v. Cohen (2015) 238 Cal.App.4th 1430, 1438–1439.)
First, Chadwick claims the term “Final Letter of Limited Immunity”
was ambiguous and the trial court should have construed it to include the
October 2015 letter, because otherwise three “other provisions in the
Agreement” would be “render[ed] meaningless”: the provision that
Chadwick’s husband be removed from the board “upon execution of [the]
Agreement,” the provision that $150,000 was due within five days of the
immunity letter’s receipt “but not sooner than November 1, 2015,” and the
provision that $310,000 was due within five days after H2C received a
certificate of occupancy for the new location. Chadwick does not explain why
any of these provisions cannot be reconciled with the court’s contractual
interpretation. Moreover, even if the October 2015 letter did qualify as a
“Final Letter of Limited Immunity,” plaintiffs’ obligation to pay the $150,000
was expressly contingent upon Chadwick’s performing other duties she failed
to discharge, including replacing the board of directors and amending H2C’s
14
bylaws. Accordingly, she has not demonstrated that the court erred by
determining that plaintiffs did not breach the immunity-letter portion of the
Agreement.
Second, Chadwick claims that plaintiffs’ obligation to make additional
payments was not excused by her failure to place plaintiffs on H2C’s board of
directors, because thereafter “they continued to recognize the validity of the
contract . . . and controlled the management of the dispensary.” Relying on
Spiegelman v. Metropolitan Life Insurance (1937) 21 Cal.App.2d 299, 301, she
argues that “[s]uch conduct constitutes a waiver.” The portion of Spiegelman
cited states that “it is well settled that when an insurance company, after
knowledge of any default for which it might terminate a policy, enters into
negotiations which recognize its continued validity, the right to claim a
forfeiture for such default is waived.” (Ibid.) Even assuming that an 85-year-
old insurance case has any bearing here, Chadwick cites no evidence to
support her assertions about plaintiffs’ conduct. Accordingly, her argument
is forfeited. (See Shenouda v. Veterinary Medical Bd. (2018) 27 Cal.App.5th
500, 514 [appellant has burden to demonstrate error with necessary citations
to record].)
E. The Trial Court Did Not Abuse Its Discretion in Awarding
Attorney Fees to Plaintiffs.
Finally, Chadwick claims the trial court abused its discretion by
awarding “excessive” attorney fees. She is incorrect.
The Agreement provided that “the prevailing party” in “any
controversy, claim[,] or dispute relating to [the Agreement’s] subject matter”
was entitled to recover “all of its expenses, including, without limitation,
attorneys fees and costs.” Plaintiffs filed a bench brief seeking attorney fees
of up to $1,619,200, representing $1,012,313 in actual fees with a multiplier
of 1.2 to 1.6. The Chadwick defendants opposed, claiming that the number of
15
hours and billing rates were unreasonable, that no multiplier was warranted,
and that the trial court should award no more than $450,000 in attorney fees.
In its second statement of decision, the trial court found that plaintiffs
were the prevailing parties and entitled to reasonable attorney fees under
section 1717. Agreeing with the Chadwick defendants that some of plaintiffs’
charges were not reasonably incurred, the court set the lodestar at
$998,394.41. The court also concluded that a multiplier of 1.2 was
warranted, based on its findings that plaintiffs’ attorneys were highly skilled,
could not take other matters while litigating the case—which “involved a
high degree of difficulty”—and obtained “a high quality result.”
Under section 1717, subdivision (a), if a “contract specifically provides
that attorney’s fees and costs, which are incurred to enforce that contract,
shall be awarded either to one of the parties or to the prevailing party,” the
party who prevails in an action on the contract “shall be entitled to
reasonable attorney’s fees in addition to other costs. [¶] . . . [¶] Reasonable
attorney’s fees shall be fixed by the court, and shall be an element of the costs
of suit.” “[T]he fee setting inquiry in California ordinarily begins with the
‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the
reasonable hourly rate. . . . The lodestar figure may then be adjusted, based
on consideration of factors specific to the case, in order to fix the fee at the
fair market value for the legal services provided.” (PLCM Group, Inc. v.
Drexler (2000) 22 Cal.4th 1084, 1095 (PLCM Group).) In determining the
appropriate figure, a trial court considers “ ‘a number of factors, including the
nature of the litigation, its difficulty, the amount involved, the skill required
in its handling, the skill employed, the attention given, the success or failure,
and other circumstances in the case.’ ” (Id. at p. 1096.)
16
“[T]he trial court has broad authority to determine the amount of a
reasonable fee” under section 1717. (PLCM Group, supra, 22 Cal.4th at
pp. 1094–1095.) “ ‘The “experienced trial judge is the best judge of the value
of professional services rendered in [the judge’s] court, and while [this]
judgment is of course subject to review, it will not be disturbed unless the
appellate court is convinced that it is clearly wrong” ’—meaning that it
abused its discretion.” (Id. at p. 1095.)
Initially, Chadwick appears to suggest that plaintiffs were not the
prevailing parties, pointing out that some of their claims were unsuccessful
and “the entire ‘damages’ phase of the trial was unnecessary and ineffective
as [plaintiffs] failed to prove any damages at all except attorney fees and
costs.” Chadwick provides no legal authority in support of this claim, and we
therefore treat it as forfeited. (See Gonzalez v. City of Norwalk (2017)
17 Cal.App.5th 1295, 1311.)
Chadwick also argues that the attorney fees plaintiffs incurred “for
inefficient and unsuccessful claims . . . adjudicated after the initial
proceedings . . . should have been deducted from the lodestar.” She does not
identify with any specificity the fees she claims should have been deducted,
much less identify where the challenged billings are in the record. Therefore,
this aspect of her claim is also forfeited. (See Shenouda v. Veterinary Medical
Bd., supra, 27 Cal.App.5th at p. 514.)
Finally, Chadwick contends that the trial court abused its discretion by
applying a multiplier. She claims that “because the [c]ourt made a finding
that the fees were reasonable without the multiplier,” it had no discretion to
increase the lodestar. In fact, on the page of the second statement of decision
that she cites, the court found that the rates charged by plaintiffs’ attorneys
were reasonable, not that the lodestar itself constituted a reasonable amount
17
of attorney fees. As the balance of the statement of decision makes clear, the
court then properly considered other relevant factors, including the result
obtained and the case’s difficulty, to conclude that the lodestar should be
increased by a multiplier of 1.2.
Chadwick claims that the use of a multiplier was also improper because
the Agreement did not authorize the prevailing parties to recover more than
the amount of attorney fees actually incurred. She argues that “parties do
not have the power to be awarded attorney fees greater than the amount they
incur unless they ‘specifically agree that the court shall have the power to
award attorney fees in an amount greater than the prevailing party actually
incurs.’ ” (Quoting San Dieguito Partnership v. San Dieguito River Valley
Regional Etc. Authority (1998) 61 Cal.App.4th 910, 919.) Her quotation of
San Dieguito is misleading, as the appellate court stated that it “need[ed] not
decide in this case whether the parties to a contract may specifically agree” to
an award of attorney fees greater than those incurred. (Ibid., italics added.)
Rather, the decision held only that an award of attorney fees is so limited if
the contract provides that “the prevailing party shall be entitled to an award
‘in the amount of attorneys’ fees and costs incurred’ ” (ibid.), and even that
holding was later undermined by PLCM Group. (See PLCM Group, supra,
22 Cal.4th at p. 1097, fn. 5.) Regardless, no such language appears in the
Agreement, and the case law makes abundantly clear that a trial court has
discretion to adjust upward the amount of attorney fees actually incurred to
reflect “the fair market value for the legal services provided.” (Id. at
pp. 1095–1096.)
In short, Chadwick fails to demonstrate that the trial court abused its
discretion in awarding attorney fees to plaintiffs. Thus, this claim also fails.
18
III.
DISPOSITION
The judgment is affirmed. Respondents are awarded their costs on
appeal.
19
_________________________
Humes, P.J.
WE CONCUR:
_________________________
Margulies, J.
_________________________
Devine, J.*
*Judge of the Superior Court of the County of Contra Costa, assigned
by the Chief Justice pursuant to article VI, section 6 of the California
Constitution.
Counts v. Chadwick A163282
20 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483919/ | 11/15/2022
IN THE SUPREME COURT OF THE STATE OF MONTANA Case Number: DA 21-0499
No. DA 21-0499
STATE OF MONTANA,
Plaintiff and Appellee,
v.
ESANDRO ROMAN RODRIGUEZ,
Defendant and Appellant.
ORDER
Upon consideration of Appellant’s motion for extension of time,
and good cause appearing,
IT IS HEREBY ORDERED that Appellant is granted an extension
of time to and including December 23, 2022, within which to prepare,
file, and serve Appellant’s opening brief on appeal.
Electronically signed by:
Mike McGrath
Chief Justice, Montana Supreme Court
November 15 2022 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/9350231/ | Matter of HBC Victor LLC v Town of Victor (2022 NY Slip Op 07313)
Matter of HBC Victor LLC v Town of Victor
2022 NY Slip Op 07313
Decided on December 23, 2022
Appellate Division, Fourth Department
Lindley, J.P.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on December 23, 2022
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
PRESENT: LINDLEY, J.P., NEMOYER, CURRAN, WINSLOW, AND BANNISTER, JJ.
683 OP 22-00329
[*1]IN THE MATTER OF HBC VICTOR LLC, PETITIONER,
vTOWN OF VICTOR, RESPONDENT.
PHILLIPS LYTLE LLP, BUFFALO (CRAIG A. LESLIE OF COUNSEL), FOR PETITIONER.
HARRIS BEACH PLLC, PITTSFORD (KYLE D. GOOCH OF COUNSEL), FOR RESPONDENT.
Lindley, J.P.
Proceeding pursuant to EDPL 207 (initiated in the Appellate Division of the Supreme Court in the Fourth Judicial Department) to annul the determination of respondent. The determination authorized condemnation of certain real property owned by petitioner.
It is hereby ORDERED that the determination is unanimously annulled on the law without costs and the petition is granted.
Opinion by Lindley, J.P.:
Petitioner commenced this original proceeding pursuant to EDPL 207 seeking to annul the determination of respondent, Town of Victor (Town), authorizing the condemnation of certain real property owned by petitioner in Ontario County. The property in question is connected to an enclosed regional shopping center known as Eastview Mall, owned by Eastview Mall, LLC. Until recently, the subject property was occupied by a Lord & Taylor department store, one of five anchor tenants at the mall. The operator of the Lord & Taylor store filed for bankruptcy in August 2020 and closed the store permanently in February 2021 during the COVID-19 pandemic.
In November 2021, while petitioner was attempting to secure a new tenant for the property, the Town passed a resolution authorizing a public hearing to start the condemnation process. At the public hearing, petitioner objected to the proposed taking and presented evidence that it was maintaining the property and actively seeking a new tenant, which petitioner explained was not easy to find during the pandemic. The Town thereafter adopted resolutions approving the acquisition of petitioner's property via condemnation and determining that the taking will not have a potential significant adverse impact on the environment.
Petitioner challenges the taking on a number of grounds, contending, inter alia, that neither the condemnation notice nor the Town's determination and findings specifically identifies or describes a legitimate public project, as required by EDPL 207 (C) (3). We agree. Indeed, the Town readily acknowledges that it has not yet decided what to do with the property after obtaining title, and the notice merely states that "[t]he proposed Acquisition is required for and is in connection with a certain project . . . consisting of facilitating the productive reuse and redevelopment of the vacant and underutilized Proposed Site through municipal and/or economic development projects . . . by attracting and accommodating new tenant(s) and/or end user(s)." In its determination and findings, the Town stated that "no specific future uses or actions have been formulated and/or specifically identified."
Because the Town has not indicated what it intends to do with the property, we are unable to determine whether "the acquisition will serve a public use" (Matter of City of New York [Grand Lafayette Props. LLC], 6 NY3d 540, 546 [2006]; see Matter of United Ref. Co. of Pa. v Town of Amherst, 173 AD3d 1810, 1810 [4th Dept 2019], lv denied 34 NY3d 913 [2020]). Of [*2]course, "[t]he existence of a public use, benefit, or purpose underlying a condemnation is a sine qua non" to the government's ability to exercise its powers to take private property through eminent domain (Matter of 49 WB, LLC v Village of Haverstraw, 44 AD3d 226, 238 [2d Dept 2007], abrogated on other grounds by Hargett v Town of Ticonderoga, 13 NY3d 325 [2009]; see Matter of Syracuse Univ. v Project Orange Assoc. Servs. Corp., 71 AD3d 1432, 1433 [4th Dept 2010], appeal dismissed and lv denied 14 NY3d 924 [2010]).
As our colleagues in the Second Department have noted, "the existence of a 'public use' must be determined at the time of the taking since the requirement of public use would otherwise be rendered meaningless by bringing 'speculative future public benefits' which might never be realized within its scope" (Matter of Gabe Realty Corp. v City of White Plains Urban Renewal Agency, 195 AD3d 1020, 1023 [2d Dept 2021] [emphasis added], quoting Daniels v Area Plan Commn. of Allen County, 306 F3d 445, 466 [7th Cir 2002]; see generally Yonkers Community Dev. Agency v Morris, 37 NY2d 478, 484-486 [1975], appeal dismissed 423 US 1010 [1975]). In simple terms, the government cannot take your land and then decide later what to do with it without running afoul of the Takings Clause of the Fifth Amendment of the United States Constitution, as applied to the states by the Fourteenth Amendment.
Relying in part on Matter of GM Components Holdings, LLC v Town of Lockport Indus. Dev. Agency (112 AD3d 1351 [4th Dept 2013], appeal dismissed 22 NY3d 1165 [2014], lv denied 23 NY3d 905 [2014]), the Town nevertheless contends that its "lack of a particularized plan as to how the Town will redevelop the Property does not negate the existence of a valid and legitimate public use in satisfaction of the EDPL." According to the Town, GM Components Holdings, LLC stands for the proposition that a municipality may acquire property for redevelopment "without having decided" how the property will be used. We cannot agree.
In GM Components Holdings, LLC, the Town of Lockport Industrial Development Agency (IDA) operated an industrial park and sought to condemn 91 acres of vacant land adjacent to the park (112 AD3d at 1351). With respect to the underlying public purpose, the IDA stated that it intended to sell the property to a business that wished to locate in the area, thereby creating jobs and adding to the tax base (id.). The IDA had previously sold numerous other parcels of land in the industrial park for that same purpose (id. at 1352). Although the IDA did not have a buyer in mind, the IDA made clear what it intended to do with the condemned property, to wit, sell it to a business that would locate in the industrial park.
Here, in contrast, the Town professes to have no idea what it intends to do with petitioner's property. The Town does not even rule out simply transferring title to Eastview Mall, LLC, which owns the adjoining mall and whose principals asked the Town to condemn the property. Again, unless and until the Town says what it plans to do with the property upon taking, we cannot determine whether the taking will serve a public use. Nor can we determine whether, as petitioner alleges, the condemnation will result in a "merely incidental public benefit coupled with a dominant private purpose," which would invalidate the taking (Syracuse Univ., 71 AD3d at 1433; see generally Kelo v City of New London, 545 US 469, 485 [2005], reh denied 545 US 1158 [2005]).
Although "the remediation of substandard or insanitary conditions (i.e., urban blight) is a proper basis for the exercise of the power of eminent domain" (Gabe Realty Corp., 195 AD3d at 1022; see Matter of Goldstein v New York State Urban Dev. Corp., 13 NY3d 511, 524 [2009], rearg denied 14 NY3d 756 [2010]), there is no indication in the record that petitioner's property is in a blighted condition. To the contrary, the evidence at the public hearing established that petitioner has cleaned and maintained the premises since the Lord & Taylor vacancy and continues to pay property taxes at the assessed value of more than $4,000,000. We do not equate mere vacancy with blight, especially when the vacancy occurs unexpectedly in the midst of a global pandemic.
The Town's reliance on Matter of Court St. Dev. Project, LLC v Utica Urban Renewal Agency (188 AD3d 1601 [4th Dept 2020]) is misplaced inasmuch as the property condemned in that case had "experienced deterioration since it became vacant" years earlier (id. at 1602). There is no evidence, or even an allegation, of deterioration here.
In sum, we conclude that petitioner met its burden of establishing that the Town's [*3]proposed taking does not rationally relate to any conceivable public purpose (see Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d 400, 425 [1986]; cf. Matter of Kaufmann's Carousel v City of Syracuse Indus. Dev. Agency, 301 AD2d 292, 303 [4th Dept 2002], lv denied 99 NY2d 508 [2003]), and that the Town's determination and findings must be rejected. Because the Town lacks authority to condemn the property, petitioner is entitled to be reimbursed for reasonable attorney's fees and costs pursuant to EDPL 702 (B) (see Hargett, 13 NY3d at 330; Gabe Realty Corp., 195 AD3d at 1023). Petitioner may submit an application to this Court upon notice to the Town.
Based on our determination, we do not address petitioner's remaining contentions.
Entered: December 23, 2022
Ann Dillon Flynn
Clerk of the Court | 01-04-2023 | 12-23-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/9350235/ | Matter of Conrad v Conrad (2022 NY Slip Op 07341)
Matter of Conrad v Conrad
2022 NY Slip Op 07341
Decided on December 23, 2022
Appellate Division, Fourth Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on December 23, 2022
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
PRESENT: LINDLEY, J.P., NEMOYER, WINSLOW, BANNISTER, AND MONTOUR, JJ.
788 CA 21-01455
[*1]IN THE MATTER OF RANDOLPH CONRAD, PETITIONER-APPELLANT,
vSUSAN CONRAD, RESPONDENT-RESPONDENT.
D.J. & J.A. CIRANDO, PLLC, SYRACUSE (REBECCA L. KONST OF COUNSEL), FOR PETITIONER-APPELLANT.
LISA DIPOALA HABER, SYRACUSE, FOR RESPONDENT-RESPONDENT.
ARLENE BRADSHAW, SYRACUSE, ATTORNEY FOR THE CHILD.
Appeal from an order of the Supreme Court, Onondaga County (Rory A. McMahon, J.), entered May 25, 2021. The order, among other things, adjudged that respondent have sole legal and physical custody of the subject child and set forth a schedule for petitioner's parenting time.
It is hereby ORDERED that the order so appealed from is unanimously modified on the law by striking from the third ordering paragraph the phrase "Sunday at 4:00 PM" and substituting therefor the phrase "the start of school on Monday," striking from the third ordering paragraph the phrase "Mother shall pick the child up at Father's residence on Sunday at the end of Father's parenting time," and striking from the fifth ordering paragraph the phrase "one week of interrupted parenting time during the summer and shall provide notification to Mother of the week he is requesting" and substituting therefor the phrase "four weeks of uninterrupted parenting time during the summer, with no more than two consecutive weeks at a time, and shall provide notification to Mother of the weeks he is requesting" and as modified the order is affirmed without costs.
Memorandum: In this Family Court Act article 6 proceeding, petitioner father appeals from an order that, inter alia, modified the parties' custody and visitation arrangement by awarding respondent mother sole legal and primary physical custody of the child and reducing the father's parenting time with the child.
The father waived his contention that the mother failed to establish the requisite change in circumstances warranting an inquiry into the best interests of the child inasmuch as he alleged in his own modification petition that there had been such a change in circumstances (see Matter of Rice v Wightman, 167 AD3d 1529, 1530 [4th Dept 2018], lv denied 33 NY3d 903 [2019]; see Matter of Biernbaum v Burdick, 162 AD3d 1664, 1665 [4th Dept 2018]). Contrary to the father's related contention, we conclude that "there is a sound and substantial basis in the record to support [Supreme Court's] determination that it was in the child's best interests to award [sole custody] to the mother" (Rice, 167 AD3d at 1530 [internal quotation marks omitted]; see Matter of Vaccaro v Vaccaro, 178 AD3d 1410, 1411 [4th Dept 2019]; Matter of Stilson v Stilson, 93 AD3d 1222, 1223 [4th Dept 2012]).
We agree with the father, however, that the court abused its discretion in reducing his parenting time with the child (see generally Matter of Shaffer v Woodworth, 175 AD3d 1803, 1804 [4th Dept 2019]). "Generally, a court's determination regarding custody and visitation issues, based upon a first-hand assessment of the credibility of the witnesses after an evidentiary hearing, is entitled to great weight and will not be set aside unless it lacks an evidentiary basis in the record" (Matter of Dubuque v Bremiller, 79 AD3d 1743, 1744 [4th Dept 2010]). Here, we conclude that the evidence does not support the court's determination that reducing the father's [*2]parenting time was in the child's best interests (see Matter of Rosenkrans v Rosenkrans, 154 AD3d 1123, 1126 [3d Dept 2017]; Matter of Knox v Romano, 137 AD3d 1530, 1532-1533 [3d Dept 2016]; Matter of Oliver v Oliver, 284 AD2d 934, 935 [4th Dept 2001]). Pursuant to the initial arrangement, the parties shared joint legal and physical custody of the child. The father had parenting time every day after school and overnights that alternated between Thursday night to Friday night and Thursday night to Monday morning every other week. That schedule was to remain in place until the child started kindergarten, at which time the parties would agree upon an appropriate parenting schedule, which they were unable to do. During the course of this proceeding, the court issued a temporary order granting the father parenting time with the child every other weekend from Thursday after school to Monday morning, when the father would drop the child off at school. By arrangement of the parties, the father was also picking the child up from school at 3:30 p.m. and dropping the child off to the mother at 5:00 p.m. every weekday. The father, the child's former therapist, and the child's principal all testified that the child was thriving under that parenting schedule. The child's therapist also testified that the child was deeply affected when his time with the father was reduced, prompting the parents to suspend the child's therapy in order to provide the child with additional time with the father. In addition, the child's therapist opined that the child would be negatively impacted if the father's parenting time was limited, as did the attorney for the child. We thus conclude that the child's best interests will be served by extending the father's weekend parenting time until Monday morning and granting him four weeks of parenting time during the summer, with no more than two consecutive weeks at a time (see generally Matter of Manioci v Schreiber, — AD3d &mdash, 2022 NY Slip Op 06609 [4th Dept 2022]; Matter of Bryan K.B. v Destiny S.B., 43 AD3d 1448, 1450 [4th Dept 2007]; Oliver,
284 AD2d at 935). We therefore modify the order accordingly.
Entered: December 23, 2022
Ann Dillon Flynn
Clerk of the Court | 01-04-2023 | 12-23-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/9350228/ | Matter of McRae v Brown (2022 NY Slip Op 07338)
Matter of McRae v Brown
2022 NY Slip Op 07338
Decided on December 23, 2022
Appellate Division, Fourth Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on December 23, 2022
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
PRESENT: LINDLEY, J.P., NEMOYER, WINSLOW, BANNISTER, AND MONTOUR, JJ.
783 CAF 21-00848
[*1]IN THE MATTER OF VICTOR MCRAE, JR., PETITIONER-RESPONDENT-APPELLANT,
vQASHEEKA S. BROWN, RESPONDENT-PETITIONER-RESPONDENT.
SCOTT T. GODKIN, WHITESBORO, FOR PETITIONER-RESPONDENT-APPELLANT.
STEPHANIE R. DIGIORGIO, UTICA, FOR RESPONDENT-PETITIONER-RESPONDENT.
LAWRENCE BROWN, BRIDGEPORT, ATTORNEY FOR THE CHILDREN.
Appeal from an order of the Family Court, Oneida County (Peter L. Angelini, R.), entered May 24, 2021 in a proceeding pursuant to Family Court Act article 6. The order, inter alia, found petitioner-respondent in willful violation of a court order.
It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Memorandum: Petitioner-respondent father appeals from an order that, inter alia, granted respondent-petitioner mother's petition seeking to hold the father in contempt for violating the provisions of the parties' order of custody. Contrary to the father's contention, Family Court did not err in granting the mother's petition. "To sustain a finding of civil contempt based upon a violation of a court order, it is necessary to establish that a lawful court order clearly expressing an unequivocal mandate was in effect and that the person alleged to have violated that order had actual knowledge of its terms" (Matter of Mauro v Costello, 162 AD3d 1475, 1475 [4th Dept 2018] [internal quotation marks omitted]). "In addition, it must be established that the offending conduct defeated, impaired, impeded, or prejudiced a right or remedy of the complaining party" (id. [internal quotation marks omitted]; see Judiciary Law § 753 [A]; Family Ct Act
§ 156). "A court's determination finding a party in contempt of an order will not be disturbed absent an abuse of discretion" (Matter of Beesmer v Amato, 162 AD3d 1260, 1261 [3d Dept 2018]; see Rech v Rech, 162 AD3d 1731, 1732 [4th Dept 2018]). Here, the order of custody provided the father with visitation every other weekend and continued a provision permitting "such other and further visitation as the parties may agree [on]." The mother established that she and the father agreed to extend one of his weekend visitations with one of the children until Monday morning. The father conceded that the child was not returned to the mother at the agreed time, and the mother established that she was required to obtain an order to show cause as well as police assistance in order to regain custody of the child several days later. Thus, the mother established by clear and convincing evidence that the father violated the order of custody (see Rech, 162 AD3d at 1732).
The father's contention that the court erred in failing to grant him primary physical custody of the children is unpreserved inasmuch as he did not seek primary physical custody of the children (see Matter of Mountzouros v Mountzouros, 191 AD3d 1388, 1389 [4th Dept 2021], lv denied 37 NY3d 902 [2021]; see generally Matter of Pontillo v Johnson-Kosiorek, 196 AD3d 1163, 1165 [4th Dept 2021]; Matter of Colleen GG. v Richard HH., 135 AD3d 1005, 1006-1007 [3d Dept 2016]).
Entered: December 23, 2022
Ann Dillon Flynn
Clerk of the Court | 01-04-2023 | 12-23-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/9350230/ | Matter of Housh (2022 NY Slip Op 07408)
Matter of Housh
2022 NY Slip Op 07408
Decided on December 23, 2022
Appellate Division, Fourth Department
Per Curiam
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on December 23, 2022
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
PRESENT: WHALEN, P.J., PERADOTTO, NEMOYER, WINSLOW, AND MONTOUR, JJ. (Filed Dec. 23, 2022.)
&em;
[*1]MATTER OF FRANK T. HOUSH, AN ATTORNEY, RESPONDENT. GRIEVANCE COMMITTEE OF THE EIGHTH JUDICIAL DISTRICT, PETITIONER.
OPINION AND ORDER
Order of suspension entered.Per Curiam
Opinion: Respondent was admitted to the practice of law by this Court on February 14, 1994. During the time period relevant to this matter, respondent maintained offices for the practice of law in Buffalo and Rochester. The Grievance Committee has filed a petition and supplemental petition alleging against respondent a total of 10 charges of misconduct, including neglecting client matters, failing to keep clients reasonably informed about their matters, misappropriating client funds, engaging in conduct involving dishonesty or deceit, and failing to cooperate in the grievance investigation. Respondent denied material allegations of the petitions, and this Court appointed a referee to conduct a hearing. Prior to the hearing, however, the parties executed a stipulation resolving most of the factual issues underlying the charges. Accordingly, the hearing before the Referee primarily concerned circumstances surrounding the alleged misconduct that may be viewed as aggravating or mitigating factors. The Referee has filed a report containing findings of fact and an advisory determination sustaining the charges of misconduct. The Referee found in mitigation that respondent did not act with venal intent, but the Referee also found that respondent failed to establish his primary proffered factor in mitigation, which is that the misconduct was attributable to mental health issues experienced by respondent during the relevant time period. The Grievance Committee moves to confirm the report of the Referee, except that the Committee requests that the Court disregard the finding that respondent did not act with venal intent. Respondent cross-moves to disaffirm the report of the Referee, particularly with respect to the findings concerning aggravating and mitigating factors. On October 25, 2022, counsel to the parties appeared before this Court for oral argument of the motion and cross motion, at which time respondent was heard in mitigation.
With respect to charge one, the Referee found that, in July 2017, respondent agreed to represent a client on a contingency fee basis in a civil matter arising from an alleged sexual assault. The Referee found that respondent accepted from the client funds in the amount of $2,500 as a "cost retainer," which respondent's retainer agreement provided would be used for only costs and expenses related to the matter. The Referee found that respondent deposited the cost retainer funds into his law firm operating account, rather than an attorney trust account or other segregated account, and thereafter misappropriated at least a portion of the funds to his own use inasmuch as the balance in his operating account fell below the amount of cost retainer funds paid by the client. The Referee found that, in October 2017, respondent told the client that a civil complaint had been filed on behalf of the client, but respondent subsequently advised the client that a complaint had not been filed. The Referee found that the client thereafter made several requests for a refund of the cost retainer funds and, although respondent's retainer agreement provided that no legal fee would be payable if no recovery was obtained, respondent sent to the client a letter stating that the client owed respondent attorneys' fees in the amount of $6,232 based on an hourly rate of $250 per hour. Respondent's letter also indicated that the client's cost retainer funds had been applied to pay respondent's claim for legal fees and that the client owed to respondent additional funds in the amount of $3,732. The Referee found that respondent did not refund the cost retainer funds to the client until August 2019, almost two years after the client first requested the refund.
With respect to charge two, the Referee found that, in January 2016, respondent agreed to represent a client on a contingency fee basis in a civil matter arising from a workplace injury. The Referee found that, although respondent accepted from the client funds in the total amount of $2,500 as a cost retainer, respondent deposited the funds into his law firm operating account and thereafter misappropriated at least a portion of the funds to his own use inasmuch as the balance in the account fell below the amount of cost retainer funds paid by the client. The Referee also found that, from March 2017 through August 2018, respondent failed to respond to several inquiries from the client in a prompt manner or to consult with the client regarding the means by which her legal objectives would be accomplished. The Referee further found that, after the client filed a grievance complaint, respondent sent to the Grievance Committee in [*2]October 2018 a letter acknowledging that he had not provided a tangible benefit to the client and asserting that he had provided to the client a partial refund in the amount of $1,500. The Referee found that respondent thereafter failed to comply with requests from the Grievance Committee for proof that he had paid to the client a partial refund, and documents eventually produced to the Grievance Committee established that respondent did not provide any refund to the client until September 2019.
With respect to charge three, the Referee found that, in August 2015, respondent agreed to represent the client on a contingency fee basis in an employment dispute. The Referee found that the client subsequently expressed concern that respondent had failed to respond to several inquiries regarding the matter, but in mid- to late 2016 respondent contacted the client and advised her to pay funds in the amount of $1,500 so that respondent could file her case. The Referee found that, in October 2016, the client paid respondent funds in the amount of $1,500 by check containing the notation "filing fees," but respondent deposited the funds into his operating account and thereafter misappropriated at least a portion of the funds to his own use inasmuch as the balance in the account fell below the amount of filing fees paid by the client. The Referee also found that respondent failed to communicate adequately with the client, respond to her inquiries, or file any complaint or petition on her behalf. The Referee found that, although the client subsequently made several requests for a refund of her unused filing fees, respondent did not remit the funds to the client until September 2019.
With respect to charge four, the Referee found that, in February 2017, respondent accepted a retainer payment in the amount of $2,500 to represent a client whose child had been suspended from school for 35 days. The Referee found that, although the client's primary objective was to either overturn the suspension or have its term shortened, respondent failed to resume contact with the client until after the 35-day period of suspension had expired, at which time respondent advised the client that an additional retainer payment in the amount of $2,500 was needed to commence a lawsuit against the school district. The Referee found that the client paid the additional retainer funds requested by respondent and, although respondent commenced an article 78 proceeding on behalf of the client in June 2017, respondent's process server served the wrong party, after which the school district moved to dismiss on grounds including improper service and expiration of the applicable statute of limitations. The Referee found that, had respondent reviewed in a timely manner the affidavit of service prepared by the process server and recognized the error, respondent could have addressed the alleged defective service before the statute of limitations expired. The Referee further found that, in October 2017, respondent filed a motion to withdraw the article 78 petition, but the client during the subsequent grievance investigation asserted that respondent had advised her only that he was unable to move forward with the petition, that the client had not authorized withdrawal of the petition, and that the client first learned of the withdrawal in November 2017, after she consulted with a different lawyer. The Referee found that the client requested that respondent refund her retainer payment, but respondent offered to refund only half the retainer and stated that he intended to arrange for a law clerk to research the client's legal options. The Referee found that, in December 2017, the client retained a lawyer to assist her in obtaining a full refund of the retainer payment, and respondent issued the refund in January 2018.
With respect to charge five, the Referee found that, in March 2016, respondent accepted a retainer payment in the amount of $2,000 to assist a client in addressing alleged bullying experienced by the client's children at school. The Referee found that the client subsequently expressed concern that respondent had failed to respond to the client's numerous inquiries regarding the matter. The Referee also found that, in August 2016, respondent advised the client that an additional retainer payment in the amount of $5,000 was needed to commence an article 78 proceeding against the school district and, after the client paid the funds, respondent failed to respond to the client's requests for information regarding the matter and failed to commence the article 78 proceeding. The Referee found that, although respondent subsequently advised the client in October 2016 that he intended to file an article 78 petition in a matter of days, respondent shortly thereafter recommended that the client commence a civil action sounding in negligence, but he failed to respond to the client's subsequent requests that he explain why he had changed legal strategies. The Referee also found that, between May 2017 and May 2018, respondent led the client to believe that a complaint or petition had been filed on her behalf, but after respondent recommended in July 2018 that the client discontinue the matter, the client [*3]visited the county clerk's office and discovered that respondent had not filed any complaint or petition for her matter.
With respect to charge six, the Referee found that, in August 2018, respondent agreed to represent a client on a contingency fee basis in relation to a workplace dispute. The Referee found that, although respondent accepted from the client a cost retainer payment in the amount of $3,500, respondent deposited the funds into his operating account and thereafter misappropriated at least a portion of the funds to his own use inasmuch as the balance in the account fell below the amount of cost retainer funds paid by the client. The Referee found that, between January and April 2019, the client sent to respondent's law office several emails requesting an update on the matter and asserting that respondent had not contacted the client for several months. The Referee found that the client terminated the representation in April 2019 and advised respondent that she would be seeking to recover the funds she had paid to respondent. The Referee found, however, that as of August 2020 respondent had not refunded the cost retainer funds to the client.
With respect to charge seven, the Referee found that, in June 2016, respondent accepted a retainer payment in the amount of $2,700 to assist the parents of a child with special needs in obtaining educational support for their child. The Referee found that, from August 2016 through January 2017, respondent failed to take action on behalf of the clients or respond to the clients' inquiries regarding the matter, and the clients eventually obtained certain educational support for their child without any assistance from respondent. The Referee found that, in February 2017, respondent agreed to the clients' request for a refund of their retainer payment, but respondent thereafter failed to respond to their numerous requests regarding the status of the refund. The Referee found that respondent did not provide the refund to the clients until November 2018, which was after the clients commenced a fee arbitration proceeding against respondent.
With respect to charge eight, the Referee found that, during the grievance investigation, respondent failed to produce to the Grievance Committee various records pertaining to his attorney trust account, as repeatedly requested by the Committee. The Referee further found that, although respondent subsequently produced to the Grievance Committee certain records relating to his law firm operating account, respondent continued to fail to comply with requests that he produce his trust account records, which necessitated the issuance of subpoenas by this Court for production of the records.
The Referee's findings in relation to charge nine are based on findings set forth above concerning respondent's misappropriation of cost retainer funds and filing fees belonging to the clients whose matters gave rise to charges one, two, three, and six.
With respect to charge ten, the Referee found that, although respondent in July 2019 opened a bank account to use as an attorney trust account, he failed to label the account as an "attorney trust account," "attorney special account," or "attorney escrow account." The Referee also found that, in April 2020, respondent issued to a client a trust account check in the amount of $245 that resulted in a negative balance in the account and the issuance of a dishonored check notice by respondent's bank. The Referee found that, to address the shortfall, respondent transferred from his operating account to his trust account funds in the amount of $200. The Referee also found with respect to a different client matter, which respondent had accepted on a contingency fee basis, that respondent deposited into his trust account settlement funds in the amount of $325,000 and thereafter disbursed from the account for the matter funds in the total amount of $327,434, which included respondent's contingency fee and settlement funds disbursed to the client. The Referee noted that, during the hearing, respondent was unable to identify the source of the additional funds in the amount of $2,434 that were disbursed in relation to that client matter, other than to state that the discrepancy was caused by clerical error. The Referee further found that, in early June 2020, respondent fell victim to a fraudulent settlement check scheme whereby he accepted a purported settlement check in the amount of $137,800 and thereafter complied with the purported client's instruction to initiate a wire transfer of funds in the amount of $135,300 to a bank account that was in the name of a limited liability company, rather than the name of the purported client. The Referee found that respondent initiated the wire transfer without verifying that any of the purported settlement funds had been deposited into his attorney trust account and that, after respondent's bank determined that the settlement check was fraudulent, the bank assessed a charge-back for the amount of the fraudulent check. The Referee found that respondent subsequently sought to shield from attachment funds held in his trust account that belonged to another client by transferring trust account funds in the approximate [*4]amount of $216,000 to his operating account, which caused respondent's trust account to have a negative balance in the approximate amount of $137,000 and generated another insufficient funds notice. The Referee found that, in August 2020, the bank closed respondent's trust account inasmuch as it had been overdrawn since June 2020 and, at the time it was closed, had a negative balance in the approximate amount of $95,000.
Although respondent submits in mitigation that the alleged misconduct occurred while he was suffering from mental health issues, the Referee found that respondent failed to establish that the alleged misconduct was caused by mental health issues. The Referee, however, made an advisory finding that respondent did not act with venal intent. The Referee also made findings in aggravation of the alleged misconduct, including that respondent engaged in a pattern of failing to refund to clients in a timely manner unearned legal fees or unused cost retainer funds, that he made misrepresentations to a client or the Grievance Committee on certain occasions, and that some of the misconduct set forth in charge ten, which concerns respondent's trust account violations and mishandling of client funds, occurred after he advised the Grievance Committee during the grievance investigation that he had taken steps to prevent such misconduct.
We confirm the factual findings of the Referee and conclude that respondent has violated the following Rules of Professional Conduct (22 NYCRR 1200.0):
rule 1.3 (a)—failing to act with reasonable diligence and promptness in representing a client;
rule 1.3 (b)—neglecting a legal matter entrusted to him;
rule 1.4 (a) (2)—failing to reasonably consult with a client about the means by which the client's objectives are to be accomplished;
rule 1.4 (a) (3)—failing to keep a client reasonably informed about the status of a matter;
rule 1.4 (a) (4)—failing to comply in a prompt manner with a client's reasonable requests for information;
rule 1.4 (b)—failing to explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation;
rule 1.15 (a)—misappropriating funds belonging to another person and commingling such funds with personal funds;
rule 1.15 (b) (1)—failing to maintain funds belonging to another person in a segregated account, separate from his business or personal accounts or any accounts of his law firm;
rule 1.15 (b) (2)—failing to identify his trust account as an "attorney special account," "attorney trust account," or "attorney escrow account" or to obtain checks and deposit slips that bear such title;
rule 1.15 (c) (4)—failing to pay or deliver to a client or another person, as requested by the client or other person, funds or other property in his possession that the client or other person is entitled to receive;
rule 1.15 (d) (1)—failing to maintain required bookkeeping and other records concerning transactions involving his attorney trust account and any other bank account concerning or affecting his practice of law;
rule 1.15 (i)—failing to make available to the Grievance Committee financial records required to be maintained and produced in response to a notice or subpoena issued in connection with a grievance complaint;
rule 1.16 (e)—failing to refund promptly any part of a fee paid in advance that has not been earned;
rule 8.4 (c)—engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation;
rule 8.4 (d)—engaging in conduct that is prejudicial to the administration of justice; and
rule 8.4 (h)—engaging in conduct that adversely reflects on his fitness as a lawyer.
Although the Grievance Committee alleges that respondent has violated certain other provisions of the Rules of Professional Conduct, we decline to sustain those alleged rule violations inasmuch as they are not supported by the record or have been rendered superfluous by virtue of our determinations set forth herein.
We have considered, in determining an appropriate sanction, respondent's submissions in mitigation, which include numerous letters of support from individuals attesting to respondent's commitment to the practice of law and his good standing in the community, as well as respondent's statement that the misconduct occurred while he was suffering from mental health [*5]issues, for which he has sought treatment. We have also considered the Referee's findings in aggravation and mitigation of the misconduct, with which we generally agree. Indeed, although we commend respondent for seeking mental health treatment, we agree with the Referee that respondent failed to establish that the misconduct at issue in this case was caused by mental health issues. We disaffirm, however, the Referee's advisory finding that respondent did not act with venal intent inasmuch as the record establishes that respondent engaged in an extensive course of misconduct that resulted in harm or prejudice to several clients and that was, at times, deceitful and knowingly in favor of respondent's personal interests at the expense of the interests of his clients and his professional obligations as a lawyer. We further agree with the Referee's finding that, during respondent's hearing testimony, respondent often became evasive when questioned about circumstances surrounding the alleged misconduct and his own culpability for the misconduct, which in our view demonstrates respondent's lack of remorse or inability to acknowledge the extent of his wrongdoing. Accordingly, after consideration of all of the factors in this matter, we conclude that respondent should be suspended from the practice of law for a period of three years. | 01-04-2023 | 12-23-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/9350232/ | Matter of Gina R. (Christina R.) (2022 NY Slip Op 07321)
Matter of Gina R. (Christina R.)
2022 NY Slip Op 07321
Decided on December 23, 2022
Appellate Division, Fourth Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on December 23, 2022
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
PRESENT: PERADOTTO, J.P., LINDLEY, CURRAN, WINSLOW, AND BANNISTER, JJ.
733 CAF 21-00672
[*1]IN THE MATTER OF GINA R., NASIR-JABAR R., JUAN R., AMALIA M., AND JAHMAR M.
MONROE COUNTY DEPARTMENT OF HUMAN SERVICES, PETITIONER-RESPONDENT;
CHRISTINA R., RESPONDENT-APPELLANT.
KAMAN BERLOVE MARAFIOTI JACOBSTEIN & GOLDMAN, LLP, ROCHESTER (GARY MULDOON OF COUNSEL), FOR RESPONDENT-APPELLANT.
JOHN P. BRINGEWATT, COUNTY ATTORNEY, ROCHESTER (AMANDA L. OREN OF COUNSEL), FOR PETITIONER-RESPONDENT.
MARYBETH D. BARNET, MIDDLESEX, ATTORNEY FOR THE CHILDREN.
Appeal from an order of the Family Court, Monroe County (Fatimat O. Reid, J.), entered September 10, 2021 in a proceeding pursuant to Family Court Act article 10. The order determined that respondent had neglected the subject children.
It is hereby ORDERED that the order so appealed from is unanimously modified on the law by vacating the finding that respondent neglected the subject children based on her repeated use of marihuana while caring for them and as modified the order is affirmed without costs, and the matter is remitted to Family Court, Monroe County, for further proceedings in accordance with the following memorandum: In this proceeding pursuant to Family Court Act article 10, respondent mother appeals from an order following a fact-finding hearing that, inter alia, determined that the mother neglected the subject children. As a preliminary matter, we exercise our discretion to treat the mother's notice of appeal from the order following the fact-finding hearing as a valid notice of appeal from the subsequently entered order of fact-finding and disposition (see CPLR 5520 [c]; Matter of Ariana F.F. [Robert E.F.], 202 AD3d 1440, 1441 [4th Dept 2022]; Matter of Hunter K. [Robin K.], 142 AD3d 1307, 1308 [4th Dept 2016]).
A neglected child is defined, in relevant part, as a child less than 18 years of age "whose physical, mental or emotional condition has been impaired or is in imminent danger of becoming impaired as a result of the failure of his [or her] parent . . . to exercise a minimum degree of care . . . in providing the child with proper supervision or guardianship, by unreasonably inflicting or allowing to be inflicted harm, or a substantial risk thereof . . . or by any other acts of a similarly serious nature requiring the aid of the court" (Family Ct Act § 1012 [f] [i] [B]). "The statute thus imposes two requirements for a finding of neglect, which must be established by a preponderance of the evidence . . . First, there must be proof of actual (or imminent danger of) physical, emotional or mental impairment to the child . . . Second, any impairment, actual or imminent, must be a consequence of the parent's failure to exercise a minimum degree of parental care . . . This is an objective test that asks whether a reasonable and prudent parent [would] have so acted, or failed to act, under the circumstances" (Matter of Afton C. [James C.], 17 NY3d 1, 9 [2011] [internal quotation marks omitted]; see Matter of Olivia W. [Courtney W.], 184 AD3d 1080, 1080-1081 [4th Dept 2020]).
Here, we conclude that there is a sound and substantial basis in the record supporting Family Court's determination that petitioner met its burden of establishing that the youngest of the subject children was neglected (see generally Matter of Sean P. [Brandy P.], 156 AD3d 1339, 1339-1340 [4th Dept 2017], lv denied 31 NY3d 903 [2018]) by presenting evidence that [*2]the mother wrapped the infant to sleep, on more than one occasion, in loose blankets, despite repeated warnings that doing so created a substantial risk to the child (see Matter of Aerobella T. [Bartolomeo V.], 170 AD3d 1453, 1455-1456 [3d Dept 2019]; Matter of Evelyn EE. v Ayesha FF., 143 AD3d 1120, 1127-1128 [3d Dept 2016], lv denied 28 NY3d 913 [2017]).
We agree with the mother, however, that the court erred in applying Family Court Act § 1046 (a) former (iii) in determining that petitioner established a prima facie case that the subject children were neglected based solely on the mother's use of marihuana, without presenting evidence that the children's condition was impaired or at imminent risk of impairment (see Family Ct Act § 1046 [a] [iii]; Matter of Mahkayla W. [Raheem W.], 206 AD3d 599, 600 [1st Dept 2022]; Matter of Saaphire A.W. [Lakesha B.], 204 AD3d 488, 489 [1st Dept 2022]), and we therefore modify the order by vacating that finding. "The Marihuana Regulation and Taxation Act (L 2021, ch 92) amended Family [Court] Act § 1046 (a) (iii), in pertinent part, by specifically foreclosing a prima facie neglect finding based solely upon the use of marihuana, while still allowing for consideration of the use of marihuana to establish neglect, provided '[that there is] a separate finding that the child's physical[,] mental or emotional condition was impaired or is in imminent danger of becoming impaired' " (Matter of Micah S. [Rogerio S.], 206 AD3d 1086, 1090 n 5 [3d Dept 2022]). The amendment to section 1046 (a) (iii) went into effect on March 31, 2021 (see L 2021, ch 92), two days before the court rendered its decision in this case and, "[a]s a general matter, a case must be decided upon the law as it exists at the time of the decision" (Rocky Point Drive-In, L.P. v Town of Brookhaven, 21 NY3d 729, 736 [2013]; see Matter of Wendy B v Ronald B, 53 AD2d 160, 162 [3d Dept 1976]). Inasmuch as petitioner's presentation of evidence was based on the state of the law at the time of the hearing, however, petitioner may not have fully explored the issue of impairment. We therefore remit the matter to Family Court to reopen the fact-finding hearing on the issue whether the children's condition was impaired or at imminent risk of impairment as a result of the mother's use of marihuana (see generally Matter of Jessica R., 78 NY2d 1031, 1032-1033 [1991]; Matter of Alfonzo H. [Cassie L.], 77 AD3d 1410, 1411 [4th Dept 2010]).
We have considered the mother's remaining contentions and conclude that none warrants further modification or reversal of the order.
Entered: December 23, 2022
Ann Dillon Flynn
Clerk of the Court | 01-04-2023 | 12-23-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/9350234/ | Matter of Damien W. (Samantha N.M.--Donald L.W.) (2022 NY Slip Op 07404)
Matter of Damien W. (Samantha N.M.--Donald L.W.)
2022 NY Slip Op 07404
Decided on December 23, 2022
Appellate Division, Fourth Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on December 23, 2022
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
PRESENT: WHALEN, P.J., PERADOTTO, LINDLEY, CURRAN, AND OGDEN, JJ.
1049 CAF 21-01225
[*1]IN THE MATTER OF DAMIEN W., DONALD L.W., IV, AND JEREMIAH M. ONEIDA COUNTY DEPARTMENT OF SOCIAL SERVICES, PETITIONER-RESPONDENT;
SAMANTHA N.M., RESPONDENT, AND DONALD L.W., III, RESPONDENT-APPELLANT.
TRACY L. PUGLIESE, CLINTON, FOR RESPONDENT-APPELLANT.
DEANA D. GATTARI, COUNTY ATTORNEY, ROME, FOR PETITIONER-RESPONDENT.
CHRISTINE S. KIESEL, SAUQUOIT, ATTORNEY FOR THE CHILDREN.
Appeal from an order of the Family Court, Oneida County (Julia Brouillette, J.), entered June 7, 2021 in a proceeding pursuant to Social Services Law § 384-b. The order, inter alia, terminated the parental rights of respondent Donald L.W., III with respect to Damien W. and Donald L.W., IV.
It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Entered: December 23, 2022
Ann Dillon Flynn
Clerk of the Court | 01-04-2023 | 12-23-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483924/ | Williams v City of New York (2022 NY Slip Op 06452)
Williams v City of New York
2022 NY Slip Op 06452
Decided on November 15, 2022
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided and Entered: November 15, 2022
Before: Gische, J.P., Kapnick, Kern, Gesmer, Higgitt, JJ.
Index No. 158117/19 Appeal No. 16636 Case No. 2021-02682
[*1]Stefan Williams, Plaintiff-Appellant,
vThe City of New York et al., Defendants-Respondents.
Caitlin Robin & Associates PLLC, New York (Caitlin A. Robin of counsel), for appellant.
Sylvia O. Hinds-Radix, Corporation Counsel, New York (Elizabeth I. Freedman of counsel), for respondents.
Order, Supreme Court, New York County (Lyle E. Frank, J.), entered on or about July 14, 2021, which, to the extent appealed from as limited by the briefs, granted defendants' motion for summary judgment dismissing the false arrest, false imprisonment, and malicious prosecution claims, unanimously affirmed, without costs.
The claims were correctly dismissed because the officers' testimony and corroborating video evidence established prima facie probable cause for plaintiff's arrest for criminal trespass in the third degree, and plaintiff failed to raise a triable issue of fact (see Flavin v City of New York, 171 AD3d 633, 634 [1st Dept 2019]). Plaintiff does not dispute that defendant sergeant ordered him to leave the precinct and warned him that he would be arrested if he did not leave (see Penal Law §§ 140.00, 140.10[a]). Plaintiff's contention that he was in fact leaving the premises is not supported by the testimonial or video evidence; rather, the body camera footage at the precinct showed that, despite the sergeant's repeated orders to leave, plaintiff continued to engage and argue, and he ultimately proffered his wrists and challenged the sergeant to arrest him. Plaintiff also admitted on the footage, as he did at his deposition, that he was trying to provoke the officer. Under these circumstances, the officers reasonably believed that plaintiff was committing the offense of criminal trespass in the third degree (see People v Bigelow, 66 NY2d 417, 423 [1985]; Colon v City of New York, 60 NY2d 78, 82 [1983]). Accordingly, defendants made an unrebutted prima facie showing of probable cause for plaintiff's arrest, which constitutes a complete defense to the claims of false arrest, false imprisonment, and malicious prosecution (see Gann v City of New York, 197 AD3d 1035, 1036 [1st Dept 2021]).
Plaintiff failed to preserve his argument that the sergeant's order directing him to leave the precinct violated his friend's constitutional right to counsel. In any event, the argument is unavailing.THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: November 15, 2022 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483928/ | People v Tugwell (2022 NY Slip Op 06442)
People v Tugwell
2022 NY Slip Op 06442
Decided on November 15, 2022
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided and Entered: November 15, 2022
Before: Manzanet-Daniels, J.P., Webber, Mazzarelli, Friedman, Shulman, JJ.
Ind. No. 2324/15 Appeal No. 16662 Case No. 2019-1875
[*1]The People of the State of New York, Respondent,
vLeon Tugwell, Defendant-Appellant.
Justine M. Luongo, The Legal Aid Society, New York (Lawrence T. Hausman of counsel), for appellant.
Darcel D. Clark, District Attorney, Bronx (Lori Ann Farrington of counsel), for respondent.
Order, Supreme Court, Bronx County (Raymond L. Bruce, J.), entered on or about January 25, 2019, which adjudicated defendant a level two sexually violent offender pursuant to the Sex Offender Registration Act (Correction Law art 6-C), unanimously affirmed, without costs.
The court providently exercised its discretion when it declined to grant a downward departure (see People v Gillotti, 23 NY3d 841 [2014]). There is no basis for a downward departure, given the seriousness of the underlying conduct, committed against a child. Defendant has not shown that his deportation to Jamaica would result in such a reduced risk to public safety as to warrant a downward departure (see e.g. People v Guaman, 136 AD3d 605 [1st Dept 2016], lv denied 27 NY3d 905 [2016]; People v Zepeda, 124 AD3d 417 [1st Dept 2015], lv denied 25 NY3d 902 [2015]). The other alleged mitigating factors do not warrant a departure. There was nothing exceptional about defendant's routine completion of sex offender and alcohol abuse treatment programs. THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: November 15, 2022 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483939/ | Matter of Loew (2022 NY Slip Op 06436)
Matter of Loew
2022 NY Slip Op 06436
Decided on November 15, 2022
Appellate Division, First Department
GISCHE J.,
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided and Entered: November 15, 2022
SUPREME COURT, APPELLATE DIVISION
First Judicial Department
Judith Gische
Cynthia S. Kern Ellen Gesmer Saliann Scarpulla Julio Rodriguez III
Index No. 500294/18 Appeal No. 16497-16498-16499 Case No. 2022-00247, 2022-00958, 2022-01285, 2022-02741
[*1]In the Matter of Edgar V. Loew, an Incapacitated Person.
Alison Loew, Petitioner-Respondent,
Rachida Naciri, Respondent-Appellant, Judy S. Mock, Esq., Guardian-Appellant, Gary Elias, Esq., Court Appointed Counsel-Appellant.
Rachida Naciri, Judy S. Mock and Gary Elias appeal from the orders of the Supreme Court, New York County (Carol Sharpe, J.), entered on or about August 24, 2021, on or about February 24, 2022, and Naciri appeals from the order entered on or about March 8, 2022, which appointed a Special Guardian to Incapacitated Person Edgar Valentine Loew, removed Judy S. Mock, Esq. as court-appointed guardian and discharged Gary Elias, Esq. as court-appointed counsel, and appointed Donald Duboulay, Esq. as successor counsel and Katherine B. Huang, Esq. as successor guardian. Mock and Elias appeal from the order of the same court justice entered on or about June 21, 2022, which, to the extent appealed from as limited by the briefs, directed the parties to appear for a hearing on the Special Guardian's motion to remove Mock as guardian and discharge Elias as counsel.
Akerman LLP, New York (Donald N. David and Paul J. Collins of counsel), for Rachida Naciri, appellant.
Abrams, Fensterman, LLP, Brooklyn (Robert Abrams and Jeffrey R. Neuman of counsel), for Judy C. Mock, appellant.
Lewis Brisbois Bisgaard & Smith LLP, New York (Mark K. Anesh of counsel), for Gary Elias, appellant.
Farrell Fritz, P.C., Uniondale (Frank T. Santoro of counsel), for Alison Loew, respondent.
Meenan & Associates, LLC, New York (Coleen M. Meenan and Lissett C. Ferreira of counsel), for Special Guardian Lissett C. Ferreira, respondent.
GISCHE J.,
On October 2, 2018, Alison Loew, the sister and only sibling of Edgar Valentine Loew, brought a petition for the appointment of an article 81 guardian for her then 74-year-old brother. The petition alleged that Edgar, who is wealthy, but suffers from mental health issues and has some physical limitations, was the victim of systematic financial exploitation by Rachida Naciri. Naciri filed a cross petition to dismiss Alison's petition, or in the alternative to have herself appointed as Edgar's guardian.
A court evaluator (Britt Burner) was appointed on October 2, 2018, appellant Gary Elias was appointed as Edgar's attorney, and appellant Judy S. Mock was appointed as Edgar's temporary guardian of the person and property.
Burner prepared both an initial and supplemental report after meeting with Edgar on four separate occasions. Burner interviewed Edgar, Naciri, Edgar's home health aides, including his full-time home health aide (Robert Hicks), the managing agent of the building where Edgar lives (Rebecca Farley), and others. She also obtained a list of his medications, financial information, and spoke to Mock.
During Burner's first interview with Edgar, on October 16, 2018, she learned that on October 11th, three days after the petition was filed and after a temporary guardian was appointed, Naciri and Edgar entered into a prenuptial agreement. Naciri assured Burner that she and Edgar had no intention of getting married. The prenuptial agreement provides that Naciri will receive $10 million if they divorce, no matter how long the duration [*2]of the marriage, and $20 million if they are still married when Edgar dies. Edgar recalled no details about the prenuptial agreement, nor could he remember who prepared it.
Notwithstanding Naciri's assurances to Burner on October 16th, that she and Edgar had no plans to marry, a wedding took place just two days later, on October 18th, at City Hall. Naciri later explained that she did not tell Burner about the wedding because she did not know they would be getting married. According to Naciri, Edgar "surprised" her by proposing.
Hicks, the only other wedding attendant, provided a very different account of the wedding day events. He said that Naciri told Edgar that day that she had a "surprise" for him, but refused to tell him what it was. The three of them went to Tavern on the Green, and afterwards proceeded to City Hall. Once there, Naciri reminded Edgar that he had always wanted her to marry him. She then told him the surprise was that "I want to marry you." When Burner asked Edgar about the wedding day, he denied being married. When Burner pointed to his wedding band, he said he had gotten married in Paris.
Burner learned from Hicks that Naciri frequently quizzed Edgar on certain pieces of information, such as when they were married, his medication, and the year and day of the week before his meetings with Burner. Hicks also said that Naciri attends Edgar's therapeutic sessions with his psychiatrist, Dr. Bryan J. Bruno. Hicks told Burner that Naciri never stays at the apartment overnight and that she did not spend the wedding night with Edgar. On holidays, Naciri typically stops by for an hour or so, but then she leaves.
Burner also learned that Edgar gave Naciri a $90,000 wedding gift which, according to Naciri, was Edgar's idea. In that same month, October 2018, there was an attempt to transfer $600,000 from one of Edgar's investment accounts to a checking account. The transfer was flagged by the bank and failed. Edgar had no recollection of the transfer, had no idea why he would have tried to transfer that much money, or what it would have been for.
A registered nurse (Heather Sullivan) who provided care to Edgar told Burner that Naciri sometimes riled Edgar up, causing him to become verbally and physically abusive to his home health care workers. Other home health aides said Naciri was prone to screaming when she was angry and that this behavior, described by one aide as "toxic," upsets Edgar and triggers violent episodes in him.
Farley, the building's managing agent said that Edgar had been urinating in the hallways of his building and had been walking around in just his bathrobe. Farley also recounted that on one occasion Edgar had wandered out to the street alone and had been found sitting at the cross walk.
Edgar's long-time friends told Burner they were concerned about Edgar's rapid deterioration, describing him as looking drugged. One friend (Melinda Pillon) said that Edgar told her he was afraid of Naciri. Edgar once asked [*3]her to go with him to consult an attorney about getting a restraining order against Naciri, but Edgar did not pursue the matter. Pillon also said that when she last visited him, some eight months earlier, the apartment was in shambles and his bed was filled with crumbs.
Jackie Swiskey, a long-time friend of 40 years, said that Edgar had "back and forth" feelings about Naciri; sometimes she was his big love, but at other times he was afraid of her. Swiskey said Edgar wanted to cancel an agreement he had signed giving Naciri monthly financial "compensation," but when he went to his bank to stop the direct deposits, he was told he would need a lawyer.[FN1]
Burner learned from Alison that she and Edgar were not close, but that Edgar unexpectedly contacted her in April 2018, asking her to be his power of attorney. She agreed, but later learned that Naciri had been appointed his power of attorney instead. Alison said Pillon called her on Labor Day 2018 informing her that Edgar was in "crisis mode" but that Naciri would not let her into the apartment when Pillon went to check on him. Alison told Burner that Edgar's doorman called her on a different occasion, saying that one time Edgar's home health aide had run out of Edgar's apartment screaming for someone to call the police. When the police arrived, they took Edgar to the hospital where he was involuntarily admitted to the psychiatric ward. Edgar's doctor told Alison that Edgar might be suffering from dementia.
In contrast to the information provided to Burner by others, Naciri said that she cares for Edgar 12 hours a day, every day, she cooks and cleans for him and also organizes his bills so he can pay them. Naciri said Edgar chose her to be his power of attorney because Alison never signed necessary paperwork. Naciri's attorney told Burner that Naciri and Edgar had been contemplating marriage for some time and that it was Edgar who chose the attorney that drafted their prenuptial agreement. Naciri denied attending Edgar's psychiatric sessions with him, and she said that the "friends" who Burner had interviewed were only after Edgar's money.
Burner reported that even after her first interview with Edgar on October 16th, she believed that he did not have capacity to handle his financial or medical affairs. She reported that Edgar could not "adequately understand and appreciate the nature and consequences of his inability to provide for his personal needs and finances" and that he was "likely to suffer physical and financial harm" if a guardian was not appointed for him. Burner described how she had been unable to engage Edgar during their meetings or have any kind of meaningful conversation with him about his circumstances. Oftentimes Edgar sat mute and did not answer her questions. Burner expressed doubts that Edgar would be able to meaningfully participate in any hearing the court would hold. In her supplemental February 2019 report, Burner observed that although Edgar seemed improved and the apartment [*4]was in better shape, he was still largely unresponsive and profoundly confused. Burner observed that Edgar was susceptible to coaching.
Burner ultimately recommended that a guardian be appointed for Edgar and that the appointment be for an unlimited duration. She also recommended that the "[g]uardian should investigate the circumstances surrounding whether Edgar had the capacity to enter into a prenuptial agreementtial agreement and marriage with [Naciri], and . . . the payments being made from Edgar's accounts . . . ." Burner recommended that a geriatric care manager be appointed for Edgar and that the guardian file a bond.
On February 14, 2019, the Hon. Tanya R. Kennedy began a testimonial hearing as to whether Edgar needed a guardian and if so, whether he had the capacity to consent to one. The court told the parties these initial proceedings were of a "narrow scope," solely to determine whether Edgar needed a guardian, but not to address the alarming issues surrounding the recent prenuptial agreement and marriage. Judge Kennedy also stated that there were "collateral matters that the guardian would address," adding that it was for the guardian to "make certain determinations regarding certain agreements."
Judge Kennedy initially found that Edgar lacked capacity to consent to a guardian. In doing so, the court described Edgar's failure to recognize Mock, although he had met her several times before, and his inability to provide a cogent answer to the court's inquiry about whether he thought he needed a guardian. Rather than answering, he simply referred to his attorney and said he (Edgar) had done nothing wrong. Edgar was confused as to time and place. When the court asked him where he was, he said a "tall building," in lower Manhattan, but failed to realize he was in a courthouse. When asked about his marriage to Naciri, he answered that he had gotten married five weeks ago although it was four months earlier. Edgar also provided certain nonresponsive answers to the court's inquiries, for instance volunteering that he was not allowed outside anymore because he had wandered about in his robe, been naked and had gone to a restaurant.
At the continued hearing, held on May 6, 2019, to determine whether a guardian should actually be appointed, Edgar appeared just as confused about where he was, why he was there, and the identity of the other people present. Edgar mistook Mock, who was sitting next to him, for his wife. He could not cogently explain what he thought a guardianship is. Edgar was uncertain of his age and could not provide any details about how he cares for his person and property, although he did know the location of one of his bank accounts. Samantha Fox, a geriatric care manager, testified that Edgar had once mistaken her for Mock and he suffers from short term memory loss. She opined that Edgar cannot care for himself nor handle money.
When the hearing concluded, the court granted Alison's petition for a guardian of the person [*5]and the property. The attorneys agreed at the time, on the record, that the guardian should be Mock and, pursuant to an order and judgment dated September 23, 2019, Mock was so appointed. The same order continued Elias's appointment as Edgar's attorney. The order of appointment expressly authorized Mock to provide Edgar with a $2,000 monthly stipend so he can pay for tips and personal items, but no other specific payments were authorized by the order, including payments to Naciri for spousal support (see Mental Hygiene Law § 81.21[a][1], [2]).
Despite Edgar's functional limitations, and adjudication as an incapacitated person (IP), necessitating the appointment of a guardian, Naciri, Mock and Elias (collectively, appellants) contend that Judge Kennedy intended that Edgar would have as much self-determination as possible concerning his finances and how he spends his money, whereas Alison contends Edgar is being victimized and the guardian must protect him from predatory acts and persons, including Naciri.
Mock filed a final account as temporary guardian on October 28, 2019, and a 2018-2019 annual account on May 30, 2020. The 2018-2019 accounting showed large credit card charges by Naciri for "personal expenses" including jewelry, clothing, and travel. That year, Naciri also received payments from Edgar's assets totaling $179,000. In December 2020, Alison filed objections to the accounting, resolution of which remains sub judice in Supreme Court.[FN2]
Alison then filed a petition and an order to show cause for visitation with her brother. Alison also asked that the court reappoint a court evaluator so that the circumstances of Edgar's marriage and the agreements he had ostensibly signed, including the prenuptial agreement, could be investigated. Alison claimed the marriage, entered into only after the guardianship proceeding was commenced, was a sham and that Mock and Elias, in dereliction of their fiduciary duties, had failed in the ensuing years to take any action to investigate these matters or protect him. The motion was separately opposed by Naciri and Mock. They each denied that Mock had any obligation to investigate the circumstances of the prenuptial agreement or marriage because there was no express directive in Mock's order of appointment to do so. Mock has held firm to this position throughout these proceedings. She admitted in court that, in accordance with her understanding of her order of appointment, she never took any steps to investigate the prenuptial agreement or marriage. In fact, at a July 21, 2021, appearance, Mock represented that "my directives were crystal clear. My directives were not to vacate the marriage, not to do a full investigation."
By order to show cause returnable June 30, 2021, Alison again sought the reappointment of the court evaluator to investigate the circumstances of Edgar's marriage to Naciri, and any agreements made within one year of the guardian's appointment. Naciri interposed written opposition to [*6]the motion, but neither Mock nor Elias opposed this motion in writing.[FN3]
These motions were heard by Hon. Carol Sharpe, the judge newly assigned to this matter.[FN4] Judge Sharpe observed that although Judge Kennedy had ordered that the issues raised in Burner's report would not be addressed at the capacity hearings, Judge Kennedy had further ordered that those issues would be dealt with by the guardian once appointed. Judge Sharpe summed up her findings as follows:
"The looming issue is what led up to that marriage, what led up to the prenuptial agreementtial agreement, and the fact that Judge Kennedy left it open for a further investigation, the spending of the amount of money that is being spent, the fact that Edgar is now in a home . . . I think that we need an investigation, and it is and whatever the result of the investigation by a special guardian will be what it is."
The court determined that a special guardian was needed and issued its order appointing the special guardian (Lissett C. Ferreira), on August 24, 2021, resolving that part of Alison's petition seeking an investigation. This is one of the orders challenged in this appeal.
The order provides Ferreira with limited powers, authorizing her to, among other things: 1) investigate the possibility of a safe discharge of Edgar to his residence in the community and engage a geriatric care manager to assist in the assessment; 2) investigate the circumstances of Edgar's marriage, as well as the prenuptial agreement; 3) investigate the financial circumstances of transactions during the guardianship and in the preceding years; and 4) review Edgar's financial records for a period of five years preceding the date of Mock's order of appointment.
Beginning in November 2021 and continuing through February 2022, the parties engaged in a rapidly escalating tumbleweed of highly contentious litigation, filing a series of overlapping motions and cross motions. As relevant to this appeal, Ferreira brought a motion on January 13, 2022, to have Mock removed as Edgar's guardian and to discharge Elias on the basis that they had a conflict of interest and had breached their fiduciary duties to Edgar by supporting Naciri's arguments, rather than acting independently to protect Edgar and his assets. Alison filed papers in support of Ferreira's motion. On January 21st, Naciri brought a separate motion to have the special guardian removed.
In opposition to the motion to remove Mock and Elias, Naciri argued that Edgar wanted to keep Mock and Elias as his fiduciaries. She argued that Ferreira and Alison were "meddling" in Edgar's life and causing him distress. Elias and Mock each separately opposed the motion for their respective discharge and removal. Mock averred that she was protecting Edgar's interests and honoring his wishes.
On the February 1, 2022, the return date of Ferreira's motion to remove Mock and discharge Elias, the court learned that Edgar had been hospitalized and there was an emergent [*7]issue of Edgar's safe discharge. The issue was whether he could be safely released to his apartment or whether he should be returned to the assisted living facility (ALF) where he apparently had been living for over two years. The court ordered that Fox, Edgar's geriatric care manager, provide a written report with her professional assessment and recommendations. The court made it clear that it wanted the guardian to investigate Edgar's living situation, stating that it was the "guardian's job to investigate whether or not he should be discharged home and make whatever arrangements [were necessary]." The court observed that prior to being placed in the ALF, had round the clock health care at home that had been privately paid for with his own funds. Fox's attorney represented that her client and the guardian would work together. The court also set a briefing schedule that day for all of the extant motions. Naciri's, Mock's and Elias's papers were due by February 22nd, Ferreria's reply, if any by March 15th, with a court appearance scheduled for March 24th.
A flurry of correspondence ensued after that court appearance. Fox's attorneys updated the court on Edgar's status, reporting it was "technically feasible" for him to be discharged to his apartment, provided all necessary medical equipment was available and other safety measures were in place. On February 14th, however, Mock's attorney advised the court that Edgar would be released to the ALF where he had previously resided. Mock made this decision without any explanation why a discharge home was inadvisable, despite Fox's recommendation. In further correspondence dated February 23rd, Mock's attorney, without elaboration, advised the court that it was Edgar's "wish" that he return to the ALF.
Mock's attorney again wrote to the court, citing ongoing confusion among the health care professionals about who was in charge of making the ultimate decision of where Edgar would be discharged to, warning that Edgar's discharge was in limbo. On February 24th, Mock's attorney urged the court to sign an order authorizing Mock to effectuate Edgar's discharge from the hospital to the ALF. Mock still had not considered any option other than returning Edgar to the ALF and she provided no fully reasoned explanation to the court for why that was in Edgar's best interest. Alison's attorney sent a letter, dated February 24th, stating that Alison had been deprived of any meaningful information about Edgar's care and was surprised to learn he was receiving end-of-life care.
By order dated February 24, 2022, Supreme Court removed Mock and discharged Elias. This order is also the subject of this appeal.[FN5] In relevant part, the February 24th order states Mock was removed, and Elias discharged for the following reasons:
"It is evident from the filings, and now the attorney's letters by Mr. Abrams, that the court appointees, both the Guardian and counsel to Mr. Loew, joined by Ms. Naciri who has a direct interest in the [*8]investigation into her marriage, oppose this Court's appointment of the Special Guardian and her recommendations that they be removed."
The court added that it had appointed Ferreira as special guardian because an investigation was required into the marriage, as well as the financial expenditures authorized by Mock and the circumstances of why Edgar was in an ALF, given that he had the financial means to pay for quality home care and owned a two-bedroom apartment. The court stated that although it was Edgar's personal needs and property management that were the focus of this proceeding, Mock and Elias had lost focus of that, instead litigating matters tangential to his well-being, including Ferreira's involvement in these proceedings. The court cited Mock's failure to fulfill her duties, including the court's directive that an investigation was needed into whether Edgar could be safely discharged home. Having been apprised that a "dangerous situation . . . has arisen," the court ordered Mock's immediate removal and discharged Elias. A new attorney was appointed for Edgar and on March 8, 2002, the court appointed a successor guardian for him. This order appointing a new guardian is also the subject of this appeal.
While the appeal was being perfected, this Court granted a limited stay of the hearing on Ferreira's motion, pending determination of the appeal. During the pending stay, Supreme Court issued an order on June 21, 2022, scheduling a hearing on Ferreira's motion. Appellants also challenge this scheduling order on appeal.
Alison's standing has been an overarching issue raised in connection with each order appealed from. We hold that Alison had standing to commence this article 81 proceeding as a "person . . . concerned with the welfare of the person alleged to be incapacitated" (Mental Hygiene Law § 81.06 [a] [6]; see Matter of de Menil (de Menil), 195 AD3d 410, 410 [1st Dept 2021]). This is a broad category of persons and standing does not rest on whether the alleged incapacitated person and the petitioner are friendly or not. Consequently, we reject any argument that Alison's and Edgar's estrangement affects standing. Not only did Alison have standing to commence the underlying article 81 proceeding, she also has standing to participate in these further proceedings to have the guardian discharged or her powers modified. Alison also has standing to pursue collateral relief as pertains to such issues (see Mental Hygiene Law §§ 81.35, 81.36 [b]), including seeking to compel an investigation into the claimed sham marriage here.
Naciri's further argument, that Alison lacks standing to seek annulment of her marriage to Edgar rests on the mistaken application of Domestic Relations Law §140 (c). The issue before this Court is not whether Alison has standing to annul the marriage. Indeed, Alison's petition did not seek authority to annul Edgar's marriage. Rather, in light of Burner's recommendations, and the record developed before Judge Kennedy[*9], Alison was seeking relief against the guardian, based upon Mock's failure to independently investigate and determine whether the marriage should be annulled. Marriage is a civil contract between two wedded individuals, and among the powers of an article 81 guardian is the power to manage the IP's property, including contracts. Where an article 81 guardian has been appointed for an IP and the individual is found to have been incapable of understanding the nature, effect, and consequences of the marriage, annulment of the marriage is an available remedy for the guardian to pursue (Mental Hygiene Law § 81.29 [d]; Matter of Kaminester v Foldes, 51 AD3d 528, 529 [1st Dept 2008], lv dismissed and denied 11 NY3d 781 [2008]).
Appellants' argument, that Supreme Court's order appointing a special guardian was issued sua sponte and in violation of Edgar's right to due process, is rejected. The appointment was a consequence of Alison's motion for an independent investigation. Appellants were on notice of that motion and Naciri opposed it in writing. Mock and Elias did not file written opposition, but they orally addressed the merits in court.
Although appellants also contend it was statutorily impermissible for Supreme Court to appoint a "special guardian" because Edgar already had a guardian and the statute does not allow for an IP to have both, this argument hinges on the semantics of Ferreira's title. Despite her title of "special guardian," Ferreira was actually an independent investigator with limited powers, as outlined in her order of appointment. She was authorized to gather information about disputed issues in this case, some of which arose after Burner completed her report and after Mock was appointed. Unlike Mock or a special guardian, as that term is used in Mental Hygiene Law § 81.16(b), Ferreira was not charged with marshalling Edgar's assets or making ultimate decisions. Those duties remained with Mock. Besides investigating the circumstances of Edgar's marriage, the court tasked Ferreira with gathering information about why Edgar was placed in an ALF despite having sizeable assets that would have allowed him to have high quality care at home. There were other disturbing matters brought to Mock's attention that Mock refused or neglected to investigate, including why Naciri was using Edgar's credit cards to travel and making large expenditures for clothing and expensive jewelry, none of which benefited Edgar. Appellants cite no statutory or legal authority that would have prevented the court from ordering an investigation to aid the court, prepare a report and protect Edgar's interests.
Appellants' further argument, that Ferreira's appointment was detrimental to Edgar's health and well-being, engendering a great deal of confusion among health care providers as to who would decide Edgar's discharge from the hospital, is also rejected. The order directing an investigation does not, on its face, conflict with the order appointing a guardian [*10]of the person and property.
Appellants ask this Court to vacate the February 24th order removing Mock as Edgar's guardian and discharging Elias, and the subsequent appointment of a successor guardian, raising procedural as well as substantive arguments. Procedurally, appellants contend that the motion was decided prematurely, before it was fully briefed and argued, and without there being a testimonial hearing. These arguments fail. By February 22nd, the appellants had fully briefed Ferreira's motion for Mock's and Elias's removal; the only papers outstanding were Ferreira's reply, which was due March 15th. The absence of a reply did not prejudice appellants, who had no right to a surreply (see CPLR 2214[b], [c]; Coleman v Korn, 92 AD3d 595 [1st Dept 2012]). The motion for Mock's removal and Elias's discharge was fully papered by appellants when it was decided by the court.
The Mental Hygiene Law does not support appellants' contention that they were entitled to a testimonial hearing in this case before being removed. Mental Hygiene Law § 81.35 provides that a guardian may be removed when she or he "fails to comply with an order, is guilty of misconduct, or for any other cause which to the court shall appear just" (see Matter of Mary Alice C., 56 AD3d 467, 468 [2d Dept 2008]). A motion on notice, served on the persons specified in Mental Hygiene Law § 81.16 (c), is required but there is no statutory right to a hearing (see Mental Hygiene Law §§ 81.16[c]; 81.35). This relaxed requirement stands in distinction to Mental Hygiene Law § 81.11 (a), which provides that the petition for the appointment of a guardian for an alleged IP, whose liberty interests are at stake, "shall be made only after a hearing" (Matter of Eggleston [Muhammed], 303 AD2d 263, 266 [1st Dept 2003]; Matter of Ruth TT, 267 AD2d 553, 554-55 [3d Dept 1999]). The reason a guardian has "no due process right to a full hearing," nor is a "full blown" hearing necessary for their removal, is that a guardian has no "property interest" to protect (Matter of Bauer, 216 AD2d 25, 26 [1st Dept 1995], appeal dismissed 86 NY2d 867 [1995], lv dismissed and denied 87 NY2d 952 [1996]).
Although a guardian cannot be summarily removed in the absence of a fully developed record or without any findings, and a hearing may be required where material facts are disputed (see Matter of Roberts, 205 AD3d 562, 563 [1st Dept 2022]), here the parties had not only fully briefed Ferreira's motion, but the salient facts were also known to the court and largely undisputed. A decision to remove a guardian of the person and property of an IP is within the sound discretion of the trial court (Matter of Agam S. B.-L. [Janna W. - Richard P.] 198 AD3d 962, 963 [2d Dept 2021]). Contrary to appellants' contention, a testimonial hearing was not necessary in this case because the court already possessed enough information for it to make findings justifying Mock's and Elias's removal, and they had an opportunity to be heard [*11](cf. Matter of Roberts, 205 AD3d 562).
On the merits, the court properly exercised its discretion in removing Mock and discharging Elias. Undisputed before the court was the fact that Mock did not investigate and make a reasoned determination about the bona fides of the marriage and the prenuptial agreement. The circumstances presented throughout this case were alarming, raising red flags that at the time of the marriage and the prenuptial agreement Edgar was not competent. Mock's defense, that it was what Edgar wanted, misses the point. While it is important to solicit the views of an IP, those views cannot be the sole basis for action (or inaction). Were that the case, there would be no reason to appoint a guardian in the first place. Moreover, Mock is incorrect in adopting the position that she had no duty to investigate. The order did not have to expressly direct her to investigate these troubling circumstances, which implicated possible serious financial abuse. A guardian's duties under the Mental Hygiene Law require that such action be taken. While such an investigation need not be undertaken in every case, here the issue was squarely raised in the court evaluator's report, identified by the court as an issue for Mock to address as guardian, and warranted given that the prenuptial agreement and marriage occurred so close in time to the filing and granting of the article 81 petition, further buttressed by the evidence demonstrating how severely compromised Edgar was. Mock's failure to investigate was in dereliction of her duties.
Moreover, also undisputed in this record is the fact that Mock did not comply with the court's order that she report back on the feasibility of Edgar's safe discharge from the hospital to his apartment, rather than the ALF. Once again, Mock's reliance on Edgar's preference, without further elaboration as to why he preferred the ALF or an independent inquiry to determine whether it was the best option for him, was a dereliction of duties, undermining the very reason she was appointed. The court was direct in requesting that some evaluation be made as to why, given Edgar's considerable financial worth, he could not be cared for in his home.
These undisputed facts provide a sufficient basis for Mock's removal and Elias's discharge because it was in Edgar's best interest (see Matter of Bauer, 216 AD2d at 26; Mental Hygiene Law § 81.35). The March 8, 2022, appointment of a successor guardian was unavoidable and necessary given that once Mock was removed, Edgar still needed a guardian of the person and property.
Mock's separate argument that her removal was motivated by Judge Sharpe's personal feelings towards her has no basis in this record.
Concerning this Court's stays and the trial court's June 21, 2022, order, the appeal from that order is dismissed as moot because no hearing was held on the issues implicated by that order, and none was necessary.
We have considered appellants' remaining arguments and find them [*12]unavailing.
Accordingly, the orders of the Supreme Court, New York County (Carol Sharpe, J.), entered on or about August 24, 2021, on or about February 24, 2022, and on or about March 8, 2022, which appointed a Special Guardian to Incapacitated Person Edgar Valentine Loew, removed Judy S. Mock, Esq. as court-appointed guardian and discharged Gary Elias, Esq. as court-appointed counsel, and appointed Donald Duboulay, Esq. as successor counsel and Katherine B. Huang, Esq. as successor guardian, should be affirmed, without costs. The appeals from the order of the same court and Justice entered on or about June 21, 2022, which, to the extent appealed from as limited by the briefs, directed the parties to appear for a hearing on the Special Guardian's motion to remove Mock as guardian and discharge Elias as counsel, should be dismissed, without costs, as moot.
All Concur.
Orders, Supreme Court, New York County (Carol Sharpe, J.), entered on or about August 24, 2021, on or about February 24, 2022, and on or about March 8, 2022, affirmed, without costs. order of the same court justice entered on or about June 21, 2022, dismissed, without costs, as moot.
Gische, J.P., Kern, Gesmer, Scarpulla, Rodriguez, JJ.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: November 15, 2022
Footnotes
Footnote 1: This was an apparent reference to an agreement signed by Edgar in February 2018, which was not disclosed by Naciri until later in these proceedings. The validity of this agreement, as well as Mock's payments thereon, are the subject of as yet unadjudicated disputes in this guardianship proceeding.
Footnote 2: The financial disputes, like other matters in these proceedings, are highly charged. However, because these matters are unresolved and they were not the basis for the orders challenged on this appeal, we do not address them in this decision.
Footnote 3: Mock belatedly filed opposition papers on February 22, 2022, well after the court had appointed Lissett C. Ferreira to conduct an investigation.
Footnote 4: By this time, Judge Kennedy had been elevated to sit on the Appellate Division, First Department.
Footnote 5: Naciri's motion for the special guardian's removal, however, remains undecided. | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483936/ | Matter of Rahman (2022 NY Slip Op 06439)
Matter of Rahman
2022 NY Slip Op 06439
Decided on November 15, 2022
Appellate Division, First Department
Per Curiam
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided and Entered: November 15, 2022
SUPREME COURT, APPELLATE DIVISION
First Judicial Department
Sallie Manzanet-Daniels,J.P.,
Cynthia S. Kern
Ellen Gesmer
Manuel J. Mendez
Martin Shulman, JJ.
Motion No. 2022-02859 Case No. 2022-03129
[*1]In the Matter of Urooj Rahman, an Attorney and Counselor-at Law: Attorney Grievance Committee for the First Judicial Department, Petitioner, Urooj Rahman, (OCA Atty. Reg. No. 5713409), Respondent.
Disciplinary proceedings instituted by the Attorney Grievance Committee for the First Judicial Department. Respondent was admitted to the Bar of the State of New York at a Term of the Appellate Division of the Supreme Court for the Second Judicial Department on June 12, 2019.
Jorge Dopico, Chief Attorney, Attorney Grievance Committee, New York (Denice Szekely, Esq., of counsel), for petitioner.
John B. Harris, Esq., for respondent.
Per Curiam
Respondent Urooj Rahman was admitted to the practice of law in the State of New York by the Second Judicial Department on June 12, 2019. The Attorney Grievance Committee (AGC) for the Second Department consented to transferring jurisdiction for respondent's matter to the AGC for the First Department in order that her matter be heard together with that of Colinford King Mattis.
On June 2, 2022, respondent entered a guilty plea to a superseding federal information which charged her and Mattis with conspiracy to commit arson and to make and possess an unregistered destructive device in violation of 18 USC §§ 371 and 844(i) and 26 USC §§ 5861(d) and 5861(f). Her conviction was based on an incident in which she and Mattis made and possessed an improvised incendiary device, i.e., a Molotov cocktail, which was used to damage an unoccupied New York City police vehicle during a 2020 protest over the death of George Floyd.
By notice of motion dated July 21, 2022, the AGC seeks an order striking Rahman's name from the roll of attorneys pursuant to Judicial Law § 90(4)(a) and (b) and the Rules for Attorney Disciplinary Matters (22 NYCRR) § 1240.12, on the ground that respondent was convicted of a felony as defined by Judiciary Law § 90(4)(e) and has therefore been automatically disbarred. It should be noted that for purposes of automatic disbarment, a conviction occurs at the time of plea or verdict (see Matter of Conroy, 167 AD3d 44, 46 [1st Dept 2018]), not at sentencing.
Respondent was convicted on federal charges "essentially similar" to one or more felony offenses as defined under New York Law so as to result in her automatic disbarment (Judiciary Law § 90[4][a]). Respondent's federal conviction for conspiracy to maliciously damage or destroy, or attempt to damage or destroy by means of fire or an explosive, any building, vehicle, or other real or personal property used in interstate or foreign commerce in violation of 18 USC §§ 371 and 844(i) is "essentially similar," in language and elements, to conspiracy in the fourth degree, a class E felony in violation of Penal Law § 105.10(1), to commit arson in the third degree, a class C felony in violation of Penal law § 150.10(1). Indeed, in her plea agreement, respondent stipulated and agreed that her federal conviction was "essentially similar" to one or more felony offenses defined under New York law, including conspiracy to commit arson in the third degree, and that "even though the likely consequence of [her] guilty plea will be automatic disbarment from the practice of law in the State of New York," she nevertheless wished to plead guilty.
We reject respondent's request to make her disbarment effective to the date of her arrest and detention, or, alternatively, the date of her first guilty plea. Contrary to counsel's assertion, the effective date of disbarment does not rest in the discretion of the [*2]Court. "[T]he statutory language of Judiciary Law § 90(4)(a) clearly provides that automatic disbarment is self-executing and occurs at the time of conviction of a felony" (Matter of Reich, 206 AD3d 22, 24 [1st Dept 2022]). Furthermore, since respondent withdrew her first guilty plea and then entered a second guilty plea to lesser offenses that form the basis of this motion to disbar, the effective date of disbarment should be June 2, 2022, the date of her conviction.
Accordingly, the AGC's motion to disbar should be granted and respondent's name stricken from the roll of attorneys in the State of New York, effective nunc pro tunc to June 2, 2022.
All concur.
IT IS ORDERED that the Attorney Grievance Committee's motion to strike the name of the respondent, Urooj Rahman, from the roll of attorney's and counselors-at-law, pursuant to Judiciary Law § 90(4), is granted; and,
IT IS FURTHER ORDERED that pursuant to Judiciary Law § 90(4)(a) and (b) and 22 NYCRR 1240.12 (c)(1), the respondent, Urooj Rahman, is disbarred, effective nunc pro tunc to June 2, 2022, and her name is stricken from the roll of attorneys and counselors-at-law; and,
IT IS FURTHER ORDERED that the respondent, Urooj Rahman, shall comply with the rules governing the conduct of disbarred or suspended attorneys (see 22 NYCRR 1240.15); and,
IT IS FURTHER ORDERED that pursuant to Judiciary Law § 90, the respondent, Urooj Rahman, is commanded to desist and refrain from (1) practicing law in any form, either as principal or as agent, clerk, or employee of another, (2) appearing as an attorney or counselor-at-law before any court, Judge, Justice, board, commission, or other public authority, (3) giving to another an opinion as to the law or its application or any advice in relation thereto, and (4) holding herself out in any way as an attorney and counselor-at-law; and
IT IS FURTHER ORDERED that if the respondent, Urooj Rahman, has been issued a secure pass by the Office of Court Administration, it shall be returned forthwith to the issuing agency.
Entered: November 15, 2022 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483933/ | People v Chevannes (2022 NY Slip Op 06441)
People v Chevannes
2022 NY Slip Op 06441
Decided on November 15, 2022
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided and Entered: November 15, 2022
Before: Manzanet-Daniels, J.P., Webber, Mazzarelli, Friedman, Shulman, JJ.
Ind. No. 971/17 Appeal No. 16656 Case No. 2019-1862
[*1]The People of the State of New York, Respondent,
vGary Chevannes, Defendant-Appellant.
Janet E. Sabel, The Legal Aid Society, New York (Heidi Bota of counsel), for appellant.
Darcel D. Clark, District Attorney, Bronx (Rafael Curbelo of counsel), for respondent.
An appeal having been taken to this Court by the above-named appellant from a judgment of the Supreme Court, Bronx County (April A. Newbauer, J.), rendered November 27, 2018,
Said appeal having been argued by counsel for the respective parties, due deliberation having been had thereon, and finding the sentence not excessive,
It is unanimously ordered that the judgment so appealed from be and the same is hereby affirmed.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: November 15, 2022
Counsel for appellant is referred to
§ 606.5, Rules of the Appellate Division,
First Department. | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483941/ | Matter of Jackson v Main St. Am. Group (2022 NY Slip Op 06431)
Matter of Jackson v Main St. Am. Group
2022 NY Slip Op 06431
Decided on November 15, 2022
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided and Entered: November 15, 2022
Before: Gische, J.P., Kapnick, Kern, Gesmer, Higgitt, JJ.
Index No. 800835/21 Appeal No. 16643 Case No. 2022-01345
[*1]In the Matter of Cedric Jackson, Petitioner-Respondent,
vMain Street American Group, Respondent-Appellant.
Gallo Vitucci Klar LLP, New York (Kim Townsend of counsel), for appellant.
Burns & Harris, New York (Mariel Crippen of counsel), for respondent.
Order, Supreme Court, Bronx County (Wilma Guzman, J.), entered February 10, 2022, which granted petitioner's motion to vacate an arbitration award and denied respondent's cross motion to confirm the arbitration award, unanimously reversed, on the law, without costs, petitioner's motion denied, and respondent's cross motion granted.
Contrary to respondent's contention, the lack of a transcript from the arbitration hearing does not, by itself, preclude judicial review of the arbitration award pursuant to CPLR 7511 (see e.g. Matter of Fried v Polacco, 190 AD3d 414, 414 [1st Dept 2021]). Nevertheless, petitioner's motion to vacate the arbitration award should have been denied. Review of an arbitration award pursuant to CPLR 7511(b) is limited, and an award will be upheld when the arbitrator "'offer[s] even a barely colorable justification for the outcome reached'" (Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471, 479 [2006]; see Matter of Rose Castle Redevelopment II, LLC v Franklin Realty Corp., 184 AD3d 230, 234 [1st Dept 2020], lv denied 36 NY3d 906 [2021]). Here, the arbitrator set forth a plausible basis for the award, including for the amount of damages for past and future pain and suffering. Petitioner's disagreements with the arbitrator's credibility determinations, and with his analysis of which cases and arbitration awards were comparable to the facts of this case, did not provide a sufficient basis for overturning the award (see Fried at 414).
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: November 15, 2022 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483940/ | Matter of Jada J. (Reginald J.) (2022 NY Slip Op 06430)
Matter of Jada J. (Reginald J.)
2022 NY Slip Op 06430
Decided on November 15, 2022
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided and Entered: November 15, 2022
Before: Manzanet-Daniels, J.P., Webber, Mazzarelli, Friedman, Shulman, JJ.
Docket No. N9024/20 Appeal No. 16652 Case No. 2022-00674
[*1]In the Matter of Jada J., a Child Under Eighteen Years of Age, etc., Reginald J., Respondent-Appellant, Administration for Children's Services, Petitioner-Respondent.
Law Office of Thomas R. Villecco, P.C., Jericho (Thomas R. Villecco of counsel), for appellant.
Sylvia O. Hinds-Radix, Corporation Counsel, New York (Amanda Abata of counsel), for respondent.
Dawne A. Mitchell, The Legal Aid Society, New York (Susan Clement of counsel), attorney for the child.
Order of fact-finding and disposition (one paper) of the Family Court, Bronx County (Karen M.C. Cortes, J.), entered on or about December 21, 2021 upon respondent father's default, which, to the extent it brings up for review the denial of his motion to dismiss the petition for failure to establish a prima facie case of neglect, unanimously affirmed, without costs.
Although the judgment was entered upon the father's default, the appeal brings up for review an issue that was decided by the Family Court and that was the "subject of contest below" before the father's default — namely, the denial of the father's motion to dismiss the petition for failure to establish a prima facie case of neglect, made August 4, 2021, at the close of petitioner's case (James v Powell, 19 NY2d 249, 256 n 3 [1967]; see Matter of Constance P. v Avraam G., 27 AD3d 754, 755 [2d Dept 2006]).
On the merits, viewed in the light most favorable to petitioner agency and making all reasonable inferences in the agency's favor (see Matter of Angel L. [Victor M.], 182 AD3d 429, 429 [1st Dept 2020]), the preponderance of the evidence supports Family Court's finding of neglect, as the father failed to provide a minimum degree of care while the child was in his custody and when the child was out of the home, thus placing her in danger of imminent harm (Family Court Act § 1012[f][i]; see Nicholson v Scoppetta, 3 NY3d 357, 368-369 [2004]). Petitioner first established that for a two-year period before mid-May 2020, while the child was living with the father, she slept on an air mattress in an unfurnished room, while the father's room was furnished. There was little food in the apartment, and even though the father told the child to buy some food, he refused to give the child money to do so, thus abdicating his parental responsibilities to provide food or proper shelter for the child (see Matter of Joelle T. [Laconia W.], 140 AD3d 513, 513 [1st Dept 2016]).
Furthermore, in mid-May 2020, while the child was staying with a friend, the father changed the locks in the apartment and did not give the child a set of keys, and during that time, failed to ensure that the child had adequate food, clothing, or shelter (see Matter of Debraun M., 34 AD3d 587, 588 [2d Dept 2006]; Matter of Elijah J. [Yvonda M.], 105 AD3d 449, 450 [1st Dept 2013]). Later, and initially unbeknownst to the father, the child relocated to her paternal aunt's house, at which time the father eventually contributed only $400 toward her care (see e.g. Matter of Charisma D. [Sandra R.], 115 AD3d 441, 442 [1st Dept 2014]). The father later rejected the child's attempts to reconcile and return home. Nor did he present any plan for the child's care, instead rejecting ACS's attempts to engage him in formulating a viable plan (see Matter of Kimberly F. [Maria F.],146 AD3d 562 [1st Dept 2017], lv denied 29 NY3d 902 [2017]).
Contrary to the father's argument, his own statements made to the caseworkers corroborated the child's [*2]out-of-court statements (see Matter of Maxwell P. [Katherine S.], 196 AD3d 416, 416-417 [1st Dept 2021]). Additionally, the child's consistent statements to caseworkers regarding her living situation with the father and the circumstances surrounding her stay with the paternal aunt bolstered their credibility (see Matter of David R. [Carmen R.], 123 AD3d 483, 484 [1st Dept 2014]).
We have considered the father's remaining arguments and find them unavailing.THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: November 15, 2022 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483934/ | Mejia v Duran de la Rosa (2022 NY Slip Op 06440)
Mejia v Duran de la Rosa
2022 NY Slip Op 06440
Decided on November 15, 2022
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided and Entered: November 15, 2022
Before: Gische, J.P., Kapnick, Kern, Gesmer, Higgitt, JJ.
Index No. 650925/20 Appeal No. 16649- Case No. 2022-02898
[*1]Alba Mejia, Plaintiff-Respondent,
vRobert Duran de la Rosa et al., Defendants-Appellants, Hugo Santana et al., Defendants.
Max D. Leifer, P.C., New York (Max D. Leifer of counsel), for appellants.
Garcia & Kalicharan, P.C., New York (William A. Garcia of counsel), for respondent.
Order, Supreme Court, New York County (Melissa Crane, J.), entered March 1, 2022, which, to the extent appealed from, denied defendants Robert Duran De La Rosa and Jose Hernandez's motion to vacate the default judgment against them, unanimously reversed, on the law and in the exercise of discretion, without costs, and the motion granted as to those defendants.
Although defendants' claimed lack of fluency in English, by itself, did not amount to a reasonable excuse for their failure to appear or interpose an answer to plaintiff's complaint, vacatur is warranted under the circumstances here, where defendants have also shown that their default was neither willful nor part of a pattern of dilatory behavior, and plaintiff has not demonstrated prejudice (see DaimlerChrysler Ins. Co. v Seck, 82 AD3d 581, 582 [1st Dept 2011]; Chelli v Kelly Group, P.C., 63 AD3d 632, 633 [1st Dept 2009]). Further, defendants raised meritorious defenses to the breach of contract and unjust enrichment claims. The subject stock purchase agreement itself establishes that Hernandez was not a signatory to the contract and had no ownership interest in the company (see Randall's Is. Aquatic Leisure, LLC v City of New York, 92 AD3d 463, 463-464 [1st Dept 2012]). Although Duran De La Rosa signed the agreement, his affidavit raised factual issues as to his actual ownership interest in the company and plaintiff's performance under the contract. In light of the strong public policy to dispose of cases on their merits, the motion court improvidently exercised its discretion in denying defendants' motion to vacate the default judgment (see Cornwall Warehousing, Inc. v Lerner, 171 AD3d 540, 541 [1st Dept 2019]).
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: November 15, 2022 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483932/ | People v Emiliano (2022 NY Slip Op 06443)
People v Emiliano
2022 NY Slip Op 06443
Decided on November 15, 2022
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided and Entered: November 15, 2022
Before: Manzanet-Daniels, J.P., Webber, Mazzarelli, Friedman, Shulman, JJ.
Ind. No. 1822/18 Appeal No. 16650 Case No. 2020-04108
[*1]The People of the State of New York, Respondent,
vLewis Emiliano, Defendant-Appellant.
Twyla Carter, The Legal Aid Society, New York (Angie Louie of counsel), and Kramer Levin Naftalis & Frankel, LLP, New York (Thomas M. Twitchell of counsel), for appellant.
Alvin L. Bragg, Jr., District Attorney, New York (Nathan Shi of counsel), for respondent.
An appeal having been taken to this Court by the above-named appellant from a judgment of the Supreme Court, New York County (Ann Scherzer, J.), rendered September 29, 2020,
Said appeal having been argued by counsel for the respective parties, due deliberation having been had thereon, and finding the sentence not excessive,
It is unanimously ordered that the judgment so appealed from be and the same is hereby affirmed.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: November 15, 2022
Counsel for appellant is referred to
§ 606.5, Rules of the Appellate Division,
First Department. | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8483937/ | Matter of Neumann (2022 NY Slip Op 06424)
Matter of Neumann
2022 NY Slip Op 06424
Decided on November 15, 2022
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided and Entered: November 15, 2022
Before: Manzanet-Daniels, J.P., Webber, Mazzarelli, Friedman, Shulman, JJ.
File No. 4105/16 Appeal No. 16661 Case No. 2022-01665
[*1]In the Matter of Dolores Ormandy Neumann, Deceased.
Belinda Neumann Donnelly, Petitioner-Appellant-Respondent,
Hubert G. Neumann et al., Objectants-Respondents-Appellants, Winter Donnelly et al., Respondents.
Greenfield Stein & Senior, LLP, New York (Gary B. Freidman of counsel), for appellant-respondent.
Farrell Fritz, P.C., Uniondale (John R. Morken of counsel), for Hubert G. Neumann, respondent-appellant.
Novick & Associates, P.C., Huntington (Donald Novick of counsel), for Mellissa Neumann, respondent-appellant.
Order, Surrogate's Court, New York County (Rita Mella, S.), entered March 30, 2022, which, insofar appealed from as limited by the briefs, granted petitioner's motion for summary judgment dismissing the objections based on lack of testamentary capacity and due execution but denied the motion as to undue influence, confidential relationship, and constructive fraud, unanimously affirmed, without costs.
The affidavits of the witnesses to the will, attesting to decedent's sound mind, memory, and understanding, "created a presumption of testamentary capacity and prima facie evidence of the facts attested to" (Matter of Giaquinto, 164 AD3d 1527, 1528 [3d Dept 2018] [internal quotation marks omitted], affd 32 NY3d 1180 [2019]). In opposition, objectants failed to raise a triable issue of fact (see e.g. Matter of Katz, 103 AD3d 484, 485 [1st Dept 2013] ["a medical opinion . . . by a doctor who had never examined decedent and based her opinion solely on medical records" was insufficient to defeat a motion for summary judgment dismissing objections]; see also Matter of Coddington, 281 App Div 143, 145 [3d Dept 1952], affd 307 NY 181 [1954]).
Given decedent's presumptive testamentary capacity and therefore the lack of triable issues of fact concerning capacity, objectants' contention that although the requirements set forth in EPTL 3-2.1(a) were satisfied, summary judgment is premature is without merit. Objectants' reliance upon Matter of Elkan (22 Misc 3d 1125[A], 2009 NY Slip Op 50280[U] [Sur Ct, Bronx County], affd 84 AD3d 603 [1st Dept 2011], lv denied 17 NY3d 709 [2011]) is misplaced.
Objectants' contention that "something more" than formal execution was required due to decedent's infirmities is also without merit. The record is silent as to any infirmities by decedent which would affect execution (Rollwagen v Rollwagen, 63 NY 504, 517 [1876]; see Matter of Creekmore, 1 NY2d 284 [1956]; Matter of Dralle, 192 AD3d 1239, 1242 [3d Dept 2021]).
As stated by the court, "objectants . . . submitted sufficient evidence to raise a question as to whether [petitioner] could have and did assume such control of decedent's affairs during decedent's hospitalization and rehabilitation that she could be considered to be in a confidential relationship with her mother at the time the propounded instrument was executed." "A confidential relationship exists between two parties where they. . .deal on unequal terms due to one party's weakness, dependence or trust justifiably reposed upon the other[,] and unfair advantage is rendered probable" (Giaquinto, 164 AD3d at 1531 [internal quotation marks and brackets omitted]). "The existence of such a relationship will ordinarily be a question of fact" (Matter of Nealon, 104 AD3d 1088, 1089 [3d Dept 2013], affd 22 NY3d 1045 [2014]; see also e.g. Doheny v Lacy, 168 NY 213, 223 [1901]).
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: November 15, 2022 | 01-04-2023 | 11-15-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491668/ | FINDINGS OF FACT AND CONCLUSIONS OF LAW
MARY D. SCOTT, Bankruptcy Judge.
THIS CAUSE is before the Court upon the trial of the Complaint for Turnover filed on May 14, 1992. The essential facts of this case are undisputed. The debtor purchased his home in January 1986, executing a promissory note and mortgage in favor of the defendant Union National Bank of Arkansas (“the bank”). In June 1991, the debtor ceased making his mortgage payments, after which the bank accelerated the loan, gave the debtor notice of default and intent to sell, and noticed a sale pursuant to the nonjudicial foreclosure statute. See Ark.Stat. 18-50-103 to 18-50-106. The sale was conducted on April 14, 1992. The sale was consummated, a deed signed, and recorded on that date. See Ark.Stat. 18-50-107, 18-50-110. The bank purchased the property.
The next day, April 15, 1992, the debtor filed a voluntary Chapter 13 petition in bankruptcy, listing the bank, the Internal Revenue Service, and the Arkansas Department of Finance and Administration as creditors. Under the proposed plan, the debtor proposed to pay $418.61 each month to the trustee who was to distribute full payment to the taxing authorities, an amount representing the full monthly mortgage payment, and a payment on the mortgage arrearage. The plan was confirmed, no objections being filed, on June 16, 1992. On Jtily 7, 1992, the bank filed a proof of claim, which asserted a secured claim, and stated the balance due on the mortgage and the rate at which interest accrues.
On April 28, 1992, the bank filed a motion for relief from stay requesting that it be permitted to proceed with state court eviction proceedings. On May 14,1992, the debtor filed this adversary proceeding, requesting turnover of the property, removal of any “cloud or claim” against debtor’s property, damages for violation of the automatic stay,1 and punitive damages. The debtor asserted that the nonjudicial foreclosure procedure is unconstitutional rendering the sale ineffective such that the real property was property of the estate when the Chapter 13 petition was filed. Further, the debtor asserted that since the confirmed plan provides for payment to the bank, the bank cannot now evict the debt- or.
The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157(a), 1334. Moreover, this Court concludes that this is a “core proceeding” within the meaning of 28 U.S.C. § 157(b) as exemplified by 28 U.S.C. § 157(b)(2)(E).
The matter was called for trial and all parties announced ready. At the close of the plaintiff’s case, the Court granted the defendant’s motion for judgment as a matter of law on the issue of the constitutionality of the statute inasmuch as the plaintiff failed to present competent evidence of any unconstitutionality of the statute. The trial proceeded on the other issues raised by the complaint and confirmation of the plan.
The first issue for the Court is whether the subject real property is property of the estate. The Arkansas statute under which the sale was conducted provides in pertinent part:
18-50-107. Manner of sale. * * *
(e) The purchaser at the sale shall be entitled to possession of the property upon the filing of record of the trustee’s or mortgagee’s deed. Any person remaining in possession thereafter under an interest subordinate to the interest of the mortgagee or trustee shall be deemed to be a tenant at sufferance, and the purchaser shall be entitled, upon application, to a writ of assistance. 18-50-108. Effect of sale.
(a) A sale made by a mortgagee or trustee of the attorney for the mortgagee or trustee shall foreclose and terminate all interest in the trust property of all per*732sons to whom notice is given under § 18-50-104 and of any other person claiming by, through, or under such person. * * * (b) A sale shall terminate all rights of redemption, and no persons shall have a right to redeem the trust property after a sale.
Ark.Stat. 18-50-107(e), 18-50-108(a), (b). Thus, under Arkansas law, on the date of the filing of the petition in bankruptcy, the debtor had no legal right or interest in the property, nor even a right of redemption. The only possible interest of the debtor, and thus of the estate, 11 U.S.C. § 541, on April 15, 1992, was what has been described by courts as a “shadowy” tenancy at sufferance. The fact that the debtor provided for payment of a sum equivalent to the mortgage payments in the plan cannot alter his legal rights in the land under state law. The fact that the plan presumes a legal right does not create the right.
However, the confirmed plan which included payments for property at which the debtor was then residing, notice of which was provided to the bank, does affect the rights of the debtor and the bank with respect to each other. Confirmation of the plan “bind[s] the debtor and each creditor, whether or not the claim of such creditor is provided for by the plan, and whether or not such creditor has objected to, has accepted, or has rejected the plan.” 11 U.S.C. § 1327. The plan contemplates that the debtor will continue to reside in the subject property, paying a sum certain for the enjoyment of that property. The plan further provides that the debtor will pay on a debt consisting of the arrearage on the mortgage payments. Since the debtor is, as of the date of the petition, merely a tenant at sufferance, and the confirmed plan essentially provides for rent, the debt- or may continue to reside in the residence for the duration of the plan, paying the rent specified in the confirmed plan. The debtor resides on the property not as owner, but as lessee.
While the bank may have had numerous legal and equitable objections to the inclusion of its property in the plan, it made no objection despite clear notice of the proceeding and plan. The Court is aware of no authority which would have permitted the debtor to create a leasehold over the objection of the bank. A tenant at sufferance is one who “comes into possession of land by a lawful title otherwise than by act of law, and occupies it thereafter without any right or title at all.... The tenancy arises only out of the laches of the owner.” 2 Brady v. Scott, 128 Fla. 582, 175 So. 724 (Fla.1937). At common law the rightful owner of property had an election to evict a tenant at sufferance. Semmes v. United States, 14 Ct.Cl. 493 (Ct.Cl.1878).
The filing of the bankruptcy, the inclusion of payment to the bank and the bank’s retention of plan payments binds the bank to the contract established by the plan. Under these particular facts, where the bank was active in the case, the neglect in failing to object to the plan and the subsequent confirmation of the plan, constituted acquiescence in the leasehold for the term of the plan. Further support for the debtor’s lawful possession for the life of the plan is found in the bank’s receipt, deposit, and retention of plan payments. At common law, the recognition and receipt of rent creates a tenancy from year to year. Semmes v. United States, 14 Ct.Cl. 493 (Ct.Cl.1878) (“If, however, the landlord, continuing to suffer the tenant to retain the occupancy, recognized him as tenant by any act of consent, such as the payment and acceptance of rent, there arose against the landlord the presumption of a continued privity between him and his tenant, and the common law again intervened and raised the estate from a tenancy at sufferance to a tenancy from year to year.”). The effect of receipt and retention of these payments, combined with the failure to object to the plan thus creates a “rightful” holdover.
The bank had the opportunity to protect its rights by objecting to confirmation, but failed to do so. In this case, of even great*733er import than accepting the payments under the plan was the failure to object to the plan. Further, after confirmation, the bank filed a proof of claim which merely asserted a security interest in, rather than ownership of, the property.3 The proof of claim thus appears to acknowledge and acquiesce to the plan's terms providing for the debtor’s continued residence in the property. Whether by neglect or design, the bank consented to the terms of the plan, thereby creating or, at least, acquiescing to, a lease for the term of the plan.
Likewise, the debtor had the opportunity to protect his rights, but failed to do so. The bank properly followed state law procedures in initiating and noticing a nonjudicial foreclosure, but neither the debtor nor his attorney took any action. Indeed, the debtor testified that he timely received .the notice of sale but failed to attend on the belief that a bankruptcy petition had already been filed. Since the bankruptcy petition was in fact filed one day too late,4 under Arkansas law, the debtor had no interest in the property on the date his bankruptcy case was filed. The plan cannot resurrect rights which were extinguished prior to the filing of his petition.
Based upon the foregoing, it is
ORDERED that the Complaint for Turnover will be dismissed on the merits. While the debtor’s plan, by which the bank is bound, provides for his continued residence in the subject real property, the debt- or is limited to tenancy for the term of the plan.
IT IS SO ORDERED.
. Debtor abandoned this issue at trial: it was not addressed in his opening statement, and no evidence was presented regarding any violation of the stay.
. A tenancy at sufferance is distinguished from a tenancy at will by conduct of the land owner: a tenant at sufferance holds over wrongfully without the land owner’s consent, while a tenant at will holds over with the landowner’s permission. Brady v. Scott, 128 Fla. 582, 175 So. 724 (Fla.1937).
. The proof of claim and motion for relief are facially contradictory. The proof of claim asserts a secured claim, states the balance due on the mortgage, and the rate at which interest accrues. In contrast, the motion for relief from stay asserts that the foreclosure already occurred and that the real property is not property of the estate. The proof of claim appends the deed of trust executed by the debtor as proof of the security interest. The motion for relief from stay appends the trustee's deed as proof of the debtor's lack of interest.
. It is well-settled that "Counsel’s disregard of his [or her] professional responsibilities can lead to extinction of his [or her] client’s claims.” Comiskey v. JFTJ Corporation, 989 F.2d 1007 (8th Cir.1993) (quoting Denton v. Mr. Swiss of Mo., Inc., 564 F.2d 236, 240-41 (8th Cir.1977)). See also, Boogaerts v. Bank of Bradley, 961 F.2d 765, 768 (8th Cir.1992) ("A [party] chooses counsel at his peril.”). | 01-04-2023 | 11-22-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/8491670/ | FINDINGS OF FACT AND CONCLUSIONS OF LAW
ALFRED C. HAGAN, Chief Judge.
Veonna L. McCarron and Joseph P. McCárron, wife and husband, apparently happily married and living together, have each filed a chapter 7 petition in this Court. Veonna L. McCarron filed her petition first, on February 2, 1993. Joseph P. McCarron filed his chapter 7 petition on April 19, 1993.
The standing trustee in both chapter 7 cases, Ford Elsaesser, has moved in both cases for the turnover of a 1985 Porsche 944 automobile.
After a hearing on May 20, 1993, the turnover order was conditionally granted. Remaining for determination, however, is the community or separate property status of the ownership of the automobile.
*15Both debtors contend the automobile is the separate property of Joseph P. McCarron. The debtors contend Veonna L. McCarron gave her interest in the automobile to Joseph P. McCarron by way of a gift. No writing evidences such a gift. The automobile is further subject to a security interest in Harold Smith, counsel for both debtors, that apparently was granted by debtor Joseph P. McCarron after the filing of Veonna L. McCarron’s petition.
“ ‘Transmutation is a broad term used to describe arrangements between spouses which change the character of property from separate to community and vice versa.’ ” Stockdale v. Stockdale, 102 Idaho 870, 643 P.2d 82, 84 (Idaho App.1982) (quoting W. Reppy & W. DeFuniak, Community Property in the United States 421 (1975)). Property acquired by a husband or wife during the marriage is presumed to be community property. Freeburn v. Freeburn (In re Estate of Freeburn), 97 Idaho 845, 555 P.2d 385, 388 (Idaho 1976). A party asserting that property was transmuted by a gift from one spouse to the other bears the burden of showing all elements of a gift by clear and convincing evidence. See Freeburn, supra, 555 P.2d at 390 (where husband’s separate property was used for the benefit of the community, party asserting that the separate property was intended as a gift to the community must prove the elements of a gift by clear and convincing evidence); Smith v. Bogert (In re Estate of Bogert), 96 Idaho 522, 531 P.2d 1167, 1171 (Idaho 1975) (to demonstrate community property was transmuted to joint tenancy with right of survivorship, party bears burden of showing intention to make a gift by clear and convincing evidence).
The automobile is community property. It was acquired during the marriage, with presumptively community funds. Insufficient evidence has been shown to recite the “clear and convincing” standard. | 01-04-2023 | 11-22-2022 |
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