url stringlengths 55 59 | text stringlengths 0 818k | downloaded_timestamp stringclasses 1 value | created_timestamp stringlengths 10 10 |
|---|---|---|---|
https://www.courtlistener.com/api/rest/v3/opinions/1539441/ | 218 B.R. 494 (1998)
In re Michael W. SAGAN, Debtor.
Alan J. FLEMING, Plaintiff,
v.
Michael W. SAGAN, Defendant.
Bankruptcy No. 97-42275, Adversary No. 97-4092.
United States Bankruptcy Court, W.D. Missouri.
March 18, 1998.
*495 Bruce Strauss, Kansas City, MO, for Plaintiff.
Tracy Robinson, Kansas City, MO, for Defendant.
MEMORANDUM OPINION
ARTHUR B. FEDERMAN, Bankruptcy Judge.
Plaintiff Alan Fleming is an attorney who previously practiced in Kansas City, Missouri. Debtor/defendant Michael Sagan is an attorney who has and continues to practice in Kansas City, Missouri. This action arises out of an agreement between the parties to split a contingent fee. Upon collection of the fee, Mr. Sagan failed to remit to Mr. Fleming his portion of the fee. This action is brought pursuant to 11 U.S.C. § 523(a)(2)(A), (4), and (6). This is a core proceeding under 28 U.S.C. § 157(b)(2)(I) over which the Court has jurisdiction pursuant to 28 U.S.C. § 1334(b), 157(a), and 157(b)(1). For the reasons set forth below, I find that Mr. Sagan has an obligation to Mr. Fleming, and that that obligation is nondischargeable. This Memorandum Opinion constitutes the Court's findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure as made applicable to this proceeding by Rule 7052 of the Federal Rules of Bankruptcy Procedure.
A. Statement of Facts
Plaintiff Alan Fleming has been a member of the Missouri Bar since 1978, specializing primarily in personal injury litigation. In 1995, he was retained to represent Terrence Anderson in a workers compensation claim. Mr. Anderson had been a driver for Consolidated Transfer and Warehouse Company, Inc. (CTW). While driving a truck for CTW in California, Mr. Anderson was involved in a rear-end collision. As a result of the accident, he is a quadriplegic, and his wife, who was a passenger in the truck at the time, was killed.
Mr. Fleming successfully represented Mr. Anderson in his workers compensation claim. He then advised Mr. Anderson that his two children, Sally Anderson and Lloyd Rex Anderson, might have a cause of action against Mr. Anderson's employer for the wrongful death of their mother. At the time of the accident Sally Anderson had reached the age of majority, but Rex Anderson had not. Rex did become eighteen, however, before the filing of the lawsuit. Thereafter, Mr. Fleming researched various aspects of California law, in part by contacting a lawyer in that state. For example, he researched spousal and family immunity, as well as the standards for contributory negligence. He also researched California law prohibiting an employee truck driver from carrying non-driver passengers. In addition, he obtained the police report and a video tape of the scene. Mr. Fleming testified that he spent approximately 15 to 20 hours in this preliminary *496 evaluation of the case, and based on his experience determined that the case had a value of approximately $200,000.00 on an early settlement.
After conducting the preliminary evaluation, Mr. Fleming advised Mr. Anderson that he could not file a lawsuit on behalf of the children. Mr. Fleming had determined that Mr. Anderson himself should be an additional defendant in the case and, since he had represented Mr. Anderson in the worker's compensation claim, he would not represent his children in a suit against him. In addition, Mr. Fleming at this time was in the process of winding down his law practice and moving to Florida, where he now resides. As a result of all these factors, Mr. Fleming contacted debtor/defendant Michael Sagan, to whom he previously had referred one or two cases. Mr. Fleming advised Mr. Sagan of the research and analysis he had conducted, and he asked Mr. Sagan to take the case. The parties agreed that Mr. Sagan would receive 40 percent of the contingency fee if the case was settled prior to trial and 50 percent if the case was tried. Mr. Fleming would receive the balance of the fee.
Mr. Fleming then arranged a meeting with Mr. Anderson, his two children, and Mr. Sagan, at Mr. Anderson's home. The purpose of that meeting was to introduce Mr. Sagan to the children, to explain that Mr. Fleming had a conflict, and to suggest that they retain Mr. Sagan to handle the case. Mr. Fleming led the discussion at the meeting regarding his conflict. He testified that he explained the conflict to the Andersons, informed them that he would receive a part of the fee in the event of a recovery, and advised them that they were free to contact a lawyer other than Mr. Sagan, if they chose to do so. Mr. Fleming testified that the Andersons decided to retain Mr. Sagan, so Mr. Fleming produced the form contract that he used in personal injury cases. According to Mr. Fleming, he gave the contract to Mr. Sagan, who filled it out and had the Anderson children sign it. By this time both Sally and Rex Anderson were over eighteen years old. Neither party produced a copy of Mr. Fleming's form contract at trial, and Mr. Sagan denies that any such contract was signed at all.
The meeting with the Andersons was held sometime in March of 1995. Thereafter Mr. Sagan testified that he did legal research on the statutes of limitations for wrongful death actions, in both California and Missouri. On April 29, 1995, Rex and Sally Anderson signed separate Contracts of Employment which had been prepared by Mr. Sagan.[1] The contracts made no reference to Mr. Fleming.
According to Mr. Fleming, Mr. Sagan periodically came by his office to talk about cases which had been referred to him, to solicit other referrals, and to socialize. In the course of one of those meetings, Mr. Sagan raised a question as to whether Mr. Fleming could collect a fee from the Andersons' case, given his conflict of interest. Mr. Fleming responded that he was ethically permitted to share in the fee, and he told Mr. Sagan that the "Hyatt" case established that proposition. On May 19, 1995, Mr. Fleming memorialized the split negotiated by the parties in March of 1995 by writing out the terms of the arrangement on his letterhead. Both Mr. Fleming and Mr. Sagan signed the agreement.[2]
In early May of 1995, without informing Mr. Fleming, Mr. Sagan contacted Gregory Grounds, an experienced trial attorney in Kansas City, and asked Mr. Grounds to act as lead counsel in the litigation. Mr. Sagan told Mr. Grounds that the case had been referred to him by another lawyer who had a conflict. Mr. Sagan did not tell Mr. Grounds the name of the other attorney or, more pertinently, that he had agreed to share his fee with that other attorney. Mr. Sagan and Mr. Grounds agreed that any fee received by them would be split 50/50. Mr. Grounds then took the lead in preparing the petition, which both he and Mr. Sagan signed. The petition was filed in mid-May of 1995.
In addition to being an experienced trial attorney, Mr. Grounds was a partner in a *497 partnership, which owned the building where Mr. Sagan had his office.
Thereafter Mr. Fleming asked Mr. Sagan whether the lawsuit had been filed, and Mr. Sagan assured him that it had. On a number of occasions Mr. Fleming asked for a copy of the petition, but Mr. Sagan never sent it to him. Had he seen the petition, he, of course, would have discovered that Mr. Grounds had somehow become involved in the case. After the lawsuit was filed, Mr. Fleming continued to take an interest in the case. He testified that he had perhaps 15 or 20 conversations with Mr. Sagan after May 1, 1995, and that Mr. Sagan never advised him that Mr. Grounds had been brought into the case. Mr. Fleming also spoke with counsel for the insurance carrier that was handling the defense of the case. He advised Mr. Sagan of these conversations with defense counsel. Mr. Fleming had been under the belief that the case could be settled quickly, before too much expense was incurred, and at some point became impatient with the lack of progress.
In April, 1996, Mr. Fleming spoke with Mr. Sagan, and attempted to determine what steps had been taken to prosecute the case. Mr. Fleming became concerned because Mr. Sagan was not able to tell him what steps had been taken, nor what conversations he had had with the insurance company regarding settlement. Mr. Sagan still did not advise Mr. Fleming that it was Mr. Grounds who was negotiating with defense counsel. Mr. Fleming testified that at that time he offered to reduce his fee if the case were settled quickly, as an incentive to Mr. Sagan to get to work on the case.
This is Mr. Sagan's second Chapter 7 bankruptcy case. The first case was filed on November 7, 1995, after the lawsuit had been filed on behalf of the Anderson children, but before a settlement had been reached. At the Section 341 Meeting of Creditors in the first bankruptcy, the Chapter 7 trustee asked Mr. Sagan to provide information as to any contingent fee contracts, or accounts receivable, due his law practice. It was the trustee's position that the right to any such fees was an asset of the bankruptcy estate and should, when collected, be turned over to the trustee. This case apparently represented one of the few, if not the only, contingent fee case pending at that time. In response to that request, Mr. Sagan proceeded to have the first bankruptcy case dismissed.
In approximately May, 1996, Mr. Grounds negotiated a settlement of the case with defense counsel for the sum of $75,000. Mr. Sagan's contract with the Anderson children entitled him to 40 percent of any recovery, or a fee of $31,000. That fee was paid to Mr. Grounds, who was entitled, under his agreement with Mr. Sagan, to 50 percent, or $15,500. By that time, Mr. Sagan was approximately $12,000.00 in arrears in rent due and owing to Mr. Grounds' partnership. Therefore, Mr. Grounds and Mr. Sagan agreed that Mr. Grounds would keep Mr. Sagan's share of the fee as payment for rent due, as well as for rent to come due in the future.
Mr. Fleming next spoke to Mr. Sagan in late July of 1996. At that time, Mr. Sagan advised him that there was an offer to settle the case. Sometime during the fall of 1996, Mr. Fleming attempted to contact Mr. Sagan again on a number of occasions, but Mr. Sagan did not return his calls. At that point, Mr. Fleming contacted defense counsel, who advised him that the case had been settled in May or June of that year. Mr. Fleming once again called Mr. Sagan, who admitted that the case had been settled, that he had been paid his fee, and that he did not believe he owed Mr. Fleming anything. Mr. Sagan contended that, due to an ethical conflict, Mr. Fleming was not entitled to any fee, and, according to Mr. Sagan, it would be unethical of him to share his fee with Mr. Fleming. In addition, Mr. Sagan advised Mr. Fleming that he was filing bankruptcy anyway, and that any obligation owed to Mr. Fleming would be discharged in the bankruptcy.
Mr. Sagan contends that there are two reasons for his nonpayment of the obligation due Mr. Fleming. First, he contends that he discovered in April of 1996, that the obligation was "not legal", because Mr. Fleming did no work on the file. Second, he contends that he did not pay the debt because he simply did not have the money.
*498 Mr. Fleming testified that after their initial conversation in 1995 concerning the legality of the fee split, which led to the signing of the May 19, 1995 Agreement, Mr. Sagan never mentioned that he believed the Agreement was illegal. And, never, prior to settlement of the case, did Mr. Sagan advise Mr. Fleming that he did not intend to honor the Agreement.
Mr. Sagan filed this second Chapter 7 case on June 18, 1997.
I note initially that Mr. Fleming filed this adversary proceeding pursuant to 11 U.S.C. § 523(a)(2)(A), (4), and (6), however, at trial he produced evidence only as to the section 523(a)(2)(A) Count. As to that Count, there are two issues to decide. The first issue is whether Sally and Rex Anderson waived any conflict Mr. Fleming had, otherwise, he is not entitled to collect a fee. As part of the waiver issue, I must find that they were fully informed that Mr. Fleming and Mr. Sagan had entered a fee-splitting arrangement. Only if Rex and Sally Anderson understood that Mr. Fleming had a conflict, and that Mr. Fleming and Mr. Sagan had a fee-splitting arrangement, is the fee-splitting arrangement between Mr. Sagan and Mr. Fleming ethical and enforceable. If the arrangement is enforceable, there is a debt, and I reach the dischargeability issue.
LEGAL CONCLUSIONS
A. CONFLICT OF INTEREST AND WAIVER
It is not disputed that a conflict of interest existed in this case. Mr. Anderson, as the driver of the vehicle at the time of the accident, would have to be a defendant in any wrongful death cause of action brought by the children. Mr. Fleming, in fact, testified that he perceived a conflict, and that this was one reason for referring the case to Mr. Sagan. Missouri Supreme Court Rule 4, Rules of Professional Conduct (MRPC), Rule 1.7 states the general rule concerning the representation of a client by an attorney for whom a conflict of interest exists. Save for limited exceptions, MRPC 1.7(b) forbids the representation of a client if a conflict of interest exists:
(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:
(1) the lawyer reasonably believes the representation will not be adversely affected;
(2) the client consents after consultation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved.[3]
Mr. Fleming testified that he believed the inclusion of Mr. Sagan in the case eliminated any adverse effect on the Anderson children. As to waiver, he stated that the purpose of the meeting in late March of 1995 between Mr. Sagan, Mr. Fleming, Mr. Anderson and the two Anderson children was to inform the Anderson children of the conflict and introduce them to Mr. Sagan. Mr. Fleming testified that at that meeting the Anderson children gave oral consent to waiver of the conflict. Mr. Sagan verified that the meeting did take place, but he did not testify as to whether Mr. Fleming informed the children of the conflict. Neither the Anderson children nor Mr. Anderson testified at the hearing. I find that Mr. Fleming informed the children of the conflict, and that they orally waived it.
Thus, the issue becomes whether oral consent to waive the conflict meets the requirements of MRPC 1.7(b). The Missouri Court of Appeals has held that oral consent is enough to remedy a conflict of interest.[4] In Henderson, a criminal defendant gave an oral waiver of a conflict of interest where the defendant's attorney represented both her *499 and a co-defendant.[5] The court held that "[s]uch informed consent remedies any apparent conflict of interest."[6] Therefore, the oral consent given by the Anderson children was sufficient to waive the actual conflict of interest.
B. FEE SPLITTING
That is not the end of the case, however. Alan Fleming and Michael Sagan also negotiated a fee-splitting arrangement. I must now decide if the fee-splitting arrangement is enforceable under the MRPC.
Among other requirements, MRPC 1.5(e) requires consent from the client before two or more attorneys can enforce a fee-splitting arrangement:
(e) A division of fee between lawyers who are not in the same firm may be made only if:
(1) the division is in proportion to the services performed by each lawyer or, by written agreement with the client, each lawyer assumes joint responsibility for the representation;
(2) the client is advised of and does not object to the participation of all the lawyers involved; and
(3) the total fee is reasonable.[7]
Alan Fleming testified that he put in fifteen to twenty hours of work on this case before referring it to Michael Sagan. Mr. Fleming's testimony was that most of this time was spent on researching the statutes of limitations issues in both California and Missouri and included phone conversations with attorneys in California. No record of the time Mr. Fleming spent working on the case before he referred the matter to Michael Sagan was introduced into evidence. Neither Michael Sagan nor Gregory Grounds offered any testimony as to how much time they spent on the case. Since Mr. Sagan and Mr. Grounds did not refute Mr. Fleming's claim that he provided at least 60 percent of the services, part 1 of Rule 1.5(e) is satisfied.
Part 2 of Rule 1.5(e) requires proof that the client is made aware that more than one lawyer is involved, and that all lawyers will share in the fee.[8] Mr. Fleming testified that he informed Sally and Rex Anderson at the meeting in March of 1995 that when and if the suit was successful he would receive a portion of the fee. Mr. Sagan never refuted that testimony.
The comments to MRPC 1.5(e) state that clients do not need to be informed of the amount of the fee split, but that they must be informed that there is a fee split. There is no requirement in Missouri that the information be in writing. Rule 1.5(e) does require a written agreement if lawyers want to assume joint responsibility for the representation.[9] But, there is no requirement for a writing to prove that a client is advised that a fee-splitting arrangement exists.[10]
The ABA Model Code section from which Rule 1.5 is adapted is Disciplinary Rule (DR) 2-107(A). The rule provides:
A Lawyer shall not divide a fee for legal services with another lawyer who is not a partner in or associate of his firm or law office, unless:
(1) The client consents to employment of the other lawyer after a full disclosure that a division of fees will be made.
(2) The division is made in proportion to the services performed and responsibility assumed by each.
(3) The total fee of the lawyers does not clearly exceed reasonable compensation for all legal services they rendered the client.[11]
When DR 2-107 is either the law in a state or state law has been derived from DR 2-107, a fee-splitting arrangement that occurs without the consent of the client is unenforceable.[12] But the Model Code section *500 from which Missouri adapted Rule 1.5 does not require disclosure of a fee-splitting arrangement to be in writing.[13]
Mr. Fleming testified that he disclosed to Rex and Sally Anderson, in the presence of Mr. Sagan, that there was a conflict and that he would receive a fee in the event of recovery. Mr. Sagan never refuted that statement, nor did he call either of the Anderson children as witnesses to refute that statement. The only evidence before this Court is that Mr. Fleming's actions were in compliance with MRPC 1.5(e). I, therefore, find the Rex and Sally Anderson did not object to the fee-splitting arrangement after it was disclosed to them, and, thus, the arrangement is enforceable. As a result, Mr. Sagan is indebted to Mr. Fleming in the amount of $18,600.
C. EXCEPTIONS TO DISCHARGE PURSUANT TO 11 U.S.C. § 523(a)(2)(A)
Section 523(a)(2)(A) excepts from discharge a debt for money to the extent the debt was obtained by false pretense, false representation or actual fraud.[14] The United States Supreme Court recently held that section 523(a)(2)(A) actual fraud is common law misrepresentation.[15] To prove actual or common law fraud, a creditor must prove the following:
(1) the debtor made a false representation;
(2) at the time the representation was made the debtor knew it was false;
(3) debtor subjectively intended to deceive the creditor at the time he made the representation;
(4) the creditor justifiably relied upon the representation; and
(5) creditor was damaged.[16]
While case law makes much of these five elements, most cases turn on whether a debtor intended to repay an obligation at the time it was incurred,[17] and whether the creditor justifiably relied on debtor's representation that he intended to repay.[18] Direct proof of an individual's actual intent and purpose is almost impossible to prove.[19] However, in this case Mr. Sagan admitted that he did not intend to pay Mr. Fleming any portion of the fee. He gave a number of reasons for that intent. He claimed it would have been unethical to pay Mr. Fleming because he had a conflict of interest; he claimed he did not have the money; he claimed the debt is dischargeable in bankruptcy anyway, and he intended to file bankruptcy. Aside from the bold testimony that he did not intend to pay Mr. Fleming, his actions can certainly be construed to demonstrate that fact as well. He made an arrangement with Mr. Fleming to give him 60 percent of any recovery, if the case settled without a trial. And then he made an arrangement with Mr. Grounds to give Mr. Grounds 50 percent of any recovery. He could not have intended to honor both agreements, even if he intended to work on the case without fee for himself. Moreover, Mr. Sagan did not dispute Mr. Fleming's testimony that Mr. Sagan did not tell him the case had settled, and, in fact, indicated it had not. For all of these reasons, I find that Mr. Sagan did not intend to share the fee with Mr. Fleming, even though he signed an Agreement to do so.
I also find that Mr. Fleming justifiably relied upon Mr. Sagan's representation. He testified that he had referred other *501 clients to Mr. Sagan, and that they had shared fees in the past. He took the precaution of reducing the Agreement to writing, and he attempted to follow the course of the case, going so far as to contact defense counsel himself. I also must note that Mr. Sagan is an Officer of the Court. He is a licensed attorney. He willingly signed his name to an Agreement with a fellow professional. I find Mr. Fleming was justified in relying on that Agreement. Therefore, I find that Mr. Sagan intended to deceive Mr. Fleming, and did, in fact deceive Mr. Fleming. I find further that Mr. Fleming justifiably relied upon the deception. I find, therefore, that Mr. Fleming was entitled to a portion of the fee in the amount of $18,600, and that the debt is nondischargeable.
An Order in accordance with this Memorandum Opinion will be entered this date.
NOTES
[1] Def. Ex. ## 1 and 2.
[2] Pl. Ex. # 1.
[3] MRPC 1.7(b).
[4] Henderson v. State, 734 S.W.2d 254, 258 (Mo. Ct.App.1987) citing Harris v. State, 609 S.W.2d 723, 724 (Mo.Ct.App.1980); Davis v. State, 573 S.W.2d 736, 737 (Mo.Ct.App.1978).
[5] Id. at 256.
[6] Id. at 258.
[7] MRPC 1.5(e).
[8] MRPC 1.5(e)(2).
[9] Id. at 1.5(e)(1).
[10] Id. at 1.5(e)(2).
[11] ABA Model Code DR 2-107(A).
[12] See e.g. King v. Housel, 52 Ohio St.3d 228, 229-230, 556 N.E.2d 501, 504 (1990); In re Fox, 327 S.C. 272, 293, 490 S.E.2d 265, 268 n. 9 (1997); In re Confidential, 670 A.2d 1343, 1345 n. 4 (D.C.1996); Anderson v. Anchor Org. for Health Maintenance, 274 Ill.App.3d 1001, 211 Ill.Dec. 213, 222, 654 N.E.2d 675, 684 (1995); Villa v. Heilmann, 162 Vt. 543, 649 A.2d 768, 771 (1994); Polland & Cook v. Lehmann, 832 S.W.2d 729, 736 (Tex.App.1992); Ryder v. Farmland Mutual Insurance Co., 248 Kan. 352, 807 P.2d 109, 115 (1991); Watson v. Pietranton, 178 W.Va. 799, 364 S.E.2d 812, 814 (1988).
[13] ABA Model Code DR 2.107(A).
[14] 11 U.S.C. 523(a)(2)(A).
[15] Id., (citing Field v. Mans, 516 U.S. 59, 70-72, 116 S.Ct. 437, 444, 133 L.Ed.2d 351 (1995)).
[16] AT & T Universal Card Services v. Ellingsworth (In re Ellingsworth), 212 B.R. 326, 333 (Bankr. W.D.Mo.1997); AT & T Universal Card Services Corp. v. Feld (In re Feld), 203 B.R. 360, 364 (Bankr.E.D.Pa.1996).
[17] Id. at 366; Chevy Chase Bank v. Briese (In re Briese), 196 B.R. 440, 449 (Bankr.W.D.Wis. 1996).
[18] Field v. Mans, 516 U.S. 59, 70-72, 116 S.Ct. 437, 444, 133 L.Ed.2d 351 (1995).
[19] Ellingsworth, 212 B.R. at 334. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539311/ | 191 A.2d 98 (1963)
A. B., Plaintiff below, Appellant,
v.
WILMINGTON TRUST COMPANY, Surviving Trustee Under Agreement Dated August 16, 1926, etc.; And Others, Appellees.
Supreme Court of Delaware.
May 3, 1963.
William Prickett, of Prickett, Prickett & Tybout, Wilmington, for appellant.
William S. Potter and James L. Latchum, of Berl, Potter & Anderson, Wilmington, for appellees, Wilmington Trust Co., Trustee.
SOUTHERLAND, C. J., and WOLCOTT and TERRY, JJ., sitting.
*99 SOUTHERLAND, Chief Justice.
This is a suit by the settlor of an inter vivos trust seeking to terminate the trust on the ground that all parties in interest (with one exception) are living, are sui juris, and have consented to the termination.
In the court below, plaintiff and defendant trustee filed cross motions for summary judgment. The case was heard on the pleadings and affidavits, and the Vice Chancellor granted the trustee's motion. Plaintiff appeals.
Plaintiff's father died on September 28, 1916. By his will he left his estate in trust for his wife for life, with remainder over to his children in equal shares freed of trusts. The widow died in 1958.
In the meantime plaintiff, one of the daughters, had in 1926 created an inter vivos trust in respect of her vested remainder under her father's will. Paragraph 4 of the agreement transfers her share to Wilmington Trust Company and an individual (since deceased), as trustees. Paragraph 5 provides for the payment of the net income to the plaintiff, and for the invasion of the principal under certain circumstances.
Paragraphs 6, 7 and 8 read as follows:
"6. In the event of the death of * *, Trustor, without any children her surviving, Trustees shall pay over the net income unto * * *, husband of said Trustor, for and during the term of his natural life, and upon his death, Trustees shall assign, transfer and pay over, absolutely and free and discharged from any Trust, the principal or corpus of said Trust Estate unto such person or persons or for such estates as said Trustor shall by Last Will and Testament, duly executed by her, direct, limit and appoint, and in default of any such appointment, then IN TRUST to the nephews and nieces of said Trustor in equal shares, and their heirs, executors, administrators and assigns per stirpes."
"7. In the event of the death of any child or children, or the issue of any deceased child or children, before attaining the age of twenty-one years (21 yrs.), leaving no issue him or her surviving, the share held for such child so dying shall be added equally to and form a part of the shares of the surviving children and shares held for the issue of any deceased children."
"8. In the event of the death of the issue of any deceased child before attaining the age of twenty-one years (21 yrs.), the portion of the Trust Fund held for the issue so dying, shall be divided equally among the surviving *100 brothers and sisters, if any, of the issue so dying, otherwise it shall be added equally to and form a part of the shares of the surviving children and shares held for the issue of any deceased children."
There is no provision expressly creating an estate in remainder for the plaintiff's children. There is also no provision setting forth the terms of a trust for the nephews and nieces. It appears to be quite uncertain whose child or children are referred to in paragraphs 7 and 8. It must be conceded that substantial mistakes or oversights occurred in the drafting of the instrument.
I. Plaintiff's first contention is that the whole agreement is void for uncertainty.
(1) It is first argued that there is no provision for the disposition of either income or corpus if plaintiff leaves issue. Without such provision, plaintiff appears to contend, the instrument is too indefinite to be enforced.
This argument overlooks the rule that a gift to A and if he dies without issue then to B, etc., creates a remainder in A's issue by implication. This is a rule more usually applied to testamentary trusts, but it has been held applicable also to inter vivos trusts. Du Pont v. Equitable Security Trust Co., 35 Del.Ch. 514, 122 A.2d 429. It should be applied here. It is quite unreasonable to suppose that plaintiff did not intend to make provision for her children if she should have any. The provisions of paragraph 5 concerning the invasion of the principal refer to children. The Vice Chancellor so held, and we agree.
(2) It is next argued that the provisions of paragraph 6 leaving the estate "in trust" for plaintiff's nephews and nieces are void for indefiniteness, because they fail to specify the terms of the trust; i. e., they do not specify whether the nephews and nieces are to receive the income for life or whether they are to receive the corpus outright on the death of plaintiff's husband.
There are two replies to this argument.
First, it is premature to attack the alternative bequest to the nephews and nieces, because if plaintiff disposes of the property by will the bequest will never take effect. There is nothing indefinite about the husband's life estate or the reserved testamentary rights.
Second, as will appear in our discussion of plaintiff's second contention, the residuary bequest to the nephews and nieces is sufficiently definite to be enforceable.
Plaintiff makes the further point that the provisions of paragraph 5 bequeathing the remainders to the nephews and nieces are in hopeless conflict with the provisions of paragraphs 7 and 8. This argument assumes that the children referred to in 7 and 8 are the children of the nephews and nieces. It seems more likely that these provisions were intended to supplement an omitted provision for the payment of income to plaintiff's children. Indeed, this supposition is definitely confirmed by a comparison of this trust instrument and the comparable trust instruments of the sisters executed on or about the same time and prepared by or under the direction of the uncle of the four sisters, who is also named as the individual trustee.
As these provisions stand, they cannot be woven effectively into the remainder of the trust agreement; but this conclusion does not render the whole instrument void. The life estates of plaintiff and her husband, the right of testamentary disposition, and in default thereof the provision for the nephews and nieces in default of testamentary disposition, may all stand.
We think that the trust agreement cannot be declared void in toto for uncertainty.
II. Plaintiff's second contention is that even if the trust agreement is not void for uncertainty, it may be partially terminated because all parties beneficially interested *101 are in being, are sui juris, and have consented thereto.
Plaintiff has one brother and three sisters. The brother, who is 65 years old, is separated from his wife and has no children. The sisters, who are 68, 67 and 61 years of age, all have children living.
Thus, under the terms of the trust agreement, the only persons in addition to the plaintiff who have any interest in the trust, vested or contingent, are the following:
Plaintiff's husband
Plaintiff's children, if she shall have any
Plaintiff's nephews and nieces, and any other nephews and nieces that may be born hereafter, and the issue of any nephew or niece, provided plaintiff dies without issue and does not exercise her testamentary right of appointment.
Plaintiff and her husband, and all of her nephews and nieces, have consented to the termination of the trust. As to the interest of plaintiff's issue, and the interest of any additional issue that may hereafter be born to any of her sisters, plaintiff says that there is now (with one exception) no possibility of there being any such issue, because she and her sisters have had the menopause and are incapable of now bearing children. As for possible issue of the brother, plaintiff says that the court may order a partial termination of the trust and require a forthcoming bond to protect the interests of such issue.
Plaintiff's argument that possibility of issue of herself and her sisters is extinct is met at once by the conclusive presumption of the common law that a woman may bear children as long as she lives. Taylor v. Crosson, 11 Del.Ch. 145, 98 A. 375; Du Pont v. Du Pont, 18 Del.Ch. 316, 159 A. 841; Equitable Trust Co. v. McComb, 19 Del.Ch. 387, 168 A. 203. Plaintiff argues, persuasively and with much force, that in the light of modern medical knowledge the rule in its rigid form has no place in the law. For example, to apply the rule to the case of a woman whose reproductive organs have been removed by surgery approaches the absurd. See Restatement of Trusts (2d) § 340(e); 3 Scott on Trusts § 340.1; 6 American Law of Property, § 24.22.
But we do not reach this question. Indeed, on the question of whether or not the abolition of the common law conclusive presumption as to the possibility of issue is a matter for judicial or legislative action, the Court is divided. However, we shall assume, without deciding, that as to plaintiff and her sisters possibility of issue is extinct, and that the interest of each of the nephews and nieces is a vested remainder, subject to be divested by the exercise of the power of appointment, but not by the birth of additional members of the class. Even on this assumption, we are of opinion that the remainder is also subject to be divested by the death of any nephew or niece before the time of distribution leaving issue surviving. Such issue, we think, has a contingent interest in the corpus of the trust. There is, therefore, an interest in respect of which consent to termination cannot be obtained.
The pertinent language is that of Paragraph 6, quoted above. It provides that upon the death of Trustor's husband, then to such persons as Trustor by will may appoint "absolutely and free and discharged of any trust", and in default of appointment, "then IN TRUST to the nephews and nieces of said Trustor in equal shares, and their heirs, executors, administrators and assigns per stirpes."
What is the significance of the phrase "in trust"? In the light of the preceding language providing for an outright gift, free of any trust, it seems doubtful that any actual trust was intended by the use of the phrase. On the contrary, the concluding language imports an absolute *102 bequest, and there is nothing in the instrument setting forth the terms of any such trust. The phrase "in trust" in itself is insufficient. Just as it is possible to create a trust without using the word "trust" or "trustee", so the use of the word "trust" does not necessarily show the intention to create one. 1 Scott on Trusts, § 24. The question is whether any trust was actually intended. We are of opinion that none was intended, and that the gift is outright, free of trust.
What sort of estate is created?
If the concluding language had omitted the phrase "per stirpes", the words "heirs, executors, administrators and assigns" would clearly have been words of limitation and not of purchase. The estates would have been absolute and not subject to be divested by death leaving issue. They would have been devisable or assignable by the nephews and nieces. In re Nelson's Estate, 9 Del.Ch. 1, 20, 74 A. 851. Under those conditions the consent of nephews and nieces would have been sufficient to bar their issue (assuming, as we do, no possibility of enlarging the class.)
But the phrase "per stirpes" prevents such a result.
It means, of course, "by right of representation". Thus, the estate is in effect given to the nephews and nieces and their heirs or next of kin by right of representation. The phrase necessarily imports an interest in members of a subsequent generation.
"The words `per stirpes' are not strictly applicable to named legatees, or legatees designated as a class, and are ordinarily, at least, appropriate and are used with respect to substitutional gifts to substituted legatees in the case of the death of a primary legatee." In re Title Guarantee & Trust Co., 159 App.Div. 803, 144 N.Y.S. 889, aff'd 212 N.Y. 551, 106 N.E. 1043.
The only reasonable construction of the language is therefore to create a substitutionary gift. Upon the death of a nephew or niece before distribution leaving issue, the share of such nephew or niece is divested, and the issue take direct from the Trustor. In re Nelson's Estate, supra; Delaware County Trust Co. v. Hanby, 19 Del.Ch. 228, 165 A. 568. This conclusion is clearly indicated by the position of the phrase at the end of the sentence.
It is true, as plaintiff says, that in the Nelson case express language was employed to create the substitutionary gift; i. e., the heirs of any child dying before distribution are "entitled to such share or shares as their respective ancestors would have been entitled to". 9 Del.Ch. 14, 74 A. 852. But this is only to spell out in precise terms the implicit meaning of the legal shorthand phrase, "per stirpes".
That a substitutionary gift may be created by implication is well settled. Thus a gift to "A or his heirs" creates a substitutionary gift. Fisher, Adm'r, v. Barcus, 14 Del.Ch. 324, 127 A. 53; Delaware County Trust Co. v. Hanby, supra.
There is ample authority to support the conclusion above stated.
In Rhode Island Hospital Trust Co. v. Shaw, 50 R.I. 78, 145 A. 98, the bequest of the corpus was to "the children of my said son in equal shares per stirpes." Conceding that there was some doubt of the testator's intention, the court held that an interpretation could be given to the phrase "per stirpes"; i. e., it expressed the intention that the issue of a child who died before the termination of the trust should take his parent's share by right of representation.
In the instant case there is nothing to cast doubt upon the settlor's intention.
To the same effect is Safe Deposit & Trust Co. of Baltimore v. Lycett, 153 Md. 443, 138 A. 225.
*103 See also Restatement, Property, § 300, comment (f).
Plaintiff's answer to this construction of the language is that the phrase "per stirpes" refers to the brothers and sisters of the settlor, with the result (presumably) that the corpus is divided into four shares and is given to the issue (the nephews and nieces) per stirpes.
This is obviously wrong. The bequest to the nephews and nieces is "in equal shares", and this phrase imports a gift per capita. Kean's Lessee v. Roe & Hoffecker, 2 Harr. 103; In re Nelson's Estate, supra.
We can find no reasonable construction of the phrase "per stirpes" other than one which imports a substitutionary gift.
We are of opinion that the language of the concluding clause of Paragraph 6 of the trust agreement creates a contingent interest in the trust corpus in the issue of the nephews and nieces, and that the consent of the nephews and nieces alone is ineffective to bar such interest.
It follows that the agreement may not be terminated.
The judgment of the Court of Chancery is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539314/ | 201 Pa. Superior Ct. 367 (1963)
Segal
v.
Segal et al., Appellants.
Superior Court of Pennsylvania.
Argued March 19, 1963.
June 13, 1963.
*368 Before RHODES, P.J., ERVIN, WRIGHT, WOODSIDE, WATKINS, MONTGOMERY, and FLOOD, JJ.
*369 Raymond J. Porreca, for appellants.
Paul J. Senesky, for appellee.
OPINION BY WOODSIDE, J., June 13, 1963:
This is an appeal from the order of the court below affirming the decisions of the Workmen's Compensation Board granting compensation in both a personal injury case and a death case.
Samuel Segal, who had been suffering from diabetes, injured a toe while in the course of his employment by Max Segal on February 26, 1958. The toe became gangrenous and had to be amputated. Under a workmen's compensation agreement, total disability was paid to the injured for 57 2/7 weeks at $37.50 a week until April 20, 1959. On May 13, 1959, the insurance carrier filed a petition to terminate the agreement alleging a liability of only 52 weeks compensation for the loss of the toe. While this case was pending and before testimony was taken thereon, Samuel Segal died of a cerebral hemorrhage on August 11, 1959. Lena Segal, widow of Samuel, did not file a claim for death benefits until January 16, 1961. This was more than 16 months after the death of Samuel Segal.
The insurance carrier denied liability on the death case on the grounds that the petition was filed too late and that there was no causal connection between the accident and the death. It also denied liability on the injury case after April 20, 1959, on the ground that *370 any disability suffered thereafter was not caused by the accident but was due to natural causes. The two cases were joined for the purpose of taking testimony. The referee, the board and the court below rejected all the insurance carrier's contentions and awarded compensation in both cases. The carrier appealed to this Court.
We shall first consider the death case.
Section 315 of The Workmen's Compensation Act, as amended, 77 P.S. § 602, provides: "In cases of personal injury all claims for compensation shall be forever barred, unless, within sixteen months after the accident, the parties shall have agreed upon the compensation payable under this article; or unless within sixteen months after the accident, one of the parties shall have filed a petition as provided in article four hereof. In cases of death all claims for compensation shall be forever barred, unless, within sixteen months after the death, the parties shall have agreed upon the compensation under this article, or unless, within sixteen months after the death, one of the parties shall have filed a petition as provided in article four hereof. Where, however, payments of compensation have been made in any case, said limitations shall not take effect until the expiration of sixteen months from the time of the making of the most recent payment prior to date of filing such petition: . . ." (Italics ours) This provision is not an ordinary statute of limitations. It is a statute of repose. When the time provided therein elapses not only the remedy but the right perishes. Overmiller v. D.E. Horn & Co. Inc., 191 Pa. Superior Ct. 562, 566, 571, 159 A. 2d 245 (1960).
As no agreement was entered into and no petition was filed in the death case "within sixteen months after the death," that claim is barred by the above provision in italics unless for some reason it is not applicable. The referee found facts upon which he concluded *371 that the claimant's attorney was misled by the insurance carrier into not filing the death claim within the statutory period. The board set aside the referee's findings on this point, but concluded that the statutory bar would not take effect until 16 months after the last payment on the personal injury agreement. The board then held that the carrier should have paid compensation in that case and not having done so the bar on the death case could not apply until after the judgment entered against the carrier in the injury case was paid.
The following facts are beyond dispute: No petition was filed and no compensation agreed upon in the death case within 16 months after death; no payments of compensation were ever made in the death case; no payments of compensation in the personal injury case were made within 16 months of the date of death; no payments could have been due for any period of disability in the injury case during the 16 months prior to the filing of the claim petition for death benefits.
The appellee argues first that the two cases should not be considered as different cases, as they clearly are in § 315 of The Workmen's Compensation Act, supra, but should be treated as one case. Then the appellee argues that even though "the most recent payment prior to date of filing [the death claim] petition" was made on the personal injury claim more than 16 months ago, nevertheless the board has now found that a payment was due and therefore, the statutory bar will not be effective until 16 months after that payment is made.
It seems clear to us that the legislature, having divided compensation cases into two classes in § 315, supra, "cases of personal injury" and "cases of death" recognized and intended that a personal injury case and a case of a death claim were separate and distinct cases and that the reference in the last above quoted sentence to "payments of compensation . . . made in any *372 case" must relate to the case being considered, here the death case, and not to any other case.
The courts have held many times that personal injury claims and death claims constitute independent and separate cases even when founded on the same accident.
In Rossi v. Hillman Coal & Coke Co., 145 Pa. Superior Ct. 108, 111, 20 A. 2d 879 (1941), this Court said and held that "the right of the widow to secure for herself and dependent children compensation for the death of the employee is, under the act, entirely independent of the right of the employee."
In a case much closer than the one before us, it was said that "compensation on behalf of a dependent child on the death of an employee is entirely separate and distinct from the widow's compensation, though the claim for the child may be asserted by the widow and the award for the child be made payable to her." Sweeney v. Reading Company, 146 Pa. Superior Ct. 539, 542, 23 A. 2d 66 (1941) (allocatur refused). There the claim of a dependent child filed beyond the statutory period after the death was held to have been barred under § 315, supra, even though an agreement had been entered into within the statutory period providing compensation for the widow and another dependent child, and payments were being made thereon up to the time the claim for the second child was filed. See also Smith v. Primrose Tapestry Co., 285 Pa. 145, 131 A. 703 (1926).
The widow's claim is an independent and not a derivative claim. Parks v. Winkler, 199 Pa. Superior Ct. 224, 228, 184 A. 2d 124 (1962); Holahan v. Bergen Coal Co., 164 Pa. Superior Ct. 177, 183, 63 A. 2d 504 (1949). In Jankaitis v. Harleigh Brookwood Coal Co., 134 Pa. Superior Ct. 125, 129, 4 A. 2d 161 (1939), it was pointed out that "The claimant in one proceeding was the husband and in the other his widow. The compensation *373 allowable to each was by virtue of separate and distinct provisions of the statute. Each right was independent of the other."
But suppose we accept as one these two cases, separately filed, separately numbered, brought by different parties upon which separate decisions were filed by the referee and the board, and which have been uniformly held by this court to be separate cases. What the board held was that the statutory bar is not effective if the board finds that disputed compensation was due, even though no payments were made on that compensation within the statutory period. It is clear that to apply this to a single compensation case would be to permit the claimant to lift himself by his own bootstraps. The rule promulgated by the board, illogical when applied to a single case, cannot become sound when complicated by taking two cases and considering them to be one case.
The claim filed by the widow in the death case was filed beyond the time allowed by statute. "The legislature made the filing of the claim petition within the specified time an express condition of the right to obtain an award of compensation, and intended that the failure so to do should operate as an absolute bar of the right." Thorn v. Strawbridge & Clothier, 191 Pa. Superior Ct. 59, 61, 62, 155 A. 2d 414 (1959).
As the death claim must be dismissed because it was filed too late, we need not decide the other question raised by the appellant in that case.
We shall now consider the personal injury case.
Samuel Segal had been suffering from diabetes prior to the injury to his toe on February 26, 1958. After the amputation of the toe, the operation site was slow in healing and the control of the diabetes became more difficult. By October 17, 1958, the operative site had healed. However, Segal was unable to work and remained under treatment for diabetes and impaired circulation. *374 The physician who was treating him testified that on October 21, 1958, the diabetes was controlled. On October 25, 1958, Segal suffered a cerebral vascular accident. He was admitted to the Veterans' Administration Hospital on May 28, 1959, was discharged August 5, was readmitted August 7, and died there August 11, 1959, at the age of 63. At the veterans' hospital, his illness was diagnosed as "cerebral hemorrhage due to arteriosclerosis; 2, diabetes mellitus; 3, encephalomalacia of the right cerebral due to arteriosclerosis." The death certificate showed death to be caused by a "Cerebral Hemorrhage due to Arteriosclerotic Cardio vas. dis." with "Diabetes Mellitus" as a contributing factor. Dr. David Warren Kramer and Dr. David Joseph Lafia, both of whom treated the deceased, testified that in their opinion there was no causal connection between his injury and his disability from the cerebral vascular accident. However, Dr. Morris Segal, who had not treated the deceased during his lifetime, was called by the claimant as an expert, and testified that in his opinion the injury to the claimant "incapacitated him as far as working." Dr. Segal further testified that, "From studying the hospital record, it is my opinion that he was totally disabled to do any work at all because of the continuous infection of the stump of the first toe. Q. And your opinion, then, is this man could be classified as totally disabled? A. That was my opinion, that he was totally disabled since the date of the accident."
The evidence seemed to indicate that the point of operation had "healed" and that the infection was not "continuous," thus substantially reducing the value of Dr. Segal's opinion. The weight of the opinion evidence appeared to us to be with the defendant, but the facts are for the board and the courts may not disturb the board's findings if there is evidence to support them. The board, therefore, had the right to reject the *375 opinions of Dr. Kramer and Dr. Lafia and accepted the opinion of Dr. Segal on the cause of the disability after the cerebral vascular accident on October 25, 1958. Having done this, we must accept the findings of the board.
The order of the court below affirming the decision of the board on the petition to terminate in the personal injury case is affirmed.
The order of the court below affirming the decision of the board in the death case is reversed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539324/ | 191 A.2d 606 (1963)
Emil J. TURGEON
v.
Freddie J. ROCKS.
EMIL J. TURGEON
v.
YELLOW CAB COMPANY OF PROVIDENCE.
Ex. Nos. 10482, 10483.
Supreme Court of Rhode Island.
June 10, 1963.
Abedon, Michaelson & Stanzler, Milton Stanzler, Richard A. Skolnik, Providence, for plaintiff.
McGee & Doorley, Frank J. McGee, Providence, for defendants.
JOSLIN, Justice.
These two actions of trespass on the case for negligence were tried together before a jury in the superior court and resulted in verdicts for the plaintiff. In each case the defendant's motion for a new trial was denied by the trial justice. The cases are before us on each defendant's single exception thereto. All other exceptions being *607 neither briefed nor argued are deemed to be waived.
The plaintiff's cause of action is for personal injuries sustained by him in a rear-end collision between a taxicab operated by him and another taxicab operated by defendant Rocks and owned by defendant Yellow Cab Company of Providence.
The collision occurred about 1:20 a.m. on January 26, 1960 on Dorrance street, a public highway in the city of Providence. Dorrance street runs generally north and south and the vehicles were each proceeding in a northerly direction and were in the center northbound lane at the time of collision. Each operator knew that the road was wet, slippery and icy in spots and that the weather was nasty.
The plaintiff testified that he was proceeding at 3 or 4 miles per hour when he was hit in the rear. Defendant Rocks, whose cab was equipped with chains, testified that he was proceeding along Dorrance street at 4 to 5 miles per hour and about three car lengths behind the cab operated by plaintiff when suddenly plaintiff stopped in the center northbound lane without giving any signal by means of stop lights or otherwise; that defendant immediately applied his brakes and turned his wheels to avoid a collision; and that his car did not turn but skidded and went straight ahead until it hit the rear of plaintiff's cab.
There is also other testimony as to the speed of each of the cabs at the time of the collision. An eyewitness estimated that defendant Rocks' speed was 10 to 15 miles per hour and that plaintiff's speed was "just about crawling." An investigating officer of the Providence police department testified that defendant Rocks stated he was going approximately 12 miles per hour and that plaintiff stated his speed was about 5 miles an hour. On our view, such conflicting evidence warranted a finding by the jury as to defendants' negligence.
It is well settled in this state "that where the evidence is `nearly balanced, or is such that different minds would naturally and fairly come to different conclusions thereon', the trial justice `has no right to disturb the findings of the jury, although his own judgment might incline him the other way.' That is to say, where two views of the evidence are both fair and reasonable, the jury's view must prevail." Murphy v. Palmer, 73 R.I. 182, 187. See also Votta v. Calcagni, 84 R.I. 289; Hirschmann v. Sun-Dial Optical Co., 89 R.I. 31.
This was the rule applied by the trial justice who, in passing on defendants' motions and after commenting on relevant evidence, stated that "there was quite a bit of conflict of testimony here and, of course, in such cases it is up to the jury to resolve that testimony. * * * I feel that they had sufficient evidence to go on and that their action in rendering a verdict for the plaintiff does substantial justice between the parties."
In passing upon a defendant's motion for a new trial, the trial justice while required to state the reasons for his decision is given a wide latitude with respect to the form in which such reasons are stated and in the ordinary case he is not required to set them out at length in any express terms. Chase v. Goyette, 85 R.I. 469, 473. The language quoted above from his decision can only mean that in his judgment the evidence was conflicting and was such that reasonable persons could naturally reach different and opposite conclusions as to who presented the more credible evidence on the issue of defendants' negligence.
The defendants contend that the trial justice should have granted their motions for new trials because the verdicts were against the evidence and the weight thereof and failed to do substantial justice between the parties. To sustain that position it is incumbent upon them to convince us that the weight of the credible evidence was contrary to the verdicts and that the trial justice's decision was clearly wrong. *608 Votta v. Calcagni, supra. This defendants have not done. We have found nothing in the record which would clearly establish that plaintiff was not worthy of credence or that the trial justice either overlooked or misconceived any material evidence, and we cannot say that the trial justice was clearly wrong in the accepting the jury's evaluation of the conflicting evidence. Grillo v. Schaperow, 81 R.I. 501; Votta v. Calcagni, supra.
The defendants also contend that their motions for new trials should have been granted because, as we understand their contention in this respect, there was no evidence of negligence on their part other than the skidding of the car operated by defendant Rocks. They cite Peters v. United Electric Rys., 57 R.I. 311, where this court said at page 318:
"There was evidence that would justify the jury in finding that the defendant's operator was negligent in the manner in which he operated the bus under all the circumstances existing at the time of the accident. The mere skidding of the bus in and of itself was not evidence of negligence * * *."
The trial justice instructed the jurors that in order to find defendants guilty of negligence where there had been a skid they were required to weigh all the surrounding circumstances. The defendants urge no exceptions to such charge or to any refusal of the trial justice to charge differently or in addition thereto. On a motion for a new trial on the ground that a verdict is against the law, the only matter open for the trial justice to consider is whether the jury accepted and followed his instructions on the law. Ricci v. New England Transp. Co., 77 R.I. 12, 72 A.2d 833.
There is nothing in the record to show that the trial justice did not follow this rule. In passing on the motions for new trials he said: "Now, the court explained that a skid in and of itself is not proof of negligence, but, of course, you must take into consideration all of the surrounding circumstances and if they considered that he was going at 12 miles an hour speed they might have considered that that was to fast for the existing conditions and they might have come to the conclusion he didn't have full control of his car and he was, therefore, negligent." In our opinion the trial justice considered whether the jury accepted and followed his instructions and he is required to do no more. See Ricci v. New England Transp. Co., supra.
We have hereinbefore pointed out the circumstances surrounding the skidding and they need not be repeated. We note, however, that there was evidence of circumstances in addition to the mere fact of skidding upon which the jury could have found the defendants to be negligent. Where such evidence exists, this court in Peters v. United Electric Rys., supra, held that the jury's finding of negligence was not against the law and we so hold here.
In each case all of the defendant's exceptions are overruled, and each case is remitted to the superior court for entry of judgment on the verdict. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539327/ | 40 N.J. 334 (1963)
191 A.2d 747
THE CITY OF EAST ORANGE, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, ET ALS., PLAINTIFFS-RESPONDENTS,
v.
THE BOARD OF WATER COMMISSIONERS OF THE CITY OF EAST ORANGE, DEFENDANT-APPELLANT, AND TRANSCONTINENTAL GAS PIPE LINE CORPORATION, AND JERSEY CENTRAL POWER & LIGHT COMPANY, DEFENDANTS-RESPONDENTS.
The Supreme Court of New Jersey.
Argued June 3, 1963.
Decided June 13, 1963.
*335 Mr. Charles Danzig argued the cause for the defendant-appellant (Messrs. Riker, Danzig, Marsh & Scherer, attorneys).
Mr. William L. Brach argued the cause for the plaintiffs-respondents.
Messrs. Crummy, Gibbons & O'Neill filed a brief for the East Orange Golf Association as amicus curiae (Mr. John J. Gibbons, of counsel; Mr. Paul T. Murphy, on the brief).
No appearance was entered for the defendants-respondents Transcontinental Gas Pipe Line Corporation, and Jersey Central Power & Light Company.
PER CURIAM.
The Law Division entered a judgment which declared that title to the lands commonly known as the Water Reserve of the City of East Orange is vested in the City of East Orange and that the power to transfer interests in the lands rests in the City Council of the City of East Orange. Its reasons may be found fully set forth in East Orange v. Board of Water Com'rs. of East Orange, 73 N.J. Super. 440 (Law Div. 1962), and we consider that its treatment of the matter was essentially sound. The appeal of the Board of Water Commissioners, certified on our own motion, concerns itself only with the basic question of such power to transfer. No appeal was taken from that portion of the judgment relating to the validity of the leases to the utility company respondents and we are therefore not concerned with the particular procedure to be followed in entering into any such leases.
In 1908, East Orange adopted the provisions of Chapter 250 of the Laws of 1908 as its basic city charter. See Acts Saved From Repeal, R.S. 40:103-5(1) et seq. Under that Act the City Council was vested with broad governing powers including the express power to acquire land for public use *336 (R.S. 40:103-5(36)(6)) and the express power to adopt ordinances for many purposes including the supply of water for the use of the city and its inhabitants. R.S. 40:103-5(37)(23). The act also authorized the establishment of a Board of Water Commissioners which would have "the custody, control and management of the waterworks and water supply of the city" and would have authority "to maintain, repair, equip and extend the waterworks and water supply system." R.S. 40:103-5(37) (38). In 1909, following a referendum of the people, an ordinance was adopted establishing a Board of Water Commissioners.
The basic acquisitions by East Orange of the water reserve lands occurred prior to 1908 and, upon the adoption of the provisions of Chapter 250, title to the lands succeeded to the city. R.S. 40:103-5(2). Subsequent acquisitions were taken in the name of the Mayor and Council. When occasion arose for the execution of a lease or other instrument conveying an interest in water reserve land, it was done cooperatively by the City Council and the Board of Water Commissioners, although there was some indication at oral argument that in most instances the City Council was the granting party. Recently the Board of Water Commissioners took the position that it, rather than the City Council, had the authority to execute instruments conveying interests in water reserve land. It acknowledged that the statute contains no express authority to that effect but it contended that a comprehensive power in the Board to acquire and dispose of water reserve lands may be implied.
We consider that such far reaching implication may not fairly be drawn from any of the language in the 1908 act. It must be borne in mind that the terms of that act were not at all comparable to modern-day enactments establishing independent authorities these enactments generally contain provisions that the newly created authority shall be a body corporate with express power to sue and be sued, to acquire and dispose of real and personal property, and to execute all instruments and do all things necessary for the carrying out of *337 its responsibility. Cf. R.S. 27:22-1 et seq.; N.J.S.A. 40:14A-1 et seq.; N.J.S.A. 40:14B-1 et seq. The 1908 act contained no such provisions. See West Jersey, &c., R.R. Co. v. Bd. of Water Comm'rs, 86 N.J.L. 634 (E. & A. 1914). It spoke not in terms of an independent body corporate but in terms of a municipal board exercising managerial functions with power to maintain, repair, equip and extend the waterworks and water supply system, power to establish rates, and power to adopt rules with respect to the protection of the water supply and waterworks. In context, the statutory power to extend may be taken to have reference to the supplementation of waterworks equipment such as the pumping plant, pipe-lines, etc., rather than to land acquisitions and, in general, the statutory terminology does not convey any reference to land dispositions. Cf. N.J.S.A. 40:60-26; R.S. 40:60-42.
The Legislature undoubtedly intended that insofar as the managerial function is concerned, the voice of the Board of Water Commissioners rather than the City Council should control. So far as the record indicates, there has not been any attempt by the City Council to interfere with that function. Apparently the underlying controversy here relates to the issue as to what body should have the ultimate determination as to the specific nature of the leasing of water reserve land where such leasing will in nowise interfere with water reserve purposes. It would seem that, absent legislative indication to the contrary, the ultimate determination would properly be vested in the governing body of the city as a whole, rather than in the specialized municipal agency. As the Law Division held, such is the result under existing legislation; further legislation has been passed by the Assembly and the Senate and is awaiting action by the Governor, but we need not deal with it here. See Assembly Bill No. 668 (1963).
Affirmed.
For affirmance Justices JACOBS, FRANCIS, PROCTOR, HALL, SCHETTINO and HANEMAN 6.
For reversal None. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539328/ | 118 B.R. 1 (1990)
In re John E. & Brenda M. MacLEOD, d/b/a Ragged Mountain Construction, Debtors.
John E. MacLEOD and Brenda MacLeod, Plaintiffs,
v.
C & G INVESTMENT GROUP, Reginald Gaudette, and William Raitt, Defendants.
Bankruptcy No. 90-698, Adv. No. 90-78.
United States Bankruptcy Court, D. New Hampshire.
July 27, 1990.
Diane M. Puckhaber, Rogers & Puckhaber, Concord, N.H., for debtors.
Marc L. Van De Water, Thomas & Utell, Manchester, N.H., for C & G Inv. Group.
Virginia Greiman, Boston, Mass., U.S. Trustee.
MEMORANDUM OPINION
JAMES E. YACOS, Bankruptcy Judge.
Plaintiffs filed a Complaint against defendants for turnover of property pursuant to section 542 of the Code. They sought the turnover of a bulldozer and excavator which defendants repossessed on April 27, 1990 prior to the chapter 11 filing. A hearing was held on June 27, 1990 after which I made a bench ruling that the repossession was unlawful and ultimately entered an order directing the turnover. Today, I refine my remarks in an opinion with regard to the repossession issue since there is no case law in New Hampshire on this issue.
Facts
Prior to the repossession on April 27th, the defendants attempted two prior repossessions. In each case, the defendants' agents came onto the plaintiffs' property, with uniformed state police, and over the verbal protests of plaintiff, John MacLeod, attempted to start the equipment. However, the equipment failed to start and they left. MacLeod on each occasion said he believed legal proceedings were going on that prevented any repossession.[1]
Prior to the attempted repossessions, the state police were shown the security agreement, which they mistook for a court order authorizing repossession. The state police were not acting in their official capacity, but were on "civil standby". Under this procedure, the police are paid by a private party to assist in matters like preventing violence at the scene of a domestic quarrel, directing traffic at a highway construction project, or escorting a wideload truck.
On April 27th a state policeman was also involved due to the anticipation of possible violence from plaintiff, John MacLeod. *2 The policeman woke John MacLeod up at 6:30 a.m., and told him that a repossession was going to take place and he was not to leave the house. MacLeod was also told not to "do something stupid." The defendants agents were able to start the equipment with the assistance of a mechanic, and took the equipment.
The defendants' attorney who was involved in the repossession on April 27th testified that if John MacLeod had told the repossessors to leave the property they would have ceased the repossession effort immediately and left the premises. I do not find this testimony credible. A person forcibly restrained by a police officer is not in the position to politely ask people to leave. In addition, I find the persistent conduct of the defendants over the repeated protests of John MacLeod inconsistent with this testimony.
Statutory Provision
A self-help repossession can only be done without a breach of the peace. This rule is stated in NHRSA 382-A:9-503 as follows:
"Unless otherwise agreed a secured party has on default the right to take possession of the collateral. In taking possession a secured party may proceed without judicial process if this can be done without breach of the peace or may proceed by action. If the security agreement so provides the secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties. Without removal a secured party may render equipment unusable, and may dispose of collateral on the debtor's premises under Section 9-504."
Discussion
The repossession was unlawful because the plaintiffs in no way consented to the repossession. See generally Teeter Motor Co., Inc. v. First National Bank of Hot Springs, 260 Ark. 764, 543 S.W.2d 938 (1976); Bloomquist v. First National Bank of Elk River, 378 N.W.2d 81 (Minn. Ct.App.1986).
Yet, there is a separate and more compelling reason why a breach of the peace occurred in this case the defendants introduced law enforcement personnel into the repossession. Four cases have held that the use of law enforcement personnel for a self-help repossession renders the repossession unlawful. See Waisner v. Jones, 107 N.M. 260, 755 P.2d 598 (1988); Walker v. Walthall, 121 Ariz. 121, 588 P.2d 863 (App.1978); First and Farmers Bank of Somerset, Inc. v. Henderson, 763 S.W.2d 137 (Ky.Ct.App.1988); Stone Mach. Co. v. Kessler, 1 Wash.App. 750, 463 P.2d 651 (1970).
In the Walker case the repossessor went with a uniformed police officer to the debtor's home and obtained verbal consent to take an automobile. The police officer said and did nothing. The creditor had the police officer there to prevent anticipated violence. The court concluded:
In the instant action we believe the presence of the deputy sheriff and its accompanying intimidation is the same kind of conduct condemned by the Washington court, supra. The fact that the deputy did not say anything is not significant. Nor is it required that the possessor (Walthall here) actually indicate resistance, either verbally or physically to the uniformed and armed officer.
Such a result, if left standing, would set a precedent by involving local law enforcement in self-help repossessions, and would create the very volatile situations the statute was designed to prevent.
* * * * * *
We believe, therefore, that the introduction of law enforcement officers into the area of self-help repossession, regardless of their degree of participation or nonparticipation in the actual events, would constitute state action, thereby invalidating a repossession without proper notice and hearing.
Id. 588 P.2d at 865-66.
*3 Similarly, in First and Farmers Bank, supra, the Kentucky court was confronted with a case where a uniformed policeman met the creditor at the scene of the repossession when the debtor was verbally protesting the repossession to the creditor. At most the policeman answered the debtor's question whether the bank had the right to repossess by nodding his head. The court stated:
If a creditor is allowed to unofficially use the powers of the state to squelch potential breaches of the peace, he can effectively evade or avoid the statute. The statute makes it clear that a creditor runs the risk of serious liability if he proceeds with a self-help repossession when there is a serious objection by the debtor. If the strong arm of the law is needed, then the creditor must secure judicial intervention when a police officer is carrying out or sanctioning the repossession.
On that issue, Stone Machinery Company v. Kessler, 1 Wash.App. 750, 463 P.2d 651 (1970), is quite persuasive. There, the creditor secured the local sheriff in full regalia to assist in the repossession of a caterpillar tractor since the debtor was inclined toward violent defense of his property. The court held that where the officer was acting under color of office, without legal process, and the creditor thereby took possession of the collateral over debtor's objection, the creditor had committed trespass. Id. [463 P.2d] at 654. The court explained that the actions amounted to constructive force, intimidation, and oppression constituting a breach of the peace. Moreover, the creditor's actions completely circumvented the purpose and intent of the Code. Id. at 655.
Although the intervention of Deputy Kelly was not as active as that in Stone Machinery, the distinction is without difference. The net effect in both cases was to override the debtor's right to object. As a result, under the authorities cited, there was a breach of the peace. Id. at 141.
The reasoning of these cases is persuasive. In short, if a creditor can argue that they have avoided a breach of the peace by use of law enforcement personnel, and then contend they are in a position for self-help repossession, they effectively circumvent the intent of the statute which is to give the debtor a right to object without the presence of state action.
Conclusion
The repossession of equipment by defendants without the consent of the plaintiffs and with the assistance of the state police was not a self-help repossession and accordingly was unlawful. Therefore, that element of plaintiff's complaint for turnover has been proven.
NOTES
[1] He was apparently referring to a Chapter 11 petition which his attorney had promised to file, but had not yet filed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1644737/ | 994 So. 2d 309 (2008)
CALTON
v.
CALTON.
No. 2D08-4811.
District Court of Appeal of Florida, Second District.
November 5, 2008.
Decision without published opinion. Proh.denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539329/ | 150 Conn. 478 (1963)
HILDA A. ANDERSON
v.
ABRAHAM ZWEIGBAUM, ADMINISTRATOR (ESTATE OF ERIK H. SKOGLUND)
Supreme Court of Connecticut.
Argued April 3, 1963.
Decided April 25, 1963.
BALDWIN, C. J., KING, MURPHY, SHEA and ALCORN, JS.
*479 Abraham Zweigbaum, for the appellant (defendant).
Robert I. Berdon, with whom, on the brief, was David D. Berdon, for the appellee (plaintiff).
KING, J.
For about six years prior to September, 1953, the plaintiff kept house, in New Haven, *480 for Edward Johnson, the uncle of Erik H. Skoglund, the defendant's decedent. The plaintiff lived in the Johnson home and received some wages in addition to her board and room. During most of the period, Skoglund also lived in the Johnson home. He was a bachelor and owned a five-room house in North Haven into which he moved soon after Johnson's death in September, 1953. The foregoing facts were not the subject of any real dispute.
The plaintiff claimed that at or about the time Skoglund moved into his North Haven home, he asked her to move into it also and to continue her housekeeping work there; and that he promised her that if she would do so and take care of the house and of him, he would provide her with a home and if anything happened to him during her lifetime he would leave her the house. There was no real dispute that the plaintiff did move into Skoglund's house sometime in September, 1953, and that she worked there as a housekeeper for about seven years until Skoglund's death in October, 1960.
There was evidence that Skoglund, who was fifty-seven at the time of his death, was about twenty-two years younger than the plaintiff, that he was a very heavy man, weighing well over 300 pounds, and that he suffered from bleeding ulcers and a heart ailment and required a somewhat restricted diet. It was undisputed that the plaintiff received no wages, and billed Skoglund for none, during the entire period. The plaintiff claimed that she did the work in reliance on Skoglund's promise that if anything happened to him she would receive the house. The defendant claimed that the plaintiff performed the services in order to get a home and that she did not *481 expect or receive, and that she was not promised, any further consideration or compensation.
Skoglund died intestate, and the plaintiff, who was unrelated to him, received nothing. A claim for compensation for the services she had rendered was duly presented to, and disallowed by, the defendant as administrator, whereupon the plaintiff brought this suit, seeking to recover the reasonable value of her services. From a verdict for the plaintiff in the amount of $13,504.40, the defendant appealed.
Since the claimed agreement called for the conveyance of real estate and was entirely oral, it was unenforceable because of the Statute of Frauds. Schempp v. Beardsley, 83 Conn. 34, 37, 75 A. 141. It was not, however, a nullity or irrelevant to the plaintiff's case. It indicated that the parties expected that the plaintiff would receive compensation over and above her mere food and lodging. Id., 38; Leahy v. Cheney, 90 Conn. 611, 615, 98 A. 132. It also precluded the plaintiff from claiming wages prior to Skoglund's death and therefore prevented the Statute of Limitations from commencing to run against her claim until its accrual at that time. Schempp v. Beardsley, supra; 2 Locke & Kohn, Conn. Probate Practice § 512, p. 578. The measure of the plaintiff's recovery if the jury found the issues in her favor, as they obviously did, was the reasonable value of the services which she rendered, over and above the value of the food and lodging which she received. Schempp v. Beardsley, supra. Her recovery was not measured by the value of the promised consideration, the house, for so to measure the recovery would be indirectly to enforce the contract. Ibid.; 2 Locke & Kohn, op. cit. § 513.
*482 The charge as given adequately explained our "clear and satisfactory proof" rule. Perkins v. Corkey, 147 Conn. 248, 251, 159 A.2d 166. The charge also clearly placed on the plaintiff the burden of proving the agreement alleged and the fair value of the services rendered under it. Id., 250. Proof of the fair value of the plaintiff's services involved two elements. Leahy v. Cheney, supra, 617. The first was the nature and extent of the services which the plaintiff performed. Bianco v. Floatex, Inc., 145 Conn. 523, 525, 144 A.2d 310. The second was the reasonable value of those services. Vigliotti v. Campano, 104 Conn. 464, 465, 133 A. 579. The only direct evidence of the fair value of the plaintiff's work was her own testimony that her services were reasonably worth $35 a week. This testimony came in over the defendant's objection that no adequate foundation had been laid as to the plaintiff's knowledge of the fair value of the services rendered by her over the seven-year period. In a situation such as this, involving the manifold tasks incident to housekeeping, mathematical precision, either in the proof of the household tasks performed or in their evaluation, would be, practically speaking, impossible. See cases such as Hedderman v. Robert Hall of Waterbury, Inc., 145 Conn. 410, 414, 144 A.2d 60; Ball v. T. J. Pardy Construction Co., 108 Conn. 549, 551, 143 A. 855. Reasonable certainty is, however, required. Bianco v. Floatex, Inc., supra; Freda v. Smith, 142 Conn. 126, 136, 111 A.2d 679; Braithwaite v. Lee, 125 Conn. 10, 14, 2 A.2d 380. The plaintiff offered evidence, with reasonable particularity and with considerable corroboration from neighbors, as to what she did as a housekeeper. Of the sufficiency of this evidence the defendant makes no complaint. His complaint is *483 confined to the claimed insufficiency and incompetency of the evidence as to the reasonable value of those services.
Under the modern rule, a plaintiff is competent to give his opinion as to the reasonable value of his own services, after they have been described with reasonable particularity. Somers v. Cooley Chevrolet Co., 146 Conn. 627, 630, 153 A.2d 426; 3 Wigmore, Evidence (3d Ed.) § 715, p. 47.[1] A defendant has a full opportunity, on crossexamination, to test a plaintiff's familiarity with the prevailing rate or market value in the community of work of the same general character, as bearing on the weight to be given his testimony. A defendant may offer evidence as to the services performed by a plaintiff or their reasonable value, and even in the absence of such evidence the trier is not bound by the evidence of a plaintiff, either as to the services he performed or as to their value. Carangelo v. Nutmeg Farm, Inc., 115 Conn. 457, 463, 162 A. 4. Even if a plaintiff's evidence of reasonable value is uncontradicted and comes only from expert witnesses, the trier may allow a lesser figure. Clark v. Haggard, 141 Conn. 668, 674, 109 A.2d 358; Graybill v. Plant, 138 Conn. 397, 402, 85 A.2d 238; Taft v. Valley Oil Co., 126 Conn. 154, 161, 9 A.2d 822. In the present case, had the evidence as to reasonable value been elicited from witnesses other than the plaintiff, who herself rendered the services, a proper foundation of knowledge of the prevailing rate or market value in the general area of work *484 of the type involved would have been required, under the rule of cases such as Leahy v. Cheney, 90 Conn. 611, 617, 98 A. 132, and Vigliotti v. Campano, 104 Conn. 464, 465, 133 A. 579. Obviously, the safer course for a plaintiff to follow is to offer the evidence of others rather than to rely solely on his own testimony. But the court was not in error in admitting the plaintiff's testimony as to the fair value of her services.
Our "clear and satisfactory proof" rule does not, as matter of law, require corroboration of a plaintiff's testimony. Perkins v. Corkey, 147 Conn. 248, 253, 159 A.2d 166. The amount of the verdict indicates that the jury accepted the plaintiff's estimate of the value of her services. Her evidence was sufficient to support the verdict, and there was no error in the refusal of the court to set it aside.
The other claims of error require no discussion.
There is no error.
In this opinion the other judges concurred.
NOTES
[1] Similarly, a plaintiff, although no qualification other than his ownership is shown, is competent to testify as to the value of his personal property; Saporiti v. Austin A. Chambers Co., 134 Conn. 476, 479, 58 A.2d 387; or as to the value of his real property. Lovejoy v. Darien, 131 Conn. 533, 536, 41 A.2d 98. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1801552/ | 370 F. Supp. 761 (1972)
The DUPLAN CORPORATION, Plaintiff,
v.
DEERING MILLIKEN, INC., et al., Defendants.
DEERING MILLIKEN RESEARCH CORPORATION, Plaintiff,
v.
The DUPLAN CORPORATION and Burlington Industries, Inc., Defendants.
The DUPLAN CORPORATION et al., Plaintiffs on the Counterclaim,
v.
DEERING MILLIKEN RESEARCH CORPORATION, Defendant on the Counterclaim,
and
Deering Milliken, Inc., et al., Additional Defendants on the Counterclaim.
Civ. A. Nos. 71-306, 70-968, 69-1096, 68-705, 69-777, 70-14, 70-189, 70-250, 70-295, 70-358, 70-385, 70-386, 70-391, 70-493, 70-622, 70-628, 70-677, 70-683, 71-87 to 71-102, 71-115, 71-126, 71-127 and 71-283.
United States District Court, D. South Carolina, Spartanburg Division.
May 30, 1972.
*762 Fletcher C. Mann, Leatherwood, Walker, Todd & Mann, Greenville, S. C., Charles B. Park, III, Parrott, Bell, Seltzer, Park & Gibson, Charlotte, N. C., Anthony F. Phillips, Willkie, Farr & Gallagher, New York City, for United Merchants & Mfg. Inc., The Duplan Corp., The Schwarzenbach-Huber Co., Jonathan Logan, Inc., Frank Ix & Sons Va., Corp., Lawrence Texturing Corp., Burkyarns, Inc.
Edward P. Perrin, Perrin, Perrin & Mann, Spartanburg, S. C., David Rabin, McNeill Smith, Smith, Moore, Smith, Schell & Hunter, Greensboro, N. C., for Texfi Industries, Inc., Blanchard Yarn Co., Reliable Silk Dyeing Co., Dixie Yarns, Inc., Tex-Elastic Corp., Hemmerich Industries, Spring-Tex, Inc., Olympia Mills, Textured Fibres, Virginia Mills, Inc., Throwing Corp. of America.
Thomas A. Evins, Butler, Means, Evins & Browne, Spartanburg, S. C., Jay Greenfield, Simon H. Rifkind and David J. Brody of Paul, Weiss, Rifkind, Wharton & Garrison, New York City, for Deering Milliken, Inc., and Deering Milliken Research Corp.
Rufus M. Ward, Ward, Howell & Barnes, Spartanburg, S. C., Granville M. Brumbaugh of Brumbaugh, Graves, Donohue & Raymond, New York City, for Moulinage et Retorderie de Chavanoz, Ateliers Roannais de Constructions Textiles, (ARCT, France).
R. Hoke Robinson, Thomas T. Moore, Robinson, McFadden & Moore, Arthur O. Cooke, Cooke & Cooke, Greensboro, N. C., for ARCT, Inc.
W. Francis Marion, O. G. Calhoun, Haynsworth, Perry, Bryant, Marion & Johnstone, Greenville, S. C., John W. Malley, Wm. K. West, Jr., of Cushman, Darby & Cushman, Washington, D. C., for Burlington Industries, Inc., Madison Throwing Co., Inc., Leon-Ferenbach, Inc., National Spinning Co., Inc.
HEMPHILL, District Judge.
In this multidistrict litigation pursuit of discovery has reached a temporary impasse on a Rule 34[1] request launched by the Duplan Corporation,[2] and associated litigants, called plaintiffs for the *763 purpose of further identification herein. On November 1, 1971, plaintiffs filed a Rule 34 request on each ARCT[3] (France) and Chavanoz;[4] these requests were extensive and request various categories of documents of each of the defendants pursued. Among the requests was one numbered 17[5] which requested:
17. Each document which refers to, reflects upon, or in any way relates to, and which was received from or went to any of the following:
(k) Leo Soep
(z) Michael Laurent
Numbers of documents have been produced in most of the categories named in the request, and some have been produced as to Leo Soep and Michael Laurent, but a claim of privilege, as between Soep and/or Laurent and the pursued defendant as client has brought this discovery effort to a halt and demands a decision by this court.
Originally, plaintiffs had signified an intention to depose Mr. Soep in Paris, or elsewhere in France because the condition of his health forbid distant travel. Also, defendants are French companies, and access to records or notes would be enhanced by stalking the witness in his business bailiwick. There arose no serious opposition to the taking of the deposition there, but counsel, and court, envisioned facility in completing certain discovery in the United States before repairing to France. While the American discovery was in progress, misfortune intervened, and the court was advised of the untimely demise of Mr. Soep.[6] Mr. Laurent, who is claimed to be an attorney for ARCT is alive and present indications evidence an intent to depose him.[7][*]
Certain papers of Mr. Soep were returned by him to his clients when heart surgery was imminent.[8] Subsequent to the death of Mr. Soep, this court requested of counsel[9] that the widow and fiduciaries of the late lamented be contacted and asked to preserve the papers of the deceased [the court realized its entire lack of any jurisdiction over any papers held by the widow or the fiduciaries of the estate]. Counsel graciously complied and there now exist certain papers of Mr. Soep either in the hands of the present targets of the Request, or in the hands of others; the availability is not the issue; privilege is the issue.
It is to be remembered that the throwsters have charged DMI, DMRC, Chavanoz, ARCT-France, Whitin and *764 ARCT, Inc. (ARCT-France's majority-owned American subsidiary) with combining and conspiring to restrain and to monopolize interstate and foreign commerce in the importation, sale and distribution of FT machines, FT processes and FT technology in violation of Sections 1 and 2 of the Sherman Act by, among other means, (1) controlling the exportation of ARCT FT machines from France and their importation into the United States, (2) regulating the licensing of Chavanoz' FT technical processes, (3) creating and maintaining a regimented distribution system for Chavanoz' FT technology and ARCT's FT machines which DMRC and Chavanoz camouflaged with an unlawful patent use-licensing system and (4) entering into collusive arrangements whenever necessary to achieve their common plan. These "means" are borne out by the FT spindle episode.
Defendants contend that the relationship between ARCT and Chavanoz, respectively, with Soep and Laurent, support the claim of privilege. Judgment on this issue as to Laurent can await his deposition; there is no reason the documents cannot be in possession of counsel at the deposition and/or available to the court for in camera inspection then or later. As to the Soep documents, the problem is immediate.
Initially, the court is confronted with the obvious, whatever relations Mr. Soep had, they were initiated in France, and there is no dispute but that
Throughout the period during which Mr. Soep and Mr. Laurent served as conseil en brevets to ARCT France, all communications with them were for the purpose of seeking their advice and assistance as conseil en brevets. During the course of these communications, ARCT France disclosed information to them which was of a confidential nature to ARCT France in order to obtain their professional advice. In was ARCT France's intent that this information should remain confidential.[10]
Henri Crouzet, President of ARCT-France, further declared under oath before a notary public:[11]
It has always been my understanding that my communications with Mr. Soep and Mr. Laurent were confidential, and that a court could not compel their disclosure. Only because of this understanding did I disclose, and authorize other ARCT France personnel to disclose, confidential information to them.
Admittedly, Leo Soep, was not a lawyer in the same professional status accorded to members of the bar in this country. He had been, however, a conseil en brevets d'invention for over ten years prior to this litigation. If the issue here concerned an American advisor on patents, or under certain circumstances, patent counsel, there would be no question but that ARCT could not claim privilege as to those Soep communications it has in possession, or accessible. In NLRB v. Harvey (C.C.A. 4 1965) 349 F.2d 900, 904, the court adopted Wigmore's statement of the essentials of the attorney-client privilege:
(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) except the protection be waived. 8 Wigmore, Evidence § 2292 (McNaughton rev. 1961).
and quoted with approval the definition of privilege as stated in United States v. United Shoe Machinery Corp. (D.Mass. 1950), 89 F. Supp. 357, 358:
* * * The privilege applies only if (1) the asserted holder of the privilege is or sought to become a client; *765 (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client.
Wigmore also explains:
2300. Persons having legal knowledge, but not admitted to practice. (1) There is no ground for encouraging the relation of client and legal adviser except when the adviser is one who has been formally admitted to the office of attorney or counselor as duly qualified to give legal advice.
That the person consulted is in fact practicing, without formal sanction of the court, is certainly not sufficient. [8 Wigmore, Evidence ā Rev.1961]
This court is not dealing with an attorney-client relationship established by parties in the United States. The client and the advisor, whether he be considered as an attorney, or other, are French. Soep, in France, occupied the status of "conseil en brevets d'invention," also called "ingénieurs conseils en propriété industrielle", as defined by Article 842 of the Code Civil of the Republic of France (decree 65-921 of 29 October 1965) which provides in part:
Any person included in a national list made by the minister responsible for industrial property according to the conditions set out below and who, to the exclusion of any industrial, commercial or financial activity or operation, normally offers his services to the public in order to advise, assist or represent interested parties in dealing with the national institute of industrial property with a view to the issue of patents, or to offer assistance in France with a view to the grant of patents in other countries, may claim the title of "conseil en brevets d'invention."
Soep was not an "avocat ą la Cour", as contemplated by French law.[12] His client cannot therefore claim the almost absolute privilege accorded the communication under French law. The court must examine in the light of his actual status.
The plaintiffs submitted affidavits of various self-acclaimed experts on the subject, to persuade this court that the communications are not privileged. Rita E. Hauser, Esquire,[13] who stated unequivocably "that said Leo Soep was not an attorney-at-law and communications between him and his former employers and/or clients are not subject to any privilege whatsoever." She argues in her affidavit that no decree, including the one establishing "conseil en brevets d'invention", provide for professional secrecy to such status. Her opinions have been given due consideration by this court.
An affidavit of Jaques Mansean, Paris lawyer[14], states
Members of the Bar are entitled and required to maintain professional secrecy and not only can they not be required to testify in respect of matters *766 relating to their relationships with clients, but papers in their office or when carried out of their office are not subject to search or examination.
A conseil de brevet is not a member of any bar and does not have any of the obligations or privileges of a member of any bar. A conseil de brevet is also not a member of any legally organized profession and is not subject to the rules or disciplinary action of any such organization. In this respect he differs from the avoué and notaire who belong to organizations created by law. Until 1965, any person could hold himself out as a conseil de brevet and act in such capacity. Decree no. 65.921 dated October 29, 1965 set out certain educational and other requirements for functioning, as a conseil de brevet, although an exception was made for those already exercising this calling. Neither the decree referred to nor any other law has required secrecy by the conseil de brevet or has granted a privilege to his communications.
Another affidavit of Pasquale J. Federico[15], deals in generalities as to the patent practice in the United States and abroad but does not deal specifically with the Soep question. An affidavit of Denis Debost[16] relies on the "narrow obligation of the members of certain professions to preserve the secrecy of certain confidential communications, as sanctioned by Article 378 of the French Penal Code,"[17] and argues that since conseil en brevets d'invention are a species excluded from the application of Article 378. He points out that, "even as regards the professions and offices to which Article 378 applies, the members thereof are bound to secrecy only to the extent that the allegedly confidential communication was made to them in the exercise of such profession."
Chavanoz and ARCT France have not maintained that the documents are privileged because Mr. Soep held the title of conseil en brevets. They concede that in those instances where Soep was engaged to give other than legal advice, i. e. business advice, advice as negotiator or attorney-in-fact, the attorney-client privilege could not attach.[18] They do claim privilege with respect to those documents where Chavanoz and/or ARCT France sought or obtained professional legal advice from Soep. In support of their claim they submit an affidavit of Zinna Weinstein.[19] Attorney Weinstein knew Mr. Soep. He states unequivocably that French law does not permit the inclusion of any claims in patent applications and/or pursuit and that:
Thus, in preparing an application for a French patent, the work of the "Conseil en Brevets d'Invention" was primarily to make a full disclosure of the invention from a technical standpoint. He was not concerned with drafting claims defining the legal scope of the patent.
Upon the application for patent being filed in the French Patent Office in proper form, it was issued or registered in due course without any examination as to novelty or patentability and without any necessity of prosecution by the "Conseil en Brevets d'Invention".
*767 The legal scope or coverage of a French patent is not determined by the Patent Office, but only by a Court in the event the patent is litigated. In such a Court action, handled by an Avocat, the patentee is allowed to claim as his invention everything mentioned in his specification.
As a consequence the main burden of a "Conseil en Brevets d'Invention" was to make a clear description and showing of the invention.
Another supporting affidavit is that of Henri Monerray[20], who states, among other things:
In French civil and commercial litigation, there is no pre-trial discovery procedure under which a party is compelled to produce documents to its adversary. Even during the trial there is very limited forced production of documents, and only in situations expressly covered by law. None of the laws pertaining to forced production of documents in civil and commercial litigation apply to actions for patent infringement or for breach of a patent license agreement.
Even in those civil and commercial cases where there is forced production of documents, members of an independent profession are prohibited by law from revealing any secret entrusted to them by a client. A "conseil en brevets" is bound by this duty of professional secrecy and is not permitted to testify in civil or commercial litigation about his confidential communications with his clients.
and
In the course of his duties, a "conseil en brevets" is entrusted by his client with information whose confidential character is of importance for the client. According to French law, the "conseil en brevets" is bound by professional secrecy as to such information, and confidential communications between the "conseil en brevets" and his client are privileged evidence.
This litigation is no different from any other in that the search for truth[21] is the object of all process including discovery. This begats a confrontation where the search for truth is met by the claim of privilege. The court is reminded that a privilege must be taken with the limitations placed upon the manner of its exercise. Stilson v. United States (1919) 250 U.S. 583, 587, 40 S. Ct. 28, 63 L. Ed. 1154, 1157. And, insofar as the privilege between attorney and client is considered, the privilege takes flight if the relation is abused. Clark v. United States (1932) 289 U.S. 1, 13, 53 S. Ct. 465, 77 L. Ed. 993, 1000, and the recognition of a privilege does not mean that it is without conditions or exceptions (Clark, supra).
The attorney-client privilege is the oldest recognized privilege for confidential communication. It goes back to the reign of Elizabeth I[22], as it was early acknowledged that "the first duty of an attorney is to keep the secrets of his client[23]." This was probably an outgrowth of "honor among gentlemen", which flourished in earlier times, but gradually yielded to the demands of courts as the latter gained integrity. Originally, the privilege was the attorney's, and not that of the client[24], but today it is undisputedly the client's and not the attorney's.
*768 Counsel for the Throwsters cited Radio Corporation of America v. Ranland Corp. (N.D.Ill.1955), 18 F.R.D. 440, which is authority for the rule that:
The attorney-client privilege does not extend to communications between directors, officers, or agents of different corporations, or to negotiations between such corporations which are made or conducted by men who happen to be members of the bar.
and
The privilege is designed to secure objective freedom of mind for the client in seeking legal advice. [Wigmore § 2291] It has no concern with other persons' freedom of mind, nor with the attorney's own desire for secrecy in the conduct of a client's case.
If the court is to follow the ruling in that case and the advice of Wigmore that "obviously, much depends upon the circumstances of individual transactions,"[25] the rules following will apply.
As to those communications between Leo Soep and either Chavanoz or ARCT France, or both, the subject of which is any United States Patent; except when giving advice to client's counsel in the preparation and/or conduct of litigation before courts of record, or when acting in a capacity equal to patent house counsel in the United States; or patent application, any licensing agreement with or to any United States person, firm, or corporation, any communication which was published or sent to any third party in the United States, or concerning any conference in the United States, except where trade secrets are involved, shall be produced by Chavanoz and ARCT France. One who does business in the United States must be subject to the laws of the country. Under the decisions of United States Courts, Leo Soep, not an attorney, does not place over his client, foreign or domestic, any umbrella of protection. The fact that he may have in fact been acting in the capacity of attorney is not sufficient to qualify the communication.[26] Any belief by Chavanoz or ARCT France that Mr. Soep occupied the same status as an attorney in this country would not suffice.[27]
As to those communications between Leo Soep and the respective clients, in France, and which reflect that the communication rested in whole or part on the client's belief that the communication was confidential, secret or privileged, on the record before the court they are held to be qualified. This does not include technical information and other information such as commercial information; trade secrets are excluded from production, however.
If counsel desire, this court is available for limited in camera inspection of the Soep documents, where doubt exists. This can only be accomplished if a translation accompanies the document. In addition, counsel are invited to provoke discussion of this order by resort to Rule 59(e) Federal Rules of Civil Procedure, by first reducing to writing all requests or motions under the rule.
The plaintiffs' Rule 34 requests are granted, subject to the limitations hereinabove.
And it is so ordered.
NOTES
[1] Rule 34, Federal Rules of Civil Procedure reads in part:
Upon motion of any party showing good cause therefor and upon notice to all other parties, and subject to the provisions of Rule 30(b), the court in which an action is pending may (1) order any party to produce and permit the inspection and copying or photographing, by or on behalf of the moving party, of any designated documents, papers, books, accounts, letters, photographs, objects, or tangible things, not privileged, which constitute or contain evidence relating to any of the matters within the scope of the examination permitted by Rule 26(b) and which are in his possession, custody, or control;
[2] The Duplan Corporation and certain other litigants having an alleged common cause, are known as "Throwsters", because the textiles they manufacture or process are those having a twisted yarn. Webster defines a throwster as "one who throws or twists silk."
[3] Ateliers Roannais de Constructions Textiles.
[4] Moulinage et Retorderie de Chavanoz.
[5] Thirty-five different categories were pursued in a voluminous document of 13 single-spaced typewritten pages.
[6] It should be noted that in one of the hearings on Rule 34 requests, Mr. Brumbaugh, of counsel for defendants stated:
"And insofar as documents that have been returned to Mr. Laurent, who is now representing ARCT-France, we will not assert privilege with respect to exchanges between Mr. Soep and DMRC." (Deering-Milliken Research Corporation, an American defendant who did not claim Soep was working for it.)
[7] At the same hearing, as to Mr. Laurent, the following colloquy occurred:
The Court: Let's put the issue right out in the open now. If Mr. Laurent, under the set practices of France, occupied the same position as a house counsel would here, what is your position?
Mr. Bell: We would have no quarrel.
[*] This court has presided over all depositions thus far and has been requested to preside in those scheduled in the future, in the United States and elsewhere.
[8] As to these papers the following colloquy occurred:
MR. SMITH: The other point, Mr. Brumbaugh advises us Mr. Soep's papers have been returned to his respective clients, or the people he represented, and I would ask Mr. Topkis whether or not Mr. Brumbaugh's offer to turn over the Soep papers as they were returned to ARCT, would also apply to the Soep papers as returned to Chavanoz or any of its companies?
MR. TOPKIS: With the exception of any which privilege might be claimed, of course.
[9] Mr. Brumbaugh.
[10] From the affidavit of Henri Crouzet, dated 18 February 1972. No rebuttal to this statement is in the record.
[11] Ibid.
[12] Article 41 of the Decree (of the Ministry of Justice of France) of April 10, 1954, as amended, and the regulations of all regional bars in France, specifically prohibit an avocat [lawyer] from divulging the contents of oral or written communications between him and his client and, additionally, an avocat is held to treat all such communications as a "professional secret" not to be divulged to anyone without the express consent of the client. [Affidavit of Rita Hauser, Esquire, submitted by Throwsters].
[13] Member of the New York and D. C. Bar, graduate of the Law Faculty of the University of Paris, holding a license en droit (Bachelor of Laws in United States).
[14] He holds "the degree of License en Droit and two diplomas d'Etudes Superierves en Droit Public et de Science Politique", and teaches at the University of Paris Law School.
[15] Member of the bar of D.C. ā patent consultant. Lecturer on domestic and foreign patent law.
[16] Avocat ą la cour d'appel de Paris, graduate of Harvard Law School.
[17] Which reads:
Doctors, surgeons and other health officers, as well as chemists, midwives and all other persons who are depositaries, by their condition or profession or by temporary or permanent duties, of secrets which are entrusted to them, who, except in cases where the law obliges or authorizes them to be informers, shall have revealed such secrets, shall be punished by imprisonment of one month to six months and by a fine of 500 F to 3,000 F.
[18] They claim production of scores of documents as to which privilege is waived. Plaintiffs say they are holding back and are delaying awaiting this ruling.
[19] Graduate of University of Paris as Bachelor of Physics, Bachelor of Mathematics, Bachelor of Engineering and Bachelor of Laws. Author of publication on French patent law.
[20] "An Avocat ą la Cour d'Appel de Paris." I, hold the degree of Doctor en Droit and have been a Chargé de Conférences at the Faculté de Droit de Paris."
[21] The court is reminded of the language of Mr. Justice Harlan in Moulor v. American Life Ins. Co. (1884), 111 U.S. 335, 345, 4 S. Ct. 466, 28 L. Ed. 447: In one sense, that only is true which is conformable to the actual state of things. In that sense a statement is untrue which does not express things exactly as they are. But in another sense, "true" is often used as a synonym of that which is honest, sincere, not fraudulent."
[22] 8 Wigmore Evidence § 2290, citing Besel v. Lovelace (Ch. 1577) 21 Eng.Rep. 33.
[23] Taylor v. Blacklow (1836), 132 Eng.Rep. 401, 406.
[24] Wigmore § 2321.
[25] Citing Mutual Life Ins. Co. v. Selby (C. C.A.9 1896), 72 F. 980; In re Fisher (S.D. N.Y.1931), 51 F.2d 424, 425, United States v. Vehicular Parking, Ltd. (D.Del.1943), 52 F. Supp. 751, 753, 754; United States v. Shoe Machinery Corp., [supra]; United States v. Rocco (W.D.Pa.1951) 99 F. Supp. 746, 748; United States v. Chin Lim Mow (N.D.Cal.1952), 12 F.R.D. 433, 444 and others.
[26] See State v. Smith (1905) 138 N.C. 700, 50 S.E. 859.
[27] Wigmore, supra, § 2302. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2183587/ | 810 F. Supp. 2d 882 (2011)
TENG MOUA, Juan Martinez, Cheri Martinez, Kua Vang Xiong, Maiku Thao, Cherpao Yang, Bee Vang, Vang Pao Moua, Mailou Xiong Yang, Vangxue Yang, Eng Thao, Choua Moua, Meshack Balira, Ferdinand Nyambarya, VMS Inc., Richard Chang, Lee Wong Chang, Khonekham Dejvongsa, Nouphet Dejvongsa, Diego Cortez Dominguez, Mohamud Egal, Mohamed Osable, Hussein Osable, Ifran Jimale, Layla Jimale, Mohamed Jimale, Paul Bel George, Chue Hang, Tong Thao Hang, Rexhep Krasniqi, Tou Lor, Mai Moua Vue, Arif Metushi, Wa Her Moua, Mee Yang, John Schroeder, Judy Schroeder, Berhane Tesfai, Dual Cykao Thao, Xong Thao Yang, Kou Thao, Yang Xiong, Kevin Vilavong, Chong Xiong, Ko S. Xiong, Blia Yang, Ying Cheng, Chang Yang, Choua Lor, Mai Blia Yang, Pang Yang, Lue Her, for themselves and all other persons similarly situated as franchisees of Jani-King of Minnesota, Inc. and Jani-King International, Inc., Plaintiffs,
v.
JANI-KING OF MINNESOTA, INC., a Texas Corporation, Jani-King International, Inc., a Texas Corporation, George Selman, a Minnesota resident, and Steve Schmidt, a Minnesota resident, Defendants.
Civil No. 08-4942 ADM/TLN.
United States District Court, D. Minnesota.
August 30, 2011.
*886 Michael W. Haag, Esq., Thomas W. Pahl, Esq., Jamie L. Habeck, Esq., and Christopher C. Grecian, Esq., Foley & Mansfield, PLLP, Minneapolis, MN, on behalf of Plaintiffs Cherpao Yang, Diego Cortez Dominguez, and Paul Bel George.
Kerry L. Bundy, Esq., Aaron D. Van Oort, Esq., William L. Killion, Esq., Christopher J.L. Diedrich, Esq., Eileen M. Hunter, Esq., and Myriam Pierre Warren, Esq., Faegre & Benson, LLP, Minneapolis, MN, on behalf of Defendants.
MEMORANDUM OPINION AND ORDER
ANN D. MONTGOMERY, District Judge.
I. INTRODUCTION
On July 7, 2011, the undersigned United States District Judge heard oral argument on Defendants Jani-King of Minnesota, Inc.'s, Jani-King International, Inc.'s (collectively "Jani-King"), and George Selman's ("Selman") Motion for Summary Judgment [Docket No. 148]. Plaintiffs Cherpao Yang ("Yang"), Diego Cortes[1] Dominguez ("Dominguez"), and Paul Bel George ("George") individually assert claims under the Minnesota Franchise Act, Minn.Stat. §§ 80C.01-30, and under the Minnesota False Statement in Advertisement Act, Minn.Stat. § 325F.67, as well as claims for fraud, breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, quantum meruit, and vicarious liability. Defendants (Selman and Jani-King are collectively "Defendants") move for summary judgment *887 on these claims as to each of the three individual Plaintiffs. For the reasons set forth below, Defendants' motion is granted in part and denied in part.
II. BACKGROUND[2]
Jani-King sells franchises to perform cleaning or janitorial work. Am. Compl. [Docket No. 54] ¶ 45. Jani-King advertises the sale of its franchises and arranges in-person meetings with those interested in becoming franchisees. See Selman Decl. [Docket No. 151] ¶ 6. In Minnesota, during the times relevant to the claims here, potential franchisees typically met either with Jani-King employee Sue Swenson ("Swenson") or Regional Director Defendant George Selman ("Selman"). See id. ¶ 3.
Jani-King has a standard franchise agreement (the "Franchise Agreement") for its franchisees. At the in-person meeting, Jani-King employees explain the Jani-King business model, sometimes with the assistance of a PowerPoint slide-show presentation. Id. ¶ 6. In Minnesota, as required by Minnesota law, Jani-King provides potential franchisees with a Uniform Franchise Offering Circular (the "UFOC"). See id. The UFOC further explains the relationship between Jani-King as franchisor and its franchisees, and discloses pertinent information including past and pending litigation involving Jani-King. See generally Hunter Decl. [Docket No. 152] Ex. 4 (the "UFOC"). The UFOC also states: "We do not furnish or authorize our salespersons or any employees to furnish any oral or written information concerning the actual or potential sales, costs, income or profits of a JANI-KING franchise." UFOC at JK Moua 001115. Despite this written recitation, Plaintiffs allege that Jani-King employees did promise them a guaranteed monthly income. See First Am. Compl. ¶ 49. Further, during the in-person meetings Jani-King personnel often make optimistic statements about the potential for success of franchisees. See, e.g., Yang Dep. 22:4 (attributing Swenson with saying "buying [a Jani-King franchise] is good"); Hunter Decl. Ex. 21 ("George Dep.") 49:16-17 (attributing Swenson with saying that "the sky would be [the] limit" for a Jani-King franchisee).
After paying the franchise fee, signing the Franchise Agreement, attending all required Jani-King training (which included business advise and teaching of the Jani-King cleaning methods), purchasing equipment, supplies, and insurance, and opening a business checking account, Plaintiffs began operating their Jani-King franchises by servicing client accounts. See Selman Decl. ¶¶ 13, 22.
The Franchise Agreement obligates Jani-King to offer franchisees the right to service client accounts. E.g., Hunter Decl. Ex. 10 ("Yang Franchise Agreement") § 6.1.1. Jani-King's obligation to offer accounts to franchisees is measured by the dollar amount billed to accounts each month. See id. The size of Jani-King's obligation is determined by the franchise "plan" purchased by franchisees. For example, if a franchisee purchases "Plan B," Jani-King is obligated to offer accounts with gross monthly billings of $1,000 within 120 days of the franchisee obtaining necessary equipment and supplies, completing training, and providing Jani-King with proof of insurance. See id. at PL013146, § 6.1.1.
The parties refer to the obligation to offer these accounts as the Initial Business Obligation ("IBO"). The IBO associated with the various plans increases as the price of each plan increases. UFOC at JK *888 Moua 001063. Jani-King must replace accounts offered as part of the IBO if the client cancels the account through no fault of the franchisee before the franchisee has serviced the account for twelve full months. E.g., Yang Franchise Agreement § 4.17(2). Under the Franchise Agreement, Jani-King is obligated only to offer accounts with total monthly billings exceeding the IBO amount. Id. §§ 6.1.1, 6.5. Therefore, if a franchisee is offered an account but declines to service that account, the monthly billings of that account are counted against the IBO amount.
Plaintiffs in this action claim that this method of calculation of the IBO was not disclosed to them, but rather that Jani-King personnel represented Jani-King would continue to offer accounts until the franchisee had accepted accounts with gross monthly billings in excess of the IBO amount. Furthermore, while not contractually obligated to do so, Jani-King also offers, from time to time, the right to service accounts in addition to the IBO. Selman Decl. ¶ 14.
The Franchise Agreement obligates Jani-King to offer accounts only in "the Territory," which is comprised of the Minnesota counties that are generally regarded as the Twin Cities metropolitan area. See, e.g., Yang Franchise Agreement at PL013146, § 6.1.1. However, Jani-King has franchisees designate a "preferred area" within the Territory. See, e.g., Hunter Decl. Ex. 8 ("Yang Franchise Application").
In addition to the UFOC and Franchise Agreement, Jani-King publishes a "Policy and Procedures Manual" (the "Manual"). The Manual is incorporated, along with the UFOC, into the Franchise Agreement. E.g., Yang Franchise Agreement § 12.3. The Manual sets forth policies and procedures for both Jani-King as franchisor and its franchisees. Among the topics discussed in the Manual are procedures for handling complaints by clients and the reassignment or transfer of accounts between franchisees. Grecian Decl. [Docket No. 154] Ex. 4 ("the Manual") §§ 4.11-4.12, § 4.22.
Plaintiffs are each current or former franchisees of Jani-King that assert eight claims against Jani-King as franchisor. This case was originally a putative class action, but Plaintiffs' Motion for Class Certification was denied by Order [Docket No. 101] dated March 12, 2010, 2010 WL 935758. Plaintiffs then proceeded jointly through discovery. The parties agreed that Jani-King would move for summary judgment on the claims of three representative Plaintiffs, Cherpao Yang, Diego Cortes Dominguez, and Paul Bel George, before further summary judgment motions are filed.
III. DISCUSSION
A. Standard of Review
Federal Rule of Civil Procedure 56(a) provides that summary judgment shall issue "if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986) (citing Fed.R.Civ.P. 56(c));[3]Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986) (same); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986) (same). On a motion for summary judgment, the Court views the evidence in the light most favorable to the nonmoving party. Ludwig, 54 F.3d at 470. The nonmoving party *889 may not "rest on mere allegations or denials, but must demonstrate on the record the existence of specific facts which create a genuine issue for trial." Krenik v. County of Le Sueur, 47 F.3d 953, 957 (8th Cir.1995).
B. Cherpao Yang
1. Facts Specific to Cherpao Yang
Plaintiff Cherpao Yang became interested in purchasing a Jani-King franchise in the summer of 2005. See Hunter Decl. Ex. 7 ("Yang Dep.") 23:11-24:23. He called Jani-King's Minnesota regional office and talked with Swenson. Yang Dep. 20:13-18. Swenson told Yang "[Jani-King] is a good business" and "If you buy more, you'll get more." Yang Dep. 20:15-17.
Yang and Swenson then met in person on July 22, 2005. Yang Dep. 24:22-23. Yang was told that if he did a good job he would be in business "for a long time." Yang Dep. 35:3-5. During the meeting, Yang was provided with the UFOC, which he had trouble understanding due to his limited proficiency in English, although he had brought his English-speaking son to the meeting to mitigate that problem. Yang Dep. 30:40-32:14.
Yang signed his Franchise Agreement on September 12, 2005. Yang Dep. 28:25-29:3. He purchased "Plan B," which cost $3,000 and was associated with a $1,000 per month IBO. Yang Franchise Agreement at PL013146. When executing the Franchise Agreement, Yang wrote "none" on an acknowledgment form that asked if Jani-King made any representations about sales, income, or profit levels. Diedrich Decl. [Docket No. 160] Ex. 1 at PL0 13099. At his deposition, Yang agreed that no misrepresentations regarding expected profits were made. Yang Dep. 83:19-23. However, in his Answers to Interrogatories, Yang avers that Jani-King orally guaranteed him $1,000 month in gross monthly billings. Hunter Decl. Ex. 9 at 5. At the time he signed the Franchise Agreement, Yang expressed a preference for accounts in the area of Brooklyn Center and Fridley, Minnesota. Hunter Decl. Ex. 8. Further, Yang claims that Swenson orally promised him that all his business would be in his preferred area. Yang Dep. 42:9-15.
Jani-King's initial account offer to Yang was in Eagan, Minnesota, outside of his preferred area, and was declined. Hunter Decl. Ex. 11. Later, Yang was offered the Luther Group account in Brooklyn Park, Minnesota, and he accepted the account. Id. That account initially had gross monthly billings of $1,431, and later increased to $1,683. Id. Yang also accepted an account with an Applebee's restaurant in his preferred area with gross monthly billings of $1,200. Id.
Sometime prior to December 2007, the Luther Group moved and Yang was instructed to stop servicing the account. Yang Dep. 54:7-18. After the Luther Group completed its move, Yang went to the new location to resume servicing the account. See Yang Dep. 55:20-23. Upon arriving at the new location, Yang learned that a non-Jani-King franchisee had begun servicing the account. Yang Dep. 55:23-56:11. Yang claims that Jani-King promised him a replacement account, but never provided him one. Yang Dep. 68:5-13. Yang continued servicing the Applebee's, his only remaining account, until January 2009 when the restaurant canceled its account. Hunter Decl. Ex. 11. With no remaining accounts, Yang took another job and ceased operating a Jani-King franchise. Yang Dep. 102:14-103:23.
2. Common Law Fraud and Minnesota Franchise Act ("MFA") Claims
The parties agree that Minnesota law applies to Yang's common law fraud *890 claim. Under the common law of Minnesota, the elements of fraud are: (1) a false representation of a past or present material fact which was susceptible of knowledge, (2) the defendant knew the representation was false or made it without knowing whether it was true or false, (3) an intention to induce plaintiff to act in reliance on the misrepresentation, (4) the representation caused the plaintiff to act in reliance thereon, and (5) and the plaintiff suffered pecuniary damage as a result of the reliance. Hoyt Props., Inc. v. Prod. Res. Group, L.L.C., 736 N.W.2d 313, 318 (Minn. 2007) (quoting Specialized Tours, Inc. v. Hagen, 392 N.W.2d 520, 532 (Minn.1986)). Reliance in common law fraud cases must be reasonable. Hoyt Props., 736 N.W.2d at 321. It is unreasonable as a matter of law to rely on a representation that is "completely contradicted" by the terms of a written agreement. Crowell v. Campbell Soup Co., 264 F.3d 756, 762 (8th Cir.2001). Further, because fraud requires a misrepresentation concerning a past or present material fact susceptible of knowledge, statements of prediction, opinion, or "puffery" cannot form the basis of a fraud claim. Minn. Forest Prods., Inc. v. Ligna Mach., Inc., 17 F. Supp. 2d 892, 909 (D.Minn.1998) (citations omitted).
Yang also asserts a statutory claim sounding in fraud under the MFA. The MFA prohibits communication of any "untrue statement of a material fact" or any omission that would be necessary to make a previously made statement not misleading. Minn.Stat. § 80C.13. Yang's common law fraud and MFA claims fail because Jani-King made no untrue statements of material fact or misrepresentations.
First, the statement to Yang that "[i]f you buy more, you'll get more" is not untrue. The undisputed facts are that Jani-King structures its franchising to correlate the amount of the IBO with the amount of initial investment by the franchisee. See UFOC at JK Moua 001063. Therefore, the more the franchisee invests, the higher the IBO will be, and the monthly billings of accounts offered by Jani-King will be higher. It is true, then, that the more a franchisee buys, the more he will receive in gross billings of offered accounts. Of course, any franchisee is free to turn down offered accounts, but if he accepts the accounts he has received more gross account billings than if he had invested less.
The statements that: (1) owning a Jani-King franchise was a "good business" and (2) the business could continue for "a long time" are not untrue statements of material fact or fraudulent because they are puffery as a matter of law. Generally speaking, puffery includes statements that are either exaggerated boasting or vague, subjective statements of product superiority. Bernstein v. Extendicare Health Servs., Inc., 607 F. Supp. 2d 1027, 1031 (D.Minn.2009) (citations omitted). Statements that a franchise is a "good business" or will continue for a "long time" are vague statements of superiority. These typical sales statements cannot be material to a serious business decision and do not form the basis of an actionable fraud or MFA claim.
Yang's counsel contends that Jani-King's puffery must be evaluated in the context of his lack of sophistication as a franchise consumer because he is an immigrant with limited proficiency in English and limited business acumen. Immigrants, even those with limited English skills and no business experience, are not a group so gullible that they cannot recognize obvious puffery. Yang cites Hollerman v. F.H. Peavey & Co., 269 Minn. 221, 130 N.W.2d 534, 540 (1964) and Berryman v. Riegert, 286 Minn. 270, 175 N.W.2d 438, 443 (1970), to support the proposition that the "equality" of parties is a factor in *891 determining what is puffery. There the challenged statements were much more specific than those here. Regardless of education or experience, consumers expect to hear some level of non-specific and optimistic references to a product's quality by its seller. Here, the identified statements are obviously so vague and subjective that no reasonable juror could say that they were anything but puffery.
Yang also argues that Jani-King falsely represented a guarantee of $1,000 per month in account billings. No genuine issue of material fact exists that such a statement was ever made. During his deposition, Yang, with the assistance of an interpreter, responded "yes" to the question "nobody made any promises to you about the sales income or profit levels before you signed your Franchise Agreement; is that correct?" Yang Dep. 83:19-23. Further, Yang admitted that he had not read his Answers to Interrogatories. Yang Dep. 118:8-10. Therefore, there is no genuine fact issue; Yang admits that he was not promised any level of profits or income. See Canal Ins. Co. v. Kwik Kargo, Inc. Trucking, Civil No. 08-439, 2009 WL 1086524, at *3 (D. Minn. April 21, 2009) (noting that party cannot create an issue of fact by relying on interrogatory answers contradicted by deposition testimony).
To counter this contradiction, Yang next argues his deposition must be read in the context of the leading questions being asked of him. The deposition transcript, while occasionally muddled, clearly shows that Yang testified that he truthfully wrote "none" on the line about profit representations and reaffirmed that no promises regarding profit levels were made to him. Yang Dep. 83:11-23. No objection was noted and Yang's counsel declined the opportunity for redirect examination after that question was posed. See Yang Dep. 83:19-23 (no objection noted), 118:23 (declining to conduct redirect examination).
Further, even if Yang's deposition could somehow be construed to be consistent with his Answers to Interrogatories, any reliance on representations regarding profitability is unreasonable as a matter of law because it is directly contradicted by the Franchise Agreement. With respect to common law fraud, reasonable reliance is firmly entrenched as an element under Minnesota law. See Hoyt Props., 736 N.W.2d at 321. The parties dispute, however, whether reasonable reliance is required under the MFA. The Court need not resolve this issue because no genuine issue of material fact exists that any representations regarding income or profit levels were made to Yang.
Assuming for argument only that his deposition could be read to create a genuine issue of material fact, the Court is convinced that reasonable reliance is an element of a claim under the MFA. The question of reliance under the MFA has been subject to a difference of opinion in this District. Compare Kieland v. Rocky Mountain Chocolate Factory, Inc., Civil No. 05-150, 2006 WL 2990336, at *8 (D.Minn. Oct. 8, 2006) (Frank, J.) (rejecting MFA claim premised on earnings representation where contract disclaimed any representations regarding earnings) with Randall v. Lady of Am. Franchise Corp., 532 F. Supp. 2d 1071, 1086 (D.Minn.2007) (Schiltz, J.) ("[T]he Court is not convinced that justifiable or reasonable reliance is an element of a claim for misrepresentation under the Minnesota Franchise Act."); see also Ellering v. Sellstate Realty Sys. Network, Inc., 801 F. Supp. 2d 834, 845 n. 13, 2011 WL 2730919, at *9 n. 13 (D.Minn. 2011) (Kyle, J.) ("To the extent Randall suggests that a plaintiff may succeed on an MFA claim with evidence that he unreasonably relied upon the franchisor's representations, *892 the Court declines to follow it."). Yang relies entirely on Randall to support his contention that unreasonable reliance is sufficient under the MFA. Randall, however, merely suggested, without holding, that unreasonable reliance could be sufficient under the MFA because that statute is remedial and requires broad construction. Randall, 532 F.Supp.2d at 1087. On the other hand, in Kieland and Ellering the absence of reasonable reliance was essential to the holding of each case. See Kieland, 2006 WL 2990336, at *8; Ellering, 2011WL 2730919, at *9-10. On that basis, this Court would require reasonable reliance for a viable MFA claim. Reliance is unreasonable as a matter of law where an oral representation is completely contradicted by a governing written instrument. Crowell, 264 F.3d at 762. Therefore, even if Yang's deposition could be read as he urges, he has no cognizable MFA claim or common law fraud claim.
Finally, Yang argues that Jani-King had a duty to disclose that it did not have "sufficient" business for him. No genuine issue of material fact, however, exists to show that Jani-King did not have enough business for Yang. To the contrary, all evidence of record indicates that Jani-King met its IBO within the contractual time period, and continued to do so as long as contractually required. Indeed, Yang serviced accounts for over two years with monthly billings beyond the amount of the IBO. See Hunter Decl. Ex. 11 (Yang Franchisee Account History Sheet).
Given that no untrue statements of material fact or misrepresentations were made to Yang as a matter of law, Jani-King is entitled to summary judgment on his common law fraud and MFA claims.
3. Minnesota False Statement in Advertising Claim
The Minnesota False Statement in Advertisement Act ("MFSAA") prohibits the dissemination of an advertisement that "contains any material assertion, representation, or statement of fact which is untrue, deceptive, or misleading." Minn. Stat. § 325F.67. Because Yang contends Swenson guaranteed him $1,000 a month in business, he argues Item 19 of the UFOC falsely states "we [Jani-King] do not furnish or authorize our salesperson or any employees to furnish any oral or written information concerning the actual or potential sales, costs, income or profits of a JANI-KING franchise." As discussed above, there is no genuine issue of material fact that Yang was ever made such a promise, the evidence of record indicates that he was not. As such, no false statement was made, and Jani-King is entitled to summary judgment on Yang's MFSAA claim.
4. Breach of Contract
Because § 12.3 of the Franchise Agreement incorporates the UFOC, Yang argues that Item 19 of the UFOC, the basis of his MFSAA claim, also forms the basis of his breach of contract claim. Because no genuine issue of material fact exists that Yang was guaranteed he would have $1,000 monthly gross billings, a breach of contract cannot have occurred as a matter of law. Furthermore, even if he were told that he would have guaranteed billings, he places the timing of the statement before the Franchise Agreement was signed and, "it is axiomatic that before there can be a breach of a contract there must be a contract." Weissman v. Cole Prods. Corp., 269 F.2d 340, 341 (7th Cir. 1959). Even if a contract-based claim could be asserted, and even if a representation regarding profitability was made to him, his contract claim would fail because Yang would have known of the representation, should have read and known of the contradictory contract term, and yet executed the contract anyway. See Thames v. *893 Smith, 280 S.W. 859, 860 (Tex.Civ.App. 1926) ("A party who executes a contract cannot thereafter defeat or cancel same... if as a matter of fact at the time the representations were made and the contract was executed he knew that said representations were as a matter of fact false."). Jani-King is entitled to summary judgment on this claim as well.
5. Implied Covenant of Good Faith and Fair Dealing
"Under Minnesota law, every contract includes an implied covenant of good faith and fair dealing requiring that one party not `unjustifiably hinder' the other party's performance of the contract." In re Hennepin Cnty. 1986 Recycling Bond Litig., 540 N.W.2d 494, 502 (Minn.1995) (citations omitted). The implied covenant of good faith and fair dealing serves only "to enforce existing contractual duties, and not to create new ones." Allen v. Thom, No. A07-2088, 2008 WL 2732218, at *5 (Minn.Ct.App. July 15, 2008). Yang's claim fails because he seeks to vary the express terms of the contract by creating new duties for Jani-King.
Yang argues that Jani-King breached the implied covenant of good faith and fair dealing by (1) failing to offer him accounts in a convenient geographic location and (2) promising, but not finding, him a replacement account for the Luther Group. The record concerning Yang's preferred area is imprecise. In his application he stated that his preferred area was the cities of Brooklyn Center and Fridley, Minnesota. Hunter Decl. Ex. 8 at JK Moua 010126. However, at his deposition, Yang admitted that in a questionnaire he stated that his preferred area consisted of the cities of Blaine, Minneapolis, Brooklyn Park, and Brooklyn Center, Minnesota. Yang Dep. 43:21-44:15. Further, he stated at his deposition that his first accepted account, the Luther Group, was located in Brooklyn Park and that city was one in which he wished to work. Id. 47:17-25. Regardless, even if his preferred area did not include Brooklyn Park, Jani-King had no contractual obligation to offer Yang only accounts in his preferred geographical area. See Yang Franchise Agreement § 6.1.1 (obligating Jani-King as franchisor to offer accounts in "the Territory"); id. at PL013146 (defining "the Territory" to include Hennepin County, which includes the city of Brooklyn Park). Yang cannot use the implied covenant of good faith and fair dealing to create an additional, narrower duty to offer accounts only in the preferred area.
Yang's theory of a promise to replace the Luther Group is similarly unavailing. The Franchise Agreement unambiguously creates no obligation on the part of Jani-King to replace accounts after twelve months of servicing. See Yang Franchise Agreement § 4.17(2) ("If an account cancels at no fault of yours before you service the account for 12 full months ... that account will be replaced. ... Franchisor is not otherwise obligated to replace the accounts that are serviced. ..."). Yang serviced the Luther Group account for nearly two years. Jani-King, even if promises were made, had no contractual duty to replace it. Yang cannot now rewrite that agreement to create an ongoing obligation to replace accounts through the implied covenant of good faith and fair dealing.
6. Quasi-Contract
Yang also asserts claims under theories of unjust enrichment and quantum meruit. Both are equitable remedies commonly referred to as "quasi-contract" claims because they are generally used in the absence of a contract between the parties. See Taylor Inv. Corp. v. Weil, 169 F. Supp. 2d 1046, 1060 (D.Minn.2001) ("The existence of an express contract between parties precludes recovery under theories of quasi-contract. ..."). However, where the claims are outside the scope of the *894 contract between the parties, unjust enrichment and quantum meruit claims are nonetheless actionable. See Ventura v. Titan Sports, Inc., 65 F.3d 725, 730 (8th Cir.1995) ("[I]f an existing contract does not address the benefit for which recovery is sought, quantum meruit is available regarding those items about which the contract is silent.").
Yang's quasi-contract claims fail because they address subject matter squarely in the purview of the Franchise Agreement. The sole basis identified by Yang for these claims is the allegation that Jani-King promised to replace the Luther Group account and did not do so. As discussed above, § 4.17 of Yang's Franchise Agreement directly addressed replacement of accounts by Jani-King, and therefore conduct regarding account replacement cannot serve as the basis for quasi-contract claims here. Jani-King is entitled to summary judgment in its favor on these claims.
7. Vicarious Liability
With summary judgment granted in Jani-King's favor on all of Yang's claims, there is no basis for vicarious liability. See Williams v. Nat'l Football League, 582 F.3d 863, 883 (8th Cir.2009).
C. Diego Cortes Dominguez
1. Facts Specific to Dominguez
In March 2005, Plaintiff Dominguez met with Swenson and received a UFOC. Dominguez Dep. 17:15-17, 18:10-14. On April 6, 2005, he purchased a "Plan B" franchise. Corrected Exhibit 14 to Hunter Decl. [Docket No. 161] ("Dominguez Franchise Agreement") at PL001806. After the purchase, he attended the Jani-King training session. See Dominguez Dep. 38:18-24. At the session, Jani-King representatives told him that he would be able to earn as much money as a doctor or Ph.D. through operating his franchise. Id. Dominguez had monthly billings several times the $1,000 per month IBO associated with his franchise for nearly two years. See Grecian Decl. Ex. 8. But as early as December 2006, Dominguez became dissatisfied with Jani-King and informed them he would not accept additional accounts but would continue servicing his remaining clients. See Hunter Decl. Ex. 15. Dominguez presently services his remaining accounts as a Jani-King franchisee. Hunter Decl. Ex. 13 ("2d Dominguez Dep.") 7:7-9.
Prior to December 2006, Dominguez had several large accounts that either were transferred to another Jani-King franchisee or cancelled their contract with Jani-King. One of those was an account Dominguez serviced with Trailway Pond, an apartment complex. In January 2007, Dominguez had a dispute with Trailway Pond's management over stained linoleum tile.2d Dominguez Dep. 47:21-25. On February 7, 2007, Jani-King transferred the account to a different franchisee. Grecian Decl. Ex. 8. Dominguez also serviced an account with Apache Animal Hospital. That account had problems with a previous franchisee and cancelled its contract with Jani-King shortly after Dominguez accepted the account. See Grecian Decl. Ex. 13. Dominguez also serviced an account with Higher Ground Academy, a charter school. That account was transferred to a different franchisee after Dominguez filled out an "Account Exchange Request Form" seeking to exchange the account for an equal or larger account. See Grecian Decl. Exs. 9, 15. The circumstances relating to each account are discussed further below as they relate to Dominguez's claims.[4]
*895 2. Common Law Fraud and Minnesota Franchise Act ("MFA") Claims
Under Minnesota law, the elements of fraud are: (1) a false representation of a past or present material fact which was susceptible of knowledge, (2) the defendant knew the representation was false or made it without knowing whether it was true or false, (3) an intention to induce plaintiff to act in reliance on the misrepresentation, (4) the representation caused the plaintiff to act in reliance thereon, and (5) and the plaintiff suffered pecuniary damage as a result of the reliance. Hoyt Props., 736 N.W.2d at 318 (quotation omitted). Reliance in common law fraud cases must be reasonable. Id. at 321. It is unreasonable as a matter of law to rely on a representation that is completely contradicted by a written agreement. Crowell, 264 F.3d at 762. The MFA prohibits offering or selling a franchise by means that include either "an untrue statement of a material fact" or an omission of a "material fact" that would be necessary prevent a previous statement from being misleading. Minn.Stat. § 80C.13, subd. 2.
Dominguez argues that Jani-King committed fraud by (1) representing that he could earn as much money as a medical doctor or Ph.D., and (2) by omitting to inform him that declined accounts would be counted against his IBO. With respect to his common law fraud claim, Dominguez could not have reasonably relied on the statement that he would earn as much as a doctor. He could not have relied on that statement in becoming a Jani-King franchisee because it was made to him after he had already signed the Franchise Agreement and agreed to its terms. See Dominguez Dep. 38:18-24 (stating that promise to earn as much as doctor or Ph.D. was made during training); 2d Dominguez Dep. 10:7-10 (stating that Jani-King employees promised he would earn as much as a doctor during training). Further, the statement would have directly contradicted the UFOC, which disclaims any representations as to profitability or income level and is incorporated by § 12.3 of the Franchise Agreement. Therefore, any reliance on the statement would have been unreasonable as a matter of law. See Crowell, 264 F.3d at 762 (ruling that reliance on oral promises contradicted by written contract was unreasonable as a matter of law). Similarly, the MFA requires the statement to be made in the offering or selling of a franchise. Here, because it was made after the franchise had been offered and sold, the claim fails.
Dominguez argues that Jani-King omitted material facts regarding the calculation of the IBO. But, it is undisputed that Jani-King disclosed the IBO calculations prior to the contract by giving Dominguez the UFOC. The UFOC explains that any declined account may be counted against the IBO. UFOC at JK Moua 001102 ("All accounts offered will apply toward the Initial Finder's Fee Business as specified in the Franchise Agreement, whether or not you accept or decline the offered business."). Therefore, there is no issue of fact that the information was disclosed in writing. Dominguez cannot impose liability under either a common law fraud or MFA claim merely because he chose not to read the UFOC. See, e.g., Haynes v. Kuder, 591 A.2d 1286, 1290-91 (D.C.1991) (holding that arbitration clause in attorney retainer agreement could not be rescinded on fraudulent inducement theory where arbitration clause was disclosed in writing notwithstanding failure to orally disclose its presence in the retainer agreement).
3. Minnesota False Statement in Advertising Claim
As discussed above, the MFSAA prohibits the dissemination of an advertisement *896 that "contains any material assertion, representation, or statement of fact which is untrue, deceptive, or misleading." Minn.Stat. § 325F.67. Dominguez argues that Item 19 of the UFOC which states "we [Jani-King] do not furnish or authorize our salesperson or any employees to furnish any oral or written information concerning the actual or potential sales, costs, income or profits of a JANI-KING franchise," UFOC at JK Moua 001115, was false because Jani-King promised to "continuously" supply him with accounts and to "support" him. Pls.' Mem. in Opp. to Defs.' Mots. for Summ. J. at 48. Promises to supply accounts and provide support, however, are not tantamount to furnishing information about the actual or potential sales, costs, income, or profits of a franchise. Therefore, no false statement was made to Dominguez, and a false statement must be made to him in order for any "causal nexus" to exist between a false statement and any damages he suffered. See Group Health Plan, Inc. v. Philip Morris Inc., 621 N.W.2d 2, 15 (Minn.2001) (requiring "causal nexus" between damages and false statements for claims under MFA). Jani-King is entitled to summary judgment on this claim.
4. Breach of Contract
Dominguez identifies four bases for his breach of contract claim. He argues that Jani-King breached provisions of the Franchise Agreement in transferring the Trailway Ponds account, not disclosing the problematic account history of Apache Animal Hospital, not replacing the Higher Ground Academy account after Dominguez relinquished it, and violating Item 19 of the UFOC. Each argument is considered in turn.
a. Trailway Pond
Dominguez argues that Jani-King breached § 12.3 of the Franchise Agreement, which incorporates the Manual. The Manual describes Jani-King's policies regarding client complaints. The Manual states that: "The regional office has the responsibility to follow up all client concerns and complaints. This follow up may include inspection of accounts being serviced. . . ." Manual § 4.12(5) (emphasis added). The Manual further states: "If the franchisee fails to: (1) either respond to the notice or correct and resolve the client concern or complaint ... or (2) if the client requests an immediate transfer... because of recurring problems or (3) states their intent to terminate the cleaning contract ... the regional office will immediately begin providing service to the account or will immediately designate another franchisee to service the account. . . ." Manual § 4.12(6). Dominguez argues that Jani-King breached the contract by not inspecting the Trailway Pond premises and providing him a chance to cure the client's complaints.
Dominguez's argument is unavailing because Jani-King had no contractual duty to inspect, it merely had discretion to do so. Further, whether or not Jani-King exercises that discretion, Jani-King has the contractual right to transfer accounts immediately if clients so request or if the client states an intent to cancel its account. Manual § 4.12(6); § 4.22(1). Jani-King maintains that Trailway Pond requested transfer and Jani-King complied with that request pursuant to its contractual rights. Dominguez emphasizes that no document shows an unambiguous request for transfer. However, Jani-King is not bound to accept only written transfer requests, and the Manual expressly provides for reassignment requests to be made orally. Manual § 4.22(1). Further, a Trailway Pond email alludes to an intent to cancel its contract with Jani-King if its account was not transferred, and Jani-King's call log shows a call days after that email to *897 request a transfer to a different franchisee. Grecian Decl. Ex. 10 (email); Diedrich Ex. 4 at JK Moua 004925 (call log). The only evidence that a transfer request was not made, therefore, is Dominguez's suspicion of wrongdoing, which cannot defeat summary judgment. See Krenik, 47 F.3d at 957.
b. Apache Animal Hospital
Dominguez next argues that Jani-King had an obligation to disclose the history of poor relations between Apache Animal Hospital and the previous Jani-King franchisee that serviced the account. However, Dominguez identifies no express contractual provision that creates an obligation to disclose such information by Jani-King. Instead, Dominguez avers that it violated Jani-King's own professed "moral obligation" and the "spirit" of the agreement between the parties. Where, as here, the relationship between the parties is governed by an express contract, only express contractual provisions can form the basis of a breach of contract claim. See Reese Design, Inc. v. I-94 Highway 61 Eastview Ctr. P'Ship, 428 N.W.2d 441, 446 (Minn.Ct.App.1988) ("Parties to an express contract are entitled to have their rights and obligations determined exclusively by its terms.") (citing Schimmelpfenning v. Gaedke, 223 Minn. 542, 27 N.W.2d 416, 421 (Minn.1947)). Therefore, no breach of contract occurred with respect to the Apache Animal Hospital account.
c. Higher Ground Academy
Dominguez also argues that Jani-King breached their contract by not replacing his Higher Ground Academy account. The undisputed facts are that Dominguez wished to exchange the Higher Ground Academy account because it was "too dirty," Dominguez Dep. 69:10-12, Dominguez filled out an Account Exchange Request Form, Grecian Decl. Ex. 15, and Jani-King then transferred the account to another franchisee without ever offering Dominguez another account with equal or higher gross monthly billings, Dominguez Dep. 71:10-11. Jani-King insists Dominguez "turned in" the Higher Ground Academy account, voluntarily discontinuing service. Dominguez is equally adamant that his desire was only to stop servicing the account once a suitable replacement, an account with equal or higher billings, had been secured. See, e.g., Dominguez Dep. 69:22, 70:7-12; 2d Dominguez Dep. 71:6-19.
The Manual provides several procedures for transferring an account from one franchisee to another. For example, a client may request transfer, Manual §§ 4.12(6), 4.22(1), or Jani-King may transfer an account due to franchisee misconduct, Manual §§ 4.22(2)-(4). A franchisee may also request that an account be transferred. Manual §§ 4.22(5)-(6). Section 4.22(5) of the Manual concerns the situation where a franchisee simply wishes to discontinue servicing an account. In that situation, the franchisee notifies the regional office and is given credit for their Finder's Fees on the account after transfer. Manual § 4.22(5). Section 4.22(6) applies where a franchisee has a new account and wishes to turn in a lower billing account to focus on the larger account. Manual § 4.22(6). The provision states in relevant part: "A franchisee may elect to relinquish the right to service an account in order to accept the right to provide service to one or more larger accounts." Id. To effectuate the transfer, the franchisee notifies the regional office of the desire to relinquish the right to service the lower billing account and accept the rights to service the larger billing account. Id. Transfer at request of the franchisee, whether under § 4.22(5) or § 4.22(6), requires the approval of the regional office and that the franchisee continue servicing the account and that the *898 client be satisfied with its service, along with other requirements. Manual §§ 4.22(5)-(6).
To comply with the written notification requirements, Jani-King provides forms to franchisees. See Grecian Decl. Ex. 15 (Dominguez's "Account Exchange Request Form"). Dominguez filled out an "Account Exchange Transfer Request Form," which expressly references § 4.22(6). Id. In filling out the form, however, instead of providing the name of a larger account, Dominguez simply wrote "open" in the space calling for the name of the larger account. Id. Further, Dominguez did not fully complete the form in other respects, leaving spaces blank or adding additional language. Id. Importantly, Dominguez did not provide corroboration that the client was satisfied with its service, a condition precedent to an account exchange. See Manual § 4.22(6)(1). Jani-King could likely have refused to approve an exchange on that basis. However, Jani-King instead chose to transfer the account to another franchisee, and offered Dominguez several lower billing accounts. Grecian Decl. Ex. 8.
Jani-King argues that it did not breach its contract with Dominguez because neither the Manual nor the Franchise Agreement can be read to create an affirmative duty to offer an equal or larger account after Dominguez stated his desire to exchange the account. Jani-King's argument misses the point. The Manual clearly envisions two methods of turning in an account: one where the franchisee simply relinquishes an account and another where the franchisee relinquishes an account for the purpose of providing service to another. Dominguez wished to avail himself of the second method, but no larger account apparently existed for him to accept. Nowhere does the contract authorize Jani-King to unilaterally deem the franchisee's wish to exchange an account under § 4.22(6) as a voluntary relinquishment under § 4.22(5). To the contrary, the Manual divests Jani-King of any authority to unilaterally transfer accounts in the absence of client complaints, only allowing them to "request" a transfer at the franchisee's option. Manual § 4.22(7). Because § 4.22(6) presupposes the existence of a larger account, the relative rights of the contracting parties if no larger accounts exist is ambiguous.
The construction of ambiguous contractual provisions is a question of fact for the jury. See Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 394 (Minn.1998) ("The construction and effect of a contract presents a question of law, unless an ambiguity exists."). Here, § 4.22(6) is reasonably susceptible to the interpretation that Jani-King will transfer an account for an exchange if and only if an equal or larger account is available for acceptance, whether its availability is secured by the franchisee or franchisor. See Manual § 4.22(6) ("A franchisee may elect to relinquish the right to service an account in order to accept the right to provide service to one or more larger accounts."). If this provision were construed to allow Jani-King to transfer only in the event that an equal or larger account is available, Jani-King would have breached the contract in reassigning the Higher Ground Academy account. Therefore, Jani-King's motion as it relates to Dominguez and the Higher Ground Academy account is denied.
d. Item 19
Finally, Dominguez argues that the provision incorporating the UFOC was breached because Item 19 of the UFOC was false, as discussed above regarding his MFSAA claim. As with the MFSAA claim, because no evidence suggests information was provided to Dominguez in violation *899 of Item 19, it was not breached as a matter of law.
In summary, Dominguez's theories of breach of contract against Jani-King are all unavailing except the reassignment of the Higher Ground Academy account claim. A genuine issue of material fact exists as to whether Jani-King breached its contract with Dominguez by reassigning the Higher Ground Academy account when no equal or larger account existed to be assigned to Dominguez.
5. Implied Covenant of Good Faith and Fair Dealing
"Under Minnesota law, every contract includes an implied covenant of good faith and fair dealing requiring that one party not `unjustifiably hinder' the other party's performance of the contract." In re Hennepin Cnty. 1986 Recycling Bond Litig., 540 N.W.2d 494, 502 (Minn.1995) (citations omitted). The implied covenant of good faith and fair dealing serves only "to enforce existing contractual duties, and not to create new ones." Allen v. Thom, No. A07-2088, 2008 WL 2732218, at *5 (Minn. Ct.App. July 15, 2008).
Dominguez asserts that Jani-King breached the implied covenant of good faith and fair dealing by requiring unpaid extra work, underbidding the accounts it offered him, offering him accounts that were about to cancel, and taking away accounts. Dominguez is unable to produce specific evidence to raise a genuine issue of material fact.
First, Dominguez has no evidence that he performed unpaid extra work. At his first deposition, Dominguez testified a payment dispute for extra work arose at Trailway Pond, but that he never actually performed the extra work. Dominguez Dep. 45:19-47:3. Likewise, with the Higher Ground Academy account, Dominguez testified that the account was transferred before he performed the extra work. See 2d Dominguez Dep. 73:4-7. Like Plaintiff Yang, Dominguez cannot defeat summary judgment by relying on Answers to Interrogatories in the face of contrary sworn deposition testimony. Canal Ins., 2009 WL 1086524, at *3.
Further, Dominguez has not identified any documentary evidence that Jani-King's accounts were underbid. Underbidding is a relative term suggesting a bid must be under some objective standard. Dominguez's only evidence of underbidding is his own subjective belief that the account was underbid based on the length of time his franchise required to clean Trailway Pond's dirtiest apartments. Dominguez Dep. 104:23-106:22. Dominguez's subjective opinion of what is a fair price is not evidence of underbidding. Indeed, because underbidding is relative, the relevant evidence would be the market price for janitorial services for similar spaces. There is no such evidence of record. Without evidence to suggest that accounts were underbid to a severe degree so as to deprive Dominguez of the benefit of the bargain of the Franchise Agreement, the claim fails.
Next, the implied covenant of good faith and fair dealing is not breached by Dominguez's receipt of clients that were considering cancelling and in fact did cancel their relationship with Jani-King. The Franchise Agreement and the Manual specifically contemplate that clients may be dissatisfied with their Jani-King franchisee and Jani-King may elect to transfer them to another franchisee in an effort to maintain them as clients. See Manual § 4.12(1). No document creates a duty to discuss the account history with the new franchisee. Dominguez agreed to this process and cannot now use the implied covenant of good faith and fair dealing to rewrite the contract to enhance Jani-King's duties. Furthermore, at the time Dominguez *900 was offered and accepted the Apache Animal Hospital account, Jani-King had met its IBO, having offered him accounts with approximately $1,700 in gross monthly billings. See Grecian Decl. Ex. 8. Therefore, Dominguez was receiving the full benefit of Franchise Agreement, and the offer by Jani-King beyond its contractual duties, even of a marginal account, cannot form the basis of liability. See In re Hennepin Cnty. 1986 Recycling Bond Litig., 540 N.W.2d at 503 ("In Minnesota, the implied covenant of good faith and fair dealing does not extend to actions beyond the scope of the underlying contract.").
Finally, Dominguez's argument that taking away accounts violated the covenant of good faith and fair dealing is also unavailing. As discussed above, Apache Animal Hospital cancelled its account with Jani-King and Trailway Pond requested a transfer to a different Jani-King franchisee. No evidence of record suggests that Jani-King induced either the cancellation or transfer request, other than the bare suspicion. Without an act, much less an act in bad faith, on the part of Jani-King, no breach of the implied covenant of good faith and fair dealing occurred with respect to Trailway Pond or Apache Animal Hospital.
The Court has already found that Jani-King is potentially liable for breach of contract for transferring the Higher Ground Academy account. Dominguez urges that the same facts be used as a basis for liability under the implied covenant of good faith and fair dealing. Under Minnesota law, a plaintiff has no cause of action for breach of the implied covenant of good faith and fair dealing if it arises from the same facts as a breach of contract claim. Sports & Travel Mktg., Inc. v. Chicago Cutlery Co., 811 F. Supp. 1372, 1383 (D.Minn.1993) (citation omitted). Jani-King is entitled to summary judgment on Dominguez's breach of the implied covenant of good faith and fair dealing claim.
6. Quasi-Contract
Dominguez, like Yang, asserts claims for recovery under theories of unjust enrichment and quantum meruit. Dominguez's claims fail because the Franchise Agreement addresses the subject matter of his claims. Specifically, the basis for Dominguez's quasi-contract claims is the transferring of his accounts. Transfer procedure is specifically addressed in the Franchise Agreement and the Manual and therefore cannot form the basis of an action premised in either unjust enrichment or quantum meruit. See Ventura, 65 F.3d at 730 ("Minnesota law is clear that `[w]here an express contract exists, there can be no implied [in law] contract with respect to the same subject matter.'") (quoting Reese Design v. I-94 Highway 61 Eastview Ctr. P'Ship, 428 N.W.2d 441, 446 (Minn.Ct.App.1988)) (alterations in original); see also Taylor Inv. Corp., 169 F.Supp.2d at 1060 ("The existence of an express contract between parties precludes recovery under theories of quasi-contract....").
7. Vicarious Liability
Jani-King seeks summary judgment on Dominguez's vicarious liability claim arguing that vicarious liability is a secondary liability doctrine and Jani-King is entitled to summary judgment on all other claims. See Williams, 582 F.3d at 883 ("Because we have concluded that each of the underlying tort claims is preempted by section 301, we need not further address vicarious liability."). Having denied summary judgment on one of the underlying claims, the Court declines summary judgment on this claim as well.
*901 D. Paul Bel George
1. Facts specific to George
On May 13, 2002, Plaintiff George met with Swenson to discuss purchasing a Jani-King franchise. See Hunter Decl. Ex. 21 ("George Dep.") 48:8-24. At the meeting, Swenson explained the plans and associated IBO levels offered by Jani-King. George Dep. 49:18-50:2. Swenson encouraged George to buy a high level plan, telling him that with a high level plan he did not "have" to do the work himself, but rather could hire employees. George Dep. 52:3-5. In May or June of 2002, George saw the Jani-King PowerPoint slide-show presentation. George Dep. 81:13-24. Further, during his discussions with Jani-King personnel, George mentioned his desire to service evening accounts because of his intent to work a day job in addition to operating his franchise. See George Dep. 118:4-24, 120:14-24. Jani-King assured George that most of its accounts were evening accounts, but stopped short of promising him only evening accounts. George Dep. 120:24-121:22.
On December 18, 2002, George purchased "Plan E-4" for $12,550. Hunter Decl. Ex. 3 ("George Franchise Agreement") at JK Moua 007011. Plan E-4 has an IBO level of $4,000 per month, and an "Initial Offering Period" of 150 days. Id. George quickly became dissatisfied with the way Jani-King offered accounts. He was offered several daytime accounts and declined them due to his need to service evening accounts. George Dep. 118:9-11. Further, he was required to make a quick decision whether to accept an account after it was offered to him, although he admits he did have an opportunity to ask questions over the phone and attend a walk-through before making a final decision about accepting an account. George Dep. 165:4-14, 169:22-170:8. In June 2003, George was dissatisfied with Jani-King after correspondence relating to the number of accounts he was offered. See Hunter Decl. Ex. 20; Grecian Decl. Ex. 17. George was surprised that Jani-King was counting accounts he declined against the IBO, and expressed his opinion that doing so was contrary to the Franchise Agreement. Grecian Decl. Ex. 17. George then ceased operation of his franchise and, after considering reviving it, his franchise remains inactive. George Dep. 203:23-204:12.
2. Common law fraud
As discussed with the other Plaintiffs' claims, the elements of common law fraud under Minnesota law are: (1) a false representation of a past or present material fact which was susceptible of knowledge, (2) the defendant knew the representation was false or made it without knowing whether it was true or false, (3) an intention to induce plaintiff to act in reliance on the misrepresentation, (4) the representation caused the plaintiff to act in reliance thereon, and (5) and the plaintiff suffered pecuniary damage as a result of the reliance. Hoyt Props., 736 N.W.2d at 318 (quoting Specialized Tours, 392 N.W.2d at 532). George argues that Jani-King made fraudulent misrepresentations, specifically that he would receive a certain level of monthly earnings, he would be able to hire employees to do all the servicing of his accounts, and that he would be offered only accounts to be serviced in the evening. George also argues that Jani-King failed to disclose that declined accounts would count against the IBO. Each argument is considered below.
a. Fraudulent misrepresentations
First, no evidence of record suggests that George was promised any level of monthly earnings. To the contrary, George testified that he was never promised any level of profits, but merely discussed *902 the various IBO levels associated with each plan available for purchase. See George Dep. 49:20-50:2 (stating that George discussed various plans with Swenson); George Dep. 71:13-18 (stating that Swenson never promised any specific level of profit). Therefore, to the extent that his claim is premised on discussion of the IBO levels, no false representation was madethe IBO levels were accurately disclosed.
Further, the representation that he would be able to hire employees to do work for him was not false. Nothing precluded him from hiring employees, the decision not to do so was his own. Furthermore, in the context of the discussion, the statement that he would be able to hire employees is puffery. The statement is vague as to how many employees, in what capacity employees would be hired, when he would be able to begin hiring employees, and other details susceptible of knowledge and measurement. There is no specific factual representation as is required for George's fraud claim to survive based on this statement.
George also argues that Jani-King defrauded him by promising to offer him accounts to be serviced at night. However, as George acknowledges, Jani-King never promised to offer him only evening accounts. George Dep. 121:174-22. Jani-King is not responsible for George's subjective belief that he would receive only evening accounts. Given the admitted absence of a specific misrepresentation made to him about evening accounts, there is no actionable claim of fraud premised upon this statement either.
b. Fraudulent nondisclosure
George asserts that Jani-King defrauded him by not disclosing that declined offers for accounts would count against his IBO. Jani-King argues that there can be no fraud by omission because it disclosed that declined accounts count towards the IBO in the PowerPoint presentation that George admits he saw. Not so. The slides state only[5] that: "If any portion of the Initial Finder's Fee Business [referred to in this opinion as the "IBO"] that Jani-King offers your franchise the right to service be declined, Jani-King is relieved of the time obligation to fulfill that portion of the Initial Finder's Fee Business." Diedrich Decl. Ex. 5 at JK Moua 013877 (emphasis added). In other words, Jani-King disclosed that declining an offered account would excuse it of fulfilling the IBO within the "Initial Offering Period," 150 days in George's case, not that declined accounts would count against the dollar amount of the IBO. Jani-King's time obligation in making IBO offers is not the same as the dollar value amount associated with the IBO. George does not complain that he was not offered accounts in a timely manner, he complains that he was not offered sufficient suitable accounts to provide him with over $4,000 in monthly billings. The presentation did not disclose that declined accounts would count against the dollar amount of the IBO.
Jani-King alternatively argues that the calculation of the IBO was disclosed in the UFOC. For his part, George does not dispute that such disclosures are in the UFOC but disputes that he ever received the UFOC, despite documentary evidence to the contrary. See George *903 Dep. 64:17-67:14 (testimony of George that he did not receive UFOC); Diedrich Decl. Ex. 7 (signed, written acknowledgment of receiving UFOC by George). Because the UFOC that George would have seen is not a matter of record, the issue cannot yet be resolved.
The only complete copies of the UFOC submitted in connection with this motion are one dated April 30, 2004, Hunter Decl. Ex. 4, and another dated May 3, 2005, Diedrich Decl. Ex. 6. George became a franchisee in 2002. Therefore, the contents of the UFOC as it existed in 2002, when George would have first seen it, are not a matter of record. A "Corrected Exhibit 6 to Diedrich Declaration" [Docket No. 162] was submitted and purports to be a version of the UFOC effective May 28, 2002. The document, however, is only two pages long and presumably cannot be the complete UFOC as it was on May 28, 2002. To add to the confusion, at George's deposition the line of questioning regarding the UFOC revealed the existence of two versions, one dated May 21, 2002, and the other dated May 28, 2002, that George signed written acknowledgments of having received. George Dep. 59:4-10 (May 21, 2002 UFOC), 74:12-75:2 (May 28, 2002 UFOC). Given the large number of parties in this matter, the apparent attempts to correct the record, and the numerous copies of the UFOC in existence, it appears that the complete copy of the UFOC that Jani-King allegedly gave George may inadvertently not be in the record. Because the contents of the UFOC, as it would have been given to George on either May 13, 2002 or June 4, 2002, may be germane to this discussion, the Court will continue to hold George's fraud by omission claim under advisement and give the parties ten days from the issuance of this Order to supplement the record with a full copy of either the UFOC dated May 28, 2002, the UFOC dated May 21, 2002, or both. This is the only supplementation to record that will be allowed.
3. MFA
As discussed above, the MFA prohibits offering or selling a franchise by means that include either "an untrue statement of a material fact" or an omission of a "material fact" that would be necessary prevent a previous statement from being misleading. Minn.Stat. § 80C.13, subd. 2. The MFA has a three-year statute of limitations. Minn.Stat. § 80C.13, subd. 5. The MFA, however, does not clearly state when a cause of action accrues, i.e. when the running of the statute of limitation begins. The proper accrual rule is a matter of dispute between the parties. The Court declines to decide what accrual rule applies to the MFA because even under the discovery rule, the rule urged by George and most favorable to him, George's claim is untimely.
Under the discovery rule of accrual, the statute of limitations for a cause of action begins running when the plaintiff knew, or should have known through the exercise of reasonable diligence, of the facts constituting the cause of action. See Klehr v. A.O. Smith Corp., 87 F.3d 231, 235 (8th Cir.1996) (discussing discovery rule for fraud claims). George purchased his Jani-King franchise in December 2002. George alleges Jani-King made misrepresentations regarding profitability, the availability of evening accounts, and the ability to hire employees at or around the time of his purchase. Had Jani-King made these statements, and were they false, George would have become aware of the facts constituting his claim within months of purchasing his franchise as daytime accounts were offered to him, he failed to realize his expected profits, and did not hire employees. Therefore, George knew of all the facts constituting *904 his MFA claim under each theory in early 2003. Further, assuming that Jani-King did fail to disclose that declined accounts would count against his IBO, George became aware that Jani-King was counting declined accounts against the IBO when the calculation became a matter of dispute in June 2003. See Grecian Decl. Ex. 17; Hunter Decl. Ex. 20. At that time he would have known of all the facts constituting his MFA claim under his omission theory. Therefore, the latest date that all facts constituting his MFA claim were known to George, under any of the theories he advances, is June 2003. With a three-year statute of limitations, George's MFA claim, commenced on July 18, 2008, is untimely. Jani-King is entitled to summary judgment on George's MFA claim.[6]
4. MFSAA/Breach of Contract
Like Yang, George premises both his MFSAA claim and breach of contract claim on Item 19 of the UFOC, which states that Jani-King does not furnish or authorize information regarding actual or potential sales, costs, income or profits. As discussed above, no genuine issue of material fact exists as to whether Jani-King furnished or authorized information regarding actual or potential sales, costs, income or profits. George testified that Jani-King discussed the IBO with him, and did not represent that George would have any particular level of sales, costs, income, or profit. George Dep. 49:20-50:2, 71:13-18.
5. Breach of Implied Covenant of Good Faith and Fair Dealing
George argues that Jani-King breached the covenant of good faith and fair dealing by failing to offer him evening accounts, failing to provide him $4,000 in monthly business, and underbidding accounts. No genuine issue of material fact exists with respect to any of these claims. As George acknowledges, Jani-King had no contractual duty to offer him only evening accounts. Jani-King did not deprive George of the benefit of the franchise agreement by failing to exclusively offer him evening accounts when it had no contractual duty to do so. See In re Hennepin Cnty.1986 Recycling Bond Litig., 540 N.W.2d at 503 ("In Minnesota, the implied covenant of good faith and fair dealing does not extend to actions beyond the scope of the underlying contract."). Jani-King offered him sufficient business to meet the IBO, and George cannot use the covenant of good faith and fair dealing to redraft the contract to include an "evenings only" provision.
Similarly, George's argument that Jani-King failed to provide him with guaranteed $4,000 in monthly business is without merit because, as noted above, no evidence of record suggests that Jani-King made such a promise, and regardless such a promise would directly contradict the terms of the Franchise Agreement.
Further, no evidence of record suggests accounts were underbid. The only evidence of underbidding provided by George is his own subjective belief that the Gray Bow account was underbid and that Jani-King lowered its bid for that account in order to secure the account. George Dep. 192:21-195:23. Rebidding is not evidence of underbidding nor is George's subjective feelings about the proper bid amount. The only useful metric, market rates for janitorial services, is not a matter of record and therefore no genuine issue of material fact exists as to underbidding. Further, George's argument that the time pressure surrounding acceptance of accounts is evidence of underbidding is unavailing. *905 As George acknowledges, he had the ability to ask questions and attend a walk-through of the account before accepting an account. George Dep. 165:4-14, 169:22-170:8. Jani-King is entitled to summary judgment in its favor on George's claim for breach of the implied covenant of good faith and fair dealing.
6. Quasi-Contract
George premises his unjust enrichment and quantum meruit claims on the manner in which he was offered accounts (with time pressure and no paperwork) and the manner in which client complaints were handled (he claims complaints were fabricated). Offering of accounts and client complaints are subject matters squarely addressed by the Franchise Agreement, UFOC, and Manual. See Ventura, 65 F.3d at 730 ("Minnesota law is clear that `[w]here an express contract exists, there can be no implied [in law] contract with respect to the same subject matter.'") (quotation omitted) (alterations in original); see also Taylor Inv. Corp., 169 F.Supp.2d at 1060 ("The existence of an express contract between parties precludes recovery under theories of quasicontract. . . ."). As such, they cannot form the basis of George's quasi-contract claims. Jani-King is entitled to summary judgment on these claims as well.
7. Vicarious Liability
As with Dominguez, the sole grounds urged by Jani-King to grant judgment in its favor on George's vicarious liability claim is that vicarious liability is a secondary liability doctrine and Jani-King is entitled to summary judgment on all other claims as well. Having denied summary judgment with respect to George's common law fraud claim, the Court likewise denies summary judgment for this claim.
IV. CONCLUSION
Based upon the foregoing, and all the files, records, and proceedings herein, IT IS HEREBY ORDERED that:
1. Defendants' Motion for Summary Judgment [Docket No. 148] is GRANTED IN PART AND DENIED IN PART;
2. All claims asserted by Plaintiff Cherpao Yang are DISMISSED WITH PREJUDICE;
3. Plaintiff Diego Cortes Dominguez's claims for breach of the implied covenant of good faith and fair dealing (Count II), violation of the Minnesota Franchise Act (Count III), fraud/misrepresentation by omission (Count IV), unjust enrichment (Count V), quantum meruit (Count VI), and false statements in advertising (Count VIII), are DISMISSED WITH PREJUDICE;
4. Plaintiff Paul Bel George's claims for claims for breach of contract (Count I), breach of the implied covenant of good faith and fair dealing (Count II), violation of the Minnesota Franchise Act (Count III), unjust enrichment (Count V), quantum meruit (Count VI), and false statements in advertising (Count VIII) are DISMISSED WITH PREJUDICE;
5. The parties may supplement the record in this matter with either the UFOC dated May 28, 2002, the UFOC dated May 21, 2002, or both, if done within ten days of the date of this Order. The Court will continue to hold Plaintiff George's fraud claim under advisement; and
6. The only triable issues that remain with respect to these Plaintiffs are Dominguez's breach of contract claim as it relates to the exchange of the Higher Ground Academy Account *906 only, and any vicarious liability related thereto, and George's fraud by omission claim as it relates to the disclosure of the calculation of the IBO, and any vicarious liability related thereto.
NOTES
[1] The caption and Complaint in this matter list Diego Cortez Dominguez among the named Plaintiffs. In their submissions, the parties refer to this individual as Diego Cortes Dominguez. The Court will also refer to him as Diego Cortes Dominguez, notwithstanding the caption and Complaint. To further avoid confusion, he will be referred to as "Dominguez" rather than his complete surname "Cortes Dominguez." See Hunter Decl. Ex. 12 ("Dominguez Dep.") 53:20-22 (noting that Plaintiff's entire last name is Cortes Dominguez).
[2] On a motion for summary judgment, the Court views the evidence in the light most favorable to the nonmoving party. Ludwig v. Anderson, 54 F.3d 465, 470 (8th Cir.1995).
[3] Federal Rule of Civil Procedure 56 was amended effective December 1, 2010; the summary judgment standard was previously located in Rule 56(c).
[4] The parties also discuss an account with an entity called Max Steininger. In his brief, however, Dominguez advances no theories of liability regarding that account. Therefore, it will not be discussed further.
[5] Jani-King does not provide "pincite" citations to the slides in support of its argument. However, the quoted language is included in the portion of the slides referenced by Jani-King during George's deposition. See George Dep. 83:17-84:2. Further, the Court has reviewed the slides and no other applicable disclosures appear to have been made, although many of the slides provided are illegible.
[6] Plaintiff George also asserts an MFA claim against Defendant George Selman. This claim is also untimely and Selman is entitled to summary judgment. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539351/ | 105 N.H. 9 (1963)
STATE
v.
JOSEPH R. MOQUIN & a.
No. 5116.
Supreme Court of New Hampshire.
Argued April 2, 1963.
Decided June 7, 1963.
*10 William Maynard, Attorney General, Elmer T. Bourque, Deputy Attorney General, and Irma A. Matthews, Law Assistant (Mrs. Matthews orally), for the State.
Devine, Millimet, McDonough, Stahl & Branch (Mr. Bartram C. Branch orally), for defendant Joseph R. Moquin.
Eaton, Eaton & Ross (Mr. Robert I. Eaton orally), for defendant Jon L. Houghton.
LAMPRON, J.
August 19, 1962, a motorcycle operated by Houghton on which Moquin was a passenger was involved in several violations of the motor vehicle laws. They eluded arrest at that time but were later apprehended. The defendants agreed between themselves that Moquin would assume responsibility for these offenses. Houghton had a record of prior violations and feared the loss of his license if he appeared in court charged with the present transgressions. Consequently the defendants led the interrogating police officers to believe that Moquin was the operator. This resulted in complaints being issued against Moquin for six violations in the operation of the motorcycle while it was in fact operated by Houghton.
Both defendants were present in the municipal court of Manchester when pleas of nolo contendere were entered by Moquin to the charges against him and accepted by the presiding justice and fines imposed.
Later the same day Moquin admitted he was not the operator and as a result complaints for these violations were issued against Houghton who pleaded guilty to the offenses charged. The prior complaints against Moquin for these same offenses were then brought forward and dismissed.
When questioned by the court both defendants admitted that Moquin was not the operator of the motorcycle when the offenses occurred, that Houghton was, and that the two had agreed between themselves that Moquin would assume the responsibility for the violations to protect Houghton's license.
On the hearing to show cause why the defendants should not *11 be adjudged in contempt, there were findings by the presiding justice that they had perpetrated a fraud upon the court, that their conduct constituted an obstruction of justice and that they were guilty of contempt.
The power to punish for contempt is inherent in the very organization of all courts and is essential to the functioning of our judicial system. State v. Matthews, 37 N. H. 450; State v. Towle, 42 N. H. 540, 546; Opinion of the Justices, 86 N. H. 597, 601; State v. Jackson, 147 Conn. 167; Wood v. Georgia, 370 U. S. 375, 383. The necessity for such powers in courts before which it is probable that more people appear than before all other courts combined is obvious. No reasons of precedent or policy compelling a contrary holding are suggested and none is apparent. Furthermore it is the duty and responsibility of courts to be alert to protect the judicial processes from being brought into disrepute and to act vigorously when confronted with acts or conduct which tend to obstruct or interfere with the due and orderly administration of justice. State v. Treon, (Ohio App. 1963), 188 N. E. 2d 308, 313.
In Berlandi v. Commonwealth, 314 Mass. 424, two persons were found guilty of contempt for their participation in a "take-the-rap" scheme designed to secure the freedom of one of them who was guilty of a crime. It was held in State v. Jaffrin, 136 N. E. 2d 436 (Ohio 1956) that the taking of money in payment for a promise to "fix" a traffic arrest so that without appearance or trial the person charged with the offense could avoid punishment constituted contempt even if no act in furtherance of this conspiracy was shown.
The facts in State v. Treon, supra, bear a striking similarity in many respects to those in the case before us. It was there held that a newspaper reporter, who, in cooperation with a police effort to trap someone suspected of fixing traffic tickets, participated in a plan to issue to him two tickets for nonexistent traffic violations which were entered on the court's docket, although not guilty of direct contempt could probably be found guilty of indirect contempt. It was so stated even though the fictitious citations were not prepared in the presence of the court but by an official in the traffic bureau and even though the defendant did not knowingly participate in an attempt to defraud the court. 17 C.J.S., Contempt, p. 10, s. 8.
The two defendants in our case could be found to have knowingly conspired to so conduct themselves as to have complaints *12 issued against Moquin, who was innocent of the numerous traffic violations charged, instead of against Houghton, who had committed these offenses. Also that their motive for so acting was to obstruct the due administration of justice which would probably result in the loss of Houghton's license to drive a motor vehicle. It could be found further that their scheme was successful and did result in the issuance and presentation of complaints in the municipal court of Manchester against a defendant other than the perpetrator of the offenses. Moquin further aided this predetermined deception and obstruction of justice by pleading to these complaints in open court and Houghton, who was present, was equally a participant by his silence which constituted a tacit approval of Moquin's action.
We are of the opinion that their entire course of conduct could be found, as it was by the presiding justice, to constitute a fraud on the court, an obstruction of justice and contempt. State v. Treon (Ohio App. 1963), 188 N. E. 2d 308, 313; State v. Jaffrin (Ohio App. 1956), 136 N. E. 2d 436; Berlandi v. Commonwealth, 314 Mass. 424. See People v. Katelhut, 322 Ill. App. 693; Ex parte Billy Burl Clayton, 350 S. W. 2d 926 (Tex. Cr. App. 1961); Taylor v. State, 112 Neb. 259.
Remanded.
KENISON, C.J. and DUNCAN, J., dissented; the others concurred.
KENISON, C.J., dissenting:
I can agree that the defendants' actions in this case were morally reprehensible, legally wrong and should be punished. But these conclusions do not decide the threshold question before us. The wrong question frequently begets a wrong answer as this case illustrates in assuming that municipal courts have jurisdiction to execute contempt decrees in motor vehicle cases. While some early cases in the Nineteenth Century held that the power of contempt was inherent in all courts independently of statute (State v. Matthews, 37 N. H. 450, 453; State v. Towle, 42 N. H. 540), the matter was put into proper focus by the Opinion of the Justices, 86 N. H. 597, 602, decided in 1933: "As before pointed out, it is the law of this state that the power to punish for contempt is an essential attribute of a court of general jurisdiction." (Emphasis supplied). It is clear that the power of contempt is inherent in the Supreme and Superior Courts as courts of general jurisdiction. *13 RSA 490:4; RSA 491:7, 19, 20; RSA 498:1. Probate courts have limited and special jurisdiction only so far as granted by the Legislature. N. H. Const., Pt. II, Art. 80; Wood v. Stone, 39 N.H. 572; Protective Check Writer Co. v. Collins, 92 N. H. 27. Consequently, it was deemed advisable to give probate courts authority to issue contempt decrees in 1911 (Laws 1911, c. 129, s. 1) which was further extended in 1957. Laws 1957, c. 240 s. 2; RSA 547:11 (supp); Seventh Report, N. H. Judicial Council 47 (1958).
Municipal courts, like probate courts, are courts of limited jurisdiction and have the authority to issue contempt decrees only in particular cases. RSA 592-A:15 (supp); Laws 1957, c. 244, s. 8 (the failure of a party to answer a summons); RSA 165:19 (contempt powers in support cases). Municipal courts, when acting as juvenile courts, have broader contempt powers but they are limited by statute in the manner of execution and the extent of punishment. RSA 169:5; RSA 169:35 (supp); Laws 1957, c. 214, s. 1. Interestingly enough the latter statute limits the extent of the punishment, provides that the defendant shall "have a reasonable time to make a defense," and that the trial shall be "before a judge other than the one who issued the written order." But there is no statute granting municipal courts contempt power in motor vehicle cases and no general statute granting them contempt powers in the exercise of their criminal jurisdiction except as mentioned in the instances cited above.
The Legislature has seen fit to grant contempt powers to the municipal courts only in limited instances, none of which is applicable to this case. Since I am convinced that the municipal court has no contempt power in the present case, I do not reach the questions discussed in the majority opinion.
DUNCAN, J., dissenting:
Unlike the district courts of Massachusetts which are courts of "superior and general jurisdiction" (Berlandi v. Commonwealth, 314 Mass. 424, 442, relied upon by the majority), the municipal courts of New Hampshire have limited jurisdiction, which does not carry with it the inherent power to punish for contempt. See also, Opinion of the Justices, 314 Mass. 767, 776, 784. I concur in the foregoing opinion by the Chief Justice. In so doing I would not have it appear that I would concur in the majority opinion if I believed that *14 the municipal court had jurisdiction.
Misrepresentations made by these defendants which gave rise to contempt charges occurred when no action was pending before the municipal court, and took place "out of the presence of the court" (RSA 169:35 (supp)) during interrogation of the police. Moquin made no representations to the court by pleading nolo. Houghton made none by preserving silence before the court, in the exercise of his constitutional right against self-incrimination.
If contempt could properly be found, it was at most indirect contempt. See In re Oliver, 333 U. S. 257, 274-275. Due process of law in such a proceeding dictates that trial shall be before a tribunal free from bias. This suggests if it does not require that some judge other than the justice found to have been subjected to fraud should have conducted the proceedings. See Goldfarb, The Constitution and Contempt, 61 Mich. L. Rev. 283, 330-333. Cf. RSA 169:35 (supp) supra. "It is the right of every citizen to be tried by judges as impartial as the lot of humanity will admit." Art. 35th, Pt. I, N. H. Const.
The express transfer by the municipal court justice of the question of "Whether Judge Chretien had authority to try the respondents in the contempt proceedings" goes unanswered by the opinion of the majority, except by implication. Other problems which surround criminal contempt proceedings likewise go unconsidered. The Constitution and Contempt, supra. Since I join the view that the municipal court had no jurisdiction to punish for contempt in this case, there is no occasion to here pursue other issues. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539356/ | 79 N.J. Super. 411 (1963)
191 A.2d 775
STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
ALLEN JOSEPHS, DEFENDANT-APPELLANT.
Superior Court of New Jersey, Appellate Division.
Argued May 20, 1963.
Decided June 10, 1963.
*413 Before Judges CONFORD, GAULKIN and KILKENNY.
Mr. Louis Santorf argued the cause for the defendant.
Mr. John K. Walsh, Assistant Prosecutor, argued the cause for plaintiff (Mr. Guy W. Calissi, Bergen County Prosecutor, attorney).
*414 The opinion of the court was delivered by GAULKIN, J.A.D.
Defendant appeals, pursuant to leave granted, from an order denying his motion to quash an indictment.
The indictment charges him, in two counts, with larceny, contrary to N.J.S. 2A:119-2, from one Ratti. The amount alleged in the first count to have been taken is $56; in the second count, $41. The basis of the motion to quash was that, prior to the return of the indictment, two separate complaints, charging the identical offenses, had been filed in the Fair Lawn Municipal Court; warrants were issued on said complaints, upon which defendant was arrested; he pleaded not guilty, and signed a waiver of indictment and trial by jury pursuant to N.J.S. 2A:8-22; the magistrate was a lawyer and had jurisdiction to try the offenses; the waiver was signed with the knowledge and consent of the prosecutor of Bergen County; the case was set down for trial in the municipal court on April 9, 1962; on April 6, 1962 the indictment was returned and, upon direction of the prosecutor, the magistrate put off the trial of the cases pending the trial of the indictment.
Defendant agrees that jeopardy did not attach, so cases like State v. Dixon, 40 N.J. 180, and State v. Labato, 7 N.J. 137 (1941), do not apply.
Defendant does not argue that after the municipal court had effectively obtained jurisdiction by defendant's signing a waiver, the grand jury no longer had jurisdiction to indict; nor could he. The grand jury has jurisdiction over all indictable offenses committed in the county, and, unless jeopardy has attached, it can not be ousted of such jurisdiction by the action of a municipal court.
A grand jury may indict for an offense for which a grand jury of another county has already indicted. Similarly, a grand jury may indict a defendant for an offense even though it previously indicted defendant for a component part of the offense, or even for the same offense (the superseding indictment), and this even if the defendant has been arrested *415 under the previous indictment, pleaded not guilty, and a trial date has been fixed. In such cases the Superior Court may stay one indictment until the other is tried, or consolidate the indictments returned in one county for trial, or compel the prosecutor to elect as to which of such indictments he would pursue, or take such other steps as justice requires; but there is no rule that the first indictment bars future indictments, or must be tried first. A fortiori, this applies to complaints in a municipal court. Until jeopardy has attached, the grand jury may ignore such complaints.
Furthermore, subject to law and the action of the grand jury, the prosecutor has exclusive jurisdiction over the prosecution of crimes committed in the county. N.J.S. 2A:158-4; State v. Winne, 12 N.J. 152 (1953). The prosecutor has the right to present such matters to the grand jury even though a complaint is already pending in a municipal court, and even if he approved or directed the filing of that complaint, and, if the grand jury indicts, he has the right (subject to the direction of the Superior Court) to try the indictment first.
The need for and the public policy served by such power in the grand jury and the prosecutor are obvious. See State v. Dixon, supra; State v. Labato, supra. L. 1957, c. 55, § 1, amending N.J.S. 2A:8-22, made it mandatory for the magistrate to accept a waiver. Therefore, if the grand jury and the prosecutor did not have the power above mentioned, a defendant could avoid indictment whenever a complaint was filed against him in a municipal court, for the same or an included offense, merely by filing a waiver; and very many criminal prosecutions begin with the filing of a complaint in a municipal court.
It may be suggested that L. 1957, c. 55, supra, gives the magistrate exclusive jurisdiction after the defendant files the waiver prescribed by N.J.S. 2A:8-22, but that is not so. L. 1957, c. 55, was passed in response to a presentment by the Monmouth County grand jury dated January 2, 1957, which complained that magistrates were refusing to accept waivers *416 without just cause, with the result that many minor cases were being sent to the grand jury which the magistrates should have tried. The effect of L. 1957, c. 55, is to compel the magistrate to accept jurisdiction and try the case when the defendant waives, but the statute has no effect on the powers of the grand jury or the prosecutor.
Finally, defendant argues, in the alternative, that once a court obtains jurisdiction to try an offense, the matter must be tried in that court without regard to the subsequent attachment of jurisdiction in another court; or, as a matter of orderly procedure and comity between courts, the magistrate should have been permitted to proceed with the trial in this case. No New Jersey case is cited for the first alternative mentioned, and we do not regard it as supported by our criminal practice statutes and rules of court.
It is true that in the exercise of its discretion and for just cause the Superior Court may say which case should be tried first, but the defendant did not ask for that here. He asked that the indictment be quashed, and to that he was not entitled. Furthermore, there is nothing in the facts in this case which would have justified the ordering of the trial of the complaints in the municipal court first, against the will of the prosecutor.
The judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539360/ | 40 N.J. 227 (1963)
191 A.2d 169
THE BROADWAY NATIONAL BANK OF BAYONNE, A NATIONAL BANKING INSTITUTION, PLAINTIFF-RESPONDENT,
v.
THE PARKING AUTHORITY OF THE CITY OF BAYONNE, AND VINCENT BURKE, FRANK CARPENTER, SR., JACOB DROGIN, WALTER P. PAGUREK, ALAN F. PAUL AND JAMES GARITO, ALAN KONIECZKO, SAMUEL LEVIS AND CHESTER ZEBROWSKI, DEFENDANTS-APPELLANTS.
VINCENT BURKE, FRANK CARPENTER, SR., JACOB DROGIN AND WALTER PAGUREK, PLAINTIFFS-RESPONDENTS,
v.
JAMES GARITO, ALAN KONIECZKO, SAMUEL LEVIS, CHESTER ZEBROWSKI, ALLEGED COMMISSIONERS OF THE PARKING AUTHORITY OF THE CITY OF BAYONNE; FRANCIS G. FITZPATRICK, ALFRED DWORZANSKI, WILLIAM MARTIN, JOSEPH LEFANTE, DENNIS COLLINS AND JOSEPH MAKOWSKI, MEMBERS OF THE GOVERNING BODY OF THE CITY OF BAYONNE, DEFENDANTS-APPELLANTS.
The Supreme Court of New Jersey.
Argued February 19, 1963.
Decided May 20, 1963.
*229 Mr. Frank J. Ziobro argued the cause for the defendants-appellants, Francis G. Fitzpatrick, Alfred Dworzanski, William Martin, Joseph LeFante, Dennis Collins and Joseph Makowski, members of the Governing Body of the City of Bayonne.
Mr. James P. Dugan argued the cause for the defendants-appellants, James Garito, Alan F. Paul, Alan Konieczko, Samuel Levis and Chester Zebrowski.
Mr. Roy G. Simmons argued the cause for the plaintiffs-respondents, Vincent Burke, Frank Carpenter, Sr., Jacob Drogin and Walter Pagurek. (Messrs. Camp & Simmons, attorneys).
*230 The opinion of the court was delivered by PROCTOR, J.
The sole issue presented on this appeal is whether the terms of office of commissioners of a municipal parking authority, created by a municipality pursuant to the Parking Authority Law, L. 1948, c. 198, N.J.S.A. 40:11A-1 et seq., terminate on the effective date of a new plan of government adopted by the municipality under the Optional Municipal Charter Law, L. 1950, c. 210, N.J.S.A. 40:69A-1 et seq. (Faulkner Act).
The facts are not in dispute. On December 17, 1958 the City of Bayonne, which was then governed by a board of commissioners under the Walsh Act, R.S. 40:70-1 et seq., enacted an ordinance creating the Parking Authority of the City of Bayonne pursuant to the Parking Authority Law, supra. Messrs. Burke, Carpenter, Pagurek, Drogin and Paul were appointed as commissioners for staggered terms ranging from one to five years, respectively. Burke, Carpenter and Pagurek were subsequently reappointed for five-year terms pursuant to N.J.S.A. 40:11A-4, when their original terms expired.
On July 1, 1962 Mayor-Council Plan C, one of the optional plans of government under the Faulkner Act (N.J.S.A. 40:69A-55 to 60), became effective in the city pursuant to a referendum previously adopted. The new municipal council appointed Messrs. Garito, Konieczko, Paul, Levis and Zebrowski as commissioners of the Parking Authority on July 16, 1962. (Paul is thus a commissioner of the Parking Authority by appointment of both the former city administration and the present governing body.)
Burke, Carpenter, Pagurek and Drogin claimed that they had valid continuing terms as commissioners of the Parking Authority, notwithstanding the change in the form of government. On the other hand, Garito, Konieczko, Levis and Zebrowski contended that the terms of the previous commissioners ceased and determined by operation of N.J.S.A. 40:69A-207 on July 1, 1962, the effective date of the Faulkner Act in the city, and that they were the legal holders of the offices involved. Because of this dispute, the Broadway National *231 Bank of Bayonne was faced with opposing claims to funds deposited with it in the name of the Parking Authority. In order to protect itself against double liability, the bank brought an action in interpleader, joining the Parking Authority and all those claiming to be commissioners. Thereafter, Burke, Carpenter, Drogin and Pagurek brought an action in lieu of prerogative writs against Garito, Konieczko, Levis and Zebrowski and the Mayor and Council of the City of Bayonne, seeking a judgment enjoining those defendants from interfering with the plaintiffs' terms of office and determining who are the legal and authorized commissioners of the Parking Authority. At the time these actions were instituted, the Parking Authority had outstanding contractual obligations in the amount of $75,000.
The actions were consolidated with the consent of the parties, all of whom moved for judgment on the uncontroverted facts.
The trial court held that a parking authority is "a separate public entity operating independently of the municipality in which it is formed," and that N.J.S.A. 40:69A-207 "does not encompass offices in other political subdivisions or the officers filling them, even if their duties and functions are exclusively within such municipality." Broadway Nat. etc., Bayonne v. Parking Auth. Bayonne, 76 N.J. Super. 139, 147 (Ch. Div. 1962). The court therefore concluded:
"* * * that the offices of commissioners of the Parking Authority of the City of Bayonne were not abolished and the terms of the incumbent officers did not cease and determine upon the taking effect of the Faulkner Act on July 1, 1962 at noon. Vincent Burke, Frank Carpenter, Sr., Jacob Drogin, Walter Pagurek and Alan Paul continue to hold office as lawful commissioners of the Parking Authority of the City of Bayonne, and the Broadway National Bank of Bayonne is directed to honor their right and title to control the bank account standing to the credit of the Parking Authority of the City of Bayonne." Id., at p. 148.
A judgment incorporating the above holding and granting the injunctive relief sought was thereafter entered.
*232 The Mayor and Council of the city and Garito, Paul, Konieczko, Levis and Zebrowski appealed and we certified the matter while it was pending in the Appellate Division. Since no stay of the trial court's judgment was granted, the Broadway National Bank has elected not to file a brief on this appeal. Effectively, therefore, the only respondents are those parking authority commissioners who were appointed prior to the effective date of the Faulkner Act in the city.
Upon the taking effect of one of the optional plans of government under the Faulkner Act, the transition from the old form of government to the new is accomplished by N.J.S.A. 40:69A-207. That section provides:
"At 12 o'clock noon on the effective date of an optional plan adopted pursuant to this act, all offices then existing in such municipality shall be abolished and the terms of all elected and appointed officers shall immediately cease and determine; provided, that nothing in this section shall be construed to abolish the office or terminate the term of office of any member of the board of education, trustees of the free public library, commissioners of a local housing authority, municipal magistrates or of any official or employee now protected by any tenure of office law, or of any policeman, fireman, teacher, principal or school superintendent whether or not protected by a tenure of office law. If the municipality is operating under the provisions of Title 11 of the Revised Statutes (Civil Service) at the time of the adoption of an optional plan under this act, nothing herein contained shall affect the tenure of office of any person holding any position or office coming within the provisions of said Title 11 as it applies to said officers and employees. If the municipal clerk has, prior to the effective date of the optional plan, acquired a protected tenure of office pursuant to law, he shall become the first municipal clerk under the optional plan.
Provision for officers and for the organization and administration of the municipal government under the optional plan may be made by resolution pending the adoption of ordinances, but any such resolution shall expire not later than 30 days after the effective date of the optional plan."
On this appeal, the defendants-appellants (the "new" commissioners) contend that the part of section 207 which provides that upon the advent of the new government, "the terms of all elected and appointed officers shall immediately cease *233 and determine," includes the terms of commissioners of the Parking Authority. On the other hand, the plaintiffs-respondents (the "old" commissioners) contend that a parking authority is an autonomous body whose existence cannot be terminated except in accordance with the Parking Authority Law; that if it were to be determined that section 207 terminates the terms of office of parking authority commissioners, then the Authority itself "was ipso facto abolished, thus impairing and obliterating the rights of those who had previously contracted with said authority." They further contend that the above-quoted part of section 207 does not apply to parking authority commissioners, because certain amendments to the Parking Authority Law impliedly repealed the Faulkner Act with respect to parking authorities.
Section 207 provides in part that "all offices then existing in such municipality" shall be abolished upon the taking effect of a Faulkner Act plan of government in a municipality. (Emphasis added) Though a parking authority is an "agency and instrumentality" of the municipality creating it (N.J.S.A. 40:11A-4), and is engaged in a municipal function, it is nevertheless a "public body corporate and politic and a political subdivision of the State." N.J.S.A. 40:11A-4, 6(1). Such authority is an independent entity distinct and separate from the municipality. DeLorenzo v. City of Hackensack, 9 N.J. 379, 389 (1952); State v. Parking Authority of the City of Trenton, 29 N.J. Super. 335, 338-339 (App. Div. 1954). It has broad powers derived from its enabling legislation, including the power to issue its own bonds and incur other obligations, to deal with the problem of alleviating traffic congestion by providing off-street parking facilities within its own territorial boundaries, which are co-terminous with those of the municipality. N.J.S.A. 40:11A-6, 8. Indeed, an authority has broader powers in some respects than the municipality which created it, e.g., it is not bound by Chapter 50 of Title 40, which imposes restrictions upon the power of municipalities to enter into contracts. N.J.S.A. 40:11A-23(4). The autonomous nature of a *234 parking authority, as shown by the above, makes it clear that the Legislature, in enacting section 207 of the Faulkner Act, did not regard the offices of parking authority commissioners, which constitute the authority (see Myers v. Cedar Grove Tp., 36 N.J. 51, 60 (1961)), as offices "then existing in such municipality" subject to being abolished upon the effective date of a new plan of government. Any other result would raise serious constitutional questions respecting the impairment of the authority's obligations to its bondholders and other creditors. See also, N.J.S.A. 40:11A-20, whereby the provisions of the Parking Authority Law constitute a part of all contracts entered into by an authority "for the benefit and security of the creditors of such authority," and the State has pledged to all bondholders that it "will not limit or alter the rights hereby vested in the authority and in the holders of such bonds" until those obligations are fully discharged.
However, the question remains whether the terms of officers (commissioners) of a parking authority come to an end upon the taking effect of the new plan of government, notwithstanding that the offices constituting the authority are not within section 207. That section does not stop with the abolishment of "all offices then existing in such municipality," but provides further that "the terms of all elected and appointed officers shall immediately cease and determine." The trial court held that the offices of parking authority commissioners could not be abolished, and that the effect of section 207 "cannot be split"; that "the term `all officers' is and can be no broader than the term `all offices'"; and that therefore the section does not encompass the ending of the terms of officers who filled offices which could not be abolished. 76 N.J. Super., at p. 147. We think this construction of section 207 makes superfluous the clause, "and the terms of all elected and appointed officers shall immediately cease and determine." (Emphasis added) Whenever an office is abolished, the term of the holder of that office necessarily comes to an end, since there cannot be an officeholder without an office to fill. If the only legislative objective were to end the terms of those office-holders *235 who held an office which was abolished, it would have been unnecessary to add the last-quoted clause. Moreover, the proviso in section 207 states that nothing in the first part of the section "shall be construed to abolish the office or terminate the term of office" of specified bodies or persons. (Emphasis added) Thus, a reading of the statute shows a clear legislative intent that each of the clauses should have a distinct and separate meaning and that each was to achieve an independent goal in the transition to a new form of government.
One of the objectives of the Faulkner Act is to centralize maximum powers in the new government, giving it "the widest possible authority to determine the organization of departments." Myers v. Cedar Grove Tp., supra, at p. 57. To this end, section 207 provides that "all offices" existing in the municipality shall be abolished, in order that the newly formed government "should not be hampered in its organization by a variety of holdover boards, bodies and departments." Ibid. Another objective envisioned by section 207 of the Faulkner Act is to provide a "clean slate" of elected and appointed personnel (with specific exceptions) with whom the new government must work in close harmony in order to efficiently perform municipal functions. Id., at p. 56.
The Parking Authority Law contemplates a close relationship between an authority and the municipality which creates it. State v. Parking Authority of the City of Trenton, supra, at p. 337; cf. Kohler v. Cobb, 31 N.J. 369, 374 (1960). Although an authority is a separate and independent entity, it is nevertheless an instrumentality of the municipality for the fulfillment of a local municipal function in the important field of traffic control. Cf. DeVita v. Housing Authority of City of Paterson, 17 N.J. 350, 360 (1955); Camden County v. Pennsauken Sewerage Auth., 15 N.J. 456, 464-465 (1954). The Law authorizes the municipality to cooperate with the authority by donating or lending funds and granting or conveying real or personal property to it; by issuing municipal bonds and paying the proceeds to the authority; by unconditionally *236 guaranteeing the payment of the authority's bonds; and by assisting the authority in many other ways to accomplish the purposes of the Law. N.J.S.A. 40:11A-21 to 23. And as further indication of the rapport intended by the Law to exist between an authority and the municipality, the authority is empowered, with the consent of the municipality, "to acquire, take over or lease, or manage, any parking project or undertaking constructed or owned by such * * * municipality or any meters, equipment or other facilities of such * * * municipality devoted to the parking or storage of vehicles * * * or necessary or useful and convenient in connection therewith or with the promotion of the free movement of traffic * * *." N.J.S.A. 40:11A-18. From the above it is clear the Legislature intended that the municipality and the commissioners of a parking authority would cooperate with each other in the fulfillment of the statutory aim of alleviating the serious problem of traffic congestion on the streets of the community. Therefore, even though the parking authority is an independent entity, it would hardly be conducive to good government or to the welfare of the municipality to have parking authority commissioners who are unfriendly toward, and in political opposition with, the newly-formed government. Cf. Downey v. Bd. of Education of Jersey City, 74 N.J. Super. 548, 554 (App. Div. 1962).
In order that the newly-created government have an opportunity to achieve a harmonious relationship among those who are to be charged with the fulfillment of local municipal functions upon the establishment of the new government, section 207 provides that "the terms of all elected and appointed officers" (without restriction to those whose offices are "existing in such municipality") immediately cease and determine. (Emphasis added) The commissioners of a parking authority fit the above description since they are appointed by the governing body of the municipality under the Parking Authority Law. N.J.S.A. 40:11A-4. In view of the above, we think that this clause in section 207 was intended to terminate the terms of office of parking authority commissioners upon the *237 effective date of a new plan of government, notwithstanding that the offices constituting the authority are not abolished.
In cases construing the transitional provision of the Walsh Act, N.J.S.A. 40:71-9, which is substantially the same as N.J.S.A. 40:69A-207 of the Faulkner Act, a similar result was reached. Keffer v. Gaskill, 88 N.J.L. 77 (Sup. Ct. 1915); Perry v. Bianchi, 96 N.J.L. 113 (Sup. Ct. 1921); Stark v. Fell, 124 N.J.L. 475 (Sup. Ct. 1940). In Keffer, it was held that although the Legislature did not intend that the office of municipal recorder should be abolished by the above section of the Walsh Act, nevertheless the term of office of the recorder was terminated upon the organization of the commission, and that the commission's subsequent appointment of a recorder for a new term was valid. The court said, "[I]t seems plain that the Legislature intended to do away with all questions of unexpired terms and let the commission start afresh." Id., at p. 80. The same result was reached in Perry upon similar facts. In Stark, the court upheld the appointment of new commissioners of a local housing authority on the ground that the terms of office of the old commissioners had terminated upon the effective date of the Walsh Act in the municipality, notwithstanding that the housing authority itself was not abolished. We think these cases manifest a legislative intent under the Walsh Act to end all terms of office, even though certain offices may not be destroyed. It seems clear that the Legislature wished to continue this policy in enacting the Faulkner Act. Compare N.J.S.A. 40:71-9 with N.J.S.A. 40:69A-207.
Our conclusion is buttressed by the language of the proviso in section 207, wherein the Legislature deemed it necessary to expressly except both the offices and the terms of office of the members of specific boards, bodies and classes of employees which it desired should remain unaffected by a change in the form of government. For example, section 207 would not abolish the offices of commissioners of a local housing authority for the same reasons set forth earlier in this opinion with respect to parking authorities, since it, too, is a separate and *238 independent corporate entity with power to issue its own bonds. N.J.S.A. 55:14A-7, 12. Hence, the legislative purpose in amending section 207 in 1954 (L. 1954, c. 69) to include the commissioners of a local housing authority in the proviso could not have been to save their offices from abolishment. Rather, the Legislature must have considered that, without the proviso, the commissioners of a housing authority would fall within the clause, "all elected and appointed officers," whose terms would come to an end upon the advent of a new form of government. On the other hand, the offices of trustees of the free public library, which are clearly part of the municipal government, Glick v. Trustees of Free Public Library, 2 N.J. 579, 583-584 (1949), would fall within the scope of "all offices then existing in such municipality" and would therefore be abolished. However, by the proviso to section 207, the Legislature saved both the offices and the terms of office of such trustees. There would be no need to expressly preserve the terms of office of such trustees if preservation of the offices were sufficient in itself to exempt those terms from the operation of section 207. Moreover, the preservation of the terms of office of commissioners of parking authorities is not within the listed exceptions in the proviso. If the Legislature had wished to save those commissioners' terms, it could readily have done so in the same manner as it saved the terms of housing authority commissioners. The failure to include the terms of parking authority commissioners indicates an intent that they should come to an end upon the effective date of a change in the form of government. See Myers v. Cedar Grove Tp., supra, at p. 59; Stark v. Fell, supra, at p. 478.
The plaintiffs contend that section 207 has been impliedly repealed with respect to parking authorities by N.J.S.A. 40:11A-23(4) and N.J.S.A. 40:11A-26, both of which were adopted subsequent to the last amendment of section 207. Even aside from the doctrine that repeals by implication are not favored, Ruckman v. Ransom, 35 N.J.L. 565, 567 (E. & A. 1871), we see no merit in these contentions. N.J.S.A. 40:11A-23(4) provides:
*239 "A parking authority shall not be subject to, or constitute a municipality or agency or component of a municipality subject to, the provisions of chapter 50 or any other provisions of Title 40 of the Revised Statutes."
N.J.S.A. 40:11A-26 provides:
"All general or special laws, or parts thereof, inconsistent herewith are hereby declared to be inapplicable to the exercise of the powers, duties and obligations authorized under the provisions of this act."
As to N.J.S.A. 40:11A-23(4), it is obvious that the Legislature did not intend to exempt parking authorities from all provisions of Title 40, since the Parking Authority Law itself is a part of Title 40. The above section was enacted in 1958 (L. 1958, c. 22) as part of an amendment to the Parking Authority Law. An examination of the entire amendment, and of the introductory statement accompanying the bill which was ultimately enacted, leads to the conclusion that this section was intended only to free the authority from those restrictions in Title 40 which would be imposed upon a municipality acting by itself in the construction and financing of parking projects. We find nothing in the amendment or in the statement which intimates in the slightest degree an intent to repeal section 207 of the Faulkner Act.
As to N.J.S.A. 40:11A-26, which was enacted as a supplement to the Parking Authority Law in 1954 (L. 1954, c. 138), it is clear from an examination of that section, in the context of the other amendments and supplements contained in the same bill which was ultimately enacted, that section 26 was primarily intended to provide additional security for parking authority bond issues. The introductory statement concludes that the proposed enactment "in no way deprives the political subdivisions of any of their home rule attributes without their consent." We find no inconsistency between this section and the termination of the terms of office of parking authority commissioners pursuant to section 207 of the Faulkner Act.
*240 For the foregoing reasons, we hold that upon the taking effect of the new plan of government in the city on July 1, 1962, the terms of the plaintiff-commissioners of the Parking Authority of the City of Bayonne immediately ceased and determined, and that upon appointment by the new governing body, the defendants, Messrs. Garito, Konieczko, Paul, Levis and Zebrowski, became the lawful commissioners of the Authority. It follows that the Broadway National Bank of Bayonne must honor the defendants-commissioners' right and title to control the bank account standing to the credit of the Parking Authority of the City of Bayonne.
The judgments of the trial court are reversed and the matters are remanded to it for the entry of judgments consistent with the above holding.
WEINTRAUB, C.J., and HANEMAN, J. (dissenting).
The majority opinion holds that although the offices of commissioners of a municipal parking authority were not abolished by the adoption of a plan of government under the Optional Municipal Charter Law (Faulkner Act), N.J.S.A. 40:69A-1 et seq., nonetheless the terms of the commissioners did come to end. We agree the offices were not abolished, but cannot agree the incumbencies were terminated.
The critical provision of the Faulkner Act is N.J.S.A. 40:69A-207 which reads:
"At 12 o'clock noon on the effective date of an optional plan adopted pursuant to this act, all offices then existing in such municipality shall be abolished and the terms of all elected and appointed officers shall immediately cease and determine; provided, that nothing in this section shall be construed to abolish the office or terminate the term of office of any member of the board of education, trustees of the free public library, commissioners of a local housing authority, municipal magistrates or of any official or employee now protected by any tenure of office law, or of any policeman, fireman, teacher, principal or school superintendent whether or not protected by a tenure of office law. If the municipality is operating under the provisions of Title 11 of the Revised Statutes (Civil Service) at the time of the adoption of an optional plan under this act, nothing herein contained shall affect the tenure of office of any person holding *241 any position or office coming within the provisions of said Title 11 as it applies to said officers and employees. If the municipal clerk has, prior to the effective date of the optional plan, acquired a protected tenure of office pursuant to law, he shall become the first municipal clerk under the optional plan." (Emphasis added)
We find nothing there to suggest that a term of office shall end notwithstanding the office itself survives. In the first italicized portion we find the phrase "all offices then existing in such municipality shall be abolished and the terms of all elected and appointed officers shall immediately cease and determine." We do not know why, after providing for the abolition of an office, the Legislature went to the trouble of adding that the term of the incumbent shall cease. We would think that if an office is abolished, the term of the holder necessarily ends. Perhaps for fear that a dislodged incumbent might claim the new office if it were the same as or very similar to the office the statute abolished, the draftsman spelled out the consequence of the abolition of the office, i.e., the termination of the holder's incumbency. Whatever the reason, there is no evidence of an intent to end the term as to an office that is not destroyed.
In the proviso which follows the portion to which we just referred, we have the language that "nothing in this section shall be construed to abolish the office or terminate the term" of offices which are then enumerated. The use of "or" rather than "and" does not indicate an intent that as to some offices the term of the incumbent shall end while the office continues unscathed. We must remember that this is only a proviso and that in the enacting part from which the proviso carves out certain exclusions there is nothing which affirmatively states a purpose to end a term rather than both office and term, and nothing which intimates a test whereby it may be discovered in what instances the term shall go and the office remain. Nor does the proviso provide such a result with respect to any office to which it applies.
Since neither the enacting portion nor the proviso would thus separate term from office, it strikes us as strange to infer *242 the Legislature intended a severance merely because "or" rather than "and" was used in the proviso. It seems to us that the disjunctive was used merely because it is the usual mode of expression when the enacting part speaks of two things and the proviso wishes to protect against both. Here an awkwardness arises because the enacting part does not really deal with two distinct things. As we have said, the term of the incumbent necessarily ends with the abolition of the office, and hence the language relating to the termination of the incumbent's term was added, not to create a second consequence, but probably to avoid a dispute as to the full impact of the abolition of the office. But whatever a grammarian may think of the use of "or" in this setting, we cannot see how it can be a springboard for a thought nowhere expressed, i.e., that a term shall end even though the office is unaffected.
The argument seems to be that the Faulkner Act contemplates a "clean sweep" which can be furthered only by the result reached by the majority. The trouble is that the Faulkner Act does not elsewhere reveal a guiding concept as to what is swept away. The act of course envisions change. But change of what? We believe the change intended relates to the structure of government and that while faces may be changed in the process, the change of faces is only incidental. Indeed the Preliminary Statement (1948) of the Commission on Municipal Government which proposed the statute is replete with statements of a purpose to improve the structure of local government. The appropriate medium for a change of faces as such would be a recall election coupled with the abolition of tenure laws. It would be quite devious and expensive as well to seek a change in government, not to achieve a better mechanism, but to effect a change of faces prior to the next scheduled election. We cannot attribute any such purpose to the Faulkner Act.[1]
*243 Since we cannot detect anywhere an intent to change faces to that end alone, we cannot find by implication that a term of office shall end notwithstanding the office continues. Nor can we find that intent by laying the Parking Authority Law, N.J.S.A. 40:11A-1 et seq., alongside the Faulkner Act. On the contrary the clear policy of the parking statute runs the other way, for it contemplates a large measure of independence. So the commissioners of the Authority are given staggered five-year terms of office which are not correlated with the terms in the governing body of the municipality itself, N.J.S.A. 40:11A-4, and a commissioner of an Authority may not be an officer or employee of the municipality, N.J.S.A. 40:11A-5. If the Legislature intended the Parking Authority to be amenable to the will of the governing body of the municipality, it would have provided that the commissioners of the Parking Authority shall hold office at the pleasure of the appointing authority or at least that their terms shall coincide with the terms of the appointing authority. That a high degree of independence was intended of course does not mean that a Parking Authority should be hostile to its creator, but it does mean that in the process of cooperation the commissioners shall be able to disagree and to prevail within the ambit of their allotted responsibility until such time as faces are changed in the only way the statute *244 permits them to be changed, i.e., by the appointment of others at the end of the staggered terms of the incumbents.
We would therefore affirm the judgment.
For reversal and remandment Justices JACOBS, FRANCIS, PROCTOR, HALL and SCHETTINO 5.
For affirmance Chief Justice WEINTRAUB, and Justice HANEMAN 2.
NOTES
[1] We find no support for the majority's view that the Faulkner Act adopted the approach of the Walsh Act. The Walsh Act expressly abolishes terms of office while leaving offices themselves intact. So it provides in N.J.S.A. 40:71-9 that upon the adoption of the act and the organization of the commissioners first elected:
"* * * the governing body or bodies and all other boards and bodies whether state or local municipal agencies then existing in the municipality, except the board of education and the district court or courts, shall be ipso facto abolished and the terms of all councilmen, aldermen and all other officers, whether elective or appointive, shall immediately cease and determine * * *." (Emphasis added)
Thus the Walsh Act abolishes only the offices within the governing body and other boards and bodies. As to other offices, the statute ends the term of the incumbent notwithstanding the office itself is not abolished. If the Walsh Act intends by this provision to authorize a change of faces to that end alone, the fact remains that the Faulkner Act is differently worded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539364/ | 118 B.R. 968 (1990)
In re Karl M. McKINNEY, Cynthia A. McKinney, Appellants.
No. C2-89-870.
United States District Court, S.D. Ohio, E.D.
April 27, 1990.
David C. Lasky, Columbus, Ohio, for appellants.
Jeffrey M. Kellner, Worthington, Ohio, for trustee.
OPINION AND ORDER
GRAHAM, District Judge.
Appellants Cynthia A. McKinney and Karl M. McKinney filed this appeal from a September 15, 1989 order of the United States Bankruptcy Court dismissing their Chapter 13 bankruptcy case for want of prosecution. Since the Chapter 13 trustee has declined to take a position on the appeal at this time and the appellees have failed to file timely briefs in response to the appellants' brief, the Court will proceed to consider the appeal.
Appellants filed their Chapter 13 petition on June 9, 1988. Some time thereafter, appellants filed their first plan of reorganization, which, pursuant to an opinion and order filed on September 22, 1988, the bankruptcy court refused to confirm. On October 5, 1988, appellants filed an amended plan of reorganization, which the bankruptcy court also declined to confirm. This order denying confirmation was filed November 16, 1988. The bankruptcy court concluded this order with the following language:
The Court's requirements having been fully restated, and since the debtors' amended plan of reorganization does not comply with those requirements, their amended plan is denied, and the debtors are granted twenty (20) days from the date of entry of this order to propose a third amended plan of reorganization. If no such plan is proposed within that twenty (20) days period, this matter will be dismissed, without further notice.
(Emphasis added). No amended plan was forthcoming nor was an appeal sought from the orders denying confirmation. Ten months having elapsed without any further action on the case, the bankruptcy court filed an order of dismissal on September 15, 1989.
Appellants do not contest the factual findings of the bankruptcy court and have submitted this appeal on their brief and the factual statements in the bankruptcy court's September 22 and November 16, 1988 opinions. Mr. McKinney's employment *969 is the sole source of the family's income.
The McKinneys' schedules reveal unsecured debts totalling $12,475.78. That amount includes a $10,000 student loan obligation to Bank Ohio National Bank and a $170.70 student loan obligation to Franklin University. Approximately 81% of the debtors' unsecured debt is comprised of student loans. Karl McKinney testified that he obtained these student loans from Bank Ohio so that he could afford to go to school. He graduated from Franklin University in December, 1986 with a bachelor's degree in business management. While attending school, Mr. McKinney worked fulltime at Dabco Pharmacy, Inc. He is presently working at Dabco.
Mr. McKinney testified that following graduation, he attempted to obtain other employment. He said that he has applied for approximately 30 jobs with no success. He further stated that he remains employed with Dabco at an annual salary of approximately $16,000.00. Mr. McKinney is married and has two young children. His family's monthly expenses include rent of $335.00, utilities of $175.00, food of $325.00, telephone of $10.00, medical expenses of $25.00, and auto expenses of $35.00. His monthly obligation to Bank Ohio is $127.29. He has made one payment toward satisfying that obligation. Mr. McKinney stated that he would not be able to feed his family if he was required to satisfy the Bank Ohio loan in full.
Yet, Mr. McKinney testified that prior to his graduation from Franklin University, he was working at Dabco for less pay. Upon graduation, his salary was increased to $16,000.00 per year. He said that he would not have received that increase had it not been for his obtaining his degree at Franklin University. Mr. McKinney testified that his prospects at Dabco for future advancement are neglible [sic] but that he continues to have hope that he will be able to find other employment to which he can apply his business education.
In re McKinney, Case No. 2-88-02911 at 3-4 (Bankr.S.D.Ohio Sept. 22, 1988). Appellants allege that they have a monthly disposable income of $1,131.36.
Appellants' first plan of reorganization proposed a schedule of $76.36 per month to be paid to their creditors. The length of the plan was to be thirty-six months, with a 10.5% dividend to be paid to their unsecured creditors. Relying upon the decision of the United States Court of Appeals for the Sixth Circuit in In re Doersam, 849 F.2d 237 (6th Cir.1988), the bankruptcy court held that the plan had not been "proposed in good faith" as required by 11 U.S.C. § 1325(a)(3), and therefore, denied confirmation.
Appellants' amended plan merely increased the duration of the plan "from 36 months to 58 months, which in turn has increased the dividend to be paid to unsecured creditors from 10.5% to 20%." In re McKinney, 93 B.R. 135, 136 (Bankr.S.D. Ohio 1988). The bankruptcy court again denied confirmation pursuant to 11 U.S.C. § 1325(a)(3) and In re Doersam.
If the Court were to confirm the debtors' amended Chapter 13 plan of reorganization, it would be acting contrary to the 6th Circuit Court of Appeals' holding in the Doersam case. This Court's interpretation of the court's holding in Doersam is that a Chapter 13 plan of reorganization that has the effect of discharging debts that would not be dischargeable under Chapter 7 [i.e. government-guaranteed student loans] violates the good faith requirement under 11 U.S.C. § 1325(a)(3).
In re McKinney, 93 B.R. at 136.
Appellants contend that In re Doersam does not require a Chapter 13 plan of reorganization to provide for 100% repayment of student loans in order to be proposed in good faith, and therefore, the bankruptcy court erroneously refused to confirm their proposed plans and dismissed their case.
The Court agrees that In re Doersam is the controlling Sixth Circuit case on this issue. In that case, the debtor had obtained student loans in order to pursue a master's degree in computer science. *970 While working toward this degree, she secured a position as a systems analyst with an annual salary of $24,000. The understanding with her employer was that she would be required to obtain her master's degree in order to retain her salaried position. Although the debtor was single, she provided room and board for her twenty-three year old daughter, who received public assistance, and her one year old granddaughter. Approximately six weeks before the first payment on the student loans was due, the debtor filed a Chapter 13 bankruptcy petition. Eighty-one percent of her total unsecured debt of $18,418.55 was composed of outstanding student loans. Her plan of reorganization provided for $375 per month to be paid to her creditors over a period of thirty-six months, thus resulting in a 19% dividend to her unsecured creditors. In re Doersam, 849 F.2d at 238.
Holding that the plan was not filed in good faith pursuant to 11 U.S.C. § 1325(a)(3), the district court affirmed the bankruptcy court's denial of confirmation. The Court of Appeals affirmed this holding.
According to the Court of Appeals, "the totality of the debtors's conduct, both before and after the plan is submitted, is to be considered when evaluating whether the debtor has acted in good faith." In re Doersam, 849 F.2d at 239 (citing Memphis Bank & Trust Co. v. Whitman, 692 F.2d 427, 431-32 (6th Cir.1982)). The Court of Appeals also enumerated certain factors it found helpful in evaluating whether the debtor acted in good faith.
1. the amount of debtor's income from all sources;
2. the living expenses of the debtor and his dependents;
3. the amount of attorney's fees;
4. the probable or expected duration of the debtor's Chapter 13 plan;
5. the motivations of the debtor and his sincerity in seeking relief under the provisions of Chapter 13;
6. the debtor's degree of effort;
7. the debtor's ability to earn and the likelihood of fluctuation in his earnings;
8. special circumstances such as inordinate medical expenses;
9. the frequency with which the debtor has sought relief under the Bankruptcy Reform Act and its predecessors;
10. the circumstances under which the debtor has contracted his debts and his demonstrated bona fides, or lack of same, in dealing with his creditors;
11. the burden which the plan's administration would place on the trustee.
In re Doersam, 849 F.2d at 239 (quoting In re Kitchens, 702 F.2d 885, 888-89 (11th Cir.1983)). These factors are not exclusive since "good faith should be evaluated on a case-by-case basis in light of the structure and general purpose of Chapter 13." Id.
As noted by the appellants in the instant case, "[t]he mere fact that a debtor attempts to discharge a debt that would be nondischargeable under Chapter 7 is not sufficient in itself to warrant a finding that the plan was not proposed in good faith." Id. Therefore, confirmation cannot properly be withheld from a Chapter 13 plan merely because it does not provide for 100% repayment of outstanding student loans. However, this "is a factor which is relevant to the determination of good faith." Id. at 240.
To the extent that the bankruptcy court in this case suggested that "a Chapter 13 plan . . . that has the effect of discharging debts that would not be dischargeable under Chapter 7 violates the good faith requirement," In re McKinney, 93 B.R. at 136, it was in error. However, the Court would note that the bankruptcy court stated the proper legal rule in its September 22, 1988 opinion and order and did in fact apply the In re Doersam analysis in both of its decisions. Indeed, this Court finds that the bankruptcy court properly followed the dictates of In re Doersam in refusing to confirm the appellants' plans of reorganization and in ultimately dismissing the case.
*971 In particular, the Court adopts the following reasoning of the bankruptcy court:
[A]lthough Mr. McKinney's education may not have provided him with short-term opportunities for better employment, those loans have enabled him to receive a higher salary at Dabco, and therefore have benefitted him and his family. Furthermore, this Court cannot conclude that Mr. McKinney's education will not benefit him in the future on the basis of the time and effort that has ensued since obtaining his degree. His testimony was that he expects and anticipates that he will receive better employment as a result of that education. Also, the Court observes that the McKinneys have made little or no effort to repay or to restructure these loans in spite of their long-term nature.
In re McKinney, 93 B.R. at 138-39.
This Court would further note that the appellants filed for bankruptcy no more than a year and a half after the first payment on the student loans was due. In addition, the difference between appellants' disposable monthly income and their identified expenses is $226.36, more than enough to cover the monthly student loan payments, although the court recognizes that other expenses may well arise periodically. Also, Mr. McKinney's job at Dabco Pharmacy was not contingent upon his obtaining a master's degree, and he should have been aware of his prospects for advancement prior to incurring his student loan obligations.
Finally, the bankruptcy court outlined in its November 16, 1990 ruling what an acceptable plan would entail.
Prior to Doersam, this Court in previous rulings on student loans has not required that debtors fully pay those loans within their plans of reorganization, and within the parameters of 11 U.S.C. § 1322(c). Rather, this Court has approved the debtor's plan when it proposed to treat the student loan as a long-term debt, with any arrearage to be cured within the plan, and regular payments to continue through the plan, as well as after plan completion pursuant to 11 U.S.C. § 1322(b)(5).
This provides the debtors with an alternative when it is not feasible to pay the student loan within the sixty-month limitation of a plan. It is the opinion of this Court that its prior ruling is still viable as to that alternative and is not in conflict with the Doersam decision.
In re McKinney, at 136-37.
Therefore, the Court concludes that the bankruptcy court's decisions denying confirmation were proper, and the appellants' failure to file a third amended plan or otherwise prosecute their case was not excusable. Therefore, the September 15, 1989 decision of the bankruptcy court dismissing appellant's Chapter 13 bankruptcy case for want of prosecution is AFFIRMED.
It is so ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539369/ | 191 A.2d 248 (1963)
Joseph M. STEPHENSON, Appellant,
v.
Versitee STEPHENSON, Appellee.
No. 3203.
District of Columbia Court of Appeals.
Argued April 29, 1963.
Decided May 28, 1963.
*249 Jean M. Boardman, Washington, D. C., for appellant.
James S. Gardiner, Washington, D. C., for appellee.
Before QUINN and MYERS, Associate Judges, and CAYTON (Chief Judge, Retired), sitting by designation under Code § 11-776(b).
MYERS, Associate Judge.
Appellant filed suit for absolute divorce on the ground of his wife's desertion. Title 16-403, D.C.Code 1961. She denied the charge, counterclaiming for divorce for his constructive desertion and alleging his cruelty had forced her to leave. At the trial each party was supported by three witnesses. At the conclusion of the hearing, the trial judge ruled that, "[t]he effect of all the testimony was such as to render the court unable to determine the truth or falsity of the conflicting claims," and dismissed both the complaint and the counterclaim for failure of both parties to carry the burden of their respective charges. Only the husband has appealed.
He argues that as the wife had failed to substantiate her counterclaim, it follows a fortiori that he was entitled to a judgment for absolute divorce because she admitted leaving the marital abode. We find this contention to be without merit.
Both husband and wife sought affirmative relief in divorce on the same statutory ground, each claiming to be the deserted party and each denying any responsibility for the separation and any intent to abandon the other. Accordingly, each had the burden of establishing that he or she was deserted without justification and without consent.[1] That burden is not carried by the failure of one party to prove desertion against the other, nor does such failure automatically entitle the other litigant to a divorce on that ground. Each must stand or fall upon the proof of his or her own case.
Here the evidence of the husband and wife is in hopeless conflict and confusion and difficult, if not impossible, to reconcile. It would serve no useful purpose to elaborate on it here. Whether the evidence established the essential elements of desertion was a factual determination to be made by the trial judge, and he was in a better position than we are to evaluate the testimony and credibility of the parties and their witnesses. We find nothing to indicate his conclusions were erroneous as a matter of law.
The admissions of both counsel at the end of the trial that neither party objected to the other's obtaining a divorce on the ground of desertion did not lend strength to the proof of either side. It was apparently of little importance to the parties which one prevailed, but willingness of the parties to have the bonds of matrimony severed is not a substitute for the evidentiary showing required to establish the statutory grounds upon which a judgment must rest. Though neither the husband nor the wife had any desire to further live together in a marital relationship, dissolution of their marriage must be accomplished upon proper statutory grounds. The much-quoted phrase that the 1935 amendments to the Code were designed to permit "termination in law of certain marriages which have ceased to exist in fact" was not intended to enunciate a lessened standard of proof required to sustain a divorce on one of the statutory grounds.[2]
We cannot say that the trial judge was manifestly wrong in ruling that neither party had proved that the other was the deserting spouse or that he was required to reach a decision favoring one side or the other.
Affirmed.
NOTES
[1] Schreiber v. Schreiber, D.C.Mun.App., 139 A.2d 278; Shirley v. Shirley, D.C. Mun.App., 138 A.2d 392; Marcey v. Marcey, D.C.Mun.App., 130 A.2d 918.
[2] Martin v. Martin, 82 U.S.App.D.C. 40, 160 F.2d 20. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539282/ | 191 A.2d 246 (1963)
Claudia CORBETT, Petitioner,
v.
Lucille KINLEIN et al., constituting the District of Columbia Practical Nurses' Examining Board, Respondents.
No. 3185.
District of Columbia Court of Appeals.
Argued April 15, 1963.
Decided May 28, 1963.
Gerald Golin, Washington, D. C., with whom Hyman M. Goldstein, Washington, D. C., was on the brief, for petitioner.
Ted D. Kuemmerling, 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 respondents.
Before HOOD, Chief Judge, and QUINN and MYERS, Associate Judges.
QUINN, Associate Judge.
The sole question on this appeal is whether the rejection of petitioner's application for a license by the Practical Nurses' Examining Board was arbitrary and therefore an abuse of discretion.
On September 6, 1960, Congress enacted the District of Columbia Practical Nurses' Licensing Act.[1] Section 10 of this act[2] contained what is commonly called a "grandfather clause."[3] Petitioner, pursuant thereto, filed an application for a license with respondents which was denied for *247 failure to comply with the District of Columbia one-year experience requirement of Section 10(A) (4).[4] The record disclosed, however, that during the one-year period in question petitioner had been actively engaged in caring for the sick for seven and one-half months. It was uncontroverted that petitioner's application met the requirements of Section 10 in all other respects.[5]
A careful review of the statute and the regulations promulgated thereunder[6] discloses that no administrative procedure was devised whereby petitioner could challenge the Board's decision. Petitioner had no right to a hearing, nor did she have a right to be informed of her failure to satisfy the statutory requirements with the opportunity to present rebutting or mitigating evidence. Her petition, therefore, is properly before this court.[7]
The only support for respondents' position is the conclusory statement appended to petitioner's application that she did not satisfy the one-year statutory requirement. It appears that petitioner was at all times ready, willing and able to accept employment and that she was at all times registered with a practical nurses' registry for possible assignment. There is no evidence that respondents considered petitioner's employment availability in making their determination nor that they sought to relate petitioner's employment record to recognized employment standards in the practical nursing profession. Nevertheless, respondents contend that their action has "warrant in the record" and a "reasonable basis in law" because they could find, in a reasonable exercise of their administrative discretion, that employment for seven and one-half months did not satisfy the statutory one-year requirement.
The legislative history of the act shows that its purpose was "to improve the status of practical nursing and to encourage qualified practical nurses to remain in the District," as well as to "assure the public that any practical nurse who holds a license is qualified to give good care."[8] In this jurisdiction it has been said that while such statutes are primarily designed to protect the public, they should be construed and administered in such a way that capable and deserving applicants, possessing the requisite character and qualifications, may not be denied the right to gain a livelihood by practicing their calling. These considerations should be observed in according due process of law to such applicants.[9]
Here the statute does not in express terms require that a formal hearing be held where an application for a license under the "grandfather clause" is denied, and perhaps no requirement of a formal hearing may be read into the statute by implication.[10] Nevertheless, we hold that an application, such as petitioner's, which substantially complies with the statutory provisions may not be denied unless the applicant has a fair opportunity to meet the Board's challenge to his qualifications and unless *248 this court is apprised of the basis of the finding against him. While the procedure of the Board may be informal, it must conform to recognized standards of fairness and a record must be made which permits review of the Board's action by the court.[11]
Reversed and remanded for proceedings not inconsistent with this opinion.
NOTES
[1] Code 1961, § 2-421 et seq.
[2] Code 1961, § 2-429.
[3] "The term `grandfather clause' was the popular designation of provisions in the constitutions of some of the southern states that exempted from property and literacy restrictions on suffrage descendants of persons voting before 1867, or descendants of persons who were in the military service of the United States or the Confederate States in time of war. In comparatively recent years the term has been applied to provisions in regulatory statutes or ordinances that extend certain prerogatives to persons theretofore established in the profession, occupation, or business regulated. * * *" Annot., 4 A.L.R.2d 667, 670 (1949).
[4] Code 1961, § 2-429 provides: "Upon receipt of an application, accompanied by the required fee for an original license, the Commissioners shall issue a license to practice as a licensed practical nurse, without written examination, to any person * * * Provided, That (A) the Commissioners find that such person * * * (4) has been actively engaged in caring for the sick in the District of Columbia for the year immediately preceding the effective date of this sub-chapter; * * *."
[5] Respondents originally claimed that petitioner had not fulfilled the general three-year experience requirement of subsection (A) (5), but waived this objection on appeal, admitting that due to a clerical error they had mistakenly computed petitioner's experience.
[6] District of Columbia Regulations, 12-2201 et seq. (1961).
[7] Code 1961, § 11-772.
[8] H.R.Rep. No. 2154, 86th Cong., 2d Sess. 7 (1960).
[9] Goldsmith v. Clabaugh, 55 App.D.C. 346, 348, 6 F.2d 94, 96 (1925).
[10] But see, Andrews v. State Board of Registration, etc., 123 Cal.App.2d 685, 267 P.2d 352 (1954).
[11] Perpente v. Moss, 293 N.Y. 325, 56 N.E.2d 726 (1944). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539287/ | 118 B.R. 267 (1990)
In re EPCO NORTHEAST, INC., Debtor.
Bankruptcy No. 89-20938T.
United States Bankruptcy Court, E.D. Pennsylvania.
August 30, 1990.
*268 Louis J. Carter, Philip P. Kalodner, Philadelphia, Pa., for Levin.
Michael J. Halprin, Volunteers of America, Collingswood, N.J., Russell D. Henkin, Paul R. Rosen, Spector, Cohen, Gadon & Rosen, Philadelphia, Pa., for debtor.
OPINION
THOMAS M. TWARDOWSKI, Chief Judge.
Before the court is a motion filed by Norman Levin ("Levin") requesting that we impose sanctions upon debtor and counsel for debtor under B.R. 9011 for improperly filing this chapter 11 petition. This chapter 11 case was dismissed with debtor's consent but we retained jurisdiction to resolve the motion for sanctions, which was filed by Levin simultaneously with his motion to dismiss. Cooter & Gell v. Hartmarx Corporation, 496 U.S. ___, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990); Eighty South Lake, Inc. v. Bank of America N.T. & S.A. (In re Eighty South Lake, Inc.), 81 B.R. 580 (9th Cir.B.A.P.1987). Because we conclude that debtor, debtor's President and debtor's counsel knew or reasonably should have known that there was no legitimate basis for filing this chapter 11 petition, we grant Levin's motion for sanctions.
Before discussing the merits of the sanctions motion, we must first address counsel for debtor's belated request for an additional hearing to present testimony on the underlying question of whether sanctions should be imposed under B.R. 9011. For the reasons that follow, we deny this request.
In Jones v. Pittsburgh National Corporation, 899 F.2d 1350 (3rd Cir.1990), the Third Circuit Court of Appeals held that an attorney must be given particularized notice of, and some opportunity to respond to, charges requesting that sanctions be imposed against him. The Third Circuit further stated that the circumstances of each case dictate the type of "opportunity to respond" that must be afforded the respondent in a sanctions action. The court then indicated that in certain situations ". . . an evidentiary hearing may be necessary to *269 resolve disputes of material fact when the cold record may not disclose the full story . . ." Id. at 1359.
To date, three hearings have been held on Levin's motion for sanctions. Counsel for debtor had ample opportunity at all of these hearings to present testimony on the underlying sanctions liability issue. Instead, he chose to focus on questioning Levin's counsel regarding the particulars of their time records and presented only argument (which is not evidence) on the underlying question of whether sanctions are mandated under B.R. 9011. In our opinion, counsel for debtor should have addressed the underlying B.R. 9011 liability issue before advancing his attack on opposing counsel's time records. Given the history of this case, we suspect that counsel for debtor's belated request for another hearing is motivated by a desire to further delay these proceedings rather than a need to present crucial evidence. Regardless, counsel for debtor was provided with more than adequate opportunity to present evidence on this issue and chose not to. Therefore, we conclude that the due process requirements outlined in Jones v. Pittsburgh National Corporation, 899 F.2d 1350, have been satisfied in this case and we deny counsel for debtor's request for an additional hearing.
We now turn to the merits of the sanctions motion. B.R. 9011 incorporates the requirements of Fed.R.Civ.P. No. 11 and mandates that sanctions be imposed against a party and/or his counsel when they sign a paper in violation of the requirements outlined in the rule. B.R. 9011, like Fed.R.Civ.P. No. 11, does not require a finding of bad faith, but instead tests the respondent's objective knowledge or belief regarding the veracity of the factual allegations contained in the paper and the legal basis for the relief requested at the time the paper was filed. See, Jones v. Pittsburgh National Corporation, 899 F.2d at 1359; Zaldivar v. City of Los Angeles, 780 F.2d 823, 829 (9th Cir.1986); In re Eighty South Lake, Inc., 63 B.R. 501, 507 (Bankr. C.D.Cal.1986); aff'd, 81 B.R. 580 (9th Cir.B. A.P.1987). In the bankruptcy context, the issue becomes ". . . whether, `after reasonable inquiry,' this chapter 11 filing is `well grounded in fact and is warranted by existing law,' or whether it was `interposed for any improper purpose.'" In re Eighty South Lake, Inc., 63 B.R. at 507.
Instantly, Levin maintains that sanctions are required under B.R. 9011 because debtor's chapter 11 petition was filed, not for the legitimate purpose of reorganizing, but instead to delay pending state court litigation and arbitration proceedings involving debtor, another company and individuals related to debtor and Levin. To support this claim, Levin argues that debtor is a shell corporation which had no assets and no business to reorganize. Levin relied upon debtor's petition and schedules (which debtor stipulated could be made part of the record in this proceeding) to prove these points. Debtor's petition listed assets of $25,000.00 and two creditors namely, Levin, who was owed an unknown amount and Sunoco, which was owed approximately $2,000.00. Debtor's schedules, however, were filed one month after the petition and listed no assets and only one creditor Levin and stated that no income tax return was ever filed on behalf of debtor. Through argument, not testimony, counsel for debtor attempted to justify these discrepancies by alleging that at the time the petition was filed, debtor was receiving income from another company but that this source of income had ceased by the time the schedules were filed. We find this argument unconvincing and conclude that debtor is a shell corporation which never operated a business or had any assets and which had neither the ability nor the need to reorganize at the time it filed its chapter 11 petition.
Counsel for debtor also argued that debtor was a proper candidate for chapter 11 relief because a related non-debtor corporation intended to give debtor money to fund a plan and because debtor desired to reject the executory contract it held with Levin. We conclude that neither of these arguments justify filing a chapter 11 petition if no legitimate reorganization purpose exists. In fact, debtor admitted in paragraph *270 18(b) of its answer to Levin's motion that ". . . the purpose of this bankruptcy, inter alia, is first to put an end to the spiraling litigation which has grown like topsy as described above (to wit, the arbitration proceedings and the State Court proceedings), and to centralize and resolve this dispute in one Court, before one Judge . . ." Clearly, this is not a legitimate reason, by itself, for filing a chapter 11 petition, especially where reorganization is not needed or possible. In Cinema Service Corporation v. Edbee Corporation, 774 F.2d 584 (3rd Cir. 1985), the Third Circuit Court of Appeals affirmed an award of sanctions imposed against the debtor for improperly filing a chapter 11 petition. The facts in Cinema Service are strikingly similar to the facts presented in the case before us in that the debtor had only one creditor, was not operating a business and filed its chapter 11 petition only to delay a sheriff sale. The Third Circuit affirmed the bankruptcy court's decision to impose sanctions against the debtor under B.R. 9011 and reported that, as in the case before us, counsel for the debtor conceded that the chapter 11 petition was filed so the debtor could obtain a reconciliation of what it owed. The Third Circuit Court of Appeals stated:
Ascertainment of the correct standing of accounts between two parties, particularly when both hold state judgments, is a matter for resolution in state court. The controversy did not involve any other creditor of the debtor, and the dispute clearly was not a proper subject for invocation of a bankruptcy proceeding.
Id. at 586.
Similarly, the Bankruptcy Court for the Middle District of Florida imposed sanctions upon counsel for the debtor under B.R. 9011 where a chapter 11 petition was filed on behalf of a company which, like debtor, had no employees, assets or income and listed only one creditor in its schedules. Matter of Indian Rocks Landscaping of Indian Rocks Beach, Inc., 77 B.R. 909 (Bankr.M.D.Fla.1987). The court concluded that the debtor filed its chapter 11 petition merely to delay a state court eviction action and to gain the protection of the automatic stay and that the debtor had neither the need not the ability to reorganize. In imposing sanctions upon counsel for the debtor, the court stated that ". . . [counsel] very well knew or should have known that there was no legitimate basis supporting the filing of the Petition." Id. at 912.
Likewise, in the case before us, we find that debtor is a shell corporation with no assets or income and only one creditor. We further find that debtor never operated a business and therefore, had neither the ability nor the need to reorganize when it filed its chapter 11 petition. Rather, we conclude that debtor filed its chapter 11 petition solely to delay and complicate the pending state court litigation and arbitration proceeding.[1] Accordingly, we find that debtor, debtor's President and debtor's counsel failed to make a reasonable inquiry to determine that the chapter 11 filing was well grounded in fact and warranted by existing law and was not filed for an improper purpose and we grant Levin's motion for sanctions.[2]
An appropriate order follows.
*271 ORDER
AND NOW, this 30th day of August, 1990, it is ORDERED that: (1) the motion filed by Norman Levin requesting that sanctions be imposed against debtor and counsel for debtor under B.R. 9011 is GRANTED; and (2) sanctions are hereby imposed against debtor, Richard Davidov, Michael J. Halprin, Esq., Russell D. Henkin, Esq. and Paul R. Rosen, Esq., jointly and severally, in the total amount of $14,178.82.
NOTES
[1] Hence, we conclude that unlike the conduct of the respondents in In re International Mobile Advertising Corp., 117 B.R. 154 (Bankr.E.D.Pa. 1990), the conduct of debtor, debtor's President and debtor's counsel in filing and maintaining this chapter 11 case cannot be justified under the objective standard set forth in B.R. 9011.
[2] In Pavelic & Le Flore v. Marvel Entertainment Group, ___ U.S. ___, 110 S.Ct. 456, 107 L.Ed.2d 438 (1989), the United States Supreme Court held that sanctions under Fed.R.Civ.P. No. 11 may not be imposed against a law firm, but rather may only be imposed against the individual attorneys who signed the papers in question. Accordingly, we shall impose sanctions only against debtor, debtor's President (who signed the petition) and those attorneys who signed pleadings or other papers on behalf of debtor in this case. In determining the amount of sanctions to be awarded, we first note that we reject counsel for debtor's argument that the sanctions award should not include compensation to Levin's counsel for time spent discussing or researching the ramifications of the bankruptcy filing on the state court litigation and the arbitration proceeding. Because this work would not have been necessary had the bankruptcy petition not been filed, we find this time compensable. However, we also conclude that the time spent by Levin's counsel on various research, pleading preparation and review and telephone conferences is excessive. Hence, we reduce the amount of sanctions requested and impose sanctions against debtor, the President of debtor and the individual counsel for debtor named in the attached order in the amount of $14,178.82. We note that we have indicated by checkmark on counsel for Levin's time records the specific items we found excessive. A double checkmark indicates the entire item was disallowed. A single checkmark indicates that the item was partially disallowed. The amount of time disallowed for each item appears next to the single checkmark. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2857825/ | harper
IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-91-310-CR
THOMAS EUGENE HARPER,
APPELLANT
vs.
THE STATE OF TEXAS,
APPELLEE
FROM THE DISTRICT COURT OF LEE COUNTY, 21ST JUDICIAL DISTRICT
NO. 4351, HONORABLE H. R. TOWSLEE, JUDGE PRESIDING
Over a plea of not guilty, the jury found Thomas Eugene Harper guilty of driving
a motor vehicle while intoxicated, third offense. See Tex. Rev. Civ. Stat. Ann. art. 6701l-1(b)
(Supp. 1992). The trial court sentenced Harper to three-years imprisonment, with all but thirty
days of the sentence probated. The trial court also ordered Harper to pay a $1000 fine, suspended
his driver's license for six months, and ordered him to pay court costs and his own attorney's
fees. Harper appeals. We will reverse the judgment and remand the cause for a new trial.
THE CONTROVERSY
A Lee County grand jury indicted Harper on November 19, 1990, for the offense
of driving while intoxicated. The indictment alleged that Harper had previously been convicted
twice of driving while intoxicated, once in Lee County and once in Fayette County, and that each
conviction became final before the November 19, 1990, indictment.
On the day the case came to trial, the State filed a motion to amend the indictment.
The original indictment alleged Harper's second conviction for driving while intoxicated was in
Lee County cause number 8745; the amended indictment alleged the second conviction was in Lee
County cause number 8797. The trial court granted the State's motion over Harper's objection.
The jury found Harper guilty of driving while intoxicated. Based on that verdict,
the trial court sentenced Harper as indicated above.
DISCUSSION
In his first point of error, Harper complains the trial court erred by allowing the
State to amend the indictment on the morning of trial. We agree.
The court of criminal appeals resolved this exact issue in Sodipo v. State, 815
S.W.2d 551 (Tex. Crim. App. 1990). In Sodipo, the State moved on the morning of trial to
amend the indictment to change a cause number in an enhancement paragraph. Over the
defendant's objection, the trial court granted the motion. The court of criminal appeals held the
trial court erred by granting the motion to amend: Because the defendant objected to the motion
to amend the indictment, "the State was not permitted to amend the instant indictment on the date
of trial prior to trial on the merits commencing." Id. at 556. Concluding no harm analysis was
necessary, the court of criminal appeals reversed the conviction and remanded the cause for a new
trial. Id.
The present cause contains facts indistinguishable from Sodipo. On the morning
of trial, the State moved to amend the indictment to change a cause number in an enhancement
paragraph. Harper objected to the motion to amend. We believe Sodipo compels reversal on
these facts.
The State apparently urges that we ignore the holding in Sodipo, arguing the
rationale of the case "defies logic" because it defeats the purpose of article 28.10 of the Code of
Criminal Procedure. See Tex. Code Crim. Proc. Ann. art. 28.10 (1989). Whatever the merits
of this contention, we are bound by the law established by the court of criminal appeals.
Moreover, we note the court of criminal appeals has interpreted article 28.10 in such a way that
it does not apply by its terms to the facts of the present cause. See Sodipo, 815 S.W.2d at 555
("A careful reading of Article 28.10 reveals that neither Subsection (a) or (b) addresses an
indictment amendment on the date of trial prior to the commencement of trial on the merits.").
We decline the State's invitation to ignore the stare decisis effect of a court of criminal appeals
decision.
Because we reverse the trial-court judgment on point of error one, we need not
address points of error two through nine. See Tex. R. App. P. Ann. 90(a) (Pamph. 1992) (a court
of appeals opinion should address issues "necessary to final disposition of the appeal"); see also
Armstrong v. State, 805 S.W.2d 791, 794 (Tex. Crim. App. 1991) (a court of appeals may not
render an advisory opinion).
We reverse the judgment of the trial court and remand the cause for a new trial.
John Powers, Justice
[Before Justices Powers, Jones and Kidd]
Reversed and Remanded
Filed: June 10, 1992
[Do Not Publish] | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2857848/ | IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-92-127-CR
CARLOS CASTILLO,
APPELLANT
vs.
THE STATE OF TEXAS,
APPELLEE
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 299TH JUDICIAL DISTRICT
NO. 106,040, HONORABLE JON N. WISSER, JUDGE
PER CURIAM
This is an appeal from a conviction for aggravated sexual assault. Punishment was
assessed at confinement for 10 years.
Appellant has filed a motion to withdraw the appeal. No decision of this Court has
been delivered. The motion is granted and the appeal is dismissed. See Tex. R. App. P. Ann.
59(b) (Pamph. 1992).
[Before Chief Justice Carroll, Justices Aboussie and B. A. Smith]
Dismissed On Appellant's Motion
Filed: June 3, 1992
[Do Not Publish]
June 3, 1992
Mr. Ira L. Davis
812 San Antonio Street
Suite G20
Austin, Texas 78701
Honorable Ronald Earle
District Attorney
Travis County Courthouse
P. O. Box 1748
Austin, Texas 78767
Re: No. 3-92-127-CR--Carlos Castillo v. The
State of Texas (t/c no. 106,040)
Counsel:
In accordance with Rule 91, Texas Rules of Appellate Procedure, enclosed is a copy of the
opinion and judgment handed down by this Court on this date in the above cause.
The Court's mandate has been issued this date to the clerk of the trial court under separate cover.
Very truly yours,
W. KENNETH LAW, CLERK
By
Barbara E. Chapman, Deputy
Enclosures
xc: State Prosecuting Attorney
Clerk, Court of Criminal Appeals
Honorable Jon N. Wisser, District Judge
Ms. Amalia Rodriguez-Mendoza, District Clerk
MR. IRA L. DAVIS
812 SAN ANTONIO STREET
SUITE G20
AUSTIN TX 78701
HONORABLE RONALD EARLE
DISTRICT ATTORNEY
TRAVIS COUNTY COURTHOUSE
P. O. BOX 1748
AUSTIN TX 78767
TRIAL COURT NO. 106,040
THE STATE OF TEXAS.
TO THE 299TH DISTRICT COURT of TRAVIS COUNTY - GREETINGS:
Before our COURT OF APPEALS, on the 3rd of June A.D. 1992, the cause upon appeal to
revise or reverse your Judgment between
CARLOS CASTILLO, Appellant,
No. 3-92-127-CR vs.
THE STATE OF TEXAS, Appellee,
was determined; and therein our said COURT OF APPEALS made its orders in these words:
THIS CAUSE came on to be heard on the written motion of the appellant to withdraw the appeal and the
same being considered, because it is the opinion of this Court that the same should be granted: it is
ORDERED, ADJUDGED and DECREED by the Court that appellant be allowed to withdraw notice of
appeal and that the appeal be dismissed; that the appellant pay all costs in this behalf expended; and that
this decision be certified below for observance.
WHEREFORE, We command you to observe the order of said COURT OF APPEALS in this
behalf and in all things have it duly recognized, obeyed and executed.
WITNESS the HONORABLE JIMMY CARROLL, Chief Justice
of our said COURT OF APPEALS for the Third District of Texas,
with the seal thereof annexed, at the City of Austin, this the 3rd day
of June A.D. 1992.
W. KENNETH LAW, CLERK
by: , Deputy
Barbara E. Chapman
June 3, 1992
Ms. Amalia Rodriguez-Mendoza
District Clerk
Travis County Courthouse
P. O. Box 1748
Austin, Texas 78767
Re: No. 3-92-127-CR--Carlos Castillo v. State of
Texas (t/c no. 106,040)
Dear Ms. Rodriguez-Mendoza:
Enclosed, with reference to the above cause, is the mandate of this Court. Please acknowledge
your receipt of same by returning the enclosed card (No. 1) to this office, appropriately
completed.
Rule 87(b), Texas Rules of Appellate Procedure, sets out the procedures to be followed upon your
receipt of the mandate.
Upon execution of the mandate in accordance with the rule, either your office or the sheriff's
office should return the remaining card enclosed (No. 2), appropriately completed.
Your cooperation in this regard is appreciated.
Very truly yours,
W. KENNETH LAW, CLERK
by
Barbara E. Chapman, Deputy
Enclosures to Clerk
xc: Mr. Ira L. Davis
Honorable Ronald Earle, District Attorney | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2857863/ | IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-92-012-CR
EDDIE RAY JACOBSON,
APPELLANT
vs.
THE STATE OF TEXAS,
APPELLEE
FROM THE COUNTY COURT OF McCULLOCH COUNTY,
NO. 6062, HONORABLE RANDY YOUNG, JUDGE
PER CURIAM
In a trial to the court on a plea of not guilty, appellant was found guilty of theft of
property valued at twenty dollars or more, but less than two hundred dollars. Tex. Penal Code
Ann. § 31.03(e)(2)(A) (Supp 1992). The trial court assessed punishment at confinement in the
McCulloch County jail for one hundred eighty days, suspended imposition of sentence, and placed
appellant on probation for one year. We will affirm the trial court's judgment.
In his first point of error, appellant contends that the trial court erred in failing to
have a court reporter present to make a record of the trial proceedings without a written waiver
by the defendant of the making of the record. Appellant urges this Court to hold that a trial judge
must, even in the absence of a request to do so, have the court reporter record the guilt or
innocence phase of a criminal trial, unless there is a written waiver of the making of a record.
We decline to do so.
The burden is on the appellant, or other party seeking review, to see that a
sufficient record is presented to show error requiring reversal. Tex. R. App. P. Ann. 50(d)
(Pamph. 1992). In his brief, appellant states that no statement of facts exists because there was
no court reporter present when the trial was conducted. Appellant does not allege, and there is
no evidence in the record to indicate, that he, the State, or the trial court requested that a record
of the proceedings be made. See Tex. R. App. P. Ann. 11(a)(1) (Pamph. 1992). If no request
is made that a court reporter record the proceedings during trial, and no record is made, an
appellant under such circumstances has waived his complaint on this ground. Emery v. State, 800
S.W.2d 530, 535 (Tex. Crim. App. 1990); Brown v. State, 505 S.W.2d 277 (Tex. Crim. App.
1974). Appellant's first point of error is overruled.
In his second point of error, appellant asserts that a fatal conflict exists in the
findings of fact and conclusions of law made by the trial court as reflected in the judgment. The
judgment reflects that the court found appellant guilty of theft. The judgment further reflects in
condition of probation twelve, that:
Other: Defendant shall make the television set in question available for inspection
by the complaining party; and if said complainant shall tender the sum of $87.50
in payment for parts and labor, said Defendant shall relinquish possession of said
set, the remote control applicable to it, and the other small T.V. Set of the
complaining party to him immediately.
Appellant argues that this condition of probation is tantamount to the trial court making a finding
of fact that he had performed repairs and furnished parts to the complainant's television set and
was entitled to payment from the complainant before he would be obligated to return the television
set to the complainant. Therefore, appellant argues, there is a fatal conflict between the trial
court's finding that he is guilty of the offense of theft and the trial court's "finding" that he has
a worker's possessory lien.
Appellant has not met his burden to see that a sufficient record is presented to show error
requiring reversal. Tex. R. App. P. Ann. 50(d) (Pamph. 1992). Generally, when no statement
of facts is present in the record before the court of appeals, it is presumed on appeal that any
omission in the record supports the trial court's judgment or order. State v. Pierce, 816 S.W.2d
824, 831 (Tex. App. 1991, no pet.). Appellant's second point of error is overruled.
The trial court's judgment is affirmed.
[Before Justices Powers, Jones and Kidd]
Affirmed
Filed: May 20, 1992
[Do Not Publish] | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1539549/ | 218 B.R. 409 (1998)
In re Marshall E. BARNES, Debtor.
Dolores C. BARNES, Plaintiff,
v.
Marshall E. BARNES, Defendant.
Bankruptcy No. 95-55376, Adversary No. 95-0728.
United States Bankruptcy Court, S.D. Ohio, Eastern Division.
February 27, 1998.
*410 Carl E. McCoy, Jr., Newark, OH, for plaintiff.
Wesley C. Emerson, Columbus, OH, for debtor.
Karen Bond Coriell, Pickerington, OH, for defendant/debtor.
OPINION AND ORDER ON PLAINTIFF'S COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT
BARBARA J. SELLERS, Bankruptcy Judge.
This matter is before the Court on plaintiff Dolores C. Barnes' amended complaint seeking a determination that the $36,000 debt owed to her by her former husband, Marshall E. Barnes (the "debtor") is nondischargeable under 11 U.S.C. § 523(a)(4), (5), (6) and (15). The debtor denied the debt was nondischargeable, and the matter was tried to the Court on September 4, 1997.
This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 157(a) and the General Order of Reference entered in this District. This is a core proceeding which this bankruptcy judge may hear and determine under 28 U.S.C. § 157(b)(2)(I).
Following the presentation of the plaintiff's case-in-chief, the debtor moved for judgment as a matter of law on all four claims. The Court, for the reasons stated on the record at that time, granted the motion as to the § 523(a)(4) and (6) counts, but denied the motion as to the § 523(a)(5) and (15) counts.
The debtor renewed his motion at the close of all of the evidence. The Court granted the motion as it pertained to § 523(a)(5) because the plaintiff had not shown that the obligation was in the nature of support. The § 523(a)(15) claim, therefore, is the only remaining claim to be decided.
Title 11, United States Code, Section 523(a)(15) provides that a discharge under § 727 does not discharge a debtor from any debt:
not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, a determination made in accordance with State or territorial law by a governmental unit unless
(A) the debtor does not have the ability to pay such debt from income or property of the debtor not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor and, if the debtor is engaged in a business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business; or
(B) discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, former spouse, or child of the debtor.
11 U.S.C. § 523(a)(15).
Generally, the party attempting to except a debt from discharge bears the burden of proving by a preponderance of the evidence that the debt falls into one of the exceptions enumerated in § 523(a). Barclays/American Business Credit, Inc. v. Adams (In re Adams), 31 F.3d 389, 393-94 (6th Cir.1994), cert. denied, 513 U.S. 1111, 115 S. Ct. 903, 130 L. Ed. 2d 786 (1995) (citations omitted). The majority of bankruptcy courts, including many within the Sixth Circuit, however, have not applied this general *411 principle to § 523(a)(15). Rather, they have required that the plaintiff make a threshold showing that the obligation in question does not fall within the parameters of § 523(a)(5), and that the obligation was incurred "in connection with a separation agreement, divorce decree, or other court order of record. . . ." Once this showing is made, the burden of proof has shifted to the defendant-debtor to prove either that he or she does not have the ability to pay the debt or that its discharge would result in a benefit to him or her greater than the harm to the plaintiff. Carroll v. Carroll (In re Carroll), 187 B.R. 197, 200 (Bankr.S.D.Ohio 1995); Belcher v. Owens (In re Owens), 191 B.R. 669, 674 (Bankr.E.D.Ky. 1996); Henderson v. Henderson (In re Henderson), 200 B.R. 322, 324-25 (Bankr. N.D.Ohio 1996); Armstrong v. Armstrong (In re Armstrong), 205 B.R. 386, 391 (Bankr. W.D.Tenn.1996).
After considerable review of the case law, this Court has determined that the exceptions to nondischargeability set out in § 523(a)(15)(A) and (B) are best treated as affirmative defenses. The creditor plaintiff, therefore, need only establish that a debt was incurred by the debtor in the course of a marital action and is not in the nature of support. That proof is enough for a judgment of nondischargeability unless the debtor, who is generally the defendant in these actions, pleads and establishes either (A) or (B). This will require the debtor to obtain information about the plaintiff's financial circumstances if (B) is the chosen defense. If the debtor is able to establish (A) or (B), then the debt will be discharged. Viewing the statute in this manner will give a more definite structure to these trials and, hopefully, will eliminate some of the confusion that results from the difficult and tortured manner in which the statute was drafted. At least one court has found that the exceptions are affirmative defenses. See Hill v. Hill (In re Hill), 184 B.R. 750 (Bankr.N.D.Ill.1995).
The Court already has determined the debt is not of the kind described in § 523(a)(5). Further, the debt arose in connection with the parties' divorce decree which was entered by the Licking County domestic relations court in accordance with Ohio law. Thus, the debt is not dischargeable unless the debtor can prove by way of an affirmative defense that either subsection (A) or (B) applies.
In determining whether the defendant-debtor has the ability to pay the obligation in question, bankruptcy courts have applied the "disposable income" test of § 1325(b)(2) because of the similarity of language between § 523(a)(15)(A) and § 1325(b)(2). Armstrong, 205 B.R. at 392; Owens, 191 B.R. at 674; Carroll, 187 B.R. at 200-01. The "disposable income" test includes the following factors:
1. The debtor's "disposable income" as measured at time of trial;
2. The presence of more lucrative employment opportunities which might enable the debtor to fully satisfy his divorce-related obligation;
3. The extent to which the debtor's burden of debt will be lessened in the near term;
4. The extent to which the debtor previously has made a good faith effort towards satisfying the debt in question;
5. The amount of the debts which a creditor is seeking to have held nondischargeable and the repayment terms and conditions of those debts;
6. The value and nature of any property the debtor retained after his bankruptcy filing;
7. The amount of reasonable and necessary expenses which the debtor must incur for the support of the debtor, the debtor's dependents, and the continuation, preservation and operation of the debtor's business, if any;
8. The income of debtor's new spouse as such income should be included in the calculation of the debtor's disposable income; and
9. Any evidence of probable changes in the debtor's expenses.
Armstrong, 205 B.R. at 392 (citations omitted).
The evidence showed that the debtor had taxable income of $67,131.67 in 1995 and $73,759.78 in 1996. Included in these *412 amounts are $5,002 and $5,601 representing the value of the debtor's car allowance in 1995 and 1996, respectively. At the time of trial, the debtor had earned $58,418 year-to-date in 1997 based on an annual salary of $76,000. The debtor was also eligible for a year-end bonus based on the company's performance. In 1996, that bonus was equal to 5% of his salary.
According to Schedule I of the debtor's bankruptcy petition filed on September 26, 1995, his take-home pay was $4,000 per month. At that time, the debtor also received $700 per month adoption assistance which by the time of trial, he no longer received. Although no current wage stubs were submitted, the Court finds that due to increases in the debtor's base salary since the date of filing, his take-home pay clearly would be in excess of $4,000 per month, and most likely would be in the neighborhood of $4,400 per month.
The debtor currently pays $750 per month in rent for a home in Hilliard in which he and the parties' two natural children reside. The adopted twins are now in separate residential treatment centers. The debtor does not pay for the twins' room and board, but continues to be responsible for some out-of-pocket medical expenses not covered by Medicaid. He estimates that he owed some $6,500 for such postpetition expenses at the time of trial.
Other household expenses include utilities, food, clothing, laundry and drycleaning, medical and dental expenses, recreation, transportation, insurance, and day care. The monthly expenses for these items on the debtor's Schedule J totaled $1,892. There was no testimony that these expenses had increased by the date of trial; and, in fact, since the twins were no longer living in the debtor's home, a decrease could be expected. There was also testimony that the debtor's obligation to pay out-of-pocket medical expenses for the twins might cease in the near future if the parties' permanent surrender of these children is approved.
The debtor relinquished the 1993 Ford Aerostar van, the 1991 Isuzu pickup, and his interest in the parties' former residence in Pataskala. Thus, he is no longer responsible for any monthly payments associated with this property. He did not retain any other liened property and did not reaffirm any debts.
There was no evidence that the debtor would acquire any employment opportunities more lucrative than his present job. The debtor does not operate a business and has not remarried.
The amount of the debt the plaintiff is seeking to have held nondischargeable is $36,000. The debtor was to pay this sum in equal monthly installments of $750. The debtor failed to establish that he had made any of the $750 payments and filed his chapter 7 petition in contravention of the parties' agreement not to file bankruptcy within one year of their divorce.
Based on the Court's review of the evidence concerning each of the "disposable income" factors, the Court finds that the debtor did not satisfy his burden of proving by a preponderance of the evidence that he is unable to pay the marital obligation under the terms of the parties' divorce decree. The only evidence to the contrary was the testimony of the debtor's domestic attorney who opined that forcing the debtor to pay the plaintiff $750 per month would be devastating to him and his two children, and would force him to take a second job. Given its own analysis of the debtor's current financial condition based on the evidence at trial, the Court does not consider this testimony to be persuasive.
Although the Court has determined that the debtor has the ability to pay the $36,000 in monthly installments of $750, he may still discharge this obligation if he can establish by a preponderance of the evidence that "discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a . . . former spouse. . . ." 11 U.S.C. § 523(a)(15)(B).
The plaintiff came forward with testimony concerning her own present financial condition and provided copies of her 1995 and 1996 federal tax returns. The evidence showed a drop in her adjusted gross income from $9,174 in 1995 to $4,193 in 1996. She currently *413 earns $9.00 per hour working at Office Max, but with only a high school education and a history of minimum wage jobs, she has little hope of earning significantly more in the future. She was involved in a serious accident in 1996 which affected her ability to work. As a result of this accident, she has incurred some $25,000 in medical expenses. She has a pending personal injury claim arising out of the accident, but has not received any offers of settlement. She drives an older car in need of extensive repairs and cannot afford to purchase another vehicle or to pay for the repairs. In order to meet her day-to-day expenses, she has been forced to borrow some $1,600 from her brothers and smaller sums from other family members.
In light of this evidence, the Court concludes that discharging the $36,000 obligation would have a significantly negative impact on the plaintiff. On the other hand, the Court calculates that the debtor has approximately $1,750 each month after deducting rent and household expenses to make the $750 monthly payment to the plaintiff and to pay for any out-of-pocket expenses for the twins' medical treatment. Therefore, the Court does not believe that discharging the debt would result in a comparable benefit to the debtor. Based on the totality of theses circumstances, the Court concludes that the debtor has not satisfied his burden of proof under § 523(a)(15)(B).
For the foregoing reasons, the Court determines that the $36,000 debt owed to the plaintiff by the debtor is nondischargeable under 11 U.S.C. § 523(a)(15). Accordingly, judgment shall be entered in favor of the plaintiff on this count, provided that the plaintiff shall not execute on this judgment as long as the debtor makes monthly payments of $750 beginning March 15, 1998, and continuing until the $36,000 is paid in full.
IT IS SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539570/ | 974 A.2d 170 (2009)
In the Matter of a Member of the Bar of the Supreme Court, of the State of Delaware,
Michael R. DAVIS, Respondent.
No. 301, 2008.
Supreme Court of Delaware.
Submitted: April 29, 2009.
Decided: May 27, 2009.
*171 Michael S. McGinniss, Esquire, Office of Disciplinary Counsel, Wilmington, Delaware.
Charles Slanina, Esquire, of Finger, Slanina & Liebesman, LLC, Hockessin, Delaware for Respondent.
Before STEELE, Chief Justice, HOLLAND, BERGER, JACOBS and RIDGELY, Justices.
PER CURIAM.
This is an attorney disciplinary proceeding. Respondent, Michael R. Davis, stipulated to the relevant facts, violations, and proposed sanctions arising from a 14 count petition filed by the Office of Disciplinary Counsel ("ODC"). In brief, the petition alleges a series of real estate transactions, in which Davis was the purchaser, that were falsely notarized. In addition, Davis failed to pay transfer taxes on one of those transactions, and restated the purchase price on two other transactions in order to substantially reduce his transfer tax liability. The parties agreed that a public reprimand and certain practice restrictions would be the appropriate sanction. After *172 carefully reviewing the record, the Court concludes that, in addition to the sanctions recommended by the Board on Professional Responsibility (the "Board"), Davis should be suspended for one year beginning on the date of this decision.
FACTS
Davis was admitted to the Delaware Bar in 1998 and worked for five years in mergers and acquisitions at Skadden, Arps, Slate, Meagher & Flom LLP. During that time, he began investing in real estate. In 2003, he started practicing real estate law at Ward & Taylor, LLC. In May 2007, after his law firm discovered certain irregularities in its files, Davis left the law firm and "self-reported" to ODC two real estate transactions in which he was the purchaser and transfer tax forms were altered to reduce the amount owed in transfer tax. During its investigation, ODC discovered that Davis falsely notarized mortgages and tax filings relating to property that he purchased during the period from September 2004 through February 2007. ODC also discovered that Davis had not paid $48,000 in transfer taxes on the home he purchased in May 2005. ODC filed a 14 count petition alleging violations of several Delaware Lawyers' Rules of Professional Conduct. The parties presented this matter to the Board on a stipulation of admitted facts, admitted violations, aggravating and mitigating factors, and recommended sanctions.
FALSE NOTARIZATIONS
Davis executed six mortgages and one Affidavit of Exemption that purport to be notarized by William E. Ward. According to Davis, after he executed the documents, he gave them to a staff person in his office and instructed that person to have Mr. Ward notarize them. It is undisputed that Mr. Ward never signed any of the notarizations. Davis explained that he would never have done such a thing with a client's documents, but that these transactions involved his own investments and he took care of them after business hours. As a result, he "regularly" executed documents and had them notarized at some other time. Davis also thought that the false notarizations were not that important because he knew the lenders and he knew that he would never disavow his signature on the documents.
FAILURE TO PAY TRANSFER TAX
When Davis and his wife purchased their home on Red Oak Road in 2005, they were also selling another home, and buying and selling the lot next to their new home. Davis described it as a "very difficult and complicated transaction,"[1] for which he hired an independent contractor paralegal to prepare the paperwork. After the closing, Davis testified that there were "some out of balance entries," but that "[a]t no time ... did [he] receive funds that should have been allocated to somebody else or allocated to the state. And that is ... why ... [he] did not realize that the taxes had not been paid until this proceeding commenced."[2]
Although it is true that Davis did not receive a check from the seller, Davis did receive a $48,000 reduction in the amount he paid to purchase the property. That reduction included $24,000 that the seller had allocated to transfer taxes. On a revised, unsigned settlement sheet, the parties' transfer taxes were listed as zero, and a $24,000 "repair credit" was listed as a reduction in the amount due the seller. That revised settlement sheet was the one *173 designed to address the "out of balance" entries. Davis suggested at one point that the transfer tax checks were cut and that somehow they were never paid. When a Board member asked him where the missing $48,000 went, Davis admitted that the money was not missing; it was used to reduce his payment to the seller.
The ODC and the Board apparently accepted Davis's claim that he never realized that the taxes had not been paid, and that he did not benefit from the non-payment. Interestingly, if the falsely notarized Affidavit of Exemption had not misstated the property that was subject to the exemption, the unpaid transfer taxes would have come to light immediately because the deed to the property would not have been accepted for filing. So, the record facts are that a real estate attorney who was purchasing a $1.1 million home for himself did not review the settlement sheet, the deed, or the Affidavit of Exemption carefully enough to see any errors, and those errors allowed the transaction to be completed without discovery of the missing tax payments. Davis's explanation was that he made a mistake in relying on the outsourced paralegal to draft all of the paperwork. After he left Ward and Taylor, LLC, however, Davis hired her to work in his solo practice.
THE DISMISSED CHARGES
The ODC and Davis stipulated to the dismissal of the two counts that were potentially the most serious. Davis purchased two investment properties from the same owner in February 2007. The Form HUD-1 (settlement statement) for the first purchase listed the sale price as $162,500, resulting in a combined transfer tax of $4,875. With the seller's consent, Davis revised the Affidavits of Gain and Value to reflect the amount of consideration received as being $40,000, resulting in a reduced tax liability of $600 (which was the amount paid). Similar revisions were made in the second transaction, where the purchase price was listed as $212,500, but the Affidavits of Gain and Value were revised to reflect consideration in the amount of $60,000. That modification caused the transfer tax to be reduced from $3,187.50 to $900.[3] After a staff person at Ward and Taylor, LLC told the firm's partners about the altered tax forms, the firm placed Davis on administrative leave and instructed him to report the matter to ODC.
Davis convinced the ODC and the Board to dismiss the charges relating to those transactions by obtaining a letter from a tax attorney. The letter outlined how Davis arrived at the values he included in the revised affidavits. For the purchase where Davis reduced the sales price from $212,500 to $60,000, the tax letter explains:
The seller provided 100% purchase money financing. The purchase money note provided for monthly payments with interest at 6% per annum with a maturity date of one year following settlement.
* * *
You told me that the property was not subject to lease at the time of settlement and that your intention was to lease it for one year then sell the property. You projected gross rental income of $16,500 for the year.... You believe that the market value of the property, based on sales of comparable properties, was $256,000 and that the value of the transaction involving the purchase, lease then *174 resale of the property was $60,000 ($256,000 minus $212,500 plus $16,500). Realty transfer taxes were paid based on this $60,000 transaction value.
The tax letter describes a similar calculation for the other transaction, as well as a third transaction (involving an adjustment from $590,000 to $150,000) that the ODC never included in its petition. The tax letter then discusses different definitions of "value," none of which relate to Davis's valuation, and notes that "the values you used are based on factors with real economic substance." The tax letter concludes that "the manner in which you determined value is not without support," and that Davis could have avoided all transfer taxes if he had structured his deals as conditional sales agreements. The tax letter fails to note that the seller was not interested in a conditional sale agreement.
As with the $48,000 in transfer taxes for the Red Oak Road property, Davis paid the full transfer taxes on the two transactions that were the subject of ODC's original petition at the time that his former firm required him to "self-report" to ODC. Davis never paid the additional transfer tax on the third such transaction, apparently because it was not included in ODC's petition.
SUPREME COURT REVIEW
The Board held a hearing to consider the stipulated facts, violations, and recommendation of sanctions. The Board accepted the stipulated record, found the stated violations, and recommended the stipulated sanction a public reprimand and permanent practice limitations.[4] The Supreme Court reviews the record independently to determine whether there is substantial evidence to support the Board's factual findings. We review the Board's conclusions of law de novo, and we consider the Board's recommended sanction helpful, but it is not binding.[5]
There is substantial evidence to support the underlying facts. The conclusion that Davis's conduct was negligent, rather than knowing, however, is not supported by the record. Davis testified at the Board hearing, but he was never cross-examined. As a result, the Board determined that Davis had been negligent because, "[a]t the hearing Respondent admitted that he had acted negligently...."[6] No one asked any probing questions about how someone who was handling the purchase of his own home could fail to check the paperwork. Moreover, after the settlement sheet had to be tweaked because it did not balance, we find it unreasonable to assume that an attorney did not notice an entry for "repairs" costing $24,000 when he knew that no repairs had been done.
Davis's failure to pay transfer taxes on his own property is but one instance of misconduct in a larger pattern of false notarizations and paperwork errors that all redounded to Davis's financial benefit. In addition, his handling of the two transactions that were dismissed, was undeniably "knowing" and was deceptive, if not criminal. Davis purchased properties, obtained deeds and fee simple ownership. The Settlement Statements listed the contract prices and the taxes due. The Affidavits *175 of Gain and Value also listed the contract prices and the taxes due based on those prices. But, the numbers were altered before the documents were filed.
The tax letter that apparently saved Davis from having to defend this conduct states that Davis's approach to determining value was "non-traditional." The letter relies heavily on the fact that Davis could have avoided transfer taxes if the sellers had retained title and the parties had executed conditional sales contracts. But the sellers did not want to retain title and the documentation for each of the transactions clearly provides for a fee simple transfer. In sum, we view the altered values in the dismissed charges as further evidence of a course of conduct that is unacceptable for Delaware lawyers.[7] Moreover, we find that Davis's admitted manipulation of the sales and tax figures in the two dismissed charges is compelling evidence that the errors and resulting failure to pay taxes on the purchase of Davis's home was knowing, not negligent.
Having concluded that Davis engaged in knowing misconduct, the remaining issue is the appropriate sanction. The Board correctly cited the factors we consider in resolving disciplinary matters:
The objectives of the lawyer disciplinary system are to protect the public, to protect the administration of justice, to preserve confidence in the legal profession, and to deter other lawyers from similar misconduct. To further these objectives... the Court looks to the ABA Standards for Imposing Lawyer Sanctions as a model for determining the appropriate discipline warranted under the circumstances of each case. The ABA framework consists of four key factors ... :(a) the ethical duty violated; (b) the lawyer's mental state; (c) the extent of the actual or potential injury caused by the lawyer's misconduct; and (d) aggravating and mitigating factors.[8]
Davis violated Rules 1.15(a), 1.15(b), 8.4(a), 8.4(c), and 8.4(d) of the Delaware Lawyers' Rules of Professional Conduct. These violations stem from: i) his repeatedly causing staff members to falsely notarize mortgages and tax filings; ii) his failure to pay transfer taxes; (iii) his failure to segregate third parties' funds; and iv) his misrepresenting the basis for tax exemptions on tax filings. In addition, although the two counts relating to this conduct were dismissed at ODC's request, Davis admitted that he restated the consideration received in two real estate transactions for the purpose of reducing the transfer taxes payable on those transactions. The record also establishes that he restated the consideration on a third transaction, and never repaid the taxing authorities for that restatement.
Davis's conduct was knowing, and caused both actual and potential injury. Davis failed to pay $48,000 in taxes, which included $24,000 owed by the seller. The fact that he paid the taxes after being charged by ODC does not mean that there was no injury. Davis placed the seller in jeopardy by pocketing her funds and he attempted to cheat the taxing authorities by not paying taxes. That conduct seriously injures the integrity of the legal profession, even if payment is made after the misconduct is exposed. The false notarizations also caused serious injury to the profession. Davis impaired Mr. Ward's good name by having a staff person *176 forge his signature on numerous recorded documents.
The Board found nothing in the aggravating or mitigating factors to alter the sanctions proposed by the parties. Based on our review, the aggravating factors must include the fact that Davis's misconduct was undertaken for personal financial gain, and that his misconduct was knowing. After considering all the circumstances, we conclude that a one year suspension is the appropriate sanction. Davis's misconduct involved false notarizations, failure to safeguard fiduciary funds, failure to pay taxes, and misrepresentation. The sanction we impose is consistent with our decisions in In re Figliola[9] (suspension for knowing and reckless misappropriation of client and Firm funds); In re Faraone[10] (suspension for knowing assistance to client in a scheme to defraud State and County of real estate transfer taxes); In re Pankowski[11] (suspension for false notarizations, failure to safeguard client funds and related misconduct); and In re Landis[12] (suspension for failure to pay employee payroll taxes and personal income taxes and related misconduct).
NOW, THEREFORE, IT IS ORDERED that Davis be disciplined as follows:
1) that Davis be suspended from engaging in the practice of law as a member of the Delaware Bar for a period of one year, commencing on the date of this decision;
2) that during the period of suspension, Davis shall not: (a) share in any legal fees arising from clients or cases referred by Davis during the period of suspension to any other attorney, or (b) share in any legal fees earned for services by others during such period of suspension;
3) that, if Davis seeks and obtains reinstatement following the period of suspension, he shall be subject to the following permanent restrictions on the nature and/or extent of his future practice of law:
(a) In any real estate closing in which either Davis, or a business entity in which he has an ownership interest, is a party to the transaction, Davis shall not act as the lawyer/settlement agent. Under such circumstances, Davis shall make arrangements for the closing to be conducted by another attorney who is not a party to the transaction.
(b) In any real estate closing in which either Davis, or a business entity in which he has an ownership interest, is a party to the transaction, Davis shall not act as a notary for any documents relating to the transaction.
(c) Davis shall not direct any person to have any documents notarized that are not signed or attested to, or would not be signed or attested to, in the presence of a notarial officer.
4) that, following reinstatement, Davis shall be subject to the following conditions for a two-year period:
(a) Davis shall have completed an audit by a licensed certified public accountant for his Certificates of Compliance, reporting the status of his compliance, or lack thereof, with the requirements of Rule 1.15 and Rule 1.15(a), and shall file each annual Certificate of Compliance by no later than February 1 of each of those years. Davis also shall provide ODC with a timely written confirmation that he has filed each annual Certificate of Compliance with the required pre-certification.
*177 (b) Davis shall file and pay, on a timely basis, all federal, state and local payroll, gross receipts, and income taxes owed for his law practice. Davis also shall file and pay, on a timely basis, all transfer taxes owed for any real estate transactions in which he has a personal or business financial interest.
(c) Davis shall cooperate promptly and fully with ODC in its efforts to monitor compliance with these conditions, including any audit performed at the request of ODC or otherwise. Davis also shall cooperate with ODC's investigation of any allegations of unprofessional conduct that may come to the attention of ODC. Upon request of ODC, Davis shall provide authorization for release of information and documentation to verify compliance with these conditions.
(d) Davis shall pay the costs of this disciplinary proceeding, pursuant to Rule 27 of the Delaware Lawyers' Rules of Disciplinary Procedure, promptly upon being presented with a statement of those costs by ODC. The costs to be paid by Davis will include, without limitation, the full cost of investigative audit work concerning Davis's professional conduct, which was performed by Mr. Joseph McCullough at the request of ODC.
5) that this Opinion and Order shall be disseminated by ODC in accordance with the Rules of the Board on Professional Responsibility.
ATTACHMENT
BOARD ON PROFESSIONAL RESPONSIBILITY
OF THE
SUPREME COURT OF THE STATE OF DELAWARE
In the Matter of a Member of the Bar of the Supreme Court of Delaware:
MICHAEL R. DAVIS, Respondent.
CONFIDENTIAL
ODC File Nos.2007-0044-B, 2007-0130-B, and 2007-0200-B
Pending before the Board on Professional Responsibility is a Petition for Discipline filed on March 5, 2008 ("Petition"). The Petition alleges that Michael R. Davis, Esq. ("Davis" or "Respondent") engaged in professional misconduct in violation of Rules 1.15(a), 1.15(b), 8.4(a), 8.4(c), and 8.4(d) of the Delaware Lawyers' Rules of Professional Misconduct ("Rules"). Mr. Davis is a real estate attorney and the alleged misconduct involved real estate transactions in which he had an interest, directly or indirectly, and in which he acted as counsel and/or settlement agent. Mr. Davis through counsel responded to the Petition on March 25, 2008. On April 17, 2008, the parties submitted a Joint Prehearing Stipulation ("JPS") in which Respondent admitted to certain misconduct and consented to certain sanctions. The Panel conducted a hearing on April 23, 2008. Based on the evidence presented at the hearing, and for the reasons stated below, the Panel recommends that that Mr. Davis be sanctioned as set forth in Section E.4 of this opinion.
A. FACTS
The parties stipulated to the following facts, all of which are taken directly from the JPS:
1. The Respondent is a member of the Bar of the Supreme Court of Delaware, He was admitted to the Bar in 1998. At all times relevant to the Petition until May 2007, the Respondent was engaged in the private practice of law in Delaware with the law firm of Ward & Taylor, LLC *178 ("Ward & Taylor"). The Respondent is presently engaged in the private practice of law in Delaware as a solo practitioner.
I. ODC File No.2007-0044-B
A. 1516 Binder Lane
2. On February 8, 2007, on behalf of Faulkland Paradigm, LLC ("Faulkland") (a business entity for which he was at that time a principal), the Respondent acted as the settlement agent for Faulkland's purchase of 1516 Binder Lane, Wilmington, DE 19805 (the "1516 Binder Lane transaction") from seller J & S Gerson Family Limited Partnership.
3. On the Form HUD-1 prepared for the February 8, 2007 closing, the total consideration exchanged/purchase price for the 1516 Binder Lane transaction was identified as $162,500.00, and, based on that figure, a combined total of $4,875.00 in transfer taxes was identified as due for collection from the parties and for payment to the State of Delaware ("State") and New Castle County ("County").
4. The State and County Realty Transfer Tax Returns and Affidavits of Gain and Value prepared for the 1516 Binder Lane transaction were subsequently revised, with the knowledge and consent of the parties to the transaction, including the seller, Mr. Gerson. Specifically, these revisions consisted of (1) reducing the "amount of consideration received" from $162,500.00 the contract sales price on the Form HUD-1 for the 1516 Binder Lane transaction to $40,000.00, and (2) reducing the "Tax Due and Payable" from $2,437.50 to $600.00. These revisions were made after Mr. Gerson had signed the documents and those signatures were notarized on February 5,2007 in the State of Florida. The Respondent directed a legal assistant, Ms. Jennifer Everson, to file the documents with the State and County authorities.
B. 1302 Clifford Road
5. On February 8, 2007, on behalf of Faulkland, the Respondent acted as the settlement agent for Faulkland's purchase of 1302 Clifford Road, Wilmington, DE 19805 (the "1302 Clifford Road transaction") from seller J & S Gerson Family Limited Partnership.
6. On the Form HUD-1 prepared for the February 8, 2007 closing, the total consideration exchanged/purchase price for the 1302 Clifford Road transaction was identified as $212,500.00, and, based on that figure, a combined total of $6,375.00 in transfer taxes was identified as due for collection from the parties and for payment to the State and County.
7. The State and County Realty Transfer Tax Returns and Affidavits of Gain and Value prepared for the 1302 Clifford Road transaction were subsequently revised, with the knowledge and consent of the parties to the transaction, including the seller, Mr. Gerson. Specifically, these revisions consisted of (1) reducing the "amount of consideration received" from $212,500.00 the contract sales price on the Form HUD-1 for the 1302 Clifford Road transaction to $60,000.00, and (2) reducing the "Tax Due and Payable" from $3,187.50 to $900.00. These revisions were made after the seller, Mr. Gerson, had signed the documents and those signatures were notarized on February 5, 2007 in the State of Florida. The Respondent directed a legal assistant, Ms. Everson, to file the documents with the State and County authorities.
C. Reporting of the February 2007 Transactions
8. By letter dated May 16, 2007, the Respondent, by and through his counsel, *179 reported to the ODC concerns raised by Ward & Taylor with him regarding the 1516 Binder Lane and 1302 Clifford Road transactions.
II. ODC File No.2007-0130-B
A. 3 Red Oak Road
9. On May 27, 2005, on behalf of himself, the Respondent acted as the settlement agent for the purchase of 3 Red Oak Road, Wilmington, DE 19806 (the "3 Red Oak Road Transaction") from seller Ms. Paula J. Malone ("Malone") for use as a personal residence. The property was comprised of two parcels, a house and a vacant lot. On or about the same date, the Respondent acted as the settlement agent for the sale of the vacant lot (referred to by the parties as "2 Red Oak Road") to a business entity wholly owned by Mr. William Freeborn ("Freeborn").
10. By law, based on the total consideration exchanged/purchase price of $1.6 million, no less than $48,000.00 in transfer taxes was due to be paid to the State and to the City of Wilmington ("City") for the 3 Red Oak Road Transaction.
11. As reflected by the Form HUD-1 signed by the parties at the May 27, 2005 closing (the "At-Closing 3 Red Oak Road HUD-1"), and distributed to Malone and Malone's real estate agent, the Respondent collected $7,500.00 from Freeborn (the purchaser of the vacant lot) for payment of Freeborn's share of the transfer taxes on the $500,000.00 sale of the vacant lot to Freeborn.
12. As reflected by the At-Closing 3 Red Oak Road HUD-1, the Respondent withheld $24,000.00 from Malone's proceeds of the 3 Red Oak Road Transaction for payment of her share of the transfer taxes on Malone's sale of the two Red Oak Road properties.
13. The At-Closing 3 Red Oak Road HUD-1 contains a signature by Malone as the seller, signatures of the Respondent and Ms. Davis as borrowers, and a signature by the Respondent as the "Settlement Agent."
14. In Ward & Taylor's accounting records for the 3 Red Oak Road Transaction, there are two entries in the amount of $24,000.00 each noted as "Pending Checks" for "City/County Tax/Stamps" and "State Tax/Stamps." However, the firm's records reflect that no checks in these amounts were actually prepared or issued for payment in the 3 Red Oak Road Transaction.
15. The Respondent failed to pay the $48,000.00 in transfer taxes due and owing by law for the 3 Red Oak Road Transaction until January 24, 2008.
* * * * * *
16. In July 2005, the Respondent filed with the City (1) a Realty Transfer Tax Return and Affidavit of Gain and Value ("3 Red Oak Road Transfer Tax Return") and (2) an Affidavit of Exemption from City of Wilmington Transfer Tax ("3 Red Oak Road Affidavit of Exemption") for the 3 Red Oak Road Transaction.
17. By his own signature on the 3 Red Oak Road Transfer Tax Return, the Respondent represented that he had notarized Malone's signature on this document on May 27, 2005. The Respondent signed, and dated May 27, 2005, the 3 Red Oak Road Affidavit of Exemption.
18. The 3 Red Oak Road Transfer Tax Return contained a representation that the transaction was exempt from transfer tax payment obligations because it was a "Parent Child Transfer," In the 3 Red Oak Road Affidavit of Exemption, the Respondent represented to the City that this transaction was exempt from transfer tax payment obligations on the ground that it was a "Parent and Child" transfer. Malone *180 is neither the parent nor the child of the Respondent or Ms. Davis.
19. Although the overall transaction, a $1.6 million sale of 3 Red Oak Road from Malone to the Respondent, was not exempt from transfer taxes on any basis, the sale of the vacant lot (2 Red Oak Road) was exempt from transfer taxes as a "straw party" transaction. The line on the pre-printed Affidavit of Exemption form for "Trustee/straw party" is directly under the line for "Parent and Child." However, on the 3 Red Oak Road Transfer Tax Return, the words "Parent Child Transfer" were typed out by the person (not the Respondent) preparing the form under "PART D EXEMPT CONVEYANCES," and the words "Parent + child" were handwritten in close proximity to that entry.
20. The 3 Red Oak Road Affidavit of Exemption purports to have been "SWORN TO AND SUBSCRIBED" before Ward and notarized by him on May 27, 2005. However, the Respondent signed this document outside of Ward's presence, and provided it to another person along with a direction to obtain Ward's notarization.
III. ODC File No.2007-0200-B
A. 1600 North Broom Street
21. On or about September 29, 2004, the Respondent acted as the settlement agent for Ms purchase of 1600 North Broom Street, Wilmington, DE 19806 (the "1600 North Broom Street transaction") from seller Mr. Bruce D. Balick ("Balick"). The Respondent obtained financing from Chase Manhattan Mortgage Corporation ("Chase") for this purchase. On September 30, 2004, the Respondent sold this property to Sunset Point Properties, LLC ("Sunset"), a company owned by him.
22. As the settlement agent for this purchase transaction, the Respondent had a professional obligation to ensure that the transaction was appropriately documented, including by obtaining notarizations performed in accordance with proper legal procedures.
23. The mortgage for the 1600 North Broom Street transaction purports that the instrument was "acknowledged before" Ward and notarized by him on September 30, 2004, However, the Respondent signed this document outside of Ward's presence, and then provided it to another person along with a direction to obtain Ward's notarization.
B. 1311 North Clayton Street
24. On or about September 29, 2004, the Respondent acted as the settlement agent for his purchase of 1311 North Clayton Street, Wilmington, DE 19806 (the "1311 North Clayton Street transaction") from seller Balick. The Respondent obtained financing from Chase for this purchase. On September 30, 2004, the Respondent sold this property to Sunset.
25. As the settlement agent for this purchase transaction, the Respondent had a professional obligation to ensure that the transaction was appropriately documented, including by obtaining notarizations performed in accordance with proper legal procedures.
26. The mortgage for the 1311 North Clayton Street transaction purports that the instrument was "acknowledged before" Ward and notarized by him on September 30, 2004. However, the Respondent signed this document outside of Ward's presence, and then provided it to another person along with a direction to obtain Ward's notarization.
*181 C. 1603 North Rodney Street
27. On or about September 29, 2004, the Respondent acted as the settlement agent for his purchase of 1603 North Rodney Street, Wilmington, DE 19806 (the "1603 North Rodney Street transaction") from seller Balick. The Respondent obtained financing from Chase for this purchase. On September 30, 2004, the Respondent sold this property to Sunset.
28. As the settlement agent for this purchase transaction, the Respondent had a professional obligation to ensure that the transaction was appropriately documented, including by obtaining notarizations performed in accordance with proper legal procedures.
29. The mortgage for the 1603 North Rodney Street transaction purports that the instrument was "acknowledged before" Ward and notarized by him on September 30, 2004. However, the Respondent signed this document outside of Ward's presence, and then provided it to another person along with a direction to obtain Ward's notarization.
D. 1311 Gilpin Avenue
30. On May 27, 2005, the Respondent acted as the settlement agent for his purchase of 1311 Gilpin Avenue, Wilmington, DE 19806 (the "1311 Gilpin Avenue transaction") from seller CIELO Investments, LLC. The Respondent obtained financing from GMAC Bank for this purchase. On May 28, 2005, the Respondent sold this property to Sunset.
31. As the settlement agent for this purchase transaction, the Respondent had a professional obligation to ensure that the transaction was appropriately documented, including by obtaining notarizations performed in accordance with proper legal procedures.
32. The mortgage for the 1311 Gilpin Avenue transaction purports that the instrument was "acknowledged before" Ward and notarized by him on May 27, 2005. However, the Respondent signed this document outside of Ward's presence, and then provided it to another person along with a direction to obtain Ward's notarization.
E. 3 Red Oak Road Purchase
33. On May 27, 2005, on behalf of himself, the Respondent acted as the settlement agent for the purchase of 3 Red Oak Road, Wilmington, DE 19806 (the "3 Red Oak Road transaction") from seller Paula J. Malone for use as a personal residence.
34. As the settlement agent for this purchase transaction, the Respondent had a professional obligation to ensure that the transaction was appropriately documented, including by obtaining notarizations performed in accordance with proper legal procedures.
35. The mortgage for the 3 Red Oak Road transaction purports that the instrument was "acknowledged before" Ward and notarized by him on May 27, 2005. However, the Respondent signed this document outside of Ward's presence, and then provided it to another person along with a direction to obtain Ward's notarization.
F. 3 Red Oak Road Home Equity Line of Credit
36. On October 10, 2005, on behalf of himself, the Respondent acted as the settlement agent in obtaining a home equity line of credit mortgage on the Respondent's personal residence, 3 Red Oak Road, Wilmington, DE 19806 (the "3 Red Oak Road Home Equity Loan").
37. As the settlement agent for this home equity loan transaction, the Respondent had a professional obligation to ensure *182 that the transaction was appropriately documented, including by obtaining notarizations performed in accordance with proper legal procedures.
38. The mortgage for the 3 Red Oak Road Home Equity transaction purports that the instrument was "acknowledged before" Ward and notarized by him on October 10, 2005. However, the Respondent signed this document outside of Ward's presence, and then provided it to another person along with a direction to obtain Ward's notarization.
B. THE ALLEGATIONS IN THE PETITION
The ODC alleged fourteen counts of professional misconduct. Count One alleged that by directing another person to change the State and County Realty Transfer Tax Returns and Affidavits of Gain and Value for the 1516 Binder Lane transaction, Respondent violated Rule 8.4(a). That Rule provides that it is professional misconduct for a lawyer to "violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so or do so through the acts of another." Count Two alleges the same misconduct in connection with the 1302 Clifford Road transaction. Count Three alleges that by failing to pay $48,000 due and owing for a transaction involving 3 Red Oak Road, Respondent violated Rule 1.15(d) which provides that "a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property." Count Four alleges that by failing to pay the $48,000 in transfer taxes due and owing for the Red Oak Road transaction on a timely basis, Respondent violated Rule 8.4(d) which provides that it is professional misconduct to "engage in conduct that is prejudicial to the administration of justice." Count Five alleges that by collecting funds for transfer taxes at the May 27, 2005 settlement for the Red Oak transaction and not disbursing them for that purpose, Respondent violated Rule 1.15(a). Count Six alleges that by directing another person to have an Affidavit of Exemption for 3 Red Oak notarized by an attorney when the Respondent had not signed the affidavit in the attorney's presence, Respondent violated Rule 8.4(a) which provides that it is professional misconduct for a lawyer to "violate or attempt to violate the rules of Professional conduct, knowingly assist or induce another to do so or do so through the acts of another." Counts Seven and Eight allege that, by filing with the City of Wilmington the 3 Red Oak Road Realty Transfer Tax Return and Affidavit of Gain and Value and the 3 Red Oak Affidavit of Exemption, each of which misrepresented that the Red Oak transaction was exempt from taxation because of a parent-child relationship between buyer and seller, the Respondent violated Rule 8.4(c), which provides that it is professional misconduct for a lawyer to "engage in conduct involving... misrepresentation," and Rule 8.4(d), which provides that it is professional misconduct for a lawyer to "engage in conduct that is prejudicial to the administration of justice." Counts Nine through Fourteen allege that in five transactions in which he acted as settlement agent 1600 North Broom Street (Count Nine); 1311 North Clayton Street (Count Ten); 1603 North Rodney Street (Count Eleven); 1311 Gilpin Avenue (Count Twelve); 3 Red Oak Road (Counts Thirteen and Fourteen) Respondent violated Rule 8.4(a) by directing another person to have documents notarized by an attorney even though the Respondent did not sign the documents in the attorney's presence.
*183 C. ADMITTED VIOLATIONS
The Respondent unconditionally admits in the JPS the following violations:
1. Rule 1.15(b) states that "a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property." Rule 8.4(d) provides that it is professional misconduct for a lawyer to "engage in conduct that is prejudicial to the administration of justice." By failing to pay the $48,000.00 in transfer taxes due and owing by law for the 3 Red Oak Road Transaction on a timely basis, the Respondent violated Rules 1.15(b) (Count Three) and Rule 8.4(d) (Count Four).
2. Rule 1.15(a) requires, in pertinent part, that a lawyer "shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property," and that property of clients or third persons must be appropriately safeguarded. By collecting, for the May 27, 2005 settlement on the Respondent's purchase of 3 Red Oak Road, $24,000.00 from Malone and $7,500.00 from Freeborn for transfer taxes due and owing by law, which funds were not remitted for that purpose, the Respondent violated Rule 1.15(a) (Count Five).
3. Rule 8.4(c) provides that it is professional misconduct for a lawyer to "engage in conduct involving ... misrepresentation." Rule 8.4(d) provides that it is professional misconduct for a lawyer to "engage in conduct that is prejudicial to the administration of justice." By filing with the City (1) the 3 Red Oak Road Realty Transfer Tax Return and Affidavit of Gain and Value and/or (2) the 3 Red Oak Road Affidavit of Exemption, each of which negligently misrepresented that this transaction was exempt from transfer tax payment obligations because of a parent-child relationship between buyer and seller, the Respondent violated Rule 8.4(c) (Count Seven) and Rule 8.4(d) (Count Eight).
4. Rule 8.4(a) provides that it is professional misconduct for a lawyer to "violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so or do so through the acts of another." Rule 8.4(c) provides that it is professional misconduct for a lawyer to "engage in conduct involving ... misrepresentation." The Respondent violated Rule 8.4(a) by:
(a) Directing another person to have the 3 Red Oak Affidavit of Exemption notarized by Ward, when the Respondent had not signed the document in Ward's presence (Count Six);
(b) Directing another person to have the mortgage for the 1600 North Broom Street transaction notarized by Ward, when the Respondent had not signed the document in Ward's presence (Count Nine);
(c) Directing another person to have the mortgage for the 1311 North Clayton Street transaction notarized by Ward, when the Respondent had not signed the document in Ward's presence (Count Ten);
(d) Directing another person to have the mortgage for the 1603 North Rodney Street transaction notarized by Ward, when the Respondent had not signed the document in Ward's presence (Count Eleven);
(e) Directing another person to have the mortgage for the 1311 Gilpin Avenue transaction notarized by Ward, when the Respondent had not signed the *184 document in Ward's presence (Count Twelve);
(f) Directing another person to have the mortgage for the 3 Red Oak Road transaction notarized by Ward, when the Respondent had not signed the document in Ward's presence (Count Thirteen); and
(g) Directing another person to have the mortgage for the 3 Red Oak Road Home Equity transaction notarized by Ward, when the Respondent had not signed the document in Ward's presence (Count Fourteen).
The ODC and the Respondent stipulate that (1) neither Ward nor the Respondent signed as the notary on any of the documents identified in paragraphs (a) through (g) above, and (2) Ward would testify that he did not authorize or instruct another person to do so. At the hearing, counsel for Respondent confirmed that "we have no reason to believe that Mr. Ward was the one that actually signed those documents." Tr. at 78.
D. DISMISSED COUNTS
The ODC and the Respondent request that the Board dismiss Counts One and Two of the Petition, such that the charges in these disciplinary matters shall be limited to the twelve (12) violations admitted and set forth in Section II herein (Counts Three through Fourteen).
E. STANDARD OF REVIEW
The Delaware Supreme Court has set forth the goals of the disciplinary system and the applicable standard:
The objectives of the lawyer disciplinary system are to protect the public, to protect the administration of justice, to preserve confidence in the legal profession, and to deter other lawyers from similar misconduct. To further these objectives and to promote consistency and predictability in the imposition of disciplinary sanctions, the Court looks to the ABA Standards for Imposing Lawyer Sanctions as a model for determining the appropriate discipline warranted under the circumstances of each case. The ABA framework consists of four key factors to be considered by the Court: (a) the ethical duty violated; (b) the lawyer's mental state; (c) the extent of the actual or potential injury caused by the lawyer's misconduct; and (d) aggravating and mitigating factors.
In Re Bailey, 821 A.2d 851, 866 (Del.2003). The Delaware Supreme Court has also emphasized that the purpose of the rules is not to punish lawyers. In Re Reardon, 759 A.2d 568, 575 (Del.2000), citing In Re Benge, 754 A.2d 871, 879 (Del.2000).
1. The Ethical Duty Violated
Respondent has stipulated to violating duties owed the public, the legal system, and the legal profession. He did so by violating Rules 1.15(a), 1.15(b), 8.4(a), 8.4(c), and 8.4(d). The Panel regarded Counts One and Two of the Petition as containing serious allegations, and examined the underlying facts and the rationale for dropping the counts at length during the hearing. Based on that examination, the Panel concurs with the decision not to pursue these issues primarily for the following reasons:
a. The report from Thomas Mammarella, Esq. (JPS 4), which was not disputed, sets forth a credible basis for the computations used in the initial tax filings;
b. The seller, Mr. Gerson, signed the revised documents; and
c. The suspicious trail of documents and revisions, while not reflecting *185 ideal office procedures, was plausibly explained.[1]
2. The Lawyer's Mental State
At the hearing Respondent admitted that he had acted negligently in failing adequately to supervise transactions in which he had an interest. He ascribed that to putting his own matters last and paying insufficient attention to them. To a large degree, the professional misconduct occurred because the Respondent acted as counsel and settlement agent in transactions in which he had an interest. Much as a lawyer who represents himself has a fool for a client, it appears that Respondent as settlement agent for transactions in which he had an interest failed to provide the level of attention to detail to himself and his entities that he would have provided to clients. He failed to do so and as a result he had "a mess on his hands." Tr. at 43.
a. The False Notarizations
Respondent at the hearing acknowledged that it was inappropriate for him as a member of the bar "to execute documents and then involve the staff in a procedure which I honestly knew did not fully comport with the requirements of my obligations or the obligations of any other attorney in the firm as a notary." Transcript of April 21, 2008 hearing at 14. Respondent's excuse was that the purpose for which the rule exists that a notary must personally observe a signatory attest to or execute a document which she notarizes to ensure the accuracy of the documents and representations for the benefit of any who might rely upon it was not violated due to his close personal relationship with the lenders for whom he was executing documents. Nonetheless, "certainly, it was an inappropriate thing to do." Id. at 14. See generally David C. Johnson-Glebe, "Professional Integrity and the Delaware Lawyer," circulated by James T. McKinstry on behalf of the Board on Professional Responsibility of the Delaware Supreme Court, August 28, 1992 (noting that "`There was no harm done'", "The client was benefited by the false notarizations", or "The literal observance of notarial formalities is too inconvenient in many cases" are excuses with which "the courts generally have little patience" and that an attorney responsible for false notarizations can expect more than a private admonition).
b. The Red Oak Transaction
The Panel finds that the record supports the stipulated negligence of Respondent in the Red Oak transaction. For example, Respondent testified that he was unaware that certain taxes totaling $48,000, which should have been collected and disbursed to the City of Wilmington and the State of Delaware in the Red Oak Transaction, in fact had not been collected and disbursed. The Panel finds disturbing that Respondent would sign an affidavit purporting to exempt a transaction in which Respondent had an interest from tax liability without reviewing it but Respondent testified that that is exactly what occurred. See Tr. at 29 ("I did not review it. I signed it. It was an exemption affidavit, which I expected to see in the transaction. And I didn't review it carefully at all.").
*186 3. The Extent of the Actual or Potential Injury Caused by the Lawyer's Misconduct
Respondent has admitted that his professional misconduct prevented the State of Delaware and the City of Wilmington from receiving transfer taxes totaling $48,000. He also testified at the hearing that upon learning of the allegation following the filing of the ODC complaint, he contacted the relevant authorities and paid $24,000 each to the State of Delaware and the City of Wilmington. The record reflects that neither authority sought any penalties or taxes. Accordingly, the record reflects that whatever injury occurred was remedied to the satisfaction of the relevant tax authorities. The record does not reflect any particular injury to clients from the false notarizations but such conduct does cause injury to the integrity of the legal system and the legal profession.
Based on the foregoing, the Panel approves the parties' stipulation that Respondent receives a public reprimand and permanent practice restrictions, and assumes responsibility for the costs of the proceeding, including the initial investigation and report performed by Mr. McCullough on behalf of the ODC. The Panel believes that the evidence supports the admitted violations of the duty to refrain from engaging in "conduct involving ... misrepresentation." Rule 8.4(c). This conduct, coupled with the admitted negligent failure properly to pay transfer taxes to the State of Delaware and the State of Delaware in the Red Oak Transaction, warrants more than a mere private admonition and more than a mere public reprimand. Permanent practice restrictions of not acting as a lawyer/settlement agent in any real estate transaction in which he has an interest and not notarizing any documents in any transaction in which he has an interest are also appropriate. The Panel believes that the practice limitations need to be extended to cover the admitted violations, i.e., directing another person to have documents notarized that were not signed or attested to in the presence of the notarial officer. Accordingly, the Panel recommends an additional item be added to the recommended sanction to prohibit Respondent from directing any person to have any documents notarized that are not signed or attested to, or would not be signed or attested to, in the presence of a notarial officer.
4. The Recommended Sanction
The Panel believes that with one adjustment as noted above, the sanctions to which the parties stipulated are appropriate. The stipulated sanctions are set forth below, except for Paragraph 2(c) which the Panel has added:
(1) The Respondent shall be publicly reprimanded for his violations of Rules 1.15(a), 1.15(b), 8.4(a), 8.4(c), and 8.4(d);
(2) The Respondent shall be subject to the following permanent restrictions on the nature and/or extent of his future law practice, as follows:
(a) In any real estate closing in which either the Respondent, or a business entity in which he has an ownership interest, is a party to the transaction, the Respondent shall not act as the lawyer/settlement agent. Under such circumstances, the Respondent shall make arrangements for the closing to be conducted by another attorney who is not a party to the transaction.
(b) In any real estate closing in which either the Respondent, or a business entity in which he has an ownership interest, is a party to the transaction, the Respondent shall not act as a notary for any documents relating to the transaction.
*187 (c) Respondent shall not direct any person to have any documents notarized that are not signed or attested to, or would not be signed or attested to, in the presence of a notarial officer.
(3) The Respondent shall be subject to the following conditions for a two-year period:
(a) The Respondent shall have completed an audit by a licensed certified public accountant for his 2009 and 2010 Certificates of Compliance, reporting the status of his compliance, or lack thereof, with the requirements of Rule 1.15 and Rule 1.15A, and shall file each annual Certificate of Compliance by no later than February 1 of each of these years. The Respondent shall also provide the ODC with a timely written confirmation that he has filed each annual Certificate of Compliance with the required pre-certification;
(b) The Respondent shall file and pay on a timely basis any federal, state and local payroll, gross receipts, and income taxes owed for his law practice. The Respondent shall also file and pay on a timely basis any transfer taxes owed for any real estate transactions in which he has a personal or business financial interest.
(c) The Respondent shall cooperate promptly and fully with the ODC in its efforts to monitor compliance with these conditions, including any audit performed at the request of the ODC or otherwise. The Respondent shall also cooperate with the ODC's investigation of any allegations of unprofessional conduct which may come to the attention of the ODC. Upon request of the ODC, the Respondent shall provide authorization for release of information and documentation to verify compliance with these conditions.
(d) The Respondent shall pay the costs of these disciplinary proceedings pursuant to Rule 27 of the Delaware Lawyers' Rules of Disciplinary Procedure, promptly upon being presented with a statement of these costs by the ODC. The costs to be paid by the Respondent will include, without limitation, the full cost of all investigative audit work concerning the Respondent's professional conduct, which was performed by Mr. Joseph McCullough at the request of the ODC.
The Panel agrees that the record supports the entry of a public reprimand, permanent practice conditions and Respondent paying for all costs of the proceeding, as set forth above. The Panel believes that the practice limitations need to be extended to cover the admitted violations, i.e., directing another person to have documents notarized that were not signed or attested to in the presence of the notarial officer. Accordingly, the Panel recommends that item 2 of the recommended sanction be expanded to include in 2(c) a prohibition against Respondent directing another person to have any documents notarized that are not signed or attested to, or would not be signed or attested to, in the presence of a notarial officer. Item 2(c) would read: "Respondent shall not direct any person to have any documents notarized that are not signed or attested to, or would not be signed or attested to, in the presence of a notarial officer."
5. Aggravating or Mitigating Factors.
The parties have stipulated that the aggravating factors are that Respondent engaged in a pattern of misconduct with respect to improper notarization procedures and the Respondent committed multiple disciplinary offenses.
The parties stipulated that the mitigating factors were that the Respondent has no prior disciplinary record, cooperated with the ODC's investigation, was inexperienced as a solo practitioner, and his character *188 and reputation is otherwise sound. The Panel accepts ODC's representation as to the letters which the ODC received vouching for the latter point and finds that the other factors are supported by the record. The Panel does not believe that these factors alter the judgment of the committee as to the appropriate sanction.
By: /s/ Lewis H. Lazarus
Lewis H. Lazarus, Esq.
Panel Chair
By: /s/ Kathleen Furey McDonough, Esq.
Kathleen Furey McDonough, Esq.
By: /s/ John Stafford
Mr. John Stafford
Dated: June 16, 2008
NOTES
[1] Board Hearing Transcript at 15.
[2] Id. at 16.
[3] Davis agreed to indemnify the sellers if the taxing authorities sought to recover the additional amounts.
[4] The Board recommended one additional practice restriction to those suggested by ODC and Davis. A copy of the Board's report to this Court is attached.
[5] In re Reardon, 759 A.2d 568, 575 (Del.2000).
[6] Board on Professional Responsibility Report at 15. See, also: Report at 16 ("[T]he record supports the stipulated negligence of Respondent in the Red Oak transaction.") (Emphasis added.)
[7] We have not lost sight of the fact that these charges were dismissed. The facts relating to those charges, however, are part of the stipulated record, which we review in its entirety.
[8] In re Bailey, 821 A.2d 851, 866 (Del.2003).
[9] 652 A.2d 1071 (Del.1995).
[10] 722 A.2d 1 (Del. 1998).
[11] 2007 WL 4245472 (Del.2007)
[12] 850 A.2d 291 (Del.2004).
[1] The Panel notes that, after learning of the allegations regarding the Binder Lane and Clifford Road transactions in the ODC complaint, and without conceding liability, Respondent paid the difference between the real estate transfer taxes he had paid and what would have been due if his characterization of the transactions were not accepted. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539421/ | 40 N.J. 320 (1963)
191 A.2d 478
THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
GEORGE DOYLE AND MONA DOYLE, DEFENDANTS-APPELLANTS.
The Supreme Court of New Jersey.
Argued May 21, 1963.
Decided June 4, 1963.
*321 Mr. Frank G. Schlosser argued the cause for defendants-appellants (Mr. Maurice M. Krivit, attorney).
Mr. Frank J. Cuccio, First Assistant Prosecutor of Bergen County argued the cause for plaintiff-respondent (Mr. Guy W. Calissi, Prosecutor of Bergen County, attorney).
The opinion of the court was delivered
PER CURIAM.
Defendants, Dr. George Doyle and his wife, Mona Doyle, were convicted of committing a criminal abortion contrary to N.J.S. 2A:87-1. The Appellate Division affirmed. State v. Doyle, 77 N.J. Super. 328 (App. Div. 1962). Since a constitutional question is involved, appeal was taken to this court as of right. R.R. 1:2-1(a).
On December 2, 1960 defendant Dr. George Doyle resided in Rutherford, New Jersey. Shortly after midnight Mrs. Pauline Fealey and Mrs. Rosemarie Intrieri left the doctor's home and drove away in Mrs. Fealey's car, with Mrs. Intrieri driving. After proceeding a short distance they were stopped by police officers who had had the Doyle home under surveillance. Following a conversation between the women and the officers, Mrs. Fealey was taken to Hackensack where she was examined by the county physician. The examination disclosed she had been aborted within the previous few hours. Meanwhile, Mrs. Intrieri was escorted back to Dr. Doyle's home where, at the request of the officers, she rang the doorbell and thus enabled them to gain admittance.
*322 The record before us indicates that Dr. Doyle was arrested by the officers immediately upon their entrance into the house. That action was followed by a search of the premises and seizure of the articles referred to in the Appellate Division opinion. 77 N.J. Super., at p. 340. (Just when in the sequence of events Mrs. Doyle was arrested is not clear. We make no ultimate finding at this time as to the order of the arrests or the search and seizure.) The officers had a search warrant with them which they exhibited. It had been issued on November 29, 1960 and authorized a search of the Doyle home "in the daytime or in the evening at any time prior to midnight." Although the exact time of the search is in dispute, the State concedes that it was made after midnight. The late execution of the warrant is presented as a ground of appeal. The question is reserved for the present. It is argued also that the affidavit supplied to the County Court as the basis for the issuance of the warrant was inadequate under our recent decision in State v. Macri, 39 N.J. 250 (1963). For reasons to be given hereafter, that issue likewise is reserved.
After defendants' arrest and the search and seizure of the articles, they were indicted for criminal abortion. Trial of the case began on June 6, 1961 and was concluded 23 days thereafter, on June 29, 1961. On June 19, 1961 the United States Supreme Court decided Mapp v. Ohio, 367 U.S. 643, 81 S.Ct. 1684, 6 L.Ed.2d 1081 (1961), which held that the rule which excludes in federal criminal trials evidence obtained by means of illegal search and seizure is binding on state courts as well in such cases. The following afternoon, June 20, 1961, when the assistant prosecutor began interrogating Dr. Doyle respecting service of the search warrant, defendants' counsel stipulated that the search and seizure were lawful and not being questioned. The assistant prosecutor then said: "Therefore, I will not pursue it any further." Although the trial continued for 9 days thereafter, during which time the press of the nation devoted much space and comment to Mapp, defense counsel made no effort to withdraw from his stipulation or to seek any relief under the new search and seizure doctrine.
*323 At no time from June 29, the date of conviction, to September 15, 1961, the date of sentence, was an application made to the trial court for a new trial because of the impact of Mapp. When the appeal was taken to the Appellate Division, however, a reversal was sought on the ground that the articles seized and introduced in evidence violated the Fourth and Fourteenth Amendments of the Federal Constitution within the meaning of Mapp. In that connection, however, the affidavit of the Bergen County detective on the basis of which the search warrant was issued was not included in defendants' appendix, nor was any specific attack made in the brief on the sufficiency of the allegations of probable cause appearing therein. The affidavit was added to the supplemental appendix filed in this court, and for the first time defendants argued that its factual allegations were inadequate to establish probable cause for the issuance of a search warrant.
The Appellate Division concluded it was unnecessary to decide the question because in its view, even if the articles admitted in evidence were obtained by an illegal search and seizure, on the whole record of the trial they were not sufficiently prejudicial to constitute reversible error. Our review of the evidence satisfies us that the articles, particularly the drugs and the contents of the garbage pail, if not evidential, were substantially detrimental to the defense and carried such inculpatory inferences in the light of the other proof in the case as to necessitate a finding of prejudice, if there was error. It follows, therefore, that consideration must be given to the claim of illegal search and seizure.
It is obvious that the legality of the search cannot be decided on the present record. An attempt to do so could be wholly unfair to the State. Even though the search and seizure were made prior to the Mapp decision, and therefore at a time when the evidence seized would have been admissible in the courts of our State, we have allowed defendants in situations similar to the present one to take advantage of the principle there announced. See, State v. Valentin, 36 N.J. 41 (1961); State v. Scrotsky, 38 N.J. 14 (1962); s.c. 39 *324 N.J. 410 (1963). But in those instances, where it appeared that, in reliance on the pre-existing rule, the State had not developed fully the facts and circumstances attending the search and seizure, we remanded the matter for the taking of any relevant additional evidence the State might care to offer on the subject, and for a finding by the trial judge as to the legality of the police action.
In the present case the need for such remand is manifest. Defense counsel stipulated the validity of the search and seizure and thus prevented the State from offering the proof it had available to combat the contrary claim now raised on appeal. Nevertheless, defendants insist a decision should be rendered on the obviously inadequate record furnished to us. The demand merits only summary rejection. Reference to but one incident occurring at the trial (apart from the stipulation) will serve to illustrate the unfairness of their position.
As has been indicated above, the police officers stopped the Fealey-Intrieri car very shortly after the women had left Dr. Doyle's house. At the trial the State endeavored to introduce the conversation which took place at that time between the officers and Mrs. Fealey and Mrs. Intrieri. Defendants' claim of hearsay was sustained. But if when this evidence was offered, the validity of the search and seizure at the Doyle house was then in question, the conversation would have been admissible (although necessarily it would have to be given out of the presence of the jury). We were advised at the oral argument that the officers were told by Mrs. Fealey, or by both women, that Dr. Doyle had just aborted Mrs. Fealey; a high misdemeanor, if true. N.J.S. 2A:87-1. On receipt of this information, the officers apparently proceeded directly to the Doyle house, arrested him and made the search and seizure in question. It is a commonplace of the law that a search which is incident to a lawful arrest is valid, irrespective of the existence of a search warrant, or of the fact that the search warrant is defective. See Abel v. U.S., 362 U.S. 217, 236-237, 80 S.Ct. 683, 4 L.Ed.2d 668, 684-685 (1960); State v. Smith, 37 N.J. *325 481, 492-494 (1962). Nor is it of significant consequence that such a search (the legally permissible limits of which need not be dealt with at this time) is incident to an arrest without a warrant where an arrest warrant is not necessary, a question which we reserve pending development of the full facts.
Under the circumstances, the matter is remanded to the County Court for the following purposes:
1. To permit the State to introduce all relevant testimony relating to (a) the arrest of Dr. and Mrs. Doyle (including the conversation immediately preceding the arrests between the officers and Mrs. Fealey and Mrs. Intrieri); (b) the question whether the search and seizure of the challenged articles were incidental to the arrest and took place after the arrest, or whether the search and seizure preceded the arrest. Defendants also may offer any pertinent testimony on the subject.
2. To enable the trial court to make a finding on all the evidence as to (a) whether the arrests were valid; (b) whether either or both of the arrests were made first and the search and seizure made thereafter as an incident thereof; or (c) whether the search and seizure preceded either or both of the arrests.
3. To permit defendants to present any available, relevant testimony to explain (a) the failure to object to the search and seizure during the 9 days of the trial which followed the Mapp decision; (b) the failure to apply to the trial court for a new trial on the basis of Mapp between the date of conviction and date of sentence, or before filing of the notice of appeal; (c) the failure to make a specific attack in the Appellate Division on the factual sufficiency of the affidavit on which the search warrant was based. This third aspect of the remand does not require any finding by the trial court. Any testimony offered shall be returned to us.
Pending return of all additional evidence and the finding of the trial court, we shall retain the appeal.
Remanded.
*326 For remandment Chief Justice WEINTRAUB, and Justices JACOBS, FRANCIS, PROCTOR, HALL, SCHETTINO and HANEMAN 7.
Opposed None. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539458/ | 411 Pa. 282 (1963)
Markle, Appellant,
v.
Robert Hall Clothes.
Supreme Court of Pennsylvania.
Argued April 16, 1963.
June 5, 1963.
Before BELL, C.J., MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.
*283 Louis George Feldmann, with him Richard A. Kane, for appellant.
John A. Gallagher, for appellee.
OPINION BY MR. CHIEF JUSTICE BELL, June 5, 1963:
Appellant instituted a trespass action against appellee, the owner of a so-called "low overhead" clothing store in Wilkes-Barre, to recover damages for personal injuries.
Clothing sold by the appellee was displayed on racks; the racks were made of pipe and were not attached to the floor. In the part of appellee's store where the plaintiff was injured, there were several parallel rows of such racks, adjacent rows being separated by aisles approximately 34 inches wide. When plaintiff, accompanied by her daughter, Mrs. Butler, was walking along one of the aisles between rows of racks they observed ahead of them another customer, a young girl of 14, who was examining clothing on one of the racks.
Mrs. Butler, who was walking ahead of her mother, passed safely by the other customer just mentioned, but when the appellant started to pass this other customer, the latter suddenly turned and bumped into the appellant with such force as to throw her off balance. In an effort to regain her balance, appellant reached for the top cross bar of an adjacent rack. In attempting to *284 grasp the top cross bar, appellant pushed the top of the rack away from her, but caused the bottom of the rack to strike her legs in such a way as to knock her down. Appellant fell to the floor and suffered the injuries complained of in this action.
The Court below entered a compulsory nonsuit, which it refused to remove; hence this appeal.
In Flagiello v. Crilly, 409 Pa. 389, 187 A. 2d 289, the Court said (page 390): "It is hornbook law that a judgment of nonsuit can be entered only in clear cases and plaintiff must be given the benefit of all evidence favorable to him, together with all reasonable inferences of fact arising therefrom, and any conflict in the evidence must be resolved in his favor: Castelli v. Pittsburgh Railways Company, 402 Pa. 135, 165 A. 2d 632; Stimac v. Barkey, 405 Pa. 253, 174 A. 2d 868; Borzik v. Miller, 399 Pa. 293, 159 A. 2d 741.
"The law is likewise clear that the plaintiff has the burden of proving by a fair preponderance of the evidence that defendant was negligent and that his negligence was the proximate[*] cause of the accident: Stimac v. Barkey, 405 Pa., supra; Schofield v. King, 388 Pa. 132, 130 A. 2d 93."
Appellant contends that defendant was negligent in failing to secure the clothing racks to the flooring and that this was the proximate cause of her injuries. To sustain plaintiff's contention of negligence in this case would make the appellee an insurer of the safety of its business invitees, and we have held that a storekeeper is not such an insurer: Hess v. Sun Ray Drug Co., 387 Pa. 199, 201, 127 A. 2d 699; Schaff v. Meltzer, 382 Pa. 43, 45, 114 A. 2d 167; McAdoo v. Autenreith's Dollar Stores, 379 Pa. 387, 391, 109 A. 2d 156; Parker v. McCrory Stores Corp., 376 Pa. 122, 124, 101 A. 2d 377; Jerominski v. Fowler, Dick and Walker, 372 Pa. 291, *285 295, 93 A. 2d 433; Lanni v. Pennsylvania Railroad Co., 371 Pa. 106, 110, 88 A. 2d 887; Sheridan v. Great Atlantic & Pacific Tea Co., 353 Pa. 11, 13, 44 A. 2d 280; Rogers v. Max Azen, Inc., 340 Pa. 328, 330, 16 A. 2d 529; Hellriegel v. Kaufmann & Baer Co., 337 Pa. 149, 154, 9 A. 2d 370; Stais v. Sears-Roebuck & Co., 174 Pa. Superior Ct. 498, 502, 102 A. 2d 204; Kramer v. Meyer, 168 Pa. Superior Ct. 13, 15, 76 A. 2d 481. Moreover, assuming arguendo that defendant's racks were so insecure as to warrant a finding of negligence, it is clear that the proximate cause of appellant's injury was not appellee's failure to fasten the clothing racks to the floor, but the independent negligent action of the "bumping" girl.
Judgment of nonsuit affirmed.
DISSENTING OPINION BY MR. JUSTICE MUSMANNO:
If a store owner maintains an oily, greasy floor with moveable racks which will slide, slip, tip or upset as a result of conditions which are foreseeable, I believe that a jury question results as to whether he is not negligent in such maintenance if a customer is injured because of such slipping, sliding or upsetting. The least a customer should expect when he enters a retail establishment is that its fixtures will not knock him over like loose furniture in a pitching ship at sea.
I believe that the facts in the case of Polinelli v. Union Supply, 403 Pa. 547, are so sufficiently close to the facts in this case that the principle therein enunciated should control this litigation. In that case Justice EAGEN said: "Union's (defendant owner) contention that if any negligence existed on its part, it was not the proximate cause of the accident is also without merit. It is argued that the act of the carpenter, an employee of Hileman, by jostling the wife-plaintiff, was *286 the primary, efficient and proximate cause of the injury. Under the facts, whether or not Union's negligence was the proximate cause of the accident was for the jury. One, who negligently creates a dangerous situation, cannot escape liability for the natural and probable consequences thereof, even though the innocent act of a third party may have contributed to the result. Jeloszewski v. Sloan, 375 Pa. 360, 100 A. 2d 480 (1953); Jowett v. Pa. Power Co., 383 Pa. 330, 118 A. 2d 452 (1955); Landis v. Conestoga T. Co. (No. 1), 349 Pa. 97, 36 A. 2d 465 (1944); Murray v. Frick, 277 Pa. 190, 121 Atl. 47 (1923); [29 A.L.R. 74;] Christman v. Segal, 143 Pa. Superior Ct. 87, 17 A. 2d 676 (1941); Restatement, Torts, § 447." (Matter in parenthesis supplied.)
I would, therefore, remove the nonsuit and give the injured plaintiff her day in court, which she has not yet had.
NOTES
[*] Italics, ours. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539459/ | 201 Pa. Superior Ct. 91 (1963)
Jackson
v.
Capello et al., Appellants.
Superior Court of Pennsylvania.
Argued March 11, 1963.
June 12, 1963.
*92 Before RHODES, P.J., ERVIN, WRIGHT, WOODSIDE, WATKINS, MONTGOMERY, and FLOOD, JJ.
William S. Bailey, with him John B. Pearson, and Bailey, Pearson & Bolton, for appellant.
James H. Stewart, Jr., with him Wilhelm E. Shissler, and Nauman, Smith, Shissler & Hall, for appellant.
Arthur Berman, with him Compton, Handler, Berman & Boswell, for appellee.
OPINION BY WATKINS, J., June 12, 1963:
James Jackson the plaintiff-appellee, brought this action in trespass in the Court of Common Pleas of *93 Dauphin County against William L. Capello, Grace A. Capello, his wife, William Capello, a minor, Charles B. Weaver, Jr., Betty M. Weaver, his wife, and Charles Weaver, III, a minor, as defendants, for personal injuries alleged to have arisen on September 29, 1958 when the plaintiff claims he was shot in the left thigh by a bullet.
The minor defendants William and Charles had their respective fathers named guardians ad litem. The case was tried before Judge KREIDER of the court below and compulsory nonsuits were entered in favor of the two mothers and it went to the jury as to the liability of the minor boys and their fathers. The jury entered a verdict in favor of the fathers individually, William L. Capello and Charles B. Weaver, Jr., as defendants, but found against them jointly as guardians ad litem of the minor defendants, in the sum of $2000.
The plaintiff filed a motion for a new trial and a motion to take off the nonsuit granted in favor of the mothers. A motion was filed on behalf of the minor defendant, Charles Weaver, III, for judgment n.o.v. The court below denied the motion for judgment n.o.v.; denied the motion to remove the nonsuits; but granted the plaintiff's motion for a new trial on the ground that the verdict was inadequate and limited the new trial to the consideration of damages only.
The defendant Weaver appealed from the refusal of his motion for judgment n.o.v. and from the granting of a new trial on the ground of inadequacy limited to damages, and the defendant Capello has appealed from the granting of a new trial on the ground of inadequacy limited to damages.
On September 29, 1958 at about 4:45 p.m., the plaintiff was injured when struck by a bullet fired by the minor, William Capello, from a rifle owned by another minor, Charles B. Weaver, III. At the *94 time William was 16 years of age and Charles was 12 years old. The boys having first secured permission from their fathers, were shooting targets in an area known as the Hollows, in the area of Swatara Township. At the time each of the boys owned a 22 caliber Marlin rifle which they had with them in the Hollows. While shooting in the general area, Weaver thought that the telescopic sight on his rifle was not accurately set and the younger boy's gun was transferred to Capello in order that the older boy might check the accuracy of the sight. A shot fired by Capello from the gun of Weaver at a cornstalk to check the accuracy of the sight caused the bullet, directly or by riccochet, to strike the left thigh of the plaintiff.
The plaintiff testified that prior to entering The Hollows he shouted, "Stop that shooting, I'm going down to my garden"; that after hollering he waited three or four minutes, heard no shots and then descended to the bottom of the Hollows; that while crossing a small stream he heard a shot and then immediately felt a sting in his leg; and that he then shouted, "who fired that shot?" The boys admitted having heard the shout after the shot was fired but not the warning before the shot was fired and by reason of the tone of voice they ran away.
The principal argument in support of Weaver's motion for judgment n.o.v. is that there was insufficient evidence to show that the Capello boy was the agent of the Weaver boy at the time of the shooting. We agree with the disposition made by the court below of this motion and adopt that portion of the court's opinion, reading as follows:
"The evidence established that while the boys were shooting in the general area of The Hollows, Charles thought that the telescopic sight of his rifle was not accurately set, whereupon his rifle was transferred to William in order that the older boy might check its *95 accuracy. The Capello boy was a marksman of ability. He had been trained in the Police Athletic League and was a member of the National Rifle Association and had been licensed to hunt by the Commonwealth of Pennsylvania. . . .
"In Mifflin Riding Assn. v. Western Mutual Fire Ins. Co., 376 Pa. 157, 160, 161 (1954), the Court speaking through Mr. Justice MUSMANNO, stated: `This litigation involved an issue of fact and fact alone . . . that issue was submitted to the jury. "It is a well established principle that whatever evidence has a tendency to prove an agency is admissible even though it be not full and satisfactory, and it is the province of the jury to pass upon it. `Direct evidence is not indispensable indeed, frequently is not available but instead circumstances may be relied on, such as the relation of the parties to each other and their conduct with reference to the subject matter of the contract.'" (Osborne v. Victor Dairies, 138 Pa. Superior Ct. 117).' . . .
"In considering the Weaver motion for judgment n.o.v. we are required to view the testimony in the light most advantageous to the plaintiff, giving him the benefit of every reasonable inference. In Downey v. Rymorowicz, 397 Pa. 205, at 207 (1959), the Court, in an opinion written by Mr. Justice McBRIDE, said: `We need consider only the contention that Rymorowicz is entitled to judgment n.o.v. In doing so we shall view the testimony in the light most advantageous to plaintiffs, giving to them the benefit of every inference that might reasonably be deduced from the evidence and resolving all conflicts in their favor. Koehler v. Schwartz, 382 Pa. 352, 115 A. 2d 155; Beatty v. Hoff, 382 Pa. 173, 114 A. 2d 173.'
"In Feagles v. Sullivan, Gdn., 32 Pa. D. & C. 47 (1938), Phila. Co., Brown, Jr., J., it was held that a minor who, having borrowed his father's automobile, *96 permits a companion to drive it in order to see how it runs, while he sits beside him, is liable for the companion's negligence, not only on the basis of respondeat superior, but also on the ground that, because of his presence, he has such a high degree of control over the driver, the negligence of the driver is legally his.
"In the instant case the jury undoubtedly found the Capello boy to be the agent of Charles Weaver III even though William may have been a volunteer in checking the gun sight. In the Restatement (2d), Agency, it is stated: (p. 497) `§ 225. Person Serving Gratuitously. One who volunteers services without an agreement for or expectation of reward may be a servant of the one accepting such services.'
"We think there was sufficient evidence to support a finding by the jury that William was the agent of Charles Weaver III at the time the Capello boy fired the shot which wounded the plaintiff."
We also agree with the disposition of the complaint of Weaver as to the contributory negligence of the plaintiff. "Contributory negligence should not be declared to exist as a matter of law unless such negligence is so clearly revealed that reasonable individuals cannot disagree as to its existence." Greco v. 7-Up Bottling Co. of Pgh., 401 Pa. 434, 446, 165 A. 2d 5 (1960). The action of this plaintiff in shouting, and the waiting three or four minutes before proceeding into the Hollows even though the two minors testified they only heard him "holler" after he was shot, was certainly not that type of evidence to find the plaintiff guilty of contributory negligence as a matter of law.
We also agree with the action of the court below in refusing to take off nonsuits entered in favor of Grace A. Capello and Betty M. Weaver, the mothers of the minor boys. As the court below said: "The uncontradicted evidence is that each of the minor defendants secured the permission from his father to go target *97 shooting in The Hollows on the day in question. The mothers did no more than acquiesce in the decision of their husbands who in law are still the heads of their households." The court below also quoted with approval Guerra v. Hiduk, 16 Pa. D. & C. 417 (1931), a Washington County case, which held: "If a father, in the exercise of his control over his son, permits the latter to possess and use a dangerous weapon, and the wife does nothing at all except to refrain from attempting to interfere with her husband's control over the son's conduct, we do not think she can be held liable for maintaining this merely negative attitude; she is presumed (in the absence of evidence to rebut the presumption) to be under his domination as to the matter of family government and control."
The grant of a new trial on the grounds of inadequacy limited to damages alone, under the facts in this case, was an abuse of discretion. We cannot understand why, under the circumstances of this case, the court below brushes aside the possibility of its being a compromise verdict. The verdict of $2000 is certainly not nominal and when, under the facts of this case, there was serious dispute as to whether the plaintiff was shot at all; serious dispute and argument as to contributory negligence; serious dispute as to the legal responsibility of the appellant under the agency theory; all of which were carefully set forth in the court's charge containing 63 pages, it seems to be just the type of case that a jury in coming to a unanimous conclusion must compromise.
A close examination of the evidence in this case makes the accurate estimate of his earnings impossible. It is only certain that he lost wages but whatever amount is fixed could only be a guess. As the court said in the charge: "What is the evidence on that? (loss of earnings) That's for you. There is evidence that he made as much money after the alleged injury *98 as he did before the injury. However, the law is also to this effect, that if a man has been injured through the negligence of another, and that he suffered an injury which decreased his earning power permanently in the future, that he can recover for that diminution of earning power even though he made more money after the accident than he did before. So you will consider how that is. . . . If you find that the plaintiff is entitled to damages, of course he would be entitled to recover his medical bills, his hospital bills, his loss of clothing, and he would be entitled to damages for pain and suffering. Now on that phase of the case we cannot give you any yardstick or measure by which you may determine what he should receive for his pain and suffering."
The plaintiff's testimony established that he sustained hospital expenses in the amount of $495.75 and medical expenses of $160. In addition, the plaintiff made a claim for a cleaning bill of $5.90. He also claims transportation charges to the doctor's office of $2 per trip for ten trips, or $20. This, if the jury awarded it all, amounted to $681.65.
As to loss of wages, the evidence is indeed most confusing. He failed to work during the period from September 29, 1958 until January 5, 1959, a period of 69 working days. There was also evidence that work was not available for 23 days of this time. There was also a conflict as to whether, when he was working he was paid as a chipper at $2.46 per hour, or if he worked at a lesser hourly rate. Even if the jury decided, and they weren't bound to, to give him 69 days loss of wages, the most it could amount to, based on his maximum claim, was $1357.92, while the defendant claims the total could only come to $905.28, and the jury was not bound by either the maximum claimed by the plaintiff or the minimum claimed by the defendant. Certainly, under this record the jury was justified in *99 cutting down the hourly rate and the maximum claimed. His total claim of out-of-pocket expenses amounted to $2039.57, while based on the estimation of the defendant, who took into consideration certain doubtful items, which the jury could have also done, amounted to $1424.65.
Most certainly the jury was not bound to believe everything stated by the plaintiff. In Karcesky v. Laria, 382 Pa. 227, 114 A. 2d 150 (1955), Justice BELL, now Chief Justice, said, at pages 234, 235:
"The doctrine of comparative negligence, or degrees of negligence, is not recognized by the Courts of Pennsylvania, but as a practical matter they are frequently taken into consideration by a jury. The net result, as every trial judge knows, is that in a large majority of negligence cases where the evidence of negligence is not clear, or where the question of contributory negligence is not free from doubt, the jury brings in a compromise verdict. Moreover, it is important to remember that neither a jury nor a judge who sees and hears the witnesses have to believe everything or indeed anything that a plaintiff (or a defendant) or his doctor, or his other witnesses say, even though their testimony is uncontradicted.
"Where the evidence of negligence or contributory negligence, or both, is conflicting or not free from doubt, a trial judge has the power to uphold the time-honored right of a jury to render a compromise verdict, and to sustain a verdict which is substantial a capricious verdict or one against the weight of the evidence or against the law, can and should always be corrected by the Court.
"Where the verdict is, as here, substantial, a new trial `for inadequacy' should be granted only when the trial court is convinced the verdict is so unreasonably low as to present a clear case of injustice even in the light of the doubtful negligence of defendant or the *100 doubtful contributory negligence of the plaintiff, or both."
Also in Elza v. Chovan, 396 Pa. 112, 152 A. 2d 238 (1959), the late Justice BOK, speaking for the majority, said, at page 115:
"The mere fact that a verdict is low does not mean that it is inadequate. Nominal damages have been upset: Bradwell v. Railway Co., 139 Pa. 404, 20 A. 1046 (1890); Spence v. Stockdale Borough, 57 Pa. Superior Ct. 622 (1914), and have been allowed to stand: Palmer v. Leader Publishing Co., 7 Pa. Superior Ct. 594 (1898).
"The same is true of low but substantial verdicts. In Stevens v. Frank, 151 Pa. Superior Ct. 222, 30 A. 2d 161 (1943), a judgment of $200 for a wife and nothing for her husband was affirmed. In Ewing v. Marsh, 174 Pa. Superior Ct. 589, 101 A. 2d 391 (1953), a verdict of $3000 was upheld, the court saying: `This was low, but certainly not a nominal verdict such as would give rise to an inference of mistake or partiality by the jury.' And in Alleva v. Porter, 184 Pa. Superior Ct. 335, 134 A. 2d 501 (1957), where the verdict was low but substantial, the grant of a new trial was reversed and judgment was entered on the verdict.
"There is no magic in amounts but only in the circumstances, and compromise verdicts are both expected and allowed: Karcesky v. Laria, 382 Pa. 227, 114 A. 2d 150 (1955). The compromise may arise out of damages or negligence or the balance of evidence concerning either or both, and the grant of a new trial may be an injustice to the defendant rather than an act of justice to the plaintiff: See Patterson v. Palley Mfg. Co., 360 Pa. 259, 61 A. 2d 861 (1948)."
And in Raffaele v. Andrews, 197 Pa. Superior Ct. 368, 178 A. 2d 847 (1962), which involved an injury to the plaintiff's leg, the out-of-pocket expenses amounted to $873. and the jury brought in a verdict for that *101 exact amount, and this Court said: "From a review of the record it appears that the appellant's injuries and the consequent result of the injuries was fairly conveyed to the jury and was fairly treated in the charge of the court below, and the verdict by the jury was not for a nominal sum but represented the out-of-pocket expenses in toto of the plaintiff, . . ."
It is true that in this case the Court was affirming the action of the court below in refusing to grant a new trial on the ground of the inadequacy of the verdict. But it seems obvious that the plaintiff in the instant case had far less reason than Raffaele to complain of the size of the verdict. The right of the jury to bring in a compromise verdict, where the issue of liability is not clear, and there are conflicting versions as to the negligence of the defendant and the contributory negligence of the plaintiff, was upheld by this Court in Walbert v. Farina, 199 Pa. Superior Ct. 361, 185 A. 2d 825 (1962).
The court below should have taken into account the complexity of the issues in this case, especially the evidence of the damages for loss of earnings and the fact that the jury was being asked to impose liability on a twelve year old boy for the act of his sixteen year old companion. We feel that this verdict was substantial and if not completely compensatory it represents a compromise that could be well expected from the conflicting evidence of liability.
The order awarding a new trial on the ground of inadequacy relating to damages only is reversed, the verdict reinstated, and it is directed that judgment be entered on the verdict. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539472/ | 232 Md. 51 (1963)
191 A.2d 575
HOFFMAN
v.
LIBERTY MUTUAL INSURANCE COMPANY
[No. 344, September Term, 1962.]
Court of Appeals of Maryland.
Decided June 17, 1963.
The cause was argued before BRUNE, C.J., and HENDERSON, PRESCOTT, MARBURY and SYBERT, JJ.
Gerald H. Cooper for the appellant.
J. William Schneider, Jr., and Eugene A. Edgett, Jr., for the appellee.
MARBURY, J., delivered the opinion of the Court.
At issue on this appeal from the granting of appellee's motion for summary judgment, is the question whether an insurance carrier may defeat the statutory lien of an attorney for his fee by applying funds held in escrow, pursuant to an order of the Workmen's Compensation Commission, to satisfy an overpayment made to a claimant.
The facts in this case are not in dispute. The appellant, Leon Hoffman, a practicing attorney in Baltimore City, represented a claimant, Homer Ross, before the Workmen's Compensation Commission for injuries sustained in the course of claimant's employment. The appellee, Liberty Mutual Insurance *53 Company, was the insurance carrier for the employer. Certain issues were raised before the Commission. The hearing resulted in an award dated April 26, 1961, in which the Commission found that the claimant had sustained an accidental injury arising out of and in the course of his employment, and further that he was temporarily totally disabled from May 17, 1959, to November 30, 1959, inclusive, and sustained a permanent partial disability under "Other Cases" amounting to a 45% industrial loss of the use of his body, of which 25% was attributed to the present accident and 20% was attributable to pre-existing disability. The appellee filed an appeal from the award on May 19, 1961, to the Baltimore City Court. The appellant filed a petition for an attorney's fee under Code (1957), Article 101, § 57, as amended by Chapter 64 of the Acts of 1958, and Rule No. 22 of the Rules of Procedure of the Workmen's Compensation Commission; and an order approving a fee of $750 was signed on May 23, 1961, with the provision that the fee was not to be paid until the pending appeal was determined. The appellee received a copy of the petition for the fee and the order of the Commission approving it. The appellant notified the appellee by letter dated June 5, 1961, that pursuant to Rule No. 22 his fee, as well as doctors' fees, should be placed in escrow until the appeal was determined.
Since the appeal by the appellee did not stay the award of the Commission, the appellee forwarded in care of the appellant, on June 27, 1961, two checks due the claimant. They were in the amount of $1925 and $1131.43 and represented respectively, permanent partial benefit payments which had accrued to date, and temporary total disability benefits due under the award. The appellant, pursuant to an agreement with the appellee, forwarded $1105 in care of the claimant's employer, reimbursing the employer's disability benefits carrier, for health and accident benefits previously paid to the claimant, to which the claimant was not then entitled because of the award of the Commission.
On February 7, 1962, the appeal was tried in the Baltimore City Court before Judge Oppenheimer and a jury, at which *54 time the jury modified the award of the Commission. The jury found that the claimant had sustained a 35% permanent partial industrial loss of the use of his body, of which 20% was pre-existing, and affirmed all of the other findings of the Commission. Thereupon, the Commission on March 12, 1962, passed a modified award of compensation implementing the findings of the jury, the effect of which reduced the award to the claimant for permanent partial disability from $3125 to $1875, a difference of $1250. Subsequently a new petition for attorney's fee was filed by the appellant, and on April 6, 1962, the Commission passed an order awarding the appellant a fee of $600, as well as doctors' fees. Appellee received a copy of the petition and the order of the Commission approving the fee.
While the appeal was pending the appellee paid out to the claimant a total of $2250, which was all of the money due under the permanent partial disability award, with the exception of the appellant's fee and doctors' fees, all of which were being held in escrow pending the outcome of the appeal. Upon the completion of the appeal and after the new attorney's fee had been awarded, the appellant requested payment of his fee, as approved by the Commission, but the appellee refused to pay it, on the ground that all payments ordered by the Commission pursuant to its modified award had been made to the claimant as requested, and that there was in fact a $375 overpayment owed by claimant to the employer and insurer, so that there was no money in the hands of the appellee due the claimant upon which appellant's claimed lien could be asserted.
Upon refusal of the appellee to pay him the fee, the appellant instituted suit in assumpsit in the Baltimore City Court, and accompanied his pleading with a motion and affidavit for summary judgment. Appellee answered the motion and at the hearing thereon, at the suggestion of the trial judge, filed its own motion for summary judgment. On January 3, 1963, Judge Oppenheimer denied appellant's motion and granted a summary judgment in favor of the appellee for costs.
Code (1957, 1962 Cum. Supp.), Article 101, § 57 provides that if a claim for an attorney's fee is approved by the Commission *55 it shall become a lien upon the compensation awarded, but shall be paid therefrom only in the manner fixed by the Commission. The Commission, pursuant to Code (1957), Article 101, § 10, has promulgated rules and regulations of procedure, one of which is Rule No. 22. This rule provides that the filing of a petition for an attorney's fee with the Commission and service upon the employer and insurer of a copy of the petition is notice to the employer and insurer, to reserve in "escrow" the amount of fee requested in such petition until such time as the amount of the fee is determined by the Commission.
The effect of the above mentioned statute and rule is to impose a lien in the amount of the attorney's fee upon a part of the award equal to the amount of the fee approved by the Commission, which is to be held in escrow by the insurer. It is this amount in escrow to which the lien attaches. This is an interception of the money in the hands of the insurer. The appellee recognized this lien and stopped payments when the amount of permanent partial disability awarded reached a sum which, when added to the attorney's fee and doctors' fees, would equal the total original award. It now contends that when the court, on appeal, reduced the amount of the award, no money remained in its possession upon which the lien could attach.
Although Maryland has no statute providing for an attorney's lien as such, Article 101, supra, does provide for a lien in Workmen's Compensation cases. The lien attached when the Commission issued its initial award. It was not abated by the appeal, but the amount of the lien was subject to change by the result of the appeal. Appellee was still compelled to keep in an escrow fund an amount equal to the ultimate fee.
The purpose of Rule No. 22 is obviously to protect attorneys who represent claimants before the Commission. We think the language in Lehigh & N.E.R. Co. v. Finnerty, 61 F.2d 289, 291 (3d Cir.), is particularly applicable here. In that case, an attorney who represented an employee injured in the line of his work was successful in imposing a statutory attorney's lien on the employer who, without the knowledge *56 of the attorney, had settled with the injured employee. In answering the employer's contention that the employer was only liable if the employee could not be sued, the Court said:
"To adopt this view would eliminate from the statute the protection which the Legislature clearly intended to afford an attorney against being deprived of his fee, where he has brought an action or suit for a plaintiff, which action or suit was settled between the parties without such attorney's consent. * * * To take any other view [other than that he may go against the employer first] would defeat the purpose which called the statute into being."
Although that case was based on a different factual situation, the same principle applies. Article 101, § 57, and Rule No. 22 are designed to protect attorneys. The appellee cannot set aside in escrow the original fee, prosecute an appeal resulting in a lower award, and then take the position that the attorney's lien does not apply. This would defeat the purpose of the law and the rule adopted pursuant thereto. The fact that appellee was compelled to make payments during the pendency of the appeal was not the result of appellant's action, but of the law, for this has been established since Branch v. Indemnity Ins. Co. (1929), 156 Md. 482, 144 Atl. 696. But for the appellant's lien the appellee would have been compelled to pay out the full amount of the first award before the appeal was determined. Appellee is estopped from claiming there is no fund from which the lien can be satisfied. The lien of the fee attached at the time of the Commission's original order, and, as stated above, the only effect of the new modified award and order was to change the amount of the fee. Contrary to appellee's contention, no money was owed by the claimant to appellee, since an overpayment does not permit a recovery by the insurer in this situation. Branch v. Indemnity Ins. Co., supra. We hold that the lien was still in effect and that appellee is deemed to be holding in escrow the amount of appellant's fee. Appellee instituted the appeal and it can not be allowed to say now that by being successful in reducing the *57 award, appellant's fee is extinguished when the lien was in effect all along. In Sargent v. New York Cent. & H.R.R. Co. (N.Y.), 103 N.E. 164, 166, a case involving the enforcement of a statutory attorney's lien, the New York Court of Appeals stated:
"The lien did not spring from the contract, but from the statute, and it secured the compensation of the intestate [the attorney having died] as payable under correct legal rules. When the settlement was arranged, the stipulated fund which by payment to McLeod [the client] was to carry it out and into which the cause of action was transformed was charged with the lien. The defendant having knowledge of the lien may not say that it disregarded it and parted with the entire fund. It was bound to retain, and the law conclusively assumes it has retained, sufficient to pay the sum which the plaintiff was entitled to receive." (Italics supplied).
Here the appellee had knowledge of the lien and it can not be heard to say it paid that amount to claimant, particularly since the fund was in escrow.
In view of what has been said above it follows that the trial judge was in error in awarding summary judgment to the appellee, and that summary judgment should have been entered for the appellant for the amount of the fee.
Judgment reversed and judgment entered for appellant against appellee for $600, with interest from April 6, 1962. Costs to be paid by appellee. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539478/ | 40 N.J. 295 (1963)
191 A.2d 465
ROBERT THEOBOLD, PLAINTIFF-RESPONDENT AND CROSS-APPELLANT,
v.
LEON ANGELOS AND DELAWARE TOWNSHIP, NOW KNOWN AS CHERRY HILL TOWNSHIP, DEFENDANTS-APPELLANTS AND CROSS-RESPONDENTS.
The Supreme Court of New Jersey.
Argued May 6, 1963.
Decided June 3, 1963.
*297 Mr. Samuel P. Orlando argued the cause for defendants-appellants and cross-respondents.
Mr. Frank E. Vittori argued the cause for plaintiff-respondent and cross-appellant (Mr. John H. Reiners, Jr., attorney).
*298 The opinion of the court was delivered by FRANCIS, J.
This is an automobile negligence case.
Plaintiff Robert Theobold is the owner of certain premises located on Berlin Road, Delaware Township, New Jersey. At about 2:00 A.M. on September 22, 1960 James Anderson was driving his car in an easterly direction on Berlin Road when for some reason, it went out of control, spun around and came to rest partly on Theobold's property and partly on the street. Theobold and his son-in-law, Kenneth Golden, were awakened, dressed themselves, and went outside to investigate the happening. The Delaware Township police were telephoned, and shortly thereafter Officer Leon Angelos appeared on the scene in a police car which he parked near the Anderson vehicle. The exact position occupied by Angelos' car was the subject of dispute in the litigation which followed. It was also alleged later that its dome light was not functioning at the time. Theobold was standing between the Anderson and police cars; Golden was nearby. While the four men were engaged in conversation, Francis X. Conaty, who had been driving along Berlin Road, crashed into the rear of the police car, driving it into Anderson's car and pinning Theobold's legs between the two vehicles. Theobold was severely injured. Golden, Angelos and Anderson also suffered some minor injuries.
Thereafter, Theobold and Golden sought damages from Conaty on account of their injuries and losses. Angelos instituted a similar suit against Conaty. Conaty brought a third-party action seeking contribution from Anderson, Angelos and Delaware Township as joint tort-feasors in the event he should be held liable to Theobold and Golden. Angelos and the township then counterclaimed against Conaty for contribution should they be found liable to Theobold and Golden. Finally, Theobold and Golden amended their original complaint and added Anderson, Angelos and the township as defendants in their action.
Prior to trial, Theobold settled his claim against Conaty and Anderson for $90,000, the former paying $88,500 and the latter $1,500. Golden also made an adjustment with these *299 defendants, Conaty paying him $1,500 and Anderson $500. A stipulation of dismissal as to Conaty and Anderson was then entered. The case proceeded to trial as to Angelos and the township and resulted in a jury verdict against them of $65,000 for Theobold and of $1,000 for Golden. At plaintiffs' request, the trial court submitted separate written interrogatories to the jury calling for a specific finding whether either Anderson or Conaty was guilty of negligence and if so, whether such negligence was a "concurring and proximate cause of" plaintiffs' injuries. This was done, although as the result of the settlement, the case was not being tried formally against Anderson or Conaty. No issue as to the propriety of such interrogatories is presented here, and decision thereon is expressly reserved. In returning its verdict, the jury answered the questions with a negative finding as to Anderson's negligence, and an affirmative one as to Conaty.
Upon receipt of the verdicts of $65,000 for Theobold and $1,000 for Golden, the trial court undertook to mold them in accordance with his conception of the requirements of section 3 of the Joint Tortfeasors Contribution Law, N.J.S. 2A:53A-1 et seq. The section provides:
"Where injury or damage is suffered by any person as a result of the wrongful act, neglect or default of joint tortfeasors, and the person so suffering injury or damage recovers a money judgment or judgments for such injury or damage against one or more of the joint tortfeasors, either in one action or in separate actions, and any one of the joint tortfeasors pays such judgment in whole or in part, he shall be entitled to recover contribution from the other joint tortfeasor or joint tortfeasors for the excess so paid over his pro rata share; * * *."
In molding the verdict, he accepted the jury's negative answer to the interrogatory as to Anderson's negligence, and eliminated him as a joint tort-feasor for purposes of adjudging the basis for contribution between Conaty on the one hand and Angelos and the township on the other. The latter two defendants had to be considered as a single tort-feasor. N.J.S. 2A:53A-1. Thus, with two tort-feasors involved, he divided Theobold's verdict of $65,000 into two equal parts of $32,500. *300 One part, in that amount, he treated as satisfied by the Conaty settlement. Then the $1,500 settlement payment made by Anderson was deducted from the remaining $32,500, and judgment for the balance of $31,000 was entered against Angelos and the township.
The same course was followed with respect to Golden's verdict of $1,000. It, too, was divided in half indicating a liability for purposes of application of the statute, of $500 for Conaty and $500 for the unit, Angelos and the township. Conaty's liability was considered satisfied because of his pretrial settlement of $1,500. Then Anderson's payment of $500 was deducted from the remaining $500 chargeable against Angelos and the township, and Golden's verdict of $1,000 was adjudged satisfied.
Thereafter, Angelos and the township moved for an order directing the clerk of the court to enter a satisfaction of the judgment of $31,000 outstanding against them. The application was based upon the ground that the plaintiff Theobold was entitled to be compensated once for his injuries, and since he received from Conaty and Anderson $90,000, or $25,000 in excess of what the jury had assessed by its verdict as reasonable compensation for his injuries and losses, i.e., $65,000, the judgment record should be marked satisfied. Obviously, if the motion prevailed, Angelos and the township would be relieved of any financial obligation toward Theobold.
Plaintiff Theobold countered with a motion for a new trial as to damages only, or in the alternative for an order amending the record to reflect as an outstanding judgment the full verdict of $65,000. The latter portion of the motion was predicated upon the contention that, as the result of the trial court's charge, the jury had mistakenly understood it was to decide upon the sum representing just compensation for the plaintiff, then divide it among the number of tort-feasors it found responsible, and return a verdict accordingly against Angelos and the township (the only remaining defendants in the case) for their pro rata share, if it found them liable to the plaintiff.
*301 Upon denial of all motions, Angelos and the Township appealed; Theobold cross-appealed. We certified the matter on our own motion before it was argued in the Appellate Division.
The appeals involve a number of problems respecting the administration of the Joint Tortfeasors Contribution Law. We have concluded, however, that they should not be decided at this time, because we are convinced justice requires a new trial of the issue of damages only. Examination of the charge of the court with respect to the settlements made by plaintiffs with Anderson and Conaty, and the effect they would have on the determination and assessment of damages by the jury, indicates such a grave probability of mistaken understanding by the jurors as to their proper function in deciding upon the amount of the verdict, if they found liability on the part of the remaining defendants, Angelos and the township, as to necessitate reconsideration of the problem by another and more fully instructed jury.
Under the common law there was no right of contribution among joint tort-feasors. Release of one operated as a release of all such wrongdoers. Payment of a judgment by one brought about the same result as to all others. If, however, an injured person gave a covenant not to sue to one joint tortfeasor in return for a sum accepted as part compensation for the damages suffered, the other wrongdoers were not discharged. Suit might be brought against them but the sum received in partial satisfaction was provable at the trial in mitigation of the recovery. Brandstein v. Ironbound Transportation Co., 112 N.J.L. 585 (E. & A. 1934). In such cases the trial courts charged the jury that they were to decide first, if the defendant was guilty of the wrongdoing which caused or contributed to causing the plaintiff's injuries or damage. If that issue was decided affirmatively, then they were to decide upon the full sum which represented fair and reasonable compensation for the plaintiff's proven injuries and losses. In the deliberations as to that amount, they were instructed to put aside and out of their minds the *302 amount already received by the plaintiff for the covenant not to sue. Then they were told that upon reaching a decision as to the sum representing full compensation, at that point, and not before, they should consider plaintiff's settlement and its effect on their verdict. If the amount of the settlement was equal to that found by the jury to constitute just compensation for the injuries and losses, they were instructed to return a verdict for the defendant. But if the settlement was for less than their monetary evaluation of just compensation, a verdict was to be returned for the difference. Id., at pp. 592, 593. The explanation given to the jury was that under the law the victim of a wrong was entitled to be paid such sum as represented full and fair compensation for his damage, but that he was entitled to be paid such compensation just once.
Adoption of the Joint Tortfeasors Law in 1952 (L. 1952, c. 335) did not change the fundamental doctrine that an injured person is entitled to receive full and fair compensation but once, regardless of the number of wrongdoers who participated in inflicting the damage. Application of the statute, however, in certain situations where a plaintiff has made a partial settlement with less than all of the alleged tortfeasors without trial of his case, may result in actual receipt of a lesser sum than that fixed by a jury as representing full compensation. See Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 93-94 (1954); 25 N.J. 17, 34-36 (1957). For example, if plaintiff settles with one of two tort-feasors for $2,000 and a jury later returns a verdict of $10,000 against the other, the courts will treat the non-settling tort-feasor's liability as $5,000, and the $2,000 payment as discharging the other half of the verdict. Thus, plaintiff will receive only $7,000 in full satisfaction of a claim, the reasonable worth of which was adjudicated at $10,000.
The other side of the coin, as exhibited by this case, has not yet received judicial consideration. What should be the result when one joint tort-feasor pays the plaintiff in advance of trial a greater sum in settlement than the jury later finds *303 to represent full and fair compensation for the injuries and losses? Here, Theobold received $90,000 in settlement from Conaty and Anderson, and the verdict of $65,000 returned against Angelos and the township (assuming the jury fully understood its function in valuing the claim) would have to be considered as fully compensatory. Should the defendants who made no settlement payment but who were adjudged tort-feasors by the jury escape any contribution at all on the theory that plaintiff has been fully compensated by the $90,000 already received? Should the plaintiff be permitted to retain the advantage of his bargain with Conaty and Anderson and, for purposes of the statute, be charged only with one-half of the $65,000 verdict plus the $1,500 received from Anderson, or $34,000, leaving the defendants who went to trial responsible for the remaining $31,000? Or, finally, since plaintiff sued Anderson as a joint tort-feasor and accepted $1,500 in settlement from him, should he be estopped from denying Anderson's status as a joint tort-feasor under the statute? If there is no estoppel, should the $1,500 received from Anderson be deducted in full or excluded entirely? If an estoppel does arise, then for application of the statute, should the $65,000 verdict be treated as divisible in three equal parts, with Anderson's pro rata share of $21,666.66 chargeable to the plaintiff in the computation of the extent of contribution liability of Angelos and the township? Cf. Hoeller v. Coleman, 73 N.J. Super. 502 (App. Div. 1962). As has been indicated, we do not reach these problems because of our opinion that the matter must be retried as to the quantum of damages.
For the present, the factor we wish to emphasize is the imperative need for adequate education of juries when settlements such as we face here are effectuated before or at trial in multiple tort-feasor cases. If such education is not accomplished, there is an ever present danger that the verdict will not represent application of the true measure of recovery.
Under the present practice, where multiple tort-feasors are or may be jointly responsible for an individual's injuries *304 and losses, and one or more of them effect a settlement in exchange for a covenant not to sue, the fact of the settlement, but not the amount paid, is generally brought to the attention of the jury at the trial. In most cases, from the plaintiff's standpoint, this is not only wise psychologically, but fair as well. When the jury has such knowledge, speculation is avoided as to the reason for the absence from the proceedings of an additional potentially liable person. But it then becomes important to make certain the jurors appreciate the significance of the settlement in connection with their duty to assess damages, if they find the remaining defendant was concurrently responsible to the plaintiff with the tort-feasors who have removed themselves from the case by their settlements. Accordingly, they must be instructed in crystal clear fashion as to the course they are to follow in reaching their verdict.
First, the jurors must decide on the evidence whether the defendant on trial was guilty of negligence which was solely or partly responsible for the incident which produced the plaintiff's injuries and pecuniary losses. After reaching an affirmative conclusion on that subject, they should then pass to a determination of the amount of compensation to be awarded. Here they have to realize that their duty is to give to the plaintiff the total sum which represents reasonable compensation for his injuries and losses. That means such sum as would be reasonable compensation for his bodily injuries, for the pain and suffering resulting therefrom, past, present and future, for the effect of those injuries upon his health according to their degree and probable duration, and for any permanent disability which in reasonable probability has resulted or will result. To that sum should be added all expense, past and future, reasonably necessary or incidental to plaintiff's efforts to cure or alleviate his injuries or resulting disability, and all other pecuniary losses suffered or to be suffered in the future as the result of his inability to engage in his usual occupation. The computation must be made without regard to the number of defendants remaining in the *305 case, or the number of defendants originally in the case, without regard to the total number of persons involved in the incident which caused the damages, including those who have made settlements with plaintiff, and without any deduction based upon what the jurors think plaintiff may or should have received in those settlements. If the defendant remaining in the case is found to be solely or partly responsible for the incident, then, in assessing the damages, the jury should treat the matter as if no one other than defendant were ever involved in the accident and as if their only problem were to decide on the monetary sum which would fully and fairly compensate the plaintiff for his injuries and damages. And advice should be given that under no circumstances are they to attempt to apportion that amount on the basis of the number of apparently culpable persons involved, and endeavor to return the fraction thereof deemed applicable to the defendant before them. An understanding is essential that when the sum representing full compensation is returned, it will be apportioned as the law dictates among the defendant or defendants found responsible by the jury and the other persons who have made settlements with the plaintiff. A properly compensatory verdict can be expected once the trial court, by its instructions, engenders in the minds of the jurors an appreciation that injustice and inadequate recovery will fall upon the plaintiff if, on the basis of some effort at allocation among the remaining defendants and the settlers, they lower the total sum he is entitled to receive as measured by the elements of damage described above.
In charging the jury in the present case, almost at the outset the court referred to the settlement by Conaty and Anderson in general but ambiguous terms. He said:
"This case originally had two other defendants. You have heard, of course, throughout the case that both of these defendants, namely, Francis Conaty and James Anderson have already settled their cases with both of these plaintiffs. The Court, of course, will not tell you the amount of the settlement that was made because you are to figure this case, if you feel that these plaintiffs are entitled to a *306 judgment, on what each of the plaintiffs' verdicts should be, assuming of course that you find that they are entitled to a verdict against the two present defendants, namely Leon Angelos and Cherry Hill Township."
Then followed a discussion of the happening of the accident and the various claims of fault, after which the court continued:
"The contention of the plaintiffs, as the Court understands, is that all three were negligent, namely, Mr. Anderson, the police car operated by Mr. Angelos, acting as the servant or agent of Cherry Hill Township, and, of course, Cherry Hill Township * * *.
As I say, the contention of both of the plaintiffs is that Mr. Conaty, Mr. Anderson, Mr. Angelos and the Township were all negligent, and that it was the negligence of the whole group that was the proximate cause of the injuries of which these two plaintiffs complain.
The basis of the contention concerning the plaintiffs is that the police car was, in addition to the disagreement concerning certain lights, improperly parked under the circumstances which existed at that particular time and place; and, of course, because of their allegation that it was the negligence of all the defendants, who were previously in the case, it was the proximate cause of their injuries. They are, of course, demanding damages for those injuries. Now, as I say, at the present time in the case there are only the two defendants, Leon Angelos and Cherry Hill Township, and likewise only two plaintiffs, Mr. Golden and Mr. Theobold."
The charge proceeded with a further outline of the claims of Angelos and the township with respect to the cause of the accident and their freedom from negligence. Burden of proof, negligence and proximate cause and weight of evidence were defined as a prelude to discussion of damages. After the conventional explanation of the rules for measuring damages and of their duty to decide the case without sympathy, passion or prejudice, this statement was made:
"The Court, in order to simplify these matters for you, has drawn up special interrogatories to be submitted to you. Under the rules of the court, that is, of course, the right of the court. The only purpose of these interrogatories is to help the jury in arriving at a final verdict in the matter. I will give these interrogatories to you, and, of course, obviously, interrogatories are questions to be answered by the jury. * * *"
*307 The interrogatories referred to included those mentioned above, making inquiry as to the negligence of Conaty and Anderson. No clear explanation was given of their function in the case or the effect, if any, of the answers on their damage verdict. The court said:
"I will not go into detail as far as the interrogatories are concerned. I ask you to give serious consideration to them; read them, consider all of the testimony that has been presented in the case on behalf of both the plaintiffs and defendants; consider the law as explained to you by the Court. And after you have given due consideration to all of those factors, answer the questions set forth in the special interrogatories that have been submitted to you by the Court. The answers to these questions will permit the Court to accept from you a verdict provided that any ten of you agree upon a verdict. When you read the interrogatories, I think that you will clearly understand them. If, however, you do not, then you have a perfect right to ask the Court for additional instructions, not only on the interrogatories, but anything as far as the Court's charge itself is concerned."
The charge ended at that point and the court asked for exceptions, which were presented out of the presence of the jury. Plaintiffs' counsel objected saying:
"I take exception, your Honor, to the failure of the Court to charge, in view of the fact that this case involves the application of the joint tortfeasors act, that the verdict should be as if the other potential joint tortfeasors were still parties to the action; and some reference by the Court to the fact that whatever the verdict is it will be molded in accordance with the applicable law with which they are not concerned. That is my only exception.
THE COURT: I will rule against this exception. The objection to the Court's ruling may be entered on the record on behalf of the plaintiffs."
We have not recited the entire charge of the court. The pertinent portions referring to the settlement and the interrogatories have been set out in order to indicate the basis of our agreement with counsel for plaintiffs that a strong possibility of misunderstanding existed in the minds of the jurors as to the effect of the settlements on the quantum of their verdicts. At no point in its charge did the trial court clearly *308 inform the jurors that their verdict should represent full and fair compensation for all the plaintiffs' damages arising out of the accident. Rather the jurors might well have understood that their duty was to award damages representing the share to be paid by Angelos and the township who the jurors were told were the only defendants remaining in the case. Appellate courts have had little occasion previously to be specific as to the scope of the charge in dealing with settlements which bring the tort-feasors contribution statute into play. We recognize also that experience in application of the statute at the trial level in cases like the present one has been relatively limited. Accordingly, we have undertaken to suggest herein the type of explanation to be given as to the operation of the statute in such cases in order to avoid the possibility of attempts by juries at apportionment of damages.
Under all the circumstances, we are satisfied that the interests of justice require a new trial and that it be limited to the issue of damages. If after retrial and entry of judgment, issues arise as to the propriety of the allocation of the verdict among the various alleged tort-feasors, on the filing of a notice of appeal to the Appellate Division, an application may be made immediately to this court for certification.
Reversed and remanded.
For reversal and remandment Chief Justice WEINTRAUB, and Justices JACOBS, FRANCIS, PROCTOR, HALL, SCHETTINO and HANEMAN 7.
For affirmance None. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539487/ | 150 Conn. 457 (1963)
STATE OF CONNECTICUT
v.
JOHN J. HANNA
Supreme Court of Connecticut.
Argued March 7, 1963.
Decided April 25, 1963.
BALDWIN, C. J., KING, MURPHY, SHEA and ALCORN, JS.
*458 H. Gibson Guion, public defender, and John F. Bianchi, special assistant public defender, for the appellant (defendant).
*459 Thomas F. Wall, state's attorney, and Jonathan F. Ells, special state's attorney, for the appellee (state).
KING, J.
The defendant was indicted, in two counts, on a charge of murder in the first degree in the killing of Francis Gavell, manager of the First National store in New Milford, on November 18, 1959. The first count charged wilful, deliberate and premeditated murder, and the second count charged murder in the perpetration of a robbery. On May 24, 1960, after a trial to the jury, the defendant was found guilty on both counts, the jury made a recommendation for clemency under General Statutes § 53-10, and on the same day the mandatory sentence of imprisonment for life was imposed. State v. Walters, 145 Conn. 60, 72, 138 A.2d 786, appeal dismissed and cert. denied, 358 U.S. 46, 79 S. Ct. 70, 3 L. Ed. 2d 45.
The appeal is divided into two parts. The first part involves claims of error in the course of the trial. The second part seeks to raise the claim that certain bloodstained garments were inadmissible because they were the fruits of an illegal search and seizure.
I
A
Dr. Howard G. Stevens, the medical examiner, testified that in his opinion the cause of the death "must have been a very, very severe hit by a heavy blunt instrument." He was then asked whether he had an opinion as to the agency causing the blow by the blunt instrument, and he answered that he had. Over the objection of the defendant, he was asked what that opinion was and stated that it *460 "must have been a very powerful blow by some other person with a blunt instrument." The defendant objected on the ground that the witness was not qualified to state more than whether or not the blow was self-inflicted. Obviously, the blow must have been self-inflicted, inflicted by another, or the result of an accident. No request was made for a preliminary or interlocutory cross-examination on the doctor's special qualifications to give an opinion. There is nothing to indicate that the wounds were of such a character that any layman could conclude that they were inflicted by a human agency, so as to obviate the necessity of expert testimony under the dictum in State v. Lee, 65 Conn. 265, 280, 30 A. 1110, a case on which the defendant seems to rely. The court, on the foundation as laid, was at least justified in concluding that the witness was competent and qualified to express an opinion that the blows were inflicted by another human being. Taylor v. Monroe, 43 Conn. 36, 44; State v. Nelson, 139 Conn. 124, 128, 90 A.2d 157. The defendant has shown no error in the ruling.
B
The defendant objected to the admission in evidence of certain colored slides taken of the body of the decedent during the autopsy. These were used by Dr. Richard Ford, an expert called by the state, in his testimony on the cause and manner of death. The finding does not indicate that the defendant stated any ground of objection or that the state urged any ground for the admission of the evidence. Under these circumstances, there was no error in the court's ruling admitting the slides. Practice Book § 155; Casalo v. Claro, 147 Conn. 625, 627, 165 A.2d 153.
*461 In his brief, the defendant claims that the slides were inadmissible because (1) they were gruesome and would unduly inflame the jury, and (2) they were not necessary to the state's case since the state had already laid in evidence black and white photographs taken at about the same time. As this is a capital case, we have decided to consider these claims. The court examined the slides in the absence of the jury and admitted only six. As is indicated by the objection to the medical examiner's testimony, the defendant in nowise conceded that the death was a homicide. Thus, the state was obliged to put in such proper evidence as it had, to prove that the death was neither a suicide nor the result of an accident. That the photographs were colored instead of black and white was, in and of itself, no ground for their exclusion. Note, 53 A.L.R.2d 1102. Its only significance would be its possible effect with respect to gruesomeness. Id., p. 1103. The slides depicted facts which were certainly relevant, and may well have been material, to the state's case, and we cannot say that they were so gruesome as to overbalance their testimonial value. State v. Culombe, 147 Conn. 194, 215, 158 A.2d 239, rev'd on other grounds, 367 U.S. 568, 81 S. Ct. 1860, 6 L. Ed. 2d 1037. In general, photographs of a corpse have been held properly admissible in prosecutions for homicide as against objections on the ground of prejudicial gruesomeness; note, 73 A.L.R.2d 769, 787; or on the ground that they constituted merely cumulative evidence. Id., p. 807. In State v. Bailey, 79 Conn. 589, 602, 65 A. 951, also a bludgeoning case, the deceased's skull itself was admitted in evidence as well as photographs of his head showing the injuries. There was no error in the admission of the colored slides.
*462 C
The state offered in evidence, as exhibits, certain audit records purporting to show the funds stolen from the First National store on the night of November 18, 1959. The records were objected to because of certain conflicting dates on the cash register tapes and the checkers' balance sheets; the defendant claimed that these conflicting dates impaired the accuracy of the audit. The state was required to prove a robbery if it was to secure a conviction under the second count, but it was not required to prove that any particular sum of money was stolen. See State v. Reid, 146 Conn. 227, 231, 149 A.2d 698. The probative value of evidence as to even the approximate amount taken was largely, if not entirely, in that this figure roughly corresponded to the amount of money testified to have been in the defendant's possession that same evening. The court was not in error in finding the foundation adequate for the admission of the exhibits in evidence. Their weight, of course, was for the jury. See cases such as Engelke v. Wheatley, 148 Conn. 398, 410, 171 A.2d 402.
D
Error is assigned in certain rulings admitting evidence concerning a laboratory test of the blood type of the defendant. The objection was on the ground that the information sought was a privileged communication between an attorney and his client. A ruling on evidence is to be tested by the finding. Facey v. Merkle, 146 Conn. 129, 131, 148 A.2d 261. On the basis of the finding, the defendant failed to show that any of the rulings were erroneous.
In connection with these rulings, we have decided to consider certain excerpts from the evidence which *463 the defendant caused to be printed in an appendix to his brief. The state, in an appendix to its brief, followed the same erroneous course in presenting an evidential ruling. Excerpts of evidence pertinent to such rulings, should be summarized, or, if necessary, quoted, in the finding. Practice Book § 405; Maltbie, Conn. App. Proc. § 147. The reason for this rule is obvious in this case. The question of privilege was for the court to determine on the foundation as laid. 8 Wigmore, Evidence § 2322, p. 630 (McNaughton Rev. 1961). When the court itself sets forth the factual setting in the portion of the finding concerned with a given evidential ruling of this type, we know what part of the foundation evidence the court credited and, so, the factual basis on which the ruling was made.
The state had offered evidence to prove that the decedent's blood had been typed and found to be type 0 and that bloodstains on a pair of trousers and a brown topcoat which the state claimed the defendant had worn on the day of the murder had also been typed and found to be type 0 human blood. The state then called Dr. Charles N. Warner, a jail physician, and asked him whether he had been requested by the public defender to do anything in connection with the defendant. An objection by the defendant on the ground that anything which Dr. Warner had done in connection with the defendant was in effect a privileged communication was overruled. The witness answered that he had taken a sample of the defendant's blood to have it typed. The fact that a blood analysis had been made was not, even though the analysis was at the request of the defendant's counsel, privileged on its face, although the result of the analysis might have been shown to be privileged. See Colton v. United States,
*464 306 F.2d 633, 637 (2d Cir.), cert. denied, 371 U.S. 951, 83 S. Ct. 505, 9 L. Ed. 2d 499; Turner's Appeal, 72 Conn. 305, 318, 44 A. 310; 8 Wigmore, op. cit. § 2309, p. 596; McCormick, Evidence §§ 93, 94. The testimony which was admitted appears to have been an essential part of any foundation for a possible claim of privilege between attorney and client. Colton v. United States, supra, 638. Except for one statutory exception irrelevant to this case, there is no privilege in Connecticut between physician and patient. Zeiner v. Zeiner, 120 Conn. 161, 167, 179 A. 644. There was no error in the admission of this testimony.
In the other rulings complained of, Phyllis Tyrrell, a laboratory technician at the Charlotte Hungerford Hospital, in Torrington, was allowed to testify that she had received a sample of blood from Dr. Warner marked with the defendant's name, that she had typed it, and that it was type A. We have decided to overlook procedural shortcomings and to consider that a proper objection to the admission of this evidence was made in a timely manner. The evidence elicited from Mrs. Tyrrell, apart from the result of the testthat is, the defendant's blood typedoes not appear to have been privileged. The same may be said of the hospital record, which was admitted over objection. See cases such as Colton v. United States, supra, 637.
It remains to consider the portions of Mrs. Tyrrell's testimony and of the hospital record which gave the result of the analysis of the defendant's blood as type A. Some further facts are now required. The state, as indicated above, had come into possession of some clothing of the defendant which was bloodstained. The state claimed that the stains were caused by the decedent's blood. The *465 defendant, however, claimed that the blood had come from an injury sustained by him and therefore was his own blood. In some manner, the defendant and his attorney found out that the state had determined that the blood of the decedent and the blood on the defendant's clothing were both type O. The defendant's blood had been typed in the past and had been recorded as type O. Thus, both the defendant and his counsel were confident that the defendant's blood was the same type as that of the decedent. With that in mind, the defendant's counsel applied to the court for funds to have the defendant's blood typed. These funds were allowed by the court. Thereupon, the public defender arranged to have Dr. Warner take a specimen of the defendant's blood at the jail and have it typed. Dr. Warner, after obtaining the specimen, took it to the hospital, where it was subjected to laboratory analysis and found to be type A. That fact, as well as that the specimen was the defendant's blood, was so entered in the laboratory records of the hospital.
On the one hand, the privilege of attorney and client must be protected, and, on the other hand, a privilege between physician and patient must not be created, since such a privilege does not exist under our law. United States v. Kovel, 296 F.2d 918, 921 (2d Cir.). There was no attempt to compel disclosure by either the attorney or the client. It is true, of course, that the privilege accorded communications between attorney and client is not limited to direct communications between the two. It extends to communications made through agents for communication. Goddard v. Gardner, 28 Conn. 172, 175; United States v. Kovel, supra; see note, 139 A.L.R. 1250, 1256; 8 Wigmore, op. cit. § 2317, p. 618. But such communications are privileged to *466 no greater extent than they would have been had they been made directly between the principals. Cf. 8 Wigmore, op. cit. § 2307, pp. 591-593. Since the privilege exists only to secure the client's subjective freedom of consultation, it goes no further than is necessary to insure that result. 8 Wigmore, op. cit. § 2311, p. 603. For reasons hereinafter discussed, we may assume, without so deciding, that on the facts the witnesses to the result of the blood test were, as claimed by the defendant, under the same prohibition against disclosure as the attorney would have been had he been a witness.
One of the essential elements of the claim of privilege between attorney and client is that the communication be confidential. Turner's Appeal, 72 Conn. 305, 318, 44 A. 310; Doyle v. Reeves, 112 Conn. 521, 523, 152 A. 882, quoting 5 Wigmore, Evidence (2d Ed.) § 2292 (almost identical in language with 8 Wigmore, Evidence § 2292, p. 554 [McNaughton Rev. 1961]); McCormick, Evidence § 95. The burden of proving the facts essential to the privilege is on the person asserting it. United States v. Kovel, supra, 923; McWilliams v. American Fidelity Co., 140 Conn. 572, 581, 102 A.2d 345; Turner's Appeal, supra, 317; Robertson v. Commonwealth, 181 Va. 520, 540, 25 S.E.2d 352. This burden includes, of course, the burden of proving the essential element that the communication was confidential. 8 Wigmore, Evidence § 2311, pp. 599, 600 (McNaughton Rev. 1961). Here, the communication sought to be protectedthat is, the defendant's blood typewas known to the laboratory technician and the hospital. As to neither, as such, was there any privilege of nondisclosure. Zeiner v. Zeiner, 120 Conn. 161, 167, 179 A. 644. There is nothing in the entire printed record indicating that the taking *467 of the blood test or its result was subjectively intended by the defendant to be confidential. The whole proceeding was entirely different from a direct communication from a client to his attorney either made in or sent to the attorney's office; in such a case, relatively little factual foundation would ordinarily be required to establish the privilege and, so, the inadmissibility of any question concerning the subject matter of the communication. McWilliams v. American Fidelity Co., supra. At the time the defendant's blood specimen was taken, both the defendant and his attorney were practically certain that the test would reveal that the blood type of the decedent and the blood type of the defendant were the same. Under the circumstances, there was nothing to fear and no occasion for confidential treatment. Only after it was learned that the result of the test was not as expected and was adverse to the defendant's case did there arise concern about keeping that result from the jury.
No foundation was laid to show that the communications had an objectively confidential character. There is nothing to indicate the circumstances under which the blood specimen was taken except that it was taken in the jail. The doctor took the specimen to the hospital, as he would any other specimen, where a routine record was madeincluding the defendant's nameat the admissions desk. Immediately thereafter, Dr. Warner took the specimen, with the accompanying record, to the hospital laboratory, where both were handed over to the laboratory technician, and the defendant's name was verbally stated to her, all in the presence and hearing of a Mr. Siebek. Who Siebek was and why he was in the laboratory are wholly unexplained. There is nothing here to indicate any confidentiality *468 regarding the specimen or the test. No evidence was elicited to show that there was any necessity for this method of procedure or that the test could not have been made in some confidential manner, if indeed any confidential communication was intended. No foundation was laid to show that, either subjectively or objectively, the blood typing was treated as confidential by the defendant, Dr. Warner, the laboratory technician, the hospital, or anyone else. Thus, there was a failure to establish the facts essential to bring the result of the blood typing under the rule of privilege. This failure is fatal to the privilege. Goddard v. Gardner, 28 Conn. 172, 175; Pulford's Appeal, 48 Conn. 247, 249; Turner's Appeal, 72 Conn. 305, 317, 44 A. 310; McWilliams v. American Fidelity Co., 140 Conn. 572, 581, 102 A.2d 345.
There was no error in the court's ruling admitting the evidence as to the taking of the blood test and its results.
E
The other assignments of error are not of sufficient consequence to require discussion. In none, under the facts in the finding, can we find harmful error. Thus, in the first part of the appeal there was no harmful error.
II
The defendant maintains that the bloodstained clothing previously referred to was inadmissible because it was obtained by an unreasonable search and seizure. This claim was not made at the trial but was subsequently inspired by the decision of the United States Supreme Court in Mapp v. Ohio, 367 U.S. 643, 655, 81 S. Ct. 1684, 6 L. Ed. 2d 1081, decided June 19, 1961, over a year after completion *469 of the trial in the present case but during the pendency of this appeal. See also our cases of State v. DelVecchio, 149 Conn. 567, 573, 182 A.2d 402, and State v. Fahy, 149 Conn. 577, 582, 183 A.2d 256, cert. granted, 372 U.S. 928, 83 S. Ct. 871, 9 L. Ed. 2d 732.
The question of the admissibility of evidence obtained by a search and seizure is a matter for the court to decide. Pickett v. Marcucci's Liquors, 112 Conn. 169, 173, 151 A. 526; State v. Griswold, 67 Conn. 290, 304, 34 A. 1046; Robinson v. Ferry, 11 Conn. 460, 463; note, 50 A.L.R.2d 531, 589; see State v. Traub, 150 Conn. 169, 171, 187 A.2d 230. At the trial, the court was not asked to, nor did it, address itself to the issue of the legality of the search and seizure, since the matter was then considered irrelevant, and the clothing came in without objection on any such ground. Ordinarily, when a question is not raised at trial it will not be considered on appeal. Practice Book § 409; Maltbie, Conn. App. Proc. §§ 305, 308. This court, however, during the pendency of the appeal, entered an order, at the defendant's request, that the trial court file a supplemental finding with respect to the manner in which the state obtained the clothing and its admission in evidence. Such a finding was filed, and we have decided to consider the claims made by the defendant on the basis of that finding. See State v. Fahy, supra, 585; People v. Friola, 11 N.Y.2d 157, 159, 182 N.E.2d 100.
Since the decision in Mapp v. Ohio, supra, evidence obtained by an unreasonable search and seizure is inadmissible. State v. Fahy, supra, 586; State v. DelVecchio, supra; U.S. Const. amend. IV, XIV, § 1; Conn. Const. art. 1 § 8. But if one consents to a search of his person, possessions, or living quarters, he waives his constitutional protection *470 and the evidence so obtained is admissible. State v. Griswold, supra; 4 Wharton, Criminal Law & Procedure § 1578. Although it is presumed, until the contrary is indicated, that a police officer has acted lawfully; State v. Reynolds, 101 Conn. 224, 231, 125 A. 636; this does not raise a concomitant presumption of consent to a search and seizure. When consent is claimed by the state to have rendered lawful an otherwise illegal search and seizure, the burden is on the state affirmatively to establish the consent. Villano v. United States, 310 F.2d 680, 684 (10th Cir.); United States v. Smith, 308 F.2d 657, 663 (2d Cir.).
The state offered evidence to prove facts which can be summarized as follows: Two days after the date of the commission of the crime, the defendant was interrogated by New York police officers at the 114th precinct in Astoria. One of the officers asked the defendant if he would mind accompanying him to Queens to look at the apartment where the defendant was staying. The defendant said, "Not at all. I will go right back with you." The defendant voluntarily accompanied the officerstwo New York and two Connecticut policemenand showed them the route to and the location of the apartment. The policemen entered the apartment with the full consent of the defendant and Miss Jean Milano, who also occupied it. Refreshments were provided for the officers by the defendant, in the apartment. The defendant voluntarily directed them to a clothes closet, where a topcoat and a pair of trousers, both bloodstained, were found by one of the Connecticut policemen. The defendant at that time identified the clothes as those which he wore on the day the crime was committed. At no time did the defendant object to being questioned by the *471 police, to being accompanied to the apartment by the police, or to the taking of his clothing by the police.
The court found that the police used no force and that the defendant cooperated with the police, directed the route to his apartment, pointed out the closet where his clothing was and made no objection to the examination of the bloodstained clothing or the taking and retention of it by the police. There was nothing to suggest any violence, threats of violence, intimidation or overawing of the defendant by the police. Indeed, the claims of proof of the defendant which bear on this question of consent were consistent with those of the state. Although the trial court, in its supplemental finding, did not in express words find consent, the subordinate facts found by it are tantamount to a finding of consent and must be so treated. United States v. Sferas, 210 F.2d 69, 74 (7th Cir.), cert. denied, 347 U.S. 935, 74 S. Ct. 630, 98 L. Ed. 1086. Under some circumstances, compliance with a request of the police for permission to enter and search premises, or even an invitation to enter and search following such a request, should not be considered as a waiver of the constitutional guarantee against an unreasonablethis is, illegalsearch and seizure. Johnson v. United States, 333 U.S. 10, 13, 68 S. Ct. 367, 92 L. Ed. 436; Amos v. United States, 255 U.S. 313, 317, 41 S. Ct. 266, 65 L. Ed. 654; Catalanotte v. United States, 208 F.2d 264, 268 (6th Cir.). It might be that consent to a search, even if executed in writing, witnessed and notarized, would not be a truly voluntary act. And unless consent is voluntary, it cannot be found. Cf. Higgins v. United States, 209 F.2d 819, 820 (D.C. Cir.). The question of consent to an otherwise technically illegal search *472 is one of fact, to be decided by the trial court upon the evidence together with the reasonable inferences to be drawn from it. Only if consent is affirmatively established should it be found. Here, where there were no threats or violence, the question is really whether the admission of the police to the apartment, at their request, and the giving to them of permission to search it, or some part of it, were in fact the truly voluntary actions of the defendant or were a yielding to supposed authority. The defendant, who had had previous experience with police, criminal procedure and penal institutions, aided the police, cooperated with them, accompanied them into his apartment and treated them as his guests. He displayed the self-assurance of a man confident that such a course would dispel their suspicions and thereby best subserve his interests. The defendant is a man of at least ordinary intelligence. His general level of intelligence is not questioned. He speaks English fluently. Clearly, his conduct was not that of a man who, from lack of education, from ignorance or from fear, submitted to implied or actual coercion of either apparent or asserted authority. United States v. Dornblut, 261 F.2d 949, 950 (2d Cir.), cert. denied, 360 U.S. 912, 79 S. Ct. 1298, 3 L. Ed. 2d 1262; United States v. MacLeod, 207 F.2d 853, 856 (7th Cir.).
In this case, the conclusion of consent which was in effect drawn by the court in its supplemental finding was not only a reasonable one but the only conclusion which it reasonably could reach. The defendant has shown no error in the admission in evidence of the bloodstained clothing.
There is no error.
In this opinion the other judges concurred. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539526/ | 974 A.2d 810 (2009)
116 Conn.App. 50
Harbajan SINGH
v.
CITY OF HARTFORD.
No. 30228.
Appellate Court of Connecticut.
Argued April 22, 2009.
Decided July 28, 2009.
*811 Wesley S. Spears, Hartford, for the appellant (plaintiff).
Jonathan H. Beamon, assistant corporation counsel, New Haven, for the appellee (defendant).
BISHOP, BEACH and FOTI, Js.
FOTI, J.
The sole issue in this appeal is whether the trial court abused its discretion in opening the record after the close of evidence but before the court rendered its decision. The plaintiff, Harbajan Singh, claims that the court improperly granted the motion filed by the defendant, the city of Hartford, to open the record after the close of evidence. We disagree and, accordingly, affirm the judgment of the trial court.
The following facts are relevant to our disposition of the plaintiff's appeal. On June 13, 2002, the plaintiff was the high bidder at a tax lien sale for a property located at 233 Capen Street in Hartford. On that date, the plaintiff entered into a contract for the sale of real estate in which he agreed, inter alia, to pay the sum of $45,547.86 for the property. The contract expressly stated that the sale was subject to the requirements of General Statutes § 12-157. One such requirement, as indicated in the contract, was that there existed "a right of redemption by any party who holds a valid interest in the property." This right of redemption was set to expire six months from the date that the parties entered into the agreement, at 4:30 p.m. on December 12, 2002. Furthermore, the tax collector's deed was to be lodged in the town clerk's office but would remain unrecorded until the right of redemption time period had run, at which time the deed would be recorded and have full effect. The contract also included an "as is" clause, in which it stated that the defendant assumed no liability whatsoever in regard to the condition of the property.
On September 29, 2003, the plaintiff filed a complaint in Superior Court in which he alleged that at the time of the transfer of the property on December 13, 2002, the defendant was aware that the property contained asbestos and other hazardous material. Furthermore, he alleged, the defendant's failure to disclose to the plaintiff that the property contained asbestos and other hazardous material required him to remove and to abate those *812 materials at a considerable cost to him and that their presence also reduced the property's value substantially. As a result, the plaintiff sought damages. On March 3, 2006, the defendant filed an answer that included a special defense alleging that the plaintiff was estopped from claiming any liability on the part of the defendant that resulted from the transfer of the property because of the "as is" clause included in the contract for sale.
The trial was held before the court, Berger, J., on April 16, 2006. At the outset of the hearing, the court noted that although the courtroom had been filled with witnesses earlier, the parties' entering into a stipulation of facts obviated the need for their presence. The court then read into the record the stipulated facts. "Number one. The [defendant] made no representations to the plaintiff concerning the existence of asbestos at the commercial property known as 233 Capen Street, Hartford, Connecticut, prior to the transfer of said property to the plaintiff on June 13, 2002. . . [and] as stated in defendant's answer, the defendant was aware of the presence of asbestos at said commercial property prior to transfer. Number two. The [defendant] does not dispute the $129,302.06 expended by the plaintiff at the aforementioned property to abate asbestos. Number three. The plaintiff at the time of the transfer understood that the contract provided that the property was being sold, `as is', which the plaintiff signed on June 13, 2002. Number four. The only issue [before the court] is whether the term `as is' prevents the plaintiff from prevailing against the city. Number five. [The plaintiff], at the time of the execution of the aforementioned contract, was unaware that said property contained asbestos and he had no access to the property." The court then ordered the parties to submit briefs and reply briefs on the remaining issue and left open the option for there to be oral argument.
On May 12, 2006, the defendant filed a motion to open the record to allow additional testimony and evidence that it alleged was material and had been omitted by mistake or inadvertence. Subsequently, the defendant filed a memorandum of law in support of its motion, and the plaintiff filed two memoranda in opposition. On July 12, 2006, the court heard oral argument on the matter and granted the motion.[1] A trial to the court thereafter commenced that resulted in a mistrial. On June 11, 2008, the plaintiff filed an amended complaint alleging that the defendant breached the implied covenant of good faith and fair dealing and an express warranty in the deed to the property. A subsequent trial to the court, Hon. Robert F. Stengel, judge trial referee, in which the stipulation of facts at issue here was not admitted into evidence, resulted in judgment in favor of the defendant. This appeal followed. Additional facts will be set forth as necessary.
The plaintiff argues that the court abused its discretion in granting the defendant's motion to open the record and allowing additional evidence to be offered. Specifically, he argues that the court abused its discretion by not requiring the defendant to identify sufficiently the evidence that it failed to introduce by mistake or inadvertence and by granting, in essence, a new trial to the defendant by allowing additional discovery to take place and the submission of new theories of defense. Also, the plaintiff contends that the court's permitting the opening of the record resulted in substantial *813 prejudice and was, therefore, an abuse of its discretion. We disagree.
"Whether or not a trial court will permit further evidence to be offered after the close of testimony in the case is a matter resting within its decision. . . . In the ordinary situation where a trial court feels that, by inadvertence or mistake, there has been a failure to introduce available evidence upon a material issue in the case of such a nature that in its absence there is serious danger of a miscarriage of justice, it may properly permit that evidence to be introduced at any time before the case has been decided." (Internal quotation marks omitted.) Grimm v. Grimm, 82 Conn.App. 41, 50, 844 A.2d 855 (2004). "The trial judge's discretion, which is a legal discretion, should be exercised in conformity with the spirit of the law and in a manner to subserve and not to impede or defeat the ends of substantial justice. . . . Consistent with this responsibility, the trial court may not, in light of all the relevant factors, arbitrarily or unreasonably reject a motion to introduce additional evidence after the moving party has rested." (Internal quotation marks omitted.) In re Janazia S., 112 Conn.App. 69, 88, 961 A.2d 1036 (2009). "Such a reopening should not be permitted if it would result in substantial prejudice to a party." (Internal quotation marks omitted.) Fahey v. Safeco Ins. Co. of America, 49 Conn.App. 306, 315-16, 714 A.2d 686 (1998). Last, we note that "[i]n reviewing a trial court's action for an abuse of discretion, every reasonable presumption should be given in favor of its correctness. . . . In determining whether there has been an abuse of discretion, the ultimate issue is whether the court could reasonably conclude as it did. [R]eversal is required [only] where the abuse is manifest or where injustice appears to have been done." (Internal quotation marks omitted.) New Hartford v. Connecticut Resources Recovery Authority, 291 Conn. 433, 477-78, 970 A.2d 592 (2009). With these precepts in mind, we turn to the plaintiff's claim on appeal.
First, our review of the record reveals that despite the plaintiff's claim to the contrary, the defendant did identify sufficiently the evidence it sought to admit. Although not specifically stated as such, we take this argument by the plaintiff to mean that because the defendant failed to identify the proffered evidence sufficiently, the court's granting the motion to open the record was not predicated on available evidence on a material issue; see Grimm v. Grimm, supra, 82 Conn.App. at 50, 844 A.2d 855; and, therefore, was an abuse of discretion.
In both its memorandum in support of its motion and in oral argument, the defendant identified the omitted evidence. The defendant contended that on July 12, 2002, during the six month right of redemption period, two inspectors from the defendant's department of licenses and inspections witnessed the plaintiff at the property removing materials therefrom. It also claimed that these materials included asbestos and other hazardous materials and that the plaintiff was cited by the state department of environmental protection. The defendant claimed that that evidence was relevant to material issues because it directly contradicted the stipulated facts as to (1) the accessibility of the property to the plaintiff prior to its transfer to him; (2) the date of the transfer of the property; (3) the plaintiff's removal of asbestos from the premises before its transfer to him and, therefore, his knowledge of its presence; and (4) the timing of the defendant becoming aware of the presence of asbestos. The defendant further claimed that the evidence was available because it was discovered when its inspectors found the plaintiff at the property removing debris on July 12, 2002.
The plaintiff, rather than arguing that the evidence did not bear on a material *814 issue, contended that the proffered omitted evidence was not credible and offered documentary evidence to support that position. Therefore, the plaintiff contended, because the evidence proffered by the defendant was incredible, it had not actually proffered to the court any evidence regarding a material issue that had been omitted by mistake or inadvertence. Our Supreme Court has stated that a material issue of fact is one that "will make a difference in the result of the case." (Internal quotation marks omitted.) Hammer v. Lumberman's Mutual Casualty Co., 214 Conn. 573, 578, 573 A.2d 699 (1990). It is clear from a reading of the stipulated facts and the record available to the court in contemplation of the defendant's motion to open the record, that the proffered evidence would have made a difference in the result of the case. It directly contradicted several material aspects of the stipulated facts, including, among others, the plaintiff's access to the property during the redemption period. Moreover, the court specifically stated that the parties had each, in their motions "given [it] enough [proof] that there was [omitted] evidence out there." Therefore, we cannot say that the court abused its discretion in determining that the evidence proffered by the defendant was on issues material to the case.
Next, the plaintiff claims that the court abused its discretion in opening the record because it "allowed the defendant to start the case all over, including . . . conducting discovery and submitting entirely new theories of defense." At the hearing, the defendant stated that it was only seeking to place into evidence exhibits and testimony "to the effect that whatever the [defendant] learned [about the asbestos at the property], it learned [it] on the day that [the plaintiff] entered the building and two city inspectors found him there." As a result, the defendant requested only that it be allowed to depose the plaintiff. The court, underscoring that the defendant had requested taking one deposition, asked the plaintiff, "[w]ould you like anything?" The plaintiff responded: "I want to start over now. . . . I'm going to do interrogatories [and] I'm going to take a bunch of depositions." The court then asked the plaintiff if he wanted to hold a pretrial scheduling conference. The plaintiff responded in the affirmative. In short, it was the plaintiff, in response to the court's granting the motion, that requested that the trial start anew. The court, after considering the point to which its decision to open the evidence would possibly extend, concluded that to do so was in the interest of justice. We cannot conclude, under these circumstances, that the court abused its broad discretion in opening the evidence to the extent that it did.
Last, the plaintiff contends that the court's permitting the opening of the record resulted in substantial prejudice to him and was, therefore, an abuse of the court's discretion. Essentially, the plaintiff asserts that the opening of the record and allowing further introduction of evidence that contradicted many of the stipulation's aspects, resulted in substantial prejudice. The plaintiff contended at the hearing that the stipulation of facts inured greatly to his benefit, a point the court noted in its oral decision.[2] That the plaintiff *815 was prejudiced by the court's decision is evidenced on the record; however, the question remains whether the court abused its discretion in determining that the prejudice was not substantial. See Fahey v. Safeco Ins. Co. of America, supra, 49 Conn.App. at 315-16, 714 A.2d 686 (opening evidence should not be permitted if result is substantial prejudice to a party). We note, nevertheless, that the ultimate source of the plaintiff's prejudice, the stipulation itself-by way of its ostensible ruin as the sole set of facts upon which the court would decide-was also the source of the danger of a miscarriage of justice that the court was seeking to avoid by granting the defendant's motion to open the evidence. The record reveals that the court took into account the prejudice that resulted from its decision and attempted to ameliorate some aspects of it by stating that it would consider assessing reasonable costs and fees to the defendant. In an effort to further minimize the prejudice, the court was solicitous of the plaintiff's request to conduct many aspects of discovery. The court's merely allowing the plaintiff the opportunity to submit more evidence, as well, served to lessen any prejudice that may have resulted from the ruling. Moreover, the court considered the defendant's proffered evidence in light of the stipulation, the plaintiff's assertions as to the credibility of the proffered evidence, as well as the circumstances involving its omission and determined that any prejudice visited on the plaintiff by its decision was not substantial because the interest in avoiding the danger of a serious miscarriage of justice outweighed it. On the basis of the record before us, we conclude that the court reasonably concluded as it did and, therefore, did not abuse its discretion in granting the defendant's motion to open the evidence. See New Hartford v. Connecticut Resources Recovery Authority, supra, 291 Conn. at 478, 970 A.2d 592.
The judgment is affirmed.
In this opinion the other judges concurred.
NOTES
[1] The plaintiff filed an appeal with this court on July 16, 2007, challenging the trial court's granting of the motion but withdrew it on October 12, 2007, because it was not taken from an appealable final judgment.
[2] The plaintiff asserts on appeal that many of his witnesses could not be located for the subsequent proceedings. This argument was not made to the court at the time of the hearing on the defendant's motion to open the record. Moreover, this fact was not only unknown but unknowable at that time. We cannot say that the court abused its discretion on the basis of information that was neither presented to the court, nor could have been presented under the circumstances. See State v. Saunders, 114 Conn.App. 493, 504, 969 A.2d 868 (2009). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539527/ | 218 B.R. 133 (1998)
In re Carl Richard THEOBALD and Connie Louise Theobald, Debtors.
GREEN TREE FINANCIAL SERVICING CORP., Appellant,
v.
Carl Richard THEOBALD and Connie Louise Theobald, Appellees.
BAP No. NM-97-071, Bankruptcy No. 97-12728.
United States Bankruptcy Appellate Panel of the Tenth Circuit.
March 2, 1998.
Daniel E. Duncan, Duncan Law Offices, P.C., Albuquerque, NM, for Appellant.
Robert L. Finch, Farmington, NM, for Appellees.
Before PEARSON, BOULDEN, and CORNISH, Bankruptcy Judges.
OPINION
BOULDEN, Bankruptcy Judge.
Green Tree Financial Servicing Corporation (Green Tree) sought a court order to require the debtors to execute and deliver a Special Warranty Deed and Estoppel Affidavit in order to effectuate the debtors' intention to surrender a mobile home. The Bankruptcy Court denied the motion. For the reasons set forth below, we affirm.[1]
I. Background
Carl Richard Theobald and Connie Louise Theobald (Debtors) filed a chapter 7 petition, *134 and with it a Chapter 7 Individual Debtor's Statement of Intention (SOI) pursuant to 11 U.S.C. § 521(2).[2] The SOI indicated the Debtors' intention to surrender a 1996 Champion Woodridge mobile home to Green Tree, a creditor having a security interest therein. The Debtors relinquished physical possession of the mobile home to Green Tree. Green Tree then requested that the Debtors sign a Special Warranty Deed and Estoppel Affidavit to provide Green Tree clear title to the property. The Debtors declined to do so, prompting Green Tree to file a Motion to Lift Automatic Stay and for Order Directing Execution and Delivery of Deed (Motion). The parties stipulated that the stay would be lifted, but the Debtors objected to the portion of the Motion that sought to require them to execute the Special Warranty Deed and Estoppel Affidavit. After a preliminary hearing on the Motion, the Bankruptcy Court took the matter under advisement. The Bankruptcy Court allowed the parties to brief the issue of whether "surrender" of real property collateral in the context of § 521(2) required the Debtors to both relinquish possession and to execute and deliver a Special Warrant Deed and Estoppel Affidavit. The Bankruptcy Court issued an oral decision denying the Motion. The stated reasons were that such a ruling would place a debtor in an untenable position if more than one lienholder had an interest in the property, and that the Bankruptcy Code anticipated that surrender would be followed by the creditor exercising steps to foreclose on the lien or execute on a judgment. The oral ruling was reflected in an Order Denying Motion Directing Debtors to Execute and Deliver Deed (Order). This appeal followed.
II. Appellate Jurisdiction and Standard of Review
We have jurisdiction over this appeal. The Order ends the dispute between the parties on the merits and is a "final" order, subject to appeal under 28 U.S.C. § 158(a)(1). See Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 710-12, 116 S.Ct. 1712, 1718, 135 L.Ed.2d 1 (1996). Green Tree's notice of appeal was timely filed. Fed.R.Bankr.P. 8002. The parties have consented to this Court's jurisdiction by failing to elect to have the appeal heard by the District Court. 28 U.S.C. § 158(c)(1); Fed.R.Bankr.P. 8001; 10th Cir. L.R. 8001-1.
There are no facts in dispute. We review the Order de novo to determine if the Bankruptcy Court erred as a matter of law in denying the Motion. Pierce v. Underwood, 487 U.S. 552, 558, 108 S.Ct. 2541, 2546, 101 L.Ed.2d 490 (1988) (questions of law are reviewable de novo); Lilly v. Fieldstone, 876 F.2d 857, 858 (10th Cir.1989) (standard of review is the same as that which was applied by the trial court in making its ruling.)
III. Discussion
Green Tree suggests we define "surrender" as used in § 521(2)[3] to require that a debtor transfer title to a creditor by executing and delivering a deed in order to effectuate surrender. We start with the language of the statute. Dalton v. IRS, 77 F.3d 1297, 1299 (10th Cir.1996) (statutory interpretation begins with the language of the statute itself). Section 521 requires, in relevant part, that:
The debtor shall
. . .
(2) if an individual debtor's schedule of assets and liabilities includes consumer debts which are secured by property of the estate
(A) within thirty days after the date of the filing of a petition under chapter 7 of this title . . ., the debtor shall file with the clerk a statement of his intention with respect to the retention or surrender of such property and, if applicable, specifying that such property is claimed as exempt, that the debtor intends to redeem such property, or that the debtor *135 intends to reaffirm debts secured by such property;
(B) within forty-five days after the filing of a notice of intent under this section, or within such additional time as the court, for cause, within such forty-five day period fixes, the debtor shall perform his intention with respect to such property, as specified by subparagraph (A) of this paragraph; and
(C) nothing in subparagraphs (A) and (B) of this paragraph shall alter the debtor's or the trustee's rights with regard to such property under this title;. . . .
11 U.S.C. § 521(2)(A) (C).
The language of the statute does not require a debtor to transfer title by executing and delivering a deed in order to effectuate surrender, much less the Special Warranty Deed and Estoppel Affidavit referenced by Green Tree. However, Green Tree argues that to give effect to the language of the statute relating to the surrender of collateral, the Bankruptcy Court must impose these additional duties upon the Debtors to ameliorate the expenses Green Tree would incur by exercising its state court foreclosure remedies.
The Tenth Circuit has ruled that a debtor's failure to comply with the mandatory requirements of § 521(2) does not create an automatic benefit for a secured creditor by establishing a right to repossess collateral. Lowry Fed. Credit Union v. West, 882 F.2d 1543, 1544-46 (10th Cir.1989) (within discretion of bankruptcy court debtor may retain property without reaffirming or redeeming).[4] Green Tree argues, however, that this Court should hold that the Debtors' compliance with § 521(2) creates a substantive right for Green Tree to enable it to obtain title to collateral without resorting to state law remedies. This argument is without merit.[5] Section 521(2) does not affect nor create substantive rights because § 521(2)(C) provides that subparagraphs (A) and (B) do not alter a debtor's or a trustee's rights with regard to the property.
*136 Many courts considering the effect of § 521(2) hold that it is primarily a notice statute. See Capital Comm. Fed. Credit Union v. Boodrow (In re Boodrow), 126 F.3d 43, 51 (2d Cir.1997) (section 521(2) "appears to serve primarily a notice function"), cert. denied, ___ U.S. ___, 118 S.Ct. 1055, 140 L.Ed.2d 118 (1998); Home Owners Funding Corp. of America v. Belanger (In re Belanger), 962 F.2d 345 (4th Cir.1992) (affirming the district court that concluded § 521 was a procedural statute that provided notice in order to inform the lien creditor of the debtor's intention); Mayton v. Sears, Roebuck & Co. (In re Mayton), 208 B.R. 61, 68 (9th Cir. BAP 1997) (concluding that § 521(2) is "essentially a notice statute"); In re Irvine, 192 B.R. 920, 921 (Bankr.N.D.Ill.1996) (stating with regard to § 521(2) that "the purpose behind the section is one of notice") (citations omitted); In re Parker, 142 B.R. 327, 329 (Bankr.W.D.Ark.1992) (stating, after discussing the legislative history of the section, "[s]ection 521 is `essentially a notice requirement adopted to permit secured creditors to ascertain the debtor's intentions early in the case'" (quoting In re Belanger, 118 B.R. 368, 370 (Bankr.E.D.N.C.), aff'd, 128 B.R. 142 (E.D.N.C.1990), aff'd, 962 F.2d 345 (4th Cir. 1992))). Indeed, the Tenth Circuit, in interpreting § 521 in the context of the consequences of a debtor's failure to file a notice of election, has stated that "there is nothing within the text of § 521 which suggests a creditor succeeds automatically to any rights as a consequence of the debtors' failure to comply with its mandatory directives." Lowry, 882 F.2d at 1546.
Section 521 was not designed to provide a mechanism by which creditors may avoid obligations imposed by state law. See Butner v. United States, 440 U.S. 48, 55, 99 S.Ct. 914, 918, 59 L.Ed.2d 136 (1979) (in bankruptcy, property interests are determined by state law unless expressly stated otherwise) (specific holding superseded by statute); see also Barnhill v. Johnson, 503 U.S. 393, 398, 112 S.Ct. 1386, 1389, 118 L.Ed.2d 39 (1992) (stating while interpreting the Bankruptcy Code that, in the absence of controlling federal law, statutory terms "property" and "interest in property" are "creatures of state law"). What Green Tree seeks from this Court is an order voiding any and all rights to which the Debtors, a trustee, or other creditors may be entitled under state law. Green Tree is not at liberty to use the Bankruptcy Code to enable it to more expeditiously obtain relief provided for under state law, or to obtain relief wholly unavailable under state law. As stated by the Ninth Circuit Bankruptcy Appellate Panel: "In view of the language of § 521(2)(C), there is no reason to believe that Congress intended that the secured creditor would be in a better position because of the happenstance of bankruptcy than would be the case under state law." Mayton, 208 B.R. at 67; see Taylor v. AGE Fed. Credit Union (In re Taylor), 3 F.3d 1512, 1514 n. 2 (11th Cir.1993) (stating in a footnote addressing § 521(2) that "[s]urrender provides that a debtor surrender the collateral to the lienholder who then disposes of it pursuant to the requirements of state law"); In re Ogando, 203 B.R. 14, 16 (Bankr. D.Mass.1996) ("In sum, section 521(2) is merely a procedural statute which by its own terms is not intended to infringe upon any rights the debtor otherwise has with respect to secured consumer debt or the underlying collateral.").
Green Tree's broad interpretation of "surrender" under § 521(2) would eviscerate state law. It would leave all parties except Green Tree in an untenable and inequitable position, and create a host of problems and additional duties not required by the Bankruptcy Code. Under Green Tree's view, a debtor surrendering property would be forced to sign a special warranty deed conveying title to the property to the creditor. This special warranty deed could create[6] additional liabilities for a debtor, augmenting the obligations contained in the underlying prepetition contract between the parties. Green Tree's definition would require a debtor to determine to whom the property should be deeded if more than one lienholder had an interest in the property. The creditor would not be required to hold a foreclosure sale or take any other action to ensure that the rights of the debtor and other creditors provided by state law were protected. If there was value in the property that exceeded the *137 secured creditor's lien, the creditor would simply keep it. This would enable a creditor not only to maintain the benefit of its bargain with the debtor, but also to gain additional income due to the bankruptcy filing and at the expense of other creditors.
Green Tree's interpretation of the law, while beneficial to Green Tree, is at odds with the plain language of § 521(2) and interferes with underlying state law foreclosure policies and procedures. Green Tree argues that the problem with state law remedies is that they are time-consuming and expensive. That complaint would be best directed to the New Mexico legislature. We will not create a substantive right in § 521(2) where none exists.
IV. Conclusion
For the reasons set forth above, the Bankruptcy Court's Order is affirmed.
NOTES
[1] After examining the briefs and appellate record, the Court has determined unanimously that oral argument would not materially assist in the determination of this appeal. See Fed. R.Bankr.P. 8012; 10th Cir. BAP L.R. 8012-1(a). The Motion to Withdraw Request for Oral Argument is granted and the case is therefore submitted without oral argument.
[2] Future references are to Title 11, United States Code, unless otherwise noted.
[3] Although this is a chapter 7 case, Green Tree asserts its suggested interpretation of § 521(2) should also apply to the surrender provision found in § 1325(a)(5)(C) that relates to the confirmation of a chapter 13 plan. Under Green Tree's analysis, this ruling would define the term "surrender" wherever used in the Bankruptcy Code, and would cover all property surrendered, whether real or personal.
[4] Accord Capital Comm. Fed. Credit Union v. Boodrow (In re Boodrow), 126 F.3d 43 (2d Cir. 1997), cert. denied, ___ U.S. ___, 118 S.Ct. 1055, 140 L.Ed.2d 118 (1998) (section 521(2) does not prevent a debtor who is current on loan obligation from retaining collateral and making payment under original loan agreement without reaffirming, surrendering, or redeeming vehicle); Home Owners Funding Corp. of America v. Belanger (In re Belanger), 962 F.2d 345 (4th Cir.1992) (debtor may retain property without reaffirming or redeeming); but see Johnson v. Sun Fin. Co. (In re Johnson), 89 F.3d 249 (5th Cir.1996) (debtor who is delinquent in payments cannot retain collateral without either redeeming or reaffirming); Taylor v. AGE Fed. Credit Union (In re Taylor), 3 F.3d 1512 (11th Cir.1993) (debtor cannot retain collateral without either redeeming or reaffirming); In re Edwards, 901 F.2d 1383 (7th Cir.1990) (debtor must redeem or reaffirm to retain property).
[5] Green Tree relies on case law in which the facts differ from this case. In two cases the debtors purportedly surrendered personal property but did not have physical possession of the property, and the surrender was in fact more properly an abandonment. See Hospital Auth. Credit Union v. Smith (In re Smith), 207 B.R. 26, 30 (Bankr.N.D.Ga.1997) (chapter 13 debtor sought to modify a confirmed chapter 13 plan by electing to surrender a vehicle in the possession of a repair shop, because the debtor did not have sufficient funds to pay the costs of repair); In re Robertson, 72 B.R. 2, 3 (Bankr.D.Colo.1985) (chapter 13 debtor sought confirmation of a chapter 13 plan that provided for surrender of a vehicle in possession of the debtor's former spouse by virtue of a decree of divorce awarding the vehicle to her). In both cases, the courts held that in order to surrender possession rather than merely effecting an abandonment, the debtor must have possession of the collateral, and return and relinquish possession or control of the collateral to the creditor.
Two additional cases relied upon by Green Tree relate to real property but also have different facts that distinguish them from this case. See In re Williams, 70 B.R. 441, 442-43 (Bankr. D.Colo.1987) (chapter 13 debtor sought to abandon/surrender real property but failed to vacate the residence and turn over possession to the creditor); In re Stone, 166 B.R. 621, 623 (Bankr.S.D.Texas 1993) (chapter 13 debtor's attempt to surrender residence solely to the Internal Revenue Service when senior liens existed did not constitute a surrender under § 1325(a)(5)(C), it being "preferable for property which is subject to the claims of several lienholders to be surrendered to all the various lienholders at once and for foreclosure of all liens concurrently" (citing In re Toth, 61 B.R. 160 (Bankr. N.D.Ill.1986))). Green Tree has not cited any case that holds that surrender under § 521(2) requires a debtor to transfer title to the surrendered property.
[6] Since Green Tree has not made the Special Warranty Deed and Estoppel Affidavit a part of the record the Court can draw no conclusions as to its effect on the parties. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539529/ | 974 A.2d 100 (2009)
Linda JACKS, Respondent Below, Appellant,
v.
DIVISION OF FAMILY SERVICES AND OFFICE OF the CHILD ADVOCATE, Petitioner Below, Appellee.
No. 497, 2008.
Supreme Court of Delaware.
Submitted: March 25, 2009.
Decided: May 14, 2009.
Corrected: May 19, 2009.
*102 Kelly J. Sasso, Wilmington, for appellant.
Theresa A. Sediver, Department of Justice, Wilmington, for appellee.
Nicholas M. Krayer, Office of the Child Advocate, Wilmington, for the Office of the Child Advocate.
Before STEELE, Chief Justice, BERGER, and JACOBS, Justices.
STEELE, Chief Justice:
Linda Jacks appeals from an order of the Family Court terminating her parental rights in her four children.[1] On appeal, Jacks claims that the Family Court abused its discretion by finding that terminating her parental rights was in the best interests of her children. We find no merit to Jacks' argument and affirm.
FACT AND PROCEDURAL BACKGROUND
Linda Jacks is the biological mother of four childrenB.J., R.H., D.J., and N.J. Jacks' eldest child, B.J., was born prematurely in 1998. Dr. Shirley Klein, B.J.'s pediatrician, became concerned about B.J.'s welfare when Jacks failed to bring her for checkups. As a result, Dr. Klein could not track B.J.'s weight and overall development, a requirement for the proper care of premature infants. R.H., Jacks' second child who was born on March 3, 2000, also was not regularly taken for medical appointments. Dr. Klein suspected that R.H. was not receiving adequate nutrition because she seemed extremely hungry and drank large amounts of formula during the appointments Jacks actually attended. Dr. Klein referred the family to Public Health authorities so that a nurse could check on the children at home twice a week. Around this time, an anonymous caller placed the first of eleven hotline referrals concerning Jacks to the Division of Family Services.
During the summer of 2000, R.H. continued to lose weight. Dr. Klein admitted R.H. to the hospital to determine the cause of R.H.'s failure to thrive. R.H. steadily gained weight during her eight days in the hospital, which suggested to Dr. Klein that R.H. was not receiving enough food at home. Dr. Klein ordered numerous tests to rule out any organic causes for the child's weight loss. The results of those tests supported Dr. Klein's opinion that R.H. simply was not being fed enough.[2] Dr. Klein recognized that R.H. gained substantial weight during two hospitalizations.
During this time, three callers referred the family to the DFS hotline.[3] These referrals reported that: the children failed to thrive; there was not enough formula in the home; the children were being neglected; and R.H. was possibly being physically abused. DFS assigned a Public Health Nutritionist, Ms. Duchesneau, to the family. Duchesneau witnessed the children not receiving enough formula, not having their prescriptions filled, Jacks not keeping food journals when asked, Jacks failing to apply for WIC benefits, and Jacks refusing to get out of bed when transportation to medical appointments arrived. *103 Additionally, Duchesneau visited the home many times and witnessed B.J. and R.H. sitting alone, unsupervised, and without stimulation.
Jacks' third child, D.J., was born June 16, 2001. No doctor examined D.J. until he was three months old. Dr. Klein only saw D.J. once in the first thirteen months of his life. D.J. steadily fell to the bottom of the growth charts, missed immunizations, and was not taken to follow up appointments regarding the possibility that he may have cerebral palsy. By April 2003, the family had been the subject of eight DFS hotline referrals. The eighth referral suggested that the children were being physically abused. During one of R.H.'s hospitalizations, Dr. Allan DeJong, a child abuse expert, examined R.H., and found marks indicating healed wounds that had been purposefully inflicted. Because of the continuous reports of neglect and the evidence of possible abuse, all three children were removed from the home in April of 2003.
The children immediately began to thrive in their foster care placements. Each child gained significant weight and exhibited improvements in his or her developmental abilities. Jacks did not visit the children while they were in foster care, or otherwise plan for their return. After spending a year in foster care, the children were ultimately placed with relatives, but those relatives returned the children to Jacks shortly after she gave birth to her fourth child, N.J., in July of 2005.
Jack's took N.J. to a different pediatrician, Dr. Alouf. That doctor expressed concerns similar to Dr. Klein'sthat N.J. failed to gain weight, was not taken for blood work, and missed several medical appointments. Dr. Klein also reported that once back in their mother's care, all of the children again began to miss medical appointments. D.J. was not taken to follow up appointments regarding dental work, hearing difficulties, and ADHD symptoms.
DFS received a ninth hotline referral in November 2006, reporting that R.H. had lost weight since returning to her mother's care. When the DFS investigated these allegations, the children reported that their mother beat them and that they missed significant amounts of school. By November 2006, B.J. had seven unexcused absences, R.H. had thirteen unexcused absences, and D.J. had seventeen unexcused absences. DFS also found the home to be filthy.
Because of their abuse and neglect, the children were again placed in foster care in November 27, 2006. They remained in foster care only a few days before being placed with their maternal grandparents. During this time, the children's maternal grandmother entrusted their care mainly to their mother. During the remainder of the 2006-2007 school year, the children continued to miss significant amounts of school and medical appointments. Despite these facts, the children were place back with their mother in March of 2007.
DFS received a tenth hotline referral in April of 2007 in which the caller described numerous scratches and marks on D.J. After an investigation, DFS allowed the children to remain in the home. In August 2007, DFS received the eleventh hotline referral. The caller reported that D.J., now six years old, had been playing with a lighter and set a comforter on fire. B.J. and R.H. reportedly attempted to wake their mother during the fire, but were unsuccessful. DFS ultimately removed the children a third time because of a lack of electricity in the home and Jacks' recent apartment eviction.
Again, the children improved significantly in foster care. B.H. and R.H. improved *104 academically and gained twelve to fifteen pounds each. N.J. gained seven to eight pounds since placement and began calling her foster father "daddy." D.J. also adjusted well to his foster care placement. During their placement, Jacks was relatively uninvolved in the children's care. She did not attend their mental health treatments or regularly visit them.
On February 13, 2008, DFS petitioned to terminate the parental rights of both Jacks and the children's fathers.[4] The Family Court heard arguments and testimony during the period April to July of 2008. In August 2008, the Court ordered the termination of Jacks' parental rights. Jacks appeals from that ruling.
DISCUSSION
The Family Court found that Jacks had failed to plan for the children's physical, mental, or emotional needs and development, and after considering the best interests of the children, terminated Jacks' parental rights. On appeal, Jacks claims that the Family Court erred in applying the "best interests of the child" test. DFS and the Office of the Child Advocate respond that the Family Court's decision has record support and is the product of an orderly and logical reasoning process.
It is well settled law that the Family Court must conduct a two step analysis when adjudicating a termination petition.[5] First, the court must determine whether DFS has proven, by clear and convincing evidence, one of the grounds for termination listed in 13 Del. C. § 1103.[6] Second, the court must determine whether the decision is in the best interests of the child by weighing the factors found in 13 Del. C. § 722.[7] A determination of the child's best interests must be established by clear and convincing evidence.[8]
Here, Jacks does not dispute that DFS established grounds for termination under 13 Del. C. § 1103. Jacks appeals only the Family Court's determination that terminating her parental rights was in the children's best interests. She claims that the Family Court abused its discretion by finding that three of the 13 Del. C. § 722 factors were either neutral or weighed against her. Those factors are: (1) the wishes of the child as to his or her custodian and residential arrangement; (2) the *105 child's adjustment to his or her home, school and community; and (3) the mental and physical health of all individuals involved. With those factors weighed in her favor, Jacks argues, the termination petition should have been denied. DFS and OCA respond that the record evidence supports the Family Court's order, which was the product of an orderly and logical reasoning process, but DFS and OCA do not directly address Jacks' arguments that the court improperly weighted those three § 722 factors.
We review Family Court decisions where the court has correctly applied the law for an abuse of discretion.[9] "This Court will not substitute its own opinion for the inferences and deductions made by the Trial Judge where those deductions are supported by the record and are the product of an orderly and logical deductive process."[10]
This case presents two issues. First, did the Family Court correctly weigh the three factors that are the subject of this appeal? Second, is there an alternative basis upon which we may affirm the Family Court's termination order? Because we conclude that the Family Court did not abuse its discretion in weighing those factors, we do not reach the second issue.
A. The Record Supports the Family Court's Finding That the Wishes of the Children Was a Neutral Factor.
The Family Court found that the wishes of Jacks' children were a neutral factor in evaluating their best interests. The court based that finding on its interview of Jacks' three eldest children.[11] B.J. and R.H. told the Family Court that they wanted to live with their mother but were also agreeable to a foster or adoptive home. D.J. said that he wanted to stay with his foster parents and that he disliked his mother's home because it had mice. When asked by the court what he liked about his Mother's home, D.J. responded that he enjoyed his friends, his bike, and his Grandmother. Weighing the facts that B.J. and R.H. appeared open to either returning to their mother or remaining in foster care, that D.J. was emphatic about not returning to his Mother's, and that N.J. was too young to be interviewed, the Family Court found this factor as neutral.
Jacks argues that the children's wishes weighed against termination because D.J. stated that he liked his Grandmother and that, if the children were returned to her, they would reside with her at their Grandmother's home. Jacks also argues that the children's wishes weighed against termination because B.J. and R.H. expressed a desire to be reunited with her, D.J. expressed affection for his grandmother, and the termination would sever that tie. Jacks, however, has not shown that the Family Court's determination was not the product of an orderly and logical reasoning process. With two children open to reunification or remaining in foster care and one child wanting to remain with his foster parents, the Family Court's finding that this factor was neutral is supported by the evidence.
B. The Record Supports the Family Court's Finding That the Children's Adjustment to Their New Homes, School, and Community Weighed in Favor of Termination.
The Family Court found that all four children had adjusted well to their *106 foster care settings, which weighed against Jacks. Although B.J. and R.H. had recently been moved to a new foster care placement, the court considered adjustment to their previous foster home placement. B.J. and R.H.'s first foster care mother testified that upon their arrival in her home they were unstructured and screamed, fought, and were disrespectful. In response, the foster mother set a bed and eating schedule, and imposed appropriate discipline. The Family Court found that although the foster mother found their behavior challenging, they had improved and the foster mother believed they were adoptable.
The Family Court also found that both D.J. and N.J. had adjusted very well in their new homes. D.J. appeared very happy and wished to remain in his current home. N.J. had developed a strong bond with her foster parents and had no further eating or health problems. The Family Court found that although changes in the children's current homes were possible, those settings still offered more permanency than anything Jacks could provide.
Jacks claims that this factor should have been weighed against termination. Jacks urged that at the time of the termination hearing, she had been living with the children's maternal grandmother for ten months, and that if the children were returned to her she would continue this living arrangement. She argues that the Family Court should have considered her current stable living arrangement and the fact that her mother's home had been renovated to accommodate the children. She also claims that there was no evidence that she had neglected their schooling when the children had previously lived with her and the maternal grandmother. That factual claim is not before us because Jacks never appealed from the Family Court's contrary factual determination. Her substantive argument lacks merit.
In fact, the Family Court did consider Jacks' living situation. The court stated "[i]f reunification is pursued, the children would eventually return to maternal grandmother's home where they have resided previous. However ... the Court is not satisfied they would stay there based upon Mother's history." While the children resided with the maternal grandmother from 2006 to 2007, they frequently missed school and medical appointments. Furthermore, Jacks had moved into and out of the maternal grandmother's home numerous times throughout the children's lives. Those facts support the Family Court's finding that the children had adjusted well to foster care and that foster care offered them greater stability than would reunification with Jacks. Jacks has not shown that the Family Court's findings were not the product of a logical and orderly reasoning process.
C. The Record Supports the Family Court's Finding That the Mental and Physical Health of all Individuals Involved Weighed in Favor of Termination.
Finally, the Family Court held that the children's mental health weighed against reunification with Jacks. The court based that determination on the three eldest children's significant mental issues that required ongoing treatment. The Family Court discussed at length the needs of each child and each child's current treatment regiments. The children are currently in counseling and on medication for issues ranging from ADHD to depression and anxiety. Given Jacks' past inabilities to address the children's medical needs, the Family Court weighed this factor against Jacks.
*107 Jacks claims that this factor should have been weighed against termination. She relies on: (1) the Family Court's finding that there were no mental or physical issues with her, the children's fathers, or the maternal grandmother; (2) that her three eldest children had all made progress while in counseling (presumably implying either that their needs had been met or that she could build upon that progress); and (3) that the children's mental health has deteriorated since they entered the foster care system.
These arguments are without merit. At the time of the termination hearing, Jacks had a lengthy history of grossly neglecting her children's physical and mental needs. She offers only unsupported assertions that she was involved in addressing her children's mental health issues, and implies that she would continue to do so if reunited with her children. Furthermore, her claim that the children had made significant progress in therapytreatment which began after DFS placed the children in foster careis clearly inconsistent with her claim that the children's mental health deteriorated after they entered foster care. Jacks has failed to indicate how the Family Court's finding was not the product of a logical and orderly reasoning process.
CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the Family Court terminating Jacks' parental rights.
NOTES
[1] The children and their respective birth dates are: B.J., 1/17/98; R.H., 3/3/00; D.J., 6/16/01; and N.J., 7/8/05.
[2] Dr. Klein testified that R.H. had some health issues that may have contributed to her failure to thrive (including disagreement with her formula and colitis), but she felt that these issues could only explain some of her weight problems.
[3] The DFS Hotline received calls in June, July, and August of 2000.
[4] The fathers are not part of this appeal.
[5] Powell v. Dep't of Servs. for Children, Youth, and Their Families, 963 A.2d 724, 731 (Del. 2008).
[6] Id.
[7] 13 Del. C. § 722 provides, in pertinent part:
(a) The Court shall determine the legal custody and residential arrangements for a child in accordance with the best interests of the child. In determining the best interest of the child, the Court shall consider all relevant factors including:
1. The wishes of the child's parent or parents as to his or her custody and residential arrangements;
2. The wishes of the child as to his or her custodian(s) and residential arrangements;
3. The interaction and interrelationship of the child with his or her parents, grandparents, siblings, person cohabitating in the relationship of husband and wife with a parent of the child, any other residents of the household or persons who may significantly affect the child's best interests;
4. The child's adjustment to his or her home, school and community;
5. The mental and physical health of all individuals involved;
6. Past and present compliance by both parents with their rights and responsibilities to their child under § 701 of this title;
7. Evidence of domestic violence as provided for in Chapter 7A of this title; and
8. The criminal history of any party or any other resident of the household....
[8] Powell, 963 A.2d at 731.
[9] Id.
[10] Solis v. Tea, 468 A.2d 1276, 1279 (Del. 1983).
[11] The Family Court did not interview N.J. because she was too young. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539531/ | 974 A.2d 884 (2009)
In re Alma BROWN, et al., Appellants.
Nos. 06-FM-1207, 06-FM-1209, 06-FM-1210, 06-FM-1213 to 06-FM-1216, 06-FM-1219 to 06-FM-1225, 06-FM-1234, 06-FM-1235.
District of Columbia Court of Appeals.
Argued February 24, 2009.
Decided July 2, 2009.
*886 Christine A. Monta, Public Defender Service, with whom James Klein, David Norman, and Joshua Deahl, Public Defender Service, were on the brief, for appellants.
Mary T. Connelly, Assistant Attorney General, with whom Peter J. Nickles, Interim Attorney General for the District of Columbia at the time the brief was filed, Todd S. Kim, Solicitor General, and Donna M. Murasky, Deputy Solicitor General, were on the brief, for the District of Columbia.
Before REID and FISHER, Associate Judges, and KING, Senior Judge.
KING, Senior Judge:
Appellants are sixteen individuals committed to the custody of the District of Columbia Department of Mental Health for an indefinite period of time, pursuant to D.C.Code § 21-545. They challenge the trial court's denial of their consolidated motion to dismiss pending civil recommitment petitions filed against them by the District of Columbia. We do not reach the merits of the appeals because we lack subject matter jurisdiction. Therefore, we dismiss the instant appeals without prejudice to possible future challenges after final judgments are entered in the trial court.
I.
The District of Columbia Hospitalization of the Mentally Ill Act, D.C.Code §§ 21-501-592 (1973) (amended 2004) ("Ervin Act"), provided for the indefinite commitment of any person found to be "mentally ill and, because of that mental illness, is likely to injure himself or others if not committed." D.C.Code § 21-545. All of the appellants were thus committed between 1976 and 2001, and remained committed when the actions in the trial court were commenced. In December of 2002, the Council of the District of Columbia ("Council") adopted the Mental Health Commitment Act of 2002, which made significant changes to the Ervin Act. D.C. Law 14-283, amending D.C.Code §§ 21-501-592 (2007 Supp.). Most relevant to the case at bar, the Act changed the duration *887 of civil commitments from an indefinite period of time to a period of one year. D.C.Code § 21-545(b)(2) (2007 Supp.). Section 2(gg), later codified at D.C.Code § 21-589.01, amended by D.C. Law 16-235, provided that all indeterminate commitments would "terminate no more than 18 months from January 1, 2003," unless recommitment petitions[1] were filed before that date.
While most provisions of the Act took effect on April 4, 2003, the portions of the Act that limited future commitments to a period of one year and established specific procedures for recommitment required affirmative congressional approval. When it became clear that Congress would not approve these provisions within 18 months after January 1, 2003 [by July 1, 2004], the Council enacted four sequential emergency and temporary amendments to Section 2(gg) in 2004. Each provided that all indefinite commitments would expire 548 days [18 months] from the date of congressional approval of the statutes in question.
Congress approved the provisions on December 10, 2004. On July 20, 2005, the last of the Council's 2004 temporary amendments expired, and the original version of Section 2(gg) became the controlling law.[2] Thus, the statutory authorization for continuing the indefinite commitments lapsed on July 20, 2005.
Apparently believing the indeterminate commitments would expire in June of 2006, eighteen months after congressional approval, the Department of Mental Health filed petitions for appellants' recommitment with the Mental Health Commission ("Commission") between October 2005 and April 2006. In May of 2006, one appellant filed the first motion to dismiss the recommitment petition "on jurisdictional grounds." The other appellants soon filed substantially verbatim motions, each arguing that the lapse of statutory authority caused his or her indefinite commitment to terminate without review on July 20, 2005. According to appellants, the government's failure to file recommitment petitions prior to that date stripped the Commission of jurisdiction to decide the petitions, necessitating dismissal of the motions to recommit.
In response to the motions filed by appellants, the Council passed a series of emergency, temporary, and permanent amendments ("2006 amendments"), all of which provided that the commitments of indefinitely committed persons expired "548 days after December 10, 2004 [the date of congressional approval], unless the Department of Mental Health has petitioned for recommitment." The amendments also state that the section "shall apply as of July 20, 2005."
Following the enactment of the first of the 2006 amendments, the District filed its response to appellants' consolidated motion to dismiss the recommitment petitions, relying on the 2006 amendments as the basis for the Commission's jurisdiction over these cases. The Commission agreed with the government's argument and denied the appellants' motions. Appellants then filed a motion for review of the Commission's order in Superior Court, continuing to seek dismissal of the petitions. *888 Judge Linda Davis rejected appellants' arguments and denied the motions to dismiss. These appeals followed.
Before us, appellants challenge the 2006 amendments as exceeding the Council's authority under the Home Rule Act, D.C.Code § 1-201.01 et. seq. (2001), as in violation of due process, and as bills of attainder. We do not reach the merits of these arguments, because we lack subject matter jurisdiction over these appeals.
II.
Subject to certain exceptions that are not applicable here, we have jurisdiction to review only "final orders and judgments" of the Superior Court, D.C.Code § 11-721(a)(1) (2001), and "the lack of finality is a bar to appellate jurisdiction." Rolinski v. Lewis, 828 A.2d 739, 745 (D.C. 2003). "A party must ordinarily raise all claims of error in a single appeal following final judgment on the merits." Id.
Before briefs were filed, appellee moved to dismiss the appeals on the grounds that this court lacks jurisdiction to entertain them. Appellants responded that this court had jurisdiction to entertain an appeal of the order denying the motion to dismiss because the order "has a final and irreparable effect on the important rights of the parties" (citations omitted). The motions panel denied the motion to dismiss the appeal without prejudice to it being renewed before the panel designated to hear the case on the merits. In its brief before us, appellants contend the order at issue should be construed as the functional equivalent of a denial of a writ of habeas corpus, and thus a final, appealable order.
While we agree that the denial of a petition for a writ of habeas corpus is a final order and thus appealable, see Jenkins v. United States, 548 A.2d 102, 107 (D.C.1988), we are satisfied that the motions to dismiss in the trial court cannot reasonably be interpreted as petitions for such a writ. At no point did appellants request their release, the relief for which the writ is intended. See Bennett v. Ridley, 633 A.2d 824, 826 (D.C.1993) (noting the "grand purpose" of a writ of habeas corpus is "protection of individuals against erosion of their right to be free from wrongful restraints upon their liberty").[3] Further, appellants did not raise the theory that their motions should be treated as petitions for habeas corpus before the trial court for its considered review, so we are unable to consider this claim on appeal. See Dorm v. United States, 559 A.2d 1317, 1318 (D.C.1989) (holding that a defendant "must present to the trial court all the issues to be raised or else forego their consideration later by this court"). Therefore, because appellants have not requested relief in the nature of that provided by the issuance of the writ and failed to raise this argument in the trial court, we decline to interpret their motions to dismiss as petitions for writs of habeas corpus in these appeals.
Furthermore, the denial of appellants' motions to dismiss does not meet the definition of a final order. An order is final for the purposes of appeal only when it disposes of all issues and claims on the merits as to all parties in the case. Rolinski, 828 A.2d at 745. A denial of a motion to dismiss is ordinarily not a final, appealable order, because it does not terminate the action on the merits. Id. at 745-46. The issue of whether appellants are a danger to themselves or others due to their purported mental illnesses was never reached by the trial court, so the cases *889 were not decided on the merits. Accordingly, we are satisfied that the orders at issue are not final orders within the meaning of § 11-721(a)(1).
Even though the orders at issue are not "final," we nonetheless may have jurisdiction to hear the appeals if the order falls within the collateral order exception recognized by the Supreme Court in Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), and followed by this court. Rolinski, 828 A.2d at 746-48 (applying Cohen test). An order satisfies this narrow exception to the finality requirement if three conditions are met. Specifically, the order must (1) conclusively determine a disputed question of law, (2) resolve an important issue that is separate from the merits of the case, and (3) be effectively unreviewable on appeal from a final judgment. Finkelstein v. Hemispherx Biopharma, Inc., 774 A.2d 332, 339-40 (D.C.2001).
Courts following Cohen, including us, have recognized only a limited number of circumstances within the collateral order exception. For example, an order denying bail in a criminal case is appealable under the exception because it is effectively unreviewable on appeal from a final judgment because, by that point, the bail order is moot.[4]See Wise v. Murphy, 275 A.2d 205, 211 (D.C.1971) (citing Stack v. Boyle, 342 U.S. 1, 6, 72 S.Ct. 1, 96 L.Ed. 3 (1951)). An order denying a motion to dismiss predicated on a constitutional right to be free from trial is also a well-recognized exception. In particular, a denial of a motion to dismiss under the speech or debate clause or on double jeopardy grounds satisfies the collateral order exception. Helstoski v. Meanor, 442 U.S. 500, 507, 99 S.Ct. 2445, 61 L.Ed.2d 30 (1979) (direct appeal available for denial of motion to dismiss based on claim that indictment violated speech or debate clause); Young v. United States, 745 A.2d 943, 945 (D.C.2000) (denial of motion to dismiss indictment on double jeopardy grounds proper subject of immediate appeal). In addition, a denial of a motion to dismiss where the motion is predicated upon a claim of immunity from suit is also immediately reviewable. Stein v. United States, 532 A.2d 641, 644 (D.C.1987) (entertaining immediate appeal of denial of motion to dismiss based on claim of immunity). In these cases, a party's right to be free from trial is at issue. Because the right would be a nullity if the proceedings continued after the denial of the motion to dismiss, requiring that the appeal be taken from a final judgment would provide an inadequate remedy. See United States v. Hollywood Motor Car Co., 458 U.S. 263, 269-70, 102 S.Ct. 3081, 73 L.Ed.2d 754 (1982).
Most other types of pre-trial orders, however, do not satisfy the requirements of the collateral order exception, because the rights implicated can be vindicated at trial or on appeal from a final judgment. These include denials of motions to dismiss indictments on grounds other than double jeopardy, the speech or debate clause, or some other recognized immunity. See, e.g., Hollywood Motor Car Co., 458 U.S. at 264, 102 S.Ct. 3081 (denial of motion to dismiss for prosecutorial vindictiveness not immediately appealable); United States v. MacDonald, 435 U.S. 850, 861, 98 S.Ct. 1547, 56 L.Ed.2d 18 (1978) (denial of motion to dismiss on speedy trial grounds not immediately appealable); Johnson v. District of Columbia, 853 A.2d 207, 213 (D.C.2004) (dismissing interlocutory appeal from denial of motion to dismiss indictment where double jeopardy exception *890 did not apply); Jones v. United States, 669 A.2d 724, 728 (D.C.1995) (denial of motion to dismiss indictment for vagueness on constitutional grounds not immediately appealable).
The denial of the consolidated motion to dismiss the recommitment petitions does not fall within the collateral order exception because the third prong of the Cohen test is not satisfied. The validity of the recommitment petitions and procedures laid out in the Council's laws would be fully reviewable on an appeal from an adverse final judgment. Appellants maintain, however, that even if they ultimately prevail, they cannot recover for any loss of liberty they have experienced due to the trial court's order, and thus their rights will be destroyed if not vindicated in the instant appeal. They argue their situation is like that of a criminal defendant denied bail or someone committed for a competency evaluation,[5] both of whom may appeal such a ruling. In both of the situations to which appellants refer, the order in question results in an immediate loss of liberty that is not subject to review on appeal from a trial judgment. Appellants' situation is distinguishable, however, because the trial court's denial of appellants' motions to dismiss does not result in any loss of liberty beyond that authorized by the initial commitment orders. Because the trial court has not yet ruled upon the recommitment petitions, there is no order that irreparably impacts appellants' rights.
We think that the circumstances here are indistinguishable from an appeal from a denial of a motion to dismiss an indictment when the defendant is being held in lieu of bail. While the legality of such a confinement in a criminal case may be challenged in an interlocutory appeal, the denial of the motion to dismiss cannot be reviewed until later. When the motion to dismiss is denied, the case moves forward and any asserted claims and rights can be vindicated at trial or on final appeal. In appellants' cases, the ultimate issue of the validity of the 2006 Amendments would be reviewable on appeal from a final judgment, as is the question of whether appellants were erroneously the subject of summary commitment procedures, rather than initial commitment procedures. While appellants may be burdened by the current proceedings, they do not have the right to be free from the proceedings. Thus, immediate review is not necessary to vindicate appellants' rights. See Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863, 870, 114 S.Ct. 1992, 128 L.Ed.2d 842 (1994) (citations omitted). Because none of appellants' rights will be irretrievably lost in the absence of an immediate appeal, the third prong of Cohen is not satisfied.
III.
The order denying appellants' motions to dismiss the recommitment petitions is a non-final order that does not fall within the collateral order exception. Therefore, this court lacks subject matter jurisdiction and we dismiss the instant appeals without prejudice to any future appeals from a final judgment.
NOTES
[1] With a petition for recommitment, the determination of whether that individual remains mentally ill and poses a risk to herself or others as a result of the mental illness is made by the Mental Health Commission. See D.C.Code § 21-545.01. In contrast, when civil commitment proceedings are instituted against an individual for the first time, the individual is entitled to a jury trial. If no jury is requested, the court makes the determination. See D.C.Code § 21-545.
[2] Under the original version of Section 2(gg), the indefinite commitments could not extend past July 1, 2004.
[3] Some of the patients, while "committed," were in fact outpatients when the motions to dismiss were filed.
[4] We also note that defendants in the District of Columbia are entitled to appellate review of pretrial detention or conditions placed on their pretrial release under D.C.Code §§ 23-1322 and-1324.
[5] See Farrell v. United States, 646 A.2d 963 (D.C. 1994) (commitment for 60-day evaluation related to competency to stand trial meets the Cohen standard). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539402/ | 191 A.2d 322 (1963)
The STATE of Delaware, upon the Relation of the STATE HIGHWAY DEPARTMENT, Plaintiff,
v.
GEORGE F. LANG COMPANY, a Delaware corporation, et al., Defendants.
Supreme Court of Delaware.
April 30, 1963.
Daniel L. Herrmann and William D. Bailey, Jr., of Herrmann, Bayard, Brill & Russell, Wilmington, for plaintiff.
H. James Conaway, Jr., of Morford, Young & Conaway, Wilmington, for defendant George F. Lang Company.
Before SOUTHERLAND, C. J., and WOLCOTT and TERRY, JJ.
WOLCOTT, Justice.
We accepted certification of three questions of law involving the exercise by the State of its power of eminent domain to acquire land on which to construct a freeway through the City of Wilmington. This freeway is known officially as F.A.I. -2 *323 or Interstate Route 95. Our reason for accepting the certification was that present planning and construction make it advisable for the State Highway Department to obtain possession of the land of George F. Lang Company on or about May 1, 1963, and further that the defenses raised by George F. Lang Company, if sustainable, would jeopardize the entire construction by the State Highway Department of Interstate Route 95. We considered it desirable to have the questions settled as promptly as possible.
The three questions certified are:
1. Will Interstate Route 95 in and through Wilmington be a "State Highway" for the construction of which the State of Delaware, acting through the State Highway Department, is empowered to take domain under 17 Del. C. §§ 132(c) (4), 138 and 175?
2. Is the exercise of the power of eminent domain by the State of Delaware over the defendant's property, for the purpose of constructing Interstate Route 95 in and through Wilmington, in violation of Article I, Section 8 of the Constitution of the United States and the Tenth Amendment thereto?
3. Is the measure of just compensation to which the defendant is entitled governed by State law and procedures or Federal law and procedures?
The facts upon which the answers to the certified questions depend are summarized below:
The State Highway Department has attempted by condemnation to acquire the property of George F. Lang Company for the construction of part of the highway known as Interstate Route 95 through the City of Wilmington. This highway will be a limited access expressway through Wilmington constructed in accordance with the specifications of the Federal Bureau of Public Roads. It will be part of the National System of Interstate and Defense Highways, and a connecting Delaware link between such highways in Pennsylvania and Maryland.
While the highway is a link in the National System, at the same time it will provide access to and from the central business district of Wilmington, and will meet the traffic needs of the State of Delaware for a controlled access highway in the area in which it will be located.
The construction of the highway has been duly authorized by the State Highway Department, and has been approved by the Mayor and Council of Wilmington and by the Federal Bureau of Roads, all in accordance with the provisions of the Federal Aid Highway Act of 1956.
Since 1957 the State Highway Department has proceeded with the planning, engineering and construction of the highway. It has acquired title to and possession of 643 parcels of property, and needs to acquire an additional 119 properties to complete the required right of way. To date, the total expenditure upon the project is approximately $7,536,000.
In carrying out the project, fee simple title to all properties acquired is taken in the name of the State of Delaware. All contracts are awarded by and in the name of the State of Delaware which, alone, is obligated thereunder, and which makes payments called for by such contracts with State funds. Upon the completion of the highway, its operation, control, maintenance and policing will be under the Delaware State Highway Department, except to the extent provided by the Federal Aid Highway Act. (23 U.S.C.A. §§ 116(c), 127 and 131.) The Federal Government will have no jurisdiction and control over the highway beyond that extent.
By reason of complying with the Federal Bureau of Public Roads standards, specifications and requirements, the State of Delaware will receive from the Federal Government reimbursement to the extent of 90% of the amount spent for the construction of the highway.
*324 The State Highway Department enlisted the aid of the Federal Bureau of Public Roads pursuant to 17 Del.C. §§ 173, 177. Accordingly, Federal participation in the construction of the highway came about by invitation of the State of Delaware pursuant to the Federal Aid Highway Act of 1956.
We turn now to the questions certified.
Question No. 1
The landowner argues that the State may condemn its land only if Interstate Route 95 is in fact a state highway. The State Highway Department concedes this to be the fact. We agree that 17 Del.C. §§ 132 and 138 limit the acquisition of land by the State Highway Department by exercise of the power of eminent domain for road purposes to the construction of "State Highways". The question is, therefore, whether or not Interstate Route 95 is a state highway.
Initially, we note that 17 Del.C. § 101(a) defines "State Highway" as "any road or highway or portion thereof which the Department has constructed or, of which the Department has taken or assumed control or jurisdiction." The landowner, however, argues that this definition is not controlling by reason of 17 Del.C. § 131, which provides that all public roads, etc., "constructed, acquired or accepted by the State Highway Department shall be under the absolute care, management and control of the Department." The argument is that if Interstate Route 95 after construction is not to be under the "absolute" control of the State Highway Department, then, by reason of 17 Del.C. § 131, requiring such control, it is not a "State Highway".
The landowner, to demonstrate the absence of such "absolute" control, points to the following provisions of Federal law as showing retention of some control by the Federal Government of Interstate Route 95:
(1) 23 U.S.C.A. § 116(c) authorizing the Federal Government after construction to notify the State Highway Department of improper maintenance, and if not corrected within 90 days to withhold future approval of all other Federal projects in Delaware until such correction is made;
(2) 23 U.S.C.A. § 131 authorizing the Federal Government the right to regulate advertising signs;
(3) 23 U.S.C.A. § 111 prohibiting the State Highway Department from adding points of access unless approved in advance by the Federal Government;
(4) 23 U.S.C.A. § 109 requiring the construction to be in accordance with Federal standards; and
(5) Provision of Federal law providing for the payment from Federal funds of up to 90% of the cost of the highway.
These provisions, it is argued, demonstrate that the State Highway Department does not have "absolute" control over Interstate Route 95 as required by 17 Del.C. § 131, and thus prevent it from being a "State Highway" for the construction of which the State Highway Department may exercise the power of eminent domain.
However, it is clear that fee simple title to Interstate Route 95 will remain in the State of Delaware; that it will be operated, controlled, maintained and policed by the State Highway Department; that it will provide access to and from the central business district of Wilmington meeting the needs of local as well as interstate traffic in the area; and that all contracts for its construction are made in the name of the State of Delaware and State funds are used in payment thereof, which may later be reimbursed to the extent of 90% from Federal funds. These recited facts, we think, make it clear that Interstate Route 95 serves a local as well as an interstate or Federal purpose.
The fact that such a dual purpose is served should not and does not preclude the highway from being at the same time a "State Highway" as well as a link in an *325 interstate system of highways. Indeed, we recognized as much in Tusso v. Smith, Del., 162 A.2d 185.
Furthermore, a complete answer to the landowner's contention is found in 17 Del. C. §§ 173 and 175, which authorize the State Highway Department, either alone or in co-operation with any Federal agency, to provide controlled-access facilities, and granting, inter alia, to the State Highway Department authority to exercise the power of eminent domain to that end.
If it be argued that 17 Del.C. §§ 173 and 175 are in conflict with 17 Del.C. § 131, the answer is that §§ 173 and 175 were enacted later in point of time and thus prevail over § 131. Rickards v. State, 6 Terry 573, 77 A.2d 199; Mayor and Council of Wilmington v. State ex rel. v. DuPont, 5 Terry 332, 57 A.2d 70.
Since we are of the opinion that Interstate Route 95 is a state highway, at least to the extent that land for its right of way may be acquired by condemnation, it follows that the answer to Question No. 1 is in the affirmative.
Question No. 2
The burden of the landowner's argument under this question is that since the Congress will ultimately supply 90% of the cost of Interstate Route 95 for the purpose of providing for the national defense which is expressly delegated to the Federal Government by Article I, Section 8 of the Federal Constitution and, hence, is not reserved to the States by the Tenth Amendment, it follows that the proposed public use of Interstate Route 95 is a National Public Use and not a Delaware Public Use for which the State may exercise its power of eminent domain.
We think what we had to say in answer to Question No. 1 answers also this argument since, as we pointed out, the public use involved here is at one and the same time both National and Delaware. Both the Federal Government and the State are combining their efforts to promote both types of use. Furthermore, the General Assembly, by 17 Del.C. §§ 173 and 175, specifically authorized the obtaining of land to fulfill the Delaware Public Use in cooperation with the Federal Government's efforts to provide for the Federal Public Use.
The landowner refers us to certain decisions. We think, however, that they are not at all pertinent to the facts underlying the questions before us. We note them briefly.
Initially is cited Kohl v. United States, 91 U.S. 367, 23 L.Ed. 449, for the proposition that the United States has the power of eminent domain to acquire land for the exercise of the powers delegated to it by the Federal Constitution. There can be no question at this date of the possession of this power by the United States, or its right if it chose to do so to condemn land in the State of Delaware to build defense highways. We do not understand the Kohl case to preclude, however, the co-operation of the Federal Authority with a State in a joint enterprise providing for State as well as Federal purposes.
Next is cited People ex rel. Trombley v. Humphrey, 23 Mich. 471, which held that a state may not exercise its power of eminent domain for a purpose other than one legitimate to its own sovereignty. In the exercise of this power, therefore, a state may not take land to be used for a purpose wholly within the sphere of the United States. The condemnation of land by the State to be turned over to the United States for the erection of a lighthouse was accordingly held to be an improper exercise by the State of its power of eminent domain, since the erection of lighthouses was properly within the sphere of the United States, not the State of Michigan.
Similarly, in Darlington v. United States, 82 Pa. 382, the Supreme Court of Pennsylvania held that one sovereignty may not take land for the use of another sovereignty.
*326 None of the cited cases, we think, is applicable to the case before us. These cases go no further than to hold that where one public purpose only is to be served by the acquisition of the land, and that purpose is within the exclusive sphere of a different sovereignty, the sovereignty which has no connection with that purpose may not condemn land for its achievement.
In the case at bar there are two purposes to be subserved. One, that of National Defense may be purely Federal, but the second, the alleviation of intolerable local traffic conditions aggravated by the passing through of interstate traffic, is certainly peculiarly within the domain of the State of Delaware. There can be no doubt but that Delaware if it desired could acquire the necessary land and construct this highway at its sole expense. This being so, how is the purely Delaware Public Use destroyed, or wiped out, by the joint financial co-operation of the Federal Government which sees in the highway a link in the furtherance of National Defense?
If the position of the landowner is pushed to its logical conclusion, the result would be that there must be constructed two approximately parallel highways one with only local use and one with purely national or interstate use. This result would be an absurdity both financially and from the standpoint of the best use of land.
From the foregoing, it follows that the answer to Question No. 2 is in the negative.
Question No. 3
The argument of the landowner under this question is that since 90% of the funds to be used in the acquisition of land for and the construction of Interstate Route 95 will in the last analysis be Federal funds, the measure of just compensation to which the landowner is entitled should be governed by Federal law and procedures.
The difficulty the landowner labors under in this respect is that its land is being condemned by the State, fee simple title to it will be taken and remain in the name of the State, and its compensation will be paid from State funds all in order to accomplish a State public purpose. The fact that the State may later be reimbursed in part by the Federal Government has no materiality to the problem.
The answer to Question No. 3 is that the measure of just compensation to which the defendant is entitled is governed by State law and procedures. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3361313/ | The parties have been married to each other for about forty-one years, during which they have raised a family of five children, and during most of the time they have lived together and have worked together in operating a retail food market. By dint of their joint labors and frugal habits, they accumulated sufficient money to invest in real estate and to provide comforts as well as the necessaries of life for themselves and their offspring. Within the last fifteen months, troubles have arisen which resulted in this and other litigation between them.
By this action, Mrs. Marino seeks to recover $1600 which she claims to have loaned her husband in 1942 and 1944. The defendant claims that there was no loan made to him.
In 1936, Mr. Marino negotiated for the purchase of a piece of real estate. By his direction, title was taken in Mrs. Marino's name, although the purchase price came from the family funds. The building on the premises was converted into a house in 1937 out of moneys taken from the business or raised on mortgages to the Farmers and Mechanics Bank. Payments were made from time to time, but further borrowings increased the mortgage from time to time, so that on August 4, 1942, the amount secured was $2250.
In the meantime, Mr. Marino had taken title to a property adjoining that owned by Mrs. Marino. In 1942, a mortgage of $3000 on his property prevented further borrowing thereon, and, as he was desirous of remodeling his house, Mrs. Marino, on August 4, 1942, borrowed $1000 on her place (which was occupied in part as the family home), thereby increasing her mortgage to $3250. The net proceeds of this additional borrowing, or $967.37, was turned over to Mr. Marino and used by him in fixing up his house. Mrs. Marino's mortgage has been paid in full, the final payment of $725 having been made on December 4, 1944. Mr. Marino completed payment of his mortgage in May, 1945.
During the few years immediately prior to April, 1945, the business was very profitable, and much of the money used to pay the bank borrowings and for improvements of the two houses came from this source. Besides, the children turned most *Page 154
of their net earnings into the common family fund, which was managed by Mrs. Marino, as was the income from the rents from the two houses. Likewise, money came from allotments made by the boys who were in military service. All of these moneys were commingled by Mrs. Marino and disbursed by her, although the bank payments were usually delivered by Mr. Marino, to whom the money was handed by his wife. Their informal and friendly relationship continued until Mr. Marino left home and went to California on April 3, 1945, and this action was instituted about two weeks later. Mrs. Marino, likewise, went to California in the spring of 1945. She lived with her husband there for about a month; he returned to Middle town, Connecticut, and again went to California for a short time. Mrs. Marino returned home in October, 1945.
It is the insistent contention of Mrs. Marino that she is entitled to recover the sum advanced to her husband and expended by him for the alterations to his house. In her complaint she alleges a "promise" to repay this sum and her testimony is to the effect that at the time she advanced the money "he promised to give it back." She states further that when she later asked for payment, in 1943, he paid no attention to her demand. She has not sustained the burden of proving an express promise to pay the sum mentioned, for her advancements as late as 1944 negative any expectation of payment of the earlier sum.
Looking at the case on the theory of a possible implied promise to pay, she must also be denied a recovery, because of the relationship between the two parties and the course of their dealings in financial matters during so many years. Where valuable services are rendered or moneys advanced from one stranger to another, there is strong basis for an inference or implication that the debt is to be paid. Bartlett v. Raidart,107 Conn. 691. But the situation is different where the parties are members of one family living in one household. Cotter
v. Cotter, 82 Conn. 331, 332; Burke v. Burke, 92 Conn. 306,308; Davis v. Davis, 128 Conn. 243, 247. Applying these principles to the facts shown here, no promise to pay is to be implied or inferred. Likewise, there is no foundation of an obligation based on quasi contract.
Another claim of Mrs. Marino is that she gave her husband about $300 in coin during December, 1944, on a loan. Mr. Marino denies this, claiming that the "change" was money *Page 155
from the store which she told him to take to the bank. Whether the latter version of the transaction is correct or not, Mrs. Marino's testimony falls far short of showing that the money was turned over on any promise to repay by her husband or any expectation of repayment on her part.
The other claim is that there was another loan of $300 made in December, 1944, by way of payment on the mortgage on Mr. Marino's house. It is admitted by both parties that Mrs. Marino handed $300 to one of her daughters to make the payment on the mortgage, and that the payment was made. Mr. Marino says that he did not know of this until later, but whether this is the fact or not there is no basis for finding an express or implied promise to reimburse the plaintiff for this item.
By way of counterclaim, Mr. Marino seeks to recover sums which, he claims, were expended for the benefit of Mrs. Marino. These sums came from the same source as those given to Mr. Marino, and he does not now press for judgment on these items. Nor does he now press for a recovery for his claimed share of the proceeds from the sale of articles of personal property sold when Mrs. Marino disposed of the business fixtures, etc.
The issues on the complaint are found in favor of the defendant; the issues on the counterclaim are found in favor of the plaintiff; judgment to be entered accordingly. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1539660/ | 974 A.2d 88 (2009)
Nicholas D. BARR, Respondent Below, Appellant,
v.
DIVISION OF FAMILY SERVICES and Casa, Petitioner Below, Appellee.
No. 538, 2008.
Supreme Court of Delaware.
Submitted: May 21, 2009.
Decided: June 1, 2009.
*90 Noel E. Primos, Esquire, Schmittinger & Rodriguez, P.A., Dover, Delaware, for appellant.
Donna Thompson, Esquire, Department of Justice, Dover, Delaware, for appellee.
Before STEELE, Chief Justice, HOLLAND and RIDGELY, Justices.
HOLLAND, Justice.
The respondent-appellant, Nicholas D. Barr, appeals from the decision of the Family Court terminating his parental rights over his daughter, Nancy.[1] Barr raises three arguments on appeal. First, he contends that the Family Court erred in finding that he intentionally abandoned Nancy. Second, he contends that the Family Court erred in finding that he failed to plan for Nancy's physical needs and mental and emotional health and development. Third, he contends that the Family Court erred in finding that the termination of his parental rights was in the best interest of Nancy.
Procedural History
Barr is the father of Nancy, who was born on December 11, 1999. After Nancy was born, she remained in the custody of her Mother. However, because the Mother was unable to gain stability in employment and housing, there was a history of Nancy being placed "with relatives and then returned back to the mother." On November 30, 2006, Nancy and her siblings entered the care and custody of the Division of Family Services ("DFS") due to the Mother being homeless. Barr was incarcerated at that time.
When Nancy first entered DFS custody, she was residing with a relative of her *91 sibling. The Mother placed Nancy with the relative in an attempt to prevent her from entering foster care. Nancy remained with the relative until being placed in a foster home on July 25, 2007. Nancy was still in the foster home at the time of the termination of parental rights ("TPR") hearing.
On December 11, 2007, the Family Court held a permanency hearing. At that time, neither Barr nor the Mother had completed their case plans for reunification with their daughter. Therefore, the permanency goal for Nancy was changed from reunification to termination of parental rights. On January 11, 2008, DFS filed a petition for the termination and transfer of parental rights with regard to Barr and the Mother. A hearing on the petition was scheduled for August.
On August 7, 2008, the Family Court held a hearing on DFS's petition to terminate Barr's parental rights. At the hearing, Barr was unable to produce proof of completing any aspect of his case plan. Barr claimed to have completed "a substance abuse evaluation through probation and parole." He did not, however, provide any proof of such completion to DFS. Barr also failed to provide financial support for Nancy since she entered DFS custody. Barr testified at the hearing and did not dispute having a history of domestic violence with the Mother or having a history of substance abuse.
By order dated September 29, 2008, the Family Court terminated the parental rights of Barr.[2] The court concluded that Barr had "failed to plan adequately for the physical needs and the mental and emotional health and development of [Nancy]" in the following ways: (1) Nancy has been in the care of the Division for more than one year; (2) there is a history of neglect, abuse and lack of care by Barr; (3) Barr is not willing or able to promptly reassume care of Nancy and pay for her care; and (4) failure to terminate the rights of Barr in Nancy will result in continued emotional instability and physical risk. Additionally, the court found that Barr "has intentionally abandoned [Nancy]." This appeal followed.
Barr's Criminal History
Barr has an extensive criminal history of twenty-five reported felonies with five convictions, including Kidnapping in the Second Degree, Escape after Conviction and Attempt to Commit a Class C Felony; and sixty-six reported misdemeanors with thirty-eight convictions, including "a variety of assault thirds," Unlawful Imprisonment in the Second Degree, Escape in the Third Degree and Possession With Intent to Deliver Cocaine. He has also been convicted twice for violation of parole violations. As a result of these convictions, Barr was incarcerated for most of his daughter's life, including the time she was brought into DFS custody in November 2006 until October 2007, and again from January 2008 until April 2008. In addition, at the time of the August 2008 TPR hearing, Barr was again incarcerated, pending trial on numerous new charges.
During his most recent probation, Barr "was moved from a lower level of supervision to a Level III case load for intensive supervision," because he was considered to have "medium high" risks and needs. On June 11, 2008, Barr was incarcerated for multiple criminal charges, which included: Assault in the First Degree, Possession of *92 a Firearm During the Commission of a Felony, Possession of a Deadly Weapon by a Person Prohibited, Reckless Endangerment in the First Degree, and Criminal Mischief. Although he maintained his innocence of those charges at the TPR hearing and was released shortly after the Family Court issued its decision, he remained incarcerated for those pending charges at the time of the TPR hearing and was thus unable to promptly assume custody of Nancy.
Barr's Interaction With DFS
Barr first came to the attention of DFS in 1998, when DFS discovered domestic violence between Barr and the Mother during an investigation regarding a sibling of Nancy. The Mother informed DFS that she had to be hospitalized because of a physical assault by Barr and that Barr had been drinking and possibly using drugs at the time of the incident. Barr was later incarcerated for the assault of the Mother.
On June 9, 1999, when the Mother was pregnant with Nancy, Barr "became belligerent" while informing DFS he had no intention of case planning to be reunified with Nancy once she was born. On June 23, 1999, the Mother told DFS that Barr "had gotten `out of control'" with her and she had to call the police. According to the Mother, Barr was subsequently arrested and a no contact order was put in place between them once he was released on bail.
On October 9, 2007, Barr signed a case plan for reunification with his daughter, in anticipation of his pending release from prison. The case plan required that Barr complete the following elements: obtain stable housing; obtain stable employment; comply with probation requirements and incur no new criminal charges; complete a parenting class; work with a parent aide; undergo a substance abuse evaluation and complete any recommended treatment; and undergo a domestic violence and anger management evaluation and complete any recommended treatment. The domestic violence requirement was based on the history of domestic violence between Barr and the Mother.
Barr was released from incarceration on October 10, 2007. He called his DFS worker on October 15 and informed her that he would meet with her at the DFS office "within a couple of days." Barr never appeared for the meeting. Barr explained at the August 2008 TPR hearing that the scheduled meeting with DFS conflicted with an appointment with his probation officer and he called to reschedule the appointment with DFS, but no one called him back. DFS claims that it was unsuccessful in its attempts to contact Barr at any of his listed numbers. As a result, the meeting was never rescheduled. There was no contact between Barr and DFS from October 2007 to May 2008, and DFS was unaware of his whereabouts. During that time, Barr moved to Richmond, Virginia, where he was incarcerated from January 2008 to April 2008.
Barr did not contact DFS again until he called DFS on May 12, 2008. During that phone call, the DFS worker discussed the elements of the case plan with Barr and informed him that "it would be his obligation to make sure he met ... the goals of his case prior to" the August 2008 TPR hearing. Barr was informed he would have to complete the elements of his case plan independently because the goal for Nancy had already been changed to termination of parental rights at the December 2007 permanency hearing for which he failed to appear. Barr had no further contact with DFS between the May 2008 phone call and the August 2008 TPR hearing.
*93 Barr's Interaction With Nancy
While incarcerated in 2005, Barr spoke with Nancy every day on the telephone and wrote her letters from prison telling her that he loved her and to keep up her good work in school. This contact stopped in late 2006 and DFS claims that Barr has had no contact with his daughter since. Barr claims that he corresponded with Nancy while she was placed in the home of relatives in May 2007. But this contact, if it occurred, was not supervised by DFS and DFS had no knowledge of it. Moreover, Barr did not have "the slightest idea" why Nancy was living with the relative or how long she was there. DFS claims that if Barr had case planned and maintained contact with DFS, Barr would have had weekly supervised visits with his daughter.
Nancy's Health
On August 12, 2007, Nancy participated in a parent competency evaluation of her Mother, performed by Dr. Donna Lentine. Dr. Lentine determined that Nancy "display[ed] attachment related difficulty" and that it is "very important that [Nancy is]... provided stable and consistent caretaking." Dr. Lentine further indicated that "the risk of instability should be weighed heavily against potential benefits of reunification."
Nancy was also involved in counseling to address her abandonment, separation and loss, and anger issues. Based on the history of lack of stability and consistency in her life, Nancy was "struggling for some type of nurturance and some type of attention." Nancy knew Barr's name, but did not have a relationship with him. She was "a very angry little girl" who had a lot of questions regarding why Barr had "never been a part of her life." Nancy did not understand why Barr did not call or contact her, especially when he was "out of prison." The possibility of adoption had been explained to Nancy and she was "eager" for the DFS worker "to find her a family" with the characteristics she desired.
Standard Of Review
When reviewing the Family Court's termination of parental rights, our standard and scope of review involves a review of the facts and law, as well as the inferences and deductions made by the trial court.[3] To the extent that the issues on appeal implicate rulings of law, we conduct a de novo review.[4] To the extent that the issues on appeal implicate rulings of fact, we conduct a limited review of the factual findings of the trial court to assure that they are sufficiently supported by the record and are not clearly wrong.[5] This Court will not disturb inferences and deductions that are supported by the record and that are the product of an orderly and logical deductive process.[6] If the trial court has correctly applied the pertinent law, our review is limited to abuse of discretion.[7]
In Delaware, the trial judge must conduct a two-step analysis when making *94 the decision to terminate parental rights.[8] First, the trial judge determines whether there is clear and convincing proof of at least one of the grounds for termination enumerated in title 13, section 1103 of the Delaware Code, which include abandonment of the child and failure to plan, and at least one of the enumerated conditions for termination exists.[9] Second, the trial judge must determine whether the decision is in the best interest of the child as that term is defined in title 13, section 722 of the Delaware Code.[10] Both of these steps must be established by clear and convincing evidence.[11]
Record Supports Abandonment
The Family Court found that Barr abandoned Nancy pursuant to title 13, section 1103(a)(2). Barr contends that the court clearly erred in this determination by erroneously finding that Barr: (1) did not communicate or visit regularly with his daughter; (2) failed to manifest the ability and willingness to assume legal and physical custody of her; and (3) had a present and continuing intent to abandon Nancy up to the time that termination proceedings were filed.
Pursuant to section 1103(a)(2), intentional abandonment occurs if the parent has failed to: (A) "[c]ommunicate or visit regularly with the minor" and (B) "[m]anifest an ability and willingness to assume legal and physical custody of the minor, if, during this time, the minor was not in the physical custody of the other parent," for a period of at least six consecutive months before the termination petition is filed.[12] In addition, in order to determine that intentional abandonment has occurred, the court must find a "settled purpose" by the parent to abandon the child and surrender any further parental claims to the child.[13] A "settled purpose" is shown through "a present continuing intent to abandon up to the time the termination proceedings were filed."[14] The court must observe both the subjective and objective intent of the parent, with the objective intent measured by the parent's conduct.[15] This finding must be supported by clear and convincing evidence.[16]
The Family Court found that Barr "did not communicate and visit regularly" with Nancy for at least six consecutive months in the year preceding the filing of the TPR petition. The TPR petition was filed on January 11, 2008. Therefore, the relevant period of time is January 2007 to January 2008.
It is undisputed that Barr did not communicate with Nancy after May 2007. *95 Barr argues, however, that his failure to communicate with her during that period was through no fault of his own. He claims that when Nancy was transferred to a new foster family, DFS would not permit Barr to contact her.
Although Barr claims that he had contact with Nancy by letters and phone calls at some point between December 2006 and May 2007, such information was unknown by either DFS workers or the Children's Choice worker assigned to the case. There is no dispute, however, that Barr's last personal meeting with Nancy was in June 2006, during a thirteen-day period in the year he was not incarcerated, and his last contact with her of any kind was May 2007. Therefore, it is undisputed that Barr did not communicate with his daughter for eight months prior to the filing of the TPR petition.
Nancy was not placed in the foster home until July 25, 2007. Barr made no attempt to have contact with her between May 2007 and the time she was placed in the foster home. After Nancy was placed in the foster home, Barr would have been permitted visitation if he had been case planning with DFS for reunificationhis case plan required weekly supervised visits with her. But, Barr failed to case plan and, by his own admission, never requested any such visitation. Accordingly, there is clear and convincing evidence that Barr did not communicate and visit regularly with his daughter for at least six consecutive months in the year preceding the filing of the TPR petition.
Unwillingness To Assume Legal And Physical Control
The Family Court found that Barr "failed to `manifest an ability and willingness to assume legal and physical custody of the minor'" for at least six consecutive months in the year preceding the filing of the TPR petition. The court noted that following Barr's release from prison in October 2007, he made initial contact with DFS, but never followed through and took no initiative to prepare to assume the legal and physical custody of Nancy. Barr argues that he set up an appointment with DFS to case plan immediately upon his release from incarceration in October 2007, but the scheduled meeting conflicted with an appointment with his probation officer. Barr called to reschedule the appointment with DFS, but no one called him back. He argues that when he next contacted DFS in May 2008, after the TPR proceedings had begun, the DFS worker told him that DFS "wouldn't be assisting him in reunification with his daughter."
Barr's repeated incarcerations have continuously interfered with his ability to care for Nancy. Barr was incarcerated from the time Nancy was brought into DFS custody in November 2006 until October 2007. He was also incarcerated in 2005 and again from January 2008 until April 2008. In addition, at the time of the TPR hearing, Barr was again incarcerated, pending trial on numerous new charges. In the three-month period between October 2007 and January 2008, in which Barr was not incarcerated, he made, at best, one attempt to contact DFS regarding his case. Barr's continual incarceration highlights his failure to be a consistent caretaker for Nancy and his inability to promptly assume custody of Nancy at the time of the TPR hearing. In addition, Barr's conduct in the brief period of time he was not incarcerated indicates that he was unwilling to exert any real effort to work with DFS on his case plan regarding Nancy. Accordingly, there is clear and convincing evidence that Barr failed to manifest an ability and willingness to assume legal and physical custody of the minor for at least six consecutive months in the year preceding the filing of the TPR petition.
*96 Continuing Intent To Abandon
The Family Court found that Barr had a "present continuing intent to abandon up to the time the termination proceedings were filed." The court noted that despite being intermittently around the Mother and Nancy for ten years, Barr "repeatedly indicated a complete lack of interest in parenting [Nancy]." Barr argues that the court improperly relied upon a hearsay statement in a Social Report prepared by DFS and admitted into evidence, that Barr stated in 1999 that "he would not be planning with the Division and that the mother would be on her own to plan with the agency." Barr asserts that while the alleged statement is an admission by a party-opponent, its recounting in the Social Report is hearsay because the evidence was not communicated by a witness at the TPR hearing. Barr further asserts that even if the statement is admissible, it merely indicates his intention as of 1999, and not as of 2007.
"`Hearsay' is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted."[17] Hearsay is not admissible except as provided by law or by the Delaware Uniform Rules of Evidence.[18] A statement offered against a party which is his own statement, is an admission by a party-opponent and is not hearsay.[19] In addition, "records, reports, statements or data compilations, in any form, of a public office or agency setting forth its regularly conducted and regularly recorded activities, or matters observed pursuant to duty imposed by law and as to which there was a duty to report, or factual findings resulting from an investigation made pursuant to authority granted by law" are not excluded by the rule against the admission of hearsay.[20] This exception does not apply to "investigative reports prepared by or for a government, a public office or an agency when offered by it in a case in which it is a party."[21]
In this case, the only objection to the Social Report at the hearing was that the report contained hearsay information, not that the report itself was inadmissible. The challenged statement was an admission by Barr at a 1999 meeting with DFS's Intensive Reunification Unit, in which he refused to plan with DFS, expressed his intent never to plan with DFS, and said that the Mother would have to plan with DFS on her own. The statement is offered against Barr and is his own statement. Therefore it is an admission by a party-opponent and is not hearsay.
This admissible statement was introduced at trial in the Social Report, which is prepared by the DFS permanency worker to summarize the case after reviewing the entire DFS record. The worker prepares the report pursuant to the mandates of title 13, section 1105(c) of the Delaware Code.[22] The report is produced at the end *97 of the case when the goal has been changed to TPR and adoption. Therefore, the Social Report is admissible as an exception to the rule against hearsay. The statement is relevant as to Barr's intent to abandon because it indicates that Barr did not wish to case plan for Nancy in 1999. When considered with other evidence in this case, the evidence shows a pattern of unwillingness or inaction by Barr from 1999 until the August 2008 TPR hearing.
Barr also argues that his conduct demonstrates that he wanted to communicate with his daughter and only ceased doing so after May 2007 because DFS would not permit him to contact Nancy at her new foster home. Thus, he asserts that there was no clear and convincing evidence of a "present continuing intent" to abandon Nancy. The record reflects, however, that Barr made no attempt to have contact with Nancy while she was residing with a relative between May 2007 and the time she was placed in the foster home on July 25, 2007. After she was placed in the foster home, Barr would have been permitted visitation with her if he had been case planning with DFS for reunification with Nancy; however, Barr failed to do so. Accordingly, the record supports the Family Court's conclusion that Barr had a "present continuing intent" to abandon Nancy.
Failure To Plan
Barr contends that the Family Court erred in determining that Barr failed to plan adequately for the physical needs and mental and emotional health and development of Nancy pursuant to title 13, section 1103(a)(5). Although Barr concedes that Nancy has been in DFS custody for at least one year, Barr contends that the court clearly erred in this determination by erroneously finding that: (1) Barr had exhibited a "positive disinterest" in parenting her; (2) there had been a history of neglect, abuse and lack of care; (3) Barr is neither willing nor able promptly to resume care of her; (4) failure to terminate Barr's parental rights would result in continued emotional instability and physical risk to Nancy.
Pursuant to section 1103(a)(5)(a.), the Family Court may determine that the parental rights of a parent should be terminated if it finds that there is both an inability or failure "to plan adequately for the child's physical needs or mental and emotional health and development," and one or more enumerated conditions exist: (1) the child has been in the care of the DFS or licensed agency for a period of one year; (2) there is a history of neglect, abuse or lack of care of the child or other children by the parent; (3) the parent is incapable of discharging parental responsibilities due to extended or repeated incarceration; (4) the parent is not able or wiling to assume promptly legal and physical custody of the child, and to pay for the child's support, in accordance with the parent's financial means; or (5) failure to terminate the relationship of the parent and child will result in continued emotional instability or physical risk to the child.[23]
The record reflects that Barr did not complete his DFS case plan which he signed on October 9, 2007. Once released from incarceration on October 10, Barr failed to meet with DFS, failed to appear at December 2007 permanency hearing, moved to Richmond, Virginia, and stopped all communication with DFS. The only other contact DFS had with Barr was in May 2008, after the goal for Nancy had already been changed from reunification to TPR and adoption. By the time of the August 2008 TPR hearing, Barr had failed to complete *98 any aspect of his case plan. During this time, Nancy was suffering from abandonment and anger issues and was confused and upset by the chronic lack of contact from Barr.
It is undisputed that Nancy was in DFS custody for more than one year. Accordingly, we need not address whether the remaining conditions under section 1103(a)(5) are satisfied because the statute only requires that the Family Court find one of the additional conditions are met. The factual findings of the trial judge that Barr failed to plan adequately for the physical needs and mental and emotional health and development of Nancy, and its conclusion that Barr's parental rights should be terminated, are supported by the record and not clearly erroneous.
Best Interests Require Termination
In order to terminate a party's parental rights, the record in the Family Court must establish not only abandonment or failure to plan, but also that the termination is in the best interest of the child.[24] Under the best interest standard, there must be "clear and convincing evidence that termination of parental rights is essential to the child's welfare."[25] The factors enumerated in title 13, section 722(a) govern the court's best interest determination in a termination of parental rights proceeding.[26]
This Court has held that, while all of the factors in section 722 must be considered by the court, when balancing the relevant factors, the Family Court may give different weight to different factors.[27] "The amount of weight given to one factor or combination of factors will be different in any given proceeding. It is quite possible that the weight of one factor will counterbalance the combined weight of all other factors and be outcome-determinative in some situations."[28]
Barr contends that the Family Court committed clear error in determining that termination of Barr's parental rights would be in the best interests of Nancy. Barr argues that there is not clear and convincing *99 evidence in the record to support a number of the factors and, in fact, there is no evidence in the record with regard to the interests of Nancy. This claim is without merit as the Family Court properly considered each of the factors in section 722.
First, the Family Court considered the wishes of the child's parents.[29] The court correctly stated that Barr was opposed to the granting of the TPR petition. The court also stated that Barr did not wish for Nancy to be placed in his care. This finding is supported by Barr's failure to case plan for reunification with his daughter. Once released from incarceration, Barr left the state of Delaware, never attempted to visit Nancy, and made no attempt to case plan with DFS for seven months. Although Barr claims that his attempts to case plan were thwarted by DFS, he made no effort to case plan until seven months after he was released from prison and three months before the TPR hearing. Even though he was reminded of the elements of his case plan and that he would have to complete these elements on his own, Barr failed to make any progress with his case plan or request to visit Nancy during the three months preceding the TPR hearing. At the time of the TPR hearing, Barr was incarcerated pending trial and was unable to provide a home for his daughter. Accordingly, there was clear and convincing evidence of a lack of care, contact and ability to provide for Nancy, which supports the finding of the Family Court that Barr did not want her to be placed in his care, even if he did not specifically so state.
The Family Court next considered the second factor, the child's wishes.[30] The court found that there was no evidence presented as to Nancy's wishes; however, the Court-Appointed Special Advocate supported the TPR petition. In Powell v. Department of Services for Children, Youth and their Families, there was no evidence presented as to the child's wishes because the child was too young to adequately express his opinion. There was also no evidence presented as to whether there was domestic violence. We found that this did not prevent the Family Court from considering those factors in a manner contemplated by section 722 and did not prevent the court from balancing the factors to determine the best interests of the child.[31]
Third, the trial judge considered the child's interaction with significant adults in her life, with other persons in the home and with other persons who may significantly affect her best interests.[32] The record indicates that Barr's repeated incarcerations over the course of Nancy's life prevented him from having contact with her. The record also indicates that when not incarcerated, Barr failed to arrange visitation with Nancy or show an interest in her life. Thus, the court found that Barr had failed to be a consistent part of Nancy's life. The court also noted that the Mother's parental rights were terminated. These findings are supported by the record.
The trial judge then considered the child's adjustment to her home, school and community under the fourth factor.[33] The court noted that, in contrast to the damaging instability she experienced in the custody *100 of the Mother, Nancy had been in a foster home since July 25, 2007, and has remained in the same schools and the same community during that time. These findings are supported by the record.
The trial judge next considered the mental and physical health of all persons involved under the fifth factor.[34] The court noted that Nancy suffers from issues of anger, separation, loss and abandonment, and attends counseling for these issues. The court also found that the Mother suffers from Dysthymic Disorder (chronic depression) and Personality Disorder, and despite repeated domestic violence, continually lets Barr back into her life, thereby creating a situation dangerous to Nancy's mental and physical health. No evidence of Barr's physical or mental health was presented to the court. These findings are supported by the record.
Sixth, the trial judge considered the parents' past and present compliance with their rights and responsibilities to their child under title 13, section 701.[35] The court noted that Barr failed to ever make any payments for child support. These findings are supported by the record.
Under the seventh factor, the trial judge may consider any evidence of domestic violence.[36] Barr argues that there is no reliable evidence in the record to support the court's finding, other than the hearsay contained in the Social Report. As noted above, the statement contained in the Social Report is not hearsay. Accordingly, the court's finding of Barr's repeated instances of domestic violence, including a 1999 arrest after Barr assaulted the Mother, who was pregnant with Nancy at the time, are supported by the record.
Finally, the court considered Barr's extensive criminal history.[37] Barr has been convicted of five felonies, thirty-eight misdemeanors, and two violations of parole. These findings are supported by the record.
The Family Court properly considered each of the factors in section 722. The trial judge's conclusion that the termination of Barr's parental rights was in the best interests of Nancy is supported by the record. It is also the product of an orderly and logical deductive process.
Conclusion
The judgment of the Family Court is affirmed.
NOTES
[1] Pseudonyms were assigned on appeal pursuant to Del.Supr. Ct. R. 7(d).
[2] In re N.N.B., No. 08-01-3TK, at 20 (Del. Fam.Ct. Sept. 29, 2008) [hereinafter TPR Order]. The TPR Order also terminated the parental rights of the Mother as to Nancy, and terminated the parental rights of the Mother and the natural fathers as to two other children.
[3] Powell v. Dep't of Serv. for Children, Youth & their Families, 963 A.2d 724, 730 (Del.2008) (citing Solis v. Tea, 468 A.2d 1276, 1279 (Del. 1983)).
[4] Powell v. Dep't of Serv. for Children, Youth & their Families, 963 A.2d at 730-31 (citing In re Heller, 669 A.2d 25, 29 (Del.1995); Black v. Gray, 540 A.2d 431, 432 (Del. 1988)).
[5] Id. at 731 (citing In re Stevens, 652 A.2d 18, 23 (Del.1995)).
[6] Id. (citing In re Stevens, 652 A.2d at 23; Solis v. Tea, 468 A.2d at 1279).
[7] Id. (citing Solis v. Tea, 468 A.2d at 1279).
[8] Del.Code Ann. tit. 13, § 1103(a) (2008); Powell v. Dep't of Serv. for Children, Youth & their Families, 963 A.2d at 731; Div. of Fam. Servs. v. Hutton, 765 A.2d 1267, 1271 (Del. 2001); Daber v. Div. of Child Protective Serv., 470 A.2d 723, 726 (Del. 1983).
[9] See Del.Code Ann. tit. 13, § 1103(a)(1)-(8); Powell v. Dep't of Serv. for Children, Youth & their Families, 963 A.2d at 731; Div. of Fam. Servs. v. Hutton, 765 A.2d at 1272.
[10] See Del.Code Ann. tit. 13, § 722.
[11] Powell v. Dep't of Serv. for Children, Youth & their Families, 963 A.2d at 731 (citing In re Stevens, 652 A.2d at 23).
[12] Del.Code Ann. tit. 13, § 1103(a)(2)(a.)(2.).
[13] R. v. T., 799 A.2d 349, 359 (Del.Fam.Ct. 2002); see In re Stevens, 652 A.2d 18, 25 (Del. 1995); Black v. Gray, 540 A.2d 431, 433 (Del. 1988).
[14] Id.
[15] Id.
[16] P.A.F. v. J.R.F., 451 A.2d 830, 831 (Del. 1982).
[17] Del. R. Evid. 801(c).
[18] Del. R. Evid. 802.
[19] Del. R. Evid. 801(d)(2)(A).
[20] Del. R. Evid. 803(8).
[21] Del. R. Evid. 803(8)(B).
[22] Del.Code Ann. tit. 13, § 1105(c) ("In any case in which a petition for the termination of parental rights has been filed pursuant to § 1103(a)(1) of this title and the Department or a licensed agency is a party to the proceeding, there shall be attached to the petition a social report. In any case in which a petition for the termination of parental rights has been filed on any other ground set forth in § 1103(a) of this title and the Department or a licensed agency is a party to the proceeding, a social report shall be filed no later than 1 week prior to the date of the hearing on the petition.").
[23] Del.Code Ann. tit. 13, § 1103(a)(5)(a.).
[24] Del.Code Ann. tit. 13, § 1103(a).
[25] Powell v. Dep't of Serv. for Children, Youth & their Families, 963 A.2d at 733 (quoting Div. of Fam. Servs. v. Hutton, 765 A.2d at 1272).
[26] Id. (citing In re Hanks, 553 A.2d 1171, 1179 (Del.1989)). Title 13, section 722(a) provides that in determining the best interests of the child, the court shall consider all relevant factors, including:
(1) The wishes of the child's parent or parents as to his or her custody and residential arrangements;
(2) The wishes of the child as to his or her custodian(s) and residential arrangements;
(3) The interaction and interrelationship of the child with his or her parents, grandparents, siblings, persons cohabiting in the relationship of husband and wife with a parent of the child, any other residents of the household or persons who may significantly affect the child's best interests;
(4) The child's adjustment to his or her home, school and community;
(5) The mental and physical health of all individuals involved;
(6) Past and present compliance by both parents with their rights and responsibilities to their child under § 701 of this title;
(7) Evidence of domestic violence as provided for in Chapter 7A of this title; and
(8) The criminal history of any party or any other resident of the household including whether the criminal history contains pleas of guilty or no contest or a conviction of a criminal offense. Del.Code Ann. tit. 13, § 722(a)(1)-(8).
[27] Powell v. Dep't of Serv. for Children, Youth & their Families, 963 A.2d at 735 (citing Snow v. Richards, 2007 WL 3262149, at *3 (Del. Supr); Fisher v. Fisher, 691 A.2d 619, 623 (Del.1997)).
[28] Id. (quoting Fisher v. Fisher, 691 A.2d at 623).
[29] Del.Code Ann. tit. 13, § 722(a)(1).
[30] Del.Code Ann. tit. 13, § 722(a)(2).
[31] Powell v. Dep't of Serv. for Children, Youth & their Families, 963 A.2d at 734-35.
[32] Del.Code Ann. tit. 13, § 722(a)(3).
[33] Del.Code Ann. tit. 13, § 722(a)(4).
[34] Del.Code Ann. tit. 13, § 722(a)(5).
[35] Del.Code Ann. tit. 13, § 722(a)(6).
[36] Del.Code Ann. tit. 13, § 722(a)(7).
[37] Del.Code Ann. tit. 13, § 722(a)(8). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539675/ | 974 A.2d 303 (2009)
2009 ME 60
Robert W. BRITTON et al.
v.
DEPARTMENT OF CONSERVATION et al.
Docket: Yor-08-602.
Supreme Judicial Court of Maine.
Argued: May 21, 2009.
Decided: June 18, 2009.
Revised: July 9, 2009.
*305 Gerald F. Petruccelli, Esq. (orally), Bruce A. McGlauflin, Esq., Petruccelli, Martin & Haddow, LLP, Portland, ME, for Robert W. Britton, et al.
Mark G. Furey, Esq. (orally), Thompson, Bull, Furey, Bass & MacColl, Portland, ME, for Daniel P. Donnell, et al.
Janet T. Mills, Atty. Gen., Amy B. Mills, Asst. Atty. Gen., Gerald D. Reid, Asst. Atty. Gen. (orally), Augusta, ME, for the Maine Department of Conservation.
Panel: SAUFLEY, C.J., CLIFFORD, LEVY, SILVER, MEAD, and GORMAN, JJ.
GORMAN, J.
[¶ 1] Robert W. Britton and Eleanor F. Britton appeal from a judgment of the Superior Court (York County, Brennan, J.) denying their request for equitable relief and damages for what they allege to be an infringement of their riparian rights by their neighbors, Daniel P. Donnell and the Trustees of the Donnell Realty Trust (Donnells), who own and operate two wharves, one of which extends forty-eight feet in front of the Brittons' property. The Donnells cross-appeal arguing that the Brittons should have been collaterally estopped from claiming any infringement of their rights because, they allege, the Bureau of Parks & Lands (Bureau), a division of the Maine Department of Conservation, already had decided that the wharves do not unreasonably interfere with the Brittons' riparian rights when issuing both Donnell and the Trust leases to operate the wharves on submerged lands.[1] The Donnells also argue that they had acquired the submerged lands in front of the Brittons' property by adverse possession, prescription, or abandonment.
[¶ 2] In deciding this case, the court applied the Submerged and Intertidal Lands Act (SILA), 12 M.R.S. § 1862 (2008), and concluded that the Brittons were not entitled to injunctive or declaratory relief or damages because Varrell Wharf, which extends in front of the Brittons' property, did not unreasonably interfere with their riparian rights. SILA governs an administrative program that authorizes the State to lease its submerged lands for compensation after determining that the proposed lease will not unreasonably interfere with such things as navigation, fishing, existing marine uses, and the ingress and egress of riparian owners in the area. 12 M.R.S. § 1862(2)(A)(6).
[¶ 3] Because SILA and its unreasonable interference standard are not relevant to the private property dispute between the Brittons and the Donnells, we vacate and remand for a determination on the Brittons' claims that Varrell Wharf constitutes a nuisance and violates the Wharves and Weirs Act, 38 M.R.S. § 1026 (2008).[2]
I. FACTUAL HISTORY
[¶ 4] In 1975, the Brittons bought waterfront property in York Harbor located *306 between two parcels owned by the Donnells. Daniel Donnell owns the property abutting the southeastern portion of the Brittons' property, and the Donnell Realty Trust owns a lot abutting the northwestern portion.
[¶ 5] The Donnells have owned and operated Simpsons Wharf and Varrell Wharf for several decades; both wharves have boating slips that the Donnells rent to commercial fishermen and recreational boaters. Simpsons Wharf is located to the south of the Brittons' property. Varrell Wharf is located to the north. At issue in this case is a forty-eight-foot section of Varrell Wharf that extends directly across the Brittons' frontage, parallel to their property line. This section was built between 1950 and 1955; the predecessor in title to the Brittons' property neither objected nor expressly consented to its installation.
[¶ 6] In order to reach the navigable waters in front of their property, the Brittons would have to maneuver a boat through a forty-one-foot gap between Simpsons Wharf and the Varrell Wharf extension; when boats are docked at the wharves, this gap is even narrower. Since 1987, the Brittons have objected to the forty-eight-foot extension in front of their property asserting that it interferes with their riparian rights of ingress and egress.[3]
[¶ 7] This litigation began in 2005 after the Trust entered into a submerged land lease with the Bureau pursuant to SILA; the lease entitled the Trust to continue occupying the submerged lands under Varrell Wharf.[4] The Brittons participated in the lease negotiations, arguing that Varrell Wharf unreasonably interfered with the potential uses of their intertidal lands including their ability to access the York River or to construct a pier from their property. The Bureau disagreed and approved the lease on January 31, 2005, finding specifically that Varrell Wharf did not unreasonably interfere with the Brittons' riparian rights.
II. PROCEDURAL HISTORY
[¶ 8] The Brittons filed the present complaint against the Maine Department of Conservation and the Donnells, pursuant to M.R. Civ. P. 80C, requesting a review of the Bureau's issuance of the submerged land lease to the Trust. The Brittons also alleged independent claims for nuisance and violation of the Wharves and Weirs Act and they sought declaratory and injunctive relief. The Donnells and the Department of Conservation argued that the Brittons should be precluded from bringing their complaint because the Bureau already had decided that Varrell Wharf did not unreasonably interfere with the Brittons' riparian rights.
*307 [¶ 9] The court dismissed the Rule 80C appeal because it was not filed within thirty days after the Brittons' attorney received notice of the final leasing decision, as required by M.R. Civ. P. 80C and 5 M.R.S. § 11002(3) (2008). Subsequently, the Donnells filed a motion for summary judgment arguing, among other things, that the Brittons' complaint is a veiled collateral attack on the Bureau's decision to issue a lease to the Donnells, and that the Wharves and Weirs Act claim is barred by the statute of limitations.
[¶ 10] Denying summary judgment to the Donnells, the court determined that the common law of riparian rightsand not the public trust doctrine[5] governs this matter. Thus, the court concluded that the Brittons were not precluded from seeking declaratory and injunctive relief against the Donnells because the Trust's lease with the State does not protect it from complaints alleging infringement of private property rights. The court also found that the statute of limitations did not bar the Wharves and Weirs Act claim or any other claim flowing from the continued use of the area in front of the Brittons' property.
[¶ 11] The case proceeded to a bench trial. In ruling against the Brittons, the court applied SILA's unreasonable interference standard and found that because the allotted forty-one feet of space between the wharves was sufficient to permit the Brittons to land a small boat, the interference with the Brittons' riparian rights was not unreasonable. Although the court found that the Donnells never obtained express consent from the Brittons that authorized them to operate Varrell Wharf in front of the Brittons' property, the court concluded that the Brittons had failed to prove a violation of the Wharves and Weirs Act because Varrell Wharf did not unreasonably interfere with the Brittons' riparian rights. The court did not rule on the Donnells' affirmative defenses, including their claim that the Brittons' riparian rights were extinguished by adverse possession, prescription, or abandonment, laches, or coming to the nuisance.[6]
II. DISCUSSION
A. Rule 80C Appeal
[¶ 12] The Brittons argue that the court should not have dismissed their Rule 80C appeal as time-barred. A petition requesting a review of a final agency action must be filed within thirty days after receipt of notice. See M.R. Civ. P. 80(C); 5 M.R.S. § 11002(3). The appeal of the Bureau's decision in this case was untimely because it was not filed within thirty days after the Brittons' attorney's office *308 received the decision. See City of Lewiston v. Me. State Employees Ass'n, 638 A.2d 739, 741 (Me.1994) (stating that statutory periods of appeal are not subject to court-ordered enlargement of time). Therefore, the court correctly dismissed the appeal as untimely.
B. Summary Judgment
1. Collateral Estoppel
[¶ 13] In denying the Donnells' summary judgment motion, the court concluded that the Bureau's lease with the Trust was issued pursuant to the public trust doctrine, and therefore, did not collaterally estop the Brittons from bringing a complaint alleging an infringement of their private rights against the Donnells.
[¶ 14] The effect of a prior judgment, including final decisions of administrative bodies, on a present court action is a question of law that we review de novo. State v. Thompson, 2008 ME 166, ¶ 8, 958 A.2d 887, 890-91; see also Cline v. Me. Coast Nordic, 1999 ME 72, ¶ 9, 728 A.2d 686, 688 ("Final adjudication in an administrative proceeding before a quasijudicial municipal body has the same preclusion effect as a final adjudication in a former court proceeding." (quotation marks omitted)).
[¶ 15] The administrative decision involved herethe issuance of the lease to the Trustwas made pursuant to SILA. Enacted in 1975, SILA gives the director of the Bureau authority to "lease, for a term of years not exceeding 30 and with conditions the director considers reasonable, the right to dredge, fill or erect permanent... wharves, docks, pilings, moorings or other permanent structures on submerged and intertidal land owned by the State." 12 M.R.S. § 1862(2). SILA is an extension of the State's long-standing authority, pursuant to the public trust doctrine, to reasonably interfere with a coastal property owner's riparian rights in order to protect the public's rights to fishing, fowling, and navigation. Conservation Law Found., Inc. v. Dep't of Envtl. Prot., 2003 ME 62, ¶ 36, 823 A.2d 551, 563; see also Great Cove Boat Club v. Bureau of Pub. Lands, 672 A.2d 91, 95 (Me.1996) (concluding that the common law rights of riparian property owners "are subject to reasonable regulation by the State in the exercise of its public trust rights").
[¶ 16] Before granting a submerged land lease, the Bureau must find, among other things, that the lease will not unreasonably interfere with the ingress and egress of riparian owners. 12 M.R.S. § 1862(2)(A)(6)(d);[7]see also L.D. 910 (114th Legis. 1989). In granting the Donnells' lease, the Bureau found that Varrell Wharf did not unreasonably interfere with the Brittons' rights of ingress and egress. The Bureau's final decision states: "even with vessels berthed at each side [of the wharves], there was sufficient space for others with similarly sized vessels exercising reasonable care to safely navigate the area as they have for many years." Although this finding is specific to the Brittons' property, it in no way resolves the *309 private property dispute between the two parties.
[¶ 17] SILA grants the State authority to protect the public's rights to open waters; it does not give the State authority to infringe upon one riparian owner's rights in order to allow an abutting riparian owner to operate a commercial enterprise. Therefore, the court correctly determined that the Trust's lease with the State to operate Varrell Wharf did not preclude the Brittons' complaint.[8]
2. Statute of Limitations
[¶ 18] The Donnells also argued in their motion for summary judgment that the six-year statute of limitations barred the Brittons from bringing a claim alleging a violation of the Wharves and Weirs Act because the section of Varrell Wharf in front of the Brittons' property has been there for more than fifty years.
[¶ 19] When there are no factual disputes, we review a court's interpretation of the statute of limitations directly for errors of law. Stromberg-Carlson Corp. v. State Tax Assessor, 2001 ME 11, ¶ 5, 765 A.2d 566, 567-68. "All civil actions shall be commenced within 6 years after the cause of action accrues and not afterwards,... except as otherwise specially provided." 14 M.R.S. § 752 (2008).
[¶ 20] Here, the statute itself contains a special provision. It states, "[n]o fish weir, trap or wharf shall be erected or maintained in tidewaters below low-water mark in front of the shore or flats of another...." 38 M.R.S. § 1026 (emphasis added). Based on the statutory language, every day that Varrell Wharf is maintained serves as a new and separate violation of the statute. Therefore, the court correctly concluded that any claims alleging a continued interference with the Brittons' riparian rights, which includes the Wharves and Weirs Act, were not time-barred.
C. Final Judgment
[¶ 21] We now proceed to the court's final judgment and a discussion about the proper laws to apply to the Brittons' claims.
1. Wharves and Weirs Act
[¶ 22] In 1892, when dealing with facts similar to those presented in this case, we held, "[t]he presumption is that an owner of land fronting on the sea has, as such owner, the right of egress and ingress from and to his land over deep water for the whole width of such frontage." Proprietors of Me. Wharf v. Proprietors of Customhouse Wharf, 85 Me. 175, 178-79, 27 A. 93, 94 (1892). The Wharves and Weirs Act protects a waterfront owner's riparian rights of egress and ingress against infringement by private individuals by requiring a party who wishes to erect or maintain a wharf or fish weir in front of the shore of another to receive consent from the owner of that shorefront property or a face a fine of $50 for each offense. See 38 M.R.S. § 1026. Originally enacted in 1885, see P.L. 1972, ch. 287, the Wharves and Weirs Act remains good law, despite the enactment of SILA.
*310 [¶ 23] Here, the court correctly found that the Brittons did not consent to the continued operation of Varrell Wharf in front of their property, but that the lack of consent alone does not constitute a violation. The court then considered the nature of the interference to determine if consent was required, referencing Sawyer v. Beal, where we concluded that the owner of a small island could not prevent the installation of any fish weir, trap, or wharf within his line of vision from any spot on the island by simply withholding consent. 97 Me. 356, 358-59, 54 A. 848, 848-49 (1903). We reasoned that the Wharves and Weirs Act applies only when the alleged infringements are:
so situated or are so near the shore of another as to injure or injuriously affect the latter in the enjoyment of his rights as such owner, as for instance by preventing, to some extent at least, fish from coming to the weir of the shore owners, if he has one, or by injuring his weir privilege, or by obstructing access by sea to his land, or in some other way.
Id. at 358, 54 A. at 848-49.
[¶ 24] In Sawyer, the distance between the nearest portions of the island and of the weir, at low-water mark, was 528 feet, leaving sufficient space for vessels of considerable size to get to and from navigable waters. Id. at 357, 54 A. at 848. In this case, by contrast, the Donnells' wharf is much closer to the low-water mark in front of the Brittons' property, and the configuration of the two wharves limits the Brittons' access to navigable waters in front of their property by requiring them to navigate through the forty-one-foot gap.
[¶ 25] In order to determine whether Varrell Wharf constitutes a violation of the Wharves and Weirs Act, the court must consider all relevant facts and then decide whether the wharf is "so situated or so near the shore" of the Brittons' property as to injure or injuriously affect the Brittons in the enjoyment of their riparian rights. We remand on this issue.[9]
2. Nuisance
[¶ 26] The court did not specifically address the Brittons' claims alleging common law and statutory nuisance. We infer from the judgment that the court found against the Brittons on their nuisance claims by again applying the reasonable use standard of SILA. For the same reasons as stated above, we also remand for further hearing and fact-finding on the Brittons' claims alleging nuisance.[10]
3. Affirmative Defenses
[¶ 27] Finally, on remand, the court should also address all of the Donnells' affirmative defenses.
The entry is:
Judgment dismissing the Rule 80C appeal affirmed. Remainder of judgment vacated. Remanded to Superior Court for *311 further proceedings consistent with this opinion.
NOTES
[1] Varrell Wharf is the wharf that extends in front of the Brittons' property; it is located in front of the property owned by Donnell Realty Trust. The Brittons argued that the other wharf, Simpsons Wharf, which is located in front of Daniel Donnell's property, also infringes upon their riparian rights because it provides an inadequate setback distance from the Varrell Wharf floats. Because Simpsons Wharf does not extend beyond Daniel Donnell's property, and because Daniel Donnell's deed specifically affords him the right to dock boats off of Simpsons Wharf, we only address the Brittons' challenge to Varrell Wharf.
[2] The Wharves and Weirs Act states, in relevant part:
No fish weir, trap or wharf shall be erected or maintained in tidewaters below low-water mark in front of the shore or flats of another without the owner's consent, under a penalty of $50 for each offense, to be recovered in a civil action by the owner of said shore or flats.
38 M.R.S. § 1026 (2008).
[3] The Donnells argue, among other things, that the deeds in the Brittons' chain of title indicate that the Brittons' property does not extend to the low-water mark, giving them no private riparian right to cross the flats to reach the York River. The court correctly interpreted the Brittons' 1999 deed, which defines their property as extending "to the York River," as providing conclusive proof that the Brittons own to the low-water mark. See Hathaway v. Rancourt, 409 A.2d 209, 213 (Me. 1979) (stating that prior deeds in a chain of title can be used to interpret the current owner's deed when the owner's deed is ambiguous) (emphasis added).
[4] For the Donnells and others who already had structures on the submerged lands when the Submerged and Intertidal Lands Act's (SILA) leasing program took effect in 1975, the State granted them constructive easements to continue using the land for thirty years before having to apply to the State for a lease. See Great Cove Boat Club v. Bureau of Pub. Lands, 672 A.2d 91, 92-93 (Me. 1996).
[5] Pursuant to the public trust doctrine, submerged lands are held by the State in trust for the public for uses such as fishing, fowling, and navigation. See Norton v. Town of Long Island, 2005 ME 109, ¶ 21, 883 A.2d 889, 896.
[6] However, the court did find that the Donnells have occupied the submerged lands in front of the Brittons' property under the perception and belief that they were legally authorized to do so and not under a claim of right hostile to the Brittons' riparian rights. The Donnells contend that the court erred as a matter of law in making this finding, arguing that hostile intent is no longer an element of adverse possession. We do not address this specific argument, but note that the submerged lands under Varrell Wharf are owned by the State. A party cannot obtain rights against the State by adverse possession, prescription, or abandonment absent express statutory authorization. See United States v. Burrill, 107 Me. 382, 385-86, 78 A. 568, 569 (1910). No such statutory authorization exists here. We do not opine regarding the applicability of adverse possession or similar doctrines in the context of the allegedly competing private rights.
[7] The director of the Bureau may grant a submerged land lease if the director finds that the proposed lease:
(a) Will not unreasonably interfere with navigation;
(b) Will not unreasonably interfere with fishing or other existing marine uses of the area;
(c) Will not unreasonably diminish the availability of services and facilities necessary for commercial marine activities; and
(d) Will not unreasonably interfere with ingress and egress of riparian owners.
12 M.R.S. § 1862(2)(A)(6) (2008).
[8] The United States Army Corps of Engineers (USACE) also had issued Daniel Donnell a permit for Varrell Wharf, and Donnell and the Trust argued that this federal permit, like the Trust's lease with the State, precluded the Brittons' claims. The USACE permit does not resolve this case for the same reasons that the State's lease with the Trust does not resolve it. Although the federal government has preserved some rights to use submerged lands for national defense and may interfere with riparian rights accordingly, see Norton v. Town of Long Island, 2005 ME 109, ¶ 33, 883 A.2d 889, 899 n.6, the USACE does not have authority to transfer private rights from one riparian owner to another.
[9] Because, as we have noted, this case is about a property dispute between the Donnells and the Brittons, we see no reason why the Department of Conservation should remain a party on remand. Our decisions, affirming the Rule 80C dismissal and the court's determination that the finding in the submerged land lease does not preclude the Brittons' claims, effectively conclude the State's involvement.
[10] In concluding that any claims alleging a continued interference with the Brittons' riparian rights were not time-barred, the court correctly addressed the Donnells' statute of limitations defense to the nuisance claims. Because the wharf is not permanent and because a court could abate by injunction, the statute of limitations would not bar the Brittons' nuisance claims. See Jacques v. Pioneer Plastics, 676 A.2d 504, 507-08 (Me. 1996). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540999/ | 155 B.R. 591 (1993)
In re APEX INTERNATIONAL MANAGEMENT SERVICES, INC., Debtor.
SOUTHEAST BANK, N.A., a national banking association, Plaintiff.
v.
Charles W. GRANT, as Bankruptcy Trustee, and the United States Department of Treasury, Internal Revenue Service, Defendants.
Bankruptcy No. 89-652-BKC-3P7, Adv. No. 92-8337.
United States Bankruptcy Court, M.D. Florida, Jacksonville Division.
June 9, 1993.
*592 William K. Thames, II, Marks, Gray, Conroy & Gibbs, P.A., Jacksonville, FL, for plaintiff.
Hildy S. Stern, U.S. Dept. of Justice, Washington, DC, for defendants.
Charles W. Grant, Jacksonville, FL, defendants, trustee.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
GEORGE L. PROCTOR, Bankruptcy Judge.
Southeast Bank, N.A. filed a complaint for turnover claiming $15,000.00 being held by the trustee, defendant Charles W. Grant. Defendant Internal Revenue Service claims the funds asserting a right of set-off provided for in § 553 of the Bankruptcy Code. This adversary proceeding is before the Court on plaintiff's motion for summary judgment. The parties have agreed that no genuine issue as to any material fact exists, and the proceeding may be resolved as a matter of law. Accordingly, the Court enters the following findings of fact and conclusions of law:
Findings of Fact
Apex International Management Services, Inc. filed for relief under chapter 11 of the Bankruptcy Code on March 14, 1989. *593 On April 11, 1990, the case was converted to chapter 7.
Prior to filing, Apex had a contract with the United States Air Force to perform maintenance at Shaw Air Force Base, South Carolina, (No. F38601-85-D-0016), which expired on September 30, 1988.
After filing, debtor's attorney began investigating claims against the government. The debtor subsequently filed claims in the United States Claims Court in the Armed Services Board of Contract Appeals on contracts for Fort Stewart, Georgia, Naval Air Station Jacksonville, Florida, and Fort Shaw, South Carolina. Debtor's attorney in an affidavit filed with this Court states that this process began in February, 1990.
Debtor and the Air Force entered into a settlement agreement concerning the Fort Shaw, South Carolina, contract on November 15, 1991. The settlement required that the Air Force increase the contract price by $15,000.00 and that the debtor would release all existing and future claims it may have in Contract No. F38601-85-D-0016. In accordance with the terms of the settlement the contract was modified on January 27, 1992.
Plaintiff has an interest in the proceeds from this contract pursuant to a perfected security interest in debtor's receivables. By Order of October 4, 1989, it was awarded adequate protection for this interest. The United States and the Air Force were parties in that proceeding. Debtor has defaulted in the payments required by the adequate protection order.
Defendant, Department of the Treasury, Internal Revenue Service (Service), filed a claim for unpaid pre-petition taxes in debtor's chapter 11 case on June 30, 1989. On May 2, 1991, the Service filed a claim for unpaid post-petition taxes. The June 30, 1989, claim states that the amounts due are not subject to any set-off or counterclaim. The May 2, 1991, claim makes no reference to any right of set-off.
In a letter dated December 10, 1991, from Major Mark W. Golden, the Air Force informed the Service that it anticipated paying the settlement from the Fort Shaw contract to the chapter 7 trustee "within the next two weeks." The Service sent a letter to the trustee, on December 23, 1991, stating that it was entitled to the settlement funds by virtue of a right to set-off. In a subsequent letter from Major Golden to the Service dated February 6, 1992, the Air Force informed the Service that an invoice had been delivered to the Air Force and that it would inform the Service when payment was made.
On January 21, 1992, the Service filed amended claims for pre-petition and post-petition taxes. The amendment to the pre-petition claim added seven cents to the total claim while the amendment of the post-petition claim left the amount unchanged. Both amended claims state that the Service has a right of set-off pursuant to § 553 of the Bankruptcy Code.
Conclusions of Law
Section 553 of the Bankruptcy Code preserves non-bankruptcy set-off rights. Section 553(a) states in pertinent part as follows:
Except as otherwise provided in this section and in sections 362 and 363 of this title, this title does not affect any right of a creditor to offset a mutual debt owing by such creditor to the debtor that arose before the commencement of the case under this title against a claim of such creditor against the debtor that arose before commencement of the case.
Mutuality
Section 553 does not mandate that the debt and claim be of identical character or that they arise from the same transaction. "The only requirement is that the debt and claim be mutualthat something is owed by both sides." In re Sound Emporium, Inc., 48 B.R. 1, 3 (Bankr.W.D.Tex. 1984). Mutuality requires that "each party must owe a debt each directly to the other." In Matter of Romano, 52 B.R. 586 (Bankr.M.D.Fla.1985).
Debtor owes the Service both pre-petition and post-petition taxes. The United States, through its Air Force, owed and has paid the chapter 7 trustee $15,000.00 pursuant *594 to the settlement between debtor and the Air Force.
If the Service is permitted to set-off part of the tax debt it is owed against the settlement obligation of the Air Force, it must stand in the shoes of the Air Force. In In re Sound Emporium, 48 B.R. 1 (Bankr.W.D.Tex.1984) the Court addressed the question whether the Service could setoff amounts owed to it against amounts owed to the debtor by the Army. The Court found that the Service and the Army stood in the same shoes and held that the Service could set-off the amount owed under an Army contract against the debtor's tax liability. Similarly, in In re Defense Services, Inc., 104 B.R. 481 (Bankr.S.D.Fla. 1989) the Court held that there was no question that the Service could set-off against amounts owed the debtor under federal food service contracts stating that "since Gratiot v. United States, 40 U.S. (15 Pet.) 336, 10 L. Ed. 759 (1841), there has been no question of the right of the government to apply moneys due it to the extinguishment of its obligations on other accounts." Id. at 484. Accordingly, the Service may set off debts owed to it against debts owed by another government unit.
Mutuality also requires "that the debts must be in the same right and between the same parties standing in the same capacity." In Matter of Romano, 52 B.R. 586 (Bankr.M.D.Fla.1985). This means that the identity of the parties determines whether mutuality exists and, in turn, the timing of the obligations determines the identity or capacity of the parties. Because the pre-petition debtor acts in a different capacity than does the post-petition debtor, debts that arose at different times, one pre-petition and one post-petition, lack mutuality and set-off may not be had under § 553. In re Charter, 86 B.R. 280 (Bankr.M.D.Fla.1988); T & B General Contracting, 12 B.R. 234 (Bankr. M.D.Fla.1981); In re Mohawk Industries, Inc., 82 B.R. 174 (Bankr.D.Mass.1987); 4 Collier on Bankruptcy, ¶ 553.08[1] 553-46 (15th ed.).
Thus, in order to determine whether mutuality exits between the obligations of the debtor and the government this Court must determine when the obligations arose. The Third Circuit held in Cooper-Jarrett, Inc. v. Central Transport, Inc., 726 F.2d 93 (3rd Cir.1984) that the settlement, post-petition, of claims pursuant to a pre-petition contract does not relate back to the contract. In that case, debtor brought a breach of contract action to enforce a contract of sale for common carrier operating rights. Subsequent to filing suit, debtor sought chapter 11 protection, and defendant filed a claim against debtor's estate for unpaid freight charges. The parties settled the suit. In refusing to allow the creditor to set off its settlement obligation against its bankruptcy claim the Court said, "[T]he settlement agreement is itself a contract, separate and independent from the dispute giving rise to the lawsuit which is settled." Thus, there was no mutuality because the debtor's obligation arose pre-petition while the creditor's obligation pursuant to the settlement agreement arose post-petition. Cooper-Jarrett, 726 F.2d 93, 96 (3rd Cir.1984).
Here, as in Cooper-Jarrett, the settlement agreement is a new post-petition contract between the Air Force and the debtor. The government's payment obligation arose post-petition. Contract No. F38601-85-0016 had expired by its own terms on September 30, 1988. Settlement of the claims arising from this contract occurred on November 15, 1991. The settlement agreement between debtor and the Air Force required that the Air Force pay $15,000.00 and that the debtor release all pending and future claims from the Fort Shaw contract. There is consideration flowing between the parties and a new contract was formed in November, 1991, twenty-five months after debtor filed its petition.
The fact that the payment obligation of the Air Force arose post-petition does not mean that the defendant's claim for set-off necessarily fails. Although § 553(a) does not specifically authorize such arrangements, the Fifth Circuit has allowed the set-off of mutual post-petition debts. In re Alfar Dairy, Inc., 458 F.2d 1258 (5th Cir.), *595 cert. denied, 409 U.S. 1048, 93 S. Ct. 517, 34 L. Ed. 2d 501 (1972).[1]
Mutuality exists between the post-petition obligations of debtor and the Air Force. Debtor as debtor-in-possession, accrued post-petition tax liability that remains unpaid. The Air Force incurred post-petition liability upon the settlement of debtor's contract claims. Because the debtor owes the Service for unpaid taxes and the Air Force owed debtor pursuant to the settlement agreement and the Service acts in the same capacity as the Air Force, there is mutuality between these obligations. Consequentially, the mutuality requirement of § 553(a) is met.
Waiver
A party may waive its right to setoff by failing to timely assert it. In re AquaSport, 115 B.R. 720 (Bankr.S.D.Fla. 1990). Additionally, a creditor may waive its right to set-off if it provides information that its claim is not subject to set-off and the debtor relies to its detriment on that information. Sound Emporium, 48 B.R. 1 (Bankr.W.D.Tex.1984); In re Britton, 83 B.R. 914 (Bankr.E.D.N.C.1988). The Court In re Sound Emporium held that an amendment reflecting a right to set-off would be allowed when the failure to assert the right was the result of a good faith mistake and the claim was promptly amended. However, when another creditor relies to its detriment on the omission, the amendment would not be allowed and the creditor would have waived its right of set-off.
Here, the Service initially filed a claim that expressly stated that it was not subject to any set-off. The June 30, 1989, claim stated that it was "not subject to any set-off or counterclaim except" and no exception was provided. Two years later, after plaintiff had reached a settlement with the Air Force, the Service amended its pre-petition claim to assert a right of set-off by including on its proof of claim form "The Service is a secured claimant under section 506(A) of the B/C and is entitled to a right of offset under section 553(A) of the B/C subject to auromatic [sic] stay in the amount of $15,000.00 due from the United States." At the same time defendant filed an amendment to its May 2, 1991, post-petition claim that contained the same language asserting a right to set-off.
The Service was aware of debtor's claims against the government because it knew of this Court's Order granting plaintiff an interest in the proceeds of debtor's government contracts. The government had knowledge of the Order because the United States and the Air Force were defendants in the adversary proceeding that resulted in the adequate protection order. In addition, because the Service stands in the shoes of the Air Force, it is charged with knowledge of plaintiff having filed claims with the United States Court of Claims in the Armed Services Board of Contract Appeals. It would be inconsistent to hold that the Service acts in the same capacity as the Air Force for purposes of allowing it to exercise a right of set-off but acts in a different capacity for purposes of its knowledge of Court orders and proceedings against other governmental agencies. This Court will not approve this inconsistency.
Plaintiff spent two years and substantial funds pursuing debtor's claims against the Air Force while the Service did nothing. It was silent until after plaintiff realized a benefit from its efforts. The Service waited to amend its claims until after the settlement even though it had prior knowledge of debtor's claims. The only action the Service took to protect its interest was the addition of the set-off notation on its claims. Clearly, it allowed plaintiff to rely to its detriment on the information provided in its original proof of claim that no offset existed. The plaintiff detrimentally relied by spending time and money pursuing debtor's claims against the government pursuant to the security interest recognized in the adequate protection order *596 while the Service waited until plaintiff prevailed to assert a right.
The Service argues in its brief that it took no action to protect its right to set-off because its interest is not adverse to that of the Air Force. However, in In re Wilson, 49 B.R. 19 (Bankr.N.D.Tex.1985), it was held that the failure to assert an offset right prior to releasing the funds to the trustee resulted in waiver of the Small Business Administration's right to offset a debt owed to it against a tax refund owed to the trustee by the Service. The government should not be treated differently than other creditors. In re Britton, 83 B.R. 914 (Bankr.E.D.N.C.1988).
The Service knew of the impending turnover of the settlement funds to the trustee and failed to take any action to prevent it. The December 10, 1991, letter from Major Golden to the Service shows that the Service was aware that the Air Force intended to turn the funds over to the trustee. Although it is true that the Service is barred from taking any steps directly against the funds because of the automatic stay, it had the right to file a motion to lift or modify the stay to permit it to levy against the funds in the hands of another agency. The Service failed to do anything except to add a line to its claim two years after filing it.
Equitable Considerations
Set-off is a permissive doctrine that is within the equitable power of the court to grant or deny. In re Charter Co., 103 B.R. 302 (D.M.D.Fla.1989), rev'd on other grounds 913 F.2d 1575 (11th Cir. 1990). Set-off is contrary to the Code's basic policy of equal treatment among creditors and as such is strictly construed. Id. In addition, the doctrine of set-off is based on fairness. In re G.S. Omni Corp., 835 F.2d 1317 (10th Cir.1987).
It seems unfair to this Court to allow the Service to exercise its right to set-off when it failed to take any action to protect its interest while plaintiff actively pursued its claims against the government. It appears to the Court that the Service's failure to insure its set-off rights should preclude its circumventing the equitable treatment of another creditor who made a major effort to obtain the settlement.
The Service knew of the contract claims and the adequate protection order two years prior to amending its claims. Allowing the government to sit back and bide its time while another creditor is relying on the information contained in the government's proof of claim is contrary to the equitable principles of the Code including the principle of equal treatment for creditors.
Conclusion
The Service waived its right to set-off because of inaction, and it will not be permitted to set-off because it would be inequitable. Although the obligations of the debtor and the Air Force and the Service are mutual, and the Service has a substantive non-bankruptcy right to set-off, this Court will not condone inactivity and failure to provide information to other creditors by rewarding the government $15,000.00 against its tax claims. Accordingly the plaintiff's summary judgment motion is granted. A separate judgment consistent with these findings of fact and conclusions of law will be entered.
NOTES
[1] In Bonner v. Prichard, 661 F.2d 1206 (11th Cir.1981), the Eleventh Circuit adopted as binding precedent the decisions of the Fifth Circuit Court of Appeals rendered prior to October 1, 1981. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2857805/ | IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-91-033-CR
MARK DIAZ,
APPELLANT
vs.
THE STATE OF TEXAS,
APPELLEE
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 331ST JUDICIAL DISTRICT
NO. 101,486, HONORABLE TOM BLACKWELL, JUDGE PRESIDING
After finding appellant guilty of injury to a child by recklessness, Tex. Penal Code
Ann. § 22.04(e) (Supp. 1992), the jury assessed punishment at two years' confinement. In a
single point of error, appellant contends that the trial court erred by submitting a charge at the
guilt-innocence stage, over his objection, which enumerated the various offense levels. We
overrule appellant's point of error and affirm the judgment of the trial court.
Appellant asserts the court's action in setting forth the offense levels, ranging from
a Class A misdemeanor to a First Degree felony, for the four offenses the jury was allowed to
consider at the guilt-innocence phase of the trial, invited "the jury to pass on punishment and
denied him a bifurcated trial." Appellant's objection at trial to the charge was "that the statements
are a comment on the weight of the evidence and I object to them for that reason."
Before the court's charge is read to the jury, "the defendant or his counsel shall
have a reasonable time to examine the same and he shall present his objections thereto in writing,
distinctly specifying each ground of objection." Tex. Code Crim. Proc. Ann. art. 36.14 (Supp.
1992). Where the objection to the court's charge urged at trial does not comport with the
contention asserted on appeal, nothing is presented for review. Pennington v. State, 697 S.W.2d
387, 390 (Tex. Crim. App. 1985). Clearly, the objection at trial is at variance with the point of
error urged on appeal.
Assuming, arguendo, that appellant's point of error is before us for review, we find
no merit in his contention. Cases relied on by appellant relate to instances where the trial court
set forth the range of punishment for the offense at the guilt-innocence stage of the trial.
Moreover, while the courts have stated that the trial court should not include the penalty range
for the offense, we have not found a case where it has been held to be reversible error. See, e.g.,
Timmons v. State, 586 S.W.2d 509, 510 n.1 (Tex. Crim. App. 1979); Carter v. State, 515
S.W.2d 668, 670 (Tex. Crim. App. 1974). In Smith v. State, 761 S.W.2d 546, 548 (Tex. App.
1988, no pet.), complaint was made that the trial court's inclusion of the degree of the offense in
its charge to the jury amounted to a comment on the weight of the evidence. The court rejected
this contention, stating:
We hold that the trial court did not err by informing the jury of the degree of the
offense. Even if such an instruction was not required, the degree of the offense
was merely a part of the general definition and description of that offense as could
properly be set forth in the jury charge.
Id. at 549.
We perceive no reversible error in the court's inclusion in its charge of the levels
or degrees of the offenses the jury may consider at the guilt-innocence phase of the trial.
Appellant's point of error is overruled.
Tom G. Davis, Justice
[Before Chief Justice Carroll, Justices Jones and Davis*]
Affirmed
Filed: June 24, 1992
[Do Not Publish]
* Before Tom G. Davis, Judge (retired), Court of Criminal Appeals, sitting by assignment.
See Tex. Gov't Code Ann. § 74.003(b) (1988). | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1539748/ | 369 B.R. 631 (2007)
In re WILLIAM L. SABER, M.D., P.C., Debtor.
No. 07-11764 MER.
United States Bankruptcy Court, D. Colorado.
April 26, 2007.
*632 *633 Jay S. Horowitz, Jeffrey Weinman, William A. Richey, Denver, CO, for Debtor.
Paul Moss, Denver, CO, for U.S. Trustee.
ORDER
MICHAEL E. ROMERO, Bankruptcy Judge.
THIS MATTER comes before the Court on the Debtor's Motion for Relief from the Requirements of 11 U.S.C. § 333 that a Patient Care Ombudsman be Appointed (the "Motion"). The Court has reviewed the pleadings, the testimony, and the relevant legal authority and makes the following findings of fact and conclusions of law.
JURISDICTION
The Court has jurisdiction in this matter pursuant to 28 U.S.C. §§ 1334(a) and (b) and 157(a) and (b)(1). This matter is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (0) as it concerns the administration of the Debtor's estate and may affect the liquidation of assets of the estate or the adjustment of the debtorcreditor relationship.
FACTUAL BACKGROUND
William L. Saber, M.D., P.C. (the "Debtor") filed its Chapter 11 voluntary petition on March 2, 2007. On March 9, 2007, the Debtor filed the present Motion seeking relief from the requirements of 11 U.S.C. § 333.[1] The office of the United States Trustee (the "Trustee") did riot file a response to the Debtor's Motion, however its representative appeared and participated at the evidentiary hearing in this matter.
The Debtor is a medical professional corporation in the business of providing plastic and reconstructive surgery to its patients. Dr. William Saber, M.D. ("Dr. Saber") is the sole owner and sole physician of the Debtor which employs three additional employees: a medical assistant, a patient coordinator and a part-time receptionist.
Dr. Saber is licensed by the State of Colorado and the state medical board and has practiced medicine for over twenty years. His practice is limited exclusively to plastic and reconstructive surgery. In this regard, Dr. Saber testified he performs routine or minor surgeries on-site at his medical office. Dr. Saber indicated his on-site surgeries are for treatment of "lumps, bumps and moles" and require a local anesthetic only. All other surgeries are performed at hospitals or out-patient surgery centers not owned or controlled by the Debtor.
When Dr. Saber was questioned regarding patient privacy and patient medical records, he indicated that under both state law and current medical board requirements he has an independent duty as a physician to maintain all patient records for at least seven years after a particular medical service is provided. These patient records are securely maintained either at his medical office or at an off-site location, depending on whether the individual is a current patient.
*634 In addition, Dr. Saber indicated the Debtor does not maintain duplicate patient records and current patient, records, never leave his office except in the rare instance where a patient record is necessary to perform surgery off-site. Under state law and medical board requirements, if a patient requests a copy of his or her medical file or if another physician requests access to a patient's file, the patient must first sign a release indicating the patient agrees to share his or her medical information with another party.
Dr. Saber testified he has maintained an unblemished professional record during his twenty years of practicing medicine and specifically noted the Debtor's bankruptcy case was not precipitated by allegations of deficient patient care or privacy concerns, but rather the entry of a state court judgment against the Debtor obtained by a former employee. He further testified he remains in good standing with the Colorado state medical board, that his continuing medical education requirements are current, and that he maintains malpractice insurance in an amount consistent with or above what is required.
Under these particular facts the Debtor asserts a patient care ombudsman is unnecessary for two reasons. First, the Debtor asserts that although it may be a health care business, it is not the type of "health care business" contemplated by the language contained in §§ 333(a)(1) and 101(27A). Second, the Debtor asserts that even if the Court determines it to be a "health care business" under the Bankruptcy Code, the appointment of a patient care ombudsman is unnecessary under the facts of this case. The Trustee suggests the Debtor is a "health care business" as that term is defined by the Bankruptcy Code, although he takes no position whether a patient care ombudsman should be appointed in this particular case.
DISCUSSION
Section 333 is a relatively new section added to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"). It states:
If the debtor in a case under chapter 7, 9, or 11 is a health care business, the court shall order, not later than 30 days after the commencement of the case, the appointment of an ombudsman to monitor the quality of patient care and to represent the interests of the patients of the health care business unless the court finds that the appointment of such ombudsman is not necessary for the protection of patients under the specific facts of the case.
11 U.S.C. § 333(a)(1). Pursuant to this statutory language, the appointment of a patient care ombudsman is mandatory unless (a) the Debtor does not qualify as a health care business, or (b) the Court finds the appointment is not necessary for the protection of patients under the specific facts of the case. Accordingly, the Court must first determine whether the Debtor is a "health care business."
Bankruptcy Code § 101(27A) states a "health care business:"
(A) means any public or private entity (without regard to whether that entity is organized for profit or not for profit) that is primarily engaged in offering to the general public facilities and services for
(i) the diagnosis or treatment of injury, deformity, or disease; and
(ii) surgical, drug treatment, psychiatric, or obstetric care; and
(B) includes
(i) any
(I) general or specialized hospital;
*635 (II) ancillary ambulatory, emergency, or surgical treatment facility;
(III) hospice;
(IV) home health agency; and
(V) other health care institution that is similar to an entity referred to in subclauses (I), (II), (III), or
(IV); and
(ii) any long-term care facility, including any
(I) skilled nursing facility;
(II) intermediate care facility;
(III) assisted living facility;
(IV) home for the aged;
(V) domiciliary care facility; and
(VI) health care institution that is related to a facility referred to in subclauses (I), (II), (III), (IV), or (V), if that institution is primarily engaged in offering room, board, laundry, or personal assistance with activities of daily living and incidentals to activities of daily living.
Based on the above-cited language, the Debtor admits it may meet the requirements of § 101(27A)(A)(i) and (ii), although it does not concede this point. However, even if subsection (A) is satisfied, the Debtor specifically argues it does not meet the requirements of subsection (B). Instead, the Debtor indicates the language in subsection (B) demonstrates Congress's intent not to include businesses such as a small medical office or a single-physician medical practice within the definition of a "health care business." Rather, the Debtor asserts subsection (B) applies only to large medical institutions such as hospitals, nursing homes, hospices, clinics and other similarly situated entities.
Sections 333 and 101(27A) are recent statutes and there is a paucity of legal authority addressing the application of these statutes and specifically what is meant by the term "health care business." The Court's research has uncovered only four cases relevant to this subject.
In In re `Medical Assoc. of Pinellas, L.L.C. (Pinellas), 360 B.R. 356, 2007 WL 117930 (Bankr.M.D.Fla. Jan. 3, 2007), the Court was asked to determine whether a debtor that provided primarily administrative support to a group of physicians satisfied the "health care business" definition. In making its determination, the Court fashioned a four-part test to determine whether the requirements of § 101(27A) subsection (A) are met. First, the debtor must be a public or private entity. Second, the debtor must be primarily engaged in offering facilities and services to the general public. Third, the facilities and services must be offered to the public for the diagnosis or treatment of injury, deformity or disease. Finally, the facilities and services must be offered to the public for surgical care, drug treatment, psychiatric or obstetric care. Id. at 358-359, 2007 WL 117930 at *2. In that case, the Court found the debtor was not primarily engaged in offering facilities and services to the general public. Id. at 259-60, 2007 WL 117930 at *3. Instead, the debtor offered non-medical services such as billing, insurance, human resources, and related financial services, as well as some laboratory support to the physicians it served. Id. For this reason, the Court determined the debtor did not satisfy the requirements set forth in § 101(27A)(A).
In In re 7-Hills Radiology, LLC (7-Hills), 350 B.R. 902 (Bankr.D.Nev.2006), the Court similarly determined the debtor in that case did not provide services to the general public because the debtor only performed radiological services at the request of a referring physician. Id. at 904. The 7-Hills Court determined the debtor in that case did not qualify under § 101(27A)(B) because that subsection suggests a "health care business" must *636 have "some form of direct and ongoing contact with patients to the point of providing them shelter and sustenance in addition to medical treatment." Id.
A North Carolina Bankruptcy Court determined a debtor engaged in the business of providing dental services also did not fall within the definition of a "health care business." See In re Banes (Banes), 355 B.R. 532, 535 (Bankr.M.D.N.C.2006). The Court's decision was based, in part, on subsection (B), indicating the types of institutions listed as examples appeared to require a debtor to provide housing and treatment for its patients, which the debtor's dental practice did not. Id. at 535. In addition, the Court noted the debtor had no active patients which was contrary to the plain language of subsection (A) requiring a debtor be "`currently' engaged in the ongoing care of patients." Id. at 535.
Finally, in a case similar to the case at bar, a Georgia Bankruptcy Court found the appointment of a patient care ombudsman in a single-physician medical practice specializing in obstetrics and gynecology to be unnecessary under § 333(a)(1). In re Total Woman Healthcare Center, P.C. (Total Woman), 2006 WL 3708164 *2 (Bankr. M.D.Ga, Dec. 14, 2006). In Total Woman, the physician employed by the debtor performed medical services such as physical exams, ultra sounds and biopsies at her medial office while she performed major surgeries, deliveries and outpatient surgery at two area hospitals. Id. *2. The doctor was in good standing with the state medical board and had not received any complaints from patients. Id. In addition, the Court found the debtor's bankruptcy filing was not precipitated by allegations of deficient patient care or privacy concerns, but rather by tax liabilities. Id. Based on these facts the Court concluded a patient care ombudsman was unnecessary under § 333(a)(1).
A. Is the Debtor a "Health Care Business?"
1. Section 101(27A)(A)
It is important to note the subsections of § 101(27A)(A) and of subsection (B) are connected by the conjunctive. Thus a debtor who is a "health care business" must meet every requirement under both subsections for a patient care ombudsman to be appointed. See In re Banes, 355 B.R. at 534.
Subsection (A) first requires the health care business to be a public or private entity, either for profit or not for profit. See Pinellas, 360 B.R. at 358-59, 2007 WL 117930 at *2. As the Pinellas Court remarked, this factor "includes almost every conceivable entity." Id. at 359, 2007 WL 117930 at *3. The Debtor in this case is a private, for-profit entity and thus meets the first factor. Second, the debtor must `be primarily engaged in offering facilities and services to the general public. Id. at 358-59, 2007 WL 117930 at *2. Dr. Saber testified the Debtor offers plastic and reconstructive surgery to the general public at its medical office or at an area hospital. Therefore, the Court finds the second factor under subsection (A) is also met. Third, the debtor must offer its facilities and services for the purpose of the diagnosis or treatment of injury, deformity or disease. Id. Dr. Saber testified the Debtor treats patients for cosmetic procedures, as well as patients who have had cancer and require reconstructive surgeries. Based on this testimony, the Court finds the Debtor treats patients both for deformity and disease, satisfying the third factor. Finally, a debtor's services and facilities must be offered to the public for surgical care, drug treatment, psychiatric care or obstetric care. Id. The Debtor *637 clearly meets this fourth factor because it provides surgical care for most if, not all of its patients. Thus, the Court finds the Debtor in this case meets all four factors as outlined in § 101(27A)(A) and the Pinellas case. See Pinellas, 360 B.R. at 358-59, 2007 WL 117930 at *2.
2. Section 101(27A)(B)
The Debtor must also meet the requirements of § 101(27A)(B). The Debtor asserts Congress did not intend a small medical office or a single-physician practice to be a "health care business" subject to the Bankruptcy Code's patient care ombudsman provision. Although the Debtor cites no case law supporting its position, it is noted the Pinellas Court appears to agree with this premise, holding "the examples included in subparagraph (B) appear to contemplate something more than a doctor's office." Pinellas, 360 B.R. at 361, 2007 WL 117930 at *4. In support of this statement, the Pinellas Court cited to the sparse legislative history of the patient care ombudsman provision. Id. However, subsection (B) begins with the word "includes," which the Pinellas Court acknowledged is not a limiting word under the Bankruptcy Code. Id. (citing 11 U.S.C. § 102(3)) ("In this title . . . `includes' and `including' are not limiting"). Thus, the list contained under subsection (B) is not an exhaustive list of entities that could be meet the definition of a "health care business."
In this case, the Court does not need to look to the legislative history underlying the patient care ombudsman provision because the statute is clear and unambiguous. Pursuant to § 101(27A)(B)(i)(II), a "surgical treatment facility" falls within the definition of a "health care business." Dr. Saber testified he performs surgeries in his office. Although Dr. Saber characterized the type of surgeries he performs in his office as "minor surgeries with a local anaesthesia," the statute does not differentiate, between minor and major surgeries. Thus, the Court finds the Debtor's case is different from the situations presented in 7-Hills and Banes because this Debtor's business is specifically included within the list of examples provided under subsection (B). Therefore, because the Court finds this Debtor is a "surgical treatment facility" it also finds the Debtor satisfies § 101(27A)(B) and therefore meets the definition of a "health care business."
However, the fact this Debtor is a "health care business" does not automatically require the Court to appoint a patient care ombudsman. Rather, § 333(a)(1) provides an exception for cases in which an ombudsman is not necessary under the particular facts and circumstances of a debtor's bankruptcy case. See 11 U.S.C. § 333(a)(1).
B. Should a Patient Care Ombudsman be Appointed in this Case?
As indicated previously, the Debtor's bankruptcy filing was not precipitated by concerns relating to the quality of patient care or patient privacy matters. Instead, the Debtor filed for bankruptcy protection due to the entry of a state court judgment based on a contractual dispute between it and a physician whom the Debtor previously employed.
Dr. Saber testified he personally secures and maintains the Debtor's patient records both at the Debtor's physical location or at an off-site location for a minimum of seven years following any patient medical services. Dr. Saber further indicated the Debtor maintains contingency plans with respect to dealing with patient records in the event of an emergency, although no specific testimony was elicited regarding the exact contingency plan. Dr. Saber *638 also noted the Debtor's financial projections predict positive cash flow during the pendency of the Debtor's bankruptcy case and therefore it is unlikely that a financial crisis would impair the Debtor's ability to continue to provide quality medical care and to protect the privacy of its patients. Finally, the evidence shows Dr. Saber has practiced more than twenty years and remains in good standing in his profession. Based on the testimony provided, the Court is satisfied the Debtor has sufficient procedures in place to enable it to continue to protect the privacy of its patients.
In addition, although no testimony was elicited regarding the potential expenses associated with the appointment of a patient care ombudsman, the Court is concerned the costs involved with the appointment of a patient care ombudsman in this case could preclude this Debtor from reorganizing its affairs under the Bankruptcy Code.[2]
CONCLUSION
The Court finds the Debtor in this case is a "health care business" as that term is defined in the Bankruptcy Code. Although the Debtor is a "health care business" under the Bankruptcy Code, the appointment of a patient care ombudsman under 11 U.S.C. § 333(a)(1) is unnecessary under the facts and circumstances of this case. Accordingly,
IT IS ORDERED the Debtor's Motion for Relief from the Requirements of 11 U.S.C. § 333 that a Patient Care Ombudsman be Appointed is GRANTED.
NOTES
[1] Unless otherwise specified, all future statutory references in the text are to Title 11 of the United States
[2] However, the Court's concern should not be interpreted as a indication it would not appoint a patient care ombudsman in a singlephysician debtor case. Under § 333(a)(1), assuming all requirements are met, the appointment is mandatory unless the Court finds it is not necessary for the protection of patients under the specific facts of the particular case. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3034980/ | United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 03-3739
___________
George E. Nixon, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the Western
* District of Missouri.
Michael Kemna; Steve Lakey; Mark *
Clark; Alysia Dale; Donna Roberts- * [UNPUBLISHED]
Wornell; Gary Kempker; Joseph Jay *
Cassady; Julie Rivera Rush; Irvin; *
Ronald L. Ellis; Hurley; Farley; *
Morgan; Jean Yount; Robert Michael, *
*
Appellees. *
___________
Submitted: June 3, 2004
Filed: June 9, 2004
___________
Before MORRIS SHEPPARD ARNOLD, FAGG, and SMITH, Circuit Judges.
___________
PER CURIAM.
Missouri inmate George E. Nixon appeals the district court’s1 orders dismissing
his 42 U.S.C. § 1983 action. Having carefully reviewed the record, we conclude that
1
The Honorable Fernando J. Gaitan, Jr., United States District Judge for the
Western District of Missouri.
the district court was required to dismiss Mr. Nixon’s lawsuit for failure to exhaust
administrative remedies. See 42 U.S.C. § 1997e(a) (prisoner shall not bring § 1983
prison-conditions lawsuit before exhausting available administrative remedies);
Johnson v. Jones, 340 F.3d 624, 627 (8th Cir. 2003) (dismissal required when inmate
has not administratively exhausted before filing lawsuit); Graves v. Norris, 218 F.3d
884, 885-86 (8th Cir. 2000) (per curiam) (dismissal proper where at least some of
claims were unexhausted).
Accordingly, we need not address Mr. Nixon’s remaining arguments on appeal,
and we affirm, but we modify the dismissal to be without prejudice as to all of
Mr. Nixon’s claims. See Chelette v. Harris, 229 F.3d 684, 688 (8th Cir. 2000), cert.
denied, 531 U.S. 1156 (2001). We also deny Mr. Nixon’s pending motions.
______________________________
-2- | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/311567/ | 479 F.2d 944
Anthony CORREALE, Appellant,v.UNITED STATES of America, Appellee.
No. 73-1009.
United States Court of Appeals,First Circuit.
Argued April 9, 1973.Decided June 6, 1973.
Richard Cotton, Manchester, N. H., by appointment of the Court, for appellant.
Roger L. Gauthier, Asst. U. S. Atty., with whom William B. Cullimore, U. S. Atty., was on brief, for appellee.
Before COFFIN, Chief Judge, McENTEE and CAMPBELL, Circuit Judges.
COFFIN, Chief Judge.
1
This appeal from a denial of a motion to vacate sentence under 28 U.S.C. Sec. 2255 requires examination of prosecutorial obligations in plea bargaining.
2
Appellant, incarcerated on October 15, 1970 in state prison under a 4-to-8 year state sentence, was indicted in December 1970 in the District of New Hampshire as an accomplice to a bank robbery. After discussions between appellant's counsel and the United States Attorney, and, of course, conversations between counsel and appellant, he changed his plea to guilty on July 23, 1971, at which time the government made a sentence recommendation which was the inducement for the plea and the subject of the present controversy. After extensive exchanges, including those required by Fed.R.Crim.P. 11, the plea was accepted and, at the government's request, sentencing postponed until after the trial of his co-defendants. On December 10, 1971, after a repetition of the government's position and statements by appellant and his counsel, a sentence of 5 years was imposed by the court under 18 U.S.C. Sec. 4208(a)(2), making the appellant eligible for parole at such time as the Board of Parole may determine.
3
Promptly after his release, on March 15, 1972, by the state authorities and his transfer to a federal institution, appellant filed the instant motion seeking to withdraw his plea or have his sentence vacated because of the government's alleged breach of what he understood to be the promise. After appointment of counsel, a full hearing was held, as required by United States v. McCarthy, 433 F.2d 591 (1st Cir. 1970). At the hearing, appellant waived his claim for withdrawal of his plea and pressed only his request that the remainder of his sentence be suspended. The government, while opposing that request, did not oppose vacation and resentencing. After finding that neither his counsel nor the United States Attorney misled the appellant and that the latter fulfilled his sentence recommendation promise, the court held that even under the petitioner's own version of the facts, he would not be entitled to relief under 28 U.S.C. Sec. 2255. This appeal followed.
4
All sides agree that, at a minimum, the United States Attorney promised to make a recommendation that the court impose a sentence that would be effectively concurrent with the state sentence that he was then serving, meaning primarily that he would be eligible for federal parole at the time that he was paroled by the state authorities. Though the appellant claimed that he understood the agreement to be a guarantee that he would in fact be paroled under his federal sentence when paroled by the state, the district court found, based on credible testimony by both the United States Attorney and appellant's counsel at disposition, that the agreement was only the more common and realistic one of a recommendation to that effect.
5
Appellant's fundamental complaint, however, was not directly dealt with in the district court's opinion, although fully aired at the hearing. It is that the United States Attorney recommended a federal sentence of 4-to-8 years, which, whether designed to effectuate a general promise of an effectively concurrent recommendation or to fulfill what appellant's counsel testified was a more specific undertaking, was an illegal federal sentence, and in any case, one which in fact would not have been effectively concurrent with the one then being served. If the agreement simply was to recommend an effectively concurrent sentence, the 4-to-8 year recommendation clearly failed to implement it. If, on the other hand, the 4-to-8 year recommendation was specifically promised, the defect is equally fatal, it being impossible of fulfillment. Under the circumstances, therefore, there is no point in remanding for further findings as to the relationship of the specific recommendation to the basic plea agreement. We must reverse, not because of any lack of good faith, but only because the most meticulous standards of both promise and performance must be met by prosecutors engaging in plea bargaining.
6
Plea bargaining is a fundamental part of our criminal justice system as presently structured. It produces prompt adjudication of many criminal prosecutions, thus reducing the period of pre-trial detention for those unable to make bail and permitting more extensive consideration of the appropriate disposition. These benefits flow, however, from the defendant's waiver of almost all the constitutional rights we deem fundamental. There must accordingly be safeguards to insure that the waiver is knowledgeable, Boykin v. Alabama, 395 U.S. 238, 89 S.Ct. 1709, 23 L.Ed.2d 274 (1969), and voluntary, Machibroda v. United States, 368 U.S. 487, 82 S.Ct. 510, 7 L.Ed.2d 473 (1962). Though a legitimate prosecution promise does not render a guilty plea legally involuntary, Brady v. United States, 397 U.S. 742, 90 S.Ct. 1463, 25 L.Ed.2d 747 (1970), its fulfillment is a necessary predicate to a conclusion of voluntariness when a plea "rests in any significant degree" on it. Santobello v. New York, 404 U.S. 257, 262, 92 S.Ct. 495, 30 L.Ed.2d 427 (1971).1
7
It does not suffice, however, simply to make any promise and fulfill it. The Supreme Court has recognized as much in defining the standard of voluntariness for guilty pleas:
8
"A plea of guilty entered by one fully aware of the direct consequences, including the actual value of any commitments made to him by the court, prosecutor, or his own counsel, must stand unless induced by . . . misrepresentation (including unfulfilled or unfulfillable promises), or perhaps by promises that are by their nature improper as having no proper relationship to the prosecutor's business (e. g., bribes)." Brady, supra, 397 U.S. at 755, 90 S.Ct. at 1472.
9
Nor are the obligations to avoid misrepresentations or improper promises limited to good faith efforts. Prosecutorial duties affecting the fairness of trials have never been so restricted. Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963); Giglio v. United States, 405 U.S. 150, 92 S.Ct. 763, 31 L. Ed.2d 104 (1972). The same is true of the government's role in plea bargaining. In Von Moltke v. Gillies, 332 U.S. 708, 68 S.Ct. 316, 92 L.Ed. 309 (1948), a majority of the Court agreed that the guilty plea there would be void if "a member of the prosecution, gave her, however honestly, clearly erroneous legal advice." Id. at 728, 68 S.Ct. at 325.2 In Santobello, the Court reaffirmed that view: "That the breach of agreement was inadvertent does not lessen its impact." 404 U.S. at 262, 92 S.Ct. at 499. Prosecutorial misrepresentations, though made in good faith, even to obtain a just, and here a mutually desired end, are not acceptable. Ignorance of the law is not excuse for the government, just as it avails not the defendant. Nor are contradictory or confusing statements of the law adequate. While we do not go so far as to say that minor and harmless slips by prosecutors will void a plea bargain, we hold that, at a minimum, a prosecutor may not, in exchange for a guilty plea, promise and/or make a recommendation of an illegal sentence.3
10
Here, the United States Attorney, though conscientious and well-intending, did not meet his obligations, whichever view is taken of the exact scope of the plea agreement. The recommendation had three fatal defects. First, a 4-to-8 year sentence is an impermissible federal sentence. 18 U.S.C. Sec. 4208(a) explicitly provides:
11
"Upon entering a judgment of conviction, the court . . . may (1) designate in the sentence of imprisonment imposed a minimum term at the expiration of which the prisoner shall become eligible for parole, which term may be less than, but shall not be more than one-third of the maximum sentence imposed." [Emphasis added.]
12
The recommended sentence, even if specifically promised, was therefore plainly contrary to law. Second, a sentence setting almost any minimum would have prevented concurrent federal parole eligibility since, as defense counsel informed the court at the disposition in December 1971, appellant's case would be considered by the state parole board by February 1972 at the latest. Third, the recommended sentence would not have been concurrent, even in the technical sense, the appellant having already served some 14 months of his state 4-to-8 year sentence by the time of federal sentencing. To make the federal sentence even facially concurrent, 14 months should have been subtracted from the outer recommended limits.
13
The United States Attorney apparently recognized this final problem at the last moment. At the disposition hearing he stated that: "I think the effect of any sentence to Mr. Correale which was in excess of three years would be to have no chance of a concurrent sentence." At the Sec. 2255 motion hearing, he explained that he had meant that were the federal sentence to be truly concurrent, the federal minimum could not have been more than the roughly three years remaining to be served under the state minimum. He made no effort at sentencing, however, to give this explanation of his cryptic comment or to explain the inconsistency between that comment and his basic 4-to-8 year recommendation. In any event, even this belated observation was completely unresponsive to the almost immediate possibility of state parole, which defense counsel had just mentioned. Nor was the situation cleared up when, after the court's announcement that it would impose a 5-year sentence with immediate parole eligibility, the United States Attorney stated that "we would go one step further and recommend that he be released on parole as soon as it is determined by State authorities that he is eligible for parole under his State sentence." This statement was obviously not adequate fulfillment of a promise to recommend concurrency, having come only after the court's response to his recommendation. Even had it come earlier, we think it so inconsistent with his earlier recommendation that only an express statement that he was changing his recommendation would have sufficed to dispel any confusion and meet his obligation of fulfilling his plea-inducing promise.4 Though these comments at sentencing suggest the prosecutor's bona fides in seeking to effectuate the plea agreement, good faith or deferential terseness do not excuse the mistakes. A government attorney must know the applicable law and its implications for the case before him, and must present a recommendation to both the defendant and court which is lawful, clear and consistent both internally and with respect to the underlying promise. Those requirements were obviously not met here.
14
We do not mean to imply that only the government attorney has obligations of knowledge and clarity. Defense counsel too must know or learn about the relevant law and evaluate its application to his or her client. Clearly, in certain cases, such failure will amount to constitutionally ineffective assistance of counsel and undermine the validity of the plea. See Tollett v. Henderson, 411 U.S. 258, 93 S.Ct. 1602, 36 L.Ed.2d 235 (1973). Here the trial counsel testified that he did not know about this most fundamental statutory provision relating to sentencing. Particularly when a plea bargain is discussed, and hence sentencing becomes the client's preeminent concern, it is incumbent on counsel to acquaint himself or herself with all the available alternatives and their consequences for the defendant's liberty and rehabilitation. Counsel's ignorance here is inexcusable, although perhaps understandable in light of his reliance on the government attorney's presumed knowledge of the available options. However, in this circumstance, his failure is not the legally relevant concern.
15
We note that the court indicated at the disposition hearing its awareness of the relevant sentencing options. Not only did it suggest and ultimately employ the (a)(2) alternative, but it also stated at one point that "Of course, he is eligible for parole after he has served one-third of [the] time." It would have been better, and would have obviated the later unfortunate train of events, if the court had gone further and stated (1) that it rejected the recommendation because of its patent illegality; (2) that the court could not accept the plea in light of the misunderstanding which obviously existed; (3) that defendant had the absolute right to withdraw his plea, or alternatively either to plead with the understanding that there would be no recommendation whatever before the court, or to consult further with the prosecutor in an effort to arrive at a new, mutually agreeable and legal recommendation; (4) that defendant and his counsel, before proceeding further, could take a reasonable time to consider the situation anew, with or without the prosecutor as they chose, after which defendant should inform the court as to the course of action he wished to take.
16
We must lastly observe, because of the government's argument here, that a prosecutorial failure to fulfill a promise or to make a proper promise is not rendered harmless because of judicial refusal to follow the recommendation or judicial awareness of the impropriety. In Santobello, supra, the trial judge had explicitly stated that "It doesn't make a particle of difference what the District Attorney says he will do, or what he doesn't do." 404 U.S. at 259, 92 S.Ct. at 497, and the Supreme Court saw "no reason to doubt that", id. at 262, 92 S. Ct. 495. It nevertheless concluded that the defendant was entitled to relief. The reason is obvious; it is the defendant's rights which are being violated when the plea agreement is broken or meaningless. It is his waiver which must be voluntary and knowing. He offers that waiver not in exchange for the actual sentence or impact on the judge, but for the prosecutor's statements in court. If they are not adequate, the waiver is ineffective.
17
We reach then the question of remedy. The right is to have the promise fulfilled. In Santobello, the Court listed the remedies as either "specific performance of the agreement" or "the opportunity to withdraw his plea", 404 U. S. at 263, 92 S.Ct. at 499. Appellant now seeks only the former. Although the Court stated that specific performance in Santobello meant that "petitioner should be resentenced before a different judge", id., to whom the promised recommendation would presumably be made, the petitioner before the Court had been released on bail pending both the state appeals and Supreme Court disposition, id. at 260, 92 S.Ct. 495, and thus had not yet commenced to serve his sentence. The Court therefore had no reason to consider other possible means of providing specific enforcement. It ruled, however, that the appropriate relief would be left to the discretion of the state court and stated that "what is reasonably due in the circumstances . . . will vary." Id. at 262, 92 S.Ct. at 499. In United States v. Carter, 454 F.2d 426 (4th Cir. 1972) (en banc), for example, the court held that if the promise which induced the appellant's plea to a stolen checks charge in the District of Columbia was, as he alleged, that he would not be prosecuted elsewhere for anything having to do with the checks, then his subsequent ten-count indictment in the Eastern District of Virginia for forgery and conspiracy should be dismissed. See also Johnson v. Beto, 466 F.2d 478 (5th Cir. 1972).
18
Here it seems to us hollow to remand for resentencing before another judge who will hear a recommendation that the federal sentence, including parole eligibility, be effectively concurrent with the state sentence which has already been served and as to which parole has already been granted some 14 months earlier. Even under the government's calculation, which appellant challenges,5 he has already served some 17 months of his original federal sentence, the last 14 after release by state authorities. Given the rather unusual nature of the agreed-upon recommendation, the length of time already served, and more importantly, the length of time already served which is contrary to the recommendation, we believe that the only just remedy and the only one which could now approximate specific enforcement of the agreement is a resentencing to the same term, execution of sentence to be suspended and the appellant placed on probation (courts, of course, being unable to mandate parole) for a period of three years, to reflect the nearly two years since change of plea when the improper recommendation was made and from which time the sentencing judge had intended the sentence to run. Accordingly, we vacate the sentence and remand for immediate resentencing,6 the sentence to be 5 years, execution of sentence suspended, and probation for 3 years.
19
Reversed and remanded for resentencing pursuant to this opinion. Mandate shall issue forthwith.
1
There is no question here, as there was in McCarthy, supra, that the promise was the inducement for the plea
2
Although four members of the Court thought that the plea there should have been voided on the existing record, two other members insisted that a finding on the quoted issue was first necessary
3
The situation before us could be analyzed under various branches of the Brady test. Though the promise to recommend an illegal sentence is not itself unfulfillable, the recommended sentence is. In any case, it is a misrepresentation to the defendant who rightfully assumes that the government's attorney will only recommend the possible. Similarly, though sentence recommendations are generally a proper part of the prosecutor's business, a proposal for an illegal sentence is not. Finally, the defect here could be thought to be the defendant's lack of full awareness of "the actual value of [the] commitments made to him by the . . . prosecutor." We need not, however, decide under which element this case is properly considered, since under any view, this type of prosecutorial error is barred by Brady
4
Despite the apparent contradictions, the district court stated repeatedly at the Sec. 2255 hearing that it understood the United States Attorney's recommendation to have been for a 4-to-8 year sentence
5
Although appellant entered his plea on July 23, 1971 and the district court recommended that his service of sentence be deemed to commence on that date, the Bureau of Prisons calculated the sentence from December 10, 1971, the date of sentencing. Appellant argues this is improper because it was the government which moved for the delay in sentencing. He also complains of the failure to credit him, under 18 U.S.C. Sec. 3568, with the time he spent in state maximum security prison, rather than in the minimum security forestry camp to which he would have been sent in January 1971 were it not for the federal indictment. We need not consider either claim relating to the calculation of his original sentence in light of our disposition. For purposes of this discussion only, we have employed the government's calculation
6
Under these unusual circumstances, the rule of Mawson v. United States, 463 F.2d 29 (1st Cir. 1972), requiring resentencing by a different judge, does not apply | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1539889/ | 369 B.R. 845 (2007)
In re RJC INDUSTRIES, INC., Debtor.
Office of the United States Trustee, Plaintiff,
v.
John Lombardozzi, Defendant.
Bankruptcy No. 1-96-bk-00012. Adversary No. 1-01-ap-00283A.
United States Bankruptcy Court, M.D. Pennsylvania.
April 28, 2006.
*846 *847 D. Troy Sellars, Gregory R. Lyons, U.S. Department of Justice, Office of the United States Trustee, Harrisburg, PA, for Plaintiff.
*848 Brian William Bisignani, Post & Schell PC, Harrisburg, PA, Lawrence V. Young, CGA Law Firm, York, PA, for Defendant.
OPINION
JOHN J. THOMAS, Bankruptcy Judge.
These matters have come before me by way of a convoluted history, litigated over the past six years, involving two prior bankruptcy judges and a District Judge.
History
In about September 1995, John Lombardozzi (hereinafter "Lombardozzi")[1] purchased all the stock of RJC Industries, Inc. (hereinafter "RJC" or "Debtor") from John Chapel for $100,000. (Transcript of 7/1/02 at 113-114.) RJC traded as American Stair Products and Armstrong Cabinet Shop. (Transcript of 11/17/04 at 39.) Shortly thereafter, RJC filed for Chapter 11 relief on January 3, 1996. On November 19, 1999, RJC moved to sell virtually all of its assets to Lombardozzi, the principal and sole stockholder of the Debtor. The United States Trustee objected, which objection was resolved by Stipulation (1-96-bk-00012 at ECF Doc. # 257) approved on January 20, 2000, by Bankruptcy Chief Judge Robert J. Woodside, since deceased. The terms of that Stipulation play a pivotal role in the disposition of this case. An important aspect of that Stipulation was the credit against the sales price allowed Lombardozzi for legitimate administrative claims against the Debtor. While there had been some Orders issued by Judge Woodside with regard to those administrative claims, their efficacy was challenged in an adversary proceeding by the United States Trustee against Lombardozzi filed November 21, 2001, to Adversary No. 1-01-ap-00283. Paragraph 15 of the Stipulation, among other things, provided that Lombardozzi would execute a note payable. to RJC for the full value of the assets transferred to him to protect the estate should future litigation result in the disallowance of all or a portion of the administrative credits claimed by Lombardozzi. The United States Trustee's adversary challenges those administrative claims, arguing that those advances were either investments or loans that should be equitably subordinated to other creditors[2]. RJC continued in Chapter 11 until March 13, 2000, when it converted to Chapter 7. On September 1, 2000, the Chapter 7 trustee sought permission to abandon that note as being of inconsequential value to the estate. (1-96-bk-00012 at ECF Doc. # 277.) The United States Trustee objected to that request. (1-96-bk-00012 at ECF Doc. # 279.) These matters came to trial before visiting Bankruptcy Judge, M. Bruce McCullough. The trial focused on the legitimacy of several discrete categories of advances from Lombardozzi to RJC as follows: (1) $350,000, primarily in the nature of insider advances in 1996-1997, (2) $450,000 of advances in December 1997, (3) the interest on those $450,000 advances, (4) an advance of $200,000 in 1998, and, finally as referenced in the Stipulation, (5) approximately $195,000 worth of miscellaneous expenditures identified by exhibit referenced in the sale motion.
On August 14, 2002, Judge McCullough issued his Memorandum and Order of Court. The Order disallowed the $350,000 advances as failing to have prior court approval. The Court awarded Lombardozzi $112,051 of the $450,000 advances by concluding that only $272,384 was owed on *849 the debt to be assigned and $160,333 of improperly paid interest to Lombardozzi must be deducted from that debt. Interest was disallowed on the advances. The $200,000 loan to RJC was `also .disallowed by the Court since Judge McCullough concluded it was not properly utilized by the Debtor. The claims, identified in the exhibit attached to the sale motion, were not addressed.
Subsequently, that Order was appealed to the District Court, which reversed and remanded the issues to be decided in accordance with its appellate findings and conclusions. I now become the third bankruptcy judge to address these issues. I do so seriatim.
Item 1. $350,000 Loan
The record indicates that the sources of these advances to RJC came from Lombardozzi ($50,000); Steve Lombardozzi, John's father, ($120,000); and Signature Kitchens[3], Lombardozzi's wholly owned company ($180,000). (Transcript of 7/1/02 at page 163.) The Bankruptcy Court did not preauthorize any of these advances. It was for that very reason that Judge McCullough declined to recognize these advances as legitimate administrative claims under 11 U.S.C. § 364(b). (Memorandum and Order of Court, McCullough, J., at 7-10 (1-01-ap-00283 at ECF Doc. # 18).) Rather, Judge McCullough characterized these funds as a "businessman's investment."
In reversing Judge McCullough, the District Court opined that there were two methods by which loans to the Debtor could be authorized. 11 U.S.C. § 364 provides:
(a) If the trustee is authorized to operate the business of the debtor under section 721, 1108, 1203, 1204, or 1304 of this title, unless the court orders otherwise, the trustee may obtain unsecured credit and incur unsecured debt in the ordinary course of business allowable under section 503(b)(1) of this title as an administrative expense.
(b) The court, after notice and a hearing, stay authorize the trustee to obtain unsecured credit or to incur unsecured debt other than under subsection (a) of this section, allowable under section 503(b)(1) of this title as an administrative expense.
11 U.S.C.A. § 364.
Although § 364(b) requires prior court approval, § 364(a) does not, if incurred in the ordinary course of the debtor's business. It was the failure to examine § 364(a) that, in part, required a remand of this case to the bankruptcy court. I am, therefore, directed to evaluate whether these advances could constitute administrative claims arising "in the ordinary course of business" under 11 U.S.C. § 364(a).
There is no statutory definition of the terminology, "ordinary course of business." I observe that cases examining this phrase have varied in scope and are far from consistent. As such, I conclude that there is sufficient ambiguity to allow us to resort to legislative history to garner congressional intent. I also observe that debts incurred in the "ordinary course" have been discussed in conjunction with a multielement review of the safe-harbor provisions of the preference defense in 11 U.S.C. § 547(c)(2)(a). In speaking of § 547(c)(2), it has been said that, "[t]he purpose . . . is to leave undisturbed normal *850 financial relations." H.R.Rep. No. 595, 95th Cong., 1st Sess., reprinted in 1978 U.S.Code Cong. & Ad. News 5787, 6329. Congress has further suggested that one distinction between § 364(a) and § 364(b), which requires notice, is that § 364(b) is to be used "to obtain a substantial loan in an operating case." App. C Alan N. Resnick, et al., Collier on Bankruptcy, Legislative History-1978 Act App. Pt. 4-1480 (15th ed. rev'd).
In fairness to Lombardozzi, I allowed the record to be reopened on remand to accept evidence of the ordinary course. Indeed, Lombardozzi introduced expert testimony as to the debtor-creditor relationship between a small market company[4] (revenues under $10 million dollars) and its principal. As I did at trial, I again overrule the United States Trustee's objection to the testimony of this witness.
Whether this satisfied the ordinary course standard requires analysis of applicable case law.
Initially, I find that it is the creditor's burden to produce evidence of industry nouns. In re Allegheny Health Educ. and Research Foundation, 127 Fed.Appx. 27 (3d Cir.2005).
Turning to the components of the $350,000 advances, I find the following specifics in the record.[5]
01/96 Signature pays Gruber Systems $769.84 (Armstrong[6] payable).
01/04/96 Steve Lombardozzi writes check in favor of RJC for $35,000.
02/96 Signature pays Gruber Systems $5,045.45 and associated freight $134.29 (Armstrong payable).
02/21/96 Steve Lombardozzi writes check in favor of Armstrong Cabinet for $15,000.
04/96 Signature pays Dunn Computer ($1827.71, $62.70, $87.00); Berenson ($405.07), and Zukowski ($206.20) (Armstrong payables).
06/05/96 Steve Lombardozzi writes. check in favor of Armstrong Cabinet for $40,000.
6/11/96 Signature transfer to RJC account for $50,000.
08/96 Signature presumably paid various Armstrong bills totaling $14,913.55. 8/21/96 Signature check to Armstrong Marble[7] for $30,000.
9/25/96 Signature check to Armstrong Marble for$15,986.94.
10/07/96 Steve Lombardozzi writes check in favor of Armstrong Cabinet for $30,000.
10/30/96 Signature check to Armstrong (RJC) for 841,461.74.
11/22/96 Signature check to American Stair (RJC) for $20,000.
01/06/97 John Lombardozzi writes check, presumably in favor of RJC for $50,000.
*851 Lombardozzi 2002 Exhibit # 2 at pages 8-20 purportedly documents the $180,000 advance by Signature Kitchens to RJC.
It was significantly subsequent to these advances, on December 23, " 1997, that Lombardozzi, as President of RJC, executed a note in favor of himself personally for the sum of $350,000 at an interest rate of 12%. (Lombardozzi 2002 Exhibit # 3.) Notwithstanding that documentation, Lombardozzi sought interest of 20% from RJC. (Transcript of 7/1/02 at 200.)
In order for these advances to be approved as administrative expenses of the Debtor without court approval, I must find that the extension of this funding was done in the ordinary course.
These transactions were among insiders or affiliates as those terms are defined at 11 U.S.C. § 101. Insider transactions are carefully scrutinized. Pepper v. Litton, 308 U.S. 295, 60 S.Ct. 238, 84 L.Ed. 281 (1939). These advances were far from stereotypical and ordinary. There was no pattern by which Lombardozzi advanced money to RJC. Monies were advanced through various sources and, later, were manipulated using book entries to reflect loans directly from Lombardozzi. Steve Lombardozzi made four separate transfers to Armstrong Cabinet, a trade name for RJC. Presumably, at a later time, these advances were characterized as loans to John Lombardozzi who, thereafter, loaned the monies to RJC. Signature Kitchens, another of Lombardozzi's wholly owned companies, "advanced" funds to RJC presumably by directly paying RJC bills and also by writing checks to Armstrong Marble. Again, later on, these advances were characterized as loans from Signature to John Lombardozzi and then from Lombardozzi to RJC.
The actual documentation for this "loan" from Lombardozzi to RJC was not made until December 23, 1997, well after the fact. (Lombardozzi 2002 Exhibit # 3.)
Courts have utilized a two prong test in determining whether a transaction has occurred in the ordinary course. This test adopts a vertical and horizontal approach. 3 Collier on Bankruptcy, 364.02[1] at 364-5 (15th ed. rev'd). This approach has been embraced by our circuit. In re Roth American, 975 F.2d 949, 952 (3d Cir.1992).
The horizontal approach to ordinary course requires the court to review an industry-wide perspective and determine whether the conduct referenced is typical in the specific trade covered by the debtor's business. In this approach, I am required to determine whether the transaction at issue is of a type that similar enterprises would engage. It need not be a regular occurrence, merely ordinary in the industry. Notwithstanding a contrary argument, I find that Lombardozzi offered no evidence of industry practice, therefore, he cannot rely on this approach.
On the other hand, the vertical approach focuses more on the creditor's reasonable expectations. Typically based on the debtor's business conduct rather than any industry's normal operation, the focus with the vertical approach is with the anticipation of creditors dealing with the debtor as to the type of transactions that the debtor might utilize. With regard to the vertical approach, courts consider whether a transaction is consistent with the debtor's prepetition transactions and conduct. In re Roth American, 975 F.2d 949, 953 (3d Cir.1992). The record references little RJC prepetition creditor relationship with Lombardozzi or any other insider.
RJC did offer expert testimony to the effect that it was typical for small business entities to depend on insider *852 loans. (Transcript of 11/15/04 at 146.) While that conclusion can be found to be supportable, the Debtor's practice of receiving funds from multiple sources subject to future categorization `and whimsical interest rates appears far from ordinary. Lombardozzi has simply failed to maintain his burden of showing that these advances were in the ordinary course, either within its industry or consistent with its creditor's expectations.
The only thing ordinary in these series of transactions was their unpredictability and randomness as to vehicle, source, status, terms and the like. At the hearing before Judge McCullough, Lombardozzi testified that, until the accountants examined the transaction in hindsight at the end of the year, he would not know how to characterize it. (Transcript of 7/1/02 at 159.) He testified about some tacit understanding that funds advanced by RJC's general manager and Lombardozzi's father to RJC were really loans to Lombardozzi who loaned funds to RJC. That same understanding governed direct payments of RJC bills by Signature. Such an approach is too convenient to represent anyone's standard of "ordinary course." This "after-the-fact" paper trail within the various companies is of little assistance in identifying the nature of the transactions at the time they occurred.
I conclude that this $350,000 series of advances cannot qualify as ordinary course loans to the Debtor.
The District Court hints at the possibility that, perhaps, these advances should be considered approved after the fact or nuns pro tune. (Memorandum, Connor, J., filed October 7, 2003 at 13-15 (1-01-ap-00283 at ECF Doc. # 28).) Consideration of that option may be entertained,' if indeed, I find that these advances were loans and not equity investments as argued by the United States Trustee and found by Judge McCullough. Our circuit has concluded that a bankruptcy court has the power to re-characterize a claim from debt to equity. In re SubMicron Systems Corp., 432 F.3d 448 (3d Cir.2006). While the circuit recognized the reliance by various other courts on a series of "multifactor tests," the overarching inquiry as to whether an advance should be considered an infusion of equity is the intent of the parties gleaned from what they say, what they do, and the economic reality of the situation. Id. at 456.
When Lombardozzi bought the company from John Chapel, RJC was apparently in trouble. Lombardozzi thought he could renegotiate a better financing package from Sam Armstrong, the principal lender. When that didn't happen, RJC filed for relief under Chapter 11 to stave off Armstrong's liquidation of secured assets. Within days, Lombardozzi's father and general manager, Steve Lombardozzi, advanced funds to RJC without any written documentation of terms. Steve Lombardozzi never testified at trial, so his intention remains obscure. Lombardozzi testified that the intention of the parties was, generally, that Steve Lombardozzi's advances were to be considered to be on Lombardozzi's behalf and the details would await a later discussion with the accountants. (Transcript of 7/1/02 at 159.) RJC was significantly undercapitalized throughout this time period, maintaining a negative equity. (Lombardozzi 2002 Exhibit # 8.) Written loan agreements with terms were not drafted until long after the advances were made. (Transcript of 7/1/02 at 199.) Interest rates utilized by the parties bore no relationship to the amounts specified in the documentation. (Transcript of 7/1/02 at 216-7 and Lombardozzi 2002 Exhibit # 3.) Of course, an influential factor toward concluding that these advances were capital contributions is the *853 identity of interest between Lombardozzi as creditor and as investor.
In fact, my analysis of the details of the transactions fully supports the argument of the United States Trustee' that these funds were no more than investment vehicles and I so find. I conclude that the entire $350,000 investment represents an equity investment.
Having so found, there is no need to determine whether nunc pro tunc approval is warranted under 11 U.S.C. § 364(b), since a finding that this was an equity investment precludes a conclusion of a debtor-creditor relationship. In re Sub-Micron Systems Corp., 432 F.3d 448 (3d Cir.2006).
Item 2. $450,000
On February 27, 1996, less than 2 months after bankruptcy, the Debtor sought authority to obtain post-petition financing from Reservoir Capital Corporation and The Lifeboat Company, LLC. (1-96-bk-00012 at ECF Doc. # 22.) The financing required the personal guarantee of Lombardozzi. It was extended for one year by Order of January 30, 1997. (1-96bk-00012 at ECF Doc. # 77.) On December 30 and 31, 1997, Lombardozzi purportedly advanced $450,000 to RJC. (Transcript of 7/1/02 at 183.) Shortly thereafter, RJC satisfied the obligations owing Lifeboat and Reservoir. Notwithstanding this apparent satisfaction, the assignment of the Lifeboat and Reservoir obligations were requested by motion on January 28, 1998. (1-96-bk-00012 at ECF Doc. # 142.) On March 4, 1998 that motion was approved by Judge Woodside. (1-96-bk-00012 at ECF Doc. # 150.) More specifically, Lombardozzi was authorized to pay s off the balances owing Lifeboat and Reservoir and receive an assignment of any "ownership interests/security interests" in receivables and inventory of RJC.
In the motion seeking assignment, counsel for RJC, Lombardozzi's wholly owned company, alleged that "[t]he only conditions under which John Lombardozzi will pay the balances due Reservoir Capital Corporation and The Lifeboat Company, LLC is to take an assignment of all rights presently enjoyed by The Reservoir Capital Corporation and The Lifeboat Company, LLC with respect to its ownership and/or security interest in the above collateral of the debtor-in-possession." (1-96bk-00012 at ECF Doc. # 142 at ¶ 5.) This document was filed January 28,1998. Notwithstanding that allegation, the record of this hearing suggests that no money was due and owing either Lifeboat or Reservoir when that motion was filed. (Transcript of 7/1/02 at 43.) The failure to indicate in the underlying motion that the "balance" to be paid Lifeboat and Reservoir in order to secure an assignment of their rights was zero displays a shocking lack of candor, at best.[8] Moreover, while RJC satisfied the Lifeboat and Reservoir loans with funds advanced from Lombardozzi, neither Lifeboat nor Reservoir effectuated an assignment of the obligations referenced until September 1999, twenty months after their obligations were satisfied. (Transcript of 7/1/02 at 220.)
In his testimony, Lombardozzi tries to link the $450,000 advances to RJC in December 1997, as the equivalent of direct payments to Lifeboat and Reservoir and also tries to effect a retroactive application of Judge Woodside's March 4, 1998 Order, which factually has no application with regard to the theretofore satisfied debt to *854 Lifeboat and Reservoir. Moreover, Lombardozzi acknowledges that of the $450,000 advanced to RJC, $350,000 went to Lifeboat and Reservoir, $60,000 went back to Lombardozzi for interest ()Wing by RJC, and the balance was used for "administrative" expenses. (Transcript of 7/1/02 at 197.) The monthly operating statement for December 31, 1997 (United States Trustee Exhibit 10), however, shows a balance due to Reservoir of $192,384.87 (line item 21) and $80,000 owing Lifeboat (line item 17) or a total of $272,384.87 and not the $450,000 referenced in the promissory note. (Lombardozzi 2002 Exhibit # 3.) See also Transcript of 7/1/02 at 44. The District Court, on appeal from the August 14, 2002 decision of Judge McCullough, "mooted" Judge Woodside's Order of March 4, 1998. (Memorandum, Connor, J., filed October 7, 2003 at 3 (1-01-ap-00283 at ECF Doc. # 28).) Moreover, even if that disposition by the District Court was dicta and not binding on me, Judge Woodside's Order had no impact since the assignments contemplated by the Order were never supported by consideration. In point of fact, at the time of Judge Woodside's Order, there existed no debt in favor of Reservoir or Lifeboat which could be assigned to a third party. Put quite simply, the loan was satisfied prior to the March 4, 1998 Order of Judge Woodside, rendering that Order meaningless.
Furthermore, the District Court was critical of Judge McCullough's partial allowance of the advance, nunc pro tune, for $112,051.00[9]. The District Court, found that the bankruptcy court is capable of allowing nunc pro tune relief relative to § 364(b) financing. Nonetheless, the District Court held that the bankruptcy court applied an "insufficiently rigorous" standard to allow retroactive validation. Consistent with the District Court Opinion, I will proceed to analyze the January 28, 1998 Lombardozzi motion as if it was submitted requesting nunc pro tune relief.
Initially, I must find that I would have granted approval if timely filed. I must further find that creditors have not been damaged by the continuation in business. Further, the proponent of the loan must "honestly believe" that they had authority to enter into the transaction. In re American Cooler Co., 125 F.2d 496, 497 (2d Cir.1942), In re Lehigh Valley Professional Sports Clubs, Inc. 260 B.R. 745, 750 (Bkrtcy.E.D.Pa.2001). I must also find the existence of "extraordinary circumstances" that justify an untimely filing, such as time pressure to extend the loan prior to securing court approval. In re F/S Airlease II v. Simon, 844 F.2d 99, 105-08 (3d Cir.), cert. denied, 488 U.S. 852, 109 S.Ct. 137, 102 L.Ed.2d 110 (1988), In re Arkansas, 798 F.2d 645 (3d Cir.1986).
I understand fully the circumstances under which Lombardozzi would be motivated to undertake the financing roles theretofore occupied by Reservoir and Lifeboat. Lombardozzi did briefly testify that, on behalf of RJC, he was unable to secure alternate sources of funding. (Transcript of 7/1/02 at 177.) While the balance sheets on record show a deterioration of the Debtor's financial strength, to the detriment of creditors, I can conceivably find that, had this application been timely presented, the bankruptcy court would have approved the substitution, albeit on the same terms as extended by Reservoir and Lifeboat. Nevertheless, Lombardozzi was at all times represented *855 by an experienced bankruptcy attorney who should have known that nunc pro tune applications are discouraged. Lombardozzi was familiar with bankruptcy, having filed for his solely owned company, Signature Kitchens, which was in bankruptcy for sixteen months. (Transcript of 7/1/02 at 201.) These are specific factors weighing heavily against allowing approval of this loan nunc pro tune. F/S Airlease II, Inc. v. Simon, 844 F.2d 99, 107 (3d Cir.1988). There was an absence of testimony that a timely application could not have been made because of time pressure. In fairness to Lombardozzi, he did testify that he thought his professionals were addressing this. Whether this was naivete on Lombardozzi's part, or just a callous disregard of protocol, is not critical. It is just these circumstances that militate against a finding of nunc pro tune approval of the $450,000 advances. On the other hand, still available to Lombardozzi is the possibility that these advances may comport to the ordinary course provisions of 11 U.S.C. § 364(a).
Lombardozzi, again, strains the concept of "ordinary course" by ignoring his own documentation and finding a different way to channel funds to the Debtor. The motion seeking authorization to pay Reservoir/Lifeboat clearly states that Lombardozzi "will personally pay all amounts due and owing Reservoir Capital Corporation and The Lifeboat Company, LLC." (1-96-bk-00012 at ECF Doc. # 141 at ¶ 4.) The United States Trustee analyst testified, however, that on December 31, 1997, wire transfers of $150,000 and $200,000 occurred from the account of Lombardozzi directly to RJC, not the creditors. (Transcript of 11/1/02 at 47.) See, also, Lombardozzi 2002 Exhibit # 2. One hundred thousand dollars ($100,000) was received by RJC from an unknown source, possibly Lombardozzi's father, Steve. (Transcript of 7/1/02 at 47 and 239.) RJC, in fact, paid Lifeboat/Reservoir directly with RJC checks. The Lifeboat and Reservoir loans were thus satisfied so nothing remained to "assign" to Lombardozzi. F/S Airlease II, Inc. v. Simon, 844 F.2d 99, 101 (C.A.3 (Pa.) 1988). It was almost two years after these monies were paid to RJC that a new security agreement was actually executed in favor of Lombardozzi. (Transcript of 7/1/02 at 220.) Interest paid to Lombardozzi was not consistent with the interest rates provided by the promissory note. (Lombardozzi 2002 Exhibit # 3.)
I, again, find that this transaction cannot be considered in the ordinary course under the standards earlier discussed.
Item 3. Interest on $450,000 loan
Having heretofore found that this $450,000 loan was not made in the ordinary course, nor made pursuant to prior court order, nor subject to nunc pro tunc approval, I can only conclude that interest "owing" on these funds is not the Debtor's obligation.[10]
Item 4. $200,000 loan
On September 15, 1998, RJC filed a motion seeking authorization to borrow money from Lombardozzi for up to $300,000 in order to meet operating expenses. (1-96-bk-00012 at ECF Doc. # 162.) It was approved by Judge Woodside on October 13, 1998. (1-96-bk-00012 at ECF Doc. # 172.) On November 2, 1998, $200,000 was deposited into the RJC account. It was noted on the record, however, that RJC, on October 27 and 28 of 1998, paid Signature Kitchens $198,184.34 *856 in alleged loans from that corporation. In effect, the $200,000 advance to RJC was used to pay Signature. (Transcript of 7/1/02 at 221.) The United States Trustee argued that the loan was not used for the purposes identified in the motion. Judge McCullough vacated Judge Woodside's Order of October 13, 1998.[11] I view the District Court's reversal of Judge McCullough's opinion as effectively reinstating Judge Woodside's October 13, 1998 Order. The District Court's Order of October 6, 2003, reversing and remanding to the bankruptcy court, effected a requirement of a relitigation of the issues "as though they had not been determined before, pursuant to the principles of law enunciated in the appellate opinion." (emphasis theirs) Kool, Mann, Coffee .Pc Co. v. Coffey 300 F.3d, 340, 355 (C.A.3 (Virgin Islands) 2002). I also note that no motion under Federal Rule of Bankruptcy Procedure 9024 (Federal Rule 60) has been filed challenging Judge Woodside's Order of October 13, 1998. I believe that I am bound to recognize that Order as law of the case. While the October 13, 1998 Order granted the motion for post-petition financing in favor of Lombardozzi up to $300,000, the parties have agreed that only $200,000 was advanced. The Order clearly gives lien status to the extent such would not interfere with a prior lien by Sam Armstrong. Lombardozzi acknowledges that the $200,000 unsecured debt owing Signature has been replaced with a $200,000 secured obligation owing Lombardozzi. (Transcript of 7/1/02 at 222.)
Item 5. $195,000 advance
On November 19, 1999, RJC filed a motion to sell all of its assets to Lombardozzi or his assignee in exchange for satisfying various enumerated administrative payables ($185,169.20 + estimated sales tax liability of $10,500) as well as satisfying RJC administrative claims owing to Lombardozzi. (1-96-bk-00012 at ECF Doc. # 236.) After the United States Trustee objected, a Stipulation was filed and approved by Judge Woodside on January 20, 2000. (1-96-bk-00012 at ECF Doc. # 257.) Paragraph 8 of the Stipulation reads:
The consideration for the transfer of assets as provided for herein is the assumption and payment of unpaid Chapter 11 expenses of administration of the debtor-in-possession at the time of the transfer, said administrative expenses being enumerated in the motion for Sale or Transfer and contained in an Appendix attached to said Motion.
That paragraph's specific reference to the fact that the consideration for the asset transfer is the administrative expenses "at the time of the transfer" as "enumerated in the Motion" and "contained in [the] Appendix" limits itself to these parameters. The transfer date is specified by paragraph 5 of the Stipulation to be December 7, 1999. While the credit to be determined with regard to the sale of assets was clearly defined by the terms of the Stipulation, there was no such agreement that the administrative claim of Lombardozzi should be likewise capped. It is for that reason that this Opinion is limited to the portion of such administrative claim (or secured claim) that can be used as a credit toward the sale of the Debtor's assets.
At the time of the initial hearing before Judge McCullough, Lombardozzi and the United States Trustee appeared to agree that the items identified in the appendix to the sale motion were administrative in nature and would be allowed as a credit so *857 long as Lombardozzi established that they were actually paid. (Transcript of 7/1/2002 at 193.) The testimony at the subsequent hearings after remand established that $173,660.03 was actually paid and should be allowed as a credit against the purchase of RJC assets. (Transcript of 11/17/04 at 32.)
Chapter 11 administrative allowance over and above amount approved as a credit toward asset purchase
The final category of dispute addresses Lombardozzi's Motion for Approval of the Payment of Certain Invoices as Administrative Expenses (1-96-bk-00012 at ECF Doc. # 308) and Supplementary Motion for Allowance of Administrative Expense (1-96-bk-00012 at ECF Doc. # 323). In addressing these motions, the Court is asked to determine the total administrative claim of Lombardozzi that is not otherwise credited toward the asset purchase by reason of the Stipulation. While the motion filed as ECF Doc. # 308 seeks a specific $340,000 award, the motion filed to ECF Doc. # 323 attempts to bootstrap a claim for legal fees of Lombardozzi as arising from Collection efforts required by Lombardozzi as successor to Reservoir Capital Corporation, approved by the Court on March 4, 1998.
While this motion was scheduled for hearing immediately after the remanded hearing, the Court concluded that testimony on that issue would be premature if taken prior to the disposition of Adversary No. 1-01-ap-00283, and the panel trustee's motion to abandon the note.
Conclusion
For the reasons in this Opinion, the panel trustee's motion to abandon the note will be denied.
Moreover, judgment will be rendered in favor of the United States Trustee regarding the above captioned Adversary Complaint in regard to Item 1, the $350,000 advances; Item 2, the $450,000 advances; and Item 3, interest on the $450,000 advances. Regarding Item 4, Lombardozzi is awarded a $200,000 administrative allowance. With regard to Item 5, Lombardozzi is awarded an administrative allowance of $173,660.03. Each of these last two items shall be allowed as a credit toward the purchase of assets as set forth in the Stipulation of January 20, 2000.
To the extent that the Motion for Approval of the Payment of Certain Invoices as Administrative Expenses (1-96-bk-00012 at ECF Doc. # 308) and the Supplementary Motion for Allowance of Administrative Expense (1-96-bk-00012 at ECF Doc. # 323) have not been addressed by this Opinion, a TELEPHONE CONFERENCE is set on these Motions for Friday, July 21, 2006, at 10:00 o'clock A.M. The Court directs counsel for Movant, John Lombardozzi, to arrange and initiate this conference call with all parties in interest. The Court can be contacted at XXX-XXX-XXXX.
An Order will follow.
ORDER
For those reasons indicated in the Opinion filed this date, IT IS HEREBY
ORDERED that the panel trustee's motion to abandon the note is denied.
Moreover, judgment is entered in favor of the United States Trustee regarding the above captioned Adversary Complaint in regard to Item 1, the $350,000 advances; Item 2, the $450,000 advances; and Item 3, interest on the $450,000 advances. Regarding Item 4, Lombardozzi is awarded a $200,000 administrative allowance. With regard to Item 5, Lombardozzi is awarded an administrative allowance of $173,660.03. Each of these last two items shall be allowed as a credit toward the purchase of *858 assets as set forth in the Stipulation of January 20, 2000.
To the extent that the Motion for Approval of the Payment of Certain Invoices as Administrative Expenses (1-96-bk-00012 at ECF Doc. # 308) and the Supplementary Motion for Allowance of Administrative Expense (1-96-bk-00012 at ECF Doc. # 323) have not been addressed in the Opinion filed this date, a TELEPHONE CONFERENCE is set on these Motions for Friday, July 21, 2006, at 10:00 o'clock A.M. The Court directs counsel for Movant, John Lombardozzi, to arrange and initiate this conference call with all parties in interest. The Court can be contacted at XXX-XXX-XXXX.
NOTES
[1] References to "Lombardozzi" will refer to John Lombardozzi. When John's father Steve is referred to, his whole name will be used.
[2] The equitable subordination claim was subsequently withdrawn on June 10, 2004.
[3] The Laminate Company, Inca traded as Signature Kitchens, Signature Companies and American Stair and Cabinetry. (Transcript of 11/17/04 at 42.) Throughout this trial, this entity was most often referred to as Signature Kitchens, a name which I will utilize in this Opinion.
[4] Middle market company was defined by the expert as having annual revenue between $10,000,000 and $200,000,000. (Transcript of 11/15/04 at 117.)
[5] The transfers from Signature Kitchens to Lombardozzi affiliates is set forth on Lombardozzi Exhibits 2 and 5 and borders on incomprehensible. The testimony is of little assistance in clarifying these figures. Their speculative nature gives further support to the conclusions reached in this decision.
[6] Used in presumed reference to the RJC trade name Armstrong Cabinet. (Transcript of 7/1/02 at 138.)
[7] I can find no reference to the connection between Armstrong Marble and RJC.
[8] The deposition of Robert Knupp, Esq. was advanced to establish, inter alia, that Judge Woodside was generally aware of Lombardozzi's advances. I found that testimony to be of marginal value in light of the contents of the Motion.
[9] Judge McCullough's calculation started with the $272,384 figure laid out in the December 31, 1997 monthly operating report which was then reduced by "unauthorized interest payments."
[10] I recognize that the record indicates that a substantial amount of interest has been paid to Lombardozzi or his affiliates by the Debtor. The pleadings do not seek redress regarding these funds, therefore, I shall not factor them into my findings.
[11] Judge McCullough's Opinion referenced "the Order of October 28, 1998" which I view as a typographical error. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539613/ | 974 A.2d 951 (2009)
186 Md. App. 429
Lamont WHALEY
v.
STATE of Maryland.
No. 1383, September Term, 2007.
Court of Special Appeals of Maryland.
July 2, 2009.
*953 Renee M. Hutchins (Nancy Forster, Public Defender, on the brief), Baltimore, for appellant.
Daniel J. Jawor (Douglas G. Gansler, Atty. Gen., on the brief), Baltimore, for appellee.
Panel: DAVIS, ZARNOCH and MATRICCIANI, JJ.
ZARNOCH, J.
On July 9, 2007, appellant Lamont Whaley was tried by a jury in the Circuit Court for Wicomico County for his alleged involvement in the attempted armed robbery of Higimio Mendez-Roque. At the time of the alleged incident, Whaley was 16 years and four months old. Prior to trial, due to Whaley's age, defense counsel sought to have Whaley's case removed from circuit court to juvenile court and to have Mendez-Roque's pretrial identification of Whaley and his co-defendant suppressed. Both motions were denied. At trial, Whaley was convicted of attempted armed robbery, attempted robbery, first degree assault, reckless endangerment, and conspiracy. He was found not guilty of carrying a dangerous concealed weapon and wearing and carrying a dangerous weapon with intent to injure.
Appellant presents the following issues in his appeal:
1. Did the judge abuse her discretion during the reverse waiver hearing by considering non-statutorily enumerated factors as a primary basis for denying Lamont's transfer of jurisdiction, when the defense counsel, through Juvenile Services Reverse Waiver Report, met its burden of showing that Lamont would *954 be fit for rehabilitation in the juvenile system?
2. Must Lamont's conviction be reversed because the record clearly reflects that the court allowed impermissible and inflammatory prosecutorial remarks during summation, which amounted to reversible error and a denial of the constitutional right to a fair trial?
3. Must Lamont's conviction be reversed and a claim for ineffective assistance of counsel stand because of defense counsel's failure to object to the prosecutor's change of theory after the jury began deliberations?
For the following reasons, we reverse the judgment of the circuit court and remand for proceedings consistent with this opinion.
FACTS AND LEGAL PROCEEDINGS
On January 12, 2007, shortly after 7:10 p.m., Salisbury police responded to a call reporting an attempted armed robbery at 609 Railroad Avenue. According to the victim, Mr. Mendez-Roque, two black males approached him outside his residence at 609 Railroad Avenue. They asked him if he had any money and proceeded to search his pockets. After discovering nothing in his pockets, one of the pair attempted to grab Mendez-Roque's knapsack from his shoulder. At the same time, the other pulled out a BB gun and shot Mendez-Roque twice in the face. Whether the first would-be robber also had a BB gun and fired would be a matter of some dispute.
Shortly after the attempted robbery, Alex Venandez, a friend of Mendez-Roque, called the police. Venandez did not witness the attempted robbery, but communicated with the police, since Mendez-Roque spoke little or no English. Mendez-Roque was unable to provide a clear description of the would-be robbers. He did not see their faces "because they had it [hoods] closed, the jacket closed up." Mendez-Roque did not specify any of their features, such as height, weight, or facial appearance. However, through Venandez, Mendez-Roque did describe the assailants as two black males with black hoods and gray shirts. According to Salisbury Police Officer Jason Harrington, Mendez-Roque told him that only one of the two males had a BB gun.[1] Gustavo Gomez, who lived in a house adjacent to Mendez-Roque and who had scared away the attempted robbers when he came outside of his home, told the officer that both men had BB guns.
After receiving the description, Harrington left the scene to assist Officer Underwood of the Salisbury Police Department, who had detained a group of five teenagers who matched the limited description given by Mendez-Roque. At 210 Records Street, a second group of three teenagers was detained by Officer Jeff Hughes. Appellant Lamont Whaley was one of the teenagers stopped by Hughes. According to Hughes, Whaley and another teenager, Christopher Maine, were wearing gray jackets and dark colored hoods. Whaley was the taller of the two. The third person detained was wearing an orange colored jacket. At trial, Hughes stated that Whaley did not have a hood on when he was stopped, and that neither Whaley nor Maine had a hood on with fur around it.[2] Hughes performed a pat down and found on Maine what appeared to be CO-2 cartridges in his pocket. Whaley, Maine, and *955 the third youth were detained so that Mendez-Roque could identify them.[3]
Mendez-Roque and Venandez were transported in Officer Dimare's patrol car to the show-up. Dimare relied on Venandez to communicate between him and Mendez-Roque. At trial, Mendez-Roque testified through an interpreter that when he arrived at 210 Records Street, "there were other young men, and there were police officers and they didn't take me in right next to them or in front of them but they pointed them to me." Mendez-Roque stated at trial that he identified Whaley and Maine based on the clothing they were wearing. At trial, Dimare said that Mendez-Roque pointed in the area where the officers had detained Whaley and Maine, but that he did not know what Venandez said to Mendez-Roque before he pointed in Whaley's direction.
At trial, Mendez-Roque testified that during the attempted robbery, his view of the two men was limited because during the entire incident, he was looking straight ahead and focusing on getting to the front door of his residence. Shortly before the attempted robbery, Mendez-Roque had stopped by a laundromat. There, he saw the two would-be assailants, without their hoods. For this reason, he was able to identify the two suspects, even though their identities were obscured by their "furry hoods" at the time of the attack. Mendez-Roque left the laundromat and went to his former residence on Cherry Street. There, he drank a beer and gathered his belongings. He did not see the pair from the laundromat again until he arrived at Railroad Avenue. Mendez-Roque also testified that the two males did not follow him and that, prior to the laundromat, he had never seen either of them.
After the show-up, Whaley and Maine were charged.[4] Whaley filed a Petition For Waiver of Jurisdiction to the Juvenile Court and Request For a Study Concerning Child. The State filed an opposition to the request for a reverse waiver, asserting among other things, that the "[d]efendant is alleged to have pulled a BB gun on the victim in an attempted armed robbery and then shot the victim in the head several times," and that the court had to presume the guilt of Whaley for purposes of the reverse waiver proceeding.[5]
On May 1, 2007, a reverse waiver and motions hearing was held for both defendants. Darlene White, a Case Management Specialist with the Department of Juvenile Services (DJS), presented a Waiver Report to the court on Whaley. In it, she recommended that "the Court consider waiver of jurisdiction back to the juvenile system since Lamont [Whaley] has not been afforded various services that are available to youth that are processed through the Court system."[6] White was *956 quizzed by the court on the ability of DJS to place Whaley in a secure facility if he were adjudicated by the juvenile court of an attempted robbery or first degree assault:
THE COURT: ... Assume, for the sake of argument, that these facts were established, whether it was determined to be a robbery or an assault, I mean if these are the facts that support the underlying finding, there is no plan in place at this point in time for you to say this would be, if these facts were adjudicated our plan would be X and therefore we could address the issue of public safety. That's not something you're prepared to testify to today, is that correct?
WHITE: Not at this moment since I don't know what the adjudicated offense would be at this point.
* * * * * *
PROSECUTOR: Assuming that he's adjudicated delinquent of an attempted armed robbery, what options are there for him in Juvenile Services?
WHITE: There are secure confinement facilities that would be available to him. Sometimes they are difficult to get into but they are available.
THE COURT: Of course, and if you can't get into them
PROSECUTOR: Then what do you do with them?
THE COURT: Good question. All right, anything else?
The DJS report also stated:
Few offenses pose more serious risk to the safety of our public than the use of a weapon in the commission of crime. While the nature of the offense is serious[,] it is noted that the weapon used was a BB gun. Young people who become involved in these types of offenses can be held accountable in juvenile jurisdiction. Public safety can be ensured in juvenile jurisdiction via various levels of commitment, including placement in secure confinement facilities.
Upon cross-examination, the following colloquy occurred between the prosecution and White:
Q. Did you discuss with [Whaley] the crime itself?
A. No, I did not. I discussed the five factors that are included in the reverse waiver report.
Q. And he is obviously, for purposes of this process, as you know he is presumed to be guilty, correct?
A. I'm not sure about that, I assume that's right.
Also testifying at the hearing was Matthew Phillips of the Department of Juvenile Services. When asked by defense counsel whether there was an available facility if Whaley were adjudicated delinquent for armed robbery, he named three out-of-state facilities. Phillips testified that the juvenile might not be placed in a residential facility, but "I can say secure confinement is our most structured and as it relates to public safety that secure confinement would address public safety." The appearance concluded with the following exchange between the court and the witness:
THE COURT: Sir, in your experience has the Department of Juvenile Services approved out-of-state placements when they are requested by the Department?
THE WITNESS: Yes, ma'am.
THE COURT: Really. That's not what I'm told. All right, very good, you may step down.
*957 THE WITNESS: It's a lengthy process. But if there are no facilities in the State of Maryland to place them, we have kids who routinely go to the Pines in Virginia, and that's an out-ofstate placement.
THE COURT: So your department doesn't tell you they won't fund that out-of-state placement if that's what's been court ordered or recommended by the Department?
THE WITNESS: No, ma'am.
After the hearing, the court denied the reverse waiver re quest. Addressing the nature of the alleged offense, the circuit judge said: "So for today's proceeding, I believe that Mr. State's Attorney is right, I am to assume that the charges as brought against the individual are true and that the allegations filed form the basis thereof are true, that's my role today." The court observed:
I'm looking at the conduct in question, as I said before I left, this does not appear to me to be an act of immaturity, it's not that one or the other of these individuals got caught up with the group and were just carried along, the facts that I have to accept is they apparently armed themselves in anticipation with BB guns, by mutual agreement approached a victim and without any kind of a it wasn't like a mutual affray, this victim was just attending to [his] own business and when they attempted to rob the victim[,] the robbery failed and at that point multiple shots were fired striking the victim in the face and head... It doesn't get much worse than that.
Pointing to Whaley's "disruptive" behavior in school and prior contacts with the juvenile justice system that did not lead to adjudications, the circuit judge said:
I cannot find that there is evidence to suggest to me that treatment in the juvenile facility for this individual would be particularly more effective than the treatments available through the normal adult criminal justice system or that the programs available in DJS would outweigh my concerns regarding public safety. Secure confinement placements are very limited resources in the Department of Juvenile Services. The nature of these charges would indicate to me that we would certainly be looking, if he were a juvenile, at a secure confinement placement and there are very lengthy delays in that process.
Whereas, he is going to be 18 years old in a year and a half. For the offense in question it appears that the criminal justice system would be able to supervise him for up to five years, if that was necessary. He would be well within his adulthood during the mid to later portion of that, and I find the Court can address his needs through detention, supervision in the community, community based interventions or confinement as well as the juvenile justice system could be this point in his life.
So I'm going to find that the defense has not met its burden in his case to demonstrate that transfer of jurisdiction is in the interest of the child or society and I'm going to deny the reverse waiver.
In addition, defense counsel moved to suppress the show-up identification by Mendez-Roque. This motion was also denied.[7]
A jury trial was held in the Circuit Court for Wicomico County on July 9, 2007. At trial, when Mendez-Roque was asked to identify Whaley in the courtroom, Mendez-Roque, at first, could not identify Whaley:
*958 Prosecutor: Do you see either of the two boys in the courtroom this morning that grabbed you and went through your pockets?
Mendez-Roque: Is he here or around here?
When the prosecutor repeated the question, Mendez-Roque identified Whaley as one of the two assailants.
At trial, the State also introduced a BB gun allegedly connected to the attempted robbery. The BB gun was found the day after the attempted robbery, on Saturday, January 13, 2007, at 409 Elizabeth Street in Salisbury on the property of Matthew Workman. Workman's son came upon the BB gun under a bush on the side of the house. Workman took it to the Salisbury Police Department. Mendez-Roque was shown the BB gun and said that he had never seen it before. Mendez-Roque said that the gun was the same size as the "one" used in the attempted robbery, "but it looked different." When questioned, by the prosecutor, Mendez-Roque stated that there were two weapons. Upon cross-examination, the following exchange occurred:
Defense counsel: "And only one of them shot the BB gun at you, correct?
Mendez-Roque: Yes, the one that was on the sidewalk.
The witness also said that the "one on the sidewalk" was the shorter of the two and that person was not Whaley.[8]
During closing arguments, the prosecutor remarked that "we have in our community those who will take advantage of some who cannot or aren't familiar with the system, who aren't from here, who are easy pickings, because you have a language barrier to start with. And we find several of the Hispanic community move from place to place." Defense counsel objected that "he [the prosecutor] is making reference to others in the community and his own personal opinion about the Hispanic community and the [sic] whether or not they're a target." The judge overruled the objection.
*959 Shortly after they retired to deliberate, the jurors sent a note to the judge, asking, "If two people are involved, one is holding a gun, can both be charged with armed robbery?"[9] Defense counsel asked the court, "Well, I don't have the aiding and abetting instruction, but is there any way we can look at it and see if we should send that back instead?" Both the prosecutor and defense counsel approved the aiding and abetting pattern jury instruction, and the judge read it to the jury. Whaley was then convicted of attempted armed robbery, attempted robbery, first degree assault, reckless endangerment, and conspiracy. He was found not guilty of carrying a dangerous concealed weapon and wearing and carrying a dangerous weapon with intent to injure. He was sentenced to 10 years imprisonment for attempted armed robbery and a concurrent 10 year sentence for conspiracy. The other counts were merged with the attempted armed robbery charge.
Additional facts will be discussed below.
DISCUSSION
I. The Trial Court's Reverse Waiver Hearing
Whaley argues that the trial court abused its discretion when it considered non-statutorily enumerated factors as the basis for denying Whaley's motion for reverse waiver. Specifically, appellant claims that the circuit court, in gauging the nature of his alleged offense, improperly assumed his guilt and, in weighing his amenability to treatment, impermissibly speculated about the juvenile's likely sentence and the availability of placement options in the juvenile system.
After a juvenile delinquency petition has been filed, the prosecution has the right to request waiver of the juvenile court's jurisdiction so that the juvenile may be tried as an adult in criminal court. Md. Code (1973, 2007 Repl. Vol.), Courts & Judicial Proceedings Article ("Cts. & Jud. Proc.") § 3-8A-06[10]; In re Johnson, 17 Md.App. 705, 708, 304 A.2d 859 (1973). When a case is brought in criminal court and an accused child is between the ages of fourteen and eighteen, the juvenile defendant may request a transfer back to the juvenile system. Md. Code (2001, 2007 Repl. Vol.), § 4-202(b) of the Criminal Procedure Article ("Crim. Proc.") During a so-called "reverse waiver" hearing, the court must consider the following factors:
(1) the age of the child;
(2) the mental and physical condition of the child;
*960 (3) the amenability of the child to treatment in an institution, facility, or program available to delinquent children;
(4) the nature of the alleged crime; and
(5) the public safety.
Crim. Proc. § 4-202(d).
The burden is on the juvenile to demonstrate that under these five factors, transfer to the juvenile system is in the best interest of the juvenile or society. Crim. Proc. § 4-202(b)(3); and Kennedy v. State, 21 Md.App. 234, 240, 319 A.2d 850 (1974). The weighing of the five factors by the circuit court is reviewed by an appellate court for abuse of discretion. King v. State, 36 Md.App. 124, 128, 373 A.2d 292 (1977). However, the question of whether an assumption of guilt of the charged juvenile is permitted under Crim. Proc. § 4-202 is purely a legal issue, reviewable de novo.
Appellant points to the obvious fact that an express directive to a juvenile court to assume guilt in a waiver case is found in Cts. & Jud. Proc., § 3-8A-06(d), but no such provision clearly appears in Crim. Proc. § 4-202 to govern when a criminal court considers a reverse waiver. He seems to argue that this creates a negative implication that the expression of assumed guilt in one statute mandates its intentional exclusion from the other. The State contends that the circuit court, in fact, did not presume guilt, but that in assessing the "nature of the alleged crime" under Crim. Proc. § 4-202(d)(4), "it could not look behind the charges to determine if Whaley was properly before the circuit court in the first place." We believe the relationship of these two statutes does shed meaning on whether an assumption of guilt or, even a lesser prohibition on looking beyond the charges, is permissible under § 4-202(d).
It is often said that the relevant factors for judicial consideration of waiver and reverse waiver are "the same," Smith v. State, 399 Md. 565, 582, 924 A.2d 1175 (2007); and King v. State, supra, 36 Md. App. at 127, 373 A.2d 292, or are "similar", Kennedy v. State, supra, 21 Md.App. at 240, 319 A.2d 850. But see Miles v. State, 88 Md.App. 360, 391, 594 A.2d 1208 (1991)(It is incorrect to conclude that if the legal principles governing reverse waivers are the same as those governing waiver, that the unconstitutionality of one scheme affects the other.). However, upon closer examination, we find that the two statutes differ in significant respects, even as their histories have intersected.
The same law that introduced the five-factor waiver analysis created the reverse waiver, with a more generalized standard: "[T]he interests of the child and society." Chapter 432, Laws of 1969. However, in 1975, both statutory schemes were amended in separate pieces of legislation. The five-factor waiver analysis was re-enacted along with new language providing that, "[f]or purposes of determining whether to waive its jurisdiction, the court shall assume that the child committed the delinquent act alleged." Chapter 554, Laws of 1975.[11]
At the same time, the amorphous standard for reverse waiver was particularized with a five-factor analysis that mirrored in many, but not all, respects the waiver standard. Chapter 830, Laws of 1975. The word "alleged" was attached to the "nature of the crime" and, most importantly, there was no mention of an assumption of guilt.[12]*961 Nevertheless, it is possible to argue that the 1975 legislation merely incorporated a guilty assumption in waiver situations from earlier caselaw, see Matter of Murphy, 15 Md.App. 434, 435-36, 291 A.2d 867 (1972), and that the Legislature, by adopting the five-factor waiver analysis for reverse waiver cases, intended the same assumption to apply. However, this is not the most likely explanation for the Legislature's actions.
Chapter 554 (HB 384) and Chapter 830 (HB 1654) were enacted during the same session of the General Assembly, passing in each chamber within days of each other. The bills were considered by the same committees in the House and Senate.[13] Each related to the same general subject and could easily have been included in a single bill. Most importantly, Chapter 830 was replicating, in large part, components of the waiver formula addressed in Chapter 554. Under these circumstances, the failure to include an assumed guilt provision in Chapter 830 could not be seen as anything but an intentional decision of the General Assembly. The Court of Appeals in In re: Samuel M., 293 Md. 83, 96, 441 A.2d 1072 (1982), recognized that the assumption of guilt provision was different from the other statutory criteria, such as the nature of the offense. The opinion in that case also observed that the Legislature had a range of options it could have selected to deal with the waiver of juvenile court jurisdiction, other than the use of a presumption. Id. at 89-92, 441 A.2d 1072. This suggests that the selection of a presumption by the Legislature or its omission was not a casual decision.
There are valid reasons for including an assumption of guilt in one statutory scheme, but not the other. A presumption of guilt in a waiver setting is mitigated by the fact that the burden of justifying the transfer of jurisdiction still remains on the State, that the ultimate issue is the child's fitness for rehabilitation, and that, after waiver, a different court considers actual guilt or innocence. Such a presumption in the criminal court, where the burden is on the juvenile, could create its own set of problems. It could force a defendant to preview his defense in an attempt to obtain the reverse waiver. In addition, the same judge hearing the reverse waiver and assuming guilt (albeit for a limited purpose) may be the one who hears the criminal case.[14] Finally, an assumption of guilt for consideration of a reverse waiver could skew the analysis of the five statutory factors; because the "nature of the alleged offense" factor will almost invariably be found by the court and be linked to the "public safety" factor. It is no surprise that one assumed guilty of a serious offense will frequently be deemed to be a threat to public safety and not amenable to treatment. This seems to run contrary to the authorization to transfer jurisdiction to the juvenile court (Crim.Proc. § 4-202(b)(3)) when it is "in the interest of the child." Cf. Matter of Wooten, 13 Md.App. 521, 528, 284 A.2d 32 (1971)("However relevant the nature of the delinquent act and the circumstances surrounding its commission may be in making a proper disposition [in a waiver case], those factors cannot be applied without regard to, or wholly apart from, the child's best interests and those of the public viewed in light of the purposes *962 underlying the juvenile law."), and In re Samuel M., supra, 293 Md. at 96, 441 A.2d 1072 ("Our statute focuses on the actor, the juvenile, not on the purported delinquent act.").
We believe the record reflects just such a disposition. The State contends that the court did not assume Whaley's guilt, but the prosecution argued for the presumption, the motions judge agreed with the contention and then indicated at several points that she was required to assume that appellant was guilty of a charge that characterized him as armed and shooting at the victim. In hindsight, on the basis of a full evidentiary record at trial and a jury's assessment, we now know that this presumption may have been overstated, if not contradicted. On the other hand, we cannot require a motions judge to be clairvoyant. It is not error to decide a reverse waiver question on the basis of a skeletal, rather than a full record. But cf. Matter of Waters, 13 Md.App. 95, 104, 281 A.2d 560 (1971)("This is not to say that evidence concerning the alleged act is not to be received at the waiver hearing.").[15] Here, however, there were some early indications that Whaley may not have been the principal perpetrator.[16] The CO-2 cartridges were found on Maine, not Whaley, and were the subject of a suppression hearing conducted immediately after the reverse waiver hearing. At the suppression hearing on the show-up, Officer Harrington testified that only one of the two males had a BB gun.[17] Only one BB gun was recovered and that was on the day after the attempted robbery. We need not scrutinize each fact with respect to the extent of Whaley's involvement in the charged offenses. The circuit court believed it was required to assume that Whaley was guilty of those offenses. This was not authorized by § 4-202 of Crim. Proc. and the assumption of guilt was a legal error.
Appellant also contends that the motions judge impermissibly speculated about Whaley's likely sentence and the availability of placement options in the juvenile system, arguing that these are non-statutory factors. Because this case must be remanded for another reverse waiver determination, this is an issue that we are not required to address. However, for the guidance of the circuit court on remand, we point out that although the court is not obliged to follow a DJS recommendation, In re Murphy, 15 Md.App. 434, 442, 291 A.2d 867 (1972), we have noted the importance of DJS reports in determining the amenability of the child to treatment. *963 Brown v. State, 169 Md.App. 442, 451, 901 A.2d 846 (2006). Without a favorable report from DJS, a reverse waiver request faces almost certain denial. Id.
In this case, DJS officials, in their report and through testimony, indicated that Whaley was amenable to treatment and could be placed in a secure facility, possibly out-of-state. This was countered by the motions judge's statement that she was "told" DJS would not approve or fund such placement, that there would be a "very lengthy delay" in such a placement, and that treatment available through the normal adult criminal system would be as effective as a DJS placement facts not immediately verifiable at the hearing.[18] The court also clearly viewed Whaley's prior contacts with the juvenile system and disruptive behavior at school as indicative of treatment failures, even though appellant was never adjudicated or treated by DJS. In contrast, prior appellate cases on the amenability to treatment in waiver and reverse waiver cases have tended to find this factor trumped when the juvenile has failed after more formal adjudication and interventions than occurred here. See e.g., In re: Samuel M., supra, 293 Md. at 86, 441 A.2d 1072 (Prior incarceration at Maryland Training School); King v. State, supra, 36 Md.App. at 129, 373 A.2d 292 (Prior probation); In re Murphy, supra, 15 Md.App. at 441, 291 A.2d 867 (Prior probation).
Because this case is being remanded for a new reverse waiver proceeding, a new DJS study will likely be ordered. The new study could address these issues and may alleviate the concerns noted by the motions judge.[19] As this Court noted in Kennedy v. State, supra, 21 Md.App. at 241, 319 A.2d 850, if on remand the facts called for a waiver to the juvenile court, then the criminal trial would be a nullity. On the other hand, Kennedy said that if the court on remand determines that waiver was not appropriate, then "the judgement of conviction shall stand." Id. In Kennedy, unlike this case, no reverse waiver hearing was held. Thus, it is not clear whether this is the procedure to be applied here. Nevertheless, because after remand appellant's conviction may still be in play, we will address the question of whether the trial court committed reversible error.
*964 II. Prosecutor's remarks made during closing argument
Appellant argues that his conviction should be reversed because the trial court allowed impermissible and inflammatory prosecutorial remarks to be made during closing argument.
During the trial, in front of the jury, the prosecutor made the following remarks during his closing statement:
Some of you may think, gee whiz, this is a young fellow, this is a pretty serious offense. He is a young fellow. And it is a serious offense. You know, unfortunately, we have in our community those who will take advantage of some who cannot or aren't familiar with the system, who aren't from here, who are easy pickings, because you have a language barrier to start with. And we find several of the Hispanic community move from place to place.
(Emphasis added.). Reviewing the record and the remarks made, we agree that the remarks were unfairly prejudicial and require reversal.
The State contends that Whaley's present attack on the closing argument has not been preserved for appellate review. Appellant's counsel at trial protested the prosecutor's remarks, stating, "He is making reference to others in the community and his own personal opinion about the Hispanic community and the whether [sic] or not they're a target. And I don't think that that is appropriate ... closing in the State." The State contends that Whaley now seeks to challenge these remarks, as a prohibited "golden rule" argument, i.e., one in which a litigant asks members of the jury to place themselves in the shoes of the victim, or in which an attorney appeals to the jury's own interests. Lee v. State, 405 Md. 148, 171, 950 A.2d 125 (2008). In our view, appellant has sufficiently preserved his challenge of prejudice from the remarks, even if they do not amount to a "golden rule" argument.
In general, during closing argument,
The prosecutor is allowed liberal freedom of speech and may make any comment that is warranted by the evidence or inferences reasonably drawn therefrom. In this regard, generally, ... the prosecuting attorney is as free to comment legitimately and to speak fully, although harshly, on the accused's action and conduct if the evidence supports his comments, as is accused's counsel to comment on the nature of the evidence and the character of the witnesses which the [prosecution] produces.
* * *
While arguments of counsel are required to be confined to the issues in the cases on trial, the evidence and fair and reasonable deductions therefrom, and to arguments of opposing counsel, generally speaking, liberal freedom of speech should be allowed. There are no hard-and-fast limitations within which the argument of earnest counsel must be confined no well-defined bounds beyond which the eloquence of an advocate shall not soar. He may discuss the facts proved or admitted in the pleadings, assess the conduct of the parties, and attack the credibility of witnesses. He may indulge in oratorical conceit or flourish and in illustrations and metaphorical allusions.
Spain v. State, 386 Md. 145, 152-53, 872 A.2d 25 (2005) (quoting Degren v. State, 352 Md. 400, 429-430, 722 A.2d 887 (1999)).
While there is "great leeway" given to prosecutors to conduct their closing statements, Lawson v. State, 389 Md. 570, 591, 886 A.2d 876 (2005),
*965 Whether it be in opening statement or in summation, appeals to class prejudice or passion are improper and may so poison the minds of jurors that an accused may be deprived of a fair trial.
* * *
Of course, not every ill-conceived remark made by counsel, even during the progress of the trial, is cause for challenge or mistrial. What exceeds the limits of permissible content depends on the facts in each case, even where the remarks may fall into the same general classification.
Wilhelm v. State, 272 Md. 404, 414-15, 326 A.2d 707 (1974) (Citations and quotations omitted.). Whether prejudicial remarks constitute reversible error depends on the closeness of the case, the centrality of the issue affected by the error, and the steps taken by the judge to mitigate the effects of the error. Id. at 416, 326 A.2d 707.
Looking at the record, we think the remarks made by the prosecutor had the tendency to appeal to class prejudice and passion and were highly prejudicial to appellant's case. The jurors were invited by the prosecutor's remarks to punish appellant for the wrongdoings committed against the Hispanic community. No curative instruction was offered by the court and general instructions regarding closing arguments would not have been sufficient. The remarks may have deprived appellant of a fair trial, given the somewhat conflicting identification and confusing testimony given by the victim in this case.[20] For these reasons, we are unable to conclude that these remarks were harmless. Thus, we reverse appellant's conviction and remand for the court to conduct a reverse waiver proceeding.[21]
JUDGMENT OF THE CIRCUIT COURT FOR WICOMICO COUNTY REVERSED. CASE REMANDED FOR FURTHER PROCEEDINGS. COSTS TO BE PAID BY WICOMICO COUNTY.
NOTES
[1] Officer Harrington testified about the single BB gun at both the May 2, 2007 suppression hearing and the July 9, 2007 trial.
[2] At trial, Mendez-Roque testified that both assailants had fur around the hoods of their sweatshirts or jackets.
[3] The third teenager was later released.
[4] A Statement of Probable Cause was prepared at the same time as the Statement of Charges and alleged that both suspects were armed and began shooting at the victim. Mendez-Roque was "shot numerous times in the head, face, and hand area. [He] was shot one time in forehead between his eyes, four times on the left side of his head, and two times on his right hand by BB projectiles ..."
[5] The request for a study was granted.
[6] At the May 1 hearing, White described the report in the following fashion:
Basically I looked in the aspects that we're concerned with when we do a reverse waiver and that's just the five aspects of the age, mental/physical condition, amenability to treatment, nature of the offense and public safety ...
She also testified that, despite appellant's prior "contacts" with the juvenile system and school altercations,
Lamont has never been adjudicated, therefore, he has not had the opportunity for any kind of probation or any kind of placement with our department[,] so we feel that, after meeting with the resource department, that he should have an opportunity to do the services that are available to youth who have been adjudicated through the juvenile system.
[7] At the same hearing, Maine's request for reverse waiver was denied, along with his motion to suppress the CO-2 cartridges found on him by Officer Hughes.
[8] The confusion over whether there were two BB gunmen was apparent from the following exchanges that occurred during Mendez-Roque's testimony:
Prosecutor: What was he aiming at when he shot?
Mendez-Roque: It was the younger one, not this one.
Prosecutor: The second boy
Mendez-Roque: Yes.
Prosecutor: Is the one that shot at you?
Mendez-Roque: That's when I resisted because I didn't want to give him my knap sack. And then the other one came and they shot at me.
* * * * * *
Prosecutor: How many of these guns did you see?
Mendez-Roque: It was two.
Prosecutor: Did each of them have a gun?
Mendez-Roque: Yes, yes.
Prosecutor: Did both of them shoot at you?
Mendez-Roque: First one, and then the other.
Prosecutor: Were both guns similar?
Mendez-Roque: Yes. They looked alike.
Prosecutor: Which one shot at your first?
Mendez-Roque: The youngest one. The one that looked younger.
Prosecutor: Okay.
And is this the younger one or is the other one the younger one?
Mendez-Roque: The other one.
* * * * * *
Defense Counsel: Initially, you told the police officer that only one person and, in fact, you said that today, only one person had a gun, is that right?
Prosecutor: That's not what he testified to.
Mendez-Roque: No, I said that both.
Defense Counsel: When you talked to the police officer with the interpreter, you told him that only one person had a gun, isn't that right?
Mendez-Roque: I told them that the shortest one had a gun, but the officer made me a question. He asked me if I thought it was real that if he had the long bullets.
Defense Counsel: Your Honor, I'm going to object to the response. It's beyond The Court: All right.
[9] During opening statements, the prosecutor had said, "Both actually produced what Mr. Mendez [sic] believed at the time were real handguns." The State had tried its case on the theory that Whaley was a first degree assailant, meaning that Whaley had carried a gun during the attempted robbery.
[10] Section 3-8A-06(e) of Cts. & Jud. Proc. outlines the factors a juvenile court is to consider "individually and in relation to each other" in determining whether to waive juvenile jurisdiction. The factors are:
(1) Age of the child;
(2) Mental and physical condition of the child;
(3) The child's amenability to treatment in any institution, facility, or program available to delinquents;
(4) The nature of the offense and the child's alleged participation in it; and
(5) The public safety.
"The purpose of the juvenile waiver hearing is not to determine guilt or innocence, but rather to determine whether or not the juvenile is fit for juvenile rehabilitative services." § 3-8A-06(d)(1); In re Franklin P., 366 Md. 306, 329-330, 783 A.2d 673 (2001). Although the burden of justifying waiver is on the State, § 3-8A-06(d)(2) provides that, "[f]or purposes of determining whether to waive its jurisdiction under this section, the court shall assume that the child committed the delinquent act alleged."
[11] Chapter 554 did alter the "nature of the offense" factor to add "and the child's alleged participation in it." Two years later, the General Assembly amended the waiver statute to require the five factors to be determined "individually and in relation to each other on the record." Chapter 490, Laws of 1977.
[12] Chapter 830 also changed the generalized standard governing reverse waiver determinations by eliminating the "and" between "child" and "society" and adding an "or."
[13] For HB 483, see 1975 H. Journ. 386 and 1975 S. Journ. 3178. For HB 1654, see 1975 H. Journ. 1600 and 1975 S. Journ. 3622.
[14] Here, the motions judge was not the trial judge.
[15] Although Waters is a waiver case, we believe its views on the ability of a court to hear evidence about the circumstances of the offense are equally applicable to reverse waiver situations. Thus, the State is incorrect in arguing that the court cannot look beyond the charges.
[16] Police reports are sometimes used to gauge the nature of the offense in a waiver setting. See In re: Samuel M., supra, 293 Md. at 85, 441 A.2d 1072. There is no police report in the record of this case. Thus, we do not know whether the motions judge considered it or based her assessment of this factor exclusively on the Statement of Charges, which eventually proved to be only partially accurate. See n. 4, supra.
[17] At the May 2, 2007 hearing, the following colloquy occurred with respect to Officer Harrington's testimony:
The Court: Well, my understanding was he said it was a BB like handgun or a handgun that he said that the victim reported that he was approached by juvenile black males with a handgun, he was shot several times with it, gray shirt
Defense Counsel: Your Honor, I wrote down that he said one person had a gun.
The Court: I have one handgun is what he said, one handgun, yes. And that he was wearing gray with black hoods, gray jackets or grayish type shirts with black hoods.
[18] In In re Demetrius J., 321 Md. 468, 583 A.2d 258 (1991), the Court of Appeals said that a juvenile court could not direct that a child be sent to a specific facility at State cost. The Court also noted:
We take into account that it is DJS, not the court, which is charged with administration of the State juvenile, diagnostic, training, detention, and rehabilitation institutions. DJS could not properly administer these institutions if it could not control the monies to be spent on them, nor could it adequately fulfill the other obligations assigned to it.
Id. at 475, 583 A.2d 258.
[19] The reverse waiver proceeding, particularly consideration of the age factor, could be complicated by the fact that Whaley is now 18. However, this fact would not prevent the court from making a decision on the reverse waiver. See e.g., Kennedy v. State, 21 Md.App. 234, 319 A.2d 850 (1974). If the reverse waiver is granted, the juvenile court could still exercise jurisdiction over appellant, even though he has now reached the age of 18. A juvenile court may still retain jurisdiction over a person who has committed a criminal offense before the age of 18. See § 3-8A-07(a) Cts. & Jud. Proc. Article. Additionally, "[i]f a person is alleged to be delinquent, the age of the person at the time the alleged delinquent act was committed controls the determination of jurisdiction under this subtitle." Cts. & Jud. Proc. § 3-8A-05(a). Jurisdiction for a person for whom the court obtains jurisdiction continues until that person reaches 21 years of age. Cts & Jud. Proc. § 3-8A-07 (a). Since Whaley was 16 years and four months at the time of the alleged delinquent act and Whaley is still under the age of 21, he would still be within the jurisdiction of the juvenile court.
[20] During the trial the victim, Mendez-Roque, initially was unable to clearly identify appellant as one of his attackers. Mendez-Roque's version of the events changed during his testimony, including the number of guns that he saw and the physical descriptions of his attackers. Additionally, there was absolutely no physical evidence presented by the State at trial which linked appellant to the crime scene.
[21] Because we reverse Whaley's conviction on the closing argument ground, there is no need to address his claim that the State impermissibly changed the theory of the case after the beginning of juror deliberations. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539641/ | 974 A.2d 1201 (2009)
ROEDER
v.
ARCHER.
No. 743 MDA 2008.
Superior Court of Pennsylvania.
April 16, 2009.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539575/ | 974 A.2d 1190 (2009)
COM.
v.
ROBERTS, J.
No. 1247 MDA 2008.
Superior Court of Pennsylvania.
April 3, 2009.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540338/ | 213 B.R. 50 (1997)
In re Patrick W. REILLY, Betty-Ann D. Reilly, Debtors.
Russell J. TYLER, Thomas J. Tyler, Plaintiffs,
v.
Patrick W. REILLY, Betty-Ann D. Reilly, Defendants.
Bankruptcy No. 96-20102, Adversary No. 96-2198.
United States Bankruptcy Court, D. Connecticut.
September 8, 1997.
Richard W. MacAdams, MacAdams & Wieck Inc., Hank D. Hoffman, Walter J. Onacewicz, Jr., Hartford, CT, for Plaintiffs.
Joel M. Grafstein, Elissa M. Flanagan, Grafstein & Associates, Farmington, CT, for Debtor-Defendants.
*51 RULING ON MOTION SET ASIDE DEFAULT
ROBERT L. KRECHEVSKY, Bankruptcy Judge.
I.
ISSUE
Thomas J. Tyler and Russell J. Tyler, the plaintiffs, on August 23, 1996, filed a complaint to except from discharge an unliquidated claim which they assert against Patrick W. Reilly ("Patrick") and Betty-Ann D. Reilly, the debtors. The debtors, on January 16, 1996, originally filed their joint petition for relief under Chapter 11. The court, on January 21, 1997, converted the case to one under Chapter 7.
The complaint, containing seven counts based on Bankruptcy Code §§ 523(a)(2)(A), (4) and (6), asserts a claim of "several hundred thousand dollars" arising out of the debtors' alleged malfeasance during a real estate joint venture with the plaintiffs. The debtors, although represented by counsel in the case, failed timely to appear. The plaintiffs, on September 26, 1996, requested the entry of a default which the Clerk of the Court entered on September 27, 1996. See Fed.R.Civ.P. 55(a), made applicable in bankruptcy proceedings by Fed.R.Bankr.P. 7055.
The debtors, on February 3, 1997, filed the instant Motion To Set Aside Default alleging that new counsel for the debtors had recently been retained, that good cause exists to set aside the default and that the debtors have valid defenses to the plaintiffs' action. The plaintiffs, on February 18, 1997, filed an objection to the debtors' motion. The court, upon agreement of the parties, thereafter entered scheduling orders setting a discovery closure date and establishing dates for the filing of original and reply memoranda of law.
II.
BACKGROUND
Based upon the record made by the parties, the court believes the following scenario generally reflects the circumstances leading to the debtors' failure to appear timely to defend against the plaintiffs' complaint. At the time of the filing of the debtors' original petition on January 16, 1996, they had been represented in Connecticut by the law firm of Rogin, Nassau, Caplan, Lassman & Hirtle ("RNCLH") in litigation with the plaintiffs. Because of RNCLH's conflict as a creditor of the debtors, William R. Breetz (Breetz), an attorney at RNCLH, referred the debtors to Attorney Neal Ossen (Ossen) to prepare and file the debtors' Chapter 11 petition and to appear for them in their bankruptcy case.
After the plaintiffs, on August 23, 1996, filed the instant adversary proceeding, Breetz and Ossen, in October 1996, decided that the debtors needed to retain another lawyer to defend them in this proceeding. Ossen claimed unfamiliarity with the facts of the debtors' and plaintiffs' joint venture. The debtors, Breetz and Ossen were aware that a default in the adversary proceeding had entered against the debtors on September 27, 1996. A memorandum dated November 13, 1996 from Ossen to Breetz stated:
When the answers and counterclaim are prepared in the Tyler . . . matters, have them typed on blank (non-legalcap) paper for signature by Patrick and Betty-Ann. Have your bankruptcy department prepare appearances for the Reillys and have the department prepare motions to set aside the defaults which were based on a failure to appear using the basis that the Reillys were attempting to find special counsel.
In light of our conversation last week, I intend to move to withdraw from the case (bankruptcy). At a pretrial, I advised the Judge that I would appear in the adversary proceedings. This was before our discussion. I have an obligation now to advise the Judge that I will not appear. It is therefore urgent that Pat and Betty-Ann appear either pro se or by new counsel.
The debtors thereafter contacted several attorneys for representation, including Attorney Joel M. Grafstein ("Grafstein"), all of whom declined to appear for the debtors. On or about January 16, 1997, Grafstein reconsidered and decided to represent the *52 debtors, and on February 3, 1997, filed the present notion to revoke the default.
III.
DISCUSSION
Fed.R.Civ.P. 55(c), made applicable in bankruptcy adversary proceedings by Fed. R.Bankr.P. 7055, provides that "[f]or good cause shown the court may set aside an entry of default." Fed.R.Civ.P. 55(c). Since Rule 55(c) does not define the term "good cause", the Second Circuit has established three criteria for courts to assess when deciding whether to relieve a party for a default. These are: "(1) whether the default was willful; (2) whether setting aside the default would prejudice the adversary; and (3) whether a meritorious defense is presented." Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d Cir.1993). Defaults are generally disfavored, to be "reserved for rare occasions," and good cause "should be construed generously." Id. Defaults "are particularly disfavored by the law when substantial rights are implicated or when substantial sums of money are demanded."[1]Id. at 97 (citations omitted).
A. Willfulness
More recently, the Second Circuit had occasion to define the criterion of "willfulness" in the default context and concluded that in light of the "[s]trong public policy favor[ing] resolving disputes on the merits," willfulness "requires a showing of deliberate default or bad faith on the part of the defaulting party [and] mere carelessness or negligence" is not sufficient. American Alliance Ins. Co. Ltd. v. Eagle Ins. Co., 92 F.3d 57, 59, 61 (2d Cir.1996) (clerical filing error by insurance company's in-house counsel, though grossly negligent, was not willful, deliberate or evidence of bad faith). Gross negligence, although of some weight, does not necessarily constitute willfulness. Id. at 61. Cf. In re Colonial Realty Company, 202 B.R. 185, 187 (Bankr.D.Conn.1996).
As noted, the debtors, on the date of entry of the default, were relying on Ossen and Breetz to handle the filing of an appropriate pleading. The plaintiffs were also proceeding to retain new counsel. Although the debtors concede that they "and their counsel . . . acted inattentively, irresponsibly and negligently," Debtor's Initial Brief at 28, the court concludes that this conduct, although grossly negligent, does not rise to the level of willfulness. See American Alliance, 92 F.3d at 61 (The Second Circuit "see[s] no reason to expand this Court's willfulness standard to include careless or negligent errors in the default judgment context"). The plaintiffs have failed to demonstrate that the debtors' conduct was egregious or in bad faith, and that the default was willful.
B. Meritorious Defense
"[A] defendant seeking to vacate an entry of default must present some evidence beyond conclusory denials to support his defense, and the test of such a defense is measured not by whether there is a likelihood that it will carry the day, but whether the evidence submitted, if proven at trial, would constitute a complete defense." Lawrence v. Willow Point on the Bay (In re Interco Systems, Inc.), 185 B.R. 447, 455 (Bankr.W.D.N.Y.1995) (citing Enron Oil Corp., 10 F.3d at 98). On a motion to reopen a default, the moving party "must support its general denials with some underlying facts." Sony Corp. v. Elm State Electronics, Inc., 800 F.2d 317, 320-21 (2d Cir.1986).
The debtors assert that meritorious defenses exist which previously have been asserted as claims in two state-court actions commenced prior to the filing of the debtors' petition. A state-court complaint attached to their motion, filed by the debtors against the plaintiffs, asserts claims of fraudulent misrepresentation, conversion and CUTPA violations. The debtors submitted Patrick's affidavit which avers facts relevant to the claims asserted in the state-court complaint. The court concludes that the debtors have sufficiently demonstrated the existence of meritorious defenses to the plaintiffs' complaint.
*53 C. Prejudice
"[D]elay alone is not a sufficient basis for establishing prejudice. . . . Rather, it must be shown that delay will result in the loss of evidence, create increased difficulties of discovery, or provide greater opportunity for fraud and collusion." Davis v. Musler, 713 F.2d 907, 916 (2d Cir.1983) (citations and internal quotation marks omitted).
The plaintiffs assert that the actions of the debtors have caused delay and frustration in their collection efforts, and that they "have spent a substantial amount of time, money and energy in diligently pursuing their Complaint against the Defendants." Plaintiff's Objection ¶ 10. The plaintiffs make no claims regarding the effect of any delay on any of the factors the Second Circuit listed. The court concludes that the plaintiffs have failed to establish prejudice sufficient to deny the debtors' motion to set aside the default.
IV.
CONCLUSION
Based on the foregoing, the court concludes that the debtors' motion to set aside the default should be granted, and that the default entered by the Clerk on September 26, 1996 be vacated and set aside. The debtors shall file a responsive pleading to the complaint within 10 days from this date. It is
SO ORDERED.
NOTES
[1] The plaintiffs, on November 1, 1996, filed motions for judgment by default which the court has not heard. Russell J. Tyler's motion seeks treble damages of $1,424,040.42, and Thomas J. Tyler's motion seeks treble damages of $1,945,633.86. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2857827/ | LOVE
IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-90-191-CR
ROBB MONTGOMERY LOVE,
APPELLANT
vs.
THE STATE OF TEXAS,
APPELLEE
FROM THE COUNTY COURT AT LAW NO. 1 OF CALDWELL COUNTY
NO. 20,069, HONORABLE EDWARD L. JARRETT, JUDGE PRESIDING
On complaint and information, appellant was charged with the misdemeanor crime
of driving while intoxicated--second offense. See Tex. Rev. Civ. Stat. Ann. art. 6701l-1 (Supp.
1992). After trial to a jury, he was convicted and sentenced to one year in the county jail and
fined $1000. He subsequently received two years' probation, terms of which included thirty days'
detention as well as the original fine. In two points of error, appellant complains that the trial
court erred by: (1) allowing the prosecutor to read to the jury during the guilt/innocence phase
of the trial that portion of the information pertaining to appellant's previous DWI conviction; and
(2) allowing the introduction into evidence of unadjudicated offenses. We will affirm the
judgment.
BACKGROUND
The facts of this case are not in dispute. On January 7, 1990, an officer from the
Caldwell County Sheriff's Department arrested appellant for driving while intoxicated (DWI).
On the day of trial, before the jury was sworn, appellant's counsel moved that the court not read
the portion of the information alleging a prior conviction for DWI. Appellant's counsel
maintained that this portion of the information was admissible for enhancement purposes only.
She maintained that this portion of the information would improperly prejudice the jury during
the guilt/innocence stage of the trial.
The State opposed this motion, arguing that proof of a previous DWI conviction
was necessary to establish all of the elements of the charged offense. The State also raised a
jurisdictional argument:
Just like if we were in felony court . . ., in order to invoke the jurisdiction of the
district court to prove a felony DWI, we would have to prove in front of the jury,
prior to the punishment phase, two prior DWI's. In order to have the jury convict
this defendant of DWI second offense, they will have to know, necessarily, about
the first.
Thus the State argued that reading the contested portion of the information was necessary to
invoke the jurisdiction of the court. The trial court overruled appellant's motion and subsequently
allowed the State to read to the jury those portions of the information detailing appellant's
previous DWI conviction.
Subsequently, appellant took the stand to testify. Appellant's counsel objected
repeatedly when the State questioned appellant concerning the potential revocation of his probation
for the previous DWI conviction. The court overruled most of these objections, sustaining only
the objection regarding the scheduling of a probation revocation hearing.
ANALYSIS
Appellant's first point of error challenges the reading of portions of the information
to the jury. This point presents two issues: (1) whether art. 6701l-1(d) is an enhancement
provision or whether it is an element of a separate offense; and (2) whether it was necessary to
invoke the jurisdiction of the court by reading that portion of the information referring to
appellant's previous DWI conviction.
This Court has previously addressed the first issue. In Pope v. State, 802 S.W.2d
418, 421 (Tex. App. 1991, no pet.), we recognized that subsection (e) of art. 6701l-1 does not
constitute a separate offense but instead merely provides for enhanced punishment for the offense
of driving while intoxicated. In doing so, we cited Bucek v. State, 724 S.W.2d 129, 131 (Tex.
App. 1987, no pet.), which held that "subsections (c), (d), (e), and (f) [of art. 6701l-1] are merely
punishment provisions. . . ." Id. at 421; see also Wilson v. State, 772 S.W.2d 118, 121 (Tex.
Crim. App. 1989). Thus we conclude that appellant's conviction under art. 6701l-1(d) was a
conviction for driving while intoxicated, subject to enhanced punishment because of an earlier
DWI conviction. We reject the State's argument that art. 6701l-1(d) constitutes a separate
offense.
The jurisdictional issue, that it was necessary for the State to read the contested
portion of the information in order to invoke the court's jurisdiction, in reality presents no issue
at all. Both first and second offense driving while intoxicated are misdemeanors, see Tex. Penal
Code Ann. § 12.41 (1974), over which the county court at law has jurisdiction. Tex. Gov't Code
Ann. §§ 25.0003 (1988); Id. § 26.045 (Supp. 1992). To invoke the county court at law's
jurisdiction, it was not necessary to establish appellant's previous DWI conviction. (1)
The Code of Criminal Procedure states:
The indictment or information shall be read to the jury by the attorney prosecuting.
When prior convictions are alleged for purposes of enhancement only and are not
jurisdictional, that portion of the indictment or information reciting such
convictions shall not be read until the hearing on punishment. . . .
Tex. Code Crim. Proc. Ann. art. 36.01 (Supp. 1992). The court of criminal appeals has noted
that the purpose of this statute is the "prevention of the extreme prejudice which would almost
invariably result from an announcement at the outset of the proceedings that the State believes that
the defendant was previously convicted of a particular offense at a particular time and in a
particular court." Frausto v. State, 642 S.W.2d 506, 508 (Tex. Crim. App. 1982). Article 36.01
is mandatory and its violation is error. Id.
Nevertheless, because of events occurring after the commission of this error, we
believe reversal is unwarranted. During the course of the guilt or innocence stage of the trial,
appellant's judgment of probation for his earlier DWI conviction was admitted into evidence
without objection. That judgment contains the identical prejudicial fact of the prior conviction
that appellant sought to exclude by objecting to a reading of the information. Consequently, we
believe beyond a reasonable doubt that the trial court's error made no contribution to appellant's
conviction. See Tex. R. App. P. Ann. 81(b)(2) (Pamph. 1992); see also Anderson v. State, 717
S.W.2d 622, 628 (Tex. Crim. App. 1982), cert denied, 110 S. Ct. 3232 (1990) ("Inadmissible
evidence can be rendered harmless if other evidence at trial is admitted without objection and it
proves the same fact that the inadmissible evidence sought to prove."). (2) We overrule appellant's
first point of error.
We likewise overrule appellant's second point of error. Appellant claimed that the
court improperly admitted evidence of extraneous offenses, but those offenses were set forth in
the judgment of probation admitted without objection. Error, if any, on the trial court's part was
rendered harmless by the admission of this judgment of probation.
Finding no reversible error, we affirm the judgment.
Bea Ann Smith, Justice
[Before Chief Justice Carroll, Justices Aboussie and B. A. Smith]
Affirmed
Filed: June 10, 1992
[Publish]
1. Contrast this with the situation in Pope in which we did recognize that, notwithstanding
the fact that subsection (e) was a penalty provision, the State was justified in referring to the
two previous DWI convictions because they were necessary to invoke the felony jurisdiction of
the district court. Pope, 802 S.W.2d at 421.
2. Of course, the information at issue does not constitute "evidence," but we cannot see
why the same reasoning would not apply here. | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1541049/ | 393 A.2d 94 (1978)
Michael A. LITTLE, Appellant,
v.
UNITED STATES, Appellee.
No. 12609.
District of Columbia Court of Appeals.
Submitted August 3, 1978.
Decided October 2, 1978.
*95 Christopher A. Teras, Washington, D. C., appointed by this court, for appellant.
Earl J. Silbert, U. S. Atty. and John A. Terry, Michael W. Farrell, Mary Ellen Abrecht, and William J. Birney, Asst. U. S. Attys., Washington, D. C., were on brief, for appellee.
Before GALLAGHER, NEBEKER and MACK, Associate Judges.
NEBEKER, Associate Judge:
After a jury trial, appellant was convicted of carrying a pistol without a license, in violation of D.C.Code 1973, § 22-3204. He contends on this appeal that the trial court erred in denying a motion to suppress the gun and oral statements made by appellant following his arrest. Finding no error, we affirm.
The police officers who made the stop in question here both testified at the suppression hearing. On November 18, 1976, the two officers, in an unmarked car, were patrolling residential neighborhoods in upper Northwest Washington, for the express purpose of watching for street robberies. At about 9:15 p. m., the officers first noticed appellant and two male companions travelling west in a car at about 15 to 20 miles per hour on McKinley Street away from Connecticut Avenue. Appellant was driving the car. Officers said they noticed the car because of its low rate of speed and because the passengers were looking from side to side at people walking on the side-walks. The officers followed the car to Western Avenue, where it turned around to head back to Connecticut Avenue. At Chevy Chase Circle, appellant turned the car onto Connecticut Avenue and pulled over to the curb by a man standing near a bus stop. After a brief conversation with that man, appellant pulled away from the curb and continued south. At Legation Street, the car turned left and drove up and down various back streets and alleys for at least the next ten minutes. At least once appellant stopped the car and the three men watched other people park cars, get out and go into houses. At one point, appellant pulled the car over to the curb and turned off the lights, from which the officers concluded that the three in the car now knew they were being followed. Shortly thereafter, the car drove on again, stopping near Connecticut Avenue and McKinley Street, where appellant and the front-seat passenger, one Moore, changed places. At that point the two officers approached the car. Appellant, then in the passenger's seat, was asked for a driver's license, and replied that he didn't have one. He was asked to get out of the car. When he did so, one of the officers saw a handgun on the floor of the car on the passenger's side. The second officer told the other person in the front seat to get out of the car, at which time he saw the gun and seized it.
All three occupants of the car then were arrested, advised of their Miranda[1] rights and taken to the police station. Appellant signed a PD 47, indicating that he understood and waived his rights. Appellant told the officers that he knew the gun was there because he had seen Moore put it under the seat. He told the officers that he and his companions were "going to go out and get money" that evening. He also said that he had changed places with the passenger because he lacked a driver's license.
*96 Appellant argued that the initial stop of the three men was illegal because the officers lacked the "specific and articulable facts, which taken together with the rational inferences from those facts" justify an investigatory stop.[2] Appellant contends that the gun and his statements to the police should have been suppressed as products of an illegal stop.
The trial court found that
the very, very strange and bizarre activities of this automobile, cruising around in that particular area after night, their actions in shutting off the lights, turning on the lights, would certainly give cause and, . . . would require a reasonable and prudent officer to make an appropriate inquiry. . . .
We agree with the trial court that, under these circumstances, it was reasonable for the officers to escalate their investigation. Had they stopped the car to make inquiry of the occupants and to ascertain their identifications, they would have been justified. Nothing like this occurred. Appellant had stopped the car of his own accord and had changed places with the front-seat passenger. The police action complained of here was the approach to the car and the request for a driver's license.
Such conduct reveals no forcible apprehension. "Here [the suspect] was merely approached and questioned . . ." People v. DeBour, 40 N.Y.2d 210, 217, 386 N.Y. S.2d 375, 380, 352 N.E.2d 562, 567 (1976). He was not seized in the sense of forced restraint on movement. Nor, on the other hand, can it be said that the police conduct was totally without reasonable basisit was not whimsical.
At least one court has held in similar circumstances that ". . . the identification of oneself as a police officer, and the request to see a driver's license, with nothing more, is not a seizure." State v. Foster, 237 S.E.2d 589 (S.C.1977). In a very thoughtful opinion, the Court of Appeals of New York, in People v. DeBour, supra, took the view that an all or nothing approach (i. e., every police-initiated encounter with a citizen must be justified by a basis warranting outright seizure of the person) is dangerous to accepted Fourth Amendment standards.
This approach is hardly reasonable and if adopted would probably lead to an overcompensation in the form of a dilution of the standards embracing reasonable suspicion or probable cause. "The history of the use, and not infrequent abuse, of the power to arrest cautions that a relaxation of the fundamental requirements of probable cause would `leave law-abiding citizens at the mercy of the officers' whim or caprice'" (Wong Sun v. United States, 371 U.S. 471, 479, 83 S. Ct. 407, 413, 9 L. Ed. 2d 441; Henry v. United States, 361 U.S. 98, 80 S. Ct. 168, 4 L. Ed. 2d 134). Common sense and a firm grasp of the practicalities involved compel us to reject an all or nothing approach. The crucial factor is whether or not the police behavior can be characterized as reasonable which, in terms of accepted standards, requires a balancing of the interests involved in the police inquiry. [Id., 40 N.Y.2d at 217, 386 N.Y.S.2d at 381, 352 N.E.2d at 568 (citations omitted).]
The balance struck requires recognition of the role of police and the needs of the society they serve.
Consequently unrealistic restrictions on the authority to approach individuals would hamper the police in the performance of their other vital tasks. This is not to say that constitutional rights to privacy and freedom from unreasonable searches and seizures must be abandoned to accommodate the public service aspect of the police function. The overriding requirement of reasonableness in any event, must prevail. [Id.]
The court then observed that:
[T]here is scant appellate authority on [the] subject . . . [of] the constitutional propriety of an investigative confrontation (. . . but see the separate concurrences of Justices Harlan and White, who maintained that there is no *97 doubt that a policeman can address questions to anyone on the street). Nevertheless the practical necessities of law enforcement and the obvious fact that any person in our society may approach any other person and attempt to strike up a conversation, make it clear that the police have the authority to approach civilians. While the extent of this power may defy precise definition it would be unrealistic to say it does not exist at all. [Id. at 219, 386 N.Y.S.2d at 382, 352 N.E.2d at 569 (citations and footnotes omitted).]
We conclude that the proper analysis in resolving a case like this one is to recognize that an approach to a stopped vehicle and the request for display of a driver's license by an indeed suspicious driver, is, if a seizure at all, one so slight as to require minimal justificationabsence of whim or caprice. The Supreme Court has recognized that various degrees of Fourth Amendment intrusion require varying levels of justification:
[W]e need presently deal only with the narrow question of whether the order to get out of the car, issued after the driver was lawfully detained, was reasonable and thus permissible under the Fourth Amendment. This inquiry must therefore focus not on the intrusion resulting from the request to stop the vehicle or from the later "pat-down," but on the incremental intrusion resulting from the request to get out of the car once the vehicle was lawfully stopped. [Pennsylvania v. Mimms, 434 U.S. 106, 98 S. Ct. 330, 332, 54 L. Ed. 2d 331 (1977).]
The Court described the additional intrusion resulting from the order to get out of the car as "de minimis." Id. at 333. We hold that nothing is revealed on the record requiring the conclusion that unconstitutionalunreasonablepolice conduct triggered exclusionary rule considerations prior to the time appellant stated he had no driver's license.
Once appellant denied possession of a driver's license, it was not inappropriate to order him out of the car. See Pennsylvania v. Mimms, supra. Driving without a valid operator's permit is a traffic offense for which appellant could have been arrested. D.C.Code 1973, § 40-301.
The trial court found that the gun was in plain view on the floor of the car. Although appellant testified to the contrary, the trial court's finding is supported by the police officer's testimony. We cannot disturb that finding, see D.C.Code 1973, § 17-305. Accordingly, the gun was properly admitted into evidence.
Appellant does not contend that his waiver of Miranda rights was invalid. Our ruling that the initial encounter was not a "seizure" of appellant's person, thus defeats his argument that his statements, made subsequent to his arrest, should have been suppressed.
The judgment appealed from is
Affirmed.
NOTES
[1] Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966).
[2] Terry v. Ohio, 392 U.S. 1, 21, 88 S. Ct. 1868, 20 L. Ed. 2d 889 (1968). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3345484/ | [EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.]MEMORANDUM OF DECISION
FACTS
The plaintiff, Mary Gaylor, filed an amended complaint on January 3, 1994, alleging in a single count that the defendant, Town of West Hartford, is liable to her for damages as a result of injuries sustained when she fell into a pothole in a parking lot owned by the defendant. The plaintiff alleges that on February 25, 1990, she was in a parking lot located at 27 Brace Road, West Hartford, when suddenly and without warning she "slipped and fell forcibly to the ground thereby sustaining injuries." The plaintiff further alleges that for sometime prior to the incident the surface of the parking lot had been in an icy, slippery, dangerous and unsafe condition. Finally, the plaintiff alleges that the defendant was negligent in that it failed to repair the pothole which allegedly caused her fall and resulting injuries. CT Page 5180
On April 8, 1991, the defendant filed an answer and special defense to the original complaint. The defendant based its special defense on the doctrine of governmental immunity. On January 24, 1994, the defendant filed a motion for summary judgment on the ground that the municipal defective highway statute which provides the exclusive remedies available to the plaintiff does not cover injuries sustained in a parking lot. As required by Practice § 380, the defendant has filed a memorandum in support of its motion for summary judgment, and the plaintiff has timely filed a memorandum in opposition.
DISCUSSION
"Pursuant to Practice Book § 384, summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled judgment as a matter of law." Scinto v. Stamm, 224 Conn. 524,530, 620 A.2d 99 (1993). A party seeking summary judgment has the burden of showing the nonexistence of any material fact. Id. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party. Town Bank Trust Co. v. Benson,176 Conn. 304, 309, 407 A.2d 971 (1978).
In its memorandum of law in support of the motion for summary judgment, the defendant argues that the plaintiff is barred from recovering in this action "in that plaintiff has failed to state a claim under Connecticut General Statutes § 13a-149 for which relief may be granted." The defendant further argues that the defective highway statute which provides the exclusive remedies available to the plaintiff does not cover injuries sustained in a parking lot. Accordingly, the defendant argues that it is immune from suit pursuant to the doctrine of governmental immunity.
In her memorandum in opposition, the plaintiff counters that the defective highway statute is not the exclusive remedy available to one suing a town or municipality when the act complained of involves negligence with respect to a ministerial act. The plaintiff further argues that the determination of whether repairing a pothole in a parking lot is discretionary or ministerial is a question of fact. CT Page 5181 Therefore, the plaintiff argues the defendant's motion for summary judgment should be denied.
In Sanzone v. Board of Police Commissioners, the Connecticut Supreme Court held that "an action under the highway defect statute, § 13a-149, is a plaintiff's exclusive remedy against a municipality or other political subdivision for damages resulting from injury to any person or property by means of a defective road or bridge." Although General Statutes § 13a-149 provides a basis for recovery to "[a]ny person injured in person or property by means of a defective road or bridge," recovery under the statute for injuries sustained on public sidewalks is also permissible. SeeRodriguez v. New Haven, 183 Conn. 473, 439 A.2d 421 (1981). The only Connecticut Superior Court cases that have examined the applicability of General Statutes § 13a-149 have held that no cause of action exists under the defective highway statute for injuries sustained in a parking lot. See Rotella v. Cityof Waterbury, 4 CSCR 544, 545 (May 31, 1989, Langenbach, J.) (parking lots maintained by municipalities do not come within the purview of § 13a-149, and a suit for damages under General Statutes § 13a-149 is not a legally sufficient cause of action); Gough v. Town of Fairfield, 7 Conn. L. Rptr. 50 (July 9, 1992, Lewis, J.) (injuries sustained in a parking lot may not be remedied by the defective highway statute); Alfano v.Town of Litchfield, 6 Conn. L. Rptr. 303, 304 (May 11, 1992, Pickett, J.) (because General Statutes § 13a-149 does not apply to parking lots, the motion to strike is granted); Appleton v.Kendra, 5 Conn. L. Rptr. 158 (November 11, 1991, Hennessey, J.) (plaintiff's fall in a parking lot does not come within the purview of § 13a-149).
Against this background, the plaintiff is precluded from bringing a cause of action under the defective highway statute. However, the amended complaint does not list allegations pursuant to the defective highway statute. Rather, the amended complaint sounds in negligence against the defendant Town of West Hartford. The plaintiff alleges that the defendant was negligent in that it failed to repair the pothole that allegedly caused her injuries. These allegations present a different factual scenario than those found in the cases cited by the defendant in its memorandum. If the defendant's duty to repair the pothole that allegedly caused the plaintiff's injury is discretionary, then the defendant is afforded the protection of governmental immunity. However, if CT Page 5182 the defendant's duty to repair the pothole is ministerial, then it cannot invoke the doctrine of governmental immunity and the plaintiff has a valid cause of action against the defendant. The determination of whether the defendant's duty to repair the pothole is discretionary or ministerial presents a question of fact.
In Evon v. Andrews, 211 Conn. 501, 559 A.2d 1131 (1989), the Supreme Court set forth the general rule of governmental or municipal immunity as follows:
A municipality itself was generally immune from liability for its tortious acts at common law . . .its employees faced the same personal tort liability as private individuals. A municipal employee has qualified immunity in the performance of a governmental duty, but he may be liable if he misperforms a ministerial act, as opposed to a discretionary act . . . the word "ministerial" refers to a duty which is to be performed in a prescribed manner without the exercise of judgment or discretion.
(Citations omitted.) Evon, supra, 211 Conn. 505. In Gordonv. Bridgeport Housing Authority, 208 Conn. 161, 544 A.2d 185
(1988), the Supreme Court held, "whether the acts complained of . . . were governmental or ministerial is a factual question which depends upon the nature of the act." Gordon, supra, 208 Conn. 165. Similarly, in Appleton v. Kendra,5 Conn. L. Rptr. 158 (November 11, 1991, Hennessey, J.), the only other Superior Court case to address the issue presented in the present case, the court denied the defendant municipality's motion for summary judgment. In Appleton, court held that "[t]he determination of whether the act of repairing potholes in a parking lot not covered under § 13a-149
is discretionary or ministerial is a question of fact."Appleton, supra, 5 Conn. L. Rptr. 160. In denying the defendants' motion for summary judgment, the court reasoned that "[t]he defendants have failed to present any case law which would support their contention that repairing potholes in a parking lot is a discretionary act." Id. Here, likewise, the defendant in the present case has failed to present any CT Page 5183 case law which would support a determination that the repairing potholes in a municipal parking lot is a discretionary act. Accordingly, since there is a genuine issue of fact as to the nature of the defendant's act, the defendant's motion for summary judgment is hereby denied.
Michael R. Sheldon Judge | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3345486/ | [EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.]
RULING ON MOTION FOR JUDGMENT OF DISMISSAL
After plaintiff presented her evidence and rested, the defendant moved for judgment of dismissal pursuant to Practice Book 302. The issue raised by the motion is whether the plaintiff proved sufficient facts to make out a prima facie case. In passing on the motion, the court must accept the evidence offered by the plaintiff as true, and interpret it in the light most favorable to the plaintiff, CT Page 9145 with every reasonable inference being drawn in her favor. Cormier v. Fugere, 185 Conn. 1, 3, 440 A.2d 820 (1981). Judgment of dismissal is only proper, in applying the prima facie standard, when evidence produced by the plaintiff "`if fully believed'" would not permit the trier "in reason" to find essential issues on the complaint for the plaintiff. Falker v. Samperi, 190 Conn. 412, 418-19,461 A.2d 681 (1983). The plaintiff's evidence will be measured against "a relatively low standard" to successfully withstand a motion for judgment of dismissal. Hinchliffe v. American Motors Corporation, 184 Conn. 607, 620,440 A.2d 810 (1981).
Based on the foregoing, the court cannot say that the plaintiff has failed to make out a prima facie case. Therefore, the motion is denied.
By the Court
Aurigemma, J. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1539649/ | 218 B.R. 390 (1998)
In re SPECO CORPORATION, Debtor and Debtor in Possession.
SPECO CORPORATION, Plaintiff,
v.
CANTON DROP FORGE, INC., Defendant.
Bankruptcy No. 95-34619, Adversary No. 97-3076.
United States Bankruptcy Court, S.D. Ohio, Western Division.
February 17, 1998.
*391 *392 *393 Robert B. Berner, Arter & Hadden, Dayton, OH, Special Counsel for Plaintiff/Debtor.
Christopher J. Freeman, Fred H. Zollinger, Jr. & Co., Canton, OH, for Defendant Canton Drop Forge, Inc.
DECISION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
WILLIAM A. CLARK, Chief Judge.
This court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334, and the standing order of reference entered in this district. Proceedings to determine, avoid, or recover preferences are core proceedings pursuant to 28 U.S.C. § 157(b)(2)(F). This Decision and Order constitutes the court's findings of fact and conclusions of law as required by Federal Rule of Bankruptcy Procedure 7052(c).
This matter is before the court on Defendant Canton Drop Forge, Inc.'s Motion for Summary Judgment [Adv. Doc. # 9-1] and Supplement to Motion [Adv. Doc. # 13-1], Plaintiff/Debtor Speco Corporation's Memorandum in Opposition [Adv. Doc. # 19-1], and Defendant's Reply Memorandum [Adv. Doc. # 20-1]. In considering this matter, the court has also reviewed Plaintiff/Debtor's Complaint to Avoid Preference and for Other Relief [Adv. Doc. # 1-1], Defendant's Answer [Adv. Doc. # 3-1], and the Preliminary Pretrial Statements of Plaintiff/Debtor [Adv. Doc. # 6-1] and Defendant [Adv. Doc. # 7-1].
Having considered the evidence and arguments presented by the parties in their pleadings and having conducted an independent examination of the legal issues in question, the court is prepared to render its decision in this matter.
FINDINGS OF FACT
The question before the court is whether five prepetition transactions between Plaintiff/Debtor and Defendant may be avoided as preferential transfers or whether the transactions were made in "the ordinary course of business." In order to make such a determination, it is necessary to examine both the nature of these transactions and that of the *394 parties' previous transactions, as is shown by the evidence before the court.
Speco Corporation, the plaintiff in this adversary proceeding and the debtor in the bankruptcy case at bar ("Plaintiff/Debtor"), is a Delaware corporation with its principal place of business in Springfield, Ohio. On December 22, 1995, Plaintiff/Debtor petitioned for voluntary bankruptcy relief under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 101, et seq. (1994). Canton Drop Forge, Inc., the defendant in this matter ("Defendant"), is an Ohio corporation with its principal place of business in Stark County, Ohio. Defendant produces drop forged material made to customer specifications for customers in various industries.
In late 1991, Plaintiff/Debtor placed its first order with Defendant, and from there on continued to place orders with Defendant on a fairly regular basis. By its customary practice, Defendant would produce and ship each order shortly after the respective order was placed. After shipping each order, Defendant would issue an invoice to Plaintiff/Debtor setting forth the price that was agreed upon by the parties. The terms of the sale were "1/2 % 10, Net 30." This meant that if Plaintiff/Debtor paid for the shipment within 10 days after receiving the invoice, Plaintiff/Debtor would receive a one-half percent discount on the total invoice price. Otherwise, payment in full was due within 30 days after receiving the invoice.
Over the four-year period in which the parties conducted business, Plaintiff/Debtor and Defendant conducted 21 separate transactions in this manner, not including the five transactions at issue here. During this course of dealing, Plaintiff/Debtor never paid for the shipments within the requisite 30 days, instead paying on average 61 days past the invoice date, or an average of 31 days beyond the 30-day net payment requirement. During that time, the latest Plaintiff/Debtor ever made a payment was 79 days after invoice, or 49 days beyond the 30-day net payment requirement, and the earliest Plaintiff/Debtor ever made a payment was one payment made 49 days after invoice, or 19 days beyond the 30-day net payment requirement.
In addition to these 21 prepetition transactions, five additional transactions occurred within the 90-day preference period, as defined in 11 U.S.C. § 547(b)(4)(A). These transactions are summarized as follows:
Invoice Invoice Invoice Date Days Past Days
No. Date Amount Paid Invoice Late
98551 8/17/95 $ 5,820.00 11/8/95 83 53
98794 9/29/95 $11,696.00 12/14/97 81 51
98965 10/31/95 $36,654.00 12/19/95 49 19
98966 10/31/95 $ 3,920.00 12/19/95 49 19
98967 10/31/95 $ 4,480.00 12/19/95 49 19
See Affidavit of William D. Price, at ¶ 11 (attached as Exhibit A to Defendant's Motion for Summary Judgment [Adv. Doc. # 9-1]).
These five transactions were paid an average of 62 days after invoice, or 32 days beyond the 30-day net payment requirement. As Defendant asserts, this is very similar to Plaintiff/Debtor's previous average payment of 61 days after invoice, or 31 days beyond the 30-day net payment requirement. In response, Plaintiff/Debtor alleges that such an averaging is deceptive, as of the five transactions in questions, the first two were made later than Plaintiff/Debtor's previous maximum days late, 79 days after invoice, or 49 days beyond the 30-day net payment requirement, and the remaining three were equal to Plaintiff/Debtor's previous minimum lateness, 49 days after invoice, or 19 days beyond the 30-day net payment requirement, which had occurred previously on only one other occasion.
In addition to the examination of the dates in question, the parties also scrutinize the method in which the payments were made. It was apparently Defendant's normal procedure to accept payments through a lock box at a local bank, not to accept payment directly *395 from customers. William D. Price, Defendant's Chief Financial Officer, stated in his deposition that hand-delivered checks were not in his definition the ordinary course of business for Defendant. See Deposition of William D. Price, Nov. 12, 1997, at pp. 26-27 (attached as Exhibit 6 to Plaintiff/Debtor's Memorandum in Opposition [Adv. Doc. # 19-1]).
Despite this mode of payment history, Plaintiff/Debtor offers evidence that the three payments made on October 31, 1995, just three weeks before Plaintiff/Debtor petitioned for relief in bankruptcy, were hand-delivered by Plaintiff/Defendant. Amongst the evidence presented by Plaintiff/Debtor is the affidavit by its Chief Financial Officer Philip Gassin that Speco had implemented an intentional preference plan prior to the filing of its bankruptcy petition. See Affidavit of Philip Gassin, Nov. 24, 1997, at ¶¶ 5-10 (attached as Exhibit 1 to Plaintiff/Debtor's Memorandum in Opposition [Adv. Doc. # 19-1]). Mr. Gassin states that the payments to Defendant were made as part of this plan. Id. at ¶¶ 7-10. Plaintiff/Debtor also submitted the affidavit of its former Purchasing Manager Mike Brugler, who states that in accordance with Plaintiff/Debtor's plan, Mr. Brugler hand delivered three checks to Defendant on December 14, 1995. See Affidavit of Mike Brugler, Nov. 24, 1997, at ¶ 8 (attached as Exhibit 2 to Plaintiff/Debtor's Memorandum in Opposition [Adv. Doc. # 19-1]). Mr. Brugler also stated that at the time he hand delivered the checks, he met with Mr. James Culp, an employee of Defendant, and informed him of Plaintiff/Debtor's financial conditions and plans. Id. The checks were recorded as received by Defendant on December 19, 1995. A copy of Mr. Brugler's Expense Report Form for the trip in question is also submitted in support of this assertion. See Exhibit 4 to Plaintiff/Debtor's Memorandum in Opposition [Adv. Doc. # 19-1].
This evidence is contradicted by the deposition of James Culp, who on the dates in question was a sales engineer for Defendant who dealt with Plaintiff/Debtor. See Affidavit of James F. Culp, Nov. 24, 1997, at pp. 4, 10 (attached as Exhibit 7 to Plaintiff/Debtor's Memorandum in Opposition [Adv. Doc. # 19-1]). Mr. Culp testified that Mr. Brugler never visited the Defendant in December of 1995. Id. at p. 12. In addition, Mr. Culp testified that he did not receive any hand-delivered checks from Mr. Brugler or any other of Plaintiff/Debtor's employees, and did not inform Mr. Culp of the Plaintiff/Debtor's financial condition or plans. Id. at pp. 12-19.
CONCLUSIONS OF LAW
The Motion before the court is for summary judgment on the issue of voidable preferences and the ordinary course of business exception. The appropriate standard to be used by a trial court when considering a summary judgment motion is contained in Federal Rule of Civil Procedure 56(c), incorporated in bankruptcy by reference in Federal Rule of Bankruptcy Procedure 7056. Rule 56(c) states in part that a court must grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no issue as to any material fact and that the moving party is entitled to judgment as a matter of law." The initial standard under Rule 56 was addressed by the United States Supreme Court in Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), where the Court stated that:
In our view, the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. The moving party is "entitled to a judgment as a matter of law" because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof. "[T]h[e] standard [for granting summary judgment] mirrors *396 the standard for a directed verdict under Federal Rule of Civil Procedure 50(a). . . . "
Id. at 322-23, 106 S.Ct. at 2552 (citations omitted).
Thus the first question to be answered is whether Plaintiff/Debtor has carried its burden of proof to establish its prima facie case that these payments are preferential transfers. 11 U.S.C. § 547(g). This burden never shifts, but the burden to rebut the prima facie case may shift. See, e.g., Yoder v. T.E.L. Leasing, Inc. (In re Suburban Motor Freight, Inc.), 124 B.R. 984, 994-95 (Bankr.S.D.Ohio 1990) (Cole, J.). Even so, the burden is more readily achievable in the context of the nonmoving party facing summary judgment. As the Sixth Circuit has stated, in a summary judgment determination the trial court must "view all facts and inferences in the light most favorable to the non-moving party." Oakland Gin Co., Inc. v. Marlow (In re Julien Co.), 44 F.3d 426, 429 (6th Cir.1995).
Section 547 of the Bankruptcy Code sets forth a five-part test to determine whether a payment is a preference, stating that:
Except as provided in subsection (c) of this section, the trustee may avoid any transfer of an interest of the debtor in property
(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the debtor before such transfer was made;
(3) made while the debtor was insolvent;
(4) made
(A) on or within 90 days before the date of the filing of the petition; or
(B) between ninety days and one year before the date of the filing of the petition, if such creditor at the time of such transfer was an insider; and
(5) that enables such creditor to receive more than such creditor would receive if
(A) the case were a case under chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by the provisions of this title.
11 U.S.C. § 547(b)(1)-(5) (1994).
The undisputed facts demonstrate that the payments were made by Plaintiff/Debtor for the benefit of Defendant on account of an antecedent debt, satisfying § 547(b)(1) and (b)(2). When Plaintiff/Debtor made the payments in the Fall of 1995, they were on behalf of the obligations already incurred by the previous ordering, shipping, and invoicing of the products. These payments were without question beneficial to Defendant. When Plaintiff/Debtor paid the invoices in question within 90 days of the petition date of December 22, 1995, this was sufficient to satisfy § 547(b)(3), as a debtor is presumed insolvent for the period of 90-days prior to the petition date. 11 U.S.C. § 547(f). The Defendant has offered no evidence to rebut this presumption. See, e.g., Whittaker v. Citra Trading Corp. (In re International Diamond Exch. Jewelers, Inc.), 177 B.R. 265, 269 (Bankr.S.D.Ohio 1995) (Waldron, J.), reh'g denied, 188 B.R. 386 (Bankr.S.D.Ohio 1995). In addition, making the payment within 90 days prior to the petition was sufficient to satisfy the requirements of § 547(b)(4)(A). Finally, by receiving payment in full on what was essentially an unsecured debt, Defendant was enabled to receive more than it otherwise would have received under a Chapter 7 liquidation, satisfying the requirements of § 547(b)(5).
Having determined that Plaintiff/Debtor has, for the purposes of summary judgment only, met the burden of establishing its prima facie case, it now becomes important to reexamine the shifting burdens of proof as they relate to summary judgment. While the party seeking summary judgment bears the initial burden of establishing the absence of genuine issues of material fact, the "ultimate burden" of demonstrating the existence of a genuine issue of material fact lies with the nonmoving party. Suburban Motor Freight, 124 B.R. at 992.
Here Defendant, the moving party, alleges that it is entitled to judgment as a matter of law that the transactions in question *397 are entitled to the "ordinary course of business" exception to § 547(b). The Defendant thus bears both the initial burden of fact above, but also the burden of demonstrating by a preponderance of the evidence that the legal theory in question is applicable. 11 U.S.C. § 547(g); Logan v. Basic Distribution Corp. (In re Fred Hawes Org., Inc.), 957 F.2d 239, 242-43 (6th Cir.1992).
Section 547(c) provides for eight exceptions where otherwise avoidable transactions may not be undone by a trustee. The "ordinary course of business" exception to § 547(b) is set forth in § 547(c)(2), which states that:
The trustee may not avoid under this section a transfer . . . to the extent that such transfer was
(A) in payment of a debt incurred by the debtor in the ordinary course of business or financial affairs of the debtor and the transferee; and
(B) made in the ordinary course of business or financial affairs of the debtor and the transferee; and
(C) made according to ordinary business terms. . . .
11 U.S.C. § 547(c)(2) (1994).
According to the Sixth Circuit, § 547(c)(2) is often seen as "a means of encouraging normal credit transactions and the continuation of short-term credit dealings with troubled debtors so as to stall rather than hasten bankruptcy." In re Fred Hawes, 957 F.2d at 243. While the transactions in question appear within the scope of the Sixth Circuit's language above, in order for a payment to be considered excepted from the preferential transfer avoidance powers of § 547 Defendant must still establish that each of the transactions fits squarely within the language of the statute. Id. at 244 ("[A] creditor attempting to satisfy § 547(c)(2) must prove all three elements of that subsection.").
In order to understand the requirements of each of the subsections of § 547(c)(2), it is necessary to examine what has come to be known as the subjective/objective test. In Fred Hawes, the Sixth Circuit addressed a split in the case authority over whether § 547(c)(2)(B) and § 547(c)(2)(C) present different requirements to be satisfied when seeking the ordinary course exception. Id. at 243. One line of cases treated these two subsections as requiring proof of essentially the same elements to be satisfied, while another series of cases treated the two sections as independent, requiring proof of different elements for each subsection to be satisfied. Id.; see also In re Xonics Imaging Inc., 837 F.2d 763, 766 (7th Cir.1988) (discussing the split); Hertzberg v. American Elec. Contractors (In re Steel Improvement Co.), 79 B.R. 681, 684 (Bankr.E.D.Mich.1987) (same).
In examining this issue, the Sixth Circuit stressed that reading statute subsections as synonymous is tantamount to nullifying Congress's intent behind enacting separate provisions. In re Fred Hawes, 957 F.2d at 243. Quoting the bankruptcy court in Steel Improvement, the Circuit stated that "`[i]t is a common axiom that a statute should be construed to give meaning to all of its provisions, if possible.'" Id. (quoting In re Steel Improvement Co., 79 B.R. at 684).
The net result is that in order for a creditor to satisfy the ordinary course requirements of § 547(c)(2), the creditor must prove that "the debt and its payment are ordinary in relation to other business dealings between that creditor and that debtor," Id. at 244 (the "subjective" component), and that "the payment is ordinary in relation to the standards prevailing in the relevant industry." Id. (the "objective" component).
With this in mind, the court will examine the transactions in question under each component of § 547(c)(2) and the requirements of the subjective/objective test. In re Fred Hawes, 957 F.2d at 242-43; Youthland, Inc. v. Sunshine Girls of Florida, Inc. (In re Youthland, Inc.), 160 B.R. 311, 313 (Bankr. S.D.Ohio 1993) (Sellers, J.).
SECTION 547(c)(2)(A)
Section 547(c)(2)(A) requires that the transfer be "in payment of a debt incurred by the debtor in the ordinary course of business or financial affairs of the debtor and the transferee." While the establishment of a two-part subjective/objective test to determine satisfaction of the three subsections in § 547(c)(2) discussed above has succeeded in attributing independent meaning to *398 §§ 547(c)(2)(B) and (c)(2)(C), it appears to have had the ironic effect of reading out independent existence to § 547(c)(2)(A). It is clear from the court's formulation of the subjective test that the Sixth Circuit intended for it to incorporate both §§ 547(c)(2)(A) and (c)(2)(B). In re Fred Hawes, 957 F.2d at 244 ("the debt and its payment," respectively) (emphasis added). Most parties, including those in Fred Hawes, presume that the requirement of § 547(c)(2)(A) has been satisfied. Id. at 243. Even so, the court will consider the requirements of § 547(c)(2)(A) in light of the existing case law.
In the Youthland case, Judge Sellers discussed the application of this first part of the ordinary course test, stating that:
The first element of § 547(c)(2) requires an examination of the debts incurred for which the transfers were payment for the normality of such incurrences in each party's business operations generally. If the debts were incurred in the routine operations of [the Debtor] and [the Creditor], then they can be said to have been incurred in the ordinary course of each party's business.
Youthland, 160 B.R. at 314. These criteria are to be weighed according to previous practices of the parties, the so-called "subjective" test discussed above. Waldschmidt v. Ranier (In re Fulghum Constr. Corp.), 872 F.2d 739, 743 (6th Cir.1989).
Provided that these criteria are met, even long-term or first-time debt can be debt incurred in the ordinary course of business. Union Bank v. Wolas, 502 U.S. 151, 162, 112 S.Ct. 527, 533-34, 116 L.Ed.2d 514 (1991); Gosch v. Burns (In re Finn), 909 F.2d 903, 907 (6th Cir.1990).
In contrast, a debt will be considered not incurred in the ordinary course of business if creation of the debt is atypical, fraudulent, or not consistent with an arms-length commercial transaction. Pioneer Technology, Inc. v. Eastwood (In re Pioneer Technology, Inc.), 107 B.R. 698, 702 (9th Cir. BAP 1988); In re Valley Steel Corp., 182 B.R. 728, 735 (Bankr.W.D.Va.1995); McCullough v. Garland (In re Jackson), 90 B.R. 793, 794 (Bankr.D.S.C.1988).
In the case at bar, no evidence has been presented that the obligations in question were incurred in anything other than the ordinary course of business. See 11 U.S.C. § 547(c)(2)(A). Prior to the transactions in question, Plaintiff/Debtor and Defendant had performed similar transactions on at least 21 separate occasions. Each of the previous transactions and the allegedly preferential transactions were made according to the "½ % 10, Net 30" terms described above. The transactions related to the same subject matter, the purchase of custom-made drop forgings to be used in Plaintiff/Debtor's business. The goods ordered were apparently all produced and shipped as per the parties' normal procedures.
It is therefore the conclusion of the court that for the purposes of summary judgment, the five transactions in question were made "in payment of a debt incurred by the debtor in the ordinary course of business or financial affairs of the debtor and the transferee." 11 U.S.C. § 547(c)(2)(A).
SECTION 547(c)(2)(B)
In addition to establishing that the debt between Plaintiff/Debtor and Defendant was incurred in the ordinary course of business, the requirements of § 547(c)(2)(A), the Sixth Circuit's subjective test also requires the party seeking the protection of § 547(c)(2) to establish that the otherwise preferential payment was also made in the ordinary course of business between the parties. 11 U.S.C. § 547(c)(2)(B) (1994).
Among the factors to be considered when determining whether payments fall within the requirements of § 547(c)(2)(B) are timing, the amount and manner a transaction was paid and the circumstances under which the transfer was made. Yurika Foods Corp. v. United Parcel Service (In re Yurika Foods Corp.), 888 F.2d 42, 45 (6th Cir.1989).
The Sixth Circuit has addressed the issue of timing on several occasions recently, including several decisions that specifically address the ordinariness of late payments under § 547(c)(2). See, e.g., Luper v. Columbia Gas of Ohio, Inc. (In re Carled), 91 F.3d 811, 817-19 (6th Cir.1996) (examining the ordinariness *399 of late payments under § 547(c)(2)(C)); In re Fred Hawes, 957 F.2d at 244-45 (holding that late payments must satisfy ordinariness tests under both § 547(c)(2)(B) and § 547(c)(2)(C), separately); In re Yurika Foods Corp., 888 F.2d at 45; see also In re Fulghum Constr. Corp., 872 F.2d at 743 (holding that in examining § 547(c)(2), courts avoid bright-line rules in favor of factual inquiry).
In Fred Hawes, the Sixth Circuit stated that a "late payment will be considered `ordinary' only upon a showing that late payments were the normal course of business of the parties." In re Fred Hawes, 957 F.2d at 244 (relying in part on Storey v. Dayton Power & Light Co. (In re Cook United, Inc.), 117 B.R. 884, 887-88 (Bankr.N.D.Ohio 1990)). Here, there is no doubt that late payments were within the ordinary course of business between Plaintiff/Debtor and Defendant. As previously discussed, in the 21 prepetition transactions not implicated in these proceedings, Plaintiff/Debtor made its payments on average 31 days past invoice. In fact, in all of the transactions between the two parties, Plaintiff/Debtor never made a payment within the 30-day terms of the parties' agreement. Given these circumstances, the case law is clear that the mere lateness of the payments in question does not cause the payments to be nonordinary.
This is not the end of the inquiry into the lateness of the payments. The Sixth Circuit recently considered the degree of lateness as an indication whether payments were made within the ordinary course of business. Brown v. Shell Canada Ltd. (In re Tennessee Chemical Co.), 112 F.3d 234, 237-38 (6th Cir.1997). In Tennessee Chemical, the panel did an extensive analysis of the degree of lateness of each of the allegedly preferential transfers, ultimately concluding that "the `ordinary course of business' exception is intended to cover precisely the type of situation now before us, allowing suppliers and other furnishers of credit to receive payment within the course that has developed in the commercial relationship between the parties unless substantial deviations from established practices occur." Id. at 238.
To this end, Defendant urges the court to consider the average lateness of the payments in question. Indeed, such a surface comparison does imply that the payments in question were ordinary. While the average lateness of the 21 prepetition payments which occurred prior to the 90-day preference period was 31 days past invoice, the five allegedly preferential payments were made on average 32 days past invoice.
Such an analysis can be misleading, however. Averages alone fail to take into account extraneous factors such as seasonal influences on performance in certain industries, see McCord v. Venus Foods, Inc. (In re Lan Yik Foods Corp.), 185 B.R. 103, 113 (Bankr.E.D.N.Y.1995), or the fact that the unusual weight of individual figures can lead to erroneous averages. First Software Corp. v. Curtis Mfg. Co., Inc. (In re First Software Corp.), 81 B.R. 211, 213-14 (Bankr.D.Mass. 1988). As Judge Sellers indicated, in such instances "a range of payment dates may be more useful . . . than an average." Youthland, Inc. v. Sunshine Girls of Florida, Inc. (In re Youthland, Inc.), 160 B.R. 311, 315 (Bankr.S.D.Ohio 1993) (Sellers, J.).
Here, the five allegedly preferential transfers occurred at opposite ends of Plaintiff/Debtor's payment spectrum. Chronologically, the first two payments were made 53 and 51 days late respectively, each more than Plaintiff/Debtor's previous maximum lateness of 49 days. The remaining three payments were made only 19 days late, equal to Plaintiff/Debtor's previous minimum lateness. Plaintiff/Debtor had at only one time previously made a payment only 19 days late.
The court is in agreement with Plaintiff/Debtor that the statistical analysis alone does little to determine whether the individual payments were made in the ordinary course of business. While the first two payments fell outside the previous range of payments, the Sixth Circuit has concluded that such payments can still be ordinary if they do not substantially deviate from the parties' previous dealings. In re Tennessee Chemical Co., 112 F.3d at 238. Here, the two payments exceeded the previous maximum lateness by only four and two days, respectively. Given that Plaintiff/Debtor *400 made its payments on average more than four weeks late, such a small deviation beyond the previous range is not substantial. Id.
Even so, the lateness of the payments is not the only timing inquiry that must be made under § 547(c)(2)(B). The bankruptcy court in First Software made it clear that the timing of the payments made in relation to the petition date, beyond the mere fact that the payments were made within the 90-day preference period, is relevant to an inquiry into ordinariness. First Software Corp. v. Curtis Mfg. Co., Inc. (In re First Software Corp.), 81 B.R. 211, 213-14 (Bankr.D.Mass.1988).
Here, the first payment of $ 5,820.00 was made on November 8, 1995, more than a month before the filing of the bankruptcy petition. The second, in the amount of $ 11,696.00, was made on December 14, 1995. These payments were made 53 and 51 days late, respectively. Had Plaintiff/Debtor paid these items 31 days late, its previous average, both payments would have still fallen within the 90-day preference period. Nothing in the timing of these two payments indicates that there was any intent to prefer Defendant over other creditors.
The remaining three payments were made on December 19, 1995, only three days before the filing of the bankruptcy petition. These payments were each made 19 days late, an amount equal to Plaintiff/Debtor's previous minimum lateness. The timing of the payments, within a week of the petition date, combined with the fact that these payments were made almost two weeks earlier than Plaintiff/Debtor's pre-preference average raises the implication that the payments were rushed on the eve of the petition so as to prefer Defendant over other creditors.
These two factors are evidence of a possible "pre-bankruptcy planning" scheme on behalf of Plaintiff/Debtor. Indeed, Plaintiff/Debtor alleges that these payments were made as part of an "Intentional Preference Plan," whereby Plaintiff/Debtor took extraordinary measures to pay important creditors prior to bankruptcy. In support of this allegation, Plaintiff/Debtor submits the affidavits of several key employees. Nothing in these affidavits states, however, exactly when such plan was implemented. In further support of its contention that the remaining payments were made according to a pre-bankruptcy planning scheme, Plaintiff/Debtor points to the method of payment for three payments recorded on December 19, 1995. Plaintiff/Debtor's former Purchasing Manager Mike Brugler states that in accordance with Plaintiff/Debtor's "Intentional Preference Plan," he hand delivered the three checks to Defendant on December 14, 1995. In addition, a copy of Mr. Brugler's Expense Report Form for a trip to the area at the time in question was submitted as evidence that extraordinary measure were taken to deliver the final three payments to Defendant. This evidence is contradicted by the deposition of James Culp, who on the dates in question was a sales engineer for the Defendant. Mr. Culp testified that Mr. Brugler never visited the Defendant in December of 1995, did not hand deliver any check to Mr. Culp, and did not inform Mr. Culp of the Plaintiff/Debtor's financial condition or plans.
Plaintiff/Debtor argues if the payments were made as result of a "pre-bankruptcy planning" scheme the Defendant is prohibited from arguing that the payments were made in the ordinary course of business. In support of this argument, Plaintiff/Debtor cites two Sixth Circuit opinions. First Fed. of Mich. v. Barrow, 878 F.2d 912, 918 (6th Cir.1989) (citing Courtney v. Octopi, Inc. (In re Colonial Discount Corp.), 807 F.2d 594, 600 (7th Cir.1986), cert. denied, 481 U.S. 1029, 107 S.Ct. 1954, 95 L.Ed.2d 526 (1987)); In re Fulghum Constr. Corp., 872 F.2d at 745 (same).
A closer examination of the two opinions, however, reveals that the Sixth Circuit has not determined what effect the state of mind of a debtor should have on an otherwise acceptable payment. In Barrow, the debtor was a corporation which acted as a go-between for property owners seeking mortgage loans and lending institutions. Barrow, 878 F.2d at 913. Upon making a successful match, the owner would execute a note in favor of the debtor, secured by the property. Id. The debtor would then assign the note to the lending institution in return for the borrowed *401 funds, which it then delivered to the owner. Id. From that point on, in return for a periodic service charge, the debtor collected the owner's monthly payments, segregated and escrowed the funds, then paid the lender and other appropriate recipients (such as a first lender or taxing authority). Id. at 913-14.
During the debtor's bankruptcy proceedings, it was discovered that the debtor had failed to segregate individual payments, instead commingling incoming payments in a incoming depository account and central account. Id. During the 90-day preference period, the debtor paid "certain favored creditors . . . on behalf of selective investors." Id. On appeal from a finding that these payments were preferential transfers, the Sixth Circuit held that "given the totally unorthodox and illegal manner in which debtors conducted their collective business operations during the ninety-day predeclaration period," the panel could not seriously consider the appellant's argument that the payments were made in the ordinary course of business. Id. at 918. The panel did not hold that "pre-bankruptcy planning" negated an ordinary course defense, and in fact only mentioned the phrase "pre-bankruptcy planning" in describing the Colonial Discount Corp. case. Id. (citing In re Colonial Discount Corp., 807 F.2d at 600).
In Fulghum Constr. Corp., after finding that the payments in question were not preferential, the Sixth Circuit simply mentioned in passing that "nothing in the record suggests that [the repayment] was related in any way to prebankruptcy planning." In re Fulghum Constr. Corp., 872 F.2d at 745 (citing In re Colonial Discount Corp., 807 F.2d at 600). Nothing in Fulghum states that if the payments were a result of pre-bankruptcy planning the payments would irrebuttably be preferences. In fact, if the Plaintiff/Debtor were to examine the two cases cited to in this discussion in Fulghum, it would have found that they do not stand for the proposition that a debtor's subjective intent can negate the ordinary course of business defense. See, e.g., In re Colonial Discount Corp., 807 F.2d at 600; Marathon Oil Co. v. Flatau (In re Craig Oil Co.), 785 F.2d 1563, 1566 (11th Cir.1986).
Instead, these cases stand only for the proposition that a debtor's state of mind, when combined with unusual collection practices on behalf a creditor, may combine to provide evidence that payments are not made in the ordinary course of business. See, e.g., In re Colonial Discount Corp., 807 F.2d at 600; In re Craig Oil Co., 785 F.2d at 1566 ("[S]tate of mind alone cannot establish `unusual' or `extraordinary' action by the debtor. It merely goes to explain the unusual payment actions by the debtor in this case."); see also T.B. Westex Foods, Inc. v. FDIC (In re T.B. Westex Foods, Inc.), 950 F.2d 1187, 1195 (5th Cir.1992) ("The creditor's or debtor's `state of mind has nothing whatsoever to do with the policy of equality of distribution.'") (quoting 4 Collier on Bankruptcy ¶ 547.01 n. 12).
Taken as a whole, these cases support the conclusion that when a debtor makes an unusual payment or normal payment in response to unusual collection practices, the debtor's subjective intent is relevant as to the ordinariness of the payment. In re Craig Oil Co., 785 F.2d at 1566. This is consistent with the underlying goal of § 547(b), which is to "`ensure that creditors are treated equitably.'" Logan v. Basic Distribution Corp. (In re Fred Hawes Org., Inc.), 957 F.2d 239, 243 (6th Cir.1992) (quoting legislative history). When, on the other hand, a debtor makes a payment which otherwise qualifies for the ordinary course of business exception, the debtor's subjective intent will not operate to negate the otherwise appropriate finding of the exception's applicability. In re T.B. Westex Foods, Inc., 950 F.2d at 1195. This is consistent with the purpose of the ordinary course of business exception, which is "formulated to induce creditors to continue dealing with a distressed debtor so as to kindle its chances of survival." Luper v. Columbia Gas of Ohio, Inc. (In re Carled), 91 F.3d 811, 815 (6th Cir.1996). To hold otherwise would be to encourage an honest creditor to discontinue doing business with a struggling debtor on the off-chance that the debtor's motive in making payments is improper.
*402 Here it is clear that the timing, amount and manner in which the November 8, 1995 and December 14, 1995 payments were made, and the circumstances under which the transfers were made satisfy the requirements of § 547(c)(2)(B) and the relevant case law. In re Yurika Foods Corp., 888 F.2d at 45. These payments do not substantially deviate from the previous range of payments, were not the result of improper actions by the Defendant, and do not otherwise appear to be anything other than the ordinary course of business between the Plaintiff/Debtor and the Defendant. The evidence indicates that these payments would likely have been made regardless of any improper motives by the Plaintiff/Debtor.
As to the December 19, 1995 payments, there exists a genuine issue of material fact in regard to the circumstances under which they were made. Unlike the previous payments, the timing and manner in which the payments were made are not clearly ordinary. In addition, the question as to the manner of delivery appears to be in genuine dispute.
It is therefore the conclusion of the court that for the purposes of summary judgment, Defendant has established that the November 8, 1995 and December 14, 1995 payments were "made in the ordinary course of business or financial affairs of the debtor and the transferee," 11 U.S.C. § 547(c)(2)(B), but that a genuine issue as to a material fact exists as to whether the circumstances surrounding the December 19, 1995 payments satisfy this requirement. As such, the court cannot conclude that summary judgment as to the December 19, 1995 payments is appropriate.
547(c)(2)(C)
Having found that circumstances surrounding the payments made on December 19, 1995 are not ripe for summary judgment, the court need only consider whether the November 8, 1995 and December 14, 1995 payments were made in accordance with § 547(c)(2)(C). Section 547(c)(2)(C) requires that in order for the transaction to be entitled to the ordinary course of business exception to § 547(b), the payment must be "made according to ordinary business terms." 11 U.S.C. § 547(c)(2)(C).
As previously discussed, the Sixth Circuit has established what is known as the "objective test" in regard to satisfaction of § 547(c)(2)(C). Logan v. Basic Distribution Corp. (In re Fred Hawes Org., Inc.), 957 F.2d 239, 244 (6th Cir.1992). "The court here compares and contrasts the particular transaction against the `practices' or `standards' of the industry." Id. at 245 n. 6. While the Fred Hawes panel stated that § 547(c)(2)(C) is satisfied if "the payment is ordinary in relation to the standards prevailing in the relevant industry," id. at 244, this does not mean that the transaction must conform with the majority of transactions within the parties' industry, but rather that "the transaction was not so unusual as to render it an aberration in the relevant industry." Luper v. Columbia Gas of Ohio, Inc. (In re Carled), 91 F.3d 811, 818 (6th Cir. 1996).
In Carled, the Sixth Circuit made it clear that a creditor need not produce specific information regarding its competitors, but rather need only show that "that a certain percentage of customers pay within a certain number of days after the due date." Id. at 819.
Here the evidence offered by Defendant is probative and uncontroverted. Defendant offers by way of affidavit the testimony of William D. Price, Defendant's treasurer and vice president of finance, who states that within the steel forging industry such late payments are not unusual. In support of this, Defendant offers the affidavit of Joseph E. Palmer, a certified public accountant. Mr. Palmer, relying on the Robert Morris Associates Annual Statement Studies for 1996, states that for the iron and steel forgings industry, the standard of late payments varies from an average of 11 days late in the upper quartile of companies to 43 days late in the lower quartile. As with any average, the nature of these figures is that an individual transaction may fall above or below the actual number. As such, Mr. Palmer states that each of the transactions between Plaintiff/Debtor and Defendant made during the preference period, including *403 the two transactions still at issue here, are not "unordinary, atypical or aberrational within the industry as a whole."
It is therefore the conclusion of the court that for the purposes of summary judgment, Defendant has established that the November 8, 1995 and December 14, 1995 payments were "made according to ordinary business terms." 11 U.S.C. § 547(c)(2)(C).
CONCLUSION
Having examined each of the elements of § 547(b) and § 547(c)(2) as they relate to the five transactions at issue here, as well as considering the burdens of proof under § 547(g), the court concludes that Defendant is entitled to summary judgment as a matter of law that the November 8, 1995 and December 14, 1995 payments were made in the "ordinary course of business," and thus may not be avoided under § 547 of the Bankruptcy Code.
As to the December 19, 1995 payments, in accordance with Federal Rule of Civil Procedure 56(d), it is the court's determination that the only material issue actually and in good faith controverted is the method of delivery of these payments, and whether the method is "made in the ordinary course of business or financial affairs of the debtor and the transferee" and "made according to ordinary business terms." 11 U.S.C. §§ 547(c)(2)(B) & (c)(2)(C); see also Fed. R. Bankr.P. 7056 (incorporating by reference Fed.R.Civ.P. 56).
The Defendant Canton Drop Forge, Inc.'s Motion for Summary Judgment [Adv. Doc. # 9-1] is therefore GRANTED in its entirety as it relates to the November 8, 1995 and December 14, 1995 payments, and GRANTED only as to the satisfaction of 11 U.S.C. § 547(c)(2)(A) as it relates to the December 19, 1995 payments. In all other respects, the Defendant's Motion is DENIED.
The case is set for trial on the remaining issues at 9:30 a.m. on March 10, 1998 in the West Courtroom, 120 West Third Street, Dayton, Ohio.
It is so ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1141085/ | 412 So. 2d 1380 (1982)
STATE of Louisiana
v.
Travis Eugene BARKLEY and Joey Lum Barnes.
No. 81-KA-2176.
Supreme Court of Louisiana.
April 5, 1982.
Rehearing Denied July 2, 1982.
William J. Guste, Jr., Atty. Gen., Barbara Rutledge, Asst. Atty. Gen., Norval J. Rhodes, Dist. Atty., William G. Yates, Asst. Dist. Atty., for plaintiff-appellee.
Charles Gary Blaize, and Warren J. Daigle, Jr., Houma, of Indigent Defender Bd., for defendants-appellants.
LEMMON, Justice.[*]
Defendants Barkley and Barnes have appealed from convictions of forcible rape and simple rape and sentences at hard labor of 40 and 15 years respectively. The principal issue is whether the trial court erred in denying defendants' motion to sever their trials.[1]
I.
Donna Emmell, the victim, and her boyfriend, Steve Archer, hitchhiked into Houma. *1381 After eating a meal they earned by washing dishes, they walked outside the restaurant and met Barkley, who invited them to smoke marijuana. In the course of conversation while smoking marijuana, Barkley invited them to spend the night at Nolan Naquin's trailer in Chauvin.
The trio then drank several beers at various bars before meeting Naquin and going to the trailer at about 8:30 p. m. Barnes joined them later for seafood and more beer. During the evening the police called at the trailer in response to a complaint about loud stereo music, and after their departure Barkley exhibited a shotgun and proclaimed that he had always wanted to kill a cop.
Several hours later Naquin whispered to Miss Emmell that Barkley and Barnes "want to get over on you" and told her that nothing would happen if she and Archer stayed in the back bedroom. The couple followed Naquin's advice and retired. Barkley burst into the room and took some shotgun shells off the dresser, but left immediately.
A short time later Barkley entered the room again and pointed a shotgun at Miss Emmell, telling her to go into the next room and take her clothes off because "Nolan wants you to give him what he wants". When Miss Emmell went into the next room, Naquin told her to remain there while he talked to Barkley and Barnes, hoping they would fall asleep.
Later Barkley entered the room and told Miss Emmell he was going to blow Archer's head off if she did not go to bed with him. Fearful for Archer's safety, she complied with Barkley's demand. After the act Barkley said "I can't believe I made you do this." Barkley then went to the living room, where Miss Emmell heard him say something about dropping bodies in the bayou.
Barnes then entered the room and told Miss Emmell he wasn't crazy like the others, but was going to force her to have sex anyway. Even more frightened by this time, Miss Emmell again submitted to sexual intercourse. Barnes later said "I hope you can forgive me for this."
Naquin advised Miss Emmell and Archer to leave, and he drove them back to Houma, where Archer called the police. Both defendants were subsequently arrested.
II.
Before trial Barnes filed a motion for severance, asserting that he could not obtain a fair trial if tried jointly with Barkley. He also alleged that he desired to call Barkley to testify on his behalf, but that a joint trial would conflict with Barkley's right against self-incrimination.
On the date scheduled for trial, both defendants argued that their trials should be severed. Barkley argued that his right to compulsory process was being denied, in that he could not call Barnes to testify since Barnes could not be forced to testify at his own trial. Barnes argued similar grounds in support of his motion.
The trial court denied the motion to sever, and the case proceeded to trial. At the end of the evidence, but before closing arguments, defendants reurged their motion to sever. The trial judge conducted a hearing, at which Barkley called Barnes to the witness stand solely for purposes of this motion. Barnes testified: He had heard the testimony presented in court, and he had been apprised of the elements of forcible rape by his attorney. He had not planned to testify in this trial, because the testimony would open him up to cross-examination by the state, but he would take the stand if there was a separate trial. He possessed information favorable to Barkley, specifically that Barkley had never used the alleged shotgun and that he and Barkley both had sexual intercourse with Miss Emmell, with her consent.
When Barnes completed his testimony on the motion, Barkley took the stand and supported Barnes' version of the facts. He also testified that he never saw Barnes with a gun and never saw him threaten Miss Emmell.
Both defendants admitted that they had never told this story before, even though *1382 they had been given ample opportunity to do so. At the conclusion of this evidence, the trial judge once again denied the motions, commenting that the testimony was incredible.
On appeal, defendants contend that the denial of the motion to sever was an abuse of discretion, because of the exculpatory nature of each codefendant's testimony. They contend that the denial of the motion eliminated all possibility of each defendant's calling the only witness who could testify on his behalf and therefore denied each the constitutional right to a fair trial.
C.Cr.P. Art. 704 provides that jointly charged defendants shall be tried jointly, unless the state elects to try them separately or the court, after a contradictory hearing, is satisfied that justice requires a severance. Whether "justice requires a severance" must be determined by the facts of each case. State v. Thibodeaux, 315 So. 2d 769 (La.1975). However, the mere allegation that the defenses will be antagonistic is not sufficient to require a severance. State v. Thibodeaux, above.
Here, defendants do not base their arguments on antagonistic defenses. Rather, each claims the other can present exculpatory evidence. Denial of a severance may be an abuse of discretion if the defendant establishes that the co-defendant would testify at a separate trial and would present exculpatory evidence. See State v. Turner, 365 So. 2d 1352, 1354 (La.1978), citing C.Cr.P. Art. 704, Official Revision Comment (c)(2); 8 Moore's Federal Practice § 14.04(4) 2d ed. 1981); 1 C. Wright, Federal Practice and Procedure: Criminal § 225 (1965).
In the present case, however, as in Turner, each defendant failed to establish (despite the testimony at the hearing on the motion to sever) the probability that the other would in fact testify at a separate trial and present exculpatory evidence. The proposed testimony by Barnesthat both defendants had consensual intercourse with the victimwould have been a highly self-incriminating statement on Barnes' part at Barkley's trial, and the trial judge properly regarded as highly unlikely Barnes' declaration that he would not invoke his constitutional privilege in a separate trial.
Furthermore, the exculpatory evidence in this case (in which one defendant in order to testify at the trial of the other must place himself at the scene of the alleged crime and must admit several of the elements of the offense charged against him) is vastly different from exculpatory testimony such as, for example, that he and the codefendant were together in Texas at the time of the alleged crime. Denial of the opportunity to call a codefendant as the sole alibi witness may well be sufficiently prejudicial to establish an abuse of discretion in denying a severance of trial. But we cannot say that the trial judge erred in concluding that one defendant would not likely have incriminated himself at a separate trial in order to establish the other's innocence or that the denial of the motion to sever in this case was so prejudicial as to constitute an abuse of discretion.
III
Defendant Barkley contends, by a supplemental pro se assignment, that the trial court erred in imposing a sentence in excess of that discussed in plea bargain negotiations.
There is no record concerning defendant's allegations, which he contends occurred in the trial judge's chambers. Defendant alleges, however, that before the jury was chosen, he rejected an offer to plead guilty to forcible rape and receive a sentence of 15 years; that a second plea bargain of 12 years was offered during the lunch recess on the day of trial; and that after the state rested its case, the judge reasserted his offer of a 12-year sentence. Furthermore, Barkley alleges, codefendant Barnes, throughout these negotiations, was first offered 10 years and then eight years for forcible rape. Both defendants rejected these plea bargain offers and asserted their right to stand trial before the jury.
Defendant Barkley further alleges that his attorney told him that if they did not *1383 take the deal and were convicted, the judge was going to sentence them to the maximum amount of time, but that the defendants still refused to plead guilty. After conviction the trial judge sentenced Barkley to 40 years at hard labor and Barnes to 15 years at hard labor.
Defendant's argument is that the trial judge punished him for standing trial by imposing a greater sentence than was offered in the plea bargain negotiation after the judge had heard all of the evidence. However, the primary sentencing considerations include not only the circumstances of the particular offense, but also the individual circumstances concerning the particular offender.
This offender was a convicted felon with a lengthy criminal record, including convictions or arrests for robbery, battery, forgery, several counts of armed robbery, kidnapping, burglary and contributing to the delinquency of a juvenile. The trial judge considered these factors in sentencing, which perhaps did not become known to him until after the plea bargain offer. Moreover, Barkley does not even contend that the sentence is constitutionally excessive or unjustified in light of his record, and a trial judge's preconviction offer of a lenient sentence should not be viewed as setting a limit for the justifiable sentence after conviction. State v. Frank, 344 So. 2d 1039 (La.1977). Finally, the merits of Barkley's contention that he was penalized for exercising his constitutional right to stand trial cannot be determined by direct appeal based on this record, but may be raised by other appropriate procedures.
The convictions and sentence are affirmed.
NOTES
[*] Judge Walter I. Lanier, Jr. of the Court of Appeal, First Circuit and Judges Fred S. Bowes and Nestor L. Currault, Jr. of the 24th Judicial District Court participated in this decision as Associate Justices ad hoc, joined by Associate Justices Calogero, Dennis, Blanche and Lemmon.
[1] The remaining assignments of error involve only settled principles of law and are treated in an unpublished appendix attached to this opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539679/ | 218 B.R. 603 (1998)
In re Stephen E. SCHUBERT, Jr. and Cathy L. Schubert, Debtors.
Bankruptcy No. 97-05856-M.
United States Bankruptcy Court, N.D. Oklahoma.
April 10, 1998.
*604 Paul R. Tom, Tulsa, OK, for Plaintiff.
Karen Carden Walsh, Tulsa, OK, for Defendant.
MEMORANDUM OPINION GRANTING TRUSTEE'S OBJECTION TO DEBTORS' CLAIM OF EXEMPTION
TERRENCE L. MICHAEL, Bankruptcy Judge.
THIS MATTER comes before the Court pursuant to the Objection to Claim of Exemption (the "Objection") filed by Karen Carden Walsh, Trustee ("Ms. Walsh" or "Trustee"), and the Response of Stephen E. Schubert, Jr. and Cathy L. Schubert, Debtors herein ("Schuberts" or "Debtors"), to the Objection ("Response"). By agreement of the parties, this matter was submitted to the Court on stipulated facts and briefs on or about February 20, 1998. At that point, the matter was taken under advisement. This memorandum opinion constitutes the Court's findings of fact and conclusions of law pursuant to Bankruptcy Rules 7052 and 9014 and Federal Rule of Civil Procedure 52.
Jurisdiction
The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(b),[1] and venue is proper pursuant to 28 U.S.C. § 1409. Reference to the Court of this matter is proper pursuant to 28 U.S.C. § 157(a), and it is a core proceeding as contemplated by 28 U.S.C. § 157(b)(2)(A) and (O).
Findings of Fact
The parties have stipulated to the following undisputed facts:
1. On May 4, 1994, one of the Debtors, Cathy L. Schubert, purchased certain residential real estate (the "Residence") from Mary Ann Sullivan and Patrick J. Sullivan (the "Sullivans").
2. The Residence is the homestead of the Debtors.
3. On May 3, 1996, Debtors filed an action (the "State Court Action") against the Sullivans and James K. Humphries ("Humphries") in the District Court in and for Tulsa County, State of Oklahoma, alleging that the Sullivans negligently and fraudulently misrepresented the condition of the heating and air conditioning system of the Residence, and that Humphries, in his capacity as an electrical, mechanical and plumbing inspector, negligently failed to discover certain latent defects in the heating and air conditioning system of the Residence. In the State Court Action, Debtors seek damages in the amount necessary to repair the Residence, plus damages for emotional distress, punitive damages, attorneys' fees and costs.
4. Debtors filed this bankruptcy case on December 18, 1997. In their schedules and statement of affairs, Debtors have claimed the Residence as exempt under 31 Okla.Stat. Ann. tit. 31, § 1(A)(1), which provides for an exemption in real estate, "provided that such home is the principal residence" of the party claiming the exemption. Okla.Stat.Ann. tit. 31, § (1)(A)(1) (West 1991).
5. Debtors have also claimed the State Court Action as exempt under 31 Okla.Stat. Ann. tit. 31, § 1(A)(1), claiming that the State Court Action should also be considered exempt as part of the Debtors' homestead.
6. The Trustee does not dispute that the Residence is properly exempt, but does take issue with Debtors claiming the State Court Action as exempt.
To the extent the "Conclusions of Law" set forth any items which should more appropriately be considered "Findings of Fact," they are incorporated herein by this reference.
*605 Issue Presented
Whether a cause of action which seeks to recover damages for undisclosed defects in a residence which is properly claimed exempt as Debtors' homestead is also exempt under 31 Okla.Stat.Ann.tit. 31, § 1(A)(1) (West 1991).
Decision
The State Court Action is not exempt.
Conclusions of Law
In this case, the Schuberts bought their home from the Sullivans and now allege in the State Court Action that the Sullivans and Humphries, the inspector, fraudulently and negligently failed to reveal or discover latent damage to the heating and air-conditioning systems. The Debtors claim the State Court Action as an extension of the Residence and, as such, equally exempt under Oklahoma law. The Trustee vigorously objects and argues that the State Court Action does not fall within the homestead exemption but instead is non-exempt personal property of the Debtors. The case appears to be one of first impression in this circuit.
The homestead exemption in Oklahoma is a creature of the state constitution and statutes.[2] The operative provision of the Oklahoma constitution reads as follows:
§ 1. Extent and value of homestead Rights of Indians Temporary Renting
A. The homestead of any person in this State, not within any city or town, shall consist of not more than one hundred sixty acres of land, which may be in one or more parcels, to be selected by the owner.
B. Effective November 1, 1997, the homestead of any person in this State, not within any city or town, annexed by a city or town on or after November 1, 1997, owned and occupied and used for both residential and commercial agricultural purposes shall consist of not more than one hundred sixty acres of land, which may be in one or more parcels, to be selected by the owner.
C. The homestead of any person in this State within any city or town, owned and occupied as a residence only, or used for both residential and business purposes, shall consist of not exceeding one acre of land, to be selected by the owner.
For purposes of this subsection, at least seventy-five percent (75%) of the total square foot area of the improvements for which a homestead exemption is claimed must be used as the principal residence in order to qualify for the exemption. If more than twenty-five percent (25%) of the total square foot area of the improvements for which a homestead exemption is claimed is used for business purposes, the homestead amount shall not exceed Five Thousand Dollars ($5,000.00).
Okla.Const.art. 12, § 1. The exempt status of the homestead is established by statute:
§ 1. Property exempt from attachment, execution or other forced sale Bankruptcy proceedings
A. Except as otherwise provided in this title and notwithstanding subsection B of this section, the following property shall be reserved to every person residing in this state, exempt from attachment or execution and every other species of forced sale for the payment of debts, except as herein provided:
1. The home of such person, provided that such home is the principal residence of such person.
31 Okla.Stat.Ann. tit. 31, § 1(A)(1) (West 1991). As a general rule, the Oklahoma exemption laws are to be liberally construed in favor of the exemption. See, e.g., Nelson v. Fightmaster, 4 Okla. 38, 41, 44 P. 213, 214 (1896); Phelan v. Lacey, 51 Okla. 393, 394, 151 P. 1070, 1071 (1915); In re Fisher, 11 B.R. 666, 668 (Bankr.W.D.Okla.1981). However, the decisions which this Court was able to locate limited their definition of a homestead under this section to real property; i.e., the residence and the land upon which it was built. See, e.g., Oklahoma State Bank v. Van Hassel, 189 Okla. 48, 114 P.2d 912, 913 *606 (Okla.1941) (homestead consists of the "home of the family"), Van Meter v. Field, 195 Okla. 555, 159 P.2d, 546, 549 (Okla.1945) ("Homestead rights may attach to any possessory interest in real estate which constitutes the dwelling place of the family regardless of the nature or character of the title or of the estate therein.").
This Court finds that the State Court Action does not fall within the homestead exemption provided for under Oklahoma law. The Oklahoma exemption scheme lists twenty-one (21) separate categories of property which may be claimed as exempt. See 31 Okla.Stat.Ann. tit. 31, § 1(A)(1)-(21) (West 1991). The homestead exemption protects a debtor's interest in selected real property. The State Court Action is personal property, not real property. It exists independently of the Residence. In the State Court Action, Debtors seek not only to recover actual damages, but punitive damages as well. Those punitive damages do not relate to the Residence or Debtors' claim of exemption. In addition, the pretrial order filed in the State Court Action would indicate that Debtors seek recovery of damages for emotional distress. See Joint Stipulation of Exhibits and Facts, Exhibit "B." While certain causes of action for personal injury are exempt (see 31 Okla.Stat.Ann. tit. 31, § 1(A)(21) (West 1991)), causes of action such as the State Court Action are not.
The Court has found little case law addressing this exact issue. However, the United States Bankruptcy Court for the Middle District of Alabama considered a case very similar to the case at bar. In re Bradley, 212 B.R. 998 (Bankr.M.D.Ala.1997) (hereafter "Bradley"). In Bradley, the debtors purchased certain real estate for use as their residence. After the sale was complete and the debtors had moved into their new home, they discovered extensive termite damage which was not disclosed to them during the sale process. Upon discovery of the termite damage, debtors filed a lawsuit alleging that the sellers and the real estate agent positively and purposefully concealed said damage. Debtors then filed a petition for relief under Chapter 7 of the Bankruptcy Code, and claimed both the real estate and the cause of action as exempt under the Alabama homestead exemption statutes. The trustee objected to the claim of exemption with respect to the cause of action. The Bradley court held that the cause of action for termite damage was not a part of debtors' exempt homestead under Alabama law, relying in large part on the fact that the alleged damage to the real property (and thus, the cause of action) occurred prior to its acquisition by the debtors. In re Bradley, 212 B.R. at 999.
Debtors argue that insurance proceeds from an insurance policy on homestead property stand in place of the property and are therefore exempt under the homestead exemption. Courts have generally so held. See, e.g., Booker v. First National Bank, 245 P. 881, 117 Okla. 179, 180 (Okla.1926) (holding proceeds from fire insurance policy exempt); In re Lewis, 28 B.R. 351, 354 (Bankr. M.D.Pa.1983); Ellis v. Pratt City, 111 Ala. 629, 20 So. 649 (Ala.1896). Debtors argue that, by analogy, the State Court Action should be exempt, since it relates to alleged damages to real estate currently used by Debtors as their homestead. The Court disagrees. The State Court Action for the nondisclosure of and failure to discover defects in the Residence is not analogous to the recovery of insurance proceeds for damage to one's homestead. The Bradley court dealt with the same issue:
The debtors contend that the cause of action in the instant case for fraudulent concealment of termite damage is analogous to the insurance claim in Ellis for damage caused by fire. However, Ellis is not applicable to the facts in the instant case because the debtors did not own the home when the termite damage occurred.
The basis of the cause of action is the fraudulent concealment of termite damage which preexisted their ownership.
The homestead exemption statute protects from creditors only a debtor's interest in the value of his home. The loss in the instant case could not affect the debtors' interest in the value of the home because the debtors did not own the home when the loss occurred. The ruling in this case does not undermine Ellis. Ellis merely holds that insurance proceeds may stand in *607 the place of destroyed property for purposes of exemption. Ellis does not create exemption rights where they do not otherwise exist.
In re Bradley, 212 B.R. at 999 (footnotes omitted). The Court finds that the State Court Action is not exempt under the Oklahoma homestead exemption.
NOTES
[1] Unless otherwise noted, all statutory references are to sections of the United States Bankruptcy Code, 11 U.S.C. § 101 et seq. (West 1998).
[2] Oklahoma has "opted out" of the federal bankruptcy exemptions found in § 522 of the Bankruptcy Code, adopting the state law exemptions in their place. 11 U.S.C. § 522(b) (West 1998); 31 Okla.Stat.Ann. tit. 31, § 1(A)(1) (West 1991). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539692/ | KENNETH E. FOWLER,[1] Petitioner Below, Appellant,
v.
PAMELA M. FOWLER, Respondent Below, Appellee.
No. 60, 2009, File No. CK05-02035.
Supreme Court of Delaware.
Submitted: April 2, 2009.
Decided: May 15, 2009.
Before HOLLAND, BERGER and JACOBS, Justices.
ORDER
CAROLYN BERGER, Judge.
This 15th day of May 2009, upon consideration of the appellant's opening brief and the appellee's motion to affirm, it appears to the Court that:
(1) By stipulation and order dated July 10, 2007 ("Agreement"), the parties, Kenneth E. Fowler ("Father") and Pamela M. Fowler ("Mother"), through their respective counsel, entered into an Agreement whereby "[l]egal custody and physical placement" of the parties' then eight-year old child ("child") was granted to Mother, and Father "expressly decline[d] any form or type of scheduled contact, or visitation."[2] The Agreement further provided that "[p]rior to and in connection with any subsequent request of Father to have contact with [the child], Father and Mother shall be required to participate in a "course of therapeutic `reunification' counseling" that was further defined in the Agreement.[3] Moreover, the Agreement provided that "[n]o Petition, Motion or other application filed by Father seeking an Order of [the Family] Court for contact with [the child] will proceed to mediation, or other judicial scheduling, until such time as Father has completed the requirements of therapeutic reunification counseling set forth in [the Agreement]."[4]
(2) In December 2007, five months after entering into the Agreement, Father, through counsel, moved for standard visitation plus additional visitation time with the child.[5] Mother opposed Father's motion on the basis that Father had not participated in the reunification counseling required by the Agreement.
(3) On October 28, 2008, a hearing was held before a Family Court Judge on Father's motion for visitation.[6] Six witnesses testified at the hearing: Father, Mother, the family's reunification counselor, the child's therapist, the visitation supervisor, and the fifteen-year-old daughter of Father's girlfriend.
(4) At the conclusion of the hearing, the Family Court denied Father's request for standard visitation and ordered that visitation would be held at a Visitation Center in accordance with a written decision issued by the Court at a later date. The Court also indicated that it would grant attorney's fees to Mother in an amount to be determined.
(5) Six days later, and prior to the issuance of the Family Court's written decision, Father, through counsel, filed a motion for new trial.[7] Father alleged that the child's therapist, who had testified at the hearing and expressed an opinion on visitation, "had been engaged in the unauthorized practice of clinical social work."[8]
(6) On November 14, 2008, the Family Court issued its written decision. First, on Father's motion for visitation, the Court found that "it is in the best interests of [the child], for Father to have [weekly] visitation, but with specific restrictions and conditions in place."[9] Second, on Father's motion for new trial, the Family Court denied the motion, stating:
Whether or not [the child's therapist] is licensed only goes to the weight of her qualifications, not an outright prohibition to testify in her area of expertise, based upon education, training and experience. Lack of authority to practice in this State does not disqualify one. However, more importantly, there was ample evidence presented, other than [the child's therapist's] testimony, that the Court assessed, weighed and accepted in reaching its decision. Interestingly enough, the Court did not accept [the child's therapist's] recommendation of once a month visitation and opted to weekly visitation, but with a delay in the start so that the child maybe better prepared.[10]
Third, the Court assessed attorney's fees against Father on the basis that his position on the motion for visitation was "clearly meritless and without any basis in law and fact."[11]
(7) On December 2, 2008, Father filed a pro se document entitled "Motion for Reconsideration or Motion for a New Trial before a New Judge." On December 17, 2008, the Family Court denied Father's motion. By separate order, the Court directed that Father pay Mother's attorney's fees in the amount of $3,510.
(8) On December 31, 2008, Father filed a pro se document entitled "Motion for Extension of Time/ Motion for Reconsideration of Attorney Fees/ Motion for a New Fair Trial before a New Judge/ Motion for Clarification." By order dated January 9, 2009, the Family Court denied Father's motion. This appeal followed.[12]
(9) Father's arguments, fairly summarized, are that (i) the Family Court "failed to recognize the significance of the unlicensed status" of the child's therapist; (ii) there were inconsistencies in the testimonies of the family's reunification counselor and the child's therapist; and (iii) the Family Court improperly awarded attorney's fees to Mother. Mother has moved to affirm the judgment of the Family Court on the ground that it is manifest on the face of Father's opening brief that the appeal is without merit.[13]
(10) This Court's review of appeals from the Family Court "extends to a review of the facts and law as well as to a review of the inferences and deductions made" by the judge.[14] The Court will not disturb the Family Court's "findings of fact unless they are clearly wrong and justice requires their overturn."[15] If the Family Court "has correctly applied the law, our standard of review is for abuse of discretion."[16] Errors of law are reviewed de novo.[17]
(11) The Court has carefully considered the parties' positions on appeal and the Family Court record and can discern no legal error or abuse of discretion on the part of the Family Court with respect to its decisions on Father's motion for visitation and related motions. An order concerning visitation may be modified at any time if the best interests of the child would be served by such modification.[18] In this case, the record clearly reflects that the Family Court modified Father's visitation in a manner that was consistent with the child's best interests.
(12) Nor can the Court conclude that the Family Court abused its discretion when awarding attorney's fees based on a finding that Father's motion for visitation had no basis in law or fact. The Family Court ruled that:
[Father's] conduct was such that he disregarded not only the position of his counsel, but the recommendation of [the reunification counselor], who was his expert witness. [Father] even disregarded his own personal position during his testimony, which went from bad to worse, by requesting more contact than he originally requested, even after hearing, again from his counsel and his expert witness, what they were presenting as the child's best interests.[19]
The Family Court's award of attorney's fees to Mother was the product of an orderly and logical deductive process.
NOW, THEREFORE, IT IS ORDERED that the motion to affirm is GRANTED. The judgment of the Family Court is AFFIRMED.
NOTES
[1] By Order dated February 9, 2009, the Court sua sponte assigned pseudonyms to the parties. Del. Supr. Ct. R. 7(d).
[2] Fowler v. Fowler, Del. Fam., File No. 05-02035; Pet. Nos. 05-22038, 05-26415, 05-31080, 07-10804, Pyott, J. (July 10, 2007) (stipulation and order) (emphasis added).
[3] Id.
[4] Id.
[5] The Court takes judicial notice of the Family Court's "Standard Visitation Guidelines," available at http://courts.state.de.us/How%20To/Visitation/?visitation.htm. See also Reston v. Gertner, 2007 WL 1206948 (Del. Supr.) (providing that [s]tandard visitation consists of one overnight a week and every other weekend with the non-custodial parent).
[6] The record reflects that on June 12, 2008, a Family Court Commissioner issued a stipulated order providing Father with temporary supervised visitation.
[7] In a pro se amendment to the motion for new trial filed on November 13, 2008, Father advised the Court that he had terminated the services of his counsel.
[8] It appears from the record that the therapist's professional license issued by the State Division of Professional Regulation expired on January 31, 2007, due to an oversight by the therapist.
[9] Fowler v. Fowler, Del. Fam., File No. CK05-02035, Pet. No. 07-38766, Walls, J. (Nov. 14, 2008).
[10] Id., n. 3.
[11] Fowler v. Fowler, Del. Fam., File No. CK05-02035, Pet. No. 07-38766, Walls, J. (Nov. 14, 2008).
[12] Both Father and Mother are proceeding pro se on appeal.
[13] Del. Supr. Ct. R. 25(a).
[14] Wife (J.F.V.) v. Husband (O.W.V., Jr.), 402 A.2d 1202, 1204 (Del. 1979).
[15] Solis v. Tea, 468 A.2d 1276, 1279 (Del. 1983).
[16] Jones v. Lang, 591 A.2d 185, 186 (Del. 1991).
[17] In re Heller, 669 A.2d 25, 29 (Del. 1995).
[18] Del. Code Ann. tit. 13, § 729 (1999).
[19] Fowler v. Fowler, Del. Fam., File No. CK05-02035, Pet No. 07-38766, Walls, J. (Nov. 14, 2008). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539664/ | 974 A.2d 1194 (2009)
COM.
v.
WELCH.
No. 1329 WDA 2008.
Superior Court of Pennsylvania.
April 8, 2009.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539722/ | 974 A.2d 1177 (2009)
COM.
v.
BULLOCK.
No. 1382 MDA 2008.
Superior Court of Pennsylvania.
April 6, 2009.
Vacated and Remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2857831/ | krueger
IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-91-293-CR
KENT ANTHONY KRUEGER,
APPELLANT
vs.
THE STATE OF TEXAS,
APPELLEE
FROM THE DISTRICT COURT OF COMAL COUNTY, 274TH JUDICIAL DISTRICT
NO. CR90-258, HONORABLE FRED A. MOORE, JUDGE PRESIDING
Over a plea of not guilty, the jury found appellant Kent Anthony Krueger guilty
of unlawful possession of methamphetamine, a controlled substance. See Tex. Health & Safety
Code Ann. §§ 481.102(6), 481.115(b) (Pamph. 1992). The jury assessed his punishment at five-years imprisonment. On its own motion, the trial court found Krueger was not indigent for
purposes of appeal. Krueger appeals from this finding. We will affirm the judgment.
THE CONTROVERSY
After being indicted for possession of a controlled substance, Krueger applied for
a court-appointed attorney. In his application Krueger acknowledged owning a motorcycle, but
swore he had no money and had no ability to obtain credit to raise money. He did not mention
any lien on the motorcycle. The court appointed an attorney to represent Krueger at trial.
After the jury found Krueger guilty and fixed his punishment, the trial court
pronounced sentence on June 3, 1991. In that same proceeding, Krueger's attorney gave oral
notice of appeal, whereupon the court sua sponte took up the issue whether Krueger was indigent.
During the indigency hearing, Krueger stated that his mother bought him the
motorcycle mentioned in the earlier application for court-appointed counsel in exchange for
Krueger's waiver of rights in a trust fund. The State had taken custody of the motorcycle at some
earlier time, perhaps on Krueger's arrest, but approximately a week before trial Krueger's mother
replevied the motorcycle for $3500. Krueger therefore had possession of the motorcycle at the
time of trial. He stated during the hearing that he owned the motorcycle "with a clear title in my
name." He also stated the motorcycle had a "book value" of $4400.
The trial court asked Krueger's mother, a Ms. Kaufman, whether she intended to
assist her son in his appeal. She stated that she could not afford to pay for an attorney for
Krueger. Based on the statements of Krueger, his mother and his attorney, the trial judge said,
"It's my finding he's not indigent. He's got access to money. That is all I've heard, sir. I'm not
paying for any appointed attorney on appeal."
On June 12, 1991, Krueger filed a second application for court-appointed attorney.
On that document he wrote, "Motorcycle has $3000 lein [sic] on title. Balance owed to Mother
and NCNB. Sorry, no dice." Krueger swore that he had no other assets except a few items of
furniture and an automobile worth $100. On the same day the trial court denied Krueger's
application, stating that he found Krueger was not indigent and therefore was not entitled to a free
record or to court-appointed counsel on appeal.
On June 18, 1991, Krueger filed an indigent's motion for statement of facts. The
trial court denied the motion. Krueger then filed a notice of appeal on the issue of indigency.
DISCUSSION
In his sole point of error, Krueger complains the trial court erred in refusing to
grant the request for a court-appointed attorney. Krueger argues that he established his indigency
by showing that he was unemployed, that he had no access to a trust fund, that he had no other
money, and that he had no one to help him with his legal fees. The State offered no argument or
evidence in rebuttal of Krueger's application. See Snoke v. State, 780 S.W.2d 210, 213 (Tex.
Crim. App. 1989) (once a defendant makes a prima facie showing of indigency, he is entitled to
court-appointed counsel unless the State offers evidence to rebut the claim).
The State contends Krueger failed to make a prima facie showing of indigency
because he admitted before the court that he had possession of and clear title to a motorcycle
worth $4400. Therefore, argues the State, the trial court did not abuse its discretion in denying
Krueger's application for a court-appointed attorney. See Rosales v. State, 748 S.W.2d 451, 455
(Tex. Crim. App. 1987) (the determination of indigency lies within the discretion of the trial
court), cert. denied, 487 U.S. 1241 (1988). We agree.
A defendant claiming indigency status (1) must exercise due diligence in asserting
his indigency, including filing his affidavit; and (2) must sustain the allegations of his affidavit
as to indigency at the hearing. Snoke, 780 S.W.2d at 212-13. We conclude no due-diligence
issue arises in this cause. The trial court addressed the indigency issue sua sponte before Krueger
had a chance to file his application for court-appointed counsel on appeal. Moreover, Krueger
filed his application within ten days of the hearing and obtained a ruling the same day.
The dispositive issue, then, is whether Krueger sustained his allegations that he had
no money and could not obtain money by selling his motorcycle. (1) See id. at 213 (the defendant
at an indigency hearing bears an initial burden to go forward with evidence to substantiate his
sworn allegation of indigency). From Krueger's statements at the hearing and in his affidavit, we
believe he established that he has no money and no opportunity to obtain money from his mother
or others. See Rosales, 748 S.W.2d at 455 (a court should consider only the defendant's financial
condition, not that of parents, friends or others). We do not believe he established that his
motorcycle was encumbered and therefore unavailable for sale.
During the hearing, Krueger said he had clear title to the motorcycle and that the
motorcycle had a book value of $4400. His mother, Kaufman, stated that she "gave" the
motorcycle to Krueger and that the motorcycle was "in his name." Finally, Krueger's attorney
stated that Krueger had possession of the motorcycle at the time of the hearing. No one at the
hearing mentioned a lien on the motorcycle in favor of Kaufman or a bank, nor did Krueger list
any liens on the motorcycle in his first application for a court-appointed attorney to represent him
at trial. The first mention of the liens appeared in the affidavit Krueger filed June 12, 1991.
Krueger argues that when a defendant is represented at trial by court-appointed
counsel, a presumption arises that the defendant is indigent for purposes of appeal as well, absent
a contrary showing. See Morey v. State, 744 S.W.2d 668, 669 (Tex. App. 1988, no pet.) (citing
Bush v. State, 557 S.W.2d 772, 773 (Tex. Crim. App. 1977)). A court, however, must determine
indigency at the time the appeal is filed, not at the time of trial. Snoke, 780 S.W.2d at 213;
Abdnor v. State, 712 S.W.2d 136, 142 (Tex. Crim. App. 1986). At the time Krueger gave his
oral notice of appeal, he stated that he had clear title to the motorcycle. We believe Krueger
rebutted the presumption of indigency by his own statements. See Castillo v. State, 571 S.W.2d
6, 7 (Tex. Crim. App. 1978) (the fact that the defendant has appointed counsel at trial is not
dispositive on the issue of indigency for purposes of appeal).
Courts cannot determine indigency by rigid standards; instead, they must decide
on a case-by-case basis whether the defendant is indigent. Snoke, 780 S.W.2d at 212. On the
facts of this case, we cannot say the trial court abused its discretion in denying Krueger's
application for a court-appointed attorney. See Taylor v. State, 799 S.W.2d 445, 446-47 (Tex.
App. 1990, no pet.) (appellant did not make prima facie showing of indigency when evidence
established he had automobile and jewelry he could sell to obtain funds for appeal). We overrule
the point of error.
Finding no error, we affirm the trial-court judgment in all respects.
John Powers, Justice
[Before Justices Powers, Jones and Kidd]
Affirmed
Filed: June 10, 1992
[Do Not Publish]
1. Krueger does not complain on appeal that the trial court erred by deciding the
indigency issue before Krueger filed his second application for court-appointed attorney
or by failing to hold a hearing on the second application. Therefore, we will assume
Krueger was obligated to establish at the hearing the allegations made in his subsequent
affidavit. He does not allege his financial circumstances changed between the hearing and
the filing of the second application. | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2857835/ | IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-90-279-CV
CELTIC LIFE INSURANCE COMPANY,
APPELLANT
vs.
JOHN D. COATS, JR.,
APPELLEE
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT
NO. 420,876, HONORABLE JON N. WISSER, JUDGE
This is an appeal from a suit by an insured against his group health insurer,
Celtic Life Insurance Company, for misrepresentations made by the insurer's soliciting agent.
Suit was brought under the Insurance Code article 21.21 (1) and the Deceptive Trade Practices-Consumer Protection Act (DTPA), (2) and on theories of common-law fraud and
misrepresentation. Judgment was rendered on a verdict in favor of the insured. We affirm the
judgment.
THE CONTROVERSY
In August 1984 appellee, John D. Coats, Jr., acquired ownership of Aloha
Pools, a swimming pool construction and service company. Aloha had previously been part of
a larger company called Swim Pack. When Aloha became a separate entity it fell below the
minimum number of employees necessary to continue group health insurance coverage with
Swim Pack's insurer. That coverage ceased for Aloha's employees on January 31, 1985.
In September 1984 Coats met with Ken Harrell, an independent insurance agent
and Celtic's soliciting agent, to discuss replacement coverage. According to Coats, he told
Harrell he was particularly interested in psychiatric benefits equal to or greater than the
$20,000 psychiatric benefits available under Swim Pack's policy.
Harrell returned with a brochure describing the coverage and benefits of a
policy from Celtic called the "Horizon Plan." Harrell orally summarized the brochure for
Coats and discussed the benefits of the plan with Paula Engelmann, Aloha's business manager.
Both Coats and Engelmann maintain that Harrell represented to them that the plan's $1 million
maximum lifetime benefit applied to in-hospital psychiatric care. On Engelmann's
recommendation, Coats purchased the Celtic policy, which became effective February 1, 1985.
Coats's son was admitted to Shoal Creek Hospital for psychiatric care the
following August. Only then did Coats discover that Celtic's policy covered only $10,000 of
his son's psychiatric treatment. Despite Harrell's further assurances at this time that the in-hospital psychiatric treatment was covered by the $1 million hospitalization limit, Celtic paid
only $10,000 of the $27,000 medical expenses.
Coats filed suit seeking to hold Celtic liable for the additional costs of the
psychiatric care on theories of common-law fraud and misrepresentation, and under the DTPA
and article 21.21. The jury found that Ken Harrell had authority to explain, on behalf of
Celtic, the benefits of the insurance policy and had misrepresented the terms, benefits,
provisions, or conditions of the policy, which was the producing cause of damages to Coats.
The jury failed to find that the misrepresentation was made knowingly or that Celtic authorized
Harrell to make representations outside the scope of the written document concerning the
insurance policy's terms, benefits, provisions, and conditions.
The trial court rendered judgment on the verdict awarding Coats $27,584.57 in
actual damages, consisting of reasonable and necessary medical expenses and prejudgment
interest. This amount was trebled under the mandatory treble-damages provision of article
21.21. 1985 Tex. Gen. Laws, ch. 22, § 3, at 395 (Tex. Ins. Code Ann. art. 21.21, §
16(b)(1), since amended). The trial court also awarded Coats attorney's fees and court costs
under article 21.21, section 16.
SUFFICIENCY OF THE EVIDENCE Celtic's first point of error complains that the evidence was factually insufficient
to support the jury's affirmative answer to question number one. As submitted to the jury, this
question read:
Did Kenneth Harrell make any misrepresentations concerning the terms, benefits,
provisions, or conditions of the insurance policy such as to be a producing cause
of damages to John Coats, Jr., . . . .
The court defined "misrepresentation" to the jury as any of the following:
(1) any untrue statement of a material fact; or
(2) any omission to state a material fact necessary to make the statements made not
misleading (considered in the light of the circumstances under which they are
made) or;
(3) the making of any statement in such a manner or order to mislead a reasonably
prudent person to a false conclusion of a material fact.
In reviewing the factual sufficiency of the evidence the court must consider and
weigh all of the evidence, both supportive of and contrary to the contested finding. Plas-Tex, Inc.
v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989). The contested findings will be upheld
unless we find that: (1) the evidence is too weak to support the finding; or (2) the finding is so
against the overwhelming weight of the evidence as to be manifestly unjust. Garza v. Alviar, 395
S.W.2d 821, 823 (Tex. 1965). We will not substitute our finding for that of the trier of fact
merely because we might have reached a different factual conclusion. Otis Elevator Co. v.
Joseph, 749 S.W.2d 920, 923 (Tex. App. 1988, no writ).
After considering all of the evidence in the record we hold that the evidence was
sufficient for the jury to conclude that Harrell made untrue statements of material fact, omitted
to state a material fact, and made a statement that misled Coats to arrive at false conclusions
regarding the policy's coverage, all of which come within the court's definition of
misrepresentation.
Coats testified that he told Harrell at their first meeting that he was particularly
interested in psychiatric benefits because one of his sons had required psychiatric care and he
anticipated that his second son might need similar care. He gave Harrell a brochure explaining
Swim Pack's coverage and requested that Harrell find replacement coverage that included
psychiatric benefits equal to or greater than the $20,000 available under Swim Pack's policy.
Harrell returned with a brochure describing Celtic's Horizon Plan and orally summarized the plan
for Coats, comparing Swim Pack's plan limit of $20,000 psychiatric benefits to the Horizon Plan's
maximum lifetime hospitalization benefits of $1 million, without mentioning that psychiatric
benefits were limited to $10,000. Coats could not remember whether Harrell ever expressly told
him that the $10,000 limit on psychiatric care benefits applied only to doctors and not to
hospitalization. Coats never read the brochure himself. Even if he had read there was a $10,000
limit, he conceded that he might have bought the policy anyway.
Coats testified that he delegated the responsibility for finding out about the
insurance coverage to Engelmann, asking her to go over the brochure, listen to Harrell's
presentation, and have Harrell answer her questions. Engelmann never told Coats the substance
of her conversations with Harrell about the psychiatric-care benefits; she told him only that she
was satisfied with the policy. Coats bought the policy based on Engelmann's opinion.
After his second son was admitted to Shoal Creek Hospital in August 1985 for
psychiatric care, Coats discovered for the first time there was a $10,000 limit on psychiatric-care
benefits. He called Harrell, who again assured him that he was covered and that the plan covered
$1 million of hospitalization. Celtic paid only the $10,000 and Coats paid the remaining $17,000.
Engelmann testified that she was present when Coats told Harrell at their first
meeting that he was interested in psychiatric-care benefits. When she read in the brochure that
there was a $10,000 limit on psychiatric benefits she discussed the matter with Harrell. He told
her that the $10,000 limit applied only to out-patient psychiatric care while the $1 million
hospitalization limit applied to in-patient psychiatric care.
Engelmann agreed that the section of the brochure explaining psychiatric benefits
does not specify that the $10,000 limit applies only to out-patient care and that Harrell did not tell
her he was authorized to change or alter the terms of the policy. Nevertheless, after reading the
brochure and discussing the coverage with Harrell, Engelmann told Coats she was satisfied with
the policy.
Harrell was unable to recall the details of his dealings with Coats and Engelmann.
He testified that he was not sure whether he told Coats the psychiatric care was limited to
$10,000, but he testified he never told anyone there was a $1 million limit on psychiatric-care
coverage, whether in-hospital or at the doctor's office; he knew that the $10,000 applied to all
psychiatric care. He never told Coats or Engelmann that he was authorized to do more than
explain coverage discussed in the brochure and he had no incentive to trick Coats because his
commission was only about sixty dollars per month. He testified that Coats and Engelmann told
him at one meeting that they did not have time to sit down and go over all the details of the policy
and asked him to leave a brochure for them to review.
Although there was conflicting evidence, the jury was able to hear the testimony
and view the demeanor of Coats, Engelmann and Harrell. They apparently found Coats's and
Engelmann's versions of the events more persuasive than Harrell's. The jury is the sole judge of
the credibility of the witnesses and the weight of their testimony and is free to believe or
disbelieve that testimony in whole or in part. Rego Co. v. Brannon, 682 S.W.2d 677, 680 (Tex.
App. 1984, writ ref'd n.r.e.). We overrule Celtic's first point of error.
RELIANCE In points of error two and three Celtic complains that the trial court erred in
refusing to submit its proposed jury question on reliance and in entering judgment without
obtaining a jury finding that Coats relied on Harrell's misrepresentation in deciding to purchase
the insurance policy. Celtic argues that there can be no producing cause without a finding that
the consumer relied on the misrepresentation. We disagree.
Reliance is not an element that consumers are required to prove in order to recover
for misrepresentations under the DTPA. In Weitzel v. Barnes, 691 S.W.2d 598, 600 (Tex. 1985),
the Texas Supreme Court reviewed the legislative history of the 1979 amendments to the DTPA
and held that proof of reliance on a misrepresentation is not required before a consumer can
recover. See also Crawford & Co. v. Garcia, 817 S.W.2d 98, 101 (Tex. App. 1991, no writ).
Appellant urges this Court to adopt Justice Gonzalez's dissenting view in Weitzel
and hold that reliance is implicit in producing cause and, therefore, should be a necessary element
of the plaintiff's proof. Weitzel, 691 S.W.2d at 601-02 (Gonzalez, J., dissenting); see also Brown
Foundation Repair & Consulting v. McGuire, 711 S.W.2d 349, 354 (Tex. App. 1986, writ ref'd
n.r.e.) (Akin, J., concurring). We decline to do so. Although this Court acknowledges that
reliance can be a factor in deciding whether a misrepresentation was a producing cause, and
certainly proof of reliance will strengthen a plaintiff's case, reliance is not a necessary element
of producing cause that a plaintiff must prove in order to recover damages under the DTPA.
We overrule Celtic's second and third points of error.
VICARIOUS LIABILITY By points of error four and five Celtic complains that it was error to hold Celtic
vicariously liable for Harrell's misrepresentation. Celtic argues that it is not vicariously liable
because Harrell was a soliciting agent, rather than a recording agent. Celtic also argues that it
is not liable because Harrell was not authorized to make any representations about policy coverage
beyond those made in Celtic's brochure.
Texas law provides two statutory remedies to consumers for misrepresentations by
insurance agents. The Insurance Code defines "[m]aking . . . any . . . statement
misrepresenting the terms of any policy issued or to be issued" as an unfair and deceptive act or
practice in the business of insurance. Tex. Ins. Code Ann. art. 21.21, § 4(1) (Supp. 1992).
Violation of article 21.21, section 4, is actionable under either article 21.21, section 16, of the
Insurance Code or section 17.50(a)(4) of the DTPA.
In Royal Globe Insurance Company v. Bar Consultants, Inc., 577 S.W.2d 688
(Tex. 1979), the Texas Supreme Court held an insurer liable under article 21.21 and the DTPA
for misrepresentations made by the insurer's local recording agent. Celtic argues that Royal
Globe is not determinative because Harrell is a "soliciting agent," not a "local recording agent."
The Insurance Code establishes the extent of authority of both types of agents. A
soliciting agent's authority is limited to receiving and forwarding applications for insurance; such
an agent has no authority to make a contract on behalf of the insurance company or to alter or
waive any terms of the policy. Tex. Ins. Code Ann. art. 21.04 (Supp. 1992); see also Guthrie v.
Republic Nat'l Life Ins. Co., 682 S.W.2d 634, 636 (Tex. App. 1984, writ ref'd n.r.e.). The
soliciting agent's authority is much more limited than that of the local recording agent, who is
additionally authorized to write, sign and execute insurance policies and to bind the insurer. Tex.
Ins. Code Ann. art. 21.14, § 2 (Supp. 1992); see also Royal Globe, 577 S.W.2d at 693. Both
soliciting and local recording agents are "agents" of the insurance company. Tex. Ins. Code Ann.
art. 21.02 (Supp. 1992).
Texas courts disagree on whether Royal Globe applies when a soliciting agent
makes a misrepresentation. Compare Guthrie, 682 S.W.2d at 634 and American Nat'l Life Ins.
Co. v. Montgomery, 640 S.W.2d 346 (Tex. App. 1982, writ ref'd n.r.e.) (holding insurer is not
liable for misrepresentations of soliciting agent) with Paramount Nat'l Life Ins. Co. v. Williams,
772 S.W.2d 255 (Tex. App. 1989, writ denied); Lucadou v. Time Ins. Co., 758 S.W.2d 886 (Tex.
App. 1988, no writ); Tidelands Life Ins. Co. v. Franco, 711 S.W.2d 728 (Tex. App. 1986, writ
ref'd n.r.e.); and Tidelands Life Ins. Co. v. Harris, 675 S.W.2d 224 (Tex. App. 1984, writ ref'd
n.r.e.) (holding insurer liable for misrepresentations of soliciting agent). However, we believe
Royal Globe does apply to soliciting agents. The focus of the court's rationale in Royal Globe
was on the agent's authority to sell insurance and in the process to make representations about the
policy, an authority both soliciting and local recording agents share:
Embrey as a local recording agent for Royal Globe, had statutory authority under
Article 21.02 and Article 21.14(2) to sell insurance policies for the company and
by necessary implication to represent the coverage afforded by such policies to the
consumer. If his representations were false as the trial court here found, under the
explicit language of Section 16, Article 21.21 and Section 17.46(b)(12) of the
DTPA, his actions constituted a deceptive act or practice for which his principal
is accountable.
Royal Globe, 577 S.W.2d at 694. We see no logical reason to relieve the insurer of statutory
liability merely because the soliciting agent's authority is limited to the sale of policies, while the
local recording agent has more extensive authority, none of which contributed to the reasoning
in Royal Globe.
In order to hold the insurance company vicariously liable it must be established that
an agent of the insurance company made the misrepresentation and that the agent had actual,
implied or apparent authority to make the representation. Royal Globe, 577 S.W.2d at 693;
Lucadou, 758 S.W.2d 886. Celtic does not argue that Harrell is not its agent. The jury found
that Harrell had "authority to explain, on behalf of Celtic, the benefits of the insurance policy."
Celtic has not attacked this finding on appeal. Thus, the two elements necessary to impose
vicarious liability on Celtic under article 21.21 and the DTPA for the misrepresentations of its
agent are established in this case. Celtic's fourth and fifth points of error are overruled.
TREBLE DAMAGES Celtic's sixth point of error complains that the trial court improperly trebled
damages because the jury did not find that Harrell's misrepresentations were made knowingly.
Celtic asserts that the cause of action accrued after the April 4, 1985, effective date of the
amendment to article 21.21 which requires a finding of knowing violation before damages are
trebled. See Tex. Ins. Code Ann. art. 21.21, § 16(b)(1).
Originally, both the DTPA and article 21.21 called for mandatory treble damages.
In 1979, the DTPA was amended to require that the conduct be committed knowingly before
damages in excess of $1000 could be trebled. Tex. Bus. & Com. Code Ann. § 17.50(b)(1) (1987).
Even then, trebling was discretionary in a standard DTPA case.
One exception to the "knowingly" requirement under the DTPA was a case brought
under section 17.50(a)(4) for violations of the Insurance Code article 21.21. In that instance, the
Texas Supreme Court held that the DTPA incorporates the Insurance Code in its entirety. Vail v.
Texas Farm Bureau Mut. Ins. Co., 754 S.W.2d 129, 132 (Tex. 1988). This Court has interpreted
the Vail decision to mean that § 17.50(a)(4) incorporated the mandatory treble damage provisions
of art. 21.21, § 16(b)(1), despite the discretionary treble damages language in § 17.50(b)(1). See
State Farm Fire & Casualty Co. v. Gros, 818 S.W.2d 908, 917 (Tex. App. 1991, no writ).
Article 21.21 was also amended in 1985 to require a finding that the prohibited
conduct be committed knowingly. Tex. Ins. Code Ann. art. 21.21, § 16(b)(1). The act amending
the Insurance Code provided that the amendment applies to a cause of action that "accrues" on or
after the effective date of the act. 1985 Tex. Gen. Laws, ch. 22, § 4, at 396. Thus, only in an
action that accrues on or after April 4, 1985, is a plaintiff required to plead and prove that a
violation of article 21.21 was committed knowingly.
The jury in this case failed to find that the conduct was committed knowingly. The
determinative issue in deciding whether the court erroneously trebled damages is, therefore, when
did the cause of action accrue. Celtic argues that the cause of action accrued when the claim was
denied in August 1985, citing Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826 (Tex. 1990).
Murray was a first-party bad-faith case and does not control our decision in this misrepresentation
case.
It is settled Texas law that a cause of action under the DTPA accrues when the
misrepresentation was made. La Sara Grain Co. v. First Nat'l Bank of Mercedes, 673 S.W.2d
558, 665 (Tex. 1984); Woods v. Littleton, 554 S.W.2d 662, 666 (Tex. 1977); State Farm Fire &
Cas. Co. v. Gros, 818 S.W.2d 908, 917 (Tex. App. 1991, no writ). Harrell's misrepresentation
was made between September 1984, when Harrell first met with Coats, and February 1, 1985,
the effective date of the policy. Accordingly, the cause of action accrued before the 1985
amendment became effective, and Coats is not required to show a knowing violation. Celtic's
sixth point of error is overruled.
In point of error seven, Celtic asserts that the trial court erroneously trebled
prejudgment interest, citing Vail, 754 S.W.2d at 137. Appellee responds that while it is improper
under Vail to calculate prejudgment interest on the trebled damages, it is proper under this Court's
opinion in Paramore v. Nehring, 792 S.W.2d 210 (Tex. App. 1990, no writ), to treble the amount
of actual damages, which includes prejudgment interest.
Although this argument initially appears to be merely a matter of semantics, further
scrutiny reconciles the apparent conflict between Vail and Paramore. The confusion stems from
the two principles underlying these cases. On the one hand, prejudgment interest may not be
awarded on punitive damages. See Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549,
555 (Tex. 1985). On the other, "actual damages," which has been held to include prejudgment
interest, are subject to being trebled under the DTPA. See Benavidez v. Isles Constr. Co., 726
S.W.2d 23, 25 (Tex. 1987); see also American Baler Co. v. SRS Systems, Inc., 748 S.W.2d 243,
250 (Tex. App. 1988, writ denied).
In Vail, the trial court erroneously trebled the amount of damages assessed by the
jury, then calculated prejudgment interest on that amount. The supreme court, relying on Cavnar,
held that it was improper to calculate prejudgment interest on the trebled amount of damages.
Without distinguishing Vail, this Court held in Paramore that prejudgment interest,
being an element of actual damages, is subject to being trebled under the DTPA. The reasoning
applied in Paramore is concisely discussed in one commentary as follows:
Recognizing that actual damages recoverable under the DTPA are those damages
recoverable at common law, the court [in Paramore] relied on the long standing
rule that interest as "compensation for detention of that which is due on account of
injury inflicted" constitutes common law damages. Such interest thus constitutes
actual damages under the DTPA, which may be trebled in appropriate cases.
Michael Curry & Melissa Krakauer, Deceptive Trade Practices and Commercial Torts, 45
Sw. L.J. 319, 324 (1991).
In fact, there is no conflict between Vail and Paramore; although the "bottom line"
amount of damages recovered may be the same, the process is distinguishable. The proper
process for calculating treble damages under the DTPA without violating the prohibition of Vail
is to (1) calculate prejudgment interest on the amount of damages assessed in the verdict, (2) add
prejudgment interest to the assessed damages to arrive at the total amount of "actual damages,"
then (3) treble that sum as appropriate.
Having reviewed the judgment, we agree with appellee that the trial court properly
calculated damages in this case. Celtic's seventh point of error is therefore overruled.
Finding no reversible error, we affirm the trial court's judgment.
Marilyn Aboussie, Justice
[Before Chief Justice Carroll, Justices Aboussie and Kidd]
Affirmed
Filed: June 10, 1992
[Publish]
1. Tex. Ins. Code Ann. art. 21.21, § 16(a) (Supp. 1992).
2. Tex. Bus. & Com. Code Ann. § 17.50(a)(3), (4) (1987). | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2857839/ | IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-91-580-CR
ROBERT KENDALL,
APPELLANT
vs.
THE STATE OF TEXAS,
APPELLEE
FROM THE COUNTY COURT AT LAW NO. 2 OF HAYS COUNTY
NO. 34,489, HONORABLE LINDA A. RODRIGUEZ, JUDGE
This appeal arises from appellant Robert Kendall's conviction for criminal mischief.
See Tex. Penal Code Ann. § 28.03 (Supp. 1992). We affirm.
Mr. Bodo Charlie Konze, owner and manager of the Merriweather Apartments,
evicted Kendall and his roommate from their apartment on November 2, 1990, for non-payment
of rent. They had five days after the eviction to retrieve their property from the apartment. Upon
entering the apartment on November 7, 1990, Konze discovered damage, including two large
holes in the back bedroom walls, one small hole in a living room wall, and a mural painted on the
living room ceiling with "Thanks a lot, Bodo" written on it.
By information and complaint, the State charged Kendall with the class A
misdemeanor of intentionally and knowingly damaging or destroying tangible property -- "to wit:
WALLS" -- without the effective consent of the owner for a pecuniary loss of more than $200 but
less than $750. Tex. Penal Code Ann. § 28.03(a)(1), (b)(3). The trial court found Kendall guilty
and assessed punishment at ninety days' confinement, probated for one year, and a fifty dollar
fine. The court also ordered Kendall to pay Konze restitution as a condition of his probation.
Kendall filed motions to set the judgment aside and for new trial. At a hearing, the court denied
the motions.
In his only point of error, Kendall complains that the trial court abused its
discretion in denying his motions because there is no evidence or insufficient evidence to prove
that the amount of damage he caused exceeded the $200 statutory minimum. (1) As an element of
the offense, the State must prove that the "pecuniary loss" was more than $200 but less than $750.
Elomary v. State, 796 S.W.2d 191, 193 (Tex. Crim. App. 1990). When the property is damaged
but not destroyed, the criminal mischief statute defines pecuniary loss as "the cost of repairing or
restoring the damaged property within a reasonable time after the damage occurred." Tex. Penal
Code Ann. § 28.06(b) (1989).
The decision whether to grant a new trial is within the discretion of the trial court
and will not be reversed on appeal absent an abuse of discretion. Appleman v. State, 531 S.W.2d
806, 810 (Tex. Crim. App. 1976). In reviewing the sufficiency of the evidence, we look at all
the evidence in the light most favorable to the judgment to determine whether any rational trier
of fact could have found all the essential elements of the crime beyond a reasonable doubt.
Jackson v. Virginia, 443 U.S. 307 (1979); Butler v. State, 769 S.W.2d 234, 239 (Tex. Crim.
App. 1989).
The prosecution presented evidence that there were two holes in the back bedroom
wall running from near the ceiling to near the floor and between three studs. Kendall admitted
at trial that he kicked the "collage of holes" in the back bedroom wall. As to the mural, Kendall
testified that he permitted a friend to paint it. Two witnesses testified that Kendall told them he
caused the damages. Thus, appellant admitted causing the majority of the damage to the
apartment. He only denied causing one small hole in a living room wall. The trial court found
him guilty of the offense as charged. On appeal, Kendall does not attack the sufficiency of the
evidence to prove that he caused damage to the apartment walls without the owner's consent.
Kendall argues instead that there was no attempt to quantify the cost of individual
repairs and thus no evidence that the cost of repairing the damage he admitted causing exceeded
the statutory minimum $200 pecuniary loss -- "The testimony was for repairs to all the damage
and not that admitted to by Appellant." See Kinkade v. State, 787 S.W.2d 507, 509-10 (Tex.
App. 1990, no pet.); Athey v. State, 697 S.W.2d 818, 821 (Tex. App. 1985, no pet.) (citing Wise
v. State, 494 S.W.2d 921, 924 (Tex. Civ. App. 1973, no pet.)). We disagree.
Konze testified that he paid $450 to repair the holes, and that this was a fair and
reasonable price for the repairs. The maintenance man who repaired the damage in December
1990 testified, "The total bill for everything that I did in that apartment as far as painting what
was messed up and repair of the walls and cleaning up came out to roughly 360-something
dollars." He also testified that the damage he repaired was not due to water damage or
deterioration. The owner's testimony that he paid a certain amount to repair the damaged
property is alone sufficient to prove the pecuniary loss element of criminal mischief. See
Kinkade, 787 S.W.2d at 509); Sepulveda v. State, 751 S.W.2d 667, 668-69 (Tex. App. 1988, pet.
ref'd).
We hold that the evidence was sufficient to prove the pecuniary loss element of
criminal mischief. We therefore overrule Kendall's point of error and affirm the trial court's
judgment.
Marilyn Aboussie, Justice
[Before Chief Justice Carroll, Justices Aboussie and B. A. Smith]
Affirmed
Filed: June 3, 1992
[Do Not Publish]
1. Kendall also complains in the same point of error that there was no evidence or
insufficient evidence that he intended to damage or destroy the property. However, this
complaint is not briefed and is therefore waived. Tex. R. App. P. Ann. 74(f) (Pamph.
1992). | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2857881/ | Stubblefield v. State
IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-91-377-CR
CHRIS B. STUBBLEFIELD, JR.,
APPELLANT
vs.
THE STATE OF TEXAS,
APPELLEE
FROM THE DISTRICT COURT OF BELL COUNTY, 146TH JUDICIAL DISTRICT,
NO. 40,328, HONORABLE RICK MORRIS, JUDGE
PER CURIAM
Appellant was convicted in a joint trial of five acts of forgery and was sentenced
to imprisonment for seven years and a $5000.00 fine. Tex. Penal Code Ann. § 32.21(b) (1989).
In two points of error, appellant contends that the district court erred in rendering judgment in
cause number 40,328 because the evidence is legally insufficient to support the judgment. We
will affirm.
Appellant allegedly stole checks belonging to Wayne Skinner, a legally blind,
elderly man who lives in a nursing home. A friend of appellant's worked in this nursing home.
Appellant attempted to pass one of Skinner's checks, number 572 (State's exhibit 4), at a King
Saver grocery store allegedly using a Department of Veteran's Affairs identification card showing
that appellant's name was Wayne Skinner. The check bore the purported signature of Wayne
Skinner as the drawer. The cashier called the police after recalling that Skinner's checks had been
reported as stolen. Appellant fled the grocery store after the cashier informed him the police were
coming and was later arrested after the police found him hiding under a pickup truck in the
parking lot.
Appellant was indicted in cause number 40,328 for forgery by possession of check
number 224 (State's exhibit 5) with intent to pass and transfer the check as well as intent to
defraud and harm another. Check number 224 had a blank payee, was purportedly drawn by
Skinner, and was endorsed with the purported signature of Chris Stubblefield and "SS#
XXX-XX-XXXX," the same number that was on check number 572 (State's exhibit 4). Appellant's
social security number is XXX-XX-XXXX. Check number 224 was passed at the King Saver grocery
store for merchandise. The store submitted the check to the bank, which later returned the check
unpaid as a forgery. The State was unable to detect appellant's fingerprints on the check.
Appellant's only explanation for the appearance of his social security number on check number
224 was that the police were responsible for it.
In his first point of error, appellant contends the evidence is insufficient to support
the judgment because the State has not proved that the purported drawer of the check, Skinner,
did not authorize appellant to write the check. See Payne v. State, 567 S.W.2d 4, 5 (Tex. Crim.
App. 1978). In Payne, the defendant's mother stated that it was possible that she authorized the
defendant to write her checks. The instant cause is distinguishable from Payne, however, because
Skinner testified that the only Chris Stubblefield he knew was white (appellant is African-American) and because Skinner testified that he did not believe he asked anyone to sign a check
for him that year. Skinner never stated that it was possible that he authorized appellant to write
checks for him.
The critical inquiry on review of the sufficiency of the evidence to support a
criminal conviction is whether the record evidence could reasonably support a finding of guilt
beyond a reasonable doubt. This Court does not ask whether it believes that the evidence at trial
established guilt beyond a reasonable doubt. Instead, the relevant question 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. Jackson v. Virginia,
443 U.S. 307, 318-19 (1979); Griffin v. State, 614 S.W.2d 155, 159 (Tex. Crim. App. 1981).
Viewing the evidence in the light most favorable to the prosecution, the jury could have
reasonably concluded that Skinner did not authorize appellant to write the check. Appellant's first
point of error is overruled.
In his second point of error, appellant contends the evidence is insufficient to
support the judgment because the State has not proved that the check was made, altered, executed,
completed, and authenticated at the time appellant allegedly possessed the check. In
circumstantial-evidence cases like the instant cause, we cannot sustain a conviction based on
circumstantial evidence if the circumstances do not exclude every other reasonable hypothesis
except that of the guilt of the defendant. Carlsen v. State, 654 S.W.2d 444, 449-50 (Tex. Crim.
App. 1983). (1) A review of the evidence, however, points to no other reasonable conclusion except
appellant's guilt: appellant was arrested while attempting to pass another of Skinner's checks at
the same grocery store; appellant possessed a false identification card in Skinner's name;
appellant's social security number and name were written on the check; appellant had access to
Skinner's checks; and Skinner was blind and did not remember writing a check to appellant.
Viewed in the light most favorable to the prosecution, the evidence is legally sufficient to prove
that check number 224 was made, altered, executed, completed, and authenticated at the time
appellant allegedly possessed it. Point of error two is overruled.
The judgment of the district court is affirmed.
[Before Justices Powers, Jones and Kidd]
Affirmed
Filed: May 6, 1992
[Do Not Publish]
1. See generally Geesa v. State, 820 S.W.2d 154, 161-62 (Tex. Crim. App. 1991)
(overruling Carlsen and requiring the use of an express instruction on "reasonable doubt").
Geesa is limited to cases tried after November 6, 1991, and, thus, does not apply to this cause. | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1539765/ | 974 A.2d 276 (2009)
2009 ME 57
Kelly Jo COOKSON
v.
BREWER SCHOOL DEPARTMENT et al.
Docket: Pen-07-706
Supreme Judicial Court of Maine.
Argued: May 15, 2008.
Decided: June 2, 2009.
*278 Arthur J. Greif, Esq. (orally), Andrea V.W. Wan, Esq., Julie D. Farr, Esq., Gilbert & Greif, P.A., Bangor, ME, for Kelly Jo Cookson.
Melissa A. Hewey, Esq. (orally), Drummond Woodsum & MacMahon, Portland, ME, for Brewer School Department and Daniel Lee.
Panel: SAUFLEY, C.J., and CLIFFORD, ALEXANDER, LEVY, and GORMAN, JJ.
SAUFLEY, C.J.
[¶ 1] Kelly Jo Cookson appeals from a summary judgment entered in the Superior Court (Penobscot County, Cuddy, J.) in favor of the defendants, Brewer School Department and Superintendent Daniel Lee, on Cookson's complaint alleging (1) sexual orientation employment discrimination, in violation of the Maine Human Rights Act, for the school's failure to rehire her as a high school softball coach, see 5 M.R.S. §§ 4571-4572 (2008), and (2) slander per se regarding certain statements made by Lee to parents who supported Cookson. We affirm in part and vacate in part.
*279 I. BACKGROUND
[¶ 2] Viewing the evidence in the light most favorable to Cookson as the nonprevailing party, see Dyer v. Dep't of Transp., 2008 ME 106, ¶ 14, 951 A.2d 821, 825, the following facts are supported in the summary judgment record.
[¶ 3] Cookson was the head coach of the Brewer High School varsity softball team from 1993 until 2005. During her tenure, the team was considered to be successful and made the playoffs in all but one of those years. Cookson is a lesbian.
[¶ 4] During the 2005 season, a player on Cookson's team quit, and that player's mother made a complaint to Betsy Webb, who was then the superintendent. Among other things, the complaint accused Cookson of subjecting her players to verbal abuse and hazing, and specifically referenced an incident before the 2005 season during which players were brought to a farm where, in Cookson's presence, they touched and walked in sheep feces. Webb investigated the allegations contained in the complaint and discovered that a similar incident had occurred prior to the 2004 season. As a result of her investigation, Webb issued a letter of reprimand to Cookson.
[¶ 5] Lee succeeded Webb as superintendent for the Brewer School Department in September 2005. The following month, Lee received a notice of tort claim from the same family that had made the previous complaint to Webb.[1] The tort claim was based on many of the same allegations as that complaint, and referenced the sheep farm incidents in 2004 and 2005. Immediately after receiving the notice of tort claim, Lee met with Cookson and the athletic director, Dennis Kiah. During that meeting, Cookson told Lee that she would not resign, and he replied, "We're not even thinking along those lines." Also at that meeting, Cookson brought to Lee's attention alleged hazing incidents on other teams. While Lee was considering whether to recommend Cookson as coach for the 2006 season, he conducted an investigation into the tort claim and learned about the earlier complaint and resulting letter of reprimand.[2]
[¶ 6] At some point before he made his hiring recommendation to the School Committee in late January or early February, Lee was made aware of Cookson's sexual orientation. During that time, Lee also met with parents who expressed support for Cookson. Lee told those parents that he had knowledge of items in Cookson's personnel file that he could not share with them and that Cookson may not have been entirely truthful with them. Lee also told them about a staff member at another school where he had worked who had been involved in a nudist colony and implied that there were similarities to Cookson's situation.
[¶ 7] Lee ultimately decided not to nominate Cookson as the head softball coach for the 2006 season. Lee asserts that this decision was based primarily on Cookson's involvement in hazing activities in 2004 and 2005, in violation of the school's anti-hazing policy, and Lee's belief that Cookson was not providing a "balanced" sports program for the team. Lee nominated Skip Estes to replace Cookson. Estes, who had been the junior varsity softball coach for one year while Cookson was the head coach, and who had coached *280 summer softball for several years, is married to a woman. The School Committee accepted Lee's recommendation and hired Estes as the head softball coach.
[¶ 8] When Cookson's contract was not renewed, she filed a complaint in the Superior Court alleging (1) employment discrimination, in violation of sections 4571 and 4572 of the MHRA, for the School Department's failure to rehire her as a high school softball coach, and (2) slander per se for Lee's statement to parents that there were things in Cookson's personnel file that he could not discuss with them. After filing an answer, the School Department and Lee jointly moved for summary judgment and the parties each filed statements of material facts with references to supporting evidence pursuant to M.R. Civ. P. 56(h).
[¶ 9] The court entered summary judgment in favor of the School Department and Lee on both the discrimination and slander per se claims. For the purposes of its summary judgment analysis, the Superior Court accepted that Cookson had demonstrated the elements of a prima facie case of discrimination and determined that the School Department and Lee had articulated a legitimate, nondiscriminatory reason for declining to rehire Cookson. See McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973). The court then concluded, viewing the evidence in Cookson's favor, that she had failed to present sufficient evidence that the stated reason she was not rehired was a pretext for illegal discrimination based on her sexual orientation. See id. at 804-05, 93 S. Ct. 1817.
[¶ 10] Regarding the slander per se count of Cookson's complaint, the court determined that the statement Lee had made regarding Cookson's personnel file was true and therefore not defamatory because he was required to keep employee information confidential, including evaluations of employee performance, complaints, and charges of misconduct. Cookson timely appealed from the judgment.
II. DISCUSSION
[¶ 11] We review a grant of summary judgment de novo, viewing the facts and any inferences that may be drawn from them in the light most favorable to the nonprevailing party to determine if the statements of material facts and referenced record evidence generate a genuine issue of material fact. Dyer, 2008 ME 106, ¶ 14, 951 A.2d at 825. "An issue is genuine if there is sufficient evidence supporting the claimed factual dispute to require a choice between the differing versions; an issue is material if it could potentially affect the outcome of the matter." Brown Dev. Corp. v. Hemond, 2008 ME 146, ¶ 10, 956 A.2d 104, 108.
[¶ 12] Although no longer an extreme remedy, summary judgment is "not a substitute for trial." Arrow Fastener Co. v. Wrabacon, Inc., 2007 ME 34, ¶ 18, 917 A.2d 123, 127. Thus, "[e]ven when one party's version of the facts appears more credible and persuasive to the court, a summary judgment is inappropriate if a genuine factual dispute exists that is material to the outcome," in which case "the dispute must be resolved through fact-finding," regardless of the nonmoving party's likelihood of success. Id. ¶ 17, 917 A.2d at 126-27.
A. Employment Discrimination Claim
[¶ 13] The Maine Human Rights Act provides that it is illegal for an employer to fail or refuse to hire a person based on that person's sexual orientation:
Unlawful employment discrimination
1. Unlawful employment. It is unlawful employment discrimination, in violation *281 of this Act, except when based on a bona fide occupational qualification:
A. For any employer to fail or refuse to hire or otherwise discriminate against any applicant for employment because of ... sexual orientation....
5 M.R.S. § 4572. Sexual orientation is defined as "a person's actual or perceived heterosexuality, bisexuality, homosexuality or gender identity or expression." 5 M.R.S. § 4553(9-C) (2008). The Act provides that "a person who has been subject to unlawful discrimination may file a civil action in the Superior Court against the person or persons who committed the unlawful discrimination." 5 M.R.S. § 4621(2008).
[¶ 14] Federal law guides our construction of the MHRA. Currie v. Indus. Sec., Inc., 2007 ME 12, ¶ 13, 915 A.2d 400, 404. Accordingly, we apply the burden-shifting analysis first described in McDonnell Douglas, 411 U.S. at 802-05, 93 S. Ct. 1817. See Doyle v. Dep't of Human Servs., 2003 ME 61, ¶ 14, 824 A.2d 48, 53-54. First, the employee must establish a prima facie case by demonstrating that (1) the employee is a member of a protected class; (2) the employee applied for and was qualified for the job that the employer was seeking to fill; (3) the employee was not hired for the job; and (4) the job was later filled by a person who was not in the protected class. St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 506, 113 S. Ct. 2742, 125 L. Ed. 2d 407 (1993); McDonnell Douglas, 411 U.S. at 802, 93 S. Ct. 1817. If the employee makes this showing, a presumption of illegal discrimination is established, and the burden shifts to the employer to produce evidence that the adverse employment action was taken for a legitimate, nondiscriminatory reason. St. Mary's Honor Ctr., 509 U.S. at 506-07, 113 S. Ct. 2742; McDonnell Douglas, 411 U.S. at 802, 93 S. Ct. 1817. If the employer produces such evidence, the presumption of discrimination is rebutted, and the inquiry shifts to the ultimate burden of persuasion on the issue of intentional discrimination, which remains at all times with the employee. St. Mary's Honor Ctr., 509 U.S. at 507-08, 113 S. Ct. 2742. To meet this burden, the employee must demonstrate that the reason asserted by the employer was a pretext and that the true reason was illegal discrimination. Id.
[¶ 15] Cookson has generated issues of fact regarding her prima facie case by offering evidence that (1) she is a lesbian; (2) she applied for and was qualified for the job of softball coach; (3) she was not rehired for the job; and (4) the job was later filled by a person who is not in the suspect class. See id. at 506, 113 S. Ct. 2742; McDonnell Douglas, 411 U.S. at 802, 93 S. Ct. 1817. The School Department then articulated legitimate, nondiscriminatory reasons for refusing to rehire Cookson: that she was involved in hazing in violation of the school's anti-hazing policy and failed to provide a balanced sports program. See McDonnell Douglas, 411 U.S. at 802, 93 S. Ct. 1817. Thus, the burden then shifted back to Cookson to present facts that could demonstrate that the reasons asserted by Lee were a pretext for illegal discrimination. See id. at 804-05, 93 S. Ct. 1817; St. Mary's Honor Ctr., 509 U.S. at 507-08, 113 S. Ct. 2742. This is the central issue on appeal.
[¶ 16] Although the plaintiff in an employment discrimination case retains at all times the ultimate burden of persuading the fact-finder that the employer was motivated by discriminatory animus, the "rejection of the defendant's proffered reasons will permit the trier of fact to infer the ultimate fact of intentional discrimination." St. Mary's Honor Ctr., 509 U.S. at 511, 113 S. Ct. 2742; see also Reeves v. Sanderson Plumbing Prods., *282 Inc., 530 U.S. 133, 147, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000) ("Proof that the defendant's explanation is unworthy of credence is simply one form of circumstantial evidence that is probative of intentional discrimination.... In appropriate circumstances, the trier of fact can reasonably infer from the falsity of the explanation that the employer is dissembling to cover up a discriminatory purpose."). Thus, once an employer has articulated a legitimate, nondiscriminatory explanation for the employment decision, an employee can survive a motion for summary judgment by presenting sufficient evidence from which a jury could reasonably conclude that either (1) the circumstances underlying the employer's articulated reason are untrue, or (2) even if true, those circumstances were not the actual cause of the employment decision.[3]See Stanley v. Hancock County Comm'rs, 2004 ME 157, ¶ 23, 864 A.2d 169, 177.
[¶ 17] Although trial courts should exercise caution in resolving issues of pretext on summary judgment in employment discrimination cases, see Billings v. Town of Grafton, 515 F.3d 39, 56 (1st Cir.2008), "the presence of the issue of motivation or intent does not relieve the plaintiff of her or his burden of producing evidence sufficient to create a question of fact on that issue," Stanley, 2004 ME 157, ¶ 25, 864 A.2d at 178. One way to meet this burden is to demonstrate through affirmative evidence "such weaknesses, implausibilities, inconsistencies, incoherencies, or contradictions in the employer's proffered legitimate reasons for its action that a reasonable factfinder could rationally find them unworthy of credence and ... infer that the employer did not act for the asserted non-discriminatory reasons." Billings, 515 F.3d at 55-56 (quotation marks omitted).
[¶ 18] With these legal principles in mind, we examine the facts set forth in the parties' statements of material facts in the light most favorable to Cookson, the nonprevailing party, to determine whether the summary judgment record evidences a genuine issue of material fact on the issue of pretext. See Dyer, 2008 ME 106, ¶ 14, 951 A.2d at 825.
[¶ 19] Cookson concedes that the conduct in the sheep pen constituted hazing. Thus, she does not assert that the factual circumstances underlying Lee's proffered explanation for the decision not to rehire her are false. She argues, rather, that illegal discrimination based on her sexual orientationand not concerns arising from the incidents of hazingcaused that decision.[4]
*283 [¶ 20] Viewed in the light most favorable to Cookson, the facts could be understood as follows: in early 2005, the parent of one of Cookson's former players registered a complaint with Betsy Webb, Lee's predecessor as superintendent, accusing Cookson of hazing. After investigating the allegations in the complaint, Webb issued a letter of reprimand to Cookson, Later that year, the same family that had made the previous complaint to Webb sent a notice of tort claim to Lee based on many of the same allegations contained in that complaint, and before Lee began his own investigation, he indicated that he was not thinking along the lines of requesting Cookson's resignation. During Lee's investigation, Cookson reported incidents of hazing on other teams to Lee, but he did not initiate an investigation into them.[5] After learning of Cookson's sexual orientation, Lee recommended Estes and not Cookson for the coaching position, ostensibly because of the same hazing incidents for which she had already been reprimanded and which he had suggested previously would not result in a decision not to rehire her.
[¶ 21] The Superior Court concluded that these facts were simply insufficient to generate a challenge to Lee's assertion of a legitimate, nondiscriminatory reason for declining to rehire Cookson. We recognize that pretext is difficult to assess at the summary judgment stage, particularly given that direct evidence of discriminatory animus will rarely be available.[6]See Reeves, 530 U.S. at 141, 120 S. Ct. 2097. There is no "mechanical formula" for identifying pretext, and the issue of whether an employee has generated an issue of fact regarding an employer's motivation or intent is one heavily dependent on the individual facts before the court. See Che v. Mass. Bay Transp. Auth., 342 F.3d 31, 39-40 (1st Cir.2003).
[¶ 22] In these circumstances, an employee's assertion of discriminatory animus on the part of an employer will not survive summary judgment if she or he relies on mere "conclusory allegations, improbable inferences, and unsupported speculation." Feliciano de la Cruz v. El Conquistador Resort & Country Club, 218 F.3d 1, 5 (1st Cir.2000) (quotation marks *284 omitted); see also LaFrenier v. Kinirey, 550 F.3d 166, 167-68 (1st Cir.2008) (holding that a party cannot defeat a motion for summary judgment merely by asserting, without affirmative contradictory evidence, that the moving party's version of events is not believable).
[¶ 23] However, an employee need not convince the court on summary judgment that she was subjected to an adverse employment decision because of her protected status, or even that her version of events is more plausible. See Chadwick v. WellPoint, Inc., 561 F.3d 38, 47 n. 11 (1st Cir.2009) ("[A]t summary judgment we do not decide which explanation for the [adverse employment action] is most convincing, but only whether [the plaintiff] has presented sufficient evidence regarding her explanation."); see also Arrow Fastener Co., 2007 ME 34, ¶ 17, 917 A.2d at 126-27 (indicating that the ultimate question for a court on summary judgment is the failure of proof and not the relative credibility or sufficiency of the evidence). Rather, the employee need only assert sufficient facts, supported in the summary judgment record, from which a reasonable fact-finder could disbelieve the employer's proffered rationale and conclude that illegal discrimination was the true motivating factor. See Reeves, 530 U.S. at 146-47, 120 S. Ct. 2097; Stanley, 2004 ME 157, ¶¶ 12, 24, 864 A.2d at 174, 177-78.
[¶ 24] Applying this standard, and viewing the summary judgment record in the light most favorable to Cookson, we conclude that she has generated a genuine issue of material fact on the issue of pretext. We recognize that a fact-finder could ultimately determine that Cookson failed to establish that Lee's offered rationale was a pretext for illegal discrimination and that the serious nature of the hazing and other alleged incidents, the parental concerns and complaints, and the need for a more balanced program were the actual motivating factors behind the decision not to nominate her as head coach. Indeed, Lee asserts that his final decision not to recommend Cookson could not have been motivated by discriminatory animus because he made that decision on January 17, 2006, prior to discovering that Cookson is a lesbian. However, he met with parents supportive of Cookson three days later and suggested that he had not yet ruled out Cookson for the position at that time. Further, his decision to recommend Estes was not communicated to the Committee until after January 23, 2006, the date that he asserts he learned of her sexual orientation.
[¶ 25] Thus, the timing of Lee's ultimate decision, relative to when he knew of Cookson's sexual orientation, is, on the record before us, a material disputed fact inappropriate for resolution at the summary judgment stage. Considered in conjunction with evidence of Lee's initial impulse not to request Cookson's resignation, his alleged failure to fully investigate Cookson's reports of hazing on other teams, and his reliance on hazing incidents for which Cookson had already been punished, a fact-finder could reasonably conclude that Lee's decision was not based on Cookson's conduct but instead was motivated by her sexual orientation.[7]See *285 Reeves, 530 U.S. at 147, 120 S. Ct. 2097; Chadwick, 561 F.3d at 47 (noting that discrimination can be demonstrated through the elimination of other nondiscriminatory reasons, leaving discriminatory animus as the most plausible explanation).
[¶ 26] Accordingly, a fact-finder is the proper entity to determine whether this and other evidence demonstrates that Lee's asserted legitimate, nondiscriminatory reasons were a pretext for illegal discrimination, and we vacate the summary judgment on Cookson's MHRA claim.
B. Slander Per Se
[¶ 27] Slander per se refers to spoken defamatory statements that "relate to a profession, occupation or official station in which the plaintiff was employed. Malice is implied as a matter of law in such cases, and the claimant may recover compensatory damages without proving special damages." Saunders v. VanPelt, 497 A.2d 1121, 1124-25 (Me. 1985). To prove defamation, a plaintiff must establish that a false statement published to a third party harmed the plaintiff's reputation so as to lower her in the community's estimation. Ballard v. Wagner, 2005 ME 86, ¶ 10, 877 A.2d 1083, 1087.
[¶ 28] Cookson argues that she generated a genuine issue of material fact regarding whether Lee's statements to the parents that he could not discuss her personnel file were defamatory because that file did not contain anything more than Webb's letter of reprimand and because Lee's comments regarding Cookson's truthfulness and the comparison with the employee who was involved in a nudist colony implied the existence of undisclosed damaging facts.
[¶ 29] However, Cookson has not presented facts to dispute that Lee's statement regarding her personnel file was true. Lee could not speak with the parents about performance evaluations or other information reflecting on Cookson's quality as a coach. See 20-A M.R.S. § 6101(2)(B)(3) (2008) (providing that information relating to "[p]erformance evaluations... and other reports and evaluations reflecting on the quality or adequacy of the employee's work or general character compiled and maintained for employment purposes" must be kept confidential). Whether or not it was physically placed in Cookson's file, the information Lee learned upon his investigation was properly part of Cookson's personnel file and was required to be kept confidential. See id.
[¶ 30] Furthermore, Cookson has not offered facts to dispute that Lee was being truthful when he said to the parents that he had made a personnel decision in another case that involved a nudist and that he did not know whether Cookson had been honest with the parents. Because Cookson has failed to raise a genuine issue of material fact on her slander per se claim, the court did not err in entering a summary judgment for Lee on this claim. In these circumstances, we need not reach Lee's additional argument that he is immune from tort liability because he was performing a discretionary government function pursuant to 14 M.R.S. § 8111(1) (2008).
The entry is:
Summary judgment affirmed as to the slander per se claim and vacated as to the employment discrimination claim. Remanded for further proceedings consistent with this opinion.
NOTES
[1] As of the date of filing of this appeal, this notice of claim had not ripened into a lawsuit.
[2] During his investigation, Lee received a copy of a report from a private investigator hired by the family who sent the notice of tort claim, detailing other alleged controversial incidents involving Cookson.
[3] Because a demonstration that the circumstances proffered by the employer were not the actual reason for the employment decision allows the inference at trial that the true reason was discriminatory animus, Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 147, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000), the generation of an issue of fact regarding the veracity of the employer's explanation is sufficient to repel a motion for summary judgment. However, this does not lessen the plaintiff's ultimate burden, and at trial the employee is required to demonstrate not only that the employer's asserted reasons were untrue, but also that the actual reasons were discriminatory. See id. at 146-48, 120 S. Ct. 2097; St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 507-08, 515-16, 113 S. Ct. 2742, 125 L. Ed. 2d 407(1993).
[4] The parties agree that, although Lee made the recommendation to the School Committee to hire Skip Estes instead of Cookson, it was ultimately the Committee's decision whether to accept or reject that recommendation. In this circumstance, Cookson can meet her burden of proof on the issue of pretext by presenting evidence that (1) the Committee harbored or demonstrated discriminatory animus towards her, either existing independently or conveyed to it by Lee; or (2) Lee's decision not to recommend Cookson was motivated by discriminatory animus and he participated in or directly influenced the ultimate decision not to rehire her. See Webber v. Int'l Paper Co., 417 F.3d 229, 236-37 (1st Cir.2005); Cariglia v. Hertz Equip. Rental Corp., 363 F.3d 77, 84-88 (1st Cir.2004). Although Cookson appears to argue that the Committee did harbor discriminatory bias against her, there are insufficient facts in the summary judgment record to support this assertion. However, the record does support the fact that the Committee deferred to Lee's recommendation regarding her contract renewal and did not conduct its own investigation into the matter. See Thompson v. Coca-Cola Co., 522 F.3d 168, 178 (1st Cir.2008) (holding that an independent decision by a neutral decision-maker breaks the causal connection between a supervisor's discriminatory animus and an adverse employment action). Thus, Cookson's discrimination claim survives if she can demonstrate that Lee's motivations were discriminatory.
[5] The School Department objects that Cookson's statements regarding hazing on other teams are not based on her personal knowledge. However, the School Department does not deny that Cookson reported these incidents, and the evidence may be considered for the purposes of demonstrating the fact and nature of Cookson's reports. See Kelley v. Airborne Freight Corp., 140 F.3d 335, 346 (1st Cir.1998). In this context, the evidence can be construed to impugn Lee's articulated reasons for not rehiring Cookson by casting doubt on the significance that her role in hazing activities played in the ultimate decision.
[6] In an affidavit submitted to the Superior Court on summary judgment, Lee indicated that he had, on another occasion, hired an administrator whom he knew to be gay because he considered her to be the best candidate for the job.
[7] We are presented here with a summary judgment record that stands in contrast to that addressed in Stanley v. Hancock County Comm'rs, 2004 ME 157, 864 A.2d 169. In Stanley, we affirmed the trial court's grant of summary judgment to an employer when the plaintiff failed to controvert through affirmative evidence the employer's proffered rationale for terminating him. Id. ¶¶ 23-24, 864 A.2d at 177-78. Here, Cookson has presented sufficient evidence to support a reasonable inference that Lee's articulated reasons for failing to recommend her as head coach were untrue. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1541091/ | 155 B.R. 476 (1993)
In re Patricia BLAKE-WARE, Debtor.
119TH & HALSTED CURRENCY EXCHANGE, Plaintiff,
v.
Patricia BLAKE-WARE, Defendant.
Bankruptcy No. 91 B 14870, Adv. No. 92 A 1034.
United States Bankruptcy Court, N.D. Illinois, E.D.
May 11, 1993.
Ardwin Boyer, Chicago, IL, for plaintiff.
Clarence King, Chicago, IL, for debtor, defendant.
MEMORANDUM, OPINION AND ORDER
ROBERT E. GINSBERG, Bankruptcy Judge.
This matter is before the court on the adversary complaint of 119th & Halsted Currency Exchange, Inc. against the Debtor, Patricia Blake-Ware. In this proceeding, Currency Exchange seeks to have its claim against the Debtor declared nondischargeable under § 523(a)(2)(A) of the Bankruptcy Code. For the reasons stated below, this courts grants judgment for Currency Exchange.
FACTS
The Debtor was the sole owner of Charon and Mylen Real Estate Company, which managed and renovated commercial buildings. Sometime in 1986-87, the Debtor began using Currency Exchange, in effect, as one of her banks, cashing large numbers of checks written on the business account of C & M with Currency Exchange each month. These checks were often for significant sums of money. For example, in November-December 1991, the Debtor cashed over seventy checks totalling almost $600,000 with the Currency Exchange. Over a six year period, the Debtor bounced only a few small checks.
In January 1992, things changed. On four days that month (January 8, 13, 14, and 17), the Debtor bounced a total of twelve checks in the amount of $77,500. In conformance with its normal check-cashing procedure, and in view of the long-standing relationship it had with the Debtor, Currency Exchange did not attempt to verify with the Debtor's bank that the checks were good prior to accepting them. However, on each occasion, Mark Kursten, the owner of Currency Exchange, specifically asked the Debtor if there were sufficient funds in the Debtor's account to cover the checks. Each time, the Debtor responded affirmatively. The Debtor made these representations despite the fact that, each morning, *477 she called her bank and was informed that there was a negative balance in the account on which the checks were written.
On July 2, 1992, the Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. On July 31, 1992, Currency Exchange filed the instant adversary complaint objecting to the dischargeability of the $77,500 debt owed by the Debtor to Currency Exchange under § 523(a)(2)(A) of the Bankruptcy Code. Currency Exchange claims that the Debtor fraudulently induced it to cash the checks in question, leaving it with a claim against the Debtor of $77,500, which claim should be found to be nondischargeable in the instant Chapter 7 case.
JURISDICTION AND PROCEDURE
This court has jurisdiction over this matter under 28 U.S.C. § 1334(b) as a matter arising under § 523 of the Bankruptcy Code. This matter is a core proceeding under 28 U.S.C. § 157(b)(2)(I) as a proceeding involving the dischargeability of a particular debt and is before the court pursuant to Local Rule 2.33 of the United States District Court for the Northern District of Illinois referring bankruptcy cases and proceedings to this court for hearing and determination.
DISCUSSION
Section 523(a) of the Bankruptcy Code provides that debts based on fraud are nondischargeable. Specifically, § 523(a)(2)(A) provides that where a debtor obtained money or property by means of "false pretenses, a false representation, or actual fraud," the debt owed to the victim is nondischargeable in a Chapter 7 case. 11 U.S.C. §§ 523(a)(2)(A), 727.
There are four elements required for a finding of fraud under § 523(a)(2)(A): (1) the debtor made a statement either knowing it to be false or with reckless disregard for the truth; (2) the debtor make the statement with the intent to deceive; (3) the creditor actually and reasonably relied upon the misrepresentation; and (4) as a result of such reliance, the creditor suffered some loss or detriment. Matter of Scarlata, 979 F.2d 521, 525 (7th Cir.1992); In re Hunter, 780 F.2d 1577, 1579 (11th Cir.1986). The party challenging the discharge has the burden of proving all of the elements of fraud by a preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 111 S. Ct. 654, 112 L. Ed. 2d 755 (1991).
There is a split in the caselaw over whether the issuance of a check by a debtor in and of itself constitutes an implied representation sufficient to qualify as a "statement" (within the meaning of § 523(a)(2)(A)) that there is money in the debtor's bank account to cover the check. Compare Matter of Scarlata, 979 F.2d 521, 525 (7th Cir.1992) with In re Kurdoghlian, 30 B.R. 500 (9th Cir. B.A.P. 1983). See also Williams v. United States, 458 U.S. 279, 102 S. Ct. 3088, 73 L. Ed. 2d 767 (1982) (bad check not a false statement within the meaning of 18 U.S.C. § 1014). Fortunately, the court need not deal with that issue in this proceeding because the Debtor made an express representation every time she induced Currency Exchange to cash one of the checks in question that the check was "good." Such assertions clearly qualify as statements under § 523(a)(2)(A). Furthermore, the Debtor testified that she called her bank every day to get the balance in her business account, the account on which the checks were written. Thus, she had to know that her statements were false. Thus, Currency Exchange has shown the first element of fraud under § 523(a)(2)(A), a false statement.
In addition, the court must conclude that the Debtor's statements were made solely with the intent to deceive Currency Exchange into cashing her checks. It is clear the Debtor was engaged in a check kiting scheme. When the Debtor's bank said it would not cover her overdrafts without a deposit of cash or the equivalent, the Debtor turned to a naive source of such cash, Currency Exchange. Consequently, Currency Exchange has proven the second element of fraud under § 523(a)(2)(A), intent to deceive.
*478 Finally, Currency Exchange has clearly shown that it relied upon the Debtor's statements in cashing the checks, and that, as a result of such reliance, the Currency Exchange has been substantially harmed it is out-of-pocket $77,500. Thus, Currency Exchange has met its burden of proof with respect to actual reliance and detriment as well.
Thus, the only question remaining is whether Currency Exchange's reliance on the Debtor's representations was reasonable. In In re Bailey, 145 B.R. 919, 932 (Bankr.N.D.Ill.1992) (Ginsberg, J.), this court considered whether a bank's failure to verify the values assigned by the debtor made the bank's reliance on those financial statements in lending to the debtor unreasonable. This court stated that:
[i]n answering that question, it is important to keep in mind that "we do not sit as an after-the-fact loan committee, second guessing lending decisions." Matter of Harasymiw, 895 F.2d 1170, 1174 (7th Cir.1990).
Among the facts the court considers relevant in measuring the reasonableness of the Bank's reliance is the fact that the evidence shows the Bank followed its lending procedures in its dealings with the Debtor and his businesses. See Harasymiw, 895 F.2d at 1174 (refusal to overturn lower court's decision based on the plaintiff's compliance with its establishing lending procedures). While it might be argued that the Bank should have verified the value the Debtor assigned to his home in his financial statements his overwhelmingly largest asset by obtaining an appraisal, the failure of the Bank to verify the information was "not so unreasonable" as to justify a finding that there was no reliance, especially in light of the past business history between the Debtor and the Bank. See Matter of Garman, 643 F.2d 1252, 1259 (7th Cir.1980).
Following the rationale of Bailey, this court believes that Currency Exchange's reliance on the Debtor's statements was reasonable. Although, as in Bailey, it might be argued that Currency Exchange should have called the Debtor's bank to verify that the Debtor had sufficient funds to cover the checks prior to accepting them, Currency Exchange's normal check-cashing procedure did not involve such verification. Furthermore, as in Bailey, there was a significant prior relationship between the Debtor and the creditor. In light of these two factors, it was not unreasonable for Currency Exchange to rely on the Debtor's representations and fail to independently verify that the Debtor had sufficient funds to cover the checks prior to accepting them. Thus, Currency Exchange's reliance on the Debtor's statements was reasonable.
The Debtor's various attempts to explain the transactions in questions simply do not ring true, nor do they make much sense. She called the Bank daily, so she knew what was going on. Her claim that she was "joking" about the checks being good is preposterous. She intentionally embarked on a check kiting scheme in a desperate effort to save her business. The effort failed, and she got caught. Now she must face the consequences of her fraudulent scheme.
The court holds that Currency Exchange has proven all the elements of fraud under § 523(a)(2)(A), and thus the debt owed by the Debtor to Currency Exchange is nondischargeable.
CONCLUSION
Because Currency Exchange has met its burden of proof with respect to the elements of fraud under § 523(a)(2)(A), the $77,500 debt owed by the Debtor to Currency Exchange is nondischargeable. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1541022/ | 482 Pa. 58 (1978)
393 A.2d 377
Dewey Lee CURTIS, Appellant,
v.
REDEVELOPMENT AUTHORITY OF the CITY OF PHILADELPHIA and William D. Glockner and Winifred M. Glockner.
Supreme Court of Pennsylvania.
Argued April 13, 1978.
Decided October 5, 1978.
*59 *60 Arnold H. Rosenberg, Philadelphia, for appellant.
David S. Winston, Paul A. Cohen, Peter A. Galante, Philadelphia, for appellee, Redevelopment Authority.
Samuel Rappaport, Philadelphia, for appellees, William D. Glockner, et al.
Before O'BRIEN, ROBERTS, POMEROY, NIX, and LARSEN, JJ.
OPINION OF THE COURT
NIX, Justice.
This is an appeal[1] from the order of the Commonwealth Court of Pennsylvania which reversed the order of the Court of Common Pleas of Philadelphia County sitting en banc. The controlling issue in this case is whether, under all the facts and circumstances, appellant was provided with notice of the taking sufficient to meet the requirements of due process. The Commonwealth Court held that the easement holder, appellant, was deemed to have received constructive notice of a taking by appellee in 1962; therefore, his petition for damages was barred by the six year statute of limitations. Act of June 22, 1964, P.L. 84, Art. V, § 524, 26 P.S. § 1-524 (Supp. 1978-79). For the following reasons, the order of the Commonwealth Court is reversed and the case is remanded to the chancellor for a determination of just compensation.
*61 On October 28, 1960, Dewey Lee Curtis, the appellant, was deeded title to a property designated as 229 Pine Street, in Philadelphia. The deed specifically reserved an easement in favor of the property conveyed in and over an alleyway three feet in width running from the rear of the property at 229 Pine Street over an abutting property (220 Delancey Street) to Delancey Street. This easement had been created by deed in 1843, apparently by a common owner.
In June, 1961, Philadelphia's City Council approved an urban renewal plan of the Philadelphia Redevelopment Authority (Authority) which included the property at 220 Delancey Street. Before the plan was approved a public hearing was held thereon and public notice of the hearing was given on three different dates in the three large Philadelphia newspapers of general circulation. Included in these notices was a detailed description of the land included in the plan and a list of the properties (by number and street) which would be condemned. On December 7, 1962, the Authority by resolution authorized acquisition of the property at 220 Delancey Street. On December 26, 1962, condemnation proceedings were begun by the filing of a petition by the Authority for leave to file bond. The petition included a description of the property at 220 Delancey Street by metes and bounds, not by street and number. The petition and the description did not mention or refer to the alleyway or the existence of any easement therein. The chancellor found as a fact that notice of this petition was not given to appellant. However, in a stipulation of facts the parties agreed of record that notice of the filing of the petition was given "in accordance with the then existing rules of service, in an Affidavit of Service of Notice of Petition for Leave to File Bond. . . ." The affidavit-exhibit executed by the Director of the housing division of the Authority stated a copy of the petition was handed to "each owner of the properties indicated . . . ." The property at 220 Delancey Street was eventually condemned by the Authority filing a bond securing the payment of all damages required by law. The servient tenement was posted with notices, but not the dominant tenement.
*62 On April 21, 1966, the Redevelopment Authority conveyed title to 220 Delancey Street to William D. Glockner and wife. In the spring of 1970 the Glockners barred appellant from using the alleyway at 220 Delancey Street. On September 21, 1972, appellant instituted an action in equity naming the Authority and the Glockners as defendants requesting 1) that the Authority be directed to prepare and deliver a new or corrected deed to the Glockners which would specifically reserve appellant's easement in and over the alleyway; and 2) that the Glockners be prohibited from obstructing appellant's use of the alleyway in the future. After an evidentiary hearing the chancellor entered a decree nisi granting all of the relief prayed for. The chancellor ruled that since appellant had not received notice of the condemnation proceedings, the condemnation was a nullity as far as the easement interest was concerned. Exceptions filed to the decree nisi by the Authority and the Glockners were later argued before a court en banc (including the chancellor).
Later two of these judges, (the chancellor had died in the interim), entered a final decree sustaining the exceptions to the decree nisi in part.[2] The final decree reversed the chancellor's decree in so far as it directed the Authority to prepare and deliver a new deed to the Glockners, but the final decree directed that the Authority pay appellant damages to cover the value of the easement. The decree also granted appellant the right to file a request for the appointment of viewers to assess the damages nunc pro tunc and also stayed the statute of limitations. Appellant and the Authority filed an appeal in the Commonwealth Court. As stated the Commonwealth Court reversed the Court of Common Pleas and dismissed the complaint in equity.
Appellant here contends that he was denied due process and equal protection of the law because he was not given actual or constructive notice that his recorded easement was *63 to be condemned. The Authority concedes that it intentionally determined not to notify any holders of property interests apart from current recorded owners of a fee interest and tenants in possession. Appellant did not occupy the dominant tenement at that time and stated that he was unaware of the condemnation until 1970. Appellant contends that the failure to provide actual or constructive notice of the purported condemnation to a known holder of a recorded easement appurtenant deprives the easement holder of his interest in real property as required by due process of law under the Fourteenth Amendment to the United States Constitution; therefore, appellant urges that the purported condemnation be deemed a nullity leaving the recorded easement unextinguished.
The scope of review for an appellate court in equity matters is limited in that the chancellor's findings of fact confirmed by the court en banc are binding on appeal if supported by substantial evidence. Piercing Pagoda, Inc. v. Hoffner, 465 Pa. 500, 351 A.2d 207 (1976). Nevertheless, conclusions derived from errors of law may be reviewed. Pruner Estate, 400 Pa. 629, 162 A.2d 626 (1960). The heart of the matter before us comprises the chancellor's conclusions 5, 6 and 7 adopted by the court en banc, which determined that appellant was denied his constitutional right to be heard and hence denied due process of law because he was not notified of the condemnation.
At the time of the taking in question, no statutorily defined form of notice to condemnees was required. See Comment to section 405 of the Eminent Domain Code, Act of June 22, 1964, Special Sess., P.L. 84, as amended, 26 P.S. § 1-405 (Supp. 1978-79). See also E. Snitzer, Pennsylvania Eminent Domain § 405-1 (Supp. 1978-79). In Mullane v. Central Hanover Bank and Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950), the United States Supreme Court held that in order for notice to comply with due process, it must be reasonably calculated under all the circumstances to apprise interested parties of the pendency of the action and afford them an opportunity to be heard. More precisely, in the context of an eminent domain proceeding, the Supreme *64 Court in Schroeder v. New York, 371 U.S. 208, 83 S.Ct. 279, 9 L.Ed.2d 255 (1962), held that a landowner whose name and address were on the tax rolls and easily ascertainable was denied due process when newspaper notices and postings which did not contain her name were the only form of notice given. Similarly, in Angle v. Commonwealth, 396 Pa. 514, 153 A.2d 912 (1959), this Court held that the mere filing of highway plans in Harrisburg did not constitute notice to the landowner when the ultimate width of the highway appeared only from pencilled lines on the plan filed some 32 years before the actual widening.[3] In Pocono Pines Corp. v. Commonwealth, 10 Pa.Cmwlth. 466, 310 A.2d 719 (1973),[4] the Commonwealth Court required actual notice to one who would have been revealed as the property owner had the condemnor made a search of the local property and tax records. The court held that the ability to locate the owner of the property interest upon a search of local property and tax records to be "the key to a determination of [the] lawsuit." Id., 10 Pa.Cmwlth. at 469, 310 A.2d at 721. We now hold that the notice provided here was insufficient for this taking of a recorded easement to comport with the requirements of due process. Thus, under the specific facts, when a record holder of an easement can be identified through investigation of land and tax records, any notice short of notice to the easement holder at the dominant tenement is insufficient. The United States Supreme Court held in Schroeder:
The general rule that emerges from the Mullane case is that notice by publication is not enough with respect to a person whose name and address are known or very easily ascertainable and whose legally protected interests are directly affected by the proceedings in question. "Where *65 the names and post office addresses of those affected by a proceeding are at hand, the reasons disappear for resort to means less likely than the mails to apprise them of its pendency."
371 U.S. 208, 212-13, 83 S.Ct. 279, 282, 9 L.Ed.2d 255, quoting Mullane v. Central Hanover Bank and Trust Co., supra, 339 U.S. at 318, 70 S.Ct. 652.
There was no affirmative burden on appellant to inspect the servient estate in order to be put on notice by the postings. To the contrary, the burden was on the Authority to conduct a search for recorded interests and then to take reasonable steps to notify holders of such recorded interests. To hold otherwise would countenance the practice of the Authority of ignoring the recording system of this jurisdiction.[5]
The proper remedy is that provided to the plaintiff by the court en banc, i.e., the right to seek damages from appellee, which right accrued when he received knowledge of the taking of his easement in 1970.[6] Appellant would have us declare his easement to be intact and unextinguished. The Restatement of Property § 507 provides that, "[a]n easement is extinguished by a taking of eminent domain of the servient tenement. . . ." Comment b of section 507 provides, inter alia:
Thus when land owned by A is appropriated by the state for the purpose of erecting a public building thereon, the title the state acquires is not derived from and through A. The state acquires a new title not dependent in any way upon the previously existing title of A. A's title is not transferred to the state but is extinguished by the exercise of an inherent power of the state. In the same way an easement is extinguished through the appropriation by the state of the land subject to it.
*66 In brief, appellant's sole remedy, assuming he had been given adequate notice, would have been to seek an award of just compensation. The failure on the part of the Authority to grant adequate notice is not remedied by conferring upon appellant a greater right, especially when the rights of innocent parties, who subsequently purchased and developed the property, would be harmed irreparably. Thus, in accordance with the foregoing, the order of the Commonwealth Court is reversed, the complaint is reinstated, and the decree, as modified by the court en banc, is affirmed. Case remanded to the Court of Common Pleas for further proceedings consistent herewith.[7]
Each party to pay own costs.
EAGEN, C.J., and MANDERINO, J., did not participate in the consideration or decision of this case.
NOTES
[1] Jurisdiction for this action is founded on Section 204(a) of the Appellate Court Jurisdiction Act of 1970. 17 P.S. § 211.204(a) (Supp. 1978-79).
[2] The opinion accompanying the final decree stated that the chancellor had agreed with this disposition before he died. It should be also noted that after the chancellor's death, the parties agreed that the surviving judges could finally dispose of the issue.
[3] See also Strong Appeal, 400 Pa. 51, 161 A.2d 380 (1960); Pagni v. Commonwealth, 179 Pa.Super. 213, 116 A.2d 294 (1955) (Cases on which appellant relies, both of which concern whether the filing of highway plans is constructive notice to landowners of a taking).
[4] The order was vacated by this Court for lack of jurisdiction for failure to join an indispensable party. Pocono Pines Corp. v. Pennsylvania Game Commission, 464 Pa. 16, 345 A.2d 709 (1975).
[5] Because we decide the case on this issue, we find it unnecessary to reach appellant's second argument based on an alleged denial of equal protection of the laws.
[6] Thus the statute of limitations does not act so as to bar the present remedy.
[7] The statutory established measure of damages in eminent domain proceedings is as follows:
Just compensation shall consist of the difference between the fair market value of the condemnee's entire property interest immediately before the condemnation and as unaffected thereby and the fair market value of his property interest remaining immediately after such condemnation and as affected thereby, and such other damages as are provided in this code.
26 P.S. § 1-602(a) (Supp. 1978-79). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539791/ | 974 A.2d 1174 (2009)
BRUNNER
v.
BRUNNER.
No. 1614 MDA 2007.
Superior Court of Pennsylvania.
March 30, 2009.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1596075/ | 28 So. 3d 1162 (2009)
STATE of Louisiana
v.
Emanuel SMITH.
No. 2009-KA-0771.
Court of Appeal of Louisiana, Fourth Circuit.
December 30, 2009.
*1163 Leon A. Cannizzaro, Jr., District Attorney, Matthew Caplan, Assistant District Attorney, New Orleans, LA, for Appellee, State of Louisiana.
*1164 Christopher A. Aberle, Louisiana Appellate Project, Mandeville, LA, for Defendant/Appellant.
(Court composed of Judge DENNIS R. BAGNERIS, SR., Judge ROLAND L. BELSOME, Judge PAUL A. BONIN).
ROLAND L. BELSOME, Judge.
The State of Louisiana charged Emanuel Smith by bill of indictment with one count of violating La. R.S. 40:967(C)(2), possession of crack cocaine. He appeared before the trial court for arraignment and pled not guilty to the charge. The trial court heard and denied the defendant's motion to suppress evidence and found sufficient probable cause to substantiate the charge after conducting a preliminary hearing. The matter was set for a January 7, 2009 trial.
Prior to trial, the defendant filed a motion to continue which was granted. On January 13, 2009, the defendant withdrew his not guilty plea and entered a plea of guilty to the charge under State v. Crosby, 338 So. 2d 584 (La.1976). After the requisite colloquy between the trial court and the defendant, the trial court sentenced the defendant to serve two years at hard labor. The trial court suspended the sentence and placed defendant on two years active probation.
The defendant appeals raising two assignments of error. He asserts that his conviction and sentence should be reversed because: 1) the trial court erred when it concluded that the arresting officers had sufficient reasonable suspicion to support an investigatory stop; and 2) the trial court erred when it held that the arresting officers' search of the defendant's closed fist was a permissible weapons search.
Officer Gerald Young was the only witness to testify at the defendant's suppression hearing. Officer Young stated that on the night of October 2, 2008, he and his partner were driving down Iberville Street towards its intersection with Crozat Street when they spotted a man walk briskly down a driveway towards Iberville Street. He observed the defendant slow down, lower his head, and proceed off to his right towards several parked cars after the defendant noticed Officer Young. Officer Young further testified that he observed the defendant crouch down behind one of the vehicles.
Considering the defendant's behavior suspicious, the officers stopped their vehicle and approached the defendant in order to speak with him. After approaching the defendant, Officer Young noticed that the defendant was still crouched down behind a vehicle with his hands out in front of him. The officers asked the defendant to stand up. Officer Young testified that he noticed that the defendant's left hand was tightly closed after he stood up. Officer Young then asked the defendant to open his left hand. When the defendant opened his hand a white rock-like substance wrapped in plastic fell to the ground.
Suspecting the substance to be crack cocaine, Officer Young's partner handcuffed the defendant, told him he was under arrest, and advised him of his rights while Officer Young retrieved the suspected contraband. Shortly thereafter, Sergeant Merlin Bush arrived at the scene. Officer Young and Sergeant Bush then conducted a field test on the evidence, and it tested positive for cocaine. The officers then transported the defendant to lockup while the cocaine was placed on the evidence books. Lastly, Officer Young identified the defendant in court as the man he and his partner observed on the night of the incident.
ASSIGNMENT OF ERROR NUMBER 1
The defendant's first argument is that the trial court erred when it found *1165 that the arresting officers possessed sufficient reasonable suspicion to conduct an investigatory stop. For Fourth Amendment purposes, a seizure occurs either with the application of physical force to an individual or by the individual's submission to the assertion of official authority. California v. Hodari D., 499 U.S. 621, 626-27, 111 S. Ct. 1547, 1551, 113 L. Ed. 2d 690 (1991). Under Louisiana's slightly broader definition of the term, a seizure may also occur "when the police come upon an individual with such force that, regardless of the individual's attempts to flee or elude the encounter, an actual stop of the individual is virtually certain [to occur]." State v. Tucker, 626 So. 2d 707, 712 (La. 1993). However, under either definition, the police remain free to exercise "the same right as any citizen to approach an individual and ask a few questions." State v. Jackson, XXXX-XXXX, p. 3 (La. 3/15/02), 824 So. 2d 1124, 1126.
In State v. Thompson, XXXX-XXXX, pp. 5-6 (La. 4/9/03), 842 So. 2d 330, 335, the Louisiana Supreme Court addressed the standard for determining whether an officer has reasonable suspicion to conduct an investigatory stop:
Reasonable suspicion for an investigatory stop is something less than probable cause and must be determined under the specific facts of each case by whether the officer had sufficient knowledge of particular facts and circumstances to justify the infringement on individual's right to be free from governmental interference. State v. Varnell, 410 So. 2d 1108 (1982); State v. Bickham, 404 So. 2d 929 (La.1981); State v. Blanton, 400 So. 2d 661 (La.1981); State v. Ault, 394 So. 2d 1192 (La.1981). . . . In determining whether or not reasonable cause exists to temporarily detain a person, the totality of the circumstances, "the whole picture," must be considered. State v. Belton, 441 So. 2d 1195, 1198 (La.1983) (citing United States v. Cortez, 449 U.S. 411, 101 S. Ct. 690, 66 L. Ed. 2d 621 (1981).)
When determining whether police officers have a "particularized and objective basis" for conducting an investigatory stop, reviewing courts "must look at the `totality of the circumstances' of each case," a process which "allows officers to draw on their own experience and specialized training to make inferences from and deductions about the cumulative information available to them that `might well elude an untrained person.'" United States v. Arvizu, 534 U.S. 266, 273, 122 S. Ct. 744, 750-51, 151 L. Ed. 2d 740 (2002)(quoting United States v. Cortez, 449 U.S. 411, 417-18, 101 S. Ct. 690, 695, 66 L. Ed. 2d 621 (1981)); State v. Johnson, 2001-2081 p. 3 (La. 4/26/02), 815 So. 2d 809, 811 ("The assessment by a reviewing court of the cumulative information known to the officers avoids a `divide-and-conquer analysis' by which the whole becomes less than the sum of its parts because each circumstance examined individually may appear `readily susceptible to an innocent explanation.'") (quoting Arvizu, 534 U.S. at 274, 122 S.Ct. at 751.).
In the present case, the defendant first caught the officers' attention when they spotted him walking briskly down a driveway towards the street and raised suspicion when he crouched down behind a car. Even when approached by the officers he did not stand up, but rather remained crouched behind the car with his hands out in front of him.
The trial court's January 7, 2009, judgment indicates that it relied upon the Louisiana Supreme Court's decision in State v. Sylvester, XXXX-XXXX (La.9/20/02), 826 So. 2d 1106, as support for denying the defendant's motion. In Sylvester, the defendant and his friend first caught the *1166 attention of the officers because they sat with their heads bent down in a car stopped in an area targeted by citizen complaints of drug activity. After the Sylvester defendant and his companion spotted the officers, the two men then began fumbling on the floor board of the car as if they were hiding something.
At the approach of the officers, the defendant then jumped from the car with his fist closed. The officers ordered the defendant to turn around and put his hands on the car. After the defendant complied, one of the officers walked up behind the defendant, grabbed him by the belt, and ordered him to open his fist. The defendant complied and a syringe fell out of his hand. This Court reversed the defendant's conviction, ruling that the police lacked reasonable suspicion to conduct an investigatory stop. State v. Sylvester, XXXX-XXXX (La.App. 4 Cir. 2/7/01), 781 So. 2d 616.
The Supreme Court granted writs, reversed, and concluded that the foregoing circumstances justified the officers' investigatory stop of the defendant. Considering Sylvester, we cannot find that the trial court erred when it determined the investigatory stop of the defendant was justified.
ASSIGNMENT OF ERROR NUMBER 2
In his second assignment of error, the defendant asserts that the trial court erred when it held that the arresting officers' search of the defendant's closed fist was a permissible weapons search. In State v. Jones, 99-0861, p. 12 (La.App. 4 Cir. 6/21/00), 769 So. 2d 28, 38, this Court explained that, in order to justify a frisk of a suspect for weapons following an investigatory stop, a police officer does not need to be absolutely certain that the suspect is armed, but the facts must justify a belief that the officer's safety or that of others is in danger, citing State v. Williams, 98-3059, p. 4 (La.App. 4 Cir. 3/3/99), 729 So. 2d 142, 144. The pertinent question is not whether the officer subjectively believes he is in danger, or even whether he articulates a subjective belief during his testimony, but rather it is an objective test of whether a reasonably prudent man in the circumstances would be warranted in the belief that his safety or that of others was in danger. See State v. Dumas, XXXX-XXXX, pp. 2-3 (La. 5/4/01), 786 So. 2d 80, 81-82.
Further, in Sylvester, the Louisiana Supreme Court observed that weapons can be concealed inside a fist. XXXX-XXXX, p. 6, 826 So.2d at 1109, citing U.S. v. Moore, 235 F.3d 700, 704 (1st Cir.2000). In Sylvester, the Louisiana Supreme Court held that an officer's concern for his safety can justify ordering a suspect to open a clenched fist. Id., citing State v. Williams, 249 Neb. 582, 544 N.W.2d 350, 353 (1996) ("If . . . a police officer is justified in conducting a protective weapons search based upon the officer's reasonable belief that a suspect may be armed and dangerous, such a weapons search would necessarily include the right to search a clenched fist.").
Again, based on the testimony of Officer Young and the Sylvester opinion, we do not find the trial court erred in finding the search permissible. For the reasons discussed, we affirm.
AFFIRMED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2857826/ | IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-89-177-CR
ROY BROWN HOWARD,
APPELLANT
vs.
THE STATE OF TEXAS,
APPELLEE
NO. 3-89-181-CR
JORY WAYNE PULLEN,
APPELLANT
vs.
THE STATE OF TEXAS,
APPELLEE
FROM THE DISTRICT COURT OF BELL COUNTY, 27TH JUDICIAL DISTRICT
NOS. 37,821, 37,820, HONORABLE JACK W. PRESCOTT, JUDGE PRESIDING
These are appeals from convictions for possession of cocaine of less than twenty-eight grams with intent to deliver. The appellants were separately indicted but jointly tried.
Following the jury's verdicts of guilty, the court assessed punishment. Appellant Howard entered
a plea of "true" to a prior conviction for delivery of marihuana. His punishment was assessed at
twenty years' imprisonment. Appellant Pullen pleaded "true" to the three prior convictions
alleged for enhancement of punishment. The court assessed his punishment at forty years'
imprisonment.
Each appellant advances a single point of error claiming that the evidence is
insufficient to support his conviction. We will affirm the judgments of conviction.
Killeen police officer Dennis Baldwin testified that about 10:00 p.m. on January
20, 1989, he received information from a confidential informant, whom he knew personally and
had worked with previously. The informant told Baldwin that two black males in their "late
twenties" were selling crack cocaine in downtown Killeen; that they were in a brown late model
vehicle bearing Texas license plates 195 RPP; that one of the men was wearing a running suit with
"cadillac" written on the side, and said he was from Waco; that this man offered to sell cocaine
to the informant. Baldwin also received the information that the two men "were going to go to
some of the local clubs in the area."
Baldwin, who had three years' experience with narcotic related offenses, went with
officer Kenneth Olson to the downtown area. About 10:45 p.m., the officers found the described
vehicle, a Chrysler LeBaron, parked in front of the National Cafe, a local club. Baldwin
described the area as a "high crime area" known for narcotics trafficking. The officers parked
their vehicle 150 to 200 yards away. Partially through binoculars, the officers observed the
appellants in and around the car bearing license plates 195 RPP. People were observed coming
up to the two men, staying a short time and leaving. Baldwin related that at the distance he was
unable to see any exchange of money or "dope," but based on his experience and training, it was
his opinion "they were dealing crack cocaine." Baldwin related the surveillance continued for
approximately an hour, and the appellants were in sight the entire time except when the appellants
went inside and once when they were "up next to a car."
Baldwin testified that the two men left in the brown car with appellant Pullen
driving and with appellant Howard riding in the passenger seat. The officers followed and with
backup assistance stopped and arrested the appellants. A search of Pullen revealed one 0.02 gram
rock of crack cocaine. There was also on his person an empty film canister. Baldwin explained
that such canisters were commonly used to carry crack cocaine. In Pullen's shirt pocket the
officers found $197.41. The officers also found four $20.00 bills in other pockets of Pullen's
jumpsuit. Baldwin testified that $20.00 bills were commonly used in the sale of crack cocaine
rocks. Under the jumpsuit, Pullen was wearing a running suit with "cadillac" written on it.
Pullen stated he was from Waco and was unemployed.
Officer Kenneth Olson generally corroborated Baldwin's testimony. After the stop
and arrest, Olson searched Howard. Two rocks of crack cocaine, later shown to weigh 0.05
grams, were found on Howard's person. He had no money and told the officers he was
unemployed. The chain of custody was established, and the chemist testified the chemical analysis
showed the substance submitted was crack cocaine.
Pullen did not testify. Howard testified on direct examination that he had received
an undesirable discharge from the Army, had been convicted of delivery of marihuana, and had
served time in prison. He also related other arrests in California and Texas, including a 1987
arrest for possession of marihuana in Bell county. Howard related that he had been watching
television in a washateria in the same building as the National Cafe, that he only asked Pullen for
a ride to his home, that he had not been with Pullen earlier, and did not know Pullen had any
cocaine on him. He stated that he had earlier been given the two rocks of cocaine by a man at
Motel 7, whose name he did not know but whom he "had seen around." Howard testified that
Pullen was unaware that he was in possession of any cocaine.
The appellants do not challenge the search and seizures. They claim the evidence
was insufficient to support their convictions, particularly the essential element of intent to deliver.
The elements of the offense charged against each appellant was that he (1) intentionally or
knowingly (2) possessed (3) cocaine (4) with intent to deliver it. Gonzales v. State, 761 S.W.2d
809, 814 (Tex. App. 1988, pet. ref'd). The trial court charged in accordance with the allegations
of the indictment and also submitted the cases upon the law of parties in each jury charge. Tex.
Penal Code Ann. § 7.02 (1974). The burden of proof was upon the State to prove each element
of the offense beyond a reasonable doubt. Tex. Penal Code Ann. § 2.01 (1974); Tex. Code
Crim. Proc. Ann. art. 38.03 (Supp. 1992). That burden can be sustained by either circumstantial
or direct evidence. Maynord v. State, 334 S.W.2d 822, 824 (Tex. Crim. App. 1960); see also
Taylor v. State, 684 S.W.2d 682 (Tex. Crim. App. 1984); Indo v. State, 502 S.W.2d 166 (Tex.
Crim. App. 1973).
There is undisputed direct evidence that each appellant had crack cocaine in his
possession. Each appellant insists, however, the evidence is insufficient to show the possession
was with intent to deliver. After receiving information from an informant that certain described
men in a given car were selling cocaine in downtown Killeen, the officers were able to locate the
two men. They were outside a local club in a high crime area where narcotic trafficking
commonly occurred. The men were under surveillance for approximately an hour. Individuals
were constantly coming up to both of them, staying a short time and leaving. Officer Baldwin
expressed the opinion the men were "dealing" crack cocaine. At the time of their arrest, both
appellants had crack cocaine in their possession, albeit small amounts. In addition, there was
found on appellant Pullen's person a film canister and a number of $20.00 bills, both of which
are commonly used in the sale of crack cocaine. No money was found on appellant Howard, but
he had been in Pullen's company for the time he was under surveillance by the officers and was
seen being approached by various individuals who stayed only a short time.
Intent can be inferred from acts, words and conduct by the accused. Dues v. State,
634 S.W.2d 304 (Tex. Crim. App. 1987); Kimes v. State, 740 S.W.2d 903 (Tex. App. 1987, pet.
ref'd); Creel v. State, 710 S.W.2d 210 (Tex. App. 1986), aff'd, 754 S.W.2d 205 (Tex. Crim.
App. 1988). It is a question of fact to be determined by the trier of facts from all the
circumstances and facts in evidence. Hemphill v. State, 505 S.W.2d 560, 562 (Tex. Crim. App.
1976); Carter v. State, 753 S.W.2d 432 (Tex. App. 1988, pet. ref'd). As a general rule, any
ultimate fact may be established by circumstantial evidence from which a jury may draw
reasonable inferences. Ex parte Watson, 606 S.W.2d 902 (Tex. Crim. App. 1980). Participation
in a criminal enterprise may be inferred from circumstances and need not be shown by direct
evidence. Markham v. State, 761 S.W.2d 553 (Tex. App. 1988, no pet.); Palez v. State, 693
S.W.2d 761 (Tex. App. 1985, no pet.). Circumstantial evidence may be used to prove one is a
party to an offense. Beier v. State, 687 S.W.2d 2, 4 (Tex. Crim. App. 1985).
Jurors are triers of the fact and the judges of the credibility of the witnesses and
the weight to be given to their testimony. Tex. Code Crim. Proc. Ann. art. 38.04 (1979). The
jurors may accept or reject any part of or all the testimony given by the witnesses. Beardsley v.
State, 738 S.W.2d 681, 683 (Tex. Crim. App. 1987).
The standard for review of the sufficiency of evidence is whether, viewing the
evidence in the light most favorable to the verdict, any rational trier of the facts could have found
the essential elements of the crime charged beyond a reasonable doubt. Jackson v. Virginia, 443
U.S. 307 (1979); Butler v. State, 769 S.W.2d 234, 239 (Tex. Crim. App. 1989); Sharp v. State,
707 S.W.2d 611, 614 (Tex. Crim. App. 1986); Jackson v. State, 672 S.W.2d 801, 803 (Tex.
Crim. App. 1984). The standard is applicable to both direct and circumstantial evidence cases.
Chambers v. State, 711 S.W.2d 240, 244-45 (Tex. Crim. App. 1986); Christian v. State, 686
S.W.2d 930, 934 (Tex. Crim. App. 1985); Houston v. State, 663 S.W.2d 455, 456 (Tex. Crim.
App. 1984).
A conviction based upon circumstantial evidence, however, cannot be sustained if
the circumstances do not exclude every other reasonable hypothesis except that of the defendant's
guilt. See Butler v. State, 769 S.W.2d 234 (Tex. Crim. App. 1989); Burns v. State, 676 S.W.2d
118, 120 (Tex. Crim. App. 1984). Any alternative hypotheses, however, must be reasonable,
consistent with the facts proved and the circumstances, and not out of harmony with the evidence.
Autry v. State, 626 S.W.2d 758, 761 (Tex. Crim. App. 1982), cert. denied, 459 U.S. 882 (1982);
see also Brown v. State, 748 S.W.2d 258, 262 (Tex. App. 1988, no pet.). (1)
Applying the "rationality test," we conclude that a rational trier of fact could have
found beyond a reasonable doubt all the essential elements of the offense charged against each
appellant, keeping in mind that the evidence must be viewed in the light most favorable to the
verdict, accepting all credibility choices and reasonable inferences made by the jury. See United
States v. Mixon, 816 F.2d 1022, 1029 (5th Cir. 1987); United States v. Blank, 653 F.2d 989, 995
(5th Cir. 1981), cert. denied, 454 U.S. 1055 (1981). The single point of error advanced by each
appellant is overruled.
The judgments of conviction are affirmed.
John F. Onion, Jr., Justice
[Before Justices Powers, Jones and Onion*)
Affirmed
Filed: June 10, 1992
[Do Not Publish]
* Before John F. Onion, Jr., Presiding Judge (retired), Court of Criminal Appeals, sitting by
assignment. See Tex. Gov't Code Ann. § 74.003 (1988).
1.
1 See Geesa v. State, 820 S.W.2d 154 (Tex. Crim. App. 1991) (The reasonable hypothesis
construct is now abolished, but the Geesa opinion is not to be applied retroactively.). | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2857845/ | IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-91-190-CR
JEROME FORD,
APPELLANT
vs.
THE STATE OF TEXAS,
APPELLEE
FROM THE COUNTY COURT AT LAW NO. 7 OF TRAVIS COUNTY
NO. 344,564, HONORABLE BRENDA KENNEDY, JUDGE
Appellant Jerome Ford was convicted of assault with bodily injury. After appellant
was found guilty by the jury, the trial court assessed his punishment at 180 days in the county jail
and a fine of $1,000.00. The imposition of the sentence was suspended and the appellant was
placed on probation subject to certain conditions.
Appellant advances three points of error, claiming prosecutorial misconduct. The
sufficiency of the evidence to sustain the conviction is not challenged.
The evidence is undisputed that appellant assaulted the complainant, Carl Turner.
The appellant claimed self-defense and defense of third parties, theories which were rejected by
the jury's verdict. Turner, his wife and young child lived at the home of his mother-in-law, Mary
Bass, in Travis County. Appellant was married to the granddaughter of Mary Bass and lived in
the same home. On September 9, 1990, Turner testified that he and his wife went to a nearby
store, and that he returned home carrying beer and cigarettes. As he entered the den, on the way
to his room, Turner stated he was socked in the jaw by the appellant. The blow knocked him onto
a couch. He hit the couch arm which had a metal cap that struck his back and ribs. Turner
suffered physical pain. The unexpected attack upon Turner was confirmed in large measure by
his wife, Lisa Turner, and by Mary Bass.
Appellant stated he knew that Turner was a user of cocaine, and that on the
occasion in question Turner's face was oily, his eyes were wide open, and he had not changed
clothes in several days. Appellant had observed these conditions before when Turner had been
using cocaine. Appellant acknowledged that this was Turner's condition before Turner left for
the store. When Turner returned carrying beer and entered the den, it appeared to appellant that
Turner made a fist and moved towards him. It was then that appellant hit Turner, knocking Turner
to the floor. Appellant claimed he acted in self-defense and in defense of his wife and infant child
who were nearby. There had not been any previous difficulty that day between the two men.
Initially, appellant urges that:
[T]he prosecutor violated Texas Rule of Criminal Evidence 404(b) by causing a
prosecution witness to interject a prior bad act of the appellant in the presence of
the jury, and the prosecutor violated Texas Rules of Criminal Evidence 402 and
403 [sic] by questioning appellant about prior and irrelevant acts in the presence
of the jury, in spite of specific rulings of the Trial Court, and such questions and
prosecutorial misconduct tainted the jury's determination of guilty, depriving the
appellant of a fair trial.
Appellant calls our attention to three separate incidents of interrogation, including
the direct examination of the complainant, the direct examination of the complainant's wife, and
the cross-examination of the appellant. The State points out that it is not clear whether appellant
considers each interrogation as individual instances of misconduct, each warranting reversal, or
whether he considers reversal appropriate when the three instances are taken as a whole. By
combining more than one contention in a single point of error, an appellant risks rejection on the
ground that nothing is presented for review. Sterling v. State, 800 S.W.2d 513, 521 (Tex. Crim.
App. 1990), cert. denied, 480 U.S. 1077 (1988). The instant point of error is multifarious and
presents nothing for review. Adkins v. State, 764 S.W.2d 782, 785 (Tex. Crim. App. 1988);
Macias v. State, 733 S.W.2d 192, 193 n.1 (Tex. Crim. App. 1987), cert. denied, 484 U.S. 1077
(1988); McCambridge v. State, 712 S.W.2d 499, 501-02 (Tex. Crim. App. 1986). Moreover,
the objections at trial do not comport with the complaint or complaints on appeal and present
nothing for review. Harris v. State, 784 S.W.2d 5, 14 (Tex. Crim. App. 1989).
Nevertheless, we observe that in the first instance, appellant did not object to the
prosecutor's question but to the witness's answer that appellant and his wife had been fighting all
day. The trial court sustained the objection, instructed the prosecutor to be more specific, told
the jury to disregard the witness's last answer, but denied the motion for mistrial. Appellant does
not claim the trial court erred in overruling the mistrial motion, but now contends there was
prosecutorial misconduct, an objection which he did not advance at trial.
In the second instance, the complainant's wife related that she and her mother had
called her father several times before the assault occurred. When the prosecutor asked her why
she had called her father, appellant made a "relevancy" objection. After a hearing out of the
jury's presence, the trial court sustained the objection. No further relief was requested.
The third instance involved appellant's cross-examination. After appellant testified
he acted in defense of third parties, he was asked by the prosecutor if he had been protecting his
family "for that majority of that day." Appellant's general objection was immediately sustained.
Out of the jury's hearing, the prosecutor argued the propriety of the question. The court
instructed the prosecutor:
You could ask him at this moment right at this time if he was beating his wife.
That is perfectly fine. But what happened earlier in the day is not relevant.
Appellant's objection to "any questions about that" was overruled.
After the court's somewhat confusing instructions, the prosecutor, in the jury's
presence, asked the appellant if it wasn't a fact that he had been beating his wife "that day."
Appellant's objection was sustained, the question was not answered, and the jury was instructed
to disregard the question. The mistrial motion was denied. No objection was made at trial as to
prosecutorial misconduct. No claim is now advanced that the trial court erred. Appellant's first
point of error is overruled.
In his second point of error, appellant contends that the prosecutor attempted to
elicit responses from him on cross-examination which had been ruled inadmissible by the trial
court in granting a motion in limine "and such questions and prosecutorial misconduct tainted the
jury's determination of guilty, depriving the appellant of a fair trial."
The trial court granted appellant's pretrial motion in limine instructing the State not
to allude to or offer evidence pertaining to appellant allegedly threatening Fred Bass with a knife.
When the cross-examination of appellant began, the record reflects:
Q. Mr. Ford, my name is Cynthia Bell, and I'm a prosecutor for the State of
Texas. Do you remember me, Mr. Ford?
A. No.
Q. Are you sure, never seen me before?
A. Not that I recall.
Q. Now, Mr. Ford . . .
At this point there was a bench conference at the request of appellant's counsel. The jury was
retired and a hearing conducted. The prosecutor insisted that it was a routine question she
generally asked, denied she had personally prosecuted the appellant, or that he had been in "this
court." She had seen him "up here before," but stated she only wanted the jury to know that she
had not talked to the appellant, and that he did not know her. Appellant's objection was that the
prosecutor was trying to show that he had been in trouble before and that it had no relevancy.
No mention was made of the ruling on the motion in limine or of Fred Bass. The prosecutor
urged that any objection was not timely as the question had been asked and answered. No ruling
was obtained on appellant's objection, but the trial court agreed to instruct the jury to disregard
the question "Do you remember me, Mr. Ford?" The motion for mistrial was overruled.
The complaint on appeal does not comport with the objection made at trial. Harris,
784 S.W.2d at 14. Moreover, a granted motion in limine does not preserve error. Counsel must
properly and timely object at trial. Webb v. State, 760 S.W.2d 263, 275 (Tex. Crim. App. 1988),
cert. denied, 491 U.S. 910 (1989); Wools v. State, 665 S.W.2d 455, 470 (Tex. Crim. App. 1983),
cert. denied, 468 U.S. 1220 (1984); Romero v. State, 577 S.W.2d 251, 252 (Tex. Crim. App.
1979). Appellant's second point of error is overruled.
Appellant, in his third point, argues that the "record in this case and case law
demonstrates that the prosecutorial misconduct is sufficient for this case to be reversed and
rendered." Appellant argues that there were three instances of prosecutorial misconduct. These
have been previously discussed. The Texas Court of Criminal Appeals has never established a
general test for all types of prosecutorial misconduct but has examined such claims on a case-by-case basis. While not considering the same as exhaustive or mandatory, the court has listed three
factors as a starting point for identifying reversible conduct. First, the defendant has objected to
the conduct of the prosecutor. Second, the prosecutors have by their actions deliberately violated
an express court order. Third, the prosecutorial misconduct was so blatant as to border on being
contumacious. Stahl v. State, 749 S.W.2d 826, 830-31 (Tex. Crim. App. 1988). In the instant
case all three factors were not met. Appellant's third point of error is overruled.
The judgment is affirmed.
John F. Onion, Jr., Justice
[Before Justices Powers, Kidd and Onion*; Justice Powers not participating]
Affirmed
Filed: June 3, 1992
[Do Not Publish]
* Before John F. Onion, Jr., Presiding Judge (retired), Court of Criminal Appeals, sitting by
assignment. See Tex. Gov't Code Ann. § 74.003(b) (1988). | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2857846/ | Smith v. Steen
IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
ON MOTION TO REINSTATE
NO. 3-91-197-CV
ELIZABETH R. SMITH,
APPELLANT
vs.
WILLIAM DAVID STEEN,
APPELLEE
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 126TH JUDICIAL DISTRICT,
NO. 487,209, HONORABLE PETE LOWRY, JUDGE PRESIDING
PER CURIAM
After the Court rendered judgment in this appeal, the attorney general filed an
amended notice of appeal with the district clerk. (1) The attorney general filed with the Clerk of this
Court the following motions: (1) motion for leave to file a supplemental transcript containing an
amended notice of appeal; (2) motion to reinstate; (3) motion for rehearing; and (4) motion for
reconsideration en banc. We hold that the original notice of appeal in lieu of bond was a bona
fide attempt to invoke appellate-court jurisdiction, and we grant the attorney general's motions
for leave to file a supplemental transcript and to reinstate based on his amendment of the original,
defective notice of appeal. We dismiss as moot the attorney general's motion for rehearing,
overrule the motion for reconsideration en banc, withdraw our judgment of April 15, 1992, and
proceed to consider the merits of the appeal. (2)
Smith appeals with four points of error and alleges that the district court erred in:
(1) holding that the RURESA action is actually a motion to modify governed by chapter 14 of the
Family Code; (2) entertaining a suit affecting the parent-child relationship because the district
court lacked jurisdiction to entertain such a suit; (3) rendering judgment for attorney's fees against
the custodial parent; and (4) denying Smith's request to have child support set in accordance with
the Texas child-support guidelines. We will reverse.
In point of error one, Smith contends that the district court erred in holding that
the RURESA action is actually a motion to modify governed by chapter 14 of the Family Code.
Tex. Fam. Code Ann. §§ 14.01-.13 (1986 & Supp. 1992). We agree. A RURESA proceeding
is not a suit affecting the parent-child relationship. Tex. Fam. Code Ann. § 11.01(5) (Supp.
1992); Brown v. State ex rel. Jarvis, 808 S.W.2d 628, 633 (Tex. App. 1991, writ denied). The
RURESA proceeding is in addition to, and not in substitution for, any other order of support that
may exist. Tex. Fam. Code Ann. § 21.03 (Supp. 1992); cf. Tex. Fam. Code Ann. § 21.31 (Supp.
1992) (support order pursuant to RURESA does not nullify Texas support order pursuant to other
law). The district court, therefore, used a standard not applicable to a RURESA action when it
required Smith to show a material and substantial change in circumstances. Point of error one is
sustained.
We need not reach the merits of points of error two, three, and four because of our
disposition of point of error one. Accordingly, the judgment of the district court is reversed, and
the cause is remanded to the district court for further proceedings.
[Before Justices Powers, Jones and Kidd]
Cause Reinstated; Reversed and Remanded
Filed: June 3, 1992
[Publish]
1. The amended notice of appeal reads in pertinent part:
CAUSE NO. 487,209
ELIZABETH R. SMITH)(
IN THE DISTRICT COURT
)(
v.)(
126th JUDICIAL DISTRICT
)(
WILLIAM DAVID STEEN)(
TRAVIS COUNTY, TEXAS
AMENDED NOTICE OF APPEAL
ELIZABETH R. SMITH, by and through the Attorney
General of the State of Texas, the Texas Title IV-D agency, the
prosecuting attorney under RURESA, Chapter 21,
Tex.Fam.Code, providing services as required by Title IV-D of
the Social Security Act, 42 U.S.C., §§ 651, et seq. and Chapter
76, Tex.Hum.Res.Code, at the request of the State of New York
and Elizabeth R. Smith, hereby files this Amended Notice of
Appeal from the judgment in this cause, signed on January 15,
1991.
The Attorney General of Texas is not required to file a
bond for purposes of perfecting this appeal, pursuant to
Tex.Civ.Prac. & Rem.Code, § 6.001.
2. Because the attorney general has amended the notice of appeal, the style of this cause
has been changed from Attorney General of Texas v. William David Steen to Elizabeth R.
Smith v. William David Steen. | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2857865/ | IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-91-132-CR
RICHARD GADOUAS,
APPELLANT
vs.
THE STATE OF TEXAS,
APPELLEE
FROM THE COUNTY COURT AT LAW OF CALDWELL COUNTY
NO. 19,561, HONORABLE EDWARD L. JARRETT, JUDGE PRESIDING
Richard Gadouas pleaded guilty to the misdemeanor offense of Driving While
Intoxicated (DWI) on August 24, 1989, and received a sentence of 120 days' confinement,
probated for twenty-four months, and a $400 fine. As one condition of his probation, Gadouas
was required to pay a thirty dollar per month probation supervision fee.
On September 13, 1990, the State filed a motion to revoke probation, alleging as
grounds for revocation a subsequent DWI offense, failure to abstain from intoxicating liquor, and
failure to pay supervision fees. Tex. Code Crim. Proc. Ann. art. 42.12, § 24 (Supp. 1992).
Gadouas pleaded "not true" to all allegations.
After hearing the evidence, the trial court found Gadouas had violated the
conditions of his probation by failing to pay his supervision fees. The court revoked Gadouas's
probation and sentenced him to 120 days' confinement in the Caldwell County Jail.
Gadouas appeals the probation revocation, complaining in a single point of error
that (1) the trial court abused its discretion by revoking his probation for failure to pay probation
supervision fees where other violations of his probation were alleged; (2) the evidence was
insufficient to prove his ability to pay; and (3) the evidence was insufficient to prove his failure
to pay was intentional.
Gadouas's complaint is multifarious in that he combines more than one contention
under his single point of error. By doing so he runs the risk of waiving all error presented
therein. See, e.g., Sterling v. State, 800 S.W.2d 513, 521 (Tex. Crim. App. 1990), cert. denied,
111 S. Ct. 2816 (1991). In the interest of justice, however, we will exercise our discretion to
review the substance of the complaints. See id.
Historically, in order to revoke probation for nonpayment of probation supervision
fees, the State was required to prove that the probationer was able to make the payments and that
the failure to make them was intentional. Jones v. State, 589 S.W.2d 419, 420 (Tex. Crim. App.
1979). In 1977, the legislature modified the rule to make the probationer's inability to pay an
affirmative defense that the probationer must raise and prove by a preponderance of the evidence.
Id.; 1977 Tex. Gen. Laws, ch. 342, § 2, at 909, and ch. 388, § 2, at 1058 (Tex. Code Crim.
Proc. Ann. art. 42.12, § 8(c), since amended).
Appellant contends that if failure to pay is the only violation alleged, the
probationer must assert and prove his inability to pay as an affirmative defense. If failure to pay
is only one of several violations alleged, however, he asserts the State retains the burden to prove
the probationer was able to pay. Relying on the court of appeals' decision in Stanfield v. State,
638 S.W.2d 127 (Tex. App. 1982), rev'd, 718 S.W.2d 734 (Tex. Crim. App. 1986), wherein the
intermediate court held that inability to pay is an affirmative defense only if it is the sole ground
alleged for revocation of probation, Gadouas argues that the burden to prove his ability to pay
remained on the State because it had alleged violations in addition to his failure to pay supervision
fees. He contends that the trial court abused its discretion by revoking probation because the State
never proved his ability to pay by a preponderance of the evidence.
Gadouas's reliance is misplaced. As pointed out by the State, the court of appeals'
decision in Stanfield was reversed. Stanfield, 718 S.W.2d at 734. In a probation revocation case
in which failure to pay was one of several violations alleged, the Court of Criminal Appeals held
that inability to pay "is an affirmative defense for a probationer to raise and to prove by a
preponderance of the evidence," regardless of the number of violations alleged. Stanfield, 718
S.W.2d at 737.
Gadouas concedes that his case is indistinguishable from Stanfield and that his
argument is thus governed by that decision. The State proved appellant's failure to pay as alleged;
Gadouas did not raise the affirmative defense of inability to pay or present any evidence that he
was unable to pay. Thus, Gadouas's first and second arguments have no merit.
Next, Gadouas complains that the evidence was insufficient to prove that his failure
to pay supervision fees was intentional. The burden of proof regarding intentional nonpayment
remains on the State. Stanfield, 718 S.W.2d at 738. A preponderance-of-the-evidence standard
is applied and it is met when the greater weight of credible evidence before the court creates a
reasonable belief that a condition of probation has been violated as alleged. Martin v. State, 623
S.W.2d 391, 393 n.5 (Tex. Crim. App. 1981).
Ability to pay is a factor relevant to intent. When the State proves failure to pay
and inability is not raised as an affirmative defense, the State has discharged its burden with little
difficulty. Proof that one is able to pay but does not do so infers intentional nonpayment.
Stanfield, 718 S.W.2d at 738.
The State presented evidence that Gadouas was employed, that he knew and
understood the condition of his probation requiring him to pay a monthly supervision fee, that he
made some payments, and that he promised to pay more but that he failed to do so. We conclude
there is sufficient evidence for the trial court to infer that Gadouas's failure to pay his probation
supervision fees was intentional.
We overrule Gadouas's first point of error. Finding no error, we affirm the
judgment of the trial court.
Marilyn Aboussie, Justice
[Before Chief Justice Carroll, Justices Aboussie and B. A. Smith]
Affirmed
Filed: May 13, 1992
[Do Not Publish] | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1539805/ | 369 B.R. 80 (2007)
In re Howard J. WUNDERLICH, Debtor.
No. 05-15295-MWV.
United States Bankruptcy Court, D. New Hampshire.
June 6, 2007.
*81 Arthur O. Gormley, III, Esq., Gormley & Gormley, P.C., Nashua, for Debtor.
James Moran, pro se.
MEMORANDUM OPINION
MARK W. VAUGHN, Chief Judge.
Following this Court's denial of Howard J. Wunderlich's (the "Debtor") property exemptions claimed under New Hampshire law, the Debtor amended Schedule C to claim property exempt under New York law. Creditor James Moran filed an ob jection to which the Debtor filed a response. The Court took the matter under advisement at the close of a January 30, 2007, hearing.
JURISDICTION
This Court has jurisdiction of the subject matter and the parties pursuant to 28 U.S.C. §§ 1334 and 157(a) and the "Standing Order of Referral of Title 11 Proceedings to the United States Bankruptcy Court for the District of New Hampshire," dated January 18, 1994 (DiClerico, C.J.). This is a core proceeding in accordance with 28 U.S.C. § 157(b).
BACKGROUND
The Debtor is an attorney who practiced bankruptcy law in New York from 1987 to 2005. Moran is a judgment creditor of the Debtor who sued the Debtor in 2003 for legal malpractice related to the Debtor's representation of a company owned by Moran that filed for. Chapter 11 protection. The Debtor filed his own Chapter 7 petition in this Court on October 14, 2005. His original Schedule C claimed a homestead exemption for a townhouse at 58 Derry Street, Merrimack, New Hampshire (the "New Hampshire address"), and other property exempt under New Hampshire law. Moran objected to the Debtor's claimed homestead exemption on the ground that the New Hampshire address was not the Debtor's domicile or primary residence, and the Court sustained the objection. Moran then objected to the Debtor's other claimed exemptions because the Debtor was not a resident or domiciliary of New Hampshire. The Court sustained that objection, too. The Debtor did not appeal either of the Court's orders disallowing his exemptions. The Debtor then filed an amended Schedule C to claim personal property as exempt under New York law. Moran seeks to defeat the amendment, alleging that the Debtor's initial claim of New Hampshire exemptions was in bad faith, which should prevent the Debtor from now being allowed to claim New York exemptions. Moran also alleges that the Debtor undervalued and concealed assets.
On his bankruptcy petition, the Debtor listed his New Hampshire address as his residence. When he filed his schedules and statement of affairs a couple of weeks later, he indicated at Question 15 of his statement of financial affairs that he had not moved within the prior two years and thus declined to list any additional addresses. At a Rule 2004 examination on February 10, 2006, the Debtor represented that, in the preceding three years, he had not had any addresses other than his New Hampshire address and that this was his primary residence since 2000. (Moran's Ex. C at 82.) He said, "My address is 58 Derry Street. That's where I live. Technically, that's where I've lived for the last several years." (Moran's Ex. B at 84-85.) The Debtor also flatly denied that his parents' house in Ronkonkoma, New York *82 (the "New York address"), was his home in the following exchange:
A: I was here [in New Hampshire] for a couple days in the middle of December. Then I went back home because I had some doctors' appointments. I went back to Ronkonkoma to their home, stayed there, had some doctors' appointments; and then wound up coming back up here for Christmas for a while.
Q: Do you know what a Freudian slip is?
A: Yes.
Q: Did you just do that when you said, "I went back home"?
A: They're all homes.
Q: So Ronkonkoma is your home?
A: I call everything home.
Q: Ronkonkoma is your home?
A: No.
Q: It's not your home?
A: No.
(Moran's Ex. C at 78.)
Despite not calling New York home, the Debtor filed a resident tax return in New York in 2003 and also listed the New York address on his federal income tax return for that year.[1] (Moran's Ex. E.) The Debtor's explanation is that he stays at his parents' house when he is in New York and that he used that address out of convenience because he had been away on military commitments. (Moran's Ex. B at 85.)[2] Indeed, many documents list either his parents' Ronkonkama address or an address in Central Islip, New York, including the following: 2005 mortgage interest statements from Digital Federal Credit Union (Moran's Ex. F); a 2005 Form 1099-DIV related to the Debtor's ownership of stocks of Monsanto Company (Moran's Ex. F); a 2006 automobile insurance renewal (Moran's Ex. K); a 2005 document related to a homeowners insurance policy (Moran's Ex. K); and 2004, 2005, and 2006 Fidelity Investments ("Fidelity") account statements (Central Islip address). (Moran's Exs. L, M, and N.)
In addition to using New York mailing addresses, other of the Debtor's actions indicate that New York was his home at the time he filed his bankruptcy petition. For instance, the Debtor explained as follows why he registered his car in New York: "It was registered in New York because the car generally was staying in New York. And I had run into a problem once before with living in one place, having a car registered elsewhere." (Moran's Ex. B at 107.) The Debtor also kept his only furniture, a bedroom set, at the New York address. (Moran's Ex. C at 78.) In fact, the Debtor's parents essentially lived in the New Hampshire address where they owned all of the furniture and had the utilities in their name. (Moran's Ex. B at 104-05, and Ex. D at 97-98.) Also, a June 2003 document titled "Second Home Rider" contains a provision that the New Hampshire property shall only be used as the Debtor's second home. (Moran's Ex. I.) The Debtor did concede at the Rule 2004 examination in February 2006 that moving to New Hampshire was his intention but that he had not "completely moved." (Moran's Ex. D at 99-100.) The Debtor's stated intention to permanently move to New Hampshire is inconsistent with his stated intention to reopen his New York law practice. (Moran's Ex. A at 29.) *83 Toward that end, the Debtor continued post-petition to pay rent on his office space despite the discontinuance of his practice in 2005. Meanwhile, the Debtor's only. effort towards practicing law in New Hampshire was to look at the New Hampshire Bar Association or New Hampshire Supreme Court website. (Moran's Ex. D at 52-53, 104-105.)
In addition to alleging the Debtor's bad faith with regard to residency, Moran argues that the Debtor has also acted in bad faith by undervaluing and concealing assets. On the Debtor's original Schedule B he listed an "IRA" with a value of $35,000 and a "Retirement Plan" valued at $102,000. (Ct.Doc. No. 8.) The Debtor's amended Schedule B values the "Gabelli Funds-Roth IRA" at $34,936.98, and lists the retirement plan as composed of two "Fidelity-Keogh" accounts (the "Fidelity accounts") with a total value of $100,929.82. (Ct.Doc. No. 96.) The Court granted Moran's motion to compel production of documents, including more recent account statements for the Fidelity accounts. The account statements provided by Fidelity show that the accounts were worth $136,273.39 one month before the Debtor filed his petition and $146,451.39 as of June 12, 2006, more than two months before he filed his amended schedules. (Moran's Exs. M and N.) The Debtor explains that he undervalued the Fidelity accounts at $100,929.82 when he filed his petition in October 2005 and again when he filed his amendments in August 2006 because at both times the only account statement he had was for the period December 11, 2003, to March 11, 2004 (the "March 2004 statement") that showed a total value of $100,929.82. (Moran's Ex. L.) Despite the more recent statements showing values of $136,273.39 and $146,451.39, the Debtor has not amended his schedule to reflect a post-2004 value.
The Court has previously denied the Debtor's discharge pursuant to section 727(a)(2)(A)[3] after finding that the Debtor concealed his receipt of approximately $30,000 from a second mortgage on the New Hampshire property less than seven months prior to filing his bankruptcy petition.[4] After conceding the existence of the second mortgage at the 341 meeting, the Debtor waited another eight months to amend his schedules to show the mortgage.
DISCUSSION
Moran first argues that the Debtor's amendments should be disallowed because the Debtor checked a box on his amended Schedule B indicating that he claims his state law exemptions pursuant to section 522(b)(3), which section was added to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA"). The Debtor's counsel acknowledges that he inadvertently used a post-BAPCPA form in this case, which was filed prior to the general effective date of BAPCPA. Although section 522(b)(3) is not applicable to this case, the amended Schedule C leaves no doubt that the Debtor's intention is to claim exemptions pursuant to New York law. Therefore, the Court will not disallow the Debtor's amendments for this reason.
Next, Moran argues that the amendments are ineffective because the Debtor violated Federal Rule of Bankruptcy Procedure *84 1008 by not verifying the amendments or submitting with them an unsworn declaration. In In re De Jounghe, the debtors attempted to file amended schedules but "they never actually filed amended schedules which were either verified or which contained an unsworn declaration. Consequently, the bankruptcy court did not err in concluding that the schedules were never amended." 334 B.R. 760, 767 (1st Cir. BAP 2005) (citation omitted). The Debtor argues that his Declaration Regarding Electronic Filing that was filed with the amendments contains his representation that the information contained in the amendments is true and accurate and is therefore the equivalent of a verification or unsworn declaration. Although the Court does not agree with the Debtor's position, the Court need not dispose of the matter on Rule 1008 grounds, as there are other grounds warranting disallowance of the Debtor's amendments.
Moran next argues that the Debtor should not be allowed to amend his schedules because the Debtor has acted in bad faith. Bankruptcy Rule 1009(a) provides that "[a] voluntary petition, list, schedule, or statement may be amended by the debtor as a matter of course at any time before the case is closed." Fed. R. Bankr.P. 1009(a). Despite this permissive language, the Court may "deny the amendment of exemptions where the amendment would prejudice creditors or where the debtor has acted in bad faith or concealed assets." Hannigan v. White (In re Hannigan), 409 F.3d 480, 481 (1st Cir.2005). "Bad faith is generally determined from an examination of the relevant surrounding circumstances" and "must be shown by clear and convincing evidence." Wood v. Premier Capital, Inc. (In re Wood), 291 B.R. 219, 226, 228 (1st Cir. BAP 2003). It takes more than mistake or inadvertence to constitute bad faith, "there must be some form of deception." McFatter v. Cage, 204 B.R. 503, 508 (S.D.Tex.1996).
The Debtor began his bankruptcy case by suppressing any notion that he lived in New York. He maintained this throughout the 341 meeting and Rule 2004 examination, yet, at the same time, gave conflicting information. The Court has previously found that the Debtor's domicile or primary residence was not New Hampshire. (Ct.Doc. No. 62.) The Debtor spent most of his time in New York. He signed a second home rider with his mortgagee that the New Hampshire property was a second home, a home at which his parents, at the time the Debtor filed bankruptcy, lived in and held the utilities in their names. The Debtor kept a New York driver's license and his car registered there. He did not register it in New Hampshire because he knew he did not live in New Hampshire, stating he had "a problem once before with living in one place [and] having a car registered elsewhere." (Moran's Ex. B at 107.) The Debtor continued postpetition to pay rent on an office space in New York that he intended to reopen. His connection to New York and his use of his parents' house exceeded simply using the New York address out of convenience when he was out of the country for military purposes. By the same token, the Debtor used the New Hampshire property sparingly. Except for owning a second home in New Hampshire, the Debtor has demonstrated almost zero connections to the State. While some debtors in his situation might claim a second home as a domicile not due to bad faith but due to ignorance, this Debtor is an attorney with significant experience with bankruptcy law. The Court is convinced that when he filed his petition, the Debtor knew that he was improperly claiming New Hampshire exemptions. He has repeatedly denied living in New York, but now that the Court has determined that he does not live in *85 New Hampshire, he claims by his amendments that he lives in New York.
The Court does not overlook the fact that the Debtor is in a pickle. Many debtors in his situation would try to amend their exemptions after being denied their initial exemptions, and this case could have turned out differently. The Debtor could have been forthright with the Court. If he was unsure about which state's exemptions he was entitled to, he could have claimed exemptions in the state he thought appropriate while also disclosing his other address. If Moran objected to the exemptions and the Court agreed with Moran, the Debtor could probably have amended his schedules to claim exemptions under the law of the other state. However, the Debtor instead concealed his New York address from the Court and repeatedly maintained that he lived in New Hampshire. Unfortunately for the Debtor, his explanation has significant holes in it. Even if the Debtor did intend to make New Hampshire his home, the evidence shows that he knew that it was not his home as of the petition date.
As for bad faith with regard to the Debtor's undervaluing of his retirement plan, the Debtor maintains that he did not intentionally undervalue his Fidelity accounts. The Debtor explains that the undervaluation was simply because he used the March 2004 statement when he valued the Fidelity accounts. However, Schedule C explicitly requires a debtor to list the current market values of his interests in property. The Debtor filed his petition in October 2005 yet used an account statement from March 2004 that showed the value as $100,929.82. Then when the Debtor amended his schedules in August 2006 he again used the March 2004 account statement to provide the "current" market value of the Fidelity accounts. It was not until Moran examined the Debtor at a Rule 2004 examination and filed a motion to compel production of more recent statements, which was granted by this Court, that the Debtor produced more current statements in November 2006. The statements reveal that as of September 14, 2005 one month prior to the petition date the account was worth $136,273.39, almost $36,000 more than the Debtor claimed it to be, and worth $146,451.39 as of June 12, 2006, more than two months before he filed his amended schedules. (Moran's Exs. M and N.)
The Debtor argues that there was no bad faith because he had no motive to choose New Hampshire exemptions over New York exemptions or to undervalue his retirement accounts. However, there were potential benefits to claiming New Hampshire exemptions. For instance, because the Debtor owned the New Hampshire home but not his parents' New York home, he could claim a $100,000 New Hampshire homestead exemption whereas he could not claim a homestead exemption in New York. N.H.Rev.Stat. Arm. § 480:1 (2003); N.Y.C.P.L.R. 5206(a) (McKinney 2005).
The Debtor argues that there was no harm in undervaluing the accounts because retirement accounts are exempt under both New Hampshire law and New York law. This argument was rejected in In re Hannigan, 409 F.3d at 483, in which the court explained that whether an undervaluation is material is not the point, instead emphasizing that "[a] bankruptcy court is entitled to insist upon filings and representations made in utmost good faith." In In re Hannigan, the debtor initially valued his homestead at $135,000 and later moved to amend his schedules to claim the full value of the Massachusetts homestead exemption, $300,000. Id. at 481. The court denied the debtor's motion to amend because he had continually and intentionally *86 undervalued his homestead by excluding one of two parcels comprising the homestead. Id. at 483-84. The court noted the irony that had the debtor been truthful from the beginning, he probably would have been entitled to the full exemption that he sought by amendment. However, despite his efforts being "misguided" and that "[h]e may have simply misunderstood where his better interests lay[,]" the court concluded as follows: "This is not to say that mere carelessness or oversight would be sufficient to show bad faith or concealment. But bad faith may encompass intentional conduct that, in retrospect, was not in the actor's best interest." Id. (discussing a similar outcome in In re Bauer, 298 B.R. 353, 357 (8th Cir. BAP 2003), in which the court disallowed the debtors' amendment because of bad faith and noted that "[t]he irony here is that if the Debtors had accurately disclosed the true value of their home from the outset, they may have been entitled to exempt their equity in it").
Further, the Debtor's contention that the undervaluation is immaterial because retirement accounts are equally exempt in both states is erroneous. In New York, unlike New Hampshire, the Debtor cannot claim as exempt any additions made to the retirement account "after the date that is ninety days before the interposition of [Moran's] claim." N.Y.C.P.L.R. 5205(c); N.H.Rev.Stat. Ann. § 511:2. According to Moran (and not disputed by the Debtor), he instituted his state court action against the Debtor on November 3, 2003, and ninety days prior to that was August 5, 2003. (Moran's Ex. P.) A summary prepared by Moran's accountant, to which the Debtor did not object, shows that the Debtor made additions totaling $18,627.88 to his retirement accounts between August 5, 2003, and September 12, 2006. (Moran's Ex. P.) These additions (plus any additions made after September 12, 2006) would probably be exempt under New Hampshire law but not under New York law.
In considering the totality of the circumstances, the evidence of the Debtor's bad faith with regard to the amendments is clear and convincing. The Debtor a former bankruptcy attorney is well aware of his duty to be truthful in his filings and representations to the Court. The Debtor repeatedly denied living in New York, but now that the Court denied his New Hampshire exemptions, he claims to live in New York. The Debtor has also twice undervalued his Fidelity accounts. The Debtor not only has a duty to disclose his assets but he also has a duty "to amend [his] schedules whenever it becomes necessary to insure accuracy and reliability of information disclosed therein." Vidal v. Doral Bank Corp. 363 F.Supp.2d 19, 22 (D.Puerto Rico 2005) (quotations omitted). In response to the Court's order compelling the Debtor to provide Moran with documents, the Debtor finally requested updated account statements from Fidelity, which he received in November 2006. The Debtor has yet to amend his schedules to reflect a more recent value of these accounts, despite their value having risen approximately fifty percent.[5] This failure on the part of the Debtor to willingly provide accurate information to the Court is representative of his management of his bankruptcy case. The Court has previously denied the Debtor's discharge because of his bad faith concealment of mortgage proceeds, and, as in Ward v. Turner, 176 B.R. 424, 426 (E.D.La.1994), bad faith is "a recurring theme" in this case. Accordingly, the Debtor's proposed amendments to Schedule *87 C in which he claims exemptions under New York law are disallowed.
CONCLUSION
This opinion constitutes the Court's findings and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052. The Court will issue a separate order consistent with this opinion.
NOTES
[1] The next year, 2004, the Debtor filed a New York state tax return on the form for nonresidents and part-year residents and listed his New Hampshire address as his permanent address. (Moran's Ex. G.)
[2] The Debtor has presented no evidence that he has traveled for military purposes during the times relevant to this case.
[3] All references to the "Bankruptcy Code" or to specific sections are to the Bankruptcy Reform Act of 1978, as amended prior to April 20, 2005, 11 U.S.C. §§ 101 to 1330.
[4] The Court's ruling is on appeal and is presently pending before the United States Bankruptcy Appellate Panel for the First Circuit. Moran v. Wunderlich (In re Wunderlich), 2007 BNH 008.
[5] Similarly, as discussed in this Court's prior opinion denying the Debtor's discharge, the Debtor waited eight months from the time he conceded the existence of a second mortgage to the time he amended his schedules accordingly. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539818/ | 369 B.R. 884 (2007)
In re NATIONAL GAS DISTRIBUTORS, LLC, Debtor.
Richard M. Hutson, II, Trustee for National Gas Distributors, LLC, f/k/a Paul Lawing Jr., LLC, Plaintiff
v.
Smithfield Packing Company, Incorporated, Defendant.
Bankruptcy No. 06-00166-8-ATS. Adversary No. S-06-00267-8-AP.
United States Bankruptcy Court, E.D. North Carolina, Fayetteville Division.
May 24, 2007.
*885 John A. Northen, Vicki L. Parrott, Northen Blue, LLP, Chapel Hill, NC, Counsel for the Trustee.
Dion W. Hayes, McGuire Woods LLP, Richmond, VA, Thomas E. Cabaniss, Robert A. Cox, Jr., McGuire Woods LLP, Charlotte, NC, Counsel for Smithfield Packing Company, Inc.
Joshua D. Cohn, Hugh McDonald, Matthew D. North, Allen & Overy LLP, New York, NY, Counsel for the International Swap& and Derivatives Association, amicus curiae.
ORDER DENYING DEFENDANT'S MOTION TO DISMISS AND ALTERNATIVE MOTION FOR SUMMARY JUDGMENT
A. THOMAS SMALL, Bankruptcy Judge.
The matters before the court, are several motions of the defendant, Smithfield Packing Company, Inc. ("Smithfield"), Smithfield moves to dismiss, under Rule 12(b)(6) of the Federal Rules of Civil Procedure (made applicable to this adversary proceeding by Rule 7012(b) of the Federal Rules of Bankruptcy Procedure), the claims of the plaintiff, Richard M. Hutson, II, trustee for the chapter 11 debtor, National Gas Distributors, LLC. Smithfield moves in the alternative for summary judgment under Rule 56 of the Federal Rules of Civil Procedure (made applicable to this adversary proceeding by Rule 7056 of the Federal Rules of Bankruptcy Procedure). Smithfield also moves to strike the Affidavit of Claire P. Gotham. With the consent of the parties, a hearing was held in Durham, North Carolina at the Duke University School of Law on April 4, 2007.
Smithfield's motion to dismiss the trustee's claims under §§ 548(a)(1)(A) and 548(a)(1)(B) is based on an affirmative defense and is more appropriately a motion for judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure (made applicable to this adversary proceeding by Rule 7012(b) of the Federal Rules of Bankruptcy Procedure). However, whether the court is proceeding under a motion to dismiss under Rule 12(b)(6), a motion for judgment on the pleadings under Rule 12(c), or a motion for summary judgment under Rule 56, the parties agree that if the contract between Smithfield and National Gas is determined to be a "swap agreement" as that term is defined under § 101(53B) of the Bankruptcy Code (as amended in 2005),[1] and if Smithfield and National Gas are "swap participants" as defined by § 101(53C), then Smithfield, pursuant to §§ 546(g), 548(c) and 548(d)(2), has an absolute defense to the trustee's causes of action.
JURISDICTION
This bankruptcy court has jurisdiction over the parties and the subject matter of this proceeding pursuant to 28 U.S.C. §§ 151, 157, and 1334, and the General Order of Reference entered by the United *886 States District Court for the Eastern District of North Carolina on August 3, 1984. This is a "core proceeding" within the meaning of 28 U.S.C. § 157(b)(2)(H), which this court may hear and determine:
BACKGROUND
National Gas Distributors, LLC filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code on January 20, 2006. Lawrence R. Hirsch, the receiver for National Gas in a state court proceeding pending at the time of the debtor's bankruptcy petition, requested the appointment of a trustee. Without objection by the debtor, the court appointed Richard M. Hutson, II as chapter 11 trustee. The trustee filed complaints against more than 20 former customers of National Gas, including Smithfield. The complaints seek to avoid, pursuant to 11 U.S.C. §§ 548(a)(1)(A) and (a)(1)(B), transfers made by the debtor, and to recover those transfers from the defendants pursuant to § 550(a)(1). Two of the other defendants, Stadler's Country Hams, Inc. and E.I. Du Pont De Nemours and Company, filed motions similar to those filed by Smithfield in this adversary proceeding, and all of the motions were heard together. The orders entered in the other proceedings will adopt the legal analysis contained in this order.
The gist of the trustee's complaints is that National Gas, as part of a fraudulent scheme, sold natural gas to some of its customers, including Smithfield, at below market prices. Specifically, with respect to Smithfield, the trustee alleges that during the twelve months preceding the filing of the bankruptcy petition, the debtor sold natural gas to Smithfield at below market prices resulting in an aggregate loss to National Gas of approximately $2,144,750. The below market price of each sale, the alleged market price at the time of each sale, and the resulting loss to National Gas from each sale is set forth in detail in an attachment to the complaint.
The trustee alleges that the sales were made by National Gas with the intent to hinder, delay and defraud creditors. He alleges that the fraud included below-market sales, false invoices, false reporting of invoices to the debtor's secured lenders, and obtaining loans on the basis of false information. According to the trustee, those alleged facts show actual fraud and support avoidance of the transfers pursuant to § 548(a)(1)(A).
The trustee also alleges that at the time of the transfers, National Gas was insolvent and, because the sales were made at a price below market value, National Gas did not receive reasonably equivalent value for the natural gas that it sold. Accordingly, the trustee maintains that the transfers were constructively fraudulent and should be avoided under § 548(a)(1)(B).
Smithfield filed an answer containing, among other things, a First Affirmative Defense stating that the transfers are not avoidable "because such transfers were made by or to a swap participant under or in connection with swap agreements before the commencement of the case, and the transfers are therefore excepted from avoidance pursuant to section 546(g) of the Bankruptcy Code." Answer at 6. Smith field then filed the motion to dismiss now before the court, contending as follows:
1. The Trustee cannot avoid the Transfers (as defined in the Complaint) as constructive fraudulent transfers under section 548(a)(1)(B) of the United States Bankruptcy Code, 11 U.S.C. § 101 et. seq. (the "Code"), because each Transfer was made by or to a swap participant under or in connection with a swap agreement and is thus not avoidable as a constructive fraudulent transfer, pursuant to section 546(g) of the Code.
*887 2. Further, the Trustee cannot avoid the Transfers as actual fraudulent transfers under section 548(a)(1)(A) of the Code because section 548(c) renders each Transfer not avoidable as an actual fraudulent transfer because: (a) each Transfer was made in connection with a swap agreement to a swap participant deemed conclusively under section 548(d)(2)(D) to have taken such Transfer for value to the extent of such Transfer; and (b) as conceded by the Trustee in the Complaint, Defendant received each such Transfer in good faith.
Smithfield Motion to Dismiss at 2. Smithfield seeks dismissal pursuant to Rule 12(b)(6), or, in the alternative, summary judgment pursuant to Rule 56.
An amicus curiae brief was filed by the International Swaps and Derivatives Association, Inc. in support of Smithfield's motion.
The Contract
The contract consists of a "Base Contract for. Sale and Purchase of Natural Gas," generated on the North American Energy Standards Board, Inc.'s Standard Form 6.3.1, and a series of e-mails between Smithfield and the debtor. The Base Contract allows the parties to select options within a set of general terms and conditions. Specifically, the contract includes the following terms:
General Terms Provision Option Selected
Section 1.2 Transaction Oral
Procedure
Section 2.5 Confirm Deadline 2 Business Days after
receipt
Section 3.2 Performance Cover Standard
Obligation
Section 2.26 Spot Price Gas Daily Midpoint
Publication
Section 6 Taxes Buyer Pays At and After
Delivery Point
Section 7.2 Payment Date 25th Day of Month
following Month of delivery
Section 7.2 Method of Wire transfer
Payment
Section 7.7 Netting Netting applies
Section 10.3.1 Early Early Termination
Termination Damages Damages Apply
Section 10.3.2 Other Other Agreement Setoffs
Agreement Setoffs Apply
Section 14.10 Confidentiality Confidentiality applies
Base Contract at 1.
The "Oral Transaction Procedure" provides that gas purchase and sale transactions may be effectuated in an electronic data interchange ("EDI") transmission or telephone conversation with the offer and acceptance constituting the agreement of the parties. Base Contract at 2, § 1.2.
The "Performance Obligation" provides that "Seller agrees to sell and deliver, and Buyer agrees to receive and purchase, the Contract Quantity for a particular transaction in accordance with the terms of the Contract. Sales and purchases will be on a Firm or Interruptible basis, as agreed to by the parties in a transaction." Base Contract at 4, § 3.1. The "Cover Standard" provides for damages for a breach of the agreement:
The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by Seller to Buyer in an amount equal to the positive difference, if any, between the purchase price paid by Buyer utilizing the Cover Standard and the Contract Price, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually delivered by Seller for such Day(s); or (ii) in the event of a breach by Buyer on any Day(s), payment by Buyer to Seller in the amount equal to the positive difference, if any, between the Contract Price and the price received by Seller utilizing the Cover Standard for the resale of such Gas, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), *888 multiplied by the difference between the Contract Quantity and the quantity actually taken by Buyer for such Day(s); or (iii) in the event that Buyer has used commercially reasonable efforts to replace the Gas or Seller has used commercially reasonable efforts to sell the Gas to a third party, and no such replacement or sale is available, then the sole and exclusive remedy of the preforming party shall be any unfavorable difference between the Contract Price and the Spot Price, adjusted for such transportation to the applicable Delivery Point, multiplied by the difference between the Contract Quantity and the quantity actually delivered by Seller and received by Buyer for such Day(s). Imbalance Charges shall not be recovered under this Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall be payable five Business Days after presentation of the performing party's invoice, which shall set forth the basis upon which such amount was calculated.
Base Contract at 4, § 3.2.
Section 10.5 of the Base Contract provides, "The parties agree that the transactions hereunder constitute a `forward contract' within the meaning of the United States Bankruptcy Code and that Buyer and Seller are each `forward contract merchants' within the meaning of the United States Bankruptcy Code."[2] Base Contract at 8, § 10.5.
After entry of the Base Contract, the parties set their prices for future months via telephone and email correspondence. For example, on February 25, 2005, Mr. Lawing sent an e-mail to Robert Miller at Smithfield as follows: "Per our telephone conversation, I have $5.75 gas plus basis for the summer (Apr-Oct) and I am still trying to nail down our Nov-Mar piece." Authentication Decl. of Robert E. Miller, Ex. B-3. On August 12, 2005, Mr. Lawing sent an e-mail to Mr. Miller at Smithfield with a subject line of "Winter," "confirming a $6.60 cap for all volumes for all the NC plants" through March 2006. Authentication Decl. of Robert E. Miller, Ex. B-4.
The issue before the court is whether the contract between Smithfield and National Gas is a "swap agreement" involving "swap participants." If so, the trustee cannot prevail on his causes of action.
STANDARDS FOR DISMISSAL AND SUMMARY JUDGMENT
When deciding a motion to dismiss for failure to state a claim upon which relief may be granted under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the court must accept the plaintiffs factual allegations as true, drawing all reasonable inferences in the plaintiffs favor. Ibarra v. United States, 120 F.3d 472, 474 (4th Cir.1997). Because the rules require only notice pleading, courts construe a plaintiffs allegations liberally. In addition, the court may not consider materials outside the pleadings without converting the motion to one for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. See Rule 7012, Fed. R. Bankr.P. The standard is the same for motions for judgment on the pleadings under Rule 12(c). Burbach Broadcasting Co. of Delaware v. Elkins Radio, 278 F.3d 401, 405-06 (4th Cir.2002); Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).
*889 "[S]ummary judgment is proper `if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). In making this determination, conflicts are resolved by viewing all facts and inferences to be drawn from the facts in the light most favorable to the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962) (per curiam). Summary judgment is not a "disfavored procedural shortcut," but an important mechanism for filtering out "claims and defenses [that] have no factual basis." Celotex, 477 U.S. at 327, 106 S.Ct. at 2555. "[A] complete failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial." Celotex, 477 U.S. at 323, 106 S.Ct. at 2552. Summary judgment should not be granted "unless the moving party has established his right to a judgment with such clarity as to leave no room for controversy." Portis v. Folk Constr. Co., 694 F.2d 520, 522 (8th Cir.1982) (internal quotations omitted).
DISCUSSION
The trustee is proceeding against Smithfield under both § 548(a)(1)(A) and § 548(a)(1)(B), and in several related adversary proceedings, the court has already considered motions to dismiss under Rule 12(b)(6) and has determined that the trustee adequately pled his causes of action under those sections of the Bankruptcy Code. See Hutson v. Purolator Prods. NA, LLC (In re National Gas Distribs., LLC), Adv. Pro. No. S-06-00122-8-AP (Bankr.E.D.N.C. Dec. 6, 2006).
Section 548 provides, in relevant part, that
(a)(1) The trustee may avoid any transfer (including any transfer to or for the benefit of an insider under an employment contract) of an interest of the debtor in property, or any obligation (including any obligation to or for the benefit of an insider under an employment contract) incurred by the debtor, that was made or incurred on or within 2 years before the date of the filing of the petition, if the debtor voluntarily or involuntarily
(A) made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made or such obligation was incurred, indebted; or
(B)(i) received less than a reasonably equivalent value in exchange for such transfer or obligation; and
(ii)(I) was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation;
(II) was engaged in business or a transaction, or was about to engage in business or a transaction, for which any property remaining with the debtor was an unreasonably small capital;
(III) intended to incur, or believed that the debtor would incur, debts that would be beyond the debtor's ability to pay as such debts matured; or
(IV) made such transfer to or for the benefit of an insider, or incurred such obligation to or for the benefit of an insider, under an employment *890 contract and not in the ordinary course of business.
11 U.S.C. § 548(a)(1) (2005).
The question before the court is whether Smithfield falls within an exception to § 548(a) that is fatal to the trustee's causes of action. Smithfield contends that it is protected by the "safe harbor" provided by § 546(g) with respect to the trustee's § 548(a)(1)(B) constructive fraud claim, and that it gave reasonably equivalent value as provided in § 548(c) and § 548(d)(2)(D) with respect to the trustee's actual fraud claim under § 548(a)(1)(A).
Section 546(g) provides
(g) Notwithstanding sections 544, 545, 547, 548(a)(1)(B) and 548(b) of this title, the trustee may not avoid a transfer made by or to "a swap participant or financial participant, under or in connection with any swap agreement and that is made before the commencement of the case, except under section 548(a)(1)(A) of this title.
11 U.S.C. § 546(g) (2005). The safe harbor from the constructive fraud allegation is available to Smithfield if it can show that it is a "swap participant" within the meaning of the statute, and that the transactions at issue constitute transfers under a "swap agreement."
Similarly, Smithfield is protected from the actual fraud allegation by the safe harbor provided by § 548(c) and § 548(d)(2)(D), if Smithfield shows that it is a "swap participant" and that its contract with the debtor is a "swap agreement." These subsections of § 548 provide:
(c) Except to the extent that a transfer or obligation voidable under this section is voidable under section 544, 545, or 547 of this title, a transferee or obligee of such a transfer or obligation that takes for value and in good faith has a lien on or may retain any interest transferred or may enforce any obligation incurred, as the case may be, to the extent that such transferee or obligee gave value to the debtor in exchange for such transfer or obligation.
(d)(1) For the purposes of this section, a transfer is made when such transfer is so perfected that a bona fide purchaser from the debtor against whom applicable law permits such transfer to be perfected cannot acquire an interest in the property transferred that is superior to the interest in such property of the transferee, but if such transfer is not so perfected before the commencement of the case, such transfer is made immediately before the date of the filing of the petition.
(2) In this section
* * *
(D) a swap participant or financial participant that receives a transfer in connection with a swap agreement takes for value to the extent of such transfer[.]
11 U.S.C. § 548(c); § 548(d)(2)(D) (2005).
Section 548(c) protects a transferee from avoidance actions under § 548(a)(1)(A) if the transferee takes for value in good faith, to the extent of value given. Section 548(d)(2)(D) provides that a swap participant that receives a transfer in connection with a swap agreement takes for value to the extent of the transfer. Consequently, because the trustee does not contest that Smithfield received the transfer in good faith, the trustee may not avoid the transfer if the contract is a "swap agreement" and Smithfield is a "swap participant."
The definitions of "swap agreement" and "swap participant," appear in §§ 101(53B) and 101 (53C) of the Bankruptcy Code, as follows:
(53B) The term "swap agreement"
*891 (A) means
(i) any agreement, including the terms and conditions incorporated by reference in such agreement, which is
(I) an interest rate swap, option, future, or forward agreement, including a rate floor, rate cap, rate collar, cross-currency rate swap, and basis swap;
(II) a spot, same day-tomorrow, tomorrow-next, forward, or other foreign exchange, or precious metals agreement;
(III) a currency swap, option, future, or forward agreement;
(IV) an equity index or equity swap, option, future, or forward agreement;
(V) a debt index or debt swap, option, future, or forward agreement;
(VI) a total return, credit spread or credit swap, option, future, or forward agreement; or
(VII) a commodity index or a commodity swap, option, future, or forward agreement;
(VIII) a weather swap, option, future, or forward agreement;
(ii) any agreement or transaction that is similar to any other agreement or transaction referred to in this paragraph and that
(I) is of a type that has been, is presently, or in the future becomes, the subject of recurrent dealings in the swap or other derivatives markets (including terms and conditions incorporated by reference therein); and
(II) is a forward, swap, future, or option on one or more rates, currencies, commodities, equity securities, debt securities or other debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, commercial, or economic consequence, or economic or financial indices or measures of economic or financial risk or value;
(iii) any combination of agreements or transactions referred to in this subparagraph;
(iv) any option to enter into an agreement or transaction referred to in this subparagraph;
(v) a master agreement that provides for an agreement or transaction referred to in clause (i), (ii), (iii), or (iv), together with all supplements to any such master agreement, and without regard to whether the master agreement contains an agreement or transaction that is not a swap agreement under this paragraph, except that the master agreement shall be considered to be a swap agreement under this paragraph only with respect to each agreement or transaction under the master agreement that is referred to in clause (i), (ii), or (iv); or
(vi) any security agreement or arrangement or other credit enhancement related to any agreements or transactions referred to in clause (i) through (v), including any guarantee or reimbursement obligation by or to a swap participant or financial participant in connection with any agreement or transaction referred to in any such clause, but not to exceed the damages in connection with any such agreement or transaction, measured in accordance with section 562; and
(B) is applicable for purposes of this title only, and shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any swap agreement under any other *892 statute, regulation, or rule, including the Securities Act of 1933, the Securities Exchange Act of 1934, the Public Utility Holding Company Act of 1935, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Securities Investor Protection Act of 1970, the Commodity Exchange Act, the Gramm-Leach-Bliley Act, and the Legal Certainty for Bank Products Act of 2000. (53 C) The term "swap participant" means an, entity that, at any time before the filing of the petition, has an outstanding swap agreement with the debtor.
11 U.S.C. § 101(53B); § 101(53C) (2005).
The court's analysis of the meaning of "swap agreement" begins, as it must with every statute, with "the language of the statute itself." United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 1030, 103 L.Ed.2d 290 (1989); see also Barnhart v. Sigmon Coal Co., 534 U.S. 438, 450, 122 S.Ct. 941, 950, 151 L.Ed.2d 908 (2002) (court's first step is to determine whether language has "plain and unambiguous meaning with regard to the particular dispute in the case"); Toibb v. Radloff, 501 U.S. 157, 162, 111 S.Ct. 2197, 115 L.Ed.2d 145 (1991) (courts examine language first); In re Sunterra Corp., 361 F.3d 257, 265 (4th Cir.2004). The definition of "swap agreement" first appeared in the Bankruptcy Code in 1990 and was substantially expanded by BAPCPA. Unfortunately, as is true with many BAPCPA amendments, the resulting statute is confusing and its meaning anything but clear.
Smithfield maintains that the analysis is quite simple Smithfield's contract to purchase natural gas from National Gas is a swap agreement because, pursuant to § 101(53B)(A)(i)(VII), a swap agreement includes a commodity "forward agreement." According to Smithfield, its contract with National Gas is a forward contract as defined in § 101(25), natural gas is a commodity, and a commodity "forward agreement" necessarily includes a forward contract dealing with natural gas. The analysis, however, is not at all easy. "Swap agreement," "forward agreement" and "forward contract" are not part of this court's or most people's "plain meaning" vocabulary, and the court must look to other sources, including the context in which the terms appear in the Code.
Both parties have cited cases that they contend support their interpretations of the statute, but those cases, which were decided before the BAPCPA amendments, involve different sections of the Bankruptcy Code, different federal statutes, or facts that are significantly different from those before the court. Both parties also rely on aspects of the legislative history for support, but the legislative history also is contradictory.
The trustee concedes that the contract is a forward contract involving a commodity, but argues that the contract is not a forward agreement as that undefined term is used in § 101(53B)(A)(i)(VII). The argument that the contract is a forward contract is supported by a decision of the United States Court of Appeals for the Fifth Circuit in Williams v. Morgan Stanley Capital Group, Inc. (In re Olympic Natural Gas Co.), 294 F.3d 737 (5th Cir. 2002). Notwithstanding the trustee's concession and Olympic Natural Gas, the court is not convinced that the contract between National Gas and Smithfield is a forward contract as defined in § 101(25).
"Forward contract" is defined in § 101(25) as follows:
(25) The term "forward contract" means
(A) a contract (other than a commodity contract) for the purchase, sale, or *893 transfer of a commodity, as defined in section 761(8) of this title, or any similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward contract trade, or product or byproduct thereof, with a maturity date more than two days after the date the contract is entered into, including, but not limited to, a repurchase transaction, reverse repurchase transaction, consignment, lease, swap, hedge transaction, deposit, loan, option, allocated transaction, unallocated transaction, or any other similar agreement;
(B) any combination of agreements or transactions referred to in subparagraphs (A) and (C);
(C) any option to enter into an agreement or transaction referred to in subparagraph (A) or (B);
(D) a master agreement that provides for an agreement or transaction referred to in subparagraph (A), (B), or (C), together with all supplements to any such master agreement, without regard to whether such master agreement provides for an agreement or transaction that is not a forward contract under this paragraph, except that such master agreement shall be considered to be a forward contract under this paragraph only with respect to each agreement or transaction under such master agreement that is referred to in subparagraph (A), (B), or (C); or
(E) any security agreement or arrangement, or other credit enhancement related to any agreement or transaction referred to in subparagraph (A), (B), (C), or (D), including any guarantee or reimbursement obligation by or to a forward contract merchant or financial participant in connection with any agreement or transaction referred to in any such subparagraph, but not to exceed the damages in connection with any such agreement or transaction, measured in accordance with section 562.
11 U.S.C. § 101(25) (2005).
The definition provides that a forward contract is one which is "presently or in the future becomes the subject of dealing in the forward contract trade." 11 U.S.C. § 101(25). The contract at issue before the court is a simple supply contract involving the sale of natural gas by one party, National Gas, to another party, Smithfield, and is not a contract that is the subject of "dealing in the forward contract trade."[3] To complicate things further, the *894 definition of forward contract excludes a "commodity contract." § 101(25). All parties agree that natural gas is a commodity. The term commodity contract is not defined and could reasonably be interpreted to mean a contract involving a commodity to be delivered in the future, but one that is not "the subject of dealing in the forward contract trade." For both of these reasons, the court believes that a simply supply contract should not be included within the definition of a forward contract.
The decision in Olympic Natural Gas found that a straightforward supply contract calling for delivery in the future was a forward contract, but the contract under consideration in that case was not the type of simple supply contract that is presently before this court. The contract in Olympic Natural Gas was a "Natural Gas Sales and Purchase Contract" which provided that "each month the parties would enter into a series of individual transactions, in which each would act sometimes as buyer and sometimes as seller, after agreeing on the price, quantity, timing, and delivery point for the natural gas." Olympic Natural Gas, 294 F.3d at 739. One of the parties to the contract, Morgan Stanley Capital Group, was not a supplier of natural gas, but it acted as both buyer and seller under the contract. The contract in that case clearly was not an actual supply contract. Another factor distinguishing that case from this one is that the issue before the court in Olympic Natural Gas involved protection, under § 546(e), of settlement payments between forward contract merchants, not the broad protections afforded to swap participants engaged in swap agreements.[4]
A sticking point for both the Olympic Natural Gas court, and this court as well, is the confusing exclusion of "commodity contract" from the definition of forward contract. The court in Olympic Natural Gas relied on commentary in Collier on Bankruptcy to deal with the confusion. Citing Collier, that court construed "commodity contract" to mean "purchases and sales of commodities for future delivery on, or subject to the rules of, a contract market or board of trade, and leverage transactions." Olympic Natural Gas, 294 F.3d at 741 (citing 5 Collier on Bankruptcy ¶ 556.02[2], at 556-4 (Lawrence P. King ed., 15th ed.2002)). This is in contrast with "forward contracts" that are "contracts for the future purchase or sale of commodities that are not subject to the rules of a contract market or board of trade." Olympic Natural Gas, 294 F.3d at 741 (citing 5 Collier ¶ 556.02[2], at 556-5). The court stated that it would not adopt an interpretation of commodities contract that conflicted with the definition in § 761(4). The court suggested that "[b]y exempting `commodities contracts' from the definition of `forward contract' in § 101(25) the Code retains a distinct definition of `commodities contracts.'" Olympic Natural Gas, 294 F.3d at 741 (citing 11 U.S.C. § 761(4) (defining "commodity contract")).
An equally plausible and more basic argument can be made that "commodity contract," as used in § 101(25), should be given its "plain meaning," which is a simple *895 commodity supply contract. Section 103(d) of the Bankruptcy Code provides that subchapter IV of chapter 7, which includes § 761(4), applies only in a case under chapter 7 involving a commodity broker. If Congress had, intended for "commodity contract" to have the meaning provided by § 761(4), it would have said so, as it did in that same sentence with respect to "commodity." Section 101(25) expressly states that "commodity" is defined in § 761(8).[5]
The court in Olympic Natural Gas also found support for its interpretation of "forward contract" in that term's "traditional definition," as expressed by several circuit court opinions. See Nagel v. ADM Investor Servs., Inc., 217 F.3d 436 (7th Cir.2000); Commodity Futures Trading Comm'n v. Co Petro Mktg. Group, Inc., 680 F.2d 573 (9th Cir.1982); Grain Land Coop v. Kar Kim Farms, Inc., 199 F.3d 983 (8th Cir.1999) (cited in Olympic Natural Gas, 294 F.3d at 741). All of those cases, however, involve the Commodity Exchange Act, not the Bankruptcy Code, and the context in which the issues were raised' and the consequences that flowed from the definition of "forward contract" are quite different from the issues that are raised and resulting consequences in a bankruptcy setting.[6] Congress sometimes does include, in the Bankruptcy Code, "specific directions that establish the significance for bankruptcy law of a term used elsewhere in the federal statutes." Howard Delivery Serv., Inc. v. Zurich American Ins. Co., ___ U.S. ___, 126 S.Ct. 2105, 2113, 165 L.Ed.2d 110 (2006) (quoting United States v. Reorganized CF & I Fabricators of Utah, Inc., 518 U.S. 213, 219, 116 S.Ct. 2106, 135 L.Ed.2d 506 (1996)). When those directions are not given, the court has "no warrant to write them into the text." Howard Delivery, 126 S.Ct. at 2113.
The gist of all this is that significant questions remain as to whether the contract at issue is a forward contract. The issue is not dispositive and the court therefore will assume, as did the trustee, that the contract is a forward contract within the meaning of § 101(25). A forward contract is not identical to a forward agreement, however, and if the contract is not a forward agreement, it is not a swap agreement.
As previously mentioned, Smithfield offers a straightforward, linear argument: § 101(53B)(A)(i)(VII) provides that a swap agreement includes "a commodity index or a commodity swap, option, future or forward agreement;" the contract with National Gas is a forward contract as defined in § 101(25); natural gas is a commodity; and a "commodity forward agreement" necessarily includes a forward contract dealing with natural gas. Because the plain statutory definition of "swap agreement" includes the contract at issue, *896 Smithfield argues, the court may not look to outside sources to determine whether the contract would be a, "swap agreement" in any other context, including definitional sources within the financial industry itself. In the event the court does look outside the statutory language, Smithfield points to the legislative history of the 2005 amendments discussing the definition of "swap agreement." In it, the following commentary appears: "The use of the term `forward' in the definition of `swap agreement' is not intended to refer only to transactions that fall within the definition of `forward contract', Instead, a `forward' transaction could be a `swap agreement' even if not a `forward contract.'" H.R.Rep. No. 109-31, pt. 1, at 129.
Smithfield also refers to the fact that Black's Law Dictionary defines "forward contract" to include a "forward agreement":
forward contract. An agreement to buy or sell a particular nonstandardized asset (usu.currencies) at a fixed price on a future date. Unlike a futures contract, a forward contract is not traded on a formal exchange. Also termed forward agreement.
Black's Law Dictionary 345 (8th ed.2004). Smithfield contends that "agreement" is broader than "contract," and that "contracts" are necessarily a subset of "agreements." Smithfield also suggested that because the International Swaps and Derivatives Association (the representative association for the financial industry) filed an amicus brief supporting the argument that the contract is a swap agreement, the industry as a whole would recognize this contract as a swap agreement. All taken together, Smithfield asserts, this is a forward contract that also is a forward agreement, and thus for that reason is a swap agreement.
The trustee disagrees. He urges the court to essentially step back and see the forest rather than only the trees. The special protections afforded to swap agreements were intended to apply to complicated financial transactions, he argues, and not to straightforward supply agreements involving the sale of natural gas. The trustee cautions that if Smithfield's argument prevails, each sale of a commodity with a delivery date more than two days after the contract date would be a swap agreement, including the simple sale of, for example, hogs or corn. The definition of "swap agreement" cannot be expanded to apply to every commodity contract that has a future delivery date. The trustee acknowledges that there are legitimate reasons for Congress to protect recognized financial markets given their far-ranging impact, but he contends that the protection should not extend to the simple sale of goods at the "farmer's market." In a nutshell, the bedrock of the trustee's legal argument is that it would defy both Congressional intent and basic common sense to define a swap agreement in such a way as to include a family farmer's agreement with a consumer to sell a bushel of corn at the end of the month for a fixed price.
As the foregoing discussion illustrates, the court cannot rely on the plain language of the statute. The term "forward agreement" is not in everyday usage, its meaning is uncertain, and the court must consider other rules of statutory interpretation. A review of the relevant statute's history is in order. See Toibb, 501 U.S. at 162, 111 S.Ct. at 2200 (explaining that where the "resolution of a question of federal law turns on a statute and the intention of Congress, we look first to the statutory language and then to the legislative history if the statutory language is unclear") (internal quotations omitted).
*897 Prior to the amendments at issue, swap agreements were defined more narrowly in the Bankruptcy Code. The definition of swap agreement first became part of the Bankruptcy Code in 1990, Pub.L. No. 101-311 (June 25, 1990). Congress sought to address "concerns regarding volatility in the swap agreement markets resulting from the uncertainty over their treatment in the Bankruptcy Code." H.R.Rep. No. 484, 101st Cong., 2d Sess. 3 (1990). The House Report for the 1990 amendments suggests that Congress intended to protect the, financial markets. "U.S. Bankruptcy law has long accorded special treatment to transactions involving financial markets, to minimize volatility. Because financial markets can change significantly in a matter of days, or even hours, a non-bankrupt party to ongoing securities and other financial transactions could face heavy losses unless the transactions are resolved promptly and with finality." H.R.Rep. No. 484, 101st Cong., 2d Sess. 3 (1990) (emphasis added). The remarks offered in both the House and Senate are in accord. See 136 Cong. R. H 2282 (May 15, 1990) (statement of Rep. Brooks); 136 Cong. R. S S7335 (daily ed. June 6, 1990) (statement of Sen. DeConcini).
The definition of swap agreement in 1990 "set out a non-exhaustive list of swaplike transactions rate, basis, commodity, currency, and cross-currency rate swaps; interest rate and currency options; rate caps, floor, and collars; and `any other similar agreement.'" Edward R. Morrison & Joerg Regal, Financial Contracts and the New Bankruptcy Code: Insulating Markets from Bankrupt Debtors and Bankruptcy Judges, 13 Am Bankr.Inst. L.Rev. 641, 646 (2005).
The definition of swap agreement was amended in 1994 to "confirm[] the market understanding that spot foreign exchange contracts are included within the definition of `swap agreement.'" H.R.Rep. No. 103-834, 103rd Cong., 2nd Sess. 29 (Oct. 4, 1994); 140 Cong. Rec. H10768 (Oct. 4, 1994). As amended in 1994, § 101(53B) read as follows:
The term "swap agreement" means
(A) an agreement (including terms and conditions incorporated by reference therein) which is a rate swap agreement, basis swap, forward rate agreement, commodity swap, interest rate option, forward foreign exchange agreement, spot foreign exchange agreement, rate cap agreement, rate floor agreement, rate collar agreement, currency swap agreement, cross-currency rate swap agreement, currency operation, any other similar agreement (including option to enter into any of the foregoing);
(B) any combination of the foregoing; or
(C) a master agreement for any of the foregoing together with all supplements[.]
11 U.S.C. § 101(53B) (1994).
Clearly, the contract before the court today is not the type of contract identified in the pre-BAPCPA definition of swap agreement and is not similar to any transaction typical in the swap markets. Consequently, prior to the 2005 amendments, the transfers under the contract at issue would have been protected only by § 546(e) and § 548(d)(2)(B), to the extent that those transfers were "settlement payments" made by or to a "forward contract merchant."[7] The pre-BAPCPA definition *898 of "swap agreement" could not have been stretched to include the transactions at issue.
The definition applicable to the issue before the court is, of course, the post-BAPCPA definition, which is more expansive. Why did Congress expand the definition of swap agreement? Legislative history is available and, in contrast to most of BAPCPA's legislative history which merely repeats the statute, the legislative history attempts to explain why the statute was enacted and what the statute means. Unfortunately, the guidance of the legislative history itself is contradictory.
As mentioned above, the legislative history of the 2005 amendments provides that the use of the term "forward" is not intended to be limited to transactions that fall within the definition of "forward con tracts." H.R.Rep. No. 109-31, Pt. 1, at 129. At the same time, it provides that "[a]s amended, the definition of `swap agreement' will update the statutory definition and achieve contractual netting, across economically similar transactions." H.R.Rep. No. 109-31, Pt. 1, at 128 (emphasis added).
The definition of "swap agreement" originally was intended to provide sufficient flexibility to avoid the need to amend the definition as the nature and uses of swap transactions matured. To that end, the phrase "or any other similar agreement" was included in the definition. . . . To clarify this, subsection (a)(1) expands the definition of "swap agreement" to include "any agreement or transaction that is similar to any other agreement or transaction referred to in [Section 101(53B) of the Bankruptcy Code] and that is of a type that has been, is presently, or in the future becomes, the subject of recurrent dealings in the swap markets" and [that] is a forward, swap, future, or option on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, commercial, or economic consequence, or economic or financial indices or measures of economic or financial risk or value.
The definition of "swap agreement" in this subsection should not be interpreted to permit parties to document non-swaps as swap transactions. Traditional commercial arrangements, such as supply agreements . . . cannot be treated as "swaps" under the FDIA, the FCUA, or the Bankruptcy Code because the parties purport to document or label the transactions as "swap agreements."
H.R.Rep. No. 109-31, pt. 1, at 128-29 (emphasis added).
The legislative history shows that Congress was attempting to be forward-thinking and to draft language that could encompass the expansion of the swap market without requiring repeated amendment. Congress wished to include any and all financial instruments traded in the swap markets, now existing or that may be created in the future, within its definition, which it did through the "any other similar agreement" language. The definition is intentionally broad in anticipation of expected changes in the use and nature of swap instruments. Congress also clearly stated, however, that it did not intend for supply agreements to be swept into the realm of swap agreements. The restrictive reference to recurrent trade, taking place in the swap markets, means that Congress was focused on financial instruments that are themselves regularly the *899 subject of trading, and did not contemplate application of this statute to a contract of the kind at issue here, which is simply an agreement by a single end-user to purchase a commodity.
In construing the statute the court also must, of course, "consider the context in which the statutory words are used because `[w]e do not . . . construe statutory phrases in isolation; we read statutes as a whole.'" Ayes v. U.S. Dep't of Veterans Affairs, 473 F.3d 104, 108 (4th Cir.2006). Here, the context is readily evident: This statute is meant to protect financial markets. Though Smithfield would have the court end the inquiry with the limited language of § 101(53B)(A)(i)(VII), which provides that a swap agreement includes "a commodity index or a commodity swap, option, future or forward agreement," putting the statute in its actual, appropriate context reveals that there is much more to the statutory definition.
It is true enough that § 101(53B)(A)(i) lists numerous agreements that fall within the definition of "swap agreement." Section 101(53B)(A)(ii) provides for additional agreements or transactions that are "similar" to those referred to in § 101(53B)(A)(i) and are the subject of recurrent dealings in the swap market and are forwards, swaps, futures, or options "on one or more rates, currencies, commodities, equity securities, or other equity instruments . . ." The word "similar," rather than expanding the universe of agreements that come within the umbrella of swap agreements, actually limits the agreements to those that "bear[] a family resemblance" to the other agreements and transactions that enjoy the protections of the Bankruptcy Code. Ayes, 473 F.3d at 108. The other agreements described in § 101(53B)(A)(i) are found in financial markets. They do not include contracts between a seller and an end-user for delivery of a product that happens to be a recognized commodity.
Congress determined that there are legitimate reasons for creating, in the financial markets, these special exceptions to the overall protections and policies of the Code. The court understands that if contracts traded on a financial market are unraveled, the market itself could become unstable and a domino effect could occur. See H.R.Rep. No. 484, 101st Cong., 2d Sess. (1990). There is nothing to suggest that the contract between Smithfield and the debtor was traded on a financial market, so in this case only the debtor's estate and Smithfield would be affected by a recovery. There is no reason to disturb the established ability of the trustee to avoid the alleged fraudulent transfers at issue in this case.
The consequences of including agreements such as the one before the court within the definition of swap agreement would be far-reaching. Not only are all transfers under swap agreements protected from the reach of a trustee in preference and fraudulent transfer actions, but setoffs by a swap participant of mutual debt, and claims under a swap agreement, are excepted from the automatic stay. See 11 U.S.C. § 362(b)(17). The rights to liquidate, terminate or accelerate a swap agreement cannot be stayed, avoided or limited by the Code or the court, 11 U.S.C. § 560, bankruptcy default clauses are enforceable, 11 U.S.C. § 561(a), and there are special provisions for rejection damages. See 11 U.S.C. § 562. These exceptions to the trustee's avoidance powers were intended to avoid the greater danger of market disruption and instability in the financial markets due to the domino effect likely as a result of some types of transfer avoidance. Congress certainly did not intend by the amendment to create a new, equally disruptive ripple effect within the *900 administration of bankruptcy estates. The court must take into consideration the effect its decision will have on the overall scheme of the Bankruptcy Code. If this agreement is a swap agreement, then many of the most important aspects of the Code, including priorities of distributions to creditors and the automatic stay, will be eviscerated in even the smallest case of a farmer who contracts to sell his hogs at the end of the month for a set price. No public purpose would be served, and the result would be wholly at odds with the established aims and order of bankruptcy proceedings.
The court's conclusion that the contract at issue is not within the definition of a swap agreement also comports with an important guiding principle for all bankruptcy courts, which was recently emphasized by the United States Supreme Court in Howard Delivery, 126 S.Ct. at 2109. The Court stated that "the Bankruptcy Code aims, in the main, to secure equal distribution among creditors." In that case, the Court concluded that it was "far from clear" that an employer's liability to provide worker's compensation coverage came within the language of § 507(a)(5), which confers priority for contributions to an employee benefit plan arising from services rendered. 126 S.Ct. at 2116. For that reason, and because other factors also weighed against that categorization, the Court determined that "any doubt concerning the appropriate characterization . . . is best resolved in accord with the Bankruptcy Code's equal distribution aim." 126 S.Ct. at 2116. Affording to the trustee the full range of his statutory avoidance powers, on the facts before the court, is in line with both the Code's goal of equal distribution and "the complementary principle that preferential treatment of a class of creditors is in order only when clearly authorized by Congress." 126 S.Ct. at 2109.
Both parties have made solid arguments to support their positions, but it is not clear to the court that the definition of swap agreement is broad enough to cover the contract between National Gas and Smithfield. Resolution of this case, as with Howard Delivery, turns on the "essential character" of the market protection statutes at issue. 126 S.Ct. at 2113. Because the contract is not clearly within the definition of swap agreement, the court will not upset the priority scheme of the Bankruptcy Code by affording the transfers under the contract the protections afforded to swap agreements and swap participants under § 546(g), and under § 548(c) and § 548(d)(2)(D).
Accordingly, Smithfield's motion to dismiss and alternative motion for summary judgment are DENIED. Because the court has not relied on the affidavit of Ms. Gotham in reaching its decision, it is not necessary to address Smithfield's motion to strike.
SO ORDERED.
NOTES
[1] See the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"), Pub.L. 109-8, 119 Stat. 23, § 907 (April 20, 2005).
[2] The Base Contract is a standard form created in April 2002, prior to the 2005 amendments to the Bankruptcy Code, and this provision is apparently an attempt to bring the parties within the protections of § 546(e) as they existed in 2002. See footnote 7, infra.
[3] The definition of "forward contract" contains a clause beginning with the word "which," and that word could affect the interpretation of the definition, depending on the word the clause modifies. The definition reads: "a contract . . . for the purchase, sale, or transfer of a commodity . . . or any similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward contract trade. . . ." If this phrase modifies "contract," then the definition is limited to the agreements' that are themselves the subject of dealing in the forward contract trade. If the phrase modifies "similar good, article, service or interest," then it is only the commodity, good, article, service or interest underlying the contract that must be the subject of dealing in the forward contract trade.
The language used in the definition of "forward contract merchant" in § 101(26) supports a conclusion that the "which" does not refer to the contract, but rather to the good, article, service or interest. That section also uses the phrase "commodity . . . or any similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward contract trade . . ." but does not have a competing noun that the phrase might modify. Although the "which" likely does not refer to the contract, the language of the statute is ambiguous. See In re Mirant Corp., 310 B.R. 548, 565-66 (Bankr.N.D.Tex.2004).
[4] A "forward contract merchant" is defined in § 101(26) as meaning "a Federal Reserve bank, or an entity the business of which consists in whole or in part of entering into forward contracts as or with merchants in a commodity (as defined in section 761) or any similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward contract trade." Section 546(e) protects settlement payments between forward contract merchants from avoidance under §§ 544, 545, 547, 548(a)(1)(B) and 548(b).
[5] The bankruptcy court in In re Mirant Corp., 310 B.R. 548-566 (Bankr.N.D.Tex.2004), felt that no inference should be drawn from the omission of § 761(4) in § 101(25), because the reference to § 761(8) was added by Congress in 1990 to clarify the meaning of "commodity." That may be so, but the fact remains that Congress did not refer to § 761(4) either in 1990 or in 2005 when the definition of "forward contract" was amended by BAPCPA. Section 101(25)(A) was amended by the Financial Netting Improvements Act of 2006, Pub.L. 109-390, § 5(a)(1)(C)(i), and now provides that "commodity contract" is defined in § 761. The 2006 amendment is not applicable in this case, because the case was filed prior to the amendment's effective date of December 12, 2006.
[6] The definitions of "forward contract" in the Federal Deposit Insurance Act and the Federal Credit Union Act were amended by BAPCPA to coincide with the new definition of "forward contract" in the Bankruptcy Code. Pub.L. 109-8, 119 Stat. 23 § 901(d)(2005).
[7] It is unlikely that the transfers before the court qualify for the protections of §§ 546(e) and 548(d)(2)(B), a point apparently conceded by Smithfield both because it is not proceeding under those subsections, and because it acknowledged at the hearing that the provision of the contract which characterizes the parties as "forward contract merchants" for purposes of the Bankruptcy Code is not relevant to this adversary proceeding. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539824/ | 974 A.2d 46 (2009)
115 Conn.App. 633
STATE of Connecticut
v.
Randal LICARI.
No. 28735.
Appellate Court of Connecticut.
Argued March 10, 2009.
Decided July 14, 2009.
*49 Raymond L. Durelli, special public defender, for the appellant (defendant).
*50 Frederick W. Fawcett, supervisory assistant state's attorney, with whom, on the brief, were Jonathan C. Benedict, state's attorney, and Howard S. Stein, assistant state's attorney, for the appellee (state).
FLYNN, C.J., and ROBINSON and STOUGHTON, Js.
STOUGHTON, J.
The defendant, Randal Licari, appeals from the judgment of conviction, rendered after a jury trial, of arson in the first degree in violation of General Statutes § 53a-111(a)(3),[1] larceny in the first degree in violation of General Statutes §§ 53a-122(a)(2) and 53a-119,[2] insurance fraud in violation of General Statutes § 53a-215(a)(1),[3] and conspiracy to commit larceny in the first degree and insurance fraud in violation of General Statutes §§ 53a-48,[4] 53a-122(a)(2), 53a-119 and 53a-215.[5] The defendant claims: (1) the trial court abused its discretion when it admitted evidence of uncharged misconduct for the purpose of establishing a common scheme, intent and absence of accident or to corroborate other evidence; (2) the court abused its discretion in admitting the written statement of the defendant's former wife as substantive evidence under the rule of State v. Whelan, 200 Conn. 743, 753, 513 A.2d 86, cert. denied, 479 U.S. 994, 107 S.Ct. 597, 93 L.Ed.2d 598 (1986), where the purported written statement was not sufficiently reliable for admission under the rule; (3) the defendant's conviction of both larceny and insurance fraud violated the double jeopardy clause of the federal constitution; and (4) the defendant was deprived of a fair trial by the prosecutor's pretrial conduct. We affirm the judgment of the trial court.
*51 The jury reasonably could have found the following facts. On December 15, 2002, the defendant, an employee for the city of New York department of environmental protection (department), left his home around 2 p.m. for a 3:30 p.m. shift at the Croton Lake Gatehouse.[6] In the early morning of December 16, 2002, the defendant received notice, while still at work, that his house, located at 1330 Huntington Turnpike in Trumbull, had been severely damaged by fire. The defendant first called the Trumbull police and fire departments to see if they knew whether his wife and daughter were safe. Once he learned that his wife and daughter were safe, he received permission to leave work and drove to the fire scene, arriving at approximately 2:30 a.m.
Three detectives from the state fire marshal's office of the Connecticut state police, Roger Baxter, Edgar Rodriguez and John Kananowicz, investigated the fire. Baxter was the electrical consultant, Rodriguez was the case officer and Kananowicz was responsible for the site sketch included in the final report prepared by Rodriguez. Baxter investigated the fire and determined that the origin of fire was in the corner of the downstairs living area near a stack of Duraflame logs located next to a Christmas tree. He observed that an electrical cord from the Christmas tree lights ran across the top of the stack of Duraflame logs and into an electrical outlet located directly above the Duraflame logs but determined that neither the electrical cord nor the electrical outlet was the cause of the fire. Baxter did not observe any other potential sources of the fire and concluded that the fire was of an "undetermined" origin. A report prepared by Rodriguez determined that the fire appeared "to be accidental in nature and more probably than not caused by the Christmas tree," but the report indicated that this determination was not absolute and that the investigation could be opened in the future if additional information was obtained.
The defendant hired John Cotter, Jr., of Nutmeg Adjusters Incorporated, a licensed Connecticut public adjuster, to represent him in his insurance claim. Cotter estimated the replacement cost of the house to be $230,000, and the defendant's insurance company, The Standard Fire Insurance Company, estimated the replacement cost of the house to be $254,500, depreciated to $190,900. On the basis of this information, both Cotter and the insurance company agreed that the full amount of the homeowner's insurance policy, $181,000, should be paid.[7] After receiving full payment from his insurance company in February, 2003, the defendant began construction on a new house at 1330 Huntington Turnpike. During the time of the construction, the defendant and his family rented a house from his mother, which was located in Patterson, New York.
In addition to his employment with the department, the defendant owned a limousine *52 chauffeur business (business). The primary customers of the business were people needing rides to and from area airports. In April, 2002, the defendant filed for bankruptcy protection pursuant to chapter 7 of the United States Bankruptcy Code as a result of a significant decrease in persons traveling due to the events of September 11, 2001. Although the defendant was granted a discharge in bankruptcy pursuant to 11 U.S.C. § 727, some of his debts relating to the business were not discharged.[8] To pay for his business debts, which totaled more than $80,000; see footnote 8; the defendant refinanced his house, taking out an additional mortgage. At the time of the fire in December, 2002, the defendant had three mortgages on his house. The defendant had been an active gambler since the 1970s and had "financial problems all the time," thus requiring him to work more than one job.
Heather Licari, the defendant's daughter from his first marriage, also worked at the department. She had gotten the job through the help of her father and grandfather. In late 2001, Heather Licari moved in with the defendant and his second wife, Angela Licari, in an effort to combat her addiction to prescription drugs. The defendant placed some restrictions on her while she was living at his house. For example, Heather Licari's boyfriend was not allowed over, and she was not allowed to bring or to use drugs in the defendant's house. About one or two months before the fire, the defendant asked Heather Licari to leave his house after finding her boyfriend and drug supplier, Frank,[9] in his house.
Near Thanksgiving of 2002, the defendant asked Heather Licari to rent a storage unit. The defendant told Heather Licari that he was having financial problems and was going to burn down his house. Although Heather Licari did not rent the storage unit, she helped the defendant transport items to the unit, which the defendant rented on December 12, 2002. On the night of the fire, the defendant called Heather Licari sometime between 11 p.m. and 1 a.m. and told her that he was on his way back to work and that he had started the fire. He then called her a second time and told her that as he was getting out of the shower in the locker room at work, he was notified of the fire. Edward Olsen, the defendant's co-worker, received a call from the defendant's brother regarding the fire and went to find the defendant to notify him of it. Olsen found the defendant as the defendant was leaving the locker room. Olsen testified that he did not know whether the defendant was at the gatehouse the entire night.
Heather Licari went to the defendant's house after the fire on December 16, 2002, and walked through it with the defendant. When they were in the living room, the defendant told her that that was the location where he had started the fire, explaining that he had placed Duraflame logs under the Christmas tree. Moreover, as they were walking through the house, the defendant was laughing at the fire investigators calling them "stupid . . . because he thought he got away with [setting the fire]."
In January, 2003, Heather Licari entered a drug detoxification program, which required her to miss several weeks of *53 work. Because she failed to inform the department that she would be missing work, she lost her job at the department. She then moved in with her new boyfriend, Olivier Vanecci, in Vermont. In December, 2003, the Vermont residence in which Heather Licari was living was burglarized. One of the items taken in the burglary was a laptop computer that the defendant had stolen from the department. The defendant was unable to use the computer because he did not know the password. Heather Licari, however, had a friend who was able to identify the password, and, because she was able to use the stolen computer, she kept it.
In December, 2004, Heather Licari received a telephone call from the New York state police informing her that they had the items taken in the burglary. When she went to retrieve the items, she spoke with two investigators affiliated with the department. The investigators told her that they had spoken with the defendant and that he told them that she had stolen the laptop. She then told the investigators about the defendant's burning down his house. She also told them that the defendant had caused a fire that destroyed her automobile in Milford in the summer of 2001 so that she could recover the insurance proceeds and pay off her automobile loan. The investigators relayed this information to Detective Anthony Recupero of the Trumbull police department. On the basis of this information, Recupero began a second investigation of the house fire. As part of his investigation, Recupero received and executed a search and seizure warrant for the defendant's new house at 1330 Huntington Turnpike on February 14, 2005. During his search, Recupero seized numerous items that the defendant indicated were lost in the fire in the claims submitted to his insurance company.[10] Recupero also interviewed Heather Licari and, in April, 2005, received a sworn written statement from her, detailing the defendant's involvement in the house fire. In May, 2005, Recupero applied for and was granted an arrest warrant for the defendant.
The defendant's trial began on October 3, 2006. At the close of the state's case-in-chief, the defendant made an oral motion for a judgment of acquittal on all counts, which the court denied. The jury returned a verdict of guilty as to all counts. Thereafter, on December 15, 2006, the defendant filed a motion for a new trial and a second motion for a judgment of acquittal. The court denied both motions after a hearing and rendered judgment accordingly. This appeal followed. Additional facts will be set forth as necessary.
I
The defendant first claims that the court improperly admitted testimony that he had set fire to Heather Licari's automobile in order that she might collect insurance money. The court admitted this testimony under § 4-5(b) of the Connecticut Code of Evidence,[11] and the defendant *54 claims that the court's ruling constituted harmful error. We disagree.
"We review the trial court's decision to admit evidence, if premised on a correct view of the law . . . for an abuse of discretion.. . . We will make every reasonable presumption in favor of upholding the trial court's ruling, and only upset it for a manifest abuse of discretion." (Internal quotation marks omitted.) State v. Beavers, 290 Conn. 386, 396, 963 A.2d 956 (2009).
The defendant contends that the court abused its discretion in admitting the evidence for the purposes of establishing a common scheme, intent and absence of accident or corroboration of other evidence. He claims that the challenged evidence fails to meet the requisite standards for admissibility for any of the purposes for which it was admitted. The state contends that the evidence was relevant on the issue of intent, as to whether the fire was accidentally caused, and to show a common scheme.
The defendant filed a motion in limine requesting that the court preclude the state from introducing any evidence relating to any fire or fires that had occurred in or to a motor vehicle either owned or driven by the defendant. In an offer of proof, the prosecutor informed the court that Heather Licari would testify that the defendant told her that she was foolish to be making car payments on her automobile, an Audi A4, and said that they would get rid of it so that she would not have to make payments anymore. He told his daughter that he was going to start a fire in the car and make it look like an electrical fire so that she could collect the insurance and pay off the automobile loan. The defendant drove the automobile, on August 8, 2001, to the Amateur Jai Alai Fronton in Milford, where he had a second job, and, at about 10:45 p.m., the Milford fire department responded to a fire in Heather Licari's Audi A4. The defendant told the fire department investigators that he had come out and found the automobile smoking and burning inside. An investigation showed that an electrical fire that appeared accidental had occurred underneath the dashboard. The automobile was a total loss; an insurance claim was paid, and the automobile loan paid off.
The state claimed that this misconduct evidence was admissible for several different reasons under § 4-5(b). The defendant claimed that he had not benefited from the automobile fire, as he did not receive any of the insurance proceeds, that he never had been charged with any crime in connection with it and that the probative value of this evidence was outweighed by the resulting prejudice to him. The court determined that the relevant rule of evidence was § 4-5(b) under which evidence of other crimes, wrongs and acts is admissible to prove, among other things, intent, motive, common plan or scheme, absence of mistake or accident, knowledge or a system of criminal activity. The court decided that the evidence was relevant, that it went to show a common plan or scheme but was not the sort of thing that was going to shock the jury and that its probative value was not outweighed by the danger of unfair prejudice. Thereafter, the court instructed the jury that the evidence was not offered to prove the defendant's bad character or tendency to commit criminal acts but was offered solely to show or to establish "a method or plan or scheme. . . in the commission of criminal acts or the existence of intent or the absence of accident."
It is well established that evidence of prior misconduct is generally inadmissible to prove that a defendant is guilty of the crime charged. State v. Beavers, supra, 290 Conn. at 399, 963 A.2d 956. On the other hand, evidence of crimes so connected *55 as to tend directly to prove the commission of the charged crime is admissible. Id. For such evidence to be admissible, it must first be relevant to one of the exceptions set forth in § 4-5(b), and, second, its probative value must outweigh its prejudicial effect. Id., at 400, 963 A.2d 956. "[T]he trial court's decision will be reversed only whe[n] an abuse of discretion is manifest or whe[n] an injustice appears to have been done. . . . On review by this court, therefore, every reasonable presumption should be given in favor of the trial court's ruling." (Internal quotation marks omitted.) Id.
We agree with the defendant that evidence of the automobile fire was not admissible to show a common scheme or plan. That fire occurred some sixteen months before the house fire. There was no evidence indicating that the two fires were part of a single, overall plan conceived by the defendant to burn both his daughter's car and his house. Although there was evidence that each fire was set to obtain insurance proceeds, there was no evidence that there was a plan to obtain insurance money by burning insured properties. See State v. Randolph, 284 Conn. 328, 339-46, 933 A.2d 1158 (2007).
The evidence was admissible, however, to prove the closely related issues of intent, which the state was required to prove, and lack of accident or mistake. See State v. Beavers, supra, 290 Conn. at 400-401, 963 A.2d 956. The evidence that the defendant started a fire in the automobile in order that his daughter might recover insurance proceeds tended to prove that he knew how to start a fire that appeared to be accidental in nature and that he intentionally set fire to his residence to recover insurance proceeds. The defendant testified that he had absolutely nothing to do with the house fire. In addition, no evidence that the house fire had been set was found by the fire investigator and the fire investigation report stated that the fire appeared to be accidental. On the other hand, Heather Licari testified that the defendant told her that he had started the fire. Thus, whether the house fire had been set or was caused accidentally was at issue. The defendant's success in destroying his daughter's automobile in what appeared to be an accidental fire so that she might recover the insurance proceeds makes utterly limpid his subsequent intent to burn down his house in what appeared to be an accidental fire to recover the insurance proceeds.
We agree with the court that this evidence was not such as to shock the sensibilities of the jury and that its probative value exceeded its prejudicial effect. We conclude, therefore, that the court did not abuse its discretion in admitting the evidence of the automobile fire.
II
The defendant next claims that the court improperly admitted the written statement of his former wife for substantive purposes under State v. Whelan, supra, 200 Conn. at 743, 513 A.2d 86, because that statement was not sufficiently reliable. We disagree.
In Whelan, our Supreme Court adopted a hearsay exception allowing the substantive use of prior written, inconsistent statements signed by a declarant who has personal knowledge of the facts stated when he testifies at trial and is subject to cross-examination. Id., at 753, 513 A.2d 86. Section 8-5(1) of the Connecticut Code of Evidence codifies this rule and incorporates subsequent developments and clarifications.[12] See State v. Simpson, 286 *56 Conn. 634, 642, 945 A.2d 449 (2008). The exception applies to a relatively narrow category of prior inconsistent statements and is carefully limited to those prior statements that carry such substantial indicia of reliability as to warrant their substantive admissibility. Id. As with all other admissible nonhearsay evidence, we allow the fact finder to determine the credibility of the hearsay statement upon consideration of all the relevant circumstances. Id., at 643, 945 A.2d 449. "[A] prior inconsistent statement that fulfills the Whelan requirements may have been made under circumstances so unduly coercive or extreme as to grievously undermine the reliability generally inherent in such a statement, so as to render it, in effect, not that of the witness." State v. Mukhtaar, 253 Conn. 280, 306, 750 A.2d 1059 (2000). In such circumstances, the court must act as a gatekeeper to ensure that the statement does not go to the jury for substantive purposes if it is persuaded that the statement is so untrustworthy that its admission into evidence would subvert the fairness of the fact-finding process. Id.
The following additional facts are relevant to the defendant's claim. Barbara Grascia had once been married to the defendant and was the mother of Heather Licari. Grascia testified for the defendant and told the jury that Heather Licari was angry at her father. Grascia testified that the day after Heather Licari gave her statement to the police, Heather Licari told her that the statement was not true and that she was angry and on drugs when she gave the statement. During the trial, but before her testimony, Grascia went to the Trumbull police department and gave a statement to Recupero. In the statement, she explained that she was afraid of the defendant, that he had threatened harm to their daughter, to her and to others in retribution for what was happening to him, and said that she did not want to testify. During his cross-examination of Grascia, the prosecutor offered the statement pursuant to § 8-5(1).
During her cross-examination, Grascia testified that she had provided the information contained in the nine page, handwritten statement, that she had signed each page of the statement and that each page included a certification that the facts contained therein were true. Grascia testified that she did not want to go to the police department and was advised by her attorney not to do so. She then offered several reasons for having gone to the police department and given the statement. Some of the reasons were that her present husband made her do it; someone from the prosecutor's office called her brother-in-law, who worked for the district attorney in Westchester, New York, to put pressure on her husband; she was scared; everyone around her was telling her that she would be arrested; and that the prosecutor had tricked her and lied to her. Moreover, she testified that her former father-in-law said that the prosecutor had threatened to arrest every member of the family until he could get to the defendant. On redirect, Grascia admitted that she was not threatened by police while she was at the police department.
When the statement was offered, the defendant conceded that it was a prior inconsistent statement in writing signed by the witness who had personal knowledge of its contents and was available for cross-examination. *57 Although it met the requirements of § 8-5(1), the defendant objected on the ground that the statement had nothing to do with the charges. When asked if there were any other objections, the defendant replied that there were none. Neither then, nor at any other time, did the defendant make the claim that he makes on appeal; that is, that the circumstances under which the statement was taken were so coercive as to make the statement unreliable.
The defendant acknowledges that this claim was not raised at trial, but he claims that Grascia's testimony was sufficient to raise the issue of unreliability. He argues that under the circumstances, it would be redundant and a mere formality to specify unreliability as a ground for objection and that the court ought to have conducted a hearing such as suggested in State v. Mukhtaar, supra, 253 Conn. at 307 n. 27, 750 A.2d 1059. We agree with the state that this claim is unreviewable because the defendant failed to object to the admission of the Grascia statement on this ground. To preserve an evidentiary ruling for review, trial counsel "must properly articulate the basis of the objection so as to apprise the trial court of the precise nature of the objection and its real purpose, in order to form an adequate basis for a reviewable ruling. . . . [This] serve[s] to alert the trial court to potential error while there is still time for the court to act." (Internal quotation marks omitted.) State v. Simpson, supra, 286 Conn. at 645, 945 A.2d 449. "[L]imiting appellate review of evidentiary claims to the ground asserted at trial applies with equal force to Whelan issues." Id., at 646, 945 A.2d 449. Accordingly, we decline to review the defendant's claim.
The defendant has also requested review under the plain error doctrine. See Practice Book § 60-5. "[T]he plain error doctrine . . . is not . . . a rule of reviewability. It is a rule of reversibility. That is, it is a doctrine that this court invokes in order to rectify a trial court ruling that, although either not properly preserved or never raised at all in the trial court, nonetheless requires reversal of the trial court's judgment, for reasons of policy. . . . In addition, the plain error doctrine is reserved for truly extraordinary situations where the existence of the error is so obvious that it affects the fairness and integrity of and public confidence in the judicial proceedings. . . . Plain error is a doctrine that should be invoked sparingly. . . . A party cannot prevail under plain error unless it has demonstrated that the failure to grant relief will result in manifest injustice. . . . [A] defendant cannot prevail under [the plain error doctrine] . . . unless he demonstrates that the claimed error is both so clear and so harmful that a failure to reverse the judgment would result in manifest injustice." (Internal quotation marks omitted.) State v. Simpson, supra, 286 Conn. at 647-48 n. 16, 945 A.2d 449.
The defendant bases this claim on his assertion that the court should have conducted a Mukhtaar type hearing on the reliability of Grascia's statements. Grascia testified to a number of circumstances, which she offered as reasons for her false statement to the police. She also testified, however, that she had signed each page of her nine page, handwritten statement and that each page included her certification that the facts contained therein were true. Moreover, she admitted that she was not threatened by police when she gave her statement. The court, therefore, properly left the credibility of Grascia's testimony to the jury. We find no error at all, much less plain error, which results in manifest injustice, in the failure of the court, sua sponte, to conduct such a hearing.
*58 III
Next, the defendant claims that his conviction of both larceny in the first degree and insurance fraud violated his federal constitutional guarantee against double jeopardy. Although he failed to raise this claim in the trial court, we grant review under the now familiar holding of State v. Golding, 213 Conn. 233, 239-40, 567 A.2d 823 (1989).[13]
It is well established that the double jeopardy clause of the United States constitution is applicable to the states. State v. Re, 111 Conn.App. 466, 468, 959 A.2d 1044 (2008), cert. denied, 290 Conn. 908, 964 A.2d 543 (2009). "Double jeopardy analysis in the context of a single trial is a two-step process. First, the charges must arise out of the same act or transaction. Second, it must be determined whether the charged crimes are the same offense." (Internal quotation marks omitted.) Id., at 469, 959 A.2d 1044. The second prong requires application of the test set forth in Blockburger v. United States, 284 U.S. 299, 52 S.Ct. 180, 76 L.Ed. 306 (1932); that is, whether each offense as charged requires proof of a fact which the other does not. State v. Re, supra, at 469, 959 A.2d 1044.
The double jeopardy clause bars cumulative punishment for nominally distinct offenses arising out of the same act or transaction only if the two offenses are substantially the same, requiring therefore a determination as to whether each count requires proof of an additional fact that the other does not. State v. Alvarez, 257 Conn. 782, 789, 778 A.2d 938 (2001). It is undisputed that both the larceny charge and the insurance fraud charge arise out of the same act or transaction the obtaining of the fire insurance proceeds from The Standard Fire Insurance Company after the defendant's house was destroyed by fire. The larceny in the first degree count in the information requires the state to prove that the defendant committed larceny in the amount in excess of $10,000, but it did not require any proof as to the method or manner of the obtaining of the currency. See footnote 2. The insurance fraud count required the state to prove that the defendant, with intent to injure, defraud or deceive an insurance company, presented or caused to be presented in support of a claim for payment statements he knew contained false, incomplete or misleading information concerning material facts. See footnote 5. Thus, it is apparent that each count required proof of a fact or facts that the other did not.
The defendant claims that insurance fraud in the circumstances of this case is a lesser offense included within larceny. "[I]f two offenses stand in the relationship of greater and lesser included offense, [however] then [t]he greater offense is . . . by definition the same for purposes of double jeopardy as any lesser offense included in it." (Internal quotation marks omitted.) State v. Peloso, 109 Conn.App. 477, 510, 952 A.2d 825 (2008). If it is possible to commit the greater offense in the manner described in the information without having first committed the lesser offense, then the lesser is not an *59 included offense. See State v. Sanseverino, 291 Conn. 574, 590 n. 12, 969 A.2d 710 (2009). Because the commission of the larceny charged did not require presentation of false, incomplete or misleading statements in support of a fraudulent claim for payment, the charge of insurance fraud was not a lesser offense included within the larceny charge. Thus, the defendant's claim fails.
IV
Finally, the defendant claims that the prosecutor committed improprieties during pretrial, which deprived him of a fair trial. More specifically, the defendant claims that the prosecutor used his position to fabricate evidence and to control those who did and did not testify for the defense. We disagree.
Because this claim was not raised at trial, the defendant seeks to prevail under State v. Stevenson, 269 Conn. 563, 849 A.2d 626 (2004). In Stevenson, our Supreme Court clarified that in cases involving prosecutorial impropriety, "it is unnecessary for the defendant to seek to prevail under the specific requirements of State v. Golding, [supra, 213 Conn. 233, 567 A.2d 823], and, similarly, it is unnecessary for a reviewing court to apply the four-pronged Golding test. The reason for this is that the touchstone for appellate review of claims of prosecutorial [impropriety] is a determination of whether the defendant was deprived of his right to a fair trial, and this determination must involve the application of the factors set out by this court in State v. Williams, 204 Conn. 523, 540, 529 A.2d 653 (1987)."[14]State v. Stevenson, supra, at 572-73, 849 A.2d 626.
"In analyzing claims of prosecutorial impropriety, we engage in a two step analytical process. . . . The two steps are separate and distinct. . . . We first examine whether prosecutorial impropriety occurred. . . . Second, if an impropriety exists, we then examine whether it deprived the defendant of his due process right to a fair trial. . . . In other words, an impropriety is an impropriety, regardless of its ultimate effect on the fairness of the trial. Whether that impropriety was harmful and thus caused or contributed to a due process violation involves a separate and distinct inquiry. . . .
"[T]he touchstone of due process analysis in cases of alleged [harmful] prosecutorial [impropriety] is the fairness of the trial, and not the culpability of the prosecutor. . . . The issue is whether the prosecutor's [actions at trial] so infected [it] with unfairness as to make the resulting conviction a denial of due process. . . . In determining whether the defendant was denied a fair trial . . . we must view the prosecutor's [actions] in the context of the entire trial." (Citations omitted; internal quotation marks omitted.) State v. Fauci, 282 Conn. 23, 32, 917 A.2d 978 (2007).
During trial, four witnesses, William Unden,[15] Randi Licari,[16] Grascia and the defendant, claimed to have been threatened with arrest for failing to cooperate with authorities. Both Unden and *60 Randi Licari testified outside the presence of the jury. Unden testified that Officer Mike Carroll, a department investigator, and another officer[17] threatened to arrest him because he "wasn't telling them what they wanted to hear" and that they wanted him to lie. Randi Licari testified that her grandparents, the defendant's mother and father, complained to her about being threatened by Carroll and another officer[18] from New York. Even if true, there is no claim that the prosecutor made or was in any way involved in the making of any such alleged threats. These claims, therefore, do not constitute evidence of prosecutorial impropriety. Moreover, it is unclear how such threats, even if made, precluded the defendant from presenting a defense. Randi Licari did not state that she was directly threatened, only that her grandparents were. Further, there was no evidence that either Randi Licari or Unden altered his testimony as a result of the alleged threats.
The defendant next asserts that the prosecutor "coerced Grascia into providing [her] statement with the sole intent of using the statement as a tool with which to discredit Grascia's in-court testimony."[19] We conclude that the defendant is merely reasserting his unpreserved evidentiary claim "through the guise of a claim of prosecutorial impropriety with constitutional implications." State v. Burgos-Torres, 114 Conn.App. 12, 121, 968 A.2d 476 (2009); see State v. Cromety, 102 Conn. App. 425, 431, 925 A.2d 1133 ("[a]lthough our Supreme Court has held that unpreserved claims of prosecutorial impropriety are to be reviewed under the Williams factors, that rule does not pertain to mere evidentiary claims masquerading as constitutional violations"), cert. denied, 284 Conn. 912, 931 A.2d 932 (2007). We therefore decline to review this unpreserved evidentiary claim.
Finally, the defendant asserts that his mother did not testify because she was threatened with arrest by the prosecutor. Grascia testified that the defendant's father told her that the prosecutor had threatened to arrest every member of the family until he could get to the defendant. The defendant claims that the prosecutor relied heavily on the rent receipts to prove that the defendant was guilty of larceny and insurance fraud; therefore, his mother's testimony was necessary to discredit the state's theory that the defendant never paid rent to her while he was rebuilding his home. Our review of the record reveals that there was myriad evidence presented by the state to prove that the defendant was guilty of larceny and insurance fraud. Although Grascia testified that the defendant's parents told her that they were threatened by the prosecutor, the defendant did not call his mother, father or any other family member who was allegedly threatened to the witness stand to testify. Thus, there was no direct evidence that they were threatened or that they were prevented or discouraged from testifying. We therefore conclude that the defendant has not established that he was denied his right to a fair trial.
The judgment is affirmed.
In this opinion the other judges concurred.
NOTES
[1] General Statutes § 53a-111(a) provides in relevant part: "A person is guilty of arson in the first degree when, with intent to destroy or damage a building . . . he starts a fire or causes an explosion, and . . . (3) such fire or explosion was caused for the purpose of collecting insurance proceeds for the resultant loss. . . ."
[2] General Statutes § 53a-122(a) provides in relevant part: "A person is guilty of larceny in the first degree when he commits larceny, as defined in section 53a-119, and . . . (2) the value of the property or service exceeds ten thousand dollars. . . ."
General Statutes § 53a-119 provides in relevant part: "A person commits larceny when, with intent to deprive another of property or to appropriate the same to himself or a third person, he wrongfully takes, obtains or withholds such property from an owner. . . ."
[3] See footnote 5.
[4] General Statutes § 53a-48(a) provides: "A person is guilty of conspiracy when, with intent that conduct constituting a crime be performed, he agrees with one or more persons to engage in or cause the performance of such conduct, and any one of them commits an overt act in pursuance of such conspiracy."
[5] General Statutes § 53a-215(a) provides in relevant part: "A person is guilty of insurance fraud when the person, with the intent to injure, defraud or deceive any insurance company: (1) Presents or causes to be presented to any insurance company, any written or oral statement including computer-generated documents as part of, or in support of, any application for any policy of insurance or a claim for payment or other benefit pursuant to such policy of insurance, knowing that such statement contains any false, incomplete, or misleading information concerning any fact or thing material to such application or claim; or (2) assists, abets, solicits, or conspires with another to prepare or make any written or oral statement that is intended to be presented to any insurance company in connection with, or in support of, any application for any policy of insurance or any claim for payment of other benefit pursuant to such policy of insurance, knowing that such statement contains any false, incomplete, or misleading information concerning any fact or thing material to such application or claim for the purposes of defrauding such insurance company."
[6] The Croton Lake Gatehouse is approximately a one hour car ride from the defendant's home in Trumbull.
[7] The $181,000 limit only applied to the dwelling structure. As Cotter explained, additional coverage was available under the defendant's insurance policy for such things as debris removal, other appurtenant structures (e.g., a garage), replacement cost of personal property and living expenses incurred while a new residence was secured. Under the defendant's insurance policy, debris removal was covered up to $6300, other appurtenant structures were insured up to $18,100, personal property was insured up to $126,700 and living expenses were covered up to $36,200; therefore, an additional $187,300 was available to the defendant. The defendant submitted claims and received moneys under these additional policy limits.
[8] The business debts that were not discharged included a $28,000 to $32,000 car loan for a limousine, which was co-signed by the defendant's wife, Angela Licari, and a $53,000 Small Business Administration loan, which was secured by the defendant's house.
[9] The record does not disclose Frank's last name.
[10] Such items, to name a few, included old bankbooks, financial documents, pictures, wedding cards, magazines, a 35 millimeter Canon camera and a Heritage antique telephone.
[11] Section 4-5(b) of the Connecticut Code of Evidence provides in relevant part: "Evidence of other crimes, wrongs or acts of a person is admissible for purposes other than those specified in subsection (a), such as to prove intent . . . common plan or scheme, absence of mistake or accident, knowledge [or] a system of criminal activity . . . or to corroborate crucial prosecution testimony." Subsection (a) provides: "Evidence of other crimes, wrongs or acts of a person is inadmissible to prove the bad character or criminal tendencies of that person."
[12] Section 8-5 of the Connecticut Code of Evidence states in relevant part: "The following are not excluded by the hearsay rule, provided the declarant is available for cross-examination at trial: (1) . . . A prior inconsistent statement of a witness, provided (A) the statement is in writing . . . (B) the writing . . . is duly authenticated as that of the witness, and (C) the witness has personal knowledge of the contents of the statement."
[13] Under Golding, "a defendant can prevail on a claim of constitutional error not preserved at trial only if all of the following conditions are met: (1) the record is adequate to review the alleged claim of error; (2) the claim is of constitutional magnitude alleging the violation of a fundamental right; (3) the alleged constitutional violation clearly exists and clearly deprived the defendant of a fair trial; and (4) if subject to harmless error analysis, the state has failed to demonstrate harmlessness of the alleged constitutional violation beyond a reasonable doubt." (Emphasis in original.) State v. Golding, supra, 213 Conn. at 239-40, 567 A.2d 823.
[14] In Williams, our Supreme Court stated: "In determining whether prosecutorial [impropriety] was so serious as to amount to a denial of due process, this court, in conformity with courts in other jurisdictions, has focused on several factors. Among them are the extent to which the [impropriety] was invited by defense conduct or argument . . . the severity of the [impropriety] . . . the frequency of the [impropriety] . . . the centrality of the [impropriety] to the critical issues in the case . . . the strength of the curative measures adopted . . . and the strength of the state's case." (Citations omitted.) State v. Williams, supra, 204 Conn. at 540, 529 A.2d 653.
[15] Unden is an employee of the department and worked with the defendant at the Croton Lake Gatehouse.
[16] Randi Licari is the youngest daughter of Grascia and the defendant.
[17] The officer's name was not provided in the record.
[18] The officer's name was not provided in the record.
[19] See discussion in part II. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539851/ | 369 B.R. 338 (2007)
In re Robert/Monica REEVES, Debtors.
Monica Reeves, Plaintiffs,
v.
Gateway Credit Card Plan, Defendants.
No. 06-3542.
United States Bankruptcy Court, N.D. Ohio.
March 19, 2007.
*339 Donald R. Harris, Sandusky, OH, for Plaintiff.
Theodore A. Konstantinopoulos, Javitch, Block & Rathbone, Cleveland, OH, for Defendant.
DECISION AND ORDER
RICHARD L. SPEER, United States Bankruptcy Judge.
This cause is before the Court on the Summary Judgment Motion of the Defendant, Gateway Credit Card Plan, and its Memorandum in Support. No response to the Defendant's motion was filed by the Plaintiff within the time period prescribed by the Rules of Bankruptcy Procedure. FED.R.BANKR.P. 7056(c); LBR 9013-1.
Under Rule 56 of the Federal Rules of Civil Procedure, made applicable to this proceeding by Bankruptcy Rule 7056, it is provided that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Where, as here, the movant is defending the claim at issue, this standard is satisfied by the movant establishing that the claimant lacks adequate proof of an essential element of the claim.
In this matter, the Plaintiffs Complaint is one for "Injunctive Relief and Monetary Damages and Punitive Damages." (Doc. No. 1). As the basis for her cause of action, the Plaintiff alleges:
Defendant has continued to report to credit reporting agencies or has failed to update its listing with the credit reporting agencies for Plaintiff's past due payments not withstanding an order of discharge being granted by the United States Bankruptcy Court on April 7, 2005. Defendant was properly notified of the discharge. This action or failure to act was willful and malicious and continues to the present time.
(Doc. No. at pg. 2). No other acts on the part of the Defendant were alleged in support of her Complaint against the Defendant.
In its Motion for Summary Judgment, the Defendant denied that it has continued to report the Plaintiffs debt as due and owing, filing an affidavit in support. But previously, in Irby v. Fashion Bug (In re Irby), 337 B.R. 293, Case No. 04-3430 (2005) and Irby v. Preferred Credit (In re Irby), 359 B.R. 859, Case No. 06-3536 (2007), this Court rejected the contention that the mere act of continuing to report a debt as due and owing in a credit report constituted a compensable violation of bankruptcy law. Therefore, regardless of the veracity of the Plaintiff's allegations, as well as the Defendant's denials thereto, the Plaintiff has failed to state a claim upon which relief can be granted. As such, the Defendant is entitled to judgment in its favor.
Accordingly, it is
ORDERED that, pursuant FED.R.Civ.P. 56 and FED.R.BANKR.P. 7056, the Defendant's Motion for Summary Judgment, be, and is hereby, GRANTED.
IT IS FURTHER ORDERED that this adversary proceeding is hereby DIMISSED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539893/ | 974 A.2d 1192 (2009)
COM.
v.
SUTHERLAND.
No. 368 MDA 2008.
Superior Court of Pennsylvania.
April 13, 2009.
Affirmed, Vacated Reversed and Remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539946/ | 974 A.2d 1201 (2009)
PHARR
v.
ROBERTS.
No. 1010 EDA 2008.
Superior Court of Pennsylvania.
April 7, 2009.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539958/ | 95 B.R. 877 (1989)
In re Shirley Y. VERDON, f/d/b/a Surf & Turf Inn, Debtor.
John PISANO, Plaintiff,
v.
Shirley Y. VERDON, f/d/b/a Surf & Turf Inn, Defendant.
Bankruptcy No. 87-00480, Adv. No. 87-0056.
United States Bankruptcy Court, N.D. New York.
January 9, 1989.
*878 *879 Gustave J. DeTraglia, Jr., Utica, N.Y., for plaintiff.
Geoffrey A. Hampton, Utica, N.Y., for defendant.
MEMORANDUM-DECISION, FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER
STEPHEN D. GERLING, Bankruptcy Judge.
This adversary proceeding was timely commenced by John Pisano ("Pisano") on June 26, 1987 in the bankruptcy case of Shirley Y. Verdon, f/d/b/a Surf & Turf Inn ("Debtor"). Pisano seeks to determine the nondischargeability of the sum of $215,000.00 for compensatory and punitive damages and for relief from the automatic stay to pursue a related pre-petition state court action, pursuant to §§ 523(a)(2)(A), 523(a)(6) and 362(d) of the Bankruptcy Code, 11 U.S.C.A. §§ 101-1330 (West 1979 & Supp.1988) ("Code").
The matter was tried in Utica, New York on June 1, 1988 and the Court reserved decision following the submittal of memoranda by the parties addressing the relief sought in the complaint as well as the Debtor's request for costs under Code § 523(d).
JURISDICTIONAL STATEMENT
Jurisdiction of this core proceeding arising under Title 11 is vested in the Court by virtue of 28 U.S.C.A. §§ 1334(b) and 157(a), (b)(1) and (b)(2)(I). The within memorandum-decision is rendered in accordance with Rules 7001(6), 7052 and 9017 of the Bankruptcy Rules ("Bankr.R.").
FACTS
The Debtor is currently employed as a cook and had formerly operated the Surf and Turf Inn in Kirkland, New York from May through October 1986. On April 8, 1987, she filed a voluntary petition under Chapter 7, listing $242,531.44 in debt and $4,147.00 in assets. Schedule A-3 of her petition indicated a disputed and contingent unsecured claim held by Pisano in the amount of $230,000.00 based upon his lawsuit against the Debtor and her daughter and son-in-law, Jeanne and Richard Sherman.
Pisano claims that in 1986 the Debtor, Jeanne Sherman ("Jeanne") and Richard Sherman ("Sherman"), conspired to defraud him of his savings of $15,000.00 which he transferred to the Debtor with the understanding that it would be used on his behalf for the down payment of a home in Clinton, New York for himself and Jeanne "in anticipation of [their] marriage." See COMPLAINT TO DENY DISCHARGEABILITY AND FOR RELIEF FROM STAY para. 7 (rec'd & filed June 26, 1987). He further asserts that he made the transfer in reliance upon false representations made by Jeanne to him sometime in February 1986 individually and as the agent of the Debtor and Sherman with regard to finding a house at 24 Concord Boulevard in Clinton "ideal for the marital residence [he] planned to purchase" and of her own ability, based upon her real estate knowledge, to conduct and conclude, with the Debtor's assistance, the transactions necessary to purchase it for his benefit. See id. at paras. 9, 10, 18. Pisano alleges that the Debtor used the $15,000.00 to purchase the Concord Boulevard house for the benefit of herself, her daughter and son-in-law. See id. at para. 14.
He also alleges that cause exists to lift the stay to allow the action he had initiated pre-petition in Oneida County Supreme Court against all three individuals to proceed since it is based upon the identical facts and involves the rights and liabilities *880 of third parties. See id. at paras. 24-25. Pisano states that this would not prejudice or delay the Debtor's Chapter 7 case. See id. at para. 24.
In her timely filed answer, the Debtor generally denies most of the allegations in the complaint and asserted two defenses: 1) that the proceeding was unenforceable under New York Law as it was "in the nature of the breach of an implied marriage contract" and 2) that the complaint failed to state a cause of action because "neither defendant purchased any real estate for the benefit of Jeanne Sherman or otherwise." ANSWER paras. 6-8 (rec'd & filed Aug. 21, 1987). She claims that the February 10, 1986 transfer to her checking account was made solely for her daughter's use and involved monies "entirely owned and belonging to Jeanne Sherman" and held by Pisano in name alone. See id. at para. 3.
The Debtor states that she received the money "without any condition, reservation or promise to the plaintiff whatsoever" and accepted it "without any responsibility for its use with the express consent and approval of the plaintiff, who was then and there present." Id. Her answer also contained a counterclaim for $2,500.00 of costs for what she characterized as Pisano's meritless suit. See id. at para. 9.
At the trial on June 1, 1988, the following facts were established:
1. On February 10, 1986, Pisano withdrew $15,000.00 from his bank account. See Plaintiff's Exhibit A (copy of withdrawal slip from The Savings Bank of Utica ("SBU") account # XXXXXXXX-X bearing Pisano's signature).
2. On February 10, 1986, the Debtor deposited the same $15,000.00 into her bank account. See Plaintiff's Exhibit B (copy of deposit ticket from SBU account # XXX-XX-XX-XX).
3. The Debtor's checking account was used to disburse the $15,000.00. From February 11 to April 25, 1986, the Debtor signed twenty-two checks totalling $12,821.76 for items identified in the memo portion on the face of each check as furniture, appliances, security for house, heating oil, a 1981 automobile, insurance, clothing, wedding dress, and household furnishings. See Plaintiff's Exhibit D (copies of check #'s 93, 95, 96, 98-116, stamped "paid" on Debtor's SBU checking account # XXXXXXX).
4. On May 19, 1986, the Debtor wrote a check to Sherman in the amount of $2,249.57, on which was written "washer and dryer, rugs, curtains, lamps, blankets and pillows" in the memo portion and "CLOSE ACCOUNT" on the top of the check. See id. (check # 118 from SBU account # XXXXXXX).
5. Pisano received nothing in exchange for the $15,000.00 and the money was not returned to him.
6. At the time of the transfer, Pisano and Jeanne had been cohabiting for twelve years with three children they had raised on Pellettieri Avenue in Utica, New York and had never married.
7. On March 1, 1986, Jeanne was receiving public assistance and had moved herself and the children out of the house they had been living in with Pisano to a residence at 24 Concord Boulevard, Clinton, New York.
8. Jeanne and Sherman were married in August 1986 and currently live in the house on 24 Concord Boulevard.
THE TRIAL TESTIMONY
Pisano testified that Jeanne had showed him the Clinton residence and that as a result he had transferred the $15,000.00 to the Debtor's account for its down payment and furniture. He stated that the $15,000.00 was not a loan to the Debtor and that he had tried unsuccessfully to get it back from the Debtor and Sherman. Pisano was not sure that he was the biological father of the three children he had raised with Jeanne in the twelve years they lived together.
Jeanne testified that she told Pisano at Christmas in 1985 that she planned to move and was looking for a place to live. She conceded that no money was discussed between her and her mother but insisted that *881 the $15,000.00 was for her benefit even though not put in her name. Jeanne stated that the money was kept in her mother's checking account until she "used it up" on, among other things, furniture for the house on Concord Boulevard. She recalled personally writing some of the checks on the Debtor's checking account, but that generally she would explain to her mother what she needed money for and the Debtor would write the check.
Jeanne testified that she did not discuss with the Debtor the purchase of real estate or the reason why Pisano gave her the $15,000.00. She further stated that Pisano gave her the money for her own use without any condition or promise because of the three children. Jeanne asserted that she had used all of her resources for the family over the past eleven years and that Pisano had continuously refused her marriage proposals made a number of times each year. She stated that "everyone knew" that Pisano gave her the $15,000.00 because she was leaving him.
The Debtor maintains that her daughter had asked to meet her at the bank on February 10, 1986 and when she arrived she transferred the funds from Pisano's account to her own, asking no questions. She testified that she had no knowledge of why the transaction occurred and did not discuss the $15,000.00 with Jeanne prior to or on February 10, 1986.
The Debtor further stated that she held the funds in her checking account for six to seven weeks and wrote checks on it for her daughter. While she knew that Jeanne was on public assistance on February 10, 1986, she did not know that her daughter was on the verge of breaking up with Pisano and planned to move out on March 1, 1986. The Debtor also attested that on the way out of the bank, Pisano said to her daughter, "See, Jeanne, I told you I was keeping this for you." She stated that she had no use of the money and that all of it went to her daughter and grandchildren.
The Debtor's counsel asserts that this was "an affair of a broken heart" and that the Debtor had accepted the money the plaintiff gave to her for Jeanne without making any promises. At the close of the evidence, he moved for dismissal on the grounds that the proof was insufficient with regard to Code § 523(a)(2)(A) and that any loss or conversion under Code § 523(a)(6) required willfulness, which was absent here.
In response, counsel for the plaintiff argued that the Debtor's participation in the fraud could be inferred from the checks and the overall circumstances. Counsel charged that the Debtor had to have known on the date of the transfer that the $15,000.00 belonged to Pisano and that her daughter was planning to move out of the house she had been sharing with him twenty days later.
ISSUE
Whether the Debtor was involved in a fraud or willful and malicious injury to Pisano's property with regard to the receipt and disbursement of $15,000.00 so as to render the sum in question and punitive damages flowing from said acts a nondischargeable debt in her Chapter 7 proceeding under Code § 523(a)(2)(A) and (a)(6)?[1]
DISCUSSION
First, it should be noted that Code § 523 provides for the exception to the general discharge of individual debts arising from ten specific situations and its thrust is remedial, rather than punitive. See F & M Marquette National Bank v. Richards (In re Richards), 81 B.R. 527, 530-31 (Bankr.D.Minn.1987). The statute creates a cause of action for nondischargeability, not damages, and, indeed, the term is not used anywhere in Code § 523, as it *882 appears, for instance, in Code §§ 303(i)(2) and 362(h). But see Kansas National Bank & Trust Co. v. Kroh (In re Kroh), 88 B.R. 972, 985-86 (Bankr.W.D.Mo.1988) (judgment for punitive damages held nondischargeable under Code § 523(a)(6) where extraordinary situation involving grand scheme of fraudulent misrepresentations caused losses of millions of dollars, state law supported punitive damages and Code § 726(a)(4) deferred distribution until all unsecured creditors' claims paid). Consequently, only that portion of the plaintiff's complaint seeking $15,000.00 in compensatory damages can be addressed by the Court in the case at bar.[2]
In addition, this Court has no jurisdiction to rule on the breach of an implied marriage contract and its enforceability under New York State law, notwithstanding considerations of comity and federalism. See Northern Pipeline Const. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982). Hence, Debtor's first affirmative defense has no impact in this proceeding. With regard to her second affirmative defense, the fact that the real estate may never have been purchased is relevant only insofar as it sheds light upon the alleged fraud and conversion of the $15,000.00. It cannot act to diminish Pisano's causes of action, defeat his recovery or shield the Debtor from the Court's scrutiny of the underlying circumstances giving rise to the adversary proceeding.
Exceptions to discharge should be narrowly construed in favor of the debtor and against the creditor to effectuate the fresh start purpose of the bankruptcy laws. See Gleason v. Thaw, 236 U.S. 558, 562, 35 S.Ct. 287, 289, 59 L.Ed. 717 (1915); Fluehr v. Paolino (In re Paolino), 75 B.R. 641, 646 (Bankr.E.D.Pa.1987); Gualtieri v. Goux (In re Goux), 72 B.R. 355, 357 (Bankr.N.D.N.Y.1987). The burden of proof lies on the plaintiff to convince the Court that the true nature of the debt necessitates a finding of nondischargeability. See Benich v. Benich (In re Benich), 811 F.2d 943, 945 (5th Cir.1987); Danns v. Household Finance Corp. (In re Danns), 558 F.2d 114, 116 (2d Cir.1977); cf. Brown v. Felsen, 442 U.S. 127, 138, 99 S.Ct. 2205, 2212, 60 L.Ed.2d 767 (1979). Furthermore, dischargeability actions relating to fraud implicate the higher evidentiary standard of "clear and convincing." See Tilbury v. Walden (In re Tilbury), 74 B.R. 73, 77 (Bankr. 9th Cir.1987) (finding of nondischargeability under Code § 523(a)(2)(A) and (a)(6)); Schwalbe v. Gans (In re Gans), 75 B.R. 474, 482 (Bankr.S.D.N.Y.1987).
It is a fundamental precept of bankruptcy law that the court does not have the jurisdiction to determine the rights of nondebtors. This proceeding has been marked, from the start, by a confusion, perhaps deliberate, between the Debtor's actions and those of her daughter and son-in-law, both non-debtors, and the general use of terms of collaboration and agency in explanation thereof. The only way the $15,000.00 can be determined nondischargeable in the Debtor's Chapter 7 proceeding is if, by clear and convincing evidence, the Debtor's own actions, individually or in concert with those of her daughter's and son-in-law's under conspiracy or agency principles, satisfy the elements of Code § 523(a)(2)(A) or Code § 523(a)(6).
"`Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.'" Pan American World Airways v. Shulman Transport Enterprises, Inc. (In re Shulman Transport Enterprises, Inc.), 744 F.2d 293, 295 (2d Cir.1984) (quoting *883 Restatement (Second) of Agency § 1(1) (1958)). The Court observes that under general agency theory, a principal is bound by the acts of his or her agent if the principal consents to the act in advance or ratifies it after the fact. See 3 Am.Jur.2d, Agency § 270 (1986). Additionally, where independent evidence supports an agency relationship, a close familial relationship is accorded significant weight toward establishing the agency relationship. See Capital City Bank & Trust v. Kroh (In re Kroh), 88 B.R. 987, 993 (Bankr.W.D.Mo. 1988) (brothers).
However, the existence of an agent-principal relationship alone is insufficient to hold the principal liable for the agent's acts. See In re Lovich, 117 F.2d 612, 614-15 (2d Cir.1941). The agent's fraud will be imputed to the principal if the principal knew or should have known of the agent's fraud or will be inferred in the case of the principal's reckless indifference to his agent's acts. See Walker v. Citizens State Bank of Maryville, Mo. (In re Walker), 726 F.2d 452, 454 (8th Cir.1984) (Code § 523(a)(2)(A)).
The nondischargeability of a fraud-related debt has been found if the principal-debtor participated in the benefits and possessed some separate culpability, even absent actual participation. See La Trattoria, Inc. v. Lansford (In re Lansford), 822 F.2d 902 (9th Cir.1987) (Code § 523(a)(2)(B)). In a "conversion" context, the principal-debtor's active, substantial and continuing personal participation has supported the nondischargeability of the debt. See Chrysler Credit Corp. v. Rebhan, 842 F.2d 1257 (11th Cir.1988) (Code § 523(a)(6)); Ford Motor Credit Co. v. Owens, 807 F.2d 1556, 1559-60 (11th Cir.1987) (same). See also Impulsora Del Territorio Sur, S.A. v. Cecchini (In re Cecchini), 772 F.2d 1493 (9th Cir.1985) (same).
Thus, assuming Jeanne was the Debtor's agent during the transfer of money on February 10, 1986 and the subsequent disbursement of funds through the Debtor's checking account, the Debtor could face a nondischargeable debt if the proof demonstrated some form of consent or ratification by the Debtor as principal and the applicable Code sections were then satisfied. See, e.g., J.C. Penney Co. v. Love (In re Love), 47 B.R. 213, 215-216 (Bankr.W.D.Mo.1985) (Code § 523(a)(2)(A)); Ford Motor Credit Co. v. Emporelli (In re Emporelli), 42 B.R. 814 (Bankr.W.D.Pa. 1984) (Code § 523(a)(6)).
However, the record, at best, thinly supports the existence of an informal agency relationship between the Debtor, as the agent, and her daughter, as the principal, as inferred through their familial "course of dealing." See 3 Am.Jur.2d, supra, at §§ 18, 21, 360, 362. This is so because the Debtor acted repeatedly for and on behalf of Jeanne, appeared to do so upon her direction and control and Jeanne was, as the checks indicate, the actual beneficiary of the $15,000.00. Thus, to hold the Debtor, the agent, potentially "liable" in the bankruptcy context for the acts of Jeanne, the principal, puts agency theory on its ear.
"The essence of a `civil conspiracy' is a concert or combination to defraud or cause other injury to person or property, which results in damage to the person or property of plaintiff." BLACK'S LAW DICTIONARY, supra, at 281 (emphasis added). See also 16 Am.Jur.2d, Conspiracy §§ 49-56 (1979). There can be no liability for damages where unlawfulness is absent in the acts or means employed and the actionable wrong must be found to be jointly committed by two or more entities so that each's acts are imputed to the others through a common purpose and intent. See id. at § 70; Newburger, Loeb & Co., Inc. v. Gross, 563 F.2d 1057, 1074 (2d Cir. 1977) (citing to New York case law). Conspiracy sounds in tort and one of its elements may include a malicious intent or "an intentional interference with a right without lawful justification, rather than ill will or actual malice." Id. at §§ 50, 64.
Each conspirator is jointly and severally liable for the damages accruing subsequent to his joining the conspiracy, and liability for damages prior to his joining the conspiracy can only be found if the individual joined the conspiracy with knowledge of the unlawfulness of its object or of the *884 means contemplated. See id. at § 56. See also Hadar Leasing International Co., Inc. v. D.H. Overmyer Telecasting Co. (In re D.H. Overmyer Telecasting Co., Inc.), 53 B.R. 963, 981 (N.D.Ohio 1984). The plaintiff bears the burden of proof to establish the existence of a conspiracy and he can do so through direct or circumstantial evidence, the latter formed by reasonable deductions and natural inferences from the totality of facts and circumstances. See id. at § 68.
"Conspiracy" causes of action in bankruptcy frequently surface through Code § 523(a)(6) and are often the subject of abstention pursuant to 28 U.S.C.A. § 1334(c) because they usually involve nondebtor, co-conspirators and pre-petition state court proceedings. See, e.g., In re Davis, 91 B.R. 470 (Bankr.N.D.Ill 1988); Braun v. Zarling (In re Zarling), 85 B.R. 802 (Bankr.E.D.Wis. 1988). When abstention is not invoked by the court sua sponte or the litigants, as here, the dischargeability analysis hinges on the debtor's participation in the alleged conspiracy or enjoyment of benefits resulting thereof. Cf. Chrysler Credit Corp. v. Rebhan, supra, 842 F.2d at 1263; American Bank of Raytown v. McCune (In re McCune), 82 B.R. 510, 512 (Bankr.W.D.Mo.1987).
The evidence demonstrates the Debtor's substantial participation and active involvement with Jeanne in the transfer and disbursement of the $15,000.00 and her lack of benefit thereof. However, it does not support a finding that a scheme existed between the Debtor, Jeanne and Sherman to defraud Pisano.
Thus, the theories of agency or conspiracy are unavailing to Pisano in the instant proceeding.
Code § 523(a)(2)(A) requires five elements: 1) the debtor made representations, 2) which he knew at the time were false, 3) that were made with the intent to deceive the creditor, 4) that were relied upon by the creditor 5) to its detriment in sustaining damage in the alleged amount as the proximate result of representations. See Thul v. Ophaug (In re Ophaug), 827 F.2d 340, 342 n. 1 (8th Cir.1987); Beneficial New York Inc. v. Bossard (In re Bossard), 74 B.R. 730, 737 (Bankr.N.D.N.Y.1987). All elements must be met for a debt to be determined nondischargeable. See United States v. Stelweck (In re Stelweck), 86 B.R. 833, 846 (Bankr.E.D.Pa.1988). The general purpose of Code § 523(a)(2)(A) "is to prevent a debtor from retaining property acquired by fraud." Id. (citing to 3 L.King, COLLIER ON BANKRUPTCY ¶ 523.08[1] at 523-39 (15th ed. 1988)).
"As a matter of bankruptcy law, a debtor must ratify by positive act any fraud or misrepresentation." In re Love, 47 B.R. at 216. The record does not reveal any such positive act on the part of the Debtor. While Jeanne may have made false representations with regard to her intentions about the Clinton residence and her real estate knowledge and proceeded under false pretenses to bring about the transfer of money on February 10, 1986, there is, as indicated, no evidence to support the Debtor's conscious involvement. See supra. Moreover, the Debtor's disbursement of the funds from her checking account cannot alone constitute the requisite positive acts.
With regard to the "actual fraud" component of Code § 523(a)(2)(A), it must consist of "deceit, artifice, trick design, some direct and active operation of the mind [and] includes cases of the intentional and successful employment of any cunning, deception, or artifice used to circumvent or cheat another." BLACK'S LAW DICTIONARY, supra, at 595, quoted in The Howard Bank v. Davis (In re Davis), 11 B.R. 156, 158 (Bankr.D.Vt.1980). The evidence submitted does not justify such a finding.
Without positive acts of "false pretenses or false representation" or direct and active "actual fraud", the debt cannot be determined nondischargeable under Code § 523(a)(2)(A) in the Debtor's Chapter 7 proceeding.
The second ground upon which Pisano requests nondischargeability is Code § 523(a)(6), presumably based upon the willful and malicious conversion of his $15,000.00. See Beneficial New York Inc. v. Bossard (In re Bossard), 74 B.R. 730, 736 *885 (Bankr.N.D.N.Y.1987); 3 COLLIER ON BANKRUPTCY, supra, at ¶ 523.16. "[T]he conversion of another's property without justification and excuse, to the other's injury, is a willful and malicious injury within the meaning of the exception. On the other hand, a technical conversion may very well lack any element of willfulness or maliciousness necessary to except the liability from discharge." COLLIER ON BANKRUPTCY, supra, at ¶ 523-118.
While "willful" has been construed to signify an act done deliberately and intentionally, the meaning of "malicious" has been the subject of some debate. See Chrysler Corp. v. Rebhan, supra, 842 F.2d at 1262-63 (discussing three approaches with respect to "intent"). This Court finds the better view to be that "malicious" within the meaning of Code § 523(a)(6) means a wrongful act that causes harm, done consciously and knowingly without just cause or excuse. See Perkins v. Scharffe, 817 F.2d 392, 393 (6th Cir.1987) (quoting 3 COLLIER ON BANKRUPTCY, supra, at 523-1111); In re Bossard, supra, 74 B.R. at 736; Car Village Buick-Opel, Inc. v. DeRosa (In re DeRosa), 20 B.R. 307, 313 (Bankr.S.D.N.Y.1982). Thus, in order to prevail, Pisano must show that the Debtor, in her individual capacity, deliberately and intentionally converted the $15,000.00 and that she did so without just cause or excuse, consciously knowing that such taking was a wrongful act which would cause injury.
The record clearly demonstrates that on February 10, 1986 the Debtor deliberately and intentionally received from Pisano the sum of $15,000.00 and then deposited it into her checking account. However, the proof is not consistent in establishing that the transfer and subsequent disbursement of the money was a wrongful act a conversion. Pisano claims that the sum represented his savings while the Debtor argues that the money was her daughter's being held by Pisano. Yet, there is Pisano's statement to Jeanne as the trio left the bank on February 10, 1986 that he was keeping the money for her and the Debtor's uncontroverted statement in her answer that the transfer took place with his express consent and approval. Furthermore, the evidence suggests that Pisano gave the money to Jeanne for the care of herself and the three children.
Consequently, the record does not disclose by a clear and convincing standard that the Debtor committed the wrongful act of conversion with the requisite consciousness and knowledge and that the transfer and use of the funds occurred without Pisano's knowledge or consent. Moreover, the Court cannot but consider the "just cause" generated by a grandmother's concern for the well-being of her grandchildren, whatever their lineage, and the guarded curiousity a mother must often exercise with respect to her daughter's affairs, which necessarily limits the mother's knowledge. Thus, a determination of nondischargeability under Code § 523(a)(6) as to the Debtor individually cannot be sustained, notwithstanding the very real possibility, bolstered by the insincere demeanor of the Debtor and her daughter at trial, that a technical conversion transpired.
Code § 523(d) was originally enacted in 1978 to protect an honest consumer debtor who, from apprehension of incurring attorney's fees, would rush to settle with a financially sound creditor seeking an exception of its debt from the discharge on the basis of falsity. See H.R.Rep. No. 595, 95th Cong., 1st Sess. 365 reprinted in 1978 U.S.CODE CONG. & ADMIN.NEWS 5787, 5963, 6321; Walter v. Walter (In re Walter), 50 B.R. 521, 522 (Bankr.D.Del.1985). It shares common conceptual ground with Bankr.R. 9011(a) inasmuch as both are directed at curbing the filing of pleadings which are either unsupported by existing law or unaccompanied by a good faith argument for its extension, modification or reversal. See Household Finance Co. v. Beam (In re Beam), 73 B.R. 434, 438 (Bankr.S.D.Ohio 1987); Associates Professional Executive Serv., Inc. v. Bernard (In re Bernard), 85 B.R. 864, 867 (Bankr. D.Colo.1988).
While retaining the mandatory language of "shall", the 1984 amendments to Code § 523(d) increased the court's discretion in *886 denying an award of attorney's fees by focusing on whether the creditor's position was "substantially justified" based upon a standard of "reasonableness." See 3 Bkr-L Ed, CODE COMMENTARY AND ANALYSIS § 22:91 at 167 (Oct.1988 Supp.) (citing to S.Rep. No. 65, 98th Cong., 1st Sess. 9, 59). See also Citizens National Bank v. Burns (In re Burns), 77 B.R. 822, 823 (D.Colo.1987) (citing Household Finance Corp. v. VanBuren (In re VanBuren), 66 B.R. 422, 424-25 (Bankr.S.D.Ohio 1986)).
"[I]t is far easier for the creditor to demonstrate the reasonableness of its action than it is for the debtor to marshal the facts to prove that the creditor was unreasonable ... The standard, however, should not be read to raise a presumption that the creditor was not substantially justified, simply because it lost the challenge."
3 Bkr-L Ed, supra, at § 22:91. See also In re Walter, supra, 50 B.R. at 523. See, e.g., Manufacturers Hanover Trust Co. v. Hudgins, 72 B.R. 214, 220-21 (N.D.Ill. 1987) (award of attorney's fees granted where the creditor proceeds to trial knowing that it lacks the sufficient evidence to sustain its burden of proof and then fails to establish a necessary element of its claim, notwithstanding it having originally commenced the suit in good faith); In re Bernard, supra, 85 B.R. at 867 (attorney's fees granted where plaintiff and his counsel did not appear on the scheduled trial date).
The Court finds that while Pisano, the Debtor's de facto son-in-law for over a decade, may not be the typical creditor seeking the nondischargeability of a debt under Code § 523(a)(2), the debt in question is a consumer debt within the meaning of Code § 101(7) since the Debtor's checks indicate that the $15,000.00 was utilized by Jeanne primarily for her family's personal and household needs. However, the Court, in its discretion, sees fit to deny the defendant's request for costs and fees pursuant to Code § 523(d). The Court finds that although on the record Pisano's position was not substantially justified with regard to the Debtor, the questionable testimony of both the Debtor and her daughter and the special circumstances of this "affair of a broken heart" would render such costs unjust and inequitable.
Furthermore, an award of attorney's fees here would not further the statute's purpose to "level the playing field" between unequally positioned litigants so as to deter abuse of the bankruptcy laws and its spirit. See In re Walter, supra, 50 B.R. at 523. Pisano and the Debtor appear to be evenly matched adversaries with similar limited resources and the record discloses no abuse. Accordingly, the Court need not address the plaintiff's substantive criticisms of the Debtor's counsel's application for compensation.
By reason of the foregoing, it is hereby
ORDERED:
1. That Pisano's first cause of action, pursuant to Code § 523(a)(2)(A) and (a)(6), is dismissed.
2. That Pisano's second cause of action, with regard to relief from the automatic stay, is denied without prejudice to renewal.
3. That the Debtor's request for costs and fees pursuant to Code § 523(d) is denied.
NOTES
[1] While Pisano's second cause of action relies upon the "cause" category of Code § 362(d)(1) in seeking relief from the automatic stay to allow the resumption of the state court action, the Court notes that no proof was submitted at trial on this issue. Hence, the Court cannot make a determination if such relief is warranted in light of the bareness of the record to support an order lifting the stay and will proceed to adjudicate the instant adversary proceeding solely on the evidence presented concerning nondischargeability.
[2] Assuming arguendo that Code § 523(a)(6) did encompass an award of punitive damages and that it was conclusively established that the $15,000.00 belonged to Pisano, the Court notes the lack of proof submitted to demonstrate that the Debtor's conduct was outrageous or that "the wrong done to him [Pisano] was aggravated by circumstances of violence, oppression, malice, fraud or wanton and wicked conduct on the part of the defendant [Debtor], and [punitive damages] are intended to solace the plaintiff for mental anguish, laceration of his feelings, shame degradation, or other aggravations of the original wrong, or else to punish the defendant for [her] evil behavior" and for deterrence purposes. BLACK'S LAW DICTIONARY 352 (5th ed. 1979); see also RESTATEMENT (SECOND) OF TORTS § 908 (1979). See infra. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539987/ | 974 A.2d 474 (2009)
408 N.J. Super. 266
Natasha ALGARIN, Plaintiff,
v.
HALEDON BOARD OF EDUCATION, Defendant.
Docket No. L-1145-09
Superior Court of New Jersey, Law Division, Passaic County.
Decided April 1, 2009.
Andrew P. Oddo, Newark, for plaintiff.
Stephen R. Fogarty, Fairlawn, for defendant (Fogarty & Hara, attorneys).
RIVA, J.S.C.
The complaint in lieu of prerogative writs, filed by plaintiff Natasha Algarin, challenges the refusal by defendant Haledon Board of Education (the "Board") to accept her nominating petition and certify her as a candidate for the local school board election scheduled for April 21, 2009. The Board's decision was based on the fact that plaintiff was not a registered voter at the time she executed the candidate's acceptance and oath of allegiance in her nominating petition. Because plaintiff registered to vote prior to filing her nominating *475 petition, and the record is devoid of any evidence plaintiff knowingly certified to false information so as to promote fraud or frustrate administration of the electoral process, the Board's decision is reversed.
The facts are not disputed. On March 1, 2009, plaintiff signed the candidate's acceptance and oath of allegiance, certifying as follows:
Natasha Algarin, the candidate for membership on the Board of Education named in the foregoing petition, does hereby certify that, [she] is qualified to be a member of the Haledon Board of Education; that [she] consents to stand as a candidate for election and, if elected, agrees to accept and qualify into that office. [She] further affirms and declares [she] is not disqualified as a voter pursuant to N.J.S.A. 19:4-1.
One of the qualifications for a candidate to run for a seat on the school board is that the candidate must be a registered voter in the district. See N.J.S.A. 18A:12-1. At the time plaintiff executed the oath, she mistakenly believed she was registered to vote in the district of Haledon. In fact, she was a registered voter under her maiden name of Natasha I. Sanchez, at her prior address in Haledon, but had been deleted from the list of eligible voters by the Passaic County Superintendent of Elections on March 27, 2007, on account of voter inactivity. Accordingly, plaintiff was unregistered on March 1, 2009, when she certified she was a registered voter in the district. Plaintiff became alerted to her voting status on March 2, 2009, when her friend, who had reviewed the current list of registered voters, advised her she was unregistered. The following day plaintiff registered to vote, and consequently was a registered voter before filing her nominating petition with the business administrator/board secretary of the Haledon School Board on March 3, 2009the deadline for filing the petition.
Because plaintiff's certification was inaccurate, a challenge to her nominating petition was filed on March 9, 2009, by Jeffrey P. Fischer. Fischer claimed, among other things, that plaintiff was not registered to vote in the district of Haledon as required by law at the time she executed the oath.[1]
On the next day, plaintiff was notified of a hearing scheduled before the Board on March 11, 2009, to take up Fischer's challenge to the validity of her petition. At the conclusion of the hearing, the Board determined that plaintiff's nominating petition was invalid because she was not registered to vote in the district when she signed the candidate's acceptance and oath of allegiance two days earlier. The Board's resolution states, in pertinent part:
WHEREAS, a candidate for a board of education seat must be a registered voter at the time she certifies that she meets the qualifications to serve as a member of the Board; and
WHEREAS, Algarin certified that she satisfied the qualifications to serve as a member of the Board in her Candidate's Acceptance/Oath of Allegiance on March 1, 2009; however, based on the documents which Algarin submitted to the Board, she did not register to vote until March 3, 2009; and
WHEREAS, the Board finds that Algarin was not qualified to serve as a member of the Board at the time she certified her Nominating Petition on March 1, 2009; and
*476 WHEREAS, the Board finds that Algarin's Nominating Petition is defective because she was not a registered voter at the time she certified under oath her Candidate's Acceptance/Oath of Allegiance on March 1, 2009.
NOW THEREFORE, BE IT RESOLVED as follows:
1. The Nominating Petition filed by Algarin is defective because she was not registered to vote in the Borough of Haledon at the time she certified under oath the Candidate's Acceptance/Oath of Allegiance on March 1, 2009.
2. The School Business Administrator/Board Secretary shall not include Algarin on the list of candidates for the April 21, 2009 Annual School Election.
Although plaintiff was notified of the Board's decision on March 11, 2009, the deadline for filing an amended nominating petition, she waited until March 13, 2009, to file an amended petition to correct the deficiency noted by the Board in its resolution. Obviously, the filing of the amended petition was untimely.
With these facts as background, I address the critical issue of whether plaintiff's nominating petition was invalid because she was unregistered to vote in the district of Haledon when she assented to the candidate's acceptance and oath of allegiance, even though she properly registered to vote before timely filing her nominating petition. There are no reported New Jersey decisions that have squarely addressed this issue.
In support of its position, the Board relies on a decision of the Commissioner of Education entitled DeLay v. Board of Education of Township of New Hanover, 1991 S.L.D. 288, 298-307. In DeLay, Thomas S. King, Jr. was a sitting member of the New Hanover Board of Education when it was alleged that he did not meet the statutory requirements for candidacy. King was not registered at the time he took his candidacy oath certifying that he was a registered voter, nor was King registered to vote at the time he filed his nominating petition. King subsequently registered to vote the day he took office. The Commissioner found that a candidate's nominating petition must contain a statement that the candidate is legally qualified to be elected to the office and "qualified to be elected" can mean nothing other than the candidate meets all the qualifications set forth in N.J.S.A. 18A:12-1, one of which is that the candidate is registered to vote in the district. Id. at 301. Finding that King did not satisfy the qualifications to hold the office at the time he executed the certification on the nominating petition, the Commissioner ordered that he be removed from his elected office because his candidacy was void at its inception. Id. at 304.
The situation in DeLay does not precisely mirror the facts here. Unlike King, plaintiff actually registered to vote prior to filing her nominating petition. She was, therefore, otherwise qualified to take office as a registered voter in the district at the time she filed her nominating petition.
The present case is also materially different from McCaskey v. Kirchoff, 56 N.J.Super. 178, 152 A.2d 140 (App.Div. 1959), cited as authority by the Board. In McCaskey, the Appellate Division was presented with a situation where candidates for municipal council submitted a nominating petition that was defective because of false certifications. In particular, the nominating petition in McCaskey required that the affiants who were certifying as to the authenticity of the signatures "`saw all the signatures made thereto, and verily believed that the signers are duly qualified voters.'" Id. at 179, 152 A.2d 140. However, after the deadline for filing nominating petitions had passed, the county clerk *477 received a written objection to the petition alleging that the candidates knew that signatures on the nominating petition were forged, but nevertheless the candidates executed the certification swearing that they saw the signatures put on the nominating petition and that the signatures were authentic. Id. at 180, 152 A.2d 140. Upon concluding that the candidates had, in fact, knowingly certified to false information, the court found that "candidates should not be allowed to go to the voters on a falsely sworn petition in circumstances such as are here present." Id. at 184, 152 A.2d 140. The court explained that "demonstrated falsity of the authenticating affidavit robs it of any effective force in furnishing the certification required by statute. The signatures to the petition, the forged ones as well as the genuine, stand without a proper authentication." Id. at 183, 152 A.2d 140.
There are no equivalent circumstances present in this case. Unlike McCaskey, there has been no showing here that plaintiff knowingly certified to false information. As I have previously stated, plaintiff had been registered in the district of Haledon under her maiden name. Unbeknownst to plaintiff, her name was removed from the list of eligible voters due to voter inactivity. When she became aware of her voting status, she cured the problem by registering to vote before filing her nominating petition.
Despite the Board's assertion to the contrary, I determine the same underlying rationale in Saunders v. Toms River Regional Schools Board of Education, 144 N.J. 371, 676 A.2d 1088 (1996), relied on by plaintiff, is applicable here. Saunders dealt with the validity of a nominating petition where a nominating signatory was not a registered voter at the time the petition was submitted. The nominating signatory finally registered to vote six days after the petition was due.
Judge Arnold M. Stein, whose dissenting Appellate Division opinion was later adopted by our Supreme Court, acknowledged that the nominating petition at issue was defective as N.J.S.A. 19:60-5(a) requires that it contain a statement that the signers of the petition are qualified voters of the constituent district. He also recognized, however, the traditional liberal interpretation given to election laws and concluded that the signatory's registration after the filing deadline was a mere "technical deficiency," and that placing the candidate's name on the ballot would "neither promote election fraud nor frustrate administration of the electoral process." Saunders v. Toms River Reg'l Sch. Board of Education, 289 N.J.Super. 225, 236, 673 A.2d 804 (App.Div.1996).
It is true, as the Board points out, that Saunders is factually distinguishable from the present case because plaintiff is a candidate rather than a nominating signatory. Nonetheless, I see no reason to depart here from the reasoned approach employed by Judge Stein in Saunders, which our Supreme Court adopted. In my view, placing plaintiff's name on the ballot here would "neither promote election fraud nor frustrate administration of the electoral process." Ibid.
Moreover, it bears repeating that "[e]lection laws are to be liberally construed so as to effectuate their purpose. They should not be construed to deprive voters of their franchise or so as to render an election void for technical reasons." Kilmurray v. Gilfert, 10 N.J. 435, 440-41, 91 A.2d 865 (1952) (citations omitted). Instead, election laws should be construed to the extent "reasonably necessary to prevent election fraud and to facilitate administration of the electoral process." Lesniak v. Budzash, 133 N.J. 1, 7, 626 A.2d *478 1073 (1993) (quoting Note, Primary Elections: The Real Party in Interest, 27 Rutgers L.Rev. 298, 301 (1974)).
Regarding the nominating process specifically, our election laws embrace the fact that the nomination of candidates is a critical stage of the electoral process. To be sure, our Supreme Court has observed that "the right to vote would be empty indeed if it did not include the right of choice for whom to vote." Gangemi v. Rosengard, 44 N.J. 166, 170, 207 A.2d 665 (1965).
Under the circumstances presented here, I conclude that plaintiff's nominating petition should not have been invalidated by the Board.[2] Accordingly, the Board's decision is reversed and defendant shall accept the nominating petition filed by plaintiff as a candidate in the April 21, 2009, school board election, and provide the Passaic County clerk with the list of qualified candidates by 1:00 p.m. on Friday, April 3, 2009.
NOTES
[1] The other challenges advanced by Fischer were rejected by the Board and consequently are not addressed in this opinion.
[2] Having reached this conclusion, I need not address the argument advanced by plaintiff that the Commissioner of Education lacked authority to revise the deadline under N.J.S.A. 19:60-7 for a Board of Education to determine challenges to a nominating petition. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540374/ | 213 B.R. 641 (1997)
In re Madena SIMS, Debtor.
WESTGATE VILLAGE APARTMENTS, Movant,
v.
Madena SIMS and Gary J. Gaertner, Trustee Respondents.
Bankruptcy No. 97-23381-JKF, Motion No. RSH & D-1.
United States Bankruptcy Court, W.D. Pennsylvania.
October 14, 1997.
*642 Eileen D. Yacknin, Neighborhood Legal Services, Pittsburgh, PA, for Debtor.
Gary J. Gaertner, Pittsburgh, PA, Chapter 13 Trustee.
Pamela J. Wentz, Rose, Schmidt, Hasley & DeSalle, P.C., Pittsburgh, PA, for Westgate Village Apartments.
MEMORANDUM OPINION[1]
JUDITH K. FITZGERALD, Bankruptcy Judge.
The matter before the court is the motion of Debtor's landlord, Westgate Village Apartments, for relief from stay to permit it to complete eviction proceedings against Debtor. The leasehold is Debtor's residence. For the reasons which follow, Westgate's motion will be denied without prejudice.
Westgate and Debtor are parties to a subsidized lease agreement which provides, inter alia, that Debtor was to timely make all rent payments and was to recertify to Westgate's Management Office that her income continued to qualify her for eligibility to the subsidized unit. The obligation to pay rent and to recertify are mandated by the Department of Housing and Urban Development (HUD) pursuant to statute and regulations. See, e.g., 42 U.S.C. § 1437a(a); 24 C.F.R. § 982.551, Obligations of participant; 24 C.F.R. § 966.4, Lease requirements.
Debtor filed an intent to vacate the premises in the spring of 1995 and again in the spring of 1996. See Order of October 7, 1996, in Debtor's chapter 7, Bankruptcy No. 96-22761, Motion No. 96-2612. She also failed to recertify her income to establish eligibility to the subsidy. In addition, Debtor did not report an increase in her income due to employment which fact could have affected her eligibility for subsidized housing or the amount of the subsidy. Westgate, therefore, issued a Notice of Termination to Debtor who failed to vacate the premises. Westgate then filed an action to repossess *643 the unit based on the monetary and certain non-monetary defaults under the lease. Debtor responded by filing a chapter 7 petition. Thus, this chapter 13 was preceded by a chapter 7 filed by Debtor in 1996. Prior to and after the filing of the chapter 7, Debtor failed to make her rent payments of $2.00 per month.[2] After an evidentiary hearing in the chapter 7, an order granting relief from stay[3] was entered October 7, 1996, at Bankruptcy No. 96-22761, Motion No. 96-2612. The order also stated that Debtor's lease was "deemed rejected insofar as this Chapter 7 bankruptcy estate is concerned. . . ." Id. Debtor received a chapter 7 discharge on October 4, 1996. On April 21, 1997, a hearing was held before a district justice who entered an award in favor of Westgate.[4] Debtor failed to appeal timely[5] and Westgate scheduled an eviction for May 15, 1997. Debtor filed this chapter 13 on May 12, 1997.
Westgate asserts that it is entitled to relief from stay because Debtor's interest in the leased premises was terminated by the order entered in the chapter 7 on October 7, 1996. Westgate is incorrect. A lease is not terminated by the granting of relief from the automatic stay. It also is not terminated[6] by rejection of the lease, whether the rejection occurs by way of a motion or by operation of law under § 365. Rejection merely constitutes a breach of the lease and entitles the landlord to damages. 11 U.S.C. § 365(g)(1). See Matter of Austin Development Co., 19 F.3d 1077 (5th Cir.), cert. denied sub nom. Sowashee Venture v. EB, Inc., 513 U.S. 874, 115 S. Ct. 201, 130 L. Ed. 2d 132 (1994); In re Modern Textile, Inc., 900 F.2d 1184 (8th Cir.1990); Leasing Service Corp. v. First Tennessee Bank National Association, 826 F.2d 434 (6th Cir.1987). In a chapter 13 case a debtor has until confirmation of the plan to assume or reject a lease. 11 U.S.C. §§ 1322(b)(7), 365(g)(1). No plan has been confirmed and no order has been entered authorizing rejection. Thus, the lease has not been rejected in this chapter 13. The question remains, however, whether, under 11 U.S.C. § 1322(b)(7), Debtor may assume the lease inasmuch as it was rejected in her prior chapter 7.
We note that the leasehold at issue would be of no value to a chapter 7 trustee inasmuch as it is Debtor's residence. The chapter 7 trustee in virtually every no asset case in which the debtor lives in a rental unit would realize no benefit to the estate by assuming the lease. Thus, in virtually every no asset chapter 7, a residential lease will be deemed rejected by operation of law under § 365(d)(1), sixty days after the order for relief. Westgate argues that rejection of the lease in the chapter 7 and the provisions of § 1322(b)(7) preclude Debtor from assuming the lease in this chapter 13. Section 1322(b)(7) provides that the plan may, "subject *644 to section 365 of this title, provide for the assumption, rejection, or assignment of any executory contract or unexpired lease of the debtor not previously rejected under such section." Westgate cites Matter of Benson, 76 B.R. 381 (Bankr.D.Del.1987), in support of its argument. The facts of Benson render that case inapposite to the situation before us. In Benson an executory contract was deemed rejected in a chapter 7 prior to the time the case was converted to chapter 13. The court addressed the effect of rejection where, in the same case, the contract was rejected by operation of law and debtors later wanted to assume it, cure and pay through a chapter 13 plan. The instant case does not involve those facts.
Section 365 concerning assumption and rejection of executory contracts is derived from the Bankruptcy Act of 1898. Section 613(1) of the Act permitted the court to allow rejection of executory contracts in wage earner cases. Section 613(1) is identical to § 313(1) of Chapter XI of the Act and so cases applying that section applied to Chapter XIII cases as well. See 10 COLLIER ON BANKRUPTCY ¶ 23.03 at 82 (14th ed.1978). Section 613(1) (and § 313(1)) provides:
Upon the filing of a petition, the court may, in addition to the jurisdiction, powers, and duties hereinabove and elsewhere in this chapter conferred and imposed upon it
(1) permit the rejection of executory contracts of the debtor, upon notice to the parties to such contracts and to such other parties in interest as the court may designate.
11 U.S.C. §§ 613(1), 313(1). Under the Act rejection under § 313(1), and, therefore, under § 613(1), was effective for all purposes under the particular chapter. Collier's states:
Where an arrangement provides for the rejection of an executory contract, the rejection itself is not effective unless and until the arrangement is confirmed. . . . But where there is a rejection pursuant to § 313(1), the rejection is immediately effective; regardless of whether or not the arrangement is later confirmed.; the rejection is effective not only for the purposes of Chapter XI, but for all purposes, and is binding upon the trustee in the event the case is subsequently administered in bankruptcy.
8 COLLIER ON BANKRUPTCY ¶ 3.15[9], p. 207 (14th ed.). The phrase "subsequently administered in bankruptcy" refers to conversion from a repayment bankruptcy to a liquidating case. See Rule 11-432(b) which provided
Dismissal or Conversion to Bankruptcy for Want of Prosecution, Denial or Revocation of Confirmation, Default, or Termination of Plan. The court shall enter an order, after hearing on such notice as it may direct dismissing the case, or adjudicating the debtor a bankrupt if he has not been previously so adjudged, or directing the bankruptcy case proceed, whichever may be in the best interest of the estate. . . .
8 COLLIER ON BANKRUPTCY ¶ 4.21[10] at n. 21, 459 (14th ed.1978) (emphasis added). As applied to the matter before us, the Bankruptcy Act of 1898 would establish that, once the lease was rejected in the chapter 7, it could not be assumed later in the same case. The Bankruptcy Code of 1978 did not change this. Thus, we conclude that rejection is final for purposes of § 1322(b)(7) only with respect to the particular case in which the contract was rejected.
In contrast to the facts in Benson, the chapter 7 in the matter before us was prosecuted to conclusion, a discharge was entered and the case was closed. Because the lease was rejected by the estate in the chapter 7, it reverted to Debtor. When she later filed this chapter 13 case, her property and possessory interests in the lease became property of this chapter 13 estate. The rejection in the chapter 7 did not affect Debtor's ability to assume or reject the lease under § 1322(b)(7) in the second case. The date of filing of the chapter 13 is the relevant date by which to measure what constitutes property of this estate. The lease remained viable on the filing date, despite Westgate's assertion to the contrary[7] and, therefore, is property of this estate.
*645 The amount Debtor owes and the amount of the cure remain to be resolved. When a Section 8 tenant fails to recertify eligibility for subsidized housing, the fair market rent becomes the rent due. 24 C.F.R. § 290.9(b)(1).[8] Westgate seeks $620 per month.[9] Debtor's monthly income consists of $497 public assistance per month and $346 per month in food stamps. Her income is insufficient to meet the non-subsidized rent. Debtor contends in her brief that she has recertified her income to the landlord and, therefore, has cured that aspect of her default. However, as of the date of the hearing on this motion, the recertification had not been approved by HUD. Debtor's compliance with recertification procedures does not relieve her from the obligation to pay the fair market rent of the premises for the period during which she failed to certify her income.
Based on the foregoing, we conclude that Debtor may assume the lease in the plan if she can establish that she has the ability to cure defaults[10] and pay current rents. As a cure,[11] Debtor will have to pay all rental arrearages from the date she filed her chapter 7 case, rents prior to that date having been discharged in the chapter 7. Because she failed to recertify in a timely fashion, and unless she obtains a reduced, retroactive rate from HUD prior to plan confirmation, she must pay the fair market rent for the period during which she was not certified. If HUD refuses her recertification, Debtor concedes that, based on her current income, she will be unable to pay market rent and her plan will not be feasible, the lease would be rejected and, at that time, Westgate would be entitled to proceed with its eviction. We cannot determine the course of events at this time. The amount of arrearages, the cure amount, and the feasibility of the plan are all issues preserved for the plan confirmation hearing.
An appropriate order will be entered.
ORDER
AND NOW, to-wit, this 14th day of October, 1997, for the reasons expressed in the foregoing Memorandum Opinion, it is ORDERED, ADJUDGED and DECREED that the Motion of Westgate Village Apartments for Relief from Automatic Stay is DENIED without prejudice.
NOTES
[1] This Memorandum Opinion constitutes the court's findings of fact and conclusions of law.
[2] The original lease, filed at docket number 30, provided for a rent of $14 per month. There is no dispute that the rent default, until Debtor failed to recertify her income, was calculated at $2 per month.
[3] Relief from stay was granted because Debtor had not paid rent for many months prepetition even though she was working and collecting welfare and had not paid rent postpetition. The court found that no equitable considerations were appropriate.
[4] Westgate contends that possession was granted on non-monetary as well as monetary defaults and that the non-monetary defaults are not curable to avoid the eviction. The district justice's April 21, 1997, order, however, granted possession "if money judgment is not satisfied by time of eviction." Exhibit A to Debtor's Answer in Opposition to Motion for Relief from Stay, Docket Entry No. 18. The non-monetary defaults alleged in the complaint were failure to recertify and report changes in income. Annual recertification is required. See, e.g., 24 C.F.R. §§ 5.617; 236.760. See also 24 C.F.R. § 290.9(b)(1) (rent is based on, inter alia, income certification). Debtor, however, has now submitted documents necessary for recertification. Westgate has not cited us to any provision of law that precludes Debtor from recertifying after a lapse. Therefore, we consider only the monetary defaults for purposes of this motion for relief from stay.
[5] See Pennsylvania District Justice Rule 1002(B); Exhibit B to Debtor's Answer in Opposition to Motion for Relief from Stay, Docket Entry 18.
[6] Even if the lease had terminated before the filing of the chapter 13, Debtor had a possessory interest to which the automatic stay applied when she filed this chapter 13. In re Atlantic Business and Community Corporation, 901 F.2d 325 (3d Cir.1990). Moreover, under Pennsylvania District Justice Rule 518 Debtor may cure the default and remain in the premises until the actual eviction.
[7] The only basis upon which Westgate alleges that the lease was terminated is the order granting relief from stay and deeming the lease rejected in the chapter 7 case. As noted, rejection is not the equivalent of termination or expiration of the lease. Debtor can assume it in this chapter 13 if she can cure the default, notwithstanding the order for possession. See D.J. Rule 518.
[8] Section 290.9(b)(1) of title 24 of the Code of Federal Regulations provides that if the tenant fails to certify income, "the tenant must pay the unit rent as determined under the rent setting requirements in paragraph (a) of this section." See also 24 C.F.R. § 882.106 (Contract rents). Fair market rents are set by HUD. 24 C.F.R. § 888.111. Fair market rent is defined in 24 C.F.R. § 5.100 as "the rent that would be required to be paid in the particular housing market area in order to obtain privately owned, decent, safe and sanitary rental housing of modest (non-luxury) nature with suitable amenities." It includes utilities except telephone.
[9] Debtor contests the fair market rent set by HUD and as stated by Westgate. We note that gross rents generally may not exceed the fair market rent, except in certain circumstances which, if met, permit an additional percentage. See 24 C.F.R. §§ 290.9(a); 882.106(a)(2); 886.110.
[10] Westgate contends that the failure to timely recertify is a default that cannot be cured but has offered no authority in support of this position.
[11] Westgate also asserts that it is entitled to relief from stay because Debtor has not paid any rent since the October 7, 1996, order. The amount necessary to cure the default cannot be ascertained on the current state of the record. The determination of that amount may affect Debtor's ability to cure through the plan. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1539995/ | 974 A.2d 1202 (2009)
SAUVE
v.
SHELBY'S INN.
No. 458 EDA 2008.
Superior Court of Pennsylvania.
March 31, 2009.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540413/ | 229 N.J. Super. 37 (1988)
550 A.2d 1003
MICHAEL NERNEY, PLAINTIFF-APPELLANT,
v.
GARDEN STATE HOSPITAL, EUGENE COHEN, M.D., INDIVIDUALLY AND JOHN DOE CORPORATION, A PROFESSIONAL CORPORATION, DEFENDANTS-RESPONDENTS.
Superior Court of New Jersey, Appellate Division.
Argued October 5, 1988.
Decided November 23, 1988.
*38 Before Judges KING, ASHBEY and SKILLMAN.
Robert L. Gambell argued the cause for appellant (Riley & Di Camillo, attorneys; Robert L. Gambell, on the brief).
Herbert Kruttschnitt, III argued the cause for respondent Eugene Cohen, M.D. (Grossman & Kruttschnitt, attorneys; Herbert Kruttschnitt, III, of counsel and Nadine R. Stark, on the brief).
The opinion of the court was delivered by SKILLMAN, J.A.D.
Plaintiff suffered a fractured wrist on January 13, 1982, which he alleges defendant Dr. Eugene Cohen negligently failed to diagnose.[1] Plaintiff's X-rays, which Dr. Cohen examined on January 13th, were sent to Dr. Paul Friedman for evaluation on plaintiff's behalf. Dr. Friedman concluded that the X-rays showed evidence of a fractured wrist. However, Dr. Friedman lost or misplaced the X-rays. Consequently, they are *39 unavailable for use at trial. In addition, Dr. Cohen has been deprived of the opportunity to have an expert review the X-rays and render an opinion based thereon.
The trial court granted Dr. Cohen's motion to preclude plaintiff from presenting testimony regarding the contents of the misplaced X-rays, concluding that the absence of the X-rays deprived Dr. Cohen of a fair opportunity to defend the action. Subsequently, the trial court granted Dr. Cohen's motion for summary judgment on the grounds that without the X-rays or testimony regarding the contents of the X-rays, plaintiff lacked evidence of malpractice by Dr. Cohen.
We conclude that the existing record does not justify the exclusion of testimony regarding the contents of the misplaced X-rays. Therefore, we reverse and remand.
Unless the subject matter of proposed evidence is a "writing" subject to the "best evidence" rule, Evid.R. 70, the law of evidence does not impose any requirement that the proponent present the "original evidence" rather than testimony describing its contents or appearance. McCormick, Evidence, § 229 at 703 (3rd ed. 1984); see United States v. Duffy, 454 F.2d 809 (5th Cir.1972); Chandler v. United States, 318 F.2d 356 (10th Cir.1963). Therefore, unless an X-ray is a "writing" as defined by Evid.R. 1(13),[2] New Jersey's rules of evidence would impose no limitation upon the presentation of *40 testimony regarding its contents rather than the X-ray itself. Moreover, even if an X-ray is considered a "writing" subject to the best evidence rule, testimony regarding its contents would be admissible upon a showing that the X-ray has been lost or destroyed without fraudulent intent on the part of the party offering the evidence. See Evid.R. 70(1)(a).
The trial court's comments in granting Dr. Cohen's motion to bar testimony regarding the X-rays were rather cryptic. However, the court apparently based its ruling on general principles of fairness rather than any specific evidence rule. The trial court viewed the absence of the X-rays as severely prejudicing Dr. Cohen's ability to defend the action and thus concluded that plaintiff should suffer the adverse consequences of his expert's loss of the X-rays.
We agree that a party to civil litigation who negligently loses evidence may be barred from presenting testimony regarding that evidence. The negligent loss of evidence is comparable to a party's failure to comply with discovery obligations, which may result in an order barring the introduction of evidence at trial. R. 4:23-2(b)(2); see Clark v. Fog Contracting Co., 125 N.J. Super. 159 (App.Div. 1973), certif. den. 64 N.J. 319 (1973). Indeed, the prejudice to a party from the loss of evidence may be even greater than the prejudice resulting from a delay in the production of evidence due to a failure to comply with discovery obligations.
However, testimony regarding evidence which a party has negligently lost should be barred only if substantial prejudice to the other party would result. As when a party has failed to comply with its discovery obligations, a party who has negligently lost evidence should be given his day in court unless the other party would suffer undue prejudice. Cf. Westphal v. Guarino, 163 N.J. Super. 139, 146 (App.Div. 1978), aff'd 78 N.J. 308 (1978) ("This accords with the overriding objective of giving the defaulting party his day in court, with due regard, however, to protecting the opposing party from the effects of surprise or *41 other prejudicial factors"); see also Aujero v. Cirelli, 110 N.J. 566, 574-579 (1988); Crispin v. Volkswagenwerk, A.G., 96 N.J. 336, 345-346 (1984). Indeed, even a criminal defendant must demonstrate substantial prejudice as a result of the prosecution's negligent loss or destruction of evidence in order to bar the State from presenting testimony regarding that evidence. California v. Trombetta, 467 U.S. 479, 488-491, 104 S.Ct. 2528, 81 L.Ed.2d 413 (1984); State v. Hollander, 201 N.J. Super. 453, 478-480 (App.Div. 1985), certif. den. 101 N.J. 335 (1985); State v. Serret, 198 N.J. Super. 21, 26-27 (App.Div. 1984), certif. den. 101 N.J. 217 (1985); State v. Washington, 165 N.J. Super. 149, 155-156 (App.Div. 1979). The same approach has been followed in an administrative proceeding involving the suspension of a license. De Vitis v. New Jersey Racing Comm'n, 202 N.J. Super. 484, 494 (App.Div. 1985), certif. den. 102 N.J. 337 (1985). We perceive no reason why a civil litigant should be barred from proceeding with his case unless there is a comparable showing of substantial prejudice to the other party from the negligent loss of evidence. Cf. In re Rasnick, 77 N.J. Super. 380, 383-392 (Cty.Ct. 1962) (even where original evidence has been deliberately destroyed, copy may be admitted where no prejudice will result).
Our conclusion that the negligent loss of evidence may require the exclusion of testimony regarding that evidence only upon a showing that such testimony would substantially prejudice the other party is also supported by out-of-state authority. In Hernandez v. Pino, 482 So.2d 450 (Fla. Dist. Ct. App. 1986), the court reversed a summary judgment the trial court had granted in favor of a dentist sued for malpractice because plaintiff's attorney lost plaintiff's X-rays after they were sent to him by the dentist. The court stated:
Assuming that the X-rays were not intentionally made unavailable, the next inquiry would be whether [defendant] will be unable to mount a defense without them.
* * * * * * * *
*42 [I]n this case there was other admissible evidence available to defendant. Defendant himself is an expert in the subject area out of which the action arises. He reviewed the X-rays, made notations, and drew conclusions upon which he based his decision to extract all of plaintiff's teeth. In preparation for the litigation defendant then gave the X-rays to his own expert for review. The record is silent as to the availability of defendant's expert witness. [482 So.2d at 453].
See also Steinberg v. Ford Motor Co., 72 Mich. App. 520, 250 N.W.2d 115, 119-120 (1976).
The record before the trial court did not provide an adequate basis for a fully informed determination as to whether Dr. Cohen would be substantially prejudiced by the loss of the X-rays. In addition to the reports of Dr. Friedman and a subsequent treating physician which expressed the opinion that the fractured wrist was visible on the January 13th X-rays, the record consisted solely of a representation by plaintiff's counsel that Dr. Friedman had lost or misplaced the X-rays and an assertion by Dr. Cohen's counsel that the absence of the X-rays would prejudice his case. The record contains no affidavit by Dr. Friedman regarding the circumstances of the loss of the X-rays. Most importantly, the record contains no affidavit by Dr. Cohen, or by any expert he may have consulted, as to the significance of the absence of the X-rays in arriving at an opinion whether Dr. Cohen deviated from the standard of care applicable to practitioners in the field.
Consequently, we conclude that the issue of substantial prejudice to Dr. Cohen from the loss of the X-rays should be decided only after full consideration of the kind of fracture suffered by plaintiff, the circumstances of the loss of the X-rays, the basis for plaintiff's claim of malpractice against Dr. Cohen, the evidence which plaintiff will present in support of that claim, Dr. Cohen's defenses to the claim and the evidence which he anticipates presenting. Discovery should be completed before the trial court decides the issue of prejudice and, if appropriate, an evidentiary hearing should be held. Cf. Georgis v. Scarpa, 226 N.J. Super. 244, 253-254 (App.Div. 1988).
*43 Accordingly, the orders barring testimony regarding the January 13, 1982 X-rays and granting summary judgment in favor of Dr. Cohen are reversed and the matter is remanded to the trial court for further proceedings in conformity with this opinion.
NOTES
[1] Plaintiff's complaint also named Garden State Hospital and "John Doe Corporation" as defendants. Summary judgment was granted in favor of Garden State without opposition. Plaintiff pursued his complaint solely against Dr. Cohen and not against the fictitious corporate defendant.
[2] This rule defines "writing" as meaning "handwriting, typewriting, printing, photostating, photography and every other means of recording upon any tangible thing any form of communication or representation, including letters, words, pictures, sounds or symbols, or combinations thereof, provided that such recording is (a) reasonably permanent and (b) readable by sight." In Bartell v. Razzano, 119 N.J. Super. 243, 245 (App.Div. 1972), we expressed doubt whether an X-ray falls within the definition of a "writing" contained in Evid.R. 1(13). The comments to the evidence rules state that such doubt is "probably wrong." Biunno, Current N.J. Rules of Evidence, Comment 1 to Evid.R. 70 (1988); see also Fed.R.Evid. 1001(2) and 1002. We find it unnecessary to pass upon this point, because the trial court's ruling barring testimony as to the contents of the X-rays must be reversed regardless of whether X-rays are considered "writings." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1541378/ | 949 A.2d 693 (2008)
Michael J. GLICK, D.D.S.
v.
CHOCORUA FORESTLANDS LIMITED PARTNERSHIP.
No. 2007-037.
Supreme Court of New Hampshire.
Argued: January 16, 2008.
Opinion Issued: May 16, 2008.
As Modified on Denial of Rehearing June 25, 2008.
*694 Douglas, Leonard & Garvey, P.C., of Concord (Charles G. Douglas, III and Benjamin T. King, on the brief, and Mr. Douglas orally), for the petitioner.
*695 Hinckley, Allen & Snyder, LLP, of Concord (Christopher H.M. Carter and Daniel M. Deschenes, on the brief, and Mr. Carter orally), for the respondent.
DUGGAN, J.
The petitioner, Michael J. Glick, D.D.S., appeals an order of the Superior Court (O'Neill, J.) denying his petition for specific performance of a right of first refusal he holds for land owned by the respondent, Chocorua Forestlands Limited Partnership (Chocorua). Chocorua cross-appeals, arguing that the trial court erred in finding that Glick possesses valid first refusal rights. We reverse in part, affirm in part, and remand.
The trial court found the following facts: In March 1974, Glick purchased a tract of land that straddles the Ossipee and Moultonborough town line. That property is abutted by Masonian lots 122 and 129 in the town of Ossipee, and Masonian lots 10 and 11 in the town of Moultonborough (Masonian lots). These lots are part of a much larger tract owned by Chocorua.
From 1983 through 1986, Glick and Chocorua engaged in negotiations regarding, among other things, Glick's desire to obtain rights of first refusal over the Masonian lots and Chocorua's desire to obtain certain rights of way across Glick's property. These discussions culminated in an agreement, on June 26, 1986, between Glick, his former wife, Victoria, and Chocorua (the Agreement). Victoria's interests in this matter were subsequently transferred to Glick during their divorce.
In the Agreement, Chocorua agreed to: (1) convey to Glick its right, title and interest in all rights of way allegedly burdening the Glick property within five days of the date of the Agreement; (2) convey to Glick approximately thirteen acres in Ossipee and Moultonborough that abutted the Glick property; (3) split all costs incurred for survey work associated with the Agreement; and (4) make "reasonable efforts to construct a stone and/or earthen barricade at the easterly end of" a road located near the parties' property. In addition, Chocorua agreed to, at "closing," "deliver to the Glicks rights-of-first refusal over the" Masonian lots. Those first refusal rights were to contain, among others, the following three terms:
(a) [Chocorua] or its successors and assigns shall, within fourteen (14) days of executing a purchase and sale agreement with a bona fide purchaser with respect to all or any portion of the encumbered Lots, send to the Glicks by certified mail, return receipt requested, a copy of the purchase and sale agreement.
(b) The Glicks shall have thirty (30) days from receipt of said notice to exercise their rights-of-first refusal by tendering to [Chocorua] the proposed purchase price by cashiers or certified check. In the event of such a tender, closing shall be held at the same time as called for in the purchase and sale agreement. . . . In the event such a tender is not made within the time specified herein or in the event of a failure by [the] Glicks to close as provided herein, the rights-of-first refusal shall terminate as to that portion of the encumbered lots in question.
(c) In the event of termination of the rights-of-first refusal with respect to all or a portion of the Lots as provided hereinabove, [Chocorua] or its successor in interest where applicable may but shall not be required to . . . record in the Carroll County Registry of Deeds an affidavit setting forth a description of the Lots affected, and a statement that a copy of the affidavit was mailed to the Glicks by certified mail return receipt requested fifteen (15) days prior to the *696 recording of the affidavit at the Carroll Country [sic] Registry of Deeds and that no objection by the Glicks was received by [Chocorua] or its successor in interest prior to recording of the affidavit.
In the Agreement, Glick agreed to: (1) convey to Chocorua two rights of way over his property; (2) convey to Chocorua a specified acre of land that would facilitate Chocorua's access to its property; and (3) pay Chocorua $6,100 for the thirteen acres. Although the Agreement provided that subsequent conveyances would be made, it also dictated that "all obligations and rights under this [A]greement shall survive the delivery of the deeds contemplated in this Agreement."
The deeds contemplated by the parties in the Agreement were recorded on September 3, 1986, and Glick transferred $6,100 to Chocorua approximately one month later. But the "closing" referenced in the right of first refusal provision never occurred, and no further documents regarding those rights were created. Instead, on October 16, 1986, the Agreement itself was recorded in the Carroll County Registry of Deeds.
The testimony offered at trial regarding the recording of the Agreement varied. According to Glick's attorney at the time, Edward E. Lawson, he and Chocorua's attorney, David W. Rayment, agreed that the Agreement adequately defined the rights of first refusal and, thus, that there was no need to prepare the additional document originally contemplated by the parties. Lawson testified that Rayment concurred that recording the Agreement itself would be sufficient to place third parties on record notice of Glick's first refusal rights. In support of Lawson's testimony, Glick submitted a letter he received several months after the Agreement was recorded in which Lawson states that Rayment had "agreed that recording the [A]greement was sufficient . . . [and that t]he right of first refusal is on the record and in effect."
Rayment, in contrast, could not recall having any conversation with Lawson regarding the recording of the Agreement. Moreover, he asserted that he never would have agreed to record the Agreement because it lacked "essential terms" such as a provision granting Chocorua access to its remaining land in the event of the sale of the Masonian lots and contained provisions he did not want disclosed to the public. According to Rayment, the parties had agreed that Lawson would draft the separate first refusal document, but they had "simply forgotten" about the issue.
Following the recording of the Agreement, there were no further communications between the parties regarding the rights of first refusal until November 4, 1998. At that time, Glick received a letter from Chocorua's then counsel, Robert Lloyd, informing him that Chocorua had entered into a purchase and sale agreement (P & S Agreement) with F. Colin Cabot and FCC Acquisition Co. (Cabot) for "all of the land that is subject to an apparent right to first refusal granted to [Glick] and the former Mrs. Glick by Chocorua." Lloyd stated that "[u]nder the terms of the right of first refusal [Glick] ha[d] thirty (30) days from the receipt of th[e letter] to exercise [his] rights of first refusal by tendering to [Chocorua] the proposed purchase price" of $375,000. Attached to the letter was a copy of the P & S Agreement, which similarly acknowledged Glick's first refusal rights. The record indicates that the sale of the Masonian lots was part of a much larger multi-million dollar sale of essentially all of Chocorua's assets to Cabot.
Following Glick's receipt of notice of the P & S Agreement, the parties' lawyers *697 exchanged several communications regarding Glick's belief that: (1) the purported purchase price was excessive; (2) the thirty-day period originally prescribed by the Agreement should be extended in recognition of the fact that subdivision approval would be required for the sale of the lots; and (3) he should be permitted to exercise his rights of first refusal over only a portion of the Masonian lots. These communications continued until November 25, 1998, when Lloyd sent Glick and Lawson a fax, advising them that the Agreement had been "cancelled and terminated" and that "any right of first refusal [Glick] may have is" no longer exercisable.
That same day, Cabot's counsel, Howard G. Seitz, sent a fax to Lloyd confirming a conversation which they had that morning. In that fax, Seitz acknowledged that Cabot had cancelled the P & S Agreement, but noted they had "agreed to review the transaction pursuant to which [Cabot was] to acquire the Chocorua lands subject to equitable adjustment for the so-called `Glick Property' with the thought, amongst others, that, if appropriate, [Cabot] might acquire the partnership interests of Chocorua['s] partners rather than the property itself."
At trial, Lawson testified that, immediately prior to receiving notification that the P & S Agreement had been cancelled, he spoke with Lloyd and informed him that Glick intended to exercise his first refusal rights. Glick also testified that several days prior to receiving Lloyd's fax, he spoke with Seitz and informed him of the same. However, the trial court found that "no documentation or communication was exchanged between respective counsel or the parties that indicated that Glick was unconditionally accepting the terms of the P & S Agreement prior to Glick's notification of its cancellation."
In February 1999, roughly two months after terminating the P & S Agreement, the general and limited partners of Chocorua sold their partnership interests, including their interest in the Masonian lots, to Cabot. In response, Glick filed the present action, arguing that his first refusal rights entitle him "to a decree of specific performance, compelling the defendant to sell him the . . . [Masonian lots], at [their] fair market value." Chocorua objected, claiming that Glick did not have first refusal rights because the separate document referenced in the Agreement was never executed. Moreover, Chocorua argued that even if Glick had such rights, they would not have been triggered by the transfer of the partnership interests in Chocorua to Cabot.
Both parties subsequently filed motions for summary judgment. In his motion, Glick argued, among other things, that "once the Rights of First Refusal were triggered [by his receipt of notice of the P & S Agreement, he] had an option to purchase the land in question." Because numerous material facts remained unresolved including the actual acreage of the Masonian lots, the enforceability of the Agreement, whether the Agreement memorialized the parties' intentions, whether the parties had acted in good or bad faith, and whether Glick had exercised his rights the trial court denied Glick's motion on July 31, 2001, "with one narrow exception." That narrow exception, as explained by the court, was as follows:
if it is determined that Glick possessed a valid right of first refusal (which, the Court is not finding in this Order), and if, in addition, the terms of . . . [the] Agreement alone define that right, then Glick, upon receipt of the . . . letter [from Chocorua], would have been the holder of a thirty day option to purchase the property described in the [P & S Agreement] for the price therein stated.
*698 Following trial, the trial court issued its final order and held "[t]hat an enforceable right[ ] of first refusal on the . . . Masonian lots was granted to Glick by Chocorua and continues to encumber the said Masonian lots." While the court agreed with Chocorua that "it is entirely possible, perhaps probable, that additional terms would [have] be[en] included in" the separate first refusal document contemplated by the parties, the court held that the Agreement nevertheless "encompassed the rights and obligations placed on each respective party." Accordingly, the court found that the Agreement "represent[ed] a `meeting of the minds' as to the subject first refusal right[s]" and that the first refusal provision in the Agreement was "an enforceable contract."
The court, however, declined "to order a sale of the . . . Masonian lots for any price" because the P & S Agreement "was cancelled and/or terminated prior to Glick exercising his right[ ] of first refusal." Moreover, because "the subsequent transfer of Chocorua's partnership interest in 1999 did not trigger Glick's right[ ] of first refusal," the court held that Glick had no right to force the sale of the Masonian lots. Finally, the court found that Glick failed to prove that Chocorua had acted in bad faith by entering into the partnership sale with Cabot.
On appeal, Glick makes three principal arguments for reversal: First, he contends that, upon his receipt of notice of the P & S Agreement, his right of first refusal ripened into an option that was irrevocable for the thirty-day period stated in the Agreement. Second, he argues that the trial court erred in refusing to find that Chocorua acted in bad faith. Third, he asserts that the trial court's July 31, 2001 summary judgment order, when considered in light of the findings made in the final order, compels an order of specific performance. Because we agree with Glick that, under the facts presented in this case, the Agreement gave him a thirty-day irrevocable option to purchase the Masonian lots, we need not reach all of his latter arguments.
I. Right of First Refusal
Glick's first argument raises an issue we have not yet had occasion to consider; that is, whether a right of first refusal, once triggered, is exercisable for the entire period of time specified by the parties, even though the third-party contract has been terminated. Glick contends that, as a matter of law, a right of first refusal always ripens into an irrevocable option once the holder has received notice of the burdened estate's intent to sell. In so arguing, he urges us to follow those authorities that have stated broadly that "[o]nce the holder . . . receives notice of a third party's offer, . . . the holder of the option has a right to buy the property, a right that is a true option." 17 C.J.S. Contracts § 56, at 503 (1999); see, e.g., Riley v. Campeau Homes (Texas), Inc., 808 S.W.2d 184, 188 (Tex. App.1991) (stating that "a right of first refusal ripens into an option when the owner elects to sell"); Chapman v. Mutual Life Ins. of New York, 800 P.2d 1147, 1150 (Wyo.1990) ("We agree with the view that when the condition precedent of the owner's intention to sell is met the right of first refusal `ripens' into an option and contract law pertaining to options applies."); Vorpe v. Key Island, Inc., 374 So.2d 1035, 1036-37 (Fla.Dist.Ct.App.1979) (explaining that once the owner of property manifests the intent to sell, the "right of first refusal [i]s converted into an irrevocable option to purchase").
Chocorua, in similarly absolute fashion, argues that a right of first refusal only gives the holder a right to receive notice of a proposed third-party sale and that, once *699 such notice has been sent, "the offeree has `received the bargained-for performance,' and cannot insist that the offer remain open after the third-party sale is abandoned." In support of its position, Chocorua relies primarily upon LIN Broadcasting Corp. v. Metromedia, Inc., 74 N.Y.2d 54, 544 N.Y.S.2d 316, 542 N.E.2d 629, 630 (1989), which held that "an offer, once made to the holder of a right of first refusal, is [not] irrevocable for the period of time set forth in the first refusal clause." See also Shower v. Fischer, 47 Wash.App. 720, 737 P.2d 291, 293 (1987) (indicating that a right of first refusal only gives the holder the power to purchase for so long as the underlying third-party contract is in existence).
While we recognize that authority exists in support of both parties' positions, we do not believe that adoption of a rigid rule that applies to all contracts that contain the phrase "right of first refusal" is sound. Generally speaking, "a right of first refusal is a conditional option which is dependent upon the decision to sell the property by its owner." 17 C.J.S. Contracts § 56, at 503. It differs materially from an option contract, Polemi v. Wells, 759 P.2d 796, 798 (Colo.Ct.App.1988), in that it is not an "offer[] and create[s] no power of acceptance" in the holder. 3 E. Holmes, Corbin on Contracts § 11.3, at 468 (rev. ed. 1996). Rather, a right of first refusal generally "empowers its holder with a preferential right to purchase property on the same terms offered by or to a bona fide purchaser." 17 C.J.S. Contracts § 56, at 503.
However, the practical reality is that the labels such as "right of first refusal" applied by contracting "parties do not always mirror the economic reality of the instruments involved." Walker, Rethinking Rights of First Refusal, 5 Stan. J.L. Bus. & Fin. 1, n. 14 (1999). As Corbin has observed:
Although the [r]ight that it creates may be described by divers[e] terms ("First Right to Buy," "Right of Pre-emption," . . . and so on), in no case are the legal relations [between the parties contracting for a right of first refusal] determinable from the name alone. In all cases, interpretation requires knowledge of the entire context, context of facts as well as context of words.
3 E. Holmes, supra § 11.3, at 481; see also Smith Trust, 480 Mich. 19, 745 N.W.2d 754, 757-58 (2008) (holding that determination of "whether a right of first refusal is revocable once the holder of the right receives notice of a third party's offer" requires interpretation of the contract language); Henderson v. Nitschke, 470 S.W.2d 410, 411 (Tex.Civ.App.Ct.1971) (stating that "[t]he determination of the rights of the parties [under a right of first refusal provision] requires an interpretation of . . . the lease").
Moreover, it has long been our practice to focus upon the intent of the parties, as manifested in the language of the entire contract, in defining the parties' respective rights. Cf. Swamscot Machine Co. v. Partridge, 25 N.H. 369, 376-79 (1852) (holding that the express, unambiguous language of the parties' agreement controls despite contrary evidence of industry custom or usage). The parties have offered no principled reason for departing from this settled approach simply because we are faced with language purporting to create "rights of first refusal." Cf. Turcotte v. Griffin, 120 N.H. 292, 294, 415 A.2d 668 (1980) (upholding a trial court's use of the rules of contract interpretation when interpreting a lease which contained an option to purchase). We therefore reject both parties' implicit argument that their use of the phrase "right of first refusal" ends the inquiry. Instead, we agree with those authorities that have *700 held that "the contract terms establishing a right of first refusal . . . control whether the right . . . becomes an irrevocable option once triggered or, instead, may be revoked by the owner if he in good faith changes his mind and withdraws his offer to sell before the right is exercised." Smith Trust, 745 N.W.2d at 759 (Corrigan, J. concurring); see also Henderson, 470 S.W.2d at 411.
Accordingly, we must look to all of the language of the Agreement in resolving the present dispute. In so doing, we will give the language used by the parties its reasonable meaning, considering the circumstances and the context in which the agreement was negotiated, and reading the document as a whole. Ryan James Realty v. Villages at Chester Condo. Assoc., 153 N.H. 194, 197, 893 A.2d 661 (2006). Absent ambiguity, however, we will determine the parties' intent from the plain meaning of the language used in the contract. Id. Ultimately, the interpretation of a contract is a question of law, which we review de novo. Barclay Square Condo. Owners' Assoc. v. Grenier, 153 N.H. 514, 517, 899 A.2d 991 (2006).
As noted above, the Agreement unambiguously required Chocorua, "within fourteen (14) days of executing a purchase and sale agreement with a bona fide purchaser" for "any portion" of the Masonian lots, to "send to [Glick] . . . a copy of" said agreement. The Agreement further provided that Glick, upon receiving such notice, "shall have thirty (30) days . . . to exercise [his] rights-of-first refusal by tendering to [Chocorua] the proposed purchase price by cashiers or certified check."
The Court of Civil Appeals of Texas addressed a similarly worded first refusal provision in Henderson. There, the parties had entered into a lease that granted the lessee the "prior right . . . to buy the leased premises" according to the following terms:
If Lessor receives from a third party an acceptable bona fide offer to buy such property, Lessor shall forthwith give Lessee written notice thereof together with a copy of such offer. Lessee or its nominee shall have sixty (60) days from the receipt of such notice and offer to buy such property at the terms of such offer relating to such property.
Henderson, 470 S.W.2d at 411 (quotations omitted; emphasis added). As in the case before us, the lessor subsequently entered into a written contract to sell the leased premises; sent written notice to the lessee; and, prior to the expiration of the sixty-day period, informed the lessee that he could no longer exercise his first refusal because the third-party offer had been revoked. Id. When the lessee's attempts to exercise his rights were rebuffed, the lessee filed suit seeking specific performance. Id.
On appeal, the court rejected the lessor's assertion that the lessee's right "to purchase [wa]s a mere right of refusal which cannot be called an option," and held that the "determination of the rights of the parties requires an interpretation of" the contract. Id. In engaging in that undertaking, the court found it significant that the first refusal provision granted lessee a definite period of time in which to exercise its right. Id. at 412. The court then determined that the language of the contract dictated that once the lessor "gave lessee written notice of the proposed sale to the third party . . . the first right of refusal matured into an option which was supported by consideration and was irrevocable by the terms of the lease for 60 days." Id.; see Mobil Oil Guam, Inc. v. Tendido, 2004 Guam 7, ¶ 20 (interpreting language similar to that in the present case as creating a "right of first refusal *701 which ripens into an irrevocable option to purchase").
Here, as in Henderson, the condition precedent triggering the right of first refusal was the occurrence of a single, isolated event; that is, Chocorua's execution of a purchase and sale agreement. Nothing in the contract indicates, as Chocorua suggests, that Glick's resultant right to purchase the property was conditioned upon the continued existence of the P & S Agreement. If that had been the parties' intent, they could have crafted the condition precedent to depend upon Chocorua's desire to "sell, transfer or otherwise dispose of its ownership interest to a third party." Cf. LIN Broadcasting Corp., 544 N.Y.S.2d 316, 542 N.E.2d at 630.
Instead, the Agreement explicitly states that, upon receiving notice, Glick "shall have thirty (30) days . . . to exercise [his] rights-of-first refusal." (Emphasis added.) We agree with the Henderson court that the incorporation of this time provision is significant. Henderson, 470 S.W.2d at 411; see Mobil Oil Guam, Inc., 2004 Guam 7 at ¶ 29 (holding that the inclusion of a time period evidences that the right of first refusal was intended to ripen into an irrevocable option to purchase upon being triggered). In common parlance, the word "shall" is "used to express a command," Webster's Third New International Dictionary 2085 (unabridged ed. 2002); see McCarthy v. Wheeler, 152 N.H. 643, 645, 886 A.2d 972 (2005), or to signify something that is required or mandatory, see Dancart Corp. v. St. Albans Rubber Co., 124 N.H. 598, 602, 474 A.2d 1020 (1984) (explaining that, "[w]hen `shall' is contained in a term requiring action by a person identified, the word commonly . . . ha[s] a mandatory character"). Given the mandatory nature of this time provision, as well as the lack of any language conditioning Glick's purchasing power upon the continued existence of the P & S Agreement, we hold that the Agreement granted Glick an irrevocable thirty-day option to purchase the Masonian lots.
Chocorua asserts that, even if Glick held a thirty-day option to purchase the Masonian lots, he cannot obtain specific performance because he "never tendered $375,000 to [Chocorua], as required under the first refusal provisions of the" Agreement. In other words, Chocorua contends that, despite its premature repudiation of his option, Glick was required to engage in the futile act of offering payment in order to preserve his right to relief in this case. As Justice Souter explained in Erin Food Services, Inc. v. Derry Motel, 131 N.H. 353, 362, 553 A.2d 304 (1988), such an argument "ignores . . . the rule excusing formal tender to a party whose repudiation of a contract has previously indicated that tender would be a useless act." (Citation omitted.) Since the evidence indicates that the option was repudiated by Chocorua, equity does not require that Glick show a useless tender. Lowell v. First Church of Christ, 101 N.H. 363, 366, 143 A.2d 671 (1958) (holding that a parties' allegation that they were ready, willing and able to purchase the property subject to an option is sufficient for specific performance); cf. Jesseman v. Aurelio, 106 N.H. 529, 534, 214 A.2d 743 (1965) ("any lack of a written undertaking to purchase on the part of the plaintiff was supplied by the bringing of his bill in equity, alleging that he is ready, willing and able to purchase").
Accordingly, because the Agreement granted Glick a thirty-day option to purchase the property upon his receipt of notice of the P & S Agreement, Chocorua breached the contract by rescinding the offer and Glick is entitled to specific performance. See 81A C.J.S. Specific Performance § 45, at 215 (2004) ("Contractual *702 rights of first refusal to purchase realty may be enforced by a decree of specific performance."). The remainder of Chocorua's arguments on this issue are without merit and sufficient basis in the record, and, thus, do not warrant further consideration. See Vogel v. Vogel, 137 N.H. 321, 322, 627 A.2d 595 (1993).
II. Glick's Remaining Arguments
Glick raises several other arguments in support of his assertion that he is entitled to an order of specific performance. For instance, he asserts that the trial court erred in failing to find that Chocorua restructured its deal with Cabot as a partnership sale for the sole purpose of preventing him from exercising his first refusal. See, e.g., Quigley v. Capolongo, 53 A.D.2d 714, 383 N.Y.S.2d 935 (1976) (holding that a grantor of a first refusal breached the obligation of good faith and fair dealing "by entering into a contract, denominated a lease in the hope of circumventing plaintiffs' rights"). In addition, he asserts that the trial court's July 31, 2001 summary judgment order, when considered in light of the findings made in the final order, compels an order of specific performance. Having already determined that the Agreement gave Glick a thirty-day option to purchase the Masonian lots, and that he is therefore entitled to specific performance, we need not address these arguments.
However, Glick also contends that the trial court erred in failing to find that Chocorua acted in bad faith in setting the purchase price for the Masonian lots. In support of his argument, Glick points to a letter submitted at trial in which Lloyd informed Seitz that the general manager of Chocorua "believe[d] that he can place [a] high enough price on the right of first refusal property so that Mr. Glick will not exercise acquisition." Glick argues that, as demonstrated by this letter, Chocorua inflated the price in the P & S Agreement "in bad faith in an effort to discourage [him] from exercising his rights of first refusal so as not to jeopardize the larger $10 [million] transaction that [Chocorua] was attempting to consummate with" Cabot.
While the trial court granted Chocorua's requested finding that "Glick did not prove his allegations that [Chocorua] had acted in bad faith by purportedly inflating the purchase price of the [l]ots, or overestimating the amount of land contained within the lots," in its order the trial court expressly declined to make findings as to both the size and value of the Masonian lots. Because these facts are inextricably tied to Glick's bad faith argument, see Bank of Vermont v. Kelley, No. CIV 93-46-JD, 1994 WL 258680, at *6-7 (D.N.H. Feb. 4, 1994) (refusing to grant summary judgment on issue of bad faith in case involving a loan workout where disputed material facts remained regarding whether the bank had accepted the fair market value for the property at issue); see also Gleason v. Norwest Mortgage, Inc., 243 F.3d 130, 143 (3d Cir. 2001) (explaining how "allocations of price by interested parties to elements of a package [deal] may readily be manipulated to defeat contractual rights to substantially similar price terms"); Gyurkey v. Babler, 103 Idaho 663, 651 P.2d 928, 934 (1982), and we are ill-suited to make such factual findings in the first instance, see Cook v. Sullivan, 149 N.H. 774, 780, 829 A.2d 1059 (2003) (explaining that the trial court is in the best position to "resolv[e] conflicts in the testimony, measur[e] the credibility of witnesses, and determin[e] the weight to be given evidence"), we are unable to assess the trial court's rejection of Glick's bad faith argument upon this record. For similar reasons, we are also unable to resolve *703 Glick's contention that the purchase price in the P&S Agreement was premised upon an erroneous assessment of the size of the Masonian lots. See Pantry Pride Enterprises, Inc. v. Stop & Shop Co., 806 F.2d 1227, 1231 (4th Cir. 1986) (granting specific performance to the holder of a right of first refusal, but remanding for findings as to the value of the encumbered property where performance would result in a windfall). Therefore, upon remand, the trial court shall determine whether the purchase price in the P&S Agreement was inflated and, if it so finds, shall set a purchase price in accord with the fair market value of the property in November 1998, when Glick should have been permitted to exercise his right. If, however, the court finds that the price was not inflated, Glick shall be held to his contractual obligation to proffer the purchase price stated in the P&S Agreement.
III. Chocorua's Cross-appeal
In its cross-appeal, Chocorua argues that the trial court erred in concluding that the Agreement created an enforceable first refusal contract between the parties. Specifically, Chocorua asserts that the trial court's finding that the Agreement "represent[ed] a `meeting of the minds' as to the subject first refusal right(s)," is "incompatible" with the court's determination "that the parties . . . intend[ed] to execute a separate document conveying the first refusal right(s)" that could have contained additional terms. Chocorua argues that, at most, the Agreement represented "an agreement to enter into a contract," which it contends is unenforceable in these circumstances. We disagree.
A valid, enforceable contract requires offer, acceptance, and a meeting of the minds on all essential terms. Durgin v. Pillsbury Lake Water Dist., 153 N.H. 818, 821, 903 A.2d 1003 (2006). A meeting of the minds is present when the evidence, viewed objectively, indicates that the parties have assented to the same terms. Syncom Indus. v. Wood, 155 N.H. 73, 82, 920 A.2d 1178 (2007). "The question of whether a `meeting of the minds' occurred is a factual question to be determined by the trier of fact," Fleet Bank-NH v. Christy's Table, 141 N.H. 285, 288, 681 A.2d 646 (1996), as is the issue of whether a valid contract was created, Gulf Ins. Co. v. AMSCO, 153 N.H. 28, 43, 889 A.2d 1040 (2005). Accordingly, on these issues, "we will sustain a trial court's findings and conclusions unless they are lacking in evidentiary support or tainted by an error of law." Syncom Indus., 155 N.H. at 82, 920 A.2d 1178.
In this case, after considering all of the evidence including Chocorua's assertion that it would have requested that additional terms be incorporated into the contemplated right of first refusal contract the trial court concluded that the Agreement "encompassed the rights and obligations placed on each respective party" and represented "a `meeting of the minds' as to the subject first refusal right(s)." There is ample evidence in the record to support this conclusion. See 17A Am.Jur.2d Contracts § 57 (2004) ("Courts liberally find right-of-first refusal clauses to be specific enough to be enforced, even if they are missing some important terms."). First, the Agreement contains a description of the property affected by the rights of first refusal. Second, the Agreement contains provisions describing the nature of the right of first refusal that is, a covenant against the Masonian lots and the period of time in which the rights would remain in effect that is, a period of twenty years, extendable to eighty years upon Glick's election. Third, as noted above, the Agreement also contains language describing, in detail, how the rights *704 would be triggered and how they would be exercised. And finally, despite the fact that the parties contemplated the execution of a separate first refusal document, the Agreement explicitly states that "all obligations and rights under this [A]greement shall survive the delivery of the deeds contemplated in th[e] Agreement."
Chocorua's argument that the trial court erred in finding that the Agreement created a first refusal contract appears to be premised upon an erroneous reading of the trial court's order. Despite Chocorua's assertions to the contrary, the trial court did not find that the Agreement failed to "contain all terms that the parties regarded as material to rights of first refusal." (Emphasis added.) Rather, the court merely found that "the parties did indeed intend to execute a separate document conveying the first refusal right(s)" and that "possibl[y], perhaps probabl[y], . . . additional terms would" have been included in that document. (Emphasis added.) Nothing in this language suggests that the trial court believed that those additional terms were material. See Lower Village Hydroelectric Assoc. v. City of Claremont, 147 N.H. 73, 75, 782 A.2d 897 (2001) (explaining that "[a] written memorandum is sufficient to establish a contract if it demonstrates that the parties have manifested their intent to be bound to the essential terms of a more detailed forthcoming agreement" (emphasis added)). To the contrary, this language, when considered in light of the court's determination that the Agreement "encompassed the rights and obligations placed on each respective party," indicates that the court found the purported additional terms proffered by Chocorua to be minor details. See id. at 76, 782 A.2d 897 (explaining how a contract can exist regardless of whether the parties "contemplated further negotiations of minor details"). Because we disagree with Chocorua's interpretation of the trial court's order, we cannot find that the court erred in holding that the Agreement created "an enforceable contract." Accordingly, we affirm the trial court on this issue.
Reversed in part; affirmed in part; and remanded.
BRODERICK, C.J., and DALIANIS, GALWAY and HICKS, JJ., concurred. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540619/ | 272 N.J. Super. 526 (1994)
640 A.2d 855
JAMES H. HUNTER, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF-APPELLANT,
v.
GREENWOOD TRUST COMPANY, DEFENDANT-RESPONDENT.
Superior Court of New Jersey, Appellate Division.
Argued January 27, 1994.
Decided April 22, 1994.
*528 Before Judges SHEBELL, LONG and LANDAU.
Michael D. Donovan of Chimicles, Burt, Jacobsen & McNew, admitted pro hac vice, argued the cause for appellant; Spector Gadon & Rosen, attorneys for appellant (Ann Miller, admitted pro hac vice, of counsel; Paul R. Rosen and Robert L. Grundlock, Jr., on both the brief and the reply brief).
Burt M. Rublin, of Wolf, Block, Schorr and Solis-Cohen, admitted pro hac vice, argued the cause for respondent; Archer & Greiner, attorneys for respondent (Sean T. O'Mara, on the brief); Alan S. Kaplinsky of Wolf, Block, Schorr and Solis-Cohen, admitted pro hac vice, of counsel.
The opinion of the court was delivered by LONG, J.A.D.
Plaintiff, James M. Hunter, here appeals from the trial judge's dismissal of the class action he filed against defendant, Greenwood Trust Company, to invalidate the late charges imposed by defendant on his credit card account.
I
Greenwood is a federally insured bank, chartered under Delaware law, located in New Castle, Delaware. One of the banking services provided by Greenwood is the Discover Card, which cardholders use to charge items and to make purchases by borrowing money from Greenwood on an open-ended credit basis. Greenwood issues its Discover Card to credit card applicants pursuant to a Cardmember Agreement which cardholders receive when they obtain their credit cards.
Among numerous other provisions, the Cardmember Agreement specifies the annual percentage rate finance charge which Greenwood assesses against the outstanding monthly debt balance on its cardholders' accounts. The Cardmember Agreement also provides that if a cardholder fails to make a specified minimum *529 payment on the outstanding debt balance within twenty days of the payment due date stated in a monthly bill, a late charge of ten dollars will be assessed against the cardholder's account. The late charge is added to the cardholder's outstanding balance and the annual percentage rate finance charge is applied to that outstanding balance in subsequent billings. The cardholder may incur multiple ten-dollar late payment charges on his or her account for failure to make the minimum payment during several billing cycles. Greenwood issues its Discover Card to applicants throughout the United States. More than 10,000 residents of New Jersey have received these cards.
Plaintiff is a New Jersey resident who received his Discover Card from Greenwood in 1985. On at least three occasions between 1985 and 1991, plaintiff did not pay the minimum monthly amount specified on his Discover Card bill. Consequently, he incurred at least three ten-dollar late payment charges over the years and those charges were added to his outstanding debt balance in subsequent billings.
Plaintiff filed a complaint, later amended to class action form, which alleged that the ten-dollar late charge Greenwood imposes for a cardholder's failure to pay the minimum monthly amount on an outstanding debt balance violates New Jersey statutory law, specifically provisions of the Retail Installment Sales Act, N.J.S.A. 17:16C-50 and -54 and the Consumer Fraud Act, N.J.S.A. 56:8-2 and -19. Plaintiff also alleged violations of New Jersey common law, specifically breach of contract and conversion, based upon the illegally imposed late charges.
Greenwood moved to dismiss the amended complaint for failure to state a claim upon which relief could be granted. In so moving, it asserted that plaintiff's state law based claims were preempted by section 521 of the Depository Institutions Deregulation and Monetary Control Act of 1980 ("DIDA"), Pub.L. No. 96-221, 94 Stat. 132 (codified as section 27 of the Federal Deposit Insurance Act (12 U.S.C.A. § 1831d)) (hereinafter section 521).
*530 The trial judge, Judge Fratto, ruled that by enacting section 521 Congress intended to preempt "the entire area" covering interest rates and the assessment of late payment charges by state-chartered, federally insured banks like Greenwood. Accordingly, he entered an order dismissing plaintiff's amended complaint.
Plaintiff appeals, contending that section 521 preempts state interest laws but excludes late charges from its preemptive scope. He also urges that, even if preemption is applicable to his state statutory claims, his state common law claims should not have been dismissed. We have carefully reviewed this record in light of these contentions and have concluded that there is no warrant for our intervention.
II
In 1864, Congress enacted the National Bank Act (NBA) ch. 106, 13 Stat. 99 (codified, as amended, in scattered sections of the United States Code). Section 85 of the NBA, states in relevant part that:
Any association [national bank] may take, receive, reserve, and charge on any loan or discount made, or upon any notes, bills of exchange, or other evidence of debt, interest at the rate allowed by the laws of the State, Territory, or District where the bank is located, or at a rate of 1 per centum in excess of the discount rate on ninety-day commercial paper in effect at the Federal reserve bank in the Federal reserve district where the bank is located, whichever may be the greater.... [12 U.S.C.A. § 85.]
The intent of section 85 was to protect national banks from discriminatory state banking laws. See Greenwood Trust Co. v. Massachusetts, 971 F.2d 818, 826 n. 6 (1st Cir.1992), cert. denied, ___ U.S. ___, 113 S.Ct. 974, 122 L.Ed.2d 129 (1993). By permitting national banks to charge interest at the rate allowed by a state's law or at a rate tied to the local federal discount rate, Congress prevented states from favoring state-chartered banks to the detriment of national banks as to the amount of interest that could be charged on bank loans. Ibid.
Ten years after the NBA was enacted, the United States Supreme Court construed section 85 in Tiffany v. National Bank, *531 85 U.S. (18 Wall.) 409, 21 L.Ed. 862 (1873). There, the Court announced what became known as the "most favored lender" doctrine, under which national banks could not be placed at a competitive disadvantage with respect to any state-regulated lender. Specifically, Tiffany allowed a national bank to charge interest rates chargeable by natural persons under Missouri law. 85 U.S. at 413, 21 L.Ed. at 863-64. The "most favored lender" doctrine has subsequently been interpreted to give national banks the same interest rate privileges as any competing state institutions, including small loan companies and retail installment sellers. See, e.g., Fisher v. First Nat'l Bank, 538 F.2d 1284, 1289-90 (7th Cir.1976), cert. denied, 429 U.S. 1062, 97 S.Ct. 786, 50 L.Ed.2d 778 (1977).
In 1936, the Comptroller of the Currency issued an interpretation of section 85 which administratively recognized the "most favored lender" doctrine as part of federal banking law. See Barkley Clark, The Law of Bank Deposits, Collections and Credit Cards, ¶ 11.09, at 43 (3d ed. 1990). The "most favored lender" doctrine was later formally incorporated into the Comptroller's regulations covering national banks. 12 C.F.R. § 7.7310(a) (1993).
The margins of the most favored lender doctrine were later tested in Marquette National Bank v. First of Omaha Service Corp., 439 U.S. 299, 99 S.Ct. 540, 58 L.Ed.2d 534 (1978). There, First National Bank of Omaha, a national bank chartered in Nebraska, where the allowable interest rate ranged up to eighteen percent on outstanding credit card balances, attempted to "export" that rate to Minnesota, where it had solicited BankAmericard customers and where the allowable interest rate was only twelve percent. Id. at 302-304, 99 S.Ct. at 542-43, 58 L.Ed.2d at 538-39. Minnesota law permitted credit card issuers within its borders to charge an annual usage fee to cardholders to compensate for the relatively low rate of allowable interest. Id. at 303, 99 S.Ct. at 542, 58 L.Ed.2d at 538-39. A national bank located in Minnesota, Marquette National Bank, brought an action to enjoin First of Omaha from soliciting business in and from "exporting" interest *532 rates to Minnesota, asserting that it was losing BankAmericard customers to First of Omaha because Minnesota's low twelve percent interest rate compelled it to charge its cardholder customers a ten-dollar annual fee for use of the card. Id. at 304, 99 S.Ct. at 543, 58 L.Ed.2d at 539. The Minnesota-based national bank was rebuffed by the Minnesota Supreme Court and appealed.
The United States Supreme Court determined that the case was governed by section 85, and ruled that a national bank may charge interest on any loan at the rate allowed by the state where the bank is located. Id. at 313-19, 99 S.Ct. at 547-50, 58 L.Ed.2d at 544-48. The Court unanimously held that First of Omaha could charge its Minnesota customers the interest rate allowed under Nebraska law, even though that rate was greater than the rate allowed in Minnesota for a Minnesota-based national bank. Id. at 318-19, 99 S.Ct. at 550-51, 58 L.Ed.2d at 547-48. Marquette effectively permitted a national bank to "export" its home state's interest rates on credit card accounts to other states.
Within two years of Marquette, the United States experienced a credit upheaval which included soaring interest rates. See Greenwood Trust Co., supra, 971 F.2d at 826. National banks fared well on credit card transactions because they could either "export" favorable home state interest rates or charge interest tied to very high local federal discount rates, pursuant to section 85 of the NBA. Ibid. State-chartered banks, however, could not do so because their interest rates were constrained by the ceilings imposed by the various states' usury laws, some of which were unrealistically low. Ibid. Congress sought to "level the playing field between federally chartered and state-chartered" banks by enacting DIDA, section 521 of which is at issue here. Ibid.
Section 521, codified as 12 U.S.C.A. § 1831d(a), states that:
[i]n order to prevent discrimination against State-chartered [F.D.I.C.-] insured depository institutions, including insured savings banks, or insured branches of foreign banks with respect to interest rates, if the applicable rate prescribed in this subsection exceeds the rate such State bank or insured branch of a foreign bank would be permitted to charge in the absence of this subsection, such State bank or *533 such insured branch of a foreign bank may, notwithstanding any State constitution or statute which is hereby preempted for the purposes of this section, take, receive, reserve, and charge on any loan or discount made, or upon any note, bill of exchange, or other evidence of debt, interest at a rate of not more than 1 per centum in excess of the discount rate on ninety-day commercial paper in effect at the Federal Reserve bank in the Federal Reserve district where such State bank or such insured branch of a foreign bank is located or at the rate allowed by the laws of the State, territory, or district where the bank is located, whichever may be greater.
This section is an analogue to section 85 of the NBA. Greenwood Trust Co., 971 F.2d at 826-28. Its purpose is to achieve a measure of parity and competitive equity between national banks and state-chartered banks by permitting state-chartered banks to enjoy the same "most favored lender" status that national banks enjoy. Ibid. To assure that equalization, Congress made a conscious choice to incorporate the section 85 standards into DIDA. Id. at 827.
Thus, under DIDA, federally insured state-chartered banks are "most favored lenders" and may charge interest at the rate permitted by any competing lending institution in their home states. See VanderWeyst v. First State Bank, 425 N.W.2d 803, 806 (Minn. 1988) (stating that "[w]e conclude that the `rate allowed' clause should be construed as granting to federally-insured, state-chartered banks most favored lender status. We are persuaded that by using the same `rate allowed' language in ... [the DIDA] that appears in [section 85 of] the National Bank Act, Congress intended to give that status to state insured banks"), cert. denied, 488 U.S. 943, 109 S.Ct. 369, 102 L.Ed.2d 359 (1988); accord, First Bank v. Miller, 131 Mich. App. 764, 347 N.W.2d 715, 718-20 (1984). To the extent that the home state's law would interfere with a state-chartered bank's interest charges in the home state, those state laws are expressly preempted under section 521 of DIDA. 12 U.S.C.A. § 1831d(a).
Although the United States Supreme Court has not yet definitively ruled on the question of whether state-chartered banks are permitted to "export" their home state's interest rates in the same manner as national banks under Marquette, persuasive authority *534 supports the proposition that the Marquette exportation rationale is equally applicable to state-chartered banks because of the parallels between DIDA § 521 and NBA § 85.
In Greenwood Trust Co. v. Massachusetts, supra, a state-chartered bank located in Delaware sought to impose upon its Massachusetts credit cardholders a late payment charge authorized under Delaware law but forbidden under Massachusetts law. The federal district court ruled that section 521 of DIDA did not preempt Massachusetts law. 971 F.2d at 821. The Delaware bank appealed and the First Circuit reversed. After determining that section 521 of DIDA and section 85 of the NBA are so similar in purpose and wording that courts are required to construe them in pari materia, the court concluded that the "principle of exportation" is "solidly embedded in the language and purpose of both acts." Id. at 827. Therefore, the Marquette rationale is applicable to section 521 and, "[t]o the extent that a law or regulation enacted in a borrower's home state purposes to inhibit the [out-of-state] bank's choice of interest term under section 521, DIDA expressly preempts the state law's operation." Ibid. See also Hill v. Chemical Bank, 799 F. Supp. 948, 951-54 (D.Minn. 1992) (holding that section 521 preempts state law and implicitly recognizing the right of a bank chartered in New York to "export" interest rates and late payment charges to Minnesota borrowers, despite a law that prohibits Minnesota banks from assessing those charges). Thus, according to Greenwood, a state-chartered bank may "export" the interest rate allowed on credit card accounts under the laws of its home state to the borrower's state, pursuant to section 521 and Marquette. See also Watson v. First Union Nat'l Bank, 837 F. Supp. 146 (D.S.C. 1993) (holding that sections 85 and 86 of the National Bank Act, which govern the interest national banks can charge, completely preempt state law claims against national banks for usury; that out-of-state national banks may therefore export interest rate to cardholders in second state; and that credit card overlimit fees are interest under sections 85 and 86); and Goehl v. Mellon Bank, 825 F. Supp. 1239 (E.D.Pa. 1993) (holding that sections 85 and 86 of the National Bank Act *535 completely preempt credit card customers' claims that national banks violated state law by charging late fees in addition to interest and that late fees were interest under the Act). But see Copeland v. MBNA America, N.A, 820 F. Supp. 537 (D.Colo. 1993) (holding that for federal jurisdiction purposes, federal law does not preempt state law because ordinary meaning of word "interest" in sections 85 and 86 of National Bank Act does not include late fees).[1] This is the backdrop against which this case must be evaluated.
III
We turn first to plaintiff's argument that the late payment charges incurred by him did not constitute allowable interest on the outstanding credit card debt balance and thus fall outside the preemptive scope of DIDA. Greenwood addressed an identical issue and concluded that a ten-dollar late payment charge on delinquent Discover card accounts was exportable interest. Greenwood, 971 F.2d at 828-31. We adopt the reasoning which undergirded this conclusion and which we find persuasive. First, Greenwood relied on section 521 "which allows a state bank to charge interest `at the rate allowed by the laws of the State ... where the bank is located.'" Id. at 829. By this provision, the laws of Delaware Greenwood Trust Company's home state provide the definition of the term "interest." Ibid. Delaware law explicitly states that delinquency charges imposed on late payments on a revolving credit plan constitute "interest." Del.Code. Ann. tit. 5, § 950 (1988). Plainly then, the charge at issue here as in Greenwood (this is the same bank and the same charge) must be considered "interest" under current Delaware law. Moreover, a Delaware court has previously characterized "interest," in part, to be "the penalty for the delays in the payment of a debt." Phillips v. Phillips, 91 A. 452, 455-56 (Del. Ch. 1914). That definition *536 of the term "interest" brings within its ambit the late payment charge at issue here which can readily be characterized as a penalty.
Nothing in Agostini v. Colonial Trust Co., 36 A.2d 33, 36-37 (Del. Ch. 1945), cited by plaintiff, suggests a contrary result. Agostini's conclusion that interest is compensation, measured by time, for a loan of money is nothing more than a methodology for computing interest to be evaluated under the state usury law. It does not delimit the charges theoretically includable within the concept of interest and cannot circumscribe the after-enacted 1988 Delaware law which specifically includes late charges within the interest rubric.
Further, as Greenwood observed, a number of federal courts have construed the term interest in section 85 of the NBA "to encompass a variety of lender-imposed fees and financial requirements which are independent of a numerical percentage rate." 971 F.2d at 829. According to Greenwood, when section 521 is read in pari materia with section 85, those lender-imposed fees would also be categorizable as exportable "interest" for state-chartered banks. Id. at 829-30.
More to the point, six federal district court decisions have recently determined that late payment charges on credit cards, like the charge in dispute here, are "interest." See Ament v. PNC Nat'l Bank, 849 F. Supp. 1015 (W.D.Pa. 1994); Watson v. First Union Nat'l Bank, supra, 837 F. Supp. 146; Goehl v. Mellon Bank, supra, 825 F. Supp. 1239; Tikkanen v. Citibank, N.A., 801 F. Supp. 270 (D.Minn. 1992); Hill v. Chemical Bank, supra, 799 F. Supp. 948; and Nelson v. Citibank, N.A., 794 F. Supp. 312 (D.Minn. 1992). Hill is particularly noteworthy because it dealt with a state-chartered bank and because it held that the late payment charge at issue there fell within the preemptive scope of DIDA § 521 because it was "interest."
Plaintiff attempts to distinguish the federal case law relied upon in Greenwood by asserting that those cases deal with "upfront lending charges," rather than with charges for the late payment of *537 the outstanding credit card debt. To us, this distinction is unpersuasive. The point is that the charges characterized as "interest" by the federal courts were not "compensation, measured by time, for a loan of money." Instead, the charges were generally flat fees, like the late payment charge in dispute here. The federal courts effectively categorized those flat fee charges as "interest" for purposes of section 85 of the NBA. Tikkanen, 801 F. Supp. at 276-78; Hill, 799 F. Supp. at 952-54, Nelson, 794 F. Supp. at 316-21. See also Fisher v. First Nat'l Bank, 548 F.2d 255, 258-61 (8th Cir.1977) (where the court impliedly considered a five-dollar flat fee authorized by the national bank's home state for cash advances on a credit card made in a second state to be a component of "interest" which could be imposed by the national bank under the "most favored lender" doctrine).
In light of this federal case law, we think Greenwood correctly concluded that federal common law includes late payment charges within the meaning of the term "interest" for purposes of exportation under the Marquette rationale. 971 F.2d at 825.
Greenwood's final ground for concluding that the bank's ten-dollar late payment charge was exportable interest involved "the rulings and informal opinion letters of the various agencies charged with interpreting the meaning of section 85 and section 521." 971 F.2d at 830. Those rulings and opinion letters almost uniformly indicate that late payment fees are includable as "interest" for purposes of section 85 of the NBA and section 521 of the DIDA. Ibid. (citations omitted).
We are fully satisfied with the reasoning of Greenwood and adopt it here. Section 521 must be construed in pari materia with section 85; such construction compels the conclusion that late payment charges are exportable interest charges under DIDA § 521.
IV
Plaintiff's remaining argument on appeal is that even if his New Jersey statutory claims were properly dismissed, his common *538 law claims for breach of contract and for conversion were not preempted by DIDA § 521. His contention is that these claims survive under the reasoning of Cipollone v. Liggett Group, Inc., ___ U.S. ___, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992).
The preemption principle is based on the supremacy clause of the United States Constitution, and requires that state law yield to federal law where the two are not consistent or are in conflict. U.S. Const., art. VI, cl. 2; Feldman v. Lederle Lab., 125 N.J. 117, 133, 592 A.2d 1176 (1991), judgment aff'd as modified, 132 N.J. 339, 625 A.2d 1066 (1993); Miller v. Northwest Airlines, 253 N.J. Super. 618, 622, 602 A.2d 785 (App.Div. 1992). State statutes and common law may both be preempted by federal legislation. Dewey v. R.J. Reynolds Tobacco Co., 121 N.J. 69, 77, 577 A.2d 1239 (1990). "The essential question for any preemption analysis is `whether Congress intended that the federal regulation supersede state law.'" Ibid. (quoting Louisiana Pub. Serv. Comm'n v. Federal Communications Comm'n, 476 U.S. 355, 369, 106 S.Ct. 1890, 1899, 90 L.Ed.2d 369, 382 (1986)). See also Maher v. New Jersey Transit Rail Operations, 125 N.J. 455, 464, 593 A.2d 750 (1991).
Section 521 of DIDA, which states that "any State constitution or statute ... is hereby preempted for the purposes of this section," 12 U.S.C.A. § 1831d(a) (1988), is an express preemption of state law by Congress. The congressional intent underlying that preemption is explicitly set out in the first ten words of section 521, which state that it was enacted "[i]n order to prevent discrimination against State-chartered insured depository institutions." Ibid.
On appeal, plaintiff contends that his common law claims do not fall within the express preemptive ambit of section 521 because that section only preempts a "State constitution or statute." Plaintiff relies for this proposition on Cipollone in which the Supreme Court effectively stated that the term "state law" in a federal statute would include state common law for preemption purposes, but that the term "state statute or regulation" would *539 include only "positive enactments" by state legislatures and agencies. See Cipollone, ___ U.S. at ___, 112 S.Ct. at 2619-21, 120 L.Ed.2d at 425-27. Plaintiff reasons that section 521's preemptive language is expressly targeted only to "positive enactments" State constitutions and statutes and not to common law claims. Thus, according to plaintiff, his common law claims are not preempted.
The problem with plaintiff's contention is his implicit assertion that the Cipollone decision provides a bright-line test for the preemption of common law claims. Not so. Cipollone recognized that not all state common law claims were preempted because, for the purposes of the federal act under review there, "the common law is not of a piece." ___ U.S. at ___, 112 S.Ct. at 2621, 120 L.Ed.2d at 427. The Court then differentiated between those common law claims which actually contravened the congressional intent underlying the federal statute and those common law claims which did not contravene that intent; the common law claims which contravened congressional intent were preempted, while those which did not were not. ___ U.S. at ___, 112 S.Ct. at 2621-25, 120 L.Ed.2d at 427-31. Thus, as Cipollone recognized, the intent of Congress is the "ultimate touchstone" of a preemption analysis. ___ U.S. at ___, 112 S.Ct. at 2617, 120 L.Ed.2d at 422.
Here, the question is whether allowance of plaintiff's common law claims for breach of contract and conversion would contravene the congressional intent expressed in DIDA "to prevent discrimination against State-chartered insured depository institutions." 12 U.S.C.A. § 1831d(a). In our view, it would.
This is so because allowance of plaintiff's claims would restrain state-chartered banks which attempted to charge late payment fees to their out-of-state customers. National banks, however, could charge those fees without interference from common law claims like plaintiff's because national banks operate under section 85 of the National Bank Act. See Tikkanen, 801 F. Supp. at 279-80. State-chartered banks would therefore suffer a disadvantage in relation to national banks if plaintiff's common law claims were *540 allowed. This is precisely the type of discriminatory disadvantage which Congress expressly sought to eradicate through DIDA. For this reason, we hold that DIDA should preempt plaintiff's common law claims as well as his statutory claims.
Affirmed.
NOTES
[1] Upon remand, in an unpublished opinion, the state court dismissed plaintiff's claims upon defendant's motion for summary judgment. Copeland v. MBNA America, N.A., No. 92 CV 3909 (Colo.Dist.Ct. Denver July 9, 1993) (appeal filed). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540045/ | 974 A.2d 438 (2009)
408 N.J. Super. 206
STATE of New Jersey, Plaintiff-Appellant,
v.
Ross FINESMITH, Defendant-Respondent.
No. A-4543-07T4
Superior Court of New Jersey, Appellate Division.
Submitted October 28, 2008.
Decided July 13, 2009.
*439 Anne Milgram, Attorney General, attorney for appellant (Kenneth R. Sharpe, Deputy Attorney General, of counsel and on the brief).
Fox Rothschild, Lawrenceville and Brickfield and Donohue, attorneys for respondent (Alain Leibman and Paul B. Brickfield, on the joint brief).
Before Judges SKILLMAN, COLLESTER and GRALL.
The opinion of the court was delivered by
COLLESTER, J.A.D.
Pursuant to leave granted, the State appeals from that portion of the March 3, 2008 order limiting the temporal scope of a communications data warrant (CDW) issued pursuant to N.J.S.A. 2A:156A-29(c) and (e) to a two-week period. We reverse.
In October 2004, the New Jersey State Police Digital Technology Investigation Unit received information from the Wyoming Internet Crimes Against Children Task Force that certain Internet Protocol (IP) addresses assigned to New Jersey residents were making or had been making available pornographic videos and images involving children to others through peer-to-peer filing networks accessed through downloading and installing a file sharing program.[1] As the possession, receipt, and distribution of child pornography is prohibited by N.J.S.A. 2C:24-4b(5)(a) and (b), State Grand Jury subpoenas were issued to Internet Service Providers (ISPs) for subscriber information on the IP addresses. Optimum Online responded to the subpoena by disclosing that one IP address was in the name of Leslie Finesmith in Basking Ridge. Further investigation by the State Police disclosed that Leslie Finesmith is the wife of defendant, Dr. Ross Finesmith, a medical doctor and pediatric neurologist, who lives at the Basking Ridge address with his wife and three daughters, ages eleven, fourteen, and fifteen.
On January 27, 2005, the State Police executed a search warrant on the Basking Ridge residence. Six computers and related media were seized: two desktop computers in the daughters' upstairs bedrooms, two on the first floor, one in an area of the basement used as a home office, and a laptop found in defendant's Honda minivan parked in the garage.[2] Forensic analysis of the desktop computer in the home office identified child pornography offered in the same manner as the child pornography found by Wyoming *440 authorities. Subsequent analysis of the laptop computer also revealed the presence of child pornography that was last viewed the day before the date of execution of the search warrant.
Defendant was arrested on the date the warrant was executed. On July 14, 2005, he was indicted by the State Grand Jury on charges of second-degree endangering the welfare of a child by distribution of child pornography, in violation of N.J.S.A. 2C:24-4(b)(5)(a) (count one), and fourth-degree endangering the welfare of a child (possession of child pornography), in violation of N.J.S.A. 2C:24-4(b)(5)(b) (count two).
The central issue in controversy is the identity of the person who downloaded the child pornography on to the home office desktop computer and the laptop computer. The defense strongly contests that defendant was the "offeror" and possessor of the child pornography and has suggested another member of the household was responsible. To rebut any such defense, the State made an ex parte application to the trial judge[3] for a CDW to require an ISP called "DocISP," a provider of email services for doctors, to provide electronic communications of the defendant as a registered user including:
Emails with attachments, opened or unopened; subscriber name, address, contact numbers; all associated information including but not limited to billing information; method and history of payment; usage; access; internet protocol logs; customer service records; static or dynamic protocol address; and any information located on the DocISP service or other databases that indicate internet sites, chat rooms or any activity or service provided by or through DocISP to its associated user Ross Finesmith.
The application sought the stored electronic content without a limitation as to the temporal scope. The State subsequently advised the court that the available stored electronic content for DocISP included electronic mail received and undeleted by the user for the period of June 28, 2004 to January 28, 2005.
The affidavit of Detective Sergeant Gorman in support of the CDW stated that on January 23, 2005, the person using the laptop accessed defendant's DocISP email account, read at least six messages, and deleted 123. The user also visited three medical sites and attempted to read a news article titled "Pediatric Patients Get Poor Follow-Up After ADHA Diagnosis," on one of the sites. About thirty minutes later, during the same computer session, the user downloaded a peer-to-peer internet file sharing program and used it to download files named with child pornography keywords.
The trial judge declined to consider the State's CDW application on an ex parte basis, requiring instead that the State present the application as a motion with notice to defendant. At oral argument the Deputy Attorney General argued that the State sought the stored electronic content in the DocISP account for an extended period to show defendant's regular use of the account and prove by circumstantial evidence that he downloaded child pornography on January 23, 2005. While the State contended it was entitled to all stored electronic content on DocISP for its investigation, it agreed to limit its CDW application to the one-year period from June 28, 2004 to the January 27, 2005, date of the execution of the search warrant.
The judge found that the State made a sufficient showing for issuance of the *441 CDW, but limited the timeframe to the two-week period before the date of the execution of the search warrant:
Frankly, the State has met the burden of showing that material may be relevant to facts in this case. The investigation is ongoing in the respect that the case is still open. The case has not been resolved, so it's an ongoing investigation. There has been in the course of this case an attempt to indicate that others in the household were using the computer, and so information as to who actually was on the site that day would be quite relevant.
In reviewing the affidavit supplied by the detective, it seems that less than 30 minutes prior to downloading of the installing of the Shareaza peer-to-peer file which led to the downloading of the child pornography matters that the person on the computer was using doc ISP and plugging into medicallymedical-type of information that is probable that only a medical physician would tie into. Also, there's information in the case that particularly the laptop is used apparently exclusively by the defendant, Dr. Finesmith.
Part of the affidavit indicates that the inquiry will lead to evidence tending to show the identity of the user who accessed the defendant's doc ISP electronic mail account on the date in question on the defendant's laptop computer, provide information as to the person authorized to access the electronic mail, provide information as to the identity of user of the laptop on January 23rd.
[The] State provided sufficient information to establish probable cause for the issuance of the CDW. It's apparent from the investigation that the medical websites were accessed on January 23rd, sites that would probably only be of interest to a medical doctor. [The] State is attempting to obtain the evidence with regard to that to further their investigation. Certainly Rules of Discovery required that the information be disclosed.
I do also find that the scope is excessive. The timeframe is very excessive, and I'm going to narrow the scope with regard to the inquiry [to] a timeframe prior to the seizure of the computer on January 27, 2005. I understand the State's problem to establish a course of conduct as to who would access this particular site. If there is only one access within a timeframe prior the question is still open as to who would seek access to that particular site. On the other hand, if there's a course of conduct that is relevant to the case to establish who was using that site, it might be quite relevant to further the investigation to disclose who was on the computer on the date in question. So with regard to the timeframe, I'm going to expand the timeframe to a fourteen-day period prior to the 27th which makes it January 13. So during that two-week timeframe, it will be able to show who was accessing and using that particular site. So, I'll modify the request to that timeframe.
On May 21, 2008 we granted the State's motion for leave to appeal from the two-week limitation of the CDW imposed by the trial court. Defendant did not seek leave to appeal from the issuance of the CDW.
The State argues that the fourteen-day limit placed on the CDW unduly and erroneously restricts the State's investigation into the identity of the user of the DocISP account who possessed and made available child pornography on January 23, 2005, because the timeframe is insufficient to show a pattern of use of the account and fails to consider that within that timeframe *442 defendant may not have used the DocISP account in his usual manner. In response, defendant claims the trial judge properly limited the State's overly broad application for a CDW.
Under the New Jersey Wiretapping and Electronic Surveillance Control Act, a CDW is different from a wiretap order in both the nature of the communication to which it is addressed and the standard for its issuance. A wiretap order permits the interception by law enforcement of a communication contemporaneous with the transmission while a CDW is directed to acquisition of communications in post-transmission electronic storage kept by an electronic communication service or remote computing service for reasons of backup protection for the communication. N.J.S.A. 2A:156A-2 to 156A-29; White v. White, 344 N.J.Super. 211, 220, 781 A.2d 85 (Ch.Div.2001); see generally Fraser v. Nationwide Mut. Ins. Co., 135 F.Supp.2d 623, 633-34 (E.D.Pa.2001); Fishman and McKenna, Wiretapping and Eavesdropping, supra, § 2.5. By definition, an electronic communication in storage cannot be "intercepted" because it is not contemporaneous with the transmission.[4]See Steve Jackson Games, Inc. v. U.S. Secret Serv., 36 F.3d 457, 462 (5th Cir.1994); Wesley Coll. v. Pitts, 974 F.Supp. 375, 389 (D.Del.1997), aff'd o.b., 172 F.3d 861 (3rd Cir.1998); Bohach v. City of Reno, 932 F.Supp. 1232 (D.Nev.1996).
As a result, a CDW is not subject to the more restrictive procedures and enhanced protections of the Wiretap Act, which include a showing of necessity because normal investigative procedures have failed, N.J.S.A. 2A:156A-10. Instead, the statutory standard for a CDW requires only a showing of "reasonable grounds to believe that the record or other information pertaining to a subscriber or customer of an electronic communications server is relevant and material to an ongoing criminal investigation." N.J.S.A. 2A:156A-29A(e).
In granting the CDW, the trial judge properly found that the information sought by the State was relevant and material to its investigation. However, the court's restriction of the CDW to the two-week timeframe was arbitrary since no reason was given for the limitation other than labeling the State's request "excessive" without any basis in the record to substantiate that conclusion.
Because the State seeks to show a pattern of use of defendant's DocISP account, a longer period than two weeks is appropriate for the State's investigation into the identification of the person who downloaded child pornography onto the laptop computer. We find no grounds to deny the State's requested period of one year as a reasonable timeframe for its investigation.
Reversed.
NOTES
[1] By installing peer-to-peer technology, an individual user is connected to all users of that peer-to-peer software without need for a centralized server in such a network. See generally, Clifford S. Fishman and Anne T. McKenna, Wiretapping and Eavesdropping, § 21.3, pp. 21 (West 3d ed. 2007).
[2] In a separate opinion, we have upheld the denial of defendant's motion to suppress evidence of the laptop and its contents. State v. Finesmith, 406 N.J.Super. 510, 968 A.2d 715 (App.Div.2009).
[3] The trial judge was and is designated to receive applications and enter orders authorizing interceptions of electronic communications under N.J.S.A. 2A:156A-8.
[4] N.J.S.A. 2A:156A-2 defines "electronic storage" as follows:
(1) Any temporary, intermediate storage of a wire or electronic communication incidental to the electronic submission thereof; and (2) any storage of such communication by an electronic communication service for purposes of backup protection of the communication. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540067/ | 974 A.2d 914 (2009)
2009 ME 68
Jason LABONTE et al.
v.
Jeffrey THURLOW et al.
Docket: Yor-08-549.
Supreme Judicial Court of Maine.
Submitted on Briefs: June 4, 2009.
Decided: July 9, 2009.
Peter L. Hatem, Esq., Scarborough, ME, for Jeffrey Thurlow and John Thurlow.
James L. Audiffred, Esq., Saco, ME, for Amy Labonte and Jason Labonte.
Panel: SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, and GORMAN, JJ.
PER CURIAM.
[¶ 1] John and Jeffrey Thurlow appeal from a judgment entered in the Superior Court (York County, Fritzsche, J.) contending that the court erred in determining the reimbursement owed by them for the cost to construct the common portion of the driveway they share with Jason and Amy Labonte.[1] We affirm the judgment and impose sanctions against the Thurlows for filing a frivolous appeal.
[¶ 2] This is the second time the parties have appealed this case. See Labonte v. Thurlow, 2008 ME 60, 945 A.2d 1237. The Labontes and the Thurlows owned abutting properties in Saco. In April *915 2006, the Labontes filed a two-count complaint against the Thurlows seeking reimbursement for the cost to construct and pave the common driveway shared by both parties. The court granted the Labontes' claim as to the paving costs (Count II), but denied their claim as to the driveway's construction costs (Count I). The Labontes appealed, and we vacated the judgment as to Count I and remanded the case for the court to "determine the correct amount of reimbursement reflecting one-third of the cost to construct the `common portion of the driveway,' as defined in the deed." Labonte, 2008 ME 60, ¶ 13, 945 A.2d at 1241.
[¶ 3] The court held a hearing in September 2008. The court determined that the common portion of the driveway, as defined by the deed, extended only as far as the Thurlows' driveway, not to the Labontes' driveway as claimed by the Labontes. The court reasoned that the language in the deed referencing the "first driveway" referred to the driveway that was first in order, not first in time, and that because the Thurlows' driveway was first in order, the common portion of the driveway extended only to the Thurlows' driveway.
[¶ 4] In calculating the amount owed by the Thurlows for the cost to construct the common portion of the driveway, the court excluded paving costs, which had already been accounted for in Count II, and which had not been appealed. The court reasoned that because the Thurlows never appealed the paving costs, and because we remanded the case solely for a determination of the amount owed for construction costs, it had no reason to consider the costs of paving on remand.
[¶ 5] At the end of the hearing, the court granted judgment in favor of the Labontes in the amount of $5406.98 plus pre-judgment and post-judgment interest. The court did not issue findings of fact and conclusions of law, and neither party filed a motion for further findings pursuant to M.R. Civ. P. 52(a). The Thurlows subsequently filed this appeal, but failed to file an appendix as required by M.R.App. P. 8(a).
[¶ 6] The Thurlows contend that the cost to construct the common portion of the driveway includes the cost to pave the driveway, and that because they have already paid a portion of the driveway's paving costs, the amount of damages awarded by the court should have been $4326.67, not $5406.98. Contrary to this contention, the court did not err in its calculation. The court properly excluded paving costs when computing the amount of damages owed by the Thurlows for the driveway's construction costs. In the first appeal of this case, the Thurlows did not challenge the amount they owed for the driveway's paving costs, and we explicitly remanded the case for the court to determine the amount owed by them for the driveway's construction costs. See Labonte, 2008 ME 60, ¶¶ 6, 13, 945 A.2d at 1239, 1241. That determination did not include paving costs. The Thurlows do not cite any authority in support of their position, and in the absence of a request for findings of fact and conclusions of law, there is no basis for disturbing the court's judgment.
[¶ 7] We further conclude that the Thurlows' appeal is frivolous. Given the Thurlows' failure to provide any legal authority for their position, and the cursory discussion of the issue in their brief, the Thurlows could not have expected to prevail on such a meritless appeal. Furthermore, the Thurlows failed to file an appendix as required by M.R.App. P. 8(a). Rule 8(a) explicitly provides that "the party who files the first notice of appeal shall file an appendix to the briefs." M.R.App. P. 8(a) (emphasis added). We therefore award *916 the Labontes $500 towards their legal fees on appeal in addition to costs and expenses pursuant to M.R.App. P. 13(f).
The entry is:
Judgment affirmed with sanctions against John Thurlow and Jeffrey Thurlow in the amount of $500. Remanded to the Superior Court for an assessment of costs and expenses against John Thurlow and Jeffrey Thurlow.
NOTES
[1] Jason and Amy Labonte cross-appeal, contending that the court erred in defining the common portion of the driveway. We find that their argument is without merit and do not address it further. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540081/ | 95 B.R. 197 (1989)
In re Allan Ray JOHNSON aka Allan R. Johnson, Al Johnson, and Teresa Darleen Johnson aka Teresa D. Johnson fka Teresa D Lamb fka Teresa D. Beauchamp, Debtors.
Bankruptcy No. 87-B-05687-M.
United States Bankruptcy Court, D. Colorado.
January 6, 1989.
James R. Waltz, Denver, Colo., for debtors.
Sally J. Zeman, Denver, Colo., for Chapter 13 trustee.
William M. Trencher, Tax Div., U.S. Dept. of Justice, Washington, D.C., for the U.S.
MEMORANDUM OPINION AND ORDER
SIDNEY B. BROOKS, Bankruptcy Judge.
THIS MATTER comes before the Court on a series of motions and objections regarding various filed proofs of claim. They include: (1) Internal Revenue Service's Motion in Opposition to Debtors' Proof of Claim filed for the IRS, (2) Debtors' Objection to proofs of claim filed by the IRS and Colorado Department of Revenue, and (3) Chapter 13 Trustee's Motion (a) to reject late filed proofs of claim and (b) to reject Chapter 13 plan provisions requiring distribution to secured creditors that do not file a proof of claim. Additionally, the IRS and Chapter 13 Trustee seek a determination that notice to certain creditors of the case, by the Debtors, was inadequate and defective. Certain of the issues presented are of first impression in this District. A hearing on the motions was held and, by agreement of the parties, briefs and affidavits on the issues were submitted to and considered by the Court.
Background and Findings of Fact
The events, communications, and acts of the parties are in dispute as reflected by the various statements of fact and affidavits submitted to the Court. The facts most pertinent to the issues before the Court, particularly with respect to the adequacy of notice to creditors, are found by *198 the Court to be as follows:[1]
1. On May 18, 1987, the Debtors filed their Chapter 13 bankruptcy Petition, Chapter 13 Plan, and Chapter 13 Statement with this Court.
2. As evidenced by a May 18, 1987 certificate of mailing, the Debtors served a copy of a Notice of Automatic Stay on five of their fourteen listed creditors, including the IRS through its local revenue officer responsible for the Debtors' tax problems, Victor Gabriella,[2] and the Colorado Department of Revenue.
3. A Section 341 meeting of creditors was held on June 16, 1987. Pursuant to Bankruptcy Rule 3002(c), the time for filing proofs of claim expired on September 14, 1987.
4. The practice and policy of the Office of the Clerk of the United States Bankruptcy Court for the District of Colorado in May of 1987 required debtors or debtors' counsel to provide the Clerk with a typed card for each scheduled creditor ("Cheshire Cards"). See, Local Rule 3(d). From these cards, the Clerk prepares a mailing label matrix used to send out notices in each bankruptcy case.
5. The Chapter 13 Trustee, as a matter of routine procedure, had its standard omnibus notice of bankruptcy filing mailed on May 20, 1987 to Debtors' creditors, including the Colorado Department of Revenue but, evidently, not the IRS. The standard notice discloses to creditors the date set for the Section 341(a) meeting, the automatic stay, and other important items, which provides, in pertinent part, that:
In order to have his claim allowed so that he may share in any distribution from the estate, a creditor must file a claim, whether or not he is included in the list of creditors filed by the debtor. Claim [sic] which are not filed within 90 days after the above date set for the meeting of creditors will not be allowed, except as otherwise provided by law.
6. On June 26, 1987, the Debtors filed an Amended Chapter 13 Plan, a Motion to Confirm, and a Notice of Hearing on the Motion to Confirm. As evidenced by a June 26, 1987 certificate of mailing, Debtors sent copies of those documents to the "Internal Revenue Service, Odgen, Utah 84201," but not to the IRS' local agent and not to the Colorado Department of Revenue.
7. On July 20, 1987, Judge Roland J. Brumbaugh confirmed the Amended Plan. In addition to attorney's fees and trustee's fees, the confirmed Plan provides for payment of priority claims (federal and state tax liability), a secured claim of the IRS, and $700.00 pro rata to general unsecured creditors.
8. Six proofs of claim were filed in this case. General unsecured creditors timely filed claims numbered one and two which are not disputed or at issue here. On October 16, 1987, the Debtors' attorney filed claims numbered three, four, and five on behalf of the: (a) IRS (secured $1,300.00; unsecured $564.26), (b) IRS (priority $5,426.00), and (c) Colorado Department of Revenue (priority $264.00), respectively. The IRS filed claim number six on December 7, 1987, which amends and consolidates claims numbered three and four, in the sum of $11,596.54, or $4,306.28 more than the IRS claim filed by the Debtors.
9. On or about May 31, 1988, the Trustee provided a summary of claims to the Debtors' attorney. The summary indicates that proofs of claim numbered three through six were not timely filed and that the Trustee would not distribute on these claims.
10. On June 9, 1988, the Debtors filed Objections to Proofs of Claims. Debtors proposed to disallow the late filed priority *199 tax claims but to allow payment of the secured IRS tax claim.
11. Special instructions for proper mailing to the IRS and Colorado Department of Revenue, among others, were issued by the Clerk of the Bankruptcy Court. The notice provided precise mailing addresses for the IRS and Colorado Department of Revenue. The special mailing addresses were implemented during 1987, but notification of the addresses for practitioners was not sent out until about December 1987. Debtors' mailings were to addresses different than those provided by the Clerk of the Court.
12. The responsible Revenue Officer at the IRS, Gabriella, maintains by sworn declaration that he had no contact and no communications whatsoever with, or from, the Debtors, their attorney or the Bankruptcy Court, at any time after May 1, 1987, until contacted by Justice Department attorneys in September 1988. The IRS officer specifically denies receiving any notices or mailings relative to the bankruptcy.
13. The Deputy Clerk and Supervisor of Claims in the Office of the Bankruptcy Court stated, by sworn declaration, that the Court file does not contain the necessary Cheshire Cards for correct mailing to the IRS. It is further stated that the "first meeting notice" would have been mailed to creditors, but only to those creditors listed and "included in the cards, as required by the local procedures at that time."[3]
Opinion and Order
The motions and requests for relief can, under the circumstances, be reduced to three issues, appropriately framed by questions.
I. Is a proof of claim required to be filed by, or on behalf of, a secured creditor in order for that creditor to receive distributions under a Chapter 13 plan?
This Court concludes that, yes, a proof of claim must be timely filed by, or for and on behalf of, a creditor with a secured claim, in order for that creditor to receive distributions through the Chapter 13 Trustee in a Chapter 13 plan. This conclusion is supported by the design and specific language of the Bankruptcy Code and Rules, the case law, and the need for efficient, responsible management of Chapter 13 cases, as well.
Specific Code provisions concerning recognition and treatment of Chapter 13 creditor claims, namely Sections 501, 502 and 1325, and Bankruptcy Rules implementing the Code, Rules 3002, 3004 and 3021 make the conclusion almost inescapable that creditors with secured claims must timely file proofs of claim in Chapter 13.
This conclusion starts with a recognition that no specific Code provision requires any creditor to file a proof of claim, ever. It is strictly permissive. Section § 501. However, any creditor may file a proof of claim, and failing that, a co-obligor, guarantor, trustee or the debtor may then file a proof of claim for, or on behalf of, a creditor. 11 U.S.C. § 501(b), (c); B.R. 3004, 3005.[4] A filed claim is, generally, the instrument *200 to establish recognition and treatment of a creditor's claim in a bankruptcy case.
If a creditor wants its unsecured claim, or undersecured portion of a secured claim pursuant to 11 U.S.C. § 506(a), to be allowed and paid, in whole, or in part, "then it must file a proof of claim in accordance with" B.R. 3002.[5] (Emphasis added.) The creditor must file a proof of claim within 90 days after the first date set for the Section 341 meeting, or if filed by a debtor, as here, then it must be filed within 30 days after that initial 90 day period of time. B.R. 3004.[6] Thus, while the Rules are clear that unsecured creditors must file a proof of claim, there is no comparable, express mandate for secured creditors.[7]
In a Chapter 13, the Court is to confirm a plan which provides for distributions on "each allowed unsecured claim . . ." and ". . . each allowed secured claim . . ." (emphasis added). 11 U.S.C. § 1325(a)(4) and (5). Distribution under a confirmed plan is then to be made by the Trustee "in accordance with the plan." 11 U.S.C. § 1326(a)(2). This distribution scheme is reinforced and implemented at B.R. 3021 where it provides that "[a]fter confirmation of a plan, distribution shall be made to creditors whose claims have been allowed. . . ."
The operative term here is "allowed" claim. Allowance of a claim is governed by 11 U.S.C. § 502(a) which provides in pertinent part:
A claim . . . proof of which is filed under section 501 of this title, is deemed allowed, unless a party . . . objects.
The language is clear and unqualified, to wit: Claims, proof of which has been filed under Section 501, are "deemed allowed." The "allowance" of claims are then subject only to specified exceptions or limitations, or to reconsideration by the Court and possible disallowance. 11 U.S.C. § 502(b), (d), (e), (j).[8] The meaning of Section 502 is not ambiguous:
Section 502(a) means nothing if its essential significance is not that the condition precedent to a claim or interest being deemed allowed is that proof of such claim or interest shall have been filed pursuant to Section 501 and, in accordance with the procedural implementation of that section, within the fixed time within which appropriate proof of claim or interest must be filed. (Emphasis added.)
3 Collier on Bankruptcy, para. 502.01 at 502.09.
*201 Other bankruptcy courts have used the same analysis and reasoning to also conclude that creditors must file proofs of claim to have a secured claim, as well as an unsecured claim, allowed and paid in a Chapter 13 case. In re Gleason, 89 B.R. 177 (Bankr.N.D.Ala.1988); In re Thomas, supra, footnote 7. In re Rogers, 57 B.R. 170 (Bankr.E.D.Tenn.1986).[9]But see, In re Simmons, 765 F.2d 547 (5th Cir.1985).[10] The conclusion of this Court and other likeminded Bankruptcy Courts is, perhaps, best stated in Collier on Bankruptcy, 15th Ed., para. 1327.01 at p. 1327-2:
The determination of whether a claim is allowed or disallowed is essential since only an allowed claim is to receive a distribution under a Chapter 13 Plan; . . . distributions under a Chapter 13 plan are made only to creditors with allowed claims.
Collier on Bankruptcy, 15th Ed., para. 1327.01 at p. 1327-2.
This Court is also persuaded that the practical administrative aspects of Chapter 13 impel a ruling that proof of a secured claim should be filed by creditors. Confirmation of a creditor's respective status and claim amount, the orderly and correct distribution of funds, bonding requirements, and protection for the debtor all bode for the filing requirement.[11]
Finally, this Court finds it significant, if by implication only, that only in Chapter 11's, at Section 1111(a) of the Code, is there an express, explicit provision for a creditor to not file a proof of claim yet still have an allowed claim and qualify for distribution in a bankruptcy case. Only where a creditor is correctly identified, is not listed by the debtor as holding a disputed, contingent or unliquidated claim, and is a creditor in a Chapter 11 case, is it deemed "not necessary . . . to file a proof of claim . . ." yet still have a valid claim.[12] No similar treatment is accorded to Chapter 13 creditors, secured or unsecured.
II. When must a proof of claim be filed in Chapter 13 by a secured creditor?
This Court concludes that a creditor with a secured claim, as well as one with an unsecured claim, must file its proof of claim within 90 days after the first date set for the meeting of creditors called pursuant to Section 341(a), if it desires to receive distribution through the Chapter 13 Trustee, under a confirmed plan. Although there is no explicit Code or Rule provision requiring filing a secured claim within 90 *202 days, B.R. 3002(c) provides that in Chapter 7 and 13 cases:
[A] proof of claim shall be filed within 90 days after the first date set for the meeting . . . "subject only to select, narrow exceptions."[13]
By inference from the Code, coupled with a need for expeditious management of and certainty in Chapter 13 cases, the 90 day period is appropriate and necessary. See, In re Thomas, supra at 616.
In this case the only recognized exception to the 90 day rule which might have accorded to the creditors an extension of time to file a late proof of claim is B.R. 3002(c)(1):
On motion of the United States, a state, or subdivision thereof before the expiration of such period and for cause shown, the court may extend the time for filing of a claim by the United States, a state, or subdivision thereof. B.R. 3002(c)(1).
Here, the creditors, the IRS and the State of Colorado, filed proofs of claim after expiration of the 90 day limit but did not file any motions to extend the time. In view of the strict Code and Rule limitations, and case law, on extending the period of time to file proofs of claim, the Court is convinced that only under truly extraordinary, compelling circumstances can late filed claims be allowed and paid in a Chapter 13 case. In re Bruce and Angela Walkington, Bankruptcy Case No. 87-B-12009-E, Judge Matheson, September 19, 1988 [1988 WL 147150]; In re Eddy L. and Susan K. Ritchie, Bankruptcy Case No. 87-B-05173-E; June 22, 1988 [1988 WL 147149]. (Both unpublished opinions.)
The Debtors had the opportunity to, and did in fact, file a proof of claim for each of these creditors, but did so in an even more tardy manner. Since the Debtors were required to file those creditors' claims within the same 90 day period, they too will not, absent truly extraordinary, compelling circumstances, be accepted, or deemed, as having been filed timely.[14]
III. Did the IRS and Colorado Department of Revenue receive adequate notice of Debtors' Chapter 13 Case?
Timely and meaningful notice to interested parties is to legal proceedings here bankruptcy what a free press is to democracy. It is the instrument that makes the system work. Without adequate notice to parties in legal proceedings, their rights and opportunities mean nothing.
This Court has previously stated its view on the importance of timely and meaningful notice:
Procedural due process and adequate notice to the [creditors] are not mere courtesies to be dispensed with for the sake of convenience or simplicity. The United States Supreme Court has firmly implanted due process for litigants or adversaries as a right, not an option:
[A]n elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. Mullane v. Central Hanover Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed. 865 (1950). Reliable Elec. Co., Inc. v. Olson Const. Co., 726 F.2d 620, 622 (10th Cir.1984).
In re Bankwest Boulder Indus. Bank, 82 B.R. 559, 561 (Bankr.D.Colo.1988).
With specific regard to notice and due process for creditors filing claims, the Tenth Circuit has spoken without equivocation:
In Reliable Elec. Co., Inc. v. Olson Constr. Co., 726 F.2d 620, 623 (10th Cir. 1984), we discussed the requirement that adequate formal notice must be given to known creditors to be constitutionally adequate. Even if a creditor is aware of bankruptcy proceedings, there must be reasonable notice before a claim will be barred for untimeliness. [Citations omit *203 ted.] Inquiry notice of the bar date, in this situation, is not enough. . . . The responsibility does not lie with the creditors or claimants to search out what is required procedurally of them in this situation. The law provides them with a right to appropriate, effective notice. [Citations omitted.] Actual knowledge of the filing of a bankruptcy does not negate the statutory notice requirements nor does it place a duty on creditors to inquire regarding the time limitations for filing claims. [Citations omitted.]
In re Herd, 840 F.2d 757, 759 (10th Cir. 1988).
The record in this case reflects inadequate notice to the IRS and Colorado Department of Revenue to allow them to both timely file their respective claims and to object to, or otherwise participate in, the bankruptcy proceedings and confirmation of the plan. This conclusion is derived from rather obvious deficiencies such as Debtors failure to mail their Amended Plan, Motion to Confirm (Amended) Plan, and Notice of Hearing (1) to the Colorado Department of Revenue, or (2) to the IRS at (a) a specific, appropriate IRS office address, preferably to the attention of (i) a designated department, or (ii) an authorized Revenue Officer's attention, or (b) in accordance with local Court requirements.[15] This conclusion is reinforced by the hopelessly confusing, inconsistent and, at times, contradictory recitations of factual events and communications between the parties and, significantly, the Debtors own documents and mailing practices.
Notices to and treatment generally of government agencies, are often subject to special provisions and procedures.[16] It creates difficulties for debtors and their lawyers, but they are mandated nonetheless. Recognizing this, some special attention ought to be given to insure timely and meaningful notice to government agencies, as well as other creditors.
Conclusion
Notice to the IRS and Colorado Department of Revenue was deficient and defective. Those creditors are, under these specific facts, entitled to consideration of their respective late filed claims pursuant to 11 U.S.C. § 502(j) and those claims will be allowed by the Court. Lack of timely and meaningful notice, i.e., due process, fulfills the requisite stated above that upon a showing of extraordinary and compelling reasons, the period of time might be extended within which a creditor may file a proof of claim.
IT IS THEREFORE ORDERED AND ADJUDGED that the proofs of claim numbered five and six, filed for the Colorado Department of Revenue and the IRS, respectively, are allowed. The Chapter 13 Trustee's Motion to Reject Late Filed Claims, those claims of the IRS and Department of Revenue, is denied. Debtors' objections to timeliness of the IRS claim filed by the IRS and the Colorado Department of Revenue claim filed by the Debtors are denied. Trustee's Motion to Reject Chapter 13 Plan Provisions requiring distribution to secured creditors that do not file a proof of claim is denied, inasmuch as the IRS did file its proof of secured claim herein. Debtors are granted ten (10) days after this Order becomes final and non-appealable to apply to modify their Chapter 13 Plan, if they so desire.
NOTES
[1] The recitations of facts submitted by the parties are long, convoluted and disputed. The parties even disagree, for example, as to the date on which the Debtors filed their Petition in bankruptcy. The Court has culled out those facts which are clearly reflected in the Court's file, those supported by sworn affidavit, and those which are not otherwise disputed.
[2] The notice was addressed to: "Federal Income Tax," not to the Internal Revenue Service or other agency.
[3] There is a good deal of disparate testimony by affidavit, argument, and proposed findings of fact between the parties on the issue of Cheshire Cards filed, status of files, what was or should have been received in the mail, "missing" or inconsistent documents, or other curious or inexplicable circumstances. The Court has carefully compared this information. It concludes that, under the circumstances, notice simply does not appear to have been effected timely or reliably. There is too little evidence which is clear and not equivocal that supports the Debtors' position that all Cheshire Cards and notices were supplied in correct form and properly addressed for mailing in a correct and timely manner. Indeed, most evidence reveals some inconsistency in communications, and inadequate and unreliable notice and mailing procedures in the case, specifically including those undertaken by the Debtors.
[4] It is noteworthy that the principal reason other parties, particularly debtors, were expressly given the right to file claims for and on behalf of their creditors who failed to timely file their own claims, was to protect debtors, not necessarily the creditors, and to assure treatment of non-dischargeable tax debts under Sections 507(a) and 523(a)(1) of the Code. See, (H.R. Rep. No. 95-595, 95th Cong. 1st Sess. 352 (1977); S.Rep. No. 95-989, 95th Cong.2d Sess. 61 (1978), U.S.Code Cong. & Admin.News 1978, p. 5787; Norton Bankr. L. & Prac., Rules, Editors' Comment (1987) at p. 186.
"In liquidation and individual repayment plan cases, the trustee or the debtor may file a proof of claim under [subsection (c)] if the creditor does not timely file. The purpose of this subsection is mainly to protect the debtor if the creditor's claim is nondischargeable. If the creditor does not file, there would be no distribution on the claim, and the debtor would have a greater debt to repay after the case is closed than if the claim were paid in part or in full in the case or under the plan. (HR Rep No. 95-595, 95th Cong, 1st Sess 352 (1988); S Rep No. 95-989, 95th Cong, 2d Sess 61 (1978)." Norton Bankr. L. & Prac., Code at p. 270.
[5] "An unsecured creditor or an equity security holder must file a proof of claim or interest in accordance with this rule for the claim or interest to be allowed, except. . . ." B.R. 3002(a).
[6] The additional 30 days for a debtor to file a proof of claim, if one was not filed by the creditor, became effective for cases filed after August 1, 1987. This case was filed before August 1, 1987, thus the Debtors would have had to file their creditor's claim, also, within the initial 90 day period. The distinction is not significant in this case, however, because the Debtors failed to file the creditor's claim timely under either provision. See, In re Starkey, 49 B.R. 984 (Bankr.D.Colo.1984), a pre-1987 case.
[7] A detailed and extended discussion of the inconsistencies in filing requirements found in the rules, particularly B.R. 3002, is found at In re Thomas, 85 B.R. 608, 613 (Bankr.N.D.Ala.1988). That recital of history and reasoning, coupled with the history and reasoning at pages 613-615 relating to the inclusion of the term "allowed claims" in Section 1325(a) is, in this Court's opinion, thoughtful and useful, and is adopted as support for the within opinion by the Court.
[8] Debtors quoted this Court in a prior decision, In re Hermansen, 84 B.R. 729, 734 (Bankr.D. Colo.1988) that: "A claim is deemed allowed unless . . ." and "the Judge did not distinguish between `claim and proof of claim' [thus] leaving open the interpretation that a claim . . . properly scheduled . . . may be allowed." The Debtors' conclusion that the Court was "leaving open the door" is hardly a conclusive or precedential application of the law binding in all subsequent similar circumstances.
[9] "To the extent Rule 3002(a) appears to say that allowance of a secured claim in a chapter 13 case does not require the filing of a proof of claim, it is inconsistent with the statutes and ineffective. 11 U.S.C. §§ 501 & 502; 28 U.S.C. § 2075. The Advisory Committee Note to Rule 3002(a) suggests that it was not intended to make secured claims allowable in chapter 13 cases without the filing of a proof of claim. The drafters apparently were concerned with the effect of a chapter 7 discharge on the lien when the secured claim was not allowed only because of failure to file a proof of claim." In re Rogers, supra at 172, footnote 1.
[10] The repeated directives in the Code and Rules that only "allowed" claims, as specified in Section 502, are to be paid under a Chapter 13 plan and by the Trustee, coupled with the practical needs for filing a proof of claim in chapter 13, are the two compelling reasons for this Court to not follow In re Simmons, supra as requested by the Debtors.
[11] The Chapter 13 Trustee argued: "From a practical point of view, timely filed proofs of claim are of tremendous assistance to the trustee. A proof of claim provides the proper mailing address for distribution. (A creditor's address provided in the schedules is often the address for regular account payments . . . and is different from the address when assigned for recovery or to legal counsel upon filing of the bankruptcy.) A proof of claim often provides the trustee with an account number to reference when making distribution. A proof of claim reduces the probability of fraud. The trustee could not operate efficiently and safely under a bond if he/she were required to make payments on claims for which no proof of claim had been filed. In re Rogers, 57 B.R. 170, 172 (Tenn. 1986). A proof of claim with attached description of security helps identity [sic] assignors/assignees." Chapter 13 Trustee's Brief Regarding Notice to Certain Creditors and the Necessity and Timing for Proof of Claim, at p. 7.
[12] See, B.R. 3003(c)(2) which mandates filing of a proof of claim only for those creditors in Chapter 11 (and 9), not scheduled or identified as disputed, contingent or unliquidated. Others are "deemed filed under Section 501," and thus allowed.
[13] Extension of the 90 day period is strictly limited by B.R. 9006(b)(3) and B.R. 3002(c)(1)-(6) exceptions.
[14] See, footnote 6.
[15] Debtors documents were addressed to: "Internal Revenue Service Ogden, Utah 84201." While this address might well be satisfactory for routine matters such as filing a tax return or payment, conducting business in the ordinary course, or corresponding under normal circumstances, it is simply not sufficient in a pending bankruptcy case, particularly where taxes are at issue and in dispute.
[16] See, B.R. 2002(j), 7004(b), 7012(a), and Rule 4(d), F.R.Civ.P. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2857820/ | Berger v. Berger
IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-90-093-CV
BRIAN BERGER,
APPELLANT
vs.
MICHELLE ANN BERGER,
APPELLEE
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 353RD JUDICIAL DISTRICT
NO. 463,236, HONORABLE F. SCOTT MCCOWN, JUDGE PRESIDING
Dr. Brian Berger appeals from a final decree of divorce and suit affecting the
parent-child relationship following trial before the court. In six points of error, he complains that
the trial court improperly awarded appellee, Dr. Michelle Berger, a portion of his medical practice
and ordered him to pay excessive child support. We affirm the trial court's judgment.
DIVISIBLE GOODWILL
Both parties are medical doctors, ophthalmologists licensed to practice in Texas.
Dr. Brian Berger specializes in retinal surgery and claims his practice is based entirely on
referrals.
Appellant's first three points of error complain of the property division. Because
appellant fails to demonstrate error requiring reversal, we will overrule all three points of error.
Appellant contends that the trial court abused its discretion by awarding appellee
a portion of the goodwill in his medical practice that is personal to him and therefore not divisible
on divorce. As a matter of law, he argues, there can be no goodwill separate and apart from the
personal skill and reputation of a physician like himself whose practice depends entirely upon
referrals. He cites no authority for this proposition.
Notwithstanding appellant's complaint, the trial court did not award appellee an
interest in the practice; instead, the court awarded appellant all of his medical practice, both
tangible and intangible assets, and as part of the property division ordered him to pay appellee a
promissory note in an amount equal to one-half the divisible portion of appellant's
practice. Appellant concedes the existence of $392,500 community interest in his medical
practice. Appellee was awarded a sum of money less than the undisputed amount.
Under Texas law, that part of goodwill which is based on a professional person's
skill, experience and reputation, as well as upon his continuing in the practice of that profession,
is not subject to division upon divorce as a part of the community estate. See Nail v. Nail, 486
S.W.2d 761 (Tex. 1972). This personal goodwill does not possess value or constitute an asset
separate and apart from the professional's ability, and it is extinguished upon his death. Id. at
764. Some goodwill as well as other intangible assets, however, may be divisible upon divorce.
One court stated the test as follows: First, goodwill must exist independently of the personal
ability of the professional spouse. Second, if any such goodwill exists, it must have a commercial
value in which the community estate is entitled to share. Finn v. Finn, 658 S.W.2d 735, 741
(Tex. App. 1983, writ ref'd n.r.e.). When the record contains evidence that the professional
business has goodwill that may be divisible, in determining the divisible portion another court has
stated that the trier of fact should exclude the value of the business attributable to the personal
goodwill of the professional spouse; the time, toil and talent the spouse will expend following the
divorce; and/or the spouse's willingness not to compete thereafter. Rathmell v. Morrison, 732
S.W.2d 6, 18 (Tex. App. 1987, no writ). The trial court need not make particular findings as to
the value of each factor considered; upon proper request, it is enough that the trial court's findings
show clearly that the value for nondivisible elements of goodwill was excluded. Id. at 18.
Appellant's first point of error assumes certain facts: (1) his practice depends
entirely upon referrals; (2) the intangible assets of his practice consist only of goodwill; (3) all of
the goodwill is personal to him; and (4) a portion of his personal goodwill is awarded to appellee.
However, there are no findings to support these assumed facts. Even if appellant's legal position
is correct, the record presented to us on appeal does not affirmatively show that the trial court
awarded any of appellant's personal goodwill to appellee. Thus, we cannot assume error.
Appellant further complains that the award to appellee constitutes an abuse of
discretion because the evidence is legally and factually insufficient to support a finding that there
is any goodwill in his medical practice that is subject to division on divorce. (1) However, the trial
court made no such finding.
The decree of divorce contains about thirty pages dealing with the disposition of
property. According to appellant, the trial court valued the parties' net community estate at
$1,674,000. The evidence showed that appellant's medical practice was valued at $1,055,067,
but the trial court found only $722,448 of that practice to be divisible community property and
only that value is included in the net community estate. Appellant contends that this figure
includes $330,000 he labels personal goodwill. He complains only with regard to this matter.
We note first that appellant does not challenge any of the trial court's findings of
fact by point of error. Thus, they are binding on appeal. See Hunt County Tax Appr. Dist. v.
Rubbermaid, Inc., 719 S.W.2d 215, 223 (Tex. App. 1986, writ ref'd n.r.e.); Texas State Bd. of
Pharmacy v. Gibson's Discount Ctr., Inc., 541 S.W.2d 884, 886 (Tex. Civ. App. 1976, writ ref'd
n.r.e.). Further, appellant did not request any findings in addition to those made, and we cannot
assume facts contrary to the judgment.
Moreover, appellant does not complain by point of error that the overall division
of community property is disproportionate or even unequal, although he attempts to assert such
an argument by post-submission letter brief. Instead, he directs his complaint to the
characterization and disposition of only a portion of one asset, personal goodwill in his medical
practice. Even mischaracterization of property, however, will not require reversal unless the
overall property division is manifestly unfair or disproportionate so as to constitute an abuse of
discretion. Murff v. Murff, 615 S.W.2d 696, 699 (Tex. 1981); Cravens v. Cravens, 533 S.W.2d
372 (Tex. Civ. App. 1975, no writ). The trial court found that the property division ordered is
fair, just, and equitable. See Tex. Fam. Code Ann. § 3.63 (Supp. 1992).
Before trial, the parties stipulated that "Darryl Kelinske is an expert in the valuation
of medical practices." They agreed that he would evaluate their respective medical practices using
a specified formula to determine the fair market value of each, and they agreed to be bound by
his valuation for purposes of property division. The stipulation provided:
The parties agree and stipulate that the fair market value of each of their respective
medical practices as determined by Darryl Kelinske using the attached formula
shall be the value submitted by the parties to the Court for use by the trier of fact
in this case in determining a division of the assets and liabilities of the parties . .
. . The parties agree and stipulate that neither party shall attempt to assert in this
cause a value for either medical practice different from the fair market value for
that medical practice determined by Darryl Kelinske using the formula attached
hereto as Exhibit A.
Appellant agrees that he is bound by the stipulated market value of his practice as assessed by
Kelinske. He simply disagrees with the portion of the value the trial court found to be divisible
on divorce.
During his testimony at trial, Kelinske explained the three-part formula he used to
evaluate the medical practices. First, he determined a value for the tangible assets such as medical
instruments, furniture, equipment and supplies. To this he added ninety-five percent of accounts
receivable. Finally, to establish the intangible value of the business, he added twelve months'
gross fees collected minus adjusted expenses. This third element, the intangible value, is at issue
on appeal.
Despite the parties' stipulation, at a pretrial hearing appellant argued that Kelinske's
formula does not provide any means of determining that portion of the intangible assets
attributable to personal goodwill. The trial judge ordered that "at the trial of this cause, [Dr.
Brian Berger] may prove what portion within the valuation of the practices established by Mr.
Kelinske is the indivisible goodwill of the practice as defined by Texas law and what portion of
the value of the practice is divisible as defined by Texas law." Under this order and section 5.02
of the Family Code, appellant had the burden to establish any asset not subject to division and to
rebut, by clear and convincing evidence, the presumption that all property the parties possessed
at the time of divorce is community property. Tex. Fam. Code Ann. § 5.02 (Supp. 1992); Hirsch
v. Hirsch, 770 S.W.2d 924, 927 (Tex. App. 1989, no writ). Appellant does not question that he
had the obligation below to prove his assertions; he disputes that the burden was "clear and
convincing." Regardless, he has the burden to demonstrate reversible error on appeal.
Employing his formula, Kelinske determined that appellant's practice had a value
of $1,055,067, including $150,848 in tangible assets, $211,600 in accounts receivable, and
$692,619 in intangible assets. Kelinske and other witnesses described various elements
comprising the intangible assets, including both goodwill and going-concern value. The trial court
excluded $332,500 in intangible assets and found that the divisible community property interest
in appellant's medical practice is $722,448. In conclusion of law number six, in effect containing
additional findings, the trial court itemized this total as the sum of $211,600 worth of accounts
receivable, $150,848 worth of tangible assets, and $360,000 worth of divisible intangible assets.
Because appellant does not challenge any finding by point of error on appeal, we are bound
thereby.
Appellant first contends that none of the intangibles is divisible, but finally argues
that an additional $330,000 should be excluded as personal goodwill. The court made no finding
of fact concerning what part if any of the intangible assets of appellant's medical practice
represented goodwill, personal or otherwise, and none was requested. In the absence of a fact
finding and in light of those made, we must presume that the trial court excluded from the
valuation appellant's personal goodwill not divisible on divorce and that appellant failed to meet
his burden of proof as to $360,000 worth of intangible assets found to be divisible. See Sterner
v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989).
The standard of review for failure to find on an issue on which the appellant had
the burden of proof is the same as that of an adverse finding on such an issue; the appellant
attacking the legal sufficiency of the evidence must demonstrate that the evidence conclusively
established all vital facts in support of the issue. Sterner, 767 S.W.2d at 690. The reviewing
court will first examine the record for evidence that supports the finding, while ignoring all
evidence to the contrary. Id. If there is no evidence to support the finding, the reviewing court
will then examine the entire record to determine if the contrary proposition is established as a
matter of law. Id.; see also Holley v. Watts, 629 S.W.2d 694, 696 (Tex. 1982).
A party challenging the factual sufficiency of the evidence to support a failure to
find on an issue on which he has the burden of proof must demonstrate the failure to find is
against the great weight and preponderance of the evidence. Parrish v. Hunt, 331 S.W.2d 304
(Tex. 1960). In reviewing a factual-sufficiency challenge, this court must examine all the
evidence in the record to determine if there is some evidence to support the finding; if the finding
is so contrary to the overwhelming weight and preponderance of the evidence as to be clearly
wrong and manifestly unjust; or if the great preponderance of the evidence supports its
nonexistence. See Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); In re King's Estate, 244
S.W.2d 660, 661 (Tex. 1951).
The evidence in this case does not conclusively establish that all intangible assets
are personal goodwill, nor is the failure to so find against the great weight of the evidence. The
evidence is both legally and factually sufficient to support the court's refusal to find an additional
$330,000 in nondivisible personal goodwill.
During his testimony at trial, Kelinske addressed the value of Dr. Brian Berger's
medical practice under several hypothetical situations. He testified that the intangible value could
range from zero to $400,000, depending upon the circumstances under which the practice might
be terminated or transferred. He testified that if appellant died and the medical practice were
sold, the value of the intangibles would be $400,000, resulting in a total value for the practice of
$762,448. Another expert witness, Thomas J. Macken, also testified that the intangible value of
the medical practice, based on a purchase after death or disability, was around $360,000. Under
this "sale-upon-death" scenario, none of the intangible value would be due solely to appellant's
skill and reputation. Nail, 486 S.W.2d at 764 (professional goodwill is extinguished at the death,
retirement, or disablement of the professional); see also Finch v. Finch, 825 S.W.2d 218 (Tex.
App. 1992, no writ).
Appellant argues in a post-submission brief that the testimony of Kelinske and
Macken should be excluded because neither witness was able to distinguish what portion of the
intangible assets of appellant's medical practice was attributable to Dr. Brian Berger's personal
skill and reputation. See Hirsch, 770 S.W.2d at 927 (If a witness cannot put a value on the
corporation which does not include goodwill, the witness's testimony should be excluded upon
proper motion.). But because appellant did not move to strike the testimony of either witness at
trial, he waived any error. Tex. R. Civ. Evid. Ann. 103(a)(1) (Pamph. 1992).
Appellant called several expert witnesses in rebuttal who testified that appellant's
medical practice had little or no going-concern value. Larry Bradford testified that the value of
the going concern was nominal, that he would advise a buyer to pay nothing for going-concern
value, and that the value of intangible assets was no more than $15,000 to $20,000. Dr.
Lawrence Arend testified that a referral-based income stream cannot be sold, that the medical
practice had no going-concern value, and that a retinal surgeon might pay $30,000 to $35,000 for
the convenience of having an office already set up. Mark Rambin testified that the going concern
value was less than $5000.
The trial court was free to resolve any conflicting evidence regarding the going-concern value of appellant's medical practice. It is the sole province of the court, sitting without
a jury, to judge the credibility and the weight to be given each witness's testimony, to resolve
conflicts in the testimony of one witness with that of another, and to believe part of a witness's
testimony and disregard other portions. Southwestern Bell Tel. Co. v. Griffith, 575 S.W.2d 92,
101 (Tex. Civ. App. 1978, writ ref'd n.r.e.).
Appellant directs much argument to the trial court's recitations in its conclusions
of law. We, of course, are not bound by legal conclusions. We may uphold the judgment if it
has any basis in the evidence. Kelinske valued appellant's medical practice at $1,055,067. The
court found it had an intangible value of $360,000. Arend testified the intangible value excluding
personal goodwill would be $30,000. Assuming the remaining $330,000 intangible value was all
personal goodwill, and excluding that amount from the value set by Kelinske, the court could find
that the remaining $725,000 was divisible as community property.
We conclude that appellant has not demonstrated as a matter of law that his medical
practice has no intangible value other than his personal goodwill. Neither has appellant
demonstrated that the trial court's finding is so contrary to the overwhelming weight and
preponderance of the evidence as to be clearly wrong and manifestly unjust.
We overrule appellant's first three points of error.
INTERRELATION OF PROPERTY DIVISION AND CHILD SUPPORT
The divorce decree recites, "The Court's award of child support assumes the
division of property made by the Court, and the Court's division of property assumes the award
of child support made by the Court." In his fourth point of error, appellant complains that this
assumption reflects an abuse of the trial court's discretion. We disagree. A trial court abuses its
discretion only when it acts arbitrarily and unreasonably, without reference to any guiding rules
or principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241 (Tex. 1985). To
the extent we consider the recitation, the statement demonstrates that the trial court acted in
accordance with the requirements of the Texas Family Code and existing case law.
The Family Code anticipates an interrelationship between the child support order
and the property division. Section 3.63 directs the trial court to divide the property "having due
regard for . . . any children of the marriage." Tex. Fam. Code Ann. § 3.63(a), (b) (Supp. 1992).
Conversely, section 14.052 instructs the trial court to consider "any financial resources available
for the support of the child" in setting the amount of child support. Id. § 14.052(b)(3). Also,
section 14.053 permits the court to "consider any additional factors that increase or decrease the
ability of the obligor to make child support payments." Id. § 14.053(e).
In addition to the Family Code, case law establishes a relationship between the
property division and the child support order. The Texas Supreme Court has held that one of the
factors to be considered in reaching an equitable property division is the relative financial
condition and obligations of the husband and wife. Murff, 615 S.W.2d at 699; see also Zuniga
v. Zuniga, 664 S.W.2d 810, 815 (Tex. App. 1984, no writ); Campbell v. Campbell, 625 S.W.2d
41, 43 (Tex. App. 1981, writ dism'd).
The financial resources and obligations of the parties are also factors to be
considered in setting the amount of child support. Zuniga, 664 S.W.2d at 814; Klise v. Klise, 678
S.W.2d 545, 547 (Tex. App. 1984, no writ); Ulrich v. Ulrich, 652 S.W.2d 503, 505 (Tex. App.
1983, no writ). Of necessity, consideration of these factors requires an interrelationship between
the property division and the amount of child support because both will affect the financial
resources and obligations of each parent.
The trial court has wide discretion in dividing the estate of the husband and wife
in a divorce action. Murff, 615 S.W.2d at 696. Under section 3.63 of the Family Code, the trial
court may divide the property as the court deems just and right. Tex. Fam. Code Ann. § 3.63
(Supp. 1992). Likewise, the trial court has wide discretion in establishing the amount of child
support. See Carpenter v. White, 624 S.W.2d 618, 619 (Tex. App. 1981, no writ); Eggemeyer
v. Eggemeyer, 535 S.W.2d 425, 427 (Tex. Civ. App. 1976), aff'd on other grounds, 554 S.W.2d
137 (Tex. 1977). On appeal, we indulge every reasonable presumption that the trial court
properly exercised its discretion. Bell v. Bell, 513 S.W.2d 20, 22 (Tex. 1974); Dorfman v.
Dorfman, 457 S.W.2d 417, 421 (Tex. Civ. App. 1970, no writ).
We cannot say that the trial court acted without reference to guiding rules and
principles in determining child support. We overrule appellant's fourth point of error.
CHILD SUPPORT
The Bergers have three children, twin daughters born in 1983 and a third daughter
born in 1987. With the parties' agreement, the trial court appointed appellee managing
conservator of the children and appellant their possessory conservator. The trial court ordered
appellant to pay $9000 per month child support until the two oldest children reach the age of
eighteen or graduate from high school, at which time support is reduced to $6000 per month for
their youngest child. By points of error five and six appellant complains that the trial court abused
its discretion in setting the amount of child support because there is either no evidence or
insufficient evidence to support the award. A judgment ordering child support will not be
disturbed on appeal absent a showing of clear abuse of discretion. The reviewing court will not
revise the amount of child support merely because it considers the sum too high or too low.
Eggemeyer, 535 S.W.2d at 427. However, the trial court abuses its discretion if it orders more
support than the party can reasonably afford. Broday v. Burleson, 632 S.W.2d 803, 805 (Tex.
App. 1982, no writ); McCartor v. Parr, 612 S.W.2d 268, 269 (Tex. Civ. App. 1981, no writ);
Krempp v. Krempp, 590 S.W.2d 229, 231 (Tex. Civ. App. 1979, no writ)
We find no abuse of discretion in this case. The legislature promulgated child
support guidelines to aid the courts in setting child support. See Tex. Fam. Code Ann.
§ 14.052(a) (Supp. 1992). The statute creates a rebuttable presumption that the amount of support
set out in the guidelines is reasonable and in the child's best interest. Id. § 14.055(a). The court
also "may consider" the following factors along with the guidelines in determining the amount of
support:
(1) the needs of the child;
(2) the ability of the parents to contribute to the support of the child;
(3) any financial resources available for the support of the child; and
(4) the amount of possession of and access to a child.
Id. § 14.052(b). Family Code section 14.054 provides for fifteen additional, but not exclusive,
factors that may justify a level of child support at variance from the range recommended in the
guidelines. The Code authorizes the trial court to order an additional amount of support,
depending on the child's needs, when the obligor's net resources exceed $4000 monthly. Id. §
14.055(c).
Appellant requested findings of fact pursuant to section 14.057 of the Family Code.
The trial court found:
1. The amount of net resources available to BRIAN BERNARD BERGER per
month is between the $35,346.00 asserted by BRIAN BERNARD BERGER
. . . and the $38,109.00 asserted by MICHELLE ANN BERGER . . . .
2. The amount of net resources available to MICHELLE ANN BERGER per
month is $2,068.00. . . The Court does not find MICHELLE ANN
BERGER to be intentionally underemployed within the meaning of §
14.054(1) of the Family Code. Under § 14.07 of the Family Code, the best
interest of the children is the Court's primary consideration in determining
questions of support. Given the BRIAN BERNARD BERGER's net
resources are at least $35,346.00 per month, and given the MICHELLE
ANN BERGER has been assigned the task of serving as the primary
caregiver of the couple's three children, the Court finds that it is not in the
best interest of the children to require MICHELLE ANN BERGER to work
as a full-time physician in order to maintain the children's standard of living.
3. The amount of child support payment per month that is computed when
§ 14.055 of the Family Code is applied is $9,000.00 for three children and
$6,000.00 for one child. Under § 14.061 of the Family Code, health
insurance would usually be paid by BRIAN BERNARD BERGER and
uninsured medical would usually be divided. The court, however, had
placed all medical insurance and medical costs on MICHELLE ANN
BERGER to be paid from the child support award.
4 . . . . Given the property division and the child support, BRIAN BERNARD
BERGER is left free and clear with monthly net resources of at least
$21,572.00.
5. By their terms, the percentage guidelines in subdivision (b) of § 14.055 of
the Family Code are not to be used to determine child support in this case
because BRIAN BERNARD BERGER has more than $4,000.00 of monthly
net resources. In their place, the Court must determine the child support
applying division (c) of § 14.055. In doing so, the Court applied 31% to the
first $4,000.00 of monthly net resources to determine child support should
be at least $1,200.00 for three children and then applied 20% to determine
child should [sic] be at least $800.00 for one child. Then, "without further
reference to the percentage recommended by these guidelines," the court
added the sum of $7,800.00 for three children and $5,200.00 for one child
as "additional amounts of child support" based upon the "proven needs of the
children." "Need" is a term of law meaning that when resources are
available the Court may set child support in an amount sufficient to ensure
that the children enjoy the standard of living (1) that they had while their
parents were married; (2) that they would have had had their parents
remained married; and (3) that the parent paying support plans to enjoy for
himself after divorce with his net resources. See Sohoki, II v. Sohoki [sic],
730 S.W.2d 30, 31-32 (Tex. App. 1987, no writ); Klise v. Klise, 678
S.W.2d 545, 547 (Tex. App. 1984, no writ).
The trial court's findings demonstrate that it relied on relevant case law and the factors set out in
the Family Code in setting the amount of child support. Further, these findings are sufficient to
support the amount of child support ordered.
Appellant argues that the evidence is legally and factually insufficient to support
the court's fact findings. We agree with appellee, however, that this Court, as well as the parties,
is bound by the findings because appellant has not directly attacked them by his points of error.
See Hunt County Tax Appr. Dist., 719 S.W.2d at 223; Texas State Bd. of Pharmacy, 541 S.W.2d
at 886. Appellant claims, however, that he has directly attacked findings one and two, at least
in argument, citing Pool v. Ford Motor Co., 715 S.W.2d 629, 632-33 (Tex. 1986) (points of error
are to be liberally construed and error is preserved when the complained of error is readily
apparent from the argument briefed). See also Holley, 629 S.W.2d at 696. Even assuming
appellant's brief is sufficient to challenge these fact findings, they are supported by evidence
sufficient to withstand appellate review.
The child-support issue was hotly contested, both parties offering volumes of
testimony and exhibits from which the court could determine the appropriate amount. Appellant
presented evidence that his net resources are $35,346; appellee presented evidence that they are
$38,109. This evidence sufficiently supports the trial court's finding that appellant's net resources
are somewhere between these two amounts. Appellee's exhibit 68 supports the trial court's
finding that her net resources are $2,068.
Sufficient evidence also supports the trial court's finding that appellee is not
intentionally underemployed and that it is in the children's best interest for her not to work full
time. Appellee testified that since March 1986 she has been required to work less than full time
in order to care for her children. For her to maintain a full-time practice, she would be required
to work all day and into the evening. She testified that the Austin medical community is overly
saturated with ophthalmologists, and that she does not have enough patients to fill her present
schedule; in order to increase her earnings she would be required to go to other communities to
see patients. She further testified that if the children could be well cared for, she would consider
a full-time practice, but past attempts to employ housekeepers who could drive the children to
their school and various activities have been unsuccessful.
Appellant offered expert testimony that a new retinal surgeon in the Austin market
could make much more money than appellee makes, that a particular full-time ophthalmologist
was making $210,000 per year, and that appellee could make $150,000 per year working five
days a week.
Appellee filed with the court a proposed support decision as part of her exhibit 44
setting forth a monthly budget with respect to the children's needs of $15,898.71. Appellant
complains on appeal that this budget includes inflated amounts and expenses personal to appellee.
He neglects to direct us to portions of the statement of facts where we may find evidence
supporting his contentions, as required by Tex. R. App. P. Ann. 74(d) (Pamph 1992). We note,
however, that the trial court has not awarded the full amount of this proposed budget, and we
presume that the trial court excluded any excessive or personal expenses.
Appellant also argues that the trial court incorrectly calculated the net resources of
the parties because it failed to take into consideration substantial cash accounts and a promissory
note awarded to appellee as part of the property division. He maintains that this miscalculation
in the net resources of the parties led to an error in calculating the amount of child support
because the Family Code requires child support to be based on the net resources of the obligor
and obligee. See Tex. Fam. Code Ann. § 14.053(a) (Supp. 1992). We are not persuaded by this
argument. The loan and cash accounts awarded to appellee as part of the property division are
not included in "net resources" for the purpose of calculating child support. See Id. § 14.053(b).
Appellant argues that section 14.053(a) requires that an order of child support
"shall be based on the `net resources' of the obligor and obligee." However, that section
concerns support based on the guidelines. The guidelines are "specifically designed to apply to
situations in which the obligor's monthly net resources are $4000 or less." Id. § 14.055(a).
When an obligor's net resources exceed $4000 per month, the guidelines apply only to the first
$4000, and "[w]ithout further reference to the percentage recommended by these guidelines, the
court may order additional amounts of child support as proven, depending on the needs of the
child at the time of the order." Id. § 14.055(c). Therefore, any miscalculation in appellee's net
resources would not necessarily lead to the rendition of an improper judgment and thus would not
be grounds for reversal. Tex. R. App. P. Ann. 81(b) (Pamph. 1992).
In light of the evidence in the record and the factors the trial court was entitled to
consider in reaching its decision, we cannot conclude that the trial court abused its discretion in
ordering the child support, or that the evidence is insufficient to support the amount set. We
overrule appellant's fifth and sixth points of error.
We affirm the judgment of the trial court.
Marilyn Aboussie, Justice
[Before Justices Aboussie, Jones and Kidd]
Affirmed
Filed: June 17, 1992
[Do Not Publish]
1. Appellant's second and third points of error are incorrectly worded. He states these
points as "no evidence" and "insufficient evidence" points. However, since appellant bore
the burden of proof on the issue of indivisible goodwill, the proper legal-sufficiency
challenge is "as a matter of law" or "conclusive evidence" and the proper factual-sufficiency challenge is "against the great weight and preponderance of the evidence." See
William Powers, Jr. & Jack Ratliff, Another Look at "No Evidence" and "Insufficient
Evidence," 69 Tex. L. Rev. 515, 523 n. 28 (1991); W. Wendell Hall, Standards of Appellate
Review in Civil Appeals, 21 St. Mary's L.J. 865, 906-910, 919-920 (1990); Robert W.
Calvert, "No Evidence" and "Insufficient Evidence" Points of Error, 38 Tex. L. Rev. 361,
363-64 (1960). Nevertheless, we will address his points of error as though he used the correct
terminology. See Holley v. Watts, 629 S.W.2d 694, 696 (Tex. 1982) (appellate courts should
look not to the wording of the point of error, but also at the argument under the point of error
to determine the complaining party's intent). | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2857871/ | rosas
IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-91-347-CV
SILBRESTRE Y. ROSAS,
APPELLANT
vs.
TRANSPORTATION INSURANCE COMPANY AND MARY LYNN NAUCKE,
APPELLEES
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT
NO. 477,394, HONORABLE JERRY DELLANA, JUDGE PRESIDING
This is a statute of limitations case involving an insurer's alleged breach of the
common law duty of good faith and fair dealing in the processing of a workers' compensation
claim. Appellant, Silbrestre Y. Rosas, applied for and received workers' compensation benefits
for an alleged work-related injury. Appellee, Transportation Insurance Company (TIC), the
workers' compensation insurer, terminated Rosas's workers' compensation benefits some months
after his alleged injury. Rosas responded by filing a workers' compensation claim against TIC.
The parties settled that lawsuit with TIC ultimately reinstating Rosas's workers' compensation
benefits. Rosas subsequently sued TIC and its insurance adjuster for breach of the duty of good
faith and fair dealing. The trial court ruled that the statute of limitations had run on Rosas's good
faith cause of action, and thus awarded TIC and its insurance adjuster summary judgment. On
appeal, Rosas contends that limitations had not expired at the time he filed his good-faith claim.
Because we hold that the statute of limitations had expired on Rosas's claim, we affirm the trial
court's grant of summary judgment.
BACKGROUND
On June 2, 1986, Rosas allegedly became injured when he slipped and fell on a
drilling rig while employed by Grace Drilling Company (Grace). Shortly thereafter, Rosas
applied for and began collecting workers' compensation benefits from TIC, Grace's insurance
carrier. On February 26, 1987, TIC terminated Rosas's weekly benefits based on an orthopedic
surgeon's opinion that Rosas was capable of returning to work. Rosas then filed a workers'
compensation claim against TIC, which ultimately settled on March 31, 1988. (1) TIC subsequently
reinstated Rosas's workers' compensation benefits.
On January 10, 1990, nearly two years after the parties settled the workers'
compensation suit, Rosas filed a second lawsuit against TIC, this time alleging that TIC had
breached its duty of good faith and fair dealing by terminating and subsequently refusing to
reinstate Rosas's workers' compensation benefits. Rosas named as co-defendant TIC's insurance
adjuster, Mary Lynn Naucke (Naucke), who had participated in the investigation and processing
of Rosas's workers' compensation claim on behalf of TIC. As a result of TIC and Naucke's
alleged misconduct, Rosas claimed tort damages for physical and mental anguish. TIC and
Naucke moved for summary judgment on Rosas's claim, citing, among other grounds, his failure
to file suit within the applicable two-year statute of limitations. Tex. Civ. Prac. & Rem. Code
Ann. § 16.003(a) (1986). Additionally, appellees pleaded that in Naucke's capacity as an
insurance adjuster, she had no contractual relationship with Rosas and thus owed him no duty
upon which he could assert a good-faith claim against her. The trial court granted the motion for
summary judgment as to both defendants on the affirmative defense of limitations. Additionally,
as regards Naucke, the court granted summary judgment on the ground that she owed no
contractual duty to Rosas. Rosas appeals, challenging solely the court's grant of summary
judgment in favor of appellees on the basis of limitations.
DISCUSSION
I. Standard of Review.
To be entitled to summary judgment, the movant must show that no genuine issues
of material fact exist and that the movant is entitled to judgment as a matter of law. Wilcox v. St.
Mary's Univ., 531 S.W.2d 589, 592-93 (Tex. 1975). In reviewing a summary judgment, the
appeals court must consider as true all evidence favorable to the nonmovant, and indulge every
reasonable inference and resolve any doubt in favor of the nonmovant. Nixon v. Mr. Property
Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985). When a defendant seeks a summary
judgment on the ground that the plaintiff's cause of action is barred by a statute of limitations, the
defendant assumes the burden of conclusively establishing as a matter of law that the suit is barred
by limitations. Delgado v. Burns, 656 S.W.2d 428, 429 (Tex. 1983); Thames v. Dennison, 821
S.W.2d 380, 382 (Tex. App. 1991, writ denied).
II. Statute of Limitations
Rosas complains in a single point of error that the trial court erred in rendering
summary judgment for appellees based on the running of the two-year statute of limitations. (2)
Citing Arnold v. National County Mutual Fire Insurance Co., 725 S.W.2d 165, 168 (Tex. 1987),
Rosas contends that his good-faith claim did not accrue, and thus the limitations period did not
commence, until his underlying workers' compensation suit against TIC settled on March 31,
1988. Calculating the limitations period from that date, Rosas claims that his good-faith claim
was timely filed on January 10, 1990, since the two-year period would not have expired until
March 31, 1990.
Citing the Texas Supreme Court's later holding in Murray v. San Jacinto Agency,
800 S.W.2d 826 (Tex. 1990), appellees contend that a good-faith cause of action against an
insurer for denial of benefits now accrues on the date the insurer denies coverage, not the date a
separate suit to determine coverage under the contract is resolved. Murray, 800 S.W.2d at 829.
Measured from February 26, 1987 -- the date on which TIC formally terminated Rosas's workers'
compensation -- appellees contend that Rosas's good-faith claim would have been timely only if
filed on or before February 26, 1989. Because Rosas did not file his good-faith claim until over
ten months after this date, appellees maintain that summary judgment was properly granted. We
agree.
Murray establishes that where, as in this case, coverage is denied outright, a good-faith claim accrues and limitations commences on the day the insurer wrongfully denies coverage.
Murray, 800 S.W.2d at 828; see also Tectonic Realty v. CNA Lloyd's, 812 S.W.2d 647, 652-53
(Tex. App. 1991, writ denied); Liberty Mut. Fire Ins. Co. v. Richards, 810 S.W.2d 232, 234
(Tex. App. 1991, writ denied) petition for cert. filed, 60 U.S.L.W. 3553 (U.S. Jan. 31, 1992)
(No. 91-1234). Whereas the standard advocated by Rosas -- gauging the accrual of a good-faith
claim against the insurer by the date the underlying suit is settled -- was formerly the controlling
standard under Arnold, the supreme court in Murray expressly modified Arnold such that the date
of denial now controls in cases of outright denial of payment or coverage. (3) Murray, 800 S.W.2d
at 829-30. It is uncontroverted that TIC formally terminated Rosas's workers' compensation
benefits on February 26, 1987, (4) and that Rosas did not file his good faith claim until nearly three
years later. Under Murray, Rosas's claim falls outside the statutory limitations period as a matter
of law.
Rosas also contends that his good-faith cause of action did not accrue until his
underlying workers' compensation claim was settled, on the theory that TIC's denial of workers'
compensation benefits between the date they were terminated and the date they were reinstated
constituted an ongoing injury. See Izaguirre v. Texas Employers' Ins. Ass'n., 749 S.W.2d 550
(Tex. App. 1988, writ denied). However, Murray makes clear that the fact that damages may
continue to occur for an extended period after accrual does not prevent the statute of limitations
from starting to run. Murray, 800 S.W.2d at 828.
CONCLUSION
Because Rosas filed his good-faith cause of action more than two years after the
date his benefits were terminated, his claim is barred by the two-year statute of limitations
prescribed by Tex. Civ. Prac. & Rem. Code Ann. § 16.003(a). We overrule Rosas's point of
error and, therefore, affirm the trial court's grant of summary judgment.
Bea Ann Smith, Justice
[Before Chief Justice Carroll, Justices Aboussie and B. A. Smith]
Affirmed
Filed: May 6, 1992
[Do Not Publish]
1. Silbrestre Y. Rosas v. Transp. Ins. Co., No. 15,333, 143rd Judicial District Court of
Ward County (March 31, 1988).
2. Tex. Civ. Prac. & Rem. Code Ann. § 16.003(a) (1986). Neither party disputes that
this statute governs limitations in this case.
3. In cases where there is no outright denial of a claim, Murray indicates that "the exact
date of accrual of a cause of action becomes more difficult to ascertain and should be a
question of fact to be determined on a case-by-case basis." Murray, 800 S.W.2d at 828 n.2;
see also Tectonic, 812 S.W.2d at 652-53. In such cases, the cause of action would seem to
accrue when the insured learns of facts that would put a reasonable insured on notice that the
insurer is acting in bad faith. See Tectonic, 812 S.W.2d at 652 n.3.
4. TIC filed a suspension-of-compensation notice with the Industrial Accident Board on
February 26, 1987. The pleadings and affidavits refer sometimes to February 24, 1987,
and other times to February 26, 1987, as the date on which Rosas's workers'
compensation benefits were terminated. Although neither date proves crucial for
calculating the statute of limitations in this case, we treat February 26, 1987, as the date
of actual suspension. | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2857891/ | Easter
IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-91-054-CV
ROBERT H. WATKINS, AND WIFE, SHARON K. WATKINS,
APPELLANTS
vs.
FRED B. EASTER, AND WIFE, DEBORAH J. EASTER,
APPELLEES
FROM THE DISTRICT COURT OF WILLIAMSON COUNTY, 368TH JUDICIAL DISTRICT
NO. 89-393-C368, HONORABLE BURT CARNES, JUDGE PRESIDING
This contract dispute involves the sale of a residence in 1987. The Easters
defaulted in 1989 and vacated the property in 1990, causing the Watkinses to bring an action for
breach of contract and two actions for common law fraud, alleging false promises and false
representation or concealment of material facts. The Easters then counterclaimed, alleging bad
faith and unfair dealing, unjust enrichment and deceptive trade practices. After a trial to the jury,
the court rendered a take-nothing judgment against both sides. The Watkinses now appeal. We
will affirm the trial court's judgment.
BACKGROUND
Robert and Sharon Watkins [Appellants] owned a residence in Round Rock, which
Fred and Deborah Easter [Appellees] contracted to buy in 1987. Much of this dispute can be
traced to the unconventional terms found in the parties' contract of sale. The Easters were to
make monthly payments to the Watkinses; those payments were to be applied first to one-twelfth
of the annual cost of taxes and insurance on the property, next to a portion of the interest, and
finally to principal. Interest on some of the principal was to be paid at ten percent, interest on
some of the principal was "waived," and interest on the remaining principal balance was to
accumulate at six percent and be added to principal at the end of the first year, when the entire
principal balance was due and payable. The Easters were not to receive a deed until they paid the
full consideration.
In November 1988 the parties orally amended the contract to extend the due date
for payment of the "balloon note." In exchange for this extension, the Easters agreed to increase
their monthly payments from $800 to $1125 while they allegedly pursued permanent financing that
would enable them to assume the Watkinses' indebtedness on the residence. In July 1989 the
Easters stopped making payments; they vacated the property in February 1990.
The Watkinses brought an action for breach of contract to recover the benefit of
their bargain, which they asserted to be the difference in the contract price of the house in 1987
($107,500) and its fair market value when they regained possession in 1990. They also brought
a tort action alleging that the Easters made false representations and concealed material facts
regarding their creditworthiness. In addition, the Watkinses sought attorney's fees for defending
groundless counterclaims.
The jury found that the Easters breached the contract of sale but failed to find that
the Watkinses suffered damages from the breach. It also found that the Easters made false
representations and concealed material facts, causing Mr. Watkins to suffer $500 damages for
mental anguish. The jury also found that the Watkinses were entitled to exemplary damages,
which may only be recovered if actual damages flowed from the Easters' tortious behavior.
Both parties asked the court to disregard certain jury findings and to render
judgment on the verdict; and in the alternative, defendants asked for judgment notwithstanding
the verdict. The trial court: (1) ruled that the Easters' counterclaims were not groundless,
depriving the Watkinses of any entitlement to attorney's fees; (2) entered a take-nothing judgment
against both sides; and (3) ordered the Easters to pay $250 to the Watkinses as sanctions for
discovery abuses. The Watkinses challenge the judgment in ten points of error.
CONTRACT DAMAGES
In their first four points of error, the Watkinses complain of the court's refusal to
disregard the jury's failure to find that they suffered damages from the Easters' breach of the
contract of sale. The first three points address the property's diminished value in 1990, when the
Watkinses regained possession; the Watkinses maintain that they have proved diminished value
as a matter of law, or in the alternative, that a failure to find any damages is against the great
weight and preponderance of the evidence. In point of error four, the Watkinses argue that
damages should be measured alternatively by the difference between the payments required under
the contract and the payments actually received. The Watkinses maintain that they proved these
damages as a matter of law, or, in the alternative, that the jury's failure to assess damages was
contrary to the great weight and preponderance of the evidence.
To establish as a matter of law that they suffered damages from the breach, the
Watkinses must first demonstrate on appeal that the evidence conclusively established all vital
facts in support of the issue. See Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989).
We apply a two-step process to overcome, as a matter of law, adverse jury findings on which
appellant had the burden of proof: (1) examine the record for evidence that supports the verdict,
ignoring all evidence to the contrary; if there is no evidence to support the fact finder's answer,
then (2) examine the entire record to see if the contrary position is established as a matter of law.
Holley v. Watts, 629 S.W.2d 694, 696 (Tex. 1982).
At trial, the Watkinses argued that their damages after regaining possession should
be measured by the property's substantial decline in value between 1987 and 1990. Their expert
witness testified that as of February 1990 the property's value had declined to $74,000. The
Easters' countervailing argument, that the house had substantially the same value in 1990 as it had
in 1987, was apparently more persuasive.
On appeal, the Watkinses appear to argue that because they presented the only
expert testimony of the property's value in February 1990, the trial court erred by failing to
disregard the jury's contrary finding. The jury could reject the testimony of the Watkinses'
appraiser, even if it was not contradicted. Kansas City Fire & Marine Ins. Co. v. Duncan, 330
S.W.2d 469, 471 (Tex. Civ. App. 1959, no writ).
Appellants complain that because the Easters introduced no direct evidence of the
property's value in February 1990, expert or otherwise, there is no evidence to support the jury's
failure to find that the house had substantially diminished in value at the time the Watkinses
regained possession. We disagree.
There is evidence in the record to support the jury's failure to find that the
Watkinses suffered damage from the property's diminished value. The parties stipulated that the
rental value of the house remained $850 per month from August 1987 to February 1990
(Stipulation No. 3). Rental value directly impacts the income approach to estimating a property's
fair market value. The parties' stipulation that the rental value of this property remained constant
is some evidence that the property did not lose its value.
The stipulation regarding the property's rental value is sufficient evidence to
support the jury's failure to find that the Watkinses suffered damages from the breach of this
contract. Because the record contains some evidence in support of the jury's verdict, appellant
cannot establish damages as a matter of law. Furthermore, we cannot say that the jury's failure
to find any damage is against the great weight and preponderance of the evidence.
We turn to the Watkinses' alternative measure of damages, payments due under the
contract less payments received, a measure that they also maintain was proved as a matter of law.
Whether such figures were proved as a matter of law is immaterial because this is not a proper
measure of damages in real estate transactions. The universal rule for measuring damages for
breach of contract is just compensation for loss or damage actually sustained. Stewart v. Basey,
245 S.W.2d 484, 486 (Tex. 1952). Points of error one through four are overruled.
TORT DAMAGES
In their fifth and sixth points of error, the Watkinses argue that the trial court erred
in entering a take-nothing judgment because the jury found they were entitled to mental anguish
damages and exemplary damages on their common law fraud claims. In order to award exemplary
damages, there first must be a finding of actual damages. Nabours v. Longview Sav. & Loan
Ass'n, 700 S.W.2d 901, 903 (Tex. 1985). We are left with two issues: (1) have the Watkinses
prevailed on their common law fraud action; and if so, (2) were mental anguish damages properly
awarded and are they actual damages in support of exemplary damages? We need not decide
whether mental anguish damages can support an award of exemplary damages because we find
that they were improperly awarded. The Watkinses failed to satisfy all the elements of common
law fraud.
A cause of action for common law fraud has the following elements:
(1) that a material representation was made; (2) that it was false; (3) that when the
speaker made it he knew it was false or made it recklessly without any knowledge
of the truth and as a positive assertion; (4) that he made it with the intention that
it should be acted upon by the party; (5) that the party acted in reliance upon it;
and (6) that he thereby suffered injury.
Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183, 185 (Tex. 1977).
The Watkinses failed to prove that the Easters made an intentional
misrepresentation. The Easters asked the court to disregard the jury's finding of "actual
awareness" in Question #15, arguing that if the jury did not find the mental state of "knowingly,"
as it was defined in Question #16, then there could be no "actual awareness" in response to
Question #15. The Easters argued that without a showing that they acted knowingly or
intentionally, the Watkinses were not entitled to recover for misrepresentation, and thus were not
entitled to exemplary damages. We agree. When jury findings appear to conflict, the trial court
may disregard such conflict because a specific finding should be held to dominate a finding which
is so general as to constitute a legal conclusion. Williams v. Williams, 559 S.W.2d 888, 894
(Tex. Civ. App. 1977, writ ref'd n.r.e). The term "actual awareness" was not defined for the
jury, whereas, "knowingly," "intentionally," and "recklessly" were. We hold that the jury's
answer to Question #16, that the Easters did not act intentionally or knowingly, dominates the
finding in Question #15, that the Easters had "actual awareness" of false actions or concealments.
Without knowledge or intent to defraud, an action for common law fraud will not lie. Because
the Watkinses failed to prove their claim of common law fraud, mental anguish damages are
inappropriate, as are exemplary damages. Points of error five and six are overruled.
COUNTERCLAIMS NOT GROUNDLESS
In points of error seven, eight and nine, the Watkinses allege that the trial court
erred in denying their motion for judgment because the Easters' counterclaims for breach of
contract and violations of the Deceptive Trade Practices-Consumer Protection Act (DTPA) (Tex.
Bus. & Com. Code Ann. §§ 17.41-17.826 (1987 & Supp. 1992)) were groundless. The trial court
issued findings of fact and conclusions of law stating that the Easters' claims had a basis in law
and fact. We agree.
The Easters brought their counterclaims for breach of contract and DTPA violations
premised upon their reading of the Contract for Sale. The provision in question reads, "When
this contract of sale has been cancelled for non-payment if need be by the Seller, the only question
to be determined is that of possession." Mr. Easter testified that he read this provision as an
exclusive remedy in the event of default: he would lose the house and all payments made prior
to default. The Watkinses instead brought suit for damages and specific performance; the Easters
counterclaimed, alleging the Watkinses' actions constituted "representations that the agreement
involved rights, remedies, and obligations which it did not have or involve," violating DTPA §
17.46(b).
We find that Mr. Easter's reading of the contract was not only plausible, but a
legally correct interpretation of what can only be deemed a contract for deed. The Easters could
well have prevailed on their counterclaims. As the Easters correctly point out, "groundless"
under the DTPA has the same meaning as "groundless" under Rule 13 of the Texas Rules of Civil
Procedure: "[N]o basis in law or fact and not warranted by good faith argument for the extension,
modification or reversal or existing law." Donwerth v. Preston II Chrysler-Dodge Inc., 775
S.W.2d 634, 637 (Tex. 1989); Tex. R. Civ. P. Ann. 13 (Supp. 1992). Every litigant who fails
to persuade the fact finder is not necessarily subject to sanctions for bringing a groundless law
suit. We hold that the Easters' claims were not groundless, and therefore overrule points of error
seven through nine.
SPECIFIC PERFORMANCE NOT APPROPRIATE
The Watkinses' final point of error alleges that the trial court abused its discretion
in denying specific performance of the contract. Specific performance is warranted where the
remedies at law are inadequate. Guzman v. Acuna, 653 S.W.2d 315, 318 (Tex. App. 1983, writ
dism'd). However, specific performance is an equitable remedy and the equities of both parties
must be protected. Johnson v. Downing & Wooten Constr. Co., 480 S.W.2d 254, 258 (Tex. Civ.
App. 1972, no writ). Further, specific performance is a matter resting in the court's discretion.
Magram v. Lewis, 618 S.W.2d 420, 422 (Tex. Civ. App. 1981, no writ). Keeping in mind that
previous events had shown the financial inability of the Easters to maintain payments on the
contract, we cannot say the trial court abused its discretion in not requiring them to complete the
contract. We overrule the tenth point of error.
We affirm the judgment of the trial court.
Bea Ann Smith, Justice
[Before Chief Justice Carroll, Justices Aboussie and B. A. Smith]
Affirmed
Filed: April 22, 1992
[Do Not Publish] | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2857902/ | IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-92-068-CR
MICHAEL LYNN BATSON,
APPELLANT
vs.
THE STATE OF TEXAS,
APPELLEE
FROM THE COUNTY COURT AT LAW NO. 2 OF HAYS COUNTY,
NO. 35,445, HONORABLE LINDA A. RODRIGUEZ, JUDGE
PER CURIAM
This is an appeal from a conviction for speeding. Punishment was assessed at a
$75 fine.
Appellant has filed a motion to withdraw the appeal. No decision of this Court has
been delivered. The motion is granted and the appeal is dismissed. See Tex. R. App. P. Ann.
59(b) (Pamph. 1992).
[Before Chief Justice Carroll, Justices Aboussie and B. A. Smith]
Dismissed On Appellant's Motion
Filed: April 15, 1992
[Do Not Publish]
April 15, 1992
Mr. Kyle W. Maysel
130 E. San Antonio, Suite C
San Marcos, Texas 78666
Honorable Lucy Del Prado Dietz
Assistant Criminal District Attorney
Hays County Courthouse, Room 208
San Marcos, Texas 78666
Re: No. 3-92-068-CR--Michael Lynn Batson v.
The State of Texas (t/c no. 35,445)
Counsel:
In accordance with Rule 91, Texas Rules of Appellate Procedure, enclosed is a copy of the
opinion and judgment handed down by this Court on this date in the above cause.
The Court's mandate has been issued this date to the clerk of the trial court under separate cover.
Very truly yours,
W. KENNETH LAW, CLERK
By
Barbara E. Chapman, Deputy
Enclosures
xc: State Prosecuting Attorney
Clerk, Court of Criminal Appeals
Honorable Linda A. Rodriguez, County Judge
Mr. Ronnie Dannelley, County Clerk
MR. KYLE W. MAYSEL
130 E. SAN ANTONIO, SUITE C
SAN MARCOS TX 78666
HONORABLE LUCY DEL PRADO DIETZ
ASSISTANT CRIMINAL DISTRICT ATTORNEY
HAYS COUNTY COURTHOUSE, ROOM 208
SAN MARCOS TX 78666
MR. W. H. MOORE
DISTRICT CLERK
HAYS COUNTY COURTHOUSE
SAN MARCOS TX 78666
TRIAL COURT NO. 35,445
THE STATE OF TEXAS.
TO THE COUNTY COURT AT LAW NO. 2 DISTRICT COURT of HAYS COUNTY -
GREETINGS:
Before our COURT OF APPEALS, on the 15th of April A.D. 1992, the cause upon appeal to
revise or reverse your Judgment between
MICHAEL LYNN BATSON, Appellant,
No. 3-92-068-CR vs.
THE STATE OF TEXAS, Appellee,
was determined; and therein our said COURT OF APPEALS made its orders in these words:
THIS CAUSE came on to be heard on the written motion of the appellant to dismiss the appeal and the
same being considered, because it is the opinion of this Court that the same should be granted: it is
ORDERED, ADJUDGED and DECREED by the Court that appellant be allowed to withdraw notice of
appeal and that the appeal be dismissed; that the appellant pay all costs in this behalf expended; and that
this decision be certified below for observance.
WHEREFORE, We command you to observe the order of said COURT OF APPEALS in this
behalf and in all things have it duly recognized, obeyed and executed.
WITNESS the HONORABLE JIMMY CARROLL, Chief Justice
of our said COURT OF APPEALS for the Third District of Texas,
with the seal thereof annexed, at the City of Austin, this the 15th
day of April A.D. 1992.
W. KENNETH LAW, CLERK
by: , Deputy
Barbara E. Chapman
April 15, 1992
Mr. Ronnie Dannelley
County Clerk
Hays County Courthouse
San Marcos, Texas 78666
Re: No. 3-92-068-CR--Michael Lynn Batson v. State of
Texas
(t/c no. 35,445)
Dear Mr. Dannelley:
Enclosed, with reference to the above cause, is the mandate of this Court. Please acknowledge
your receipt of same by returning the enclosed card (No. 1) to this office, appropriately
completed.
Rule 87(b), Texas Rules of Appellate Procedure, sets out the procedures to be followed upon your
receipt of the mandate.
Upon execution of the mandate in accordance with the rule, either your office or the sheriff's
office should return the remaining card enclosed (No. 2), appropriately completed.
Your cooperation in this regard is appreciated.
Very truly yours,
W. KENNETH LAW, CLERK
by
Barbara E. Chapman, Deputy
Enclosures to Clerk
xc: Mr. Kyle W. Maysel
Honorable Lucy Del Prado Dietz, Assistant Criminal District Attorney | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1823199/ | 960 So. 2d 29 (2007)
Elroy PHILLIPS, Appellant,
v.
STATE of Florida, Appellee.
No. 4D06-1273.
District Court of Appeal of Florida, Fourth District.
May 23, 2007.
Rehearing Denied August 1, 2007.
*30 Elroy Phillips, Atlanta, GA, pro se.
Bill McCollum, Attorney General, Tallahassee, and Georgina Jimenez-Orosa, Assistant Attorney General, West Palm Beach, for appellee.
TAYLOR, J.
Defendant Elroy Phillips appeals an order denying his Rule 3.850 motion for postconviction relief entered after an evidentiary hearing. We affirm.
The defendant entered a plea to felony charges in three separate cases filed in the Palm Beach County circuit court: burglary of a dwelling while armed; possession of cocaine; carrying a concealed firearm; possession of a firearm by a convicted felon, and possession of cocaine with intent to sell. He was adjudicated guilty and sentenced to eighteen months' probation in one case and concurrent one-year terms of probation in the others.
Subsequently, a federal grand jury indicted the defendant on various firearm and drug charges. He was eventually found guilty of those charges. At sentencing, the defendant's prior state convictions were used to enhance his federal sentence from twenty years to thirty years.
The defendant filed a motion for postconviction relief pursuant to Florida Rule of Criminal Procedure 3.850. He alleged that his counsel in the state criminal cases told him that his pleas to the charges were "pleas of convenience," and that they would never be used against him and would be expunged after completion of probation. Defendant claims that this misadvice caused him to enter into pleas without full knowledge of the consequences and that, had he known that counsel would not or could not expunge his record, he would not have entered the pleas.
The circuit court conducted an evidentiary hearing concerning the defendant's postconviction claim of ineffective assistance of counsel. After the hearing, the court denied the defendant's motion.
We affirm the trial court's denial of the defendant's motion for postconviction relief based on State v. Dickey, 928 So. 2d 1193 (Fla. 2006). In Dickey, the Florida Supreme Court resolved conflicting opinions among the five district courts on the question of whether a defense counsel's wrong advice about the potential for sentence enhancement for a future crime constitutes ineffective assistance of counsel. The court "conclude[d] that allegations of affirmative misadvice by trial counsel on the sentence-enhancing consequences of a defendant's plea for future criminal behavior in an otherwise facially sufficient motion are not cognizable as an ineffective assistance of counsel claim." Id. at 1198.
Because the defendant's claim of ineffective assistance of counsel in this case is not cognizable, we affirm the trial court's order. We also affirm as to all other points raised in this appeal.
Affirmed.
WARNER and SHAHOOD, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540737/ | 259 B.R. 73 (2001)
In re EAGLE ENTERPRISES, INC. and Liberty Recovery Systems, Inc., Debtors.
Mitchell W. Miller, as Trustee for The Estates of Eagle Enterprises, Inc. and Liberty Recovery Systems, Inc., Plaintiff,
v.
USA Waste Services, Inc. (Now Known as Waste Management Inc.), Defendant.
Bankruptcy Nos. 98-11297 SR, 98-11298 SR. Adversary No. 99-501.
United States Bankruptcy Court, E.D. Pennsylvania.
February 8, 2001.
*74 *75 Michael A. Bloom, Morton R. Branzburg, Stephen M. Calder, Kevin J. Carey, John T. Carroll, III, Cozen & O'Connor, Philadelphia, PA, Samuel Conte, Kenilworth, NJ, David S. Elkind, Reboul, MacMurray, Hewitt, Maynard & Kristol, New York City, Leslie B. Gaynus, Comm. of PA., Dept. of Labor & Industry, Harry J. Giacometti, Maxwell P. Gorson, Philadelphia, PA, Peter J. Gutowski, Freewill, Hogan & Mahar LLP, New York City, Adam H. Isenberg, Centre Square West, Larry M. Keller, Laurie A. Krepto, Pepper Hamilton LLP, Michael R. Lastowski, Philadelphia, PA, Pauline K. Morgan, Wilmington, DE, Robert I. Morris, Philadelphia, PA, Gary D. Sesser, Carter, Ledyard & Milburn, New York City, Joel C. Shapiro, Blank Rome Comisky & McCauley LLP, Philadelphia, PA, J. Stephen Simms, Baltimore, MD, Joseph L. Steinfeld, Jr., Insolvency Financial & Collection Legal Services, Fairfax, VA, John F. Stoviak, Saul, Ewing, Remick & Saul LLP, Richard Q. Whelan, Sandra H. Young, Philadelphia, PA, for creditor.
Edward J. Didonato, Philadelphia, PA.
Mark E. Felger, Cozen & O'Connor, Wilmington, DE, for debtor.
OPINION
STEPHEN RASLAVICH, Bankruptcy Judge.
Introduction.
Before the Court is a Motion by Plaintiff/Trustee Mitchell W. Miller, Esquire for reconsideration of the Court's Opinion and Order of November 17, 2000 denying the Trustee's Motion for Leave to Amend Complaint and add new counts for fraudulent inducement and tortious interference with contract. The Motion is opposed by Defendant, USA Waste Services, Inc. Oral argument was heard January 8, 2001 and the matter has been briefed by the parties. For the reasons discussed herein the Motion will be denied.[1]
*76 The Trustee makes three arguments in support of the present motion. The Court will consider them in the order they are raised. First, the Trustee contests the Court's conclusion that the claims which the Trustee seeks to add are barred by the applicable statute of limitations. In this respect, the Trustee maintains that the claims in question can be seasonably brought because they arise from the same transaction or occurrence as underlies the claims stated in the Trustee's original complaint. As a consequence, says the Trustee, the new claims "relate back" to the date the existing claims were instituted, as the phrase relate back has been construed under Fed.R.Civ.P. 15(c), such that their assertion now would be timely, the statute of limitations notwithstanding. On this score, the Trustee argues specifically that the Court erred in not considering or properly applying the relation back doctrine. Having reviewed this question, the Court disagrees.
As a threshold matter, what is particularly striking about the Trustee's position is his insistence that his earlier amendment motion was all along predicated on Fed.R.Civ.P. 15(c) and that this issue was simply ill considered by the Court in connection with the earlier proceeding. This proposition is totally incorrect. The Trustee's amendment motion sought relief under Fed.R.Civ.P. 15(a) only. There was no reference in the Trustee's Motion papers or his voluminous memoranda of law to the applicability of Fed.R.Civ.P. 15(c). Rather, there was always a clear, candid acknowledgment by the Trustee that, other things being equal, the statute of limitations applicable to the claims he sought to add had expired. The Trustee relied on the "discovery rule" exception and argued that the running of the statute of limitations had been equitably tolled. Indeed, the Trustee expressly confirmed at oral argument that without the benefit of the discovery rule, his motion was doomed. This point was captured in the following exchange.
The Court: Well now, Mr. Regan, . . . I don't think you quarrel with the fact that unless you get the benefit of the discovery rule, you lose here.
Mr. Regan: Correct
The Court: You would agree with that?
Mr. Regan: I agree with that[2]
It thus came as something of a surprise to see the Trustee contend, as he does here, that he had heretofore "expressly set forth the factual and legal basis on which the relation back doctrine should have been applied" and that ". . . the Trustee could not have more clearly stated his position that the new fraud claims arise from the same transaction that forms the basis of the original complaint." (Motion for Reconsideration Trustee Reply Brief at pages 5-6) Even giving Trustee's counsel considerable license as an advocate, this argument surely does more than simply overstate the case. The Defendant, for its part, contends that the Trustee is actually attempting to change his position on an important issue previously conceded. The Court is constrained to agree. The question, therefore becomes whether the Trustee may legally do so.
Neither the Trustee's reconsideration motion, nor his supporting memorandum of law, expressly state the statutory basis upon which the Trustee seeks the present review. The authorities cited by the Trustee in his brief, however, all relate to motions for reconsideration filed under F.R.C.P. 59(e) or 60(b). The Trustee, in fact, originally offered the well known standard of review applicable to such motions as the applicable standard herein, *77 that is to say, a motion for reconsideration is to be granted where it is necessary to correct a clear error of law or to prevent manifest injustice. (Trustee Reconsideration Motion Trustee Memorandum of Law at page 6) In its response, the Defendant in turn observed certain well known limitations upon Rule 59(e) motions; to wit: that the scope of a Rule 59(e) motion is narrow, that such motions are to be sparingly granted, and that Motions for reconsideration under Rule 59(e) are not at the disposal of an unsuccessful party to rehash arguments and facts previously presented. Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3rd Cir.1985); Keyes v. National Railroad Passenger Corporation, 766 F. Supp. 277, 280 (E.D.Pa.1991). The decision whether to grant or deny a Rule 59(e) motion is entrusted to the sound discretion of the Court. Matter of Prince, 85 F.3d 314, 324 (7th Cir.1996).
Having received clear indication from the Trustee that he was preceding under Rule 59(e), it thus came as yet another surprise when the Trustee in his reply brief shifted gears once again, arguing for the first time that his motion herein is premised on Fed.R.Civ.P. 54(b), which deals with the revision of interlocutory orders. In keeping with this the Trustee offered a new and significantly different view as to the applicable standard of review governing the present motion, arguing that under Fed.R.Civ.P. Rule 54(b) the Court has the inherent power to reconsider interlocutory orders when it is "consonant with justice to do so." Case law, says the Trustee, makes clear that while reconsideration might be denied under the stringent standards applicable to motions under Rule 59(e), or 60(b), relief may still be granted in the same factual context under the more liberal consonant with justice standard. The Trustee's point that Fed. R.Civ.P. 54(b) applies to this motion to reconsider the Court's November 17, 2000 Order, due to its interlocutory nature, is well taken. The fact that the Court possesses the power to revisit an earlier uncertified adjudication, however, does not mean that the Court should or must do so. In a complex multi-claim action, early adjudications are often essential to effective management of the action. If motions based on the Court's power under Rule 54(b) could compel courts to revisit those adjudications, much of the advantage in making the early rulings would be lost. It is thus well established that a court should not depart from its earlier decision without good reason. Informing its determination in this respect should be consideration of the doctrine of judicial estoppel, as well as the potential for prejudice to other parties. 10 MOORE'S FEDERAL PRACTICE § 54.25[4] (Matthew Bender 3rd ed.) As discussed, infra, an analysis so informed convinces the Court that relief here is unwarranted.
To begin on what may be a small note, the Trustee's assertion that his arguments herein have always proceeded on the basis of Fed.R.Civ.P. 54(b). (See Trustee Reply Brief Footnote 1 at page 5) hardly withstands scrutiny. It seems perfectly clear, in other words, that it belatedly came to the Trustee's attention that a different rule of procedure than Fed.R.Civ.P. 59(e), with perhaps a less stringent standard of review, was available to him. Realizing as much, the Trustee acted accordingly. While this is perfectly understandable, it must be noted nevertheless that the Trustee's refusal to acknowledge as much, and his rather thin attempt to distance himself from his mistake by simply pretending it did not exist, is counter-productive, for ultimately it serves only to undermine the Trustee's credibility vis a vis larger issues with which he must contend.
In this respect, the Court reiterates its categorical rejection of the wholly unpersuasive argument that the Trustee's "relation back" contentions were fully pressed but ill considered in the context of his original motion. On the contrary, the issue was not joined on the merits by the Trustee. It is perhaps in recognition of the weakness of this argument that the *78 Trustee moves quickly from it to pose the separate question of whether reconsideration on the basis of Fed.R.Civ.P. 15(c) should be afforded irrespective of whether the issue of relation back had previously been raised by him. The Trustee, of course, answers this question in the affirmative. The Court, however, concludes otherwise.
As noted, the issue of relation back under Rule 15(c) was not argued by the Trustee. As with the case of the proverbial dog that did not bark, however, one must not only note the non-occurrence of the fact, but also ask why. The absence of debate over whether the new claims proposed by the Trustee arose from conduct set forth in the original breach of contract complaint, such as would support an entitlement to relief under Fed.R.Civ.P. 15(c), was not simply an oversight, as the Trustee at this juncture implies, for the recognition of a possible nexus between these claims was clearly not something of which the Trustee lately became aware. On the contrary, in both his papers and at oral argument, Trustee's counsel made quite plain that the interplay of the Trustee's contract and would-be fraud claims had been closely examined by counsel from the very earliest days of his engagement. Even accepting the Trustee's argument that it was only through discovery that the Trustee ultimately gleaned facts sufficient to support his suspicions of fraud, it is clear that the Trustee was cognizant of the statute of limitations problem he faced and had pinned his hopes on the discovery rule as the means of overcoming it. In this vein it is obvious that the Trustee felt and continues to feel strongly as to the merits of his position on the discovery rule issue. Indeed, Trustee's counsel once candidly stated in open court that he could not possibly even imagine a scenario where the Trustee's Motion to Amend Complaint would be denied. (Transcript October 12, 2000 hearing at pages 9-10) Whether such hubris led the Trustee to abandon recourse to a relation back argument may be debatable. What seems clear, however, is that this legal theory was foregone and a different legal theory was pursued. Even under a "consonant with justice" standard of review, the Court does not see in these circumstances grounds sufficient to warrant relief. Indeed, this seems little more than an attempt by the Trustee to secure a "second bite at the apple."
The Court, in particular, rejects as inapposite those authorities cited by the Trustee to the effect that any fraud claim may be added by amendment to an existing contract claim on a relation back basis where the alleged fraud is claimed to arise from the same transaction. While this general legal proposition no doubt has merit, it is not without limitation. Here, not only did the Trustee fail to raise the relation back argument despite repeated opportunity to do so, he implicitly acknowledged the unavailability of the theory to him by expressly acknowledging his need for a favorable ruling on the discovery rule issue in order to sustain his motion to amend complaint. To permit the Trustee to abruptly alter his course on this important issue is not lightly to be sanctioned. Indeed, the doctrine of judicial estoppel exists to prevent such inconsistent posturing. The Court finds the doctrine of judicial estoppel appropriately invoked here.
Simply stated, the doctrine of judicial estoppel bars people from taking inconsistent positions. Astor Chauffeured Limousine Co. v. Runnfeldt Inv. Corp., 910 F.2d 1540, 1547 (7th Cir.1990). The doctrine of judicial estoppel has not been uniformly adopted by courts. For example, it is not recognized at all in the Tenth Circuit. See, e.g., Webb v. ABF Freight System, Inc. 155 F.3d 1230, 1242 (10th Cir.1998). It has long been recognized, however, in this circuit. Scarano v. Central R.R. Co. of New Jersey, 203 F.2d 510, 513 (3rd Cir.1953) (Judicial estoppel looks to the relationship between the litigant and the Court. "It prevents a party from `playing fast and loose with the Court' by *79 using intentional self contradiction . . . as a means of obtaining unfair advantage.")
The Trustee opposes application of the doctrine of judicial estoppel, arguing that the doctrine applies only where counsel changes his position with respect to matters of fact previously proffered to the Court, but not to a change in a legal position argued to the Court. The Trustee's major premise (i.e., facts v. law) seems reflective of the majority position, although courts are certainly not unanimous on the point. See, e.g., Continental Ill. Corp. v. Commissioner, 998 F.2d 513, 518 (7th Cir. 1993) and Yniguez v. Arizona, 939 F.2d 727, 738 (9th Cir.1991) and the Third Circuit Court of Appeals does not seem to have squarely addressed that narrow question. Our Circuit Court has made clear, however, that application of judicial estoppel requires that each case be decided on its own particular facts and circumstances, expressly eschewing any formulaic approach. Motley v. New Jersey State Police, 196 F.3d 160, 163 (3rd Cir.1999). The analysis follows the two pronged framework set out in Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355 (3rd Cir.1996); to wit: the Court must ask 1) is a party's position inconsistent with a position previously asserted and, if so, 2) did the party assert either or both positions in bad faith, i.e., with intent to play fast and loose with the Court. Id. at 361. Analyzing the present question under these guidelines the Court finds against the Trustee.
To begin, the Court reiterates that the Trustee has clearly changed the legal position offered in support of his Motion to Amend Complaint. Moreover, even the Trustee's minor premise, i.e., that a law vs. facts safe harbor exists here, is flawed. The Trustee's maneuver certainly involves more than the simple proffer of an alternative legal theory. In a subtle way the Trustee's request goes beyond that. The Trustee's present change of position cannot be characterized benignly as the Trustee would do, for in the legal position he had adopted in connection with his motion to amend (i.e., reliance on the discovery rule) the Trustee simultaneously adopted and stressed his own unique version of this factually complex case. Through his resort to the discovery rule exception the Trustee staked out numerous claims of fraudulent concealment on the part of the Defendants. These claims are inextricably interwoven both with the Trustee's putative fraudulent inducement claims, as well as with his breach of contract claims. Factual allegations incident to the assertion of concealment might in varying degrees serve to buttress and/or confirm the Trustee's claims of fraudulent inducement or breach of contract. It may not be possible to precisely correlate the relationship at this juncture, however it is readily apparent that inherent in the Trustee's legal position as to the discovery rule are numerous matters of fact which the Trustee seemingly now minimizes, wholly relegates to the dust pile, or as to which the Trustee effectively reverses course. It is unfair to insist that the Defendant or the Court guess as to the Trustee's state of mind.
More significantly, the Defendant notes that in his original complaint the Trustee alleges a contract breach on the part of USA Waste based on its alleged failure to provide Debtor, Eagle Enterprises, Inc. with 3500 tons of municipal solid waste per day to transport. USA Waste points out that there are no allegations at all in the original complaint which refer to the gravamen of the Trustee's fraud contentions as set forth in his proposed amended complaint. (i.e., a truckload restriction at USA Waste's Virginia port facility and inadequate tipping equipment at USA Waste's landfill). This is not altogether surprising. Indeed, the Trustee himself has stressed that virtually all of the salient facts which give rise to the Trustee's fraud allegations were wholly unknown to him, or anyone else supportive of the Plaintiff's position herein, until long after the Trustee's original complaint was filed. (Trustee's Motion to Amend Complaint Reply Brief at p. 7). Yet, if this be true it is fair to question how the Trustee can contend that the Defendant *80 in this lawsuit nevertheless had adequate notice of forthcoming fraud claims on the basis of his original pleading. The Trustee not only reduces the chronology on which he so heavily relied in connection with his discovery rule argument to an irrelevancy, he seems now to assert basically that any claim of fraud that so much as refers to the contract between the Debtors and USA Waste is fair game for addition to this lawsuit, since such claim, at bottom, would relate to the parties' written agreement. USA Waste urges that in all of this grounds for judicial estoppel are evidenced. The Court agrees. The Trustee's relation back argument seems no more than a belated strategy adopted in the face of the Court's unfavorable ruling on the discovery rule issue, as such his tactics are reflective of bad faith, which is to say that they are indeed "fast and loose."
It is unfair to require the Defendants or the Court to sit by as the Trustee adjusts his legal theory to the latest ruling of the Court. The Defendant, moreover, argues that it will prejudiced by the Trustee's change in position, and notes inter alia, that enormously extensive discovery has already been completed, that discovery is now closed, and that a dispositive motion (summary judgment) is pending. If that Motion is resolved adversely to the movant, this matter is ready for trial. The Court concurs that under these circumstances additional indicia of unfairness also attend the Trustee's request. Prejudice being apparent, and the doctrine of judicial estoppel being appropriately called into play, the Court will bar the Trustee's attempted recourse to the doctrine of relation back as the possible means by which to preserve his otherwise time barred fraud claims.
Having reached this conclusion, the Court need not separately address in detail various arguments the Trustee makes which go to the question of whether the assertion of a relation back defense would succeed if the same were otherwise to go forward. The Court will close, however, by noting that for the very same reasons discussed above the assertion of the Trustee's Rule 15(c) argument has significant problems on its merits. Rule 15(c) allows a party to amend their pleading despite the running of an applicable State statute of limitations when other parties are sufficiently on notice of the facts and claims that gave rise to the proposed amendment. Courts historically are liberal in the exercise of their discretion to permit amendments. Once again, however, there are limitations, and the application of Rule 15(c) is not mechanical. Compuwill Express Inc. v. ATX Telecommunications Services Ltd., 2000 WL 694780 at *6 (E.D.Pa.)
The Trustee's proposed amendment can in no way be described as minor. It does not seek to correct mere technical deficiencies or to amplify a claim attempted to have been set forth in the Trustee's original pleading. Rather, it proposes to add a significant and entirely distinct new claim. The circumstances in which the Motion arises thus warrant scrutiny.
There is no basis here on which to argue that notice of fraudulent inducement is to be gleaned from the text of the original complaint. Indeed, the text of the complaint quite unambiguously couches the Trustee's cause of action as a straightforward claim for breach of contract. Moreover, earlier in the case Trustee's counsel in open court disavowed intentions to pursue a fraud claim, and opposed efforts by an estate creditor to institute a similar fraud action. In later discovery, the Trustee reconfirmed that his claim sounded only in contract. As noted above, the Trustee has disclaimed possession of knowledge sufficient to have brought a fraud claim on a timely basis. To insist in the face of this, that the Defendant at all times knew or should have known that the entirety of the parties' transaction was going to be "sifted," such that a fraud claim on the part of the Trustee should have been anticipated, is unconvincing and certainly not a conclusion to be arrived at *81 from a review of the record or a fair reading of the Trustee's original complaint. USA Waste argues that yet another case for judicial estoppel is made out in this context. That argument has probable merit, although the Trustee's relation back argument founders without consideration of that point. The addition of new theories of recovery is permissible only when the new claims are not based on events different from or in addition to those set out in a parties' original complaint. An amendment will not, however, relate back under Rule 15(c)(2) in the following situation:
[I]f the alteration of the original statement is so substantial that it cannot be said that the defendant was given adequate notice of the conduct, transaction, or occurrence that forms the basis of the claim or defense, then the amendment will not relate back and will be time barred if the limitations period has expired.
6A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure, Civil 2d § 1497 (1990).
For the reasons discussed above, the Court concludes that the situation described above exists here. The Court thus would be disinclined to permit the Trustee's proposed amendment on a relation back basis even absent the adverse findings made herein on threshold questions of prejudice and judicial estoppel.
The Trustee's second argument in support of his Motion for Reconsideration is that in the course of evaluating the merits of the Trustee's discovery rule argument, the Court erred in applying an inquiry notice versus actual notice standard to the Trustee's allegations of fraudulent concealment. The Court has considered but rejects this argument.
The Trustee cites the Court to Riddell v. Riddell Washington Corp., 866 F.2d 1480 (D.C.Cir.1989) in support of his position. Review of that decision, however, reveals it to be essentially, if not entirely, consistent with controlling law in this jurisdiction on the issues of the discovery rule and fraudulent concealment. That is to say that an inquiry notice standard normally applies to a plaintiff's attempt to invoke the discovery rule in order to toll the limitations period on a fraud claim. Hayward v. Medical Center of Beaver County, 530 Pa. 320, 325, 608 A.2d 1040, 1043 (1992); Pennsylvania Ship Supply, Inc. v. Fleming International, Ltd., 2000 WL 748141 at *3, 2000 U.S. Dist. LEXIS 7955 at *10 (E.D.Pa. June 9, 2000)("when the underlying cause of action sounds in fraud, . . . the statute of limitations is tolled until the plaintiff learns or reasonably should have learned through the exercise of due diligence of existence of the claim"); accord, Beauty Time, Inc. v. VU Skin Systems, Inc., 118 F.3d 140, 148 (3rd Cir.1997) ("discovery rule" applies in Pennsylvania); Gee v. CBS, Inc., 471 F. Supp. 600, 622 (E.D.Pa.), aff'd, 612 F.2d 572 (3d Cir.1979). For statute of limitations purposes, a claimant need only be put on inquiry notice by storm warnings of possible fraud. Beauty Time, Inc. v. VU Skin Sys., Inc., 118 F.3d at 148 (citing Ciccarelli v. Gichner Sys. Group, Inc., 862 F. Supp. 1293, 1301 (M.D.Pa.1994)); Gurfein v. Sovereign Group, 826 F. Supp. 890, 918 (E.D.Pa.1993). Further, where fraudulent concealment is alleged as the basis on which to contest the existence of legally sufficient notice, the law requires the plaintiff to demonstrate the existence of an affirmative and independent act of concealment such as would divert or mislead the plaintiff from discovering an injury or its cause. Bohus v. Beloff, 950 F.2d 919, 925 (3d Cir.1991); Glaziers & Glass Workers Union Local No. 252 Annuity Fund v. Janney Montgomery Scott Inc., 155 F.R.D. 97, 101 (E.D.Pa.1994); Compuwill Express, Inc., 2000 WL 694780 at *9 (E.D.Pa.); In re TMI, 89 F.3d 1106, 1117-18 (3rd Cir.1996); Miller v. Janney Montgomery Scott, Inc., 1998 WL 398146 at *2 (E.D.Pa.). The thrust of the Trustee's second argument in actuality is an assertion that the Court erred in failing to conclude that the Trustee had met the foregoing evidentiary burden. This argument, however, fails for at least two reasons.
*82 First, despite his present contentions to the contrary, the Trustee heretofore offered no evidence of any affirmative or independent act of concealment as to the two facts which undergird his putative fraud claim. (i.e., truckload restriction and tipper limitation). It is thus fair to observe that, to this extent, the Trustee is simply attempting to reargue a point previously lost. This, of course, is not the purpose of a motion for reconsideration regardless of what stage in a proceeding it is made. Second, although the Trustee in the context of the present motion does for the first time endeavor to address in specific the issue of fraudulent concealment, he fails to meet his evidentiary burden. On this score, the Trustee argues that in conversation USA Waste employee Ben Victory intentionally misled Debtor/principal Robert Ferro by citing operational problems on the Debtor's part as the reason for shortfalls in contractual waste tonnage deliveries, rather than conceding that the true reasons were USA Waste's own truckload and tipper problems. Even overlooking the untimeliness of the Trustee's argument, it still breaks down.
As USA Waste notes, the truckload restriction was a matter of public record and was set forth in a permit issued to USA Waste by the local municipality. Moreover, for the reasons discussed in its prior opinion, the Court has concluded that the Debtor, through its managerial employee Lawrence Jones, had actual knowledge of the truckload restriction. Similarly, with respect to the tipper, the Court has previously concluded that not only Jones, but no doubt Ferro as well, was on notice of the inadequacy of the Defendant's single tipper, each having personally witnessed it himself. It cannot be plausibly argued, therefore, that either of these constraints was concealed at all, let alone fraudulently concealed. The Trustee's Motion as premised on his second argument is thus without merit.
The Trustee's third argument represents his most extensive revisitation of adjudicated issues in the hopes of achieving a different result. It bears noting, therefore, that in its course, the Trustee has presented absolutely no newly discovered evidence. Rather, the Trustee reiterates arguments previously considered but rejected by the Court, and offers other evidence and arguments previously available to him but not used. It of course cannot be overemphasized that this approach is sharply at odds with proper procedure.
The thrust of the Trustee's third argument, in any event, is twofold. First, the Trustee maintains that the Court misinterpreted the 1997 letter from landfill manager Lee Wilson to Robert Ferro, arguing that this letter did not provide inquiry notice of the landfill truck restriction, such as would undermine the Trustee's recourse to the discovery rule tolling exception. On this point, the Trustee suggests that the Court has misconstrued the text of the letter, and offers his own counsel's affidavit to the effect that he (i.e., counsel) had read the letter and understood it differently given what he knew about the case. The Court views the affidavit as a dubious gambit and will not engage in such debate. For the reasons stated in its original opinion, the Court stands by its conclusion as to the import of the subject correspondence, and its effect on the Trustee's Motion to Amend Complaint.
The second contention of the Trustee's third argument is that the Court gave inappropriate weight to the September 8, 2000 affidavit of the Debtor's landfill site manager, Lawrence Jones in concluding that the Debtor, through Jones, had actual notice of the truckload restriction at the USA Waste landfill. In support, the Trustee renews an old argument and makes a new one. As to the former point, the Trustee reiterates his view that Jones' credibility is suspect because his deposition testimony is allegedly at variance with his affidavit. As to the latter point, the Trustee now adds the new challenge of bias on the part of Jones, the same alleged to flow from business dealings between Jones' brother, Stephen Jones, and USA Waste. Once again, leaving aside the obvious procedural infirmities, the Court finds *83 in neither of these arguments cause to change its original ruling.
It is true that the Jones affidavit offers more detail than is to be found in the transcript of his deposition. The explanation for this, however, appears to lie mainly in the fact that the relevant deposition questioning of Jones on the point in issue (i.e., a truckload restriction) was abbreviated. Moreover, it is an exaggeration to say that the two sets of sworn testimony are even inconsistent. While the Court notes that in his affidavit Jones describes a precise daily truckload restriction (i.e., 125 trucks), whereas in his deposition he previously stated that he could not recall the exact number, in each instance Jones nevertheless confirms clearly his awareness that a specific numerical truckload restriction existed. This is by far the more important point to take away for purposes of analysis of inquiry and/or actual notice of the restriction, and the Court finds nothing sinister in Jones' inability to recall the exact number during his oral examination.
The Trustee also asserts, for the first time here, that undue weight was given to the Jones affidavit because Jones is an "interested" witness. In this respect, the Trustee alleges that Jones' brother has submitted a bid to USA Waste on an enormous waste shipment contract thereby creating a substantial incentive for Jones to file an affidavit favorable to USA Waste. This, of course, is a very serious charge, making its belatedly assertion at first blush puzzling. The evidence offered by USA Waste in rebuttal seems to at least partially explain matters, for it effectively refutes the Trustee's insinuation.
The Trustee's allegation is premised on a short passage from the deposition of Stephen Jones in February 2000 wherein he refers to "having a proposal in front of USA Waste" for the transport of waste from New York. There are no details beyond this in the deposition, nor have any relevant supporting documents been produced herein. In response, however, USA Waste has offered an affidavit from an employee in its accounting department which states that the proposal referred to in the deposition of Stephen Jones was indeed for barging waste from New York, but that the proposal was rejected by USA Waste "well before" September 8, 2000, that no other proposals from Jones' company were pending on September 8, 2000, and that by that date (i.e., September 8, 2000) Jones' company had in fact discontinued barging operations. This rather convincing and uncontradicted rejoinder makes the Trustee's allegations of bias seem little more than a hip shot, and the Court rejects it as such.
In conclusion, the Court has considered and reconsidered all arguments which the Trustee has advanced in support of his Motion for Reconsideration. Finding no grounds to change its original decision, the Trustee's Motion will be denied.
NOTES
[1] The Trustee's moving papers actually speak only to the Court's ruling as to the Trustee's new fraud claims. These accordingly are what the Court addresses herein.
[2] Transcript of Oral Argument, Oct. 12, 2000, at p. 29:10-15. The Court here expressly rejects the Trustee's contention that this concession was limited in effect to a particular point being discussed prior to the cited passage. This argument is unsupported by a fair reading of the relevant portion of the transcript and the record in its entirety. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540118/ | 974 A.2d 729 (2009)
115 Conn.App. 752
STATE of Connecticut
v.
Ulises COLLAZO.
No. 28878.
Appellate Court of Connecticut.
Argued April 23, 2009.
Decided July 21, 2009.
*731 James B. Streeto, assistant public defender, for the appellant (defendant).
Rita M. Shair, senior assistant state's attorney, with whom, on the brief, were Stephen J. Sedensky III, state's attorney, and David R. Shannon, assistant state's attorney, for the appellee (state).
DiPENTIMA, GRUENDEL and PELLEGRINO, Js.
*732 PELLEGRINO, J.
The defendant, Ulises Collazo, appeals from the judgment of conviction, rendered after a jury trial, of one count of assault in the first degree as an accessory in violation of General Statutes §§ 53a-8 and 53a-59(a)(5), three counts of assault in the first degree as an accessory in violation of §§ 53a-8 and 53a-59 (a)(1), three counts of assault in the first degree as an accessory in violation of §§ 53a-8 and 53a-59(a)(4), one count of conspiracy to commit assault in the first degree in violation of General Statutes §§ 53a-48 and 53a-59(a)(1), and one count of conspiracy to commit assault in the first degree in violation of §§ 53a-48 and 53a-59(a)(4).[1] On appeal, the defendant claims that the trial court improperly (1) failed to order an evaluation of his competency to stand trial and to conduct an independent inquiry as to the need for such evaluation, (2) instructed the jury that it could find him guilty as either a principal or an accessory and (3) denied his Batson[2] challenge. We affirm the judgment of the trial court.
The jury reasonably could have found the following facts. On July 30, 2004, Rudy Ortiz, the president of the Danbury Latin Kings, was involved in a fight with several young men from Stamford. Ortiz was angry about the fight and wanted revenge. Ortiz crafted a plan to seek his revenge and arranged for Sabrina Colon, who knew one of the men from Stamford, Keven Louis, to invite the Stamford men to Danbury. On August 2, 2004, five men from Stamford, Louis, Cliff Certillian, Kenny Poteau, Herbie Servil and Stanley Bruno, arrived at a basketball court at Eden Drive in Danbury. Waiting in the bushes to ambush the five Stamford men were Ortiz, Juan Macias, Luis Guzman, Alex Garcia, the defendant and a few others. As the five Stamford men walked onto the basketball court, Macias and the defendant followed them. After a prearranged signal, the defendant threw the first punch, and the remaining Danbury men ran out from the bushes to continue the assault. Gunshots were heard.
Garcia had a nine millimeter assault rifle and shot Louis once in the leg and at least once more in the abdomen. Servil suffered twelve to thirteen separate stab wounds to his back, abdomen and right arm, one of which damaged his liver. Bruno ran off but was either shot or stabbed in the back, resulting in a collapsed lung. The defendant elected a trial by jury and was tried together with Garcia.[3] The jury found the defendant guilty of seven counts of assault in the first degree as an accessory and two counts of conspiracy to commit assault in the first degree. He was sentenced to a total effective term of thirty-five years incarceration. This appeal followed. Additional facts will be set forth as necessary.
I
The defendant's first claim is that the court denied him due process of law by improperly denying his counsel's request for a competency evaluation, pursuant to General Statutes § 54-56d,[4] and by failing *733 to conduct an independent inquiry to determine the need for such an evaluation. We disagree.
The very incident that the defendant claims denied him due process occurred in the Danbury Superior Court on April 13, 2006, when he was before the court for a status conference involving this matter and an additional unrelated criminal matter. See State v. Collazo, 113 Conn.App. 651, 967 A.2d 597 (2009). On that date, attorney Robert Field represented the defendant in both cases. The defendant, at that status conference, informed the judge that he did not want Field to represent him. Field informed the court that the defendant was very contentious, would not listen to him, would yell at him, told him that he did not know what he was doing and threatened to file a slander lawsuit against him. Field suggested that the defendant might have bipolar disorder or intermittent explosive disorder and moved for a competency examination. After the court questioned the defendant, it denied the request for a competency examination. The court, however, appointed new counsel to represent the defendant.
The defendant argues here, as he did in State v. Collazo, supra, 113 Conn.App. at 651, 967 A.2d 597, that he was denied due process because the court denied his request for a competency examination and failed to conduct an independent inquiry to determine the need for such an evaluation. After its review of the April 13, 2006 transcript, this court observed in its opinion that the attorney-client relationship had broken down, the defendant did not want Field to represent him and that the defendant responded appropriately to the court's questions and presented himself as being able to think reasonably and lucidly. Id., at 663-64, 967 A.2d 597. This court concluded in Collazo that the trial court did not abuse its discretion by denying the defendant's motion for a competency examination. Id., at 665, 967 A.2d 597.
We will not conduct an additional analysis of the defendant's claim, as it has been decided previously. "The common-law doctrine of collateral estoppel, or issue preclusion, embodies a judicial policy in favor of judicial economy, the stability of former judgments and finality.... Collateral estoppel, or issue preclusion, is that aspect of res judicata which prohibits the relitigation of an issue when that issue was actually litigated and necessarily determined in a prior action between the same parties upon a different claim.... For an issue to be subject to collateral estoppel, it must have been fully and fairly litigated in the first action. It also must have been actually decided and the decision must have been necessary to the judgment." (Internal quotation marks omitted.) Lyon v. Jones, 291 Conn. 384, 406, 968 A.2d 416 (2009); see also State v. Jones, 98 Conn. App. 695, 704-706, 911 A.2d 353 (2006) (res judicata barred defendant from raising sufficiently similar claim previously decided), cert. denied, 281 Conn. 916, 917 A.2d 1000 (2007). This claim was raised previously, fully and fairly argued in this court and a decision was rendered. Moreover, once the defendant was provided with new trial counsel, no additional claims as to his competency were ever raised. Neither his new trial counsel, nor the judge presiding over his criminal trial, raised any issue regarding the defendant's competency. Accordingly, this claim fails.
II
The defendant next claims that the court improperly instructed the jury that it could find him guilty as either a principal *734 or an accessory on the counts of assault in the first degree. The defendant did not raise his claim in the trial court and did not object at trial to the court's instruction on principal liability. The defendant contends, however, that the claim is reviewable under State v. Golding, 213 Conn. 233, 239-40, 567 A.2d 823 (1989). We agree that the record is adequate for review and that the defendant raises a constitutional claim with regard to his rights to present a defense and to notice of the charges against him. We do not agree, however, that the claimed constitutional violation clearly exists because we conclude that the defendant waived this claim at trial. This claim, therefore, fails under the third prong of Golding.
"Waiver is an intentional relinquishment or abandonment of a known right or privilege.... It involves the idea of assent, and assent is an act of understanding.... The rule is applicable that no one shall be permitted to deny that he intended the natural consequences of his acts and conduct.... In order to waive a claim of law it is not necessary ... that a party be certain of the correctness of the claim and its legal efficacy. It is enough if he knows of the existence of the claim and of its reasonably possible efficacy.... Connecticut courts have consistently held that when a party fails to raise in the trial court the constitutional claim presented on appeal and affirmatively acquiesces to the trial court's order, that party waives any such claim....
"Under [State v. Golding, supra, 213 Conn. at 239-40, 567 A.2d 823], a defendant can prevail on a claim of constitutional error not preserved at trial only if all of the following conditions are met: (1) the record is adequate to review the alleged claim of error; (2) the claim is of constitutional magnitude alleging the violation of a fundamental right; (3) the alleged constitutional violation clearly exists and clearly deprived the defendant of a fair trial; and (4) if subject to harmless error analysis, the state has failed to demonstrate harmlessness of the alleged constitutional violation beyond a reasonable doubt. The first two Golding requirements involve whether the claim is reviewable, and the second two involve whether there was constitutional error requiring a new trial....
"A defendant in a criminal prosecution may waive one or more of his or her fundamental rights.... In the usual Golding situation, the defendant raises a claim on appeal which, while not preserved at trial, at least was not waived at trial.... In Fabricatore, our Supreme Court cited with approval opinions of this court holding that a defendant who has waived a constitutional right at trial cannot prevail on that claim on appeal. In [State v. Cooper, 38 Conn.App. 661, 670, 664 A.2d 773, cert. denied, 235 Conn. 908, 665 A.2d 903 (1995), cert. denied, 517 U.S. 1214, 116 S.Ct. 1837, 134 L.Ed.2d 940 (1996), this court] held that a defendant could not satisfy the third prong of Golding where he had implicitly waived at trial a challenge to the alleged constitutional deprivation that was the basis of his claim on appeal. Therefore, a defendant cannot prevail under Golding on a claim that he implicitly waived at trial.... [This court] determined that the defendant's claim [in Cooper] was reviewable under the first two prongs of Golding, but concluded that, because he had waived his right to have the state prove all elements of his crime, he failed to demonstrate that the alleged constitutional violation clearly existed....
"In Cooper, this court also concluded that the defendant had waived any challenge to the alleged constitutional violation because the defendant not only failed to object to the court's instruction, but also voiced satisfaction with it.... To allow [a] defendant to seek reversal now that his *735 trial strategy has failed would amount to allowing him to induce potentially harmful error, and then ambush the state with that claim on appeal." (Citations omitted; internal quotation marks omitted.) State v. McDaniel, 104 Conn.App. 627, 633-34, 934 A.2d 847 (2007), cert. denied, 285 Conn. 912, 943 A.2d 471(2008). In the present matter, during the charging conference, the court indicated that the state had asked for a charge on both principal and accessory liability as to each count. After a discussion regarding the elements of the assault charge and that the jury could find the defendant guilty as either a principal or as an accessory, defense counsel, when asked for comment replied, "I have no comment at this time," and, "I'm in agreement." After continued discussion regarding the jury charge, defense counsel expressed concern over the instruction for count two that the instrument that caused the injury must be a firearm and not a knife. After even further discussion, defense counsel then stated: "I have no disagreement with the way the court's going to charge it; it's just how it's going to charge because thereit's in [the] alternative each way, and if the court ... [is] ... going to group them ... this is a confusing long form information ... for the jurors, who really are unfamiliar."
The defendant's right to challenge the jury instruction on appeal was effectively waived. Defense counsel expressed his concern that, as to the charge on count two, § 53a-59(a)(5) requires that the injury must be from a firearm and not a knife. Defense counsel, however, expressed no disagreement with the jury instruction as to assault in the first degree as both a principal and an accessory. Moreover, two days later, once the jury had been instructed in its entirety, the court again asked counsel if there were any exceptions to the charges as given, and defense counsel stated: "Nothing from the defense ... for [the defendant]." Accordingly, we conclude that because the defendant has waived this claim, there is no clear, existing constitutional violation, and thus the claim fails to satisfy the third prong of Golding.
III
The defendant's final claim is that court improperly denied a Batson challenge, after the state exercised a peremptory challenge against B[5] in a discriminatory manner during voir dire.[6] B stated that she was born in New York and went to high school and college there. She stated that she is married, has one child and works as a teacher. At some point, she went to the Dominican Republic but had returned to New York seventeen years ago, prior to moving to Connecticut. B stated that she previously had served on a jury in a criminal case in New York. The defendant accepted B as a juror, but the state exercised a peremptory challenge and dismissed her. Because the defendant and B are both Hispanic, the defendant raised a Batson challenge.[7] The prosecutor *736 responded that he was exercising his challenge on two grounds: (1) B was a teacher, and "there is the stereotype [that] teachers are sometimes more sympathetic, not always the best jurors for the state," and (2) B had never heard of the Latin Kings, and "there hasn't been a juror that I've taken who hasn't heard at least the term Latin King, to my knowledge." The court noted that the jury already included a Hispanic venire-person and denied the defendant's Batson challenge.
"In Batson ... the United States Supreme Court recognized that a claim of purposeful racial discrimination on the part of the prosecution in selecting a jury raises constitutional questions of the utmost seriousness.... [T]he Equal Protection Clause [of the fourteenth amendment] forbids the prosecutor to challenge potential jurors solely on account of their race...." (Internal quotation marks omitted.) State v. Monroe, 98 Conn.App. 588, 590-91, 910 A.2d 229 (2006), cert. denied, 281 Conn. 909, 916 A.2d 53 (2007).
"Under Connecticut law, [o]nce a [party] asserts a Batson claim, the [opposing party] must advance a neutral explanation for the venireperson's removal.... The [party asserting the Batson claim] is then afforded the opportunity to demonstrate that the [opposing party's] articulated reasons are insufficient or pretextual.... [T]he trial court then [has] the duty to determine if the [party asserting the Batson claim] has established purposeful discrimination.... The [party asserting the Batson claim] carries the ultimate burden of persuading the trial court, by a preponderance of the evidence, that the jury selection process in his or her particular case was tainted by purposeful discrimination." (Internal quotation marks omitted.) Id., at 591, 910 A.2d 229. "[T]he trial court's decision on the question of discriminatory intent represents a finding of fact.... Accordingly, a ... court's determination that there has or has not been intentional discrimination is afforded great deference and will not be disturbed unless it is clearly erroneous." (Internal quotation marks omitted.) Id., at 592, 910 A.2d 229. "Nonetheless, because of the constitutional implications of the alleged defects in the jury selection process, in reviewing the defendant's claims under the state constitution, we will subject the findings of the trial court to the same independent and scrupulous examination of the entire record that we employ in our review of constitutional fact-finding.... We invoke that heightened review, however, within the broader context of the clearly erroneous standard." (Citations omitted; internal quotation marks omitted.) State v. Morales, 71 Conn.App. 790, 802-803, 804 A.2d 902, cert. denied, 262 Conn. 902, 810 A.2d 270 (2002).
As noted, after the defendant asserted his Batson claim, the state responded with two reasons for its peremptory challenge. Additionally, the prosecutor argued that he had already accepted a Hispanic juror so that there was no pattern of purposeful discrimination. Once the prosecutor had offered his race neutral reasons, the burden of persuasion rested on the defendant to demonstrate to the court that the state purposefully discriminated against this potential juror. See State v. Hamlett, 105 Conn.App. 862, 878, 939 A.2d 1256, cert. denied, 287 Conn. 901, 947 A.2d 343 (2008). The court, after stating that it was not sure that being a schoolteacher was a reason to excuse a juror, ultimately concluded that "out of four jurors, one is clearly Hispanic. And ultimately after one[the *737 defendant has] the burden of proving that the selection process is tainted by purposeful discrimination. I can't conclude that there's purposeful discrimination on the record before me."
On appeal, the defendant argues that the state made no attempt to determine specifically whether B's occupation as a teacher caused her to have the liberal bias for which the prosecutor excused her. Additionally, the defendant argues that the state had accepted other, non-Hispanic jurors who had not heard of the Latin Kings. The defendant claims that the prosecutor's reasons for excusing B were inadequate and pretextual, and, therefore, the court improperly denied the defendant's Batson challenge. We disagree.
Our review of the record reveals that the following day, the prosecutor corrected the record to indicate that he had actually accepted the first two Hispanic jurors prior to exercising his peremptory challenge as to B. The first Hispanic juror that the prosecutor had accepted was excused by the defendant. In light of the prosecutor's reasons and his acceptance of two Hispanic jurors, we cannot say that the court's determination that there was no pattern of discrimination and that its rejection of the defendant's Batson challenge was clearly erroneous. "[T]he fact-bound determination concerning the propriety of the use of peremptory challenges is a matter that necessarily must be entrusted to the sound judgment of the trial court, which, unlike an appellate court, can observe the attorney and the venireperson and assess the attorney's proffered reasons in light of all the relevant circumstances." State v. Hodge, 248 Conn. 207, 261, 726 A.2d 531, cert. denied, 528 U.S. 969, 120 S.Ct. 409, 145 L.Ed.2d 319 (1999). Although the court did not specifically think that B's occupation as a teacher was a reason to excuse her, the court ultimately determined that there was no pattern of discrimination and denied the defendant's Batson challenge.
We note, however, that "[p]eremptory challenges based on employment reasons have been upheld." State v. Cepeda, 51 Conn.App. 409, 425, 723 A.2d 331, cert. denied, 248 Conn. 912, 732 A.2d 180 (1999). See, e.g., United States v. Johnson, 4 F.3d 904, 913-14 (10th Cir.1993) (striking teacher race neutral), cert. denied sub nom. Nottingham v. United States, 510 U.S. 1123, 114 S.Ct. 1081, 127 L.Ed.2d 398 (1994); United States v. Nelson, 450 F.3d 1201, 1208 (10th Cir.) (no racially discriminatory intent in explanation that teachers or other highly educated persons do not make good jurors), cert. denied, 549 U.S. 937, 127 S.Ct. 326, 166 L.Ed.2d 244 (2006); Williams v. State, 939 S.W.2d 703, 706 (Tex.App.1997) (excusing teacher race neutral when defendant did not challenge explanation); State v. Sanders, 263 Kan. 317, 327, 949 P.2d 1084 (1997) (race neutral to strike one teacher and not another when nonexcused teacher had sister who was victim of crime), superseded by statute on other grounds as stated in State v. Bedford, 269 Kan. 315, 327, 7 P.3d 224 (2000). Moreover, the defendant did not contest the peremptory challenge on the ground that the state's reason was due to B's employment; defense counsel stated instead: "I'm not going to claim that one, but I am going to claim the second part because she doesn't know the Latin Kings, and she is Hispanic."
The prosecutor's second reason, that B previously had not heard of the Latin Kings, appears to have been accepted as race neutral by the court. "A neutral explanation means an explanation based on something other than the race of the juror.... [T]he issue is the facial validity of the prosecutor's explanation. Unless a discriminatory intent is inherent in the prosecutor's explanation, the reason *738 offered will be deemed race neutral.... If the prosecutor's reason, however, is without regard to the particular circumstances of the trial or the individual responses of the jurors, [it] may be found by the trial judge to be a pretext for racial discrimination.... The factors that might be used to determine pretext have been discussed by our appellate courts.... [This] include[s] whether the prosecutor's reasons are related to the case...." (Citations omitted; internal quotation marks omitted.) State v. Patterson, 37 Conn.App. 801, 807, 658 A.2d 121(1995), rev'd on other grounds, 236 Conn. 561, 674 A.2d 416 (1996). Here, B was excused because she had not heard of the Latin Kings, and the potential involvement of the defendant with the Latin Kings was related to the case. Accordingly, we cannot conclude that the court's denial of the defendant's Batson challenge was clearly erroneous. We conclude, therefore, that the court properly determined that the state had not exercised its peremptory challenge in a racially discriminatory manner.
The judgment is affirmed.
In this opinion the other judges concurred.
NOTES
[1] The jury found the defendant not guilty of one count of assault in the first degree as an accessory.
[2] See Batson v. Kentucky, 476 U.S. 79, 96-98, 106 S.Ct. 1712, 90 L.Ed.2d 69 (1986).
[3] State v. Garcia, 115 Conn.App. 766, 973 A.2d 1278 (2009).
[4] General Statutes § 54-56d provides in relevant part: "(a) ... A defendant shall not be tried, convicted or sentenced while the defendant is not competent. For the purposes of this section, a defendant is not competent if the defendant is unable to understand the proceedings against him or her or to assist in his or her own defense....
"(c) ... If, at any time during a criminal proceeding, it appears that the defendant is not competent, counsel for the defendant or for the state, or the court, on its own motion, may request an examination to determine the defendant's competency...."
[5] We refer to the venireperson by initial to protect legitimate privacy interests. See, e.g., State v. Wright, 86 Conn.App. 86, 88 n. 3, 860 A.2d 278 (2004).
[6] The state relies on State v. Lane, 101 Conn. App. 540, 548-49, 922 A.2d 1107, cert. denied, 283 Conn. 910, 928 A.2d 538 (2007), and State v. Owens, 63 Conn.App. 245, 263, 775 A.2d 325, cert. denied, 256 Conn. 933, 776 A.2d 1151 (2001), and argues that this court need not reach the merits of this claim because B's ethnicity was not established prior to the court's ruling on the Batson challenge, and thus the record is inadequate for review. We choose to reach the merits, however, because unlike in Lane and Owens, B's ethnicity was established on the record, albeit after the court had made its ruling.
[7] B did not state her ethnicity on the juror questionnaire. Prior to the court's ruling on the Batson challenge, neither the court nor the prosecutor would affirmatively say that B was Hispanic. The court, however, after its ruling, had B return to the courtroom to ask her ethnicity, to which she responded that she is Hispanic. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540149/ | JOHN H. BENGE, JR., Defendant Below-Appellant,
v.
STATE OF DELAWARE, Plaintiff Below-Appellee.
No. 546, 2008.
Supreme Court of Delaware.
Submitted: April 24, 2009.
Decided: June 2, 2009.
Before HOLLAND, BERGER, and JACOBS, Justices.
ORDER
CAROLYN BERGER, Justice.
This 2nd day of June 2009, upon consideration of the parties' briefs and the record on appeal, it appears to the Court that:
(1) The appellant, John Benge, filed this appeal from the Superior Court's summary denial of his second motion for postconviction relief, which challenged Benge's 2004 guilty plea and sentence. We find no merit to Benge's appeal. Accordingly, we affirm the Superior Court's judgment.
(2) The record reflects that a grand jury indicted Benge in January 2003 for an October 2002 assault on his ex-wife and shooting of her friend. Three charges in the indictment were severed from the others. In August 2003, a Superior Court jury convicted Benge of second degree assault, offensive touching, and first degree criminal trespass. This Court affirmed on direct appeal.[1] Thereafter, in January 2004, Benge pled guilty to the three remaining charges, which included possession of a deadly weapon by a person prohibited and two counts of criminal contempt. The Superior Court sentenced him to fifteen days at Level V incarceration on each of the criminal contempt convictions. On the weapon conviction, the Superior Court sentenced him to two years at Level V incarceration, to be suspended after serving six months for probation. Benge did not appeal.
(3) Instead, he filed a motion for postconviction relief and a motion for correction of illegal sentence in December 2006. The Superior Court denied Benge's postconviction claims on the grounds that: (i) his challenge to his guilty plea was procedurally defaulted because Benge had failed to challenge it on direct appeal; (ii) his double jeopardy claim was procedurally defaulted and had been waived at the time Benge entered his guilty plea; (iii) his claim of an illegal sentence was untimely and without merit; and (iv) his claim that the prosecutor breached the plea agreement was both procedurally defaulted and without merit. We affirmed the Superior Court's judgment on appeal.[2]
(4) In September 2008, Benge filed his second motion for postconviction relief. As grounds for relief, Benge argued: (i) that the Family Court protective order banning Benge from possessing a firearm was overly broad and violated his constitutional right to bear arms; (ii) the Family Court's protective order was constitutionally invalid because it was entered by a Commissioner and not a Judge of the Family Court; and (iii) double jeopardy prohibited his convictions for contempt. The Superior Court denied Benge's motion on the grounds that it was untimely, repetitive, and the claims could have been pursued in a direct appeal.[3] The Superior Court concluded that Benge's motion did not assert any retroactive right and that he did not otherwise overcome the procedural hurdles of Rule 61.
(5) After careful consideration of the parties' briefs and the record on appeal, we find it manifest that the judgment below should be affirmed on the basis of the Superior Court=s well-reasoned decision dated October 1, 2008. The Superior Court did not err in concluding that Benge's second motion for postconviction relief was procedurally barred and that Benge had failed to overcome the procedural hurdles.
NOW, THEREFORE, IT IS ORDERED that the judgment of the Superior Court is AFFIRMED.
NOTES
[1] Benge v. State, 2004 WL 2742314 (Del. Nov. 15, 2004).
[2] Benge v. State, 945 A.2d 1099 (Del. 2008).
[3] See Del. Super. Ct. Crim. R. 61(i)(1)-(3). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540151/ | 974 A.2d 1225 (2009)
TECH ONE ASSOCIATES, Appellant
v.
BOARD OF PROPERTY ASSESSMENT, APPEALS AND REVIEW of Allegheny County, West Mifflin Borough and West Mifflin Area School District.
No. 103 C.D. 2008.
Commonwealth Court of Pennsylvania.
Argued May 6, 2009.
Decided June 1, 2009.
*1226 John A. Straka, III, Sewickley, for appellant.
Michael Adams, Pleasant Hills, for appellee, West Mifflin Borough.
John F. Cambest, Pittsburgh, for appellee, West Mifflin Area School District.
BEFORE: LEADBETTER, President Judge, McGINLEY, Judge, PELLEGRINI, Judge, RENÉE COHN JUBELIRER, Judge, SIMPSON, Judge, LEAVITT, Judge, and BUTLER, Judge.
OPINION BY Judge PELLEGRINI.
Tech One Associates (Landowner) appeals an order of the Court of Common Pleas of Allegheny County (trial court) assessing the value of its property for tax years 2001 through 2005. The issue on appeal is whether buildings and other improvements on the property made and owned on land leased property must be included in the assessed value of the property. The trial court determined that those improvements were to be included, and finding no fault with the trial court's determination, we affirm.
Landowner owned 47.5 acres of undeveloped land in West Mifflin Borough, Allegheny County, Pennsylvania. In 1989, it entered into a 50-year lease agreement with Terra Associates (Lessee) covering *1227 this land with an annual rent of $665,000. Landowner gave Lessee the right to improve the land, own what it built, and assign its interests at any time. Under the lease agreement, Lessee pays all real estate taxes and other related taxes for the entire property.
On the land in the early 1990s, Lessee constructed a one-story shopping center now known as Century Square, that has 415,613 square feet of rentable area with 29 tenant spaces. Lessee, or others pursuant to agreements with Lessee, have also built a multi-screen movie theater building and a restaurant building on the land.
In 2001, the Allegheny County Board of Property Assessment, Appeals and Review (Board) assessed the fair market value of Landowner's property for 2001 at $30,984,700. It included the land (based on Landowner's leased fee, i.e., the rent it received) and the buildings and improvements in its assessment. Landowner appealed, and a hearing was held before the Board of Viewers.[1]
At that hearing, Anthony Barna (Barna), a licensed real estate appraiser, testified for Landowner stating that in making his appraisal of the property for the tax years in question, he recognized the "economic reality" of the impact of the long-term land lease between Landowner and Lessee in using the capitalization-of-income approach to value the property.[2] He stated that the income capitalization method established a capitalization rate by assessing the property and surrounding area as well as comparable properties, and any reversion interest in the property with the annual income of the property divided by the capitalization rate to obtain the value of the land. He established a capitalization rate of seven percent, and based on the annual rent Landowner received, the value of Landowner's lease fee interest in the land was $9,500,000 for each of the four tax years, 2001 through 2005.[3] He placed no value on the buildings because the economic reality of the long-term land lease held by Landowner, the party being assessed, was that it received no economic benefit from the buildings constructed on the land.
The taxing bodies, Borough of West Mifflin and the School District of West Mifflin, presented the expert testimony of Mark Ackerman (Ackerman) who used the income approach in arriving at his values. His appraisal value included the lease fee interest held by Landowner and the value of the improvements which it did not own. He testified that the values of the combined *1228 interest ranged from $36,130,000 in 2001 to $22,600,000 in 2004. He stated that he used a highest and best use evaluation and appraisal for a retail shopping center; however, his capitalization of income analysis of the leased fee concluded a value similar to that of Landowner's expert and was just $200,000 less.[4]
The Board of Viewers concluded that Marple Springfield I controlled the outcome of this matter and, therefore, accepted Barna's fair market value of $9,500,000 for the property owned in leased fee by Landowner. No value was assigned to the buildings. The taxing bodies filed objections with the trial court and oral arguments were heard. The trial court then issued an opinion and order rejecting the Board of Viewers' recommendation and rejecting the application of the Marple Springfield I and Marple Springfield II decisions. The trial court found that Landowner's approach to value violated the Uniformity Clause of the Pennsylvania Constitution and the prohibition against creating exemptions not provided for in the Pennsylvania Constitution, an issue not discussed in either Marple Springfield I or Marple Springfield II. Instead, it accepted the value of the property for each of the tax years offered by the taxing bodies' expert who included the value of the improvements in his opinion of fair market value. This appeal by Landowner followed.[5]
On appeal, Landowner contends that trial court erred (1) because it was at variance with our Supreme Court's decision in Marple Springfield I where it holds that a long-term lease value is not subject to being assessed; (2) in holding that buildings built on the land lease are subject to taxation because no statutory authority exists for imposing a real estate tax assessment on a lessee's leasehold interest; and (3) in finding that the methodology used by Landowner's expert resulted in a constitutional violation of the Uniformity Clause of the Pennsylvania Constitution because our Supreme Court was aware of that clause at the time its decision came down and saw fit not to include it in its decision.
I.
In Marple Springfield I, the taxpayer was the owner of land on which a shopping center was built in 1964. In 1968, the taxpayer's predecessor in title entered a long-term lease for the entire property which, with renewals, expired in 2044, and had values that were well below market rates which would not change during the term of the lease. There was no mention that the lessee was responsible for real estate taxes. The property was assessed based on the market rent that lessee received from its subtenants, not the contract amount the lessee paid to the taxpayer/landowner.[6] The taxpayer challenged *1229 its real estate tax assessments contending that property should be valued based on the rent that it received, not the fair market rent. Our Supreme Court agreed, holding that "the economic realities of commercial real estate transactions" had to be taken into consideration when valuing property and stating:
The capitalization-of-income approach to tax appraisals is the most appropriate if not the only valid means of establishing fair market value of real estate when the rental income is below what would otherwise be the current market level but for a long-term commercial lease, because such long-term leases are an accepted aspect of commercial real estate transactions and their effects have a decisive impact on the price a buyer would pay for the affected property. To interpret the tax assessment statute as requiring valuation of property in hypothetical unencumbered form, . . . ., is to ignore the economic realities of commercial real estate transactions. (Emphasis added.)[7]
Marple Springfield I, 530 Pa. at 126-127, 607 A.2d at 710. See also In re Assid, 842 A.2d 995 (Pa.Cmwlth.2004).
Marple Springfield I, however, does not apply to this appeal because of different economic and legal "realities." The economic difference between this appeal and Marple Springfield I is that Marple Springfield I made no mention that the lessee was responsible for all real estate taxes. If a lessee is responsible for all real estate taxes, the landowner's economic reality would not change because if the value of the leased premises increased for whatever reason, new buildings went up or market rents increased the lessee would solely be responsible for the value of the landowner's interest in the real property, not the landowner, who would receive the bargain for the amount under the lease, without deductions for taxes. The legal reality is also different because what was involved in Marple Springfield I was the value of the shopping center, land and buildings, not, as here, where Landowner is contending that those buildings should remain untaxed because they are built on leased property which is akin to receiving an exemption from taxes.
II.
That leads us to Landowner's central contention whether the leasehold interests are not taxable because they are not real estate under the General County Assessment Law which provides that only real estate can be subject to taxation. It argues that leasehold interests are not real estate because a lessee only has the right to use and occupy real estate for a stated term and under certain conditions. Even though buildings that were worth millions of dollars were built on the leasehold, absent specific legislative authority to impose real estate taxation upon the leasehold, it argues that those buildings cannot be taxed. Independent Oil and Gas Association of Pennsylvania v. Board of Assessment *1230 Appeals of Fayette County, 572 Pa. 240, 243, 814 A.2d 180, 182 (2002). "[I]n Pennsylvania, the power to tax is statutory and must be derived from [an] enactment of the General Assembly."
Section 204(a) of the General County Assessment Law, 72 P.S. § 5020-204(a), places on the assessors the duty to value all "objects of taxation" providing that:
(a) It shall be the duty of the several elected and appointed assessors, . . . to rate and value all objects of taxation,. . . according to the actual value thereof, and at such rates and prices for which the same would separately bona fide sell. . . . In arriving at the actual value, all three methods, namely, cost (reproduction or replacement, as applicable, less depreciation and all forms of obsolescence), comparable sales and income approaches, must be considered in conjunction with one another. Except in counties of the first class, no political subdivision shall levy real estate taxes on a county-wide revised assessment of real property until it has been completed for the entire county.
Notably, it provides that the cost approach to valuation must be used which is an approach only applicable to valuation of improvements to real estate and not just land itself.[8]
"Objects of taxation" are set forth in Section 201 of the General County Assessment Law, 72 P.S. § 5020-201, which provides that "all real estate" is to be assessed and subject to taxation. It describes real estate as:
(a) All real estate, to wit: House, house trailers and mobile homes buildings permanently attached to land or connected with water, gas, electric or sewage facilities, buildings, lands, lots of ground and ground rents, trailer parks and parking lots, mills and manufactories of all kinds, furnaces, gorges, bloomeries, distilleries, sugar houses, malt houses, breweries, tan yards, fisheries, and ferries, wharves, all office type construction of whatever kinds, that portion of a steel, lead aluminum or like melting and continuous casting structures which enclose, provide shelter or protection from the elements for the various machinery, tools, appliances, equipment, materials or products involved in the mill, mine, manufactory or industrial process, and all other real estate not exempt by law from taxation. (Emphasis added.)
Through these provisions, the General Assembly directed the assessors to assess real estate including lands and buildings. To make that determination, who owns it and what are the ownership interests in the land a fee simple, a fee simple determinable, a leasehold interest or month-to-month lease are irrelevant. Once the assessment is made, who pays the real estate taxes the landowner or the tenant or subtenant is not the concern of the taxing body but is determined by the parties in the terms of the lease or by some other private arrangement.
III.
Landowner also contends that the trial court erred in finding that the Uniformity Clause contained in Article 8, Section 1 of the Pennsylvania Constitution would be violated under its view of what is the effect *1231 of a land lease on the real estate tax assessment. That provision provides, in relevant part: "All taxes shall be uniform, upon the same classes of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws." Landowner contends that uniformity is not violated if some concrete justification can be discerned for treating a relevant group of taxpayers as members of distinguishable classes to differing tax burdens. City of Harrisburg v. School District of Harrisburg, 675 A.2d 758 (Pa.Cmwlth.1996), reversed on other grounds, 551 Pa. 295, 710 A.2d 49 (1998). Landowner argues that the distinguishable class consisting of those properties that are encumbered by long-term ground leases that affect the income potential of that real estate has already been defined by our Supreme Court in Marple Springfield I. Landowner further argues that the trial court ignored that the Uniformity Clause existed at the time Marple Springfield I was decided by our Supreme Court.
Initially, we point out that the fact that the Uniformity Clause existed at the time our Supreme Court decided Marple Springfield I is of no legal import because the uniformity issue was not addressed in that decision. Also, it did not inferentially recognize that leased property and non-leased property could be treated differently for real estate tax purposes; all that it addressed is what revenue stream should be used in the income approach to value. When it addressed uniformity, our Supreme Court emphatically stated that a tax must be applied upon similar kinds of property with substantial equality of the tax burden on all members of the class. Amidon v. Kane, 444 Pa. 38, 51, 279 A.2d 53, 60 (1971). See also Truck Terminal Motels of America, Inc. v. Berks County Board of Assessment Appeals, 127 Pa. Cmwlth. 408, 561 A.2d 1305 (1989). For example, while there are substantial differences between commercial or industrial real estate and residential real estate, to tax them differently has been held to violate the Uniformity Clause. Appeal of Massachusetts Mutual Life Insurance Company, 426 Pa. 566, 235 A.2d 790 (1967); McKnight Shopping Center v. Board of Property Assessment, 417 Pa. 234, 209 A.2d 389 (1965); Deitch Company v. Board of Property Assessment, 417 Pa. 213, 209 A.2d 397 (1965). As explained above, the real estate land and buildings are the objects of taxation and because different parties own them is insufficient not to assess all "objects of taxation." Moreover, we would also be adopting a class of buildings that would be exempt from taxation, which would similarly violate Article VIII, Section 2 of the Pennsylvania Constitution that only allows real estate used and occupied by "purely public charities" to be exempt from taxation.
Accordingly, for the reasons set forth above, the well-reasoned decision of the Honorable Stanton Wettick of the Court of Common Pleas of Allegheny County is affirmed.
ORDER
AND NOW, this 1st day of June, 2009, the order of the Court of Common Pleas of Allegheny County, dated December 28, 2007, is affirmed.
Dissenting Opinion by Judge McGINLEY.
I must respectfully dissent.
It is well settled that in a long-term leased property scenario, the "income approach" to valuation must be considered and the implications of the long-term lease must be considered when an assessment of property is made. Marple Springfield. In the landmark case Marple Springfield, our Supreme Court held that fair market value is to be determined by the price a *1232 buyer will pay in accordance with the "economic realities" of commercial real estate transactions. The Supreme Court explained: "To interpret the tax assessment statute as requiring valuation of property in hypothetical unencumbered form . . . is to ignore the economic realities of commercial real estate transactions." Marple Springfield, 530 Pa. at 126-127, 607 A.2d at 710.
In In re Assid, 842 A.2d 995 (Pa. Cmwlth.2004), this Court reversed a trial court when faced with a very similar fact pattern. There the trial court ignored the economic realty of a long-term commercial lease which encumbered the property.[1]
In Assid, Dr. and Mrs. Assid (Assids) owned a 339-acre tract of land in Armstrong County (county) which they leased on April 1, 1999, to Spring Church. The lease term was for an initial five years, with an option for four consecutive five-year renewals with a right of reversion to the taxpayers at the end of the lease. Pursuant to the lease, Spring Church constructed an 18-hole golf course and club house on approximately 100 acres of the property. The annual rent was $60,000 or 10% of the gross profits from all operations, whichever amount was greater.
The Assids received a notice of appraisal from the Armstrong County Board of Assessment setting the fair market value of the property at $1,346,390. Taxpayer appealed. At trial the county's appraiser testified that he used the cost approach and did not consider the effect of the lease on the value of the property.
The Assids' expert, on the other hand, valued the property as encumbered by the long-term lease. He used the income approach to value and capitalize the net operating income from the lease to arrive at a present market value. He then added that to the Assids' reversionary value in the property and arrived at a fair market vale of $555,900. The trial court rejected this value and accepted the county's valuation.
This Court reversed because the trial court was required to "determine the fair market value of [the Assids'] property . . . by considering the impact of the [long-term commercial] Lease, and it failed to do so." Assid, 842 at 1001.
In the present controversy, the trial court, like the trial court in Assid, ignored the impact of the long-term lease. However, this case is slightly different from Assid. Here, the trial court accepted Mr. Ackerman's use of the income approach. However, instead of considering the long-term lease and valuing only the Taxpayer's lease fee interest, the trial court found that the Tenant's leasehold interest must also be valued. I believe this was error.
Marple Springfield and Assid were based on the underlying principle that the proper inquiry in any valuation should focus on the market value of the property exposed for sale "as is." See Assessment Law and Procedure in Pennsylvania, Bert M. Goodman, (2008 Ed.) at 199-200. Since a property is only worth what an investor-buyer could earn from it, a property encumbered by a long-term lease with a fixed rent must be valued based on the income it will yield to a purchaser. Id. As Professor Goodman explains, in the long-term lease situation, "[t]he owner . . . should be taxed upon the current income from the property (rent) and the present *1233 value of the reversion of the building at the end of the lease." Id. at 200.
In the present scenario, a prospective buyer would be limited by what he could earn from the property for the duration of the lease because of the long-term lease encumbrance. The prospective buyer's fee simple ownership interest, like Taxpayer's, would be limited in that he is not free to sell the property unencumbered and is powerless to unilaterally void the encumbrance. Given the economic reality of the long-term fixed rent and the limitations on transferability, the valuation must take into consideration the encumbrance of the long-term lease in order to fairly value the property.
This is so, even if, under the trial court's example, a tenant builds a replica of the "Taj Mahal or Empire State Building." Trial Court Opinion at 3-4. If there is a long-term commercial lease in effect this negatively restricts the owner's fee simple interest. That economic reality must be taken into account when valuing the property. A prospective buyer could, at most, earn the fixed annual rent of $665,000 until the expiration of the lease. Only after could the prospective purchaser sell the property outright, including the buildings and improvements. Thus, the trial court was required to take into consideration Taxpayer's leased fee interest and the fact that the then-current economic benefit to Taxpayer was its receipt of a fixed annual rent for $665,000 per year for fifty years. So long as the lease was an arms-length transaction and entered into in good faith, the long-term lease and its implications must be considered when valuing the property.
Because an owner of property must be taxed solely upon the fair market value of the property as it presently exists, not upon the hypothetical unencumbered value, I believe that the trial court erred when it included the value of the buildings and improvements in the assessment. Marple Springfield. The trial court was required to value the Taxpayer's interest in the property at the income value of its cash flow plus reversionary value of the realty which is precisely what Taxpayer's expert, Mr. Barna, did.
Because the trial court erred when it failed to employ the method of valuation espoused in Marple Springfield and Assid, I would reverse.[2]
NOTES
[1] The General County Assessment Law, Act of May 22, 1933, P.L 853, as amended, 72 P.S. § 5020-518.1(c), allow for the courts of common pleas to appoint the Board of Viewers to hear tax assessment appeals.
[2] Barna testified that he did his appraisal based on this Court's holding in In re Appeal of Marple Springfield Center, Inc. (Marple Springfield II), 654 A.2d 635 (Pa.Cmwlth. 1995) (which followed our Supreme Court's holding in In re Appeal of Marple Springfield Center, Inc. (Marple Springfield I), 530 Pa. 122, 607 A.2d 708 (1992)) (requiring an appraiser to utilize the capitalization-of-income approach to establish fair market value of real estate when rental income is below what would otherwise be current market levels due to a long-term commercial lease).
[3] Valuation of Anthony C. Barna, Landowner's Expert:
Year Land (Leased Fee) Improvements (Leasehold) Total
2001 9,500,000.00 Not Valued 9,500,000.00
2002 9,500,000.00 Not Valued 9,500,000.00
2003 9,500,000.00 Not Valued 9,500,000.00
2004 9,500,000.00 Not Valued 9,500,000.00
2005 9,500,000.00 Not Valued 9,500,000.00
[4] Valuation by Mark D. Ackerman, Taxing Bodies' Expert:
Year Land (Leased Fee) Improvements (Leasehold) Total
2001 9,300,000.00 26,685,000 35,985,000
2002 9,300,000.00 26,685,000 35,985,000
2003 9,300,000.00 19,350,000 28,650,000
2004 9,300,000.00 13,300,000 22,600,000
2005 9,300,000.00 21,350,000 31,650,000
[5] Our scope of review in a tax assessment appeal is limited to determining whether the trial court abused its discretion, committed an error of law, or made findings of fact unsupported by substantial evidence. First Korean Church of New York, Inc. v. Montgomery County Board of Assessment Appeals, 926 A.2d 543 (Pa.Cmwlth.2006).
[6] As we explained in footnotes in Appeal of/Property of Cynwyd Investments, 679 A.2d 304, 310 (Pa.Cmwlth.1996), "Market rent is [t]he rental income that a property would most probably command in the open market; indicated by current rents paid and asked for comparable space as of the date of the appraisal." American Institute of Real Estate Appraisers, The Dictionary of Real Estate Appraisal, p. 71 (1984). Contract rent is "[t]he actual rental income specified in a lease." Id.
[7] Our Supreme Court in Marple Springfield I noted that there was no suggestion that the lease was fraudulent in any way, and that it was an otherwise unremarkable business transaction reasonable at the time it was entered. We understand that to mean that if a lease is entered into by affiliated entities or arrangements are made that would present a false and fraudulent view of the economic realities, the contract rent could obviously not be used in valuing the property.
[8] As this Court explained in Appeal of Property of Cynwyd Investments, 679 A.2d at 308, n. 2: "The cost approach values the property by considering the reproduction or replacement cost of the property, less depreciation and obsolescence. 72 P.S. § 5020-402. Specifically, this method entails (1) estimating the value of the land assumed vacant and available for its highest and best use; (2) estimating the reproduction cost or cost new of the facility; (3) subtracting from the latter amount the facility's depreciation; and (4) adding to this depreciated balance the value of the land estimated in (1) above."
[1] An "encumbrance" is a claim or liability that is attached to property or some other right that may lessen its value, such as a lien or mortgage. Black's Law Dictionary 547 (7th Ed. 1999). Importantly, an encumbrance will not defeat the transfer of possession, but it remains after a property or right is transferred. So, in this case, if Taxpayer sold the property, the transfer of possession and title would be sold subject to the long term commercial lease.
[2] I must also disagree with the majority's analysis of the Uniformity Clause because I do not agree that a property encumbered by a 50-year long term lease is similarly situated to or comparable to a property with no such restriction. The actual current market values of the two types of properties will be different. The market value of a property encumbered by a long-term lease (an encumbered fee) will be different than a similar property free and clear of all encumbrances. A potential purchase will be, in the first instance, purchasing an encumbered fee and will logically discount the property because of the encumbrance. Assessment Law and Procedure in Pennsylvania, Bert M. Goodman, (2008 Ed.) at 200. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540169/ | 95 B.R. 4 (1989)
In re Modesty June GAUDET Debtor.
Bankruptcy No. 8700638.
United States Bankruptcy Court, D. Rhode Island.
January 13, 1989.
Richard D. Boriskin, Markoff and Boriskin, Providence, R.I., for debtor.
Neill B. Lyon, Kirshenbaum Law Associates, Warwick, R.I., for Kirshenbaum Inv. Co., Inc.
Joseph Szabo, Boston, Mass., Trustee.
John Gyorgy, Adler Pollock & Sheehan, Providence, R.I., for Greater Providence Deposit Corp.
DECISION
ARTHUR N. VOTOLATO, Jr., Bankruptcy Judge.
Heard on August 16, 1988, on conflicting motions: (1) the motion of the debtor, Modesty J. Gaudet, for voluntary dismissal of her Chapter 13 case, and the objection of Kirshenbaum Investment Company (hereinafter "Kirshenbaum"), and (2) Kirshenbaum's motion to convert debtor's Chapter 13 case to one under Chapter 7, and debtor's objection thereto.
In support of her motion, but at the same time greatly oversimplifying things, Mrs. Gaudet argues that "there being no further matters before the Court," she has an absolute right to a dismissal.
Kirshenbaum, who holds a note, with recourse, endorsed by the debtor, objects to Mrs. Gaudet's request for a dismissal, based upon her exhibited bad faith in utilizing the bankruptcy system, and specifically, for her failure to settle or otherwise make arrangement for payment of his claim in her Chapter 13 plan.
Mrs. Gaudet, like her husband previously, see In re Gaudet, 61 B.R. 349 (Bankr.D. R.I.1986), filed her Chapter 13 petition solely for the purpose of invoking the Bankruptcy Code's automatic stay provision in order to prevent the foreclosure sale of the family residence, which she owns jointly with her husband, Enos Gaudet, and which was the subject of dispute in all of his litigation before this Court over a six year period. The petition was filed on the day scheduled for the foreclosure sale, September 16, 1987. Only two creditors were listed on debtor's schedules, Greater Providence Deposit Corp. (holding two mortgages on debtor's property) and Kirshenbaum Investment Co. Mrs. Gaudet filed her Chapter 13 plan on October 1, 1987, which plan did not provide for payment or settlement of Kirshenbaum's claim. Kirshenbaum seeks conversion of the debtor's case to one under Chapter 7, in order to preserve this Court's jurisdiction and enable us to hear and decide its disputed claim.
11 U.S.C. § 1307(b) provides that "[o]n request of the debtor at any time, if the *5 case has not been converted under section 706, 1112, or 1208 of this title, the court shall dismiss a case under this chapter." This seemingly mandatory language is somewhat watered-down however, where "the debtor has filed the case for an improper purpose, in bad faith, or to abuse or misuse the bankruptcy process." In re Powers, 48 B.R. 120, 121 (Bankr.M.D.La. 1985); In re Zarowitz, 36 B.R. 906, 907 (Bankr.S.D.N.Y.1984). This limitation is intended to preserve the court's inherent duty to guard against jurisdictional abuse and manipulation of the bankruptcy process, as well as maintaining the spirit and purpose of Chapter 13. In re Jacobs, 43 B.R. 971, 11 C.B.C.2d 905, 908 (Bankr.E.D. N.Y.1984).
Where the primary purpose of the debtor's filing is to invoke the automatic stay provisions of § 362 in order to avoid a foreclosure sale, without any intention of realistically effectuating a Chapter 13 plan (especially where the proposed plan does not even address all claims), bad faith is shown. In re Whitten, 11 B.R. 333, 338 (Bankr.D.D.C.1981); In re Gaudet, 61 B.R. 349 (Bankr.D.R.I.1986). In the circumstances of this case, and because of the debtor's misuse of the bankruptcy process, she is not entitled to the protection of § 1307(b), particularly in the face of a conflicting § 1307(c) motion to convert. In re Tatsis, 72 B.R. 908, 910 (Bankr.W.D.N.C. 1987). Accordingly, it is ORDERED that the debtor's Motion to Dismiss is DENIED, and the case is converted to Chapter 7.
Enter Judgment accordingly. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540176/ | 95 B.R. 857 (1989)
In the Matter of Ronald DALTON and Patricia L. Dalton, Debtors.
Bankruptcy No. 88-30220.
United States Bankruptcy Court, M.D. Georgia, Athens Division.
February 3, 1989.
Robert E. Dunn, Bill Parker, Bill Parker & Associates, Atlanta, Ga., Anne Martin, Athens, Ga., for debtors.
Camille Hope, Macon, Ga., for the trustee.
ROBERT F. HERSHNER, Jr., Chief Judge.
STATEMENT OF THE CASE
Ronald Dalton and Patricia L. Dalton, Debtors, filed a petition for relief under Chapter 13 of the Bankruptcy Code on May 3, 1988. A hearing on confirmation of Debtors' Chapter 13 plan was held on August 31, 1988. An order confirming Debtors' Chapter 13 plan was entered on October 11, 1988.
On September 16, 1988, Camille Hope, Trustee, notified the Court that the fee application submitted by Bill Parker & Associates, attorneys for Debtors, failed to include an itemization of time. The Court deemed it appropriate to hold a hearing on *858 attorney fees in this bankruptcy case. A hearing was held on October 27, 1988.[1] At the conclusion of the hearing, the Court denied the application for attorney fees and ordered that Bill Parker & Associates pay to the office of Trustee the sum of ninety dollars, which Debtors had paid as a retainer fee.
Following the Court's ruling, Mr. Bill Parker requested that the Court issue written findings of fact and conclusions of law. The Court, having considered this request and being of the opinion that guidance and clarification are appropriate, now publishes this memorandum opinion.
FINDINGS OF FACT
In November of 1987, Patricia L. Dalton telephoned the law firm of Bill Parker & Associates to discuss the possibility of filing a bankruptcy petition.[2] Following the telephone conversation, the law firm sent Mrs. Dalton some forms through the mail. She completed the forms and returned them to the law firm along with ninety dollars to cover the filing fee for a Chapter 13 bankruptcy petition. Using the information furnished by Mrs. Dalton, Bill Parker & Associates then filled out the Chapter 13 petition and the Chapter 13 Statement. Bill Parker & Associates then mailed to Mrs. Dalton the completed Chapter 13 petition and statement. The Daltons did not execute and return the petition and statement because they did not have the ninety-dollar retainer that Bill Parker & Associates required. It was not until May 1988 that the Daltons returned the executed petition and statement to Bill Parker & Associates along with the ninety-dollar retainer.
In April of 1988, prior to the filing of the Daltons' Chapter 13 case, Covington Credit Corporation took possession of several items of the Daltons' personal property through a writ of possession.
The Chapter 13 petition and statement were signed by the Daltons and returned to the law firm in May of 1988. The petition and statement were filed with the Court on May 3, 1988. Bill Parker & Associates did not attempt to update the information contained in the Chapter 13 petition and statement before filing the documents, although the law firm did change the date on the documents. As a result, some of the information filed with the Court was false. The statement of personal property lists two cars which the Daltons owned in November of 1987. Neither of these cars was owned by the Daltons in May of 1988. The information concerning the Daltons' places of employment is also incorrect. Furthermore, the exhibits attached to the petition are incomplete. Item seven of the petition states that a declaration or affidavit in the form of Exhibit "B" is attached to or made a part of the Chapter 13 petition. No such exhibit was attached.[3]
The Daltons failed to notify Bill Parker & Associates of the changed information when they returned the executed documents for filing. Mrs. Dalton testified that the law firm made no attempt to verify the accuracy of the documents when she returned them, even though more than five months had elapsed before the documents were signed and returned. Bill Parker & Associates was first made aware of the changes during the section 341 meeting held in June of 1988.
CONCLUSIONS OF LAW
Rule 1008 of the Rules of Bankruptcy Procedure requires that "[a]ll petitions, . . ., Chapter 13 statements and amendments *859 thereto"[4] be verified or contain an unsworn declaration as provided in section 1746 of title 28 of the United States Code.[5] Bankruptcy Rule 9011 requires that the debtor's attorney sign the petition to certify that it is filed in good faith.[6]
The Chapter 13 petition filed by the Daltons contained the following statement:
"I (We), Ronald Dalton & Patricia L. Dalton, the petitioner(s) named in the foregoing petition, declare under penalty of perjury that the foregoing is true and correct."
Following this statement is the signature of Mr. and Mrs. Dalton, dated May 2, 1988.[7] The Chapter 13 statement bears the following similar statement, also signed by Mr. and Mrs. Dalton and dated May 2, 1988:[8]
Unsworn Declaration under Penalty of Perjury of Individual to Schedules A and B
I/we, Ronald Dalton and Patricia L. Dalton declare under penalty of perjury that I/we have read the foregoing schedules, consisting of ___ sheets, and that they are true and correct to the best of my/our knowledge, information and belief.
Mrs. Dalton testified that she read each of these statements at home before she signed the documents. She further testified, however, that her attorney never attempted to explain the significance of these statements to her. Mrs. Dalton's testimony reveals that she never met with her attorneys for any type of conference or consultation. She testified that the only meetings with her attorneys occurred during the section 341 meeting and the hearing on attorney fees. All other contacts, which appear to be rather limited at best, were initiated by Mrs. Dalton and were handled entirely by telephone. The evidence does not reflect any contact whatsoever between Mr. Dalton and the law firm.
The procedures followed by Bill Parker & Associates in this case resulted in the Daltons verifying information which they knew to be false. Having heard the testimony of Mrs. Dalton and having observed her demeanor, the Court is not of the opinion that she intended to deceive the Court by filing false information. Rather, the Court is persuaded that Mr. and Mrs. Dalton did not comprehend the significance of the statements which they signed. Although Mrs. Dalton testified that she read and understood the statements, the Court is of the opinion that the statements carry a legal significance which Bill Parker & Associates had a professional duty to convey to the Daltons.
Bill Parker & Associates failed to attach Exhibit "B" to the Daltons' Chapter 13 petition. Exhibit "B" is a signed statement by a debtor's attorney stating that the attorney has explained to the debtor the relief available under the various chapters of the Bankruptcy Code. The Court questions whether Bill Parker & Associates could have signed such a statement in good faith in this case, since there is no evidence that the law firm has ever spoken with Mr. Dalton, who is a debtor in this Chapter 13 case.
The failure of Bill Parker & Associates to meet with the Daltons concerning the contents of their Chapter 13 petition and statements resulted in the filing of false information with the Court. The failure of the law firm to counsel the Daltons resulted in the Daltons verifying as true information which they knew to be false. In the Court's view, allowing attorneys to file documents without attempting to ascertain the accuracy of the information contained therein creates an open invitation to misuse the bankruptcy process for personal gain. Cf. In re Cadet, 56 B.R. 301 (Bankr.E.D.N. Y.1985 (abuse of bankruptcy law is aggravated by giving false information in Chapter 13 petition prepared by law firm. Without *860 sanctions, court has no means of discouraging debtors and attorneys from submitting inaccurate and false documents to the court in Chapter 13 cases).
In addition to filing false information with the Court, the procedures followed by Bill Parker & Associates resulted in the Daltons losing property to Covington Credit Corporation. By asking for a retainer when the Bankruptcy Code provides a means for paying attorney fees in Chapter 13 cases, Bill Parker & Associates caused the Daltons to forego the protection of the Bankruptcy Code for a period of five months. The Court cannot condone such self-serving procedures, particularly when the procedures work to the detriment of the client.
This Court believes that the practice of bankruptcy law involves more than completing forms and answering telephone calls. This Court believes that an attorney has an affirmative duty to meet with his or her clients, to counsel those clients regarding the legal significance of their actions and to answer any questions or concerns which the clients may raise. The Court finds that the procedures followed by Bill Parker & Associates fail to meet this minimum standard.
Section 329 of the Bankruptcy Code provides that if compensation received by an attorney exceeds the reasonable value of the services rendered by the attorney for a Chapter 13 debtor, then the Court may order the return of such payment.[9] Having examined the services rendered by Bill Parker & Associates in this bankruptcy case, the Court has determined that Bill Parker & Associates is not entitled to an award of attorney fees and must pay the ninety-dollar retainer to the office of the Chapter 13 trustee.
An order in accordance with this opinion is attached hereto.
NOTES
[1] This case was one of several heard on this date, each of which concerned the application for attorney fees filed by Bill Parker & Associates.
[2] Apparently, Bill Parker & Associates never talked to Mr. Dalton before the filing of the Daltons' Chapter 13 case.
[3] Exhibit B should contain the following information:
I, ........, the attorney for the petitioner named in the foregoing petition, declare that I have informed the petitioner that [he or she] may proceed under chapter 7, 11, 12, or 13 of title 11, United States Code, and have explained the relief available under each such chapter.
Executed on .........
Signature .........................
Attorney for Petitioner
[4] R. Bankr. P. 1008.
[5] 28 U.S.C.A. § 1746 (West Supp.1988).
[6] R. Bankr. P. 9011.
[7] This date had been altered. It originally was dated November 1987.
[8] This date was also altered, as it originally read November 1987.
[9] 11 U.S.C.A. § 329(b) (West Supp.1988). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540178/ | 95 B.R. 566 (1988)
In re Jesus M. NUNEZ, Debtor.
Joseph RAITANO and Donald Farrell, Plaintiffs,
v.
Jesus M. NUNEZ, Defendant.
Bankruptcy No. 87 B 16333, Adv. No. 88 A 00318.
United States Bankruptcy Court, N.D. Illinois, E.D.
November 28, 1988.
*567 Lawrence Rolla, Chicago, Ill., for defendant Jesus M. Nunez.
Robert A. Egan, Chicago, Ill., for plaintiffs Joseph Raitano and Donald Farrell.
MEMORANDUM OPINION
JOHN H. SQUIRES, Bankruptcy Judge.
This matter comes before the Court on a motion for summary judgment filed by the plaintiffs Joseph Raitano ("Raitano") and Donald Farrell ("Farrell"). For the reasons set forth herein, the Court having considered all the pleadings and exhibits filed, does hereby grant the motion for summary judgment.
I. JURISDICTION AND PROCEDURE
The Court has jurisdiction to entertain this motion pursuant to 28 U.S.C. § 1334 and General Orders of the United States District Court for the Northern District of Illinois. The motion constitutes a core proceeding under 28 U.S.C. § 157(b)(2)(A), (I), (O).
II. FACTS AND BACKGROUND
On September 15, 1985, Raitano and Farrell were employed as Chicago police officers. On that same date, Raitano and Farrell received a radio assignment to proceed to 1437 North Wicker Park, Chicago, Illinois, in response to a complaint. Upon arriving at the scene, Raitano and Farrell placed the debtor, Jesus M. Nunez ("Nunez"), under arrest for the offenses of battery and criminal damage to property. Nunez was thereafter taken into custody. While Raitano and Farrell were escorting Nunez into an interrogation room, Nunez kicked Raitano in the leg and hand and kicked Farrell in the leg and foot causing injury to both. On September 18, 1985, Raitano and Farrell filed criminal complaints against Nunez for the offense of battery claiming that Nunez intentionally, without legal justification caused bodily harm to each by kicking them several times. On October 10, 1985, Nunez entered guilty pleas to the charges of battery as set forth in Section 12-3(a) of the Illinois Criminal Code. Ill.Rev.Stat. ch. 38 para. 12-3(a) (1985).
Thereafter on May 23, 1986, Raitano and Farrell filed a civil complaint in the Circuit Court of Cook County. In essence, the two-count complaint alleged that Nunez kicked, struck and beat Raitano and Farrell without cause or provocation after being placed under arrest. Nunez answered the complaint, denying the batteries, the lack of provocation and the injuries of Raitano and Farrell. A motion for summary judgment was filed by Raitano and Farrell in that case. The Honorable Thomas E. Hoffman granted the motion on April 1, 1987, as to the issue of liability. Nunez failed to file a response to the motion as ordered. Subsequently, on September 28, 1987, after hearing sworn testimony of Raitano and Farrell, the Honorable Benjamin Nelson entered judgment for Raitano and Farrell and assessed damages in the amounts of $10,000.00 and $3,500.00 respectively. Nunez failed to appear on that date.
Nunez filed a Chapter 7 petition on November 4, 1987. Raitano and Farrell filed the instant adversary proceeding on April 27, 1988, pursuant to 11 U.S.C. § 523(a)(6) to determine the dischargeability of the debts owed them. Nunez has admitted to the facts surrounding the incident. However, Nunez contends that his actions were not willful and malicious because he was intoxicated. Moreover, Nunez claims that Raitano and Farrell suffered no disabling injuries. In addition, Nunez states that the prior civil judgments entered against him were by default, thus precluding the admission of evidence as to the nature and severity of the injuries sustained by Raitano and Farrell. Raitano and Farrell have supported the motion with copies of the criminal misdemeanor complaints, a transcript of the plea agreement on October 10, 1985, the civil complaint, Nunez's answer and both the judgment orders of Judge Hoffman and Judge Nelson. In addition, the parties have submitted their local Rule 12(e) and 12(f) statements.
III. STANDARD FOR SUMMARY JUDGMENT
In order to prevail on a motion for summary judgment, the movant must meet the *568 statutory criteria set forth in Rule 56 of the Federal Rules of Civil Procedure ("Rule 56") made applicable to adversary proceedings in the Bankruptcy Court by Federal Rule of Bankruptcy Procedure 7056. Rule 56(c) reads in part:
[T]he judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Hossman v. Spradlin, 812 F.2d 1019, 1020 (7th Cir.1987).
The primary purpose for granting a summary judgment motion is to avoid unnecessary trials when no genuine issue of material fact is in dispute. Farries v. Stanadyne/Chicago Div., 832 F.2d 374, 378 (7th Cir.1987). The burden is on the moving party to show that no genuine issue of material fact is in dispute. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 585-586, 106 S.Ct. 1348, 1355-1356, 89 L.Ed.2d 538 (1986). Moreover, all reasonable inferences to be drawn from the underlying facts must be viewed in a light most favorable to the party opposing the motion. Marine Bank, Nat. Ass'n v. Meat Counter, Inc., 826 F.2d 1577, 1579 (7th Cir.1987); DeValk Lincoln Mercury, Inc. v. Ford Motor Co., 811 F.2d 326, 329 (7th Cir.1987); Bartman v. Allis-Chalmers Corp., 799 F.2d 311, 312 (7th Cir.1986), cert. denied, 479 U.S. 1092, 107 S.Ct. 1304, 94 L.Ed.2d 160 (1987).
The Court has reviewed all pleadings and exhibits submitted and hereby finds that no genuine issue of material fact exists. Thus, the case is ripe for determination by summary judgment. The Court notes that In re Castaneda, 81 B.R. 470 (Bankr.N.D. Ill.1988) is distinguishable from the case at bar. Factually, Castaneda was similar to the instant case. However, Judge Ginsberg declined to grant summary judgment because the record before him was devoid of any facts surrounding that alteration. The Castaneda court had no transcript of the state court proceedings. The record in this case contains a sufficient portion of the relevant state court proceeding providing the necessary factual bases and evidence upon which to properly grant summary judgment. Raitano and Farrell are entitled to summary judgment as a matter of law as discussed hereafter.
IV. DISCUSSION
A. 11 U.S.C. § 523(a)(6)
The discharge provisions of section 523 are construed strictly against a creditor and liberally in favor of a debtor. In re Pochel, 64 B.R. 82, 84 (Bankr.C.D.Ill.1986). The creditor seeking an exception to discharge has the burden of proving each element by clear and convincing evidence. In re Bogstad, 779 F.2d 370, 372 (7th Cir. 1985); In re Bonnett, 73 B.R. 715, 717 (Bankr.C.D.Ill.1987).
Section 523(a)(6) provides:
(a) A discharge under Section 727, 1141, or 1328(b) of this title does not discharge an individual debtor from any debt
. . . . .
(6) for willful and malicious injury by the debtor to another entity or to the property of another entity.
11 U.S.C. § 523(a)(6).
In order for a debt to be held nondischargeable under section 523(a)(6), the creditor has the burden of proving that the injury resulted from an act that was both willful and malicious; In re Kimzey, 761 F.2d 421, 425 (7th Cir.1985); United Bank of Southgate v. Nelson, 35 B.R. 766, 768 (N.D.Ill.1983); In re Hopkins, 82 B.R. 952, 953 (Bankr.N.D.Ill.1988). The term "willful" means "deliberate or intentional," and "malicious" means "wrongful and without just cause or excuse, even in the absence of personal hatred, spite or ill will." In re Condict, 71 B.R. 485, 487 *569 (N.D.Ill.1987). The debtor need not act with ill will or malevolent purpose toward the injured party. In re Hallahan, 78 B.R. 547, 550 (Bankr.C.D.Ill.1987). Thus, "a wrongful act done intentionally, which necessarily produces harm and is without just cause or excuse, may constitute a willful and malicious injury." 3 Collier on Bankruptcy ¶ 523.16 at 523-117 (15th ed.1988). Section 523(a)(6) protects injured parties who have hazarded the risks of litigation and obtained a verdict, only to have the debtor declare bankruptcy. In re Kimzey, 761 F.2d at 425.
Debts that are based on the traditional intentional torts such as assault and battery are generally considered to derive from willful and malicious conduct and therefore are nondischargeable under section 523(a)(6). In re Cunningham, 59 B.R. 743, 746 (Bankr.N.D.Ill.1986); Smith v. Pitner, 696 F.2d 447, 449 (6th Cir.1982); In re Cooney, 18 B.R. 1011, 1013 (Bankr.W.D. Ky.1982); Ginsberg Bankruptcy, § 11,309 at 11,049 (1985).
1. THE WILLFUL REQUIREMENT
Based on all the state court pleadings furnished and with special attention paid the transcript of the plea agreement and Nunez's statements and admissions therein, the Court finds that Nunez's acts of striking Raitano and Farrell were intentional and therefore willful. Nunez pled guilty to both criminal battery charges and admitted kicking the police officers without justification.
The Illinois Criminal Code defines intent as: "A person intends, or acts intentionally or with intent, to accomplish a result or engage in conduct described by the statute defining the offense, when his conscious objective or purpose is to accomplish that result or engage in that conduct." Ill.Rev. Stat. ch. 38, para. 4-4 (1985).
In addition, knowledge is defined by the Illinois Criminal Code as follows:
A person knows, or acts knowingly or with knowledge of:
(a) The nature or attendant circumstances of his conduct, described by the statute defining the offense, when he is consciously aware that his conduct is of such nature or that such circumstances exist. Knowledge of a material fact includes awareness of the substantial probability that such fact exists.
(b) The result of his conduct, described by the statute defining the offense, when he is consciously aware that such result is practically certain to be caused by his conduct.
Conduct performed knowingly or with knowledge is performed wilfully, within the meaning of a statute using the latter term, unless the statute clearly requires another meaning.
Ill.Rev.Stat. ch. 38, para. 4-5 (1985).
Nunez, however, now contends that he was highly intoxicated at the time of the incident and was therefore unable to form any specific intent nor able to have malice imputed to his actions. Intoxication is no excuse where the act of the debtor is clearly intentional. Cooney, 18 B.R. at 1014. Upon careful review of the state court record presented, the Court finds no evidence to make a finding that Nunez was so highly intoxicated so as to vitiate intent or malice on his part.
The only reference to intoxication was made in the criminal action. During the plea agreement hearing, counsel for Nunez stated, "Also at this time I'd indicate he had been drinking. Although he is not saying he is not guilty, he is just indicating these incidents were all by the impact of the alcohol." Thereafter, Nunez said, "I went to the hospital thirty days; they stole my car, $27,000. I'd like to say I am sorry. They stole it in front of my house; I was all depressed and drinking, but I am still going [to an alcoholic treatment program] because I need the help." Certainly these oblique statements about Nunez's drinking do not constitute a plea of not guilty by reason of intoxication. Moreover, these comments did not preclude the state court judge from approving the plea agreement. In any event, Nunez's claim of intoxication asserted here is no excuse where the acts *570 giving rise to the dischargeability complaint are clearly intentional.
2. THE MALICIOUS REQUIREMENT
The Court further finds that Nunez's actions were malicious. Nunez voluntarily pled guilty to the offense of battery. Section 12-3(a) of the Illinois Criminal Code provides:
A person commits battery if he intentionally or knowingly without legal justification and by any means, (1) causes bodily harm to an individual or (2) makes physical contact of an insulting or provoking nature with an individual.
Ill.Rev.Stat. ch. 38, para. 12-3(a) (1985).
A state court judge, after an evidentiary hearing on damages, found that Nunez's actions caused damage in the amount of $10,000.00 and $3,500.00 to Raitano and Farrell respectively. Nunez's admitted actions were much more than mere physical contact of an insulting nature. His actions of intentionally kicking both Raitano and Farrell to the extent of such damages as awarded by Judge Nelson were admitted. Such conduct is essentially "wrongful, without just cause, even in the absence of personal hatred, spite or ill will," well within the scope of the term "malice" for Bankruptcy Code § 523(a)(6) purposes as the above case law has evolved in this District and Circuit.
In Illinois, in a civil action for assault and battery, "[t]he gist of the action for an assault and battery is malice, which implies a wrong inflicted on another with evil intent or purpose." 3 Illinois Law and Practice, Assault and Battery, § 12 (1983 and Supp.1987), and cases cited therein. In civil actions for assault and battery the complaint need not specifically charge malice. Id. at § 21. Malice need not be expressly proved, but may be presumed where the defendant has acted with wanton, willful, or reckless disregard of a plaintiff's rights. Id. at § 22.
Nunez contends malice may not be imputed because during the course of the incident there were no "vicious consequences." Nunez further alleges that the extent of the beating was not unusual. Moreover, he asserts that the record is silent as to whether any of the injuries were the result of Raitano's and Farrell's misreading of a volatile situation and perhaps overreacting to it. The Court is unaware of any necessity of a finding of "vicious consequences" in order to find the existence of willfulness and maliciousness. The admitted and undenied fact that Nunez struck two police officers in and of itself constitutes an intentional act for which malice is presumed under Illinois law. Furthermore, the nature of these batteries and the surrounding facts in the record before this Court amply support the finding that Nunez's actions were both willful and malicious and caused damage to Raitano and Farrell. His conduct was far more serious than a mere technical battery for which nominal damages would lie.
Moreover, because the burden of proof standard of "guilty beyond a reasonable doubt" was higher in the criminal action the Court finds that Raitano and Farrell have met the less stringent standard of "clear and convincing" evidence as shown by the record in this case. Nunez's guilty plea to the criminal charges of battery, his statements at the hearing thereon, the civil determination of Nunez's liability and assessment against him of damages after an evidentiary hearing all combine to lead the Court to the logical conclusion that his actions were both willful and malicious. The case at bar is distinguishable from Castaneda. There, the court refused to apply the doctrine of collateral estoppel because the parties failed to furnish the court a record sufficient to determine whether the debtor acted willfully and maliciously.
B. COLLATERAL ESTOPPEL
Raitano and Farrell contend that Nunez's actions were determined to be willful and malicious in the state criminal and civil proceedings, thus the issue of liability is res judicata. The United States Supreme Court has stated that the doctrine of res judicata is inapplicable to a bankruptcy court's consideration of debt dischargeability. Brown v. Felsen, 442 U.S. 127, 138-139, 99 S.Ct. 2205, 2212-2213, 60 L.Ed.2d *571 767 (1979). However, as to the doctrine of collateral estoppel, the Supreme Court noted in dicta that
[i]f, in the course of adjudicating a state-law question, a state court should determine factual issues using standards identical to those of § 17 [of the former Bankruptcy Act], then collateral estoppel, in the absence of countervailing statutory policy, would bar relitigation of those issues in the bankruptcy court.
Id. at 139, 99 S.Ct. at 2213. The Court notes that under Brown, although the issue of dischargeability for purposes of section 523(a)(6) is to be determined by the bankruptcy court, collateral estoppel would prevent relitigation of issues previously determined in the state court if: (1) the state court, in determining those issues, used standards identical to those in the Bankruptcy Code; and (2) the criteria necessary for collateral estoppel to apply were satisfied. See also Klingman v. Levinson, 831 F.2d 1292, 1295 (7th Cir.1987); In re Roemer, 76 B.R. 126, 128 (Bankr.S.D.Ill.1987).
In Grip-Pak, Inc. v. Illinois Tool Works, Inc., 694 F.2d 466 (7th Cir.1982), the court explained the difference between collateral estoppel and res judicata as follows:
Res judicata bars the relitigation of claims that could have been advanced in an earlier proceeding, whether they were or not, because they arise out of the same facts. The purpose is to reduce the costs of litigation, to the parties and to the courts, by forcing closely related claims to be combined in a single lawsuit. . . . The doctrine of collateral estoppel is based on a different concept of economy of litigation: if an issue happens to have been litigated and determined in a previous suit between the parties, there is no reason to litigate it again. But the object is not to force the issue to be litigated in the earlier suit. The propriety of having two suits is accepted, presumably because they are not that closely related; and if the issue in question is first litigated in the second suit, that is fine; the only desideratum is that it not be twice litigated.
Id. at 469.
The Seventh Circuit in Gilldorn Sav. Ass'n v. Commerce Sav. Ass'n, 804 F.2d 390 (7th Cir.1986) provided an explanation of the doctrine of collateral estoppel.
"Collateral estoppel, which is also known as issue preclusion, generally prevents a party from relitigating an issue the party has already litigated and lost." Ferrell v. Pierce, 785 F.2d 1372, 1384 (7th Cir. 1986). "In general, collateral estoppel precludes relitigation of issues in a subsequent proceeding when: (1) the party against whom the doctrine is asserted was a party to the earlier proceeding; (2) the issue was actually litigated and decided on the merits; (3) the resolution of the particular issue was necessary to the result; and (4) the issues are identical." Kunzelman v. Thompson, 799 F.2d 1172, 1176 (7th Cir.1986). Accord County of Cook v. Midcon Corp., 773 F.2d 892, 898 (7th Cir.1985). The policy underlying the doctrine is that "one fair opportunity to litigate an issue is enough." Bowen v. United States, 570 F.2d 1311, 1322 (7th Cir.1978). The party asserting estoppel has the burden of establishing which issues were actually determined in his favor in the prior action. Davis & Cox v. Summa Corp., 751 F.2d 1507, 1518 (9th Cir.1985). See Jones v. City of Alton, 757 F.2d 878, 885 (7th Cir.1985).
Id. at 392-393; See also Appley v. West, 832 F.2d 1021, 1025 (7th Cir.1987).
Collateral estoppel has been used to support an award of summary judgment in discharge cases. United States Life Title Insurance Co. v. Dohm, 19 B.R. 134, 137 (N.D.Ill.1982). All elements are present for application of the doctrine to this case based upon the record of both state court proceedings presented to this Court. Nunez was party defendant; the civil battery issues were litigated and decided on the merits; resolution of those issues are necessary to the result here; and the dispositive substantive issues under Illinois law are identical to those in this adversary proceeding. *572 The dischargeability provision pursuant to section 523(a)(6) was the only issue not present in the state battery actions.
The bankruptcy court may look behind a state court judgment to determine whether a debt is dischargeable. Klingman v. Levinson, 831 F.2d at 1295. In the case at bar, only the issue of dischargeability was not litigated in the state court. Therefore, the state court determination of liability and damages for the batteries in the civil matter and the guilty plea in the criminal matter do not absolutely preclude a trial on the issue of dischargeability. Nevertheless, the doctrine of collateral estoppel may be used to preclude relitigation of issues that were previously litigated in the state court.
The issues of the willfulness and maliciousness of the injuries to Raitano and Farrell were effectively disposed of in the state court proceedings. The Court has no doubt that Nunez's actions on September 15, 1985, constituted willful and malicious acts for Bankruptcy Code purposes. Nunez's actions were admittedly intentional and without legal justification in the state court criminal proceeding at the time of the plea agreement. Malice was presumed under Illinois law in the subsequent state court civil action which proceeded to summary judgment on liability and an evidentiary hearing on damages which produced the subsequent judgment. Nunez is, therefore, collaterally estopped from relitigating the question of whether he willfully and maliciously injured Raitano and Farrell.
Nunez argues that the judgments entered against him in the civil action were by default and no evidence as to the nature of severity of the injuries was presented. To the contrary, Judge Nelson's Judgment Order assessing damages clearly shows on its face that he heard the sworn testimony of Raitano and Farrell. Prior thereto, Judge Hoffman entered summary, not default, judgment on the issue of Nunez's civil liability for his batteries of Raitano and Farrell. Nunez was represented by the same attorney of record in the state court civil action as in this bankruptcy case and adversary proceeding. The entry of summary judgment constitutes litigation for purposes of collateral estoppel. Continental Can, U.S.A. v. Marshall, 603 F.2d 590, 596 (7th Cir.1979); United States Life Title Insurance Co. v. Dohm, 19 B.R. 134, 138 (N.D.Ill.1982). The fact that Nunez defaulted and did not appear at the evidentiary hearing on damages does not bar application of the doctrine of collateral estoppel. Under section 523(a)(6) the nature of the act gives rise to nondischargeability, not the amount of damages resulting from the act.
V. CONCLUSION
For the foregoing reasons, the Court hereby grants the plaintiffs' motion for summary judgment and finds the debts owed Joseph Raitano in the amount of $10,000.00 and Donald Farrell in the amount of $3,500.00 nondischargeable pursuant to 11 U.S.C. § 523(a)(6).
This Opinion is to serve as findings of fact and conclusions of law pursuant to Rule 7052 of the Federal Rules of Bankruptcy Procedure.
See written Order. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540179/ | 974 A.2d 156 (2009)
Charles CAMPBELL, Defendant Below, Appellant,
v.
STATE of Delaware, Plaintiff Below, Appellee.
No. 294, 2008.
Supreme Court of Delaware.
Submitted: March 11, 2009.
Decided: May 27, 2009.
*158 Patrick J. Collins, Law Office of Patrick J. Collins, Wilmington, DE, for appellant.
James T. Wakley and Danielle J. Brennan (argued), Department of Justice, Wilmington, DE, for appellee.
Before STEELE, Chief Justice, HOLLAND and BERGER, Justices.
STEELE, Chief Justice:
In this appeal from the Superior Court, Charles Campbell seeks to reverse his convictions for Trafficking in Methamphetamine and Delivery of a Schedule II Controlled Substance. Campbell raises three issues on appeal: (1) whether the trial judge abused his discretion by admitting evidence related to a future drug deal and whether the jury instruction related to that evidence was proper; (2) whether the trial judge abused his discretion by permitting a downstream purchaser to identify the substance he received as methamphetamine; and (3) whether the trial judge abused his discretion by allowing the State to present rebuttal evidence. Because the judge acted within his discretion by: (1) admitting evidence of a common plan or scheme; (2) permitting a lay witness to render an opinion on a matter rationally based on his own perception; and (3) allowing the State to rebut testimony presented by the defense, we AFFIRM.
FACTS AND PROCEDURAL HISTORY
In October 2006, the Delaware State Police (DSP) set up a wiretap on Raul Morales' phone as part of a drug investigation. DSP also placed a GPS tracker on Morales' car and set up surveillance on him. During the investigation, DSP determined that Charles Campbell was supplying methamphetamine to Morales who in turn sold it to two purchasers, Michael Kanich (a/k/a Hippie) and Billie Gillespie.[1] From the wiretap, DSP overheard Morales call Campbell to arrange the purchases. From the GPS tracker, DSP learned that Morales drove to Campbell's house at 1 Liberty Street in Port Penn and stayed for 15 to 20 minutes. From the surveillance they conducted, DSP saw Morales meet Kanich at the Grotto's Pizza on Pennsylvania Avenue in Wilmington to sell Kanich methamphetamine.[2]
Morales testified at trial that he purchased methamphetamine from Campbell four times in October 2006. Morales also *159 testified that a fifth exchange was scheduled for the weekend of November 3, 2006. Morales testified that he called Campbell and asked to pick up the methamphetamine Friday night November 3, 2006, but Campbell refused because he had to wake up early the next morning for a trip with his wife. Morales testified that he then called his buyer Kanich to tell him that the purchase was cancelled.
That November 3rd weekend, DSP obtained a search warrant and searched Campbell's house while he was out of town. DSP executed other search warrants in connection with the drug investigation that weekend. DSP arrested Morales and Campbell. These arrests thwarted the potential November 3rd weekend transaction.
A Grand Jury indicted Campbell on four counts of Trafficking in Methamphetamine, 5 to 50 grams, and four companion counts of Delivery of Methamphetamine based on four separate occasions in October 2006. The first six counts alleged that Campbell was trafficking and delivering on unspecified dates before October 25, 2006. Counts seven and eight alleged that Campbell was trafficking and delivering on October 26, 2006. The State originally charged Morales as a codefendant, but dropped the charge because Morales testified against Campbell as part of a "plea agreement and the promise of a substantial assistance motion."
Campbell presented two motions in limine at his pretrial conference. First, Campbell objected to Kanich identifying the substance as methamphetamine and speculating about its weight. Campbell sought to exclude Kanich's testimony. The State wanted to introduce the testimony to prove that the substance was methamphetamine and that Campbell sold it to Morales who sold it to Kanich. The State argued that Kanich could identify the methamphetamine and its weight as a lay witness based on Wright v. State.[3] The trial judge overruled Campbell's objection by stating: "this case is stronger than Wright." Kanich testified at trial that the substance he purchased from Morales was methamphetamine. Kanich described how methamphetamine affected him and how it affected him differently than cocaine. Kanich testified that until five or six years ago he used methamphetamine once or twice a month for about 15 to 20 years. Kanich and Morales worked together at Amtrak. Morales approached him to offer to sell him methamphetamine. Kanich testified that he bought methamphetamine from Morales twice. He testified that he had never met Campbell before.
Second, Campbell argued that evidence of the fifth methamphetamine transaction that was scheduled for the weekend of November 3, 2006 and never took place was not admissible under Delaware Rule of Evidence 404(b). D.R.E. 404(b) prohibits evidence of "other crimes, wrongs or acts" by the defendant "to prove the character of a person in order to show action in conformity therewith."[4] D.R.E. 404(b) permits evidence of "other crimes, wrongs or acts" "for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity or absence of mistake or accident."[5] The State argued that evidence of Campbell's plans for the future methamphetamine transaction was admissible "pursuant to the same scheme that has been manifested in the deal on [October 26] and in the prior deliveries." The trial judge denied Campbell's second motion in limine and held that "the evidence *160 does not offend Rule 403 or 404(b). It's evidence of a plan or scheme which is clearly admissible under Rule 404(b)...." At trial, the trial judge instructed the jury, according to Campbell's requested instruction, that they could consider the evidence about the later planned drug transaction only as evidence of intent.
In its case in chief, the State offered GPS printouts that placed Morales' truck between 980 and 1099 Port Penn Road in Middletown on October 26, 2006. Campbell lived at 1 Liberty Street in Port Penn, Middletown. The State called Detective Ellingsworth to testify that DSP attached a GPS tracker to Morale's truck. The State called Detective Clemons to testify that 1099 Port Penn Road is where Liberty Street, Port Penn Road, and Route 9 intersect.
To corroborate the GPS evidence, the State called Morales. Morales testified that in late October he drove to Campbell's house to pick up more methamphetamine. Morales testified that he parked his truck in Campbell's driveway at 1 Liberty Street.
During Campbell's cross examination of Morales, he entered Defense Exhibit 2, a Google satellite map of the Port Penn area, into evidence. Campbell asked Morales if he remembered stopping at the area indicted on the map as 980 Port Penn Road. Morales said that he did not remember stopping there. On redirect, Morales testified that the only reason he would have stopped there would be to make a phone call. During his defense, Campbell testified that Morales did not come to his house on October 26.
In the State's rebuttal, the State called Detective Chorlton to rebut Defense Exhibit 2. Detective Chorlton testified that when he entered the GPS coordinates into MapQuest the resultant GPS coordinates corresponded to the intersection of Port Penn Road and Route 9. This intersection is in the vicinity of Campbell's house.
The jury convicted Campbell on one count each of Trafficking in Methamphetamine (count seven) and Delivery of Methamphetamine (count eight) based on the transaction that took place on October 26, 2006. They acquitted him on the other charges.
ANALYSIS
I. The Trial Judge Properly Admitted Evidence of a Future Drug Deal.
Campbell argues that the trial judge improperly admitted later bad acts evidence. Campbell claims that a "major focus of the trial" was evidence of a drug transaction that was planned to occur over the November 3, 2006 weekend. Campbell contends that the trial judge committed legal error in his application of the Getz analysis and D.R.E. 404(b). The trial judge admitted evidence of this uncharged, planned transaction because it was "evidence of a plan or scheme," under D.R.E. 404(b). We review for abuse of discretion a trial judge's admission of evidence that is relevant for some purpose other than to prove the defendant's propensity to commit crimes pursuant to D.R.E. 404(b).[6]
D.R.E. 404(b) forbids the State from introducing character evidence solely to prove that a defendant acted in conformance with his propensity to commit bad acts.[7] In Getz, we established the following guidelines for the admissibility of evidence subject to D.R.E. 404(b):
*161 (1) The evidence of other crimes must be material to an issue or ultimate fact in dispute in this case. If the State elects to present such evidence in its case-in-chief it must demonstrate the existence, or reasonable anticipation, of such a material issue. (2) The evidence of other crimes must be introduced for a purpose sanctioned by Rule 404(b) or any other purpose not inconsistent with the basic prohibition against evidence of bad character or criminal disposition. (3) The other crimes must be proved by evidence which is "plain, clear and conclusive." (4) The other crimes must not be too remote in time from the charged offense. (5) The court must balance the probative values of such evidence against its unfairly prejudicial effect, as required by D.R.E. 403. (6) Because such evidence is admitted for a limited purpose, the jury should be instructed concerning the purpose for its admission as required by D.R.E 105.[8]
Campbell asserts that the trial judge: (1) failed to completely address the materiality prong; (2) did not address the `plain, clear and conclusive' prong; and (3) improperly instructed the jury to consider evidence of intent instead of evidence of a plan or scheme.
The State suggests that the evidence of the planned November 3rd transaction could be admitted after a simple relevancy analysis because the transaction did not in fact occur and thus no bad act occurred. This suggestion over simplifies the evidence. Though the planned transaction did not occur, it was proffered to show that Campbell and Morales engaged in an ongoing drug enterprise. The State introduced the evidence as one part of several ongoing bad acts under the rubric of D.R.E. 404(b)'s plan or scheme exception. The fact that the planned transaction did not occur is relevant to whether the State offered "plain, clear and conclusive" evidence, but not on the issue whether the State offered it as an intention to commit a bad act in the future. Therefore, we will subject this evidence to a Getz analysis.
A. Materiality Prong of Getz Test.
To support his criticism of the trial judge's analysis of the materiality prong, Campbell relies on our holding in Deshields v. State.[9] In Deshields, we quoted Getz's holding that "no evidential purpose is served by proof that the defendant committed other intentional acts of the same type."[10] The State replies that "it is clear that this evidence was material to an ultimate issue in dispute in this case: whether Campbell was trafficking and delivering methamphetamine to Morales." The State claims that the evidence is vital to explain Campbell's trafficking plan and operation because the State could not recover physical evidence and only recorded one wiretapped conversation about delivery (October 26), which did not refer to Campbell.
Getz and D.R.E. 404(b) permit later bad acts evidence under certain conditions.[11] Where the evidence of a later bad act is offered for a proper purpose, like plan or scheme, the trial judge should engage in the Getz analysis.[12] Evidence of other bad acts is admissible when those acts have "independent logical relevance" and when their "probative value is not substantially outweighed by the danger of *162 unfair prejudice."[13] "The evidence of the prior bad act must be logically related to the material facts of the case."[14] In Getz, we held that "evidence of other crimes must be material to an issue or ultimate fact in dispute in the case."[15]
The planned November 3rd transaction has independent logical relevance because it is material to identifying Campbell as part of a trafficking scheme. The probative value of identifying Campbell as the supplier outweighs the prejudice of notifying the jury about the later bad act. In this case, the State did not prefer evidence of the future deal for the purpose of showing Campbell's bad character but instead to show that Campbell was engaged in ongoing drug deals.[16] This evidence allowed the jury to evaluate the evidence in this case to determine whether Campbell engaged in trafficking as well as delivery of methamphetamine. The evidence of a future drug deal is sufficiently material to satisfy Getz.
B. Plain, Clear and Conclusive Prong of Getz Test.
Campbell contends that "the trial court also committed legal error by not conducting any analysis under the `plain, clear and conclusive prong' of the Getz test" before admitting evidence of Morales' November 3rd phone call to Campbell. Campbell asserts that the November 3rd telephone call that the State characterizes as an attempt to arrange a drug buy does not present clear and conclusive evidence that Campbell possessed methamphetamine. Campbell maintains that the telephone call transcript indicates that "Campbell gave no assent to any drug transaction." There was no mention of drugs in the transcript. To bolster their argument for admitting Morales's November 3rd call to Campbell, the State offered Morales' testimony about calling his cocaine supplier Angel Torres on November 3rd. Morales testified that he called Torres the same evening he called Campbell to tell Torres that it was too late in the evening for Morales to travel to Philadelphia to purchase Torres' cocaine. Campbell denies that Morales' testimony about his conversation with Angel Torres provided plain, clear and conclusive evidence that he possessed methamphetamine on November 3rd.
The State also offered GPS tracking evidence to show that Morales was in the vicinity of Campbell's house on the same date that Morales testified he went to pick up drugs from Campbell. The State insists that the GPS tracking evidence and the wiretap corroborated Morales' testimony. Campbell emphasizes that DSP did not recover any drugs or drug paraphernalia from his house that weekend while Campbell was out of town and unaware of the search warrant. Campbell complains that Morales' wiretapped phone call to him is not plain, clear and conclusive evidence of a drug trafficking scheme.
The State suggests that "[t]estimony alone is sufficiently plain, clear and conclusive." The State relies on Lloyd v. State[17] for the proposition that testimony standing alone is enough to support an element of a crime. In Lloyd, we held that testimony sufficient to support an element of a crime must also be sufficient to show reliability *163 under the "plain, clear and conclusive" standard articulated in Getz.[18] Our standard of review is abuse of discretion and we will not disturb the trial judge's ruling if it is based on conscience and reason, as opposed to being arbitrary and capricious.[19] Testimony implicating a person's plan to meet to sell drugs could support a criminal conviction for trafficking. The November 3rd phone call transcript is consistent with the GPS tracking evidence and Morales' testimony. Therefore, the evidence of a future drug deal is sufficiently plain, clear, and conclusive to satisfy Getz.
C. The Instruction Prong of the Getz Test.
The third Getz factor Campbell quarrels with is the jury instructions. The trial judge left it up to defense counsel to fashion an instruction. Getz requires a trial judge to instruct the jury about the specific purpose for which they can use the bad acts evidence.[20] The jury instruction, submitted by Campbell, states:
You have heard evidence in this trial alleges [sic] that the defendant was involved in acts subsequent to the offense charged. You may not use that evidence as proof that the defendant is a bad person and, therefore, probably committed the offenses charged in the indictment. You may only consider subsequent acts evidence to help you in deciding whether the defendant possessed the requisite intent to commit the acts for which he is now on trial. Again, you are not to consider the alleged subsequent bad acts as proof that the defendant is a person of bad character.
Campbell argues that the use of the word "intent" instead of "plan" or "scheme" was reversible error. Neither party nor the trial judge objected to the instruction.
Jury instructions are not grounds for reversal if they are "reasonably informative and not misleading."[21] Some inaccuracies in jury instructions are permissible.[22] A jury instruction is grounds for reversal only when the "deficiency undermined the ability of the jury `to intelligently perform its duty in returning a verdict.'"[23] All jury instructions will be reviewed as a whole.[24]
Campbell argues that we should find his case analogous to Milligan v. State,[25] in which we found the trial court's cryptic reference to "another proper purpose" in the jury instructions was, as a matter of law, reversible error.[26] In Milligan, we found the jury instructions were not specific enough to limit the jury's consideration to the proper purpose for which the evidence had been admitted.[27] Campbell argues that the trial judge admitted the bad acts evidence for "plan or scheme," and therefore, it was improper to instruct the jury to consider the bad acts for "intent." Campbell emphasizes that "intent" is an element of the charged offenses unlike "plan" or "scheme." Campbell contends that "intent" focuses prospectively on the acts to show evidence of a defendant's *164 specific intent to do the bad act, which in this case was the future November 3rd weekend deal. Campbell distinguishes "plan" or "scheme" by claiming that those terms focus retrospectively to show evidence of a defendant's ongoing plan to do bad acts like the charged offense. His concern is that the jury found him guilty of the one offense that occurred only a few days before the alleged later bad act because the jury was allowed to infer that he had a specific intent to engage in that later bad act. Whereas, if the jury was instructed to determine if he had "plan[ned]" or "scheme" to engage in the later bad act, then Campbell might not have been found guilty on the one charge because the jury acquitted him on all the similar charges and having done so could not have believed that he engaged in an ongoing plan or scheme.
Campbell's reliance on Milligan is misplaced because his jury instructions stated specifically that the jury should limit their consideration of the alleged bad acts to "whether the defendant possessed the requisite intent to commit the acts for which he is now on trial." The evidence of later bad acts was admitted as evidence of a plan or scheme. We fail to comprehend Campbell's distinction between whether he "intended to" or "planned to" arrange a future drug deal. The jury instructions were specific enough to limit the jury's consideration of the evidence to the purpose for which it was admitted. In the context of jury instructions as a whole, the trial judge's use of defense counsel's wording did not constitute error.
II. The Trial Judge Properly Admitted Lay Testimony by a Downstream Purchaser to Establish the Substance Ingested was Methamphetamine.
Campbell argues that the trial judge abused his discretion by admitting Kanich's lay witness testimony to prove beyond a reasonable doubt that the substance Kanich purchased from Morales was methamphetamine. We review evidentiary rulings for abuse of discretion.[28]
Campbell notes that DSP did not seize any drugs and no expert identified the alleged methamphetamine that Campbell was convicted of trafficking and delivering. In order to establish that the substance Kanich ingested was methamphetamine, the State relied on Kanich's testimony that after swallowing the drug, he experienced the same effects as he had experienced over his 15 to 20 years of methamphetamine use. The State also relied on Kanich's testimony that Morales told Kanich that he was going to give Kanich some crank, which is a nickname for methamphetamine. Before trial, Campbell objected in a motion in limine to Kanich testifying to the identity and the weight of the substance.[29] The State defended their use of the lay testimony to identify a controlled substance by relying on Wright v. State.[30]
When a lay person gives opinion testimony it must be consistent with D.R.E. 701:
If the witness is not testifying as an expert, the witness' testimony in the *165 form of opinions or inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness and (b) helpful to a clear understanding of the witness' testimony or the determination of a fact in issue and (c) not based on scientific, technical or other specialized knowledge within the scope of Rule 702.[31]
Campbell argues that Wright v. State[32] does not apply to his case because the main issue in Wright was whether Delaware's corpus delicti rule prohibited the State's conviction for delivery of cocaine based on the defendant's confession. We explained in Wright that the State had produced sufficient evidence, beyond Wright's confession that he sold cocaine, to satisfy the corpus deliciti rule.[33] The corpus deliciti rule requires the State to present "some evidence of the existence of a crime, independent of the defendant's confession, to support the conviction."[34] In Wright, Raheem Cannon supplied cocaine to Wright. Cannon testified that the substance he sold to Wright, and which Wright later sold in the transaction for which he was charged with delivery of cocaine, was in fact cocaine. Cannon testified that he had been selling cocaine on a daily basis for about two years, and that, although he never used cocaine, he knew that the substance he placed in a small baggie and gave to Wright was cocaine because "[i]f you deal with it every day, you can just tell from the texture and the smell and just the look of it."[35] Cannon testified that he had received the cocaine from someone else and divided it into smaller portions, which he put in plastic baggies.[36] He testified that the cocaine was a mixture of powder and chunks and had a "fuelly smell" like gasoline.[37] He also testified that no one had ever complained that he had sold fake cocaine.[38] The police never recovered any cocaine in that case.[39] We found that the dealer's description and familiarity with the substance was sufficient evidence, beyond Wright's confession that he sold cocaine, to satisfy the corpus deliciti rule.[40]
Wright applies to this case because in Wright we considered "whether, in the absence of chemical testing or expert testimony, a lay witness can identify an illegal substance sufficient to support a jury finding."[41] We noted that at least three United States Courts of Appeals have accepted lay opinion testimony to identify a controlled substance.[42]
In United States v. Dominguez, the first case we cited in Wright, the United States Court of Appeals for the Seventh Circuit stated: "It is well established that the government need not prove the identity of a controlled substance by direct evidence, as long as the available circumstantial evidence establishes its identity beyond a reasonable *166 doubt."[43] The court explained in Dominguez that "[c]ircumstantial evidence establishing identification may include a sales price consistent with that of cocaine; the covert nature of the sale; on-the-scene remarks by a conspirator identifying the substance as a drug; lay-experience based on familiarity through prior use, trading, or law enforcement; and behavior characteristic of drug sales."[44] In that case, the government failed to establish the identity of the controlled substance by circumstantial evidence because "the record is unclear as to what [the investigating agent's] considered which eventually convinced him that the delivered substance was cocaine."[45] The court determined that there was no factual basis in the record to support the agent's belief that the substance was cocaine, and no evidence that another agent, who accepted delivery of the substance as part of the investigation, "was experienced in identifying cocaine."[46] Instead, the agent who had accepted delivery of the cocaine "was uncertain whether the substance she received was authentic."[47] The court concluded that the other circumstantial evidence the government presented, that the agreed upon price was $12,000, which was consistent with the market rate for the quantity purchased, and that the transaction was conducted in a covert manner, with delivery in Guatemala and payment in Milwaukee, "could as easily support the existence of a sham drug sale as an authentic one."[48]
The court in Dominguez explained that the evidence presented was "distinguishable from those cases in which the identity of the substance was established by circumstantial evidence."[49] For example, in one of those cases, a co-conspirator testified that she knew that the drug she received from the defendant was cocaine because the defendant told her it was and she tried it.[50] In two other cases, the co-conspirators testified that they had smoked marijuana for five to ten years and the substance they received from the defendant to sell "looked, smelled and smoked like marijuana."[51]
In United States v. Westbrook, the second case we cited in Wright, the defendant argued on appeal that the trial judge erroneously permitted four witnesses to refer to the substance sold or manufactured as "amphetamine" because, he argued, their testimony was "unreliable on the grounds that they did not have prior experience with amphetamine."[52] The defendant did not, however, challenge the sufficiency of the evidence identifying the substance as amphetamine.[53] The United States Court of Appeals for the Eighth Circuit explained that "[t]he identity of a controlled substance can be proved by circumstantial evidence"[54] and "[c]ircumstantial evidence *167 of a drug's identity may include opinion testimony of a witness who couples past use with present experience with the substance in question."[55] The court in Westbrook relied on a case from the United States Court of Appeals for the Eleventh Circuit, United States v. Harrell, in which that court explained that "[i]dentification of a controlled substance does not require direct evidence if available circumstantial evidence establishes its identity beyond a reasonable doubt" and "[s]uch evidence can include lay experience based on familiarity through prior use, trading or law enforcement; a high sales price; on-the-scene remarks by a conspirator identifying the substance as a drug; and behavior characteristic of sales and use such as testing, weighing, cutting and peculiar ingestion."[56] The Harrell court further explained that the testimony to which the defendant objected in that case was permissible because "[i]dentification based on past use coupled with present observation of the substance at hand will suffice to establish the illicit nature of a suspected substance"[57] and the witness had "testified that he became a user and pusher of an assortment of drugs, including cocaine, amphetamines, and quaaludes" in the past before working with the defendant on the drug transactions at issue in the case.[58]
The Harrell court held that the witness's past experience qualified him to testify about the drug transactions he participated in with the defendant to sell cocaine and quaaludes.[59] In addition, another witness admitted in his testimony that he had become a frequent cocaine user before meeting the defendant.[60] The Harrell court held that the second witness's "testimony of habitual use coupled with observations of [the defendant's] characteristic behavior qualified [that witness] to identify the substance that he observed [the defendant] snorting."[61]
In United States v. Paiva, the third case we cited in Wright, the defendant argued on appeal that the trial judge abused his discretion when he permitted a lay witness to testify that, in her opinion, the identity of a substance allegedly distributed by the defendant was, in fact, cocaine.[62] The lay witness was the 21 year old daughter of the defendant's ex-wife.[63] She testified that while she lived with the defendant and her mother in Florida, she found a plastic bag with white powder inside of the defendant's shoes.[64] She testified that, before that time, "she had used and tasted cocaine on many occasions and had developed a cocaine problem at age fourteen."[65] She testified that the substance she found in the defendant's shoe was a white powder with little bits of rocks in it and that she tasted the powder and it tasted like cocaine.[66] The witness testified "that based upon looking at the substance and *168 tasting it, the substance, in her opinion, was cocaine."[67]
In Paiva, the defendant argued on appeal, as he had argued before trial in his motion in limine, that the witness' testimony was inadmissible under Federal Rule of Evidence 701 "because identification of a substance, such as cocaine, is beyond the common knowledge of ordinary persons" and also under Federal Rule of Evidence 702 because the government had not qualified the witness as an expert.[68] In Paiva, the court explained that the admissibility of lay opinion testimony under Rule 701 is within the sound discretion of the trial judge and would not be overturned absent a clear abuse of discretion.[69] The court held that a drug user testifying as a lay witness, who had not been qualified as an expert, was competent to express an opinion about the identity of a particular controlled substance.[70] Accordingly, the court in Paiva concluded that the admission of the witness' testimony "that the substance she found in [the defendant's] shoe looked and tasted like cocaine was clearly proper and within the trial judge's discretion."[71] In addition, the witness' "definite opinion identifying the white powder as cocaine" was also properly admitted.[72] The court rejected the defendant's argument that "identification of a substance, such as cocaine, is exclusively within the domain of expert opinion evidence and an improper subject for lay opinion testimony."[73] Instead, the court held that "[a]lthough a drug user may not qualify as an expert, he or she may still be competent, based on past experience or personal knowledge and observation, to express an opinion as a lay witness that a particular substance perceived was cocaine or some other drug."[74]
Delaware Rule of Evidence 701 tracks the federal rule and it was amended in 2001 to be consistent with the 2000 amendments to the federal rule.[75] Federal Rule of Evidence 701 permits a drug user to testify about the identity of a controlled substance as long as the government lays a foundation that the witness' testimony is rationally based on his own perception of and personal experience with the substance and not on scientific, technical or *169 other specialized knowledge.[76]
Kanich was a 15 to 20 year methamphetamine user[77] who testified that he purchased the substance in question from Morales on two occasions and ingested the substance on both occasions.[78] Morales told Kanich that the substance was methamphetamine.[79] He testified that the substance looked, felt, and tasted the same as the methamphetamine he had used in the past.[80] He also testified that the substance had the same effect when he ingested it as the methamphetamine that he had ingested in the past.[81] He testified that he had tried cocaine and that the substance gave him different effects than from cocaine. Therefore, the State laid a sufficient foundation that Kanich had past experience with methamphetamine and present knowledge of the substance at issue in this case to testify that the substance he obtained from Morales was in fact methamphetamine. Accordingly, the trial judge correctly concluded that a sufficient foundation existed for the lay opinion and did not abuse his discretion when he admitted Kanich's testimony that the substance delivered was methamphetamine.[82]
III. The Trial Judge Properly Allowed Rebuttal Evidence.
Campbell argues that the trial judge allowed the State to argue improper rebuttal testimony about GPS tracking evidence. We review whether the trial judge admitted rebuttal testimony improperly under an abuse of discretion standard of review.[83] The trial judge has discretion to craft the order in which the parties present evidence and thus, the proof at trial.[84] To that end, "it is entirely proper for the affirmative side to give evidence in rebuttal in reply to the evidence of the other side of the case."[85]
Campbell complains that Detective Chorlton's testimony had no purpose other than to rebut an exhibit that Campbell's counsel presented during the State's case-in-chief. *170 Campbell claims that this alleged rebuttal testimony was merely to bolster the State's case. Campbell argues that the fact that Campbell introduced a defense exhibit during the State's case bars the State from rebutting that exhibit's significance. Campbell overlooks that he introduced the impeaching evidence when, on cross examination, Morales testified that the middle of the area indicated on the GPS printout between 980 and 1099 Port Penn Road appeared more than a mile from Campbell's house at 1 Liberty Street. Campbell ignores that he cross examined Morales, who acknowledged on cross that he could not think of a reason to stop on that Port Penn block. Campbell opened the door for rebuttal with this impeaching testimony about Morales' whereabouts on October 26. Then, Campbell testified that Morales did not come to his house that day.
To rebut Campbell's exhibit, the State called Detective Chorlton. Detective Chorlton rebutted Defense Exhibit 2, the Google map, with State Exhibit 5, showing MapQuest's result typing in the GPS coordinates. The trial judge properly allowed the rebuttal testimony and did not abuse his discretion.
CONCLUSION
For the above reasons, the judgments of the Superior Court are AFFIRMED.
NOTES
[1] Billie Gillespie died before trial.
[2] At first, Kanich testified that he bought methamphetamine from Morales at Amtrak's parking lot and at Morales' house. He testified that when he met Morales in the Grotto's parking lot, they were exchanging scrap metal and boiler plates for a home project. Kanich later testified that he met Morales at Grotto's to buy methamphetamine and pick up the boiler plates and scrap metal.
[3] Wright v. State, 953 A.2d 188 (Del.2008).
[4] D.R.E. 404(b).
[5] Id.
[6] Hicks v. State, 913 A.2d 1189, 1196 (Del. 2006); Pope v. State, 632 A.2d 73, 78-79 (Del. 1993).
[7] D.R.E. 404(b).
[8] Getz v. State, 538 A.2d 726, 734 (Del. 1988).
[9] Deshields v. State, 706 A.2d 502 (Del. 1998).
[10] Id. at 508 (quoting Getz, 538 A.2d at 733).
[11] Getz v. State, 538 A.2d 726, 730 n. 3 (Del. 1988); see Joynes v. State, 797 A.2d 673, 675-76 (Del.2002).
[12] Joynes, 797 A.2d at 675-76.
[13] Getz, 538 A.2d at 730 (citing D.R.E. 403; Diaz v. State, 508 A.2d 861, 865 (Del.1986)).
[14] Ruiz v. State, 2003 WL 1824840, at *3 (Del.) (citing Getz, 538 A.2d at 731).
[15] Getz, 538 A.2d at 734.
[16] See Deshields v. State, 706 A.2d 502, 507-508 (Del.1998).
[17] Lloyd v. State, 1991 WL 247737 (Del.).
[18] Id. at *3.
[19] Id. at *1 (citing Pitts v. White, 109 A.2d 786 (Del. 1954)).
[20] Getz, 538 A.2d at 734 (citing D.R.E. 105).
[21] Floray v. State, 720 A.2d 1132, 1137 (Del. 1998) (internal citation omitted).
[22] Id. at 1138.
[23] Id. (internal citation omitted).
[24] Id.
[25] Milligan v. State, 761 A.2d 6 (Del.2000).
[26] Id. at 10.
[27] Id. at 9.
[28] Manna v. State, 945 A.2d 1149, 1153 (Del. 2008).
[29] Because the State proffered that Kanich would testify that he purchased half an ounce from Morales and the minimum for trafficking is only five grams, the trial judge permitted Kanich to testify about the weight of the substance. Campbell restricts his appeal to the trial judge's discretion in allowing Kanich to identify the substance. Thus, we do not analyze the trial judge's decision to permit Kanich to testify about the weight of the substance.
[30] Wright v. State, 953 A.2d 188 (Del.2008).
[31] D.R.E. 701.
[32] Wright v. State, 953 A.2d 188 (Del.2008).
[33] Id. at 190.
[34] Id. at 192.
[35] Id. at 190.
[36] Id. at 190-91.
[37] Id. at 191.
[38] Id.
[39] Id.
[40] Id. at 190.
[41] Id. at 194.
[42] Id. at 194-195 (citing U.S. v. Dominguez, 992 F.2d 678, 681 (7th Cir.1993); U.S. v. Westbrook, 896 F.2d 330, 336 (8th Cir. 1990); U.S. v. Paiva, 892 F.2d 148, 157 (1st Cir. 1989)).
[43] U.S. v. Dominguez, 992 F.2d at 681 (citing U.S. v. Manganellis, 864 F.2d 528, 541 (7th Cir.1988)).
[44] Id.
[45] Id.
[46] Id.
[47] Id.
[48] Id.
[49] Id.
[50] Id. at 681-82 (citing U.S. v. Manganellis, 864 F.2d at 541).
[51] Id. at 682 (citing U.S. v. Murray, 753 F.2d 612, 615 (7th Cir.1985); U.S. v. Roman, 728 F.2d 846, 859 (7th Cir.), cert. denied, 466 U.S. 977, 104 S.Ct. 2360, 80 L.Ed.2d 832 (1984)).
[52] U.S. v. Westbrook, 896 F.2d 330, 336 (8th Cir. 1990).
[53] Id.
[54] Id. (citing U.S. v. Meeks, 857 F.2d 1201, 1204 (8th Cir.1988); U.S. v. Harrell, 737 F.2d 971, 978-79 (11th Cir. 1984)).
[55] Id. (citing U.S. v. Harrell, 737 F.2d at 978-79).
[56] Harrell, 737 F.2d at 978.
[57] Id. at 978-79.
[58] Id. at 979 n. 9.
[59] Id.
[60] Id.
[61] Id.
[62] U.S. v. Paiva, 892 F.2d 148, 155 (1st Cir. 1989).
[63] Id.
[64] Id. at 155-56.
[65] Id. at 156.
[66] Id.
[67] Id.
[68] Id.
[69] Id.
[70] Id. (citing U.S. v. Honneus, 508 F.2d 566, 576 (1st Cir. 1974), cert. denied, 421 U.S. 948, 95 S.Ct. 1677, 44 L.Ed.2d 101 (1975)).
[71] Id.
[72] Id.
[73] Id. at 157.
[74] Id. (internal citations omitted).
[75] D.R.E. 701 cmt. (2001) ("D.R.E. tracks F.R.E. 701 in effect on December 31, 2000."). Fed.R.Evid. 701 (2000) provides:
If the witness is not testifying as an expert, the witness' testimony in the form of opinions or inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness, (b) helpful to a clear understanding of the witness' testimony or the determination of a fact in issue, and (c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.
Fed.R.Evid. 701.
D.R.E. 701 (2001) similarly provides:
If the witness is not testifying as an expert, the witness' testimony in the form of opinions or inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness and (b) helpful to a clear understanding of the witness' testimony or the determination of a fact in issue and (c) not based on scientific, technical or other specialized knowledge within the scope of Rule 702.
D.R.E. 701.
[76] Fed.R.Evid. 701.
[77] See e.g., U.S. v. Harrell, 737 F.2d 971, 979 n. 9 (11th Cir. 1984) (testifying as a habitual user).
[78] See e.g., U.S. v. Dominguez, 992 F.2d 678, 681-82 (7th Cir. 1993) (knowledge from tasting the substance).
[79] Id. (dealer acknowledged identity of substance to witness).
[80] See e.g., Wright v. State, 953 A.2d 188, 190 (Del.2008) (witness was familiar of the substance's smell, texture, and appearance).
[81] See e.g., Harrell, 737 F.2d at 979 n. 9 (testifying to the drug effects).
[82] In contrast, a police officer does not usually have past experience with drug use or present personal knowledge of the substance at issue. Therefore, this Court properly held in Norman v. State, that "police officers must be qualified as experts before identifying a controlled substance." Norman v. State, 968 A.2d 27, 28 (Del.2009). In Norman, we distinguished between a police officer trained in "apprehending criminals who are involved in drugs" from "a drug dealer who was familiar with cocaine because he bought and sold the drug." Id. at 31. That rationale is consistent with the Advisory Committee Notes to Federal Rule of Evidence 701, which explain that if the witness such a police officer was to testify about "how a narcotic was manufactured" or "the intricate workings of a narcotic distribution network," the witness would have to be qualified as an expert under Rule 702. Fed. R.Evid. 701 Advisory Committee Notes (2000) (citing U.S. v. Figueroa-Lopez, 125 F.3d 1241, 1246 (9th Cir. 1997)).
[83] Lampkins v. State, 1991 WL 22357, at *3 (Del.); Gaston v. State, 234 A.2d 324, 325 (Del. 1967).
[84] Taylor v. State, 298 A.2d 332, 337 (Del. 1972).
[85] Herhal v. State, 283 A.2d 482, 485 (Del. 1971). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540420/ | 213 B.R. 839 (1997)
In re Robert A. DeLAUGHTER, d/b/a River City Pets and 4 Paws Grooming, Debtor-Appellant.
Forrest E. EBERSOLD, Appellant,
v.
Nichola K. DeLAUGHTER, Creditor-Appellee.
BAP No. 97-6030SI.
United States Bankruptcy Appellate Panel of the Eighth Circuit.
Submitted September 18, 1997.
Decided October 27, 1997.
Forrest E. Ebersold, Counsel Bluffs, IA, for appellant.
*840 James E. Bachman, Omaha, NE, for appellee.
Before KOGER, Chief Judge, HILL, and DREHER, Bankruptcy Judges.
NANCY C. DREHER, Bankruptcy Judge.
This is an appeal by Debtor's counsel, Forrest E. Ebersold ("Appellant"),[1] from an order of the bankruptcy court awarding sanctions against him pursuant to Federal Rule of Bankruptcy Procedure 9011.[2] The bankruptcy court ordered Appellant to pay Debtor's spouse, Appellee Nichola DeLaughter, the attorneys' fees and expenses she had incurred in responding to Debtor's amended Chapter 13 plan filed in the bankruptcy case.[3] We find that the bankruptcy court did not abuse its discretion in awarding sanctions. Accordingly, we affirm.
BACKGROUND
On July 25, 1995, Appellee filed a petition for dissolution of her marriage in Iowa state court. Within days, Debtor filed a petition for relief under Chapter 13 of the Bankruptcy Code, scheduling Appellee as an unsecured nonpriority creditor. At the time, Debtor was also being pursued by other creditors, including the Internal Revenue Service.
On August 14, 1995, Debtor filed his first Chapter 13 plan. The terms of the plan classified the debt to Appellee separately, providing as follows:
Class C. Class C shall consist of the debt to Nichola K. DeLaughter. On or about July 25, 1995 she filed for Dissolution of Marriage after two years of marriage and any property settlement is subject to discharge. Under existing [law] any award made during the dissolution case i[s] not in the form of support. Failure to object to this plan will result in a[n] order confirming the same.
Appellee did not file an objection to the proposed plan, but the Chapter 13 Trustee did object on the ground that Debtor's dissolution proceedings had not concluded and the plan could not purport to resolve undetermined marital distribution rights in the context of a Chapter 13 plan. At the confirmation hearing, Appellant, on behalf of Debtor, orally withdrew the proposed plan, and the bankruptcy court then overruled the objections to confirmation as moot.
Subsequently, Appellant prepared, signed and, on October 16, 1995, filed the amended Chapter 13 plan which serves as the basis for the award of sanctions. The treatment of Appellee in the amended plan was substantially identical to that in the original plan. The Chapter 13 Trustee objected again to confirmation of the amended plan for the previously stated reason. Appellee also now for the first time objected on the same ground and moved for relief from the automatic stay. Appellant prepared a response to Appellee's motion for relief from the automatic stay which continued to assert that Debtor could properly resolve his marital obligations in bankruptcy court, rather than in state court. The bankruptcy court rejected this argument and granted Appellee's motion.
On December 14, 1995, at the confirmation hearing on the Debtor's amended Chapter 13 plan, Appellant orally withdrew the proposed plan and moved to convert the case to Chapter 7. Although Appellant knew he was going to take such action in advance of the hearing, he made no attempt to alert Appellee's attorney to this possibility. The bankruptcy court overruled the objections to confirmation as moot and granted the motion to convert.
Appellee then filed a motion for sanctions under Bankruptcy Rule 9011. The motion was based, in part, on Appellee's showing that the legal positions taken by Appellant *841 were wholly unsupported by applicable law. Further, Appellee argued that Appellant had used the bankruptcy proceeding in order to frustrate Appellee's attempt to resolve the marital dispute in state court and as a lever to force Appellee to accept a settlement in the dissolution proceedings. After a hearing, the bankruptcy court awarded sanctions against Appellant in the amount of $1,575.00.[4]
DISCUSSION
We review the bankruptcy court's award of sanctions for abuse of discretion. Grunewaldt v. Mutual Life Ins. Co. (In re Coones Ranch, Inc.), 7 F.3d 740, 743 (8th Cir.1993); Mid-Tech Consulting, Inc. v. Swendra, 938 F.2d 885, 888 (8th Cir.1991); see also Dorsey & Whitney v. Dakota Rail, Inc. (In re Dakota Rail, Inc.), 132 B.R. 25, 27 (D.Minn.1991). Thus, we should reverse the award only if we conclude that it was based on "an erroneous view of the law or on a clearly erroneous assessment of the evidence." Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 2461, 110 L.Ed.2d 359 (1990), quoted in Swendra, 938 F.2d at 888.
Rule 9011 provides that the signature of an attorney to a pleading constitutes a certificate that the attorney has read the document; that to the best of the attorney's knowledge, information, and belief, formed after reasonable inquiry, it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification or reversal of existing law; and, that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needlessly increase the cost of administration of the case. FED.R.BANKR.P. 9011. If a document is signed in violation of this rule, the court "shall" impose on the person who signed it, the represented party, or both, an appropriate sanction. FED. R.BANKR.P. 9011. Violations of the rule mandate sanctions thereunder, and discretion, in this respect, is entirely removed from the court. Happy Chef Sys., Inc. v. John Hancock Mut. Life Ins. Co., 933 F.2d 1433, 1438 (8th Cir.1991)("[S]anctions are mandatory when a [Rule 9011] violation occurs. . . ."); see also, O'Connell v. Champion Int'l Corp., 812 F.2d 393, 395 (8th Cir.1987). Thus, the court's discretion is constrained to the determination of whether the rule has been violated and then, if so, to formulating a sanction for a new violation thereof. See Stuebben v. Gioioso (In re Gioioso), 979 F.2d 956, 960-61 (3rd Cir.1992).
The bankruptcy court correctly found that Appellant had filed the amended plan and had pursued it to confirmation for the improper purpose of "needlessly delaying the state court action, increasing the costs of litigation, and provid[ing] [the Debtor] with leverage in the dissolution case." The bankruptcy court was also correct in holding that Appellee's claim was made without reasonable inquiry into the law or a good faith argument for an extension of the law.[5] The evidence clearly supports the finding that the amended plan was filed merely for the purpose of prolonging the Debtor's bankruptcy case in order to extend the life of the automatic stay, which in turn caused needless delay in the state court dissolution action. Debtor filed his first Chapter 13 plan while still under the protection of the automatic stay, only to withdraw it, without advance warning, at the confirmation hearing upon encountering objections to confirmation. After the bankruptcy court terminated the stay to allow Nichola to proceed with the state court dissolution proceeding, Debtor opted to convert to Chapter 7, but waited until the confirmation hearing to do so. In addition, the bankruptcy court was correct in concluding that Appellant had done no research and had no reasonable basis to assert that the bankruptcy court had jurisdiction to grant or modify a marriage dissolution decree and in *842 further finding that Appellant filed the amended plan with ample warning that he had no legal basis for doing so. It is clear from this record that Appellant made no inquiry into the law, much less a reasonable one. Appellant's disregard for the law, the facts, and the need for respect to the court and opposing counsel was demonstrated when he filed an appeal and then, without warning, simply failed to appear at oral argument to pursue it. On this record, the bankruptcy court's conclusion that the Appellant's amended plan was filed for an improper purpose and without a reasonable inquiry into the law was correct.[6]
Accordingly, the order of the bankruptcy court is AFFIRMED.
NOTES
[1] The notice of appeal also lists Debtor as an Appellant, but no sanctions were awarded against Debtor and he is not a proper party to this appeal.
[2] In its order, the bankruptcy court also referenced, as support, § 105 of the Bankruptcy Code. Our disposition of this appeal under Rule 9011 renders any discussion of § 105 or the bankruptcy court's treatment of that issue unnecessary.
[3] The order was not explicit in providing that the sanctions award be paid to Nichola and/or her counsel, but the parties have assumed this was the import of the court's order.
[4] This number represented the fees charged by counsel to Appellee to defend against the amended plan. Appellant does not challenge the amount of the fee award.
[5] Appellant argues that the bankruptcy court could not and should not have found that Debtor filed the bankruptcy petition itself for an improper purpose. Appellant further argues that the bankruptcy court should not have found his resistance to the motion for relief from stay to be sanctionable. However, the decision on these issues was made in the context of § 105, which we do not address. See supra note 2.
[6] In her brief, Appellee requested that she be awarded attorneys' fees and costs incurred in this appeal. Bankruptcy Appellate Panels may award sanctions for frivolous appeals under Rule 38 of the Federal Rules of Appellate Procedure. Determan v. Sandoval (In re Sandoval), 186 B.R. 490, 496 (9th Cir. BAP 1995); Franchise Tax Bd. v. Roberts (In re Roberts), 175 B.R. 339, 345 (9th Cir. BAP 1994). Such a request must be made by motion after notice; it is not enough to request fees in a brief or at argument. Sandoval, 186 B.R. at 496; FED.R.APP.P. 38. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1541373/ | 949 A.2d 583 (2008)
In re Charles C. WRIGHT, Respondent.
A Member of the Bar of the District of Columbia Court of Appeals (Bar Registration No. 329888).
Nos. 07-BG-73, 07-BG-74.
District of Columbia Court of Appeals.
Submitted May 15, 2008.
Decided June 5, 2008.
Before FARRELL and KRAMER, Associate Judges, and KING, Senior Judge.
PER CURIAM:
This disciplinary matter involves a consolidated reciprocal proceeding, pursuant to D.C. Bar R. XI, § 11, and an original proceeding arising from respondent's criminal conviction, pursuant to D.C. Bar R. XI, § 10(c). In its report and recommendation the Board on Professional Responsibility recommends that respondent be disbarred from the practice of law as identical reciprocal discipline based on the Supreme Court of Pennsylvania's order of disbarment. We accept the Board's recommendation.
In 2003, respondent pleaded guilty in criminal proceedings in Pennsylvania to two counts of third-degree felony sexual abuse of children, one count of dissemination of obscenity to minors, one count of criminal use of a communication facility, and one misdemeanor count of possessing instruments of a crime.[1] After being personally served with notice of disciplinary proceedings in the Supreme Court of Pennsylvania, but not participating in those proceedings, respondent was disbarred in the state of Pennsylvania.[2] After Bar Counsel filed with this court certified copies of both the Pennsylvania criminal conviction and the disbarment order, this court suspended respondent pending further proceedings before the Board.[3] The matters were consolidated, *584 and the Board now recommends that we disbar respondent as reciprocal discipline and not reach the question of whether respondent committed a crime of moral turpitude per se, thus necessitating disbarment under D.C.Code § 11-2503(a). We agree and adopt the recommended sanction.
Given the presumption in favor of imposing identical reciprocal discipline, and the fact that neither Bar Counsel nor respondent has opposed such discipline, this court has only a limited role to play. See In re Childress, 811 A.2d 805, 807 (D.C.2002) (quoting In re Spann, 711 A.2d 1262, 1265 (D.C.1998)); In re Cole, 809 A.2d 1226, 1227 n. 3 (D.C.2002) (per curiam) (noting that where respondent did not participate in any of the proceedings, "the imposition of identical discipline should be close to automatic, with minimum review by both the Board and this court"). After reviewing the record, we agree with the Board that there was "no obvious miscarriage of justice" in the foreign proceeding, see In re Spann, 711 A.2d at 1265; that respondent received notice of the disciplinary proceedings in Pennsylvania; and that his conduct also constitutes misconduct within the District of Columbia. See District of Columbia Rules of Professional Conduct R. 8.4(b). Further, we find nothing in the record that allows us to conclude that disbarment would be inconsistent with disciplinary action imposed in this jurisdiction for similar conduct. Accordingly, it is
ORDERED that respondent Charles C. Wright, as reciprocal discipline, is hereby disbarred from the practice of law in the District of Columbia. We direct respondent's attention to the affidavit requirements of D.C. Bar R. XI, § 14(g). See also D.C. Bar R. XI, 16(c) (setting forth requirements for reinstatement). It is
FURTHER ORDERED that the criminal conviction matter is hereby dismissed as moot.
So ordered.
NOTES
[1] The conduct leading to the conviction involved instances of sending sexually graphic digital images of children to a person respondent believed to be a fifteen-year-old female, but who was in fact an undercover detective.
[2] Respondent failed to inform Bar Counsel of his disbarment as required by D.C. Bar R. XI, § 11(b), and failed to inform the court of his criminal conviction as required by D.C. Bar R. XI, § 10(a). Respondent was admitted to the District of Columbia Bar in December 1980, but has been administratively suspended for nonpayment of Bar dues and failure to file annual registration statements since December 1996.
[3] Respondent was suspended for the criminal conviction pursuant to D.C. Bar R. XI, § 10(c), and suspended based on the Pennsylvania disbarment proceeding pursuant to D.C. Bar R. XI, § 11(d). Respondent has not participated in the proceedings before the Board, nor the proceedings before this court. | 01-03-2023 | 10-30-2013 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.