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IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-90-194-CV
IN THE MATTER OF B.J.S.,
APPELLANT
FROM THE COUNTY COURT AT LAW OF CALDWELL COUNTY,
NO. 449-90CC, HONORABLE EDWARD L. JARRETT, JUDGE
On the night of March 8, 1990, appellant, who was then only thirteen years old,
fatally shot his mother and father in their rural Caldwell County home. At the adjudication
hearing, a jury rejected appellant's insanity defense, Tex. Fam. Code Ann. § 55.05 (1986), and
found that appellant engaged in delinquent conduct, the murder of his mother. Tex. Penal Code
Ann. § 19.02(a)(1) (1989). (1) At the disposition hearing, the jury sentenced appellant to
commitment in the Texas Youth Commission with transfer to the Texas Department of Criminal
Justice for thirty years, the petition having been previously approved by the grand jury. 1987
Tex. Gen. Laws, ch. 385, § 9, at 1894 (Tex. Fam. Code Ann. § 54.04(d)(3), since amended).
The juvenile court rendered an order of adjudication, sentence, and commitment reflecting the
jury's findings. We will affirm this order.
Admissibility of Written Statement
In his first three points of error, appellant complains of the admission in evidence
of his written statement to the police. (2) In order to understand appellant's contentions and our
disposition of them, we must set out the circumstances surrounding the taking of the statement in
some detail.
After the shooting, appellant loaded a number of personal items into his parents'
car and drove to his girlfriend's house in Lockhart. His girlfriend's mother called the junior high
school counselor when she discovered that appellant had a pistol in his possession. The counselor
in turn called the police. Told by appellant that he had run away from home, a sheriff's deputy
and the counselor drove to appellant's house to talk to his parents. The deputy discovered the
bodies at approximately 9:00 p.m.
Appellant was taken into custody at his girlfriend's house at 9:15 p.m. and taken
to the "multipurpose room" of the Caldwell County Public Safety Building. This is a large room,
not a cell, furnished with chairs and certified and used as a temporary juvenile detention facility.
There, appellant waited alone for the arrival of Jill Townsend, a Caldwell County juvenile
probation officer who had been designated by the juvenile court as an "intake officer." Townsend
arrived at approximately 10:30 p.m. and proceeded to advise appellant of his rights and to conduct
an intake interview. This interview ended at approximately 12:00 midnight. After Townsend left,
appellant went to sleep in a chair.
Appellant remained in the multipurpose room until 1:30 a.m., when sheriff's
investigator Kirk Bennett arrived to take him to the Guadalupe County juvenile detention center
in Seguin. (3) Appellant and Bennett reached Seguin shortly before 2:00 a.m., but they did not stay
long. Because no Guadalupe County judge would agree to come to the center to administer the
magistrate's warning, Bennett and appellant were soon on their way to San Marcos, where Justice
of the Peace Becky Sierra had agreed to perform this task. Appellant was quiet during these trips,
and Bennett made no effort to interview him. Appellant was handcuffed while in transit, but the
cuffs were removed when he was inside the buildings.
Judge Sierra met appellant in an office at the San Marcos police department at 3:00
a.m. and advised him of his rights pursuant to 1989 Tex. Gen. Laws, ch. 84, § 1, at 412 (Tex.
Fam. Code Ann. § 51.09, since amended). Appellant was calm and did not appear to be tired.
After being admonished, appellant agreed to give a statement to Bennett. This written statement
was signed by appellant before Judge Sierra at 4:00 a.m. The judge certified in writing that she
had examined appellant outside the presence of any law enforcement officer or prosecuting
attorney, and that she had determined that appellant understood the nature and contents of the
statement and had knowingly and voluntarily waived his statutory rights.
Appellant concedes that the procedural requisites of former § 51.09(b) were
satisfied. Nevertheless, in point of error two, appellant argues that under the totality of the
circumstances, his waiver of rights was not shown to have been knowingly, intelligently, and
voluntarily made. See Fare v. Michael C., 442 U.S. 707 (1979). Appellant relies chiefly on the
opinion in E.A.W. v. State, 547 S.W.2d 63 (Tex. Civ. App. 1977, no writ), in which it was held
that a girl of eleven could not knowingly, intelligently, and voluntarily waive her constitutional
privilege against self-incrimination in the absence of a parent, attorney, or other friendly adult.
Under section 51.09, a child may waive his statutory and constitutional rights and
make a confession without the assistance of counsel, parent, or guardian. We decline to hold as
a matter of law that a thirteen-year-old boy is incapable of understanding and waiving his rights
without assistance. Further, we find that the evidence before us is sufficient to support the
conclusion that appellant's waiver of his rights was knowingly and voluntarily made.
Psychological testimony at trial indicates that appellant is of average intelligence. Although the
hour was late and appellant had had little sleep, there is no evidence that he was tired or otherwise
suffering from a lack of rest when he was advised of his rights and consented to give the
statement. Although appellant had nothing to eat or drink between his arrest and the confession,
appellant made no request for nourishment, no request was denied, and the testimony shows that
nourishment would have been provided had he asked for it. Appellant was restrained as he was
driven from place to place, but there is no evidence that he was physically abused or threatened
in any way while in custody. There also is no evidence that appellant was unlawfully questioned
before being admonished or that any promises were made to secure his confession. The totality
of the circumstances support the conclusion that appellant knowingly and voluntarily waived his
rights. We overrule point of error two.
In point of error three, appellant argues that his waiver of rights was invalid
because Judge Sierra was not a designated Caldwell County juvenile magistrate. Section 51.09(b)
requires that a magistrate advise a juvenile of his rights, but it does not require that the magistrate
be from the county in which the suspected delinquent conduct took place. We find no merit in
appellant's contention that Judge Sierra was not authorized to administer the statutory
admonishment.
Appellant also complains in this point of error that he was erroneously informed
by the judge that a petition charging him with an offense would be filed in Hays County, rather
than in Caldwell County, and thus he was misled concerning the consequences that would result
from giving the statement. (4) We disagree. Before giving his statement, appellant was told that he
was charged with having engaged in delinquent conduct by reason of having allegedly committed
two counts of murder, and that a petition to that effect would be filed in juvenile court. There is
no evidence that the misstatement as to the county in which the petition would be filed had any
impact on appellant's decision to give a statement. Point of error three is overruled.
Finally, in point of error one, appellant urges that his written statement was
inadmissible because it was obtained in violation of 1973 Tex. Gen. Laws, ch. 544, § 1, at 1470
(Tex. Fam. Code Ann. § 52.02, since amended). As it applies to this cause, former Tex. Fam.
Code section 52.02(a) provided:
A person taking a child into custody, without unnecessary delay and without first
taking the child elsewhere, shall do one of the following:
. . . .
(2) bring the child before the office or official designated by the juvenile court;
[or]
(3) bring the child to a detention facility designated by the juvenile court.
A statement that results from a detention in violation of former section 52.02 is inadmissible even
when the procedural requirements of former section 51.09(b) are met. Comer v. State, 776
S.W.2d 191 (Tex. Crim. App. 1989); In re L.R.S., 573 S.W.2d 888 (Tex. Civ. App. 1978, no
writ). Appellant argues that officials involved in this case violated former section 52.02 in two
ways.
Appellant first argues that he was taken "elsewhere" before being taken to the
multipurpose room for his intake interview with Townsend. Specifically, appellant contends that
he was taken to the Lockhart Police Department, which is not a designated juvenile detention
facility. The record does not support this contention. Lockhart police officer John Roescher
detained appellant. Roescher testified that another officer, Jim Gillis, took appellant to the
multipurpose room. As to whether Gillis may have first taken appellant to the police station,
Roescher testified, "I was told they went to the police station, but when they arrived, they were
called -- they were notified that he needed to go somewhere else, so they did not stop, they went
somewhere else." Gillis was not called to testify at the hearing on appellant's motion to suppress
the statement or at the adjudication hearing. The trial court could reasonably conclude from the
evidence before it that appellant was taken to the multipurpose room for his intake interview
without unnecessary delay and without first being taken elsewhere.
Next, appellant argues that neither the multipurpose room nor Townsend had been
properly designated by the juvenile court. Appellant refers to Tex. Fam. Code Ann. section 51.12
(1986 & Supp. 1992), which requires that "the judge of the juvenile court and the members of the
juvenile board shall personally inspect the detention facilities at least annually and shall certify in
writing to the authorities responsible for operating and giving financial support to the facilities that
they are suitable or unsuitable for the detention of children." Appellant introduced evidence
showing that the multipurpose room had been certified as suitable for the detention of children on
March 2, 1988. On that same date, Townsend and the other Caldwell County juvenile probation
officers had been designated as intake officers by the juvenile court. Appellant argues that
because neither the multipurpose room nor Townsend had been designated within the twelve
months preceding his detention, his confession was illegal due to the violation of former section
52.02.
Section 51.12(c) does not require, either explicitly or implicitly, that juvenile officers
be designated annually. Thus, whatever the status of the multipurpose room, the record reflects
that appellant was taken before a designated official in compliance with former
section 52.02(a)(2).
In Comer, the court stated that by enacting former section 52.02(a),
the Legislature intended that the officer designated by the juvenile court make the
initial decision whether to subject a child to custodial interrogation. He can take
a statement himself . . . or, pursuant to [Tex. Fam. Code Ann.] § 52.04(b)
[(1986)], he can refer the child back to the custody of law enforcement officers to
take the statement.
776 S.W.2d at 196. Appellant was not interviewed by the police and his statement was not taken
until after he was interviewed by Townsend, the juvenile officer designated by the juvenile court.
Townsend testified that after she completed her intake interview with appellant, she returned him
to the custody of the Caldwell County Sheriff's Department for further investigation.
The multipurpose room was the place used for temporary detention of juvenile
offenders. Although section 51.12(c) requires and common sense dictates that juvenile detention
facilities be inspected annually, we decline to say that the lack of written certification dated within
the last twelve months rendered the confession illegal or inadmissible. Although the statutory
requirements should be carefully followed, there is no evidence that the multipurpose room had
not been inspected and found suitable by the proper persons within the twelve months preceding
March 8, 1990, or that it had been inspected but found no longer suitable. We believe this cause
is distinguishable from Comer and L.R.S., in which the police detained the juveniles and obtained
the incriminating statements before the children were taken to the designated juvenile officer. The
record before us does not reflect a violation of former section 52.02 or of the holding in Comer.
The first point of error is overruled.
Other Points of Error
Appellant's seventh point of error complains of the juvenile court's denial of his
motion for a continuance of the hearing to determine his fitness to proceed. Tex. Fam. Code
Ann. § 55.04 (1986). Pursuant to appellant's section 55.04 motion, the court appointed a
neuropsychiatrist to examine appellant. Counsel for appellant filed his motion for continuance
on April 16, 1990, the day set for the hearing, complaining that he had not had adequate time to
examine the doctor's report.
Defense counsel met with the judge and counsel for the State in Lockhart on the
morning of April 6 and was told at that time that the psychiatrist's report was to be filed later that
day. Counsel returned to his office in San Marcos before the report was filed, believing that it
would be mailed to him. It was not mailed, and counsel made no further inquiries until April 12,
when he went to Lockhart and obtained a copy of the report.
A motion for continuance is addressed to the sound discretion of the trial court.
State v. Wood Oil Distrib., Inc., 751 S.W.2d 863, 865 (Tex. 1988). A court is not required to
grant a continuance to a party who has not shown due diligence. Wright v. Brooks, 773 S.W.2d
649, 652 (Tex. App. 1989, no writ). Knowing that the report was to be filed on April 6 and that
the hearing was set for April 16, counsel made no effort to obtain the report until April 12. He
nevertheless had several days to examine the report before trial. Under the circumstances, the
court did not abuse its discretion by overruling the motion for continuance. Point of error seven
is overruled.
In his fifth point of error, appellant contends the juvenile court erred by conducting
a portion of the hearing to determine his fitness to proceed in the absence of his grandmother, who
had been appointed his guardian ad litem. Tex. Fam. Code Ann. § 51.11 (1986). He further
contends that the court erred by subsequently appointing defense counsel to serve as guardian ad
litem in his grandmother's absence.
Appellant's grandmother was not present in court when the hearing was called, and
efforts to contact her were unsuccessful. Without objection, the court decided to proceed with
jury selection in her absence. Having failed to object, appellant waived any complaint concerning
this decision. Tex. R. App. P. Ann. 52(a) (Pamph. 1992).
When the guardian ad litem had still failed to arrive at the conclusion of jury
selection, the juvenile court appointed defense counsel, over objection, to serve in that capacity
until she arrived. We find no error. Section 51.11(c) states that an attorney for the child may
also be his guardian ad litem. Appellant does not state how he was harmed by the court's action,
and we can find no evidence of harm in the record. The fifth point of error is overruled.
In point of error eight, appellant urges that the juvenile court erred by overruling his
motion to consolidate this cause with the cause charging the murder of his father. The decision
whether to consolidate two causes for trial is committed to the discretion of the trial court. Tex.
R. Civ. P. Ann. 174 (1976); Brentwood Fin. Corp. v. Lamprecht, 736 S.W.2d 836, 838 (Tex.
App. 1987, writ ref'd n.r.e.). Appellant argues that by refusing to consolidate the two causes for
a single hearing, the juvenile court deprived him of "a simple judicial procedure and ruined his
chances of a fair hearing on the second cause of action." Appellant cites no authority and refers
to no evidence in support of this claim. We also note that the motion to consolidate was not
presented to the court for a ruling until the day the adjudication hearing was set to begin. No
abuse of discretion is shown. Point of error eight is overruled.
The three remaining points complain of alleged errors at the disposition hearing. In
point of error four, appellant contends the juvenile court erroneously admitted extraneous
misconduct evidence after having previously granted a motion to suppress such evidence. The
testimony in question concerns an incident in which appellant struck a female detention officer
with a chair. Appellant asserts, without supporting argument or authorities, that the admission
of this testimony prejudiced appellant's right to a fair hearing and contributed to the jury's
decision to assess a thirty-year sentence.
Appellant filed a motion to suppress "any alleged extraneous offense" on the grounds
that such evidence was not relevant or that its relevance was outweighed by its unfair prejudice.
Tex. R. Civ. Evid. Ann. 402, 403 (Pamph. 1992). This motion did not refer to any particular
evidence and was granted by the court without a hearing when the State indicated that it did not
oppose the motion. Under the circumstances, it cannot be said that the court ruled on the
admissibility of the assault on the officer when it granted the motion.
One of appellant's witnesses at the disposition hearing was a clinical psychologist
who specializes in counseling adolescents. The witness testified that, based on his evaluation of
appellant, he believed appellant's rehabilitation would best be achieved in a residential facility of
the sort unavailable in the Texas Youth Commission. The witness also stated that appellant was
not a threat to himself or to others. During his cross-examination, counsel for the State was
permitted to ask, over objection, if the witness knew that appellant "took a chair and hit a female
detention officer over the head." Later, the State called a rebuttal witness who described the
attack on the officer as observed by him.
The challenged evidence was relevant to rebut the testimony that appellant did not
pose a threat to others. The juvenile court could reasonably conclude that the relevance of this
evidence outweighed its potential for unfair prejudice. Point of error four is overruled.
Appellant's sixth point of error complains of this statement by counsel for the State
during his argument to the jury: "Now, while it may be trite for me to ask you to send a message,
I think this is the case that -- ." Appellant interrupted to object that "[]his is a disposition hearing.
. . . Nothing about sending a message has any bearing in this particular case. This is a plea for
law enforcement. That's relevant only in a criminal proceeding, not in a juvenile matter." The
objection was overruled. Counsel resumed his argument by asking the jury if it "want[ed] to
make this one of these additional forms of behavior that we just tolerate today" or if it "want[ed]
to make a statement that we will not, even today, tolerate this, that this is the worst form of a
criminal act that could occur."
Appellant contends that asking the jury to "send a message" was "inappropriate in
light of the express purpose and intent of the Family Code and the specific reasons for which a
disposition of a juvenile case may be had." One purpose of Title 3 of the Texas Family Code is
to effectuate the protection of the welfare of the community and the control of the commission of
unlawful acts by children. Tex. Fam. Code Ann. § 51.01(2) (1986). A disposition following
adjudication may be made only if the child needs rehabilitation or if the protection of the child or
public so requires. Tex. Fam. Code Ann. § 54.04 (c) (1986). While the cited argument may not
further these purposes, we cannot say the statement, in its entirety, constitutes error requiring
reversal. Point of error six is overruled.
Appellant's ninth and final point of error is that at the conclusion of the disposition
hearing, the juvenile court erroneously failed to advise him, or to instruct his attorney to advise
him, of his right to appeal. Tex. Fam. Code § 54.04(h); 1973 Tex. Gen. Laws, ch. 544, § 1, at
1483 (Tex. Fam. Code Ann. § 56.01(e), since amended). While appellant is correct, the record
reflects that appellant filed his notice of appeal and affidavit of inability to give cost bond the day
after the disposition order was signed. Four days after that, appellant was called before the
juvenile court and fully advised of his rights respecting an appeal. Under the circumstances, the
error, if any, was harmless. C.W. v. State, 738 S.W.2d 72, 73 (Tex. App. 1987, no writ). The
point of error is overruled.
The order of the juvenile court is affirmed.
Marilyn Aboussie, Justice
[Before Chief Justice Carroll, Justices Aboussie and B. A. Smith]
Affirmed
Filed: August 26, 1992
[Do Not Publish]
APPENDIX
[First paragraph, identifying appellant and his parents, omitted.]
1. The murder of appellant's father was alleged in a separate petition on which, apparently,
no hearing has been conducted.
2. A photocopy of the statement is appended to this opinion.
3. Caldwell County had a contractual agreement with Guadalupe County for the use of its
juvenile center.
4. Judge Sierra testified that, by mistake, she marked through the words "Caldwell County"
and substituted "Hays County" on the waiver of rights document. Thus, the document reflects
that appellant was advised that a petition might be filed in the Hays County juvenile court.
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679 F. Supp. 2d 488 (2010)
Barbara HANDSCHU, et al., Plaintiffs,
v.
POLICE DEPARTMENT OF THE CITY OF NEW YORK, et al., Defendants.
No. 71 Civ. 2203(CSH).
United States District Court, S.D. New York.
January 19, 2010.
*490 Paul G. Chevigny, Jethro M. Eisenstein, Profeta & Eisenstein, Martin R. Stolar, Franklin Siegel, New York, NY, Attorneys for Plaintiff Class; Arthur Eisenberg, New York Civil Liberties Union, New York, NY, appearing with Attorneys for Plaintiff Class.
Gail Donoghue, Peter G. Farrell, Special Asst. Corporation Counsel of the City of New York, New York, NY, for Defendants.
MEMORANDUM OPINION AND ORDER
HAIGHT, Senior United States District Judge:
This civil rights action against the New York City Police Department ("NYPD"), complaining about certain surveillance and intelligence-gathering conduct, was filed in 1971. This Court certified the suit as a class action in 1979, and in 1986 approved a settlement agreed upon by the plaintiff class and the NYPD. That settlement created what came to be known as the "Handschu Guidelines" governing the pertinent police conduct. The Court modified the Guidelines in 2003. The case, now in its 39th year, has generated a number of opinions in this Court and the Court of Appeals. Familiarity with those opinions is assumed. They need not be recounted in detail to address the present issues, which this opinion resolves.
The present issues arise out of a motion by Class Counsel for a declaration that the plaintiff class is the prevailing party in respect of a particular aspect of the litigation, thereby entitling the class to attorneys' fees under the fee-shifting provisions of 42 U.S.C. § 1988, and for related relief. The NYPD, represented by the Corporation Counsel of the City of New York (hereinafter "Corporation Counsel"), contends that the class should not be regarded as a prevailing party, and that in any event the award of attorneys' fees would not be appropriate in the circumstances of the case. The pertinent facts, essentially undisputed, are established by certain of the Court's prior opinions, and by affidavits *491 submitted by the parties previously and on the present motion. The issues have been fully briefed. The Court has heard oral argument.
I. BACKGROUND
Following the modification of the Handschu Guidelines, the NYPD promulgated Interim Order 47, which is captioned "Guidelines for the Use of Photographic/Video Equipment to Record Police Operations and Public Activities" and sets forth detailed instructions and procedures for such conduct by NYPD officers.
In November 2005 Class Counsel, contending that Interim Order 47 violated the modified Handschu Guidelines and the First Amendment to the United States Constitution, moved to enjoin the NYPD from continuing to implement Interim Order 47 with respect to the videotaping of political activity. Corporation Counsel resisted that motion.
The validity and implementation of Interim Order 47 gave rise to spirited litigation and three separate opinions of the Court, described in Part II, infra. However, the present motion turns upon related but different circumstances. The motion papers establish that on April 13, 2007, the NYPD replaced Interim Order 47 (the target of the plaintiff class's motion for equitable relief) with Interim Order 22, which contained a materially different set of procedures and directives.[1] But Corporation Counsel did not inform Class Counselor the Court that Interim Order 47 was no longer in effect. On the contrary, from April 2007 until September 2008, during the course of a number of hearings, submission of motion papers, and correspondence, Corporation Counsel defended Interim Order 47 and resisted discovery into its application requested by Class Counsel, just as if (contrary to the fact) Interim Order 47 was still in full force and effect.
It was not until September 2008 that Corporation Counsel informed Class Counsel that Interim Order 22 had replaced Interim Order 47; and even then, Corporation Counsel's disclosure was inadvertent, not intentional. Specifically, on August 11, 2008 Corporation Counsel complied with an order of the Court allowing the plaintiff class discovery into the manner in which the NYPD was applying Interim Order 47 (discovery which Corporation Counsel had energetically resisted in submissions during July 2008). In so complying, Corporation Counsel delivered to Class Counsel 83 NYPD videotapes, which Corporation Counsel described in a letter as "taken during the effective period of Interim Order 47." (emphasis added). Struck by this wording, Class Counsel wrote a letter dated August 19, 2008 to Corporation Counsel, stating: "The wording of your letter suggests to us that Interim Order 47 is no longer in effect. Please advise whether that is correct and if it is, please provide us with a copy of the policy or procedure that has replaced Interim Order 47." Corporation Counsel replied in a letter dated September 18, 2008, which said in pertinent part: "We write in response to plaintiffs' letter dated August 19, 2008, wherein plaintiffs request `a copy of the policy or procedure that has replaced Interim Order 47.'. . . In response, Defendants enclose Interim Order 22, dated April 13, 2007, consisting of pages 1 though 3."[2]
*492 As a result of the NYPD's promulgation of Interim Order 22 to replace Interim Order 47, and in the light of certain prior decisions by the Court during the litigation, Class Counsel now move to have the plaintiff class declared a "prevailing party" under § 1988 on its underlying motion for injunctive relief, thereby paving the way for an application for attorneys' fees. Class Counsel also ask the Court, in an exercise of its equitable powers, to direct the NYPD "to give notice to plaintiff class counsel and to the Court of any decision to withdraw Interim Order 22 or to substitute a new policy concerning the videotaping or photographing of political activity for that set forth in Interim Order 22." Supplemental Notice of Motion at 2. Class Counsel do not attempt to conceal their irritation, manifestly genuine and not feigned for the sake of advocacy, at Corporation Counsel's continuing to litigate the validity and effect of Interim Order 47 long after that Order had been replaced by Interim Order 22, without notifying Class Counsel or the Court of the change.
Corporation Counsel express indignation at Class Counsel's indignation, defend the conduct of their Office and the NYPD, deny that the plaintiff class is a "prevailing party" under the statute and is entitled to any attorneys' fees, and object to the request that the NYPD give notice of any changes in the policies and procedures set forth in Interim Order 22.
II. DISCUSSION
A. Is the Plaintiff Class a "Prevailing Party?"
1. The Statute
The governing statute is 42 U.S.C. § 1988, which provides in pertinent part:
In any action to enforce a provision of sections 1981, 1981a, 1982, 1983, 1985, and 1986 of this title, . . . the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs . . . .
42 U.S.C. § 1988(b).
"The legislative history of § 1988 makes clear that a plaintiff who has prevailed on a claim under § 1983 `should ordinarily recover an attorney's fee unless special circumstances would render such an award unjust.'" Orchano v. Advanced Recovery, Inc., 107 F.3d 94, 97 (2d Cir.1997) (citing and quoting S.Rep. No. 94-1011, at 4 (1976)). "We review the district court's grant of attorney's fees for abuse of discretion." Garcia v. Yonkers School District, 561 F.3d 97, 102 (2d Cir.2009). "Inasmuch as the resolution of the district court's grant of attorney's fees implicates questions of law, our review is de novo." Id. (citation omitted).
2. The Litigation
To determine whether the plaintiff class should be regarded as the "prevailing party" in that aspect of the case identified on the present motion, it is necessary to revisit three prior opinions of this Court, which I refer to by the numerology developed for this 38-year old case: Handschu VII, v. Special Services Div., 475 F. Supp. 2d 331 (S.D.N.Y.2007); Handschu VIII v. Special Services Division, 2007 WL 1711775 (S.D.N.Y.2007); and Handschu IX v. Special Services Div., 2008 WL 515695 (S.D.N.Y. Feb. 27, 2008).
Handschu VII recites that "on September 10, 2004, the NYPD by direction of Commissioner Kelly distributed Order 47 to all commands." 475 F.Supp.2d at 334. The plaintiff class commenced that aspect of the litigation pertinent to this motion by moving "to enjoin enforcement of Order 47 and the implementation by the NYPD of the procedures the Order directs." Id. *493 The class based that motion upon two claims: (1) Interim Order 47 and police conduct implementing the Order violated the Modified Handschu Guidelines, id. at 338-353;[3] and (2) the procedures established by Interim Order 47 and police activities conducted thereunder constituted violations of the United States Constitution, id. at 353-355.
The Court's opinion in Handschu VII rejected the plaintiff class's constitutional challenge to Interim Order 47, principally on the authority of Laird v. Tatum, 408 U.S. 1, 92 S. Ct. 2318, 33 L. Ed. 2d 154 (1972), and its progeny. 475 F.Supp.2d at 353-355. As for the class's contention that Interim Order 47 violated the Handschu Guidelines, the Court accepted the class's contentions in part, and entered an order, id. at 357, which has come to be known as "the 2/07 Order." I will use that designation in this opinion. The specifics of the 2/07 Order are not recited here, because its directives were changed as the result of the opinions in Handschu VIII and Handschu IX.
Handschu VIII was generated by the NYPD's motion under Federal Rules of Civil Procedure 59 and 60(b)(1) and Local Civil Rule 6.3 for, inter alia, an order "vacating, altering, and/or reconsidering" the 2/07 Order with which Handschu VII concluded. The parties' submissions on these two motions made it apparent that the differences and disputes between the plaintiff class and the NYPD extended far beyond the narrow boundaries of Interim Order 47's validity and implementation. Those submissions revealed a fundamental disagreement about the rights and obligations of the parties within the context of the entire case, as shaped by the Court's earlier opinions and orders. Handschu VIII took note of that fundamental disagreement:
Modified Handschu is the version of the decree under which the parties have coexisted since August 2003. Nevertheless, it appears that uncertainty remained as to the consequences of my incorporation of the NYPD Guidelines into the Order and Judgment of the Court. When Class Counsel appeared before the Court with their motion to enjoin Interim Order 47, they possessed one view of those consequences; it turned out that Corporation Counsel possessed quite another. In Handschu VII, the 2/07 opinion and order, I granted Class Counsel's motion. For the reasons there stated, I held that Modified Handschu empowered the plaintiff class to seek reliefincluding contemptfor violations of the NYPD Guidelines and that Interim Order 47 violated the NYPD Guidelines. It is this 2/07 Order that the NYPD's present motion requires me to revisit.
2007 WL 1711775, at *4. The sensation is akin to pulling on a loose thread and unraveling the entire sweater.
In Handschu VIII, the NYPD contended that "the 2/07 Order misinterpreted or impermissibly modified the consent decree as it has been interpreted in prior orders of this Court." 2007 WL 1711775, at *7. In support of that contention, the NYPD made three arguments: (1) The 2/07 Order's conclusion that the NYPD could be subject to contempt for non-constitutional violations of the NYPD Guidelines was *494 inconsistent with a prior order making the NYPD subject to contempt only for violations of the Guidelines that rise to a constitutional level. (2) Sole power to ensure non-constitutional compliance with the Guidelines is vested in the Police Commissioner. (3) In determining whether Interim Order 47 conflicted with the Guidelines, the 2/07 Order's interpretation of the Guidelines conflicted with a prior determination of their scope. Id. I prefaced the discussion in Handschu VIII by saying: "For the reasons that follow, I agree with the first and third of the NYPD's contentions. The 2/07 Order must perforce be vacated. I disagree with the NYPD's second contention." Id. Handschu VIII, dated June 13, 2007, vacated the 2/07 Order, concluded with certain holdings, and has come to be called "the 6/07 Opinion."
Still dissatisfied, the NYPD made yet another motion, this time under Federal Rule 59 and Local Rule 6.3 of Civil Procedure, for relief from or reconsideration of the 6/07 Opinion. That motion begat Handschu IX, dated February 27, 2008. The NYPD asserted that the 6/07 Opinion in Handschu VIII overlooked the Section X "Reservation" with which the NYPD Guidelines concluded, and which, the NYPD contended, "significantly limits the Court's oversight function and Class Counsel's ability to participate in the process." Handschu IX, 2008 WL 515695, at *4. Class Counsel, content with the 6/07 Opinion and its accompanying directives, opposed the NYPD's motion for reconsideration and cross-moved for the Court's "permission to seek discovery of the documentation required by Interim Order 47, in order to assess the Order's implementation by the NYPD." Id., at *6. Handschu IX denied the NYPD's motion attacking the 6/07 Opinion, and granted the plaintiff class's cross-motion for discovery into how the NYPD was implementing Interim Order 47.
It is now necessary to take a deep breath and review the rights and obligations of the parties as of February 27, 2008, the date the Court decided Handschu IX. Those rights and obligations were defined, amplified and clarified by the Handschu VII, VIII, and IX trilogy. Those opinions and their accompanying orders may be summarized as follows:
1. The Court rejected the plaintiff class's claims that Interim Order 47 was facially invalid under the Guidelines or the Constitution, but recognized the possibility that the Order could violate the Guidelines as applied.
2. The Court accepted the NYPD's claim that police conduct must violate a class member's constitutional rights in order to sustain a motion by Class Counsel to hold the NYPD in contempt of the Court's order establishing the Guidelines.
3. The Court rejected the NYPD's claim, advanced repeatedly in different guises, that the Police Commissioner had sole power to ensure the NYPD's compliance with the Guidelines in matters not implicating the Constitution, with Class Counsel and the Court having no roles to play in that regard.
4. The Court accepted plaintiff class's claim that, contrary to the NYPD's contention, the Guidelines and the NYPD's compliance with them fell within the Court's equitable power, and that if Class Counsel were able to demonstrate the NYPD had adopted a policy that disregarded the Guidelines, the Court may exercise that equitable power and grant equitable relief.
5. The Court held that the Guidelines' Section X Reservation's "limitation on the creation of enforceable rights, properly understood, prohibits (1) individual legal actions based on violations of the NYPD Guidelines, and (2) legal actions in the *495 name of the plaintiff class based on isolated instances of violations of the NYPD Guidelines that do not rise to constitutional violations; but the Section X Reservation does not preclude Class Counsel from challenging NYPD policies that disregard the NYPD Guidelines." Handschu IX, 2008 WL 515695, at *5 (emphasis in original).
6. Given that holding that Class Counsel had standing to challenge NYPD policies, the Court granted the plaintiff class's motion to discover the NYPD documentation required by Interim Order 47.
Those were the rules of engagement on February 27, 2008, established after vigorous litigation and three opinions by this Court. From all outward appearances, in February 2008 the NYPD was conducting photographic and video surveillance in accordance with the provisions of Interim Order 47. Class Counsel, exercising the right granted by the Court in Handschu IX, served discovery demands upon the NYPD with respect to the documents whose creation Order 47 mandated. However, as recounted in Part I, supra, during that discovery process the NYPD inadvertently revealed that on April 13, 2007 the NYPD had rescinded Interim Order 47 and replaced it with Interim Order 22, without notifying either Class Counsel or the Court.
That revelation triggered the plaintiff class's present motion.
3. The Plaintiff Class as Prevailing Party
The NYPD contends that the plaintiff class cannot be regarded as the prevailing party in the litigation focusing upon Interim Order 47 because the class's motion initially sought injunctive relief on the grounds that Order 47 was facially invalid under the Guidelines and the First Amendment, and the Court rejected both claims.
If the facial validity of Interim Order 47 was the only issue addressed by the Court's three subsequent opinionsthe alpha and omega of this chapter of the casethen the NYPD's position would be unassailable. However, as the discussion in Part II.2. demonstrates, during the course of this part of the case, additional issues were raised by the submissions of both parties, vehemently argued by counsel, and decided by the Court. On one of those additional issues, the Court accepted the contention of Class Counsel and rejected that of the Corporation Counsel, resulting in the Court's holding that Class Counsel could assert a non-constitutional claim that an NYPD policy violated the Guidelines, and if the claim be proven, obtain injunctive relief for the benefit of the class. If the plaintiff class can be characterized as a prevailing party, it is because of the ways in which that issue was posed by the parties and decided by the Court.
It is therefore necessary to review that issue and its resolution in greater detail. A useful method of doing so is to quote pertinent passages from Handschu VIII and Handschu IX:
Corporation Counsel contend that in the case of non-constitutional violations, sole and unfettered authority is vested in the Police Commissioner to monitor and enforce compliance with the NYPD Guidelines. Counsel base that contention upon their characterization of the NYPD Guidelines incorporated in the Patrol Guide as "internal." In Corporation Counsel's view, so long as police conduct does not violate a class member's constitutional rights, the Commissioner may turn a blind eye and a deaf ear to a violation or disregard of the procedures required by the NYPD Guidelines, whether that violation or disregard is an isolated incident or an established practice. The careful reader will understand *496 that I am not saying Commissioner Kelly has behaved in this fashion or is likely to do so. But the logical conclusion of Corporation Counsel's argument poses the question whether the Commissioner could behave that way if he chose, with Class Counsel and the Court powerless to take any action. Upon careful consideration, I answer this question in the negative.
Handschu VIII, 2007 WL 1711775, at *10 (citations to record omitted).
The 6/07 Opinion [Handschu VIII] contains four holdings . . . .
Second, I held that since the NYPD Guidelines resulted from a promise made to the Court by the NYPD, were enacted in compliance with an order of the Court, and were expressly ordered to remain in the NYPD Patrol Guide unless otherwise directed by the Court, those acts brought the NYPD Guidelines within the ambit of the Court's equitable power, and if it were shown that the NYPD had adopted a policy that disregards the NYPD Guidelines, the Court may exercise its continuing equitable powers in granting appropriate injunctive relief. That holding rejected the NYPD's contention that Class Counsel cannot complain of and the Court cannot consider NYPD conduct that violates the NYPD Guidelines but not the Constitution.
Handschu IX, 2008 WL 515695, at *1-*2 (citations and internal quotation marks omitted).
That holding, resolving a core question in the case, determined a crucial relationship between Class Counsel and the NYPD under the Guidelines, namely, Class Counsel's ability to inquire into and challenge NYPD policies and the NYPD's obligation to respond to such inquiries and challenges, rather than simply ignoring them. Had the NYPD's contention prevailed, much of the combined efforts of counsel and Court over years of litigating this case would have become "sound and fury, signifying nothing," Macbeth, V. v. 17, "a consummation devoutly to be wish'd" by the NYPD, Hamlet, III. i. 56. However, the plaintiff class prevailed on the question, thereby establishing to its advantage its relationship, through Class Counsel, with the NYPD, and setting the stage for possible future litigation. In these circumstances, I conclude without difficulty that the plaintiff class is a "prevailing party" under § 1988.
"[T]o be considered a prevailing party, a plaintiff must not only achieve some material alteration of the legal relationship of the parties, but the change must also be judicially sanctioned." Ma v. Chertoff, 547 F.3d 342, 344 (2d Cir.2008) (citing Buckhannon Bd. & Care Home, Inc. v. W.Va. Dep't of Health & Human Res., 532 U.S. 598, 121 S. Ct. 1835, 149 L. Ed. 2d 855 (2001)) (other citations and internal quotation marks omitted). However, to materially alter parties' legal relationship, a party need not succeed on all its claims. In LaRouche v. Kezer, 20 F.3d 68, 71 (2d Cir.1994), the Second Circuit said:
A party need not succeed on every issue raised by him, nor even the most crucial one. Victory on a significant claim will suffice to give him prevailing party status. The degree of success on the merits does not alter plaintiffs eligibility for a fee award, although it may decrease the amount of the award.
(citations omitted). In consequence, and contrary to the NYPD's contention, the plaintiff class's lack of success on its initial claims that Interim Order 47 was facially invalid does not preclude prevailing party status, so long as the class achieved (1) victory on a significant claim which (2) brought about a material alteration of the *497 legal relationship between the parties and (3) was which was judicially sanctioned. In the particular circumstances of the case at bar, it is entirely clear that the plaintiff class satisfies all three criteria.
a. Victory on a Significant Claim
During this most recent motion practice the plaintiff class achieved victory on a significant claim: that the Guidelines subjected the NYPD to Class Counsel's inquiries into police surveillance policies and potential injunctive relief for the class and against the NYPD. The central importance of that victory to the ongoing governance of this important class action has been demonstrated supra.
b. Material Alteration of the Legal Relationship
The Court's ruling on this claim brought about a material alteration in the legal relationship between the parties. Until that ruling, the NYPD's perceived relationship with the class and Class Counsel cast the NYPD in the role of the all-powerful arbiter of implementation of the Guidelines in non-constitutional areas, and cast the class and Class Counsel in the roles of powerless onlookers. Having contended for its perceived relationship during the litigation and lost, the NYPD cannot now be heard to say that the Court's ruling did no more than reaffirm a relationship that everyone agreed had always existed. The NYPD was entitled to its perception and contention; I accept that my prior opinions on the point were capable of two reasonable interpretations. Thus was the field laid out for the battle that then ensued, from which the class withdrew victorious on a claim that, for the first time and forever (barring appeals), altered the relationship between the NYPD and the class by empowering Class Counsel to challenge NYPD policies resulting in non-constitutional violations of the Guidelines.
My conclusion that this is a sufficient relationship alteration to qualify the plaintiff class as a prevailing party is supported by the Second Circuit's latest decision on point, Perez v. Westchester County Department of Corrections, 587 F.3d 143 (2d Cir. 2009). Plaintiffs, Muslim inmates confined at the Westchester County Jail, claimed that the County violated their constitutional rights "by serving them meat that was `Haram' (in violation of their beliefs) as opposed to `Halal' (which is consistent with their beliefs)." Id. at 145.[4] After motion practice and conferences before District Judge Berman, the parties entered into a "Settlement, Release and Stipulation of Discontinuance" pursuant to which "the County agreed to provide all present and future Muslim inmates . . . who request a Halal diet with Halal meat with the same frequency as Kosher meat is served to Jewish inmates requesting the Kosher diet." Id. at 148. While the agreement expressly indicated that it was "not a consent decree," it recited that the County "made this change `in contemplation of settling' the lawsuit and in consideration of Plaintiffs' discontinuing their actions," and "the dismissal of the lawsuits only took effect `[u]pon the Court's approval and entry of this Stipulation and Order.'" Id. Judge Berman reviewed the agreement, amended the caption to reflect that it was an "Order of" Settlement, made several other non-substantive alterations, "instructed the clerk to close the case, and `so-ordered' the settlement." Id.
The District Court held that in these circumstances, the plaintiff class qualified *498 as a "prevailing party" under 42 U.S.C. § 1988. The Court of Appeals affirmed. On the element of material alteration of a legal relationship, the Second Circuit rejected the County's contention that "it began serving Halal meat voluntarily and that the legal relationship between the parties was unaltered." 587 F.3d at 149-150. The Court reasoned that during the litigation the County defendants repeatedly acknowledged that "they did not serve Halal meat to Muslim inmates as often as they served Kosher meat to Jewish inmates and did not want to do so." Id. at 150 (emphasis added). However, as the result of the so-ordered settlement agreement, "the County is now legally incapable of acting as it did before the entry of the Order." Id. (emphasis added). Even if the County was constitutionally "free to serve Halal meat to Muslim inmates less often than it served Kosher meat to Jewish inmates, it cannot do so now without violating a Court order." Id. (citation omitted, emphasis in original). "Whether the County's initial decision to serve Halal meat at the appropriate frequency was voluntary or not is thus inconsequential, as it can no longer freely reverse that decision." Id. (emphasis added).
On this element, Perez is directly in point with the case at bar. The NYPD made it plain repeatedly that it did not want to pay any attention to Class Counsel's questions or views about whether its surveillance policies violated the Handschu Guidelines. The NYPD argued through Corporation Counsel that so long as no constitutional violation was implicated, the Police Commissioner's authority to promulgate such a policy was unfettered, beyond Class Counsel's ability to challenge or the Court's authority to address. After the so-ordered opinions in Handschu VIII and Handschu IX, the NYPD is no longer free to disregard the plaintiff class because it wanted to, just as after the so-ordered agreement in Perez, Westchester County officials were no longer free to serve or withhold Halal meat whenever they wanted to. By prevailing on this issue in Handschu VIII and Handschu IX, the plaintiff class achieved an alteration of the legal relationship between the NYPD and the class that is of central importance to the ongoing functioning and effect of the Guidelines.[5]
Corporation Counsel, characterizing this particular issue as one of standing, argue that a litigant cannot earn its "prevailing party" stripes by achieving nothing more than establishing its standing to sue. While on occasion Class Counsel referred to "standing" in their submissions, and may now regret their use of the noun, in reality the contested claim upon which the class prevailed was not one of standing of the sort that Corporation Counsel's argument posits. "Standing," in that sense, asks if someone is entitled to assert a *499 claim. It is a threshold the claimant must cross in order to litigate the merits of his claim. In constitutional cases, standing depends upon a claimant's ability to demonstrate a particular form of personal injury in order to reach the merits of an asserted violation of the Constitution. In the case at bar, however, the settlement of the class action, and the promulgation of the Handschu Guidelines incorporated in a Court order, conferred standing upon the class and Class Counsel on behalf of its members to assert the non-constitutional Guidelines claim upon which the class prevailed in Handschu VIII and Handschu IX.
c. Judicial Imprimatur
This element requires little discussion. The alteration of the legal relationship between the plaintiff class and the NYPD was judicially sanctionedindeed, brought aboutby the Court's opinions in Handschu VIII and Handschu IX. Both opinions ended with the significant declaration "It is So Ordered." That decretal language endowed the settlement agreement in Perez, which counsel drafted, with the judicial sanction necessary to confer prevailing party status upon the plaintiff class. In the case at bar, the Court wrote the opinions with which the so-ordered language concluded. On the question of judicial sanction, Perez applies to this case a fortiori.
For the foregoing reasons, the plaintiff class qualifies as a "prevailing party" under § 1988 and is entitled to an award of attorneys' fees. However, as noted in Part II.A.2., the class did not succeed on all claims it asserted on its motion for equitable relief. In particular, the Court rejected the plaintiff class's claim that Interim Order 47 was facially invalid under the Constitution and the Handschu Guidelines. In consequence, the question arises whether the class's attorneys' fees are subject to reduction to reflect that partial lack of success. I turn to that question.
B. Reduction of the Fee
In Hensley v. Eckerhart, 461 U.S. 424, 436, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983), involving an award of attorneys' fees under 42 U.S.C. § 1988, the Supreme Court said that where "a plaintiff has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount. This will be true even where the plaintiff's claims were interrelated, non-frivolous, and raised in good faith." Based on that principle, the Court held in Hensley that "[w]here the plaintiff has failed to prevail on a claim that is distinct in all respects from his successful claims, the hours spent on the unsuccessful claim should be excluded in considering the amount of a reasonable fee." Id. at 440, 103 S. Ct. 1933. That holding applies to the plaintiff class's distinct and unsuccessful claim that Interim Order 47 was facially invalid. Accordingly, Class Counsel's fees for the recent motion practice must be reduced, even if their time was reasonably expended and the claimed hourly rate is reasonable.
In Hensley, the Court suggested two alternative procedures for district courts to utilize in reducing such fees: "The district court may attempt to identify specific hours that should be eliminated, or it may simply reduce the award to account for the limited success." 461 U.S. at 436-37, 103 S. Ct. 1933. Either procedure is available to district courts considering awards of attorneys' fees under a fee-shifting statute such as § 1988. I used the second one in Sheehan v. Metropolitan Life Insurance Co., 450 F. Supp. 2d 321 (S.D.N.Y.2006), an ERISA action where plaintiff complained *500 of the defendant insurance company's cessation of disability payments. After trial, plaintiff received a judgment for part of the amount he claimed, but his claim for another part was rejected. On plaintiffs subsequent application for attorneys' fees, I held that he was a prevailing party under ERISA's fee-shifting statute, and the full amount of his attorneys' fees was reasonable. However, that amount was subject to reduction under Hensley and its progeny because "Sheehan received only a part of the claimed past disability payments, and his claim for future payments was rejected entirely," losses "sufficient in amount to require a downward adjustment of his attorney's fees." Id. at 330. The amount of the adjustment is fact specific; given the particular circumstances in Sheehan, I reduced the attorney's fee by 30%. See id.
In the case at bar, I opt for the first procedure, which requires the identification "of specific hours that should be eliminated." That part of the recent motion practice upon which the plaintiff class prevailedthe empowerment of Class Counsel in respect of NYPD surveillance policiesis separate and distinct from that part where the class failedits challenge to the facial validity of Interim Order 47. Time spent on that latter issue is not compensable. An accurate allocation of time should not be difficult. Hensley places the responsibility for eliminating uncompensable hours upon "the district court," but the initial burden falls fairly upon the attorneys, who are seeking an award and have superior knowledge of how their time was spent. Class Counsel are directed to pare down their requested fees and costs so as to eliminate the time and expense allocable to the issue of Interim Order 47's facial invalidity. The time and expense allocable to the issues Handschu VIII and Handschu IX decided in favor of the plaintiff class will be allowed.
The discussion in this subpart relates to an allowance of attorneys' fees under 42 U.S.C. § 1988. However, there is a second vehicle for awarding attorneys' fees in this case: the inherent power of this Court. I turn to the applicability of the inherent power doctrine to the instant case.
C. An Award of Attorneys' Fees Under the Court's Inherent Power
1. 28 U.S.C. § 1927
Before discussing the Court's inherent power to impose the sanction of attorney's fees, it is necessary to consider an alternative source of authority that, as will appear, is not applicable to this case.
During the briefing and argument of the case, reference was made to 28 U.S.C. § 1927 as a possible source of the Court's authority to award attorneys' fees to the plaintiff class. That statute provides:
Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.
The question of § 1927's applicability to this case arises out of the conduct of Corporation Counsel in continuing to litigate for 17 months the validity of Interim Order 47 after the NYPD rescinded the Order and replaced it with Interim Order 22, which changed the NYPD's surveillance policies and practices in material ways. Order 47 was rescinded and replaced by Order 22 on April 13, 2007. Corporation Counsel did not advise Class Counsel or *501 the Court that this had happened. Instead, the parties continued to litigate and the Court continued to consider the validity and effect of Order 47. The Court delivered its opinion in Handschu VIII on June 13, 2007, and in Handschu IX on February 27, 2008. Both dealt with Interim Order 47. Corporation Counsel did not inform Class Counsel of Order 47's rescission until September 18, 2008, and even then the disclosure was inadvertent, not intentional. The pertinent facts are recited in fall in Part I, supra.
I think it plain that Corporation Counsel's conduct cannot be excused. The able Assistant Corporation Counsel who argued the case, and was not involved in the underlying facts, had the unenviable task of defending the indefensible. The papers submitted by Corporation Counsel on its own and the NYPD's behalf seek to justify the failure to notify Class Counsel and the Court of the rescission of the Order being litigated by describing internal discussions and perceptions, and by contentions that certain impressions should have been formed from communications that were exchanged. This is not good enough. Such rationalizations entirely disregard Corporation Counsel's professional obligation as officers of the Court to notify their adversaries and the Court that Interim Order 47, the focal point of the ongoing litigation, had been rescinded. That is not an onerous obligation. The Police Commissioner replaced Order 47 with Order 22 on April 13, 2007. All Corporation Counsel had to do to satisfy their professional responsibilities was to send Class Counsel on April 14 a one-sentence letter advising that Interim Order 47 had been rescinded and enclosing a copy of Interim Order 22. Corporation Counsel's conduct in keeping mum about this event of central importance, and continuing the litigation as if it had not occurred, multiplied the proceedings unnecessarily and therefore unreasonably.
Nonetheless, Corporation Counsel's conduct, while deplorable, is not sanctionable under § 1927. Corporation Counsel's fallback position is that even if they should have notified Class Counsel and the Court of the withdrawal of Interim Order 47 when it occurred, their failure to do so cannot be characterized as in bad faith, which, it is contended, Second Circuit jurisprudence requires before attorneys' fees can be awarded under 28 U.S.C. § 1927. That contention finds support in the statutory language that to be sanctionable, an attorney must multiply proceedings "unreasonably and vexatiously." (emphasis added). The adverb "vexatiously" is linguistically paired with the adjective "vexatious," defined as conduct "without reasonable or probable cause or excuse; harassing; annoying," Black's Law Dictionary (7th ed.1999 at 1559), a concept consistent with bad faith. And indeed, the Second Circuit has said recently that § 1927 "authorizes sanctions when the attorney's actions are so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose, and upon a finding of conduct constituting or akin to bad faith," Gollomp v. Spitzer, 568 F.3d 355, 368 (2d Cir.2009) (citation and internal quotation marks omitted). I agree with Corporation Counsel that the conduct of that office in representing the NYPD as an advocate does not support an explicit finding of bad faith.
2. The Court's Inherent Power
But that does not end the inquiry. Alternatively, a district court may exercise its "inherent power" to levy sanctions in response to attorneys' abusive litigation practices. Roadway Express, Inc. v. Piper, 447 U.S. 752, 764, 100 S. Ct. 2455, 65 *502 L.Ed.2d 488 (1980).[6] In United States v. International Broth., of Teamsters, 948 F.2d 1338, 1345 (2d Cir.1991), the Second Circuit made it plain that a court's inherent power exists in addition and as an alternative to 28 U.S.C. § 1927 and Fed. R.Civ.P. 11 ("Finally, a court has a third means at its disposal for sanctioning improper conduct: its inherent power.") (after discussing § 1927 and Rule 11).
The court's inherent power derives from the basic principle that courts are "vested, by their very creation, with power to impose silence, respect, and decorum, in their presence, and submission to their lawful mandates." Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S. Ct. 2123, 115 L. Ed. 2d 27 (1991) (quoting Anderson v. Dunn, 19 U.S. (6 Wheat.) 204, 227, 5 L. Ed. 242 (1821)); accord, DLC Management Corp. v. Town of Hyde Park, 163 F.3d 124, 136 (2d Cir.1998). This inherent power is "governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases." Chambers, 501 U.S. at 43, 111 S. Ct. 2123.
Included in a court's inherent power is the ability to "assess attorney's fees when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons." Chambers, 501 U.S. at 45-46, 111 S. Ct. 2123. See also Roadway Express, 447 U.S. at 765-66, 100 S. Ct. 2455 ("There are ample grounds for recognizing, however, that in narrowly defined circumstances federal courts have inherent power to assess attorney's fees against counsel .... The power of a court over members of its bar is at least as great as its authority over litigants.").
"Because inherent powers are shielded from direct democratic controls, they must be exercised with restraint and discretion." Roadway Express, 447 U.S. at 764, 100 S. Ct. 2455. Accordingly, where the conduct of an attorney as an advocate for his client is at issue, the Second Circuit generally requires a finding of "bad faith" for the imposition of sanctions under the inherent power doctrine. Teamsters, 948 F.2d 1338, 1345 (2d Cir.1991) ("this Court, in recognizing the need for restraint, has always required a particularized showing of bad faith to justify the use of the court's inherent power.").
Just as with § 1927, discussed in Part II.C.1., I am not prepared to hold that in failing to advise Class Counsel and the Court of the rescission of Interim Order 47, Corporation Counsel acted in bad faith in its role as advocate for the NYPD. However, the Second Circuit does not condition the imposition of attorney's fees under the trial court's inherent power when attorney misconduct is not related to the course or substance of a litigation, but is rather a "negligent or reckless failure to perform his or her responsibility as an officer of the court." United States v. Seltzer, 227 F.3d 36, 41 (2d Cir.2000).
In Seltzer, the Second Circuit drew a distinction, crucial to the case at bar, between an attorney's conduct "that is integrally related to the attorney's role as an advocate for his or her client, 227 F.3d at *503 40, and the conduct expected of an attorney as an officer of the court. Bad faith is a necessary prerequisite where courts impose sanctions "by reason of [an attorney's] excesses in conduct of the sort that is normally part of the attorney's legitimate efforts at zealous advocacy for the client." Id. Thus when a district court imposes sanctions for behavior by an attorney in "the actions that led to the lawsuit.. [or] conduct of the litigation," or actions "taken on behalf of a client, the district court must make an explicit finding of bad faith." Id. at 41-42. However, the Second Circuit continued in Seltzer, "when the district court invokes its inherent power to sanction misconduct by an attorney that involves that attorney's violation of a court order or other misconduct that is not undertaken for the client's benefit, the district court need not find bad faith before imposing a sanction under its inherent power." Id. at 42 (emphasis added). This distinction invests a district court with the "power to police the conduct of attorneys as officers of the court, and to sanction attorneys for conduct not inherent to client representation." Id. Accordingly, a district court may sanction attorneys' conduct "which interferes with the court's power to manage its calendar and the courtroom without a finding of bad faith." Id.
In Seltzer, a criminal case, the district court, invoking its inherent power, fined the defense attorney for an unexplained and unapologetic tardiness in returning to the courtroom after the jury had arrived at a verdict, leaving the trial judge, prosecutors, defendant and jurors collectively cooling their heels. The attorney appealed on the ground, inter alia, that "there is no indication of bad faith on her part, and bad faith is required prior to imposition of a sanction pursuant to the inherent powers of the court." 227 F.3d at 37. The Second Circuit rejected that contention, on the basis of the distinction just noted,[7] a distinction it reasserted in In re Pennie & Edmonds LLP, 323 F.3d 86, 93 (2d Cir. 2003) ("Noting that the conduct at issue was not `undertaken as part of [the lawyer's] role in representing her client,' ... we ruled [in Seltzer] that in such circumstances a sanction may be justified `absent a finding of bad faith ...'").[8]See also Richard A. Leslie Company v. Birdie, LLC, 2007 WL 4245847 at *5 (S.D.N.Y. 2007) (applying Seltzer distinction to impose sanctions on plaintiffs attorney for being "grossly negligent" in engaging in "radio silence," failing to communicate with opposing counsel or the court for months).
In the case at bar, it cannot be said that Corporation Counsel's conduct in failing to advise Class Counsel and the Court of the rescission of Interim Order 47 was "undertaken for the client's benefit." Corporation Counsel's client, the NYPD, and the taxpayers who fund it derived no benefit from Corporation Counsel continuing to litigate the validity and implementation of an Interim Order which had ceased to exist 17 months before. Quite the contrary: Corporation Counsel's indulgence in meaningless litigation imposed a cost on their client, it did not confer a profit. I conclude without difficulty that Corporation Counsel's conduct constitutes a quintessential example of "neglect or reckless failure to perform [their] responsibility as an officer of the court" to notify opposing counsel and this Court of a material *504 change in the underlying litigated facts, a particularly egregious failure when one considers Corporation Counsel's belated notification of the replacement of Interim Order 47 was made inadvertently, not intentionally. The Court is left to wonder when, if ever, Corporation Counsel would have chosen to reveal the replacement of the Order if Class Counsel had not specifically inquired about a possible replacement in their August 19, 2008 letter to Corporation Counsel.
In these circumstances, and in the exercise of the Court's inherent power, I impose a sanction upon the office of the Corporation Counsel which requires that office to pay Class Counsel's fees and expenses from April 13, 2007, the date Interim Order 47 was rescinded, to September 18, 2008, the date Corporation Counsel told Class Counsel of the rescission, to the extent that such fees and expenses would not have been incurred if Corporation Counsel had told Class Counsel of the Order's rescission when it occurred.[9] To recover on this ground, Class Counsel must demonstrate that the allocation is sound. To the extent they do so, the resulting award of fees and expenses will not be subject to reduction on a Hensley rationale of partial success.
D. The Plaintiff Class's Additional Claim for Equitable Relief
As noted in Part I, the plaintiff class couples its present motion for attorney's fees with a request, addressed to the Court's equitable powers, that the NYPD be directed "to give notice to plaintiff class counsel and the court of any decision to withdraw Interim Order 22 or to substitute a new policy concerning the videotaping or photographing of political activity for that set forth in Interim Order 22."
I agree with Class Counsel that an order of some sort is justified by the fact that neither Class Counsel nor the Court were notified that Interim Order 47 had been withdrawn, a failure of responsibility ascribable more to Corporation Counsel than the NYPD. The wording of an order suggested by Class Counsel is problematic, because it could be read to require the NYPD to give Class Counsel (and the Court) notice of a decision or policy being formulated within the NYPD hierarchy and not yet promulgated or made effective. It would not be appropriate to have Class Counsel given notice and the concomitant ability to interject their views at such a stage in the process. However, if after the date of this opinion the NYPD promulgates and makes effective a new or revised order, directive or policy which alters, modifies or has any effect upon the sort of police conduct and activity which forms the subject matter of this action and is governed by the Handschu Guidelines, the NYPD or Corporation Counsel must give Class Counsel written notice of its substance within ten calendar days of the effective date of the new order, directive or policy. If the NYPD is of the view that such disclosure should not be made for security reasons or other concerns, the requisite notice must be made to this Court within the same time frame for examination in camera. This paragraph sets forth the Court's ORDER in response to the claim of the plaintiff class for additional equitable relief.
III. CONCLUSION
For the foregoing reason, the motion of the plaintiff class for an award of attorney's *505 fees is GRANTED. The amount to be awarded will be the subject of further submissions.
Class Counsel are directed to file and serve, on or before February 12, 2010, a claim for attorneys' fees and expenses in an amount or amounts consistent with this Opinion. If Counsel claim amounts under both 42 U.S.C. § 1988 and the Court's inherent power, they must avoid double counting. The Court will enforce the Second Circuit's requirements for court-ordered compensation for attorneys:
Hereafter, any attorneywhether a private practitioner or an employee of a non-profit law officewho applies for court-ordered compensation in this Circuit for work done after the date of this opinion must document the application with contemporaneous time records. These records should specify, for each attorney, the date, the hours expended, and the nature of the work done.
New York State Association for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1148 (2d Cir.1983).[10]
The NYPD and Corporation Counsel are directed to file and serve opposing papers as to the amounts claimed on or before February 26, 2010. Class Counsel may, if so advised, file and serve reply papers on or before March 5, 2010. If the Court desires oral argument, counsel will be notified.
The motion of the plaintiff class for additional equitable relief is GRANTED in the manner specified in Part II.D. of this opinion.
It is SO ORDERED.
NOTES
[1] This portion of the discussion in text is taken from an earlier opinion and order, reported at 2009 WL 666940 (S.D.N.Y. March 13, 2009), and reproduced here for the sake of continuity.
[2] The system by which the NYPD numbers its Interim Orders is baffling, but not material to the issues.
[3] The manner in which the original Handschu Guidelines morphed into the Modified Handschu Guidelines, or "Modified Handschu" as they are sometimes called, is summarized in Handschu VIII, 2007 WL 1711775, at *4. In this opinion, I will henceforth refer to the present version as "the Handschu Guidelines" or "the Guidelines." It should also be noted that the Modified Handschu Guidelines were incorporated into the text of the NYPD Patrol Guide and are sometimes referred to as "the NYPD Guidelines."
[4] "Halal" is an Arabic term that is widely used to designate food seen as permissible according to Islamic law. It is the opposite of "Haram." Haram food has the same significance for Muslims as Kosher food does for Jews.
[5] This concept of legal relationship alteration through behavior modification finds support in Farrar v. Hobby, 506 U.S. 103, 113 S. Ct. 566, 121 L. Ed. 2d 494 (1992), upon which the NYPD places a mistaken reliance. Farrar held that a civil rights plaintiff who recovered a judgment for nominal damages of one dollar was a "prevailing party" under the fee-shifting provisions of § 1988 because "[a] judgment for damages in any amount, whether compensatory or nominal, modifies the defendant's behavior for the plaintiff's benefit by forcing the defendant to pay an amount of money he otherwise would not pay," Id. at 113, 113 S. Ct. 566. So in the case at bar: the orders in Handschu VIII and Handschu IX force the NYPD to respond to possible future contentions by the plaintiff class that its policies violate the Guidelines, and to submit to discovery in aid of such a challenge. Farrar went on to hold that although the plaintiff was a "prevailing party," a de minimis victory did not justify the award of his attorney's fees: a separate question, which does not arise in this case.
[6] See also Sassower v. Field, 973 F.2d 75, 80-81 (2d Cir.1992) (inferring and upholding district court's "inherent authority" as proper alternative grounds to impose sanctions against pro se litigant for vexatious and oppressive tactics where section 1927 and Rule 11 would not apply to non-lawyer); Bowler v. United States I.N.S., 901 F. Supp. 597, 606 n. 5 (S.D.N.Y.1995) (acknowledging that sanctions under inherent power doctrine would have also been appropriate in case where court used restraint and thus chose to apply section 1927 instead). Sassower used the phrase "inherent authority." The more frequently used phrase, which of course means the same thing, is "inherent power."
[7] The court of appeals in Seltzer remanded the case to the district court for additional factual development with respect to the attorney's conduct. In the instant case, no further development of the facts is necessary.
[8] In re Pennie turned upon the proper application of Rule 11. The Pennie court distinguished Seltzer for that reason.
[9] For example, it would seem that any post-April 13, 2007 work by Class Counsel in preparing for or seeking to compel discovery into the NYPD's implementation of the then non-existent Interim Order 47 would fall within this compensable category.
[10] The Second Circuit decided Carey in 1983, a year so far removed from the technological, electronic and computerized marvels of the present day that it evokes images of Dickensian scriveners perched on high stools making entries with quill pens. Cases following Carey have recognized the changing technology and allow the amount and purpose of attorneys' time to be proved by artifacts such as computer-generated printouts or summaries. However, such proof must be accompanied by affidavits or other evidentiary material showing that the printouts are based upon or derived from contemporaneous records which are accurately reflected in the printouts or summaries.
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91 N.J. Super. 167 (1966)
219 A.2d 529
TUCKERTON BEACH CLUB, A CORPORATION NOT FOR PECUNIARY PROFIT OF THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
CLARENCE H. BENDER AND IRENE O. BENDER, HIS WIFE, CLIFFORD W. PRICE AND MARGARET JANE PRICE, HIS WIFE, HARRY N. LUTZ AND HAZEL LUTZ, HIS WIFE, DEFENDANTS-APPELLANTS.
Superior Court of New Jersey, Appellate Division.
Argued April 25, 1966.
Decided May 10, 1966.
*168 Before Judges SULLIVAN, LEWIS and KOLOVSKY.
Mr. Laurence C. Stamelman argued the cause for appellants (Messrs. Stein & Stamelman, attorneys).
Mr. John Jay Mangini argued the cause for respondent (Messrs. Campbell, Mangini, Foley & Lee, attorneys; Mr. Michael J. Cernigliaro, on the brief).
SULLIVAN, S.J.A.D.
This case, in essence, involves the validity of certain restrictions and covenants contained in the deeds of some 500 property owners in a development known as Tuckerton Beach, Ocean County, New Jersey.
*169 The covenants and restrictions are as follows:
"All property owners in this development are required to be members of a property owners' association known or to be known as `Tuckerton Beach Club' or similar name and to faithfully abide by its rules. No sale, resale or rental of any property in Tuckerton Beach shall be made to any person or group of persons who are, have been, or would be disapproved for membership by the said club.
Being a private club, the Tuckerton Beach Club shall make such rules as it deems necessary pertaining to persons eligible for membership and any other rules or regulations it chooses.
The Tuckerton Beach Club shall each year collect from its bona fide member lot owners or lot lessees the sum of Twenty Five ($25.00) Dollars per lot owned or leased by each member, except as modified by Charter membership privilege as hereinafter defined.
One half the yearly charges thus made are to be paid yearly to Tuckerton Beach, a corporation, the beach owners, as yearly consideration and payment for the use of the Club House and bathing beach and lagoon to be leased to the Tuckerton Beach Club.
The use of the Club House and bathing beaches designated on plan of Tuckerton Beach are for the exclusive use of members in good standing of the Tuckerton Beach Club and/or guests, and/or tenants of such members.
The Tuckerton Beach Club shall lease on long term the bathing beaches, Club House area and Club House designated on plan of Tuckerton Beach, from the owners of said beaches, areas and buildings.
* * * * * * * *
All covenants contained herein are to run with the land and shall be binding on all parties and persons claiming under them until January 1, 2000, at which time the said covenants shall automatically extend for an additional period of fifty (50) years, unless by vote of the majority of the members of the Tuckerton Beach Club it is agreed to change said covenants in whole or in part."
Under the original by-laws of the club, the membership committee, consisting of three club members, had absolute discretion to admit or reject any application for club membership. In July 1964, during the pendency of the present suit, the club adopted or attempted to adopt an amendment to the by-laws which would make merely a properly completed application to the club and the payment of the first year's dues the sole requirement for membership.
The Tuckerton Beach development was commenced in 1955 and continued until 1960 when the various developers went into bankruptcy. In 1961 a group of property owners took *170 over the club and since then have attempted to revitalize the project. It is asserted that the success or failure of the club and its ability to furnish beach facilities, club house and other improvements, depend on each property owner in the development being required to belong to the club and pay the annual dues specified in the covenants and restrictions set forth in the deeds. When defendants refused to become members of the club and to pay the annual dues of $25, the instant suit was commenced to enforce the aforesaid deed provisions. Defendants counterclaimed to have said provisions declared void.
The trial court held that the covenants and restrictions under the original club by-laws would be clearly void. The court also expressed doubts as to the efficacy of the July 1964 attempted amendment. However, the court determined that it would declare the deed covenants and restrictions to be valid "provided" that plaintiff club within 60 days amended its constitution and by-laws to provide that admission to the club could be had by anyone who filed an application and paid the first year's dues; "membership shall not in any wise be conditioned upon any vote on any other factor or any approval by any membership committee or otherwise." This was done, and a final judgment was then entered declaring the covenants and restrictions in the deed to be valid and binding and requiring defendants to pay to plaintiff club the sum of $25 per year for each year since 1961.
We conclude that the covenants and restrictions are void on their face. They prohibit sale, resale or rental to anyone who "would be disapproved for membership" in the club. They provide that the club shall make such rules as it deems necessary "pertaining to persons eligible for membership." Manifestly, these provisions indicate that the property may be conveyed only to persons who would be approved for membership and eligible for membership under such rules as the club might in its discretion see fit to adopt. These provisions, as written, contain an unreasonable restraint on alienation, are against public policy and are void. Mountain Springs Association of New Jersey, Inc. v. Wilson, 81 *171 N.J. Super. 564 (Ch. Div. 1963). The amendments attempted in 1964 while suit was pending, and in 1965 pursuant to the court's ruling, cannot breath life into them. The provision requiring payment of $25 annual dues is so inextricably interwoven with the invalid restraints upon alienation that it must likewise fall.
The judgment herein in favor of plaintiff is reversed and the matter remanded for entry of judgment in favor of defendants declaring the covenants and restrictions in question to be null and void. No costs on this appeal.
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219 A.2d 110 (1966)
Calvin DUNCAN, Jr., Appellant,
v.
UNITED STATES, Appellee.
Calvin DUNCAN, Jr., Appellant,
v.
DISTRICT OF COLUMBIA, Appellee.
Nos. 3856, 3857.
District of Columbia Court of Appeals.
Argued March 7, 1966.
Decided April 28, 1966.
*111 Peter R. Sherman, Washington, D. C. (appointed by this court), for appellant.
Allan M. Palmer, Asst. U. S. Atty., with whom John C. Conliff, Jr., U. S. Atty., and Frank Q. Nebeker and Henry J. Monahan, Asst. U. S. Attys., were on the brief, for appellee in No. 3856.
David P. Sutton, Asst. Corporation Counsel, with whom Chester H. Gray, Corporation Counsel, Milton D. Korman, Principal Asst. Corporation Counsel, and Hubert B. Pair, Asst. Corporation Counsel, were on the brief, for appellee in No. 3857.
Before HOOD, Chief Judge, and QUINN and MYERS, Associate Judges.
QUINN, Associate Judge:
Appellant was convicted of disorderly conduct under Code 1961, § 22-1107 and of simple assault under Code 1961, § 22-504. At the trial before the court sitting without a jury the arresting officer testified that he had just ordered a group of juveniles of both sexes to move off the corner of Rhode Island Avenue and First Street, N.W., when appellant and a companion approached. Appellant stopped and looked around and the officer also ordered him to move on. Appellant walked away reluctantly and when he was about five feet from the officer, the latter heard him remark, in a fairly loud voice, "No black s___ o___ b___, m___ f___ cop is going to chase me off the corner." Appellant's back was to the officer and the officer testified that he did not know whether appellant was addressing him or the companion.
Upon hearing the obscene remarks, the police officer placed appellant under arrest on a charge of disorderly conduct. As he put his hands on appellant in order to effectuate the arrest, appellant swung at him, striking him in the shoulder. A crowd gathered and a melee followed during which the officer's hand was bitten by appellant. The officer admitted that he was holding the collar of appellant's coat rather tightly at the time.
Testifying in his own behalf, appellant admitted that he used "profane" words, but stated that they were not spoken to or about the officer. He claimed that they were used in reference to a dance to which he was not going. He further testified that he tapped the officer on the shoulder in order to get him to release the grip on his neck and that he bit the officer because he was being choked.
The trial court found appellant guilty of both charges and this appeal followed. Appellant seeks reversal of the convictions *112 contending that an essential element of the disorderly conduct charge was lacking, that his arrest was thus made without probable cause, and that consequently he had a right to use reasonable force to resist the unlawful arrest.
The disorderly conduct statute, Code 1961, § 22-1107, under which appellant was charged and convicted, provides that:
"* * * [I]t shall not be lawful for any person or persons to curse, swear, or make use of any profane language or indecent or obscene words, or enage in any disorderly conduct in any street, avenue, alley, road, highway, public park or inclosure, public building, church, or assembly room, or in any other public place, or in any place wherefrom the same may be heard in any street, avenue, alley, road, highway, public park or inclosure, or other building, or in any premises other than those where the offense was committed * * *."
Although the statute, by its terms, requires only a showing that profane, indecent or obscene words were used or heard in a public place, appellant argues that a third element circumstances which may tend to incite a breach of the peace must be found before a conviction can result. He contends that prior decisions of this court[1] reviewing convictions under the statute considered the "circumstances" element; that the police should not be given the power to arrest for the use of profanity regardless of the circumstances; and that to allow profanity to be an offense per se would raise constitutional questions under the free speech and due process clauses of the Constitution.
As to this last point, the Supreme Court of the United States has stated that lewd, profane and obscene words are beyond the protection of the First Amendment. Chaplinsky v. State of New Hampshire, 315 U.S. 568, 62 S. Ct. 766, 86 L. Ed. 1031 (1942). Moreover, disorderly conduct is generally held to embrace those actions or words which tend to corrupt the public morals or outrage the sense of public decency, 2 Wharton, Criminal Law and Procedure § 805, and it is not limited to those acts which tend to breach the peace or cause an actual disturbance. City of Saint Paul v. Morris, 258 Minn. 467, 104 N.W.2d 902 (1960), cert. denied 365 U.S. 815, 81 S. Ct. 696, 5 L. Ed. 2d 693 (1961). It may well be that Section 22-1107 is violated when indecent or obscene words are uttered in a public place where they might be heard by others even though they would not be likely to cause a breach of the peace. But we need not decide that now, for assuming, without deciding, that appellant's contention has merit, we believe the circumstances present in this case were such that a breach of the peace might have been incited by appellant's words.
It is a reasonable inference from the evidence presented that the obscene words spoken by appellant in a fairly loud voice, about five feet away from the officer, were meant for his ears even if not spoken directly to him. As such they were insulting, degrading, abusive, and fighting words an invitation to trouble and a breach of the peace. That they were addressed to or about a police officer does not alter the situation. Mayle v. District of Columbia, D.C.Mun.App., 168 A.2d 398 (1961); City of St. Petersburg v. Calbeck, 121 So. 2d 814 (Fla.1960); Elmore v. State, 15 Ga.App. 461, 83 S.E. 799 (1914); City of Saint Paul v. Morris, supra; People v. Pleasant, 23 Misc. 2d 367, 122 N.Y.S.2d 141 (1953); People v. Fenton, 102 Misc. 43, 168 N.Y.S. 725 (1917); Pavish v. Meyers, 129 Wash. 605, 225 P. 633, 34 A.L.R. 561 (1924); see Annot. 34 A.L.R. 566 (1925). As stated in Pavish v. Meyers, supra, 225 P. at 634, 34 A.L.R. at 563:
"* * * although it is the duty of a peace officer to preserve the peace, yet *113 he is like other human beings and under great stress of abuse may forget his official duty and fight back. He does not lose his human nature simply because he wears a star. But if he, for the time being, observe the injunction of his oath, the offense still tends to breach the peace, because, once off duty and being a private citizen, he may resent the abuse and thus violate the peace. * * *"
We thus are of the opinion that appellant's arrest was legal and that his convictions must be affirmed.
One further matter must be discussed. Appellant sought production of a police report under the Jencks Act, 18 U.S. C.A. § 3500. As he failed to lay a proper foundation by showing that the words in the statement were those of the government witness, the court did not err in refusing to order its production. 18 U.S.C.A. § 3500 (e)(2).
Affirmed.
NOTES
[1] Heilman v. District of Columbia, D.C. Mun.App., 172 A.2d 141 (1961); Morris v. District of Columbia, D.C.Mun.App., 31 A.2d 652 (1943).
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242 Md. 307 (1966)
219 A.2d 62
BOLLINGER
v.
BOLLINGER, ET AL.
[No. 278, September Term, 1965.]
Court of Appeals of Maryland.
Decided April 26, 1966.
The cause was argued before PRESCOTT, C.J., and HAMMOND, MARBURY and McWILLIAMS, JJ., and CARTER, J., Chief Judge of the Second Judicial Circuit, specially assigned.
Donald C. Sponseller, with whom were Stanford Hoff and Sponseller & Hoff on the brief, for appellant.
No brief and no appearance for appellees.
McWILLIAMS, J., delivered the opinion of the Court.
The late Ring Lardner, were he writing this opinion, might have begun it by saying that although the Bollinger boys were not very congenial brothers they were not very congenial partners either. George (appellant) is the youngest. Stanley is the oldest and Francis fits somewhere in between. They are the appellees. The three brothers have spent their lives in the vicinity of Westminster, where, until 1958, they farmed, operated orchards and did grading and excavating work under informal and apparently unsatisfactory cooperative arrangements.
On 1 October 1958 they executed a formal partnership agreement which had been prepared for them by counsel employed for the purpose. This agreement required each to contribute *309 $20,000 in capital, gave each a one-third interest in the partnership and provided for the distribution of profits in equal shares. Among other things, each partner was given the right to withdraw from the partnership upon giving thirty days' notice to the others.
By common consent George devoted most of his time to the farms and the cattle but from time to time he helped with the excavating. Stanley handled all of the grading and excavating. Francis did some farm work but for the most part he helped Stanley.
It was not long before the partnership began to fall apart. On 9 April 1960 George served on Stanley and Francis notice of his withdrawal. He told them he would "be forced to take definite action" unless they settled with him before the expiration of 30 days. The wording of the notice reflects the depths of his bitterness and disillusionment. "Since everything I say is a lie before I say it and regardless of how right I am I'm always wrong * * * [it] makes life here seem like a living hell" and, he continued, "I do not intend to live under [it] for the rest of my life."
In addition to "many slanderous things" he accused them, in the notice, of "dishonesty in dealing with each other." He documented this charge with a recital of two revealing incidents. Francis told him, he went on, "that Stanley and Edna [Stanley's wife] were a hindrance to the Company and should be eased out * * * that Edna's gossip was bad for the Company and that Stanley * * * [did] very little work." He said Francis suggested taking over as manager and that he (Francis) could "make a lot more money elluminating Stanley's bludering and stupidity." He said he told Francis that if he was so smart he ought to be able to "improve and profit the company without degrading or elluminating Stanley."
Stanley's proposal, on the other hand, was somewhat more direct and unsubtle. It seems that Francis "bought the Blizzard property and worked at it solely to profit himself." George said, "Stanley and Edna came to me and told me that while Francis had violated the partnership and was profiting himself by it, that I and Stanley should take unknowingly to Francis large sums of money and split between us." George claims he *310 told Stanley that "two wrongs [did not] make a right, and * * * [that he] refused to have any part of this."
George concluded his notice by saying he thought the "fair and reasonable value" of his interest in the partnership was $35,000, which, in addition to his life insurance policy and his pickup truck, he was ready to accept.
Stanley's reaction was short and to the point. He told George he was crazy. A few days later Stanley and Francis came to George's house and took possession of all of the books and records, which had been kept for the partnership by George's wife, Ruth. According to George, Francis said "if you walk out now all the farms will go to ruin" and asked him if he would "stay the summer." George agreed to stay until October and he testified he continued working as before. Stanley was sharply contradictory. He testified that after 9 April 1960 George "contributed very little, if any" to the business. Francis conceded "he [George] did some towards it."
In October George discontinued his efforts in behalf of the partnership and became a salesman in his brother Edward's real estate business. There is testimony that he tried, on many occasions, to effect a settlement with Stanley and Francis. They usually agreed that something ought to be done but they never seemed to get around to it. There was some talk of paying him $18,000 but it is not clear that a firm offer ever was made. In the summer of 1962 George began to realize that they would never settle with him unless he applied pressure. He employed counsel who, late in September, wrote to the others suggesting the likelihood of litigation unless an amicable settlement could be effected.
Counsel's letter having been ignored by Stanley and Francis, George's bill in equity was filed on 4 March 1963. In the prayer for relief he asked that his brothers be enjoined from removing or destroying any of the partnership records, that an auditor be appointed to examine the records and accounts and report thereon and that a judgment be entered against them for the amount due him "together with legal interest from the day payment should have been made" to him. At the suggestion and upon the agreement of counsel, Chief Judge Boylan, on 31 May 1963, appointed Frederick Paul Keppel, a certified public *311 accountant, "to examine into the accounts and records of" Bollinger Brothers. Keppel submitted his report to Judge Boylan on 19 July 1963. It was his opinion that on 9 May 1960, conceded to be the date of dissolution, the net worth of the partnership was $65,979.92.
Early in September 1963, counsel for Stanley and Francis offered George $21,993.31 (1/3 of Keppel's valuation) in exchange for a general release, the dismissal of the equity proceeding and the payment of 1/3 of the court costs and 1/3 of Keppel's charges. George declined the offer and pressed for a hearing on the validity and accuracy of Keppel's report. On 22 January 1964 Judge Boylan heard the testimony of the partners and a number of other witnesses. He died just short of a year later leaving the matter undecided. On 7 June 1965 counsel stipulated that the case be submitted to Judge Edward C. Weant "for a decision upon the testimony heretofore taken before the late Judge James E. Boylan, Jr."
Judge Weant promptly filed an able and comprehensive opinion in which he held that 9 May 1960 was the date of the dissolution of the partnership and that the "partners are entitled to an accounting." He discussed all of the conflicting claims in respect of valuation and found the interest of each partner to be worth $22,326.64. From his order directing the entry of a judgment in favor of George against Stanley and Francis, George has taken this appeal. No brief was filed on behalf of Stanley or Francis.
The first of George's contentions is that Judge Weant incorrectly valued his interest in the partnership. There are many pages of conflicting testimony having to do with the dairy herd, the farm machinery, the crops and the sale of cattle. The same is true in respect of the grading and excavating equipment. Judge Weant observed that the records were not as clear as they might have been and that George made no effort to provide appraisals on his own behalf. The judge adopted Keppel's figures for the construction equipment, the heifers, the crops and the farm machinery. He increased Keppel's valuation of the dairy herd. There was little or no dispute about the other items. For some reason, to us unknown, the interest on a $10,000 savings account was omitted. Otherwise we see no reason to disturb *312 Judge Weant's findings as to valuation. See cases collected in 2 M.L.E., Appeals, § 443 (1960); Smith v. Smith, 78 So. 2d 687 (Fla. 1955); Combs v. Haddock, 11 Cal. Rptr. 865 (1961); Gotta v. Colombero, 138 Cal. App. 2d 676, 292 P.2d 261 (1956).
George's second contention is that he is entitled to interest, from the date of dissolution, on the value of his share in the dissolved partnership. Judge Weant held that he was not entitled to interest because his demand for $35,000 "was the cause for his not being paid more promptly." He indicated that his "exorbitant demand * * * discouraged settlement." We do not agree.
It must be conceded that George was not conspicuously diligent in pressing his claim. On the other hand it cannot be said that he slept on his rights. He kept after his brothers about settling with him but they appear to have been quite adept at putting him off. That he did not file suit against them sooner may very well reflect a diffidence arising out of the fact that he was the youngest and a hope that eventually they would deal justly with their brother.
Assuming, for the sake of argument, that his demand was "exorbitant" it is not at all clear from the evidence that he steadfastly refused to consider anything less than $35,000. On the contrary, there is evidence tending to show that, in desperation and disgust, he was ready at one time to accept $20,000 and would have done so if Stanley and Francis had not insisted on deducting $2,000 for electricity and gasoline which they claimed was paid for by the partnership. There is nothing, prior to September 1963, to indicate that a firm, bona fide offer, in any amount, was ever made. Although George, on at least two occasions, suggested getting together and going over the books so that a figure could be developed and agreed upon, they refused. Indeed there is nothing in the record which indicates an intention on the part of Stanley and Francis to do other than "stand pat" until George might be willing to accept whatever they might feel like paying.
The record does not reveal why counsel, after having made a formal demand on Stanley and Francis in late September 1962, waited until early March 1963 before filing suit. However, *313 since counsel may well have been engaged in attempts to arrive at a satisfactory compromise, perhaps it would not be fair to charge this time against George. The pace accelerated somewhat after suit was filed and within four months Keppel had completed and filed his report. Stanley and Francis did nothing (nor did George) until September when the offer, hereinbefore mentioned, was made. We think George was justified in refusing to settle on the basis proposed.
In the absence of some evidence to the contrary we shall assume that 22 January 1964 was the earliest date which could have been arranged for the hearing before Judge Boylan. Furthermore neither George nor his attorney can be blamed for the delay brought about by Judge Boylan's illness and death. And we can understand that Judge Weant, because of Judge Boylan's unfinished work, may not have been able to take up the case until June 1965. His decision was certainly prompt but we cannot say that George was not justified in taking this appeal which, of course, resulted in further delay. So while it is true that the disposition of this case has been unduly protracted and that George is not altogether blameless in this regard, nevertheless it is undisputed that Stanley and Francis have been and now are in the possession and sole control of the assets of the partnership (including George's 1/3 interest) since April 1960 and are now operating and conducting the business. Nor is it disputed that they have tendered to George neither profits nor interest. George testified he was obliged to pay income taxes on his share of the profits for the year 1960 but that he received none of the income. What may have happened after 1960, in regard to taxes, is not in the record.
Since we have so recently considered the principles of law applicable to the case at bar an extended discussion at this time is unnecessary. As Judge Oppenheimer pointed out, for the Court, in Gianakos, Ex'r v. Magiros, 238 Md. 178, 184-85, 208 A.2d 718 (1965):
"Absent any breach of fiduciary relationship, it is clear under the Act [The Uniform Partnership Act, Code, Art. 73 A] that Thomas, as surviving partner, had the right to continue the business without liquidation of the partnership affairs, under Section 41 *314 (2) of the Act, with his own consent as representative of the deceased partner (George's estate of which Thomas was administrator); that such consent was given, although not in formal terms, by Thomas as administrator to Thomas as surviving partner; that by virtue thereof, under § 41 (3), Thomas, as surviving partner, had the same rights as if a formal assignment had been made; and that, there being no agreement to the contrary, under § 42 of the Act, Thomas' rights as George's administrator were to receive as an ordinary creditor the value of George's interest in the dissolved partnership, with legal interest, or at Thomas' option, as George's representative, instead of interest on the claim, the profits attributable to the use of the right of George's estate in the property of the dissolved partnership. Sykes, Probate Law & Practice (1956), § 553." (Emphasis supplied.) (The designated sections of the Act were set forth in the footnotes.)
In the case before us George did not give his consent "in formal terms." However, the partnership agreement indicates a clear intention that the remaining partners had the right, at their option, to continue the business, and, in our opinion, this amounts to implied consent. Moreover, George has never objected to their continuing to conduct the business. Since George demanded interest in his prayer for relief the question whether he should receive a share of the profits (if any) in lieu of interest, is not before us.
Something more than simple justice is involved in the allowance of interest. In Hurst v. Hurst, 401 P.2d 232, 236 (Ariz. 1965), the court said: "The reason for allowance of interest or profits on his share to a retiring partner is to hasten the process of `winding up'."
The Oregon court expressed the same thought in slightly different language:
"The option * * * to receive interest or profit on his share while awaiting receipt of this value upon the completion of the winding up of the partnership *315 business is in the nature of a species of compulsion as to those continuing the business in order to hasten its orderly winding up, thereby avoiding the burden to themselves of paying Wikstrom interest or profits for the use of his property." Wikstrom v. Davis, 211 Ore. 254, 315 P.2d 597, 608 (1957).
The case will be remanded so that the order of 9 June 1965 can be modified to reflect (a) the addition to the judgment of one-third of whatever the interest on the savings account shall be determined to be up to 9 May 1960, (b) the allowance of interest from 9 May 1960, and (c) the fixing of the rate of interest at 5% which is the rate established by paragraph 12 of the partnership agreement.
Remanded for modification in conformity with the views expressed in this opinion and as modified, affirmed. Costs to be paid by appellees.
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679 F. Supp. 508 (1988)
Lois P. LACH, Administratrix of the Estate of Ronald T. Lach, Jr., Deceased, as Administratrix and on her own behalf, Plaintiff,
v.
Edward Palmer ROBB, individually and as a Security Police Officer of California University of Pennsylvania; George Parkinson Kyle, individually and as a Security Police Officer of California University of Pennsylvania; Miles Jackson Crago, individually and as a Security Police Officer of California University of Pennsylvania; John P. Watkins, individually and as President of California University of Pennsylvania; California University of Pennsylvania; James Encapera, individually and as a Police Officer of the Borough of California; Charles Rapp, individually and as a Police Officer of the Borough of California; Joseph Dochinez, individually and as Mayor of the Borough of California; and Borough of California, a municipal corporation, Defendants.
Civ. A. No. 87-468.
United States District Court, W.D. Pennsylvania.
February 16, 1988.
*509 *510 Harry S. Cohen, Pittsburgh, Pa., for plaintiff.
Thomas F. Halloran, Sr. Deputy Atty. Gen., Pittsburgh, Pa., for Robb, Kyle, Crago, Watkins and California University of Pennsylvania.
Donald Bebenek, Meyer, Darragh, Buckler, Bebenek & Eck, Pittsburgh, Pa., for Dochinez and Borough of California.
Peter J. Taylor, Pittsburgh, Pa., for Encapera and Rapp.
MEMORANDUM OPINION
TEITELBAUM, District Judge.
On June 20, 1986 Ronald P. Lach, Jr. was stopped by university security officers for motor vehicle violations, fled on foot, and drowned in the Monongahela River. His mother subsequently brought this civil rights action against the three university security officers who allegedly stopped, pursued, and failed to rescue Lach; the university which employed them; and its president; the two municipal police officers who allegedly pursued and failed to rescue Lach; the municipality which employed them; and its mayor.[1] A claim under 42 *511 U.S.C. § 1983 is asserted against the university security officers, the university, its president, the municipal police officers, the municipality, and its mayor.[2] State law claims for wrongful death and survival are asserted against the university security officers, the university president, the municipal police officers, and the mayor; a state law claim for failure to maintain realty is asserted against the university.
Presently before the court are defendants' motions for summary judgment on the § 1983 claims. For the reasons set forth summary judgment will be granted for all defendants on the § 1983 claims and the pendent state law claims will be dismissed without prejudice.
The following facts are not disputed in the record. At approximately 1:00 a.m. on the morning of June 20, 1986 three university security officers stopped Lach for motor vehicle violations. Lach was unable to produce any identification, and it was believed that he had been drinking.
Lach fled on foot and was pursued by the university security officers. During the pursuit, one officer rolled or threw his flashlight at Lach to trip Lach, but the flashlight missed Lach. The university security officers radioed for assistance from the municipal police.
The university security officers followed Lach to an embankment above the Monongahela River. Lach either climbed or fell down the embankment.
The university security officers remained on the embankment. When the municipal police officers arrived on the scene, Lach was already in the river.
All the officers shouted to Lach to return and shone their lights on him. The officers radioed for a river rescue boat and to stop river traffic.
The cause of death was drowning. Lach's blood alcohol level was .17.
The Municipal Defendants
The municipal police officers move for summary judgment on the § 1983 claim contending there is no evidence that they violated Lach's constitutional rights.
Fed.R.Civ.P. 56(c) mandates the entry of summary judgment, after an adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 321-24, 106 S. Ct. 2548, 2552-53, 91 L. Ed. 2d 265, 273 (1986). A party moving for summary judgment bears the initial burden of showing or pointing out to the court that there is an absence of evidence to support the non-moving party's case. At 322-26, 106 S.Ct. at 2553-54, 91 L.Ed.2d at 274-275. The non-moving party then must show evidence sufficient to establish the existence of essential elements of its case on which it will bear the burden of proof at trial. At 321-24, 106 S.Ct. at 2552-53, 91 L.Ed.2d at 273. The non-moving party can make this showing through depositions, answers to interrogatories, admissions and affidavits. At 324-26, 106 S.Ct. at 2554, 91 L.Ed.2d at 275. The non-moving party cannot rely on the mere allegations of its pleadings. At 324-26, 106 S.Ct. at 2554, 91 L.Ed.2d at 275.
The standard for summary judgment mirrors the standard for a directed verdict. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-51, 106 S. Ct. 2505, 2511, 91 L. Ed. 2d 202, 213 (1986). The inquiry before the court is whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law. At 251-53, 106 S.Ct. at 2512, 91 L.Ed. 2d at 214. If there is a mere scintilla of evidence, or if the evidence is merely colorable or is not significantly probative, summary judgment may be granted. At 247-51, 106 S.Ct. at 2510-11, 91 L.Ed.2d at 212-213.
*512 Section 1983 makes actionable only deprivations of constitutional rights. Jackson v. Byrne, 738 F.2d 1443, 1445 (7th Cir.1984). There is no constitutional right to adequate police protection, absent some special relationship between the police and the injured party. Estate of Bailey by Oare v. County of York, 768 F.2d 503, 508-511 (3d Cir.1985). The fact that Pennsylvania law imposes a duty on a police officer to make a reasonable effort to rescue a person in danger, Altamuro v. Milner Hotel, Inc., 540 F. Supp. 870, 877 n. 9 (E.D.Pa.1982) cannot create a constitutional right.
A special relationship, giving rise to a constitutional right to adequate police protection, may be created if the police put a person in a position of danger or if the police know that the person, as distinguished from the public at large, faces a special danger. Estate of Bailey, 768 F.2d at 510. For example, a special relationship, based on the police putting a person in a position of danger, arose when police arrested the driver of a car and abandoned the passenger children thereby placing the children in a position of danger. Id. at 510 citing White v. Rochford, 592 F.2d 381 (7th Cir.1979). A special relationship, based on knowledge that the person, as distinguished from the public at large, faces a special danger, arose when an agency knew that a child had been abused by the mother's lover, but nevertheless returned the child to the mother's custody without insuring that the mother's lover did not have access to the child. Id. at 510. See also Lowers v. City of Streator, 627 F. Supp. 244 (N.D.Ill.1985) (police knew rapist would repeat crime; held, special relationship); Jackson v. Byrne, 738 F.2d 1443 (7th Cir. 1984) (city failed to rescue children from burning home; held, no special relationship).
Although plaintiff argues that the municipal police officers placed Lach in a position of danger thereby creating a special relationship with Lach, there is no evidence to support this argument. It is not disputed that the municipal police officers did not stop Lach, did not arrest Lach, and did not pursue Lach as he fled on foot. It is not disputed that although the municipal police officers were called to assist in the pursuit of Lach, by the time the municipal police officers arrived Lach was already in the river. It is evident that since the municipal police officers arrived after Lach was in the river, they could not have caused him to go into the river.
Although plaintiff also argues that the municipal police officers knew that Lach faced a special danger, there is no evidence to support this argument. Of course the municipal police officers knew that Lach was floundering in the river. But a comparison with the decided cases discussed above makes it clear that this is not the kind of knowledge of a special danger that gives rise to a special relationship.
There is no evidence that there was a special relationship between the municipal police officers and Lach. A special relationship between the municipal police officers and Lach is an essential element of plaintiff's claim that the municipal police officers violated Lach's constitutional rights by failing to rescue Lach. Because plaintiff cannot show sufficient evidence to raise a jury question on an essential element of her constitutional claim, the municipal police officers are entitled to summary judgment on the § 1983 claim.
The municipality and the mayor move for summary judgment on the § 1983 claim contending that since there is no evidence that the municipal police officers violated Lach's constitutional rights, there is no basis for municipal liability under § 1983.
If there is no underlying constitutional tort, then there can be no liability of the municipality or its supervisory officials. City of Los Angeles v. Heller, 475 U.S. 796, 799, 106 S. Ct. 1571, 1573, 89 L. Ed. 2d 806 (1986). Because there is no evidence that the municipal police officers violated Lach's constitutional rights, the municipality and the mayor are entitled to summary judgment on the § 1983 claim as well.
The University Defendants
The university moves for summary judgment contending that suit against it in federal *513 court is barred by the eleventh amendment.
Unless the state consents, the eleventh amendment bars a civil rights suit brought against a state in federal court. Laskaris v. Thornburgh, 661 F.2d 23, 25 (3d Cir.1981). Pennsylvania has expressly withheld consent to suit. Id. The eleventh amendment's bar extends to suits brought against departments and agencies of a state having no existence apart from the state. Id.
The former Pennsylvania state colleges were state agencies, immune from suit in federal court under the eleventh amendment. Skehan v. Board of Trustees of Bloomsburg State College, 538 F.2d 53, 62 (3d Cir.), cert. denied, 429 U.S. 979, 97 S. Ct. 490, 50 L. Ed. 2d 588 (1976); Samuel v. University of Pittsburgh, 375 F. Supp. 1119, 1126 (W.D.Pa.1974), aff'd in part and rev'd in part, 538 F.2d 991 (3d Cir. 1976). In 1983 Pennsylvania created the State System of Higher Education which transformed the former state colleges into state universities. 24 P.S. § 20-2002-A(a). The State System of Higher Education is a state agency immune from suit in federal court under the eleventh amendment. Skehan v. State System of Higher Education, 815 F.2d 244, 247 (3d Cir.1987). It follows that the constituent parts of the State System, the state universities, also share eleventh amendment immunity. Id. citing with approval Wynne v. Shippensburg University, 639 F. Supp. 76 (M.D.Pa.1985). Because the university is immune from suit in federal court under the eleventh amendment, it is entitled to summary judgment on the § 1983 claim.
The university president moves for summary judgment on the § 1983 claim contending there is no evidence he violated Lach's constitutional rights.
Plaintiff alleged the university president failed to provide training and supervision in river rescue and in proper apprehension of suspects. There is no evidence that the university president had contemporaneous knowledge of the pursuit and drowning of Lach or knowledge of a prior pattern of similar incidents.
In this Circuit a supervising public official has no affirmative constitutional duty to train, supervise and discipline subordinates so as to prevent violations of constitutional rights. Chinchello v. Fenton, 805 F.2d 126, 132-134 (3d Cir.1986). While supervising public officials may not in any way authorize, encourage, or approve constitutional torts, they have no affirmative constitutional duty to train, supervise or discipline so as to prevent such conduct. Id. at 133 citing Black v. Stephens, 662 F.2d 181 (3d Cir.1981), cert. denied, 455 U.S. 1008, 102 S. Ct. 1646, 71 L. Ed. 2d 876 (1982).
Other Circuits which have held that a failure to train or supervise may state a § 1983 claim have required both 1) contemporaneous knowledge of the offending incident or knowledge of a prior pattern of similar incidents, and 2) circumstances under which the supervisor's inaction could be found to have communicated a message of approval to the offending subordinate. Id. at 133. Plaintiff's proferred evidence fails to satisfy the first of these essential elements of § 1983 liability.
Because allegations of inadequate training and supervision fail to state a § 1983 claim against a supervisory official, the university president is entitled to summary judgment on the § 1983 claim.
The university security officers move for summary judgment on the § 1983 claim contending there is no evidence they violated Lach's constitutional rights, or in the alternative, that they are entitled to qualified immunity.
Plaintiff had alleged the university security officers stopped Lach for motor vehicle violations, Lach fled on foot and the security officers pursued Lach. Plaintiff alleged that in the course of trying to subdue and apprehend Lach, the security officers used "excessive and potentially deadly force." Plaintiff alleged the security officers "cornered" Lach along the riverbank. Plaintiff alleged that "in an attempt to avoid the continuing excessive and potentially deadly force" Lach "fled over the *514 bank" and was "chased out into the river." Plaintiff alleged that "having placed Lach in a perilous position out in the Monongahela River," the security officers took no action to rescue him.
The undisputed facts before the Court present a scenario significantly different from that alleged: as the university security officers were pursuing Lach, one of them grabbed at Lach and later rolled or threw his flashlight at Lach to trip Lach, but missed him. Contrary to plaintiff's allegations of excessive force, the university security officers did not draw weapons, or fire at Lach, or beat Lach, or with the exception of grabbing at Lach, have any physical contact with Lach whatsoever.
The undisputed facts also indicate that the university security officers followed Lach to the riverbank, and that Lach climbed or fell down the embankment to the river. The university security officers remained on the embankment, shone lights on Lach, and shouted to Lach to return to shore. Contrary to plaintiff's allegations that the university security officers placed Lach in a position of danger, Lach placed himself in a position of danger. Lach fled toward the river, and after climbing or falling down the embankment, refused to heed the officers' shouts to return to shore.
Qualified immunity shields government officials performing discretionary functions from civil damages liability as long as their actions could reasonably have been thought consistent with the rights they are alleged to have violated. Anderson v. Creighton, ___ U.S. ___, ___, 107 S. Ct. 3034, 3038, 97 L. Ed. 2d 523, 530 (1987). The relevant inquiry is the objective question whether a reasonable officer could have believed the defendant's action to be lawful, in light of clearly established law. Id. at ___, 107 S.Ct. at 3040, 97 L.Ed.2d at 532.
Here the question becomes whether a reasonable officer could have believed that university security officers' actions throwing a police flashlight at Lach to attempt to trip him as he fled and pursuing Lach to a riverbank and shouting for Lach to return were lawful in light of the constitutional proscription against the use of excessive force and the constitutional obligation to rescue a person whom the state places in a position of danger. Stating the question makes it obvious that it must be answered in the affirmative. Notwithstanding plaintiff's arguments that the university security officers acted with "reckless disregard" or "deliberate indifference" to Lach's rights, based on the undisputed facts before the Court, the university security officers are shielded by qualified immunity.
Because the university security officers have qualified immunity on the § 1983 claim, they are entitled to summary judgment on the § 1983 claim.
Pendent Claims
All defendants are entitled to summary judgment on the § 1983 claims: the municipal police officers because there is no evidence of a constitutional obligation to rescue Lach, the municipality and its mayor because there is no underlying constitutional tort, the university because of the eleventh amendment, the university president because there is no evidence of a constitutional violation, and the university security officers because of qualified immunity. Plaintiff has also asserted pendent state law claims: failure to maintain realty against the university, wrongful death and survival against the university president and the university security officers, and wrongful death and survival against the mayor and municipal police officers.
The eleventh amendment bars pendent state law claims brought against a state or its agencies in federal court. Allegheny County Sanitary Authority v. United States EPA, 732 F.2d 1167, 1173-1174 (3d Cir.1984). Therefore, the eleventh amendment bars the failure to maintain realty claim asserted against the university.
Similarly the eleventh amendment bars pendent state law claims seeking damages against a state official acting in his official capacity brought in federal court. Laskaris v. Thornburgh, 661 F.2d *515 at 25-26. However, the eleventh amendment does not bar pendent state law claims seeking damages against a state official acting in his individual capacity. Id. Because the university president and university security officers are sued in both their official and individual capacities, the eleventh amendment bars the wrongful death and survival actions against them in their official capacities.
Thus, there remains pendent state law claims for wrongful death and survival asserted against the university president in his individual capacity, the university security officers in their individual capacities, the mayor in his official and individual capacities and the municipal police officers in their individual and official capacities.
The decision whether to retain jurisdiction over the remaining pendent state law claim is committed to the sound discretion of the district court. Carnegie-Mellon University v. Cohill, ___ U.S. ___, ___, 108 S. Ct. 614, 618, 98 L. Ed. 2d 720 (1988). In order to decide whether to exercise jurisdiction over pendent state law claims a court should consider and weigh the values of judicial economy, convenience, fairness and comity. Id. In the usual case in which all federal law claims are eliminated before trial, the balance of factors will point toward declining to exercise jurisdiction over the remaining pendent state law claims. Id. at n. 7; see also Weaver v. Marine Bank, 683 F.2d 744, 746 (3d Cir.1982).
In the present case all the federal claims have been eliminated before trial. Moreover, several of the pendent state law claims, because of the eleventh amendment, may only be heard in state court. There is presently pending in state court a wrongful death and survival action against the university. Given this posture, the pendent state law claims will be dismissed without prejudice.
An appropriate order will be entered.
NOTES
[1] Also named as a defendant was the beer distributor which allegedly sold alcoholic beverages to Lach. The action against the beer distributor was dismissed for want of subject matter jurisdiction.
[2] Claims under 42 U.S.C. § 1985(2) and (3) and § 1986 were dismissed for failure to state a claim.
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338 B.R. 862 (2005)
In re Clarence Joseph EBEL, Jr., Debtor.
Clarence Joseph Ebel, Jr., Plaintiff,
v.
Dennis King, Trustee, et al., Defendants.
Bankruptcy No. 90-40360 HRT, Adversary No. 03-1443 HRT.
United States Bankruptcy Court, D. Colorado.
April 28, 2005.
*863 *864 Clarence Joseph Ebel, Jr., Niwot, CO, pro se.
Philip D. Geil, Boulder, CO, for Debtor.
Douglas C. Pearce, II, Tom H. Connolly, Broomfield, CO, John William Barnett, Aurora, CO, L. Jay Labe, Denver, CO, for trustee.
ORDER DENYING PLAINTIFF'S AMENDED COMPLAINT
HOWARD R. TALLMAN, Bankruptcy Judge.
This case comes before the Court on Plaintiffs Amended Complaint. By order dated September 22, 2004, trial of the Amended Complaint was bifurcated under FED. R. BANKR. P. 7042 and FED. R. Civ. P. 42(b). On December 15 and 16, 2004, the Court held a trial as to liability and damages with respect to Dennis King, Trustee. Trial of the Amended Complaint as to the remaining defendants Continental Casualty Co., Fireman's Insurance Co. of Newark, N.J., National Fire Insurance Co. of Hartford, National Fire Insurance Co. of Pittsburgh, Pa., Fireman's Fund Insurance Co., and Liberty Mutual Insurance Co. [the Insurance Company Defendants], has been held in abeyance pending the outcome of this initial trial.
Phillip D. Geil appeared at trial representing Plaintiff Clarence Joseph Ebel, Jr., and Douglas C. Pearce, II, appeared at trial representing Dennis King, Trustee. The Court has reviewed and considered all pleadings filed in this matter as well as evidence and argument presented at trial and is ready to rule.
I. FACTS
This factual recitation necessarily includes only the relevant high points of the legal wrangling that has gone on for nearly twenty years in state court domestic proceedings and for the last fifteen years in the bankruptcy court.
1. In the parties' pre-trial statement, they were apparently able to agree on only the following three stipulated facts:
*865 a. Debtor, together with his wife, Lois Ebel ["Mrs. Ebel"], owned and operated the Haystack Mountain Golf Course and Driving Range ["Haystack"] located in Boulder County, Colorado. On June 19, 1985, Mrs. Ebel filed for divorce in Boulder County District Court [the "State Court"]. On July 15, 1987, the State Court appointed a receiver to operate Haystack.
b. The State Court set a hearing in the divorce proceeding for March 26 and 27, 1990, which was suspended and later continued to June 12, 1990.
c. On June 8, 1990, Plaintiff filed the underlying chapter 7 bankruptcy case [the "Main Case"].
2. The Court finds the following additional facts from the evidence presented at trial and the Court's files.
a. On June 12, 1990, notwithstanding the filing of Mr. Ebel's bankruptcy petition, the State Court proceeded with its final orders hearing in the divorce case captioned In re the Marriage of Lois Ebel and Clarence Ebel, District Court, Boulder County, Colorado, Case No. 85 DR 1206 [the "Domestic Case"] and issued an opinion awarding all of the marital property to Mrs. Ebel on June 14, 1990.
b. Subsequently, in the Main Case, Mrs. Ebel applied for relief from the automatic stay and, on July 18, 1990, Bankruptcy Judge Donald Cordova, entered an order lifting the stay to allow the State Court to enter judgment on it; June 14, 1990 order. Plaintiff did not appeal the bankruptcy court's order lifting the stay.
c. On August 10, 1990, the State Court entered judgment on its final orders. Plaintiff appealed the August 10, 1990, judgment to the Colorado Court of Appeals and on September 9, 1993, the State Court judgment was affirmed.
d. On February 20, 1991, Mrs. Ebel filed adversary number 91-1158 DEC in the bankruptcy court ["Mrs. Ebel's Adversary Case"] against Mr. Ebel and Dennis King [the "Trustee"] seeking an order compelling the defendants to render an accounting and turnover proceeds from operation of Haystack and other marital property.
e. In an order dated June 10, 1994, in Mrs. Ebel's Adversary Case, the bankruptcy court revisited its July 20, 1990, lift of stay order in the Main Case and held that it was void because the State Court proceedings took place in violation of the automatic stay. At the same time, the stay was lifted to allow the parties to return to the State Court and relitigate the property issues.
f. On August 9, 1994, the bankruptcy court vacated the June 10, 1994, order in Mrs. Ebel's Adversary Case. The effect of that vacatur was to reinstate its prior ruling which retroactively lifted the stay to validate the June 12, 1990, proceedings in the State Court. Both the Trustee and Mr. Ebel appealed the August 9, 1994, order to the U.S. District Court which affirmed Judge Cordova's ruling on March 26, 1996. That ruling was, in turn, *866 appealed to the Tenth Circuit Court of Appeals.
g. On July 30, 1997, the Tenth Circuit Court of Appeals rendered an opinion that addressed several issues raised by the bankruptcy court litigation. One of those issues was the validity of the domestic proceedings held on June 12, 1990, and the subsequent order and judgment emanating from those proceedings. The Tenth Circuit reversed and remanded. Among other things, the Tenth Circuit found that the State Court hearing was held in violation of the automatic stay and that the subsequent order dividing the marital property was void.
h. On December 8, 1997, partially in response to the Tenth Circuit decision, the bankruptcy court issued an order holding Mrs. Ebel's Adversary Case in abeyance and directing the parties return to State Court to relitigate the property division issues.
i. Upon retrial of the property issues, the State Court once again awarded the entire marital estate to Mrs. Ebel in a order dated December 9, 1999. That ruling was affirmed by the Colorado Court of Appeals on February 14, 2002, and Mr. Ebel's petition for writ of certiorari to the Colorado Supreme Court was denied on January 27, 2003. The State Court property division order is, therefore, final and no longer subject to appeal.
j. In the course of his administration of the bankruptcy estate, the Trustee received approximately $322,000.00, representing primarily proceeds and rents from the operation of Haystack.
k. On June 27, 1996, while Mrs. Ebel's Adversary Case was still pending, the Trustee entered into a settlement agreement with Mrs. Ebel for the estate to retain approximately $74,400.00 of those funds received by the Trustee and to turn the remaining funds over to Mrs. Ebel. Contemporaneously with the execution of that agreement, the Trustee turned the funds and property over to Mrs. Ebel and executed the associated releases.
l. On August 31, 2000, the Trustee filed his motion to approve that agreement. That motion also included a request that the court authorize abandonment of: 1) any interest in Haystack; 2) all funds received from the operation of Haystack other than the amount to be retained under the Trustee's agreement with Mrs. Ebel; 3) building lots in the Brigadoon Glen subdivision; 4) real property in Longmont, Colorado, known as 5877-5900 Niwot Road; 5) any interest in a land sale contract on real property located in Traverse City, Michigan; 6) any interest in a mobile home located in San Marcos, California; 7) two motor vehicles; and 8) a tort claim. Plaintiff filed an objection to the approval of that agreement and to the Trustee's proposed abandonment.
m. On March 26, 2004, Bankruptcy Judge A. Bruce Campbell held a hearing on the approval of the agreement with Mrs. Ebel and the Trustee's proposed abandonment. *867 On April 14, 2004, Judge Campbell issued his Order Granting Approval of Settlement Agreement and Overruling Objections to Abandonment of Property.[1]
II. DISCUSSION
In many ways, this adversary proceeding represents a collateral attack upon various orders entered in the Plaintiff's Domestic Case, his bankruptcy case and related adversary actions. This Plaintiff has been almost uniformly unsuccessful in pursuing his various litigation positions both in the State Court and in his bankruptcy proceedings.[2] As an apparent last ditch, fall-back position, Plaintiff brings this action which seeks to establish that the Trustee has breached fiduciary duties owed to him. Plaintiff claims that the Trustee breached his fiduciary duties: 1) by his failure to collect and account for property received by the estate due to not properly collecting and accounting for the profits from the operation of Haystack and not collecting rent from Mrs. Ebel for her occupancy of the family residence; 2) by turning over marital property to Mrs. Ebel; and 3) by inadequately investigating the assets of the estate and failing to object to the IRS tax claim.
Plaintiff's problems in this case are manifold. As an initial matter, the Trustee has put Plaintiff's standing to bring these claims at issue.
A. Standing
A chapter 7 bankruptcy trustee is the representative of the bankruptcy estate. 11 U.S.C. § 323(a). In his representative capacity, he may both sue and be sued. 11 U.S.C. 323(b). The duties of a chapter 7 trustee include:
(1) collect and reduce to money the property of the estate for which such trustee serves, and close such estate as expeditiously as is compatible with the best interests of parties in interest;
(2) be accountable for all property received;
(3) ensure that the debtor shall perform his intention as specified in section 521(2)(B) of this title;
(4) investigate the financial affairs of the debtor.
(5) if a purpose would be served, examine proofs of claims and object to the allowance of any claim that is improper;
(6) if advisable, oppose the discharge of the debtor;
(7) unless the court orders otherwise, furnish such information concerning the estate and the estate's administration as is requested by a party in interest;
(8) if the business of the debtor is authorized to be operated, file with the court, with the United States trustee, and with any governmental unit charged with responsibility for collection or determination of any tax arising out of *868 such operation, periodic reports and summaries of the operation of such business, including a statement of receipts and disbursements, and such other information as the United States trustee or the court requires; and
(9) make a final report and file a final account of the administration of the estate with the court and with the United States trustee.
11 U.S.C. § 704.
The Plaintiff complains that the Trustee failed to perform several of the duties enumerated above. There is certainly no question that the Trustee is charged with the performance of those duties which the Plaintiff claims he failed to perform. But the initial question is not whether the Trustee properly performed those duties; the initial question is whether or not this Plaintiff is entitled to enforce them. That is the question addressed by the standing issue.
1) Applicable Standing Elements
First of all, it is necessary to differentiate between the "person aggrieved" standard for standing which is applicable to bankruptcy appeals and the constitutional case or controversy standing by which this Court must measure its authority to adjudicate a matter. "The `person aggrieved' test is meant to be a limitation on appellate standing in order to avoid `endless appeals brought by a myriad of parties who are indirectly affected by every bankruptcy court order.'" Lopez v. Behles (In re American Ready Mix, Inc.), 14 F.3d 1497, 1500 (10th Cir.1994) (quoting Holmes v. Silver Wings Aviation, Inc., 881 F.2d 939, 940 (10th Cir.1989)).
Under the "person aggrieved" standard, only those parties whose "rights or interests are directly and adversely affected pecuniarily by the decree or order of the bankruptcy court" are permitted to prosecute an appeal of that order. Holmes, 881 F.2d at 940. Thus, the "person aggrieved" test, which focuses on whether or not the appellant has been financially affected by a bankruptcy court order, is a prudential doctrine meant to limit bankruptcy appeals and sets a somewhat higher standard than the Article III cases or controversies standard that serves as a constitutional limitation on federal jurisdiction in the first instance. Nintendo Co., Ltd. v. Patten (In re Alpex Computer Corp.), 71 F.3d 353, 357 n. 6 (10th Cir.1995).
"Standing is an essential part of Article III's case-or-controversy requirement." Utah Animal Rights Coalition v. Salt Lake City Corp., 371 F.3d 1248, 1255 (10th Cir.2004). Article III of the Constitution restricts federal jurisdiction to matters which present a case or controversy:
The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority;-to all Cases affecting Ambassadors, other public Ministers and Consuls;-to all Cases of admiralty and maritime Jurisdiction;-to Controversies to which the United States shall be a Party;-to Controversies between two or more States;-between a State and Citizens of another State;-between Citizens of different States;-between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.
U.S. CONST. art. III § 2, cl. 1.
The Supreme Court has explained that:
*869 Over the years, our cases have established that the irreducible constitutional minimum of standing contains three elements. First, the plaintiff must have suffered an "injury in fact" an invasion of a legally protected interest which is (a) concrete and particularized, and (b) "actual or imminent, not `conjectural' or `hypothetical.'" Second, there must be a causal connection between the injury and the conduct complained of the injury has to be "fairly . . . trace[able] to the challenged action of the defendant, and not . . . th[e] result [of] the independent action of some third party not before the court." Third, it must be "likely," as opposed to merely "speculative," that the injury will be "redressed by a favorable decision."
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S. Ct. 2130, 2136, 119 L. Ed. 2d 351 (1992) (internal citations omitted).
As the Supreme Court made clear in Lujan, standing is an evidentiary issue. Once the issue of standing was controverted by the Trustee, the burden was upon Mr. Ebel to offer evidence at trial that would demonstrate his standing. Mr. Ebel failed in that task.
2) Application of Standing Elements to the Amended Complaint
As Lujan states, the first standing issue is whether Mr. Ebel has suffered a genuine injury which is concrete, particularized and actual or imminent.
The First and Second Claims for Relief stated in the Amended Complaint focus on the operation of Haystack. Mr. Ebel alleges that the Trustee breached his fiduciary duties by his failure to require Mrs. Ebel to escrow half of the Haystack profits and account to the estate for those profits. Mr. Ebel also complains that the Trustee turned funds over to Mrs. Ebel pursuant to his settlement agreement with her before that agreement was approved by the Court.
Assuming the truth of the factual allegations made in those first two counts, Mr. Ebel has suffered no injury as a result of those actions. All of the property referred to in those counts is property which the State Court found to be property of Mrs. Ebel. Even if the Trustee would have taken all of the actions that Plaintiff suggests he should have taken, Plaintiff would have received no benefit, either direct or indirect from the Trustee's actions. The bankruptcy estate simply has no interest in those assets,[3] so they could not have been used to fund any surplus back to Mr. Ebel; nor could they have been used to pay down non-dischargeable tax debt for which Mr. Ebel is now responsible.
The Court finds that, at least with respect to the allegations made in the First and Second Claims for Relief in the *870 Amended Complaint, Mr. Ebel has stated no injury not even hypothetical or conjectural which he has suffered as a result of the Trustee's actions or failure to act. In the absence of any injury suffered by Mr. Ebel, the Court need not examine the remaining standing elements in connection with his First and Second Claims for Relief.[4] Mr. Ebel is without standing to bring those claims.
Mr. Ebel's Third Claim for Relief contains a potpourri of alleged breaches of the Trustee's fiduciary duties. First of all, Mr. Ebel charges that the Trustee breached his fiduciary duties "by willfully not objecting to Plaintiffs motion to lift the stay, causing the debtor to be charged in the State Court action with approximately $500,000 of attorney fees incurred by Lois Ebel from 1990 to 1997."
The Court is more than a little unclear on this allegation. Since Mr. Ebel is the Plaintiff in this present action, the Court assumes that the party that Mr. Ebel refers to as "Plaintiff' is Lois Ebel, the Petitioner in the Domestic Case. The only motion for relief from stay filed by Mrs. Ebel was filed in the Main Case on June 18, 1990, for the purpose of obtaining retroactive relief from stay to, in effect, ratify the State Court's previous proceedings in the Domestic Case. On June 20, 1990, the Trustee objected to that motion insofar as the motion sought enforcement of the State Court Decree and Order. The Trustee did not object to relief from the stay to allow that order to enter. On July 18, 1990, Judge Cordova lifted the stay solely for the purpose of allowing the State Court Decree and Order to enter.
While the Court accepts as true that Mr. Ebel has spent substantial sums in attorney fees to litigate the stay issue, he has not demonstrated the necessary causation between the Trustee's acquiescence to limited stay relief and his expenditure of attorney fees. There was, after all, an intervening third party. It was not the Trustee who lifted the stay; it was Judge Cordova, at Mrs. Ebel's request. The notice of hearing set the deadline for filing objections as July 11, 1990, and set July 18, 1990, as the hearing date. The Court has examined its file with respect to that hearing and finds: 1) that Mr. Ebel elected neither to file an objection to the motion prior to the applicable deadline nor to appear at the scheduled hearing; 2) that the court heard statements from the parties present; and 3) that Judge Cordova entered judgment lifting the stay on July 18, 1990, the day of the hearing. He followed up that judgment with a written order on July 20, 1990. For reasons known only to Mr. Ebel, he elected not to file a written objection to Mrs. Ebel's relief from stay motion until July 19, 1990, one day after the hearing was held and the judgment was entered. Despite Mr. Ebel's non-participation in the process, the motion was put at issue before Judge Cordova by the Trustee's filing of his objection. Judge Cordova considered the merits of the motion and found that cause existed for lifting the stay.[5] Mr. Ebel has *871 not pointed this Court to any causal link between the Trustee's action and the fact that attorney fees were expended on protracted litigation following Judge Cordova's ruling. Consequently, Mr. Ebel has no standing to bring an action against the Trustee based on the nature of the Trustee's objection to Mrs. Ebel's June 18, 1990, motion for relief from stay.
Another of the allegations contained in the Plaintiffs Third Claim for Relief is stated as follows: "In addition, the Trustee earlier attempted to abandon the marital property in 1995 without having any concept of the value of the marital property." The Debtor has not alleged, let alone proven, any injury which he suffered as a result of the Trustee's attempted abandonment of marital property. Without an injury, this allegation fails to meet the first of the Lujan factors, therefore, Mr. Ebel lacks standing to bring this allegation.
Finally, Mr. Ebel charges that "The Trustee . . . refused to investigate the IRS tax claims and to obtain a compromise, nor did he require that the compromised tax claim against Plaintiff, of $265,000, be paid by Lois Ebel as required by the Boulder District Court order of December 9, 1999."
That allegation appears to involve two complaints: first, that the Trustee failed to investigate the tax claim and engage in compromise discussions with the IRS relative to its claim against Mr. Ebel; and second, that the Trustee failed to enforce a State Court order requiring Mrs. Ebel to pay $265,000.00 to the IRS as a compromise of her tax liability.
The second of the two complaints lacks any factual basis as demonstrated by the Court's review of the State Court order to which Mr. Ebel refers. The State Court's December 9, 1999, Decree and Order states that "IRS now has a standing offer to compromise the entire tax debt for $265,000.00." In addition the State Court observed that "Because of Mr. Ebel's conduct, the marital property is now subject to over four million dollars in tax liens. The IRS has agreed to settle the tax debt for $265,000. Therefore, the marital property will be diminished by an amount not less than $265,000." The Decree and Order contains no directive whatsoever stating that Mrs. Ebel is to pay the referenced $265,000.00 compromise amount.[6] Thus, Mr. Ebel lacks standing to bring this allegation because he has again stated no injury. That Mrs. Ebel has been ordered to pay $265,000.00 by the State Court order is a fact that apparently exists only in Mr. Ebel's perception, it does not exist anywhere within the four corners of the document Mr. Ebel relies on. Even if there were some basis to believe that the Trustee *872 had a duty to seek enforcement of a State Court order having no bearing on the affairs of the bankruptcy estate,[7] Mr. Ebel could not have been injured by the Trustee's failure to enforce a non-existent order.
Finally, as to the remaining allegation of the Third Claim for Relief with respect to the Trustee's supposed breach of duty to investigate and compromise Mr. Ebel's tax controversy with the IRS, Mr. Ebel cannot maintain standing to pursue that allegation by claiming an injury to a non-existent right. State of Utah v. Babbitt, 137 F.3d 1193, 1207 (10th Cir.1998) (citing Claybrook v. Slater, 111 F.3d 904, 907 (D.C.Cir. 1997); Arjay Assocs., Inc. v. Bush, 891 F.2d 894, 898 (Fed.Cir.1989)).
The IRS filed a claim (# 4) in the amount of $407,695.26. That claim is presumed allowed. 11 U.S.C. § 502. The IRS claim is dated on August 1, 1990. The Debtor himself filed a proof of claim (# 7) on behalf of the IRS on December 13, 1990.
The Debtor's proof of claim stated that the IRS asserts a total claim in the amount of $938,809.38. According to the Debtor's version, the IRS claim consists of its original filed claim in the amount of $407,695.26 plus "[a]dditional proposed deficiency of income tax as shown on the letter and accompanying documents dated September 19, 1990, form Letter 1384." The amounts shown on that letter add up to $194,819.00. Lastly, the Debtor states that the IRS is also claiming an "[a]dditional proposed deficiency of Employment Tax, assessed against Haystack Mountain Golf Course." The Debtor does not specify the amount of the employment tax deficiency, but the total amount of the proof of claim, less the original IRS claim amount and the additional proposed deficiency of income tax, leaves $336,295.12 which is attributable to the Haystack employment tax deficiency. Significantly, the Debtor states that "[t]he undersigned believes that the amount attributed to the proposed deficiency of Haystack Mountain Golf Course, Employment Tax forms 941 and 940 are in dispute." The clear implication of that statement is that the original IRS claim amount and the additional income tax deficiency are not disputed. According to Mr. Ebel, "[t]his claim is entitled to priority status under section 507(a)(6) [now § 507(a)(8)] of the Bankruptcy Code."
The duty to investigate and enter into compromise negotiations with a creditor filing a proof of claim is not specifically enumerated under § 704. However, investigation of the factual basis underlying a claim and working toward disallowance or compromise of the claim are part of the Trustee's duty to object to an improper claim, under § 704(5). Under that subsection, the Trustee has a duty "if a purpose would be served, [to] examine proofs of claim and object to the allowance of any claim that is improper." 11 U.S.C. § 704(5) (emphasis added). Thus, the Code imposes two important qualifiers on the Trustee's duty to object to a proof of claim. The claim must be improper and, even if it is improper, the Trustee is under no duty to object in the absence of a proper purpose to do so. The apparent *873 purpose which the Debtor wants the Trustee to serve is to reduce the Debtor's overall tax obligation so that the tax owed by the Debtor post-bankruptcy will be reduced. But the Court does not read the language of § 704(5) to suggest that a proper purpose for examination of, and objection to, a claim is to make the Debtor's life easier after his bankruptcy case is concluded. The focus of the Trustee's duties is the collection and distribution of estate assets for the benefit of creditors. In re Balco Equities Ltd., Inc., 323 B.R. 85, 97 (Bankr.S.D.N.Y.2005) (citing In re Poage, 92 B.R. 659, 662 (Bankr.N.D.Tex. 1988)) ("Although a Chapter 7 trustee is a fiduciary obligated to treat all parties fairly, his primary duty is to the estate's unsecured creditors."); In re Ngan Gung Rest., 254 B.R. 566, 570 (Bankr.S.D.N.Y.2000) ("A trustee has the statutory duty to protect and preserve property of the estate for the purpose of maximizing a distribution to creditors."). The purpose to be served, therefore, must relate to the Trustee's duty to the creditors to collect and distribute assets. It cannot be a proper purpose for the Trustee to expend estate assets objecting to a proof of claim if no benefit would otherwise accrue to the remaining creditors of the estate.
Moreover, the Court has seen no evidence to the effect that the IRS claim is improper. Indeed, the Debtor's own version of the amount owed to the IRS not only includes the original $407,695.26 reflected on the IRS filed claim, it adds a minimum of $194,819.00 of additional income tax liability to that amount.
Thus, the evidence discloses that neither of the predicates to the Trustee's duty to object to a claim are present here. There is no evidence either that the IRS claim is improper or that a proper purpose would be served by pursuing an objection to that claim. Since the Trustee has no duty to object to the IRS claim, the Debtor lacks standing to complain about the Trustee's failure to perform such duty.
In accordance with the above discussion, the Debtor lacks standing to pursue any of the three Claims for Relief enumerated in the Amended Complaint. Therefore, the relief prayed for in the Amended Complaint must be denied.
B. Lack of Fiduciary Duty
The question of whether or not the Trustee owed Mr. Ebel a fiduciary duty goes to the merits of the Amended Complaint. Each of the causes of action in the Amended Complaint charges the Trustee with a breach of fiduciary duty. A chapter 7 trustee is, of course, a fiduciary.
But to say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary? In what respect has he failed to discharge these obligations? And what are the consequences of his deviation from duty?
SEC v. Chenery Corp., 318 U.S. 80, 85-86, 63 S. Ct. 454, 458, 87 L. Ed. 626 (1943) (Justice Frankfurter).
The first of the above questions to whom is the Trustee a fiduciary? creates the problem for Mr. Ebel in this matter. The Trustee is indeed a fiduciary but, under the facts of this case, the Trustee owes no fiduciary duties to Mr. Ebel.
This bankruptcy estate is hopelessly insolvent. The Court's review of Plaintiffs bankruptcy schedules reveals that all of the real property listed in his schedules is marital property. The evidence that was *874 adduced at trial makes it quite clear that the estate has no interest in the marital property owned by the Plaintiff and Mrs. Ebel at the time of their divorce in 1985. The only personal property listed by Plaintiff that has anything but de minimis value is an asserted tort claim against the law firm of Chrisman, Bynum and Johnson, P.C. The asserted value of that claim was $3,000,000.00.
The Trustee investigated the claim and determined that it held no value for the estate. Consequently, the Trustee made application to the Court to abandon that claim. The court docket reveals that Mr. Ebel received notice of the proposed abandonment and lodged an objection. After a hearing on the merits of the Trustee's abandonment notice, Judge Campbell allowed the claim to be abandoned by the estate. The only other property scheduled by the Plaintiff was the remaining personal property which he valued at $10,000.00.
Much of that remaining $10,000.00 worth of property was marital property in which the estate has no interest. The remainder has been abandoned by the Trustee. That leaves the $74,400.00, received by the Trustee from his settlement with Mrs. Ebel, as the sole asset of this bankruptcy estate. By contrast, there have been unsecured claims filed in the case that total at least 8545,595.61.[8]
Because the estate lacks the potential to generate any surplus that would be distributed back to Mr. Ebel, the Court finds that he is not a party in interest with respect to matters of estate administration. 60 East 80th Street Equities, Inc. v. Sapir (In re 60 East 80th Street Equities, Inc.), 218 F.3d 109, 115 (2nd Cir.2000); Richman v. First Woman's Bank (In re Richman), 104 F.3d 654, 658 (4th Cir. 1997). In those rare cases where a chapter 7 bankruptcy trustee owes a fiduciary duty to a chapter 7 debtor, that duty is triggered by the debtor's status as a party in interest as to the assets of a surplus estate. See, e.g., George Schumann Tire and Battery Co., Inc. v. Grant (In re George Schumann Tire and Battery Co., Inc.), 145 B.R. 104, 107 (Bankr.M.D.Fla. 1992). In this case, however, Mr. Ebel lacks any conceivable interest in the administration of bankruptcy estate assets and, accordingly, he lacks any basis to claim that the Trustee owes him a fiduciary duty.
Even if Mr. Ebel had standing to pursue the claims alleged in his Amended Complaint, on the merits of the Amended Complaint, the evidence establishes that the Trustee owes Mr. Ebel no fiduciary duty. Because each and every Claim for Relief enumerated in the Amended Complaint is based on an allegation of the Trustee's breach of fiduciary duty, and because Mr. Ebel has been unable to establish the fiduciary duties upon which each of his Claims for Relief is based, all relief prayed for in the Amended Complaint must be denied.
C. Trustee Liability under Sherr v. Winkler
Even if Mr. Ebel had standing to pursue these causes of action; even if *875 the Trustee owed Mr. Ebel a fiduciary duty, in the Tenth Circuit, the case of Sherr v. Winkler, 552 F.2d 1367 (10th Cir. 1977), controls when a bankruptcy trustee may be found personally liable for a breach of duty. The matter is not without controversy and disagreement amount the circuits, see LeBlanc v. Salem (In re Mailman Steam Carpet Cleaning Corp.), 196 F.3d 1, 7 (1st Cir.1999); but, in this circuit, Sherr holds that "a trustee or receiver in bankruptcy is (a) not liable, in any manner, for mistake in judgment where discretion is allowed, (b) liable personally only for acts determined to be willful and deliberate in violation of his duties and (c) liable, in his official capacity, for acts of negligence." Sherr v. Winkler, 552 F.2d 1367, 1375 (10th Cir.1977) (citing Mosser v. Darrow, 341 U.S. 267, 272, 71 S. Ct. 680, 682, 95 L. Ed. 927 (1951)). The Sherr court went on to explain that
a trustee in bankruptcy is not [to] be held personally liable unless he acts willfully and deliberately in violation of his fiduciary duties. A trustee in bankruptcy may be held liable in his official capacity and thus surcharged if he fails to exercise that degree of care required of an ordinarily prudent person serving in such capacity, taking into consideration the discretion allowed.
Sherr, 552 F.2d at 1375.
Mr. Ebel does not seek to hold the Trustee liable in his official capacity and to collect damages from the estate. Mr. Ebel believes that he is entitled to collect damages of: 1) his liability for attorney fees of approximately $500,000.00; 2) $265,000.00 to fund a tax compromise with IRS; 3) approximately $290,000.00 of profits from Haystack; 4) $100,500.00 rent for the golf course residence; 5) attorney fees for the current action; and 6) punitive damages. The $74,400.00 being held by the estate would hardly make a dent in the damages to which Mr. Ebel believes he is entitled, so an assessment of personal liability against the Trustee would be essential to Mr. Ebel's recovery of the damages which he seeks. It also brings Mr. Ebel's claims against the Trustee squarely within the ambit of Sheer v. Winkler.
The Court will observe that the Trustee's actions in this case are not totally beyond reproach. Specifically, the Court would have much preferred it if the Trustee would not have performed his agreement with Mrs. Ebel until after obtaining court approval. Nonetheless, Judge Campbell found the settlement to be in the best interests of the estate and did give it his approval after a full and fair hearing of Mr. Ebel's objections to the deal. Consequently, even the one action on the Trustee's part that this Court finds somewhat questionable hardly gives Mr. Ebel any basis to claim that he was damaged by that action. In fact, as to the merits of the settlement itself, the Court is impressed with the Trustee's negotiation skills. It is likely that Mrs. Ebel would have prevailed if she had taken the position that the estate was not entitled to a dime of the money that the Trustee collected.
As to the standard for trustee liability in this circuit, Mr. Ebel's evidence at trial fell far short of demonstrating the willful and deliberate conduct that it was Mr. Ebel's burden to prove in order to prevail on his claim of personal liability against the Trustee. The evidence fell short of proving any negligence on the part of the Trustee, let alone willful and deliberate conduct.
D. Derived Judicial Immunity
The First and Second Claims for Relief In the Amended Complaint allege that the *876 Trustee breached his fiduciary duty: 1) by his failure to collect and account for property received by the estate because he did not properly collect profits from the operation of Haystack or collect rent from Mrs. Ebel for her occupancy of the family residence; and 2) by turning over marital property to Mrs. Ebel. Both of these causes of action center upon ownership of the marital assets. That was, of course, the subject of litigation in the State Court Domestic Case as well as the subject of the Trustee's settlement with Mrs. Ebel. The Trustee sought approval of his settlement with Mrs. Ebel from the bankruptcy court and on April 14, 2004, Judge Campbell granted that approval.
It is well settled that a trustee who acts pursuant to court orders, after full disclosure to the court, is cloaked in the mantle of derived judicial immunity. See, e.g., Mosser v. Darrow, 341 U.S. 267, 274, 71 S. Ct. 680, 683, 95 L. Ed. 927 (1951); LeBlanc v. Salem (In re Mailman Steam Carpet Cleaning Corp.) 196 F.3d 1, 8 (1st Cir.1999); Yadkin Valley Bank & Trust Co. v. McGee, 819 F.2d 74, 76 (4th Cir. 1987); Lonneker Farms, Inc. v. Klobucher, 804 F.2d 1096, 1097 (9th Cir.1986); Boullion v. McClanahan, 639 F.2d 213, 214 (5th Cir.1968). The Court finds that the Trustee sought and received court approval of all of the actions complained of in Mr. Ebel's First and Second Claims for Relief. The Court heard no credible evidence to the effect that the Trustee did not fully disclose the facts and circumstances surrounding his settlement with Mrs. Ebel to the court which approved the settlement. Moreover, Mr. Ebel objected to the settlement and received a full and fair hearing of his objection. Consequently, at least as to the allegations stated in Mr. Ebel's First and Second Claims for Relief, the Court finds that the Trustee is immune from suit.
The allegations of improper action or inaction by the Trustee, contained in the Third Claim for Relief, did not involve situations where the Trustee would be required to obtain court permission. Therefore, because the Court's previous analysis of these claims indicates the Trustee was not required to address such matters in judicial proceedings, derived judicial immunity is inapplicable to the Third Claim for Relief.
III. CONCLUSION
The Court found Mr. Ebel's demeanor on the witness stand to be a bit of a contrast to the impression that one gets from reviewing the voluminous pleadings in the various cases in which he has been involved. Mr. Ebel was unfailingly courteous and deferential to the Court and the Court has no reason to doubt his sincerity or the veracity of his testimony. Nonetheless, it does appear that, as Judge Campbell observed, "Mr. Ebel's appetite for litigation in this bankruptcy is nothing short of insatiable." In re Ebel, No. 90-10360 n. 1 (Bankr.D.Colo. filed April 14, 2004). Indeed, the bankruptcy court's association with Mr. Ebel is now in its fifteenth year. Therefore, the Court believes that it is appropriate to provide some perspective to the alleged wrongs for which Mr. Ebel has sought redress in this action.
The Court will start with the observation that the whole tenor of Mr. Ebel's Amended Complaint appears to be based upon a profound misunderstanding of how bankruptcy law operates generally; the scope of a bankruptcy trustee's legitimate concerns in particular; and the deference that federal courts owe to the state courts in the areas of their specialized expertise. *877 An overview of this fifteen year old bankruptcy case presents the appearance of a gentleman who has attempted to enlist the good offices of the bankruptcy court and the bankruptcy trustee to aid him in his battles with taxing authorities and his former spouse.
It seems that, some years ago, Mr. Ebel adopted a somewhat unorthodox view of a citizen's relationship to his government that caused him to believe that the U.S. Constitution supported his distaste for the payment of income taxes. He subsequently ceased payment of such taxes and came into some conflict with the Internal Revenue Service.
In addition to his issues with the IRS, problems also arose in Mr. Ebel's domestic life which led Mrs. Ebel to petition the state courts for a dissolution of the marriage. The Court can certainly understand how an individual who is beset by personal and legal challenges on multiple fronts may come to feel that he is under siege, but what baffles the Court is how Mr. Ebel apparently came to view the federal bankruptcy system as the white knight that would ride to his rescue.
Simplified to its absolute most basic level, a bankruptcy filing under chapter 7 represents an agreement that a debtor makes to give up all of his non-exempt property to be liquidated and distributed by the bankruptcy trustee in return for relief from his dischargeable debts. The relationship between a debtor and the bankruptcy trustee requires a fair amount of cooperation on the debtor's part to clarify information, turn over property and supply records and documents when necessary. It is also a relationship that contains a potential for conflict because disagreement can arise between a debtor and a trustee concerning a debtor's interests in certain property and whether or not property is available for administration in the bankruptcy estate. That is not to say that the debtor's interests may not coincide with the estate's interests at times. Certainly, in the rare situation where the debtor turns over sufficient property to the trustee to pay all claims and administrative expenses of the estate, the debtor's interest in receiving the surplus coincides with the trustee's duty to safeguard estate assets. But, it is reasonable to observe that the interests of a debtor and the interests of the bankruptcy estate, represented by the bankruptcy trustee, are very different at times and, on occasion, those interests are in direct conflict. As a consequence, it is illogical to view a bankruptcy trustee as one whose role requires advocacy of the debtor's interests.
The Court sees nothing in the relationship between a debtor and a trustee, or the relationship of the debtor to the bankruptcy court, that should have suggested to Mr. Ebel that either one may be used as an active ally in his fights with the IRS or with his former spouse. A bankruptcy trustee is primarily responsible to the creditors to expeditiously and cost-effectively liquidate and distribute property to creditors. It is only in rare instances that a duty is owed to the debtor. When such a duty is owed, it typically centers on the trustee's responsibility to safeguard surplus property that will be returned to the debtor. Here, there is no surplus because the courts have ruled that the Trustee has no interest in the marital property. A court, of course, takes the side of no litigant against another, but must serve as an impartial arbiter of the disputes which arise. One role that federal courts never take on, in the absence of a valid basis of federal jurisdiction, is that of *878 a court of appeals for state court determinations.
Nonetheless, it appears to this Court that the primary focus of Mr. Ebel's efforts during the course of his bankruptcy case has been an attempt to enlist the aid of the bankruptcy court in reviewing and modifying state court orders and to enlist the aid of the bankruptcy trustee to take on his fight with the IRS and his former spouse. In particular, much of the relief prayed for in the current Amended Complaint would have this Court exact a penalty against the Trustee for failing to spend the scant resources of the bankruptcy estate in order to function as the Debtor's advocate before the IRS, as well as for failing to fight Mrs. Ebel in order to keep her from concluding the state court domestic case that was begun years before the bankruptcy was filed.
In addition, the domestic litigation at issue is an area in which the state courts possess particularized expertise in the adjudication of those state law domestic issues, which is lacking in the bankruptcy court. Even if a bankruptcy court possessed the jurisdiction to wade into those murky waters, it is hard to imagine why it would do so. That is especially true for a case such as this one where, before a petition in bankruptcy was filed, domestic proceedings had been ongoing in the state court system for five years and those proceedings were one hearing away from being concluded.
In accordance with the above discussion, the Court will deny all relief prayed for against the Trustee. The remaining defendants in the case are all insurance companies for whom any liability to the Plaintiff would be derivative of the Trustee's liability. The Court's decision herein has rendered the Amended Complaint moot with regard to those Insurance Company Defendants. Therefore, the Court will dismiss this action against those defendants as well. It is, therefore
ORDERED that the Court hereby DENIES all relief prayed for in the Amended Complaint against the Trustee and will enter judgment in his favor. It is further
ORDERED that judgment will enter in favor of the Insurance Company Defendants. The Amended Complaint is DISMISSED as to Continental Casualty Co., Fireman's Insurance Co. of Newark, N.J., National Fire Insurance Co. of Hartford, National Fire Insurance Co. of Pittsburgh, Pa., Fireman's Fund Insurance Co., and Liberty Mutual Insurance Co. on the basis of mootness.
NOTES
[1] The Court notes that, after the trial of this matter, on March 14, 2005, the U.S. District Court entered its final judgment affirming Judge Campbell's April 14, 2004, order.
[2] The one bright and shining moment. Plaintiff's litigation history was the Tenth Circuit decision which had the effect of requiring that the State Court property division proceeding be relitigated. It was a Pyrrhic victory because, upon retrial of the property issues, the State Court came to the same conclusion that Mrs. Ebel should receive 100% of the marital property due to the Plaintiff's waste of marital assets in excess of the half to which he would have otherwise been entitled.
[3] The Court takes Mr. Ebel's point that, at various times in this long and tortured process, the issues surrounding the adjudication of Mr. and Mrs. Ebel's respective property rights in the State Court have been subject to appeals filed in the state courts and in various levels of the federal court system. But that does not mean that the Trustee was not entitled to act upon the existing orders in the absence of a stay pending appeal. See, e.g., Weatherford v. Bonney, 2 F.3d 1161 (10th Cir. 1993). At the time of the Trustee's settlement with Mrs. Ebel, the existing orders supported the Trustee's conclusion that the estate had no interest in the marital property. After the Tenth Circuit's reversal of the order granting Mrs. Ebel relief from the automatic stay, until the State Court retried the property matters and came to the same conclusion, the Trustee took no new actions.
[4] However, with respect to those remaining standing issues, even if the Court could find that Mr. Ebel had suffered some injury, the Court would be at a loss to find an causal connection between the Trustee's actions and any effect upon Mr. Ebel. The Trustee's actions were simply an appropriate response to State Court orders which awarded the marital property to Mrs. Ebel. Furthermore, no decision from this Court could give Mr. Ebel favorable redress from those final and non-appealable State Court orders.
[5] The Court also notes that Mr. Ebel never appealed the decision to modify the automatic stay. That order was addressed on numerous subsequent occasions in various collateral attacks but, again for reasons known only to Mr. Ebel, he ignored his right to take a direct appeal of the order. Such an appeal certainly would have been the most straight-forward, cost-effective method of resolving his concerns over the validity of that order.
[6] The State Court appears to be engaging in the reasonable assumption that the IRS tat lien will follow the marital property and that Mrs. Ebel may elect to pay the IRS $265,000.00 as a compromise of her liability rather than allow the IRS to move forward with a seizure of property that is subject to its lien. That is the very most that this Court can make of the State Court's comment with respect to a $265,000.00 compromise of the tax debt. Those comments appear in the discussion section of the State Court's Decree and Order. By contrast, the section containing the State Court's actual orders is devoid of any reference to that $265,000.00 tax claim compromise amount.
[7] Even if the Court could interpret the State Court Decree and Order in the way that Mr. Ebel does, it is not at all clear why the topic of whether or not Mrs. Ebel settles her liability with the IRS from property in which the estate has no interest would be a matter of concern to the Trustee with respect to his fiduciary responsibilities to the bankruptcy estate.
[8] This total was derived by the Court from a cursory review of the claims filed in the case. Secured claims and those that appeared to be amended or replaced by later filed claims were not counted. The Court also disregarded the claim filed by Mr. Ebel on behalf of the IRS because the IRS had previously filed its own claim. This calculation was done only for the purpose of analyzing the apparent solvency or insolvency of the estate and does not constitute an allowance or disallowance of any filed claim.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/8304129/
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Mr. Special Justice Robert S. Clement,
delivered the opinion of the Court.
. The Plaintiffs in error, hereinafter referred to as the Defendants or by name, were convicted of burglary in the third -degree and grand larceny, and each sentenced to serve three years in the State Penitentiary. Both assign errors questioning the sufficiency of the evidence. Defendant Cupp relies on an additional assignment wherein he insists that the Court should have granted him a continuance because of the absence of a material witness.
• This case is unusual in that the State relies solely upon fingerprints as evidence. On the night of April 9, 1963, sometime between midnight and 5:45 in the morning, the Cumberland Bowling Lanes located at 5700 Oak Ridge Highway, Knoxville, Tennessee, was entered and burglarized. There were a number of vending machines and pinball machines broken into. An investigation was made *167by the Knoxville Police Department and fingerprints were lifted from some of the machines. In each machine there, is what is referred to as a coin box into which money falls, placed in the machine by cnstomers. These boxes are not accessible to the general public and can only be reached by unlocking the door or prying same open. A print taken-from the-coin box inside the coca-cola inachine was determined by a fingerprint expert, one Lewis J. Webb of the Knoxville Police Department, to be that of Defendant Petree. Defendant Cupp’s fingerprints were found on the coin box inside the cigarette machine according to the testimony of the State’s witness, Webb. •An explanation of the comparison of the fingerprints found on these two coin boxes was made by the State’s witness Webb and explained to the jury by showing enlarged copies of the fingerprints found and fingerprints taken of the Defendants after their arrest. These copies Were made exhibits to the testimony of the witness and are a part of the record in this cause.
Both Defendants testified in their own behalf and both contended that they were elsewhere on the night in question. Cupp testified that on the night in question he was at home; that he remembered thé date because it was on that afternoon that he washed his father’s car, went to the grocery store, returned home before seven o’clock and stayed there,until noon of the next day. He ..was supported in this testimony by his mother and his sixteen-y.ear-old brother. Defendant Petree testified that he lived at Fountain City, Tennessee, and that he was ..at home on the eighth and ninth of April except that ■ part of the time that he was with his girl.
We will first dispose of Defendant Cupp’s assignment of error relative to the Court’s refusing to grant *168a continuance on account of tlie absence of a material witness. The affidavit which has been made an exhibit in this cause states that Lillie Wrinn, age 71, the grandmother of- the Defendant, was ill and unable to attend Court and that she would testify that on the 8th of April, 1963, and the early morning of April 9, 1963, the Defendant Cupp was at home; that she sleeps next to the back door in the house with Defendant and if he had left during the night, she would have awakened and that on Tuesday morning, April 9th, about daylight, the Defendant was in bed with his brother. This evidence would have been cumulative as two members of the family had already testified that the Defendant was at home, and we-do not believe the Trial Judge abused his discretion in refusing to grant a continuance. •
As heretofore stated, the only evidence that connects •these Defendants with the crime is the testimony, of Lt. Lewis J. Webb of the Knoxville Police Department. Thus, the appeal here and assignments of error are •based almost entirely on the proposition that the evidence adduced herein is insufficient to support the conviction. Forcible argument is made by the Defendants through their counsel that this being the sole evidence to connect them with the crime, it is insufficient upon which a conviction can be predicated. This question was before the Court in the recent case of Jamison v. State, 209 Tenn. 426-434, 354 S.W.2d 252. Jamison was indicted for burglary in the third degree wherein he was charged with burglarizing a school in Rutherford County. It was noticed that a Ditto machine in the principal’s office had been moved and a member of the Tennessee Bureau of Identification was summoned to the scene and conducted an investigation. In this investigation, he found certain *169fingerprints upon the bottom of the Ditto machine. These prints subsequently were proved to be the prints of Jami-son and his conviction was upheld. In the opinion of this Court written by now Chief Justice Burnett, fingerprint evidence was discussed wherein the Court stated:
“In the very able briefs of both the plaintiff in error and the State the annotation covering all questions we know anything about in reference to fingerprints, 28 A.L.R.2d beginning at page 1115 and extending through page 1158, is cited. This annotation covers Evidence— Finger, Palm, or Footprint. Counsel for plaintiff in error cite several Texas cases and others from this annotation which illustrate cases where the evidence was insufficient to convict. There are also cited in this same annotation many cases illustrative of where the factual situation showed a sufficiency of the evidence to convict. One such case is Grice v. State, 142 Tex.Cr.R. 4, 151 S.W.2d 211, wherein a very full and thorough discussion of the weight to be given fingerprint evidence is set forth. In this opinion the court takes up cases from many jurisdictions wherein the evidence was held sufficient and wherein it was held not sufficient and very clearly sets forth the distinguishing, features of the cases. In this opinion the cases relied upon by the plaintiff in error from Texas are clearly distinguished. The court says:
“ ‘The question we have is whether or not the identity of fingerprints may be used as sufficient identification of the individual or only a circumstance taken with others to identify him.’ •
“In this opinion the case of Stacy v. State, 49 Okl.Cr. 154, 292 P. 885 is quoted from, as follows:
*170‘ ‘ ‘ The fingerprints of Stacy were found on the door of the vault. There was no other testimony tending to connect Stacy with the commission of the crime. On appeal he contended that the evidence was insufficient to sustain a conviction. In affirming the judgment of conviction the court said, 292 P, at page 887: “We have no doubt but that the finding of the fingerprints of the defendant on the door of the vault, with the further proof that defendant did not have access to and had not been at the place burglarized so that the print could be accounted for upon any hypothesis of his innocence, is a circumstance irresistibly pointing to his guilt. In conformity to decisions of the courts in many states, we take, judicial knowledge that there are no two sets of fingerprints exactly alike. ” ’
‘ ‘ This court then concluded in this Texas case wherein the proof was fingerprints on a pane of glass thus:
“ ‘The presence of appellant’s fingerprints on the portion of the glass covered by the molding is inconsistent with his innocence. It could not have been placed there while the pane was in the door and the molding in place. The evidence was sufficient to authorize the jury’s finding. This court has no right to disturb their verdict. ’
“We cite and quote the above because the statements there made are peculiarly applicable to the factual situation in the present case.
“In the annotation above referred to at page 1149, the annotator says:
“ ‘The weight to be accorded the type of evidence herein discussed is a question for the jury to decide *171in light of all the surrounding- facts, and circumstances of the particular case.’ ’* ■ '
It is insisted by the Defendants that the evidence preponderates against the verdict. We must keep in mind that the well established rulé that the presumption of innocence no longer exists and the Defendants come to this Court with a presumption of guilt; and the burden is on the Defendants to show that the- evidence preponderates against the verdict. Hale v. State, 179 Tenn. 201, 164 S.W.2d 822. Mahon v. State, 127 Tenn. 535-539, 156 S.W. 458; Batey v. State, 191 Tenn. 592, 235. S.W.2d 591.
Another well established rule'is that the'jury has seen and heard the witnesses, and after seeing and hearing them, has determined the issues against the Defendants. In other words, the credibility of the witnesses has been determined. McGhee v. State, 183 Tenn. 20-23, 189 S.W.2d 826, 164 A.L.R. 617. Ferguson v. State, 138 Tenn. 106-109, 196 S.W. 140; Batey v. State, supra.
Thus, it can be seen that the duty of this Court is to pass on the sufficiency of the evidence in the case at bar, and whether the evidence is sufficient to sustain the verdict; and if we conclude that it is, then it is our duty to affirm the verdict. We can only reverse if we conclude that the evidence preponderates in favor of innocence, but if we conclude that the jury, as triers of facts, agree on the reasonableness of the hypothesis that nothing else except guilt could be drawn from the evidence, then it is our duty to affirm.
In the case at bar the corpus delicti of the crime is made out. The place of business was burglarized and various sums of money were taken therefrom. The Defendants ’ fingerprints were found in places not accessible *172.except by key or breaking into same. Tbe matter boils down to whether or not the testimony of State witness Webb is to be accepted as the truth. There is no evidence in the record that either of the Defendants had ever been in the Cumberland Bowling Lanes prior to April 9, 1963, and there would have been no occasion for their fingerprints being found therein.
The jury believed the testimony of Lt. Webb and the verdict was approved by the Trial Judge. We thus must conclude that his testimony was sufficient evidence to uphold these, convictions and the judgment of the lower court must be affirmed.
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01-03-2023
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10-17-2022
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679 F. Supp. 1107 (1988)
Nora I. BEE, Jr., Plaintiff,
v.
DeKALB COUNTY, A Political Subdivision of the State of Georgia, and Richard K. Morton, both individually and in his capacity as Police Officer of DeKalb County, Defendants.
1:87-CV-356-RHH.
United States District Court, N.D. Georgia, Atlanta Division.
February 23, 1988.
*1108 Waymon Steven Harrell, Hyatt Legal Services, Stone Mountain, Ga., for plaintiff.
Albert Sidney Johnson, Office of DeKalb Co. Atty., Decatur, Ga., Karen Kirkpatrick Karabinos, Johnson & Montgomery, Atlanta, Ga., for defendants.
ORDER
ROBERT H. HALL, District Judge.
Plaintiff brings this civil rights action under 42 U.S.C. § 1983 alleging defendants deprived him of his constitutional rights. Currently before the court are defendants' motions for summary judgment in their favor. For the reasons given below, the court GRANTS defendant DeKalb County's motion and DENIES the motion of defendant Morton in his individual capacity.
FACTS
This action arises out of the events surrounding the stop, search and arrest of plaintiff by defendant Morton on August 20, 1986. On that date, at approximately 5:30 a.m., plaintiff was allegedly driving a Honda NC50 motorscooter to his home in DeKalb County. Deposition of Nora I. Bee, Jr., pp. 14-17 ("Plaintiff's Depo."). Plaintiff testified that he was driving approximately 33 miles per hour on a road carrying a maximum speed limit of 35 miles per hour and that, indeed, the motorscooter could not maintain speeds over 35 m.p.h. Id., p. 21. Defendant Morton testified that he clocked plaintiff travelling at a speed of approximately 60 miles per hour in the 35 m.p.h. speed zone. Deposition of Richard K. Morton, p. 3 ("Morton Depo."). Defendant Morton allegedly then turned on his emergency blue lights and siren and followed plaintiff down approximately three different streets, or one to two miles, before plaintiff stopped at his home. Id., pp. 4, 42-44.
When defendant Morton caught up with plaintiff at plaintiff's driveway, he questioned plaintiff regarding the speed of plaintiff's travel and the reasons plaintiff did not stop for his police vehicle. Id. Plaintiff stated he did not know defendant Morton was following him and that he did not hear the siren or observe the blue lights before turning into his driveway. Id. pp. 4, 45. Plaintiff's Depo., p. 34. Defendant Morton asked to see plaintiff's driver's license and insurance and plaintiff provided him with the former. Plaintiff did not carry insurance on the Honda NC50 motorscooter because allegedly his insurance agent informed him insurance on that vehicle was unnecessary. Plaintiff's Depo., pp. 32-33. Plaintiff did allegedly have proof of insurance on another motorcycle, Id. p. 33, although defendant Morton testified that plaintiff was unable to show any type of insurance. Morton Depo., pp. 8, 46.
While defendant Morton was checking plaintiff's license, plaintiff allegedly was attempting to talk with defendant, stating that he hadn't been speeding and hadn't heard Morton's siren or seen the lights on the police car. At that point another police officer drove up and defendant Morton informed plaintiff that he was under arrest for speeding, attempting to elude a police officer and lack of insurance coverage. Plaintiff's Depo., p. 34; Morton Depo., p. 4. Upon hearing he was under arrest and believing he hadn't done anything wrong, plaintiff grabbed the chain-link fence bordering his driveway and called out for his neighbor. Plaintiff's Depo., pp. 35-37. According to plaintiff, defendant Morton did not attempt to take him by the arm when defendant Morton told him he was under arrest. Rather, plaintiff testified that he quickly turned, grabbed tightly on to the fence and stood in a locked position. Id., pp. 40-41.
*1109 Defendant Morton testified that both he and the other officer attempted to pull plaintiff away from the fence and that failing at that, defendant Morton successfully began a "finger roll" on plaintiff which entailed taking each of plaintiff's fingers and using force on each to loosen plaintiff's hands from clenching the fence. Morton Depo., p. 5. According to Morton, as he successfully performed the finger roll method on plaintiff, plaintiff attempted to strike him by swinging at him with plaintiff's right elbow. Id. Defendant Morton stated in his deposition that when plaintiff "swung" at him, he "moved out of the way from the swing and struck Mr. Bee in the right side of his face. Mr. Bee went down to the ground" at which time the officers handcuffed plaintiff and took him to the police station. Id.
Plaintiff disputes that he attempted to swing at defendant Morton. In his deposition, plaintiff stated that he stood without moving, locked to the fence, expecting the officers to pat him down. He further testified that he never tried to pull away from the officers and that defendant Morton never did try to ungrip his hand from the fence. Plaintiff's Depo., pp. 40-42. According to plaintiff, he stood braced to the fence calling for his neighbor when, in only five to seven seconds, defendant Morton wilfully and without provocation hit plaintiff in the face causing him to sustain eye injuries. Plaintiff alleges that defendant Morton maliciously and deliberately arrested him on a false charge and struck him in his right eye thereby depriving him of his Fourth and Fourteenth Amendment rights.
Plaintiff further alleges that DeKalb County deprived him of his constitutional rights by allegedly failing to discipline or dismiss defendant Morton. Plaintiff contends that defendant DeKalb County ("County") knew of defendant Morton's alleged propensity toward violence but failed to take appropriate disciplinary action and in general failed to promulgate adequate rules and regulations for dealing with citizen complaints and allegations of violence and use of excessive force. Both the County and defendant Morton bring motions for summary judgment in their favor. Plaintiff argues that genuine issues of material fact exist to preclude summary judgment. Further facts will be disclosed as necessary for discussion of the motions.
DISCUSSION
I. Liability of DeKalb County[1]
Plaintiff accurately acknowledges that a municipality may not be held liable under 42 U.S.C. § 1983 solely on a theory of respondeat superior. Rather, a county may be subject to section 1983 liability only if the action complained of by plaintiff "implements or executes a policy statement, ordinance, regulation, or decision officially adopted and promulgated by that body's officers" or is "visited pursuant to governmental `custom' even though such a custom has not received formal approval through the body's official decision making channels." Monell v. Department of Social Services of the City of New York, 436 U.S. 658, 690-91, 98 S. Ct. 2018, 2035-36, 56 L. Ed. 2d 611 (1978). Moreover, the county "custom" or "policy" must be the "moving force" behind the constitutional violation alleged by plaintiff to have been committed on him. Id. at 690-94, 98 S.Ct. at 2035-37.
Interpreting the Monell language, the Eleventh Circuit has held that, for a municipality to be liable under 42 U.S.C. § 1983, it "must be at fault in some sense for establishing or maintaining the policy which causes the injurious result...." Owens v. City of Atlanta, 780 F.2d 1564, 1567 (11th Cir.1986) (citing Fundiller v. City of Cooper City, 777 F.2d 1436, 1442 (11th Cir.1985). Therefore, while a "policy" or "custom" may be found to exist where a municipality fails to correct unconstitutional behavior of its police officers, section 1983 liability will not lie unless the municipality either tacitly authorizes the behavior or displays deliberate indifference towards the police misconduct. Brooks v. *1110 Sheib, 813 F.2d 1191, 1193 (11th Cir.1987) (citing Cannon v. Taylor, 782 F.2d 947, 951 (11th Cir.1986)). In establishing the fault element, plaintiff must prove either gross negligence or some higher degree of fault on the part of the municipality. Id.[2]
In the instant action, plaintiff contends DeKalb County may be held liable under § 1983 on two grounds. First, plaintiff alleges that DeKalb County knew of defendant Morton's alleged tendency to use excessive force yet failed to take proper corrective measures. Second, plaintiff alleges that the County's rules and regulations designed to address the issue of police officers' use of force are inadequate. Plaintiff argues that the County should establish an impartial board of inquiry to investigate citizens' allegations of police officers' excessive use of force.
The only evidence plaintiff presented to support his first contention are the depositions of Detective David L. Donehoo, a police officer in the Internal Affairs Division of the DeKalb County Police Department, and Michelle Wilkinson, an acquaintance of plaintiff and ex-girlfriend of defendant Morton. Detective Donehoo testified that prior to plaintiff's lodging a complaint against defendant Morton, only two citizen's complaints alleging unjustified use of force were filed against Morton with the DeKalb County Police Department. Deposition of David L. Donehoo, pp. 15-20 ("Donehoo Depo."). In both instances, the DeKalb County Police Department investigated the complaints pursuant to established County procedures. In one case, the investigation showed that defendant Morton should have cited or arrested the complainant for disorderly conduct. In the second, the complainant withdrew the complaint. Having found that the complaints lacked merit, the County determined that no disciplinary measures were warranted. Id., pp. 16-24.
In the case of plaintiff's complaint, the Internal Affairs Division took written statements from plaintiff and defendant Morton as well as the second officer present during the incident in question. Because plaintiff's and defendant's versions of the incident differed, both submitted to polygraph tests administered by the Internal Affairs Division. The results of the polygraph tests were inconclusive and, because the Internal Affairs Division had exhausted all its means of investigation, it closed the investigation with a finding of "not sustained." This finding corresponded to a finding that neither the defendant nor the plaintiff could be proved right; the allegation could not be upheld and therefore a finding of "sustained" was not warranted and defendant Morton could not be definitively proved to be without fault and therefore could not be "exonerated."[3]
In addition to pointing to the citizens' complaints, plaintiff refers to a statement made by Michelle Wilkinson in her deposition to support his contention that the County knew of defendant Morton's alleged propensity toward violence. Wilkinson, who at one time dated defendant Morton, testified that Morton told her he was being investigated by the Internal Affairs Division. According to Wilkinson, Morton *1111 told her the Internal Affairs Division was investigating a complainant's allegations that Morton hit the complainant after the complainant's vehicle allegedly collided with Morton's car. Deposition of Michelle Wilkinson, pp. 11-13. Wilkinson stated that Morton only told her what the complainant alleged and that he did not tell her he actually struck the complainant. Id., pp. 12-13. Wilkinson also testified that she never witnessed Morton exhibiting violence toward others and she was aware of no other investigations by Internal Affairs.[4]
In Brooks v. Sheib, supra, the plaintiff alleged, as plaintiff does in the instant action, that the City knew of the defendant police officer's alleged violent nature yet failed to discipline him. The Brooks plaintiff argued that past citizens' complaints about the police officer supported a finding that the City knew of the officer's alleged propensity toward violence. The Eleventh Circuit found both that the plaintiff failed to demonstrate that past complaints of the officer's misconduct had any merit and that the City presented testimony that each complaint was fully investigated and found to be lacking in merit. The court concluded, "[i]n sum, there [was] no evidence that would allow a jury to find that the City knew or should have known that the natural consequence of its policy and practice would be the deprivation of constitutional rights." Brooks, supra, 813 F.2d at 1193 (citing Owens, supra, 780 F.2d at 1568). The Eleventh Circuit held that the plaintiff in Brooks was "obligated to produce some evidence that the complaints against [the officer] had some merit ..." and failing to do so, the City could not be held liable. Id. at 1195.
The Brooks plaintiff also alleged, as does the instant plaintiff, that the City promulgated faulty procedures for dealing with allegations of excessive use of force by police officers. The alleged defects in the rules and regulations promulgated by the City in Brooks were similar to those alleged by plaintiff in the present case. The Brooks plaintiff argued, among other things, that citizens should be given a role in reviewing complaints and disciplining police officers. The Eleventh Circuit "assume[d] arguendo that the failure to adopt a specific procedure can fall within the Monell definition of custom or policy ... [but] nevertheless, [had] doubts as to the validity of this proposition." The court continued, "the federal judiciary should avoid limiting the discretion of state and local governments by dictating specific remedial measures." Id. at 1194 n. 4.
As with the Brooks plaintiff's first argument that the City knew, through past complaints, of the officer's alleged violent nature, the Eleventh Circuit concluded that the plaintiff was "obligated to produce some evidence that ... more effective citizens' complaint procedures would have prevented his injuries." Id. at 1195. The Brooks court found that the plaintiff failed "to establish the causal element the `affirmative link' between the procedures for investigating citizens' complaints and [the officer's] deprivation of [the plaintiff's] constitutional rights necessary to prove a section 1983 claim." Id.
The Brooks decision could have been written in reference to the instant case. Defendant DeKalb County has supported its motion for summary judgment by providing affidavits and deposition testimony showing that past complaints of defendant Morton's alleged misconduct were investigated and found to be without merit. Plaintiff has not shown that past complaints, including the alleged complaint referred to by Ms. Wilkinson, had any merit. In addition, defendant DeKalb County has shown that it follows very specific procedures for investigating allegations or suspicions of police misconduct and plaintiff has *1112 not shown any causation between these procedures and his alleged injuries.
Once a movant supports its motion for summary judgment, as the County has here, the adverse party "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The Supreme Court, in Celotex v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986), noted that the standard for granting summary judgment mirrors the standard for granting a directed verdict. The Court held that, after adequate time for discovery, Rule 56(c) "mandates the entry of summary judgment ... against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id., 106 S.Ct. at 2552-2553 (emphasis added). In Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986), the Supreme Court further clarified that
at the summary judgment stage the judge's function is ... to determine whether there is a genuine issue for trial.... [T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict. [cit] If the evidence is merely colorable ... or is not significantly probative ... summary judgment may be granted.
Id., 106 S.Ct. at 2511 (citations omitted).
The evidence plaintiff has presented to counter defendants' showing that no County policy or custom was the moving force behind plaintiff's alleged constitutional injuries is at best colorable and not significantly probative. Therefore, the court GRANTS defendant DeKalb County's motion for summary judgment.
II. Liability of Defendant Morton
Plaintiff alleges that defendant Morton violated his Fourth and Fourteenth Amendment rights by allegedly falsely arresting him and using excessive force against him. Defendant Morton, in his individual capacity, moves for summary judgment in his favor on the ground of qualified immunity. Defendant Morton argues that he acted under a good faith belief based upon reasonable grounds that the measures he took were necessary.
The Supreme Court has created a qualified immunity doctrine which protects government officials from suit. In Harlow v. Fitzgerald, 457 U.S. 800, 102 S. Ct. 2727, 73 L. Ed. 2d 396 (1982), the Court held that "government officials performing discretionary functions, generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." Id. at 818, 102 S.Ct. at 2738. The qualified immunity doctrine, as enunciated in Harlow, was designed to "avoid `subject[ing] government officials either to the costs of trial or to the burdens of broad-reaching discovery' in cases where the legal norms the officials are alleged to have violated were not clearly established at the time." Mitchell v. Forsyth, 472 U.S. 511, 526, 105 S. Ct. 2806, 2815, 86 L. Ed. 2d 411 (1985) (quoting Harlow, 457 U.S. at 817-818, 102 S.Ct. at 2737-2738).
The Court has concluded that qualified immunity is actually an entitlement not to stand trial under certain circumstances. Id. 472 U.S. at 525, 105 S.Ct. at 2815. Where the allegations of the complaint or the undisputed facts after discovery fail to show that an official violated "clearly established" laws, the official is entitled either to have the complaint dismissed or his motion for summary judgment granted. The Supreme Court recently clarified that
The right the official is alleged to have violated must have been `clearly established' in a ... particularized, and hence ... relevant, sense: The contours of the right must be sufficiently clear that a reasonable official would understand that what he is doing violates that right.... [I]n the light of preexisting law the unlawfulness must be apparent.
Anderson v. Creighton, ___ U.S. ___, 107 S. Ct. 3034, 3039, 97 L. Ed. 2d 523 (1987). Thus, in Anderson, a case involving a warrantless search, the Court defined the "relevant question" as "the objective (albeit fact-specific) question of whether a reasonable *1113 officer could have believed [the] warrantless search to be lawful, in light of clearly established law and the information the searching officers possessed." Id. 107 S.Ct. at 3040.
Defendant Morton argues that his actions during the incident which is the subject of this suit did not violate clearly established law. He contends that a reasonable officer could have believed that arresting and hitting plaintiff was lawful in light of clearly established Fourth and Fourteenth Amendment law and the information Morton possessed at the time. Although defendant acknowledges that plaintiff's version of the facts differs from defendant's version, defendant argues that plaintiff's "testimony is irrelevant in determining the good faith immunity of defendant Morton." Defendant Morton's Supplemental Brief in Support of Motion for Summary Judgment, p. 10. Defendant submits that the court must ignore plaintiff's testimony and focus on the facts as they reasonably appeared to Morton.
If the language of Anderson, Mitchell and Harlow quoted above is read out of context and in a vacuum, one might arrive at the erroneous conclusion arrived at by defendant. Although the Supreme Court has specified that dismissal or summary judgment is often proper on grounds of qualified immunity, it has not suggested that the rules of procedure which apply to either dismissal or summary judgment should be abrogated. Even where a defendant moves for summary judgment on the ground of qualified immunity, a court may not grant the motion if there exists a genuine issue of material fact. Indeed, in Mitchell, the Court stated "even if plaintiff's complaint adequately alleges the commission of acts that violated clearly established law, the defendant is entitled to summary judgment if discovery fails to uncover evidence sufficient to create a genuine issue as to whether defendant in fact committed those acts." Mitchell, supra, 472 U.S. at 526, 105 S.Ct. at 2816.[5]
In the instant action, discovery has uncovered evidence sufficient to create a genuine issue as to whether defendant Morton had probable cause to arrest plaintiff and was justified in striking plaintiff on the right side of his face. Under defendant's version of the events of the morning in question, he did not violate clearly established laws of which a reasonable person should have known. If the facts as asserted by plaintiff are true, however, defendant may not escape liability on grounds of qualified immunity. The credibility of the parties and the truthfulness of each person's version of the incident are questions for determination by the jury.[6] For these reasons, the court DENIES the motion for summary judgment of defendant Morton in his individual capacity.
CONCLUSION
The court GRANTS defendant DeKalb County's motion for summary judgment and hereby DISMISSES the complaint against the County and defendant Morton in his official capacity. The court DENIES the motion for summary judgment of defendant Morton in his individual capacity.
NOTES
[1] A suit brought against an officer or employee of the county in his official capacity is tantamount to a suit against the county itself. Brandon v. Holt, 469 U.S. 464, 471-472, 105 S. Ct. 873, 877-878, 83 L. Ed. 2d 878 (1985). Thus, insofar as plaintiff has sued defendant Morton in his official capacity, the same defenses apply as set forth by DeKalb County.
[2] The Supreme Court is divided on the question of which standard of fault a plaintiff must prove in order to prevail. See City of Oklahoma City v. Tuttle, 471 U.S. 808, 105 S. Ct. 2427, 85 L. Ed. 2d 791 (1985), reh'g denied, 473 U.S. 925, 106 S. Ct. 16, 87 L. Ed. 2d 695 (1985).
[3] DeKalb County has a policy of investigating all alleged or suspected personnel misconduct. The Internal Affairs Unit investigates all incidents involving the alleged use of force as well as all allegations of civil rights violations. Second Affidavit of F.D. Hand, ¶ 2 ("Second Hand Aff."). All investigations of DeKalb County Police officers must result in one of four findings: unfounded (the acts complained of did not occur or did not involve public safety personnel); exonerated (acts did occur but were justified lawful and proper); not sustained (insufficient evidence to either prove or disprove the allegations of the complaint); or sustained (sufficient evidence to clearly prove the allegations of the complaint). Id. ¶ 4. Based on the findings of the Internal Affairs Division, the officer's superior as well as Hand, the Director of Public Safety, recommend corrective disciplinary action ranging from verbal and/or written counseling, suspension without pay, demotion and termination. Id. ¶ 5. Use of excessive force is an expressly prohibited offense and can result in termination. Id. ¶ 7.
[4] To support his allegations of DeKalb County's knowledge and failure to discipline, plaintiff also notes that, when Morton took plaintiff to the station to be booked, defendant Morton told his supervisor that he had hit plaintiff and the supervisor had replied that Morton should receive boxing gloves or a trophy. The court is unable to perceive how such a comment provides evidence that the County knew of defendant Morton's alleged propensity toward violence.
[5] At the conclusion of its opinion, the Anderson Court noted that no discovery had yet taken place in the case. Therefore, the Court elaborated that the trial court would first have to determine whether the actions the plaintiff alleged the officer took were actions that a reasonable officer could have believed lawful. "If they [were] not, and if the actions [the officer] claim[ed] he took [were] different from those the [plaintiff] allege[d] (and [were] actions that a reasonable officer could have believed lawful), then discovery may be necessary before" the officer's motion for summary judgment could be resolved. Anderson, supra 107 S.Ct. at 3042 n. 6. In the instant action, the court, by granting plaintiff's motion to amend his complaint, at least impliedly concluded that the allegations of plaintiff's complaint stated a claim of violation of clearly established law. Thus, discovery was necessary to determine whether the actions of plaintiff and defendant on the morning of August 20, 1986 occurred as one or the other asserted in the complaint and answer.
[6] As the Supreme Court noted in Mitchell, "At trial, the plaintiff may not succeed in proving his version of the facts, and the defendant may thus escape liability." 472 U.S. at 527, 105 S.Ct. at 2816.
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421 Pa. 464 (1966)
Kitchen
v.
Grampian Borough, Appellant.
Supreme Court of Pennsylvania.
Argued April 25, 1966.
May 24, 1966.
*465 Before BELL, C.J., MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.
William U. Smith, with him Smith, Smith & Work, for appellant.
Carl A. Belin, Jr., with him Belin & Belin, for appellee.
OPINION BY MR. JUSTICE MUSMANNO, May 24, 1966:
James Kitchen was injured when he fell on a sidewalk in the Borough of Grampian at a point in front of privately owned property. Kitchen filed a suit in *466 trespass against the Borough, and the Borough brought in as additional defendants Ward McDonald and Gust Chelgren. It developed at the trial that the McDonald property was owned by Ward and Faith McDonald and the Chelgren property by Gust Chelgren and his wife, Marie. The defendant moved to amend to include the other mentioned persons as party defendants. The amendment was allowed. After the trial which resulted in a verdict for the plaintiff against the Borough and both Chelgrens, the Chelgrens moved for a new trial.[*] The lower court granted the new trial, giving reasons.
The reasons assigned by the trial court for a new trial are unfair to itself. The court says that it "is constrained to indict itself as having erred" in two instances. Neither one deserves the self-criticism imposed.
The first auto-censure is in allowing amendment of the defendant's original complaint. In cases of this kind the involved municipality has a right of indemnification against the property owner. This right ripens into a litigable reality when a judgment is entered against the municipality. The municipality, therefore, is not bound by the expiration of the statute of limitation applicable to the injured plaintiff. In Carlin v. Pennsylvania Power & Light Co., 363 Pa. 543, we said (p. 545): ". . . Where the statute of limitations bars a suit directly against an alleged tortfeasor, he may not be joined as an additional defendant in an action for the tort on an allegation that he is alone liable: Zachrel, Admrx. v. Universal Oil Products Company et al., 355 Pa. 324 (1946). However, the rule is different where the defendant claims and submits facts in the complaint which indicate that the additional defendant is liable over to him, or jointly liable.
*467 "`The fact that the statute of limitations will bar the plaintiff from a direct recovery against the additional defendant can have no effect on the defendant's right to enforce his claim of contribution or indemnity. The cause of action owned by the plaintiff is distinct from the cause of action arising out of the duty of the additional defendant to indemnify the defendant.' Goodrich-Amram Rules of Civil Procedure, Comments on Rule 2252 (a)-9."
The case of Saracina v. Cotoia, 417 Pa. 80, cited by the lower court is not apposite. There, the amendment was not allowed because the plaintiff attempted to bring in for primary liability, after the statute of limitations had expired, a new party.
Neither is the second averment of mea culpa of the lower court of such a character as to warrant a new trial. While trial rules and procedure must be obeyed in order to assure just verdicts based on evidence, it does not follow that a new trial is imperative if it is demonstrated that a slight deviation from the highway of technical procedure did not take justice over the brink. The trial court says that "it failed to instruct fully as to the effect of life expectancy, as determined by life expectancy tables."
It is true that the charge in this respect suffered in content. It is not apparent, however, that the fundamentals of life expectancy, in connection with future loss of earning power, were not adequately communicated to the jury. The resulting verdict would indicate that neither side suffered from the lack of a fuller treatment of the subject.
The complaint raised by the appellant on this feature of this case had its prototype in the case of Butz v. Manning, 320 Pa. 336, where this Court, speaking through Justice SCHAFFER, concluded that the scarcity of steam in the engine of the charge did not fail to carry the reasoning of the jury to a just and fair termination *468 of the litigation, and accordingly affirmed the judgment: "Complaint is made that the court did not properly instruct the jury concerning the use of life expectancy tables and concerning the subject of present worth. While it may be said that the instructions in both respects were somewhat scanty, we are fully satisfied from the moderateness of the verdict that appellant was in no way prejudiced thereby."
We are satisfied here that justice has been done and that a retrial of the cause is unnecessary.
Order reversed with directions that judgment be entered on the verdict.
NOTES
[*] They had also filed a motion for judgment n.o.v., which was later abandoned.
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242 Md. 519 (1966)
219 A.2d 826
WASHBURNE AND DIRECTOR OF FINANCE, BALTIMORE COUNTY, MD.
v.
HOFFMAN, ET AL., ETC. WASHBURNE
v.
DIRECTOR OF FINANCE, BALTIMORE COUNTY, MD.
[No. 219, September Term, 1965.]
Court of Appeals of Maryland.
Decided May 26, 1966.
The cause was argued before PRESCOTT, C.J., and MARBURY, BARNES and McWILLIAMS, JJ., and EVANS, J., Associate Judge of the Fifth Judicial Circuit, specially assigned.
Jervis Spencer Finney, for Thomas D. Washburne, one of appellants, and E. Scott Moore and Mrs. Jean G. Rogers, with whom was Walter R. Haile on the brief, for Director of Finance, Baltimore County, Maryland, other appellant, and one of appellees.
Richard C. Murray and John J. Caslin, with whom was Donald J. Gilmore on the brief, for W. Ross Hoffman, et al., constituting the majority members of the Board of Supervisors of Elections for Baltimore County, appellees.
McWILLIAMS, J., delivered the opinion of the Court.
These three appeals are the consequence of a minor skirmish in the perennial conflict between the majority and minority political parties in Baltimore County. The autonomy of the Board of Supervisors of Elections (Board), controlled by appointees of the majority (2 out of 3 members), has been challenged by leaders of the minority. Since the appeals all arose out of the same facts, which, with few exceptions, are not in dispute, we shall treat them as one appeal.
For reasons which have not been disclosed the County Executive (Executive) (a member of the minority) recommended to the County Council (Council) that $440,000 be appropriated for the use of the Board for the fiscal year 1 July 1964 to 30 June 1965. The Council, solidly controlled by the majority (6 *522 out of 7 members) appropriated only $351,000 ($89,000 less than the Executive's recommendation). In December the Board concluded the $351,000 would be exhausted before June. A supplementary appropriation of $77,000 was requested but the Executive approved only $50,000, which the Council (in February) appropriated. Later the Executive claimed he approved the Board's request only after reaching an "understanding" that no more would be required until the end of the fiscal year and that "there would be some curtailment of spending until the 1965-1966 budget funds were available."
The Board says two creditors, whose claims totaled $16,517, had agreed "to wait until after July 1st to receive their money" and that it was "understood" the entire $50,000 would be available for its use and that it "would have been clearly enough to operate on." Later, however, the Board was "officially notified [by the Office of Finance] that the $16,517 had been incumbered for bills that * * * [the parties] had agreed would be paid later." As a result the Board wound up "short the $16,517."
It seems to be conceded that the Board did curtail its expenditure to some extent. Nevertheless, in April, the Council was persuaded to make an "emergency appropriation"[1] of $16,517 from "available surplus funds." Its action, known as Bill No. 40 (passed by a vote of 6 to 1), was vetoed by the Executive. In his veto message to the Council he suggested that the Board, in by-passing the Executive and going directly to the Council, had shown "nothing but contempt for the budget procedures established under the County Charter." He expressed surprise that the Council "would accede to this request * * * in the light of its possible illegality." He denied the existence of an "emergency" unless it could be said to exist "in the need to apply curbs to the * * * Board's reckless spending for purposes of political patronage." Three weeks later (3 May) the Council, again by a vote of 6 to 1, passed Bill No. 40 over the Executive's veto.
On the day following Thomas D. Washburne (an appellant), *523 then (but not now) the minority member of the Board, filed a bill for a decree declaring the action of the Council to be illegal and void and enjoining the payment of any of the funds appropriated by Bill No. 40. The Director of Finance[2] had been withholding payroll checks from Board personnel since 23 April and, of course, continued to do so. Within the week the majority members filed a petition for a writ of mandamus to compel the Director of Finance to make the $16,517 available to the Board. Washburne was granted leave to intervene in the mandamus proceeding.
On 25 May both cases came on for trial and it was agreed, "since the factual situation is the same," that consolidation for trial was proper.[3] Judge Turnbull dismissed the bill in the equity case and granted the writ of mandamus. A week passed. The Director of Finance continued to withhold the paychecks. On 2 June the majority members of the Board filed a petition for the enforcement of the order of 25 May. On the next day Judge Turnbull signed an order directing the Director of Finance to "meet the present payroll * * * [and] the payroll * * * due and owing since 23 April." Also, as part of his order, he expressed the opinion that the case was "not a proper one for a stay of execution." Maryland Rule 817 e. The Director obeyed the order and disbursed the funds to the employees, who, of course, are not parties to this appeal. By 30 June all but $1,285 had been expended. It seems to be conceded that this amount "lapsed into the county treasury" pursuant to section 713 of the Baltimore County Charter.
Washburne appealed from the dismissal of his bill of complaint. The Director of Finance appealed from the granting of the writ of mandamus. Washburne also, as intervenor, appealed from the judgment in the mandamus case. His standing to do so has not been challenged. Neither of the appellants sought *524 to have these appeals advanced for argument pursuant to Maryland Rule 845 c. Appellees point out that on three occasions they consented to extensions of time (totaling 6 months) for filing briefs.
Why there was no appeal from Judge Turnbull's order of 3 June[4] is not explained and whether, if taken, it would have improved the appellants' position in the instant case is a question we need not consider. That such an appeal is lacking, however, makes our decision virtually inevitable.
In his oral opinion Judge Turnbull concluded the Board was an agency of the State of Maryland and that its activities were not subject to the control of the county government. He thought it unnecessary to decide whether the Council's determination that an emergency existed was reviewable but he found that an emergency did exist. During the trial he excluded proffers of alleged "illegal and wasteful expenditures by the Board." Appellants urge us to appraise Judge Turnbull's rulings (and his final orders as well) and declare them to be erroneous. Appellees, on the other hand, have moved to dismiss the appeal because, they allege, the case has become moot. Appellants disagree but they say, even if the case has become moot, matters of importance and general public interest are involved and, under the rule announced in Lloyd v. Supervisors of Elections, 206 Md. 36, 111 A.2d 379 (1954), the questions presented should be decided. We think Lloyd is controlling on both counts and that the appeal should be dismissed.
The language of Judge Hammond, who spoke for the Court in Lloyd, seems especially pertinent here:
"The chronology of the case makes it apparent that nothing this Court could do, by reversal or otherwise, could undo or remedy that which has already occurred. It is beyond our power to make a decision in the case which will bind any of the parties to it or accomplish any of the purposes for which it was brought *525 or defended. The case was moot as to the parties when it reached us. Appellate courts do not sit to give opinions on abstract propositions or moot questions, and appeals which present nothing else for decision are dismissed as a matter of course." Id. at 39.
We are fully persuaded it is beyond our power to undo or in any way revise what has already taken place. We could not make a decision which, as far as the parties are concerned, would accomplish any of the purposes for which the litigation was instituted. Appellants argue, however, that a dismissal of the appeal will make Judge Turnbull's decision a precedent which would impair their right, as established in Gloyd v. Talbott, 221 Md. 179, 156 A.2d 665 (1959), to recover against the recipients of the money. As they put it "the right of the County and the taxpayer to recover the funds paid would be foreclosed." While we are confident Judge Turnbull's colleagues on the Baltimore County court, or, indeed, the court of any other county, would consider his decisions very persuasive, we cannot agree that they are in any sense binding. No trial judge is required to abdicate his own individual judgment merely because a colleague of coordinate jurisdiction has enunciated a principle of law which he feels is erroneous. Brown v. Fidelity & Dep. Co., 143 Md. 29, 33, 121 A.2d 920 (1923); 21 C.J.S., Courts, § 200 (1940). Whatever the outcome of any attempt to collect from the recipients, the doors of this Court would be open, and we have never considered nisi prius decisions to be anything more than merely persuasive.
In respect of the exception to the general rule of dismissal, we said, in Lloyd:
"The courts of other jurisdictions, which recognize the exception, have found difficulty in drawing the line which separates the exception from the general rule of dismissal. Those which we regard as the better considered and reasoned cases take the view that only where the urgency of establishing a rule of future conduct in matters of important public concern is imperative and manifest, will there be justified a departure from the general rule and practice of not deciding academic *526 questions. They hold that if the public interest clearly will be hurt if the question is not immediately decided, if the matter involved is likely to recur frequently, and its recurrence will involve a relationship between government and its citizens, or a duty of government, and upon any recurrence, the same difficulty which prevented the appeal at hand from being heard in time is likely again to prevent a decision, then the Court may find justification for deciding the issues raised by a question which has become moot, particularly if all these factors concur with sufficient weight." 206 Md. at 43.
In Lloyd we adapted (without actually adopting) the criteria above set forth to that particular set of facts and we found "none of the imperative and manifest requirements necessary if the Court is to give an opinion when the matter is moot as to the parties before the Court." Ibid. If we apply the criteria used in Lloyd to the facts in the case at bar we reach a like result.
It cannot seriously be contended that we are concerned with a matter of important public concern. We are not dealing, as we did in Lloyd, with a statute. Nothing more important than a single enactment of the legislative body of one county is involved here. The sum of money in dispute is minuscule when contrasted with the total budget of the county. There seems to be no urgency to establish anything, let alone an "imperative and manifest urgency." There has been no showing that "the public interest clearly will be hurt" if we do not decide this case immediately. Indeed, not many of the appeals which come to this Court proceed at a pace quite as leisurely as this one did. If the public's money has been improperly or illegally disbursed suits can be filed to compel its return. Otherwise there seems to be no aspect of the controversy which cannot adequately be dealt with by the General Assembly. If the state government wants the budget of its Board to be subject to the control of the government of Baltimore County it can by statute so provide. In fact, a step in that direction was taken a few years ago when the Board (together with similar agencies) was made "subject to the purchasing laws and regulations * * * *527 [of the county] now or hereafter in effect." Code, Art. 15 A, § 34 (1963 ch. 701) (1957 Cum. Supp. 1965).
No one has argued, nor even suggested, that this situation is "likely to recur frequently" or at all. Perhaps the fact that (although another fiscal year is about to expire) there has been no recurrence has some significance. We find nothing in this record to indicate it will ever recur. If it does, counsel can surely choose a type of action calculated to bring it to this Court to be passed upon as a live issue.
That the case is moot is obvious. That it does not measure up to the criteria which would justify our dealing with it as an exception, if not obvious, certainly requires no further discussion.
Appeal dismissed. Costs to be paid by appellants.
NOTES
[1] Section 712(b) of the Charter of Baltimore County provides, in part, as follows: "(b) Emergency. To meet a public emergency affecting life, health or property, the county council may * * *."
[2] Appointed by the County Administrative Officer with the consent of the Executive.
[3] Maryland Rule 503 expressly does not authorize the consolidation or joint trial of law actions with equity actions, or vice versa. It will be observed, however, that neither the consolidation nor joint trial of such actions is prohibited. In the instant case the court and all parties agreed to the joint trial and it is unchallenged in this Court.
[4] The order declared the case was not a proper one for a stay of execution, held that the Director of Finance had no discretion "to withhold payment of salaries and wages" and required him to make immediate payment thereof.
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219 A.2d 155 (1966)
Edward LITTLEJOHN, Appellant,
v.
The STATE of Delaware, Appellee.
Supreme Court of Delaware.
April 12, 1966.
Michael F. Tucker, Asst. Public Defender, Wilmington, for appellant.
Grover C. Brown, Deputy Atty. Gen., Dover, for the State.
WOLCOTT, C. J., and CAREY and HERRMANN, JJ., sitting.
*156 WOLCOTT, Chief Justice:
The appellant, Edward Littlejohn, was convicted of the manslaughter of Mamie Bryant. He appeals, attacking the sufficiency of the State's evidence and the refusal to suppress from evidence statements made by the deceased to neighbors shortly after the events which the State maintains caused her death.
Prior to September 22, 1963, the day on which these events took place, Littlejohn had lived with Mamie Bryant near Lincoln, Delaware. Their near neighbors were Lillian and Joseph Robinson. On the day in question, Littlejohn and Mamie Bryant, about 11:00 a. m., accompanied the Robinsons in their car on a trip. They visited various places and all were drinking. At least one altercation took place between Littlejohn and Joseph Robinson. They returned to Lincoln in the early evening, going to their respective homes.
Shortly thereafter, Mamie Bryant came to the Robinsons' home and borrowed some matches. About ten minutes later, Mamie Bryant appeared again at the Robinsons'. She asked them to take her to the hospital because Littlejohn had thrown coal oil upon her and struck a match to her. The trial court permitted the Robinsons to testify as to her statements thus made to them.
The crime of manslaughter charged here is the killing of another without malice while engaged in the doing of an unlawful act; that is something which the defendant had no right to do. State v. Woods, 7 *157 Pennewill 499, 77 A. 490. Seizing upon the element of the crime that death must be caused by the doing of an unlawful act, Littlejohn argues that there is no evidence that he intentionally set Mamie Bryant afire.
The argument is that the only evidence offered by the State was the statement made by the deceased to the Robinsons that Littlejohn threw coal oil on her and threw a lighted match on her. This evidence is characterized as circumstantial which, under the rule, must be inconsistent with any hypothesis other than guilt. Holland v. State, 9 Terry 559, 107 A.2d 920. Thus, it is argued, the statement made by the deceased is as consistent with the view that the coal oil had been thrown and ignited accidentally.
We think the argument without merit. The deceased's statement was to the effect that Littlejohn first threw coal oil on her and then threw a lighted match on her. If this statement was accepted by the jury, as obviously it was, any possibility of accident is precluded. Furthermore, the deceased's statement is not circumstantial evidence but is direct evidence even though hearsay. This being so, the rule of Holland v. State has no application.
Next, Littlejohn argues that the State failed to prove any motive on his part to set fire to the deceased. This may be so but there is no requirement of law that the State must prove a motive. The lack of proof of motive may be of importance in a trial for a crime involving an element of willfulness and malice when the State is relying solely upon circumstantial evidence, State v. Buckingham, 11 Terry 469, 134 A.2d 568, but as we have pointed out, this conviction does not stand solely upon circumstantial evidence. The State may, of course, always prove motive if it can, but its inability to do so is not fatal. 21 Am.Jur. 2, Criminal Law, § 86.
Littlejohn next argues that the State failed to prove the cause of death and to connect it with his act. The deceased actually died from a severe distention of her stomach related to the presence of a huge ulcer on the lesser curvature. The doctor who so testified went on to state that "these terminal changes in the stomach which killed her were sequential or secondary to the burns" which brought about poisoning and secondary infection.
We think the evidence sufficient to warrant a finding by the jury that Mamie Bryant died from an organic condition which was a direct result of the effect of the burns she suffered. Therefore, death having resulted as a natural result of the burns inflicted by Littlejohn, he is criminally responsible for the death. 52 Am.Jur., Homicide, § 52.
Finally, Littlejohn argues that testimony as to the statements made by Mamie Bryant to the Robinsons shortly after she had been burned were inadmissible in evidence and should have been suppressed as hearsay evidence. They were admitted in evidence by the trial judge as part of the res gestae.
One of the numerous exceptions to the rule of hearsay evidence is a statement made as part of the res gestae. The basis for the exception is that statements made instinctively at the time of an event without the opportunity to fabricate are likely to be true. The law thus presumes their truthfulness. While the statement to be admissible must be made at or near the time of the event, the statement need not be exactly coincident in point of time with the event. Today the test applied is one of spontaneity; that is, was or was not the statement induced by the shock of the event. 20 Am.Jur., Evidence, § 662; 31A C.J.S. Evidence §§ 413, 417; 2 Jones on Evidence, § 321, and see Cloud v. State, 2 Storey 182, 154 A.2d 680, 78 A.L.R. 2d 294.
In the case at bar Mamie Bryant returned to the Robinson home not more than ten minutes after borrowing a box of matches; she was obviously badly burned and in *158 pain; she spoke louder and more excitedly than normal, and she was on the verge of tears. The trial judge ruled that these circumstances satisfied the requirement of spontaneity. We agree with his ruling. In any event, his decision lay within his sound discretion which ordinarily is conclusive upon appeal. 20 Am.Jur., Evidence § 663.
To the extent that State v. Trusty, 1 Pennewill 319, 40 A. 766 is inconsistent with this holding, we overrule it.
The conviction below is affirmed.
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886 S.W.2d 631 (1994)
318 Ark. 595
Scott A. SCHERZ and Connie A. Scherz, His Wife, Appellants,
v.
MUNDACA INVESTMENT CORPORATION; J. Phillip Pounders and Jane E. Pounders, His Wife; Dale Davis and Vicki Davis, His Wife; and Estate of Don Baker a/k/a Dan Baker, Deceased, Appellees.
No. 93-1217.
Supreme Court of Arkansas.
November 7, 1994.
Homer Tanner, No. Little Rock, for appellants.
Dorcy Kyle Corbin, John E. Pruniski, III, No. Little Rock, for appellees.
DON R. ELLIOTT Jr., Special Justice.
This action involves the foreclosure of a four-plex located in Little Rock, Arkansas. The case was tried on its merits on October 9, 1991. At the conclusion of the trial, the Court instructed the appellee's counsel to prepare a foreclosure decree, and advised that the Court would sort out the various interests. On February, 19, 1992, a decree was signed and entered of record by the trial judge as a final judgment. Subsequently, appellant's counsel wrote a letter to the trial judge objecting to the provisions of the decree, requested a hearing, and asked that the decree be set aside. No action was taken by the trial court. The Commissioner then sold the property pursuant to the decree, and the first sale was set aside. On February 11, 1993, a second Commissioner's sale was held. After the appellant filed a motion to vacate, a hearing was held on May 12, 1993, denying the appellant's motion to vacate, and as a *632 result, an order of confirmation was filed on July 27, 1993. On August 6, 1993, the separate party, Allison, filed a motion for reconsideration, and on August 17, 1993, appellants filed their notice of appeal. This Court lacks jurisdiction, and the appeal is dismissed.
The first issue is whether the original decree of February 19, 1992, is a final judgment, and therefore, appealable. The chancellor declared that the decree was a final judgment and there was no just reason for delay. The decree set an attorney's fee and appointed a commissioner to sell the property if judgment was not paid within ten (10) days. Alberty v. Wideman, 312 Ark. 434, 850 S.W.2d 314 (1993) reaffirms this court's long standing principle that a decree foreclosing a mortgage and a later decree confirming the foreclosure sale were both final and appealable orders.
Thus, a decree that orders a judicial sale of property and places the court's directive into execution is a final order and appealable under Ark.R.App.P. 2(a)(1). When there is such an order, a certification under Rule 54(b), is not necessary ... If it were otherwise, and there were questions about the validity of sale, prospective bidders might not bid a reasonable amount because there would be a cloud over the matter, and no one wants to buy a lawsuit. Those issues can be finally determined under our procedure. As a separate matter, any questions concerning the validity and adequacy of the bids might be heard on a later appeal from the order confirming title.
Id. at 437, 850 S.W.2d at 316.
In Alberty, the chancellor only determined that the property shall be sold by a commissioner appointed by the Court within sixty days from the date of the order. This court held that such an order did not place the court's directive into execution. Here, however, the court appointed a commissioner, established that if the judgment was not paid within ten days the commissioner should sell the property by auction, and set attorneys fees.
Therefore, this court finds that the February 19, 1992, decree was final since it placed the court's directive into execution and no additional orders were required prior to the sale. Therefore, we hold that the notice of appeal, which was filed on August 17, 1993, is untimely for the purposes of reviewing the foreclosure decree of February 19, 1992.
The second issue in this case is whether the notice of appeal which was filed on August 17, 1993, allows this court to review the order which was entered on July 27, 1993. Obviously, the notice of appeal was filed within thirty days of the July 27, 1993, decree. However, on August 6, 1993, a motion to vacate judgment was filed by the separate party, Allison, who is not a party to this appeal. Pursuant to Ark.R.App.P. 4(c), if a timely motion listed in Section (b) of this rule is filed by any party, the time for appeal for all parties shall run from the entry of the order granting or denying the new trial.
In the motion to vacate, it is alleged that the decree is contrary to the proof offered at trial. This court has previously held in Jackson v. Arkansas Power and Light Co., 309 Ark. 572, 832 S.W.2d 224 (1992), that when a motion to vacate is couched in terms of a motion for new trial, it will be treated as such. Ark.R.App.P. 4(b) states that upon the timely filing of a motion for new trial, the time for filing of a notice of appeal shall be extended. The trial court in this case neither granted nor denied the motion to vacate, and therefore, Ark.R.App.P. 4(c) controls as follows:
Provided, that if the trial court neither grants nor denies the motion within thirty days of its filing, the motion will be deemed denied as of the thirtieth day. A notice of appeal filed before the disposition of any such motion, or if no order is entered, prior to the expiration of the thirty day period, shall have no effect.
(Emphasis added).
Therefore, the motion was deemed denied on September 5, 1993. To effectively appeal the July 27, 1993, order, a new notice of appeal should have been filed during the time period of September 5, 1993, through October 5, 1993. Since this was not done, the appeal is hereby dismissed.
*633 ROBERT L. DEPPER, Special Justice, joins in this opinion.
CORBIN and BROWN, JJ., not participating.
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679 F. Supp. 726 (1988)
Robert KESECKER, et al., Plaintiffs,
v.
UNITED STATES DEPARTMENT OF ENERGY, N.L. Industries, Inc., NLO, Inc., Defendants.
Civ. No. C-1-86-1236.
United States District Court, S.D. Ohio, W.D.
January 28, 1988.
*727 Michael Hall, Dayton, Ohio, for plaintiffs.
John Wirthlin, Donetta Wiethe, Asst. U.S. Atty., Cincinnati, Ohio, Rupert Mitsch, Washington, D.C., for defendants.
FINDINGS OF FACT, OPINION AND CONCLUSIONS OF LAW
CARL B. RUBIN, Chief Judge.
This matter is before the Court following trial held December 8, 9 and 10, 1987 with presentation of evidence and testimony. Plaintiff seeks relief for an asserted injury incurred while in the employ of NLO, Inc., in facilities owned by the United States of America and leased to NLO, Inc. In accordance with Rule 52 of the Federal Rules of Civil Procedure the Court does submit herewith its Findings of Fact, Opinion and Conclusions of Law.
I.
FINDINGS OF FACT
1. Plaintiff Robert E. Kesecker was employed from January 23, 1956 through October 18, 1965 at a uranium processing plant owned by defendant United States of America and operated by NLO, Inc. ("NLO")[1]. NLO was a complying employer under Ohio Workers Compensation laws during plaintiff's period of employment. In his employment plaintiff dealt with uranium and was required to machine "cores" of uranium to remove surface imperfections. (Defendant's Ex. 434). In his employment plaintiff was exposed to some radiation emanating from uranium dust and uranium particles caused by the machining process.
2. The operation of the plant in question was governed by safety regulations which included the following:
A. All employees were prohibited from wearing street clothes into the plant but were instead required to wear clothing issued by defendants. Employees were issued fresh clothing both in the morning upon arrival and after their lunch break. In each instance they were required to shower before leaving the plant and to discard all clothing previously worn.
B. All employees were required to wear an identifying badge which included a film strip indicating the amount of exposure to radiation.
C. All employees were required to submit urine samples and to undergo periodic physical examinations.
D. The defendant NLO established standards of radiation exposure more restrictive than those established by the Atomic Energy Commission (AEC) and required that the plant at all times conform to such restrictions.
E. An extensive duct and ventilation system was established to remove wherever practical particles and dust from the *728 air that might be radioactive. (See Defendant's Ex. 434.)
3. Plaintiff Kesecker has had physical health problems during his entire adult life. In October, 1955, when he first applied for employment he was put in "Class C". He was deemed satisfactory for the position for which he was considered, but a specific restriction was placed upon his transfer to certain other positions. (Plaintiff's Ex. 112) At about the same time plaintiff had been rejected for a position "production mechanical" with the following language: "Did not meet physical requirements of position for which hired." (Plaintiff's Ex. 111) Neither counsel nor any witness indicated the specific reason for such rejection.
4. Plaintiff has been treated by the following physicians who are listed in chronological order.
1. Dr. George Rourke
2. Dr. Peter Enyeart
3. Dr. Donald Pulver
4. Dr. R. Michael Kelly
5. Dr. Robert McQueen
6. Dr. W. Giles Allen
The following observations are contained in the medical records submitted to the Court[2].
A. Dr. Rourke on October 15, 1973 "Asthma, cough, wheezing, no fever (illegible word), 15-20 years ago with weather changes."[3] (Joint Ex. 1, Tab Lebanon Medical Group Dr. Rourke, page 00006)
B. Dr. Peter Enyeart noted on September 27, 1983: "History bronchial asthma years ago in West Virginia." (Joint Ex. 1, Tab "Dr. Enyeart", page 00011)
C. Dr. Donald W. Pulver on May 25, 1984: "... Robert Kesecker, a fifty-two year old male with a four year history of bronchial asthma ... Final diagnoses: bronchial asthma Intrinsic and Extrinsic, Perennial Allergic Rhinitis." (Joint Ex. 1, Tab "Dr. Enyeart", page 00007)
Dr. Enyeart relied upon a chest x-ray by Dr. Susan Weinberg of the Bethesda Hospital Radiology Services made on December 12, 1983. Her findings: "P.A. and lateral chest. The cardiopericardial silhoette is normal in size and configuration. The lungs are clear. The soft tissues and bones are unremarkable. Impression: Normal chest." (Joint Ex. 1, Tab "Dr. Enyeart", page 00010)
D. Dr. W. Giles Allen on July 16, 1987 made the following comments: "Chest x-ray: Prominent peribronchial markings bilaterally but no interstitial changes ... Impression (1) Asthma, poorly controlled, but well tolerated ... (3) History of uranium exposure in alleged toxic doses...." (Joint Ex. 1, Tab "Dr. Allen", page 00001)[4].
5. Two medical experts were presented to the Court. Dr. Michael Kelly, an internist in occupational medicine diagnosed the plaintiff's condition as interstitial fibrosis[5].
Defendants' expert witness was Dr. Robert P. Baughman who is board certified in internal medicine and board certified in internal medicine pulmonary. Dr. Baughman testified that in his opinion it was a 90% medical certainty that the plaintiff has asthma and that it was less than a 5% medical certainty that the plaintiff has pulmonary fibrosis.
*729 The totality of evidence presented to the Court indicates that only was Dr. Kelly made a diagnosis of pulmonary fibrosis.
6. As noted in Finding 2D, the safety standards imposed at the plant in question were substantially above the requirements imposed by the AEC. The plant itself was operated in a conservative fashion and safety restrictions imposed upon employees were substantially above those accepted in other similar plants. In the nine years of employment by plaintiff his skin exposure in terms of "rem"[6] varied from a low of 2.4 rems per year to a high of 5.3 rems per year. During this entire period the AEC limit for annual exposure was 30 rem. With the exception of 1959 when the exposure was 5.3 and 1960 when the exposure was 5.1, plaintiff's annual exposure never exceeded 3.9. (Defendant's Ex. 407)
7. The external radiation exposure for plaintiff in his whole body never exceeded 1.5 rem while the AEC standard limit of exposure was 15 rem in the years 1955, 1956 and 1957; 12 rem in the years 1958 and 1959; and 5 rem in all years thereafter. With the exception of the years 1963 when the exposure was 1.5 and 1964 when the exposure was 1.1, plaintiff's exposure never exceeded 0.7. (Defendant's Ex. 408)
The foregoing establishes that at no time was plaintiff exposed to a hazardous quantity of radiation.
II.
OPINION
The Court confronts in this case a question that is of brought on by exposure to potentially dangerous substances. The illness of "black lung" (pneumoconiosis) among coal miners and "asbestosis" among asbestos workers are specific examples. Dealing appropriately with this problem must impact upon the overall relationship of employer and employee irrespective of industry. In essence the inquiry must be this: May a court reward an employee who deals with a hazardous product simply because of his exposure or must there be a showing of actual injury? Plaintiff herein has been exposed but he has not been injured.
There is in addition a separate inquiry as to liability of the United States and the liability of N.L. Industries, Inc. and NLO, Inc.
A. Liability of the United States
Liability of the defendant United States of America Department of Energy is limited to the Federal Tort Claim Act, 28 U.S.C. § 2671 et seq. The significant section thereof is § 2674 which provides in part: "The United States shall be liable respecting the provisions of this title relating to tort claims in the same manner and to the same extent as a private individual under like circumstances...."
It is not entirely clear who the "private individual" is. The United States is both an owner of real estate and a safety regulator. A landlord out of possession is not liable for the torts of a tenant in which such landlord does not participate.
As a regulator the United States acting through the Department of Energy and its predecessor Atomic Energy Commission established standards of maximum exposure that were not even approached. (See Findings of Fact 6 and 7) Indeed, plaintiff has never asserted violation of AEC standards.
If some assertion of vicarious liability be asserted it cannot rise above the liability of the employer.
B. Liability of Defendants N.L. Industries, Inc. and NLO, Inc.
These defendants are employers and their liability can only be established by the laws of the State of Ohio.
"It has been the law of Ohio for over seventy years that the system of workers compensation is the exclusive remedy for industrial injury ..." The Ohio Workers' Compensation Commission was "intended to remove from the common law tort system *730 all disputes between or among employers and employees regarding the compensation to be received for injury or death to an employee ..." (Ohio Revised Code § 4121.80(B)).
In addition, Ohio Revised Code § 4121.80 refers to an intentional tort claim and imposes a burden upon a plaintiff to establish an intentional tort which gives rise under Ohio law to additional compensation[7]. Section 4121.80 of the Ohio Revised Code is instructive in that it defines certain terms which are important to any consideration of this matter. The term "intentional tort" is defined as "an act committed with the intent to injure another or committed with the belief that the injury is substantially certain to occur."
"Substantially certain" means that an employer acts with deliberate intent to cause an employee to suffer injury, disease, condition or death". Id.
Only one expert witness addressed the question of intentional tort. Dr. Eugene Saenger, Professor Emeritus of Radiology at the University of Cincinnati and board certified in Radiology and Nuclear Medicine observed: "[The manner in which the plant was operated] was substantially likely not to cause injury." (TR., pg. 59) (emphasis added)
The only remaining assertion of plaintiff is that the defendants failed to warn him of the dangers of his occupation.
There can be no question that plaintiff during his entire employment was constantly aware that he was dealing with conditions different from those that he had ever experienced before or would ever experience again. He was required to change his clothing twice each day. He was required to shower twice each day. He was required to wear a badge showing radiation exposure. He was required to submit to frequent urinary examinations and he was required to submit to physical examinations.
While admittedly uranium is radioactive, the testimony before the Court was quite instructive as to the nature of the danger. According to Dr. Saenger, the only expert presented to the Court on this subject, had the plaintiff been exposed to five rems per year his risk would have only been one to two percent greater than that accepted by all members of our society. (TR. pg. 41-18) The evidence presented convincingly establishes that plaintiff does not have any exposure related illness. While it is arguable that the results of plaintiff's inhalation of uranium might not appear for a prolonged period of time, it is equally arguable that the longer such period continues the greater likelihood there is of exposure to some other cause of cancer. In an industrial society there are carcinogens in the food we eat, the water we drink and the air we breathe. Even twenty years after the last date of exposure, plaintiff does not suffer from a condition resulting from his employment. In examining the expert testimony and the factual predicate to that testimony, there is far greater weight to the conclusion that plaintiff suffers from asthma from which he has likewise suffered off and on during much of his life than that his asthma condition was caused by any exposure to uranium.
In view of the foregoing the Court determines that the plaintiff has not shown by a preponderance of the evidence any liability of the United States pursuant to the Federal Tort Claim Act or any liability of his former employer pursuant to § 4121.80 Ohio Revised Code.
III.
CONCLUSIONS OF LAW
A. This Court has jurisdiction pursuant to the Federal Tort Claim Act, 28 U.S.C. § 2671, 28 U.S.C. § 1331 and 28 U.S.C. § 1332 and the pendant and ancillary jurisdiction of the Court.
B. Liability under the Federal Tort Claims Act is determined by ascertaining *731 whether a private person would be responsible for similar acts under the laws of the state where the acts occurred. 28 U.S.C. § 2674; Rayonier, Inc. v. United States, 352 U.S. 315, 77 S. Ct. 374, 1 L. Ed. 2d 354 (1957).
C. In an action brought by an employee against his employer pursuant to the Ohio Workers' Compensation laws, the Court is limited to a determination of whether or not the employer committed an intentional tort. Ohio Revised Code § 4121.80(D).
D. The evidence herein demonstrates that no intentional tort was committed.
E. In accordance with Conclusions of Law B, C and D, Plaintiff's complaint is hereby dismissed at plaintiff's costs.
IT IS SO ORDERED.
NOTES
[1] Even though ownership was separated from operation, safety standards established by the United States were enforced at the plant by onsight inspection and by periodic safety review.
[2] The parties have submitted Joint Exhibit 1 which is a large volume containing tabs with pages numbered separately under each tab. References in this Finding of Fact refer to such exhibit and the identifying tab being used.
[3] On cross-examination of plaintiff Kesecker, defense counsel asserted that the missing word was "history" without any objection either by plaintiff or plaintiff's counsel.
[4] The foregoing are not considered by the Court as additional expert opinions. They are condensations only of documents presented and admitted into evidence as factual evidence of plaintiff's physical condition.
[5] Dr. Kelly qualifies as an expert under Rule 702 of the Federal Rules of Evidence. Information supplied to the Court in Appendix E-6 of the final pretrial order contained the following language as to Dr. Kelly: "Board certified in the specialty of internal medicine and board certified in specialty." His expertise must be qualified by a lack of board certification as a pulmonologist.
[6] The unit of biologically effective dose for humans is the "rem". The origin of the term is "Roentgen-Equivalent-Man." The rem is the absorbed dose (rad) multiplied by the quality factor (QF). (Plaintiff's Ex. 121, page 0044).
[7] The Court notes without comment Ohio Revised Code § 4121.80(A) which provides in part: "In no event shall any action be brought pursuant to this section more than two years after the occurrence of the act constituting the alleged intentional tort." The employment of plaintiff ceased over twenty years prior to the commencement of suit.
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431 Pa. Super. 58 (1993)
635 A.2d 1070
Betty GREEN, Appellant,
v.
Lawrence VINGLAS and Walter P. Vinglas and Chrissy Reed A/K/A Christine Reed A/K/A Christina Reed and Donald Mento A/K/A Don Mento C/O Niagra Plastic and Martin Lecomte President St. Pietro Di Roma Italian Society and St. Pietro Di Roma Italian Society.
Superior Court of Pennsylvania.
Argued October 19, 1993.
Filed December 20, 1993.
Eric G. Zajac, Philadelphia, for appellant.
*59 Kevin D. Persio, Ebensburg, for Vinglas & Mento, appellees.
J. Michael Dorezas, Hollidaysburg, for Reed & Lecomte, appellees.
Before CIRILLO, FORD ELLIOTT and CERCONE, JJ.
CIRILLO, Judge.
Betty Green appeals from a judgment entered in the Court of Common Pleas of Cambria County sustaining appellees' preliminary objections in the nature of a demurrer and dismissing Green's action with prejudice. We affirm.
The instant action arose from an incident that occurred at the St. Pietro Di Roma Italian Society (Italian Society), one of the appellees in this case. On the evening of January 24, 1990, Green, while at the Italian Society, was allegedly injured as a result of an altercation between four individuals Lawrence Vinglas, Walter Vinglas, waitress Chrissy Reed, and the Italian Society's steward, Don Mento all of whom are appellees. Nearly two years later, on January 22, 1992, Green's counsel filed a praecipe for writ of summons (writ) in Blair County. For reasons set forth below, the writ was not served on appellees within the requisite thirty day period. See Pa.R.C.P. 401.[1] A complaint was then filed on July 24, 1992 and was served on all but two of the appellees. The writ was reissued on October 6, 1992, and duly served. By agreement of the parties, venue was transferred from Blair County to Cambria County, since all of the appellees reside in Cambria County.
Appellees filed preliminary objections, asserting that Green's complaint should be dismissed with prejudice because the statute of limitations had expired before Green's lawsuit *60 was commenced. The trial court agreed and dismissed Green's action with prejudice.
The facts leading up to the dismissal are as follows. Green asserts that she made a good faith effort to have the writ served by instructing the Blair County Prothonotary to have the sheriff serve it as quickly as possible. Along with the writ, Green gave the Prothonotary a check in the amount of $50.00 for filing. As instructed, the Blair County Prothonotary forwarded the writ to the Sheriff's Office in Blair County. Apparently, in cases where service is to be made outside of Blair County, also called "deputized service,"[2] the standard local practice is to advance the costs required for service of the writ. (Affidavit of Pat Imler, clerk at Blair County Sheriff's Office).[3] In her affidavit, Green's counsel avers that the costs were not advanced to the Cambria County Sheriff because she did not realize that appellees were located in Cambria County rather than Blair County; she was not aware that deputized service was necessary. Green's counsel further contends that she never received a phone call from anyone at the Blair County Sheriff's Office or anyone in the Blair County Prothonotary's Office notifying her of the additional fees required for service of the writ to Cambria County. As a result, the writ was not delivered to the Cambria County Sheriff and service was not effectuated before the statute of limitations had run.[4]
Green appeals from the trial court's decision to dismiss the action and raises the following issue for our review:
*61 Whether appellant, after attempting in good faith to toll the statute of limitations and preserve her cause of action, should be denied her only remedy at law due to a clerical error beyond her control?
The trial court determined that Green "failed to meet her burden of good faith compliance" pursuant to the landmark case of Lamp v. Heyman, 469 Pa. 465, 366 A.2d 882 (1976).[5] Since all parties, along with the trial court, look to the Lamp decision to support their respective positions, we will examine Lamp and its progeny within the confines of the instant set of facts.
In Lamp, just days before the expiration of the two-year statute of limitations, plaintiff's attorney filed a praecipe for a writ of summons against the defendants for personal injuries sustained in an accident.[6] Instead of delivering the writ to the sheriff for service, however, the plaintiff instructed the prothonotary to "issue and hold" the writ. In other words, no service was effectuated. A praecipe for reissuance of the writ, along with service, was made at a much later date. The defendants filed preliminary objections claiming that the original writ was a nullity due to plaintiff's "issue and hold" instructions and was, therefore, barred by the statute of limitations.
*62 The Pennsylvania Supreme Court held that, pursuant to what is now Pa.R.C.P. 401(b)(5),[7] when the writ was reissued, plaintiff's action was not barred by the statute of limitations. This, however, was not the end of the Court's decision. In deciding whether the "issue and hold" instructions rendered the original filing ineffective, the Court set forth the following rule:
[W]e rule that henceforth, i.e., in actions instituted subsequent to the date of this decision, a writ of summons shall remain effective to commence an action only if the plaintiff then refrains from a course of conduct which serves to stall in its tracks the legal machinery he has just set in motion. . . . [A] plaintiff should comply with local practice as to the delivery of the writ to the sheriff for service. If under local practice it is the prothonotary who both prepares the writ and delivers it to the sheriff, the plaintiff shall have done all that is required of him when he files the praecipe for the writ; the commencement of the action shall not be affected by the failure of the writ to reach the sheriff's office where the plaintiff is not responsible for that failure. Otherwise, the plaintiff shall be responsible for prompt delivery of the writ to the sheriff for service.
Lamp, 469 Pa. at 478-79, 366 A.2d at 889. See also Rosenberg v. Nicholson, 408 Pa.Super. 502, 506, 597 A.2d 145, 147 (1991), appeal denied, 530 Pa. 633, 606 A.2d 903 (1992); Leidich v. Franklin, 394 Pa.Super. 302, 308, 575 A.2d 914, 917 (1990), appeal denied, 526 Pa. 636, 584 A.2d 319 (1990); Feher By Feher v. Altman, 357 Pa.Super. 50, 53, 515 A.2d 317, 319 (1986), appeal denied, 515 Pa. 622, 531 A.2d 430 (1987); Gould *63 v. Nazareth Hospital, 354 Pa.Super. 248, 251, 511 A.2d 855, 857 (1986); Watts v. Owens-Corning Fiberglas Corp., 353 Pa.Super. 267, 270, 509 A.2d 1268, 1270 (1986), appeal denied, 514 Pa. 632, 522 A.2d 559 (1987).
In support of this ruling, the Lamp court espoused this rationale:
[T]here is too much potential for abuse in a rule which permits a plaintiff to keep an action alive without proper notice to a defendant merely by filing a praecipe for a writ of summons and then having the writ reissued in a timely fashion without attempting to effectuate service. In addition, we find that such a rule is inconsistent with the policy underlying statutes of limitation of avoiding stale claims, and with that underlying our court rules of making the process of justice as speedy and efficient as possible . . . . Our purpose is to avoid the situation in which a plaintiff can bring an action, but, by not making a good-faith effort to notify a defendant, retain exclusive control over it for a period in excess of that permitted by the statute of limitations.
Lamp, 469 Pa. at 477-78, 366 A.2d at 888-89 (footnotes omitted); see also Rosenberg, supra; Leidich, supra; Feher, supra; Gould, supra; Watts, supra.
"[O]ne's `good faith' effort to notify a defendant of the institution of a lawsuit is to be assessed on a case-by-case basis[.]" Leidich, 394 Pa.Super. at 311, 575 A.2d at 918. While there is no mechanical approach to apply in determining what constitutes a good faith effort to effectuate service, it is the plaintiff who has the burden of showing that his/her efforts were reasonable. Rosenberg, 408 Pa.Super. at 506, 597 A.2d at 147. "At a minimum, the good faith requirement in [Lamp] mandates compliance with the Pennsylvania Rules of Civil Procedure and, importantly, local practice." Feher, 357 Pa.Super. at 54, 515 A.2d at 319; see Farinacci v. Beaver County Industrial Development Authority, 510 Pa. 589, 511 A.2d 757 (1986). Depending upon the process in a particular county, stalling the legal machinery can be accomplished "by instructing either the prothonotary or the sheriff to hold the *64 writ, by personally retaining the writ and not delivering it to the sheriff for service, or by neglecting to pay the sheriff his fee." Farinacci, 510 Pa. at 593-94, 511 A.2d at 759 (quoting Lamp, 469 Pa. at 472, 366 A.2d at 886).
Were we to look only at the Lamp decision itself, it would appear that Green has not engaged in the evils that Lamp was seeking to prevent when she unwittingly failed to pre-pay the sheriff's office for deputized service. This was obviously an unintended delay. Clearly, the effect of Lamp should not be to punish those who make a good faith effort to comply with the local rules. When we look at the cases decided subsequent to Lamp, however, it appears as though Green has not met her burden of proving that she made a good faith effort to comply with local practice.
In Weiss v. Equibank, 313 Pa.Super. 446, 460 A.2d 271 (1983), for instance, plaintiffs filed a writ on the last day before the running of the statute. They failed, however, to give directions to the sheriff for service or to pay for the costs of service, as required by the local rules. In affirming the dismissal of plaintiffs' case, this court stated:
First, neglecting to pay the sheriff's fee was one of the examples given by the supreme court [in Lamp v. Heyman], of methods used by plaintiffs to delay service of the writ. Second, simple neglect or mistake is an example of failing to fulfill the responsibility of plaintiff or his counsel to see to it that the requirements for service are carried out. Untoward circumstances, such as a third person preventing delivery to the sheriff of the writ, may except a plaintiff from the rule of Lamp, but the facts of this case do not warrant such an exception.
Weiss, 313 Pa.Super. at 455, 460 A.2d at 275 (citations omitted); accord Watts, 353 Pa.Super. at 270, 509 A.2d at 1270.
Rosenberg, supra, echoed the rationale set forth in Weiss. There, it was determined that simple neglect regarding service requirements "may be sufficient to bring the rule in Lamp to bear[;] [t]hus, conduct that is unintentional that works to delay the defendant's notice of the action may *65 constitute a lack of good faith on the part of the plaintiff." Rosenberg, 408 Pa.Super. at 510, 597 A.2d at 148. In Rosenberg, the appellant twice attempted to serve appellee at an incorrect address. In finding a lack of good faith on the part of the appellant, this court upheld the dismissal of appellant's complaint, as the statute of limitations had run.
In Feher, supra, another analogous case, it was determined that good faith compliance with the local practice in Beaver County required paying the prothonotary's filing fee, giving the sheriff written instructions for service, and prepaying the sheriff for service. Plaintiff failed to give instructions to the sheriff and failed to prepay the sheriff for service. In finding that the plaintiff did not meet his burden of good faith in attempting to have the writ served, we stated:
Thus, although appellant's counsel did not actively attempt to thwart service of the writ, he also did not take any affirmative action to see that the writ was served and to put the defendant on notice that an action had been filed against him. In failing to prepay the sheriff or give the sheriff instructions for service of the original writ, appellants' counsel failed to comply with local practice and thereby failed to demonstrate an affirmative good faith effort to provide notice to defendant.
Feher, 357 Pa.Super. at 56, 515 A.2d at 320. See also Farinacci, supra (where plaintiff neglected to deliver requisite instructions and payment to sheriff, and failed to provide an explanation for counsel's inadvertence, Pennsylvania Supreme Court was constrained to hold that dismissing plaintiff's action was proper).
In light of the foregoing case law, Green's attempt to categorize the failure to effectuate service as "a clerical error beyond her control" is inaccurate. Rather, judging from the cases finding noncompliance with Lamp, Green did not meet her burden of good faith when she filed the writ two days before the statute of limitations expired and neglected to advance the necessary costs for deputized service as required by local practice. Furthermore, appellees were not notified of *66 the action until approximately seven months after the statute of limitations had expired.
In conclusion, we find no abuse of discretion on the part of the trial court in dismissing the instant action. The complaint and reissued writ, without benefit of the original writ tolling the statute of limitations, was not effective, thus, the action was not preserved.
Judgment affirmed.
NOTES
[1] Rule 401. Time for Service. Reissuance, Reinstatement and Substitution of Original Process. Copies for Service
(a) Original process shall be served within the Commonwealth within thirty days after the issuance of the writ or the filing of the complaint.
* * * * * *
Pa.R.C.P. 401(a), 42 Pa.C.S.A.
[2] Pennsylvania Rule of Civil Procedure 400(d) provides:
If service is to be made by the sheriff in a county other than the county in which the action was commenced, the sheriff of the county where service may be made shall be deputized for that purpose by the sheriff of the county where the action was commenced.
42 Pa.C.S.A. § 400(d).
[3] We can find no Blair County local rule which specifically addresses the practice of deputized service, thus, we must look to affidavits in order to determine the county's "local practice."
[4] It is undisputed that the applicable statute of limitations governing this action is two years. See 42 Pa.C.S.A. § 5524.
[5] We note that where noncompliance with Lamp is alleged, an abuse of discretion standard of review applies. See Farinacci v. Beaver County Indus. Development, 510 Pa. 589, 511 A.2d 757 (1986).
[6] A writ may be defined as follows:
[A] written precept running in the name of the state, issuing from a court of justice and sealed with its seal, addressed to the officer of the law or directly to a person whose action the court desires to command, either as the commencement of the suit or other proceedings or as incidental to its progress, and requiring performance of a specific act, or giving authority and commission to have it done. Any writ is process, the two terms being interchangeable. Indeed, any means of acquiring jurisdiction is properly denominated `process.'
Standard Pennsylvania Practice, Vol. 2, § 10:1. Additionally,
[t]he principal object or purpose of original process is to give to the party to whom it is addressed, or the party to be notified, notice of the proceedings against him, so that he may properly prepare himself to answer the claim or charge.
Id. at § 10:3.
[7] Rule 401. Time for Service. Reissuance, Reinstatement and Substitution of Original Process. Copies for Service
(b)(5) If an action is commenced by writ of summons and a complaint is thereafter filed, the plaintiff instead of reissuing the writ may treat the complaint as alternative original process and as the equivalent for all purposes of a reissued writ, reissued as of the date of the filing of the complaint. Thereafter the writ may be reissued, or the complaint may be reinstated as the equivalent of a reissuance of the writ, and the plaintiff may use either the reissued writ or the reinstated complaint as alternative original process.
Pa.R.C.P. 401(b)(5), 42 Pa.C.S.A.
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886 S.W.2d 117 (1994)
Jerry J. KERR, et al., Appellants,
v.
Carl E. JENNINGS, et ux., Respondents.
No. WD 47369.
Missouri Court of Appeals, Western District.
August 30, 1994.
Motion for Rehearing and/or Transfer Denied October 4, 1994.
Application to Transfer Denied November 22, 1994.
*119 Don R. Lolli, Kansas City, for appellants.
Elvin S. Douglas, Jr., Harrisonville, for respondents.
Before ULRICH, P.J., and BRECKENRIDGE and SPINDEN, JJ.
Motion for Rehearing and/or Transfer to Supreme Court Denied October 4, 1994.
BRECKENRIDGE, Justice.
This appeal involves real estate owned by Jerry J. Kerr and Dea Daniels (the Kerrs) which is subject to a non-exclusive easement held by Carl E. and Mary Jennings (the Jenningses). The Kerrs filed a five-count petition against the Jenningses seeking a declaratory judgment, a permanent injunction, *120 actual, statutory and punitive damages for trespass and property damage. The Kerrs also filed a motion asking the trial court to find the Jenningses in contempt for allegedly violating a temporary restraining order and a preliminary injunction. After a hearing on the motion for contempt, the trial court granted the Kerrs' request for a declaratory judgment and entered a permanent injunction but did not award the Kerrs damages, declined to make its injunction permanent in all respects, and denied the motion for contempt. The Kerrs raise four points on appeal, contending that the trial court erred (1) in failing to award the Kerrs damages; (2) in failing to find the Jenningses in contempt for violating an April 17, 1992, preliminary injunction; (3) in failing to find the Jenningses in contempt for violating an August 14, 1991, temporary restraining order; and (4) in prohibiting the placement of gates at the entrance to and exit from the easement and in failing to make the provisions in its preliminary injunction regarding the placement of those gates permanent. The judgment of the trial court is affirmed.
The Kerrs and the Jenningses purchased adjoining tracts of land in Grandview, Missouri, from Sunrise Dairy Farms at an auction on December 19, 1987. Both the Kerrs and the Jenningses purchased two forty-acre lots. The four lots lie south of Missouri Highway 50, which runs east-west, and west of Kelly Road, a public road and north-south thoroughfare. The Kerrs' property is bounded on the east by Kelly Road. The two lots purchased by the Jenningses are landlocked and have access to Kelly Road only through an easement which bisects the two lots purchased by the Kerrs. All parties had knowledge of the easement prior to the sale.
On January 20, 1988, Sunrise Dairy Farms filed a Declaration of Easement providing that the easement begin at Kelly Road and run west, equally separating the Kerrs' two lots at a width of sixty feet, and then run further west across the northern part of the Jenningses' lots. See Appendix A. The Declaration creates a non-exclusive, perpetual easement for the purpose of pedestrian and vehicular ingress and egress to and from the respective tracts over the easement area and for the purpose of facilitating the installation, maintenance, and replacement of utilities for the tracts served by the easement. The Declaration also provides that "the owners of each of the tracts agree that except when necessitated by repairs or maintenance, neither shall block, obstruct, hinder or interfere with the easement area or the permitted traffic thereon."
When the Kerrs and the Jenningses first purchased their property, there was no actual roadway in existence over the easement. Rather, a fence (the "centerline fence") equally dividing the Kerrs' two tracts ran down the center of the easement. Vegetation, including trees and shrubs, grew along this east-west centerline fence.
In the spring of 1988, the Jenningses commenced the construction of a road on the easement between Kelly Road and their property. The Jenningses first created an entrance from Kelly Road by cutting a swath centered on the easement eighteen to twenty feet wide through the hedgerow which ran along the Kelly Road ditch. In creating the entrance Mr. Jennings removed ten to twelve elm, hedge, and hackberry trees, all within the easement.
The Jenningses next began grading a roadbed within the easement. They graded a fifteen-foot wide road primarily to the south of the centerline fence. Mr. Jennings, however, did remove part of the centerline fence.
On the west side of the Kerrs' property lie several ponds. The easement runs between one larger pond on the north and two smaller ponds to the south. A portion of the banks of the dams of these ponds are within the easement. Mr. Jennings testified that in constructing the roadway he removed only a small part of the dams which encroached upon the easement. Mr. Jennings also stated that he cleared and slightly enlarged a spillway/ditch south of the larger pond.
Beginning in the summer of 1988, the Kerrs allowed Allen M. "Bill" Galloway, as their tenant, to use both of the Kerrs' forty-acre lots for pasturing cattle, harvesting hay, and for other agricultural purposes. Mr. Galloway was the Kerrs' tenant from the *121 summer of 1988 until the fall of 1991. He generally pastured his cattle on the property from the last of April or beginning of May until sometime in December of each year. Although Mr. Galloway had permission to use both of the Kerrs' lots, he primarily kept the cattle on the south forty-acre lot and used the north forty acres for hay. Because there was usually not enough water in the southern ponds during the summer months, though, Mr. Galloway had to move his cattle across the easement several times daily to water the cattle from the larger northern pond.
At the time that the parties purchased their lots, there was a wooden gate at the western end of the easement. Mr. Galloway replaced this wooden gate with a hinged metal gate in 1989. After creating the entrance from Kelly Road in 1988, Mr. Jennings installed a metal gate at the opening on the eastern end of the easement.
In 1989, Mr. Jennings removed the metal gate at the Kelly Road entrance and Mr. Galloway replaced it with another metal gate. From 1989 until 1991, the Kelly Road gate remained in place during the time Mr. Galloway pastured his cattle on the Kerrs' property. Mr. Galloway removed the gate when he took his cattle home in December of each year and reinstalled it each spring when he brought his cattle back to the Kerrs' lots.
There was evidence that Mr. Jennings may have removed the gates at both ends of the easement sometime in 1991. Mr. Galloway testified that Mr. Jennings admitted removing the gates in April or May of 1991.
On August 14, 1991, the Kerrs filed an application for a temporary restraining order seeking to enjoin the Jenningses from removing the gates at both ends of the easement. The Jenningses did not object to the request for a temporary restraining order and did not present any evidence at the August 14, 1991, hearing on the Kerrs' application. After the hearing, the trial court entered a temporary restraining order prohibiting the Jenningses from removing the gates.
Mr. Jennings testified that he removed the gate at the eastern end of the easement at the Kelly Road entrance in November of 1991 in order to allow construction vehicles to enter the easement and travel through to his property. According to Mr. Jennings, at the time he removed the gate there were no cattle on the Kerrs' property. The gate was down for approximately two weeks, after which time Mr. Jennings replaced the metal gate with a cable or wire gate.
The Jenningses eventually poured a concrete pad at the Kelly Road entrance onto the easement. Sometime before April of 1992, Mr. Jennings placed some rock and concrete along the easement roadway "to fill the low spot and level up the road."
After the Jenningses removed portions of the centerline fence, Mr. Galloway built a new fence running east to west on the Kerrs' land on the northern edge of the easement. Mr. Galloway also installed an electrical fence running east to west adjoining the southern edge of the easement.
The new fences on the northern and southern borders of the easement were allegedly removed and/or damaged at times, allowing Mr. Galloway's cattle access to areas where they were not wanted. The Kerrs and Mr. Galloway believed that Mr. Jennings was responsible for the removal and damage of these fences.
On March 24, 1992, the Kerrs filed a petition for a preliminary injunction in which they asked the court (a) to enjoin the Jenningses from placing more concrete and asphalt on the easement and order them to remove the existing asphalt and concrete; (b) to prohibit the Jenningses from enlarging the spillway/ditch and require them to fill the existing trench; (c) to enjoin the Jenningses from destroying electric fences on the Kerrs' property; (d) to order the Jenningses to reinstall the hinged gate on the east end of the easement, keep the gate closed and locked, and provide a key to the Kerrs; and (e) to enjoin the Jenningses from placing any additional material on the easement until a permanent injunction is heard. After a hearing on the petition, the court issued a preliminary *122 injunction on April 17, 1992,[1] enjoining and prohibiting the Jenningses from engaging in the following activities:
1. Placing any more concrete, asphalt, stone or other rubble on the easement crossing [the Kerrs'] property. [The Jenningses] shall, within 30 days of the date of this Order, remove such concrete, asphalt, stone or other rubble from the easement... or, in the alternative, [the Jenningses] shall cover such concrete, asphalt, stone or other rubble with sufficient dirt in such a manner as to prevent it from being a hazard to cattle crossing the easement....
2. [The Jenningses] shall, with [sic] 30 days of the date of this Order, place a culvert in the existing ditch along the south side of the easement and cover the culvert with dirt so that cattle may travel without hazard across the easement....
3. Disturbing in any way the fence which currently divides the [Kerrs'] southern 40 acres and northern 40 acres.
4. Removing, damaging, destroying or disturbing any hinged gates which the [Kerrs] may erect in the Kelly Road entrance/exit to the easement....
5. [The Jenningses] shall erect and maintain a gate at the entrance/exit of the easement at the west side of plaintiffs' property, and this gate shall remain closed at all times, except as is necessary to allow passage of traffic through it.
6. Further grading, digging or otherwise reducing the embankments of any of the ponds on [the Kerrs'] property.
The trial court subsequently issued a supplemental order to its preliminary injunction in which it stated that "[n]othing in the preliminary injunction ... shall preclude either party from constructing a hard surface roadway upon the easement.... The court envisions such roadway surface could be made of concrete, asphalt, gravel or such other material customarily used in surfacing roadways." The Jenningses did eventually gravel a roadway adjoining the dirt roadway they originally constructed.
On April 23, 1992, the Kerrs filed a five-count petition against the Jenningses. Count I sought a judgment declaring the rights and obligations of the parties with regard to the use and improvement of the easement. Count II sought a temporary restraining order and preliminary and permanent injunction enjoining the Jenningses from denying the Kerrs free access to the easement and from any further excavation on the easement which would affect the contour and condition of the Kerrs' property. In Count III, the Kerrs requested damages, trebled pursuant to § 537.340, RSMo 1986, for trespass. In Count IV, the Kerrs asked the court to award them damages from the Jenningses for the opening and removal of gates and fences. Count V sought punitive damages.
In addition to their answer to the Kerrs' petition, the Jenningses filed in response a two-count counterclaim. In the first count the Jenningses sought damages for the "wrongful conduct of [the Kerrs]" in "unreasonably threaten[ing]" the Jenningses and "unreasonably interfer[ing] with their exercise of the easement rights owned and possessed by [the Jenningses]." The second count sought an order reforming the Declaration of Easement, specifically changing the description of the easement.
On September 25, 1992, the Kerrs filed a motion for contempt. In their motion the Kerrs alleged that the Jenningses had violated the August 14, 1991, temporary restraining order and the April 17, 1992, preliminary injunction.
On November 10 and 12, 1992, the trial court conducted a hearing on the Kerrs' five-count petition, the Jenningses' two-count counterclaim, and the Kerrs' motion for contempt. After hearing all the evidence and viewing the easement and property in question in person, the trial court issued its judgment on December 21, 1992. In its judgment, the trial court granted the Kerrs' request for a declaratory judgment but specifically declared that "[t]he easement is not to be obstructed in anyway by the placement of gates, fences or any other objects at the entrance to or exit from or along the way of the easement." The trial court also entered a permanent injunction enjoining the Jenningses *123 from placing more concrete, asphalt, stone, or other rubble upon the easement area except in constructing a road, from digging any more trenches unless reasonably necessary for drainage or maintenance of the roadway, from disturbing or damaging any fences installed by the Kerrs along the easement boundaries, from reducing the embankments of any of the ponds even though the embankments may be upon the easement area, from damaging or removing any trees or vegetation not within the easement area, and from damaging or leaving open any gate in the Kerrs' fence line along the north and south boundaries of the easement area. The trial court ordered that the Kerrs recover nothing for their claims of trespass and interference with the gates and fences and denied punitive damages. The trial court further ordered that the Jenningses receive nothing for their counterclaim for obstruction of the easement and denied the Kerrs' motion for contempt.[2] The Kerrs now appeal the decision of the trial court.
Appellate review of this court-tried civil case is governed by the dictates of Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976). The decision of the trial court must be affirmed unless there is no substantial evidence to support the decision, the decision is against the weight of the evidence, or the decision erroneously declares or applies the law. Id. at 32.
On appeal, the judgment of the trial court is presumed correct. Sutton v. Goldenberg, 862 S.W.2d 515, 517 (Mo.App.1993). The appellant bears the burden of demonstrating that the trial court's judgment is erroneous. United Siding v. Residential Imp. Serv., 854 S.W.2d 464, 469 (Mo.App. 1993). Due regard must be given to the trial court's determination of the credibility of witnesses. Rule 73.01(c)(2); In re Marriage of Lewis, 808 S.W.2d 919, 922 (Mo.App.1991).
I.
The Kerrs allege as their first point on appeal that the trial court erred in failing to award them damages for the Jenningses' conduct. The Kerrs first argue that four of the findings of fact and conclusions of law made by the trial court are against the weight of the evidence. The Kerrs next contend that three of the trial court's findings of fact and conclusions of law misstate or misapply the law.
The four findings of the trial court which the Kerrs claim are against the weight of the evidence are as follows:
14. Some of the earth which was removed or cut into formed the outer edge of the base of two pond dams. Such dirt and earth which were removed or cut into did not damage or compromise the integrity of the dams and did not cause the ponds to lose water.
17. There is no evidence that the [Jenningses'] efforts in preparing the easement for use, including the removal of the fence, trees and earth, were unreasonable or unduly and adversely affected or damaged [the Kerrs'] property outside the easement area.
19. The evidence does not show that [the Kerrs] sustained any damage to their property or the use of their property as a direct result of the action of the [Jenningses] in removing the [Kelly Road] gate....
21. Although [the Kerrs] believe that [the Jenningses] were responsible for the removal and damage of [the] fences [along the southern and northern edges of the easement], the evidence fails to establish who in fact did these things....
The power to set aside a decree or judgment because it is "against the weight of the evidence" should be exercised only "with caution and with a firm belief that the decree or judgment is wrong." Murphy, 536 S.W.2d at 32. "`Weight of the evidence' means its weight in probative value, not its quantity. Looney v. Estate of Eshleman, 783 S.W.2d 164, 165 (Mo.App.1990). `The weight of evidence is not determined by mathematics, but on its effect in inducing belief.' Id." Lewis, 808 S.W.2d at 922.
*124 In support of their argument that the finding made by the trial court in paragraph 14 of its December 21, 1992 decision was against the weight of the evidence, the Kerrs cite various statements made by either Mr. Kerr or Mr. Galloway that Mr. Jennings cut into the pond dams, that the ponds did not leak until Mr. Jennings cut into the dams, that the ponds now leak, and that Mr. Jennings admitted to Mr. Galloway that he shaved the embankment of one of the pond dams. The Kerrs, however, fail to acknowledge the evidence which supports the decision of the trial court.
While Mr. Jennings did admit that he did some grading work around the ponds, he stated that he took out "very little" dirt around the pond. According to Mr. Jennings, the easement roadway became difficult to travel on during wet weather. In order to provide drainage for the roadway, Mr. Jennings slightly enlarged a spillway/ditch between the road and one of the ponds by cleaning out the dead weeds and grass and removing some of the dirt. Although Mr. Jennings believed that his work may have caused one of the ponds to lose some of its water, he stated that the work did not cause the ponds to leak. An excavation expert who inspected the ponds on November 11, 1992, testified on behalf of the Jenningses that the ponds were not leaking at the time of his visit, that there were not signs that the ponds had leaked previously in the area where the dirt work had been done, and that the dirt work had not affected the integrity of dams. The trial court viewed the property and stated that the viewing was significant in reaching its decision.
In maintaining that the finding of the trial court in paragraph 17 concerning the reasonableness of the efforts of the Jenningses in preparing the easement and the effect of those efforts on the Kerrs' property outside the easement area is against the weight of the evidence, the Kerrs again fail to recognize the evidence which supports the trial court's finding. Mr. Jennings admittedly removed a portion of a fence and cut down trees in order to create an entrance from Kelly Road onto the easement and removed part of the centerline fence in order to construct the roadway, but Mr. Jennings testified that he never removed fencing that was not on the easement and that he cut down only trees that were in the path of the easement roadway. Although Mr. Galloway testified that Mr. Jennings told him that he had taken the electric fence on the southern edge of the easement down and put it back up, Mr. Jennings denied doing this, and Mr. Galloway admitted that he never saw anyone disturbing the fence.
The Kerrs claim that the trial court's finding in paragraph 19 of its December 21, 1992, order that the Kerrs sustained no damage as a result of the Jenningses' removal of the Kelly Road gate is against the weight of the evidence. The Kerrs allege that as a result of the removal of the gate, they lost rental income from Mr. Galloway, who did not rent pasture land from them after the fall of 1991 because Mr. Galloway "didn't feel comfortable having to drive over there two or three times a day to water [his] cows, which is sixty or seventy miles a day, and wondering whether the gate was shut, whether it was open, or leaning against the fence." The Kerrs also claim they were forced to move hay bales to another farm since they could not keep cattle on the land without the gate up.
The Jenningses admitted that they did not want to have to open and close gates in order to use the easement. According to the Jenningses, the gates were a source of concern for them because Ms. Jennings was under a physician-imposed lifting restriction and Mr. Jennings had a "heart valve condition." Both Mr. and Ms. Jennings, however, testified that Mr. Jennings left the Kelly Road gate open only when there were no cattle on the Kerrs' property. Mr. Jennings testified that he removed the gate only once after the August 14, 1991, temporary restraining order for the purpose of allowing construction vehicles to enter the easement and travel through to his property. According to Mr. Jennings, there were no cattle on the Kerrs' property at the time he removed the gate, and he replaced the gate within two weeks.
The fourth finding of the trial court disputed by the Kerrs is the finding in paragraph *125 21 that the evidence failed to establish who was responsible for the removal and damage of the fences on the Kerrs' property along the northern and southern edges of the easement. Although the Kerrs and Mr. Galloway believed that Mr. Jennings was responsible for the damage to these fences, Mr. Galloway admitted that he never saw anyone damage the fences, and Mr. Jennings testified that he never damaged the electric fence on the southern edge of the easement and never removed any fence that was not on the easement.
The trial court was free to believe all, part or none of the testimony of each witness. Fowler v. Fowler, 732 S.W.2d 235, 237 (Mo.App.1987). A review of the evidence as a whole does not leave this court firmly convinced that the trial court's findings in paragraphs 14, 17, 19, and 21 were against the weight of the evidence.
As the second part of their first point on appeal, the Kerrs allege that the following findings of fact made by the trial court in its December 21, 1992, order misstate or misapply the law:
15. [The Jenningses] never cut, damaged, removed or carried away any trees growing on [the Kerrs'] property which were not totally within the easement. [The Jenningses] had the right to cut and remove such trees and other growth within the easement which interfered with their use of the easement and to prepare the easement for the construction of an adequate roadway, including removal of the fence running down the middle of the easement, so that they could access their property at all times and under all weather conditions.
16. [The Jenningses] had the right to restructure the ground and earth within the easement to properly prepare the easement for the construction of an adequate roadway so that they could access their property at all times and under all weather conditions.
17. There is no evidence that [the Jenningses'] efforts in preparing the easement for use, including the removal of the fence, trees and earth, were unreasonable or unduly and adversely affected or damaged [the Kerrs'] property outside the easement area.
The Kerrs basically contend that the trial court erred in not concluding that Jenningses' use of the easement was unreasonable and not finding the Jenningses liable for trespass.
The reasonable use of an easement is a question of fact. Beiser v. Hensic, 655 S.W.2d 660, 663 (Mo.App.1983). In a bench-tried case such as this, the trial judge is the finder of fact. First Nat. Bank of Sikeston v. Goodnight, 721 S.W.2d 122, 123 (Mo.App. 1986).
The Declaration of Easement gives the Jenningses a nonexclusive, perpetual easement for the purpose of ingress and egress, by foot or by vehicle, to and from their land and for the purpose of facilitating the installation, maintenance, and replacement of utilities for their property. The Declaration specifically provides that except for repairs or maintenance, the land owners "shall not block, obstruct, hinder or interfere with the easement area or the permitted traffic thereon."
In general, "the person having the right to use an easement has the right to remove obstructions unlawfully placed thereon, as well as natural obstructions interfering with the use of the easement, so long as there is no breach of the peace." 25 Am. Jur.2d Easements and Licenses § 92 (1966). See also, 28 C.J.S. Easements § 100 (1941). This right is based on the theory that the obstruction "constitutes a private nuisance which the owner of the easement is entitled to abate under the rules applicable to nuisances generally; in doing so, he does not become a trespasser." 25 Am.Jur.2d Easements and Licenses § 92 (1966). When the owner of the land has covenanted to keep the easement open, the owner of the easement does not need to bring an action for the breach of the covenant in order to remove the obstruction but may remove it himself or herself. 28 C.J.S. Easements § 100 (1941).
In the instant case, the Jenningses maintained that the only trees, fences, and earth which were removed were within the easement and were removed in order to construct *126 the easement roadway. The trial court was free to believe or disbelieve both the Jenningses' and the Kerrs' testimony. See Fowler, 732 S.W.2d at 237.
Upon reviewing the evidence as a whole, this court concludes that the trial court's finding that the Jenningses' use of the easement was reasonable is supported by substantial evidence, is not against the weight of the evidence, and does not misstate or misapply the law. Point one is denied.
II.
The Kerrs contend as their second point on appeal that the trial court erred in failing to find the Jenningses in contempt for violating the April 17, 1992, preliminary injunction. The Kerrs allege that the trial court's findings in its December 21, 1992 judgment that the Jenningses attempted to cover the broken concrete and other debris with gravel and installed and covered the culvert within thirty days as ordered in the preliminary injunction was against the weight of the evidence. The Kerrs also claim that the trial court's finding that the Jenningses' conduct since April 17, 1992, did not show any willful or contumacious violation of the orders of the preliminary injunction was against the weight of the evidence and that the trial court abused its discretion in not holding the Jenningses in contempt.
The Jenningses were required by the April 17, 1992, preliminary injunction to remove or cover the concrete, asphalt, stone and other rubble they had placed on the easement crossing the Kerrs' property within 30 days. If they chose to cover the debris, the covering had to be sufficient to prevent the debris from being a hazard to cattle crossing the easement. Mr. Kerr and Mr. Galloway testified that the Jenningses failed to comply with all of the provisions of the preliminary injunction within the thirty-day time limit mandated in the injunction. Mr. Kerr testified that as of July of 1992, concrete debris and wire were still exposed through a thin coating of gravel and that the debris could cause hoof damage to cattle. Mr. Galloway made a similar observation and also believed the state of the easement presented a hazard to cattle.
The April 17, 1992, preliminary injunction also compelled the Jenningses to place a culvert in the existing ditch along the south side of the easement and cover the culvert with dirt so that cattle could travel without hazard across the easement within thirty days of the order. Mr. Galloway testified that the culvert had been installed but was only partially covered by July of 1992.
Though Mr. Jennings stated that he did not start doing what was required of him by the April 17, 1992, preliminary injunction until sometime after he received the order signed June 1, 1992, in the mail, he testified that he placed gravel over the concrete debris on May 4 and 5, 1992. Ms. Jennings echoed her husband's testimony that the debris was covered in May of 1992. While he testified that pictures showing what the ditch looked like before and after he covered the culvert were taken in October of 1992, Mr. Jennings insisted that he had installed and covered the culvert within thirty days of the order.
The trial court noted in its December 21, 1992, judgment that the court's visual examination of the property on November 11, 1992, disclosed that the concrete debris had been adequately covered and that the culvert had been properly installed and covered. Although the evidence is conflicting on exactly when the Jenningses complied with the April 17, 1992, preliminary injunction, this court is not firmly convinced that the finding of the trial court that the Jenningses had complied with the injunction within the thirty-day time period is against the weight of the evidence. Thus this court also concludes that the finding of the trial court that the Jenningses' conduct since April 17, 1992, did not evince any willful or contumacious violation of the orders of the preliminary injunction is also not against the weight of the evidence.
The Kerrs also argue that the trial court misstated and/or misapplied the law in failing to find the Jenningses in contempt for violating the April 17, 1992, preliminary injunction. Whether to grant a motion for civil contempt, however, is within the discretion of the trial court, whose judgment will not be disturbed on appeal absent a clear showing *127 that the court abused its discretion. Campbell v. Campbell, 825 S.W.2d 319, 322 (Mo. App.1992) disapproved on other grounds by Ansevics v. Cashaw, 881 S.W.2d 247, 250 (Mo.App.1994). Because this court has determined that the trial court's finding that the Jenningses' behavior after the issuance of the April 17, 1992, preliminary injunction was not contumacious and was not against the weight of the evidence, we necessarily conclude that the trial court did not abuse its discretion in failing to hold the Jenningses in contempt. Point two is denied.
III.
As their third point on appeal, the Kerrs assert that the trial court erred in failing to find the Jenningses in contempt in its December 21, 1992, judgment for allegedly violating the August 14, 1991, temporary restraining order. The temporary restraining order prohibited the Jenningses from removing the gates at either end of the easement. The Kerrs claim that the trial court misstated or misapplied the law because the court found that the Jenningses removed the gate at the Kelly Road entrance after the issuance of the temporary restraining order but failed to find that the Jenningses' conduct was a willful and contumacious violation of the order.
Mr. Jennings admitted that he removed the gate at the Kelly Road entrance in November of 1991 in order to allow a well-drilling truck to enter the easement and travel through to his property. According to Mr. Jennings, the truck was too long to negotiate the Kelly Road entrance without removing the gate. Mr. Jennings testified that at the time he removed the gate there were no cattle on the Kerrs' property. The gate was down for approximately two weeks, after which time Mr. Jennings replaced the metal gate with a cable or wire gate.
Although the Jenningses may have technically violated the August 14, 1991, temporary restraining order, the facts surrounding the violation indicate that it was not clearly willful or contumacious. The trial court did not abuse its discretion in failing to hold the Jenningses in contempt, and this court therefore declines to disturb the trial court's judgment. See Watkins v. Watkins, 839 S.W.2d 745, 747-48 (Mo.App.1992). Point three is denied.
IV.
The Kerrs argue as their fourth and final point on appeal that the trial court erred in prohibiting the placement of gates at the entrance to or exit from the easement in its December 21, 1992, judgment and in failing to make the provisions of the preliminary injunction regarding the placement of the gates permanent. The Kerrs contend that the trial court's finding that requiring the installation of gates at any point on the easement would unduly interfere with the use of the easement by those with the right to enter and exit their properties by way of the easement was against the weight of the evidence. The Kerrs also allege that the trial court's judgment misstated and misapplied the law.
When the terms of a right-of-way easement are reduced to writing, the terms of the grant prevail. Teal v. Lee, 506 S.W.2d 492, 497 (Mo.App.1974). The words used in the conveyance of an easement are subject to judicial interpretation only when such words are ambiguous and unclear. Karches v. Adolph Inv. Corp., 429 S.W.2d 788, 792 (Mo. App.1968). Only when the exclusion of the erection of a fence or gate is not specifically set out in the grant may the servient estate owner place gates across the right-of-way, and then only if the gates do not unreasonably interfere with the right of passage. See Claybrook v. Murphy, 746 S.W.2d 140, 143-44 (Mo.App.1988).
Paragraph No. 5 of the Sunrise Dairy Farms' Declaration of Easement provides that "Sunrise Dairy Farms and the owners of each of the tracts agree that except when necessitated by repairs or maintenance, neither shall block, obstruct, hinder or interfere with the easement area or the permitted traffic thereon." In the context of the easement, the terms "block," "obstruct," "hinder" and "interfere" have plain and common meanings which are not ambiguous and do not require judicial construction. The definitions of these terms include the complete *128 stoppage of progress on a roadway, as well as the slowing or impeding of progress over a roadway.[3] Gates slow or impede the progress of traffic on a roadway.
The clear and unambiguous language of the Declaration of Easement forbids the installation of gates on the easement as an obstruction or hinderance to traffic traveling across the easement. Waskey v. Lewis, 224 Va. 206, 294 S.E.2d 879, 881 (1982) ("without let or hinderance" defined to preclude the erection of manually-operated gates across an easement right of way). The Kerrs' citation to Webb v. Finley, 806 S.W.2d 501 (Mo. App.1991), and Claybrook, 746 S.W.2d 140, does not further their argument, as the facts of both are distinguishable from the facts in the instant case.[4] The judgment of the trial court is not against the weight of the evidence and does not misstate or misapply the law. Point four is denied.
The judgment is affirmed.
All concur.
*129 Appendix A
NOTES
[1] The preliminary injunction was not signed and mailed to the parties until June 1, 1992.
[2] The parties agreed in open court on November 10, 1992, that Count II of the Jenningses' counterclaim be sustained and that the Declaration of Easement be reformed so that the description of the easement would conform to that contained in the Jenningses' counterclaim.
[3] The relevant definitions are:
Block"[T]o render (as a way) unsuitable for passage or progress by obstruction ..., to obstruct the passage, progress, or accomplishment of (someone or something) esp. by a positive obstacle...." Webster's Third New International Dictionary 235 (1981).
Obstruct"To hinder or prevent from progress, check, stop, also to retard the progress of, make accomplishment of difficult and slow..., [t]o block up; to interpose obstacles; to render impassable; to fill with barriers or impediments, as to obstruct a road or way." Black's Law Dictionary 1077 (6th ed. 1990).
Hinder"Obstruct or impede." Id. at 729.
Interfere"To check; hamper; hinder; infringe; encroach; trespass; disturb; intervene; intermeddle; interpose." Id. at 814.
[4] The Webb and Claybrook cases are distinguishable in that neither case involved an express grant pertaining to gates. Without an express provision in the grant of easement, the courts conduct an analysis of whether the erection or maintenance of gates across the roadways are permissible, by considering "1) the purpose for which the grant was made; 2) the intention of the parties as gleaned from the circumstances surrounding the grant; 3) the nature and situation of the property; and 4) the manner in which the easement has been used." Webb, 806 S.W.2d at 503 (quoting Teal, 506 S.W.2d at 497. See also Claybrook, 746 S.W.2d at 143-44. Such analysis is not applicable to the case at bar.
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338 B.R. 505 (2006)
In re Jason G. FAWSON, Debtor.
In re Francis William Webster and Diana Lorrie Webster, Debtors.
Nos. 05-80224, 05-80217.
United States Bankruptcy Court, D. Utah.
February 21, 2006.
*506 *507 Jory L. Trease, Jory L. Trease, Inc., Salt Lake City, UT, for Jason G. Fawson.
R. Kimball Mosier, Parsons, Kinghorn, Harris, Salt Lake City, UT, Chapter 7 Trustee of Jason G. Fawson.
Ronald H. Goodman, American Fork, UT, for Francis William Webster.
Philip G. Jones, Orem, UT, Chapter 7 Trustee of Francis William Webster.
Office of the United States Trustee, Cy Castle, Assistant United States Trustee, Salt Lake City, UT.
AMENDED[1] MEMORANDUM DECISION DENYING MOTIONS TO EXTEND TIME TO FILE PAPERS REQUIRED BY 11 U.S.C. § 521(a)(1)
JUDITH A. BOULDEN, Bankruptcy Judge.
These two Chapter 7 cases raise the issue of the extent of the Court's discretion regarding the automatic dismissal of a case pursuant to 11 U.S.C. § 521(i).[2] The debtors failed to timely file all information required by § 521(a)(1), and no one sought an extension of the time to file the papers until more than 45 days after the petitions were filed. Because the Court finds that no discretion exists under the circumstances of Webster's and Fawson's cases, the untimely motions to extend time to file papers are denied, and, by operation of § 521(i), Webster's and Fawson's cases were dismissed effective 46 days after the petitions were filed.[3]
I. BACKGROUND
Jason G. Fawson (Fawson) filed a Chapter 7 petition on December 6, 2005. On the same day, Francis William Webster (Webster) and Diana Lorrie Webster (together the Websters) also filed a Chapter 7 petition. Immediately thereafter, Fawson and the Websters (collectively, the Debtors) filed various papers, but the Debtors did not file copies of payment advices or other evidence of payment received within 60 days before the date of the filing of the petition as required by § 521(a)(1)(B)(iv). The Debtors did not file a statement indicating that no such payment advices had been received and that they were not, therefore, required to file payment advices.[4]
Different trustees were appointed in each case. A § 341 meeting was noticed *508 for January 3, 2006 in Fawson's case and for January 17, 2006 in the Websters' case. In Fawson's case, the Chapter 7 trustee continued the § 341 meeting until January 27, 2006 for the purpose of inquiring about Fawson's 2004 Federal and State tax returns. On January 13, 2006, the United States trustee filed a § 704(b)(1)(A) notice stating that Fawson had not filed nor transmitted all of the required means testing documents and that without those documents, the United States trustee could not make a determination as to whether Fawson's case was presumed abusive under § 707(b). In the Websters' case, the Chapter 7 trustee has filed a request for creditors to file claims, indicating that there are assets the Chapter '7 trustee intends to administer. There is also a Motion for Relief from the Automatic Stay pending.
The § 521(i) 45-day time limit to file papers ran in both cases on January 20, 2006. None of the Debtors expressly requested an extension of time under § 521(i)(3) in which to file their § 521(a)(1) papers, and neither Chapter 7 trustee filed a motion under § 521(i)(4) before the 45-day time limit expired. Because it was unclear whether or not the Debtors had received payment advices or other evidences of payment from any employer within 60 days prior to the date of the filing of the petition, the Court issued an Order to Show Cause in both cases on January 26, 2006. The Court ordered the Debtors to file a written explanation of the failure to timely file the documents required by § 521(a)(1)(B)(iv) and to otherwise show cause why the Chapter 7 cases were not dismissed by operation of the statute "effective on the 46th day after the date of the filing of the petition."
At this point, the two cases diverged somewhat. In Fawson, payment advices were filed on January 27, 2006, the day after issuance of the Order to Show Cause and, apparently, at the conclusion of the continued § 341 meeting. These papers, however, did not cover the 60 days prior to the date of filing, and on January 30, 2006, amended payment advices were filed that covered the required period. A "Debtor's Response to Order to Show Cause Dated January 26, 2006, and Ex Parte Motion to Extend Time to File Pre-Petition Payment Advices" (Fawson's Motion) was filed a week later. In Webster, three affidavits or statements were filed one by Diana Lorrie Webster indicating that she was not employed during the 60 days prior to the fling and did not receive any payment advices from an employer; one by Webster indicating that he was employed and had delivered his payment advices to his attorney; and one by the Websters' attorney giving an explanation of the reasons why Webster's payment advices were not filed and requesting affirmative relief that the Websters' Chapter 7 case not be dismissed. Webster also filed his payment advices reflecting his income from his employer during the applicable period. Neither Chapter 7 trustee has responded to the Court's Order to Show Cause. Deeming the issues joined, the Court has decided to treat the Websters' attorney's affidavit that seeks affirmative relief as a motion and to consolidate the ruling on both Fawson's and the Websters' motions in one memorandum decision.
II. DISCUSSION
Having jurisdiction over these core matters as more fully discussed below,[5] the Court will take, in order, each of the Debtors' arguments as to why these cases were not dismissed by operation of the statute *509 on January 21, 2006.[6]
A. FAWSON
Fawson's Motion represents, and the Court accepts as fact, that his attorney was experiencing computer difficulties in the week prior to the January 3, 2006 § 341 meeting. This affected the attorney's ability to retrieve and transmit copies of Fawson's 2004 tax returns, as well as the electronically maintained notes in the attorney's data base. This computer problem affected Fawson's case as well as this attorney's other cases. There is no specific indication in Fawson's Motion as to when his payment advices were available for filing or how the computer problems prior to the § 341 meeting precluded their filing within the 45-day period. Upon receipt of the United States trustee's notice pursuant to § 704(b)(1)(A), Fawson's attorney contacted personnel at the United States trustee's office on January 20, 2006, and as a result of the ensuing conversation, Fawson's attorney "accepted the insinuation [from United States trustee staff] that the Debtor had complied with the requirement to provide the necessary documentation."[7] Thereafter, on January 27 and 30, payment advices were filed as set forth above. Fawson's Motion also moves the Court to issue an order extending the deadline to file the payment advices to January 30, 2006.
B. WEBSTER
The affidavit filed by Webster's attorney represents, and the Court accepts as fact, that he delivered Webster's payment advices to the United States trustee and to the Chapter 7 trustee. He explains, however, that the papers were not filed in a timely manner with the Court because of his inexperience with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), and that his unfamiliarity with each of the Court's filing requirements led him to deliver the documents required to the United States trustee and to the Chapter 7 trustee but to omit filing the documents with the Court. Webster's attorney's affidavit then requests the Court to excuse as "harmless error" the untimely filing and requests that the Chapter 7 case not be dismissed.
C. ARGUMENTS RAISED
The Debtors argue that the cases were not dismissed on the 46th day by operation of the statute and that the Court retains discretion in this matter for four reasons: a) the content of § 521(i)(1) is ambiguous, it allows the Court discretion, and any other interpretation would render § 521(i)(2) meaningless; b) dismissal by operation of the statute would also render subparagraphs § 521(i)(3) and (4) meaningless; c) Section 521(a)(1)(B) only requires that papers be filed "unless the court orders otherwise";[8] and d) Rule 9006(b) of the Federal Rules of Bankruptcy Procedure (Rules) does not prohibit enlargement of the 45 days, and failure to timely file was a result of excusable neglect or is "harmless error." In the order *510 raised, and as applied to these two cases, the Court disagrees for the reasons set forth.
1. The Interplay Between § 521(i)(1) and § 521(i)(2)
Fawson argues that § 521(i)(1) is ambiguous, that the Court retains discretion over whether or not to enter a dismissal order (essentially "overriding" § 521(i)(1)), or that automatic dismissal renders § 521(i)(2) superfluous. The Court disagrees. Section 521(i)(1) is not ambiguous as Fawson argues. The section provides that the case is automatically dismissed on the 46th day if an individual debtor fails to file the § 521(a)(1) papers within 45 days of filing the petition. Automatic means "acting or operating in a manner essentially independent of external influence or control."[9] Section 521(i)(1) does not contemplate any independent action by the Court or any other party the case is merely dismissed by operation of the statute itself. There is no ambiguity.[10]
Fawson argues that § 521(i)(2), which requires the Court to enter a dismissal order not later than 5 days after a party in interest makes a request, is a clear indication that Congress intended courts to have discretion not to enter dismissal orders in circumstances such as those in his case. Fawson's interpretation is contrary to the statute. Section 521(i)(2) requires entry of the dismissal order but only if the Court has determined that § 521(i)(1) is applicable. If all the requirements of § 521(i)(1) are not present, the Court would not enter the order even if requested. The case of Diana Lorrie Webster illustrates this point. It is now clear that she did not receive payment advices from an employer within 60 days before the date of the filing of the petition, she did comply with her duties under § 521(a)(1) and, therefore, her case was not automatically dismissed under § 521(i)(1). If a party had requested entry of a dismissal order under § 521(i)(2), the order could not have been entered.
Once the determination that all of the provisions of § 521(i)(1)[11] are met, and *511 subject to subparagraph (4), the statute is quite clear regarding the Court's duties under § 521(i)(2). Even the time to execute the dismissal order, unlike some other provisions of BAPCPA,[12] is about as clear as it can be. Such clarity, if all criteria are met, relieves the Court of discretion in the matter and makes entry of the dismissal order under § 521(i)(2) ministerial. The law is consistent that courts retain jurisdiction over entry of orders ministerial in nature,[13] even if the case has been dismissed by operation of the statute. As such, Fawson's argument that § 521(i)(2) is rendered meaningless if the case was previously dismissed by operation of the statute is flawed.
This interpretation is neither inconsistent with § 521(i)(2) nor does it render that section superfluous. Foremost, the determination of whether to issue a § 521(i)(2) order clarifies, as in Diana Lorrie Webster's case, if § 521(i)(1) is applicable. Further, a § 521(i)(2) order indicating that the case was dismissed on the 46th day could provide a variety of benefits to parties. An order may be useful in fixing the effective date of dismissal, in evidencing for a trustee that administration of the case should end, in processing an appeal of the dismissal, in indicating that a motion to lift the stay (as filed in the Websters' case) is not necessary, or in proving to third parties that the case is dismissed. To the extent that Fawson's argument implies that the case is not dismissed unless the Court issues such an order, that interpretation is contrary to the explicit language of the statute. Section 521(i)(2) requires an affirmative act from the court but only upon request of a party in interest. This affirmative act does not imply discretion not to dismiss the case, nor does this affirmative request change the legal effect of § 521(i)(1). The debtor's case is simply dismissed. In fact, it is Fawson's argument that would render § 521(i)(2) superfluous. If the case were not dismissed under § 521(i)(1) until a party in interest made a § 521(i)(2) request, then what effect would the automatic dismissal language of § 521(i)(1) have? None. The same absurd result would occur were the Court to find that the phrase "Subject to paragraphs (2) and (4)" found at the beginning of § 521(i)(1) required that the Court wait until a party in interest filed a § 521(i)(2) request before dismissing a case. Were this the intended procedure, courts would have cases languishing on their dockets that were "effectively dismissed" on the 46th day. But trustees might continue to administer the case because everyone is awaiting a § 521(i)(2) request. Such an absurd result could not have been what Congress intended.
2. Sections 521(i)(3) and (4)
Section 521(i)(3)[14] allows a debtor to request, within 45 days of the date of *512 the filing of the petition, an additional period of not to exceed 45 days to file the required information upon a showing that justification exists for extending the period for the filing. Section 521(i)(4)[15] allows the trustee to request, within 45 days of the date of the filing of the petition, that the case not be dismissed if the court finds that the debtor attempted in good faith to file the payment advices required by § 521(a)(1)(B)(iv) and that the best interests of creditors would be served by administration of the case. Both provisions require action within 45 days of the date of the filing of the petition and prior to dismissal by operation of the statute. Because neither the Debtors nor the Chapter 7 trustees[16] filed such a motion, relief cannot be granted under these provisions. To the extent that the Debtors argue that these two subsections somehow give the Court additional discretion after the 45 days have passed, the statute is to the contrary.
Webster's case, however, could have raised a slightly different issue. Copies of the payment advices were given to the Chapter 7 trustee. But they cannot be deemed to have been filed with the Court by an error in filing as provided in Rule 5005(c) because to deem a filing with a trustee a filing with the Court, the filing party must have intended to file the papers with the Court.[17] Clearly that is not the fact in Webster's case. Because the Chapter 7 trustee did not file a timely motion under § 521(i)(4), the Court does not reach the issue of whether the submission of the papers to the Chapter 7 trustee *513 would have constituted an attempt in good faith to file the payment advices.
3. Section 521(a)(1)(B)
Fawson also argues that the Court's discretion to order that the case not be dismissed and to extend the time to file the payment advices until January 30, 2006 is reflected in § 521(a)(1)(B),[18] which provides that the payment advices must be filed "unless the court orders otherwise." This equitable argument might be persuasive were it not for the clear language of the more specific provisions of § 521(i) and the lack of any compelling argument as to why the payment advices were not filed.
4. Requests for Enlargement of Time under Rule 9006(b)
It is unclear whether the Debtors' requests for enlargement of time are based on an enlargement of the 15-day period provided in Rule 1007(c) or whether the Debtors are requesting to extend the 45-day period to stop dismissal of the case under § 521(i)(3). Under either scenario, the Court finds that the requests are insufficient.
a. Enlargement of the 15-day Period in Rule 1007
Rule 9006(b), Fawson argues, allows the Court to enlarge the time for filing payment advices. Rule 1007(c) requires that payment advices be filed within 15 days of the filing of the petition.[19] Any extension of time may be granted only on motion for cause shown and on notice to the United States trustee and others as the court directs.[20] In turn, Rule 9006(b)(1)[21] allows *514 enlargement of the time to file for cause shown only if the request is made within the specified period. The Debtors did not file requests for enlargement within the 15-day period; therefore, the Court may enlarge the time only if failure to act was a result of excusable neglect. The Court recognizes that it may have been lax in the past in allowing enlargement of time to file papers where the request was made after the 15-day deadline for excuses that may have fallen short of the required excusable neglect standard. But the provisions of § 521(i) now require the Court to redouble its examination of proffered excuses and whether they meet the excusable neglect standard. Here, the Court has lost the ability to make a determination of whether the enlargement may be granted because, by operation of the statute, both Fawson's and Webster's cases were already automatically dismissed long before the motions were made.
Webster has argued that the failure to timely meet the requirements of § 521(a)(1) is harmless error which the Court should excuse. Harmless error is an appellate standard under Rule 9005 and is inapplicable to the facts to be analyzed here. But to address Webster's argument, the Court will interpret this harmless error argument to be one for excusable neglect. For the reasons articulated above, however, the Court cannot consider the request because the case was automatically dismissed on the 46th day.
b. Enlargement of the Statutory Time Found in § 521(i)(3)
If Webster and Fawson intended to request an enlargement of time to file § 521(i)(3) motions, the Court finds that it cannot enlarge the § 521(i)(3)[22] period for two reasons. First, this Court cannot enlarge the time to file § 521(i)(3) motions because the case was automatically dismissed by operation of the statute on the 46th day, and the Court no longer has jurisdiction to consider and make an affirmative ruling regarding the requests.
Second, Rule 9006(b)(1) only allows parties to enlarge the time "when an act is required or allowed to be done at or within a specified period by these rules or by a notice given thereunder or by order of court."[23] By its own terms, Rule 9006(b) does not allow courts to enlarge time periods expressly set forth in the Code.[24] This is consistent with the case law establishing that when the Rules and the Code are in *515 conflict, the Code controls.[25] As further support for this conclusion, the Court notes that subsection (a) of Rule 9006 (which provides the procedure for computation of time periods) applies not only to the Rules but also to the Federal Rules of Civil Procedure, local rules, court orders, and any applicable statute. The exclusion of any reference to any applicable statute (including the Code) in Rule 9006(b) lends support to the conclusion that Rule 9006(b) cannot be used to enlarge statutory deadlines.
III. CONCLUSION
The new requirements of BAPCPA are numerous, and filing a case under the new Code can be perilous. There are many new pitfalls to be negotiated throughout the pendency of a bankruptcy case. Here, Fawson and Webster failed to timely file their payment advices, and no one timely filed a request for an extension of time. The belated requests for enlargement of time due to excusable neglect are time barred. Section 521(i)(1) mandates the dismissal of cases when debtors fail to timely comply with the requirements of § 521(a)(1). In the absence of a § 521(i)(3) or (4) motion, and at the expiration of the 45-day time period, both Fawson's and Webster's cases were dismissed by operation of the statute. Notice to that effect will be forwarded to parties in interest, and the Court will enter separate orders denying the motions to extend time to file papers required by § 521(a)(1). Diana Lorrie Webster's case, however, remains under the jurisdiction of the Court.
NOTES
[1] The first and third sentences of subsection 1 on page six have been amended to cite to 11 U.S.C. § 521(i)(1), and the reference in footnote 21 has been changed to account for the renumbering of footnotes.
[2] Future statutory references are to title 11 of the United States Code unless otherwise noted.
[3] For the reasons articulated below, Diana Lorrie Webster's case is not dismissed, and the case will remain under the jurisdiction of the Court.
[4] Some attorneys file a pleading indicating that a debtor did not receive any payment advices from any employer in the 60 days prior to filing, which is a prudent practice. An example of this form entitled Statement Under Penalty of Perjury Concerning Payment Advices Due Pursuant to 11 U.S.C. § 521(a)(1)(B)(iv) that was drafted by personnel at the United States trustee's office is posted as a courtesy on the Court's web site.
[5] 28 U.S.C. § 157(b)(2)(A).
[6] FED. R. BANKR. P. 9006(a) governing the computation of time provides that when the last day for an act to be done falls on a weekend or legal holiday, the time for doing the act is extended to the next day that is neither a weekend nor legal holiday. In both of these cases, the deadline for filing all papers required under § 521(a)(1) expired on Friday, January 20. Neither the statute nor the Federal Rules contemplate that an automatic statutory dismissal at a particular point in time involves the sort of "act" or "period of time" subject to extension if the date falls on a weekend. Thus, the statutory dismissal became effective on Saturday, January 21.
[7] Fawson's Mot. at ¶ 6.
[8] Section 521(a)(1)(B).
[9] http://dictionary.reference.
com/search?q=automatic (February 10, 2006). BLACK'S LAW DICTIONARY 169 (Rev. 4th Ed.) provides a similar definition: "Having inherent power of action or motion; selfacting or self-regulating; mechanical."
[10] The only discretion built into § 521(i) is found in subsections (3) and (4), discussed below, which allow courts to enlarge the time to file § 521(a)(1) papers upon the timely request of the debtor or the trustee. The Court has no discretion to enlarge the time to file § 521(a)(I) documents after the 45-day period has expired because by operation of the statute, the case is already automatically dismissed.
[11] The difficulty with § 521(i)(2) is not that it allows a court discretion to "override" § 521(i)(1). Instead, it is that 5 days is a very short time for the Court to make a determination whether a case meets all the requirements of § 521(a)(1). Usually, ascertaining that a debtor is an individual and that certain papers have been filed will not be difficult. However, an issue as to whether the case is dismissed by operation of the statute will inevitably arise if a required paper is filed but is incomplete. Illustrative of that point is Fawson's filing of payment advices for the wrong prepetition period. Since the payment advices incomplete or complete were not filed prior to January 20, 2006, the Court need not reach that issue. The most difficult determination may be in deciding whether or not a debtor has received payments advices from an employer within 60 days before the date of the filing of the petition. The job would be made easier if a debtor, who is not subject to § 521(a)(1)(B)(iv), filed a statement so indicating. In some courts the debtor's failure to respond to a notice of deficiency prepared by the court will be of assistance. It would also be helpful, if grounds exist, for a trustee to file a motion under subsection (4) indicating the intent to administer estate assets as is apparently the case in Webster.
[12] For example, § 362(c)(4)(A)(ii) which requires the Court to "promptly" enter an order confirming that no stay is in effect.
[13] In re Commercial Fin. Servs., Inc., 247 B.R. 828, 844 (Bankr.N.D.Okla.2000) (stating that bankruptcy courts retain jurisdiction over certain matters after dismissal or closing of a bankruptcy case including jurisdiction to enforce orders); In re Harris, 258 B.R. 8, 12 (Bankr.D.Idaho 2000) (stating that courts retain jurisdiction to "consider a variety of issues dealing with the closing of the case")
[14] Section 521(i)(3) provides:
Subject to paragraph (4) and upon request of the debtor made within 45 days after the date of filing of the petition described in paragraph (1), the court may allow the debtor an additional period of not to exceed 45 days to file the information required under subsection (a)(1) if the court finds justification for extending the period for filing.
[15] Section 521(i)(4) provides:
Notwithstanding any other provision of this subsection, on the motion of the trustee filed before the expiration of the applicable period of time specified in paragraph (1), (2), or (3), and after notice and a hearing, the court may decline to dismiss the case if the court finds that the debtor attempted in good faith to file all the information required by subsection (a)(1)(B)(iv) and that the best interests of creditors would be served by administration of the case.
[16] If the Chapter 7 trustees did not believe grounds existed to file motions under § 523(i)(4), then it would seem appropriate for them to file a request for entry of a dismissal order under § 523(i)(2) rather than continue to administer assets in a dismissed case.
[17] FED. R. BANKR. P. 5005(c) provides that "[a] paper intended to be filed with the clerk but erroneously delivered to the United States trustee, the trustee, the attorney for the trustee, a bankruptcy judge, a district judge, or the clerk of the district court shall, after the date of its receipt has been noted thereon, be transmitted forthwith to the clerk of the bankruptcy court." In such circumstances, the Court may exercise its discretion "[i]n the interest of justice" to deem the paper as filed with the clerk on the date of the original misdelivery. At a minimum, however, the party who incorrectly filed the paper must have actually intended that the paper be filed with the clerk. Willfully serving papers only on one or more of the parties covered by Rule 5005(c) is insufficient. No evidence of intent to file papers with the clerk has been presented in the cases at bar and there is no evidence of the date the papers were originally sent; thus, Rule 5005(c) cannot be used to prevent automatic dismissal for failure to file all papers required by § 521(a)(1). See, e.g., In re Rainbow Trust, 179 B.R. 51, 54 (Bankr.D.Vt. 1995) (declining to deem informal proof of claim properly filed because the filer willfully sent the paper only to the U.S. Trustee and because the filer received "more than adequate notice" of claim filing requirements); Northeast Office & Commercial Props., Inc. v. Smith Valve Corp. (In re Northeast Office & Commercial Props., Inc.), 178 B.R. 915, 920 (Bankr.D.Mass.1995) (finding Rule 5005(c) inapplicable because, inter alia, the joint motion was "filed precisely in the manner the parties intended" and was never intended for filing with the clerk); In re A.H. Robins Co., Inc., 118 B.R. 436, 440 (Bankr.E.D.Va.1990) (finding that "[a] letter sent to the debtor but not filed with the Court does not qualify as an informal proof of claim").
[18] Section 521 provides:
(a) The debtor shall
(1) file
(A) a list of creditors; and
(B) unless the court orders otherwise
(i) a schedule of assets and liabilities;
(ii) a schedule of current income and current expenditures;
(iii) a statement of the debtor's financial affairs and, if section 342(b) applies, a certificate
(I) of an attorney whose name is indicated on the petition as the attorney for the debtor, or a bankruptcy petition preparer signing the petition under section 110(b)(1), indicating that such attorney or the bankruptcy petition preparer delivered to the debtor the notice required by section 342(b); or
(II) if no attorney is so indicated, and no bankruptcy petition preparer signed the petition, of the debtor that such notice was received and read by the debtor;
(iv) copies of all payment advices or other evidence of payment received within 60 days before the date of the filing of the petition, by the debtor from any employer of the debtor;
(v) a statement of the amount of monthly net income, itemized to show how the amount is calculated; and
(vi) a statement disclosing any reasonably anticipated increase in income or expenditures over the 12-month period following the date of the filing of the petition.
[19] FED. R. BANKR. P. 9006(b)(1) provides:
Except as provided in paragraphs (2) and (3) of this subdivision, when an act is required or allowed to be done at or within a specified period by these rules or by a notice given thereunder or by order of court, the court for cause shown may at any time in its discretion (1) with or without motion or notice order the period enlarged if the request therefor is made before the expiration of the period originally prescribed or as extended by a previous order or (2) on motion made after the expiration of the specified period permit the act to be done where the failure to act was the result of excusable neglect.
[20] FED. R. BANKR. P. 1007(c) states:
any extension of time for the filing of the schedules, statements and other documents may be granted only on motion for cause shown and on notice to the United States trustee and to any committee elected under § 705 or appointed under § 1102 of the Code, trustee, examiner, or other party as the court may direct.
[21] See footnote 19.
[22] Had the parties filed a § 521(i)(3) motion before the 45-day period had expired, the Court would have had to determine whether there was "justification for extending the period for filing." This standard differs from the excusable neglect standard articulated in Rule 9006(b)(1).
[23] FED. R. BANKR. P. 9006(b)(1) (emphasis added).
[24] In re Damach, Inc., 235 B.R. 727, 731 (Bankr.D.Conn.1999) (stating that neither Rule 9006 nor rule 60(b) of the Federal Rules of Civil Procedure "permits a court to extend a time limitation set by Congress in a statute; they permit modification only of time limitations imposed by other rules or by the court") (internal citations omitted); In re Win Trucking, Inc., 236 B.R. 774, 780-81 n. 10 (Bankr. D.Utah 1999) (stating that Rule 9006(b) "covers only enlargement of time fixed by the Bankruptcy Rules or by court order, and not time fixed by the Code itself"). BAPCPA is replete with statutory time requirements that did not appear in the prior version of the Code. Courts had more discretion under the prior version of the Code because the statutory deadlines or time periods imposed were often softened to allow courts to modify the time periods or deadlines through the use of the phrase (or a similar permutation) "or within such additional time as the court, for cause, within such period fixes. . . ." § 521(2)(A). This phrase, or one like it, is conspicuously absent from §§ 521(i)(3) and (4).
[25] 28 U.S.C. § 2075; see also U.S. v. Towers (In re Pac. Atl. Trading Co.), 33 F.3d 1064, 1066 (9th Cir.1994) (stating that "any conflict between the Bankruptcy Code and the Bankruptcy Rules must be settled in favor of the Code"); U.S. v. Cardinal Mine Supply, Inc., 916 F.2d 1087, 1089 (6th Cir.1990) (stating that to the extent that a rule contradicts a statute, that rule cannot stand).
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886 S.W.2d 951 (1994)
Ron THOMAS and Larry Thomas, Plaintiffs-Appellants,
v.
Carl SMITHSON, Defendant-Respondent.
No. 19189.
Missouri Court of Appeals, Southern District, Division Two.
November 15, 1994.
Robert L. Gross, Little Rock, Ark., for appellants.
Dwight Douglas, Douglas, Douglas, Johnson & Wood, Neosho, for respondent.
PARRISH, Judge.
Ron Thomas and Larry Thomas (plaintiffs) appeal a summary judgment entered in favor of Carl Smithson (defendant). The judgment is affirmed.
Plaintiffs purchased business assets of Container Storage Co., a sole proprietorship, from defendant. Plaintiffs' third amended petition alleged that defendant made negligent misrepresentations regarding the company's business operations. Plaintiffs contended they sustained damages because they relied on the alleged misrepresentations. *952 Defendant filed a motion for summary judgment. The trial court granted the motion.
Plaintiffs' points on appeal state:
I.
[Plaintiffs] submit that [defendant's] motion for summary judgment that was granted by the trial court failed to meet the burden imposed by Rule 74.04(c), in that said motion did not establish [defendant's] right to summary judgment as a matter of law. [Plaintiffs] cite the Court to the following sources to support this contention: Missouri Rules of Civil Procedure Rule 74.04; ITT Commercial Finance v. Mid-Am. Marine, 854 S.W.2d 371 (Mo. banc 1993).
II.
[Plaintiffs] submit that the pleadings that were submitted to the trial court demonstrate that the [defendant's] actions comprised the elements required to support a cause of action for negligent misrepresentation on the part of [defendant], that there are genuine issues of material fact that can only be resolved by a trial, and that accordingly, the trial court erred when it granted [defendant's] motion for summary judgment. [Plaintiffs] cite the Court to Restatement (Second) of Torts sec. 552 (1977), and to the following cases to support this contention: Chubb Group of Ins. Cos. v. C.F. Murphy & Assoc., Inc., 656 S.W.2d 766 (Mo.App.W.D.1983); Springdale Gardens, Inc. v. Countryland Development, Inc., 638 S.W.2d 813 (Mo. App.1982); Ligon Specialized Hauler, Inc. v. Inland Container Corp., 581 S.W.2d 906 (Mo.App.1979); Aluma Kraft Manufacturing v. Elmer Fox & Co., 493 S.W.2d 378 (Mo.App.1973); Jacobs Mfg. Co. v. Sam Brown Co., 792 F. Supp. 1520 (W.D.Mo. 1992); and Cooper v. Schlesinger, 111 U.S. 148 [4 S. Ct. 360, 28 L. Ed. 382].
Rule 84.04(d) states:
The points relied on shall state briefly and concisely what actions or rulings of the court are sought to be reviewed and wherein and why they are claimed to be erroneous, with citations of authorities thereunder....
Setting out only abstract statements of law without showing how they are related to any action or ruling of the court is not a compliance with this Rule.
A point relied on must meet three requirements; (1) it must state the trial court's action or ruling about which the appellant complains; (2) it must state why the ruling was erroneous; (3) it must state what was before the trial court that supports the ruling appellant contends should have been made. See Carrier v. City of Springfield, 852 S.W.2d 196, 198 (Mo.App.1993).
Point I does not distinctly identify the trial court action about which plaintiffs complain. However, this court can discern that the act plaintiffs claim was erroneous was the granting of the summary judgment motion. Point I satisfies the first requirement.
Point I identifies the claimed deficiency of the trial court's ruling to be a failure to meet requirements of Rule 74.04(c). Arguably, the point states "why" the trial court's ruling is claimed to be erroneous. However, the point does not state "wherein" the trial court's ruling was deficient. Point I does not identify the manner in which the motion for summary judgment failed to comply with Rule 74.04(c). It does not meet the third requirement of a point relied on.
Point II meets the first requirement in that it contends the trial court erred "when it granted [defendant's] motion for summary judgment." It contends that the pleadings adequately set forth elements of the tort of negligent misrepresentation, thereby stating "why" plaintiffs contend the ruling is erroneous. However, the point does not state what was pleaded that sufficed as elements of the tort of negligent misrepresentation nor what was pleaded that constituted "genuine issues of material fact." It does not state "wherein" the ruling was erroneous. It does not meet the third requirement of a point relied on.
Points relied on that do not comply with requirements of Rule 84.04(d) preserve nothing for review. Hubbs v. Hubbs, 870 *953 S.W.2d 901, 908 (Mo.App.1994); Farm Credit Bank of St. Louis v. Jensen, 844 S.W.2d 132, 133 (Mo.App.1993); In Interest of J.L.C., 844 S.W.2d 123, 126 (Mo.App.1992). Judgment affirmed.
GARRISON, P.J., and CROW, J., concur.
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886 S.W.2d 721 (1994)
Donna Marie LAMASTUS, Petitioner-Respondent,
v.
Ernest Lee LAMASTUS, Respondent-Appellant.
No. 64936.
Missouri Court of Appeals, Eastern District, Division Four.
November 8, 1994.
*722 William P. Bertram, Eric C. Harris, P.C., Flat River, for petitioner-respondent.
Stanley D. Schnaare, the Schnaare Law Firm, P.C., Hillsboro, for respondent-appellant.
SIMON, Judge.
Ernest Lee Lamastus ("Husband") appeals from a default judgment dissolving his marriage to Donna Marie Lamastus ("Wife") and awarding Wife primary custody of the child born of their marriage, without rights of visitation or any other contact.
Husband contends on appeal that the trial court erred in entering its judgment because: (1) the court failed to appoint a guardian ad litem, pursuant to § 452.423, R.S.Mo.Supp. 1993 (all further references to this section shall be to R.S.Mo.Supp.1993); (2) the alias *723 summons and return were defective, making personal jurisdiction over Husband improper; (3) Husband did not receive timely notice of the dissolution hearing; and (4) the court should not have denied Husband's request for a continuance where he "acted in a responsible manner ... and was diligent." We affirm the dissolution and division of property, but we reverse the judgment as to the paternity, custody and support of the child and remand for further proceedings.
On September 22, 1992, Wife filed a petition for dissolution of the marriage. In her petition, Wife alleged that the marriage was irretrievably broken, and that she was due to deliver a child of Husband in September,
1992. There was one other child in the household, A.L.S., who was not a child of the marriage. Wife also sought primary custody of and child support for her unborn child. The child, C.L.L., was born October 7, 1992.
Wife's counsel wrote a letter dated May 18, 1993, seeking out-of-state service on Husband at his last known address, in Mt. Pleasant, Texas. The summons was returned nonest. On July 23, 1993, Wife's counsel again filed a request for out-of-state service on Husband, who then was incarcerated at the Garrett County Jail in Oakland, Maryland. The return indicated that the summons was received on July 29, 1993, and that service was performed by Corporal Larry E. Gnegy of the Garrett County Sheriff's Department.
On August 30, 1993, the Washington County Circuit Clerk's Office received an undated letter from Husband. In it, Husband requested "a delay or continuance" in the dissolution proceeding, and he added, "I strongly believe [that C.L.L.] is not mine and until a gene test ... can be performed and [sic] verify whether the child is mine or not I will not take responsibility for said child." Husband also addressed the division of property in his letter, but he did not address the trial court's jurisdiction in any way. The Circuit Clerk sent a notice to Wife's counsel on September 3, 1993, stating that the court "does not intend to respond or react to [Husband's] letter (pleading) until the case is heard on September 20th, 1993."
Wife's counsel sent a notice of the September 20 hearing to Husband at the Garrett County Jail on September 8, 1993. Counsel also sent a letter to the Circuit Clerk's Office confirming that the notice was sent, along with a signed proof of service affidavit.
The hearing convened as scheduled on September 20, 1993. The trial court treated Husband's letter as a motion for a continuance, denied the motion, and found Husband in default. The court did not respond to any other matters contained in the letter.
The only witness to testify at the hearing was Wife. She affirmed that the marriage was irretrievably broken and that C.L.L. was the only child born of the marriage. On direct examination, Wife requested that the court deny Husband all visitation rights to C.L.L., on the ground that he "sexually molested or raped" A.L.S., her daughter from a prior union.
The court entered an order on September 23, 1993, dissolving the marriage and dividing the property; granting primary custody of C.L.L. to Wife; denying Husband all visitation rights; and ordering Husband to (1) pay to Wife $60.98 per week for child support, beginning 90 days after Husband's release from jail, and (2) provide medical insurance for C.L.L. through Husband's employer. On October 20, 1993, Husband, through counsel, filed a motion to vacate and modify the dissolution decree and to set aside the default judgment, on grounds substantially the same as those contained in his points on appeal. The motion was denied.
Our review is governed by the oft-cited principles of Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976). We will sustain the judgment of the trial court unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Id. at 32[1].
Husband first asserts that the trial court erred in failing to appoint a guardian ad litem because (1) Wife alleged that Husband sexually molested her daughter, A.L.S., and (2) Husband placed the paternity of C.L.L. in issue in his letter. We will address each of these grounds in turn.
Section 452.423.1 states:
*724 In all proceedings for child custody or for dissolution of marriage or legal separation where custody, visitation, or support of a child is a contested issue, the court may appoint a guardian ad litem. The court shall appoint a guardian ad litem in any proceeding in which child abuse or neglect is alleged.
Our legislature enacted § 452.423 in 1988 in response to the Southern District's entreaty in C.J.(S.)R. v. G.D.S., 701 S.W.2d 165 (Mo.App.1985). See King v. King, 793 S.W.2d 200, 203[6] (Mo.App.1990). In C.J.(S.)R., the Southern District held:
[I]t is an abuse of discretion not to appoint a guardian ad litem ... where, as here, the choice of the custodian of minor children is in issue, and the court has knowledge, from the pleadings or from any other source, that the children in question have been, or are being, abused while in the custody of one claiming the right to be their custodian.
701 S.W.2d at 169[5] (emphasis added). We note initially that C.J.(S.)R., from which § 452.423 is derived, requires appointment of a guardian ad litem where there is abuse of the "children in question," that is, the children whose custody is a contested issue. The Western District, after the enactment of § 452.423, likewise concluded that "the statute compels the appointment of a guardian ad litem in all child custody proceedings where a party alleges abuse or neglect of a minor child whose custody, visitation, or support is a contested issue." Johnson v. Johnson, 812 S.W.2d 176, 177[1] (Mo.App.1991).
There is no issue as to the custody, visitation or support of A.L.S.; rather, it is C.L.L., the only child of Husband and Wife, whose paternity is at issue. Therefore, Wife's testimony as to abuse of A.L.S. did not compel the appointment of a guardian ad litem.
Our inquiry does not end there, however. Husband contested the paternity of C.L.L. in his letter to the trial court. He now argues that because he raised paternity as an issue, the court was required to appoint a guardian ad litem for C.L.L.
Although no statute addresses this issue, there is caselaw precedent for Husband's position. "When pleadings or the evidence in the case show that the paternity of the child is an issue, a guardian ad litem must be appointed for the child." In re Marriage of Myers, 845 S.W.2d 621, 626[9] (Mo.App.S.D.1992). The appointment of a guardian ad litem under such circumstances is mandatory, and the proceeding cannot continue until the guardian is appointed. Lechner v. Whitesell by Whitesell, 811 S.W.2d 859, 861[4] (Mo.App.1991). A trial court's failure to appoint a guardian ad litem in such a situation is reversible error if it is properly raised or it justifies sua sponte relief. S.______ v. S. ______, 595 S.W.2d 357, 361[3] (Mo.App.1980).
Wife's only response is that paternity was not actually at issue because Husband's letter either was not a pleading or, if it was an answer to Wife's petition, it was not filed in time.
Husband was served with process on July 29, 1993, at the Garrett County Jail in Maryland. He then had thirty days in which to file an answer. Rule 55.25(a). July 29 did not count in the computation of time, as "the day of the act [of service] ... after which the designated [thirty-day] period of time begins to run...." Rule 44.01(a). July 30, then, was the first day, so August 28 was the thirtieth day. However, August 28, 1993, was a Saturday. Rule 44.01(a) states: "The last day of the period so computed is to be included, unless it is a Saturday, Sunday or a legal holiday, in which event the period runs until the end of the next day which is neither a Saturday, Sunday nor a legal holiday." Therefore, the period for Husband to answer was extended to Monday, August 30, 1993, the date on which his letter was filed. If his letter was an answer, it was timely, and Wife's contention to the contrary is incorrect.
The trial court, however, treated Husband's letter as a motion for continuance rather than an answer. Myers, supra, makes it clear that any evidence that places the paternity of a child in question mandates the appointment of a guardian ad litem. Whether Husband's letter is an answer or a motion is not determinative here because, in either case, it properly raised paternity as an *725 issue; thus, the court was required to appoint a guardian. Further, since paternity is disputed, the child should be joined as a party, Lechner, 811 S.W.2d at 861[5], particularly where, as here, Husband's contentions, if true, could bastardize the child. L.M.K. v. D.E.K., 685 S.W.2d 614, 616[8] (Mo.App. 1985). Point granted.
In his second point, he contends that the circuit court lacked personal jurisdiction over him, thereby invalidating the default judgment, because the alias summons and return were defective. Specifically, Husband argues that the summons and return (1) did not contain an affidavit of service as required by Rule 54.20(b), and (2) did not inform Husband that he must file a verified answer to the petition.
Since personal jurisdiction may be conferred by waiver, State ex rel. Tinnon v. Mueller, 846 S.W.2d 752, 754[3] (Mo.App. E.D.1993), we will not address Husband's specific contentions. Entry of a general appearance waives a challenge to personal jurisdiction. See C & H Distributors, Inc. v. Cloud Enterprises, Inc., 866 S.W.2d 927, 928 (Mo.App.E.D.1993). The law regarding appearances changed with the adoption of the Civil Code of 1943, which abrogated the old rule requiring a "special appearance" to challenge personal jurisdiction. See id. Many courts still followed the old rule, under which if a party took any action, other than an objection to subject-matter jurisdiction, which recognized the case as being in court, the action amounted to a general appearance and a waiver of personal jurisdiction. See, e.g., Germanese v. Champlin, 540 S.W.2d 109, 112[8] (Mo.App.1976).
In State ex rel. White v. Marsh, 646 S.W.2d 357 (Mo. banc 1983), our Supreme Court addressed this situation, holding that a defendant did not waive personal jurisdiction by filing a request for an extension of time under Rule 44.01(b). Id. at 361[2]. However, the Marsh Court expressly excepted "situations in which a defendant takes steps in a case which are clearly inconsistent with any claim of want of personal jurisdiction." Id. at 362. We recently reaffirmed this principle, noting that the filing of a responsive pleading "recogniz[es] that a cause is in court [and] amounts to a general appearance." Walker v. Gruner, 875 S.W.2d 587, 589[6] (Mo.App.E.D.1994). Likewise, whether Husband's letter was an answer or a motion for continuance, it demonstrated his knowledge that the dissolution proceeding was in court. Further, the letter did more than merely seek an extension of time, in that it also contested the paternity of C.L.L. and the division of property. Therefore, the situation here is distinguishable from that in Marsh, and Husband's letter "amounted to a general appearance" and a waiver of the improper return and lack of personal jurisdiction. Point denied.
Husband contends in his third point that the trial court erred in not setting aside the dissolution decree because he did not receive timely notice of the setting of the hearing. He explicitly disavows any insinuation that Wife's attorney failed to send the notice, but, he argues, "the mailing of said notice does not constitute receipt by [Husband]...." The suggestion that proper notice depends on receipt is contrary to common practice. The evidence here shows that proper notice was sent to Husband at his last known address. Point denied.
In his final point, Husband claims error in the denial of his request for a continuance where he "acted in a responsible manner by filing a written response to the pleadings and was diligent in seeking help from an attorney."
The trial court has broad discretion in deciding whether to grant a motion for continuance. Nance v. Nance, 880 S.W.2d 341, 344[1] (Mo.App.E.D.1994). The denial of such a motion rarely is reversible error. In the Interest of S_____ G., 779 S.W.2d 45, 51[2] (Mo.App.1989). The decision of a trial court to deny a motion for continuance will not be set aside absent a showing of arbitrary or capricious exercise of its discretion. Pupillo v. Pupillo, 863 S.W.2d 631, 633[3] (Mo.App.E.D.1993).
Rule 65.03 enumerates the proper procedure for seeking a continuance. It states in relevant part: "An application for a continuance shall be made by written motion *726 accompanied by the affidavit of the applicant or some other credible person setting forth the facts upon which the application is based...." Husband's letter, which the trial court construed as a motion for continuance, did not comply with Rule 65.03 because it lacked the required affidavit. See Commerce Bank of Mexico, N.A. v. Davidson, 667 S.W.2d 474, 476[3] (Mo.App.1984). In the absence of compliance with the requirements of the rule, there can be no abuse of discretion in denying a continuance. In the Interest of C.L.L., 776 S.W.2d 476, 477[1] (Mo. App.1989).
Husband seems to suggest that the trial court should have granted his motion because he was "responsible" and "diligent" despite not being represented by counsel. However, parties acting pro se are bound by the same rules and procedures as lawyers, and they are entitled to no indulgence they would not have received if represented by counsel. Jim Medve Inv. Co. v. Bailous, 740 S.W.2d 678, 680[4] (Mo.App.1987). The trial court did not abuse its discretion in denying Husband's motion for continuance because his letter did not comply with Rule 65.03. Point denied.
The judgment is affirmed with respect to the dissolution of the parties' marriage and division of property, but as to the paternity, custody and support of C.L.L., it is reversed and remanded to the trial court for further proceedings consistent with this opinion.
Judgment affirmed in part and reversed and remanded in part with directions.
AHRENS, P.J., and KAROHL, J., concur.
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430 Pa. Super. 488 (1993)
635 A.2d 155
Leroy BARNUM, Appellant,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee.
Superior Court of Pennsylvania.
Argued September 14, 1993.
Filed December 16, 1993.
*490 Joel M. Lieberman, Philadelphia, for appellant.
Louis E. Bricklin and Moira C. Duggan, Philadelphia, for State Farm, appellee.
Jennifer L. Abram, Media, for Ins. Federation, amicus curiae.
Before WIEAND, TAMILIA and HESTER, JJ.
*491 WIEAND, Judge.
On July 10, 1991, Leroy Barnum was operating a vehicle insured by State Farm Mutual Automobile Insurance Company (State Farm) when he was involved in an accident causing injuries to his person. Barnum received medical treatment for his injuries and thereafter made a claim against State Farm for first party benefits under the Motor Vehicle Financial Responsibility Law. State Farm questioned some of Barnum's medical bills and submitted them to a Peer Review Organization for evaluation pursuant to 75 Pa.C.S. § 1797(b). The PRO determined that certain medical treatment was unnecessary. State Farm then refused to pay the unnecessary charges.
Without seeking a reconsideration of the PRO determination, Barnum filed a civil action against State Farm in which he sought to recover his medical bills, plus interest, counsel fees and damages allowed by 42 Pa.C.S. § 8371. State Farm filed preliminary objections in the nature of a demurrer in which it contended that (1) Barnum had failed to exhaust his statutory remedy by failing to request reconsideration by the PRO, and (2) the provisions of 42 Pa.C.S. § 8371 were inapplicable to a claim for first party benefits under the Motor Vehicle Financial Responsibility Law. The trial court agreed and dismissed the complaint.[1] Barnum appealed.
The Motor Vehicle Financial Responsibility Law, according to recent amendment,[2] permits insurers to utilize PROs to evaluate the utility and medical necessity of medical treatment provided to a person injured in a motor vehicle accident. See generally: Harcourt v. General Accident Ins. *492 Co., 419 Pa.Super. 155, 160 n. 2, 615 A.2d 71, 74 n. 2 (1992), citing 21 Pa.Bull. 5601 (Nov. 1991). The Peer Review Process is set forth at 75 Pa.C.S. § 1797(b). Subparagraph (b)(2) thereof provides for reconsideration of a PRO determination as follows:
(2) PRO reconsideration. An insurer, provider or insured may request a reconsideration by the PRO of the PRO's initial determination. Such a request for reconsideration must be made within 30 days of the PRO's initial determination. If reconsideration is requested for the services of a physician or other licensed health care professional, then the reviewing individual must be, or the reviewing panel must include, an individual in the same specialty as the individual subject to review.
In Terminato v. Pennsylvania National Ins. Co., 422 Pa.Super. 92, 618 A.2d 1032 (1993), allocatur granted, ___ Pa. ___, 631 A.2d 1010 (1993), the Superior Court held that this provision was mandatory and that the peer review procedure, once started, had to be exhausted before an action at law could be commenced in the courts. With respect to appellant's argument that the word "may" was permissive and did not require a prior petition for reconsideration, the Court said:
We find the appellant's argument unpersuasive for several reasons. The appellant, first of all, is misguided if it believes that the word "may" is used to indicate that a party has a choice of either requesting reconsideration or appealing directly to a court of law. To the contrary, the use of the word "may" indicates a party has a choice between requesting reconsideration of the initial determination or accepting the initial determination as binding. "It is well settled that where the legislature provides a [statutory] remedy without preserving the parallel right to resort directly to the courts, that remedy is exclusive and must be strictly pursued." Concerned Taxpay. v. Beaver Cty. Bd. of Assess., 75 Pa.Cmwlth. 443, 446, 462 A.2d 347, 349 (1983); accord Lashe v. Northern York County School District, 52 Pa.Cmwlth. 541, 546, 417 A.2d 260, 263 (1980). In such circumstances, we have interpreted words such as "may *493 appeal" to indicate an aggrieved party must exhaust the statutorily defined remedy before proceeding to court. Concerned Taxpay., supra, 75 Pa.Cmwlth. at 443, 462 A.2d at 347 (words "may appeal" mean that taxpayer must pursue appeal before Taxpayer Board of Assessment). Accordingly, the statute does not indicate that a party in the Peer Review process can resort directly to the courts, but must either appeal within the Peer Review process or accept the PRO's initial determination as binding.
Id. 422 Pa.Super. at 98-99, 618 A.2d at 1035 (footnote omitted).
The peer review process provides a strong incentive for insurance carriers to route disputed claims through this alternate dispute resolution process. Where the insurer denies a claim without first obtaining a PRO evaluation, the claimant may immediately commence a court action. If the court finds in favor of the claimant, the insurer becomes liable, in addition to the amount of the claim, for counsel fees, costs, and interest at the rate of 12%. Moreover, if the court finds that the insurer acted wantonly in denying a claim, treble damages may be awarded. Conversely, if the insurer uses the peer review process, its potential liability is limited to the amount of the claim plus interest. This feature of the law caused the Terminato Court to observe:
[I]t appears the statute is structured to push the insurer to submit claims it considers dubious into the Peer Review process. We believe the statutory design evidences an intention to make the Peer Review process the primary system for initially evaluating challenged insurance automobile policy medical claims. To accept the appellant's argument, we would have to provide insured individuals the unilateral right to circumvent the Peer Review process by allowing them to proceed at their inclination in a court of law. The statute does not lend itself to such an interpretation.
Id. at 102, 618 A.2d at 1037 (footnote omitted).
Subsection (b)(2) provides that a request for reconsideration by the PRO may be made within 30 days of the *494 PRO's initial determination. Where the legislature has provided a statutory remedy without preserving the parallel right of direct and immediate access to the courts, that remedy is exclusive and must be exhausted. Under the statutory procedure, an immediate resort to the courts is permissible only where the insurer denies a claim without first obtaining a PRO evaluation. Otherwise, an insured cannot proceed in the courts until reconsideration of an unfavorable PRO evaluation has been sought. To hold otherwise would be to defeat the purpose of and the benefits to be derived from the PRO procedure established by the legislature.
Our construction of the statute is supported by administrative regulation appearing at 31 Pa.Code § 69.52(m). It is there provided that "[u]pon determination of a reconsideration by a PRO, an insurer, provider or insured may appeal the determination to the courts." A court should not disregard or overturn an administrative agency's construction of a statute unless it is clearly erroneous. Slovak-American Citizens Club of Oakview v. Pennsylvania Liquor Control Board, 120 Pa.Commw. 528, 532, 549 A.2d 251, 253 (1988). This is because administrative regulations may often serve to clarify an arguable vagueness existing in the statute. Pennsylvania Medical Society v. Foster, 137 Pa.Commw. 192, 199, 585 A.2d 595, 598 (1991). Thus, in this case, the regulations confirm the only logical interpretation to be given the statute. They confirm this Court's decision to follow Terminato.
Appellant argues further that the trial court erred when it dismissed his claim for punitive damages, based on alleged bad faith conduct by the insurer, pursuant to 42 Pa.C.S. § 8371.[3] This statutory provision was a part of the same amendatory legislation which produced 75 Pa.C.S. § 1797.[4] It provides as follows:
*495 In an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions:
(1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%.
(2) Award punitive damages against the insurer.
(3) Assess court costs and attorney fees against the insurer.
By its terms, the provision has general application to actions on insurance policies.
The provisions of 75 Pa.C.S. § 1797, however, have specific application to claims for first party benefits under the Motor Vehicle Financial Responsibility Law. It is these claims which are subject to the PRO procedure. In such cases, if it is determined by a PRO or a court that medical treatment or rehabilitative services or merchandise for which the claim is made were medically necessary, the insurer can be made to pay interest at the rate of twelve (12%) percent and/or attorney fees as set forth in 75 Pa.C.S. § 1797(b)(5) and (6). If the insurer's conduct was wanton, moreover, it can be made to pay treble damages. These remedies clearly are at variance with and in conflict with the general remedies set forth in 42 Pa.C.S. § 8371.
When a general statutory provision conflicts with a specific provision and the two are applicable to the same matter, the legislature has provided as follows at 1 Pa.C.S. § 1933.
Whenever a general provision in a statute shall be in conflict with a special provision in the same or another statute, the two shall be construed, if possible, so that effect may be given to both. If the conflict between the two provisions is irreconcilable, the special provisions shall prevail and shall be construed as an exception to the general provision, unless the general provision shall be enacted later and it shall be the manifest intention of the General Assembly that such general provision shall prevail.
*496 The several sections of the statute here being examined cannot be reconciled. The damages specified by the legislature in the event of wanton or bad faith conduct by an insurer are different, and the rate of interest to be awarded is also different. The provisions of 75 Pa.C.S. § 1797 are narrowly limited to those situations in which a disputed claim is to be submitted to the PRO procedure. With respect to such claims, the procedure to be followed is set forth with specificity, and the remedy, whether the procedure is followed or not, is set forth with equal specificity. If the procedure is followed by an insurer, its liability cannot be greater than as therein set forth. If it follows the PRO procedure, it cannot be subjected to damages for bad faith.
Because the two provisions were enacted at the same time and cannot be reconciled, the specific provisions of 75 Pa.C.S. § 1797 must be deemed an exception to the general remedy for bad faith contained in 42 Pa.C.S. § 8371. The provisions of 75 Pa.C.S. § 1797 are to be applied to claims for first party benefits under the Motor Vehicle Financial Responsibility Law. Accord: Danley v. State Farm Mutual Automobile Ins. Co., 808 F. Supp. 399, 401 (M.D.Pa.1992) (provisions of 75 Pa.C.S. § 1797 are impossible to reconcile with 42 Pa.C.S. § 8371, and courts have properly held that § 1797 provides exclusive remedy in auto insurance medical claim area.); Gavaghan v. Replacement Rent-A-Car, Inc., 811 F. Supp. 1077, 1081 (E.D.Pa.1992) (42 Pa.C.S. § 8371 can apply to claims brought pursuant to MVFRL as long as such claims do not involve first party benefits.); Elliott v. State Farm Mutual Automobile Ins. Co., 786 F. Supp. 487, 492-493 (E.D.Pa.1992).
For all of the foregoing reasons, we hold that this case was correctly decided by the trial court.
Order affirmed.
NOTES
[1] Although the trial court granted leave to file an amended complaint, it is readily apparent that appellant cannot file a pleading which will obviate the objections which State Farm has raised. The trial court's order, therefore, is final and appealable; it has put plaintiff out of court. See: Fizz v. Kurtz, Dowd & Nuss, Inc., 360 Pa.Super. 151, 153 n. 1, 519 A.2d 1037, 1038 n. 1 (1987); Urban v. Urban, 332 Pa.Super. 373, 378, 481 A.2d 662, 664-665 (1984); Freeze v. Donegal Mutual Ins. Co., 301 Pa.Super. 344, 349-350, 447 A.2d 999, 1002 (1982), aff'd, 504 Pa. 218, 470 A.2d 958 (1983).
[2] See: 75 Pa.C.S. § 1797.
[3] In view of the PRO decision affirming State Farm's partial denial of appellant's claim, it is difficult at this point to perceive bad faith in State Farm's conduct.
[4] Act of February 7, 1990, P.L. 11, No. 6, effective April 15, 1990.
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338 B.R. 402 (2006)
In re. Anthony H. LYBRAND and Micki Jo Lybrand, Debtors.
No. 6:04-bk-78412.
United States Bankruptcy Court, W.D. Arkansas, Hot Springs Division.
March 9, 2006.
Annabelle Patterson, Dickerson Law Firm, Hot Springs, AR, for Debtors.
ORDER
JAMES G. MIXON, Bankruptcy Judge.
On this date, the Court considers the objection to confirmation of plan filed by the United States of America, by and through its agency, the Internal Revenue Service ("IRS"), on June 13, 2005, and a motion to lift the automatic stay to set off a tax refund filed by the IRS on June 14, 2005. Anthony and Micki Lybrand ("Debtors") do not object to the motion to lift the automatic stay. The issue at bar is whether the IRS may allocate a prepetition tax refund to offset the prepetition tax liability of its choice.
The proceeding before the Court is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(G) and (L), and the Court has jurisdiction to enter a final judgment in this case.
*403 FACTS
On December 27, 2004, the Debtors filed a voluntary petition for relief under the provisions of Chapter 13 of the United States Bankruptcy Code. The Debtors' original plan, filed the same date, proposed to pay in full a priority claim due the IRS in the sum of $8000.00 in accordance with the requirements of 11 U.S.C. § 1322(a)(2). On March 30, 2005, the Debtors filed their first modified plan, which did not change the treatment of the claim of the IRS. The Debtors' modified plan was confirmed on April 28, 2004.
On May 18, 2005, the Debtors filed their second modified plan. The plan provided the following as to the claim of the IRS:
1. IRS Debtors have objected to the claims of IRS, and believe that the correct amount owed on priority claim to be $7,824.00. The Debtor:, will amend plan if claim is allowed for more than $7,824.00.
The Debtors filed their third modified plan on May 24, 2005. The third modified plan did not change the treatment of the claim of the IRS.
On June 13, 2005, the IRS filed an objection to confirmation of the second modified plan. The IRS alleged that the proper amount of the priority claim was $10,257.58 instead of the Debtors' claimed amount of $7824.58 and that the plan failed to provide for full payment of the priority claim as required by 11 U.S.C. § 1322(a)(2).
On June 14, 2005, the IRS filed a motion to lift the automatic stay to set off a 2003 tax refund due the Debtors in the sum of $2434.00 against its amended claim dated March 8, 2005, in the total amount of $21,579.69 in tax liabilities for the years 1999 through 2002. The motion further states that the IRS retained $5096.13 in a suspense account.
On October 26, 2005, a hearing was held in Hot Springs, Arkansas, on the objection to confirmation by the IRS and the motion to lift the automatic stay filed by the IRS. The matter was submitted upon stipulated facts and both parties have filed briefs.
The parties entered into the following stipulation of facts:
1. The debtors filed a petition for Chapter 13 relief on December 27, 2004. Debtors' Chapter 13 Plan was confirmed on April 28, 2005.
2. On June 9, 2005, the Internal Revenue Service filed Amendment No. 2 to Proof of Claim dated March 8, 2005, in the total amount of $21,579.69 for tax liabilities for 1999 through 2002.
3. The Proof of Claim of the IRS reflects an unsecured priority claim in the amount of $10,257.58, and an unsecured general claim in the amount of $11,322.11.
4. The debtors have a tax refund due them for 2003 in the amount of $2,434.00. . . .
5. The 2003 tax refund is for a tax period before the petition date. The obligation of the IRS to the debtors for this refund has mutuality with the pre-petition debt owed by the debtors to the IRS as described in Paragraph 2 above.
6. The debtors are currently $1,019.70 in arrears on their Chapter 13 plan payments.
7. The debtors have no income other than the debtor husband's social security disability in the amount of $1,334.00 per month. Both debtors have serious medical problems, and monthly expenses for health expenses which have increased substantially since filing.
*404 8. An offset of the tax refund against the general unsecured claim, will result in an increase of the debtors' plan payment.
9. Any increase in debtors' plan payment, will render the plan non-feasible and debtors will be unable to fund such a plan.
(Stipulation of Facts, December 5, 2005.)
ARGUMENT
The IRS asserts that it holds an unsecured priority claim, pursuant to 11 U.S.C. § 507(a)(8), in the amount of $10,257.58 and a general unsecured claim in the amount of $11,322.11. The IRS argues that it is entitled to set off the tax refund due the Debtors against the nonpriority portion of its claim. The IRS states that the taxpayers have no right to direct how overpayments of their tax liability should be applied and cannot require that overpayments first be credited against those tax liabilities that are not dischargeable in bankruptcy.
The Debtors do not dispute the amount of the claimed right of setoff or the right of the IRS to exercise the right of setoff, but argue that this Court should order the IRS to apply the setoff amount against the priority portion of the claim pursuant to its equitable power granted under 11 U.S.C. § 105(a). The Debtors state that otherwise the plan payments will have to be increased, and the Debtors do not have sufficient income to pay increased payments. Therefore, the plan will fail.
DISCUSSION
As stipulated, a portion of the tax debt is a priority claim. The Bankruptcy Code provides that a Chapter 13 debtor must propose a plan that will pay the IRS's priority claim in full. 11 U.S.C. § 1322(a)(2)(2000). If the refund is set off against the priority debt, that debt will be reduced. Thus, the Debtors can make a significantly smaller monthly plan payment and still comply with the provisions of Chapter 13 that require full payment of priority claims. In contrast, the IRS can maximize its recovery through the plan by setting off the refund monies against the general unsecured debt because its priority debt must be paid in any event. If the refund is applied to the priority claim as the Debtors advocate, the IRS will receive little or no payment on its general unsecured claim through the plan, and the balance remaining upon plan completion will be discharged.
Generally, if a taxpayer voluntarily pays a tax obligation, that taxpayer may direct how the payment is applied. Internal Revenue Serv. v. Kaplan (In re Kaplan), 104 F.3d 589, 599 (3d Cir.1997)(citing In re Energy Resources Co., 871 F.2d 223, 227 (1st Cir.1989)(citing Rev. Rul. 79-284, 1979-2 C.B. 83, 1979 WL 51035; Slodov v. United States, 436 U.S. 238, 98 S. Ct. 1778, 56 L. Ed. 2d 251 (1978)); United States v. Pepperman, 976 F.2d 123, 127 (3d Cir. 1992)); Jehan-Das Inc. v. United States (In re Jehan-Das Inc.), 925 F.2d 237, 238 (8th Cir.1991) (citing In re Energy Resources Co., 871 F.2d 223, 227 (1st Cir. 1989)).
However, if the payment is deemed to be an involuntary payment, the IRS is free to allocate the payment in the way that will maximize recovery of the taxes due. In re Harker, 357 F.3d 846, 849 (8th Cir.2004) (citing In re Jehan-Das, Inc., 925 F.2d at 238). See also United States v. Ryan (In re Ryan), 64 F.3d 1516, 1524 (11th Cir.1995) (holding that "[p]ursuant to clear statutory authority and the implementing Treasury Regulations, the IRS has the discretion to designate the applications among a taxpayer's various tax liabilities"); Pepperman, 976 F.2d at 127 (stating that long-standing *405 IRS policy that taxpayers may designate the application of voluntary but not involuntary payments (citations omitted)); In re DuCharmes & Co., 852 F.2d 194, 196 (6th Cir.1988) (per curiam) (ruling that involuntary payments are allocated by the IRS, allowing the government to maximize its recovery); In re Ribs-R-Us, Inc., 828 F.2d 199, 203 (3d Cir.1987) (concluding that Chapter 11 corporate debtor's involuntary payments could not be allocated between portions of tax liability); Kalb v. United States, 505 F.2d 506, 509 (2d Cir. 1974) (stating that IRS has statutory authority to apply a refund, whether classified as voluntary or involuntary, to any tax liability); Pacific Nat'l Ins. Co. c. United States, 422 F.2d 26, 33 (9th Cir. 1970) (asserting that insurance company surety stipulated that, absent a specific request, IRS has the discretion to apply any available funds to a taxpayer's obligation in accordance with the agency's own procedures) (citations omitted).
The Debtors argue that, notwithstanding the general rule on allocation, the Bankruptcy Court has the authority pursuant to its equitable power granted under 11 U.S.C. § 105(a)[1] to order the IRS to apply their tax refund to the priority claim in order to make the Debtor's plan feasible. The Debtors cite the Supreme Court decision in United States v. Energy Resources Co., 495 U.S. 545, 110 S. Ct. 2139, 109 L. Ed. 2d 580 (1990)[2] as authority for their argument.
In the Energy Resources case, the separate debtors proposed Chapter 11 plans to pay in full certain "trust fund" taxes[3] entitled to priority under the plans as well as other taxes due the IRS. Each plan provided that tax payments would be applied to first extinguish trust fund taxes before non-trust fund taxes. The separate plans were confirmed over the objections of the IRS, and each Debtor attempted to pay the IRS claims over a period of five and six years by allocating initial payments to extinguish the trust fund tax debt prior to paying other tax liability.
The IRS objected to the debtors' method of allocation and sought to apply the payments to non-trust fund taxes. The difference to the IRS was that if the trust fund taxes were not paid, the IRS also had recourse against the individuals who worked for the debtors and were responsible for the collection and payment of the taxes. The court orders denying the objections of the IRS and ordering the agency to apply the monies to the trust fund *406 tax liabilities were appealed. The Supreme Court stated that it granted certiorari because the First Circuit's decision in In re Energy Resources, 871 F.2d 223 (1st Cir.1989) conflicted with other circuits' decisions, such as In re Ribs-R-Us, Inc., 828 F.2d 199 (3d Cir.1987). Energy Resources, 495 U.S. at 548-549, 110 S. Ct. 2139.
The Supreme Court held in Energy Resources that 26 U.S.C. § 6672, which requires the payment of trust fund taxes, does not limit a bankruptcy court from confirming a plan that provides for payment of non-trust fund taxes first if the specific allocation of payments is necessary for successful reorganization. The Court recognized that plans paying trust fund taxes first might put the government at greater risk of nonpayment by first eliminating the responsible third-party liability but stated that section 6672 does not protect against such an eventuality. United States v. Energy Resources Co., Inc., 495 U.S. at 551, 110 S. Ct. 2139.
In the case of In re Divine, 127 B.R. 625 (Bankr.D.Minn.1991), Judge Robert Kressel considered the impact of Energy Resources on facts similar to those in this case. The only difference between the instant case and In re Divine is that in In re Divine, a portion of the IRS claim was secured by a tax lien, and the balance included both priority and general unsecured claims.
In In re Divine, the IRS argued that its tax lien secured the general unsecured claim while the debtors wanted to allocate the priority taxes to the IRS's secured claim. The debtors contended that the Supreme Court decision in Energy Resources permitted this treatment under the plan.
Judge Kressel distinguished Energy Resources by first pointing out that Energy Resources only concerned which type of tax would be paid first and that the plans provided for full payment of the entire tax claim. By contrast, the debtors in In re Divine wanted to allocate payments among secured and unsecured claims and, therefore, minimize the amount of the tax claim proposed to be paid under the plan. In re Divine, 127 B.R. at 629. Judge Kressel declined to broadly construe Energy Resources to allow the debtors to choose which tax debts were secured so that they would be able to discharge most of the debt.
The most significant distinction between Energy Resources and this case is that Energy Resources did not involve the allocation of a refund, which is governed by a specific statute, 26 U.S.C. § 6402(a)(2000).[4] The Second Circuit has found that "26 U.S.C. § 6402(a) (1970) clearly gives the IRS discretion to apply a refund to `any liability' of the taxpayer." Kalb v. United States, 505 F.2d at 509. Also, the Eleventh Circuit has held that, pursuant to 26 U.S.C. § 6402(a) and the implementing Treasury Regulations, "the IRS has the discretion to designate the application of overpayments among a taxpayer's various tax liabilities." In re Ryan, 64 F.3d at 1524. Nothing in the Supreme Court decision of Energy Resources indicates an intention to construe the provisions of 26 U.S.C. § 6402(a), which specifically gives the IRS the power to apply overpayments as it sees fit.
*407 The Debtor also cites the case of In re Moore, 200 B.R. 687 (Bankr.D.Or.1996), which concerns facts identical to the case at bar. In Moore, the IRS sought relief from the stay to apply the refund to the nonpriority unsecured portion of its claim. At the hearing, the Trustee stated that if payments were applied according to the IRS's request, the plan would not be feasible. The Moore court conceded that under nonbankruptcy law, the IRS could credit the Debtor's tax refund to any tax liability. However, citing Energy Resources and the court's equitable powers under § 105(a), the Moore court ruled that the debtors could direct the application of the refund despite 26 U.S.C. § 6402(a) if such action were necessary for the success of the plan. In re Moore, 200 B.R. at 690.
In re Moore is unpersuasive, particularly since it simply refuses to follow the unambiguous language of 26 U.S.C. § 6402(a). The plain language of 26 U.S.C. § 6402(a) governs overpayment, and the statute is unequivocal in giving the IRS the authority to allocate tax refunds.
Therefore, the objection to confirmation is sustained. The stay is relaxed to permit the IRS to set off the refund against the tax liability of its choice. The Debtors are granted 20 days to file a modified plan consistent with the terms of this order.
IT IS SO ORDERED.
NOTES
[1] The statute provides,
(a) The court may issue any order, process or judgment that is necessary or appropriate to carry out the provisions of this title. No provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.
11 U.S.C. § 105(a).
[2] Energy Resources Company petitioned for reorganization under Chapter 11 in January 1983, and the plan was confirmed in September 1984. Newport Offshore Ltd. filed a petition for reorganization under Chapter 11 on November 13, 1985, and the plan was approved in June 1986. The two cases were consolidated on appeal to the First Circuit Court of Appeals in 1989.
[3] "Trust fund" taxes refer to the employees' share of taxes required to be withheld by the employer and held in trust for the federal government pursuant to 26 U.S.C. § 7501(a). Under 26 U.S.C. § 6672, the IRS may collect unpaid trust fund taxes directly from the employer's officers or employees who are responsible for collecting the tax. These individuals are referred to as "responsible" persons. Energy Resources, 495 U.S. at 547, 110 S. Ct. 2139. In the instant case, the priority claims of the IRS are not designated by the parties as trust fund taxes.
[4] This section provides in relevant part: "(a) General Rule. In the case of any overpayment, the Secretary, within the applicable period of limitations, may credit the amount of such overpayment, including any interest allowed thereon, against any liability in respect of an internal revenue tax on the part of the person who made the overpayment . . ." 26 U.S.C. § 6402(a)(emphasis added).
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886 S.W.2d 759 (1994)
Juanita Johnson POLLARD, Plaintiff/Appellee,
v.
KNOX COUNTY, Tennessee, Defendant/Appellant.
Supreme Court of Tennessee, at Knoxville.
October 10, 1994.
Lynn Bergwerk, Farmer & Bergwerk, Knoxville, for appellee.
Michael W. Moyers, Sr. Deputy Knox County Law Director, Knoxville, for appellant.
OPINION
O'BRIEN, Chief Justice.
In this workers' compensation case, the defendant-employer, Knox County, appeals the chancery court judgment in which the chancellor concluded the plaintiff's "average weekly wage" included the sums paid by her employer as a contribution to the Health Care Insurance Plan which covered county employees, including the plaintiff. The chancellor awarded disability benefits accordingly. We now reverse the judgment of the trial court.
Juanita Johnson Pollard suffered injuries and residual disability on 10 July 1990, in the course and scope of her employment. As an employee of Knox County, Ms. Pollard had the option of electing coverage under the county's health insurance program. She elected to receive health insurance benefits provided by the county and the employer paid a portion of the health insurance premium on her behalf. The remaining portion of the premium was deducted automatically from her paycheck. The county contributed $31.62 per week for payment of the employee's coverage. The trial court included the county's contribution to the capitulation of the employee's weekly wage in the following language:
As to the average weekly wage, I think as defined by the TCA as benefits from which the employee recognizes an economic gain without the legislature having limited that to the taxable gain, that I will find that she is entitled as part of the average weekly wage to that amount contributed by the employer for the health benefits ...
T.C.A. § 50-6-102(a)(1)(A) defines average weekly wage in the following terms: "Average weekly wages" means the earnings of the injured employee in the employment in which the injured employee was working at the time of the injury ...
Subsection (D) of the Code Section provides: Wherever allowance of any character *760 made to any employee in lieu of wages are specified as part of the wage contract, they shall be deemed a part of such employee's earnings.
The phraseology used by the trial judge in making the award does not come from the Tennessee Code. It is contained in a citation from 2 Larson, Workers' Compensation Law, Sec. 60.12 cited by Justice Robert Cooper in PNL Construction Co., Inc. v. Lankford, 559 S.W.2d 793 (Tenn. 1978), as follows: "The earnings of an employee include anything received by him under the terms of his employment contract from which he realizes economic gain." It was said in dictum in a case in which an owner/employee received no salary. The court ruled that T.C.A. § 50-902(c) [T.C.A. § 50-6-102(a)(1)(c)] was the measure by which the owner/employee's earnings should be calculated. The entire citation from Larson's is as follows:
In computing actual earnings as the beginning point of wage-basis calculations, there should be included not only wages and salary but anything of value received as consideration for the work as for example, tips, bonuses, commissions and room and board, constituting real economic gains to the employee.[1]
It is pertinent to note that the Larson treatise indicates that a majority of the jurisdictions which have considered the issue propounded by the employee in this case have ruled to the contrary. Sec. 60.12(b) (1993), in his latest revision, contains a strong statement on the subject:
Workers' compensation has been enforced in the United States for over 70 years, and fringe benefits have been a common feature of American industrial life for most of that period. Millions of compensation benefits have been paid during this time. Whether paid voluntarily or in contested and adjudicated cases, they have always begun with a wage basis calculation that made "wage" mean the "wages" that the worker lives on and not miscellaneous "values" that may or may not some day have a value to him depending on a number of uncontrollable contingencies... .
When the Tennessee Workers' Compensation Act was passed in the year 1919, code section 50-6-102(a)(1)(D) contained precisely the same language it contains today. The employee would have us construe subsection (D) so as to include the employer's financial contribution to her health insurance package in the calculation of her average weekly wage. In considering the plain language of the Act, the Legislature has never, in more than a dozen times in which it has amended the statute, changed the definition of wages to include fringe benefits. See Morrison-Knudsen Construction Co. v. Director, Office of Workers' Compensation Programs, 461 U.S. 624, 103 S. Ct. 2045, 76 L. Ed. 2d 194 (1983).
While the Workers' Compensation Act is to be liberally construed for the employee's benefit, that policy does not authorize the amendment, alteration or extension of its provisions beyond its obvious meaning. Gajan v. Bradlick Co., Inc., 4 Va. App. 213, 355 S.E.2d 899 (1987).
It would be inappropriate for this Court to judicially legislate what would amount to a large increase in compensation costs never contemplated by employers, carriers or the Legislature. Had the Legislature intended the payments made to third parties on behalf of employees for the purpose of securing fringe benefits be considered earnings, it could have so stated. If the definition of average weekly wage is to be broadening to include the value of fringe benefits it is a function of the Legislature, not the Judiciary. See Gajan v. Bradlick, supra.
The judgment of the trial court is reversed. The cause is remanded to the trial court for such other and further proceedings as may be required in accordance with this opinion. Costs are assessed against the appellee.
DROWOTA, ANDERSON, REID and BIRCH, JJ., concur.
NOTES
[1] A review of the text makes it plain that this is the author's analysis from a series of cases from various states, none of which are pertinent to the issue before us.
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886 S.W.2d 492 (1994)
Linda Katherine FARMER, Appellant,
v.
BEN E. KEITH COMPANY, Appellee.
No. 2-93-216-CV.
Court of Appeals of Texas, Fort Worth.
October 19, 1994.
Rehearing Overruled December 6, 1994.
*493 Ken Wigginton, Ken Wigginton, P.C. & Associates, Wichita Falls, for appellant.
William L. Latham, McDonald Sanders, Fort Worth, for appellee.
Before HILL, C.J., and DAY and FARRAR, JJ.
OPINION
FARRAR, Justice.
This case addresses the effect on appellate timetables when a plaintiff files a supplemental original petition which abandons all outstanding, unlitigated claims while reasserting a claim on an issue on which the trial court has already signed a partial summary judgment. We conclude appellant's supplemental petition made the interlocutory summary judgment a final judgment and triggered the appellate timetables. Because appellant failed to perfect her appeal within the prescribed time limit, her appeal is untimely. We dismiss the cause for want of jurisdiction.
Farmer suffered a series of on-the-job injuries which ultimately prevented her from working for one year. Her employer, Ben E. Keith Company, a non-subscriber to the Texas Workers Compensation System, paid Farmer 75% of her salary and most of her medical bills while she was incapacitated. When Farmer obtained her physician's release to return to work, she was informed there were no openings and was terminated.
On March 14, 1991, Farmer brought suit asserting common law negligence and breach of contract claims. The breach of contract pleading asserted the employee handbook constituted a contract which Keith had breached. On November 13, 1992, Keith moved for summary judgment. The motion was supported by affidavits and a copy of the handbook. Although Farmer filed a response, she presented no evidence to the court and moved for additional time to conduct discovery. On December 17, 1992, the trial court granted and signed a partial summary judgment finding no genuine issue of material fact regarding the contract claim.
On April 19, 1993, Farmer filed "Plaintiff's First Supplemental Original Petition" in which she specifically abandoned her negligence claim but expressly stated she was not abandoning her contract claim. The following day, April 20, 1993, Farmer filed a "Motion for Rehearing and Abatement" of the summary judgment. On July 19, 1993, the trial court signed an order denying the rehearing. A "Final Judgment" overruling the motion for rehearing and abatement was signed August 16, 1993, by the trial court, apparently on its own motion.[1] Appellant appeals this "Final Judgment," and filed her cash deposit in lieu of bond on September 15, 1993. Appellee contends the appeal is untimely because appellant failed to perfect her appeal within ninety days from the date the summary judgment became final, April 19, 1993. We agree.
*494 To be final and appealable, a summary judgment must dispose of all issues and parties in the lawsuit. Teer v. Duddlesten, 664 S.W.2d 702, 703 (Tex.1984). If the summary judgment does not dispose of all issues it is interlocutory, and an appellant can not properly appeal from it. A motion for dismissal ends the litigation by disposing of all outstanding issues and parties in the case. Greenberg v. Brookshire, 640 S.W.2d 870, 871-72 (Tex.1982). Abandonment of a cause of action serves the same result. See Tex. R.Civ.P. 162.[2] A plaintiff has an absolute right to end the lawsuit unless the defendant has a claim for affirmative relief pending at the time the motion is filed. BHP Petroleum Co., Inc. v. Millard, 800 S.W.2d 838, 841 (Tex.1990); Progressive Ins. Companies v. Hartman, 788 S.W.2d 424, 427 (Tex.App. Dallas 1990, no writ); Tex.R.Civ.P. 162. The right to abandon an action exists at the moment the pleading is filed, and any granting of the abandonment, or dismissal, by the trial judge is merely ministerial. Shadowbrook Apartments v. Abu-Ahmad, 783 S.W.2d 210, 211 (Tex.1990); Greenberg, 640 S.W.2d at 872.
In the instant case, we construe the "Plaintiff's First Supplemental Original Petition" to be a motion for dismissal. When a party has mistakenly designated any plea or pleading, the court shall treat the plea or pleading as if it has been properly designated if justice so requires. Tex.R.Civ.P. 71. We look to the substance of the pleading not merely its title. State Bar of Texas v. Heard, 603 S.W.2d 829, 833 (Tex.1980) (motion for summary judgment construed to be a motion to invoke the statutory remedy of suspending law license). Appellant's petition ended the litigation by disposing of all outstanding issues in the case and was in effect a motion to dismiss. The resurgence of her contract claim in the supplemental petition, on which partial summary judgment had previously been granted, achieved no purpose. As a motion for dismissal, "Plaintiff's First Supplemental Original Petition" caused the preceding partial summary judgment to become a final judgment. See Merrill Lynch Relocation Management, Inc. v. Powell, 824 S.W.2d 804, 806 (Tex.App.Houston [14th Dist.] 1992, orig. proceeding). In this case no formal order was needed to effect a final, appealable judgment. See Strawder v. Thomas, 846 S.W.2d 51, 59 (Tex.App.Corpus Christi 1992, no writ).
We further construe appellant's "Motion for Rehearing and Abatement" to be a timely motion for new trial. Tex.R.Civ.P. 71, 329b(a). When a motion for new trial has been filed, an appellant has ninety days from when a judgment becomes final to perfect an appeal by the filing of a bond or cash in lieu of bond. Tex.R.App.P. 41(a)(1). The effect of appellant's motion was to allow appellant ninety days from April 20, 1993 to perfect her appeal. The filing of the bond on September 15, 1993 was well beyond the ninetieth day.
Moreover, we conclude the "Final Judgment" of August 16, 1993 is void as a matter of law because the trial court was without plenary power when it was signed. The trial court has plenary power to vacate, modify, correct, or reform its judgment within thirty days after the judgment is signed or thirty days after timely motions for new trial are either expressly overruled or overruled by operation of law, whichever occurs first. Tex.R.Civ.P. 329b(d), (e). The court's plenary power expired August 5, 1993, thirty days after the motion for new trial was overruled by operation of law. Tex.R.Civ.P. 329b(e). The July 19, 1993 order, denying appellant's *495 motion for rehearing and abatement, was of no consequence because the motion for new trial had already been overruled by operation of law. Tex.R.Civ.P. 329b(e). Accordingly, the judgment was a nullity. Even if the July 19, 1993 order had been signed within the court's period of plenary power, a subsequent judgment, serving no other purpose than to extend the appellate timetable, is without effect. Anderson v. Casebolt, 493 S.W.2d 509, 510 (Tex.1973); see also Old Republic Ins. Co. v. Scott, 846 S.W.2d 832, 833 n. 2 (Tex.1993).
For the foregoing reasons, appellant's appeal is dismissed for want of jurisdiction.
NOTES
[1] The "Final Judgment" reads:
Plaintiff's Motion for Rehearing and Abatement having been overruled by the court on July 19, 1993; and it further being called to the court's attention that Plaintiff has otherwise abandoned her cause of action sounding in negligence;
It is therefore ORDERED, ADJUDGED and DECREED that Plaintiff, Linda Katherine Farmer, take nothing of or from Defendant, Ben E. Keith Company in this cause.
It is further ORDERED, ADJUDGED and DECREED that court costs in this matter shall be borne by the party upon whose behalf same were expended.
All relief not expressly granted is ORDERED denied.
Signed and entered this 16th day of August, 1993.
[2] Rule 162 provides:
At any time before the plaintiff has introduced all of his evidence other than rebuttal evidence, the plaintiff may dismiss a case, or take a non-suit, which shall be entered in the minutes. Notice of the dismissal or non-suit shall be served in accordance with Rule 21a on any party who has answered or has been served with process without necessity of court order.
Any dismissal pursuant to this rule shall not prejudice the right of an adverse party to be heard on a pending claim for affirmative relief or excuse the payment of all costs taxed by the clerk. A dismissal under this rule shall have no effect on any motion for sanctions, attorney's fees or other costs, pending at the time of dismissal, as determined by the court. Any dismissal pursuant to this rule which terminates the case shall authorize the clerk to tax court costs against [the] dismissing party unless otherwise ordered by the court.
TEX.R.CIV.P. 162.
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679 F. Supp. 764 (1988)
William T. KUCHAN, Plaintiff,
v.
UNITED STATES of America, Defendant.
No. 87 C 11.
United States District Court, N.D. Illinois, E.D.
February 16, 1988.
*765 Joseph A. Lamendella, Kris Daniel, Lamendella & Daniel, Chicago, Ill., for plaintiff.
Martin B. Lowery, Asst. U.S. Atty., Office of Special Litigation Tax Div., U.S. Dept. of Justice, Alice J. Davis, Noreene C. Stehlik, Washington, D.C., for defendant.
MEMORANDUM OPINION
KOCORAS, District Judge:
This dispute concerns the interpretation and application of § 6701 of the Internal Revenue Code of 1954, as amended (the *766 "Code"). 26 U.S.C.A. It is presently before the court on defendant's motion for partial summary judgment and plaintiff's motion for summary judgment. For the reasons contained herein, defendant's motion is granted and plaintiff's motion is denied.
FACTS
Plaintiff, William T. Kuchan, is a certified public accountant who provides tax and financial advice and reviews and prepares tax returns for his clients. He has been an accountant since 1952. On May 5, 1986, the Internal Revenue Service ("IRS") assessed penalties against plaintiff in the following amounts and for the following years: $95,000.00 for the taxable period ending December 31, 1983; $67,000.00 for the taxable period ending December 31, 1984; and, $29,000.00 for the taxable period ending December 31, 1985.
Each penalty was based on plaintiff's activities involving an investment plan offered by Price Coal & Energy, Inc. ("Price Coal"). The investment plan involved coal mining leases entered into by investors. This plan had been offered by Price Coal over a period of years, between 1977 and 1985. The IRS determined that the investment plan was an abusive tax shelter.
In May of 1981, Kuchan began to provide services to Rodman G. Price, individually, and Price Coal. Kuchan prepared Price's personal income tax returns and corporate tax returns for Price Coal. Plaintiff also prepared tax returns and, in 1983 and 1984, financial statements for Coal Funding Corporation, a corporation involved in the investment plan with Price Coal.
In 1983, 1984 and 1985, plaintiff prepared a "transmittal letter" that was to be sent to each of the investors in the Price Coal coal mining plan. Plaintiff prepared these transmittal letters at the request of, and as a service to, Rodman Price, the president of Price Coal. Plaintiff was paid for preparing these transmittal letters.
Plaintiff knew that the transmittal letters were to be attached to "Schedule C's" which Price Coal sent to each of the investors in their investment plan. Schedule C's are tax return documents that are to be filed by persons who claim profits or losses from business activities on their tax returns. Kuchan did not prepare any of the Schedule C's or income tax returns for any investor.
Kuchan's letter dated January 28, 1983, with respect to the 1982 Schedule C's, prepared on Kuchan's letterhead, is reproduced below:
"Dear Price Coal & Energy Lessee:
Enclosed please find a copy of Schedule C, Form 1040, Profit or (Loss) from Business or Profession. This indicates the amount of coal mining royalties for use as a deductible business expense in connection with the filing of your Federal Income Tax Return for the year ended December 31, 1982.
This is being transmitted to you in accordance with the information which has been provided by Price Coal & Energy, Inc.
Very truly yours,
/s/ William T. Kuchan"
With the exception of adding language that the Schedule C also related to "mine development expenses," the substance of the letters for tax years 1983 and 1984 were identical.
§ 6701, which plaintiff is alleged to have violated, provides in relevant part:
(a) Imposition of penalty. Any person
(1) who aids or assists in, procures, or advises with respect to, the preparation or presentation of any portion of a return, affidavit, claim, or other document in connection with any matter arising under the internal revenue laws,
(2) who knows that such portion will be used in connection with any material matter arising under the internal revenue laws, and
(3) who knows that such portion (if so used) will result in an understatement of the liability for tax of another person, shall pay a penalty with respect to each such document in the amount determined under subsection (b).
(b) Amount of penalty.
*767 (1) In general. ... the amount of the penalty imposed by subsection (a) shall be $1,000.
26 U.S.C. § 6701. In determining the amount of the § 6701 penalty ultimately imposed on plaintiff, the IRS used listings of Price Coal's investors for 1982, 1983, and 1984, showing to whom the Schedule C's were to be sent. Over the three year period, there were 191 investors to whom the Schedule C's, with the accompanying transmittal letter, were sent.
Defendant's Motion for Partial Summary Judgment
Defendant's motion is limited to a single issue: assuming plaintiff violated § 6701 by preparing the three transmittal letters to accompany the Schedule C's which were sent to 191 investors, was it proper to compute the penalty based on the number of Schedule C's to which the transmittal letter was attached and sent out? Without expressing any opinion as to whether plaintiff is liable for any penalty under § 6701, we find that the method of computation which the IRS used in this case is proper.
Although plaintiff prepared only three letters, he knew that each letter was to be duplicated and sent to each investor as a cover letter for the Schedule C's which Price Coal prepared. Under § 6701, if plaintiff is subject to the imposition of a penalty at all, he is so subject "with respect to each such document in the amount of ... $1,000." 26 U.S.C. § 6701(a) and (b). The "document" to which this language refers is "any portion of a return, affidavit, claim, or other document in connection with any matter arising under the internal revenue laws...." 26 U.S.C. § 6701(a)(1). Thus, assuming that plaintiff violated § 6701, he did so with respect to each Schedule C to which his letter referred and was attached. Therefore, the IRS properly calculated the amount of penalty for which plaintiff may be liable based on the number of investors to whom a Schedule C and plaintiff's transmittal letter were sent. Accordingly, defendant's motion for partial summary judgment on this single, narrow issue is granted.
Plaintiff's Motion for Summary Judgment
Plaintiff contends that he is entitled to summary judgment for three reasons: (1) defendant imposed the penalties for the wrong taxable periods; (2) the statute of limitation bars the imposition of penalties for the taxable year ended December 31, 1982; and, (3) the essential element of "preparation" or "presentation" required by § 6701(a)(1) is not present under the facts of this case as a matter of law. We will discuss each issue seriatim.
Plaintiff's first argument is based on the erroneous assumption that § 6701(b)(3) requires that the penalty be imposed for the taxable period to which the underlying tax documents relate. In fact, § 6701 contains no provision fixing the taxable year for which the penalty must be imposed. § 6701(b)(3) merely limits the amount of the penalty by providing that any person subject to a penalty shall be penalized only once for documents relating to the same taxpayer for a single taxable period. Furthermore, simple logic dictates that the penalty should relate to the year in which the prohibited conduct occurs rather than the year for which the underlying tax document was prepared. The penalty is triggered by "any person's" act of aiding, assisting, procuring, or advising, not by the taxpayer's act of filing an understated return. In this case, plaintiff's allegedly offending letters were written and disseminated in 1983, 1984, and 1985. Thus, regardless of the underlying taxable years to which plaintiff's letters related, plaintiff's alleged unlawful conduct occurred in the years 1983, 1984, and 1985. Defendant did not err by assessing the penalty for the taxable years in which plaintiff allegedly violated § 6701.
Plaintiff's second argument is that the penalty assessed for 1983, even if assessed for the correct year, is barred by a three-year statute of limitation. Plaintiff asserts this limitation period based on § 6671(a), which states that penalties provided by subchapter B of Chapter 68 "shall *768 be assessed and collected in the same manner as taxes," and on § 6501(a), which provides that "the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed...." (emphasis added). The main problem with applying § 6501(a) to penalties imposed under § 6701 is that § 6501(a) depends for its operation upon the filing of a tax return and, as discussed infra, § 6701 imposes no such requirement. Additionally, § 6703 entitled "Rules applicable to penalties under sections 6700, 6701, and 6702" makes no mention of any statute of limitation or § 6501.
The general rule is that statutes of limitation "`barring the collection of taxes otherwise due and unpaid are strictly construed in favor of the government.'" Badaracco v. C.I.R., 464 U.S. 386, 392, 104 S. Ct. 756, 761, 78 L. Ed. 2d 549 (1984), quoting, Lucia v. U.S., 474 F.2d 565, 570 (5th Cir.1973). No period of limitation will run against the collection of taxes unless Congress consents to such a defense. Lucia, 474 F.2d, at 570. We find that Congress did not intend that § 6501(a) apply to the assessment of penalties under § 6701. Rather, § 6701 is analogous to other sections enacted to combat fraud which provide unlimited periods of limitation (e.g. 26 U.S.C. §§ 6653(b), 6694(b)). See Id.
Plaintiff's final argument is that, as a matter of law, his act of providing the letters in 1983, 1984 and 1985 did not constitute aiding, assisting in, or advising with respect to, the preparation or presentation of any portion of a return or other document in connection with any matter arising under the internal revenue laws. Plaintiff bases this argument on two primary contentions. First, plaintiff contends that his letter could not have had any effect on the "preparation" of the Schedule C's since they were prepared by Price Coal, nor could it have affected the "preparation" of the investors' returns since the investors had been informed from the start by Price Coal as to the nature and amount of deduction to which they were entitled. Second, plaintiff contends that "presentation" is a term of art and, as defined in § 7206(2) (the criminal counterpart to § 6701), means filing with the IRS. Neither position is persuasive.
In his deposition, plaintiff testified that he did not personally prepare or review the Schedule C's to which his letters referred. Yet, his letters informed the investors to whom they were sent that the "[e]nclosed ... Schedule C ... indicate[d] the amount ... for use as a deductible business expense in connection with the filing of [their] Federal Income Tax Return...." Read fairly, plaintiff's letter advised the investors that in preparing their returns they were entitled to deduct the amount shown in the pre-prepared Schedule C. Clearly, it is possible to "advise with respect to the preparation" of a portion of a document without physically preparing such document.
Plaintiff's second contention is based on an equally strained interpretation of the term "presentation." Plaintiff's reliance on cases interpreting 26 U.S.C. § 7206(2) is misplaced. That section provides:
Any person who
(2) Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document; ...
shall be guilty of a felony....
26 U.S.C. § 7206. The glaring difference between the language of this section and § 6701 is the omission of the phrase "(if so used)." This language is part of the third requirement for imposing § 6701 liability which provides that the individual "knows that such portion (if so used) will result in an understatement of the liability for tax of another person." 26 U.S.C. § 6701(a)(3) (emphasis added). Plaintiff argues that we should regard this language as establishing a condition precedent that such portion *769 must be so used before liability may be imposed. Quite the contrary, we find that the addition of the phrase "if so used" in the civil counterpart to § 7206(2) is evidence that the intent of Congress was to impose liability for the act of aiding, assisting, procuring, or advising in a prohibited manner regardless of whether any document is ever filed at all.
The legislative history of § 6701 supports this interpretation. The Senate Finance Committee stated four reasons for enacting § 6701, including to "permit more effective enforcement of the tax laws by discouraging those who would aid others in the fraudulent underpayment of their tax" and to "help protect taxpayers from advisors who seek to profit by leading innocent taxpayers into fraudulent conduct." 1982 U.S.Code Cong. & Adm.News 781, at 1022. The use of the phrases "who would aid others" and "who seek to profit", like the phrase "(if so used)", indicates that it was the intent of Congress to punish conduct intended to result in a violation of the tax laws whether or not the underlying violation ever actually occurs. Thus, one who violates the express prohibitions of § 6701 will not be absolved of liability for his own wrongdoing merely because the taxpayer he intended to lead astray subsequently receives better advice and does not file the understated return. In short, liability attaches under § 6701 as soon as the three prerequisites are met regardless of whether the ill-advised taxpayer ever files the understated return.
In conclusion, assuming, without deciding, that plaintiff's conduct is subject to § 6701 penalties, the IRS correctly based the amount of the penalty on the number of Schedule C's sent out which plaintiff's letter accompanied. Additionally, the penalties were properly assessed for the taxable years in which plaintiff's allegedly prohibited conduct occurred. Finally, giving effect to the plain language of the statute, § 6701 does not require the filing of an understated return as a prerequisite to the imposition of a penalty thereunder. Therefore, the three-year limitation period provided by § 6501(a), which requires the filing of a return to set the clock in motion, cannot logically govern penalties imposed under § 6701. Rather, like other civil fraud provisions, enforcement of § 6701 is not confined to any limitations period whatsoever. Accordingly, defendant's motion for partial summary judgment is granted and plaintiff's motion is denied.
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430 Pa. Super. 625 (1993)
635 A.2d 649
PACKER SOCIETY HILL TRAVEL AGENCY, INC., Appellee,
v.
PRESBYTERIAN UNIVERSITY OF PENNSYLVANIA MEDICAL CENTER a/k/a Presbyterian Medical Center of Philadelphia, Appellant.
Superior Court of Pennsylvania.
Argued September 13, 1993.
Filed December 28, 1993.
*626 Jonathan B. Sprague, Philadelphia, for appellant.
Warren L. Soffian, Philadelphia, for appellee.
Before WIEAND, CIRILLO and HESTER, JJ.
WIEAND, Judge.
Is an action on a written contract not under seal subject to a four year statute of limitations or a six year statute of limitations? The trial court held that the applicable period of limitation was six years and denied a defense motion for judgment on the pleadings based upon a four year period of limitations. The Superior Court allowed an interlocutory appeal under Pa.R.A.P. 1311 to review the trial court's ruling before the parties incurred the time and expense of trial.
The present action was commenced on November 22, 1991, by Packer Society Hill Travel Agency (Packer) against Presbyterian-University of Pennsylvania Medical Center (Presbyterian). The action was based on an alleged breach of a written travel agreement executed by the parties on April 10, 1985. Pursuant to the terms of the agreement, according to the complaint, Packer was to provide travel services for employees of Presbyterian for a period of two years from March 1, 1985, to March 1, 1987. As a part of the same agreement, Packer allegedly agreed to install in Presbyterian's medical center certain computer equipment necessary to provide the travel services contemplated by the parties' agreement. As consideration, Presbyterian allegedly agreed to pay *627 Packer a credit of 1% of the gross sales made as well as the value of the computer equipment installed.[1] Presbyterian initially made periodic payments to Packer based upon invoiced travel sales but not, according to Packer, in correct amounts. After January 13, 1986, however, Presbyterian stopped making any payments. A demand for payment failed to produce results. It was not until November 22, 1991, however, that Packer filed the present action to recover (1) a balance of $4,199.85 owed for travel services, and (2) the costs of installing the computer equipment. Presbyterian filed an answer containing new matter in which it asserted, inter alia, that Packer's action was barred by the applicable four year statute of limitations. Thereafter, relying on the four year statute of limitations contained in 42 Pa.C.S. § 5525(8), Presbyterian filed a motion for judgment on the pleadings. The court denied the motion, holding that the applicable statute of limitations was that appearing in 42 Pa.C.S. § 5527.
The application of the statute of limitations to an alleged cause of action is a matter of law to be determined by the court. Romeo & Sons, Inc. v. P.C. Yezbak & Son, Inc., 421 Pa.Super. 333, 335, 617 A.2d 1320, 1322 (1992). Neither the research of the parties nor the independent research conducted by this Court, however, has disclosed an appellate court decision which has specifically considered the issue now before us. The issue, therefore, is one of first impression.
The statute of limitations at 42 Pa.C.S. § 5525 provides in pertinent part as follows:
§ 5525. Four year limitation
The following actions and proceedings must be commenced within four years:
. . . .
(8) An action upon a contract, obligation or liability founded upon a writing not specified in paragraph (7) [relating *628 to actions upon negotiable or nonnegotiable bonds, notes or other similar instruments in writing], under seal or otherwise, except an action subject to another limitation specified in this subchapter.
Added 1982, Dec. 20, P.L. 1409, No. 326, art. II, § 201, effective in 60 days.
The section relied upon by Packer appears at 42 Pa.C.S. § 5527 as follows:
§ 5527. Six year limitation
Any civil action or proceeding which is neither subject to another limitation specified in this subchapter nor excluded from the application of a period of limitation by section 5531 (relating to no limitation) must be commenced within six years.
As amended 1982, Dec. 20, P.L. 1409, No. 326, art. II, § 201, effective in 60 days.
Packer argues that the words "or otherwise" in 42 Pa.C.S. § 5525(8) should be interpreted to mean that for the four year limitation to be applicable the writing must be under seal or "in like respects." We reject this argument.
When faced with an issue of statutory construction, the goal of a court should be to effectuate the intention of the legislature. 1 Pa.C.S. § 1921(a). "When the words of a statute are clear and free from all ambiguity, the letter of it is not to be disregarded. . . ." 1 Pa.C.S. § 1921(b). Here, the words of the statute are clear and free of ambiguity. The statute of limitations for an action based on "a contract, obligation or liability founded upon a writing . . . under seal or otherwise" is four years. The words and phrases used in a statute are to be construed according to rules of grammar and in accord with their common and approved usage. 1 Pa.C.S. § 1903(a). The term "otherwise," when used as an adjective is synonymous with "different" or "other." MacMillan Contemporary Dictionary 713 (1979). It seems clear, therefore, that the words "under seal or otherwise" can only mean "under seal or not under seal." It cannot mean under seal or in a manner having the effect of a seal.
*629 Our construction of the statute is supported by prior law and by the circumstances which caused the legislature to enact the Judicial Code. Prior to enactment of the Judicial Code, which became effective on June 27, 1978, the statute of limitations for suits upon instruments not under seal was six years. Klein v. Reid, 282 Pa.Super. 332, 334, 422 A.2d 1143, 1144 (1980). See: Act of March 27, 1713, 1 Sm.L. 76, § 1, 12 P.S. § 31 (now repealed). Suits upon instruments under seal were not subject to a period of limitations; rather, there was a presumption of payment after twenty years. Gordon v. Sanatoga Inn, Inc., 429 Pa.Super. 537, 537, 632 A.2d 1352, 1352 (1993). When the Judicial Code was initially enacted, a four year limitation was established for:
(1) An action upon a contract, under seal or otherwise, for the sale, construction or furnishing of tangible personal property or fixtures.
(2) Any action subject to 13 Pa.C.S. § 2725 (relating to statutes of limitations in contracts for sale).
(3) An action upon an express contract not founded upon an instrument in writing.
(4) An action upon a contract implied in law, except an action subject to another limitation specified in this subchapter.
42 Pa.C.S. § 5525. A six year limitation, however, was established, inter alia, for actions upon (1) judgments or decrees; (2) contracts, obligations or liabilities founded upon bonds, notes or other written instruments; and (3) official bonds. 42 Pa.C.S. § 5527. Under these provisions, therefore, the statute of limitations applicable to oral contracts, contracts implied in law and contracts of sale was four years; whereas, the period of limitations applicable to written contracts was six years.
This was changed in 1980, when the legislature adopted a twenty year limitation for actions based on contracts under seal. 42 Pa.C.S. § 5529(b). Then, finally, in 1982, the legislature adopted 42 Pa.C.S. § 5525(8) and § 5527 in their present forms. Now the statute of limitations for all written contracts is four years and the statute of limitations for contracts under seal, irrespective of the provisions of 42 Pa.C.S. § 5525, is *630 twenty years. Thus, the statute of limitations applicable to all actions on contracts not under seal is uniform. The period of limitations is four years.
The interpretation urged by appellee and accepted by the trial court would establish a four year statute of limitations for contracts under seal and a six year statute of limitations for written contracts not under seal. Such an interpretation would be contrary to the history of our system of law in this Commonwealth, which has always recognized a longer period of limitation for contracts under seal. The legislature has given no basis for believing that it intended such an absurd result.
Although the precise issue raised in this appeal has not previously been before the appellate courts, we observe that prior decisions of the Superior and Commonwealth Courts have uniformly applied the statute of limitations consistently with our interpretation. Thus, in Unisys Finance Corp. v. U.S. Vision, Inc., 428 Pa.Super. 107, 630 A.2d 55 (1993), it was held that an agreement to lease equipment was a contract founded on a writing and subject to the statute of limitations at 42 Pa.C.S. § 5525(8). Similarly, in Horowitz v. Horowitz, 411 Pa.Super. 21, 600 A.2d 982 (1991), the four year statute of limitations was held applicable to a written separation agreement. In Storch v. Miller, 137 Pa.Commw. 325, 585 A.2d 1173 (1991), the Commonwealth Court held that the four year statute of limitations was applicable to a written collective bargaining agreement. See also: Southeastern Pennsylvania Transportation Authority v. Frankford 5206 Bar, Inc., 138 Pa.Commw. 209, 217 n. 3, 587 A.2d 855, 859 n. 3 (1991) (written lease). The federal courts have interpreted the statute similarly. In Dodge v. Susquehanna University, 796 F. Supp. 829 (M.D.Pa.1992), the court held that a claim based on a written contract of employment was governed by the four year statute of limitations found at 42 Pa.C.S. § 5525(8); and in Wheeler v. Nationwide Mutual Ins. Co., 749 F. Supp. 660 (E.D.Pa.1990), the court held that an action to recover uninsured motorist benefits pursuant to a written policy of insurance was subject to the four year statute of limitations contained in 42 Pa.C.S. § 5525(8).
*631 For all these reasons, therefore, we conclude that a cause of action for an alleged breach of the written contract in the instant case, which was not under seal, is subject to the four year statute of limitations at 42 Pa.C.S. § 5525(8).
The statute of limitations begins to run on a claim from the time the cause of action accrues. 42 Pa.C.S. § 5502; Cucchi v. Rollins Protective Services Co., 377 Pa.Super. 9, 34, 546 A.2d 1131, 1144 (1988), rev'd on other grounds, 524 Pa. 514, 574 A.2d 565 (1990). In general, an action based on contract accrues at the time of breach. Id.; Sadtler v. Jackson-Cross Co., 402 Pa.Super. 492, 499, 587 A.2d 727, 731 (1991). Here, it is not disputed that Presbyterian ceased making payments under the travel agreement on January 13, 1986. This, then, was the date on which the four year period of limitations began to run on Packer's breach of contract claim. After January 13, 1990, the claim was barred. Packer did not commence the present action until November 22, 1991, twenty-two months after the statute had run. Packer's action, therefore, was untimely. It was barred by the statute of limitations at 42 Pa.C.S. § 5525(8).
Reversed and remanded for the entry of judgment in favor of the appellant medical center.
NOTES
[1] These averments of the complaint are in contrast to the provisions of the agreement, which suggest that Packer, not Presbyterian, is to pay the 1% sales credit and assume the cost of installing the computer equipment.
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886 S.W.2d 594 (1994)
318 Ark. 524
AMALGAMATED CLOTHING & TEXTILE WORKERS INTL. UNION, Appellant.
v.
EARLE INDUSTRIES, INC., Appellee.
No. 94 00218.
Supreme Court of Arkansas.
November 7, 1994.
*595 Rick W. Skelton, Little Rock, for appellant.
Jeff Weintraub, Memphis, TN, James W. Moore, Little Rock, for appellee.
HOLT, Chief Justice.
This interlocutory appeal arises from a labor dispute involving appellant Amalgamated Clothing and Textile Workers International Union, an unincorporated association, and appellee Earle Industries, Inc., a corporation engaged in the manufacture of clothes hangers and garment bags.
Amalgamated raises two arguments on appeal, contending that the chancery court erred in denying (1) the union's motion to dismiss Earle Industries' complaint for failure to state facts upon which relief might be granted and (2) the union's alternative motion for summary judgment while granting Earle Industries' motion for a temporary restraining order. In support of these arguments, various sub-points have been presented, which focus on the conflicts in testimony concerning allegations of harm, the adequacy of other legal remedies, and the injuries to the union and the public interest.
It should be noted at the outset that Amalgamated's first point on appeal, relating to the denial of the motion to dismiss, cannot be considered by this court because it is couched in terms of an appeal of the denial of a motion to dismiss. The union's motion was based on Ark.R.Civ.P. 12(b)(6), which allows the defense of "failure to state facts upon which relief can be granted." However, Rule 12(b) also provides that:
If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.
(Emphasis added.) Perusal of the record reflects that matters presented to the court outside the pleadings consisted of videotapes of newscast coverage and security surveillance of the picketing on September 14, 1993, the texts of various appellate decisions, and the testimony of various witnesses.
Unquestionably, the motion to dismiss was effectively converted, under our rules of civil procedure, to one for summary judgment, and its denial is not subject to review on appeal. Daniels v. Colonial Ins. Co., 314 Ark. 49, 857 S.W.2d 162 (1993). In his order granting a temporary restraining order, the chancellor specifically noted that "[a]t the hearings, both parties were given the opportunity to present evidence" and that the decisions to issue an order and to deny the motions to dismiss and for summary judgment were "[b]ased on the evidence adduced at the hearing, the arguments of counsel, and the record as a whole." In *596 Eldridge v. Board of Correction, 298 Ark. 467, 768 S.W.2d 534 (1989), we reviewed a case involving a motion to dismiss as if it were an appeal following summary judgment where the chancellor had recited in his order that he had considered the "motions, the responses thereto, as well as the pleadings, briefs, exhibits attached thereto, and other matters."
Similarly, the portion of the second point on appeal relating to the chancellor's denial of the union's motion for summary judgment must also be disregarded. As we have repeatedly held, the denial of a motion for summary judgment is neither reviewable nor appealable. Daniels v. Colonial Ins. Co., 314 Ark. 49, 857 S.W.2d 162. What remains for us to consider, then, is a single issue: Amalgamated's appeal from the chancery court's granting of Earle Industries' motion for a temporary restraining order. Another item, however, should be briefly addressed before we proceed to the merits of this issue.
The union contends, in its reply brief, that Earle Industries' brief should be stricken for failure to comply with the requirement of Ark.Sup.Ct.R. 4-4(b). That rule states that "[b]riefs tendered to the Clerk will not be filed unless evidence of service upon opposing counsel and the trial court has been furnished to the Clerk." The certificate of service contained in Earle Industries' brief does not recite that a copy was sent to the trial court. No penalty is provided in the rules of the court for such an oversight, and the Clerk appeared to have been satisfied with the status of the brief when it was submitted. Thus, we see no prejudice in the Clerk permitting Earle Industries' brief to be filed.
Facts
On September 14, 1993, members and supporters of Amalgamated gathered at the high school in Earle, Arkansas, for a rally. The Reverend Jesse Jackson delivered a speech, after which approximately sixty to seventy-five persons,[1] carrying banners, marched down U.S. Highway 64 to Earle Industries' factory.
Law enforcement officials accompanied the group to ensure traffic control. When the marchers arrived at the manufacturing plant, they congregated at the main entrance, and the Reverend Jackson spoke with the personnel manager, Gary Smith, asking to see Peter Felsenthal, Earle Industries' senior vice president. Meanwhile, Melvin Luebke, a union activist, was arrested by the Earle Police Department on charges of criminal mischief and criminal trespass after he cut the lock and chain on the factory's back gate.
The demonstrators remained in front of the plant's main entrance during the employee lunch period for about forty or forty-five minutes, picketing, singing, chanting, and listening to a speech by the Reverend Jackson. Plant employees taking their lunch breaks were allowed to join the union supporters. The front gate was closed for the duration of the protest, and traffic was impeded on U.S. Highway 64. About fifty protesters sat down in the middle of the highway, and a number of them parked their vehicles on the side of the highway. All but one of the demonstrators, Steve Klawan, who was arrested, eventually moved out of the highway. Some vehicles remained on the roadside and they were towed. Two more union supporters, Kathleen Lee and Edna Mae Byars, were arrested for obstructing traffic by parking their cars on the highway, bringing to a total of four the number of protesters who were taken into custody. All four pled guilty and were released after a union representative paid their fines. Less than an hour after the protesters arrived, they dispersed.
On September 21, 1993, Earle Industries filed a complaint for injunctive relief against the union in the Chancery Court of Crittenden County, alleging that the "mass picketing" that occurred the previous week and the "threat of additional mass picketing" posed an "imminent threat of danger to the public safety and to the Plaintiff's business interests and employees, as well as a threat to Plaintiff's property interests...." Continued *597 mass picketing, the complaint alleged, would result in "irreparable harm" to Earle Industries and its employees and would imperil the public safety "since the marching and parading of a large number of people would again block ingress and egress to the main employee entrance to Plaintiff's Plant and block Highway 64[,] which is a major public thoroughfare."
Asserting the lack of an adequate remedy at law, Earle Industries requested a temporary restraining order:
to restrain the Defendants, and those acting by, through, and in concert with them, from using or employing mass pickets in the act of picketing on Highway 64 or within a 50-foot radius of the fence surrounding Plaintiff's Plant; congregating, patrolling, walking, or sitting in parked cars within 50 feet of the fenced area immediately surrounding Plaintiff's Plant in Earle, Crittend[e]n County, Arkansas[,] or to interfere in any ma[nn]er, with the peaceful ingress and egress to and from Plaintiff's Plant or Highway 64 surrounding Plaintiff's Plant in Earle, Crittend[e]n County, Arkansas. Plaintiff also requests that this court enjoin Defendants and those acting on their behalf from employing more than three pickets in the area described herein. Plaintiff also requests that this court issue a Preliminary Injunction, and, following a trial in this matter, a permanent injunction.
A hearing was held on September 22, 1993, and testimony was delivered, and exhibits, including videotapes of both area news coverage and factory security surveillance of the incident, were received by the chancellor. Another hearing was held on September 29, 1993, and additional evidence was presented.
Prior to the beginning of the second hearing, Earle Industries filed a brief in support of its motions for a temporary restraining order and preliminary injunction. Simultaneously, Amalgamated filed a motion to dismiss and an alternative motion for summary judgment, asserting the allegations in the complaint were unsupported by "specific factual statements" and that adequate legal remedies were available for any future harm.
Following the September 29, 1993 hearing, the chancellor took the matter under advisement. On November 18, 1993, the chancery court issued an order granting to Earle Industries a temporary restraining order and denying the union's motions to dismiss and for summary judgment. The order stated, in part:
The Court finds that Defendants' action in (1) cutting the lock and chain on Plaintiff's gate; (2) blocking traffic on that portion of Highway 64 in front of Plaintiff's business; and (3) blocking Plaintiff's right of ingress and egress to one of its drives, are actions that should be restrained and enjoined.
* * * * * *
IT IS ... HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant ACTWU, Southwest Regional Joint Board, Local 828, their officials, and others cooperating with them are RESTRAINED AND ENJOINED from:
(1) blocking or obstructing, or attempting to obstruct, the free use of the streets and highways adjacent to Plaintiff Earle Industries' place of business, as well as passageways into and out of said business;
(2) going on Plaintiff's place of business, unless invited by Plaintiff, and
(3) cutting or damaging Plaintiff's property.
The union then filed this interlocutory appeal.
Temporary restraining order
As noted earlier, Amalgamated's first point for reversal amounts to an appeal from a denial of a motion for summary judgment and is not subject to review on appeal. Moreover, as indicated above, part of the union's second point for reversal is framed in terms of an appeal from the chancellor's denial of the defense motion for summary judgment in its favor and is not appealable. See Daniels v. Colonial Ins. Co., 314 Ark. 49, 857 S.W.2d 162.
In the remaining portion of its second point on appeal, the union urges that the chancery court erred in granting Earle Industries' motion for a temporary restraining *598 order, the sole issue we may consider and to which we now turn.
In granting or refusing interlocutory injunctions, the trial court shall set forth the findings of fact and conclusions of law which constitute the grounds of its action and those findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard will be given the opportunity of the trial court to judge the credibility of the witness. Ark. R.Civ.P. Rule 52(a). Here, the chancellor's findings were brief, but he was not asked to make further findings regarding irreparable harm. In any event, requests for findings are unnecessary for purposes of review. Ark.R.Civ.P. Rule 52(a). In reviewing the record before us, we hold the evidence is more than sufficient to show that Earle Industries had sustained irreparable harm at least to the extent the chancellor fashioned and tailored the narrow relief granted.
The applicable law in these matters is well settled. Arkansas courts have granted injunctive relief in situations where mass picketing, blocking, and intimidation are employed during a labor dispute. Smith v. F & C Engineering Co., 225 Ark. 688, 285 S.W.2d 100 (1955); Local Union No. 858 v. Jiannas, 211 Ark. 352, 200 S.W.2d 763 (1947). Smith v. F & C Engineering, supra, involved a labor dispute between a local labor union and an engineering company which refused to pay overtime. The union established a picket line at one of the engineering company's plants. The trial court issued an injunction restraining union members from picketing the company's places of business and from threatening or committing acts of intimidation or violence against the company's business, employees, and customers. In granting the injunction, this court observed that:
It is well settled by the decisions of the U.S. Supreme Court and our own cases that peaceful picketing is allowed under the constitutional guaranty of freedom of speech in order that a union may acquaint the public with the fact and nature of a labor dispute and solicit public support in any lawful manner to prevail in the controversy. Thornhill v. Alabama, 310 U.S. 88, 60 S. Ct. 736, 84 L. Ed. 1093; Local Union No. 313 v. Stathakis, 135 Ark. 86, 205 S.W. 450, 6 A.L.R. 894. It is equally settled that the law does not countenance the use of threats, intimidation, force, coercion, violence or other unlawful means, however laudable the motive or purpose of the strikers. Riggs v. Tucker Duck & Rubber Company, 196 Ark. 571, 119 S.W.2d 507; 31 Am.Jur., Labor, § 240. In this connection the U.S. Supreme Court has held the state still may exercise "its historic powers over such traditionally local matters as public safety and order and the use of the streets and highways." Allen-Bradley Local, W.E.R.M.W. v. Wisconsin Employment Relations Board, 315 U.S. 740, 62 S. Ct. 820, 86 L. Ed. 1154.
225 Ark. at 697, 285 S.W.2d at 105. (Emphasis added.)
In Jiannas, a local union was enjoined from the illegal picketing of a restaurant in Pine Bluff. In affirming the trial court, we quoted the following rules with approval:
"Permissible activities on the part of pickets do not include obstruction of access of customers. Pickets may not aggressively interfere with the right of peaceful ingress and egress to and from the employer's shop, or obstruct the public thoroughfares. Picketing is not peaceful where the sidewalk or entrance to a place of business is obstructed by pickets parading around in a circle or lying on the sidewalk."
* * * * * *
"Picketing a place having direct dealings with the public, such as a restaurant, has been condemned in some cases because of its tendency to deter prospective patrons of the business by intimidation from entering the place of business. Thus, it has been decided that employees of a restaurant keeper who are on a strike, have no right to congregate about the entrance of his place of business and there, either by persuasion, coercion, or force, prevent his patrons and the public at large from entering his place of business or dealing with him."
* * * * * *
*599 "Force threatened is the equivalent of force exercised. In many cases, it has been observed, it is difficult to draw the line of demarcation between intimidation and inoffensive persuasion. But even when the acts of the strikers, although unaccompanied by violence or threats, are such an annoyance to others as to amount to coercion or intimation, they are unlawful."
211 Ark. at 358-9, 200 S.W.2d at 766. (Emphasis added.)
We first point out that, while unlawful activities occurred in the case here, it can be said that the facts here existent do not quite reach the level of concern exhibited in either Smith or Jiannas. In Jiannas, union pickets and their sympathizers milled in the entrance way to a Pine Bluff restaurant, urged customers and employees not to enter. They cursed, bumped, and threatened people who did, or attempted to, enter, and one such man was beaten and severely injured. In Smith, evidence showed cars were parked up and down the road running by the company's plant, and on one occasion, a truck was used to block the road. Employees were cursed, threatened, and frightened and the company's general foreman was attacked by a union member. Evidence further revealed that nails had been placed in entrance and exit ways to and from the plant, causing numerous flats on company vehicles.
In the present case, a continuing strike was not involved. Even so, the proof showed that, in an earlier labor dispute and demonstration in October 1991, the Reverend Jackson led a similar march against Earle Industries, and he vowed to return. He kept that vow on September 14, 1993, and at the demonstration's end, the Reverend Jackson again pledged to return a third time. Trespasser convictions resulted from both demonstrations. However, the 1993 demonstration posed more problems than those that arose in 1991. In fact, those problems in 1993 involved not only Earle Industries and its business and employees, but also the local law enforcement's ability to control the demonstration.
The Chief of Police of Earle, Gregory Martin, offered the strongest testimony in support of Earle Industries' request for an injunction. Chief Martin was the officer who observed a union member cutting the lock off the back gate of Earle Industries. He stated that the union demonstrators, numbering approximately sixty to seventy-five people, were heading toward the back gate when the man cut the lock. Chief Martin immediately arrested the man, and his officers then formed a line to stop the crowd from marching toward the gate. According to Chief Martin's testimony, the demonstrators blocked Highway 64 and the entrance to Earle Industries' factory. Ten to fifteen demonstrators' vehicles blocked the east and westbound lanes of Highway 64. Chief Martin stated that several demonstrators refused to move their cars and that those cars were towed. About fifty people were sitting in the middle of Highway 64 when the officers arrived at the scene. Eventually, all of the protestors moved from the highway, but one individual had to be physically removed by Chief Martin. Demonstrators used banners to block Highway 64 and the factory's entrance, and, while officers made arrests, the crowd chanted, "We shall not be moved." Chief Martin stated that he employed all five officers of the Earle Police Department to control the demonstration and called for other backup because he was concerned that "things would get out of hand." He added that, because of the demonstration, he had no officers available to respond to calls from other parts of town.
Employees of Earle Industries also testified that they were frightened and intimidated by the large group of protestors. Moreover, employees were distracted from their work because of the demonstration. Earle Industries enhanced security measures, using supervisors to monitor the situation. Pamphlets were distributed, claiming, "We Will Not Stop Until We Get Justice" and "The only thing Felsenthal understands is brute force."
Amalgamated counters with evidence and testimony that it claims mitigates or conflicts with that presented by Earle Industries. While it is true that conflicting evidence was presented, it is sufficient to say that the chancellor was in a more favorable position than this court to judge credibility. After *600 careful consideration of all the evidence, we hold that the chancellor's decision was not clearly erroneous or clearly against the preponderance of the evidence and that, under the circumstances, he did not abuse his discretion in issuing the temporary injunction. See Smith v. F & C Engineering, supra; Ark.R.Civ.P. Rule 52(a).[2]
Amalgamated presents an alternative argument that would require the trial court to balance the threat of irreparable harm to Earle Industries against the harm and injury the requested relief would inflict upon Amalgamated and to consider the effect that the injunctive relief would have upon the public. Roberts v. Van Buren Public Schools, 731 F.2d 523 (8th Cir.1984).
Regarding a worker's right to strike, this court in Local Union No. 858 v. Jiannas, supra, stated the following:
We do not hold or intend to decide anything which abridges these rights, but he must exercise them in a lawful manner. He may not employ force, violence, threats or intimidation, because in so doing he is interfering with the rights of others as sacred, and as much entitled to the protection of the law, as are his own rights.
211 Ark. at 357, 200 S.W.2d at 766.
Earle Industries has shown irreparable harm inflicted upon it as well as the threat of such harm in the future. The chancellor, however, issued no blanket injunction prohibiting Amalgamated from picketing or demonstrating. Nor would this court countenance such an injunction under the circumstances of this case. In balancing the harm to Amalgamated or the public against the irreparable harm to Earle Industries, the chancellor merely enjoined Amalgamated from engaging in the illegal activities shown to have occurred in 1991 and 1993. He did not, it must be emphasized, enjoin the union from conducting demonstrations. In other words, the chancellor only restrained union members from (1) blocking or obstructing, or attempting to obstruct, the free use of the streets and highways adjacent to Earle Industries' place of business, as well as passageways into and out of said business; (2) going on Earle Industries' place of business, unless invited; and (3) cutting or damaging Earle Industries' property.
Although we affirm the chancellor's granting of a temporary restraining order, Amalgamated is not without relief. If and when Amalgamated shows the chancery court that peaceful picketing and demonstrating can be carried on in a manner that will avoid the likelihood of a repetition of the unlawful activities found by the trial court as described in its order, it may do so. Upon making such a showing, it may seek modification of the court's order. Smith v. F & C Engineering, supra.
Affirmed.
DUDLEY, NEWBERN and BROWN, JJ., dissent.
BROWN, Justice, dissenting.
I disagree with the majority's conclusion that Earle Industries has shown that irreparable harm was inflicted upon it.
Our law is clear that a temporary restraining order will not issue unless a party seeking the order demonstrates to the court that there is a likelihood that irreparable harm will result without the temporary order. See Smith v. American Trucking Ass'n, 300 Ark. 594, 781 S.W.2d 3 (1989); Kreutzer v. Clark, 271 Ark. 243, 607 S.W.2d 670 (1980); Paccar Financial Corp. v. Hummell, 270 Ark. 876, 606 S.W.2d 384 (Ark.App.1980). Moreover, a temporary restraining order is an extraordinary remedy to be invoked only where the complainant's right is clear, and there is no other adequate remedy. I Joyce on Injunctions, § 9, p. 18 (Matthew Bender & Co. 1909). Harm is only considered to be irreparable "when it cannot be adequately compensated by money damages or redressed in a *601 court of law." Kreutzer, 271 Ark. at 244, 607 S.W.2d at 671.
That irreparable harm was likely to afflict Earle Industries because of the 45-minute demonstration during the lunch hour on September 14, 1993, is not borne out by the record. I have no doubt that the demonstration caused the managers and some employees of Earle Industries inconvenience, frustration, and even consternation. There was some criminal activity (three persons were arrested for trespassing and a fourth for cutting a lock off a back gate) and the business operation was disrupted that day because of the activity. But the test for a temporary restraining order, as stated above, is irreparable harm that cannot be repaired or remedied by money damages or by our criminal laws. Under that test, I glean no proof of irreparable harm resulting from the demonstration or proof that irreparable harm was likely to occur in the future in the absence of a temporary order.
The basis for the TRO was the Reverend Jesse Jackson's two demonstrations at Earle Industries over a two year period: one in October 1991 and the demonstration in question on September 14, 1993. Earle Industries also pointed to the four arrests, the all-but-total blocking of its main entrance by the demonstrators for 45 minutes, and the partial impediment to traffic on U.S. Highway 64 caused by the marchers. The potential for future demonstrations was evidenced, according to Earle Industries, by a leaflet distributed after the demonstration which stated that Reverend Jackson "declared that he will return and fight for the workers until there is a contract." The leaflet also stated: "The only thing that Felsenthal [Earle Industries' senior vice president] understands is brute force." A union member in addition, told a television reporter that the law had failed another union member, and they were taking the law into their hands.
Despite the leaflet and the union member's statement, a reading of the record makes it clear that local law enforcement agencies had this relatively brief demonstration well under control from the outset. Arrests were made and disturbances were contained. One man was dragged from U.S. Highway 64 by the Chief of Police of the Earle Police Department. Otherwise, there was no proof of physical confrontation. In short, public safety was not jeopardized. Enforcement of existing criminal statutes was sufficient to quell any disturbance. Speeches were made, and the demonstration was short lived.
This activity by the union was undoubtedly orchestrated as a media event. Admittedly, disruption to the business operations of Earle Industries did occur, but not irreparable harm, present or future. More dire circumstances must be shown to justify such a finding. A 45-minute rally during the lunch hour, even with all the attendant circumstances, simply does not qualify. Because only a modicum of evidence of likely irreparable harm to Earle Industries in the future exists and because the order addresses activities which are readily remedied under existing criminal law, there is no basis for invoking this extraordinary remedy. Furthermore, to issue a temporary injunction under these facts could well have the effect of thwarting peaceful demonstrations in the future. I would reverse the chancellor's decision and void the order.
NEWBERN, J., joins.
DUDLEY, Justice, dissenting.
Amalgamated Clothing and Textile Workers International Union raises three points of appeal. The first two can be summarily dismissed. The first point is that the complaint of Earle Industries, Inc. did not state a cause of action. The second is that Amalgamated was entitled to summary judgment. Both arguments are bypassed since the motion for a temporary restraining order was heard on its merits. The only real issue is whether a court of equity should have assumed jurisdiction to enjoin the commission of criminal offenses. The majority opinion holds that the chancery court properly assumed jurisdiction. I respectfully dissent.
I.
The undisputed facts are as follows. In October 1991, Reverend Jesse Jackson visited the plant of Earle Industries in support of Amalgamated's efforts at negotiation and *602 spoke from the back of a truck parked in the Earle Industries' employee parking lot. Earle Industries objected to the presence of Reverend Jackson and the Amalgamated supporters. Two Amalgamated supporters were arrested and charged with trespassing. Significantly, both trespass charges were dismissed at the request of Earle Industries.
Almost two years later, on September 14, 1993, Amalgamated and its supporters, again including Reverend Jackson, held another rally in the City of Earle. The rally began with a speech by Reverend Jackson at Earle High School. After the speech, local law enforcement officers escorted Reverend Jackson and sixty to seventy-five Amalgamated supporters the short distance down State Highway 64 to the plant of Earle Industries. The main entrance to the plant is from Highway 64.
The management of Earle Industries, knowing that the Amalgamated supporters were coming to the plant, placed new chains on all gates and closed the main gates. The Amalgamated group reached the plant's main gates just as the employees' lunch break began. During the forty-five-minute lunch break the supporters remained in front of the closed main gates. They sang, chanted, and listened to another speech by Reverend Jackson. Two supporters were given police citations for obstructing traffic because their parked cars partially blocked Highway 64. Another supporter, who sat in the highway and had to be physically removed by the officers, was given a citation. A fourth Amalgamated supporter was cited by police for criminal mischief and criminal trespass after he cut the lock and chain on the plant's back gate. All four later pleaded guilty to the criminal charges. During the rally a flyer was distributed. It was captioned, "We Will Not Stop Until We Get Justice." The body of the flyer contained the sentence, "The only thing that Felsenthal [management] understands is brute force."
II.
Arkansas remains one of the few states that still maintains separate courts of law and equity. Mark R. Killenbeck, Nothing That We Can Do? Or, Much Ado About Nothing? Some Thoughts on Bates v. Bates, Equity, and Domestic Abuse in Arkansas, 43 Ark.L.Rev. 725 (1990); see Ark. Const. art 4. Under our separate court system, unless a cause of action is confided by the constitution exclusively to another court, it belongs exclusively, or concurrently, to the circuit court. State v. Devers, 34 Ark. 188, 198 (1879). The separation required by the Arkansas Constitution in cases such as the present was set out in Meyer v. Seifert, 216 Ark. 293, 225 S.W.2d 4 (1949), as follows:
That equity will not act to restrain ordinary violations of the criminal law, but will leave the task of enforcing the criminal laws to courts having criminal jurisdiction, is basic learning in our legal system. But it is equally basic that if grounds for equity jurisdiction exist in a given case, the fact that the act to be enjoined is incidentally violative of a criminal enactment will not preclude equity's action to enjoin it.
Id. at 298, 225 S.W.2d at 7.
The sequence of conditions which are necessary before equity will enjoin a crime were set out in Webber v. Gray, 228 Ark. 289, 295, 307 S.W.2d 80, 84 (1957), as follows:
In general, these conditions are, that unless relief is granted a substantial right of the plaintiff will be impaired to a material degree; that the remedy at law is inadequate; and that injunctive relief can be applied with practical success and without imposing an impossible burden on the court or bringing its processes into disrepute.
Each of the three conditions must be met before equity will exercise jurisdiction and enjoin the commission of a criminal offense.
A.
The first condition is that the party seeking the equitable remedy will suffer the loss of a substantial right to a material degree if equity does not intervene. This substantial right must be weighed against any harm the injunction might cause. Smith v. Hamm, 207 Ark. 507, 181 S.W.2d 475 (1944).
*603 1.
The direct losses of a substantial right suffered by Earle Industries in the past are losses occasioned by three misdemeanor trespass offenses and one criminal mischief offense. Earle Industries asked that two of the misdemeanor charges be dismissed, and they were dismissed. Consequently, it is hard to rationalize those trespasses now being of significance and, under these circumstances, cannot be said to be a loss to a "material degree." The only other direct loss of a right was caused by the offender who cut the chain and was arrested for trespass and criminal mischief. Trespass and criminal mischief cannot be condoned, and Earle Industries did suffer the loss of a chain when the chain that locked the gate was cut. Earle Industries must have also suffered some worry about its security as a result of the criminal mischief. The offender who cut the chain pleaded guilty and was fined. There is no direct or circumstantial proof that the offender might again cut a chain locking a gate or again commit criminal mischief. The other three losses of rights were indirect, as they concerned illegal parking and sitting in Highway 64. These three offenses would be more correctly described as adversely affecting the rights of the public.
2.
The losses suffered by Earle Industries must be weighed against any harm that might be caused by a court of equity assuming jurisdiction and granting relief. Four potential harms are always present when a case involves an injunction against criminal offenses. First, there is a potential harm in the possible conflict with the constitutional guarantee of the right to trial by jury. Equity does not afford a jury trial, and the absence of that protection is a substantial factor to be weighed against chancery assuming jurisdiction. Smith, 207 Ark. at 512, 181 S.W.2d at 478; see also Robert A. Leflar, Equitable Prevention of Public Wrongs, 14 Tex.L.Rev. 427, 429-33 (1936). Second, the proof necessary for a conviction in a criminal court is constitutionally designed to require a high standard of proof, proof beyond a reasonable doubt. The proof necessary to sustain a civil action for contempt is lesser, a preponderance of the evidence. Third, a court of equity can issue a show cause order, and the person cited must show why he should not be held in contempt. In a criminal proceeding the accused cannot be compelled to give evidence against himself. As a result, when a court of equity enjoins the commission of a crime, the person enjoined might be cited for contempt in a court of equity and stands to lose these three constitutional guarantees. Fourth, the person enjoined will suffer some stigma or embarrassment comparable to that suffered by being labeled a habitual offender because, before a court of equity assumes jurisdiction, there must be proof that the person enjoined committed acts of violence with such systematic persistence as to warrant a finding that they would be continued unless restrained. Local Union No. 858 Hotel & Restaurant Employees Int'l Alliance v. Jiannas, 211 Ark. 352, 200 S.W.2d 763 (1947).
The majority opinion intimates that a flyer entitled, "We Will Not Stop Until We Get Justice," shows, in part, that a court of equity should assume jurisdiction. Before exercising jurisdiction in this type of case, a court of equity must always be aware that the right of free expression through speech and peaceful picketing is not to be endangered by the use of injunctions.
In summary, it is doubtful that Earle Industries would have suffered the loss of a substantial right to a material degree if equity had refused to exercise jurisdiction. It is even more doubtful when the "right" is weighed against the potential harms of equity exercising jurisdiction in this particular case.
B.
The second condition to be shown before equity exercises jurisdiction is that the remedy at law is inadequate. Except in narrow circumstances, equity will not enjoin the commission of a crime because the remedy at law is adequate, and criminal jurisdiction is in circuit court. The limited exception, articulated in Smith v. Hamm, 207 Ark. 507, 181 S.W.2d 475 (1944), arises when the criminal act is only "incidental" and there is a danger *604 of "irreparable pecuniary injury to property or pecuniary rights of the complaining party." Id. at 512, 181 S.W.2d at 478. In McGehee v. Mid South Gas Co., 235 Ark. 50, 55, 357 S.W.2d 282, 286 (1962), we slightly modified the Smith v. Hamm standard and said, "[T]he mere existence of a remedy at law does not deprive equity of such jurisdiction unless such remedy is `clear, adequate and complete.'" The exception giving equity jurisdiction thus turns on the "adequacy" of the criminal remedy. In this vein, the court of appeals wrote that "the Arkansas Criminal Code contains numerous provisions which punish this type conduct, and these matters may be laid to rest between the parties by their initiating appropriate criminal proceedings." Maxwell v. Sutton, 2 Ark.App. 359, 363, 621 S.W.2d 239, 241 (1981). The limitations of this exception were recently affirmed in Bates v. Bates, 303 Ark. 89, 793 S.W.2d 788 (1990).
The majority opinion implies that equity can exercise jurisdiction in part because the Amalgamated supporters gathering outside the front gate prevented employees from leaving and entering the front gate. However, the criminal law provides that it is a felony to prevent employees from engaging in any lawful vocation. Ark.Code Ann. § 11-3-401 (1987). The majority opinion provides that equity can exercise jurisdiction in part because of obstruction of the highway. Yet obstructing a highway is a criminal offense. Ark.Code Ann. § 5-71-214 (Repl.1993). The majority opinion states that Amalgamated supporters might trespass on Earle Industries' property in the future. Yet those who might trespass on Earle Industries' property can be charged with criminal trespass or criminal mischief. Ark.Code Ann. §§ 5-38-203 & 5-39-203 (Repl.1993). The very fact of the four arrests, coupled with the fact that the violations stopped thereafter, shows that the remedy at law is "clear, adequate and complete."
When an act constitutes a criminal offense, there must be repeated and systematic violations of the criminal law before the remedy will be deemed "inadequate" and equity will intervene. The three cases involving labor union activities in Arkansas which are cited in the majority opinion clearly illustrate this requirement. In Smith v. F & C Engineering Co., 225 Ark. 688, 285 S.W.2d 100 (1955), the first of the three cases cited in the majority opinion, employees of F & C Engineering were repeatedly cursed and threatened with physical violence by union sympathizers. Bands of union sympathizers roamed near the place of employment and at times blocked the entrance. Employees were in real fear for their safety. On one occasion an employee had to seek a police escort to his home. Another quit his job rather than continue under the circumstances. A foreman was attacked with a blackjack. The same foreman's pickup truck was tampered with to the extent that it would not run. Employees who crossed the picket line were told that the same thing would happen to them. A rock was hurled into an employee's car. Oil and water were drained from a motorized machine. Each morning nails were strewn along the roads used by F & C Engineering and its employees, and they were plagued with numerous flats on company vehicles. Other threats were made over a considerable period of time. In upholding the grant of an injunction we observed:
In Local Union No. 858 Hotel and Restaurant Employees Int'l Alliance v. Jiannas, 211 Ark. 352, 200 S.W.2d 763, we held that acts of violence and coercion were committed with such systematic persistence as to warrant a finding that they would be continued unless restrained where pickets walked very close to the door and on several occasions had to be pushed aside by customers to gain entrance to the restaurant being picketed, and on one occasion a customer was knocked down with a pair of brass knuckles and severely injured.
Id. at 698, 285 S.W.2d at 106.
It is noteworthy that the above-cited case of Jiannas is the second labor dispute case cited in the majority opinion. Yet it shows that the violence and coercion must have been pursued with a "systematic persistence" before the remedy at law will be deemed inadequate. In that case the union went on strike against a restaurant that had one front entrance, a five-foot-wide door. Picketers *605 walked back and forth in front of the one entrance. While there were usually only two picketers, the union sympathizers often numbered from ten to thirty, and they milled around the building. Customers were brushed by picketers or supporters. One customer had to push his way into the restaurant; he was later knocked down with a pair of brass knuckles and severely injured. Other customers were told not to enter the business. They were told they would have trouble if they entered. Many customers were stopped. One lady testified that as she entered someone said, "Nobody but whores would go into that cafe." On another occasion, as customers entered, someone shouted, "There go some sons of bitches now." Both the owners and employees were frightened. The violence and threats of violence continued over a considerable period of time. While these threats of violence and actual violence continued, the restaurant's business dropped by 90%.
The third case involving a labor dispute in Arkansas that is cited in the majority opinion also stands for the rule that a criminal statute will not be deemed inadequate until there have been repeated and continuous violations of the statute. In that case, Harrison v. Terry Dairy Products, Inc., 225 Ark. 953, 287 S.W.2d 473 (1956), the chancellor entered an order enjoining acts of intimidation and violence because the union had threatened physical harm to the company's employees, used force to prevent the employees from entering their place of employment, used "goon squads" to follow employees and threaten and intimidate those employees until they quit work, beat and battered employees, and damaged the dairy's plant. After the temporary injunction was entered, heavy charges of dynamite were planted in the milk bottling room and in each of the boilers of the dairy's plant, and each was set off. An additional twenty-one sticks of dynamite were also found inside the plant and foreign substances were found in the gasoline tanks of the dairy's trucks.
In contrast to the facts of those three cases are the facts of the case at bar. The majority opinion relies heavily on the testimony of the Earle Chief of Police, Gregory Martin. His cross-examination is abstracted, in part, as follows:
There were about fifty people sitting in the highway when we arrived, but we had to physically remove only one. Other than the one person I arrested for cutting the lock, I can't say that any other person got on the company's property. He is the only person we had to physically remove from the company's property. The protestors came to the plant behind my police car, and we did not ask them to leave the area, because we were under the impression that they were going to stand right in front of the factory. We did ask them to move back off the property once they started moving towards the gate.
We escorted the crowd right up to the front gate. We did not ask them to completely leave the scene. We just tried to make sure they did not get on the company property, and we physical[ly] removed one man from the highway after asking him to move. When I first arrived at the front gate, there were no people sitting in the road. Ten to fifteen minutes later, people started sitting in the highway. At first, I was standing down by the front gate, then I saw the people in the road. I told everyone sitting in the highway they would have to move at that time. They were chanting "we shall not be moved." After we asked them several times, everyone moved but the one person.
I didn't hear any of the protestors make any threats of bodily harm to any other person. I didn't see any of the protestors inflict any bodily harm on any other person. I am aware of no damage to the property, other than the lock being cut. I didn't hear any threats of property damage being made by any of the protestors.
The two people arrested during the incident of October, 1991 were charged, but the charges were dropped because the staff at Earle Industries decided not to proceed with the charges. Of the four people arrested on September 14, 1993, one was arrested with respect to cutting the lock, one was arrested after he was removed from the highway, the other two *606 were arrested for illegal parking when they came to claim their vehicles.
The facts of the case at bar do not rise to the same level of repeated harassing conduct as the facts of the cases cited by the majority. The remedy at law thus has not been shown to be "inadequate," as that word is used in our cases, and, as a result, the court of equity erred in exercising jurisdiction to enjoin the commission of a criminal offense.
C.
The third condition is that injunctive relief can be applied with practical success and without imposing an impossible burden on the court or bringing its processes into disrepute. The initial part of this condition is that the relief can be applied with practical success. Here, the chancellor issued a temporary restraining order against Amalgamated that, in the language of the majority opinion, provides that "the union is simply enjoined from (1) blocking or obstructing, or attempting to obstruct, the use of adjacent highways and streets and business passageways; (2) going uninvited onto business property; and (3) cutting or damaging business property." Thus, the temporary restraining order provides relief that is no different than that afforded by the criminal laws. The only difference is that it would be enforced with contempt powers. Thus, it does not seem that the court of equity has any more chance of success, as a practical matter, than the criminal courts.
III.
The basic issue in this case is the separation of the courts of law and equity mandated by the Constitution of Arkansas. We should follow the mandate of the Constitution. Equity should not enjoin the future commission of criminal acts in this case.
NEWBERN, J., joins in this dissent.
NOTES
[1] Another estimate placed the number of demonstrators between seventy and seventy-five, while one media source reported about two hundred.
[2] We note that Amalgamated cites Paccar Fin. Corp. v. Hummell, 270 Ark. 876, 606 S.W.2d 384 (App.1980), for the proposition that the plaintiff's allegations of irreparable harm must stand unrebutted or must show that it will suffer irreparable harm absent an injunction. While this rule is correct as stated in Hummell, the rule does not mean that the mere offering of rebuttal evidence negates issuance of an injunction. In any event, we are holding that the chancellor did not err in deciding that Earle Industries would suffer irreparable harm in the absence of an injunction.
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431 Pa. Super. 34 (1993)
635 A.2d 1058
CLAIRTON CORPORATION, Appellant,
v.
GEO-CON, INC.
Superior Court of Pennsylvania.
Argued October 19, 1993.
Filed December 20, 1993.
*35 John M. Studeny, Pittsburgh, for appellant.
Alfred W. Babb, Warrendale, for appellee.
Before CIRILLO, FORD ELLIOTT and CERCONE, JJ.
CIRILLO, Judge.
This is an appeal from an order entered in the Court of Common Pleas of Allegheny County denying appellant Clairton Corporation's (Lessor) motion for post-trial relief. We affirm.
Lessor and appellee Geo-Con, Inc. (Tenant) were parties to a commercial lease for a business premises located in Monroeville, Pennsylvania. The lease was for a term of two years. At the expiration of the two-year term, which was September 15, 1990, Tenant, with the consent of Lessor, remained on the premises for approximately seven months. During that time, Tenant continued to pay the same monthly installment rate as provided for in the two-year lease. The lease, which had been signed by the parties on August 10, 1988, provides in pertinent part:
TO HAVE AND TO HOLD THE said premises for a full term of two years, commencing on September 15, 1988.
* * * * * *
*36 The Tenant shall pay as rental hereunder the sum of One Hundred Seventy Three Thousand Eight Hundred Seventy-Seven and 36/xx Dollars in 24 equal monthly installments, without demand, of Seven Thousand Two Hundred Forty Four and 89/xx, beginning on the commencement of the term and on the first day of each calendar month thereafter.
* * * * * *
The lease did not include a "hold-over" provision and, at the end of the two-year term, the parties had made no definite new arrangements. Tenant eventually vacated the premises in April, 1991.
Lessor filed a complaint seeking to recover rent for the remainder of the one year hold-over term from early April, 1991 through September 14, 1991. Tenant claimed that it did not hold over; it was engaged in negotiations for a new lease for additional rental space with Lessor and, thus, became a month-to-month tenant. A non-jury trial ensued, whereupon a verdict was entered in favor of Lessor in the amount of $1,466.50.[1] Lessor, believing the verdict to be inadequate, filed post-trial motions which were argued and denied. This timely appeal followed. Lessor raises the following issue for our review:
Where a tenant for a term of years holds over after the expiration of the original term with the consent of the lessor, and where no definite new arrangement has been *37 made between the lessor and the tenant, is the hold-over tenancy for a term of one year?
In support of its claim, Lessor cites principles established at common law. Specifically, when a lease for a term of years expires, and the lessee remains in possession, the landlord may, at his option, treat the lessee as a hold-over tenant; such law implies that the possession of the hold-over is subject to the same terms, conditions, and covenants as the old lease. Pittsburgh v. Charles Zubik & Sons, Inc., 404 Pa. 219, 171 A.2d 776 (1961); see also Reading Terminal Merchants Assoc. v. Rappaport Assoc., 310 Pa.Super. 165, 456 A.2d 552 (1983); Mack v. Fennell, 195 Pa.Super. 501, 171 A.2d 844 (1961). Lessor relies primarily on Routman v. Bohm, 194 Pa.Super. 413, 168 A.2d 612 (1961), where it was specifically held that the tenants, who had held over after an expiration of a three-year lease and continued to pay the same monthly rent, became tenants from year to year. The court in Routman set forth the following rule of law:
[W]here following the expiration of a tenancy for a term of one or more years, the tenant with the consent of the landlord holds over, prima facie, in the absence of evidence showing a contrary intent, the normal inference from the conduct of the parties is that they thus exhibited an intent to convert the tenancy into one from year to year.
Id. at 414-15, 168 A.2d at 613-14 (emphasis added).
In further support of its position, Lessor relies upon Harvey v. Gunzberg, 148 Pa. 294, 23 A. 1005 (1892), one of the cases cited by this court in Routman. In Harvey, the Pennsylvania Supreme Court proclaimed that where a tenant holds over after the expiration of his term, and no different arrangement has been made between the landlord and tenant, a tenancy for another year is created. Id. at 295-96, 23 A. at 1005; see also English v. Murtland, 214 Pa. 325, 63 A. 882 (1906).
In its evaluation of the foregoing precedent, the trial court in this case found "evidence showing a contrary intent," Routman, supra regarding the term of Tenant's "hold-over." There is no question that Tenant continued to pay, and the *38 Lessor continued to accept, the monthly rental rate set forth in the expired lease. The record also reflects that, from approximately August, 1990 (one month before the termination of the two-year lease), through April, 1991 (when Tenant vacated the premises), the Lessor and Tenant were involved in negotiations for a new lease. The negotiations mostly centered around the fact that Tenant desired an increased amount of rental space.[2] At no time during their negotiations was there discussion of whether Tenant was occupying the space on a hold-over basis for a year or on a hold-over basis from month to month.[3] Thus, in light of the fact that there was an attempt to have a new lease drafted, the trial court refused to hold that Tenants had agreed to another yearly lease, finding, inter alia, that the parties' intent was contrary to the creation of a hold-over tenancy. We agree.
In addition to citing Routman and distinguishing it from the instant case, the trial court pointed to no other law in support of its conclusion. Indeed, our research on this specific issue reveals a scarcity of authority. We are convinced, however, that a hold-over for a term of one year was not created under the instant set of circumstances.
"[I]t is established law that mere continuance in possession and payment of rent does not of itself constitute a renewal of the lease with all its provisions." Young Men's Christian Association v. Harbeson, 407 Pa. 489, 492, 180 A.2d 916, 918 (1962) (citing English v. Murtland, supra) (emphasis added). In Harbeson, the lessee sought specific performance of an *39 option to purchase certain property, as specified in a lease agreement between the lessee and lessor. The Pennsylvania Supreme Court specifically held that the lease agreement, including the option clause, was not renewed for a second five-year term when the lessee continued in possession of the property after the end of the first term. Rather, the Court looked to the specific facts of the case and came to the conclusion that there was a mutually agreed upon modification of the original lease agreement, the modification being the elimination of the option to purchase. Significantly, the Court took into account the fact that the lessor informed the lessee that he would no longer sell at the option price and that such price was to be renegotiated. Thus, when the lessee continued possession at the termination of the lease, his acceptance of the modification was implied.
We decline to follow Lessor's strict interpretation of the rule set forth in Routman and Harvey and, in light of the facts at hand, will instead adopt a more flexible approach. Like the court in Harbeson, we are of the opinion that Tenant's possession of the premises after the termination of the lease, in and of itself, does not automatically bind them to a renewal of their original lease agreement. When we consider the surrounding circumstances, specifically the failed renegotiation of the lease, we refuse to hold Tenant liable for another entire year's rent. See Severance v. Heyl & Patterson, Inc., 308 Pa. 101, 108, 162 A. 171, 173 (1932) ("[t]he fact that money was paid as rent does not establish any particular term or holding and if the beginning of the tenancy or its length is in question, these facts must be shown by other evidence"); Peterson v. Schultz, 162 Pa.Super. 469, 58 A.2d 360 (1948) (fact that tenant has paid rent after expiration of term and the landlord has accepted it is not an affirmance of the lease for a new year but merely evidence of affirmance which may be rebutted by proof that such was not the intention of the parties). Lessor's acceptance of Tenant's rent, combined with Lessor's involvement in negotiations for a new lease to include more rental space for Tenant, clearly implies that Lessor knew that the terms and conditions of the *40 old lease would not have been acceptable to Tenant. It can be deduced, therefore, that under these circumstances, the creation of a month to month lease was more appropriate.
In further support of our conclusion, we are persuaded by the following language set forth in Southern Ry. Co. v. Peple, 228 F. 853 (4th Cir.Va.1915):
Continuance in possession by a tenant, with the payment of rent, will usually be regarded as renewal of the lease; the acceptance of the rent by the lessor being considered a waiver of any right to notice of intention to renew. But this rule does not apply where the possession is retained and the rent paid pending negotiations with respect to the renewal of the lease.
Id. at 856 (citations omitted) (emphasis added); see also 45 A.L.R. 2d 841, § 6.[4]Peple involved a proceeding in which a lessor alleged that a right to renew a lease had not been exercised. The court held that the lessor had waived the notice requirement in the lease asking for ninety days' notice for exercise of the option to renew. In reaching this conclusion, the court looked to the following factors: the lessor knew that expense and labor had been incurred and plans had been laid out for the future in reliance on renewal of the lease; the lessor had allowed the lessee to remain in possession and pay rent and taxes after the end of the initial term, pending negotiations for a possible new lease; the lessor had delayed for approximately five weeks after receiving a sixty day notice from the lessee; and the lessor had responded to such notice that lessor would renew the lease on receiving a more formal letter from the lessee.
*41 We find it significant that, in finding for the lessee, the court in Peple looked to the fact that the lessor had allowed the lessee to remain in possession of the property after the lease had ended, that negotiations for a new lease were pending, and that the lessor had delayed in responding to the notice received from the lessee. The court focused on the conduct of the lessor in determining that the lessor had accepted the lessee's notice to renew. Although the instant case does not involve an option to renew, Peple lends analogous support for our decision to uphold the implication of a month to month lease. In reaching this decision, we, too, look to Lessor's conduct involving negotiations for a new lease, along with the delay incurred in doing so. When these factors are considered, it is clear that the parties' intent was not to enter into the same lease as was originally executed.
Our refusal to focus solely on the fact that Tenant has remained in possession of the property after the expiration of the lease is not in conflict with the rules set forth in Routman and Harvey; rather, it is consistent with them. In fact, the reasoning employed here can be considered an example of Routman's "contrary intent" exception to the general rule regarding holdovers. Thus, because the parties' conduct evidenced an intent to enter into a new agreement, even though a new lease never actually came to fruition, such conduct was sufficient to invoke an exception to the common law rule making Tenant liable for another year's rent. In the interest of fairness, we will not disturb the trial court's conclusion, and hold that Tenant's occupation of the premises after the original lease had expired became a month to month tenancy.
Order affirmed.
NOTES
[1] At trial, the Lessor had claimed the following items of damage: (1) unpaid rent for the remainder of the one-year holdover term ending September 14, 1991, being a total of $39,846.90; plus, (2) late charges as required by the lease in the amount of $4,081.44; plus, (3) a partial underpayment of rent during one month of the original term of the lease in the amount of $967.50; minus, (4) a credit for a security deposit in the amount of $950.00.
The trial judge awarded damages as follows: (1) instead of unpaid rent for the remainder of the one-year hold-over term, only per diem rental from March 31, 1991 through April 6, 1991 (the date Tenant vacated the property), which totaled $1,449.00; plus, (2) nothing for late charges; plus, (3) the partial underpayment of rent during one month of the original term of the lease in the amount of $967.50; minus, (4) a credit for a security deposit in the amount of $950.00. Accordingly, the total damage award amounted to $1,466.50.
[2] At the time that the lease was in effect Tenant occupied 7,000 square feet of Lessor's rental space; Tenant wanted the new lease to provide an additional 3,000 square feet of space. The record reflects that Lessor was slow in responding to Tenant's requests for this new agreement.
[3] On cross-examination, Joseph Jonnet, President of the Lessor corporation, testified as follows:
Q. So is it correct to say that you and Steve [Mr. Jonnet's nephew] decided that you would just simply treat it as a one-year election on your part, the landlord's part, and didn't feel an obligation to tell them anything; is that right?
A. Well, I felt they knew it.
Q. And how
A. It's the law.
[4] Landlord's consent to extension or renewal of lease as shown by acceptance of rent from tenant holding over:
§ 6. Circumstances rendering rule inapplicable; receipt of rent during negotiations for new lease.
Where a tenant remains in possession of realty after the expiration of his term, and during a period in which he and the landlord are negotiating for a new lease, and the landlord accepts rent for this period, it is uniformly held that such acceptance is not a manifestation of the landlord's consent to an extension or renewal of the lease.
45 A.L.R. 2d 841, § 6.
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430 Pa. Super. 480 (1993)
635 A.2d 151
Albert F. CAFAZZO and Tammy J. Cafazzo, His Wife, Appellants,
v.
CENTRAL MEDICAL HEALTH SERVICES, INC., a corporation; Central Medical Pavillion, Inc., a corporation; and Norman Stern, D.M.D.; Hospital Association of Pennsylvania.
Superior Court of Pennsylvania.
Argued September 2, 1993.
Filed October 27, 1993.
Reargument Denied January 6, 1994.
*481 Robert W. Deer, Pittsburgh, for appellants.
Stella L. Smetanka, Pittsburgh, for Stern, appellee.
Louis C. Long, Pittsburgh, for Cent. Medical, appellee.
Before ROWLEY, President Judge, and WIEAND and CIRILLO, JJ.
CIRILLO, Judge.
This is an appeal from an order entered in the Court of Common Pleas of Allegheny County. We affirm.
The issue presented is whether, as a result of implantation of a defective prosthetic, liability should be extended to a hospital or a doctor based on a theory of product liability under Section 402A of the Restatement (Second) of Torts.
Appellants Albert F. Cafazzo and Tammy J. Cafazzo, husband and wife, initiated this lawsuit against appellees Central Medical Health Services, Inc., Central Medical Pavilion, Inc., [hospital] and Norman Stern, D.M.D., after Dr. Stern implanted *482 into Mr. Cafazzo's jaw a prosthetic device known as the Vitek Proplast TMJ prosthesis. In their complaint, Mr. and Mr. Cafazzo alleged that the hospital and Dr. Stern "provided, sold or otherwise placed into the stream of commerce products manufactured by Vitek, Inc., known as Proplast TMJ implants." Mr. Cafazzo alleged that the product was defectively designed, not safe for its intended use, and lacked any warnings necessary to make it safe for its intended use. Mr. Cafazzo further alleged that as a result of the implant he suffered the following injuries: erosion of the mandibular condyle; fragmentation of dense fibrous connective tissue; chronic inflammation; generation of numerous foreign body type giant cells containing polarizing particles; infection; and pain, stress and anxiety. As a result of these medical conditions, Mr. Cafazzo averred that he was required to undergo additional surgery for removal of the implant and reconstruction of his jaw. In addition to the product liability action, Mrs. Cafazzo alleged a claim for loss of consortium.
The hospital and Dr. Stern filed preliminary objections in the nature of a demurrer. Following argument before the Honorable Eugene Strassburger, the trial court issued an order granting both the hospital's and Dr. Stern's preliminary objections and dismissing the Cafazzos' complaint. This appeal followed.[1]
Mr. and Mrs. Cafazzo raise the following issue: whether a physician or hospital who regularly provides, sells and charges for prosthetic implants can be liable under Restatement of Torts (Second) § 402A for selling a defective product when the implant is defective and causes damage to a patient?
*483 When reviewing an order granting preliminary objections in the nature of a demurrer, we apply the same standard as the trial court: all material facts set forth in the complaint as well as all inferences reasonably deducible therefrom are admitted as true for the purposes of review. The question presented by the demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible. Where any doubt exists as to whether a demurrer should be sustained, it should be resolved in favor of overruling the demurrer. Kyle v. McNamara & Criste, 506 Pa. 631, 633, 487 A.2d 814, 815 (1985); Baker v. Magnetic Analysis Corp., 347 Pa.Super. 188, 191, 500 A.2d 470, 472. In reviewing preliminary objections, only facts that are well pleaded, material, and relevant will be considered as true, together with such reasonable inferences that may be drawn from those facts, and preliminary objections will be sustained only if they are clear and free from doubt. Ohio Casualty Group Insurance Company v. Argonaut Insurance Company, 92 Pa. Cmwlth. 560, 500 A.2d 191 (1985). Preliminary objections will be sustained only where it appears with certainty that, upon the facts averred, the law will not allow the plaintiff to recover. International Union of Operating Engineers, Local No. 66, AFL-CIO v. Linesville Construction Company, 457 Pa. 220, 322 A.2d 353 (1974).
Under the Pennsylvania system of fact pleading, the pleader must define the issues; every act or performance essential to that end must be set forth in the complaint. See Pa.R.C.P. 1019; 4 Standard Pennsylvania Practice § 21:32; see also Pike County Hotels Corporation v. Kiefer, 262 Pa.Super. 126, 396 A.2d 677 (1978) (at a minimum, the pleader must set forth facts upon which his cause of action is based).
Section 402A of the Restatement (Second) of Torts provides in relevant part:
(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if
*484 (a) the seller is engaged in the business of selling such a product, and
(b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.
Restatement (Second) of Torts. Comment f to section 402A provides that the rule "applies to any manufacturer of such a product [and] to any wholesale or retail dealer or distributor.. . ." Restatement (Second) of Torts, Comment f. See Coyle v. Richardson-Merrell, Inc., 526 Pa. 208, 210, 584 A.2d 1383, 1384 (1991); see also Webb v. Zern, 422 Pa. 424, 220 A.2d 853 (1966) (adopting section 402A as the law of Pennsylvania).
A. Hospital Liability
The Cafazzos argue that the theory of "corporate liability" or "corporate negligence," adopted in Thompson v. The Nason Hospital, 527 Pa. 330, 591 A.2d 703 (1991) affords a basis for extending 402A liability to hospitals. In Thompson, the Pennsylvania Supreme Court embraced as a theory of hospital liability
the doctrine of corporate negligence or corporate liability under which the hospital is liable if it fails to uphold the proper standard of care owed the patient. . . . It is important to note that for a hospital to be charged with negligence, it is necessary to show that the hospital had actual or constructive knowledge of the defect or procedures which created the harm.
Id. at 340, 591 A.2d at 708. This argument, however, provides no logical basis to extend strict product liability principles to a hospital; the Thompson court was presented with a question negligence.
In Coyle, supra, the Pennsylvania Supreme Court was presented with the question of whether a pharmacy should be subject to liability as a supplier in accordance with principles of strict liability found in section 402A. The Court began its analysis by considering whether extending liability would advance the purposes of section 402A. Quoting comment c to *485 section 402A, the Court noted the following as the rationale supporting the rule of strict product liability:
the seller, by marketing his product for use and consumption, has undertaken and assumed a special responsibility toward any member of the consuming public who may be injured by it; [] the public has the right to and does expect, in the case of products which it needs and for which it is forced to rely upon the seller, that reputable sellers will stand behind their goods; [] public policy demands that the burden of accidental injuries caused by products intended for consumption be placed on those who market them, and be treated as a cost of production against which liability insurance can be obtained; and [] the consumer of such products is entitled to the maximum of protection at the hands of someone, and the proper persons to afford it are those who market the products.
(Emphasis added). Citing to a previous case, Francioni v. Gibsonia Trucking Company, 472 Pa. 362, 372 A.2d 736 (1977), which held that section 402A applied equally to lessors and sellers, the Court identified four "pertinent factors:" (1) supplier liability makes a member of the marketing chain available to the injured plaintiff for redress; (2) strict liability provides an incentive to safety; (3) a supplier is in a better position to prevent the circulation of defective products; and (4) the supplier can distribute the cost of compensating for injuries resulting from defects by charging for it in its business. Coyle, 526 Pa. at 216, 584 A.2d at 1387, citing Francioni, 472 Pa. at 368-69, 372 A.2d at 739.
Consideration of these factors weighs against extension of 402A liability to hospitals or physicians. A hospital is not a purveyor of products or goods; it is a provider of services, an intermediary in the distribution chain of a product such as the implant device in this case. The use of the implant device was incidental to the hospital's primary function of providing medical services. Coyle, supra; see also Podrat v. Codman-Shurtleff, Inc., 384 Pa.Super. 404, 558 A.2d 895 (1989) (hospital was not liable to patient under theory of strict liability for injury which resulted when medical instrument broke during *486 surgery, even if a charge was made for the use of the instrument as the hospital was not in the business of selling the instrument and its use was only incidental to the hospital's primary function of providing medical services).
Holding physicians and hospitals liable would do little in the way of providing an incentive to safety. The safety of the product depends not on the judgment of the physician or the hospital administration, but on the judgment of those connected to the research, development, manufacture, marketing and sale of the product. Further, as to the circulation of defective products, a hospital not involved in the development or manufacture of the product is in no better position to prevent circulation of a defective product. This necessarily follows from the previous consideration.
Distribution of cost and availability of redress for a plaintiff, as the only considerations in favor of extending liability, would, as stated in Coyle, "result in absolute liability rather than strict liability." 526 Pa. at 216, 584 A.2d at 1387. Relying solely on cost factors creates liability without a logical basis and confines the focus to a search for a deep pocket.
B. Physician Liability
Physicians, like hospitals, are providers of health care services. The physician's expertise lies in the diagnosis, treatment and cure of illness, not in the research or development of prosthetics or devices used to aid medical diagnosis or treatment. A physician is not in the business of selling products, but rather is in the profession of providing medical services. Products such as the prosthetic device in this case are supplied and utilized only as needed to deliver the professional medical service. They are incidental, or integral, to a physician's service, but they are not the focus of the physician's delivery of health care.
The Commonwealth Court, in Hannis v. Ashland State General Hospital, 123 Pa.Cmwlth. 390, 554 A.2d 574 (1989), rejected an argument that the distinction between sale of products and services for purposes of strict liability is merely *487 technical. There, the deceased patient's estate filed an action against physicians for failure to diagnose under a strict liability theory. The appellants essentially argued that the physicians' care was a "sale" for purposes of strict liability and that the sale/service dichotomy was "merely technical." Id. at 398, 554 A.2d at 578. The court, affirming an order sustaining preliminary objections, stated: "The courts of Pennsylvania have never extended strict liability to the services provided by a physician, and we are not willing to do so in this case." Id. at 398-99, 554 A.2d at 578, citing Hoffman v. Misericordia Hospital of Philadelphia, 439 Pa. 501, 267 A.2d 867 (1970). The court, though not presented with the question of a prosthetic implant or other medical device, acknowledged the sales/services distinction in the law of the Commonwealth.
Although no Pennsylvania appellate court has directly addressed the issue of physician strict liability with respect to a defective implant, other jurisdictions have refused to extend strict liability to a health care provider in similar circumstances on the grounds that the implantation or use of a medical device is incidental to the provision of services. See, e.g., Betro v. GAC International, Inc., 158 A.D.2d 498, 551 N.Y.S.2d 72 (1991) (orthodontist's prescription of a night brace did not constitute "sale" of a device; prescription was incidental to medical treatment); Goldfarb v. Teitelbaum, 149 A.D.2d 566, 540 N.Y.S.2d 263 (1989) (insertion of an alleged defective prosthetic device was a procedure incidental to medical treatment and did not constitute a "sale"); Carmichael v. Reitz, 17 Cal. App. 3d 958, 95 Cal. Rptr. 381 (1971) (court refused to extend the doctrine of strict liability to physician for prescribing a drug which caused untoward effects in the patient); Barbee v. Rogers, 425 S.W.2d 342 (Tex.1968) (optometrists who had prescribed, fit and sold contact lenses were not liable on the theory of strict liability in tort); Magrine v. Krasnica, 94 N.J.Super. 228, 227 A.2d 539 (1967) (court refused to extend strict liability principles to a dentist for personal injuries caused to a patient when a defective needle broke in the patient's mouth; the court found that the dentist had not engaged in the "sale" of a product).
*488 Physicians are not infallible beings; they are a class of men and women confined by an inexact science. Without a claim of negligence or intentional wrongdoing, we are reluctant to extend the principle of strict liability to those engaged in the art of healing, or to those institutions providing a forum for that art. Hospitals and physicians, unlike manufacturers, are not capable of effecting risk distribution. Thus, in accordance with the rationale behind 402A liability, we decline to find the physician or hospital in this case were "sellers" under 402A and thus decline to extend the rule of strict product liability to the hospital or physician in this case. Coyle, supra; see also Podrat v. Codman-Shurtleff, Inc., supra.
Order affirmed.
NOTES
[1] An amicus curiae brief has been filed by the Hospital Association of Pennsylvania (HAP) in support of the position that liability under Section 402(A) should not be extended to hospitals for an injury allegedly caused by a defective prosthetic implant. HAP is a statewide association of health care institutions representing 252 hospitals licensed in the Commonwealth. HAP views itself as "the Pennsylvania health care industry's principal forum for developing public policy initiatives and for the exchange of ideas on the effective delivery of quality health care services." Amicus Brief, p. 2.
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886 S.W.2d 511 (1994)
Alexander JUAREZ, Appellant,
v.
STATE of Texas, Appellee.
No. 01-93-00206-CR.
Court of Appeals of Texas, Houston (1st Dist.).
October 20, 1994.
*513 William Bennie House, Jr., Houston, for appellant.
John B. Holmes, Jr., Scott A. Durfee, Elsa Alcala, Houston, for appellee.
Before OLIVER-PARROTT, C.J., and MIRABAL and O'CONNOR, JJ.
OPINION
OLIVER-PARROTT, Chief Justice.
Appellant, Alexander Juarez, was charged with murder, but convicted of the lesser included offense of involuntary manslaughter. The jury assessed punishment at 10 years confinement. Appellant raises 13 points of error attacking the trial court's charge to the jury. We affirm.
Background
On the night of March 3, 1991, appellant and a friend, Ruben Capelo, drove to a convenience store to buy some beer. Outside the store was a group of about eight men, including Frederick Broussard and Kevin Allen. On his way out of the store, appellant got into an argument with Broussard. Allen intervened on Broussard's behalf, and Capelo testified that he saw one of the men give Allen a gun. Capelo convinced appellant to leave, and they walked back to appellant's car. Capelo and appellant both testified that as they drove away, they saw Allen aiming a gun at the car. While driving away, appellant pulled out his own gun and fired several shots into the crowd of men. One of the bullets hit and killed Elda Vasquez, a woman standing behind the men.
Standard of review
When we review the charge to the jury, our first inquiry is whether the alleged error was preserved. If so, any harm, regardless of the degree, is sufficient to require reversal of the conviction. Almanza v. State, 686 S.W.2d 157 (Tex.Crim.App.1984); Gibson v. State, 726 S.W.2d 129 (Tex.Crim.App. 1987); Arline v. State, 721 S.W.2d 348 (Tex. Crim.App.1986). Error is harmful if, looking at the entire jury charge, and the trial as a whole, it is calculated to injure the rights of the defendant. Almanza, 686 S.W.2d at 171.
If the alleged error was not preserved, the defendant must show that the harm was "egregious," or so harmful that the defendant was denied "a fair and impartial trial." Id. at 172; Turner v. State, 721 S.W.2d 909 (Tex.App.Houston [1st Dist.] 1986, pet. ref'd).
In his first three points of error, appellant contends that the trial court should have included the fact that he was retreating in the instruction on the law of self-defense. Appellant contends that this exclusion violated the Texas Code of Criminal Procedure, the Sixth Amendment to the United States Constitution, and article I, section 19 of the Texas Constitution.
Appellant argues that the charge failed to "apply the law to the facts, and instruct the jury that Appellant was using self defense when he fired while retreating." To the contrary, instructing the jury that appellant was using self-defense would have been an impermissible comment on the weight of the evidence, in violation of Tex. Code Crim.Proc.Ann. art. 38.05 (Vernon 1979).
In addition, such an instruction would have been an improper application of the law. Appellant argues that because he fired the gun while driving away from the scene, the jury should have been instructed to find that he was retreating at the time he fired. The law is clear, however, that the use of deadly force is justified only when retreat *514 is unreasonable. Tex.Penal Code Ann. § 9.32(2) (Vernon 1974). Thus, as a matter of law, defendant could not have been in retreat at the moment he fired the gun. Bartmess v. State, 708 S.W.2d 905, 908 (Tex. App.Tyler 1986, no pet.) ("The actual use of deadly force necessarily implies no retreat at the moment the force was applied. One may be in retreat and then abandon that retreat by using deadly force.").
The self-defense portion of the charge instructed the jury to find appellant not guilty if they decided or had a reasonable doubt that appellant acted reasonably. The charge properly allowed the jury to decide whether appellant was acting in self-defense when he fired the gun. We overrule appellant's first three points of error.
In his next four points of error, appellant argues that the trial court should have authorized acquittal on the ground that he was acting in self-defense not only from Kevin Allen, but from the other men at the scene. Appellant claims this error violated Tex.Code Crim.Proc.Ann. arts. 36.14, 36.15, and 36.19 (Vernon Supp.1994); the Sixth and Fourteenth Amendments to the United States Constitution; and article I section 19 of the Texas Constitution.
Appellant did not object to the charge on these grounds; therefore, he did not preserve this point of error. Our standard of review is the "egregious error" standard, and we will reverse only if the error is so egregious and created such harm that appellant did not have a fair and impartial trial. Almanza, 686 S.W.2d at 171.
Appellant introduced evidence that appellant and Capelo "were surrounded by seven or eight men."[1] Therefore, appellant argues, the jury should have been instructed that if they believed that appellant acted as a reasonable person would have if he were assailed by seven or eight men, they should acquit.
A person has the right to use deadly force in self-defense if a reasonable person would not retreat and "he reasonably believes the deadly force is immediately necessary" to defend against another's use of deadly force. Tex.Penal Code Ann. § 9.32 (Vernon 1974). The reasonableness of an accused's belief that force was required to defend himself is viewed from the defendant's standpoint at the time he acted. Tanguma v. State, 721 S.W.2d 408 (Tex.App. Corpus Christi 1986, pet. ref'd). In order to get an instruction on self-defense involving multiple assailants, an accused must raise an issue whether he reasonably believed that he was under attack or imminent attack from multiple assailants. Frank v. State, 688 S.W.2d 863, 868 (Tex.Crim.App.1985); Tanguma 721 S.W.2d at 411. The record is silent about the conduct of the seven or eight other men. There is no evidence to suggest that it was reasonable to think that any or all were about to attack with deadly force.
The evidence showed that only Allen posed a threat to appellant and Capelo.[2] The jury was instructed on self-defense in relation to Allen.
We overrule points of error four through seven.
In his next four points of error, appellant contends that the jury charge was erroneous because it did not apply the doctrine of transferred intent to the lesser included offenses. Appellant claims this error violated articles 36.14, 36.15, and 36.19 of the Texas Code of Criminal Procedure, the Sixth Amendment to the United States Constitution, and article I, section 19 of the Texas Constitution.
Even assuming that this was error, it could only have benefitted the appellant. The doctrine of transferred intent serves to expand a defendant's liability when an act has an unexpected consequence. See Tex.Penal Code Ann. § 6.04(b)(2) (Vernon 1974). Without an instruction on the doctrine of transferred intent, the State did not have the benefit of the doctrine in the lesser included offenses.
*515 The appellant also argues that the absence of the instruction amounted to a comment on the weight of the evidence. Because appellant cites no case authority to support this assertion, we overrule it. Vuong. v. State, 830 S.W.2d 929, 940 (Tex. Crim.App.1992). We note as well, that transferred intent would make no sense when applied to the lesser included offenses. These offenses are not crimes requiring intent; therefore, transferred intent is never an issue.
We overrule appellant's points of error eight through 12.
In his final point of error, appellant contends that the charge did not instruct the jury that self-defense is a justification for the lesser included offenses, and that this error was a violation of articles 36.14, 36.15, and 36.19 of the Texas Code of Criminal Procedure.
The parties cite two cases dealing with the failure to apply self-defense to lesser included offenses, Jordan v. State, 782 S.W.2d 524 (Tex.App.Houston [14th Dist.] 1989, pet. ref'd), and Ross v. State, 763 S.W.2d 897 (Tex.App.Dallas 1988, pet. ref'd).
In Jordan, the defendant was charged with murder. The jury received instructions on murder, involuntary manslaughter, and criminally negligent homicide, as well as an instruction on self-defense. The application paragraph applied self-defense only to murder. The court of appeals held that the jury charge was misleading because the jury was not advised of their duty to apply self-defense to each of the charged offenses. Jordan, 782 S.W.2d at 526.
Similarly, in Ross, the trial court failed to apply self-defense to the lesser-included offenses. Unlike Jordan, however, the court included the following instruction: "It is a defense to this prosecution if the defendant's conduct was justified by law. This applies to any alleged offense set forth in the court's charge." Ross, 763 S.W.2d at 902. The court of appeals held that the blanket instruction advised the jury to apply self-defense to the lesser included offenses. Id. at 903.
Here, the jury was first instructed on murder, voluntary manslaughter, involuntary manslaughter, aggravated assault, and criminally negligent homicide. Then, the trial court instructed the jury on the law of self-defense. In the application paragraph, the court instructed the jury that if it found that appellant "did shoot" the victim, but also found that appellant was acting in self-defense, then it was to find the defendant not guilty. The instructions were not erroneous. Id. We overrule point of error 13.
We affirm the judgement of the trial court.
NOTES
[1] "Q: How many people were around youall at the time all this took place?
A: It was quite a few, but I don't know how many. It was about, at least seven or eight."
[2] Appellant and Capelo testified that as they drove away, Allen was pointing a gun at them.
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886 S.W.2d 357 (1994)
Frank McDOLE and Sally McDole, Individually and as Next Friend of Frank Burch McDole, a Minor, and Sally Haney, a Minor, By and Through Her Father and Next Friend, Michael R. Haney, Appellants,
v.
SAN JACINTO METHODIST HOSPITAL and the Methodist Hospital System, Appellees.
No. 01-93-00457-CV.
Court of Appeals of Texas, Houston (1st Dist.).
August 31, 1994.
*358 Thomas M. Stanley, Houston, for appellants.
Craig Smyser, Patrick W. Mizell, Houston, for appellees.
Before DUGGAN, COHEN and MIRABAL, JJ.
OPINION
DUGGAN, Justice.
This is the appeal of a take-nothing judgment. Appellants, Frank McDole and Sally McDole, individually and as next friend of Frank Burch McDole, a minor, and Sally Haney, a minor, by and through her father and next friend, Michael R. Haney, sued a number of physicians[1] and the appellees, San Jacinto Methodist Hospital and the Methodist Hospital System, for negligent acts and omissions leading to the death of Cheryl Ann Burgess. In four points of error, appellants claim the trial court erred in granting a summary judgment because (1) appellees failed to establish their right to a summary judgment as a matter of law, and (2) genuine issues of material fact existed precluding summary judgment. In four identical points of error, appellants claim that the trial court erred in denying their motion for new trial. We affirm.
On September 4, 1988, Cheryl Burgess was admitted by Dr. James Bernick to San Jacinto Methodist Hospital for acute abdominal pain. Dr. Bernick transferred her to intensive care on September 6th. On the morning of September 6, Dr. Bernick determined that Ms. Burgess had a very complex medical problem, and needed to be transferred to a tertiary center because neither he nor the San Jacinto Methodist Hospital were *359 capable of treating her problems. After several failed attempts to transfer Ms. Burgess to Ben Taub Hospital, the Methodist Hospital, and Hermann Hospital, physicians at John Sealy Hospital in Galveston agreed to accept her. She was life-flighted on September 8, 1988, and taken to surgery at about midnight. The surgeon found that she had blockages of the hepatic vein, the mesenteric vein, and the splenic vein. The surgeon decided that surgery would not be useful and closed the incision. Ms. Burgess died on September 10, 1988.
Appellants contend that appellees caused Ms. Burgess' death by failing to:
1. obtain a timely transfer from San Jacinto Methodist Hospital to a tertiary care facility;
2. establish rules or procedures for the transfer of patients within the Methodist Hospital System capable of providing tertiary care for patients such as Ms. Burgess;
3. recommend procedures, protocols or rules for the transfer of patients within the Methodist Hospital System capable of providing tertiary care for patients such as Ms. Burgess; and
4. seek assistance from the administrators, chiefs of staff or other management officials of the Methodist Hospital or the Methodist Hospital System for the transfer of patients within the Methodist Hospital System capable of providing tertiary care for patients such as Ms. Burgess.
The standard for appellate review of a summary judgment in favor of a defendant is whether the summary judgment proof establishes, as a matter of law, that there is no genuine issue of fact about one or more of the essential elements of the plaintiff's cause of action. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970). The movant has the burden to show that there is no genuine issue of material fact, and that it is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). Once the defendant has negated, as a matter of law, such elements of plaintiff's cause of action, the plaintiff has the burden of introducing evidence that raises issues of fact with respect to the elements negated by the defendant's summary judgment evidence. "Moore" Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 936-37 (Tex.1972); Wheeler v. Aldama-Luebbert, 707 S.W.2d 213, 215 (Tex.App.Houston [1st Dist.] 1986, no writ). Every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in its favor. Montgomery v. Kennedy, 669 S.W.2d 309, 310-11 (Tex. 1984).
A summary judgment cannot be affirmed on any ground not presented in the motion for summary judgment. Hall v. Harris County Water Control & Improvement Dist. No 50, 683 S.W.2d 863, 867 (Tex.App. Houston [14th Dist.] 1984, no writ). When a trial court's order does not specify the grounds relied on for its ruling, the summary judgment will be affirmed if any of the theories advanced are meritorious. Insurance Co. of North America v. Security Ins. Co., 790 S.W.2d 407, 410 (Tex.App.-Houston [1st Dist.] 1990, no writ).
To recover on each of their claims against appellees, appellants must establish: (1) a duty requiring appellees to conform to a certain standard of conduct, (2) the applicable standard of care and its breach, (3) injury, and (4) causation, i.e., a reasonably close causal connection between the breach of that standard of care and the injury. Garza v. Levin, 769 S.W.2d 644, 645 (Tex.App.Corpus Christi 1989, writ denied); Wheeler, 707 S.W.2d at 217.
Appellees' motion for summary judgment asserted two grounds: (1) that there was no duty on a hospital or a corporation to seek or secure another hospital to receive a transferring patient; and (2) that there was no causation between any acts of appellees and the death of Ms. Burgess. In support of their motion, appellees offered the affidavit of John Stroehlein, M.D., an independent expert, stating, in pertinent part:
I have reviewed the medical records of Cheryl Ann Burgess and the transfer policies of San Jacinto Methodist Hospital and The Methodist Hospital System. I was and am personally familiar with the standard *360 of care for a reasonably prudent hospital as it regards the transfer of a patient such as Cheryl Ann Burgess under the circumstances in this case. The standard of care for the transfer of a patient such as Ms. Burgess under those circumstances is that a physician determines if a patient needs to be transferred to the care of another physician at another hospital or medical facility. Based on the medical needs of the patient, the physician contacts another physician at the receiving hospital who is willing to accept the patient in transfer and who has the expertise related thereto. When a physician determines to try to transfer a patient like Ms. Burgess, the standard of care requires the hospital personnel and administrators to assist the physician in the transfer process. The hospital is not responsible for transferring a patient to another hospital because it is the physician(s), not the hospital(s), who is/are ultimately involved in the transfer process. This involves many medical considerations which include, but are not limited to, the type and severity of the disease process in question, the stability of the patient to tolerate transfer, and whether there is any reasonable expectation that intervention and treatment by the receiving physician will affect the outcome of a case being considered for transfer.
Administrative personnel at San Jacinto Methodist Hospital made suggestions to help find an accepting physician and appropriately attempted to assist Dr. James Bernick, the attending physician of Ms. Burgess, as he requested in the transfer of this patient. Both San Jacinto Methodist Hospital and The Methodist Hospital complied with the standard of care in this case.
. . . .
Further, it is my expert opinion that, based upon a reasonable degree of medical probability, no act or omission by San Jacinto Methodist Hospital or The Methodist Hospital System, or any of their respective employees or agents, caused Cheryl Ann Burgess' death.
In point of error one, appellants contend that appellees' summary judgment proof does not address all of their theories of recovery. In point of error two, appellants contend that appellees did not meet their burden of summary judgment proof to establish the standard of care. In point of error three, appellants contend that the affidavit of Dr. Stroehlein fails to negate causation because it is conclusory and unclear. In point of error four, appellants contend that a genuine issue of material fact existed precluding summary judgment. Because causation is an element common to all of appellees' theories of recovery, we will consider it first.
A summary judgment may be based on uncontroverted testimonial evidence of an interested witness, or of an expert witness as to subject matter concerning which the trier of fact must be guided solely by the opinion testimony of experts, if the evidence is clear, positive and direct, otherwise credible and free from contradictions and inconsistencies, and could have been readily controverted. Garza, 769 S.W.2d at 645; Wheeler, 707 S.W.2d at 215; Tex.R.Civ.P. 166a(c).
In a medical malpractice case, it is the plaintiff's burden to prove by competent testimony that the defendant's negligence proximately caused the plaintiff's injury. Duff v. Yelin, 751 S.W.2d 175, 176 (Tex.1988). Appellees contend that Dr. Stroehlein's affidavit testimony negated the element of causation. Dr. Stroehlein set forth the following standard of care:
When a physician determines to try to transfer a patient like Ms. Burgess, the standard of care requires the hospital personnel and administrators to assist the physician in the transfer process. The hospital is not responsible for transferring a patient to another hospital because it is the physician(s), not the hospital(s), who is/are ultimately involved in the transfer process.
Dr. Stroehlein then reviewed the acts of appellees: "Administrative personnel at San Jacinto Methodist Hospital made suggestions to help find an accepting physician and appropriately attempted to assist Dr. James Bernick, the attending physician of Ms. Burgess, as he requested in the transfer of this patient." He then concluded that "[b]oth San Jacinto Methodist Hospital and The Methodist Hospital complied with the standard *361 of care in this case." He further concluded that "based upon a reasonable degree of medical probability, no act or omission by San Jacinto Methodist Hospital or The Methodist Hospital System, or any of their respective employees or agents, caused Cheryl Ann Burgess' death." We have previously considered affidavit testimony which was virtually identical to the testimony before us.
In White v. Wah, 789 S.W.2d 312, 317 (Tex.App.Houston [1st Dist.] 1990, no writ), we affirmed a summary judgment where, after setting forth the standard of care, the defendant physician's affidavit stated, "Further, it is my expert opinion, based on a reasonable degree of medical probability, that none of the damages plaintiff now claims in his first Amended Original Petition were in any way caused by any negligent act or omission on my part." We held likewise in Wheeler, where the defendant physician's affidavit set forth the standard of care, and then concluded, "that the damages plaintiffs now complain of in their First Amended Original Petition were in no way caused by the examinations, operative procedures and treatments performed by me for Mr. Wheeler." Wheeler, 707 S.W.2d at 216.
Like the affidavits in White and Wheeler, appellees' affidavit is clear, positive, direct, credible, free from contradictions and inconsistencies, and can be readily controverted. We hold that appellees presented competent summary judgment evidence attacking causation sufficient to sustain the summary judgment. Once appellees negated, as a matter of law, an element of the cause of action, appellants had the burden of introducing evidence that raises an issue of fact with respect to the element negated by the summary judgment evidence. White, 789 S.W.2d at 318.
Appellants introduced excerpted portions of the deposition testimony of James J. Bernick, M.D. and Lisa Dever, M.D. Dr. Bernick was the primary physician for Ms. Burgess while she was a patient at San Jacinto Methodist Hospital; Dr. Dever was one of the treating physicians for Ms. Burgess while she was a patient at John Sealy Hospital. Nothing in the testimony of Dr. Bernick or Dr. Dever addresses causation, i.e., that some act or omission of appellees caused the death of Ms. Burgess. Appellant argues that a reasonable inference was raised that the "delay in obtaining a transfer had an effect on the ultimate outcome." Appellants' assertion is made, however, without any specific references to the testimony. We have reviewed the excerpted deposition testimony in its entirety, and find no fact issue regarding possible effects of a delay in transfer. Appellees' uncontroverted testimony establishes that, based on reasonable medical probability, none of appellees' acts or omissions caused Ms. Burgess' death. Wheeler, 707 S.W.2d at 218.
We find that appellees' summary judgment proof established, as a matter of law, that there is no genuine issue of fact regarding causation, an essential element in each of appellants' theories of recovery against appellees. Gibbs, 450 S.W.2d at 828. Because the trial court's order does not specify the grounds relied on for its ruling, the summary judgment is affirmed if any of the theories advanced are meritorious. Security Ins. Co., 790 S.W.2d at 410. Therefore, we need not address whether the trial court erred in granting the motion for summary judgment because appellees had no duty to secure a receiving physician or hospital.
We overrule appellants' point of error three, and points of error one, two and four to the extent they relate to causation. Because the summary judgment was proper, the trial court did not err in denying appellants' motion for new trial. Therefore points of error five through eight are overruled.
We affirm the trial court's judgment.
MIRABAL, J., dissents.
O'CONNOR, J., requested a vote to determine if the case should be heard en banc, pursuant to Tex.R.App.P. 79(d), (e) and Tex. R.App.P. 90(e).
OLIVER-PARROTT, C.J., and DUGGAN, COHEN, HUTSON-DUNN and HEDGES, JJ., voted against en banc consideration.
WILSON and ANDELL, JJ., did not participate.
*362 MIRABAL and O'CONNOR, JJ., dissented from the denial of en banc consideration and O'CONNOR, J., joins MIRABAL's, J., dissent.
MIRABAL, Justice, dissenting.
I dissent.
In this summary judgment case, the majority specifically does not decide whether a fact issue exists regarding appellees' duty in this case, or regarding whether the applicable standard of care was breached. The holding of the majority is: even if appellees breached the applicable standard of care, there was no causation of Mrs. Burgess' death as a result of that breach, as a matter of law. The majority bases this holding on the affidavit of Dr. John Stroehlein filed in support of appellees' motion for summary judgment. In my opinion, the portion of Dr. Stroehlein's affidavit dealing with causation is strictly conclusory, and therefore it is incompetent summary judgment evidence on the issue of causation.
Focusing only on the portion of Dr. Stroehlein's affidavit that deals with causation, the affidavit states:
I have reviewed the medical records of Cheryl Ann Burgess....
. . . .
[I]t is my expert opinion that, based upon a reasonable degree of medical probability, no act or omission by San Jacinto Methodist Hospital or The Methodist Hospital System, or any of their respective employees or agents, caused Cheryl Ann Burgess' death.
In my opinion, this affidavit is insufficient because it does not include the basis for the doctor's opinionit is conclusory only. The affidavit does not set out the nature of Mrs. Burgess' medical condition, either on the day she was admitted into the hospital (September 4), or on the day she was placed in intensive care and her primary care physician decided she needed to be transferred (September 6), or on the day she was transferred to a tertiary care facility (September 8), or at the time she was finally operated on (approximately midnight on September 8). We do not know if, by his affidavit testimony, Dr. Stroehlein meant that even if Mrs. Burgess had been transferred to a tertiary care facility promptly, she would have had no better chance of survival than she did when she finally received specialized care two and one-half days later. Or perhaps the doctor meant, in light of the balance of his affidavit, that because in his opinion the appellees complied with the applicable standard of care regarding transfer, no acts of negligence on their part proximately caused Mrs. Burgess' death.[1] Or perhaps Dr. Stroehlein meant that the acts or omissions of the doctors, or nurses, or the life flight helicopter crew, or someone else, caused Mrs. Burgess' death, notwithstanding any acts or omissions of the appellee hospitals and their staff. We are left completely to conjecture regarding the meaning of Dr. Stroehlein's affidavit testimony regarding causation.[2]
Conclusory statements made by an expert witness are insufficient to support summary judgment. Anderson v. Snider, 808 S.W.2d 54, 55 (Tex.1991). An expert opinion that a plaintiff suffered no damages or legal injury as a result of professional representation, without stating the basis or reasoning behind the opinion, is wholly conclusory, rendering the expert opinion incompetent to support summary judgment as a matter of law. Id. Further, if the meaning of an expert witness' statement in an affidavit is unclear with respect to the issue of in-fact causation of injury, the expert testimony does not meet the express requirement of Tex.R.Civ.P. 166a(c) that expert opinion evidence be "clear" in order to support a summary judgment. Cloys v. Turbin, 608 S.W.2d 697, 701 (Tex.Civ.App.Dallas 1980, no writ).
*363 The majority opinion in the present case cites the White and Wheeler cases in support of the conclusion that Dr. Stroehlein's affidavit is sufficient to sustain summary judgment based on lack of causation. However, White and Wheeler are distinguishable by the nature of the affidavits involved; in each case, the affiant doctor set out in detail the relevant medical history and treatment of the plaintiff patient. White v. Wah, 789 S.W.2d 312, 317 (Tex.App.Houston [1st Dist.] 1990, no writ); Wheeler v. Aldama-Luebbert, 707 S.W.2d 213, 216 (Tex.App.Houston [1st Dist.] 1986, no writ).
Because appellees did not negate the causation element of appellants' cause of action as a matter of law, we should address the other points of error to determine if appellees' other ground for summary judgment was established as a matter of law. The majority has declined to address the merits of appellants' other points of error, and I therefore also decline to do so.
O'CONNOR, J., joins this dissenting opinion.
NOTES
[1] James Bernick, M.D., James M. Strangmeier, M.D., Pamela Medellin, M.D., Farouk Bargandi, M.D., Fernando Sarti, M.D., and Obstetrical & Gynecological Associates.
[1] Appellant has specifically attacked the sufficiency of the summary judgment evidence regarding appellees' compliance with the applicable standard of care.
[2] I also note that Dr. Stroehlein's affidavit only addresses the causation of Mrs. Burgess' death. Appellants allege, under the survival cause of action, that Mrs. Burgess suffered damages before her death as a result of appellees' negligence, including physical pain, mental anguish, and emotional distress. Appellees presented no summary judgment evidence negating causation of pre-death injuries.
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338 B.R. 855 (2006)
In re Layne H. ASTLE & Carleen May Astle, Debtors.
No. 05-05706-TLM.
United States Bankruptcy Court, D. Idaho.
March 14, 2006.
*856 D. Blair Clark, Boise, ID, for Debtors.
MEMORANDUM OF DECISION
TERRY L. MYERS, Bankruptcy Judge.
BACKGROUND AND FACTS
On November 14, 2005, Layne and Carleen Astle ("Debtors") filed a "family farmer" chapter 12 petition for bankruptcy relief in order to reorganize their dairy operation in Grand View, Idaho. See Doc. No. 1.
On February 8, 2006, Debtors filed a "Motion for Determination of Utility Deposit with Idaho Power Company and for Providing Secured Credit as Assurance of Payment (11 USC § 366)." See Doc. No. 43 (the "Motion"). Debtors' Motion proposes to provide Idaho Power with a $44,162.00 first priority lien[1] in their 220 head dairy herd and receivables as a mechanism to provide adequate assurance of payment of projected 2006 post-petition utility charges. The Motion states:
This Motion is made because Idaho Power refuses to provide power to Debtors for their pumps unless Debtors prepay a deposit of $44,162. Counsel for Debtors has attempted to negotiate an arrangement with them [sic, Idaho Power] as provided in [Debtors'] budget, but Idaho Power refuses to negotiate along those lines, or along any lines that do not involve Debtors getting outside financing.
Motion at 2.
Debtors set the Motion for hearing on March 6, 2006. Though no written objection to the Motion was filed, Idaho Power's counsel appeared at that hearing and voiced an objection to the Motion and to the type of assurance of payment Debtors proposed.[2] Idaho Power argued at the hearing that it is entitled to adequate assurance of payment in the form of a cash deposit, letter of credit or surety bond, by virtue of § 366(c) of the Bankruptcy Code.[3]
Neither party submitted evidence at hearing, viewing the matter as essentially a legal question framed by Debtors' Motion and the record before the Court.[4] The Court did allow both parties an opportunity to submit post-hearing briefs, which *857 they did on March 10. See Doc. No. 68, 69.[5]
The Court concludes Debtors' Motion will be granted. The following constitute the Court's findings of fact and conclusions of law on this contested matter. See Fed. R. Bankr.P. 9014 (incorporating Fed. R. Bankr.P. 7052).
DISCUSSION AND DISPOSITION
As with most issues arising under BAPCPA, the threshold inquiry is to determine precisely what was said, and left unchanged, as Congress amended the Code.[6]
Section 366 states in full:
(a) Except as provided in subsections (b) and (c) of this section, a utility may not alter, refuse, or discontinue service to, or discriminate against, the trustee or the debtor solely on the basis of the commencement of a case under this title or that a debt owed by that debtor to such utility for service rendered before the order for relief was not paid when due.
(b) Such utility may alter, refuse, or discontinue service if neither the trustee nor the debtor, within 20 days after the date of the order for relief, furnishes adequate assurance of payment, in the form of a deposit or other security, for service after such date. On request of a party in interest and after notice and a hearing, the court may order reasonable modification of the amount of the deposit or other security necessary to provide adequate assurance of payment.
(c)(1)(A) For purposes of this subsection, the term "assurance of payment" means
(i) a cash deposit;
(ii) a letter of credit;
(iii) a certificate of deposit;
(iv) a surety bond;
(v) a prepayment of utility consumption; or
(vi) another form of security that is mutually agreed on between the utility and the debtor or the trustee.
(B) For purposes of this subsection an administrative expense priority shall not constitute an assurance of payment.
(2) Subject to paragraph (3) and (4), with respect to a case filed under chapter 11, a utility referred to in subsection (a) may alter, refuse, or discontinue utility service, if during the 30-day period beginning on the date of the filing of the *858 petition, the utility does not receive from the debtor or the trustee adequate assurance of payment for utility service that is satisfactory to the utility.
(3)(A) On request of a party in interest and after notice and a hearing, the court may order modification of the amount of an assurance of payment under paragraph (2).
(B) In making a determination under this paragraph whether an assurance of payment is adequate, the court may not consider
(i) the absence of security before the date of the filing of the petition;
(ii) the payment by the debtor of charges for utility service in a timely manner before the date of the filing of the petition; or
(iii) the availability of an administrative expense priority.
(4) Notwithstanding any other provision of law, with respect to a case subject to this subsection, a utility may recover or set off against a security deposit provided to the utility by the debtor before the date of the filing of the petition without notice or order of the court.
The words "and (c)" in § 366(a), and all of § 366(c), were added by BAPCPA; the balance previously existed. The parties focus their attention on BAPCPA's addition of § 366(c).
A. The parties' arguments
Debtors argue in their post-hearing brief, Doc. No. 69 at 2-3, that § 366(c) does not apply because this is a chapter 12, and not a chapter 11, case.[7] Alternatively, Debtors contend that, if § 366(c) does apply, their proposal of a first priority lien secured in the cattle herd and receivables is the legal and/or functional equivalent of a cash deposit or a surety bond as required by § 366(c)(1)(A)(i) or (iv).[8]
Idaho Power disagrees with this latter contention.[9] It argues that under the language of § 366(c), it is entitled to a cash deposit under § 366(c)(1)(A)(i) or one of the alternatives specifically authorized in § 366(c)(1)(A)(ii) through (v), and that no other technique or approach will satisfy its right to adequate assurance of payment.[10]
B. Section 366(c)'s provisions apply only in chapter 11
Generally, provisions found in chapter 3 of the Code apply in cases under *859 chapters 7, 11, 12 or 13. See § 103(a). However, the language of § 366(c) is itself limiting.
Section 366(c)(2) states:
Subject to paragraphs (3) and (4), with respect to a case filed under chapter 11, a utility referred to in subsection (a) may alter, refuse, or discontinue utility service if during the 30-day period beginning on the date of the filing of the petition, the utility does not receive form the debtor or the trustee adequate assurance of payment for utility service that is satisfactory to the utility.
(emphasis added). This language rather clearly makes § 366(c)(2) applicable only in chapter 11 cases.
The initial clause found in § 366(c)(2) (i.e., "Subject to paragraphs (3) and (4)") does not contradict this conclusion. First, neither paragraph (c)(3) nor (c)(4) purports to expand § 366(c)(2)'s scope beyond chapter 11; they merely qualify (c)(2)'s operation in chapter 11 cases. For example, § 366(c)(3)(A) provides a debtor with the ability to seek to modify the amount of an assurance of payment afforded a utility "under paragraph (2)." The provisions of paragraph (c)(4) address recovery or set off against a security deposit, but in no way indicate application beyond chapter 11 given (c)(4)'s limiting language "with respect to a case subject to this subsection."
Second, there is a matter of nomenclature. Section 366(c)(2) refers to "paragraphs (3) and (4)" while it refers to "subsection (a)" later in the same sentence. This leads to the conclusion that when § 366(c)(1)(A) the listing of the forms of adequate assurance debated here by the parties says "For purposes of this subsection," it is referring to subsection (c) alone. It does not state "for the purposes of this section." Nor does it state "for the purposes of subsection (b)." So a dispute over whether a proffered form of adequate assurance falls within the list in § 366(c)(1)(A) would be misplaced unless the case is one that falls under subsection (c) in the first place. As § 366(c)(1)(A) and (c)(2) together indicate, these are only chapter 11 cases.[11]
The Court is thus persuaded by statutory structure and language to conclude that all of subsection (c) applies only in chapter 11 cases and, to the precise point at issue in the present case, the specification of acceptable forms of adequate assurance of payment found in § 366(c)(1)(A) applies only in chapter 11 cases. Accord In re Lucre, Inc., 333 B.R. 151, 153 (Bankr. W.D.Mich.2005) (stating that "[s]ubsection (c) applies to all Chapter 11 cases filed after October 16, 2005");[12]see also Richard Levin & Alesia Ranney-Marinelli, The Creeping Repeal of Chapter 11: The Significant Business Provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, 79 Am. Bankr.L.J. 603, 608 n. 14 (2005).
*860 While this conclusion is driven by the plain language of the Code, the Court acknowledges another indication of possible Congressional intent. In reference to BAPCPA, Congress stated that:
Section 417 amends section 366 of the Bankruptcy Code to provide that assurance of payment, for purposes of this provision, includes a cash deposit, letter of credit, certificate of deposit, surety bond, prepayment of utility consumption, or other form of security that is mutually agreed upon by the debtor or trustee and the utility. It also specifies that an administrative expense priority does not constitute an assurance of payment.
H.R.Rep. No. 109-31, at 89 (2005), U.S.Code Cong. & Admin.News 2005, pp. 88, 155 (emphasis added).
This excerpt might suggest that Congress intended to restrictively define assurance of payment for the whole of § 366. It depends on whether the word "provision" refers to section 417 of the legislation or to § 366 of the Code. But as enacted, BAPCPA provided a definition of adequate assurance applicable only to "subsection" (c).
Recourse to legislative history when the language of the Code is otherwise capable of a plain reading is debatable. See Lamie, 540 U.S. at 536, 124 S. Ct. 1023 ("We should prefer the plain meaning [of the Code] since that approach respects the words of Congress. In this manner we avoid the pitfalls that plague too quick a turn to the more controversial realm of legislative history."); Exxon Mobil Corp. v. Allapattah Servs., Inc., ___ U.S. ___, 125 S. Ct. 2611, 2626, 162 L. Ed. 2d 502 (2005) ("As we have repeatedly held, the authoritative statement is the statutory text, not the legislative history or any other extrinsic material. Extrinsic materials have a role in statutory interpretation only to the extent they shed a reliable light on the enacting Legislature's understanding of otherwise ambiguous terms. . . . [L]egislative history is itself often murky, ambiguous, and contradictory. Judicial investigation of legislative history has a tendency to become, to borrow Judge Leventhal's memorable phrase, an exercise in `looking over a crowd and picking out your friends.'" (citations omitted)). Section 366(c)'s language and meaning are plain enough, therefore the Court does not rely on this legislative history.
Since this is a chapter 12 case, the Court concludes Debtors must provide adequate assurance of payment pursuant to § 366(b); they need not torture the language of subsection (c) to make their proposal fit.[13]
C. Debtors have offered adequate assurance of payment
Under § 366(b), adequate assurance of payment must be "in the form of a *861 deposit or other security." Section 366(b) (emphasis added).[14] In determining if a debtor has provided adequate assurance of payment to a utility, the Court is "afforded significant discretion" and must look at the facts of the case. Virginia Elec. & Power Co. v. Caldor, Inc., 117 F.3d 646, 650 (2d Cir.1997);[15]In re Utica Floor Maint., 25 B.R. 1010, 1016 (N.D.N.Y.1982) (noting that "every § 366 proceeding must be decided upon its unique facts and the ultimate finding by the Court must be that the utility involved has or has not been provided with adequate assurance of payment.").
Adequate assurance of payment under subsection (b) "does not require an absolute guarantee of payment. What is required is that the utility will be protected from unreasonable risk of nonpayment." Utica Floor, 25 B.R. at 1014 (quotations omitted); Steinebach, 303 B.R. at 641 (noting that adequate assurance does not mean absolute assurance); In re Santa Clara Circuits W., Inc., 27 B.R. 680, 684-86 (Bankr.D.Utah 1982) (discussing alternatives and types of "other security" available).
In this case, Debtors propose to provide Idaho Power with a first position, secured lien in the amount of $44,162.00 in the herd valued by Debtors at approximately $390,000.00 and in receivables. In addition, Debtors' budget shows an ability to make the scheduled payments to Idaho Power, see Motion at Ex. 1 and see Doc. No. 49, and the chapter 12 Trustee has approved the feasibility of the suggested approach, see Doc. No. 56.
To be sure, Idaho Power focused its argument on subsection (c) as added by BAPCPA, and it did not focus on the pre-BAPCPA provisions in subsection (b). Still, even when Idaho Power's critique of Debtors' proposal is read generously, the Court cannot conclude that Idaho Power has effectively challenged the proposed first priority lien on Debtors' dairy herd and receivables as not qualifying as "other security" providing it with "adequate assurance" of payment under § 366(b).
CONCLUSION
Based on this record and considering the matter under § 366(b), not § 366(c), this Court conclude that Debtors' proposed lien meets the requirements of the Code and provides Idaho Power with adequate assurance of payment for post-petition services.
Debtors' Motion will therefore be granted. Debtors shall submit an appropriate form of order.
NOTES
[1] Secured creditor J.R. Simplot Co. agreed to subordinate its first priority position in the collateral to the proposed lien in favor of Idaho Power. This was confirmed by that creditor's counsel at hearing. Debtors' assertion that the herd is worth almost $400,000.00 was uncontested.
[2] Debtors' assertions at hearing that they were "surprised" by Idaho Power's appearance and objection were irrelevant. Nothing in the Motion, notice of hearing, or the Local Bankruptcy Rules operated to suggest that a prior written response was required. And, if relevant, the assertions were unconvincing given the language of Debtors' Motion quoted above.
[3] All citations herein are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, as amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub.L. No. 109-8, 119 Stat. 23 (2005) ("BAPCPA"), since this case was filed after BAPCPA's October 17, 2005, effective date.
[4] The Court takes judicial notice of its files and records. Fed.R.Evid. 201.
[5] Debtors also submitted post-hearing affidavits of Debtor Layne Astle and Debtors' counsel. See Doc. Nos. 70, 71. Such submissions were not authorized by this Court, nor would they be an appropriate method of addressing disputed facts. See Fed. R. Bankr.P. 9014(d); Local Bankruptcy Rule 9014.1. The factual assertions in the affidavits have therefore not been considered.
[6] This approach is driven by the consistent command that the Court defer to the language of the Code and to follow its "plain meaning." See Lamie v. United States Trustee, 540 U.S. 526, 534-36, 124 S. Ct. 1023, 157 L. Ed. 2d 1024 (2004); Duncan v. Walker, 533 U.S. 167, 174, 121 S. Ct. 2120, 150 L. Ed. 2d 251 (2001) (noting that it is the court's duty "to give effect, if possible, to every clause and word of a statute" (internal quotations omitted)); Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6, 120 S. Ct. 1942, 147 L. Ed. 2d 1 (2000) (stating that the court's role is to enforce the text according to its terms when the language is plain); Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438, 119 S. Ct. 755, 142 L. Ed. 2d 881 (1999) (stating that the court must start its analysis with the existing statutory text); United States v. Ron Pair Enters., 489 U.S. 235, 242, 109 S. Ct. 1026, 103 L. Ed. 2d 290 (1989).
[7] This argument was not advanced in the Motion, or at the hearing. The Motion asserted that the arrangement was proposed under " § 366(b)(3)(A)." Motion at 3. As § 366(b)(3)(A) does not exist, it was read by the Court as a reference to § 366(c)(3)(A), and Debtors' arguments at hearing confirmed that interpretation.
[8] Debtors also suggested that because Idaho Power was served with the Motion and did not file an objection prior to hearing, it had "agreed" to the proposal and thus § 366(c)(1)(A)(vi) (authorizing adequate assurance "that is mutually agreed on") was satisfied. The contention was not at all persuasive, and not only because it was inconsistent with the above quoted language of Debtors' own Motion.
[9] Neither Idaho Power's oral nor written arguments considered the question of whether § 366(c) might not be applicable to chapter 12.
[10] Idaho Power also cites its own regulatory tariffs as authority for the proposition that only cash deposits and letters of credit are acceptable forms of adequate assurance of payment. It does not address whether § 366 preempts the allegedly controlling effect of the tariffs or whether the tariffs themselves acknowledge that a court of competent jurisdiction can prescribe some other form of assurance of payments. See Adelphia Bus. Solutions, Inc., 280 B.A. 63, 80 (Bankr.S.D.N.Y. 2002) (noting that when a bankruptcy court is determining adequate assurance of payment under § 366, it is not bound by local or state tariff regulations).
[11] Additional support for this reading comes from the opening clause of § 366(a) which states "Except as provided in subsections (b) and (c) of this section. . . ." This shows that Congress knew how to refer to the entire section when intended. It also shows that subsections (b) and (c) are coequal, and both provide exceptions to or limits upon subsection (a). The rub is that subsection (c) internally and intentionally refers to and limits its application to chapter 11 cases, while subsection (b) contains no limits on the chapter(s) to which it is applicable. Accord Steinebach v. Tucson Elec. Power Co. (In re Steinebach), 303 B.R. 634, 641 (Bankr.D.Ariz.2004) (applying § 366(b) to chapter 13 consumer debtors).
[12] Tilt. Court notes, however, that Lucre was not presented with the question raised here as to whether § 366(c) applies in other than chapter 11 uses.
[13] Torture it they do. Their arguments that a lien, which secures a debtor's promise to pay, is the equivalent in a legal or economic sense of providing the utility a letter of credit or a cash deposit or a surety bond are strained and unconvincing. So, too, are their arguments that the listing of acceptable forms of assurance in § 366(c)(1)(A) should not be viewed as exclusive. See Doc. No. 69 at 4-5, 10. This subsection says that "the term `assurance of payment' means" and not "the term `assurance of payment' includes." The difference is telling. Section 102(3) establishes that the words "includes" and "including" when used in the Code are not limiting, and courts have thus read Code provisions with lists following the word "including" (such as those in § 1112(b)(4) and § 1307(c)) as nonexclusive. But, unlike those provisions, the term "includes" does not appear in § 366(c)(1)(A).
[14] Since BAPCPA did not amend § 366(b), the case law interpreting that subsection is still applicable. See, e.g., Lorillard v. Pons, 434 U.S. 575, 580, 98 S. Ct. 866, 55 L. Ed. 2d 40 (1978) ("Congress is presumed to be aware of an administrative or judicial interpretation of a statute and to adopt that interpretation when it re-enacts a statute without change. . . . ")
[15] Caldor validates an administrative expense priority as sufficient assurance of payment in a chapter 11 case. However, the exclusion found in § 366(c)(1)(B) and the instruction contained in § 366(c)(3)(B)(iii) effectively overrule that aspect of Caldor in chapter 11 cases.
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338 B.R. 618 (2006)
In re CHI-CHI'S, INC., et al., Debtors.
Sysco Corporation and The SYGMA Network, Inc., Plaintiffs,
v.
Chi-Chi's, Inc., Defendant.
Bankruptcy No. 03-13063, Adversary No. 05-52726.
United States Bankruptcy Court, D. Delaware.
January 18, 2006.
*619 Bruce Grohsgal, Laura Davis Jones, Sandra G. McLamb, Rachel Lowy Werkheiser, Pachulski, Stang, Ziehl, Young, *620 Jones, Frederick B. Rosner, Jaspen Schlesinger Hoffman, Wilmington, DE, for Debtors.
MEMORANDUM OF OPINION AND ORDER
RANDOLPH BAXTER, Bankruptcy Judge.
Before the Court is the complaint of Sysco Corporation and the SYGMA Network (collectively, "Sysco") seeking to enjoin the Debtor Chi-Chi's Inc. ("Chi-Chi's") from initiating, continuing, and/or participating in any additional actions, including arbitration, against them in connection with certain hepatitis claims.
The Court acquires core matter jurisdiction over this proceeding pursuant to 28 U.S.C. §§ 157(a), (b) and 1334(b). Upon an examination of the parties' respective briefs and supporting documentation, and after conducting a trial on the matter, the following findings of fact and conclusions of law are hereby rendered:
*
1. Factual History
The present action arises out of a November 2003 outbreak of Hepatitis A illnesses attributed to the consumption of certain contaminated green onions at a Chi-Chi's restaurant in Monaca, Pennsylvania. The outbreak caused at least four deaths, and at least 650 illnesses. Chi-Chi's alleges that Sysco was the supplier of the contaminated onions. Sysco, in turn, allegedly obtained the onions from Castellini Company, LLC ("Castellini").
Bodily injury claimants have filed several hundred claims and/or complaints against Chi-Chi's (collectively, the "Hepatitis Claims"). To date, Chi-Chi's, through its own funds and those of its liability insurers, has paid approximately $31,000,000 in damages. Empire Indemnity Insurance Company ("Empire"), one of Chi-Chi's liability insurers, has paid, or will pay out, some $10,000,000 ("Empire costs").[1] Chi-Chi's also alleges that it has suffered its own damages of more than $30,000,000, including lost profits, property damage, self-insurance costs, indemnification, and other outbreak related costs (collectively, "lost profits damages").
2. Procedural History
a. Chi-Chi's Action
In July 2004, Chi-Chi's filed an adversary proceeding in this Court against Sysco and Castellini (the "Chi-Chi's Action"). Castellini informed Chi-Chi's of its intention to demand a jury trial and to seek withdrawal of the District Court's reference. Chi-Chi's also asserts that Sysco indicated a desire to submit the matter to arbitration, pursuant to the Distribution Service Agreement executed by the parties. For these reasons, on November 12, 2004, Chi-Chi's filed 1) a stipulation of dismissal as to defendant Castellini, so that Chi-Chi's could initiate an action against Castellini in the United States District Court for the Central District of California ("California District Court"), and 2) a notice of dismissal as to defendants Sysco and SYGMA, allegedly upon Sysco's suggestion that they would pursue resolution of the dispute through arbitration.
On November 22, 2004, Chi-Chi's filed a complaint in the Central District of California against Castellini. On June 1, 2005, the California District Court abstained from hearing the matter pursuant to 28 U.S.C. § 1334(c)(1). On June 6, 2005, Chi-Chi's reified its complaint against Castellini in the United States District Court for the Western District of Pennsylvania *621 ("Pennsylvania District Court") as a third-party complaint in a bodily injury case filed against Chi-Chi's.[2] On October 7, 2005, the Pennsylvania District Court, citing the first filed rule, granted Castellini's motion to dismiss Chi-Chi's third party complaint in favor of the action currently pending in this Court prosecuted by Empire against Castellini (see below).
On September 8, 2005, Chi-Chi's filed an arbitration claim against Sysco with ADR Options in Philadelphia, Pennsylvania.
b. Empire Action
On November 16, 2004, Empire filed, as a real party in interest, its own adversary action in this Court (the "Empire Action"). Empire, naming Chi-Chi's as the plaintiff in the adversary action, noted that the complaint was filed by Empire, as subrogee of Chi-Chi's.[3] The complaint was brought by Empire's own litigation counsel. The complaint in the Empire Action is nearly word-for-word identical to the complaint in the Chi-Chi's Action.
Similar to the Chi-Chi's Action, Sysco also allegedly indicated to Empire that it would seek to invoke the mandatory arbitration provision contained in the Distribution Service Agreement. Accordingly, on December 7, 2004, Empire filed a notice of dismissal of its complaint, without prejudice, as to Sysco and SYGMA. Empire's complaint alleging claims against Castellini remains pending at this time.
* *
The Court must determine whether 41(a)(1) bars Chi-Chi's from bringing an arbitration claim and/or other proceedings against Sysco. Under the two dismissal rule, "if the plaintiff invokes Rule 41(a)(1) a second time for an `action based on or including the same claim,' the action must be dismissed with prejudice." Radogna v. Ashland, Inc., 2005 WL 736599, *1 n. 2 (E.D.Pa.2005) (citing Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 394, 110 S. Ct. 2447, 110 L. Ed. 2d 359 (1990)). The Court must determine whether Chi-Chi's is barred by Federal Rule of Civil Procedure 41(a)(1) from pursuing arbitration, as well as all other actions. Rule 41 states, in relevant part:
(a) Voluntary Dismissal: Effect Thereof.
(1) By Plaintiff; by Stipulation. . . . Unless otherwise stated in the notice of dismissal or stipulation, the dismissal is without prejudice, except that a notice of dismissal operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in any court of the United States or of any state an action based on or including the same claim.
FED.R.CIV.P. 41(a)(1).
Because it operates as an adjudication on the merits, the two dismissal rule has been strictly construed. E.g., Manze v. State Farm Ins. Co., 817 F.2d 1062, 1066 (3d Cir.1987) ("several other courts of appeals have strictly interpreted Rule 41(a)(1)"); Janssen v. Harris, 321 F.3d 998, 1001 (10th Cir.2003); Sutton Place Development Co. v. Abacus Mortg. Inv. Co., 826 F.2d 637, 640 (7th Cir.1987) ("We should be especially careful not to extend the scope of such a narrow exception when the purpose for the exception would not be served."); Seippel v. Jenkens & Gilchrist, P.C., 2004 WL 2809205, *1 (S.D.N.Y.2004); Muzikowski v. Parmount Pictures Corp., 2003 WL 22872117, *3 (N.D.Ill.2003); Kuhn v. Williamson, 122 F.R.D. 192, 195 (E.D.N.C.1988) ("Since the two dismissal *622 rule is in derogation of previously existing right and thus is to be strictly construed . . . ").
Sysco argues that arbitration, as well as all other actions against Sysco, should be enjoined because the two dismissal rule prohibits Chi-Chi's from bringing a third action in connection with the Hepatitis Claims. Sysco argues that two dismissals have already occurred: 1) the Chi-Chi's Action, which was dismissed by notice as to Sysco and SYGMA on November 12, 2004, and 2) the Empire Action, which was also dismissed by notice as to Sysco and SYGMA on December 7, 2004. Therefore, pursuant to Rule 41(a)(1), the Empire Action would serve as an adjudication on the merits, and Chi-Chi's should be enjoined from pursuing arbitration at this stage.
As the party seeking to invoke Rule 41(a)(1), Sysco bears the burden of proving the applicability of the two dismissal rule by a preponderance of the evidence. Marques v. Federal Reserve Bank of Chicago, 286 F.3d 1014, 1017 (7th Cir. 2002) (placing the burden under Rule 41(a)(1) on the defendant, "since it is the defendant that is asserting the right to prevent the plaintiff from dismissing the suit.").
* * *
Initially, Sysco asserts that if applicable, this Court has the authority to enjoin arbitration proceedings in order to enforce Rule 41(a)(1). This assertion is not' disputed by Chi-Chi's, since Chi-Chi's believes that Rule 41(a)(1) is inapplicable. Sysco argues that pursuant to Rule 41(a)(1), the dismissal of the Empire Action in this Court would operate as an adjudication on the merits of Chi-Chi's complaint. In the event that this Court determines that Rule 41(a)(1) would apply in this manner, this Court would have the power to enjoin arbitration in order to protect its prior judgment. See John Hancock Mut. Life Ins. Co. v. Olick, 151 F.3d 132, 138 (3d Cir.1998) ("[A] realistic concern for the finality and integrity of judgments would arise if parties were free to ignore federal court decisions that have conclusively settled claims or issues now sought to be arbitrated. . . . When a federal court is presented with the contention that a prior federal judgment determined issues now sought to be relitigated in an arbitral forum it must first determine the effect of the judgment."); In re American Honda Motor Co., Inc., Dealerships Relations Litigation, 315 F.3d 417, 443 (4th Cir.2003).
* * * *
The express language of Rule 41(a)(1) requires that the second action be filed by a "plaintiff who has once dismissed." The Court must determine whether the Chi-Chi's Action and the Empire Action were filed by the same real party in interest.
The complaints in both actions are captioned with Chi-Chi's as the named plaintiff. The fact that the same plaintiff is named in the case caption, however, is not sufficient, alone, to invoke the two dismissal rule. The Empire complaint states that it was filed by Empire, as subrogee of the Debtor.[4] At oral argument the Court noted, and counsel for Sysco acknowledged, that it is not uncommon for a subrogated action by an insurer to be captioned in the name of the insured.[5]Michigan Alkali Co. v. Bankers Indemnity Ins. Co., 103 F.2d 345, 348 (2d Cir.1939) ("Even when a suit is for the benefit of an insurer, it may be brought in the insured's name."); see *623 also Link Aviation, Inc. v. Downs, 325 F.2d 613, 615 (D.C.Cir.1963) ("We are of like opinion, that is to say that though brought in the name of the insureds, this suit was not a nullity, since, as we hold, it was brought for the use of the real parties in interest."); In re Profile Systems, Inc., 1996 WL 26258, *6 n. 2 (Bankr.D.Minn. 1996) ("[S]ubrogation claims are generally brought in the name of the insured rather than the insurer so that the controversy appears as a dispute between the insured and third parties. When, such as in this case, an insurer has paid only part of the loss and the insured continues to have a beneficial interest in the cause of action, such a practice can be further justified.").
Similarly, "the two-dismissal rule should not be defeated by a change in the nominal parties, without a change in the real party in interest." Poloron Prods. Inc. v. Lybrand Ross Bros. & Montgomery, 66 F.R.D. 610, 614 (S.D.N.Y.1975) (hereinafter "Poloron I"), rev'd on other grounds, 534 F.2d 1012 (2d Cir.1975) (hereinafter "Poloron II"). In Poloron I, the district court found that three separate actions, although involving nominally different plaintiffs, were filed by the same real party in interest, and therefore the two dismissal rule could be applied.[6]
Therefore, the Court must determine whether the Chi-Chi's Action and the Empire Action were brought by the same real parties in interest. It is clear in this case, however, that Empire and Chi-Chi's are separate real parties as required by the two dismissal rule. Empire seeks to assert its own rights, as subrogee. It is well settled that where there is partial subrogation, both the insured and the insurer are real parties in interest. Virginia Elec. & Power Co. v. Westinghouse Elec. Corp., 485 F.2d 78, 84 (4th Cir.1973) (citing United States v. Aetna Casualty & Surety Co., 338 U.S. 366, 381-82, 70 S. Ct. 207, 94 L. Ed. 171 (1949)) ("Where there is partial subrogation, there are two real parties in interest under Rule 17."); Gannett v. Pettegrow, 224 F.R.D. 293, 294 (D.Me.2004) (citing State Farm Mut. Liab. Ins. Co. v. United States, 172 F.2d 737, 739 (1st Cir. 1949)); Hancotte v. Sears, Roebuck & Co., 93 F.R.D. 845, 846 (E.D.Pa.1982) ("It is settled law that an insurer, whether it has paid all of the loss or only part of the loss, is a real party in interest under Rule 17(a)."); St. Paul Fire & Marine Ins. Co. v. Peoples Natural Gas Co., 166 F. Supp. 11, 12 (W.D.Pa.1958) ("a partial subrogee may maintain an action in a federal court alone without joining other real parties in interest, i.e., the indemnitee and other subrogees."). Further, there has been no allegation that Empire is in privity with Chi-Chi's, or that Chi-Chi's assigned its rights to Empire.
At oral argument, Sysco argued that an insured may have the right to pursue the entire claim, citing Catalfano v. Higgins, 188 A.2d 357 (Del.1962).[7] This proposition, while uncontroversial, is misguided. The fact that Chi-Chi's may have been able to pursue the entire claim, does not mean that Chi-Chi's did, in fact, pursue the entire claim. E.g., Virginia Elec. & Power Co. v. Westinghouse Elec. Corp., 485 F.2d 78, 84 (4th Cir.1973) ("Either party may bring suit-the insurer-subrogee to the extent it has reimbursed the subrogor, or the subrogor for either the entire loss or only its unreimbursed loss."). The two dismissal *624 rule does not operate as an adjudication on the merits for any claims that Chi-Chi's could have brought, but operates only on causes of action which were actually pursued by Chi-Chi's. Accordingly, it is hereby determined that the Chi-Chi's and Empire Actions were not filed by the same plaintiff. Thusly, the two dismissal rule is inapplicable.
* * * * * *
Because the two actions were not brought by the same plaintiffs, it is unnecessary to make a determination on whether the other requirements of the two dismissal rule have been met. As determined above, it is an unsupported contention that the Chi-Chi's Action and the Empire Action involve the same claims. It is true that the Chi-Chi's complaint and the Empire complaint arise from the same underlying facts, the hepatitis outbreak. Chi-Chi's, however, seeks recovery for lost profits, and other amounts paid in connection with the hepatitis claims. Empire seeks only to recover part or all of the $10,000,000 that it paid as Chi-Chi's insurer. Empire cannot, and does not, seek to recover for Chi-Chi's lost profits, and brings its own, distinct, causes of action. See Jackson Nat. Life Ins. Co. v. Greycliff Partners, Ltd., 226 B.R. 407, 417 (E.D.Wis. 1998) ("The argument is meritless because the two Delaware actions do not involve the same claims. . . . Thus, the actions were brought by legally-distinct plaintiffs asserting two completely different sets of legal rights."). The fact that Empire chose to use language in its complaint that is quite similar to Chi-Chi's complaint is insufficient, alone, to place the actions within the scope of the two dismissal rule.
Second, even though both dismissals were accomplished by notice as to Sysco, courts have declined to apply the two dismissal rule under similar circumstances. Chi-Chi's alleges that its complaint was allegedly dismissed due to Chi-Chi's belief that Sysco would seek arbitration. As stated by the District of Puerto Rico in Island Stevedoring:
Even were we to find that the second dismissal was voluntary or by notice as required by the language of Rule 41(a)(1), we would still find the two dismissal rule inapplicable. A second dismissal as contemplated by this provision preceded by a dismissal by stipulation knowingly consented to by all the parties does not trigger the two dismissal rule. The rationale for this exception stems from the underlying policy of the rule. The primary purpose of the "two dismissal" rule is to prevent an unreasonable use of the plaintiffs unilateral right to dismiss an action prior to the filing of defendant's responsive pleading. However, the danger of abuse of this right lessens when the original dismissal stems from mutual agreement.
While the parties did not file a formal stipulation, the record in the case clearly indicates that the first dismissal resulted from negotiations and a consent agreement among the parties. BORDELON, however, by insisting on a formal stipulation, asks this court to swear allegiance to the language of Rule 41(a)(1) at the expense of its underlying policy. This we refuse to do.
. . . Consequently, we find that the first dismissal was in essence, if not in form, by stipulation. The two dismissal rule, therefore, does not apply.
Island Stevedoring, Inc. v. Barge CCBI, 129 F.R.D. 430, 432 (D.P.R.1990); TCW Special Credits v. FISHING VESSEL CHLOE Z, 2000 WL 1277922, *2 (9th Cir. 2000) (holding that although a prior dismissal "was not formally `stipulated,' it was not unilateral as all parties tacitly agreed to the dismissal in favor of litigating the action" elsewhere, and that there was "no *625 evidence that the filings and dismissals were part of a strategy to harass" the defendant); Ater ex rel. Ater v. Follrod, 238 F. Supp. 2d 928, 953-54 (S.D.Ohio 2002) (finding that application of the two dismissal rule was not warranted because the "dismissals were not completely unilateral, and there is no evidence in the record that Plaintiffs acted with the intent of harassing Defendants.").
* * * * * *
Further, the purpose of the two dismissal rule would not be served if applied in this instance. "The purpose of the two dismissal' rule, `pointed out in numerous decisions, is to prevent unreasonable abuse and harassment,' `by plaintiff securing numerous dismissals without prejudice.'" E.g., Sutton Place Development Co. v. Abacus Mortg. Inv. Co., 826 F.2d 637, 640 (7th Cir.1987) (citations omitted); ASX Inv. Corp. v. Newton, 183 F.3d 1265, 1268 (11th Cir.1999) (citing Poloron II, 534 F.2d at 1017) ("[T]he primary purpose of the `two dismissal' rule is to prevent an unreasonable use of the plaintiff's unilateral right to dismiss an action prior to the filing of the defendant's responsive pleading."); American Cyanamid Co. v. McGhee, 317 F.2d 295, 297-98 (5th Cir. 1963); Western Group Nurseries, Inc. v. Ergas, 211 F. Supp. 2d 1362, 1370 (S.D.Fla. 2002) ("The purpose of the two dismissal rule is to prevent duplicative, wasteful and harassing litigation."). There has been no allegation or indication from the record that Chi-Chi's actions have been taken in bad faith to harass Sysco, or to otherwise abuse the judicial system. The record does not reflect whether Sysco filed a responsive pleading in any of the subject proceedings. While the two dismissal rule exists to protect Sysco from harassment, it would not be served by penalizing Chi-Chi's for the unilateral decisions of Empire to bring an action against Sysco and Castellini, inserting Chi-Chi's as the nominal plaintiff, and incorporating the language of the complaint in the Chi-Chi's Action. Empire is represented by separate counsel, which has acted to protect its own interests without the consultation or collaboration of Chi-Chi's. Instead, application of the two dismissal rule would serve to operate as an adjudication on the merits of Chi-Chi's claim, leaving Chi-Chi's without its first opportunity to litigate its claims. See Poloron II, 534 F.2d at 1017 ("Where the purpose behind the two dismissal' exception would not appear to be served by its literal application, and where that application's effect would be to close the courthouse doors to an otherwise proper litigant, a court should be most careful not to construe or apply the exception too broadly.").
Sysco also notes that Chi-Chi's arguments would allow Sysco to be sued by Chi-Chi's, and then individually by each of Chi-Chi's insurers and creditors. Other protections, however, exist to protect Sysco against this hypothetical scenario. Sysco's arguments may have been more persuasive in a motion seeking to join Empire or Chi-Chi's as a necessary party. Arkwright-Boston Mfrs. Mut. Ins. Co. v. City of New York, 762 F.2d 205, 209 (2d Cir. 1985) ("In a subrogation case the insurer and the insured are `necessary' parties, but clearly they are not indispensable parties."); St. Paul Fire & Marine Ins. Co. v. Peoples Natural Gas Co., 166 F. Supp. 11, 12 (W.D.Pa.1958) (citing Yorkshire Ins. Co. v. United States, 171 F.2d 374 (3d Cir. 1948)) ("the defendant is protected from a multiplicity of suits by its opportunity under the rules to join the necessary parties."). Neither Sysco nor Castellini filed motions seeking to join Empire or Chi-Chi's as necessary parties in either action. Accordingly, Sysco cannot now attempt to utilize Rule 41(a)(1) to extinguish Chi-Chi's ability to litigate its claims.
* * * * * *
*626 Sysco also cites language contained in the order of the Pennsylvania District Court, which states that
In addition to both claims being brought solely in the name of Chi-Chi's, Inc., both assert the "same rights" through the same six contractually based theories of recovery, both assert the "same facts" and claim the same harm, and both demand the same "relief" from Castellini. The Court, therefore, concludes that pursuant to the first filed rule, the Third-Party Complaint filed against Castellini in this Court should be dismissed.
Funkhouser v. Chi-Chi's Inc., 2005 WL 2545300, at *2 (W.D.Pa.2005) (citations omitted). Initially, it should be noted that the Pennsylvania District Court found only that under the first filed rule, the suits were both brought solely in the name of Chi-Chi's. It did not make a determination as to the real party in interest in each action, as required by the two dismissal rule. The findings of the Pennsylvania District Court, moreover, were made under different procedural circumstances, and are not necessarily binding in this matter. Further, the preclusive effect of the Pennsylvania District Court's findings may be defeated where the difference in legal standards applied are significantly different. E.g., Raytech Corp. v. White, 54 F.3d 187, 191 (3d Cir.1995) ("To defeat a finding of identity of the issues for preclusion purposes, the difference in the applicable legal standards must be `substantial.'"); Peterson v. Clark Leasing Corp., 451 F.2d 1291 (9th Cir.1971) ("Issues not identical [for collateral estoppel purposes] if the second action involves application of a different legal standard, even though the factual setting of both suits be the same.").
"The first-filed rule is a judicial construct aimed at conserving judicial resources and safeguarding litigants by preventing concurrent duplicative litigation of the same issues between the same parties in more than one federal court." APV North America, Inc. v. Sig Simonazzi North America, Inc., 295 F. Supp. 2d 393, 396 (D.Del.2002). As stated by the Pennsylvania District Court, the "first-filed rule has been employed by the courts in the Third Circuit to enjoin, where appropriate, `the subsequent prosecution of similar cases . . . in different federal district courts.'" Funkhouser, 2005 WL 2545300 at *1 (quoting EEOC v. University of Pennsylvania, 850 F.2d 969, 971 (3d Cir. 1988)); Hay Acquisition Co., I, Inc. v. Schneider, 2005 WL 1017804, *12 (E.D.Pa. 2005); see also Ellenby Technologies, Inc. v. AT Systems Inc., 2002 WL 356686, *2 (D.Del.2002) (the first filed rule applies "where two federal courts have concurrent jurisdiction over sufficiently similar issues and parties."). "The decision to invoke the first-filed rule is an equitable determination that is made on a case-by-case, discretionary basis." Nutrition & Fitness, Inc. v. Blue Stuff, Inc., 264 F. Supp. 2d 357, 360 (W.D.N.C.2003). The Pennsylvania District Court made a determination based on considerations of judicial economy and convenience that the plaintiffs in the actions were sufficiently similar to invoke the first-filed rule. Accordingly, Chi-Chi's third party complaint was dismissed in favor of the Empire Action being prosecuted in this Court against Castellini.
The legal standards applied under the first-filed rule are significantly different from the requirements under Rule 41(a)(1). As noted above, because it operates as an adjudication on the merits, the two dismissal rule is a statutory rule that has been strictly construed. Adherence to the statutory language of Rule 41(a)(1) overrides a doctrine judicially created for reasons of convenience and economy. See Applied Concepts, Inc. v. Olympia Indus., Inc., 15 Fed.Appx. 793, 799 (Fed.Cir.2001) *627 ("Moreover, the judicially created doctrine of claim differentiation cannot override the statutory requirements of § 112. . . ."); Coohey v. U.S., 172 F.3d 1060, 1063 (8th Cir.1999) ("These provisions override and displace judicially-created doctrines in cases where the statutory provisions apply."). The Pennsylvania District Court's findings should not be given preclusive effect in this proceeding, where the policy of the two dismissal rule would not be served, and the narrow requirements of Rule 41(a)(1) are not present. See Bath Iron Works Corp. v. Director, Office of Workers' Compensation Programs, U.S. Department of Labor, 125 F.3d 18, 22 (1st Cir.1997) ("Certainly a difference in the legal standards pertaining to two proceedings may defeat the use of collateral estoppel. . . . But this is so only where the difference undermines the rationale of the doctrine."); Copeland v. Merrill Lynch & Co., Inc., 47 F.3d 1415, 1422 (5th Cir.1995) (citing Brister v. A.W.I., Inc., 946 F.2d 350, 354 & n. 1 (5th Cir.1991)) ("[E]ven when issues are stated in `nearly identical language,' collateral estoppel is unavailable when there are disparate policies underlying each inquiry which result in definite differences in application and result."); City of Cleveland v. Cleveland Elec. Illuminating Co., 538 F. Supp. 1227, 1231 n. 3 (N.D.Ohio 1980) ("Where, as here, the legal standards of two statutes are significantly different, the decision of issues under one statute does not give rise to collateral estoppel in the litigation of similar issues under a different statute.").
* * * * * *
Sysco has not met its burden of showing that Rule 41(a)(1) should be applied to bar Chi-Chi's arbitration claim, since this case involves separate real parties in interest, represented by separate counsel, prosecuting distinct causes of action. Accordingly, judgment is hereby rendered in favor or Debtor-Defendant Chi-Chi's, and the complaint is hereby DISMISSED. Each party is to bear its respective costs.
IT IS SO ORDERED.
NOTES
[1] Empire Response, at 2.
[2] Funkhouser v. Chi-Chi's, 05-cv-00638, (W.D.Pa.) (McVerry, J.).
[3] Empire Complaint, at 1 n. 1.
[4] Empire Complaint, at 1 n. 1.
[5] Transcript of November 16, 2005 Hearing, at 10.
[6] Poloron I was reversed by the Second Circuit in Poloron II on the basis that a stipulated dismissal did not operate as a first "strike" under the two dismissal rule. Poloron II, 534 F.2d at 1017-18. In this case, both actions were dismissed by notice as to Sysco and SYGMA.
[7] Transcript of November 16, 2005 Hearing, at 9.
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635 A.2d 948 (1993)
Gerald OTTINGER, et al.
v.
SHAW'S SUPERMARKETS, INC.
Supreme Judicial Court of Maine.
Submitted on briefs November 5, 1993.
Decided December 23, 1993.
*949 Gerald L. Ottinger, pro se.
Peter B. LaFond, Jensen, Baird, Gardner & Henry, Portland, for defendant.
Before ROBERTS, GLASSMAN, CLIFFORD, COLLINS and RUDMAN, JJ.
CLIFFORD, Justice.
Plaintiffs Gerald and Debra Ottinger appeal from a summary judgment entered in the Superior Court (York County, Cole, J.) for the defendant, Shaw's Supermarkets, Inc., on the Ottingers' negligence claim. Finding no error, we affirm the judgment.
Viewed in the light most favorable to the plaintiffs, the facts before the Superior Court may be summarized as follows. Gerald Ottinger, a truck driver from Augusta, Michigan, was making a delivery at the Shaw's warehouse in Wells as the facility opened on the morning of November 1, 1988. Gerald slipped on a piece of banana that was present on the loading dock, and suffered back injuries as a result. The parties agreed that Gerald was a business invitee.
Fresh fruit was not among the items processed by the warehouse and the record neither demonstrates how the banana came to be on the loading dock, nor indicates that any Shaw's employee was aware of the banana's presence prior to the accident. One employee noted after the accident that the banana was medium brown in color.
The Ottingers filed suit in the Superior Court, alleging that Gerald suffered direct injuries as a result of the defendant's negligence and that his wife, Debra, suffered loss of consortium. The Ottingers' appeal followed the entry of a summary judgment in favor of Shaw's.
We review decisions granting a summary judgment for errors of law, viewing the facts in the light most favorable to the nonprevailing party. Chasse v. Mazerolle, 622 A.2d 1180, 1182 (Me.1993). When a business invitee is injured as the result of a foreign substance on the floor of the premises, the invitee must prove the owner's negligence by establishing one of three things:
(1) that the defendant caused the substance to be there, or (2) that the defendant had actual knowledge of the existence of the foreign substance, or (3) that the foreign substance was on the floor for such a length of time that the defendant should have known about it.
Milliken v. City of Lewiston, 580 A.2d 151, 152 (Me.1990). We affirmed the summary judgment entered for the defendant in Milliken because the plaintiff, a student injured when she slipped on a piece of food on the floor of a school cafeteria, "offered no evidence that her injury resulted from a recurring *950 condition and generated no factual issue concerning defendant's actual or constructive knowledge of the presence [of the substance] on the floor." Id. In the instant case, the trial court properly concluded that our holding in Milliken forecloses the possibility of the Ottingers' recovery.
The Ottingers do not controvert Shaw's assertion that it lacked actual knowledge of the presence of the banana on the loading dock. They do contend, however, that they have generated an issue that the cause of the hazard is Shaw's legal responsibility.
Gerald began to unload his cargo at or shortly after the warehouse's 7:00 a.m. opening time. Relying on an assertion in Gerald's affidavit that "no one other than Shaw's employees could have been at or near the [loading dock] up to 7:00 a.m. of the accident day," the Ottingers argue that a Shaw's employee is the only possible cause of the hazard and therefore Shaw's is liable to them. We disagree. Ottinger lacked personal knowledge as to who had access to this area prior to the warehouse's opening, and nothing else in the record suggests that only Shaw's employees could have been the source of the hazard. Moreover, the record reflects that warehouse employees were routinely instructed not to consume food in the working areas of the facility. Thus, even if the Ottingers could establish that the banana was dropped on the loading dock by a Shaw's employee, that employee would have been acting outside the scope of employment. In such circumstances, we have been reluctant to impose direct liability on the employer. See Trusiani v. Cumberland & York Distrib., 538 A.2d 258, 262-63 (Me.1988) (employer not liable for injuries caused by intoxicated employee driving home after company party). Had the matter progressed to trial based on the present record, Shaw's would have been entitled to a judgment as a matter of law on this issue. Therefore, a summary judgment in favor of Shaw's was appropriate. See H.E.P. Development Group v. Nelson, 606 A.2d 774, 775 (Me.1992).
Ottinger also contends that the brown color of the banana on which he slipped creates a genuine issue of fact as to whether Shaw's should have known of the banana's presence on its loading dock within the meaning of Milliken, 580 A.2d at 152. The only evidence as to the length of time the banana had been present is the testimony of a warehouse employee who observed the banana's "medium brown" color shortly after the accident. The Superior Court correctly concluded that the color of the banana does not sustain an inference that it had been present on the loading dock for any length of time, let alone sufficiently long to impute constructive knowledge of the hazard to Shaw's. See Bates v. Winn-Dixie Supermarkets, Inc., 182 So. 2d 309, 311 (Fla.1966) (color of banana showing ripeness insufficient to support inference that banana on floor for any length of time).
Because the Ottingers failed to meet their burden as articulated in Milliken, the Superior Court did not err in granting a summary judgment to Shaw's.
The entry is:
Judgment affirmed.
All concurring.
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744 S.W.2d 542 (1988)
Dorthia VAUGHN, Plaintiff-Appellant,
v.
Alfred M. EMS, et al., Defendants-Respondents.
No. 52945.
Missouri Court of Appeals, Eastern District. Division Five.
January 26, 1988.
*544 Marsha Brady, Hillsboro, for plaintiff-appellant.
Louis Nathan Laderman, Manchester, for defendants-respondents.
SIMEONE, Senior Judge.
This is an appeal by Dorthia Ann Vaughn from a judgment of the circuit court of Jefferson County affirming a decision of the duly elected officials and members of the council of the City of Arnold which declined to renew appellant's liquor license. Appellant makes a constitutional challenge to an ordinance of the City. We have jurisdiction. Art. V, § 3, Mo. Const.; State ex rel. Payton v. City of Riverside, 640 S.W.2d 137, 139 (Mo.App.1982). We affirm.
I.
Ms. Vaughn is the owner and sole proprietor of the Span Disco Lounge located in Arnold, Missouri and has operated that lounge since July 1, 1979. She was issued an annual retail liquor by the drink license since that date. On June 9, 1986, appellant made application for renewal of her license to sell liquor by the drink for the period July 1, 1986 through June 30, 1987. Her application was referred to and reviewed by the Public Works-Health and Safety Committee on which Paul Zimmerman, a council member, served. On June 17, 1986, the members of Public Works-Health and Safety Committee met and discussed, among other matters, liquor license renewals. The minutes of the committee show that all of the establishments "on the list" with the exception of the Span Disco, Inc. were recommended by the committee for approval. The committee recommended that the Span Disco license not be renewed. The minutes referred to inter-department police memoranda relating to a number of events which occurred at the Span Disco over the years. At the meeting of the city council on June 19, 1986, Councilman Zimmerman presented the minutes, the police department's memoranda, and the recommendation of the committee to the council regarding the non-renewal of the license. He moved to deny the renewal because of "their [Span Disco] failure to keep an orderly place of business." The minutes of the council show that the motion passed unanimously.
On June 20, 1986, Ms. Vaughn was notified by certified mail that her license was not renewed. The letter read as follows:
The Span Disco, Inc. has been recommended for non-renewal of the liquor license because of their failure to keep an orderly place of business. The council feels that it is not in the best interests of the city to grant another license to the Span Disco, Inc. due to the increasing frequency and severity of the problems which have occurred at this establishment since January, 1979, and because it is likely that it will continue in the future.
On July 14, 1986, pursuant to § 536.150, R.S.Mo., Ms. Vaughn filed her "Petition For Review of Denial of Liquor License," against the mayor, members of the city council and city clerk in the circuit court of Jefferson County. She alleged that the denial to renew her license was "unlawful and invalid" in that (1) she had never been cited for violating any ordinance which prohibited disorderly conduct on her premises; (2) the denial is "wholly unauthorized" by reason of § 311.220; (3) the discretion vested in the city council by virtue of Section 3-44.1[1] Ordinance No. 4.2 is "unconstitutional"; *545 and (4) the denial is "unreasonable, arbitrary, capricious, and an abuse of discretion." She prayed that the court order the defendants to renew her "liquor by the drink license."
The parties entered into a joint stipulation of facts. The stipulation recited that Ms. Vaughn had been issued a liquor license since July 1, 1979; that she applied for a renewal for the period of July 1, 1986 through June 30, 1987; that she is a person of good moral character, is a qualified voter, has never had her license revoked and has never been convicted of any law applicable to the sale of liquor. The stipulation further recited that the Public Works-Health and Safety Committee considered her application for renewal and reviewed certain inter-department memoranda received by it from the chief of police with respect to the lounge and that the council, on the recommendation of the committee, denied to renew the license. The parties further agreed that Ms. Vaughn could continue to operate and transact business pending a final judicial disposition of the issues.
On January 13, 1987, a hearing was held by the trial court on the petition. At the hearing, Mr. Zimmerman testified that he reviewed the appellant's application for renewal and after examining two inter-department police memoranda, he recommended denial of the license. One inter-department memorandum was dated December 9, 1985 and the other May 29, 1986. Each listed the number of "incidents" which occurred at the lounge since January, 1979. There were eleven such incidents in 1979ranging from a disturbance to a bomb threat; there were ten incidents in 1980; fourteen in 1981; six in 1982; sixteen in 1983; thirty-one in 1984 and thirty-five in 1985. In 1986, there were several incidentsone on February 1, 1986 involving a fight inside the lounge at which "20-25 patrons were involved." Mr. Zimmerman did not request copies of the underlying police reports before making his recommendation to the council.
At the trial court hearing, Ms. Paula Brady, secretary to the detective bureau and custodian of records, testified. She testified that she maintained "tavern files" and referred to Exhibits 9 and 10 showing a number of reports and complaints which came into the police department. These reports are prepared by a police officer, "made in the regular course of business" and "made at or near the time of the act, condition or event that's recorded." When Exhibit 9reports and complaint cards were sought to be admitted, counsel for appellant objected:
Your Honor, I would object to the relevancy of Exhibit 9 since these reports were not made available to the committee or the council members.
The court overruled the objection.
Exhibit 10, containing additional police reports concerning incidents other than those related in Exhibit 9, was also admitted over objection on the ground of relevancy.
Captain B.J. Nelson, an officer with some eighteen years service and assistant chief of the City of Arnold, also testified. While he was chief of detectives and as part of his responsibilities, he reported to the chief of police on violations of the liquor law. He maintained "tavern files""incidents that occur at any place that has a liquor license in the City of Arnold." In 1986, he examined the incidents at the Span Disco as well as other taverns, and based upon his observations, he noted that there was an "unusual amount of police activity generated," and a "large amount of serious activity occurring there." This "unusual" and "large" amount of activity took policemen away from the "patrols position" to respond to the incidents and complaints. The reports showed that there were fights on the parking lot, a police officer was assaulted, and incidents with "weapons, pool cues, knives, guns." There was also a "major fight there involving 25 people which took my whole department to handle." One incident which he recalled "vividly", which took place in front of the Span Disco and wound up on the upper parking lot, involved a family fighting with a bumper *546 jack so that police officers had to disarm them. There had also been a shooting which occurred in front of the establishment for which one man was convicted.
The frequency of police calls were "much greater at the Span compared to other liquor establishments." In Captain Nelson's opinion the tavern presents a law enforcement problem in that there "is a large amount of fights and disturbances" which "put people in jeopardy, not only my police officers but the customers that go in there." Captain Nelson personally had been called to the tavern "maybe six times." He spoke to "Dorthia about the problems," and urged her to "try to take more control over the liquor establishment, try to keep down the trouble."
Captain Nelson did not know whether appellant was ever cited for failure to maintain an orderly place of business, but testified that the inter-department memoranda listed "these items" and in December 1985 he "went to the chief of police and asked him to take this to the city council and discuss with them whether she should be cited or not;" that it was "up to the council to decide whether to cite her or take her license or suspend her, or whatever action deemed necessary."
Following hearing in the trial court and the filing of briefs,[2] the court entered its order that the decision of the council was "lawful and proper and is supported by substantial evidence." The court therefore dismissed the appellant's petition for review.
II.
On appeal, appellant contends that the trial court erred (1) in failing to find § 3-44.1 of the Arnold alcoholic beverage code "invalid because the ordinance grants unlimited discretion to the city council to grant or deny a liquor license and is subject to arbitrary enforcement," and (2) in receiving Exhibits 9 and 10 because these exhibits, comprising police reports, were not properly qualified as business records since there was no showing that the information contained in them was relayed to the reporting officer by a person with a business duty to do so.
Our review is to determine whether the trial court abused its discretion in affirming the decision of the city council. The order of the trial court is to be sustained unless there is no substantial evidence to support it, unless it is against the weight of the evidence, or unless it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). In turn, the trial court's review of the decision of the city council to deny the renewal of the license is governed by § 536.150to determine whether such decision, in view of the facts as they appear to the court, is unconstitutional, unlawful, unreasonable, arbitrary, or capricious or involves an abuse of discretion. Section 536.150, rather than § 536.110, is the proper vehicle for judicial review in this "non-contested" case. Kopper Kettle Restaurants, Inc. v. City of St. Robert, 439 S.W.2d 1, 3 (Mo.App.1969); State ex rel. Keeven v. City of Hazelwood, 585 S.W.2d 557, 560 (Mo.App.1979); State ex rel. Walmar Investment Co. v. Mueller, 512 S.W.2d 180, 182 (Mo.App.1974). The denial of a liquor license is not a "contested case" under the *547 Administrative Procedure and Review Act. Keeven, supra, 585 S.W.2d at 560; cf. Kehr v. Garrett, 512 S.W.2d 186 (Mo.App. 1974)state supervisor of liquor control.
Based upon this standard of review, we conclude the order of the trial court should be affirmed.
III.
As we perceive her first point, appellant contends that the Arnold ordinance is invalid and unconstitutional because it grants unlimited discretion to the city council to grant or deny a liquor license with no standards or guidelines to guide a council decision. Therefore the ordinance, she says is unreasonable and conflicts with state law. Relying on § 311.220.2, which provides that municipalities may charge for licenses, make and enforce ordinances for the regulation and control of the sale of intoxicating liquor within their limits and provide penalties where not inconsistent with state law, she contends that the ordinance gives unfettered discretion to act arbitrarily.
Ordinance 3-44.1 reads as follows:
The city council may refuse to issue a liquor license ... if, in its discretion, it is not advisable to grant it to the applicant, or if the proposed location is unsatisfactory, or if it is not in the best interests of the city to grant another license.
This ordinance deals with two pertinent situations: (1) refusal to issue an original license, if in the council's discretion, it is not advisable to grant it, and (2) renewal of a license once granted if in the best interests of the city. We deal here only with the latter situation.
The precise issue to be determined therefore is whether the action of the governing body of the municipality, acting under an ordinance which sets forth broad and general standardsthe best interests of the citymay properly, validly, lawfully and constitutionally decline to renew a liquor license when there is substantial evidence to do so and the refusal is not arbitrary, capricious or unreasonable. We conclude that ordinance in this regard is not invalid or unconstitutional and that the action of the council under the facts here was lawful and not unreasonable, arbitrary or capricious.
We deal here with a liquor business, and the renewal of a liquor license. The liquor business stands on a different plane than other commercial and business operations. It is placed under the ban of the law and is differentiated from all other occupations. No person has an inherent or natural right to engage therein. Those who engage in the business of the sale of liquor have no legal rights except those expressly granted by statute and by license. Kehr v. Garrett, 512 S.W.2d 186, 189 (Mo.App.1974); Queen of Diamonds, Inc. v. McLeod, 680 S.W.2d 289, 291 (Mo.App 1984). The state may impose such conditions, burdens and regulations as it may deem wise and proper. Peppermint Lounge v. Wright, 498 S.W.2d 749, 752 (Mo.1973); Kehr v. Garrett, supra, 512 S.W.2d at 189; May Department Stores Inc. v. Supervisor of Liquor Control, 530 S.W.2d 460 (Mo.App.1975). A renewal of a license is not a matter of right and may be refused for good cause.
Although it may be desirable for an ordinance regulating the sale of liquor to contain greater specificity, ordinances or regulations relating to the sale of intoxicating liquor have been consistently upheld against a challenge of invalidity or unconstitutionality. Queen of Diamonds, Inc. v. McLeod, supra, 680 S.W.2d 289; Mainstreet Enterprises v. Supr'r of Liq. Cont., 665 S.W.2d 641 (Mo.App.1984); Peppermint Lounge, Inc. v. Wright, 498 S.W.2d 749 (Mo.1973).
A municipality acting through its governing body or council has broad, although not unlimited, discretion to grant or renew licenses for the sale of intoxicating liquor, and it has been consistently held that courts will not interfere with such municipal discretion, absent an abuse of that discretion. 9A E. McQuillan, Municipal Corporations, §§ 26.181, 26.198 (1986). Ordinances which vest discretion in the governing body or board to grant or renew a license have been held to be valid, if the discretion is exercised reasonably and not *548 arbitrarily. See 48 C.J.S., Intoxicating Liquors, § 93 at 438; 1 W.W. Woolen, Intoxicating Liquors, § 131 at 194 (1910).
Furthermore, the governing body of a municipality, as distinguished from a delegated administrative board, may exercise, in a reasonable and proper manner, the power granted by statute regarding regulation of selling intoxicating liquor. Section 311.220.2; State ex rel. Payton v. City of Riverside, supra, 640 S.W.2d 137, 140. While an ordinance which vests discretion in administrative officials must generally include standards for their guidance in order to be constitutionally acceptable, that principle applies to a delegation of authority to administrators and not to the exercise of substantive legislative functions by the political and governing body, especially when the governing body deals with police regulations. State ex rel. Payton, supra, 640 S.W.2d at 141; Clay v. City of St. Louis, 495 S.W.2d 672, 676 (Mo.App. 1973); State ex rel. Mackey v. Hyde, 315 Mo. 681, 286 S.W. 363, 366 (banc 1926). Where an ordinance deals with a situation which requires the vesting of discretion, and it is impracticable to lay down a definite comprehensive rule, or where the discretion relates to the administration of a police regulation or is necessary to protect the public safety, morals, health or general welfare, such an ordinance is not constitutionally infirm because standards are not spelled out in great detail. Browning-Ferris Ind. of Kansas City v. Dance, 671 S.W.2d 801, 811 (Mo.App.1914). Unless action is taken arbitrarily to deny a renewal of a license on the basis of personal bias, religious beliefs or other irrelevant factors, an ordinance vesting discretion is not invalid or infirm. Cf. State ex rel. Casey's v. City Council, 699 S.W.2d 775 (Mo.App. 1985). The enactment of this ordinance in the liquor regulation context insofar as it relates to the renewal of a liquor license is within the legitimate exercise of legislative discretion and is not invalid. Neither is the ordinance in conflict with § 311.220.2. State ex rel. Payton v. City of Riverside, supra, 640 S.W.2d at 141.
In the instant case, the ordinance vests discretion in the council to refuse a renewal of a liquor license; and the provisions thereof relating to renewal is within the legitimate exercise of the substantive legislative functions of the political body. The council did not act arbitrarily or unreasonably in declining to renew the license. There was a reasonable basis for its actions. There had been numerous incidents and problems at the appellant's place of business over the years. An "unusual" and "large" amount of activity engaged the police; it took policemen away from their "patrol positions" to respond to such incidents and complaints. Under such circumstances the council's action was not arbitrary, and the ordinance under which it acted was not invalid or void.[3] The exercise of discretion by the council was based upon sufficient reasons.
State ex rel. Casey's v. City Council, supra, relied upon by appellant is not controlling. There, an ordinance provided that no liquor license shall be issued where the place of such business is located "outside the business district of the city" of Salem. This ordinance was struck down because it was a zoning type ordinance and it did not involve a matter of police regulation.
The trial court properly concluded in accordance with § 536.150, in view of the facts as they appeared to it, that the decision of the council was not unconstitutional, unlawful, unreasonable, arbitrary, capricious or involved an abuse of discretion.
IV.
Appellant next contends that the trial court erred in receiving Exhibits 9 and 10 the police reports containing complaints concerning the activity and incidents at the appellant's lounge. She contends on appeal that these reports and complaints were not properly qualified as business records under *549 the Business Records Act, §§ 490.660-490.690, R.S.Mo.1986, because there was no showing that the information contained in them was relayed to the reporting officer, by a person with a business duty to do so.
This contention is without merit. It is to be noted that the point asserted on appeal, that the exhibits were not properly qualified as business records was not presented to the trial court and was not preserved for appeal. At the hearing, counsel for appellant objected to the reports and complaints on the ground of relevancy, stating that the reports had not been presented to the council when the license was not renewed. An appellant cannot broaden or change an objection on appeal beyond that made in the trial court. Dyer v. Globe-Democrat Pub. Co., 378 S.W.2d 570, 582 (Mo.1964). An objection made for the first time on appeal will not be reviewed when not presented to and ruled on by the trial court. Pierce v. New York Cent. R. Co., 257 S.W.2d 84 (Mo. 1953). When the proper objection is not made at trial, the trial court cannot be considered to have erred and nothing is preserved for appellate review. In re Estate of King, 572 S.W.2d 200, 204 (Mo.App. 1978).
Regardless of whether the reports were or were not admissible under the Business Records Act, §§ 490.660-490.690, as contended on appeal, the reports and complaints were admissible and did not violate the rule against hearsay. The theory of the hearsay rule is that if an extrajudicial statement is offered to prove the truth of the matter asserted therein, it is objectionable and inadmissible. However, if the "extrajudicial utterance is offered, not as an assertion to evidence the matter asserted, but without reference to the truth of the matter asserted, the hearsay rule does not apply" and the matter is non-hearsay and admissible. See 6 J. Wigmore, Evidence, §§ 1766, 1788 (Chadbourn Ed.1976). The reports and complaints, Exhibits 9 and 10, were admissible, regardless of the truth of the matter asserted, in order to show the facts upon which the council acted. Such reports are admissible not as an exception to the rule against hearsay, but because they are not within the rule and are admissible as circumstantial evidence. State v. Tolisano, 136 Conn. 210, 70 A.2d 118 (1949) (telephone slips and telephone calls making bets on horse racingadmissible as non-hearsay); McCormick, Evidence, § 249 at 588 (2nd ed. 1972); 6 Wigmore, Evidence, supra, § 1788 at 313. The issue before the trial court was whether the council's decision not to renew was arbitrary or unreasonable. The exhibits were admissible to show the reasonableness of the council's action. The trial court did not err in admitting the police reports as exhibits.
V.
In sum, we hold that under all the facts and circumstances, the action of the city council in denying a renewal of the appellant's liquor license was not arbitrary or capricious, was not an abuse of discretion and was not based upon an ordinance relating to a renewal of a liquor license which was constitutionally infirm. The decision was based upon sound reasons. The council had cause to decline to renew appellant's license. It acted within its power, consistent with the law of the state and its decision was not unlawful, unreasonable, arbitrary or capricious.
The trial court did not err in affirming the action of the city council.
The judgment is affirmed.
SATZ, C.J., and CARL R. GAERTNER, J., concur.
NOTES
[1] Section 3-44.1 is part of a comprehensive code relating to alcoholic beverages. The code deals with detailed regulation of the sale of liquor including hours of sale, reports, licenses, labeling, possession, sale and consumption. Article II deals with licenses, applications therefor, fees and eligibility. The article provides that no person shall be granted a license unless the person is of good moral character, a citizen, qualified voter, taxpayer, who has been convicted, or who employs in the business any employee whose license has been revoked or convicted. The code prohibits gambling on the premises and no person licensed "shall suffer or permit any disorderly conduct" or immoral dancing on the premises.
Section 3-44.1, adopted in 1979, provides that "[t]he city council may refuse to issue a liquor license or nonintoxicating beer license if, in its discretion, it is not advisable to grant it to the applicant, or if the proposed location is unsatisfactory, or if it is not in the best interests of the city to grant another licence." (Emphasis added).
[2] In her memorandum of law filed with the trial court Ms. Vaughn argued that the issue is whether the City may vest greater authority in its Council than the Legislature has vested in the State Supervisor of Liquor Control under § 311.220, R.S.Mo. She contended that when the legislative body of a city chooses to delegate to itself the discretionary power to grant or deny a permit such discretion must be circumscribed by sufficient standards to require it to be reasonably and not arbitrarily exercised. She argued that the "ordinance upon which the City based its denial of [her] application for renewal" sets forth no standards, is unlimited and an "impermissible usurpation of discretion subject to arbitrary enforcement contrary to the Due Process Clause of the United States Constitution and Article I, Section 10 of the Constitution of the State of Missouri." She further argued that the City cannot justify denying a license because of her asserted failure to keep an orderly place of business because the City has never cited her for such. She also contended that the Uniform Business Records as Evidence Law, §§ 490.660-490.690, does not authorize a police officer to read his report as a substitute for direct testimony. State ex rel. Pini v. Moreland, 686 S.W.2d 499 (Mo.App.1984).
[3] Implicit in appellant's contention is that the ordinance is unconstitutional under the void-for-vagueness doctrine. Numerous decisions hold statutes and ordinances are valid against such a contention. Queen of Diamonds, Inc. v. McLeod, supra, 680 S.W.2d 289; Mainstreet Enterprises v. Sup'r of Liq. Cont., supra, 665 S.W.2d 641.
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269 N.J. Super. 198 (1993)
635 A.2d 104
EILEEN FOTI, PLAINTIFF-APPELLANT,
v.
JEFFREY K. JOHNSON, DEFENDANT-RESPONDENT.
Superior Court of New Jersey, Appellate Division.
Submitted November 23, 1993.
Decided December 17, 1993.
*199 Before Judges PRESSLER, DREIER and KLEINER.
Robert M. Rich, attorney for appellant.
Wolff, Helies & Duggan, attorneys for respondent (Maureen G. Bauman, on the brief).
The opinion of the court was delivered by PRESSLER, P.J.A.D.
This is a verbal threshold case in which plaintiff Eileen Foti appeals from a summary judgment dismissing her personal injury, automobile negligence complaint against defendant Jeffrey K. Johnson. The judge concluded, based on the motion papers, that plaintiff, who sustained soft tissue injuries, had made an inadequate showing of objective criteria to warrant a jury trial. We disagree and consequently remand for trial.
At the time of the accident plaintiff, then 25 years old, had just completed her graduate training in master printmaking, having obtained both a bachelor's and master's degree in printmaking as well as a certification as a master printmaker. Having completed her studies in New Mexico, she had just come to New Brunswick, *200 New Jersey, where she had obtained employment at Rutgers University as its master printmaker. The accident occurred in New Brunswick on January 5, 1989, as the alleged result of defendant's having passed through a stop sign on Livingston Avenue.
According to the motion papers, the consequences of the accident, in which plaintiff suffered a low-back injury, have been professionally devastating. She asserts that she is no longer able to manipulate the heavy limestones that constitute the surface for a large proportion of prints. Although she can still manipulate the metal plates which provide an alternative surface, the plates are regarded as a less acceptable surface and are not utilizable at all for some techniques. Beyond that, she experiences severe and constant pain whenever she works despite beginning and ending each day with exercises and taking breaks from her work in order to perform exercises designed to relax her back muscles. In sum, it is her assertion that as a result of the accident she is unable to pursue the profession for which she arduously trained. The report of plaintiff's examining physician confirms that plaintiff "is young and she should be able to find a different job in the future, even if it requires retraining."
The trial judge suggested that the so-called subjective criteria for meeting the verbal threshold as explicated by Oswin v. Shaw, 129 N.J. 290, 609 A.2d 415 (1992), were not the problem here. This is plainly so. The substantial effect of plaintiff's back injury on her life was poignantly asserted. The judge's concern rather was with the so-called objective criteria, which, he concluded, had not been demonstrated by the motion papers. We do not share his appraisal.
The experts for both parties agreed that plaintiff suffered from a pre-existing spondylolisthesis and spondylolysis at L5-S1. Spondylolisthesis is defined as the "forward movement of the body of one of the lower lumbar vertebrae on the vertebra below it, or upon the sacrum." Stedman's Medical Dictionary, Third Unabridged Lawyers' Edition (1972). Spondylolysis is defined as the *201 "breaking down or dissolution of the body of a vertebra," or "a cleft formation in the vertebral body," or a "loosening of the firm attachment of the contiguous vertebrae." Ibid. According to plaintiff's medical history, these conditions were caused by a fall when she was a child and confirmed by x-ray when she was fourteen. These physical conditions had, however, been functionally quiescent until this accident. She had had no episodes of pain or other problem until then. It is plaintiff's theory that the accident aggravated the pre-existing condition, resulting in her present disability.
Although plaintiff's treating physician noted that there had been no appreciable movement of the spondylolisthesis since the 1977 x-rays, it was nevertheless his opinion that the accident had aggravated that condition. His report suggests that that opinion was based on plaintiff's continuing back spasms and pain. In addition, plaintiff's examining physician, while also noting the absence of any appreciable x-ray change, diagnosed aggravation of the preexisting condition as well, relying on findings of "mildly spastic" musculature, "a few scattered trigger points," discomfort of palpation of the right sciatic nerve, a "questionable positive straight leg raising on the right," an absent right ankle jerk, and "a sensory deficit in the right SI distribution." At least some of these, including the absent ankle jerk and the spasm, are obviously objective findings.
Defendant's examining physician did not dispute the preexisting condition, although his report notes that since he had not reviewed any of the x-rays, he was unable to determine the grade of spondylolisthesis. He also expressed the opinion that these preexisting conditions are usually asymptomatic and therefore probably not the cause of plaintiff's present complaints, although he did note that these conditions at L5-S1 could cause pain in some people. He found no other objective basis for plaintiff's continuing pain and present disability.
We think it clear that demonstrable aggravation of a demonstrated pre-existing condition meets the Oswin requirement for *202 objective findings to explain the symptomatology from which a plaintiff suffers. Compare Polk v. Daconceicao, 268 N.J. Super. 568, 634 A.2d 135 (App.Div. 1993), in which we recognized that principle but concluded that the record there had failed to provide a sufficiently adequate showing of a demonstrable aggravation to survive defendant's summary judgment motion. Here plaintiff's experts expressed the medical opinion that spondylolisthesis and spondylolysis can be aggravated without appreciable x-ray change. It is, as we understand it, inherent in the original condition itself that a new traumatic involvement of the affected area can trigger symptomatology not previously experienced even without a demonstrable deterioration in the condition itself. It then becomes a question of fact as to whether plaintiff's physical problems are to be attributed to the new trauma to the L5-S1 area because it aggravated the pre-existing condition, resulting in the disability.
In our view, that theory of plaintiff's symptoms meets both the prescription of Oswin and the legislative policy implicit in the verbal threshold legislation. The legislative purpose was to weed out of the judicial system those causes of action arising out of automobile negligence involving injuries that are not serious. It did so by specifying nine categories of injury that meet the verbal threshold, three of which cover serious soft tissue injuries. The point of the categorization is to define those injuries that are sufficiently serious to warrant an action for non-economic damages in the courts. As Justice Clifford explained in Oswin, supra, at 318, 609 A.2d 415, plaintiff, particularly where soft tissue injuries are involved, "must show a nexus between the injury and the disability." The nexus is ordinarily proved by "objective evidence of injury and disability that fit the statutory definition of `serious injury'...." Id. at 318-319, 609 A.2d 415.
As we understand the principles of Oswin as applied to this situation, objective evidence of a pre-existing condition will suffice to meet the objective evidence test provided that as a matter of medical opinion, aggravation of the original condition by the new trauma has actually produced the disability now complained of and *203 provided further that the pre-existing condition, by its nature, has the capacity to have produced the disability without further objective deterioration. If those qualifications are medically supported, then the requisite nexus between injury and disability will have been proved and the desideratum of an objectively-based medical opinion that the disability is fairly attributable to the injury suffered in the accident will have been met.
We do not, of course, intend to suggest that plaintiff must prevail. She is, however, clearly entitled to put her proofs, including her medical proofs, before the jury just as defendant is entitled to the opportunity to counter those proofs.
The summary judgment dismissing the complaint is reversed and we remand for further proceedings.
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679 F. Supp. 1066 (1988)
Kimberly GUINTHER, President, Individually and in Behalf of the Utah Dancer's Association; Hall of Giants Enterprises, Inc., dba Dino's; David Maxwell; Mini Spas, Inc. dba The Entertainment Place, The Zodiac Health Studio and The King's Palace; Greg Bisseger; Shawn Strong dba Adams Apple; and Heidi Tracy dba Aladdins Geni, Plaintiffs,
v.
Honorable David L. WILKINSON, Attorney General of the State of Utah; State of Utah; Honorable David Yocum, County Attorney of Salt Lake County, Utah; Bud Willoughby, Chief of Police of Salt Lake City; The City of South Salt Lake; and Val Bess, Chief of Police of the City of South Salt Lake, Defendants.
Civ. No. C87-423G.
United States District Court, D. Utah, C.D.
January 21, 1988.
*1067 Steven R. Cook, Salt Lake City, Utah, for plaintiffs.
Stanley H. Olsen, Salt Lake City, Utah, for defendants.
MEMORANDUM DECISION AND ORDER
J. THOMAS GREENE, District Judge.
This matter came on for hearing on August 25, 1987, pursuant to defendants' Motion to Dismiss. Kimberly Guinther, et al. ("Guinther") was represented by Steven R. Cook, and David Wilkinson, et al. ("Wilkinson") was represented by Stanley H. Olsen. The parties submitted memoranda and presented oral argument. The court directed that any additional memoranda and affidavits be submitted by September 15, 1987, and that the matter then would be under advisement for decision without further argument unless a written request for further oral argument was filed on or before September 18, 1987. No further affidavits, memoranda or request for oral argument were filed. However, on September 16, 1987, the plaintiff and defendant representatives of the State of Utah filed a stipulation that stated the following: (1) the underlined portion of § 76-10-1301(1) is severable from the rest of the statute; (2) the underlined portion of the statute violates the first and fourteenth amendments of the United States Constitution; (3) the remaining portion of the statute is enforceable; and (4) the issue of fees and costs under 42 U.S.C. § 1988 (1982) should be reserved, although the parties agreed that $2,500 *1068 was a reasonable award of attorneys fees. The court raised several questions concerning the validity of such a stipulation in which the Attorney General of Utah agrees that an Act of the Utah Legislature should be ruled unconstitutional. That matter and other related issues were briefed and presented to the court on January 4, 1988. The court now being fully advised enters its Memorandum Decision and Order.
BACKGROUND
In 1987, the Utah State Legislature amended the prostitution section of the Utah Code, changing the definition of "sexual activity" as used in that section to provide the following:
"Sexual activity" means acts of masturbation, sexual intercourse, or any touching of a person's clothed or unclothed genitals, pubic area, buttocks, anus, or, if the person is a female, her breast, whether alone or between members of the same or opposite sex, or between humans and animals, in an act of apparent or actual sexual stimulation or gratification.
Utah Code Ann. § 76-10-1301(1) (Supp. 1987) (emphasis added).[1] This definition applies to an existing section of the Utah Code, which in pertinent part provides:
(1) a person is guilty of prostitution when:
(a) He engages or offers or agrees to engage in any sexual activity with another person for a fee;
Id. § 76-10-1302 (1978) (emphasis added).
On May 6, 1987, this action was filed. Plaintiffs consist of performing artists, dancers, actors, businesses, and a prospective spectator, all of whom claim that the 1987 amendment infringes their first amendment rights, and they seek declaratory and injunctive relief. Plaintiffs named Attorney General David L. Wilkinson, Salt Lake County Attorney David Yocum, Salt Lake City Chief of Police Bud Willoughby and South Salt Lake City Chief of Police Val Bess as defendants in their official capacities as the representatives of the state and city responsible for enforcing the statute.
On May 18, 1987, this court ruled the underlined portions of § 76-10-1301(1) to be severable from the remaining portions and that the remaining (not underlined) portions are enforceable. The court also denied plaintiff's Motion for a Temporary Restraining Order as to enforcement of the underlined portion of the statute because defendants made it clear that they would not attempt to enforce that portion of the statute with respect to the conduct outlined in the Complaint and set forth in Affidavits presented by plaintiffs.
The court will first address certain issues raised by the stipulation of unconstitutionality presented by the Attorney General of Utah and other counsel, and then will address the merits of the constitutionality of the statute in question.
I. POWER OF ATTORNEY GENERAL TO STIPULATE AS TO UNCONSTITUTIONALITY OF STATUTES
After receipt of the proferred stipulation of unconstitutionality concerning the underlined portion of the statute in question, this court sua sponte directed counsel to respond to the question:
Does the Attorney General's stipulation that Utah Code Ann. § 76-10-1303(1) is unconstitutional exceed the Attorney General's various powers, or violate the separation of powers doctrine under the Utah Constitution?[2]
*1069 It was properly recognized by both counsel that the stipulation is not and could not be binding upon the court, and that only upon order of the court could there be a binding declaration of unconstitutionality.
Utah law sets forth the general duties of the Attorney General, and provides in part:
It is the duty of the attorney general:
(1) to attend the Supreme Court of this state, and all courts of the United States, and prosecute or defend all causes to which the state, or any officer, board, or commission of the state in an official board, or commission of the state in an official capacity is a party; and has the charge, as attorney, of all civil legal matters in which the state is in anywise interested.
Utah Code Ann. § 67-5-1 (1986) (emphasis added). In Hansen v. Barlow, 23 Utah 2d 27, 456 P.2d 177 (1969), the Utah Supreme Court referred to this statute and said:
This statute alone, ... would provide an adequate basis for the attorney general to initiate a declaratory judgment action where he believes a statute is in direct contravention to some mandatory provision of the Constitution of Utah.
Id. 456 P.2d at 181. The Hansen court addressed an issue not unlike the question posed by this court: "Does the Attorney General have the right to challenge the constitutionality of a statute enacted by the State Legislature." Id. at 177. The Hansen court concluded:
After consideration of our Constitution, statutes and decisions of sister courts, we are of the opinion that it is within the right of the Attorney General, if not his duty to bring suits to clarify the constitutionality of laws enacted by the Legislature if he deems it appropriate. He is in a much more informed, duty-entrusted, and advantageous position to do so than the individual citizen and taxpayer.
In addition to the authority to bring an action seeking a declaration as to the constitutionality of a Utah law, the Attorney General presented the proposition to this court that there is no "prohibition in his acknowledgment of such unconstitutionality."[3]
Recently this court has observed that mere lack of enforcement of a law which has been regarded by the Attorney General as unconstitutional is not enough to render the statute of no force or effect. Cooper v. State of Utah, et al., slip op. 87-C-606G (December 21, 1987). Nor can the assurance by the Attorney General that he does not intend to enforce the law defeat standing to challenge the law of a person who realistically may be aggrieved by the enactment. Id. Until a court acts, an apparently invalid or dormant statute may become operative, notwithstanding a pattern of apparent lack of enforcement, an opinion by the Attorney General, or even, as here, an agreement by the Attorney General that the act is unconstitutional. It follows that the stipulation of counsel may be accepted or rejected by the court, in whole or in part, and that any declaration or ruling as to constitutionality stands as an action of the court independent of any stipulation of counsel.
There appears to be no dispute by counsel as to the aforesaid principles. Accordingly, this court now addresses the merits of the statute in question as to whether it passes constitutional muster.
II. CONSTITUTIONALITY OF THE STATUTE
The underlined portion of the Utah statute under scrutiny here, excluding the portion this court has already upheld as enforceable and not unconstitutional, is as follows:
Sexual activity means ... any touching of a person's clothed or unclothed geni- *1070 tals, pubic area, buttocks, anus, or, if the person is a female, her breast, whether alone or between members of the same or opposite sex, or between humans and animals, in an act of apparent or actual sexual stimulation or gratification. § 76-10-1301(1).
This court now holds that the underlined portion of the statute violates the due process clause of the Fourteenth Amendment of the United States Constitution in two particulars, i.e. that it is overbroad, and that it is impermissively vague.[4]
A. Overbreadth
The actions set forth by plaintiffs as possibly subject to proscription under the statute include in addition to nude or semi nude dancing, anticipated ballet dancing by artists who dance for Ballet West, Disney on Parade, the San Francisco Opera and the San Francisco Ballet, in such productions as "Paradise Lost," "Garden of Evil," "Samson and Delilah," "Ballet Chaos" and "many others"; anticipated acting by professional actors in such productions as "Romeo and Juliet," "Taming of the Shrew," "Merry Wives of Windsor," "A Midsummer Nights Dream," "Kiss Me Kate," "Hair," "Oh! Calcutta," "A Chorus Line," and "Gypsy." In all of the aforesaid forms of expression, fear was expressed that enforcement of the statute could curtail artistic expression because during the course thereof one might touch his or her own clothed or unclothed pubic area, buttocks or breast in an act of apparent sexual stimulation or gratification.
In Doran v. Salem Inn, Inc., 422 U.S. 922, 95 S. Ct. 2561, 45 L. Ed. 2d 648 (1975) the Supreme Court held that "even though a statute or ordinance may be constitutionally applied to the activities of a particular defendant, that defendant may challenge it on the basis of overbreadth if it is so drawn as to sweep within its ambit protected speech or expression of other persons not before the court," 422 U.S. at 933, 95 S.Ct. at 2568-69. See also Grayned v. City of Rockford, 408 U.S. 104, 92 S. Ct. 2294, 33 L. Ed. 2d 222 (1972); Mini Spas, Inc. v. South Salt Lake City Corp., 810 F.2d 939, 942 (10th Cir.1987). In the case before us, the Utah prostitution statute applies to "sexual activity" with another person for a fee" Utah Code Ann. § 76-10-1302(1)(a) (emphasis added), but the term "sexual activity" in the underlined portion of the statute under scrutiny embraces acts of touching "whether alone or between members of the same or opposite sex" Utah Code Ann. § 76-10-1301 (emphasis added). The breadth and reach of the statute is clearly too wide, as well as being inconsistent with the prostitution law itself. As written, the statute embraces conduct that very well justifiably may be regulated under the police power of the state, but it is so broad as also to embrace conduct which could not justifiably be so regulated. Whether the particular offending language could be severed, or interpreted as consistent with the pre-existing law, is doubtful. In all events, however, the statute does not pass constitutional muster because it is impermissively vague.
B. Vagueness
There is no definition or standard set forth in the statute concerning the meaning of the term "apparent or actual sexual stimulation or gratification." Without some standard of objective measurement, subjective interpretation of allegedly offensive acts and conduct, either as constituting "apparent" or even "actual" sexual stimulation or gratification, could and likely would be wholly capricious. Without such a standard, many of the ordinary acts associated with performances could be subjectively so construed.[5]
*1071 The law is clear that persons who must conform their conduct to particular requirements are entitled to fair notice of what is permitted and what is proscribed. Village of Hoffman Estates v. Flipside Hoffman Estates, 455 U.S. 489, 102 S. Ct. 1186, 71 L. Ed. 2d 362 (1982); Grayned v. City of Rockford, supra; United States v. Salazar, 720 F.2d 1482, 1484-85 (10th Cir.1983). If a law does not provide standards against which a person's conduct may be measured it is unconstitutionally vague and "incapable of any valid application," Steffel v. Thompson, 415 U.S. 452, 94 S. Ct. 1209, 39 L. Ed. 2d 505 (1974); Smith v. Goguen, 415 U.S. 566, 94 S. Ct. 1242, 39 L. Ed. 2d 605 (1974). The enactment at issue provides no standards against which a person's conduct may be measured and is susceptible to mischievous subjective application. Thus, it is unconstitutionally vague.
It should be noted that under this court's prior ruling the statute as enacted by the Utah Legislature is severable, so only the underlined portions here under scrutiny are now held to be unconstitutional.[6] Also, acts which are obscene, or constitute lewd conduct, while not acts of prostitution, are prohibited under other sections of Utah law.[7] Finally, it should be noted that the court does not reach the contention of plaintiffs that the statute is unconstitutional under the First Amendment as an impermissible infringement of free expression, since the basis upon which the court strikes down the statute is that it offends the Fourteenth Amendment.[8]
For the reasons aforesaid, this court holds the severed portion of Utah Code Ann. § 76-10-1301(1) (Supp.1987) to be in violation of the due process clause of the Fourteenth Amendment of the United States Constitution.
Counsel for the State of Utah is directed to submit a form of Judgment to the Court in accordance with this Memorandum Decision and Order, after compliance with Rule 13(e) of the Rules of this Court.
IT IS SO ORDERED.
NOTES
[1] On April 8, 1987, the city of South Salt Lake passed an identical amendment to its ordinances, which became effective May 5, 1987. City of South Salt Lake, Utah, Ordinance 202 (April 8, 1987), to be codified at § 8C-8-5.
[2] Order, November 5, 1987.
Additional questions addressed to counsel were:
Does the Attorney General's stipulation that part of Utah Code Ann. § 76-10-1301(1) is unenforceable by the state destroy plaintiffs' standing in this case, or eliminate this case as a "case or controversy" for jurisdictional purposes?
What effect would this Court's approval of the parties' tendered stipulation have on:
a. The right of plaintiffs to engage in the activities they allege are protected?
b. The rights of third parties to engage in such allegedly protected activities?
c. The power of present and future Attorney Generals to enforce Utah Code Ann. § 76-10-1301(1)?
d. Utah Code Ann. § 76-10-1301(1)?
Id.
[3] Brief of State of Utah and David L. Wilkinson at p. 11. In support of this proposition, the State cited D'Amico v. Board of Medical Examiners, 520 P.2d 10, 20-21 (Cal.1974) (attorney general with common law powers, as representative of the public interest, may concede "constitutional facts").
[4] Since this court regards the statute as unconstitutional under the Fourteenth Amendment, the Free Speech issues under the First Amendment are not reached.
[5] "The clasping of a breast in the display of emotion, such as when a female clasps her breast with a sight of longing when she sees her paramour, could be construed as an act or apparent of actual sexual stimulation or gratification. A slap on the posterior made as a lover's greeting, in a play for example, could be considered an act or apparent of actual sexual stimulation or gratification. Placing the hands on the hips with the fingertips touching the buttocks and making a grinding motion with the hips could be considered an act of apparent or actual sexual stimulation or gratification. Touching the genitals as a part of a comedy routine, as has often been done by performers, could be construed as an act or apparent of actual sexual stimulation or gratification. When a dancer grabs their own or another dancers buttocks to aid in a gymnastic maneuver which is part of a dance with sexual connotations, it could be construed as an act of apparent or actual sexual stimulation of gratification. When an actor in a play is on his or her knees and embraces a standing actor, while pressing his or her head against their buttocks or pubic area, even though clothed, it could be construed as an act or apparent or actual sexual stimulation or gratification." Plaintiff's Memorandum in Support of Plaintiffs' Motion for Temporary Restraining Order and Preliminary Injunction, p. 12.
[6] Under the portion of the statute which was severed and held to be enforceable by this court, acts of masturbation and sexual intercourse are prohibited when engaged in with another person for a fee.
[7] Acts of obscenity are prohibited under § 76-10-1204, Utah Code Annotated, and lewd conduct is proscribed under § 76-9-702 of the Utah Code.
[8] See supra n. 4.
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744 S.W.2d 690 (1988)
Sydney BONHAM and Ward Fairchild, Appellants,
v.
David C. FLACH, Appellee.
No. 04-87-00363-CV.
Court of Appeals of Texas, San Antonio.
January 27, 1988.
*691 William Keaton Blackburn, Junction, for appellants.
Edwin H. White, Rocksprings, for appellee.
Before BUTTS, REEVES, and CHAPA, JJ.
CHAPA, Justice.
This suit arises out of the termination of employment of appellee, David C. Flach, from the Edwards County, Texas, road department.
Appellee brought suit against:
a) Neville G. Smart, Jr., individually and as County Judge of Edwards County, Texas;
b) Tony Villarreal, individually and as Commissioner of Precinct No. 1, Edwards County, Texas;
c) Gene Borchardt, individually and as Commissioner of Precinct No. 2, Edwards County, Texas;
*692 d) Sidney Bonham, individually and as Commissioner of Precinct No. 3, Edwards County, Texas;
e) Bill Mitchell, individually and as Commissioner of Precinct No. 4, Edwards County, Texas;
f) Ward Fairchild, individually and as county road superintendent of Edwards County, Texas; and
g) Edwards County, Texas.
All of the defendants with the exception of Bonham, Fairchild, and Edwards County, Texas were dismissed prior to the case being submitted to the jury.
Although various causes of action are alleged in the pleadings, the basic cause of action is tortious interference with appellee's contract of employment with the county road department. The jury findings were favorable to appellee. The jury found actual damages in the amount of $3,300.00; that Fairchild acted maliciously and awarded $3,500.00 in exemplary damages against him; that Bonham acted maliciously and awarded $10,000.00 in exemplary damages against her; and granted appellee $8,600.00 in attorney's fees. However, the trial court granted Edwards County, Texas a non obstante veredicto judgment based upon the doctrine of sovereign immunity. After granting a motion to disregard the jury finding on attorney's fees, the court entered judgment against appellants Fairchild and Bonham, who have perfected this appeal.
The issues before this court are that:
1) the trial court erred in overruling the motion for instructed verdict and non obstante veredicto because there was no evidence that Fairchild and Bonham acted in their individual capacity;
2) the record contains no evidence or insufficient evidence to sustain the verdict against Fairchild and Bonham in their individual capacity;
3) the record contains no evidence or insufficient evidence to sustain the verdict against Fairchild and Bonham as to exemplary damages.
Appellee has cross-assigned error in connection with attorney's fees.
Appellants' initial complaint is that the court erred in not granting an instructed verdict or a non obstante veredicto judgment in favor of Fairchild and Bonham.
In an instructed case, our task is to determine whether there is any evidence of probative force to raise fact issues on the material questions presented. Upon review, we must consider all of the evidence in its most favorable light in support of the plaintiff's position and discard all contrary evidence and inferences. Anderson v. Moore, 448 S.W.2d 105 (Tex. 1969); Triangle Motors of Dallas v. Richmond, 152 Tex. 354, 258 S.W.2d 60 (1953).
Henderson v. Travelers Insurance Company, 544 S.W.2d 649, 650 (Tex.1976). A motion for judgment non obstante veredicto should be granted only when a directed verdict would have been proper. TEX.R. CIV.PROC. 301.
In acting on the motion, all evidence must be considered in a light most favorable to support the jury verdict, and `every reasonable intendment deducible from the evidence' is to be indulged in favor of the verdict. Douglass v. Panama, Inc., 504 S.W.2d 776, 777 (Tex. 1974); Leyva v. Pacheco, 163 Tex. 638, 358 S.W.2d 547 (1962). Only the evidence and inferences therefrom that support the jury finding should be considered, with all contrary evidence and inferences being rejected. Burt v. Lochausen, 151 Tex. 289, 249 S.W.2d 194 (1952).
Dodd v. Texas Farm Products Company, 576 S.W.2d 812, 814 (Tex.1979).
In the motions for instructed verdict and judgment non obstante veredicto, appellants argued that they were acting in an official capacity when they discharged appellee, and they therefore enjoy official immunity. Bagg v. University of Texas Medical Branch at Galveston, 726 S.W.2d 582, 586 (Tex.App.Houston [14th Dist.] 1987, writ ref'd n.r.e.); Kelly v. Galveston County, 520 S.W.2d 507, 513 (Tex.Civ.App. Houston [14th Dist.] 1975, no writ). However, official immunity only shields persons from suits complaining of official *693 acts. Persons can still be sued in their individual capacities for wrongful unofficial acts. Bagg v. University of Texas Medical Branch of Galveston, 726 S.W.2d at 586. Therefore, the question before this court is whether there is evidence of probative force in the record that appellants committed acts in discharging appellee which could not have been within the scope of their official duties.
Kelly v. Galveston County, involved a summary judgment granted by the trial court in favor of the defendant public officials. In reversing, the court of appeals held that the summary judgment was not proper since plaintiff alleged a conspiracy on the part of the public officials to have plaintiff dismissed, actions which exceeded the legitimate bounds of their office, and the public officials did not sufficiently controvert the allegation in their summary judgment evidence.
The evidence in the record, considered in the light most favorable to the verdict, which tends to support a conspiracy between Fairchild and Bonham to cause appellee's dismissal is:
1) that Fairchild's immediate supervisor was Bonham;
2) that Fairchild and Bonham worked together and consulted often;
3) that Fairchild and Bonham disliked Flach;
4) that both Fairchild and Flach applied for the job of road superintendent;
5) that Bonham nominated Fairchild for the position and opposed Flach;
6) that before the Commissioners Court, Bonham failed to fully disclose all the facts pertaining to an incident involving Flach and his qualifications for road superintendent;
7) that Fairchild was appointed road superintendent on October 15, 1985;
8) that on October 29, 1985, Fairchild and Bonham, without authority to discharge Flach, prepared a letter purporting to terminate Flach's employment, citing reasons which did not constitute "just cause";
9) that on November 15, 1985, the Commissioners Court upheld the firing of Flach.
The point is overruled.
In the next point, appellants contend the record contains no evidence or insufficient evidence to sustain the verdict. Specifically, appellant argue that there is no evidence or insufficient evidence which establishes that they individually tortiously interfered with appellee's contract of employment.
To maintain a cause of action for tortious interference with a contract, it must be established that 1) there was a contract subject to interference, 2) the act of interference was willful and intentional, 3) such intentional act was a proximate cause of plaintiff's damages, and 4) actual damage or loss occurred. Armendariz v. Mora, 553 S.W.2d 400, 404 (Tex.Civ.App. El Paso 1977, writ ref'd n.r.e.).
In determining a no evidence point, appellate courts consider only the evidence supporting the jury's finding in its most favorable aspect and give effect to all reasonable inferences which may be properly drawn therefrom. In determining factually insufficient evidence points such courts consider the evidence supporting the jury finding and determine whether its probative effect is of sufficient strength to support the finding. And further, in determining factual insufficiency all evidence will be considered by courts of appeals to determine whether the jury's finding is so contrary to the great weight and preponderance of the evidence as to be unjust. Dolenz v. Continental National Bank of Fort Worth, 620 S.W.2d 572, 576 (Tex.1981); Elliot v. Great National Life Insurance Co., 611 S.W.2d 620, 621 (Tex.1981); In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951); Calvert, `No Evidence' and `Insufficient Evidence' Points of Error, 38 TEX.L.REV. 361 (1960).
Steinmetz & Associates, Inc. v. Crow, 700 S.W.2d 276, 278 (Tex.App.San Antonio 1985, writ ref'd n.r.e.).
*694 The record reflects evidence that Flach had a contract of employment with Edwards County that was subject to interference; that he was hired in 1983 with a promise that he would have the job as long as he did his work; that the appellants, who disliked Flach, consulted together and willfully and intentionally without authority or "just cause" initiated Flach's discharge, hiring immediately a relative of Fairchild to replace Flach; that such improper acts of the appellants were a proximate cause of Flach's loss of his employment, income, and benefits.[1] We find that there was probative evidence to support a finding of tortious interference and that the evidence was not so insufficient as to "shock the conscience." Pool v. Ford Motor Company, 715 S.W.2d 629 (Tex.1986). The second point of error is overruled.
In their final point, appellant contend the record contains no evidence or insufficient evidence to sustain the award of exemplary damages.
Actual malice is a necessary element to sustain an award of exemplary damages. Amendariz v. Mora, 553 S.W.2d at 407.
As suggested in Clements v. Withers, [437 S.W.2d 818 (Tex.1969) ] the problem presented is the distinction between the intent on the part of the Defendant to contract favorably and profitably among themselves knowing that they were going to cause a breach of the Plaintiff's contract which would be a wrong and a basis for actual damages. Or, on the other hand, were the motives and purposes on the part of the Defendants those of acting with `ill-will, spite, evil motive, or purposing the injury of another.'
Armendariz v. Mora, 553 S.W.2d at 407.
The record reflects evidence that the appellant disliked appellee; initiated unauthorized actions to discharge Flach in what appears to be retaliation for Flach opposing Fairchild for the supervisor's job; improperly discharged Flach without just cause; and pursued their improper attempt to discharge Flach, obtaining his discharge by the Commissioners Court. Applying the appropriate standard of review, we find the evidence sufficient to justify the award of exemplary damages.
Appellants also contend that the evidence does not support the finding of exemplary damages since there was no proof establishing the amount of exemplary damages.
Exemplary damages are intended to punish defendants and to set example to others. They are assessed over and above the amount of damages necessary to indemnify the plaintiff. Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549, 555-56 (Tex.1985). The amount to be awarded rests largely in the discretion of the jury, and unless the award is so large as to indicate that it is the result of passion, prejudice or corruption, or that the evidence has been disregarded the verdict of the jury is conclusive and will not be set aside on appeal. Bond v. Duren, 520 S.W.2d 460, 463 (Tex.Civ.App.Waco 1975, writ ref'd n.r.e.). Exemplary damages were authorized by the record and we find the amount awarded is not excessive. The point is overruled.
By cross-point, appellee complains of the trial court's holding that appellee was not entitled to recover attorney's fees because "the evidence gave no breakdown of the time expended by [appellee's attorney] on the unsuccessful claim against the Defendant County and the successful claim against the two individual Defendants. Thus, the evidence fails to support an award of attorney's fees against the individual Defendants." There being no limitation in connection with appellants' appeal from the judgment below, we must consider the cross-point of error. Hernandez v. City of Fort Worth, 617 S.W.2d 923, 924 (Tex.1981); Brown v. Cox, 459 S.W.2d 471, 474 (Tex.Civ.App.Houston [14th Dist.] 1970, writ ref'd n.r.e.). Further, no complaint *695 has been made to appellee assigning the cross-point on appeal.
The special issue on attorney's fees requested the jury to find appellee's fees for the entire case. Appellants failed to object to the special issue. Appellants, therefore, waived any complaint that the trial court allowed the jury to consider and award attorney's fees not associated with appellee's successful claim. Matthews v. Candlewood Builders, Inc., 685 S.W.2d 649 (Tex.1985). The cross-point is sustained.
The judgment as to attorney's fees is reversed and rendered in accordance with the jury finding. The judgment is affirmed in all other respects.
NOTES
[1] The jury found in Special Issue No. 3 that Edwards County required that employees be discharged only for good cause. In Special Issue No. 4, the jury found that Flach was not discharged for good cause. Appellants do not challenge these findings on appeal.
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744 S.W.2d 956 (1988)
E-SYSTEMS, INC., Appellant,
v.
Ed TAYLOR & R.D. Burnett, Appellee.
No. 05-86-01217-CV.
Court of Appeals of Texas, Dallas.
January 11, 1988.
Rehearing Denied February 22, 1988.
*957 Jess C. Rickman, III, Terri A. Hunter, Dallas, for appellant.
Cornel W. Walker, Dallas, for appellee.
Before DEVANY, LAGARDE and THOMAS, JJ.
LAGARDE, Justice.
E-Systems, Inc. appeals from a judgment awarding Ed Taylor and R.D. Burnett damages in their suit for additional retirement benefits. Because we agree with E-System's thirty-first point of error that the Employee Retirement Income Security Act, 29 U.S.C.A. § 1001 et seq (1974)[1] (ERISA) pre-empted Taylor's and Burnett's claims, we reverse the trial court's judgment and dismiss the cause.
The following facts underlying this controversy are undisputed. Taylor and Burnett are former employees of E-Systems who retired from the company and received retirement benefits under the union negotiated company pension plan. Taylor originally retired in 1978 and, at that time, the "multiplier rate" used to determine his monthly retirement benefits was $9. Burnett originally retired in 1980; the multiplier rate used to determine his monthly benefits was $10.
In 1981, Taylor and Burnett were re-hired by E-Systems. They returned to work and continued to draw monthly retirement benefits in addition to hourly wages until each finally re-retired in 1983. Shortly after Taylor and Burnett returned to work, each learned that if he worked one thousand hours during one calendar year, he could re-retire at the then current multiplier rate of $12. Each worked at least one thousand hours during a calendar year and when each retired, the multiplier rate of $12 was used to re-calculate the retirement benefits to which each would be entitled. In re-calculating Taylor's and Burnett's retirement benefits, E-Systems also offset against the new benefits the retirement benefits each had already received, applying the following provision contained in the pension plan:
Reemployment of Retired Participants: If a retired Participant who is receiving Pension payments is reemployed by the Employer, Pension payments shall be continued until he has worked one thousand (1,000) Hours of Service after such reemployment within a Plan Year. No Pension payments shall be made from the Pension Trust during the period of such reemployment after the Participant has worked one thousand (1,000) or more Hours of Service after such reemployment in any Plan Year. Upon the subsequent termination of employment by a retired Participant, the Participant shall be entitled to receive a Pension based on his Benefit Service prior to the date of previous Retirement, increased by any Benefit Service credited during the period of his reemployment. In the case of reemployment of a retired Participant who received any Pension payments prior to his reemployment, the Pension payable upon his subsequent Retirement shall be reduced by the Actuarial Equivalent of any Pension Payments, except Disability Pension payments, he received prior to his Normal Retirement Date during his previous period of Retirement.
(Emphasis added). As a result, despite use of the higher multiplier rate, neither Burnett nor Taylor received an increase in his monthly retirement benefits.
The controverted facts at trial[2] concern oral representations that Taylor and Burnett contend were made by representatives *958 of E-Systems. At trial, Taylor testified that about four months after he had returned to work, he went to Leslie Brown's office to turn in his resignation. Brown worked in the benefits section for E-Systems. Taylor testified that, during his discussion with Brown, Brown stated: "If you'll stay and work a thousand hours, we will completely re-retire you at the present day rate." Taylor testified that he did some calculations in his head and told Brown "that would mean somewhere between $50 and $60 a month raise." He testified that "I made the statement that I'd be stupid not to stay and take advantage of it, and he [Brown] said, `you're absolutely right.'" Brown did not mention any "formula" by which benefits were to be calculated, nor did Brown refer Taylor to the employee handbook for further information regarding how retirement benefits were calculated. Taylor testified that, to him, "present day rate" meant twelve dollars a month per year of service with E-Systems.
Similarly, Burnett testified that he planned to quit work until he was told by Louis Pippin in the benefits section of E-Systems that "if you'll stay ... and work a thousand hours, Poncho, you can re-retire at the present rate of retirement." Burnett testified that he did calculations using the $12 multiplier that caused him to arrive at a monthly increase of $52 over the retirement benefits he was then receiving. He testified that he told Pippin "that sounds like a pretty good deal." He also testified that, to him, "present rate of retirement" meant the $12 multiplier.
Taylor and Burnett contend that their suit against E-Systems is simply one to enforce an oral agreement to pay additional monthly retirement benefits. Accordingly, they argue that their cause of action is entirely independent of ERISA and the E-Systems pension plan and is, therefore, not pre-empted by ERISA. E-Systems, however, contends that Taylor's and Burnett's suit actually is one to enforce an oral agreement to modify the retirement plan by eliminating the offset provision of the plan in calculating Taylor's and Burnett's retirement benefits. Thus, E-Systems contends that the cause of action is pre-empted by ERISA. In light of the evidence on which Taylor and Burnett rely and the way the pertinent special issues at trial were worded, we agree with E-Systems. Thus, we do not reach the broader question of whether a suit given Taylor's and Burnett's characterization would also be pre-empted by ERISA.
Section 1144(a) of ERISA provides:
Except as provided in subsection (b)[3] of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title. This section shall take effect on January 1, 1975.
By enacting ERISA, Congress set out:
to protect the interests of participants in employee benefit plans and their beneficiaries, by requiring the disclosure and reporting to participants and beneficiaries of financial and other information with respect thereto, by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing appropriate remedies, sanctions, and ready access to the Federal courts.
Section 1001(b). Accordingly, the pre-emption provisions of ERISA are deliberately expansive, designed to establish pension plan regulation as exclusively a federal concern. Pilot Life Insurance Co. v. Dedeaux, ___ U.S. ___, 107 S. Ct. 1549, 1552, 95 L. Ed. 2d 39 (1987); Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523, 101 S. Ct. 1895, 1906, 68 L. Ed. 2d 402 (1981). *959 The term "state law" as used in section 1144 encompasses "all laws, decisions, rules, regulations, or other State action having the effect of law, of any State." Section 1144(c). For purposes of that section, a state's law includes its decisional law. Light v. Blue Cross and Blue Shield of Alabama, Inc., 790 F.2d 1247, 1249 (5th Cir.1986). Of course, the state law must, under section 1144, also "relate to" an employee benefit plan. A law "relates to" an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 104 S. Ct. 2890, 2900, 77 L. Ed. 2d 490 (1983). That phrase has given rise to some confusion where it is asserted to apply to a state law ostensibly regulating a matter quite different from pension plans. Alessi, 451 U.S. at 523, 101 S.Ct. at 1906. Nevertheless, courts have consistently held that, because of the broad goals of Congress in passing ERISA and the sweeping scope of the pre-emption section, ERISA pre-empts even state common law causes of action that do not explicitly concern pension plans. See Dedeaux, ___ U.S. ___, 107 S.Ct. at 1553; Alessi, 451 U.S. at 524-25, 101 S.Ct. at 1907; Scott v. Gulf Oil Corp., 754 F.2d 1499, 1504 (9th Cir.1985). Instead, pre-emption of state law claims by ERISA depends on the conduct to which such a law is applied, not on the form or label of the law. Scott, 754 F.2d at 1504.
At trial, the jury affirmatively answered two special issues, one concerning Taylor, the other concerning Burnett, which asked:
Do you find from a preponderance of the evidence that there was a contract between [each of the employees] and E-Systems, Inc. providing that [each employee] would receive increased retirement benefits on a monthly basis without regard to any offset or reduction as contained in the retirement plan?
Thus, it is clear that, although the common law cause of action asserted by Taylor and Burnett ostensibly does not regulate pension plans, the conduct relied on by Taylor and Burnett to establish their claims does, indeed, refer to and affect the administration of the pension plan.
Under similar facts, other courts have held that common law causes of action are pre-empted by ERISA. In Ogden v. Michigan Bell Telephone Co., 571 F. Supp. 520 (E.D.Mich.1983), the employees had been told by the fiduciary of the company's severance benefits plan that the benefits would never again be available and that "anyone considering retirement should not wait for another offering of" the benefits. Ogden, 571 F.Supp. at 521. The employees, relying on this statement, retired and when the company later announced that the benefits would again be available, the employees brought suit, alleging inter alia, a cause of action for common law fraud. Id. In dismissing this claim, the court emphasized that Congress unambiguously indicated its intent to "occupy the field" of pension plan regulation by enacting section 1144(a) and that ERISA provided the employees with a remedy for any misrepresentation by the fiduciary. Ogden, 571 F.Supp. at 523. Accordingly, the court held that ERISA pre-empted the cause of action for fraud.
Similarly, in Muenchow v. Parker Pen Co., 615 F. Supp. 1405 (W.D.Wisc.1985), the employees brought suit based upon misrepresentations by company officials concerning the scope of proposed lay offs. Muenchow, 615 F.Supp. at 1410. The employees, relying on these representations, accepted benefits under the severance pay plan and terminated their seniority with the company. Id. In dismissing the employees' suit for reinstatement and back pay, the court agreed that the severance pay plan was governed by ERISA and that their claim was, therefore, pre-empted by ERISA. Muenchow, 615 F.Supp. at 1416-17. The court held that "[a]lthough [the employees] do not allege that [the company] was acting as a fiduciary under ERISA in making statements concerning its future employment needs, [the employees] cannot avoid the preemptive effect of § 1144(a) by simply *960 omitting from their complaint all references to a violation of § 1104(a)(1)" (governing fiduciary duties). Muenchow, 615 F.Supp. at 1417.
The holdings in Ogden and Muenchow appear to reflect the majority view concerning the scope of section 1144(a), although in Provience v. Valley Clerks Trust Fund, 509 F. Supp. 388 (E.D.Cal.1981), the court held that ERISA did not pre-empt the employees' state law claim that the company had fraudulently misrepresented the nature of benefits available under its medical plan. Id. at 391-92. In light of the Supreme Court's recent decision in Dedeaux, however, we believe that Ogden and Muenchow represent the sounder view.
Of course, Ogden, Muenchow, and Provience all concern causes of action based upon misrepresentation, while in the present case, Taylor and Burnett assert an oral agreement that, as stated in the special issues, each "would receive increased retirement benefits on a monthly basis without regard to any offset or reduction as contained in the retirement plan." Nevertheless, a cause of action based upon misrepresentation is analogous to the present case, as is a cause of action based on promissory estoppel, which has also been held pre-empted by ERISA. See United Electrical, Radio and Machine Workers v. Amcast Industrial Corp., 634 F. Supp. 1135, 1143 (S.D.Ohio 1986).[4]
We also note that policy considerations weigh against Taylor's and Burnett's claim. Section 1104(a)(1)(D) requires that the plan be administered "in accordance with the documents and instruments governing the plan insofar as the documents and instruments are consistent with the provisions of [ERISA]." Section 1104(a)(1)(D). Thus, were we to permit claims such as Taylor's and Burnett's, the administrator of the plan would be faced with the competing duties of administering the plan as written, yet ignoring certain provisions of the plan when calculating the retirement benefits due particular employees. Cf. Blau v. Del Monte Corp., 748 F.2d 1348, 1353 (9th Cir. 1985) ("[t]he administrator of an employee welfare benefit plan ... has no discretion to secrete the plan, to flout the reporting, disclosure and fiduciary obligations imposed by ERISA, or to deny benefits in contravention of the plan's plain terms"). We also note that the E-Systems' pension plan was the result of a bargaining agreement between the company and the employees' union. Thus, permitting particular employees to assert claims that would result in the recovery of benefits not available to other employees might run afoul not only of ERISA, but also of the provisions of the National Labor Relations Act. We conclude that it is just such difficulties that Congress sought to avoid by enacting the sweeping pre-emption provision of ERISA. Thus, we hold that Taylor's and Burnett's claim is pre-empted by ERISA.
The trial court's judgment is reversed and the cause is dismissed.[5]
NOTES
[1] All statutory references are to 29 U.S.C.A. § 1001 et seq. unless otherwise noted.
[2] E-Systems presents points of error concerning both the legal and the factual sufficiency of the evidence. Because of our disposition of this case, we do not reach those points of error.
Nevertheless, a recitation of some of the facts is necessary to place the issues in perspective. We recite only the facts necessary for that purpose and, in doing so, we apply neither of the respective standards for reviewing the legal or factual sufficiency of the evidence, nor make any holding on E-System's points of error complaining of the sufficiency of the evidence.
[3] The provisions of subsection (b) of section 1144 are not applicable to the present case.
[4] Other common law causes of action which have been held to be pre-empted by ERISA include tortious breach of contract, breach of fiduciary duty, and fraud in the inducement, Dedeaux, ___ U.S. ___, 107 S.Ct. at 1551; bad faith refusal to pay claims and infliction of emotional distress, Light 790 F.2d at 1247-48; breach of employment agreement, Scott, 754 F2d at 1505; and fraud, breach of contract, and deceit, Blau v. Del Monte Corp., 748 F.2d at 1356-57.
[5] Because pre-emption concerns the trial court's subject matter jurisdiction over the claim, this court, once it determines that the trial court lacked subject matter jurisdiction, can only reverse the trial court's judgment and dismiss the cause. See City of Garland v. Louton, 691 S.W.2d 603, 605 (Tex.1985).
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679 F. Supp. 608 (1987)
Paul C. TATE, Jr.
v.
John Ed BRADLEY and Washington Post Company.
Civ. A. No. 85-0570.
United States District Court, W.D. Louisiana, Lafayette Division.
February 27, 1987.
Fruge & DeJean, Kenneth DeJean, Lafayette, La., for plaintiffs.
Caffery, Oubre, Dugas & Campbell, Patrick T. Caffery, New Iberia, La., and Williams & Connolly, Kevin T. Baine and Jeffrey B. Kindler, Washington, D.C., for defendants.
*609 RULING
NAUMAN S. SCOTT, District Judge.
This matter is now before us on a Motion for Summary Judgment filed by defendants John Ed Bradley and the Washington Post Company.
Plaintiff, Paul C. Tate, Jr., brought this action for defamation based upon quotations which were attributed to him in an article entitled "Cajun Mardi Gras: The Native Returns for Raucous Rites," (the "article") which was published in the Washington Post on March 7, 1984. As the title implies, the article is a description of Mardi Gras festivities as celebrated in a "colorful Cajun atmosphere" at Church Point, Louisiana, and as observed by the writer, John Ed Bradley, a former resident of nearby Opelousas, Louisiana.
Since before March 1984, plaintiff has served as the President of the Mamou Mardi Gras Association and the Mamou Cajun Music Festival Association in Mamou, Louisiana. Plaintiff is also a practicing attorney and has served as a Town Alderman of Mamou since being elected in 1981. In addition, plaintiff has served as Secretary of the Evangeline Parish Gravity Drainage District No. 4 for approximately the past five years. During the summer of 1985, plaintiff was appointed by the Governor to a position on the Council for the Development of French in Louisiana (CODOFIL). CODOFIL is a subagency within the State Department of Education and its purpose is "to accomplish the development, utilization and preservation of the French language as found in the State of Louisiana for the cultural, economic and tourist benefit of the State." La.R.S.Ann. §§ 25:651-53 (1975); 36:651 (1985). Although at the time the article was published, plaintiff had not been appointed to CODOFIL, he had aspired to that position at that time, and has claimed that the article had a bearing upon whether or not he would receive that appointment. Dep.Tr. of Plaintiff, pp. 7-17. Plaintiff considers himself, and is viewed by others, to be a leader of the movement for the preservation of the Cajun culture and heritage in Louisiana, and he has acted as a spokesman for that cause on various occasions. Dep.Tr. of Plaintiff, pp. 16-20. His efforts to promote the celebration of Mardi Gras and the Cajun culture in Louisiana have received attention from local media and press, as well as coverage in the March 4, 1985 issue of Time Magazine. As President of the Mamou Mardi Gras Association and the Mamou Cajun Music Festival Association, plaintiff "views it as an important part of [his] job to deal with the press and educate them on the missions of those two organizations and on what the Cajun culture is all about." Dep.Tr. of Plaintiff, p. 30.
"[O]ne of the most sensitive positions of all [is] trying to get across to the many, many press organizations and individuals and artists and writers and photographers, film photographers, cinematographers, video photographers, whatever, to try to educate them as to what the culture is and why it has survived and why it's important that it continues to survive, because it's so easily distorted by people who are less sensitive to ethnic groups."
Dep.Tr. of Plaintiff, p. 29 (emphasis added). Plaintiff has also written various articles for local newspapers regarding his duties as Mamou Town Alderman.
Approximately one week before Mardi Gras, Bradley contacted the plaintiff, who he understood was in charge of the Mamou Mardi Gras, and discussed his desire to write an article about Cajun Mardi Gras. Based on their discussion, Bradley decided to attend the Mardi Gras celebration in Church Point, since it occurred before the Mamou celebration and Bradley wanted the extra time to prepare the article for publication the morning after Mardi Gras.[1] Affidavit of John Ed Bradley, ¶ 5; Dep.Tr. of Plaintiff, p. 36. Bradley then attended the *610 celebration in Church Point and was accompanied by Jerry Ward, a freelance photographer from Baton Rouge. At some point during the day, Bradley interviewed the plaintiff. This interview apparently became the basis for the following portion of the Post article written by Bradley:
"The gravel road cuts through a dried-out soybean field and a crawfish farm. The courir stops to eat links of boudin (red-hot Cajun sausage) and hard-boiled eggs. The native says it has been over 13 months since he's eaten boudin.
"`People don't know what tastes good up dare, do dey?' says Paul Tate, Jr., whose father had helped found both Mamou's and Church Point's Official Courir de Mardi Gras almost 25 years ago.
"The native shakes his head no and asks for another beer.
"You get north of Shreveport and you lose the South," Tate says. `All you got is Americans up dare. Well, I'm an American, but I'm a Cajun first. Americans look down on anyone who doesn't speak their own language. But you know what you can do, Coonass? You can just tell America that we're French and we're proud. Tell America a Coonass ain't nothing to be ashamed of. They ran our ancestors out of Acadia (Canada) for political reasons but we got a home here in Loozianne. So go back, you. And take your time. But tell'em we'll live here forever.'
"The courir cranks up again and passes rows of house trailers and shotgun shanties that sit like shipwrecks in the muddy fields...."
The plaintiff alleges in his complaint that when publishing the article, the defendants deliberately misquoted remarks he made during the conversation with Bradley and distorted the manner in which he spoke those remarks. Plaintiff alleges that these misrepresentations portray him as "an inarticulate, illiterate and confused person concerning the role of the French culture in Louisiana," and as a result, have caused him to suffer "an extreme amount of humiliation, embarrassment and damage to his professional and personal reputation." Plaintiff's Original Complaint, ¶ 4-6. In addition, he alleges that the article has damaged "his reputation in the community [as] a strong promoter of the French culture." Plaintiff's Original Complaint, ¶ 7. The defendants argue that their Motion for Summary Judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure should be granted on the grounds that it is undisputed that (1) the quoted material in the article is accurate in substance and is not defamatory; (2) the language and spellings used in the article are not defamatory on their face and there is no evidence of common law malice; and (3) the plaintiff is both a public official and a public figure, and there is no evidence of constitutional malice within the rule of New York Times Co. v. Sullivan, 376 U.S. 254, 84 S. Ct. 710, 11 L. Ed. 2d 686 (1964).
In Louisiana in order to recover for defamation a plaintiff must prove: (1) Defamatory words; (2) Publication or communication to some person other than the one defamed; (3) Falsity; (4) Malice, actual or implied; and (5) Resulting injury. Madison v. Bolton, 234 La. 997, 102 So. 2d 433 (1958); Cashio v. Holt, 425 So. 2d 820 (La. App. 5th Cir.1982), writ denied, 430 So. 2d 94 (1983); Carter v. Catfish Cabin, 316 So. 2d 517 (La.App.2d Cir.1975); cf. Bartimo v. Horsemen's Benevolent & Protective Assn., 771 F.2d 894 (5th Cir.1985); Manale v. City of New Orleans, 673 F.2d 122 (5th Cir.1982). In addition to State law requirements, a plaintiff must also satisfy Federal constitutional standards as set forth by the United States Supreme Court in New York Times Co. v. Sullivan, 376 U.S. 254, 84 S. Ct. 710, 11 L. Ed. 2d 686 (1964). In Sullivan, the Court held that where defamation of a "public official" has been alleged, then the plaintiff must prove that the defamatory statement was made with "actual malice that is, with knowledge that it was false or with reckless disregard of whether it was false or not." Id. at 279-80, 84 S.Ct. at 725-26, 11 L.Ed. 2d at 706. The actual malice requirement is intended to safeguard freedom of expression on public issues as required by the First Amendment and applied to the states through the Fourteenth Amendment. This *611 First Amendment protection exists "against the background of a profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide open, and that it may well include vehement, caustic, and sometimes unpleasantly sharp attacks on government and public officials." Id. at 270, 84 S.Ct. at 721, 11 L.Ed.2d at 701. The actual malice test "requires a plaintiff to demonstrate with clear and convincing evidence that the defendant realized that his statement was false or that he subjectively entertained serious doubt as to the truth of the statement." Bose Corp. v. Consumers Union of United States, Inc., 466 U.S. 485, 511 n. 30, 104 S. Ct. 1949, 1965, n. 30, 80 L. Ed. 2d 502, 524, n. 30 (1984).
In the companion cases Curtis Publishing Co. v. Butts and Associated Press v. Walker, 388 U.S. 130, 87 S. Ct. 1975, 18 L. Ed. 2d 1094 (1967), the Court extended application of the actual malice requirement to defamation cases involving "public figures" those who are "intimately involved in the resolution of important public questions or, by reason of their fame, shape events in areas of concern to society at large." Id. at 164, 87 S.Ct. at 1996, 18 L.Ed.2d at 1116 (Warren, C.J., concurring). In Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S. Ct. 2997, 41 L. Ed. 2d 789 (1974), the Court commented on the effect of applying the New York Times actual malice standard in defamation cases:
"This standard administers an extremely powerful antidote to the inducement to media self-censorship of the common-law rule of strict liability for libel and slander. And it exacts a correspondingly high price from the victims of defamatory falsehood. Plainly many deserving plaintiffs, including some intentionally subjected to injury, will be unable to surmount the barrier of the New York Times test. Despite this substantial abridgment of the state law right to compensation for wrongful hurt to one's reputation, the Court has concluded that the protection of the New York Times privilege should be available to publishers and broadcasters of defamatory falsehood concerning public officials and public figures. New York Times Co. v. Sullivan, supra; Curtis Publishing Co. v. Butts, supra."
Gertz, supra, at 342-43, 94 S.Ct. at 3008-09, 41 L.Ed.2d at 807. However, in Gertz the Court declined to extend application of the actual malice requirement to limit defamation actions brought by private individuals. The rationale for imposing the requirement on public figures, but not on private individuals, was twofold:
"First, we recognized that public figures are less vulnerable in injury from defamatory statements because of their ability to resort to effective `self-help.' They usually enjoy significantly greater access than private individuals to channels of effective communication, which enable them through discussion to counter criticism and expose the falsehood and fallacies of defamatory statements. 418 US, at 344, 41 LEd2d 789, 94 SCt 2997; see, Curtis Publishing Co. v. Butts, 388 US, at 155, 18 LEd2d 1094, 87 SCt 1975 (plurality opinion); id., at 164, 18 LEd2d 1094, 87 SCt 1975 (Warren, C.J., concurring in result). Second, and more importantly, was a normative consideration that public figures are less deserving of protection than private persons because public figures, like public officials, have `voluntarily exposed themselves to increased risk of injury from defamatory falsehood concerning them.' 418 US, at 345, 41 LEd2d 789, 94 SCt 2997; see, Curtis Publishing Co. v. Butts, supra, at 164, 18 LEd2d 1094, 87 SCt 1975 (Warren, C.J., concurring in result). We identified two ways in which a person may become a public figure for purposes of the First Amendment:
`For the most part those who attain this status have assumed roles of especial prominence in the affairs of society. Some occupy positions of such persuasive power and influence that they are deemed public figures for all purposes. More commonly, those classed as public figures have thrust themselves to the forefront of particular public controversies in order to influence the resolution of the issues involved.'" *612 418 US, at 345, 41 LEd2d 789, 94 SCt 2997.
Wolston v. Reader's Digest Association, Inc., 443 U.S. 157, 164, 99 S. Ct. 2701, 2705-06, 61 L. Ed. 2d 450, 458 (1979) (discussing Gertz, supra).
Therefore, if we find that the plaintiff, Paul Tate, Jr., is either a "public official" or a "public figure" for purposes of this action, then he must prove that the defendants acted with actual malice, in addition to proving the five elements of fault required under Louisiana law. On the other hand, should we find that the plaintiff is merely a private individual in this litigation, then he need only prove the Louisiana elements of fault.
Applying the guidelines established in Gertz and Curtis Publishing Co., we find that the plaintiff is a public figure for the limited purposes of this lawsuit arising out of a news publication on Mardi Gras and Cajun culture in Louisiana.[2] The plaintiff has assumed an active public role in promoting these specific interests. He considers himself, and is viewed by others, to be "one of the young leaders to carry on the cause of preserving the Cajun culture and heritage." Dep.Tr. of Plaintiff, p. 19-20. In the past, the plaintiff has acted as a spokesman concerning Mardi Gras and Cajun culture in Louisiana in an effort to educate the press and the public. In fact, the defendants' article was in part the result of the plaintiff's efforts. When approached by Bradley concerning the idea to provide press coverage of a Cajun Mardi Gras Celebration, the plaintiff responded with a willingness to help, and later he voluntarily consented to be interviewed by Bradley. The plaintiff recognizes that there has been public debate concerning whether Louisiana Cajuns should speak classical French or a more "commonized version" of Cajun-style French, Dep.Tr. of Plaintiff, p. 152-53; see generally, W. Rushton, The Cajuns, 289 (1979); C. Hallowell, People of the Bayou, 83 (1979); and that there also has been general controversy among Cajuns regarding the use of the term "coonass". Some Cajuns claim that coonass has a derogatory connotation, while others use it as a term of endearment or affection when referring to themselves. Dep.Tr. of Plaintiff, p. 185-86. In his leadership capacity plaintiff has advocated for the adoption of classical French as the spoken language for Cajuns in Louisiana and has also expressed concern that the term "coonass" not be used to identify Cajuns. To a certain degree these issues have been made a part of this lawsuit by plaintiff. Plaintiff does not seriously argue the substantive accuracy of the statements published by defendants, except for his claim that defendants falsely attribute use of the term "coonass" to him during the interview; rather, plaintiff objects to the linguistic form chosen by defendants to convey the sound of his speech. The plaintiff, however, cannot deny public figure status since prior to the time the article was published, he had "thrust [himself] to the forefront of [the] particular public controversies in order to influence the resolution of the issues involved." Gertz, supra, at 345, 94 S.Ct. at 2997, 41 L.Ed.2d at 789. A plaintiff simply cannot choose whether or not he is to be a public figure in disregard of his actions. Jensen v. Times Mirror Co., 634 F. Supp. 304, 311 (D.Conn.1986); Rosanova v. Playboy Enterprises, Inc., 580 F.2d 859 (5th Cir.1978).
"[T]he status of public figure vel non does not depend upon the desires of an individual. The purpose served by limited protection to the publisher of comment upon a public figure would often be frustrated if the subject of publication could choose whether or not he would be a public figure. Comment upon people and activities of legitimate public concern often illuminates that which yearns for shadow. It is no answer to the assertion that one is a public figure to say, truthfully, that one doesn't choose to be. It is sufficient, as the district court found, that `Mr. Rosanova voluntarily engaged *613 in a course that was bound to invite attention and comment.'"
Id. at 861 (quoting 411 F. Supp. 440, 445 (S.D.Ga.1976)) (emphasis added). Additionally, we feel the plaintiff enjoyed "significantly greater access than private individuals to channels of effective communication," Gertz, supra, at 344, 94 S.Ct. at 3009, and is more able to dispel any falsehoods regarding his expression of speech or ideas. We therefore conclude that plaintiff is a limited public figure and that defendants are entitled to the First Amendment protection accorded to publishers under New York Times Co. v. Sullivan and its progeny.
Applying the actual malice test to the facts before us, we find that there has been no clear and convincing evidence presented which would support a finding that Bradley or the Washington Post knew that the statements published were false or that they had a reckless disregard of whether the statements were false or not. Plaintiff has simply not shown any evidence of malice on the part of the defendants. Plaintiff offers three identically worded affidavits signed by individuals who have known plaintiff "well for many years" and who attest that they have never heard him speak as quoted in defendants' article and have never heard him use the term "coonass" except when discussing the term itself. Nevertheless, none of these individuals were present when plaintiff was interviewed by Bradley and their affidavits do not create a genuine issue concerning the possible presence of malice or reckless disregard of the truth.
"The First Amendment, as explicated in Sullivan and its progeny, instructs us that the law of libel cannot purport to punish the defamer or compensate the defamed when the allegedly libelous statements are merely false or the product of literary license. .... as the Court said in Sullivan, `erroneous statement is inevitable in free debate, and ... it must be protected if the freedoms of expression are to have the "breathing space" that they "need ... to survive."' ... The actual malice standard is the instrument with which the courts have struggled to carve out this breathing space in a complex and litigation-saturated culture." Bartimo, supra, at 901 (citations omitted).
Therefore, we hold that the evidence in the record is insufficient to support a reasonable jury finding that the plaintiff has shown actual malice by clear and convincing evidence. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986); Herbert v. Landeau, 781 F.2d 298 (2d Cir.), cert. denied, 476 U.S. 1182, 106 S. Ct. 2916, 91 L. Ed. 2d 545 (1986); Rosanova v. Playboy Enterprises, Inc., supra. Cf. Levine v. CMP Publications, Inc., 738 F.2d 660, 675 (5th Cir.1984); Dacey v. Florida Bar, Inc., 427 F.2d 1292, 1295-96 (5th Cir.1970).
"When determining if a genuine factual issue as to actual malice exists in a libel suit brought by a public figure, a trial judge must bear in mind the actual quantum and quality of proof necessary to support liability under New York Times. For example, there is no genuine issue if the evidence presented in the opposing affidavits is of insufficient caliber or quantity to allow a rational finder of fact to find actual malice by clear and convincing evidence."
Anderson, supra, 477 U.S. at 254, 106 S.Ct. at 2513, 91 L.Ed.2d at 215.
We also hold that defendants are entitled to summary judgment due to plaintiff's failure to prove one of the necessary elements of his cause of action as required under Louisiana law. Where a defendant's statements are not "indisputably defamatory on their face" defamatory per se the plaintiff must prove that the defendant acted with common law malice in the sense of spite or ill will. Makofsky v. Cunningham, 576 F.2d 1223, 1235-36 (5th Cir.1978); Madison v. Bolton, supra, 102 So.2d at 438; Carter v. Catfish Cabin, supra, 316 So.2d at 521-22.
"Words are defamatory when, inter alia, they have `tendency to deprive [a person] of the benefits of public confidence or injure him in his occupation ... or [have] a natural tendency to injure the person's reputation.'" Madison v. Bolton, supra, 102 So.2d at 437. When the words themselves have those results, *614 even without considering extrinsic facts and surrounding circumstances, they are defamatory per se. Id., 102 So.2d at 438.
Makofsky, supra, 576 F.2d at 1235-36 and n. 23 (emphasis added). Words that are defamatory per se "impute to the person the commission of a crime or subject him to public ridicule, ignominy or disgrace, and are susceptible of but one meaning." Madison, supra, 102 So.2d at 438 (footnote omitted).
We find that the words used in defendants' article were not defamatory per se. The plaintiff himself agrees that the way he was quoted would not offend or defame many other Cajuns. Dep.Tr. of Plaintiff, p. 152, 280. Certainly merely attributing mention of the word "coonass" to the plaintiff does not make the article defamatory on its face. Therefore, plaintiff is required to prove that the defendants acted with common law malice. Plaintiff has presented no evidence whatsoever of common law malice in this case. Considering the pleadings, depositions, and the affidavits submitted by plaintiff, we find that there is no genuine issue concerning common law malice and accordingly defendants are entitled to summary judgment as a matter of law under Rule 56 of the Federal Rules of Civil Procedure.
It is therefore ORDERED that the Motion for Summary Judgment be GRANTED.
NOTES
[1] Plaintiff alleges in paragraph 3 of his Original Complaint that Bradley interviewed him during the Mamou Mardi Gras on or about March 6, 1984. The parties, however, agree that the interview actually took place in Church Point two days earlier on March 4, 1984. Dep.Tr. of Plaintiff, pp. 94-98; Telephone Interview with Kenneth DeJean and Patrick Caffery, Counsel for Parties (Jan. 7, 1987).
[2] Because we find that plaintiff is a "public figure" it is not necessary for us to decide whether he is also a "public official".
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679 F. Supp. 151 (1988)
Edna ACOSTA SEPULVEDA, Plaintiff,
v.
Pedro HERNANDEZ PURCELL, Executive Director of the Land Administration of the Commonwealth of Puerto Rico, in his personal and official capacity, Defendant.
Civ. No. 86-0862(JP).
United States District Court, D. Puerto Rico.
January 12, 1988.
*152 José Ramón Pérez Hernández, Old San Juan, P.R., for plaintiff.
María L. Jiménez Colón, Federal Litigation Div., Dept. of Justice, San Juan, P.R., for defendant.
OPINION AND ORDER
PIERAS, District Judge.
Edna Acosta Sepúlveda brought this action for back pay, damages, injunctive relief, and declaratory relief pursuant to 42 U.S.C. § 1983. She alleges four causes of action, two under the first amendment and two under the fourteenth amendment. Acosta was demoted from her position as Assistant Executive Director in the Land Administration for the Commonwealth of Puerto Rico, a trust position, to Personnel Director, a career position. She was subsequently dismissed from her position as Personnel Director. These adverse personnel decisions, she claims, were based on her political beliefs and affiliation with the New Progressive Party (NPP) and Acosta alleges a first and fourteenth amendment violation as to both job changes.
The matter was tried to the Court without a jury, and both parties presented witnesses *153 and submitted documentary evidence. After careful consideration of the evidence, and after due deliberation, the Court now makes the following Findings of Fact and Conclusions of Law. Fed.R.Civ. P. 52(a).
FINDINGS OF FACT
1. Plaintiff Edna Acosta Sepúlveda is a former employee of the Land Administration of the Commonwealth of Puerto Rico.
2. Defendant Pedro Hernández Purcell is, and was at the time of the action that gave rise to the complaint, the Executive Director of the Land Administration. The Puerto Rico Land Administration is a governmental agency created by Law No. 13 of 1962, codified at 23 L.P.R.A. § 311 et seq.
3. Acosta is a member of the New Progressive Party (NPP), and her political affiliation was known by her co-workers in the Land Administration. The NPP lost the general elections held in Puerto Rico on November 6, 1984, and the control of the Executive Branch of the Commonwealth Government which it held for the previous eight years. Defendant is a member of the Popular Democratic Party (PDP) whose candidate, Rafael Hernández Colón, was elected Governor of the Commonwealth of Puerto Rico in the general elections held on November 6, 1984, and who at present holds said office. Pedro Hernández Purcell was appointed Executive Director on April 1, 1985, after the Governor had taken office on January 1, 1985.
4. Acosta graduated from the University of Puerto Rico in 1978 with a bachelor of arts degree in Finance and Business Administration. Thereafter, and while a public employee, Acosta went to law school and earned the degree of Juris Doctor.
5. Acosta worked in the private sector for the Gas Products Corporation from August 27, 1979, to March 31, 1980, in the Accounting Department. Among her functions were the receipt of valuables and application of payments from clients toward regular accounts. She was also in charge of the Group Medical Plan from the Travelers Insurance Company, in which she handled and coordinated the Plan and provided follow up to claims from employees. These duties involved maintenance of personnel records and dealings with the corporation's employees. This experience is sufficient to be incorporated as an integral part of the four-year personnel administration requirement for the post of Personnel Director.
6. Acosta began work with the Commonwealth Government on July 1, 1978, with the Social Services Department, as Administration Technician. She prepared federal proposals, supervised federally funded projects, coordinated Social Security contributions and benefits, reported how federal funds were distributed, and followed up on projects with the Committee to Fight Crime and the Right to Work Administration.
7. Acosta began work with the Land Administration on April 1, 1980, as Personnel Director, a trust position. Her duties included coordinating the administrative and technical functions of the personnel area regarding classification, appointments, selection, training, retention, and supervision of four employees. She held that position for three years and three-and-one-half months until June 15, 1983, when the position was changed to a career position. She held this position until December 1983, the date she was appointed to Assistant Executive Director of Management, also known as Director of Administration, a trust position. That position involved the coordination of personnel and the inventory of land. She was directly responsible to the Executive Director of the Land Administration. On June 15, 1985, defendant Hernández, the Executive Director, demoted Acosta to her previous position as Director of Personnel with a reduced monthly salary from $2,114.00 to $1,749.00, a $365.00 decrease. Acosta did not grieve this personnel action.
8. Acosta was replaced as Director of Administration by Mr. Ramón A. Rivera, a member of the Popular Democratic Party (PDP). Acosta held the position of Personnel Director until May 27, 1986, when Hernández dismissed her.
9. The minimum qualifications for Personnel Director are the following: (a) a *154 Bachelor's Degree from an accredited college or university, preferably in Business Administration, with a major in management; (b) four years' experience in personnel administration with two of those four years in supervisory functions.
10. The minimum qualifications for the position of Assistant Executive Director of Administration are the following: (a) a Bachelor's Degree in Business Administration with a major in management from an accredited college or university; (b) 5 years experience directing personnel and real estate works.
11. After due notice, a pretermination hearing as to Acosta's qualifications for the position of Personnel Director was held on January 17, 1986, before William Cancel Burgos, a staff attorney with the Land Administration appointed as a hearing examiner. A further hearing was held on February 11, 1986. Counsel for Acosta represented her at both hearings. Acosta presented evidence as to her qualifications, including an expert witness, Francisco Cappas, who testified that Acosta was qualified to hold the trust position of Personnel Director on April 1, 1980, and that she also qualified to hold the career position of Personnel Director on July 15, 1983. On April 4, 1986, Cancel issued a Report and Recommendation, finding that Acosta was not qualified for the position of Personnel Director in the career service. On May 27, 1986, by letter, Hernández terminated plaintiff from employment as Personnel Director, effective the next day.
12. Cancel's political affiliation is "Popular Independentista," that is, a pro-independence member of the PDP.[1]
13. Both plaintiff and her counsel requested copies of the Report and Recommendation that led to her dismissal. These requests were denied by defendant.
CONCLUSIONS OF LAW
1. Preliminary Considerations
The Court held an Initial Scheduling Conference (ISC) on November 25, 1986, at which counsel for the parties appeared. Under the Court's schedule established at the ISC by the agreement of the parties, defendant was to have filed its motion for summary judgment on the issue of qualified immunity during the week of January 5, 1987. Defendant did not file the motion until February 18, 1987. Because the defendant's late filing was in serious contravention of the ISC Order, and because the motion was filed on the eve of trial, the Court refused to entertain the motion. See Order, dated March 4, 1987; see also Pieras, Jr., Judicial Economy and Efficiency Through the Initial Scheduling Conference: The Method, 35 Cath.U.L.Rev. 943 (1986); Fed.R.Civ.P. 16. Defendant took an immediate interlocutory appeal of this decision requesting a stay of the trial until the motion for summary judgment was acted upon, and the First Circuit Court of Appeals denied the stay. Edna Acosta Sepúlveda v. Pedro Hernández Purcell, No. 87-1212, (1st Cir. March 13, 1987). Plaintiff never opposed the motion for summary judgment. The issue of qualified immunity will be decided herein.
2. Demotion from Executive Assistant Director
The defendant maintains that because this is a trust and confidence position, Hernández may dismiss Acosta for political reasons.
In actions brought under 42 U.S.C. § 1983, a defense of qualified immunity from liability for damages is available to state executive officers performing discretionary functions, "insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S. Ct. 2727, 2738, 73 L. Ed. 2d 396 (1982). On a motion for summary judgment, it is appropriate for a trial court to determine whether the law was clearly established at *155 the time of the conduct at issue. De Abadía v. Izquierdo Mora, 792 F.2d 1187 (1st Cir.1986). At the time of Acosta's demotion, the law was clearly established that public employees are protected by the First Amendment guarantees of freedom of speech and association from being discharged or demoted solely because of political affiliation, unless political affiliation is an appropriate requirement for the effective performance of the office involved. Branti v. Finkel, 445 U.S. 507, 518, 100 S. Ct. 1287, 1294, 63 L. Ed. 2d 574 (1980); Elrod v. Burns, 427 U.S. 347, 367-68, 96 S. Ct. 2673, 2686-87, 49 L. Ed. 2d 547 (1976). In Branti and Elrod, the Supreme Court recognized that in certain positions of government employment, where an employee's private political beliefs would interfere with the performance of her public duties, her first amendment rights could be required to yield to the state's vital interest in maintaining governmental effectiveness and efficiency. Branti, 445 U.S. at 517, 100 S.Ct. at 1294; Elrod, 427 U.S. at 366, 96 S.Ct. at 2686. The issue we must decide is whether. under an objective analysis, Hernández was reasonable in believing party affiliation was an appropriate requirement for Acosta's position. De Abadía, 792 F.2d at 1191.
Under the Branti-Elrod analysis, the threshold inquiry is to determine whether the position at issue relates to partisan political interests or concerns. Jimenez Fuentes v. Torres Gaztambide, 807 F.2d 236, 242 (1st Cir.1986) (en banc), cert. denied, ___ U.S. ___, 107 S. Ct. 1888, 95 L. Ed. 2d 496 (1987); see also Collazo Rivera v. Torres Gaztambide, 812 F.2d 258, 260 (1st Cir.1987). If that issue is satisfied, then we must determine whether the inherent responsibilities of the position are such that party affiliation is an appropriate requirement for the job. Jiménez Fuentes, 807 F.2d at 243; Collazo Rivera, 812 F.2d at 261.
The First Circuit has further expanded the threshold inquiry by addressing whether the agency involved "handled matters potentially subject to political differences and to focus upon how the plaintiff's position influenced the resolution of such matters." Mendez-Palou v. Rohena Betancourt, 813 F.2d 1255, 1258 (1st Cir.1987). This inquiry is designed to eliminate from further consideration those positions involving "strictly technical or professional" functions. Mendez Palou, 813 F.2d at 1258.
The purpose of the Land Administration is to promote the general welfare, economic freedom, and social justice of this island through the efficient utilization of our land. It is empowered to purchase, sell, lease and assign Commonwealth land in order to preserve the natural value of the land, beaches, forests, and landscapes. It is authorized to act jointly with different Commonwealth agencies, the federal government, and private entities in projects designed to foster the efficient use of the land for recreational, historical, and commercial purposes. 23 L.P.R.A. §§ 311 et seq.; see also Statement of Motives, Law 13, May 16, 1962.
The description of the duties of the Assistant Executive Director, taken from the "Plan of Classification of Trust Positions in the Land Administration," outlines the nature of her work. The Assistant Executive Director works directly under the Executive Director of the Land Administration, and has a "high degree of personal judgment" in administering policies and procedures of the agency. She is responsible for coordinating, managing, and supervising personnel and the purchase of land. The position requires supervisory, communicative, and analytical abilities. See General Description of Duties, defendant's Exhibit III. Because of the close working relationship, with direct reporting to and counseling of the Executive Director, and the nature of the work involved, we think that this position is similar to the Deputy Executive Director for the Puerto Rico Sewer and Aqueduct Authority (PRASA), and that the "occupant of the position could potentially deal with matters of partisan interest or concern on a regular basis." Méndez-Palou v. Rohena-Betancourt, 813 F.2d 1255, 1262 (1st Cir.1987). We conclude that this position is among those not protected *156 from patronage dismissal under the Branti-Elrod exception. Accordingly, Pedro Hernández Purcell is entitled to immunity from civil damages as a matter of law. Further, and on the merits, the claim under the first amendment resulting from her demotion is therefore DISMISSED.
3. Due Process Claim: Demotion from Assistant Executive Director
The defendant argues that plaintiff did not hold a property interest to continued employment. The due process clause of the fourteenth amendment guarantees public employees with a property interest in continued employment the right to an informal hearing prior to being discharged. Brock v. Roadway Express, 481 U.S. ___, 107 S. Ct. 1740, 95 L. Ed. 2d 239 (1987); Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 542, 105 S. Ct. 1487, 1493, 84 L. Ed. 2d 494 (1985). A property interest is created by "existing rules or understandings that stem from an independent source such as state law." Loudermill, 470 U.S. at 538, 105 S.Ct. at 1491.
The local law governing the issue of the property right is the Puerto Rico Public Personnel Law, ("Act") 3 L.P.R.A. § 1301, et seq. The Act divides government employees into two categories, career employees and trust or confidential employees. 3 L.P.R.A. § 1349. Confidential employees are "those who intervene or collaborate substantially in the formulation of public policy, who advise directly or render direct services to the head of the agency." 3 L.P.R.A. § 1350. In contrast, career employees may only be dismissed for "good cause, after preferment of charges in writing." 3 L.P.R.A. § 1336(4) (Supp.1986). Confidential employees are "of free selection and removal." 3 L.P.R.A. § 1351 (1978).
Under the "Plan of Classification of Trust Positions in the Land Administration," executed pursuant to the Public Personnel Act, the Assistant Executive Director is classified as a trust and confidence position. Under the Personnel Act, a trust employee does not possess a property interest to continued employment, and therefore, is not entitled to due process protections prior to discharge. Laureano-Agosto v. García Caraballo, 731 F.2d 101, 103 (1st Cir.1984). Accordingly, because she has no right to a hearing prior to her demotion, defendant is entitled to both qualified immunity from damages and a dismissal of the claim for violation of the fourteenth amendment.
4. Due Process Claim: Dismissal from Personnel Director
Acosta was demoted from Executive Assistant Director on June 16, 1985, and was reinstated to Personnel Director, a career position. On November 25, 1985, the defendant sent her a letter stating that an analysis of her personnel file revealed that she was illegally recruited for the trust position of Director of Personnel, in that she did not possess the minimum preparation requirements for that position. She was given the right to request a hearing to show cause why her dismissal should not proceed. She exercised that right, and two hearings on her behalf were held on January 17, 1986, and February 11, 1986, before hearing examiner William Cancel Burgos, who had been appointed by defendant.
At the first hearing, Ramón Rivera González testified on behalf of the government concerning normal personnel procedures. The hearing examiner granted plaintiff's request to present an expert witness, and the hearing was continued. On February 11, 1986, the second hearing commenced, and the examiner received the testimony of Francisco Antonio Cappas. The government did not offer an expert witness, and rested on the evidence presented. Acosta did not testify at either hearing.
The hearing examiner considered whether Acosta possessed the minimum qualifications for the career position of Personnel Manager, as of July 15, 1983, that is, whether she had four years' experience in personnel administration before that date. The examiner recognized that she performed the position in the trust service for three years and three-and-one-half-months, from April 1, 1980, to July 15, 1983. In deciding the issue, the examiner considered *157 whether the duties she performed at the Department of Social Services, as Administration Technician, from July 1, 1978, until August, 1979, were related to personnel and could be credited towards the four-year requirement. The hearing examiner rejected this proposition, reasoning that the position did not involve technical administrative matters. The hearing examiner did not even mention Acosta's work with Gas Products, although evidence of the dates and duties of her employment were contained in her personnel file. Had the hearing examiner included evaluation of Acosta's work at Gas Products, in order to find Acosta unqualified, Cancel would have had to divine Acosta's management of an employment medical benefit plan as unrelated to personnel administration. Instead, Cancel merely ignored it. Cancel reached the conclusion Acosta did not have the necessary qualifications, her appointment was null and void ab initio, and recommended the Executive Director proceed to dismiss her. The April 4, 1986, report was referred to the Executive Director, but was not sent to plaintiff.
Based on this report, the defendant sent a May 27, 1986, letter to plaintiff, firing plaintiff the following day. He also informed plaintiff of her right to an appeal before the Appeals Board of the Personnel Administration System within 30 days from the notice of the firing. Acosta did not take an appeal.
Although state law provides a basis for a property interest in continued government employment, it is not the totality of "existing rules and understandings" from which a property interest in continued governmental employment may arise. Loudermill recognizes that an expectation of continued employment may arise from promises and understandings given to an employee, or from the manner in which an employer deals with a particular employee. Loudermill, 470 U.S. at 538, 105 S.Ct. at 1491.
In this case, Acosta developed a reasonable expectation of continued employment through the following actions taken by her employer. In early 1983, after having held the position of Personnel Director for almost three years, Acosta received a certification from the Central Office of Personnel Administration (OCAP) that she was qualified to hold the position she already occupied as it was being reconstituted in the career service. The directorship had been in the trust and confidence wing of the civil service when Acosta was first appointed. When the office was reformed, the Personnel Director's post was re-evaluated and certain qualifications laid out. Before her official designation as a career employee and Personnel Director, Acosta was certified to have met the minimum qualifications for the position. Without more, Acosta was reappointed to the career position she had held since 1980. Six months later, Acosta was promoted to a higher-level position. After her removal from that second, higher, post, Acosta was returned to her work as Personnel Director. She filled that role for another eleven months before her termination.
Acosta was promoted with the understanding that she had a continuing property right to the same or an equivalent position in the Land Administration. That understanding is codified in the personnel law of Puerto Rico.[2] She was returned to the same career position she had been promoted from upon leaving the Assistant Executive Director's post. Acosta's expectation of continued employment was thereby reinforced by the regularity of her employer's actions. At every step of the process, Acosta was treated as an ordinary member of the civil service, and nothing seemed amiss. It was not until late 1985, well after she first entered work as the Personnel Director, that irregularities in her appointment were charged.
Much water had passed under the bridge by this time. Acosta had achieved the entitlement of continued public employment by the continuing reassuring and reinforcing *158 actions of her superiors concerning her own personnel matters. Where the Land Administration accepted plaintiff as minimally qualified for the tenured position of Personnel Director after her holding the post for three years as a trust employee, promoted her to a higher-level position, and returned her to the directorship according to statutory entitlement, defendant is estopped from arguing that plaintiff had no property interest in continued government employment based on purported initial lack of qualification.
There being a property interest in continued employment, basic notions of procedural due process necessitate notice and a fair hearing by an impartial decisionmaker before deprivation of that property interest. Cleveland Bd. of Ed. v. Loudermill, 470 U.S. 535, 542-43, 105 S. Ct. 1487, 1493-94, 84 L. Ed. 2d 494 (1985). Acosta's claim for deprivation of procedural due process rights centers on attacking the impartiality of the decisionmaker. Reviewing the facts as evaluated by the hearing examiner, bias is the only explanation.
This Court has found that the hearing examiner chosen by defendant was of the same political persuasion as defendant. That hearing examiner found that after having served as Personnel Director since 1980, Acosta was appointed to the same position in the career service in 1983. She was promoted from that position and returned to it eighteen months later. Then, after almost another year as Personnel Director, Acosta was found to have been unqualified at the start. All of this work, both at the Personnel Director's level and at the Assistant Executive Director's post was summarily disposed of when the hearing examiner recommended her firing. To reach this result, the hearing examiner also took and unfounded and myopic view of Acosta's experience before her 1980 appointment to the directorship. All of this occurred at a time when Acosta was improving herself through continuing and professional education. In the face of this concatenation of facts, Acosta's claim of bias on the part of the hearing examiner is not only fully supported but obvious from the record. Only a biased examiner could reach the capricious conclusion that Acosta had no right to her position because of lack of qualification. The finding of the hearing examiner that Acosta lacked minimum qualifications was a subterfuge for the political animus that put her out of work.
Although the defendant may have arranged to go through the motions of a pretermination hearing, the findings of the hearing examiner are so glaring that they plainly reveal bias. Acosta's experience with both the Social Services Department and in the private sector paralleled her work as Personnel Director. Her experience as Administration Technician with the Social Services Department and as an Accountant with the Gas Products Corporation are appropriately considered personnel administration, and she surely had the requisite total of four years' experience in Personnel Administration. With Gas Products, Acosta handled and coordinated employee claims and benefits under that company's Group Medical Plan. In the Department of Social Services, she similarly coordinated the Social Security contributions and benefits for employees of that agency. Derogation of this experience is unfounded in fact and represents arbitrariness on the part of the hearing examiner. The hearing examiner merely hacked out whole episodes of her work history, until Acosta appeared to be approximately eight months short of the minimum qualifications. The decision of the hearing examiner is transparent and the hearing was therefore a sham.
When Acosta was reappointed to the position of Personnel Director from her post of Assistant Executive Director, her qualifications to hold that former job had increased. She had worked closely with the highest levels of the agency and had responsibility for not merely maintaining records and evaluating personnel, but also coordinating personnel agency-wide. Added to this is is her continuing legal education, where Acosta would have been studying the entire panoply of rights and obligations of citizens, workers, and the government. In studying the law, Acosta was preparing herself for better service to *159 the public. This legal education garnered her further qualifications for the post of Personnel Director. This is no "batata política;" this is a civil servant concerned with her career and concerned with competent and efficient governmental services. Cf. Ortiz v. Torres Gaztambide, 673 F. Supp. 645 (D.P.R.1987) (patronage employment of unqualified party member in concocted position). The hearing examiner took no notice of any of these developments. Proceeding with blinders on surpasses merely arguable interpretation of evidence; ignoring these circumstances is unfounded in reason.
Buttressing the finding of bias on the part of the hearing examiner is the flat refusal of defendant to provide Acosta with a copy of the hearing examiner's Report and Recommendation. Although the hearing examiner explicitly noted Acosta's right to seek both administrative and judicial review of any adverse decision, Hernandez would not turn over a copy of the Report and Recommendation upon which Acosta's discharge was based. This refusal offends basic notions of fairness and again points up the bias that permeated Acosta's discharge and the hearing that attempted to justify it.
Although a pretermination hearing was held, no meaningful concepts of procedural due process were honored. Nor can the Court conclude that the defendant had an objectively reasonable belief that a hearing presided over by such a hearing examiner could possibly satisfy the procedural due process guarantee of the fourteenth amendment. A grant of qualified immunity in this case would be inappropriate. Acosta's right to be free from deprivation of property without due process of law was denied.
Acosta is entitled to recover compensatory damages for that deprivation. Carey v. Piphus, 435 U.S. 247, 263-4, 98 S. Ct. 1042, 1052, 55 L. Ed. 2d 252 (1978); Wood v. Strickland, 420 U.S. 308, 95 S. Ct. 992, 43 L. Ed. 2d 214 (1975); Fernández v. Chardón, 681 F.2d 42, 60 (1st Cir.1982). This rancorous disregard of the fundamental liberties of this land caused deep humiliation and frustration to Acosta. The Court with its own eyes saw Acosta recount the bewilderment and consternation caused in her by defendant's actions. Acosta suffered and is entitled to $10,000.00 in compensatory damages on this claim. Further, this Court was amazed by the extraordinary misconduct by which defendant callously disregarded Acosta's basic rights. Punitive damages are available under section 1983 when the defendants' conduct is shown to have been motivated by evil motive or intent, or when it involves reckless or callous indifference to the federally protected rights of others. Smith v. Wade, 461 U.S. 30, 52, 103 S. Ct. 1625, 1638, 75 L. Ed. 2d 632 (1983). Punitive damages "are designed by the law to punish extraordinary misconduct." Fishman v. Clancy, 763 F.2d 485, 489 (1st Cir.1985). The extraordinary misconduct in this case is the egregious manner in which defendant first tried to deny Acosta's property interest and then attempted to justify it with a meaningless pirouette of a hearing. Acosta shall be awarded $10,000.00 in punitive damages.
5. First Amendment Claim: Dismissal from Personnel Director
Acosta's final claim is that she was discharged from the post of Personnel Director because of her political affiliation in violation of her first amendment rights to free speech and free association. Although Acosta's higher position as Assistant Executive Director had no protection from political dismissal because of the proximity in which she worked to policy formulation and implementation of politically sensitive matters, no such concerns enter the position of Personnel Director. Indeed, defendant has not argued at any point in the proceedings that political affiliation was an appropriate requirement to hold the position of Personnel Director for the Land Administration. Despite defendant's silence in this matter, the Court finds below that he is not entitled to qualified immunity as to damages on the first amendment claim for Acosta's dismissal.
Defendant rested on the defense that Acosta's initial appointment was void ab initio. Without being explicit, defendant *160 has raised the Mt. Healthy defense. Defendant, tacitly argues that, even in the absence of political considerations, plaintiff would have been dismissed because of her purported illegal hiring. Mt. Healthy City School Dist. Bd. of Ed. v. Doyle, 429 U.S. 274, 287, 97 S. Ct. 568, 576, 50 L. Ed. 2d 471 (1976). Mt. Healthy establishes a "but-for" causality chain in evaluating governmental discharges: if plaintiff would not have been fired but for her political affiliation, the Mt. Healthy defense fails; if plaintiff could have been fired for any legitimate reason, e.g., insubordination or malfeasance, the Mt. Healthy defense succeeds. Defendant's argument urges the Court to ignore whether Acosta's dismissal from the directorship of personnel at the Land Administration was politically motivated in favor of examining only Acosta's 1983 résumé.
In any event, the Court finds Acosta's testimony as to the political harassment and dictation from above of politically motivated personnel orders to be the true account of what Acosta underwent as Personnel Director. Moreover, the sensitivity of Acosta's position illuminates how inappropriate political affiliation is as a requirement for holding a position as a Personnel Director. Although, as analyzed in section 2, above, the Land Administration is an agency that may deal with issues of potentially partisan political interest, the position of Personnel Director is not a post that deals with these issues.
The personnel department of a public service agency is the central workshop of employment policy and practice. When the department conducts its business honestly and within the norms and regulations established by law, it produces an efficient workforce comprising employees of merit. The community, which is composed essentially of the citizens who pay taxes and deserve service of excellence, consequently receives the benefits of better public service. But the personnel department can also be the nerve center of a political patronage system. In a grotesque parody of the ideal system that is envisioned by law-makers, the marionette at the head of a patronage department disregards all rules and regulations in employing the political hacks of the party in power. The result is not only a mockery of orderly government, but the oppressive imposition of a political machinery upon the constitutionally protected rights of citizens.
The government is not the property of the party in power. It belongs to the people and it is organized to do the people's bidding. In celebrating the Bicentennial of the United States Constitution, our eyes were repeatedly turned to an inspiring theme: "We the People". Our living constitution demands that patronage practices, which degrade our system of government, cease forthwith. The people of Puerto Rico are entitled to have the person in charge of employment conduct her practices in accordance with the rules and regulations established for the benefit of all. The people should be protected from the consequences of political personnel decisions that serve the selfish benefit of a few politicians who seek to elevate themselves in the eyes of the populace by dispensing favors and privileges. The people have a right to a government of laws and not of persons who may, at a particular time, sit in positions of power.
Accordingly, the Court finds that political affiliation is an inappropriate requirement for the position of Personnel Director of the Land Administration. The Court further finds that plaintiff has proved by a preponderance of the evidence that her discharge was politically motivated. The record clearly showed instances when Acosta was directed to make personnel decisions based on the applicants' politics. After Acosta could no longer respond to these edicts with sufficient alacrity, reasons were found to dispose of her.
As has been analyzed in section 4 above, the reasons given for her discharge cannot support the action. Just as defendant is estopped from arguing the purported illegality of her 1983 assumption of the Personnel Director's post she already held, it becomes clear that the purported illegality of her hiring was merely a trumped-up charge, having no legitimate nexus with *161 Acosta's performance or true qualifications. As such, and without defendant making the argument that political affiliation could be an appropriate requirement for Acosta's post, the Court finds that defendant's actions objectively evince a lack of an belief that Acosta could be fired for political reasons. Qualified immunity will not lie. As for defendant's other argument, he cannot ride a Mt. Healthy stalking horse over plaintiff in this case. The reasons given for the discharge were sham.
The violations of plaintiff's constitutionally protected rights under the first amendment are as grievous as those committed against her in violation of her fourteenth amendment rights. These injuries, however, are separate and must be compensated separately. Plaintiff is therefore awarded $10,000.00 in compensatory damages. Punitive damages lie as well in the amount of $10,000.00 for the defendant's blatant disregard for free speech and free association, and the insulting cynicism with which defendant attempted this purge of the Personnel Director.
The denial of Acosta's rightful job as Personnel Director of the Land Administration is an irreparable injury, not only to Acosta but to the citizens of Puerto Rico that rely on honest and effective government. A Court order of reinstatement would not be an undue disruption of the activities of the Land Administration. Acosta has worked as Personnel Director since 1980. She is not unqualified for the job. The public interest in this case, as noted before, would be served by a civil service free from the vagaries of politics. Reinstatement of the plaintiff would restore a directorship untainted by political selection. The Court shall enter judgment ordering, adjudging, and decreeing that defendants reinstate Acosta to the position of Personnel Director of the Land Administration with career civil service status, and that defendant cease and desist from this course of political discrimination.
As an integral part of this injunctive relief, the Court shall also order that defendant restore plaintiff's backpay. Acosta suffered a financial loss of $1,749.00 monthly since her dismissal in May 1986. The Court shall enter Judgment directing the payment of $31,482.00 in backpay from June 1986 to the end of December 1987, as a integral part of the injunctive relief. The Court shall further enter judgment directing defendant to continue the payment of this backpay amount, at the monthly rate of $1,749.00, until Acosta's actual reinstatement with full pay and benefits.
Judgment shall be entered accordingly.
IT IS SO ORDERED.
NOTES
[1] "Independentista" refers to the movement that desires Puerto Rico become a nation unaffiliated with the United States of America.
[2] "Every regular employee in a career position who is appointed to a confidential position shall be entitled to a position equal or similar to the last one he held in the career service." 3 L.P.R. A. § 1350.
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744 S.W.2d 934 (1988)
Jack D. TRULY, Petitioner,
v.
James D. AUSTIN, et al., Respondents.
No. C-6087.
Supreme Court of Texas.
February 17, 1988.
Rehearing Denied March 16, 1988.
*935 Seale, Stover, Coffield, Gatlin and Bisbey, Blair A. Bisbey, Jasper, for petitioner.
Golden and Gray, Joe Bob Golden, Jasper, Orgain, Bell and Tucker, Gary Neale Reger, Beaumont, for respondents.
*936 SPEARS, Justice.
The issue in this case is whether a party who has breached an express contract may nevertheless recover under a theory of quantum meruit. Petitioner Jack Truly performed certain services as specified in a joint venture agreement. He later breached the joint venture agreement by refusing to assume personal liability for joint venture debts. Truly brought suit against Respondents James Austin and Gearld Clark, his co-joint venturers, for the services he rendered pursuant to the agreement. Based on a jury verdict, the trial court rendered judgment in favor of Truly. The court of appeals reversed that judgment and remanded the cause with instructions. 721 S.W.2d 913 (1986). We affirm the judgment of the court of appeals.
In 1975, Austin purchased a tract of land in Jasper, Texas. Austin, Clark, and Truly later agreed to develop a shopping center on the tract. The three men entered into a written agreement to form a joint venture for the purpose of acquiring, developing, and financing the acquisition and development of the land. The agreement provided that (1) Austin would sell the tract to the venture; (2) Austin and Clark would "arrange financing of the construction and development" of the shopping center contemplated by the joint venture; (3) Truly would supervise construction and be paid $2,000 per month for twenty-four months; and (4) the ownership interest of each party would be 40% to Truly, 30% to Austin, and 30% to Clark.
After signing the agreement, Truly refused to assume personal liability on the financing of the joint venture project. When the dispute could not be resolved, Austin and Clark terminated their relationship with Truly. Truly sued his co-joint venturers for the value of the services he rendered under the contract, seeking to recover on breach of contract and quantum meruit theories. At trial, Truly abandoned his breach of contract claim and proceeded solely on quantum meruit. The jury awarded Truly $215,000 in damages and $70,000 in attorney's fees.
The court of appeals reversed the judgment of the trial court, holding that recovery on quantum meruit is not allowed when there is an express contract covering the subject matter of the suit. The entire cause was remanded to the trial court with instructions limiting Truly's recovery to that which Truly could plead and prove under the written contract.
As a general rule, a plaintiff who seeks to recover the reasonable value of services rendered or materials supplied will be permitted to recover in quantum meruit only when there is no express contract covering those services or materials. Black Lake Pipeline v. Union Construction Co., Inc., 538 S.W.2d 80, 86 (Tex.1976); Woodard v. Southwest States, Inc., 384 S.W.2d 674, 675 (Tex.1964). The joint venture agreement executed by Truly, Austin, and Clark specifically and unambiguously provided that Truly would "supervise the construction and development" of the shopping center. By his own pleadings, Truly limited his quantum meruit claim to the services he agreed to render under the joint venture agreement. Thus, an express contract covered the subject matter of Truly's claim, and Truly is not entitled to recover under the general rule of quantum meruit.
There are instances when recovery in quantum meruit is permitted despite the existence of an express contract that covers the subject matter of the claim. First, recovery in quantum meruit is allowed when a plaintiff has partially performed an express contract but, because of the defendant's breach, the plaintiff is prevented from completing the contract. Coon v. Schoeneman, 476 S.W.2d 439 (Tex.Civ. App.Dallas 1972, writ ref'd n.r.e.); Beller v. De Lara, 565 S.W.2d 319 (Tex.Civ.App. San Antonio 1978, no writ). Truly's claim does not fit within this type of quantum meruit because, contrary to Truly's contention, it was Plaintiff Truly who breached the joint venture agreement.
Truly entered into an express agreement to form a joint venture for the purpose *937 of financing and developing a shopping center. He conceded in his pleadings that the agreement set forth the respective obligations and interests of the parties. As a joint venturer, Truly was subject to the same rules that apply to partners. Hackney v. Johnson, 601 S.W.2d 523, 526 (Tex. Civ.App.El Paso 1980, writ ref'd n.r.e.). A joint venturer is jointly and severally liable for joint venture debts and obligations. Tex.Rev.Civ.Stat.Ann. art. 6132b, § 15 (Vernon 1970). Further, each joint venturer assumes the obligation to share joint venture losses according to his share of the profits. Id. § 18(1)(a). In light of these provisions, we agree with the court of appeals that, as a matter of law, Truly's refusal to sign the note for the financing of the joint venture project constituted a breach of contract. By contrast, Defendants Austin and Clark neither breached the contract nor prevented Truly from performing his contractual obligations. Therefore, Truly is not entitled to recover under this theory of quantum meruit.
Recovery in quantum meruit is sometimes permitted when a plaintiff partially performs an express contract that is unilateral in nature. Colbert v. Dallas Joint Stock Land Bank of Dallas, 129 Tex. 235, 102 S.W.2d 1031 (1937) (partial performance of contract by broker to sell real estate); Benson v. Harrell, 324 S.W.2d 620 (Tex.Civ.App.Fort Worth 1959, writ ref'd n.r.e.) (partial performance by attorney to recover fee title to minerals). In these cases, the unilateral contract imposed no legal obligation on the plaintiff, and the plaintiff, thus, did not breach the contract. See Calamari & Perillo, Contracts § 1-10, at 17-18 (1977). Truly's quantum meruit claim does not fit this type of recovery because Truly entered into a bilateral contract in which he incurred the legal obligation to assume personal liability for joint venture debt. He voluntarily breached the contract by refusing to sign the development note.
The only Texas cases that have permitted a breaching plaintiff to recover in quantum meruit have involved building or construction contracts. In these cases, plaintiffs have been allowed to recover the reasonable value of services less any damages suffered by the defendant. See, e.g., City of Sherman v. Connor, 88 Tex. 35, 29 S.W. 1053 (1895); City of Ingleside v. Stewart, 554 S.W.2d 939, 947 (Tex.Civ.App.Corpus Christi 1977, writ ref'd n.r.e.). Central to the contractor's right to recover in quantum meruit is the owner's acceptance and retention of the benefits arising as a direct result of the contractor's partial performance. 10 Tex.Jur.3d Building Contracts § 49, at 292 (1980).
Truly's claim is significantly different from the quantum meruit claims made in the construction cases. First, the breaching contractors in these cases provided labor and materials for the direct benefit of the property owners. Truly, by contrast, was not rendering services for the defendants, Austin and Clark. Instead, pursuant to the joint venture agreement, he performed his services for the joint venture. To recover in quantum meruit, the plaintiff must show that his efforts were undertaken for the person sought to be charged; it is not enough to merely show that his efforts benefitted the defendant. Bashara v. Baptist Memorial Hospital System, 685 S.W.2d 307, 310 (Tex.1985). Truly rendered services for the joint venture in an effort to enhance the success and profitability of a project in which he held a 40% ownership interest. Truly thus acted to benefit his own financial interests as well as those of his co-joint venturers.
Second, in the construction cases, the defendant retains a tangible product of value. In this case, Austin and Clark were left with no tangible benefit after Truly breached the joint venture agreement. When Truly refused to assume personal liability for joint venture debt, he in effect destroyed the very relationship that his services were designed to benefit. Truly's breach precipitated the failure of the joint venture project, a fact in no way alleviated by the supervisory services that Truly previously *938 performed. Truly, by his own actions, caused the value of his services to evaporate.
If Truly had a quantum meruit claim for the value of his services, it would have been against the joint venture itself for whose benefit the services were performed. Having terminated the joint venture by his own breach, Truly seeks to impose personal liability on Austin and Clark for a joint venture debt. Truly has repeatedly argued that because the joint venture agreement did not expressly impose personal liability on him for joint venture debt, he was not required to assume any such obligation. Ironically, he now seeks to impose personal liability on Austin and Clark for such a debt despite there being no express provision imposing that obligation on them.
Recovery in quantum meruit is based on equity. It is well-settled that a party seeking an equitable remedy must do equity and come to court with clean hands. City of Wink v. Griffith Amusement Co., 129 Tex. 40, 100 S.W.2d 695, 702 (1936); Breaux v. Allied Bank of Texas, 699 S.W.2d 599, 604 (Tex.App.Houston [14th Dist.] 1985, writ ref'd n.r.e.). To justify a recovery in quantum meruit, the plaintiff must not only show that he has rendered a partial performance of value, but must also show that the defendant has been unjustly enriched and the plaintiff would be unjustly penalized if the defendant were permitted to retain the benefits of the partial performance without paying anything in return. 5A A. Corbin, Corbin on Contracts § 1122 (1964).
Equity does not support a recovery in quantum meruit in this case. Truly rendered services to benefit a joint venture in which he held a large ownership interest. He then breached the joint venture agreement, terminating the joint venture and precipitating the failure of the project. Truly now seeks to impose personal liability on his co-joint venturers pursuant to an agreement which he contends imposes no such liability on himself. Truly, by his course of conduct, has violated the reasonable expectations and values that permeate business transactions. Accordingly, we hold that Petitioner Truly may not recover in quantum meruit.
The judgment of the court of appeals is affirmed.
KILGARLIN, J., concurring joined by PHILLIPS, C.J., and RAY, J.
KILGARLIN, Justice, concurring.
I concur in the court's judgment only because Jack Truly did not preserve error by seeking an accounting, which I consider to be the proper method for him to recoup that to which he claims he is entitled. Clearly, quantum meruit is not the right vehicle.
Truly was involved in a joint venture. A joint venture is in the nature of a partnership. Brown v. Cole, 155 Tex. 624, 631, 291 S.W.2d 704, 709 (1956); Holcombe v. Lorino, 124 Tex. 446, 455, 79 S.W.2d 307, 310-11 (1935). Consequently, a joint venture is generally governed by the rules applicable to partners. Thompson v. Duncan, 44 S.W.2d 904, 907 (Tex.Comm'n App. 1932, judgm't adopted). See also J. Crane & A. Bromberg, Crane and Bromberg on Partnership § 35 (1968); H. Reuschlein & W. Gregory, Handbook on the Law of Agency and Partnership § 266 (1979); 47 Tex.Jur.3d, Joint Ventures § 4 (1986). Thus, when a joint venture agreement is silent on an issue, this court will turn to the Texas Uniform Partnership Act. See Park Cities Corp. v. Byrd, 534 S.W.2d 668, 672 (Tex.1976).
In refusing to sign the development loan note and assume joint and several liability for this joint venture debt, Truly breached the joint venture agreement. Tex.Rev.Civ. Stat.Ann. art. 6132b, § 15 (Vernon 1970).
A suit for an accounting is the appropriate remedy for a joint venturer or partner who has breached the joint venture or partnership agreement. See Dobson v. Dobson, 594 S.W.2d 177 (Tex.Civ.App.Houston [1st Dist.] 1980, writ ref'd n.r.e.) (partnership); *939 Lane v. Phillips, 509 S.W.2d 894 (Tex.Civ.App.Beaumont 1974, writ ref'd n.r.e.) (joint venture). See also Tex.Rev. Civ.Stat.Ann. art. 6132b, § 22 (Vernon 1970). I agree with the court that quantum meruit relief is not a suitable remedy when sought by a venturer who has failed to perform his obligations under the joint venture agreement. See, e.g., White v. Lemley, 328 S.W.2d 694 (Mo.1959); Pemberton v. Ladue Realty & Const. Co., 237 Mo.App. 971, 180 S.W.2d 766 (1944).[1] Further, a materially breaching venturer may not recover damages under the contract. See Schnitzer v. Josephthal, 122 Misc. 15, 16-17, 202 N.Y.S. 77, 78 (1923), aff'd, 208 A.D. 769, 202 N.Y.S. 952 (1924) ("As in the case of any claim to damages for breach of contract, [the claimant] must show his own substantial performance of essential conditions" [citations omitted]).
A suit for an accounting of the partnership affords some protection against forfeiture to breaching parties such as Truly. Breach of the joint venture or partnership agreement does not result in the forfeiture of the joint venturer's or partner's interest.[2]Dobson, 594 S.W.2d at 181-82; Lane, 509 S.W.2d at 898-99. See also Hillman, Misconduct as a Basis for Excluding or Expelling a Partner: Effecting Commercial Divorce and Securing Custody of the Business, 78 Nw.U.L.Rev. 527, 542 n. 57 (1983).
One commentary says:
A joint venture is to be conducted by the parties to the undertaking, and the failure of any party completely to perform his part does not forfeit his fully acquired interest. Notwithstanding defaults and omissions, each has an interest in such assets as have been preserved or accumulated. Thus, default by a member of a joint venture will not justify the other members in excluding him from participation in the accrued assets.
46 Am.Jur.2d, Joint Ventures § 38 (1969). See also 47 Tex.Jur.3d, Joint Ventures § 11 (1986).
The interests of the non-breaching venturers are also protected by this procedure. The breaching venturer is not entitled to assets accruing after his default. Id. More important, the breaching venturer must pay, in an accounting, for the damages caused by his misconduct. Dobson, 594 S.W.2d at 181. The Dobson court quoted from Fisher v. Fisher, 352 Mass. 592, 227 N.E.2d 334, 336 (1967): "A partner does not lose his rights in the accrued profits of a firm by reason of breaches of the partnership articles, whether or not committed in bad faith, although of course he will be subject to charges for all unexcused breaches in the final accounting."
By not seeking an accounting, however, Truly has failed to preserve his right to do so. For this reason, I concur with the decision arrived at by the court.
PHILLIPS, C.J., and RAY, J., join in this concurring opinion.
NOTES
[1] The court ably discusses some of the policy reasons disfavoring quantum meruit recovery in this context.
The court, however, incorrectly asserts that the only Texas cases permitting a breaching plaintiff to recover in quantum meruit have involved building or construction contracts. See, e.g., Cotton v. Rand, 93 Tex. 7, 51 S.W. 838, reformed, 93 Tex. 7, 26, 53 S.W. 343 (1898) (agency agreement to procure mineral lands).
[2] Of course, a different result would obtain when the joint venture agreement contains a forfeiture clause. Dobson, 594 S.W.2d at 181.
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146 B.R. 391 (1992)
AM INTERNATIONAL, INC., Plaintiff,
v.
DATACARD CORPORATION and Addressograph Farrington, Inc., Defendants.
DATACARD CORPORATION, Addressograph Farrington, Inc., and DBS, Inc., Counterclaimants,
v.
AM INTERNATIONAL, INC., Counterdefendant.
No. 87 C 3408.
United States District Court, N.D. Illinois, E.D.
October 5, 1992.
*392 *393 John W. Costello, W. Scott Nehs, Wildman, Harrold, Allen & Dixon, Michael Robert Enright, Arvey, Hodes, Costello & Burman, Chicago, Ill., Thomas W. Tinkham, Paul J. Scheerer, Steven J. Kinnunen, Becky Comstock, Scott H. Peters, B. Andrew Brown, Dorsey and Whitney, Minneapolis, Minn., for Data Card Corp. and Addressograph Farrington Inc.
Lewis S. Rosenbloom, Robert J. Labate, Winston & Strawn, Erica Lynn Dolgin, Schiff, Hardin & Waite, John William Watson, III, Gardner, Carton & Douglas, Chicago, Ill., for AM Intern., Inc.
ORDER
NORGLE, District Judge.
Before the court are the objections of plaintiff-counterdefendant AM International, Inc. ("AMI"), defendants-counterclaimants DataCard Corporation and Addressograph Farrington, Inc., and counterclaimant DBS, Inc. (collectively "counterclaimants") to Magistrate Judge Ronald A. Guzman's Report and Recommendation ("Report"). For the following reasons, the court adopts the Report. The court denies AMI's motion for partial summary judgment in part and grants the motion in part.
BACKGROUND
Pursuant to 28 U.S.C. § 636(b)(1), the court referred all pretrial matters to the Magistrate Judge. The Magistrate Judge issued a thirty-eight page Report (attached as Exhibit A) recommending that AMI's motion for partial summary judgment be denied as to counterclaimants' claims under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. ("CERCLA"), and granted as to counterclaimants' nuisance, negligence, trespass, and strict liability claims.
AMI objects to the Magistrate Judge's adoption and recommendation of a "fair contemplation" standard for the determination of when CERCLA claims arise for the purpose of bankruptcy law.[1] Counterclaimants object to the portion of the Report (1) concluding CERCLA claims arise for the purposes of bankruptcy law upon the release or threat of release of hazardous substances into the environment and not upon the incurrence of response costs, (2) proposing factors for application of the "fair contemplation" standard, (3) granting AMI's summary judgment motion on counterclaimants' common law claims, and (4) determining counterclaimants were not entitled to notice before AMI's environmental liabilities were discharged.
DISCUSSION
Upon the submission of a report and recommendation on a dispositive motion, the district judge shall make a de novo determination upon the record and may accept, reject, or modify the recommended decision. 28 U.S.C. § 636(b)(1); Fed. R.Civ.P. 72(b). In making this decision, the district judge must look at all the evidence contained in the record and retains final authority over the determination of the dispositive motion. Delgado v. Bowen, 782 F.2d 79 (7th Cir.1986).
The court has completely reviewed the Report and arguments of counsel. The Court finds the Report to be thorough, accurate, and the decision proper. The court further finds both AMI's and counterclaimants' objections to be without merit.
In support of the Magistrate Judge's recommendation, the court makes the following additional observations on the issue of when CERCLA claims arise for purposes of bankruptcy dischargeability in light of the Seventh Circuit's recent decision in In re Chicago, Milwaukee, St. Paul & Pac. R.R. Co., 974 F.2d 775 (7th Cir. 1992). In that case, the Seventh Circuit thoroughly discussed the relevant authority. *394 Not only did the court conclude that it is not necessary for a party to incur response costs before it possesses a CERCLA claim for purposes of bankruptcy law, In re Chicago, 974 F.2d at 785-86 (disposing of counterclaimants' objection on this point), but also held that a CERCLA claim does not arise for purpose of dischargeability under bankruptcy law upon the mere release or threatened release of hazardous substances, Id. at 784 (disposing of AMI's objection).
Though the court did not adopt a test directly on point with the facts of this case or with the Magistrate Judge's recommendation, the court made a point of noting the importance of knowledge or foreseeability on the part of potential CERCLA claimants in the determination of when a CERCLA claim arises. Id. at 784 n. 4. Specifically, the court stated,
rather than adopting such a rule [that a claim arises when the party incurs response costs], or any rule, we explain below that when a potential CERCLA claimant can tie the bankruptcy debtor to a known release of a hazardous substance which this potential claimant knows will lead to CERCLA response costs, and when this potential claimant has, in fact, conducted tests with regard to this contamination problem, then this potential claimant has, at least, a contingent CERCLA claim. . . .
Id. at 786. Thus, if information before the potential CERCLA claimant had indicated that response costs were imminent, the case for dischargeability becomes greater. See Id. at 787 ("Not only did the information . . . indicate that CERCLA response costs . . . were imminent, but [the potential claimant] began sampling procedures [with regard to the contamination problem] . . . ").
As can be gleamed from the court's later discussion, the inquiry must center on whether the potential CERCLA claimant has "sufficient information to give rise to a claim or contingent CERCLA claim" before the consummation date of the bankruptcy. Id. at 787. Furthermore, the court cited with some level of approval a "fair contemplation" test. See Id. at 781 n. 2 (noting similar requirement in Second Circuit that claim must result from prepetition conduct fairly giving rise to claim) (citing United States v. LTV Corp. (In re Chateaugay Corp.), 944 F.2d 997, 1005 (2d Cir.1991) (citing In re Chateaugay, 112 B.R. 513, 521 (S.D.N.Y.1990))).
Accordingly, the court adopts the Magistrate Judge's recommendation that genuine issues of material fact exist with respect to the respective knowledge of all three counterclaimants therefore making summary judgment improper. See Fed. R.Civ.P. 56(c) (summary judgment "shall be rendered forthwith if . . . there is no genuine issue as to any material fact . . ."). The court does not adopt the "fair contemplation" test per se, but decides that the factors cited in the Magistrate Judge's discussion of such test are relevant to the inquiry framed by the Seventh Circuit.
Moreover, the Seventh Circuit's opinion also supports the Magistrate Judge's recommendation on the issue of whether DataCard was entitled to notice as an interested party at the time of the bankruptcy proceedings. In re Chicago, 974 F.2d at 788-89.
Accordingly, the Court adopts and incorporates Magistrate Judge Guzman's Report and Recommendation and the holdings contained therein pursuant to 28 U.S.C. § 636(b)(1).
CONCLUSION
For the above stated reasons, AMI's motion for partial summary judgment is denied as to the claims arising under CERCLA and is granted in favor of AMI as to counterclaimants' breach of warranty, misrepresentation, nuisance, negligence, trespass, and strict liability claims.
IT IS SO ORDERED.
EXHIBIT A
TO: HONORABLE CHARLES R. NORGLE, SR., JUDGE UNITED STATES DISTRICT COURT
HONORABLE JUDGE:
*395 REPORT AND RECOMMENDATION
of Magistrate Judge Ronald A. Guzmán
Pending is AMI's motion for summary judgment. This is an action in which the Plaintiff AM International, Inc. (AMI) seeks injunctive and declaratory relief as to the discharge of pre-confirmation claims in it's Chapter 11 proceeding. AMI contends it is entitled to a declaration that it's debt owed to Defendants-Counterclaimants Data Card Corporation (Data Card), DBS Inc. (DBS), and Addressograph Farrington Inc. (AFI) for AMI's pre-confirmation release of hazardous materials at the Holmesville facility (described below) was discharged in it's Chapter 11 proceeding. AMI has filed a two count complaint against Defendants-Counterclaimants (Counterclaimants) Data Card, DBS, and AFI. This court's jurisdiction is invoked pursuant to 28 U.S.C. § 1331; 28 U.S.C. § 1332; Section 7002(a)(1)(A), (B) for the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. § 6972(a)(1)(A), (B); and Sections 107(a), 113(b) of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. §§ 9607(a), 9613(b). Counterclaimants have filed an eleven count Amended Joint Answer and Counterclaim, seeking response costs for the cleanup of the facility.
AMI has moved for partial summary judgment on the ground that the Counterclaimants' claims arose prior to the bankruptcy confirmation and such claims were discharged in bankruptcy.[1] Counterclaimants submitted a Memorandum in Opposition to Summary Judgment, on the basis that CERCLA claims arise when response costs are incurred, and thus were post-confirmation in this case, prohibiting their discharge in bankruptcy. For the reasons listed below, it is hereby recommended that AMI's motion for summary judgment be denied.
BACKGROUND FACTS
This action for injunctive and declaratory relief was commenced by AMI after Data Card discovered hazardous substances in the soil and groundwater at the Holmesville facility.[2] From 1959 until November 1981, AMI owned a manufacturing facility located in Holmesville, Ohio.[3] During this period of time, both AMI's Addressograph and Multigraphics divisions conducted manufacturing operations at the Holmesville facility.[4] At the Holmesville facility, an above-ground tank farm was maintained for the mixing of Blankrola, a solvent sold by the Multigraphics division for the cleaning of multilith duplicating machines.[5] The tank farm consisted of nine tanks ranging in size from 6,000 to 8,000 gallons. Two of the tanks were used for the mixing of Blankrola. Six of the tanks were used for storage of tetrachloroethylene and naphtha, the two raw material constituents of Blankrola.[6] A pump house was located at the tank farm from which AMI employees controlled the mixing of Blankrola through the opening and closing of valves.[7] Statements by former employees of AMI and Counterclaimants reveal that at least one major spill of a couple thousand gallons of Blankrola and its constituent chemicals occurred prior to 1980 at the tank farm during the course of mixing operations.[8]
By Purchase and Sale Agreement, dated November 30, 1981 ("1981 Agreement") *396 DBS acquired the Holmesville facility and the assets of the Addressograph division from AMI and continued Addressograph operations at the facility through its subsidiary AFI.[9] In the 1981 Agreement, AMI extended an express warranty to DBS that the Holmesville facility was free and clear of any and all claims, except certain listed claims not including ones arising from the contamination of the Holmesville facility by hazardous substances.[10] In the 1981 agreement, AMI extended an express written warranty that the Holmesville facility was in compliance with all laws and regulations.[11]
Under the terms of the 1981 Agreement, AMI leased a portion of the Holmesville facility, including the above-ground storage tanks, and continued operations of its Multigraphics division.[12] At the time of the acquisition, some AMI employees were given the option to stay with AMI or accept employment with AFI.[13] A number of AMI personnel who had been employed by AMI in mixing operations at the tank farm chose to become employees of AFI.[14]
After the DBS acquisition and until Multigraphics operations ceased in 1985, both AMI and AFI participated in maintenance activities at the tank farm. Who controlled the maintenance activities at the Holmesville facility is disputed. AMI contends that "AFI provided maintenance services" such as furnishing electricity, heat and lighting, mowing the grass, and some assisting in equipment repairs at the Holmesville facility.[15] Counterclaimants assert that while AFI provided the services listed above, AMI "maintained" the tank farm. Counterclaimants assert that AFI did not agree to "maintain the tank farm".[16]
On April 14, 1982, AMI commenced its Chapter 11 reorganization case No. 82 B 04922 by filing a voluntary petition under Section 301 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois.[17] Prior to the deadline for filing claims in AMI's Chapter 11 case, DBS and AFI were notified of the commencement of the bankruptcy and DBS filed proofs of claims against AMI based upon the 1981 Agreement.[18] Since it had no association with AFI, DBS or AMI prior to 1986, Data Card was not given notice of AMI's pending bankruptcy.[19] Data Card did not purchase the stock of DBS until August 25, 1986. On November 7, 1983, AMI filed its objection and counterclaim to DBS' claim. On or about August 20, 1984, DBS, AFI and AMI entered into a Settlement Agreement ("Settlement Agreement"), approved by order of court pursuant to which the parties agreed to release each other from all claims, demands, and causes of action which each had or may have against the other on the date of the Settlement Agreement.[20]
Prior to confirmation of AMI's Plan of Reorganization on September 11, 1984, no *397 one from DBS, AFI or AMI ever questioned Mr. Bill Kuchta (in charge of Multigraphics operations at the tank farm for AMI) concerning any environmental problems associated with operations of AMI at the Holmesville facility tank farm.[21] Furthermore, DBS, AFI, and AMI did not inquire of Mr. John Ford about historical environmental matters associated with the Holmesville facility before 1981.[22] Mr. Ford was responsible for environmental matters at the Holmesville facility for AMI since 1980, and went to work for AFI in the same capacity in 1981.[23] AMI claims it did not know of any environmental liabilities in connection with its ownership and/or operation of the Holmesville facility prior to 1986.[24] Both during the pendency of AMI's bankruptcy (1982-1984) and after the confirmation of AMI's Reorganization Plan, releases of tetrachloroethylene and naphtha occurred at the tank farm at the Holmesville facility.[25] On September 11, 1984, AMI's Plan of Reorganization in its Chapter 11 reorganization case was confirmed.[26]
In 1985, AMI ceased its operations at and vacated the Holmesville facility.[27] In late 1985 and early 1986, Data Card commenced a due diligence investigation at the Holmesville facility as part of its proposed acquisition of AFI operations.[28] The due diligence investigation included an analysis of environmental concerns. Consistent with Data Card's practices when contemplating facility acquisitions of that size, as part of the environmental evaluation, Data Card retained an environmental engineering firm, Samsel Services Company ("Samsel") to conduct soil and ground water sampling at the Holmesville facility.[29] While AMI contends that Data Card had identified the tank farm at Holmesville to be a potential environmental problem area before the investigation occurred, Counterclaimants contend that Data Card relied on Samsel to determine the scope of the investigation of the Holmesville facility.[30]
In March and April of 1986, Samsel conducted soil and ground water sampling in and around the tank farm. The highest concentrations of tetrachloroethylene and naphtha were around the pump house and the southwest corner of the concrete tank pad.[31] After Samsel discovered that the soil and ground water were contaminated, Mr. Ford talked with two current AFI employees, Mr. Fitzpatrick and Mr. Proper, who had responsibility for the mixing operations for AMI prior to becoming employed by AFI in 1981. These employees recounted two spill events which occurred before 1980 at the tank farm.[32] Ford did not have knowledge of the spills of tetrachloroethylene and naphtha until the Samsel investigation in 1986.[33]
Upon identification of constituents of Blankrola in the soil and ground water, Data Card notified AMI of the contamination by letter dated April 30, 1986.[34] AMI personnel subsequently collected additional soil and ground water samples to confirm the validity of the Samsel results.[35] While the reliability of the results obtained by the AMI employees is questioned by Counterclaimants, analyses of these samples confirmed the existence of contamination in *398 the soil and ground water at the facility.[36] By letter dated May 1, 1986, Data Card notified the Ohio Environmental Protection Agency that it believed that the soil and ground water at the Holmesville facility were contaminated.[37] On August 25, 1986, Data Card purchased the stock of DBS and became the owner of the Holmesville facility.[38] By letter dated January 23, 1987, Data Card informed AMI that Data Card had expended $35,644.95 for "response actions" associated with the contamination of the soil and ground water at the Holmesville facility.[39] The purpose of the letter was to provide a statutorily required 60-day notice to AMI of Counterclaimants' intent to bring a civil action against AMI pursuant to:
A. Section 505 of the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. section 1365;
B. Section 7002 of the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. section 6972; and
C. Sections 107 and 310 of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9607, PL 99-499 Super Fund Amendments and Reauthorization Act of 1986, October 17, 1986.[40]
As of December 1991, Data Card has incurred response costs in excess of $150,000 in connection with the release of hazardous substances at the Holmesville facility.[41]
On March 20, 1987, AMI filed suit against Data Card and AFI. Count I alleges that the claim of DBS against AMI arose on or about November 30, 1981, when the Holmesville facility was sold to DBS and continued to arise to and including August 20, 1984, the date of the settlement agreement. AMI alleges that it was discharged from any debt which arose before the date of confirmation of bankruptcy, September 11, 1984 and seeks injunctive relief to that effect. Count II seeks declaratory relief to the effect that the debt incurred by AMI with respect to Counterclaimants before the confirmation date has been discharged under the Chapter 11 reorganization.
DISCUSSION
In AMI's Reply Brief in Support of It's Motion for Summary Judgment, AMI asserted it is moving for partial summary judgment pursuant to Rule 56(a). Subdivisions (a) and (b) of Rule 56 contemplate that a motion for summary judgment may be made upon all or a part of a claim.
The United States Supreme Court set forth the following principles to be applied in ruling on a motion for summary judgment:
Rule 56(c) of the Federal Rules of Civil Procedure provides 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 issues as to any material fact and that the moving party is entitled to a judgment as a matter of law." By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there is no genuine issue of material fact.
As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted. This materiality inquiry is independent of and separate from the question of the incorporation of *399 the evidentiary standard into the summary judgment determination. That is, while the materiality determination rests on the substantive law, it is the substantive law's identification of which facts are critical and which facts are irrelevant that governs. Any proof or evidentiary requirements imposed by the substantive law are not germane to this inquiry, since materiality is only a criterion or categorizing of factual disputes in their relation to the legal elements of the claim and not a criterion for evaluating the evidentiary underpinnings of those disputes.
. . . . .
More important for present purposes summary judgment will not lie if the dispute about a material is "genuine." that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). See also Celotex Corporation v. Catrett, 477 U.S. 317, 330, 106 S.Ct. 2548, 2556, 91 L.Ed.2d 265 (1986).
The Court went on to say that "at the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986).
When a properly supported motion for summary judgment is made, the adverse party "must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986). There is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, or is not more than a scintilla, a summary judgment may be granted. The substantive evidentiary standard of proof that would apply at a trial on the merits applies on a motion for summary judgment. Id.
Further, Local Rule 12(n) requires a party opposing a motion for summary judgment to file, in addition to the evidentiary materials allowed by Rule 56(e), a response listing the factual assertions by the movant with which the opponent disagrees. Bell, Boyd, & Lloyd v. Tapy, 896 F.2d 1101, 1102 (7th Cir.1990). The list must be supported by specific references to the evidentiary materials relied on and must set forth any additional facts that require denial of summary judgment, also supported by specific references in the record. Any facts asserted by the movant and not contradicted in the manner specified by the Rule are deemed admitted pursuant to Local Rule 12(m) and (n). Id., at 1102.
Therefore, this court must determine whether Counterclaimants have offered any evidence to create a genuine issue of fact as to AMI's summary judgment claim against Counterclaimants. In doing so, this court will examine Counterclaimants' evidence in it's most favorable light.
At the outset, Counterclaimants have argued that AMI's motion for summary judgment should be denied for three reasons. First, AMI released hazardous substances into the environment of the Holmesville facility after its bankruptcy confirmation, thus exposing AMI to joint and several liability for all cleanup costs even under its expanded definition of contingent liability. Second, Data Card had no notice of AMI's bankruptcy and, as admitted by AMI in its brief, notice of bankruptcy is a minimal due process requirement of claim preclusion. Finally, since DBS and AFI had no knowledge of environmental damage and had spent no money in a cleanup until after the confirmation of AMI's reorganization plan, they had no claim which could be discharged in AMI's bankruptcy. Each of Counterclaimants' arguments will be addressed in turn.
AMI'S RELEASE OF HAZARDOUS MATERIALS SUBSEQUENT TO CONFIRMATION DOES NOT PRECLUDE SUMMARY JUDGMENT
Counterclaimants first argue that AMI's motion for summary judgment must be denied *400 because the distinction made by AMI between releases occurring pre-confirmation and post-confirmation is irrelevant. Counterclaimants contend that even if this court were to adopt AMI's argument, that a CERCLA claim arises for purposes of bankruptcy, upon the release of a hazardous substance, this court cannot dismiss the CERCLA claim against AMI, so long as there was any release of a hazardous substance from the tank after the confirmation of AMI's reorganization plan. Counterclaimants argue that CERCLA imposes joint and several liability upon every responsible party, and therefore a party partially responsible for the contamination of a facility, at a subsequent point in time, can be held liable for any or all remediation costs. Counterclaimants point out that AMI has conceded that a factual dispute exists as to whether spills occurred at the tank farm after AMI's confirmation. This concession, Counterclaimants argue raises a genuine issue of material fact which precludes summary judgment.
AMI replies that it does not seek judgment barring recovery for any activities conducted at any time after September 11, 1984, the date of AMI's confirmation in bankruptcy. AMI argues that the dispute before this court is not properly one for cost recovery where the court would be asked to impose joint and several liability, rather this claim can only be one for contribution pursuant to section 113 of CERCLA, 42 U.S.C. § 9613(f). This section provides as follows:
Contribution
(1) Contribution
Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title, during or following any civil action under section 9606 of this title or under section 9607(a) of this title. Such claims shall be brought in accordance with this section and the Federal Rules of Civil Procedure, and shall be governed by Federal law. In resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate. Nothing in this subsection shall diminish the right of any person to bring an action for contribution in the absence of a civil action under section 9606 or section 9607 of this title.
As to whether a post-confirmation release of hazardous substances precludes summary judgment as to a party's liability on pre-confirmation releases, I have concluded that it does not. My conclusion is premised on the legal authority set forth in two cases: In re Chateaugay, 944 F.2d 997, 999 (2d Cir.1991) and In re National Gypsum Company 139 B.R. 397 (N.D.Tex. 1992).
In Chateaugay, LTV, a diversified steel, aerospace, and energy corporation filed a bankruptcy petition under Chapter 11. LTV's schedule of liabilities included 24 pages of claims, labeled "contingent" that were held by the Environmental Protection Agency. In re Chateaugay, 944 F.2d 997, 999 (2d Cir.1991). The EPA then filed a proof of claim for approximately $32 million, representing response costs incurred pre-petition at fourteen of LTV's sites. Id. at 999. With respect to the contingent claims, i.e. those for which response costs had not been incurred prepetition, LTV informed the government that LTV expected the confirmation of its reorganization to discharge all obligations, including those for response costs that were incurred post-confirmation. Id. at 1000. In disagreement with that position, the government brought an adversary proceeding for a declaratory judgment that response costs incurred post-confirmation are not dischargeable because they do not arise from pre-petition claims. Id. at 1000. In the government's view, it did not have a "claim" within the meaning of the Bankruptcy Code, 11 U.S.C. § 101(4) (1984) for reimbursement of post petition CERCLA response costs.
The District Court ruled substantially in favor of LTV. Judge Sprizzo did not go quite so far as to include response costs claimed to be discharged based on any of LTV's pre-petition conduct related to the *401 injury, a position that would have included LTV's pre-petition conduct of placing hazardous substances in sealed containers, followed by releases of the substances into the environment years after confirmation. However, Judge Sprizzo, agreed with LTV to the extent of ruling that an obligation to reimburse [the] EPA for response costs is a dischargeable claim whenever based upon a pre-petition release or threat of release. Id. at 1000. This ruling covered releases that occurred pre-petition, even though they had not then been discovered by the EPA (or anyone else). Id. at 1000.
However, the court in National Gypsum Company, 139 B.R. 397 (N.D.Tex, 1992) noted that the Chateaugay court utilizes so broad a definition of claim that it encompasses costs "that could not `fairly' have been contemplated by the EPA or the debtor pre-petition." National Gypsum, 139 B.R. 397-407. The National Gypsum court was concerned about the fact that in making so broad a definition for claim, the Code's objective of "fresh start" was given preference over CERCLA's objective of environmental clean up. To eliminate the possibility of a broad-brush application of Chateaugay, in which discharge of claims would occur whether or not they were contemplated by the parties, the National Gypsum court defined a test. This test limits the discharge of claims relating to pre-petition conduct resulting in a release or threat of release of hazardous materials to cases in which the costs were fairly contemplated by the parties. National Gypsum, 139 B.R. 397-407 (N.D.Tex.1992). The court decided that the "[t]he only meaningful distinction that can be made regarding CERCLA claims in bankruptcy is one that distinguishes between cost associated with pre-petition conduct resulting in a release or threat of release that could have been `fairly' contemplated by the parties and may therefore be discharged, and those that could not have been `fairly' contemplated by the parties." Id.
Based on the relevant authority in Chateaugay and National Gypsum it is clear that AMI's distinction between releases occurring pre-confirmation and post-confirmation is relevant and the fact that there was a spill subsequent to AMI's confirmation does not automatically preclude summary judgment if the releases which resulted in the clean up costs were fairly contemplated by the parties. Therefore, the fact that there was a post-confirmation spill does not automatically preclude AMI's summary judgment as to pre-confirmation spills.
As to AMI's argument, that the case at bar is not properly one for joint and several liability, it is true that courts "may allocate response costs among liable parties using such equitable factors as the court determines are appropriate." 42 U.S.C. § 9613(f)(1). This contribution provision, however, does not preclude the possibility that this case may turn out to be one for joint and several liability.
In general, CERCLA does not expressly provide for joint and several liability. Congress expressly left to the courts the determination of what standard of liability to impose under CERCLA, based on a case by case basis. National Gypsum at 413 quoting H.Rep. No. 253(I), 99th Cong.2d Sess. 74, reprinted in 1986 U.S.Code Cong. & Adm. News 2835, 2856. Subsequently, however, in enacting the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), Congress endorsed the standard of joint and several liability imposed by the seminal case of United States v. Chem-Dyne Corp., 572 F.Supp. 802 (S.D.Ohio 1982). National Gypsum at 413. In determining the scope of liability, the Chem-Dyne court followed the strict approach advocated by the Restatement (Second) of Torts. Under this approach, the burden of proof as to apportionment of harm is on the defendant; absent a showing of divisibility, each defendant is jointly and severally liable for the entire harm. National Gypsum at 413; Chem-Dyne, 572 F.Supp. at 808.
Since Chem-Dyne, courts have uniformly imposed joint and several liability where the harm has been indivisible. National Gypsum at 413; Amoco Oil Co. v. Borden, Inc., 889 F.2d 664, 672 (5th Cir.1990); O'Neil v. Picillo, 883 F.2d 176, 178-79 (1st Cir.1989); United States v. Monsanto Co., *402 858 F.2d 160, 171-72 (4th Cir.1988). Even courts critical of the inequitable results of joint and several liability have applied this standard to the circumstances before them. National Gypsum at 414; See e.g. O'Neil, 883 F.2d at 178; United States v. A & F Materials Co., 578 F.Supp. 1249, 1256 (S.D.Ill.1984).
In order to avoid joint and several liability, the debtor must establish that (1) the environmental injury is in fact capable of divisibility; and (2) a reasonable basis exists for such apportionment. National Gypsum at 414; See Chem-Dyne, 572 F.Supp. at 811; United States v. Miami Drum Services, Inc., 25 E.R.C. 1469, 1474, 1986 WL 15327. (S.D.Fla.1986). Divisibility of harm is a question of fact to be determined by presentation of evidence. National Gypsum at 414; United States v. Thomas Solvent Co., 714 F.Supp. 1439, 1448 (W.D.Mich.1989).
The facts in this case reveal that the Samsel report found the constituent elements of Blankrola in the contaminated groundwater and soil. Whether these chemicals were the only chemicals constituting the contamination or whether chemicals having absolutely nothing to do with the production of Blankrola were present is unclear. Obviously, though, Counterclaimants' argument that this case may be one of joint and several liability is well taken and this court at this stage certainly cannot make a determination as to divisibility or apportionment. I, therefore, recommend that the Court reject counterclaimants' argument that the past confirmation contamination automatically precludes summary judgment in favor of AMI. Rather, I recommend the Court find that the effect of the post confirmation release depends upon the divisibility of the harms and that as to this issue, there remain substantial factual questions to be resolved.
THE FACT THAT DATA CARD RECEIVED NO NOTICE OF AMI'S PENDING BANKRUPTCY FAILS TO RAISE A GENUINE ISSUE OF FACT OR LAW
Counterclaimants next contend that AMI's partial motion for summary judgment must be denied as to Data Card because Data Card did not have notice or actual knowledge of AMI's pending Chapter 11 bankruptcy. This lack of notice and/or actual knowledge, Data Card argues, deprives Data Card of its rights under due process. Data Card relies on In re Penn Cent. Transp. Co., 771 F.2d 762 (3d Cir.1985) cert. denied, 474 U.S. 1033, 106 S.Ct. 596, 88 L.Ed.2d 576 (1985) to support their proposition that due process requires that a creditor must have notice or actual knowledge of the debtor's bankruptcy case before the creditor's claim is discharged. Id.
In In re Penn Cent. Transp. Co., plaintiffs Pinney and Litton alleged that although they received notice of Penn Central's reorganization proceedings, their claims now before the court, were based on antitrust conspiratorial acts which were fraudulently concealed from plaintiffs. Plaintiffs argued that the reorganization process of the bankruptcy code was dependent on "proper" notification to creditors and other interested parties. Plaintiffs argued that their notice was not proper. The court then reviewed the requirements of due process noting:
In Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314-15 [70 S.Ct. 652, 657, 94 L.Ed. 865] (1950) the Supreme Court stated that an elementary and fundamental requirement of due process in any proceedings 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 reasonable to convey the required information . . . and it must afford a reasonable time for those interested to make their appearance . . . But if with due regard for the practicalities and peculiarities of the case these conditions are reasonably met, the constitutional requirements are satisfied.
(citation omitted).
The facts before this court reveal that Data Card did not purchase the stock of *403 DBS, Inc. the parent holding company of AFI until August of 1986. Thus, Data Card did not become an interested party entitled to notice under the Bankruptcy Code, until it acquired the property in 1986. At the time AMI filed for bankruptcy in 1982, and when AMI's reorganization plan was confirmed in 1984, there was absolutely no basis for AMI to perceive Data Card as an interested party or Data Card to assert a claim against AMI. Thus, Data Card was not an interested party who was entitled to notice at the time of AMI's bankruptcy and by reason of its subsequent ownership of all DBS stock, the knowledge of AFI and DBS is imputed to Data Card.
Further, AMI is correct in arguing that the proposition that Data Card's argument cannot be squared with the Bankruptcy Code. A debtor that provides notice to all parties who may have claims against the debtor relating to a piece of property cannot lose the benefit of its discharge because another party acquires title to the property at some future date. The efficacy of the debtor's discharge would then be subject to subsequent conveyances of the property over which the debtor had no control. This scheme would end-run around the policies underlying the Bankruptcy Code which provide for a "fresh start" to the debtor. Thus, it is inappropriate for Data Card to contend that the motion for summary judgment should be denied because Data Card was never given notice.
A CLAIM FOR PURPOSES OF THE BANKRUPTCY ACT ARISES UPON THE RELEASE OF HAZARDOUS SUBSTANCE
The primary issue raised by AMI in this motion for summary judgment is whether, for purposes of bankruptcy, Counterclaimants' environmental claims arose before the confirmation of AMI's reorganization plan. AMI argues that its liability hinges on when the events that gave rise to claims, the alleged contamination of soil and groundwater and the sale of the Holmesville facility occurred. Any claims based on event which occurred pre-confirmation were discharged in the AMI bankruptcy case because the Bankruptcy Code defines debt as "liability on a claim". 11 U.S.C. § 101(11). Section 101(4) of the Code and the cases define "claim" very broadly to include contingent and unliquidated claims. See In re Edge, 60 B.R. 690, 692 (Bkrtcy. M.D.Tenn.1986). (Legislative history confirms that Congress intended the broadest definition for `claim' in bankruptcy. "By this broadest possible definition . . . the bill contemplates that all legal obligations of the debtor no matter how remote or contingent will be able to be dealt with in the bankruptcy case." H.R.Rep. No. 595, 95th Cong., 2d Sess. 309 (1979), reprinted in 1978 U.S.Code Cong.Ad.News 5963, 6266.
Counterclaimants, however, contend that the contamination was not discovered until after the confirmation of AMI's reorganization plan, and that therefore such claims could not have been discharged in bankruptcy. Counterclaimants further argue that the mere release of a hazardous substances is insufficient to give rise to a CERCLA claim because response costs are a necessary element of such claims. Because Data Card's response costs were not incurred until after the confirmation, the claim could not have been discharged by AMI's reorganization. Counterclaimants argue that AMI's argument stretches the definition of contingent claim to a new extreme and that no court has held that CERCLA liability should be discharged when the debtor fails to disclose its potential CERCLA liability in the bankruptcy proceeding.
Counterclaimants rely on two cases, the United States v. Union Scrap Iron & Metal, 123 B.R. 831 (D.Minn.1990) and Sylvestor Bros. Dev. Co. v. Burlington Northern, 133 B.R. 648 (D.Minn.1991), to support their position. In Union Scrap, the court refused summary judgment of a bankrupt co-defendant, Taracorp, and stated the issue of when CERCLA liability arises for purpose of bankruptcy as:
Should a party's liabilities for environmental damage be discharged in bankruptcy when the harm was done pre-petition, but it was not known at the time *404 to the [creditor] that the party was a responsible party, and when CERCLA liability could not be incurred until after the bankruptcy reorganization was complete?
The court, relying on In re UNR Industries, Inc., 29 B.R. 741, 745-46 (Bankr. N.D.Ill.1983) held that "CERCLA provides no basis for [the debtor's] position that the mere release of a hazardous substance is sufficient to create a legal obligation constituting a claim in bankruptcy." 123 B.R. at 835-36. Judge Murphy, then concluded that "[t]he EPA could not have a bankruptcy claim based on CERCLA until it had incurred response costs." 123 B.R. at 836. Sylvestor Bros., also a Judge Murphy decision, employed a similar legal analysis.
Counterclaimants argue that CERCLA the relevant substantive non-bankruptcy law in this case, as in the above cases, should be applied to determine when a claim arises for purpose of bankruptcy. To establish a claim under CERCLA, four elements must be established: (1) there must be a facility; (2) there must be a release or threatened release of hazardous substances at the facility; (3) there must be a responsible person, as defined under 42 U.S.C. § 9607(a); and (4) the non-government claimant must have incurred necessary cost of response in responding to the release at the facility. United States v. Aceto Agriculture Chems. Corp., 872 F.2d 1373, 1378-79 (8th Cir.1989).
AMI replies that all four elements of the CERCLA test do not need to be present and that the legal analysis applied in Union Scrap and Sylvester Brothers is incorrect. This is because both subsection 502(c) allows for the estimation of "contingent or unliquidated" claims and subsection 502(e) disallows, but does not except from discharge, contingent claims for contribution and reimbursement. AMI further argues that Section 1141(d)(1)(A) of the Bankruptcy Code provides that the confirmation of a Chapter 11 plan or reorganization discharges the debtor from all debts. AMI, citing In re Jensen, 127 B.R. 27 (9th Cir.BAP 1991), contends that in determining when a claim in bankruptcy arises, the court should focus on when the debtor's conduct occurred not when the harm becomes known or discovered.
In Jensen, the State of California attempted to recover from a Chapter 7 debtor cleanup costs related to contamination that had occurred pre-petition. The court rejected the argument that the claim did not arise until cleanup costs had been incurred, holding that "claims in bankruptcy arise based upon the debtor's conduct . . ." 127 B.R. at 33. Because Jensen's conduct, its release of hazardous materials, had occurred pre-bankruptcy, the state's claim was deemed discharged. Id.
In accord with Jensen is In re Chateaugay Corp., 112 B.R. 513 (S.D.N.Y.1990), aff'd 944 F.2d 997 (2d Cir.1991). The Chateaugay court distinguished claims arising from a pre-bankruptcy release of hazardous waste from those that arise from a post-bankruptcy release. As reasoned by the Court:
Where . . . there has been a pre-petition release or threatened release of hazardous waste, there does exist an event that would render any claims arising from the circumstance dischargeable pursuant to the broad definition of "claim" set forth in the Bankruptcy Code.
112 B.R. at 522. The court in recognizing the underlying environmental laws, concluded:
The Court cannot accept the government's argument that any future environmental obligations are not dischargeable merely because a CERCLA cause of action fully arises only after a review had been made, a remedy chosen, and costs incurred. So long as there is a pre-petition triggering event, i.e. the release or threatened release of hazardous waste, the claim is dischargeable, regardless of when the claim for relief may be ripe for adjudication.
Id. at 522.
Both the Jensen and Chateaugay decisions relied on In re Johns-Manville Corp., 57 B.R. 680 (Bankrtcy.S.D.N.Y.1986) in reaching their conclusion that future environmental debts are dischargeable. *405 Johns-Manville involved a third-party claim filed against the debtor post-petition which related to building materials that the debtor had sold pre-petition. After the debtor's bankruptcy filing, the building material proved to be defective, resulting in claims by the building owner of the building against the contractor and developer. Those parties sought indemnification and contribution from the debtor. The claimants, in the Johns-Manville case, argued that their claims arose post-petition and thus were not subject to the automatic stay. The claimants relied on In re Frenville Co., 744 F.2d 332 (3rd Cir.1984), which held that a claim is a post-petition claim if the right to payment that the claim represents did not arise under state law or non-bankruptcy federal law, as the case may be, until after the bankruptcy filing. The Johns-Manville court declined to follow the Frenville decision, finding that Frenville undermined the broad definition of claim intended by Congress and that Frenville would frustrate the process of channelling claims against a debtor into a single forum. 57 B.R. at 690. The Johns-Manville court concluded, in determining when a claim arises, that the focus must be on the actions or omissions of the debtor that ultimately gave rise to the claim, and not on when third parties might obtain rights of indemnification or contribution. 57 B.R. at 690.
Counterclaimants counter that Jensen and Chateaugay are both inapposite because they both were cases in which the question of discharge of CERCLA liability arose in the context of ongoing bankruptcy proceedings where the creditor could still file a claim. In addition, the debtor, in both cases, disclosed its CERCLA liability in the bankruptcy proceedings, and consequently the creditor had actual knowledge of the debtors' CERCLA liability before the bankruptcy plan was confirmed. These factual distinctions, Counterclaimants contend, cut to the crucial issues identified by the District Court of Minnesota in Union Scrap and Sylvestor Bros.
Before moving to the merits of both parties' arguments, I would like to comment that I do not agree with Counterclaimants' characterization of the proceedings in Jensen. Jensen was a Chapter 7 case, which had been closed for 5 years before the discharge issue came before the court. Thus, this court cannot agree with Counterclaimants' statements that the Jensen case arose in the context of an ongoing bankruptcy proceeding where the creditor could still file a claim. Further, in finding that CERCLA claims arise for bankruptcy purposes upon the release of hazardous materials neither the Jensen nor Chateaugay courts, explicitly or implicitly suggested the pendency of the bankruptcy proceeding was at all relevant in their determinations.
Now to the issue of when a claim arises under CERCLA for purposes of bankruptcy. A logical approach has been set forth in Johns-Manville Corp., 57 B.R. 680, 692 (Bankr.S.D.N.Y.1986). In Manville the court looked to both contract law and tort law to decide when a "claim" arises. Under tort law, a tort-feasor's pre-petition conduct causing post-confirmation manifestation of injury in the tort victim can give rise to a claim. Some courts have ruled that in the absence of pre-petition manifestation of injury, no claim exists. (See, Schweitzer v. Consolidated Rail Corp., 758 F.2d 936, 944 (3d Cir.1985); In re Forty-Eight Insulations, Inc., 58 B.R. 476, 477 (Bankr.N.D.Ill.1986).) Other courts have ruled that even in the absence of pre-petition manifestation of injury, a claim does exist due to the tort-feasor's pre-petition conduct. (See, In re Johns-Manville Corp., 57 B.R. 680, 686-688 (Bankr. S.D.N.Y.1986); In re Edge, 60 B.R. 690 (Bankr.M.D.Tenn.1986).) Under contract law, pre-petition conduct between parties can establish a situation in which upon occurrence of an event in the future, one party has to fulfill a promise to the other party. That is, a "contingent claim" is one in which the "debtor's legal duty to pay does not come into existence until triggered by the occurrence of a future event and such future occurrence was within the actual or presumed contemplation of the parties at the time the original relationship of *406 the parties was created." In re All Media Properties, Inc., 5 B.R. 126, 133 (Bankr. S.D.Tex.1980), aff'd, 646 F.2d 193 (5th Cir. 1981).
In the context of liability under CERCLA, the application of neither tort law nor contract law precisely fits, although the latter seems to be a closer fit. While the relationship between the EPA (or another party) and a U.S. corporation is more defined than that existing between a potential tort victim and a tort-feasor, it is not as well defined as a contractual relationship. As the court noted in Chateaugay, "We need not decide how the definition of `claim' applies to tort victims injured by prepetition conduct . . . we deal here with the far more manageable problem of sums ultimately to be owed to EPA [or some private party] at such times as it incurs CERCLA response costs." Chateaugay 944 F.2d at 1004. The court likened that relationship between EPA [or as in the present case, a party that has incurred response costs] and the debtor as more like a contractual relationship than the relationship that arises in the tort situation. Such a relationship brings contemplation of contingencies which bring many ultimately maturing payment obligations based on pre-petition conduct within the definition of "claims". Thus, such claims based on pre-petition conduct would be considered "contingent," and not outside the Code's definition of "claim."
While this court follows much of the Chateaugay court's reasoning, some interpretations which take Chateaugay to it's logical conclusion may give too broad a meaning to the word claim, and a recent case,[42] while adopting much of the Chateaugay court's reasoning, tempers the breadth of the definition of claim which may be discharged. In re National Gypsum Company, 139 B.R. 397, 406 (N.D.Tex.1992). The court in National Gypsum noted that the Chateaugay court utilizes so broad a definition of claim that it encompasses costs "that could not `fairly' have been contemplated by the EPA or the debtor pre-petition." National Gypsum at 406. The National Gypsum court was concerned about the fact that in making so broad a definition for claim, the Code's objective of "fresh start" was given preference over CERCLA's objective of environmental clean up.
It does not appear from a careful reading of the Chateaugay opinion that the court intended discharge of all costs relating to the debtor's pre-petition conduct resulting in a release or threat of release, whether or not these costs were fairly contemplated by the parties at the time of the bankruptcy[43]. Yet, the Chateaugay court provided no means of distinguishing between those claims that were contemplated by the parties and those that were not. The National Gypsum court felt that to eliminate the possibility of a broad-brush application of Chateaugay, in which discharge of claims would occur whether or not they were contemplated *407 by the parties, it would define its own test. This test limits the discharge of claims relating to pre-petition conduct resulting in a release or threat of release of hazardous materials to cases in which the costs were fairly contemplated by the parties. The National Gypsum court decided that "[t]he only meaningful distinction that can be made regarding CERCLA claims in bankruptcy is one that distinguishes between costs associated with pre-petition conduct resulting in a release or threat of release that could have been `fairly'[44] contemplated by the parties; and those that could not have been `fairly' contemplated by the parties." National Gypsum at 139 B.R. 397, 407. The court held that only those costs that had been "`fairly' contemplated" by the parties may be discharged. National Gypsum at 407. The court listed a number of factors which are relevant to the application of the "fair contemplation" standard, such as knowledge by the parties of a site in which a PRP may be liable, NPL listing, notification by the EPA of PRP liability, commencement of investigation and cleanup activities and incurrence of response costs. National Gypsum at 407. Thus, the National Gypsum court adopted much of the reasoning of the Chateaugay court, but it established a test which would define the types of claims that would fall within the range of "dischargeable" claims under CERCLA in a bankruptcy context.
Although the present case can be distinguished in some ways from Chateaugay and National Gypsum, I feel that the principles taught in those two cases are applicable here. In this case, there is a suit between private parties and a debtor, unlike the Chateaugay and National Gypsum cases which took place in the context of government regulation, where the suits were between the EPA and a debtor. Although both of the other cases were decided in the context of a government regulatory relationship, it is not clear that the principles developed by the Chateaugay court and the National Gypsum court should not be applied here. Certainly the relationship between Counterclaimants and AMI is more like a contractual relationship than that between a tort-feasor and victim, despite the fact that it is not between a regulated party and a government regulatory agency like the EPA. That is, AMI and DBS entered into a contractual arrangement for the sale of the Holmesville facility, although the contract did not include express contingencies relating to release of hazardous materials. When Data Card purchased DBS in 1986, it was aware that the release of hazardous materials had occurred, due to it's retention of Samsel for environmental investigation. These arrangements make these parties contractual parties, at least on some issues.
Another difference between the present case and Chateaugay and National Gypsum is that in the present case, the site of the release of hazardous material was not reported to the EPA until 1986, two years after the bankruptcy proceeding, when Data Card notified the Ohio EPA of the results of the due diligence testing it had conducted at the site. In National Gypsum, the seven listed sites were on the EPA's NPL before the bankruptcy proceeding and in Chateaugay, LTV had been identified as a PRP at the 14 sites in question before the bankruptcy proceeding. Thus, in Chateaugay and National Gypsum, there was knowledge by the parties during the bankruptcy proceeding that they might be dealing in a government regulation context with the EPA.
In the present case, Counterclaimants DBS and AFI and plaintiff AMI had no such knowledge as none had reported the Holmesville facility to the EPA before the bankruptcy. Data Card, however, certainly knew it would be dealing with the EPA *408 as a regulated party before it entered into the contractual relationship to buy the DBS shares, although not in the context of bankruptcy. Finally, the factors set forth in the above test may be applied between AMI and DBS but not AMI and Datacard. Datacard, as DBS's successor had no relationship with AMI, that these factors could be applied to. Rather, the application of this test will be between AMI and DBS. Despite these differences, I conclude that the relationship between parties that have incurred response costs and debtors who have released hazardous materials prepetition is more similar to a contractual relationship than to a relationship between a tort-feasor and the tort victim, and thus the principles of both the Chateaugay and National Gypsum courts should apply here.
Further, the legal reasoning applied to the facts in Jensen, Chateaugay, and National Gypsum fit more appropriately to the facts at bar. Although Judge Murphy in Union Scrap and Sylvestor Bros. did not cite In re Frenville, Judge Murphy's conclusion on when a claim arises for bankruptcy purposes is the same conclusion reached by the Frenville court. That is, the Frenville court held that a claim for bankruptcy purposes arose when a cause of action arose under state law. 744 F.2d at 337. Likewise, the Union Scrap court held that a claim for bankruptcy purposes arose under CERCLA when a "legal obligation" arose under CERCLA, which is when response costs are incurred. 123 B.R. at 836. The Frenville holding, however, has been rejected by numerous subsequent cases that considered the issue, including several in this district. See In re Jensen, 127 B.R. 27 (9th Cir. BAP 1991); In re Black, 70 B.R. 645, 648 (Bkrtcy. D.Utah), In re Service Decorating, 105 B.R. 859, 864 (N.D.Ill.1989), and In re Diamond Mortgage Corp., 105 B.R. 876, n. 4 (Bkrtcy.N.D.Ill.1989). Further, this court agrees with AMI that the authority of the Minnesota cases is somewhat undermined by the court's reference to the District Court's reasoning in In re Jensen, 114 B.R. 700 (Bkrtcy.E.D.Cal.1990), whose decision Judge Murphy called "[a] sensible approach to balancing environmental and bankruptcy goals." Union Scrap, 123 B.R. at 838. However, the Ninth Circuit Bankruptcy Appellate Panel reversed the District Court's ruling in Jensen, and rejected the argument that a CERCLA claim in bankruptcy arise when response costs are incurred. In re Jensen, 127 B.R. 27, 33 (9th Cir. BAP 1991).
I agree with AMI that the analysis of the Minnesota cases oversimplifies the bankruptcy test for determining the existence of a claim. The issue is broader than whether a claim could be brought outside of bankruptcy. This is because, the Bankruptcy Code specifically contemplates the resolution of claims that would be premature in a non-bankruptcy forum. See Section 502(c) and Section 502(e). As pointed out in Chateaugay:
"the Bankruptcy Code manifests a strong and clearly expressed congressional intent that a debtor be discharged from all claims, both actual and contingent, which arise out of pre-petition conduct. Moreover, the courts have effectuated that congressional intent by, as noted above, construing the concept of `claim' very broadly. Therefore, this court may not and should not subvert that policy by judicially created exceptions not clearly supported by the bankruptcy statute itself or by other congressional legislation.
In that regard, it is significant that the Bankruptcy Code itself specifically defines classes of claims that cannot be discharged, see 11 U.S.C. § 523, and in a reorganization context specifically limits these exceptions to individual debtors. See 11 U.S.C. § 1141(d)(2)
. . . . .
In addition, courts have required a clear manifestation of congressional intent in order to find that a debt is not dischargeable because of other statutory provisions . . . "
In re Chateaugay, 112 B.R. 513 at 524.
The Chateaugay court was apt in noting that such an interpretation of "claim" arising under CERCLA would anticipate other CERCLA claims in the context of differing *409 bankruptcy situations. That is, should the court render the opinion that a pre-petition release of hazardous materials was not a "claim" in a Chapter 11 reorganization as that case was [and this one is], then what recourse would a party have who will incur response costs against a dissolving corporation in a Chapter 7 liquidation case? Since the claim would not "arise" until response costs are incurred, if they are incurred post confirmation the debtor's estate would have already been liquidated. On the other hand, if a claim exists at the time of release of hazardous materials, it is more likely that the debtor's estate will be available to contribute to cleanup costs. Furthermore, if a pre-petition release of hazardous materials is not considered a claim until response costs are incurred post-confirmation, then some corporations would not be able to reorganize at all due to the specter of non-dischargeable (post-confirmation) debts which would arise under CERCLA.
Thus, I find the arguments of the Chateaugay and National Gypsum courts convincing, and maintain that in the long run, it may behoove us not to narrowly interpret the CERCLA statutory language as the Minnesota court did. This court rather recommends that the district court hold that a "contingent claim" arises when the release of hazardous substances occurs, and such a claim may be discharged in bankruptcy if both parties "fairly contemplated" that such a claim may arise.
In the present case, it is necessary to determine whether the parties "fairly contemplated" that future response costs might be incurred. In cases which involve a debtor and a private party, factors other than those noted by the National Gypsum court must be considered in applying the "fair contemplation" standard since those factors dealt more with the government regulation context. In any case, to apply the "fair contemplation" standard, this court needs to make factual findings. Thus, the determination of whether the parties "fairly contemplated" that response costs could be incurred is a genuine issue of material fact.
Some of the factors that may be considered in this future determination of this are: before purchasing the DBS stock and the Holmesville facility, Data Card was aware of AMI's releases of hazardous materials at the site; the environmental risks which Data Card was aware of may have played a role in the purchase price Data Card paid for DBS, and Data Card clearly contemplated suit with AMI, as evidenced by its letter of notice of incurrence of response costs to AMI dated January 23, 1987. One of the factors that may be considered in determination of this issue with respect to DBS and AFI is whether anyone at DBS or AFI considered the Holmesville facility to be an environmental risk prior to the bankruptcy proceeding and the effect of the August 20, 1984 settlement agreement.
Thus, I recommend that the district court hold that a "contingent claim" arises when the release or threat of release of hazardous substances occurs, and such a claim may be discharged in bankruptcy when both parties "fairly contemplated" that such a claim may arise. In the present case, the application of such a "fair contemplation" standard raises a genuine issue of material fact with respect to all three Counterclaimants. Therefore, AMI's partial motion for summary judgment should be denied.
COUNTERCLAIMANTS BREACH OF WARRANTY AND MISREPRESENTATION CLAIMS ARE PRE-PETITION CLAIMS.
Counterclaimants contend that the motion for summary judgment should be denied with respect to Counterclaimants' breach of warranty and misrepresentation claims as they argue that these claims arose post-confirmation when fraud was discovered. Counterclaimants have no basis to assert that there are material facts at issue on these grounds. AMI's sale of the Holmesville facility took place shortly after CERCLA was enacted in 1980. Due to the infancy of CERCLA the potential liability arising out of such a sale may not have been formed in many sellers' minds. Counterclaimants have presented no facts to *410 support their contention of misrepresentation. As to the breach of warranty, this clearly is a pre-petition claim upon which no test such as the fair contemplation test set forth in National Gypsum has been developed. These claims relate to a pre-petition contract, and as such, are contingencies which arose at the time of the creation of the contract. Since these claims are pre-petition claims, they are barred by AMI's discharge. I therefore recommend that the motion or partial summary judgment be granted as to counterclaimants breach of warranty and misrepresentation claims.
COUNTERCLAIMANTS' COMMON-LAW CLAIMS AROSE PRE-PETITION
Counterclaimants contend that the motion for summary judgment should be denied with respect to Counterclaimants' other common law claims (nuisance, negligence, trespass, strict liability) because such claims arose post-confirmation. Counterclaimants rely again on In re Forty-Eight Insulations, Inc., 58 B.R. 476 (Bankr.N.D.Ill.1986) and In re UNR Industries, Inc., 29 B.R. 741 (N.D.Ill.1983), stating that these cases have held that pre-petition wrongful conduct that may result in a latent injury does not create a claim under the Bankruptcy Code. As discussed above, while the lower court decision in UNR might have so held, the Forty-Eight court and the Seventh Circuit in In re UNR Industries, Inc. did not so hold. In re UNR Industries, 29 B.R. 741 (N.D.Ill. 1983), aff'd, 725 F.2d 1111 (7th Cir.1984); In re Forty-Eight Insulations, Inc., 58 B.R. 476 (N.D.Ill.1986). Once again, these common law claims, relate to a pre-petition contract, and as such, are contingencies which arose at the time of the creation of the contract. The application of the fairly contemplated test is inapplicable here also. Since these claims are pre-petition, they are barred by AMI's discharge. I therefore recommend that the motion for partial summary judgment be granted as to Counterclaimants' common law claims.
COUNTERCLAIMANTS' CITIZEN SUIT PRECLUDES SUMMARY JUDGMENT
Finally, Counterclaimants contend that this motion for summary judgment should be denied with respect to Counterclaimants' citizen suit claims because this claim arose after the confirmation date. Provisions for such suits. The citizen suits arise under CERCLA and are found at CERCLA § 310(a), 42 U.S.C. § 9659(a) (1988). This section provides as follows:
(a) Authority to bring civil actions
Except as provided in subsection (d) and (e) of this section and in section 9613(h) of this title (relating to timing of judicial review), any person may commence a civil action on his own behalf
(1) against any person (including the United States and any other government instrumentality or agency, to the extent permitted by the eleventh amendment to the Constitution) who is alleged to be in violation of any standard, regulation, condition, requirement, or order which has become effective pursuant to this chapter (including any provision or an agreement under section 9620 of this title, relating to Federal facilities); or
(2) against the President or any other officer of the United States (including the Administrator of the Environmental Protection Agency and the Administration of the ATSDR) where there is alleged a failure of the President or of such other officer to perform any act or duty under this chapter, including a act or duty under section 9620 of this title (relating to Federal facilities), which is not discretionary with the President or such other officer.
Despite the fact, that I agree with AMI's point, that Counterclaimants' characterization in this matter as a private attorney general is somewhat misplaced, if the results of the fair contemplation test set forth in National Gypsum, reveals that liability belongs to AMI, then possibly a citizen suit could survive. If the application of the test concludes that AMI's liability was released, then this citizen suit will be barred. Therefore, I recommend the *411 court rule that partial summary judgment is precluded at this time.
CONCLUSION
For the foregoing reasons it is recommended that Plaintiff's Partial Motion for Summary Judgment be DENIED as to the claims arising under CERCLA and GRANTED as to the Breach of Warranty, misrepresentation and common-law claims.
Respectfully submitted,
DATE: JUNE 25, 1992
__________________
RONALD A. GUZMAN
United States Magistrate Judge
NOTES
[1] AMI also objects, in a footnote, to the Report's conclusion that the court must determine whether joint and several liability is appropriate in allocating liability for post-confirmation releases of hazardous substances. Nevertheless, "arguments raised in passing in a footnote are waived." Federal Labor Relations Auth. v. United States Dept. of the Navy, 975 F.2d 348, 352 n. 1 (7th Cir.1992); see also Fed.R.Civ.P. 72(b) (specific, written objection required).
[1] See Counterclaimants Memorandum In Opposition to AMI's Motion for Summary Judgment, page 2 and AMI's reply brief, page 1.
[2] Plaintiff's "Statement of Facts As To Which There Is No Genuine Issue", ¶ 36; Counterclaimant's "Statement of Genuine Issues of Data Card Corporation, DBS, Inc. and Addressograph Farrington, Inc.", ¶ 28, 29. Hereinafter, Plaintiff's "Statement of Facts As To Which There Is No Genuine Issue" will be referred to as AMI's Stat. and Counterclaimant's "Statement of Genuine Issues of Data Card Corporation, DBS, Inc. and Addressograph Farrington, Inc." will be referred to as Counterclaimants' Stat.
[3] AMI's Stat. ¶ 1.
[4] AMI's Stat. ¶ 2.
[5] AMI's Stat. ¶ 3.
[6] AMI's Stat. ¶ 4.
[7] AMI's Stat. ¶ 5.
[8] AMI's Stat. ¶¶ 7, 9.
[9] A fact at issue is whether DBS acquired the tank farm in the acquisition of the Holmesville facility. This is a fact which is not material to the issues to be decided before this court. AMI contends that DBS acquired the tank farm in 1981, and that AMI leased the above-ground storage tanks from DBS to continue the operations of its Multigraphics division. (AMI's Stat. ¶¶ 10, 15.) Counterclaimants contend that under the terms of the 1981 agreement, AMI retained ownership of the tank farm and leased the grounds where the tank farm was located from DBS. (Counterclaimants' Stat. ¶¶ 10, 15.)
[10] Counterclaimants' Stat. ¶ 52.
[11] Counterclaimants' Stat. ¶ 53.
[12] As mentioned in footnote 8, whether DBS acquired the tank farm is at issue. AMI's Stat. ¶ 15.
[13] AMI's Stat. ¶ 12; Counterclaimants' Stat. ¶ 12.
[14] AMI's Stat. ¶ 13.
[15] AMI's Stat. ¶ 16.
[16] Counterclaimants' Stat. 16, 17. AMI's Stat. ¶ 17.
[17] AMI's Stat. ¶ 18.
[18] AMI's Stat. ¶ 19.
[19] Counterclaimants' Stat. ¶ 39.
[20] Complaint ¶ 12.
[21] Counterclaimants' Stat. ¶ 20. AMI's Stat. ¶ 6.
[22] AMI's Stat. ¶ 21; Counterclaimants Stat. ¶ 21.
[23] AMI's Stat. ¶ 14.
[24] Counterclaimants' Stat. ¶ 51.
[25] Counterclaimants' Stat. ¶ 47.
[26] Counterclaimants' Stat. ¶ 49.
[27] AMI's Stat. ¶ 22.
[28] AMI's Stat. ¶ 23.
[29] AMI's Stat. ¶ 25.
[30] AMI's Stat. ¶ 26; Counterclaimants' Stat. ¶ 26.
[31] AMI's Stat. ¶¶ 27-29; Counterclaimants' Stat. ¶¶ 28, 29.
[32] AMI's Stat. ¶ 31; Ford Transc. p. 72-75.
[33] Ford Transc. p. 73.
[34] AMI's Stat. ¶ 32; Complaint ¶ 14.
[35] AMI's Stat. ¶¶ 33, 34.
[36] AMI's Stat. ¶ 36; Counterclaimants' Stat. ¶ 36.
[37] Complaint ¶ 15.
[38] Complaint ¶ 16.
[39] Complaint ¶ 17.
[40] Complaint ¶ 17.
[41] Counterclaimants' Stat. ¶ 58.
[42] In re National Gypsum Company, (N.D.Tex.) was published on February 12, 1992, after both parties in this case submitted their briefs on the present summary judgment motion.
[43] In a careful reading of the Chateaugay case, there are indicia that the court felt that discharge of costs relating to pre-petition conduct resulting in a release or threat of release should be limited to cases in which the costs were "`fairly' contemplated" by the parties. First off, there are the references to the use of the term "fairly" discussed in footnote 3 infra.
Secondly, there is discussion that the Code's inclusion of "contingent" and "unmatured" claims refers to obligations that will be due with the occurrence of a future event that is "within the actual or presumed contemplation of the parties at the time the original relationship between the parties was created." In re All Media Properties, Inc., 5 B.R. 126, 133 (Bankr.S.D.Tex. 1980), aff'd mem., 646 F.2d 193 (5th Cir.1981). Thus, the Chateaugay court's use of "contingent" and "unmatured" claims is similar to the use of those terms in a contract law sense, requiring previous contemplation by the parties.
Lastly, the court indicated that it considered that such contemplation may exist in the context of rights and responsibilities arising out of public regulation. "The relationship between environmental regulating agencies and those subject to regulation provides sufficient `contemplation' of contingencies to bring most ultimately maturing payment obligations based on pre-petition conduct within the definition of `claims.'" Chateaugay 944 F.2d 997 at 1005.
[44] The National Gypsum court noted that the court in Chateaugay used the term "fairly" on numerous occasions, "specifically in affirmation of the lower court's recognition that `before a contingent claim can be discharged, it must result from pre-petition conduct fairly giving rise to that contingent claim.'" In re Chateaugay Corp. 112 B.R. 513, 521 (S.D.N.Y.1990) (emphasis added). "This court, finding the use of the term `fairly' both significant and apt, adopts the same language." National Gypsum n. 22 at 407.
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635 A.2d 964 (1993)
Sally Ann RANCOURT
v.
TOWN OF GLENBURN, et al.
Supreme Judicial Court of Maine.
Argued November 5, 1993.
Decided December 28, 1993.
Joel A. Dearborn (orally), Ferris, Dearborn & Willey, Brewer, for plaintiff.
Robert E. Miller (orally), Spencer, Zmistowski & Miller, Old Town, Thomas Russell (orally), Mitchell & Stearns, Bangor, for defendants.
Before ROBERTS, GLASSMAN, CLIFFORD, COLLINS, RUDMAN and DANA, JJ.
ROBERTS, Justice.
Sally Ann Rancourt appeals from a judgment entered in the Superior Court (Penobscot *965 County, Mead, J.) dismissing for lack of standing her appeal from a decision of the Glenburn Board of Appeals. She contends that "party," as used in 30-A M.R.S.A. § 2691(3)(G) (Pamph.1992), should include a permit holder whose permit has been revoked by a zoning board of appeals, regardless whether that person appeared or otherwise participated before the board. Because a permit holder is an essential party to a complaint challenging either the issuance or revocation of a permit, we vacate the dismissal of Rancourt's appeal, but direct the entry of a judgment against her on the merits.
We have not previously addressed the question whether a permit holder who does not appear, personally or through counsel, or otherwise participate in a proceeding before a zoning board of appeals has standing to challenge in the Superior Court the board's revocation of the permit. Our interpretation of "party" as used in 30-A M.R.S.A. § 2691(3)(G) has arisen only in the context of litigation initiated by persons other than the permittee, e.g., Singal v. City of Bangor, 440 A.2d 1048, 1050-51 (Me.1982), or by an applicant who participated in the board's hearing, e.g., New England Herald Dev. Group v. Town of Falmouth, 521 A.2d 693, 695-96 (Me.1987). We conclude, however, that because a permit holder is an essential party to a complaint challenging either the issuance or revocation of a permit, such a permit holder necessarily has standing to seek judicial review of the permit's revocation, despite the failure to participate before the board. See Centamore v. Commissioner, Dep't of Human Services, 634 A.2d 950 (Me.1993).
We recognize that our decision today might be interpreted as encouraging permittees not to participate at the municipal level. On the contrary, anyone who bothers to obtain a permit should have sufficient self-interest to defend it. Moreover, the holder of a revoked permit who seeks judicial review will be limited to the issues actually considered by the board. Penobscot Area Hous. Dev. Corp. v. City of Brewer, 434 A.2d 14, 20 n. 7 (Me.1981). We are confident that occasions when the permit holder fails to appear before the board and yet subsequently seeks judicial review will be exceedingly rare.
Reaching the merits, we review the board's decision directly for abuse of discretion, error of law, or findings unsupported by substantial evidence in the record. Gorham v. Town of Cape Elizabeth, 625 A.2d 898, 903 (Me.1993). As the party bearing the burden of proof before the board, Rancourt must demonstrate that the evidence compelled the board to find that her application met the requirements of the law. Tompkins v. City of Presque Isle, 571 A.2d 235, 236 (Me.1990). She has failed to meet that burden.
In order to be eligible to apply for a permit, one must have the type of relationship to a site "that gives ... a legally cognizable expectation of having the power to use that site in the ways that would be authorized by the permit or license [sought]." Murray v. Town of Lincolnville, 462 A.2d 40, 43 (Me.1983). Here the board found that Rancourt did not have a "sufficient legal interest" in a right-of-way leading to Pushaw Lake to entitle her to apply for a permit to place a dock on the right-of-way. Two clauses in Rancourt's deed granted a right of "ingress and egress" to Pushaw Lake, as well as "any and all other rights, easements, privileges and appurtenances" attached to her property. The board interpreted those clauses in light of the original developer's site plan.
The scope of an interest in land conveyed by deed is determined solely from the language of the deed, if that language is unambiguous. Badger v. Hill, 404 A.2d 222, 225 (Me.1979). The first clause in Rancourt's deed does not indicate whether "ingress and egress" includes the right to place a dock at the end of the right-of-way. When the purposes of an express easement are not specifically stated, a court must "ascertain the objectively manifested intention of the parties in light of circumstances in existence recently prior to the execution of the conveyance." Englishmans Bay Co. v. Jackson, 340 A.2d 198, 200 (Me.1975).
The only evidence of intent relates to that of the developer in 1936. At that time, the site plan showed five rights-of-way, ranging in width from twenty to twenty-five feet, that provided access to the lake for more than 60 *966 non-shorefront property owners. Rancourt has pointed to no evidence to suggest that the developer intended to allow each of those owners to place a dock on the rights-of-way. On the contrary, testimony presented to the board revealed that Rancourt's dock alone, which she placed on the right-of-way before her permit became final, interfered with other property owners' access to the lake. See Morgan v. Boyes, 65 Me. 124, 125 (1876) (owner of right-of-way may not "materially impair, nor unreasonably interfere with its use as a way").
The board correctly determined that Rancourt did not establish a sufficient legal interest in the right-of-way to entitle her to apply for a permit to place a dock thereon. Accordingly, the decision to revoke her permit should be affirmed.
The entry is:
Judgment of dismissal vacated.
Remanded for entry of a judgment affirming the decision of the Glenburn Board of Appeals.
All concurring.
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744 S.W.2d 636 (1987)
The CITY OF BELLS and A.L. Isom, Appellants,
v.
GREATER TEXOMA UTILITY AUTHORITY, Appellee.
No. 05-85-00996-CV.
Court of Appeals of Texas, Dallas.
December 22, 1987.
Rehearing Denied February 19, 1988.
*637 Roger D. Sanders, Sherman, for appellants.
John B. Kyle, Dallas, for appellee.
Before STEWART, HECHT and THOMAS, JJ.
ON MOTION FOR REHEARING
THOMAS, Justice.
We grant the motion for rehearing of appellee, Greater Texoma Utility Authority (GTUA) and withdraw the former opinions and substitute this as the Court's opinion. The City of Bells and A.L. Isom (the mayor of Bells) appeal from a judgment declaring that the GTUA was constitutionally created and that its actions, particularly the issuance of certain bonds, were constitutionally taken. The judgment also enjoins all parties from instituting or maintaining any proceeding contesting the constitutional existence of GTUA, or the validity of any proceedings taken in connection with issuance of GTUA's bonds.
In order to understand the issues in this case, it is necessary to discuss the facts surrounding the litigation. GTUA is a public agency of the State of Texas formed as a conservation and reclamation district to provide services to member cities for such *638 things as water supply, sewer services and solid waste disposal. Bells is not a member city of GTUA, and is therefore not generally affected by the actions of that entity. However, GTUA desired to use certain property purportedly voluntarily annexed by Bells as a landfill site. Therefore, GTUA and the landowner sued Bells seeking to have the annexation of the land by Bells declared invalid. Bells, in its amended answer in that case, alleged that GTUA was unconstitutionally created and therefore did not exist as an entity which could bring suit. Bells further alleged that GTUA had engaged in various void actions, all of which tended to make GTUA an improper party plaintiff to that lawsuit.
At the time Bells amended its pleadings to include the allegations of unconstitutionality, GTUA was preparing to issue certain revenue bonds. One condition precedent to the issuance of such bonds by a governmental authority such as GTUA is an opinion by the Attorney General of Texas validating the bond issuance. The Attorney General maintains a policy of denying validation when the agency is then under constitutional attack in any court in Texas. GTUA, fearing that the Attorney General would refuse to validate the bonds, brought a class action suit for a declaratory judgment under article 717m-1 to have GTUA, its actions and specifically its bond issuance, declared constitutional. See TEX.REV.CIV.STAT.ANN. art. 717m-1 (Vernon Supp.1986). It is from the trial court's actions in this declaratory judgment suit that Bells and Isom appeal.
Bells was served with notice of the declaratory judgment suit brought by GTUA. Thereafter, GTUA filed a motion to require Bells to post a bond under section 8[1] to entitle it to maintain its defense in the declaratory judgment suit. The trial court set the bond at two million dollars ($2,000,000.00). Isom then filed his first answer in the declaratory action, seeking to intervene as a member of the class under article 717m-1. Upon its failure to post the bond, Bells was dismissed from the suit. The trial court then struck Isom's answer and, with an attorney ad litem appointed to represent the class, the trial court rendered judgment for GTUA. As a part of the judgment, the court issued a permanent injunction against the class, and specifically against Bells, precluding it from ever contesting, among other things, the constitutionality of GTUA in any court proceeding. Thus, GTUA sought and obtained a permanent injunction to prevent Bells from maintaining one of its defensive theories in the annexation suit.
Bells and Isom bring forty-five points of error asserting, inter alia, that the trial court erred: (1) in finding GTUA had complied with the Open Meetings Act; (2) in exercising jurisdiction over Bells because Bells and other members of the defendant class involved in the suit were not properly served with process; (3) in dismissing Bells for failure to file the bond and rendering judgment against Bells by default; (4) in finding that the statute under which GTUA brought suit was constitutional; and (5) in finding that GTUA was constitutionally created and that its actions were constitutionally taken. We agree with Bells and Isom that GTUA failed to comply with the Open Meetings Act in its meeting that, inter alia, authorized its counsel to file this declaratory judgment suit. Accordingly, we vacate the judgment of the trial court and dismiss the cause.
TEX.REV.CIV.STAT.ANN. art. 6252-17 (Vernon Supp.1987) provides, in pertinent part:
Sec. 3A. (a) Written notice of the date, hour, place, and subject of each meeting held by a governmental body shall be given before the meeting as prescribed by this section, and any action taken by a governmental body at a meeting on a subject which was not stated on the agenda in the notice posted for such meeting is voidable.
(g) The governing body of a water district, other district, or other political subdivision, *639 except a district or political subdivision described in Subsection (f) of this section, shall have a notice posted at a place convenient to the public in its administrative office, and shall also furnish the notice to the county clerk or clerks of the county or counties in which the district or political subdivision is located. The county clerk shall then post the notice on a bulletin board located at a place convenient to the public in the county courthouse.
(h) Notice of a meeting must be posted in a place readily accessible to the general public at all times for at least 72 hours preceding the scheduled time of the meeting.
The parties stipulated at trial that from the time of GTUA's inception in November of 1979 up to April of 1984 GTUA had never complied with the Open Meetings Act. Although not stipulated to, the record reflects that from May of 1984 to May of 1985 GTUA was still failing to comply with the Open Meetings Act. Beginning in May of 1983 and continuing to May of 1985 GTUA had the following procedure. Approximately ten to twelve days before a meeting, a notice was prepared and posted at GTUA headquarters. (From May of 1983 to April of 1984 this notice was posted on a bulletin board in the interior of the building. Consequently, the public was not able to see the notice during the periods of time that the building was not open. From April of 1984 to May of 1985 this notice was posted on the outside glass of the front door where it was visible to the public at all times.) The notice contained the date, place, and hour of the meeting but not the subject matter. Once the agenda was prepared, approximately four to five days before the meeting, the agenda was posted and the notice taken down. The agenda contained the date, location, and subject matter of the meeting, but not the hour of the meeting. Therefore, the notice that is required to be posted for the 72 hours immediately preceding the meeting did not inform the public of the hour of the meeting. The hour of a meeting is part of the explicitly required information that must be in the notice under section 3A(a) of the Act.
The record shows that between GTUA's inception in November of 1979 and May of 1985 GTUA failed to literally comply with the Open Meetings Act. GTUA does not dispute this, but asserts instead that: (1) Bells and Isom have no standing to complain of GTUA's non-compliance with the Act; and (2) substantial compliance is all that is required under the Act. We disagree.
GTUA in its original brief addresses the standing issue by claiming that "BELLS probably has no standing to protest this issue since none of its citizens are citizens of the district and the three bond issues in question do not affect BELLS". GTUA cites no authority for its claim and we have found no cases that apply the standing doctrine against a defendant to a lawsuit. Nevertheless, we shall address GTUA's standing argument. The general rule is that standing consists of some interest peculiar to the person or entity individually. Hunt v. Bass, 664 S.W.2d 323, 324 (Tex.1984). Specifically, one has standing to sue if: (1) he has sustained, or is immediately in danger of sustaining, some direct injury as a result of the wrongful act of which he complains; (2) he has a direct relationship between the alleged injury and claim sought to be adjudicated; (3) he has a personal stake in the controversy; (4) the challenged action has caused the plaintiff some injury in fact, either economic, recreational, environmental, or otherwise; or (5) he is an appropriate party to assert the public's interest in the matter as well as his own interest. Billy B., Inc. v. Board of Trustees, 717 S.W.2d 156, 158 (Tex.App. Houston [1st Dist.] 1986, no writ); Housing Authority v. State ex rel. Velasquez, 539 S.W.2d 911, 913-14 (Tex.Civ.App.Corpus Christi 1976, writ ref'd n.r.e.). As a result of a meeting held in violation of the Open Meetings Act, Bells was sued and placed in a position of either posting a two-million dollar bond (Bells' yearly tax revenue is $32,000) or forever losing any claims it had against GTUA. We hold that under these circumstances Bells and Isom *640 have standing to raise GTUA's violations of the Open Meetings Act.
GTUA also asserts that it is required only to substantially comply with the Act. Although the trial court, in its amended findings of fact and conclusions of law, concluded that GTUA had substantially complied with the Act with respect to any meetings relevant to the bond issues in question (including the meeting which authorized this suit), we need not decide whether the trial court was correct because substantial compliance is not sufficient. Literal compliance is required under the Act. Smith County v. Thorton, 726 S.W.2d 2, 2-3 (Tex.1986).
The notice of the April 1985 meeting in which GTUA voted to authorize this lawsuit to be filed did not comply with the Open Meetings Act. Compliance with the Open Meetings Act is mandatory, and actions taken by a governmental body in violation of the Act are subject to judicial invalidation. Lower Colorado River Authority v. City of San Marcos, 523 S.W.2d 641, 646 (Tex.1975); Garcia v. City of Kingsville, 641 S.W.2d 339, 341 (Tex.App. Corpus Christi 1982, no writ). We hold that GTUA's actions authorizing this lawsuit were invalid and we vacate the judgment of the trial court and dismiss the cause.
NOTES
[1] All references are to TEX.REV.CIV.STAT. ANN. art. 717m-1 (Vernon Supp.1986) unless otherwise indicated.
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160 Pa. Commw. 637 (1993)
635 A.2d 732
Regina M. KURTIAK, Petitioner,
v.
WORKMEN'S COMPENSATION APPEAL BOARD (WESTERN SIZZLIN' STEAK HOUSE), Respondent,
WESTERN SIZZLIN' STEAK HOUSE, Petitioner,
v.
WORKMEN'S COMPENSATION APPEAL BOARD (KURTIAK), Respondent.
Commonwealth Court of Pennsylvania.
Submitted November 24, 1993.
Decided December 23, 1993.
*640 Patrick H. Mahady, for petitioner/respondent Regina M. Kurtiak.
James B. Hudzik, for respondent/petitioner Western Sizzlin' Steak House.
Before PALLADINO and FRIEDMAN, JJ., and NARICK, Senior Judge.
PALLADINO, Judge.
Regina M. Kurtiak (Claimant) and Western Sizzlin' Steak-house (Employer) cross appeal from an order of the Workmen's Compensation Appeal Board (Board) which reversed the referee's decision granting Claimant's claim petition and also reversed the referee's decision granting Employer's modification petition under The Pennsylvania Workmen's Compensation Act (Act).[1] We affirm in part and reverse and remand in part.
The record reveals that Claimant was a food preparation worker for Employer, and on April 4, 1988 Claimant sustained a work-related injury to her right arm and shoulder when she lifted a bus pan of hot chile. Pursuant to a notice of compensation payable, Claimant began receiving total disability benefits on May 4, 1988. Employer paid medical expenses relative to Claimant's right arm and shoulder including expenses for surgery to repair a torn rotator cuff in Claimant's right shoulder. When Employer refused to pay additional medical bills incurred by Claimant for the treatment of carpal tunnel syndrome in both hands, Claimant filed a claim petition. Thereafter, Employer filed a modification petition asserting that Claimant's disability had changed from total to partial.
The referee granted Claimant's claim petition, ordering Employer to pay the medical bills in question. The referee also granted Employer's modification petition, reducing Claimant's benefits from total to partial.
*641 Both parties appealed to the Board. The Board, without taking additional testimony, sustained both appeals. Specifically, the Board reversed the referee's decision granting Claimant's claim petition and reversed the referee's decision granting Employer's modification petition.
Both parties filed petitions for review, and the petitions were consolidated before this court. On appeal to this court, the issues presented are: 1) whether the Board erred in concluding that Employer was not responsible for the payment of medical expenses incurred in the treatment of Claimant's bi-lateral carpal tunnel syndrome; 2) whether the Board erred in concluding that Employer failed to establish that Claimant's disability had decreased; and 3) whether referee erred in his determination of the appropriate partial disability rate.[2]
With respect to the Claimant's claim petition, we note that, in order for an employer to be liable for a claimant's medical treatment, the treatment must be causally connected to the claimant's work-related injury. King v. Workmen's Compensation Appeal Board (Wendell H. Stone Co.), 132 Pa.Commonwealth Ct. 292, 572 A.2d 845 (1990). Furthermore, it is the claimant's burden to establish the necessary causal connection. King. Unless there is an obvious causal connection between a work incident and a subsequent injury, the claimant bears the burden of presenting unequivocal medical testimony to establish the requisite causation. Thomas Jefferson University Hospital v. Workmen's Compensation Appeal Board (Giordano), 116 Pa.Commonwealth Ct. 392, 541 A.2d 1171 (1988).
In the instant case, the work injury occurred when Claimant jarred herself while lifting a bus tub of chile. She immediately noticed pain in her shoulders, and thereafter her principal problem was with her right shoulder and arm. The *642 Notice of Compensation Payable lists Claimant's injuries as "pulled muscles in right arm, neck and shoulder." Eventually, Claimant underwent surgery to correct a torn rotator cuff in her right shoulder, and Employer paid all associated medical expenses.
Claimant did not seek treatment for any problems with her hands until November of 1989. The disputed medical expenses incurred for the treatment of Claimant's hands are dated February 8, 1990 through October 25, 1990. Because the nature of Claimant's injury on April 4, 1988 was a jarring injury to her shoulder, there is no obvious causal connection between that incident, which resulted in injury to Claimant's right shoulder, and the subsequent medical treatment for Claimant's hands. Claimant, therefore, under King had to establish a causal connection by unequivocal medical testimony.
In support of her burden, Claimant proffered the deposition testimony of Dr. James P. Bradley, M.D.
With respect to the cause of Claimant's carpal tunnel syndrome, Dr. Bradley testified as follows:
A. First of all, you have got to understand carpal tunnel syndrome. There is [sic] other things that can give you carpal tunnel syndrome. There is a group of things, and when you get carpal tunnel syndrome you go in your mind through those.
Diabetes can give it to you. Hypoparathyroidism can give it to you. Hyperthyroidism can give it to you. Myxedema can give it to you. Chronic synovitis can give it to you. That's all been proven. She did not have those other said things, but she was a baker and
Q. Is a baker
A. A baker is a repetitive motion job with the wrists. Just like a hairdresser. Just like a dentist. Those are repetitive high motion jobs with the wrists that have been shown to be correlated in studies with carpal tunnel syndrome.
*643 Q. So then, Doctor, do you have an opinion within a reasonable degree of medical certainty as to the cause of the condition for which you treated [Claimant] relative to the carpal tunnel syndrome?
A. She had bilateral carpal tunnel syndrome. I believed, and I said it in my notes, that this was job related due to the repetitive activity of being a baker.
Bradley Deposition, 8/20/91 at 7-8.
Upon a review of Dr. Bradley's testimony, we find no assertion that Claimant's carpal tunnel syndrome was caused by the April 4, 1988 work-related injury. Because the evidence introduced by Claimant fails to establish a causal connection between the work-related injury and Claimant's bilateral carpal tunnel syndrome, Employer is not liable for the payment of medical expenses associated with Claimant's carpal tunnel syndrome.
Accordingly, the order of the Board with respect to the non-payment of these medical expenses is affirmed.
With respect to Employer's modification petition, Employer contends that Claimant's disability has decreased from full disability to partial disability.
Where an employer seeks to modify a claimant's workmen's compensation benefits from full to partial, it is the employer's burden to establish that the claimant's disability has decreased. This burden is satisfied when the employer shows that the claimant's condition has changed and that other work is available which the claimant is capable of performing. Kachinski v. Workmen's Compensation Appeal Board (Vepco Construction Co.), 516 Pa. 240, 532 A.2d 374 (1987). Once the employer has met this burden, the burden shifts to the claimant to establish a good faith follow through on the job referrals. Kachinski; Champion Home Builders Company v. Workmen's Compensation Appeal Board (Ickes), 136 Pa.Commonwealth Ct. 612, 585 A.2d 550 (1990), petition for allowance of appeal denied, 528 Pa. 638, 598 A.2d 995 (1991).
*644 In support of its burden, Employer offered the testimony of Barbara A. Graham, a rehabilitation counselor who works for Interpose, a company hired by Employer to assist Claimant in obtaining a suitable position. Graham testified that she located and informed Claimant of thirteen positions which were within Claimant's physical restrictions and were available. Employer also offered the testimony of Dr. Graham F. Johnstone, M.D., who testified that he had reviewed four of the positions proposed by Graham and that Claimant was capable of performing the duties associated with the four positions.
The referee found that there were two positions available which were within Claimant's physical limitations and that Claimant had failed in good faith to apply for either of these positions. Therefore, the referee held that Employer was entitled to a modification of benefits. In reversing the referee, the Board held:
Nowhere, however, does the Referee find that the Claimant's physical condition changed so as to reduce her disability as required by Kachinski, supra. The referee's decision merely states that if the Claimant were employed, her disability vis-a-vis her ability to earn income, would be reduced. This is not sufficient to meet the [Employer's] required burden of proof and accordingly we will reverse the Referee's grant of the Defendant's Modification Petition and sustain the Claimant's appeal in that regard.
Opinion of the Board at 3.
However, there is no requirement that an employer establish that a claimant's physical condition had changed in order to meet its burden of proving that the claimant's disability decreased. In Harrell v. Workmen's Compensation Appeal Board (Circle HVAC),[3] this court held that a physician's testimony that a claimant was able to work within certain restrictions was sufficient under Kachinski. As previously noted, Employer's physician testified that he had approved *645 four positions as within Claimant's physical limitations. Therefore, Employer met its burden of establishing that Claimant's disability had decreased, and the Board erred in reversing the referee's order to that effect.
Finally, we address the issue of the amount of the partial benefits as calculated by the referee. The referee reduced the amount of Claimant's benefits based upon the wages which she would have earned as a part-time telephone operator/dispatcher at Greiner Security. Greiner Security was one of the two jobs which the referee found to be available to Claimant and to be within her physical limitations and which Claimant failed to pursue in good faith.
Employer argues that the referee should have reduced Claimant's benefits based upon on the wages Claimant would have earned at Wendy's, the other job found suitable by the referee. The position at Wendy's was a full-time position, and Employer argues that the full-time position more accurately reflects Claimant's earning capacity.
We agree. Partial disability payments are calculated based upon the difference between the wages the employee earned at the time of the injury and the employee's earning power after the injury. 77 P.S. § 512. The referee found that Claimant was approved for full time employment and that the position at Wendy's was available and within Claimant's physical limitations. Therefore, Claimant's earning power was that amount which she would have earned at Wendy's, and the referee should have reduced Claimant's benefits based upon full time employment at Wendy's.
We find that the referee's decision to base the amount of the reduction in Claimant's benefits on the wages she would have earned at the part-time position at Greiner Security was error. Because the Board reversed the referee's order reducing Claimant's benefits, it did not reach this issue. Therefore, in addition to reversing the order of the Board with respect to the modification petition, we also remand to the Board with instructions to remand to the referee for a recalculation of Claimant's benefits.
*646 Accordingly, the order of the Board is affirmed in part and reversed and remanded in part.
ORDER
AND NOW, December 23, 1993, the order of the Workmen's Compensation Appeal Board in the above-captioned matter with respect to the claim petition is affirmed.
The order of the Workmen's Compensation Appeal Board with respect to the petition to modify benefits is reversed. The matter is remanded to the Board with instructions to remand to the referee for a recalculation of partial disability benefits in accordance with the foregoing opinion.
FRIEDMAN, Judge, dissenting.
I respectfully dissent.
First, I would have initially addressed the employer's contention that Claimant failed to give timely notice of the carpal tunnel syndrome. If employer's contention proved correct, there would be no need to address the other issues.
However, I also have a more fundamental disagreement with the majority's analysis. I would affirm the Board's conclusion that Employer failed to meet its burden of proving a change in Claimant's physical condition, as required by Kachinski v. Workmen's Compensation Appeal Board (Vepco Construction Co.), 516 Pa. 240, 532 A.2d 374 (1987). The majority cites our recent decision in Harrell v. Workmen's Compensation Appeal Board (Circle HVAC), 151 Pa.Commonwealth Ct. 8, 616 A.2d 1051, petition of allowance of appeal denied, 532 Pa. 645, 614 A.2d 1142 (1992) for the proposition that "there is no requirement that an employer establish that a claimant's physical condition has changed in order to meet its burden of proving that the claimant's disability decreased." (Maj. Op. at 736.) This statement is not consistent with Kachinski[1] and is not found in Harrell although a review of *647 Harrell's facts might lead to such a conclusion. I do not believe that Harrell, which is an opinion of this court, should be read in such a way as to contradict the Supreme Court's teaching in Kachinski. Therefore, I disagree with the majority's statement of the law and its application to this case. I would affirm the Board.
Accordingly, I dissent.
NOTES
[1] Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1031.
[2] Our scope of review is limited to determining whether constitutional rights were violated, an error of law was committed, or whether necessary findings of fact are supported by substantial evidence. Bethenergy Mines, Inc. v. Workmen's Compensation Appeal Board (Sebro), 132 Pa.Commonwealth Ct. 288, 572 A.2d 843 (1990).
[3] 151 Pa.Commonwealth Ct. 8, 616 A.2d 1051, petition for allowance of appeal denied, 532 Pa. 645, 614 A.2d 1142 (1992).
[1] Unora v. Glen Alden Coal Co., 377 Pa. 7, 104 A.2d 104 (1954), relied upon in Kachinski, contains the following quote from Professor Arthur Larson's work on Workmen's Compensation Law (Vol. 2, Sec. 57, 10, pp. 2, 3):
. . . the disability concept is a blend of two ingredients, . . . the first ingredient is disability in the medical or physical sense, as evidenced by obvious loss of members or by medical testimony that the claimant simply cannot make the necessary muscular movements and exertions; the second ingredient is de facto inability to earn wages, as evidenced by proof that claimant has not in fact earned anything.
Id. 377 Pa. at 12, 104 A.2d at 107. Kachinski required that evidence on medical condition and earning ability be produced separately.
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744 S.W.2d 323 (1988)
Maureen BEANS, Appellant,
v.
ENTEX, INC., Appellee.
No. 01-87-00356-CV.
Court of Appeals of Texas, Houston (1st Dist.).
January 7, 1988.
Rehearing Denied January 28, 1988.
*324 Edward F. Blizzard, Williams & Blizzard, Houston, for appellant.
Jim C. Ezer, Ryan & Marshall, Houston, for appellee.
Before JACK SMITH, LEVY and HOYT, JJ.
OPINION
HOYT, Justice.
This appeal is taken from a summary judgment entered in a wrongful death action brought on theories of negligence and strict product liability.
In June 1984, the appellant's father, Albert Beans, purchased a home and requested that Entex, Inc. ("Entex"), a supplier of natural gas, begin servicing his home with its gas. Entex complied, and gas service to Mr. Beans' home was initiated. On the evening of November 29, 1984, Mr. Beans turned on an unvented gas-fired space heater and retired to bed. The next morning, he was found dead; the cause of death was determined to be asphyxiation due to carbon monoxide inhalation.
On November 15, 1985, the appellant commenced this wrongful death suit against Entex and Dover Corp., Inc., manufacturer of the heater, under theories of negligence and strict product liability, for defective design and manufacture, and for failure to warn of the unreasonably dangerous nature of their products.
Entex filed a motion for summary judgment, and after a hearing, summary judgment was granted for Entex. A final judgment and order of severance was signed on March 9, 1987, and this appeal was brought.
In three points of error, the appellant contends that the trial court erred in entering a summary judgment: (1) on the appellant's claim of product liability; (2) on the appellant's claim of negligence; and (3) on the appellee's plea of limitation.
Where a movant has received a summary judgment in his favor, the question on appeal is not whether the summary judgment proof raises fact issues with reference to the essential elements of a plaintiff's claim or cause of action, but rather whether the summary judgment proof establishes, as a matter of law, that there is no genuine issue of material fact as to one or more of the essential elements of the nonmovant's cause of action. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970). The burden of summary judgment proof is on the movant, and all reasonable doubts as to the existence of a genuine issue of material fact are resolved against him. Farley v. Prudential Ins. Co., 480 S.W.2d 176, 178 (Tex.1972).
The subject of product liability is addressed in Restatement (Second) of Torts § 402A (1965), which provides:
(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if
(a) The seller is engaged in the business of selling such a product, and
(b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.
This rule is not relaxed even though the seller exercises all possible care in the preparation and sale of the product. Id. at § 402A(2). Similarly, in common-law negligence cases, a plaintiff, to recover must establish a duty on the part of a defendant. Duff v. Yelin, 721 S.W.2d 365, 370 (Tex. App.Houston [1st Dist.] 1986, writ pending).
The appellant contends that Entex's failure to inspect Mr. Beans' pipes and appliances, *325 and to warn of the potentially life-threatening consequences of using an unvented gas heater caused the gas sold by the appellee to be "defective" and unreasonably dangerous.
A product cannot be said to be unreasonably dangerous because of a failure to warn, unless there is a duty to warn. Houston Lighting & Power Co. v. Reynolds, 712 S.W.2d 761, 767 (Tex.App.Houston [1st Dist.] 1986, writ granted). The seller's duty to warn arises only where the dangers to be warned of are reasonably foreseeable and are such that a consumer cannot reasonably be expected to be aware of them. Id.
The evidence in the summary judgment proof shows that the cause of Mr. Beans' death was due to a faultily adjusted or vented gas heater and not the product (natural gas). A duty on the part of Entex to warn that asphyxiation could result from a faultily adjusted gas heater or to inspect every pipe and appliance in every establishment serviced would require Entex to take responsibility for property that it does not own or control. See Lane v. Community Natural Gas Co., 133 Tex. 128, 123 S.W.2d 639 (1939). There is nothing in our record to indicate that the deceased or any other person requested Entex to inspect the gas appliances at the deceased's residence. We conclude that Mr. Beans was responsible for the maintenance and upkeep of his heater and that, absent any proof that the gas supplied caused the defect in the appliance, or that the gas was otherwise in a defective condition such as would prevent it from being used for its intended purpose, it is not reasonably foreseeable that a consumer would attempt to operate a gas appliance without first obtaining a maintenance check on the appliance. See Houston Lighting & Power Co., 712 S.W.2d at 767. Asphyxiation, due to carbon monoxide inhalation from unvented gas heating, is of such common propensity as to be an open and obvious danger.
Because the summary judgment proof establishes, as a matter of law, the absence of an essential element of the appellant's cause of action, i.e., the duty to inspect and warn, the summary judgment was proper. Sakowitz v. Steck, 669 S.W.2d 105 (Tex. 1984). Additionally, the appellant has failed to establish any common-law duty to warn.
The appellant's first and second points of error are overruled.
In view of our disposition of the appellant's first and second points of error, it is unnecessary to address her third point of error.
The judgment of the trial court is affirmed.
LEVY, J., dissenting.
LEVY, Justice, dissenting.
I dissent from the majority's opinion on all three points of error, and turn first to the third point, in which appellant asserts that the trial court erred in granting a summary judgment on appellee's plea of limitations, among other grounds.
Tex.Civ.Prac. & Rem.Code sec. 16.003(b) (Vernon 1986) provides: "A person must bring suit not later than two years after the day the cause of action accrues in an action for injury resulting in death. The cause of action accrues on the death of the injured person."
Appellant's father died on the evening of November 29-30, 1984. She filed her original petition on November 15, 1985, within the requisite two years after his death. Appellant's original petition did not assert strict product liability as a ground of recovery against appellee, but her first amended original petition, which did assert strict product liability, was filed December 3, 1986, more than two years after the cause of action arose. Appellee contends that application of the two-year statute of limitations bars appellant's assertion thereafter of strict product liability as a ground of recovery.
However, Tex.Civ.Prac. & Rem.Code sec. 16.068 (Vernon 1986) states:
If a filed pleading relates to a cause of action, cross action, counterclaim, or defense that is not subject to a plea of *326 limitation when the pleading is filed, a subsequent amendment or supplement to the pleading that changes the facts or grounds of liability or defense is not subject to a plea of limitation unless the amendment or supplement is wholly based on a new, distinct, or different transaction or occurrence.
Id.
Appellant's strict product liability theory is based on the same occurrence, death by carbon monoxide asphyxiation, that was the basis for the timely filed original petition. The amended petition could not possibly have surprised or delayed the appellee, or rendered its investigation useless, merely by enlarging the theory of liability. Therefore, the newly asserted ground of liability is not barred by the statute of limitations because it does not arise from a new, distinct, or different transaction or occurrence. Where an action is timely filed, subsequent amendments may "relate back" to the date of the original petition. Bradley v. Etessam, 703 S.W.2d 237 (Tex. App.Dallas 1985, writ ref'd n.r.e.).
Accordingly, I would sustain appellant's third point of error.
Under appellant's first point of error, she argues that the trial court erred in granting appellee's motion for summary judgment on appellant's claim of product liability.
Comment "h" of Restatement (Second) of Torts sec. 402A (1965), asserts that a product is not in a "defective" condition when it is safe for normal handling and consumption, but if a seller has reason to anticipate that danger may result from a particular use, he may be required to give adequate warning of the danger, and a product sold without such warning is in a "defective" condition.
Comment "i" of the Restatement explains that the rule stated in sec. 402A applies only where the defective condition of the product makes it unreasonably dangerous to the user or consumer, and that the article sold must be dangerous to an extent beyond that which would be contemplated by the ordinary consumer who purchases it with merely ordinary knowledge common to the community as to its characteristics. Restatement (Second) of Torts sec. 402A comment i (1965).
Comment "j" of the Restatement states further that to prevent a product from being unreasonably dangerous, the seller may be required to give directions or warnings as to its use. Restatement (Second) of Torts sec. 402A comment j (1965).
Appellant contends that Entex's failure to warn, in itself, of the potentially life-threatening consequences of using an unvented gas heater caused the gas sold by appellee to be "defective" and unreasonably dangerous. Liability of a seller under sec. 402A has been extended by the courts to cover not only a defective product, but a dangerous nondefective one as well, if the seller places it into the flow of commerce without adequate warning of its dangerous propensity or without adequate instructions for its safe use. Pearson v. Hevi-Duty Elec., 618 S.W.2d 784, 787 (Tex. Civ.App.Houston [1st Dist.] 1981, writ ref'd n.r.e.). Where the seller knows or should know of potential harm to a user because to the nature of its product, arising from the intended or foreseeable use thereof, the seller is required to give an adequate warning of such danger. Houston Lighting & Power Co. v. Reynolds, 712 S.W.2d 761, 767 (Tex.App.Houston [1st Dist.] 1986, writ granted).
However, a product cannot be said to be unreasonably dangerous because of a failure to warn unless there is a duty to warn. Id. The seller's duty to warn arises only where the dangers to be warned of are reasonably foreseeable and are such that a consumer cannot reasonably be expected to be aware of them. Id.
Appellant presented evidence that Entex had abundant knowledge of the dangers of using a faultily adjusted or vented gas heater, that Entex was well aware that death by asphyxiation due to carbon monoxide inhalation could result from such use, and that Entex was also aware that the general public was not apt to be aware of such danger in connection with the use of gas heaters. Appellant reasons that *327 Entex's knowledge imposed a duty on Entex to adequately warn consumers of such dangers, and that its failure to so warn rendered the product "defective" and unreasonably dangerous. This failure to warn has been found to give rise to a cause of action based on strict product liability to one who is damaged by not being so warned. See Technical Chem. Co. v. Jacobs, 480 S.W.2d 602 (Tex.1972); Ragsdale Bros., Inc. v. Magro, 693 S.W.2d 530 (Tex. App.San Antonio 1985), rev'd on other grounds, 721 S.W.2d 832 (Tex.1986).
The proof Entex offered in support of its motion for summary judgment wholly failed to address appellant's contention that Entex owed a duty to consumers to warn them of the danger of possible asphyxiation due to carbon monoxide inhalation. In support of its motion for summary judgment, Entex asserted that any cause of action against it based on strict product liability must fail as a matter of law because the natural gas was not in a defective condition at the time it was sold to Albert Beans. This argument is inadequate to disprove, as a matter of law, appellant's claim that the natural gas was rendered "defective" by Entex's failure to warn of the lethal danger that could result from an intended or foreseeable use. Nowhere in its motion for summary judgment, or in its briefs to the trial court in support of the motion, does Entex ever present any discussion or proof concerning the duty to warn urged by appellant. See Houston Lighting & Power Co. v. Reynolds, 712 S.W.2d at 767. By this omission, Entex failed to negate appellant's possibility of recovery on her strict product liability cause of action based on failure to warn. Entex, as the movant for the summary judgment, thus failed to meet its burden of establishing that there existed no genuine issue of material fact as to one or more of the essential elements of appellant's cause of action and that Entex was entitled to a judgment as a matter of law. Gibbs, 450 S.W.2d at 828.
I would, accordingly, sustain appellant's first point of error, reverse the judgment of the trial court, and remand the cause for trial.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/1529675/
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679 F. Supp. 2d 395 (2009)
IMG FRAGRANCE BRANDS, LLC, Dana Classic Fragrances, Inc. Zohar CDO 2003-1 Limited, Zohar II 2005-1 Limited, Zohar III Limited, and IMG Holdings, Inc., Plaintiffs,
v.
HOUBIGANT, INC., Etablissement Houbigant, and Michael J. Sherman, Defendants.
Houbigant, Inc. & Etablissement Houbigant, Counter-Plaintiffs,
v.
IMG Fragrance Brands, LLC, Dana Classic Fragrances, Inc. Zohar CDO 2003-1 Limited, Zohar II 2005-1 Limited, Zohar III Limited, IMG Holdings, Inc., Patriarch Partners, LLC, and Lynn Tilton, Counter-Defendants.
No. 09 Civ. 3655 (LAP).
United States District Court, S.D. New York.
December 18, 2009.
*399 George G. Mahfood, Broad and Cassel, Miami, FL, Charles Anthony Michael, Hillary Richard, Brune & Richard LLP, Maryann Jungmin Sung, Cleary Gottlieb Steen & Hamilton, LLP, New York, NY, Richard Lawrence Rosenbaum, for Plaintiff's and Counter-Defendants.
John W. Schryber, Patton Boggs LLP, Washington, DC, Todd R. Harrison, Patton Boggs LLP, Mary E. Flynn, Morrison Cohen, LLP, New York, NY, for Defendants and Counter Claimants.
MEMORANDUM & ORDER
LORETTA A. PRESKA, Chief Judge.
Defendants and Counter-Plaintiffs Houbigant, Inc. and Etablissement Houbigant bring various counterclaims arising out of alleged breaches of a trademark licensing agreement and other collateral agreements. Plaintiffs and Counter-Defendants move to dismiss Counterclaims II-IX pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons set forth below, Counter-Defendants' motion is GRANTED in part and DENIED in part.
I. BACKGROUND[1]
A. The Parties
Counter-Plaintiffs Houbigant, Inc. and Etablissement Houbigant (collectively, "Houbigant" or "Plaintiffs") are engaged in the business of licensing fragrance product trademarks. (Countercl. ¶ 63.) Counter-Defendant IMG Fragrance Brands, LLC ("IMG Brands"), a wholly-owned subsidiary of Counter-Defendant IMG Holdings, Inc. ("IMG Holdings"), licenses certain *400 fragrance product trademarks owned by Houbigant pursuant to a License Agreement dated December 19, 2003 (the "License Agreement"). (Id. ¶¶ 64-65.) Counter-Defendant Dana Classic Fragrances, Inc. ("DCF") is a sub-licensee of IMG Brands that manufactured and promoted various fragrance products. (Id. ¶ 67.) Counter-Defendants Zohar CDO 2003-1 Limited ("Zohar I"), Zohar II 2005-1 Limited ("Zohar II"), and Zohar III Limited ("Zohar III," and together with Zohar I and Zohar II, the "Zohar Funds") are private equity funds with each holding the following percentage of IMG Holdings' stock: Zohar I-13%; Zohar II-51%; and Zohar III-11%. (Id. ¶¶ 68-70.) Counter-Defendant Patriarch Partners, LLC ("Patriarch") is the collateral manager for the Zohar Funds, and Counter-Defendant Lynn Tilton ("Tilton") is the Chief Executive Officer of Patriarch. (Id. ¶¶ 71-72.)
B. The License Agreement
On December 19, 2003, Houbigant entered into a License Agreement with IMG Brands whereby IMG Brands, as Licensee, was given the exclusive right to use various trademarks including Chantilly®, White Chantilly®, and Demi-Jour among others (the "Products"). (Id. ¶ 80-81.) Although the License Agreement was scheduled to expire on December 31, 2008, Houbigant maintains that it terminated the agreement by notifying IMG Brands on December 28, 2008. (Id. ¶ 82.)
The License Agreement set forth several conditions with which IMG Brands had to comply in order to receive Houbigant's continuing consent to use the trademarks. Some of these conditions included:
(a) IMG Brands had the ability to manufacture and promote the sales of the Products (Countercl., Ex. A § 3);
(b) Any sub-licensee would need to be preapproved by Houbigant and would have to abide by the terms of the License Agreement (id.);
(c) Facilities used to manufacture the Products must be disclosed to Houbigant, and Houbigant reserved the right to inspect those facilities (id. § 7(b), (e));
(d) IMG Brands would pay periodic royalties to Houbigant on the first day of each month throughout the duration of the License Agreement (id. § 9);
(e) Upon termination of the agreement, IMG Brands would be permitted to sell Products for an additional 135 days, known as the "Relevant Period" (id. § 18);
(f) Either party could enforce an amendment to the License Agreement so long as the amendment was in writing and signed by both parties (id. § 28); and
(g) On the thirtieth day after termination of the License Agreement, IMG Brands had the option to purchase the trademarks for $1,000, so long as IMG Brands made payment for any outstanding Royalty Payments on or before the twenty-ninth day following termination. (Id. § 9)
In January 2004, IMG Brands appointed DCF as a sublicensee. (Compl. ¶ 88.) In October 2008, Houbigant alleges that IMG Brands and DCF engaged several subcontractors to manufacture the Products and that the manufacturing facilities the subcontractors used were not specified in the License Agreement. (Id. ¶ 90; Ex. A § 7(e).)
C. The Supplemental Royalty Agreement
The Supplemental Royalty Agreement ("SRA") was executed on December 19, *401 2003 by Houbigant and IMG Holdings. (Id. ¶ 135.) Under the terms of the SRA, IMG Holdings was required to provide Houbigant with notice should there be any inquiry, offer, or plan by an entity to acquire 50% or more of the stock of IMG Holdings. (Id. ¶ 137.) If a non-affiliate of IMG Holdings acquired 50% or more of IMG Holdings' stock, the SRA provided that IMG Holdings would pay Houbigant a supplemental royalty. (Id. ¶¶ 141-43.) Houbigant alleges that on or about October 10, 2008, the Zohar funds, which had loaned money to DCF, issued an "Acceleration Notice," which if not rescinded would force DCF, and its guarantors-IMG Holdings and IMG Brands-to turn over their assets to DCF's lenders. (Id. ¶ 145.) On October 17, 2008, the Zohar Funds agreed to rescind the Acceleration Notice in exchange for a 75% shareholder interest in IMG Holdings. (Id. ¶ 146.) Houbigant further alleges that in order to gain the approval of Isaac Cohen, IMG Holdings' majority shareholder, IMG Holdings caused the Zohar Funds to release Cohen's personal guarantees valued at over $20 million. (Id.)
D. Subsequent Agreements
i. The Fifth Deferral Agreement
On August 27, 2008, Houbigant and IMG Brands entered into a Fifth Deferral Agreement ("FDA") which set forth a payment schedule for IMG Brands to pay the past due royalty payments owed pursuant to the License Agreement. (Id. ¶¶ 154-55.) The FDA contained several other conditions and also incorporated the previous four deferral agreements. (Id. ¶¶ 158-164.) Some of the amendments made by the prior deferral agreements included: (1) reducing the cure period from thirty days to five days (id. ¶ 164); (2) requiring IMG Brands to pay a Deferral Fee of $350,000 no later than the date of expiration of the License Agreement (id. ¶ 165); and (3) requiring yet another deferral fee of $175,000 (id. ¶ 166.).
Houbigant alleges that IMG Brands represented that it had obtained all of the necessary approvals from its lenders to enter into the FDA. (Id. ¶ 171.) Houbigant further claims that IMG Brands, the Zohar Funds, and Tilton knew of the FDA and performed pursuant to its terms until December 31, 2008. In fact, Houbigant received at least one scheduled payment from Wells Fargo, one of IMG Brands lenders. (Id. ¶ 177.) It was not until December 31, 2008 that IMG Brands, through Patriarch, informed Houbigant that the FDA was unenforceable because it modified the terms of the License Agreement without the consent of Wells Fargo. (Id. ¶ 190.) Therefore, IMG Brands did not make the remaining payments. (Id. ¶ 188.)
ii. The Consulting and Product Development Agreement
In order to assist DCF's sale of Houbigant products, the parties entered into a Consulting and Product Development Agreement ("CPDA"). (Id. ¶ 192.) Under the terms of the agreement, Houbigant was to provide consulting services in exchange for a fee that equaled the outstanding royalty payments. (Id.) Houbigant alleges that, although its services were never requested, DCF confirmed that its obligation to Houbigant under the CPDA was $1,139,736. (Id. ¶ 195.)
E. The Alleged Breaches
Houbigant alleges that IMG Brands and DCF caused Products to be manufactured at unauthorized locations (Id. ¶¶ 92, 196.) Houbigant further alleges that IMG Brands and DCF, both under the direction of Patriarch and Tilton, breached the License Agreement in myriad ways, including: selling Products after December 31, *402 2008; failing to pay additional royalties; failing to make final payments under the FDA; failing to disclose or to provide notice to Houbigant of default notices received from lenders; failing to provide Houbigant with financial reports and statements; and failing to honor its account-stated debt under the CPDA. (Id. ¶ 196.)
II. ANALYSIS
A. Motion to Dismiss Standard
To survive a motion to dismiss under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). A pleading that offers "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555, 127 S. Ct. 1955. Nor does a complaint suffice if it tenders "naked assertion[s]" devoid of "further factual enhancement." Id. at 557, 127 S. Ct. 1955.
In Iqbal, the Supreme Court set forth a "two-pronged" approach for analyzing a motion to dismiss. Iqbal, 129 S.Ct. at 1950. First, a court must accept a plaintiff's factual allegations as true and draw all reasonable inferences from those allegations in plaintiff's favor. Id. at 1949-50. The court may then proceed to identify "pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 1950. Once the court has stripped away the conclusory allegations, it must determine whether the complaint's "well-pleaded factual allegations. . . plausibly give rise to an entitlement to relief." Id. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 1949 (citing Twombly, 550 U.S. at 556, 127 S. Ct. 1955). "The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. Evaluating the plausibility of a plaintiff's claim is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 1950 (citation omitted).
B. Counts II and IV-Breach of the License Agreement and the SRA
In its second claim for relief, Houbigant alleges that Defendants IMG Brands, DCF, Patriarch, and Zohar II breached the License Agreement and, in its fourth claim for relief, Houbigant alleges that IMG Holdings breached the SRA. The Counterclaims adequately state a claim for breach of the License Agreement as against IMG Brands and DCF and a claim for breach of the SRA as against IMG Holdings. Because neither Patriarch nor Zohar II was a signatory to the License Agreement, neither can be held liable for breach of contract. Accordingly, Defendants' motion to dismiss Count II is granted in part and denied in part, and their motion to dismiss Count IV is denied.
In order to plead a breach of contract claim, a plaintiff must allege: "(1) the existence of a contract; (2) performance by the party seeking recovery; (3) nonperformance by the other party; and (4) damages attributable to the breach." Ixe Banco, S.A. v. MBNA America Bank, N.A., No. 07 Civ. 0432, 2008 WL 650403, at *5 (S.D.N.Y. Mar. 7, 2008) (citing Musket Corp. v. PDVSA Petroleo, S.A., 512 F. Supp. 2d 155, 160 (S.D.N.Y.2007)).[2] Defendants *403 argue that because Houbigant did not give Defendants notice of any defaults and opportunity to cure, Houbigant's breach of contract claim is precluded. (Def. Mot. at 5.) Section 17 of the License Agreement provides that a "party claiming a breach or default shall promptly notify the other party, in writing of the claimed default or breach in as specific detail as is reasonably possible . . . and shall provide [the breaching party] with a right to cure the claimed default or breach, if curable, within thirty days of the date of notification.. . ." (Countercl., Ex. A § 17(a).) As this Court discussed in Ixe Banco, however, a notice and cure provision like the one here provides a party with a means of curing a default which would otherwise allow the non-defaulting party to terminate the agreement; it does not constitute a condition precedent to a party's right to sue. See Ixe Banco, 2008 WL 650403, at *11. Under the License Agreement, "`a declaration of default is a condition precedent not to suing for a breach of contract but to being authorized to terminate the contract immediately without liability to the other party.'" Id. (quoting Allan Block Corp. v. County Materials Corp., 512 F.3d 912, 919 (7th Cir.2008)); see Trustco Bank, N.A. v. Cannon Bldg. of Troy Assocs., 246 A.D.2d 797, 800, 668 N.Y.S.2d 251 (N.Y.App.Div., 3d Dep't, 1998) (finding that, pursuant to the terms of an agreement, a "declaration of default was not a condition precedent" to a suit on a guarantee); see also Hypergraphics Press, Inc. v. Cengage Learning, Inc., No. 08 C 5102, 2009 WL 972823, *3 (N.D.Ill. Apr. 8, 2009) ("[I]n order for notice and opportunity to cure to be a condition precedent to filing suit on the claim, the contract must state so.") (emphasis added). Therefore, Houbigant was not required to plead around Defendants' affirmative defense in order to state a claim for breach of contract. Accordingly, Defendants IMG Brands' and DCF's, motion to dismiss Count II is denied.
Houbigant's allegations that Patriarch and Zohar II are also liable for breach of the License Agreement are insufficient to state a cause of action. IMG Brands is a wholly-owned subsidiary of IMG Holdings. (Countercl. ¶ 66.) As alleged in the Counterclaims, Zohar II acquired 51% of the stock of IMG Holdings on or about October 17, 2008. (Id. ¶ 69.) Patriarch is the collateral manager of the Zohar Funds. (Id. ¶ 71.) Under New York law, a corporate parent is not automatically liable for the acts of its wholly owned subsidiary, even where the parent and subsidiary corporations have interlocking directorates. See Beck v. Conrail, 394 F. Supp. 2d 632, 637 (S.D.N.Y.2005); Manchester Equip. Co. v. Am. Way Moving Co., 60 F. Supp. 2d 3, 7 (E.D.N.Y.1999); Lorkowski v. J.C. Pitman Co., Inc., 177 A.D.2d 1021, 578 N.Y.S.2d 40 (N.Y.App. Div., 4th Dep't, 1991) (holding that parent corporation could not be held liable for any acts of wholly-owned subsidiary; although boards of directors of the two corporations overlapped, in all other respects corporation had not disregarded subsidiary's corporate separateness, had not involved itself directly in management of subsidiary and had not otherwise dominated or controlled subsidiary); Townley v. Emerson Elec. Co., 178 Misc. 2d 740, 681 N.Y.S.2d 741, 745 (N.Y.Sup.Ct.1998) ("Stock control, interlocking directors and interlocking officers are in and of themselves insufficient facts to justify the imposition of such liability on the parent corporation.") (citing Musman v. Modern Deb, 50 A.D.2d 761, 762, 377 N.Y.S.2d 17 (N.Y.App.Div., 1st Dep't, 1975)); see also Am. Protein Corp. v. AB Volvo, 844 F.2d 56, 60 (2d Cir.1988). However, a parent can be held liable for a subsidiary's breach of contract if the plaintiff can show that the "parent corporation *404 `exercised complete domination of [the subsidiary] corporation in respect to the transaction attacked; and . . . that such domination was used to commit a fraud or wrong against the plaintiff which resulted in the plaintiff's injury.'" Banks v. Corr. Servs. Corp., 475 F. Supp. 2d 189, 196 (E.D.N.Y.2007) (quoting Morris v. N.Y. State Dep't of Taxation and Fin., 82 N.Y.2d 135, 141, 603 N.Y.S.2d 807, 623 N.E.2d 1157 (1993)); see Sheridan Broadcasting Corp. v. Small, 19 A.D.3d 331, 332, 798 N.Y.S.2d 45 (N.Y.App.Div., 1st Dep't, 2005) ("Parent and subsidiary or affiliated corporations are, as a rule, treated separately and independently so that one will not be held liable for the contractual obligations of the other absent a demonstration that there was an exercise of complete dominion and control but evidence of domination alone does not suffice without an additional showing that it led to inequity, fraud or malfeasance.") (internal citations and quotation marks omitted).
Here, the Counterclaims do not adequately allege Patriarch's or Zohar II's domination and control of IMG Brands. In considering whether a parent corporation exercised "complete domination" over its subsidiary, courts consider such factors as:
(1) disregard of corporate formalities; (2) inadequate capitalization; (3) intermingling of funds; (4) overlap in ownership, officers, directors, and personnel; (5) common office space, address and telephone numbers of corporate entities; (6) the degree of discretion shown by the allegedly dominated corporation; (7) whether the dealings between the entities are at arms length; (8) whether the corporations are treated as independent profit centers; (9) payment or guarantee of the corporation's debts by the dominating entity, and (10) intermingling of property between the entities.
Freeman v. Complex Computing Co., 119 F.3d 1044, 1053 (2d Cir.1997); see Fantazia Int'l Corp. v. CPL Furs New York, Inc., 67 A.D.3d 511, 512-13, 889 N.Y.S.2d 28 (N.Y.App.Div., 1st Dep't, 2009) (listing factors and citing Freeman). The Counterclaims do not contain such allegations. Moreover, Zohar II and Patriarch are the majority shareholder and manager, respectively, of IMG Brands' parent, IMG Holdings. Therefore, in order to place Patriarch or Zohar II on the hook for IMG Brands' alleged breach, Houbigant would have to allege that IMG Holdings dominated and controlled IMG Brands and that Zohar II and Patriarch dominated and controlled IMG Holdings-a two-tiered domination so to speak. The Counterclaims make no such allegations.
Furthermore, Houbigant's argument that Patriarch and Zohar II succeeded to IMG Brands' liabilities pursuant to the successor clause in the License Agreement is unavailing. The License Agreement provides that the "Agreement shall be binding on and enure to the benefit of the successors and assigns of both parties hereto and all persons or entities succeeding to or acquiring the business now carried on by [Houbigant] or [IMG Brands]." (Countercl., Ex. A § 31.) As discussed above, Zohar II acquired an interest in IMG Brands' parent, IMG Holdings, and Patriarch is the collateral manager for Zohar II. Therefore, neither Zohar II nor Patriarch can be deemed a successor to IMG Brands, as neither entity acquired an interest in IMG Brands. Moreover, the Counterclaims lack any allegation that either Zohar II or Patriarch expressly assumed the obligations of the License Agreement. See Sillman v. Twentieth Century-Fox Film Corp., 3 N.Y.2d 395, 402, 165 N.Y.S.2d 498, 144 N.E.2d 387 (1957) ("[I]t is well settled in this State that the assignee of rights under a bilateral *405 contract does not become bound to perform the duties under that contract unless he expressly assumes to do so. . . .") (citations omitted). Accordingly, Defendants Zohar II's and Patriarch's motion to dismiss Count II is granted.
Finally, the Counterclaims adequately allege a breach of the SRA by IMG Holdings. Houbigant alleges that, pursuant to the SRA, it was entitled to (1) notice of a potential change in control transaction whereby an entity would acquire 50% or more of the equity of IMG Holdings, and (2) a supplemental royalty payment equaling a percentage of the consideration received by IMG Holdings for the acquisition. (Countercl. ¶¶ 139, 143; Ex. B §§ 1, 2.) Houbigant alleges that it never received notice that the Zohar Funds sought to acquire a 75% stake in IMG Holdings and that it never received a percentage of the consideration IMG Holdings received for the acquisition. (Countercl. ¶¶ 144, 146.) The alleged consideration received by IMG Holdings consisted of the Zohar Funds' release of over $20 million in personal guarantees by its then-CEO, Isaac Cohen. (Id. ¶ 146.)
Although IMG Holdings contends that the release of Cohen's guarantee did not constitute a transfer of "economic value" to IMG Holdings, thereby negating its duty to make a supplemental royalty payment to Houbigant (see Def. Mem. at 18), this argument is inappropriate on a motion to dismiss. This Court must accept Houbigant's allegations as true, and here, Houbigant adequately alleges that IMG Holdings received valuable consideration in exchange for Zohar II's acquisition. (Countercl. ¶ 146.) Regardless, Houbigant adequately alleges that it was entitled to notice if IMG Holdings received inquiries from potential purchasers and that it never received such notice. (Id. ¶¶ 138-40, 144.) Accordingly, IMG Holdings' motion to dismiss Count IV is denied.
C. Counts III and V Tortious Interference
i. Zohar Funds and Patriarch
In its third claim of relief, Houbigant alleges that Zohar I and Zohar III induced IMG Brands to breach the License Agreement.[3] In its fifth claim of relief, Houbigant alleges that Patriarch, Tilton, and the Zohar Funds induced IMG Holdings to breach the SRA. Because the Zohar Funds and Patriarch have an economic interest in IMG Holdings and IMG Brands, the parties cannot be liable for tortious interference absent sufficient allegations of malice, fraud or illegality. Houbigant's conclusory allegations do not meet the pleading standard set forth in Iqbal, nor do they plead fraud with the necessary particularity; as such, the claim must be dismissed. Moreover, the Counterclaims do not adequately allege that Tilton acted so far outside her scope as Chief Executive Officer of Patriarch as to make her liable for tortious interference. Therefore, Defendants' motion to dismiss Counts III and V are granted.
Under New York law, a claim for tortious interference requires "the existence of a valid contract between plaintiff and a third party, defendant's knowledge of the contract, defendant's intentional procurement of the third-party's breach of the contract without justification, actual breach of the contract, and damages resulting therefrom." Lama Holding Co. v. Smith Barney Inc. et. al., 88 N.Y.2d 413, 424, 646 N.Y.S.2d 76, 668 N.E.2d 1370 *406 (1996).[4] Where the defendants have an economic interest in the contract, however, alleging the above elements is insufficient. See White Plains Coat & Apron Co., Inc. v. Cintas Corp., 8 N.Y.3d 422, 426, 835 N.Y.S.2d 530, 867 N.E.2d 381 (2007) (holding that economic interest defense is available, inter alia, "where defendants were significant stockholders in the breaching party's business; where defendant and the breaching party had a parent-subsidiary relationship; where defendant was the breaching party's creditor; and where the defendant had a managerial contract with the breaching party at the time defendant induced the breach of contract with plaintiff.") (footnotes omitted). The plaintiff must also adequately allege that the defendant either acted maliciously, fraudulently, or illegally. See Foster v. Churchill, 87 N.Y.2d 744, 750, 642 N.Y.S.2d 583, 665 N.E.2d 153 (1996); Hirsch v. Food Resources, Inc., 24 A.D.3d 293, 297, 808 N.Y.S.2d 618 (N.Y.App.Div., 1st Dep't, 2005).[5]
Here, Houbigant acknowledges that the Zohar Funds and Patriarch have an economic interest in IMG Holdings-the parent of IMG Brands. (Countercl. ¶¶ 68-71 (alleging that Zohar Funds had a 75% interest in IMG Holdings and that Patriarch was the collateral manager of the Zohar Funds).); see Hirsch, 24 A.D.3d at 297, 808 N.Y.S.2d 618 (owner of 83 1/3% interest acted "with an economic interest"). Therefore, in order adequately to allege tortious interference by a party with an economic interest, Houbigant must allege that the Zohar Funds and Patriarch acted either maliciously, fraudulently, or illegally. Houbigant has failed to do so.
In characterizing Defendants' conduct as "malicious," Houbigant alleges that the Zohar Funds and Patriarch acted "without justification." (Countercl ¶¶ 201, 227, 236.) Such allegations, without more, are inadequate. See Rather v. CBS Corp., 68 A.D.3d 49, 886 N.Y.S.2d 121, 128 (N.Y.App.Div., 1st Dep't, 2009) (finding "bare allegations of malice" to be insufficient "to bring the [tortious interference] claim under an exception to the economic interest rule"); see also Ruha v. Guior, 277 A.D.2d 116, 717 N.Y.S.2d 35, 36 (N.Y.App. Div., 1st Dep't, 2000) (holding that "plaintiffs' bare allegations of malice do not suffice, particularly where such allegations are contradicted by plaintiffs' own claims that defendants' actions were financially [motivated]").
Additionally, Houbigant's claims that "IMG Brands (and the other Counter-Defendants)" committed fraud by withholding from Houbigant that IMG Brands had obtained the consent of all the lenders "relative to each deferral agreement" are wholly insufficient under Iqbal, let alone under the heightened pleading standard required under Rule 9(b). Moreover, as will be discussed in Section II.C, infra, because Houbigant's and IMG Brands' relationship was a contractual one as opposed to a fiduciary one, IMG Brands did not have a duty to disclose to Houbigant, and therefore, its alleged omissions were not fraudulent.
Finally, Houbigant's allegations that Defendants induced IMG Brands' and *407 IMG Holdings' breach by illegal means-specifically, by violating the Lanham Act (see Countercl. ¶¶ 196-99, 201, 227, 238)- are wholly without merit. As an initial matter, the SRA was a separate agreement between IMG Holdings and Houbigant. (Countercl., Ex. B.) The SRA does not state that a breach of the SRA operates to rescind the Licensing Agreement. Accordingly, even if the Zohar Funds and Patriarch counseled IMG Holdings to breach the SRA, that activity would be a mere breach of contract, not illegal conduct.
As for the License Agreement, any alleged inducements by the Zohar Funds or Patriarch are also only breach of contract claims, not illegal activity. Affiliated Hospital Prods., Inc. v. Merdel Game Mfg. Co., 513 F.2d 1183, 1186 (2d Cir.1975) (holding that where license agreement existed the "agreement controls the rights of the respective parties in the use of the [trademark]" and in order to bring a claim for trademark infringement, the licensor must show conduct by the licensee "sufficiently grave to warrant rescission of that agreement"-absent such a showing, licensor is only entitled to a claim for breach of contract). None of Defendants' alleged breaches rises to the level of materiality that would permit Houbigant to rescind the License Agreement, nor has Houbigant requested such relief. Among other breaches, though, Houbigant alleges that, pursuant to the direction of the Zohar Funds and Patriarch, IMG Brands and DCF continued to sell Products beyond the December 31, 2008 termination date of the License Agreement. (Countercl. ¶ 196.) Although such conduct would normally constitute trademark infringement, the License Agreement provided that, following termination of the agreement, IMG Brands could continue to sell Products for an additional 135 days.[6]See Baskin-Robbins Ice Cream Co. v. D & L Ice Cream Co., Inc., 576 F. Supp. 1055, 1060 (E.D.N.Y. 1983) ("[T]he continued use by the defendants of a licensed trademark after the Franchise Agreement had been terminated constitutes . . . trademark infringement as well as a breach of contract."); see also Romacorp, Inc. v. TR Acquisition Corp., No. 93 Civ. 5394, 1993 WL 497969 (S.D.N.Y. Dec. 1, 1993) (holding that continued use of trademark after termination of franchise for nonpayment of royalties constitutes Lanham Act violation). Lastly, to the extent Houbigant alleges post-termination breaches (i.e., alleged breaches that occurred after the close of the 135-day period), these claims do not concern tortious interference with contract, but instead, because the contact by its terms no longer existed, the claims are ones for trademark infringement. Accordingly, Defendants Patriarch's and the Zohar Funds' motion to dismiss Counts III and V is granted.
ii. Tilton
Houbigant's tortious interference claim against Tilton, in her individual capacity, also fails. As discussed above, the general rule is that a claim for tortious interference will lie only against a stranger who improperly interferes with a contract between two contracting parties. See, e.g., Finley v. Giacobbe, 79 F.3d 1285, 1295 (2d Cir.1996) (tortious interference claim was properly dismissed because plaintiff could not establish that defendants were third parties to the contract). However, "a narrow exception exists for officers acting wholly outside the scope of *408 their authority for purely personal gain, but an enhanced pleading standard applies." Scuderi v. Springer, No. 03 Civ. 2098, 2004 WL 2711048, at *2 (S.D.N.Y. Nov. 29, 2004) (citing Finley); see also Joan Hansen & Co., Inc. v. Everlast World's Boxing Headquarters Corp., 296 A.D.2d 103, 109-110, 744 N.Y.S.2d 384 (N.Y.App.Div., 1st Dep't, 2002) ("A cause of action seeking to hold corporate officials personally responsible for the corporation's breach of contract is governed by an enhanced pleading standard. . . . Failure to plead in nonconclusory language facts establishing all the elements of a wrongful and intentional interference in the contractual relationship requires dismissal of the action." (citations omitted)). "A pleading must allege that the acts complained of, whether or not beyond the scope of the [officer's] corporate authority, were performed with malice and were calculated to impair the plaintiff's business for the personal profit of the [officer]." Everlast, 296 A.D.2d at 110, 744 N.Y.S.2d 384.
Here, aside from general allegations that Defendants operated under the direction of Tilton, Houbigant makes no claim that Tilton acted to interfere with the License Agreement or the SRA for her own personal gain. Merely asserting that Tilton caused IMG Brands, DCF, Patriarch, and IMG Holdings to breach their respective agreements fails to meet the enhanced pleading requirement under New York law to hold corporate officers personally liable. Accordingly, Tilton's motion to dismiss Counts III and V is granted.
D. Count VI Fraud
Houbigant's sixth cause of action for fraud alleges two different types of fraudulent behavior. First, Houbigant alleges that IMG Brands and DCF failed to disclose to Houbigant multiple events of default, which Houbigant claims, if it had been aware of such breaches, it would have terminated the License Agreement. (Countercl. § 242.) Houbigant further alleges that IMG Brands misrepresented to Houbigant that it had obtained all of the necessary lender consents it needed to enter into the deferral agreements. (Id. § 245.) For the reasons set forth below, the claim is dismissed.
To state a cause of action for fraud in New York, a plaintiff must allege: (1) a material false representation; (2) intent to defraud; (3) reasonable reliance upon the misrepresentation; and (4) resulting damages. See Lama Holding Co. v. Smith Barney, Inc., 88 N.Y.2d 413, 421, 646 N.Y.S.2d 76, 668 N.E.2d 1370 (1996); see also Orlando v. Kukielka, 40 A.D.3d 829, 831, 836 N.Y.S.2d 252 (N.Y.App.Div., 2d Dep't, 2007) (same). Additionally, in order for a plaintiff to state a claim for fraudulent concealment, there must exist a "confidential or fiduciary relationship" between the parties. Mobil Oil Corp. v. Joshi, 202 A.D.2d 318, 318, 609 N.Y.S.2d 214 (N.Y.App.Div., 1st Dep't, 1994). New York law also requires that a fraud claim, raised in a case that stems from breach of contract, be "sufficiently distinct from the breach of contract claim." Bridgestone/Firestone, Inc. v. Recovery Credit Services, Inc., 98 F.3d 13, 20 (2d Cir.1996) (citing Papa's-June Music, Inc. v. McLean, 921 F. Supp. 1154, 1162 (S.D.N.Y. 1996)); see Ritchie Capital Mgmt., L.L.C. v. Coventry First LLC, No. 07 Civ. 3494, 2007 WL 2044656, at *7 (S.D.N.Y. July 17, 2007) (dismissing fraud claim where the it appeared "to rest entirely on the subjects covered in the representations and warranties contained in the agreements"); Gibraltar Mgmt. Co., Inc. v. Grand Entrance Gates, Ltd., 46 A.D.3d 747, 749, 848 N.Y.S.2d 684 (N.Y.App.Div., 2d Dep't, 2007) (affirming grant of summary judgment *409 where plaintiff could not show that the "cause of action was [] sufficiently distinct from the breach of contract cause of action to constitute a separate cause of action."); see also Kestenbaum v. Suroff, 268 A.D.2d 560, 561, 704 N.Y.S.2d 260 (N.Y.App.Div., 2d Dep't, 2000) (same); Rubinberg v. Correia Designs, 262 A.D.2d 474, 475, 692 N.Y.S.2d 172 (N.Y.App.Div., 2d Dep't, 1999) (same). In Bridgestone/Firestone, the Court of Appeals for the Second Circuit set forth three ways by which a party could distinguish its fraud claim from its breach of contract claim. A plaintiff must either: "(i) demonstrate a legal duty separate from the duty to perform under the contract; or (ii) demonstrate a fraudulent misrepresentation collateral or extraneous to the contract; or (iii) seek special damages that are caused by the misrepresentation and unrecoverable as contract damages." Id. at 20 (citations omitted). As discussed below, Houbigant fails to meet any of these exceptions.
First, Houbigant's argument that the parties' relationship was not merely contractual in nature but In fact rose to the level of a fiduciary relationship is not supported either by the allegations in the Counterclaims or by controlling law. Houbigant contends that the terms of the License Agreement and the FDA establish a fiduciary relationship. (Opp. at 14.) However, nothing in the FDA implies that IMG Brands owes fiduciary duties to Houbigant (see Countercl., Ex. C), and the License Agreement, other than setting forth the parties' rights and obligations to each other, does not state that IMG Brands (or its sublicensee, DCF) owes Houbigant any heightened duty of trust or confidence (see id., Ex. A). In New York, "parties to a commercial contract do not ordinarily bear a fiduciary relationship to one another unless they specifically so agree." Calvin Klein Trademark Trust v. Wachner, 123 F. Supp. 2d 731, 733-34 (S.D.N.Y.2000); see EBC I, Inc. v. Goldman Sachs & Co., 5 N.Y.3d 11, 19-20, 799 N.Y.S.2d 170, 832 N.E.2d 26 (2005) ("Generally, where parties have entered into a contract, courts look to that agreement `to discover . . . the nexus of [the parties'] relationship and the particular contractual expression establishing the parties' interdependency.'" (quoting Ne. Gen. Corp. v. Wellington Adv., 82 N.Y.2d 158, 160, 604 N.Y.S.2d 1, 624 N.E.2d 129 (1993))). This is true even in the context of trademark licensing agreements. See id. at 734; see also Weight Watchers of Quebec Ltd. v. Weight Watchers Intern., Inc., 398 F. Supp. 1047, 1053 (E.D.N.Y.1975) (finding that trademark "license, without more, does not create a fiduciary relationship."); 3 R. Callmann, UNFAIR COMPETITION TRADEMARKS AND MONOPOLIES, § 20:54 (4th ed. 2009) (same). Accordingly, because neither IMG Brands nor DCF owed any special duty to Houbigant, Houbigant cannot satisfy the first Bridgestone/Firestone exception. See Ritchie Capital Mgmt., L.L.C., 2007 WL 2044656, at *7 ("To the extent that there was a misrepresentation or omission in connection with those contractual representations and commitments, then that conduct must be pleaded as a breach of contract claim.").
Second, although Houbigant's claim that IMG Brands misrepresented to Houbigant that it had obtained the consent of the lenders to enter into the FDA would satisfy the second Bridgestone/Firestone exception, Houbigant did not plead the fraud with particularity. Therefore, Houbigant is granted leave to replead the alleged fraudulent misrepresentations made by Mr. Cohen in accordance with Fed. R.Civ.P. 9(b).
To satisfy the second Bridgestone/Firestone factor, the plaintiff must allege that *410 the misrepresentation is "collateral or extraneous to the contract." Bridgestone/Firestone, 98 F.3d at 20. To determine whether the fact is collateral to the contract, courts look to "whether the contract itself speaks to the issue." Great Earth Int'l Franchising Corp. v. Milks Dev., 311 F. Supp. 2d 419, 427 (S.D.N.Y. 2004). Here, the alleged representations concern whether IMG Brands received the approval of its various lenders-specifically, the approval of Wells Fargo-to enter into the FDA. (Countercl. § 245.) Nothing in the FDA speaks to whether IMG Brands either needed or received approvals from its lenders. Therefore, the allegation could survive a challenge under Bridgestone/Firestone. See Astroworks, Inc. v. Astroexhibit, Inc., 257 F. Supp. 2d 609, 617 (S.D.N.Y.2003) (declining to dismiss fraud claim at "this early stage" where plaintiff "has alleged promises that may have been collateral") (emphasis in the original). Nevertheless, Houbigant did not plead fraud with the particularity required under Rule 9(b).
In order to plead fraud, Houbigant must comply with the Federal Rules, in particular Rule 9(b), which states: "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be averred generally." Fed.R.Civ.P. 9(b). The Court of Appeals "has read Rule 9(b) to require that a complaint [alleging fraud] `(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.'" Rombach v. Chang, 355 F.3d 164, 170 (2d Cir.2004) (quoting Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir.1993)). If the allegations do not comply with these rules, "the court may, on motion or sua sponte, dismiss the complaint." Shelly v. Brandveen, No. 06 Civ. 1289, 2006 WL 898071, at *4 (E.D.N.Y. Apr. 3, 2006) (citing Kittay v. Kornstein, 230 F.3d 531, 542 (2d Cir. 2000)); see Bonnie & Co. Fashions v. Bankers Trust Co., 945 F. Supp. 693, 719 (S.D.N.Y.1996) (dismissing sua sponte fraud claim on Rule 9(b) grounds). Here, the only substantive allegation concerning IMG Brands' misrepresentation is as follows:
Before Houbigant executed the Fifth Deferral Agreement, IMG Brands, then-CEO, Isaac Cohen, represented to Houbigant that IMG Brands had obtained Wells' consent to the terms of the Fifth Deferral Agreement as they had been negotiated by the parties through the conclusion of such negotiations.
(Countercl. ¶ 169.) This sole allegation falls woefully short of the particularity required by the Federal Rules. Houbigant has identified both the content of the misrepresentation and who made the misrepresentation but has failed to identify when the misrepresentation was made, where it was made, and how it was made. Consequently, because this allegation may allow Houbigant to survive a Bridgestone/Firestone challenge, Houbigant is granted leave to replead this allegation with the particularity required by Rule 9(b).
As to the third and final exception of Bridgestone/Firestone, Houbigant has not pleaded "special damages [] caused by the misrepresentation and unrecoverable as contract damages." Bridgestone/Firestone, 98 F.3d at 20. The damages Houbigant seeks are indistinguishable from the damages it seeks from IMG Brands alleged breach of the License Agreement.
Accordingly, because neither IMG Brands nor DCF owed Houbigant any special or fiduciary duty, the fraudulent concealment claim is dismissed. Moreover, *411 the fraudulent misrepresentation claim as against IMG Brands is also dismissed because Houbigant has not pleaded the fraud with particularity. Houbigant is granted leave to replead the fraudulent misrepresentation with the particularity required by Rule 9(b).
E. Count VII Accounting
Under New York law, to state a claim for accounting, a plaintiff must establish four conditions: "(1) relations of a mutual and confidential nature; (2) money or property entrusted to the defendant imposing upon him a burden of accounting; (3) that there is no adequate legal remedy; and (4) in some cases, a demand for an accounting and a refusal." Pressman v. Estate of Steinvorth, 860 F. Supp. 171, 179 (S.D.N.Y.1994) (quoting 300 Broadway Realty Corp. v. Kommit, 37 Misc. 2d 325, 235 N.Y.S.2d 205, 206 (N.Y.Sup.Ct.1962)). For the reasons set forth above, the relationship between Houbigant and IMG Holdings was merely contractual, not fiduciary in nature. Moreover, Houbigant has the tools of discovery to determine the value of IMG Holdings' assets. See Addax BV Geneva Branch v. Eastern of New Jersey, Inc., No. 05 Civ. 9139, 2007 WL 1321027, at *2 (S.D.N.Y. May 4, 2007) ("Although [plaintiff] seeks an accounting to establish its damages, it can make use of `familiar discovery devices [to] obtain any information. . . it need[s] to establish its allegations as to damages.'" (quoting Arnold Prods., Inc. v. Favorite Films Corp., 298 F.2d 540, 542-43 (2d Cir.1962))). Accordingly, IMG Holdings' motion to dismiss Count VII is granted.
F. Count VIII Account Stated
The Counterclaims adequately plead a claim for an account stated. To state a claim for an account stated, the plaintiff must plead that: "(1) an account was presented; (2) it was accepted as correct; and (3) debtor promised to pay the amount stated." The Haskell Co. v. Radiant Energy Corp., No. 05-CV-4403, 2007 WL 2746903, at *12 (E.D.N.Y. Sept. 19, 2007); see Eastman Kodak Co. v. W.H. Henken Industries, Inc., No. 05-CV-6425, 2007 WL 1726472, at *3 (W.D.N.Y. June 14, 2007) ("To recover under a theory of an `account stated,' a plaintiff must demonstrate `an agreement between the parties to an account based upon prior transactions between them'") (citing LeBoeuf, Lamb, Greene & MacRae, L.L.P. v. Worsham, 185 F.3d 61, 64 (2d Cir.1999)) (citation and internal quotation marks omitted); see also Abbott, Duncan & Wiener v. Ragusa, 214 A.D.2d 412, 413, 625 N.Y.S.2d 178 (N.Y.App.Div., 1st Dep't, 1995) ("An account stated is an account, balanced and rendered, with an assent to the balance either express or implied. There can be no account stated where no account was presented or where any dispute about the account is shown to have existed.") (internal citations omitted); Reisman, Peirez & Reisman, L.L.P. v. Gazzara, No. 2823/02, 15 Misc.3d 1113(A), 2007 WL 949436, at *2 (N.Y.Sup.Ct.2007) ("The common law elements of a cause of action for an account stated are: the existence of a debtor-creditor relationship, a mutual examination of the claims of the respective parties, the striking of a balance, and an agreement, express or implied, that the party against whom the balance is struck will pay the debt."). The second and third requirements (acceptance of the account as correct and a promise to pay the amount stated) may be implied if "a party receiving a statement of account keeps it without objecting to it within a reasonable time or if the debtor makes partial payment." Worsham, 185 F.3d at 64. Under a claim for an account stated, "[e]ven though there may be no express promise to pay, yet from the very fact of stating an account, a *412 promise arises by operation of law as obligatory as if expressed in writing." Leepson v. Allan Riley Co., Inc., No. 04 Civ. 3720, 2006 WL 2135806, at *4 (S.D.N.Y. July 31, 2006) (quoting Kramer, Levin, Nessen, Kamin & Frankel v. Aronoff, 638 F. Supp. 714, 719 (S.D.N.Y.1986)).
Here, Houbigant's Counterclaims contain allegations that Houbigant and DCF entered into a series of agreements that, together, constituted the CPDA. (Countercl. ¶ 192.) Moreover, in December 2008, Houbigant alleges it received correspondence from DCF confirming that DCF owed Houbigant $1,139,736.00 under the CPDA. (Id. ¶ 195.) DCF's argument that "Houbigant had failed to plead that than [sic] the deferral agreements were authorized by the lenders, and thus, those agreements are also void," are factual arguments that this Court cannot consider on a motion to dismiss. Accordingly, Defendant DCF's motion to dismiss Count VIII is denied.
G. Count IX Permanent Injunction
Finally, Houbigant's ninth cause of action for a permanent injunction must be dismissed because Houbigant has not alleged that it has no adequate remedy at law. Houbigant requests that Defendant IMG Holdings be permanently enjoined both from destroying various records and from making payments to its shareholders. (Countercl. ¶ 256.) Generally, to obtain a permanent injunction "a party must show the absence of an adequate remedy at law and irreparable harm if the relief is not granted." New York State Nat'l Org. for Women v. Terry, 886 F.2d 1339, 1362 (2d Cir.1989). As to Houbigant's request concerning the records, Houbigant is already protected by the rules of general discovery. "The obligation to preserve evidence arises when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation." Fujitsu Ltd. v. Fed. Express Corp., 247 F.3d 423, 436 (2d Cir.2001). Should it be discovered that IMG Holdings destroyed any relevant information after being put on notice, "the determination of an appropriate sanction for spoliation, if any, is confined to the sound discretion of [this Court]." See West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999). Lastly, Houbigant's request concerning the dissipation of assets is covered by its request for damages in conjunction with its breach of contract claim. Accordingly, Defendant IMG Holdings' motion to dismiss Count IX is granted.
CONCLUSION
For the foregoing reasons, Counter-Defendants' motion to dismiss Counts II through IX of Counter-Plaintiff's Counterclaims [dkt. no. 12] is GRANTED in part and DENIED in part as follows: Counts III, V, VII, and IX are dismissed in their entirety. Count II is dismissed as to Defendants Zohar II and Patriarch but not as to Defendants IMG Brands and DCF. Count VI is dismissed, but Houbigant is granted leave to replead its claim of fraudulent misrepresentation as against IMG Brands in accordance with Fed.R.Civ.P. 9(b). Counts IV and VIII remain in their entirety.
The parties shall confer and inform the Court by letter no later than January 8, 2010 how they propose to proceed.
SO ORDERED:
NOTES
[1] In their Counterclaims, Counter-Plaintiffs detail many of the provisions of the various agreements at issue here. This Background section will outline the parties, the relationship among the parties, and the main contractual provisions. The allegations concerning each specific count of the Counterclaims will be set forth in greater detail in Section II infra.
[2] The License Agreement is governed by New York Law. (Countercl., Ex. A § 23.)
[3] Houbigant also alleges, in the alternative, that if Patriarch and Zohar II are not liable for breach of the License Agreement, that they be held, along with Tilton, liable for tortious interference.
[4] The parties have assumed that New York State law governs Plaintiff's asserted claims, and the Court concludes that New York choice of law rules would point to the application of New York State law.
[5] See Staehr v. Hartford Financial Services Group, Inc., 547 F.3d 406, 425 (2d Cir.2008) ("[A] defendant may raise an affirmative defense in a pre-answer Rule 12(b)(6) motion if the defense appears on the face of the complaint."); Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 74 (2d Cir.1998) (same).
[6] For a more thorough discussion of this provision, the Court refers the parties to the Memorandum and Order [dkt. no. 54] in Houbigant, Inc. et al. v. IMG Fragrance Brands, LLC et al., No. 09 Civ. 839(LAP), 2009 WL 5102791 (S.D.N.Y. Dec. 18, 2009).
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679 F. Supp. 429 (1988)
Patrick Michael O'BRIEN, Plaintiff,
v.
BOROUGH OF WOODBURY HEIGHTS, et al., Defendants.
Carol Ann LIND, Plaintiff,
v.
BOROUGH OF WOODBURY HEIGHTS, et al., Defendants.
Civ. A. Nos. 86-2819(SSB), 86-2820(SSB).
United States District Court, D. New Jersey.
February 11, 1988.
*430 *431 Albertson, Ward & McCaffrey by Thomas H. Ward, Thomas M. North, Woodbury, N.J., for plaintiffs.
White and Williams by Michael O. Kassak, Cherry Hill, N.J., for defendants.
OPINION
BROTMAN, District Judge:
I. INTRODUCTION
These consolidated civil rights actions arise out of the arrest and imprisonment of plaintiffs Patrick Michael O'Brien and Carol Ann Lind by the Borough of Woodbury Heights, the County of Gloucester and six individually named law enforcement officers employed by these entities. Plaintiffs bring their claims pursuant to 42 U.S.C. § 1983, alleging, inter alia, that defendants subjected them to unlawful detentions and strip/body cavity searches in violation of plaintiffs' constitutional rights. Plaintiffs also assert state law claims for false imprisonment and intentional infliction of emotional distress, as well as other additional state law claims (hereinafter referred to as "additional state law claims")[1], and seek punitive damages from the individual defendants.[2]
Presently before the court are the parties' cross-motions for summary judgment, Fed.R.Civ.P. 56, on the following issues:
(A) Whether defendants are liable to plaintiffs under Section 1983 for subjecting them to strip/body cavity searches;
(B) Whether defendants are liable under Section 1983 for the detentions of plaintiffs;
(C) Whether defendants are liable to plaintiffs under the laws of the State of New Jersey for false imprisonment. Defendants also move for summary judgment on the questions of:
(D) Whether defendants are liable to plaintiffs under the laws of the State of New Jersey for intentional infliction of emotional distress; and
(E) Whether the individual defendants are entitled to immunity on plaintiffs' additional state law claims under the New Jersey Tort Claims Act.
Finally, defendants move:
(F) to dismiss plaintiffs' claims for punitive damages against the individual defendants.
For the reasons set forth below, the motions of the parties are granted in part and denied in part.
II. FACTUAL BACKGROUND
Patrick Michael O'Brien was arrested in the early morning of December 28, 1985 by the East Greenwich Police Department at the request of the Borough of Woodbury Heights Police Department. O'Brien's arrest followed an alleged altercation at Gallagher's Tavern, a bar in Woodbury Heights, New Jersey, during which plaintiff was involved in a fight with a Bruce Leap. Upon his arrest, O'Brien was taken to the Woodbury Hospital, where the officers who had arrested him turned plaintiff over to defendant Patrolman Dean Golding of the Woodbury Heights Police.
*432 Defendant Golding first transported O'Brien to the Borough's police station, where plaintiff was fingerprinted and processed. Plaintiff was then taken to the Gloucester County Jail. At the jail, plaintiff was ordered to disrobe, subjected to a visual strip/body cavity search conducted by a male officer, defendant Mozell Danzby, and sprayed with a delousing agent. O'Brien was then placed in a jail cell, where he spent the night. At 10:00 A.M. the next morning, plaintiff was picked up at the jail by Walter Riley, Police Chief of the Woodbury Heights Police Department, and transported to the Borough's police station. At that time, George Johnson, the manager of Gallagher's Tavern, filled out a disorderly persons complaint against plaintiff. This complaint was subsequently dismissed due to Johnson's failure to appear at a later hearing.
On May 4, 1986, at approximately 12:30 A.M., Carol Ann Lind was arrested at Gallagher's Tavern by Patrolman Lindsay and Patrolman James Golding of the Woodbury Heights Police Department. This arrest followed an altercation at Gallagher's between Ms. Lind and a Mr. Selfridge. During this incident, Johnson, the bar manager, telephoned the police.
Lind was taken by the officers to the Gloucester County Jail, where plaintiff was ordered to disrobe, subjected to a visual strip/body cavity search conducted by a female officer, defendant Nicola Easter, showered, and sprayed with a delousing agent. Lind was then placed in a cell, where she spent the rest of the night.
At approximately 8:15 a.m. on May 4, 1986, Lind was transported to the Borough's police station, where George Johnson filled out a complaint against her for disorderly conduct. This complaint was subsequently dismissed due to Johnson's failure to appear in court.
No judicially authorized warrant was sought for the arrest or detention of either plaintiff. Defendants concede that both plaintiffs were detained pursuant to the custom and policy of the Woodbury Heights Police Department to detain individuals believed to pose a danger to themselves, to others or to property at the County jail for a period not to exceed twenty-four hours. Defendants also concede that Lind and O'Brien were subjected to the strip/body cavity search procedure pursuant to the policy of the Gloucester County Jail to conduct such searches on all arrestees prior to incarceration, regardless of the nature of the charges against them.
III. DISCUSSION
The standard for granting summary judgment is a stringent one. Fed.R.Civ.P. 56(c) provides that summary judgment may be granted only when the materials of record "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." Hersh v. Allen Prods. Co., 789 F.2d 230, 232 (3d Cir.1986); Lang v. New York Life Insurance Co., 721 F.2d 118 (3d Cir. 1983). In deciding whether an issue of material fact does exist, the court is required to view all doubt in favor of the nonmoving party. Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 (3d Cir.1983), cert. denied, 465 U.S. 1091, 104 S. Ct. 2144, 79 L. Ed. 2d 910 (1984); Knoll v. Springfield Township School District, 699 F.2d 137, 145 (3d Cir.1983); Smith v. Pittsburgh Gage and Supply Co., 464 F.2d 870, 874 (3d Cir.1972). The threshold inquiry is whether there are genuine issues that properly can be resolved only be a finder of fact because they may reasonably be resolved in favor of either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 2511, 91 L. Ed. 2d 202, 213 (1986). The Supreme Court has interpreted Fed.R. Civ.P. 56(c) as mandating:
... the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.
Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265, 273 (1986). Thus, if the plaintiff's evidence is merely "colorable" or is "not significantly probative," summary judgment may be granted. *433 Anderson v. Liberty Lobby, Inc., 106 S.Ct. at 2511.
The court will first consider those issues arising under plaintiffs' Section 1983 claims.
(A) Whether Defendants are Liable to Plaintiffs Under Section 1983 for Subjecting Them to Strip/Body Cavity Searches?
It is the confessed policy of the Gloucester County Jail to conduct a visual strip/body cavity search on each arrestee who is brought to the jail for the purposes of incarceration, regardless of the offense with which the person is charged. Pursuant to this search procedure, prospective inmates are required to disrobe and to expose their body cavities to a visual inspection by an officer of the same sex as the person being searched.
Defendants move for summary judgment on those counts of the complaints that allege that plaintiffs' Fourth Amendment rights were violated when they were subjected to visual strip/body cavity searches at the Gloucester County Jail. Defendants argue that such searches are necessary to insure that weapons or contraband are not introduced into the facility. Plaintiffs cross-move for summary judgment, arguing that strip/body cavity searches are impermissible under the Fourth Amendment unless based on a reasonable suspicion of concealment. Because this court finds itself in total agreement with the predominating caselaw in this area, which has found blanket strip/body cavity search policies such as the one in force at the Gloucester County Jail to be insupportable and unconstitutional, plaintiffs' motion for summary judgment on this issue will be granted and defendants' corresponding motion will be denied.
1. The Unconstitutionality Of The Searches
In evaluating the permissibility of body cavity or strip searches of arrestees, seven of the United States Circuit Courts of Appeals have held that such searches must be based on a "reasonable suspicion"[3] that an arrestee is concealing contraband or weapons. See Weber v. Bell, 804 F.2d 796 (2d Cir.1986), cert denied sub nom County of Monroe v. Weber, ___ U.S. ___, 107 S. Ct. 3263, 97 L. Ed. 2d 762 (1987); Jones v. Edwards, 770 F.2d 739 (8th Cir. 1985); Stewart v. County of Lubbock, 767 F.2d 153 (5th Cir.1985), cert. denied, 475 U.S. 1066, 106 S. Ct. 1378, 89 L. Ed. 2d 604; Giles v. Ackerman, 746 F.2d 614 (9th Cir. 1984), cert. denied, 471 U.S. 1053, 105 S. Ct. 2114, 85 L. Ed. 2d 479; Hill v. Bogans, 735 F.2d 391 (10th Cir.1984); Mary Beth G. v. City of Chicago, 723 F.2d 1263 (7th Cir. 1983); Logan v. Shealy, 660 F.2d 1007 (4th Cir.1981), cert. denied, 455 U.S. 942, 102 S. Ct. 1435, 71 L. Ed. 2d 653 (1982). And while the Third Circuit has yet to address the question, in a recent opinion issuing from this district, the Honorable Mitchell H. Cohen declared unconstitutional a blanket policy of the Camden County Jail which subjected all arrestees to indiscriminate strip/body cavity searches. Davis v. City of Camden, 657 F. Supp. 396 (D.N.J.1987).
Nonetheless, defendants contend, in the face of this overwhelming contrary authority, that the blanket strip/body cavity search policy of the Gloucester County Jail is a necessary and constitutional procedure. Defendants further argue that the case of Davis v. City of Camden was wrongly decided and is inconsistent with the Supreme Court's holding in Bell v. Wolfish, 441 U.S. 520, 99 S. Ct. 1861, 60 L. Ed. 2d 447 (1970). In Bell v. Wolfish, the Court upheld as constitutional a policy under which pretrial detainees were subjected to body cavity searches following contact visits.
Initially, it must be noted that the Davis decision is fully consistent with the seven court of appeals decisions which found strip and body cavity searches of arrestees unconstitutional when not supported by *434 reasonable suspicion. Furthermore, all of these opinions were rendered after the Supreme Court's ruling in Bell v. Wolfish. Consequently, to the extent defendants argue that Davis is a misapplication of the holding in Bell, the defendants must necessarily make the same claim regarding the majority view among the circuits.[4]
More importantly, defendants' argument that the Supreme Court's decision in Bell justifies the search policy in question here is simply not persuasive. Indeed, the facts presented in the Bell case were quite different than those presently before the court. In Bell, the court upheld strip/body cavity searches of pre-trial detainees "prisoners who had already been arraigned, had failed to make bail, and had presumably chosen to receive visitors and to enjoy physical contact with them." Weber v. Dell, 804 F.2d at 800. Furthermore, as the Supreme Court has noted, many pre-trial detainees are "awaiting trial for serious, violent offenses" and "have prior criminal convictions." Block v. Rutherford, 468 U.S. 576, 586, 104 S. Ct. 3227, 3233, 82 L. Ed. 2d 438 (1984).
By contrast, plaintiffs in the present case were arrested for petty disorderly offenses and subjected to the humiliation and degradation of a strip/body cavity search procedure prior to any determination by a neutral and detached magistrate that their arrest or continued detention was supported by probable cause. In fact, charges were not even officially filed against plaintiffs until moments prior to their release. None of the officers involved in the searches of plaintiffs bore any suspicion, reasonable or otherwise, that either plaintiff was concealing a weapon or contraband at the time of the search, and indeed, no reasonable basis existed for such a suspicion, given the nature of the offense charged in each case.[5] Given these circumstances, the strip/body cavity searches of plaintiffs in this case were not only unconstitutional. They were senseless.
2. Whether The County Is Liable Under Section 1983 For The Unlawful Strip/Body Cavity Searches?
In Monell v. New York City Dept. of Social Services, 436 U.S. 658, 98 S. Ct. 2018, 56 L. Ed. 2d 611 (1978), the Supreme Court held that a municipality cannot be held liable under a theory of respondeat superior for the torts of its employees. Id. at 691, 98 S.Ct. at 2036. Nonetheless, the Court also held that "local government, like every other Section 1983 `person,' by the very terms of the statute, may be sued for constitutional deprivations visited pursuant to governmental `custom' even though such a custom has not received formal approval through the body's official decisionmaking channel." Id. at 690-91, 98 S.Ct. at 2036.
Defendants in the present action concede that "it is the policy of the Gloucester County Jail to strip search all inmates regardless of the charge." See Defendants' *435 Briefs in Support of Motion for Summary Judgment and/or Partial Summary Judgment at p. 5. Therefore, the County is liable under Section 1983 for the unlawful strip/body cavity searches to which plaintiffs were subjected.
3. Whether The Borough Is Liable Under Section 1983 For The Unlawful Strip/Body Cavity Searches?
The record clearly indicates that the Borough had a policy, at the time plaintiffs were arrested, of bringing arrestees to the Gloucester County Jail. See Riley Deposition at pp. 38, 55. The record also establishes that the Borough was aware of the policy at the Gloucester County Jail of conducting strip/body cavity searches on all arrestees. Id. at p. 58. Consequently, the Borough is liable under Section 1983 for causing plaintiffs to be subjected to the unconstitutional searches. See Black v. Stephens, 662 F.2d 181, 189 (1981) cert. denied, 455 U.S. 1008, 102 S. Ct. 1646, 71 L. Ed. 2d 876 (1982) (plaintiff in Section 1983 case must establish a "causal connection" between defendant's conduct and the constitutional deprivation suffered); Sabo v. O'Bannon, 586 F. Supp. 1132, 1143 (E.D.Pa. 1984) ("Of course, it is not necessary to prove that the official policy itself is unconstitutional. Monell requires only that the official policy cause the constitutional violation.").
4. Whether The Individual Defendants Are Liable Under Section 1983 For The Unlawful Strip/Body Cavity Searches?
The individual defendants, as government officials, are entitled to qualified immunity from liability for their discretionary acts, "insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S. Ct. 2727, 2738, 73 L. Ed. 2d 396 (1982). In Harlow, the Supreme Court stated, "[o]n summary judgment, the judge appropriately may determine, not only the current applicable law, but whether that law was clearly established at the time an action occurred." Id. at 818, 102 S.Ct. at 2738.
As the court noted in Davis, "[t]here is no general consensus on when the unconstitutionality of blanket strip search policies became `clearly established.' Weber v. Dell, 804 F.2d 796, 803 (2d Cir.1986), cert. denied sub nom County of Monroe v. Weber, ___ U.S. ___, 107 S. Ct. 3263, 97 L. Ed. 2d 762 (1987) (clearly established in 1983); Ward v. County of San Diego, 791 F.2d 1329, 1333 (9th Cir.1986) (clearly established in 1981), cert. denied sub nom Duffy v. Ward, ___ U.S. ___, 107 S. Ct. 3263, 97 L. Ed. 2d 762 (1987) with Fann v. City of Cleveland, 616 F. Supp. 305, 314 (N.D.Ohio 1985) (not clearly established in 1983); John Does 1-100 v. Ninneman, 612 F. Supp. 1069, 1072 (D.Minn.1985) (not clearly established in 1984)." 657 F.Supp. at 401. In Davis, the court determined that the blanket strip search policy that was in place in May 1984 at the Camden County Jail, which called for the strip search of all inmates, was not "so clearly unconstitutional that the defendants reasonably should have known that they were obligated not to implement it." Id. at 401-02. In so holding, the court noted "the relatively recent vintage of most strip search cases," id., and the fact that the Third Circuit Court of Appeals has yet to rule on whether blanket strip search policies are constitutional. Additionally, the Davis court pointed out that the policy at the Camden County Jail had been specifically mandated by a state regulation, N.J.A.C. § 10A:31-3.12(2) (1979), at the time the individual defendants in that case caused plaintiff to be subjected to an unconstitutional search.
This court believes that the immunity question presented in Davis is distinguishable from the present case. First, the earlier search in this case took place in December 1985; the later search occurring in May 1986. Consequently, the defendants in this action had a minimum of eighteen months more than the defendants in Davis to inform themselves of the prevailing caselaw outlawing the searches in question. More importantly, N.J.A.C. § 10A:31-3.12(2) (1979), the statute which *436 provided for a blanket strip search policy and which was in force at the time of the 1984 search in Davis, was amended in December 1985 to prohibit body cavity searches conducted on less than probable cause, and to require that an arrestee be given a reasonable opportunity to post bail before he or she is subjected to a strip search.
Under these circumstances, the court finds that the law prohibiting blanket strip/body cavity searches such as the ones conducted in this case was clearly established in December 1985 and May 1986 when those searches took place. As the Court noted in Harlow, "a reasonably competent public official should know the law governing his conduct." 457 U.S. at 819, 102 S.Ct. at 2738. Thus, it is held that the individual defendants named in this action are liable for the illegal searches to which plaintiffs were subjected.
(B) Whether the Detention of Plaintiffs Violated Their Rights Under the Fourth and Fourteenth Amendments?
The parties do not dispute that it is "the custom and policy of the Woodbury Heights Police Department to detain individuals who are dangerous to themselves or to others for a period not to exceed twenty-four hours at the Gloucester County Jail." See Defendants' Brief at p. 4. Defendants contend that this policy is carried out pursuant to Rule 3:4-1 of the New Jersey Rules Governing Criminal Practice, which sets out the procedure to be followed subsequent to an arrest[6]. Plaintiffs argue that the detention policy both on its face and as applied violates the terms of Rule 3:4-1 and the plaintiffs' rights under the Fourth and Fourteenth Amendments to be secure from unreasonable seizures.
Under Rule 3:4-1, when a person is arrested for a minor offense, the officer in charge of the police station to which the arrestee is taken shall, after completing the required post-arrest administrative procedures, issue a complaint-summons to the arrestee and "release that person in lieu of continued detention." R.3:4-1(c). However, the officer in charge has discretion not to release the arrestee if that officer determines that any one of certain conditions enumerated in subsection (d) of the rule are present. In that case, the officer is required to bring the arrestee before the nearest available committing judge "without unnecessary delay," for a probable cause determination. Id. If the judge then finds that there is probable cause to believe that the arrestee committed the offense charged and that any one of the section (d) conditions is present, that person shall be detained pursuant to a complaint-warrant. Correspondingly, if no probable cause is found or the judge determines that none of the section (d) conditions exist, the arrestee shall be issued a complaint-summons and released.
It is clear from the plain language of this provision that the Borough's policy of detaining arrestees up to twenty-four hours upon a police officer's unreviewed *437 determination that the person arrested poses a threat to himself, others or property violates Rule 3:4-1. Nonetheless, a violation of Rule 3:4-1 does not constitute a per se violation of a plaintiff's constitutional rights. As explained by the court in Talbert v. Kelly, 799 F.2d 62 (3d Cir.1986), "[i]f the procedure that a municipality chooses violates or is contrary to state law, but meets federal standards, we may not set it aside." Id. at 68. Furthermore, pursuant to this reasoning, an individual defendant's non-compliance with a state-mandated procedure does not in and of itself give rise to a claim cognizable under Section 1983.
The provision in question, R.3:4-1, does, however, incorporate the Fourth Amendment's requirement that a judicial determination of probable cause be had "as a prerequisite to extended restraint of liberty following arrest." Gerstein v. Pugh, 420 U.S. 103, 114, 95 S. Ct. 854, 863, 43 L. Ed. 2d 54 (1975). Under Gerstein, a detention following a warrantless arrest and prior to a probable cause hearing before a magistrate is reasonable, within the meaning of the Fourth Amendment, if it lasts only "for a brief period" necessary for the taking of "administrative steps incident to arrest." Id. at 114, 95 S.Ct. at 863. As a result, once defendants decided to detain plaintiffs, they had a constitutional obligation to seek a judicial determination of probable cause forthwith. See Bernard v. City of Palo Alto, 699 F.2d 1023, 1025 (9th Cir.1983) ("The arresting officer's determination of probable cause justifies only `a brief period of detention to take the administrative steps incident to arrest.' ... Detention beyond that period requires a determination of probable cause by a neutral magistrate."); Williams v. Ward, 671 F. Supp. 225, 227 (S.D.N.Y.1987) ("[O]nce an arrest is effected, the necessity for detaining the suspect beyond a brief period of detention to take the administrative steps incident to an arrest evaporates.").
What constitutes an unnecessarily long detention under Gerstein "must be determined on a case-by-case basis," according to the factual circumstances presented. Moore v. Marketplace Restaurant, Inc., 754 F.2d 1336, 1351 (7th Cir. 1985); see also Bernard, 699 F.2d at 1025; Sanders v. City of Houston, 543 F. Supp. 694, 701 (S.D.Texas 1982), aff'd, 741 F.2d 1379 (5th Cir.1984). The record here does not contain sufficient undisputed facts to answer the question of whether plaintiffs were actually detained beyond a period reasonably required to take necessary administrative steps. In so stating, the court notes that detention of plaintiffs on the basis of a belief that they posed a threat to themselves, others or property is not a reasonable administrative step within the meaning of Gerstein. In fact, such extended detention pursuant to the exercise of unbridled discretion on the part of a law enforcement officer is precisely the type of harm that the Gerstein holding seeks to avoid. 420 U.S. at 116-119, 95 S.Ct. at 864-65. Nevertheless, the record leaves unanswered several pertinent questions: i.e., precisely what administrative steps were taken regarding the plaintiffs' arrests; whether plaintiffs were detained longer than necessary to carry out such steps and to present plaintiffs to a magistrate for a probable cause determination; and whether a magistrate was available during plaintiffs' period of incarceration. Thus, the parties cross-motions for summary judgment on the issue of the constitutionality of plaintiffs' detention are denied.[7]
(C) Whether Defendants Are Liable To Plaintiffs Under The Laws Of The State Of New Jersey For False Imprisonment?
Plaintiffs move for summary judgment on those claims in their complaints alleging *438 false arrest and false imprisonment. Defendants cross-move for judgment in their favor on two grounds (1) that the arrest and detention of plaintiffs was legal under New Jersey law; and (2) that even if an illegal imprisonment occurred, defendants are immune from liability for such an occurrence.
Preliminarily, the court notes that "false arrest and false imprisonment are not separate torts; they are different names for the same tort." Price v. Phillips, 90 N.J.Super. 480, 485, 218 A.2d 167 (App.Div.1966). See also Roth v. Golden Nugget Casino/Hotel, Inc., 576 F. Supp. 262, 265 (1983). Consequently, plaintiffs' claims are more accurately characterized as alleging two instances of false imprisonment, those being the initial arrest of plaintiffs and the subsequent detention of plaintiffs pursuant to the Borough's detention policy. That having been said, the court will next consider whether, on the facts presented, the tort of false imprisonment was committed.
"The tort of false imprisonment is established upon showing any `unlawful restraint upon a man's freedom of locomotion.'" Bartolo v. Boardwalk Regency Hotel Casino, Inc., 185 N.J.Super. 534, 537, 449 A.2d 1339 (Law Div.1982). Furthermore, "it has long been established that under New Jersey law a public official may be held liable for false arrest or imprisonment where he has acted outside his authority." Skevofilax v. Quigley, 586 F. Supp. 532, 545 (D.N.J.1984).
1. The Arrests
In the present case, plaintiffs argue that they were unlawfully arrested as disorderly persons without a warrant and for conduct which occurred outside the presence of the arresting officers. In so arguing, plaintiffs cite N.J.S.A. § 2A:169-3, which states:
Whenever an offense is committed in his presence, any constable or police officer shall, and any other person may, apprehend without warrant or process any disorderly person, and take him before any magistrate of the county where apprehended.
Id. This provision has been interpreted as requiring that arrests for offenses of a lower grade than misdemeanors which are committed outside the presence of an arresting officer be made pursuant to a warrant. Roth, 576 F.Supp. at 267; State v. Morse, 54 N.J. 32, 252 A.2d 723 (1969).
Because the warrantless arrests in the case at bar were for disorderly persons offenses committed outside the presence of the arresting officers, plaintiffs have established the elements of false imprisonment arising out of those arrests.
a) The Liability Of The Arresting Officers
In the case of plaintiff Lind, her initial arrest was executed by Patrolman James Golding and a Patrolman Lindsay. Patrolman Lindsay is not a named defendant in this action.
Regarding Patrolman James Golding, defendants argue that he is entitled to immunity pursuant to section 59:3-2(a) of the New Jersey Tort Claims Act. That provision states, "[a] public employee is not liable for any injury resulting from the exercise of judgment, or discretion vested in him." N.J.S.A. § 59:3-2(a). However, the applicability of Section 59:3-2(a) is superseded in this case by N.J.S.A. § 59:3-3 which states,
A public employee is not liable if he acts in good faith in the execution or enforcement of any law. Nothing in this section exonerates a public employee from liability for false arrest or false imprisonment.
Id. (emphasis added). As the court explained in Marley v. Borough of Palmyra, 193 N.J.Super. 271, 473 A.2d 554 (Law Div. 1983), "[t]he discretionary/ministerial distinction [of 59:3-2(a)] ... does not apply when express immunities are provided." Id. at 289, 473 A.2d 554, citing Malloy v. State, 76 N.J. 515, 521, 388 A.2d 622 (1978); Bosch v. Hain, 184 N.J.Super. 204, 445 A.2d 465 (Law Div.1982). Therefore, the court must apply N.J.S.A. § 59:3-3, which expressly states that no immunity is available for public employees for claims of false arrest or false imprisonment. See *439 Anela v. City of Wildwood, 595 F. Supp. 511, 514 (D.N.J.1984) rev'd on other grounds 790 F.2d 1063 (3d Cir.1986). As a result, defendant James Golding is liable to plaintiff Lind for her false imprisonment.
The initial arrest of plaintiff O'Brien was accomplished by officers of the East Greenwich Police Department, who are not parties to this action. Custody of O'Brien was subsequently turned over to Patrolman Dean Golding, who brought plaintiff to the Woodbury Height Police Station.
Despite the fact that he did not participate in the original apprehension of O'Brien, Patrolman Dean Golding may be liable to plaintiff if he did take affirmative steps to secure plaintiff's imprisonment. Keeton, Prosser and Keeton on Torts, § 11 at 52 (5th Ed.1984). Furthermore, Patrolman Dean Golding need not have known or suspected that the initial arrest of O'Brien was unlawful. "Malice or bad faith is not an element of this cause of action [false imprisonment] and need not be proven by the plaintiff." Roth, 576 F.Supp. at 265. Nor is this defendant entitled to immunity pursuant to N.J.S.A. 59:3-3.
Plaintiff O'Brien's complaint alleges that his arrest took place at the direction of Dean Golding. However, nothing in the record before the court indicates what role, if any, this patrolman played in the warrantless arrest of O'Brien. Thus, summary judgment cannot be entered at this time on the issue of Patrolman Dean Golding's liability to O'Brien for false imprisonment.
b) The Liability Of The Borough
Section 59:2-2 of the New Jersey Tort Claims Act imposes liability on public entities under a theory of respondeat superior for the torts of their employees. That section provides in pertinent part:
A public entity is liable for injury proximately caused by an act or omission of a public employee within the scope of his employment in the same manner and to the same extent as a private individual under like circumstances.
N.J.S.A. 59:2-2(a). As applied to the case at bar, Section 59:2-2 renders the Borough of Woodbury Heights liable for the tort of false imprisonment committed by the Borough's employees.
c) The Detentions
Plaintiffs also assert claims for false imprisonment arising out of their incarceration pursuant to the Borough's policy of detention discussed at section (B) supra. Specifically, plaintiffs argue that their detentions were in violation of Rule 3:4-1 of the New Jersey Rules Governing Criminal Practice.
As stated in section (B), the factual record before the court is insufficient to allow for the entry of summary judgment for plaintiffs or defendants on the issue of whether plaintiffs' actual periods of detention, following warrantless arrests and prior to probable cause determinations by a magistrate, were longer than that permitted by either the Fourth Amendment or Rule 3:4-1.
In light of the foregoing, the motion of defendant James Golding for summary judgment on plaintiff Lind's false imprisonment claim is denied, and plaintiff Lind's corresponding cross-motion for summary judgment against James Golding and the Borough is granted. Furthermore, the motions of the remaining defendants for summary judgment on plaintiffs' false imprisonment claims are denied, as are plaintiffs' cross-motions for summary judgment against those remaining defendants.
(D) Whether Defendants Are Liable To Plaintiffs Under The Laws Of The State Of New Jersey For Intentional Infliction Of Emotional Distress?
In order to establish a claim for the tort of intentional infliction of emotional distress in New Jersey, a plaintiff must show that defendant "by extreme and out-rageous conduct intentionally or recklessly cause[d] severe emotional distress to [plaintiff]...." Hume v. Bayer, 178 N.J.Super. 310, 315, 428 A.2d 966 (Law Div.1981), quoting Restatement, Torts 2d § 46. This tort has been described as encompassing *440 conduct that is "so extreme and outrageous `as to go beyond all possible bounds of decency, and be regarded as atrocious and utterly intolerable in a civilized community.'" Hafner v. Hafner, 135 N.J.Super 328, 333-34, 343 A.2d 166 (Law Div.1965), quoting Restatement Torts, 2d § 46, comment (d) at 73. Defendants, in moving for summary judgment on this claim, argue that the conduct of none of the defendants meets this definition.
The court is hampered by the fact that plaintiffs do not specify in their complaint or moving papers precisely what conduct they seek recovery for on an emotional distress basis. Nonetheless, on the record presented, the only conduct alleged by plaintiffs which arguably approaches behavior that goes "beyond all possible bounds of decency" is the strip/body cavity search procedure to which plaintiffs were subjected. The court believes that a jury could find, given the facts of this case, that the searches conducted on plaintiffs, after they were arrested without a warrant for petty disorderly persons offenses, rose to the level of intentional infliction of emotional distress. Therefore, the defendants' motions for summary judgment on this claim will be denied.[8]
(E) Whether Defendants Are Entitled To Immunity On Plaintiffs' Additional State Law Claims Under The New Jersey Tort Claims Act?
Defendants move for summary judgment on plaintiffs additional state law claims, arguing that the individual defendants are immune from claims arising out of discretionary activities, N.J.S.A. § 59:3-2, or the good faith execution or enforcement of any law, N.J.S.A. § 59:3-3. Defendants further contend that the Borough and the County vicariously assume the immunity of their employees by virtue of N.J.S.A. § 59:2-2, which provides, "[a] public entity is not liable for an injury resulting from an act or omission of a public employee where the public employee is not liable." Id.
Defendants' argument ignores the fact that § 59:3-3 provides only a good faith immunity for claims arising out of law enforcement activity. As explained earlier in section (C)1(a) supra, this provision controls the question of defendants' immunity in this case. As a result, whether the individual defendants acted in good faith with respect to their conduct in this matter is a material fact which clearly is in dispute.[9]
(F) Whether the Individual Defendants Can Be Held Liable to Plaintiffs for Punitive Damages?
Plaintiffs seek punitive damages from the individual defendants.[10] The Supreme Court has held "that reckless or callous disregard for the plaintiff's rights, as well as intentional violations of federal law, should be sufficient to trigger a jury's consideration of the appropriateness of punitive damages." Smith v. Wade, 461 U.S. 30, 51, 103 S. Ct. 1625, 1637, 75 L. Ed. 2d 632 (1983). Because the question of the individual defendants' good faith and motives in the present case raises a material issue of disputed fact, the motion by defendants to dismiss the punitive damages claims asserted against the individual defendants is denied.
(G) Conclusion
For the reasons outlined in the foregoing opinion, the court will grant plaintiffs' motion *441 for summary judgment as to defendants' liability for the unconstitutional strip/body cavity searches which were conducted on plaintiffs, and will deny defendants' corresponding motion for summary judgment on this issue. The court will also deny the motions of both parties on plaintiffs' Section 1983 claims for unconstitutional detention. Additionally, the court grants plaintiff Lind's motion for summary judgment on her false imprisonment claim against Patrolman James Golding and the Borough, and denies James Golding and the Borough's motions for summary judgment on that claim. The court also denies the parties' motions for summary judgment on plaintiffs' false imprisonment claims against the County and defendants Dean Golding, Walter Riley, George Small, Mozell Danzby and Nicola Easter. Finally, defendants' motions for summary judgment on plaintiffs' claims for intentional infliction of emotional distress and plaintiffs' additional state law claims are denied, as is defendants' motion to dismiss plaintiffs' claims for punitive damages against the individual defendants.
An appropriate order will be entered.
ORDER
This matter having been brought before the court; and
The court having considered the submissions of the parties; and
For the reasons stated in the court's opinion filed this date,
IT IS on this 11th day of February, 1988, hereby
ORDERED:
1) Plaintiffs' motions for summary judgment on their claims under 42 U.S.C. § 1983 arising out of the strip/body cavity searches are GRANTED;
2) Defendants' motions for summary judgment on plaintiffs' claims under 42 U.S.C. § 1983 arising out of the strip/body cavity searches are DENIED;
3) The motions of the parties for summary judgment on plaintiffs' claims under 42 U.S.C. § 1983 for unconstitutional detention are DENIED;
4) Plaintiff Lind's motion for summary judgment on her false imprisonment claim against defendants James Golding and the Borough of Woodbury Heights is GRANTED;
5) Defendants James Golding and the Borough of Woodbury Heights' motion for summary judgment on plaintiff Lind's claim for false imprisonment is DENIED;
6) The motions of plaintiffs Lind and O'Brien and defendants the County of Gloucester, Dean Golding, Walter Riley, George Small, Mozell Danzby and Nicola Easter for summary judgment on plaintiffs' false imprisonment claims against these defendants are DENIED;
7) Defendants' motion for summary judgment on plaintiffs' claims for intentional infliction of emotional distress are DENIED;
8) Defendants' motions for summary judgment on those state claims asserted in ¶ 20, subsections a-f, h, and j of plaintiffs' amended complaints are DENIED; and
9) The motions of defendants Walter Riley, Dean Golding, James Golding, George Small, Mozell Danzby and Nicola Easter to dismiss plaintiffs' claims for punitive damages against the individually named defendants are DENIED.
No costs.
NOTES
[1] These claims are asserted in ¶ 20, subsections a-f, h, and j of plaintiffs' amended complaints.
[2] The complaints in these actions also allege violations of plaintiffs' rights to due process, the establishment of reasonable bail and to be informed of the nature and cause of an accusation, as well as numerous violations of the New Jersey State Constitution. These claims are not the subject of the present motions.
[3] Reasonable suspicion has been described as a less stringent standard than probable cause which requires a "particularized and objective basis for suspecting the particular person" of secreting weapons or contraband. United States v. Montoya De Hernandez, 473 U.S. 531, 541-42, 105 S. Ct. 3304, 3311, 87 L. Ed. 2d 381 (1985), quoting United States v. Cortez, 449 U.S. 411, 417, 101 S. Ct. 690, 695, 66 L. Ed. 2d 621 (1981).
[4] In arguing the constitutionality of the blanket search policy, defendants simply neglect to mention the seven circuit court opinions which declare searches such as the ones in question unconstitutional. Defendants do cite Dufrin v. Spreen, 712 F.2d 1084 (6th Cir.1983), a case in which the court upheld the body cavity search of an arrestee. However, in so holding, the Sixth Circuit expressly declined to address the issue of whether such a search was permissible when conducted on a person charged with a minor offense not commonly associated with weapons or contraband, since the plaintiff in Dufrin had been charged with a felony. Id. at 1087. Therefore, the Dufrin decision provides no support for defendants' position.
[5] Several courts have noted that the nature of the offense for which a person is arrested may contribute to a reasonable suspicion that that person might attempt to secrete a weapon or contraband on his or her person. As explained by the court in Davis,
... a blanket policy covering only persons charged with felonies or with misdemeanors involving weapons or contraband arguably is justifiable because it is based on a reasonable generalization: that persons charged with these offenses are liable to be concealing weapons or contraband.
657 F.Supp. at 400. As a corollary, federal courts have recognized that blanket strip/body cavity search policies which condone the searches of all arrestees, including those charged with minor offenses, are unconstitutional. See Weber v. Dell, 804 F.2d at 801 n. 6 (citing cases striking down strip searches of non-felony offenders where nature of offense charged did not give rise to a reasonable suspicion).
[6] Subsection (c) of R.3:4-1 provides:
Whenever a law enforcement officer has effected an arrest without a warrant for an offense other than an offense enumerated in paragraph (b) hereof [felonies and crimes involving the possession or use of a firearm], the arrested person shall be taken to a police station where the officer in charge shall, after completion of all post-arrest identification procedures required by law, prepare a complaint-summons, issue it to the person arrested and release that person in lieu of continued detention. However, the officer has the discretion not to prepare a complaint summons if the officer determines that any of the conditions set forth in paragraph (d) exist. If the officer determines not to prepare a complaint summons, a complaint-warrant shall be prepared forthwith and the person arrested shall be taken without unnecessary delay before the nearest available committing judge. If there is probable cause to believe that the defendant committed the offense, the judge, court clerk, or deputy clerk shall issue the complaint-warrant unless it is determined that none of the conditions set forth in paragraph (d) hereof exist in which case a complaint-summons shall be prepared, issued, and the person arrested shall be released....
Under Subsection (d) of R.3:4-1, one of the conditions in the presence of which an officer has discretion not to issue a complaint-summons is if "[t]he officer has reason to believe that the person is dangerous to himself, to others or to property...." R.3:4-1(d)(2).
[7] In support of their motion for summary judgment on plaintiffs' claims for unconstitutional detention, defendants' argue only the constitutionality of the Borough's admitted detention policy. Consequently, under the rule of Monell, the Borough would be liable for any deprivations of plaintiffs' constitutional rights caused by the Borough's detention policy.
With regard to the County and the individually-named defendants, no arguments are proffered in support of granting these defendants summary judgment in the event the detention of plaintiffs is found to have been unconstitutional. Therefore, the court will not address the issue at this time.
[8] As explained in section (E) infra, a public employee who engaged in conduct which would constitute the intentional infliction of emotional distress would not be entitled to immunity under the New Jersey Tort Claims Act.
[9] Plaintiffs also cite N.J.S.A. § 59:3-14, which also renders the intent and motive of the individual defendants a material issue of fact. That section provides in pertinent part:
Nothing in this act shall exonerate a public employee from liability if it is established that his conduct was outside the scope of his employment or constituted a crime, actual fraud, actual malice or willful misconduct.
Id.
[10] Plaintiffs concede that they are not entitled to punitive damages from the Borough or the County under the Supreme Court's holding in City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 101 S. Ct. 2748, 69 L. Ed. 2d 616 (1981).
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744 S.W.2d 640 (1987)
John Thomas HOWARD, Appellant,
v.
The STATE of Texas, Appellee.
No. B14-86-917-CR.
Court of Appeals of Texas, Houston (14th Dist.).
December 23, 1987.
Paul Nugent, Houston, for appellant.
John B. Holmes, Jr., Timothy G. Taft, Houston, for appellee.
Before PAUL PRESSLER, MURPHY and ELLIS, JJ.
OPINION
PAUL PRESSLER, Justice.
Appellant was convicted of driving while intoxicated. The court assessed punishment at one year in jail, probated for two years, and a $500 fine. Appellant complains *641 that his consent to take an intoxilyzer test was involuntarily given. We reverse and remand for a new trial.
A police officer saw the appellant driving in circles in a parking lot. The officer stopped him and, after observing him, gave him the warnings from the implied consent law. See TEX.REV.CIV.STAT. art. 6701l -5. Appellant agreed to take a breath test. The intoxilyzer indicated a blood alcohol content of 0.16 percent.
The first point of error is that the trial court should have suppressed the results of the test. Appellant alleges that his consent was involuntary because the officer incorrectly told him that the implied consent law applied. This statute applies only to driving on a public highway or a public beach but not to driving on a parking lot. See art. 6701l-5. On the other hand, the driving while intoxicated law does apply to parking lots. See art. 6701l -1. In essence, appellant has found a loophole which only legislative action can close. A reversal is required. Hall v. State, 649 S.W.2d 627 (Tex.Cr.App.1983); Turpin v. State, 606 S.W.2d 907 (Tex.Cr.App.1980); see TEX.CODE CRIM.PROC. art. 38.23. The first point of error is sustained. The second and third points of error are not reached because they presuppose the overruling of the initial point of error.
The fourth point of error relates to testimony of the arresting officer about a sobriety test's being given to the appellant. The officer performed a horizontal gaze nystagmus (HGN) test before taking the appellant to the station. The HGN test calls for the subject's eyes to follow the movement of an object. As the object moves steadily to one side of the subject's field of vision, the subject's eyes eventually fail to track the object smoothly. The HGN test presumes that a sober person will exhibit smooth eye movement up to a greater angle than an intoxicated person.
Appellant contends that since the officer was not qualified as an expert, the evidence of the HGN performance should not have been admitted. The state maintains that an HGN test is merely an optical version of the routine "walk a straight line" test. No Texas case addresses the use of HGN evidence in DWI cases, but other states have considered the issue. The most persuasive decision is that of the Arizona Supreme Court in State v. Superior Court, 149 Ariz. 269, 718 P.2d 171 (1986). That case holds that HGN evidence is proper as to the issue of intoxication but not as to precise blood alcohol content. In other words, the HGN results are admissible for qualitativebut not quantitative purposes. Contra People v. Loomis, 203 Cal. Rptr. 767, 156 Cal. App. Supp. 3d 1 (1984). Any lay witness may give an opinion as to intoxication. See TEX.R.CRIM. EVID. 701. The fourth point of error is overruled. See generally Frye v. United States, 293 F. 1013 (D.C.Cir.1923) (addressing standards for permitting evidence of a scientific test); People v. Vega, 145 Ill. App. 3d 996, 99 Ill. Dec. 808, 496 N.E.2d 501 (1986) (reversing a DWI conviction because of an inadequate predicate for testimony about an HGN test).
The conviction is reversed and the cause remanded for a new trial.
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744 S.W.2d 911 (1987)
STATE of Tennessee, Appellee,
v.
Vernon W. NEWSOME and Harden Jenkins, III, Appellants.
Court of Criminal Appeals of Tennessee, at Nashville.
September 2, 1987.
Permission to Appeal Denied December 28, 1987.
*912 Al Cocke (At Trial), J. Paul Newman (On Appeal), Asst. Public Defenders, Nashville, for Newsome.
Owen B. Stratvert, Nashville, for Jenkins.
W.J. Michael Cody, Atty. Gen. & Reporter, William Barry Wood, Asst. Atty. Gen., David Komisar, Asst. Dist. Atty. Gen., Nashville, for appellee.
Permission to Appeal Denied by Supreme Court December 28, 1987.
OPINION
JAMES C. BEASLEY, Special Judge.
After an eight-day jury trial, Vernon W. Newsome and Harden Jenkins III were *913 each convicted of robbery with a deadly weapon and three counts of aggravated rape. The trial judge assessed punishment as to each defendant at thirty-five (35) years for armed robbery and forty (40) years for each of the aggravated rape convictions. The rape sentences were ordered to be served concurrently with each other but consecutive to the robbery.
The defendants raise numerous issues in this appeal, some singly and some jointly. Although there is no challenge to the sufficiency of the evidence, we believe a summary of the pertinent facts will aid our discussion of the issues presented.
The State's proof shows that at approximately 3:00 a.m. on November 9, 1984, Cordellia Harris was visiting in her mother's home at 578 16th Avenue North in Nashville. After hearing loud talking including a statement, "where is the money," Ms. Harris looked out the window and saw two male blacks with a black female. The shorter man was holding a knife or razor to the female's neck. When she saw the men drag the woman across the parking lot into an alley and heard screaming from that area, Ms. Harris called the police.
Several Metro police units converged on the scene in response to the "possible rape in progress" report. Officer James Polk entered the alley where he found the victim who was completely nude. He spotted two shadows running from that point and he immediately reported by radio that he had found the victim and that the suspects were running toward Jo Johnston.
While briefly talking with the victim who stated she had been raped, Officer Polk saw a subject running from the area. When the man refused to halt and after firing a warning shot, the officer fired again striking the suspect in the right buttock.
Officer Polk testified that he approached the wounded man, identified as the defendant Jenkins, and after advising him of his rights asked, "Why did you rape her?" Jenkins responded, "I didn't do it, the other guy did." The defendant then pulled a knife from his pocket and threw it on the street.
Officer Gary Clements and David Reasoner who had also responded to the call were driving west on Jo Johnston when they saw the defendant Newsome running from the chapel yard on the north side of the street. Officer Clements stated that the defendant's pants were unbuttoned and unzipped and as he ran he was attempting to fasten them. After a chase of approximately one hundred yards Newsome was apprehended and a search of his person revealed a gold ladies' wrist watch, four one-dollar bills, some change and a knife. In a later search at police headquarters, a twenty-dollar bill was found in his jeans pocket.
The victim testified that she came to the area in search of her cousin who was to assist her in acquiring some marijuana. After leaving her friend's car, she was approached by a man she identified as the defendant Newsome, who asked if she was looking for drugs. This man grabbed her and placed a knife to her neck. They were joined by the defendant Jenkins and the two men took her watch and thirty dollars consisting of a twenty, a five and some one-dollar bills. She was forced to accompany the men across the street to the back of a church where she was disrobed and raped by both men. The victim specifically described being forced to perform oral sex on Jenkins while Newsome was behind her "having sex from both ends" (vaginal and anal). She said the men then switched positions and while she performed oral sex on Newsome, the defendant Jenkins was preparing to have sex with her from behind but was prevented from doing so by the arrival of a car.
The victim made positive in-court identification of both defendants. She also identified photographs of each wearing the clothing she had described. She also identified the knives which were recovered from the defendants as well as her watch which was found on Newsome at the time of his arrest. *914 She denied any involvement in drug transactions with either defendant and stated that she did not know them but had seen Newsome before just passing by.
Defendant Newsome claimed during his testimony that he knew the victim and had sold her drugs more than twenty times. He testified that at approximately 9:30 or 9:45 p.m. on the night in question he sold the victim fake drugs for $130 and at that time took possession of her watch as part payment. He denied the rape or robbery and said he was returning home from a neighborhood store when arrested. His reason for telling the police that he did not know Jenkins was that he knew him only as "Baby Brother."
Defendant Jenkins testified that he only knew the victim by sight. He denied robbing or raping her or seeing anyone else do so. He stated that shortly before being shot he had purchased cocaine from the victim. When the drug did not cook up right he went in search of her to get his money back. He said he found her by the "dempsey dumpster" and demanded that she return his money. He cursed her and "smacked" her in the face at which point she left in search of some money. He stood around on the street for five minutes and smoked a "joint of reefer" before the police drove up. He explained that he ran because he had a screwdriver, pliers and a knife in his possession.
At the hospital Jenkins was seen giving his mother some money including a five-dollar bill. He testified that he had this money both before and after encountering the victim.
Both defendants complain about statements or suggestions by the prosecuting attorney during voir dire.
Defendant Jenkins says that during voir dire the assistant district attorney general prefaced one question or remark with some statement having to do with the kind of favors that rape defendants and/or their attorneys would or would not want, such as young women. In Newsome's brief it is alleged that the State through its assistant district attorney made comments that implied that counsel for the defendant was using trickery in an effort to select men or exclude all women from the jury to hear the case.
These vague conclusory allegations fall far short of presenting issues for review by this Court. The record does not include a transcript of what occurred during the voir dire proceedings. We are thus asked to speculate as to what was actually said, in what context and what if any corrective action was requested and/or taken.
It is the duty of appellants to have prepared an adequate record to convey a fair, accurate and complete account of what transpired with respect to those issues that are the basis of appeal. Tenn.R.App.P. 24(b). The record does not reflect any effort by either appellant to meet this requirement beyond the mere filing of a form which included a request that the entire voir dire proceedings be transcribed. This is insufficient. Any possible error is waived by this inaction.
Both defendants next say the trial court committed reversible error in instructing the jury to consider count five of the indictment when that count had been dismissed prior to trial.
Count one of the indictment charged the defendants with robbery by the use of a deadly weapon. In counts two through five inclusive identical language was used charging aggravated rape in that the defendants forced the victim to submit to unlawful sexual penetration while they were armed with weapons.
While the transcript reflects that prior to trial count five was dismissed on the oral motion of the State, we are unable to find an order of dismissal in the record. At any rate, the trial court's charge to the jury included instructions to consider all five counts of the indictment. After the jury retired from the courtroom, the attorney for the state informed the trial judge that count five had been withdrawn and should not have been submitted.
*915 Before they began deliberating the jurors were returned to open court and instructed as follows:
The Court inadvertently charged you with regard count five of this indictment. This was the Court's error and count five should not have been submitted to you. Accordingly, you need not consider count five for any purpose whatsoever.
We feel that any error here was cured by the prompt action of the trial judge. There is a presumption that the jury does not disregard the trial court's instructions. Craig v. State, 524 S.W.2d 504 (Tenn. Crim. App. 1974). In order to overcome this presumption an accused must show by clear and convincing evidence that such instructions were not followed. State v. Vanzant, 659 S.W.2d 816 (Tenn. Crim. App. 1983). The defendants have not shown and there is nothing in this record even suggesting that the jury disobeyed the court's instructions.
Furthermore there was no objection interposed by either defendant to the charge as given or to the corrective action taken. This issue is without merit.
In his first issue the defendant Jenkins complains that the trial court improperly refused to charge the jury as to the lesser included offense of assault and battery on the first count of the indictment. This count charged armed robbery committed by means of an assault. Clearly under this count assault would be a lesser included offense. State v. Shaw, 619 S.W.2d 546 (Tenn. Crim. App. 1981).
If no evidence at all is offered as to a lesser included offense, there is no requirement that it be included in jury instructions. State v. Briley, 619 S.W.2d 149 (Tenn. Crim. App. 1981). However, if there is any evidence reasonable minds could accept as to any such lesser offense, the accused is entitled to appropriate instructions regarding the lesser offense. State v. Atkins, 681 S.W.2d 571 (Tenn. Crim. App. 1984).
While it is true that the defendant testified to an earlier encounter with the victim during which he "smacked" her in the face, he denied being present at the time she was robbed and raped. In other words the thrust of his testimony was that the "smacking" was a totally unrelated incident and that he was elsewhere when the crimes with which he was charged were committed.
The jury not only rejected this defense but also declined to give the defendant the benefit of the lesser offenses charged under count one, i.e., robbery and larceny from the person. Under the proof in this record, we fail to see where reasonable minds could have done otherwise. The refusal of the requested instruction was at best clearly harmless error and is not grounds for reversal.
In the next two issues the defendant Jenkins challenges the photographic lineup as being unduly suggestive and says the trial court erred in allowing an officer to relate to the jury statements made by the victim at the time she viewed that lineup.
It was established at the pre-trial suppression hearing that the victim had been shown an array of photographs of six black males which were arranged in a manila folder. Each man was shown in a frontal and profile view. The basis for the first complaint is that the dual photograph of Jenkins has a profile view on the left and a frontal view on the right; whereas, in the other five photographs the frontal views are all on the left and the profile views are to the right.
In denying the motion to suppress the identification the trial judge stated, "There is no earthly way I can interpret the fact that the defendant's face is perhaps in a different way on one aspect than do other persons in this lineup, that by itself, in and of itself, would cause this lineup to be suggestive in any way. There is no basis for such conclusion." The evidence supports the trial court in that decision.
While our examination of the photographic array fails to reveal any suggestiveness *916 therein, we have, nevertheless, looked to the totality of the circumstances surrounding the identification by the victim and find it to be reliable under the criteria set forth in Neil v. Biggers, 409 U.S. 188, 93 S. Ct. 375, 34 L. Ed. 2d 401 (1972).
During the trial the victim was not asked about and did not testify concerning her pre-trial identification of the defendant. Later when the State sought to prove through Detective McBride that the victim had identified Jenkins at a photographic lineup, the trial judge initially properly sustained objections to this testimony on the grounds of hearsay. Shortly thereafter he reversed himself sua sponte and announced to the assistant district attorney general that the testimony would be allowed. The officer then testified that the victim identified Jenkins' picture and stated, "that is him."
The trial judge reasoned that since this evidence had all the indicia of reliability that it should be admitted although it was admittedly hearsay. In its brief, the State contends that it was not hearsay for the detective to relate that which he observed. We do not agree. This testimony was clearly offered to establish the truth of the prior out-of-court statement and act of the victim identifying the defendant and was, as recognized by the trial judge, clearly hearsay.
In Blankenship v. State, 1 Tenn. Crim. App. 178, 432 S.W.2d 679 (1967), the following language was used:
We hold that the testimony of the prosecuting witness, concerning his previous identification of the defendant, was competent.
However, the author of that opinion, Presiding Judge Mark Walker, went on to point out:
The testimony of a third person as to a prior identification of the defendant by the victim is incompetent as original testimony, and unless the witness has been impeached, is inadmissible on the issue of identification.
Here the victim had not been impeached and it was error to admit over objection this evidence through Detective McBride.
We conclude, however, that given the positive in-court identification of the defendant by the victim plus the facts and circumstances connecting the defendant to these crimes, the admission of this evidence did not affect the outcome of the trial and was harmless beyond a reasonable doubt.
In his final issue, Mr. Jenkins contends that the trial court erred by not suppressing statements made by him at the time of his arrest because the State failed to prove that he knowingly and voluntarily waived his "Miranda rights."
After a pre-trial hearing the trial judge determined that the statement was in all respects admissible and overruled the motion to suppress. He found that the defendant had been advised of his rights and although he was apparently in some pain from the gunshot wound there was no suggestion that the pain was so overwhelming that he could not understand those rights. These findings have the weight of a jury verdict and are binding upon us when, as here, we find material evidence to support the trial judge's findings. See State v. O'Guinn, 709 S.W.2d 561, 565-566 (Tenn. 1986). This issue is without merit.
In addition to those joint issues which we have heretofore discussed, the defendant Newsome has presented five other issues for review. First he says the trial court erred in failing to suppress "the suggestive jailhouse show-up identification of the defendant caused by deliberate, negligent police action."
The proof shows that after the victim was examined at the hospital, she accompanied Detective McBride to the police station for the purpose of obtaining a warrant. While the two of them were at the copy machine in the warrant section, two officers accompanied by the defendant entered the building and proceeded down a nearby hallway. Detective McBride testified that *917 he immediately stepped in front of the victim in an effort to keep her from seeing the defendant but as he did so she stated, "That is him."
In overruling the motion to suppress the identification of this defendant, the trial judge found that there was no state conduct in the staging of any sort of procedure. The record supports that conclusion. There is no showing that the police presented the defendant to the victim for pre-trial identification or even intended that she see him at that time. Under the facts shown here, we hold that the spontaneous identification of the defendant by the victim does not constitute an impermissible show-up so as to make the identification unduly suggestive or give rise to any substantial likelihood of irrepressible misidentification. See State v. McDougle, 681 S.W.2d 578 (Tenn. Crim. App. 1984); see also Rippy v. State, 550 S.W.2d 636 (Tenn. 1977).
Defendant Newsome next says the trial court erred in refusing his request to review the written police report before cross-examining the officer at the suppression hearing.
Rule 26.2(a), Tenn.R.Crim.P., provides, in pertinent part, as follows:
After a witness other than the defendant has testified on direct examination, the trial court, on motion of a party who did not call the witness, shall order the attorney for the state or the defendant and his attorney, as the case may be, to produce, for the examination and use of the moving party, any statement of the witness that is in their possession and that relates to the subject matter concerning which the witness has testified. (Emphasis added.)
After Officer Gary Clements' direct testimony at the suppression hearing, defense counsel asked to see the officer's report. The State responded that there was no mention of any statements in the report and submitted the document to the trial judge for an in-camera inspection. After examining the report the trial judge announced that there was nothing pertinent to the officer's testimony contained therein and denied the request. The report has not been preserved in this record and there is no showing that the trial judge erred in his ruling.
Defendant Newsome also contends that the trial court erred in refusing to grant his pre-trial motion to require the State to produce any criminal records of the witnesses the State intended to call.
In overruling this motion the trial judge noted that the defense had equal access to such records. It was pointed out again by our Supreme Court in the recent case of State v. King, 718 S.W.2d 241 (Tenn. 1986) that the State has no duty either under the Tennessee Rules of Criminal Procedure or by decisional law in this state to provide such information to the defendant. Furthermore, it appears that in this case the defense had more information than the State concerning the prior convictions and bad acts of the victim. There is no merit to this complaint.
In the next issue Newsome says the trial court erred in excluding from evidence the victim's prior criminal record concerning false reports to police.
Prior to the cross-examination of the victim, an extensive hearing was held pursuant to State v. Morgan, 541 S.W.2d 385 (Tenn. 1976) to determine which convictions could be used for the purpose of impeaching her testimony. The defense sought to introduce evidence of the victim's prior convictions for making false reports to the police. The trial judge excluded this evidence on the grounds that these violations of a Metro ordinance were not admissible as prior convictions.
In its brief the State correctly admits that the making of false reports to the police could be admitted as specific instances of conduct or prior bad acts under Morgan. Also during the Morgan hearing below the assistant district attorney general *918 in arguing against admissibility as a criminal conviction pointed out that the defense might wish to inquire upon it as a prior bad act. However, from our perusal of the record we find no effort by the defendant to do so.
Now on appeal the defendant seeks to rely for the first time on Rule 608(b) adopted in Morgan as a basis for admission of this evidence. The record reflects that in the trial court the defendant urged the admissibility of this evidence on the grounds that it represented a prior conviction under Federal Rules of Evidence 609 also adopted by the Supreme Court in Morgan v. State, supra. Thus it appears that the trial judge was never given the opportunity to rule on its admissibility as a specific instance of a bad act. A trial judge cannot be put in error as to a matter upon which he did not rule. Dotson v. State, 2 Tenn. Crim. App. 388, 454 S.W.2d 174 (1970). See also State v. Galloway, 696 S.W.2d 364 (Tenn. Crim. App. 1985).
Furthermore, we would observe that with the jury being apprised of the victim's prior convictions for robbery, shoplifting and conspiracy to conceal stolen property, it is doubtful that proof of her false reports to the police would have had much if any effect on her credibility.
In the final issue error is claimed in the failure of the trial court to declare a mistrial following testimony that the defendant refused to sign a written statement.
The record reflects that after Detective Garafola had testified concerning certain oral statements made to him by the defendant Newsome the following occurred:
Q (By Gen. Komisar) Detective, these statements that Mr. Newsome gave to you were oral statements, were they not?
A Yes, sir.
Q You asked Mr. Newsome to make a formal written statement?
A Yes.
Q Did he do that?
A No, sir.
Q What did he do?
A He said he had nothing to say, just what he had told us.
MR. COCKE: Your Honor, I would like to approach the Bench.
(Whereupon, an off-the-record discussion was held at the Bench, after which the following proceedings were had:)
THE COURT: Members of the Jury, it you heard any evidence regarding any refusal or failure to make a statement you should disregard that. The defendant has a right not to say anything at all and you should draw no inference or allow no inference to be drawn from any defendant's failure or refusal to make a statement. So if you have heard any evidence to that extent, then please disregard it and don't use it for any purpose whatsoever. All right.
A fair reading of what transpired here does not support the defendant's charge that this was a deliberate attempt by the State to comment to the jury that the defendant elected to exercise his constitutional right to remain silent. Clearly the defendant did not remain silent. He simply declined to have his statements put in formal written form. At any rate, the prompt, thorough instruction by the trial judge cured any possible error.
Likewise without merit is the defendant's claim that his discovery request was not fully complied with. He was made aware of the oral statements and of the fact that there were no written statements. His sole contention seems to be that the failure of the State to specifically tell him of the defendant's refusal to sign a written statement was a violation of the discovery rules and grounds for a mistrial. We think not. The trial court properly denied the motion for a mistrial.
Finding no reversible error as to either defendant, we affirm the judgments as entered below.
O'BRIEN and BYERS, JJ., concur.
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901 F. Supp. 330 (1994)
Evans PAUL, Jean Auguste Mesyeux, Marino Etienne, Gerald Emile Brun, Serge Gilles, and Fernand Gerard Laforest, Plaintiffs,
v.
Prosper AVRIL, Defendant.
No. 91-399-CIV.
United States District Court, S.D. Florida.
July 1, 1994.
*331 Matthew J. Chachére, Beth Stephens, Michael Ratner, Jennifer Green, Center for Constitutional Rights, New York City, Ira Kurzban, Kurzban, Kurzban & Weinger, P.A., Miami, FL (Harold Hongjukoh, Ronald C. Slye, Intern. Human Rights Clinic, New Haven, CT), for plaintiffs.
Stephen A. Papy (Richard A. Hibey, Gordon A. Coffee, Anderson, Hibey, Nauheim & Blair), Washington, DC, for defendants.
FINAL JUDGMENT GRANTING DEFAULT AND AWARDING DAMAGES
FERGUSON, District Judge.
This case involves the claims of six prominent Haitian citizens, opponents of the ruling military regime, for damages suffered by torture and false imprisonment directed by Prosper Avril who was then military ruler.[1] The torts were committed in Haiti in 1989 and 1990 during the defendant's reign as head of government.
Plaintiffs, all citizens of Haiti, sought relief under the Alien Tort Statute, 28 U.S.C.A. § 1350, which provides district courts with original jurisdiction over civil actions brought by aliens for torts committed in violation of the law of nations or a treaty of the United States. The summons and complaint were served on defendant Avril in his home in Miami Lakes, Florida, on February 28, 1991. Defendant's motion to dismiss the complaint was denied by this Court in 1993, in Paul v. Avril, 812 F. Supp. 207 (S.D.Fla.1993). After that adverse ruling, the defendant declined to participate further in the case. At the hearing to determine the proper amount of damages to be awarded in this case, no defense was presented.
All six plaintiffs filed extensive documentary evidence in support of their claims for damages, including affidavits and medical records. The declarations of three experts were presented, including the exiled Chief Justice of the Haitian Supreme Court, an expert on the command structure of the Haitian military and police, and an expert on the human rights situation in Haiti. Oral testimony presented at the hearing included the testimony of plaintiff Fernand Gerard Laforest and human rights expert William G. O'Neil. Based on the documentary and testimonial *332 evidence, the Court makes the following factual findings:
1. Plaintiff Evans Paul is currently the elected mayor of the capital of Haiti, Port-au-Prince, although he has been prevented from performing the duties of the office since the 1991 military coup. A long-time opponent of military rule, in 1986 he helped organize a coalition of grassroots organizations which protested continuing military rule and human rights violations.
2. Plaintiff Jean Auguste Mesyeux, who currently lives in exile in Canada, was a co-founder of Haiti's largest trade union, the Autonomous Federation of Haitian Workers. As the executive secretary, he was actively involved in organizing opposition to military rule during the regime of defendant Avril.
3. Plaintiff Marino Etienne currently lives in exile in Paris, France. A former sergeant in the Presidential Guard, Etienne was the leader of a group of former soldiers committed to democratic reform in Haiti.
4. On October 30, 1989, plaintiffs Paul, Mesyeux and Etienne appeared at a televised press conference where they called for a month-long nonviolent protest to demand democratic reforms from the government of General Avril. They participated in the press conference as leaders of the Rassemblement National, a coalition of organizations supporting democratic change.
5. On November 1, 1989, Paul, Mesyeux and Etienne were lured to a meeting at the home of a member of the military. Soldiers from the Presidential guard and other military units detained the plaintiffs without warrant or charge. The soldiers pushed the plaintiffs to the ground, beat them with truncheons, boots and guns, and threatened to kill them. They were thrown into a jeep and taken to Police Headquarters.
6. At Police Headquarters, the beatings of plaintiffs Paul, Mesyeux, and Etienne continued. Soldiers used nightsticks to beat their backs, kidneys and the soles of their feet. Their testicles were pulled and squeezed. When they fainted from the pain, the soldiers revived them by singeing the hair in their nostrils with fire from cigarette lighters.
7. High-ranking military officials interrogated Paul, Mesyeux, and Etienne as they were beaten with iron bars, rifle butts, helmets and fists. Etienne was forced into the "djak" position, in which his hands and feet were bound and his body was suspended from a pole.
8. On November 2, 1989, Paul, Mesyeux, and Etienne were forced to appear on television while false charges were read against them. They were then returned to prison where they were detained for three months. Medical treatment was denied for one week and administered only sporadically and inadequately thereafter.
9. As a result of his ordeal, Evans Paul suffered broken ribs, a herniated disc, a perforated lung, a crushed hip, a fractured back, and pain and inflammation in his genitals and right ear. He was confined to a wheelchair for a year and continues to walk with a limp. He can no longer run or play with his children, suffers from migraines and pain in his eyes, hip and groin, and bears scars on his scalp, back and face. Paul also suffers fear and anxiety, fatigue, and has difficulty sleeping.
10. The beatings caused Jean-Auguste Mesyeux to experience throbbing headaches and severe pain and swelling in his wrists, feet, and groin. Mesyeux's severe injuries required him to seek medical treatment in the United States in March 1990. He still suffers pain in his hips, lower back and the soles of his feet, making it impossible to stand for extended periods of time. In addition, Mesyeux's vision is now impaired and he has occasional headaches. Due to the physical ailments resulting from the torture, Mesyeux has been unable to continue working as director of the trade union.
11. Marino Etienne, as a result of the beatings, suffered a punctured eardrum, three broken fingers, recurring migraine headaches and severe injuries to his back and waist. For several weeks after the torture he was only partially conscious, and was delirious from the pain. His right arm is virtually paralyzed, as are two fingers on his right hand. He has lost hearing in his right ear and most of the sight in his right eye. *333 He suffers from recurring migraine headaches and pain in his kidneys and groin which makes urination painful. His psychological trauma manifests itself in terrifying flashbacks and a highly-agitated emotional state. He has incurred significant medical expenses which have limited his ability to support his wife and nine children. Etienne has been unable to find work in France because his injuries inhibit physical activity.
12. Plaintiff Gerald Emile "Aby" Brun was a leader of the opposition political movement called the party of the National Congress of Democratic Movements (KONAKOM). On January 20th, 1990, defendant Avril declared a state of siege and Brun was arbitrarily arrested and detained at a KONAKOM meeting at the Ecumenical Center for Human Rights in Port-au-Prince. At about 12:15 p.m., approximately 15 heavily-armed Presidential Guard soldiers, members of Avril's personal security detail and policemen, stormed the building shouting threats, beating people, and ordering everyone to lie down.
13. The armed men handcuffed Brun, forced him to the ground, battered his buttocks, back and kidneys with truncheons, stomped on his back, spit in his face, shouted threats and slashed his skin with broomsticks and thorny branches as neighbors watched his suffering and humiliation. The soldiers then dragged Brun through the Ecumenical Center, shoved him into a jeep, and continually beat him in the chest, arms, shoulders and hips with gun butts while the vehicle drove around the city arresting other activists. Upon arrival at Brun's home, soldiers searched his house, ransacking his belongings. Soldiers continued to hit and kick Brun in the presence of his children and stepmother.
14. Brun was then taken to a tiny cell at the Office of Investigations and Anti-Gang Services. Confined to the cell, Brun was not permitted to seek medical attention or to speak with relatives or legal counsel.
15. Later that night, Brun was transported to the National Penitentiary. The next day he was taken to Police Headquarters for a second interrogation, during which one of defendant's officers threatened to kill Brun if he did not confess to a number of fictitious crimes. He was thereupon forcibly deported to Miami without the benefit of any legal process.
16. In Miami, Brun was hospitalized for injuries stemming from his beating and torture. He temporarily lost the use of his left hand and suffered multiple contusions on his buttocks, hips and back. He also suffered severe pain in his spinal column, shoulders and neck. During his exile in the United States, Brun experienced severe psychological trauma resulting from the torture and detention. He feared for his family's safety and agonized over his forced separation from them.
17. Brun continues to suffer lingering physical and emotional injuries. He experiences sharp lower-back pain that severely restricts his movement and requires regular medical treatment. His injuries prevent him from engaging in athletic activities and he is unable to lift his children. Brun is on medication for hypertension, a condition he developed as a result of the beatings. He experiences nightmares and flashbacks of his ordeal and lives in constant anxiety for his own and his family's safety.
18. Due to his forced exile, Brun lost over $25,000 in income from his job as an architect. Since his return to Haiti, his capacity to work has been drastically curtailed due to his physical and psychological scars. The cost of medical treatment in Miami totalled between $8,000 and $10,000. Ongoing medical services have cost approximately $250 a year. In addition, medication for his high blood pressure costs approximately $100 a month. Several emergency hospital and doctor visits have cost between $5,000 and $10,000. Other expenses stemming from his torture and forced exile include living in Miami for two months.
19. Plaintiff Gilles was the founder and leader of the Progressive National Revolutionary Haitian Party, an organization opposed to Avril's military regime. On January 20th, 1990, at around 2:00 p.m., approximately five heavily-armed members of Avril's personal security detail forcibly entered Gilles's home. The soldiers "smashed" his *334 face against the floor, handcuffed him, and kicked and punched him in the head, stomach and other parts of his body, as his wife and young daughters watched in horror. The armed men accused Gilles of "annoying" Avril and questioned him about his political work. During the incident, a soldier struck his torso with a heavy, marble ashtray. The soldiers ransacked Gilles's house and seized his personal papers and valuables.
20. Gilles was forced into a vehicle with other beaten prisoners, including plaintiff Brun. During a ride to the National Palace, Gilles was rendered unconscious by a sharp blow to the head. Military personnel continued to deride and insult Gilles for his political activism, threatening to send him away so that he could not interfere with Avril.
21. Upon arrival at the National Palace, Gilles was surrounded and beaten by 75 to 100 Presidential Guard soldiers. Another blow to the head ruptured his right eardrum. Gilles was then transported to the Office of Investigations and Anti-Gang Service and locked in a tiny cell with 14 or 15 other prisoners. He was released that same day after President Francois Mitterand of France and other international leaders contacted Avril to intervene on Gilles's behalf.
22. As a result of the beatings and torture of January 20th, 1990, plaintiff Gilles suffered a punctured eardrum, ripped tendons in the left shoulder, and three displaced vertebra. The ear injury caused him excruciating pain until relieved by surgery in a Paris hospital. Injuries to his stomach, back, and shoulder required two operations and many physical therapy sessions. Due to his injuries, Gilles was unable to work for three months after the beatings. He is on medication for his back injuries and finds it impossible to sit for long periods of time. His hearing remains impaired and he has experienced problems moving his left arm due to injuries to his shoulder. One year later, Gilles was diagnosed with double hepatitis caused by the beating in the region of his liver. Gilles's overall physical condition has been weakened, preventing him from playing with his children and engaging in physical activities that he once enjoyed. Gilles remains emotionally scarred by the traumatic events of January 20th, 1990, and his doctors warn that the beatings of January 20th, 1990, may cause him other medical problems in the future. Gilles has had to pay for his operations, physical therapy, and medications, expenses which he estimates at $400,000 out of his own pocket.
23. Fernand Gerard Laforest, a physician who was engaged in rural development work, was arrested without cause or explanation, along with a female companion, on January 20th, 1990, at about 12:30 p.m. Soldiers stripped Laforest of possessions on his person and broke into and searched his house. Laforest was interrogated for about three hours at the Office of Investigations and Anti-Gang Service. After a call from the Presidential Palace, Laforest and his companion were transported to Metropolitan Police Headquarters in Port-au-Prince.
24. At Police headquarters, Laforest was beaten and interrogated by Avril's officers and soldiers from about 8:00 p.m. until about 4:00 a.m. Soldiers battered his eyes, ears, and head with wooden bats and metal rods. Each time Laforest attempted to raise himself off the floor, soldiers threw him down, kicking his body with their heavy boots. One soldier plucked out his eyelashes and hairs from his beard. At one point, Laforest's female friend was brought into the room and beaten in his presence in order to coerce a confession from Laforest to a murder. He was forced into tight plastic handcuffs and placed in the "djak" position, his hands and feet tied together, with vulnerable parts of the body exposed. In the beatings which followed he lost consciousness several times.
25. When Laforest again refused to confess, he was confined, unconscious, to a small cell at the Investigations and Anti-Gang Service. On regaining consciousness in the afternoon of January 21st, 1990, Laforest's head was swollen and he had difficulty breathing. Despite his severe injuries, Laforest was refused food for four days and was denied medical treatment for eight days.
26. On January 21st, 1990, the national media broadcast news of Laforest's arrest, further humiliating the plaintiff. On the night of January 22nd, 1990, Laforest was *335 transferred to the prison in Petionville. Six day later, he was finally permitted to see a doctor.
27. On February 2nd, 1990, Laforest was transferred to the National Penitentiary where he was forbidden from communicating with fellow inmates. Laforest was released on February 7th, 1990, as part of the general amnesty declared by Avril. Following his release, Laforest remained in danger and was forced to go into hiding for two weeks, during which time he could not obtain medical care.
28. As a result of his ordeal, Laforest suffered broken ribs, a perforated eardrum, a detached retina, severe knee, joint, and back injuries, digestive problems, an inguinal hernia, hypertension, and severe migraines caused by a subdural hematoma, as well as various scars on his head. After his release, Laforest experienced severe nausea and severe pain in movement. For the acute migraine headaches and persistent dizziness he sought medical treatment in the United States where intercranial surgery was performed to remove fluid from the brain. His vision is permanently impaired, is sometimes distorted, and his eyes tire easily. Laforest's ear injury has resulted in painful pressure, a 40% hearing loss in his right ear, and a 15% loss in his left. He is unable to engage in any of the physical activities he once enjoyed and his ability to work has been drastically reduced. Laforest continues to suffer from severe migraines. As a result of lower back and joint pains, he finds it difficult to climb stairs. He continues to have nightmares and flashbacks of his torture and confinement. Laforest estimates his past lost income to be $200,000 and his future loss of income to be $1,000,000. In addition, he estimates his past medical expenses for treatment of his injuries arising out of the torture to be approximately $50,000, as well as substantial travel and living expenses in connection with his trips to the United States and France for treatment, totalling at least $10,000. He estimates that his future medical expenses in connection thereto will be $100,000.
29. Because of his years as a sergeant in the Presidential Guard, Etienne recognized the soldiers and officers who detained and tortured plaintiffs. On three different occasions on the day of their arrest, Etienne heard his captors state that the arrests had been ordered by defendant Avril. One of the arresting soldiers spoke with defendant Avril by walkie-talkie during the ordeal. At one point the soldier placed the device close to Etienne's ear so he could confirm for himself that the voice on the other end was that of defendant Avril.
30. Defendant Avril bears personal responsibility for a systematic pattern of egregious human rights abuses in Haiti during his military rule of September 1988 until March 1990. He also bears personal responsibility for the interrogation and torture of each of the plaintiffs in this case. All of the soldiers and officers in the Haitian military responsible for the arbitrary detention and torture of plaintiffs were employees, representatives, or agents of defendant Avril, acting under his instructions, authority, and control and acting within the scope of the authority granted by him. Many of the tormentors included members of the Presidential Guard and Avril's personal security detail.
31. All of the plaintiffs suffered arbitrary detention, torture, and cruel, inhuman or degrading treatment inflicted by soldiers acting under the direction and control of defendant Prosper Avril.
32. The arbitrary detention, torture, and other cruel, inhuman or degrading treatment of plaintiffs Brun, Gilles, and Laforest were conducted under defendant Avril's order, approval, instigation, and knowledge during a round-up of opposition political leaders on January 20th, 1990, the first day of a state of emergency declared by defendant Avril.
DAMAGES
As a result of the torture and detention, plaintiffs suffered extensive physical, psychological, and consequential damages. Both compensatory and punitive damages are recoverable for violations of international law. See, e.g., Filartiga v. Pena-Irala, 577 F. Supp. 860 (E.D.N.Y.1984). The Court awards compensatory damages for the pain and suffering, medical expenses, and lost income *336 suffered by the plaintiffs in the following amounts:
Evans Paul $2,500,000.00
Jean August Mesyeux $2,500,000.00
Marino Etienne $3,500,000.00
Gerald Emile Brun $2,500,000.00
Serge Gilles $3,000,000.00
Fernand Gerard Laforest $3,000,000.00
The Court finds that punitive damages are appropriate in this case as the acts committed by the defendant were malicious, wanton, and oppressive. An award of punitive damages must reflect the egregiousness of the defendant's conduct, the central role he played in the abuses, and the international condemnation with which these abuses are viewed. Filartiga, 577 F.Supp. at 866.
Although in assessing punitive damages, the Court must consider the defendant's financial condition, the burden is on the defendant to introduce evidence of his modest means. Zarcone v. Perry, 572 F.2d 52, 56 (2d Cir.1978). Here, the plaintiffs presented evidence showing that Avril, the former finance minister in the Duvalier government, is a person of considerable wealth. The defendant, who refused to answer interrogatories concerning his financial worth or to appear for deposition, presented no evidence to the contrary. The Court concludes that an award of punitive damages in the amount of $4,000,000.00 to each plaintiff is appropriate considering the extreme brutality of the defendant's acts, which such damages are designed to punish.
FINAL JUDGMENT is hereby entered against the defendant, in favor of the plaintiffs individually for damages as found herein, in the total amount of $41,000.000.00, for which sum execution may issue forthwith.
DONE AND ORDERED.
NOTES
[1] An order granting Plaintiffs' Motion for Default pursuant to Federal Rule of Civil Procedure 37(b) was entered by this court on March 7, 1994, in accordance with a Report and Recommendation of Magistrate Judge Peter R. Palermo, after the defendant failed repeatedly to comply with a court order requiring him to appear for deposition. The cause came before the Court on June 6, 1994 for a hearing on damages.
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744 S.W.2d 214 (1987)
Curtis ROBERTS, Appellant,
v.
CITY OF CORPUS CHRISTI, Appellee.
No. 13-86-572-CV.
Court of Appeals of Texas, Corpus Christi.
November 30, 1987.
Rehearing Denied February 4, 1988.
*215 Phillip M. Westergren, Corpus Christi, for appellant.
Karen A. L. Barratt, Corpus Christi, for appellee.
Before NYE, C.J., and DORSEY and KENNEDY, JJ.
OPINION
DORSEY, Justice.
Retired Corpus Christi Police Officer Curtis Roberts appeals the summary judgment granted to the City of Corpus Christi in his suit to collect overtime pay. The City moved for summary judgment on the sole ground that Roberts had failed to utilize the grievance procedure provided in the collective bargaining agreement between the City and the police officers' association, preventing Roberts from pursuing the claim in district court. The trial court granted the motion. We reverse and remand for trial.
The summary judgment evidence, consisting of interrogatories and Roberts' deposition, reveals that Roberts was a police officer employed by the City of Corpus Christi until his retirement in 1985. During the period that he alleges he worked overtime, he was a member of the Corpus Christi Police Officers' Association. As a member, he was subject to collective bargaining agreements between the Association and the City.
The collective bargaining agreements provide for a grievance procedure, Article VII, which consists of six successive steps to be taken by an aggrieved employee, as well as a timetable for each step. The six steps begin with informal discussions with the employee's immediate supervisor and progress through written complaints to various levels of the police department. The last step involves a written complaint to the city manager. Either the City or the employee may then voluntarily seek binding arbitration. If arbitration is not mutually chosen, an action may be brought in district court.
In his second point of error, Roberts maintains that the summary judgment is in error because there is no requirement that the grievance procedure be utilized as a prerequisite to filing suit, and because paragraph B of Article VII provides: "Association Representation. A grievance may be brought under this procedure by one or more aggrieved employees with or without an Association representative."[1] [Emphasis added.]
There is no express language in the collective bargaining agreements wherein the employee waives his right to litigate rather than progress through the contractual grievance procedure. However, an employee generally must exhaust the grievance remedies provided for in a collective bargaining agreement or other contract *216 before bringing suit. Republic Steel Corp. v. Maddox, 379 U.S. 650, 652, 85 S. Ct. 614, 616, 13 L. Ed. 2d 580 (1965); see also Thompson v. Monsanto, 559 S.W.2d 873, 874 (Tex.Civ.App.Houston [14th Dist.] 1977, no writ); Duckstein v. General Dynamics Corp., 499 S.W.2d 907 (Tex.Civ. App.Fort Worth 1973, writ ref'd n.r.e.).[2] Exhaustion of remedies is generally required because, according to the United States Supreme Court, "A rule that permitted an individual to overstep available grievance procedures would cause arbitration to lose most of its effectiveness." Maddox, 379 U.S. at 652-53, 85 S.Ct. at 616-17. Although not binding here since it interpreted federal law, Maddox is highly persuasive authority. Moreover, although the contract does not state that the grievance procedure is the exclusive remedy, "Step 6" of the procedure provides that an employee may request to have an unresolved grievance submitted to binding arbitration, or, with the police association's approval, appeal most unresolved grievances directly to a state district court. This indicates a comprehensive plan to resolve all disputes by first attempting an administrative solution before resort to the courts is had.
We also disagree with Roberts' contention that the permissive language of Article VII renders the grievance procedure non-mandatory. The language on which he relies means that an aggrieved employee has the option of bringing a grievance alone or with a police association representative. See Maddox, 379 U.S. at 658-59, 85 S.Ct. at 619-20 (use of permissive "may" does not alone indicate that grievance procedures are not mandatory, and "[a]ny doubts must be resolved against" a permissive interpretation [interpreting federal labor law]).
We overrule Roberts' second point of error.
By his first point of error, Roberts contends a material fact issue exists precluding the granting of summary judgment. He argues that he was justified in not following the grievance procedure because he feared retaliation from his supervisors if he did so.
Federal courts have found exceptions to the general requirement that an employee must exhaust his or her contractual remedies before resort to the courts is had, including: (1) a showing of irreparable harm which is either job-related or will affect the exercise of employee rights under the controlling federal statute; or (2) a showing that it would be futile to require the employee to internally exhaust remedies. See, e.g., Glover v. St. Louis-San Francisco Railway Co., 393 U.S. 324, 89 S. Ct. 548, 21 L. Ed. 2d 519 (1969); Lucas v. Warner & Swasey Co., 475 F. Supp. 1071 (E.D.Pa.1979). It is well settled, however, that none of the exceptions apply unless the employee first makes some attempt to exhaust internal remedies and is then denied meaningful access to the grievance procedure. Maddox, 379 U.S. at 652, 85 S.Ct. at 616; see also Glover, 393 U.S. at 330, 89 S.Ct. at 551.
In the instant case, step one of the City's grievance procedure calls for the complainant to meet with his immediate supervisor and "orally discuss the grievance." Roberts testified that he discussed his problem of "working nine hours to everyone else's eight" with each of several supervisors, who told him to "take it up with the commander." When he did so, the commander tore up his overtime slip with the explanation that "this [policy] came from City Hall." Construing the evidence in the light most favorable to the non-movant, Roberts, we find there is some evidence that Roberts made an unsuccessful attempt to utilize the City's internal remedies.
Robert contends, furthermore, that his fear of retaliation for progressing through step six of the procedure constituted a denial of meaningful access to the *217 procedure. We hold that a reasonable fear of retaliation which operates to deny one meaningful access to an employer's internal remedial system constitutes an exception to the doctrine of exhaustion of remedies. Roberts stated during his deposition that several fellow officers had been disciplined by transfer to less desirable jobs for complaining about various conditions at the police department. Even though he presented no evidence to show that the transfers of the other officers were in fact caused by their usage of the grievance procedure, his testimony is some evidence of a fear of retaliation. In addition, the commander's act of tearing up the overtime slip could be construed not only as a rejection of his claim for overtime pay, but also as an indication that no discussion of the problem would be entertained.
Viewing the evidence in the light most favorable to the nonmovant, we find that a fact issue is present regarding whether Roberts had a reasonable fear of retaliation by the City if he attempted to exhaust his administrative remedies resulting in a denial to him of meaningful access to the grievance procedure.
Roberts' first point of error is sustained.
The judgment of the trial court is REVERSED and the cause REMANDED for trial.
NOTES
[1] The 1983 contract further provides, "or by the Association itself in cases where the subject of the grievance is an on-going practice by the City which affects the bargaining unit as a whole."
[2] Richards v. Hughes Tool Co., 615 S.W.2d 196 (Tex. 1981) and Spainhouer v. Western Electric Co., 615 S.W.2d 190 (Tex.1981) involved employees who used some but not all the steps of the employer's grievance procedure. The issue of failure to exhaust internal remedies was not raised. The Texas Supreme Court in each case held that where there was no final settlement under union grievance proceedings, the employee was not precluded from bringing his action in court, thus distinguishing Thompson v. Monsanto.
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744 S.W.2d 709 (1988)
294 Ark. 496
ARKANSAS LOUISIANA GAS COMPANY, et al., Appellants,
v.
Glen MORRIS, et al., Appellees.
No. 87-190.
Supreme Court of Arkansas.
February 16, 1988.
Daily, West, Core, Coffman & Canfield, J.H. Evans, Fort Smith, for appellants.
Bradley Jesson, Fort Smith, and Lonnie Turner, Ozark, for appellees.
PURTLE, Justice.
The only issue on this appeal is whether the chancellor correctly granted class action certification. We affirm the chancellor's decision.
The appellees filed this action alleging that they were representative of a class comprised of all "fixed price" lessors of several hundred mineral tracts in the Cecil Field located in Franklin, Crawford, and Sebastian Counties, Arkansas. The appellees, whose "fixed price" leases were entered into during the 1940's and 1950's, want to be paid royalties on the new wells drilled in the Cecil Field based upon the "proceeds" from the sale of gas from the new wells. The original complaint contained eight or ten different theories of recovery including estoppel, waiver, and reformation. After a hearing on the petition to proceed in a class action, the court determined it was proper for the appellees to proceed as a class pursuant to A.R.C.P. Rule 23.
Rule 23, Arkansas Rules of Civil Procedure provides in part as follows:
*710 (a) ... Where the question is one of a common or general interest of many persons or where the parties are numerous, and it is impracticable to bring all before the court within a reasonable time, one or more may sue or defend for the benefit of all.
(b) ... An action may be maintained as a class action if the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.... An order under this section may be conditional and it may be altered or amended before the decision on the merits.
The requirements of subsection (a) have been met in this case. But this is only a threshold question. The class action must stand or fall on the subsection (b) holding by the court that questions of law or fact common to the members of the class predominate over any question affecting only individual members and that the class action is superior to other available methods for fair and efficient adjudication of the controversy.
Appellants contend that since the appellees' pleadings contain estoppel and reformation theories of recovery, the pleadings automatically indicate that questions of fact affecting individual members of the class predominate over questions of law and fact common to all members of the class. Appellants argue that before the appellees can prevail as a class under an estoppel theory, each member of the class would have to show his or her individual detrimental reliance. Appellants also point out that the appellees as a class cannot prove a reformation theory of recovery unless every member of the class can show a mutual mistake or a unilateral mistake accompanied by fraud and inequitable conduct.
The appellants rely primarily on the case of Ford Motor Credit Company v. Nesheim, 287 Ark. 78, 696 S.W.2d 732 (1985). In Nesheim the chancellor granted a conditional class action. We reversed that decision primarily because the defenses of mutual mistake, waiver, estoppel, and set off pled by the defendant as well as the defendant's possible counter claims would splinter the action into possibly 6,000 individual cases. The foreseeable problems of manageability and the lack of prejudice to anyone by denying certification led us to conclude that the class action would not be superior to individual remedies.
Even if appellants are correct in this respect it does not require decertification of the class action because the appellees allege several other grounds for relief and other valid grounds for relief may be developed during the trial. Additionally, at this point in this case there are no indications of management problems or prejudice to any party in allowing the case to proceed as a class action. We are able to determine from the record a common question of fact that all "fixed price" lessors in the Cecil Field have been treated identically by the defendant lessees for a number of years. The parties have for some reason ignored the royalty amount fixed in the original leases and have paid and accepted royalties of different amounts. It is apparent that the common question of law in this case is whether the defendants' course of conduct gives rise to a cause of action in favor of the "fixed price" lessors in the Cecil Field. There is no requirement that the trial court find that the facts as to each individual of a class action must in every respect be identical with that of all other members of the class. It is enough to show that a common question of law or fact predominates over other questions affecting only individual members.
If the trial court finds that the evidence presents individual questions of reliance or mistake, it could either defer those individual questions until after it disposed of the questions common to the class, or at any time prior to judgment, order an amendment of the pleadings eliminating therefrom all reference to representation of absent persons, and order entry of judgment in such form as to affect only the parties to *711 the action and those who were adequately represented.
Although our class action rule is patterned somewhat after the federal rule, there is a considerable difference in application. The federal rule leans toward allowing class actions whereas our position tends to discourage class actions if the matter can be handled by individual action. But in Cooper Communities, Inc. v. Sarver, 288 Ark. 6, 701 S.W.2d 364 (1986) and Drew v. First Federal Savings & Loan Association of Fort Smith, 271 Ark. 667, 610 S.W.2d 876 (1981), we held that in determining the appropriateness of a class action, the trial judge has broad discretion. From the record before us we are unable to say that the chancellor abused his discretion in declaring this to be a proper class action.
Affirmed.
HICKMAN and GLAZE, JJ., concur.
HAYS, J., not participating.
HICKMAN, Justice, concurring.
I agree with the result reached but write to point out that we are, in my judgment, overruling our decision in Ford Motor Credit Company v. Nesheim, 287 Ark. 78, 696 S.W.2d 732 (1985). When the Rules of Civil Procedure were adopted, we took the view that class actions would not be favored. Indeed, we looked upon them with disfavor. That view prevailed through the Ford Motor Credit case, decided in 1985.
I think the court has moderated its view regarding class actions.
GLAZE, Justice, concurring.
While I agree with the result reached by the majority, I do so because the limited record before us now reflects that, after these "fixed price" leases were executed in the 1940's and 1950's, the appellants have not treated any of the Cecil Field fixed-price lessors in an individual manner. Rather, the appellants appear to have treated those lessors the same, irrespective of the fixed rate set forth in the individual leases. At this point, at least, I cannot say the trial judge was wrong in certifying this case as a class action. As the case develops more fully, the evidence may reflect the class order should be altered or amended, which the trial judge is authorized to do under Rule 23 of the Arkansas Rules of Civil Procedure.
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744 S.W.2d 392 (1988)
23 Ark.App. 73
GENERAL TELEPHONE COMPANY OF THE SOUTHWEST, Appellant,
v.
ARKANSAS PUBLIC SERVICE COMMISSION, Appellee.
No. CA 86-212.
Court of Appeals of Arkansas, En Banc.
January 20, 1988.
Rehearing Denied February 17, 1988.
*394 William G. Mundy, William H. Ballard, Irving, Tex., Kent Foster, Michael O'Malley, Hermann Ivester, Little Rock, for appellant.
Art Stuenkel, Gilbert L. Glover, Little Rock, for appellee.
CRACRAFT, Judge.
This case was commenced by General Telephone Company of the Southwest in May of 1985 before the Arkansas Public Service Commission seeking $4,600,000.00 to $6,410,615.00 in additional revenues, which would increase basic local rates by 39% to 56%. The Company requested that the appellee authorize rates sufficient to achieve a return on equity of 16.25% and an overall rate of return on rate base of 11.37%. In March of 1986, following hearings on the merits, the appellee by its Order No. 10 authorized appellant to collect $809,001.00 of the requested additional revenues and allowed a return on equity of 12.13% with a return on rate base of 8.78%. One month later, the appellee's staff moved for rehearing on certain issues and, after rehearing, the appellee entered Order No. 18 on October 28, 1986, and revised Order No. 10 downward to reflect a revenue deficiency of $159,165.00.
The original award of $809,001.00 had been appealed to this court and, after the modification in October, 1986, the issues involved in rehearing were appealed. Because the record was voluminous and related to both the original orders and those orders which resulted from rehearing, the second appeal was consolidated with the first, and the entire case is now before this court.
The issues raised by appellant on appeal are as follows:
1. Without substantial evidence in the record, and by Orders No. 10 and 11, the Arkansas Public Service Commission arbitrarily and capriciously and without notice used the modified balance sheet approach to find the cash working capital component of rate base and a cost free component of capital structure, resulting in a confiscation of property and return on investment.
2. The overall rate of return of 8.78% and the return on equity of 12.13% constitute the unlawful taking and confiscation of property, are not supported by substantial evidence, and double leverage as applied fails to take into account financial risk.
3. The finding of Order No. 18 that the third quarter 1985 Arkansas intralata toll pool rate of return of 11.3889% was appropriate for General Telephone Company of the Southwest's toll revenue requirement is not supported by substantial evidence and the method by which the 11.3889% was calculated is contrary to established ratemaking principles; and has the effect of overstating toll revenues for the test period.
4. The Arkansas Public Service Commission by Order No. 9 arbitrarily and capriciously overruled General Telephone Company of the Southwest's motion to extend the final order deadline, and denied General Telephone Company of the Southwest the opportunity to present the latest and best toll pool results occurring within the adjusted test year.
5. The accounting adjustment finding contained in Order No. 18 as appropriate for cost savings projects arbitrarily and capriciously included adjustments taking *395 place, if at all, after the close of the adjusted test year; and has the effect of understating reasonable and necessary expenses for the test period.
6. The Arkansas Public Service Commission arbitrarily and capriciously granted a rehearing to the staff of the Arkansas Public Service Commission by Order No. 13 because the staff is not a statutory or procedural party who can petition for rehearing; and arbitrarily and capriciously overruled General Telephone Company of the Southwest's motion to dismiss the rehearing by Order No. 15.
We find no error and affirm the orders of the appellee.
Our standard of review of appeals from the Public Service Commission is limited by the provisions of Ark.Stat.Ann. Section 73-229.1 (Supp.1985), which defines our scope of review as a determination of whether (1) the Commission's findings of fact are supported by substantial evidence; (2) the Commission has regularly pursued its authority; and, (3) the order under review violated any right of appellant under the laws or Constitution of the State of Arkansas or the United States. In reviewing such cases, we must give due regard to the expertise of the Commission, which derives its ratemaking authority from the general assembly.
Although we do not judge the wisdom of the decisions of the Commission, our review is not a mere formality but seeks to determine whether the findings are properly supported and that there has been no abuse of discretion. We do not advise the Commission how to discharge its function of arriving at findings of fact or the exercise of its discretion. The question of reasonableness of the action of the Commission relates only to its findings of fact and whether it has acted arbitrarily. Southwestern Bell Telephone Co. v. Arkansas Public Service Commission, 18 Ark.App. 260, 715 S.W.2d 451 (1986).
The Commission has broad discretion in choosing its approach to rate regulation and is free within its statutory authority to make the pragmatic adjustments which may be called for under particular circumstances. The appellate court is generally not concerned with the methodology used by the Commission in reaching its result, so long as its findings are based on substantial evidence and are not arbitrary. In these cases, it is the result reached, not the method employed, which controls; and judicial inquiry is concluded if the decision is supported by substantial evidence and the total effect of the order is not unjust, unreasonable, unlawful or discriminatory. Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 64 S. Ct. 281, 88 L. Ed. 333 (1944); General Telephone Co. v. Arkansas Public Service Commission, 272 Ark. 440, 616 S.W.2d 1 (1981); Southwestern Bell Telephone, supra. It is not the theory, but the impact of the rate order that counts in determining whether rates are just, reasonable and nondiscriminatory, and if the total effect of the rate order cannot be said to be unjust, unreasonable, or discriminatory, judicial inquiry is concluded and infirmities in the method employed are deemed unimportant. Southwestern Bell Telephone Co., supra; Walnut Hill Telephone Co. v. Arkansas Public Service Commission, 17 Ark.App. 259, 709 S.W.2d 96 (1986). Guided by these observations as to our standard of review, we address the issues presented by appellant on appeal.
Appellant first questions the validity of a methodology known as the "modified balance sheet approach" to determine appellant's working capital requirements. Appellee's staff witness Rodney Merritt described this methodology as follows:
The basic theory behind [the Modified Balance Sheet] approach is simply that assets which are necessary to provide utility service, which are not considered elsewhere in rate base, and which are not interest bearing, should be included in rate base, thereby allowing the Company to earn a return on these assets. Additionally, current, accrued, and other liabilities are considered to be a source of funds used to finance the assets of the Company and are placed in the capital structure at their respective costs.
*396 (R. 497). Working capital is the cash and other non-plant investment in assets a utility must maintain in order to meet its current financial obligations and provide utility service to its customers in an economical and efficient manner. Since at least part of working capital represents a contribution from investors, an amount is generally included in the calculation of a utility's rate base upon which a return is allowed.
The appellee has in previous rate cases utilized what is known as a "lead/lag study" for determination of the working capital requirement of a utility. Appellant described a lead/lag study in its brief at page 5 as follows:
A lead/lag study measures the cash working capital requirement as net lag days between the time utility service is rendered to a customer and the time customers pay for that service reduced by the offsetting leads between the time goods and services are rendered to the utility and the time the utility pays for goods and services. The investor in the utility supplies the capital for the net lag from the time costs are incurred until payment is received.
A lead/lag study generally will result in a ratio of lead or lag days to the total number of days in a year, and that ratio is then applied to various components on the company's income statement to yield the working capital requirement. As is pointed out in the briefs, the appellee's own filing requirements require a utility to file a rate request to calculate leads and lags. The modified balance sheet approach (MBSA) was adopted as a check on lead/lag studies in a previous Commission docket[1], wherein the appellee directed appellee's staff to check the results of any lead/lag studies by comparison with a calculation accomplished through the modified balance sheet approach. According to staff witness Merritt, a lead/lag study is the generally accepted measure for determining working capital. He testified:
Staff accepts a properly prepared lead/lag study and proves the results of that study by comparing it to the results of the modified balance sheet approach. In the absence of a properly prepared lead/lag study, Staff will calculate the working capital requirement using the modified balance sheet approach.
(R. 496-97).
Merritt testified that the appellee's staff rejected appellant's lead/lag study here because it contained deficiencies which resulted in calculations which were unverifiable or errors which were uncorrectable. While Merritt testified that, although some alleged deficiencies in the lead/lag study could be corrected by appellee's staff, certain problems could not be corrected and cited as an example the inclusion of expenses in the study which were not those of the test year utilized in the rate case. Merritt testified that this deficiency was serious because:
The expense inputs to the study must be functionalized and properly measured to arrive at individual lead days. Those individual lead days and expenses are combined to determine composite lead days and dollar days for functional categories.
The $100,000,000 discrepancy [an error found by Staff] impacts at least four (4) functional categories and the lead days for those categories. Correcting errors of this magnitude would involve a great deal of analytical work on individual expense inputs and recalculation of lead days and dollar days.
(R. 495-96).
Because of the deficiencies Merritt testified he found with appellant's lead/lag study, he proceeded to determine appellant's working capital requirement by the use of the modified balance sheet approach. Merritt testified in some detail as to which asset accounts were included or excluded in rate base and articulated in detail his reasons for those actions. He also explained why current, accrued, and other liabilities were placed in appellant's capital structure. Merritt explained his treatment of liabilities as follows:
*397 The rationale for placing liabilities in the capital structure is simply that all liabilities are a source of funds used to finance the assets of a company. Moreover, the distinction cannot be made as to which asset each liability is funding, i.e., liabilities are fungible. This has long been recognized for the largest liability on the balance sheet, long-term debt. If this were not the case, one could identify specific debt funding non-utility investments and simply exclude the interest expense associated with that debt and accordingly, include in the cost of service the interest expense associated with debt financing utility property only. However, since that distinction cannot be made, long-term debt is placed in the capital structure and the weighted cost applied to the rate base.
If we are to determine the total cost of funds to a company, current, accrued, and other liabilities cannot be ignored, nor can they be netted against working capital assets and placed in the rate base. To do so would violate the concept of fungibility for these liabilities while accepting it for others. This would be both inconsistent and theoretically incorrect.
(R. 501-02). (Emphasis in original). Essentially, then, the modified balance sheet approach proceeds on the notion that all liabilities are representative of funding sources and that these funds cannot be traced to any particular rate base asset; therefore, all funding sources are accounted for on the liability side of the balance sheet at their respective costs.
In our view, near the heart of appellant's and the appellee's disagreement is the contention that liabilities are "fungible." The parties do not quarrel that at least one funding source is "fungible": long-term debt. Appellant claims, however, that the other funding sources can be traced to particular assets, whereas the appellee contends that it is inconsistent to treat one source of funding as fungible and other sources as not fungible.
Arkansas Statutes Annotated Section 73-237 (Repl.1979) puts the burden of justifying any proposed change in rates upon appellant. There was evidence that appellant's lead/lag study contained errors and problems which could cause reasonable persons to doubt its reliability. For example, an auditor found a $100,000,000 expense error in the original lead/lag study. Although corrections were apparently attempted, the appellee's staff was unable to verify the corrections or reconcile the results to the modified balance sheet approach. While appellant argues that an error of $100,000,000 was relatively insignificant because the net revenue effect was under $30,000, we are not so much concerned with the relative magnitude of any error as we are with the appellee's finding that the lead/lag study was not reliable. Whether the lead/lag study should be accepted is a matter for the trier of fact, and, on the record before us, we cannot say the appellee's rejection thereof is not based on substantial evidence.
In this case, the appellee did not accept appellant's evidence as to working capital based on a lead/lag study but, instead, accepted the appellee's staff's evidence as to the working capital requirement resulting from calculations utilizing the modified balance sheet approach. A working capital allowance represents only a portion of the utility's rate base upon which it is allowed to earn a return. It is apparent that no particular methodology is precise and that a determination of working capital is in many respects an exercise of discretion as to what particular method yields the most fair and equitable result in each case. Without question, the particular amount of working capital allowance, along with the particular methodology used to derive that amount, is a matter of educated opinion, expertise, and informed judgment of the Commission and not one of mathematically demonstrable fact.
As the trier of fact in rate cases, it is within the province of the appellee to decide on the credibility of the witnesses, the reliability of their opinions, and the weight to be given their evidence. The appellee is never compelled to accept the opinion of any witness on any issue before it. The appellee is not bound to accept one *398 or the other of any conflicting views, opinions, or methodologies. Arkansas Public Service Commission v. Continental Telephone Co., 262 Ark. 821, 561 S.W.2d 645 (1978).
The evidence also sharply conflicted as to whether "return on return" is allowable in calculating rates. The parties seem to agree that, during the time the utility renders service to the customer until the time the company receives payment from the customer for that service, the utility theoretically advances to the customer some amount of money, which is includable as working capital in the rate base. Whether the company advances the "cost" as opposed to the "price" of the service to the customer is the point at which the witnesses diverge. Appellant contends that the utility advances both the expenses incurred in connection with rendition of utility service along with the return (or profit) the utility will earn as a result of rendering service. Therefore, according to appellant, appellant advances the "price" of the service to the customer. The opposing view proceeds from the posture that the ratepayer pays the return or profit and that the only advance by appellant is the cost it actually incurs in providing the service. The appellee found and concluded that the utility only advances the "cost" of service and not the "price" (i.e., cost plus profit or return) to the customer and that allowing the application of net lag days to revenues is improper because it allows appellant to earn a return on top of a return. The appellee argues that acceptance of appellant's position on this issue results in a portion of profit being placed in rate base and another profit allowed thereon, which it contends overcompensates the utility at the expense of the ratepayer. From our review of the record, we cannot conclude that the finding of the Commission is not supported by substantial evidence.
The appellant's argument that use of the modified balance sheet approach to determine cash working capital was contrary to the appellee's Rules of Practice and Procedure is without merit. As stated in Rule 9.01 of the Rules, the purpose of the appellee's filing requirements is to define the information desired by the appellee from a utility when a rate application is filed and not to establish particular ratemaking principles. The appellee's rules as to filing requirements merely provide a starting point from which the appellee may proceed to discharge its obligation to investigate the reasonableness of any rate application. We cannot conclude that the use of certain forms and the requirement of particular data with a rate application establishes intractably the methodology or means by which the appellee is to pursue the exercise of the authority delegated it by the legislature.
The appellant's argument that the modified balance sheet approach was utilized in its rate case without sufficient notice is likewise without merit. The record reflects that the appellee's staff used the modified balance sheet approach as a check on appellant's lead/lag study and, when irreconcilable discrepancies resulted, sought to recalculate appellant's working capital allowance. The record reflects that the appellee's staff's use of the modified balance sheet approach and the staff's problems with appellant's lead/lag study were manifested more than a month prior to hearing when the appellee's staff filed its testimony. Appellant had ample opportunity to dispute the appellee's staff's position and in fact cross-examined the staff extensively on the modified balance sheet approach.
The appellee adopted the appellee's staff's recommendation as to appellant's rate of return. Appellant sought a return on equity of 16.25% and an overall rate of return of 11.37%. The staff recommended a return on equity of 12.13% and an overall rate of return on rate base of 8.78%, using what is known as "double leverage." Appellant claims that these figures are not supported by substantial evidence, primarily because they do not take into account appellant's financial risk.
Appellant is a wholly-owned subsidiary of General Telephone and Electric (GTE), a fact which makes calculation of *399 the required return on equity for the subsidiary more difficult because there exists no public market for its stock. A commonly-used and widely recognized principle known as "double leverage" is used in situations such as this to determine the cost of a subsidiary corporation's equity. This theory holds that the cost of capital for a parent corporation equals the cost of equity for its subsidiary. Appellee's staff witness Kilburn and Attorney General witness Wilson used the double leverage approach, and the appellee argues that, without recognizing double leverage, appellant's equity return would be 19.8%.
The first step in using double leverage is to calculate the parent corporation's cost of capital. Staff witness Kilburn used the discounted cash flow method (DCF)[2] to obtain GTE's cost of equity. Kilburn followed tried and true methods of applying the DCF method, utilizing market-specific information as to GTE within the DCF formula to determine GTE's cost of equity. Kilburn also used a comparative sample of nine major independent telephone companies and again estimated the proper return on equity according to the DCF model. Kilburn found the cost of equity for GTE (the parent corporation) to fall within the range of 13.10% to 14.14%, with a midpoint of 13.62%. To this was added a flotation cost of .03%[3] from which she arrived at a cost of equity for GTE of 13.65%. In determining the weighted cost of capital for GTE, Kilburn arrived at 12.13%, which cost was imputed to appellant as its cost of capital under the double leverage theory.
The concept of double leverage has been recognized by the Arkansas Supreme Court on several occasions. General Telephone Co. v. Arkansas Public Service Commission, 272 Ark. 440, 616 S.W.2d 1 (1981); Arkansas Public Service Commission v. Lincoln-Desha Telephone Co., 271 Ark. 346, 609 S.W.2d 20 (1980); Southwestern Bell Telephone Co. v. Arkansas Public Service Commission, 267 Ark. 550, 593 S.W.2d 434 (1980). In Arkansas Public Service Commission v. Lincoln-Desha Telephone Co., supra, the Arkansas Supreme Court said:
Corporations are usually financed partly with debt capital and partly with equity capital. "Leverage" is a financial term used to describe the situation in which a corporation is funded by debt in addition to the equity supplied by the stockholders. A corporation is said to be "leveraged" to the extent that debt is included in its capital structure. The leverage arises from the advantage gained by equity holders through the rental of capital at a lower rate than the return they receive on their equity. Thus, we see that by use of leverage the equity owners are able to earn an over-all rate of return in excess of the cost of capital. The added earnings above the cost inure to the benefit of the stockholders as they then receive a higher rate of return than if the institution had been financed entirely by equity.
271 Ark. at 348-49, 609 S.W.2d at 22. In that same case, our supreme court stated that "double leverage is merely an extension of the concept of leverage to a parent-subsidiary corporate relationship." Id. at 348, 609 S.W.2d at 22, citing New England Telephone and Telegraph Co. v. Public Utilities Commission, 390 A.2d 8 (Me. 1978).
As earlier noted, appellant claims that the use of double leverage does not properly account for the financial risk inherent in appellant. Risk is not particularly quantifiable, but rather is a matter of discretion on the part of the appellee in the application of its expertise. The evaluation of financial risk and what constitutes a "fair return" is *400 a judgment call involving a good bit of educated speculation at best, in light of the evidence from expert witnesses. While appellant makes some appealing arguments relative to the DCF calculations made by Staff witness Kilburn, we cannot say that the appellee's finding that the market place accounts for all risk at the parent corporation level is not supported by substantial evidence. Simply put, the appellee chose the testimony of one witness over that of another as to the rate of return in this case.
Before proceeding with the remaining issues, we address the last issue raised by appellant in its supplemental brief, which pertains to whether the appellee's staff may properly seek rehearing before the appellee. Arkansas Statutes Annotated Section 73-229.1 (Supp.1985) provides that "[a]ny party to a proceeding before the Commission aggrieved by an order issued by the Commission may apply for a rehearing within thirty (30) days after the service of such order." Appellant argues that the appellee erred in granting a rehearing to the appellee's staff because, under Section 73-229.1, the appellee's staff is not and cannot be an "aggrieved" party. The applicable statutes do not spell out whether the appellee's staff may be treated as a party for purposes of such rehearings. The appellee, however, through its Rules of Practice and Procedure, has required that the staff be bound by and conform to the appellee's rules as a party in proceedings before the appellee.
An agency's or department's interpretation of its own rules and regulations is not binding upon the courts but is nevertheless highly persuasive; the agency's interpretation of its own rules is controlling unless plainly erroneous or inconsistent. Boone County v. Apex of Arkansas, Inc., 288 Ark. 152, 155, 702 S.W.2d 795 (1986); Clinton v. Rehab Hospital Services Corp., 285 Ark. 393, 688 S.W.2d 272 (1985). In addition, appellant did not question the status of the appellee's staff as a party to the proceedings until after an order granting the staff's petition for rehearing had been entered.
Appellant is a member of what is known as the Arkansas IntraLata Toll Pool (AITP). The toll pool serves as a clearing house for revenues generated in the form of charges for toll telephone service, which is primarily long distance. The pool divides up revenues it collects periodically among the various telephone companies which are its members, including an amount of money representative of a rate of return earned by the pool. Depending upon the rate of return the toll pool earns, the member companies receive a share of the pool's profits which come into play "above the line" in the revenue requirement calculation. The intralata toll pool rate of return is important because it results in the inclusion of a particular dollar figure in appellant's revenue requirement which can serve to offset the revenue requirement which must be recovered from ratepayers in their basic rates. The lower the toll pool rate of return, the more revenues that must be recouped from basic rates; the higher the toll pool rate of return, the lower the amounts that must be recovered in basic rates.
In its original order, the appellee adopted an intralata toll pool rate of return (10.08%) it had established in a previous docket as the proper target toll pool rate of return for appellant, which results in revenues of $11,503,710.00 being imputed into appellant's revenue requirement calculation. Appellant had originally requested a 5.21% toll pool rate of return and subsequently amended that figure upward to 9.5%. Upon rehearing, the realized toll pool rate of return for the third quarter of 1985 was introduced, which showed that the actual rate of return for the third three-month period of 1985 was 11.3889%. After rehearing, that figure was adopted, and the original order was modified to reflect the 11.3889% figure instead of 10.08% as the estimated intralata toll pool revenue requirement to be applied in calculating rates for appellant as a result of their rate application.
Appellant does not argue here about 10.08% being an inappropriate target rate of return. Appellant complains, however, that the appellee's adoption of a higher *401 target rate of return upon rehearing, based upon the actual performance of the toll pool during the third quarter of 1985 is not supported by substantial evidence. The effect of the appellee's revision of the target toll pool rate of return from 10.08% to 11.3889% results in more money being imputed from the toll pool to appellant's revenue requirement, thereby lowering the revenue requirement which must be recovered from ratepayers in the form of basic rates. Since witnesses for both sides below testified that actual results for the third quarter of 1985 would be the only rate of return data which would not be estimates and would be desirable from an accuracy standpoint, we cannot say the appellee's adoption of third quarter results is arbitrary or not supported by substantial evidence.
In this case, appellant sought an extension of the statutory deadline in order to allow it to gather fourth quarter 1985 intralata toll pool rate of return information. There is a ten-month statutory deadline established by the General Assembly within which rate cases must be decided. Both parties argue that resolution of the issue as to whether the appellee should have extended the statutory deadline to allow introduction of fourth quarter 1985 toll pool results would turn on an inquiry as to whether the appellee abused its discretion in extending the statutory deadline or in refusing to do so.
Arkansas Statutes Annotated Section 73-217 (Supp.1985) provides that the appellee must act within ten months of the filing of the rate application. The legislature enacted this limitation to reduce regulatory delay and to induce some certainty into the ratemaking process. We do not agree, however, that the statutory deadlines provided in Ark.Stat.Ann. Section 73-217 may be waived. In Southwestern Bell Telephone Co. v. Arkansas Public Service Commission, 267 Ark. 550, 559, 593 S.W.2d 434, 440, (1980), our supreme court said:
The time limit was imposed by the General Assembly. It must be remembered that the PSC is a creature of the legislature and that, in rate-making, it is performing a legislative function, which has been delegated to it. City of Ft. Smith v. Department of Public Utilities, 195 Ark. 513, 113 S.W.2d 100; Arkansas Power & Light Co. v. Arkansas Public Service Com'n., 226 Ark. 225, 289 S.W.2d 668. The commission was created to act for the General Assembly and it has the same power that body would have when acting within the powers conferred upon it by legislative act. Department of Public Utilities v. Arkansas Louisiana Gas Co., 200 Ark. 983, 142 S.W.2d 213. The General Assembly certainly has not surrendered the power to fix time limitations on the actions of its own agency.
We hold this language applicable in this case. The Arkansas General Assembly has not surrendered to the appellee the power to fix time limitations in rate cases, and, consequently, the time limitation provisions of Section 73-217 may not be waived or disregarded by any party or by the appellee itself. We cannot conclude that the action of the Commission was arbitrary.
Finally, appellant contends that giving effect to certain cost-saving projects[4] was improper in light of Section 73-217.5 because no savings would be realized from those projects during the pro forma year, i.e., the twelve months following the close of the rate case test year. Arkansas Statutes Annotated Section 73-217.5 (Supp.1985) reads in full as follows:
For the purpose of justifying the reasonableness of the proposed new rate schedule or rate schedules, a utility may utilize either a historical test period of 12 consecutive calendar months, or a forward looking test period of 12 consecutive calendar months consisting of 6 months of projected data which together shall be the period or test year upon which fair and reasonable rates shall be determined by the Commission. Provided, *402 however, that the Commission shall also permit adjustments to any test year so utilized to reflect the effects on an annualized basis of any and all changes in circumstances which may occur within 12 months after the end of such test year where such changes are both reasonably known and measurable.
The test year ended December 31, 1984, and the record shows (and the appellee found) that several of appellant's witnesses testified that the savings projects would be implemented during the pro forma year. The appellee's staff, using data supplied by appellant, annualized the savings to account for those which could be realized from the projects during the pro forma year. Appellant contends that, even though the projects may have been implemented during the pro forma year, savings realized therefrom are not reasonably known and measurable. We cannot quarrel with the appellee's finding of fact based upon evidence presented by appellee's staff which was based upon data supplied by appellant. We cannot conclude that it was arbitrary or not supported by substantial evidence.
The decision of the appellee is affirmed in all respects.
NOTES
[1] Re Arkansas Power & Light Co., 66 PUR 4th 167 (1985).
[2] We described this method in Southwestern Bell Telephone Company v. Arkansas Public Service Commission, 18 Ark.App. 260, 267, 715 S.W.2d 451 (1986) as follows: "[t]his mathematical formula takes into account dividends per share, market price per share, and the expected growth rate in dividends per share. The result is a percentage figure representing the required return on equity for the particular utility under consideration. The DCF formula is designed to derive an allowable return on equity based upon an estimate of investors' expectations.
[3] "Flotation cost" is an additive which attempts to account for the costs a company incurs in handling its equity and matters related thereto.
[4] SORCES (Service Order Record and Computer Entry System), 4-TEL (Line Routing and Testing), and CAROT (Centralized Automatic Report on Trunks).
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333 Md. 411 (1994)
635 A.2d 967
DOUGLAS W. VERZI T/A MADONNA AUTO SALES AND SERVICES, INC.
v.
BALTIMORE COUNTY, MARYLAND.
No. 47, September Term, 1993.
Court of Appeals of Maryland.
January 17, 1994.
David E. Carey and Augustus F. Brown, on brief, Bel Air, for appellant.
Nancy C. West, Asst. Co. Atty. (Stanley J. Schapiro, Acting Co. Atty., on brief), Towson, for appellee.
Argued before MURPHY, C.J. ELDRIDGE, RODOWSKY, McAULIFFE[*], CHASANOW, KARWACKI and ROBERT M. BELL, JJ.
KARWACKI, Judge.
We are asked in this case to decide whether Baltimore County's "location requirement" for towing operators, i.e., a requirement that a licensed tow operator have a place of business within the county before that operator may be called by police to tow vehicles which have been disabled by accidents, violates either Article 24 of the Maryland Declaration of Rights or the federal constitution.
I.
In order to protect the general welfare and public interests of the community, prevent fraud, and eliminate unnecessary traffic problems and delays, Baltimore County has declared that the towing of vehicles which are disabled in the County by collision or other accident is subject to the supervision and administrative control of the County. The regulations affecting county towing businesses are found in Title 24, Article VI, §§ 24-221 to 24-235 of the Baltimore County Code (1988, Supp. 1993) ("the Code").[1]
According to the regulatory scheme, prospective Baltimore County towing operators must apply for a license with the Baltimore County Department of Permits and Licenses ("DPL") in order to tow disabled vehicles from the scene of an accident occurring in Baltimore County. § 24-226. The Department of Permits and Licenses then forwards the application to the Baltimore County Police Department ("BCPD") in order to ensure that the applicant meets various requirements such as adequate facilities, proper registration and maintenance of towing vehicles, etc. § 24-228. The license approval process is governed by § 24-229, which provides in pertinent part:
"(a) New license towers shall be approved by the department of permits and licenses based on the need for additional service. If the need does not exist, the application will not be approved. The transfer of an existing license shall be treated in the same manner as a new license, and any such transfer shall be subject to all provisions applicable thereto."
Section 24-230 governs the procedure by which towing operators are dispatched. That section provides in part:
"The chief of police shall retain a current list of all duly licensed towing operators. Whenever the services of a towing vehicle shall be required and request is made to the police department for the providing of such services, the police department shall call the licensed towing operator located in the county whose place of business is closest to the scene of the accident, except when an owner requests a specific licensed tow company; provided that such tow company can respond within a reasonable time."
In order to simplify the dispatching procedure, the BCPD has divided the county into separate geographical tow areas. Each licensed tow operator is assigned a tow area and, in the event of an accident, is called to tow vehicles in its area only, unless a motorist requests a specific operator serving another tow area. No provision is made for the towing of vehicles disabled by other than accident.
Douglas Verzi is the owner and operator of Madonna Auto Sales and Services, Inc.. The business, which includes towing services, is located in Harford County, about two and one-half miles from the Baltimore County line. Verzi's February, 1987 application for a tower's license was denied in November, 1987. Verzi appealed the denial to the Baltimore County Board of Appeals ("the Board") pursuant to § 24-225.[2] The Board determined that there was an established need for another tower in the section of Baltimore County that Verzi wished to serve, but it held that § 17-64 (currently § 24-230) prohibited the issuance of a towing license to an operator not located in Baltimore County. Verzi sought judicial review of the Board's decision in the Circuit Court for Baltimore County. That court reversed the Board's decision, citing the Board's finding of a demonstrated need for a tower and holding that the eligibility for a towing license was governed by § 17-63 (currently § 24-229), a section which contains no location restrictions.
Pursuant to the court's order, the County granted Verzi a towing license. The BCPD, however, declined to assign him a towing area, relying on § 24-230 which requires the police to call "the licensed towing operator located in the county whose place of business is closest to the scene of an accident, except when an owner requests a specific licensed tow operator...." (Emphasis added). As a result of the BCPD's failure to assign him a tow area, Verzi has not been called to tow vehicles disabled by accident except on two occasions in which motorists specifically requested his services.
Verzi filed suit in the Circuit Court for Baltimore County, seeking a declaratory judgment that the location requirement in § 24-230 of the Baltimore County Code is unconstitutional and requesting a writ of mandamus ordering the County to assign Verzi a tow area and to call him in the event that a tow operator is needed in his tow area. That court granted summary judgment for the County, declaring the location requirement in § 24-230 constitutional. Verzi noted an appeal to the Court of Special Appeals, and this Court issued a Writ of Certiorari prior to consideration by the intermediate appellate court. 331 Md. 178, 626 A.2d 967. We shall reverse the judgment of the Circuit Court for Baltimore County.
II.
Verzi asserts that the location requirement found in § 24-230 of the Baltimore County Code violates the equal protection guarantees of the Fourteenth Amendment to the United States Constitution and Article 24 of the Maryland Declaration of Rights. Section I of the Fourteenth Amendment provides in part:
"No State shall ... deny to any person within its jurisdiction the equal protection of the laws."
Article 24 of the Maryland Declaration of Rights states:
"That no man ought to be taken or imprisoned or disseized of his freehold, liberties or privileges, our outlawed, or exiled, or, in any manner, destroyed, or deprived of his life, liberty or property, but by the judgment of his peers, or by the Law of the land."
The doctrine of equal protection of the laws is an integral element of our theory of government. Justice Jackson, in an oft-quoted passage, succinctly summed up both the doctrine and its purpose:
"Invocation of the equal protection clause ... does not disable any governmental body from dealing with the subject at hand. It merely means that the prohibition or regulation must have a broader impact. I regard it as a salutary doctrine that cities, states and the Federal Government must exercise their powers so as not to discriminate between their inhabitants except upon some reasonable differentiation fairly related to the object of regulation. This equality is not merely abstract justice. The framers of the Constitution knew, and we should not forget today, that there is no more effective practical guaranty against arbitrary and unreasonable government than to require that the principles of law which officials would impose upon a minority must be imposed generally. Conversely, nothing opens the door to arbitrary action so effectively as to allow those officials to pick and choose only a few to whom they will apply legislation and thus to escape the political retribution that might be visited upon them if larger numbers were affected. Courts can take no better measure to assure that laws will be just than to require that laws be equal in operation."
Railway Express Agency v. New York, 336 U.S. 106, 112-13, 69 S. Ct. 463, 466-67, 93 L. Ed. 533, 540 (1949) (Jackson, J., concurring). Although the Maryland Constitution does not contain an express guarantee of equal protection of the laws, it is well established that Article 24 embodies the same equal protection concepts found in the Fourteenth Amendment to the U.S. Constitution. See, e.g., Kirsch v. Prince George's County, 331 Md. 89, 96, 626 A.2d 372, 375, cert. denied, ___ U.S. ___, 114 S. Ct. 600, 126 L. Ed. 2d 565 (1993); Murphy v. Edmonds, 325 Md. 342, 353, 601 A.2d 102, 107 (1992); Hargrove v. Board of Trustees, 310 Md. 406, 416, 529 A.2d 1372, 1377 (1987), cert. denied, 484 U.S. 1027, 108 S. Ct. 753, 98 L. Ed. 2d 766 (1988); State v. Wyand, 304 Md. 721, 726, 501 A.2d 43, 46 (1985), cert. denied, 475 U.S. 1095, 106 S. Ct. 1492, 89 L. Ed. 2d 893 (1986); Hornbeck v. Somerset County Bd. of Educ., 295 Md. 597, 640, 458 A.2d 758, 780-81 (1983); Attorney General v. Waldron, 289 Md. 683, 704-05, 426 A.2d 929, 940-41 (1981); Bruce v. Director, Chesapeake Bay Affairs, 261 Md. 585, 600, 276 A.2d 200, 208 (1971).
We have consistently recognized that the federal Equal Protection Clause and the Article 24 guarantee of equal protection of the laws are complementary but independent, and "a discriminatory classification may be an unconstitutional breach of the equal protection doctrine under the authority of Article 24 alone." Attorney General v. Waldron, supra, 289 Md. at 715, 426 A.2d at 947. See also Kirsch, supra, 331 Md. at 97, 626 A.2d at 376; Hornbeck, supra, 295 Md. at 640, 458 A.2d at 781. At the same time, however, the two provisions are similar enough that we will consider Supreme Court decisions interpreting the federal clause as persuasive, but not controlling, authority for our interpretation of Article 24.
Recently, we reviewed the traditional standards under which equal protection claims have been judged. In Kirsch, supra, we relied on Judge Eldridge's comprehensive review of equal protection analysis from Murphy v. Edmonds, supra.
"In most instances when a governmental classification is attacked on equal protection grounds, the classification is reviewed under the so-called `rational basis' test. Generally under that test, a court `will not overturn' the classification unless the varying treatment of different groups or persons is so unrelated to the achievement of any combination of legitimate purposes that [the court] can only conclude that the [governmental] actions were irrational.' A statutory classification reviewed under the rational basis standard enjoys a strong presumption of constitutionality and will be invalidated only if the classification is clearly arbitrary.
"Where, however, a statutory classification burdens a `suspect class' or impinges upon a `fundamental right,' the classification is subject to strict scrutiny. Such statutes will be upheld under the equal protection guarantees only if it is shown that `they are suitably tailored to serve a compelling state interest.'
"Finally, there are classifications which have been subjected to a higher degree of scrutiny than the traditional rational basis test, but which have not been deemed to involve suspect classes or fundamental rights and thus have not been subjected to the strict scrutiny test. Included among these have been classifications based on gender, discrimination against illegal aliens with regard to a free public education, and a classification under which certain persons were denied the right to practice for compensation the profession for which they were qualified and licensed."
Kirsch v. Prince George's County, 331 Md. at 98, 626 A.2d at 376 (quoting Murphy v. Edmonds, 325 Md. at 355-357, 601 A.2d at 108-109 (citations omitted)).
We also noted in Kirsch that the Supreme Court has on occasion varied from the strict, three-level analysis of equal protection claims. In recent years, the Court has applied rational basis scrutiny to several statutes and found them lacking. See discussion in Kirsch, supra, 331 Md. at 98-104, 626 A.2d at 376-379 (citing City of Cleburne v. Cleburne Living Center, 473 U.S. 432, 105 S. Ct. 3249, 87 L. Ed. 2d 313 (1985) (invalidating a city ordinance which required certain group homes, including homes occupied by mentally retarded citizens, to obtain a special use permit); Hooper v. Bernalillo County Assessor, 472 U.S. 612, 105 S. Ct. 2862, 86 L. Ed. 2d 487 (1985) (striking down a statute which provided a state tax exemption for Vietnam veterans who resided in the state before a certain date); Williams v. Vermont, 472 U.S. 14, 105 S. Ct. 2465, 86 L. Ed. 2d 11 (1985) (invalidating automobile registration tax scheme which exempted cars purchased and on which sales tax was paid in Vermont); Metropolitan Life Ins. Co. v. Ward, 470 U.S. 869, 105 S. Ct. 1676, 84 L. Ed. 2d 751 (1985) (striking down gross premiums tax scheme which favored domestic insurance companies over out-of-state firms); Zobel v. Williams, 457 U.S. 55, 102 S. Ct. 2309, 72 L. Ed. 2d 672 (1982) (invalidating Alaska's dividend distribution scheme that based amount of dividend on length of Alaskan residency)).
We, too, have not hesitated to carefully examine a statute and declare it invalid if we cannot discern a rational basis for its enactment. "The vitality of this State's equal protection doctrine is demonstrated by our decisions which, although applying the deferential standard embodied in the rational basis test, have nevertheless invalidated many legislative classifications which impinged on privileges cherished by our citizens." Attorney General v. Waldron, supra, 289 Md. at 715, 426 A.2d at 947. Although we have traditionally accorded legislative determinations a strong presumption of constitutionality, Murphy v. Edmonds, 325 Md. at 356, 601 A.2d at 114; Briscoe v. Prince George's Health Dep't, 323 Md. 439, 448, 593 A.2d 1109, 1113 (1991), we have also required that a legislative classification rest upon "some ground of difference having a fair and substantial relation to the object of the legislation." State Bd. of Barber Examiners v. Kuhn, 270 Md. 496, 507, 312 A.2d 216, 222 (1973).
In Mayor and City Council of Havre de Grace v. Johnson, 143 Md. 601, 123 A. 65 (1923), the city of Havre de Grace enacted a local ordinance which required an individual to establish city residency for a minimum of six months before he or she could operate a car for hire within the city limits. The city claimed that the ordinance was enacted to remove congestion from the streets and to reduce the large number of "irresponsible drivers" of cars for hire. We found no true relationship between the stated object of the legislation and the distinction between resident drivers and nonresident drivers, and we declared the ordinance invalid. There was so little relation between the classification and its proffered justification, in fact, that the classification raised questions about the true goal of the ordinance.
"It certainly cannot be seriously argued that an ordinance, which forbids nonresidents of Havre de Grace from transacting on its streets the same business which they permit residents to transact there, is a reasonable regulation designed in the interest of the public health or welfare, because we certainly cannot assume as a matter of law that the operation of an automobile hiring business by a nonresident of Havre de Grace would, because of his nonresidence, constitute a greater peril to the health or welfare of that town than it would if operated by a resident. A more reasonable and probable view would be that it was intended to confer the monopoly of a profitable business upon residents of the town."
Mayor & City Council of Havre de Grace v. Johnson, 143 Md. at 608, 123 A. at 67. By effectively conferring a monopoly upon residents of the city, Havre de Grace unconstitutionally infringed on the right of nonresidents to ply their trade within the city limits.
Residency was also a classifying characteristic in Bruce v. Director, supra. Bruce concerned state statutes which imposed residency requirements and territorial licensing requirements on commercial crabbing and oystering in Maryland. The statute required commercial crabbers and oystermen to obtain licenses issued by their county of residence, and it restricted commercial crabbing and oystering to that county in which a license was issued. Because counties could not issue licenses to nonresidents, commercial watermen who resided in one of 13 tidewater counties could not cross county lines to pursue their trade, and residents of the 10 non-tidewater counties in Maryland were effectively foreclosed from all commercial crabbing and oystering in the state. We recognized in Bruce that although a distinction between residents of different counties may be valid for some purposes, "an otherwise legitimate classification of residents which may be made for many purposes, cannot be made if it affects a right ... which, as citizens of this State, they enjoy equally." Id., 261 Md. at 606, 276 A.2d at 211. The territorial licensing restrictions in Bruce "unconstitutionally discriminate[d] among the residents of the 13 tidewater counties of the State, and also between the residents of those counties and the 10 remaining counties and Baltimore City." Id. Like the city ordinance held invalid in Havre de Grace v. Johnson, supra, the state laws examined in Bruce had no real and substantial relation to the object of the legislation, and they unconstitutionally infringed on the right of commercial crabbers and oystermen to ply their trade throughout the state.
We have also held that territorial classifications were invalid when they imposed greater burdens on paperhangers in Baltimore City than on paperhangers elsewhere in the state, Dasch v. Jackson, 170 Md. 251, 183 A. 534 (1936), and when the classifications imposed greater restrictions on commercial mining in only one of two similarly situated counties. Maryland Coal and Realty Co. v. Bureau of Mines, 193 Md. 627, 69 A.2d 471 (1947). Both of these cases, like Havre de Grace v. Johnson, supra, and Bruce, supra, concerned territorial restrictions on economic activity that tended to favor residents of one county over another. Both were determined to violate equal protection guarantees.
We have, on occasion, found territorial classifications to be legitimate. We have upheld distinctions, based on county location, among types of businesses which are subject to Sunday closing laws, Supermarkets Gen. Corp. v. State, 286 Md. 611, 624, 409 A.2d 250, 257 (1979), appeal dismissed, 449 U.S. 801, 101 S. Ct. 45, 66 L. Ed. 2d 5 (1980), distinctions among geographical areas for purposes of enforcing vehicle emissions controls, Department of Transp. v. Armacost, 299 Md. 392, 474 A.2d 191 (1984), and distinctions among sections of Baltimore City for purposes of regulating billboards. Donnelly Advertising Corp. v. City of Balt., 279 Md. 660, 370 A.2d 1127 (1977). In each of these cases, persons who were adversely affected complained that a legislative classification treated them differently from those who were similarly situated elsewhere. In all of these cases, however, we determined that the primary legislative purpose of the classification was other than economic, and that the classification bore a real and substantial relation to the object of the legislation. In Supermarkets, supra, we reiterated the statement of the Supreme Court in McGowan v. Maryland, 366 U.S. 420, 81 S. Ct. 1101, 6 L. Ed. 2d 393 (1961), that a legislature may validly determine that a day of rest and recreation will benefit the state's population, and that it may make exceptions to general closing laws for the health of the populace and for the enhancement of the recreational atmosphere of the day. Supermarkets, supra, 286 Md. at 618-19, 409 A.2d at 254. The economic ramifications were incidental to the primary purpose of creating a day of rest. Similarly, the classification among regions made in Armacost was created on the basis of air quality measurements, and the primary purpose of the classification was to reduce pollutants and to comply with the federal Clean Air Act. Armacost, supra, 299 Md. at 401, 474 A.2d at 195. Again, the economic ramifications were secondary to the primarily environmental purpose of the classification. The same is true in Donnelly, in which the billboard restrictions applied only to that section of the city designated as an urban renewal zone. Donnelly, supra, 279 Md. at 670-71, 370 A.2d at 1133. The clear purpose of the territorial classification was to rejuvenate a blighted region of the city, and we had no trouble finding a real and substantial relation between the classification and the object of the legislation. Id.
The County submitted the case of County Comm'rs of Charles County v. Stevens, 299 Md. 203, 473 A.2d 12 (1984), to this Court at oral argument, offering it as an example of an economic territorial classification which was upheld. Stevens is a case which concerned the application of the federal Commerce Clause to a county landfill ordinance. The County suggests that we should follow Stevens' reasoning in the case sub judice because under a Commerce Clause analysis as set forth in Stevens, the location requirement in the towing ordinance is valid. The County's reliance on Stevens is misplaced.
In Stevens, Charles County had enacted an ordinance which declared that a county-run landfill could not accept trash which originated outside the county. We determined that the County was, in that instance, acting as a market participant, and that the ordinance did not therefore violate the federal Commerce Clause. Id. at 216, 473 A.2d at 19. Contrary to the County's assertion, that situation and the instant case are factually dissimilar. In issuing towing licenses and deciding which licensee may tow which vehicles, Baltimore County functions not as a market participant but as a pure market regulator. Moreover, if the federal doctrine of interstate relations (which consists not only of the Commerce Clause, but also of the closely related Privileges and Immunities Clause of Art. IV, sec. 2) has any relevance here, it is solely by analogy, and application of the doctrine does not favor the County's argument.
In areas of economic regulation, as we have discussed, this Court has been particularly distrustful of classifications which are based solely on geography, i.e., treating residents of one county or city differently from residents of the remainder of the State. Although we have not yet expressly stated so, it is evident that elements of our Article 24 equal protection jurisprudence are analogous to those found in the Commerce Clause and the Privileges and Immunities Clause of Article IV, Section 2 of the United States Constitution. The two federal clauses are similar: both originated in the so-called "states' relations" article of the Articles of Confederation, and both are concerned with a limitation on states' abilities to give economic preferences to their own citizens. See Laurence H. Tribe, American Constitutional Law, § 6-35, at 536 (2d ed. 1988). Article 24's guarantee of equal protection of the laws is concerned, inter alia, with limiting counties' abilities to give economic preferences to their own citizens. See, e.g., Havre de Grace v. Johnson, supra. Just as the Privileges and Immunities Clause frowns on arbitrary distinctions among citizens of different states, particularly in the area of economic regulation, the concept of equal protection of the laws found in Article 24 frowns on arbitrary distinctions among citizens of different counties within Maryland. In discussing legislation which is based on geographical and territorial classifications, we have said:
"[I]t is equally clear that the power of the Legislature to restrict the application of statutes to localities less in extent than the State, as the exigencies of the several parts of the State may require, cannot be used to deprive the citizens of one part of the State of the rights and privileges which they enjoy in common with the citizens of all other parts of the State, unless there is some difference between the conditions in the territory selected and the conditions in the territory not affected by the statute sufficient to afford some basis, however slight, for classification."
Maryland Coal and Realty Co. v. Bureau of Mines, supra, 193 Md. at 642, 69 A.2d at 477.[3]See also Bruce v. Director, Chesapeake Bay Affairs, supra.
III.
The Appellant in this case has set forth a prima facie case of an unreasonable legislative classification in violation of Article 24's guarantee of equal protection under the laws. Notwithstanding the Board of Appeals' finding of a definite need for a tower in the area of Baltimore County which Verzi wishes to serve, Verzi was initially denied an application and denied an assigned tow area for the sole reason that his business is not located in Baltimore County. In applying the rational basis test in this case, we must determine whether the distinction in the Baltimore County ordinance between in-county towers and out-of-county towers is rationally related to a legitimate governmental objective.
At oral argument, counsel for the County stated that the policy underlying the towing legislation is twofold: to protect the public from fraud, deception and abuses and to decrease traffic congestion and delays in the roadways. Clearly, both the prevention of fraud and ensuring a free flow of traffic are legitimate governmental objectives, but we are not convinced that the classification created by § 24-230 furthers those objectives.
The County first asserts that the County Council could have reasoned that requiring licensees to have an established place of business in Baltimore County was rationally related to time and distance factors and, therefore, would serve to more expeditiously eliminate the retarding of traffic, unnecessary street congestion, unnecessary delays and traffic hazards. It is established, however, that Verzi, located two and one-half miles over the county line, is closer to much of the area he intends to serve than are existing in-county towers. Furthermore, it is not difficult to envision numerous other situations in which an out-of-county tower will be substantially closer, both in response time and in actual distance, to an accident scene than are in-county towers. "Time and distance" factors, offered as a justification for the geographic delineation between in-county and out-of-county towers, are spurious.
The County has also suggested that the classification was needed "to subject towing operators to the supervision and administrative control of the County." The towing ordinance, however, provides for a comprehensive regulatory scheme to be enforced by the DPL. Within this scheme, the DPL has the broad power to "revoke or suspend the license of any person licensed to engage in the towing business who shall violate any of the provisions of this article or any rules and regulations promulgated pursuant hereto...." § 24-224. The DPL's regulatory power extends to all license-holders, not merely those which are located within Baltimore County boundaries. The DPL may also initiate criminal proceedings against towers who violate the Article, regardless of the county of violation. The BCPD is likewise empowered to go beyond the County's geographical boundaries in order to investigate crimes committed in Baltimore County. Given the broad regulatory reach of these agencies, we find little merit to the County's claim that it will be unable to effectively regulate out-of-county towers.
Even if we accepted the County's administrative burden argument, we still could not find a rational basis for the distinction between in-county and out-of-county towers. The County freely admits that a motorist's request for a specific out-of-county tower will be honored indeed, Verzi was summoned into Baltimore County twice in this manner. Moreover, the police are free to call out-of-county towers for vehicles which simply break down; it is only when vehicles are disabled by accident that the police must call the designated in-county tower. The administrative burdens of inspections, investigations, inventories, and record-keeping are just as likely to arise with towers which service break-downs or towers requested by motorists as they are with towers which are called by the police to service accident vehicles, yet the County has found it necessary to place location restrictions only on the latter group. There is simply no rational basis for the classification of in-county and out-of-county towers created by § 24-230.
We believe that this case is similar to our earlier decision in Havre de Grace v. Johnson, supra. In both instances, a local body enacted an ordinance which effectively prohibits nonresidents from conducting a specific business activity within the municipal boundaries. Because we can find no rational basis for the distinction between in-county and out-of-county towers, we are led to the "more reasonable and probable view ... that [the classification] was intended to confer the monopoly of a profitable business upon residents of the town." Havre de Grace v. Johnson, supra, 143 Md. at 608, 123 A. at 67. The County attempts to distinguish Havre de Grace v. Johnson, asserting that Verzi is not prohibited from conducting business in Baltimore County; he simply won't be asked by the County to tow disabled vehicles from accident scenes. We believe this argument ignores the nature of the regulatory scheme. Baltimore County has comprehensively regulated the towing business such that it effectively controls which towers will receive business and which will not. By requiring all of its towers to be located within the county boundaries, Baltimore County has, in effect, conferred the monopoly of a profitable business upon certain Baltimore County businesses. The location requirement of § 24-230 of the Baltimore County Code is wholly unrelated to any legitimate government objective, and thus it violates the Equal Protection guarantees of Article 24 of the Maryland Declaration of Rights.[4] This is not to say that Baltimore County may not impose any limitations on its licensees; the County is free, for example, to consider time and distance factors in determining grid assignments for towers (recognizing that time and distance do not correspond strictly with county boundaries), for those factors clearly have a real and substantial relation to maintaining the free flow of traffic. The County is not free, however, to make arbitrary distinctions based simply on whether a licensee's business premises are located within the county; such distinctions run afoul of the guarantee of equal protection of the laws.
JUDGMENT OF THE CIRCUIT COURT FOR BALTIMORE COUNTY REVERSED; CASE REMANDED TO THAT COURT FOR THE ENTRY OF A JUDGMENT DECLARING THE LOCATION REQUIREMENT OF SECTION 24-230 OF THE BALTIMORE COUNTY CODE INVALID AND FOR FURTHER PROCEEDINGS NOT INCONSISTENT WITH THIS OPINION; COSTS TO BE PAID BY BALTIMORE COUNTY.
NOTES
[*] McAuliffe, J., now retired, participated in the hearing and conference of this case while an active member of this Court; after being recalled pursuant to the Constitution, Article IV, Section 3A, he also participated in the decision and adoption of this opinion.
[1] When the litigation in this case began, the law governing the towing of vehicles in Baltimore County was codified in Title 17, Article V of the Baltimore County Code. The law was recodified in 1989 and is now contained in Title 24, Article VI, §§ 24-221 to 24-235 of the Baltimore County Code. The only substantive change from the earlier version is a vesting of oversight and enforcement authority to the Department of Permits and Licenses in addition to the Police Department.
[2] Baltimore County Code (1988, Supp. 1993), § 24-225 provides:
"Sec. 24-225. Rights to appeal.
Any person who is aggrieved by a decision of the department of permits and licenses shall have the right to file an appeal within thirty (30) days thereafter for a hearing in the matter by the board of appeals.
[3] An example of this type of analysis is found in a recent Fourth Circuit case holding that Montgomery County, Maryland violated the Privileges and Immunities Clause when it considered county residence as a factor in determining whether an applicant for a taxicab license was familiar with the county. O'Reilly v. Board of App. of Montgomery County, 942 F.2d 281 (4th Cir.1991). Familiarity with the county was one of the primary factors considered in determining which applicants received licenses, and although Montgomery County submitted that mere residency did not conclusively determine familiarity, the facts of the case led the court to the "inescapable conclusion that the Board ultimately rested its determination of which applicants were the most familiar with the geographic area to be served on the applicant's residency." Id. at 284. Because the disgruntled applicant who was denied a license was a not merely a resident of another county, but a resident of Virginia, interstate relations (and hence, the Privileges and Immunities Clause) were at issue. We believe, however, that the same principles at work in O'Reilly are applicable to intercounty relations under Article 24.
[4] Because we so hold, we need not address either the appellant's due process arguments under Article 24 of the Declaration of Rights or his federal constitutional claims.
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744 S.W.2d 112 (1988)
Terry D. REED, Appellant,
v.
The STATE of Texas, Appellee.
No. 64984.
Court of Criminal Appeals of Texas, En Banc.
January 20, 1988.
*113 Don R. Wilson, Abilene, for appellant.
Patricia A. Elliott, Dist. Atty., Abilene, Robert Huttash, State's Atty., Austin, for the State.
Before the court en banc.
*114 OPINION
ONION, Presiding Judge.
This is an appeal from a conviction of murder. V.T.C.A., Penal Code, § 19.02. Trial was by jury, and after finding appellant guilty of murder, the jury assessed punishment at eight years' confinement in the Texas Department of Corrections.
In a single point of error (nee ground) appellant alleges that the trial court erred in rendering a judgment of conviction against appellant, because the non-accomplice evidence was insufficient to corroborate the testimony of the accomplice witness. See Article 38.14, V.A.C.C.P. Since appellant alleges insufficiency of the evidence we will review the facts as set forth in a voluminous record comprising over 2700 pages of testimony and exhibits to determine whether sufficient corroborative evidence was adduced to sustain the conviction.
The two count indictment alleges in relevant part that appellant on or about May 20, 1978, in Taylor County "did then and there unlawfully, intentionally and knowingly cause the death of an individual, Marsha Jeanette Reed, by strangling her with his hands, ..." and "by strangling her by stuffing a washcloth into her mouth." The deceased was appellant's wife.
Out of the jury's presence a hearing was conducted to determine whether the accomplice witness, Howard T. Hill should be allowed to testify at appellant's trial. At this time Hill had not been granted immunity by the State. However, a plea bargain was reached and as a result Hill agreed to testify in exchange for a five year prison sentence. The trial court agreed to follow the plea bargain and found Hill guilty of the offense of murder. The court assessed punishment at five years' imprisonment.
Hill testified at appellant's trial that he came to Texas from Wyoming in March 1978, after "a very bitter divorce." He met appellant while working at the Texas Truck and Frame Company in Abilene.
Hill stated that around May 1, 1978, he was in need of money to pay rent and he approached appellant to obtain a $200 loan. Although appellant agreed to make the loan at a later date, he suggested Hill could "earn" the money by staging a "robbery" of appellant's house. Appellant explained that if Hill stole a few items from his house, appellant could collect some insurance money and pay Hill $200.[1] Hill initially declined the offer, but approximately one week later he agreed to participate in the scheme.
Approximately one week before Marsha Reed's death, Hill visited appellant's home and discussed the details of the "burglary." Appellant showed Hill around the house, pointed out where the guns, TV, stereo, and jewelry boxes were located, and told Hill he would leave the back door unlocked. Appellant also agreed to let his dogs run free on the night of the burglary. According to Hill, the burglary was to occur on the first weekend in June. However, on May 19, 1978, appellant approached Hill at work and said the burglary would have to take place that night. Appellant told Hill that he and his wife would go out around 6:00 or 7:00 p.m., and that he wanted Hill to come to the house between 10:00 and 10:30 p.m. The agreed upon signals for Hill to proceed with the "burglary" included a light turned on in the living room and an open gate in the back yard.
On the agreed upon date Hill left work and went to the Green Dragon Club with a co-worker named Phil Mitchell. They arrived at the club around 6:30 p.m., and Hill stayed until approximately 9:45 p.m. At that time Hill told Mitchell he "had some business to take care of" and left. However, Hill's blue Mustang, which he had borrowed from his grandfather in Cisco, would not start and Mitchell had to help "push it off." Hill left the premises accompanied by an unidentified female who needed a ride. This testimony was fully corroborated *115 by Mitchell, who testified that he knew Hill as "J.D. Hunter."[2]
After dropping off the female passenger Hill had difficulty locating appellant's house and decided to stop at a convenience store to ask directions. One of the customers, Billy Bilbrey, testified that Hill asked him for directions to the 1800 or 1900 block of Anderson Lane. Bilbrey referred Hill to a friend waiting outside the store, who agreed to lead Hill to Anderson Lane. Hill followed Bilbrey and his friend, James Stabler, and their wives to the intersection of Anderson and Old Anson Road, where Hill had to make a U-turn to return to appellant's house. Stabler estimated that the time was between 9:00 and 10:00 p.m. Stabler's wife, Julie, identified Hill and the blue Mustang. She also reported the incident to the police after hearing about Marsha Reed's murder.
Hill drove past appellant's house and noticed that the back gate was open and that the light was on, according to the plan. Hill noted that it was "right at 10:30 or quarter to 11:00" when he took another drive around the block before parking behind a church at the end of the block. Hill walked down an alley to the back of appellant's house and entered the house through the unlocked back door. Hill took an 8 millimeter rifle, a shotgun, a sword, and a .22 caliber pistol back to his car and placed the items in the trunk. Hill returned to the house and took the jewelry boxes, a knife, a camera, a base station CB, and a mobile unit CB. Hill testified that he left the TVs and stereos, because appellant had indicated that he would help carry them out later.
Hill left appellant's house and returned to the Green Dragon Club. Phil Mitchell was still at the club when Hill returned, and he estimated that Hill had been gone "something over an hour." According to Mitchell, Hill seemed "moody" and "mad." Mitchell recalled that Hill left the club by himself around 11:30 p.m., just as the last call for drinks was made. Hill himself testified that he left the club for the second time "right at twenty after 11:00."
Hill returned to appellant's house around 11:40 p.m. and again parked in the alley way, this time closer to the house beside an abandoned vehicle. He testified that the reason for returning was to pick up "the bigger things," according to appellant's instructions. Hill reentered the empty house and waited for appellant's arrival. According to Hill, appellant and his wife returned "just before midnight." Appellant unlocked the front door and held the door for Marsha. He then told Marsha to get the baby's things ready, and placed the child on the living room couch. Hill stated appellant "appeared angry." While Marsha went to the baby's room, appellant handed Hill a cardboard box containing sexual paraphernalia and magazines, and ordered him to "get this out of the house."
Hill proceeded out the back door and was standing on the patio when he heard Marsha scream. Hill dropped the box and ran back into the house. From the entrance of the hallway Hill heard "scuffling" sounds coming from the baby's room, and when he peered in he saw the following:
"A I seen Terry was pretty much on top of his wife beating on her with his fist.
"Q Describeshow the Jury what you saw.
"A Well, she came in and he was holding her with one hand and hitting her with the other.
"Q Which hand was he hitting her with?
"A The right hand.
"Q All right. What was Marsha's position at that time?
"A She was flat on her back in the baby's room.
"Q Was she on the floor?
"A Yes, she was.
"Q And what was Terry's position?
"A He was kneeling over her.
"Q Was he straddled over her?
*116 "A Yes, he was. It looked like her left arm was pinned by his knee.
"Q All right. And he was striking her with his right fist?
"A Yes.
"Q And where was he striking her?
"A In the face."
Hill noticed that Marsha was grabbing appellant's hair with her right hand, and appellant instructed him to "get her hand." Hill freed Marsha's hand and left the bedroom after appellant ordered him to "get the hell out of here."[3]
Hill testified that he went to sit on the couch by the baby and then heard appellant "breathing real hard." Hill walked back to the entrance of the baby's room and saw appellant pulling on a belt placed around Marsha's throat. Hill noticed that she was not fighting at all, and went back to sit on the couch. At this point, appellant called to Hill and told him he would need his help in disposing of the body. Hill initially refused, but agreed to help when appellant threatened to "hang the whole thing on" him. Appellant then instructed Hill to ransack the master bedroom.
According to Hill, appellant "came into the bedroom and he told me we would have to make it look good, as if he had been beat up, like somebody was robbing the house and they walked in and they killed Marsha and beat him." Appellant next ripped the blue pullover shirt he was wearing off his back and threw it into the baby's room. Hill stated that appellant was in the hallway facing the kitchen when he ripped the shirt off. A button that had popped off appellant's shirt was found by Jack Dieken, an Abilene Police Lieutenant, in the hallway near the threshold of the kitchen.
Appellant used a kitchen knife to cut the back screen door just above the latch. Hill testified that neither he nor appellant put his hand through the screen.
Appellant also got Hill to stage a mock fight to make it look like a real struggle had taken place. Hill hit appellant twice, once in the left cheek with his right fist and once in the chin with his left hand. However, appellant stopped him, saying: "Well, forget that, I'll make it look right."
The next thing that Hill heard was the sound of "clothes ripping." He stepped into the baby's room and saw appellant ripping the clothes off Marsha's body. Hill noticed that she had a pink wash cloth in her mouth, and that her head was wrapped in a towel. Appellant ordered Hill to "help me put her in the blanket," and together they "put her in the blanket and then [appellant] stuffed [her] clothes in it and folded it over." The body was carried out the back door and dragged through the field to Hill's car in the alley. While the men were carrying the body through appellant's yard, Hill noted that a car pulled into the driveway of the house located on the east side of appellant's residence. After a few minutes the car drove away and Hill and appellant "kind of half dragged and half carried" the body to the car. According to Hill, "we put the body in the back seat of my grandfather's Mustang."
Appellant instructed Hill to drive to an isolated location on the east access road of Highway 277. At the top of a hill appellant told Hill to stop and appellant, who had gotten into the back seat, opened the passenger door and threw the body out "face first." Hill later testified that appellant bumped his head on the window frame of the car, causing a bump on the right side of his forehead along the hairline. Hill dropped appellant off in the alley behind his house between 12:30 and 1:00 am. Before departing appellant gave Hill his wallet and Marsha's purse.
*117 Hill stated that after he dropped appellant off he left Abilene headed for Cisco. Along the way he stopped at a roadside park approximately ten miles outside of town to get rid of the contents of the large jewelry box, Marsha's purse, and various items stuffed into a sack. He stated that it took "forty-five minutes to an hour, maybe an hour and a half" to complete this process, because he would have to stop when people pulled in and out of the rest area. Hill drove to the next crossroad and pulled over to throw out the large jewelry box. He arrived in Cisco between 4:00 and 4:30 a.m. This was corroborated by his grandfather, John Conger, who testified that Hill returned at 4:30 a.m. on Saturday, May 20, 1978. Conger stated that he did not notice any blood on Hill or his clothing.
Upon arriving at his grandfather's house, Hill took the blanket, towels, and the victim's clothing out of the Mustang and placed them in the trunk of his Buick LaSabre. Hill noticed the blood in the back seat and tried to clean it up. When his grandfather asked about the guns and the blood in the back seat, Hill lied, stating that he had bought the guns from someone at work and that the blood came from a co-worker who had been injured. Hill spent the rest of the weekend in Cisco, helped his step-uncle work on a car, and went back to work on Monday morning. However, Hill only worked half a day on Monday, May 22, because of back pains he had suffered since working on his step-uncle's car. On Tuesday Hill went to the emergency room at the Eastland County Hospital and stayed in the hospital until Friday afternoon.
On Saturday, May 27, Hill left Cisco in his Buick LaSabre with all the items taken from appellant's residence, as well as the blanket, the bloody towels, and the victim's clothing. Hill did not realize that he had left a bloody towel in his grandfather's Mustang. Hill drove to Abilene from Cisco, where he checked into the Silver Spur Motel under the name J.D. Hawk. When Hill saw the manager's wife burning some trash, he offered to watch the fire for her and then burned the clothes, the bloody towels and the blanket.
That same evening Hill used a Mobil credit card belonging to appellant's father in Clyde. Hill signed the receipt "W.G. Reed." Hill noted that appellant "told me I could use them [the credit cards] that there would be no problem." The North Dakota license plate number from Hill's Buick was also recorded on the receipt. On Monday, May 29, Hill spoke with Dick David, president and owner of the Texas Truck and Frame Company, about coming back to work, but David refused Hill's request. Consequently, Hill drove to Colorado Springs, Colorado, to see a chiropractor, using appellant's Master Charge card to finance the trip. Hill also used the Master Charge card in Colorado Springs on May 31 to purchase a bus ticket back to Abilene, but the ticket was never used. Burl Marshall, owner of the Coachlight Motel in Woodland Park, Colorado, testified that Hill, who had registered as Terry D. Reed, checked into his motel on May 31 and left before 5:00 a.m. the next morning. Hill explained that he "almost muffed it" in Manitou Springs, Colorado, because he started to sign his real name to the credit card receipt. "There's an `H' before Terry D. Reed and it's scribbled out."[4] Hill returned to Abilene "late Saturday night or early Sunday morning" and went back to work for Dick David on the following Monday morning.
Hill noted that appellant was "very displeased" about his return, since appellant had expected Hill "to leave and stay gone." Hill continued to work until early September, when he left Abilene accompanied by a woman named Debbie Klements. Hill had met Klements at a bar and Klements testified that she wanted to get away from her husband. Hill, Klements, and her three children left for Colorado on September 6, 1978. They returned to Abilene on September 18. On September 21 Hill again left Abilene to work for Klements' uncle, Rex Blessing, at a truck repair shop in Roswell, *118 New Mexico. Hill testified that he left appellant's CB equipment and the guns with Klements. She verified that her husband later smashed the CB base station.
Hill returned to Abilene "just after Thanksgiving" to pick up the "stolen" guns, the sword, and some clothes from Klements' parents.[5] On the Saturday after Thanksgiving Hill was en route to Roswell when he was stopped by police in Andrews, Texas, because the taillights on his Buick were out. The police searched the trunk and found the weapons taken from appellant's residence.
Hill explained that Lieutenant Dieken came to Andrews to speak to him. Hill initially lied, stating that he had bought the weapons "from a guy in a bar," but later confessed that they were taken from appellant's home. Dieken testified that he learned about Hill's arrest on November 26, 1978. Dieken corroborated the fact that Hill had lied several times about how he had obtained the weapons, before telling the truth. Hill was brought back to Abilene on December 13, 1978, and on December 15 he signed a detailed written statement.
The non-accomplice evidence shows that on the evening of May 19, 1978, appellant, his wife, and their six-week-old daughter, Tabitha, went to the Western Sizzler in Abilene for dinner before attending a drive-in movie. Appellant told Lieutenant Dieken, who investigated the murder, that he left the drive-in shortly before midnight, drove around for approximately fifteen minutes, and then returned home around 12:15 a.m. This was corroborated by Gilbert Lara, a co-worker of appellant's, who testified that he saw appellant and his wife driving home around 12:00 p.m.
When the couple entered their house appellant placed the baby on the living room couch and turned on a lamp. Appellant told Dieken that he heard a "thud" and that his wife started "screaming loudly." As a result, appellant ran into the baby's room and saw a man "on top of Marsha, beating her."
Appellant's brother-in-law, Johnny Thompson, related appellant's version of the incident as follows:
"A. Okay. He said he run into the baby's room and at that point he said he seen somebody on top of Marsha, and that he jumped on top of them trying to pull them off, and that while he was doing this that somebody started beating him on the back and that when he rolled over slightly that somebody hit him in the temple, right temple, and he said that was the last he remembers to the point until he got to, you know, my house.
"Q. He said then that he was knocked unconscious?
"A. Yes, sir."
Lieutenant Dieken also testified that appellant had remembered hitting the assailant with "both fists" and being hit across his "right shoulder." "And then [appellant's] next statement was `It didn't hurt me all that much, but I seemed to roll over and that's all I remember until I woke up.'" After waking up in the baby's room appellant saw some blood "and something else" on the floor and proceeded to look for his wife. When he couldn't find her he ran to his brother-in-law's house.
Appellant arrived at Thompson's residence around 1:30 a.m. on May 20, 1978. Thompson recalled that appellant seemed to be "dizzy" and "spaced out," and that he "stumbled in through the front door and just kind of fell there in my living room." When appellant said that his wife was gone, Thompson got dressed and ran to appellant's house located a little over a block away. Upon arriving there Thompson noticed that several drawers had been pulled out and dumped on the floor, and that there was a lot of blood in the baby's room. Thompson also noticed a blue shirt lying on the floor; appellant had arrived at *119 Thompson's house wearing only Wrangler blue jeans and boots, but no shirt. Thompson also recalled that it was raining slightly when he first ran to appellant's home, but that it rained harder later that same night.
Thompson recalled feeling a knot on the back of appellant's head,[6] as well as "the large lump that was on the front part of his head on his right temple." Thompson later noticed "some red marks on the right side of his back," as if appellant had been hit with an instrument. He said the marks were six or eight inches long. However, Thompson's statement to the police read: "I looked very close at Terry's back and I did not see any marks that would indicate that he had been hit very hard." On cross-examination Thompson testified that appellant recalled the blows on the back coming before the blow to the forehead.
Lieutenant Dieken testified that police records showed a call was made to the police department at 1:38 a.m. This corroborated Thompson's testimony that he called the police around 1:40 a.m. Thompson again called the police shortly before 2:00 a.m., and they finally arrived "a little bit after 2:00 o'clock."
Ruben Adams was the first police officer at the scene and the first person to interview appellant. Appellant told Adams that he had jumped on the intruder, grabbed him around the neck with the right hand, and then hit the intruder with his left hand. Appellant gave the same version to Officer John Perry. However, both Adams and Perry noticed swelling on appellant's right hand, and noticed no swelling to his left hand. Appellant also indicated that he had been hit across the shoulder, but Adams could see no injuries or any marks on his shoulders. Appellant did not complain about an injury to the back of his head, and Adams did not remember hearing about such an injury. On cross-examination Adams reiterated that there was no visible knot on the back of appellant's head.
Appellant also told Adams that the blue shirt he had been wearing was taken off after he had been knocked unconscious. Adams admitted picking up the shirt and noticing that it was torn, before dropping the shirt in the same location where it was found. This was corroborated by Officer Perry who stated that when Adams picked up the shirt Perry advised him to put it back until it could be photographed. Both Johnny and Lonnie Thompson testified that they saw Adams pick up appellant's blue shirt, but they did not notice whether the shirt was dropped into any bloody spots on the carpet. Johnny Thompson testified: "Basically, [Adams] just dropped it back down where he picked it up, yes, sir."
When Adams asked how the intruders might have gotten in, appellant mentioned a cut in the screen door at the back of the house. Adams investigated the screen door, but did not put his fingers through the slit. Later, Officer James Becker photographed the screen door and testified that "it didn't appear that anybody's hand had been stuck through it." Officer Perry also formed the opinion that no one had put a hand through the screen, because it "was not bulged out at the cut." Finally, Lieutenant Dieken was recalled to testify that he actually placed his hand through the slit in the screen. "To determine by myself whether somebody could have reached through that screen and unlock[ed] the door from inside I inserted my hand through the opening and unlatched the door from inside and when I removed my hand the screen was offset, or there was a bulge in there." It was Dieken's opinion that his was the first hand to go through the opening. There was no sign of entry through any window or door in the house.
Before leaving, Officer Adams investigated the back yard and noticed that appellant's dogs were not in the back yard, and that the back gate was open. Erin Snelson, appellant's next-door-neighbor, had *120 also noticed that the dogs were outside appellant's fenced back yard that night and that appellant's living room light was on, which she found to be "unusual." She estimated the time was 12:30 a.m. Snelson recalled that the Reeds' vehicle was not in the driveway at 11:30 p.m. when the Snelsons returned home that evening, nor had the living room light been on. Her mother, Betty Kinikin, arrived at the Snelson residence around 12:30 a.m. to pick up her son. Kinikin noticed that appellant's dogs were loose and she even petted them. Kinikin also noticed that the living room light was on at appellant's residence. Snelson further testified that while she was standing in the driveway talking to her mother she heard "a noise" coming from appellant's residence. She stated: "It sounded like something hitting the wall, or door being slammed, but their air conditioner was on, too." Betty Kinikin recalled that her daughter "kept looking over her shoulder," because she "kept hearing this funny racket."
Before being taken to the hospital, appellant gave Officer Perry an extensive list of personal property items missing from the residence when he regained consciousness. According to Perry, appellant "named three guns, two rifles, a .22 Ruger pistol, a jewelry box I believe he said was out of his bedroom. His billfold and his wife's purse." Also missing was a CB base station, another CB radio, an antique Civil War sword, and a smaller jewelry box. Perry also discovered numerous items of valuable personal property that had not been taken, including two portable television sets, a stereo, and money on the dresser in the bedroom. Officer Havin Yarborough, in charge of the pawn shop detail, testified that none of the items reported stolen ever turned up in any of the pawn shops in the Abilene area. By the time Lieutenant Dieken arrived at the scene, around 3:30 a.m., appellant had already gone to the hospital.
Dr. Herbert Nassour, Jr., an emergency room physician in Abilene, examined appellant shortly after 3:45 a.m. on May 20. Dr. Nassour asked appellant several questions and noticed that he was very slow in answering. When appellant told him that he had been hit in the forehead, the doctor examined his head and could not locate any bumps, although he noticed some redness on the forehead. Dr. Nassour testified that the spot on appellant's forehead "looked like somebody had rubbed it real hard," and he could not detect any swelling. The appellant did not look like he had been hit in the forehead.
Appellant complained that his right hand hurt, and that he had struck the alleged assailant with his right hand. The doctor noticed some swelling on appellant's right hand and bruises, but there was nothing noticeable about his left hand. The doctor found no lumps or bumps on the back of appellant's head, and there was no indication that he had been struck on the back of the head.
"Q. Did he [appellant] tell you that he had or had not been struck on the back of the head?
"A. He told me he had not. I asked specifically.
"Q. All right. You asked specifically, and he said he had not?
"A. Yes, sir.
"Q. All right. And you found no indication that he had?
"A. That's right." (Emphasis supplied.)
Dr. Nassour also found no indication of a "karate chop" to appellant's back or neck as alleged by appellant's father, W.G. Reed.
It was Dr. Nassour's opinion that appellant appeared to be "shell shocked," and that he had suffered some emotional stress. However, there was no indication that appellant had recently been unconscious.[7] X-rays taken of appellant's skull, *121 his right hand, and his right ribs did not reveal any broken bones. Although Dr. Nassou'r determined that appellant was physically fit, he also felt that appellant had been through a traumatic experience. The doctor could not be sure whether appellant had "fooled" him about his condition, but conceded that this might be possible.
On cross-examination Dr. Nassour stated there would have to be some sign of injury, such as a bruise, to indicate that appellant had been knocked unconscious for half an hour. On redirect the doctor noted that it would have taken a very severe blow to the forehead to cause unconsciousness for half an hour, and that "a very large swelling" would result. Such swelling would have still been noticeable even after two or three hours.
Lieutenant Dieken took appellant to the police station from the hospital to be interviewed, noting that appellant seemed calm and collected. Around 6:00 a.m. Dieken learned that Marsha Reed's body had been found and without stating his intention, Dieken asked appellant to accompany him. Dieken described the following:
"We drove up to within, oh, thirty-five or forty yards of the body and I stopped my car practically in the middle of the road and probably over to the east side closer to the east shoulder. At that time I said, `Terry, come on.' He looked at me and said, `Do I have to?' And I said, `Yes, you do, you've got to identify the body.' So, we walked together up to where the body was. He began sniffling and shaking and crying a little bit. And I said, `Is that Marsha?' And he kind of just glanced down and said, `Yes.' And then his next reaction from that was `Can I go over here and sit in this other patrol car?' So, I told him yes he could. I asked him after I had already received information from him that that was Marsha then his next reaction was he just wanted to get away from there and he wanted to get over in the patrol car."
Dieken stated that appellant only got within six or seven feet of the body, and that the victim's face was turned away from the direction from which appellant was looking. It was Dieken's opinion that appellant could not have seen the victim's face, because "her clothing was up around her shoulders and neck and her hair was down over her head and face and you couldn't see her face at all." Upon returning to the police station Dieken took a detailed statement from appellant about the events of the previous night.
Dr. James Duff, a pathologist, performed the autopsy on Marsha Reed on May 20, 1978. He observed "bluish grey coloration especially around the eyes," indicating lack of oxygen to the head. The victim's face was also swollen with bruising around the orbit of the left eye. A wash cloth had been stuffed into the victim's mouth. The victim had also hemorrhaged from a cut above the left eyelid, and swelling in that area indicated she received more trauma to the left side of her face. Dr. Duff considered the wounds to have been caused by a right-handed person.
The wash cloth appeared to have been forced into the victim's mouth, and vomitous foodstuff and meat found beneath the tongue indicated that the victim had possibly vomited before the wash cloth was placed there. The effect of forcing the wash cloth into the victim's mouth was to press the tongue "back and up," thus cutting off the airway. Vomitous material was also found coming out of the nostrils, in the airways, and in the lung, causing the victim to aspirate.
Further examination revealed a laceration about 1¾ inches long on the back of the victim's head. This wound was caused by a sharp object, and was not severe enough to cause death. Dr. Duff testified that this cut was administered before death, due to the hemorrhage around it and the contusion. The victim suffered another laceration along her hairline to the right of *122 her nose. This wound was about an inch long and appeared to be superficial.
The victim also had a symmetrical scrape wound "in the shape of a half moon" on her lower back. This wound was consistent with the body being dragged.
An internal investigation into the victim's neck area showed considerable hemorrhage in the strap muscles around the trachea. The "hyoid bone," which lies above the thyroid cartilage and on top of the larynx, was fractured on the left side and had hemorrhage around it. This wound was also consistent with being caused by a right-handed person. Dr. Duff theorized that the most common cause of a fractured hyoid bone is manual strangulation. The injuries Dr. Duff observed on the victim were similar to others he had seen in manual strangulation cases.
Dr. Duff also testified that he did not find any marks on the victim's neck, although he could not rule out the possibility that a belt had been stretched around her neck. The doctor stated that if the victim were dead at the time a belt was wrapped around her neck, there would be a "greater possibility" that no marks would be visible.[8]
A pap smear of the victim's vagina revealed numerous sperm. Significantly, many of the spermatozoa still had tails, meaning that they had not started to degenerate. Dr. Duff was fairly certain that intercourse had taken place within 24 hours. There was no evidence of trauma to the vaginal area.
It was Dr. Duff's opinion that the cause of death was "asphyxia, secondary to strangulation, or just the cut off of oxygen and strangled to death." The doctor also felt that both factors had contributed to the victim's death.
After learning the results of Marsha Reed's autopsy, Dieken obtained samples of appellant's blood, saliva, pubic hairs, and head hairs. According to Officer Perry, the samples were obtained on Tuesday, May 23. Appellant told Dieken that he had not had sexual relations with his wife since Wednesday, May 17.
Sarah Williams, a forensic serologist, examined various pieces of evidence to detect and identify blood and body fluids. On carpet removed from the baby's bedroom she discovered several type A blood stains. Williams also found "vomitous material" on the same carpet. Type A blood was present on blankets found in the baby's bedroom, as well as on playpen mats. Furthermore, type A blood was found splattered on appellant's blue shirt, specifically on the front, the right sleeve, "and on the portion that was torn off with the buttons on it." The victim's blood was type A, while appellant's blood is type O.
The blood splattered on appellant's shirt was also consistent with Hill's blood type. Williams also tested the back seat of the 1967 Mustang for the presence of blood and body fluids. She found traces of blood along the seams and along the back edges. However, there was not enough blood present to even determine whether it was human or animal. A towel found in the Mustang contained human type A blood stains, consistent with the victim's blood type.
Williams analyzed vaginal swabs from the body of the deceased to determine whether seminal fluid was present. A positive reaction to the presence of acid phosphatase indicated the presence of seminal fluid. Due to the strength of the acid phosphatase reaction, plus the fact that the spermatozoa had not rapidly decomposed, Williams estimated that intercourse had taken place two to six hours prior to the *123 victim's death.[9] An examination of the body fluids from appellant and the victim, showed there was nothing inconsistent with appellant having had intercourse with his wife prior to her death.
An examination conducted on Howard Hill's body fluids revealed that he had type A blood, and was a secreter of blood group substance "A" and "O." His body fluid make-up was identical to that of the victim, and Sarah Williams testified that the male and female fluids could not be separated or distinguished. The tests were consistent with Hill, or the appellant, or both having had intercourse with the victim prior to her death. On redirect Hill denied having sexual relations with Marsha Reed, and to his "knowledge" neither did appellant.
Dieken's continuing investigation revealed that a Mobil credit card issued to appellant's father was used on May 27, 1978, at a Mobil station in Clyde, Texas. A North Dakota license number was written on the credit card receipt. From appellant's father Dieken learned that the credit card had been in appellant's billfold at the time of the murder, and due to an oversight it had not been reported stolen. This discovery lead to inquiries of every credit card company appellant and his wife were affiliated with, and requests for credit card statements issued after May 20. Appellant's Master Charge card was shown to have been used on several occasions at various gas stations, restaurants, and motels in Dalhart, Amarillo, Clayton, New Mexico, Monte Vista and Woodland Park, Colorado, as well as the Continental Bus Station in Colorado Springs, Colorado. The dates on the receipts showed that the card was used from May 31 through June 3, 1978.
Appellant was arrested on June 9, 1978.
In order to show appellant's motive for the murder of his wife, the State presented several witnesses who testified about appellant's relationship with a co-worker named Denise McKelvey. McKelvey testified that she and the appellant were "good friends," but stated that the relationship did not become "more than just friendly." McKelvey related that she received a phone call from Marsha Reed in March 1978. Marsha asked McKelvey not to ask appellant to drive her to work and told her not to speak to appellant at work. McKelvey admitted once putting a bandaid on appellant's forehead, but she was not aware that the incident had caused trouble between appellant and the deceased. McKelvey also testified that she had gone on a hunting trip with appellant and Rex Haas in September 1977. This was corroborated by Haas, who testified appellant and McKelvey held hands and kissed during the trip.
McKelvey stated that she had gone to see a movie with appellant on one occasion since the death of the deceased, and that she met him at the West Texas Fair in September 1978. These separate incidents were verified by Phil Mitchell, who saw appellant and McKelvey together at a cinema on Christmas Day 1978, and Vickie Jones, another Texas Truck and Frame employee, who saw the couple together at the fair holding hands.
When asked whether she and appellant had ever been "intimate," McKelvey replied: "One time." She explained that appellant had called her after his wife had delivered her baby, and that McKelvey congratulated him and offered to buy him a drink. The appellant picked McKelvey up at her apartment around 9:00 p.m. that same evening, and after "riding around a little while" they returned to appellant's house around 10:00 p.m. Appellant's wife was still in the hospital. McKelvey testified that she and appellant went to bed that evening, and that appellant "just kind of off the wall said, `We should get married,' but he wasn't serious when he said it." McKelvey admitted to previous "heavy petting" having taken place at her apartment, but that this had not lead to sex. According to McKelvey, appellant never indicated that he wanted a divorce or separation from his wife.
*124 Jackie Hobbs, a former Texas Truck and Frame employee, was of the opinion that appellant and McKelvey were having an affair. He recalled a conversation in which appellant indicated that "as soon as his wife had her baby he planned to get rid of her." Hobbs stated: "I made some offhand remark like he can't just knock her in the head and Terry said he thought if he could get away with it he would." At the time Hobbs did not take appellant's statement too seriously, but he later changed his mind after reading about Marsha Reed's death.
Several witnesses testified about appellant's interaction with McKelvey at work. Vickie Jones stated that she saw appellant and McKelvey kiss on three or four occasions in the front office. Jones also recalled a Friday night in March 1978, when McKelvey and her roommate Beverly came to Jones' apartment around midnight. Jones stated that McKelvey "appeared to be drunk" and wanted Jones to call the appellant for her. When Jones refused, McKelvey made the call but hung up when Marsha Reed answered the phone. Jones was under the impression McKelvey was in love with appellant.
Linda Bates testified that appellant and his wife "were having a lot of trouble" before Marsha's death, and that Marsha suspected that appellant was seeing someone else. Bates, whose husband Larry worked at Texas Truck and Frame, had previously seen McKelvey and appellant sitting together in appellant's pickup truck. Bates later told Marsha about this incident, and that she (Bates) "had heard talk." According to Bates, Marsha was "very much afraid" that appellant and McKelvey were having an affair.
Roy Havner, appellant's friend and co-worker, also testified that he had seen appellant and McKelvey kissing in the parking lot. According to Havner, "Terry [would] always go to work early and sit in the car and wait for her at lunch and after work some time an hour or two." Havner stated that appellant would make phone calls to McKelvey from his house, lasting 30 minutes or longer. Havner also recalled a fight appellant and his wife got into at a drive-in theatre, because Havner mentioned that McKelvey had placed a bandaid on appellant's forehead. On a separate occasion Havner and his wife Jodie were visiting the Reeds to watch a movie when appellant and his wife got into another fight about whether McKelvey brought appellant presents at work. The Havners left due to the tension. Roy Havner was not under the impression that the Reeds were happy together, although he had never heard appellant talk about wanting a separation or divorce.
Finally, Sherill Kincaid testified that she received a phone call in July 1978 from an unidentified woman who called "for a man she worked with and wanted some information on the house," which was for rent. The woman told Kincaid that the man was 22 years old, had an infant daughter, and a roommate. That same afternoon appellant came by to look at the house. The house was located directly across from the Elmwood Manor Apartments where McKelvey lived.
Ray Manley, a former Texas Truck and Frame employee, approached appellant about renting a house together in July 1978, and recalled visiting Kincaid's house on Potomac Street. Upon arriving at the house, Manley and appellant were greeted by Kincaid's husband Raymond, who informed them that the house had already been rented. Manley was aware of the close proximity of the Elmwood Manor Apartments, since he had previously dated McKelvey's roommate Beverly. Manley recalled only one occasion when he, Beverly, appellant, and McKelvey went out together since Marsha Reed's death.
Appellant did not testify at either stage of the bifurcated trial, and the trial judge instructed the jury that Hill was an accomplice witness as a matter of law.
Turning now to appellant's contention, we observe that Article 38.14, V.A.C.C.P., provides:
"A conviction cannot be had upon the testimony of an accomplice unless corroborated by other evidence tending to connect the defendant with the offense *125 committed; and the corroboration is not sufficient if it merely shows the commission of the offense." (Emphasis supplied.)
In Edwards v. State, 427 S.W.2d 629 (Tex.Cr.App.1968), this Court wrote:
"The test as to the sufficiency of the corroboration is to eliminate from consideration the evidence of the accomplice witness and then to examine the evidence of other witnesses with the view to ascertain if there be inculpatory evidence, that is evidence of incriminating character which tends to connect the defendant with the commission of the offense. If there is such evidence, the corroboration is sufficient; otherwise, it is not. Dalrymple v. State, Tex.Cr.App., 366 S.W.2d 576; Bradford v. State, 170 Tex. Crim. 530, 342 S.W.2d 319."
See Satterwhite v. State, 726 S.W.2d 81, 88 (Tex.Cr.App.1986); Losada v. State, 721 S.W.2d 305, 308 (Tex.Cr.App.1986); Killough v. State, 718 S.W.2d 708, 710 (Tex. Cr.App.1986); Romero v. State, 716 S.W.2d 519, 523 (Tex.Cr.App.1986); Cruz v. State, 690 S.W.2d 246, 250 (Tex.Cr.App.1985); Brooks v. State, 686 S.W.2d 952, 958 (Tex. Cr.App.1985); Carrillo v. State, 591 S.W.2d 876 (Tex.Cr.App.1979); Brown v. State, 561 S.W.2d 484, 487 (Tex.Cr.App.1978); Dillard v. State, 550 S.W.2d 45 (Tex.Cr. App.1977).[10]
*126 In applying the test of the sufficiency of the corroboration, each case must be considered on its own facts and circumstances. Mitchell v. State, 650 S.W.2d 801, 807 (Tex.Cr.App.1983), cert. den. 464 U.S. 1073, 104 S. Ct. 985, 79 L. Ed. 2d 221; Paulus v. State, supra at 844.
All the facts and circumstances in evidence may be looked to as furnishing the corroboration necessary. Washburn v. State, 318 S.W.2d 627, 634 (Tex.Cr.App. 1958); Brown v. State, 561 S.W.2d 484 (Tex.Cr.App.1978). The corroborative evidence may be circumstantial or direct. 23 C.J.S., Crim. Law, § 812(3), p. 107; Brown v. State, supra. The combined cumulative weight of the incriminating evidence furnished by the non-accomplice witnesses which tends to connect the accused with the commission of the offense supplies the test. Perkins v. State, 450 S.W.2d 855 (Tex.Cr.App.1970); Colunga v. State, 481 S.W.2d 866 (Tex.Cr.App.1972); Mitchell v. State, 650 S.W.2d 801 (Tex.Cr.App.1983), cert. den. 464 U.S. 1073, 104 S. Ct. 985, 79 L. Ed. 2d 221. It is not necessary that the corroboration directly link the accused to the crime or be sufficient in itself to establish guilt. Attwood v. State, 509 S.W.2d 342 (Tex.Cr.App.1974); Reynolds v. State, 489 S.W.2d 866 (Tex.Cr.App.1972); Mitchell v. State, supra; Shannon v. State, 567 S.W.2d 510, 513 (Tex.Cr.App.1978); Castaneda v. State, 682 S.W.2d 535, 537 (Tex. Cr.App.1984); Richardson v. State, 700 S.W.2d 591, 594 (Tex.Cr.App.1985). Insignificant circumstances sometimes afford most satisfactory evidence of guilt and corroboration of accomplice witness testimony. Holmes v. State, 70 Tex. Crim. 423, 157 S.W. 487 (1913); Paulus v. State, 633 S.W.2d 827, 844 (Tex.Cr.App.1982); Mitchell v. State, supra.
In Reynolds v. State, supra, it was written:
"The corroborative testimony need not directly link the accused to the crime or be sufficient in itself to establish his guilt. Otherwise the testimony of the accomplice would be valueless. The corroborative evidence is sufficient if it tends to connect the accused with the crime, and it is the cumulative weight of such evidence which supplies the test." See also Minor v. State, 108 Tex. Crim. 1, 299 S.W. 422 (1927).
In the instant case the accomplice witness Hill made out a complete case against the appellant. Without the requirements of Article 38.14, supra, there could be no question as to the sufficiency of the evidence to sustain the jury's verdict. Applying Article 38.14, supra, as we are required to do, and the test of sufficiency of the corroboration as discussed in Edwards v. State, supra, we must look to the non-accomplice witness' testimony.
Article 38.14, supra, expressly provides that evidence merely showing the commission of an offense is not sufficient alone to corroborate an accomplice witness. Nelson v. State, 542 S.W.2d 175 (Tex.Cr. App.1976); Anders v. State, 501 S.W.2d 665 (Tex.Cr.App.1973); Reynolds v. State, supra. However, it is a factor to be considered along with other possible factors in determining whether there is sufficient independent evidence to corroborate the accomplice witness. Mitchell v. State, supra, at 807; Paulus v. State, supra, at 845. The independent evidence in this case showed the murder of appellant's wife by someone.
The other non-accomplice testimony, inter alia, showed that the appellant was having an affair with Denise McKelvey, a co-worker, with whom he was seen kissing and holding hands. McKelvey testified they had been intimate at appellant's house while his wife was in the hospital after the birth of their baby. He had even mentioned marriage to her. The affair had caused marital discord, and the appellant and deceased had argued about his relationship with McKelvey in the presence of others, and the deceased had once told McKelvey not to talk to her husband at *127 work. Appellant told Hobbs, a co-worker, that he planned to get rid of his wife after the birth of their child. When told (by Hobbs) that he couldn't "just knock her in the head," appellant replied that if he "thought he could get away with it he would."
Evidence which merely goes to show motive or opportunity of the accused to commit the crime is insufficient alone to corroborate the accomplice witness. It may, however, be considered in connection with other evidence tending to connect the accused with the crime. Paulus v. State, supra, at 846; Mitchell v. State, supra, at 808; Reynolds v. State, supra; Rogers v. State, 461 S.W.2d 399 (Tex. Cr.App. 1970); 23 C.J.S., Crim.Law, § 812(4), p. 111. Thus the "affair" may be considered in connection with all other evidence tending to connect the appellant with the murder of his wife. See and cf. Duff-Smith v. State, 685 S.W.2d 26 (Tex.Cr.App.1985).
In Brown v. State, 672 S.W.2d 487, 489 (Tex.Cr.App.1984), this Court wrote:
"Proof that the accused was at or near the scene of the crime at or about the time of its commission, when coupled with other suspicious circumstances, may tend to connect the accused to the crime so as to furnish sufficient corroboration to support a conviction. Passmore v. State, 617 S.W.2d 682 (Tex.Cr.App.1981); Rodriquez v. State, 508 S.W.2d 80 (Tex. Cr.App.1974); Edwards v. State, 427 S.W.2d 629 (Tex.Cr.App.1968)." See also Shannon v. State, 567 S.W.2d 510, 513 (Tex.Cr.App.1978); Cawley v. State, 166 Tex. Crim. 37, 310 S.W.2d 340, 342 (1957).
By his own statements to the police and others appellant acknowledged that he was present at the time of the offense in his home. He was not shown by non-accomplice testimony to be with Hill, his co-worker, and accomplice witness shortly before, at the time of or shortly after the offense, although non-accomplice testimony placed Hill in the neighborhood on the night in question. Nor does the evidence show flight. However, we look to see if other suspicious circumstances are present. Appellant claimed to police that he had been rendered unconscious for about 30 minutes, that when he regained consciousness he looked for his wife and then ran to his brother-in-law's house. The brother-in-law testified that appellant arrived at his house around 1:30 a.m. The time frame does not fit appellant's story since approximately an hour and 15 minutes would have elapsed between his fight at 12:15 a.m. with the intruder or intruders and his arrival at the brother-in-law's house. The evidence would indicate that appellant did more during that time than look for his wife and run down the street to his brother-in-law's house. There was time to do what Hill testified that appellant did.
Four police officers observing appellant after responding to a call about his wife's disappearance did not believe from their observations he had been unconscious. As a result appellant was taken to a hospital. The doctor who examined him and had him x-rayed, etc., was of the opinion that appellant had not been rendered unconscious as he contended by a blow to the forehead. Appellant stated to the doctor that only his forehead had been injured. The doctor saw only redness and no swelling on the right side of the forehead. He found no other injuries. Appellant had earlier stated to one officer he had been hit from the rear. This was not, however, what he told the doctor in answer to specific questions.
Hill, the accomplice witness, testified that appellant had pushed the body of the deceased out of the car "face first" onto the side of the highway, and bumped his forehead on the right side. Thus, according to Hill, appellant was well aware of the location of the body. When the body of the deceased was found, and the police notified, Lt. Dieken took appellant to the scene along the highway, without stating to appellant his intention. He related that appellant got within only six or seven feet of the body on the side of the highway, glanced down, and immediately identified the body as that of his wife, and went immediately to the police vehicle. The deceased's face was turned away from appellant's position and was not otherwise visible because of hair and the clothing being *128 pushed up. Dieken was of the opinion appellant could not have seen the face. Sgt. Ronald Harris observed the identification and stated that from appellant's position a person could not tell if the body was male or female, see the face, or tell who it was.
Hill testified that in preparing the scene to appear that a burglary had occurred after the killing of the deceased, appellant cut a 6" to 8" slit in the screen above the door and right above the latch and that neither he nor appellant put his hand through the cut or slit. Upon investigating possible points of entry, appellant himself alerted the police to the cut in the screen and told them the house was otherwise secure. The screen was cut vertically and was not bulged out as if a hand or instrument had entered the slit. It appeared undisturbed. No other points of entry were found.[11] When Lt. Dieken inserted his hand through the slit to determine if the door could be opened such action left a bulge in the screen which had not been there before.
Hill testified that appellant struck his wife in the face with his right hand. The pathologist testified the wounds to the left side of the deceased's face had been caused by a right-handed person. Appellant told some of the officers that he had hit the assailant with his left hand. It was, however, observed that only his right hand appeared bruised and swollen. He later told others, however, that he had hit the assailant with his right hand. This was typical of a number of inconsistencies appellant related to officers or others after the alleged offense.
There are other matters that could be discussed, but we do not deem it necessary. All the facts and circumstances in the case, both direct and circumstantial evidence, may be looked to in furnishing the necessary corroboration. Keeping in mind that testimony of the accomplice witness made out a complete case against the appellant, we conclude that the combined cumulative weight of the incriminating evidence furnished by the non-accomplice testimony tends to connect the appellant with the commission of the offense and supplies the proper test.[12]
The judgment of the conviction is affirmed.
NOTES
[1] Raymond Fletcher, an insurance agent, testified that his company handled the mortgage loan on appellant's residence. Appellant's policy did not cover articles stolen during a burglary.
[2] Hill later explained the origin of his alias: "J.D. because of the drink I drank and some iron worker buddies gave it to me. Hunter came from my hunting partner because I'm a bow hunter and he always called me the Hunter."
[3] Dr. Irving Stone, chief of the physical evidence section at the Dallas Crime Lab, examined the strands of hair recovered from the baby's bedroom and determined them to be "the same in all observable characteristics as the sample of head hair I got from Howard T. Hill." Although Dr. Stone could not state with absolute certainty that the hair came from Hill's scalp, he was positive that it did not come from either the victim or the appellant. He further noted that the strands had been "forcibly removed" from the scalp, because they still had tissue particles clinging to the roots.
On cross-examination Dr. Stone added that the likelihood of the hair sample coming from any one other than Hill was "extremely remote."
[4] The Master Charge sales slip with the scratched out "H" is dated May 31, 1978, and was signed at Marshall's Motel in Woodland Park, not in Manitou Springs.
[5] Bob Blessing, Klements' brother, testified that he picked up the guns and the sword in late September, because he was "worried about [Klements'] welfare and the childrens' welfare with those weapons in the house." Blessing took the weapons, along with some of Hill's clothes, to his parents' residence.
[6] Thompson's brother, Lonnie, also testified feeling a knot on the back of appellant's "neck," although on cross-examination he stated "I felt something on the back of his head." Johnny Thompson's wife, Rebecca, said she felt a knot on the back of appellant's head, as did Jean Irvin, the deceased's mother, who described feeling "a huge knot on the back of [appellant's] head."
[7] All four police officers who testified noted that appellant did not appear to have been unconscious. Officer Adams remarked that appellant seemed "very clear and awake," pointing out specific items of property that were missing.
Officer Becker observed that appellant "didn't seem disoriented and dazed," and responded normally to questions. Officer Perry also doubted that appellant had been unconscious, which prompted him to send appellant to the hospital to be examined. Finally, Lieutenant Dieken, who visited appellant at the hospital around 4:00 a.m., noted that after waking him up appellant did not appear to act like other people Dieken had seen in the past who had been unconscious.
[8] Dr. Jarrett Williams, a pathologist, testified for the defense. He noted: "[I]f there are no protective clothing (sic) there should be a mark or blemish of some type with a pull that is strong enough to close the windpipe or the larynx and also to produce a fracture of the hyoid bone of the neck. There should be a mark, or a blemish, or a depression of some type." On cross-examination Dr. Williams admitted that he had not examined Marsha Reed's body and that he was testifying "[i]n general terms from my own experience." He also stated that a fracture of the hyoid bone would be "more likely" to occur as a result of manual strangulation or by blows to the throat and neck area.
[9] On cross-examination she admitted that due to the high level of acid phosphatase intercourse could have taken place after the victim's death.
[10] In briefing the sole contention here advanced both parties have used the test that the corroborating evidence need only make the accomplice witness' testimony "more likely than not." This is not the proper test. The proper test is set forth in Article 38.14, supra. It is the only test. Cubit v. State, 122 Tex. Crim. 286, 54 S.W.2d 535 (1932). This Court sought to make this clear in Vertz v. State, 702 S.W.2d 196 (Tex.Cr.App. 1986). The Vertz opinion refused the petition for discretionary review and affirmed the judgment of the Court of Appeals [Vertz v. State, 686 S.W.2d 696 (Tex.App.-Corpus Christi 1985) ], but disclaimed the "more likely than not" test utilized by the Court of Appeals. Citing Cruz v. State, 690 S.W.2d 246, 250 (Tex.Cr.App.1985), it was observed that the correct standard is the statutory "evidence tending to connect the defendant with the offense committed" test.
The confusion apparently stems from the language used in Warren v. State, 514 S.W.2d 458, 463 (Tex.Cr.App. 1974): "Although appellant asserts otherwise, the corroboration need only tend to connect the accused with the offense charged. Article 38.14, V.A.C.C.P.; Sheffield v. State, 371 S.W.2d 49 (Tex.Cr.App.1963), and make the accomplice's testimony more likely than not." (Emphasis supplied.) No authority was cited for this latter underlined statement. Warren, however, did not abandon the statutory test. To the contrary. Warren appears to add a requirement to the correct test, although when the evidence "tends to connect" the accomplice witness' testimony will normally then be "more likely than not," particularly where the accomplice witness in his testimony has made out a complete case against the defendant. The difficulty arose when later cases, often citing Warren, indicated the standard was only the "more likely than not" test. See, i.e., Bentley v. State, 520 S.W.2d 390, 393 (Tex.Cr.App. 1975), and James v. State, 538 S.W.2d 414, 416 (Tex.Cr.App. 1976). Thus, to the extent they conflict with today's decision and the correct statutory "tending to connect" test, the following cases and all others so holding are overruled: Warren, supra; Bentley, supra; James, supra; Carrillo v. State, 591 S.W.2d 876, 883 (Tex.Cr.App.1979); McManus v. State, 591 S.W.2d 505, 514 (Tex.Cr. App.1979); Sheets v. State, 606 S.W.2d 864, 866 (Tex.Cr.App.1980); Passmore v. State, 617 S.W.2d 682, 684 (Tex.Cr.App.1981); Eckert v. State, 623 S.W.2d 359, 361 (Tex.Cr.App. 1981); Meyers v. State, 626 S.W.2d 778 (Tex.Cr.App.1982).
Further, some Court of Appeals' opinions, citing some of the above cases, have utilized the wrong "more likely than not" test. To the extent they are in conflict with the instant case and the proper test, they are not to be followed or cited. See, i.e., Chambers v. State, 630 S.W.2d 413, 416 (Tex.App.-Houston [14th] 1982); Gordon v. State, 640 S.W.2d 743, 757 (Tex.App.-San Antonio 1982); Byers v. State, 641 S.W.2d 629 (Tex.App.-Tyler 1982); Hill v. State, 644 S.W.2d 849, 854 (Tex.App.-Amarillo 1982); Verrett v. State, 648 S.W.2d 712 (Tex.App.-Beaumont 1982); Edwards v. State, 649 S.W.2d 710 (Tex.App.-Tyler 1983); MacDonald v. State, 650 S.W.2d 95, 96 (Tex.App.-Houston [14th] 1982); Simmons v. State, 650 S.W.2d 108, 109 (Tex. App.-Houston [14th] 1983); Hill v. State, 666 S.W.2d 130, 134 (Tex.App.Houston [14th] 1983); Wolf v. State, 674 S.W.2d 831 (Tex.App. Corpus Christi 1984); Davis v. State, 675 S.W.2d 331, 332 (Tex.App.-San Antonio 1984); Protz v. State, 681 S.W.2d 296, 298 (Tex.App.-Houston [14th] 1984); Parker v. State, 693 S.W.2d 640, 644 (Tex.App.-Beaumont 1985); Valdez v. State, 700 S.W.2d 338, 341 (Tex.App.-Corpus Christi 1985); Worthington v. State, 714 S.W.2d 461, 463 (Tex.App.-Houston [1st] 1986).
The danger of the "more likely than not" test lies in the fact that an accomplice witness may state any number of facts that may be corroborated by evidence of other witnesses making his testimony "more likely than not" yet none of the facts may tend to connect the defendant with the commission of the alleged offense. See Castaneda v. State, 682 S.W.2d 535 (Tex.Cr.App. 1984); Paulus v. State, 633 S.W.2d 827, 844 (Tex.Cr.App.1982); Mitchell v. State, 650 S.W.2d 801 (Tex.Cr.App.1983), cert. den. 464 U.S. 1073, 104 S. Ct. 985, 79 L. Ed. 2d 221.
[11] The window in the baby's room was raised, but not enough to let a body enter, the dust and dirt on the sill were undisturbed, and although the ground was wet outside, no footprints were found outside the window, and no muddy footprints were found in the house.
[12] Many of the things that Hill stated that he had done before and after the alleged offense were corroborated by the testimony of other witnesses. It must be remembered that although an accomplice witness may state any number of facts that are corroborated by evidence of other witnesses, still if the facts do not tend to connect the accused with the crime, corroboration on that basis would not meet the requirements of Article 38.14, supra. Paulus v. State, supra, at 844; Mitchell v. State, supra. In reaching our conclusion, we have kept in mind this proposition of law.
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635 A.2d 925 (1993)
DALE DENTON REAL ESTATE, INC., Appellant,
v.
Brian FITZGERALD and Allen Curtis, Appellees.
No. 91-CV-1012.
District of Columbia Court of Appeals.
Argued September 2, 1992.
Decided December 29, 1993.
*926 Raymond L. Gooch, for appellant.
Andrew FitzGerald, for appellees.
Before WAGNER and KING, Associate Judges, and MACK, Senior Judge.
PER CURIAM:
Appellant, a real estate brokerage firm, appeals from the trial court's denial of its motion for summary judgment and the sua sponte dismissal of its action seeking a commission on the sale of residential property previously owned and sold by appellees after the expiration of an exclusive listing period in a contract between the parties. Appellant, urging solely that it was the procuring cause of the sale, contends that trial court erred in not following this jurisdiction's legal precedent. We affirm.
I.
On September 5, 1989, appellant, Dale Denton Real Estate, Inc., by and through its agent, Kevin Talley, entered into an exclusive listing agreement with appellees, Brian Fitz-Gerald and Allen Curtis, to sell property located at 5425 Sherier Place, Northwest. The agreement was for a 90-day term and recited a sales price of $543,000 and 6% of the sales price for the agent's commission.
The original listing agreement had a "protection" period that provided for the payment of the commission after the termination of the listing contract:
if the Property is sold, conveyed, or otherwise transferred within 90 days ... to anyone to whom the Property has been shown by Broker, or anyone else, including the Seller, prior to final termination of this listing contract....
During the term of the listing, appellant introduced Harry and Ann Wallace to the property.
After viewing the property on other occasions with the Wallaces, on January 14, 1990, Mr. Talley informed appellees that he had a prospective buyer. As the initial listing agreement had expired, the parties, on January 15, 1990, executed a second listing agreement which conditioned appellant's commission to be earned upon the sale to the Wallaces under the contract dated January 17, 1990. The standard provision of the contract that set forth the protection period in the earlier contract and the listing term for the contract were not completed.[1] After subsequent amendments to the listing agreement, appellees, on January 18, 1990, accepted the Wallaces' contract offer which was contingent upon the sale of the Wallaces' residence.[2]
As the Wallaces were unsuccessful in finding a buyer for their residence, the contracting parties terminated the sales contract and, thus, the second listing agreement expired. Appellees then informed appellant that they would try to sell the property by themselves. Two weeks following the termination of the sales agreement, the Wallaces received an offer for their home. The Wallaces and appellees undertook independent negotiations, and on April 10, 1990, they entered into another sales contract which ultimately resulted in settlement. Appellant then brought action against appellees for a commission on the sale on grounds that its previous efforts were the procuring cause of the sale.
*927 Following a hearing on appellant's motion for summary judgment, the trial court concluded that no material facts were in dispute and that appellees were entitled to judgment as a matter of law. The trial court denied appellant's motion and dismissed the case, sua sponte. In his opinion, the trial judge explained that, although appellant was the procuring cause of the sale, there was a conflict in precedent case law[3] and he, therefore, adopted the Restatement's view[4] that absent bad faith by the principal, a broker is not entitled to a commission where a prospective buyer located by him purchases the property after the period of the broker's exclusive listing had expired. The court concluded that appellant implicitly conceded that the terms upon which it agreed to earn its commission were not fulfilled and, therefore, appellees were entitled to judgment as a matter of law. From this standpoint, we address appellant's claims.
II.
In reviewing a trial court's summary judgment, we look to whether a factual issue existed which would preclude the grant of summary judgment. Word v. Ham, 495 A.2d 748, 750 (D.C.1985) (citing Dresser v. Sunderland Apartments Tenants Ass'n, 465 A.2d 835 (D.C.1983)). Appellant concedes that the facts are undisputed. [Tr. 9][5] Where facts are not in dispute and a question of law is before an appellate court, reversal of the trial court's judgment is warranted if the trial court reached an erroneous conclusion. Woods v. Poor, 29 App.D.C. 397 (1907). However, a trial court's decision must be affirmed if the result is correct, despite the fact that the court may have relied upon a wrongful ground. Marinopoliski v. Irish, 445 A.2d 339, 340 (D.C.1982) (citing Helvering v. Gowran, 302 U.S. 238, 58 S. Ct. 154, 82 L. Ed. 224 (1937)). We are left to decide whether the trial court misinterpreted this jurisdiction's precedent case law and whether the precedent case law supports the appellant's ex contractu claim for a commission.
III.
Unlike the trial court, we find no inconsistency in precedent in our reading of Rieffer and Facchina. The issue in both cases was the factual one of whether the broker was the procuring cause of the sale. In Rieffer, there was an expired exclusive listing agreement and a trial court's finding that the broker was not the procuring cause of the sale. This finding was supported by the fact that the purchaser "knew the owner and knew all about the property, because she was actually occupying it long before the plaintiff broker came upon the scene." Rieffer, supra note 3, 53 A.2d at 786. In addition, this Court was persuaded by the fact that there was no evidence of fraud or misrepresentation. Id. In Facchina, there was a non-exclusive listing agreement and a trial court's finding that the broker was the procuring cause of the sale. In that case, this Court found no error with the trial court's finding because the evidence demonstrated that the buyers were first interested in the property by the broker's advertisement, they were shown the property through the broker, and submitted an offer through the broker, which was rejected. Facchina, supra note 3, 109 A.2d at 582. Here, we have an expired exclusive listing agreement that conditioned the broker's right to its commission upon a separate transaction (not occurring during the life of the agreement) and the trial court accepted as an undisputed fact that the broker was the procuring cause.[6]
*928 Although we agree with appellant that Rieffer and Facchina are not in conflict, we do not accept appellant's contention that these cases support its ex contractu claim for a commission. Specifically, appellant contends that these cases support the proposition that in absence of any legal remedy available under a brokerage agreement, a broker is entitled to a commission if the broker was the procuring cause of the sale. We disagree with this latter contention.
Appellant's reliance on Rieffer and Facchina is misplaced as neither case involved an agreement where the parties consented to impose a condition upon the broker's right to a commission. The application of the "procuring cause" principle "presupposes the existence of a valid and unconditional contract." Krebs v. Morgan, 143 A.2d 518, 519 (D.C.1958) (emphasis added). Notwithstanding the general rule that a broker is entitled to a commission if he shows that he was the procuring cause of the sale, the seller is entitled to prescribe any lawful condition upon the broker's right to a commission to which the parties consent. Mike Palm, Inc. v. Interdonato, 547 A.2d 1016, 1020 (D.C.1988); Gill v. American Sec. Corp., 209 A.2d 629, 631 (D.C.1965); Dixon v. Bernstein, 86 U.S.App.D.C. 336, 182 F.2d 104 (1950). Irrespective of appellant's contention that it was the procuring cause of the subsequent sale which was conducted directly between appellees and the buyer, we first look to the agreement for any conditions imposed on appellant's right to a commission. If such a condition was included in the listing agreement, we look to see whether this condition was fulfilled.
Here, the parties entered into a conditional contract where the condition was not fulfilled during the life of the contract. The parties' listing agreement incorporated appellees' contingency that appellant's commission would be earned upon the sale to the Wallaces in accordance with the terms of the January 17, 1990, contract.[7] As appellees and the Wallaces were unable to consummate the sale, this contingency was not fulfilled and appellant had no right to a commission. When the validity of an agreement is dependent "upon the performance of a condition and this condition is not fulfilled, there can be no binding contract and no obligations arise." Krebs, supra, 143 A.2d at 519 (footnote omitted). However, if the failure to fulfill the condition is attributable to the fault or misconduct of the seller, then the broker may still be entitled to a commission provided he can show that he was the procuring cause of the sale. Mike Palm, Inc., supra, 547 A.2d at 1020. Since no contention was made that the contracting parties' failure to consummate the sale was caused by the fault or misconduct of appellees, the trial court did not err when it found the "procuring cause" issue to be immaterial.
IV.
Lastly, the circumstances do not support appellant's quantum meruit claim. There is no need to resort to a quasi-contract claim based on quantum meruit if a true contract was in existence at the time the services were performed. Bloomgarden v. Coyer, 156 U.S.App.D.C. 109, 118, 479 F.2d 201, 210 (1973). The following passage provides a reasonable justification for this general rule:
When parties enter into a contract[,] they assume certain risks with an expectation of a return. Sometimes, their expectations are not realized, but they discover that under the contract they have assumed the risk of having those expectations defeated. As a result, they have no remedy under the contract for restoring their expectations. In desperation, they turn to quasi-contract for recovery. This the law will not allow.
Mass Transit Admin. v. Granite Const. Co., 57 Md.App. 766, 776, 471 A.2d 1121, 1126 (1984) (quoting Industrial Lift Truck Serv. Corp. v. Mitsubishi Int'l Corp., 104 Ill. *929 App.3d 357, 360-61, 60 Ill. Dec. 100, 103, 432 N.E.2d 999, 1002 (1982)).
During the time that appellant performed services for appellees, there was a true contract that set forth each parties' obligations. Appellant agreed that appellees' obligation to pay its commission would be conditioned upon the consummation of a specific sale. Unfortunately for appellant, the conditions required for payment of the commission under the contract were not met. It would not be appropriate to allow appellant to recover on a quantum meruit claim merely because it failed to protect its interests in the listing agreement.[8]
V.
In conclusion, we find that the trial court was incorrect in its reasoning that Rieffer and Facchina were in conflict.[9] However, this misinterpretation was not fatal to the trial court's decision.[10] As neither the precedent case law relied upon by appellant nor the circumstances of the present case before us support appellant's quantum meruit claim, it was not error for the trial court sua sponte to dismiss appellant's motion and enter a judgment as a matter of law for the appellees.
Affirmed.
NOTES
[1] We take notice of the fact that the symbol "N/A" appears on the line specified for the commission.
[2] Although the sales contract was dated January 17, 1990, appellees and the Wallaces signed the contract on January 18, 1990. The listing agreement indicated that appellant's commission would be earned upon the sale to the Wallaces pursuant to the sales contract dated January 17, 1990.
[3] The trial judge alluded to Rieffer v. McGuire, 53 A.2d 784 (D.C.1947), and Facchina v. Sullivan, 109 A.2d 581 (D.C.1954).
[4] RESTATEMENT (SECOND) OF AGENCY § 446 (1957).
[5] "Tr." refers to the transcript from the March 7, 1991 hearing on the appellant's motion for summary judgment.
[6] Although neither court in Rieffer and Facchina addressed whether the type of listing agreement should be considered in determining whether the broker is entitled to his commission, we deem it relevant to note that an exclusive listing agreement is designed to provide more protection to a broker than a non-exclusive listing agreement.
Thus, while under a non-exclusive listing agreement more than one broker may be hired and the broker who produces a ready, willing, and able buyer is entitled to a commission, under an exclusive listing agreement the particular broker is protected for the duration of the employment contract. 7 RICHARD R. POWELL, POWELL ON REAL PROPERTY § 938.16[2][c] (1949) (emphasis added).
[7] As no contention has been made with respect to the interpretation of the listing agreement and finding no ambiguity in the agreement, we interpret its terms by their plain and obvious meaning. Gandal v. Telemundo Group, Inc., 781 F. Supp. 39, 45-46 (D.D.C.1992).
[8] Any ambiguity in a contract is generally construed against the party who drafted it. Cowal v. Hopkins, 229 A.2d 452, 454 (D.C.1967) (citations omitted). Here, the listing agreement was on a form provided by appellant.
[9] Since we find that Rieffer and Facchina are distinguishable from the present case before us, we need not address appellant's arguments as to the stare decisis doctrine.
[10] See Marinopoliski, supra, 445 A.2d at 340.
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744 S.W.2d 604 (1988)
George GRAY, Relator,
v.
Richard A. ROBINSON, Norman Christian, L.T. Owen, Billy Bacon, and Scott Bailey, Commissioners Court of Eastland County, Respondents.
No. 69873.
Court of Criminal Appeals of Texas, En Banc.
January 13, 1988.
*605 Philip Durst, Austin, for relator.
Emory C. Walton, Dist. Atty., Eastland, for respondents.
Robert Huttash, State's Atty., Austin, for the State.
Before the court en banc.
OPINION
WHITE, Judge.
This is an original mandamus action brought by a court-appointed criminal defense attorney (relator) seeking to compel the Commissioners Court of Eastland County (respondents) to pay $17,010.00 in attorney's fees ordered by a district judge under the provisions of Article 26.05,[1] V.A. C.C.P. We will deny relief.
Disposition of this case requires an understanding of the following sequence of events. On January 3rd, 1986, defendant, Brenda Gail (Perry) Andrews, was one of several persons indicted in a complex felony case. Relator appeared as retained co-counsel for this defendant shortly after indictment. In early 1987, relator became sole counsel, after co-counsel was permitted to withdraw. On March 12, 1987[2] relator filed an affidavit requesting appointment as counsel. On April 1st, relator announced at a pre-trial hearing that he was appearing for defendant pro bono. Two days later an indigency hearing was held, defendant was found to be indigent and relator was officially appointed to represent defendant. See Article 26.04, V.A. C.C.P.
On April 15th, prior to trial, relator filed a fee request stating that he had represented defendant since September 1986 and requested $17.010.00 in attorney's fees, travel expenses and various other expenses. On the same day, a visiting district judge issued an order approving this fee request.[3] This order was filed with the District Clerk on April 22nd, and on May 8th, relator submitted the order to the Eastland County Auditor. The auditor, finding that relator had only appeared in court for 3 days subsequent to formal appointment, did not formally submit relator's claim to the respondents because of the amount of the order relative to the time spent in court. However, at some subsequent time, the respondents were presented with this order and refused to honor it.[4]
Defendant's trial commenced on May 18th and concluded on June 5th. On June 9th relator filed another fee request in the amount of $13,250.00 for services rendered solely during the trial. Relator calculated his fees at a rate of $100.00 per hour. On this same day, June 9th, the visiting district *606 judge who presided at trial ordered relator to be paid a total of $3,500.00, calculated at a rate of $250.00 per day of trialthe minimum rate under Article 26.05 for a capital case. This order was honored by respondents and the amount was paid to relator.
In the instant mandamus action, relator is seeking to compel respondents to pay the $17,010.50 pre-trial order. However, as evidenced by relator's fee request and the court's order, the majority of these fees were accumulated prior to April 3rd, the date relator was appointed to represent the defendant. Thus, we are presented with the question of whether the district judge had authority to order attorney's fees for services rendered prior to appointment.
This appears to be a question of first impression. Article 26.05, V.A.C.C.P., which designates compensation of appointed counsel provides:
Section 1. A counsel appointed[5] to defend a person accused of a felony or a misdemeanor punishable by imprisonment, or to represent an indigent in a habeas corpus hearing, shall be paid from the general fund of the county in which the prosecution was instituted or habeas corpus hearing held, according to the following schedule:
(a) For each day or a fractional part thereof in court representing the accused, a reasonable fee to be set by the court but in no event to be less than $50;
. . . .
(d) For expenses incurred for purposes of investigation and expert testimony, a reasonable fee to be set by the court but in no event to exceed $500.
Article 26.04, V.A.C.C.P., which designates when counsel is to be appointed to a defendant, states:
(a) Whenever the court determines at an arraignment or at any time prior to arraignment that an accused charged with a felony or a misdemeanor punishable by imprisonment is too poor to employ counsel, the court shall appoint one or more practicing attorneys to defend him. In making the determination, the court shall require the accused to file an affidavit, and may call witnesses and hear any relevant testimony or other evidence.
Finally, Article 40.09, Subd. 5, V.A.C.C.P., which sets out the procedure for indigent defendants to obtain a free transcript on appeal, states:
If a party desires to have all or any portion of a transcription of a court reporter's notes included in the record, he shall so designate with the clerk in writing and within the time required by Section 2 of this Article ... The court will order the reporter to make such a transcription without charge to appellant if the court finds, after a hearing in response to an affidavit filed by appellant... that he is unable to pay or give security therefor.
These statutes have been consistently construed according to their clear, unambiguous and strict mandates, which is in keeping with the tight budgetary limitations of this State. Smith v. Flack, 728 S.W.2d 784, 789 (Tex.Cr.App.1987); Dickens v. Court of Appeals for Second Judicial District, 727 S.W.2d 542, 547 (Tex.Cr. App.1987). Under Article 26.05, an appointed attorney can only be compensated if he appears in court and will only be compensated once where he appears in court for two separate defendants or where he appears in court for a single defendant twice indicted. Freeman v. State, 556 S.W.2d 287, 302-303 (Tex.Cr.App.1977). See Tex.Atty.Gen.Op. No. H-298 (1974); Tex.Atty.Gen.Op. No. H-330 (1974). Concerning investigative and expert witness expenses, under section 1(d) of Article 26.05, appointed counsel can only be reimbursed for expenses actually incurred, and cannot be compensated under this section for legal research and trial preparation. Myre v. State, 545 S.W.2d 820, 826 (Tex.Cr. App.1977); Henriksen v. State, 500 S.W.2d 491, 494-495 (Tex.Cr.App.1973). See, Tex. Atty.Gen.Op. No. H-909 (1976).
*607 Notice of indigency is a requirement that pervades the statutory scheme, and, likewise, the active, discretionary determination of the court is heavily relied upon for the appointment of counsel. See, Abdnor v. State, 712 S.W.2d 136, 141 (Tex.Cr.App. 1986); Ex parte Bain, 568 S.W.2d 356 (Tex.Cr.App.1978); Castillo v. State, 571 S.W.2d 6, 7 (Tex.Cr.App.1978); Hoagland v. State, 541 S.W.2d 442 (Tex.Cr.App 1976); Shaw v. State, 539 S.W.2d 887 (Tex.Cr. App.1976); Weeks v. State, 521 S.W.2d 858 (Tex.Cr.App.1975); Foley v. State, 514 S.W.2d 449 (Tex.Cr.App.1974). See generally, 1 Texas Criminal Practice Guide, Sec. 1.03[1]-[4], p. 1-24.
There is no duty imposed on the trial court to appoint counsel until the defendant shows that he is indigent. The indigency determination is to be made on a case-by-case basis as of the time the issue is raised and not as of some prior or future time. Abdnor v. State, supra; Harriel v. State, 572 S.W.2d 535, 537 (Tex.Cr.App. 1978); Barber v. State, 542 S.W.2d 412, 413 (Tex.Cr.App.1976). In order to make its determination of indigency, the trial court is authorized under Articles 26.04 and 40.09, V.A.C.C.P., to conduct an evidentiary hearing. The court may conduct such hearings at any time during the proceedings when it is placed on notice that there may be a change in the financial or economic condition which would alter the accused's indigency status. Foley v. State, supra. The trial court has no duty to appoint counsel where an indigent defendant has managed to retain counsel or where the defendant has made no showing of indigency. Harriel v. State, supra; Steel v. State, 453 S.W.2d 486, 487 (Tex.Cr.App. 1970).
Thus, from the statutes governing the appointment of counsel to indigents emmanates a body of caselaw reinforcing the requirements of when and how counsel shall be appointed. These requirements are evidence of the importance placed on notice and formal appointment. Counsel is to be appointed only when indigency is shown and it follows that prior to such a showing counsel is not to be appointed or compensated by the State. See, Tex.Atty. Gen.Op. No. JM-803 (1987).[6]
We now hold that state funded attorney fees cannot be awarded for services rendered prior to the date that counsel is appointed to represent an indigent. Before indigency is brought to the court's attention or proven at a hearing, it is presumed that counsel has made the proper fee arrangements. Where counsel is already representing a client, fee arrangements are a private matter between client and counsel. District courts cannot carry the burden of ensuring that defense counsel receives compensation from his clients. Unless the court knows or reasonably should know of indigency, the court need not initiate an inquiry. We properly place the burden on the defendant and his counsel to bring indigency to the court's attention.
In the instant case, relator wholeheartedly represented defendant without any mention of appointment or indigency. Relator, in fact, voluntarily took over as sole counsel for defendant when co-counsel withdrew and never requested appointment throughout months of representation. By all indications, it was only after counsel realized that defendant was not going to pay that he requested attorney fees for the work that he had completed. Thus, relator attempts to place the state in the precarious position of paying fees that he could not collect from his client. Such compensation is not contemplated by Article 26.05, V.A.C.C.P.
The trial court had no authority to order payment of attorney fees accumulated prior to formal appointment. Thus, we find that the portion of the judges' order awarding pre-appointment fees is void.
Nothing in this opinion precludes relator from re-petitioning the district judge for *608 any and all post-appointment court appearances for which he has not yet been compensated. Nor does our holding today limit the district judge's authority under Article 26.05, V.A.C.C.P. to order any reasonable post-appointment fee.
The application is denied.
DUNCAN, J., concurs in result.
CLINTON, J., dissents.
ONION, Presiding Judge, dissenting.
This mandamus action seeking to collect $17,010.00 in attorney's fees is not a "criminal law matter" as contemplated by Article V, § 5 of the State Constitution and Article 4.04, V.A.C.C.P. This Court is without jurisdiction to entertain this application for mandamus. For the reasons stated in my dissenting opinion in Smith v. Flack, 728 S.W.2d 784, 796 (Tex.Cr.App.1987), I dissent to any action except dismissal of the application for writ of mandamus.
TEAGUE, Judge, dissenting.
The issue that is actually before this Court to be resolved is whether the trial judge had the authority to order the Commissioners Court of Eastland County to pay relator the sum of $17,010.00 as court appointed attorney's fees, which concerned his court appointment to represent an indigent accused individual. The question whether a trial judge might order that attorney's fees be paid for work done by the attorney when the attorney represented the accused in a non-court appointed capacity is what Judge White, on behalf of a majority of this Court, answers and writes on. Perhaps one should not quarrel with what he states on that issue. But that is not the issue that is before us to resolve.
I attach hereto and make a part hereof as "Appendix A" a copy of the trial judge's order ordering the Commissioners Court of Eastland County to pay relator $17,010.00 as his fee for representing an indigent defendant. The trial judge's order, as it now reads, is a non-severable order. Because it is subject to debate whether the trial judge's order was intended to cover both the period of time when relator represented his client in the capacity of a non-court appointed attorney and when he represented his client in the capacity of a court appointed attorney, a hearing should be conducted in the trial court. The majority of this Court, however, declines to issue that order. I dissent to that decision.
Thus, the trial judge's order as it now reads must be construed in the most liberal manner and not how one might desire that it should read.
Of course, in construing the order as it is now worded, one should take into consideration the law that then governed the trial judge's authority to set the amount of the attorney's fee for court appointed counsel.
As easily seen, the trial judge's order expressly provides that the application that had been submitted by relator was ordered approved. However, after the trial judge approved the application, he then stated the following: "and it is the further ORDER of the Court that the Honorable Commissioners Court of Eastland County, State of Texas, promptly pay GEORGE GRAY, court appointed attorney for the indigent defendant, BRENDA GAIL (PERRY) ANDREWS, the sum of $17,010.00 for said attorney's legal services rendered said defendant to date in the above captioned and numbered cause." There is nothing in this order that might reflect or indicate that the trial judge was not ordering relator paid $17,010.00 for the services he performed after he was court appointed. Given the wording of the order, it is actually only the trial judge himself who knows on what basis he arrived at the $17,010.00 figure, and the record at this time does not reflect just exactly what he had in mind when he signed the order. We have not yet heard from the trial judge.
Because we have not yet heard from the trial judge, given the state of this record, and to be fair to both parties, I find that a factual hearing is necessary in this case. Because this Court is ill equipped to conduct a hearing, the preferred procedure in a mandamus proceeding is to have the trial court conduct the hearing. See and compare Wolters v. Wright, 623 S.W.2d 301, 305 (Tex.1981). Therefore, in order to *609 make the determination whether the order should be severable, I first vote to order the trial judge to conduct a hearing on this issue, during which hearing Hon. Claude Williams must testify so that we will be aware of his views on the subject.
Otherwise, we must read the order in the light most favorable to relator. Such a reading requires that we grant the writ of mandamus.
The order that orders the payment of $17,010.00 to relator, as it now reads, is not a severable order and the order, as it now reads, must be liberally read. This causes the order to read that when the trial judge signed the order he intended that relator be paid $17,010.00 for the services that he rendered since becoming court appointed for Andrews.
The record before us makes it clear to me that at all times the respondents have defended this application on the following, and only the following, ground: The trial judge's order was not duly presented to the Commissioners Court of Eastland County for its consideration and determination of whether or not to approve the same. Judge White himself correctly eliminates this "defense" from the case, because "The Commissioners Court knew of the order and refused to pay it. This suffices as a demand for performance and a denial making it the proper subject for the instant writ." Footnote 4, page 605.
It is true that the respondents argue that they received no notice that the trial judge was going to sign the order when he did. However, there was nothing in our law when the trial judge signed the order that might have required them to be notified that the trial judge was going to sign the order. Of course, when the respondents learned of the order, they unquestionably could have petitioned or motioned the trial judge to reconsider the total amount of $17,010.00 that he had ordered paid to relator, or sought to have it clarified. But, they did not see fit to take either step, and have not to this date seen fit to take either step.
It is important for the reader to understand that from the face of the order, that ordered the payment of $17,010.00 to relator, one cannot state with legal certainty that any portion of the $17,010.00 was meant to go to the pre-court appointment stage of the proceedings. The order, like any court order, must be read and construed in a liberal fashion.
As the order, ordering the payment of $17,010.00 to relator, now reads, it is a nonseverable order as to the total figure of $17,010.00, and because there is nothing in the order that any portion of the $17,010.00 related to the pre-court appointment proceedings, or, to put it another way, because there is nothing in the order that might reflect or indicate that all of the $17,010.00 was not meant to go to the post-court appointment proceedings, relator is entitled to be paid the $17,010.00, as ordered by the trial judge. His application for the writ of mandamus should be granted because, under this record, respondents only have a ministerial duty to perform, and that is to approve the order so that the County Treasurer of Eastland County can issue a check in the amount of $17,010.00 to relator.
Under the terms of Art. 26.05, supra, as it existed when the trial judge made the appointment and when he signed the order of payment of $17,010.00 to relator, the statute clearly provided that as to the sum of money that might be ordered paid a court appointed attorney by the trial judge, that determination would be made solely by the trial judge and no one else, and the statute did not set any maximum fee that the trial judge could approve to be paid for each day or fractional part thereof in court representing the accused. The statute only set a minimum fee of $50.00; it did not set a maximum fee that could be paid. Nor did the statute require that an itemized bill be presented to the trial judge. Nor did the statute require that any notice be given to anyone before he signed the order of payment. Therefore, under the statute, a trial judge could approve whatever sum he felt was reasonable and could arrive at the figure by whatever method he himself chose to use, and he did not have to give anyone notice of what he was about to do or what he had done. And this Court so *610 held, either expressly or implicitly, in Smith v. Flack, 728 S.W.2d 784, 789 (Tex. Cr.App.1987). This Court further held in Smith v. Flack, supra, at pages 789-790, that "we find that Article 26.05 clearly places a mandatory duty upon the county to pay court-appointed attorney fees." (Footnote omitted).
In this instance, the Commissioners Court of Eastland County has never defended relator's application for the writ of mandamus on the ground that the $17,010.00 ordered by the trial judge to be paid to relator was an unreasonable attorney's fee for the services he performed after he was court appointed.
Given the state of the record before us, this Court should issue the writ of mandamus. To the failure of this Court to do its duty and issue the writ, I must, but respectfully, dissent.
APPENDIX A
The State of Texas
vs.
Brenda Gail (Perry) Andrews
No. 17,184
In the District Court
of
Eastland County, Texas
ORDER
The foregoing Application having come on to be considered by the Court, the Court finds that the facts set forth therein are true and correct and that said Application has merit, and that it should be granted;
THEREFORE, it is ADJUDGED, ORDERED AND DECREED that the Application is approved and it is the further ORDER of the Court that the Honorable Commissioners Court of Eastland County, State of Texas, promptly pay GEORGE GRAY, court-appointed attorney for the indigent defendant, BRENDA GAIL (PERRY) ANDREWS, the sum of $17,010.00 for said attorney's legal services rendered said defendant to date in the above-captioned and numbered cause.
Approved this 15 day of April, 1987.
/s/ Claude Williams
JUDGE PRESIDING
APR 22 1987
NOTES
[1] Article 26.05 has been substantially changed, effective September 1, 1987. See Acts 1987, 70th Leg., Ch. 979, sec. 3 at 6674, 6678. These changes are prospective in application and, thus, have no effect on the instant case.
[2] All dates refer to 1987 unless noted otherwise.
[3] This visiting judge was initially assigned to preside over the trial after the regular district judge recused himself, but, due to a schedule conflict, was later unable to preside at the trial. It is noted that five different judges were assigned at various times to hear the many pre-trial matters raised and the actual trial of the subject criminal case.
[4] Respondents seize on this fact to argue that since the order was not "properly presented" to the Commissioners Court, this request for a mandamus is moot. Such an assertion is invalid. The presentment to and rejection by the auditor is sufficient predicate for the instant suit. See, Art. 1573, V.T.C.S. (while in effect at the time of this case, this Article was repealed and replaced by Section 81.041, Tex.Gov.Code, effective Sept. 1, 1987); Art. 1660, V.T.C.S. (also repealed on Sept. 1, 1987); Smith v. McCoy, 533 S.W.2d 457, 461 (Tex.Civ.App.Dallas 1976, writ dismissed).
[5] All emphasis added unless otherwise noted.
[6] This Attorney General Opinion was issued in response to a letter requesting such opinion from the Eastland County District Attorney concerning the instant action. In the opinion, the Attorney General refused to resolve the issues presented because the instant writ was presently pending in the courts.
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146 B.R. 325 (1992)
In re EAST COAST AIRWAYS, LTD., Debtor.
Bankruptcy No. 089-90418-21.
United States Bankruptcy Court, E.D. New York.
September 30, 1992.
*326 C. Steven Hackeling, Macco, Hackeling, Stern & Christensen, Huntington, N.Y., I. Leonard Feigenbaum, Special Counsel, Melville, N.Y., for debtor.
James J. Von Oiste, Port Jefferson, N.Y., for Beechcraft.
State of N.Y. Office of Atty. Gen. Robert Abrams, Barrie Goldstein, and David Cook, New York City, for DOT.
Scott Stuart, Garden City, N.Y., U.S. Trustee.
OPINION
CECELIA H. GOETZ, Bankruptcy Judge:
Before the Court is a motion to convert this three year old Chapter 11 proceeding to Chapter 7. The motion is made by the New York State Department of Transportation ("DOT"). The motion is made pursuant to 11 U.S.C. § 1112(b). The grounds recited in the motion are: (1) continuing loss to or diminution of the estate and absence of a reasonable likelihood of rehabilitation because the debtor is insolvent, not operating and is not economically viable; (2) an inability to effectuate a plan since the debtor has not filed a plan of reorganization; (3) an unreasonable delay by the debtor that is prejudicial to creditors. DOT's motion is supported by Beechcraft East, Inc. ("Beechcraft") and by the New York State Department of Taxation & Finance. It is opposed by the Debtor, which is not, however, opposing dismissal of the proceeding. The United States Trustee takes no position on the motion.
*327 The Debtor, East Coast Airways, Ltd. (the "Debtor" or "East Coast") voluntarily filed under Chapter 11 on April 7, 1989. No creditors committee has ever been appointed. Although the Debtor tried in 1991 to have a bar order imposed on the filing of claims, it is doubtful that it succeeded.
DOT has filed a claim for over $300,000, making it the Debtor's largest creditor. Since 1985 East Coast has been litigating with DOT with respect to the money DOT claims East Coast owes it. That litigation, which started in the Supreme Court of the State of New York, is still going on in this Court. Michael Peragine, who controls East Coast and who either owns all, or a majority of, its stock, has acknowledged that East Coast's only current activity is its litigation with DOT which is also being pursued before the Federal Aviation Administration ("FAA"). East Coast and Peragine have filed a complaint with that body, alleging discriminatory treatment by DOT.
On August 27, 1991, East Coast filed a plan of reorganization under which it proposes to use $100,000 (or $120,000) to be contributed by Peragine to pay all undisputed creditors. Nothing is to be paid DOT. The Debtor has twice amended the proposed disclosure statement to accompany its plan, most recently on April 21, 1992. The hearing on approval of East Coast's disclosure statement, objection having been taken to earlier versions by DOT and other creditors, has been indefinitely adjourned pending disposition of this motion to convert.
The Findings of Fact which follow are based on the testimony elicited at the hearings on this motion, on the statements and exhibits submitted by the parties, and on the records of this Court, including the schedules filed by the Debtor, and, at the request of the parties the record in the adversary proceeding brought by East Coast against Beechcraft and DOT.[1]
FINDINGS OF FACT
East Coast Airways, Ltd., the Debtor, is a New York corporation incorporated under the laws of the State of New York in November 1978. It is owned by Michael Peragine, although I. Leonard Feigenbaum, Special Counsel to the Debtor, may have a small stock interest. It is one of three corporations (there may be more) owned or controlled by Mr. Peragine and engaged in aviation related activities. The other corporations are Montauk-Caribbean Airlines, d/b/a Long Island Airlines ("LIA") and Long Island Aviation Center, Ltd. ("Aviation Center").
LIA filed for relief under Chapter 11 on the same date as the Debtor. On March 18, 1989, LIA and East Coast moved for an order directing joint administration of their Chapter 11 proceedings. The motion to administer the two cases jointly represented that both companies operated out of the same facilities and that their "facilities, staff and services . . . are cross utilized to the extent that separation would be managerially and fiscally impossible to accomplish." The motion was withdrawn on June 16, 1989. One year later, LIA sold, for over one million dollars, certain rights which it enjoyed at LaGuardia Airport. After the sale was approved by this Court, LIA was permitted to withdraw its petition on the condition that it pay in full all filed claims. LIA's Chapter 11 case was closed January 8, 1992.
In 1980, East Coast negotiated for, and was given, a sublicense by Beechcraft on a portion of the premises at Republic Airport in Farmingdale, New York, which Beechcraft leased from the Metropolitan Transportation Authority ("MTA"). (Adv.Ex. 7). In 1982, ownership of Republic Airport was transferred from MTA to DOT which assumed all the rights and obligations of the MTA pursuant to New York State Transportation *328 Law Section 400. DOT contracted with Lockheed Air Terminal, Inc. ("LAT") to manage the Airport.
Beechcraft under its contract was given the power to function through sublicensees. Paragraph 4 of its License Agreement read: "Licensee shall have the right, subject to the prior written approval of the MTA in each instance and subject to all of the terms and provisions hereof, to cause any one or more of the activities required or permitted to be performed by Licensee hereunder to be conducted by a sublicensee, who in the reasonable judgment of MTA, is competent to provide such services or perform such functions with a high degree of skill and competence, provided that Licensee shall not thereby be relieved any of its obligations or liabilities hereunder."
Paragraph 30 of Beechcraft's License negated any third party rights in its terms, providing "No third party is intended to be benefitted by the provisions of this Agreement, and only the parties hereto may enforce any rights created hereunder."
Beechcraft occupies the status of a fixed base operator ("FBO") at Republic Airport which carries with it certain benefits. Beechcraft is one of only two FBO operators at Republic Airport; there was a third which went into bankruptcy in 1986 or earlier. (Adv.Exs. 28, 29).
Beechcraft's agreement committed it to pay five percent of its gross receipts, with certain exceptions, to its lessor, after its first year of operation. Taxes were one of the exceptions from gross receipts in calculating the five percent.
Beechcraft's Sublicense to East Coast required the approval of MTA. Even before it was given, East Coast, in expectation of its receipt, began work on renovating the premises which it ultimately was given the right to occupy. Under East Coast's agreement with Beechcraft, its rent for the original term of the Sublicense thirty months was excused in light of improvements of a value of $43,040 that East Coast committed itself to make. (Adv.Ex. 6).
The original term of the lease was for 30 months beginning March 1, 1980. However, an addendum to the Sublicense Agreement provided as follows:
Sublicensee shall have the option to extend the term for successive thirty (30) month periods as long as Sublicensee is not in default hereunder and as long as any license agreement or extension thereof covering the Premises between Beech and MTA is in effect . . . Sublicensee shall notify Beech in writing at least ninety (90) days before the end of each thirty (30) month period if Sublicensee desires to exercise its option to extend. If Sublicensee does not exercise its option to extend one of the thirty (30) month periods, all options to extend for subsequent thirty (30) month periods shall terminate.
East Coast's Sublicense required certain monthly payments to Beechcraft. Paragraph 3 of the Sublicense entitled "Fees," read:
Sublicensee agrees to pay Beech sublicense fees as provided on Exhibit "B" attached hereto and made a part hereof. All payments shall be made in advance on the first day of each month to Beech or to such agents and at such places as Beech shall designate.
Exhibit B provides that Sublicensee was to pay to Beach for transmittal to MTA
additional license fees as follows: (a) Five (5)% (percent) of Sublicensee's gross fees accruing during the term of this Sublicense and of each renewal term hereof, except that there shall be excluded from Sublicensee's gross receipts for the purposes of determining the additional license fee payable under this sublicense, all state, local, and federal sales, use and excise taxes. Excluded from gross receipts are all revenues generated from operations not taking place at Republic Airport.
On May 22, 1980, Frank S. Tarbell, Director of Aviation at MTA, wrote Beechcraft saying that the MTA Board has approved Beechcraft's Sublicense with East Coast dated March 21, 1980 provided that Paragraph 5(a) of Exhibit "B" was amended by adding the following sentence: "However, all revenues generated from aircraft *329 that are owned or leased by East Coast Airways and based at Republic Airport shall be subject to the 5% fee regardless of where income from said aircraft is generated." The letter asked the parties to signify their concurrence with these changes by signing the letter. The letter was signed by Beechcraft on May 22, 1980; and by East Coast the same day. (Adv.Ex. 8) The amendment has been referred to by the parties as the Tarbell Amendment.
Mr. Peragine maintains that he agreed to pay five percent on all revenues generated by East Coast only as a result of fraud and duress. The duress lay in the fact that had he not signed both the original document and the Tarbell Amendment he would have lost the entire investment he had made in the improvements at the Airport. The fraud and misrepresentation lay in the fact that an employee of Beechcraft and the Airport Manager for LAT told him that the provision for payment of five percent to MTA was absolute and non-negotiable, that MTA had a legal right to that provision and that a similar provision was in effect in every other lease or license of the airport, but that it was strictly for appearance sake and the actual system followed was to charge a fixed amount based on the aircraft utilized. (Adv.Ex. 5).
Certain provisions of East Coast's Sublicense are pertinent to the present motion. They are:
4. Books and Records: Beech or the Metropolitan Transportation Authority shall have the right to audit Sublicensee's books and records at any time during normal business hours for the purpose of determining or verifying Sublicensee's gross receipts.
5. Alterations: It is understood and agreed that no alterations, additions or improvements to the Premises shall be made by Sublicensee without first having the written consent of Beech . . .
* * * * * *
8. Abandonment: Sublicensee shall not vacate or abandon the Premises at any time during the term without Beech's written consent.
* * * * * *
12. Assignment or Subletting: Sublicensee shall not have the right to assign this Sublicense or any interest therein, without Beech's written approval, and such approval shall not be unreasonably withheld, and Sublicensee shall not be relieved of liability for the rent and obligations herein without written consent from Beech. Sale, assignment or transfer of more than 50% of the stock of Sublicensee or other change of control shall be deemed an assignment.
For many years, operating under the Sublicense, East Coast was a successful company. During each of the years 1983 through 1986, its gross revenues exceeded $2 million. (Affidavit of Stephen Mendelsohn, Esq., dated June 6, 1991 and submitted in support of DOT's motion, hereinafter "DOT Aff.") (Exs. A, B).
The Republic Airport Operations Report for December 1985 showed that East Coast was the largest passenger operator at the airport having carried over 60 percent of the total passengers enplaned that month. (Letter of Mr. Feigenbaum to Republic Airport Commission, dated January 31, 1986, which is Ex. 17 to a copy of the complaint filed by East Coast with the Federal Aviation Administration, entitled "Complaint Filed for the Purposes of Seeking an Appropriate Order or Other Enforcement Action." (Referred to hereinafter as "FAA Complaint", admitted herein as Ex. 5)).
East Coast never paid anyone the five percent called for by its Sublicense Agreement, paying Beechcraft for transmittal to DOT only the flat fee that Peragine says had been represented to him to be the fee that would be acceptable.
In early 1985, DOT audited East Coast's books to determine how much was owed under the five percent proviso. East Coast says it requested a copy of this audit but was advised that it was not yet available although East Coast has reason to believe that it was completed in April or May 1985. (Adv.Exs. 12-18). The audit is not part of the record and it is unclear whether it was ever made available to East Coast.
*330 East Coast claims that on May 27, 1985 it mailed Beechcraft a letter confirming its intent to exercise its option to renew its Sublicense Agreement for an additional thirty month term. Its second thirty month term expired September 30, 1985.
Beechcraft, which denies ever receiving this letter, notified DOT in late September 1985 that because of East Coast's failure to renew the Sublicense Agreement it had been terminated on September 30, 1985.
A letter to East Coast from LAT followed advising Peragine that neither East Coast nor LIA had a valid license to conduct commercial operations out of Republic Airport and requested that all such operations cease immediately. The letter also demanded payment of $300,000 under the Sublicense Agreement. (Adv.Ex. 19).
The Adversary Proceeding
On December 1, 1985, East Coast sued Beechcraft, LAT and DOT in the Supreme Court of the State of New York, Suffolk County. The first cause of action against Beechcraft alone demands a "declaration that plaintiff has renewed its Sublicense Agreement which is valid and continuing." The second cause of action was against LAT alone and was discontinued prior to the time the adversary proceeding was transferred to this Court. The third and fourth causes of action are against the DOT. The third cause of action challenges the legality of the five percent override called for in the Sublicense Agreement. East Coast demands "a declaration that the Tarbell Amendment is void and unenforceable, that the percentage provision of the Sublicense Agreement is void and unenforceable and that plaintiff is not indebted to the DOT." The fourth cause of action claims that East Coast had been denied a facility to construct a fixed base operation in violation of 49 U.S.C.App. § 2210 and asks for a judgment directing LAT and DOT to make available to East Coast sufficient land on which to construct such an operation. No monetary recovery from DOT is requested, only equitable relief. (Adv.Ex. 1).
DOT counterclaimed for $311,470, representing the amount due on the override to that point in time and a declaration that East Coast is under a continuing obligation for the time period following December 31, 1984 to remit five percent of its commissionable revenues to DOT on a monthly basis. (Adv.Ex. 2).
During subsequent proceedings in the Supreme Court, Justice Goldstein held that the fourth cause of action against the DOT had to be dismissed in its entirety and the third cause of action, to the extent it was based upon 49 U.S.C.App. § 2201, et seq., likewise had to be dismissed because that statute does not create any private right of action. (Adv.Ex. 5).
However, in addition to granting DOT's motion for summary judgment in part, Justice Goldstein ruled "in the interest of maintaining the status quo, East Coast's motion for preliminary injunction is granted to the extent that, pending the determination of this matter, defendants are prohibited from interfering with the plaintiff's business and activities at Republic Airport and from denying plaintiff utilization of the terminal facility." This injunction was subsequently continued in effect by Justice Joseph J. Saladino.
Starting around 1984, East Coast had tried to become a fixed base operator at Republic Airport but DOT refused to make land available to it for that purpose. (FAA Complaint, Exs. 15-19). On May 12, 1986, the FAA advised East Coast that an airport which has received federal funds may not exclude a fixed based operator on the ground that there is not sufficient business at the airport. (FAA Complaint, Ex. 20).
In 1988, East Coast ceased all, or virtually all, its air carrier operations, transferring those operations to LIA. It also arranged to have its FAA Air Carrier Certificate reissued to LIA. (Tr., 7/30/91, pp. 29-33).
That same year, according to the schedules filed by East Coast, East Coast sold a plane to GFL Aerocraft, Ltd., two automobiles to East Coast Micro Systems and transferred $43,500 of inventory to an unnamed recipient in exchange for forgiveness *331 of a similar amount of indebtedness. On January 1, 1989, it sold three aircraft to Aviation Center for $15,000.
On April 7, 1989 East Coast voluntarily filed under Chapter 11. In an affidavit of Peragine, accompanying the required Chapter 11 schedules, the Debtor represented that at the time of filing and since November 1978, it had been "engaged in aircraft charter management and flight operations." (Affidavit, April 7, 1989, Par. 7). It gave its main business location as 1300 New Highway, Farmingdale, New York. The affidavit stated that East Coast had been forced to seek the umbrella of the bankruptcy court because it could not pay its debts as they matured and the Internal Revenue Service had levied on its property just before it filed. Id.
According to Peragine's affidavit, it was "desirable for the debtor to continue in the operation of its business and to cease to operate for even a short period of time would cause irreparable harm to the Debtor and make any reorganization or liquidation proposed herein impossible for confirmation." He further represented that East Coast anticipated starting to make a profit in the first 30 days and expected its profit in that period of time to be $1,600.
The Debtor's schedules showed $76,000 in assets, including $3,000 cash, a 1982 Jeep, accounts receivable of the value of $40,000 and an account receivable due from Atlantic Express, itself in bankruptcy, of $30,000. According the schedules, East Coast owned no office equipment, no machinery, no inventory and no tangible personal property. Listed as an asset, but of unknown value, was its license for office and hangar space and operational authority at Republic Airport.
East Coast was given authority to retain Macco, Hackeling & Stern ("MH & S") as attorneys in the Chapter 11 proceeding and to retain Mr. Feigenbaum to represent it in the adversary proceeding with DOT and Beechcraft.[2] Mr. Feigenbaum's retention order authorized payment of $200 per hour on proper application to the Court. MH & S's retention order stated that it intended to bill at an hourly rate of $195.
After East Coast filed under Chapter 11 the pending action in the Supreme Court against Beechcraft and DOT was removed to this Court. (Stipulation, dated July 17, 1989).
Although East Coast had ceased air carrier operations in 1988 it continued "Part 91" operations until the end of 1989. Peragine identified Part 91 operations as "flight school, flight instruction, sightseeing rides in aircraft." Such operations continued up until sometime in early 1990 when they, too, ceased. (Tr., 7/30/91, p. 59; Tr. 8/28/91, pp. 10-12).
Asked on November 26, 1991 what was the business of East Coast, Mr. Peragine gave the following testimony:
Q And what is East Airways?
A East Coast Airways is a New York Corporation doing business at Republic Airport.
Q And what is its principal business?
A At the moment?
Q Yes, at the moment?
A Its principal business is this lawsuit at the moment.
Q Does it have any ongoing operations?
A No.
Q What year did it cease its ongoing operations?
A It has ongoing operations to the extent it is involved in this lawsuit.
(Deposition 11/26/90 at 12; Tr. 7/30/91 at 31).
At some point in time one of Mr. Peragine's other companies moved into the space covered by East Coast sublease with Beechcraft. (Tr., 7/30/91, pp. 35-36). It is unclear whether the company which moved in is Aviation Center or LIA or both or whether one succeeded the other in the space. It is also unclear whether this took *332 place before or after East Coast filed its Chapter 11 Petition.
The Debtor's Proposed Amended Disclosure Statement, filed April 21, 1992 (p. 3) acknowledges that East Coast has discontinued active operations and "subletted a portion of its space to an affiliate Long Island Aviation Center." Currently, the only evidence at Republic Airport of East Coast's presence is a faded sign on a post at the edge of the parking lot, reading "East Coast Airways." (Tr. 8/28/91, pp. 5-9; Debtor's Ex. 2).
During the pendency of the Chapter 11, some, or all, of East Coast's records were moved from Republic Airport to a building in Syosset owned by Peragine. No notice of this move was given the Bankruptcy Court which continues to show East Coast's address as 1300 New Highway, Farmingdale, New York. (Tr., 7/30/91, pp. 59-60).
The only compensation East Coast has received for the occupancy of its space is that the rent (but not the five percent override to DOT) was paid by whatever company was occupying the premises. When Mr. Peragine was asked whether the company paying the rent at Republic Airport was the Aviation Center, he responded:
I think Long Island Aviation Center made rent payments. Long Island Aviation Center stopped operating a while back, though I don't know exactly when, but it really has been a case of over a period of time whoever had had the money made the payment.
THE COURT: Whoever had money among what, four corporations?
THE WITNESS: Whoever had the money of for between If East Coast had the money it made the payments. East Coast had made the recent payment.
THE COURT: East Coast, Montauk, Long Island Aviation, whoever had the money. Who else was in this group?
THE WITNESS: No, that's it, and or me.
(Tr. 8/28/91, pp. 54-55)
East Coast never sought, nor received, the approval of either Beechcraft or of the Bankruptcy Court to sublet or assign its space at Republic Airport or to turn any of the space over to any of Peragine's companies. (Tr., 7/30/91, pp. 38-43).
East Coast last filed an operating report on September 5, 1989. The three operating reports it filed cover the period from April 7, 1989 through July 1989.
On September 4, 1990, the DOT responded in the adversary proceeding to interrogatories framed by East Coast respecting what aviation companies paid it five percent of the company's gross receipts for facilities at Republic Airport. It showed that after 1980, East Coast was the only non FBO entity obligated to pay five percent of its gross receipts for operating at Republic Airport.
On August 6, 1991, East Coast and Peragine filed a formal complaint with the FAA against DOT and Beechcraft, predicated on the five percent override included in its Sublicense and the denial to it of land on which to operate an FBO facility.
In connection with the complaint East Coast lodged with the FAA in 1991, two attorneys were retained, Professor Marty Schwartz and Leon Friedman, who did "months and months and months of research." (Tr., 8/28/91, pp. 23-24). Peragine also hired an accountant in anticipation of East Coast's being charged with a fraudulent conveyance. Id. No authority was obtained from this Court to retain Professor Schwartz or Leon Friedman or an accountant.
Peragine testified that he has been renovating the Republic Airport facility, doing a good deal of construction, wallpapering it and carpeting it. He says "We probably I personally, again, have spent a pile of money." (Tr., 8/28/91, p. 48).
Respecting these renovations Mr. Peragine gave the following testimony:
Q Now you mentioned before, I believe, that you were renovating space at Republic Airport. Is that true?
A We've been doing renovations at our own space, yes.
THE COURT: You've got to keep your voice up, I can't hear you.
*333 A Yes, we've done renovations at our own space.
Q And who has financed these renovations?
A I have.
Q Meaning Mike Peragine?
A Yes.
Q Now who is this on behalf of? Who are you renovating for?
A We're renovating a facility.
Q For whom?
A Hopefully, for East Coast.
Q Is this a loan to East Coast or a gift?
A Everything that I do for East Coast at this point is, obviously, a gift if you want to characterize that it way.
(Tr., 8/28/91, p. 100)
In October 1990, DOT first moved to convert East Coast's Chapter 11 to Chapter 7 or to appoint an operating trustee. After East Coast objected to the motion on the ground, inter alia, of insufficient notice, the motion was voluntarily withdrawn without prejudice.
Shortly thereafter, East Coast took the first necessary steps for confirming a plan of reorganization. It submitted to the Court in late 1990 an order calling for a bar date of "February 1, 1990" for the submission of prepetition claims against the Debtor. "1990" was clearly a typographical error since February 1, 1990 was far in the past when the proposed order was submitted. The Court noted the error and corrected the error in the order it signed so that the bar date in the Court's Order is "February 1, 1991." However, East Coast failed to conform its papers and apparently published the order as originally submitted with the typographical error. Hence, the notice published in November 1990 sets the deadline for filing claims nine months earlier, or February 1st, 1990. The Bankruptcy Rules require 20 days notice of a bar date. Fed.R.Bankr.P. 2002(a). No such notice has ever been given.
On April 28, 1992, DOT filed a claim for $311,470 plus "an undetermined amount equal to 5 percent of each month of [East Coast's] commissionable revenues" from January 1985 to present, saying that it was confirming its informal proof of claim "the documentation of which is set forth in the Department's counterclaim and papers filed in the adversary proceeding No. 090-7004 commenced in this Court on January 19, 1990." No objection has been filed to DOT's claim.
In an application filed in support of a motion by the Debtor voluntarily to dismiss its Chapter 11 petition conditioned upon payment in full of all filed undisputed claims, the Debtor set out the claims which it did not dispute and those which it did. (The Debtor later withdrew the motion to dismiss.) The Debtor said its debt to the IRS was paid, that it owed New York State Department of Taxation up to $27,087.24 and had undisputed, unsecured debts totalling $12,854. Disputed claims, not counting the claim of DOT, added up to $137,135.11. (Debtor's Application to Dismiss, March 11, 1992). The Debtor has filed no objection to any of the claims which it describes as disputed.
On June 6, 1991, the DOT moved a second time to convert this Chapter 11 proceeding and this is the motion now pending before the Court. The hearing on this motion began on July 30, 1991 and continued on August 28, 1991. Testimony was received from Peragine, principal of the Debtor, and various exhibits were put in evidence by the DOT, including a deposition taken earlier of Peragine.
While the hearings were in adjournment, the Debtor, in August 1991, filed a plan of reorganization and disclosure statement. Objections to both were filed by the United States Trustee, the United States Attorney and the DOT. An amended disclosure statement was filed on April 21, 1992 and still a second amended disclosure statement was filed on May 29, 1992. Hearings on these disclosure statements have been adjourned pending decision of this motion.
Under the proposed plan Peragine and LIA will contribute $100,000 (or $120,000) to pay all undisputed, unsecured claims. This excludes the claim of the DOT. Although not entirely clear from the terms of the plan or the disclosure statement, the Debtor's attorney has stated that payment *334 to the unsecured creditors must await resolution of the litigation with the DOT. (Tr., 8/28/91, p. 36). What the disclosure statement says on this issue is:
In the unlikely event the New York DOT sustained its claim to an alleged license surcharge of $250,000-$700,000, the debtor's reorganization effort would be effectively terminated and unsecured creditors would not receive any distribution. If the present plan is confirmed prior to the resolution of this litigation, the creditors will be entitled to keep the $120,000 distribution provided therein.[3]
Assumption of East Coast's Sublicense
Although the Debtor in its disclosure statement and elsewhere repeatedly asserts that it has assumed its license agreement with Beechcraft, it has not done so. A debtor may assume an executory contract or unexpired lease only if it cures or provides adequate assurance that it will cure any default under the lease and provides adequate assurance of future performance. 11 U.S.C. § 365(b). Shortly after the Debtor filed it moved to approve its assumption of its Sublicense with Beechcraft. The motion was opposed and ultimately was resolved by a stipulation that assumption would await decision of the adversary proceeding transferred to the Bankruptcy Court. Should East Coast lose that adversary proceeding, it will be able to assume its Sublicense at Republic Airport only by paying or providing adequate assurance of payment of whatever was owed when it filed, which DOT claims to be more than $300,000.
According to the Debtor's most recent disclosure statement, general unsecured creditors, who the Debtor estimates are owed $120,000, will receive whatever is left over from $100,000 after payment of administrative claims estimated to run $25,000 and priority claims calculated to be $30,000. Not included in this estimate is DOT's claim.
According to a liquidation analysis attached to the proposed disclosure statement (Ex. E), East Coast's only assets at the present time are office equipment of a value of $5,000, insurance proceeds for a damaged Jeep automobile in the amount of $2,500, and a counterclaim against DOT for $50,000. All receivables have been collected.
The basis for valuing a claim against DOT at $50,000 is unknown since East Coast has never asserted a monetary claim against the agency.
A 1988 Income Statement and Balance Sheet for East Coast shows total assets of minus $28,281.60 and a total equity of minus $258,943.91. A 1989 balance sheet covering the period after the company filed under Chapter 11 shows assets of minus $112,845.19, a drop of $80.000 and a corresponding reduction in equity to a minus $380,200.75, a decline of $120,000. (Tr., 7/30/91, pp. 46-47; DOT Aff., Exs. F, G).
At the close of DOT's presentation and after it rested, East Coast moved for a directed verdict. While the Court originally said that it considered such a verdict unavailable, it later issued a memorandum dated April 10, 1991 stating that it would deem the motion to be one made under Federal Rules of Bankruptcy Procedure 7041 and 7052 and would rule on the motion at the conclusion of the evidence. The Court directed East Coast to be prepared to proceed with its evidence on the adjourned date. The Court also advised the parties that it is the practice of this Court to take judicial notice on a motion to convert of the entire record. This led to a request by East Coast for treatment of the motion as a contested matter. While the DOT originally opposed the motion, it agreed that Bankruptcy Rule 9014 provided that a motion to convert is a contested matter. The Debtor then said it would submit an appropriate order, but to this point in time it has not done so. Nevertheless, this Court deems this proceeding to be a contested matter to which Rule 9014 applies.
*335 For the reasons which follow, the Court is denying East Coast's motion for a directed verdict and is converting this proceeding to Chapter 7.
DISCUSSION
11 U.S.C. § 1112(b) authorizes conversion of a Chapter 11 proceeding to Chapter 7, or dismissal, after notice and a hearing, whichever is in the best interests of creditors and the estate, for cause, if a party in interest or the United States Trustee so requests.
The Debtor asserts that DOT lacks standing to bring the motion to convert this Chapter 11 case. This contention is without merit. DOT was scheduled as a creditor by the Debtor itself, albeit a disputed one. 11 U.S.C. § 101(10)(A) defines a creditor to mean an "entity that has a claim against the debtor that arose at the time of or before the order for relief concerning the debtor." 11 U.S.C. § 101(5)(A) defines claim to mean "right to payment whether or not such right is . . . disputed." 11 U.S.C. § 1109(b) states that "a party in interest, including . . . a creditor . . . may appear and be heard on any issue in a case under this chapter." DOT has filed a claim for over $300,000, to which East Coast has never objected; it has standing to make this motion.
Among the grounds enumerated in 11 U.S.C. § 1112(b) include the following: (1) continuing loss to or diminution of the estate and absence of a reasonable likelihood of rehabilitation; (2) inability to effectuate a plan; (3) unreasonable delay by the debtor that is prejudicial to creditors. DOT and creditors which support it rely on each of the foregoing.
The Court may convert a Chapter 11 to Chapter 7 even where no creditor moves for such relief. 11 U.S.C. § 105 authorizes the Court sua sponte to take any action necessary or appropriate to prevent an abuse of process.
Section 1112(b) is drafted to give "wide discretion to the court to make an appropriate disposition of the case when a party in interest requests . . . The Court will be able . . . use its equitable powers to reach an appropriate result in individual cases." House Report No. 95-595, 95th Cong. 1st Sess., pp. 405-406 (1977) reprinted in [1978] U.S.Code Cong. and Admin.News, pp. 5787, 5963, 6362, cited in In re Larmar Estates, Inc., 6 B.R. 933 (Bankr.E.D.N.Y. 1980); In re Coffee Cupboard, Inc., 119 B.R. 14, 17 (Bankr.E.D.N.Y.1990).
Peragine has used the shield of Chapter 11 to reduce East Coast to an empty shell having no purpose other than to carry on his feud with the DOT. East Coast describes this reorganization as a two party dispute with the DOT. (Debtor's Application to Dismiss, dated March 11, 1992, Par. 7; Tr., 5/29/92, p. 19). "Chapter 11 was never intended to be used as a fist in a two party bout. The Chapter is entitled reorganization and not litigation." (Emphasis Added). In re HBA East, Inc., 87 B.R. 248, 260 (Bankr.E.D.N.Y.1988).
There can be no question that during the three years East Coast has loitered in Chapter 11 there has been a significant diminution of its assets. A comparison of the assets its schedules show East Coast had when it filed with the liquidation analysis forming part of its proposed disclosure statement establishes diminution beyond peradventure. Whereas when East Coast filed it had $76,000 in assets, including $40,000 in accounts receivable, it now has no assets other than a monetary claim against DOT, never asserted in any court, and office equipment, none of which it possessed when it filed, of an alleged value of $5,000.
For all practical purposes East Coast has been out of business for over two years, although it represented when it filed that the briefest of interruptions would do it irreparable harm. Not only have its assets decreased while in Chapter 11, but its liabilities for administrative expenses have mounted to an unknown amount. Mr. Hackeling has spent hours in this Court representing the Debtor, as has Mr. Feigenbaum. Often they have been here together. (Tr., 5/29/92) The Debtor's estimate in its proposed disclosure statement that administrative expenses will not exceed *336 $25,000 seems wildly optimistic. The Debtor is incurring an administration expense building up its liabilities even as it combats this motion to convert.
Mr. Feigenbaum and Mr. Hackeling are not the only professionals being retained by East Coast. According to Peragine, he has also engaged other attorneys and accountants in pursuit of his grievance against the DOT. Although their retention has not been authorized disqualifying them from payments out of the estate, that is no assurance that they will not in the future make a claim against the Debtor.
Peragine also says that he has spent money on renovating the facilities at Republic Airport in the name of East Coast. The Debtor has not received authorization either to make renovations at Republic Airport or to borrow money from Peragine for the purpose of doing so.
While a huge administration expense is being built in litigating with the DOT, the premises which form the subject matter of the litigation, and the right to which the litigation has been brought to preserve, have been turned over to one of Peragine's other corporations, Long Island Airlines or Aviation Center, at no benefit to East Coast other than the payment of the rental to Beechcraft. Thus, the only beneficiary of the litigation has been a corporation which is a stranger to the present Chapter 11.
There need not be a significant diminution in the estate to satisfy Section 1112(b)(2). All that need be found is that the estate has suffered some diminution in value. In re Kanterman, 88 B.R. 26, 29 (S.D.N.Y.1988).
In addition to diminution of assets, there is present here a total absence of a reasonable likelihood of rehabilitation.
When a corporation is involved the purpose of Chapter 11 is rehabilitation. Absent a reasonable amount of assets and a feasibly operating business, there is no reason for continuing a corporate debtor in Chapter 11. In re 312 West 91st Street Co., 35 B.R. 346, 347 (Bankr.S.D.N.Y.1983); In re Tracey Service Co., Inc., 17 B.R. 405, 409 (Bankr.E.D.Pa.1982). Whether the debtor has assets, whether the debtor has an ongoing business to reorganize, and whether there is a reasonable probability of a plan being proposed and confirmed are factors the bankruptcy court properly takes into consideration when considering whether to convert or dismiss a case filed by a business debtor. "It is not the purpose of Chapter 11 to allow a debtor a permanent cloak of protection while the estate assets continue to diminish and the operational coherency unravels." In re Galvin, 49 B.R. 665, 669 (Bankr.D.C.N.D. 1985).
East Coast ceased operations at least two years ago and perhaps much earlier. It survives only as a name on a sign post and as a plaintiff in a lawsuit in this Court and a complainant to the FAA. The Debtor has no employees and no assets. All its proposed financial disclosure statement says about its current operations is the following: "The debtor has not continued its pre-petition operations while in Chapter 11. The Debtor will not assume any prepetition contracts upon entry of its plan of reorganization."
East Coast's sole response to the overwhelming evidence adduced by DOT, that East Coast has ceased operations and has exhausted its assets and does not even occupy the premises over which it has been battling for several years, is that the Supreme Court held in Toibb v. Radloff, ___ U.S. ___, 111 S. Ct. 2197, 115 L. Ed. 2d 145 (1991) that the Code contains no "ongoing" business requirement for a Chapter 11 reorganization. ___ U.S. at ___, 111 S.Ct. at 2199. But the issue the Supreme Court was addressing was whether an individual consumer debtor, not engaged in any business, was eligible for relief under Chapter 11 or was limited to Chapter 7 and Chapter 13.
In rebuffing arguments that permitting a non-business Chapter 11 would lead to abuse, the Court said, "The Code gives Bankruptcy Courts substantial discretion to dismiss a Chapter 11 case in which the debtor files an untenable plan of reorganization. See, Sections 1112(b) and 1129(a)." *337 Id. ___ U.S. at ___, 111 S.Ct. at 2201. Thus, the Court counted on the Court's power to utilize Section 1112(b), exactly as the DOT is doing here to stop misuse of Chapter 11 by debtors having no business to reorganize.
Further, "rehabilitation" of an individual debtor does not require an ongoing business because his rehabilitation lies in the reorganization of his financial life. Whatever occurs in the bankruptcy court the individual does not cease to exist. The same is not true of a corporate debtor. Its rehabilitation requires an ongoing business, otherwise, it is just a name.
The fact that a debtor who has no ongoing business can file does not mean that the lack of an ongoing business is not evidence of the presence of the factors made significant by Section 1112(b). In this case, the fact that the Debtor when it filed was actively engaged in business and no longer is, is evidence that there has been a diminution of assets, that there is no reasonable possibility of rehabilitation and that creditors have been injured by the delay.
The Debtor has demonstrated no interest in reorganizing its affairs in Chapter 11. It has engaged in a few desultory motions only to spike DOT's motion to convert. It has yet to establish an effective bar date. It has taken no action to eliminate disputed claims. The Debtor's only interest in this Chapter 11 is to drag it out while Peragine continues to pursue his grievance against the DOT.
The Debtor has no ability to effectuate a plan out of its own resources. The plan which Peragine says he is willing to subsidize cannot be confirmed. Mr. Peragine is willing to pay all creditors except DOT. If East Coast loses its litigation with DOT, he cannot be compelled to give East Coast money to pay the claim. If East Coast wins that litigation, nothing will be owed DOT. In either event, DOT gets nothing.
Chapter 11 is not designed to provide a safe haven for riskless litigation. It is not designed to allow a corporate party to litigate its obligations, safe in the knowledge that if it loses it will not be required to pay anything because it will be judgment proof in every sense of the word.[4]
That an investigation by the FAA is in progress is not a reason for continuing East Coast indefinitely in Chapter 11. FAA has agreed to investigate charges made jointly by East Coast and Peragine that the DOT acted, in derogation of 49 U.S.C.App. § 2201, in not acceding to East Coast's request to become a FOB operator. How long the FAA's investigation will take and what its results will be are unpredictable. It is unlikely that DOT will acquiesce in an unfavorable determination and an appeal may take years. That being an FBO operator is not any guarantee of riches is shown by the fact that Cosmopolitan, which held that status went into bankruptcy. Moreover, what advantage East Coast as it is today, a corporation without assets, can gain from a favorable determination is equally unclear. The ephemeral possibility of some benefit to East Coast some time in the indefinite future cannot overcome the clear evidence that the DOT has satisfied the conditions for demanding conversion of this protracted and burden-some Chapter 11 proceeding.
There can be no doubt that the three years this Debtor has been in Chapter 11 have been prejudicial to creditors. All its assets have been used up. What was an active company is now an empty name. Administrative expenses of unknown magnitude have been created and are still being *338 generated. The delay has made it harder to trace the pre-petition transfers of significant assets made by the Debtor within one year prior to filing. Records may have disappeared, memories have dimmed and there may be other impediments to recovery.
Conversion is in the best interest of creditors because a trustee may be able to recover assets which the Debtor has had no interest in pursuing. Among the transfers which might yield assets to a disinterested trustee are East Coast's pre-petition sale of its airplanes, the transfer of the Debtor's inventory and of its operating certificate to LIA and the million dollar sale by LIA of various slots at LaGuardia Airport which may have been the property of East Coast.
While DOT has more than demonstrated the existence of the causes on which it relied in moving to convert, what has been disclosed during the course of the hearings on the DOT's motion provides independent cause for conversion. See, In re Sal Caruso Cheese, Inc., 107 B.R. 808 (Bankr. N.D.N.Y.1989). Peragine is an unfit trustee of East Coast's assets. Shielded by Chapter 11 from scrutiny by East Coast's creditors, Mr. Peragine has treated East Coast as his personal property to be dealt with like his other corporations without notice to creditors and without authorization from the Court. He has turned over East Coast's premises at Republic Airport to a related company under terms he has never elected to disclose for no compensation. Without any authorization from this Court, he has transferred East Coast's operations, such as they are, from Farmingdale to Syosset. Claiming to be acting on behalf of East Coast, he has hired accountants and attorneys, spent a "pile" of money on renovations on premises which companies other than East Coast are occupying.
East Coast has filed no operating reports since July 1989, therefore, no one can know what has happened to its assets or what expenses, if any, it has paid. The failure to submit the required monthly operating reports alone constitutes cause under Section 1112(b). In re Copy Crafters Quickprint, Inc., 92 B.R. 973, 986 (Bankr.N.D.N.Y. 1988); In re Cohoes Indus. Terminal, Inc., 65 B.R. 918, 922-23 (Bankr.S.D.N.Y.1986).
As Peragine has collected money from its accounts receivable, he has spent it as he elected, for what expenses no one knows. Whether or not permitting one of Peragine's other corporations to occupy East Coast's premises at Republic Airport is, or is not, a technical violation of the Sublicense, by leaving East Coast open to the claim that it is, he has jeopardized East Coast's license agreement with Beechcraft. He has thereby put East Coast's principal asset when it filed at risk.
This Court is persuaded that the DOT has satisfied its burden under § 1112(b) that there is a continuing loss to or diminution to the estate coupled with the absence of a reasonable likelihood of rehabilitation. The Debtor has no present ability to effectuate a plan of reorganization. Further, the Debtor's sojourn in Chapter 11 has been prejudicial to its creditors because its assets have not been safeguarded. The Court finds that conversion of this case under § 1112(b) of the Code to be in the best interest of the creditors and the estate.
CONCLUSIONS OF LAW
This is a core proceeding under 28 U.S.C. 157(b)(2)(A).
The DOT and the other creditors moving to convert this case from Chapter 11 to Chapter 7 have standing to do so.
There is present here continuing loss to or diminution of the estate since the Debtor filed and absence of a reasonable likelihood of rehabilitation.
The Debtor has no present ability to effectuate a plan.
Since the Debtor filed in April 1989 there has been unreasonable delay that is prejudicial to creditors.
Conversion to Chapter 7 is in the best interests of the creditors and the estate.
For the foregoing reasons, this proceeding is hereby converted to Chapter 7.
*339 An Order consistent with the foregoing Findings of Fact and Conclusions of Law is being issued contemporaneously.
NOTES
[1] The Court agreed to take judicial notice of the complaint, the answer and all the affidavits and affirmations filed in the adversary proceeding. (Tr., 8/28/91, p. 65). In that proceeding, East Coast has submitted two volumes of exhibits in support of its motion for summary judgment: "Exhibits on Plaintiff's Motion for Summary Judgment" dated July, 1991 and "Additional Exhibits on Plaintiff's Motion for Summary Judgment" dated August, 1991, which are referred to herein as "Adv. Ex."
[2] In the application to the Court to approve Feigenbaum as special attorney, Feigenbaum was described as having a five percent stock interest in the Debtor. In the Debtor's most recent Disclosure Statement, Mr. Feigenbaum is said to own 17 percent. Nothing was said about his being a creditor, although the schedules list him as owed $1,000.00.
[3] In the Debtor's Opposition to DOT's motion to convert, it stated flatly that "Payment could not be made to the unsecured creditors until such time as the litigation with the New York Department of Transportation is resolved." (Supplemental Affirmation in Opposition, p. 2).
[4] This litigation is particularly riskless. East Coast is challenging its contractual obligation to pay five percent of its gross receipts, including all revenues generated from aircraft it owns or leases. Evidently East Coast has owned or leased no aircraft since 1988 and probably has had no gross receipts since 1990. While DOT and Beechcraft have been enjoined from interfering with East Coast's operations at Republic Airport, East Coast has ceased such operations, turning over its planes and its operations at Republic to a stranger to the Sublicense, thus radically altering the status quo which the injunction was intended to preserve, all to the potential prejudice of DOT. East Coast has laid the groundwork for the argument that even if the DOT wins, it is entitled to nothing for Peragine's operations at Republic since 1988 because not carried on by East Coast and not involving East Coast planes.
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744 S.W.2d 329 (1988)
Darrell Hobson PINKSTON, Appellant,
v.
The STATE of Texas, Appellee.
No. 01-86-00997-CR.
Court of Appeals of Texas, Houston (1st Dist.).
January 7, 1988.
*331 Robert A. Scardino, Jr., Houston, for appellant.
Calvin Hartmann, Asst. Dist. Atty., for appellee.
Before EVANS, C.J., and SAM BASS and DUGGAN, JJ.
OPINION
DUGGAN, Justice.
A jury found appellant guilty of aggravated robbery with the use of a firearm. The trial court assessed punishment at 15 years and one day imprisonment. Appellant asserts five points of error.
At approximately 7:45 PM on July 6, 1984, the complainant, Reginald Brinkley, answered a knock on his garage door. He was confronted by two men, one of whom asked if "Amy was there?" Mr. Brinkley explained that no one by that name lived there. Brinkley testified that appellant, Darrell Pinkston, and his companion, David Wilson, burst through the doorway, knocking Brinkley to the floor.
Armed with guns, the two men forced Brinkley into the adjacent room where his wife was eating dinner. While Wilson held the couple at gunpoint, appellant went upstairs and returned with sheets, which he used to tie the Brinkleys' hands and feet. The couple was made to lie face down on the living room floor. Appellant then ransacked the upper living area while Wilson went through the downstairs.
At various intervals during the robbery, the Brinkleys observed appellant carrying items from the upstairs to the downstairs. At one point, appellant demanded that Mr. Brinkley tell him where his money was kept. When Brinkley stated that there was no more money, appellant threatened "to blow off" his head. After approximately 35 to 40 minutes, the two men loaded the stolen property into Brinkley's car and drove away. The stolen property included gold cufflinks, western belts, guns, watches, jewelry, and a fur coat.
In his first and second points of error, appellant contends that his trial counsel's failure to interview potential alibi witnesses, and his failure both to go to the jury for punishment and to request a jury instruction on probation, fell below the objective standard of reasonableness required of trial counsel and deprived him of his constitutional right to effective assistance of counsel.
The test for ineffective assistance of counsel is whether counsel's conduct so undermined the proper functioning of the adversarial process that the trial cannot be relied upon as having produced a just result. Strickland v. Washington, 466 U.S. 668, 104 S. Ct. 2052, 2064, 80 L. Ed. 2d 674 (1984). Effective counsel is to be judged by the sixth amendment standard of "reasonably effective assistance." Ex parte Duffy, 607 S.W.2d 507 (Tex.1980). Under this standard, the sufficiency of an attorney's assistance is gauged by the totality of the representation of the accused. Ferguson v. State, 639 S.W.2d 307 (Tex.Crim. App.1982); Passmore v. State, 617 S.W.2d 682 (Tex.Crim.App.1981). The constitutional right to counsel does not mean errorless counsel or counsel whose competency is to be judged by hindsight, but counsel reasonably likely to render and rendering reasonably effective assistance. Ex parte Duffy, 607 S.W.2d at 516-17. Each case must be considered on its own particular circumstances. Mercado v. State, 615 S.W.2d 225 (Tex.Crim.App.1981).
*332 First, appellant claims that his trial counsel failed to perform the investigation that would have uncovered the testimony of potential alibi witnesses. He contends that his counsel did not know the evidence existed and that due to his failure to investigate, the evidence was not placed before the jury.
An attorney has a duty to make an independent investigation of the facts of his client's case; counsel's failure to seek out and interview potential witnesses is ineffective where the result is that any viable defense available to the accused is not advanced. See Ex parte Ewing, 570 S.W.2d 941 (Tex.Crim.App.1978).
In the instant case, appellant's trial counsel presented an alibi defense. At trial, appellant testified that he was in Austin on July 6, 1984, the date of the offense. He claimed that he arrived in Austin on July 3, 1984, to stay with his friend, Jim Green, and other guests for the Fourth of July holidays. He stated that he played golf with a man named Victor Wallace and two Austin police officers on the afternoon of July 6, 1984, and then spent the evening in the company of his friend and the other guests.
Appellant's trial counsel called Green, Wallace, and one of the officers to testify. Green testified that appellant stayed with him from July 3rd through July 9th. He claimed that he spent every evening with appellant, including the evening of July 6, 1984. Wallace and the officer testified that they played golf with appellant over the holidays, although neither was sure of the exact date.
An attorney's failure to investigate or present witnesses will be a basis for establishing ineffective assistance of counsel only where it is shown that the witnesses would have been available and that the presentation of the evidence would have benefitted appellant. See Coble v. State, 501 S.W.2d 344 (Tex.Crim.App.1973). In the instant case, the record does not indicate that the other officer or the guests were available for interviews or that their testimony would have benefitted appellant. There is no showing that the other officer would have been able to be more exact about the date on which he played golf with appellant two years earlier, nor is there any showing that the other guests would have known or remembered where appellant was at the time of the offense.
Appellant also claims that his trial counsel failed to interview Gerald Howell, who would have established that he, not appellant, along with Wilson robbed the Brinkleys. However, in his fourth point of error, appellant claims that Howell refused to be interviewed or to testify about the Brinkley robbery, thus undermining any argument that his counsel was ineffective in failing to conduct an interview.
Next, appellant contends that his trial counsel failed to go to the jury for punishment and failed to request a jury instruction on probation at the punishment phase of the trial. Appellant notes that the record shows that he was clearly eligible for probation because he had no prior felony convictions; therefore, the jury could have recommended probation, if it had assessed punishment of less than 10 years. Tex.Code Crim.P.Ann. art. 42.12, sec. 3a (Vernon Supp.1988).
An examination of the record reveals that appellant entered a plea of not guilty and requested that the trial court assess punishment. No application for probation was made. Appellant argues that his attorney should have told him that he was eligible for probation and that the trial court could not grant him probation if the jury found him guilty of aggravated robbery. Tex.Code Crim.P.Ann. art. 42.12, sec. 3g(a)(1)(D) (Vernon Supp.1988).
However, appellant has failed to prove that his counsel did not inform him of such matters. The record before us does not reveal what advice appellant was given by his attorney, nor does it explain the defense counsel's strategy. Without conclusive support in the record, we cannot presume that the decisions originated with the attorney and were not the result of acquiescence to the client's wishes. Shepherd v. State, 673 S.W.2d 263, 267 (Tex. App.Houston [1st Dist.] 1984, no pet.).
*333 An assertion of ineffective assistance of counsel will be sustained only if the record affirmatively supports such a claim. Ex parte Ewing, 570 S.W.2d at 943.
Moreover, matters of trial strategy will be reviewed only if an attorney's actions are without a plausible basis. Ex parte Burns, 601 S.W.2d 370 (Tex.Crim. App. 1980). In the instant case, appellant was being tried for aggravated robbery of an elderly couple with the use of a firearm in their home. It was reasonable to believe that the trial court might be more lenient than the jury in such a case. As it was, the trial court assessed punishment at 15 years and one day, a relatively light sentence considering that the maximum punishment is life or any term of not less than five years or more than 99 years. Tex.Penal Code Ann. secs. 12.32 and 29.03 (Vernon Supp.1988). Therefore, under the facts of the instant case and based on a totality of the representation, appellant was not denied effective assistance of counsel at his trial. Appellant's first and second points of error are overruled.
In his third point of error, appellant asserts that the trial court erred in overruling his motion to suppress Mr. and Mrs. Brinkley's in-court identifications. Appellant claims that the in-court identifications were tainted by the suggestive nature of the out-of-court identifications.
At the hearing on the motion to suppress, Officer Davis of the Houston Police Department testified that on July 17, 1984, Mrs. Brinkley told one of the investigating officers that she could not identify anyone involved in the robbery.
Officer Davis also testified that on August 13, 1984, 38 days after the offense, he showed a photo spread to Mr. and Mrs. Brinkley at their residence. The spread consisted of six black and white photos from the driver's license division of the Department of Public Safety. Davis testified that the persons depicted in the photos were similar in race, age, and facial hair.
Mrs. Brinkley was shown the photo spread before Mr. Brinkley arrived home. She was unable to identify anyone. At that time, she indicated that she did not think that she had seen the appellant well enough to identify him because he was upstairs most of the time.
When Mr. Brinkley arrived home that day, he was shown the same photo spread while his wife was in another room. He was not told that she had been unable to identify anyone. He positively identified appellant as one of the men who robbed him.
On October 22, 1984, Mr. and Mrs. Brinkley attended a line-up at the Harris County jail, in which appellant participated along with four other men of similar appearances. Appellant's trial counsel was present. The Brinkleys were told not to communicate with each other in any way. After the line-up, each was taken into a separate room and asked if they could identify anyone. Both Mr. and Mrs. Brinkley made positive identifications of appellant, and testified that they did so based on their observations of him during the robbery.
Mrs. Brinkley testified at the hearing that prior to the line-up she was not sure if she could identify anyone, but that once she saw the man in person, she was able to make the identification without hesitation. She stated that "seeing the whole person apparently made a difference rather than photographs, but I knew it was him when I saw him."
Mr. and Mrs. Brinkley testified that although they discussed the photo spread identification prior to the line-up, she never learned that it was appellant that her husband had identified. Further, she testified that her husband did not tell her whom to identify before the line-up.
Appellant also argues that the out-of-court identifications were suggestive because he was the only person who appeared in both the photo spread and the line-up. However, this contention was not presented at the motion to suppress, nor is it supported elsewhere in the record. Moreover, because appellant was positively identified from the photo spread by Mr. Brinkley and not identified by Mrs. Brinkley, it was reasonable to consider him a suspect *334 and to include him in the subsequent line-up that they both attended.
The record does not reveal any unnecessarily suggestive procedures by the officers, nor any improper discussions between the Brinkleys. More importantly, the couple testified that their in-court identifications were based on the robbery and were independent of any out-of-court identifications.
Finally, appellant notes that both Mr. and Mrs. Brinkley testified that they only saw appellant for approximately 35 to 45 seconds of the approximately 40 minutes that he was in their house, and that those seconds were divided into several intervals. Appellant adds that Mr. Brinkley testified that his glasses were knocked from his face when he was forced to lie on the floor, and that Mr. Brinkley testified that he has trouble seeing up close without them. However, Mr. Brinkley also testified that he was wearing his glasses when he answered the door and that even thereafter, he was able "to make out" the appellant. Mrs. Brinkley testified that she had no trouble with her vision.
Moreover, the length of time during which the Brinkleys viewed appellant and the fact that Mr. Brinkley had trouble seeing without his glasses go to the weight of the in-court identifications and not to their admissibility. See Moore v. State, 700 S.W.2d 193, 198 (Tex.Crim.App.1985). Appellant's third point of error is overruled.
In his fourth point of error, appellant asserts that the trial court erred in denying his out-of-time amended motion for new trial based on newly available evidence.
The record reflects that the trial court imposed sentence on October 23, 1986. Appellant filed a motion for new trial on November 20, 1986. No ruling was made on this motion; consequently, it was overruled by operation of law on January 6, 1987. Tex.R.App.P. 31(e)(3).
On May 13, 1987, appellant filed an amended motion for new trial in which he alleged that newly available evidence would disclose that Gerald Howell, not appellant, committed the Brinkley robbery.
After a hearing on the motion, the trial court denied appellant a new trial.
The State's response to appellant's point of error is two-fold: 1) that the trial court did not have jurisdiction to entertain appellant's motion for new trial; and 2) that the trial court did not err in denying the appellant a new trial.
Tex.R.App.P. 31(a)(1) provides that a motion for new trial or an amended motion for new trial must be filed within 30 days of the date sentence is imposed or suspended in open court. In the instant case, appellant's amended motion for new trial was not filed until more than six months later.
A trial court lacks jurisdiction to grant a motion for new trial filed more than 30 days after sentencing. Deloro v. State, 712 S.W.2d 805 (Tex.App.Houston [14th Dist.] 1986, no pet.); see also Washburn v. State, 692 S.W.2d 576 (Tex.App. Houston [1st Dist.] 1985, no pet.); Ganim v. State, 638 S.W.2d 628 (Tex.App.Houston [1st Dist.] 1982, no pet.).
Appellant argues that the trial court had jurisdiction to hear his out-of-time motion because it was based on newly available evidence that he was unable to obtain earlier. At the time of appellant's trial, Howell was serving sentences in the Texas Department of Corrections for convictions on several other counts of aggravated robbery, some of which he had committed with appellant's co-defendant, Wilson. Howell testified that sometime in 1985, before appellant's trial, he was questioned by appellant's investigator about the Brinkley robbery. He stated that he could not remember if he told the investigator that he committed the robbery. However, he testified that shortly thereafter, he told his own attorney that he was involved in the Brinkley offense. His attorney advised him not to discuss the Brinkley robbery with anyone.
After appellant's trial, Howell's convictions were reversed. Howell was then questioned by a representative of appellant's counsel on appeal about the Brinkley robbery. He testified that he told the representative that he would not be willing to *335 discuss anything until he had made his "deal" with the State on the other charges. Howell subsequently entered into a plea bargain agreement with the State and was sentenced to 25 years imprisonment.
Thereafter, Howell told appellant's attorney on appeal that he would be willing to testify at appellant's motion for new trial that he, not appellant, committed the Brinkley robbery.
Appellant contends that because Howell was unwilling to testify earlier, he was denied his constitutional right to compulsory process and therefore was entitled to an out-of-time motion and a new trial. Appellant relies on Whitmore v. State, 570 S.W.2d 889, 898 (Tex.Crim.App.1977) (op. on reh'g), in which the Court of Criminal Appeals held that "where an accused's constitutional rights are in conflict with a valid procedural rule of law, the procedural rule must yield to the superior constitutional right." In that case, the court found that the accused was entitled to a hearing on an untimely motion for new trial based on newly available evidence because he was denied his constitutional right to compulsory process when he attempted to obtain the testimony of his co-defendant, but was unable to do so when the co-defendant indicated that he would assert his fifth amendment privilege against self-incrimination.
However, the facts in Whitmore are distinguishable from the facts in the instant case. In this case, appellant made no attempt before or during trial, or upon a timely motion for new trial to procure Howell's testimony by requesting a bench warrant or subpoena, although his possible involvement was known to appellant at that time. Further, there is no showing that Howell personally asserted his fifth amendment privilege against self-incrimination, thus defeating appellant's constitutional right to compulsory process. The right to compulsory process for obtaining witnesses is not an absolute right. United States v. Wilson, 732 F.2d 404 (5th Cir.1984); Weaver v. State, 657 S.W.2d 148, 150 (Tex.Crim. App.1983). Moreover, appellant's trial counsel testified that he did not consider Howell a suspect in the case and that he chose to try appellant's case based on his alibi defense.
The Court of Criminal Appeals in Drew v. State, 743 S.W.2d 207, (Tex.Crim.App. 1987), held that:
A defendant cannot normally complain that he was deprived of a constitutional right, such as compulsory process of witnesses, which he did not attempt to exercise and in fact waived, or assert it was blocked by the superior constitutional right of a codefendant, such as the privilege against self-incrimination which the codefendant never personally claimed.
At 225.
Under the facts in the instant case, appellant waived his constitutional right to compulsory process. Therefore, the application of rule 31 of the Texas Rules of Appellate Procedure did not deprive him of a right secured by the Constitution. The trial court did not have jurisdiction to grant appellant's motion for new trial.
Moreover, even if the trial court had jurisdiction, it did not abuse its discretion in denying the motion. Motions for new trial based on newly discovered or newly available evidence are not favored by the court and are viewed with great caution. United States v. Vergara, 714 F.2d 21, 22 (5th Cir.1983); Drew v. State, at 225.
The denial of a motion for new trial based on newly discovered or newly available evidence will not constitute an abuse of discretion unless the record shows:
1) that the evidence was unknown or unavailable to the movant before trial;
2) that the movant's failure to discover or obtain it was not due to want of diligence on his part;
3) that its materiality was such as would probably bring about a different result at another trial; and
4) that it was competent, not merely cumulative, corroborative, or impeaching.
See Boyett v. State, 692 S.W.2d 512, 516 (Tex.Crim.App. 1985); Van Byrd v. State, 605 S.W.2d 265 (Tex.Crim.App. 1980); see also Whitmore v. State, 570 S.W.2d at 896.
First, appellant has not shown that the evidence was unknown or unavailable *336 before trial, or that his failure to discover or obtain it was not due to lack of diligence.
The record reveals that appellant's trial counsel had access to the State's file, which indicated that the police considered appellant, Howell, and Wilson as suspects in a series of robberies, and that neither Mr. nor Mrs. Brinkley were able to identify Howell from a lineup. Prior to trial, appellant's trial counsel did not inquire about Howell's possible involvement in the Brinkley robbery. Moreover, appellant's trial counsel testified that he did not consider Howell a suspect even after learning of the possible connection among the three men, and that he chose to try the case based on appellant's alibi defense.
Further, both Howell and appellant's trial counsel testified that appellant's investigator spoke with Howell about the Brinkley robbery before appellant's trial. As noted earlier, appellant made no attempt to call Howell as a witness at trial to compel him to testify or invoke his fifth amendment right on the record. Greater diligence on the part of appellant and his trial counsel could have resulted in the discovery and procurement of Howell's testimony.
Most importantly, appellant does not show that Howell's testimony was material in the sense that it is probably true and of such weight as to probably produce a different result at another trial. Etter v. State, 679 S.W.2d 511, 514 (Tex.Crim.App. 1984).
At the hearing, Howell testified to details of the robbery; however, he also made several key statements obviously inconsistent with the facts presented at trial. Mr. and Mrs. Brinkley were able to positively identify appellant at both the line-up and at trial, but did not identify Howell from the photo spread. Further, Howell was already serving sentences for the other robberies, and he waited until he made his "deal" with the State before coming forward with his admission.
Appellant has not shown that Howell's testimony was probably true and that it would probably produce a different result at another trial. The trial court heard and saw the witnesses at both the trial and the hearing, and was in the best position to determine their credibility. The trial court has wide discretion in deciding whether or not to grant a new trial. Based on the record before us, the appellant has failed to show that the trial court abused its discretion in denying his motion for new trial. Appellant's fourth point of error is overruled.
In his fifth point of error, appellant contends that he was denied his constitutional right to due process when the State failed to disclose that at the time of Howell's arrest, stolen property belonging to the Brinkleys was recovered from the apartment that Howell shared with Wilson. Appellant claims that it was not until the hearing on the amended motion for new trial that he first learned of the information.
It is reversible error for the State to either actively suppress or inadvertently fail to disclose evidence that might exonerate or be of material value to the accused. Brady v. Maryland, 373 U.S. 83, 83 S. Ct. 1194, 10 L. Ed. 2d 215 (1963); Quinones v. State, 592 S.W.2d 933 (Tex.Crim.App.1980).
In determining whether reversible error has occurred, the appellate court must consider three factors: 1) the suppression of the evidence by the State after a request from the defense, 2) the evidence's favorable character for the defense, and 3) the materiality of the evidence. Coe v. State, 683 S.W.2d 431 (Tex.Crim.App.1984); Crawford v. State, 617 S.W.2d 925 (Tex. Crim.App.1980).
In Quinones v. State, 592 S.W.2d at 941, the Court of Criminal Appeals defined "materiality" under Texas law in the due process terms used by the Supreme Court in United States v. Agurs, 427 U.S. 97, 96 S. Ct. 2392, 49 L. Ed. 2d 342 (1976). The court held that:
[t]he mere possibility that an item of undisclosed information might have helped the defense, or might have affected the outcome of the trial, does not establish "materiality" in the constitutional *337 sense ... In determining materiality, the omission must be evaluated in the context of the entire record, and constitutional error is committed only if the omitted evidence creates a reasonable doubt that did not otherwise exist.
In the instant case, appellant admits that no pre-trial motion for discovery was filed. Appellant made no general or specific request for the State's evidence. Moreover, the appellant's trial counsel admitted at the hearing on the motion for new trial that he had access to the State's complete file. As noted earlier, the offense report indicated that the State considered appellant, Howell, and Wilson as suspects in a series of robberies.
Further, the stolen property belonging to the Brinkleys was found in an apartment that Howell shared with Wilson, who was positively identified by the Brinkleys as one of the men who robbed them at gunpoint. Howell was not identified by either of them from the photo spread. There was no evidence that the stolen property was in Howell's exclusive possession within the apartment. Therefore, appellant has failed to show how it is exculpatory to him that stolen property was found in an apartment shared by one of the men positively identified as having committed the offense.
More importantly, even if the information was exculpatory to him, based on the context of the entire record, the omitted evidence would not have created a reasonable doubt about appellant's guilt that did not already exist. Appellant's fifth point of error is overruled.
The judgment of the trial court is affirmed.
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744 S.W.2d 1 (1987)
James R. HURT, Independent Executor of the Estate of Huling W. Smith, Deceased et al., Petitioners,
v.
Calvin SMITH and Carol June Smith Brown et al., Respondents.
No. C-5747.
Supreme Court of Texas.
November 10, 1987.
Rehearing Denied February 24, 1988.
*2 Cullom F. Milburn, Milburn, Hudman, Peterson & Zimmermann, Odessa, for respondents.
James A. Carter, Allen L. Price, Smith, Carter, Rose, Finley & Hofmann, San Angelo, Walter A. Locker, III, McMahon, Cox, Tidwell, McCoy, Hansen & Atkins, P.C., Odessa, W.H. Heatly, Rhodes, Heatherly & Myers, Abilene, Jimmie B. Todd, Todd, Barron, Bridges & McKeel, Odessa, James W. Witherspoon, Witherspoon, Aikin & Langley, Hereford, for petitioners.
OPINION
HILL, Chief Justice.
This is a will construction case involving a determination of the sequence by which legacies should be charged with taxes due on the estate, the proper classification of bequests, and the entitlements of income earned by assets during estate administration. The trial court ordered that all estate and inheritance taxes should be paid: first, from the personal property residuary as described in section 9 of the will; second, if needed, from the real property residuary in section 7; and third, if necessary, pro rata from the bequests in sections 1, 2, 3 and 8. It further ordered that all income from mineral interests would belong to the beneficiaries under sections 4 and 5, and that all other income would belong to the beneficiaries under the personal property residuary in section 9. In an unpublished opinion, the court of appeals affirmed the judgment of the trial court in part and reversed and rendered in part. We affirm in part and reverse and render in part.
*3 ESTATE AND INHERITANCE TAXES
Huling W. Smith died on January 6, 1984. His will divided his estate among several friends, some relatives, and three charities. Article IV of Smith's will authorized the executor to enter "such proceeding as may be necessary in connection with the determination of my estate or inheritance or other succession taxes which may be due on account of or in connection with my death...." Article VI, § 8 provided that his "just debts, funeral expenses, expenses of last illness, and costs and expenses incurred in the probate of this Will" should be deducted from the charities' bequest. Calvin Smith and the other beneficiaries assert that this provision expressly charged the charities' bequest with all the estate and inheritance taxes. We disagree.
This Court has previously held that reference in a will to "debts and expenses" included only those owing by the testatrix at death, funeral expenses, and administration expenses. Stewart v. Selder, 473 S.W.2d 3, 10 (Tex.1971). Such words are not to be construed as charging estate and inheritance taxes against the particular bequest. We hold that such a result is not changed by the insertion into a will of the language "costs and expenses of probate." Since the testator specifically mentioned estate taxes in Article IV, he could just as easily have specified in Article VI that the property passing to the charities should be charged with such taxes. No such provision exists, and although the question is not free from difficulty, we hold that the phrase "just debts, funeral expenses, expenses of last illness, and costs and expenses incurred in the probate of this Will" does not include estate and inheritance taxes under the circumstances presented in this case. See Stewart. 473 S.W.2d at 10.
CLASSIFICATION OF BEQUESTS[1]
Because we hold that the Smith will does not provide for the payment of taxes, we must classify each bequest in order to determine the sequence by which these legacies should be charged with federal estate and inheritance taxes due on the estate.[2]
Once these bequests are properly categorized, the general rule is that estate and inheritance taxes will be charged, to the extent necessary, as follows: first, from the personal property residuary; second, from the real property residuary; third, pro rata from the general bequests; fourth, pro rata from the demonstrative legacies; and fifth, pro rata from the specific bequests. See Thompson v. Thompson, 149 Tex. 632, 236 S.W.2d 779, 789 (1951); see also Sinnott v. Gidney, 159 Tex. 366, 322 S.W.2d 507, 510 (1959); Houston Land Trust Co. v. Campbell, 105 S.W.2d 430, 433 (Tex.Civ.App.El Paso, writ ref'd).
Article VI of Smith's will devises his estate as follows:
(1) $10,000 cash to Cregory Mayberry;
(2) $10,000 cash to John Mahan;
(3) $10,000 cash to Esther Resendiz;
(4) an undivided one-half interest of all mineral interests to his nephew, Calvin Smith;
(5) an undivided one-half interest of all mineral interests in trust for the children of Calvin Smith;
(6) 23.521 acres of land to Michael and Debora Whittemore;
(7) all real estate not specifically bequeathed in (4), (5), and (6) above to Calvin Smith;
(8) the remaining balance of all cash, checking accounts, savings accounts, certificates of deposit, savings certificates, and money market certificates, after the payment of all just debts, funeral expenses, expenses of last illness, *4 and costs and expenses incurred in probate;
(a) one-third to West Texas Boys Ranch;
(b) one-third to West Texas Rehabilitation Center;
(c) one-third to Permian Basin Rehabilitation Center for Crippled Children and Adults, Inc.;
(9) all the rest and residue to Calvin Smith and Carol June Smith Brown.
The court of appeals classified the bequests in sections 1, 2 and 3 as demonstrative bequests; the bequests in sections 4 and 5 as general bequests; the bequest in section 6 as a specific bequest; the bequest in section 7 as a real estate residuary; and the bequests in sections 8 and 9 as personal property residuaries. While we agree with the court of appeals' classification of sections 6, 7 and 9, we disagree with the others.
Texas law has long recognized that a testator's bequests can be divided into four categories: specific, demonstrative, general and residuary. See, e.g., Sinnott v. Gidney, 159 Tex. 366, 322 S.W.2d 507 (1959) (residuary); Houston Land Trust Co. v. Campbell, 105 S.W.2d 430 (Tex.Civ. App.El Paso 1937, writ ref'd) (specific, demonstrative, general). Such classification depends upon the intent of the testator as shown by the entire will. Lake v. Copeland, 82 Tex. 464, 17 S.W. 786, 787 (1891). We hold that when classifying bequests in a will, we must consider the testator's intent by looking at the entire dispositive scheme rather than reaching an arbitrary determination based on ritualistic classification. It is necessary to determine, for each item bequeathed in the will, whether the testator intended the property to be disposed of as a specific asset, or merely as a portion of his general estate.
With this principle as our guide, a legacy should be classified as specific if (1) it is described with such particularity that it can be distinguished from all of the testator's other property and (2) the testator intended for the beneficiary to receive that particular item, rather than cash or other property from his general estate. See Campbell, 105 S.W.2d at 433; see also Atkinson, Law of Wills § 132, at 732 (1953). Demonstrative legacies are bequests of sums of money, or of quantity or amounts having a pecuniary value and measure, not in themselves specific, which the testator intended to be charged primarily to a particular fund or piece of property. Campbell, 105 S.W.2d at 433; see Law of Wills § 132, at 134-35; Bailey, Wills § 574, at 367-68 (Texas Practice 1968). A legacy is a general bequest if (1) it bequeaths a designated quantity or value of property or money and (2) the testator intended for it to be satisfied out of his general assets rather than disposing of, or being charged upon, any specific fund or property. See Law of Wills § 132, at 734-35; Page on Wills § 48.2, at 7-8. And finally, a legacy should be classified as a residuary bequest if the testator intended for the gift to bequeath everything left in the estate, after all debts and legal charges have been paid, and after all specific, demonstrative and general gifts have been satisfied. See Shriner's Hospital for Crippled Children of Texas v. Stahl, 610 S.W.2d 147, 152 (Tex.1980); see also Law of Wills § 132, at 736; Page on Wills § 48.10, at 35.
In applying these guidelines to the facts of this case, we note that sections 4 and 5 of Smith's will each devised a one-half interest of "all" Smith's mineral interests. See Brady v. Nichols, 308 S.W.2d 100 (Tex.Civ.App.San Antonio 1957), reformed, 158 Tex. 382, 312 S.W.2d 381 (1958). Although the bequests do not identify each of the mineral interests owned by Smith, the description is specific enough to distinguish the gifts from the remainder of Smith's property. Brady, 308 S.W.2d at 111 (a bequest of "all the Stock on all my ranches" constituted a specific description of all the cattle on all the testator's ranches). In addition, the legacies clearly indicate that Smith only intended for the beneficiaries to receive the mineral interests that he owned when he died, rather than cash or other property from his general estate. Thus, even though the mineral interests passing under sections 4 and 5 are *5 generically described, the description is definite enough to constitute a specific gift. See id.: see also Page on Wills § 48.4, at 16-17; Law of Wills § 132, at 732-33.
Section 6 bequeaths a 23.521 acre tract of land. The devise, which is described by metes and bounds, is plainly distinguishable from Smith's other property. Thus, the court of appeals correctly held that the land passing under section 6 is a specific bequest. Currie v. Scott, 144 Tex. 1, 187 S.W.2d 551 (1945).
Section 7 devised "all real estate" not specifically bequeathed in sections 4, 5 and 6. Rather than disposing of any particular property, this gift disposes of the real property not bequeathed by other sections of Smith's will; this is typical of a real property residuary clause. Although section 7 does not contain residuary language such as "all of the rest and residue of my real property," the gift nevertheless has the practical effect of a real estate residuary clause. Thus, we agree with the court of appeals' holding that section 7 is a real property residuary clause.
Section 8 bequeathed "[t]he remaining balance of all cash, checking accounts, certificates of deposit, savings certificates, and money market certificates I have at the time of my death, after the payment of all my just debts, funeral expenses, expenses of last illness, and costs and expenses incurred in the probate of this Will, shall pass to and vest as follows, to-wit:
(a) One-third (1/3) shall pass to and vest in West Texas Boys Ranch, Tankersly, Texas;
(b) One-third (1/3) shall pass to and vest in West Texas Rehabilitation Center, a non-profit corporation with central offices in Abilene, Texas; and
(c) One-third (1/3) shall pass to and vest in Permian Basin Rehabilitation Center for Crippled Children and Adults, Inc., a non-profit corporation of Odessa, Texas."
Although this section does not set forth the amount of money or value of the accounts or certificates passing under it, the section identifies the assets and funds bequeathed to the charities. Thus, the legacies passing under section 8 are specific bequests. See Brady, 308 S.W.2d 100, 109-11 (a bequest of "all my moneys in Banks" is a specific bequest).
We agree with the court of appeals' holding that section 9 is a residuary clause. As with most residuary clauses, section 9 is the last dispositive provision in Smith's will. More significantly, the section uses the language "all the rest and residue of my Estate...." See Sinnott v. Gidney, 159 Tex. 366, 322 S.W.2d 507, 510 (1959); see also In re Estate of Boultinghouse, 320 S.W.2d 409, 410-11 (Tex.Civ.App.El Paso 1959, writ ref'd). Although most residuary clauses deal with personal and real property, section 9 cannot bequeath any real property since section 7 disposes of all Smith's remaining real estate. Thus, section 9 is only a personal property residuary clause.
Sections 1, 2 and 3 each bequeath $10,000 cash to one of Smith's friends. Although the legacies disposed of a designated sum of money, they did not bequeath a specific and identifiable fund or article of property, nor were they charged upon such a fund or property. Thus, the gifts passing under sections 1, 2 and 3 are general bequests.
Our analysis, however, does not end here. In ascertaining what we believe to be the intent of the testator as to the priority of payment, it is important to consider these legacies in the overall context of this will. We believe the testator intended for the legacies in sections 1, 2 and 3 to be paid before the bequest in section 8. Sections 1, 2 and 3 provide for legacies of specific dollar amounts of cash, while section 8 refers, inter alia, to the "remaining balance of all cash."
Under a ritualistic application of the rules governing classification, sections 1, 2 and 3 are general bequests, and section 8 is a specific bequest. Consequently, to the extent that the residuary estate is insufficient to pay the estate tax, these general legacies are exhausted before the specific bequest is reached, under the general *6 rule discussed earlier herein. We believe, however, that this is an inappropriate result, given the relationship of these two bequests in the overall context of this will. Therefore, although we recognize the legacies in sections 1, 2 and 3 are ordinarily viewed as general bequests, while those under section 8 are classified as specific bequests, we hold that under the facts of this case, the section 8 bequests should be utilized for the payment of estate taxes before those bequests described in section 1, 2 and 3.
INCOME EARNED DURING THE ADMINISTRATION OF THE ESTATE
During the administration of Smith's estate, substantial income was earned by the mineral interests passing under sections 4 and 5 of Article VI and the property passing to the charities under Article VI, § 8. The trial court ruled that the beneficiaries of the mineral interests were entitled to the income earned by those interests during the administration of the estate. The trial court also ruled that the beneficiaries of Article VI, § 9 were entitled to the income earned by the property passing under section 8 of Article VI. The court of appeals affirmed both of these rulings. We affirm in part and reverse and render in part.
Under the Probate Code, the property bequeathed to the charities under Article VI, § 8 vested in the charities immediately upon Smith's death. TEX.PROB.CODE ANN. § 37 (Vernon 1980). As the owners of that property, the charities are entitled to any interest that their property generates. Therefore, from the moment of Smith's death, any income earned by the property bequeathed to the charities belonged to them. Likewise, the income earned by the mineral interests during the administration of the estate also belongs to the beneficiaries of those interests. See Stiff v. Fort Worth Nat'l Bank, 486 S.W.2d 859, 862 (Tex.Civ.App.Eastland 1972, writ ref'd n.r.e.).
We reverse the judgment of the court of appeals that the charities are not entitled to all of the income generated from the property bequeathed to them. We affirm the court of appeals' judgment that the beneficiaries of the mineral interests are entitled to the income earned by those interests. We reverse the judgment of the court of appeals as to the classifications of the bequests discussed herein and hold that all estate and inheritance taxes are payable; first, from the personal property residuary under Article VI, § 9; second, from the real property residuary under § 7; third, from the specific bequest in § 8; fourth, pro rata from the general bequests in sections 1, 2 and 3; and fifth, pro rata from the specific bequests in sections 4, 5 and 6 to the extent necessary to satisfy all estate and inheritance taxes.
NOTES
[1] Although the old common law made a distinction between bequests, legacies and devises, we use the terms interchangeably in this opinion.
[2] The Texas Legislature recently passed an apportionment statute providing how federal estate and inheritance taxes are paid when a testator's will does not provide otherwise. See Estate TaxesApportionment And Allocation-Liability Of Descendent's Property For Certain Debts And Expenses, ch. 742, § 1, 1987, Tex. Sess.Law Serv. 5323 (Vernon). Because Huling Smith died before September 1, 1987, this statute does not apply to his will. See id. § 3.
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744 S.W.2d 156 (1987)
Oris REYNOLDS, Appellant,
v.
The STATE of Texas, Appellee.
No. 07-87-0033-CR.
Court of Appeals of Texas, Amarillo.
October 28, 1987.
Rehearing Denied January 12, 1988.
*158 Tom Oliver, Vernon, for appellant.
Kelly Wright, Co. Atty., Vernon, for appellee.
Before DODSON, COUNTISS and BOYD, JJ.
BOYD, Justice.
Appellant Oris Reynolds brings this appeal from his conviction by a jury of driving while intoxicated and the consequent court-assessed punishment of six months confinement in the county jail, a $1,000 fine, and a one year suspension of appellant's driver's license. We affirm the judgment of conviction.
In attacking his conviction, appellant contends that the trial court erred in (1) not directing the jury to enter a verdict of acquittal and/or not entering a verdict of acquittal notwithstanding the jury verdict because the State failed to sustain its burden of proof due to insufficient evidence; (2) not granting a mistrial when State's attorney commented in the presence of the jury on defendant's failure to testify; (3) admitting evidence of prior convictions when the State failed to establish that the prior convictions were of the appellant; (4) admitting declarations of appellant against his penal interest in violation of Rule 803(24) of the Texas Rules of Criminal Evidence; (5) admitting the printed result of an Intoxilyzer Test when there had been no predicate laid for its admission; (6) questioning the voir dire panel as to whether any prospective juror had ever sat on a trial against appellant for the offense of driving while intoxicated; (7) not granting a mistrial when a State's witness testified that defendant refused to take a breath test; and (8) not requiring the court reporter to transcribe the entire trial proceeding after previously ordering same.
To sustain a conviction for driving a motor vehicle while intoxicated the evidence must show that appellant (1) drove and operated a motor vehicle (2) while intoxicated (3) in a public place. Tex.Rev.Civ.Stat. Ann. art. 6701l-1(b) (Vernon Supp.1987). In his first point appellant argues there was insufficient evidence (1) of appellant driving and operating a motor vehicle, and (2) that the driving and operating of the motor vehicle by appellant occurred at the location alleged in the indictment, which was alleged to be a public place.
In determining whether evidence at trial is sufficient to uphold a conviction we must review the evidence bearing in mind the standard of review articulated by the United States Supreme Court in Jackson v. Virginia, 443 U.S. 307, 319, 99 S. Ct. 2781, 2789, 61 L. Ed. 2d 560, reh'g denied, 444 U.S. 890, 100 S. Ct. 195, 62 L. Ed. 2d 126 (1979), which is: "whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt" (emphasis in original). The Texas Court of Criminal Appeals applied the Jackson standard in Houston v. State, 663 S.W.2d 455, 456 (Tex.Crim.App.1984) and Griffin v. State, 614 S.W.2d 155, 159 (Tex.Crim.App. 1981). Moreover, in making this evaluation, we must look at all the evidence in the light most favorable to the verdict. Houston v. State, 663 S.W.2d at 456; Mahavier v. State, 644 S.W.2d 129, 131 (Tex.App. San Antonio 1982, no pet.).
Our review of the State's evidence reveals that the arresting officer testified that he found appellant alone behind the wheel of a car that was half in a ditch and half on a farm-to-market road. He testified that appellant's feet were on the floorboard of the driver's seat under the steering wheel and that no one else was in the car. The officer also testified that he found no one else in the vicinity and found no liquor bottles either in or around the vehicle. The driver's door was closed.
The officer also said that appellant admitted to the officer that he was driving the vehicle in which he was found. Although appellant objected to the officer's testimony as hearsay without an exception under Texas Rule of Criminal Evidence 803(24), for reasons which we discuss infra under appellant's point of error number four, we find sufficient corroborating evidence to indicate the trustworthiness of *159 appellant's statement against interest. Therefore, appellant's statement against interest is additional admissible evidence to support the jury's finding beyond a reasonable doubt that appellant was driving and operating a motor vehicle while intoxicated.
In support of his position, appellant primarily relies on Johnson v. State, 517 S.W.2d 536, 538 (Tex.Crim.App.1975), in which the Court found insufficient evidence to sustain a misdemeanor conviction of driving a motor vehicle on a public highway while intoxicated even though that appellant admitted driving the vehicle. However, that case is distinguishable. In Johnson the appellant was found in a group of people standing on the other side of the street from the pickup truck and there was no evidence as to when he had driven the truck or that he was intoxicated when he drove the truck, no evidence as to how recently the truck had been driven (such as a hot engine), and no evidence that the ditch where the truck was standing was in the street right-of-way. Id.
In the present case the arresting officer testified in detail as to the condition in which he found appellant inside the vehicle as well as to his observation of the surroundings. Where there is evidence that appellant was found alone in the motor vehicle, this Court has recently held that there is sufficient evidence to show appellant was the driver of the vehicle. See Keenan v. State, 700 S.W.2d 12, 14 (Tex. App.Amarillo 1985, no pet.). Moreover, the record before us contains additional evidence that he was located in the driver's seat with the door closed and with his feet on the floorboard under the steering wheel. We find there was sufficient evidence under the Jackson standard to support the evident jury finding that appellant drove and operated a motor vehicle on August 28, 1986, prior to his arrest.
As to the issue of the sufficiency of the State's evidence as to the location of the offense, we must again look at all the evidence in the light most favorable to the verdict. Houston v. State, 663 S.W.2d at 456; Mahavier v. State, 644 S.W.2d at 131. The arresting officer twice testified that he found appellant in a motor vehicle "on FM 1949 about a half mile south of Business 287 in Wilbarger County." Appellant's counsel's secretary testified that she had measured the distance of the location of the motor vehicle from Business 287, based upon the officer's description and reference to defense counsel's drawing (which counsel admitted was "not exactly to scale"), and that it measured two-tenths of a mile.
The credibility of witnesses and the weight to be given their testimony, as well as the resolution of conflicts in testimony, are matters which cannot be reviewed by the appellate court in criminal appeals. They are within the exclusive province of the jury as trier of fact. Tex.Code Crim. Proc.Ann. art. 36.13 (Vernon 1981) and art. 38.04 (Vernon 1979); Penagraph v. State, 623 S.W.2d 341, 343 (Tex.Crim.App.1981). We find there is sufficient evidence to support the jury's evident finding that the offense occurred as alleged. Appellant's first point of error is overruled.
In his second point appellant contends that the trial court erred in not granting a mistrial when the "State's attorney commented in the presence of the jury on the Defendant's failure to testify." The basis for this attack originated during the production of defense testimony and at a time when defense counsel was querying his secretary about her conversation with appellant concerning appellant's health. The State's objection was as follows:
Your Honor, this is hearsay. We'll object to it. If the defendant wants to testify about his physical condition, that's fine.
Initially, we must note the Texas rule that, in determining whether a remark is an allusion to or comment upon the failure of a defendant to testify, the language used must be looked to from the standpoint of the jury and the implication that the language used had reference to the defendant's failure to testify must be a necessary one. It is not sufficient that the language might be construed as an implied or indirect allusion thereto. Ramos v. State, 419 S.W.2d 359, 367 (Tex.Crim.App.1967). It is *160 well established that a comment such as this which occurs prior to the time testimony in the case has closed, cannot be held to refer to a failure to testify which has not yet occurred. McCarron v. State, 605 S.W.2d 589, 595 (Tex.Crim.App.1980); Garcia v. State, 513 S.W.2d 559, 562 (Tex.Crim. App.1974); Jackson v. State, 501 S.W.2d 660, 662 (Tex.Crim.App.1973); Terry v. State, 489 S.W.2d 879, 881 (Tex.Crim.App. 1973).
The circumstances in Garcia v. State, 513 S.W.2d 559, and this case are closely analogous. In Garcia, the following question during cross-examination and prior to the close of the evidence of a defense alibi witness was held not to be improper:
Well, if he was asleep, of course, Robert Garcia [the defendant] knows better than anybody else in the world whether he was asleep or not?
Id. at 562. In asserting that the State's question requires reversal, appellant places primary reliance upon the decisions in Bird v. State, 527 S.W.2d 891 (Tex.Crim.App. 1975) and Easterling v. State, 168 Tex. Crim. 219, 325 S.W.2d 138 (1959). In each of these cases, the allusion to a failure to testify was made in argument after the close of evidence, a situation completely different from that in this case. Moreover, in Bird, the court was considering a capital murder case in which the death penalty had been assessed and the Court held that the error could not be harmless because of the severity of the punishment assessed. 527 S.W.2d at 895.
While the making of the type of remark made by the State during its objection is not be be encouraged, under the circumstances of this case, it does not require reversal. The court, in its charge to the jury after the completion of testimony, specifically charged the jury that it must not consider for any purpose the appellant's failure to testify. This was sufficient to cure any error. Maddox v. State, 591 S.W.2d 898, 903 (Tex.Crim.App. 1979), cert. denied 447 U.S. 909, 100 S. Ct. 2994, 64 L. Ed. 2d 859 (1980). Appellant's second point of error is overruled.
In his third point appellant argues that the trial court erred in admitting evidence of prior convictions when the State failed to establish that the prior convictions of one Oris Reynolds were of appellant. Appellant cites Chaney v. State, 494 S.W.2d 813, 815 (Tex.Crim.App.1973), which held that the mere introduction of a charging instrument, judgment, and sentence from a prior conviction is not sufficient in and of itself to sustain the burden of proof of the prior conviction.
It is well established that one of the several methods by which the prosecution may prove that the accused is the person previously convicted is by the use of testimony of a witness who personally knows the accused and the fact of his prior conviction. Daniel v. State, 585 S.W.2d 688, 690 (Tex.Crim.App. 1979). In the case at bar, during the punishment phase, the State introduced documentation of a prior conviction in 1977 for driving while intoxicated of one Oris Reynolds, being Cause No. 1055 in the County Court of Wilbarger County. The county clerk testified that appellant, Oris Reynolds, was the person she remembered "getting this DWI previously." She testified that she was not in the courtroom during the prior proceedings, but that her records indicated that the fine for the driving while intoxicated conviction was paid with a check from O & S Cattle Company and that she had personal knowledge that appellant was engaged in the cattle business. The former county attorney then testified that he remembered prosecuting appellant for driving while intoxicated during his tenure in 1976-77, but that he had no independent recollection of whether there was a conviction in the case, without reviewing the file.
We find there was sufficient evidence from the documents authenticated by the county clerk and county judge and the combined testimony of the county clerk and former county attorney who prosecuted the prior case, to establish that the accused was the same person previously convicted. Appellant's third point is overruled.
Appellant contends in his fourth point that the trial court erred in admitting *161 the arresting officer's testimony that appellant stated that he "had been driving on the road and he had met another vehicle coming at him head on and that he swerved and went into the ditch." Appellant argues that such statement was against his penal interest and that the State failed to prove corroborating circumstances clearly indicating the trustworthiness of the statement. Tex.R.Crim.Evid. 803(24).
As corroboration for appellant's statement that he was driving and operating the motor vehicle, the arresting officer testified that he found appellant alone behind the wheel of a car that was half in a ditch and half on a farm-to-market road. He testified that appellant's feet were on the floorboard of the driver's seat under the steering wheel, no one else was in the car or in the vicinity, and that the driver's door was closed.
As a standard for reviewing an insufficiency of the evidence claim as to corroboration of an appellant's out-of-court declaration against his penal interest, we think it appropriate to refer to the established law as to corroborating evidence necessary to support accomplice testimony. In James v. State, 538 S.W.2d 414, 416 (Tex.Crim.App. 1976), the Court described corroborating evidence as that "which tends to connect the defendant with the offense in order to support a conviction" based on such testimony. James further states:
The well-established test of the sufficiency of the corroborating testimony is to eliminate from consideration the evidence of the accomplice witness and then to examine the testimony of other witnesses to ascertain if there is inculpatory evidence which tends to connect the defendant with the commission of the offense. If there is other evidence of an incriminating nature, the corroboration is sufficient; otherwise it is not. (Citing Bentley v. State, 520 S.W.2d 390, 392-93 (Tex. Crim.App.1975)).
Id.
It is not necessary that the corroborating evidence directly link the accused to the crime or that it be sufficient in itself to establish guilt. See Attwood v. State, 509 S.W.2d 342, 345 (Tex.Crim.App.1974). It need only make the testimony more likely true than not. Warren v. State, 514 S.W.2d 458, 463 (Tex.Crim.App.1974). The testimony of the arresting officer as to the position in which he found appellant in the motor vehicle and his observation of the motor vehicle and its surroundings tends to connect appellant with an essential element of the crime of driving while intoxicated, to-wit: driving and operating a motor vehicle.
Following the standard explicated in James v. State, 538 S.W.2d at 416, and eliminating from consideration appellant's declaration, our examination of the record reveals evidence of an incriminating nature which makes the declaration of appellant more likely true than not. Such corroborating evidence is sufficient to justify the admission of appellant's statement. Appellant's fourth point of error is overruled.
In his fifth point appellant contends that the trial court erred in admitting the printed result of an Intoxilyzer test because there was conflicting testimony as to the date on which the test was made. Appellant's contention on appeal varies from his trial objection, therefore, this issue was not properly preserved for appellate review. Stringer v. State, 632 S.W.2d 340, 342 (Tex.Crim.App. 1982); Carrillo v. State, 591 S.W.2d 876, 892 (Tex.Crim.App. 1979); Tex.R.Crim.Evid. 103. Appellant's fifth point of error is overruled.
In his sixth point appellant says the trial court reversibly erred in querying the panel of prospective jurors as follows:
[I]s there anyone on the jury panel ... [a] person who has sat as a petit jury [sic] in a former trial involving the same defendant in another case involving the same question? Have any of you ever served as a juror in a trial involving Mr. Oris Reynolds?
No objection was made to the question.
It is axiomatic that if there is no trial court objection, only fundamental error requires reversal. Gooden v. State, 576 S.W.2d 382 (Tex.Crim.App.1979). The reason for this rule is that a trial court *162 must be given the opportunity to consider any such objection and, if necessary, to take appropriate action to properly protect a defendant. Miller v. State, 623 S.W.2d 491, 493 (Tex.App.Beaumont 1981), aff'd on other ground, 692 S.W.2d 88 (Tex.Crim. App.1985).
In asserting that the court's question requires reversal, appellant relies upon the Court's decision in Pennington v. State, 172 Tex. Crim. 40, 353 S.W.2d 451, 452 (1962). However, that case is distinguishable. In Pennington, the appellant had made a proper objection to the offending statement, a fact which mandated an appellate test quite different from that required here. In this instance, even if it be assumed, arguendo, that the court's question was error, it was not such an egregious error as to create such harm as to deprive appellant of a fair and impartial trial. Therefore, we find that the court's question was not fundamental error and, in the absence of proper objection, would not require reversal. Appellant's sixth point is overruled.
In his seventh point appellant contends that the trial court erred in not granting a mistrial when one of the State's witnesses, William A. Skinner, testified that appellant refused a breath test. Although appellant, in his brief, states that, in addition to an objection and request for instruction, he also moved for mistrial and was denied this motion, the record does not support this contention. The statement of facts shows an objection to the testimony and a discussion at the bench, at which, apparently, the objection was sustained because the court then gave an instruction to the jury to disregard. The statement of facts and the instrument denominated "First Amended Statement of Facts by Agreement of Counsel" do not show any motion for mistrial and this Court cannot accept as fact any allegation in a defense brief that is not supported by the record. Beck v. State, 573 S.W.2d 786, 788 (Tex.Crim.App.1978). Since appellant received all the relief he requested, no error is shown. Hopkins v. State, 480 S.W.2d 212, 216 (Tex.Crim.App. 1972). Appellant's seventh point is overruled.
In his eighth, and last, point of error appellant contends that the trial court erred in not requiring the court reporter to transcribe the entire trial proceedings after previously ordering the court reporter to do so. However, on May 14, 1987, an instrument denominated as "First Amended Statement of Facts by Agreement of Counsel" was filed in this cause. This instrument contained appellant's agreement that, when taken together with the original statement of facts, "same will truly reflect the entirety of the court proceedings at the trial of said cause." This point of error is, therefore, moot and, as such, is overruled. See State ex rel. Millsap v. Lozano, 692 S.W.2d 470, 480 (Tex.Crim.App.1985).
In summary, all of appellant's points of error are overruled and, there being no reversible error, the judgment of conviction is affirmed.
ON MOTION FOR REHEARING
Appellant Oris Reynolds, in his motion for rehearing, argues in four points for reversal and acquittal. Appellant argues that this Court erred in (1) finding sufficient evidence to support the jury's finding that the offense of driving while intoxicated occurred as alleged; (2) holding that the sidebar remark of the State's attorney did not constitute reversible error; (3) holding that there was sufficient evidence to establish that appellant was the same person previously convicted; and (4) holding that there was sufficient corroborating evidence to justify the admission of appellant's statement against penal interest.
In his first point, appellant again argues that the testimony of the State's witness, the arresting officer, as to the location of the offense, was equivocal and thus, could not support the jury's finding. He additionally argues, as he did in his original brief, that defense counsel's secretary's testimony was the "only competent and unequivocal testimony offered." However, as we noted in our original opinion, her testimony was based on personal observation of the distance of the location of the *163 motor vehicle from Business 287, "based on the officer's description and reference to defense counsel's drawing (which counsel admitted was `not exactly to scale')...."
The evident conclusion of the jury, as evidenced by their verdict, was their resolution of the conflicts in testimony in favor of the arresting officer. Such resolution and determination of credibility of witnesses is within their exclusive province as trier of fact. Penagraph v. State, 623 S.W.2d 341, 343 (Tex.Crim.App.1981).
Additionally, in regard to the sufficiency issue, appellant again argues that Johnson v. State, 517 S.W.2d 536 (Tex.Crim.App. 1975) "in pertinent aspects" is indistinguishable from the present case. As he points out, in both cases there was no evidence of a "hot engine." However, in this case, and contrary to Johnson, the appellant was found alone inside the motor vehicle with the driver's door closed and seated in the driver's seat with his feet on the floorboard under the steering wheel. In Johnson, the appellant was found in a group of people standing on the other side of the street from the motor vehicle, in addition to there being no other evidence, such as a "hot engine." We continue to believe that the determinative facts in Johnson are distinguishable from those in the instant case.
In this case, as was the case in Keenan v. State, 700 S.W.2d 12, 14 (Tex.App. Amarillo 1985, no pet.), this appellant was found alone in the automobile in a position that justified the jury's conclusion that he was the driver of the car. Viewing the evidence in the light most favorable to the State, Houston v. State, 663 S.W.2d 455, 456 (Tex.Crim.App. 1984), we persist with our original finding of sufficient evidence to support the evident jury finding that the offense occurred as alleged. Appellant's first point on motion for rehearing is overruled.
In his second point, appellant contends that we erred in holding that the sidebar remark of the State's attorney did not constitute reversible error. Restated, the incident originated during the production of defense testimony and at a time when defense counsel was querying his secretary about her conversation with appellant concerning appellant's health.
Appellant attempts to distinguish the cases relied upon by this Court in our conclusion that "[i]t is well established that a comment such as this which occurs prior to the time testimony in the case has closed, cannot be held to refer to a failure to testify which has not yet occurred." In McCarron v. State, 605 S.W.2d 589, 595 (Tex.Crim.App.1980), the complained of comment, "you just have to accept it at face value unless you talk to the person who wrote it," occurred during cross-examination of a witness by the prosecutor. The State had not closed its case and appellant had not rested her case. The Court based its finding on the facts that the prosecutor had no way of knowing whether appellant would testify at the time the complained of question was asked and that the question did not refer to her failure to testify, but as to her knowledge of the check as a "draw." Id.
In Garcia v. State, 513 S.W.2d 559, 562 (Tex.Crim.App.1974), at the time the complained of statement occurred, the defense had not rested its case, and it was not known by the State's attorney or the jury, whether or not appellant would testify. The Court held that "such language could not refer to a failure that had not occurred." Id. The contents of the question were held to have done no more than to indicate that appellant knew whether he was asleep or not at the time of the burglary, and made no allusion to his failure to testify. Id.
As appellant points out, Jackson v. State, 501 S.W.2d 660, 662 (Tex.Crim.App. 1973), held that appellant's point of error directed to a reference to failure to testify was waived due to failure to object on such ground. However, the Court went on to state the "well-established rule" that had such error been preserved, the statement, "if he would just tell us," was made at a time when State's counsel had no way of knowing whether appellant would testify or not; nor was it a direct allusion to appellant's failure to testify. Id.
*164 In Terry v. State, 489 S.W.2d 879, 881 (Tex.Crim.App.1973), the question was asked by the court of the defense counsel as to whether the defendant would testify, for the stated purpose of aiding the court in determining if there would be sufficient testimony to fill the remaining portion of the day. Immediately the next morning, the court apologized for the remark, gave a curative instruction to the jury to disregard his remark and, if the defendant chose not to testify, not to consider the defendant's "failure to testify at that time for any purpose." The appellant subsequently did testify, and the Court of Criminal Appeals held such question, although improper, could not be considered by the jury as an allusion to a failure that did not occur. Moreover, the Court said, if harm was done, it was cured by the instruction. Id.
Likewise, in our case, from the standpoint of the jury, Ramos v. State, 419 S.W.2d 359, 367 (Tex.Crim.App. 1967), there was no necessary implication that the language used referred to the defendant's failure to testify. It simply referred to the hearsay statement elicited from the witness as to appellant's alleged health problems, since such defensive theory had not been tendered or pled. At the time of the statement by the prosecutor, it was not yet known whether appellant would testify or not.
Moreover, the instruction regarding the jury's responsibility to not consider appellant's failure to testify for any reason, was sufficient to cure any harm. Under the standard for testing objectionable remarks as to prejudicial value found in Maddox v. State, 591 S.W.2d 898, 903 (Tex.Crim.App. 1979), cert. denied, 447 U.S. 909, 100 S. Ct. 2994, 64 L. Ed. 2d 859 (1980), we believe the complained of statement was not so inherently prejudicial as to suggest the impossibility of withdrawing the impression created in the minds of the jury. Appellant's second point on motion for rehearing is overruled.
In his third point on motion for rehearing, appellant argues that there was insufficient evidence to establish that the accused was the same person previously convicted. The State introduced a certified copy of the prior conviction for driving while intoxicated, probated, for Oris Reynolds, to which the County Clerk testified as to its authenticity. Such file also contained the revocation of such probation based on a conviction in Knox County, which was not introduced or certified by the witness. The County Clerk testified that she remembered the appellant "getting this DWI previously," although she was not in the courtroom at the time of the proceedings. The County Attorney testified that he remembered prosecuting appellant for driving while intoxicated during his tenure in 1976-77, but that he had no independent recollection of whether there was a conviction in the case, without reviewing the file. Thus, under Daniel v. State, 585 S.W.2d 688, 690 (Tex.Crim.App.1979), meshing the testimony of the two witnesses, there was sufficient evidence through the testimony of witnesses who personally knew the appellant and knew the facts of his prior conviction, and who correctly identified appellant as the person previously convicted, to establish that appellant was the same person as the "Oris Reynolds" previously convicted. Appellant's third point on motion for rehearing is overruled.
In his final point, appellant correctly points out that Rule 803(24) of the Texas Rules of Criminal Evidence requires that the corroborating circumstances required to admit a statement against penal interest must "clearly indicate the trustworthiness of the statement." He argues that the testimony of the arresting officer as to appellant's out-of-court statement that he "had been driving on the road and he had met another vehicle coming at him headon [sic] and that he swerved and went into the ditch" was not sufficiently corroborated. The officer had previously testified that he found the appellant behind the steering wheel in a car that was half off in a ditch and half in the road. He testified the appellant was alone in the car, with his feet on the floorboard under the steering wheel.
Appellant concedes that under the standard of James v. State, 538 S.W.2d 414, 416 (Tex.Crim.App.1976) (discussion of corroborating evidence necessary to support *165 accomplice testimony), the declaration "would probably have been admissible." However, he argues that such evidence does not "clearly indicate" the statement's trustworthiness. We disagree.
The Texas Rules of Criminal Evidence were adopted December 18, 1985, and became effective September 1, 1986. Although there may be no case law interpreting the new rule, we may still rely upon the precedential value of prior case law on the subject.
In Weaver v. State, 721 S.W.2d 495 (Tex. App.Houston [1st Dist.] 1986, pet. ref'd), the Court discussed the type of corroborating evidence necessary to support admission of an accused's extra-judicial statement against interest. The Court used the Jackson v. Virginia, 443 U.S. 307, 319, 99 S. Ct. 2781, 2789, 61 L. Ed. 2d 560, reh. denied, 444 U.S. 890, 100 S. Ct. 195, 62 L. Ed. 2d 126 (1979) standard to evaluate the sufficiency of the evidence. In Weaver, there was evidence that the appellant had been drinking intermittently for several hours before the accident, there was a short lapse of time between appellant's departure from the beer garden and the dispatch of the arresting officer, that appellant was found leaning against the vehicle shortly after the accident, and that his blood/alcohol level was very high. 721 S.W.2d at 499. The Court found sufficient corroborating circumstances to support the admission of appellant that he was driving the vehicle on the occasion in question. Id. at 500. In our case, there was evidence that the appellant was intoxicated at the time of the arrest and detailed observations that appellant was found alone, inside the vehicle, in the position of driver of the vehicle.
As to the wording used in Rule 803(24), Texas Rules of Criminal Evidence, "clearly indicate the trustworthiness of the statement," assuming, arguendo, that such language would create a higher standard of review of the corroborating circumstances, we find the above evidence sufficient under such test as well. "Clear and convincing" has been held by the Court of Criminal Appeals to mean "so clear as to leave no substantial doubt and sufficiently strong to command unhesitating assent of every reasonable mind." Spencer v. State, 466 S.W.2d 749, 752 (Tex.Crim.App.1971). "Clearly established" requires only that the proof be shown by a "clear preponderance of the evidence." Labay v. Commissioner of Internal Revenue, 450 F.2d 280, 282 (5th Cir.1971). Our examination of the record reveals evidence of an incriminating nature which not only makes the declaration of appellant more likely true than not, it is sufficiently strong to meet the standard of "clearly" indicating the statement's trustworthiness. Appellant's fourth point is overruled.
In summary, all of appellant's points on motion for rehearing are overruled, and there being no reversible error, the judgment of conviction is affirmed.
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619 S.W.2d 557 (1981)
Frank H. BRUNSTETTER et ux., Mary B. Brunstetter, Appellants,
v.
Bill SOUTHERN and Bill Southern and Associates, Inc., et al., Appellees.
No. 16510.
Court of Civil Appeals of Texas, San Antonio.
May 20, 1981.
Rehearing Denied July 1, 1981.
*558 Thomas Rocha, Jr., San Antonio, for appellants.
James L. Drought, San Antonio, for appellees.
KLINGEMAN, Justice.
This is a deceptive trade practice suit involving the sale of a house. Frank H. Brunstetter and wife, Mary B. Brunstetter (Brunstetters), sued Bill Southern and Bill Southern & Associates, Inc. (Southern), for damages caused by the alleged flooding of plaintiffs' house. Plaintiffs contend that Southern unlawfully failed to disclose the existence of a claimed structural defect in the house which caused the house to flood when it rains, and that defendants had a duty to inform them of such defect and failed to do so. Southern counterclaimed for attorney's fees, alleging that the Brunstetters' suit was groundless and brought in bad faith and for purposes of harassment. Trial was to a jury whose verdict was adverse to the Brunstetters on all aspects of liability and in favor of Southern on his counterclaim. The district court found that the Brunstetters' suit was groundless and rendered judgment for Southern upon his counterclaim and against Brunstetters on their claim. Brunstetters' motion for a new trial based primarily on jury misconduct was overruled, and the Brunstetters appealed.
The Hurns bought the house which is the subject of this suit when it was new. The house never flooded while they were living in it. They subsequently moved out of state, and listed the house for sale with Southern as realtor in March, 1976. The multiple listing agreement between the Hurns and Southern stated there were no latent structural defects in the house. Around May 8, 1976, while the house was still vacant, Southern noticed that water had flooded the family room of the house during a rainstorm. He inspected the house for leaks but found none and concluded the flooding was caused by some debris which had collected above a retaining wall, causing a damming effect. Southern removed the debris and decided that the problem was thereby alleviated. Southern telephoned the Hurns to report the flooding. The Hurns told Southern this had never happened before. Southern told the Hurns that there had been a very severe thunderstorm and some debris had collected around the house and altered the flow of the water around the house. The Hurns and Southern concluded that there was nothing wrong with the house. The Brunstetters purchased the home in February, 1977, but were not told that the house had flooded in May, 1976. The house again flooded on November 1, 1977. The Brunstetters did not notify Southern of the flooding problem, but consulted an engineer, T. S. Graham, Jr., for a proposed solution. Mr. Graham concluded that the problem was caused by the yard landscaping, the lack of a good exit path and a solid board fence impeding rainfall runoff. Mr. Graham suggested cutting an opening at the bottom of the board fence, removing vegetation, cutting a swale in the ground surface and installing a drainage channel. Mr. Graham further suggested that an investigation of the entry path into the house interior should be conducted. The Brunstetters were not satisfied with Mr. Graham's report; therefore, they hired another engineer, Harvey R. Livesay, Jr. Mr. Livesay examined the house to determine how the water entered and concluded that a construction defect on a corner of the house was responsible for the flooding of the house. Mr. Livesay suggested the problem be solved by waterproofing the wall and making some landscaping *559 changes in the yard. A contractor was then hired to make such suggested changes.
By thirteen points of error, the Brunstetters basically complain that the trial court erred (a) in failing to render judgment for plaintiffs on their claim against Southern; (b) in failing to find defendant is not entitled to recover on his counterclaim; and (c) in failing to grant appellant a new trial because of jury misconduct. In this opinion, we will generally discuss such points of error under these three areas.
PLAINTIFFS' CLAIM FOR DAMAGES
By one point of error plaintiffs complain that the trial court erred in failing to render judgment for plaintiffs. The gist of plaintiffs' contention is that they were consumers who purchased goods that were defective; that defendant violated the Deceptive Trade Practices Act; that plaintiffs suffered actual damages of at least $1,639.95, and were therefore entitled to treble the amount for the actual damages plus court costs and attorney's fees.
We have concluded that the trial court properly held that plaintiffs were not entitled to recover on their claims for damages under the Deceptive Trade Practices Act because (a) plaintiffs had, prior to trial, received in settlement more than three times their actual damages; and (b) the jury's answers to special issues holding adversely to plaintiffs on all liability issues are sufficiently supported by the evidence.[1]
The Brunstetters' suit was originally against the Hurns (the sellers of the property), Southern (the listing broker) and Howard Tate, Inc. (the cooperating broker), jointly and severally, for damages occasioned by the leaking of water in the house sold by the Hurns to the Brunstetters. The Brunstetters sought to ground liability against all parties upon an alleged fraudulent concealment of a latent structural defect in the house.
Prior to trial, the Brunstetters settled their claim against the Hurns for $4,000.00 and their claim against Tate, the cooperating broker, for $1,000.00, for a total of $5,000.00 paid to them in satisfaction of their claim.
The total amount of the Brunstetters' actual damages, as found by the jury, was $1,639.95. The Brunstetters do not challenge this finding.
Based upon the foregoing, and disregarding everything else, the "credit rule," as it exists in Texas, conclusively bars the Brunstetters from any recovery upon their claim against Southern simply because they have had a full satisfaction of their claim and are entitled to but one satisfaction of it.
The proper rule is set forth in McMullen v. Coleman, 135 S.W.2d 776 (Tex.Civ.App. Waco 1940, no writ), as follows:
There are two reasons why we think the record presents reversible error. In the first place, we think the trial court should have credited the amount found by the jury as being adequate compensation to plaintiffs with the amount previously received by plaintiffs in the settlement with [the co-defendant]. While in Texas a settlement with and release of one of two alleged joint tort-feasors does not release the other, [citation omitted], the amount received from one of them must be credited on the loss suffered by the injured party, and the amount of the recovery against the other reduced proportionately. This rule prevails even though it be found that the one released was in fact not liable. The holding is based on the principle that the injured party is entitled to but one satisfaction for a single injury.
*560 Id. at 778. See also Gill v. United States, 429 F.2d 1072 (5th Cir. 1970); Sweep v. Learjet Corp., 412 F.2d 457 (5th Cir. 1969); Petco Corp. v. Plummer, 392 S.W.2d 163 (Tex.Civ.App. Dallas 1965, writ ref'd n. r. e.).
While it is true that the unity of release rule is no longer followed in Texas, it is still recognized that a claimant is not entitled to recover more than the amount required for full satisfaction of his damages. McMillen v. Klingensmith, 467 S.W.2d 193 (Tex.1971).
It is undisputed that plaintiffs' actual damages did not exceed the amount received in settlement from the Hurns and Tate. The jury in this case found that plaintiffs had suffered damages of $1,639.95. They have received $5,000.00 in settlement from the Hurns and Tate. This is more than three times the amount of actual damages found by the jury. The credit rule precludes plaintiffs' recovery against Southern.
DEFENDANT'S COUNTERCLAIM
By a number of points of error plaintiffs assert (1) that the trial court erred in failing to find that Southern is not entitled to recover on his counterclaim; (2) that the trial court erred in submitting a special issue to the jury whether plaintiffs' action was groundless; (3) that there is no evidence to sustain the jury's affirmative findings to such issue; (4) that the jury's finding was against the great weight and preponderance of the evidence; and (5) that defendant is not entitled to recover attorney's fees.
Defendant asserts that there is ample evidence in the record that plaintiffs' purposes in these proceedings was not to be made whole in respect to the damage they suffered but to strike out and punish the defendant; that plaintiffs proceeded against Southern basically not to recover their damages but to damage Southern for the wrong they felt had been done to them; that plaintiffs gave defendant no notice of their damages or intent to sue and no opportunity to cure; that plaintiffs insisted on prosecuting their suit despite offers to pay them the full amount of the damages and expenses, including reasonable attorney's fees, and continued prosecuting their suit despite the fact that they had been fully and adequately compensated.
The Deceptive Trade Practices Act § 17.50(c) allows recovery by defendant of attorney's fees and costs where the court finds an action was groundless and brought in bad faith or for purposes of harassment. We have found no cases which are particularly helpful in suits involving such section.
In the instant case the following special issue was submitted to the jury and answered as follows:
Issue No. 10:
Do you find from a preponderance of the evidence that the action brought by Frank and Mary Brunstetter under the Texas Deceptive Trade Practices Act against Defendant Southern was groundless and brought in bad faith or for the purposes of harassment?
Answer `We do' or `We do not.'
Answer: `We do.'
It is somewhat unclear how the section 17.50(c) issue should be determined. In Bray v. Curtis, 544 S.W.2d 816 (Tex.Civ. App. Corpus Christi 1976, writ ref'd n. r. e.), the jury found that a deceptive trade practice act was not groundless or brought for the purpose of harassment; however, in O'Shea v. International Business Machines Corporation, 578 S.W.2d 844 (Tex.Civ.App. Houston [1st Dist.] 1979, writ ref'd n. r. e.), the court found that "groundless" is an issue to be determined by the court, whereas "bad faith" or "for the purpose of harassment" is an issue for the jury.
In the first judgment signed by the trial court on December 5, 1979, the court found that on the basis of the jury verdict, the plaintiffs should take nothing and the defendant should recover on his counterclaim against plaintiffs for reasonable attorney's fees. In the second judgment signed by the trial judge on January 3, 1980, the court made the same basic finding but added: "The Court, furthermore, based upon such *561 testimony, evidence and argument of counsel, finds that Plaintiffs' action was groundless and was brought and prosecuted in bad faith and for the purpose of harassment."
We do not see how plaintiffs were harmed in any manner by the submission of the "groundlessness" issue to the jury. If it was error to submit special issue number ten to the jury, such error was cured by the corrected judgment which was signed within 30 days of the original judgment in which the judge made the finding.
As hereinbefore indicated, we have found no cases which set forth any particular guidelines for determining when a suit is groundless and brought in bad faith or for purpose of harassment.
A recent law review article stated that the defendant who tries to prove a suit was instituted in bad faith or for the purpose of harassment
"will probably be required to prove that the consumer's claim was motivated by a malicious or discriminatory purpose. Personal ill will or spite on the part of the consumer toward the defendant is relevant to the issue of malice, although ill will is not a prerequisite to a finding of malice. Even if no ill will existed between the parties, the defendant may be able to show that the consumer was motivated by a reckless disregard for the defendant's rights. In such cases, malice may be inferred from proof that the consumer did not have a good faith belief that there was a basis for his claim."
Goodfriend & Lynn, Of White Knights and Black Knights: An Analysis of the 1979 Amendments to the Texas Deceptive Trade Practices Act, 33 S.W.L.J. 941, 988 (1979).
Southern testified in some detail as to his efforts to settle or negotiate with plaintiffs. He stated that suit was brought against him without any knowledge on his part that plaintiffs had a problem, and that the first he knew about any problem was when he was served in the lawsuit. He testified that after he was served with a copy of plaintiffs' petition, he offered to correct the damages. He also stated he made an offer in writing within 30 days after the suit was filed to correct the problems. He testified that he thought the suit was groundless and in bad faith for purposes of harassment because plaintiffs gave him no opportunity to cure the defect. He also testified of various money offers that he had made to plaintiffs.
Mr. Brunstetter, one of the plaintiffs, testified of his dissatisfaction with the flooding and of his belief that Southern had intended to deceive him. He stated that he did not notify Southern about any flooding and that he saw no reason to notify him because Southern already knew about it. Brunstetter testified that in addition to his actual damages occasioned by the repairs that he had made to the house that he was also seeking mental anguish damages and exemplary damages and that his attorney be fully compensated for his services. He testified that there is no question that $1,800 was a sufficient amount to pay him for everything that was wrong with the house and that he had been paid $5,000. He stated that he instituted legal action without notice. He testified that he settled with Tate for $1,000 because he thought he was the least culpable of the three defendants and that he settled with the Hurns for $4,000 because they were more guilty and culpable. He has sold the house and no longer lives in Texas.
It is undisputed that appellants' actual damages did not exceed the amount that they received in settlement from the Hurns and Tate. The amounts sued for against Southern were essentially for attorney's fees, recovery for mental anguish, and for exemplary damages based on fraud.[2]*562 Plaintiffs would be entitled to recover attorney's fees in relation to the Deceptive Trade Practices claim only if they were found entitled to recover on their cause of action. Reiger v. DeWylf, 566 S.W.2d 47 (Tex.Civ.App. Beaumont 1978, writ ref'd n. r. e.); Burnett v. James, 564 S.W.2d 407 (Tex.Civ.App. Dallas 1978, writ dism'd); Cordrey v. Armstrong, 553 S.W.2d 798 (Tex. Civ.App. Beaumont 1977, no writ). However, they could not have recovered on their cause of action because they had already received full satisfaction of their damages by settling with the Hurns and Tate.
We hold that the evidence sufficiently supported the findings that the suit was groundless and brought in bad faith or for the purpose of harassment.
JURY MISCONDUCT
By several points of error plaintiffs complain that the court erred in denying their motion for new trial on grounds of jury misconduct. Plaintiffs assert four areas of jury misconduct: (1) that insurance had been mentioned; (2) that "attempts to settle" were discussed; (3) that comparisons were made of the relevant wealth of the parties; and (4) that there was a decision to "discourage plaintiffs' appeal by denying attorney's fees."
We have carefully examined the record and find no merit in such contentions. The trial court made a number of findings of fact pertaining to jury misconduct, all of which were adverse to plaintiffs' contentions.
In order for a new trial to be granted on the basis of jury conduct, there must be a finding of misconduct and also an injury which probably resulted to the complaining party. Rule 327, Tex.R.Civ.P. (Vernon 1980). Whether or not jury misconduct actually occurred is a question of fact for the trial court. Cook v. Chapa, 492 S.W.2d 339 (Tex.Civ.App. Amarillo 1973, writ dism'd) and cases therein cited. If the evidence offered at the hearing for motion for new trial is conflicting as to whether or not misconduct occurred, the decision of the trial court on the question is binding on appeal. Brawley v. Bowen, 387 S.W.2d 383 (Tex.1965); Maryland Casualty Co. v. Hearks, 144 Tex. 317, 190 S.W.2d 62 (1945); Barrington v. Duncan, 140 Tex. 510, 169 S.W.2d 462 (1943); Armstrong v. Callan, 485 S.W.2d 350 (Tex.Civ.App. Waco 1972, writ ref'd n. r. e.); Spear v. Central Distributing Co., 384 S.W.2d 180 (Tex.Civ.App. San Antonio 1965, writ ref'd n. r. e.). We have carefully examined the record. A number of jurors testified that such misconduct did not occur. The evidence at best was conflicting, contradictory and uncertain as to the matters of jury misconduct presented by the Brunstetters. The trial court found that misconduct did not occur.
All of plaintiffs' points of error pertaining to jury misconduct are overruled.
We have considered and reviewed all of appellants' points of error and all are overruled. The judgment of the trial court is affirmed.
NOTES
[1] The jury found that (a) defendant's failure to disclose to plaintiffs that the house had leaked water on May 7, 1976, was not made with intent to deceive plaintiffs; (b) the failure of defendant to reveal to plaintiffs any latent defect, if any, was not a misrepresentation of an existing condition; (c) plaintiffs had suffered damages as a result of defendant's failure to reveal subject defect; (d) the reasonable and necessary expenses incurred by plaintiffs in correcting the damages which resulted from water leaking into their house was $1,639.95; (e) plaintiffs should be awarded no money as exemplary damages; and (f) defendant's attorney is entitled to no attorney's fees.
[2] Appellants' case was originally for damages for mental anguish also; however, it has since been held that damages for mental anguish are not recoverable under the Deceptive Trade Practices Act. Dennis Weaver Chevrolet, Inc. v. Chadwick, 575 S.W.2d 619 (Tex.Civ.App. Beaumont 1979, writ ref'd n. r. e.). Further, damages for mental anguish are rarely granted in Texas in absence of physical injury. See id. at 621, note 2 and cases cited therein. Appellant also alleged fraud on the part of defendants; however, the jury refused to so find and appellants do not complain of such refusal.
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619 S.W.2d 483 (1981)
Robert H. ALLPHIN, Commissioner of Revenue, Commonwealth of Kentucky et al., Movants,
v.
Robert J. BUTLER, Jr., Property Valuation Administrator, Jefferson County, et al., Respondents.
Supreme Court of Kentucky.
May 26, 1981.
Nathan Goldman and William S. Riley, Legal Division, Dept. of Revenue, Frankfort, for movants.
William E. Scent and James R. Higgins, Jr., Wyatt, Tarrant & Combs, Louisville, for respondents.
LUKOWSKY, Justice.
This case began in May, 1980 when a majority of Kentucky's property valuation administrators (PVAs) refused to follow a directive from the Department of Revenue (Department) to increase their assessments of real property in their respective counties to correspond to the Department's estimation of the fair cash value of that property. The Department threatened to withhold the PVAs' salaries to force compliance with its directive. The PVAs sought relief in the Franklin Circuit Court, which declared that the Department's directive was "wrongful and illegal" and permanently enjoined the Department from withholding the PVAs' paychecks. The Court of Appeals affirmed. We reverse.
On or before the first Monday in May, 1980 the PVAs submitted recapitulations or summaries of the aggregate value of real property by class in their counties to the Department pursuant to KRS 133.040(1). Thereafter the Department notified *484 the PVAs that, "based on the relationships between assessed valuations and actual sale prices," their assessments were "not in compliance with the full fair market value requirements of the constitution and the courts."[1] The Department directed the PVAs to raise the aggregate assessed values by minimum increases to make them satisfy the requirement of fair cash value. The Department sent these directives pursuant to KRS 133.040(1). The PVAs refused to follow them. The Department ordered that their paychecks be withheld until they complied. KRS 132.690(3).
The PVAs contend that once they submit their recapitulations, assuming they have assessed property in good faith, they do not have to reassess the property in their counties to increase its value to agree with the figures determined by the Department. They further argue that if the Department is dissatisfied with their assessments, then it is the Department's job to reassess each county's property. In general terms, this case involves the relationship between Kentucky's PVAs and the Department of Revenue. Specifically, it raises the issue whether the Department has the authority to direct the PVAs to correct their assessments of real property after the PVAs submitted their recapitulations to the Department.
In 1891 the drafters of our constitution provided for the election of an assessor in each county, but also empowered the General Assembly to abolish the office and require the assessment of property be made by other officers. Ky.Const. Secs. 99 and 104. Accordingly, our legislature eventually replaced the office of assessor with the position of property valuation administrator and provided that PVAs be elected in each county every four years. KRS 132.370(1) and (2). PVAs are state officers serving both the Commonwealth and their respective counties. Talbott v. Burke, 287 Ky. 187, 152 S.W.2d 586 (1941). Their duties are detailed in KRS Chapters 131, 132 and 133. Their primary duties are to make the assessment of all property in their counties and to prepare property assessment records. KRS 132.420. Furthermore, they must assess all property at its fair cash value. KRS 132.450.
The PVAs do not perform their duties independently. In addition to working with various county officials, the PVAs must work with the Department of Revenue. The relationship between the PVAs and the Department is defined in bits and pieces throughout KRS Chapters 131, 132 and 133. A review of a few of these statutes should be sufficient to appreciate the nature of this relationship:
A. KRS 131.130(1): "The Department may make rules and regulations, and direct proceedings and actions, for the administration and enforcement of all tax laws of this state."
B. KRS 132.420(1): "The [PVA] shall, subject to the directions, instructions and supervision of the Department of Revenue, make the assessment of all property in his county . . . ."
C. KRS 132.690(1): "Each parcel of taxable real property . . . shall be revalued during each year of each term of office by the [PVA] at its fair cash value in accordance with standards prescribed by the Department of Revenue. . . ."
Obviously, the PVAs do not function in a vacuum, but are aided by and answerable to the Department.[2] This legislative scheme *485 provides the PVAs with no excuse for failure to comply with the Department's directives.
In addition, the PVAs violated the specific mandate of KRS 133.040 by refusing to raise the aggregate assessments of their counties' real property to meet the Department's estimation of its value. The Department arrived at its figures by using a method involving sales-assessment ratio studies.[3] In laymen's terms the Department reviewed the sales of real estate in each county from the previous year to determine the valuation of all property as of January 1 of the taxing year. The PVAs do not object to this method. They disagree with the results of the method, viz., the Department's estimations, which are higher than their assessments. Because they contend that they arrived at their valuations in good faith, they believe that when the Department rejected their assessments then the Department itself was required to reassess the property to correspond to its own valuations. Not so, the legislature has not seen fit to give them the right to ignore the Department's figures.
KRS 133.040 is unambiguous. It states: "The [PVA] shall complete the tax roll of all property in his county before the first Monday in May of each year in accordance with law, and on or before that date he shall file with the department of revenue. . . a recapitulation of all property assessed on said tax roll . . . . Within thirty (30) calendar days after receiving the recapitulation the department of revenue shall direct the property valuation administrator to make any changes that are necessary to correct the assessment . . . ." The Department's mandate is explicit. It has no choice when the PVAs' assessments are different from its valuations. It must order the PVAs to correct them. Implicit in this mandate, especially when viewed in light of the Department's general supervisory powers, is the correlative requirement that the PVAs follow the Department's directives.
The basis of the PVAs' argument that the mandate of KRS 133.040 does not apply to them is that their duty to correct their assessments is superseded by the department's ability to assess property as provided in KRS 133.150. A close look at this statute reveals that it neither relieves the PVAs of following the Department's directives nor restricts the Department to achieving fair cash value assessments only pursuant to its terms. Although the statute gives the Department the power to reassess property, especially when read in the context of its companion statutes KRS 133.160 and KRS 133.170, it is but one weapon in the Department's arsenal to assure that the requirement found in Section 172 of our constitution is met. Apparently the legislature did not want to require the Department to use a sledge-hammer to swat a gnat.
We reiterate that the Department and the PVAs are both mandated to assess all property in Kentucky at its fair cash value. The statutory scheme set out by the legislature in KRS Chapters 131, 132 and 133 contemplates a team effort. But there is no doubt that the Department is the team leader. No other conclusion is reasonable because the legislature has armed the Department not only with general supervisory powers over the PVAs, but also with specific controls to force the PVAs to comply with its directives. KRS 132.690(3) and KRS 132.370(4).
As part of the team the PVAs have the initial responsibility of assessing real property at its fair cash value for taxation. As team leader the Department has the ultimate responsibility of achieving this goal. If the Department disagrees with the PVAs' assessments, the legislature has empowered it to direct the PVAs to correct the assessments and to withhold their pay-checks if they don't. KRS 133.040; KRS 132.690(3) and Luckett v. Monson, Ky., 465 S.W.2d 719 (1971). The legislature has also authorized the Department to assess real property in Kentucky, KRS 133.150; KRS 132.660 and KRS 132.330. This arms the Department with a variety of weapons to accomplish its task, i.e., promptly, efficiently *486 and economically assure that all property is assessed at its fair cash value. The legislature has seen fit to leave the choice of weapons to the discretion of the Department.
Consequently, the PVAs' refusal to follow the Department's directive should not have been sanctioned on the basis that their responsibilities ceased upon submission of their recapitulations to the Department. The Department acted within the authority and discretion granted it by the legislature to direct the PVAs to correct their assessments and to withhold their paychecks for noncompliance.
We have answered the sole question presented and ordinarily would stop here. However, we believe it necessary to continue because the PVAs, the Circuit Court and the Court of Appeals injected an element into the case which is not relevant the plight of the taxpayer. Overlooking their lack of standing to assert the rights of the taxpayers, the PVAs argue that their compliance with the Department's directive would adversely affect the taxpayers' ability to protest increases in the assessment of their property. This argument is based on the following statutory timetable:
A. The PVAs must submit their recapitulations to the Department by the first Monday in May. KRS 133.040(1).
B. The Department has 30 days to review the recapitulations and notify the PVAs of any necessary corrections to be made. KRS 133.040(1).
C. Any taxpayer whose property has been assessed at a greater value than in the previous year must be notified by first class mail. KRS 132.450(4).
D. Any taxpayer who wishes to protest the increase in his assessment must file a letter or petition with the county clerk during the period in which the tax roll is open for inspection. KRS 133.130(1).
E. This inspection period begins on the fourth Monday in May and runs for twelve days. KRS 133.045, effective June 15, 1980. (In 1980 the inspection period opened on the first Monday in June and ran for five days.)
F. The Board of Assessment Appeals convenes on the second Monday in June to review taxpayers' protests. KRS 133.030.
Hypothetically if the PVAs wait until the last minute to submit their recapitulations and the Department waits until the last minute to direct the PVAs to correct the assessments, the inspection period will have begun before the PVAs can make the necessary increases and notify the taxpayers. We recognize that the legislature may not have laid out a perfect schedule. However, we do not believe that it facially violates the taxpayers' rights to protest their assessment increases because the legislature has provided for an extension of the inspection period in KRS 133.045(1).[4] Ideally, the PVAs and the Department will work together to assess property at fair cash value so that taxpayers can be notified of any increases prior to the commencement of the regular or extended inspection period. If a taxpayer does not have an adequate opportunity to protest his assessment, then he may have a legitimate complaint. At that time he may take the necessary legal action to protect his rights. That is a matter for another case and need not be addressed here.
The decision of the Court of Appeals and the judgment of the trial court are reversed and the cause is remanded to the Franklin Circuit Court for entry of a judgment consistent herewith.
All concur except CLAYTON, STEPHENS and STEPHENSON, JJ., who dissent.
CLAYTON, Justice, dissenting.
As in the companion case of Parrent v. Fannin, decided this same day, I agree with the circuit court and the Court of Appeals.
*487 As the majority opinion points out, the PVAs submitted their recapitulations of the aggregate value of property in their counties on or before the first Monday in May 1980. The Department then ordered the PVAs to raise the submitted assessments under penalty of having their salaries withheld pursuant to KRS 132.690. The dispositive issue becomes whether the Department has the statutory power to reject the tendered assessments.
The gist of the PVAs' argument is that the Department lacks such power after the PVAs have performed the duties of their office in good faith. Their statutory responsibilities dictate that, "The property valuation administrator shall, subject to the direction, instruction, and supervision of the department of revenue, make the assessment of all property in his county . . . ." KRS 132.420. The PVAs act under a constitutional mandate to assess the property in their counties at fair market value. Ky. Const., § 172; Russman v. Luckett, Ky., 391 S.W.2d 694 (1965).
The Department, on the other hand, contends that it has the authority to reject the assessments under its general supervisory powers. KRS 131.130 provides that, "The department may make rules and regulations, and direct proceedings and actions, for the administration and enforcement of all tax laws in this state."
The intended purpose of the statutes in question is to delegate the powers to regulate the assessment of property for tax purposes. The elected PVAs have the specific duty to assess property subject to the department's general powers of supervision. Where two or more statutes deal with a common subject matter, the more specific enactment prevails over the general statute. Morton v. Auburndale Realty Company, Ky., 340 S.W.2d 445 (1960).
The Department further agrees that it has the power to reject the recapitulations under its authority to correct assessments contained in KRS 133.150-133.170. These statutes merely provide the power to correct assessments to guarantee equalization among the counties. The statutory requirement of equalization does not authorize the department to raise assessments after the PVAs, in good faith, have submitted their computations. See Ballard County v. Citizens State Bank of Wickliffe, Ky., 261 S.W.2d 420 (1953).
A compatible balance must be reached under which the PVAs acquire at least some autonomy in order to function in their elected offices. Otherwise, their positions become meaningless. The majority opinion characterizes the parties as a "team" in which the department acts as a "team leader." On the contrary, the practical effect of the court's decision is to eject the PVAs from the team altogether.
I would affirm the judgment of the trial court and the decision of the Court of Appeals.
STEPHENS, Justice, dissenting.
I respectfully dissent.
I do not disagree with the majority's general description of the relationship of the department of revenue and the locally elected property valuation administrator. Nor do I disagree with the obvious constitutional mandate that all property within this Commonwealth be assessed at fair cash value.
However, I have a strong parting of the ways with the majority's interpretation of the statutory scheme setting up the procedure when one or more local PVAs disagrees with the department of revenue as to the local assessment.
The argument of the PVAs is that when there is a bona fide disagreement as to an assessment, the department of revenue has the duty to make its own assessment. KRS 133.150, et seq. In disagreeing, the majority hangs its hat on KRS 133.040. That statute, after directing the PVA to complete the "tax roll of all property in his county," requires that the PVA shall file a recapitulation of it with the department of revenue. Within 30 days after receiving it, "the department of revenue shall direct the PVA to make changes that are necessary to correct the assessment."
*488 The majority says that this statute requires the department of revenue to "order the PVAs to correct" local assessments when such differs with that of the department. Extending the logic of this interpretation, the department would be required to mandate the assessment of the PVA to be changed if the department's assessment were lower, or higher. Such mandated changes would be made even if the department's figures were arrived at improperly, were illegal, arbitrary and capricious. Under this view, a local PVA could be required to answer, in court, for the possible illegal or bad faith acts of a department of revenue official. I suggest that the general assembly of Kentucky never intended such a situation.
KRS 133.150, 133.160 and 133.170 provide the legislature's simple answer to a situation where there is an honest disagreement between the department of revenue and the PVA.
The "department of revenue shall have power to increase or decrease the aggregate assessed valuation of the property of any county or taxing district thereof . . . (t)he department of revenue shall fix the assessment of all property at its fair cash value. . . ." KRS 133.150 (emphasis added). This unequivocally requires the department to make its own assessment.
KRS 133.160 then provides a specific, detailed procedure whereby the affected county shall be notified of the reassessment action of the department.
"Notice of assessment raised by department To whom given Contents. When it is contemplated by the department of revenue that it will be necessary to raise the assessed valuation of property in any county, it shall give notice of the contemplated action to the county judge/executive, the superintendent of any school district affected by such action, the mayor of any city which is affected and which has adopted the assessment, and to the taxpayers of that county through the county judge/executive, who shall pose the notice sent him on the courthouse door and certify to the department of revenue that this has been done, and it shall fix a time and place for a hearing which may be in Frankfort or any convenient place in or nearer the county seat."
The majority finesses the clear impact of these statutes by saying that they do not relieve the PVA of following the department's directives and that they do not restrict the department from achieving fair cash value assessments solely pursuant to their terms. KRS 133.150, et seq., are described as "one weapon in the department's arsenal." I cannot believe that the procedure set out in KRS 133.150, 133.160 and 133.170 is a "weapon" of enforcement. It is, rather, a mandate of the legislature requiring the department of revenue to make its own assessment. The other methods of enforcements described in the majority opinion, viz., KRS 132.690(3), 132.370(4), and Commonwealth ex rel. Luckett v. Monson, Ky., 465 S.W.2d 719 (1971), are more than sufficient to enforce the department of revenue's power over the local PVAs.
I believe that in a case of an honest difference of opinion, in a case of good faith disagreement, the legislature, by enacting KRS 133.150, mandated that the department of revenue make its own assessment. The detailed procedure set out in KRS 133.160 corroborates this view. Would the legislature do a vain act in enacting these statutes? Would it have been guilty of overkill in providing another "weapon" to hammer the PVAs? I believe not.
In the oral argument before us, counsel for the department of revenue stated that the enforcement procedures previously described were sufficient to carry out the authority set out in KRS 133.040. He stated that KRS 133.150, 133.160 and 133.170 were "too expensive and too cumbersome for the department." Very candidly, counsel admitted that, as a practical matter, the procedure established by the legislature in KRS 133.150, et seq., was "impractical and couldn't be done."
This statutory scheme was established by the legislature of the Commonwealth. It is not for this court to determine its cost, its *489 practicability or, indeed, its wisdom. It is our duty to effectuate it. Counsel's argument, to me, is tantamount to a concession that the procedure is proper and appropriate in this case. If the department of revenue has the facilities and expertise (and the legislature has said that it does) to develop an assessment in each of the 120 counties of this Commonwealth, it certainly has the ability to make its own assessments pursuant to KRS 133.150, et seq.
I would affirm the Court of Appeals and direct that the department of revenue make its own reassessment, following the procedure set out by statute.
STEPHENSON, J., joins in this dissent.
NOTES
[1] Section 172 of the Constitution of Kentucky requires that all property be assessed for taxation at its fair cash value, estimated at the price it would bring at a fair voluntary sale. In Russman v. Luckett, Ky., 391 S.W.2d 694 (1965) we stated the obvious, that this means that property must be assessed at 100% of its cash value.
[2] The PVAs are firmly fixed on the horns of a dilemma. They are elected by their constituents who are taxpayers and they are accountable to the Department which is a tax collector. They are elected officials and department employees. Salmon Corp. v. Kentucky Board of Tax Appeals, Ky., 426 S.W.2d 473, 475 (1968). Perhaps at times this position makes them feel like Odyseus facing Scylla and Charybdis, but nothing in the record indicates that the PVAs here were unaware of the paradoxical nature of the job for which they chose to run.
[3] See generally KRS 133.250(1) and (2), effective July 15, 1980.
[4] Tax revenue equals rate of taxation times assessment for taxation. Because of the restrictions imposed on tax revenue increases by KRS 132.020 through 132.028, the effect of increases in assessments will ordinarily be softened by reductions in rate.
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619 S.W.2d 441 (1981)
William D. REITMEYER d/b/a Cadillac Sales and Service, Appellant,
v.
CHARM CRAFT PUBLISHER, Appellee.
No. 6287.
Court of Civil Appeals of Texas, Waco.
July 2, 1981.
Robert S. Morris, Feeney, Morris, O'Hanlon & Moore, P.C., Austin, for appellant.
Michael Deitch, Salmanson, Smith & Mouer, Austin, for appellee.
*442 OPINION
McDONALD, Chief Justice.
Defendant seeks by writ of error to set aside a default judgment rendered against him by the trial court for $1,747.98.
Plaintiff Charm Craft sued defendant Reitmeyer on sworn account of $1,195 interest and attorney's fees. On October 5, 1979 defendant filed with the County Clerk of Travis County his answer, pro se. On November 16, 1979 there was nothing in the case file to indicate that an answer had been filed, and the trial court rendered default judgment against defendant for $1,747.98. The Clerk of the Court mailed notice of default judgment to defendant on November 29, 1979. On February 14, 1980, within six months after the entry of the default judgment defendant filed his petition for writ of error.
Defendant urges one point: "The trial court erred in rendering default judgment against [defendant] because an answer was on file at the time the default judgment was rendered".
Article 2249a provides that a writ of error is available to one who has not participated in the actual trial of a case. Article 2255 provides the writ of error must be sued out within six months after the final judgment is rendered.
The Statement of Facts as well as the judgment show defendant did not participate in the trial of the case.
The filing of an answer does not constitute participation in the actual trial of a case so as to bar review by writ of error. Wilson v. Brickstone Products Corp., Tex. Civ.App., (San Antonio) NRE, 465 S.W.2d 183.
Defendant's right to relief by writ of error depends on a showing of the invalidity of the judgment from the papers on file in the case. McEwen v. Harrison, 162 Tex. 125, 345 S.W.2d 706; Smith v. Smith, Tex., 544 S.W.2d 121.
The transcript shows that defendant had an answer on file with the Clerk; the Clerk's file stamp shows it was filed on October 5, 1979. The judgment shows it was rendered on November 16, 1979.
When an answer is deposited with the Clerk for the purpose of making it part of the records in the case, it is filed. Hanover Fire Ins. Co. v. Shrader, 89 Tex. 35, 33 S.W. 112; Griffin v. Browne, Tex.Civ.App., (Houston 1) NRE, 482 S.W.2d 716.
Rule 239 TRCP provides that a plaintiff may take a default judgment any time after a defendant is required to answer "if he has not previously filed an answer".
The fact that through inadvertence the defendant's answer was not in the case file does not make the default judgment proper. And the fact that suit was on sworn account and an answer was unverified does not warrant the rendition of a default judgment. Stanford v. Lincoln Tank Co., Tex.Civ.App., (Fort Worth) NWH, 421 S.W.2d 412.
Defendant's point is sustained.
REVERSED and REMANDED.
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901 F. Supp. 525 (1995)
UNITED STATES of America
v.
Gabriel REGUER etc., Defendant.
No. CR-88-00155-02 (CPS).
United States District Court, E.D. New York.
May 30, 1995.
Stuart J. Grossman, Grossman, Lavine & Rinaldo, Forest Hills, NY, for Gabriel Reguer.
Kelly A. Moore, U.S. Atty's Office, Crim. Div., Brooklyn, NY, for U.S.
MEMORANDUM AND ORDER
SIFTON, District Judge.
This case involves a prosecution for wire fraud and conspiracy relating to the sale of counterfeit Passover Haggadahs. Defendant successfully moved to withdraw his plea for lesser charges, and by order of this Court the prior superseding indictment was reinstated against him. Defendant now moves for dismissal of the indictment as barred by the statute of limitations.[1] For the reasons set forth below, defendant's motion to dismiss the indictment as barred by the statute of limitations is denied.
BACKGROUND
The original indictment in this case was filed in March of 1988, and the government filed a superseding indictment on May 23, 1988. This indictment charged Reguer and *526 co-defendant Raphael Podde with three counts of wire fraud and one count of conspiracy to commit wire fraud, all in relation to the sale of counterfeit Guadalaxara Haggadahs, which are rare versions of a Jewish text read during Passover celebrations.
Trial began on June 2, 1988. After the jury was selected and the government made its opening statement, defendant Podde decided to enter a plea of guilty to the entire indictment. At his plea allocution, Podde informed the Court that he had convinced Reguer to sell "certain books [by] giving him a wrong representation." Reguer was offered the opportunity to plead guilty to different, lesser charges. He thus pleaded to a new information charging him with violating 31 U.S.C. § 5313 and § 5322 by causing the First National Savings Bank to fail to file a currency transaction report. Reguer admitted that he "structured" his transactions to avoid the reporting requirements but contended that he was never aware that it was a crime to do so. Reguer was sentenced to three years of probation and a fine of $150,000. Reguer was also ordered to pay restitution to the victims.
Subsequent to the Supreme Court's holding in Ratzlaf v. United States, ___ U.S. ___, 114 S. Ct. 655, 126 L. Ed. 2d 615 (1994), that a defendant is not guilty of structuring under 31 U.S.C. § 5313(a)(3) unless he knew that his conduct was illegal, Reguer moved this Court to vacate his plea and expunge his record, arguing that Ratzlaf should apply to his conviction. In a Memorandum and Order dated January 5, 1995, this Court granted Reguer's request, vacated his conviction and plea of guilty, and directed the parties to appear to fix a new trial date.
The government subsequently moved to reinstate the May 23, 1988 indictment against Reguer. In a bench ruling on March 3, 1988, and in a subsequent written opinion, this Court granted the government's motion over the defendant's arguments that to do so would violate principles of double jeopardy. The Court specifically declined to rule at that time on defendant's arguments that the indictment was barred by the statute of limitations and reinstated the indictment without prejudice to a subsequent motion to dismiss on those grounds.
DISCUSSION
Defendant argues that, when this Court dismissed the May 23, 1988 indictment, the tolling of the statute of limitations was lifted and that, since it is now more than five years since the alleged acts occurred, prosecution on the May 23, 1988 indictment is barred. The government responds with an analysis based in contract theory: it argues that, since the defendant has repudiated his plea bargain, both parties should be placed back in the position they were in prior to entering the plea agreement, and thus the May 23, 1988 indictment should be treated as never having been dismissed and the statute of limitations should be treated as tolled for the intervening period.
The Court of Appeals explained "the interplay of an indictment with a statute of limitations" in United States v. Grady, 544 F.2d 598, 601 (2d Cir.1976):
Once an indictment is brought, the statute of limitations is tolled as to the charges contained in that indictment. This is a sensible application of the policies underlying statutes of limitations. The defendants are put on timely notice, because of the pendency of an indictment, filed within the statutory time frame, that they will be called to account for their activities and should prepare a defense. The statute begins to run again on those charges only if the indictment is dismissed, and the Government must then reindict before the statute runs out or within six months, whichever is later, in order not to be time-barred. Since the statute stops running with the bringing of the first indictment, a superseding indictment brought at any time while the first indictment is still validly pending, if and only if it does not broaden the charges made in the first indictment, cannot be barred by the statute of limitations.
Id. at 601-602 (citations and footnotes omitted); United States v. Gengo, 808 F.2d 1, 3 (2d Cir.1986). Other courts have acknowledged that providing notice to a defendant that he will be called to prepare a defense is *527 "the central policy underlying the statutes of limitation." United States v. Italiano, 894 F.2d 1280, 1283 (11th Cir.), cert. denied, 498 U.S. 896, 111 S. Ct. 246, 112 L. Ed. 2d 205 (1990); United States v. Pacheco, 912 F.2d 297, 305 (9th Cir.1990) (quoting Italiano). The Supreme Court set forth a parallel rational for limitations periods:
The purpose of a statute of limitations is to limit exposure to criminal prosecution to a certain fixed period of time following the occurrence of those acts the legislature has decided to punish by criminal sanctions. Such a limitation is designed to protect individuals from having to defend themselves against charges when the basic facts may have become obscured by the passage of time and to minimize the danger of official punishment because of acts in the far distant past. Such a time limit may also have the salutary effect of encouraging law enforcement officials to investigate suspected criminal activity.
Toussie v. United States, 397 U.S. 112, 114-15, 90 S. Ct. 858, 860, 25 L. Ed. 2d 156 (1970).
The Supreme Court went on to say that "[f]or these reasons and others, we have stated before `the principle that criminal limitations statutes are to be liberally interpreted in favor of repose.'" Id. (quoting United States v. Habig, 390 U.S. 222, 227, 88 S. Ct. 926, 929, 19 L. Ed. 2d 1055 (1968)). It is also established that statutes of limitations "provide predictability by specifying a limit beyond which there is an irrebuttable presumption that a defendant's right to a fair trial would be prejudiced." United States v. Marion, 404 U.S. 307, 322, 92 S. Ct. 455, 464, 30 L. Ed. 2d 468 (1971).
Nonetheless, this is not a case where the government has been delinquent in bringing a prosecution or where the government seeks to disturb the interests in finality that the statute of limitations protects. Here, the Court has vacated a plea in accordance with the defendant's request; it was the entry of that plea that led to the dismissal of the charges defendant now seeks to avoid. The defendant had clear notice of the prior charges and took substantial steps toward the preparation of a defense his plea on the lesser information was taken after trial on the May 23, 1988 indictment had already commenced. While the passage of time may have clouded the memories of material witnesses and others essential to the parties' cases, the fact remains that any prejudice to the defendant therefrom is not attributable to any action by the government, save their offer of a plea to lesser charges in the first place. The traditional reasons that support the protections of a statute of limitations are inapposite here. It would be fully consonant with the policies underlying the statute of limitations to consider the statute tolled with respect to the May 1988 indictment so that the government can be returned to the position it was in before the plea agreement was made.
It is clear that the defendant could be tried on the information to which he pleaded in 1988. See Williams v. McMann, 436 F.2d 103 (2d Cir.1970), cert. denied, 402 U.S. 914, 91 S. Ct. 1396, 28 L. Ed. 2d 656 (1971). In Williams, the Court of Appeals approved the reinstatement of an indictment, albeit during the limitations period, when a defendant had applied to withdraw his guilty plea. The court wrote:
For us to hold that one in Williams's position may not be tried and sentenced upon the charge originally brought would encourage gamesmanship of a most offensive nature. Defendants would be rewarded for prevailing upon the prosecutor to accept a reduced charge and to recommend a lighter punishment in return for a guilty plea, when the defendant intended at the time he entered the plea to attack it at some future date. Although there is not suggestion in the record that [defendant] attempted this gambit, one way in which it might be achieved would be to plead guilty after a bargain has been struck with the prosecutor on the lesser charge and sentence. But, if the court after reading the defendant's probation report imposed a sentence higher than contemplated, the `unbargained-for' longer sentence would then trigger proceedings to vacate the plea. Indeed, any reason the defendant could conceive for setting aside his plea and sentence would lose him little. If the defendant's argument were to prevail, then a trial on the lesser charge only could result.... To frustrate this strategy, prosecutors would be restrained from entering plea bargains, thereby adding further *528 to the staggering burdens of our criminal courts, and judges would become more rigid in exercising their discretion in favor of permitting withdrawal of a guilty plea. This would hardly enhance the administration of justice.
It is also clear that, under the general rule of Grady, a defendant could be tried on any superseding indictment that did not substantially alter or modify those charges and that the statute of limitations would be considered tolled as to such a superseding indictment as well. Under the peculiar facts of this case, the reinstated indictment should not be considered to broaden the charges in that information, since in every practical respect that information devolved from the May 23, 1988 indictment, even though the charged crime was new. This is the only result consistent with both the principles of Williams and the limitations analysis of Grady. To hold otherwise would produce as absurd a result as that forestalled in Williams by allowing reinstatement of an indictment in the first place.[2]
Neither the parties nor this Court has found any case on all fours with the present issue. However, both the Court of Appeals and other courts have indirectly referred to the question, and this Court's resolution is in accord with these decisions.
In United States v. Liguori, 430 F.2d 842 (2d Cir.1970), cert. denied, 402 U.S. 948, 91 S. Ct. 1614, 29 L. Ed. 2d 118 (1971), the Court of Appeals reversed the conviction of an individual subsequent to a change in the law wrought by the Supreme Court. In his concurrence, Judge Lumbard expressed his concern about overturning a plea to lesser charges. "In such a situation, there appears to be every reason to permit the government either to re-indict Liguori on the other counts, or to move in the district court to vacate the dismissal of the other counts. If the government elects to continue with the prosecution of Liguori it must do so promptly, as the acts charged occurred more than four years ago and the running of the statute of limitations will soon become a bar to further prosecution." 430 F.2d at 851. In Ennis v. Fitzpatrick, 438 F.2d 1201 (2d Cir. 1971), again vacating a conviction after a plea bargain, the court observed that reindictment "may be questionable here since more than five years have elapsed ... unless the statute of limitations has in some manner been tolled." Id. at 1202.
Citing Judge Lumbard's concurrence, the Seventh Circuit Court of Appeals in United States v. McCarthy looked closely at the considerations that might allow reinstatement of an indictment. 445 F.2d 587, 591 (7th Cir.1971). "We have no doubt that the Government had the right to make the rescission [of a plea agreement] complete and promptly to reinstate the dismissed counts. The question is not so easily answered, however, when the Government postpones its request for reinstatement for a period of three years and until after the statute of limitations has run." The court refused to allow reinstatement in large part because the government waited three years, until after the limitations period had run, to reinstate the indictment:
We agree with the implications in Chief Judge Lumbard's opinion that in a situation of this kind the government must proceed with diligence and that the right to prosecute will be lost unless the record is protected by filing a timely motion to reinstate the dismissed counts. Moreover, in view of the age of this litigation, and the fact that a retrial on Count III is unlikely to have a significant practical effect on its ultimate disposition ... we believe the scales should be tipped in favor of the defendant.
Id.
As noted above, the government has in no way been dilatory or delinquent in Mr. Reguer's case. Once Reguer's plea was vacated, the government moved promptly to reinstate the May 1988 indictment against him. Its conduct has been timely and proper; the *529 government has not sat on its rights but pursued them diligently. In such a case, the statute of limitations is to be considered tolled, and thus the reindictment in this case is proper.
A similar result would obtain under the contract-based approach advanced by the government. The Court of Appeals has rejected the strict application of the law of commercial contracts to plea agreements in the criminal context, Innes v. Dalsheim, 864 F.2d 974, 978 (2d Cir.1988), cert. denied, 493 U.S. 809, 110 S. Ct. 50, 107 L. Ed. 2d 19 (1989), but such principles still may inform the analysis of a plea dispute. In Innes, the court acknowledged that systemic safeguards must accompany the acceptance of a guilty plea and that such safeguards "include requiring the prosection either to keep its promises or permitting the defendant to withdraw his plea." Id. (citing Santobello v. New York, 404 U.S. 257, 262-63, 92 S. Ct. 495, 499, 30 L. Ed. 2d 427 (1971)). Moreover, the court observed that "[t]he rule also applies to the rarer situation in which the defendant has breached the plea arrangement. There the relief afforded the government includes release from its promises under the plea arrangement, and the right to proceed against the defendant without reference to its earlier promises." Id. (citing United States v. Gonzalez-Sanchez, 825 F.2d 572, 578 (1st Cir.), cert. denied, 484 U.S. 989, 108 S. Ct. 510, 98 L. Ed. 2d 508 (1987)).[3]
The court in Gonzalez-Sanchez specifically addressed the situation where a defendant breaches a plea agreement:
When a defendant has entered into a plea agreement with the government, the court must ensure that he receives what is reasonably due him under the agreement. Contractual principles apply insofar as they are relevant in determining what the government "owes" the defendant. If the defendant lives up to his end of the bargain, the government is bound to its promises. On the other hand, if the defendant fails to fulfill his promises, the government is released from its agreement and may indict and try the defendant regardless of whatever it may have promised earlier. As in this case, the failure of the defendant to fulfill his promise to cooperate and testify fully and honestly releases the government from the plea agreement.
825 F.2d at 578.
By successfully moving to vacate his plea, Reguer has breached the agreement; in contract terms, he has revoked his acceptance. As part of the agreement, the government promised to dismiss the other pending charges, and in reliance on the agreement these charges were indeed dismissed. The appropriate remedy for the government, then, would be to treat their motion to reinstate the indictment as essentially a motion to vacate the dismissal of the charges dismissed in 1988. Just as Reguer has voided his plea and the consequences therefrom, so should the government be permitted to void their consent to the dismissal of the pending charges. Under this analysis, the May 1988 indictment becomes "pending" just as if it had never been dismissed.[4]
Accordingly, defendant Reguer's motion to dismiss the indictment as barred by the statute of limitations is denied.
SO ORDERED.
NOTES
[1] Defendant's pretrial motion included several broad discovery demands. Upon the defendant's statements at oral argument that the government was complying and that there were no specific disputes to bring before the Court, these demands are deemed withdrawn without prejudice.
[2] Grady does make plain that the clock begins running again when the charges in an indictment are "dismissed," but there is some reason to believe that such dismissal refers to one brought about by the deficiency of an indictment or some error of the government, not a dismissal pursuant to a plea agreement. Compare 18 U.S.C. § 3288 (pre-1988) and 18 U.S.C. § 3288 (post-1988) (old statute provided saving clause for reindictment after expired limitations period when indictment had been dismissed due to deficiency in the grand jury proceedings; amendments broadened applicability to dismissals for "any reason.").
[3] The Innes court specifically referred to Santobello in setting forth three-step framework for evaluating a plea dispute. That framework which requires analysis of what was promised, whether there was a breach, and whether the defendant knowingly and intelligently waived his rights is applicable to the situation where the relief defendant seeks is to vacate his plea in the light of a breach by either prosecution or defense, but not the case where the plea has already been vacated.
[4] United States v. DiStefano, 347 F. Supp. 442, 443 (S.D.N.Y.1972), is not to the contrary. There, the district court held that where an indictment has been dismissed for failure to prosecute, reindictment is impossible as "the court is without power to reinstate the indictment." In that case, dismissal did not bar further prosecution, and a new indictment could have been brought within the limitations period. Here, however, none of these factors apply, and the Court has the power, in the narrow circumstances presented by this case, to reach back through the statute of limitations and vacate the dismissal of the indictment.
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383 Pa. 54 (1955)
Strank
v.
Mercy Hospital of Johnstown, Appellant.
Supreme Court of Pennsylvania.
Argued September 29, 1955.
November 14, 1955.
Before STERN, C.J., STEARNE, JONES, MUSMANNO and ARNOLD, JJ.
*55 Leonard Shapiro, with him Harry E. Simmons, for appellant.
Frank P. Barnhart, for appellee.
OPINION BY MR. CHIEF JUSTICE HORACE STERN, November 14, 1955:
It is unfortunate that a case which involves merely the claimed right of a student nurse to be given credits for her two years' work at a school for nursing, from which school she was then dismissed, should be enveloped in a veritable maze of pleadings, arguments, decisions and appeals now protracted over a course of three years and without even the beginning as yet of any inquiry into the substantive merits of the controversy.
The facts are set forth in the opinion of this court on a former appeal (Strank v. Mercy Hospital of Johnstown, 376 Pa. 305, 102 A.2d 170). Briefly stated, they are that the defendant institution conducts a school of nursing in conjunction with its hospital, that plaintiff, then a minor, enrolled in the school as a student nurse and paid the expenses incidental thereto, that *56 she successfully completed the work prescribed for the first two years of the course but was dismissed in her third and final year of training because she had broken a rule of the school in remaining away overnight without permission (she explained the circumstances of this infraction). She does not seek reinstatement as a student in the school but only that defendant give her transfer credits for the work she has completed in order that she may secure advanced standing in some other nursing school; this the defendant has refused to do. Plaintiff brought an action in mandamus to compel defendant to give her the credits; to her complaint defendant filed a preliminary objection raising the question of jurisdiction. We held that a writ of mandamus could not issue to enforce a right or duty which was not imposed by law but rested solely on contract, and therefore that the complaint in mandamus must be dismissed.
Following this decision plaintiff instituted the present proceedings in equity. She filed a complaint, and, after defendant filed preliminary objections thereto, an amended complaint, in which she set forth her oral arrangements with the school at the time she entered, later confirmed in part by writing and carried out by both parties for a period of two years. She alleged that these arrangements and understandings imposed upon defendant the legal duty to give her proper credits for work completed, and that, because of defendant's refusal to do so, she has suffered great damage by loss of time for which she has no adequate remedy at law. Defendant again filed preliminary objections, among them that the court did not have jurisdiction to entertain such an action in equity. The court below entered a decree dismissing the objections and ordering defendant to file an answer to the complaint. Thereupon defendant took the present appeal under the Act *57 of March 5, 1925, P.L. 23, thereby again raising the sole question of jurisdiction.
Plaintiff has moved to quash the appeal on the ground that the court's decree was interlocutory and not a final decree from which an appeal may properly be taken. It is true, of course, that the appeal is not from a final decree, but the very purpose of the Act of 1925 was to permit such an appeal in order that the question of jurisdiction might be preliminarily determined. The motion to quash is overruled.
There is not the slightest merit in defendant's contention that the court in equity was without jurisdiction to enter upon these proceedings; indeed the case is one peculiarly for determination by such a court. Under the Acts of June 16, 1836, P.L. 784, § 13, and February 14, 1857, P.L. 39, the courts of common pleas have the jurisdiction and powers of a court of chancery in all cases such as those in which they had theretofore possessed jurisdiction and powers under the Constitution and laws of the Commonwealth, and also so far as relates to the affording of specific relief when a recovery in damages would be an inadequate remedy. They have jurisdiction not only for the prevention of acts contrary to law and prejudicial to the rights of individuals, but also for the enforcement of obligations whether arising under express contracts, written or oral, or implied contracts, including those in which a duty may have resulted from long recognized and established customs and usages, as in this case, perhaps, between an educational institution and its students. Moreover, it is the peculiar province of equity to afford relief where the measurement of damages in such cases cannot be formulated and applied in a suit at law because of their being necessarily speculative and indeterminate, and therefore the legal remedy is not adequate and complete: H. Daroff & Sons, Inc. v. Vitullo, *58 350 Pa. 501, 507, 39 A.2d 595, 598; Ritz v. Rafail, 366 Pa. 274, 276, 277, 77 A.2d 411, 413. Indeed it might be said that it would be a reproach to our system of jurisprudence if plaintiff should be found entitled to the transfer credits which she seeks, but nevertheless neither law nor equity can furnish her any adequate means of redress.
The decree of the court below is affirmed, costs to abide the event.
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744 S.W.2d 319 (1988)
Jorge Eduardo HINOJOSA, Appellant,
v.
The STATE of Texas, Appellee.
No. 13-86-556-CR.
Court of Appeals of Texas, Corpus Christi.
January 7, 1988.
Rehearing Denied February 11, 1988.
Discretionary Review Refused May 4, 1988.
*320 Mark Alexander, Joseph A. Connors, III, McAllen, for appellant.
Rene Guerra, Dist. Atty., Edinburg, for appellee.
Before KENNEDY, NYE and DORSEY, JJ.
OPINION
KENNEDY, Justice.
The appellant, Jorge Eduardo Hinojosa, was tried by a jury and convicted of murder. He was sentenced to forty-five years confinement and assessed a fine of $10,000.00. The appellant brings error on the ground that the trial court refused to charge the jury on self-defense. We reverse the judgment of the trial court and remand the case for a new trial.
Uncontroverted testimony indicates that the appellant was standing with a small group of his friends on one side of a vacant lot and the deceased, Reymundo Sendejo, was standing with another small group some ten to fifteen yards away on the opposite end of the lot. Verbal threats were made by one or both groups, and a number of gunshots were fired, one of which, fired by the appellant, hit the deceased in the throat and killed him.
The appellant testified that he wandered by the vacant lot looking for another friend, not associated with the groups, to help the friend fix his car. When appellant walked past the group on his side of the lot, members of the opposing group shouted that they were going to beat him up for getting involved with the first group. At this point, the group on appellant's side ran away. Appellant, however, did not at first believe the threats and stayed in the alley on his side of the vacant lot. He observed that some members of the opposing group were carrying sticks and pipes and one ("Prieto") was carrying a handgun. Prieto pointed the handgun in appellant's direction and appellant jumped behind a light post for protection. He heard one or two shots. Appellant then fired once without aiming, "just to scare them, so they wouldn't harm me," because he was afraid the other group would "beat me up or shot [sic] me." He then ran from the scene.
In his first two points of error, appellant complains of the court's failure to include *321 an instruction on self-defense in the charge. He objected to the charge and filed a written requested instruction. The court overruled his objection and included no instruction on self-defense. Dyson v. State, 672 S.W.2d 460 (Tex.Crim.App.1984) explains the duty of the trial court to charge the jury on self-defense:
It is well settled that if the evidence raises the issue of self-defense, the accused is entitled to have it submitted to the jury. Semaire v. State, 612 S.W.2d 528 (Tex.Cr.App.1980). A defendant is entitled upon timely request to an instruction on every affirmative defense raised by the evidence, "regardless of whether it is strong, feeble, unimpeached, or contradicted, and even if the trial court is of the opinion that the testimony is not entitled to belief." Warren v. State, 565 S.W.2d 931, 933 (Tex.Cr. App.1978); see also Horne v. State, 607 S.W.2d 556 (Tex.Cr.App.1980). The defendant's testimony alone may be sufficient to raise a defensive theory requiring a charge. Warren v. State, supra; Cain v. State, 549 S.W.2d 707 (Tex.Cr. App.1977).
Dyson, 672 S.W.2d at 463.
The right to self-defense is set out in Tex. Penal Code Ann. § 9.31 (Vernon 1974), as follows:
(a) Except as provided in Subsection (b) of this section, a person is justified in using force against another when and to the degree he reasonably believes the force is immediately necessary to protect himself against the other's use or attempted use of unlawful force.
§ 9.32 (Vernon Supp.1987) further provides:
A person is justified in using deadly force against another:
(1) if he would be justified in using force against the other under Section 9.31 of this code;
(2) if a reasonable person in the actor's situation would not have retreated; and
(3) when and to the degree he reasonably believes the deadly force is immediately necessary:
(A) to protect himself against the other's use or attempted use of unlawful deadly force....
Under the appellant's version, deadly force was being used against him by members of the opposing group and appellant's actions were in defense against that force. When the accused is attacked by multiple assailants, the courts have held that he has the right to a charge on self-defense as it relates to multiple assailants. Frank v. State, 688 S.W.2d 863, 868 (Tex. Crim.App.1985); Brown v. State, 651 S.W.2d 782, 784 (Tex.Crim.App.1983); Sanders v. State, 632 S.W.2d 346, 348 (Tex.Crim. App.1982); Tanguma v. State, 721 S.W.2d 408, 411 (Tex.App.Corpus Christi, 1986, pet. ref'd). The facts of Sanders are similar to the present case. While in a bar with his brother, defendant was hit with a pool cue by a person other than the victim. The defendant and his brother then ran out as a crowd from the bar chased them into the parking lot and yelled at them. The defendant's brother tossed him a gun and the defendant, intending only to scare the crowd so that he could get away from them, fired a shot that killed the victim. Sanders, 632 S.W.2d at 346-47. The unlawful deadly force against which the defendant may protect himself need not have been manifested by the victim, as Brown held that "the appellant had a right to act in self-defense against [the victim] if he was in fear of death or serious bodily injury at the hands of either [the victim] or [another assailant]." Brown, 651 S.W.2d at 784. In the present case, the appellant was put in fear of death or serious bodily injury by a combination of the threats made by the opposing group, the weapons they carried and the gunshots he heard. He was thus entitled to use deadly force, if at all, against the entire group of assailants, including the deceased.
However, the appellant is only entitled to use deadly force in self-defense under § 9.32 if a reasonable person in his situation would not have retreated. In Sternlight v. State, 540 S.W.2d 704, 706 (Tex. Crim.App.1976), the court held that an instruction on the law of retreat requires the jury "in deciding the issue on self-defense *322 to determine whether the [defendant] had the ability and opportunity to retreat considered as part of all of the circumstances of the moment." Quoting the Practice Commentary to § 9.32, the court in Valentine v. State, 587 S.W.2d 399, 402 (Tex. Crim.App.1979) (emphasis added) agreed that:
"[a] person ought to retreat, if he can do so safely, before taking human life.... By measuring the existence and extent of the retreat obligation in terms of the ordinary person in the actor's situation, it is contemplated that the factfinder will make a moral judgment on whether the defendant in a specific case ought to have retreated before threatening or using deadly force."
The factfinder is given the responsibility to determine whether appellant's failure to retreat was reasonable under the circumstances.
The State argues in the present case that a reasonable person would have retreated at the time appellant's friends ran from the vacant lot, before violence became imminent and when only verbal threats had been made. However, appellant is not put to a reasonable person election to retreat or fight until the need for deadly force in defense becomes apparent. In Young v. State, 530 S.W.2d 120, 123 (Tex.Crim.App.1975), the defendant had an altercation with the deceased which put him in fear of his life. However, the defendant wanted to discuss the matter further with the deceased and went to his house, but armed himself for protection. The deceased then threatened the defendant with a broom and started to kick him, at which time the defendant moved back and shot the deceased. The court held that the defendant was not "confronted with need for the use of deadly force until the deceased made such use imperative. Thus, not until after the situation arose as to the necessity of using deadly force would appellant be faced with the decision as to whether to retreat." Id., 530 S.W.2d at 123. In the present case, appellant did not believe the opposing group's threats and was not put in fear of deadly force being used against him until he saw the opposing group's weapons and heard gunshots. The jury could have found that a reasonable person would not then have retreated.
The cases on which the State relies to prove that retreat was available as a matter of law can be distinguished from the present case because they all involve situations where there was also no evidence to show that the defendant was threatened with deadly force and the reasonableness of retreating was tied to the unreasonableness of the underlying fear. Werner v. State, 711 S.W.2d 639, 645 (Tex.Crim.App. 1986); Reece v. State, 683 S.W.2d 873, 874 (Tex.App.Houston [14th Dist.] 1984, no pet.); Dyson v. State, 654 S.W.2d 577, 579 (Tex.App.Fort Worth 1983), affirmed, 672 S.W.2d 460 (Tex.Crim.App.1984); Ogas v. State, 655 S.W.2d 322, 324 (Tex.App. Amarillo 1983, no pet.); Bray v. State, 634 S.W.2d 370, 372-73 (Tex.App.Dallas 1982, no pet.). Moreover, the standard, if there is one, for the court to use in determining the reasonableness of retreat before submitting the question to the jury appears to be whether "appellant had a clear and unbridled avenue to escape ... to which appellant had easy access." Dyson, 654 S.W. 2d at 579; see also Reece, 683 S.W.2d at 874. An armed and firing aggressor only yards away from him in an open lot hardly leaves the appellant with a clear and unbridled avenue to escape to which he has easy access. While the appellant did first hide behind a lamp post, that was only a temporary position of safety and the appellant could hardly be expected to make that his position of retreat and remain there until his assailants reached him.
In the present case, it was error for the trial court not to charge the jury in accordance with appellant's request on self-defense against multiple assailants. The presence of any harm, regardless of degree, which results from preserved charging error, is sufficient to require a reversal of the conviction. Arline v. State, 721 S.W.2d 348, 351 (Tex.Crim.App.1986); see also Almanza v. State, 686 S.W.2d 157, 171 (Tex.Crim.App.1984). Although the evidence against the appellant is substantial, we cannot say that he suffered no harm by *323 the trial court's failure to charge on self-defense. See Hayes v. State, 728 S.W.2d 804, 808 (Tex.Crim.App.1987). Appellant's first two points of error are sustained.
In points of error five through seven, appellant complains that the trial court erred in the punishment phase of the trial by submitting a charge to the jury on the law of parole in accordance with Tex.Code Crim.Proc.Ann. art. 37.07, § 4(a) (Vernon Supp.1987). Appellant timely objected to the charge on the ground that it violates the Constitution of the State of Texas and the separation of powers doctrine. The Texas Court of Criminal Appeals recently held that the form mandated by art. 37.07, § 4 is unconstitutional because it violates the separation of powers doctrine and due course of law. Rose v. State, No. 193-87 (Tex.Crim.App. November 12, 1987) (not yet reported). Accordingly, we hold that it was error for the trial court to charge the jury on the law of parole. Since the appellant objected to the charging error, we must ask if it caused him any harm. Arline, 721 S.W.2d at 351. The punishment for murder was explained in the charge to be confinement in the Texas Department of Corrections for life or for any term of not more than ninety-nine years or less than five years. We cannot say that the jury did not consider the wrongful charge, and thereby cause some harm to the appellant, in assessing punishment at confinement for forty-five years. Points of error five through seven are sustained.
Having found reversible error for the reasons already stated, we will not address appellant's remaining grounds of error. The judgment of the trial court is reversed and the case is remanded for a new trial.
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744 S.W.2d 749 (1987)
HOME FOLKS MOBILE HOMES, INC., and Nanette Berry, Appellants,
v.
MERIDIAN MUTUAL INSURANCE COMPANY, Appellee.
No. 86-CA-2611-MR.
Court of Appeals of Kentucky.
October 9, 1987.
As Corrected on Denial of Rehearing December 11, 1987.
Discretionary Review Denied by Supreme Court February 23, 1988.
John Bickel, George Thacker, Thacker, Thacker, Bickel, Wetzel & Hodskins, Owensboro, for appellants.
Stephen B. Lee, McCarroll, Nunley & Hartz, Owensboro, for appellee.
Before HOWARD, McDONALD and WILHOIT, JJ.
McDONALD, Judge:
The appellants, Home Folks Mobile Homes, Inc., a corporation solely owned by Richard Berry, and Nanette Berry, Richard's daughter, have appealed from the judgment of the Daviess Circuit Court in favor of the appellee, Meridian Mutual Insurance Company. Nanette Berry was involved in an accident in July, 1985, while driving a car owned by someone other than herself or her father. Meridian filed this declaratory judgment action to determine whether the policy it had issued to Home Folks Mobile Homes, Inc., afforded any coverage for the injuries caused by the alleged negligence of Nanette and whether it had a duty to defend Nanette in the suits filed against her.
The policy at issue was a Business Auto policy. There is no dispute that the policy also provided coverage and that a premium was paid for the nonbusiness use of those vehicles specified on the declaration page. Richard Berry testified that he sought automobile liability coverage both for his business and family. Bobby Baize, Meridian's agent, testified that his notes of a *750 conversation with Berry indicated Berry indeed wanted "full coverage." Several endorsements were appended to the policy, two of which, for example, provided personal injury protection and uninsured motorists insurance. Meridian insists, however, that it provided no coverage for Nanette's accident, that is, coverage commonly known as "drive other car" coverage, and that its liability extended only to the use of the specific automobiles listed on the declaration sheet of the policy. "Drive other car" coverage would ordinarily come with a family automobile policy if bought separately.
The appellants argue that they were entitled to summary judgment on the issue of coverage because of the inclusion of the endorsement CA 99 17. This endorsement, like the others, is headed in large, bold print with the following: "THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY." It is entitled "INDIVIDUAL NAMED INSURED" and begins:
If you are an individual, the policy is changed as follows: ...
B. CHANGES IN LIABILITY INSURANCE
. . . . .
2. PERSONAL AUTO COVERAGE While any auto you own of the private passenger type is a covered auto under the LIABILITY INSURANCE:
. . . . .
b. Any auto you don't own is a covered auto while being used by you or by any family member except:
[four exceptions follow which are not applicable; emphasis our own.]
In granting summary judgment for Meridian, the trial court concluded the endorsement did not apply in this case as it, in "clear and unequivocal language," provided the additional coverage only if the insured was an individual; and the named insured, Home Folks Mobile Homes, Inc., was not an individual but a "business corporation."
The trial court's determination, however, overlooks the ambiguity created by the inclusion of the endorsement in the policy which by its own terms would never have any effect. Generally, ambiguities in insurance policies, as with other contracts, are construed against the drafter. Wolford v. Wolford, Ky., 662 S.W.2d 835 (1984); State Automobile Mutual Insurance Company v. Ellis, Ky.App., 700 S.W.2d 801 (1985). Meridian insists that CA 99 17 does not contain any language which creates an ambiguity. Nevertheless we believe an ambiguity has arisen simply by virtue of the insurer's inclusion of the endorsement in the policy. In its brief Meridian states that the endorsement was included "for exactly the reason stated in the endorsement itself, to change the policy if the named insured was an individual as opposed to a corporation." This explanation is nonsensical as the insurance carrier was obviously aware that the named insured was not an individual but a corporation. Meridian has simply offered no reason, nor can we think of any, for including the endorsement unless it was to provide the expanded personal coverage as requested by the insured. As the Supreme Court noted in Simon v. Continental Ins. Co., Ky., 724 S.W.2d 210, 212 (1987), "[w]e do not accept as a fact that the parties, in good faith, intended to bargain for insurance that paid no benefits." Thus, as the endorsement explicitly sets out that it "changes" the policy, and as the endorsement provides "drive other car" coverage not provided elsewhere in the policy, the insured could reasonably expect the endorsement was meant to extend such coverage to members of the Berry family. The "doctrine of reasonable expectations" is one, as explained in Simon, appropriate for resolving such ambiguities. Id., p. 213. See also 1A R. Long, The Law of Liability Insurance § 5.12 (1987).
The judgment of the Daviess Circuit Court is reversed and remanded for further proceedings on the merits of the complaint.
HOWARD, J., concurs.
WILHOIT, J., concurs in result and files a separate opinion.
*751 WILHOIT, Judge, concurring.
I concur in the result reached by the majority because I believe as the evidence now stands there is an issue of material fact as to the intent of the parties with respect to "drive other car" coverage. The endorsement for this coverage is not patently ambiguous but, as pointed out by the majority, the circumstances as a whole are indicative of a latent ambiguity.
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146 B.R. 748 (1992)
In re FARLEY, INC., Debtor.
Bankruptcy No. 91 B 15610.
United States Bankruptcy Court, N.D. Illinois, E.D.
November 2, 1992.
*749 *750 Herbert S. Edelman, Howard A. Becker, Kaye Scholer Fierman Hayes & Handler, New York City, Raymond E. Stachnik, Mark K. Thomas, Katten Muchin & Zavis, Chicago, Ill., for debtor.
Thomas Petkus, Petkus & Associates, Abraham Brustein, Christopher R. Smith, Smith Williams & Lodge Chartered, Chicago, Ill., for claimants.
FINDINGS OF FACT AND CONCLUSIONS OF LAW CONCERNING THE ESTIMATION OF PERSONAL INJURY AND CONTRIBUTION CLAIMS FOR PURPOSES OF PLAN VOTING AND FEASIBILITY
JACK B. SCHMETTERER, Bankruptcy Judge.
The Debtor Farley, Inc. ("Farley") objected to claims filed by Messrs. Colakovic, Kostich, Leach, Mirkovic, and Moreno (collectively, the "Injury Claimants") and the claims filed by Barber-Colman Company, Maxon Corporation, NCR Corporation, Olin Corporation, Westronics, Inc., and Vertac Chemical Company (collectively, the "Contribution Claimants"). Claims of the Injury Claimants arise out of an explosion that occurred at a factory in Chicago. They are pursuing tort actions against Farley and several other defendants based on injuries sustained due to the explosion. The Contribution Claimants are co-defendants in that tort case who have cross-claims against Farley. The tort case pends in the Circuit Court of Cook County, Illinois. As of this date, no trial date has been set.
Hearing as to whether Farley's proposed Plan will be confirmed is scheduled within a few weeks. To allow Farley to proceed to confirmation hearing, a hearing was set for purposes of estimating these injury and contribution claims for purposes of voting and determining plan feasibility pursuant to 11 U.S.C. § 502(c). That hearing was initially held on August 31 and September 1, 1992, at which time Farley and the Injury Claimants presented extensive exhibits and testimony. Subsequently, Farley, the Injury Claimants, and the Contribution Claimants entered into further stipulations and no further evidence was offered. All parties are found to have rested. The record is sufficient to allow estimation of the collective size of the Injury Claimants' and Contribution Claimants' claims. Accordingly, the Court now makes and enters the following Findings of Fact and Conclusions of Law:
FINDINGS OF FACT
1. On April 26, 1985, an explosion occurred at the Tool & Engineering Company's ("T & E") manufacturing plant located at 900 West 18th Street in Chicago, Illinois.
2. The Injury Claimants were then all members of the United Steelworkers of America, Local 758. Messrs. Colakovic and Mirkovic were screw machine operators at the T & E factory under the immediate supervision and control of Mr. Kostich. The other Injury Claimants were similarly employed in the manufacture of T & E's products. All of the Injury Claimants were either killed or injured in the explosion on April 26.
3. T & E has never been a distinct and separate corporate entity. Thus, it did not comprise the entity that was the Injury Claimants' employer at the time of the explosion. The ultimate factual and legal issue presented at the hearing was whether the Injury Claimants were employed by Farley Industries, Inc. ("Industries") or Farley Metals, Inc. ("Metals") at the time of the explosion.
4. Metals is a Delaware corporation formed on September 8, 1982. Metals subsequently acquired a Federal Employer Identification Number (XX-XXXXXXX) for payroll tax purposes. On December 28, 1987, Metals amended its Articles of Incorporation *751 to change its name to Farley, Inc., the Debtor-in-Possession in this case. Farley Ex. 38.
5. Industries is an Illinois Corporation formed on January 2, 1985. Industries also acquired a Federal Employer Identification Number (XX-XXXXXXX) for payroll tax purposes.
6. Prior to September 10, 1982, T & E was an operating division of NL Industries, Inc. On that date, Metals entered into an agreement with NL Industries to acquire T & E. The agreement consisted of an acquisition agreement, an assignment of T & E assets, an assumption of T & E liabilities, and warranty deeds conveying all T & E real property to Metals. See Farley's Exs. 2 to 5.
7. When Industries was formed, it entered into an oral management agreement with Metals whereby Industries provided management services to Metals in 1985 for a $7.8 million fee.
8. Various documents admitted into evidence list T & E as a division of Metals. These documents include Metal's 1985 annual report, Farley Ex. 36, Farley's Form 10-K filed with the Securities and Exchange Commission for 1987, Farley Ex. 39, Employer's Quarterly Report of Employees' Wages, Farley Exs. 8 to 10, and W-2 Forms sent to the Injury Claimants, Farley Exs. 11 to 23. Industries' Federal Employer Identification Number never appeared on any of the claimants' W-2's.
9. The Injury Claimants have, however, produced several documents that call T & E a division of Industries. These documents include the union contract between T & E and the United Steelworkers of America, Claimants' Ex. 2, and the employer's first report of injury or illness to the Illinois Industrial Commission after the explosion occurred, Claimants' Ex. 6a. There are also several documents which indicate that the insurer who paid the workers' compensation awards to the Injury Claimants listed Industries as the insured employer. See, e.g., Claimants' Ex. 9a (a letter from Travelers Insurance Co. to the wife of Mr. Colakovic concerning the payment of certain death benefits).
10. There are also several letters written on company stationery which has printed on it, "Tool & Engineering Company/division of Farley Industries, Inc." T & E's president maintained that T & E was, in fact, a division of Metals. He offered an explanation for the stationery, stating that a change from NL Industries to Farley Industries was less drastic and less likely to confuse customers than a change from NL Industries to Farley Metals. Therefore, he testified that he ordered the stationery to list T & E as a division of Industries rather than Metals.
11. The weight of evidence tends to show that the Injury Claimants' had an employee-employer relationship with Metals. They were all employees of T & E, and it is clear that T & E was owned by Metals. The claimants' payroll was paid by Metals, and taxes were withheld and paid by Metals. Also, the managers of T & E had the authority as employees of Metals to hire, promote, discipline, fire, and direct the work of all employees of T & E manufacturing facility (albeit subject to the conditions of the union contract).
12. An employment relationship between the Injury Claimants and Industries could well be found based on the union contract which named "Farley Industries, Inc." as the worker's employer. However, if Industries had an employment relationship with the Injury Claimants, then the evidence tends to show that Metals was likely a joint-employer. Metals and Industries had an identical set of officers. See Farley Ex. 36. Agents of Industries could also be found to be agents of Metals. Since Metals owned the explosion site and everything in it, and paid the wages and taxes of T & E's employees, the relationship between Industries and Metals became blurred when it came to supervising employees. It is apparent, however, that any employee of Industries who disciplined a factory worker in his capacity as an agent of the management was likely also an employee of Metals who could have disciplined that worker as an agent of the owner. Therefore, a finding of joint-employer status could be warranted from the evidence if *752 Industries was found to have an employment relationship with the Injury Claimants.
13. After the explosion, the claimants filed claims for workers' compensation and subsequently received awards from T & E's workers' compensation insurance provider. Metals paid for this workers' compensation insurance policy. The provider was Travelers Insurance Company, and the policy lists Metals as the insured employer. Farley Ex. 45. However, several letters to the claimants list Industries as the insured.
14. After the explosion, the Injury Claimants filed lawsuits in the Circuit Court of Cook County, Illinois, which were subsequently consolidated into one case (Mareno, et al. v. Armil, CFS, Inc., et al., 85 L 28175). Farley is named as one of several co-defendants. The Contribution Claimants are some of those co-defendants. Prior to filing of this bankruptcy, Farley moved for summary judgment in the consolidated state court case on grounds that it employed the Injury Claimants. That motion was denied by an order entered August 27, 1990. Claimants' Ex. 24.
15. A key part of the dispute here between Farley and the Injury Claimants turns on the question of who owned T & E on April 26, 1985. Whatever entity owned the factory then was the Injury Claimants' employer. Farley has produced documents which show the chain of T & E's ownership which passed from NL Industries to Metals in 1982. They have further produced documents and testimony which show that Metals' funds were used to pay salaries, benefits, and workers' compensation insurance for the employees at T & E. The Injury Claimants have used selected documents in an attempt to prove that T & E is actually owned by Industries. The evidence produced by Farley should be accorded greater weight than the evidence produced by the claimants, because Farley's evidence goes to the substance of the employment relationship while the claimants's evidence is explainable for other reasons (e.g., mistake, avoidance of confusion, etc.).
16. The preponderance of the evidence clearly indicates that Metals was either the employer or at least a joint-employer of the Injury Claimants. However, this decision was reached by evaluating the evidence. Since this Court may not decide the issue of employment, that issue will go to a state court jury as claimants have a right to the jury trial demanded by them. The jury may decide to weigh the evidence differently. However, given the heavy weight of evidence favoring a ruling for debtor on the employment issue, the Court estimates that claimants have only about a one-in-four chance of winning on this issue at trial in state court.
17. The parties have stipulated that, in the event Farley is found liable to the Injury Claimants in their tort action, the aggregate amount of damages suffered by the Injury and Contribution Claimants could be estimated at $5 million. This stipulated number is not broken down to apportion damages among the individual claimants, or between the Injury and Contribution Claimants.
18. Additional facts contained in the Conclusions of Law will stand as Findings of Fact.
CONCLUSIONS OF LAW
1. This matter is before the Court pursuant to 28 U.S.C. § 157, and is referred to here under Local District Court Rule 2.33. Subject matter jurisdiction lies under 28 U.S.C. § 1334, and this is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (B).
2. The Parties have extensively argued the question of jurisdiction in memoranda submitted pre-trial. Debtor argues that this Court can finally determine the employment issues, should do so in its favor, and therefore should estimate at zero. Farley thereby seeks judgment that will collaterally estop the state court claims against it. However, this Court has no authority to determine finally a personal injury claim. UNR Industries, Inc. v. Continental Ins. Co., 101 B.R. 524 (N.D.Ill.1989); In re Federal Press Co., 116 B.R. 650 (Bankr.N.D.Ind.1989). Nor does this Court have authority to conduct the requested jury trial. In re Grabill *753 Corp., 967 F.2d 1152 (7th Cir.1992). This is but a limited estimation proceeding. Section 157(b)(2)(B) provides that core proceedings include,
. . . estimation of claims . . . for purposes of confirming a plan under chapter 11 . . . of this title but not the liquidation or estimation of contingent or unliquidated personal injury tort or wrongful death claims against the estate for purposes of distribution in a case under title 11.
In the instant proceeding, the Court is not liquidating the personal injury claims, nor is it estimating such claims for purposes of distribution. The estimation procedure was held merely to allow Farley to proceed to confirmation with an estimate of the size of the claims involved here for purposes of voting and determining plan feasibility. This limited purpose is well within the purview of § 157(b)(2)(B). The final determination sought by debtor is not.
3. The parties also argued whether this estimation hearing will have any collateral estoppel effect. Such argument cannot be resolved by this Court, as the collateral estoppel effect of a prior proceeding is an issue that only the judge in the later forum can decide. See Pettibone Corp. v. Easley, 935 F.2d 120, 123 (7th Cir.1991), and cases cited, ("Disputes about the effect of a decision in one case on the prosecution of another are for the judge presiding in the second case. In the law of preclusion the second court normally determines the effect of the first judge's order.").
Procedural Standards for Claims Estimation
4. Farley maintains that the estimation of the Injury Claims for purposes of voting and determining plan feasibility is necessary for the confirmation process to proceed, and no party has disputed this. Therefore, an estimation proceeding pursuant to 11 U.S.C. § 502(c) was an appropriate procedure here. See, e.g., In re MacDonald, 128 B.R. 161 (Bankr.W.D.Tex. 1991), and In re Federal Press Co., 116 B.R. 650 (estimating personal injury claims).
5. Section 502(c) provides in relevant part,
There shall be estimated for purpose of allowance under this section
(1) any contingent or unliquidated claim, the fixing or liquidation of which, as the case may be, would unduly delay the administration of the case. . . .
In estimating claims pursuant to this provision, courts should use "whatever method is best suited to the circumstances." Matter of Brints Cotton Marketing, Inc., 737 F.2d 1338, 1341 (5th Cir.1984). See also Bittner v. Borne Chemical Company, Inc., 691 F.2d 134 (3d Cir.1982). In determining the claims' value, the Court "is bound by the legal rules which may govern the ultimate value of the claim." Brints Cotton Marketing, 737 F.2d at 1341; Bittner, 691 F.2d at 135. Therefore, to estimate the Injury Claimants' unliquidated tort claims, the Court must apply the relevant laws of Illinois to the issues presented in their claims.
6. Farley argues that, if the preponderance of the evidence weighs in their favor, then the Court should estimate the value of the claims at zero. It would not be an abuse of the Court's discretion under § 502(c) to take this approach. See Bittner, 691 F.2d at 136 (affirming a bankruptcy court's decision to value a claim at zero). However, such a valuation method is not appropriate in the circumstances presented here. The Illinois Circuit Court has denied an earlier summary judgment motion filed by Farley, based on the same employment issue that it raised here. Barring settlement, the tort case will be going to trial before a state court jury. Therefore, the subject claims cannot and do not have a zero value in any legal or practice sense. Their more realistic value consists of the amount stipulated as damages in event Farley is found liable, discounted by the chance that Farley will not be found liable.
7. Courts may determine values based on probabilities when estimating claims under § 502(c). See Federal Press, 116 B.R. at 653 ("a court only needs to reasonably estimate the probable value of *754 the claim"). The Court has broad discretion to determine the best valuation method for the circumstances. In re Corey, 892 F.2d 829, 834 (9th Cir.1989). As discussed, the most realistic valuation of the personal injury claims here involves applying probabilities. Therefore, the claims will be estimated by taking the stipulated figure for damages and then discounting that figure by the high probability that Farley will not be found liable in tort under Illinois law.
Application of Illinois Law
8. Section 5(a) of the Illinois Workers' Compensation Act provides in relevant part,
No Common law or statutory right to recover damages from the employer . . . for injury or death sustained by any employee while engaged in the line of his duty as such employee, other than the compensation herein provided, is available to any employee who is covered by the provisions of this Act, to any one wholly or partially dependent upon him, or any one otherwise entitled to recover damages for such injury.
Ill.Rev.Stat. Ch. 48, ¶ 138.5(a). Thus, common law or statutory actions by employees against their employers to recover damages for injuries sustained within the scope of their employment are barred. 37 Ill. Law & Prac., Workers' Compensation § 21 (1987).
9. The bar in the Workers' Compensation Act to statutory or tort recovery applies whether the employee is employed by one employer or two joint-employers. Freemen v. Augustine's Inc., 46 Ill.App.3d 230, 233, 4 Ill. Dec. 870, 872, 360 N.E.2d 1245, 1247 (1977) ("More than one employer may be liable for the same injury under the [Workers' Compensation] Act and, therefore, immune from common law liability"), citing American Stevedores Co. v. Industrial Comm., 408 Ill. 445, 97 N.E.2d 329 (1951).
10. Since the Injury Claimants have filed claims for and recovered damages pursuant to the Workers' Compensation Act, the question is whether they are entitled to recover from Farley under a tort or wrongful death theory. No one disputes that the Injury Claimants' injuries were sustained or death suffered while they were engaged in the line of their duties at the T & E factory. The only dispute is whether they were employed by Metals at the time of the explosion. If Metals had no employment relationship with the Injury Claimants, then their tort actions are not barred by the Workers' Compensation Act. See Fregeau v. Gillespie, 96 Ill. 2d 479, 483, 71 Ill. Dec. 716, 718, 451 N.E.2d 870, 872 (1983), and Collier v. Wagner Castings Co., 81 Ill. 2d 229, 237, 41 Ill. Dec. 776, 780, 408 N.E.2d 198, 202 (1980) (listing the elements that plaintiffs must prove to escape the exclusivity provision of § 5(a) of the Workers' Compensation Act).
11. To determine whether an employment relationship exists, the Court must examine several factors. The Illinois Supreme Court has noted,
No single facet of the relationship between the parties is determinative, but many factors, such as the right to control the manner in which the work is done, the method of payment, the right to discharge, the skill required in the work to be done, and the furnishing of tools, material or equipment have evidentiary value and must be considered . . . Of these factors, the right to control the work is perhaps the most important single factor. . . . (citations omitted)
Clark v. Industrial Comm., 54 Ill. 2d 311, 314-15, 297 N.E.2d 154, 156 (1973). See also Dildine v. Hunt Transportation, Inc., 196 Ill.App.3d 392, 394, 143 Ill. Dec. 94, 96, 553 N.E.2d 801, 803 (1990) (setting out the same factors).
12. In the instant case, the weight of the evidence tends to warrant findings:
(1) that Metals had the right to control the manner in which the Injury Claimants did their work on the factory floor;
(2) that Metals paid the wages, benefits, and workers' compensation insurance for the Injury Claimants;
(3) that Metals had the right (subject to conditions set out in the union contract) to discharge the Injury Claimants; and
*755 (4) that Metals owned all the tools and equipment in the T & E factory and thus furnished the Injury Claimants with the tools and equipment necessary to do their work.
Therefore, the Court estimates that a jury is very likely to find that Metals (now named Farley, Inc.), and not Industries, was the Injury Claimants' employer.
13. A joint-employment relationship exists where the right of control the employee is shared by two employers and both benefit from the work. American Stevedores Co., 408 Ill. at 447, 97 N.E.2d at 330; Freeman, 46 Ill.App.3d at 233, 4 Ill. Dec. at 872, 360 N.E.2d at 1247.
14. A jury could find that Industries had a right of control over the Injury Claimants' work based on the union contract and several letters written to the employees, and thus find that the claimants had an employment relationship with Industries. However, in this situation, the evidence would still warrant a possible finding that Metals retained control over the T & E employees in its capacity as T & E's owner and the payor of the employees' wages and benefits. Therefore, a finding of joint-employment could follow.
15. In Dildine v. Hunt Transportation, Inc., 196 Ill.App.3d 392, 143 Ill. Dec. 94, 553 N.E.2d 801, an explosion occurred in a garage owned by defendant, and occupied by both defendant and a cab company. Plaintiff was in the garage working on a car owned by the cab company and was injured in the explosion. Both defendant and the cab company were wholly owned subsidiaries of a third corporation, and defendant carried workers' compensation insurance that named the cab company as an insured. While plaintiff was primarily employed to repair the cab company's cars, the managers of defendant had authority to control plaintiff's work. The trial court dismissed plaintiff's tort action against defendant, finding that defendant and the cab company were joint-employers of plaintiff. Plaintiff appealed based on the evidence that his wages were paid by the cab company. The appellate court rejected this argument and affirmed the judgment because defendant had a right of control over plaintiff. Dildine, 196 Ill.App.3d at 394-95, 143 Ill.Dec. at 96-97, 553 N.E.2d at 803-04.
16. This case is strikingly similar to Dildine. Indeed, a finding that Metals was a joint-employer would be even more supported by the evidence here because Metals paid the claimants' wages and benefits while the defendant in Dildine did not.
17. However, this Court's view as to Metals' status as employer is only an estimation, i.e. a "tentative opinion". See W. Morris, ed., The American Heritage Dictionary of the English Language 449 (New College Ed.1981) (defining "estimate"). A jury could possibly weigh the evidence differently to reach a different decision. If so, it would not be the first time that skills of counsel sold a difficult case. However, even then the claimants would face risk of loss on appeal.
Claimants' Equitable Estoppel Theory
18. The Injury Claimants argue that, even if the Court does not find that evidence warrants finding that Industries was their employer, Farley should be equitably estopped from denying the existence of this relationship. "Estoppel requires words or conduct which either misrepresent or conceal material facts with the intent or expectation it will be relied upon. . . . Fraudulent intent is not necessary; it is sufficient if an injustice results." Kievman v. Edward Hospital, 135 Ill. App. 3d 442, 446, 90 Ill. Dec. 109, 112, 481 N.E.2d 909, 912 (1985).
19. In the instant case, there is no clear evidence that Metals acted in such a way as to conceal their ownership of T & E from the Injury Claimants. However, even assuming a concealment, the doctrine of estoppel has no application here because no injustice has resulted from the alleged "misrepresentation". The Injury Claimants had a statutory right to receive workers' compensation, and it is undisputed that they received such compensation. Finally, there was no evidence of any reliance by the Injury Claimants on Metal's alleged act of holding out Industries to be their employer. It is undisputed that everyone considered *756 the Injury Claimants to be employed by T & E, and, until the explosion, it was immaterial to the claimants who owned T & E.
20. No Illinois precedents have been found to have applied the doctrine of estoppel to a similar scenario. The Injury Claimants cite Kievman to support their argument. The defendant in Kievman was a municipal corporation. As such, it was protected by an Illinois law requiring that people who wish to sue it for tort damages must serve notice upon it of their intent to bring suit. See Ill.Rev.Stat. Ch. 85, ¶ 8-102. However, none of defendant's stationery or billing indicated its status as a municipal corporation. Plaintiff sued that defendant in tort for damages, and the trial court dismissed the suit for failure to comply with ¶ 8-102. The Appellate Court reversed the dismissal, finding that defendant was estopped from asserting the ¶ 8-102 defense. That court reasoned that ¶ 8-102 existed to give municipal corporations a chance to work out their disputes with prospective plaintiffs before litigation started, and that the hospital's concealment of its status ran counter to the purpose of the statute. Kievman, 135 Ill.App.3d at 446-47, 90 Ill.Dec. at 112-13, 481 N.E.2d at 912-913. In this case, Metals' alleged concealment has neither prejudiced the Injury Claimants nor frustrated the goals of the Workers' Compensation Act. Thus, Kievman is distinguishable. The equitable estoppel argument has no weight.
Contribution Claims
21. The contribution claims against Farley are based on potential liability of the Contribution Claimants to the Injury Claimants in the Illinois Circuit Court case. Farley has argued that these claimants must be given the same treatment as the Injury Claimants. They argue that, if the Injury Claimants are barred from recovering damages in tort by the Workers' Compensation Act, then the Contribution Claimants must be similarly barred. They cite Kotecki v. Cyclops Welding Corp., 146 Ill. 2d 155, 166 Ill. Dec. 1, 585 N.E.2d 1023 (1991), for support. The Contribution Claimants have not responded to this argument, nor have they offered any evidence or filed any brief. In Kotecki, the Illinois Supreme Court held,
The language of the Workers' Compensation Act clearly shows an intent that the employer only be required to pay an employee the statutory benefits. These limited benefits are paid in exchange for a no-fault system of recovery. . . . [t]he defendant/third party plaintiff, Cyclops [a contribution claimant], [is entitled] to seek contribution in an amount not greater than the workers' compensation liability of the third-party defendant, Carus [the employer].
(citations omitted) 166 Ill.Dec. at 6, 585 N.E.2d at 1028. No cases were found to support a contrary position. Thus, Farley is correct in asserting that the contribution claims must be limited to the same extent as the personal injury claims.
CONCLUSION
Accordingly, by separate order entered this date, the Injury Claimants and Contribution Claimants are estimated to have a total aggregate claim of $1.25 million for purpose of voting. This number consists of the $5 million stipulated figure for damages discounted by the Court's estimation that the claimants have a one-in-four chance of prevailing on the employment issue at trial. The Contribution Claimants are treated likewise, and their claimants are limited to Farley's estimated liability to the Injury Claimants. However, it must be emphasized that this estimate lumps all these claims into one estimated aggregate number. The parties have supplied no basis as of yet for apportioning the estimated aggregate claim total between the several defendants. That lack was pointed out to counsel, who have assured the Court that a further stipulation will apportion the estimated aggregate number for purposes of counting the votes of the several claimants at the confirmation hearing.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/1529911/
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901 F. Supp. 471 (1995)
William McDONALD, Plaintiff,
v.
COMMONWEALTH OF MASSACHUSETTS and General Accident Insurance Co., Defendants.
Civ. A. No. 92-11772-GAO.
United States District Court, D. Massachusetts.
September 25, 1995.
*472 *473 William McDonald, Whitinsville, MA, pro se.
Edmund J. Sullivan, Edward J. DeAngelo, Jane L. Willoughby, Attorney General's Office, Boston, MA, Beth D. Levi, Government Bureau, Boston, MA, for Commonwealth of Massachusetts.
Linda D. Oliveira, Parker, Coulter, Daley & White, Fall River, MA, Cheri L. Crow, Reading, MA, for General Acc. Ins. Co. of America.
MEMORANDUM AND ORDER
O'TOOLE, District Judge.
The Court has for consideration the Report and Recommendation of Magistrate Judge Collings, dated April 7, 1995 (Docket Entry # 83), analyzing the issues presented by the defendants' motions to dismiss the plaintiff's various claims and recommending that each of the claims asserting a right under federal law be dismissed for failure to state a claim upon which relief could be granted under Fed.R.Civ.P. 12(b)(6), and further recommending that the Court decline to exercise supplemental jurisdiction over the various state claims and that they be dismissed as well. After the Magistrate Judge's Report and Recommendation was filed, none of the parties filed any objection to it. See Rule 3(b), Rules for United States Magistrates in the United States District Court for the District of Massachusetts.
After review of the parties' pleadings, motions and supporting papers, and the Report and Recommendation of Magistrate Judge Collings, the Court approves and adopts the reasoning and conclusions of the Magistrate Judge and rules as follows:
1. The plaintiff has not alleged that he was excluded from participation in a "program or activity receiving Federal financial assistance" within the meaning of § 504 of the Rehabilitation Act, 29 U.S.C. § 794(a), and his complaint consequently fails to state a claim under that statute. Bento v. I.T.O. Corp. of Rhode Island, 599 F. Supp. 731, 741 (D.R.I.1984); see Consolidated Rail Corp. v. Darrone, 465 U.S. 624, 635, 104 S. Ct. 1248, 1255, 79 L. Ed. 2d 568 (1984).
2. The plaintiff's allegation that he has not been paid workers' compensation benefits he is entitled to by reason of his physical injury does not state a claim for handicap discrimination under the Americans with Disabilities Act, 42 U.S.C. § 12131 et seq. The gist of his claim is not that he has been treated discriminatorily because of his disability, but that he has been denied benefits despite his qualifying injury. This claim is not within the scope of the prohibitions of the ADA.
3. Because the plaintiff has no rights in the premises under the Rehabilitation Act or the ADA, he has not been deprived of those rights unlawfully and has therefore failed to state a claim under the Civil Rights Act, 42 U.S.C. § 1983.
4. In these circumstances, the Court ought not to retain supplemental jurisdiction over the state claims.
Therefore, it is ORDERED that the defendants' motions to dismiss be granted and the plaintiff's amended complaint be DISMISSED.
REPORT AND RECOMMENDATION ON STATE DEFENDANT'S MOTION TO DISMISS STATE LAW CLAIMS IN AMENDED COMPLAINT (# 27) AND DEFENDANT GENERAL ACCIDENT INSURANCE COMPANY'S MOTION TO DISMISS (# 48)
COLLINGS, United States Magistrate Judge.
I. INTRODUCTION
On or about May 21, 1993, plaintiff William McDonald (hereinafter "McDonald") filed a pro se amended complaint (# 20) against the Commonwealth of Massachusetts (hereinafter *474 "the Commonwealth") and the General Accident Insurance Company (hereinafter "GAIC") alleging claims arising under the Rehabilitation Act of 1973, 29 U.S.C. § 701, et seq., the Americans With Disabilities Act (hereinafter "ADA"), 42 U.S.C. § 12101, et seq., and Massachusetts General Laws chapter 152. The thrust of the amended complaint (# 20)[1] is that the defendants have failed and refused to pay McDonald worker's compensation benefits to which he is purportedly entitled as a result of injuries sustained in an industrial accident. More specifically, GAIC is alleged to have denied the insurance benefits while the Commonwealth is alleged to have acquiesced in that refusal.
In addition to filing an answer to the amended complaint (# 26), the Commonwealth submitted a motion to dismiss the state law claims alleged therein. (# 27) McDonald interposed an objection to that dispositive motion. (# 29) On September 29, 1993, the Court issued an order (# 41) requiring each of the defendants to file a memorandum of law in support of the affirmative defense raised in their respective answers that the amended complaint failed to state a claim upon which relief could be granted. The Commonwealth filed a response on October 14, 1993 (# 44) and GAIC followed suit five days later. (# 45)
A further order (# 46) issued on October 28, 1993, wherein the Court noted that although the dispositive motion earlier filed related only to the state law claims in the amended complaint, the defense raised by the Commonwealth applied to both the state and federal claims.[2] The Commonwealth was ordered to file a further memorandum in support of the defense that the amended complaint failed to state any federal claims upon which relief could be granted. The Commonwealth complied with the further order on or about November 9, 1993. (# 50)
Subsequent to submitting a response to the September 29th Order, GAIC filed a motion to dismiss the amended complaint for failure to state a claim (# 48), together with a memorandum in support. (# 49) McDonald has not opposed GAIC's dispositive motion, nor has he addressed in any fashion the defendants' arguments in support of their affirmative defenses.
Thus to summarize, in essence the Commonwealth has moved to dismiss the federal law claims alleged in the amended complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim[3] and the state law claims under Rule 12(b)(1), Fed.R.Civ.P., for lack of subject matter jurisdiction. Defendant GAIC seeks dismissal of all the claims asserted against it in accordance with Fed. R.Civ.P. 12(b)(6). This case has been referred to the undersigned pursuant to 28 *475 U.S.C. § 636(b)(1)(B) for the issuance of proposed findings of fact and recommendations for disposition with respect to the motions to dismiss.
II. THE FACTS
As mandated in the present context, all the well-pleaded factual allegations of the amended complaint are accepted as true and, further, the facts will be construed in the light most favorable to the non-moving party. See, e.g., Caribe BMW, Inc. v. Bayerische Motoren Werke Aktiengesellschaft, 19 F.3d 745, 748 (1 Cir., 1994) citing Garita Hotel Ltd. Partnership v. Ponce Fed. Bank, F.S.B., 958 F.2d 15, 17 (1 Cir., 1992).
Plaintiff McDonald is an individual resident in Whitinsville, Massachusetts. (Amended Complaint, # 20 ¶ 1) In or about October of 1985, while an employee of Garelick Farms, he suffered severe injuries in an industrial accident on the job. (# 20 ¶ 8) Due to his resultant disabilities, McDonald applied for worker's compensation benefits through his employer. (# 20 ¶ 9) At the time of the accident and thereafter, GAIC was the worker's compensation insurance carrier for Garelick Farms. (# 20 ¶ 10) GAIC, a duly organized and licensed insurance company, maintains a principal place of business in Peabody, Massachusetts. (# 20, ¶ 5)
Since October, 1985, McDonald's claim for worker's compensation has been pending before the Department of Industrial Accidents, the appropriate administrative agency of the Commonwealth. (# 20 ¶¶ 3, 11, 12) During this period, i.e., continuously from the date of the accident forward, it is alleged that GAIC has either failed and/or refused to provide McDonald with the benefits to which he is entitled. (# 20 ¶ 13) As detailed in the amended complaint, GAIC has been remiss in the following ways: failure to pay doctor, hospital and therapy bills during 1989 when the services were rendered[4] (# 20 ¶ 13a); failure to pay hospital and therapy bills during 1990 when the charges were incurred[5] (# 20 ¶ 13b); failure to pay unspecified doctor and emergency room bills (# 20 ¶ 13c); failure and refusal to pay for equipment such as bars, ramps and wheelchairs, apparatus required to ensure the safety and accessibility of McDonald's house, thereby rendering the plaintiff unable independently to use the bathroom, exit his home for pleasure or in an emergency, and practice his religion (# 20 ¶¶ 13d, f, g and h); failure to provide unspecified services relating to certain injuries and illnesses McDonald has endured consequent to his industrial accident (# 20 ¶ 13e); employing threats and coercion by means of repeated demands for McDonald to undergo physical examinations while knowing full well that McDonald could not comply due to his disabilities (# 20 ¶ 13j); and, finally, denying permanent benefits to McDonald as a result of his "refusal" to be subjected to an unlawful and unauthorized physical examination, having actual knowledge that McDonald was physically unable to attend. (# 20 ¶ 13j)
With respect to the second defendant, it is contended that the Commonwealth was remiss in its consistent failure to compel GAIC to provide McDonald with the services he needs. (# 20 ¶ 14) By permitting GAIC to act in such a manner, McDonald alleges that the Commonwealth has aided the insurance company in discriminating against him. (# 20 ¶ 15) Lastly, although aware of McDonald's disabilities, the Commonwealth purportedly has failed to provide the plaintiff reasonable accommodations such as would allow him to comply with the requirements of the Massachusetts worker's compensation statute. (# 20 ¶ 16)
It should be noted that the following allegations are also set forth in the amended complaint. First, it is alleged that McDonald "is a qualified individual with a disability pursuant to the ADA." (# 20 ¶ 2) Second, the Commonwealth is alleged to be "a public entity as defined by the ADA." (# 20 ¶ 4) Next, GAIC is purported to be "an instrumentality of the Commonwealth of Massachusetts for purposes of providing Worker's Compensation insurance pursuant to M.G.L. *476 chapter 152, as defined by the ADA 42 U.S.C. § 12115 and is subject to the requirements of the ADA." (# 20 ¶ 6) Finally it is asserted that GAIC "in its capacity as a private entity is subject to the requirements of the ADA." (# 20 ¶ 7)
III. THE CLAIMS
Given McDonald's status as a pro se plaintiff, it is axiomatic that his amended complaint is "held to `less stringent standards'" and must be "liberally construed." Estelle v. Gamble, 429 U.S. 97, 106, 97 S. Ct. 285, 292, 50 L. Ed. 2d 251 (1976) (quoting Haines v. Kerner, 404 U.S. 519, 520, 92 S. Ct. 594, 595, 30 L. Ed. 2d 652 (1972)); see also Boag v. MacDougall, 454 U.S. 364, 365, 102 S. Ct. 700, 701, 70 L. Ed. 2d 551 (1982). Under such a broad view, the amended complaint could be read to allege ten claims, five against each defendant.
In Count I, McDonald contends that, premised upon its enumerated failures to provide required benefits, GAIC has denied him "equal access as guaranteed under the ADA." The same acts and omissions are alleged to be a violation of the Rehabilitation Act. Consequent to these transgressions of the ADA and the Rehabilitation Act, GAIC supposedly has deprived McDonald of his civil rights, presumably in violation of 42 U.S.C. § 1983.
With respect to state law claims, McDonald asserts that GAIC has violated the Massachusetts worker's compensation statute by refusing and failing to provide him with the benefits to which he is entitled thereunder. Lastly, the allegations of Count I may fairly be construed to set forth a claim under M.G.L. ch. 93, § 103 against GAIC for an equal rights violation based on handicap.
The claims in Count II against the Commonwealth are essentially identical. As regards federal claims, McDonald alleges violations of the ADA, the Rehabilitation Act and 42 U.S.C. § 1983 founded on the failure by the Commonwealth to force GAIC to provide obligatory benefits to him. Further, the Commonwealth has allegedly deprived McDonald of his right to compensation under the state worker's compensation laws. Finally, the second state law claim is again a purported equal rights violation under M.G.L. ch. 93, § 103.
IV. ANALYSIS
A. The Federal Claims
The First Circuit has had occasion to write that:
The jurisprudence of Civil Rule 12(b)(6) is well defined. An appellate court reviews the granting of a motion to dismiss de novo, applying the same criteria that obtained in the court below. McCoy v. Massachusetts Institute of Technology, 950 F.2d 13, 14 (1st Cir.1991). Thus, we take the factual averments contained in the complaint as true, indulging every reasonable inference helpful to the plaintiff's cause. See Dartmouth Review v. Dartmouth College, 889 F.2d 13, 16 (1st Cir. 1989); Gooley v. Mobil Oil Corp., 851 F.2d 513, 514 (1st Cir.1988). Great specificity is ordinarily not required to survive a Rule 12(b)(6) motion. Apart from certain specialized areas not implicated here, it is enough for a plaintiff to sketch an actionable claim by means of "a generalized statement of facts from which the defendant will be able to frame a responsive pleading." 5A C. Wright & A. Miller, Federal Practice and Procedure § 1357 (1990). In the last analysis, then, the court of appeals "may affirm a dismissal for failure to state a claim only if it clearly appears, according to the facts alleged, that the plaintiff cannot recover on any viable theory." Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 52 (1st Cir.1990).
Garita Hotel, Ltd. v. Ponce Federal Bank, 958 F.2d 15, 17 (1 Cir., 1992) (footnote omitted).
In footnote 1, the Garita court recognized that "more detailed statements of claim" were required in, among other types, civil rights cases. Id. at n. 1. Moreover, a complaint will be deemed insufficient if the plaintiff relies upon "`bald assertions, unsupportable conclusions, and "opprobrious epithets."'" The Dartmouth Review v. Dartmouth College, 889 F.2d 13, 16 (1 Cir., 1989) quoting Chongris v. Board of Appeals, 811 F.2d 36, 37 (1 Cir.), cert. denied, 483 U.S. *477 1021, 107 S. Ct. 3266, 97 L. Ed. 2d 765 (1987) (further citation omitted). In short, under Rule 12(b)(6),
... minimal requirements are not tantamount to nonexistent requirements. The threshold may be low, but it is real and it is the plaintiff's burden to take the step which brings his case safely into the next phase of litigation. The court need not conjure up implied allegations or contrive elaborately arcane scripts in order to carry the blushing bride through the portal.
Gooley v. Mobil Oil Corporation, 851 F.2d 513, 514 (1 Cir., 1988).
Although review of the amended complaint in the present case is moderated in the sense that it is held to "less stringent standards", the First Circuit has nevertheless "required even pro se plaintiffs to plead specific facts backing up their claims of civil rights violations." Glaros v. Perse, 628 F.2d 679, 684 (1 Cir., 1980) (citations omitted). In addition, the "duty to be `less stringent' with pro se complaints does not require [the court] to conjure up implied allegations." McDonald v. Hall, 610 F.2d 16, 19 (1 Cir., 1979) (citation omitted).
Having set forth the applicable standard, the individual claims shall be considered.
1. The Rehabilitation Act Claims
In pertinent part, § 504 of the Rehabilitation Act provides:
No otherwise qualified individual with a disability ... shall, solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance or under any program or activity conducted by any Executive agency or by the United States Postal Service.
29 U.S.C. § 794(a).
The purpose underlying § 504 is "to assure evenhanded treatment and the opportunity for handicapped individuals to participate in and benefit from programs receiving federal assistance." Alexander v. Choate, 469 U.S. 287, 304, 105 S. Ct. 712, 722, 83 L. Ed. 2d 661 (1985) citing Southeastern Community College v. Davis, 442 U.S. 397, 99 S. Ct. 2361, 60 L. Ed. 2d 980 (1979).
The Supreme Court has noted that "[s]ection 504, by its terms, prohibits discrimination only by a `program or activity receiving Federal financial assistance.'" Consolidated Rail Corporation v. Darrone, 465 U.S. 624, 635, 104 S. Ct. 1248, 1255, 79 L. Ed. 2d 568 (1984). Courts have held that
In order to state a claim for violation of § 504, [the plaintiff] must prove that (i) he is a "handicapped person" under the Act, (ii) he is "otherwise qualified" for the position, (iii) he is being excluded from the position solely by reason of his handicap, and (iv) the position exists as part of a program or activity receiving federal financial assistance.
Bento v. I.T.O. Corporation of Rhode Island, 599 F. Supp. 731, 741 (D. R.I., 1984); see also, e.g., Simpson v. Reynolds Metals Company, Inc., 629 F.2d 1226, 1231-2 (7 Cir., 1980); Martin v. Delaware Law School of Widener University, 625 F. Supp. 1288, 1298 (D.Del., 1985); John A., By and Through, Valerie A. v. Gill, 565 F. Supp. 372, 384 (N.D.Ill., 1983).
There is no question but that receipt of federal financial assistance is an element of the cause of action under the Rehabilitation Act. Indeed,
[a] primary purpose of [42 U.S.C.] § 12131 [ADA] was to extend the reach of § 504 of the Rehabilitation Act of 1973, 29 U.S.C.A. § 794,
"to all programs, activities, and services provided or made available by state and local governments or instrumentalities or agencies thereto, regardless of whether or not such entities received Federal financial assistance. Currently, section 504 prohibits discrimination only by recipients of Federal financial assistance."
H.Rep. No. 485 (II), 101st Cong., 2d Sess. 84 (1990), reprinted in 1990 U.S.C.C.A.N. 267, 366.
Ethridge v. State of Alabama, 847 F. Supp. 903, 906 (M.D.Al., 1993) (emphasis added).
At no place in his amended complaint does McDonald make any allegation with respect to "federal financial assistance." On this *478 ground alone, the amended complaint is fatally deficient under Rule 12(b)(6) for failing to state a claim. See, e.g., Simpson, 629 F.2d at 1231-2. Any claims premised upon purported violations of the Rehabilitation Act should be dismissed.
2. The ADA Claims
Generally speaking, "Title II of the ADA, 42 U.S.C. 12131-12134, incorporates the `non-discrimination principles' of section 504 of the Rehabilitation Act and extends them to state and local governments." Helen L. v. DiDario, 46 F.3d 325, 331 (3 Cir., 1995) (citation omitted). McDonald specifically references this portion of the ADA in his amended complaint; the statute provides, inter alia, that
... no qualified individual with a disability shall, by reason of such disability, be excluded from participation in or be denied the benefits of the services, programs, or activities of a public entity, or be subjected to discrimination by any such entity.
42 U.S.C. § 12132.
By statutory definition, a public entity is "any state or local government" or "any department, agency, special purpose district, or other `instrumentality of a state or states or local government." 42 U.S.C. § 12131(1)(A) and (B). Also as defined in the subchapter,
The term "qualified individual with a disability" means an individual with a disability who, with or without reasonable modifications to rules, policies, or practices, the removal of architectural, communication, or transportation barriers, or the provision of auxiliary aids and services, meets the essential eligibility requirements for the receipt of services or the participation in programs or activities provided by a public entity.
42 U.S.C. § 12131(2).
Parsing the statutory provision in § 12132 to its basics,
[t]o establish a violation of Title II, plaintiff must show:
(1) that he is a qualified individual with a disability;
(2) that he was either excluded from participation in or denied the benefits of some public entity's services, programs, or activities, or was otherwise discriminated against by the public entity; and
(3) that such exclusion, denial of benefits, or discrimination was by reason of the plaintiff's disability.
Tyler v. City of Manhattan, 849 F. Supp. 1429, 1439 (D.Kan., 1994) citing Concerned Parents to Save Dreher Park Center v. City of West Palm Beach, 846 F. Supp. 986, 989-90 (S.D.Fla., 1994).
In his amended complaint, McDonald alleges that he is a "qualified individual with a disability", that the Commonwealth is a "public entity", and that GAIC is an "instrumentality" of the Commonwealth and, hence, also a "public entity" within the meaning of the ADA. It is certainly open to question whether these allegations constitute facts or are really mere conclusions. The First Circuit has been
... cognizant that the line between "facts" and "conclusions" is often blurred. But, there are some general parameters. Most often, facts are susceptible to objective verification. Conclusions, on the other hand, are empirically unverifiable in the usual case. They represent the pleader's reactions to, sometimes called "inferences from," the underlying facts. It is only when such conclusions are logically compelled, or at least supported, by the stated facts, that is, when the suggested inference rises to what experience indicates is an acceptable level of probability, that "conclusions" become "facts" for pleading purposes.
The Dartmouth Review, 889 F.2d at 17.
In the present case, McDonald has set forth absolutely no underlying facts that would support the allegations either that he is a "qualified individual with a disability" or that GAIC is an "instrumentality" of the Commonwealth as those terms are defined in the ADA. This insufficiency in and of itself proves fatal to his claim.
The essence of McDonald's allegations is that he has not received the benefits to which he believes he is entitled under the state worker's compensation laws. The *479 plaintiff does not contend that he has been denied any benefits "by reason of" any disability. Rather, McDonald asserts, fundamentally, that on account of his disability, he is due benefits that have not been provided. Such a claim, quite simply, is not cognizable under the ADA.
3. The Civil Rights Claims
In relevant part, 42 U.S.C. § 1983 provides:
Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof, to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the person injured in an action at law, suit in equity, or other proper proceeding for redress.
Id.
To the extent that McDonald's amended complaint can be read to allege such a civil rights violation, the claim is premised upon a deprivation of rights secured by either the Rehabilitation Act or the ADA. Having failed to state a claim under either of these federal laws, any concomitant claim under § 1983 likewise is unsuccessful. See, e.g., Noland v. Wheatley, 835 F. Supp. 476, 483-5 (N.D.Ind., 1993).
B. The State Claims
With the dismissal of all the federal law claims, the Court should decline to exercise pendent jurisdiction over the state law claims and they too, therefore, should be dismissed. United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S. Ct. 1130, 1139, 16 L. Ed. 2d 218 (1966). In these circumstances, although the Commonwealth's motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(2) appears to have merit, there is no need to discuss it; the Commonwealth would not be able to interpose the Eleventh Amendment as a defense in a state court proceeding.
V. RECOMMENDATIONS
For all of the reasons stated hereinabove, I RECOMMEND that the State Defendant's Motion to Dismiss (# 27) be DENIED as moot. Construing the State Defendant's Response to Order (# 50) to constitute a motion to dismiss, I RECOMMEND that the motion be ALLOWED. I FURTHER RECOMMEND that GAIC's Motion to Dismiss (# 48) be ALLOWED.
VI. REVIEW BY THE DISTRICT JUDGE
The parties are hereby advised that under the provisions of Rule 3(b) of the Rules for United States Magistrates in the United States District Court for the District of Massachusetts, any party who objects to this report and these recommendations must file a written objection thereto with the Clerk of this Court within 10 days of the party's receipt of this Report and Recommendation. The written objections must specifically identify the portion of the recommendations, or report to which objection is made and the basis for such objections. The parties are further advised that the United States Court of Appeals for this Circuit has indicated that failure to comply with this rule shall preclude further appellate review. See Park Motor Mart, Inc. v. Ford Motor Co., 616 F.2d 603 (1 Cir., 1980); United States v. Vega, 678 F.2d 376, 378-379 (1 Cir., 1982); Scott v. Schweiker, 702 F.2d 13, 14 (1 Cir., 1983). See also Thomas v. Arn, 474 U.S. 140, 106 S. Ct. 466, 88 L. Ed. 2d 435 (1985).
April 7, 1995
NOTES
[1] The plethora of pleadings in this case can be confusing. The initial "Civil Action Complaint" was filed on July 20, 1992. (# 1) The Commonwealth responded with a Motion for a More Definite Statement. (# 5) I allowed the motion in an Order dated September 23, 1992. (See # 10) McDonald replied in a pleading dated October 7, 1992 in which he indicated that he needed legal counsel in order to comply with the September 23rd Order and was actively seeking counsel. (See # 11) In a Further Order dated December 29, 1992, I granted McDonald an extension of time to comply with the September 23rd Order. (See # 15) He responded by stating that he could not comply without legal counsel and was unable to obtain a lawyer on his own. Accordingly, the Clerk, at my direction, contacted a lawyer whom McDonald had said had represented him in the past and asked that lawyer if he would assist McDonald in complying with the September 23rd Order. On May 21, 1993, the attorney filed an Amended Complaint (# 20) on McDonald's behalf. McDonald filed a Further Amended Complaint (# 31) on or about July 29, 1993. The state defendant moved to strike the further amended complaint, and that motion (# 33) was allowed by the Court on September 29, 1993. On November 10, 1993, McDonald filed a motion to strike the amended complaint which had been drafted for him by the attorney on the ground that he never authorized its filing. (See # 51) The Court has not acted upon that motion because a review of the Amended Complaint (# 20) prepared by the attorney and the Further Amended Complaint (# 31) which McDonald sought to file reveals that there is no substantive, legally relevant difference between them. The end result is the same whether one views the Amended Complaint (# 20) or the Further Amended Complaint (# 31) as the operative pleading.
[2] The memorandum filed by GAIC in response to the September 29th Order addressed all the claims, both federal and state, that were advanced in the amended complaint.
[3] Although a formal motion to dismiss for failure to state a claim has not been filed, the Court-ordered memorandum of law (# 50) shall be treated as such a dispositive motion.
[4] The therapy bills were paid when a conciliation conference was scheduled approximately a year later. (# 20 ¶ 13a)
[5] These bills were paid approximately a year later when a conciliation conference was set. (# 20 ¶ 13b)
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146 B.R. 339 (1992)
In re CHATEAUGAY CORPORATION, Reomar, Inc., the LTV Corporation, et al., Debtors.
Nos. 92 Civ. 130 (SWK), (92 Civ. 0130 to 92 Civ. 0136).
United States District Court, S.D. New York.
October 15, 1992.
Wells, Wells, Marble & Hurst by J. Jerry Langford, Walter D. Willson, Kelly D. Simpkins, Jackson, Miss., for claimant, appellant Sarah M. Lancaster.
Paul William Beltz, P.C. by Kevin J. Sullivan, Buffalo, N.Y., for claimants, appellants Robert J. Seufert, Jr., Darryl MacNeil, Paul D. MacNeil and Timothy Willis.
Harvey, Pennington, Herting & Renneisen, Ltd. by William G. Adamson, Philadelphia, Pa., for claimant, appellant Robert V. Rodgers.
Offerman, Mahoney, Cassano, Pigott, Greco & Whalen by Eugene F. Pigott, Jr., Buffalo, N.Y., for claimant, appellant Joseph Dotterweich.
Sol H. Weiss and Alan Starker, Philadelphia, Pa., for claimant, appellant Donna Tozer.
Heller & Owen by Gregory James Owen, Encino, Cal., for claimant, appellant Arland Paul.
Kaye, Scholer, Fierman, Hays & Handler by Herbert Stephen Edelman, Steven E. *340 Fox, New York City, Skadden, Arps, Slate, Meagher & Flom by Gary E. Crawford, Katherine A. Armstrong, Richard T. Bernardo, New York City, for debtors, appellees.
MEMORANDUM OPINION AND ORDER
KRAM, District Judge.
Appellants/Claimants[1] appeal from a Memorandum Decision of the United States Bankruptcy Court for the Southern District of New York (Liflind, C.J.) (the "Bankruptcy Court"), dated March 6, 1990, and amended March 7, 1990, holding that the Bankruptcy Court had subject matter jurisdiction to make a threshold determination regarding the allowance or disallowance of (1) personal injury tort or wrongful death claims which may have been asserted against an inappropriate (wrong) defendant or Debtor and (2) personal injury tort or wrongful death claims which may be barred, as a matter of law, by the government contractor defense established in Boyle v. United Technologies Corp., 487 U.S. 500, 108 S. Ct. 2510, 101 L. Ed. 2d 442 (1988) ("Boyle"). See In re Chateaugay Corp., 111 B.R. 67 (Bankr.S.D.N.Y.1990) (the "Jurisdiction Opinion" or the "March 7, 1990 Opinion").
Appellants also appeal from an October 21, 1991 Memorandum Decision of the Bankruptcy Court granting Appellees'[2] motion for summary judgment on the grounds that the government contractor defense shields the Appellees from liability for claims arising from allegedly defective vehicles sold to Appellants, see In re Chateaugay Corp., 132 B.R. 818 (Bankr. S.D.N.Y.1991) (the "October 21, 1991 Opinion"), and a final Order, dated November 13, 1991, "Granting Debtors' Motion for Summary Judgment on Objection to Allowance of Certain Claims . . . Involving Postal Dispatchers" (the "November 13, 1991 Order"). By Order of January 30, 1992, this Court consolidated the appeals relating to the above issues.
Background[3]
On September 19, 1983 (the "Acquisition Date"), pursuant to a stock purchase agreement dated July 24, 1983, Nakoma Corporation, an indirect subsidiary of LTV Corporation ("LTV"), acquired all of the capital stock of AM General Corporation ("AM General"), a wholly owned subsidiary of American Motors Corporation ("AMC"). On September 21, 1983, Nakoma Corporation transferred the stock of AM General to LTV Aerospace and Defense Company ("LTVAD"). Since September 21, 1983, AM General has been a wholly owned subsidiary of LTVAD.
On July 17, 1986 (the "Filing Date"), and thereafter, LTV, LTVAD, AM General and their affiliates each filed a petition for reorganization under chapter 11 of the Bankruptcy Code (the "Code"), and have continued in the management and possession of their businesses and assets as debtors-in-possession pursuant to §§ 1107 and 1108 of the Code. No trustee or examiner has been appointed.
On October 6, 1989, LTV, LTVAD and AM General on behalf of themselves and the other debtors and debtors-in-possession (collectively, the "Debtors" or "Appellees") filed with the Bankruptcy Court their objection (the "Objection") to 32 claims (the "Claims") which alleged, inter alia, that claimants and claimant's decedents (the "Claimants" or the "Appellants") sustained severe injuries and extensive damages as a result of accidents involving an AM General designed and manufactured motor vehicle known as the "Postal Dispatcher."[4]*341 Specifically, Debtors objected to Claims that alleged that AM General designed and sold a vehicle that had a lower resistance to rollover than typical passenger cars, a characteristic which they claim is a product defect known as "rollover propensity." Each of the Claims objected to was based upon the allegedly defective design of the Postal Dispatcher and a failure to warn of the risks associated with the allegedly defective design. The Claims sounded in breach of warranty, negligence, strict tort liability, or other state law theories of recovery.
The following is the substance of the Debtors' Objection to the Claims.[5] Debtors assert that AM General designed, manufactured, and sold over 100,000 of these vehicles to the United States Post Office and its successor, the United States Postal Service (collectively, the "Post Office") to be employed as mail delivery vehicles, pursuant to contracts with the United States Government. The Debtors further allege that AM General did not sell any Postal Dispatchers to any of the Claimants referred to herein. It is also alleged that LTV and LTVAD did not design, manufacture, or sell the Postal Dispatchers, and are not proper parties against whom claims involving the Postal Dispatchers can be asserted. Moreover, the Debtors state that LTV never held any ownership interest in AM General, and that LTVAD did not acquire any ownership interest prior to the production of some units of the last model of the Postal Dispatchers manufactured by AM General. Debtors assert that LTVAD as owner of the stock of AM General was not involved in the design, manufacture, or sale of any Postal Dispatchers. Finally, the Debtors argue that as a result of recent case law recognizing the government contractor defense, including the decision of the Supreme Court in Boyle, a government contractor cannot be held liable for defective design or failure to provide warnings, when the product was manufactured in accordance with reasonably precise specifications approved by the Government. The Debtors assert that the Post Office and the United States Government approved reasonably precise specifications with regard to the Postal Dispatchers, which conformed to those specifications. The Debtors also contend that the manufacturers of the Postal Dispatchers did not know of any risks in the use of the vehicle that were not known to the Post Office and the United States Government.
Based on the aforementioned assertions, the Debtors requested that with respect to LTV and LTVAD, the Claims be disallowed entirely, and with respect to all of the Debtors (including AM General), the Claims be disallowed to the extent they allege that the Postal Dispatcher was defectively designed or that Debtors are liable for failure to warn of the risks associated with the design.
In contrast, the Claimants, who were injured in the Postal Dispatcher accidents, argued to the Bankruptcy Court that it did not have jurisdiction to determine Debtors' Objection to allowance of certain Claims involving Postal Dispatchers. Second, the Claimants contended that even if such jurisdiction existed, the government contractor defense, as set forth in Boyle, did not bar the Claimants' Claims against the Debtors as the defense does not apply in a civilian context and the Government had not promulgated or approved reasonably precise specifications concerning certain features of the Postal Dispatchers.
As a preliminary matter, on March 7, 1990, the Bankruptcy Court held that it had subject matter jurisdiction to determine the threshold issues of whether or not: (1) the LTV and LTVAD assertions in the Objection that the Claims against them must be disallowed because they had no involvement whatsoever in the design, manufacture, or sale of Postal Dispatchers, are valid; and (2) LTV, LTVAD, and AM General are entitled to immunity from civil liability under the government contractor defense enunciated by the Supreme Court in Boyle, and, consequently, whether, as a *342 matter of law, the Claims must be disallowed. The Bankruptcy Court also held, however, that it did not have jurisdiction to liquidate or estimate the Claims for purposes of distribution, if, as a threshold matter, it determined that the Claims were sustainable as a matter of law. See In re Chateaugay Corp., 111 B.R. at 67.
Having found that it had jurisdiction to determine these threshold issues, on October 21, 1991, the Bankruptcy Court granted Debtors' motion for summary judgment, holding that the government contractor defense shields the Debtors from liability for Claims arising from the allegedly defective vehicles sold to Claimants. See In re Chateaugay Corp., 132 B.R. at 827.[6] On November 13, 1991, the Bankruptcy Court issued its final "Order Granting Debtors' Motion for Summary Judgment on Objection to Allowance of Certain Claims . . . Involving Postal Dispatchers." These appeals followed and were consolidated by the Court on January 30, 1992.[7]
The issues before this Court on appeal are as follows:
(1) Did the Bankruptcy Court have jurisdiction to consider Debtors'/Appellees' Objection to Allowance of Certain Claims Involving Postal Dispatchers and, on a motion for summary judgment, to enter an order disallowing such Claims as a matter of law?
(2) Does the government contractor defense, as set forth in Boyle, bar Claimants'/Appellants' Claims against the Debtors?
(a) Does the government contractor defense apply to non-military or civilian vehicles?
(b) Were the requisite elements of the government contractor defense satisfied with respect to these Claims?
Discussion
I. Standard of Review
This Court's review of bankruptcy court orders is plenary, with conclusions of law, including jurisdictional rulings, being reviewed de novo. In re Financial News Network, Inc., 126 B.R. 152 (S.D.N.Y.1991); In re Wise, 119 B.R. 392 (E.D.N.Y.1990). The bankruptcy court's factual determinations are reviewed under the clearly erroneous standard. In re Chateaugay Corp., 104 B.R. 637 (S.D.N.Y.1989); In re Beker Indust. Corp., 89 B.R. 336 (S.D.N.Y.1988).
II. Jurisdiction
As stated above, in its March 7, 1990 Opinion, the Bankruptcy Court determined that it had jurisdiction to hear and determine Debtors' Objection to allowance of certain Claims involving Postal Dispatchers and, on a motion for summary judgment, to enter an order disallowing such Claims as a matter of law. Appellants urge this Court to reverse that ruling on the grounds that the Bankruptcy Court's decision to disallow their personal injury tort and wrongful death Claims transgressed the statutory limits on jurisdiction contained in 28 U.S.C. § 157,[8] the *343 constitutional limits outlined by the Supreme Court in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S. Ct. 2858, 73 L. Ed. 2d 598 (1982) ("Marathon"), and the prohibition against bankruptcy courts trying and otherwise disposing of personal injury and wrongful death claims. While the Court has reservations about holding that the Bankruptcy Court, expert in the restructuring of debtor-creditor relations, has subject matter jurisdiction to disallow Appellants' personal injury tort and wrongful death Claims based on the government contractor defense, it concurs with the Bankruptcy Court's March 7, 1990 Jurisdiction Opinion in its entirety. The Bankruptcy Court was correct in concluding that the actual provisions of 28 U.S.C. § 157, as well as the broad jurisdictional mandate enunciated by the Second Circuit in In re Ben Cooper, Inc., 896 F.2d 1394 (2d Cir.1990), compel a finding that the Bankruptcy Court has jurisdiction to disallow legally deficient personal injury tort and wrongful death claims in the first instance.[9]
To hold otherwise, would mean either stripping the bankruptcy courts of all jurisdiction with respect to personal injury tort and wrongful death claims, a result clearly inconsistent with the statutory language of the 1984 Amendments to the Bankruptcy Code[10] as well as precedent in this Circuit,[11] or creating what this Court deems an unworkable system, proposed by certain Appellants, in which bankruptcy courts would have jurisdiction to allow or disallow personal injury tort or wrongful death claims on traditional bankruptcy grounds, but not on non-bankruptcy grounds.
At least one Appellant claims that a bankruptcy court "may not allow or disallow *344 any personal injury tort or wrongful death claim on nonbankruptcy grounds," but "can disallow [these] claims on such traditional bankruptcy grounds as discharge of a particular debt or untimely filing of a proof of claim, among other reasons." See Brief of Appellant-Claimant Sarah M. Lancaster ("Lancaster Brief"), at 12, n. 9. That Appellant, however, has not articulated any basis for determining, with any particularity or consistency, which grounds should be considered traditional bankruptcy grounds and which should be considered non-bankruptcy grounds, and this Court can think of none. Further, any effort to so distinguish undercuts Appellants' argument that disallowance in this case was the equivalent of "liquidation or estimation . . . for purposes of distribution." 28 U.S.C. § 157(b)(2)(B). Appellants have argued before this Court and the court below that disallowance based on the government contractor defense falls into the jurisdictional exclusion contained in § 157(b)(2)(B) because such disallowance effectively values the personal injury and wrongful death claims at zero and denies the claimants any distribution from the estate. This argument, however, is equally applicable to situations where the disallowance is based on so-called traditional bankruptcy grounds. In fact, the potential for that result inheres in the very nature of an action to disallow a claim. Thus, it would be illogical for this Court to hold that bankruptcy courts can disallow personal injury tort and wrongful death claims so long as they do so on traditional bankruptcy grounds.
Accordingly, the Bankruptcy Court's determination that it had jurisdiction to entertain Debtors' Objection to allowance of certain Claims involving Postal Dispatchers and disallow such Claims as a matter of law, is affirmed.[12]
III. Summary Judgment
A. The October 21, 1991 Opinion
In its October 21, 1991 Opinion, familiarity with which is assumed, the Bankruptcy Court held that the government contractor defense recognized in Boyle was applicable to actions for damages resulting from the use of nonmilitary equipment. Id. at 825-27. The Court also held that the Appellees satisfied each of the elements specified in Boyle, and as a matter of law properly invoked the government contractor defense. Id. at 822-24. Accordingly, the Bankruptcy Court found that Appellants' Claims involving Postal Dispatchers had no legal basis, and the Debtors were entitled to summary judgment disallowing the Claims to the extent they alleged that the Postal Dispatcher was defectively designed or that Debtors are liable for failure to warn of the risks associated with the design.
Appellants seek reversal of this decision on a number of grounds. First, they claim that the government contractor defense is not applicable to situations involving nonmilitary equipment or equipment used for nonmilitary purposes. Second, Appellants contend that even if the defense applies in the nonmilitary context, the requisite elements necessary for application of the defense are not present in the instant action. Third, Appellants argue that because application of state or local law would not significantly interfere with any uniquely federal interest or frustrate the specific objectives of any federal legislation, the Bankruptcy Court erred in finding the government contractor defense applicable to the instant case.
*345 B. Summary Judgment Standard
Under Rule 56(c) of the Federal Rules of Civil Procedure, a motion for summary judgment must be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." The moving party must initially satisfy a burden of demonstrating the absence of a genuine issue of material fact, which can be done merely by pointing out that there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 323-25, 106 S. Ct. 2548, 2552-54, 91 L. Ed. 2d 265 (1986). The nonmoving party then must meet a burden of coming forward with "specific facts showing that there is a genuine issue for trial," Fed. R.Civ.P. 56(e), by "a showing sufficient to establish the existence of [every] element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. at 322, 106 S.Ct. at 2552.
The court "must resolve all ambiguities and draw all reasonable inferences in favor of the party defending against the motion." Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 249 (2d Cir.1985); see also Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-159, 90 S. Ct. 1598, 1608-1609, 26 L. Ed. 2d 142 (1970); Hathaway v. Coughlin, 841 F.2d 48, 50 (2d Cir.1988); Knight v. U.S. Fire Insurance Co., 804 F.2d 9, 11 (2d Cir.1986), cert. denied, 480 U.S. 932, 107 S. Ct. 1570, 94 L. Ed. 2d 762 (1987). But the court is to inquire whether "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for the party," Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 2511, 91 L. Ed. 2d 202 (1986), and to grant summary judgment where the nonmoving's evidence is merely colorable, conclusory, speculative or not significantly probative. Id. at 249-50, 106 S.Ct. at 2510-11; Knight v. U.S. Fire Insurance Co., 804 F.2d at 12, 15; Argus Inc. v. Eastman Kodak Co., 801 F.2d 38, 45 (2d Cir.1986), cert. denied, 479 U.S. 1088, 107 S. Ct. 1295, 94 L. Ed. 2d 151 (1987). To determine whether the nonmoving party has met his or her burden, the court must focus on both the materiality and the genuineness of the factual issues raised by the nonmovant. As to materiality, "it is the substantive law's identification of which facts are critical and which facts are irrelevant that governs." Anderson v. Liberty Lobby, Inc., 477 U.S. at 248, 106 S.Ct. at 2510. A dispute over irrelevant or unnecessary facts will not preclude summary judgment, id., but the presence of unresolved factual issues that are material to the outcome of the litigation mandates a denial of the summary judgment motion. See, e.g., Knight v. U.S. Fire Insurance Co., 804 F.2d at 11-12.
Once the nonmoving party has successfully met the burden of establishing the existence of a genuine dispute as to an issue of material fact, summary judgment must be denied unless the moving party comes forward with additional evidence sufficient to satisfy his or her ultimate burden under Rule 56. See Celotex Corp. v. Catrett, 477 U.S. at 330, n. 2, 106 S.Ct. at 2556, n. 2 (Brennan, J., dissenting). In sum, if the court determines that "the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'" Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986) (quoting First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 288, 88 S. Ct. 1575, 1592, 20 L. Ed. 2d 569 (1968)); see also Weg v. Macchiarola, 654 F. Supp. 1189, 1191-92 (S.D.N.Y.1987).[13]
*346 C. Application of the Government Contractor Defense
In Boyle, the Supreme Court held that in certain circumstances federal law may shield government contractors from tort liability for injuries arising from design defects in military equipment. Specifically, the Supreme Court, relying on the earlier decisions of the Fourth and Ninth Circuits in Tozer v. LTV Corp., 792 F.2d 403 (4th Cir.1986) and McKay v. Rockwell International Corp., 704 F.2d 444 (9th Cir. 1983), respectively, held that:
Liability for design defects in military equipment cannot be imposed, pursuant to state law, when (1) the United States approved reasonably precise specifications; (2) the equipment conformed to those specifications; and (3) the supplier warned the United States about the dangers in the use of the equipment that were known to the supplier but not to the United States.
Boyle, 487 U.S. at 512, 108 S.Ct. at 2518.
Sitting by designation as a member of a panel of the Eleventh Circuit, former Supreme Court Justice Powell analyzed the Boyle decision as follows:
[T]he Court recognized that in certain areas of "uniquely federal interests," state law must be preempted, and if necessary replaced, by federal common law. One such area of uniquely federal interest is the government's procurement of military hardware. The Court grounded the contours of the defense in the "discretionary function" exception to the Federal Tort Claims Act, 28 U.S.C. § 2680(a), that protects the United States from liability for its agents' performance of duties involving discretionary decisions. [487 U.S. at 504-512,] 108 S.Ct. at 2514-2518.[14] Without the defense, the government's own tort immunity for its discretionary functions would be undermined. Contractors held liable for design features that were the subject of discretionary approval by the government would predictably pass on the costs of liability, ultimately imposing costs on the government that its immunity was intended to preclude. See id. [at 511, 108 S.Ct.] at 2518.
Justice Powell went on to explain that:
The [government contractor] defense derives from the principle that where a contractor acts under the authority and direction of the United States, it shares the sovereign immunity that is enjoyed by the government. See Yearsley v. W.A. Ross Construction Co., 309 U.S. 18, 60 S. Ct. 413, 84 L. Ed. 554 (1940). In the military context, this immunity serves the further important purpose of shielding sensitive military decisions from scrutiny by the judiciary, the branch of government least competent to review them. Application of ordinary tort law to military design and procurement decisions is not appropriate, for the government "is required by the exigencies of our defense effort to push technology towards its limits and thereby incur risks beyond those that would be *347 acceptable for ordinary consumer goods." Tozer v. LTV Corp., 792 F.2d 403, 406 (4th Cir.1986) (quoting McKay v. Rockwell International Corp., 704 F.2d 444, 449-50 (9th Cir.1983)).
Before turning to the issue of whether the three requisite conditions are met in the instant case, however, the Court must, as a threshold matter, determine whether the government contractor defense is applicable to a case involving damages resulting from nonmilitary equipment or products used for nonmilitary purposes, such as Postal Dispatchers.
Appellees argue that the only logical conclusion to draw from Boyle is that the Supreme Court clearly intended that the defense apply in the nonmilitary context. According to the Appellees, this intention is evidenced by the Court's reliance on the discretionary acts exception to the FTCA, which applies to nonmilitary contracts, rather than the Feres doctrine, which applies only in the military context. See Boyle, 487 U.S. at 510-12, 108 S.Ct. at 2517-19. By refusing to predicate Boyle on the Feres doctrine, the Court formulated the government contractor defense to reach nonmilitary products in an appropriate case. As contract procurement by the Post Office is considered a discretionary act within the meaning of the FTCA, the reasoning underlying Boyle must apply with equal force to suits premised on the allegedly defective design of the Postal Dispatcher as it does to the design of military equipment.
Appellees further argue that although Boyle involved a military helicopter, the Supreme Court, repeatedly referring to the defense as the "government contractor defense" and analyzing the potential liability imposed upon "government contractors", did not limit its discussion or the scope of its holding to military contractors. See Boyle, 487 U.S. at 505-06, 108 S.Ct. at 2514-15 (civil liability "arising out of the performance of federal procurement contracts" is an area of uniquely federal interest); id. at 507, 108 S.Ct. at 2515 (discussing the implications of "imposition of liability on Government contractors"); id. at 510, 108 S.Ct. at 2517 (referring to "the Government contractor defense"); id. at 513, 108 S.Ct. at 2519 (same); id. at 514, 108 S.Ct. at 2519 (same).
Finally, Appellees contend that the mere happenstance that military equipment has given rise to most of the government contractor defense cases cannot logically prove that the defense is limited to that context. As the Bankruptcy Court noted in its October 21, 1991 Opinion, 132 B.R. at 825, Justice Brennan, who dissented in Boyle, flatly stated that the majority's rationale extended to any design choice made in purchases by the federal government, whether it involved "NASA's Challenger space shuttle [or] the Postal Service's old mail cars." Boyle, 487 U.S. at 516, 108 S.Ct. at 2520 (Brennan, J., dissenting).
By contrast, Appellants claim that despite the rejection of the Feres doctrine, the government contractor defense espoused in Boyle is to be limited to military contractors. According to Appellants, the Supreme Court explicitly held that "liability for design defects in military equipment cannot be imposed" if the three criteria set forth in Boyle are satisfied. Boyle, 487 U.S. at 512, 108 S.Ct. at 2518 (emphasis added). Moreover, the Court held that:
It makes little sense to insulate the Government against financial liability for the judgment that a particular feature of military equipment is necessary when the Government produces the equipment itself, but not when it contracts for the production. In sum, we are of the view that state law which holds Government contractors liable for design defects in military equipment does in some circumstances (when the three criteria cited above are met) present a "significant conflict" with federal policy and must be displaced.
Id. at 512, 108 S.Ct. at 2518 (emphasis added).
Furthermore, Appellants argue that although Boyle altered the scope of the government contractor defense, the policy underlying the defense remains "rooted in considerations peculiar to the military." Nielsen v. George Diamond Vogel Paint *348 Co., 892 F.2d 1450, 1455 (9th Cir.1990). The salient purpose behind the government contractor defense is to "encourage active communication between suppliers of military equipment and military authorities in the development and testing of equipment." Kleemann v. McDonnell Douglas Corp., 890 F.2d 698, 704 (4th Cir.1989) (emphasis added). As additional support for these propositions, Appellants point to the fact that the overwhelming majority of cases decided after Boyle involved a product either procured or used for military purposes. See Stout v. Borg-Warner Corp., 933 F.2d 331, 332 (5th Cir.1991) (Army hawk Missile System Mobile Repair Unit); In re Joint Eastern & Southern Dist. New York Asbestos Litig., 897 F.2d 626 (2d Cir.1990) (asbestos installed in Naval vessels); Maguire v. Hughes Aircraft Corp., 912 F.2d 67, 68 (3d Cir.1990) (Army National Guard helicopter); Skyline Air Service, Inc. v. G.L. Capps Co., 916 F.2d 977, 978 (5th Cir.1990) (Army helicopter); Mitchell v. Lone Star Ammunition, Inc., 913 F.2d 242, 243 (5th Cir.1990) (defective mortar shells supplied to Marine Corps); Kleemann v. McDonnell Douglas Corp., 890 F.2d 698 (4th Cir.1989) (Naval F/A-18 aircraft); Smith v. Xerox Corp., 866 F.2d 135 (5th Cir.1989) (VIPER weapon simulator); Garner v. Santoro, 865 F.2d 629 (5th Cir.1989) (epoxy paint applied to Naval vessels); Trevino v. General Dynamics Corp., 865 F.2d 1474, 1475 (5th Cir.1989) (submarine); Monks v. General Elec. Co., 919 F.2d 1189, 1190 (6th Cir.1990) (Army helicopter); United States v. Lindberg Corp., 882 F.2d 1158 (7th Cir.1989) (tank gears); Harduvel v. General Dynamics Corp., 878 F.2d 1311, 1313 (11th Cir.1989) (Air Force F-16); In re Aircraft Litig., 752 F. Supp. 1326, 1330 (S.D. Ohio 1990) (Air Force EC-135N jet aircraft); Maguire v. Hughes Aircraft Corp., 725 F. Supp. 821, 822 (D.N.J.1989) (Army National Guard helicopter); Niemann v. McDonnell Douglas Corp., 721 F. Supp. 1019, 1021 (S.D.Ill.1989) (asbestos-containing products in Air Force T-29, C-131, C-54, and C-118); Nicholson v. United Technologies Corp., 697 F. Supp. 598, 599 (D.Conn.1988) (Army helicopter): Schwindt v. Cessna Aircraft Co., 1988 WL 148433 (S.D.Ga.1988) (Air Force O-Z aircraft); Zinck v. ITT Corp., 690 F. Supp. 1331 (S.D.N.Y.1988) (night vision goggles used in Marine Corps helicopter).
Finally, Appellants contend that numerous courts have recently reaffirmed the reasoning in Boyle, and held that the government contractor defense was to be strictly limited to cases involving military equipment or products used for military purposes. See In re Hawaii Fed. Asbestos Cases, 960 F.2d 806 (9th Cir.1992); Nielsen v. George Diamond Vogel Paint Co., 892 F.2d at 1455; Reynolds v. Penn Metal Fabricators, Inc., 146 Misc. 2d 414, 550 N.Y.S.2d 811 (1990); Weitzman v. Eagle-Picher Indus., 144 Misc. 2d 42, 542 N.Y.S.2d 118, 121 (1989).
For the following reasons, the Court agrees with Appellants and finds that the government contractor defense is to be limited to the military context.
The analysis of Boyle was directed toward deciding the extent to which federal law should displace state law with respect to the liability of a military contractor. As the Appellees argue, the underlying premise in Boyle does apply to all government contracts, and is not limited to the military context. See Nielsen v. George Diamond Vogel Paint Co., 892 F.2d at 1454. That premise is that there is a "uniquely federal interest" in potential liabilities arising out of the performance of any government contract, regardless of its military or civilian nature, and regardless of whether it is a procurement or a construction contract. Id. (citing Boyle, 487 U.S. at 504-06, 108 S.Ct. at 2514-15). However, the Boyle analysis did not end with this assumption. Rather, the Boyle Court stated that the uniquely federal interest inherent in all federal government contracts is a necessary condition for the displacement of state law, but not a sufficient condition. Boyle, 487 U.S. at 507, 108 S.Ct. at 2516. "Displacement will occur only where . . . a `significant conflict' exists between an identifiable `federal policy or interest and the [operation] of state law.'" Nielsen (quoting Boyle, 487 U.S. at 507, 108 S.Ct. at 2516).
*349 In defining where such a "significant conflict" exists between federal and state law, the majority focused its analysis on the military context of the case. Boyle, 487 U.S. at 511, 108 S.Ct. at 2518 ("the selection of the appropriate design for military equipment to be used by our Armed Forces . . . involves not merely engineering analysis but judgment as to the balancing of many technical, military, and even social considerations, including specifically the trade-off between greater safety and greater combat effectiveness"). The Court, however, rejected the Feres doctrine as an appropriate source of such a conflict. According to Boyle, the Feres doctrine, immunizing the Government from all liability for suits for service-connected injuries, would, if extended to contractors, be too broad in that it would immunize contractors from the results of their own negligence. Nielsen, 892 F.2d at 1454 (citing Boyle, 487 U.S. at 510, 108 S.Ct. at 2517). At the same time, Boyle stated that the Feres doctrine's scope of immunity is in one respect too narrow, as the doctrine "covers only service-related injuries, and not injuries caused by the military to civilians. . . ." Id. (quoting Boyle, 487 U.S. at 510, 108 S.Ct. at 2517-18). The Court reasoned that the interests of the Government in avoiding scrutiny of sensitive military decisions, as for example, the design of a fighter plane interests which led to the evolution of the Feres doctrine in the first instance are the same regardless of whether the injured party in a given instance is a member of a military service, or a civilian. Id. (citing Boyle, 487 U.S. at 510-11, 108 S.Ct. at 2517-18).
The Court in Boyle therefore abandoned the Feres doctrine as defining the scope of the defense available to the military contractor in that case, and turned instead to the "discretionary function" exception to the FTCA. The Court determined that the design of military equipment is a "discretionary function" from which the Government itself would be immune from liability, and concluded that a defense of similar scope should be available to a military contractor. Id. Specifically, the Court held that:
It makes little sense to insulate the Government against financial liability for the judgment that a particular feature of military equipment is necessary when the Government produces the equipment itself, but not when it contracts for the production.
Boyle, 487 U.S. at 512, 108 S.Ct. at 2518.
As the Ninth Circuit in Nielsen pointed out, however, despite its abandonment of the Feres doctrine, the Supreme Court in Boyle emphasized the importance of the military context by endorsing all aspects of McKay v. Rockwell International, except the limitation of its applicability to service-connected injuries, a limitation arising from its reliance upon the Feres doctrine. Nielsen, 892 F.2d at 1454. A review of McKay indicates that the roots of the defense lie in the special need for the maintenance of military discipline and the avoidance of litigation "second-guessing" sensitive military decisions. McKay, at 449. The defense is also essential in the military context because the "United States is required by the exigencies of our defense effort to push technology towards its limits and thereby to incur risks beyond those that would be acceptable for ordinary consumer goods." McKay, at 449-50.
Thus, this Court agrees with the Ninth Circuit's conclusion in Nielsen that although the Supreme Court's decision in Boyle altered the scope of the military contractor defense by holding that it was not limited to situations involving service-connected injuries, and changed the intellectual moorings from the Feres doctrine to the "discretionary function" exemption of the FTCA, the policy behind the defense remains rooted in considerations peculiar to the military. Nielsen, 892 F.2d at 1454-55; see also Kleemann v. McDonnell Douglas Corp., 890 F.2d 698, 704 (4th Cir.1989) ("the very purpose of the government contractor defense is to encourage active communication between suppliers of military equipment and military authorities in the development and testing of equipment"); Garner v. Santoro, 865 F.2d 629, 634-36 (5th Cir.1989) (recognizing the principle that the policy behind the defense is rooted *350 in considerations peculiar to the military); Trevino v. General Dynamics Corp., 865 F.2d 1474, 1483-84 (5th Cir.), cert. denied, 493 U.S. 935, 110 S. Ct. 327, 107 L. Ed. 2d 317 (1989) (same); Harduvel v. General Dynamics Corp., 878 F.2d 1311, 1315-16 (11th Cir.1989) ("in the sensitive area of federal military procurement . . . the balance [of safety concerns against cost and performance] is not one for state tort law to strike. Although the defense may sometimes seem harsh in its operation, it is a necessary consequence of the incompatibility of modern products liability law and the exigencies of national defense").
The Court also agrees with the Nielsen court's decision rejecting the military contractor defense as a bar to an action brought by a former employee of the Army Corps of Engineers against a paint manufacturer. In Nielsen, the plaintiff alleged that fumes from a paint he had used extensively while working for the Corps had caused him brain damage. Noting that the paint "was not designed for any special military purpose," id. at 1453, but rather was "designed to further civilian . . . objectives," id. at 1455, the court affirmed the view expressed in McKay, that the military contractor defense does not apply to "an ordinary consumer product purchased by the armed forces." McKay, 704 F.2d at 451.
These conclusions are in accord with other post-Boyle decisions involving the procurement of nonmilitary equipment. See In re Hawaii Federal Asbestos Cases, 715 F. Supp. 298 (D.Hawaii 1988), aff'd, 960 F.2d 806 (9th Cir.1992); Reynolds v. Penn Metal Fabricators, Inc., 146 Misc. 2d 414, 550 N.Y.S.2d 811 (1990); Pietz v. Orthopedic Equipment Co., 562 So. 2d 152, 155 (Ala.1989) cert. denied, ___ U.S. ___, 111 S. Ct. 75, 112 L. Ed. 2d 48 (1990); Weitzman v. Eagle-Picher Indust., 144 Misc. 2d 42, 542 N.Y.S.2d 118 (1989). For example, the Hawaii Federal Asbestos Cases actions involved individuals who were exposed to asbestos dust while serving in the United States Navy, and suffered asbestosis or cancer as a result. Defendants in the actions attempted to assert the government contractor defense as a barrier to liability. The district court, however, struck the military contractor defense on the grounds that the federal interest in Boyle was the procurement of military equipment by the United States to be used by the armed forces. 715 F.Supp. at 300 (emphasis added). According to the district court, since asbestos insulation products were not military equipment, the manufacturer was entitled to no immunity under Boyle. The procurement of supplies by the United States is not enough to immunize the manufacturer under Boyle. Id. at 300.
The Ninth Circuit affirmed the district court's decision, finding that the Boyle Court repeatedly described the military contractor defense in terms limiting it to those who supply military equipment to the Government. See 960 F.2d at 810. Specifically, the Ninth Circuit recognized that the Boyle Court was "of the view that state law which holds Government contractors liable for design defects in military equipment does in some circumstances present a `significant conflict' with federal policy and must be displaced," and that "[l]iability for design defects in military equipment cannot be imposed [] pursuant to state law," when the elements of the defense are satisfied. Id. at 810-11 (quoting Boyle, 487 U.S. at 512, 108 S.Ct. at 2518) (emphasis added).
The Ninth Circuit also found that limiting the defense to the military context was consistent with the purposes the Boyle Court ascribed to the defense. The Boyle Court noted that the military makes highly complex and sensitive decisions regarding the development of new equipment for military usage. Allowing the contractors who are hired to manufacture that equipment to be sued for injuries caused by it would impinge unduly on the military's decision-making process. The contractors would either refuse to produce the military equipment for the Government or would raise their prices to insure against their potential liability for the Government's design. Id. (citing Boyle, 487 U.S. at 512, 108 S.Ct. at 2518). These same concerns do not exist with respect to products readily available on the commercial market as the products *351 have not been developed on the basis of involved judgments made by the military. Id. Thus, the Ninth Circuit held that since the asbestos insulation alleged to have caused plaintiffs' injuries is not military equipment, its manufacturers are not protected by the military contractor defense.
Similarly, in Reynolds v. Penn Metal Fabricators, 146 Misc. 2d 414, 550 N.Y.S.2d 811 (1990), a case involving an action brought against a nonmilitary government contractor who manufactured postal carts for the Postal Service, the court held that policy considerations present in Boyle, namely the selection of an appropriate design for military equipment to be used by the Armed Forces, and the balancing of technical, military and social considerations, including the trade-off between greater safety and greater contract effectiveness, were not present in a case involving civilian equipment. Id., 550 N.Y.S.2d at 812. Accordingly, the court held that the defense should not be expanded to shield all nonmilitary government contractors from liability. Id.
Limiting the use of the defense to the military context is also in accord with the Second Circuit's decision in In re Joint Eastern & Southern Dist. New York Asbestos Lit., 897 F.2d 626 (2nd Cir.1990) (the "Grispo' case). Although the Grispo case does not explicitly address the issue of whether the government contractor defense extends to situations involving nonmilitary equipment,[15] the Court makes clear its preference that the defense be confined to actions involving the design of military equipment. First, the Grispo Court referred to the common law defense outlined in Boyle as a "military contractor defense," using that term exclusively in its opinion. Id. at 627, 628, 629, 630, 631, 632, 633, 634. Second, in its analysis of the Boyle decision, the Grispo Court plainly found that the military context at issue in the Boyle case formed an integral part of the rule of conditional immunity for government contractors. Specifically, the Second Circuit stated as follows: "the Supreme Court recognized a federal common law defense for military contractors which, in certain instances, displaces duties imposed pursuant to state tort law," id. at 627; the Supreme Court reasoned that "the `uniquely federal' interest in regulating the liability of military contractors working for the Government warranted granting military contractors a federal common law defense displacing state tort law duties," id. at 628; the Supreme Court "considered the Government's selection of design of military equipment a paradigmatic policy decision that the discretionary function exception shields from . . . judicial `second-guessing,'" id.; and "[w]ithout a congruent defense for military contractors acting pursuant to government design specifications . . . the discretionary function exception would lose much of its force." Id.
Based on the foregoing, the Court finds that the defense set forth in Boyle is to be limited to the military context.[16] Since the case at hand involves civilians injured by a product designed to further civilian, rather than military objectives, there is no reason to hold that application of state law would create a "significant conflict" with federal policy requiring a displacement of state tort law. Accordingly, Appellees cannot rely on the military contractor defense to shield them from liability, and the Bankruptcy Court's October 21, 1991 Opinion, *352 granting Appellees' motion for summary judgment disallowing Appellants' defective design and failure-to-warn claims on the basis of the government contractor defense, is reversed. Because of that determination, there is no need for the Court to address the question of whether the three conditions of the Boyle test were satisfied in the instant case.[17]
Conclusion
For the reasons set forth above, the Bankruptcy Court's determination that it had subject matter jurisdiction to make a threshold determination regarding the allowance or disallowance of (1) personal injury tort or wrongful death claims which may have been asserted against an inappropriate (wrong) defendant or Debtor and (2) personal injury tort or wrongful death claims because they may be barred, as a matter of law, by the government contractor defense established in Boyle, is affirmed. The Bankruptcy Court's decision granting summary judgment to the Appellees disallowing Appellants' claims on the basis of the government contractor defense, is reversed. As a result, this action is remanded to the Bankruptcy Court for a determination of the question of successor liability.
SO ORDERED.
NOTES
[1] The Appellants shall be referred to throughout this opinion as either "Appellants" or "Claimants."
[2] The Appellees shall be referred to throughout this opinion as either "Appellees" or "Debtors."
[3] The facts below are taken from Chief Judge Liflind's prior opinions reported at 111 B.R. 67 (Bankr.S.D.N.Y.1990) and 132 B.R. 818 (Bankr. S.D.N.Y.1991).
[4] The accidents involved both postal carriers and ordinary citizens riding in Postal Dispatchers. Ordinary citizens were also involved because in 1973, the Post Office began selling surplus Postal Dispatchers to the general public on an "as is, where is" basis. Affidavit of Raymond J. Divacky, sworn to on October 5, 1989 ("Divacky Aff."), at ¶ 17.
[5] The LTV Bank Group has joined in the Debtors' request for the entry of an order disallowing these claims.
[6] Although the Bankruptcy Court held that it had jurisdiction to determine the threshold issue of whether the claims against LTV and LTVAD must be disallowed because they had no involvement in the design, manufacture, or sale of Postal Dispatchers, it did not consider that matter in its October 21 Opinion as the parties merely touched on the issue in their briefs, and its finding disallowing the Claims on the basis of the government contractor defense was dispositive. Accordingly, that issue is not properly the subject of this appeal.
[7] The November 13, 1991 Order of the Bankruptcy Court is a final order appealable to this Court pursuant to 28 U.S.C. § 158(a). The Bankruptcy Court's Memorandum Decision dated March 6, 1990, as amended March 7, 1990, is brought up for review by virtue of the appeal from the November 13, 1991 Order. See Dow Chemical v. Rascator Maritime, S.A., 782 F.2d 329 (2d Cir.1986); 28 U.S.C. § 158(c).
[8] The most relevant provisions of 28 U.S.C. § 157 for purposes of this appeal are the following:
(b)(1) Bankruptcy judges may hear and determine all cases under title 11 [11 U.S.C.S. §§ 101 et seq.] and all core proceedings arising under title 11 [11 U.S.C.S. §§ 101 et seq.], or arising in a case under title 11 [11 U.S.C.S. §§ 101 et seq.] . . ., and may enter appropriate orders and judgments, subject to review under section 158 of this title [28 U.S.C.S. § 158]. (b)(2)(B) Core proceedings include, but are not limited to allowance or disallowance of claims against the estate, and estimation of claims or interests for the purposes of confirming a plan under chapter 11, 12, or 13 of title 11 [11 USCS §§ 1101 et seq., 1201 et seq. or 1301 et seq.] but not the liquidation or estimation of contingent or unliquidated personal injury tort or wrongful death claims against the estate for purposes of distribution in a case under title 11. . . .
(c)(1) A bankruptcy judge may hear a proceeding that is not a core proceeding but that is otherwise related to a case under title 11. . . . In such proceeding, the bankruptcy judge shall submit proposed findings of fact and conclusions of law to the district court, and any final order or judgment shall be entered by the district judge. . . .
[9] Pettibone Corp. v. Easley, 935 F.2d 120 (7th Cir.1991), does not warrant a different result. In Pettibone, following confirmation of the debtor's plan of reorganization, the debtor asked the bankruptcy court to rule on whether certain tort claims were barred by statutes of limitation. The Seventh Circuit held that the court lacked jurisdiction to decide the question. The reason, however, was not that the motion was dispositive, as Appellants suggest, but rather that the debtor's plan of reorganization had already been approved and, as a result, the bankruptcy court had no further role to play. As Judge Easterbrook noted, a debtor "may not come running to the bankruptcy judge every time something unpleasant happens." Id. at 122. Nothing in Pettibone suggests that had the debtor still been in active reorganization proceedings before the bankruptcy court, the bankruptcy court would have lacked jurisdiction to enter dispositive orders concerning legally insufficient personal injury tort claims. Id. at 122.
In any event, the Court respectfully disagrees with Pettibone's conclusion that a bankruptcy court lacks jurisdiction to decide certain defenses that establish whether a personal injury claim against a bankrupt estate exists. See Pettibone, 935 F.2d at 123. As the Bankruptcy Court noted, determination as to the existence or non-existence of a claim is a core matter, and it is essential to the bankruptcy process that this determination be made in an expedited matter. See October 21, 1991 Opinion, at 821 n. 4.
[10] Section 157(b)(2)(B) explicitly states that proceedings are deemed non-core only if they relate to the estimation or liquidation "of contingent or unliquidated personal injury tort or wrongful death claims against the estate for purposes of distribution. . . ." 28 U.S.C. § 157(b)(2)(B).
[11] In In re Johns-Manville Corp., 45 B.R. 823, 825-26 (S.D.N.Y.1984), this Court held that bankruptcy courts are permitted, under 28 U.S.C. § 157(b)(2)(B), to estimate tort claims for purposes other than distribution. Specifically, the Court stated that:
Even assuming that section 157(b)(5) requires that all personal injury and wrongful death claims be tried in the district courts,. . . . [s]ection 157(b)(2)(B) does not exclude from the definition of core proceedings estimation of personal injury and wrongful death claims for all purposes. The section is limited to estimation "for purposes of distribution." This leaves estimation for other purposes within the jurisdiction of the bankruptcy court.
45 B.R. at 826. See also In re UNR Indus., Inc., 45 B.R. 322, 326-27 (N.D.Ill.1984); In re Poole Funeral Chapel, Inc., 63 B.R. 527, 532 (Bankr. N.D.Ala.1986).
[12] Since the Court has determined that the Bankruptcy Court had jurisdiction to rule on the government contractor defense, it is unnecessary to even address appellants' request for abstention as that request was premised upon a determination that the Bankruptcy Court lacked jurisdiction. See Reply Brief of Appellants Robert J. Seufert, Jr., Darryl MacNeil, Paul D. MacNeil and Timothy Willis ("Seufert Rep. Brief"), at 4-5 ("plaintiffs' submit that the proper procedure to follow after finding that the court below lacked jurisdiction would be [for this Court to abstain from handling the underlying personal injury actions, and] to remand the Seufert, Willis, and MacNeil cases back to the Supreme Court, Erie County. . . ."). Accordingly, the Court will turn to the second issue on appeal, namely, the applicability of the government contractor defense.
[13] In its October 21, 1991 Opinion, the Bankruptcy Court notes that Appellants failed to include in their response to Debtors' motion for summary judgment "a separate, short, and concise statement of the material facts as to which [they] contended that there exists a genuine issue to be tried", as required by Local Bankruptcy Rule 13(h). Under Rule 13(h), the result of this failure is that the material facts set out in Appellees' statement are deemed admitted as a matter of law. While Appellants' failure to comply with Local Bankruptcy Rule 13(h) is, taken alone, a sufficient ground for the granting of summary judgment in Appellees' favor, the Bankruptcy Court went on to consider Appellants' other submissions and concluded that Appellants "have failed completely to produce any evidence to contradict any of the facts relied upon by the Debtors." See 132 B.R. at 822. Accordingly, the Court will not rely on the dictates of Local Bankruptcy Rule 13(h) in its review of the October 21, 1991 Opinion.
[14] Prior to Boyle, many Circuits premised the government contractor defense on the Feres doctrine, which provides that the Federal Tort Claims Act ("FTCA") does not cover injuries to Armed Services personnel in the course of military service. See Feres v. United States, 340 U.S. 135, 71 S. Ct. 153, 95 L. Ed. 152 (1950). According to the Fourth Circuit, military contractor liability would conflict with the Feres doctrine because the increased cost of the contractor's tort liability would be added to the price of the contract, and "[s]uch pass-through costs would . . . defeat the purpose of the immunity for military accidents conferred upon the government itself." Tozer v. LTV Corp., 792 F.2d 403, 408 (4th Cir.1986); see also Bynum v. FMC Corp., 770 F.2d 556, 565-66 (5th Cir.1985); Tillett v. J.I. Case Co., 756 F.2d 591, 596-97 (7th Cir.1985); McKay v. Rockwell Int'l Corp., 704 F.2d 444, 449 (9th Cir.1983), cert. denied, 464 U.S. 1043, 104 S. Ct. 711, 79 L. Ed. 2d 175 (1984). In Boyle, however, the Supreme Court explicitly rejected the Feres doctrine as a basis for the defense, finding that its application "produces results that are in some respects too broad and in some respects too narrow." Boyle, 487 U.S. at 510-11, 108 S.Ct. at 2417-18; see also infra p. 349.
[15] The case instead involves whether Boyle bars a state law failure-to-warn action seeking recovery for injuries alleged to have occurred from exposure to asbestos-based cement used at the Brooklyn Navy Yard during World War II.
[16] Justice Brennan's dissent in Boyle does not warrant a different result. In his dissent, Justice Brennan indicated that his reading of the Court's majority opinion extended the government contractor defense "to any made-to-order gadget that the Federal Government might purchase after previewing plans from NASA's Challenger space shuttle to the Postal Service's old mail cars." Boyle, 487 U.S. at 516, 108 S.Ct. at 2520 (Brennan, J., dissenting). However, there is no support for such an expansive reading of the defense in the majority opinion. As stated above, the Court's majority opinion supports a finding that the defense is to be limited to the military context. Moreover, the fact that the majority did not comment on Justice Brennan's reading of the defense does not signify that the majority implicitly adopted Justice Brennan's expansive notion of the defense.
[17] There is, however, one remaining issue, namely the issue of successor liability. In its March 7, 1990 Opinion, the Bankruptcy Court concluded that it had jurisdiction to determine the threshold issue of whether or not the LTV and LTVAD assertions in the Objection that the claims against them must be disallowed because they had no involvement in the design, manufacture, or sale of Postal Dispatchers, are valid. 111 B.R. at 67. The Bankruptcy Court did not consider this issue in its October 21, 1991 Opinion because it found the government contractor defense dispositive. As this Court has found that the government contractor defense does not apply to the instant case, a decision must be reached on the issue of successor liability before this Court can determine if a trial is necessary and, if so, in which court the trial should proceed. See 28 U.S.C. § 157(b)(5). Accordingly, the Court remands this case to the Bankruptcy Court for a decision on the issue of successor liability.
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744 S.W.2d 600 (1988)
Jimmy Franklin MUTTER, et ux., Relators,
v.
Honorable Sharolyn P. WOOD, et al., Respondents.
No. C-6479.
Supreme Court of Texas.
February 10, 1988.
Jim M. Perdue, Andrew L. Todesco and Mark D. Clore, Perdue, Turner & Berry, Houston, for petitioner.
Marion Woodrow Kruse, Jr., and Frank N. Luccia, Kruse & Associates, Craig Smyser and Keith Ketterling, (Vinson & Elkins), Houston, for respondent.
OPINION
MAUZY, Justice.
This mandamus proceeding arises out of a medical malpractice action. The trial judge, Honorable Sharolyn P. Wood, ordered the Mutters to sign an authorization permitting the defendant-hospital's attorney to discuss the medical care and treatment of their deceased son with the treating physicians and health care providers. The authorization does not require that the physicians talk with the hospital's attorney but "removes any claim of privilege" the Mutters might have. Under the particular facts of this case, we hold that the trial court abused its discretion in ordering the Mutters to sign the authorization. Accordingly, we conditionally grant the writ of mandamus.
The authorization that the Mutters were ordered to sign completely waives their physician-patient privilege as to all physicians who provided care or treatment. Moreover, it provides no reasonable method to allow the Mutters to preserve whatever claims of privilege they might have because it would effectively allow defendant's counsel to question the physicians outside the presence of plaintiffs' counsel. Such an authorization fails to properly balance the competing interests of the parties in the underlying case.
Under Tex.R.Evid. 509(b), confidential communications between a physician and patient are privileged and may not be disclosed. There are, however, eight exceptions to the privilege. Three of those exceptions *601 are relevant here: when proceedings are brought "by the patient against a physician," Tex.R.Evid. 509(d)(1); when a written consent to release privileged information is submitted, Tex.R.Evid. 509(d)(2); and when a communication or record otherwise privileged is "relevant to an issue of the physical, mental or emotional condition of a patient in any proceeding in which any party relies upon the condition as a part of the party's claim or defense," Tex.R.Evid. 509(d)(4).
In this case, the privilege was waived completely as to the defendant doctors and partially as to the treating doctors. To the extent, however, that the treating doctors had records or communications which were not relevant to the underlying suit, they remained privileged until the judge ordered their complete waiver. The question, then, is whether Judge Wood abused her discretion in ordering Mutter to execute a 509(d)(2) waiver of the privilege. We hold that she did.
Judge Wood's order should have been drawn more restrictively to respect whatever privileged communications or records might exist after suit was filed and to allow those privileges to be preserved. See Travelers Insurance Co. v. Woodard, 461 S.W.2d 493 (Tex.Civ.App.Tyler 1970, writ ref'd n.r.e.).
In Martinez v. Rutledge, 592 S.W.2d 398 (Tex.Civ.App.Dallas 1979, writ ref'd n.r. e.), the plaintiff refused to obey discovery orders and the court of appeals ruled against the plaintiff's claim of privilege. However, in so doing, the court instructed the plaintiff on what he should have done. The court noted that the plaintiff had not moved for a protective order and stated:
[H]e could have requested that the court require the examining or treating doctors not be questioned out of his presence.... We perceive no reason why plaintiff could not have incorporated into the authorization any reasonable safeguard he deemed necessary....
In this case, the Mutters did exactly what the Martinez court said they should. They moved for a protective order and included safeguards in an authorization they consented to sign. However, the trial judge nevertheless ordered them to sign the broader authorization waiving their physician-patient privilege absolutely.
Even in the interest of broad discovery directed at seeking the truth, no privilege should be totally ignored. We conditionally grant the Mutters' petition for writ of mandamus; the writ will issue only if the trial judge refuses to rescind her order.
CULVER, J., not sitting.
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635 A.2d 352 (1993)
In re Jeanne ROBINSON, Respondent.
A Member of the Bar of the District of Columbia Court of Appeals.
No. 92-SP-182.
District of Columbia Court of Appeals.
Submitted December 7, 1993.
Decided December 27, 1993.
Before FERREN and STEADMAN, Associate Judges, and MACK, Senior Judge.
PER CURIAM:
This disciplinary matter is before the court on the report and recommendation of the Board on Professional Responsibility ("Board"), to which respondent has filed no exception with us, that respondent be suspended for a period of thirty days, but staying the execution of suspension; be placed on unmonitored probation for one year, with two conditions of probation: that respondent not be found in contempt of court for failing to appear for conduct occurring since the date this discipline is imposed, and that respondent be ordered to complete a continuing legal education course on professional responsibility and so certify to the Board. The factual and procedural history of this matter are set forth in the Report and Recommendation of the Board, which we incorporate by reference and attach hereto as an appendix.
We review the Board's recommendation in accordance with D.C.Bar R. XI § 9(g) (1993): "[T]he Court shall accept the findings of fact made by the Board unless they are unsupported by substantial evidence of record, and shall adopt the recommended disposition of the Board unless to do so would foster a tendency toward inconsistent dispositions for comparable conduct or would otherwise be unwarranted." See In re Hutchinson, 534 A.2d 919, 924 (D.C.1987) (en banc). We conclude that the Board's findings are supported by substantial evidence in the record and that the Board's recommended sanction is warranted and is not inconsistent with previous dispositions for comparable conduct. See In re Evans, No. M-126-82 (D.C. Dec. 17, 1982) (thirty-day suspension appropriate for engaging in conduct that was prejudicial to the administration of justice by failing to appear for two scheduled court appearances).
Accordingly, to commence within thirty days from the date of this opinion, respondent shall be suspended from the practice of law for a period of thirty days, D.C.Bar R. XI, § 3(a)(2) (1993), but this suspension shall be stayed and instead respondent shall be placed on unmonitored probation for a period of one year, D.C.Bar R. XI, § 3(a)(7) (1993), conditioned upon the following terms:
(a) respondent shall not be found in contempt of court for failing to appear for conduct occurring since the date this discipline is imposed; and
(b) respondent shall complete a continuing legal education course on professional responsibility and so certify to the Board. See In re Spaulding, 635 A.2d 343, 344 (D.C.1993).
So ordered.
*353 APPENDIX
DISTRICT OF COLUMBIA COURT OF APPEALS BOARD ON PROFESSIONAL RESPONSIBILITY
In The Matter of
JEANNE ROBINSON,
Respondent.
Docket No. 125-92
REPORT AND RECOMMENDATION OF THE BOARD ON PROFESSIONAL RESPONSIBILITY
Background
Respondent was charged with two counts of violation of Rule 8.4(d) of the D.C. Rules of Professional Conduct (seriously interfering with the administration of justice), and violation of D.C.Bar Rule XI, § 2(b)(3) (failure and refusal to respond to an order of the Board on Professional Responsibility).
Hearing Committee Number Two heard the matter on October 6, 1992, and December 9, 1992. Respondent, although on notice, did not appear at the first session; she did appear and testify at the second session.
In a brief filed prior to the second session, Bar Counsel recommended that Respondent be suspended for a period of thirty days. However, in a supplemental brief, Bar Counsel, "in light of Respondent's appearance at the resumed hearing, her explanation of her misconduct and her statements of contrition," now recommends public reprimand by the Board as the appropriate sanction. The Hearing Committee found that Respondent violated the aforesaid rules, and also recommended that she be publicly reprimanded by the Board on Professional Responsibility.
Facts Pertaining to Violations
Respondent, a sole practitioner with an office in her residence, was admitted to practice in the District of Columbia on June 16, 1980. She testified that, as of the date of the hearing, she represented between thirty and fifty clients under the CJA program. (II, p. 55)[1]
The events giving rise to this matter related to Respondent's representation of a CJA client charged with unauthorized use of a motor vehicle. A status hearing in the case was scheduled for 9:00 a.m., December 6, 1991, before Judge Harriett Taylor. Respondent previously had discussed with Judge Taylor the possibility of entering a plea on behalf of her client.
Early in the morning of December 6, 1991, two of the Respondent's dogs were injured in a fight, one more severely than the other. Respondent informed Judge Taylor's clerk by telephone that she had a medical emergency, and would be unable to appear in Court at 9 a.m. She stated she would be at home at 11 o'clock, and provided the clerk with her telephone number. Respondent then took both dogs to a veterinarian, where they were treated for their injuries. She left one there, and brought the other back to her home.
At about 11:15 a.m., the clerk informed Respondent by telephone that she was required to appear in court at 2 o'clock that afternoon. Respondent apparently had difficulty locating a dog sitter, and did not leave her home until 2 o'clock, traveling by public transportation. She reached Judge Taylor's Court at 2:35 p.m., by which time the Court was in recess.
Judge Taylor issued an order requiring Respondent to show cause why she should not be held in contempt of court. Following a hearing, during which Respondent was given a full opportunity to explain her tardiness, Judge Taylor held her in contempt and imposed a $150 fine.
Respondent failed to pay the fine within the time limit prescribed, and was fined an additional $150, the second order providing also for incarceration for a period of ten days if the fine was not timely paid.
A copy of the complaint filed by Judge Taylor was sent by Bar Counsel to Respondent at her home address on March 25, 1992. Bar Counsel requested a response by no later than April 4, 1992. No response was received.
*354 Respondent telephoned the Office of Bar Counsel on April 7, 1992, and requested an extension until April 21 to respond. The request was granted; however, no response was received.
On April 30, 1992, Bar Counsel sent a letter to Respondent requesting a response to the complaint by May 5, 1992. No response was received.
Thereafter, Bar Counsel filed and served a motion to compel the filing of a response by Respondent. No opposition was filed, and no response to the motion was received from Respondent.
On June 4, 1992, at the request of Bar Counsel, the Board on Professional Responsibility issued an order which required Respondent to respond to the motion to compel within 10 days. The order was personally served on July 2, 1992. No response to the Board's order was received.
Discussion
As noted heretofore, Respondent failed to attend the first Committee hearing session. She appeared at the second session only after a subpoena compelling her appearance had been personally served.
Respondent made no effort to contest the charge that she violated Rule XI, § 2(b)(3) or the charge that her failure to cooperate with Bar Counsel violated Rule 8.4(d) of the D.C. Rules of Professional Responsibility, and it is clear that those charges are supported by clear and convincing evidence. However, Respondent largely blamed Judge Taylor for her failure to appear in Court as ordered, asserting that there is "some personal animus that is making it difficult for Judge Taylor and me to interact as judge and attorney." (II, p. 81) She also claimed that Judge Taylor's animus was both "selective" and "personal." (Id. at 61) Respondent requested that her claimed differences with Judge Taylor be arbitrated.
There is no justification whatever for Respondent's beliefs regarding Judge Taylor's attitude and feelings towards her. Judge Taylor, during the contempt hearing, listened patiently to a prolonged and irrelevant monologue without showing any animus, and without indicating any inclination to cut off Respondent's rambling and unpersuasive explanations.
The Court of Appeals has expressed itself in no uncertain terms with respect to the seriousness of an unexcused failure by an attorney to appear at a scheduled court proceeding, noting that such behavior causes "a loss of valuable time to the court, its personnel, and to every other participant in the trial...." Matter of Alexander, 466 A.2d 447, 450 (D.C.1983).
The Hearing Committee, after the first session, was inclined to recommend censure by the Court; however, following Respondent's appearance at the second session, recommended a public reprimand by the Board. The factors supporting the less severe sanction, as the Committee phrased it, are "Respondent's compelling explanation of her respect for the court and for the judicial system," and the fact that she had "real personal problems that made it difficult for her to be in court as ordered by Judge Taylor." (Comm.Rept., p. 7)
The Board does not believe Respondent's conduct reflected proper respect to the Court or to the judicial system, and does not agree that her personal problems were such as to justify her failure to appear in a timely manner as ordered by Judge Taylor. Nor has Respondent shown any contrition regarding her failure to obey Judge Taylor's order, as suggested by Bar Counsel. On the contrary, she "felt that [her] not showing up in the afternoon was reasonable." (II, p. 12) As noted before, she basically blames Judge Taylor for her misconduct. By placing her personal convenience and desires ahead of those of the Court and the disciplinary system, Respondent demonstrated a marked disrespect for the Court and the judicial system, and wasted a substantial amount of the time and resources of the Court and the Office of Bar Counsel.
The Board, in considering the question of sanction, is strongly influenced by the fact that this episode is only the latest, so far, in a series of similar actions engaged in by Respondent. It is apparent that some of her late or non-appearances in Court have not *355 resulted in sanctions. Thus, she testified that:
"If the question is, have they handled it the way that Judge Taylor did, no. Because if I don't make a hearing, I tend to go to the judge and in open court apologize, or go to the Court." (II, p. 55)
Moreover, Respondent has been informally admonished twice by Bar Counsel for similar misconduct.
The first letter of admonition is dated April 13, 1989, and was issued because of Respondent's failure to appear at court proceedings in two separate matters before Judge Taylor. In the first, she failed to appear on the date a trial was scheduled. In the second matter, Respondent telephoned Judge Taylor's chambers and asked that a trial date be postponed. She was told to file a written motion, but did not do so. Instead, without informing the Court, she left town to visit her sick mother, and failed to appear on the scheduled trial date. Respondent was found in contempt of court with respect to both failures to appear. Bar Counsel concluded that her action violated DR 1-102(A)(5) (conduct prejudicial to the administration of justice).
The second letter of admonition is dated February 7, 1990. Respondent failed to appear before Judge Nan R. Huhn at a status hearing. She was warned by Judge Huhn that "continued failure to appear in a timely manner would result in a finding of contempt and a referral to Bar Counsel." Later, in another matter, Respondent failed to appear on behalf of a client for a sentencing before Judge Huhn. Respondent was held in contempt, and fined $50. Bar Counsel concluded that Respondent had violated both DR 6-101(A)(3) (neglect of a legal matter) and DR 1-102(A)(5).
Thus, Respondent, prior to the instant case, has twice been found to have engaged in conduct prejudicial to the administration of justice, and has also been found to have neglected a client because of inexcusable failures to appear at previously scheduled court proceedings. Judging from her testimony at the hearing in this matter, Respondent does not appear to understand or appreciate the seriousness of her misconduct; in fact, she does not believe that her repeated failures to meet her court obligations even constituted misconduct.
The Board seriously considered recommending the imposition of an outright thirty-day suspension; however, it notes that Respondent is a sole practitioner, practicing out of her own home; a suspension obviously would have a drastic adverse financial impact on her. On the other hand, the Board does not believe that a public reprimand or even censure by the Court would be likely to deter Respondent from engaging in similar misconduct in the future.
Recommendation
Accordingly, the Board recommends that the District of Columbia Court of Appeals issue an order suspending Respondent for a period of thirty days, but staying the execution of suspension, and placing Respondent on unmonitored probation for one year, with the condition of probation being that Respondent refrain for the period of one year from engaging in any conduct violative of the D.C. Rules of Professional Conduct.
BOARD ON PROFESSIONAL RESPONSIBILITY
By: /s/
James C. McKay
Dated: June 2, 1993
All members of the Board on Professional Responsibility join in this report and recommendation, except Ms. Christensen, who did not participate.
NOTES
[1] Transcript of December 9, 1992, hearing.
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744 S.W.2d 274 (1987)
Daniel Joseph LUKEN, Jr., Appellant,
v.
The STATE of Texas, Appellee.
No. 01-86-00576-CR.
Court of Appeals of Texas, Houston (1st Dist.).
December 24, 1987.
Discretionary Review Granted (Appellant) April 27, 1988.
Discretionary Review Granted (State) April 27, 1988.
*275 Randy R. Holzapple, Houston, for appellant.
John B. Holmes, Jr., Harris County Dist. Atty., Carol M. Cameron, Carol Davies, Harris County Asst. Dist. Attys., Houston, for appellee.
Before EVANS, C.J., and COHEN and DUGGAN, JJ.
COHEN, Justice.
Our original opinion is withdrawn, and the following is substituted.
A jury found appellant guilty of felony burglary of a habitation with intent to commit sexual assault, and that he used a deadly weapon in the commission of this offense. The jury then found the enhancement paragraph allegation true, and assessed punishment of confinement for 75 years.
The appellant does not challenge the sufficiency of the evidence. Early on February 14, 1986, Susan Annette Franz, the complainant, was asleep in bed when appellant broke into her apartment and partially disrobed. Franz awoke to find appellant on top of her, kissing her face. She testified appellant told her "to lie there; it would [sic] be over shortly." Franz also testified that the appellant threatened her by brandishing a small, serrated knife, evidently taken from Franz' kitchen.
Shortly thereafter, the telephone rang and Franz seized the opportunity by telling appellant that if she failed to answer the telephone, the caller would suspect something was wrong. When appellant allowed her to answer the telephone, she screamed into the receiver for help. Unnerved, appellant fled from the apartment. Franz, hysterical, ran into the bedroom of her roommate, Iva Ellis. Together they screamed for help from the balcony of Ellis' bedroom until the police arrived.
Sometime after this incident, Franz identified appellant as the man who assaulted her, picking his picture from six photographs provided by the police. About a month after this, upon being arrested for an unrelated felony, appellant made a written confession, admitting that he committed the assault on Franz.
Appellant first contends that the trial court erred in submitting, over his objection, a jury issue on the use of a deadly weapon because he had no notice that the State would seek such an affirmative finding. Neither the indictment nor any special *276 plea by the State informed appellant that the State would seek a deadly weapon finding.
Our original opinion failed to take note of Ex parte Patterson, 740 S.W.2d 766 (Tex. Crim. App.1987). The Patterson court struck a deadly weapon finding from a murder judgment because neither the indictment nor any special plea requested a deadly weapon finding. The court granted post-conviction habeas corpus relief even though: (1) there was no objection at trial; (2) the issue was raised in a collateral, rather than a direct, attack; (3) there was no statement of facts or transcript before the court, but only the indictment and the judgment; and (4) the conviction was for murder by "stabbing with a knife."
The Patterson court held that the State must "plead" that it will seek an affirmative finding of deadly weapon use and may do so either in the indictment or by a special plea, as authorized by Tex.Code Crim.P.Ann. art. 27.01 (Vernon 1966). The fatal defect in Patterson was the submission of a special issue that had no support in the State's pleading. The court made no inquiry into harm, as in Almanza v. State, 686 S.W.2d 157 (Tex.Crim.App.1985), because "no amount of uncontroverted evidence" would remedy the fact that the defendant had no "prior indication" that the nature of the weapon used would be an issue bearing on his liberty. Ex parte Patterson, at 777.
Because it is undisputed in the instant case that neither the indictment nor any special plea alleged that appellant used a "deadly weapon," Patterson requires us to reform the judgment by striking the deadly weapon finding. We must do this even though the facts indicate that appellant was neither surprised nor harmed.
Appellant's pre-trial motion for discovery sought disclosure of weapons he allegedly used in the commission of the offense, and he does not claim that he never obtained such discovery. When the trial court overruled appellant's objection to the special issue, he did not move for a continuance, or seek to reopen in order to produce witnesses to answer the charge that he used a deadly weapon.
The record reflects that the victim testified about the knife in a pretrial hearing; that the State's opening statement declared its intent to prove the use of a knife in the offense; that the victim testified about the knife at the guilt stage; and that a police officer testified that the knife was a deadly weapon. Appellant did not object to this evidence based on lack of notice. Appellant does not assert that the State told him that it would not seek a deadly weapon finding.
Finally, appellant did not move for a new trial based upon newly discovered witnesses, who, because of surprise, were unavailable to testify at trial concerning the issue of use of a deadly weapon. But for Ex parte Patterson, we would conclude, as we originally did, that under Almanza and Adams v. State, 707 S.W.2d 900 (Tex.Crim. App.1986), as well as Tex.Rule App.P. 81(b)(2), no reversible error occurred.
In Ex parte Patterson, the court has apparently recognized a new form of fundamental error requiring relief without objection, without harm, and without regard to the usual burden of proof in a collateral attack, which requires the applicant to produce a statement of facts and transcript to demonstrate that harm occurred. Indeed, the decision is based partly on Patterson's undisputed testimony at his post-conviction habeas hearing, stating that he first learned an affirmative finding was possible when the jury charge was read, in response to which his lawyer told him, "Everything was alright, not to worry about it, so (he) didn't." Ex parte Patterson, at 774, note 6.
This testimony indicates to us that Patterson's lawyer was not surprised, thus indicating that he had notice and was not hampered in his ability to defend. Nevertheless, Patterson apparently holds that notice to the defendant, personally, is required. Notice to the lawyer, the person in charge of preparing the defense and explaining all proceedings to the defendant, is apparently insufficient. Moreover, by excusing the requirement of a transcript and *277 statement of facts, Patterson renders irrelevant any evidence therein reflecting notice or lack of harm. Thus, surprise and harm inevitably are found.
While we are bound by Patterson's holding that the State must give written notice that it will seek a deadly weapon finding, we regret the conclusion that the absence of this notice is automatic reversible error, without an objection or an appellate record, and even when the charge is murder by stabbing with a knife.
The first point of error is sustained.
Points of error two through five also challenge the deadly weapon finding and thus are moot.
Point of error six asserts that the trial court erred in failing to grant a mistrial because of jury argument that injected the prosecutor's personal opinion concerning appellant's guilt. The prosecutor argued:
And the legal definitions in this case are pretty much, I think, what your common everyday sense agrees with. Certainly you follow the legal definitions but just to go through those elements set forth in the charge paragraph, the evidence is so clear there really remains no objection in this case.
The trial court sustained an objection to this argument and instructed the jury to disregard the statement, but refused to grant a mistrial.
The purpose of closing argument is to facilitate the jury in properly analyzing the evidence presented at trial in order that it may arrive at a just and reasonable conclusion based on merely the evidence introduced, and not on any fact not admitted into evidence. Campbell v. State, 610 S.W.2d 754, 756 (Tex.Crim.App.1980). To be permissible, jury argument must be within one of the following four general areas: 1) summation of the evidence; 2) reasonable deduction of the evidence; 3) answer to argument of opposing counsel; and 4) plea for law enforcement. Id.
The prosecutor stated her opinion on the sum of the evidence here, viz., that the evidence was clear. It is well-established that a prosecutor may argue her opinions concerning issues in the case so long as the opinions are based on the evidence in the record and do not constitute unsworn testimony. McKay v. State, 707 S.W.2d 23, 27 (Tex.Crim.App.1985).
However, if we were to find that the prosecution's argument was improper, the conviction would not be set aside automatically. When an argument exceeds the permissible bounds of the above-listed four areas, it will not constitute reversible error unless, in light of the record as a whole, the argument is extreme or manifestly improper, violative of a mandatory statute, or injects new facts harmful to the accused into the trial proceeding. Mathews v. State, 635 S.W.2d 532, 539 (Tex.Crim.App. 1982).
The prosecution's argument neither violated a mandatory statute, nor injected new facts. Nor is the argument manifestly improper or extreme. The evidence in this case was substantial. Susan Franz testified that she clearly saw appellant's face during the attempted rape, and she identified appellant from a series of photographs provided by the police. Appellant confessed to the police, giving detailed information of how he travelled to the complainant's apartment (on a bicycle); where her apartment was (on Threadneedle); why he chose her apartment (he knew she was there because he could see her through the bathroom window); how he entered the apartment (climbing over a fence in the backyard and then jimmying the sliding glass door which was held shut by the placement of a broom stick at its base); what he left behind (his pants and wallet); and how he escaped (by running down the bayou nearby, leaving the bicycle behind). This confession was made about a month after the attempted rape occurred and was consistent with the physical evidence and the police investigation. The prosecutor's opinion on the clarity of the evidence was accurate.
Point of error six is overruled.
Appellant next argues that the court erred in overruling his objection to another *278 jury argument that injected the prosecutor's personal opinion of his guilt.
The argument was:
The only two things left that I would expect the defense counsel to attempt to argue to you are whether we have presented evidence sufficient to convince you beyond a reasonable doubt that this man is the man who broke into Susan Franz' bedroom that night. And what his intent was when he went into that house. The evidence is clear, its overwhelming.
(Emphasis added.)
For the reasons stated in overruling point of error six, we hold that this argument was a proper summation of the evidence.
Point of error seven is overruled.
Point of error eight asserts that the trial court erred in denying a mistrial due to jury argument commenting on his failure to testify. The argument was:
Tattoos, well what we know is that on July 22, 1986, Daniel Joseph Luken has a few blue tattoos on his arm. We don't really know whether he had tattoos on February 14th, big deal.
The appellant did not testify in the jury's presence during the guilt-innocence stage of the trial.
An indirect allusion to a defendant's failure to testify does not require reversal. Cannon v. State, 691 S.W.2d 664, 677 (Tex.Crim.App. 1985), cert. denied, 474 U.S. 1110, 106 S. Ct. 897, 88 L. Ed. 2d 931 (1986). For an indirect comment to constitute reversible error, it must call for a denial of an assertion of fact or contradictory evidence that only the defendant is in a position to offer. Losado v. State, 721 S.W.2d 305, 313 (Tex.Crim.App.1986).
The State's argument was not limited to facts that only appellant could have refuted. Testimony by the person who placed these tattoos on the defendant or by appellant's acquaintances could have established whether the tattoos were present before the offense occurred.
Point of error eight is overruled.
In points of error nine and ten, appellant argues that Tex.Code Crim.P.Ann. art. 37.07, § 4 (Vernon Supp.1987), is unconstitutional and that the court erroneously overruled his objection to the jury instruction mandated by this statute.
In Rose v. State, No. 193-87 (Tex. Crim.App., Nov. 12, 1987, en banc) (not yet reported), the court held the statute unconstitutional but required a showing of harm to justify reversal. Id. at 67. Six judges in Rose agreed that Almanza v. State, 686 S.W.2d at 157, provides the correct standard of review.
At the penalty stage, three acquaintances of appellant testified that his reputation was bad. The prosecution proved that appellant previously had been convicted of burglary of a habitation, received probation, violated probation, and served a term in prison. Appellant points to no specific evidence of harm in the record, but asserts that the jury probably increased his sentence due to the parole instruction. We find no evidence of harm.
Points of error nine and ten are overruled.
Appellant's final contention is that his confession was improperly induced.
In a Jackson v. Denno hearing, the trial court found that the two written statements were voluntary. The standard of review of these findings is abuse of discretion. Sinegal v. State, 582 S.W.2d 135, 137 (Tex.Crim.App.1979). If supported by the record, the findings will not be disturbed on appeal. Burdine v. State 719 S.W.2d 309, 318 (Tex.Crim.App.1986), cert. denied, ___ U.S. ___, 107 S. Ct. 1590, 94 L. Ed. 2d 779 (1987).
The court found that the officers warned appellant several times before appellant's first statement; that the officers took him before the magistrate; that before his second statement, officers warned him again; that no one threatened the appellant, induced him to confess, or physically abused him; that appellant was in good health before his statements were given; and that no one made any promises to appellant regarding his confession. The *279 findings were supported by testimony of police witnesses. The trial court did not abuse its discretion.
The eleventh point of error is overruled.
The judgment of the trial court is reformed so that the phrase "affirmative finding of a deadly weapon" is deleted. In all other respects, the judgment of the trial court is affirmed.
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146 B.R. 482 (1992)
In re Vern Odean LAING, M.D., Debtor.
Lawrence A.G. JOHNSON and Don Bradshaw, Plaintiffs,
v.
Vern O. LAING, Defendant.
Bankruptcy No. 92-00612-C, Adv. No. 92-0056-C.
United States Bankruptcy Court, N.D. Oklahoma.
October 22, 1992.
Lawrence A.G. Johnson, Tulsa, Okl., for plaintiffs.
Kenneth G.M. Mather, Tulsa, Okl., for defendant.
MEMORANDUM OPINION
STEPHEN J. COVEY, Chief Judge.
This matter comes before the Court upon the Cross Motions for Summary Judgment filed by Lawrence A.G. Johnson and Don Bradshaw ("Plaintiffs") and the Defendant, Vern Odean Laing, ("Debtor") in regard to the dischargeability of Plaintiffs' debt. The parties have filed numerous briefs in support of their respective positions. Upon careful consideration of the arguments and the authorities presented, the Court finds as follows:
Procedural History
Debtor has filed four petitions in bankruptcy. The first was a Chapter 7 filed in 1984. Debtor was granted a discharge in this bankruptcy. The second was a Chapter 13 filed in 1988, which Debtor dismissed and in which no discharge was granted. The third was a Chapter 11 filed in 1988, in which a plan was confirmed. The Plan specifically provided that "the Debtor shall not be discharged of any of his pre-petition debts." This case was converted to Chapter 7 in February 1992, and remains open. No discharge will be granted because the 1988 Chapter 11 was filed within six years of Debtor's 1984 discharge and because Debtor's confirmed plan waived a discharge. The fourth and present bankruptcy was a Chapter 7 filed on December 11, 1991, in Dallas, Texas. The case was subsequently transferred to this venue on February *483 19, 1992, and given a 1992 case number.
Debtor will be granted a discharge in the present Chapter 7 case because it was filed more than six years after his previous discharge in 1984 and no objections to discharge have been filed within the allotted time. The only question before the Court is whether the debt of Plaintiffs is a non-dischargeable debt to be excepted from discharge.
Factual Background
The trouble between the parties and the debt to the Plaintiffs arose in connection with their co-ownership interests in an airplane. This Court, the state court, the United States District Court for the Northern District of Oklahoma, and the Tenth Circuit Court of Appeals have examined the facts and circumstances surrounding this controversy. This Court will not discuss those facts and circumstances again.[1]
During the 1988 Chapter 11, this Court determined the amount of Plaintiffs' claim to be $29,666.00.[2] On September 27, 1989, the Court held a hearing on Debtor's Fourth Amended Chapter 11 Plan. The Plaintiffs objected to confirmation of Debtor's plan because of the treatment of their claim. At that time, Debtor agreed in open court that if the Plaintiffs would accept the plan then Debtor would agree that Plaintiffs' debt was nondischargeable at the present time and in any future Chapter 7. Based on this agreement, the Plaintiffs withdrew their objections to the plan. Debtor filed his Fifth Amended Chapter 11 Plan on September 28, 1989. The Plaintiffs' claim was dealt with as follows:
As to the claim of (Plaintiffs), in open court the said creditors offered to withdraw all objections to the plan provided the Debtor waive a discharge as to the claim of (Plaintiffs) in any future bankruptcy pursuant to 11 U.S.C. § 727(a)(10). The Court fully advised the Debtor that he had an unqualified right to file a Chapter 7 bankruptcy when eligible and further advised the Debtor as to the consequences of waiving the discharge of said debt and his agreement in open court not to seek the discharge of said debt in any future bankruptcy, notwithstanding the pending appeal by (Plaintiffs) regarding the partial denial of their claim, the Court, in approving said plan, makes the specific finding that the Debtor agreed in open court that said debt, in whatsoever amount it be [sic] ultimately be determined by the appeals court, is not a dischargeable debt, and the Debtor specifically waives any discharge as to the same, and the Court specifically finds that said agreement and waiver was a conscious and informed judgment by the Debtor who was fully informed of the consequences of waiver of discharge of the (Plaintiffs) debt in any future bankruptcy that may be filed by the Debtor, and said debt, in the present amount of $29,666.00 or as may be ultimately determined by the appellate courts, is hereby declared to be non-dischargeable.[3]
In the Order Confirming Plan, this Court determined that the Fifth Amended Chapter 11 Plan complied with § 1129(a) of the Bankruptcy Code and should be confirmed. The Order contained the following language in regard to the Plaintiffs' claim:
[I]f the Debtor does file for relief under Chapter 7 of the Bankruptcy Code prior to the completion of all payments set out in the Debtor's Fifth Amended Plan and prior to the payment in full of the finally allowed claim of [Plaintiffs], any remaining claim of [Plaintiffs] is hereby declared to be nondischargeable all pursuant to the specific terms set out in the Debtor's Fifth Amended Plan.
Subsequent to confirmation, Debtor encountered difficulties which made it impossible *484 to consummate his plan. The first occurred when the Tenth Circuit increased the amount of Plaintiffs' claim to $65,550.00. The second occurred upon entry of a divorce decree in state court, requiring Debtor to pay a large sum of monthly alimony.[4] As indicated above, Debtor's Chapter 11 case has been converted to Chapter 7.
On March 2, 1992, the Plaintiffs filed this adversary complaint, within the 1992 Chapter 7, objecting to the dischargeability of their debt on numerous grounds. The complaint requests that the debt be declared nondischargeable under § 523(a)(4) and (6) of the Bankruptcy Code, and/or on the basis of judicial estoppel, collateral estoppel, res judicata, accord and satisfaction, compromise and settlement, waiver, due to Debtor's treatment of their claim in the confirmed Chapter 11 plan. As previously stated, Debtor's Fifth Amended Chapter 11 Plan expressly declared the Plaintiffs' debt to be nondischargeable and waived its discharge in any subsequent bankruptcy.
Arguments and Analysis
The issue before the Court is whether the provisions of the Chapter 11 Plan and Order Confirming Plan in regard to the nondischargeability of Plaintiffs' debt are binding on Debtor in a subsequent bankruptcy. This question requires the Court to consider the effect of a confirmed plan.
Section 1141 of the Bankruptcy Code is entitled "Effect of confirmation." The effect of confirmation under the plain language of § 1141(a) is to bind all parties to the terms of the plan.[5] It binds not only creditors but debtors as well. In essence, a confirmed plan is a binding contract and is res judicata as to all issues decided. Stoll v. Gottlieb, 305 U.S. 165, 59 S. Ct. 134, 83 L. Ed. 104 (1938); Paul v. Monts, 906 F.2d 1468 (10th Cir.1990) (holding that confirmation of a Chapter 11 plan creates a binding contract which may be enforced in state court). This is true even if the plan is not consummated and the Chapter 11 is converted to Chapter 7. See In re Blanton Smith Corp., 81 B.R. 440 (Bankr. M.D.Tenn.1987). Once a plan is confirmed, neither a debtor nor a creditor may assert rights that are inconsistent with its provisions. In re Riverside Nursing Home, 137 B.R. 134 (Bankr.S.D.N.Y.1992). See also Republic Supply Company v. Shoaf, 815 F.2d 1046 (5th Cir.1987); In re Stratford of Texas, Inc., 635 F.2d 365 (5th Cir.1981); In re Dooley, 116 B.R. 573 (Bankr.S.D.Ohio 1990); In re Moussa, 95 B.R. 449 (Bankr. N.D.Tex.1989); In re Astroglass Boat Co., Inc., 32 B.R. 538 (Bankr.M.D.Tenn.1983).
In a thorough discussion of the binding effect of a confirmed plan, the Court in In re Blanton Smith Corp., supra stated:
[T]he Supreme Court [has] determined that the order confirming a plan of reorganization is res judicata. Stoll v. Gottlieb, 305 U.S. 165, 59 S. Ct. 134, 83 L. Ed. 104 (1938), reh den'd, 305 U.S. 675, 59 S. Ct. 250, 83 L. Ed. 437 (1938). In subsequent decisions, the courts of other circuits, relying on Stoll, have held a confirmation order to be equivalent to a judgment. In Miller v. Meinhard-Commercial Corporation, 462 F.2d 358, 360 (5th Cir.1972), the Fifth Circuit stated:
An arrangement confirmed by a bankruptcy court has the effect of a judgment rendered by a district court, and any attempt by the parties or those in privity with them to relitigate any of the matters that were raised or could have been raised therein is barred under *485 the doctrine res judicata. (citations omitted).
81 B.R. at 442.
The binding effect of a confirmed plan extends to provisions that are later determined to be inconsistent with bankruptcy law. As the court stated in Republic Supply Company v. Shoaf, supra:
Regardless of whether that provision is inconsistent with the bankruptcy laws or within the authority of the bankruptcy court, it is nonetheless included in the Plan, which was confirmed by the bankruptcy court without objection and was not appealed.
815 F.2d at 1050.
Additionally, § 1141(d)(1) of the Bankruptcy Code provides that a confirmed Chapter 11 plan works to discharge a debtor from all pre-confirmation debts "[e]xcept as otherwise provided in . . . the plan, or in the order confirming the plan. . . . " (Emphasis added). Therefore, the Bankruptcy Code expressly contemplates that a Chapter 11 plan may provide for special treatment of a claim relative to its dischargeability by insertion of a specific provision in the plan. In this case, Debtor's Fifth Plan specifically provides that the Plaintiffs' claim "is not a dischargeable debt, and Debtor specifically waives any discharge as to the same[.]" The plan was confirmed only after Debtor was fully informed of the consequences of inserting of such a provision and Debtor expressly agreed to its inclusion.
The Court recognizes that the provision contained in this plan is unusual and creates a harsh result. However, under the Bankruptcy Code both Debtor and his creditors are bound by the provisions of a confirmed plan even in a subsequent bankruptcy. Debtor expressly agreed to the terms of this plan which was confirmed and is bound thereby.
This Court need not address the Plaintiffs' arguments that Debtor is bound by the terms of the Plan on the basis of res judicata, judicial or collateral estoppel or waiver because § 1141 of the Bankruptcy Code in effect codifies these principles.
Debtor raises three principal arguments as to why he should not be bound by the terms of the Fifth Amended Chapter 11 Plan or the Order Confirming Plan in this subsequent bankruptcy. First, Debtor asserts that § 727(a)(10) of the Bankruptcy Code, which was referred to in the paragraph of the confirmed plan dealing with the nondischargeability of Plaintiffs' debt, is inappropriate and therefore renders the entire paragraph void and unenforceable. It is true that § 727(a)(10) does not apply in a Chapter 11 or to the discharge of an individual debt.[6] However, aside from any reference to § 727(a)(10), it is clear from the terms of the Plan that Debtor intended to declare the Plaintiffs' debt nondischargeable. Therefore, any improper reference to § 727(a)(10) does not render the provisions concerning nondischargeability unenforceable.
Debtor also argues that he cannot agree to waive a discharge in a subsequent bankruptcy. This is the general rule. However, the plan in this case does much more than waive a discharge in the future. It provides that the Plaintiffs' debt "is not a dischargeable debt." Therefore, Debtor did not just waive the dischargeability of the Plaintiffs' debt in a future bankruptcy but declared the Plaintiffs' debt presently to be nondischargeable.
Lastly, Debtor points out that no adversary proceeding requesting the nondischargeability of Plaintiffs' debt was filed and therefore there has been no determination that Plaintiffs' debt is nondischargeable. The Court rejects this argument because of the express language in § 1141 of the Bankruptcy Code. Ordinarily, in order for a debt to be held nondischargeable, the creditor must file an adversary proceeding and prove that its debt is nondischargeable under § 523 of the Bankruptcy Code. However, § 1141(d) contemplates that the plan may provide an alternative arrangement. In this case, Debtor agreed that the *486 Plaintiffs' debt was nondischargeable. Debtor's intention was explicitly set forth in the plan. Therefore, there was no reason for the Plaintiffs to file an adversary complaint to determine the nondischargeability of their claim. The Plaintiffs relied on the provisions of the plan which the Court holds they were entitled to do.[7]
A separate order consistent with this Memorandum Opinion shall be entered.
NOTES
[1] See this Court's decision dated June 16, 1989, which allowed the Plaintiffs' claim.
[2] The district court affirmed this decision, but the Tenth Circuit Court of Appeals reversed and determined the amount of Plaintiffs' claim to be $65,550.42.
[3] It should be noted that at the time of confirmation of Debtor's Fifth Amended Chapter 11 Plan, the Court of Appeals had not yet increased the amount of Plaintiffs' claim from $29,666.00 to $65,550.42.
[4] This Court recently held in another adversary arising within this 1992 Chapter 7 that the monthly payments ordered to be paid Debtor's ex-wife represented alimony and were nondischargeable, except to the extent Debtor was required to make payments on his own car.
[5] Section 1141(a) states:
(a) Except as provided in subsections (d)(2) and (d)(3) of this section, the provisions of a confirmed plan bind the debtor, any entity issuing securities under the plan, any entity acquiring property under the plan, and any creditor, equity security holder, or general partner in the debtor, whether or not the claim or interest of such creditor, equity security holder, or general partner is impaired under the plan and whether or not such creditor, equity security holder, or general partner has accepted the plan.
[6] Under § 727(a)(10) of the Bankruptcy Code: "The Court shall grant the debtor a discharge, unless . . . the court approves a written waiver of discharge executed by the debtor after the order for relief under this chapter." (Emphasis added).
[7] Even though there was no adversary proceeding filed, there was a factual basis for the Debtor agreeing that the Plaintiffs' claim was nondischargeable: In the order allowing the Plaintiffs' claim, the Court found that Debtor had breached a fiduciary duty to the Plaintiffs. Under § 523(a)(4) of the Bankruptcy Code such finding would render the debt nondischargeable.
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901 F. Supp. 597 (1995)
Vincent BOWLER, Petitioner,
v.
U.S. IMMIGRATION AND NATURALIZATION SERVICE, Respondent.
No. 94 M-54.
United States District Court, S.D. New York.
September 12, 1995.
*598 Mary Jo White, United States Attorney, Southern District of New York, New York City, F. James Loprest, Jr., Special Assistant United States Attorney, of counsel, for respondent.
Paul Freedman, New York City, for petitioner.
Memorandum Opinion and Order
SOTOMAYOR, District Judge.
At the invitation of the Court, respondent, the United States Attorney's Office for the Southern District of New York, has moved for sanctions against petitioner Vincent Bowler's attorney, Paul I. Freedman ("Freedman"), pursuant to Federal Rule of Civil Procedure 11 ("Rule 11"). Freedman, in turn, moves for Rule 11 sanctions based on respondent's filing of the instant motion. For the reasons discussed below, petitioner's and respondent's Rule 11 motions are denied. I do, however, impose sanctions against Freedman pursuant to 28 U.S.C. § 1927 ("§ 1927").
*599 Background
Vincent Bowler ("Bowler"), a citizen and national of Jamaica, entered the United States on a six month tourist visa in November 1983. Since that time, Bowler has compiled an extensive criminal record, including possession of marijuana and a loaded firearm. See Record File Deportation Proceedings, certified September 9, 1994 (hereinafter "Deportation Record"), at 88-90, attached as Ex. 5 to Declaration of F. James Loprest, Jr., sworn to November 30, 1994 (hereinafter "Loprest Decl."). On March 18, 1993, the United States Immigration and Naturalization Service ("INS") served an administrative order to show cause on Bowler, who was serving a sentence on a New York State weapons charge at the Collins Correctional Facility in Helmuth, New York, why he should not be deported. Id. In the order to show cause, the INS alleged that Bowler was deportable because he had overstayed his visa and due to his criminal record pursuant to 8 U.S.C. § 1251, subsections (a)(2)(B)(i) and (a)(2)(C). Id.
In late 1993 or early 1994, Bowler was taken into federal custody and transferred to the Federal Correctional Institutional at Oakdale, Louisiana ("Oakdale"). On April 7, 1994, Bowler was notified that his deportation hearing would be held at Oakdale on May 10, 1994. At the May 10 hearing, Immigration Judge Charles A. Wiegand, III (the "Immigration Judge") advised Bowler about the nature of the proceeding, advised him of his right to counsel, and gave him a list of pro bono counsel in the area. Bowler requested an adjournment of the proceedings so that he could try to retain a private attorney. See Hearing Transcripts, attached as Ex. 6 to Loprest Decl. (hereinafter "Hearing Trans."), at 2-3. The Immigration Judge granted Bowler's request, and set a new hearing date for May 20, 1994. Bowler was handed a notice that contained the new hearing date. Id.
At the May 20 hearing, Bowler informed the Immigration Judge that he was still making arrangements to retain an attorney, and that he was trying to obtain a bond so that he could be released from detention. Id. at 4. The Immigration Judge delayed the proceedings until June 14, 1994. Id. at 5. The Immigration Judge advised Bowler that if he was released on bond before the June 14 hearing, Bowler would still be obliged to be present for that hearing "unless you [Bowler] receive notice from my office that the [June 14] hearing has either been postponed or that the venue of the proceeding is changed to some other location." Id. at 5.
On May 23, 1994, the INS granted Bowler's request for release on a $15,000 bond. See Loprest Decl. at ¶ 7. Thereafter, Bowler apparently left Louisiana for New York. Bowler did not appear at the June 14 hearing. At that hearing, the Immigration Judge noted that Bowler had not contacted the Court to explain his absence, and conducted a hearing in absentia pursuant to 8 U.S.C. § 1252b, which empowers immigration judges to deport aliens who fail to show exceptional circumstances for failing to appear at a scheduled hearing. See Hearing Trans. at 5. The government produced evidence concerning Bowler's alienage, entry into the United States, and criminal history. Id. at 6. Finding the government's evidence sufficient to support a deportation order, and in light of Bowler's failure to either appear or to apply for any form of relief, the Court ordered Bowler deported to Jamaica pursuant to 8 U.S.C. § 1252b(c)(1).
On June 21, 1994, Bowler, through his recently retained counsel Freedman, filed a motion to reopen his deportation proceedings with the INS's District Office in New York. See Deportation Record at 38. In the motion, Freedman affirmed under penalty of perjury that he meant to file a motion to change the venue of Bowler's deportation hearing prior to the final hearing held on June 14, but failed to do so because his office was "backed up" with other cases and a new employee made a mistake. Id. at 39 and 41. Freedman indicated that he wished to file an application for political asylum, although he did not specify the grounds for such an application. Id. at 40. Attached to the motion to reopen was an affidavit executed by Bowler, in which he states that he retained Freedman on June 6, 1994 and that he did not show up to the June 14 hearing because Freedman told him that the hearing would *600 be rescheduled. Id. at 42. The INS opposed the motion to reopen, and forwarded it to the Immigration Judge in Oakdale.
On June 27, 1994, Bowler's deportation order became final, because he had failed to file a notice of appeal to the Board of Immigration Appeals. See Loprest Decl. at ¶ 9; 8 C.F.R. §§ 3.38-3.39 (alien has 13 days to file notice of appeal from Immigration Judge's decision when notice of decision provided by mail, after which time decision of Immigration Judge becomes final). On July 14, the Immigration Judge in Oakdale denied Bowler's motion to reopen the deportation proceedings because Bowler had failed to show any exceptional circumstances for failing to appear as defined by 8 U.S.C. § 1252b(f)(2). See id. at 30-31.
On the basis of the June 14 order of deportation, the INS ordered Bowler to surrender for deportation at Oakdale on July 15, 1994. When Bowler did not surrender, the brokerage firm that posted Bowler's $15,000 bond hired Fugitive Task Force, Inc. ("FTF") to locate Bowler. See Affidavit of John Mancini, sworn to September 9, 1994 ("Mancini Aff."), at ¶ 1.
On August 12, Freedman filed another motion to reopen the deportation proceedings with the INS District Office in New York. Again, Freedman indicated that he wished to file an application for political asylum, but did not specify the grounds for such an application. See Deportation Record at 20. The INS forwarded this motion and its opposition papers to the Immigration Judge in Oakdale.
On August 19, 1994, Freedman filed an Order to Show Cause in this Court (the "August 19 Order to Show Cause") seeking to stay the deportation and the activities of FTF. Sitting in Part I, this Court's emergency part, Judge Loretta A. Preska denied the order to show cause without prejudice, inter alia, because Freedman had failed to include a memorandum of law setting forth the jurisdictional basis for the action. See Order to Show Cause, dated August 19, 1994.
On Tuesday August 23, 1994, John Mancini ("Mancini"), a FTF bail enforcement agent, was informed by the Bronx County Probation Office that Bowler was present in that office. Mancini Aff. at ¶ 3. Mancini went to the Probation Office sometime between 4:00 and 4:30 pm on August 23, and took custody of Bowler. Id. at 4; see also Affidavit of Michael Siegel, sworn to September 9, 1994 ("Siegel Aff."), at ¶ 4. Mancini made arrangements to transport Bowler to the Oakdale and then brought Bowler to a hotel in Clifton, New Jersey. At 2:00 am on August 24, Mancini and Bowler were joined at the hotel by FTF bail enforcement agent Michael Siegel ("Siegel"). Siegel Decl. at ¶ 4. At about 6:20 am on August 24, Siegel, Mancini, and Bowler boarded a flight to Dallas, Texas. Id. at ¶ 5. From Dallas, the trio caught a flight to Alexandria, Louisiana, and then drove to Oakdale where INS officers took custody of Bowler at about 1:00 pm. Mancini Aff. at ¶ 7. From the moment of his apprehension in the Bronx to his arrival in Oakdale, Bowler was in the constant custody of Mancini and Siegel. Siegel Aff. at ¶ 7.
On August 24, Freedman refiled the Order to Show Cause in this Court (the "August 24 Order to Show Cause"). At that time, I was the Part I judge. Attached to both the August 19 and the August 24 Orders to Show Cause were letters from FTF to Freedman. In one of the letters, dated August 16, 1994, Siegel stated:
I have been waiting for you to return my phone calls. It appears that you are not going to follow thru [sic] with your promises. We have been trying to work this out with your office since the end of last week, but when promises are not kept ... then we will have to execute the actions that are within our legal rights ... Please be advised that unless this matter is resolved today, Mr. Bowler will be apprehended and transported back to Oakdale La.
See Letter of Michael Siegel, attached to August 19 Order to Show Cause at Ex. A; August 24 Order to Show Cause at 9 (hereinafter the "Siegel Letter").[1]
*601 In the accompanying Memorandum of Law, Freedman represented that this Court had jurisdiction because "the relief sought is not a review of a final order" as Bowler simply sought review of a denial of a stay of deportation while his motion to reopen was still pending. See Memorandum of Law, attached to Loprest Decl. at Ex. 1. At a hearing held the same day the Order to Show Cause was filed, August 24, Freedman stated that Bowler's deportation hearing was supposed to have been conducted telephonically. Freedman continued:
[i]n this situation, the [immigration] judge apparently contacted our office. A member of our firm contacted the judge, because Mr. Bowler was in our office. Let me state for the record, Mr. Bowler's affidavit I believe was under the original order to show cause. He was in our office. He appeared in our office.
We attempted to contact the judge. The judge has one phone in Louisiana, not nine lines, one phone. The judge was on trying to reach either us or doing another hearing. We don't know. We attempted to call the judge four times in an attempt to request a continuance because our office was engaged in [another matter] ...
We couldn't get through to the court. The judge in that situation tried us. We tried the judge ...
The petitioner in this proceeding did not fail to appear at our office. That's where the hearing was taking place. The judge issued him an order of deportation in absentia. Our office did not file an appeal within the 10-day required filing period because of the fact that the filing of the appeal would have brought this case to the Board of Immigration Appeals in Virginia. It would have wasted months of time. Instead, we filed a motion to reopen.
See August 24, 1994 Hearing Transcript at 5-6, attached as Ex. 2 to Loprest Decl. Addressing whether jurisdiction was proper in this Court, Freedman maintained:
we submitted a memorandum of law which shows this is a nonfinal order ... The reason why [Y]our Honor has jurisdiction is on three simple bases. One, he [Bowler] was detained in New York when he went to his probation officer. His probation officer acted as an agent of the Immigration and Naturalization Service and held him, due to the fact that he did not have an order staying deportation yesterday ... the probation officer then contacted the Fugitive Task Force and they came from New Jersey to take him. When the order to show cause was filed, he [Bowler] was still in New York. We don't know where he is now.
Your court has jurisdiction because he had no violation of probation. He was held on an immigration violation, failing to appear in Louisiana. INS has a district director who sends their agents from 26 Federal Plaza. No one from Louisiana is here. If there was an agent from Louisiana, [Y]our Honor, the government might be able to argue this is a Louisiana jurisdiction case.
Id. at 7, 9-10. Relying on Freedman's representations, I
accept[ed] Mr. Freedman's argument that to the extent that he has surrendered himself here in New York to probation officers ... that his body was taken here, that I have his body.
Id. at 15. I then enjoined the government from executing Bowler's order of deportation and scheduled another hearing for August 30, 1994. Id. at 16-17. Specifically, I instructed the parties that I would
stay his [Bowler's] deportation only so long as until the 30th to give me time to look at this, and I want more papers from you in the interim.
Secondly, Mr. Freedman, give me something in writing that makes sense. I am only staying this until the 30th and/or until a decision is rendered on the motion for reopening [before the Immigration Judge]. If it's denied in this interim, you have a *602 final order and you may go to the Court of Appeals. I am assuming that I have jurisdiction only so long as that has not been entered. I am not giving you an indefinite stay.
Id. at 14.
On August 26, 1994 at 10:24 a.m., the following message was left on FTF's answering machine:
My name is Irwin Berowitz. I'm calling from the law office of Paul Freedman, we're attorneys for Vincent Bowler. Two days ago a Federal District Court Judge ordered that Vincent Bowler not be removed from the greater New York Metropolitan area and that his deportation be stayed pending a full hearing before her, Judge Sonia Sotomayor, in Foley Square. We now understand that Vincent Bowler has been removed from New Jersey. I suggest that you call Judge Sotomayor's chambers as quickly as possible before she cites you for being in contempt of her order. Her telephone number is 791- [the message cut off at that point].
See Mancini Decl. at ¶ 9.
Just prior to the August 30 hearing, the government submitted a letter to the court noting, inter alia, that petitioner had not started a valid proceeding before this Court by filing either a writ of habeas corpus or a complaint. The government also alleged, with legal citations, that if petitioner's August 24 application was intended to be a writ, the Court lacked jurisdiction because Bowler had been taken out of New York the night before the service of the order to show cause application. Finally, the government maintained that the court had no jurisdiction because petitioner had failed to exhaust his administrative remedies by failing to seek a deportation stay from the INS District Director in either Louisiana or New York.
At the August 30th hearing, I again expressed concern with the status of the motion to reopen before the INS District Director and whether I had jurisdiction over this matter.
That letter [the Government's August 30 letter], yes, is not what I want, Mr. Loprest. I want an actual statement. Where did they [FTF] pick him [Bowler] up, when and where, and from whom, and under what circumstances....
And I want to know whether that act had occurred and where this man was physically on what dates. Because even if the apprehension initially, Mr. Freeman, had been here, if the body had already been moved by the time I came in, and maybe you belonged in New Jersey or Louisiana, I am still trying to find out.
Transcript of August 30, 1994 Hearing at 6-7.
At the August 30th hearing, the government did not know whether the motion to reopen had been decided. Moreover, Freedman recognized that he had not properly commenced an action and explicitly promised this court that he was going to file a writ of habeas corpus:
Mr. Loprest: I think it was remiss last week not to ask that petitioner be required to properly file a civil action in this case and get a civil number.
The Court: I think yes.
Mr. Freedman: I said I would do that. I want to let the record note that I will do so.
Id. at 10. I continued to stay Bowler's deportation pending further briefing by the parties and a decision from the INS regarding Bowler's motion to reopen his deportation proceedings. See August 30, 1994 Hearing Transcript, at 7-10, attached as Ex. 7 to Loprest Decl. Relying on Freedman's representations, I found that Bowler had been unable to present his arguments to the Immigration Judge because Bowler had
in fact [been] present in the attorney's office for the hearing in question ... and there was a snafu due to an inability to get through on the telephone lines but the gentlemen in fact was present and has been deemed to have waived or waived his presence when he in fact didn't. That is the issue that I have before me in affidavits.
Id. at 12-13.
At the August 30 hearing, both Freedman and his associate Irwin Berowitz ("Berowitz") were present. I informed them that my *603 Chambers had received an "hysterical call" from FTF representatives who stated that a member of Freedman's office said that I was going to hold FTF in contempt. Freedman responded:
Mr. Berowitz has spoken with me, who is the individual who spoke with the individual at the [Fugitive] Task Force ... No member of this firm ever communicated an `order of Judge Sotomayor that if they didn't act in a certain way they would be held in contempt.' The individual who spoke with them is to my left and my investigation and my firm indicates that no one threatened contempt in your name ... They say they have a voice mail ... let them give you a transcript of the voice mail.
Id. at 13-14. After warning Freedman and Berowitz not to misrepresent orders of the Court, I set another hearing date for September 9, 1994. Id. at 10-11. Freedman was directed to file a petition of habeas corpus in order to provide the proper legal and procedural basis for Bowler's petition before me. Id. at 10.
By letter dated September 1, 1994, Freedman requested an adjournment for the filing of papers and of the hearing date because his son was ill. By Order dated September 9, 1994, I granted the adjournment and set new dates for papers and a hearing for September 27, 1994. On September 11, 1994, Freedman again asked for a further adjournment of the scheduled dates. That request was denied. On September 23, 1994, Freedman asked for another adjournment, without even a cursory response to the very serious allegations in the government's papers filed on September 15, 1994, that he had misrepresented facts to the Court and that no legal or factual basis existed for the court's continuing jurisdiction. Freedman's September 23 request for an adjournment was also denied.
After reviewing the government's September 15 affidavits and documents and the Government's subsequently submitted memorandum of law, it became apparent that Freedman had misled me. The government's papers unequivocally demonstrated that Freedman had never sought permission to hold a telephone conference in place of the June 14 deportation hearing as he had misled me into believing. From the government's papers, I also learned that the motion to reopen "was based on a totally unrelated issue of political asylum," for which Bowler had never submitted any supporting papers and that his appeal to the District Director to stay the deportation was based on the same flawed documents.
Finally and most significantly, the INS on September 7, 1994 had denied Bowler's motion to reopen and stay of deportation. Freedman had failed to notify me of this denial and had not mentioned it in any of his numerous requests for adjournments despite my repeated comments at the August 24 and August 30 hearing that I would keep my temporary stay in place only until that motion was decided.
At the September 27 hearing, I held that the September 7 denial of Bowler's second motion to reopen made Bowler's deportation order final, and deprived me of jurisdiction. See Hearing Transcript, dated September 27, 1994, at 5. I also determined that even if this were not the case, I never had jurisdiction to issue my temporary stay because Bowler was outside the jurisdiction of the court when the motion seeking a stay was filed and when the stay of deportation was issued. Id. I also concluded that I had issued the stay on misrepresented facts and lifted the stay. Id. at 6. I noted, for example, that Freedman represented that Bowler's deportation hearing was supposed to have been conducted by via telephone conference, and that Bowler went to Freedman's office to participate in the telephone conference. In fact, Freedman never arranged for a telephone conference to be conducted, nor had he ever secured an order from the Immigration Judge transferring venue to New York. Id. Finally, I invited the government to submit papers in support of Rule 11 sanctions based on Freedman's gross misrepresentations to the court. Id. at 7.
The government maintains that from the inception of the instant action, Freedman not only failed to make a reasonable inquiry as to the facts, but flagrantly misrepresented them to the Court. The government further argues *604 that the instant action was filed improperly to delay Bowler's deportation.
Freedman argues that Rule 11 does not apply to any verbal representations he made to the Court during the various hearings before me. See Memorandum of Law by Petitioner's Counsel in Opposition to Motion for Sanctions and in Support of his Cross-Motion for Sanctions at 3. He further argues that sanctions cannot be imposed based upon his representations that Bowler was present in this judicial district when the August 24 order to show cause was drafted and filed because respondent's attorney, who as the representative of the government is necessarily better positioned, did not know of Bowler's exact location either. Id. at 2. Finally, Freedman argues that the government improperly delayed in bringing the instant motion. Id. at 2. In a "Rebuttal Affirmation," Freedman asks that I deny the motion for sanctions because he is undergoing "psychiatric and psychological treatment", and because he has resigned from the New York Bar. See Undated Rebuttal Affirmation of Paul I. Freedman at ¶¶ 1-2.
Discussion
I do not apply Rule 11 sanctions to the instant case because of the failure to provide notice as required by Rule 11(c)(1)(A). Under Rule 11(c)(1)(B), a court may impose sanctions under Rule 11 on its own initiative only if an order is entered by the court directing an attorney or party to show cause why Rule 11 sanctions should not be imposed. Because I invited the government to consider whether to seek Rule 11 sanctions, no such order to show cause was issued. Under Rule 11(c)(1)(A), a party may move for sanctions, but the non-moving party must be given twenty-one days to withdraw or correct the challenged paper. Unfortunately, in cases involving orders to show cause and preliminary injunctions, such as this one, a twenty-one day waiting period is often impractical. In the instant case, I lifted the stay of deportation, thereby terminating petitioner's action, before the government had the opportunity to discover and react to Freedman's misconduct under Rule 11. Although I agree with the government that Freedman's misconduct falls within the ambit of Rule 11 and I could conclude that the government's various letters questioning the legal and factual basis for Freedman's application gave Freedman "notice" of his misconduct, I choose not to impose sanctions under Rule 11 because of the ambiguity of whether its procedural requirements have been met here.
I also reject Freedman's cross-motion for Rule 11 sanctions. Respondent filed the instant motion at my invitation. Even without my invitation, I find that respondent would have had a good faith basis to bring a Rule 11 motion.[2]
In addition to Rule 11, however, a court may impose sanctions under 28 U.S.C. § 1927 ("§ 1927") and the inherent power doctrine. See U.S. v. Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen and Helpers of America, AFL-CIO, 948 F.2d 1338, 1344 (2d Cir.1991); see also Oliveri v. Thompson, 803 F.2d 1265 (2d Cir.1986), cert. denied, 480 U.S. 918, 107 S. Ct. 1373, 94 L. Ed. 2d 689 (1987).
Section 1927 provides that an attorney "who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorney's fees reasonably incurred because of such conduct." Thus, § 1927 "imposes an obligation on attorneys throughout the entire litigation to avoid dilatory tactics." Int'l Bhd. of Teamsters, 948 F.2d at 1345. As the purpose of § 1927 is to deter unnecessary delays in litigation, an award under this statute is appropriate "when an attorney's actions are so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose such as delay." Id. (citing Oliveri, 803 F.2d at 1273 and H.R.Conf.Rep. No. 1234, 96th Cong., 2d *605 Sess. 8, U.S.Code Cong. & Admin.News 1980, p. 2716). Unlike Rule 11 sanctions which focus on particular papers, the inquiry under § 1927 is on a course of conduct. Id. at 1346. Bad faith "is the touchstone of an award under this statute." Id. at 1345 (citation omitted).
The inherent power doctrine, also known as the bad faith exception to the American Rule against fee shifting, derives from a court's need to manage its affairs so as to achieve an orderly and expeditious resolution of cases. Id. at 1345 (citing Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S. Ct. 2123, 2132, 115 L. Ed. 2d 27 (1991) (quoting Link v. Wabash R.R. Co., 370 U.S. 626, 630-31, 82 S. Ct. 1386, 1388-89, 8 L. Ed. 2d 734 (1962)). Under the "inherent power" doctrine, attorneys' fees can be imposed when the losing party has continued an action "in bad faith, vexatiously, wantonly, or for oppressive reasons." Id. (citing Alyeska Pipeline Serv. Co. v. Wilderness Society, 421 U.S. 240, 258-59, 95 S. Ct. 1612, 1622, 44 L. Ed. 2d 141 (1975)). The Supreme Court and the Second Circuit have long cautioned that the inherent power doctrine should be used with "restraint and discretion." See Chambers, 501 U.S. at 52, 111 S.Ct. at 2137. Thus, the Second Circuit requires (1) clear evidence that the challenged actions were entirely without color and taken for improper purposes such as harassment or delay; and (2) a high degree of specificity in the district court's factual findings before sanctions may be imposed under the inherent power doctrine. See Int'l Bhd. of Teamsters, 948 F.2d at 1345 (citations omitted).
I find that sanctions under § 1927 are appropriate in the instant action.[3] In his papers, Freedman does not deny that he never arranged for a telephonic hearing with the INS. As I repeated at the September 27 hearing, the decisive factor in my decision to order a stay of deportation was my belief that the INS knew Bowler was in New York and that a `snafu' or some technical error had deprived Bowler of his right to be heard. Freedman knew that this was a decisive factor in my decision to issue an injunction at the August 24 hearing. I specifically referenced his misrepresentation and my reliance upon it at the August 30 hearing. See, supra, at 602. Freedman's bad faith is further illustrated by Berowitz's phone call to FTF, threatening it with contempt.[4] At the August 30 hearing, Freedman admitted the call was made but denied that anyone "threatened contempt in your name ... They [FTF] say they have a voice mail ... let them give you a transcript of the voice mail." See August 30 Hearing Transcript at 13-14. The government accepted Freedman's suggestion, and set forth a transcription of FTF's answering machine tape in Mancini's declaration, which was prepared and executed within ten days of the August 30 hearing. See Mancini Decl. at ¶ 9. Freedman's papers fail to address, let alone challenge, the accuracy of the transcription. In fact, Freedman's papers are silent on this issue. Nothing in the record suggests any reason why I should not credit the facts as set forth in Siegel's and Mancini's declarations.
In short, Freedman filed a baseless application for a stay which he continued to advocate improperly even after any reasonable inquiry would have led a practitioner acting in good faith to conclude that he or she had no legal or factual basis for their position. Freedman has not offered an even plausible *606 excuse for his conduct in continuing to advocate his application after it became clear that he had no basis for it. An attorney with Freedman's expertise in immigration law could only act in bad faith when he asks the court for repeated adjournments to file supplemental papers to his admittedly incomplete initial pleadings and then fails to do so. Collectively, the actions described above demonstrate the sort of bad faith and improper course of conduct required to impose sanctions under § 1927.[5]
Although I do not impose sanctions based upon the following issues, I note that Freedman made a series of half-truths regarding the basis for jurisdiction in the instant action. Freedman stated that Bowler was in New York when the Order to Show Cause was filed. See August 24 Hearing Transcript at 9-10. While this may have been true on August 19, it is dubious that Freedman believed that Bowler was in New York when the August 24 Order to Show Cause was filed. Freedman clearly knew that Bowler would be transported by FTF to Oakdale. See Siegel Letter. There is some evidence suggesting that Freedman received a phone call on August 24 from FTF informing him that Bowler was in Oakdale. Furthermore, Freedman's numerous representations that the focus of the instant action was to review a non-final order smack of bad faith, and at best reflect an extraordinary disregard of the law and the procedural posture of Bowler's case.
The government requests sanctions in the amount of $5,825.00. The government calculated this amount by determining the number of hours spent by various members of the United States Attorney's Office, and then charging the rate at which each individual would charge at a New York law firm of comparable size and expertise. See Loprest Decl. at ¶¶ 17-25. In his papers, Freedman argues that no monetary sanctions should be imposed because he has resigned from the bar, has psychological problems, and is on the verge on bankruptcy. Other than his declarations, which in the past have ranged from misleading to completely false, Freedman has not provided me with any evidence that support his pleas for leniency and I do not credit his claims. See, e.g., Undated Rebuttal Affirmation of Paul Freedman at ¶ 5 (stating he cannot afford to pay even $1,000 in sanctions, but not proffering a sworn statement from an accountant or tax records).
In awarding attorney's fees as a sanction, the Second Circuit has cautioned that a court should consider the financial circumstances of the sanctioned party. See Sassower v. Field, 973 F.2d 75, 81 (2d Cir. 1992) (citations omitted), cert. denied, ___ U.S. ___, 113 S. Ct. 1879, 123 L. Ed. 2d 497 (1993). While I have no doubt that Freedman's income will have dropped if he in fact has resigned from the bar, I note that by Freedman's own admission he was making $778 per hour while he was practicing and I have no credible evidence before me that he did not generate enough assets to justify a reasonable sanction. See Declaration of Paul Freedman, sworn to December 14, 1994, at ¶ 4. Nevertheless, I have carefully reviewed the government's papers, and find that its request for attorney's fees is overbroad, and includes expenses for time occasioned by burdensome bureaucratic systems which should not be imposed upon Freedman. I believe a fair sanction, in light of the outrageous course of conduct pursued by Freedman and the resources the government had to expend as a result of such actions, is an award of $2,500.00.
Conclusion
For the reasons discussed above, petitioner's and respondent's motions for sanctions pursuant to Federal Rule of Civil Procedure 11 are denied. Sanctions, in the form of attorney's fees, are imposed against Paul Freedman pursuant to 28 U.S.C. § 1927 in the amount of $2,500.00. I am also referring this matter to the Grievance Committee of the Southern District of New York. The *607 Clerk of the Court is directed to enter this memorandum opinion and order accordingly.
SO ORDERED.
NOTES
[1] In paragraph 6 of his declaration, Siegel affirms that on or about August 4, he informed Freedman that Bowler would be transported from the Bronx to Oakdale. This date is clearly erroneous, as Siegel and Mancini did not gain custody of Bowler until August 23. Given that the paragraphs in Siegel's declaration are in chronological order, and that paragraph 5 details the events of August 23, I believe that August 4 is a typographical error that should read August 24. Regardless, Freedman's inclusion of the August 16 letter in the August 19 Order to Show Cause clearly demonstrates that Freedman was on notice that Bowler would be transported to Louisiana immediately upon his apprehension.
[2] Although tempted, I will not issue an order directing Freedman to show cause why he should not be sanctioned under Rule 11 for bringing his cross-motion for sanctions. Although I believe Freedman's cross-motion is frivolous, it is my hope to bring some measure of finality to the instant action.
[3] Although the parties have not filed briefs on the propriety of sanctions under § 1927 or the inherent powers doctrine, I believe it appropriate to consider these sanctions. The explanations Freedman has proffered regarding his conduct apply with equal force to a motion for sanctions under § 1927. The inquiry here is a largely factual determination based upon the record created at the three hearings before me. If Freedman in good faith believes that he has any additional legal defenses to § 1927 sanctions, he may of course set them forth in a motion for reargument. See Southern District of New York Local Civil Rule 3(j).
[4] Freedman is responsible for Berowitz's violation of the Disciplinary Rules of the Code of Professional Responsibility because Freedman was Berowitz's supervisor and knew or should have known about the content of the phone call. See Model Code of Professional Responsibility DR 1-104 (responsibilities of a supervisory lawyer), adopted by the Appellate Divisions of the Supreme Court of New York as DR § 1200.5. Furthermore, Freedman took no remedial steps in response to Berowitz's phone call to FTF. Id.
[5] I note that sanctions would also be appropriate under the inherent power doctrine. Because the inherent power doctrine should be used with restraint, I am imposing sanctions under § 1927 because that statute satisfactorily extends to Freedman's conduct.
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146 B.R. 495 (1992)
In re Earl J. MOULTON, Jr. and Wanda Sue Moulton, Debtors.
Earl J. MOULTON, Jr. and Wanda Sue Moulton, Plaintiff,
v.
UNITED STATES of America DEPT. of TREASURY-INTERNAL REVENUE SERVICE, D.W. Rucker and P. Dougherty, Defendants.
Bankruptcy No. 80-0822-8P3, Adv. No. 91-853.
United States Bankruptcy Court, M.D. Florida, Tampa Division.
October 8, 1992.
*496 Malka Isaak, Tampa, Fla., for debtors.
Chris Larimore, Bradenton, Fla., Chapter 13 trustee.
U.S. Atty., Tampa, Fla.
U.S. Atty. Gen., Washington, D.C., for U.S.
ORDER DENYING UNITED STATES' MOTION TO DISMISS
ALEXANDER L. PASKAY, Chief Judge.
THIS CAUSE came on for hearing with notice to all parties of interest to consider a Motion filed by the United States (Government) to Dismiss the Debtors' Complaint based on the Court's alleged lack of subject matter jurisdiction. The Court has considered the Motion, together with the record, has heard argument of counsel, and now finds and concludes as follows:
On January 25, 1988, the Debtors were granted a discharge pursuant to § 1328 of the Bankruptcy Code of all debts provided for by the Plan, including the claim of the Internal Revenue Service. On May 15, 1990, the Government filed a Notice of Federal Tax Lien against the Debtor, Earl J. Moulton. The Debtors in turn filed a Motion to Hold the United States in Contempt of Court, or, in the Alternative, for Sanctions for Violation of the Permanent Injunction. On October 16, 1991, this Court entered a detailed Order finding that the Government had in fact violated the permanent injunction set forth in 11 U.S.C. § 524(a)(2). 133 B.R. 248. The Court then scheduled a final evidentiary hearing to consider an appropriate award of sanctions to be imposed against the Government based on its willful violation of the permanent injunction. Shortly before the final evidentiary hearing, the IRS issued a Final Notice of Intention to Levy dated September 14, 1991. On December 17, 1991, Coast Bank withdrew $1,359.28 from the Debtors' checking account pursuant to the Government's levy.
The Debtors subsequently filed this adversary proceeding seeking injunctive relief, declaratory relief and damages based on the Government's willful violation of the permanent injunction against the Government. The Government then filed the Motion to Dismiss the Complaint presently under consideration alleging that this Court lacks subject matter jurisdiction to award monetary damages against the Government because of the principles of sovereign immunity, for the reasons set forth in the Supreme Court's decision in United States v. Nordic Village, Inc., ___ U.S. ___, 112 S. Ct. 1011, 117 L. Ed. 2d 181 (1992). A close analysis of Nordic Village, however, reveals that its ruling is inapplicable to the matter under consideration, and for this reason, the Government's Motion should be denied. Nordic Village did not address the interplay between sovereign immunity and the award of damages based on a violation of the permanent injunction provided for in § 524 of the Bankruptcy Code.
In Nordic Village, a corporate officer transferred company funds to the IRS to be applied to his personal income tax liabilities post-petition. The Bankruptcy Court for the Northern District of Ohio then entered a judgment against the IRS, ordering it to return the money to the estate. The District Court and the United States Court of Appeals for the Sixth Circuit affirmed the judgment. The Supreme Court granted certiorari and concluded that the Bankruptcy Court erred in entering a judgment against the Government as it had not waived its sovereign immunity. Relying on some statements of the Court's holding in Hoffman v. Connecticut Dept. of Income Maintenance, et al., 492 U.S. 96, 109 S. Ct. 2818, 106 L. Ed. 2d 76 (1989), the Supreme Court stated that to be effective, a waiver of sovereign immunity must be "unequivocally expressed" citing Irwin v. Veterans Administration, 498 U.S. 89, 111 S. Ct. 453, 112 L. Ed. 2d 435 (1990), and cannot be inferred and implied. The majority noted that the traditional principle that the Government's consent to be sued must be construed *497 strictly in favor of the sovereign is still a valid principle and should not be enlarged beyond what the language requires, citing Ruckelshaus v. Sierra Club, 463 U.S. 680, 685, 103 S. Ct. 3274, 3277, 77 L. Ed. 2d 938 (1983).
The difficulty with applying the holding of Nordic Village to the facts under consideration should be apparent when one considers what is and what is not involved in the matter under consideration. Unlike Nordic Village, which involved suits to recover money judgments against governmental units on claims, in the present instance the action by the Debtors is not to assert a claim for a money judgment, but to impose sanctions against the IRS for a willful, knowing violation of the permanent injunction. In considering whether the Motion to Dismiss is well taken, it is important to note that § 106 of the Bankruptcy Code, which deals with the subject of waiver of sovereign immunity, provides as follows:
§ 106. Waiver of Sovereign Immunity
(a) A governmental 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", or "entity", or "governmental unit" applies to governmental units; and
(2) a determination of the court of an issue arising under such a provision binds governmental units.
Under § 106(a), sovereign immunity is waived if the Government has filed a claim against the estate, and the estate has a claim against the Government which arises out of the same transaction or occurrence for which the Government's claim arose. The intent of this provision is to provide an opportunity to the debtor to file a compulsory counterclaim based upon the Government's claim. Such a situation does not exist in this case, as the Government's claim has been fully paid. Thus, § 106(a) is not applicable.
Section 106(b) provides a waiver of sovereign immunity where an offset is available for an allowed claim of the Government. This is also inapplicable in the present case. The relief sought by the Debtors is not a right to exercise a set-off against a claim filed by the Government simply because the Government no longer has any claim, since the only allowed claim of the Government has been paid in full by the Debtors.
This leaves for consideration subclause (c) of the § 106 and its relevance to the matter under consideration. As noted earlier, this subclause provides that notwithstanding any assertions of sovereign immunity:
(1) a provision of this title that contains "creditor", or "entity", or "governmental unit" applies to government units; and
(2) a determination of the court of an issue arising under such a provision binds governmental units.
Section 524 of the Bankruptcy Code describes the effects of the discharge provided by the Code and reads in part as follows:
§ 524. Effect of discharge
(a) A discharge in a case under this title
. . . . .
(2) operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived; and
. . . . .
Section 524 admittedly does not use the trigger words "creditor", "entity", or "governmental unit". Notwithstanding, a sensible reading of § 524(a)(2) should not leave any doubt that it applies to all "creditors", *498 including the Government. If the Government is a creditor, clearly then the Government is bound by the protection provided by the general bankruptcy discharge. Here, the Government is clearly a creditor as it filed four proofs of claim in this case.
It needs no elaborate discussion to point out that § 524 was designed by Congress to assist a discharged Debtor. Lines v. Frederick, 400 U.S. 18, 91 S. Ct. 113, 27 L. Ed. 2d 124 (1970). The basic purpose of the Bankruptcy Code is to give the debtor a "new bid for life and a clear field for future effort, unhampered by the pressure and discouragement of the pressure and discouragement of pre-existing debt." Local Loan Company v. Hunt, 292 U.S. 234, 244-45, 54 S. Ct. 695, 699, 78 L. Ed. 1230, 1235, (1934).
To construe § 524(a)(2) in any other way would render this subclause meaningless, since it would permit the Government to pursue a discharged Debtor with impunity and without suffering the consequence of conduct clearly prohibited by the permanent injunction included in the discharge. Thus, the fact that § 524(a)(2) does not include the "trigger terms" is of no consequence. The Government is bound by the protection afforded by § 524. In sum, to permit the Government to escape the consequence of its actions would be a completely erroneous construction of § 524(a)(2) of the Bankruptcy Code.
Accordingly, it is
ORDERED, ADJUDGED AND DECREED that the Motion By The United States To Dismiss Claim Against United States For Lack Of Subject Matter Jurisdiction is hereby denied, and a status conference in this adversary proceeding is scheduled before the undersigned on October 20, 1992 at 10:30 am in Courtroom A, 4921 Memorial Highway, Tampa, Florida 33634.
DONE AND ORDERED.
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146 B.R. 47 (1992)
In re Stewart AVRET, Debtor.
UNION MORTGAGE COMPANY, INC., Objecting Creditor,
v.
Stewart AVRET, Respondent Debtor.
Bankruptcy No. 92-10074.
United States Bankruptcy Court, S.D. Georgia, Augusta Division.
October 6, 1992.
*48 James D. Walker, Jr., Surrett, Walker, Creson, Way & Coleman, Augusta, Ga., for objecting creditor.
Lee Ringler, Augusta, Ga., for respondent debtor.
ORDER
JOHN S. DALIS, Bankruptcy Judge.
Union Mortgage Company, Inc. ("Union Mortgage") objects to confirmation of the debtor's Chapter 13 plan. Based on the evidence presented at hearing, I make the following findings of fact and conclusions of law.
FINDINGS OF FACT
On April 19, 1990 Union Mortgage loaned Eight Thousand Six Hundred Thirty-Eight and 83/100 ($8,638.83) Dollars to Stewart Avret, the Chapter 13 debtor. Debtor executed a promissory note in connection with the loan whereby he promised to repay the loan in monthly installments of One Hundred Fifty and 03/100 ($150.03) Dollars, including interest at the rate of 16.98% per annum. To secure the note, debtor executed a security deed dated April 19, 1990 in favor of Union Mortgage which granted Union Mortgage a security interest in real property that serves as debtor's principal residence at Route 2, Box 390, Neely Road, Hephzibah, Georgia. It is undisputed that Union Mortgage's lien against debtor's residence is a second lien, subordinate to a lien held by Commercial Credit Corporation in the amount of Thirty-Six Thousand Eighty-Nine and 85/100 ($36,089.85) Dollars.[1]
Debtor filed his Chapter 13 petition January 10, 1992. Debtor's proposed Chapter 13 plan calls for monthly payments of One Thousand Twenty and No/100 ($1,020.00) Dollars to the trustee for 60 months to pay all secured claims and court costs with unsecured claims to be paid pro rata from the balance of the funds paid to the trustee. The trustee estimates a dividend of 17% will be paid to unsecured creditors. In conjunction with the proposed plan the debtor, by motion, seeks to value Union Mortgage's collateral at One Thousand Five Hundred and No/100 ($1,500.00) Dollars. The plan provides, relevant to the claim of Union Mortgage,
2. . . . (b) Secured creditors shall retain liens securing their claims. Creditors who file claims and whose claims are allowed as secured claims shall be paid the lesser of (1) the amount of their claim, or (2) the value of their collateral as set forth here: . . . Union Mortgage: $1,500.00 . . .
(c) Subsequent to secured creditors, dividends to unsecured creditors who file claims and whose claims are allowed (including the unsecured balances of any partially secured debt) shall be paid . . .
2. pro rata, from remaining funds . . .
Union Mortgage filed a proof of secured claim for Eight Thousand Nine Hundred Sixty-Seven and 99/100 ($8,967.99) Dollars, to which no objection was filed. Debtor's testimony at confirmation hearing regarding the value of his residence varied, ranging from an estimated fair market value of Thirty-Three Thousand and No/100 ($33,000.00) Dollars to Forty Thousand and No/100 ($40,000.00) Dollars. No evidence was offered by Union Mortgage on valuation. Based on debtor's testimony, the value of his residence for the purpose of plan confirmation is Forty Thousand and No/100 ($40,000.00) Dollars. The value of Union Mortgage's interest in the bankruptcy estate's interest in the collateral securing Union Mortgage's claim is Three Thousand Nine Hundred Ten and 15/100 ($3,910.15) Dollars.[2]
*49 Union Mortgage contends debtor's proposed plan impermissibly modifies its claim under 11 U.S.C. § 1322(b)(2)[3] by valuing its collateral for less than the full amount of its claim, thereby bifurcating its claim, which is secured only by debtor's principal residence, into secured and unsecured portions without full payment of the unsecured claim. Union Mortgage argues that bifurcation pursuant to 11 U.S.C. § 506(a) of its principal residence secured claim with only partial payment of the unsecured portion of the claim invokes the lien avoidance provisions of 11 U.S.C. § 506(d)[4] in a manner prohibited by the United States Supreme Court's recent decision in Dewsnup v. Timm, ___, U.S. ___, 112 S. Ct. 773, 116 L. Ed. 2d 903 (1992).
The debtor argues that bifurcation of an undersecured principal residence secured claim pursuant to 11 U.S.C. § 506(a) is not prohibited by 11 U.S.C. § 1322(b)(2), nor does § 1322(b)(2) bar modification of the unsecured portion of such a claim. Debtor further argues that § 506(d) is not involved in bifurcating Union Mortgage's claim because the proposed Chapter 13 plan calls for full payment of the secured portion of the obligation and upon confirmation, pursuant to § 1327(c) all property of the debtor vests in the debtor free and clear of any liens.
CONCLUSIONS OF LAW
Section 506(a) is used to determine a creditor's secured status. In re Hall, 752 F.2d 582, 588-89 (11th Cir.1985); 11 U.S.C. § 103(a). Under § 506(a), "a creditor's allowed claim is an unsecured claim to the extent that the value of such creditor's interest in the collateral is less than the amount of the allowed claim." Lamoureux v. Thomas-Wesby (In re: Thomas-Wesby), Ch. 13 case No. 89-10291 slip op. at 7, 1990 WL 455311 (Bankr. S.D.Ga. Dalis, J. March 30, 1990). In Thomas-Wesby I determined that § 1322(b)(2) does not prohibit bifurcation pursuant to § 506(a) of an undersecured claim that is secured solely by an interest in real property that is the debtor's principal residence. Thus, "only the secured portion of a creditor's claim is protected from modification by a Chapter 13 plan." Thomas-Wesby, supra, at 10. Accord Hougland v. Lomas & Nettleton Co. 886 F.2d 1182 (9th Cir.1989); Wilson v. Commonwealth Mortgage Corp., 895 F.2d 123 (3rd Cir.1990); Bellamy v. Federal Home Loan Mortgage Corp., 962 F.2d 176 (2nd Cir. 1992).
Union Mortgage challenges the result reached in Thomas-Wesby contending the words "secured claim[]" in § 1322(b)(2) do not necessarily mean the same thing as they mean in § 506(a). In support, Union Mortgage cites Dewsnup, supra, wherein the United States Supreme Court held that the phrase "allowed secured claim" in § 506(d) is not defined according to how those same words are used in § 506(a). Id. The Supreme Court, however, did not address the issue of whether § 1322(b)(2)'s prohibition against modification of "secured claims . . . secured only by" a debtor's principal residence applies to the unsecured portion of an undersecured claim as *50 determined by reference to § 506(a)'s definition of "secured claim." Unfortunately the legislative history of § 1322(b)(2) gives way to contrary interpretations of § 1322(b)(2)'s intended application. Compare Wilson, supra, at 127-28 with In re Strober, 136 B.R. 614, 620-22 (Bankr. E.D.N.Y.1992), overruled by, Bellamy, supra, and In re Ireland, 137 B.R. 65 (Bankr. M.D.Fla.1992). The Supreme Court's exception in Dewsnup to the general rule of statutory construction that "identical words used in different parts of the same act are intended to have the same meaning," Atlantic Cleaners & Dyers, Inc. v. U.S., 286 U.S. 427, 433, 52 S. Ct. 607, 609, 76 L. Ed. 2d 1204 (1932), does not persuade me that Congress intended different meanings of "secured claim" in §§ 506(a) and 1322(b)(2). See Dewsnup, supra, ___ U.S. at ___ n. 3, 112 S.Ct. at 778 n. 3. "[W]hile § 506(d), unlike § 506(a), is concerned with liens, § 1322(b)(2) as does § 506(a) addresses claims." Bellamy, supra, at 183. Absent binding contrary authority, I am unconvinced by Union Mortgage's reading of § 1322(b)(2) to preclude bifurcation of a principal residence secured claim pursuant to § 506(a) and rely on my previous analysis in Thomas-Wesby and the cases cited therein, as well as Bellamy, in reaffirming that bifurcation of such a claim is authorized by § 506(a).
Having resolved the bifurcation issue in favor of the debtor, remaining for resolution is Union Mortgage's contention that even if bifurcation is permitted, following the completion of debtor's plan and discharge, Union Mortgage will retain its lien, an in rem claim, to secure payment to the full extent of the remaining unpaid debt. Union Mortgage relies upon the Supreme Court's analysis in Dewsnup. In Dewsnup, the Supreme Court held that a Chapter 7 debtor could not use § 506(d) in conjunction with § 506(a) to avoid a secured creditor's lien to the extent that the creditor's allowed claim exceeded the value of the collateral, id., ___ U.S. at ___, 112 S.Ct. at 778, relying on "the pre-Code rule that liens pass through bankruptcy unaffected." Id. Union Mortgage is correct in its position that the analysis of § 506(d) in Dewsnup that "allowed secured claim" in § 506(d) is not an indivisible term of art defined by § 506(a), but must be read, for § 506(d) purposes, term-by-term to determine that the claim is first allowed, and second secured, applies equally in a Chapter 13 context. Although the Court expressed no opinion as to whether the words "allowed secured claim" have different meaning in other provisions of the Bankruptcy Code, id., ___ U.S. at ___ n. 3, 112 S.Ct. at 778 n. 3, the Court was clear as to the analysis required for the application of § 506(d). As § 506(d) applies in Chapters 7, 11, 12 and 13, 11 U.S.C. § 103(a), the analysis for invoking this provision must apply equally in each chapter.
In the context of a Chapter 13 case, however, § 506(d) is not necessary to satisfy the lien. Section 506(a) provides that "[a]n 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." (Emphasis added). Once an "allowed claim" is bifurcated pursuant to § 506(a) the creditor is allowed two claims, one secured and one unsecured.
As it pertains to the allowed secured claim secured by an interest in real property that is the debtor's principal residence, pursuant to § 1322(b)(2), such claim holder's rights may not be modified. Therefore, under the facts of this case, the plan must provide for the payment of the allowed secured claim at the contracted payment together with future interest at the contracted rate. A lien is defined as a "charge against or interest in property to secure payment of a debt. . . ." 11 U.S.C. § 101(37). A debt is defined as "liability on a claim." 11 U.S.C. § 101(12). Therefore, once the liability on the allowed secured claim has been paid the liability of the debtor is satisfied to the extent of payment and, the lien, to the extent that it secures the payment of the allowed secured claim, is satisfied.
*51 Regarding the allowed unsecured claim, § 1322(b) provides that "the plan may . . . (2) modify the rights . . . of holders of unsecured claims." As the holder of an allowed unsecured claim the rights of Union Mortgage are subject to modification to the extent of any charge against or interest in property which purports to secure payment of the allowed unsecured claim. Therefore, the plan may provide for the satisfaction of the lien upon completion of the plan to the extent that the lien purports to secure payment of the allowed unsecured claim. The provisions of § 506(a) and § 1322(b)(2) permitting the modification of the rights of the holder of an allowed unsecured claim authorize "lien stripping" in a Chapter 13 case, not § 506(d).
Debtor's argument that § 1327(c) effectuates the lien stripping and not § 506(d) is not applicable in this case. Section 1327(c) provides "[e]xcept as otherwise provided in the plan or in the order confirming the plan, the property vesting in the debtor under subsection (b) of this section is free and clear of any claim or interest of any creditor provided for by the plan." (Emphasis added). The plan submitted by the debtor provides that "[s]ecured creditors shall retain liens securing their claims." Under the plan, upon confirmation the property upon which Union Mortgage holds a lien vests in the debtor subject to the lien of Union Mortgage.
Therefore, any confirmable plan as it pertains to the "allowed secured claim" of Union Mortgage must provide for the maintenance of payments in the amount contractually agreed between the parties, One Hundred Fifty and 03/100 ($150.03) Dollars per month, together with future interest at the rate specified in the agreement, 16.98% per annum. The permitted bifurcation merely shortens the term for pay out. See, Thomas-Wesby, supra. As it pertains to the allowed unsecured claim, the plan may modify the rights of Union Mortgage to provide for the satisfaction of the lien upon completion of the plan to the extent that the lien purports to secure payment of the allowed unsecured claim.
It is therefore ORDERED that the objection of Union Mortgage as to valuation proposed by the debtor is sustained. The debtor shall file a modification to the proposed Chapter 13 plan meeting the requirements of this order within fifteen (15) days.
NOTES
[1] Commercial Credit filed a proof of secured claim for Thirty-Six Thousand Eighty-Nine and 85/100 ($36,089.85) Dollars, to which no objection was filed.
[2]
$40,000.00
-$36,089.85 (amount of Commercial Credit
_____________
$3,910.15 Corp. first mortgage)
[3] Section 1322(b) provides in pertinent part:
Subject to subsections (a) and (c) of this section, the [Chapter 13] plan may ...
(2) modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor's principal residence, or of holders of unsecured claims, or leave unaffected the rights of holders of any class of claims....
[4] Section 506 provides in pertinent part:
(a) An allowed claim of a creditor secured by a lien on property in which the estate has an interest, or that is subject to setoff under section 553 of this title [11], is a secured claim to the extent of the value of such creditor's interest in the estate's interest in such property, or to the extent of the amount subject to setoff, as the case may be, and is an unsecured claim to the extent that the value of such creditor's interest or the amount so subject to setoff is less than the amount of such allowed claim....
....
(d) To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void unless
(1) such claim was disallowed under section 502(b)(5) or 502(e) of this title; or
(2) such claim is not an allowed secured claim due only to the failure of any entity to file a proof of such claim under section 501 of this title.
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146 B.R. 298 (1992)
In re Leonard HAIMES, Debtor.
UNITED STATES of America, Appellant,
v.
Leonard HAIMES, Appellee.
No. 91-2845-CIV.
United States District Court, S.D. Florida.
October 19, 1992.
*299 Shirley D. Peterson, Asst. Atty. Gen., Steve Shapiro, Ann Reid, Mark Steir, U.S. Dept. of Justice, Tax Div., Washington, D.C., for U.S.
Jay J. Reynolds, Boca Raton, Fla., for Haimes.
MEMORANDUM OPINION
HIGHSMITH, District Judge.
THIS MATTER is before the Court on appeal from the following two orders of the United States Bankruptcy Court, Southern District of Florida:
(1) Order Granting Defendant's Motion for Directed Verdict and Final Judgment, entered July 31, 1991; and
(2) Order Denying Plaintiff's Motion to Alter or Amend Judgment and to Amend Complaint, entered October 3, 1991.
This Court has appellate jurisdiction, pursuant to 28 U.S.C. § 158.
The Court finds that the Bankruptcy Court erred in granting a directed verdict and final judgment of discharge in favor of Defendant/Appellee Leonard Haimes at the close of the plaintiff's case in chief. The Court also finds that the Bankruptcy Court erred in denying Plaintiff/Appellant United States' motion to amend the complaint. Therefore, the Court VACATES the Bankruptcy Court's final judgment and REMANDS for further proceedings in accordance with this opinion. In light of this determination, the Court finds that it need not reach the Bankruptcy Court's denial of the motion to alter or amend judgment.
STANDARD OF REVIEW
Fed.R.Bankr.P. 8013 provides:
On an appeal the district court or bankruptcy appellate panel may affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceedings. Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses.
A decision whether to grant or deny a discharge is reviewable for abuse of discretion. In re Oesterle, 651 F.2d 401, 402 (5th Cir. Unit B 1981), cert. denied, 456 U.S. 989, 102 S. Ct. 2268, 73 L. Ed. 2d 1283 (1982). Likewise, the granting or denial of a motion to amend pleadings under Fed.R.Civ.P. 15(b), which applies to Bankruptcy adversary proceedings pursuant to Fed. R.Bankr.P. 7015, is subject to reversal for abuse of discretion. Hall v. National Supply *300 Co., 270 F.2d 379, 383 (5th Cir.1959). Fed.R.Civ.P. 15(b) provides:
When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice the party in maintaining the party's action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence.
PROCEDURAL BACKGROUND
On December 21, 1990, Appellee Leonard Haimes filed a petition for bankruptcy pursuant to Chapter 7 of the Bankruptcy Code. (R. 1, at 1.) The first meeting of creditors was scheduled for January 28, 1991. (R. 1, at 2.)
On or about March 29, 1991, one such creditor, Plaintiff/Appellant United States, commenced this adversary proceeding to object to Haimes' discharge, pursuant to 11 U.S.C. § 727. (R. 1) The United States claimed that Haimes had an outstanding federal income tax liability, including penalties, in excess of $400,000. (R. 1, at 2.) As grounds for denial of discharge, the United States asserted that Haimes had made a false oath or account in his bankruptcy filings, thereby undervaluing his assets, understating his income for 1988 and 1989, and understating his gross and take-home pay, pursuant to 11 U.S.C. § 727(a)(4). (R. 1, at 2-3.) As additional grounds for denial of discharge, the United States also alleged that Haimes had failed to explain satisfactorily the loss of over $25,040.00, pursuant to 11 U.S.C. § 727(a)(5). (R. 1, at 3.)[1]
Section 727(a)(4) provides, in pertinent part:
The court shall grant the debtor a discharge, unless
. . . . .
the debtor knowingly and fraudulently, in or in connection with the case made a false oath or account.
11 U.S.C.A. § 727(a)(4) (West 1979). Section 727(a)(5) provides, in pertinent part:
The court shall grant the debtor a discharge, unless
. . . . .
the debtor has failed to explain satisfactorily, before determination of denial of discharge under this paragraph, any loss of assets or deficiency of assets to meet the debtor's liabilities.
11 U.S.C.A. § 727(a)(5) (West 1979).
A trial of the matter was held on June 25 and 26, 1991, before the Honorable James Mixon. At trial, the evidence showed that Haimes, a medical doctor, operated his practice through Metabolic Health Systems, Inc., a subchapter S corporation. Haimes' wife owned a separate corporation, Isotherapy Laboratories, Inc. In April 1988, Metabolic entered into a contract with Isotherapy for the provision of practice management services. However, the parties did not commence performance under the contract until September 1989. At that time, Metabolic began paying Isotherapy a $600 weekly fee plus 25% of Metabolic's proceeds from the sale of vitamin supplements to Haimes' patients. In that same month, Isotherapy entered into a lease agreement with Metabolic whereby Isotherapy provided an ozone generator to *301 Metabolic in exchange for 60% of the gross receipts derived from the use of the machine. The United States contended that, through these contracts, Haimes had diverted large sums of money to his wife, thereby preventing the use of these monies to pay Haimes' federal tax liabilities. (Amended Pretrial Stipulation, R. 4, at 5-6.) In particular, the United States challenged the $25,040 transferred over the first five-months of 1990. Id. at 5.
At the close of the plaintiff's case, the Bankruptcy Court granted Haimes' motion for a directed verdict, finding that the United States had not made out a case for denial of discharge under 11 U.S.C. § 727(a). As to the § 727(a)(4) grounds, the Bankruptcy Court found that the United States had not made out a case in support of the false oath allegations. (R. 16, at 199-206.)[2] As to the § 727(a)(5) grounds, the Bankruptcy Court found "satisfactory" Haimes' explanation that his subchapter S Corporation, Metabolic, had paid the "lost" $25,040 to his wife's corporation, Isotherapy, for various services rendered by Isotherapy. Id. at 201-03.
The Court, however, expressed serious misgivings in making the latter ruling, stating, "I am not at all impressed with the legitimacy of all this hocus-pocus and mirrors and things that the debtor has set up in his medical practice. I think there is all kinds of inferences of fraud that I could draw from this and it is very obvious that these are contrivances designed to conceal and disguise the true nature of transactions." (R. 16, at 198-99). Nevertheless, the Court concluded, "Here [Haimes] has given [the $25,000] to Isotherapy Laboratories pursuant to these admittedly convoluted contracts with his wife, which don't appear to have much economic substance and probably I could draw an inference for fraudulent conveyance as to his wife, yet he has explained it in detail and so I cannot use this section." (R. 16, at 202-03).)
In light of the Court's remarks, the United States moved to alter or amend judgment and to amend the complaint to conform to the evidence. (R. 10). In its proposed amendment to the complaint, the United States sought to allege that Haimes' tax liabilities were excepted from discharge, pursuant to 11 U.S.C. § 523(a)(1)(C), which provides:
A discharge under section 727 . . . of this title does not discharge an individual debtor from any debt for a tax or a customs duty
. . . . .
with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax.
11 U.S.C.A. § 523(a)(1)(C) (West 1979 & Supp. Pamphlet 1992).
Despite the concerns it had expressed at trial, the Bankruptcy Court denied the United States' motion to alter or amend judgment. (R. 17, at 18.) The Bankruptcy Court also denied the motion to amend the complaint as untimely because the United States had not sought the exception from discharge within the sixty-day period following the date set for the first meeting of creditors. Id. at 15-18.
DISCUSSION
1. The final judgment of discharge:
At the close of the United States' case in chief, the Bankruptcy Court found "satisfactory" Haimes' explanation that his subchapter S Corporation, Metabolic, had paid the "lost" $25,040 to his wife's corporation, Isotherapy, for various services rendered by Isotherapy. Accordingly, the Bankruptcy Court granted Haimes' motion for directed verdict and issued a final judgment of discharge.
"The question of whether a debtor satisfactorily explains a loss of assets is a question of fact." In re Chalik, 748 F.2d 616, 619 (11th Cir.1984) (per curiam) (citing Shapiro & Ornish v. Holliday, 37 F.2d 407, 407 (5th Cir.1930)). Therefore, this Court must accept the Bankruptcy Court's finding *302 of satisfactory explanation unless it is clearly erroneous. Id. "[A] satisfactory explanation in this regard is, for the most part, one which is credible or believable one that does not arouse suspicion that the facts are other than those presented by the debtor." In re Bernstein, 78 B.R. 619, 623 (S.D.Fla.1987). After hearing the explanation, the judge is "satisfied. He no longer wonders. He is content." Id. (citing In re Shapiro & Ornish, 37 F.2d 403 (N.D.Tex. 1929), aff'd sub nom, Shapiro & Ornish v. Holliday, 37 F.2d 407 (5th Cir.1930)).
Judge Mixon found that Haimes' explanation as to where the money went from Metabolic to Isotherapy was "satisfactory" under section 727(a)(5). Judge Mixon's additional comments, however, indicate that he was anything but "satisfied, no longer wondering, or content" with Haimes' explanation. Indeed, Judge Mixon found that the circumstances surrounding the transfer of the monies from Metabolic to Isotherapy were sufficient to support an inference of fraud. Therefore, Haimes' explanation that he had paid the monies pursuant to a bona fide business contract was neither credible nor reasonable. In re Bernstein, 78 B.R. at 623 ("Standard by which explanation is measured is one of reasonableness or credibility.") (citing In re Cohen, 47 B.R. 871 (Bankr.S.D.Fla.1985)). See also In re Pisano, 105 B.R. 125, 128 (Bankr.S.D.Fla.1989) ("To be satisfactory, an explanation must convince the court of the debtor's good faith and businesslike conduct.") Accordingly, Judge Mixon's finding that Haimes's explanation was satisfactory was contrary to the evidence, hence clearly erroneous.
Even assuming that Haimes' explanation was credible in the wooden sense that he truthfully stated where the money went from Metabolic to Isotherapy Judge Mixon's inquiry should not have ended there. A discharge could be denied under section 727(a)(5) if "the explanation reveals conduct which is otherwise prohibited by Section 727." In re Bernstein, 78 B.R. at 624. Judge Mixon found that, after looking at all the evidence, he could draw an inference that Haimes had fraudulently conveyed to his wife the $25,040 paid by Metabolic to Isotherapy. Because the monies were transferred during the first five months of 1990, within one year of Haimes' filing for bankruptcy in December 1990, such conduct potentially falls under subsection 727(a)(2)(A), which provides:
The court shall grant the debtor a discharge, unless
. . . . .
the debtor, with intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of property under this title, has transferred, removed, destroyed, mutilated, or concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed property of the debtor, within one year before the date of the filing of the petition.
11 U.S.C.A. § 727(a)(2)(A) (West 1979).
The Court finds, therefore, that the Bankruptcy Court abused its discretion by disregarding the inference of fraudulent conveyance and granting Haimes a discharge. In re Kerner, 99 B.R. 484, 486 (Bankr.S.D.Fla.1989) ("Plaintiff is entitled to the relief appropriate to its proof, regardless of the theory or statute it pled.") (citing Fed.R.Civ.P. 54(c), applicable to Bankruptcy proceedings pursuant to Fed. Bankr.R.P. 7054; and United States v. Hougham, 364 U.S. 310, 81 S. Ct. 13, 5 L. Ed. 2d 8 (1960)).
2. The denial of the motion to amend:
The Bankruptcy Court also denied the United States' motion to amend the complaint to seek an exception for discharge under 11 U.S.C. § 523(a)(1)(C) as untimely because the United States had not done so within the sixty-day period following date set for the first meeting of creditors. Haimes concedes that the sixty-day limitation does not apply to actions for exception from discharge of a tax obligation. (Appellee's Br., at 12.) Therefore, the Bankruptcy Court abused its discretion in denying the United States' motion to amend on the grounds that it was time-barred.
Moreover, in reviewing the record, the Court notes that the United States *303 raised the issue of tax evasion, the grounds for relief under section 523(a)(1)(C), in a joint pre-trial pleading. (Amended Pretrial Stipulation, R. 4, at 5-6) (Leonard Haimes' "testimony, supplemented by documentary evidence, will demonstrate that he has diverted large sums of money to his wife, Samantha Haimes, to prevent the use of said sums to pay his tax liabilities.") Had the Bankruptcy Court considered the merits of the United States' motion, it could have found that inclusion of this issue in the pretrial stipulation effectively amended the pleadings. In re Perez, 954 F.2d 1026, 1028 (5th Cir.1992) (finding that incorporation of an issue in the pre-trial order amends the previous pleadings to state a claim). At a minimum, the Court could have found that, by signing the pretrial stipulation, Haimes had consented to trial of the tax evasion, thereby satisfying the criteria of Fed.R.Civ.P. 15(b).
CONCLUSION
The Bankruptcy Court's final judgment of discharge in favor of Leonard Haimes and the Bankruptcy Court's order denying the United States' motion to amend the complaint are VACATED. This cause is REMANDED to the Bankruptcy Court for further proceedings in accordance with this opinion.
NOTES
[1] Although the complaint only asserted section 727 generally, at a hearing on Haimes' motion to dismiss, counsel for the United States made a clarification on the record to the effect that the United States was proceeding under subsections (a)(4) and (a)(5) of section 727. (R. 13, at 8.) Finding that the complaint stated a cause of action under both subsections, the Court denied the motion to dismiss. Id.
[2] The United States is not appealing this portion of the Bankruptcy Court's ruling. (Appellant's Br., at 13 n. 2.)
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878 A.2d 486 (2005)
Johnathan M. SCOTT, Appellant,
v.
UNITED STATES, Appellee.
No. 04-CM-481.
District of Columbia Court of Appeals.
Submitted June 9, 2005.
Decided June 30, 2005.
*487 William Francis Xavier Becker, Rockville, MD, was on the brief for appellant.
Kenneth L. Wainstein, United States Attorney, and John R. Fisher, Thomas J. Tourish, Jr., and Alessio D. Evangelista, Assistant United States Attorneys, were on the brief for the United States.
Before TERRY, RUIZ and GLICKMAN, Associate Judges.
GLICKMAN, Associate Judge:
Johnathan M. Scott entered a conditional plea of guilty to one count of possession with intent to use drug paraphernalia,[1] reserving the right to appeal the denial of his motion to suppress the evidence recovered from his person in a search incident to his arrest. Scott claims that the arrest was unlawful because it was for a civil infraction. The arresting officer's alleged mistake of law is immaterial, however, because, regardless of his actual reason for making the arrest, he did have probable cause to arrest Scott for committing a misdemeanor offense in his presence. Scott's Fourth Amendment rights were not infringed, therefore, and so we uphold the trial court's denial of his suppression motion and affirm his conviction.
Metropolitan Police Officer Maurice MacDonald, whose testimony the trial court credited, was investigating complaints of narcotics activity with two fellow officers when he saw Scott and a male companion walk through a gas station parking lot to a secluded area behind a "broken down parked van." The officers approached to investigate and observed Scott urinating on the front bumper of the van. Believing public urination to be a crime proscribed by municipal regulation in the District of Columbia, Officer MacDonald placed Scott under arrest. The officers then searched Scott and found two plastic bags in his front pants pocket. The bags contained marijuana residue.
The Fourth Amendment to the United States Constitution protects "[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures." U.S. CONST. amend. IV. As the search of Scott's person was incident to his arrest, it was reasonable under the Fourth Amendment, and hence permissible, so long as the arrest itself was lawful, even if the arrest was for only a minor criminal offense. See Gustafson v. Florida, 414 U.S. 260, 266, 94 S. Ct. 488, 38 L. Ed. 2d 456 (1973) (arrest of driver for not having driver's license in his possession); United States v. Robinson, 414 U.S. 218, 220-21, 94 S. Ct. 467, 38 L. Ed. 2d 427 (1973) (arrest for driving after license was revoked).[2] Scott's arrest was lawful so long as Officer MacDonald had probable cause to believe Scott was committing a criminal offense in his presence. See Atwater v. City of Lago Vista, 532 U.S. 318, 354, 121 S. Ct. 1536, 149 L. Ed. 2d 549 (2001) ("If an officer has probable cause to believe that an individual has committed even a very minor criminal offense in his *488 presence, he may, without violating the Fourth Amendment, arrest the offender."); D.C. CODE § 23-581(a)(1)(B) (2001 & Supp.2004) (providing that a law enforcement officer is authorized to arrest, without a warrant, "a person who he has probable cause to believe has committed or is committing an offense in his presence").
Although the record is not entirely clear, Scott asserts and the government does not dispute that Officer MacDonald arrested him for violating a particular municipal regulation relating to "Public Toilets."[3]See D.C. MUN. REGS. tit. 24, § 122.1 (2005).[4] Such a regulatory violation, Scott claims, is only a civil infraction, not a criminal offense, making his arrest unwarranted and the ensuing search unconstitutional. See Barnett v. United States, 525 A.2d 197, 198-99 (D.C.1987) (reversing conviction based on evidence seized following unlawful arrest for violating a noncriminal pedestrian traffic regulation). The government questions Scott's premise that violations of § 122.1 are not criminal, pointing out that D.C. Mun. Regs. tit. 24, § 100.6 (2005) states that "[A]ny person violating any provision of this title for which a specific penalty is not provided [including § 122.1] shall, upon conviction, be punished by a fine of not more than three hundred dollars ($300)." (Emphasis added.) In the view we take of this case, however, we need not reach the issue.
Even if Officer MacDonald erred in arresting Scott for violating the municipal regulation, however, he did have probable cause to arrest Scott for violating an undisputably criminal statute in his presence. The officer saw Scott urinate on the front bumper of a van parked in a gas station parking lot and could have considered such conduct to be "an act sufficiently annoying and offensive to others that it might occasion a breach of the peace." United States v. Williams, 244 U.S.App. D.C. 20, 21, 754 F.2d 1001, 1002 (1985). Officer MacDonald thus had probable cause to arrest Scott for disorderly conduct in violation of D.C.Code § 22-1321 (2001).[5] Officer MacDonald also had probable cause to arrest Scott for defacing private property in violation of D.C.Code § 22-3312.01.[6]
Scott asserts that Officer MacDonald did not believe he had violated any of these criminal statutes and did not arrest him for doing so. Assuming Scott's *489 assertion to be true, however, MacDonald's subjective belief makes no difference, for under both the Fourth Amendment and D.C.Code § 23-581(a)(1), the test of a lawful arrest is an objective one. "[A]n arresting officer's state of mind (except for the facts that he knows) is irrelevant to the existence of probable cause," and thus his "subjective reason for making the arrest need not be the criminal offense as to which the known facts provide probable cause." Devenpeck v. Alford, ___ U.S. ___, ___ - ___, 125 S. Ct. 588, 593-94, 160 L. Ed. 2d 537 (2004); see also Whren v. United States, 517 U.S. 806, 812-13, 116 S. Ct. 1769, 135 L. Ed. 2d 89 (1996); Jefferson v. United States, 776 A.2d 576, 580 (D.C.2001). In short, the "[s]ubjective intent of the arresting officer ... is simply no basis for invalidating an arrest. Those are lawfully arrested whom the facts known to the arresting officers give probable cause to arrest." Devenpeck, 125 S.Ct. at 594.
As Officer MacDonald had probable cause to believe that Scott was committing a misdemeanor offense in his presence, Scott's arrest was lawful, and the subsequent search of his person was reasonable within the meaning of the Fourth Amendment. We affirm Scott's conviction.
NOTES
[1] See D.C. CODE § 48-1103(a) (2001).
[2] Although "searches incident to a valid arrest can be unconstitutional when the scope of the search is unjustified and the method used shocks the conscience," Washington v. United States, 594 A.2d 1050, 1053 (D.C.1991), in marked contrast to the strip and body cavity search at issue in cases such as Washington, the search in this case was not even arguably egregious. Cf. State v. Nieves, 383 Md. 573, 861 A.2d 62 (2004) (holding that strip search was unreasonable following defendant's arrest on traffic charges).
[3] When Officer MacDonald testified at the suppression hearing, he was not asked, nor did he volunteer, the specific municipal regulation on which he relied in arresting Scott.
[4] Although neither party makes this argument, we note that § 122.1 appears inapplicable to the conduct at issue in this case, as it provides:
No person shall blow, spread, or place any nasal or other bodily discharge; or spit, urinate, or defecate; on the floors, walls, partitions, furniture, fittings, or on any portion of any public convenience station, or in any place in a public convenience station; except directly into the particular fixture provided for that purpose.
Id. We understand the term "public convenience station" to refer to a place where rest room facilities are furnished for public use. It is undisputed that Scott was not in such a facility when he was arrested.
[5] "Whoever, with intent to provoke a breach of the peace, or under circumstances such that a breach of the peace may be occasioned thereby: (1) acts in such a manner as to annoy, disturb, interfere with, obstruct, or be offensive to others... shall be fined not more than $250 or imprisoned not more than 90 days, or both." D.C.Code § 22-1321.
[6] In pertinent part, the statute makes it "unlawful for any person ... willfully and wantonly to ... place filth or excrement of any kind" on public or private property. D.C.Code § 22-3312.01. The offense is a misdemeanor punishable by a fine of up to $1,000, imprisonment for up to 180 days, or both. Id. § 22-3312.04(a) (Supp. 2004).
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878 A.2d 290 (2005)
2005 VT 64
Paul L. BIDGOOD
v.
TOWN OF CAVENDISH, et al.
No. 03-555.
Supreme Court of Vermont.
September 15, 2005.
*291 REIBER, C.J., JOHNSON, SKOGLUND, JJ., HAYES, Supr. J., ALLEN, Chief Justice, (Ret.), Specially Assigned.
ENTRY ORDER
¶ 1. Appellant Paul Bidgood appeals a trial court order denying his request to rescind a settlement agreement and resume trial to adjudicate issues that the parties had resolved through the settlement agreement. We affirm.
¶ 2. This case involves a dispute between Mr. Bidgood and the Town of Cavendish over the reclassification of a town highway from Class 3 to Class 4. Mr. Bidgood sought to ensure winter access to his property, which fronts the highway, by filing two actions in Windsor Superior Court: (1) an appeal from the road commissioner's reclassification determination; and (2) a civil action seeking a declaration of the highway's legal status and asserting various tort claims against the Town of Chester, Cavendish, a town manager, and the Agency of Natural Resources. The trial court consolidated both actions and held a trial.
¶ 3. During trial, the parties reached a comprehensive settlement agreement of all contested matters. In negotiating the agreement, Mr. Bidgood was represented by two attorneys. The court incorporated the settlement agreement into an Order of Dismissal on May 16, 2003, and dismissed the case with prejudice "with leave to reopen within ninety (90) days" if certain conditions in the settlement agreement were not satisfied. Accordingly, the deadline for reopening the case under the court's order was August 14, 2003.
¶ 4. On August 25, 2003, Mr. Bidgood filed a document dated August 14, 2003, and titled, "Motion to Inform The Court That Plaintiff Rescinds Settlement." On October 2, 2003, Mr. Bidgood filed another motion titled motion to resume trial. The trial court denied Mr. Bidgood's motion to inform stating that it did not contain an appropriate request for court action. The trial court also denied the motion to resume trial, finding that plaintiff "has not shown grounds to set aside the Order of May 16, 2003 in a manner required by Rule 60(b) of the Vermont Rules of Civil Procedure," and that the contingency set out in the dismissal order was unsatisfied. Plaintiff appeals.
¶ 5. Mr. Bidgood requests this Court to reach the merits and adjudicate his claims against the opposing parties. He also argues that the lower court lacked subject matter jurisdiction to dismiss the case because it failed to: (1) follow statutory procedures; (2) appoint commissioners; (3) stay the proposed reclassification; (4) make all interested persons parties to the action; and (5) bring the controversy before the Transportation Board.
¶ 6. We affirm because the doctrine of res judicata precludes Mr. Bidgood from collaterally attacking the validity of the order. "Res judicata bars litigation of a claim or defense if there exists a final *292 judgment in former litigation in which the parties, subject matter, and causes of action are identical or substantially identical." Kellner v. Kellner, 2004 VT 1, ¶ 8, 176 Vt. 571, 844 A.2d 743 (mem.) (quotations omitted). Res judicata also bars parties from litigating claims that the parties should have raised in a previous proceeding. Id. A settlement agreement that is incorporated into a final judgment can be disturbed pursuant only to the procedures set forth in Vermont Rule of Civil Procedure 60(b). Id. ¶¶ 6, 8 (discussing and relying on Johnston v. Wilkins, 2003 VT 56, 175 Vt. 567, 830 A.2d 695 (mem.)).
¶ 7. In the present case, the settlement agreement was incorporated into a final order. The parties are identical. The subject matterreclassification and maintenance of a town highwaywas central to the litigation that the settlement agreement resolved. Thus, Mr. Bidgood's renewed claims are barred by res judicata, and the final order controls.
¶ 8. The final order permitted Mr. Bidgood to reopen the case by August 14, 2003. He did not file his motion to rescind the settlement agreement until after that deadline, and thus the motion did not reopen the case. Although Mr. Bidgood's motion to inform was dated August 14, 2003, he filed it with the court on August 25. V.R.C.P. 3 ("A civil action is commenced by filing a complaint with the court. . . ."); V.R.C.P. 5(e) (filing of papers with the court "shall be made by filing them with the clerk of the court"). While Mr. Bidgood filed the motion with the clerk of the court, he was not timely because it was not filed until August 25, after the ninety-day deadline under the settlement agreement. Therefore, the final judgment remains binding on Mr. Bidgood.
¶ 9. The final judgment may be disturbed pursuant only to Rule 60(b). The trial court treated Mr. Bidgood's motion to resume trial as a motion under Rule 60(b) and found that he showed no grounds under the rule to set aside the order. We review a Rule 60(b) decision narrowly, and will not overturn it unless the trial court abused its discretion. Murphy v. Dep't of Taxes, 173 Vt. 571, 573, 795 A.2d 1131, 1133 (2001) (mem.). The record contains no evidence that Mr. Bidgood acted under duress, or that an unfair bargaining process took place. Indeed, he was represented by two attorneys during trial and the negotiation process. Thus, the trial court did not abuse its discretion.
¶ 10. Mr. Bidgood attempts to challenge the superior court's subject matter jurisdiction over this case by arguing that the trial court failed to follow statutory procedures in reclassifying the highway. Title 4 V.S.A. § 113 confers jurisdiction on the superior court in all civil cases except in certain situations not applicable to this case. Mr. Bidgood invoked the jurisdiction of the superior court when he filed an action under Vermont Rule of Civil Procedure 75, and appealed the road commissioner's determination. Under § 113, the superior court had jurisdiction over these actions, and Mr. Bidgood's challenges to the correctness of the court's decision do not remove its jurisdiction. Thus, the settlement agreement controls and we, therefore, affirm.
Affirmed.
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901 F. Supp. 500 (1995)
UNITED STATES POSTAL SERVICE
v.
TOWN OF GREENWICH, CONNECTICUT
v.
CENTRAL LAND COMPANY OF GREENWICH and Felix Equities, Inc.
Civ. No. 3:94 CV 1279 (JBA).
United States District Court, D. Connecticut.
September 5, 1995.
*501 Alan M. Soloway, Assistant U.S. Attorney, Bridgeport, CT, Ruth A. Gottlieb, U.S. Postal Service, Ofc. of Field Legal Services, Windsor, CT, Margot E. de Ferranti, U.S. Dept. *502 of Justice, Civil Division, Federal Programs Branch, Washington, DC, for Plaintiff.
John Meerbergen, Bleakley Platt & Schmidt, Greenwich, CT, Joyce H. Young, Town of Greenwich, Law Dept., Town Hall, Greenwich, CT, for Defendant.
Margaret A. Triolo, Whitman Bread Abbott & Morgan, Greenwich, CT, for Third-Party Defendant, Central Land Company of Greenwich.
Mark P. Santagata, Ronald E. Kowalski, II, Cacace Tusch & Santagata, Stamford, CT, for Third-Party Defendant, Felix Equities.
RULING ON PLAINTIFF'S and DEFENDANT'S CROSS-MOTIONS FOR SUMMARY JUDGMENT AND THIRD-PARTY DEFENDANTS' MOTIONS TO DISMISS
ARTERTON, District Judge.
I. Factual and Procedural History
This case poses the question of whether the Town of Greenwich, Connecticut ("Town") may enforce state building code requirements and require payment of building permit fees relating to the construction of a new post office (the "West Putnam Station") in Greenwich against the United States Postal Service, the lessor of the property (Central Land Company of Greenwich) and/or the independent building contractor constructing the post office (Felix Equities, Inc.).
The essential facts of this controversy are not in dispute. On May 26, 1993, the United States Postal Service ("Postal Service") entered into a forty-year lease with five five-year renewal options with Third-Party Defendant Central Land Company of Greenwich ("Central Land") for the property at 500 Old Post Road in Greenwich. The lease gives the Postal Service the right to erect a new building. The lease explicitly states that the Postal Service is liable for any applicable license or permit fees and shall, at its expense, comply with all applicable federal, state, county, and municipal laws, orders, ordinances, and regulations. (Central Land Lease, §§ 3.01, 5.01, Town Exhibit 1). At the end of the term (or renewal term) of the lease, any improvements to the land become the property of Central Land. (Central Land Lease, § 6.01, Town Exhibit 1).
Apparently because it does not have title to the land upon which the West Putnam Station sits, Congress has not acted to assert exclusive jurisdiction over the site, See U.S. Const. Art. I, § 8, cl. 17 (Congress shall have Power ... "to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be ..."), nor has the State of Connecticut ceded exclusive jurisdiction over the land to the federal government. See C.G.S. § 48-1 (1993) ("Exclusive jurisdiction in and over land so acquired by the United States is ceded to the United States ..."). Under Connecticut law, the consent of the state is statutorily granted for the acquisition of land by the United States for post offices or any other government purposes and the property is "exempt from all state, county, and municipal taxation, assessment, or other charges." Id.
On September 28, 1993, the Postal Service awarded Felix Equities, Inc. the contract to construct the post office for a total amount of $4,347,000. The building plans call for a total floor area of 66,700 square feet including a lobby that can accommodate sixty-eight people. Included in the Postal Service's original contract with Felix Equities for the West Putnam Station, and referenced in the Postal Service's Architect-Engineer Project Requirements ("Project Requirements"), were the following clauses:
[G.11.a.] State and local building codes and regulations do not apply as a matter of law to work inside the property lines of Postal Service-owned properties but generally do apply to Postal Service-leased properties. In compliance with Postal Service policy, the contractor must comply with all State and local building code requirements unless otherwise specifically provided.
[G.11.b.] The contractor must pay all fees and charges for connections to outside services for use of property outside the site.
(West Putnam Station Solicitation, Town Exhibit 3).
When Felix Equities applied to the Town for a permit to access electrical facilities offsite, *503 the Town Engineer refused to issue the permit unless the Postal Service or Felix Equities secured a general building permit pursuant to Conn.Gen.Stat. § 29-263 or obtained a waiver from the Town. Under Connecticut law, "no building or structure may be constructed or altered until an application is filed with the local building official and a permit issued." Conn.Gen.Stat. § 29-263 (1993). Prior to the issuance of the permit, the local building official is required to review the building plans to determine compliance with the state building code. Id. With the exception of the State of Connecticut, the Town imposes a building permit fee of one percent of the estimated total cost of construction against any person or entity engaged in new construction or material alteration.[1] Conn.Agencies Regs. § 114.3.1 (1993) ("Each municipality shall establish a schedule of fees for each ... building permit."); Conn. Gen.Stat. § 29-252a(h) (1993) ("State agencies shall be exempt from the permit requirements of section 29-263 ...").
The Town and the Postal Service disagreed on whether a general building permit could be required. The Town maintained that Section G.11.a. of the Postal Service's contract with Felix Equities and the Project Requirements required the issuance of a building permit. The Postal Service, on the other hand, contended that it did not consider the project as "Postal Service-leased property," but rather a "Postal Service-owned improvement on leased land,"[2] which is not subject to building code regulations.[3]
The Town building official has reviewed and objected to certain aspects of the building plans, most notably, emergency lighting and sprinklers in "lookout galleries," where postal inspectors secretly monitor Postal employees, and the number of women's toilets. The Town has demanded that the design features be corrected, and that the building permit fee of $43,470 be paid before construction continued.
During the course of negotiations, the Postal Service deposited the disputed building permit fee with the Town in escrow pending the judicial resolution of the dispute and work continued on the project. The Postal Service also modified its contract with Felix Equities by eliminating Section G.11.a. and amended its lease with Central Land to state that the improvements on the land would be the property of the Postal Service during the term of the lease.
Pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, the Postal Service filed this action against the Town seeking a declaration that the Postal Service is not subject to the state building code under the Postal Service Reorganization Act and the Supremacy Clause of the United States Constitution. In turn, the Town brought a third-party action against Central Land and Felix Equities seeking a declaration that the Town may enforce the state building code against *504 Central Land and Felix Equities by requiring them to secure a building permit and certificate of occupancy, and to pay the necessary fees, as would normally be required of such building contractors and lessors of land to projects not involving the federal government. Conn.Gen.Stat. § 29-263 (1993).
Before the Court are the following motions: Central Land's Motion to Dismiss, Felix Equities' Motion to Dismiss, Postal Service's Motion for Summary Judgment, and the Town of Greenwich's Motion for Summary Judgment. The Court heard oral arguments on these motions on July 28, 1995. Pursuant to the Court's request, the parties filed post-hearing briefs on August 29, 1995.
For the reasons that follow, the Court concludes that the state building code does not apply to the Postal Service, its contractor, and/or its lessor for the construction of the West Putnam Station.
II. DISCUSSION
A. Introduction
Postal Service and the Town of Greenwich have filed cross-motions for summary judgment pursuant to Fed.R.Civ.P. 56 while Central Land and Felix Equities moves this Court to dismiss the complaint against them pursuant to Rule 12(b)(6). The parties have agreed on the essential facts underlying this case, and that this case can be decided as a matter of law. The Court concurs with the parties' assessment. Further, as required, the Court accepts the factual allegations in the Town's Third-Party Complaint as true in its consideration of the Third-Party Defendants' Motions to Dismiss. Walsche v. First Investors Corp., 793 F. Supp. 395, 396 (D.Conn.1992) (citing Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 1686, 40 L. Ed. 2d 90 (1974)).
B. Postal Service's Motion for Summary Judgment
The Court begins its analysis by turning to the applicability vel non of this state building code enforcement statutory scheme to post offices. The United States Constitution authorizes Congress to establish post offices. U.S. Const. art. I, § 8, cl. 7 (The Congress shall have Power ... "To establish Post Offices and post Roads."). Accordingly, Congress enacted the Postal Reorganization Act, which established the United States Postal Service as "an independent establishment of the executive branch of the Government of the United States," 39 U.S.C. § 201 (1993), to provide postal services. 39 U.S.C. § 403 (general duties of Postal Service). The Postal Service has the right to establish and maintain postal facilities so that patrons throughout the country will "have ready access to postal services." 39 U.S.C. § 403(b)(3) (1993). The Postal Service has the right to determine the need for post office and facilities, 39 U.S.C. § 404(a)(3), and may acquire and lease real property in this purpose. 39 U.S.C. § 401(5). The Postal Service also has the power "to construct, operate, lease, maintain buildings, facilities, equipment, and other improvements on any property owned or controlled by it." 39 U.S.C. § 401(6) (1993).
Because the owner and operator of the building at issue is the United States Postal Service, the Court begins its analysis by determining the applicability of federal law and the Supremacy Clause to this matter. The Supremacy Clause of the United States Constitution states: "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; ... shall be the supreme Law of the Land ..." U.S. Const. art. VI, cl. 2. In enforcing the Supremacy Clause, the Supreme Court has consistently held that:
the activities of federal installations are shielded by the Supremacy Clause from direct state regulation unless Congress provides `clear and unambiguous' authorization for such regulation.
Goodyear Atomic Corp. v. Miller, 486 U.S. 174, 180, 108 S. Ct. 1704, 1709, 100 L. Ed. 2d 158 (1988) (quoting Environmental Protection Agency v. California ex rel. State Water Resources Control Bd., 426 U.S. 200, 211, 96 S. Ct. 2022, 2028, 48 L. Ed. 2d 578 (1976)). See U.S. v. Town of Windsor, Conn., 496 F. Supp. 581, 588 (D.Conn.1980) ("Windsor I") ("[A]bsent express Congressional consent, where the legal incidence of state or local taxation or regulation falls on the Federal Government *505 or its instrumentalities, such is prohibited by the Supremacy Clause.") (citing U.S. v. State Tax Commission of Mississippi, 421 U.S. 599, 95 S. Ct. 1872, 44 L. Ed. 2d 404 (1975); Hancock v. Train, 426 U.S. 167, 96 S. Ct. 2006, 48 L. Ed. 2d 555 (1976); Mayo v. U.S., 319 U.S. 441, 63 S. Ct. 1137, 87 L. Ed. 1504 (1943)).
In order for federal governmental instrumentalities to be subject to state or local taxes or regulations, Congress must give such authorization in clear and unambiguous language. M'Culloch v. Maryland, 17 U.S. (4 Wheat) 316, 4 L. Ed. 579 (1819); United States v. County of Allegheny, 322 U.S. 174, 177, 64 S. Ct. 908, 911, 88 L. Ed. 1209 (1944) ("But unshaken, rarely questioned, ... is the principle that possessions, institutions, and activities of the Federal Government itself in the absence of express congressional consent are not subject to any form of state taxation."); Hancock v. Train, 426 U.S. at 179, 96 S.Ct. at 2012 (no clear declaration by Congress requiring federal installations to obtain state air pollution permits). The Town has offered no evidence that Congress has granted clear, unambiguous authorization for post offices to be subjected to building code regulations or permit fees. See Middletown Township v. N/E Regional Office, U.S. Postal Service, 601 F. Supp. 125, 127 (D.N.J.1985) ("Township of Middletown has not brought to the court's attention any evidence of congressional intent to subject federal instrumentalities such as the Postal Service to local zoning regulations.").
Courts have consistently held that the local municipalities cannot regulate the United States Postal Office regarding its opening of post offices. See Id. (zoning ordinances); Stewart v. U.S. Postal Service, 508 F. Supp. 112, 115 (N.D.Cal.1980) (zoning ordinances); Crivello v. Board of Adjustment of Borough of Middlesex, 183 F. Supp. 826 (D.N.J.1960) (zoning ordinances). Although the cases cited involved the imposition of zoning ordinances, the same legal basis applies to building code regulations and permit fees:
[I]f the Postmaster General, pursuant to and in the exercise of the authority vested in him by congressional enactment, contemplates the erection of a post office on the proposed site, his authority may not be restricted by local ordinance.
Crivello, 183 F.Supp. at 829.
For these reasons, the Court grants the Postal Service's Motion for Summary Judgment and declares that the Town may not impose the state building code or the building permit fee schedule on the Postal Service in connection with the West Putnam Station.
C. Central Land's and Felix Equities' Motions to Dismiss
1. Applicability of State Building Code Regulations
In their respective Motions to Dismiss, Central Land and Felix Equities maintain that because they effectively stand in the shoes of the Postal Service, the state building code regulations and local building permit fees cannot be applied to them because any regulation of them necessarily interferes with the Postmaster General's authority to establish post offices, and thus, violates the Supremacy Clause. See Breeze v. Town of Bethlehem, 151 Misc. 2d 230, 573 N.Y.S.2d 122 (N.Y.Sup.Ct.1991) (lessor of property to Postal Service not required to apply for building permit); Durkin v. Board of Appeals of Falmouth, 21 Mass.App.Ct. 450, 488 N.E.2d 6 (1986) (zoning ordinances not applicable to lessor of land to Postal Service); Thanet Corp. v. Board of Adjust. of Township of Princeton, 104 N.J.Super. 180, 249 A.2d 31, 34 (Law.Div.1969), aff'd, 260 A.2d 1 (N.J.Super.App.Div.1969), cert. denied, 55 N.J. 360, 262 A.2d 207 (1970) (lessor of land to Postal Service immune from local zoning ordinances).
The Town maintains that the principles of the Supremacy Clause do not automatically extend to Central Land and Felix Equities by virtue of their contracts with the federal government. See Windsor I, supra; U.S. v. Town of Windsor, Conn., 765 F.2d 16 (2nd Cir.1985) ("Windsor II").
In Windsor I, the Government entered into a joint venture with Combustion Engineering, Inc. to construct and operate a coal gasification research Process Developing Unit. The federal government funded twothirds *506 of the project while Combustion Engineering funded one-third of the project and was responsible for the design, construction, and operation of the facility. Combustion Engineering owned the land on which the facility was built and leased it to the Government for $1.00 a year. Windsor I, 496 F.Supp. at 581.
The court held that while the Supremacy Clause barred the Town of Windsor, Connecticut, from imposing state building code requirements or from exacting a building permit fee from the federal government, Combustion Engineering was nonetheless subject to the regulations and fee. The Windsor I court adopted the language of a Third Circuit opinion:
"[T]he Government has deliberately opted for the `genius' of private enterprise ... In so choosing, the Government enjoys the benefits that are derived from private operation, but by the same measure, it must also suffer any reciprocal burdens. One of these burdens is the responsibility of (the private entity's) compliance with state ... regulations."
Windsor I, 496 F.Supp. at 592 (quoting U.S. v. Pennsylvania Environmental Hearing Board, 584 F.2d 1273, 1279 (3rd Cir.1978) (independent contract hired to operate a federal government ammunition plant was subject to state pollution laws)).
In Windsor II, the Town of Windsor sought to enforce building code provisions against the contractors hired by the federal Department of Energy to build and operate an expansion to an atomic power laboratory, already existing on federally-owned land. The Government conceded that the laboratory facility was not a federal enclave, and that the contractors were not alter egos of the government. See U.S. v. New Mexico, 455 U.S. 720, 739-740, 102 S. Ct. 1373, 1385, 71 L. Ed. 2d 580 (1982) (private contractors hired to construct and manage a government-owned atomic laboratories were not "instrumentalities" of the United States).
The Second Circuit held that since the atomic laboratory was not a federal enclave and the contractors were not the alter egos of the government, "application of the Supremacy Clause requires a balancing of the state and local interest in enforcing their regulations against the Government's interest in opposing the regulation." Windsor II, 765 F.2d at 19 (citations omitted). In rejecting the Town's right to enforce the state regulations, the Second Circuit found that the federal government's interest in maintaining the confidentiality of its classified plans and not opening a classified site to town building inspections outweighed the town's interest in enforcing safety rules in an area not accessible to the general public. Id.
The Town of Greenwich urges the Court to apply the balancing test in Windsor II in that, similarly to Windsor II, the West Putnam Station is not a federal enclave, and Central Land and Felix Equities are not alter egos of the federal government. The third-party defendants assert, and the court agrees, that the holding of Windsor II is limited to the unique factual circumstances of that case and thus is not applicable here.
Since the Windsor II balancing test was formulated ten years ago, there have been no reported cases in this Circuit interpreting its applicability to other government-private entity contractual relationships. Both Windsor cases involved formal joint ventures between the federal government and independent contractors, in which the private companies constructed and solely operated the facilities. In the instant case, however, no ongoing operational partnership between the federal government and the third-party defendants exists because third-party defendants Central Land and Felix Equities will have no role in the operation of post office.
Because the Postal Service will be solely managing the West Putnam Station and has not delegated any operational authority, the government has not opted for the `genius' of private enterprise within the meaning of the Windsor I court. See Windsor I, 496 F.Supp. at 592. It has merely contracted with private companies to lease the site and to construct a building instead of purchasing land and constructing the building itself. The lack of any ongoing operating arrangement with the private companies distinguishes this case from the Windsor cases, and for this reason, the Court will apply a *507 preemption analysis rather than the Windsor II balancing test here.
As a general rule, "where the legal incidence of a regulation falls on one other than the Government or its instrumentalities, such regulation is not of necessity barred by the Supremacy Clause." Windsor I, 496 F.Supp. at 591. See James Stewart & Co. v. Sadrakula, 309 U.S. 94, 60 S. Ct. 431, 84 L. Ed. 596 (1940) (safety requirements applicable to contractor constructing federal post office); Penn Dairies v. Milk Control Commission of Pennsylvania, 318 U.S. 261, 63 S. Ct. 617, 87 L. Ed. 748 (1943) (military base not exempted from state milk price control laws). The Town argues that nothing in the Postal Reorganization Act and Postal Service regulations expresses a clear and manifest purpose to override state and local safety regulations, and that any government immunity should not be extended to contractors or lessors. See Hillsborough County v. Automated Med. Labs., 471 U.S. 707, 105 S. Ct. 2371, 85 L. Ed. 2d 714 (1985) (Federal Drug Administration regulations did not preempt local regulations governing blood donor centers); Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 67 S. Ct. 1146, 91 L. Ed. 1447 (1947) (no preemption found under the United States Warehouse Act); Environmental Encapsulating Corp. v. City of New York, 855 F.2d 48 (2d. Cir.1988) (local regulations regarding training and certification of asbestos workers not preempted by Occupational Safety and Health Act).
Although the Postal Reorganization Act does not expressly preempt state building code regulations, the building code is "preempted to the extent it actually conflicts with federal law." Environmental Encapsulating Corp., 855 F.2d at 53. Unlike the three cases cited by the Town, the state law in this case conflicts with a federal scheme by infringing on the Postal Service's mandate to construct and operate post offices as authorized under the Postal Reorganization Act. E.g. 39 U.S.C. § 401(5) (acquiring and leasing of real property); 39 U.S.C. § 401(6) (constructing and operating buildings). Any regulation of the post office project, whether against the property, the lessor, or the building contractors "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Hines v. Davidowitz, 312 U.S. 52, 67, 61 S. Ct. 399, 404, 85 L. Ed. 581 (1941).
Although the Town undoubtedly has a legitimate interest in ensuring the construction of safe buildings, the Town cannot directly or indirectly regulate post office buildings owned by the Postal Service, even if on leased land without specific authorization from Congress. See Hancock v. Train, 426 U.S. at 179, 96 S.Ct. at 2012; Goodyear Atomic Corp. v. Miller, supra; EPA v. California ex rel State Water Resources Control Board, supra. In the absence of such specific Congressional authorization, the Court finds that the state building code cannot be applied to the lessors of land to the Postal Service and to the contractors hired to construct postal facilities because it conflicts with federal law. See Breeze v. Town of Bethlehem, 151 Misc. 2d 230, 573 N.Y.S.2d at 124; Durkin v. Board of Appeals of Falmouth, supra; Thanet Corp. v. Board of Adjust. of Township of Princeton, supra. See also Leslie Miller, Inc. v. Arkansas, 352 U.S. 187, 77 S. Ct. 257, 1 L. Ed. 2d 231 (1956) (contractor for Air Force not subject to state licensing requirements); U.S. v. Montana, 699 F. Supp. 835 (D.Mont.1988) (government contractors constructing military installation not subject to state building code).
2. Applicability of Building Permit Fee
The final issue to be addressed is whether the Town may exact the permit fee against either Central Land or Felix Equities. The third-party defendants assert that assessing the fee against them is the same as imposing it against the federal government, and is violative of the Supremacy Clause because it directly burdens the United States.
"The mere fact that the imposition of a particular fee may ultimately burden the United States financially does not provide a sufficient basis to invalidate the tax as violative of the supremacy clause." U.S. v. Montana, 699 F.Supp. at 839. See U.S. v. New Mexico, 455 U.S. 720, 102 S. Ct. 1373, 71 L. Ed. 2d 580 (1982) (state gross receipts tax *508 and compensating use tax valid against contractors constructing and managing government-owned atomic laboratory); James v. Dravo Contracting Co., 302 U.S. 134, 58 S. Ct. 208, 82 L. Ed. 155 (1937) (gross receipts tax on federal contractor valid even though it may increase the cost of service to government); Alabama v. King & Boozer, 314 U.S. 1, 62 S. Ct. 43, 86 L. Ed. 3 (1941) (government contractor liable for sales tax on purchases made for work on government facility).
However, where the payment of a fee is required before the federal agency can carry out a government function, such a fee violates the Supremacy Clause. The Supreme Court stated in Mayo v. U.S., 319 U.S. 441, 447, 63 S. Ct. 1137, 1140, 87 L. Ed. 1504 (1943):
These inspection fees are laid directly upon the United States. They are money exactions the payment of which, if they are enforceable, would be required before executing a function of government. Such a requirement is prohibited by the Supremacy Clause.
The Mayo Court found that the state inspection fees are distinguishable from a tax upon the purchases of a government supplier, Alabama v. King & Boozer, supra, and price controls on a government contractor, Penn Dairies v. Milk Control Commission, supra:
In these cases the exactions directly affected persons who were acting for themselves and not for the United States. These [inspection] fees are like a tax upon the right to carry on the business of the post office or upon the privilege of selling United States bonds through federal officials.
Mayo v. U.S., 319 U.S. at 447, 63 S.Ct. at 1140.
In the instant case, although the state building code authorizes the Town to collect the fees against the lessor and contractor, the fee is being assessed against a building owned and operated by the United States. Because the Town required the building permit fees to be satisfied before work on the project could continue, the Town directly infringed on the federal government's "right to carry on the business of the post office." Id. Because of this precondition, the Town may not exact the permit fee against the third-party defendants because it places "a direct burden upon the United States in the execution of its governmental functions in violation of the supremacy clause." U.S. v. Montana, 699 F.Supp. at 839 (building code fee assessed on federal property directly burdens the United States).
For these reasons, the Town cannot enforce the state building code and the building permit fees on the private contractors Central Land and Felix Equities and thus, the Court grants Central Land's and Felix Equities's Motions to Dismiss and denies the Town of Greenwich's Motion for Summary Judgment.
III. CONCLUSION
The Court grants the United States Postal Service's Motion for Summary Judgment (# 19), Central Land's Motion to Dismiss (# 25), and Felix Equities's Motion to Dismiss (# 30), and denies the Town of Greenwich's Motion for Summary Judgment (# 32).
In accordance with these judgments, the Court orders the following relief:
1. Pursuant to 28 U.S.C. § 2201, the state building code does not apply to the Postal Service, its contractor, and/or its lessor for the construction of the West Putnam Station.
2. The Town of Greenwich, Connecticut is permanently enjoined from all current and future actions against the Postal Service, its contractors, subcontractors and/or its lessor for the Postal Service's failure to secure a general building permit.
3. The Town of Greenwich shall return the escrow deposit of $43,370 to the Postal Service within seven days of this Order.
SO ORDERED.
NOTES
[1] The Postal Service maintains the permit fee is an impermissible tax on the federal government. See Massachusetts v. U.S., 435 U.S. 444, 464, 98 S. Ct. 1153, 1165, 55 L. Ed. 2d 403 (1978) citing Evansville-Vanderburgh Airport Authority Dist. v. Delta Airlines, 405 U.S. 707, 716-720, 92 S. Ct. 1349, 1355-1357, 31 L. Ed. 2d 620 (1972) ("taxes are valid so long as they (1) do not discriminate against interstate commerce, (2) are based upon some fair approximation of use, and (3) are not shown to be excessive in relation to the cost of the government of the benefits conferred."). Because the state government is exempt from municipal building permit fees, the Postal Service maintains that the Town's attempted enforcement of such fees against the federal government is discriminatory. Further, the Postal Service asserts that the fee schedule (1% of construction cost) does not fairly approximate the building inspector's services, and that in any event, the inspection is of no benefit to the Postal Service because it has its own inspection procedures.
Because the court's analysis of the Supremacy Clause is determinative, it is unnecessary to reach this claim.
[2] "Postal Service-owned improvements on leased land" is defined as a project where the Postal Service leases land on which it designs, constructs, and owns the building and the site improvements. In contrast, at a "Postal Service-leased property," the Postal Services leases both the building and a site from a lessor. (Project Requirements, § 1.5.a., Town Exhibit 4).
[3] The Postal Service's Architect-Engineer Project Requirements explicitly state that for Postal Service-owned improvements on leased land, Sections G.11-12 of the construction contract "must not be interpreted as requiring the obtaining of a building permit or the submitting of plans for approval by local building department." (Project Requirements, § 1.5.d., Town Exhibit 4).
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619 S.W.2d 191 (1981)
J. R. LEGGETT and Eunice Leggett, Appellants,
v.
The CHURCH OF ST. PIUS OF CANNON FALLS, MINNESOTA, Appellee.
No. 17934.
Court of Civil Appeals of Texas, Houston (1st Dist.).
April 30, 1981.
Rehearing Denied May 28, 1981.
*192 Philip Gates, Hodges, Gates & Halcom, Columbus, for appellants.
Joe S. Maida, Maida & Lincoln, Houston, Phillip L. Kunkel, Moratzka, Dillon & Kunkel, Cannon Falls, Minn., for appellee.
Before DOYLE, SMITH and EVANS, JJ.
EVANS, Justice.
This is an action in trespass to try title to the oil, gas and other minerals in and under a ten acre tract in Colorado County. The plaintiff church is the record owner of the mineral estate, and the defendants' claim is principally based upon adverse possession under the five and ten year statutes of limitation. After a non-jury trial, judgment was entered for the plaintiff, and the defendants appeal from that judgment.
The stipulated common source of title was Mrs. Louis E. Contella, a resident of Minnesota, who acquired the tract of land in 1913. Subsequently, in 1962, Mrs. Contella conveyed the surface of the land to defendant J. F. Leggett, reserving all of the oil, gas and other minerals in and under the land conveyed.
Mrs. Contella died testate in 1968, naming the plaintiff as the residuary beneficiary of her estate and her nephew, L. P. Schueller, as executor. Exemplified copies of Mrs. Contella's will and order admitting same to probate in Minnesota were subsequently filed in the deed records of Colorado County.
On November 6, 1969, L. P. Schueller executed a deed to defendant J. F. Leggett, purporting to convey, as executor of Mrs. Contella's estate, the oil, gas and other minerals in and under the subject land. It is the defendants' contention that this deed effected a merger of the surface and the mineral estates and that their use and possession of the land following that conveyance was adverse to the plaintiff.
When an executor under a foreign will properly recorded in the deed records of any county in this state is granted a power of sale with respect to any property of the estate situated in this state, no order of a court of this state is necessary to authorize the executor to make such sale and execute a proper conveyance. Tex.Prob.Code Ann. § 107. However, in the absence of a power of sale given in the foreign will, a purported conveyance by the executor is void. Berry v. Hindman, 61 Tex. Civ. App. 291, 129 S.W. 1181 (1910, writ ref'd).
It is apparent from the face of the record in the case at bar that the terms of Mrs. Contella's will do not give the executor *193 a power of sale with respect to any of the assets of her estate. Thus, the instrument of conveyance executed by the foreign executor was wholly ineffective to convey any title, and the instrument did not effect a merger of the surface and mineral estates.
It is undisputed that the defendants' continued possession of the surface estate was entirely consistent with their record ownership following severance of the mineral estate. It is also uncontroverted that the defendants did not exercise any physical dominion with respect to the mineral estate which would constitute notice to the plaintiff of their alleged adverse claim. It is well settled that a surface owner, and those claiming under him, cannot acquire a limitation title to the mineral estate merely by reason of exclusive possession of the surface estate after severance of the minerals. Greene v. White, 137 Tex. 361, 153 S.W.2d 575, 585 (1941).
The trial court properly determined that the plaintiff established a record title to the mineral estate in the subject land and that the defendants failed to establish any legal basis for their claim of ownership to the severed mineral estate.
The trial court's judgment is affirmed.
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619 S.W.2d 196 (1981)
Harold W. WALKER, Appellant,
v.
Juanette WALKER, Appellee.
No. 1397.
Court of Civil Appeals of Texas, Tyler.
May 14, 1981.
Rehearing Denied July 30, 1981.
*197 Billy D. Hullum, Wills Point, Richard Ray, Canton, for appellant.
Kiel Boone, Dallas, Robert F. Bartlett, Canton, for appellee.
SUMMERS, Chief Justice.
This is an appeal from a judgment accelerating at a discounted value certain future monthly installments awarded appellee in a prior divorce decree.
On June 4, 1975, in Cause No. 74-55, the court rendered a decree of divorce between appellant Harold W. Walker and appellee herein; among other property awarded to appellee was an award of the sum of one thousand dollars per month, to be paid to appellee by appellant Walker beginning April 21, 1975, and continuing for a period of one hundred (100) months.
Appellee, the former wife, brought this suit against appellant, her former husband, and his present wife, seeking to recover all matured and unpaid installments beginning June 21, 1978, to date of hearing. She also sought to recover the discounted value of all remaining unmatured installments, alleging that such installments should be accelerated because of appellant's repudiation of his obligation to pay the same.
Appellant Walker and his wife filed an answer with special exceptions, a cross-action and a plea in abatement. On February 22, 1980, the court overruled the special exceptions and plea in abatement and, after a non-jury trial on that date, rendered a judgment in favor of appellee, providing in pertinent part as follows:
(1) That appellant Walker is indebted to appellee in the amount of $22,057.82 (representing the matured and unpaid installments beginning June 21, 1978 to date in the amount of $21,000.00 plus six percent interest from that date).
(2) That the remaining unmatured installments should be accelerated and the appellee given judgment for the additional sum of $37,104.79 (representing the discounted value of the remaining unmatured installments).
(3) That appellant Walker is entitled to offsets and credits in the total amount of $11,660.00; that all other recovery prayed for by him be denied.
(4) That by reason of the foregoing, the court ordered as follows:
IT IS THEREFORE ORDERED, ADJUDGED and DECREED by the Court that the Plaintiff, JUANETTE WALKER, do have and recover from the Defendant, HAROLD W. WALKER, the sum of FORTY-SEVEN THOUSAND, FIVE HUNDRED TWO AND 61/100 ($47,502.61) DOLLARS, with interest thereon from the date of judgment at the rate of nine (9) per cent per annum, and that all costs herein be taxed against the Defendant, HAROLD W. WALKER, for which let execution issue.
From this adverse judgment appellant Walker has appealed, predicating his appeal upon two points of error.
We reverse in part; judgment modified, and as modified, affirmed.
In his first point of error appellant asserts that the trial court erred in refusing appellant a trial by jury. He contends that since a jury fee had been timely paid, the court erred in trying the case without a jury. We find no merit in this contention. A litigant must take affirmative action to avoid a waiver of his right to jury trial. *198 Rule 216[1] requires that a demand for jury be made and the fee paid "on or before appearance day or, if thereafter, a reasonable time before the date set for trial of the cause on the non-jury docket, but not less than 10 days in advance." (Emphasis added.) The record reflects the following: appearance day for appellant Walker was Monday, October 22, 1979; the case was set for non-jury trial on February 22, 1980 (no jury being available on that date); and Mr. Walker did not deposit the jury fee with the district clerk until February 11, 1980. No notice of this deposit was given to appellee's counsel. A demand for jury made ten days in advance is not necessarily timely as a matter of law. Texas Oil & Gas Corporation v. Vela, 429 S.W.2d 866, 876-77 (Tex. 1968); Young v. Young, 589 S.W.2d 520, 521 (Tex.Civ.App. Austin 1979, writ dism'd). Moreover, in the case at bar, the record does not reflect that any demand was made by appellant Walker for a jury trial. The deposit of the jury fee with the district clerk did not constitute a demand for a jury. Rule 216; 3 R. McDonald, Texas Civil Practice § 11.03.1 (rev. 1970). We therefore hold that appellant waived his right to a jury trial.
Furthermore, even if we assume that timely demand and fee deposit were made in compliance with Rule 216, appellant has still waived his right. When the case was called for trial, appellant's only request was that the preliminary matters (his plea in abatement and special exceptions) "... be considered prior to getting into the merits...." After the court ruled upon these matters, the record is devoid of any request for a jury or any objection to the court proceeding to trial of the case on its merits. Where, as here, appellant comes into court and enters upon a hearing before the court without objection and calls upon the court to decide an issue of fact, he waives his right to a jury by entering upon the hearing without complaint. After the court rules adversely to his position, appellant will not be heard to complain that he was entitled to have a jury decide the fact question rather than the court. Hernandez v. Light Pub. Co., 245 S.W.2d 553, 554 (Tex. Civ.App. San Antonio 1952, writ ref'd n. r. e.); Richardson v. Raby, 376 S.W.2d 422, 425 (Tex.Civ.App. Tyler 1964, no writ). Appellant's first point of error is overruled.
In his second point of error, appellant asserts that the trial court erred in reconstructing the judgment of Cause No. 74-55 by granting acceleration of future payments. Appellant contends that the 1975 divorce decree which awarded appellee, as a part of the property partition, the one hundred monthly installments of $1,000.00, each payable as set forth therein, was res judicata of any relitigation of such matters in this cause. We agree.
It is undisputed that the 1975 divorce decree became final in July 1975 and that no appeal was taken from the decree which was signed June 4, 1975. Appellee's attempt to relitigate the property partition ordered in the divorce judgment by accelerating the unmatured installments to a discounted amount and obtaining judgment therefor ahead of the payment schedule set forth in the divorce decree is foreclosed by the finality of the judgment in the former case. Additionally, such decree, not being void on its face, was not subject to collateral attack. Day v. Day, 603 S.W.2d 213, 215 (Tex.1980); Faglie v. Williams, 569 S.W.2d 557, 563 (Tex.Civ.App. Austin 1978, writ ref'd n. r. e.); Marks v. Marks, 470 S.W.2d 83, 86 (Tex.Civ.App. Tyler 1971, writ ref'd n. r. e.); White v. White, 380 S.W.2d 672, 678 (Tex.Civ.App. Tyler 1964, writ ref'd n. r. e.).
Appellee contends that appellant, by his failure in the past to pay installments as they became due, repudiated his obligation to make such payments as provided in the divorce decree and that, under the law of anticipatory breach of contract, the court properly matured the remaining installments. In this connection, appellee cited several cases[2] involving actions for anticipatory *199 breach of contract by repudiation in which the court allowed a recovery of present discounted value of unaccrued future payments. In Chavez v. Chavez, 577 S.W.2d 306 (Tex.Civ.App. El Paso 1979, writ ref'd n. r. e.), a case relied upon by appellee, the court held that a former husband, in failing to pay monthly installments to his former spouse on "a contract in the nature of a property settlement agreement in their divorce action," repudiated the contract, thus entitling the ex-wife to recover the present value of future payments.
The case at bar is not a contract case, and thus Chavez and the other cases cited by appellee are not applicable, and can be distinguished from the instant case where the obligation to pay monthly installments is court ordered in the 1975 divorce decree and not founded upon any contractual agreement. Appellant's second point of error is sustained.
We accordingly reverse that part of the trial court's judgment which accelerated the remaining unmatured installments and allowed appellee to recover the additional sum of $37,104.79 as the discounted value of such installments. Furthermore, to reflect this action, the sum of $37,104.79 is deducted from appellee's recovery and the trial court's judgment is modified to provide that the plaintiff, Juanette Walker, recover from the defendant, Harold W. Walker, the sum of $10,397.82, with interest thereon from the date of judgment at the rate of nine (9) percent per annum.[3]
Since we have affirmed the judgment in part and reversed in part, we tax the costs on appeal and in the court below equally against the parties. Rule 448; Lone Star Life Ins. Co. v. Griffin, supra at 582; Combined American Ins. Co. v. City of Hillsboro, 421 S.W.2d 488, 491 (Tex.Civ.App. Waco 1967, writ ref'd n. r. e.).
As so modified, the trial court's judgment is affirmed.
McKAY, J., not participating.
NOTES
[1] All references to rules are to Texas Rules of Civil Procedure unless noted otherwise.
[2] Look v. Werlin, 590 S.W.2d 526 (Tex.Civ. App. Houston [1st Dist.] 1979, no writ) [commercial lease contract]; Republic Bankers Life Ins. Co. v. Jaeger, 551 S.W.2d 30 (Tex.1976) [insurance policy contract]; Lone Star Life Ins. Co. v. Griffin, 574 S.W.2d 576 (Tex.Civ.App. Beaumont 1978, writ ref'd n. r. e.) [insurance policy contract].
[3] This ruling is made without prejudice to future actions which may be brought by appellee from the recovery of matured and unpaid installments.
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146 B.R. 315 (1992)
In re HUB BUSINESS FORMS, INC., Debtor.
In re WINTHROP HOSPITAL, INC., Debtor.
Bankruptcy Nos. 92-13408-JNG, 92-14034-JNG.
United States Bankruptcy Court, D. Massachusetts.
October 21, 1992.
*316 Michael P. Cashman, Widett, Glazier & McCarthy, Boston, Mass., for debtor Hub Business Forms, Inc.
Mary K. DeNevi, Widett, Slater & Goldman, Boston, Mass., for debtor Winthrop Hosp., Inc.
MEMORANDUM
JAMES A. GOODMAN, Chief Judge.
I. INTRODUCTION
Several applications to employ professional persons pursuant to 11 U.S.C. *317 § 327[1] have been filed in the above captioned cases and are now pending before the Court. These two cases are not consolidated or jointly administered, but because the issues raised by the applications in the two cases are identical, the Court addresses them together in a single memorandum.
On July 23, 1992, the Court held a hearing on the application of Hub Business Forms, Inc. ("HBF") to employ an accountant, Joseph Walter, C.P.A. The U.S. Trustee objected to the application. The Court took the applications under advisement and requested the parties to submit briefs.
On August 28, 1992, the Court held a hearing on the applications of Winthrop Hospital, Inc. ("Winthrop") (1) to employ the law firm of Bagley & Bagley, P.C. as special counsel; (2) to employ the Law Offices of Peter V. Kent as special counsel; and (3) to employ the accounting firm of Ernst & Young. The Court, after requesting briefs, took the applications under advisement.
On September 17, 1992, Winthrop came before the Court on its application to employ the firm of Deloitte & Touche. The Official Unsecured Creditors' Committee objected to the application. The Court took that matter under advisement without the need for further briefs from the parties.
II. POSITIONS OF THE PARTIES
A. Applications Pursuant to Section 327(a)
The Court has before it briefs submitted by HBF and Winthrop in support of their respective applications to employ professionals, as well as the brief of the U.S. Trustee opposing HBF's application to employ Joseph Walter. Since the legal arguments of the applicants are essentially the same in both cases, the legal arguments contained in the U.S. Trustee's brief apply with equal force to Winthrop's applications.
HBF argues that section 1107 of the Bankruptcy Code creates an exception to the requirement of disinterestedness found in 11 U.S.C. § 327. HBF cites 11 U.S.C. § 101(14), which defines disinterestedness, and 11 U.S.C. § 1107(b), which it argues creates an exception to the requirements of section 327 in support of its position. Section 101(14) provides:
"disinterested person" means person that
(A) is not a creditor, an equity security holder, or an insider;
* * * * * *
(E) does not have an interest materially adverse to the interest of the estate or of any class of creditors or equity security holders, by reason of any direct or indirect relationship to, or connection with, or interest in, the debtor . . ., or for any other reason.
11 U.S.C. § 101(14). Section 1107(b) states:
Notwithstanding section 327(a) of this title, a person is not disqualified for employment under section 327 of this title by a debtor in possession solely because of such person's employment by or representation of the debtor before the commencement of the case.
*318 11 U.S.C. § 1107(b).[2] HBF recognizes that section 327(a) contains a two prong test that requires that professionals employed in a case be disinterested and neither hold or represent an interest adverse to the estate. However, it argues that "the twin requirements of disinterestedness and lack of adversity telescope into what amounts to a single hallmark," In re Martin, 817 F.2d 175, 180 (1st Cir.1987), so that the ultimate consideration in hiring a professional pursuant to section 327(a) is disinterestedness. HBF cites several cases in which bankruptcy courts have held that section 1107(b) provides an exception to section 327's disinterestedness requirement, allowing employment of professionals who are creditors solely because of prepetition employment. See, e.g., In re Viking Ranches, Inc., 89 B.R. 113 (Bankr.C.D.Cal.1988); In re Best Western Heritage Inn Partnership, 79 B.R. 736 (Bankr.E.D.Tenn.1987); In re Heatron, Inc., 5 B.R. 703 (Bankr.W.D.Mo. 1980).
In Viking Ranches, supra, the court considered the debtor's request to employ the accounting firm of Ernst & Whinney, the holder of an unsecured, prepetition debt in the approximate amount of $21,000, for services performed in a case with total debt far in excess of that amount. The U.S. Trustee filed the only objection to the application. Relying upon In re Pierce, 809 F.2d 1356 (8th Cir.1987), he argued that Ernst & Whinney as a creditor was not disinterested and that the majority of cases hold that section 1107(b) "applies as an exception only where the professional is not owed any money pre-petition, and had merely been previously employed by the debtor-in-possession." Viking Ranches, 89 B.R. at 114. Noting a distinction between debtor-in-possession cases and trustee cases, the court stated the following:
the purpose of the Section 1107(b) exception in debtor-in-possession cases is to allow the debtor-in-possession to utilize its "management team" which may include professionals who are familiar with the operation of the business and in whom the debtor-in-possession has confidence. Obviously, if these professionals have provided regular service to the debtor, the chances are quite substantial that these professionals will be unsecured creditors of the estate. To allow pre-petition professionals to be employed only if their debt is "paid in full," would necessitate these professionals, when they become aware of severe financial problems, to seek payment in full of the obligation in order that said professionals might be employed by the debtor-in-possession in the future. This would tend to taint the relationship of professionals to debtors-in-possession and may even encourage "adverse" positions due to the possibility that payment to these professionals, prior to bankruptcy for pre-bankruptcy work would be preferential payments and possibly voidable, if pursued by separate counsel. It does not make sense that Congress would encourage such action in debtor-in-possession cases.
Id. at 115.
The U.S. Trustee, in its opposition to HBF's application to employ Joseph Walter as an accountant, cites In re Anver Corp., 44 B.R. 615 (Bankr.D.Mass.1984), as the majority rule and the "settled law" in this district. According to the U.S. Trustee, the holder of a prepetition claim is disqualified from serving as a professional. See Anver Corp., supra. See also In re Siliconix, Inc., 135 B.R. 378 (N.D.Cal.1991) (creditors are per se "interested," and so are barred from employment as professionals); In re Watervliet Paper Co., 111 B.R. 131 (W.D.Mich.1989) (pre-petition unsecured claim by an attorney against the debtor prevents that attorney from being "disinterested"); In re Jaimalito's Cantina Associates Ltd. Partnership, 114 B.R. 1 (Bankr.D.D.C.1990) (counsel who held prepetition claim of unspecified amount did not qualify as "disinterested").
The U.S. Trustee argues that the "minority" rule advocated by Winthrop and HBF *319 is "wrong as a matter of law." The plain meaning of the Bankruptcy Code, the U.S. Trustee asserts, is to prevent the employment of professionals with any claims against the debtor. HBF attempts to distinguish Anver on grounds that the court disqualified two professionals not merely because they were creditors but because one was an officer and the other an equity holder of the debtor. HBF correctly notes that these are relationships for which section 1107(b) does not provide an exception. Nevertheless, in Siliconix, supra, the court unequivocally rejected the reasoning adopted by HBF and Winthrop and set forth in the Viking Ranches case. The court in Siliconix stated:
The clear language of the statutes involved proscribes employment of creditors. Moreover, a majority of courts have specifically rejected the arguments offered in support of the minority rule. . . . "[W]ith respect to questions of efficiency, it is by now plain that Congress when it enacted § 327(a), made a conscious choice that efficiency would be sacrificed for the appearance of propriety." The bankruptcy rules were designed to "insure the integrity of the bankruptcy process and the public confidence in the bankruptcy courts."
In re Siliconix, Inc., 135 B.R. 378, 380 (Bankr.N.D.Ca.1991) (citations omitted). The court also emphasized the lack of clear standards for applying the minority rule:
courts permitting employment of creditors have required the claim against the estate be "small," and required that the particular professional must be able to confer a benefit to the debtor in terms of efficiency. However, no court has explained just how small "small" must be, and whether the size of the claim is to be evaluated in relation to the other creditors, the total debt, the size of the creditor-professional's business, or anything else.
Id.
B. Applications Pursuant to Section 327(e)
Two of the applications filed by Winthrop seek the employment of special counsel pursuant to section 327(e). Winthrop correctly points out that section 327(e) does not contain the requirement that the professional whose employment is sought must be disinterested. See 11 U.S.C. § 101(14). Section 327(e) requires only that the professional neither hold nor represent an interest adverse to the estate. Section 327(c) adds the requirement that there be no actual conflict of interest from the representation of a creditor of the debtor by the professional whose employment is sought. Therefore, because of the more limited scope of the employment of special counsel, some connections to the case may be allowed under subsections 327(c) and (e) that would not otherwise be allowed under section 327(a). Winthrop suggests that the appropriate test under section 327(e) is whether there is an actual or potential conflicts with respect to the particular matters for which representation is sought. In re Statewide Pools, Inc., 79 B.R. 312, 314 (Bankr.S.D.Ohio 1987). Winthrop urges the Court to find that no such conflict exists for their two proposed special counsels.
III. DISCUSSION
This Court must be guided by the decision of the First Circuit in In re Martin, 817 F.2d 175 (1st Cir.1987). In that case, the court was faced with the debtors' application to employ a law firm that held a prepetition mortgage given by the debtors on real estate to secure payment of legal fees that would be incurred during the bankruptcy proceeding. In Martin the debtors were unable to provide counsel with a $5,000 retainer. Instead, approximately one month prior to their bankruptcy filing, they executed a note to the law firm in the amount of $10,000. The debtors filed a Chapter 11 petition on the same day the law firm recorded a mortgage to secure repayment of the note. The court held that the prepetition secured claim against the debtor did not render the professional interested per se, particularly since, as the court observed, the note was secured by a *320 second mortgage on property that was not crucial to the debtors' reorganization and the law firm's secured position was fully disclosed.
Martin is distinguishable from the present cases, however, because it dealt with a secured claim incurred in contemplation of the filing of a bankruptcy petition. In Martin, the First Circuit stated:
At first blush, this statute [section 327(a)] would seem to foreclose the employment of an attorney who is in any respect a "creditor." But, such a literalistic reading defies common sense and must be discarded as grossly overbroad. After all, any attorney who may be retained or appointed to render professional services to a debtor in possession becomes a creditor of the estate just as soon as any compensable time is spent on account. Thus, to interpret the law in such an inelastic way would virtually eliminate any possibility of legal assistance of a debtor in possession, except under a cash-and-carry arrangement or on a pro bono basis. It stands to reason that the statutory mosaic must, at the least, be read to exclude as a "creditor" a lawyer, not previously owed back fees or other indebtedness, who is authorized by the court to represent a debtor in connection with reorganization proceedings-notwithstanding that the lawyer will almost instantaneously become a creditor of the estate with regard to the charges endemic to current and future representation.
817 F.2d at 180 (emphasis supplied) (citations and footnote omitted). In a footnote, the court observed that the performance of standard prepetition services to facilitate a Chapter 11 filing would not disqualify an otherwise eligible attorney. Id. at n. 5. In view of the distinction between lawyers who become creditors when a bankruptcy filing is contemplated and those who are "previously owed back fees or other indebtedness," id., it is clear to this Court that the position of the First Circuit and the positions of the courts in the cases cited by the U.S. Trustee, see inter alia In re Siliconix, Inc., 135 B.R. 378 (Bankr.N.D.Cal. 1991), are reconcilable. The initial inquiry must focus on whether the obligations owed to the professionals whose employment is at issue were incurred in contemplation of and to facilitate the filing of the bankruptcy petition or whether the obligations were incurred with respect to matters wholly unrelated to the bankruptcy filing. In the latter situation, the rationale of the Martin case carries little weight and the unambiguous wording of the statute should be enforced. Cf. United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241, 109 S. Ct. 1026, 1030, 103 L. Ed. 2d 290 (1989). Accordingly, the Court rules that with respect to applications filed pursuant to section 327(a) there is no exception carved out by section 1107(b) of the Bankruptcy Code for professionals who are creditors of the debtor's estate for services performed unrelated to the bankruptcy filing.
With this foundation, the Court proceeds to consider the merits of each application in turn.
IV. IN RE HUB BUSINESS FORMS
HBF filed a petition for protection under Chapter 11 of the Bankruptcy Code on April 6, 1992. HBF's schedules list total assets of $92,582.29 and total debts of $328,220.60, which are all unsecured. HBF filed an application to employ Joseph Walter ("Walter"), a certified public accountant on June 26, 1992. In its application, HBF states that Walter has represented HBF as its accountant for over twenty years. HBF seeks to employ Walter to prepare updated financial statements, to provide financial and management advice, and to assist with projections of cash flow, sales and other relevant financial information. HBF states that the total compensation that Walter will receive shall not exceed $15,000.
HBF's application also discloses that Walter holds an undisputed, unsecured claim in the amount of $7,033.12, representing about 2% of HBF's total debt. The application and the affidavit of Walter state that Walter is disinterested and holds no interest adverse to the estate, except with respect to the unsecured claim.
*321 In accordance with the conclusions of law outlined above, the Court shall not approve HBF's application to employ Walter unless within 15 days of the date of the order, or within such additional time as the HBF may request, Walter files with the Court a waiver of his prepetition unsecured claim. If Walter waives his claim, he will no longer be a creditor, and the bar to his employment resulting from his lack of disinterestedness as a creditor will be removed.
V. IN RE WINTHROP HOSPITAL
A. Ernst & Young
Winthrop filed a petition for protection under Chapter 11 of the Bankruptcy Code on June 10, 1992. Winthrop's schedules list total assets of $12.8 million and total debts of $28.3 million, of which $17.4 million is secured and $10.9 million is unsecured. Winthrop seeks to employ the accounting firm of Ernst & Young ("E & Y") nunc pro tunc as of June 24, 1992. Winthrop's application states that, in June 1992, it learned of the need for filing a Determination of Need Application (the "Application") with the Massachusetts Department of Public Health ("DPH"). This Application was necessary for Winthrop to obtain DPH approval to increase the size of Winthrop's psychiatric service. Despite Winthrop's assertion that it only learned of the need for the Application some time in June, the deadline for the Application was July 1, 1992. E & Y stepped in on June 24, 1992, performed the requested duties and prepared the Application. Winthrop's application to employ E & Y states that the value of these services is $21,386. E & Y's services to Winthrop, for which Winthrop makes this application nunc pro tunc, have been completed and no future work is anticipated.
Winthrop's application to employ also discloses that E & Y has previously assisted Winthrop in developing monthly cash flow projection models. E & Y holds a prepetition claim for $53,995 for these and other consulting services.
No party in interest filed an objection to Winthrop's application to employ E & Y. Nevertheless, in accordance with the conclusions of law set forth above, the Court shall not approve the application to employ E & Y, unless within 15 days of the date of the order, or within such additional time as Winthrop may request, E & Y files with the Court a waiver of its prepetition unsecured claim. As in the HBF case, if E & W waives it prepetition claim, it will no longer be a creditor and barred from employment as a result of 11 U.S.C. §§ 327(a) and 101(14).
B. Deloitte & Touche
On August 27, 1992, the Debtor has filed an application to employ the firm of Deloitte & Touche ("D & T") to act as an auditor for Winthrop. D & T has worked as Winthrop's auditor since 1981. Winthrop represents that it needs the services of D & T to account for property received by the estate, to maintain Winthrop's financial records, and to determine Winthrop's tax liabilities. Winthrop also expects D & T to provide accounting services to assist Winthrop in verifying accounts receivable with regard to Medicare and Medicaid insurance payments.
The application to employ D & T discloses that D & T holds a $40,664 unsecured claim for services performed prepetition. In addition, D & T is currently employed as an auditor for Advacare, a company with a subsidiary, Maximum Claims Service, which is on the Official Unsecured Creditors' Committee. Winthrop's application further states that D & T may be employed currently or may have been employed in the past as an auditor for other creditors of Winthrop. However, the application to employ provides no further details on this specific issue, and it does not identify any such additional creditors. Despite these potential conflicts, Winthrop asserts that "ethical principals of the accounting profession would prevent D & T from becoming involved in disputes between two clients, such as Winthrop and Maximum Claims Service or some other creditor."
The Unsecured Creditors' Committee filed an objection to Winthrop's application *322 to employ D & T, citing grounds not relevant to the issue before the Court.
The Court finds that D & T is not a disinterested person, as required by section 327(a). D & T's unsecured claim and connection with Maximum Claims Service, a member of the Official Unsecured Creditors' Committee, creates the potential for conflicts. In addition, by Winthrop's own admission, D & T may be representing other creditors. This presents the possibility of even greater, hidden conflicts. The Court denies Winthrop's application to employ D & T.
C. Law Offices of Peter V. Kent
Winthrop has filed an application to employ the Law Offices of Peter V. Kent ("Kent") as special counsel for the collection of patient accounts receivable. Winthrop's application states that Winthrop retained Kent prepetition to collect delinquent or otherwise disputed accounts receivable from third-party payors and patients. Winthrop desires to employ Kent as special counsel to continue these legal services. The application proposes to employ Kent on a contingent fee basis for the postpetition services to be performed.
Winthrop's application discloses that Kent holds an unsecured claim for prepetition services in the amount of $34,569.10, representing about one tenth of one percent of Winthrop's total debt. In addition, Kent is a member of the Official Unsecured Creditors' Committee.
No party in interest filed an objection to Winthrop's application to employ Kent.
Because Winthrop seeks to employ Kent as special counsel, subsections 327(c) and (e), and not 327(a), apply. The appropriate test, then, is whether Kent represents or holds an interest adverse to the estate.
The Court finds that Kent is not precluded from employment because of the prepetition claim for $34,569.10 that he holds. The application to employ Kent is approved. As special counsel for the limited purpose of collecting accounts receivable, his actions will not affect either the administration or outcome of the Chapter 11 case.
D. Bagley & Bagley, P.C.
Winthrop has filed an application to employ the law firm of Bagley & Bagley, P.C. ("B & B"), nunc pro tunc as of the date of filing, April 23, 1992. Winthrop retained B & B prepetition to represent it at commitment hearings that periodically arise in state court. B & B has represented Winthrop postpetition as well. Winthrop, believing these services to be in the ordinary course of business, has been making periodic payments to B & B.
In addition, Winthrop retained B & B in connection with a charge of employment discrimination filed in 1986 with the Massachusetts Commission Against Discrimination ("MCAD") by a former employee. Winthrop requests in its application to employ B & B as special counsel in the event that the claim becomes the subject of proceedings before this Court. Settlement negotiations in that action have been initiated but now are stayed by the filing.
Winthrop's application to employ B & B discloses that B & B is counsel to East Boston Savings Bank, which is a "participant" in a loan secured by a mortgage on a building owned by Winthrop. Winthrop asserts, though, that B & B does not represent East Boston Savings Bank in any matters involving Winthrop and that counsel to the lead bank on the loan is handling that matter.
The application to employ B & B further discloses that B & B holds a prepetition unsecured claim for legal services in the amount of $1,117.52. In addition, Ralph R. Bagley, a stockholder of B & B, is on Winthrop's Board of Trustees. The application to employ states that Ralph Bagley receives no compensation for his position as a Trustee.
B & B has received payments for postpetition services in the amount of $2,302. Its application to employ also seeks approval of these prior payments.
The Unsecured Creditors' Committee has filed an objection to the application to employ B & B. The Committee objects to the nunc pro tunc application. The Committee *323 also objects to the application because of Ralph Bagley's position on the Board of Trustees.
For the reason set forth in the Committee's objection, the Court shall not approve the employment of B & B. In light of the potential conflicts and the appearance of impropriety, the Court finds that Winthrop has failed to establish that B & B does not hold an interest adverse to the estate. The Court shall await appropriate pleadings with respect to the $2,302 paid to B & B postpetition.
VI. CONCLUSION
The foregoing shall constitute findings of fact and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052.
NOTES
[1] Section 327 provides in relevant part:
(a) Except as otherwise provided in this section, the trustee, with the court's approval, may employ one or more attorneys, accountants, appraisers, auctioneers, or other professional persons, that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the trustee in carrying out the trustee's duties under this title.
* * * * * *
(c) In a case under chapter 7, 12, or 11 of this title, a person is not disqualified for employment under this section solely because of such person's employment by or representation of a creditor, unless there is objection by another creditor or the United States trustee, in which case the court shall disapprove such employment if there is an actual conflict of interest.
* * * * * *
(e) The trustee, with the court's approval, may employ, for a specified special purpose, other than to represent the trustee in conducting the case, an attorney that has represented the debtor, if in the best interest of the estate, and if such attorney does not represent or hold any interest adverse to the debtor or to the estate with respect to the matter on which such attorney is to be employed.
U.S.C. § 327.
[2] Section 1107(a) provides a debtor in possession with all the rights and powers of a Chapter 11 trustee. Section 1107(b), by its terms, creates an exception only for professionals sought to be employed by debtors-in-possession, and not by trustees. Both HBF and Winthrop are operating as debtors-in-possession, so 1107(b) applies in each case.
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878 A.2d 241 (2005)
2005 VT 47
STATE of Vermont
v.
Wayne HUTCHINS.
No. 04-188.
Supreme Court of Vermont.
April 8, 2005.
*242 Present: REIBER, C.J., DOOLEY, JOHNSON and SKOGLUND, JJ., and ALLEN, Chief Justice (Ret.), Specially Assigned.
ENTRY ORDER
¶ 1. Defendant Wayne Hutchins appeals from his conditional guilty plea to committing perjury. He argues that the trial court erred in denying his motion to dismiss the prosecution for lack of a prima facie case because: (1) the State failed to present sufficient independent corroborating evidence to support the charge; and (2) the State failed to show that the alleged perjurious testimony was material to any issue at the hearing where the alleged perjury occurred. We agree that the State's corroborative evidence was insufficient to support the charge, and we therefore reverse.
¶ 2. In August 2002, defendant pled guilty to committing a lewd act and furnishing malt beverage to a minor. When the victim of the criminal acts learned that defendant had received a large monetary settlement from his insurance company in an unrelated matter, she filed a civil suit against him. In connection with her suit, plaintiff filed an ex parte motion for trustee process, seeking to attach any of defendant's assets held by others. The court denied the motion and set the matter for an expedited hearing at plaintiff's request. At the hearing, held on September 18, 2002, defendant was served with a motion for a possessory writ of attachment. Plaintiff asserted that there was a reasonable likelihood that she would recover judgment against defendant in an amount greater than or equal to $350,000, and there was a clear danger that defendant would spend whatever cash he received from his insurance settlement. Although defendant indicated that he had not had time to hire counsel, the court asked him to respond to plaintiff's motions under oath.
¶ 3. Defendant was then examined under oath by plaintiff's attorney. He testified that he had received $100,000 in insurance proceeds approximately two weeks before the hearing. He stated that he had spent $30,000 cash on a mobile home, buried $40,000, and given $10,000 to his son, $10,000 to Larry Lanphere, and $10,000 to Paul Mayer. At the close of the hearing, the trial court approved the possessory attachment of $350,000 worth of defendant's assets. Later that day, Paul Mayer provided a signed affidavit denying that defendant had given him $10,000. Mayer averred that on the morning of the attachment hearing, defendant had come running into his workplace, and said that he was being sued. According to Mayer, he rebuffed defendant's attempt to give him $10,000.
¶ 4. The State then charged defendant with perjury, alleging that he had knowingly testified falsely to a material matter. Defendant moved to dismiss the charge for lack of a prima facie case, asserting that the State's evidence was insufficient to prove falsity and materiality. As to his first argument, defendant maintained that the State failed to present any independent corroborating evidence to prove the falsity of his statements as required under Vermont law. See, e.g., State v. Tinker, 165 Vt. 548, 548, 676 A.2d 785, 785-86 (1996) (mem.) (when State presents only *243 one witness to testify to falsity of defendant's statements, it must present independent corroborating evidence that is equal in weight to the testimony of another witness, and by itself, inconsistent with the innocence of the defendant).
¶ 5. After a hearing, the court denied defendant's motion to dismiss. It found that the hearing transcript provided circumstantial evidence that, along with Mayer's affidavit, lent sufficient support to Mayer's testimony to sustain the perjury charge. The court explained that the transcript showed that defendant knew he had been convicted of the conduct at issue in the pending civil suit, and that the victim's family was trying to reach his assets. The court noted that defendant had purchased a mobile home in cash but registered it in his son's name "in case something happens"; he had buried $40,000; and he had testified that he could not retrieve the money that he had given to his friends because he knew that they had spent it. The court concluded that this circumstantial evidence showed motive, as well as actual attempts to prevent assets from being discovered, and it sufficiently corroborated Mayer's assertion that defendant had not given him the money as he said he did. The court also rejected defendant's argument that his testimony was not material to any issue at the attachment hearing. Defendant entered a conditional guilty plea, and this appeal followed.
¶ 6. We review the trial court's denial of defendant's V.R.Cr.P. 12(d)(2) motion to dismiss to "determine whether the State met its burden in demonstrating that it had substantial, admissible evidence as to the elements of the offense challenged by the defendant's motion." State v. Dixon, 169 Vt. 15, 17, 725 A.2d 920, 922 (1999) (internal quotation marks and citation omitted); see also V.R.Cr.P. 12(d)(2) (State must establish that it has substantial, admissible evidence as to elements of offense challenged by motion sufficient to prevent the grant of a motion for judgment of acquittal at trial). In conducting our analysis, we view the evidence in the light most favorable to the State, and exclude modifying evidence, to determine if the evidence can fairly and reasonably establish defendant's guilt beyond a reasonable doubt. State v. Baron, 2004 VT 20, ¶ 2, 176 Vt. 314, 848 A.2d 275.
¶ 7. Perjury must be proved by the testimony of two witnesses, or by the testimony of one witness with independent corroborating evidence. Tinker, 165 Vt. at 548, 676 A.2d at 785-86 (citing State v. Wheel, 155 Vt. 587, 607, 587 A.2d 933, 945 (1990)). As previously noted, when the State presents only one witness to testify as to the falsity of a defendant's statements, the "independent corroborating evidence must be equal in weight to the testimony of another witness, and it must be, by itself, inconsistent with the innocence of the defendant." Id. (internal quotation marks and citations omitted). The State's corroborative evidence was plainly insufficient here.
¶ 8. In support of the perjury charge, the State points to the "unequivocal" nature of Mayer's affidavit, the transcript of the attachment hearing proceedings, and the testimony of Deputy Sheriff Donald Keeler and defendant's probation officer Stephen Hoke. Turning first to the transcript, we disagree with the trial court's conclusion that it contains circumstantial evidence that sufficiently corroborates Mayer's affidavit. The trial court discerned a motive to lie from the transcript, and pointed to defendant's attempts to hide his assets, as well as his knowledge that he had been convicted of the same conduct at issue in the civil proceeding. The facts identified by the trial court are equivocal, however, and they are not by *244 themselves inconsistent with defendant's innocence. They equally support a finding that defendant testified truthfully at the attachment hearing. Giving Mayer $10,000 would be consistent with defendant's attempts to keep his assets from plaintiff; it would also be consistent with defendant's testimony that he gave $10,000 to two other individuals. Compare State v. Tonzola, 159 Vt. 491, 498, 621 A.2d 243, 246 (1993) (sufficient corroborative evidence existed to sustain perjury conviction where defendant's testimony that he had not committed any lewd acts was contradicted by testimony of multiple complaining witnesses who provided similar accounts).
¶ 9. The testimony of Sheriff Keeler and Stephen Hoke is equally insufficient to corroborate Mayer's assertion. Sheriff Keeler averred that on the day of the attachment hearing defendant left the courthouse and was gone for twenty minutes. Stephen Hoke testified that defendant told him that he did not want the State to know about his insurance settlement. This evidence is not, by itself, inconsistent with defendant's innocence, nor does it in any way tend to establish defendant's guilt of perjury beyond a reasonable doubt. See United States v. Weiner, 479 F.2d 923, 929 (2d Cir.1973) (evidence that corroborates incidental facts in witness's testimony insufficient to satisfy two-witness rule; evidence must be independent and inconsistent with innocence of accused); United States v. Diggs, 560 F.2d 266, 270 (7th Cir.1977) (no interpretation of two-witness rule permits perjury conviction "where the corroboration consists of merely peripheral testimony not tending to show the falsity of the accused's statements while under oath"). In this case, the record does not show what time defendant left the courtroom, nor how long it would take him to get to Mayer's workplace, assuming, of course, that he had $10,000 in cash with him at the hearing, or had him at the hearing, or had sufficient time to retrieve it from another location. Even if the record did establish the time that defendant left the courthouse, it would not suffice to corroborate Mayer's allegationdefendant could have gone anywhere during his absence from the courthouse. Similarly, defendant's desire to keep his assets from the State is in no way inconsistent with his innocence of the charged crime; indeed, as discussed above, it equally supports an assertion that he testified truthfully.
¶ 10. In Diggs, the United States Court of Appeals for the Seventh Circuit explained that
[a]s in all criminal cases, the burden on the Government against which its evidence must be judged is that of proving the defendant guilty beyond a reasonable doubt. The two-witness rule in perjury cases merely imposes an evidentiary minimum required to meet this burden as a matter of law. The rule focuses on the totality of the Government's evidence in order to assure a sufficiency necessary to fulfill its underlying policy that perjury convictions not be based merely on an "oath against an oath."
560 F.2d at 270. In this case, the evidence presented by the State, whether considered separately or cumulatively, does not provide sufficient corroboration for Mayer's assertion that defendant lied under oath, and it is insufficient to establish defendant's guilt of perjury beyond a reasonable doubt. Because the State failed to establish a prima facie case of perjury, the trial court erred in denying defendant's motion to dismiss. See V.R.Cr.P. 12(d)(2) (trial court must dismiss information if State does not establish by affidavits, depositions, sworn oral testimony, or other admissible evidence, that it has substantial, admissible evidence as to the elements of *245 the offense challenged by motion to dismiss); see also Tinker, 165 Vt. at 548, 676 A.2d at 786 (State's failure to present independent evidence to corroborate falsity of defendant's statements required reversal of his perjury conviction). Given our conclusion, we do not address defendant's argument that his testimony was not material to any issue at the attachment hearing.
Reversed.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/1530126/
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878 A.2d 303 (2005)
2005 VT 72
Susan Smith WADE
v.
Mason D. WADE.
No. 04-045.
Supreme Court of Vermont.
July 1, 2005.
*304 Geoffrey W. Crawford, J.
Brian K. Valentine of Schoenberg & Associates, Burlington, for Plaintiff-Appellee.
Lauren S. Kolitch, Waitsfield, for Defendant-Appellant.
Present: REIBER, C.J., DOOLEY, JOHNSON and SKOGLUND, JJ., and ALLEN, C.J. (Ret.), Specially Assigned.
*305 ALLEN, C.J. (Ret.), Specially Assigned.
In this appeal from a final judgment of divorce, husband challenges the family court's exclusion from the marital estate money given to the parties' minor child in accordance with the Vermont Uniform Gifts to Minors Act (VUGMA), 14 V.S.A. §§ 3201-3209. Husband also contests the property division as inequitable because the court awarded nearly ninety percent of the marital property to wife. We affirm.
¶ 2. Husband and wife were married in 1991, had one child together, and separated in 2002. The parties, their daughter, and husband's son from a prior relationship lived in the Town of Waitsfield in a home that wife purchased before the parties married. Since 1985, wife used part of the home to run the Sunshine Montessori School, Inc., a nursery school she founded and continues to operate. Husband has a landscaping business. During the marriage husband also took on seasonal work in the restaurant, construction, and ski industries. Over the last four years, husband earned between $13,000 and $23,000 annually. Wife's income from the Sunshine School averaged $21,824 in 2000-2002.
¶ 3. In 1996, wife received a series of gifts from her mother. She was given title to her mother's home, which wife rented out until 2002 when she sold the property. Wife also received $22,000 in cash and put $40,000 from her mother into a VUGMA account for the parties' minor daughter. The $22,000 gift to wife went into an account in her name only. Wife subsequently exhausted the money in the account by using it to pay for various family expenses. At the time of the divorce hearing, the VUGMA account had a $25,000 balance. Wife testified that she spent approximately $18,000 from the VUGMA account for family expenses, including her own medical expenses.
¶ 4. After wife sold the home her mother gave her in 2002, the parties each received $10,000 from the proceeds. The remaining proceeds of $59,000 were placed into escrow pending distribution in the divorce proceeding. After her mother died, wife used some of her inheritance to purchase a twenty-nine foot sailboat and a catamaran for the family. Husband spent time repairing and maintaining the boats for the family, and used his carpentry and other handyman skills to maintain and improve the parties' residence. The family also owned a camper, and husband held a half interest in a seasonal camp in Rochester, Vermont.
¶ 5. Throughout the marriage, wife paid the mortgage on the marital residence and most of the household expenses. Husband paid half of the household utilities and charged many of his own expenses, and those of his landscaping business, to credit cards. At the time the parties separated, husband had over $23,000 in personal and business credit card debt. Wife's credit card debt was a fraction of husband's. After separating, wife remained in the marital home, and husband moved into a friend's home where he acts as caretaker.
¶ 6. Wife filed for divorce in October 2002. She sought primary custody of the parties' daughter and most of the parties' property, although wife agreed that husband and their daughter should have liberal contact. Husband wanted a shared parenting arrangementone week every other weekand asked the court to split their property roughly fifty-fifty. Both parties hired expert witnesses to testify about the value of the Sunshine School. It was undisputed that husband's business had no value.
¶ 7. The court issued a written order following a hearing in December 2003. Wife received approximately ninety percent *306 of the marital property, including the parties' home and all of its equity, the catamaran, the camper, and the escrowed proceeds from the sale of her mother's home. The court awarded husband the sailboat, $10,000 from the sale proceeds that he had already received, his interest in the Rochester camp, and his tools. Crediting wife's expert witness, the court found that the Sunshine School, while valuable to wife personally, had no market value. The court also concluded that the VUGMA account was not subject to distribution because it was the property of the parties' daughter. As to parental responsibilities for the minor child, the court adopted the arrangement set forth in the parties' stipulated temporary order, which allowed the child to spend overnights with husband every Wednesday and every other weekend from Friday until Monday morning.
¶ 8. In support of the property award, the court explained that wife had lived in the parties' home since 1985, six years before the parties' married. Wife paid the mortgage and property taxes. She also paid for the parties' two boats and contributed all of her income to other household expenses. The court acknowledged that what money husband earned was spent primarily on the household, but it noted that husband "never earned much in any year." The court found that husband had not "followed a conventional career; instead he has enjoyed the freedom of working on a seasonal basis and taking time when he wishes to work on his own business." The court found that husband could earn more money working a full-time job in construction or some other business if he chose.
¶ 9. In his appeal, husband first claims that the court should have distributed the VUGMA account because it was part of the marital estate. He argues that wife never executed any trust documents to establish an irrevocable account for their daughter, and that she used the money for her own purposes. Therefore, husband contends, the funds in the account are marital property subject to distribution in the divorce. The family court's fact findings on the VUGMA account will stand on appeal if they are supported by any credible evidence in the record. Hayden v. Hayden, 2003 VT 97, ¶ 14, 176 Vt. 52, 838 A.2d 59. We will uphold the court's legal conclusions if supported by the findings. Payrits v. Payrits, 171 Vt. 50, 53, 757 A.2d 469, 472 (2000).
¶ 10. Contrary to husband's claim, establishing a VUGMA does not require the execution of trust documents to make the gift irrevocable. The VUGMA's purpose is to provide a simple procedure for gifting property to minors. See In re Marriage of Hendricks, 681 N.E.2d 777, 781 (Ind.Ct. App.1997) (construing Indiana's Uniform Gifts to Minors Act). For cash gifts, the Act requires only that the donor pay or deliver the money "to a broker or a bank for credit to an account in the name of the donor, another adult person, an adult member of the minor's family, a guardian of the minor or a bank with trust powers, followed, in substance, by the words: `as custodian for (name of minor) under the Vermont Gifts to Minors Act.'" 14 V.S.A. § 3202(a)(3). Once made according to statutory procedures, the gift is irrevocable, and the child possesses an indefeasible interest in the property held in the VUGMA account. Id. § 3203(a); In re Marriage of Hendricks, 681 N.E.2d at 781; In re Marriage of Agostinelli, 250 Ill.App.3d 492, 189 Ill. Dec. 898, 620 N.E.2d 1215, 1220-21 (1993). The account's custodian has authority under the Act to spend "so much of or all the custodial property as the custodian deems advisable for the support, maintenance, education and benefit of the *307 minor." 14 V.S.A. § 3204(b). Because the funds in a VUGMA are the child's property, they are not part of the marital estate subject to equitable distribution in a divorce proceeding. In re Marriage of Agostinelli, 189 Ill. Dec. 898, 620 N.E.2d at 1221.
¶ 11. To prevail on his first claim, therefore, husband must demonstrate that the record lacks evidence supporting the court's finding that the account was created in accordance with the VUGMA. Because the record supports the court's finding, husband's claim must fail. The $40,000 check that wife's mother wrote to fund the account was admitted into evidence. The check was payable to an investment firm and not to wife. On the check, wife's mother wrote the child's name and indicated that it was for a VUGMA account. Wife also introduced the account statements she received as custodian of the VUGMA account. The statements identify the account as a VUGMA account, they name wife as the account's custodian, and they identify the parties' child as the account holder. That evidence, in addition to wife's testimony about the account, provide ample support for the court's findings on this issue.
¶ 12. Wife's alleged misuse of the funds in the account does not transform the child's property into the property of her parents. To the extent that wife violated her obligations as custodian on the account, the VUGMA provides a different remedy in a different forum. The probate court, not the family court, has jurisdiction over VUGMA accounts, 4 V.S.A. § 311; 14 V.S.A. § 3201(4), and it may require the custodian to provide an accounting of all deposits to, and expenditures from, the account. 14 V.S.A. § 3208. The probate court may also remove and replace the custodian for cause, id. § 3207(d), (e), and may hold the custodian liable for losses to the account resulting from intentional wrongdoing, gross negligence or actions taken in bad faith. Id. § 3205(e). The family court correctly decided to exclude the account from the marital estate because it was not marital property, and the court had no jurisdiction over its management in light of the governing statutes.
¶ 13. Husband next argues that the court awarded a disproportionate share of the marital property to wife by ignoring some of the statutory factors in 15 V.S.A. § 751 and giving too much weight to others. Section 751 of Title 15 directs the family court to divide the marital estate in an equitable manner after considering several factors:
(1) the length of the marriage;
(2) the age and health of the parties;
(3) the occupation, source and amount of income of each of the parties;
(4) vocational skills and employability;
(5) the contribution by one spouse to the education, training, or increased earning power of the other;
(6) the value of all property interests, liabilities, and needs of each party;
(7) whether the property settlement is in lieu of or in addition to maintenance;
(8) the opportunity of each for future acquisition of capital assets and income;
(9) the desirability of awarding the family home or the right to live there for reasonable periods to the spouse having custody of the children;
(10) the party through whom the property was acquired;
(11) the contribution of each spouse in the acquisition, preservation, and depreciation or appreciation in value of the respective estates, including the nonmonetary contribution of a spouse as a homemaker; and
*308 (12) the respective merits of the parties.
15 V.S.A. § 751(b). The family court has broad discretion when analyzing and weighing the statutory factors in light of the record evidence. See Lalumiere v. Lalumiere, 149 Vt. 469, 471, 544 A.2d 1170, 1172 (1988) (explaining that family court has wide discretion in equitably dividing marital property and noting that court's task is not an "exact science"). When fashioning an equitable award, the court must explain the underlying rationale for its decision, Cabot v. Cabot, 166 Vt. 485, 500, 697 A.2d 644, 654 (1997), which we will not disturb absent a showing that the court abused its discretion. Weaver v. Weaver, 173 Vt. 512, 513, 790 A.2d 1125, 1127 (2001) (mem.).
¶ 14. Husband asserts that the property division lacks equity because the court did not consider the length of the marriage; husband's lack of a college education and his contributions to wife's business; husband's credit card debt; the lack of maintenance for husband where wife earns more than him; husband's inability to acquire capital assets or additional income; husband's sweat equity in maintaining and improving the marital home and the rental property acquired from wife's mother; and the lack of a proper home for their daughter when she spends time with husband. We find no merit to husband's contention because the text of the court's decision reflects that it considered all of those factors.
¶ 15. The court found that the parties were married for twelve years. It determined that in light of all of the factors the length of the marriage did not weigh in favor of either party. The court acknowledged husband's lack of a college degree, but it found that husband could increase his annual income by taking a full-time position in the construction industry or in another industry in the Mad River Valley. Husband is healthy and his ageforty-eight-years old at the time of the divorcedid not preclude him from acquiring his own home or other assets in the future. On the issue of maintenance, husband did not request maintenance in lieu of property, and cannot now fault the family court for not considering this factor.
¶ 16. As for husband's suggestion that the property award left him without an ability to obtain a suitable residence where his daughter can stay when she is in his care, there is no factor in § 751 that directly addresses this issue. Under § 751(b)(9), the court must consider the "desirability of awarding the family home . . . to the spouse having custody of the children." 15 V.S.A. § 751(b)(9). The court considered that factor when it determined that the child's best interests were served by allowing her to remain in the marital residencethe only home the child has ever knownunder wife's primary care.
¶ 17. According to the family court, the statutory factors that weighed most heavily in its decision were numbers (10) and (11): through whom the assets were acquired, and which party contributed more to their preservation. Id. § 751(b)(10) & (11). All of the assets in this case came through wife, either because she acquired them before the marriage or purchased them after marriage with money wife's mother provided. All of wife's income, as well as her inheritance, went to support the family and the family's recreational interests. She paid the mortgage and property taxes on the marital home. Husband's financial contribution to the marriage was recognized through the $10,000 he received from the sale of wife's mother's home and the sailboat the court awarded husband. The court declined to allocate the parties' debt because it found *309 that husband's larger share of credit card debt was due to the relatively low income he earned by choice. In light of wife's substantial monetary contribution to the family's expenses, the court determined that it would be unfair to saddle her with a portion of husband's personal and business debt.
¶ 18. The dissent would ignore the family court's discretion in this case and find the court's division of marital property "facially inequitable" because of the ninety-ten split in a twelve-year marriage. Neither of the two cases that the dissent relies on provides any support for this position. In Dreves v. Dreves, 160 Vt. 330, 628 A.2d 558 (1993), we reversed, based on lack of sufficient findings, a property division in a six-year marriage that gave the wife approximately twelve percent of the marital property. We never suggested that such an award was facially invalid, however. Rather, we found inadequate the family court's bare explanation that most of the assets in the brief marriage were originally attributable to the husband, given the court's findings that (1) the wife left her home state and her employment to join her husband; (2) she withdrew from the workforce, with the husband's approval if not desire, and served as a homemaker during the marriage; (3) her earning capacity was considerably less than the husband's; and (4) she would have the expense of finding a suitable place to live. Id. at 334, 628 A.2d at 560. We concluded that, given these facts, a remand was necessary to get a more detailed explanation of why there was such a great disparity in the property division. Id. at 335, 628 A.2d at 561.
¶ 19. Similarly, in Harris v. Harris, 162 Vt. 174, 647 A.2d 309 (1994), we reversed a property division in a seven-year marriage that gave the wife just eight percent of the marital assets. Noting that the only tenable explanation for the great disparity in the property division was that most of the assets had come from the paternal grandfather, we pointed out that (1) the grandfather had given the husband land to build a home in anticipation of the parties' marriage; (2) both parties had worked on the home; (3) the home was financed by a mortgage that had been gradually reduced throughout a marriage in which the wife withdrew from the workforce and served as a homemaker to care for the children while the husband gained earning power; and (4) at the time of the divorce, the wife, who needed to find suitable housing for her and her daughter, was just reentering the workforce at minimum wage after a seven-year absence. Id. at 183-84, 647 A.2d at 315.
¶ 20. These cases do not hold that a large disparity in a property division is facially inequitable. Rather, at most, they stand for the proposition that we will carefully examine the evidence and findings to assure that the family court made adequate findings and acted within its wide discretion in awarding one spouse the vast majority of the marital assets. Notwithstanding the dissent's attempts to compare this case to Dreves and Harris, the evidence and findings here, which reasonably support the family court's decision, are starkly different from the evidence and findings in those cases. The major assets in this relatively small marital estate were the family home and funds that came from wife's mother. The court gave the vast majority of these assets to wife because (1) wife had owned and lived in the marital home for six years before the parties married; (2) wife had paid most of the home expenses during the marriage, including all of the mortgage payments and property taxes; and (3) wife had contributed nearly all of her income, including much of her inheritance, to household needs and common family interests. The court acknowledged *310 husband's sweat equity in the marital home, but concluded that the home should be awarded to wife in its entirety, given that wife had owned it for many years before the marriage and had contributed a disproportionate amount of finances to its upkeep throughout the marriage.
¶ 21. Further, notwithstanding the dissent's claims to the contrary, husband cannot be considered a displaced homemaker, as were the wives in Dreves and Harris. There is no evidence, no findings, nor even any claim by husband, that he left the workforce to serve as a homemaker, or that he was the primary care giver during the marriage. To the contrary, the family court found that husband was a skilled carpenter and landscaper who chose a lifestyle that provided little income but allowed him to work on his own terms. In so finding, the court was not discriminating against husband, as the dissent suggests, but rather explaining why it was equitable to award the vast majority of the marital assets to wife, considering that this was not a long-term marriage and that she brought most of those assets into the marriage. We find this explanation reasonable and within the court's wide discretion in allocating marital property.
¶ 22. Moreover, we expressly reject the dissent's claim that the family court failed to give husband sufficient financial resources to allow him to obtain and maintain a place to live so that he can share physical responsibilities for his daughter. There are no findings nor any evidence in the record suggesting that father is not capable of obtaining housing that would allow him to share physical responsibilities for the parties' daughter. In any event, husband has not even challenged the family court's order on parental rights and responsibilities.
¶ 23. We recognize that wife received approximately ninety percent of the parties' assets. Had the family court failed to explain in detail the reasons for the facially disproportionate property distribution, the outcome of this case would likely be different. But the family court carefully explained why it weighed factors (10) and (11) more heavily in reaching its decision. As trier of fact, the family court was in the best position to assess the merits of the parties' contentions, and its decision addresses the relevant statutory factors. Therefore, we cannot say that the court abused its discretion in fashioning the property award in this case.
¶ 24. Husband next argues that the court erred by finding that the Sunshine School had no market value. He asserts that the business was an ongoing concern, it provided wife a reasonable income, and its gross sales and net profit were experiencing an upward trend at the time of the divorce proceeding. Again, we review the court's finding on this issue for clear error. Hayden, 2003 VT 97, ¶ 14, 176 Vt. 52, 838 A.2d 59. So long as the court's findings are grounded in the evidence, even if substantial contrary evidence exists, the findings will stand on appeal.
¶ 25. The Sunshine School's value was the subject of competing expert testimony at trial. Wife's expert testified that the school lacked excess cash flow and thus had no market value. Husband's expert criticized the methodology wife's expert used, but conceded on cross-examination that his opinion might change if the assumptions he made about enrollment and the base salary for wife were different. The court found that the business has value to wife because it provides her with a modest livelihood and personal fulfillment. But, the court noted, wife's average income from the school over the last three years was less than the average salary for a preschool teacher. That fact, combined *311 with the school's location in wife's home, reduced the market value of the business to zero. The court found that "[a]ny purchaser of the business who paid a reasonable rentestimated by [husband's] business appraiser at $8,000 per yearand hired a pre-school teacher to replace [wife] would lose money even if the sales price was $1.00." Husband has not demonstrated that the court's decision on this issue lacks support in the record.
¶ 26. Husband's last claim relates to the court's findings on the value of the marital residence in 1991 when the parties married. The home's 1991 value is relevant only to its appreciation during the marriage and what share of that appreciation should go to husband. As husband conceded at oral argument, however, this claim is moot if the Court affirms the overall property award, which we have done. Accordingly, we decline to address this issue because it has no bearing on the outcome of husband's appeal.
Affirmed.
¶ 27. SKOGLUND, J., dissenting.
"The purpose of discretion is not to foster inconsistency." Klein v. Klein, 150 Vt. 466, 473, 555 A.2d 382, 386 (1988). Thus, different judges addressing discretionary matters in similar cases ought to arrive at similar results. Our prior cases suggest that the lopsided award in this case would never be affirmed if it had been wife and not husband who received the paltry ten percent share of the parties' marital estate. Here, both spouses earned less through their labors than their potential would permit, but the trial court faulted only husband for his failure to follow a "conventional career" path. Perhaps more importantly, the court's award leaves husband with questionable financial ability to find and maintain suitable housing for himself and his daughter after the divorce, even though the court found it in the child's best interests that parental rights and responsibilities be shared by the parties. To me, the inequity in the trial court's award under the facts here, and in light of our prior decisions, is apparent on its face. I must, therefore, dissent.[*]
¶ 28. I do not disagree with the majority that the family court enjoys broad discretion to determine what is equitable when dividing a divorcing couple's property. But the family court's exercise of discretion must, in the end, achieve an equitable result. In a twelve-year-long marriage, a 90/10 split of marital property is facially inequitable. See Harris v. Harris, 162 Vt. 174, 647 A.2d 309 (1994) (reversing judgment awarding wife only eight to twelve percent of marital property in marriage of seven years); Dreves v. Dreves, 160 Vt. 330, 628 A.2d 558 (1993) (reversing judgment awarding wife eighteen percent, compared to husband's eighty-two percent, of marital estate in six-year marriage). Such a great disparity in the property awarded each spouse in a marriage of this length demands that this Court examine the equities more closely to assure that the result is just. Harris, 162 Vt. at 184, 647 A.2d at 316 (citing Daitchman v. Daitchman, 145 Vt. 145, 150, 483 A.2d 270, 273 (1984)).
¶ 29. Such a close examination convinces me that the equities here are not just and, as in similar cases, would support reversal. As the majority acknowledges, the family court weighed two statutory factors more heavily than others in its *312 decision: (1) the party through whom the property was acquired, and (2) the contributions of each spouse to the maintenance and preservation of the parties' property. 15 V.S.A. § 751(b)(10), (11). Reasoning that those factors were the most important in this case, the family court gave no weight to the length of the marriage, and it discounted husband's financial and in-kind contributions to the household and to the maintenance of valuable marital property. Id. § 751(b)(1), (11). The family court's findings, and the record supporting them, indicate that husband contributed to the maintenance of the marital home and the rental property gifted by wife's mother. He performed renovations that permitted wife to run the Sunshine School from her home. The family court's decision notes those contributions, but gives them virtually no weight in its decision. That was reversible error in my view.
¶ 30. In Dreves v. Dreves, the Court reversed a similar award, which, in contrast to this case, gave most (eighty percent) of the property to husband rather than to wife. The family court's only reasons for the disproportionate award in Dreves were the short length of the marriage, six years, and the fact that virtually all of the parties' assets were attributable to husband. 160 Vt. at 334, 628 A.2d at 560. The Court reversed. Holding that the family court did not adequately explain the facially inequitable judgment, the Court chastised the family court for not weighing more heavily wife's lower earning capacity and her need to find alternative living arrangements after the divorce. Id.
¶ 31. Similarly, in Harris v. Harris, the Court reversed an award that gave wife only eight to twelve percent of the parties' property. The parties in Harris were married for only seven years, five years fewer than the parties in this case. Like husband here, Mrs. Harris brought no property to the marriage. And, like wife and her mother in this case, Mr. Harris and his family were the source of most of the parties' property. On appeal, the Court held that the property's origin alone is not enough to warrant a one-sided award when other factors were present. 162 Vt. at 183, 647 A.2d at 315. For example, the Court explained, Mrs. Harris worked as a homemaker during the seven-year marriage, but she was given no credit for that contribution to the family. Id.
¶ 32. This case is not meaningfully different from cases like Harris and Dreves involving a displaced homemaker where the spouses decide to allocate their time and labor in a manner that allows one spouse to pursue a career. Like a homemaker, husband spent his time caring for the parties' minor daughter and making in-kind contributions to the family's welfare. The family court found that during the marriage husband contributed most of his earnings to pay a share of the parties' household expenses, even though it also found that he never earned very much. The court found that husband had to charge some of the family's expenses to his credit cards because of his low earnings. Husband invested sweat equity to improve the marital home for use as a school, thereby contributing to wife's professional development. Husband spent both money and time working on the sailboat wife purchased with funds that her mother gave her. Husband's active participation in caring for the parties' minor daughter was the reason the court ordered the shared parenting arrangement. Husband has limited education in comparison to wife, and he suffers from a learning disability. At nearly fifty-years old, husband has a work history consisting mostly of seasonal labor. While the court found husband "receives compensation for his work on the house through the $10,000 he has already received from the sale of [wife's] mother's house," $10,000 for twelve years of contributions *313 to the marriage and family cannot seriously be considered equitable. Husband's contributions to the family's well-being cannot have been properly factored into the property award.
¶ 33. The only meaningful differences between the circumstances of this case and the circumstances leading to the Court's reversal of the property division for the homemakers in Dreves and Harris are: (1) the parties here were married for nearly twice as long as the couples in Dreves and Harris, and (2) the family court in this case shortchanged husband and not wife. The first difference should presumably weigh in favor of giving husband a greater share of the parties' property under the theory that the longer the marriage, the more entitlement each spouse has in the other's property. The second difference is one that concerns me.
¶ 34. Husband and wife together chose a lifestyle in which both parties earned less than their potential. The family court viewed husband's lifestyle and under-earnings differently from wife's without any rational explanation, however. The court's negative view of husband's lifestyle is most apparent in the court's discussion of the parties' education and employment histories. The court explained that husband decided not to pursue a "conventional career," rather he worked on a "seasonal basis and taking time when he wishe[d] to work on his own business." It denied husband a share of the $128,000 of equity in the marital home because, in the court's view, husband's career choices "d[id] not entitle him to a share of the equity." The family court observed that husband could make more money by working full time doing construction or some other work in the Mad River Valley. It made no findings, however, on how much more money husband could earn in light of his age, limited education, dyslexia, and seasonal work experience.
¶ 35. In contrast, the family court characterized wife's employment and earning decisions in a positive light. The court found that wife has a college degree in psychology and arts and is a certified Montessori teacher. The court found that on average a preschool teacher earns more than wife does running her own school at home. It also found that wife's business has no value, and, in fact, would lose money if she were to relocate the school to another building. The court explained that wife's chosen path provided her with a living and that it "fulfills her personal interest in childhood education." The court fails to explain why it treated these similarly situated parties differently, and no rational reason to do so is apparent from the record.
¶ 36. The award here also fails as a sustainable exercise of discretion because it gives husband shared parental rights and responsibilities but does not give him sufficient financial resources to obtain and maintain a place to live so he can share physical responsibilities for his daughter. Cf. Harris, 162 Vt. at 183-84, 647 A.2d at 315 (reversing a property award in part because the family court failed to consider wife's need to find a suitable place to live for herself and her daughter after the divorce). The family court found that husband's living arrangements are fine for him, but not for the child. The court was well aware of the shared parenting arrangement that called for husband to care for the child nearly forty percent of the time. The family court appears to have overlooked husband's concern about finding a suitable place to live with his daughter after the divorce. On appeal, the majority rejects husband's argument on this point, explaining only that § 751(b) neither forbids nor requires the family court to consider husband's post-divorce living circumstances. Ante, ¶ 16. When divorcing *314 parties and the family court agree that it is in the child's best interests to share parental rights and responsibilities, and the court finds that one parent does not live in conditions suitable for that child, equity demands that, to the extent possible, the family court apportion the marital property so that both parents can achieve stable and suitable housing for themselves and their child after the divorce. That principle is especially applicable where, as here, there is sufficient property to make possible appropriate living arrangements for both parties.
¶ 37. I do not favor giving undue scrutiny to the discretionary decisions our trial courts are responsible for making, decisions they make hundreds of times each day. And, I believe that the party seeking reversal of a family court judgment under the abuse-of-discretion standard has a very high hurdle to overcome. Here, husband has plainly overcome that hurdle. The family court's decision in this case places far too much weight on wife's financial contributions to the marital estate where other factors were present, just as the family court did in Harris and Dreves. Moreover, it is apparent that the ninety/ten split in wife's favor arises in great part from the family court's negative view of husband's under-earning, a view the court notably did not hold about wife's similar history of under-earning. Finally, the award leaves the parties' daughter with no suitable place to live when father has physical responsibility for her under the shared parenting arrangement, an arrangement that all agree is in the child's best interests. For those reasons, the property division in this case is inequitable and I would reverse the judgment. I am authorized to state that Justice Johnson joins in this dissent.
NOTES
[*] I do not disagree with the Court's analysis of husband's claim regarding his daughter's Uniform Gifts to Minors Act account. My dissent relates solely to the glaring inequity in the family court's property apportionment given its findings and its award of parental rights and responsibilities.
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870 So. 2d 149 (2004)
Dean TORRES, Appellant,
v.
STATE of Florida, Appellee.
No. 2D03-3311.
District Court of Appeal of Florida, Second District.
January 16, 2004.
Robert R. Jacobs, II, Public Defender, and Timothy E. Moffitt, Assistant Public Defender, Fort Myers, for Appellant.
Stephen B. Russell, State Attorney, and Carrie Ann Pollock, Assistant State Attorney, Fort Myers, for Appellee.
CASANUEVA, Judge.
Held in contempt and sentenced to a suspended jail sentence and administrative probation for violation of an injunction for protection against repeat violence, Dean Torres contends that the trial court erred in basing its finding solely on inadmissible hearsay. We agree with Mr. Torres that the evidence was legally insufficient for the trial court to find that he violated the injunction and reverse.
The injunction in this case was in effect to protect the daughter of the complaining witness, Donald Cramer, who was the only person called to testify in the State's case. Mr. Cramer testified that when he answered the telephone, a male voice asked for his daughter by name. Not recognizing the voice, Mr. Cramer gave the phone to his daughter, who then had a conversation with that person. Subsequently, Mr. Cramer became concerned; shortly after she received the call his daughter "became missing." Mr. Cramer filed a report and *150 gave the police the phone number of that call from his caller I.D.
At this point in the trial the assistant state attorney posed a series of questions to which objections were sustained, all of which dealt with how the Cape Coral Police Department handled the information Mr. Cramer gave them. For example, when the State asked whether Dean Torres was ever determined to be the person who made the call, a hearsay objection was sustained. Mr. Cramer then went on to testify that he did not know if the Cape Coral police had contacted the defendant; however, he filed an affidavit for violation of the injunction based on information he received from the Cape Coral Police Department. Although the trial court sustained a hearsay exception to a question asking why Mr. Cramer believed the person on the telephone was Dean Torres, Mr. Cramer was permitted to testify, over objection, as follows: "I had been hearing reports of a Poppy calling and being calling her; and so when I heard the phone conversation, stated the name was Poppy, and I guess I put two and two together and...." A defense motion to strike was overruled, and the State went on to elicit from Mr. Cramer that the person who called identified himself as Poppy. Over objection, Mr. Cramer stated that he "learned that Poppy was Dean Torres."
This recitation of the evidence demonstrates that the court permitted the State to evade the proscription against hearsay when it allowed Mr. Cramer to testify that he "had been hearing reports of a Poppy calling" and that he "learned that Poppy was Dean Torres." Even though Mr. Cramer did not testify as to any specific out-of-court statements, this is a distinction without a difference: it is apparent that the State's sole witness possessed no independent knowledge concerning the identity of the person who called the Cramer household on the date alleged.
Without the impermissible hearsay, the evidence was insufficient to find that Mr. Torres violated the injunction against repeat violence. Accordingly, we reverse and remand with directions to discharge the defendant.
Reversed and remanded.
ALTENBERND, C.J., and NORTHCUTT, J., Concur.
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901 F. Supp. 863 (1994)
Sandra BENDER, Plaintiff,
v.
SMITH BARNEY, HARRIS UPHAM & CO., INC., Richard Carlin, John Maine and Ronald Reisman, Defendants.
Civ. A. No. 91-5493 (JBS).
United States District Court, New Jersey.
October 27, 1994.
*864 *865 Sandra Bender, Cherry Hill, NJ, Plaintiff pro se.
Matthew Farley, Thomas A. Roberts, Shanley & Fisher, P.C., Morristown, NJ and David S. Friedman, Office of the General Counsel, Smith Barney Shearson, Inc., New York City, for Defendants.
OPINION
SIMANDLE, District Judge:
This is an employment discrimination action in which plaintiff, Sandra Bender, alleges, inter alia, that she was discriminated against on the basis of sex and religion when she was terminated from her position as broker at Smith, Barney. On March 20, 1992, the Honorable William G. Bassler, U.S.D.J., filed an Opinion in which he determined that petitioner was contractually obligated to arbitrate her employment dispute and entered an Order compelling plaintiff to arbitrate all of her claims pursuant to the Federal Arbitration Act, 9 U.S.C. § 1 et seq. 789 F. Supp. 155. The matter was stayed pending arbitration, and on March 18, 1993, the case was administratively terminated without prejudice to the right of any party to reopen the docket. Arbitration is completed, the arbitrators having awarded $69,843.41 in favor of plaintiff on the ground that Smith Barney failed to meet an appropriate procedural "business-like standard" when terminating plaintiff. The arbitrators found no evidence of discrimination, and further denied relief on plaintiff's claims against the individual claimants in their entirety. On a counterclaim for defamation propounded by defendant John Carlin, defendant-counter-claimant Carlin was awarded $7,500.00 to be paid by plaintiff. The case has been reopened by Order entered May 31, 1994 and is presently before the court upon plaintiff's motion to vacate award of arbitrators and upon the cross-motion of defendants to confirm the award of arbitrators, including Carlin's recovery upon the counterclaim.
Discussion
A. Plaintiff's Motion to Vacate Award Of The Arbitrators On Her Claim Against Defendants On Grounds of Evident Partiality And Defendants' Cross-Motion to Confirm
Plaintiff was terminated from her position as a broker in the Cherry Hill, New Jersey branch of Smith, Barney on May 1, 1990. Plaintiff ultimately instituted suit in this court, claiming that she was fired for discriminatory reasons, and the matter was ordered to arbitration by Judge Bassler on March 20, 1992. As Judge Bassler's Opinion explains, plaintiff signed a Form U-4 in connection with her employment at Smith, Barney to effectuate the transfer of her registration with certain securities exchanges and organizations. The U-4 form is routinely completed by licensed brokers in order to *866 become registered with their prospective firms. Paragraph 5 of the form states in its entirety:
I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitutions or by-laws of the organizations with which I register, as indicated in Item 10 as may be amended from time to time.
It was pursuant to that contractual clause that plaintiff was ordered to arbitration.
The arbitration was commenced when plaintiff filed a Statement of Claim with the National Association of Securities Dealers (NASD). In her Statement of Claim, plaintiff charged that defendants breached their contract with her, intentionally interfered with her employment, wrongfully failed to pay certain commissions due her, wrongfully terminated her in violation of Title VII of the Federal Civil Rights Act, and that defendants were guilty of gender and race discrimination in violation of public policy. She further alleged intentional infliction of emotional distress, interference with advantageous business relationships, failure to execute sell orders, slander, libel, falsification of U-5 form and negligent supervision. She sought compensatory damages in the amount of $2,719,258.00 and punitive damages in the amount of $8,157,774.00, as well as interest, costs, and attorney's fees.
The panel of three NASD arbitrators was chaired by Charles Boyd. Mr. Boyd was required, pursuant to NASD procedures, to disclose certain background information, including the names of present and previous employers, so that the parties could ascertain whether there might be a conflict of interest in his arbitrating the case. By letter dated February 2, 1993, Mr. Boyd disclosed that he had been employed until July 5, 1991 by W.H. Newbold's, the company which hired plaintiff subsequent to her May, 1990 termination by Smith, Barney.
Plaintiff claims that the arbitration award must be vacated because of a failure of Mr. Boyd to disclose additional information which, in plaintiff's view, suggests a potential bias against her. As stated, certain disclosures were made by Mr. Boyd. Specifically, in the Arbitration Disclosure document forwarded to plaintiff some two months prior to the start of the arbitration, Mr. Boyd noted that he had worked for W.H. Newbold, the company currently employing plaintiff. Mr. Boyd supplemented this disclosure by way of the February 2, 1993 letter which stated that Mr. Boyd did not know plaintiff, and that he was not instrumental in her hiring by W.H. Newbold. He offered the opinion that he was capable of "rendering a fair and unbiased decision in this matter." Ex. K. to Friedman Aff. Plaintiff did not seek to disqualify Mr. Boyd on the ground that he once had worked for W.H. Newbold.
Plaintiff's principal complaint on the instant motion is that although Mr. Boyd disclosed that he had once been employed by W.H. Newbold, he failed to disclose that the employment ended when he was fired by the company, and that the firing resulted in Boyd's initiation of an action against Newbold for breach of employment contract. Plaintiff further alleges that "the individual who was instrumental in the decision to employ petitioner was the same party who had the distasteful duty of discharging Mr. Boyd, thereby creating an inference of bias against petitioner." Pl.Br. at 6-7.
Assuming for present purposes that plaintiff's allegations are true, Mr. Boyd's failure to disclose these details about his relationship with W.H. Newbold, which was not a party to the arbitration proceedings, does not entitle plaintiff to relief. The Federal Arbitration Act provides that an arbitration award may be vacated upon application by a party if there was "evident partiality" by the arbitrators. 9 U.S.C. § 10(a)(2).[1] Plaintiff is correct that § 10(a)(2) has been interpreted such that under certain circumstances, such as where an arbitrator has a substantial interest in a firm which has had more than trivial business dealings with a party, a failure to disclose will, in and of itself, require an arbitration award to be vacated. See Commonwealth Coatings Corp. v. Continental Cas. Co., 393 U.S. 145, 151-52, 89 S.Ct. *867 337, 340-41, 21 L. Ed. 2d 301 (1968); Middlesex Mut. Ins. Co. v. Levine, 675 F.2d 1197 (11th Cir.1982). Plaintiff is incorrect that the present case presents such circumstances.
"In order to show `evident partiality,' `the challenging party must show "a reasonable person would have to conclude that the arbitrator was partial" to the other party in the arbitration.'" Kaplan v. First Options of Chicago, Inc., 19 F.3d 1503, 1523 n. 30 (3d Cir.1994) (quoting Apperson v. Fleet Carrier Corp., 879 F.2d 1344, 1358 (6th Cir. 1989)). The Apperson court rejected the standard urged by plaintiff here for application in the present case, namely, the "appearance of bias" standard. Id., 879 F.2d at 1358. The applicable standard is whether a "reasonable person would have to conclude that an arbitrator was partial" to a particular party. Id. As the Third Circuit recently explained, "`[e]vident partiality' is strong language and requires proof of circumstances `powerfully suggestive of bias.'" Kaplan, 19 F.3d at 1523 n. 30 (quoting Merit Ins. Co. v. Leatherby Ins. Co., 714 F.2d 673, 681-82 (7th Cir.), cert. denied, 464 U.S. 1009, 104 S. Ct. 529, 78 L. Ed. 2d 711 (1983)).
There is no such powerful suggestion of bias in the instant case. First, to the extent that it is relevant to bias, Mr. Boyd did disclose that he had a prior relationship with Newbold. Second, and more importantly, Newbold is not a party to the present litigation. Rather, Newbold happens to be a company which hired plaintiff subsequent to her termination from Smith, Barney, and as such has no stake in the outcome of plaintiff's case against Smith, Barney; the court is aware of no authority finding evident partiality as a consequence of a relationship between an arbitrator and an entity having no interest in the outcome of the arbitration proceeding. That by coincidence the same individual who terminated Mr. Boyd hired plaintiff does not create an antagonistic relationship between Mr. Boyd and plaintiff, nor does plaintiff allege any connection in fact between Boyd's firing and her hiring by Newbold. Simply stated, a reasonable person would not conclude that because Mr. Boyd may have been terminated by his former employer, he has a bias against plaintiff because she is one of the approximately 230 brokers presently employed by his former employer. Boyd properly disclosed his prior relationship with Newbold as well as the fact he was unaware of plaintiff as a Newbold employee. Any failure of Mr. Boyd to disclose the facts surrounding the termination of his relationship with Newbold is insufficiently consequential to constitute "evident partiality" under the Act.[2]
Nor has plaintiff stated a claim for vacating the award on the ground of evident partiality by alleging that Mr. Boyd failed to disclose that "he was under review by his [subsequent] employer for violating investment-related statutes." Pl.Br. at 5. Plaintiff sets forth in her moving papers that on October 21, 1993, while the Bender arbitration was proceeding, Mr. Boyd was permitted to resign from Robert Thomas Securities in connection with a customer's forgery charges. Id. While plaintiff might desire to have been informed of these charges, the fact remains that Mr. Boyd's failure to disclose, prior to the start of the arbitration, that he was "under investigation" for conduct unrelated to any of the parties to the case does not suffice as a basis to set aside an award once it has been rendered.[3] The court rejects *868 plaintiff's claim that § 10(a)(2), the evident partiality subsection, provides such a basis for vacating the award. There is no logical link between an investigation by Mr. Boyd's current employer and bias in favor of one party or another.
Plaintiff further supports her motion by proffering "evidence" of instances of "actual bias." Only two of the alleged instances of bias are supported by citations to the record, and neither of these instances materially advance plaintiff's claim[4]. These claims of bias are that (1) the panel imposed filing fees against petitioner but not against defendant-counterclaimant Carlin as required under § 44(a) of the NASD Code of Procedure, and (2) the panel required plaintiff to deposit adjournment fees and then refused to return payment to her upon a showing of financial need as permitted under § 30(a) of the NASD Code of Procedure. Plaintiff is merely complaining of instances in which she disagrees with unfavorable rulings of the panel. Neither claim could support a finding of evident partiality absent an underlying conflict such as a substantial business relationship between an arbitrator and a party to the litigation. These circumstances, taken together with plaintiff's additional allegations regarding Mr. Boyd's failure to disclose certain information, are not "powerfully suggestive of bias," and no claim for vacating the award of the arbitrators is stated in plaintiff's motion. Accordingly, plaintiff's motion to vacate the arbitrators' decision on her claims against defendants will be denied without the need for an evidentiary hearing. In addition, because there is no ground for vacating the award on plaintiff's claim, this court will grant defendants' motion to confirm the award on plaintiff's claims against *869 defendants. See 9 U.S.C. § 9; Barbier v. Shearson Lehman Hutton, Inc., 752 F. Supp. 151, 158 (S.D.N.Y.1990), rev'd in part on other grounds, 948 F.2d 117 (1991) (court must confirm an arbitration award unless the award is vacated, modified, or corrected as provided for under sections 10 and 11 of Federal Arbitration Act).
B. Plaintiff's Motion to Vacate Award of the Arbitrators On Defendant-Counter-claimant Carlin's Counterclaim and Defendants' Cross-Motion to Confirm The Award On The Counterclaim
1. Plaintiffs Argument That The Arbitrators Exceeded The Scope of Their Authority When They Entertained The Counterclaim
Plaintiff next moves to vacate the award in favor of defendant-counterclaimant Carlin and against plaintiff for $7,500.00 on Carlin's counterclaim for damages. The counterclaim alleges that plaintiff defamed Carlin both in print (in an article authored by someone other than plaintiff appearing in an industry publication entitled Financial Planning on Wall Street) and by verbal comments to individuals in the industry; the arbitrators received evidence on the counterclaim and found in favor of Carlin. Plaintiff claims that the award must be vacated because the arbitrators lacked jurisdiction over the counterclaim. Plaintiff alleges that because the contractual agreement to arbitrate pertained only matters arising out of plaintiff's employment, and because the alleged instances of defamation occurred some time subsequent to plaintiff's termination, the counterclaim was not properly before the arbitration panel.
As defendants point out, plaintiff raises this objection for the first time in her motion to vacate. It is not raised in plaintiff's Answer to the counterclaim, nor was it raised in any other formal manner before the arbitrators, and thus plaintiff has waived her right to object to the panel's jurisdiction over her claim.[5] In order to further the strong federal policy in favor of arbitration and to preserve the speed and efficiency of arbitration proceedings, the Third Circuit has made clear that, even when the objection to an arbitration award is jurisdictional in nature, a party who fails to address the objection before the arbitrators in the first instance waives the right to raise the jurisdictional objection on appeal. Teamsters Local No. 764 v. J.H. Merritt and Co., 770 F.2d 40, 42-43 (3d Cir.1985). See also Amalgamated Meat Cutters & Butcher Workmen of North America, Local 195 v. Cross Brothers Meat Packers, Inc., 518 F.2d 1113, 1121 and n. 19 (3d Cir.1975) (failure to object to submission of claim to a single arbitrator rather than a panel waived); compare Kaplan, 19 F.3d at 1510-13 (plaintiffs did not waive objections to submitting claim to arbitration where they reasserted objection regularly during the arbitration). This rule ensures that a party will not be permitted to await a ruling and find out whether it is adverse before asserting objections on grounds about which she had knowledge prior to the award. See, e.g., *870 Int'l. Brotherhood of Electrical Workers v. Coral Electric Corp., 576 F. Supp. 1128, 1134 (S.D.Fla.1984). Because plaintiff failed to address the objection to the arbitrators' authority to hear the counterclaim to the arbitrators in the first instance and thus waived any jurisdictional objections to their consideration of the counterclaim, this court will not consider the merits of the objection. The award in favor of defendant-counterclaimant Carlin will not be disturbed on this ground.
2. Plaintiff's Argument That The Arbitrators Manifestly Disregarded The Law In Finding In Defendant-Counterclaimant Carlin's Favor On The Counterclaim
As to the merits of the award on the counterclaim for defamation, plaintiff argues that the award must be vacated because the arbitrators acted in "manifest disregard" of the law when they rejected plaintiff's defense of truth and found in favor of defendant-counterclaimant Carlin. The "manifest disregard" doctrine may provide a basis for vacating an award in some circumstances, but its scope is exceedingly narrow:
[Manifest disregard] means more than error or misunderstanding with respect to the law. The error must have been obvious and capable of being readily and instantly perceived by the average person qualified to serve as an arbitrator. Moreover, the term "disregard" implies that the arbitrator appreciates the existence of a clearly governing legal principle but decides to ignore or pay no attention to it.... The governing law alleged to have been ignored by the arbitrators must be well defined, explicit, and clearly applicable. We are not at liberty to set aside an arbitration panel's award because of an arguable difference regarding the meaning or applicability of laws urged upon it.
Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bobker, 808 F.2d 930, 933-34 (2d Cir.1986) (citations omitted). Accord, Tanoma Mining Co., Inc. v. Local Union No. 1269, United Mine Workers of America, 896 F.2d 745, 749 (3d Cir.1990) (arbitrator did not act in manifest disregard of the law although his understanding of agency law was "hazy," where arbitrator was attempting to apply principles as he understood them).
The relevant substantive law of defamation was in no way disregarded by the arbitration panel in the instant case. Defamation imposes liability for (1) publication (2) of statements that are false (3) that injure the reputation of another. Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739, 765, 563 A.2d 31 (1989). It follows that truth is a defense to a charge of defamation. Id. A communication is "published" to a third person when it is communicated by way of a writing or by way of a verbal or other act. W. Prosser and W.P. Keeton, The Law of Torts, § 113, at 797 (5th ed. 1984).
Here, there was testimony about the publication of allegedly defamatory material by plaintiff to the author of the Financial Planning on Wall Street article, Ms. Amey Stone. On direct examination in the counterclaim case, plaintiff admitted that she took a copy of the NASD statement of claim she filed in order to initiate the arbitration proceeding and voluntarily sent it to Ms. Stone. Tr. 623:5-10. As plaintiff conceded at the hearing, she was aware at the time she sent Ms. Stone a copy of the pleading that within the four corners of the document were "some very serious allegations" that plaintiff's supervisor, Mr. Carlin, had discriminated against her on the basis of gender. Tr. 624:18-24.[6]
*871 Once the arbitration panel rejected plaintiff's discrimination claim, it follows that it rejected the version of events set forth in her statement of claim and thus rejected plaintiff's "truth" defense to the counterclaim. Moreover, once plaintiff admitted that she voluntarily provided a copy of the NASD pleading to Ms. Stone, plaintiff could no longer assert a defense of absolute privilege to the defamation counterclaim. In Citizens State Bank of New Jersey v. Libertelli, 215 N.J.Super. 190, 521 A.2d 867 (App.Div. 1987), the court noted:
Distribution of court-filed documents to the press or other interested persons merely republishes material otherwise absolutely privileged. However, such distribution is not protected because it is foreign to the purposes of the privilege and serves only the interest of the distributor in getting one side of the story out first or most vividly.... Distribution to the press and public of pleadings and other documents may be a tactic chosen by litigators, but it is not immunized as a part of the judicial process.
Id. at 196-99, 521 A.2d 867. Thus, even if the arbitrators were to have afforded the confidential NASD pleading the privilege ordinarily afforded pleadings filed in open court, the statement of claim would not be privileged for purposes of the counterclaim, as it was published to a magazine reporter to assist her in writing a piece on the subject of gender discrimination in the brokerage industry rather than to directly advance plaintiff's litigation. Thus, under New Jersey law, the purposeful dissemination of defamatory allegations contained in a pleading, for purposes of obtaining publicity of the allegation, causes the otherwise privileged allegations to lose their protected status when published.
A second question is whether the Arbitration Panel could have reasonably found Ms. Bender's comments to the news reporter to have been defamatory. In New Jersey, a generalized accusation of bigotry is not actionable; a false claim of discriminatory conduct can become actionable when accompanied by "reasonably specific facts that are capable of objective proof of truth or falsity." Ward v. Zelikovsky, 136 N.J. 516, 539, 643 A.2d 972 (1994). A false allegation that a manager engaged in invidious gender discrimination against a subordinate employee by firing her can become actionable in defamation if the statement was made "in such a manner or under such circumstances as would fairly lead a reasonable listener to conclude that he or she had knowledge of specific facts supporting the conclusory allegation." Id. The Arbitration Panel's finding in this regard is supported by evidence in the record sufficient to support their finding that Ms. Bender's allegations against Carlin were false and specific and harmful.
With the evidence and relevant substantive law of New Jersey so understood, there is no basis for challenging the arbitrators' decision on the defamation counterclaim on the ground of manifest disregard for the law. To the contrary, the decision rendered appears to be entirely consistent with an application of governing legal principles to the facts found by the panel.[7] Plaintiff's motion to vacate the award in favor of defendant-counterclaimant Carlin on the basis of manifest disregard for law will, accordingly, be denied. Defendants' cross-motion to confirm that award will be granted.
Conclusion
For the reasons stated herein, plaintiff's motion to vacate award of arbitrators will be *872 denied. Defendants' cross-motion to confirm the award will be granted.
An appropriate Order follows.
JUDGMENT ORDER
This matter having come before the court upon the motion of plaintiff, Sandra Bender, to vacate award of arbitrators, and upon the cross-motion of defendants to confirm the award of arbitrators; and the court having considered the submissions of the parties and having heard oral argument on July 1, 1994; and having considered the supplemental submissions; for the reasons stated in the Opinion of today's date;
IT IS this 26th day of October, 1994 hereby
ORDERED that plaintiff's motion to vacate the award of arbitrators is DENIED; it is
FURTHER ORDERED that defendants' motion to confirm the award of arbitrators is GRANTED; and it is
FURTHER ORDERED that the award of the NASD arbitration panel in "Sandra Bender v. Smith Barney Harris Upham & Co., et al.," No. 92-02080 (date of decision January 4, 1994), be and hereby is CONFIRMED in its entirety as to all claims, including the claims of Sandra Bender and the counterclaim of Richard T. Carlin; and it is
FURTHER ORDERED AND ADJUDGED that judgment is hereby entered in favor of Defendants, Richard T. Carlin, John Maine, and Ronald H. Reisman and against Plaintiff Sandra Bender dismissing the Complaint with prejudice; and it is further
ORDERED AND ADJUDGED that pursuant to the arbitration award, Smith Barney Shearson, Inc. shall pay to Plaintiff Sandra Bender the sum of $69,843.41; and it is further
ORDERED AND ADJUDGED that pursuant to the arbitration award, judgment is hereby entered in favor of Defendant/Counterclaimant, Richard T. Carlin, and against Plaintiff/Counterclaim Defendant Sandra Bender in the amount of $7,500.00, and Sandra Bender is enjoined from use of the article, which was the subject of the arbitration award, in its original or copied form or by verbal reference thereto, except as necessary for purposes of this litigation; and it is further
ORDERED that the parties shall bear their respective costs and attorneys' fees of the NASD arbitration, unless specifically addressed in the arbitration award.
No costs to be assessed by Clerk herein.
NOTES
[1] Prior to amendment in 1992, this provision appeared at 9 U.S.C. § 10(b).
[2] Nor is it apparent that Boyd would bear antipathy against a person asserting wrongful termination. Boyd invoked NASD in his claim against Newbold for wrongful termination in a claim filed August 12, 1991. See Boyd v. Hopper Soliday & Co., Inc., NASD Docket No. 91-02489 (Award dated April 10, 1992). Boyd was successful on his claim against Newbold, gaining an award of full recovery in the amount of $200,000 because his firing was found to be without cause. Id. at pp. 2-3 (Attached to Plaintiff's Motion to Vacate Award of Arbitrators filed April 4, 1994, at Ex. E). Mr Boyd's own experience and his successful invocation of the NASD Arbitration remedy could well have made him at least a sympathetic member of the panel.
[3] Based upon representations made by plaintiff at oral argument which suggested that Mr. Boyd may have been removed from the list of eligible NASD arbitrators at or about the time the arbitration award was issued in her case, the court granted plaintiff leave to file a supplemental submission regarding the status of Mr. Boyd during the relevant time period, and further permitted defendant the opportunity to respond to plaintiff's supplemental submission. The information provided to the court establishes that, at all relevant times, Mr. Boyd was qualified to adjudicate plaintiff's claims. The affidavit of John J. Flood, Associate General Counsel, NASD, sets forth that "Charles H. Boyd is not and has not been the subject of any NASD disciplinary proceeding." Flood Aff. ¶ 2. Additionally, the affidavit of Shari L. Strum, Senior Attorney, NASD Arbitration Department, sets forth that Mr. Boyd was an "arbitrator in good standing at the NASD from his appointment on January 22, 1993 through the issuance of the arbitration award on January 4, 1994 and from that date to the present." She testifies that no disciplinary action has been taken against him from January 22, 1993 to the present. Ms. Strum further explains, as counsel for defendant did at oral argument, that, pursuant to NASD Code of Arbitration § 19(c)(2), Mr. Boyd will remain eligible to serve as an "industry" arbitrator for three years after October 29, 1993, the date he left the securities industry.
In her letter dated July 20, 1994, plaintiff attacks the veracity of the affidavits submitted at her behest by the NASD officials; the allegations against the affiants are baseless, and will be disregarded by the court. In addition, Ms. Bender attaches to her letter three documents dated April, 1994, which evidence "claims" against Mr. Boyd by individuals whose accounts he handled: (1) an NASD Arbitration Statement of Claim filed by Jack and Ann Stratton v. Robert Thomas Securities, Inc. on April 26, 1994; (2) an attorney's letter dated April 29, 1994 to Robert Thomas Securities, Inc., on behalf of Frances Ritchey Gentieu; and (3) an attorney's letter dated April 8, 1994 to Raymond James & Associates on behalf of Alyn Robinson Caulk. As defendants point out in their opposition submission, these letters evidence nothing more than that complaints were made against Mr. Boyd by private customers, unconnected to his role as an NASD arbitrator, subsequent to the disposition of plaintiff's arbitration case; these complaints have not yet been adjudicated and Mr. Boyd continues to be qualified to serve as an NASD arbitrator to this day. In sum, plaintiff's supplemental materials fail to materially advance plaintiff's claim of evident partiality.
[4] The alleged instances of actual bias not supported by references to the record are: (a) permitting defendants to offer evidence supporting their position in discharging plaintiff which was not part of the pleadings; (b) failure of the panel to follow its own mandates with regard to required discovery ordered by the panel to be produced by defendant, while strictly requiring plaintiff to adhere to discovery orders; and (c) sustaining defendants' objections to plaintiff's exhibits on the ground that they had not been provided in discovery upon the simple assertion of defendants' counsel during the proceedings while not affording the even-handed right to plaintiff to the same courtesies. Pl.Br. at 9-10. The record of the arbitration proceedings, supplied by defendants in opposition to plaintiff's motion, constitutes approximately two feet of material. The court is not required to comb this extensive record on its own to discern whether plaintiff's claims (a)-(c) are supported. It was incumbent upon plaintiff, as the moving party, to support her argument by providing the record and directing the court to particular examples of alleged bias, and this plaintiff failed to do. In any event, to the extent plaintiff complains that certain isolated rulings did not go her way during the course of the protracted arbitration proceedings, the court can discern no grounds for relief.
[5] When pressed at argument as to when, if ever, an objection was made to the panel's jurisdiction over the counterclaim, plaintiff referenced only a letter dated May 12, 1993 from Mr. Peruto, plaintiff's arbitration counsel, to the NASD. The record contains only a letter dated May 10, 1993 from Mr. Peruto to Shari Sturm of the NASD, which reads, in pertinent part, as follows:
I am in receipt of the fax copy of the letter dated May 5, 1993 by David S. Friedman, Esquire, to you. I also have a copy of your communication of the same date advising Mr. Friedman of the procedure involved in counterclaims. I therefore assume that Mr. Friedman's letter is written to comply with your direction to him in your letter. I therefore respond as follows.
Sandra Bender filed her Amended Statement of Claim dated January 6, 1993 and it is indicated that it was received by NASD on January 12, 1993. Mr. Friedman's proposed counterclaim apparently refers to matters set forth in the Amended Statement of Claim as well as the Fall, 1992 edition of Financial Planning on Wall Street. It therefore is unmistakably clear that the gravamen of the counterclaim was well known to the Respondent prior to any hearings and within the time required for response. Obviously, therefore, this is so far out of time that it should not be permitted.
We therefore object to any counterclaim filing at this late date.
Ex. "N" to Friedman Aff. Clearly, this letter propounds only a timeliness objection and fails to set forth a jurisdictional objection to the counterclaim.
[6] The information furnished by plaintiff to Ms. Stone ultimately formed the basis of the Financial Planning article, which read in pertinent part:
Stockbroker Sandra Bender used to shrug off tales of discrimination against brokers as the whining of poor producers looking for an excuse. Consistently a top producer, she took a perverse sort of pride when colleagues referred to her as the "Iron woman," or when one veteran male broker said to others, "Bender can swim with the best of them."
But she claims it took one Smith Barney manager only four months in 1990 to render her emotionally shaken and decimate her $350,000 production book. Eventually, she found herself out of a job. "I kept lying in bed thinking, what could I have done wrong," Bender says.
Bender is now one of the few women brokers who will openly attest that discrimination exists in the brokerage industry. She is bringing the Mount Laurel, New Jersey branch office manager she worked under to arbitration next spring in a wrongful termination and discrimination claim. She says she was forced to resign on 45 minutes notice without any cause or explanation other than the manager telling her she made him "uncomfortable."
[7] As to the amount of damages awarded on the counterclaim, $7,500.00, the court has reviewed the record and concludes that there was at least some evidence to support the award. Mr. Carlin testified that, although no one came out and stated that they would not interview with him as a result of the Financial Planning article, he believed that his recruitment efforts were affected by the publication of the article. He stated that there was a "significant decline in the number of appointments" he was able to make. Tr. 10/29/93 at 700:10-12. Of course, Carlin was not required to prove special damages, because occupational misconduct, which was the subject of the defamation claim, is one of the four recognized categories of slander per se. See Ward, 136 N.J. at 526, 643 A.2d 972.
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878 A.2d 1189 (2005)
Anthony JEFFREY, Appellant,
v.
UNITED STATES, Appellee.
Nos. 01-CF-932, 04-CO-252.
District of Columbia Court of Appeals.
Argued May 3, 2005.
Decided June 30, 2005.
*1190 Thomas D. Engle, appointed by the court, for appellant.
Joycelyn S. Ballantine, Assistant United States Attorney, for appellee. Kenneth L. Wainstein, United States Attorney, John R. Fisher, Elizabeth Trosman, and Diane G. Lucas, Assistant United States Attorneys, were on the brief, for appellee.
Before TERRY, REID and WASHINGTON, Associate Judges.
WASHINGTON, Associate Judge.
After a jury trial, appellant Anthony Jeffrey ("Jeffrey") was convicted of carrying a pistol without a license ("CPWL") in a gun-free zone,[1] possession of an unregistered *1191 firearm,[2] and possession of ammunition.[3] On appeal, Jeffrey contends: (1) the trial court erred when it denied his D.C.Code § 23-110 motion alleging ineffective assistance of trial counsel; (2) the trial court erred when it refused to hold a hearing on his 23-110 motion or compel trial counsel to cooperate with his appellate counsel; and (3) the evidence was insufficient to support his enhanced conviction of carrying a pistol without a license in a gun-free zone. We affirm.
I.
As Jeffrey states in his brief on appeal, "[m]ost of the evidence at trial was not contested." The government's evidence showed that, at about 7:30 p.m. on August 14, 1999, Metropolitan Police Lieutenants Dianne Groomes and Edward Delgado were on patrol near the alley behind the 1200 block of Neal Street, Northeast. The officers had received complaints about the alley being used for drug deals and prostitution. According to the testimony, on the other side of the 1200 block of Neal Street, Northeast "is Wheatley Elementary School and the day care center and there is a playground area and the parking lot." As the officers approached the alley, they noticed a car blocking the alley. The officers noticed two people, one of whom was Jeffrey, in the car reclining back in their seats.
Lieutenant Delgado saw Jeffrey turn around to look at the officers from the front passenger's seat and then bend down toward the floorboard of the car. When the officers got out of their car to investigate, both officers also detected the smell of marijuana coming from the car. At this point, Jeffrey jumped out of the car and started walking to the front of the car. Lieutenant Groomes tried to block him and Jeffrey did "kind of like a little skirmish-type of a thing, kind of what we call on the street like a faking me out."
Lieutenant Delgado pulled Jeffrey onto the trunk of the car and put him in the frisk position. Because the car door was left ajar, Lieutenant Groomes noticed a barrel of a gun protruding from underneath the passenger's seat. The officers told the female passenger to stay seated in the car. According to Lieutenant Groomes, Jeffrey spontaneously told the officers that the female passenger had nothing to do with it, that it was his car and that he had just bought it. Lieutenant Delgado testified that Jeffrey also admitted that "[w]hatever is in the car is mine."
A crime scene search technician responded to the scene, saw the gun protruding from underneath the car seat, and took photographs. The technician also measured the distance from the location of the gun to the property line near the fence of Wheatley Elementary School, and testified at trial that the distance was 151 feet and 7 inches.
Jeffrey presented no evidence at trial. After deliberations, a jury found Jeffrey guilty of all counts. Jeffrey was sentenced on June 22, 2001, to multiple sentences of two years supervised probation, all to run concurrently. On May 17, 2002, Jeffrey's probation was revoked and he was sentenced to one to three months' incarceration.
II.
A. Jeffrey's Section 23-110 Motion
On October 16, 2002, Jeffrey filed an Ex Parte Motion to Compel Cooperation *1192 of Trial Counsel, which the trial court denied on November 4, 2002. The motion stated that cooperation of trial counsel was necessary to determine whether an ineffective assistance of counsel motion would be appropriate. On February 11, 2003, Jeffrey filed a Motion to Vacate Sentence pursuant to D.C.Code § 23-110 (2001) alleging ineffective assistance of trial counsel. Specifically, Jeffrey argued that trial counsel was ineffective because he should have put forth evidence showing that Jeffrey did not own the vehicle, and that, because of this, Jeffrey had no knowledge of the gun underneath the seat. Jeffrey contended that this evidence was crucial to his defense, and that, had his attorney established such facts, the outcome of his trial would have been different.
The trial court denied Jeffrey's motion on March 11, 2004. On appeal, Jeffrey challenges the trial court's denial of his § 23-110 motion on the merits, the trial court's denial of his motion without a hearing, and the trial court's denial of his motion to compel trial counsel to cooperate with appellate counsel for purposes of the § 23-110 motion.
The government opposed Jeffrey's § 23-110 motion arguing that Jeffrey had failed to show either deficient performance or prejudice from his trial counsel's alleged ineffectiveness. The government also argued, however, that because Jeffrey was no longer "in custody," the § 23-110 motion was not properly before the court.
On appeal, the government again argues that Jeffrey was not "in custody" at the time he filed his motion to vacate sentence under § 23-110, and thus, the motion was not properly before the trial court. The government points out that on May 17, 2002, Jeffrey was sentenced to one to three months incarceration and that, by February 11, 2003, when Jeffrey filed his motion, he had already served his sentence.
Upon a review of the record, we agree that the trial court lacked jurisdiction to hear Jeffrey's § 23-110 motion and, thus, his challenge to the trial court's ruling is not properly before this court. Although this precise argument was not made to the trial court, "jurisdictional challenges may be raised at any time." Friendship Hosp. for Animals, Inc. v. District of Columbia, 698 A.2d 1003, 1006 (D.C.1997). Motions made pursuant to § 23-110, under which Jeffrey sought relief, may only be made by a "prisoner in custody under sentence of the Superior Court." D.C.Code § 23-110(a) (2001) (emphasis added). Moreover, we have expressly held that "[t]o meet the in-custody requirement of § 23-110, a prisoner must currently be serving or detained upon a sentence imposed by the Superior Court." Thomas v. United States, 766 A.2d 50, 51 (D.C.2001). Because Jeffrey had already served his sentence, and therefore was not detained or in custody at the time he filed his § 23-110 motion, the motion was not properly before the trial court.
Because the trial court lacked jurisdiction to hear Jeffrey's ineffective assistance of counsel claim, we need not address whether the court erred substantively in denying the motion or whether it erred in refusing to hold a hearing on the matter. Furthermore, we need not address Jeffrey's claim that the court erred in denying his motion to compel, as this motion was directly related to his investigation on his § 23-110 motion.
B. Sufficiency of the Evidence
We now turn to Jeffrey's claims regarding his conviction for CPWL in a gun-free zone. Jeffrey argues that the trial court erred in allowing the jury to consider whether he carried a pistol without *1193 a license in a gun-free zone. The D.C.Code provides for an enhanced penalty to any person carrying a gun illegally within a gun-free zone, which includes: "[a]ll areas within 1000 feet of a public or private day care center, elementary school, vocational school, secondary school. . . ." § 22-3202.1 (1981). Jeffrey contends that, because the evidence at trial showed the distance of 151 feet 7 inches to be from the property line of the school, not the actual building itself, to the location of the gun in the car, the trial court erred in submitting that element to the jury. According to his interpretation of D.C.Code § 22-3202.1 (1981), a gun-free zone is that area within 1000 feet of an elementary school building itself, not within 1000 feet of the school grounds or the school's real property. Because "there was no testimony regarding the distance of Wheatley School from the property line or the distance between the gun and Wheatley School," Jeffrey contends, the elements of the statute were not met.
Because Jeffrey failed to raise this specific claim in the trial court, we would ordinarily review it for plain error. See Williams v. United States, 858 A.2d 984, 990 (D.C.2004). Because of the importance of the statutory interpretation issue, however, we have decided to review the case de novo. Our first step when interpreting a statute is to look at the language of the statute. See National Geographic Soc'y v. District of Columbia Dep't of Empl. Servs., 721 A.2d 618, 620 (D.C.1998). We are required to give effect to a statute's plain meaning if the words are clear and unambiguous. See Office of People's Counsel v. Public Serv. Comm'n, 477 A.2d 1079, 1083 (D.C.1984). "The primary and general rule of statutory construction is that the intent of the lawmaker is to be found in the language that he has used." Peoples Drug Stores, Inc. v. District of Columbia, 470 A.2d 751, 753 (D.C.1983). Furthermore, "in examining the statutory language, it is axiomatic that `the words of the statute should be construed according to their ordinary sense and with the meaning commonly attributed to them.'" Id. (quoting Davis v. United States, 397 A.2d 951, 956 (D.C.1979)).
"`The literal words of [a] statute, however, are not the sole index to legislative intent, but rather, are to be read in the light of the statute taken as a whole, and are to be given a sensible construction and one that would not work an obvious injustice.'" Columbia Plaza Tenants' Ass'n v. Columbia Plaza L.P., 869 A.2d 329, 332 (D.C.2005) (quoting Boyle v. Giral, 820 A.2d 561, 568 (D.C.2003)). We must also be mindful that our interpretation is not at variance with the policy of the legislation as a whole, "requiring that we remain more faithful to the purpose than the word." Id. (internal quotation marks omitted). Toward this end, in certain cases, we also consult the legislative history of a statute. See Abadie v. D.C. Contract Appeals Bd., 843 A.2d 738, 742 (D.C.2004).
Upon a review of the statute, its legislative history, and intended purpose, we hold that a gun-free zone as defined in D.C.Code § 22-3202.1 (1981), recodified at D.C.Code § 22-4502.01 (2001), is the zone within 1000 feet of the grounds and real property of a school, not just the building itself.
The text of the gun-free zone statute states:
(a) All areas within 1000 feet of a public or private day care center, elementary school, vocational school, secondary school, college, junior college, or university, or any public swimming pool, playground, video arcade, or youth center, or an event sponsored by any of the above *1194 entities shall be declared a gun free zone.
(b) Any person illegally carrying a gun within a gun free zone shall be punished by a fine up to twice that otherwise authorized to be imposed, by a term of imprisonment up to twice that otherwise authorized to be imposed, or both.
D.C.Code § 22-3202.1 (1981).
Here, although the statute does not explicitly state whether the grounds and real property of the buildings are included in the gun-free zone, it is evident that the statute is intended to protect children from being exposed to criminal activity. The legislative history of the statute makes this point clear. The Committee for the Judiciary of the Council of the District of Columbia stated that the legislation was prompted by gun violence continuing in places "where children abound." JAMES E. NATHANSON, BILL 10-265, THE "YOUTH FACILITIES FIREARM PROHIBITION AMENDMENT ACT OF 1994," COMM. ON THE JUDICIARY, at 2 (1994). "It is the intent of the bill to cover most places where children are intended to congregate." Id.
Jeffrey suggests that we read the statute to mean that a gun-free zone must be measured from the actual building itself to the locus of the gun. Were we to adopt Jeffrey's interpretation, however, we would lose sight of the legislative purpose and policy behind this provision. It is difficult to imagine why the legislature would consider only the area within 1000 feet of a school building to be a gun-free zone, but exclude the school grounds, upon which children are just as likely to linger and "abound."
Such an interpretation is also consistent with our cases interpreting the District drug-free zone statute, which is almost identical to the gun-free zone statute. See Boddie v. United States, 865 A.2d 544, 549 (D.C.2005); compare D.C.Code § 33-547.1 (1997 Supp.) with § 22-3202.1 (1981). Like the gun-free zone statute, the text of the drug-free zone statute does not expressly specify whether the zone includes the area within 1000 feet of the grounds of a school. In Boddie, we determined that because "the critical controlling language in the District's [drug-free zone] statute is virtually identical to that in the federal law," the statute should be interpreted in the same way the federal circuits had interpreted it. Boddie, 865 A.2d at 553. Similarly, it is appropriate for us to take guidance from the federal gun-free zone statute in interpreting our own version. Under the comparable federal statute, a "school zone" is defined as the area: (1) "in, or on the grounds of, a public, parochial or private school"; or (2) "within a distance of 1,000 feet from the grounds of a public, private or parochial school." 18 U.S.C. § 921(25) (emphasis added). We are satisfied that our interpretation of the D.C. gun-free zone statute is consistent with our federal counterpart.
Our interpretation is also consistent with our opinion in Goodson v. United States, 760 A.2d 551 (D.C.2000), in which we first addressed how distance is computed for the 1000-foot requirement in our drug-free zone statute.[4] We held that the evidence was insufficient to sustain appellant's conviction based on the fact that the end point (locus of the drug offense) of the measurement was incorrect. In so holding, however, we stated that: "we agree with the D.C. Circuit in interpreting the 1000-foot requirement `to mean the straight-line footage between the closest point within the real property of the school and the locus of the drug offense.'" Goodson, 760 A.2d at 554 (quoting United States v. Applewhite, *1195 315 U.S.App.D.C. 222, 226, 72 F.3d 140, 144 (1995)) (emphasis added).
Having found that a gun-free zone includes the area within 1000 feet of the grounds and real property of a school and not just the building itself, we now turn to whether the evidence at trial was sufficient to sustain Jeffrey's conviction. In this regard, we review a claim of insufficiency of evidence "in the light most favorable to the government, recognizing the province of the trier of fact to weigh the evidence, determine the credibility of the witnesses and to draw reasonable inferences from the testimony." Dickerson v. United States, 650 A.2d 680, 683 (D.C.1994). Because the undisputed evidence at trial showed that Jeffrey possessed the gun in this case 151 feet and 7 inches from the property line of Wheatley Elementary School, we find the evidence sufficient to sustain his conviction of CPWL in a gun-free zone.
Accordingly, we affirm the judgment of the trial court.[5]
So ordered.
NOTES
[1] In violation of D.C.Code §§ 22-3202(a), -3202.1 (1981), recodified at D.C.Code §§ 22-4502(a), -4502.01 (2001).
[2] In violation of D.C.Code § 6-2311(a) (1981), recodified at D.C.Code § 7-2502.01(a) (2001).
[3] In violation of D.C.Code § 6-2361(3) (1981), recodified at D.C.Code § 7-2506.01(3) (2001).
[4] See D.C.Code § 33-547.1 (1997 Supp.).
[5] Jeffrey argues in the alternative that the trial court erred in instructing the jury that the government must prove that Jeffrey "carried the pistol on or about or within 1,000 feet of the real property of a public school." (Emphasis added). Given our decision in this case, we find that the trial court correctly instructed the jury.
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901 F. Supp. 1440 (1995)
Angela Marie PARTON
v.
CITY OF BENTONVILLE; James David Dray, Individually and as an employee of the City of Bentonville; Larry Horton, Individually and as an employee of the City of Bentonville; Leon Reece, Individually, as an employee of the City of Bentonville, and as Chief of the Bentonville Fire Department.
No. 94-5159.
United States District Court, W.D. Arkansas, Fayetteville Division.
June 2, 1995.
V. John Lisle, Jr., Donnie W. Rutledge, II, Lisle Law Firm, Springdale, AR, for Plaintiff.
Kevin J. Pawlik, Bentonville, AR, Mark Robert Hayes, No. Little Rock, AR, for Defendants.
*1441 AMENDED MEMORANDUM OPINION
H. FRANKLIN WATERS, Chief Judge.
The complaint alleges that James Dray, a licensed EMT and ambulance driver for the City of Bentonville Fire Department, engaged in reckless and deliberately indifferent operation of an ambulance, resulting in accident and injury to plaintiff. The same allegation is made against Larry Horton, also an employee of the City of Bentonville Fire Department, who was "riding shotgun" in the ambulance at the time of the accident. The complaint also seeks damages against the City of Bentonville and Leon Reece, Chief of the Bentonville Fire Department, for failing to adequately train, supervise, and discipline the emergency personnel of the Bentonville Fire Department.
Plaintiff seeks relief under 42 U.S.C. § 1983 for deprivations of her constitutional rights under the Due Process Clause and the Search and Seizure Clause of the Fourth and Fourteenth Amendments. Further, plaintiff filed state law claims of outrage and negligence.
Defendants have filed a motion for partial summary judgment arguing that all the defendants are entitled to judgment as a matter of law on the due process, unreasonable seizure and outrage claims. Defendants do not seek a ruling on plaintiff's negligence claim, but they do request that the court not exercise discretionary jurisdiction over the remaining state law claim.
The court will grant the motion for partial summary judgment as to all the defendants on all federal claims. As to the remaining state law claims of outrage and negligence, the court will dismiss those without prejudice.
I. SUMMARY JUDGMENT STANDARD
Rule 56(c) provides that summary judgment "shall be rendered if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there exists no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56, Fed.R.Civ.Proced.
In determining whether there are any genuine issues of material fact, the court must first give the nonmoving party "the benefit of the reasonable inferences that can be drawn from the underlying facts." Fischer v. NWA, Inc., 883 F.2d 594, 598 (8th Cir.1989), citing, Trnka v. Elanco Prod. Co., 709 F.2d 1223 (8th Cir.1983), cert. denied, 495 U.S. 947, 110 S. Ct. 2205, 109 L. Ed. 2d 531 (1990). The court may then grant the motion for summary judgment only "if the evidence is such that a reasonable jury could [not] return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986).
II. BACKGROUND
The facts of the case on summary judgment are as follows. Plaintiff and defendants, James Dray and Larry Horton, were involved in an automobile collision in the early evening on February 26, 1993. At the time, Dray and Horton, members of the Bentonville Fire Department Ambulance Squad, were responding to an emergency cardiac call in a Bentonville Fire Department ambulance. According to Dray's testimony, he was driving westbound on State Highway 102. Dray recalls looking at the speedometer and says that he was driving at approximately 65 m.p.h. He began decelerating 200 to 300 yards away from the intersection of "J" Street and Highway 102 where the accident occurred. He estimates his speed at 40 m.p.h. at the time of impact, although he did not look at the speedometer.
According to both Dray and Horton, they observed traffic as they approached the intersection to determine if it was safe to cross, and they sounded the ambulance's siren, using its four different sound frequencies. When Dray and Horton were both satisfied that all cars in the north, south and east bound lanes of the intersection had stopped, Dray drove through the intersection against the red light. Plaintiff, driving south on "J", apparently drove by all the stopped cars and collided with the ambulance.
In an attempt to show that this scenario creates a genuine issue as to the recklessness *1442 and deliberate indifference of the driver, plaintiff relies on the following.
First, plaintiff notes that a "giant Wal-Mart distribution center is adjacent to the accident site, and has a row of trees or shrubs that run for a substantial distance near the Highway 102 right of way." Presumably, plaintiff means to indicate that defendants could not have had a decent view of oncoming traffic due to the shrubs, but there is no evidence to that effect. The only pertinent evidence is Dray's own testimony that the trees were "tiny" so that he "could see over them easily" and that they had no "visual effect" on him whatsoever.
Second, plaintiff claims that there were a number of cars "in or near" the intersection at the time of the accident. Defendants own testimony is that there were a number of stopped cars at the intersection and that plaintiff apparently drove right by these parked cars and into the intersection. The court cannot understand how that fact goes to show any egregious conduct by the defendants. If anything, the fact that there were already stopped cars in the intersection would appear to indicate that plaintiff's conduct was not entirely proper.
Third, the ambulance was going at least 40 m.p.h. when it ran the red light. According to the affidavit of plaintiff's expert:
the speed of an ambulance may properly be as little as 5-10 miles per hour when going through a red light. Factors that influence what the speed should be include: congestion of the intersection, visibility, time of day, and other factors.
Of course, the fact that speeds over 10 m.p.h. may be too great in some circumstances says nothing about what occurred in this case, but plaintiff's expert goes on to testify that:
I have never seen or heard of a supervisor at a fire department that would allow a driver to proceed through a red light at an intersection in a heavily traveled, urban intersection at forty (40) miles per hour, or any speed that is even close to that speed. I would never teach my students to drive in that manner, as in my opinion it would probably violate Illinois law and probably Arkansas law. It is not safe to drive at that speed through that type of intersection.
The relevant statute, Ark.Code Ann. § 27-49-109(a) (Michie Repl.1994) provides in pertinent part that:
The driver of any authorized vehicle when responding to an emergency call upon approaching a red or stop signal or any stop sign shall slow down as necessary for safety but may proceed cautiously past the red or stop sign or signal.
At the time of the accident, Dray, a licensed EMT and experienced ambulance driver, was responding to an emergency cardiac call with his partner Horton, also a licensed EMT and certified paramedic.
III. DUE PROCESS
The Due Process Clause provides that "[n]o State shall ... deprive any person of life, liberty, or property, without due process of law." U.S. Const. amend. XIV. The Eighth Circuit has held that the Due Process Clause is violated when the state fails to protect the life, liberty or security of individual citizens in only two situations: "first, in custodial and other settings in which the state has limited the individuals' ability to care for themselves; and second, when the state affirmatively places a particular individual in a position of danger the individual would not otherwise have faced." Gregory v. City of Rogers, 974 F.2d 1006, 1010 (8th Cir.1992), cert. denied, ___ U.S. ___, 113 S. Ct. 1265, 122 L. Ed. 2d 661 (1993). The first class of cases can be referred to as custodial cases, and the second class of cases can be referred to as state-created danger cases. The two classes of cases together will be referred to as due process cases or substantive due process cases.
This case is a state-created danger case. However, even in a state-created danger case, the state actor is not liable every time he affirmatively places a particular individual in a position of danger the individual would not otherwise have faced. Rather, the state actor must place the individual in danger with conduct that is culpable to some degree. As to the required showing of culpability, it is clear that more than mere negligence is required to prevail on a due process claim. *1443 Daniels v. Williams, 474 U.S. 327, 106 S. Ct. 662, 88 L. Ed. 2d 662 (1986). It is also clear that more than "gross negligence" is required. Myers v. Morris, 810 F.2d 1437, 1468 (8th Cir.1987), cert. denied, 484 U.S. 828, 108 S. Ct. 97, 98 L. Ed. 2d 58 (1987).[1] However, the exact level of culpability that is required to prevail on a due process claim has not been settled in this circuit. In fact, the Eighth Circuit expressly refused to decide that question in Gregory, 974 F.2d at 1012 ("we need not consider ... what greater standard of care is necessary to state a substantive due process claim under section 1983").[2]
This court is thus faced with a question of first impression in this circuit. In the circuit courts as a whole, there is no clear agreement setting forth the level of culpability that offends due process under 42 U.S.C. § 1983.
The Supreme Court has not definitively established the level of culpability that is required to make out a substantive due process claim based on a failure to protect [or enhancement of danger], but has held that something more than "mere negligence" must be shown. [Davidson v. Cannon, 474 U.S. 344, 347, 106 S. Ct. 668, 670, 88 L. Ed. 2d 677 (1986)] Indeed in Collins v. City of Harker Heights, [503 U.S. 115, 112 S. Ct. 1061, 117 L. Ed. 2d 261 (1992)], the Court implied that allegations of deliberate conduct that "shocks the conscience" might be required to state a substantive due process claim. [Id., at 129-30, 112 S.Ct. at 1071]. Multiple standards including gross negligence, recklessness, deliberate indifference, and conscience-shocking conduct, have been articulated by the lower federal courts. [citations omitted].
Karen M. Blum, DeShaney: Custody, Creation of Danger, and Culpability, 27 Loy. L.A.L.Rev. 435, 471-478 (1994) (emphasis added). For more citations to the varying standards utilized by various courts in due process cases, see Fagan v. City of Vineland, 22 F.3d 1296, 1305-06 (3rd Cir.1994); Temkin v. Frederick County Commissioners, 945 F.2d 716, 722-23 (4th Cir.1991), cert. denied, 502 U.S. 1095, 112 S. Ct. 1172, 117 L. Ed. 2d 417 (1992).
As the Eighth Circuit has not determined the precise level of culpability that must be shown to prevail on a substantive due process claim, this court now holds that, where innocent civilians are injured in a car accident caused by a high speed police chase, or by any other state actor who is acting in the line of duty and in contravention of the rules of the road, the injured civilian states a due process claim only if the alleged misconduct "shocks the conscience."[3]
*1444 There are numerous reasons for adopting the "shocks the conscience" standard as the appropriate one. First of all, the lesser concepts of culpability (recklessness, gross negligence, and deliberate indifference) have little meaning in those situations when a police officer or ambulance driver is acting in deliberate contravention of the rules of the road. If one were looking for conduct that would normally be considered reckless per se, it would be hard to find better examples than a driver who intentionally ran stop signs, ran red lights, and doubled the speed limit while trying to chase another vehicle or just get somewhere. Still, we allow certain state actors to engage in such conduct in certain situations because it serves the public good. Given the known risks we are assuming as a community, this court must adopt the "shocks the conscience" standard as the appropriate one.
Second, any lesser standard would lead to federal litigation almost every time there is an accident with a state vehicle driving in an emergency situation, and the due process clause would become a "font of tort law to be superimposed upon whatever systems may already be administered by the States" which is clearly something the Supreme Court wants to avoid. Paul v. Davis, 424 U.S. 693, 701, 96 S. Ct. 1155, 1160, 47 L. Ed. 2d 405 (1976). For instance, in Dorothy J. v. Little Rock Sch. Dist., 7 F.3d 729, 734 (8th Cir. 1993), the Eighth Circuit refused to apply the state-created danger theory in such a way as to "make § 1983 virtually coterminous with traditional tort law, the very expansion of constitutional tort liability that the Supreme Court has rejected...." Other courts have addressed similar concerns in the context of what might be called condoned reckless driving cases. According to Apodaca v. Rio Arriba County Sheriff's Dep't, 905 F.2d 1445, 1446-47, n. 3 (10th Cir.1990), "[c]ollisions between police vehicles and others caused by police negligence clearly fall on the `tort' side of the line" even when plaintiffs attempt to "dress up" their claims by labelling the conduct as "reckless and wanton." Also, in Fagan, 22 F.3d at 1306-07, the court stated its opinion, with lengthy explanation, that in police pursuit cases, the reckless indifference standard "is grounded in tort law, not in constitutional principles."
Third, we know that the Eighth Circuit has already rejected gross negligence as the proper standard, and it is difficult to make any meaningful distinctions between recklessness and gross negligence. Depending on how gross negligence is defined, there may not be any difference. In Britt v. Little Rock Police Dept., 721 F. Supp. 189, 192 (E.D.Ark.1989), Judge Eisle defined recklessness as:
intentionally doing an act of an unreasonable character in disregard of a known or obvious risk that was so great as to make it highly probable that harm would follow, Prosser & Keeton, Torts, at 212....
In contrast, the Sixth Circuit in Simescu v. Emmet County Dep't of Social Serv., 942 F.2d 372, 375 (6th Cir.1991) (internal quotation omitted), defined gross negligence as:
intentionally [doing] something unreasonable with disregard to a known risk or a risk so obvious that he must be assumed to have been aware of it, and of a magnitude such that it is highly probable that harm will follow.
As pointed out by the Third Circuit, this concept of gross negligence "closely resembles reckless indifference." Fagan v. City of Vineland, 1993 WL 290386, at *12 (3d Cir. Aug. 5, 1993), vacated, 5 F.3d 647 (3d Cir. 1993) (en banc), cited by DeShaney: Custody, Creation of Danger, and Culpability, 27 Loy.L.A.L.Rev. at 472. Moreover, this concept of gross negligence has been adopted by many courts in the due process cases. Thus, only a "shocks the conscience" standard provides a truly meaningful alternative to the gross negligence standard rejected by the Eighth Circuit.
Fourth, at least two circuits have expressly held that the appropriate standard of culpability in police chase cases is a "shocks the conscience" standard. Fagan, supra (adopting "shocks the conscience" test for all state-created danger cases); Temkin, supra (adopting "shocks the conscience" standard *1445 for all "police driving misconduct" cases). Moreover, both cases convincingly argue that at least one other case adopts a nominal gross negligence standard but qualifies that standard in such a way as to make it the functional equivalent of a "shocks the conscience" standard. In Jones v. Sherrill, 827 F.2d 1102, 1106-07 (6th Cir.1987), the court, applying what it called a "gross negligence and outrageous conduct" standard, found that the facts "were not sufficient to charge the government officials with outrageous conduct or arbitrary use of government power" necessary to state a claim because the officer's intent in initiating the chase was "to protect public safety."
Applying the "shocks the conscience" standard to the facts of this case, it is clear that there is nothing shocking about what transpired. To illustrate, in Temkin, supra, the Fourth Circuit affirmed the granting of summary judgment for defendants in a police chase case. In so doing, the court examined the most egregious allegations against the defendants and found them to be inadequate.
the Temkins have called our attention to five specific facts which they have contended would demonstrate that [defendant's] conduct was violative of the applicable standard of care: 1) the chase continued for a significant period of time over a ten mile area; 2) the chase continued at a very high rate of speed; 3) the chase was initiated because of a minor violation; 4) the police already had, at a minimum, a partial identification of the license plate of the suspect vehicle; and 5) the chase violated General Order # 204 because [defendant] failed to maintain radio contact with his supervisor throughout. To those five facts, we would add the expert deposition testimony of Dr. Geoffrey Alpert that [defendant's] conduct was "reckless," "totally irresponsible," and "wanton."
Temkin, 945 F.2d at 723.
There is nothing about the facts of these cases that strikes the court as any more egregious than the facts in Temkin or many other police chase cases where the claim or the evidence has been found to be inadequate under gross negligence, reckless disregard and shocks the conscience standards. Rather than discuss the details of these cases at length, the court simply cites to a lengthy discussion of such cases in Temkin, 945 F.2d at 721-723. This discussion concludes that the facts of Temkin are "almost indistinguishable from those found in Roach, Taylor, Sherrill, and Walton. Indeed, some of the facts in those four cases involved conduct more egregious than that present here." To this list, the court would add the case of Apodaca, supra.
It is not clear what type of abuse of discretion would be so eye-catching as to shock the conscience. What is clear is that the conduct at issue in this case does not rise to that level. Apodaca, 905 F.2d at 1446-47 n. 3 (plaintiffs claim dismissed because "their cases come down to allegations that [defendant] was driving too fast for the road and visibility conditions").
Even if the court has chosen the wrong appellation for the standard to be applied in these cases, it is still clear that the motion should be granted because plaintiff's lawyers are attempting to turn an ordinary negligence case which should have been filed in state court into a federal case. The record before the court supports only a garden variety vehicular accident negligence case, if that, and one cannot make a federal case out of that irrespective of how imaginatively it is pled or how many "experts" are retained.[4]
IV. CONCLUSION
The court has found that there was no due process violation committed by the ambulance driver, James Dray. As to the claim for unreasonable seizure, the facts of this case clearly do not even state a claim, since *1446 the accident was unintentional. Roach, 882 F.2d at 296-97. The court does not understand why this "theory" was pled since it was clearly meritless (nothing was searched and nothing was seized).
Since there was no underlying constitutional violation by the driver, James Dray, there can be no liability on the part of Larry Horton, who was simply "riding shotgun." Also in the absence of an underlying constitutional violation, there can be no liability on the part of the City of Bentonville or Leon Reece, the Chief of the Bentonville Fire Department, for failure to train. Id., 882 F.2d at 297-98.
As to the remaining state law claims, the court will dismiss those without prejudice. United Mine Workers of America v. Gibbs, 383 U.S. 715, 86 S. Ct. 1130, 16 L. Ed. 2d 218 (1966).
NOTES
[1] As authority for its holding in Myers, the Eighth Circuit relied entirely on the Supreme Court's decision in Daniels, supra. However, that case only held that merely negligent conduct by state actors does not offend the due process clause. Daniels specifically reserved the question of "whether something less than intentional conduct, such as recklessness or `gross negligence,' is enough to trigger the protections of the Due Process Clause." Id., 474 U.S. at 334 n. 3, 106 S.Ct. at 667 n. 3. As such, Myers was in error when it treated Daniels as controlling, a fact which has been noted by more than one court. See Fargo v. City of San Juan Bautista, 857 F.2d 638, 641 n. 3 (9th Cir.1988); Roach v. City of Fredericktown, 693 F. Supp. 795, 798 (E.D.Mo. 1988), aff'd, 882 F.2d 294 (8th Cir.1989). Nevertheless, the Eighth Circuit has followed Myers or cited it without criticism in a string of cases. See e.g. Sellers v. Baer, 28 F.3d 895, 902-903 (8th Cir.1994), cert. denied, ___ U.S. ___, 115 S. Ct. 739, 130 L. Ed. 2d 641 (1995); Gregory, 974 F.2d at 1012; Roach v. City of Fredericktown, 882 F.2d 294, 297 (8th Cir.1989).
[2] In at least two post-Gregory cases, the Eighth Circuit has not taken the opportunity to clarify the proper standard. In Sellers v. Baer, 28 F.3d 895 (8th Cir.1994), the court assumed that a state-created danger resulting from "recklessness" would state a due process claim, but held that no reasonable fact-finder could find reckless conduct. In Roach v. City of Fredericktown, 882 F.2d 294 (8th Cir.1989), the court assumed that a state-created danger that "shocks the conscience" states a due process claim, but held that the allegations in the complaint did not rise to that level.
[3] The court specifically reserves the question of whether this standard applies to all due process cases. The court in Fagan, supra, limited the "shocks the conscience" standard to state-created danger cases, but did not apply the same standard to custodial due process cases. The court in Temkin, supra, limited the "shocks the conscience" standard to state-created danger cases involving police chases, and did not decide whether the same standard would be extended to reach other due process cases. See DeShaney: Custody, Control & Creation of Danger, 27 Loy. L.A.L.Rev. at 476 ("There is certainly precedent for applying different standards of culpability to the same constitutional provision.").
[4] In this respect, the affidavit of plaintiff's expert which was submitted adds little if anything to this case, and it is doubtful that he would be allowed to testify to his conclusions in this court because such conclusions would not "assist the trier of fact to understand the evidence or to determine a fact in issue." Federal Rule of Evidence 702. That is true because the jury would, when given the facts relevant to the occurrence, be in as good a position to reach its conclusions and the "expert's" conclusions would not aid the individual jury members in reaching a determination that, in our system, is properly within the province of the jury.
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619 S.W.2d 843 (1981)
A. R. D. C., INC., Appellant-Plaintiff,
v.
STATE FARM FIRE & CASUALTY CO., et al., Respondents-Defendants.
No. WD 31670.
Missouri Court of Appeals, Western District.
June 30, 1981.
Motion for Rehearing and/or Transfer Denied August 4, 1981.
Application to Transfer Denied September 8, 1981.
Dean A. Hodapp, Blumer & Nally, Kansas City, for appellant-plaintiff.
Glenn McCann, James Welsh, Knipmeyer, McCann, Fish & Smith, Kansas City, for respondents-defendants.
Before WASSERSTROM, C. J., and PRITCHARD, DIXON, TURNAGE, CLARK, MANFORD and NUGENT, JJ.
Motion for Rehearing and/or Transfer to Supreme Court Denied August 4, 1981.
TURNAGE, Judge.
A.R.D.C., Inc. and two of its stockholders filed suit in eight counts against State *844 Farm Fire & Casualty Company and two of its employees. Four of the counts were brought by A.R.D.C. and the remaining four by the individuals. The court sustained a motion to dismiss the counts brought by A.R.D.C. because suit had been filed after its charter had been forfeited for failure to file the annual registration and to pay the required fee. This appeal followed. Reversed and remanded.
A.R.D.C.'s petition was filed in June, 1978, and the petition alleged that State Farm had entered into an oral contract of insurance to protect A.R.D.C. from loss by burglary. The petition alleged the contract of insurance was entered into prior to April 1, 1974, and that on April 1, 1974, A.R.D.C. suffered loss by burglary. One count filed by A.R.D.C. was for the breach of the contract of insurance for the failure of State Farm to pay the burglary loss and the other counts were for fraud, intentional interference with a protected property interest and bad faith.
State Farm filed an answer to the petition and a separate motion to dismiss for failure to state a cause of action. In January, 1979, a first amended petition was filed. In March State Farm filed an answer and another motion to dismiss for failure to state a cause of action. In August State Farm, for the first time, filed a motion to dismiss on the ground that A.R. D.C. did not have the capacity to sue and was not the real party in interest. Suggestions filed in support of such motion indicated the ground to be that the charter of A.R.D.C. had been forfeited for failure to file the annual registration report and pay the annual registration fee for the year 1974. The forfeiture of the charter of A.R. D.C. was on January 1, 1975.
Thereafter A.R.D.C. requested additional time to respond to the motion and later filed documents from the secretary of state indicating the forfeiture had been rescinded in November, 1979. The court overruled State Farm's motion to dismiss because A.R.D.C.'s charter had been forfeited but reconsidered such action and then entered an order dismissing all counts brought by A.R.D.C.
A.R.D.C. contends that under § 351.540.2, RSMo 1978[1] the rescission of the forfeiture related back to the date of the forfeiture and gave validity to the lawsuit even though it was filed at a time when the charter stood forfeited. State Farm contends that under Clark Estate Co. v. Gentry, 362 Mo. 80, 240 S.W.2d 124 (1951) the rescission of the forfeiture did not have any retroactive effect and the suit was actually filed by a non-entity because A.R. D.C. had lost its corporate standing with the forfeiture of its charter. State Farm contends the real parties in interest to bring any action on the part of A.R.D.C. after the forfeiture were the directors and officers in office at the time of the forfeiture who became the trustees of A.R.D.C. under § 351.525(4).
In Clark the court held that a corporation was not entitled to file suit in its own name after its charter had been forfeited and that a rescission of the forfeiture did not have any retroactive effect but was prospective only. The court concluded that the effect of the rescission was only to give the corporation power to act thereafter, but this would not relate back to give validity to any act which occurred after forfeiture and prior to rescission. The court also, at page 130, relied on Cleveland v. Gore Bros., 14 Cal. App. 2d 681, 58 P.2d 931, 932 (1936) for holding that the filing of a suit by a corporation after forfeiture and prior to rescission does not toll the statute of limitations because the subsequent rescission does not have retroactive effect and could not breathe life into the suit. A.R.D.C. contends that the amendment of § 351.540 by the adoption of § 351.540.2 in 1975 abrogates the holding in Clark. Section 351.540.2 provides as follows:
"Upon the issuance of a certificate rescinding the forfeiture of the corporate rights of a corporation, the restoration of corporate rights and privileges shall have effect from the date of the forfeiture, *845 and all acts of the corporation, in the period between the date of forfeiture and the date of the rescission* of the forfeiture shall be thereby confirmed and held as the acts of the original corporation; except that, any judgment obtained against any person in his capacity as a trustee under section 351.525 shall not be vacated by reason of any rescission* under this section, but shall continue in full force and effect notwithstanding the rescission*. No corporation shall prosecute any action enumerated in section 351.535[2] following a rescission* under this section if the action was filed after the forfeiture of the corporation's corporate rights but prior to the rescission* of that forfeiture.
"* Original rolls use word `recision'."
On this appeal the parties collide on the issue of the effect to be given to the above amendment. No question is raised concerning the validity of the amendment nor the power of the legislature to adopt such amendment. State Farm basically contends that the amendment does not change the decision in Clark and A.R.D.C. contends the amendment nullifies the holding in Clark.
The effect of an amendment to a statute in the light of decisions construing that statute was stated in Wright v. J. A. Tobin Construction Company, 365 S.W.2d 742, 744[3, 4] (Mo.App.1963) as follows:
"[I]t is presumed that the legislature is aware of the interpretation of existing statutes placed thereon by the state's appellate courts, and that in amending a statute or enacting a new one on the same subject it is ordinarily the intent of the legislature to effect some change in the existing law. If this were not so the legislature in amending a statute would be accomplishing nothing, and legislatures are not presumed to have intended a needless and useless act."
Applying the rule in Wright to this case requires this court to conclude that in adopting the amendment the legislature intended to make a change in the existing law. The amendment did not change any of the existing statutes which declared that upon the failure to file the annual registration and pay the annual fee that a corporation's charter be forfeited and the directors and officers in office at the time would become trustees and would have the right to file suits on behalf of the corporation. Nor did the amendment change § 351.530 which makes it a misdemeanor for any person or persons to exercise any of the powers, privileges or franchises of any corporation after the charter has been forfeited. By leaving those sections intact, the amendment did not affect the ruling in Clark that after the charter of a corporation has been forfeited the dissolved corporation is no longer the real party in interest and the filing of such suit is illegal. Clark was cited by this court recently in J. M. Morris Const. v. Mid-West Precote Co., 613 S.W.2d 180 (Mo.App.1981) in holding that after the charter of the corporation was forfeited it ceased to be a corporation or to have legal capacity to sue.
Clark further held that the rescission of a forfeiture of a corporate charter would not have any retroactive effect because the general rule concerning the effect of statutes is prospective only unless the legislature expressed a clear intent that the statute be given retroactive effect.
This court finds no conflict between the amendment and the statutes previously enacted relating to the statutory trustees being the only persons authorized to file suits and the criminal penalty of misdemeanor imposed upon persons who exercise corporate powers after the charter has been forfeited. This court holds that as to corporations whose charter has been forfeited and prior to a rescission of that forfeiture, the law announced in Clark and Morris remains unchanged. However, after a rescission of that forfeiture the legislature has now declared in express terms that the restoration of corporate rights and privileges has retroactive *846 effect and is effective from the date of forfeiture. The legislature has further declared that all acts of the corporation taken in the period between the forfeiture and the rescission are confirmed and are held to be the acts of the original corporation. No argument is advanced that the legislature may not forgive the violation of a statute by validating an act which was improper at the time. While the filing of the suit in the name of the corporation after the forfeiture was denounced, the legislature nevertheless provided that if the forfeiture were rescinded, the suit was the act of the corporation the same as if the forfeiture had not occurred.
The effect of the amendment for all practical purposes is to treat the forfeiture as if it had never occurred. In plain language the amendment provides for the restoration of all corporate rights and privileges to become effective from the very date of forfeiture and all acts taken between forfeiture and rescission are confirmed and held to be valid. Thus, even though it is unlawful for persons to exercise corporate powers after a charter has been forfeited, once that forfeiture has been rescinded the legislature has forgiven the illegal use of corporate powers.[3]
One of the concerns of the court in Clark was the status of a judgment which might be obtained against the statutory trustees of a corporation after a forfeiture if retroactive effect were given to the rescission of the forfeiture. The legislature addressed that problem in the amendment and held that even though full retroactive effect was being given to the rescission and all acts of the corporation were confirmed, any judgment obtained against the statutory trustees would remain unaffected.
The retroactive effect of the amendment and the holding of this court comports with the general rule stated in 13 A.L.R. 2d 1220 AnnotationCharterReinstatement Interim Acts (1950):
"That the reinstatement or revival of the corporate powers of a corporation validates its acts during such interim would seem to follow sometimes from the plain language of the applicable statute, as where it provides that, upon the issuance of a certificate reviving a corporation whose charter has expired, `the acts and doings of such corporation, in the period between the date of expiration and the date the reviver, shall be thereby confirmed and held as acts and doings of the original corporation so revived,' ...."
See Fletcher Cyclopedia, Corporations, Rev. Vol. 16A, § 7998, p. 74 (1979).
State Farm further contends that A.R.D.C.'s cause of action was barred by limitations under § 516.120 because the five-year period expired after the suit was filed but before rescission of the forfeiture. Without deciding the applicability of § 516.120, the answer to this contention rests on the same reasoning as set out above. The filing of a petition and the issuance of summons tolls the running of the statute of limitations. Emanuel v. Richards, 426 S.W.2d 716, 718[1, 2] (Mo.App.1968).
Although the suit here in question was filed and summons issued while the charter of the corporation was in forfeiture, once the rescission was issued, all acts of the corporation were confirmed and held to be the acts of the corporation. Since the suit was not dismissed prior to rescission, under the terms of the amendment the filing of the suit became valid on the issuance of the rescission. Thus the suit was validly filed at a time prior to the expiration of the period of limitations. For that reason the filing of the suit tolled the running of limitations.
In Clark it was held that the filing of a suit after forfeiture and before rescission would not toll the running of limitations because at that time there was no retroactive effect to the rescission. Under the amendment the legislature has given full retroactive effect to the rescission.
*847 The judgment dismissing the counts filed by A.R.D.C. is reversed and this cause is remanded for further proceedings.
WASSERSTROM, C. J., and PRITCHARD and MANFORD, JJ., concur.
CLARK, J., concurs in separate concurring opinion.
DIXON and NUGENT, JJ., concur in concurring opinion.
CLARK, Judge, concurring.
I concur in the disposition of this case reached in the majority opinion and in the rationale which bases that decision on the manifest intent of the General Assembly to work a change in the law formerly controlled by Clark Estate Co. v. Gentry, 362 Mo. 80, 240 S.W.2d 124 (1951). I deem it appropriate, however, to point out the qualifications and limitations which this result imposes upon certain long recognized and recently reiterated principles of the law of corporations. What must result, if possible, is a harmonizing of statutes dealing with the same subject matter. City of Willow Springs v. Mo. State Librarian, 596 S.W.2d 441, 446 (Mo.banc 1980).
Retroactive validation of de facto lawsuits, such as that commenced in June 1978 by the then defunct A.R.D.C., Inc., runs afoul of several fundamental propositions. Under § 351.525(4), RSMo 1978,[1] the power of a corporation in forfeiture to sue and be sued is exclusively vested in the directors and officers as statutory trustees, a condition which assumes no alternate authority in the corporation itself. Second, it has recently been held in J. M. Morris Construction Co. v. Mid-West Precote Co., 613 S.W.2d 180 (Mo.App.1981), that a suit brought in the corporate name after forfeiture is a nullity. Finally, the doctrine of relation back to overcome a statute of limitations is only operative when the original plaintiff had a legal right and status to sue at the time the suit was commenced. Briggs v. Cohen, 603 S.W.2d 20 (Mo.App. 1980).
By the unmistakable language of § 351.540.2, all acts done in the corporate name during the term of corporate charter forfeiture are not absolutely invalid, only conditionally so.[2] Thus, the statute has imposed a condition of uncertainty upon the affairs of the defunct corporation and those who deal with the corporation must act in recognition that legitimacy depends on future events, not on current status. Unless precluded by some intervening event, the corporate principals are indefinitely entitled to obtain relief by rescission of the forfeiture thereby expunging the taint which otherwise lay upon corporate acts during forfeiture.
Precautionary language alerting to this transitory condition was inserted in § 351.525, RSMo 1978, in the same amendment which provided the retroactive effect of forfeiture rescission. In § 351.525(4), RSMo 1978, the termination of corporate powers, privileges and franchises and the dissolution of corporate existence upon forfeiture are expressly made "* * * subject to rescission as provided in this chapter * * *." Whatever may be the wisdom of legislation creating this uncertain state of corporate affairs, potentially without limit in duration, the intent of the statutes is manifest. Those who deal with a corporation in suspension, with or without knowledge of its registration status, are instructed by the statute that acts which are ultra vires may, at the option of the corporation, be retroactively validated by rescission of forfeiture.
As the majority observes, State Farm made no contention that the legislature was without power to create a retroactively operative rescission of forfeiture, arguing only that the language of the statute should not be so construed. The fact is, however, that the statutes bear no other interpretation.
*848 Some conditions must therefore be engrafted on the fundamental propositions earlier stated. Jurisdiction and authority of officers and directors as statutory trustees for a defunct corporation to act, to sue and to be sued, as conferred by § 351.525(4), may or may not be operative depending on whether the forfeiture is later rescinded. A possibility remains for parallel actions, the assumption being that all rights and obligations in the statutory trustees terminate on rescission of forfeiture.
An action pursued to a conclusion in the name of the defunct corporation, as in J. M. Morris Construction Co. v. Mid-West Precote Co., supra, and prior to rescission of forfeiture, is a nullity. If, however, rescission is accomplished before the cause is terminated, the action is fully restored to vitality as though no impediment had existed. A pending cause by a defunct corporation is therefore of uncertain status dependent on whether rescission is effected before judgment.
Finally, as to the question of the statutes of limitation, it must be concluded that no certain bar of the statute forecloses the claim of a defunct corporation so long as some action has been commenced within the statutory period. In this, as in other situations, the effect of § 351.540.2 is to place within the control of the corporation's principals the means to restore the corporate entity to its original standing or abandon the venture as may best serve their individual advantage. The General Assembly alone is the forum where the propriety of this condition can be addressed.
DIXON and NUGENT, JJ., concur.
NOTES
[1] All statutory references are to RSMo 1978 unless otherwise noted.
[2] It should be noted that this action does not come within § 351.535 because the contract in this case was alleged to have been entered into at a time when A.R.D.C. was in good standing.
[3] Not decided by this appeal is the question of whether or not persons could be prosecuted for a misdemeanor for exercising corporate powers by causing a lawsuit to be filed in the name of the corporation if the forfeiture were rescinded.
[1] All statutory citations are to RSMo 1978.
[2] A single exception, not material here, concerns contracts made by the corporation during forfeiture. Such contracts may not be enforced by suit filed during forfeiture, but may be enforced in an action commenced after forfeiture has been rescinded.
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901 F. Supp. 172 (1995)
UNITED STATES of America,
v.
Joseph A. WILSON, Defendant.
No. 95 Crim. 493 (LAK).
United States District Court, S.D. New York.
October 25, 1995.
*173 Roman Dahmer, Assistant United States Attorney, Mary Jo White, United States Attorney, for the United States.
Tracy L. Eadie Gaffey, Associate Attorney, Leonard F. Joy, Attorney-in-Charge Federal Defender Division, for Defendant.
MEMORANDUM OPINION
KAPLAN, District Judge.
The defendant in this case is charged with uttering a false, forged and counterfeited Japanese government certificate in the amount of ¥ 300 billion in violation of 18 U.S.C. § 479 and 2. He moves to suppress statements he made to agents of the Federal Bureau of Investigation ("FBI") in an interview that took place prior to his formal arrest. The Court has conducted an evidentiary hearing and now denies the motion.
Facts
In December 1994, the FBI was informed that the defendant intended to deposit a Japanese certificate to an account maintained by a securities broker-dealer at the National Stock Clearing Corporation ("NSCC"). Special Agent Jennifer Keenan, who apparently had information suggesting that the certificate was not genuine, made arrangements to act in an undercover capacity at NSCC.
On December 9, 1994, Agent Keenan, in her undercover role, spoke to the defendant twice by telephone and made a tentative appointment for the defendant to present the certificate at NSCC on the following Monday, December 12. In consequence, Agent Keenan was at the NSCC when the defendant and a Mr. Vaillancourt arrived together at about 12:30 p.m.
When the defendant arrived at the NSCC "window," which resembles a bank teller's station and to which people deliver securities, he asked for Agent Keenan (under her undercover pseudonym). She came to the window, where the defendant identified himself and Mr. Vaillancourt and furnished Agent Keenan with the certificate and a number of other documents including his passport, which he used to establish his identity. Agent Keenan took the documents, told defendant that she had to photocopy them, and left the window. Moments later, she and two other agents went into the customer area in which the defendant and Mr. Vaillancourt were waiting, showed their credentials, told the two men that the certificate was "fake," and asked if they would consent to be interviewed. The two men agreed.[1]
At approximately that point, an employee of Depository Trust Company ("DTC") appeared in the area to escort the agents, the defendant and Mr. Vaillancourt to a conference *174 room on a higher floor of the building, which Agent Keenan previously had arranged to use. The DTC employee led the group through a public corridor to a public elevator and thence to the conference room.
Once in the conference room, the agents explained to Messrs. Wilson and Vaillancourt that they wished to conduct separate interviews. No objection was raised, and one agent took Vaillancourt to a kitchen area near the conference room while Agent Keenan and another agent remained in the conference room with the defendant. Agent Keenan thereupon conducted an interview that lasted approximately two hours during which no weapons or handcuffs were displayed, and Wilson never was told that he was under arrest. No threats were made or voices raised. At one point, Agent Keenan took Wilson to the kitchen area where Vaillancourt was speaking to the other agent, left Wilson with the other agent, and returned to the conference room with Vaillancourt for a time. Later on, she returned Vaillancourt to the kitchen area and returned to the conference room with Wilson. While Wilson was free to move around throughout, he always was in the company of one or two agents. At about the mid-point of the interview,[2] Agent Keenan accused Wilson of lying and, in substance, of having committed a crime. She suggested to him that his best interests would be served by admitting his guilt and cooperating. She told him also that he and Vaillancourt were subjects of the investigation and that it would be in his best interests not to speak to Vaillancourt about the matter.
At the conclusion of the interview, Agent Keenan served Wilson with a grand jury subpoena, which was returnable that day, December 12, 1994, and required the production of documents. Wilson said that it would be difficult for him to comply on that day and asked for an extension. Agent Keenan crossed out the return date and inserted December 20 as a new return date. Wilson then or shortly thereafter left.
No Miranda warnings were given at any point. At no point was Wilson told that he was under arrest or that he was not free to leave, patted down or frisked. Nor was he ever placed in locked premises or taken to any location under the control of the government. At no point did he seek or ask to leave.
Discussion
Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966), requires the suppression of any statements made by a defendant while he is in custody unless the defendant first has been warned concerning his legal rights. The only question presented by the defendant's motion to suppress therefore is whether he was in custody at any point during the interview of December 12, 1994.
It would be naive to suggest that there is not a hint, however slight, of threat in almost any circumstance in which law enforcement personnel seek to question a citizen. But the cases make crystal clear that far more than this is required in order to transform a perfectly appropriate request for information into a custodial interrogation. The standard governing this determination is clear. It "(a) asks whether a reasonable person would have understood herself to be `subjected to restraints comparable to those associated with a formal arrest,' and (b) `focuses upon the presence or absence of affirmative indications that the defendant was not free to leave.'" United States v. Kirsh, 54 F.3d 1062, 1067 (2d Cir.1995) quoting United States v. Mitchell, 966 F.2d 92, 98 (2nd Cir. 1992) (internal quotes omitted). The fundamental question is whether the agents acted in a manner that conveyed "the message that they would not [have] permit[ted] the accused to leave." Campaneria v. Reid, 891 F.2d 1014, 1021 n. 1 (2d Cir.1989), cert. denied, 499 U.S. 949, 111 S. Ct. 1419, 113 L. Ed. 2d 471 (1991). The standard, moreover, is an objective one. E.g., Mitchell, 966 F.2d at 98.
*175 In this case, the agents identified themselves to Wilson in a public place. Nothing smacking of force or restraint was used or displayed. Wilson freely agreed to an interview, which was conducted in an ordinary business conference room in a commercial firm, not even on government premises. Wilson was not searched, frisked or patted down. His briefcase was not taken from him or its contents inspected. He was not told that he was under arrest or that he was not free to leave. The circumstances here thus were far less favorable to the position of the defendant than in United States v. Kirsteins, 906 F.2d 919 (2d Cir.1990), where the defendant, an immigrant, was questioned under oath behind locked doors in the United States Attorney's office, but the Second Circuit nonetheless reversed an order of suppression.
The only factor present here that gives the Court pause is Agent Keenan's accusation, made during the interview, that Wilson was lying and that he in fact was guilty of a crime. In other circumstances, such an assertion might tip the balance in favor of suppression. In view of the facts outlined above particularly that the interview was conducted during ordinary business hours in commercial, as opposed to government, premises and that there was no overt or explicit suggestion of compulsion this Court is satisfied that a reasonable person in defendant's position would have concluded that he was free to leave.[3]Cf. Beckwith v. United States, 425 U.S. 341, 342-43, 96 S. Ct. 1612, 1614-15, 48 L. Ed. 2d 1 (1976).
Accordingly, the motion to suppress is denied.
The foregoing constitute the Court's findings of fact and conclusions of law.
SO ORDERED.
NOTES
[1] The agents were dressed in business attire and did not display weapons or handcuffs or raise their voices.
[2] The Court finds, crediting Agent Keenan's testimony, that the Agent's memorandum of the interview (Gaffey Ex. C) relates what was said at the interview in the order in which the events took place and that the accusation of lying took place in the discussion of Wilson's prior interview with another FBI agent, which is referred to at page 4 of the memorandum.
[3] While the Court would reach the same result in any case, it finds that Wilson is a lawyer and that a reasonable lawyer in his circumstances certainly would have understood that this was not a custodial interrogation.
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878 A.2d 623 (2005)
163 Md. App. 211
KEITH ALAN ZELINSKI, et al.
v.
ROBERT MALCOLM TOWNSEND, III, et al.
No. 2087 September Term, 2003.
Court of Special Appeals of Maryland.
July 8, 2005.
*624 William S. Patterson, Baltimore, (Andrew Janquitto and Gary A. Berger, on the brief), Towson, for appellant.
William C. Parler, Jr., Towson, for appellee.
Panel: MURPHY, C.J., JAMES R. EYLER, JAMES S. GETTY, (Retired, specially assigned), JJ.
MURPHY, C.J.
This appeal arises out of a December 18, 2000 automobile accident in which appellants Angela Gail Zelinski and Dylan Walter *625 Zelinski sustained injuries that were caused by the negligence of appellee Robert Malcolm Townsend, III (Robert, III). At the time of the accident, Robert, III was driving a vehicle owned by "Mac's Septic Service" and insured by appellee Harleysville Mutual Insurance Co. (Harleysville). In the Circuit Court for Cecil County, appellants sued Robert, III and his parents, appellees Robert Malcolm Townsend, Jr. (Robert, Jr.) and Louise Townsend, the owners/operators of Mac's Septic Service. Instead of defending the Townsends in that lawsuit, Harleysville filed a COMPLAINT FOR DECLARATORY JUDGMENT in which it requested that the United States District Court for the District of Maryland
find and declare that Harleysville is under no duty to defend or indemnify Mac's Septic Service, Robert Townsend, Jr., Robert Townsend, III or any agents of Mac's Septic Service against any claims, or for any sums which Mac's Septic Service, Robert Townsend, Jr., Robert Townsend, III or any agents of Mac's Septic Service may incur and pay by reason of the alleged injuries sustained by Angela Zelinski or any member of the Zelinski family or any other party as a result of the accident of December 18th, 2000.
Appellants were not parties to the federal declaratory judgment action, which concluded with a determination that Harleysville "is relieved of any duty to defend or indemnify [Mac's Septic Service and/or any of the Townsends] for any claims arising out of the December 18, 2000 accident." Harleysville Ins. Co. v. Mac's Septic Service, et al., 225 F. Supp. 2d 595, 599 (D.Md.2002).
Appellants' lawsuit against the Townsends was litigated in the Circuit Court for Cecil County. At the conclusion of a three day jury trial, the jury returned verdicts that included the following findings of fact:
1. [Appellee] Robert Malcolm Townsend, III was negligent.
2. [Appellee] Robert Malcolm Townsend, III was acting within the scope of his employment.
3. [Appellee] Robert Malcolm Townsend, Jr. was an owner of Mac's Septic Service.
4. [Appellee] Louise Townsend was an owner of Mac's Septic Service.
The jury awarded damages in the amount of $4,480,206.17 to Angela and in the amount of $1,557,282.00 to Dylan. After the circuit court had reduced the awards (pursuant to the "cap" statute) and entered judgments in favor of the appellants, (1) the appellants filed a REQUEST FOR ISSUANCE OF WRIT OF GARNISHMENT DIRECTED TO GARNISHEE HARLEYSVILLE MUTUAL INSURANCE COMPANY, and (2) Harleysville responded to that request by filing an answer that included the following assertions:
6. On December 18th, 2000 Harleysville Mutual Insurance Company had in effect for Mac's Septic Service and Robert Townsend, Jr. a Commercial Auto Policy with a liability limit of $500,000 per each accident, and a Commercial Umbrella Liability policy with an aggregate limit of one million dollars. These coverages did not apply when Robert Townsend, III was driving. On September 1st, 2000 Harleysville Mutual Insurance Company issued a named driver exclusion for Defendant Robert Townsend, III as a result of a suspension of his driver's license due to a citation for attempting to drive under the influence.
7. Since September 1st, 2000, there is no coverage under the Harleysville Mutual Insurance Company policies for any accident involving the operation of a motor *626 vehicle by Robert Townsend, III. Following the accident of December 18th, 2000, Harleysville Mutual Insurance Company filed a Complaint for Declaratory Judgment in the U.S. District Court for the District of Maryland. On September 18th, 2002, the Honorable Judge Nickerson of the U.S. District Court for the District of Maryland issued a Declaratory Order relieving Harleysville Mutual Insurance Company of any duty to defend or indemnify Mac's Septic Service, Robert Townsend, Jr. or Robert Townsend, III for any claims arising out of the accident of December 18th, 2000. I have reviewed Judge Nickerson's opinion in Harleysville Ins. Co. v. Mac's Septic Service, 225 F. Supp. 2d 595 (D.Md.2002).
8. Harleysville Mutual Insurance Company owes no debt either under an insurance contract or otherwise, to Mac's Septic Service, Robert Townsend, Jr., Robert Townsend, III, or Louise Townsend for any claims arising out of the December 18th, 2000 accident. Harleysville Mutual Insurance Company does not owe any debt, or have any other obligation, monetary or otherwise, to Mac's Septic Service, Robert Townsend, Jr., Robert Townsend, III or Louise Townsend.
The circuit court ultimately
ORDERED, that [appellee Harleysville Mutual Insurance Co.'s] Amended Motion to Dismiss the Writ of Garnishment is hereby Granted; or in the alternative, it is hereby
ORDERED, that [appellants'] Writ of Garnishment is hereby Quashed.
This appeal followed, in which appellants present two questions for our review:
1. Whether the lower court erred in determining that the writ of garnishment was barred by res judicata or collateral estoppel.
2. Whether the lower court erred in determining that the named driver exclusion was authorized by the General Assembly.
For the reasons that follow, although we answer "yes" to each of these questions, further proceedings are required to determine the amount of the writ of garnishment to which appellants are entitled.
I.
It is well settled that, in a declaratory judgment action initiated by an insurance company that seeks to be "relieved of any duty to defend or indemnify" its insured against claims arising out of an accident caused by the insured's negligence, the insured is not in privity with a victim of the insured's negligence. Therefore, because appellants were not parties to the federal declaratory judgment action, there is no merit in the argument that the writ of garnishment was properly quashed on the ground of either res judicata or collateral estoppel.
II.
Appellants argue that the Named Driver Exclusion, which expressly excludes all coverage for any claims arising out of Robert, III's operation of an insured vehicle, is invalid because such an exclusion is not authorized by Md.Code Ann., Ins., § 27-606. According to appellants, in § 27-606(a)(1), the General Assembly has limited its approval of a Named Driver Exclusion to those liability policies that are "issued in the State to a resident of a household, under which more than one individual is insured." This argument is supported by the legislative history.
In 1989, Chapter 367 of the Laws of Maryland repealed and reenacted the Named Driver Exclusion then found in Article 48A, § 240C-1, by enacting House *627 Bill 62, which expressly limited this exclusion to "an automobile liability insurance policy ISSUED IN THIS STATE TO ANY RESIDENT OF A HOUSEHOLD." According to the FLOOR REPORT that accompanied House Bill 62:
SUMMARY:
This bill does several things:
5) Clarifies that the right to exclude a driver under an automobile policy issued in Maryland is limited to policies of private passenger motor vehicle liability insurance.
BACKGROUND
5) Currently, the language of Art. 48A, § 240C-1 generally deals with the exclusion of an individual in the Insured's household and is applied to policies of private passenger motor vehicle policies. The bill clarifies that the right to exclude drivers does not accrue to policies of commercial motor vehicle insurance.
From our review of the above quoted legislative history,[1] we are persuaded that the Named Driver Exclusion in a commercial motor vehicle insurance policy is void. Appellants are therefore entitled to a writ of garnishment against Harleysville. Further proceedings are required, however, to determine the precise amount to which appellants are entitled.
Proceedings on Remand
Maryland law "certainly does not require insurance companies to provide coverage greater than that mandated by statute." Stearman v. State Farm, 381 Md. 436, 448, 849 A.2d 539(2004). The circuit court must determine whether Harleysville's liability is limited to the statutorily required minimum amount of coverage. This determination must be consistent with the analysis found in West American v. Popa, 352 Md. 455, 723 A.2d 1 (1998), in which the Court of Appeals stated:
In State Farm Mut. v. Nationwide, supra[307 Md. 631, 516 A.2d 586 (1986)], this Court held that a "household exclusion" to liability coverage in an automobile insurance policy was invalid only to the extent of the $20,000/$40,000 statutorily prescribed minimum liability coverage. The holding of the State Farm Mut. Case, however, has not been applied by this Court to any other automobile insurance policy exclusions or provisions. Moreover, we have specifically declined to apply the State Farm Mut. holding in a context other than the household exclusion to liability coverage. See Van Horn v. Atlantic Mutual, supra, 334 Md. at 694-696, 641 A.2d at 207-208.
Adoption of the broad proposition advanced by West American would permit insurers to load up motor vehicle insurance policies with a multitude of invalid exclusions, thereby limiting coverage in numerous situations to the statutory minimums instead of the stated coverage limits set forth on the insured's declaration page. For example, an insured could purchase what he believed was $300,000 liability insurance, pay a premium for $300,000 liability insurance, and, after an accident, discover that he has only $20,000/$40,000 liability insurance because the circumstances fell within one or more of the many invalid exclusions or exceptions in the insurance policy. Persons who paid much more in premiums for coverage in excess of minimums could, in many circumstances, receive no more than those who only paid for minimum coverages. Consequently, we decline to extend the holding of State *628 Farm Mut. v. Nationwide, supra, beyond the household exclusion clause which was involved in that case.
Id. at 477, 723 A.2d 1.
Based upon that analysis, we are persuaded that Harleysville's liability under the commercial policy is limited to the statutorily minimum coverage only if Harleysville establishes that the Named Driver Exclusion at issue in this case was either (1) accompanied by a reduction in premiums, or (2) issued at the request of the insured to avoid an increase in premiums.
As to the issue of Harleysville's liability under the umbrella policy, the Complaint it filed in federal court included the following assertion:
The Harleysville's commercial umbrella liability policy excludes coverage for any claims arising out of an auto accident when there is no underlying liability insurance available for the claims[.]
Although we have held that there is "underlying liability insurance available" under the commercial policy, we are persuaded that the amount of Harleysville's additional liability under the umbrella policy should also depend upon whether Harleysville can establish that the Named Driver Exclusion at issue in this case was either (1) accompanied by a reduction in premiums, or (2) issued at the request of the insured to avoid an increase in premiums. Unless Harleysville can establish either of these facts, its additional liability under the umbrella policy is not limited to the statutorily minimum coverage.
It is well established that, in the absence of fraud and/or collusion, when a liability insurer elects not to defend an action against the insured, the judgment returned in that action is binding on the insurer when the insurer is later sued by the person who obtained the judgment against the insured. See 27 A.L.R. 3d 350 and cases cited therein. For this reason, Harleysville will be entitled to a new trial at which counsel retained by Harleysville will have an opportunity to relitigate the issues of liability and damages that have been decided by the jury only if Harleysville proves to the circuit court that, as a result of fraud and/or collusion such as a Mary Carter type agreement,[2] the Townsends' trial counsel did not make a bonafide effort to obtain the most favorable result that could be obtained under the circumstances.
ORDER QUASHING WRIT OF GARNISHMENT VACATED; CASE REMANDED FOR FURTHER PROCEEDINGS NOT INCONSISTENT WITH THIS OPINION; HARLEYSVILLE MUTUAL INSURANCE COMPANY TO PAY THE COSTS.
NOTES
[1] There is no indication that the legislative history was brought to the attention of Judge Nickerson during the federal declaratory judgment action.
[2] See General Motors Corp. v. Lahocki, 286 Md. 714, 720, 410 A.2d 1039 (1980).
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146 B.R. 499 (1992)
In re Mark TARDIFF, Debtor.
Civ. No. 92-0068-B.
United States District Court, D. Maine.
July 6, 1992.
Charles Shumway, II, Brunette, Shumway & Ryer, Portland, Me., for debtor.
Charles W. Hodsdon, II, Bangor, Me., for State Court Tort Claimants.
ORDER AND MEMORANDUM OF OPINION
BRODY, District Judge.
On New Year's Eve (1987-88), Mark Tardiff was involved in an automobile accident. Approximately one month later, he pled guilty to operating a motor vehicle while intoxicated. In April 1988, Tardiff filed a petition under Chapter 7 of the Bankruptcy Code, 11 U.S.C. §§ 701-66. Tardiff's "sole purpose . . . was to discharge liabilities arising from" the accident. In September 1988, he was granted a discharge which indicated that:
3. This order does not prohibit filing of a complaint under Section 523(a) . . . (9) of the Bankruptcy Code.
In re Mark T. Tardiff, Ch. 7 Case No. 88-10174 (Bankr.D.Me. Sep. 16, 1988) (Discharge of Debtor).
In April 1990, five individuals allegedly injured in the New Year's Eve accident sued Tardiff in state court. Tardiff filed a motion to dismiss, contending that his liability had been discharged. Tardiff's motion to dismiss was denied in August 1990, after a state judge determined that his liability for the accident was nondischargeable.
Tardiff returned to bankruptcy court, seeking to have his 1988 discharge revoked and his case converted to Chapter 13. Tardiff's filings in bankruptcy court all conceded that under section 523(a)(9), debts for death or personal injury caused by a debtor operating a motor vehicle while legally intoxicated were nondischargeable. Tardiff alleged, however, that any debts that might have arisen from the New Year's Eve accident were dischargeable under Chapter 13 as in effect in 1988.
The bankruptcy court granted Tardiff's motion to reopen the case on January 3, 1992. After hearing oral argument, the bankruptcy court denied Tardiff's motion for revocation and conversion on March 3, 1992. The bankruptcy court abstracted and responded to Tardiff's principal argument as follows:
Pointing to § 706(a), he argues that, because a debtor has the "absolute right" to convert his Chapter 7 case to Chapter 13 "at any time," it necessarily follows that an earlier-entered discharge can be dispensed with upon request. The law is to the contrary.
In re Mark T. Tardiff, 137 B.R. 83, 85 (Bankr.D.Me.1992). Relying on cases decided by other bankruptcy courts no court in our circuit has faced this issue the bankruptcy court rejected Tardiff's argument.
Although Tardiff neglected to cite the strongest authority available for his position to either the bankruptcy court or this court, his argument is not entirely novel or *500 unsupported. The Fifth Circuit has held that a debtor may convert his or her case from Chapter 7 to Chapter 13 even after a discharge has been granted. In re Martin, 880 F.2d 857, 860 (5th Cir.1989). The Fifth Circuit has not indicated, however, what effect conversion will have on the previously granted discharge. Id.
Of course, neither the bankruptcy court nor this court is bound by a decision of a court of appeals for another circuit. The only appellate decision on point, however, does conflict directly with the decisions of courts outside this circuit upon which the bankruptcy court relied. The bankruptcy court should reconsider its decision in light of the reasoning advanced by the Fifth Circuit, giving their decision as much weight as its intrinsic persuasiveness merits.
If the bankruptcy court does grant Tardiff's request for revocation and conversion, it will have to determine whether Tardiff is able to comply with Chapter 13's requirement that he propose a plan in "good faith" where his "sole purpose" is to discharge a debt he could not avoid under Chapter 7. See In re Schaitz, 913 F.2d 452, 454-55 (7th Cir.1990) (noting but not resolving the issue).
For the foregoing reasons, the decision of the bankruptcy court is VACATED and REMANDED.
SO ORDERED.
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619 S.W.2d 15 (1981)
TEXAS GENERAL INDEMNITY COMPANY, Appellant,
v.
Roberto VILLANUEVA, Appellee.
No. 1733.
Court of Civil Appeals of Texas, Corpus Christi.
June 25, 1981.
*16 Tom Lockhart, James Mardis, Harlingen, for appellant.
Melchor Chavez, Harlingen, for appellee.
OPINION
NYE, Chief Justice.
This is a workmen's compensation case in which Texas General Indemnity Company, appellant, is appealing the judgment of the trial court which awarded appellee, Roberto Villanueva, $3,741.69 in compensation benefits. Trial was to a jury, and judgment was entered in accordance with the jury findings.
On May 30, 1973, Roberto Villanueva suffered an on-the-job injury to his knee while in the course and scope of employment for PPG Industries, Inc. Villanueva reported the injury to his employer, on the day of the accident, and an accident report was filed. Villanueva continued working after the accident; however, his injury eventually led to his hospitalization and surgery about one year later, in August of 1974. This hospitalization and surgery was paid for by Texas General Indemnity Company under Villanueva's workmens' compensation policy. During the resulting convalescent period, the insurance Company paid Villanueva compensation benefits. On May 8, 1975, Villanueva received a lump sum payment from the Insurance Company for 15% Permanent Partial Disability to his leg. Accompanying this check was a letter which in part read:
"THIS CASE REMAINS OPEN BEFORE THE INDUSTRIAL ACCIDENT BOARD.
Please call our office or the Board if your require additional medical treatment or become disabled as a result of this injury."
Villanueva first saw his attorney on December 8, 1975. A letter was sent to the Industrial Accident Board notifying the board that a compensation claim was pending before the Board, and that Villanueva desired to claim additional compensation. Later, a formal notice of claim was sent on January 26, 1976, to the Industrial Accident Board by his attorney.
The appellant Insurance Company alleges that Villanueva did not file a claim within six months from the date of his injury, and if a claim was filed, good cause did not exist for such a late filing. On appeal appellant Insurance Company is contending that the trial court erred in submitting special issues to the jury because there was no evidence regarding: (1) whether Villanueva believed a claim for compensation had been filed with the Board, (2) that such belief constituted good cause for his delay in the actual filing of a claim, and (3) whether or not good cause existed up to the date of the *17 filing of his claim. Appellant argues additionally that these issues were improper because there was no evidence as to the date when a claim was filed with the Board.
In a workmens' compensation action, the claimant must plead and prove that he timely presented his claim to the Industrial Accident Board within six months after the occurrence of the accident. If there existed a delay in the filing of the claim, the claimant must show that good cause existed for his failure to file a claim within the statutory period. When a claim is not presented within the six-month period, the claimant must show that good cause for late filing continued up until the date when the claim was actually filed. Tex.Rev.Civ.Stat.Ann. art. 8307 § 4a (1979); Lee v. Houston Fire and Casualty Insurance Corp., 530 S.W.2d 294 (Tex.1975); Texas Employers' Insurance Assoc. v. Herron, 569 S.W.2d 549 (Tex. Civ.App. Corpus Christi 1978, no writ).
Rule 277, T.R.C.P., requires the trial court to submit the special issues that control the disposition of the case and that are raised by the pleadings and the evidence. In this regard, a trial court is permitted broad discretion in the submission of such special issues. Wood v. Texas Farmers Insurance Co., 593 S.W.2d 777 (Tex.Civ.App. Corpus Christi 1979, no writ); State v. Norris, 550 S.W.2d 386 (Tex.Civ.App. Corpus Christi 1977, writ ref'd n. r. e.); City of Baytown v. Townsend, 548 S.W.2d 935 (Tex. Civ.App. Houston [14th Dist.] 1977, writ ref'd n. r. e.).
Villanueva testified during the trial that he thought his notice of injury and claim for compensation was filed with the Industrial Accident Board shortly after the accident happened because, "I went into my employer's office and the manager filled out the forms for me which I presumed were sent to Austin. At least, that's what I was told by my employer's representative." The following day, the Insurance Company's representative contacted Villanueva and advised him that everything was taken care of. The record is clear that Villanueva was assured on several occasions by both his employer and the Insurance Company that "everything would be taken care of." The Insurance Company paid for Villanueva's surgery more than six months after the date of the injury. The Insurance Company also paid him compensation while he was convalescing. The lump sum payment of 15% disability to his right leg was accompanied by a letter which stated that "... your case remains open before the Industrial Accident Board ...." The letter further stated that if Villanueva became further disabled, he should notify the Insurance Company and the Board. Shortly after Villanueva talked to his attorney, a claim was filed and formal notice given.
In order to support the submission of a special issue concerning "good cause" and to uphold its affirmative finding on appeal, there must be evidence that the claimant prosecuted his claim with that degree of diligence that an ordinarily prudent person would have exercised under the same or similar circumstances. This is a question of fact to be determined by a jury from the evidence. If a claimant relies upon the representations of his employers, or in this case, the employer and his Insurance Company, such reliance, if believed by the jury, is sufficient to justify a claimant's delay in the filing of his claim. Hawkins v. Safety Casualty Co., 207 S.W.2d 370 (Tex. 1948); Lee v. Houston Fire & Casualty Insurance Corp., 530 S.W.2d 294 (Tex.1975); Texas Employers' Insurance Assoc. v. Herron, 569 S.W.2d 549 (Tex.Civ.App. Corpus Christi 1978, no writ). See Burk Royalty Company v. Walls, 616 S.W.2d 911 (1981).
After reviewing the entire record, we hold that there was ample evidence present that would support the trial court's submission of the special issues involved and that judgment was properly entered based on the jury's answers. Garza v. Alviar, 395 S.W.2d 821 (Tex. 1965); Burk Royalty Company v. Walls, supra. Texas General Indemnity Company's points of error are overruled.
Judgment of the trial court is affirmed.
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878 A.2d 889 (2005)
WENTZEL-APPLEWOOD JOINT VENTURE, Appellant,
v.
801 MARKET STREET ASSOCIATES, LP, A/K/A 801 Market Street Holdings, LLC, Citizens Bank, Item Processing Center and Preferred Real Estate Investments, Inc., Appellees.
Superior Court of Pennsylvania.
Argued March 16, 2005.
Filed June 29, 2005.
*890 Paul A. Logan, King of Prussia, for appellant.
Nicholas Deenis, Philadelphia, for appellee.
Before: TODD, J., KELLY, J., and McEWEN, P.J.E.
*891 OPINION PER CURIAM:
¶ 1 Appellant, Wentzel-Applewood Joint Venture, has taken this appeal from the order entered in this mechanics' lien action[1] and dismissing appellant's claim with prejudice in response to the preliminary objections filed by appellees, 801 Market Street Associates, LP, a/k/a 801 Market Street Holdings, LLC, Citizens Bank, Item Processing Center and Preferred Real Estate Investments, Inc.[2] We affirm.
¶ 2 The relevant facts of this case have been set forth by the esteemed Judge Matthew D. Carrafiello as follows:
[Citizens Bank] is a tenant on the 11th, 12th, and 13th floors of a multiple floor building.[3] [Citizens Bank] entered into a contract with Carlson Implementation Associates, Inc. (hereinafter "Carlson") to convert said floors from their previous use as retail and storage space into an "item processing center" on the 11th and 12th floor with office space on the 13th floor.1 Carlson then subcontracted with appellant to provide and install the drywall, studs, doors, windows, ceilings and millwork required in building the item processing center.
1 According to appellant's statement of matters complained of, the final contract price was $15,839,309.00, with Wentzel's portion set at $2,290,889.00 [after change work orders].
Appellant completed the work on January 15, 2003, and [Citizens Bank] paid Carlson the amount due. Carlson, however, subsequently declared bankruptcy and did not pay appellant. Thereafter, on March 24, 2003, appellant provided formal written notice of their intent to file a mechanics' lien.
¶ 3 Appellant filed a mechanics' lien on May 13, 2003, to which appellees filed preliminary objections asserting that appellant failed to give, prior to completion of its work, the required written preliminary notice of its intent to file a mechanics' lien.[4] The trial court overruled the objections, but subsequently granted reconsideration by order dated October 8, 2003 and directed that discovery and depositions be completed within thirty days. Subsequently, on April 21, 2004, upon review of the evidence produced, the trial court, without further evidentiary proceedings, sustained the preliminary objections in favor of appellees, and dismissed appellant's claim. The trial court thereafter by order of May 18, 2004, granted appellant's petition for reconsideration and vacated its April 21, 2004 order. When the trial court subsequently sustained the preliminary objections and struck the lien on August 26, 2004, this appeal timely followed.
¶ 4 Appellant, in the brief presented in support of this appeal, raises the following questions for review:
*892 Did the trial court err in granting the preliminary objections of Citizens Bank and striking the May 13, 2003, mechanic's lien of Wentzel-Applewood seeking the unpaid contract balance on the basis that the trial court decided, without a hearing, that the work performed by Wentzel-Applewood was an "alteration or repair" rather than an "erection and construction" as statutorily defined by the Mechanics' Lien Law (49 P.S. § 1201) and requiring the statutorily provided notice provisions related to "repair and alteration" liens?
Did the trial court err or abuse its discretion in failing to conduct an evidentiary hearing as provided in 49 P.S. § 1505, with respect to the factual disputes respecting the scope and nature of the changes to the use and appearances of the three floors and basement of the building, the factual question of whether contracts by Carlson and Wentzel-Applewood rendered the premises "new" and for a distinct use and the disputed facts that the contracts affected a material change to the interior of that building, and only thereafter, resolve the issues raised in Wentzel-Applewood's lien claim and the defenses proffered by the bank?
¶ 5 Appellant argues that the trial court erred when it sustained the preliminary objections of appellee by reason of appellant's failure to give preliminary notice of its intent to file a lien. Our scope and standard of review of a challenge to an order that has sustained preliminary objections is well settled:
In determining whether the trial court properly sustained preliminary objections, the appellate court must examine the averments in the complaint, together with the documents and exhibits attached thereto, in order to evaluate the sufficiency of the facts averred. The impetus of our inquiry is to determine the legal sufficiency of the complaint and whether the pleading would permit recovery if ultimately proven. This Court will reverse the trial court's decision regarding preliminary objections only where there has been an error of law or abuse of discretion. When sustaining the trial court's ruling will result in the denial of claim or a dismissal of suit, preliminary objections will be sustained only where the case is free and clear of doubt.
Brosovic v. Nationwide Mutual Insurance Co., 841 A.2d 1071, 1073 (Pa.Super.2004) (citation omitted).
¶ 6 "The Mechanics' Lien Law is a creature of statute in derogation of the common law," and "any questions of interpretation should be resolved in favor of a strict, narrow construction. To effectuate a valid lien claim, the contractor or subcontractor must be in strict compliance with the requirements of the Mechanics' Lien Law." Martin Stone Quarries, Inc. v. Robert M. Koffel Builders, 786 A.2d 998, 1002 (Pa.Super.2001) (citation omitted), appeal denied, 569 Pa. 707, 805 A.2d 525 (2002). The type of notice required of a subcontractor in order to properly file a mechanic's lien is set forth in 49 Pa.C.S. § 1501, which states in relevant part:
(a) Preliminary notice in case of alteration and repair. No claim by a subcontractor for alterations or repairs shall be valid unless, in addition to the formal notice required by subsection (b) of this section, he shall have given to the owner, on or before the date of completion of his work, a written preliminary notice of his intention to file a claim if the amount due or to become due is not paid. . . .
(b) Formal notice in all cases by subcontractor. No claim by a subcontractor, whether for erection or construction or *893 for alterations or repairs, shall be valid unless, at least thirty (30) days before the same is filed, he shall have given to the owner a formal written notice of his intention to file a claim, except that such notice shall not be required where the claim is filed pursuant to a rule to do so as provided by section 506 [49 P.S. § 1506].
49 Pa.C.S. § 1501(a), (b). Thus, as there is no dispute that appellant failed to give preliminary notice of its intention to file a lien prior to the completion of the job, appellant's claim rests on whether the work performed qualifies as "erection and construction" or "alterations and repairs."
¶ 7 The Mechanics' Lien Law defines the relevant phrases as follows:
"Improvement" includes any building, structure or other improvement of whatsoever kind or character erected or constructed on land, together with the fixtures and other personal property used in fitting up and equipping the same for the purpose for which it is intended.
* * *
"Erection and construction" means the erection and construction of a new improvement or of a substantial addition to an existing improvement or any adaptation of an existing improvement rendering the same fit for a new or distinct use and effecting a material change in the interior or exterior thereof.
"Alteration and repair" means any alteration or repair of an existing improvement which does not constitute erection or construction as defined herein.
49 Pa.C.S. § 1201(1), (10), and (11). The improvement of real estate has been determined to be erection and construction where the adaptation (1) is substantial enough in its own right to constitute a new structure, or (2) creates a significant change in the use of the existing structure. City Lighting Products Company v. The Carnegie Institute, 816 A.2d 1196, 1199-1200 (Pa.Super.2003).
¶ 8 In the instant case, Thomas Wentzel of Wentzel-Applewood Joint Venture testified that, prior to the adaptations completed by appellant, the eleventh, twelfth, and thirteenth floors of 801 Market Street were "retail, old space" used as storage for the commercial operations conducted by Strawbridge & Clothier department store on the lower levels. He further stated that after those three floors had been "gutted" by another party, appellant "performed drywall, metal studs, acoustical, door frames and hardware, millwork, specialty metal ceilings to create computer rooms, electrical rooms, sprinkler rooms, office space, [and] bathrooms." He went on to testify that, currently, the pertinent floors are used for "office space" and "processing areas."[5]
¶ 9 As the foregoing testimony of the principal of appellant himself reveals, the renovations completed on the eleventh, twelfth, and thirteenth floors of 801 Market Street were alterations of the existing building and, extensive though they were, did not constitute the erection of a "new improvement" or a "substantial addition" to the existing building. See: City Lighting Products Company v. The Carnegie Institute, supra at 1199. See generally: Anastasi v. Brunet, 171 Pa.Super. 464, 90 A.2d 636 (1952); Eisenberg v. Wolf, 86 Pa.Super. 169 (1925) (substantial addition is rebuilding on another and larger scale). Nonetheless, the improvements qualify as erection and construction if the renovations *894 created a significant change in the use of the existing structure. See: City Lighting Products Company v. The Carnegie Institute, supra.
¶ 10 As we have noted, the very testimony of the principal of appellant established that prior to the alterations, the renovated floors were "retail, old space" used as storage in the commercial operations of Strawbridge and Clothier, and that after the construction the floors were used in the commercial operations of Citizens Bank as "office space" and "processing areas." Thus, while the specific activities carried out on the pertinent floors changed, the character of the use of the floors remained the same, namely, a use attendant to the commercial operations of first, Strawbridge and Clothier and subsequently, Citizens Bank. Since, therefore, the renovations do not meet the definition of "Erection and Construction," the work must be viewed as "Alteration and Repair," and appellant was obliged under 49 Pa.C.S. § 1501 to have provided, prior to completion of its work, a written preliminary notice of its intention to file a mechanics' lien. The failure of appellant to do so compelled the trial court to sustain the preliminary objections, a ruling which we affirm.
¶ 11 Appellant further argues that the trial court erred when it sustained the preliminary objections without conducting a hearing. "[W]hen issues of fact are raised by preliminary objections, the trial court may receive evidence by depositions or otherwise." Mellon Bank, N.A. v. Fabinyi, 437 Pa.Super. 559, 650 A.2d 895, 899 (1994). However, "[n]othing in section 1505 [49 Pa.C.S. § 1505, permitting objections to liens,] requires a trial court to either hold a hearing or to solicit depositions." Mele Construction Company, Inc. v. Crown American Corporation, 421 Pa.Super. 569, 618 A.2d 956, 960 (1992)(emphasis in original), appeal denied, 536 Pa. 627, 637 A.2d 288 (1993).
¶ 12 In any event, the trial court here had directed that the parties proceed to the presentation of evidence through depositions. The record reveals that the depositions of Thomas Wentzel and Jason Vallance, principals of the parties, provided full clarification of the determinative issues of (1) the extent of the work done by appellant, and (2) the uses of the renovated floors before and after the alterations, thereby, affording an ample evidentiary basis for the rulings of the trial court. Thus, there was no need for the trial court to undertake further evidentiary proceedings. Id.
¶ 13 Accordingly, as there is no basis on which to disturb the ruling of the trial court, we affirm the Order which dismissed the mechanics' lien of appellant.
¶ 14 Order affirmed.
NOTES
[1] An order striking the lien was originally entered on April 21, 2004. Appellant simultaneously filed a notice of appeal and a motion for reconsideration. The trial court granted reconsideration and vacated the order of April 21, 2004, pending reconsideration. Thereafter, on August 26, 2004, the trial court again entered an order striking the lien. It is from this later order that the appellant filed the instant appeal.
[2] The mechanics' lien at issue is in the amount of $257,286.31, the amount of the unpaid portion of the contract. The lien was lifted by order of the trial court dated November 3, 2003, after appellee Citizens Bank posted a bond for $514,572.62, a sum which, pursuant to 49 Pa.C.S. § 1510(d), is twice the amount of the lien for the unpaid portion of the contract.
[3] The building was owned by appellees, 801 Market Street Associates, LP, a/k/a 801 Market Street Holdings, LLC, and Preferred Real Estate Investments, Inc.
[4] There is no dispute that appellant failed to give preliminary notice of its intention to file a lien prior to the completion of the job.
[5] Jason Vallance of Citizens Bank explained that check handling would take place in the processing areas of the eleventh floor.
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619 S.W.2d 301 (1981)
Beatrice CALAWAY, Appellant,
v.
SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY, INC., Appellees.
No. CA 80-371.
Court of Appeals of Arkansas.
June 3, 1981.
Rehearing Denied August 19, 1981.
Rubens, Rubens & Forrest, West Memphis, Tenn., and Howard & Howard, Jonesboro, for appellant.
Ray & Donovan, Marianna, for appellees.
CLONINGER, Judge.
This is an interpleader action filed by Southern Farm Bureau Life Insurance Company, the insurer, in which the proceeds of a life insurance policy in the sum of $48,409.78 have been paid into court. The insured, Walter Calaway, Jr., was shot and killed by his wife, the appellee, Rose Marie Calaway, the primary beneficiary under the policy, and it is the contention of the appellant, Beatrice Calaway, the mother of the insured and contingent beneficiary under the policy, that the killing was under such circumstances as would disqualify appellee as beneficiary.
This appeal is from a finding by the trial court that the killing was justified and that appellee is entitled to the proceeds due under the policy. The only issue on this appeal is whether the findings of the trial court were clearly against the preponderance of the evidence.
The trial court was correct and we affirm.
At about 12:30 a.m., September 25, 1977, decedent arrived at his home, intoxicated, and he continued to drink beer until 4:30 a.m., at which time the fatal shooting occurred. During the intervening four hours, decedent alternatively talked angrily about his parents, drank beer, and threatened, slapped, choked and kicked appellee. For a period of some fifteen minutes decedent played with a loaded .44 caliber pistol, pointing it at appellee and inquiring whether she was scared of it. Shortly after 4:00 a.m. decedent staggered from the dining room to the bedroom then returned to the dining room door and told appellee to bring the gun to him. Decedent returned to the *302 bedroom, lay across the bed, and had propped up his head on one elbow; appellee just stood by the bed, holding the gun. Her ankle had been broken, and she was told to stop limping, that there was nothing wrong with her. Appellee testified that decedent then told her that she just didn't look bad enough; that he was going to pistol whip her and might as well kill her. Appellee stated that decedent was in the process of getting up when appellee closed her eyes, lifted the gun, and pulled the trigger. It is undisputed that appellee fired the shot, and that the shot was the cause of death. Appellee said she always did what decedent told her to do; that if she had disobeyed him or left the house he would have found her then or at a later time and would probably have killed her.
During the trouble the couple's two children, ages 2 and 1, awoke and stood at the bedroom door crying. Decedent told the children that if they didn't shut up he would whip them. Appellee put the children back to bed, and she stated that she was afraid to leave the children in the house with decedent, and that in her injured condition she could not take them with her.
Appellee testified that decedent had beaten her severely many times upon previous occasions, and that she was afraid of him. She stated: "I would not tell him it would hurt, he would just hit harder. Walter was the type of person that when he was drinking that if you didn't do what he said when he said it then it was just too bad. He would light into me and just start hitting me with his fist and slapping me and kicking me, and this wasn't just this time, it was years years of it I mean the time he shot my cat and shot the hole in the kitchen I mean that he would do things like that when he was drunk. I was always required to do exactly what he said..."
Following the incident, appellee was in the hospital eight days. Her injuries, medically verified, included fractures to her ankle, upper leg and jaw, swollen eyes, bruises on the face, arms, back, and throat.
In Couch on Insurance 2d, § 27:154 (1960), it is stated that a beneficiary who kills the insured under such circumstances that the act is justifiable, excusable, or lawfully committed in self defense, or under such circumstances that he has no criminal responsibility for his acts, is not barred from receiving the proceeds of the policy. Thus, the beneficiary is entitled to recover when he killed the insured while acting in self defense. Ark.Stat.Ann. § 41-507 (Repl. 1977) provides:
Justification. Use of deadly physical force in defense of a person.
(1) A person is justified in using deadly physical force upon another person if he reasonably believes that the other person is:
(a) committing or about to commit a felony involving force or violence; or
(b) using or about to use unlawful deadly physical force.
(2) A person may not use deadly physical force in self defense if he knows that he can avoid the necessity of using that force with complete safety:
(a) by retreating, except that a person is not required to retreat if he is in his dwelling and was not the original aggressor...
It is settled law in Arkansas that when the beneficiary in a policy of life insurance wrongfully kills the insured, public policy prohibits a recovery by the beneficiary. Horn v. Cole, Administrator, 203 Ark. 361, 156 S.W.2d 787 (1941). In the case of Metropolitan Life Insurance Company v. Shane, 98 Ark. 132, 135 S.W. 836 (1911), the Court said:
The willful, unlawful and felonious killing of the assured by the person named as beneficiary in a life policy forfeits all rights of such person therein. It is unnecessary that there should be an express exception in the contract of insurance forbidding a recovery in favor of such person in such event. On considerations of public policy the death of the insured, willfully and intentionally caused by the beneficiary of the policy, is an excepted risk so far as the person thus causing the death is concerned.
*303 A case almost directly in point with the case at bar is Pendergrass et al. v. New York Life Insurance Company, 181 F.2d 136 (1950), in which the United States Court of Appeals, 8th Circuit, in applying Arkansas law, found the homicide to be justifiable, and stated:
At this time the deceased was violent and abusive to cross-defendant. When in the bedroom the deceased struggled with the cross-defendant and attempted to choke her. She extricated herself from his hold and flung her body across his in an attempt to hold him on the bed. The deceased threw the cross-defendant to the floor. At that time she had an urge to run but the deceased, with an oath, then demanded his gun. The cross-defendant impulsively began to execute his command as she had done many times before. Just as the cross-defendant was handing the gun to deceased, the latter, with an oath, threatened to `kill' or `get' the cross-defendant. He made this threat as he was arising from the bed, and at that moment the cross-defendant pulled the trigger.
Appellant contends that the testimony of appellee is unworthy of belief, because of inconsistent statements between her deposition and the testimony at the trial. In his ruling, the trial judge made the following specific finding:
It is contended that she is unworthy of belief, because her statements to the Court conflict with those given in a pretrial deposition. When those statements relied upon are read in context and along with the whole deposition, the Court finds no inconsistency.
We agree with the trial court that appellee's testimony, when read in context, is not inconsistent. In Digby v. Digby, 263 Ark. 813, 567 S.W.2d 290 (1978), the Court stated:
While this Court considers the evidence on a chancery appeal de novo, it will not reverse the chancellor unless it is shown that the lower court decision is clearly contrary to a preponderance of the evidence. Particularly where the credibility of witnesses appearing before the chancellor is concerned, this Court attaches substantial weight to the chancellor's findings on material issues of fact.
The trial judge believed the testimony of appellee, and we not only recognize the superior position of the trial judge to gauge the credibility of the witness, there is nothing in the record to cause this Court to doubt the truthfulness of appellee. Appellee was in her dwelling and she was not required to retreat from the home. Her testimony was that she feared for her life and the safety of the couple's small children, and evidence given by decedent's closest friend and drinking companion indicated that appellee's fears were well founded. The companion testified that he had been present on a previous occasion when decedent had severely beaten appellee, and that he had observed decedent severely punish the older child, a two-year-old girl, when the child did not perform as decedent demanded. On both occasions, the actions of the decedent were of such an extreme nature that the companion intervened and persuaded decedent to desist.
The trial court found, and we hold, that appellee had justification to reasonably believe that decedent was about to commit a felony involving force of violence or was about to use unlawful deadly physical force.
The decision of the trial judge is affirmed.
CRACRAFT, J., not participating.
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878 A.2d 259 (2005)
2005 VT 56
Sheldon GARDNER
v.
William JEFFERYS III, Susan Jefferys, George Soules and Janice Soules.
No. 04-022.
Supreme Court of Vermont.
May 4, 2005.
Motion for Reargument Denied June 21, 2005.
*262 Present: REIBER, C.J., JOHNSON, J., BURGESS, Administrative Judge, Specially Assigned, ALLEN, Chief Justice (Ret.), Specially Assigned, GIBSON, Associate Justice (Ret.), Specially Assigned.
ENTRY ORDER
¶ 1. Plaintiff Sheldon Gardner appeals the superior court's determination that a restrictive covenant in his deed runs with the land to the benefit of adjacent landowners, defendants George and Janice Soules and defendants William and Susan Jefferys. We affirm.
¶ 2. In 1957, William Jefferys Jr. and his wife Ena, the parents of defendant William Jefferys III, purchased approximately two hundred acres of farm land in Fayston, Vermont known as the Strong Farm. Beginning in 1966, the elderly Jefferys began selling off parcels of the farm. In 1969, plaintiffs Sheldon and Carin Gardner purchased, by warranty deed, a ten-acre parcel of undeveloped land from the Jefferys. The deed contains a restrictive covenant providing that a specified
part of the premises . . . shall forever be and remain open and free of all buildings and structures, except the right to construct on said open land a private swimming pool, and/or tennis court, and, the usual fences and structures appurtenant thereto and such other buildings and structures as meet the approval, in writing of the Grantors herein, their heirs and assigns.
¶ 3. The provision further states that rights secured therein are "to be enjoyed by the Grantors, their heirs and assigns." In 1975, the Jefferys conveyed a five-acre parcel of land to Karin Souminen, who, in turn, sold the parcel to George and Janice Soules in 1987. The Soules moved to Vermont and began to reside on the property in 1990, after they constructed a house there. Their property is located above the Gardners' land. In 1979, the elderly Jefferys conveyed the remainder of their Fayston property to their son, William Jefferys III, and his wife, Susan.
¶ 4. In the late summer and early fall of 1999, the Gardners wrote to William and Susan Jefferys twice requesting approval to build a two-story structure within the area restricted by the above-quoted covenant. The Jefferys gave the Soules a copy of the request. In June 2000, one month after the Gardners obtained a permit to build a fifteen-foot accessory structure in the restricted area, the Soules wrote the Gardners a letter advising that they were interested parties to the restrictive covenant. In September 2000, after receiving a letter from the town zoning administrator informing them that the posts and net placed on their open field *263 were more similar to a temporary badminton or volleyball net than a permanent tennis court requiring a permit, the Gardners filed a declaratory judgment action seeking a determination of the effect of the restrictive covenant in their deed. The Soules responded by filing a counterclaim.
¶ 5. In May 2001, the Gardners began constructing a shed in the restricted area. Shortly thereafter, the superior court granted the Soules' request for a preliminary injunction halting the construction. In the fall of 2001, the Gardners began planting white pines in the restricted area directly in the Soules' view. The Soules sought to enjoin the Gardners from planting the trees, but, following a hearing, the superior court denied the request for a preliminary injunction. In July 2003, following four days of a hearing on the merits of the declaratory judgment action, the superior court ruled that the benefit of the restrictive covenant ran with the land and was enforceable by both the Soules and the Jefferys, and that the Gardners had violated the covenant by commencing construction of the proposed shed and by planting trees in the restricted area. Accordingly, the court enjoined the continued existence of the shed and the trees. Further, the court prohibited the Gardners from allowing plants or crops in the restricted area to exceed six feet in height. On appeal, plaintiff Sheldon Gardner argues that the superior court erred (1) by concluding that the restrictive covenant runs with the land to the benefit of the Soules and the Jefferys; (2) by requiring him to ensure that vegetation in the restricted area does not exceed six feet in height; and (3) by determining that the restrictive covenant prohibits him from constructing the proposed shed and planting the trees.
¶ 6. Plaintiff first contends that the restrictive covenant does not run with the land to the benefit of defendants because the parties intended the covenant to bind only the grantors, their heirs and assigns, and neither the Soules nor the Jefferys are heirs or assigns of the grantors. We do not find this argument persuasive. Four requirements must be met for a restrictive covenant to "run with the land" so that successor property owners may enforce its burdens and benefits: (1) the covenant must be in writing; (2) the parties to the covenant must have intended that the covenant run with the land; (3) the covenant must "touch and concern" the land; and (4) privity of estate must exist between the parties. Rogers v. Watson, 156 Vt. 483, 487, 594 A.2d 409, 411 (1991). Plaintiff argues only that the second requirement is not met in this case. Intent that a restrictive covenant is to run with the land may be either express or implied, and may be shown by extraneous circumstances. Id. at 488, 594 A.2d at 412; see Welch v. Barrows, 125 Vt. 500, 504, 218 A.2d 698, 702 (1966) ("The intention of the parties, not the language used, is the dominating factor, and the circumstances existing at the time of the execution of the deed, the situation of the parties and the subject matter are to be considered."). In some instances, a covenant is "so intimately connected with the land as to require the conclusion that the necessary intention for the running of the benefit is present absent language clearly negating that intent." Albright v. Fish, 136 Vt. 387, 393, 394 A.2d 1117, 1120 (1978). For example, we have held that a covenant prohibiting placing a particular type of structure on a property is such a restriction. See Rogers, 156 Vt. at 488, 594 A.2d at 412. Indeed, unless the terms of a restrictive covenant provide otherwise, when a property benefitted by a restrictive covenant is divided into separately owned parcels, "[e]ach separately *264 owned parcel is entitled to enforce [the] . . . covenant benefitting the property." Restatement (Third) of the Law of Property: Servitudes § 5.7(2) (2000).
¶ 7. Here, plaintiff argues that the restrictive covenant in his deed does not run with the land because it expressly benefits only the grantors and their heirs and assigns, thereby implying an intent not to allow the covenant to be enforced by successors to the land who are not heirs or assigns. Plaintiff further states that neither the Soules' deed nor the Jefferys' deed includes an assignment from the elderly Jefferys, and that the Jefferys are not heirs because Ena Jefferys is still alive, and they did not obtain the land through inheritance. According to plaintiff, they would never have purchased the property with the restrictive covenant if they thought that an indefinite number of successors could dictate how they used their property. We conclude that the record in this case overwhelmingly demonstrates that the parties intended the restrictive covenant to run with the land. The testimony of several witnesses, including Ena Jefferys, unequivocally demonstrated that the covenant was intended to keep the restricted area, which had always been an open meadow, "forever" open and free of any obstructions that would diminish the view from the grantors' remaining lands located above the meadow. Moreover, the record, including evidence of negotiations surrounding the covenant and of the Gardners' subsequent conduct, demonstrates that the Gardners were aware of this intent.
¶ 8. Notwithstanding plaintiff's argument to the contrary, use of the term "assigns" rather than "successors" does not suggest that the parties intended to preclude subsequent owners of the dominant estate from enforcing the covenant. To the contrary, "[i]t is well settled that where a restrictive covenant contains words of succession, i.e., `heirs and assigns,' a presumption is created that the parties intended the restrictive covenant to run with the land." Weeks v. Kramer, 45 Conn.App. 319, 696 A.2d 361, 363 (1997). The word "assignee" is generally defined as "[o]ne to whom property rights or powers are transferred by another." Black's Law Dictionary 114 (7th ed.1999). As Black's Dictionary states:
Use of the term is so widespread that it is difficult to ascribe positive meaning to it with any specificity. Courts recognize the protean nature of the term and are therefore often forced to look to the intent of the assignor and assignee in making the assignment rather than to the formality of the use of the term assignee in defining rights and responsibilities.
Id. As noted, the record demonstrates that the parties intended the covenant to run with the land. Moreover, the fact that the grantors added the word "successors" to the term "heirs and assigns" in later covenants does not demonstrate that they intended the word "assigns" to have a more restrictive meaning in the instant covenant. The covenants were written years apart and appear to have several boilerplate terms to express the grantors' intent that the covenants run with the land.
¶ 9. Next, plaintiff argues that the superior court erred by construing the restrictive covenant to prohibit him from planting trees in the restricted area, and that, by doing so, the court imposed a burden on his property greater than that imposed by the restrictive covenant. We disagree. Generally, in construing a deed, the trial court must "`give effect to the intention of the parties if it can be gathered from the language used when interpreted in connection with, and in reference to, the subject matter and purpose sought *265 to be accomplished at the time the instrument was executed.'" Creed v. Clogston, 2004 VT 34, ¶ 17, 176 Vt. 436, 852 A.2d 577 (quoting McDonough v. W.W. Snow Constr. Co., 131 Vt. 436, 441, 306 A.2d 119, 122 (1973)); see Welch, 125 Vt. at 504, 218 A.2d at 702 (intention of the parties is dominating factor). Although the trial court may employ various rules of construction in interpreting a covenant, including the general rule that restrictive covenants should not be extended by implication, such rules are merely subordinate aids to the court's ultimate goal of determining the parties' intent. Creed, 2004 VT 34, ¶ 17, 176 Vt. 436, 852 A.2d 577; see County of Addison v. Blackmer, 101 Vt. 384, 389, 143 A. 700, 701 (1928) (although restrictive covenants are ordinarily construed strictly, "the intention of the parties is the thing to be determined, and all rules of construction are subordinate aids to its discovery"); cf. Lakes at Mercer Island Homeowners Ass'n v. Witrak, 61 Wash.App. 177, 810 P.2d 27, 28 (1991) (while restrictive covenants were once disfavored, "modern courts have recognized the necessity of enforcing such restrictions to protect the public and private property owners" from urbanization pressures; primary objective in interpreting restrictive covenant is to determine intent of parties).
¶ 10. If the language of a restrictive covenant is clear and unambiguous, the covenant is given effect according to its terms. Creed, 2004 VT 34, ¶ 13, 176 Vt. 436, 852 A.2d 577. Normally, the trial court determines, as a question of law, whether a covenant is ambiguous, and in doing so, may consider the circumstances surrounding the making of the covenant. Id. An ambiguity exists when the language of the document supports a different interpretation from that which appears when the language is considered in light of the surrounding circumstances, and both interpretations are reasonable. Id. If a covenant is determined to be ambiguous, the question of the parties' intent is one of fact to be determined based on all of the evidence. Id. ¶ 18. We review the trial court's findings of fact under a clearly erroneous standard, and thus we will uphold those findings unless there is no reasonable or credible evidence to support them, taking the evidence in a light most favorable to the prevailing party and excluding the effect of modifying evidence. Id.
¶ 11. In this case, the covenant requires that the restricted area "shall be forever open and free of all buildings and structures," apart from the right to construct "on said open land" the usual structures appurtenant to a swimming pool or tennis court. The trial court made no explicit finding on whether the covenant is ambiguous, but rather determined that it was intended to maintain unobstructed views from the north to the south. We conclude that both the language of the covenant and evidence of the circumstances surrounding the making of the covenant support the court's determination. Notwithstanding plaintiff's arguments to the contrary, the word "open" is nonsensical as an adjective modifying the phrase "of all buildings and structures." Rather, the latter phrase is connected only to the word "free," while the word "open" stands apart and refers to the land that had historically been maintained as an open field. This interpretation is reinforced by the use of the term "open land" later in the same sentence.
¶ 12. The question, then, is what the parties meant by "open." The record demonstrates that most of the restricted area had been mowed or hayed for several decades or more when the restrictive covenant was signed. Ena Jefferys, one of the original grantors, testified that she always assumed that the phrase "open and free of *266 all buildings and structures" meant that nothing would interfere with the view, which was "everything up there" and the reason why people bought property there. Indeed, plaintiff himself acknowledged that he bought his property, at least in part, for the view, and that the word "open" in the covenant did not necessarily refer to buildings and structures. In short, there was overwhelming evidence that the intent underlying the restrictive covenant at issue here was to maintain the restricted area as an open meadow, thereby allowing unobstructed views to the south for the benefit of adjoining neighbors. Therefore, the superior court did not increase the burden imposed under the covenant by requiring the Gardners to ensure that vegetation in the restricted area remained below six feet in height.
¶ 13. Moreover, even if we were to construe the critical phrase of the restrictive covenant as meaning only that the restricted area was to be kept free of buildings and structures except those expressly allowed, we would still uphold the trial court's order prohibiting the Gardners from planting trees within the area. Other courts have interpreted the word "structure" or "fence" to include a row trees when such an interpretation furthered the purpose and intent of the covenant or statutory provision. In Witrak, for example, the restrictive covenant foreclosed the erection of a fence over six feet in height. After considering that the purpose of the covenant was to preserve an open appearance in the community, the court concluded that even the literal meaning of the word "fences" did not exclude a row of trees that acted as a barrier. Witrak, 810 P.2d at 29-30. In another case involving a spite fence statute that prohibited any maliciously erected "structure" that was in the nature of a fence, the court held that "a row of trees, arranged in a line by the person who planted them, could easily constitute a `structure.'" Wilson v. Handley, 97 Cal. App. 4th 1301, 119 Cal. Rptr. 2d 263, 267 (2002); see Dowdell v. Bloomquist, 847 A.2d 827, 830 (R.I.2004) (accord). Here, the evidence at trial demonstrated that the row of trees plaintiff planted acted as a structure obstructing the view to the south, in violation of the restrictive covenant.
¶ 14. We also reject plaintiff's argument that the superior court's earlier ruling refusing to temporarily enjoin the Gardners from planting trees is the "law of the case" with respect to whether the restrictive covenant prohibited them from planting trees in the restricted area. The law of the case doctrine "`posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.'" Morrisseau v. Fayette, 164 Vt. 358, 364, 670 A.2d 820, 824 (1995) (quoting Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 816, 108 S. Ct. 2166, 100 L. Ed. 2d 811 (1988)). The doctrine is only a rule of practice, however, which the court may disregard under the proper circumstances. Thus, a court ruling on an issue of law in the course of denying a motion for summary judgment retains the power to reopen what had previously been decided. Morrisseau, 164 Vt. at 364, 670 A.2d at 824. Here, the superior court denied the Soules' request for a temporary injunction in an interim order. The court did not consolidate the hearing on the Soules' request with a trial on the merits of the case. See V.R.C.P. 65(b)(2) (court may order trial on merits of action to be advanced and consolidated with hearing on application for preliminary injunction). Indeed, the merits hearing did not take place until nearly two years later. Further, the court limited the scope of the hearing on the application for a temporary *267 injunction, stating that it was not interested in conducting a trial within a trial. Under these circumstances, the superior court's construction of the restrictive covenant in denying a temporary injunction was not "the law of the case," and, in any event, the court was not precluded from later rendering a different decision based on a fully developed evidentiary record. See Converse v. Town of Charleston, 158 Vt. 166, 169, 605 A.2d 535, 537 (1992) (even if pretrial judge had decided issue on its merits, trial judge retained power to reopen what had been decided).
¶ 15. Finally, plaintiff argues that the superior court erred by prohibiting them from constructing the shed and ordering them to remove the already installed footings for the shed. According to plaintiff, the proposed shed is consistent with a structure used to service a residential swimming pool and tennis court, and nothing in the deed prohibits the Gardners from maintaining the construction remnants on their property even if the shed cannot be built. We find no error. The restrictive covenant allows only "usual" structures "appurtenant" to a pool or tennis court. The evidence demonstrated that the Gardners had not built, or even planned, a swimming pool or tennis court, and that the shed would be out of proportion for use in conjunction with a pool or tennis court. Therefore, the court did not err by enjoining construction of the shed. Moreover, the footings are within the restricted area, which the covenant requires to be kept "open and free of all buildings and structures," except for those designated therein. The footings did not fit within the covenant's exception and therefore must be removed.
Affirmed.
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01-03-2023
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10-30-2013
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