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https://www.courtlistener.com/api/rest/v3/opinions/1553371/ | 57 B.R. 412 (1984)
In re NORTH DUKE LIMITED PARTNERSHIP, Debtor.
Bankruptcy No. 79-00001.
United States Bankruptcy Court, District of Columbia.
November 20, 1984.
Stephen Daniel Keefe, Keefe and Hart, Washington, D.C., for debtor.
*413 ORDER
GEORGE FRANCIS BASON, Jr., Bankruptcy Judge.
This matter is before the Court upon the motion of North Duke Mall Limited Partnership ("North Duke"), Debtor, to reopen bankruptcy proceedings which had been closed by order of this Court dated September 21, 1981. North Duke had filed a petition seeking relief under Chapter XII of the Bankruptcy Act on January 3, 1979. At the time of its filing, the partnership was comprised of one general partner, Eugene Hooper, and two limited partners, Anthony Musolino and John F. Warner. The sole asset of the partnership was a shopping center located in Durham, North Carolina.
Foreclosure proceedings begun by the major creditor of North Duke, Mortgage Investors of Washington ("MIW"), precipitated the bankruptcy petition. During the course of the bankruptcy proceeding North Duke operated as debtor-in-possession with general partner Hooper conducting its affairs. According to an affidavit of Hooper, "it became necessary to settle affairs of the Limited Partnership and a settlement agreement was reached with MIW."[1] On October 23, 1979, an order approving and implementing certain provisions of the settlement agreement was signed by this Court. This order left MIW free to commence or recommence foreclosure proceedings under its deed of trust.
In 1977, prior to the filing of this bankruptcy case, Musolino commenced an action for an accounting against North Duke and partners Hooper and Warner in the Circuit Court of Fairfax County, Virginia.[2] Musolino's action was prosecuted prior to, during, and after the North Duke bankruptcy proceeding. On July 26, 1984, the Circuit Court issued a final decree and judgment awarding to North Duke a judgment of $8,430,000.00 plus interest against Hooper, and ordering Musolino and Warner to dissolve the partnership. Liability was based upon the court's determination that Hooper had caused the loss of partnership property and had also breached his construction contract with the partnership.
In light of efforts to enforce the Virginia Court's judgment Hooper now seeks, through the entity of North Duke, to reopen the original bankruptcy case which has been closed since 1981. His request is premised upon two principal points. First, he claims that he was, until recently, unaware that the North Duke estate had been closed without a disposition of all matters regarding the partnership. Hooper attributes some of his misunderstanding about the bankruptcy to the death of one of North Duke's principal attorneys. Second, Hooper contends that had he known that the settlement agreement and this court's order, which allowed MIW to foreclose against North Duke, would be used against him in any court proceeding, he would not have settled with MIW on behalf of North Duke. He now requests that the bankruptcy proceeding be reopened in order to settle the affairs of North Duke.
As a threshold matter, this Court notes that the law applicable in this case is the Bankruptcy Act of 1898.[3] A case commenced under the Bankruptcy Act and all related matters are conducted and determined under the Bankruptcy Act, rather than under the Bankruptcy Reform Act of 1978. Pub.L. No. 95-598, § 403, 92 Stat. 2683. The North Duke bankruptcy petition was filed on January 3, 1979, well before October 1, 1979, when the 1978 Act became effective. See In re Becker's Motor Transportation, Inc., 632 F.2d 242 (3d Cir. 1980).
The provisions which govern this motion to reopen the North Duke bankruptcy *414 case are section 2(a)(8) of the Bankruptcy Act and former Bankruptcy Rule 515. Under these provisions the court may reopen a case where the movant has shown "good cause" as determined by the court. Hull v. Powell, 309 F.2d 3, 4 (9th Cir.1962). The decision whether a bankruptcy estate should in fact be reopened is within the sound discretion of the court. In re Haker, 411 F.2d 568, 569 (5th Cir.1969); Reid v. Richardson, 304 F.2d 351, 355 (4th Cir. 1962); In re Holloway, 10 B.R. 744, 745 (Bankr.D.R.I.1981).
This requirement is meant to promote the efficient and effective settlement of bankruptcy estates. More specifically, it has been noted that "[t]he right to reopen and reinstate a bankruptcy case exists where there is a seasonable and diligent application, good cause, and the absence of intervening rights which would make it inequitable and unjust to disturb the case." In re Baker, 299 F. Supp. 404, 407 (W.D. Mo.1969). Upon review of the papers accompanying North Duke's motion, it does not appear that those criteria have been met.
This case was closed by order of this Court on September 21, 1981. Now, over three years later, Movant seeks to reopen the estate because Hooper claims he was not aware that the disposition of all of North Duke's affairs had not been completed. North Duke has not set forth a satisfactory excuse for its delay in asserting its rights. Hooper's asserted personal ignorance of the ramifications of actions he took on behalf of North Duke is irrelevant. There has been no allegation that the debtor North Duke itself, through its counsel, was unaware of North Duke's rights and liabilities. Indeed, the clear implication of Hooper's present allegation of his own personal ignorance is that the now-deceased counsel was fully informed and aware. Moreover, both Hooper and North Duke's counsel were aware of the suit brought by Musolino in the Virginia Court; both also participated in formulating the MIW settlement agreement.
Permitting North Duke to reopen the estate would work an injustice to the rights of dissolving partners Musolini and Warner. Moreover, to reopen the estate would result in no apparent benefit to North Duke, because there is no evidence that further administration would lead to recovery of additional assets. Quite the contrary. The Virginia court's decree gave the North Duke Limited Partnership a judgment against Hooper. Reopening the bankruptcy estate would serve to jeopardize enforcement of this judgment.
Movant has not acted diligently in seeking relief from this Court, has shown no satisfactory reason for its delay, and by its delay has caused prejudice to the parties that prevailed in the Virginia proceeding. For these reasons this Court, sua sponte, finds that the equitable doctrine of laches, the absence of good cause, and the intervening rights of third parties all bar North Duke's request from being granted.[4]
The motion is therefore DENIED.
NOTES
[1] Affidavit in Support of Motion to Reopen Proceedings and Relief from Ancillary Proceedings.
[2] Musolino v. North Duke Limited Partnership, Chancery No. 54683 (Cir.Ct. Fairfax County, July 26, 1984).
[3] As amended by the Chandler Act in 1938.
[4] This Court is ever mindful that, as a court of equity, it is guided by equitable principles in the exercise of its powers. Hull v. Powell, 309 F.2d at 5. Although Bankruptcy Rule 924 specifies that a motion to reopen a case is not subject to the one year limitation on actions of Federal Rule of Civil Procedure 60(b), courts invariably require that a motion to reopen a case be brought without unconscionable delay. In re Fair Creamery Co., 193 F.2d 5 (6th Cir.1951); In re Tyler, 27 B.R. 289 (Bankr.E.D.Va.1983); see also H.R.Rep. No. 595, 95th Cong., 1st Sess. 338 (1977); S.Rep. No. 989, 95th Cong., 2d Sess. 49 (1978), U.S.Code Cong. & Admin.News 1978, p. 5787. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1552955/ | 48 B.R. 528 (1985)
In re David A. CRABTREE, a/k/a West Knoxville Investment Company, Inc., Debtor.
D. Broward CRAIG, Trustee, Plaintiff,
v.
UNION COUNTY BANK, Defendant, James R. Martin, Trustee of the Estate of C.H. Butcher, Jr.; Garrett Enterprises, Inc., Intervenors.
Bankruptcy No. 3-83-01116, Adv. No. 3-84-0353.
United States Bankruptcy Court, E.D. Tennessee.
April 12, 1985.
*529 Cadwalader, Wickersham & Taft, Mark C. Ellenberg, Washington, D.C., Walker & Walker, P.C. John A. Walker, Jr., Knoxville, Tenn., for plaintiff.
Stephen R. Moseley, Donald K. Vowell, Knoxville, Tenn., for defendant Union County Bank.
James R. Moore, Knoxville, Tenn., for intervenor, James R. Martin, Trustee of the estate of C.H. Butcher, Jr.
J. Michael Winchester, Knoxville, Tennessee for intervenor, Garrett Enterprises.
MEMORANDUM
CLIVE W. BARE, Bankruptcy Judge.
At issue is whether the debtor's estate has an interest of consequential value or benefit entitling the trustee to turnover of a debenture and a stock certificate. 11 U.S.C.A. § 542(a) (1979). Denying the estate has any equity in the debenture and stock, Union County Bank (UCB) asserts it has a perfected security interest and that it is entitled to relief from the automatic stay to enforce its interest. 11 U.S.C.A. § 362(d)(2) (Supp.1985). The trustee contends UCB does not have a perfected security interest because it did not take possession of the debenture and stock certificate until six months after the commencement of the debtor's case. Tenn.Code Ann. § 47-9-305 (1979). Also, the trustee maintains the debtor's note held by UCB is usurious and thus unenforceable under Tennessee law. Tenn.Code Ann. § 47-14-117(a) (1984).
I
An involuntary chapter 7 petition was filed against David A. Crabtree (debtor) on July 14, 1983. An order for relief was entered on August 22, 1983. Plaintiff D. Broward Craig is serving as trustee for the debtor's estate.
In 1981, Mississippi Coast Properties, Inc. (MCP) raised several million dollars to purchase a resort hotel. Six million dollars was raised through the sale of $400,000 investment units to fifteen investors. In exchange for $400,000 each investor received from MCP a $350,000 seven-year, subordinated debenture and two hundred and fifty (250) shares of no par value MCP common stock. The debtor, one of the fifteen investors, funded his $400,000 investment through loans of $350,000 and $50,000 from two different banks. Only the $350,000 loan is relevant in this case.[1]
*530 Bank of Cumberland (BOC) in Burkesville, Kentucky, made the $350,000 loan to the debtor in exchange for his promissory note. BOC's loan was effected through a debit of its correspondent bank account at, and a deposit to debtor's account with, United American Bank of Knoxville, Tennessee. Debtor's note, dated July 15, 1981, and having a maturity date of July 15, 1983, provides for quarterly interest payments. The stated rate of interest is variable: "Chemical Bank Prime + 1%." The face of the note reflects it is secured by an assignment of the $350,000 debenture and two hundred and fifty (250) shares of MCP common stock. According to its president, James Meredith, BOC received debtor's note, the debenture, and a certificate representing two hundred and fifty (250) shares of MCP stock in a package mailed from Tennessee. The debenture and stock certificate were placed in BOC's security vault on September 29, 1981.
On or about June 23, 1983, BOC transferred without recourse its interest in six notes, including debtor's $350,000 note, to C.H. Butcher, Jr. The notes and BOC's corresponding loan files were delivered to Butcher's representative, Tim Ellis, currently president of UCB. Through a mutual mistake the security for debtor's note (the debenture and MCP stock certificate) was not delivered to Ellis with the note. Thereafter, on an indefinite date but prior to July 14, 1983 (commencement date of debtor's case), Butcher transferred debtor's note to Garrett Enterprises, Inc. (Garrett).[2] A letter agreement, dated July 27, 1983, provides for assignment by Garrett of debtor's $350,000 note to UCB for the purpose of collection. UCB is entitled to retain twenty-five (25) percent of the proceeds collected on the note or $25,000, whichever is less, plus expenses.[3] UCB knew the debtor's note was in default and that an involuntary bankruptcy petition had been filed against him when Ellis, acting on behalf of UCB, accepted Garrett's proposed assignment. On August 9, 1983, Garrett endorsed debtor's note to the order of UCB.
Ellis simply assumed the collateral for debtor's note was in the file when he accepted it on behalf of UCB. He phoned Meredith at BOC in January 1984, after discovering UCB did not have possession of either the debenture or the MCP stock certificate. Ellis informed Meredith that UCB held debtor's $350,000 note and inquired about the whereabouts of the collateral. Meredith discovered that the debenture and stock certificate were still in BOC's security vault. He retrieved the two instruments from the security vault and mailed them to UCB on January 17, 1984.
II
An interpleader action related to MCP is pending in the district court. Each of the fifteen investors, or their assignees or successors in interest, will recover approximately $150,000 upon presentation of his debenture and MCP stock certificate.
On October 17, 1984, UCB filed its motion for relief from the automatic stay. UCB asserts it is a holder in due course of debtor's $350,000 note and that it has a perfected security interest in the debenture and stock certificate, the only security for the note. Since no payment has ever been made against the $350,000 principal indebtedness, *531 UCB contends the debtor's estate clearly has no equity in the debenture and stock certificate.
The trustee opposes the UCB motion for relief from stay. On December 4, 1984, the trustee commenced this adversary proceeding demanding turnover by UCB of the debenture and stock certificate.[4] The trustee contends these instruments are property of the debtor's estate subject to turnover; UCB obtained the instruments in violation of the automatic stay; and that UCB's purported security interest in the debenture and stock certificate is not only unperfected but void.
James R. Martin, bankruptcy trustee for the C.H. Butcher, Jr. estate, and Garrett Enterprises, Inc. have filed a joint motion seeking either intervention or consolidation with another adversary proceeding.[5] Their motion to intervene has been granted.
III
Asserting his rights as a lien creditor under Bankruptcy Code § 544(a),[6] the trustee insists that he is entitled to turnover because no one had a perfected security interest in the debenture and stock when debtor's petition was filed. According to the trustee, any perfected security interest in the debenture and stock terminated on or about June 23, 1983, when BOC assigned debtor's note without recourse to C.H. Butcher, Jr., who failed to take possession of the collateral for the note.
The debenture and stock certificate are "instruments," as defined in Tenn. Code Ann. § 47-9-105(1)(g) (1979).[7] With the exception of the twenty-one (21) day automatic perfection provisions, a security interest in an instrument (other than instruments which constitute part of chattel paper) can be perfected only through possession. Tenn.Code Ann. § 47-9-304 (1979).
Tenn.Code Ann. § 47-9-305 (1979) recites in material part:
When possession by secured party perfects security interest without filing. A security interest in letters of credit and advices of credit (subsection (2)(a) of § 47-5-116), goods, instruments, negotiable documents or chattel paper may be perfected by the secured party's taking possession of the collateral. If such collateral other than goods covered by a negotiable document is held by a bailee, the secured party is deemed to have possession from the time the bailee receives notification of the secured party's interest. A security interest is perfected by possession from the time possession is taken without relation back and continues only so long as possession is retained. . . . (emphasis added)[8]
*532 This provision permits perfection by an original secured lender and makes secondary pledges possible where instruments are in the hands of a bailee. Possession of instruments by a third party coupled with the owner's lack of possession alerts prospective creditors that the ownership rights may be restricted or encumbered. Appeal of Copeland, 531 F.2d 1195 (3d Cir.1976).[9]
UCB contends BOC was a constructive bailee for the benefit of C.H. Butcher, Jr., and subsequent holders (Garrett and UCB) of debtor's note until January 1984, when BOC delivered the debenture and stock certificate to UCB. Conceding the assignment of a secured note likewise effects an assignment of the security interest,[10] nonetheless, the trustee argues BOC could not be a constructive bailee because it was unaware that it continued to possess the debenture and stock certificate. Though ordinarily created by delivery and acceptance pursuant to an agreement, a bailment may result from conduct, though neither foreseen nor contemplated. Campbell v. State, 2 Tenn. Crim.App. 39, 51, 450 S.W.2d 795, 800-801 (1969), cert. denied. A "constructive bailment" arises where a person having possession of a chattel holds it under such circumstances that an obligation to deliver it to another is imposed by law. 8 Am. Jur.2d Bailments § 19 (1980); Black's Law Dictionary 180 (4th ed.1968). Because C.H. Butcher, Jr. was entitled to receive the debenture and stock certificate when he acquired debtor's note, BOC became a constructive, or involuntary, bailee on Butcher's behalf through its unintentional retention of the debenture and stock certificate.[11]
Assuming arguendo BOC was likewise a bailee for the benefit of Garrett and UCB, UCB does not have a perfected security interest in the debenture and stock certificate vis-a-vis the trustee because BOC did not receive notice of UCB's interest until January 1984, some six months after commencement of debtor's case. A mutual mistake occurred with each assignment of debtor's note; each assignor and assignee apparently thought the collateral for the note was in a file delivered with the note. Acting on the mistaken belief they had possession of the debenture and stock certificate, no reason existed for either Garrett or UCB to notify BOC of their interest. Nonetheless, notification to a bailee of a secured party's interest is indispensable to perfection under Tenn.Code Ann. § 47-9-305 (1979).[12]Hutchison v. C.I.T. Corp., 576 F. Supp. 1 (W.D.Ky.1982), aff'd, 726 F.2d 300 (6th Cir.1984). Since BOC did not have prepetition notice, actual or constructive, of the interest of either Garrett or UCB, their interests are unperfected.[13]*533 Hence, the UCB motion for relief from stay is denied.
This conclusion, however, does not necessarily entitle the Crabtree trustee to a turnover of the debenture and stock certificate. Indeed, considering the interest of James R. Martin, the intervening trustee for the C.H. Butcher, Jr. estate,[14] the court must address the trustee's contention that debtor's note is usurious.[15]
IV
The stated rate of interest in debtor's note is "Chemical Bank Prime + 1%." According to the trustee, when the debtor's note was executed in July 1981 Chemical Bank's prime rate was twenty and one-half (20.5) percent, but the applicable maximum effective rate under Tennessee law was only eighteen (18) percent. 1979 Tenn.Pub. Acts ch. 203 (current version at Tenn.Code Ann. § 47-14-103 (1984)). Hence, the trustee asserts the debtor's note is usurious on its face and unenforceable. However, if the question of usury is a matter of Kentucky law the note is not usurious. Kentucky law permits parties to agree on any rate of interest where the obligation is in writing and the original, principal amount of indebtedness exceeds $15,000. Ky.Rev. Stat. § 360.010 (Supp.1984).[16]
Both Kentucky and Tennessee have significant contacts reasonably related to the loan transaction. The debtor, a Tennessee resident, apparently executed his note in, and mailed it to BOC from, Tennessee. Further, the loan funds were advanced in Tennessee, through a bank where BOC and the debtor both maintained accounts. But the lender is domiciled in Kentucky; interest payments were made to BOC, and the note is presumably payable, in Kentucky; the loan documents were accepted and agreed to in Kentucky; and the security for the loan was stored in BOC's security vault in Kentucky.
Although the note does not contain a choice of law provision, the intent of the parties is important.
The rule deducible from the Tennessee cases and the one deemed more in accord with principle is that neither the place of the execution nor the place of performance conclusively fixes the law governing a contract, but this is to be determined from the intention of the parties gathered from the instrument itself, taken in connection with all the circumstances surrounding the transaction. Of course, this intent, when ascertained, must have been entertained in good faith, and not for the purpose of evading the usury law, and, before the contract can be determined to be controlled by the law of any particular state, the intent must be reasonably referable to a place where some important element of the contract has its situs. In arriving at this intent the presumption is against the intent to violate the law, especially where several of the elements of the contract have their situs in that state where the contract is a valid one.
Bowman v. Price, 143 Tenn. 366, 380, 226 S.W. 210, 214 (1920).
Debtor's note is arguably usurious on its face, and thus unenforceable, if Tennessee law controls. Tenn.Code Ann. § 47-14-117(a) (1984).[17] On the other hand, the *534 note is unquestionably non-usurious under Kentucky law.
Tennessee, like many other states, has long recognized a choice of law principle unique in usury cases that parties are presumed to have chosen that law which will uphold the legality of their bargain. That law which will lend greatest validity to the transaction will be applied if it is otherwise logically relevant.
Goodwin Bros. Leasing, Inc. v. H & B, Inc., 597 S.W.2d 303, 308 (Tenn.1980) (citations omitted).
There is no evidence of misleading, over-reaching, or a bad faith attempt by BOC to circumvent usury laws. Indeed, the debtor was a sophisticated borrower. Presumably he and BOC intended to enter into a legitimate loan agreement, not one of questionable enforceability. Accordingly, the court finds that the debtor and BOC intended for Kentucky law to govern their rights relative to his note. Since it is logically relevant, the law of Kentucky controls the usury question, and the note is not usurious. Ky.Rev.Stat. § 360.010 (Supp.1984).
V
On October 25, 1984, James R. Martin, intervenor, in his capacity as trustee for the estate of C.H. Butcher, Jr., filed a complaint asserting that Butcher's assignment to Garrett of debtor's note (and five others) was fraudulent.[18] A consent judgment, approved by the attorneys for both Garrett and the Crabtree trustee, entered on March 26, 1985, provides that Garrett's purchase of the debtor's note is void, subject to the rights if any of UCB, whose interest in the debenture and stock is unperfected. Because it took debtor's note with notice it was overdue, UCB is not a holder in due course. Tenn.Code Ann. § 47-3-302 (1979). Further, as a collection agent its rights are merely derivative. Garrett, UCB's principal, has conceded that Butcher's transfer to it of debtor's note is void. Therefore, when the debtor's case was commenced Butcher was the holder of his note. Fortuitously, BOC held the instruments securing debtor's note as a constructive or involuntary bailee with notice of the interest of Butcher, BOC's immediate assignee. Hence, Butcher's interest in the debenture and stock was perfected when debtor's petition was filed. Ky.Rev. Stat. § 355.9-305 (1972).[19] Therefore, the Crabtree trustee is not entitled to a turnover of the debenture and stock certificate because these instruments are of inconsequential value or benefit to the estate. 11 U.S.C.A. § 542(a) (1979).
This Memorandum constitutes findings of fact and conclusions of law, Bankruptcy Rule 7052.
NOTES
[1] The $50,000 loan, obtained from City and County Bank of Jefferson County, Tennessee, was an unsecured loan.
[2] Butcher also transferred to Garrett the other notes he had received in the package from BOC. James R. Martin, Butcher's trustee in bankruptcy an order for relief under chapter 7 was entered against C.H. Butcher, Jr., on July 15, 1983challenged Butcher's transfer to Garrett of debtor's note and the other notes. Martin v. Garrett Enterprises, Inc., Adv.Proc.No. 3-84-0314. Though Garrett contends it acquired its interest in the notes from Red Wind, Inc., a Florida corporation, and not from Butcher, a consent judgment has been entered. The consent judgment recites in part that Butcher's transfer is voided and the notes and collateral acquired from, or through, him and in Garrett's possession are to be turned over to Butcher's bankruptcy trustee. However, the rights of UCB as to Crabtree's $350,000 note are preserved. The consent judgment is also subject to the rights, if any, of Red Wind, Inc.
[3] The assignment of rights in debtor's note was offered to UCB as additional consideration for UCB's discount purchase of another note held by Garrett.
[4] The issues in the instant adversary proceeding and those raised by the UCB motion for relief from stay are identical.
[5] See note 2, supra.
[6]
Trustee as lien creditor and as successor to certain creditors and purchasers
(a) The trustee shall have, as of the commencement of the case, and without regard to any knowledge of the trustee or of any creditor, the rights and powers of, or may avoid any transfer of property of the debtor or any obligation incurred by the debtor that is voidable by
(1) a creditor that extends credit to the debtor at the time of the commencement of the case, and that obtains, at such time and with respect to such credit, a judicial lien on all property on which a creditor on a simple contract could have obtained such a judicial lien, whether or not such a creditor exists;
(2) a creditor that extends credit to the debtor at the time of the commencement of the case, and obtains, at such time and with respect to such credit, an execution against the debtor that is returned unsatisfied at such time, whether or not such a creditor exists. . . .
11 U.S.C.A. § 544 (Supp.1985).
[7]
"Instrument" means a negotiable instrument (defined in § 47-3-104), or a security (defined in § 47-8-102) or any other writing which evidences a right to the payment of money and is not itself a security agreement or lease and is of a type which is in ordinary course of business transferred by delivery with any necessary endorsement or assignment[.]
[8] The text of Ky.Rev.Stat. § 355.9-305 (1972), with the immaterial exception of the parenthetical, is identical.
[9] Accord Ingersoll-Rand Fin. Corp. v. Nunley, 671 F.2d 842 (4th Cir.1982) (third party's possession of mining equipment satisfied notice function underlying bailee with notice provision of U.C.C. § 9-305 because it afforded notice to prospective creditors that secured debtor did not enjoy unfettered use of equipment).
[10] See McAllester v. Jackson, 5 B.R. 164, 166 (Bankr.M.D.Tenn.1980).
[11] BOC had constructive notice through its own security vault records of its continued possession of the debenture and stock certificate.
[12] The court has considered Hale v. Kontaratos, 10 B.R. 956 (Bankr.D.Me.1981) wherein Judge Cyr concluded that notification to the bailee means notification by the pledgor. Though cited by UCB, Kontaratos does not support its apparent position that no notice to BOC of UCB's security interest was necessary. Instead it is clear that notice to a bailee is necessary. The opinion recites in part:
UCC § 9-305 makes the receipt of "notification" of the secured party's interest by a "bailee" the critical event that triggers an ipso facto possession in the secured party.
. . . . .
"Notification" of the "bailee" in se affords no notice of the secured party's interest to creditors of the debtor. Why then does UCC § 9-305 require "notification" of the bailee? It can only have been because notification has long been viewed as essential to the validity of the nonpossessory pledge, a substitute for the actual possession which is infeasible in the circumstances. (footnotes omitted)
Kontaratos, 10 B.R. at 969-70.
[13] Cf. Tenn.Code Ann. § 47-9-302(2) (1979): "If a secured party assigns a perfected security interest, no filing under this chapter is required in order to continue the perfected status of the security interest against creditors of and transferees from the original debtor." (emphasis added)
[14] See note 2, supra, and section V of this memorandum.
[15] The trustee also contends debtor's pledge of the MCP stock to BOC is voidable because it violated a transfer restriction conspicuously typed on the stock certificate. Assuming arguendo debtor's pledge to BOC violated the transfer provision, his pledge was not illegal. Further, the trustee is not a beneficiary of the restrictive transfer provision and does not have standing to challenge debtor's pledge on this basis.
[16] This statute was last amended in 1980, more than one year prior to BOC's loan to the debtor.
[17] This statute, unmodified since its enactment in 1979 (two years previous to execution of debtor's note), recites:
Usury or excessive chargesContracts.(a) Any contract which on its face requires the payment of usury or excess loan charges, commitment fees or brokerage commissions shall not be enforceable; but the original lender or creditor may sue to recover the principal actually advanced plus lawful interest, loan charges, commitment fees and brokerage commissions.
[18] See note 2, supra.
[19] See note 8, supra, and accompanying text. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1552963/ | 48 B.R. 141 (1985)
In re Sally M. RICHARDSON, Debtor.
Bankruptcy No. 1-84-01562.
United States Bankruptcy Court, E.D. Tennessee.
March 27, 1985.
Robert D. Hale, Chattanooga, Tenn., for American National Bank.
Denise Moretz, Thomas E. Ray, Chattanooga, Tenn., for debtor.
MEMORANDUM
RALPH H. KELLEY, Bankruptcy Judge.
The debtor filed an objection to claim number 1 of American National Bank and Trust Company. The claim as filed is for an unsecured deficiency after the bank foreclosed on the debtor's real estate that secured the debt.
The parties stipulated the facts in this case but for its own convenience the court has restated them as follows.
*142 In March, 1982, the debtors bought a house that had been damaged by fire. They assumed the first mortgage to American National Bank. They later borrowed $10,000.00 from the bank and gave it a second mortgage on the house to secure the debt. The debt was later increased to $13,000.00.
The debtors defaulted on payments on both mortgages and in November, 1983, the bank foreclosed. The bank foreclosed only on the second mortgage. The second mortgage debt was $16,905.67 at the time of foreclosure. The bank bid $15,000.00 at the foreclosure and bought the property. The bid of $15,000.00 apparently was based on an appraisal of the property for that amount, free of any mortgages. The foreclosure deed to the bank says that the property was still subject to the bank's first mortgage.
At the end of January, 1984, the bank sold the property for $22,500.00. The bank had not made any substantial improvements to the property between buying it at foreclosure of the second mortgage and selling it for $22,500.00. When the bank sold the property it took a new first mortgage from the buyers with the intention of releasing its original first mortgage so that the buyers would have clear title.
Within four months after buying the property for $22,500.00, the buyers resold it for $28,000.00.
The bank credited the debtors with the $15,000.00 it bid at foreclosure of the second mortgage, leaving a debt of $1,905.67 on the second mortgage and $34,472.59 on the first mortgage. When the bank sold the property for $22,500.00, it gave the debtors credit for the additional $7,500.00 above its $15,000.00 bid. This left a deficiency of $28,878.26.
Discussion
The debtor argues that the bank's bid of $15,000.00 when only the second mortgage was being foreclosed shows that the property was worth $15,000.00 more than the first mortgage debt.
When a person who does not hold the second mortgage bids at its foreclosure, the bid reflects his opinion of the value of the property above the first mortgage debt. This is also true as to a bid by the holder of the second mortgage when there is a competing bid.
What if the same creditor holds both the first and second mortgages and chooses to foreclose only the second mortgage without foreclosing on the first? As to the amount the creditor can bid, foreclosing only on the second mortgage may have the same effect as foreclosing on both mortgages. The creditor can bid according to the value of the property free of both mortgages. The court finds that is what happened in this case.
In such situations, the holder of the mortgages may have the opportunity to take unfair advantage of the debtor. Compare Sletten v. First National Bank, 37 N.D. 47, 163 N.W. 534 (1917) and Oklahoma State Bank v. Dotson, 109 Okla. 190, 235 P. 181 (1925). In this case the bank did not take unfair advantage of the debtor. The bank in effect sold the property free of both mortgages for $22,500.00, and gave the debtor credit against his mortgage debt for the entire $22,500.00.
The court has found nothing in the Tennessee cases cited by the debtor that would require it to hold that the bank gave up its claim for the deficiency after giving full credit for the $22,500.00. The practical effect of the bank's foreclosure and subsequent private sale of the property should control.
The court concludes that the deficiency in the amount of $28,878.26 is owed. The court will enter an order accordingly. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1552965/ | 48 B.R. 633 (1985)
In re Timothy D. SMOLEN, Debtor.
Bankruptcy No. 84 B 5041.
United States Bankruptcy Court, N.D. Illinois, E.D.
April 25, 1985.
Jurgensmeyer & Associates, Elgin, Ill., for debtor.
Puklin & Puklin, Elgin, Ill., for plaintiff.
*634 MEMORANDUM AND ORDER
ROBERT L. EISEN, Bankruptcy Judge.
This matter came before the court upon the plaintiff's motion to file an adversary complaint instanter. Proper notice of that hearing was given; the court has reviewed all pleadings filed herein as well as the record in this matter. From the documents and record herein, it appears that a complaint to determine dischargeability pursuant to section 523(a)(6) of the Bankruptcy Code was mailed to the court and filed stamped in chambers on July 17, 1984. No adversary filing fee was paid; no adversary number assigned, no summons issued and no service of process effectuated. Subsequently at the hearing on discharge, the plaintiff moved the court for leave to file its complaint instanter. The last date to file such complaints had been previously set as July 18, 1984.
ISSUE
The issue which the court must resolve is whether, when filing has not been accomplished in accordance with applicable rules, the court may enlarge the time within which a complaint to determine dischargeability may be filed where the motion was made after the date to file such complaints had passed.
DISCUSSION
A complaint to determine dischargeability is an adversary proceeding, the filing requirements for which are governed by Rule 7004 of the Bankruptcy Rules of Procedure. A complaint is to be filed with the Clerk of the Court and summons is to issue. Id.
Compliance with the provisions of Rule 7004 is required before a complaint will be considered properly and timely filed. It is noted that at least one other bankruptcy court, when confronted with a similar situation dismissed the plaintiff's complaint. Matter of Anderson, 5 B.R. 47, 49 (Bankr. N.D.Ohio 1980). Thus, the Plaintiff did not accomplish "filing" when he mailed and had file stamped the complaint on July 17, 1984 without paying the adversary filing fee or arranging for the issuance and service of summons.
The remaining question is whether the court can grant the motion to file the complaint when that motion was made after the time for filing such complaints had expired.
Enlargement of time is governed by Rule 9006(b) which provides:
(b) Enlargement.
(1) In General. Except as provided in paragraphs (2) and (3) of this subdivision, when an act is required or allowed to be done at or within a specified period by these rules or by a notice given thereunder or by order of court, the court for cause shown may at any time in its discretion (1) with or without motion or notice order the period enlarged if the request therefor is made before the expiration of the period originally prescribed or as extended by a previous order or (2) on motion made after the expiration of the specified period permit the act to be done where the failure to act was the result of excusable neglect.
(2) Enlargement Not Permitted. The court may not enlarge the time for taking action under Rules 1007(d), 1017(b)(3), 1019(2), 2003(a) and (d), 4001(b), 7052, 9015(f), 9023, and 9024.
(3) Enlargement Limited. The court may enlarge the time for taking action under Rules 1006(b)(2), 3002(c), 4003(b), 4004(a), 4007(c), and 8002 only to the extent and under the conditions stated in those rules.
Bankr.R.Proc. 9006(b). Subparagraph 1 sets forth the general requirements while subparagraphs 2 and 3 set forth limitations upon the court's authority to enlarge the time.
Subparagraph 3 of Rule 9006(b) governs extensions of time for filing a complaint to determine dischargeability under section 523(a)(6) of the Code because Rule 4007(c) governs time for filing complaints under section 523(c). The complaint involved here is such a complaint. Rule 4007(c) provides:
*635 (c) Time for Filing Complaint Under § 523(c) in Chapter 7 Liquidation and Chapter 11 Reorganization Cases; Notice of Time Fixed. A complaint to determine the dischargeability of any debt pursuant to § 523(c) of the Code shall be filed not later than 60 days following the first date set for the meeting of creditors held pursuant to § 341(a). The court shall give all creditors not less than 30 days notice of the time so fixed in the manner provided in Rule 2002. On motion of any party in interest, after hearing on notice, the court may for cause extend the time fixed under this subdivision. The motion shall be made before the time has expired.
Bankr.R.Proc. 4007(c).
Thus, a motion to enlarge the time within which to file a complaint to determine dischargeability must be made before the time to file has expired. The Advisory Committee Note to Rule 9006 makes clear this limitation upon the court's authority by stating that in situations where subparagraph 3 applies, the court may not extend the time under subparagraph 1 for reasons such as excusable neglect.
The Advisory Committee Note provides in relevant part:
Many rules which establish a time for doing an act also contain a specific authorization and standard for granting an extension of time and, in some cases, limit the length of an extension. In some instances it would be inconsistent with the objective of the rule and sound administration of the case to permit extension under rule 9006(b)(1), but with respect to the other rules it is appropriate that the power to extend time be supplemented by Rule 9006(b)(1). Unless a rule which contains a specific authorization to extend time is listed in paragraph (3) of this subdivision, an extension of the time may be granted under paragraph (1) of this subdivision. If a rule is included in paragraph (3) an extension may not be granted under paragraph (1). The following rules are listed in paragraph (3): Rule 1006(b)(2), time for paying the filing fee in installments; Rule 3002(c), 90 day period for filing a claim in a Chapter 7 or 13 case; Rule 4003(b), 30 days for filing objections to a claim of exemption; Rule 4004(a), 60 day period to object to a discharge; Rule 4007(b), 60 day period to file a dischargeability complaint; and Rule 8002, 10 days for filing a notice of appeal.
Bankr.R.Proc. 9006 advisory committee note. Rule 4007 is included in paragraph 3. Thus, it is clear that this court lacks authority to extend the date for filing a complaint under section 523(a)(6) and declines to do so.[*] Several other bankruptcy courts have also so held. In re Lane, 37 B.R. 410, 414 (Bankr.E.D.Va.1984); See also In re Beehler, 33 B.R. 104, 105 (Bankr.W.D.N.Y. 1983); In re Figueroa, 33 B.R. 298 (Bankr. S.D.N.Y.1983) (construing former Rules).
In this case, the complaint was not timely filed. The court lacks authority to extend the time to file such a complaint because the motion to extend the time was not filed until after the last day for filing had passed. It is ordered that the plaintiff's motion be and hereby is denied.
NOTES
[*] Even if the court found that it had authority under Rule 9006 to extend the time for "excusable neglect," lack of knowledge of and compliance with the Rules has generally not constituted excusable neglect. Matter of Anderson, 5 B.R. 47, 50 (Bankr.N.D.Ohio 1980) (construing former Rule 906(b)); In re Peterson, 15 B.R. 598 (Bankr.N.D.Iowa 1981). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1552983/ | 48 B.R. 315 (1985)
In re RATH PACKING COMPANY, an Iowa Corporation, Debtor.
UNITED FOOD & COMMERCIAL WORKERS INTERNATIONAL UNION, AFL-CIO, Appellant,
v.
The RATH PACKING COMPANY, Appellee.
Bankruptcy No. 83-02293, No. 2C 84-2033.
United States District Court, N.D. Iowa, Central Division.
April 3, 1985.
Robert E. Funk, Jr., Washington, D.C., for appellant.
Catherine Steege, Chicago, Ill., for debtor.
ORDER
DONALD E. O'BRIEN, Chief Judge.
The United Food & Commercial Workers International Union (Union) brought this appeal to challenge the Bankruptcy Court's decision granting the Debtor, Rath Packing *316 Company, leave to reject certain collective bargaining agreements. This Court heard arguments in Des Moines, Iowa on January 18, 1985. For the reasons stated below, the decision of the Bankruptcy Court is affirmed.
On December 20, 1983, the Bankruptcy Court began to hear three days of testimony on the Debtor's application for leave to reject. On December 30, 1983, the Bankruptcy Court ruled and later, on January 12, 1984, issued a 52-page opinion setting forth its Findings of Fact and Conclusions of Law. 36 B.R. 979. The Bankruptcy Court did not have the benefit of the Supreme Court's decision in National Labor Relations Board v. Bildisco, 465 U.S. 513, 104 S. Ct. 1188, 79 L. Ed. 2d 482 (1984), at the time it entered its decision. Faced with this uncertainty, the Bankruptcy Court applied the three different legal standards which had some backing at that time. The Bankruptcy Court found for the Debtor under all three standards.
I.
In Bildisco, the Supreme Court set forth the applicable standard as follows:
[T]he Bankruptcy Court should permit rejection of a collective-bargaining agreement when under § 365(a) of the Bankruptcy Code, if the debtor can show that the collective-bargaining agreement burdens the estate, and that after careful scrutiny, the equities balance in favor of rejecting the labor contract.
465 U.S. at ___, 104 S.Ct. at 1196. The parties have taken differing legal positions about how prerejection negotiations fit into the analysis to be applied by the Bankruptcy Court. In Bildisco, the Supreme Court stated:
Before acting on a petition to modify or reject a collective-bargaining agreement, however, the Bankruptcy Court should be persuaded that reasonable efforts to negotiate a voluntary modification have been made and are not likely to produce a prompt and satisfactory solution. The NLRA requires no less. Not only is the debtor-in-possession under a duty to bargain with the union under § 8(a)(5) of the NLRA, 29 U.S.C. § 158(a)(5), see post at 18-19 [104 S.Ct. at 1200-1201], but the National Labor policies of avoiding labor strikes and encouraging collective bargaining, id., § 1, 29 U.S.C. § 151, generally require that employers and unions reach their own agreements on terms and conditions of employment free from governmental interference. (Cites omitted). The Bankruptcy Court need step into this process only if the parties' inability to reach an agreement threatens to impede the success of the debtor's reorganization. If the parties are unable to agree, a decision on the rejection of the collective-bargaining agreement may become necessary to the reorganization process. At such a point, action by the Bankruptcy Court is required, while the policies of the Labor Act have been adequately served since reasonable efforts to reach agreement have been made. That court need not determine that the parties have bargained to impasse or make any other determinations outside the field of its expertise. See post, at 18 [104 S.Ct. at 1200].
Id., at ___, 104 S.Ct. at 1196. In this case, the Bankruptcy Court properly considered the negotiations between the parties before acting on the application to reject. See Decision, pp. 44-46. At page 49 of his decision, the Bankruptcy Judge stated:
It appears rather that both sides have fired their big negotiating guns to no avail in terms of settlement. Because the parties have been unable to negotiate a settlement, the issue of contract rejection has become ripe for decision.
The Bankruptcy Court's findings with respect to the negotiations are not clearly erroneous. Bankruptcy Rule 8013. Nor did the Bankruptcy Court apply an erroneous legal standard to those findings.
II.
Much has been made of the scheduled increase in wage rate from $7.24 per hour *317 to $10.24 per hour which was to occur January 1, 1984. The Union contends that it unconditionally offered to reduce the January 1, 1984 wage rate to $8.00 per hour and to continue negotiations on a further concession package. The Union further contends that this concession on wages would have resulted in a savings to the Debtor in excess of $5 million per year. In essence, the Union is arguing that the Bankruptcy Court should have looked upon the $8.00 wage rate as a reduction from what Rath would have had to pay rather than viewing it as a pay raise which would have increased Rath's total cost by $1,824,000.00 per year.
This Court seriously considered whether this case should be remanded for further findings with respect to the $8.00 wage rate. However, even if the Bankruptcy Court had the power to implement the $8.00 wage rate, the record shows that the Debtor's operation still would have lost money with that rate. Also, the Debtor's failure to accept what the Union characterizes as an unconditional offer to reduce wages to $8.00 does not undermine the finding that the Debtor negotiated in good faith. The Court holds that the Bankruptcy Court sufficiently considered the $8.00 wage rate matter and remand for further consideration of that matter would serve no purpose.
III. SUMMARY.
This Court has reviewed the decision of the Bankruptcy Court and is unable to find clear errors of fact which warrant a reversal of the Bankruptcy Court's decision. In light of the lengthy and well-reasoned decision of the Bankruptcy Court, further discussion of the issues by this Court would not be productive. The decision of the Bankruptcy Court is affirmed.
IT IS THEREFORE ORDERED that the decision of the Bankruptcy Court granting Rath leave to reject certain collective bargaining agreements is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1552981/ | 48 B.R. 85 (1985)
In re LAKELAND DEVELOPMENT CORPORATION, Debtor.
Dwight R.J. LINDQUIST, Trustee of the Bankrupt Estate of Lakeland Development Corporation, Inc., Plaintiff,
v.
FIRST NORTHTOWN NATIONAL BANK and Spring Lake Park Partnership, a General Partnership, Defendants.
Bankruptcy No. 4-82-2102, Adv. No. 4-84-196.
United States Bankruptcy Court, D. Minnesota.
March 11, 1985.
*86 James A. Lundberg, Minneapolis, for plaintiff.
Joseph H. Anderson, Dorsey & Whitney, Minneapolis, for defendants.
ORDER APPROVING SETTLEMENT
ROBERT J. KRESSEL, Bankruptcy Judge.
This matter came on for hearing on February 27, 1985, on the motion of the trustee to approve a settlement of this adversary proceeding. Dwight R.J. Lindquist, the trustee, appeared in propria persona and by his attorney, James A. Lundberg. Joseph H. Andersen appeared on behalf of the defendants, First Northtown National Bank (bank) and Spring Lake Park Partnership (partnership). Walter Anderson (Anderson) appeared pro se. Christopher A. Elliott appeared on behalf of Precision Graphics, Inc., J.T. Nelson and William H. Burns (secured creditors). Thomas A. Roe appeared on behalf of the debtor.
BACKGROUND
The debtor Lakeland Development Corporation, Inc., was formerly the owner of Lots 2, 3 and 4, Block One, Middletown, Anoka County, Minnesota (land). The bank held a first mortgage on this land. Lakeland defaulted on its obligations under the mortgage and the bank foreclosed. A foreclosure sale was held on November 23, 1981. That sale resulted in the issuance of a sheriff's certificate of sale of the land to the bank. The partnership held two junior mortgages on the land and has now purchased it from the bank. Lakeland did not redeem the land. On November 22, 1982, the last day of the statutory redemption period, Lakeland filed a petition under 11 U.S.C. Chapter 11.
On January 20, 1983, the debtor filed an adversary proceeding (ADV 4-83-33) in which it sought an injunction against the bank's continuation with its foreclosure. Specifically, the debtor requested that the running of the statutory redemption period be tolled or extended for "a sufficient period of time to enable the plaintiff to carry out its proposed reorganization plan." Complaint at 4, para. 3. On January 20, *87 1983, Judge Owens granted the debtor's request for a temporary restraining order against any activity by the bank to perfect the foreclosure. On February 16, 1983, however, Judge Owens dissolved that temporary restraining order and denied the debtor's request for an injunction. Judge Owens held that the stay imposed by 11 U.S.C. § 362 does not operate to toll or suspend the mere running of time incident to a period of redemption afforded by state law. While Judge Owens' order recognized that 11 U.S.C. § 105 gives the Court general equitable powers to intervene, he held that such relief is only available where very compelling equities exist. Judge Owens held that the mere inability to pay the sum required for redemption and the existence of some excessive value over the mortgage amount does not create grounds for intervention. Finally, Judge Owens held that while 11 U.S.C. § 108 provides a statutory extension of time to cure defaults, that extension is only for 60 days following the entry of the order for relief and that at the time of his order that period had expired so that it was unnecessary to determine whether the default envisaged by § 108 was sufficiently broad to include payment in redemption or merely the default which precipitated the mortgage foreclosure.[1]First Northtown National Bank v. Lakeland Development Corp. (In re Lakeland Development Corp.), ADV 4-83-33 (Bktcy.Minn. Feb. 16, 1983).
On March 31, 1983, the parties to the adversary proceeding entered into a stipulation in lieu of an appeal of Judge Owens' February 16, 1983 order. The stipulation was signed by Anderson, as president of both the debtor and the debtor in possession and by representatives of the bank and the partnership. On March 31st Judge Owens entered an order approving the stipulation.
The March 31, 1983 stipulation provides, among other things, that "the Debtor's statutory right to redeem the Land was extinguished by the running of the statutory redemption period and the order of the Bankruptcy Court dated February 16, 1983." March 31, 1983 stipulation at para. 2(ii) (Stip.). See also, March 31, 1983 order approving stip. at para. 2. (Order). The stipulation also provides that Lakeland,
admits and agrees that its redemption period has expired and that it may no longer redeem the Land . . . The Debtor further admits and agrees that the Bank was conveyed all right, title and interest of the Debtor in and to the Land, with the benefit of the priority of the mortgage held by the Bank, by virtue of the foreclosure and expiration of all applicable redemption periods, without any other conveyance, and that the Bank now has and is entitled to exclusive possession of the Land. In confirmation of the foregoing, the Debtor hereby grants, bargains, quitclaims and conveys unto the Bank any right, title or interest the Debtor may have in the Land as of the date of this Stipulation.
Stip. at para. 5. (Emphasis supplied).
Lakeland did not appeal either the February 16th or the March 31, 1983 orders; thus they both became final.
As part of the stipulation and order the bank granted Lakeland an option to purchase the land. Paragraph 6 of the stipulation among the parties provides,
In consideration of the Debtor's agreement to this Stipulation and not to appeal the February 16, 1983 Order, the Bank agrees to grant the Debtor an exclusive option to purchase the Land on the terms and conditions set forth in and substantially in the form of Exhibit B attached hereto. Said option agreement will be executed by the Bank immediately upon approval of the Stipulation by the Bankruptcy Court.
*88 The option expired by its terms on August 31, 1983.[2] Lakeland did not tender payment to the bank pursuant to the option. On the last day of the option period, Lakeland attempted to get from the Bankruptcy Court an extension of the option, stating that on the morning of August 31, 1983, a potential buyer had agreed to provide the funds but could not provide them in time or in the manner necessary to prevent the expiration of the option. Judge Owens refused to extend the option. See Transcript of Hearing, August 31, 1983, at 2-3, 9-10.
On August 17, 1983, Walter R. Anderson, Lakeland's president and sole shareholder, filed a complaint against the bank and the partnership in Anoka County District Court, Tenth Judicial District of Minnesota. Anderson was represented by James A. Lundberg. Anderson alleged that, as a consequence of the stipulation and order, he had a personal interest in the land that secured an equitable mortgage, and therefore that interest could not be extinguished without a foreclosure action.[3] Anderson also alleged he had been injured by alleged breaches by the bank of the contract evidenced by the stipulation and order and by alleged fraud, misrepresentation, interference with contractual rights, and breaches of fiduciary duty with respect to that contract. On June 8, 1984, following the removal of the State Court action to the Bankruptcy Court and its subsequent remand by the Bankruptcy Court to the Anoka County District Court, Anderson's complaint was dismissed with prejudice for failure to state a claim upon which relief could be granted. See Anderson v. First Northtown National Bank, No. B-54204 (10th Dist.Minn., June 8, 1984). The Anoka County District Court characterized Anderson's Complaint as
an unconscionable attempt . . . to retain an interest in . . . land long after his company exhausted the statutorily prescribed remedies available under Minnesota real estate law and the United States Bankruptcy Code. The plaintiff's arguments in this respect are clearly without merit.
Anderson v. First Northtown National Bank, supra at p. 1 of Memorandum. The district court also found as fact that "Neither Lakeland nor Anderson made or tendered any payments to the Bank pursuant to the option." See Finding of Fact 14. The district court order was appealed by Anderson and affirmed. Anderson v. First Northtown National Bank, 361 N.W.2d 116 (Minn.App.1985).
On November 8, 1983, on the motion of the partnership Lakeland's Chapter 11 case was dismissed. That order was based inter alia on a finding that the land had "since been lost to the estate through foreclosure and title to that property vested in First Northtown National Bank which held a first mortgage on the property." In re Lakeland Development Corp., BKY X-XX-XXXX (Bktcy.Minn. Nov. 8, 1983). That finding of fact was not challenged on appeal, and following the reversal of the order for dismissal by the District Court and remand to this Court, an identical finding of fact was made in an order converting Lakeland's bankruptcy case from a case under Chapter 11 to a case under Chapter 7. Although Lakeland has appealed the conversion order, it did not challenge the finding of facts relating to its interest in the land.[4]
*89 Following the order converting Lakeland's case, Dwight R.J. Lindquist, the plaintiff in this action, was appointed as trustee of Lakeland's bankruptcy estate. The trustee was contacted by Anderson and his attorney about possible claims against the bank and the partnership. They did not tell the trustee about the adverse decision in state court. On October 29, 1984, a summons and complaint initiating a lawsuit in Anoka County District Court were served by the trustee on the bank and the partnership. The bank and the partnership jointly removed the action to the Bankruptcy Court on November 7, 1984. An amended summons and complaint still captioned and filed in the state court were served on the bank and the partnership on November 13, 1984. In his complaint, the trustee raises arguments similar to those previously raised by Anderson in his state court action. On January 11, 1985, I dismissed three of the four counts in the trustee's complaint. The trustee and the defendants appealed. Notices of appeal were also filed by Anderson and by the secured creditors.
The trustee has now reached a settlement with the defendants and seeks approval of the settlement under Bankruptcy Rule 9019(a) which provides:
On motion by the trustee and after a hearing on notice to creditors, the debtor and indenture trustees as provided in Rule 2002(a) and to such other persons as the court may designate, the court may approve a compromise or settlement.
The settlement basically provides for mutual dismissals of the appeals and the adversary proceeding and mutual release of all claims.
APPROVAL OF SETTLEMENTS
The proposed settlement agreement is before the Court on the trustee's motion pursuant to Bankruptcy Rule 9019(a). Rule 9019(a) gives the Court broad authority in approving compromises or settlements. Official Creditors Committee v. Beverly Almont Co. (In re General Store of Beverly Hills), 11 B.R. 539, 542 (Bktcy.App. 9th Cir.1981); Fogg v. Sherman Homes, Inc. (In re Sherman Homes, Inc.), 28 B.R. 176, 177 (Bktcy.D. Me.1983). "The determination of whether to approve an application to compromise is a matter within the sound discretion of the bankruptcy judge.". Providers Benefit Life Insurance Co. v. Tidewater Group, Inc. (In re Tidewater Group, Inc.), 13 B.R. 764, 765 (Bktcy.N.D.Ga.1981). See also River City v. Herpel (In re Jackson Brewing Co.), 624 F.2d 599, 602-603 (5th Cir. 1980); American Employers' Insurance Co. v. King Resources Co., 556 F.2d 471, 478 (10th Cir.1977); Knowles v. Putterbaugh (In re Hallet), 33 B.R. 564 (Bktcy. D.Me.1983); Fogg v. Sherman Homes, Inc. (In re Sherman Homes, Inc.), 28 B.R. 176, 177 (Bktcy.D.Me.1983). The Court should approve a compromise after considering all factors involved, only if it is in the best interest of the estate. Knowles v. Putterbaugh (In re Hallet), 33 B.R. 564, 565 (Bktcy.D.Me.1983); In re Haas Davis Packing Co., 2 B.C.D. 167, 168 (Bktcy.S.D. Ala.1975).
The factors the Bankruptcy Court is to consider when reviewing proposed settlements or compromises have been set out by *90 the Eighth Circuit Court of Appeals in Drexel v. Loomis, 35 F.2d 800 (8th Cir. 1929). The Drexel criteria include:
(1) the probability of success in the litigation;
(2) the difficulties, if any, to be encountered in the matter of collection;
(3) the complexity of the litigation involved, and the expense, inconvenience and delay necessarily attending it;
(4) the paramount interests of the creditors and the proper deference to their reasonable views in the premises.[5]
Id. at 806. Accord, Protective Committee for Independent Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 88 S. Ct. 1157, 20 L. Ed. 2d 1 (1968); Lands v. Ericson (In re Orrin A. Ericson), 6 B.R. 1002 (D.Minn.1980). See also Fogg v. Sherman Homes, Inc. (In re Sherman Homes, Inc.), 28 B.R. 176, 178 (Bktcy D.Me.1983); Providers Benefit Life Insurance Co. v. Tidewater Group, Inc. (In re Tidewater Group, Inc.), 13 B.R. 764, 765 (Bktcy.N.D.Ga.1981); In re W.T. Grant Co., 10 B.R. 801, 804 (Bktcy.S.D.N.Y.1981); In re W.T. Grant Co., 4 B.R. 53, 69 (Bktcy. S.D.N.Y.1980).
If I can be presumptuous, I think a fifth factor can be added to the Eighth Circuit's list:
(5) whether conclusion of the litigation promotes the integrity of the judicial system.
Finally, the Court must consider the principle that "the law favors compromise.". Port O'Call Investment Co. v. Blair (In re Blair), 538 F.2d 849, 851 (9th Cir.1976); Fogg v. Sherman Homes, Inc. (In re Sherman Homes, Inc.), 28 B.R. 176, 177 (Bktcy D.Me.1983).
PROBABILITY OF SUCCESS
I have expressed my view previously on the probability of the plaintiff's success on three of his four counts. I dismissed those three counts on the defendants' motion. Thus I have already concluded that they were without any merit and the fact that the trustee has appealed that decision does not change my mind.[6]
Count three, the remaining count of the plaintiff's complaint, is based on "interference with contract relation". Since commencement of this adversary proceeding in the state court, the trustee has discovered that Lakeland Development never actually made an offer to exercise its option and therefore he has serious doubts about the merits of count three as well. I did not dismiss count three because I did not feel that the earlier stipulation and order or the proceedings on August 31, 1983, had any res judicata effect on the allegations made in the plaintiff's complaint. However no facts relating to the alleged interference have ever been put in the record one way or the other, although Anderson has presented several affidavits dealing with the merits on other issues. With the history of the litigation between Lakeland and the defendants, I would be very surprised if there was any merit to count three and I suspect it is nothing more than the wishful thinking of Anderson and the product of his personal hard feelings towards the defendants and their attorneys.
In fact, at the August 31, 1983 hearing which began at 2:30 p.m. the debtor attempted to convince Judge Owens to extend *91 the option period. No mention was ever made of any alleged interference by the bank or partnership. In fact, the debtor made it very clear at the hearing that it wanted a hearing because it simply was unable to exercise the option.
DIFFICULTIES OF COLLECTION
The trustee and the defendants concede that this is not a consideration in the proposed settlement since the defendants are well able to pay any potential judgment.
COMPLEXITY, EXPENSE, INCONVENIENCE AND DELAY
It is worth discussing the status of this litigation. Appeals by the plaintiff and the defendants as well as two non-parties are pending to the district court of my January 11, 1985 order of dismissal. Several things can happen as a result of those appeals.
First of all, it seems to me that the order appealed from is interlocutory and thus non-appealable as of right. See Bankruptcy Rule 7054(a), Fed.R.Civ.P. 54(b) and 28 U.S.C. § 158(a). Thus it is a distinct possibility that the appeals will all be dismissed and a trial held on Count Three. Appeals would then be proper. I have little doubt that if Anderson has his way appeals would then be pressed to the Court of Appeals and review beyond that sought as well.
If the district court disagrees with me and considers my earlier order final for appeal purposes or exercises its discretion to hear the appeals anyway, then there are several possibilities. Obviously it is my opinion that my earlier order is correct and would be affirmed which would then result in a trial on Count Three followed by the inevitable appeals. Another possibility, of course, is that my dismissal of Counts One, Two and Four would be affirmed and I would be reversed on my refusal to dismiss Count Three which would then conclude the entire adversary proceeding in the favor of the defendants subject again to ensuing appeals.
Obviously there is also some possibility, as remote as I might think it is, that I will be reversed on my decision to dismiss Counts One, Two and Four. The only motion decided in my earlier order was that of the defendants to dismiss. Thus the result of reversal would be a reversal of that dismissal and presumably a remand to try all four counts. It is clear to me that there is little merit to the plaintiff's complaint and the trustee has concluded that there is not.[7] Regardless of how the matter came out at trial, guaranteed appeals would follow. Thus it is fairly clear to me that if not settled, this litigation will become lengthy, complex and very expensive to both the trustee and the defendants. Nothing that either Anderson or the secured creditors suggest in their objections justifies me allowing protracted litigation by parties who have concluded that it is without merit.
VIEWS OF CREDITORS
Three objections were made at the hearing: by Anderson, the debtor and the secured creditors. To the extent that Anderson is the sole shareholder of the debtor, there really is no difference between them for these purposes. He presumably speaks for the debtor. Drexel makes no mention of considering the rights of equity security holders or the debtor, although they might have something to gain from the litigation. If as successful as Anderson thinks the litigation could be, there would presumably be enough money to pay all creditors and have money left over for the debtor and therefore Anderson. 11 U.S.C. § 726(a)(6). Drexel provides in any case that I need give only "proper deference" to "reasonable views". I find nothing reasonable about Anderson's views. He obviously feels that he has lost much as a result of the mortgage foreclosure and is unwilling to let law, fact or reason stand in his way of pressing his views in as many forums as *92 he can. Because of this lack of objectivity and his status as an equity security holder, I give little deference to his views and therefore the views of the debtor.
The last objection is by the secured creditors who jointly hold a mortgage on another piece of real property which remains in the estate. The original mortgage was in the amount of $23,650.43 and is a mortgage on property worth $48,100.00. I do not know what the relationship is between the secured creditors and Anderson which would prompt them to make such a loan. However the relationship is such that Anderson was prompted to have the debtor grant a mortgage to them on the eve of the filing of the debtor's bankruptcy to secure the loan. I will assume that the objections are made by the secured creditors since they concede their mortgages are avoidable and therefore they will become unsecured creditors. Otherwise they would have no interest in the outcome of this litigation.
Because of the small amount of debt to other creditors[8] including the secured creditors as opposed to the magnitude of the proposed litigation, it is obvious that the major beneficiary of this adversary proceeding is Anderson and not the estate or creditors. I cannot find that the interest of the secured creditors outweighs the other factors which weigh heavily in favor of disposing of this adversary proceeding.
INTEGRITY OF THE JUDICIAL SYSTEM
The current adversary proceeding was suggested to the trustee by Anderson personally and through his attorney. Perhaps the trustee was too trusting and ended up hiring Anderson's attorney to bring this current litigation. Upon reflection the trustee now realizes that his lawsuit is without merit and was being pursued by Anderson's lawyer primarily for Anderson's benefit. To his credit, the trustee now seeks to rectify his mistake. The trustee is an attorney and an experienced trustee and as such is familiar with Fed.R. Civ.P. 11 which is applicable to this proceeding by Bankruptcy Rule 9011. Rule 11 was part of the Supreme Court's reaction to the perceived abuse of the judicial system. What the objectors seek is in effect to force the trustee to proceed with litigation that he knows is without merit in contravention of the duties imposed upon him by the Bankruptcy Code, the Code of Professional Responsibility and Rule 11. Prosecution of this adversary proceeding would only result in additional cost, expense and delay to the estate and the risk involved in responding to the defendants' claims of malicious prosecution, slander of title and their claims under Minn.Stat. § 549.21 and presumably Rule 11. Contrary to the views of the objectors, these are not insubstantial claims and settlement is in everyone's best interest with the possible exception of Anderson's.
In one guise or another Anderson has managed to press his claims in five different forums. First in the guise of the debtor was the adversary proceeding brought to enjoin the running of the redemption period. The debtor was unsuccessful and threatened appeal to the district court. Although never determined on the merits in the district court, it is fairly clear that based on the later pronouncement of the Eighth Circuit that the debtor would have been unsuccessful. See Johnson v. First National Bank of Montevideo, 719 F.2d 270 (8th Cir.1983), cert. denied, ___ U.S. ___, 104 S. Ct. 1015, 79 L. Ed. 2d 245 (1984).
Anderson then personally adopted several new theories and pressed them a third time in Anoka County District Court. Unsuccessful there, he appealed to the Minnesota Court of Appeals and was unsuccessful there. Anderson has now convinced the trustee to press his claims in a fifth forum through this adversary proceeding and has been largely unsuccessful. If the matter is now not settled, he proposes to press the matter a sixth time in the *93 district court and I have little doubt if unsuccessful there, yet again in the Court of Appeals.
While courts should all stand ready to redress reasonable grievances by those parties who feel that they have been wronged, there comes a time when the continued litigation over the same transactions must be ended. The remote possibility of some recovery does not justify burdening the judicial system any longer with this litigation.
Along those same lines I note that Anderson has written a letter (Plaintiff's Ex. 1) to his own attorney who is also the trustee's attorney, which purports to be an offer to purchase this litigation for $2,000.00 and furnish an expense bond. While the $2,000.00 would be some small benefit to the estate, it does not begin to compensate the estate for the risk of responding to the defendants' claims against the estate and the trustee, especially when the integrity of the judicial system is added to the balance.
More importantly, while the letter purports to be an offer of purchase, it is nothing more than a thinly veiled threat by Anderson to sue the trustee if he proceeds with settlement of the litigation. The trustee has not succumbed to that threat and I do not intend to either.
ORDER
THEREFORE, IT IS ORDERED:
The settlement agreement between the parties to this adversary proceeding embodied in a stipulation dated February 7, 1985, and filed on February 8, 1985, is approved.
NOTES
[1] While the issues decided by Judge Owens were unsettled at the time of his order, the Eighth Circuit subsequently, in an unrelated case, resolved these issues in substantially the same way as Judge Owens. See Johnson v. First National Bank of Montevideo, 719 F.2d 270 (8th Cir.1983), cert. denied, ___ U.S. ___, 104 S. Ct. 1015, 79 L. Ed. 2d 245 (1984).
[2] The option agreement is not part of the record in this adversary proceeding. According to other evidence submitted, however, the option granted the debtor had very specific performance provisions and expired on August 31, 1983. See Transcript of Hearing, August 31, 1983.
[3] The attorney representing the trustee in this adversary proceeding, represented Anderson in the state court proceeding. See 11 U.S.C. §§ 327 and 328(b).
[4] The partnership originally appealed from the November 8, 1983 order dismissing the case. The stated issues on that appeal were,
"1) Did the Bankruptcy Judge err in holding that the bankruptcy court had the power to dismiss this Chapter 11 proceeding in response to a motion seeking conversion of the proceeding to a Chapter 7 liquidation proceeding, without notice or hearing on the issue of dismissal?
2) Did the Bankruptcy Court err in determining that dismissal rather than conversion was in the best interest of creditors in the estate?"
Spring Lake Park Partnership's Designation of Record and Statement of Issues on Appeal, BKY X-XX-XXXX, Nov. 25, 1983.
The district court reversed my November 8, 1983 order and remanded the matter. I subsequently converted the case from a case under Chapter 11 to a case under Chapter 7. The debtor has appealed the August 8, 1984 conversion order. The stated issues in that yet undecided appeal are:
"1) Did the Bankruptcy Court err in determining that conversion rather than dismissal was in the best interest of the creditors and the estate?
2) Did the Bankruptcy Court err in not finding that Spring Lake Park Partnership has standing as a creditor in this proceeding?"
Lakeland Development Corporation's Designation of Record and Statement of Issues on Appeal, BKY X-XX-XXXX, September 24, 1984.
[5] However, "creditors' objections are not controlling and will not prevent approval." Knowles v. Putterbaugh (In re Hallet), 33 B.R. 564 (Bktcy.D.Me.1983); Fogg v. Sherman Homes, Inc. (In re Sherman Homes, Inc.), 28 B.R. 176, 178 (Bktcy.D.Me.1983). See also In re General Store of Beverly Hills, 11 B.R. 539, 541 (Bktcy.App. 9th Cir.1981).
[6] I note that Anderson and the secured creditors have also appealed. However I doubt that either has standing to appeal since neither is a party to this adversary proceeding. Anderson filed a motion to intervene on November 21, 1984, but never made any arrangements with the Court to schedule a hearing on his motion. Even if he had, the motion would likely have been denied. See Anderson v. First Northtown National Bank, 361 N.W.2d 116 (Minn.App. 1985). The secured creditors also filed a motion to intervene and scheduled a hearing. I denied their motion on February 25, 1985.
[7] Anderson puts much reliance on an appraisal of the land which places its value at approximately $1.1 million. However, that is a question of fact as are all of Anderson's other allegations.
[8] Other than the claims of Anderson, the partnership is far and away the largest unsecured creditor. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553032/ | 423 B.R. 34 (2010)
In re Christina FASARAKIS, Debtor.
Alan Nisselson, Trustee for the Chapter 7 Estate of Christina Fasarakis, Plaintiff,
v.
Christina Fasarakis, Defendant.
Bankruptcy No. 08-46986-CEC. Adversary No. 09-1009-CEC.
United States Bankruptcy Court, E.D. New York.
February 3, 2010.
*35 Leslie S. Barr, Esq., Windels, Marx, Lane & Mittendorf, LLP, New York, NY, Attorney for Plaintiff.
George Poulos, Esq., Astoria, NY, Attorney for Defendant.
DECISION
CARLA E. CRAIG, Chief Judge.
This matter comes before the Court on the motion of Alan Nisselson, the Chapter 7 Trustee ("Plaintiff" or "Trustee"), for summary judgment on the first claim for relief in his complaint against Christina Fasarakis ("Defendant" or "Debtor"), seeking a turnover of the Defendant's 2008 federal and state income tax refunds as property of the Defendant's bankruptcy *36 estate pursuant to §§ 521(a)(4) and 542(a)[1] ("Complaint"). The Defendant filed an Opposition to the Plaintiff's Motion for Summary Judgment ("Opposition"), arguing that the portions of the tax refunds attributable to Earned Income Credits and Child Tax Credits are not property of the estate, or that those portions are exempt as public assistance benefits under N.Y. Debtor & Creditor Law ("Debt. & Cred. Law") § 282. For the reasons set forth below, the Trustee's motion for summary judgment is granted.
Jurisdiction
This Court has jurisdiction of this core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(A), (B) and (E), 1334(b), and the Eastern District of New York standing order of reference dated August 28, 1986. This decision constitutes the Court's findings of fact and conclusions of law to the extent required by Federal Rule of Bankruptcy Procedure 7052.
Facts
The following material facts in this case are undisputed.
On October 17, 2008, the Defendant filed a voluntary petition for relief under Chapter 7. The Trustee commenced an action against the Defendant on January 13, 2009 seeking a judgment denying the Defendant's discharge under §§ 727(a)(2)(B) and 727(a)(4)(A), and compelling the Defendant to turnover her anticipated 2008 federal refund in the approximate amount of $5,112 and her anticipated 2008 New York State refund in an undetermined amount (collectively, the "Tax Refunds").[2] Defendant did not list the Tax Refunds as personal property on Schedule B, or as exempt on Schedule C. On February 7, 2009, Defendant filed an amended Schedule B, to include the Tax Refunds as personal property, and an amended Schedule C to claim exemptions in the Tax Refunds in an aggregate amount of $7,652.00. On February 17, 2009, Defendant filed an Answer and Counterclaim asserting that a portion of the Tax Refunds consists of Earned Income Credits ("EICs") and Child Tax Credits ("CTCs") and is therefore not property of the estate. On February 27, 2009, Plaintiff filed an Answer to Defendant's Counterclaims and Objection to Claimed Exemption for Tax Refunds. The Trustee seeks summary judgment denying the exemption, and seeks turnover of the Tax Refunds less the $2,500 cash exemption provided for by N.Y. Debt. & Cred. Law § 283(2)[3].
Standard for Summary Judgment
Summary judgment is appropriate when the record shows that "there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Fed. R. Bankr.P. 7056; Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The court's function is not to resolve disputed issues of fact, but only to determine whether there is a genuine *37 issue of material fact to be tried. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). A fact is considered material if it "might affect the outcome of the suit under the governing law." Id. at 248, 106 S. Ct. 2505. No genuine issue exists "unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-50, 106 S. Ct. 2505 (citation omitted). The nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). On the other hand, if "there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the nonmoving party, summary judgment is improper." Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 37 (2d Cir.1994) (citation omitted).
Arguments
The Defendant presents several arguments in support of her position that the portions of the Tax Refunds attributable to EICs and CTCs (the "EIC and CTC Funds" or "the Funds") are not property of the estate. First, the Defendant argues that the EIC and CTC Funds are not property of the estate because she did not file the claims for the tax credits until after she commenced her bankruptcy case, and thus did not have an interest in the EIC and CTC Funds at the commencement of her case. Alternatively, the Defendant argues, based on In re Searles, 445 F. Supp. 749 (D.Conn.1978), that even if the EIC and CTC Funds are property of the estate under § 541(a)(1), they are exempt as public assistance grants pursuant to N.Y. Debt. & Cred. Law § 282(2)(a).
The Plaintiff argues that the Tax Refunds are property of the estate as defined by § 541(a)(1) and that the Defendant's claimed exemptions in portions of the Tax Refunds are not permitted under New York law.
Discussion
A. The EIC and CTC Funds Are Property Of The Estate
Section 541 broadly defines property of the bankruptcy estate as "all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)(1); see United States v. Whiting Pools, Inc., 462 U.S. 198, 204-205, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983) (the "House and Senate Reports on the Bankruptcy Code indicate that § 541(a)(1)'s scope is broad"). Pursuant to § 542(a), property of the estate not abandoned by the trustee or exempted by statute must be turned over to the trustee for administration. 11 U.S.C. § 542(a). The Defendant argues that under § 541(a)(1), the EIC and CTC Funds are not property of the estate because the Debtor did not have an interest in the Funds until she submitted her claim for the Funds, which occurred after she commenced her bankruptcy case.
The Debtor's argument has no merit. The proposition that the Debtor's interest in the Funds did not arise until she filed a claim for the Funds post-petition is at odds with the broad interpretation given to § 541(a)(1). "Property of the estate" includes all pre-petition interests of a debtor, including inchoate, contingent interests and assets not in the debtor's possession at the time of filing. Segal v. Rochelle, 382 U.S. 375, 379, 86 S. Ct. 511, 15 L. Ed. 2d 428 (1966) ("The term `property' has been construed most generously and an interest is not outside its reach because it is novel or contingent or because *38 enjoyment must be postponed."). "By including all legal interests without exception, Congress indicated its intention to include all recognizable interests although they may be contingent and not subject to possession until some future time." Rau v. Ryerson (In re Ryerson), 739 F.2d 1423, 1425 (9th Cir.1984) (citing H.R.Rep. No. 595, 95th Cong., 1st Sess. 175-76 (1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6136). Because "every conceivable interest of the debtor, future, nonpossessory, contingent, speculative, and derivative, is within the reach of § 541," whether the Defendant filed her claims to collect the Funds before or after the commencement of the case is irrelevant. In re Yonikus, 996 F.2d 866, 869 (7th Cir.1993); Chartschlaa v. Nationwide Mut. Ins. Co., 538 F.3d 116, 122 (2d Cir. 2008). For this reason, "[w]ages for services rendered by the debtor prior to the bankruptcy filing are rooted in his pre-bankruptcy past and become property of the estate even if paid subsequent to his bankruptcy filing." Jackson v. Novak (In re Jackson), 593 F.3d 171, 176-77 (2d Cir. 2010) (Summary Order) (citing Forker v. Irish (In re Irish), 311 B.R. 63, 66 (8th Cir.BAP (Iowa),2004)). By the same token, funds paid to the Debtor on account of tax credits attributable to the pre-petition period constitute property of the estate even if paid to her post-petition.
B. The EIC and CTC Funds Are Not Exempt As Public Assistance Grants
The Debtor also argues that the portions of the Tax Refunds attributable to EICs and CTCs, even if property of the estate, are exempt from administration. Section 522(b) allows a debtor to claim certain property as exempt from administration by the trustee. 11 U.S.C. § 522(b). On May 17, 1982, pursuant to § 522(b)(2), New York opted out of the federal exemption scheme, limiting debtors domiciled in the state of New York to exemptions provided by New York state law. CFCU Cmty. Credit Union v. Hayward, 552 F.3d 253, 258-259 (2d Cir.2009); John T. Mather Mem'l Hosp. v. Pearl, 723 F.2d 193, 194 (2d Cir.1983); see N.Y. Debt. & Cred. Law § 282.
In New York, exemption of property from the bankruptcy estate is governed by N.Y. Debt. & Cred. Law § 282, which provides, in relevant part, as follows:
Under section five hundred twenty-two of title eleven of the United States Code, entitled "Bankruptcy", an individual debtor domiciled in this state may exempt from the property of the estate,... only (i) personal and real property exempt from application to the satisfaction of money judgments under sections fifty-two hundred five and fifty-two hundred six of the civil practice law and rules, (ii) insurance policies and annuity contracts and the proceeds and avails thereof as provided in section three thousand two hundred twelve of the insurance law and (iii) the following property:
2. Bankruptcy exemption for right to receive benefits. The debtor's right to receive or the debtor's interest in: (a) a social security benefit, unemployment compensation or a local public assistance benefit[.]
N.Y. Debt. & Cred. Law § 282(2)(a).
The Defendant contends that the EIC and CTC Funds are exempt as public assistance benefits under N.Y. Debt. & Cred. Law § 282(2)(a), which permits a debtor to claim an exemption in "a social security benefit, unemployment compensation or a local public assistance benefit." N.Y. Debt. & Cred. Law § 282(2)(a). In making this argument, the Defendant takes the position that the "local public assistance benefit" exemption provided by N.Y. Debt. *39 & Cred. Law § 282 should be read to include all public assistance benefits, whether local or not, because subsection (l) of section 5205 of the CPLR, effective January 1, 2009, which provides an exemption for certain bank accounts into which "statutorily exempt payments" have been made, states that "[f]or the purposes of this article, `statutorily exempt payments'" includes "public assistance." CPLR § 5205(l)(2). In other words, the Defendant argues that the word "local" should be read out of the statutory language "local public assistance benefit" appearing in N.Y. Debt. & Cred. Law § 282, because CPLR § 5205 was amended as of January 1, 2009 to provide a separate exemption for bank accounts containing certain other public assistance benefits. The Defendant also argues that, although the Defendant's bankruptcy petition was filed on October 17, 2008, the amendment is applicable in this case because the EIC and CTC Funds were not received until after January 1, 2009.
The Defendant's latter argument is contrary to § 522(b)(3)(A), which "governs the date on which ... exemption[s] come[ ] into play." Hayward, 552 F.3d at 259 (holding that the amendment to CPLR § 5206, which increased the allowable homestead exemption from $10,000 to $50,000 may be invoked by debtors who file for relief after the effective date of the amendment). While New York state law provides the allowable exemptions, federal law governs the date of effectiveness. Id. Section 522(b)(3)(A) provides that "[d]ebtors may exempt `any property that is exempt under ... State or local law that is applicable on the date of filing of the petition.'" Id. at 258-259 (quoting 11 U.S.C. § 522(b)(3)(A)) (emphasis added). Therefore, when the Defendant received the Funds is irrelevant. The Debtor filed for bankruptcy on October 17, 2008, before the effective date of CPLR § 5205(l), and in accordance with § 522(b)(3)(A), the amendment can have no application in this case.
The Defendant's argument that the statutory phrase "local public assistance" in N.Y. Debt. & Cred. Law § 282(2)(a) should be read as "public assistance" because of the 2009 amendment to CPLR § 5205 must also be rejected. Although CPLR § 5205(l) defines "statutorily exempt payment" to include public assistance, section (l)(2) limits the application of the definition "[f]or the purposes of this article." CPLR § 5205(l)(2). Further, the exemption for "public assistance" benefits provided for by CPLR § 5205(l) is limited to $2,500 "reasonably identifiable as statutorily exempt payments" that are directly deposited into a debtor's account during the 45 days preceding the date of service on the bank of a restraining notice. CPLR § 5205(l)(1). There is no basis to conclude that the statutory exemption of N.Y. Debt. & Cred. Law § 282(2)(a) should be read to include anything other than "local public assistance benefits."
Although the Defendant did not argue that the Funds are exempt as local public assistance pursuant to N.Y. Debt. & Cred. Law § 282, that issue was before the bankruptcy court in the Western District of New York in In re Garrett, 225 B.R. 301, 303 (Bankr.W.D.N.Y.1998). The Debtor in Garrett relied on Searles, 445 F. Supp. 749, arguing that earned income credits as well as child and dependent care credits received as part of her federal and state tax refunds were designed for poverty relief and therefore exempt under N.Y. Debt. & Cred. Law § 282. The court found Searles to be inapplicable, pointing out that "the debtor in [Searles ], filed her petition under the Bankruptcy Act, which applied a completely different definition of property." Garrett, 225 B.R. at 302 (citing *40 11 U.S.C. § 110(a)(5)). The Court rejected the debtor's argument that the tax credit payments may be considered "local public assistance" under N.Y. Debt. & Cred. Law § 282, stating that:
Although they may serve a similar purpose, the tax credits at issue are simply not included within this list of designated benefits. More specifically, Ms. Garrett's tax refunds do not derive as a benefit under the Social Security Act; they do not arise by reason of any unemployment; they are payable from federal and state tax agencies, not from any local governmental unit.
Id. at 303. For the reasons articulated by the Garrett court, the Funds are not exempt as "local public assistance."
Conclusion
The Plaintiff's motion for summary judgment is granted. A separate order shall issue herewith.
NOTES
[1] Unless otherwise indicated, statutory citations are to provisions of Title 11, U.S.C.
[2] The Defendant's 2008 federal and state tax returns ("2008 Returns") were submitted as an attachment to the Opposition and reflect a federal tax refund for the 2008 tax year in the amount of $5,193, and a state refund in the amount of $1,744. (Hearing Tr. 8:15-18).
[3] Section 283 provides that a debtor who "does not elect, claim, or otherwise avail himself of" the homestead exemption under CPLR § 5206 or who does not "utilize[ ] to the fullest extent" the personal property exemption under CPLR § 5205, "may exempt cash in the amount of" $2,500, including "the right to receive a refund of federal, state and local income taxes, and deposit accounts in any state or federally chartered depository institution." N.Y. Debt. & Cred. Law § 283(2). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553039/ | 423 B.R. 502 (2010)
In re FF ACQUISITION CORP. d/b/a Flexible-Flyer
David Angles, et. al., Plaintiffs
v.
Flexible Flyer Liquidating Trust, f/k/a FF Acquisition Corp., d/b/a Flexible-Flyer, Defendant.
Bankruptcy No. 05-16187-DWH. Adversary No. 07-1193-DWH.
United States Bankruptcy Court, N.D. Mississippi.
January 20, 2010.
*503 Louis H. Watson, Jr., Jackson, MS, for Plaintiffs.
Craig M. Geno, Jeffrey K. Tyree, Melanie T. Vardaman, Harris Jernigan & Geno, PLLC, Ridgeland, MS, for Defendant.
OPINION
DAVID W. HOUSTON, III, Bankruptcy Judge.
On consideration before the court is a Motion for Summary Judgment filed by the plaintiffs; a response to said motion having been filed by the defendant, Flexible Flyer Liquidating Trust, f/k/a FF Acquisition Corp, d/b/a Flexible Flyer, (hereinafter "Flexible Flyer"); and the court, having heard and considered same, hereby finds as follows, to-wit:
I.
The court has jurisdiction of the parties to and the subject matter of this proceeding pursuant to 28 U.S.C. § 1334 and 28 U.S.C. § 157. This is a core proceeding as defined in 28 U.S.C. § 157(b)(2)(A), (B), and (O).
II.
Flexible Flyer manufactured swing sets, hobby horses, go-carts, utility vehicles, fitness equipment, and related products that were sold to Wal-Mart, Toys-R-Us, K-Mart, Sam's Club, as well as, other large and small retailers. Flexible Flyer enjoyed long term relationships with most of its customers, who would make purchases through written orders or, on occasion, through verbal orders.
The operating capital needs of Flexible Flyer were obtained through a factoring arrangement with CIT Group Commercial Systems, LLC, (hereinafter "CIT"), which purchased Flexible Flyer's eligible accounts receivable. CIT would advance Flexible Flyer eighty percent of the eligible receivables that it acquired, and then collect the receivables. CIT charged interest on the advances, and, once a receivable was collected, CIT retained twenty percent of the collected funds and gave Flexible Flyer credit for the balance. The factoring arrangement with CIT, plus infusions of capital from Cerberus Corporation, Flexible Flyer's parent company, were Flexible Flyer's primary sources of operating funds for approximately five years.
In calendar year 2005, Flexible Flyer began experiencing financial problems. In April, the go-cart employees were informed that the go-cart line might be eliminated. In June, Flexible Flyer's go-carts were subjected to a substantial recall due to defective ball joints. During this same time, three of Flexible Flyer's major customers decided to defer purchasing $5,000,000 in swing sets. Another customer Tractor Supply, began withholding payments for merchandise that had already been shipped.
CIT and Cerberus constantly monitored Flexible Flyer's financial and operational performance. Within weeks prior to Flexible Flyer's filing its bankruptcy petition, CIT reduced its advance rate on receivables to fifty percent and, immediately prior to filing, cut the rate to zero, effectively terminating the factoring arrangement. Cerberus refused to infuse any additional capital into the business due to a lack of written commitments from Flexible Flyer's customers. With no sources of working *504 capital, Flexible Flyer was compelled to file for bankruptcy protection on September 9, 2005. On this same date, Flexible Flyer provided notice that it was ceasing operations pursuant to the Worker Adjustment and Retraining Notification Act (hereinafter "WARN Act").
III.
Summary judgment is properly granted when pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Bankruptcy Rule 7056; Uniform Local Bankruptcy Rule 18. The court must examine each issue in a light most favorable to the nonmoving party. Anderson v. Liberty Lobby, 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986); Phillips v. OKC Corp., 812 F.2d 265 (5th Cir.1987); Putman v. Insurance Co. of North America, 673 F. Supp. 171 (N.D.Miss.1987). The moving party must demonstrate to the court the basis on which it believes that summary judgment is justified. The nonmoving party must then show that a genuine issue of material fact arises as to that issue. Celotex Corporation v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986); Leonard v. Dixie Well Service & Supply, Inc., 828 F.2d 291 (5th Cir.1987), Putman v. Insurance Co. of North America, 673 F. Supp. 171 (N.D.Miss.1987). An issue is genuine if "there is sufficient evidence favoring the nonmoving party for a fact finder to find for that party." Phillips, 812 F.2d at 273. A fact is material if it would "affect the outcome of the lawsuit under the governing substantive law." Phillips, 812 F.2d at 272.
The court notes that it has the discretion to deny motions for summary judgment and allow parties to proceed to trial so that the record might be more fully developed for the trier of fact. Kunin v. Feofanov, 69 F.3d 59, 61 (5th Cir.1995); Black v. J.I. Case Co., 22 F.3d 568, 572 (5th Cir.1994); Veillon v. Exploration Services, Inc., 876 F.2d 1197, 1200 (5th Cir.1989).
IV.
The plaintiffs allege that Flexible Flyer failed to comply with the WARN Act by failing to give its employees a sixty day layoff notice as required by 28 U.S.C. § 2102. It is undisputed that the provisions of the WARN Act were triggered. There were more than 100 employees at the time of the plant closing on September 9, 2005, (28 U.S.C.A. § 2101), and Flexible Flyer admits that it failed to give a sixty day written layoff notice. In its answer to the complaint, Flexible Flyer asserts the following primary defenses for its failure to give the sixty day notice, to-wit: 1) unforseen business circumstances; 2) the faltering company exception; and 3) that it gave as much notice as it possibly could under the circumstances.
As to the unforeseen business circumstances exception to the requirement of a sixty day written layoff notice, the employer must show, 1) the circumstances were unforeseeable, and 2) the layoffs were caused by those circumstances. See, Roquet v. Arthur Andersen, LLP, 398 F.3d 585, 588 (7th Cir.2005). In this proceeding, whether or not the circumstances that caused the shutdown of Flexible Flyer were foreseeable is a disputed factual issue. The plaintiffs contend that the plant shutdown was foreseeable for the following reasons: 1) from the beginning of Flexible Flyer's business, it was in a deficit position that steadily increased yearly; 2) Flexible Flyer knew as early as the spring of 2005 that layoffs could occur because it informed its go-cart employees of possible layoffs during that same year; 3) in the *505 spring of 2005, Wal-Mart, K-Mart and Toys-R-Us deferred purchasing swing sets valued at approximately five million dollars; 4) go-carts were recalled in June, 2005; 5) Cerberus warned that it would close Flexible Flyer if it did not make a profit; and 6) Flexible Flyer knew that CIT would terminate the factoring arrangement because of the go-cart recall along with the other losses that Flexible Flyer was experiencing.
To the contrary, Flexible Flyer takes the position, as set out in the affidavit of Mike Earrey, Flexible Flyer's Chief Financial Officer, that the reduction by CIT of its advance rate to fifty percent and then, immediately thereafter, to zero was the unforeseen circumstance that primarily caused the plant's closing. Flexible Flyer also contends that it was completely unforeseeable, based on past experience, that Cerberus would refuse to supply additional capital infusions.
As to the "faltering company" exception, there are also disputed factual issues. The Department of Labor regulation that interprets the "faltering company" exception lists four requirements that must be established by the employer to establish the exception, to-wit: 1) the employer must have been actively seeking capital at the time the sixty day notice would have been required; 2) the employer had a realistic opportunity to obtain the financing sought; 3) the financing would have been sufficient, if obtained, to enable the employer to avoid or postpone the shutdown; and 4) the employer reasonably and in good faith believed the sixty day notice would have precluded it from obtaining financing. 20 C.F.R. § 639.9(a). The plaintiffs argue that Flexible Flyer cannot meet any of these four elements, while Flexible Flyer contends that it meets each one. Needless to say, evidence must be presented at trial to resolve these conflicting positions.
Because there are obviously material factual issues remaining in dispute, the motion for summary judgment is not well taken and will be overruled by a separate order to be entered contemporaneously herewith. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553038/ | 423 B.R. 790 (2010)
In re GENERAL VISION SERVICES, INC., Debtor.
Ned Steinfeld, as Representative of the Estate of General Vision Services, Plaintiff-Appellant,
v.
Richard A. Eisner & Company, LLC, Ralph Balsamo, and Shelby Goldgrab, Defendants-Appellees.
No. 06 CV 5992(GBD).
United States District Court, S.D. New York.
February 3, 2010.
*791 MEMORANDUM DECISION AND ORDER
GEORGE B. DANIELS, District Judge.
Appellant Ned Steinfeld, as representative of the Estate of General Vision Services ("GVS"), is appealing two orders of the Bankruptcy Court: (1) an Order, dated March 13, 2006, granting appellees' summary judgment motion dismissing the complaint as time-barred; and (2) an Order, dated June 12, 2006, denying appellant's motion to reargue the summary judgment motion. The Bankruptcy Court held that appellant's claims for negligence and breach of fiduciary duty were untimely under N.Y. C.P.L.R. ("CPLR") 214(4), which is the three-year statute of limitations applicable to claims seeking damages for injuries to property. Appellant argues that, since appellees are being sued in their capacity as de facto directors of the debtor-corporation, the Bankruptcy Court erred by not applying the six-year statute of limitations, under CPLR 213(7), governing derivative actions against a corporate director.
Several bondholders filed an involuntary petition for relief under Chapter 11 against GVS, and subsequently moved for the appointment of an interim trustee. That motion and the involuntary petition were resolved through a stipulation of the parties, that was so-ordered by the Bankruptcy *792 Court on September 10, 1999.(the "Management Order"). As stipulated, the motion for the appointment of a trustee was withdrawn, and a "Management Committee" was created to manage and review the operations of GVS until a plan of reorganization was confirmed and became effective, or upon further order of the Bankruptcy Court. The named members of the Management Committee were GV's Chief Executive Officer ("CEO"), and appellees Shelby Goldgrab and Ralph Balsamo. Mr. Balsamo, was a member of appellee Richard E, Eisner & Company, LLC ("Eisner"), an accounting firm. Although the Management Order did not specifically designate Eisner as a committee member, the Bankruptcy Court explained that "there is evidence that the parties intended Eisner to be the member of the management committee, and Balsamo to act as Eisner's representative on it." In re General Vision Servs., Inc., 2006 WL 687162, at *1 n. 3 (Bkrtcy.S.D.N.Y. Mar.13, 2006).
Pursuant to the Management Order, the CEO was to continue in that role and manage the day-to-day operations of GVS, provided that a majority vote of committee members was required before any business decision or transaction outside the ordinary course of business could be effectuated. The Order authorized Mr. Balsamo to review all of GVS's receipts and disbursements and review the current operations of GVS, including its business plans, systems, budgets and cash flow. All checks, wire transfers and cash payments in excess of five hundred dollars could not be issued by GVS without obtaining Mr. Balsamo's approval and, if he did not approve, the Management Order provided certain mechanisms to override his denial. The Management Order further provided that the Management Committee was to immediately begin a search for a new chief financial officer and new chief operating officer for GVS.
On March 13, 2001, the bankruptcy action was converted from a chapter 11 to a chapter 7 action. The United States Trustee's Office appointed an interim trustee of the GVS estate, who subsequently became a permanent trustee by operation of law. On March 30, 2005, the Bankruptcy Court granted the trustee's motion allowing appellant to pursue possible claims held by GVS against appellees, with the estate to be entitled to a percentage of any net proceeds recovered. The instant adversary proceeding was instituted on May 20, 2005, against Ralph Balsamo, Shelby Goldgrab and Eisner. The complaint alleges that appellees failed to fulfill the responsibilities imposed upon them by the Management Order, thereby "rendering the Debtor administratively insolvent." (Compl. ¶ 17). Two causes of action were pled, one sounding in negligence and the other for breach of fiduciary duty. The first claim alleges appellees "were negligent in the duties to monitor the Debtor Board of Directors." (Id. ¶ 25). The second claim alleges that appellees "did not fulfill their fiduciary duties on the management committee." (Id. ¶ 30). As a result of appellees' purported failings, the debtor-corporation allegedly suffered five million dollars in damages.
The parties stipulated that appellant's claims arose no later than March 13, 2001, approximately four years before the commencement of this adversary proceeding. Appellees moved for summary judgment on the grounds that the action was barred by the general three-year statute of limitations, set forth in CPLR 214(4), applicable to claims for damages based on injuries to property. Appellant opposed the motion arguing that the causes of action were governed by CPLR 213(7), the six-year statute of limitations applicable to claims for damages against present or former shareholders, officers and directors. Appellant *793 argued that, by virtue of the powers conferred by the Management Order, appellees were the de facto directors of GVS and, as such, fall within the scope of CPLR 213(7).
The Bankruptcy Court, focusing on the plain language of § 213(7), found that the statute only applied to actual officers and directors (i.e., de jure directors), and not to de facto officers and directors. The Bankruptcy Court held that appellant's claims were governed by the general three year statute Of limitations under CPLR 214{4). Accordingly, appellant's claims were time-barred.
Appellant moved for reargument and, in support thereof, argued for the first time, that: (1) appellants were the actual directors of GVS, as the term "director" is defined in New York Business Corporation Law; and (2) this action was governed by the six-year statute of limitations, set forth in CPLR 213(1), for "actions for which no limitation is specifically prescribed by law." The Bankruptcy Court denied the reargument motion. It found that appellant failed to make the requisite showing that the court overlooked any legal or factual matter of import, or that reargument was necessary because of clear error or manifest injustice. The Bankruptcy Court found that appellant's new arguments, having not previously been raised, had not been overlooked by the court, and were, in any event, lacking substantive merit.
Appellant appeals the original order of the Bankruptcy Court granting appellees' motion for summary judgment, and the court's subsequent order denying appellant's reargument motion. On appeal, the district court "may affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceedings." Fed.R.Bank.P. 8013. This Court "review[s] the Bankruptcy Court's findings of fact for clear error [and] its conclusions of law de novo [.]" In re Bayshore Wire Prods. Corp., 209 F.3d 100, 103 (2d Cir. 2000) (internal citations omitted); see also, Fed.R.Bank.P. 8013. The bankruptcy court's decision to deny reargument is reviewed for abuse of discretion. See, In re BDC 56 LLC, 330 F.3d 111, 123 (2d Cir. 2003).
Under New York law, claims premised on a breach of fiduciary duty are not governed by a single statute of limitations period. Generally, the substantive remedy sought is determinative of the applicable limitations period. IDT Corp. v. Morgan Stanley Dean Witter & Co., 12 N.Y.3d 132, 879 N.Y.S.2d 355, 907 N.E.2d 268, 272 (2009). Where solely equitable relief is sought, the claims are governed by the six-year limitations period set forth in CPLR 213(1). Id.; Cooper v. Parsky, 140 F.3d 433, 440-41 (2d Cir.1998). "Where the remedy sought is purely monetary in nature," the action is generally deemed to be one "alleging `injury to property' within the meaning of CPLR 214(4), which has a three-year limitations period." IDT Corp., 879 N.Y.S.2d 355, 907 N.E.2d at 272; see also, Ciccone v. Hersh, 320 Fed.Appx. 48, 50 (2d Cir. April 7, 2009); Cooper, 140 F.3d at 440-41. However, claims seeking damages for breach of fiduciary duty may be subject to the six-year limitations period, under CPLR 213(7), where they are asserted in an action by or on behalf of a corporation against a present or former director, officer or stockholder to recover damages for corporate Waste or for an injury to property.
The Bankruptcy Court found that the term "director," for purposes of CPLR 213(7), did not include de facto directors. Appellant argues that the definition of "director" is not as limited as the Bankruptcy Court determined. He argues that the *794 Bankruptcy Court erred by not adopting the broad definition of "director" set forth in the New York Business Corporation Law ("BCL"). Section 102 of the BCL provides that, "[a]s used in this chapter,.... the term ... `Director' means any member of the governing board of a corporation, whether designated as director, trustee, manager, governor, or by any other title." N.Y.B.C.L. § 102(a)(5) (emphasis added). By its express terms, that statutory definition of "director" is only to be applied in the context of that chapter of the BCL. In light of this explicit restriction, the Bankruptcy Court did not err in not defining the term "director," as used in CPLR 213(7), as broadly as the BCL's definitional section. See generally, Matter of Keane (Bethlehem Steel Co.), 2 A.D.2d 148, 153 N.Y.S.2d 290, 294 (N.Y.App.Div. 1956) ("It seems clear that the definition prescribed by a statute for words used in that particular statute does not necessarily govern the construction of those same words ... as they may appear in other acts[.]"), aff'd 6 N.Y.2d 910, 190 N.Y.S.2d 714, 161 N.E.2d 17 (1959).
Appellant further argues that, since New York law does not itself distinguish between de facto and de jure directors for purposes of liability by or against the corporation, there was no legal justification for the Bankruptcy Court to distinguish between de facto and de jure directors when applying the relevant statute of limitations. Notwithstanding appellant's contention to the contrary, an important distinction exists between de jure and de facto directors under New York law.
The de facto doctrine is a legal fiction invoked to protect the interests of third parties who have relied, in good faith, upon the acts of the de facto officer. In re George Ringler & Co., 204 N.Y. 30, 97 N.E. 593, 598 (1912) (quotation marks and citation omitted). It is not intended to benefit the corporate officer, who is presumed to know whether he has been legally appointed or elected. Id. Where the public or innocent third parties are concerned, the acts of the de facto director are as valid and binding as the acts of de jure directors. See, Id. at 598-99; Stile v. Antico, 272 A.D.2d 403, 707 N.Y.S.2d 227, 228 (N.Y.App.Div.2000) (citing Matter of Salnor Realty Corp., 16 Misc. 2d 189, 183 N.Y.S.2d 879 (N.Y.Sup.1959)). One's status as a de facto officer is limited to the public and third persons interested in his acts, and beyond that he is a "mere usurper" whose acts are invalid. George Ringler, 97 N.E. at 598 (internal quotation marks and citation omitted). In his relationship with the corporation itself, "a de facto director in not a director in law or in fact." Stile, 707 N.Y.S.2d at 228 (citing Salnor Realty, 183 N.Y.S.2d 879). Since appellant's claim is a derivative action asserted on behalf of GVS, appellees cannot be sued in their capacity as corporate directors, when they were never actual officers or directors of GVS.
Notably, the complaint does not allege that, by virtue of the Management Order, appellees became directors of GVS. Nor does it allege that the acts or omissions complained of were committed by appellees in their capacity as GVS corporate directors. Rather, the complaint alleges that appellees breached their fiduciary duties by "fail[ing] to oversee the actions of the Debtor'[s] Board of Directors" and "were negligent in the duties to monitor the Debtor['s] Board of Directors." (Compl. ¶¶ 24, 25). The six-year statute of limitations governing derivative actions against directors, under § 213(7), does not extend to actions against individuals or entities responsible for overseeing the board of directors, but who were not themselves directors. See, Trinity Co-op. Apts. Inc. v. J.S. Bldg. *795 Corp., 25 A.D.2d 891, 270 N.Y.S.2d 644 (N.Y.App.Div.1966) (Finding that CPLR 213(7)'s predecessor statute was inapplicable in action brought by corporation against individuals who controlled it's officers and directors, but were not officers, directors or shareholders of plaintiff).
Appellant also moved to reargue on the additional basis that actions by a corporation against a fiduciary who was not an officer, director or shareholder of the corporation are subject to the six-year statute of limitations, set forth in CPLR 213(1), since they are "actions for which no limitation is specifically prescribed by law." Claims seeking monetary damages for breach of fiduciary duty, including ones based on negligence, are governed by the prescribed three-year statute of limitations set forth in CPLR 214(4). Ciccone v. Hersh, 320 Fed.Appx. at 50; Dragon Inv. Co. II LLC v. Shanahan, 49 A.D.3d 403, 854 N.Y.S.2d 115, 117 (N.Y.App.Div.2008); Kaszirer v. Kaszirer, 286 A.D.2d 598, 730 N.Y.S.2d 87, 88 (N.Y.App.Div.2001). Since a statutory limitation period exists for the causes of action pled by appellant, § 213(1) is also inapplicable.
The Bankruptcy Court correctly granted appellees' motion for summary judgment on the grounds that the claims were time-barred under the three-year statute of limitations of CPLR 214(4). CPLR 213 is totally inapplicable. The Bankruptcy Court's denial of appellant's motion to reargue was not an abuse of discretion. The Orders appealed from are hereby affirmed. The appeal dismissed. The Clerk of the Court is directed to close this case.
SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553119/ | 37 B.R. 897 (1984)
In re PRIME, INC., Debtor.
Bankruptcy No. 81-03200-S-11.
United States Bankruptcy Court, W.D. Missouri, S.D.
March 21, 1984.
Gary A. Love, Springfield, Mo., for debtor.
Donald B. Steele, Kansas City, Mo., for Creditors CIT Corp. and CIT Financial Services.
MEMORANDUM OPINION AND ORDER
JOEL PELOFSKY, Bankruptcy Judge.
Debtor filed for relief in October of 1981. At that time and to the present it owned certain over-the-road tractors and trailers in which CIT Corporation, hereinafter CIT, and CIT Financial Services, hereinafter Financial, have security interests. Prior to July 1983 no request for adequate protection was made by either creditor and debtor made no payments although it continued to use the vehicles. In July of 1983 both creditors asked that claims for moneys due under the financing agreements on the trucks *898 from the date of filing to July 1983 be allowed as administrative expenses. Debtor opposes such an allowance.
A hearing was held on the Motion. The parties appeared by counsel. Evidence was heard and the matter taken under advisement. The parties filed briefs in support of their contentions.
Section 503(b)(1)(A) of the Code provides that "the actual, necessary costs and expenses of preserving the estate, including wages, salaries, or commissions for services rendered after the commencement of the case" shall be allowed as administrative expenses. Creditors contend that, since debtor used the collateral, they are entitled to the payments called for in the financing arrangements or the reasonable rental value of the property as an administrative expense. Debtor argues that creditors contributed nothing to the estate since debtor owns the property and that the only remedy is adequate protection payments which creditors waived by not asking for them.
This section of the Code is drawn from Section 64(a) of the Bankruptcy Act, Section 104 of Title 11, U.S.C., now repealed, which provided, in part, that "the costs and expenses of administration, including the actual and necessary costs and expenses of preserving the estate subsequent to filing the petition" are entitled to a first priority. Other categories included trustee's costs and expenses incurred in various kinds of legal proceedings. The Supreme Court has held that "the words preserving the estate include the larger objective, common to arrangements, of operating the debtor's business with a view to rehabilitating". Reading Company v. Brown, 391 U.S. 471, 475, 88 S.Ct. 1759, 1762, 20 L.Ed.2d 751 (1968). In that case the court specifically held that a claim for damages arising out of the trustee's negligence during the period of arrangement was entitled to a priority. In the case of In re Avorn Dress Co., 78 F.2d 681 (2d Cir.1935) the court awarded a priority under Section 64a(1) of the Act to a claim held by a creditor who sold merchandise to a debtor who then resold the merchandise in its retail business. See generally 3A Collier on Bankruptcy ¶ 63.105 (14th Ed.).
Chapter 11 of Title 11 contemplates the operation of businesses while the cases are being administered. The laundry list of administrative expenses has been much simplified by the language of Section 503 but there is little question that the gloss on the predecessor statute has not been altered by the passage of the Code. House Report 95-595, 95th Cong., 1st Sess. (1977) 355 reprinted in App. 2 Collier on Bankruptcy (15th Ed.); 3 Collier on Bankruptcy ¶ 503.04 (15th Ed.). The costs and expenses of preserving the estate, therefore, are not restricted to the categories specified in the statute but also must deal with costs and expenses incurred in running the business.
The general proposition is that the estate is obligated to pay for collateral it controls and uses for the benefit of the estate. Kneeland v. American Loan & Trust Co., 136 U.S. 89, 10 S.Ct. 950, 34 L.Ed. 379 (1890). The analysis has been much refined since that opinion was written. In Kneeland the Court concluded that the estate had an obligation to pay for the collateral it possessed without regard to whether all of it resulted in benefit to the estate. But in In re Rhymes, Inc., 14 B.R. 807 (Bkrtcy.Conn.1981) the Court held that no administrative rent was due where debtor never used the premises which it had leased. The issue, the court noted, is one of "preventing unjust enrichment rather than the compensation to the creditor for loss ..." 14 B.R. at 808 citing American A & B Coal Corp. v. Leonardo Arrivabene, S.A., 280 F.2d 119 (2d Cir.1960). The secured creditor is to be protected "throughout the proceedings, to the extent of the value of the property ... There is no constitutional claim of the creditor to more than that". Wright v. Union Central Life Ins. Co., 311 U.S. 273, 278, 61 S.Ct. 196, 199-200, 85 L.Ed. 184 (1940).
There is no dispute that debtor has used the collateral in which the creditors hold security interests and that the use has resulted in benefit to the estate. The Court *899 holds that the creditors are entitled to some administrative allowance. The remaining question is the amount of such allowance.
Where the debtor continues to operate its business after the filing of the petition, a creditor furnishing assets is to be paid in cash or in accordance with credit terms approved by the Court. Section 364 of the Code. If there is a default in this arrangement, the creditor is entitled to a priority claim. Matter of Isis Foods, Inc., 19 B.R. 329 (Bkrtcy.W.D.Mo.1982). Where the asset is leased to the debtor, the unpaid rent is to be treated as an administrative expense. Matter of Merchants Storage Co. of Va., Inc., 15 B.R. 448 (Bkrtcy.E.D.Va. 1981); Matter of Fred Sanders Co., 22 B.R. 902 (Bkrtcy.E.D.Mich.1982).
In the transactions described above the amount of the administrative allowance is either the cost of the goods or the amount of the rent, Matter of Fred Sanders Co., supra at 906, but this is not always so. But where the debtor owns the asset and the creditor holds only a security interest, the amount of the administrative claim, if any, for use of the collateral is more difficult to determine.
Creditors argue that they are entitled to the payments required by the loan documents or reasonable rent. As a third alternative they suggest an amount equal to depreciation. At the outset of a Chapter 11 case, the secured creditor is entitled to its collateral, In re Prime, Inc., 35 B.R. 697 (Bkrtcy.W.D.Mo.1984), or to adequate protection. Section 362(e) of the Code. The essence of the arrangement is a balancing whereby the collateral maintains the value for which the creditor bargained and the debtor has the use of the collateral in its business.
In the absence of a demand by the creditor or voluntary payment by debtor the Court may not fashion adequate protection arrangements. In re San Clemente Estates, 5 B.R. 605 (Bkrtcy.S.D.Cal.1980). There has been no demand here. Allowance of an administrative claim in the amount of the debt payments therefore is inappropriate, first because it gives creditors something they failed to request and second because the administrative claim is to be paid at confirmation and the debt payments contain a charge for interest over time, payment of which in a lump sum would be discriminatory in relation to the treatment of other secured creditors. An allowance based upon rental runs afoul of the same criticism. In addition there is no evidence which would enable the Court to conclude that the rental charge debtor makes to its drivers is the same which debtor would pay creditors for the collateral under a lease.
The administrative allowance is based upon what the creditor contributed to the ongoing business of the debtor. What the creditors contributed here was the value of their collateral over the period of use. That value is represented in money terms as the amount of depreciation suffered by the collateral from use and the passage of time. In re Callister, 15 B.R. 521 (Bkrtcy.Utah 1981). There is no evidence as to what those amounts are but they are susceptible to agreement or proof. Further hearing will be afforded at the request of the parties. The Court notes that if the proposed adequate protection agreement, not yet executed pays the claim, as opposed to the value of the collateral, no administrative claim will be allowed.
Creditors also seek an administrative claim for certain sums of money used by debtor at the time of filing which should have been turned over to creditors. The claim represents collections from accounts previously assigned to creditors. A part of the funds used has been allowed as an administrative expense. Since all of the post-petition debt to CIT has been paid, it may well be that the part previously allowed has been paid. It may be also that all of those funds used have been repaid. The evidence is insufficient to enable the Court to make a finding on the question.
Creditors are directed therefore, to make an accounting for the several days preceding and following the date of filing, a time period sufficient for the Court to determine *900 the precise status of the pre and post-petition debts. Such accounting is to be furnished the Court on or before April 13, 1984. Debtor is granted ten (10) days thereafter to make any challenge to the accounting. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553139/ | 37 B.R. 909 (1984)
In re Helena BROADNAX, Debtor.
Bankruptcy No. 82-05549K.
United States Bankruptcy Court, E.D. Pennsylvania.
March 28, 1984.
*910 Christine Shubert, Camden, N.J., for debtor.
Joseph P. Kane, John F. Egan, Philadelphia, Pa., for PGW and Phila. Facilities Management Corp.
James J. O'Connell, Philadelphia, Pa., standing trustee.
OPINION[1]
WILLIAM A. KING, Jr., Bankruptcy Judge.
The issue before the Court is whether Philadelphia Gas Works ("PGW") can demand payment from the debtor for stolen gas before restoring her gas service even though she was living away from home at the time the gas theft occurred. For the reasons stated herein, we find there is insufficient evidence to connect the debtor with the tampering and gas theft which took place on her premises prior to the bankruptcy filing to require her to pay voluntary restitution to PGW. Therefore, we will grant the debtor's application for reinstatement of gas service upon payment of an adequate security deposit to PGW under § 366 of the Bankruptcy Code.
FACTS
The debtor's home is located at 1543 South 32nd Street in Philadelphia, Pennsylvania. Gas service to this residence was shut off in July, 1977, for non-payment of arrearages owed to PGW. From September, 1977 to September, 1982, the debtor lived in Cambridge, Maryland, and left her home in Philadelphia in the care of a friend who agreed to pay all bills.
During a routine inspection of the debtor's home in February, 1981, PGW employees discovered that a gas meter had been removed from another residence located at 1528 South Napa Street and placed in the debtor's home. Gas service at the Napa Street residence had been voluntarily terminated by the customer in May of 1977, according to PGW's records. A PGW employee discovered that the gas meter was missing from the Napa Street residence in November, 1977. Therefore, PGW estimates that the gas meter was stolen and installed in the debtor's home sometime between May and November of 1977, enabling the occupants to receive stolen gas undetected by the gas company for a period of almost four (4) years.
On February 11, 1981, when the PGW representative first discovered the bypass, he removed the stolen meter and shut off the gas with a bypass blocker. PGW then mailed notices to the debtor at the South 32nd Street address on February 23rd and March 16, 1981, unaware that someone other than the debtor was living on the premises. These notices threatened legal action if the debtor did not contact PGW about the "gas irregularities" found at the premises on February 11th.
The debtor claims she had no contact with PGW during the five (5) years she was absent from her home. She says she first learned about the stolen meter and unauthorized use of gas in September, 1982 when she contacted PGW to regain service. It was then that she was informed by PGW representatives that her gas service would not be restored unless she made voluntary restitution in the amount of $3,887.16. It is the policy of PGW to refuse to restore gas service in cases of gas tampering and theft unless voluntary restitution is made by the customer.
On November 18, 1982, the debtor filed a petition in bankruptcy under Chapter 13 of the Bankruptcy Code. Her Chapter 13 Plan was confirmed on April 12, 1983. On April *911 13, 1983, the debtor filed the application now under consideration by the Court seeking reinstatement of gas service and offering to PGW a security deposit of $326, an amount equivalent to twice the average monthly gas bill of the debtor during the time she was a customer. The $326 security deposit would ordinarily constitute adequate assurance to the gas company under § 366 of the Code.
The debtor contends she should not be penalized for events which occurred at her home while she was living elsewhere and that PGW cannot demand restitution from her before restoring service because it is an attempt to collect a pre-petition debt in violation of § 366.
The position of PGW is that § 366 of the Code does not apply in cases of gas tampering and theft because PGW's refusal to restore service is based on public safety considerations and not solely on the basis of unpaid pre-petition debts. PGW argues that its policy of demanding voluntary restitution from the customer (the debtor-homeowner in this instance) should be upheld in this case despite the debtor's contention that she was not responsible for the tampering and gas theft.
CONCLUSIONS OF LAW
Section 366 of the Code provides:
(a) Except as provided in subsection (b) of this section, a utility may not alter, refuse, or discontinue service to, or discriminate against, the trustee or the debtor solely on the basis that a debt owed by the debtor to such utility for service rendered before the order for relief was not paid when due.
(b) Such utility may alter, refuse, or discontinue service if neither the trustee nor the debtor, within 20 days after the date of the order for relief, furnishes adequate assurance of payment, in the form of a deposit or other security, for service after such date. On request of a party in interest and after notice and a hearing, the court may order reasonable modification of the amount of the deposit or other security necessary to provide adequate assurance of payment.
The general rule as stated in § 366(a) is that a utility company may not refuse service to a debtor solely on the basis of an unpaid pre-petition debt. The insertion of the word "solely" into the statutory language of subsection (a) implies that there may be other grounds for the utility to refuse to furnish service. Another bankruptcy court has already so held:
In essence, a utility has the discretion to refuse service to any debtor for any reason which would validly constitute a ground for refusal if that debtor were not in bankruptcy, with the single exception of nonpayment for past services.
Hennen v. Dayton Power & Light Co., 17 B.R. 720, 724 (Bkrtcy.S.D.Ohio 1982).
Because of the safety factors involved, and the risks posed to the public by those who tamper with gas company equipment, we believe that tampering and unauthorized use of gas constitute valid grounds for refusal to restore gas service or for conditioning restoration of service upon the payment of voluntary restitution. However, in order for this exception to the general rule to apply, there must be some evidence before the Court that the debtor either engaged in the illegal activity herself or authorized it. In the usual tampering situation, we can presume that the debtor authorized the tampering as long as the debtor was residing on the premises when the tampering occurred. In the case sub judice, there is little evidence pointing to an awareness on the debtor's part of her tenant's conduct during the time period in question. At trial, a PGW witness testified from notations made to the file that the debtor telephoned PGW about her gas account on March 1, 1981, but the debtor denies that she had any contact with PGW prior to 1982.
In conclusion, we find that the facts in this case can be distinguished from our recent Opinion in Marie Webb v. Philadelphia Gas Works et al, Bankruptcy No. 83-03458K, Adversary No. 83-2325K, slip op. March 27, 1984. In Marie Webb, we held that the debtor was not entitled to restored gas service upon payment of a security deposit *912 because it appeared that the debtor was directly responsible for the tampering with PGW equipment and gas theft which occurred prior to the bankruptcy filing. Therefore, we will enter an Order directing PGW to reinstate the debtor's gas service upon payment of a security deposit as adequate assurance under § 366(a) of the Bankruptcy Code.
NOTES
[1] This Opinion constitutes the findings of fact and conclusions of law required by Rule 7052 of the Rules of Bankruptcy Procedure. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553069/ | 37 B.R. 553 (1984)
In re George Marvin HINES, Debtor.
John S. STANSBERRY, Plaintiff,
v.
George Marvin HINES, Defendant.
Bankruptcy No. 3-83-01434, Adv. No. 3-83-0898.
United States Bankruptcy Court, E.D. Tennessee.
March 7, 1984.
Rainwater, Humble & Vowell, Donald K. Vowell, Knoxville, Tenn., for plaintiff.
*554 Lynn Tarpy, Knoxville, Tenn., for defendant.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
CLIVE W. BARE, Bankruptcy Judge.
This case involves a dischargeability question arising out of an alleged willful and malicious injury inflicted during a fist-fight between two individuals. 11 U.S.C.A. § 523(a)(6) (1979). Trial was held January 24, 1984.
I
The plaintiff, John S. Stansberry (Stansberry), and the defendant, George Marvin Hines (Hines), had been involved in a previous encounter resulting in the filing of a union grievance by Stansberry against Hines wherein Stansberry charged that Hines had locked him out of a union meeting over which Hines was presiding. This grievance was withdrawn by Stansberry in a letter dated January 16, 1983.
During the course of another union meeting held at the Quality Inn at Sweetwater, Tennessee, on the night of April 1, 1983, a vote on a proposed assessment was taken. Afterwards, some of the members, including Stansberry and Hines, retired to the lounge area of the Inn while the vote was being counted. A short time later, as Stansberry was leaving the lounge, Hines approached him and requested that he accompany him into the hall area outside of the lounge. Hines made this request in a normal, nonthreatening tone of voice. Stansberry testified that he went out of the door first and, before any words were spoken, Hines struck him in the face without warning, breaking his nose and causing considerable bleeding. According to Stansberry, Hines then proceeded to beat him vigorously.
Stansberry immediately left the Inn and drove to Knoxville, planning to stop at Park West Hospital, a distance requiring approximately a half-hour's drive. By the time he arrived in Knoxville, the bleeding was under control, and he proceeded to his home where he spent the evening. He went to St. Mary's Hospital the following morning. Ex. 3. He was treated at the hospital and was then referred to a specialist who put him in the hospital approximately a week later for surgery on his nose, including the reworking of some cartilage.
On the Monday morning following the April 1st incident, Stansberry went to Madisonville, Tennessee, and swore out a criminal warrant against Hines, charging him with assault and battery. Approximately a week later, Hines swore out a criminal warrant against Stansberry, charging him with assault and battery. At a preliminary hearing held at Madisonville, Tennessee, Hines was bound over to the Grand Jury. The charge against Stansberry was dismissed.
Florine Gordon, the manager of the lounge, was stationed just inside the door of the lounge on the evening in question when she heard a loud thud. She opened the door of the lounge, saw two men fighting in the hall, and immediately locked the lounge door.
Another employee of the lounge, Debra Culvahouse, was stationed outside the door at a table. She was passing a note through the door to Ms. Gordon when she heard a commotion. Both Ms. Gordon and Ms. Culvahouse looked through the door into the hallway area when they heard the noise. Neither saw anyone in the hall except the two men fighting, Stansberry and Hines.
Hines testified that he was in the lounge discussing the vote with some of his fellow union members when he asked Stansberry to step into the hall so that he might advise Stansberry of the vote. He testified there was some conversation between them in the hall, which resulted in Stansberry throwing a punch at him. Hines further testified that he partially blocked that blow and then retaliated by striking Stansberry, knocking him to the floor.
James Gillespie, a union member who testified for the defendant, stated that he was just inside the door of the lounge when Stansberry and Hines went out the door and that he went out the door immediately *555 behind Hines. Gillespie testified that Stansberry struck the first blow. The court finds material discrepancies, however, between the testimony of Gillespie and Hines. Gillespie's testimony of the conversation between the parties differs from Hine's version. Further, no other person saw Gillespie at any time in the hallwayneither the two ladies who worked in the lounge, nor either of the parties. By the same token, Mr. Edwin Hayes, whose testimony was before the court by transcript of the state court hearing held in Madisonville, testified that he was standing just inside the door of the lounge, that he saw Stansberry and Hines leave the lounge, but that he did not see Gillespie leave the lounge. He did not, however, state definitely that Gillespie did not leave the lounge. Although Hines testified that he knocked Stansberry to the ground with a punch, Gillespie testified that Hines "tackled" Stansberry and put him on the ground.
Hines' explanation for asking Stansberry to step into the hall also is suspect. Hines says that although he had advised several members of the outcome of the union vote inside the lounge, he asked Stansberry to step into the hall area since the band had started up, and he was afraid Stansberry could not hear him.
Testimony also indicated that although Hines was wearing glasses earlier in the evening, he had removed his glasses prior to asking Stansberry to step into the hall.
On April 1, the date of the incident, Stansberry was taking a blood-thinning medication which could have potentially resulted in his death from severe bleeding in a short period of time. Stansberry was also under a rated disability of 20 percent to one leg and 30 percent to the other, partially related to phlebitis.
The court does not believe that a rational person with Stansberry's medical condition would start a fight which could result in serious injury or possible death. Observing Stansberry's demeanor on the stand, the court is satisfied that he is not an irrational person.
Exhibit 2, a facial picture of Stansberry taken the morning after the fight, indicates that the blow received by Stansberry was unexpected. During oral argument of counsel, it was stated that Stansberry was a former golden gloves boxer. The court notes that, had Stansberry thrown the first punch, he would certainly have expected and been prepared for a return blow and would have at least partially blocked the return blow instead of taking that blow directly on his face and nose.
The court finds that Stansberry has carried the burden of proof that Hines inflicted upon him a willful and malicious injury. The assault was unprovoked, without cause, and unexpected.
Stansberry also alleges malicious prosecution resulting from the state court charges filed against him by Hines. The evidence is insufficient, however, to support a charge of malicious prosecution.
II
Section 523(a)(6) of the Bankruptcy Code excepts from discharge any debt "for willful and malicious injury by the debtor to another entity or to the property of another entity."
In order to fall within the exception of section 523(a)(6), the injury to an entity or property must have been willful and malicious. An injury to an entity or property may be a malicious injury within this provision if it was wrongful and without just cause or excessive, even in the absence of personal hatred, spite or ill-will. The word "willful" means "deliberate or intentional", a deliberate and intentional act which necessarily leads to injury. Therefore, a wrongful act done intentionally, which necessarily produces harm and is without just cause or excuse, may constitute a willful and malicious injury.
3 Collier on Bankruptcy ¶ 523.16 (15th ed. 1983).
Hines' act in striking Stansberry in the face was deliberate and intentional. It was wrongful and without just cause. It therefore *556 constitutes a willful and malicious injury within the meaning of § 523(a)(6) of the Bankruptcy Code.
The debt having been held nondischargeable, the remaining issues shall be determined in a bench trial[1] commencing April 16, 1984, at 9:00 a.m.
NOTES
[1] After the trial on the dischargeability issue on January 24, 1984, the debtor, on February 1, 1984, moved for a jury trial on the "issue of liability and damages." The motion was denied March 5, 1984, as not having been filed within the prescribed time, Bankruptcy Rule 9015(b). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553075/ | 37 B.R. 195 (1984)
In re Earl JONES and Queen Esther Jones, Debtors.
MISSOURI DIVISION OF FAMILY SERVICES, Plaintiff,
v.
Queen Esther JONES, Defendant.
Bankruptcy No. 83-01426(2), Adv. No. 83-0583(2).
United States Bankruptcy Court, E.D. Missouri, E.D.
March 7, 1984.
Leonora S. Long, St. Louis, Mo., for plaintiff.
Bernard J. Cuddihee, St. Louis, Mo., for defendant.
*196 MEMORANDUM OPINION
DAVID P. McDONALD, Bankruptcy Judge.
Plaintiff seeks a determination that certain indebtedness owed it by Defendant is non-dischargeable under 11 U.S.C. § 523(a)(2)(B). Plaintiff, whose statutory duty it is to disburse and administer payments under the Missouri Aid to Families with Dependent Children (AFDC) program alleges that Defendant applied for and received such payments for March, April, and May of 1979 while intentionally concealing the fact that she was fully employed and receiving income from her employment during these months. Such receipt of income would have rendered her ineligible for these benefits, totaling $497.00, under Missouri law.
From the evidence adduced at trial, the Court makes the following findings of fact:
1. On January 3, 1979, the Defendant was laid off from her employment at R.L. Polk & Co. She returned to work on January 28, 1979, but quit on February 6, 1979.
2. On February 9, 1979, Defendant made a written application to the Missouri Division of Family Services for AFDC benefits. On the application, she stated that she was unemployed and that her only income was Social Security benefits in the amount of $129.40 per month. As part of this application, Defendant signed a document acknowledging that the provisions of section 205.967, R.S.Mo., had been explained to her. A portion of this statute requires AFDC recipients to report changes in income or employment status to the Division of Family Services.
3. On February 12, 1979, Defendant commenced working for the local U.S. Army Records Center on a full time basis.
4. On February 26, 1979, a Social Worker from the Missouri Division of Family Services conducted a home visit with Defendant. During the course of the visit, Defendant completed an application for benefits under the Food Stamp program. Again, no mention was made of her employment and the income therefrom.
5. Defendant's application for AFDC benefits was approved in the amount of $166 per month. Defendant first received these benefits in March, 1979.
6. Defendant's employment with the local U.S. Army Records Center continued until May 17, 1979. She received AFDC benefits during the months of April and May, 1979, as well as thereafter.
7. Subsequently, employees of the Missouri Division of Family Services discovered the fact of Defendant's employment at the U.S. Army Records Center. They confronted Defendant with the knowledge and, on June 9, 1982, she executed a non-interest bearing promissory note in the amount of $497.00.
8. Defendant made no payments on this indebtedness. On August 18, 1983, she filed a petition for relief under Chapter 7 of the Bankruptcy Code.
CONCLUSIONS
Plaintiff contends that Defendant's written statement of unemployment, first made on February 9, 1979, was materially false, was made with the intent to deceive its employees in their decision whether to grant Defendant AFDC benefits, and that its employees reasonably relied on this written statement in granting such benefits to Defendant. Thus, Plaintiff asserts that the reimbursement Defendant owes it for payments to Defendant for March, April, and May of 1979 are non-dischargeable under 11 U.S.C. § 523(a)(2)(B).
After considering the evidence and assessing the credibility of the Defendant, the Court agrees that the indebtedness owed by Defendant is non-dischargeable under 11 U.S.C. § 523(a)(2)(B).
(a) Did Defendant Make A Materially False Statement?
On February 9, 1979, Defendant on her written application for AFDC benefits stated that she was unemployed. On February 12, 1979, Defendant started a full-time job at the local U.S. Army Records Center. While Defendant's statement was true on *197 February 9, 1979, it became incorrect a mere three (3) days later. No evidence was introduced on whether Defendant knew of her subsequent employment on February 9, 1979.
However, under the circumstances, Defendant had a statutory duty under section 205.967(3), R.S.Mo., to advise Plaintiff of any changes in her employment status. Defendant was aware of this obligation when she made her application on February 9, 1979.
Defendant testified that she twice notified the social worker of her new employment. However, the absence of any record of this notification in Plaintiff's file on the Defendant and the fact that Defendant made no mention of employment during the February 26, 1979, home visit contradict her on this point.
Accordingly, the Court finds and concludes that, under these circumstances, Defendant made a materially false statement to Plaintiff by her failure to subsequently notify Plaintiff of her employment. The Oregon Bankruptcy Court reached a similar result in In re Berry, 3 B.R. 430 (Bkrtcy.D. Or.1980).
(b) Intent to Deceive
Under the circumstances, the Court can only infer that Defendant intended to deceive Plaintiff on her employment status. It would have been obvious to Defendant that her AFDC benefits would cease upon her disclosure of her employment to Plaintiff. No other motive can be reasonably inferred under these circumstances.
(c) Reasonable Reliance
Plaintiff's sole basis for determining Defendant's eligibility for AFDC benefits was her written statement of her financial condition. Plaintiff had no other reasonable means of verifying Defendant's unemployment. Hence, the Court finds that Plaintiff reasonably relied on Defendant's written statement of employment.
For these reasons, the Court concludes that the $497.00 owed Plaintiff is non-dischargeable under 11 U.S.C. § 523(a)(2)(B). The fact that Plaintiff accepted a promissory note from Defendant for the debt does not, as Defendant has conceded, alter this result.
A separate order consistent with this opinion will be entered this date. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553076/ | 37 B.R. 171 (1984)
In re James N. BOWEN, Debtor.
GEORGIA HIGHER EDUCATION ASSISTANCE CORPORATION for itself and as assignee of Pineland State Bank, Plaintiff,
v.
James N. BOWEN, Defendant.
BOARD OF REGENTS OF the UNIVERSITY SYSTEM OF GEORGIA on behalf of Middle College of Georgia, Plaintiff,
v.
James N. BOWEN, Defendant.
Bankruptcy No. 83-170-BK-J-GP, Adv. Nos. 83-322, 83-323.
United States Bankruptcy Court, M.D. Florida, Jacksonville Division.
February 23, 1984.
*172 Mark S. Marani, Atlanta, Ga., for plaintiffs.
Lawrence C. Rolfe, Jacksonville, Fla., for defendant.
MEMORANDUM OPINION
GEORGE L. PROCTOR, Bankruptcy Judge.
The issue with which the Court deals in this opinion presents itself identically in two adversary cases in which the named defendant is James Bowen, i.e. In re James N. and Donna C. Bowen, 83-170-BK-J-GP, adversary 83-322, Georgia Higher Education Assistance Corporation v. James N. Bowen and adversary 83-323, Board of Regents of the University of Georgia v. James N. Bowen. Because the issues raised in each of the cases are identical with the issues raised in the other, we will in effect merge the cases for purposes of this discussion.
This matter came before the Court for trial on January 11, 1984, and for final argument by telephone conference on January 24, 1984. The overriding issue is whether James Bowen's federally insured student loans are dischargeable under the terms of § 523(a)(8) of the Bankruptcy Code. In order to make a finding of dischargeability, the Court would be required to find the existence of "undue hardship" within the meaning of that section. The evidence indicated that the defendant incurred the subject indebtedness while he studied for his M.D. degree at the University of Georgia. Repayment was routinely deferred while Dr. Bowen pursued a post-graduate residency program in general surgery. The evidence further indicated that the defendant dropped out of the residency program because a debilitating thyroid condition left him unable to perform the duties required of him. Dr. Bowen has been unemployed continuously since that time, and he and his wife and their child have been exclusively dependent on her salary as a registered nurse. The record indicates that he has been, and is currently, not able to make payments on the subject notes as they become due. According to the defendant and to the testimony of his treating physician, a thyroid specialist, his recuperative course has been complicated and has included relapses. The strong inference of the testimony of both the debtor and his physician was that, barring an unlikely but not impossible further relapse, the defendant should be physically able to function as a physician by August 1984.
The defendant testified that he has not yet taken his medical licensing test but that he expects to take and pass the test in June of 1984, and for the results to be reported within approximately six weeks. Upon completion of his licensing requirements, he will be qualified to work as an emergency room physician. The defendant testified that he intends to seek such employment as soon as he is officially qualified and that he expects that such a position will be available to him at an approximate annual salary of $70,000. Thus, the record as a whole supports a finding that Dr. Bowen can reasonably expect to begin payment of his loan without undue, or indeed any, hardship within the year.
The reported cases are explicit to the effect that the basis of hardship must be long-term in order for the Court to find dischargeability under § 523(a)(8), See, e.g. In re Johnson, 5 B.C.D. 532 (Bkrtcy.E.D.Pa. 1979), In re Bagley, 4 B.R. 248, 6 B.C.D. 404, 2 C.B.C.2d 251 (Bkrtcy.D.Ariz., 1980), inter alia, in which it is held that in determining the existence of undue hardship, the court *173 must look to the debtor's future prospects, as well as his current situation. The facts simply cannot support a finding of dischargeability.
The question remains, however, whether it is within the proper exercise of the equitable powers of this Court to set forth a payment schedule which takes into account the defendant's temporary severe difficulties. While the literal language of the statute does not create such leeway, several bankruptcy courts faced with the same question have concluded that the "either/or" result suggested by the statute is unnecessarily harsh in many less-than-clearcut cases. Several courts have concluded that it is appropriate, and within the policy of the statute, to enter a judgment which holds the educational loan debt to be non-dischargeable, but restructures repayment of the indebtedness in such a way as to take into account severe but non-permanent difficulties experienced by a debtor. Several published cases authorize just such a holding by a bankruptcy judge. See, In re Hemmen, 7 B.R. 63 (Bkrtcy.S.D.Ala. 1980); In re Brown, 18 B.R. 219 (Bkrtcy.D. Kan.1982); In re Archie, 7 B.R. 715 (Bkrtcy. E.D.Va.1980); In re Littell, 6 B.R. 85 (Bkrtcy.D.Or.1980).
Accordingly, we will treat the defendant's indebtedness as follows: The principal and scheduled interest on indebtedness to both plaintiffs shall be adjudged non-dischargeable. Not included in the judgment of non-dischargeability is additional interest which has accrued in the form of late charges. The debt to the Board of Regents is thus found to be $375; the payment schedule set out in the judgment will call for payment of $300 on September 1, 1984, and the balance to be due on October 1, 1984. The judgment in favor of Georgia Higher Education Assistance Corporation shall be for $14,600, to be paid in monthly installments of $316.00 each, beginning November 1, 1984.
The defendant requests that the Court retain jurisdiction over this matter to supervise the defendant's future earning capability and further reschedule his obligation if his earning capacity fails to meet present expectations. This we decline to do; indefinite involvement in the defendant's affairs following his discharge appears inappropriate and unwarranted.
An Order in accordance with this Opinion has been entered this day. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553074/ | 37 B.R. 934 (1983)
Joanne Mitchell WOLFE, Appellant,
v.
Charles William EBERT and Shirley Logston Ebert, Appellees.
Civ. A. No. 83-575-15.
United States District Court, D. South Carolina, Columbia Division.
December 22, 1983.
*935 HAMILTON, District Judge.
This case is presented to the court by way of appeal from an order of the U.S. Bankruptcy Court for the District of South Carolina (hereinafter "Bankruptcy Court"). Jurisdiction is based upon 28 U.S.C. § 1334 (1976). The appellant, Joanne Mitchell Wolfe, excepts to the January 25, 1983, order of the Bankruptcy Court denying her claim for interest and attorneys' fees on an indebtedness. The Bankruptcy Court denied the claim upon the ground that the underlying transaction was usurious. The appellant contends that the debtors are estopped to claim usury as a defense to her claim.
On April 15, 1980, the S.L. Ebert School, Inc., executed a promissory note to Halmark School, Inc., and the appellant, Joanne Mitchell [now Joanne Mitchell Wolfe] for the purchase of the business of Halmark School, Inc. The appellee, Shirley Logston Ebert, was president and sole shareholder of the S.L. Ebert School, Inc., and personally guaranteed the indebtedness.[1] The note, drawn by the attorney for the appellees, provided for the payment of Seventy-one Thousand ($71,000.00) Dollars in monthly installments at an interest rate of twelve (12%) percent per annum.
There being no payments made upon this note, the appellant brought a collection action in the Court of Common Pleas for Lexington County and obtained a judgment in the amount of Sixty-five Thousand ($65,000.00) Dollars as principal. The state court retained jurisdiction to rule on the availability of a recovery of interest and attorneys' fees. Prior to this determination, the appellees filed a joint wage-earner petition in bankruptcy pursuant to Chapter 13 of the Bankruptcy Code, 11 U.S.C. §§1301-1330 (1982).
On December 13, 1981, the appellant filed a proof of claim for Sixty-five Thousand ($65,000.00) Dollars representing the judgment recovered on the aforementioned note. The appellant also asserted a claim for Eleven Thousand Seven Hundred ($11,700.00) Dollars in interest and Seven Thousand Five Hundred ($7,500.00) Dollars in attorneys' fees[2] accrued from the date of the note to October 15, 1981. The debtors-in-possession objected to the portion of the claim representing attorneys' fees and interest upon the ground that the underlying note was usurious. A hearing was conducted on June 28, 1982, before the Honorable J. Bratton Davis, United States Bankruptcy *936 Judge for the District of South Carolina. By an order filed January 25, 1983, Judge Davis held that the underlying note was usurious and therefore the appellant could recover only the principal amount of the debt. S.C.Code Ann. §§ 34-31-30 to -50 (Law.Co-op.1976). The Bankruptcy Court rejected the appellant's contention that the debtor was estopped from pleading usury as a defense to the claim.
Since the S.L. Ebert School, Inc., was the primary obligor on the note, this court must analyze the transaction and determine if it could raise the defense of usury. The appellees, as guarantors, may only assert usury as a defense to the same extent as the principal debtor. 91 C.J.S. Usury § 132(b) (1955). If the note was usurious as to the S.L. Ebert School, Inc., then the appellees may avail themselves of the defense. Id. However, if the defense of usury is denied to the corporate debtor, the guarantors of the corporate debt may not assert the defense. Id. at § 132(d).
"The generally accepted definition of `usury' is `the taking of more for the use of money than is allowed by law.'" Barringer v. Jefferson Standard Life Insurance Co., 9 F. Supp. 493, 495 (D.S.C.1935). The maximum interest allowed by law at the time this note was executed was ten (10%) percent per annum. S.C.Code Ann. § 34-31-30 (Law.Co-op.1976)[3] provided, inter alia, "that in the case of loans evidenced by written contracts in which the amount advanced exceeds fifty thousand dollars, but not more than one hundred thousand dollars, a rate of interest not exceeding ten percent may be charged. . . ." S.C.Code Ann. § 34-31-50 provided that "[a]ny person who shall . . . contract to receive as interest any greater amount than is provided for in § 34-31-30 shall forfeit all interest and the costs of the action and such portion of the original debt as shall be due shall be recovered without interest or costs." Since the parties herein contracted for interest at a rate of twelve (12%) percent per annum, there can be no doubt that the note was usurious as defined in the Barringer case. The appellant seeks to escape the penalties of S.C.Code Ann. § 34-31-50 by asserting, on various grounds, that the debtors are estopped from asserting usury as a defense.
The appellant's first contention is that the debtors may not claim usury since the attorney for the debtors drafted the note. However, this argument fails to consider the bankruptcy implications involved in a Chapter 13 proceeding. The bankruptcy court is charged with protecting the interests of all creditors of the bankrupt. At the time this matter was heard in the Bankruptcy Court,[4] Bankruptcy Rule 13-301 provided:
(a) A proof of claim shall consist of a statement in writing setting forth a creditor's claim and setting forth facts showing that such claim is free from any charge forbidden by applicable law. . . .
(b) A proof of claim executed and filed in accordance with these rules shall constitute prima facie evidence of the validity and amount of the claim, but any creditor may be required by the court to establish, by affidavit or in such other manner as the court may require before allowance of the claim, that it is free from any charge forbidden by applicable law.
(emphasis added). By the enactment of this rule, Congress intended, inter alia, to disallow claims which were usurious under state law. See Advisory Committee's Note to Bankruptcy Rule 13-301. This obligation of the court benefits all creditors, and as such, may be asserted by the court independently *937 of the debtors' right to assert usury as a defense.
An excellent discussion of the effect of this provision is contained in In re Perry, 272 F. Supp. 73 (S.D.Me.1967). In examining Section 656(b) of the Bankruptcy Act of 1898 (the predecessor to Rule 13-301 of the Bankruptcy Code of 1978), the court noted that the rule was devised to accomplish two primary objectives: "(1) of imposing on the court the responsibility of assuring that claims are free from usury; and, (2) of eliminating the need of establishing the existence of usury by shifting the burden to the lender to prove the absence of usury." 272 F.Supp. at 91 (emphasis in original). The court held:
In invoking Section 656(b), the court is simply fulfilling a mandatory obligation which must be honored irrespectively and independently of the debtor's right to contest the validity of the loan. It makes no difference whether the debtor disputes the claim or not. Cf., Parkfield Trust, Ltd. v. Dent, (1931) 2 K.B. 579; (1931) All E.R. 720. It is indeed immaterial even if the debtor insists that the claim is valid and should be paid under the plan. Cf., Mills Conduit Investment, Ltd. v. Leslie, (1932) 1 K.B. 233; (1932) All E.R. 442. Regardless of anything the debtor or others may or may not do about the allowance of the claim, therefore, nothing can relieve the court of its duty to demand proof from the lender that its claim is free from usury.
Thus, the lender, in proving the absence of usury, deals exclusively with the court in response to a demand for information. Its burden, accordingly, cannot be sustained by an allegation, legal conclusion or by a presentation of evidence merely sufficient to constitute a prima facie case as if it were dealing only with the debtor or some other interested individual. . . .
Id. (emphasis added).
In examining the appellant's claim, the Bankruptcy Court correctly disallowed any claim for interest and attorneys' fees. The appellant could not sustain her burden of proving that the claim was not tainted by usury, as the note provided for an interest charge in excess of the maximum allowed by law. The Bankruptcy Court properly held:
The claimant contends that the debtors are estopped from asserting usury as a defense because the interest rate was a term of the note set by the debtors' attorney. This contention overlooks the bankruptcy considerations involved. Allowance of the usurious claim for interest and attorney's fees would reduce the funds available for payment of other claims against the debtors, thereby favoring the claimant at the expense of the debtors' other creditors. Bankruptcy Rule 13-301 disallows usurious claims for the protection of both the debtors and all creditors. The debtors are laypersons; it would be unfair and inequitable to penalize the debtors, and, more so, the debtors' creditors, by allowing the claimant to unlawfully collect usurious interest. Since the usury defense is in the best interest of all creditors, the debtors are not estopped from asserting the defense of usury.
Order at p. 3.
Turning to the argument as advanced by the appellant, it is clear that the South Carolina courts would refuse to apply equitable estoppel in the present case.
The elements of an equitable estoppel as related to the party claiming the estoppel are (1) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance upon the conduct of the party estopped; and (3) the action based thereon was of such a character as to change prejudicially the position of the party claiming the estoppel.
Murphy v. Hagan, 275 S.C. 334, 338-39, 271 S.E.2d 311, 313 (1980). In the present case, the appellant was represented by counsel in the negotiations concerning the sale of Halmark School, Inc., and the execution of the note. Where a creditor is represented by counsel, he "cannot say that he lacked the *938 means to ascertain the requirements of South Carolina usury law." Id.
Being penal in nature, the South Carolina usury statutes must be strictly construed and a case must clearly fall within its terms. Jones v. Godwin, 187 S.C. 510, 198 S.E. 36 (1938). However, where a creditor clearly contracts to receive interest in excess of the legal maximum rate, the South Carolina courts have not hesitated to apply the usury laws.
The usury statute was enacted to prevent the charging of more interest than that fixed therein. It should be construed to suppress the evil it sought to prevent. The courts . . . have uniformly held that no subterfuge or evasion will be permitted to defeat the purpose of the law. It matters not that there is no intent to do an unlawful act. Here it is the spirit of the law that must be enforced.
Schlosburg v. Bluestein, 150 S.C. 311, 322, 148 S.E. 60, 64 (1929) (emphasis added). The South Carolina legislature clearly intended to disallow the rate of interest contracted for by the appellant, and to allow the appellant a claim for interest and attorneys' fees would defeat this intent.
The appellant also asserts that the appellees are estopped from asserting usury upon a misrepresentation theory. The appellant contends that, by contracting for interest in excess of the legal maximum, the S.L. Ebert School, Inc., impliedly represented that it was exempt from the usury laws under S.C.Code Ann. § 34-31-80. This section provided, inter alia:
No corporation lawfully organized to engage in business for a profit and having an issued capital stock of forty thousand dollars or more par value, or stated value in the case of capital stock without par value, shall by way of defense or otherwise avail itself of the [usury provisions].
This estoppel argument must fail for the same reason that the appellant's first estoppel argument fails. Clearly, the appellant had a means of ascertaining knowledge of the capitalization of the S.L. Ebert School, Inc., as a mere inquiry would have revealed the true facts. S.C.Code Ann. § 34-31-80. There was no valid basis for the appellant to rely upon the note as an implied representation of exemption from the usury laws. The mere entry into a financial transaction by a corporation does not in itself constitute an implied representation as to the value of its issued capital stock.
The appellant cites Maners v. Lexington County Savings and Loan Association, 275 S.C. 31, 267 S.E.2d 422 (1980), for the proposition that a corporation which enters into an otherwise usurious transaction impliedly represents that it is exempt from the usury laws. Maners does not stand for such a proposition. A careful reading of that case reveals that the South Carolina Supreme Court did not consider the issue of implied misrepresentation as to the corporation's capitalization.
The lower court found that the corporation had in fact misrepresented its capitalization, but the record did not reveal whether the misrepresentation was express or implied. The court held that "[a]lthough the record is not clear, no exception was taken to the lower court's finding that [the corporation] misrepresented to the respondent that it was a corporation capitalized at over Forty Thousand ($40,000) Dollars." Id. at 35, 267 S.E.2d at 423-24. In Maners the issue of misrepresentation was not challenged on appeal.
The appellant finally contends that a debtor cannot claim usury unless he pays the entire amount of the principal debt. The case to which the appellant cites, however, does not stand for this proposition. The cited case merely stands for the proposition that the debtor remains liable for the entire amount of the original loan, even where the defense of usury is proven. Jones v. Kilgore, 19 S.C.Eq. (2 Rich.Eq.) 63 (1845). The appellees undoubtedly remain liable for the principal amount of the note, and this claim was accorded its proper priority in the appellees' wage-earner plan. There is no requirement, however, that a debtor must pay the entire principal of a *939 loan as a condition precedent to asserting usury.
Based upon the foregoing reasoning and cited authorities, the court is of the opinion that the Bankruptcy Court properly excluded the appellant's claim for interest and attorneys' fees. The judgment of the Bankruptcy Court is therefore affirmed.
NOTES
[1] The memorandum and order of Judge Davis found that "The debtors [Charles William Ebert and Shirley Logston Ebert] are guarantors on the note."
[2] The order of the Bankruptcy Court indicated that the amount of the claimed interest and attorneys' fees totaled Seven Thousand Five Hundred ($7,500.00) Dollars. The amended proof of claim, submitted with the record for this appeal, indicates that the amount noted in the body of this order was the actual amount of the claim.
[3] Subsequent to the execution of this note, the usury provisions of the South Carolina Code of Laws were repealed. At the time of its execution, however, the usury provisions were still in effect. This order will, therefore, cite the specific sections of the S.C.Code as they existed at the time of the execution of the note, April 15, 1980.
[4] A new set of bankruptcy rules went into effect on August 1, 1983. This court, however, must analyze this case in light of the bankruptcy rules in effect at the time of the hearing before the Bankruptcy Court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553035/ | 423 B.R. 771 (2010)
In re BILL HEARD ENTERPRISES, INC., et al., Debtors.
BMW Financial Services, NA, LLC, d/b/a Alphera Financial Services, Plaintiff,
Columbus Bank & Trust Company, Intervening Plaintiff
v.
Bill Heard Enterprises, Inc., Landmark Chevrolet, Ltd., Bill Heard Chevrolet, Inc.Huntsville, Bill Heard Chevrolet Company, Tom Jumper Chevrolet, Inc., Bill Heard Chevrolet CorporationOrlando, Bill Heard Chevrolet at Town Center, LLC, Bill Heard Chevrolet, Inc.Buford, Bill Heard Chevrolet Corp.NW Las Vegas, Bill Heard Chevrolet Corp.Las Vegas, Bill Heard Chevrolet, Inc.Collierville, Defendants.
Bankruptcy No. 08-83029-JAC11. Adversary No. 09-80117.
United States Bankruptcy Court, N.D. Alabama, Northern Division.
February 5, 2010.
*775 James H. Rollins, Holland & Knight LLP, Atlanta, GA, for Plaintiff.
*776 Jeffrey W. Kelley, Troutman Sanders LLP, Atlanta, GA, for Intervening Plaintiff.
Derek F. Meek, Marc P. Solomon, Robert B. Rubin, Burr & Forman, Birmingham, AL, for Defendants.
MEMORANDUM OPINION
JACK CADDELL, Bankruptcy Judge.
This matter having come before the Court on cross motions for summary judgment filed by William F. Perkins in his capacity as the Liquidating Trustee for the Debtors (the "Liquidating Trustee's Motion"), BMW Financial Services NA, LLC, d/b/a Alphera Financial Services, Plaintiff in the above styled adversary proceeding ("the Alphera Motion"), and Columbus Bank & Trust Company, Intervenor Plaintiff (the "CB & T Motion," together with the Liquidating Trustee Motion and the Alphera Motion, the "Motions") in the above styled adversary proceeding (the "Adversary"); and it appearing that this Court has jurisdiction over the Motions pursuant to 28 U.S.C. §§ 157 and 1334 and venue is proper in this district pursuant to 28 U.S.C. § 1409; and this is a core proceeding pursuant to 28 U.S.C. § 157(b); and this Court having determined that granting the Liquidating Trustee Motion, denial of the Alphera Motion and denial of the CB & T Motion are warranted; and it appearing that notice of the Motions has been given, and that no other or further notice need be given; and for sufficient cause shown, the Court makes the following findings of fact and conclusions of law:
FINDINGS OF FACT
1. On September 28, 2008 (the "Petition Date"), the Debtors filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code.[1]
2. Prior to the Petition Date, the Debtors owned and operated fourteen Chevrolet dealerships located in seven different states. The Debtors were in the business of operating automotive dealership franchises for the sale of new and used motor vehicles to consumer and commercial customers.
3. Pre-petition, BMW Financial Services NA, LLC, d/b/a Alphera Financial Services ("Alphera") provided floor plan financing to Debtors Bill Heard Chevrolet, Inc.Union City, Bill Heard Chevrolet, Inc.Plant City, and Bill Heard Chevrolet, Ltd. (the "Sugar Land Debtor") (collectively, the "Alphera Debtors") pursuant to a Master Inventory Financing Agreement and related agreements, dated on or about July 28, 2008 (the "Alphera Floorplan Agreements"). In connection with the Alphera Floorplan Financing, Alphera asserted a perfected security interest in virtually all of the non-real estate assets of the Alphera Debtors, including all of the motor vehicle and parts inventories, equipment, *777 fixtures, accounts, general intangibles and other personal property owned by each of the Alphera Debtors and all proceeds thereof. The total amount of the Alphera Floorplan Financing, including debtor-in-possession financing provided by Alphera to the Alphera Debtors, exceeded $59 million.
4. GMAC LLC ("GMAC") provided floor plan financing to the defendants in this adversary proceeding ("the GMAC Debtors") pursuant to (1) a Second Master Amended and Restated Cross-Default, Cross-Collateralization, and Cross-Guaranty Agreement, effective as of August 21, 2007, (ii) a Master Inventory Financing and Security Agreement, dated August 21, 2007, and (iii) a Master General Security Agreement, effective February 18, 2004 (the "GMAC Floorplan Agreements"). The total GMAC Financing, including debtor-in-possession financing provided by GMAC to the GMAC Debtors, exceeded $165 million.
5. GMAC obtained a perfected first-priority security interest in virtually all non-real estate assets of the GMAC Debtors, including all motor vehicle parts, inventories, equipment, fixtures, accounts, general intangibles and other personal property owned by each of the GMAC Floorplan Debtors and all proceeds thereof ("GMAC Collateral").
6. In addition, GMAC asserted a security interest in the motor vehicle and parts inventory, accounts and general intangibles of the Sugar Land Debtor (the "Contested Sugar Land Collateral") arising out of its relationship as floor plan lender to the Sugar Land Debtor from the 1980's through May 2007 and further claimed that its security interest had priority over the security interest of Alphera in the Contested Sugar Land Collateral because of a prior UCC-1 financing statement covering the Contested Sugar Land Collateral still of record with the Secretary of State of Texas.
7. On October 3, 2008, GMAC commenced an adversary proceeding styled GMAC LLC v. BMW Financial Services NA, LLC d/b/a Alphera Financial Services, et al., Adversary Proceeding No. 08-80152 (the "Sugar Land Proceeding"), by filing a complaint seeking to determine the validity, priority and extent of interests in the Contested Sugar Land Collateral. Alphera answered the complaint asserting various affirmative defenses and counterclaims, but not asserting an affirmative defense or counterclaim seeking marshaling.
8. On October 29, 2008, the Court entered the Consent Order Granting Expedited Motion of Alphera Financial Services For Relief from the Automatic Stay pursuant to 11 U.S.C. § 362(d)(1) in the Debtors' main bankruptcy case, (the "Stay Relief Order"). [Docket No. 333] Following the Stay Relief Order, the Contested Sugar Land Collateral was liquidated and its proceeds were placed in escrow.
9. Although Alphera disputed GMAC's claim to the Contested Sugar Land Collateral, in order to protect its asserted interest in the collateral and minimize the expense of further litigation, Alphera entered into a settlement with GMAC in May of 2009, (the "Sugar Land Settlement"). Pursuant to the Sugar Land Settlement, GMAC agreed to release any and all claims to the Contested Sugar Land Collateral in consideration of a distribution of $3,320,743.00 (the "Sugar Land Settlement Proceeds"), amounting to roughly 15% of the total net proceeds of the Contested Sugar Land Collateral.
10. On May 18, 2009, GMAC and Alphera filed the Consent Motion of Alphera Financial Services and GMAC, LLC for an Order Authorizing and Directing Final Disbursements of Escrowed Funds. [Docket No. 1783]
*778 11. On May 18, 2009, the Court entered that Order on Consent Motion of Alphera Financial Services and GMAC LLC Authorizing and Directing Final Disbursement of Escrowed Funds [Docket No. 1785] authorizing, among other things, disbursement of the Sugar Land Settlement Proceeds to GMAC from the total net proceeds of the Contested Sugar Land Collateral pursuant to the terms of the Sugar Land Settlement.
12. Following the Sugar Land Settlement, GMAC continued to liquidate its collateral by, among other things, commencing litigations and executing on collateral or the proceeds of such collateral.
13. On or about October 24, 2009, GMAC, General Motors Company ("New GM"), Motors Liquidation Company (f/k/a General Motors Corporation ("Old GM")), the Debtors and the Committee entered into a settlement agreement (the "GM/GMAC Global Settlement") and moved for court approval of such settlement. [Docket No. 2670] The GM/GMAC Global Settlement had the effect of fully and finally resolving GMAC's claims against the Debtors by, among other things, waiving any other claims GMAC may have against the Debtors. On November 4, 2009, the Court entered the Order Approving Compromise and Settlement Agreement [Docket No. 2708], which approved the GM/GMAC Global Settlement.
14. Alphera claims that it has a deficiency of approximately $1.2 to $1.3 million and attributes its deficiency to the payment of the Sugar Land Settlement Proceeds to GMAC pursuant to the terms of the Sugar Land Settlement. Because GMAC's has waived any other claims in the Debtors' cases, Alphera takes the position that it may now be equitably subrogated to GMAC and can assert GMAC's collateral position against the GMAC Debtors. If successful, Alphera's claim would reduce the recovery to unsecured creditors in these cases by the full amount of its deficiency claim.
15. CB & T, who has intervened as plaintiff against the Liquidating Trustee in this Adversary, asserts equitable subrogation through three standby letters of credit (the "LOCs"), each issued in the face amount of $2,000,000.00, on behalf of Bill Heard Chevrolet, Inc.Plant City, Bill Heard Chevrolet, Inc.Union City and the Sugar Land Debtor, none of which are included in the GMAC Debtors. Alphera was the beneficiary under each of these letters of credit. Since the Petition Date, Alphera has drawn down on all of the LOCs. Upon presentation by Alphera on October 2, 2008, CB & T paid to Alphera the entire face amount of $2,000,000.00 on each of the three letters of credit for a total of $6,000.000.00. CB & T now asserts that it is subrogated to GMAC by virtue of being subrogated to Alphera. If successful, CB & T would also reduce the recovery to creditors in these cases by the full amount of its deficiency claim up to the cap of $3,320,744.00. CB & T's claims to equitable subrogation in this Adversary are wholly dependent upon the success of Alphera's claims to equitable subrogation. Whether Alphera obtained CB & T's consent to the GMAC settlement or consulted with CB & T prior to the settlement giving rise to Alphera's subrogation claim is not in evidence. CB & T's deficiency claim in this case is in excess of $10 million.
16. The parties entered into a pre-trial order for briefing on the Motions and, on January 11, 2010, the Court held a hearing on the Motions.
CONCLUSIONS OF LAW
A. Standard for Grant of a Motion for Summary Judgment
17. The standard for summary judgment is set forth in Rule 56 of the Federal Rules of Civil Procedure, made applicable *779 to this Adversary by Rules 7056 and 9014 of the Federal Rules of Bankruptcy Procedure.
18. Summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986); Hyman v. Nationwide Mut. Fire Ins. Co., 304 F.3d 1179 (11th Cir.2002).
19. The evidence and all factual inferences therefrom must be viewed in the light most favorable to the party opposing the motion and all reasonable doubts about the facts must be resolved in favor of the non-moving party. Andreini & Co. v. Pony Express Delivery Servs., Inc. (In re Pony Express Delivery Servs., Inc.), 440 F.3d 1296, 1300 (11th Cir.2006); see also Loren v. Sasser, 309 F.3d 1296, 1301-02 (11th Cir.2002); Hyman, 304 F.3d 1179 (citing Burton v. City of Belle Glade, 178 F.3d 1175, 1187 (11th Cir.1999)). However, "[w]hen a motion for summary judgment has been made properly, the nonmoving party may not rely solely on the pleadings, but ... must show that there are specific facts demonstrating that there is a genuine issue for trial." Brown v. Crawford, 906 F.2d 667, 670 (11th Cir. 1990). The nonmovant "`has the burden of making a showing sufficient to establish the existence of each essential element to the nonmovant's case on which he will bear the burden of proof at trial.'" United States v. 2204 Barbara Lane, 960 F.2d 126, 129 (11th Cir.1992)(citation omitted). Where multiple parties seek summary judgment, the Court must consider each motion independently and apply the applicable standards to each motion to determine whether summary judgment is appropriate under the individual motions. Smith v. Fendley (In re Allied Sign Co., Inc.), 280 B.R. 694 (Bankr.S.D.Ala.2001).
20. All parties are in agreement that there are no genuine issues of material fact remaining for trial. The Court finds that summary judgment is due to be entered in favor of the Liquidating Trustee and denied with respect to Alphera and CB & T, because neither Alphera nor CB & T, by extension, can satisfy the standard for equitable subrogation under any applicable law. The Liquidating Trustee is entitled to judgment as a matter of law in its favor and dismissal of the claims asserted by each of Alphera and CB & T.
B. Equitable Subrogation Generally
21. Equitable subrogation, a type of subrogation,[2] "is a legal fiction `whereby' an obligation, extinguished by a payment made by a third person, is treated as still subsisting for the benefit of this third person, so that by means of it one creditor is substituted to the rights, remedies, and securities of another." Murray v. The Cadle Co., 257 S.W.3d 291, 299 (Tex.App.2008) (citing First Nat'l Bank v. Ackerman, 70 Tex. 315, 8 S.W. 45, 47 (1888)).
22. The purpose of equitable subrogation is to obtain substantial justice, to prevent wrongdoing or unjust enrichment, and to accomplish what is just and fair as between the parties. Acuity v. McGhee Eng'g, Inc., 297 S.W.3d 718 (Tenn.Ct.App. Dec.15, 2008); Bankers Trust Co. v. Collins, 124 S.W.3d 576, 580 (Tenn.Ct.App. *780 2003); AT&T Technologies, Inc. v. Reid, 109 Nev. 592, 855 P.2d 533, 535 (1993) (citing Laffranchini v. Clark, 39 Nev. 48, 153 P. 250, 252 (1915)).
23. Subrogation, generally, is defined as the "substitution of another person in the place of a creditor, so that the person in whose favor it is exercised succeeds to the rights of the creditor in relation to the debt." Castleman Constr. Co. v. Pennington, 222 Tenn. 82, 432 S.W.2d 669, 674 (1968); Bonfiglio v. Hoey (In re Hoey), 364 B.R. 427, 432 (Bankr.S.D.Fla. 2005) (citing Fortenberry v. Mandell, 271 So. 2d 170 (Fla. 4th DCA 1972)) ("Equitable subrogation arises by operation of law where one pays a debt owed by another under circumstances in which he is in equity entitled to the security held by the creditor whom he has paid"); In re Hubbard, 89 B.R. 920, 922 (Bankr.N.D.Ala. 1988) (noting that "[n]umerous Alabama cases have invoked the doctrine of subrogation where one advancing money to discharge a prior lien on property is entitled to be subrogated to the rights of such prior lien as against intervening lienors"). In its most basic form, subrogation means that party A is substituted for party B, and party A can then raise the rights party B had against party C. Blankenship, 5 S.W.3d at 650; see also Dade County Sch. Bd. v. Radio Station WQBA, 731 So. 2d 638, 646 (Fla.1999) ("As a result of equitable subrogation, the party discharging the debt stands in the shoes of the person whose claims have been discharged and thus succeeds to the right and priorities of the original creditor.").
C. State Common Law Applies
24. An initial question concerns what law should apply. When applying the doctrine of equitable subrogation, bankruptcy courts typically look to the law of the forum state. See In re CUA Autofinder, LLC, 387 B.R. 906, 912 (Bankr. M.D.Ga.2008) (citing Hamada v. Far East Nat'l Bank (In re Hamada), 291 F.3d 645, 651 (9th Cir.2002)); Celotex Corp. v. Allstate Ins. Co. (In re Celotex Corp.), 289 B.R. 460 (Bankr.M.D.Fla.2003) (applying Florida law). However, due to the locations of the various dealerships of the GMAC Debtors and their various places of incorporation, the potential candidates could arguably be the law of Alabama, Florida, Georgia, Nevada, Tennessee or Texas. Nevertheless, the standards of equitable subrogation in the various jurisdictions are exceedingly similar and the parties to this proceeding agree that none of the differences in the law of these jurisdictions would alter the outcome of this case.
25. The Court will therefore emphasize equitable subrogation as it is expressed under Alabama law, the forum state, but will also cite to the law of other jurisdictions. Courts have formulated the elements of equitable subrogation in a variety of ways.[3] Under Alabama law, the elements of equitable subrogation are expressed as follows: "(1) the money is advanced at the instance of the debtor in order to extinguish a prior [e]ncumbrance; (2) the money is used for that purpose with *781 the just expectation on the part of the lender for obtaining security of equal dignity with the prior [e]ncumbrance; (3) the whole debt must be paid before subrogation can be enforced; (4) the lender must be ignorant of ... intervening lien[s]; and (5) the intervening lienor[s] must not be burdened or embarrassed." Ex Parte Lawson, 6 So. 3d 7, 12 (Ala.2008) (quoting Collateral Inv. Co. v. Pilgrim, 421 So. 2d 1274 (Ala.Civ.App.1982)); See also Foster v. Porter Bridge Loan Co., Inc., 2009 WL 2105484 (Ala.2009)(citing the elements listed in Lawson for equitable subrogation); and AOD Fed. Credit Union v. State Farm Fire and Cas. Co., 931 So. 2d 31 (Ala.Civ.App.2005)(explaining that a party's entitlement to equitable subrogation depends on that party's satisfaction of the five elements listed above). While failure to prove any one element is detrimental to a claim for equitable subrogation, the Court finds that Alphera has failed to satisfy four of the five required elements.
1. Alphera Did Not Advance Money At the Instance of the GMAC Debtors to Pay A Prior Encumbrance
26. The first element of equitable subrogation under Alabama law is that "the money is advanced at the instance of the debtor in order to extinguish a prior [e]ncumbrance." Lawson, 6 So.3d at 12. This element has two components: (a) advancement of money to pay a debt, and (b) advancement at the instance of a debtor. Neither component is satisfied under the facts of this case.
a. Alphera Did Not Pay A Third Party Debt
27. The Liquidating Trustee contends that Alphera did not "advance money to pay a debt." While Alphera insists that the Sugar Land Settlement constituted a payment by Alphera to GMAC that was used to discharge part of the GMAC debt which was a liability of the GMAC Debtors, the Liquidating Trustee argues that Alphera made no "payment" because its property rights in the Contested Sugar Land proceeds were subject to dispute. Neither party was able to find any case directly on point. The Court finds that Alphera did not "pay" a debt of the GMAC Debtors by virtue of the settlement. A party seeking equitable subrogation must show that it paid the debt of a third party. Bonfiglio v. Hoey (In re *782 Hoey), 364 B.R. 427, 432 (Bankr.S.D.Fla. 2005) (citing North v. Albee, 155 Fla. 515, 20 So. 2d 682, 683 (1945)). Equitable subrogation applies when "one person, not acting voluntarily, has paid a debt for which another was primarily liable and which in equity should have been paid by the latter." Frymire Eng'g Co. v. Jomar Int., Ltd., 259 S.W.3d 140, 142 (Tex.2008) (quoting Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d 765, 774 (Tex.2007)); see also Lawson, 6 So.3d at 12 (citing Collateral Inv., 421 So. 2d 1274 (listing elements of equitable subrogation, the first being that "the money is advanced at the instance of the debtor in order to extinguish a prior [e]ncumbrance.")). The undisputed facts in this case do not show that Alphera has met this essential element of equitable subrogation.
28. After being named by GMAC in the Sugar Land Proceeding, Alphera denied GMAC's position that GMAC's security interest had priority over Alphera's on the Contested Sugar Land Collateral, raised numerous affirmative defenses, and asserted various counterclaims against GMAC. Through the terms of the Stay Relief Order, Alphera liquidated the Sugar Land Debtor's assets, following which the proceeds from the sale of the Contested Sugar Land Collateral were placed in an escrow account pending resolution of disputes concerning entitlement to the proceeds. The Sugar Land Proceeding was commenced in order to litigate issues concerning the validity, priority and extent of each of GMAC's and Alphera's liens in the proceeds. Prior to any trial on the issues, Alphera and GMAC voluntarily reached a resolution of the Sugar Land Proceeding and split the proceeds in the escrow account. The parties embodied their resolution in an agreement approved by this Court. However, nothing in the agreement provided that the portion of the proceeds going to GMAC was unequivocally the property of Alphera, nor did the agreement provide for Alphera to assert any purported rights in collateral, and nothing in the associated motion to approve the Sugar Land Settlement gave such rights.
29. It is not the law of this case that the Contested Sugar Land Collateral, let alone the amount retained by GMAC in the Sugar Land Settlement, was the undisputed property of Alphera. While Alphera may have asserted a perfected security interest in all assets of the Sugar Land Debtor, GMAC challenged the extent and priority of the security interest in the Contested Sugar Land Collateral in the Sugar Land Proceeding. If GMAC's position was correct, any security interest Alphera could have claimed in the Contested Sugar Land Collateral, especially the portion of the proceeds that ultimately went to GMAC, would have been completely worthless.
30. The Sugar Land Settlement prevented this Court from making any kind of ruling on the merits of Alphera's claims in the Sugar Land Proceeding. The Sugar Land Settlement documents included no admissions as to the proper party in interest of the Contested Sugar Land Collateral, and this Court made no determinations of each party's respective rights in the Contested Sugar Land Collateral. Absent a clear conclusion on the proper party to the funds received by GMAC, this Court cannot make a finding that GMAC's portion of the proceeds under the Sugar Land Settlement were properly Alphera's all along. Alphera may view itself as having "paid" $3.32 million to GMAC, but such a position assumes facts that lack any basis. What is undisputed is that Alphera and GMAC agreed to divide contested escrow proceeds. What is undisputed is that no determination was ever made that the funds that went to GMAC were the property *783 of Alphera or subject to any valuable property interest of Alphera.
31. The Sugar Land Settlement did not involve an advancement of Alphera's property.[4] The Sugar Land Settlement was an agreement to divide the proceeds of the Contested Sugar Land Collateral in order to resolve a dispute. It allowed Alphera to receive a portion of the escrowed funds despite GMAC's claim to the entirety. Alphera did not extend funds, but merely agreed to a division at the risk of losing all claim to the proceeds to GMAC's asserted lien. Therefore, Alphera cannot claim to have paid a debt of the GMAC Debtors because it cannot be said to have advanced its own property to pay the debt of the GMAC Debtors. Alphera made a business decision to agree that GMAC would receive a portion of the funds in order to minimize litigation expense and avoid the risk of losing all claim to the Contested Sugar Land Proceeds. That decision does not give Alphera rights that it has never proved existed prior to execution of the Sugar Land Settlement.
32. Alphera has failed to cite a single authority for the proposition that a division of contested proceeds between secured creditors affords a settling party the right to equitable subrogation. Under the facts and circumstances of these cases, the lack of a single supporting case underscores the impropriety of applying the doctrine of equitable subrogation here.
33. A settlement agreement to divide disputed escrowed funds is not equivalent to payment of a debt of a third party and thus does not qualify for the first element of equitable subrogation. The doctrine of equitable subrogation is designed to protect parties who have actually given up property of value in order to discharge an obligation so that another party is not unjustly enriched at the parties' expense. If the property given up was of no value or the value was subject to dispute, the party incurred no ascertainable expense. Such failure is fatal to Alphera's equitable subrogation claim.
34. Because Alphera has not paid any third party debt through the Sugar Land Settlement, there is no basis for Alphera to claim equitable subrogation. On this basis alone, summary judgment against Alphera, and, by extension CB & T, may be granted.
b. Alphera Was a Volunteer
35. The words "at the instance of the debtor" in the first element of equitable subrogation as expressed under Alabama law embody the doctrine that a "volunteer" is not entitled to equitable subrogation. See Lawson, 6 So.3d at 12. Alphera was a volunteer and stranger with respect to the GMAC Debtors' indebtedness to GMAC. Alphera's volunteer or stranger status an independent reason why it fails to satisfy the first element of equitable subrogation.
36. The doctrine of subrogation is not applied for the mere stranger or volunteer who has paid the debt of another. Bankers Trust Co. v. Hardy, 281 Ga. *784 561, 640 S.E.2d 18, 21 (2007) (Bankers Trust was a mere volunteer with respect to Hardy's interest because it failed to obtain his legal consent to the transaction.). A "volunteer, stranger, or intermeddler is `one who thrusts himself into a situation on his own initiative, and not one who becomes a party to a transaction upon the urgent petition of a person who is vitally interested, and whose rights would be sacrificed did he not respond to the importunate appeal.'" Mort, 86 F.3d at 894 (citing Laffranchini, 39 Nev. 48, 153 P. 250). A "volunteer" is one "who has paid the debt of another, without any assignment or agreement for subrogation, without being under any legal obligation to make payment, and without being compelled to do so for the preservation of any rights or property of his own." Murray, 257 S.W.3d at 300 (citations omitted); Hubble v. Dyer Nursing Home, 188 S.W.3d 525, 538 (Tenn.2006) ("A `volunteer' or `stranger' within this Rule is one who has no obligation or liability to pay the debt and has no interest in the property affected by the debt."). "[I]n the absence of legal compulsion to pay the debt of another, voluntary payment of another's debt, absent fraud, accident, mistake, or by contract with the payee, does not entitle one to subrogation." Id. at 538 (citing Walker v. Walker, 138 Tenn. 679, 200 S.W. 825 (1918)); see also Scott v. Land, Mortgage, Inv. & Agency Co., 127 Ala. 161, 28 So. 709, 710 (1899) (lender is treated as a mere volunteer in a "case of ordinary borrowing").
37. The GMAC Debtors neither requested that Alphera settle with GMAC nor otherwise embroil themselves in the negotiations (in fact none of the GMAC Debtors were even named as parties in the Sugar Land Proceeding). The agreement to split the proceeds of the Contested Sugar Land Collateral was an agreement made exclusively between GMAC and Alphera. It was even asserted that "[n]o claimants other than Alphera and GMAC [hold] or claim any interest in or to the Inventory Proceeds, and the amounts owed by the Sugar Land Debtor to Alphera and GMAC far exceed the amount of the Inventory Proceeds." [See Consent Motion at ¶ 5]. The GMAC Debtors merely gave their consent to the settlement.
38. Alphera argues that the volunteer or "instance of the debtor" requirement is not applicable here because it was acting to protect an interest. See, e.g., Groom v. Fed. Land Bank of New Orleans, 240 Ala. 335, 199 So. 237, 239 (1940) (indicating that "instance of the debtor" requirement is inapplicable to "one not under necessity to act to protect his own interest or rights"). However, this argument in unavailing. The Sugar Land Settlement had nothing to do with any property interest of Alphera in the GMAC Debtors. In the context of equitable subrogation a "`volunteer' or `stranger' is one who has no obligation or liability to pay the debt and has no interest on the property affected by the debt." Hubble v. Dyer Nursing Home, 188 S.W.3d 525, 538 (Tenn.2006) (emphasis added). The Sugar Land Settlement concerned Alphera's contested security interest in the property of the Sugar Land Debtor. It had nothing to do with any interest Alphera had in the property of the GMAC Debtors affected by the GMAC debt.
39. Alphera entered into the settlement voluntarily and willinglynot at the urging of the GMAC Debtors. The Debtors had no role in the Sugar Land Settlement other than giving the consent necessary for approval by the Bankruptcy Court. See AOD Fed. Credit Union v. State Farm Fire & Cas. Co., 931 So. 2d 31, 39-40 (Ala.Civ.App.2005) (applying Alabama law and concluding that a required element of equitable subrogation was lacking when credit union "did not `advance' money" on the debtor's behalf in order to *785 pay off indebtedness); Pilgrim, 421 So.2d at 1276 (denying equitable subrogation where court was unable to find "in the present case that the money was advanced at the instance of the debtor to satisfy the prior [e]ncumbrance."). Lack of contract privity obligating the payment to GMAC defeats any purported "palpable interest" Alphera attempts to assert in the GMAC Debtors.
40. The voluntary nature of the settlement is an additional reason why equitable subrogation is inappropriate here. Alphera had the right to litigate the Sugar Land Proceeding, but voluntarily chose to resolve it. One court has observed that "one who has ample opportunity to have his rights litigated and can utilize all processes of law to protect himself against an unwarranted demand, but chooses to compromise the claim, is not entitled to a right of recovery over by way of subrogation or indemnity, since payment thus made is not compulsory." Willard v. Interpool, Ltd., 758 A.2d 684 (Pa.Sup.Ct.2000) (citing Tugboat Indian Co. v. A/S Ivarans Rederi, 334 Pa. 15, 5 A.2d 153 (1939)). Alphera's was not compelled to settle with GMAC, but made a voluntary business decision to settle. Accordingly, Alphera cannot overcome its volunteer status.
2. The Distribution of Proceeds from the Contested Sugar Land Collateral Was Not Used For The Purpose of Satisfying the GMAC Debtors' Indebtedness to GMAC. Alphera Had No Expectation of Obtaining Security of Equal Dignity With the Prior Encumbrance.
41. Equitable subrogation "manifestly require[s] more than the mere appropriation" of funds to the payment of a debt. Pilgrim, 421 So.2d at 1276. The money must be used "in order to extinguish a prior [e]ncumbrance ... with the just expectation on the part of the [party advancing funds] of obtaining a valid security." Id. The division of the Contested Sugar Land Proceeds under the Sugar Land Settlement was not accomplished for the purpose of extinguishing a prior encumbrance on the property of the GMAC Debtors. It was a settlement of a dispute between GMAC and Alphera concerning the priority of liens in the Contested Sugar Land Collateral. The Sugar Land Settlement agreement is void of any reference to Alphera's right to receive security of equal dignity with GMAC in the property of the GMAC Debtors in the event GMAC were to find itself oversecured. See Docket No. 1783. Instead, it provides that "the amounts owed by the Sugar Land Debtor to Alphera and GMAC far exceed the amount of the Inventory Proceeds." Id. at ¶ 5.
42. Alphera's failure to make any disclosure in the motion for approval of the Sugar Land Settlement that it was seeking equal dignity with GMAC's collateral position in the GMAC Debtors is evidence that the parties had no such intent.[5]See, e.g., AOD Fed. Credit Union, 931 So.2d at 40 (finding element of equitable subrogation lacking where credit union "could have had no reasonable expectation that it would receive" an interest in the real property that had been occupied by the debtors); Brunson, 145 So. at 157 (finding that "complainant did not take its mortgage on block 4 embraced in Guaranty Association's *786 mortgage, to which subrogation is here sought, but only on that portion of block 4 included in the Brunson mortgage, thus negating any intention of the parties that complainant should be treated as an equitable assignee of the Guaranty Association mortgage").
43. GMAC did not name any Debtors in the Sugar Land Proceeding, and none ever sought to intervene. Furthermore, neither the settlement agreement nor the underlying Consent Order indicated that Alphera was paying funds to GMAC with the intent of "standing in" GMAC's stead or to provide Alphera with a recovery against the GMAC Debtors' estates in the event that GMAC found itself oversecured. Therefore, Alphera also fails to satisfy the second element of equitable subrogation.
3. GMAC Has No Further Claims Against the Debtors' Estates
44. GMAC has no further claims against the Debtors' estates and is now satisfied as a result, among other things, of the GM/GMAC Settlement. Although Alphera can arguably meet this one element of equitable subrogation, it fails to satisfy all four others.
4. Alphera was not ignorant of intervening interests in the GMAC Debtors.
45. To warrant equitable subrogation, the requesting party must demonstrate that it was ignorant of intervening liens and interests of the collateral. Whitson v. Metropolitan Life Ins. Co., 225 Ala. 262, 142 So. 564, 567-68 (1932). Alphera was aware of intervening interests in the GMAC Debtors due to the presence of these actions in Bankruptcy Court. The Bankruptcy Code has specific priorities for creditors. The extent of a secured claim is governed by section 506(a) of the Bankruptcy Code, which provides that a secured creditor's deficiency claim is treated as an unsecured claim. Additionally, section 544(a) of the Bankruptcy Code grants the Debtors the rights of lien creditors as of the Petition Date.
46. Alphera has been an active participant in the Debtors' cases since their inception and was fully aware that the rights of other secured creditors in the collateral of the GMAC Debtors, as well as the rights of unsecured creditors, were subject to the jurisdiction of the Bankruptcy Court when it entered into the Sugar Land Settlement. In short, Alphera had actual knowledge of the rights of third parties when it entered into the Sugar Land Settlement.
47. An analogous situation arose in Ex Parte Lawson, 6 So. 3d 7 (Ala.2008), a case in which purchase money mortgagees were attempting to assert equitable subrogation to defeat the rights of materialmen. The Supreme Court of Alabama held that "the constructive notice supplied by [Alabama's] materialman's lien statute defeats the lenders' equitable subrogation claim." 6 So.3d at 14. The court noted that "[t]he materialman's lien statutes `are an expression of legislative intent that should stay the hand of equity in this situation. If we held otherwise, we would violate the equitable maxim that equity follows the law.'" Id. (citation omitted).
48. Recognizing the risks of litigation and understanding that the full portion of the Contested Sugar Land Collateral was at risk, Alphera made a calculated decision to enter into a settlement with GMAC. This decision was made in the context of a bankruptcy case where the rights of creditors, secured and unsecured, are set forth in the Bankruptcy Code. Allowing Alphera to now assert a claim to the extent of its overall deficiency to the detriment of unsecured creditors, the interests of whom Alphera was fully aware, would seriously *787 interfere with the rights of these creditors and go against equity.
5. Equitable Subrogation Would Unfairly Burden the Rights of Creditors In These Cases
49. Had Alphera prevailed on the other elements discussed above, the Court would nevertheless find that equitable subrogation is not appropriate under the circumstances of this case because Alphera cannot satisfy the final element of equitable subrogation under Alabama law which concerns prejudice to third parties. Subrogation should not be allowed where the exercise of such right will substantially prejudice the legal or equitable rights of another party. Byers v. McGuire Props., Inc., 285 Ga. 530, 679 S.E.2d 1, 7 (2009); Dade County Sch. Bd. v. Radio Station WQBA, 731 So. 2d 638, 646 (Fla.1999); Fed. Land Bank of New Orleans v. Henderson, Black & Merrill Co., 253 Ala. 54, 42 So. 2d 829, 836 (1949) (stating that in applying equitable subrogation, "[o]ne will not be permitted to secure an advantage to the prejudice of another"); Laffranchini, 153 P. at 252 (equitable subrogation is not "allowed so as to do injury to the rights of others"); Lawyers Title Ins. Corp. v. United Am. Bank, 21 F. Supp. 2d 785, 792 (W.D.Tenn.1998). Application of equitable subrogation under the facts of this case would be unfairly prejudicial to unsecured creditors. Alphera's proposed relief will burden the rights of unsecured creditors by interposing new secured creditors (Alphera & CB & T) above their rights and would also dilute their recovery.
50. The overall fairness of applying equitable subrogation should be assessed with a view to the purpose of the doctrine, which is to prevent unjust enrichment. If this goal is not accomplished, the doctrine should not be applied. See, e.g., Casstevens v. Smith, 269 S.W.3d 222, 228 (Tex.App.2008) (refusing to apply equitable subrogation where it would not prevent unjust enrichment). The rights asserted by Alphera also must be weighed against the competing equities in this case and viewed from a perspective of what Alphera as the entity seeking subrogation could have done differently in this case. "`Equity rules are not absolute and competing equities must be considered in any subrogation-restitution situation. The subrogee must have clear equity and subrogation is defeated by countervailing equities.'" In re Hutchins, 400 B.R. 403, 414 (Bankr. D.Vt.2009) (quoting Norfolk & Dedham Fire Ins. Co. v. Aetna Casualty & Surety Co., 132 Vt. 341, 318 A.2d 659, 661-62 (1974)).
51. The equities do not favor Alphera, who had the opportunity to continue litigating with GMAC over its rights in the Contested Sugar Land Collateral, but who chose to settle. Alphera assumed the risk that GMAC would be oversecured when it entered into the Sugar Land Settlement. Having closed the chapter on the Sugar Land Proceeding, the fortuity of GMAC's agreement to have no further claims against the Debtors' estates and the existence of unencumbered assets should not be converted into a renewed opportunity for Alphera to relitigate the Sugar Land Proceeding or lay claim to additional funds. Alphera was in the best position to avoid the consequences it complains of now. It was not forced to or compelled to settle with GMAC in the Sugar Land Proceeding. Alphera's reference to the "equitable doctrine of marshaling" is especially telling. One must question why Alphera failed to raise a marshaling claim against GMAC in the Sugar Land Proceeding. Alphera did not do so, but instead chose to settle with GMAC. It would be contrary to equity to subjugate the rights of the estates for Alphera's own failure to pursue *788 potential counterclaims against GMAC. See Equicredit Corp. v. Simms (In re Simms), 300 B.R. 877 (Bankr.S.D.W.Va.2003)(finding that equitable subrogation will not be sued to benefit parties who were in the best position to protect themselves).
52. Alphera's attempt to assert equitable subrogation rights on the basis of a final settlement order is an impermissible attempt to relitigate issues that should have been raised in the Sugar Land Proceeding. The creditors in this case have relied on the finality of the Sugar Land Settlement, and only those rights explicitly set forth therein should be recognized, especially where such rights would impair the rights of creditors in these cases. The creditors could not have foreseen that Alphera would attempt to reclaim the funds it agreed that GMAC would share from the Contested Sugar Land Proceeds. Therefore, granting equitable subrogation to Alphera would result in substantial prejudice to the creditors of these estates and result in all the efforts taken to date to be solely for the benefit of the secured creditors.
53. The application of equitable subrogation in this case would create additional secured creditors with claims to collateral of the GMAC Debtors whose claims would then diminish the recovery to unsecured creditors of the Debtors' estates. Nothing in Alphera and GMAC's pleadings filed concerning the Sugar Land Settlement specifically asserted that Alphera should be granted equal dignity with GMAC's liens merely by agreeing to split the proceeds of the Contested Sugar Land Collateral. Accordingly, neither the Debtors, the Committee, nor any of the secured creditors anticipated that Alphera would attempt to assert rights of equitable subrogation pursuant to its settlement. The Sugar Land Settlement was a resolution of the Sugar Land Proceeding and approved by an order of this Court. Any attempt to impair the rights of third parties through the operation of the Sugar Land Settlement should have been explicitly reserved or asserted in the motion and order approving the Sugar Land Settlement, and the other creditors would have been given the opportunity to object and in all likelihood would have done so.
54. There is no unjust enrichment in this case for equitable subrogation to prevent or remedy. The instant dispute is unlike the typical equitable subrogation scenario wherein one party satisfies a debt of a debtor by payment to a secured creditor, and properly deserves to step into the shoes of the secured creditor whose claim it satisfied because the debtor would be unjustly enriched by retaining the benefits of the debt satisfaction. This is not a case where an individual debtor has gained a windfall at the expense of another party's payment of that debtor's debt. As explained earlier, Alphera made no "payment" here because its property rights in the Contested Sugar Land Proceeds were subject to dispute. Moreover, the excess collateral here is not going to the Debtors themselves, but going to the distribution to creditors of the Debtors' estates, many of whom are former employees of the Debtors who have waited over a year for any distribution. Under these facts, the Court cannot find that the fortuity of excess collateral after satisfaction of the GMAC indebtedness is unjust enrichment to the Debtors' estates. Therefore, equitable subrogation should not be applied.
55. Alphera's retrospective analysis of the Sugar Land Settlement fails to justify the significant dilution of the claims of creditors which would result from application of equitable subrogation in favor of Alphera. In a bankruptcy case, the rights and equities of multiple parties are at *789 stake and to stretch the doctrine of equitable subrogation to the lengths desired by Alphera would work a gross inequity against other creditors of the Debtors' estates, both secured and unsecured. See Farmer v. LaSalle Bank (In re Morgan), 291 B.R. 795, (Bankr.E.D.Tenn.2003) (refusing to allow creditor to use the doctrine of equitable subrogation to avoid effects of its failure to note lien on vehicle certificate of title where the interests of unsecured creditors were implicated). The relief requested by Alphera is beyond the purview of equity. As a matter of law, Alphera has no entitlement to equitable subrogation. Summary judgment on the Complaint in favor of the Liquidating Trustee is thus appropriate.
CB & T is Not Entitled to Equitable Subrogation
56. CB & T, through the Intervenor Complaint, also seeks to be equitably subrogated to GMAC's liens in the GMAC Debtors to the extent Alphera is equitably subrogation therein. However, as established above, Alphera has no right to equitable subrogation against the GMAC Debtors. Accordingly, CB & T has no such right against the GMAC Debtors by virtue of the LOCs issued in favor of Alphera. Significantly, Alphera's debt is not paid in full, and, therefore, CB & T would have no right to assert subrogation. Moreover, it should be noted that the Debtors on whose behalf CB & T issued the LOCs are not included among the GMAC Debtors, the Defendants in this case. Thus, there is a disconnect between the parties for whom CB & T allegedly paid a debt and the parties against which it desires to assert subrogation rights. Finally, for the reasons explained above, granting subrogation to CB & T would work an injustice against the other creditors of these estates by granting it an unexpected security position where other parties had no anticipation that such rights would be asserted. Accordingly summary judgment should also be granted in favor of the Liquidating Trustee as to the claims in the Intervenor Complaint.
A separate order will be entered consistent with this opinion.
NOTES
[1] In addition to Bill Heard Enterprises, Inc., the Debtors include the following entities: (i) Bill Heard Chevrolet Company, (ii) Tom Jumper Chevrolet, Inc., (iii) Bill Heard Chevrolet, Inc.Huntsville, (iv) Landmark Chevrolet, Ltd., (v) Bill Heard Chevrolet, Ltd., (vi) Bill Heard Chevrolet Corporation Nashville, (vii) Bill Heard Chevrolet CorporationOrlando, (viii) Bill Heard Chevrolet, Inc.Union City, (ix) Bill Heard Chevrolet at Town Center, LLC, (x) Bill Heard Chevrolet, Inc. Collierville, (xi) Bill Heard Chevrolet, Inc. Scottsdale, (xii) Bill Heard Chevrolet, Inc. Plant City, (xiii) Bill Heard Chevrolet, Inc. Buford, (xiv) Bill Heard Chevrolet CorporationLas Vegas, (xv) Bill Heard Chevrolet CorporationN.W. Las Vegas, (xvi) Twentieth Century Land Corp., (xvii) Enterprise Aviation, Inc., (xviii) Century Land Corporation, (xix) Century Land CompanyTennessee, (xx) Bill Heard Management, LLC, (xxi) Landmark Vehicle Mgt., LLC, (xxii) Georgia Services Group, LLC, (xxiii) Columbus Transportation, LLC, and (xxiv) Airport Chevrolet, Inc. Airport Chevrolet, Inc. filed bankruptcy on October 12, 2008.
[2] Subrogation may arise by (1) contract, (2) statute, or (3) by application of principles of equity. Blankenship v. Estate of Bain, 5 S.W.3d 647, 650 (Tenn.1999). Only the latter, known as equitable subrogation, is implicated in this Adversary.
[3] Florida: "Equitable subrogation is generally appropriate where: (1) the subrogee made the payment to protect his or her own interest, (2) the subrogee did not act as a volunteer, (3) the subrogee was not primarily liable for the debt, (4) the subrogee paid off the entire debt, and (5) subrogation would not work any injustice to the rights of a third party." Dade County Sch. Bd., 731 So.2d at 646 (citations omitted); see also Fibreboard Corp. v. Celotex Corp. (In re Celotex Corp.), 472 F.3d 1318, 1323 (11th Cir.2006) (applying Florida law).
Georgia: "Equitable subrogation requires that a party show that (1) it paid a debt in order to protect its own interest, (2) it was not acting as a volunteer in making the payment, (3) it was not primarily liable for the debt, (4) the entire debt was paid, and (5) subrogation would not cause an injustice to the rights of third parties." In re CUA Autofinder, LLC, 387 B.R. 906, 913 (Bankr.M.D.Ga.2008) (citations omitted)
Nevada: "Equitable subrogation is generally appropriate where: (1) the subrogee made the payment to protect his or her own interest, (2) the subrogee did not act as a volunteer, (3) the subrogee was not primarily liable for the debt paid, (4) the subrogee paid off the entire encumbrance, and (5) subrogation would not work any injustice to the rights of the junior lienholder." Mort v. United States, 86 F.3d 890, 894 (9th Cir. 1996) (applying Nevada law, but looking to California law for guidance).
Tennessee: "Under equitable subrogation, the following requirements must be met: (1) payment must have been made by subrogee to protect own interest; (2) subrogee must not have acted as a volunteer; (3) debt paid must be one for which subrogee was not primarily liable; (4) entire debt must have been paid; (5) subrogation must not work any injustice to rights of others." In re Southwest Equipment Rental, Inc., 193 B.R. 276, 283-84 (E.D.Tenn. 1996) (citation omitted).
Texas: "The test [for equitable subrogation] is as follows: (1) the claimant must have made payment to protect his own interests; (2) the claimant must not have been a volunteer; (3) the payment must satisfy a debtor for which the claimant was not primarily liable; (4) the entire debt must have been paid; and (5) subrogation must not cause injustice to the rights of others." In re East Tex. Steel Facilities, Inc., 117 B.R. 235, 241 (Bankr.N.D.Tex. 1990) (citation omitted).
[4] Alphera claims section 162 of the Restatement (First) of Restitution ("Section 162") is supportive of its claims to equitable subrogation. Section 162 is inapplicable to the facts of this case. Section 162 provides as follows:
Where property of one person is used in discharging an obligation owed by another or a lien upon the property of another, under such circumstances that the other would be unjustly enriched by the retention of the benefit thus conferred, the former is entitled to be subrogated to the position of the oblige or lienholder. Restatement (First) of Restitution § 162 (emphasis added). As discussed supra, it has never been determined and cannot be determined that the portion of the proceeds that went to GMAC were the property of Alphera.
[5] The motion to approve the Sugar Land Settlement refers to a settlement agreement between GMAC and Alphera. That agreement was not filedthe only public document was the motion itself and a form of consent order that provides for a distribution to be made of the Contested Sugar Land Collateral in accordance with the agreement. See Docket No. 1785. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553092/ | 37 B.R. 731 (1984)
In re George and Dena DERVOS d/b/a Athenaikon Hellenic American School, a/k/a Athenaikon School, Debtors.
Ruth SWAN a/k/a Betty Mae Swan, Elizabeth Seimenis, Elaine Stryski and Lynn Jacobson, Plaintiffs,
v.
George DERVOS, Defendant.
Bankruptcy No. 82 B 11763, Adv. No. 83 A 1673.
United States Bankruptcy Court, N.D. Illinois, E.D.
January 25, 1984.
*732 John H. Redfield, Chicago, Ill., for debtor/defendant.
Meyer H. Weinstein, Chicago, Ill., for plaintiffs.
MEMORANDUM OPINION AND ORDER
EDWARD B. TOLES, Bankruptcy Judge.
This cause comes on to be heard upon the complaint to lift the automatic stay filed by RUTH SWAN, a/k/a BETTY MAE SWAN [Swan], ELIZABETH SEIMENIS [Seimenis], ELAINE STRYSKI [Stryski] and LYNN JACOBSON [Jacobson], represented by MEYER H. WEINSTEIN, in the bankruptcy proceeding of GEORGE and DENA DERVOS, d/b/a ATHENAIKON HELLENIC AMERICAN SCHOOL, a/k/a ATHENAIKON SCHOOL, [Debtors] represented by JOHN H. REDFIELD, the court having heard testimony and reviewed the evidence and memoranda of law submitted by the parties, and being fully advised in the premises,
The Court Finds:
1. The Debtors, as individual proprietors, were engaged in the operation of a school known as the ATHENAIKON HELLENIC AMERICAN SCHOOL and employed Swan, Seimenis, Stryski and Jacobson as teachers at the school for a period during 1982 prior to the commencement of the bankruptcy proceeding.
2. On September 3, 1982, Debtors filed a petition under Chapter 13 of the Bankruptcy Code. Objections to confirmation of the Chapter 13 Plan were filed by the FEDERAL DEPOSIT INSURANCE COMPANY, THE DES PLAINES BANK, and AMERICAN NATIONAL BANK, all creditors of the estate.
3. On March 2, 1983, the standing Chapter 13 Trustee, CRAIG PHELPS, filed a motion to dismiss this proceeding for unreasonable and prejudicial delay pursuant to Section 1307(c)(1) of the Bankruptcy Code.
4. On May 11, 1983, the case was converted to a proceeding under Chapter 7 of the Bankruptcy Code and July 7, 1983 was fixed as the last date for filing objections to discharge.
5. On June 8, 1983, RICHARD FOGEL was appointed Interim Trustee and the time was extended to September 30, 1983 for the Trustee to object to discharge of the Debtors.
6. On May 26, 1983, Plaintiffs Swan, Seimenis, Stryski and Jacobson filed a complaint to lift the automatic stay imposed by Section 362 of the Bankruptcy Code. Plaintiffs had recovered a judgment for restitution *733 in the case, People of the State of Illinois v. George Dervos, Case Number 82 MI 396282, Circuit Court of Cook County, Municipal Division, First District. The State prosecuted the Debtor, George Dervos, on behalf of Swan, Seimenis, Stryski, and Jacobson, who had been employed as teachers at the ATHENAIKON HELLENIC AMERICAN SCHOOL, for violations of the Wage Payment and Collection Act, Illinois Revised Statutes Chap. 48, ¶ 39M-14, violation of said Act constituting a Class C misdemeanor. A plea of guilty was entered by George Dervos and in the judgment order dated July 1, 1982, judgment of conviction was deferred and George Dervos was placed on supervision until December 9, 1982, and said supervision was conditioned upon performance of certain obligations set out in the judgment order which stated, in pertinent part:
b. With regard to ELIZABETH SEIMENIS, the Defendant is paying her $810.00, one-half of the amount on September 30, 1982 and the other half on December 9, 1982.
c. With regard to LYNN JACOBSON, the Defendant is paying her $1,500.00, one-half of the amount on September 30, 1982 and the other half on December 9, 1982.
d. With regard to ELAINE J. STRYSKI, the Defendant is paying her $925.00, one-half of the amount on September 30, 1982 and the other half on December 9, 1982.
e. With regard to BETTY MAE SWANN, the Defendant is paying her $925.00, one-half of the amount on September 30, 1982 and other half on December 9, 1982.
Debtors filed the petition in Bankruptcy on September 3, 1982, approximately three weeks prior to the date of the first payments to be made in compliance with the order of restitution quoted above, and to date, George Dervos has failed to comply with the order of restitution.
7. On September 27, 1983, a hearing was held on the complaint to lift the automatic stay and George Dervos testified that he had not made any payments to the Plaintiffs pursuant to the order of the Circuit Court, and MEYER WEINSTEIN, attorney for the Plaintiffs, represented to the Court that JUDGE WARD of the Circuit Court of Cook County had given him leave to act as co-counsel to the Assistant Attorney General in the State court proceeding.
The Court Concludes and Further Finds:
1. Section 362 provides for the imposition of an automatic stay, applicable to all entities, of any proceedings against a party who has petitioned for relief under the Bankruptcy Code. However, in drafting this section of the Code, Congress carved out several exceptions to the applicability of the automatic stay and the exceptions of particular importance and applicability in this proceeding are as follows:
Section 362 Automatic Stay
(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970 [15 U.S.C. 78eee(a)(3)], does not operate as a stay
(1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor;
(4) under subsection (a)(1) of this section, of the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental units, police or regulatory power; . . .
2. The applicability of the exception to the automatic stay provided by Section 362(b)(1) of the Code depends upon whether the proceeding against the debtor is criminal in nature. This analysis begins with an examination of the Statute the debtor violated. George Dervos entered a plea of guilty to a violation of the Wage Payment and Collection Act, Illinois Revised Statutes Ch. 48 ¶ 39M-14, which provides, in relevant part:
39M-14. Refusal to pay wages or final compensationPunishmentFailure to obey order to pay wagesPenalty
*734 § 14. Any employer or any agent of an employer, who, being able to pay wages, final compensation, or wage supplements and being under a duty to pay, wilfully refuses to pay as provided in this Act, or falsely denies the amount or validity thereof or that the same is due, with intent to secure for himself or other person any underpayment of such indebtedness or with intent to annoy, harass, oppress, hinder, delay, or defraud, the person to whom such indebtedness is due, upon conviction, is guilty of a Class C misdemeanor. Each day during which any violation of this Act continues shall constitute a separate and distinct offense.
A violation of this statute is a misdemeanor, punishable by the imposition of a penalty; therefore, a proceeding commenced under this statute is criminal in nature. Upon entering a plea of guilty to the charge of violating this statute, judgment of conviction of George Dervos was deferred and he was placed on supervision, said supervision conditioned upon George Dervos making restitution to the Plaintiffs Swan, Seimenis, Stryski and Jacobson. George Dervos did not comply, but instead Debtors filed a Chapter 13 proceeding under the Bankruptcy Code three weeks before performance under the judgment order was due.
A State court order for restitution may not be discharged in Bankruptcy because under Section 362(b)(1), an order for restitution is excepted from the automatic stay as part of a criminal proceeding against a debtor. In re Newton, 5 Colliers Bankruptcy Cases 1181 (N.D.Ga.1981).
3. Section 362(b)(4) of the Code excepts from the applicability of the automatic stay the commencement or continuation of actions brought by governmental units in the enforcement of their police or regulatory powers. This exception contemplates actions where a governmental unit has commenced an action against a debtor to prevent or stop a violation of fraud, environmental protection, consumer protection, public welfare, safety or similar police or regulatory laws. H.R. No. 95-595, 95th Cong., 1st Sess. 342-3 (1977); S.R. No. 95-989, 95th Cong., 2d. Sess. 51-2 (1978), U.S. Code Cong. & Admin.News 1978, p. 5787. George Dervos was sued by the People of the State of Illinois represented by the Assistant Attorney General. However, whether Section 362(b)(4) applies in any given situation depends upon the purpose of the governmental unit in suing the debtor. It must be determined that the proceeding was commenced in the interest of the public health, safety or welfare and that harm would result to the public if the government action was stayed. When a government unit has acted against the debtor for fraud and it is motivated to do so in order to punish the debtor's misconduct and prevent the repetition of the fraudulent behavior, then the governmental unit's actions represent an application of its police and regulatory powers. In re Thomassen, 5 Colliers Bankruptcy Cases 997, 9th Cir., B.A.P. 1981. See also, When is a Governmental Unit's Action to Enforce its Police or Regulatory Power Exempt from the Automatic Stay Provisions of Section 362?, 9 Fla. St.Law Rev. 369, 1981.
Actions by a governmental unit to enforce its police or regulatory powers are not aimed at gaining a pecuniary advantage but are aimed at protecting a broad public interest. In prosecuting George Dervos under the Illinois Wage Payment and Collection Act, the State sought to protect the interests of citizens who are non-governmental employees, to prevent a repetition of such fraudulent behavior, and to deter other non-governmental employers from committing such fraudulent behavior.
4. In the memorandum in opposition to the complaint to lift the automatic stay, Debtors contended that the Plaintiffs lacked standing to proceed against the Debtors under Section 362(b)(4) because they did not constitute a governmental unit. At the hearing held on the complaint on September 27, 1983, MEYER WEINSTEIN, attorney for the Plaintiffs, represented to the court that JUDGE WARD of the Circuit Court of Cook County, Municipal Division, had given him leave to act as co-counsel to the Assistant Attorney General in the *735 proceeding. Notwithstanding the foregoing, it is not fatal to a complaint brought under Section 362(b)(4) that it was not actually filed by a governmental unit. In re Briarcliff, 5 Colliers Bk. Cases 1455 (D.N.J. 1981).
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that the complaint to lift the automatic stay filed by RUTH SWAN a/k/a BETTY MAE SWAN, ELIZABETH SEIMENIS, ELAINE STRYSKI, and LYNN JACOBSON against GEORGE and DENA DERVOS d/b/a ATHENAIKON HELLENIC AMERICAN SCHOOL a/k/a ATHENAIKON SCHOOL, Debtors, be and the same is hereby granted, and the automatic stay is hereby lifted. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553096/ | 37 B.R. 597 (1984)
In re HEAVEN SENT LTD., a/k/a Heaven Sent Couriers, Debtor.
HEAVEN SENT LTD., a/k/a Heaven Sent Couriers, Plaintiff,
v.
COMMERCIAL UNION INSURANCE COMPANY, Defendant.
Bankruptcy No. 83-02389G, Adv. No. 84-0188G.
United States Bankruptcy Court, E.D. Pennsylvania.
March 19, 1984.
Jay G. Ochroch, John C. Halderman, Fox, Rothschild, O'Brien & Frankel, Philadelphia, Pa., for the debtor/plaintiff, Heaven Sent Ltd., a/k/a Heaven Sent Couriers.
Neal D. Colton, E. David Chanin, Dechert, Price & Rhoads, Philadelphia, Pa., Barnett Ovrut, Commercial Union Ins. Co., Boston, Mass., for defendant, Commercial Union Ins. Co.
OPINION
EMIL F. GOLDHABER, Bankruptcy Judge:
The issue in the case at bench is whether we can direct the defendant to renew certain insurance policies at their respective expirations, which policies the defendant had issued to the debtor and which policies are set to expire by their own terms in the immediate future. Because nothing in the Bankruptcy Code ("the Code") enlarges the rights of a debtor under a contract nor prevents the termination of a contract by its own terms, we will deny the debtor's *598 complaint and motion seeking to direct the defendant to renew the insurance policies in question on their expiration dates.
The facts of the instant case are as follows:[1] On June 8, 1983, Heaven Sent Ltd., a/k/a Heaven Sent Couriers ("the debtor"), an entity engaged in the business of sameday package delivery, filed a petition for reorganization under chapter 11 of the Code. Prior thereto, Commercial Union Insurance Company ("Commercial") had issued two insurance policies to the debtor an "automobile policy," which was due to expire at 12:01 A.M. on March 17, 1984, and a "workers' compensation policy," which is due to expire at 12:01 A.M. on April 9, 1984.
In February, 1984, Commercial sent to the debtor notices of non-renewal of both insurance policies. Consequently, on March 7, 1984, the debtor filed the instant complaint and motion for "preliminary mandatory and injunctive relief" seeking a court order directing Commercial to renew both of the aforesaid insurance policies. The expiration date of the automobile policy has been extended to 12:01 A.M. on March 20, 1984, by agreement of the parties.
The debtor contends that we have the equitable power to direct Commercial to renew the insurance policies, which are about to expire by their own terms, because said policies are essential to the debtor's reorganization. The debtor avers that unless Commercial is forced to renew the insurance policies, it (the debtor) will be unable to acquire replacement coverage, the "inevitable result" of which will be the cessation of the debtor's business and a liquidation of its assets.
We note at the outset that the debtor asks us to do more than enjoin the cancellation of insurance policiesit requests that we direct Commercial to renew the policies in question. The debtor directs our attention to the case of Matter of Amber Lingerie, 30 B.R. 736 (Bkrtcy.S.D.N.Y.1983), wherein the court, pursuant to section 105 of the Code,[2] enjoined an insurance company from cancelling an unexpired policy. The dispositive factor in that case, as well as in the other cases cited by the debtor, was that the policy in question had not expired. In the case sub judice, however, both policies will terminate by their own terms in the very near future. We are unaware of any provision in the Code which authorizes us to direct Commercial to renew the subject policies and thereby create new contractual rights between it and the debtor where none heretofore existed. As the court stated in White Motor Corp. v. Nashville White Truck, Inc., 5 B.R. 112, 117 (Bkrtcy.M.D.Tenn.1980):
"The Code does not, however, grant the debtor in bankruptcy greater rights and powers under the contract than he had outside of bankruptcy. The court finds nothing in the Code which enlarges the rights of [the debtor] under the contract or which prevents the termination of the contract on its own terms on [the expiration date]".[3]
Consequently, while we are fully cognizant of the debtor's plight and the ramifications of our decision, we conclude that the debtor's complaint and motion must be DENIED.
NOTES
[1] This opinion constitutes the findings of fact and conclusions of law required by Bankruptcy Rule 7052 (effective August 1, 1983).
[2] Section 105(a) of the Code provides that "[t]he bankruptcy court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title." 11 U.S.C. § 105(a) (1979).
[3] Accord: In re Advent Corp., 24 B.R. 612 (Bkrtcy.App. 1st Cir.1982); In re Douglas, 18 B.R. 813 (Bkrtcy.W.D.Tenn., W.D.1982). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553093/ | 37 B.R. 752 (1984)
In re Jack F. GADBERRY.
Bankruptcy No. 382-01631, Adv. No. 383-0057.
United States Bankruptcy Court, C.D. Illinois.
February 3, 1984.
Gregory Barnes, Thomas M. Wheeler, LTD., Attys. at Law, Decatur, Ill., for the bank.
Jon D. Robinson, Hull, Campbell & Robinson, Attys. at Law, Decatur, Ill., for debtor.
BASIL H. COUTRAKON, Bankruptcy Judge.
This action comes to the Court for a determination of the dischargeability of a debt due the Central National Bank of Mattoon (the bank) by debtor Jack F. Gadberry pursuant to 11 U.S.C. § 523(a)(2)(B). (Count II of Complaint)[*] The Court encounters Dischargeability Complaints on false financial statements practically every week, but now directly faced with a specific challenge to its philosophy concerning renewals, welcomes the opportunity to speak.
The Court makes the following findings of fact. In January, 1980 the East Central Illinois Dairy Queen Co., Inc. executed a note with the bank for $120,000. As the debtor was one of four partners to a 1975 Partnership Agreement formed to own and operate a Dairy Queen franchise, he was asked to and did provide a financial statement. Among the assets of the debtor was listed a beneficial interest in a land trust. All four partners guaranteed this loan.
Gadberry assigned the beneficial interest in the aforementioned land trust to his parents on May 30, 1980. The $120,000 note was renewed on March 2, 1981. Yet neither this note nor this renewal has been made an issue here.
In June, 1981 the bank considered itself insecure. Because East Central Illinois Dairy Queen Co., Inc. had ceased to own or operate a franchise there was a lack of collateral. To cure what it considered to be *753 a default, the bank then asked each partner/guarantor to pay one quarter of the debt within ten days. Defendant's Exhibit 3.
Nonetheless, no action on the default was taken by the bank until two and one-half months later when a renewal for each partner individually was issued in September, 1981. Gadberry alleges that he objected to this re-arrangement. It is at this time that the bank contends it sustained a loss by releasing the other partners from the debt as a whole and by the addition of new money to Gadberry's segment. This new money, $10,000, was Gadberry's share of the partners' debt to another bank which the Central National Bank paid. With accumulated interest, Gadberry then had a $43,000 note.
There is certain proof that at this time the debtor caused the bank to rely upon the no longer true January, 1980 financial statement by assigning the bank the beneficial interest in the land trust already assigned to his partners.
On the basis of the use of a statement that was false in September, 1981 the bank contends that the entire $43,000 debt is not dischargeable. The bank's argument principally relies upon First American National v. Carter, (In re Carter), 11 B.R. 992, 7 BCD 1046, 5 CBC 2d 357, BLD ¶ 68249 (Bkrtcy.M. D.Tn., 1981) as well as upon several other opinions which briefly cite Carter with approval. The Court hereby respectfully disagrees with the opinion expressed in Carter as being one that is increasingly cited by creditors for a new standard this Court fears may prevail.
Reliance to the creditor's detriment is the key. It is obvious that the $10,000 new money was extended in reliance upon a false financial statement and as such is not dischargeable. Household Finance Corp. v. Danns, 558 F.2d 114 (2d Cir.1977). To that extent the Court in Carter would be in accord.
This Court disagrees with Carter on its analysis of the dischargeability of the renewed portion of a debt. The analysis starts well enough with a discussion of the importance of reliance.
When renewals are forced on debtors, either as a result of finance company policy or state regulation, neither are the renewals obtained by the debtor nor do the creditors rely on the statements in the renewal process. Debtors only intend to obtain the additional cash advances, not the renewals, and the creditors only rely on the statements in making the advances, not in renewing the prior loans, which are renewed as a consequence of the decision to make the new loans. In such situations, the renewed portion of the debt does not come within the scope of § 17(a)(2) of the Act or § 523(a)(2)(B) of the new one. Carter, at 995.
Yet Carter goes on to conclude that in cases that allowed discharge of the renewed portion only actual reliance and not the lack of "fresh cash" was important. From there, "compensatory relief"reimbursement for just that new money upon which there was reliancegives way to "punitive relief"the entire debt as long as there was reliance, regardless of fresh cash.
Of course a Court must look specifically at how a debtor "obtained" his credit. There might not have been reliance by a creditor who asked the debtor to renew merely because of state law or bank policy. Yet equally obvious is that there must have been a detriment. Carter wrongfully jumped over the requirement of detriment to arrive at "punitive relief" by discussing only fresh cash. In Danns there happened to be fresh cash. There could be and have been any of a number of other possible detriments that a Bankruptcy Court might find to be a necessary element. Such is consistent with the legislative history of Section 523(a)(2)(B).
In many cases, a creditor is required by state law to refinance existing credit on which there has been no default. If the creditor does not forfeit remedies or otherwise rely to his detriment on a false financial statement with respect to existing credit, then an extension, renewal, or refinancing of such credit is nondischargeable *754 only to the extent of the new money advanced; on the other hand, if an existing loan is in default or the creditor otherwise reasonably relies to his detriment on a false financial statement with regard to an existing loan, then the entire debt is nondischargeable under section 523(a)(2)(B). This codifies the reasoning expressed by the second circuit in In re Danns, 558 F.2d 114 (2d Cir.1977). 124 Cong.Rec., at S17412 (emphasis supplied).
Such is also consistent with case law. Unfortunately the Court in Carter cited a prime example, but for its own proposition. "At least one court (the only one cited by Carter) has applied a punitive measure of relief under § 17(a)(2) when the debtor initiated the request for the renewal." Carter, at 996. That case, Municipal Credit Union v. Burton, (In re Burton), 4 BCD 569 (Bkrtcy.S.D.N.Y.1978), did not involve fresh cash but did involve something "otherwise" upon which the creditor could have relied. The creditor in Burton, by foregoing an opportunity to garnish after a default, sustained a detriment. It is for the proposition that a detriment can be something other than fresh cash that this Court cites Burton.
Further Carter was also incorrect in that there was no finding in Burton that the debtor initiated the renewal. As far as who contacted whom to renew on default, this Court on these facts does not feel the issue a relevant one.
Thus there is no authority to adopt a punitive approach, as would the bank have the Court here do. Carter's only example was not purely punitive, but merely an example of another type of detriment. Whether or not Congress wanted to maintain some last "punitive" vestige in Section 523(a)(2)(B), there still must be a detriment. How would the creditor have changed his position had he known the true state of the debtor's affairs?
Next, the Court is challenged to ascertain the detriment. Detriment, in the form of fresh cash, is easy to calculate. Yet detriment in the form of foregoing garnishment or releasing rights needs calculation in the form of how much, if anything, could have been realized upon garnishment.
In the case at bar, the $120,000 note was in default in June, 1981 (if not earlier, the Court suspects). The bank requested four individual debts within 10 days. Still, over two and one-half months expired before new notes were issued. Had the bank known the true status of the debtor's affairs in June, 1981, it might not have renewed the debt with Gadberry and might have, because of the default, instituted other legal action against him to collect. Nevertheless, the false statement did not come into play until September, 1981. It appears to the Court that, by that time, the bank was no longer interested in pursuing anyone for a default other than by way of individual notes. Further if, at that late date, the bank had received a true financial statement from Gadberry how could it have changed its position against him anyway. Gadberry had very few assets at that time.
The facts simply do not convince the Court that the bank would have or could have changed its position to its detriment by doing other than refinancing four individual loans.
Therefore, the Court holds that $10,000 owed by J.F. Gadberry to the Central National Bank of Mattoon not be discharged and the $33,000 owed by J.F. Gadberry to the Central National Bank of Mattoon be discharged in bankruptcy.
Mr. Robinson will draw an Order consistent with the Opinion herein expressed encompassing both Counts I and II of the Complaint, and send it to Mr. Barnes for approval as to form.
NOTES
[*] Count I of Complaint has been resolved in the debtor's favor, but the Court has yet to receive an Order on it from the debtor. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553101/ | 37 B.R. 766 (1984)
In re Calvin Scott SAUNDERS, Debtor.
THORP CREDIT INC. OF OHIO, Plaintiff,
v.
Calvin Scott SAUNDERS, Defendant.
Bankruptcy No. 82-0929, Related Case: 82-01506.
United States Bankruptcy Court, N.D. Ohio, W.D.
February 13, 1984.
*767 L. Mari Taoka, Toledo, Ohio, for plaintiff.
Samuel G. Bolotin, Toledo, Ohio, for defendant.
MEMORANDUM OPINION AND ORDER
RICHARD L. SPEER, Bankruptcy Judge.
This cause comes before this Court upon the Complaint to Determine Dischargeability filed by the Plaintiff-Creditor. At the conclusion of that proceeding the Court requested the parties to submit post-trial briefs and any additional evidence they wished the Court to consider. The Court has reviewed all the evidence and the arguments of counsel, both in the briefs and as presented at the Trial. For the following reasons the Court finds that the debt in question is dischargeable in part and nondischargeable in part.
FACTS
Sometime prior to the filing of his voluntary Chapter 7 Petition, the Debtor-Defendant received in the mail from the Plaintiff an offer for a guaranteed loan of up to Two Thousand and no/100 Dollars ($2,000.00). Although the exact terms of the offer are unclear, it appears as though the primary requirement for receiving such a loan was an annual income of at least Fifteen Thousand and no/100 Dollars ($15,000.00). Acting on that offer, the Debtor applied for a Two Thousand and no/100 Dollar ($2,000.00) loan on or about July 1, 1982. He offered as evidence of his income a pay stub from his employer which, if taken over the course of one (1) year, reflected an income in excess of the minimum amount. Satisfied that the Debtor met the minimum requirements, the Plaintiff issued the loan and in return took a security interest in all the Debtor's household goods.
On approximately the same day the loan was issued, the Debtor's father had a discussion with his son regarding the latter's financial difficulties and the possibility of seeking legal advice. Several days later the Debtor contacted counsel and discussed with him the possibility of filing bankruptcy. At the time counsel was first contacted the Two Thousand and no/100 Dollar ($2,000.00) check from the Plaintiff had not been cashed. After the Plaintiff decided that he would file a bankruptcy petition, counsel advised him that the check could be cashed and used to purchase exempt property, could be returned to the Plaintiff, or could be turned over to the Trustee that would be appointed. Selecting the first of the three options, the Debtor purchased approximately One Thousand and no/100 Dollars ($1,000.00) worth of clothing for himself and his dependent son. The balance of the loan was used to pay for a weekend trip to Reno, Nevada. When the Debtor returned from the trip on or about July 11, 1982, he had Four Hundred and no/100 Dollars ($400.00) in cash assets remaining. On July 15, 1982, the Debtor filed his petition with this Court.
*768 At Trial, the Debtor testified that he was gainfully employed and that part of his compensation was paid on a commission basis. He further testified that the pay stub offered to the Plaintiff did not represent a consistent rate of pay. That particular stub reflected his compensation from one of his more successful pay periods. He also indicated that he did not have an income in excess of Fifteen Thousand and no/100 Dollars ($15,000.00) for that particular year. The record also reflects that the trip to Reno may have cost more than Six Hundred and no/100 Dollars ($600.00), inasmuch as part of the cash which remained at the time the petition was filed was earned through the Debtor's employment. It should also be noted that the lien on the Debtor's household items has been avoided since the filing of the Petition.
LAW
Although it is not specifically set forth in the Complaint, the Plaintiff appears to base its allegations of nondischargeability on the provisions of 11 U.S.C. § 523(a) which states in pertinent part:
(a) A discharge under section 727, 1141, or 1328(b) of this title does not discharge an individual debtor from any debt
(2) for obtaining money, property, services, or an extension, renewal, or refinance of credit, by
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition; or
(B) use of a statement in writing
(i) that is materially false;
(ii) respecting the debtor's or an insider's financial condition;
(iii) on which the creditor to whom the debtor is liable for obtaining such money, property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive...
Specifically, the Plaintiff appears to allege that the Debtor's use of the pay stub without clarifying the information contained thereon was a fraudulent use of a written statement for the purpose of obtaining an extension of credit. The Complaint can also be interpreted to allege that the Debtor's contemplation of bankruptcy on or immediately subsequent to the taking of the loan was conduct sufficiently fraudulent so as to disqualify the debt from discharge. In light of the uncertainty as to which of the allegations is intended, both will be considered.
It is well established that a debtor may convert non-exempt property into exempt property on the eve of bankruptcy without necessarily committing a fraud upon his creditors. Matter of Mehrer, 2 B.R. 309 (Bkrtcy.E.D.Wash.1980), In re White, 28 B.R. 240 (Bkrtcy.E.D.Va.1983). Such conversions are only fraudulent to the extent that the exempt property was obtained as the result of fraudulent conduct. In re White, supra, 3 Collier on Bankruptcy 15th ed. § 522.08[4]. If the exempt property or the funds which were used to acquire the exempt property were dishonestly obtained, the debtor will be denied an exemption in that property. Matter of Mehrer, supra. Debtors may not, with the intent to defraud creditors, abuse or take unreasonable advantage of the ability to convert non-exempt into exempt property.
When asserting fraud, regardless of whether for the purpose of proving nondischargeability under 11 U.S.C. § 523(a)(2)(A) or that exemptions were wrongfully taken, a plaintiff must show: 1) that the debtor made a representation to the plaintiff, 2) that he knew the representation was false, 3) that it was made with the intent to deceive, 4) that the plaintiff relied on the representation, and 5) that the plaintiff suffered a loss as a result of the representation. Matter of Lambert, 21 B.R. 23 (Bkrtcy.E.D.Mich.1980), In re Benson, 33 B.R. 572 (Bkrtcy.N.D.Ohio 1983). The fraudulent intent may be inferred from the circumstances of a case, the debtor's conduct, or the debtor's silence. Matter of Schnore, 13 B.R. 249 (Bkrtcy.W.D.Wis.1981). Despite a debtor's assertion of an honest motive, a debt will be nondischargeable if *769 the facts demonstrate that actual fraud has occurred. In re Aldrich, 16 B.R. 825 (Bkrtcy.W.D.Ky.1982).
If, on the other hand, a plaintiff asserts nondischargeability under the provision which addresses the use of a written statement, he must show: 1) that the statement was materially false, 2) that it had to do with the debtor's financial condition, 3) that it was offered to the plaintiff with the intent to deceive, and 4) that the plaintiff reasonably relied on the statement. In re Goff, 17 B.R. 564 (Bkrtcy.W.D.Ky.1982). As with an allegation of fraud under 11 U.S.C. § 523(A)(2)(B), intent may be inferred from either the circumstances of the case or the debtor's conduct. However, when proceeding under this section of the Code, the element of reliance is of greater significance. It must be shown that the plaintiff's reliance on the written statement was reasonable. Reasonable reliance is that degree of care which would be exercised in an average business transaction by parties under similar circumstances. In re Ardelean, 28 B.R. 299 (Bkrtcy.N.D.Ill.1983). This standard imposes a duty on the creditor to make a reasonable inquiry as to the information provided by the statement and to comply with local standards in doing so.
In the present case, it is apparent that the Debtor submitted the pay stub to the Plaintiff with the intention that it be accepted as proof of income in excess of Fifteen Thousand and no/100 Dollars ($15,000.00). By doing so he has made a representation to the Plaintiff which he knew to be false. The failure to explain the information on the stub, despite his awareness it did not accurately reflect an income over Fifteen Thousand and no/100 Dollars ($15,000.00), expressed an intent to deceive the Plaintiff in that regard. The Plaintiff, relying on the stub, issued a loan and thereby sustained the loss it now seeks to recover. Accordingly, all the elements of fraud under 11 U.S.C. § 523(a)(2)(A) appear to have been satisfied.
Similarly, if the facts are applied to the elements of 11 U.S.C. § 523(a)(2)(B), the cause of action would appear to be sustained. The Debtor offered a written document to the Plaintiff which reflected the type of information as to financial condition which was asked for by the Plaintiff. He also used the pay stub under circumstances which expressed an intent to mislead the Plaintiff as to the information thereon. Finally, it is apparent that the Plaintiff relied on that information in making its decision on whether or not to issue the loan.
While it would appear that under either analysis the debt should be held nondischargeable, the element of reliance is not necessarily satisfied merely upon a showing of actual reliance. It must also be determined whether or not the reliance was reasonable. The record does not contain the precise terms of the loan offer. However, it is apparent from the record that the principal factor to be considered in assessing an applicant's eligibility was his annual income. The record does not reflect that the Debtor was required to list his assets or his prior obligations. There has also been no showing that the Plaintiff relied on any representations other than the pay stub. Therefore, under these terms it would be incumbent on the Plaintiff to verify the Debtor's income statement and to inquire into aspects of his employment which affected his income. The record does not show that such an inquiry or verification was made. Therefore, the Plaintiff's failure to do so would be a breach of the duty to adequately guard its interests.
Although the Plaintiff may not have made an adequate inquiry, it is also true that this failure was not the sole cause of the circumstances which give rise to this Complaint. If the Debtor had made a full disclosure at the time he applied for the loan, no allegations of fraud could have been asserted. While the Plaintiff may not have conducted a proper investigation, it was not that failure which necessarily caused the Debtor to submit a misleading statement. As previously indicated, the record does not reflect whether or not the Plaintiff, at the time the Debtor was applying for the loan, asked if the pay stub represented a consistent pay for every pay *770 period. However, if it was asked of the Debtor, it is entirely possible that he did not give a truthful answer. If it was not asked, it was incumbent on the Debtor, in light of his knowledge as to the minimum income and the inconsistency of his wages, to disclose that which the stub did not. In either event, the Debtor has perpetrated a fraud on the Plaintiff.
It is also apparent that the Plaintiff's conduct was not a contributing factor to the Debtor's unreasonable use of the monies. As previously pointed out, it is permissable to convert cash into exempt property just prior to the filing of a petition. Nonetheless, the Debtor owes some degree of responsibility to his creditors not to take unreasonable advantage of that capability. He was not entitled to utilize funds in a manner which totally disregarded the rights of the creditor to whom the monies may be owed. In this case, if the Debtor had used all the funds to purchase exempt property, the property would be available to the creditor in the event it was determined the loan was wrongfully acquired. However, the Debtor spent approximately half the loan in such a manner so as to be of no potential benefit to this or any other creditor. This type of conversion is not a proper or equitable use of pre-estate funds, especially when they were obtained in a suspect fashion.
In light of the circumstances of this case and the attendant responsibility each party must accept, the Court cannot justify a simple finding as to whether the debt should be held entirely dischargeable or nondischargeable. There has been the requisite showing that the Debtor committed acts which would, in the absence of the Plaintiff's misjudgment, have been sufficient to hold the debts nondischargeable. In addition, the Debtor has abused the ability to convert non-exempt to exempt property. However, the Plaintiff is equally responsible for failing to protect its interests. Accordingly, it must be concluded that the Debtor should be allowed to retain the One Thousand and no/100 Dollars ($1,000.00) in clothing that was purchased with the loan proceeds of the loan, and that this portion of the debt should be declared dischargeable. It must also be concluded that the remaining One Thousand and no/100 Dollars ($1,000.00) should be held nondischargeable.
In reaching these conclusions, the Court has considered all the evidence and arguments of counsel, regardless of whether or not they were specifically referred to in this Opinion.
It is ORDERED that the debt be, and it is hereby, held dischargeable in the amount of One Thousand and no/100 Dollars ($1,000.00).
It is FURTHER ORDERED that the debt be, and it is hereby, held nondischargeable in the amount of One Thousand and no/100 Dollars ($1,000.00). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553355/ | 57 B.R. 824 (1986)
In re CURRY AND SORENSEN, INC., a California corporation, Debtor.
Walter T. HANSEN, Donald F. Rau and Ross H. Buckwalter, Plaintiffs,
v.
Kenneth R. FINN and Curry and Sorensen, Inc., a California corporation, Defendants.
BAP No. CC-85-1009, Bankruptcy No. LA 84-07761-JA, Adv. No. LA M4-07770-BR.
United States Bankruptcy Appellate Panels of the Ninth Circuit.
Argued and Submitted May 16, 1985.
Decided February 7, 1986.
*825 *826 Roger A. Ferree, McCutchen, Black, Verleger & Shea, Los Angeles, Cal., for plaintiffs.
Peter S. Fishman, LeVene & Eisenberg, Los Angeles, Cal., for defendants.
Before MEYERS, ABRAHAMS and VOLINN, Bankruptcy Judges.
JOHN W. MEYERS, Bankruptcy Judge:
I
On August 28, 1984, the appellants Walter T. Hanson, Donald F. Rau and Ross H. Buchwalter ("Appellants") filed a complaint naming the Debtor, Curry and Sorenson, Inc. ("Debtor") and its President Kenneth R. Finn ("Finn") as defendants. In this complaint the Appellants seek to void the Debtor's issuance of 75,000 shares of its capital stock to Finn, claiming it was a fraudulent transfer under Section 548 of the Bankruptcy Code ("Code"); to void these shares under Section 409 of the California Corporations Code; and to have injunctive relief restraining Finn from exercising any rights as the holder of these shares.
On September 14, 1984, the Debtor filed a motion to dismiss the complaint on the grounds that the Appellants lacked standing to bring the action under Section 548 and that the complaint failed to state a claim upon which relief could be granted.
The Bankruptcy Court heard this matter on October 17, 1984 and subsequently filed a memorandum decision finding that the complaint should be dismissed as the Appellants lacked standing. On November 8, 1984, the Appellants filed a "Motion for Clarification or, in the Alternative, for Reconsideration of the Decision." However, on November 20, 1984, the Bankruptcy Court filed its order dismissing the complaint.
On December 5, 1984, a hearing was held on the Appellant's motion for clarification or reconsideration. On December 13, 1984, the order affirming the decision of November 20, 1984 was entered with the notice of appeal being filed by the Appellants on December 20, 1984.
On April 17, 1985, the Debtor filed a motion with the Panel to dismiss this appeal for lack of jurisdiction on the grounds that the notice of appeal was not timely filed.
II
DISCUSSION
A. TIMELINESS OF NOTICE OF APPEAL
Under Bankruptcy Rule 8002(a) a notice of appeal must be filed within 10 days of the date of the entry of the judgment, order or decree appealed from. See Matter of Ramsey, 612 F.2d 1220, 1221 (9th Cir.1980). The time limits established for filing a notice of appeal are "mandatory and jurisdictional." See Browder v. Director, Ill. Dept. of Corrections, 434 U.S. 257, 264, 98 S. Ct. 556, 561, 54 L. Ed. 2d 521 (1978); United Artists Corp. v. La Cage Aux Folles, Inc., 771 F.2d 1265, 1267 (9th Cir.1985).
In this case the Bankruptcy Court's order was filed on November 20, 1984, while the notice of appeal was not filed with the Bankruptcy Court Clerk until December 20, 1984, well outside the 10-day time bar established by Rule 8002(a). The Appellants argue, however, that their motion for clarification or reconsideration acted to toll the time for appeal under Rule 8002(b). This rule provides, in part, that the time to appeal is tolled by a timely filed motion to alter or amend a bankruptcy court's judgment filed under Rule 9023. In re Lovitt, 757 F.2d 1035, 1039 n. 2. (9th Cir.1985). See also In re 6 & 40 Inv. Group, Inc., 752 F.2d 515, 516 (10th Cir.1985). Such motions are the equivalent of those filed under Rule 59(e), Fed.R.Civ.P., which is made *827 applicable to bankruptcy cases by Rule 9023. See In re Branding Iron Steak House, 536 F.2d 299, 301 n. 1 (9th Cir.1976); In re Morrison, 26 B.R. 57, 60 (Bkrtcy.N. Ohio 1982).[1]
The federal rules do not contemplate motions for reconsideration. Smith v. Hudson, 600 F.2d 60, 62 (6th Cir.1979); In re Morrison, supra, 26 B.R. at 60. However, there is a policy of liberally construing appellate rules to carry out the desire of Congress to promote fairness in the administration of justice and a just determination of litigation. Bordallo v. Reyes, 763 F.2d 1098, 1102 (9th Cir.1985). Therefore, motions for reconsideration have traditionally been treated as motions to alter or amend under Rule 59(e), Fed.R.Civ.P., if the motion draws into question the correctness of the trial court's decision. See In re Branding Iron Steak House, supra, 536 F.2d at 301; Bestran Corp. v. Eagle Comtronics, Inc., 720 F.2d 1019 (9th Cir.1983); In re 6 & 40 Inv. Group, Inc., supra, 752 F.2d at 515-16.
Here the Bankruptcy Court announced its decision on November 5, 1984. The Appellants filed their motion for reconsideration on November 8, 1984. The Court filed the order dismissing the complaint on November 20, 1984. The motion was heard on December 5, 1984 and the order affirming the order of November 20 was filed on December 13, 1984. The notice of appeal was filed on December 20, 1984. We hold that the motion for reconsideration tolled the time for filing the notice of appeal until the trial court's order of December 13, 1984 was entered. See In re Lovitt, supra, 757 F.2d at 1039 n. 2.[2] Therefore, the notice of appeal was timely filed and this Panel has jurisdiction to consider this appeal.
B. DISMISSAL OF COMPLAINT
The Appellants, the former owners of the Debtor, currently are creditors of the Debtor and own 5,373 shares of the Debtor's capital stock. The remaining 75,000 shares of the outstanding stock are held in the name of the Debtor's president, the defendant Finn. The Appellants filed the complaint in question here to challenge the February 6, 1984, issuance of the stock to Mr. Finn. In the Bankruptcy Court, the Debtor moved to dismiss the complaint on the grounds that the Appellants lacked standing and that the complaint failed to state a proper claim. The trial court granted this motion, ordering that the complaint be dismissed for lack of standing.
In reviewing the order dismissing this complaint, the Panel notes that the Appellants have the burden of proving that they had standing to bring this action. See Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26, 45, 96 S. Ct. 1917, 1927, 48 L. Ed. 2d 450 (1976); Copper & Brass Fabricators v. Dept. of Treasury, 524 F. Supp. 945, 947 (D.C.1976), aff'd, 679 F.2d 951 (D.C.Cir.1982).
In the first claim of the complaint the Appellants seek to have the transfer of the 75,000 shares to Mr. Finn set aside as a fraudulent transfer under 11 U.S.C. § 548. Section 548 establishes power to avoid fraudulent transfers, which usually may only be asserted by a trustee or, under Section 1107(a) of the Code, by a Chapter 11 debtor-in-possession. See In re Van Brock, 33 B.R. 546, 547 (S.Fla.1983). Individual creditors generally have no remedy to institute such an action except through the trustee or debtor-in-possession. See In re Teal, 35 B.R. 360, 362 (Bkrtcy.E.Pa. 1984); In re Philadelphia Light Supply *828 Co., 39 B.R. 51, 52 (Bkrtcy.E.Pa.1984) (complaint under section 547).
This limitation on creditor action is cushioned by the duty imposed on a trustee to investigate the conduct of prior management to uncover and pursue causes of action against the debtor's officers and directors. Commodity Futures Trading Comm'n v. Weintraub, ___ U.S. ___, 105 S. Ct. 1986, 1993, 85 L. Ed. 2d 372 (1985). While pursuant to Section 1107(a) of the Code, a debtor in possession is not required to investigate and report under Sections 1106(a)(3) and (4), the debtor's directors bear essentially the same fiduciary obligation to creditors and shareholders as would a trustee for a debtor out of possession. Weintraub, supra, 105 S.Ct. at 1994-95.
The exclusive power to commence avoidance actions vested in trustees and debtors-in-possession is permissive rather than mandatory and the exercise of this power can only be reviewed for abuse of discretion. See Matter of Monsour Medical Center, 5 B.R. 715, 718 (Bkrtcy.W.Pa. 1980); In re Amarex, Inc., 36 B.R. 59, 61 (Bkrtcy.W.Okla.1984). If a creditor is dissatisfied with lack of action on the part of the debtor-in-possession, the creditor may move to replace the debtor-in-possession with a Chapter 11 trustee; or to convert the Chapter 11 case to one under Chapter 7; move to dismiss the Chapter 11 case; or petition the court to compel the debtor-in-possession to act or to gain court permission to institute the action itself. See Matter of Monsour Medical Center, supra, 5 B.R. at 718.
Thus, if an aggrieved creditor believes that the debtor-in-possession has failed to fulfill its duty to prosecute actions, then the creditor must bring this to the attention of the court by an appropriate motion. This promotes the fair and orderly administration of the bankruptcy estate by providing judicial supervision over the litigation to be undertaken. See Meyer v. Fleming, 327 U.S. 161, 169, 66 S. Ct. 382, 387, 90 L. Ed. 595 (1946); Gochenour v. George & Francis Ball Foundation, 35 F. Supp. 508, 518 (S.Ind.1940). This judicial intervention is crucial, for resolution of the conflict between the creditor and the debtor-in-possession requires a balancing of the competing interests to determine whether or not the debtor-in-possession's failure to bring the action is unjustifiable and therefore constitutes an abuse of discretion. See In re Toledo Equipment Co., Inc., 35 B.R. 315, 319 (Bkrtcy.N.Ohio 1983). At such a hearing the court can determine if the initiation of such an action at that time would forward the reorganization effort, or to the contrary, might be a detriment. Here the Appellants made no attempt to bring this matter to the attention of the Bankruptcy Court before commencing this action. The mere fact that the Debtor failed to institute such proceedings did not authorize them to proceed in their own names and upon their own behalf. See Gouhenour v. George & Francis Ball Foundation, supra, 35 F.Supp. at 517.
This Panel is not oblivious to the difficulty in gaining the cooperation of a debtor-in-possession to act against its own responsible officer, no matter how meritorious the cause of action may be. See James V. Steifer Mining Co., 35 Cal. App. 778, 785, 171 P. 117 (1918). However, in order to avoid the confusion that would result if creditors could act on their own discretion, the Appellants should have sought court permission before filing a complaint urging relief under Section 548 of the Code.[3]See In re Scientific Resources Corporation, 391 F. Supp. 63, 67 (E.Pa.1975).
Further, the complaint here is improperly styled with the Appellants themselves being named as plaintiffs. An action to set aside a fraudulent transfer must be brought in the name of the bankruptcy *829 estate as the real party in interest. See In re Macloskey, 66 F. Supp. 610, 612 (N.J. 1946); In re Toledo Equipment Co., Inc., supra, 35 B.R. at 317.
We therefore hold that the trial court was correct in dismissing the first claim for relief as the Appellants had no standing to pursue that action under section 548 without prior court approval.[4]
As an alternative basis for our decision, we find that the First Claim does not state a claim upon which relief could be granted.[5] An action brought under Section 548 of the Code seeks to avoid a transfer of "an interest of the debtor in property, or any obligation incurred by the debtor," which is the product of a fraudulent transfer. The appellant's First Claim attacks the transfer of 75,000 shares of the Debtor's capital stock to Finn.
A share of capital stock represents a unit of ownership interest and has no extrinsic value to the corporation itself. See In re Whitaker, 18 B.R. 314, 316 (Bkrtcy.Kan.1982); Feiring v. Gano, 114 Colo. 567, 168 P.2d 901, 905 (Colo.1946). Since an action directed at recovery of corporate stock could only affect equitable ownership of the corporation and would not restore property to the estate or avoid an estate obligation, then it is not a transfer subject to question under Section 548. See KDI v. Former Shareholders of Labtron of America, 536 F.2d 1146, 1149 (6th Cir. 1976); Matter of Paso Del Norte Oil Co., 755 F.2d 421, 424 (5th Cir.1985); Matter of Calamity Jane's, Inc., 22 B.R. 5, 7 (Bkrtcy. N.J.1982). But see Courtney v. Youngs, 42 Am.Bankr.Rpt. 67, 71 (Mich.1918).
Appellants also appeal the Bankruptcy Court's order dismissing the Second and Third causes of action. In their Second Claim the Appellants allege that cancellation of two $10,000 bonuses that had earlier been awarded Finn, did not constitute valid consideration under Section 409 of the California Corporations Code, supporting the issuance of 75,000 shares of the Debtor's capital stock to him. In their Third Claim they seek to restrain Finn from exercising any rights or taking any action as the holder of these 75,000 shares, which represent majority control of the Debtor.
In considering the Appellant's standing to bring an action under Section 409 we must refer to Section 544 of the Code. Under Section 544, a debtor-in-possession holds the full gamut of remedies that applicable state law makes available to any creditor of the debtor. See Carlton v. BAWW, Inc., 751 F.2d 781, 785 (5th Cir. 1985); In re Louisiana Indus. Coatings, Inc., 31 B.R. 688, 692 (Bkrtcy.E.La.1983). However, Section 544 is also limited to actions to avoid transfers of "property of the debtor" or "obligation incurred by the debtor." As this cause of action is not to retrieve property or void an obligation, then the debtor-in-possession is not entitled to pursue the action for the estate. The debtor-in-possession having no interest in the claim, then the Appellants are not required to defer to the representative of the estate and, therefore, have the necessary standing to bring this action in their own names.[6]
As the Second Cause of action is brought under Section 409 of the California Corporations Code by a party with standing, then the Bankruptcy Court erred in dismissing it and the related claim for injunctive relief *830 prayed for in the Third Cause stated in this complaint. See In re Burton Coal Co., 126 F.2d 447, 448 (7th Cir.1942); Matter of SCK Corp., 54 B.R. 165 (Bkrtcy.N.J.1984).
III
CONCLUSION
The Panel has considered this timely filed appeal and holds that the Bankruptcy Court's order dismissing the First Cause of action is AFFIRMED, while the order dismissing the Second and Third Causes is REVERSED and the case REMANDED for further proceedings on these claims.
NOTES
[1] A timely Rule 59(e) motion tolls the time for appeal under Rule 4(a) of the Fed.R.App.P. Browder v. Director, Ill. Dept. of Corrections, supra, 434 U.S. at 264, 98 S.Ct. at 561; Vreeken v. Davis, 718 F.2d 343, 346 (10th Cir.1983). Such motions can be used to challenge an order dismissing a complaint. See Roque v. City of Redlands, 79 F.R.D. 433, 435 (C.Cal.1978).
[2] We note that the motion in question was actually filed prior to the entry of the order dismissing filed on November 20, 1984. It was appropriate for the Bankruptcy Court to consider the motion even though it was prematurely filed. See Smith v. Hudson, supra, 600 F.2d at 62; Calculators Hawaii, Inc., v. Brandt, Inc., 724 F.2d 1332, 1335 (9th Cir.1983); Katcoff v. Marsh, 582 F. Supp. 463, 477 (E.N.Y.1984).
[3] It should be noted that even creditors' committees organized under 11 U.S.C. § 1102 must also secure prior court approval before instituting such suits. See In re Amarex, Inc., supra, 36 B.R. at 61, 62. See also Fuel Oil Supply and Terminaling v. Gulf Oil Corp., 762 F.2d 1283, 1287 (5th Cir.1985).
[4] Of course, such a dismissal is without prejudice to an action being maintained by an appropriate party. See McCarney v. Ford Motor Co., 657 F.2d 230, 233 (8th Cir.1981); In re Van Brock, supra, 33 B.R. at 547. The debtor would not be a proper defendant in such an action as the transferor is not a party from whom recovery can be sought. See In re Gerson, 35 B.R. 129, 130 (9th Cir. BAP 1983).
[5] This Panel can affirm an order on any ground clearly presented in the record. See City of Las Vegas, Nev. v. Clark County, Nev., 755 F.2d 697, 701 (9th Cir.1985); United States v. $129,374 in U.S. Currency, 769 F.2d 583, 586 (9th Cir.1985).
[6] Under California law the debtor corporation should be concerned in the cancellation of improperly issued certificates of stock. See James V. Steifer Mining Co., supra, 35 Cal.App. at 784, 171 P. 117. Thus, it is appropriate to name the debtor as a party to this action. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553432/ | 57 B.R. 109 (1985)
In re Wendell Nelson GASS, Dorothy Marie Gass, Debtors.
Wendell Nelson GASS, Dorothy Marie Gass, Plaintiffs,
v.
MID-STATE HOMES, INC., & Best Insurors, Inc., Defendants.
Bankruptcy No. 1-84-00178, Adv. No. 1-84-0169.
United States Bankruptcy Court, E.D. Tennessee.
December 31, 1985.
*110 Robert J. Harriss of Harriss, Hartman, Aaron, Townley, & Wharton, Rossville, Ga., for plaintiffs.
Richard H. Gill of Copeland, Franco, Spears and Gill, Montgomery, Ala., and Phillip M. Durrence of Hall, Haynes, Lusk & Foster, Chattanooga, Tenn., for defendant, Mid-State Homes, Inc.
MEMORANDUM
RALPH H. KELLEY, Bankruptcy Judge.
This is a suit by the chapter 13 debtors against the holder of a mortgage on their house, Mid-State Homes, to determine how they should divide the money paid by the fire insurance company after the house burned to the ground. The parties stipulated the facts as follows.
On November 22, 1980, Wendell N. Gass and wife, Dorothy M. Gass entered into and signed a contract with Jim Walter Homes in Scottsboro, Alabama. Under the terms of the contract, Jim Walter Homes was to build a house for the plaintiffs on their property located in Flat Rock, Alabama, for the cash price of $23,315.00.
On the same date, Wendell N. Gass and Dorothy M. Gass financed their house through Jim Walter Homes, the terms of which were that they were required to make 180 monthly payments of $249.90 for a deferred purchase price of Forty-Four Thousand Nine Hundred Eighty-Two Dollars and No/100 ($44,982.00). The plaintiffs executed a promissory note and mortgage to secure the note in favor of Jim Walter Homes.
Specific terms under the mortgage agreement and building contract required the plaintiffs to keep the property in good repair and to keep the property insured making the proceeds payable to Jim Walter Homes, Inc., or its assigns to the extent of its interest in the property.
The mortgage and contract also provided that if the plaintiffs failed to procure adequate insurance on the property, the mortgagee had the right to purchase such coverage on behalf of the buyer and add the premiums to the outstanding indebtedness.
The plaintiffs procured insurance on the property through Best Insurors, Inc. Best Insurors, Inc. procured a policy of insurance from International Insurance Company to cover the subject property. Best Insurors, Inc., did not issue the insurance policy itself and its only connection with this matter was procurement of an insurance policy from an independent insurance company.
The terms of the mortgage agreement provided that "in the event that Buyer is in default in the performance of any of his obligations under this contract", then the creditor may at its option accelerate the amount then owing and declare it due and payable.
The terms of the mortgage agreement and the contract also provided that in the event of acceleration, the plaintiffs "shall receive a refund credit for the unearned finance charges computed pursuant to the Rule of 78's". The contract also provided that "Buyer may prepay in full the unpaid time balance of this contract at any time and upon prepayment" the unearned finance charge refund due the plaintiffs shall be computed pursuant to the Rule of 78's.
Subsequent to the execution of the building contract, promissory note and mortgage agreement, all papers were duly conveyed by Jim Walter Homes, Inc., to Mid-State Homes, Inc., the defendant.
In July, 1983, the defendant received notice that the insurance policy was being canceled for failure to pay insurance premiums. Plaintiffs did not receive these notices. Pursuant to the terms of the party's contract, Mid-State paid insurance premiums due on the policy in the amount of $365.00 on October 5, 1983, and this amount was added to the balance of the plaintiffs' indebtedness.
On December 17, 1983, the plaintiffs' house was completely destroyed by fire. *111 The cause of the fire remains unknown at this time and it is undisputed that the fire was not the result of any intentional act or other fault on the part of the plaintiffs.
Prior to the fire the plaintiffs had paid monthly installments in the amount of $7,996.80 toward the aforementioned deferred payment price.
The last payment made by the plaintiffs was on November 30, 1983, in the amount of $126.00. This amount constituted one-half of the installment due for the month of October, 1983, and no other payments were made thereafter.
At the time of the fire, the house was insured in the amount of $24,000.00. Mid-State Homes was named as mortgagee and loss payee on the standard fire loss insurance policy.
Immediately after the fire, Mid-State Homes informed the plaintiffs that the pay-off on the loan was $23,200.91, and that the proceeds from the insurance policy would be used to satisfy the loan. The plaintiffs made no further payments on the mortgage and a notice of processing the claim was sent to the plaintiffs on December 30, 1983.
Mid-State calculated the total payoff on the loan pursuant to the Rule of 78's. Mid-State contends that according to the Rule of 78's the plaintiffs were due a rebate from the insurance proceeds in the amount of $799.09. Prior to February 1, 1984, International Insurance Companies issued its draft for the total amount due under the policy, $24,000.00 to Mid-State Homes, said draft being payable to Mid-State Homes and the plaintiffs.
On February 1, 1984, Mid-State Homes sent the insurance draft along with its own check in the amount of $799.09 payable to the plaintiffs to the Scottsboro, Alabama, office of Jim Walter Homes, Inc., requesting the plaintiffs' signature on the insurance company's draft in return for payment to the plaintiffs of $799.09, which represented the difference between the insurance draft and the net payoff on the plaintiffs' account.
On February 7, 1984, the plaintiffs filed a petition for a Chapter 13 bankruptcy.
The plaintiffs refused to endorse the original insurance draft.
On February 17, 1984, the plaintiffs' attorney sent a letter to Mid-State Homes expressing the opinion that the payoff on the loan should have been figured by a pro rata apportionment method rather than the Rule of 78's. Mid-State responded by expressing their opinion that prepayment on the loan through insurance proceeds warranted a rebate according to the Rule of 78's and no Alabama law required a pro rata apportionment.
On February 29, 1984, the plaintiffs' attorney sent Mid-State Homes another letter expressing the opinion that computation of the unearned finance charge pursuant to the Rule of 78's could only be used in case of default. Mid-State responded by letter dated March 12, 1984, expressing the opinion that the Rule of 78's was appropriate whether prepayment or acceleration was voluntary or involuntary.
On April 2, 1984, the plaintiffs' attorney responded by letter expressing the opinion that he did not agree with the interpretation of the mortgage and that the plaintiffs were not in default. Mid-State's legal department responded by letter dated May 14, 1984, expressing the opinion that insurance coverage was irrelevant to the issue of default.
Subsequently, Mid-State Homes returned the $24,000.00 draft to International Insurance Company and requested a draft payable to Mid-State Homes in the amount of $23,200.91 which represented the net payoff on the plaintiffs' loan. Mid-State received this draft along with a hold harmless agreement from the International Insurance Company in May, 1984.
Plaintiffs contend that subsequent to February 24, 1984, Mid-State Homes formally gave plaintiffs notice for the first time that Mid-State was declaring the mortgage to be in default and was accelerating the entire indebtedness.
*112 The defendant contends that it notified the plaintiffs that the insurance proceeds would be used to satisfy the balance of the indebtedness shortly after the house was totally destroyed by fire. The defendant contends further that pursuant to Alabama law the extent of its interest is determined by the Rule of 78's and that prepayment warrants the rebate pursuant to the Rule, rendering the issue of default irrelevant to the payment of insurance proceeds.
On July 3, 1984, the plaintiffs filed a complaint seeking to recover additional proceeds.
The plaintiffs contend that the refund due to them if the finance charges were calculated pursuant to the pro rata method would be $2,714.68.
The defendant contends that after using the Rule of 78's to determine the unearned finance charges, an annual rate of finance charge on the entire transaction was only 11.44% from the time of execution of the mortgage until its payoff.
The insurance proceeds of $799.09 have been paid to the plaintiffs. The amount in controversy and dispute is $1,913.59.
The court adds one additional fact. The contract provided for interest at a 10% annual percentage rate.
Discussion
The plaintiffs rely on Bankruptcy Code § 502(b)(2). 11 U.S.C. § 502(b)(2). It establishes a general rule that interest on a debt is collectible from the bankruptcy estate only to the extent it is earned before the filing of the bankruptcy petition. The filing of the petition creates the bankruptcy estate. 11 U.S.C. §§ 541 & 302.
The plaintiffs seek to recover about $1,900 as unearned interest. This is the difference between the interest that Mid-State calculated as due at the time of the fire by using the rule of 78's and the interest that would have been earned up to the time of bankruptcy at the basic contract rate of interest. The plaintiffs argue that the additional interest was not earned before bankruptcy under § 502(b)(2) of the Code and is not allowable as a claim against the bankruptcy estate.
Mid-State made the argument that it is not trying to collect unearned interest from property of the bankruptcy estate. Mid-State essentially argues that it and the plaintiffs became the joint owners of the insurance money before the plaintiffs' bankruptcy, according to their rights under the contracts and state law. To the extent of the principal debt and the interest allowable outside of bankruptcy, Mid-State would be entitled to the insurance. Section 502(b)(2) would be irrelevant.
This argument must be rejected. Mid-State's right under the insurance policy was to be paid as its interest appeared. Mid-State's interest was a lien for payment of its debt. No matter how you construe it, Mid-State was at the time of the plaintiff's bankruptcy simply a creditor trying to collect its debt from a particular fund available to pay the debt. In bankruptcy cases the courts generally have not treated the secured creditor's share of insurance money received for the destruction of the collateral as property owned by the secured creditor. See Chapman v. England, 231 F.2d 606 (9th Cir.1956); Pearson v. Rapstine, 203 F.2d 313 (5th Cir.1953); In re Kink, 15 B.R. 701, 33 UCC Rep. 404 (Bankr.W.D.Mo.1981).
The court is of the opinion that under the facts of this case Mid-State should not be allowed the additional interest brought about by using the rule of 78's.
The fire itself was not a breach of the debtors' covenant to keep the house in good repair, and thus did not entitle Mid-State to accelerate the debt. The requirement that the debtors keep the premises insured was Mid-State's protection against damage or destruction by fire. A covenant to keep the premises in good repair serves a different purpose. Erickson v. Rocco, 433 S.W.2d 746 (Tex.Civ.App.1968).
In Nationwide Mutual Fire Insurance Company v. Wilborn, the Alabama Supreme Court discussed the effect of destruction if the mortgaged premises before and after foreclosure as it affected the mortgagee's right to the insurance proceeds. 291 Ala. 193, 279 So. 2d 460 (1973). The court, however, did not consider the *113 specific question of whether destruction of the premises by fire was a default entitling the mortgagee to accelerate the debt.
Prepayment under the parties' contract and under the Alabama statute should be read to mean voluntary prepayment by the debtors, not prepayment brought about against the debtors' will and through no fault of their own when the house was destroyed by fire.
No matter how you look at it the rule of 78's imposes a penalty on prepayment. By calling it a penalty, the court does not mean that the rule of 78's can never be used to calculate a claim against the bankruptcy estate. If allowed by contract or state law, the rule of 78's may be the appropriate method for calculating interest owed at the time of bankruptcy when there has been a prepetition default and acceleration of the debt. Some courts have approved the use of the rule of 78's. In re Watson, 32 B.R. 491, 9 C.B.C.2d 345 (Bankr.W.D.Wis.1983); In re Clausel, 32 B.R. 805 (Bankr.W.D.Tenn.1983); In re Eastern Equipment Co., 11 B.R. 732 (Bankr.S.D.W.Va.1981). The court in this case does not establish any general rule as to whether the rule of 78's can or cannot be used in calculating the interest earned on a debt before the debtor's filing of a chapter 13 petition.
The courts have been concerned that allowing an accelerated rate of interest upsets the bankruptcy policy of equitable distribution. Creditors in essentially the same situation would be treated differently according to which ones had declared a default and accelerated their debts before bankruptcy. Furthermore, any increase in a secured claim by increasing the rate of interest above the basic contract rate can reduce the amount available to pay on unsecured claims. In re Willis, 6 B.R. 555 (Bankr.N.D.Ill.1980); In re United Merchants and Manufacturers, Inc., 5 B.C.D. 1016 (Bankr.S.D.N.Y.1979); In re Gossage, 1 B.C.D. 1539 (Bankr.W.D.Mo.1975).
Allowing Mid-State to use the rule of 78's in this case would simply give it a windfall or impose an uncalled-for penalty on the debtors to the detriment of their other creditors. The destruction of the house by fire was not the debtors' fault. Mid-State treated the debt as paid by the insurance money at or about the time of the fire. The debtors' subsequent failure to continue payments should be considered irrelevant. The debtors had defaulted in making payments before the fire but were not deeply in arrears and Mid-State had not declared a default and "at its option" accelerated the debt. Acceleration after the bankruptcy petition was filed was automatically stayed. 11 U.S.C. § 362. The court has already pointed out that the fire itself and the prepayment by the insurance company should not entitle Mid-State to use the rule of 78's. In these circumstances the rule of 78's should not be used to gain an unwarranted advantage over other creditors.
Since the debtors have not claimed the additional interest as exempt, the court will enter an order directing Mid-State to pay it to the chapter 13 trustee for distribution to creditors under the plan.
This memorandum constitutes findings of fact and conclusions of law. Bankruptcy Rule 7052. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553451/ | 57 B.R. 609 (1986)
In re Bruce S. GARDNER f/d/b/a Couture & Gardner, Debtor.
Bankruptcy Nos. 185-00041, C7-50804.
United States Bankruptcy Court, D. Maine.
February 5, 1986.
*610 Robert J. Daviau, Daviau, Jabar & Batten, Waterville, Me., for creditor Andrew Couture.
John E. Nale, Nale & Nale, Waterville, Me., for creditor George F. Terry, III.
Jonathan Hull, Damariscotta, Me., for debtor.
MEMORANDUM DECISION
FREDERICK A. JOHNSON, Bankruptcy Judge.
The interesting issue presented in this proceeding is whether an agreement to settle a pre-filing state court negligence action is a reaffirmation agreement subject to the requirements of 11 U.S.C. § 524(c), or is a post-filing agreement for new consideration. The court concludes that the agreement is a reaffirmation which does not meet the requirements of Section 524(c) of the Code and is not enforceable against the debtor.
Debtor filed a chapter 7 petition on February 21, 1985. At that time, debtor and debtor's partnership, Couture and Gardner, CPA, were defendants in a negligence/malpractice action brought by plaintiff, George Terry. Couture and Gardner had served as personal accountants for plaintiff for many years. In late 1981, the partnership provided investment advice to Mr. Terry, who claims that he suffered financial losses of $69,200 as a result of that advice. Mr. Terry filed an unsecured proof of claim for this amount with this court.
On April 11, 1985, this court granted relief from stay for the limited purpose of obtaining a final judgment in State Court which would be payable by debtor's malpractice insurance carrier.
The malpractice action came on for trial in state court on July 17, 1985. The debtor was subpoenaed as a witness and appeared without counsel. After a jury was drawn settlement negotiations were held by plaintiff's attorney, John E. Nale, Esq. and Robert J. Daviau, Esq., who represented debtor's former partner. These negotiations left the parties $4,500 apart. At this point the debtor offered to pay the $4,500.00. He placed $1,500 in escrow with Mr. Daviau and agreed to sign a note for the $3,000 balance. The debtor called his lawyer from the courthouse to tell him what he was doing. His lawyer advised him that what he proposed to do was "improper."
The debtor testified that he was very distressed about the state court proceeding. Although he was subpoenaed as a witness he was a named defendant and was required to participate in the trial. He participated in the selection of a jury and accompanied the lawyers "two or three times" to the Judge's Chambers for conferences. He stated that he was also concerned about what effect a jury verdict of negligence would have on his future as an accountant. He also felt an obligation to his former partner. He felt like a "bumbling idiot" and just "wanted to get out of there."
For two or three days after the settlement the debtor thought about what he had done. He contacted his lawyer who again advised him that the proceedings at the courthouse were improper. The debtor then decided to rescind his agreement and demand return of the $1,500 held in escrow. The promissory note in the amount of $3,000 was never signed.
Despite numerous demands by the debtor and his attorney Mr. Daviau has refused to return the $1,500 held by him in escrow and has demanded that the debtor sign the $3,000 promissory note as he agreed to do. Daviau's position is supported by Mr. Nale. They argue that the debtor voluntarily agreed to pay $4,500 in order to settle the case and received new consideration for the agreement.
Mr. Daviau and Mr. Nale may be correct; the agreement may have been voluntary and some new consideration may have been received. But, being correct avails them nothing. Section 524(c) of the Code provides that any agreement between *611 the plaintiff Terry and the debtor "the consideration for which, in whole or in part is based upon a debt that is dischargeable. . . ." must comply with section 524(c). Even though the debtor may have received some post filing consideration, at least part of the consideration for the agreement is based upon the dischargeable debt.
Section 524(c), as pertinent, requires that:
An agreement between a holder of a claim and the debtor, the consideration for which, in whole or in part; is based upon a debt that is dischargeable . . . is enforceable . . . only if . . .
(2) such agreement contains a clear and conspicuous statement which advises the debtor that the agreement may be rescinded at any time prior to discharge or within sixty days after such agreement is filed with the court, whichever occurs later, by giving notice of rescission to the holder of such claims;
(3) such agreement has been filed with the court . . .
(6)(A) in a case concerning an individual who was not represented by an attorney during the course of negotiating an agreement under this subsection, the court approves such agreement. . . .
In enacting these reaffirmation rules, Congress attempted to preserve the fresh start goal of the bankruptcy laws and insure that "voluntary" reaffirmation agreements were truly voluntary. See S.Rep. No. 989, 95th Cong., 2d Sess. 162-164, reprinted in 1978 U.S.Code Cong. & Ad.News 5787, at 6123-6125.
Because of the danger that creditors may coerce debtors into undesireable reaffirmation agreements, the language of section 524(c) must be strictly construed. See In re Roth, 38 B.R. 531 (Bankr.N.D.Ill. E.D.1984), aff'd 43 B.R. 484 (Bankr.N.D.Ill. E.D.1984); In re Farmer, 13 B.R. 319 (Bankr.M.D.Fla.1981); In re Miller, 13 B.R. 697 (Bankr.E.D.Pa.1981); In re Stephens, 2 B.R. 365 (Bankr.N.D.Ohio 1980).
There is no evidence that either Mr. Daviau or Mr. Nale executed any pressure on the debtor to participate in the settlement agreement. Lack of such pressure, however, makes no difference here. The agreement must comply with Section 524(c) to be enforceable.
An appropriate order will be entered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1128283/ | 716 So. 2d 891 (1998)
Melanie K. STARKMAN
v.
MUNHOLLAND UNITED METHODIST CHURCH.
No. 98-C-0400.
Supreme Court of Louisiana.
March 27, 1998.
Denied.
KNOLL, J., not on panel. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/304262/ | 462 F.2d 740
Pedro Luis Rodriguez y PAZ et al., Defendants-Appellants,v.UNITED STATES of America, Plaintiff-Appellee.
No. 28997.
United States Court of Appeals,
Fifth Circuit.
June 29, 1972.
William A. Daniel, Jr., Miami, Fla., for Dulce Espinosa.
Gino P. Negretti, Miami, Fla., for Fernandez, Lum & Echavarry.
James E. Siff, New York City, for Jackson.
Lawrence E. Hoffman, Miami Beach, Fla., for Acosta.
Frank Ragano, Miami, Fla., for Rodriguez y Paz.
Max Kogen, Miami, Fla., for Inchaustegui.
Robert W. Rust, U. S. Atty., J. V. Eskenazi, Neal R. Sonnett, Asst. U. S. Attys., Miami, Fla., for plaintiff-appellee.
Before BELL, AINSWORTH and GODBOLD, Circuit Judges.
GODBOLD, Circuit Judge.
1
There were 13 defendants and 23 additional named co-conspirators in this complex and lengthy narcotics case, which concerns drug traffic activities in Miami, New York, Detroit, Nicaragua, South American countries, and elsewhere, and involving dozens of persons. Four defendants fled and were not tried. In a lengthy trial in Miami, Florida, ending June 23, 1970, one defendant was acquitted. The remaining eight-Paz, Raul Fernandez, Acosta, Lum, Echavarry, Espinosa, Jackson and Inchaustegui-were convicted under Count I, conspiracy to import heroin and cocaine.1 Five of them-Paz, Acosta, Raul Fernandez, Echavarry and Inchaustegui-were convicted under Count II, transportation and concealment of cocaine.2 All eight appeal.
2
We reverse the convictions under Count Two. As to several issues, we affirm. And we remand for an evidentiary hearing on the issue of the presence in the jury room of non-evidentiary material relating to drugs and drug traffic.
3
The government's evidence tended to show a conspiracy of the following general nature. The original actors were defendants Paz, Acosta and Raul Fernandez, who were associated together in drug activities in the New York area. Subsequently Paz and his wife, defendant Dulce Espinosa, went to the Central American city of Managua, Nicaragua, which became their base of operations, while Raul Fernandez and Acosta began to operate principally out of Miami. Illegal shipments of drugs were brought into Miami from Managua and South American points, but principally from Managua, by young American women couriers who entered Miami with parcels of drugs strapped to their bodies. The usual payment to the courier was $1,000. The couriers also transported between Miami and Managua letters, funds, lactose (for "cutting" drugs) and even merchandise destined as gifts for Nicaraguan officials. Many of these young couriers were named as co-conspirators but not defendants. Defendant Anna Echavarry accompanied couriers on numerous flights between Miami and Central and South America and assisted in arrangements at these foreign points of origin.
4
The couriers were recruited by co-conspirator Frank Cocossa, assisted by co-conspirator Gloria Richards. Also Cocossa made several trips between Miami and Managua, where he met Paz a number of times, and he assisted in moving at least one shipment of drugs to New York. Cocossa had been brought into the operation by defendant Inchaustegui, whose activities were chiefly in Miami but who was at times in Managua. Inchaustegui also supplied expense money to couriers, received incoming shipments, and supplied lactose.
5
Defendants Acosta and Raul Fernandez were active at the Miami end. They supplied drugs to a New York group which included a number of co-conspirators and defendant Lucrecia Lum. Lum also transported, sold and guarded drugs. Defendant Jackson was a purchaser of the ring's drugs, based in the Detroit area. Also he assisted in transportation of drugs. Defendant Raul Fernandez was from time to time engaged in collecting monies due from purchasers.
6
Facets of the conspiracy were described in detail by several couriers, the recruiters Cocossa and Gloria Richards, two members of the New York group, and several government agents.
1.
7
There is no merit to the contention that there were multiple conspiracies rather than one. This is a question for the trier of the facts, Koolish v. United States, 340 F.2d 513 (8th Cir.), cert. denied, 381 U.S. 951, 85 S. Ct. 1805, 14 L. Ed. 2d 724 (1965), and it is quite clear that there was sufficient evidence on which to submit it to the jury.
2.
8
The trial court erred in denying the timely motions of the Count Two defendants for judgment of acquittal on that count, which was the substantive count. Count Two charged that seven named defendants "did fraudulently, knowingly and wilfully receive, conceal and facilitate the transportation and concealment" of approximately six pounds, 10 ounces of cocaine on or about September 27, 1968, at Miami, in violation of 21 U.S.C. Sec. 174. Five of the defendants were among those already described-Paz, Acosta, Raul Fernandez, Echavarry, and Inchaustegui. The other two were Norberto Fernandez, whose motion of judgment for acquittal was granted, and Mario Marrero, who fled and was not tried but was described in testimony as a participant in the conspiracy.
9
Evidence concerning this particular charge was that on September 27, 1968, a government agent, acting on information the contents of which were unrevealed, put under surveillance deplaning passengers coming into the customs enclosure of the Miami airport. He observed a female passenger, Denise Bethancourt, who had arrived on a Lanica Airline flight from Managua, Nicaragua. He noted that she was bulky around the hips. The agent intercepted her after she had made her customs declaration and had completed a customs inspection. She was searched by female inspectors, who found taped to her body, underneath a girdle, six plastic bags of cocaine. Miss Bethancourt was wearing an "A-line" dress, a loose fitting dress that hangs from the shoulders and does not have a tight or fitted waist.
10
Prior to the arrival of the Lanica flight the agent checked the area outside of the customs enclosure at which vehicles park to pick up passengers and luggage, and noted a gold Buick Riviera and took its license number. Approximately two weeks before, while surveilling the Miami airport, the agent had observed the same Buick just prior to the arrival of the Lanica flight from Managua, Nicaragua. Also, in September, prior to September 27, the agent had observed the same automobile parked at the residence of Marrero in Hialeah, near Miami. There was ample testimony of Marrero's part in the conspiracy. After taking the license number on September 27, the agent had it checked and found that the car was registered in the name of Gilbert Roque at a Miami address which was shown to be the residence of defendant Acosta, a central figure in the conspiracy. Miss Bethancourt was not seen in or about the Buick at the airport or elsewhere. Her ticket stub showed that she had departed Miami on September 22, 1968.
11
At trial Miss Bethancourt claimed the privilege against self-incrimination and did not testify. There was no testimony by any of the other couriers, or the recruiters of couriers, or by anyone else, identifying her as a courier for this ring, or as even being in contact with or in the presence of any defendant or coconspirator, nor was the cocaine which she brought in connected by direct evidence to the conspiracy. In fact her name was mentioned in the testimony with respect to only this single incident at the Miami airport.3
12
To sum up, the evidence on the substantive count was this:
13
(1) Of a conspiracy, a facet of which was to import cocaine into Miami from Managua, Nicaragua, with testimony tending to show participation therein by each of the convicted Count Two defendants at either the Miami or the Managua end, or both;
14
(2) Of numerous shipments of cocaine made from Managua to Miami pursuant to the conspiracy and over a period of approximately a year, including September 1968;
15
(3) Of a modus operandi of shipment the same as that employed by Miss Bethancourt;
16
(4) Of the presence, in the vicinity of the customs area, of a gold Buick which had been seen earlier at the residence of a participant in the conspiracy and which was registered at the address of a central participant but in another name, and which had been observed at the airport prior to arrival of another flight from Managua.
17
This is not enough circumstantial evidence on which to convict. A jury could not reasonably conclude that the evidence excluded every reasonable hypothesis but that of guilt. Surrett v. United States, 421 F.2d 403 (5th Cir. 1970); Harper v. United States, 405 F.2d 185 (5th Cir. 1969). The possibility cannot reasonably be excluded that Miss Bethancourt was acting solely on her own behalf and had no connection with this ring, or that she was acting as part of another group. There is a suspicion that the Buick was at the airport to meet her, but it is no more than suspicion. The reason for its presence may have been innocent, and, if it was there as part of the conspiracy, the purpose of its presence was not necessarily connected with the arrival of Miss Bethancourt.
18
Meyers v. United States, 310 F.2d 801 (5th Cir. 1962), relied upon by the government, is no help to it. In that case the courier attempted to bring across an international bridge marijuana concealed in an automobile door. The codefendant was her husband. He was seen on the bridge less than two hours after his wife was stopped. In his possession was a cologne bottle, and the odor from it was similar to that of the heavily perfumed car driven by his wife. The marijuana was concealed in a position difficult to reach, and the inspector who retrieved it suffered scratches on his arm. Defendant, when arrested, had similar scratches on his arm, and was carrying a pair of gloves. No such nexus between courier and any defendant has been established in the present case.
3.
19
The case must be remanded for a limited post-trial hearing because of the presence in the jury room during the trial of two books, concerning drug traffic, drug problems, and people involved in drugs, that were not in evidence. The books were "Merchants of Misery," by J. A. Buckwalter, published by Pacific Press Publishing Association, Mountain View, Calif., and "Up Tight," by John Gimenez as told to Char Meredith, published by Word Books, Waco, Texas. "Merchants of Misery" was the more susceptible of influencing the juror. It concerns large-scale drug business carried on by criminal syndicates, which is the type of operation these defendants are claimed to have had.
20
The books were discovered on the seventeenth trial day, the last day of taking of testimony, when the trial judge and attorneys went into the jury room for the court to hear a legal argument out of the hearing of the jury. All defendants called the books to the attention of the court and moved for a mistrial, which was denied. The books were left in the jury room. A motion was made that they be obtained and the prefaces read into the record. The trial judge declined on the ground that to take the books away from the jury would only call attention to the problem. No inquiry was made of jurors to ascertain the extent, if any, that the books had been seen by members of the jury and discussed. Since no inquiry was ever made, the exact circumstances of the books being in the room were not established. The supposition is that one of the jurors brought them from a church library in Ft. Lauderdale, since the name of the library appears in at least one of the books. No corrective or cautionary instruction was given when the books were discovered and called to the court's attention or when the jury was charged. However, at the end of the proceedings on the day of discovery the court instructed the jury not to read newspapers or listen to news broadcasts, and added this:
21
Let me say one other thing. I hate to restrict you on your reading. However, until after this case is over, don't read anything, unless you get a letter from someone in your family. If you have to read any books or anything that might give you new and independent ideas about any of this matter, don't discuss it with each other.
22
Rather than being an instruction not to read extrinsic matter concerning the subject matter of the trial, this was subject to the interpretation that such reading was permissible so long as not discussed with other persons.
23
At the conclusion of the trial, after the verdict was rendered, the defendants requested the court to inquire of the jurors to determine who had checked out the books and the location of the library. The United States objected, and the court refused the request. The books before us are stipulated to be correct copies.
24
The defendants are entitled to a new trial unless it can be said that there is no reasonable possibility that the books affected the verdict. Farese v. United States, 428 F.2d 178 (5th Cir. 1970). In Farese the defendant was accused of interstate transportation of a fraudulent security. There was put in evidence an attache case which had a clean shirt in it. While examining the attache case the jury found $750 in cash in the shirt. There had been no testimony concerning any such sum-the only nexus was that the crime charged concerned monetary gain. This court reversed, applying the test of whether it could be said there was no reasonable possibility that the extrinsic matter affected the verdict. In United States v. Staples, 445 F.2d 863 (5th Cir. 1971), cert. denied, Kellis v. United States, 404 U.S. 1048, 92 S. Ct. 710, 30 L. Ed. 2d 739 (1972), law books had been left in the jury room. The judge interrogated the jurors and found that only one had examined the books, and what he had seen was not relevant to the offense on trial. The test, therefore, was satisfied. Here, as in Farese, the extrinsic matter does not go directly to the offense charged but to the type of conduct and activities on trial. Stoehr v. United States, 196 F.2d 276 (3d Cir.), cert. denied, 344 U.S. 826, 73 S. Ct. 28, 97 L. Ed. 643 (1952), is no help to the government. In a criminal income tax trial, the jury saw a movie about gangsters with remote references to income tax matters. The defense made no showing sufficient to place on the judge a duty to inquire. In his charge the court instructed the jury to disregard movies.
25
In framing relief which will give due regard to the rights of the government and of the defendants, we follow the procedure outlined by Judge Simpson in United States v. Barson, 434 F.2d 127, 131 (5th Cir. 1970). We remand to the District Court with directions to conduct an evidentiary hearing to determine whether there is or is not a reasonable possibility that the books affected the jury's verdict, Farese v. United States, supra. Inquiry must be made into how the books reached the jury room; whether they were available to members of the jury and, if so, for how long; the extent, if any, to which they were seen, read, discussed and considered by members of the jury; and such other matters as may bear on the issue of the reasonable possibility of whether they affected the verdict.4 The court shall make and certify to us findings of fact and conclusions of law together with a transcript of the hearing. Our determination of whether to affirm the judgments of conviction or to reverse and remand for new trial will follow such certification. Jurisdiction of the appeal is retained in this court during the limited remand for the purpose stated.
4.
26
Upon conclusion of the direct examination of each of several government witnesses, various of the defendants moved for production of the respective witnesses' testimony given before the grand jury. In each instance the motion was denied. Some of the witnesses had read the transcript of their respective grand jury testimony in preparation for testifying at the trial. The ground asserted for production was defendants' claim that the testimony at trial was inconsistent within itself, inconsistent with other statements, and inconsistent with the indictment. On appeal the claimed inconsistencies are said by defendants to be of particular importance because at least some of the witnesses concerned were convicted felons, or narcotics addicts, users and pushers, or both, and at least some were named as co-conspirators but not defendants.
27
Since Dennis v. United States, 384 U.S. 855, 86 S. Ct. 1840, 16 L. Ed. 2d 973 (1966), this circuit has continued to adhere to the rule that the defendant must make a showing of particularized need to be entitled to inspect grand jury minutes. United States v. Jenkins, 442 F.2d 429 (5th Cir. 1971); United States v. Barson, 434 F.2d 127 (5th Cir. 1970); Posey v. United States, 416 F.2d 545 (5th Cir. 1969), cert. denied, Snowden v. United States, 397 U.S. 946, 90 S. Ct. 965, 25 L. Ed. 2d 127 (1970); James v. United States, 416 F.2d 467 (5th Cir. 1969), cert. denied, 397 U.S. 907, 90 S. Ct. 902, 25 L. Ed. 2d 87 (1970); White v. United States, 415 F.2d 292 (5th Cir. 1969), cert. denied, 397 U.S. 993, 90 S. Ct. 1128, 25 L. Ed. 2d 400 (1970); Stassi v. United States, 401 F.2d 259 (5th Cir. 1968), vacated on other grounds sub nom. Giordano v. United States, 394 U.S. 310, 89 S. Ct. 1163, 22 L. Ed. 2d 297 (1969); Nolan v. United States, 395 F.2d 283 (5th Cir. 1968); Menendez v. United States, 393 F.2d 312 (5th Cir. 1968), cert. denied, 393 U.S. 1029, 89 S. Ct. 639, 21 L. Ed. 2d 572 (1969). Our position is contrary to the rule established in some other circuits which dispense with a required showing of a particularized need. See United States v. Amabile, 395 F.2d 47 (7th Cir. 1968), vacated on other grounds sub nom. Giordano v. United States, 394 U.S. 310, 89 S. Ct. 1163, 22 L. Ed. 2d 297 (1969); Allen v. United States, 129 U.S.App.D.C. 61, 390 F.2d 476 (1968); United States v. Youngblood, 379 F.2d 365 (2d Cir. 1967). Unlike several courts, see Cargill v. United States, 381 F.2d 849 (10th Cir. 1967), cert. denied, 389 U.S. 1041, 88 S. Ct. 781, 19 L. Ed. 2d 831 (1968); Schlinsky v. United States, 379 F.2d 735 (1st Cir.), cert. denied, 389 U.S. 920, 88 S. Ct. 236, 19 L. Ed. 2d 265 (1967), we have not read Dennis as equating an asserted need for grand jury minutes in order to impeach a government witness with the particularized need required for inspection. See Nolan v. United States, supra; Menendez v. United States, supra. While our decisions have stressed the need for maintaining the secrecy of grand jury proceedings, Nolan v. United States, supra; Menendez v. United States, supra, especially to prevent loss of testimony through fear of retaliation and to protect the independence of the grand jury, Posey v. United States, supra, we have recognized, as we must, the need for lifting the veil of secrecy when there is an actual discrepancy between a witness' grand jury and trial testimony. So that the grand jury's realm will be invaded no more than necessary we have approved as the initial step in response to motions for inspection an in camera inspection conducted by the district judge to discover any such inconsistencies. See Barson v. United States, supra; James v. United States, supra; Menendez v. United States, supra. Disclosure of grand jury minutes is thus a matter committed to the sound discretion of the district judge for evaluation in light of the particularized need alleged. In reviewing the exercise of that discretion, keeping in mind the desire for a balance between the need for secrecy and fairness to the defendant in presenting his defense, we have deemed relevant the availability of Jencks Act material as an alternative source of statements impeaching the witness whose grand jury testimony is sought. See United States v. Barson, supra; James v. United States, supra; Posey v. United States, supra.
28
We conclude that the trial judge did not commit reversible error in denying defendants access to the minutes. In reaching that view we bear in mind that the only asserted particularized need was the desire to search for impeaching material for use in cross examination, that as to some of the witnesses the trial judge made an in camera inspection of the minutes and found no inconsistencies, and that as to at least some of the witnesses defendants were given Jencks Act material for use in cross examination. We have pointed out that the policy of protecting individuals who have given information to the grand jury with respect to commission of crime is a wise one, but that "once the individual has been called as a witness at trial and his testimony made public, this principle in the run of the mill case is of slight if any weight." Barson, supra, 434 F.2d at 129. But this is not a routine case. The record is replete with evidence of organized crime and of misconduct of all sorts, and of far reaching and intricate criminal organization in many countries and in several parts of the United States, and some of the defendants were at large at the time of trial. As we pointed out in Barson, when there is a compelling need for secrecy to protect individuals even fair play does not demand that a defendant be allowed access to the grand jury minutes for impeachment purposes. We have considered the fact that in this instance, as in Barson, the trial judge examined testimony of some government witnesses in camera (and found no inconsistency) but, with no apparent reason for the distinction, declined to examine that of other government witnesses of no less importance. Nevertheless, because of the other factors we have enumerated, we are of the view that the present trial judge's allowable range of discretion was not exceeded.
5.
29
If admission into evidence of the cocaine brought into the country by Denise Bethancourt5 was error, as to the conspiracy count it was harmless beyond reasonable doubt. There had been day after day of testimony by witness after witness of the details of bringing in shipments of cocaine in the same manner, and of the financing of and arrangements for the shipments, and of distribution of cocaine thus brought in. It was not reversible error for the jury to see the seized fruits of a single shipment that was not sufficiently tied to the Count One defendants. Similarly, if it was error to admit into evidence two packages of heroin purportedly sold by Paz to an undercover agent-and the question is a close one-it was not reversible. This was only one item of an overwhelming mass of testimony relating to Paz's involvement as a central figure in the conspiracy.
30
The volunteered statement by a witness that he had come to Miami with two marshals and with defendant Paz handcuffed to him was not reversible error. In context it was little more prejudicial than a statement that Paz had been arrested. While Paz had not testified and thus had not put his character in issue, there was not, as in Odom v. United States, 377 F.2d 853 (5th Cir. 1967), a plain reference to a prior offense committed by a defendant; indeed, it is unclear whether the reference related at all to a different offense.
31
There is no merit to the contention of Acosta that a display of photographs from which witness Gloria Richards selected a picture of co-conspirator Jesus Alvarez was impermissibly suggestive.
32
Other contentions raised by defendants either do not require, or do not deserve, comment.
33
Affirmed in part. All convictions under Count Two are reversed. The case is remanded for the limited purpose of an evidentiary hearing, and jurisdiction of the appeal is otherwise retained.
*
Sitting by designation
1
In violation of 21 U.S.C. Secs. 173 and 174
2
In violation of 21 U.S.C. Sec. 174
3
Except for one other reference, which was stricken from evidence
4
Factors which go into cutting a Gordian knot of this kind are discussed in the dissenting opinion in United States v. McKinney, 429 F.2d 1019, 1031 (5th Cir. 1970), which opinion, on rehearing, became one of two opinions of the majority, United States v. McKinney, 434 F.2d 831 (5th Cir. 1970), cert. denied, 401 U.S. 922, 91 S. Ct. 910, 27 L. Ed. 2d 825 (1971)
5
See part 2, supra | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/532819/ | 890 F.2d 968
UNITED STATES of America, Plaintiff-Appellee,v.Alfred JORDAN, Defendant-Appellant.
No. 89-1774.
United States Court of Appeals,Seventh Circuit.
Argued Sept. 22, 1989.Decided Dec. 7, 1989.
R. Jeffrey Wagner, Asst. U.S. Atty. (argued), Office of the U.S. Atty., Milwaukee, Wis., for plaintiff-appellee.
Nikola Kostich (argued), Milwaukee, Wis., for defendant-appellant.
Before CUMMINGS, COFFEY and KANNE, Circuit Judges.
CUMMINGS, Circuit Judge.
Alfred M. Jordan appeals three determinations made by the district court in sentencing him under the Sentencing Reform Act of 1984 to 10 years in prison for possession with intent to distribute cocaine in violation of 21 U.S.C. Sec. 841(a)(1). Jordan objects to the district court's decisions to: (1) enhance the sentence for obstruction of justice pursuant to Section 3C1.1 of the United States Sentencing Commission Guidelines (the "Guidelines") on the basis of a finding that Jordan lied to his probation officer about his use of cocaine while awaiting sentencing in this case; (2) reject Jordan's request to reduce the sentence for Acceptance of Responsibility pursuant to Guidelines Sec. 3E1.1 on the basis of a finding that Jordan, again while awaiting sentencing in this case, continued to deal in cocaine; and (3) depart upward from the sentence dictated by the Guidelines for a combination of reasons. We conclude that the district court was not clearly in error in its factual determinations or incorrect in applying the Guidelines with regard to the first two decisions, and that the departure was reasonable on the grounds articulated by the district court. Therefore, we affirm the sentence of the district court.
BACKGROUND
The events that resulted in Jordan's indictment and conviction occurred during the course of one day. Jordan persisted in criminal conduct as his case proceeded through the criminal justice system, however, and that conduct significantly affected the sentence of confinement ordered by the district court.
1
On August 3, 1988, a confidential informant for Wisconsin's Division of Criminal Investigation in Milwaukee telephoned Raymond Donaldson and they discussed a sale of cocaine to the informant. That afternoon, the informant met Donaldson and Jordan at Donaldson's residence, where Donaldson and Jordan agreed to sell the informant four ounces of cocaine. Jordan would later testify that he had obtained the cocaine for the deal. Transcript of Change of Plea, October 31, 1988, at 15-16.
2
Jordan and Donaldson left the house, but were confronted by state and federal agents as they entered a car Jordan was using. Donaldson surrendered, was arrested, and became Jordan's co-defendant in the criminal case that followed.1 Jordan, on the other hand, fled after struggling with an agent and breaking free. While running from the car, he threw a paper bag containing four one-ounce packages of cocaine into the air. As the chase continued, Jordan slammed shut a fence gate, tripping an agent of the Internal Revenue Service's Criminal Investigation Division and causing the agent to dislocate a finger. Surgery to the agent's hand was required. Jordan was captured and arrested after he was discovered underneath the porch of a nearby residence.
3
Jordan and Donaldson were indicted by a federal grand jury for the Eastern District of Wisconsin of the following: Count I, conspiracy to distribute cocaine in violation of 21 U.S.C. Sec. 841(a)(1); Count II, possession with intent to distribute four ounces (113.4 grams) of cocaine, also in violation of 21 U.S.C. Sec. 841(a)(1). Jordan was also charged with a third count, assault on a law enforcement officer engaged in performance of his official duties, in violation of 18 U.S.C. Sec. 111. The grand jury also sought forfeiture of the car Jordan was using at the time of his arrest as an instrumentality of the crimes.
4
Jordan pleaded guilty to Count II of the indictment pursuant to an agreement with the government under which Counts I and III were dropped. He agreed as part of that written plea agreement to forfeit any interest he might have in the car. He was released on a $100,000 bond secured by property.
5
On December 22, 1988, while he awaited sentencing, Jordan submitted to a urinalysis test by the United States Probation Office. The test yielded a positive result for the presence of cocaine on February 6, 1989. When his probation officer told him of the positive result the next day, Jordan denied using any illegal drugs.
6
In the meantime, on January 6, 1989, Milwaukee police had stopped a vehicle in front of a known drug house. Inside the car were Jordan, then 33 years old, and a 17-year-old male. Jordan had in his possession a plastic bag containing $3,983 in cash, a beeper, and approximately 7.5 grams of marijuana. The juvenile carried a plastic bag filled with 101 paper packages containing a total of approximately 19 grams of cocaine. Then, on February 8, 1989, a similar scenario was played out. A car containing Jordan and a 14-year-old was stopped by Milwaukee police in the same area. This time, Jordan had a plastic bag in the glove compartment containing $1,617 in cash and cocaine residue. Jordan did not contest the police accounts of these two arrests at his sentencing hearings, nor did he attempt to give those facts innocent explanations. After these incidents were brought to the attention of the district court, Jordan's bail was revoked.2
SENTENCING
7
Federal probation officers assigned to the case initially recommended a "total offense level," the score net of applicable adjustments, of 32 under the Guidelines. At the other axis of the Sentencing Table, Jordan's Criminal History Category was determined to be VI, the maximum level.3 This translated into a sentencing range of imprisonment of 210-262 months, in part because probation officials placed Jordan in the career offender category, pursuant to Guidelines Secs. 4B1.1 and 4B1.2.4 After hearing extensive testimony on a range of sentencing and factual issues,5 the district court determined at the final sentencing hearing on April 3, 1989 that no two of Jordan's prior convictions were crimes of violence and therefore he could not be sentenced as a career criminal under the Guidelines. That decision left Jordan with a "base offense level," before adjustments, of 18, with his Criminal History Category level remaining at VI.
8
The court then added two levels for obstruction of justice under Guidelines Sec. 3C1.1. The court based this enhancement on Jordan's denial of cocaine use even after he was confronted with the positive test results.
9
As his next step toward fixing a total offense level, the district judge declined to grant Jordan's request for a two-level reduction for Acceptance of Responsibility under Guidelines Sec. 3E1.1. The district court based that decision on the two incidents of drug-related activity during the presentence period. The district court acknowledged Jordan's plea and accompanying admission of responsibility for the possession with intent to distribute. Nevertheless, the court was persuaded that "this is one of those cases where the old adage actions speak louder than words certainly comes into play." Transcript of Sentencing Continuation, April 3, 1989 (hereinafter "Tr.") at 76.
10
Those two decisions left Jordan with a total offense level of 20. This would dictate a range of imprisonment of 70-87 months at his Criminal History Category. See Sentencing Table, United States Sentencing Commission, Guidelines Manual, at 5.2 (Nov.1989) (hereinafter Manual ). The government urged an upward departure to 180 months, or 15 years, based on the provision in the Guidelines that the court may depart from the sentencing schedule when, but only when, it finds "an aggravating or mitigating circumstance ... that was not adequately taken into consideration by the Sentencing Commission." 18 U.S.C. Sec. 3553(b). The Probation Office stated in a report to the district court that upward departure "might be considered" because of Jordan's flight from arrest and the injury to the federal agent and also because the two new arrests had not been counted as past criminal conduct in computing Jordan's criminal history category. Addendum to presentence investigation report, Defendant's Br., at 3.
11
The district court decided to depart upward, but not so far as the government urged and far below the statutory maximum of 20 years in prison and a fine of $1 million. The court sentenced Jordan to serve 120 months and also fined Jordan $2,500.6 The court based its decision to boost the sentence by 33 months above the maximum end of the Guidelines range on the following factors: (1) Jordan's attempt to flee from the agents during the original drug-dealing incident, resulting in injury to one of the agents; (2) the two incidents of criminal activity while Jordan was awaiting sentencing; (3) Jordan's abuse of cocaine while awaiting sentencing; and (4) Jordan's criminal record "as a whole." Tr. at 88-90.
12
This timely appeal followed entry of the court's sentencing judgment.7
I.
Standards of Review
A. Questions of Fact and Application
13
We review a district court's factual findings in determining an appropriate criminal sentence for clear error. 18 U.S.C. Sec. 3742(e); United States v. Herrera, 878 F.2d 997, 999-1000 (7th Cir.1989). Whether Jordan obstructed justice within the meaning of Guidelines Sec. 3C1.1 and whether he accepted responsibility within the meaning of Guidelines Sec. 3E1.1 were essentially questions of fact for the district court to resolve from a variety of sources. The commentary to Section 3E1.1 in particular instructs a court of appeals to be especially deferential in reviewing a finding that a defendant has not accepted responsibility because "[t]he sentencing judge is in a unique position to evaluate a defendant's acceptance of responsibility. For this reason, the determination of the sentencing judge is entitled to great deference on review and should not be disturbed unless it is without foundation." Application Note 5, Manual at 3.24.
14
Because the district court works within the limits imposed by the Guidelines, however, a reviewing court must determine whether the district court correctly applied those provisions, a question of statutory construction to be reviewed under what may be a somewhat less deferential standard, as suggested by 18 U.S.C. Sec. 3742(e)(2).8 The result is that we will affirm the district court if it correctly applied the Guidelines to findings of facts that do not leave us " 'with the definite and firm conviction that a mistake has been committed.' " Herrera, 878 F.2d at 1000 (citations omitted).
B. Departure
15
We review a district court's decision to depart from the Guidelines sentencing range to determine whether it was reasonable in light of the factors dictated by the Guidelines and the district court's explanations for its departure. 18 U.S.C. Sec. 3742(e)(3); United States v. Missick, 875 F.2d 1294, 1300-1301 (7th Cir.1989); United States v. Miller, 874 F.2d 466, 471 (7th Cir.1989).9 As this Court stated in Miller: " 'Reasonableness' implies that a sentencing judge must provide articulable reasons, of a type contemplated by the Act and the Guidelines, and based on a sufficiently sound factual foundation, to justify a departure from the guidelines." 874 F.2d at 471.
16
In addition, we agree with the Second, Fifth, and Sixth Circuits that the Sentencing Commission did not intend to deprive district courts of "sensible flexibility" in deciding to depart from the Guidelines. See, e.g., United States v. Sturgis, 869 F.2d 54, 56-57 (2d Cir.1989); United States v. Rodriguez, 882 F.2d 1059, 1068 (6th Cir.1989); United States v. Roberson, 872 F.2d 597, 601, 602 n. 4 (5th Cir.1989).
II.
Analysis
A. Enhancement for Obstruction of Justice
17
Under Guidelines Sec. 3C1.1, the district court is to increase the base offense level by two if the defendant "willfully impeded or obstructed, or attempted to impede or obstruct[,] the administration of justice during the investigation or prosecution of the instant offense." The application notes list examples suggestive of behavior that would call for the adjustment, including "testifying untruthfully or suborning untruthful testimony concerning a material fact ...; [and] furnishing material falsehoods to a probation officer in the course of a presentence or other investigation of the court." Application Note 1(c), (e). The Commentary to Section 3C1.1 explains that sentences should be increased in those cases in which a defendant "engages in conduct calculated to mislead or deceive authorities or those involved in a judicial proceeding, or otherwise to willfully interfere with the disposition of criminal charges, in respect to the instant offense."
18
On the basis of the positive test for cocaine and Jordan's denial that he had used cocaine while he awaited sentencing in this case, the trial court concluded that Jordan had lied about his drug use to the probation officer. Jordan does not base his appeal on the validity of the drug test per se or its use by the probation office. Instead, Jordan maintains that his denial could not be considered a "material falsehood" of the sort that the Sentencing Commission intended to punish under Guidelines Sec. 3C1.1.
19
The district court did not clearly err in finding that Jordan's continued drug use while out on bail for a drug-related conviction was material to the disposition of his case, and therefore that his lie about that conduct was a material falsehood. Jordan's drug abuse during the pendency of his drug-dealing prosecution was directly relevant to both the Probation Office and the district court in determining how Jordan's case should be handled. Monitoring the behavior of convicted defendants is an integral and critical function of the Probation Office and of the courts in criminal case management. Such monitoring is particularly important in cases involving defendants with criminal records who have pleaded guilty to drug dealing. The importance of monitoring is buttressed by the very fact that the Probation Office takes urine specimens from defendants in Jordan's position.
20
We infer that the district court found that Jordan was trying to obstruct investigation of his drug-related activities as a whole, a finding bolstered by the two incidents of drug dealing that followed his plea and the urinalysis test. Jordan willfully attempted to hinder the prosecution and disposition of his case. A false statement about drug use during the sentencing stage of criminal court proceedings could thus be seen as constituting "obstruction of justice during ... prosecution" of the case against Jordan. See United States v. Mata-Grullon, 887 F.2d 23, 24 (3d Cir.1989) (per curiam ) (dicta) (nothing improper in such adjustment where defendant lied about his name, birth date, and citizenship to immigration agent and federal magistrate).
21
B. Rejection of Acceptance of Responsibility
Guidelines Sec. 3E1.1 provides that:
22
(a) If the defendant clearly demonstrates a recognition and affirmative acceptance of personal responsibility for his criminal conduct, reduce the offense level by 2 levels.10
23
* * *
24
(c) A defendant who enters a guilty plea is not entitled to a sentencing reduction under this section as a matter of right.
25
In determining whether a defendant qualifies for an acceptance of responsibility adjustment, consideration may be given to "voluntary termination or withdrawal from criminal conduct or associations." Application Note 1(a). In addition, Application Note 4 states that acceptance of responsibility is "ordinarily" not warranted where a defendant's sentence is being enhanced pursuant to Guidelines Sec. 3C1.1, as Jordan's is here.11
26
The district court rejected Jordan's request for "remorse points" on the basis of Jordan's undisputed participation in what appeared to be two separate incidents of drug dealing involving minors while he awaited sentencing. There was no factual dispute regarding these incidents. The district judge exercised his discretion properly in finding that a defendant who took advantage of his status as a convicted drug dealer free on bond to pursue drug trafficking in the company of minors has not accepted responsibility for the criminal behavior for which he was convicted. Jordan does little more than point to his guilty plea to a single count of his three-count indictment as evidence of his acceptance of responsibility. The Sentencing Commission went out of its way in subsection 3E1.1(c) to suggest that a plea alone does not justify leniency; a district court may expect more than Jordan has provided in the way of visible acceptance of responsibility. Just as it is difficult to credit Jordan with acceptance of responsibility in light of his continued drug dealing, it is also hard to see how his use of cocaine while awaiting sentencing for dealing in that drug is consistent with acceptance of responsibility for that crime.
C. Upward Departure
27
The sentencing court is not generally allowed to depart from a prescribed guidelines sentence on the basis of circumstances adequately taken into consideration by the Sentencing Commission. 18 U.S.C. Sec. 3553(b). The Sentencing Commission nonetheless decided to allow for departures for two primary reasons. First, the Commission recognized the difficulty of establishing within one set of categories and commentaries, particularly the first such set, a system that would adequately address "the vast range of human conduct potentially relevant to a sentencing decision." Policy Statements, Manual at 1.6. Second, the Commission trusted sentencing courts to save their authority to depart for the truly atypical case. "[T]hey will not do so very often." Id. at 1.7.
28
Thus if the Guidelines simply do not capture circumstances of a case which the district court determines are relevant to a proper sentence or if the circumstances are sufficiently unusual, the district court may in its discretion factor those circumstances into his or her sentencing decision. Guidelines Policy Statement Sec. 5K2.0, Manual at 5.42. Such occasional departures do not defeat the purpose of the Guidelines, which is to "carve out a 'heartland,' a set of typical cases," against which each individual case must be measured. See Policy Statement 4(b), Manual at 1.6.
29
A district court may consider departure only after it has already computed the total offense level and criminal history category according to the Guidelines, as the court did here with painstaking care during the course of three hearings spread over a month's time. At that point, when the court is determining whether departure is warranted, "the court may consider, without limitation, any information concerning the background, character, and conduct of the defendant, unless otherwise prohibited by law." Guidelines Sec. 1B1.4 (citing 18 U.S.C. Sec. 3661); see also United States v. de la Cruz, 870 F.2d 1192, 1196 (7th Cir.1989). Thus, as the commentary of the Guidelines notes, "[t]he range of information that may be considered at sentencing is broader than the range of information upon which the applicable sentencing range is determined." Background to Commentary of Sec. 1B1.3, Manual at 1.20.
30
Judge Stadtmueller explained his decision to depart beyond the sentence dictated by the Guidelines grid in open court in accordance with 18 U.S.C. Sec. 3553(c) and provided specific reasons for the departure in accordance with 18 U.S.C. Sec. 3553(c)(2). He stated that Jordan's was not a prototypical case falling within the "heartland" of such drug-dealing cases:
31
This is not a simple possession case in any sense of the word. The facts belie that. The facts speak out loud and clear that even once charged the defendant was found to have cocaine present in his body systems and involved juveniles in the further trafficking of cocaine.
32
And those facts as well as the defendant's record as a whole, coupled with the matter of the apprehension of the defendant on the occasion of his arrest for the offense with which he presently stands charged and convicted of, in the view of the court cry out for a sentence that goes a bit beyond that called for under the guidelines.
33
Tr. at 89-90.
34
Jordan objects that the district court: (1) did not inform him in advance that the court would be departing from the Guidelines range; (2) was not sufficiently specific in its statement explaining the decision to depart, thus violating the requirement that sentencing courts justify departure; (3) based its departure in part on offenses to which Jordan did not plead guilty; and (4) subjected Jordan to "double punishment" by relying on factors that already counted against him under the Guidelines. Keeping in mind the "reasonableness" standard cited above, we consider each objection in turn, treating the third objection as a subset of the second objection.
1. Notice
35
This objection is defeated by logic, the guidelines themselves, and the record in this case. First, the district court cannot announce what the court plans to order in advance of a hearing called for the purpose of soliciting testimony, weighing evidence, and reaching a final sentencing decision. A defendant and his or her defense counsel come to the final sentencing hearing prepared to seek the most favorable sentence possible, having been informed of the probation officer's recommendations. See Fed.R.Crim.P. 32(a)(1).12 As long as they are not unfairly surprised with new evidence or information, the court is free to announce its sentence in compliance with the Guidelines and other applicable law.
36
Second, the Sentencing Commission stated that "[t]he controlling decision as to whether and to what extent departure is warranted can only be made by the court at the time of sentencing." Sec. 5K2.0, Manual at 5.42 (emphasis added). This statement anticipates a "sentencing moment" during which the court makes a final determination about departure. That moment most logically falls at the close of a final hearing.
37
Finally, the district court gave Jordan innumerable opportunities to address the calculation of the sentence and the circumstances of the case, well in excess of any requirement of the Guidelines or due process. See United States v. Agyemang, 876 F.2d 1264, 1270 (7th Cir.1989) (government need not tell defendant whom it plans to call to testify, what evidence it plans to present, or even whether it plans to present evidence at sentencing hearing). That fact distinguishes this case from United States v. Palta, 880 F.2d 636, 640 (2nd Cir.1989), in which the court determined that the defendant was not given an adequate opportunity to be heard regarding departure from the Guidelines. If Jordan and his counsel harbored any false sense of security at the time of sentencing it was in spite of the record developed to that date, not because of it. See Tr. at 55-56 (Jordan's counsel referring to departure and "possible departure").
2. Specificity and Reasonability
38
The sentencing court must state "the specified reason for imposition of a sentence different from that described" in the Guidelines. 18 U.S.C. Sec. 3553(c). The district court explained that Jordan's case was extraordinary because he had continued to use and deal in cocaine while awaiting sentencing on a cocaine conviction, because he fled from the scene of his initial arrest, causing injury to a federal agent, and because he took these actions despite the fact that he had already compiled what should have been a sobering criminal record. The record reflects that Jordan and his counsel had ample opportunities before and during the final sentencing hearing to challenge and probe all of those findings. We take each of the district court's justifications for departure in turn, considering jointly Jordan's cocaine use and drug dealing while awaiting sentence.
39
a. Attempt to Flee Arrest and Assault on Officer. --As part of the plea agreement, the government dropped Count III of the indictment, charging Jordan with assaulting the federal agent during his flight from arrest on August 3, 1988. Jordan did not contest the government's description of his flight and the injury to the federal agent, but only denied that Jordan intended to injure the agent and that therefore the injury was "self-inflicted." Defendant's Br. at 10.
40
The fact that the government decided not to pursue prosecution on a count returned by the grand jury as part of a plea agreement does not in itself preclude the district court from considering the facts involving that count as an aggravating circumstance "of a kind ... that was not adequately taken into consideration by the Sentencing Commission in formulating the Guidelines." 18 U.S.C. Sec. 3553(b). Just as a defendant who engages in a high-speed car chase while violating an unrelated federal law may justifiably receive an enhanced sentence for violating the federal law, see United States v. Ramirez-DeRosas, 873 F.2d 1177 (9th Cir.1989), so too a defendant who flees federal and state agents and causes serious injury to one of them may be sentenced more harshly. Such conduct is not part and parcel of possessing cocaine with the intent to distribute it. It was within the discretion of the district court to consider the harm inherent in Jordan's flight from and struggle with armed agents, including the potential for even more serious injury to authorities and bystanders than occurred in this case. It was also of course within the authority of the district court to determine that the injury was not "self-inflicted."
41
b. Use of Cocaine and Drug Dealing While Awaiting Sentence.--The charges arising out of the two arrests that occurred while Jordan was awaiting sentencing were still pending at the time of sentencing in this case. The record does not reflect any attempt to prosecute Jordan for illegal drug use in connection with the positive drug test. Regardless of the disposition of the state charges and the potential criminal liability for the drug use, however, Jordan was already in the highest criminal history category for purposes of sentencing in the present case. That fact distinguishes this case from those in which a sentencing court attempts to disregard the Guidelines based on a finding that the defendant's criminal history score inadequately accounts for past conduct, despite the fact that the court could adjust for the inadequacy by increasing the criminal history category one or more levels. Miller, 874 F.2d 466; see Taylor v. United States, --- U.S. ----, 110 S. Ct. 265, 107 L. Ed. 2d 215 (1989) (Stevens, J., concurring with denial of certiorari).
42
According to the Guidelines Policy Statement regarding the adequacy of the criminal history category, departure is permissible where:
43
[R]eliable information indicates that the criminal history category does not adequately reflect the seriousness of the defendant's past criminal conduct or the likelihood that the defendant will commit other crimes,.... Such information may include, but is not limited to, information concerning:
44
* * *
45
* * *
46
(e) prior similar adult conduct not resulting in criminal conviction.
47
Sec. 4A1.3.
48
The sentencing judge need not "incant the specific language used in the guidelines." United States v. De Luna-Trujillo, 868 F.2d 122, 124 (5th Cir.1989) (discussing departure based on Guidelines Sec. 4A1.3). Strongly implicit in the district court's explanations of the departure was a finding that Jordan--who dealt in cocaine, abused cocaine, and then lied about his use when confronted with solid evidence to the contrary, all while awaiting sentencing in a cocaine-dealing case--clearly exhibited a propensity to commit future crimes. The federal prosecutor described Jordan during the final sentencing hearing as "completely incorrigible." Tr. at 85. In explanatory remarks before pronouncing sentence, the district court stated, "Clearly we have an individual who has not in any sense of the word seen the error of his ways when it comes to drug dealing and involvement in it." Tr. at 89.
49
The circumstances of Jordan's two presentencing arrests, together with his drug use, are uncontested and provide "reliable information" supporting a finding by the district court that the use of a Category VI criminal history in Jordan's case did not adequately reflect "the seriousness of the defendant's past criminal conduct or the likelihood that the defendant will commit other crimes." See United States v. Diaz-Villafane, 874 F.2d 43, 50 (1st Cir.1989). There were clear indications in the two arrests that Jordan was not simply consuming illegal drugs, but was in fact trafficking in them. The district court made a reasonable decision in finding that such activities bespeak a potential for future criminal conduct far beyond the factors that went into reaching Jordan's total offense level and criminal history category.
50
c. Criminal Record.--Had the district court in this case not probed Jordan's criminal record in great detail during the series of hearings held in this case--largely to settle the career offender question not at issue in this appeal--the district court's reference to Jordan's record as a grounds for departure would be more troubling. See, e.g., United States v. Wells, 878 F.2d 1232, 1233 (9th Cir.1989) (Guidelines not satisfied by general recitation that defendant's criminal history category or offense level underrepresents defendant's criminal record); United States v. Michel, 876 F.2d 784 (9th Cir.1989) (same). In determining whether Jordan qualified as a career offender, however, the court had an opportunity to review and discuss his record in some detail. The district court did not simply rely upon the prior arrest record, which is discouraged by the Guidelines. Sec. 4A1.3, Manual at 4.9 ("[A] prior arrest record itself shall not be considered under Sec. 4A1.3."). Instead, it found that Jordan both before and after his arrest in this case generated a record of criminal behavior that was not captured by the highest category of criminal history. That finding was not clearly erroneous.
51
Finally, Jordan suggests that a departure of "well over 50% of the lower end of the range," in fact 71 percent, was unreasonable. Br. at 10. The degree of departure must be reasonable. 18 U.S.C. Sec. 3742(e)(3); United States v. Ryan, 866 F.2d 604, 610 (3d Cir.1989). The facts supporting the district judge's decision to depart from the sentence dictated by the Guidelines also support his decision to make the departure substantial. It does not appear unreasonable.
52
3. "Double Punishment"
53
Finally, Jordan argues that the district court impermissibly relied on the same factors more than once in its various adjustments to the base offense level and in arriving at its decision to depart from the Guidelines. These claims misstate the district court's grounds for his various decisions and also misconstrue the Guidelines.
54
A factor listed as an adjustment or as a specific offense characteristic within the Guidelines may still provide grounds for departure "if the court determines that, in light of unusual circumstances, the guideline level attached to that factor is inadequate." Policy Statement, Sec. 5K2.0. Moreover, a district court's determinations regarding adjustment for such factors as Acceptance of Responsibility are judgments made entirely separately from the decision regarding upward or downward departure from the Guidelines, though the two decisions probably will often involve use of the same underlying facts. Compare Sec. 1B1.3 and Sec. 1B1.4.
55
In departing from the Guidelines, the district court carefully considered the circumstances of Jordan's particular case and did not act out of generalized dissatisfaction with the Guidelines. Because the district court did not rely on any impermissible ground in deciding to depart, we need not decide whether any improper reasons would have called for reversal. Compare United States v. Nuno-Para, 877 F.2d 1409, 1414 (9th Cir.1989) (remand where improper and proper reasons given) with United States v. Rodriguez, 882 F.2d 1059, 1066-1068 (6th Cir.1989) ("reasonable" departure despite district court's use of impermissible rationale). The upward departure was warranted under the circumstances of Jordan's case and the amount of the departure was not unreasonable in light of his continuing criminal activity.
III.
56
For the reasons discussed above, the sentence of the district court is affirmed.
1
Donaldson's case is unrelated to this appeal
2
Also before the sentencing court in this case were the following incidents reported in Jordan's record: on May 17, 1988, before his arrest in the present case, Jordan was arrested in Milwaukee and charged with possession of marijuana and driving on a revoked license; authorities recorded five other separate cases against Jordan for driving after license revocation. All of these offenses were apparently pending at the time of sentencing in this case
3
Jordan had an extensive record, but it did not include any drug offenses. He was convicted of robbery in 1974, theft in 1977, and burglary in 1984. In addition to those felonies, he was convicted of bail jumping in 1974 and escape in 1980, 1982, and again in 1986. This history left him with a subtotal criminal score of 14 points. To this two points were added because he committed the present offense less than two years after release from imprisonment on a sentence of more than one year and one month. The highest level of criminal history categories is defined as 13 or more points
4
Section 4B1.1 provides in relevant part:
A defendant is a career offender if ... (2) the instant offense of conviction is a felony that is either a crime of violence or a controlled substance offense, and (3) the defendant has at least two prior felony convictions of either a crime of violence or a controlled substance offense....
Section 4B1.2 defines the terms used in the quoted Section. See United States v. Belton, 890 F.2d 9 (7th Cir. 1989).
5
The record reflects that Judge Stadtmueller scheduled at least five sentencing hearings, three of which developed into substantive inquiries, and the record suggests that he gave considerable attention to each of the defendant's objections
6
The fine represented a downward departure from the Guidelines, which the government has not appealed
The district court also sentenced Jordan to five years of supervised release upon his release from prison, the first 120 days of which are to be spent in a community treatment center, enrollment in a substance abuse program, and assessment of a $50 fine.
7
Defendant failed to comply with Seventh Circuit Rule 30(a), (b), or (c), thereby creating a deficient record for review. See United States v. White and United States v. Roe, 888 F.2d 490 (7th Cir.1989). Briefs must contain complete summaries of the reasons delivered by sentencing courts for their decisions. We do not penalize the defendant for this omission, but repeat that such omissions may be adequate grounds for summary affirmance. Id
8
Congress amended 18 U.S.C. Sec. 3742(d) in 1988 to require appellate courts to give "due deference to the district court's application of the guidelines to the facts." Anti-Drug Abuse Act of 1988, Pub.L. 100-690. Though it has been suggested that appellate courts should as a result use a "clearly erroneous" standard to review applications of the Guidelines, see, e.g., United States v. Wright, 873 F.2d 437, 443-444 (1st Cir.1989), the legislative history of the adoption of the "due deference" standard indicates that a sliding scale is appropriate:
This standard is intended to give the court[s] of appeals flexibility in reviewing an application of a guideline standard that involves some subjectivity. The deference due a district court's determination will depend upon the relationship of the facts found to the guidelines standard being applied. If the particular determination involved closely resembles a finding of fact, the court of appeals would apply a clearly erroneous test. As the determination approaches a purely legal determination, however, the court of appeals would review the determination more closely. 134 Cong.Rec. H11257 (daily ed. Oct. 21, 1988).
The present case does not call for a precise determination of this standard, however, because the district court's application of the Guidelines in the present case meets a standard well above the "clearly erroneous" measure.
9
The First and Sixth Circuits have followed a three-step process. United States v. Diaz-Villafane, 874 F.2d 43, 49-50 (1st Cir.1989); United States v. Rodriguez, 882 F.2d 1059, 1067 (6th Cir.1989); United States v. Joan, 883 F.2d 491, 494 (6th Cir.1989). The Second and Fifth Circuits appear to use a more simply stated requirement that the district court offer acceptable reasons for a reasonable departure. See United States v. Sturgis, 869 F.2d 54, 57 (2d Cir.1989); United States v. Velasquez-Mercado, 872 F.2d 632, 637 (5th Cir.1989)
10
This provision was amended effective January 15, 1988, by substituting the phrase "his criminal conduct" for the phrase "the offense of conviction" to clarify the intent of the Sentencing Commission. Manual at C.22
11
This commentary was amended effective November 1, 1989, to delete the statement that Acceptance of Responsibility points are "not warranted" for defendants to whom Sec. 3C1.1 applies. Manual at C.135. The district court in this case was guided by the older language, but did not base its decision to deny "remorse points" on that commentary
12
Jordan does not claim a Rule 32(a)(1) or (c)(3)(A) violation on the ground that the district court failed to determine or address whether he and his counsel had the opportunity to read and discuss the presentence investigation report | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/864275/ | IN THE SUPREME COURT OF MISSISSIPPI
NO. 2001-CA-01494-SCT
CONSOLIDATED WITH
NO. 1999-CA-01629-SCT
SHERMAN BOYLES, JR.
AND FAYE BOYLES
v.
SCHLUMBERGER
TECHNOLOGY CORPORATION
DATE OF JUDGMENT: 12/11/1997
TRIAL JUDGE: HON. BILLY JOE LANDRUM
COURT FROM WHICH APPEALED: JONES COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANTS: JOHN D. SMALLWOOD
GLENN LOUIS WHITE
STUART H. SMITH
ATTORNEYS FOR APPELLEE: OTIS R. TIMS
JOHN S. HILL
DONNA M. BARNES
NATURE OF THE CASE: CIVIL - OTHER
DISPOSITION: AFFIRMED - 12/12/2002
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE PITTMAN, C.J., WALLER AND GRAVES, JJ.
WALLER, JUSTICE, FOR THE COURT:
¶1. On October 8, 1993, Sherman and Faye Boyles sued Lynx Operating Company, Inc., the operator
of an oil well on their property, for damages for contamination of their property with salt water and naturally
occurring radioactive materials. On October 18, 1996, the Boyleses filed an amended complaint which
added Schlumberger Technology Corporation as a defendant. Schlumberger filed a motion for judgment
on the pleadings, contending that the running of the three-year statute of limitations1 barred the Boyleses'
claims against Schlumberger. In response to the motion, the Boyleses raised the discovery rule, alleging
that they did not know that Schlumberger had performed work on the property until 1996. The circuit
court granted Schlumberger's motion for judgment on the pleadings. On appeal,2 the Boyleses argue that
the discovery rule was applicable and the statute of limitations did not bar their claims against
Schlumberger.3 We find that the Boyleses' response to Schlumberger's motion for judgment on the
pleadings was insufficient and that the circuit court did not err in granting the motion.
DISCUSSION
I. WHETHER THE GRANT OF JUDGMENT ON THE
PLEADINGS WAS APPROPRIATE.
A. SCHLUMBERGER'S MOTION.
¶2. Schlumberger filed a motion for judgment on the pleadings, claiming that the Boyleses' claims
against it were barred by the three-year statute of limitations. The original complaint was filed on October
8, 1993, and the amended complaint adding Schlumberger as a defendant was filed on October 18, 1996.
B. CONVERSION OF THE MOTION FOR JUDGMENT ON THE
PLEADINGS TO A MOTION FOR SUMMARY JUDGMENT.
¶3. Under M.R.C.P. 12(c), a trial court may convert a motion for judgment on the pleadings to a
motion for summary judgment if the court considers matters outside the pleadings in ruling on the motion.
1
Miss. Code Ann. § 15-1-49 (2001).
2
The Boyleses appeal after the circuit court certified the order of dismissal of Schlumberger
pursuant to M.R.C.P. 54(b).
3
The appeal sub judice is actually the second appeal we have considered in this case. The first
appeal was an interlocutory appeal which presented procedural issues which are not relevant to the current
appeal. See Boyles v. Schlumberger Tech. Corp., 792 So. 2d 262 (Miss. 2001).
2
Although the circuit court did not characterize the motion as a motion for summary judgment, it is evident
that the circuit court treated the motion as one for summary judgment. As soon as the Boyleses filed their
response, the motion became one for summary judgment because they attached to their response exhibits
which were not in the pleadings.
¶4. Resolution of the issue of the discovery rule depended on exactly when the Boyleses were made
aware of their claims against Schlumberger. This information was not contained in the pleadings. We will
therefore treat the motion for judgment on the pleadings as one for summary judgment.
C. STANDARD OF REVIEW.
¶5. We employ a de novo standard of review of a trial court's grant or denial of a summary judgment
and examine all the evidentiary matters before it -- admissions in pleadings, answers to interrogatories,
depositions, affidavits, etc. The evidence must be viewed in the light most favorable to the party against
whomthe motion has been made. If, in this view, there is no genuine issue of material fact, and the movant
is entitled to judgment as a matter of law, summary judgment should forthwith be entered for the movant.
Otherwise, the motion should be denied. Issues of material fact sufficient to require denial of a motion for
summary judgment obviously are present where one party swears to one version of the matter in issue and
another says to the opposite. In addition, the burden of demonstrating that no genuine issue of fact exists
is on the moving party. That is, the non-movant should be given the benefit of any doubt. Heigle v.
Heigle, 771 So. 2d 341, 345 (Miss. 2000) (citing McCullough v. Cook, 679 So. 2d 627, 630 (Miss.
1996)).
D. THE SUBSTANCE OF THE BOYLESES' RESPONSE TO THE
MOTION FOR SUMMARY JUDGMENT.
3
¶6. The Boyleses claim that the statute of limitations was tolled by the discovery rule. The discovery
rule provides a tolling of the running of a statute of limitations until a plaintiff "should have reasonably known
of some negligent conduct, even if the plaintiff does not know with absolute certainty that the conduct was
legally negligent." Sarris v. Smith, 782 So. 2d 721, 725 (Miss. 2001). Expressed another way, "The
operative time [for the running of the statute of limitations] is when the [plaintiff] can reasonably be held to
have knowledge of the injury itself, the cause of the injury, and the causative relationship between the injury
and the conduct of the [defendant]." Smith v. Sanders, 485 So. 2d 1051, 1052 (Miss. 1986) (quoted
with approval in Sarris, 782 So. 2d at 723).
¶7. We have specifically applied the discovery rule in a similar case where property was allegedly
damaged by radioactive contaminants in oil field waste. Donald v. Amoco Prod. Co., 735 So. 2d 161,
167 (Miss. 1999).
¶8. The Boyleses allege that they did not know that Schlumberger had performed any work at the site
until the deposition of Ora C. Collins, Jr., the principal officer of defendant O. C. Collins Associates, Inc.,
was taken on February 29, 1996. Therefore, they contend, the discovery rule is applicable to their claims
against Schlumberger, and the filing of the amended complaint on October 18, 1996, was timely.
E. THE FORM OF THE BOYLESES' RESPONSE TO
SCHLUMBERGER'S MOTION FOR SUMMARY JUDGMENT.
¶9. The Boyleses state that their "response pointed out that they had first discovered evidence of
Schlumberger's participation in the contamination of their property at the deposition of O. C. Collins, held
on February 29, 1996, and cited authority that the limitations period had been tolled until then." Attached
to the response are the following exhibits: (1) a copy of the first "title" page of Ora C. Collins' deposition
taken on February 29, 1996; (2) a copy of the complete motion to amend the complaint to add
4
Schlumberger as a defendant; (3) a copy of the order granting the motion to amend; and (4) a copy of the
first page of the amended complaint which added Schlumberger as a defendant.
F. THE SUFFICIENCY OF THE BOYLESES' RESPONSE TO
SCHLUMBERGER'S MOTION FOR SUMMARY JUDGMENT.
¶10. Schlumberger contends that the Boyleses' response was insufficient under the current law of this
State. Indeed, M.R.C.P. 56(c) provides that summary judgment shall be granted by a court if "the
pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any,
show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment
as a matter of law." M.R.C.P. 56(c). As we have ruled:
When a motion for summary judgment is made and supported as provided
in Rule 56, an adverse party may not rest upon the mere allegations or
denials of his pleadings[;] his response must set forth specific facts
showing that there is a genuine issue for trial. If he does not so respond,
summary judgment, if appropriate, shall be entered against him. . . . An
issue of fact may be present where there is more than one reasonable
interpretation of undisputed testimony, where materially different but
reasonable inferences may be drawn from uncontradicted evidentiary
facts, or when the purported establishment of the facts has been
sufficiently incomplete or inadequate that the trial judge cannot say with
reasonable confidence that the full facts of the matter have been disclosed.
Miller v. Meeks, 762 So. 2d 302, 304-05 (Miss. 2000) (citing Dennis v. Searle, 457 So. 2d 941,
944 (Miss. 1984)).
¶11. The Boyleses' response to Schlumberger's motion was simply insufficient. All the Boyleses did was
argue that they did not know of their claims against Schlumberger until the Collins' deposition and attach
the first dated page of the deposition. They wholly failed to support their argument with hard evidence such
as affidavits that they did not know of their claims against Schlumberger until the deposition. Clearly, the
Boyleses "rest[ed] upon the mere allegations or denials of [their] pleadings," and did not "set forth specific
5
facts" which would create a genuine issue of material fact and which would preclude the entry of judgment
on the pleadings. A bare statement that "the discovery rule proof was obvious to all" does not defeat a
motion for summary judgment.
CONCLUSION
¶12. We affirm the Jones County Circuit Court's entry of summary judgment in favor of Schlumberger.
¶13. AFFIRMED.
PITTMAN, C.J., SMITH, P.J., COBB, DIAZ, EASLEY, CARLSON AND GRAVES,
JJ., CONCUR. McRAE, P.J., DISSENTS WITHOUT SEPARATE WRITTEN OPINION.
6 | 01-03-2023 | 04-27-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553146/ | 37 B.R. 582 (1984)
In re Friedhelm CORDES, Marlene Cordes, Debtors.
GEICO FINANCIAL SERVICES, INC., Plaintiff,
v.
Friedhelm CORDES, Marlene Cordes, John Kroh, Trustee, Defendants.
Friedhelm CORDES, and Marlene Cordes, Plaintiffs,
v.
GEICO FINANCIAL SERVICES, INC., et al., Defendants.
PRECISION MORTGAGE SERVICE, INC. and Precision Mortgage Corporation, a California corporation, Counter-claimants,
v.
Friedhelm CORDES and Marlene Cordes, Counter-defendants.
Bankruptcy No. SA 83-01110 PE, Ref. No. M3-164, Adv. No. SA 83-2599.
United States Bankruptcy Court, C.D. California.
March 13, 1984.
*583 Pagter Law Corporation, Santa Ana, Cal., for Cordes.
A.C. Foell, Garden Grove, Cal., for Geico Financial Services, Inc.
Blake, Niermann & Barnett, Santa Ana, Cal., for Precision Mortgage Services.
MEMORANDUM OF DECISION ON MOTION TO AMEND FINDINGS
PETER M. ELLIOTT, Bankruptcy Judge.
The Chapter 7 debtors seek to amend the judgment entered December 16, 1983 and the findings of fact and conclusions of law contained in my memorandum of decision, particularly as to the secured status of Government Employees Insurance Co. (Geico) under 11 U.S.C. § 506.
The issue is whether the court can avoid a lien on the Chapter 7 debtors' residence to the extent that the obligation exceeds the amount of the creditor's secured claim. I hold that the lien cannot be avoided.
Geico filed a secured claim for $100,000. in the Cordeses' bankruptcy case on April 1, 1983. In the findings of fact filed November 17, 1983, I made the following findings:
24. The property commonly known as 1867 Las Lanas Lane, Fullerton, California, is worth the sum of $182,000.00.
25. There is a balance due to Great Western Savings and Loan on a note secured by a first trust deed on the property of approximately $98,000. There is a balance due Geico on its note secured by a deed of trust on the property of approximately $108,000.
The debtors' complaint in SA 83-2599 was filed on July 15, 1983. The fourth claim for relief alleges that Geico is undersecured and the debtors pray that the court value Geico's interest in the debtors' residence and declare that Geico's claim be declared unsecured in the amount of the claim which is in excess of the value of Geico's interest. The debtors further pray that Geico reduce its obligation to the value of its interest in the property (its secured claim) and permit the debtors to reinstate their loan by paying off the secured claim. The debtors rely upon 11 U.S.C. § 506(a) and (d) and case law interpreting that section. Section 506(a) provides, in part,
An allowed claim of a creditor secured by a lien on property in which the estate has an interest . . . is a secured claim to the extent of the value of such creditor's interest in the estate's interest in such property . . . and is an unsecured claim to the extent that the value of such creditor's interest . . . is less than the amount of such allowed claim.
Under this section, if applicable, Geico would hold a secured claim for $84,000. and an unsecured claim for $24,000. Section 506(d)(1) provides:
(d) To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void unless
(1) a party in interest has not requested that the court determine and allow or disallow such claim under section 502 of this title;
Because Geico has filed a secured claim and the debtors have, in effect requested that I determine and allow Geico's claim as part secured and part unsecured, 11 U.S.C. § 506(d)(1) is complied with. That distinguishes this proceeding from In re Hotel Associates Inc., (Bkrtcy.E.D.Pa.1980) 3 B.R. 340, 6 B.C.D. 145 (no claim filed by creditor) and In re Spadel, (Bkrtcy.W.D. Pa.1982) 28 B.R. 537, 10 B.C.D. 506 (no request to allow claim under § 502).
*584 Section 506 does not operate in a vacuum. It must be read together with other parts of the Code. For example, § 363(b) authorizes the trustee to sell property of the estate and subsection (k) of § 363 provides:
At a sale under subsection (b) of this section of property that is subject to a lien that secures an allowed claim, if the holder of such claim purchases such property, such holder may offset such claim against the purchase price of such property.
The legislative history shows:
Subsection (e) [now (k)] also provides that where a sale of the property is proposed, an entity that has an interest in such property may bid at the sale thereof and set off against the purchase price up to the amount of such entity's claim. No prior valuation under section 506(a) would limit this bidding right, since the bid at the sale would be determinative of value.
Senate Report 95-989, 95th Cong.2d, Sess. 55, U.S.Code Cong. & Admin.News 1978, p. 5787, (1978).
The language in § 363(k) refers to a lien secured by an allowed claim, not a lien secured by an allowed secured claim (Cf. § 722redemption for payment of allowed secured claim).
Section 506 would not afford the debtors the relief they seek in Chapter 13 because § 1322(b)(2) does not permit modification of the rights of a holder of a claim secured by debtor's principal residence. And, although § 506 would come into play in Chapter 11, Geico would have additional rights such as the § 1111(b)(2) election.
To the extent that the debtors seek to avoid Geico's lien, they seek to redeem the property for the amount of Geico's secured claim.
11 U.S.C. § 722 allows a debtor to ". . . redeem tangible personal property intended primarily for personal, family, or household use, from a lien securing a dischargeable consumer debt, if such property is exempted under section 522 of this title or has been abandoned under section 554 of this title, by paying the holder of such lien the amount of the allowed secured claim of such holder that is secured by such lien."
In light of the exclusion of real property from § 722, it is obvious to me that Congress did not intend to permit the debtor to redeem his real property through § 506(d). Inclusio unius est exclusio alterius.
Even if § 722 included real property, redemption requires a lump sum cash payment, In re Carroll, (Bkrtcy.App.Pan. 9th Cir.1981) 11 B.R. 725.
In conclusion, I agree with the decision in In re Mahaner, (Bkrtcy.W.D.N.Y.1983) 34 B.R. 308 and hold that the debtors are not entitled to an order avoiding Geico's lien on their residence to the extent that Geico's claim exceeds Geico's secured claim.
I disagree with and decline to follow cases cited by debtors to the extent applicable to this proceeding, namely, Brace v. State Farm Mutual Insurance Co., (Bkrtcy. S.D.Ohio 1983) 33 B.R. 91, 8 B.C.D. 347 which, in turn, relies on In re Tanner, (Bkrtcy.W.D.Pa.1981) 14 B.R. 933, 8 B.C.D. 347 and the line of cases which follow that decision: In re Rappaport, (Bkrtcy. E.D.Pa.1982) 19 B.R. 971, 6 C.B.C.2d 749, In re Vigne, (Bkrtcy.W.D.Pa.1982) 18 B.R. 946. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553147/ | 37 B.R. 908 (1984)
In re J. LEVITT, INC., Debtor.
Bankruptcy No. 81-05345G.
United States Bankruptcy Court, E.D. Pennsylvania.
March 28, 1984.
Richard L. Hahn, Erwin L. Pincus, Pincus, Verlin, Hahn, Reich & Goldstein, Philadelphia, Pa., for debtor, J. Levitt, Inc.
Carl S. Primavera, Claudia Z. Stotter, Mesirov, Gelman, Jaffe, Cramer & Jamieson, Philadelphia, Pa., for The Employers Ins. Co.
Robert Kargen, White & Williams, and Adelman, Lavine, Krasny, Gold & Levin, Philadelphia, Pa., for Creditors' Committee.
OPINION
EMIL F. GOLDHABER, Bankruptcy Judge:
The case before us was badly presented. By agreement, no testimony was offered. Instead, counsel made statements of purported facts, interspersed with inadmissible bits of hearsay. No one objected to anything. The issue is whether a creditor may apply certain post-petition monies received from the debtor against the debtor's pre-petition account with said creditor. Because any such application would violate section 362(a)(6) of the Bankruptcy Code ("the Code") and since the creditor has not met its burden of proving that the sum in question was a pre-petition debt, we will grant the debtor's objection to the creditor's proof of claim which credited the amount received to the debtor's pre-petition debt, leaving the post-petition debt (hence, a priority claim) still owing.
*909 The "admitted" facts of the instant case are as follows:[1] On December 29, 1981, J. Levitt, Inc. ("the debtor") filed a petition for reorganization under chapter 11 of the Code. In February, 1982, the debtor issued a check in the amount of $7,494.21 to I.R. Weinraub & Co., Inc., an insurance broker ("the broker"), which had written certain policies of insurance on the debtor's behalf and placed them with Employer's Insurance of Wausau ("Wausau"). The broker, in turn, on June 4, 1982, drafted a check in the amount of $5,574.12 to Wausau, which credited the check against pre-petition debts owed it by the debtor. It is undisputed that the debtor has both a pre-petition and post-petition account with Wausau.
The debtor contends that Wausau incorrectly applied the post-petition check to a pre-petition account and argues that since the check in question was, in fact, paid post-petition, that check was to be credited against post-petition debts. We agree.
It is axiomatic that section 362(a)(6) of the Code stays "any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title." 11 U.S.C. § 362(a)(6). Wausau, however, offers some hearsay testimony alleging that an employee of the broker (and a purported agent of the debtor) had informed it that the sum sent to Wausau by the debtor (the $5,574.12) represented monies that had been collected pre-petition and that said employee instructed Wausau to credit the debtor's pre-petition account. Regardless of whether said allegation, if proven, could pass legal muster, the fact remains that Wausau has not proven the allegation as a matter of record. Barring the obvious hearsay, the record simply establishes that the debtor drafted a check post-petiton and that Wausau credited the money received therefrom against a pre-petition indebtedness of the debtor. Consequently, we will grant the debtor's objection to Wausau's proof of claim.
NOTES
[1] This opinion constitutes the findings of fact and conclusions of law required by Bankruptcy Rule 7052 (effective August 1, 1983). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553148/ | 37 B.R. 676 (1984)
In re Frank Louis LACZKO and Louise M. Laczko, Debtors.
Frank Louis LACZKO and Louise M. Laczko, Appellants,
v.
GENTRAN, INC., Appellee.
BAP No. AZ 82-1352 EAsP, Bankruptcy No. 80-238 PHX RGM, Adv. No. 82-219.
United States Bankruptcy Appellate Panels of the Ninth Circuit.
Argued January 20, 1984.
Decided March 28, 1984.
*677 John Friedman, Friedman & O'Leary, Phoenix, Ariz., for appellants.
Thomas E. Weland, Treon, Warnicke & Roush, Phoenix, Ariz., for appellee.
Before ELLIOTT, ASHLAND and PYLE, Bankruptcy Judges.
OPINION
ELLIOTT, Bankruptcy Judge:
Debtors Frank Louis and Louise M. Laczko appeal from an order of the bankruptcy court granting summary judgment in favor of creditor Gentran, Inc.
This proceeding concerns the claim of a creditor, added to the debtors' schedules after the time for filing claims had expired. The question presented is whether that debt can be discharged in a no-asset case where the omission of the creditor from the original schedules was a result of mistake or inadvertence and not because of any fraud by the debtor.
The Laczkos filed their Chapter 7 case on February 12, 1980. The court gave notice of the § 341 creditors' meeting set for March 17. That notice also fixed six months from March 17 as the last date to file claims. The debtors received their discharge on June 26, 1980.
On February 8, 1982, and prior to the date the case was closed, the Laczkos filed a petition to amend their schedule of unsecured creditors to include Gentran, which had not been listed in the original schedules and on February 10 they filed a complaint to determine dischargeability of the Gentran debt. Gentran answered and motions for summary judgment were subsequently filed by both sides.
On June 15, 1982 the trial court denied the Laczkos' motion and granted Gentran's motion for summary judgment.
FACTS
Gentran initially brought an action against Frank Laczko, individually and against the company he was managing, Kontrols, Inc. The case was brought in the Arapahoe County District Court, State of Colorado. Neither Mr. Laczko nor the company answered the complaint and a default judgment was entered on April 25, 1977 in the amount of $8,069.55 plus interest.
Approximately two months after judgment was entered, Mr. Laczko was served *678 with an order to attend a debtor's examination. The process server noted that the Laczkos appeared to be in the process of packing to move out of their residence. Mr. Laczko did not appear at the examination and the Lackos did, in fact, move to Arizona, leaving no forwarding address.
Gentran did not become aware of the bankruptcy proceeding until approximately two years after the bankruptcy case was filed when it was discovered that the Laczkos were residing in Arizona. Upon learning of their whereabouts, Gentran filed a proceeding in the Superior Court of the State of Arizona to establish their Colorado judgment as an Arizona judgment. The Laczkos thereafter petitioned the bankruptcy court to amend their original schedules and sought to discharge Gentran's judgment claim.
Amendment of Schedules
The debtors petitioned for leave to amend their schedules to add appellee as a creditor four days before the case was closed. Permission to amend is not required when the amendment is made before the case is closed, Bankruptcy Rule 110 (in effect when the amendment was filed). Therefore, the appellee was duly added to the debtors' list of creditors.
Application of 11 U.S.C. § 523(a)(3)
Bankruptcy Code § 523(a)(3) which provides for the nondischargeability of certain unscheduled debts, is derived from § 17(a)(3) of the Bankruptcy Act. Section 17(a)(3) excepted from the operation of a discharge debts which had not been
duly scheduled in time for proof and allowance with the name of the creditor, if known to the bankrupt unless such creditor had notice or actual knowledge of the proceedings in bankruptcy.
Under § 17(a)(3) of the Act, two lines of cases developed.
The liberal rule is best illustrated by Robinson v. Mann, 339 F.2d 547 (5th Cir.1964) where the court held that bankruptcy courts have the discretion to invoke their equity powers to allow amendment of schedules after the expiration of the claims period under exceptional circumstances, and the court suggested such circumstances exist where (1) the case is a no-asset one, (2) there is no fraud or intentional laches, and (3) the creditor was omitted through mistake or inadvertence.
The leading case advocating a stricter construction of § 17(a)(3) is the case of Milando v. Peronne, (2nd Cir.1946) 157 F.2d 1002 where the court refused to allow the debtor to reopen bankruptcy proceedings in a no-asset case to amend schedules to include an inadvertently omitted claim and permit discharge of that debt. The court stated, ". . . . he who seeks the protection of a statutory bar against payment of his debts is required to bring himself within the provisions of the statutory grant" 157 F.2d at 1004.
Cases decided under § 523(a)(3) have generally denied reopening of proceedings to allow amendment of schedules even where the exceptional circumstances exist, particularly where the claims period has expired. The court in In re Iannacone, (D.Mass.1982) 21 B.R. 153, 9 B.C.D. 571 refused to allow the debtor to reopen the bankruptcy to add an omitted creditor after the time for filing proof of claim had long since passed, holding that reopening the case would not result in relief being afforded to the debtor since the amendment would not relate back to the time prior to the claims filing bar date for the purpose of discharge. The court also held that the absence of assets for distribution did not permit the bankruptcy court to contravene the unequivocal language of § 523(a)(3).
In In re Jordan, (E.D.N.Y.1982) 21 B.R. 318, 6 C.B.C.2d 1222, the court refused to allow amendment of schedules and discharge of an omitted debt after the claims period had expired. The court specifically rejected the no-asset-no-prejudice argument raised by the debtor and held there was no way to avoid the consequences of § 17(a)(3) when the last date to file proofs of claim had been scheduled and expired. See also In re Brown, (N.D.Ohio 1982) 27 B.R. 151.
The case of In re Stark, (C.A.7th 1983) 717 F.2d 322, decided under the new Code, at first blush seems to favor appellants, but *679 can be distinguished. In Stark the bankruptcy court, under Bankruptcy Rule 203(b), notified creditors that there were no assets and that no claims need be filed unless and until further notice of the opportunity to file claims be given to creditors. Because the date to file claims were never set, § 523(a)(3) was never triggered.
At 3 Collier on Bankruptcy (15th Ed.) 533-81, the editors state that § 523(a)(3) clarifies certain uncertainties generated by case law decided under § 17(a)(3) of the former Act. Unfortunately, Congress did not specifically overrule the exceptional circumstances rule of Robinson v. Mann, supra.
However, we agree with the Second Circuit in Milando v. Peronne, supra, at Page 1003:
This section [§ 17(a)(3)] provides that a discharge shall not release a bankrupt from a debt which he has not scheduled in time for it to be proved and allowed in the bankruptcy proceedings unless the creditor has notice or actual knowledge of the proceedings. The courts have no power to disregard this clear language.
AFFIRMED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553184/ | 37 B.R. 614 (1984)
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff,
v.
The RATH PACKING COMPANY, et al., Defendants.
Civ. No. 77-57-D.
United States District Court, S.D. Iowa, Davenport Division.
January 11, 1984.
*615 Charles F. Swisher and Steven Weidner, Swisher & Cohrt, Waterloo, Iowa, for Rath Packing Co.
Sue Phillips, Trial Atty. of St. Louis, Beltan, Mo., for EEOC.
STUART, Chief Judge.
The Court has before it defendant Rath Packing Company's motion to stay further proceedings in this action pursuant to 11 U.S.C. §§ 105 and 362, and 28 U.S.C. § 1651. Plaintiff has resisted the motion. Accordingly, the Court concludes that the motion to stay is ready for ruling.
After more than six years of litigation, on September 30, 1983, Special Master A.V. Hass submitted his Report and Recommendation as to the appropriate remedies to be awarded based on the Court's earlier determination that defendants had violated Title VII. On November 1, 1983, defendant Rath Packing Company filed a petition for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the Northern District of Iowa. The Court ordered the parties to report to the Court the effect they thought Rath Packing Company's bankruptcy filing should have on the proceedings in this action on November 16, 1983.
Defendant Rath Packing Company contends that the Court should stay its consideration of the special master's Report and Recommendation. Any proceedings on the portions of the Report and Recommendation concerning remedies for past violations, according to defendant, would violate the automatic stay provision, 11 U.S.C. § 362(a)(1). This contention is based on defendant's assertion that the recommended retrospective remedies are not meant to enforce plaintiff's police or regulatory powers, and thus are not excepted from the bankruptcy automatic stay by 11 U.S.C. § 362(b)(4).[1] Defendants state that *616 plaintiff's litigation of this action is actually meant only to compensate persons aggrieved by defendant's past discrimination. Defendant also contends that the Court should exercise its discretion not to consider the recommended prospective injunctive relief because it would be wasteful in light of the small probability that such relief would ever take effect under the facts of this action.
Plaintiff contends that, because its primary purpose is to eradicate discrimination and because it is merely seeking to liquidate its judgment, the Court's consideration of the special master's Report and Recommendation and entry of judgment thereon are excepted from the bankruptcy automatic stay by § 362(b)(4). According to plaintiff, the authority relied on by defendant is distinguishable because the agency enforcement actions held stayed by § 362(a)(1) in cases cited by defendant involved situations in which the enforcement action would have resulted in a direct conflict with the bankruptcy court's control of the bankruptcy estate, with a resulting preference to the administrative agency. Plaintiff asserts that, in the circumstances of this action, it merely seeks to promote judicial economy to have this Court liquidate and enter its judgment, allowing proceedings to enforce the judgment to be addressed by the United State Bankruptcy Court for the Northern District of Iowa.
The automatic stay provided for under 11 U.S.C. § 362(a) is fundamental to an orderly and fair disposition of bankruptcy proceedings. It serves the salutary purposes of giving the debtor a breathing spell, allowing for a genuine attempt at repayment and reorganization, and eliminating the possibility for certain creditors to obtain unfair preferences by seeking relief against the debtor's property. 2 Bankruptcy Service Lawyer's Edition § 15:17, at 29 (1983); 2 Collier on Bankruptcy § 362.04 (1983). In excepting from the automatic stay all actions by governmental units to enforce the units' police or regulatory powers, Congress recongized that public interests might override the interests of the debtor. As explained in the legislative history of the governmental police powers exception,
[p]aragraph (4) excepts commencement or continuation of actions and proceedings by governmental units to enforce police or regulatory powers [from the automatic stay]. Thus, where a governmental unit is suing a debtor to prevent or stop violation of fraud, environmental protection, consumer protection, safety, or similar police or regulatory laws, or attempting to fix damages for violation of such a law, the action or proceeding is not stayed under the automatic stay.
H.R.Rep. No. 95-595, 95th Cong., 2d Sess. 343, reprinted in 1978 U.S.Code Cong. & Admin.News 5787, 6299 (italics added). It is significant that no provision of the bankruptcy code excepts from the automatic stay any proceedings that would allow for enforcement of a judgment. SEC v. First Fin. Group, 645 F.2d 429, 437 (5th Cir.1981).
Plaintiff, pursuant to federal law, provides leadership and coordination to the federal government's efforts to enforce federal law and policy requiring equal employment opportunity without regard to sex. It has a mandate to work efficiently and to maximize its enforcement efforts. 42 U.S.C. § 2000e-14; see Executive Order No. 12,067, reprinted in 42 U.S.C.A. § 2000e at 25 (1981); Reorganization Plan No. 1 of 1978 § 6, 5 U.S.C.A. App. I, at 162 (abolishing Equal Employment Opportunity Coordinating Council; placing EEOC in charge of Title VII enforcement). In an effort to carry out its mandate plaintiff has pursued the litigation of this action vigorously. Although one effect of enforcement of the judgment in this action would be compensation to certain individuals, the Court is asked to allow plaintiff to continue proceedings only to the point of liquidation and entry of judgment. Finding the proceedings up to entry of judgment to fall within the governmental police powers exception would be proper for two reasons.
First, the exclusive authority of plaintiff to enforce federal law and policy against discrimination would be obstructed by the *617 escape mechanism that § 362(a) would provide if EEOC enforcement actions would be stayed on the filing of a bankruptcy petition. It is clear that by enacting § 362(b)(4) Congress did not intend this result. In re Mansfield Tire & Rubber Co., 660 F.2d 1108, 1116 (6th Cir.1981); SEC v. First Fin. Group, 645 F.2d 429, 439 n. 16 (5th Cir.1981); see Ahrens Aircraft, Inc. v. N.L.R.B., 703 F.2d 23, 24 (1st Cir.1983). Last, allowing proceedings to proceed to the point at which judgment is entered will not interfere with the bankruptcy court's control of the bankruptcy estate. Thus, plaintiff will not obtain an unfair preference, but proper consideration of a liquidated debt. This also supports the conclusion that proceedings up to judgment entry fall within the governmental police powers exception. Missouri v. United States Bankruptcy Court, 647 F.2d 768, 776 (8th Cir.1981); In re Mansfield Tire & Rubber Co., 660 F.2d 1108, 1113 (6th Cir.1981); SEC v. First Fin. Group, 645 F.2d 429, 439 (5th Cir.1981); N.L.R.B. v. Evans Plumbing Co., 639 F.2d 291, 293 (5th Cir.1981). In summary the Court concludes that proceedings in this action up to entry of judgment are excepted from the automatic stay by § 362(b)(4). The Court shall not exercise its discretion to distinguish retrospective and prospective relief.
IT IS THEREFORE ORDERED that defendant Rath Packing Company's motion to stay proceedings in this action is denied to the extent of proceedings that will result in entry of final judgment.
NOTES
[1] Title 11, United States Code, Section 362 provides in pertinent part:
(a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title, or an application filed under section 5(a)(3) of the Securities Investor Protection Act of 1979 (15 U.S.C. 78eee(a)(3)), operates as a stay, applicable to all entities, of
(1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title;
. . . . .
(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970 (15 U.S.C. 78eee(a)(3)), does not operate as a stay
. . . . .
(4) under subsection (a)(1) of this section, of the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power;. . . . | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553193/ | 37 B.R. 631 (1984)
In re The WHITE MOTOR CREDIT CORPORATION, White Motor Corporation, Gemini Manufacturing Company, White Motor Corporation of Canada Limited, The White Motor Credit Corporation of Canada Limited, Debtors,
CITIBANK, N.A. and the other bank creditors listed on Exhibit I, Appellants,
v.
The WHITE MOTOR CORPORATION, Debtor and Debtor in Possession, Appellee.
In re WHITE MOTOR CORPORATION, Gemini Manufacturing Co., White Motor Corporation of Canada Limited, The White Motor Credit Corporation of Canada Limited, Debtors,
ROCKWELL INTERNATIONAL CORPORATION, et al., Appellants,
v.
WHITE MOTOR CORPORATION, Appellee.
The TIMKEN COMPANY, Appellant,
v.
WHITE MOTOR CORPORATION, Appellee.
SKF INDUSTRIES, INC., Appellant,
v.
WHITE MOTOR CORPORATION, Appellee.
Robert L. DEATON, Garelick Farms, Inc. and Hanover Insurance Company, Appellants,
v.
WHITE MOTOR CORPORATION, Appellee.
Larry MOORE and Brenda Moore, Appellants,
v.
WHITE MOTOR CORPORATION, Appellee.
Civ. A. Nos. C81-1088, C82-2898, C82-2887, C82-2888, C82-2834, C82-2426 and C83-1151.
United States District Court, N.D. Ohio, E.D.
February 17, 1984.
*632 Joseph Patchan, Cleveland, Ohio, for appellants.
John C. Parks, Cleveland, Ohio, for appellee.
*633 MEMORANDUM AND ORDER
ANN ALDRICH, District Judge.
This Memorandum and Order sets forth this Court's determination of the proper forums for resolving products liability claims that are pending against White Motor Corporation ("White").
This Court has jurisdiction pursuant to 28 U.S.C. §§ 1334 and 1471(a) and (b); rule (c)(2) of the interim rule governing the Bankruptcy Court adopted by the United States District Court for the Northern District of Ohio as General Order No. 61 (effective Dec. 25, 1982); and the mandate of the Sixth Circuit Court of Appeals in White Motor Corporation v. Citibank, N.A., 704 F.2d 254, 265 (6th Cir.1983).
I
A.
White and its affiliates filed for reorganization under Chapter 11 of the Bankruptcy Reform Act of 1978 ("Code"), 11 U.S.C. § 1101 et seq., on September 4, 1980. The relevant facts are not in dispute and are set forth in detail in earlier opinions by this Court.[1] When White sought the protection of the Bankruptcy Court, about 160 state-law products liability actions, comprising some 500 individual claims, were at various procedural stages in state and federal courts throughout the country ("pre-petition" claims). Each suit presents a contingent, unliquidated claim. All have been frozen for three-and-a-half years by the "automatic stay" provision of 11 U.S.C. § 362(a),[2] as have been suits filed after the petition date but involving causes of action that arose before that date. In addition, in some cases White has sought to use the Code to stay suits involving causes of action that arose after September 4, 1980 ("post-petition" claims).[3]
On April 22, 1981, White asked the Bankruptcy Court to appoint a Special Master to adjudicate the products liability claims. The same day, the Bankruptcy Court issued an Order Appointing a Special Master ("Order"). Citibank, N.A. and other bank creditors of White ("bank creditors") filed a Notice of Appeal on May 1, 1981. On May 18, 1981, this Court denied a motion for a stay, after which the Special Master formulated a Products Liability Claims Disposition Program ("Program"). On July 7, 1982, the Bankruptcy Court approved the Program. Appeals of both the Order and Program then came before this Court, which after a hearing on September 13, 1982, stayed the Special Master from implementing his Hearing Memorandum pursuant to the Program until the appeals could be heard.
*634 B.
1.
In their appeal, the bank creditors contended that the Bankruptcy Court was not an Article III court and therefore lacked authority to appoint a Special Master to adjudicate state law products liability claims. On September 20, 1982, guided by the then-recent decision in Northern Pipeline Company v. Marathon Pipe Line, 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982), this Court agreed that the Bankruptcy Court could not constitutionally rule on the claims. It therefore vacated the appointment of the Special Master, on the ground that the Bankruptcy Court could not delegate authority it did not possess. Citibank, N.A. v. White Motor Corporation (In re White Motor Credit Corporation), 23 B.R. 276 (N.D.Ohio 1982).
Three days after that opinion was issued, the Judicial Conference of the United States passed a resolution that led to the drafting of an interim rule. The rule provided for the continued operation of the Bankruptcy Courts after Northern Pipeline became effective on December 24, 1982. Pursuant to a directive from the Judicial Council of the Sixth Circuit, the judges of this District adopted the interim rule as General Order No. 61. The interim rule reestablished the Bankruptcy Court as an adjunct of the District Court, permitting its judges to hear cases and issue orders. Under the rule, the Article III courts may withdraw the reference of cases from the Bankruptcy Court and conduct de novo review of all decisions made there.
On appeal, the Sixth Circuit affirmed this Court's holding that neither the Bankruptcy Court nor the Special Master could constitutionally hear the products liability cases pursuant to 28 U.S.C. § 1471(c), the jurisdictional provision voided in Northern Pipeline. White Motor Corporation v. Citibank, N.A., supra, 704 F.2d at 259. The Court of Appeals then went on to examine the interim rule, which was adopted after this Court had issued its September 20, 1982 opinion. Finding the rule constitutional, the panel held that
. . . Pursuant to interim rule (d)(1), in the absence of district court action to the contrary, the bankruptcy judge may perform all acts necessary for handling of the White Motor case including adjudication of the products liability cases.
Id. at 264. Concluding that the interim rule authorized this Court to withdraw the reference of matters from the Bankruptcy Court, it decided that
. . . The Order vacating the appointment Order shall be treated as a withdrawal by the District Court of that portion of the White Motor reorganization dealing with the disposition of the products liability cases. Under interim rule (c)(2), the District Court may refer back to the Bankruptcy Court any part of the White Motor products liability litigation with instructions specifying the powers and functions that the bankruptcy judge may exercise.
Id. at 265.
The Court suggested four possible forums for handling the products liability cases and instructed this Court to hold a hearing and "determine the best method for adjudicating" the cases. Id. The four forums suggested were:
(1) this Court;
(2) the Bankruptcy Court;
(3) a United States Magistrate appointed as Special Master pursuant to Fed.R. Civ.P. 53; or
(4) the courts where the cases were initially pending.
Pursuant to this mandate, this Court held a lengthy hearing on June 1, 1983. White gave hundreds of claimants notice of the hearing; dozens of representatives of both White and the claimants appeared and exhaustively briefed and argued the pros and cons of the four options. Representatives of post-petition claimants also appeared at the hearing, concerned that the Citibank opinion might be interpreted to give this Court jurisdiction over those claims as well.[4]*635 White has endorsed this position, both by accepting proofs of claim from post-petition claimants, and by its statements at the hearing.[5]
2.
While the bank creditors had challenged the appointment of the Special Master, six pre-petition products liability claimants filed a separate appeal challenging the validity of the Program he had formulated. The claimants included plaintiffspersons injured by allegedly defective White products or, in wrongful death actions, their widows and/or surviving childrenand White's co-defendants in the product liability cases. Treating its Citibank decision as controlling, on October 12, 1982 this Court vacated the Order approving the Program. Rockwell International Corporation v. White Motor Corporation (In re White Motor Corporation), 24 B.R. 200 (N.D.Ohio 1982), vacated and remanded per curiam sub nom. Larry and Brenda Moore v. White Motor Corporation, 711 F.2d 1057 (6th Cir. 1983). This Court directed the Bankruptcy Court to exempt the six parties from the Program and to continue the stay of the Hearing Memorandum. However, only those who had filed timely appeals were permitted to challenge the Special Master's rulings; his other decisions disposing of claims under the Program were held de facto valid and res judicata in collateral actions.
White appealed. After the Sixth Circuit issued its Citibank opinion, the claimant-appellees moved to remand the case to this Court. White concurred, and a separate panel of the Court of Appeals remanded the case to this Court for reconsideration in light of Citibank.
3.
Two of the appellants in Rockwell, Larry and Brenda Moore, initiated a separate appeal from the Bankruptcy Court's refusal to grant their petition for relief from the § 362(a) automatic stay.
The Moores had commenced a products liability action in 1979 in the Circuit Court of St. Louis, Missouri against White and several other defendants. They sought damages for a 1976 accident involving a White vehicle which left Larry Moore with third-degree burns over ninety percent of his body. The case was stayed on September 4, 1980, when White filed for reorganization.
After the Bankruptcy Court appointed the Special Master, the Moores filed a timely objection to the Program, asking that the stay be lifted and that they be permitted to conduct discovery of White's liability insurance policies. Upon the Bankruptcy Court's denial of their motions, the Moores filed an appeal which was heard by this Court during the Rockwell proceedings. On October 21, 1982, after this Court issued its Order in that case, the Moores filed a complaint for relief from the stay with the Bankruptcy Court. At a hearing held on January 21 and 22, 1983, the Moores contended that because White retains more than $2 million in insurance coverage for 1976 (the year *636 Larry Moore was injured) and at least $45 million in reinsurance, it would suffer a maximum loss of $50,000 in the event the Moores won a judgment. They termed this an insufficient basis for continuing the § 362(a) stay, arguing that the stay was operating to protect not White but the insurance companies. White responded by contending that an adverse judgment would bring it higher insurance premiums, a "loss" to the debtor-in-possession that is impermissible under Chapter 11. The Bankruptcy Court agreed with White and on February 2, 1983 denied their petition for relief.
The Moore's appeal is before the Court for de novo review pursuant to interim rule (e)(2)(B).
C.
This Court's efforts to formulate an appropriate plan permitting the now-desperate claimants to proceed with their products liability cases in some forum have been further complicated by the progress of White's Second Modified Plan of Reorganization, as Amended ("Plan") through the Bankruptcy Court and this Court.
Early in this litigation, White indicated that the products liability suits presented contingent and unliquidated claims which had to be fixed or liquidated in order for White to complete its reorganization. See Citibank, N.A. v. White Motor Corporation, supra, 23 B.R. at 277. After the Bankruptcy Court's orders appointing the Special Master and approving his Program were vacated, however, White changed its strategy. Rather than await disposition of the products liability claims, White created a Reserve Fund from which successful claimants will be paid, and proceeded with the reorganization. On November 18, 1983, the Bankruptcy Court issued an order confirming White's Plan. Article X of the Plan provides for the Reserve Fund described above.[6] With one amendment not related to the products liability claims, this Court affirmed the Confirmation Order.[7]
In a supplemental brief filed on December 19, 1983, White suggested for the first time that the Confirmation Order, in discharging all debts that arose prior to the confirmation date, also discharged both the pre-petition and post-petition products liability claims and prevented claimants from pursuing actions against White in any forum except the court handling the Chapter 11 proceedings. White's contentiondiscussed in greater detail in Part III, infra is that after confirmation the discharge provision, 11 U.S.C. § 1141(d)(1), transformed the § 362(a) automatic stay into a § 524 permanent injunction. Under § 524, White argues, only products liability claimants who have submitted proofs of claim to the Bankruptcy Court pursuant to 11 U.S.C. § 501 may proceed against the reorganized entity, and they may only proceed before *637 this Court, the Bankruptcy Court, or a Magistrate acting as Special Masternot before the state or federal courts where they were filed, or would have been filed but for § 362(a). If White is correct, confirmation of the Plan reduced the four options suggested to this Court by the Sixth Circuit to three.
II.
A.
When litigants in dozens of forums scattered around the nation seek to press suits against a reorganizing corporation, a host of competing, complementary, and sometimes confusing equities come into play. At hearings and through pleadings, the parties have been most energetic and diligent in bringing these equities to the attention of this Court.
For more than three years, White reorganized under the protection of the Bankruptcy Court. Chapter 11 of the Code states a Congressional policy that the debtor, its creditors and employees, and the public at large all benefit when the debtor is given opportunities to reduce or extend debts so that it can return to financial viability.
The purpose of a business reorganization case, unlike a liquidation case, is to restructure a business's finances so that it may continue to operate, provide its employees with jobs, pay its creditors, and produce a return for its stockholders. The premise of a business reorganization is that assets that are used for production in the industry for which they were designed are more valuable than those same assets sold for scrap. Often, the return on assets that a business can produce is inadequate to compensate those who have invested in the business. Cash flow problems may develop, and require creditors of the business, both trade creditors and long-term lenders, to wait for payment of their claims. If the business can extend or reduce its debts, it often can be returned to a viable state. It is more economically efficient to reorganize than to liquidate, because it preserves jobs and assets.
H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 220 (1977), reprinted in 1978 U.S.Code Cong. & Admin.News 5787, 5963, 6179 ["House Report"].
Numerous statutory provisions effectuate the policies behind Chapter 11. The automatic stay of § 362 is among the most important of those provisions. As the Sixth Circuit Court of Appeals has written:
The legislative history of § 362 discloses a congressional intent to stay proceedings against the debtor, and no other, to preserve the status quo of the estate in an effort to ultimately effect and implement, to the extent possible, a successful and equitable reorganization or liquidation. The Notes of the Committee on the Judiciary identify the debtor as the intended primary congressional beneficiary of the stay . . .
. . . The stay of proceedings was intended to promote an orderly reorganization or liquidation of the debtor's estate thereby benefiting, secondarily, creditors of the estate . . .
Lynch v. Johns-Manville Sales Corp., 710 F.2d 1194, 1197 (6th Cir.1983), citing House Report, supra, and S.Rep. No. 95-989, 95th Cong., 2d Sess. 54-55 (1978), reprinted in 1978 U.S.Code Cong. & Admin.News 5787, 5840-41 ["Senate Report"].
The § 362 stay freed White from the obligation to defend pre-petition products liability suits across the nation, enabling the corporation to concentrate on its reorganization plan. The stay also, for a time, effectively freed White's co-defendants and insurers from having to go to trial and compensate prevailing plaintiffs or co-defendants entitled to indemnification or contribution. With White's reorganization now complete, that and a number of other equities counsel against any further suspension of these cases.
B.
1.
The preeminent equity in these cases at this point is swift adjudication. The acts giving rise to these suits took place as long ago as the mid-1970s. Tort victims, their *638 widows, and their children in the pre-petition cases have been prevented from pursuing their cases since 1980, as their claims have been bounced from the Bankruptcy Court to the District Court to the Court of Appeals and back again. They have ample reason to liken themselves to Dickens characters, as the victims of a modern-day Jarndyce v. Jarndyce.[8]
This Court, then, must give considerable deference to whichever forum can most knowledgeably and swiftly bring these cases to conclusion. While judicial officers in Clevelandthis Court, the Bankruptcy Court, or a Magistrate appointed as Special Masterwould be most familiar with White's byzantine financial structure, the courts where the suits were originally brought would be most familiar with the state products liability law under which the cases will be tried.
Moreover, it is only in those courts that all defendants could be tried together. Because there are multiple defendants in many of these actions, most of the various state and federal courts will continue to hear actions against co-defendants and insurers even if White's own liability is adjudicated in this district. In Northern Pipeline, the plurality opinion noted that "one of the express purposes of the [1978] Act was to ensure adjudication of all claims in a single forum and to avoid the delay and expense of jurisdictional disputes." 485 U.S. at 87 n. 40, 102 S.Ct. at 2880 n. 40. But complex tort cases like these do not lend themselves to consolidation in the bankruptcy forum.[9] Rather, only the courts of origin could adjudicate the claims against all defendants in one proceeding.
2.
Related to the claimants' right to an expeditious hearing is their possible right to a jury trial. This Court noted earlier that "[t]he product liability claims to be resolved against [White] . . ., like the contract and warranty claims in Northern [Pipeline], involve `counts which are the stuff of the traditional actions at common law tried by the courts at Westminster in 1789 . . . No *639 method of adjudication is hinted, other than the traditional common law mode of judge and jury . . .'" Citibank, N.A. v. White Motor Corporation, supra, 23 B.R. at 279, quoting Northern Pipeline, supra, 458 U.S. at 90, 102 S.Ct. at 2881 (Rehnquist, J., concurring). Under interim rule (d)(3)(A), however, the cases before this Court are not "Northern Pipeline caes""related proceedings" which are "brought by an estate against parties who have not filed claims against the estate."[10] They are therefore cases in which bankruptcy judges may enter final judgments under interim rule (d)(2), even though interim rule (d)(1)(D) forbids bankruptcy judges from conducting jury trials.
Notwithstanding the Sixth Circuit's holding that the interim rules are constitutional, its Citibank opinion does not offer a definitive answer to the question of whether 28 U.S.C. § 1480(a) provides the products liability plaintiffs a right to a jury trial. That subsection provides:
Except as provided in subsection (b) of this section, this chapter and Title 11 do not affect any right to trial by jury, in a case under Title 11 or in a proceeding arising under Title 11 or arising in or related to a case under Title 11, that is provided by any statute in effect on September 30, 1979.
The clearest lesson to be drawn from the provision and its legislative history is that "whether particular proceedings will be characterized as in equity or at law, depending on their nature, will determine the future of juries in the bankruptcy court." 1 Collier on Bankruptcy, ¶ 3.01[4][i] (15th ed. 1982). Early cases under § 1480(a) have not elaborated much on this explanation, and neither cases decided under the old Bankruptcy Act,[11]Northern Pipeline, nor the recent cases concerning the constitutionality of proceedings conducted by federal magistrates[12] definitively resolve the issue.
In short, there is a substantial question as to whether the claimants in these cases have a right to a jury trial. Any plan for resolving these cases that grants or denies them a jury trial raises constitutional issues justifying a non-frivolous appeal. The mandate from the Sixth Circuit, however, does not require a decision on the issue at *640 this time, and this Court, in its discretion, declines to set forth any opinion in this extremely complicated area. Nevertheless, the jury trial issue merges with the need to resolve these cases expeditiously, for to remand parties who are not willing to waive their jury demand to the Bankruptcy Court or a Magistrate would be tantamount to holding that they have no right to a jury trial, and would precipitate months of delay while the appeal is heard.[13]
C.
Upon consideration of these competing equities, this Court has determined that those claimants who wish to proceed in the courts where they filed their cases should be allowed to do so.
Because of the possibility that the Seventh Amendment guarantees the products liability plaintiffs the right to demand a jury trial, these cases cannot be assigned directly to the Bankruptcy Court or to a Magistrate without creating grounds for an appeal that will delay resolution of these cases by months or even years. Only two of the four options proferred by the Sixth Circuit protect this right: trial before this Court or trial before the courts of origin, which are state courts or Article III federal district courts sitting pursuant to their diversity jurisdiction.
There can be little doubt that the courts of origin can resolve these cases more swiftly and efficiently than this Court could. All the proceedings before the cases were stayed took place in those courts; this Court, on the other hand, has for the most part dealt with the cases only collectively or in the abstract, and is not intimately familiar with the specific claims being raised. Similarly, the judges in the courts of origin are familiar with the diverse state products liability statutes and common law that will govern these cases; this Court is familiar only with the federal law governing White's reorganization, and with the Ohio law that governs only a few of the cases. Additionally, those courts can try all the defendants in one proceeding, and none of those courts will have to try more than a few of these cases; in this Court, where there were 474 pending civil cases and 14 pending criminal cases as of January 31, 1984, it would take years to try the dozens of pre-petition and post-petition products liability cases. Finally, the evidence, witnesses, and counsel are, for the most part, located in the cities where the claims arose. This is true of all parties, not just the plaintiffs, since in product liability cases White is represented by local counsel, not by the Cleveland and New York corporate counsel who have orchestrated its reorganization proceedings.
The claimants may, therefore, pursue their claims in the courts of origin. If successful, they may collect judgments in accordance with the procedures set forth in Part IV, infra.
III.
This Court must now deal with White's contention that the Code bars implementation of the sensible approach outlined above. White's arguments are not persuasive.
A.
White states that "[a]s a result of the discharge granted by Section 1141 and the statutory injunction imposed by Section 524 of the Bankruptcy Code, . . . the pre-confirmation *641 product liability cases against it can proceed only against the assets held by the WMC Reorganization Trust pursuant to the terms of Article X of the plan of reorganization and through proceedings on a timely filed proof of claim. Proceedings on proofs of claim, pursuant to Section 502 of the Bankruptcy Code, can take place only in connection with the Chapter 11 reorganization proceeding." Supplemental Brief of White Motor, at 7-8. An appropriate response to this argument requires close textual analysis of Chapter 11.[14]
The first part of White's argument is that § 1141 discharged all products liability claims that were pending against it on November 18, 1983, when the Bankruptcy Court confirmed the Plan. Section 1141(d)(1) describes the effect of confirmation as follows:
Except as otherwise provided in this subsection, in the plan, or in the order confirming the plan, the confirmation of a plan
(A) discharges the debtor from any debt that arose before the date of such confirmation, and any debt of a kind specified in section 502(g), 502(h) or 502(i) of this title, whether or not
(i) a proof of the claim based on such debt is filed or deemed filed under section 501 of this title;
(ii) such claim is allowed under section 502 of this title; or
(iii) the holder of such claim has accepted the plan. . . . [15]
It is abundantly clear that, as confirmed by the Bankruptcy Court and this Court, the White Plan "otherwise provides" for the products liability claims and does not discharge them. In its "Application for Approval of Reduced Reserves for Certain Product Liability Claims" ("Application"), which the Bankruptcy Court approved concurrently with the Plan on November 18, 1983, White represented that the Plan left intact liability insurance of approximately $60 million for each year relevant to the products liability and related claims, and provided a $4.2 million Reserve Fund to pay, on a pro rata basis, that portion of any judgment against White not covered by insurance. The representations made in the Application must be read together with the contents of the Plan, just as the simultaneous orders confirming the Plan and approving the Application must be read together.
In the Application, White made the following representations about its insurance coverage:
7. White Motor has, at all pertinent times, maintained liability insurance covering product liability and related claims. . . . Such coverage has been provided through a combination of insurance policies, including a base level policy and one or more excess liability policies (the "Policies"). The aggregate annual limits under the Policies have totaled, during the pertinent periods, approximately $60,000,000 for each policy year.
8. Subsequent to June 1, 1982, White Motor's Policies provide what is known as "first dollar coverage." Under such coverage, White Motor is, to the maximum limit of the Policies, protected against all economic risk incident to product liability *642 claims. Second, for occurrences prior to January 1, 1975, White Motor has exhausted any retained exposure applicable under its Policies. . . .
9. With respect to occurrences during the period from January 1, 1975 through May 31, 1982, the various Policies provide for a specified "self-insured retention." Such self-insured retention ("S.I.R.") functions similar [sic] to an insurance deductible in that White Motor retains liability for a specified dollar amount applicable to each occurrence and subject to an annual aggregate maximum of retained liability [of $1,250,000 per year for 1975 through 1977, $2,500,000 per year for 1978 through 1980, and $1,250,000 per year for the period from January 1, 1981 through May 31, 1982]. . . . When the S.I.R. limits are exhausted, either for a single occurrence or for an annual aggregate, insurance takes over for any remaining liability. . . .
The S.I.R., or deductible, is covered by the Reserve Fund created by Article X of the Plan. The Bankruptcy Court approved White's proposal:
11. . . . that a cash reserve of $4,281,124 be established by it pursuant to Article X of the Plan with respect to the S.I.R. exposure pertaining to the Claims pertaining to the occurrences during the period January 1, 1975 through May 31, 1982. Such a reserve reflects treatment of such claims under the classifications for which they have been filed, up to their pro rata share of White Motor's maximum remaining S.I.R. liability. . . . In addition, the proposed reserve includes an unallocated contingency amount of approximately $1,500,000. This additional amount reflects the potential for the existence of filed product liability and related claims which have not been discovered and identified by White Motor as such, the potential for the allowance of late-filed claims and the potential for amendment by holders of Claims to the amounts or classifications previously asserted by them.
These provisions are consistent with White's longstanding and numerous representations to this Court that, with only a few exceptions,[16] White's estimates are based on the full amount claimed by both pre-petition and post-petition plaintiffs, rather than on a more realistic lower figure apt to be awarded, regardless of the forum in which the contingent claims are actually litigated. This Court relies on statements of White's counsel made just last month:
MR. MEYER: * * *
The face of a proof of claim in a product liability claim does not take account of the insurance.
* * * * * *
All the other claims with respect to the product liability are reserved as they are filed, and take into account the fact of the insurance payable, so except for Miller, every other product liability claim, if they were all allowed in the full amount, they are set for their money in the reserve, the four million, and the insurance, and they would be paid in full.
THE COURT: When you are saying "They would be paid," these are Class 2 creditors?
MR. MEYER: Commensurate treatment. What they would get is Class 2 treatment, and we estimate that to beit is 41 so far, and we estimate it will end up about 50.
*643 United States of America v. White Motor Corporation, supra (transcript of Jan. 12, 1984, at 24-25).[17]
The Plan sets aside the insurance policies and the Reserve Fund from the moneys deemed essential for the start-up of the new, reorganized entity fashioned from White's remnants, Northeast Ohio Axle, Inc. ("NEOAX"). This Court's interpretation of § 1141 does not allow claimants to sue NEOAX and in no way interferes with the Code's policy to provide NEOAX with "a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of existing debt." Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S.Ct. 695, 699, 78 L.Ed. 1230 (1934). It is clear that the Plan and Confirmation Order "otherwise provide" for payments from the insurance policies and the Reserve Fund. White's representation that $4.2 million is a large enough Reserve Fund to cover all of the S.I.R. relating to the products liability claims was the basis for the Bankruptcy Court's decision to approve the Application and permit the Reserve Fund for product liability claims to be reduced from $68 million. It is totally inconsistent for White to now argue that the Reserve Fund and the insurance policies are insufficient to protect NEOAX from financial exposure. Accepting White's previous contentions, and believing that after confirmation "the reorganized entity is insulated from being pursued by creditors who formally asserted non-dischargeable claims",[18] this Court holds that § 1141(d)(1) does not bar actionson prepetition or post-petition claimsto collect from the insurance policies, the Reserve Fund, or White's co-defendants.
B.
1.
White also contends that all the products liability actions are barred by the discharge injunction of 11 U.S.C. § 524(a). Under the Code, a discharge under § 1141(d)(1) transforms the § 362(a) automatic stay into a permanent injunction.[19]
Section 524(a) provides:
(a) A discharge in a case under this title
(1) voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor with respect to any debt discharged under section 727, 944, 1141, or 1328 of this title, whether or not discharge of such debt is waived;
(2) operates as an injunction against the commencement or continuation of an action, the employment of process, or any act, to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived . . .
*644 White argues that the Confirmation Order: (1) terminated the § 362 automatic stay with respect to pre-petition claims, replacing it with a § 524 injunction; and (2) also imposed a § 524 injunction with respect to post-petition, pre-confirmation claims, notwithstanding the Bankruptcy Court's refusal to extend the § 362 stay to those claims. See Order of April 5, 1983.
The second contention is frivolous and meritless. The legislative history indicates that the injunction and discharge is directed solely toward pre-petition debts:
. . . Subsection (a) specifies that a discharge in a bankruptcy case voids any judgment to the extent that it is a determination of the personal liability of the debtor with respect to a prepetition debt, and operates as an injunction against the commencement or continuation of an action, the employment of process, or any act, . . . to collect, recover or offset any discharged debt as a personal liability of the debtor . . . (Emphasis supplied.)
S.Rep. at 80; 1978 U.S.Code Cong. & Admin.News at 5866 (emphasis added). See also In re Amatex Corporation, 30 B.R. 309, 315 (Bkrtcy.E.D.Pa.1983) ("By defining the terms `creditor', `claim', and `debt' to be coextensive, Congress clearly intended that only prepetition claims could be affected by bankruptcy proceedings.")
The facts of this case render § 524 inapplicable to the pre-petition claims as well because the discharge injunction (1) is only triggered by a § 1141 discharge, which, because the Plan "otherwise provides", has not taken place with respect to the products liability claims; and (2) operates as an injunction only against suits which attempt "to collect, recover or offset any such debt as a personal liability of the debtor or from the property of the debtor . . .", 11 U.S.C. § 524(a)(2), which is not the case with respect to these claims. That is, even if the § 1141 discharge were applicable to these products liability cases, § 524 does not enjoin them because any judgment against White will not result in personal liability to NEOAX; rather, White's insurers, its co-defendants, and the Reserve Fund will be responsible for such liability.
Section 524 is limited to actions which affect the reorganized debtor personally. Subsection 524(e) expressly provides that ". . . discharge of a debt of the debtor does not affect the liability of any other entity on, or the property of any other entity for, such debt." This expresses a policy complementing that of § 362(a), which is that co-defendants and insurers are not the intended beneficiaries of the automatic stay granted to the reorganizing debtor. In Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 544 (and cases cited therein), vacated in part on other grounds, 706 F.2d 548 (5th Cir.1983), the Eleventh Circuit held that applying the stay to co-debtors neither provides the debtor with a "breathing spell", nor assists in "preventing a race for the debtor's assets". Id. at 544. And the court in Lynch v. Johns-Manville Sales Corp., 23 B.R. 750 (S.D.Ohio 1982), aff'd, 710 F.2d 1194 (6th Cir.1983) observed:
. . . We conclude that it would distort congressional purpose to hold that a third party solvent co-defendant should be shielded against his creditors by a device intended for the protection of the insolvent debtor.
It is settled law that the automatic stay of section 362(a) does not operate against sureties, guarantors, or co-obligors of the Chapter 11 debtor. . . . It is surely both illogical and inequitable to provide the solvent products liability co-defendant with the protection of section 362(a) when that same protection is unavailable to the surety, guarantor or co-obligor of the insolvent co-defendant.
Id. at 753 (citations omitted).
The Wedgeworth court also refused to extend the S362 stay to insurers. It stated:
We cannot read the language of § 362(a)(1), "against the debtor," as including the debtor's liability insurers. Nor does any other provision of § 362 grant the insurer an automatic stay. Section 362 . . . provides a narrow protection directed at the debtor and its estate. Those interests are not automatically impinged *645 by suit against the debtor's liability insurer in an instance in which the payment by the insurer cannot inure to the debtor's pecuniary benefit. Such is the situation in the case at bar. A payment by the liability carrier will neither enhance nor decrease the bankruptcy estate.
706 F.2d at 547.[20]
Wedgeworth is more relevant to the insurance issues in this case than is Johns-Manville v. Asbestos Litigation Group (In re Johns-Manville Corporation), 26 B.R. 421 (Bkrtcy.S.D.N.Y.1983). In that reorganization proceeding, all suits against Manville's insurers were stayed because "Manville's rights under its insurance policies and all the causes of action arising thereunder constitute property of the Manville estates within the purview of Section 541(a) of the Code." At the time Manville filed its Chapter 11 petition, claims alleging more than $216 million in damages were pending and Manville estimated that it faced some 32,000 additional suits involving not less than $2 billion in liability. 26 B.R. at 422, 435. The court feared that judgments against the insurers would "frustrate prompt and effective formulation of a plan of reorganization" and interfere with efforts to "insure uniform treatment of all asbestos-related health claimants." Id. at 436-37.
This case is much different. The reorganization is complete; NEOAX was created and sent off into the business world without need for the insurance or Reserve Fund moneys. Furthermore, claimantsparties who have filed lawsuits, proofs of claim, or bothhave been identified, and the list is not subject to any major future expansion by "latent claimants". Finally, White has represented that the insurance policies and the Reserve Fund are sufficient to compensate the claimants. In short, none of the unique circumstances which justified judicial protection of Johns-Manville's insurers apply to White's carriers.
It is clear, then, that § 524 poses no barrier to products liability suits against White's insurers and co-defendants. It is also clear that such suits could continue in their place of origin. Matter of Holtcamp, 669 F.2d 505, 508 (7th Cir.1982); Jessie v. Honosky (In re Honosky), 6 B.R. 667, 669 (Bkrtcy.S.D.W.Va.1980); Senate Report at 50; 1978 U.S.Code Cong. & Admin.News at 5836.[21]
Section 524 is limited to actions which personally affect the debtor and "[T]he injunction is only required when the continuance of a civil suit will result in efforts to collect from the debtor or his property in a judgment award." In re McGraw, 18 B.R. 140, 143 (Bkrtcy.W.D.Wis. 1982). As discussed above, neither the White estate nor the fledgling NEOAX are the targets of these products liability actions. The suits will proceed against White, its co-defendants and its insurers. Any judgment against White, however, will not be immediately payable. It will merely enable plaintiffs or co-defendants to receive insurance funds and then, provided that a timely proof of claim has been filed or deemed filed, seek to recover their pro rata share from the Reserve Fund, as administered by the Bankruptcy Court. In short, absent any personal liability on the debtor, § 524 is inapplicable and does not bar these suits from proceeding.
*646 2.
Even if § 524(a) is applicable, it appears that this Court has the power to modify the injunction and allow these cases to proceed for the limited purpose of fixing liability and collecting from all co-defendants and entities other than NEOAX. In re McGraw, supra, 18 B.R. at 243; Jessie v. Honosky, supra, 6 B.R. at 669-70. White argues that the injunction under § 524(a) cannot be modified because there is no provision for modification comparable to § 362(d), which allows the automatic stay under § 362(a) to be lifted or modified. It contends that if Congress had intended to permit modifications of § 524(a), the section would contain a counterpart to § 362(d). This Court is not convinced that Congress was so omniscient. Rather, § 524 must be read in conjunction with the overall purposes of the Code. Chapter 11 seeks to free a beleaguered debtor from harassing creditors' attempts to collect on debts which have been discharged, and to protect the reorganized company's assets. Merely requiring White to assume responsibility for its alleged tortious actsand to do so for the limited purposes of fixing liability without a right of collection against NEOAX's assetsis not inconsistent with these purposes.
Accordingly, this Court finds that the provisions of § 524 do not bar further proceedings in state courts and other federal courts, subject to the limitations set forth below.
IV.
In light of the conclusions of law enunciated above, this Court, pursuant to the mandate of the Sixth Circuit in White Motor Corporation v. Citibank, N.A., supra, orders the following disposition of products liability claims against White Motor Corporation and its affiliates:
(1) The automatic stay provided by 11 U.S.C. § 362 having terminated on November 18, 1983, and the discharge injunction of 11 U.S.C. § 524 being inapplicable to the claims before this Court, products liability cases may be resumed or continued in the appropriate state and federal courts, subject to the following restrictions:
(a) Within the limitations of the relevant state law, these actions may proceed to trial and judgments may be obtained against all appropriate parties, including White, White's co-defendants, and, where permitted, White's insurers.
(b) Within the limitations of the relevant state law, prevailing parties may collect judgments obtained against White's co-defendants and, where permitted, White's insurers. Prevailing parties may also collect that portion of any judgment against White which is covered by White's liability insurance policies. No party may collect any portion of any judgment against White which is not covered by such insurance policies, except as provided in paragraph (1)(c). No party may seek to execute any judgment against White by commencing any action against NEOAX.
(c) A party who obtains a final judgment against White, and who cannot collect the total amount of such judgment from White's insurance policies, may petition the Bankruptcy Court for payment from the Reserve Fund established by Article X of the Reorganization Plan. Such payment shall be made only if the party has filed or is deemed to have filed a timely proof of claim, or is hereafter permitted to file a late proof of claim, pursuant to 11 U.S.C. § 501. The Bankruptcy Court shall make payments on those claims in a manner consistent with the provisions of the Reorganization Plan, the Bankruptcy Code and this Opinion.
(2) Within the limitations of the relevant state and federal law, a party who has filed or is deemed to have filed a timely proof of claim, or is hereafter permitted to file a late proof of claim, pursuant to 11 U.S.C. § 501, but who has not commenced a civil action against White, its co-defendants and, where permitted, White's insurers, may do so in a state or federal court of appropriate jurisdiction within thirty (30) days of the date of this Opinion, except that where commencement of an action for contribution or indemnification *647 by a co-defendant against White or, where permitted, White's insurers, is contingent upon entry of a final judgment in a pending action, such an action may be commenced in a state or federal court of appropriate jurisdiction within thirty (30) days after the entry of such judgment.
(3) Failure by a party to commence an action within the time limits set forth in paragraph (2) shall be deemed a waiver of any right to a trial by jury. The Bankruptcy Court shall then estimate the value of the proof of claim pursuant to 11 U.S.C. § 502(c), and shall make payments on those claims in a manner consistent with the provisions of the Reorganization Plan, the Bankruptcy Code, and this Opinion.
(4) Pursuant to interim rule (c)(2), and subject to such exceptions and limitations as this Court shall make, thirty (30) days following the date of this Opinion the products liability cases will be referred back to the Bankruptcy Court for proceedings not inconsistent with this Opinion.
(5) The decision of the Bankruptcy Court in Larry and Brenda Moore v. White Motor Corporation, Civil No. C83-1151, Misc. Nos. 83-11 and 83-311 (rendered prior to the establishment of the Reserve Fund and Article X, when different facts obtained and White was not representing, as it does now, that its insurance would pay product liability judgments and the Reserve Fund would absorb, pro rata, any remaining liability assessed against White) is reversed and judgment is entered for the plaintiff-appellant.
IT IS SO ORDERED.
EXHIBIT 1
AmeriTrust Company
Bank of America N.T. & S.A.
Bank of Montreal
The Bank of New York
The Bank of Nova Scotia
Central National Bank of Cleveland
The Chase Manhattan Bank, National Association
Citibank, N.A.
Continental Illinois National Bank and Trust Company of Chicago
Crocker National Bank
European-American Bank & Trust Company
First National Bank in Dallas
The First National Bank in Dallas
The First National Bank in Atlanta
First National Bank of Minneapolis
First Security Bank of Utah, N.A.
Manufacturers Hanover Trust Company
Mellon Bank, N.A.
Michigan National Bank of Detroit
Michigan National Bank of Lansing
Morgan Guaranty Trust Company of New York
National City Bank (Cleveland)
North Carolina National Bank
Security Pacific National Bank
Society National Bank
Union Bank of Bavaria
Union Bank of Los Angeles
Union Commerce Bank
NOTES
[1] Citibank, N.A. v. White Motor Corporation (In re White Motor Credit Corporation), 23 B.R. 276 (N.D. Ohio 1982), rev'g 11 B.R. 294 (Bkrtcy.N.D. Ohio 1981), rev'd in part and remanded, 704 F.2d 254 (6th Cir.1983) (remanding for reconsideration in light of interim rule); Rockwell International Corporation v. White Motor Corporation, 24 B.R. 200 (N.D. Ohio 1982), vacated and remanded per curiam sub nom. Larry and Brenda Moore v. White Motor Corporation, 711 F.2d 1057 (6th Cir.1983) (remanding for reconsideration in light of White Motor Corporation v. Citibank, N.A., supra).
[2] Title 11 U.S.C. § 362(a) provides:
Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title . . . operates as a stay, applicable to all entities, of
(1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title . . .
[3] White originally sought a determination from the Bankruptcy Court that post-petition claims were stayed by § 362. The court denied that request on April 5, 1983. Recently, White has filed motions for permanent injunctions in the courts where the post-petition claims are proceeding, arguing that such claims are barred by 11 U.S.C. § 1141(d)(1) and § 524(a). White also sought an injunction from this Court to halt a pending state court trial in a post-petition case. The injunction was denied. White Motor Corporation v. Aron Chambliss, et al. (In Re White Motor Corporation), No. 84-402 (N.D. Ohio Feb. 10, 1984). White's argument is discussed in Parts I-C and III, infra.
[4] The initial Citibank appeal involved only the Program, which at that time was limited to pre-petition claims. However, the Sixth Circuit's language remanding to this Court "that portion of the White Motor reorganization dealing with the products liability cases" appeared to broaden the scope of the appeal to include post-petition as well as pre-petition claims. Accordingly, in an appropriate abundance of caution, counsel for many post-petition claimants appeared at the hearing to seek direction from this Court.
[5] At the hearing White's counsel stated:
MR. PARKS: Post-petition claims are being handled in the ordinary course of business. An automatic stay of 362(a) would not apply, or one could argue it does not apply to claims which occurred or occurrences which took place after September 4, 1980, in the case of White Motor, that is, post-petition occurrences.
The product liability claims disposition program as originally conceived and originally developed by the debtor did not include claims based upon post-petition occurrences.
* * * * * *
Through a process of elimination, we take the view they are claims. If they are going to get paid, they are going to be paid by part of the reorganization plan . . .
Citibank, N.A. v. White Motor Corporation, supra (transcript of June 1, 1983, at 17-18) (emphasis added).
[6] Article X of the Plan, as amended, provides in pertinent part:
10.1. . . . [T]he Disposition Assets Trustee shall retain such number of shares of common stock and preferred stock of the Debtor and shall retain and set aside in a reserve fund an amount in cash such that the aggregate number of such retained shares and the aggregate balance of such fund (exclusive of any interest earned thereon) shall be sufficient to make all payments and distributions which may be subsequently required by Section 10.2 below, or such lesser number and amount as may be approved by the Bankruptcy Court from time to time. . . .
10.2. Subsequent to the Consummation Date when a Claim shall become an Allowed Claim . . . :
(a) . . . [T]he Disposition Assets Trustee shall as soon as practicable pay to the holder of such Allowed Claim in cash, without interest, from the Reserve Fund an amount equal to the aggregate of the cash distributions which would have been previously distributed to such holder by the Disposition Assets Trustee, as if such Allowed Claim had been an Allowed Claim eligible for distribution on the Consummation Date.
[7] United States of America v. White Motor Corporation (In Re White Motor Corporation), No. 83-5082 (N.D. Ohio Jan. 13, 1984). The United States appealed from the Confirmation Order, contending that the Plan lacked adequate guarantees that the government would obtain sufficient funds if it prevailed in a corporate tax dispute. After a hearing on January 12, 1984, attorneys for White and the Department of Justice entered into a stipulation which, inter alia, amended the Plan to designate a specific portion of the Reserve Fund for claims filed by the Internal Revenue Service.
[8] Those plaintiffs who, quite understandably, cannot fathom how a lawsuit filed in Massachusetts, Pennsylvania or Texas has been frozen in Ohio for three-and-a-half years might well concur with Dickens' vision of Victorian "justice":
This is the Court of Chancery; which has its decaying houses and its blighted lands in every shire; which has its worn-out lunatic in every madhouse, and its dead in every churchyard; which has its ruined suitor, with his slipshod heels and threadbare dress, borrowing and begging through the round of every man's acquaintance; which gives to monied might the means abundantly of wearying out the right; which so exhausts finances, patience, courage, hope, so overthrows the brain and breaks the heart, that there is not an honourable man among its practitioners who would not givewho does not often givethe warning, "Suffer any wrong that can be done you rather than come here!"
* * * * * *
Jarndyce and Jarndyce drones on. This scarecrow of a suit has, in course of time, become so complicated that no man alive knows what it means. The parties to it understand it least; but it has been observed that no two Chancery lawyers can talk about it for five minutes without coming to a total disagreement as to all the premises. . . .
C. Dickens, Bleak House 2-3 (1953 ed.).
[9] As one commentator has noted:
. . . [I]f the bankruptcy court were to estimate claims individually, a sort of mass mitosis would occur, splitting each of the . . . claims into two components and requiring two separate courts to consider each claim. The result would be a multiplicity of suits and a massive waste of judicial resources. . . .
Considerations of "fairness to litigants" also weigh heavily against the estimate of individual claims by the bankruptcy court. The estimation of each individual claim would place an intolerable burden on the plaintiffs, who would be forced to pursue suits simultaneously in two separate forums, perhaps thousands of miles apart. Moreover, the plaintiffs would be faced with the prospect of inconsistent judgments on a single claim. Plaintiffs winning jury verdicts against . . . codefendants would understandably feel cheated if a panel of experts in the bankruptcy court gave them either no award against [the debtor] or an award much smaller than they could have expected from a jury.
Note, The Manville Bankruptcy: Treating Mass Tort Claims in Chapter 11 Proceedings, 96 Harv.L.Rev. 1121, 1139 (1983) ["Harvard Note"].
[10] Interim rule (d)(3)(A) states clearly: "A proceeding is not a related proceeding merely because the outcome will be affected by state law."
[11] Katchen v. Landy, 382 U.S. 323, 86 S.Ct. 467, 15 L.Ed.2d 391 (1966), held that "bankruptcy courts have summary jurisdiction to adjudicate controversies relating to property over which they have actual or constructive possession, . . . and as the proceedings of bankruptcy courts are inherently proceedings in equity, . . . there is no Seventh Amendment right to a jury trial for determination of objections to claims . . ." Id. at 336-37, 86 S.Ct. at 476-77.
In Katchen, however, the Court explicitly limited its opinion to the bankruptcy court's summary jurisdiction to order the surrender of voidable preferences asserted and proved by the trustee in response to a claim filed by the creditor who received the preference. It did not overrule the doctrine of Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959) and Dairy Queen, Inc. v. Wood, 369 U.S. 469, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962), that cases presenting mixed issues of law and equity must have their legal aspects tried to a jury, even if there has been a prior determination of the equitable aspects. Katchen can hardly be said to be dispositive of the issue before this Court under the new Code. See Levy, Trial by Jury Under the Bankruptcy Reform Act of 1978, 12 Conn.L.Rev. 1 (1979).
[12] The cases involving the Federal Magistrates Act of 1979 are informative, however, with respect to Article III problems posed by proceedings before a bankruptcy judge or magistrate. While Pacemaker Diagnostic Clinic of America v. Instromedix, Inc., 712 F.2d 1305 (9th Cir.1983) (§ 636(c) of Act unconstitutional under Northern Pipeline even where parties consented to trial of patent case before magistrate), argued en banc, 725 F.2d 537 (9th Cir. 1983) and Wharton-Thomas v. United States, 721 F.2d 922 (3d Cir.1983) (§ 636(c) constitutional where parties consented to trial of Federal Tort Claims Act by magistrate) disagree over the per se unconstitutionality of proceedings conducted by non-Article III federal magistrates, both cases stand for the proposition that unconsented-to trials before magistrates pose serious, perhaps insurmountable, constitutional problems. See also Heckers v. Fowler, 69 U.S. (2 Wall.) 123, 128, 17 L.Ed. 759 (1864) (not unconstitutional for parties to agree to refer case to referee and further agree "that the report of the referee have the same force and effect as a judgment of the court").
[13] The effect of estimating individual claims in the bankruptcy court would be to deny plaintiffs the juries to which they would be entitled in other courts. This denial cannot be justified by the policy underlying the absence of a jury right in the typical bankruptcy casefreeing the bankruptcy court to carry out its mission quickly and efficiently. . . . [T]he bankruptcy court would promote neither efficiency nor any other policy of the Bankruptcy Code by estimating individual claims itself.
Harvard Note, supra note 9, at 1141. See also Bittner v. Borne Chemical Co., Inc., 691 F.2d 134, 135 (3d Cir.1982) ("It is conceivable that in rare or unusual cases arbitration or even a jury trial may be necessary to obtain a reasonably accurate evaluation of the claims"), citing 3 Collier on Bankruptcy ¶ 502.03 (15th ed. 1981); cf. Olick, Chapter 11A Dubious Solution to Massive Toxic Tort Liability, 18 Forum 361 (1982).
[14] Parsing the language of an individual Code provision is a frustrating endeavor:
The statutory structure of the new Act raises the image of a classical Elizabethan labyrinth. Like the Internal Revenue Code, convoluted sentences are combined with mysterious cross-references that defy any simple answer to the question, "What does this mean?"
Aaron, The Bankruptcy Reform Act of 1978: The Full-Employment-for-Lawyers Bill, Part V: Business Reorganization, 1982 Utah L.Rev. 1, 39-40.
[15] The legislative history of the provision states:
Subsection (d) contains the discharge for a reorganized debtor. Paragraph (1) specifies that the confirmation of the plan discharges the debtor from any debt that arose before the date of the order for relief unless the plan or the order confirming the plan provides otherwise. The discharge is effective against those claims whether or not proof of the claim is filed (or deemed filed), and whether or not the claim is allowed.
Senate Report at 129; 1978 U.S.Code Cong. & Admin.News at 5915.
[16] In paragraph 12 of the Application, White states that a $100 million pre-petition claim by Ronna C. Miller and post-petition claims by Duvernay, Dunnaway, Falgoust, Moore, Babb, and the Cummins Engine Company, "have been asserted for amounts which are grossly excessive and bear no possible relationship to the maximum likely award on such Claims." At a hearing on February 8, 1984 on Duvernay's Motion to Clarify, counsel for Duvernay agreed that the $43 million claim was indeed exaggerated.
The Bankruptcy Court approved the reduction of the Reserve Fund to a level White conceded to be insufficient to meet the face value of those particular claims. The Bankruptcy Court's action, however, in no way operates to exclude Miller and Duvernay, et al. from sharing in the Reserve Fund.
[17] At the February 8, 1984 hearing, this Court learned for the first time that some of White's insurers disclaim a portion of the insurance coverage which White contends it carries. At the hearing, White represented that it had only recently learned of this dispute and that the Bankruptcy Court would be asked to resolve the issue.
Also on February 8, the Ideal Mutual Insurance Company and Northbrook Excess and Surplus Insurance Company filed a Motion to Intervene. By endorsed order, this Court today denies the Motion as untimely and inappropriate.
[18] Hopper, Confirmation of a Plan Under Chapter 11 of the Bankruptcy Code and the Effect of Confirmation on Creditors' Rights, 15 Ind.L.Rev. 501, 514 (1982).
[19] The process is described in Rendleman, The Bankruptcy Discharge: Towards a Fresh Start, 58 N.Car.L.Rev. 723, 750-51 (1980):
Congress replaced the automatic stay rule with a broader statute, coordinated the discharge injunction with the automatic stay, and expanded the conduct forbidden by the automatic and the discharge injunction. When the debtor files bankruptcy, each creditor receives a stay that forbids the creditor from suing, repossessing, and perfecting or enforcing liens, and from "any act to collect, assess, or recover a [prebankruptcy] claim." Unless removed by the bankruptcy court, this stay lasts until it is replaced by the discharge injunction. The discharge releases the bankrupt from discharged debts, voids all judgments on discharged debts, and enjoins conduct inconsistent with the discharge. The injunction under the 1970 amendments only forbade creditors from "instituting or continuing any action or employing any process." The 1978 Code broadens the interdiction to ban also "any act, to collect, recover or offset any such debt as a personal liability of the debtor." (Footnotes omitted).
[20] While the court later vacated that portion of its opinion concerning direct action against the insurers, 706 F.2d at 548, it merely held "that the district court did not abuse its discretion in declining to permit the plaintiffs to amend their complaints to add, as party defendants, the liability insurance carriers . . .", and in no way repudiated the discussion quoted above.
[21] See also 2 Collier on Bankruptcy ¶ 362.07 (15th ed. 1982):
. . . Generally, proceedings in which the debtor is a fiduciary or which involve the post-petition activities of the debtor need not be stayed since they bear no real relationship to the purpose of the stay which is to protect the debtor and the estate from creditors. Where the claim is one covered by insurance or indemnity, continuation of the action should be permitted since hardship to the debtor is likely to be outweighed by hardship to the plaintiff. Finally, the liquidation of a claim may be more conveniently and speedily determined in another forum. (Footnotes omitted). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553209/ | 37 B.R. 380 (1984)
In the Matter of ST. PETERSBURG HOTEL ASSOCIATES, LTD., Debtor.
ST. PETERSBURG HOTEL ASSOCIATES, LTD., Plaintiff,
v.
ROYAL TRUST BANK OF ST. PETERSBURG, Defendant.
Bankruptcy No. 82-1065, Adv. No. 83-718.
United States Bankruptcy Court, M.D. Florida, Tampa Division.
January 25, 1984.
Howard Batt, Clearwater, Fla., for Royal Trust Bank.
Domenic L. Massari, Tampa, Fla., David L. Schrader, St. Petersburg, Fla., for debtor.
ALEXANDER L. PASKAY, Chief Judge.
ORDER ON COMPLAINT FOR INJUNCTIVE RELIEF
THIS IS the next, and hopefully the last, round in the above-captioned adversary proceeding instituted by St. Petersburg Hotel Associates, Ltd. (Associates) by a Complaint which sought injunctive relief against Royal Trust Bank of St. Petersburg (Royal Trust), the Defendant named in the proceeding. Shortly after the commencement of the proceeding, Associates filed a Motion for Preliminary Injunction and sought an order prohibiting Royal Trust to proceed in a pending state court action filed by Royal Trust against Darrell Wild and his wife, LouAnn Wild, both of whom are non-debtors, although Mr. Wild is a general partner of Associates.
On November 2, 1983, this Court entered an order and denied the Motion for Preliminary Injunction, 36 B.R. 524. In the interim, Associates also filed a Motion for Temporary Restraining Order and a Motion for Rehearing.
On January 3, 1984, this Court entered an order and denied the Motion for Rehearing. *381 However, the order did not act on the Motion for Temporary Restraining Order.
The present matter under consideration is a Motion filed by Associates on January 5, 1984 which sought a final evidentiary hearing on its request for a permanent injunction. On the same date, this Court entered an order and originally scheduled a final evidentiary hearing for January 31, 1984. However, inasmuch as the final evidentiary hearing in the state court proceeding is now scheduled to be held on January 23, 1984, an earlier hearing was requested. The request was granted and the matter was rescheduled for January 17, 1984.
The record as established at the final evidentiary hearing consists of the following matters: the testimony received at both the initial hearing and the second hearing; an order heretofore entered by this Court which authorized Associates to enter into two distinct leases relating to the partial use of the hotel facility owned by Associates; the fact that Associates filed its disclosure statement which is now scheduled to be heard on February 6, 1984; and lastly, testimony received at the valuation hearing. In addition, the Court also heard testimony of Mr. Wild.
It is the contention of Associates that the record as established warrants limited injunctive relief because in the event Mr. Wild is unable to obtain the protection sought, the efforts of Associates will be thwarted and frustrated and Associates will not be able to achieve the rehabilitation it seeks through this Chapter, a prospect which is not only real, but could be achieved in the near future. This contention is based on the proposition advanced by Associates that Associates needs at least $1.2 million or possibly as much as $1.8 million to achieve rehabilitation and unless Mr. Wild and his wife are protected against the entry of an impending judgment against them on their guarantees, Mr. Will will be effectively prevented from obtaining additional investment from the limited partners and he will not be able to refinance some of his holdings located in Wisconsin which will produce sufficient funds to permit him to invest a minimum of $400,000 toward the reorganization of Associates. In this connection, Associates points to the fact that the disclosure statement has already been filed; it is scheduled to be considered on February 6, 1984 and if approved, it would permit the general partner, Mr. Wild, to proceed to solicit new investments not only from the limited partners initially, but also possibly from new investors which he cannot so, of course, without running afoul of Securities Laws. This is so, contends Associates, because the protection accorded by § 1125(e), the "safe harbor provision" of the Code, only protects persons from possible violation of any applicable law governing the offers, issuances, sales or purchases of securities, if the solicitation was made in good faith and in full compliance with the provision of the Code which, of course, includes the approval of the disclosure statement, a prerequisite of § 1125(b) of the Code for solicitation.
In opposition of these contentions, Royal Trust contends that there is absolutely no justification for injunctive relief because the proposition urged by Mr. Wild is nothing more than a speculative, unsupported hope; there is no commitment from all of the limited partners of any additional funds to invest; and there is no commitment presented at this time to assure that Mr. Wild is able to obtain financing. Moreover, so contends Royal Trust, LouAnn Wild is not even a partner, general or limited, of Associates and her only connection with Associates is that she happens to be married to Mr. Wild. Accordingly, there is clearly no justification to grant injunctive relief to LouAnn Wild.
Chapter 11, unlike Chapter 13, contains no provision which permits injunctive relief to protect co-debtors not involved in any case pending under the Code, c.f. § 1301. Nevertheless, there are respectable authorities which held that under special circumstances non-debtors, co-debtors may be protected temporarily if such protection is essential to the efforts of a debtor to achieve rehabilitation. In re Otero Mills, Inc., 25 B.R. 1018 (D.C.N.M.1982) and In the *382 Matter of Old Orchard Inv. Co., 31 B.R. 599, 10 B.C.D. 1200 (D.C.W.D.Mich.1983). It is well settled as a general proposition that before the stay may be issued, the petitioner must demand "a clear case of hardship or inequity" if there is "a fair possibility that the stay would work damage on another party." Landis v. North American Co., 299 U.S. 248, 255, 57 S.Ct. 163, 166, 81 L.Ed. 153 (1936). Thus, it is recognized that while the automatic stay provision of the Bankruptcy Code, § 362, does not protect non-debtors, the Bankruptcy Court possesses ample power pursuant to § 105 of the Code to issue such orders which appear to be necessary and appropriate to carry out the provisions of Title 11 of the Bankruptcy Code and in appropriate circumstances protect non-debtors. In re Landmark Air Fund II, 19 B.R. 556 (Bkrtcy.N.D.Ohio 1982). For instance, technical legal distinction between corporations and alleged alter-egos of corporations must be respected and observed in determining the automatic stay impact uses against or with respect to property of someone who is not technically a debtor. In re Loughnane, 28 B.R. 940 (Bkrtcy.D.Colo. 1983). See also the series of cases involving asbestosis litigation; Wedgeworth v. Fibreboard Corp., 706 F.2d 541 (5th Cir.1983); Lynch v. Johns-Manville Sales Corp., 710 F.2d 1194 (6th Cir.1983); Williford v. Armstrong World Industries, et al., 715 F.2d 124 (4th Cir.1983).
Considering the foregoing, this Court is satisfied that this record fails to establish the requisite degree of proof that LouAnn Wild is entitled to any injunctive protection since there is nothing in this record which shows that the judgment against her would have any impact on Associates. However, this is not the case in the case of Mr. Wild, the general partner of Associates and while a stronger showing could have been made based on changed circumstances, this Court is satisfied that it is appropriate to grant a short respite and protection by way of an injunction against any further proceedings at this time by Royal Trust against Mr. Wild. As noted earlier, since the last hearing this Court authorized Associates to enter into two substantial leases, and it is likely that the competing plan of reorganization filed in this case by St. Petersburg Bayfront Concourse Hotel Corporation, the holder of the first mortgage on the hotel, is no longer a viable plan of reorganization. Moreover, Mr. Wild should be given a limited time, in the event a disclosure statement is approved, to solicit funds necessary for funding the reorganization and to proceed to attempt to obtain a confirmation of a plan of reorganization.
This leaves for consideration the matter of Royal Trust's right to call up a certain letter of credit issued in favor of Royal Trust on behalf of Associates in the amount of $90,000, a letter of credit which was pledged as security for a personal guarantee given to Royal Trust by Mr. and Mrs. Wild. Whether or not this letter of credit is entitled to protection or conversely, Royal Trust is entitled to call upon the issuer of the letter of credit to honor the same would depend on whether or not a letter of credit is deemed to be property of the estate within the meaning of § 541 of the Code. This Court had the occasion to consider this question, albeit, in a totally different context and held in the case of In re Twist Cap, Inc., 1 B.R. 284 (Bkrtcy.Fla.1979) that under the particular state of circumstances involving that case it was proper to issue a temporary restraining order prohibiting the holder of a letter of credit to demand the issuer to honor the same. This decision, which created a great furor among banks and other institutionalized lenders, has been severely criticized and several decisions since expressly rejected the holding without considering the facts involved in that case and the circumstances which this Court considered to be controlling. See, In re Page, 18 B.R. 713 (D.C.Colo.D.D.C.1982); In re North Shore & Central Illinois Freight Co., 30 B.R. 377 (Bkrtcy.N.D.Ill.1982); In re Planes, Inc., 29 B.R. 370 (Bkrtcy.N.D.Ga. 1983); In re M.J. Sales & Distributing Company, Inc., 25 B.R. 608 (Bkrtcy.S.D.N.Y. 1982); Baird, Standly Letter of Credit in Bankruptcy, 49 Univ. of Chicago L.Rev. 130 (1982); and Chaitman & Sovern, Enjoining *383 Payment on a Letter of Credit in Bankruptcy: A Tempest in a Twist Cap, 38 Bus. Lawyer 21 (Nov. 1982). For instance, in the case of In re Page, 18 B.R. 713 (D.C.Colo.D. D.C.1982), Judge Gesell held on appeal that the automatic stay, § 362(a)(3) and (4) does not prevent honoring the letter since the letter and its proceeds are not the debtor's property; and the lien on the debtors' indemnifying collateral, which is a security interest to secure a future advance, was created and perfected pre-petition when the transaction was entered into, not after bankruptcy when the Bank is asked to honor the letter. He also held, however, that the automatic stay prevents the Bank from enforcing its security interest in the indemnifying collateral without the bankruptcy court's permission. In this particular instance, this Court is satisfied that there is nothing in this record which would warrant either a finding that this particular letter of credit is property of the estate, therefore, protected by the automatic stay or that Royal Trust should not be permitted to proceed and obtain the proceeds on the ground that they would materially impact Associates.
Based on the foregoing, it is the considered opinion of this Court that while a limited injunctive relief is appropriate protecting Mr. Wild against the entry of a judgment, Royal Trust should be permitted to proceed against LouAnn Wild and permitted to demand the proceeds of the letter of credit.
Accordingly, it is
ORDERED, ADJUDGED AND DECREED that Royal Trust, its agents, servants and attorneys or anyone acting on its behalf be, and the same hereby is, restrained and prohibited to proceed and undertake any steps, direct or indirect, toward obtaining a final judgment against Darrell Wild provided Associates obtains an approval of its disclosure statement on February 6, 1984 and further provided that Associates obtains a confirmation not later than 45 days after the entry of the order approving the disclosure statement and further provided that Darrell Wild furnishes to this Court satisfactory proof 30 days subsequent to the entry of the order approving disclosure statement of the committment of funds sufficient to fund the plan of reorganization. It is further
ORDERED, ADJUDGED AND DECREED that in the event Associates is unable to meet these conditions and Darrell Wild is unable to furnish this satisfactory proof of committment as noted above, the injunction shall be deemed to be dissolved forthwith and Royal Trust will be authorized to proceed in the state court to seek a final judgment against Darrell Wild. It is further
ORDERED, ADJUDGED AND DECREED that the injunction shall not be construed to prohibit Royal Trust to proceed and demand the proceeds of the letter of credit. It is further
ORDERED, ADJUDGED AND DECREED that the complaint for injunctive relief against LouAnn Wild be, and the same hereby is, dismissed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553214/ | 37 B.R. 755 (1984)
In re Donald D. MANNING and Judith E. Manning, Debtors.
Tom H. CONNOLLY, Trustee, Plaintiff,
v.
NUTHATCH HILL ASSOCIATES, Bernard A. Karshmer, Leo Goettelman, Arthur I. Karshmer, and Hazen E. Moore, Defendants.
Bankruptcy No. 82 B 1823 M, Adv. No. 83 G 0935.
United States Bankruptcy Court, D. Colorado.
February 6, 1984.
John D. Phillips, Glenwood Springs, Colo., for plaintiff.
Stephen T. Susman, Denver, Colo., for defendants.
MEMORANDUM OPINION AND ORDERS
JAY L. GUECK, Bankruptcy Judge.
I. Introduction
THIS MATTER comes before the Court pursuant to a Complaint filed by the Chapter 7 Trustee of the above-named debtors in which he seeks an order declaring dissolution and directing windup of a partnership, an order authorizing sale of partnership property free and clear of the interest of the partnership and general partners and for a partnership accounting. The parties have submitted a Stipulation of Facts and legal briefs in lieu of trial. The issue presented is the manner by which a Trustee is to reach a debtor's interest in real property held by a general partnership in which the debtor is a general partner.
The Trustee contends that certain provisions of the Bankruptcy Code, namely § 363(b), (f), (g), (h), (i), and (j), together with the Colorado Uniform Partnership Law, Article 60 of Title 7 of the Colorado Revised Statutes, provide the mechanism to sell the partnership property free and clear of the interests of the partnership and individual partners in order to realize the true value of the debtors' undivided interest in the partnership.
The defendants admit that the Trustee has succeeded to and may sell the debtors' undivided interest in the partnership. However, defendants argue that neither statutory authority nor applicable Colorado law nor the written partnership agreement enable the Trustee to compel the partnership or partners to sell the partnership real property in toto.
II. Findings of Fact
On August 15, 1969, Bernard Karshmer, Arthur Karshmer, Leo Goettleman, Hazen Moore and Donald Manning formed Nuthatch *756 Hill Associates (hereinafter "Nuthatch") as a Colorado general partnership pursuant to a written partnership agreement. Each individual is a resident of the state of Colorado and contributed an equal capital amount at the outset. Hence, each owns a 20% undivided interest in the partnership.
On August 17, 1969, Nuthatch purchased an 88 acre parcel of real property in Clear Creek County, Colorado. Nuthatch holds the title to the real property except for 1/15 of one acre conveyed to James and Adelaide Behen in 1971 for title clarification purposes. The property is encumbered by a deed of trust in the amount of $35,000 in favor of the former owners, Robert and Agnes Allen. In December of 1982 the property was appraised by a MAI appraiser as having a fair market value of $722,700 and a minimum sale price of $578,200. Partition in kind of the real property among the five general partners is impracticable.
On April 29, 1982, Donald and Judith Manning filed a petition for a relief under Chapter 7 of the Code as joint debtors. Tom H. Connolly was appointed interim trustee and no successor trustee was elected at the § 341 meeting.
The Stipulation of Facts submitted by the parties on October 14, 1983 is adopted herein as further Findings of Fact. Significant among those stipulated facts is the following:
"17. Partition of the Nuthatch Property (as distinguished from Nuthatch Hill Associates partnership), in kind, among the five equal owners (including the estate) is impracticable in the sense of `carving up' the Nuthatch Property into five essentially similar shares of separately-owned real estate. Partition of the Nuthatch Property acquired and owned by the partnership itself, in its name and status into five equal, undivided tenancies in common is not impracticable.
"18. Sale of (a) the estate's undivided 20% interest in the Nuthatch Hill Associates partnership, or of (b) an undivided 20% interest in the Nuthatch Property, would realize significantly less for the estate than would the sale of either of such interests free of the interests of the other general partners.
"19. The benefit to the estate of such a sale of the Nuthatch Property free of the interests of the other partners in Nuthatch Hill Associates would probably outweigh the detriment to the Defendants (the other partners). Such detriment would primarily consist of the imposition of long-term capital gains taxes upon the other four general partners.
"20. The Nuthatch Property is not used in the production, transmission or distribution, for sale, of electric energy or of natural or synthetic gas for heat, light or power."
These stipulated facts track the four requirements which must be present to sell interests of co-owners in property under 11 U.S.C. § 363(h).
The Partnership Agreement contains particular provisions which should be highlighted. The Agreement provides, in part:
"12. Voluntary Termination. The partnership may be dissolved at any time by the request of any partner, in which event the partners shall proceed with reasonable promptness to liquidate the partnership affairs. The assets of the partnership shall be used and distributed in the following order: (a) to pay or provide for the payment of all partnership liabilities and liquidating expenses and obligations other than to partners; (b) to pay debts owed to partners; (c) to discharge the balance of the capital accounts of the partners; and (d) to discharge the balance of the income accounts of the partners. Notwithstanding the foregoing, if such dissolution is not consented to by partners owning a majority of the partnership interests, then the nonconsenting partners shall have the right to purchase the entire partnership interest of the partner or partners seeking to dissolve the partnership at the price and payment terms stated in paragraph 15. Thereafter, the partnership business shall be continued by the successor partnership comprising the remaining partners.
*757 "13. Right of First Refusal. If any partner shall at any time propose to sell or otherwise dispose of for a consideration any or all of his interest in the partnership, he shall first make a written offer to sell such interest to the partnership at a purchase price equal to that of the proposed transfer.
. . . . .
"15. Default. If any partner shall fail to contribute his proportionate share of additional capital when required pursuant to Paragraph 5(b) and shall remain in default for a period to ten days, or such additional period specified by unanimous agreement of all other partners, after the date designated for such additional capital contribution, the remaining partners (or one or more of them) who have committed their proportionate shares of such additional capital shall have an option to purchase the entire partnership interest in the defaulting partner at a price equal to 75% of the defaulting partner's capital account."
III. Conclusions of Law
The Trustee claims authority to sell the real property owned by the Nuthatch Partnership free and clear of the interests of Nuthatch and the general partners under two Code provisions. First, he contends that 11 U.S.C. § 363(h) authorizes sale of the estate's interest and the interest of any co-owner in property provided that four conditions specified thereunder are satisfied. Second, he contends that § 363(f)(1) or (f)(5) authorize the sale of property of the estate free and clear of any interest in such property of entities other than the estate.
"When a partner is a debtor in a case under Title 11, the partner's interest in the partnership in which such partner is a partner is property of the partner's estate under 11 U.S.C. § 541(a)(1)." (emphasis supplied). H.R. Report 95-595 at page 199, 1st Sess. (1977).
§ 363(h) provides:
"Notwithstanding subsection (f) of this section, the trustee may sell both the estate's interest, under subsection (b) or (c) of this section, and the interest of any co-owner in property in which the debtor had, immediately before the commencement of the case, an undivided interest as a tenant in common, joint tenant, or tenant by the entirety, only if
(1) partition in kind of such property among the estate and such co-owners is impracticable;
(2) sale of the estate's undivided interest in such property would realize significantly less for the estate than sale of such property free of the interests of such co-owners;
(3) the benefit to the estate of a sale of such property free of the interests of co-owners outweighs the detriment, if any, to such co-owners; and
(4) such property is not used in the production, transmission, or distribution, for sale, of electric energy or of natural or synthetic gas for heat, light, or power.
§ 363 does apply in Chapter 7 proceedings. § 103(b).
The courts, interpreting § 5 of the Bankruptcy Act of 1898, held that a bankruptcy court had no jurisdiction to administer partnership assets absent consent of non-bankrupt partners. Benitez v. Bank of Nova Scotia, 110 F.2d 169 (1st Cir.1940); In re Segal, 157 F.Supp. 232 (D.C.Cal.1957). Further, they held that the only interest held by a bankrupt partner was "The right to demand and receive the individual's interest, if any, in the partnership assets after an accounting and payment of partnership debts out of the property belonging to the partnership." Turner v. Central National Bank of Mattson, 468 F.2d 590, (7th Cir. 1972); In re Dreske, 25 B.R. 268, 271 (Bkrtcy.Wis.1982); In re Dixon, 1 Bankr.Ct. Dec. 1648 (Bkrtcy.Ohio 1975); Partnership Bankruptcy, 31 Hastings Law Journal 149, 167 (1979).
In the case of In re Victory Pipe Craftsmen, Inc., 12 B.R. 822 (Bkrtcy.Ill.1981) the bankruptcy court decided that § 363(h) does not authorize a debtor-partner to sell partnership property free and clear of partnership *758 and individual partner's interests. The court ruled:
".... [even] if this court found that debtor was a partner in the Venture, it would appear that debtor could not sell the property pursuant to 11 U.S.C. § 363 in light of the Illinois Supreme Court's opinion in Lueth v. Goodknecht, 345 Ill. 197, 177 N.E. 690 (1931) which held that `The interests of the partners in firm property is neither that of joint tenants nor of tenants in common.' Section 363(h) provides for sales of co-owners interest only where such property consists of `an undivided interest as a tenant in common, joint tenant or tenant by the entirety', indicating Lueth is directly in point." (emphasis added). Victory Pipe Craftsmen, at page 824.
The case of In re Dreske, supra, is also relevant to the legal issues raised herein. In Dreske, supra, an individual partner filed a petition under Chapter 11 of the Code. The partnership held real property and, subsequent to the bankruptcy, the property was foreclosed upon. The bankruptcy court was called upon to determine the effect of the automatic stay on the real estate foreclosure action. In reaching its decision that the stay did not apply, the court declared:
"What both parties have overlooked is the primary rule in bankruptcy cases, in considering a problem involving partners or partnerships, that a partnership is a distinct legal entity separate and apart from the partners who formed it. 1A Collier on Bankruptcy (14th ed.) Para. 5.03; Turner v. Central Nat'l Bank, 468 F.2d 590 (7th Cir.1972); Liberty Nat'l Bank v. Bear, 276 U.S. 215, 48 S.Ct. 252, 72 L.Ed. 536 (1928); In re Aboussie Brothers Construction Co., 3 CBC 2d 684, 8 B.R. 302, 7 BCD 309 (D.C.1981). The Bankruptcy Reform Act of 1978 continues the entity principle. The very availability of the bankruptcy liquidation and reorganization processes to partnerships is a recognition of their existence as entities. Rosenberg, Partnership Reorganization Under the Bankruptcy Reform Act, 56 N.Y.U.L.Rev. 1173, 1177 (1981). Under the Bankruptcy Code, with some exceptions, a `person' may be a debtor under chapter 7 (s. 109(b)) or chapter 11 (s. 109(d)), and a partnership is a `person' as defined in s. 101(30) of the Code.
"When Dreske filed under chapter 11, a bankruptcy estate was created, comprising all of Dreske's personal legal or equitable interests in property as of the commencement of the case (s. 541), and it is to that estate that the automatic stay of s. 362 applied. Dreske had no interest in the real estate which was the subject of the foreclosure action. As a matter of fact, the schedules filed by Dreske list no real estate whatsoever as belonging to him. The only interest that he had was the right to demand and receive the individual partner's interest, if any, in the partnership assets after an accounting and payment of partnership debts out of the property belonging to the partnership." (emphasis supplied). Dreske, supra, at pages 270-271. See also, In re Gagnon, 26 B.R. 926, 929 (Bkrtcy.Pa. 1983).
Although general partners have a right in the specific partnership property as tenants in partnership, C.R.S. § 7-60-125, "the incidents of this tenancy are so negligible that ownership of the property is, for all practical purposes, in the partnership, not the partners." Law of Partnership, Crane and Bromberg (1968) § 40 at page 228. The partnership holds title to the real property and if the entity theory of partnerships is respected, the general partners are not really co-owners of the property itself. See, C.R.S. § 7-60-108. The Trustee argues that when a partnership is dissolved the partners' interest as tenants in partnership is extinguished and they become tenants in common. I disagree. The Trustee has not cited authority for that position. It is my conclusion that upon dissolution, the partners remain tenants in partnership pending windup and termination. See, Law of Partnership, Crane and Bromberg (1968) § 73, et seq.
Further, I cannot legislate to stretch the language of § 363(h) to authorize sale of *759 undivided interests in a tenancy in partnership. Statutory analysis begins with the statute itself. Consumer Product Safety Commission v. GTE Sylvania, 447 U.S. 100, 100 S.Ct. 2051, 64 L.Ed.2d 766 (1980); Touche Ross & Co. v. Redington, 442 U.S. 560, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979). Under the Act such a sale by the Trustee was not possible. Segal, supra. I find no clear Congressional intent to the contrary. If one examines the genesis of § 363(h), it appears that Congress was concerned about changing rules regarding marital interests in property. House Report 95-595 at page 177, 1st Sess. (1977), U.S.Code Cong. & Admin.News 1978, p. 5787.
Accordingly, I hold that § 363(h) is not an available mechanism by which the Trustee may sell the real property of the partnership in the manner he desires because the parties are not tenants in common, tenants by the entirety or joint tenants and the property of the debtor-partner's estate is his undivided interest in the partnership. C.R.S. § 7-60-108; In re Dreske, supra.
The Trustee's next contention is that the sale of partnership real property is authorized under 11 U.S.C. § 363(f).
§ 363(f)(1) and (f)(5) state:
"The trustee may sell property under subsection (b) or (c) of this section free and clear of any interest in such property of an entity other than the estate, only if
(1) applicable nonbankruptcy law permits sale of such property free and clear of such interest; ..... or ....
(5) such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest."
As noted above, the Trustee contends that applicable non-bankruptcy law authorizes such a sale.
However, the defendants argue that § 363(f) is inapposite because it primarily covers situations involving liens. I disagree. § 363(f) speaks in terms of selling property free and clear of interests in such property. The statutory language is broader than the construction urged by the defendants. Additionally, § 363(f)(4) specifically sets forth the requirements to be met when liens are involved. In my view, this argument of the defendants is without merit.
A brief review of applicable non-bankruptcy law appears necessary.
When a general partner files a petition for relief under the Bankruptcy Code the partnership is dissolved. C.R.S. § 7-60-131(1)(e) (as amended 1982 cum.supp.). Upon dissolution the partnership is not terminated; rather, it continues until the partnership affairs are wound up. The partners who have not wrongfully dissolved the partnership, except a bankrupt partner, have the right to wind up the affairs of the partnership, but any partner or his legal representative, upon cause shown, may obtain winding up by the court. C.R.S. § 7-60-137. C.R.S. § 7-60-138 specifies the manner in which partnership property is applied when the partnership is dissolved. C.R.S. § 7-60-138(1) is apposite here because the partnership was not dissolved in contravention of the partnership agreement. See, ¶ 12 of the Agreement and C.R.S. § 7-60-131(1)(b) (as amended 1982 cum.supp.).
Pursuant to C.R.S. § 7-60-138(1) and Davis v. Davis, 149 Colo. 1, 366 P.2d 857 (1961):
"It is a general rule that in an action for a partnership accounting and dissolution the entire partnership property will be converted into cash. (citations omitted).... The rule is especially applicable when there are partnership debts; in fact, at least one court has stated that a partition of partnership property can only be made when there are no partnership debts owing to third parties. (citations omitted).... C.R.S. '53, 104-1-38, embodies the essence of the same rule by providing that in cases of dissolution, unless otherwise agreed, each partner as against the other partners may have the partnership property applied to discharge partnership liabilities, and the surplus applied to a cash payment of any amount owing to the respective partners. (citations omitted).... A sale of partnership property provides the best method not *760 only of determining the value of the property, but also of discharging existing partnership indebtedness and precisely settling the account of the partners out of the surplus." Davis, supra, at 5, 366 P.2d at 859 (emphasis added).
By virtue of these pronouncements, the Trustee claims that he can sell the partnership property free and clear of all interests.
However, both the common law, as expressed in Davis, supra, and the Colorado Uniform Partnership Act (specifically C.R.S. § 7-60-138(1)) are expressly subject to a contrary agreement of the parties. The partners of Nuthatch provided for such a contingency in ¶ 12 of the Partnership Agreement. That paragraph states that if the voluntary dissolution is not consented to by a majority of the partners, the non-consenting partners have the right to purchase the entire partnership interest of the partner who dissolved the partnership at 75% of that partner's capital account.
Additionally, as previously discussed herein, the interest sought to be sold is the interest in real property. That is not "property of the estate" as contemplated in § 363(b) and (c), to which § 363(f) refers. The "property of the estate" is the debtor's interest in the partnership, as a tenant in partnership.
Therefore, the Trustee may not use § 363(f)(1) or § 363(f)(5) to sell the real property free and clear of the interests of other entities because applicable non-bankruptcy law does not permit such a sale. Further, these entities cannot be compelled, in a legal or equitable proceeding, to accept a money satisfaction of their interests.
However, because of the stagnant nature of this bankruptcy proceeding, I will direct the Trustee to wind up the affairs of the partnership unless, within ten days of the date of this opinion, the remaining partners exercise the option contained in paragraph 12. Manning does have the right to demand and receive his interest in the partnership assets after an accounting. The partnership has been "dissolved", not by virtue of a voluntary dissolution under the Partnership Agreement, but by operation of 1973 C.R.S. § 7-60-131(1)(e) (as amended 1982 cum.supp.). The partnership affairs should now be wound up and the partnership terminated pursuant to the Colorado Uniform Partnership Act and the Partnership Agreement. Once Manning has received his share, distribution shall occur pursuant to the law contained in 11 U.S.C. § 701 et seq.
By reason of the foregoing authorities, IT IS ORDERED:
1. The Trustee's Complaint for an order declaring dissolution and directing windup of Nuthatch is granted;
2. The Trustee's Complaint for a partnership accounting is granted;
3. The Trustee's Complaint for an order authorizing windup of the partnership affairs will be granted, unless the remaining partners exercise their rights under paragraph 12 of the Agreement within ten days of the date of this Order;
4. The Trustee's Complaint for an order authorizing sale of partnership property free and clear of the interest of Nuthatch and it's general partners is denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553197/ | 37 B.R. 229 (1984)
In re Robert Gary NELMS, d/b/a Sun Realty, a/d/b/a Sun Financial Services, Debtor.
BAP No. CC-82-1407-GAbH.
United States Bankruptcy Appellate Panels of the Ninth Circuit.
Argued March 23, 1983.
Decided February 18, 1984.
Arnold L. Kupetz, Sulmeyer, Kupetz, Baumann & Rothman, Los Angeles, Cal., for appellant.
Craig M. Lytle, P.C., Hermosa Beach, Cal., for appellee.
Before GEORGE, ABRAHAMS, and HUGHES, Bankruptcy Judges.
OPINION
GEORGE, Bankruptcy Judge:
ARNOLD L. KUPETZ, the Trustee in the above-entitled case, has appealed an order of the bankruptcy court extending the time for a number of unsecured creditors to file their respective proofs of claim. Although we conclude that the order of the lower court was improvidently granted, we vacate that order without prejudice to the claims of those unsecured creditors who filed during the extension period.
I. BACKGROUND
Little factual background is contained in the actual trial record of this proceeding. Nevertheless, for purposes of clarity only, we shall use the statements of fact provided by counsel:
*230 The creditors involved in the proceedings underlying this appeal were investors in two separate financing arrangements used by the debtor, ROBERT GARY NELMS, to capitalize his real estate business. One of these financing methods, referred to as the "Sun Satellite" program, relied upon the formation of limited partnerships to invest in a number of the debtor's offices. The second program, known as "Sun Financial Services," involved the sale of deeds of trust to prospective investors.
During the course of the administration of the debtor's estate, the trustee claimed that all of the deeds of trust held by the debtor at the commencement of his case were the property of his estate. The trustee, therefore, objected to the claims of the Sun Financial Services creditors to an interest in those trust deeds. He further objected to the alleged interests claimed by the Sun Satellite limited partners in the various partnerships' assets.
In contesting the Trustee's position, with respect to the claims of the Sun Financial Services investors, Mr. Craig M. Lytle, Esq. has represented a number of persons seeking, by a class action in bankruptcy court, to recover several of the notes held by the debtor and by three banks which handled the debtor's pre-petition business affairs. Mr. Lytle was also approached to represent the claims of Sun Satellite investors, but he declined to render them his services. Due to certain representations by a third party, however, it is alleged that some of the Sun Satellite creditors were misled into believing that Mr. Lytle would be representing their interests before the bankruptcy court.
Despite his refusal to act as counsel for the Sun Satellite investors, Mr. Lytle did attempt to notify these creditors of the need to file proofs of claim against the Nelms estate. Some question, nonetheless, exists as to whether any of the Sun Satellite creditors received actual notice of this advice.
Eventually, the trustee stipulated that, if certain of the Sun Financial Services creditors would abandon their alleged interests in the debtor's deeds of trust, they would be allowed unsecured claims against Mr. Nelms' estate. An order formalizing this agreement was consequently entered by the trial court, which specifically provided that these creditors should file proofs of claim in the debtor's case.
In the meantime, the debtor's case had been converted from Chapter 11 to Chapter 7. In the Order for and Notice of hearing, which scheduled the section 341(a) hearing in that converted case for March 10, 1982, all creditors were informed of the need to file a proof of claim within six months after the hearing date.
Notwithstanding these notices, as the September 10, 1982 claim-filing deadline became imminent, Mr. Lytle was apprised that a significant number of creditors, having both Sun Satellite and settled Sun Financial claims, were still unaware of the need to file proofs of claim with the bankruptcy court. During the Labor Day weekend, immediately preceding the filing deadline, Mr. Lytle and his staff made a substantial effort to inform these creditors of the proof of claim requirement. Nevertheless, they discovered a great deal of confusion surrounding the investors' interpretations of alleged representations made by the court, the trustee, Mr. Lytle, and others. Mr. Lytle felt that this confusion had rendered these creditors incapable of responding, in a timely fashion, to the notices of the court and of the trustee. He, therefore, moved ex parte for an extension of time for the filing of proofs of claim in the instant case.
Following a hearing on this motion, at which the trustee's counsel was also in attendance, the bankruptcy court granted a thirty-day extension to those creditors listed by Mr. Lytle as having been Sun Satellite partners or Sun Financial investors with settled claims. This appeal followed the entry of that order.
II. ANALYSIS OF THE FACTS AND THE LAW
When the bankruptcy court's order was entered in this matter, the filing of proofs *231 of claim was governed by Bankruptcy Rule 302. Bankruptcy Rule 302(e) mandates that "[a] claim must be filed within 6 months after the first date set for the first meeting of creditors . . .," subject to certain exceptions not relevant to the present case. Despite the narrow language used in this rule and in its predecessor statute, both have been subject to differing interpretations over the years. Compare In re Pigott, 684 F.2d 239 (3d Cir.1982) (inability of creditors' counsel to return to office in the wake of the Three-Mile Island evacuation not sufficient ground to excuse the late filing of proofs of claim); In re Vandergrift, 341 F.2d 921 (3d Cir.1965) (per curiam), affirming 232 F.Supp. 857 (W.D.Pa.1964); In re Mellen Manufacturing Co., 287 F.2d 37 (3d Cir.1961) (the latter two cases relied upon section 57n of former Bankruptcy Act, 11 U.S.C. § 93(n) (1976), to preclude the allowance of late-filed claims) with In re H. & C. Table Co., Inc., 457 F.Supp. 858 (W.D.Tenn. 1978); Matter of Comac, 402 F.Supp. 43 (E.D.Mich.1975); In re Sieban & Byrnes, Inc., 291 F.Supp. 315 (S.D.N.Y.1968) (following dicta in Pepper v. Litton, 308 U.S. 295, 304-305 n. 11, 60 S.Ct. 238, 244-245 n. 11, 84 L.Ed. 281 (1939), to permit the late filing of claims).
We do not rule, at this time, on the relative merits of the above-cited cases; instead we simply conclude that, at the very least, the equitable powers of the bankruptcy court should not have been applied so broadly as was permitted by the trial court's order. In particular, we note the lack of any detailed examination, by the court below, of the factual reasons for the late filing of each creditor's claim or claims. This weakness in the proceedings below seems to lie at the heart of both the Trustee's complaint concerning the standing of Mr. Lytle to represent all of the Sun Satellite and excluded creditors and the Trustee's objections to the actual merits of the lower court's order.
Taking no regard for the differing factors of notice, reliance, degree of education or experience, and so forth, affecting the actions (or inaction) of each of these creditors, the trial court permitted all to be saved from the loss of their claims, as a matter of equity, merely upon the representations of Mr. Lytle concerning the general plight of this group of creditors. While prompt and comprehensive solutions are included as goals of the bankruptcy system and piecemeal litigation is seldom conducive to prompt solutions, equity must be applied on a case-by-case basis to prevent its misuse.
In order to use such a case-by-case method, we agree with the trustee that the more appropriate time to have examined late-filed proofs of claim would have been when objections were made to their allowance. Therefore, although the trial court's order must be vacated as being overly broad, we see no need, at this time, to require a dismissal of those claims filed after September 10, 1982. Rather, we anticipate that the trustee will pursue his objections to each ostensibly late-filed claim, on an individual basis.
III. CONCLUSION
We conclude that the order of the trial court, extending the time to file proofs of claim for the Sun Satellite and Sun Financial creditors with settled claims, was improvidently granted. We, therefore, REVERSE and VACATE that order without prejudice to the claims of the creditors involved or to the trustee in objecting to any or all of those claims.
HUGHES, Bankruptcy Judge, concurring.
I concur in the judgment to reverse the order appealed.
The appeal is from an order extending the date by which a class of unsecured creditors could file claims against the estate. The order violated the then relevant bankruptcy rules. Bankruptcy Rule 302(e) enumerated the circumstances under which such an order was authorized. None of those circumstances existed in this case. Furthermore, Bankruptcy Rule 906 expressly limited the court's discretion to extend time to file claims under Rule 302(e) "except *232 to the extent and under the conditions stated in" Rule 302(e). The order was thus erroneous and an abuse of discretion.
This appeal does not present the question of whether an untimely filed claim may nevertheless be allowed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553200/ | 37 B.R. 175 (1984)
In re VENTURE PROPERTIES, INC., Debtor.
VENTURE PROPERTIES, INC., Plaintiff,
v.
NORWOOD GROUP, INC., Adrian Culveyhouse, and Donald Cooney, Defendants.
Bankruptcy No. 83-298, Adv. No. 83-196.
United States Bankruptcy Court, D. New Hampshire.
February 27, 1984.
*176 Marcus Cohn, Peabody & Brown, Boston, Mass., for Norwood Group, Inc. and Adrian Culveyhouse.
Mark Vaughn, Manchester, N.H., for Venture Properties, Inc.
Joseph Krolikowski, Nashua, N.H., for Donald Cooney.
MEMORANDUM OPINION
JAMES E. YACOS, Bankruptcy Judge.
This case is before the court on a complaint by the Chapter 11 debtor seeking injunctive relief to prevent the defendants from proceeding to sell or otherwise dispose of certain real property that was subject to a pre-bankruptcy purchase and sale agreement.
Venture Properties, Inc. (hereinafter "Venture") filed its Chapter 11 petition on June 21, 1983. Venture is a general partner in Milford Green Associates (hereinafter "Milford") which is a New Hampshire limited partnership. The partnership is not a debtor in any pending bankruptcy proceeding.
Prior to bankruptcy, an officer of Venture entered into a purchase agreement with the defendant Cooney regarding the property in question. The parties are in conflict as to whether that agreement had lapsed prior to the Chapter 11 filing but the decision of the court makes it unnecessary to reach that question.
Venture's original complaint alleged that the buyer's rights under the purchase agreement had been assigned to itself, by its officer, and that the defendants' actions in attempting to re-sell the property were in violation of the automatic stay imposed by § 362 of the Bankruptcy Code.
It then turned out however that the buyer's rights had actually been assigned to the Milford limited partnership several days before the Chapter 11 filing. Venture amended its complaint requesting that the court "extend" the automatic stay to enjoin the defendants from terminating the sales agreement. The defendants moved to dismiss the complaint on the basis that § 362 does not protect property which is owned or claimed by a non-debtor entity, and that no other legally sufficient basis for relief was alleged.
It is clear that § 362 by itself has no application to the situation since it deals only with "property of the estate" as defined in § 541 of the Code. The buyer's rights here were owned by Milford, not Venture, at the time of filing. Venture's status as general partner in the Milford limited partnership gave it an obvious reason to be concerned as to the disposition of any assets of Milford but this "interest" does not amount to a "legal or equitable interest in property" within the meaning of § 541 in the judgment of the court.
It therefore appears that Venture's amended complaint can survive dismissal only if it alleges sufficient grounds for discretionary relief under the general injunctive power provided by § 105 of the Code.
The crucial issue here is whether an injunction should issue to protect a non-debtor's assets when there is no allegation that it would not have been feasible for that party to file its own reorganization petition to "earn" the right to such relief.
In an analogous situation the court in In re Eden Associates, 4 CBC 2d 1249, 13 B.R. 578 (S.D.N.Y.1981), dismissed a Chapter 11 petition in which the debtor was the limited partnership but the asset apparently remained with another entity. The court in Eden commented:
"Under the Code, to prevent misuse of the Chapter 11 remedy by debtors which are not bona fide business organizations filing to reorganize an ongoing enterprise, a petition may be dismissed pursuant to § 1112(b). This is particularly applicable to asset-culled entities where `debtors have elected not to submit the *177 actual entities in interest to the jurisdiction of the court, thereby isolating the entities in interest from the scrutiny and control of the court during proceedings.' In re Dutch Flat Investment, 6 B.R. 470, 471, 6 B.C.D. 1134, 1135, 3 C.B.C.2d 136, 138 (Bkrtcy.N.D.Cal.1980)."
Venture cites some partnership cases in which injunctive relief to protect a non-debtor partner was granted. See Elemar Associates v. Goldsmith, 14 CBC 574 (S.D.N.Y.1977); Matter of Old Orchard Investment Company, 31 B.R. 599, 9 CBC 2d 139 (W.D. Mich.1983). The Elemar ruling was not followed in In re Aboussie Brothers Construction Co., 8 B.R. 302, 3 CBC 2d 684 (E.D.Mo.1981). None of these cases are of much help in the present situation, however, since the Code gives specific powers to reach a nondebtor partner's assets where the partnership itself is a debtor. 11 U.S.C. §§ 508, 723.
Venture also cites recent decisions in the Manville "abestos" reorganization proceeding in which injunctive relief has been granted to restrain suits against Manville's insurance carriers in certain instances. See Johns-Manville Corp. v. Asbestos Group, 26 B.R. 420, 8 CBC 2d 130, supplemented by later decision, 33 B.R. 254, 9 CBC 2d 731 (S.D.N.Y.1983). The insurers "protected" in that instance did not need such relief, however, and it would not have made any sense to ask why they had not filed their own reorganization cases.
Venture's strongest argument is in terms of the interference with its reorganization effort that will occur if the defendants can proceed to dispose of the real estate in question. Such a justification was used in In re Otero Mills, Inc., 25 B.R. 1018, 7 CBC 2d 1017 (D.N.M.1982), to support an injunction against collection efforts against the non-debtor principal officer (and personal guarantor) of the debtor corporation. The opposite was held on similar facts in In re Loughnane, 28 B.R. 940, 8 CBC 2d 512 (D.Colo.1983). The Otero Mills decision is most closely in point but this court is forced to conclude that that decision was simply wrongly decided.
It has been a cardinal principle of bankruptcy law from the beginning that its effects do not normally benefit those who have not themselves "come into" the bankruptcy court with their liabilities and all their assets. In re Eden Associates, supra; In re Aboussie Brothers Construction Co., supra; In re Dolton Lodge Trust No. 35188, 22 B.R. 918, 7 CBC 2d 303 (N.D.Ill.1982). Cf. Austin v. Unarco Industries, Inc., 705 F.2d 1 (1st Cir.1983) (Court notes that when Congress intended that non-debtors be protected, as in 11 U.S.C. § 1301, it provided such protection directly).
To violate this principle on the appealing facts of a particular case, where no specific necessity for doing so is set forth, is simply to invite a wholesale restructuring of the expectations of those involved in commercial transactions without any indication from Congress that such a profound change was intended. Section 105 of the Code is essentially the same as the prior provisions in § 2(a)(15) of the Bankruptcy Act.
Moreover, there is no essential difference in venture's position in this case and that of any debtor who might contend that "property of the estate" was involved because the debtor owned an interest in a non-debtor entity which itself had a legal or equitable interest in some asset. This rationale could be used to justify injunctive relief against disposition of such assets merely because the debtor owned corporate stock, for example, in a corporation holding the assets.
The Bankruptcy Code generally denies relief to "partial entities" such as an ordinary land trust in which only part of the true beneficiaries' assets are brought into the bankruptcy court in a purported reorganization. In re Dolton Lodge Trust No. 35188, supra. Essentially the same thing is being attempted in the present case and accordingly no basis for injunctive relief, whether as a matter of law or of discretion, is indicated.
The amended complaint will be dismissed by separate order. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/507389/ | 849 F.2d 204
26 Fed. R. Evid. Serv. 488
Leo E. EDWARDS, Jr., Petitioner-Appellant,v.Gene A. SCROGGY, Commissioner, Mississippi Department ofCorrections, et al., Respondents-Appellees.
No. 87-4553.
United States Court of Appeals,Fifth Circuit.
July 15, 1988.Opinion on Denial of Rehearing and Rehearing En Banc Aug. 17, 1988.
Kenneth J. Rose and Dennis C. Sweet, Jackson, Miss. (court-appointed), Owens & Owens, Jackson, Miss., for petitioner-appellant.
Marvin L. White, Jr., Asst. Atty. Gen., Felicia C. Adams, Asst. Atty. Gen., Jackson, Miss., William S. Boyd, III, Special Counsel, Gulfport, Miss., for respondents-appellees.
Appeal from the United States District Court For the Southern District of Mississippi.
Before CLARK, Chief Judge, WILLIAMS, and DAVIS, Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:
1
Petitioner, Leo E. Edwards, appeals from the denial of his habeas corpus petition under 28 U.S.C. Sec. 2254. He is under sentence of death on his conviction for murder committed in the course of an armed robbery. Following two thoughtful opinions dealing with Edwards' habeas claims, see Edwards v. Thigpen, 595 F.Supp. 1271 (S.D.Miss.1984) and 682 F.Supp. 1374 (S.D.Miss. 1987), the district court granted a stay of execution and a certificate of probable cause to appeal. After thorough consideration of petitioner's contentions, we affirm the denial of the writ of habeas corpus and vacate the stay of execution.I.
2
The petitioner was convicted in the First Judicial District of the Seventh Circuit Court District of Mississippi of capital murder, and pursuant to the jury's recommendation he was sentenced to be executed. The conviction and sentence were affirmed by the Mississippi Supreme Court. Edwards v. State, 413 So.2d 1007 (Miss.), cert. denied, 459 U.S. 928, 103 S.Ct. 239, 74 L.Ed.2d 188 (1982). Appellant's application for leave to file a petition for writ of error coram nobis in the Mississippi Supreme Court was denied. Edwards v. Thigpen, 433 So.2d 906 (Miss.1983).
II.
3
Edwards was convicted for the June 14, 1980 murder of Lindsey Don Dixon, a convenience store clerk in Jackson, Mississippi. The state introduced evidence from which the jury could have concluded that Edwards held up Dixon at gunpoint and then shot him so that Dixon could not identify him. Edwards came to the attention of the Jackson police the following day when they investigated a complaint that a man was threatening a woman at gunpoint. Edwards proved to be the object of this complaint, and the investigating officer confiscated the weapon in Edwards' possession. Ballistics tests established that the shot that killed Dixon was fired from the confiscated pistol. This evidence, together with the testimony of Edwards' co-indictee, Mikel Leroy White, was the principal evidence adduced against Edwards at the guilt phase of the trial.
4
During the sentencing phase of the trial, the state introduced evidence of a number of earlier convictions entered against Edwards. The state also introduced evidence that at the time of Dixon's murder Edwards was at large as an escapee from the Louisiana State Penitentiary. Edwards called two witnesses in the sentencing phase, his mother and a Catholic priest. The jury recommended a death sentence after finding the following statutory aggravating circumstances:
5
(1) the capital murder was committed while the Defendant was engaged in the commission of a robbery; (2) the capital murder was committed for pecuniary gain; (3) the capital murder was committed for the purpose of avoiding lawful arrest; (4) the capital murder was committed by the Defendant while under sentence of imprisonment; (5) the capital murder was committed by the Defendant who was previously convicted of a felony involving the use or threat of violence to the person; (6) another capital murder was committed by the Defendant.
6
Appellant asserts a number of constitutional violations in his trial, conviction, and sentence, each of which he contends justifies granting the writ. We shall consider each argument in turn.
III.
A.
The Swain Claim
7
For his first claim, the petitioner asserts that Ed Peters, the prosecuting district attorney for the Seventh Circuit Court District of Mississippi, uses the state's allotted peremptory challenges to systematically exclude blacks from juries in violation of the fourteenth amendment. Following a period of discovery, the district court held a hearing and rejected petitioner's claim.
8
At the outset, we agree with the district court that the rule established in Swain v. Alabama, 380 U.S. 202, 85 S.Ct. 824, 13 L.Ed.2d 759 (1965), governs this case. Although the Supreme Court in Batson v. Kentucky, 476 U.S. 79, 106 S.Ct. 1712, 90 L.Ed.2d 69 (1986), drastically changed the ground rules for the state's exercise of peremptory challenges, the Court announced that Batson is not to apply retroactively to cases pending federal habeas corpus review at the time of the decision, Allen v. Hardy, 478 U.S. 255, 106 S.Ct. 2878, 92 L.Ed.2d 199, 204-06 (1986), or to cases in which the appeals process has been completed, see Griffith v. Kentucky, 479 U.S. 314, 107 S.Ct. 708, 93 L.Ed.2d 649, 661-62 (1987). In Smith v. McCotter, 798 F.2d 129, 132 (5th Cir.1986),we held that Batson does not apply retroactively in capital cases.
9
We now turn to a review of petitioner's claim under the standard established in Swain v. Alabama. The district court held a hearing on this claim in which the facts were fully ventilated. The petitioner, Leo Edwards, was tried and convicted by an all-white jury in the circuit court for the First Judicial District of Hinds County, Mississippi. Ed Peters has served as the district attorney for this district since 1972. Peters was quoted in a newspaper article in July of 1983 as saying that when he was presented with blacks on a jury panel his philosophy was to "get rid of as many" as he could. This article caught the attention of defense counsel in this case and others, and Peters was later deposed. In his deposition and testimony at the hearing, Peters stated that he had a philosophy of striking the black juror when presented with a choice between a white and black juror and all other factors were equal. Mr. Peters explained that his experience in the trial of criminal cases had taught him that blacks were more sympathetic to the defense than white jurors are.
10
Discovery on this issue revealed that the district attorney's office had kept records of important facts bearing on jury selection in 242 criminal cases tried in the First Judicial District and that the trial judge who presided over the majority of the criminal trials in that district kept his own records in 76 additional cases. All of these records had complete jury lists reflecting the names and races of the potential jurors, the peremptory strikes exercised by both the prosecution and the defense, and the racial composition of the jury selected in each case. These records covered 318 criminal trials (approximately half of the cases tried during this period) from 1976 to 1985. Summary sheets were submitted in evidence and served as raw data for experts called by both sides at the hearing.
11
The two experts agreed on the substance of the statistical data but drew different conclusions as to its significance. The evidence revealed that the voter registration rolls from which the jury lists were drawn reflected a registered voter population that was 64.13% white and 33.94% black. Based upon a composite of the available data, the parties agreed that: (1) the preperemptory strike pool venire was 62.3% white and 37.7% black; (2) the jury composition in the cases tried was 71.4% white and 28.6% black; (3) this percentage varied slightly depending upon whether a black defendant was on trial (black defendant: 72.2% white, 27.8% black; white defendant: 68.3% white, 31.17% black); and (4) the jury composition in all cases that District Attorney Peters tried personally was virtually the same as the composite figure in our second observation above.1
12
Dr. Allen Lichtman testified as an expert for Edwards. He concluded that the statistical information revealed that the prosecutors in this judicial district depressed the proportion of black persons serving on juries by use of the peremptory challenge. The data revealed a 9% actual or mean difference between the percentage of blacks on the venire panel (37%) and the percentage of blacks serving on juries (28%). Dr. Lichtman concluded that the prosecutors' different treatment of black and white veniremen was racially motivated.
13
The state's expert witness, Dr. Claude Rowland, focused on the evidence that approximately 29% of all jurors serving in this district were black. According to Dr. Rowland, this percentage was not grossly disproportionate to the percentage of blacks registered to vote in the district--34%--or the number of blacks on the pre-peremptory venire panel--38%. Dr. Rowland concluded that blacks were not disenfranchised from serving on juries. Dr. Rowland also found significant the number of occasions when the prosecutors challenged whites and left blacks on the venire. Dr. Rowland's analysis revealed that the prosecutor had an average of 1.9 of these "foregone opportunities" to strike black jurors in each case.
14
District Attorney Peters testified that on the average blacks are less law-enforcement oriented than whites. He attributes this to their socioeconomic background as well as a history of oppression. He testified that he sometimes accepts black jurors in all types of cases. Peters testified nonetheless that if he is faced with a choice of striking a black venireman or a white venireman and there is no specific reason to exclude either, he excludes the black. The district court found no evidence that Peters is a racist; it was persuaded that Peters challenged a disproportionate number of black prospective jurors because of a sincerely held belief that a black juror was ordinarily less sympathetic to the prosecutor and to law enforcement officials than a white one.
15
The district court held that the petitioner established a prima facie case of systematic exclusion of black jurors, but that the state rebutted the prima facie case. The rebuttal rested on two facts. First, approximately 28% of all jurors were black. Second, the prosecution established racially neutral reasons for exercising peremptory challenges against blacks in this case. The district court for those reasons rejected Edwards' claim.
16
We agree that the district court correctly rejected petitioner's claim. We hold, however, that the evidence fails to establish a prima facie case of systematic exclusion of blacks from the jury by the state under Swain.
17
In Swain v. Alabama, the Court held in Part II of its opinion that a prosecutor's challenges, when made for the purpose of prevailing in the particular case being tried, would not violate the defendant's constitutional rights even if the challenges were racially motivated:
18
The essential nature of the peremptory challenge is that it is one exercised without a reason stated, without inquiry and without being subject to the court's control.... It is no less frequently exercised on grounds normally thought irrelevant to legal proceedings or official action, namely, the race, religion, nationality, occupation or affiliations of people summoned for jury duty. For the question a prosecutor or defense counsel must decide is not whether a juror of a particular race or nationality is in fact partial, but whether one from a different group is less likely to be....
19
With these considerations in mind, we cannot hold that the striking of Negroes in a particular case is a denial of equal protection of the laws. In the quest for an impartial and qualified jury, Negro and white, Protestant and Catholic, are alike subject to being challenged without cause.
20
Swain, 380 U.S. at 220-21, 85 S.Ct. at 835-36 (footnotes and citations omitted); see United States v. Leslie, 783 F.2d 541 (5th Cir.1986) (en banc).
21
The Court in Swain did suggest, however, in Part III of the opinion that it was improper for prosecutors to "consistently and systematically exercise[ ] their strikes to prevent any and all Negroes on petit jury venires from serving on the petit jury itself." Swain, 380 U.S. at 223, 85 S.Ct. at 837.
22
The critical question for decision in this case is whether petitioner's proof established the systematic, broad-based exclusion with which the Supreme Court was concerned in Part III of Swain.
23
The Court defined in some detail the nature and scope of the systematic exclusion the petitioner is required to establish to obtain relief under Part III:
24
But when the prosecutor in the county, in case after case, whatever the circumstances, whatever the crime, and whoever the defendant or the victim may be, is responsible for the removal of Negroes who have been selected as qualified jurors by the jury commissioners and who have survived challenges for cause, with the result that no Negroes ever serve on petit juries, the Fourteenth Amendment claim takes on added significance.... Such proof might support a reasonable inference that Negroes are excluded from juries for reasons wholly unrelated to the outcome of the particular case on trial and that the peremptory system is being used to deny the Negro the same right and opportunity to participate in the administration of justice enjoyed by the white population.
25
Id. at 223-24, 85 S.Ct. at 837-38 (citation omitted).
26
In Swain the record revealed that no black had ever served on a petit jury in a civil or criminal case in Talledega County, Alabama. The record, however, did not reveal the extent to which this absence of blacks on juries was the state's responsibility. The Court concluded that because the record did not reveal the role of the prosecutor in excluding blacks, the petitioner had failed to lay the proper predicate for proof of systematic exclusion of blacks from jury service.
27
We agree with the district court that, unlike the Swain case, the proof presented here is sufficient to demonstrate the practice of both prosecutors and defense counsel in challenging potential black jurors in the First Judicial District. The data introduced at the hearing included this information in 318 trials over a nine-year period. This is an adequate pool of information to decide whether a Swain violation has been established. We turn to that question.
28
The Court in Swain made it exceedingly difficult for a defendant to establish a fourteenth amendment violation predicated on the state's systematic exclusion of blacks from jury service through the exercise of its peremptory challenges. The Court required a showing that in the particular jurisdiction the prosecutors "consistently and systematically" exercise their challenges to prevent "any and all" blacks on jury panels from serving on petit juries. Id. at 223, 85 S.Ct. at 837. The Court stated that if "... no Negroes ever serve on petit juries the fourteenth amendment takes on added significance." Id. And again, "if the state has not seen fit to leave a single Negro on any jury in a criminal case the presumption ... may be overcome." Id. at 224, 85 S.Ct. at 838.2 We are persuaded that Edwards' proof does not make out a prima facie case of systematic exclusion of black jurors under Swain. Juries in the district during the period in question were 28.6% black. This figure falls only 9% short of the percentage of jurors in the pre-peremptory strike pool and slightly over 5% short of the number of blacks who were registered to vote in the district. See United States v. McDaniels, 379 F.Supp. 1243 (E.D.La.1974). Because the proof fails to measure up to the bright line test established by Swain, this claim must be rejected.3
B.
Prosecutorial Misconduct
29
Edwards asserts next that the prosecutor's argument at the sentencing proceeding was inflammatory and rendered that proceeding fundamentally unfair.4 Edwards points to four statements by the prosecutor that he contends were improper.
30
First, Edwards asserts that the prosecutor misstated the law when he argued to the jury that "the Supreme Court has said: 'We admit we were wrong. We did away with the death penalty but we admit we were wrong.' " Edwards argues that the prosecutor improperly implied that the Supreme Court reestablished the death penalty and, in doing so, admitted that it had been wrong in striking down certain death penalty statutes.
31
Edwards complains next that the prosecutor improperly gave his personal opinion when he agreed that aggravating circumstances "just don't get any worse than this." He also argues that the prosecutor's statement that he did not seek capital punishment for Edwards' codefendant, Mikel White, was designed to convey to the jury that the prosecutor concluded that Edwards rather than White was the triggerman. Edwards also argues that the prosecutor's statements that "all of our evidence indicated that Edwards was the triggerman" denied Edwards a fundamentally fair sentencing proceeding because it was unsupported by the record.
32
Edwards next asserts that the prosecutor improperly argued to the jury that a life sentence for Edwards was too expensive for the public.5 Edwards asserts that cost is an unacceptable and indeed illegitimate justification for the death penalty.
33
Finally, Edwards argues that the prosecutor sought to inflame the jurors by invoking images of the victim's family.6
34
We agree with Edwards that two of the prosecutor's statements were not invited by defense counsel and were improper. The argument that the Supreme Court admitted that it had been wrong in invalidating certain death penalty statutes was an inexcusable misstatement of the law. The prosecutor was also out of bounds in suggesting that taxpayers would save money if the jury recommended the death penalty. See Zant v. Stephens, 462 U.S. 862, 103 S.Ct. 2733, 77 L.Ed.2d 235 (1983).
35
The Supreme Court in Darden v. Wainwright, 477 U.S. 168, 106 S.Ct. 2464, 91 L.Ed.2d 144 (1986), considered in detail the scope of review of a federal habeas court in considering improper closing argument by the prosecutor. The court stated: "The relevant question is whether the prosecutors' comments 'so infected the trial with unfairness as to make the resulting conviction a denial of due process.' ... Moreover, the appropriate standard of review for such a claim on writ of habeas corpus is 'the narrow one of due process and not the broad exercise of supervisory power.' " Id. 477 U.S. at 180-81, 106 S.Ct. at 2471-72, 91 L.Ed.2d at 157 (quoting Donelly v. DeChristoforo, 416 U.S. 637, 94 S.Ct. 1868, 40 L.Ed.2d 431 (1974) ).
36
The two arguments of the prosecutor referred to above, although improper, were neither persistent nor pronounced. The prosecutor in both instances made a single improper reference and moved on to another subject. As we stated in Felde v. Blackburn, 795 F.2d 400, 403 (5th Cir.1986), cert. denied, 108 S.Ct. 210, 98 L.Ed.2d 161 (1987), "To establish that a prosecutor's remarks are so inflammatory as to prejudice the substantial rights of a defendant, the petitioner must demonstrate either persistent and pronounced misconduct or that the evidence was so insubstantial that (in probability) but for the remarks no conviction would have occurred." The remarks of the prosecutor in this case simply do not measure up to that standard. The district court correctly rejected habeas relief on this claim.C.
37
Erroneous Admission of a Misdemeanor Conviction In the
Sentencing Phase
38
Appellant contends that his sentence should be set aside because the state introduced a prior misdemeanor conviction for carrying a concealed weapon that belonged to his father rather than to him.
39
In addition to the above misdemeanor, the state introduced a number of felony convictions from Louisiana courts, including three theft convictions and one for robbery. In 1976 a Louisiana court sentenced Edwards to three years imprisonment as an habitual felony offender. In 1978 he received a six-year sentence for burglary. In February 1980 Edwards escaped from the custody of the Louisiana Department of Corrections, and a warrant was issued for his arrest. The state also introduced the judgment of Edwards' February 12, 1981 murder conviction in Hinds County, Mississippi, for which he received a life sentence.
40
Considering the extent of Edwards' criminal record, it is inconceivable that the erroneously admitted misdemeanor conviction of carrying a concealed weapon affected the jury's decision.
41
Petitioner argues further that once evidence of this conviction is disregarded the state has no evidence to support one of the aggravating circumstances found by the jury: commission of capital murder by one who had previously been convicted of a felony involving the use or threat of violence to the person. Assuming that the misdemeanor conviction of carrying a concealed weapon is necessary to support the jury's finding of this aggravating circumstance, appellant's argument nevertheless must fail. The Court in Zant v. Stephens, 462 U.S. 862, 103 S.Ct. 2733, 77 L.Ed.2d 235 (1983), held that the invalidation of one aggravating circumstance did not require the vacation of the death penalty so long as there were other valid aggravating circumstances remaining.7 The jury in this case found six aggravating circumstances and the invalidation of one of them would not require vacation of the death sentence. See Rault v. Butler, 826 F.2d 299 (5th Cir.), cert. denied , --- U.S. ----, 108 S.Ct. 14, 97 L.Ed.2d 803 (1987); Celestine v. Butler, 823 F.2d 74 (5th Cir.1987); Evans v. Thigpen, 809 F.2d 239 (5th Cir.), cert. denied, --- U.S. ----, 107 S.Ct. 3278, 97 L.Ed.2d 782 (1987). The district court correctly rejected this claim.
D.
Erroneous Exclusion of Mitigating Evidence
42
Edwards next argues that the trial court improperly excluded mitigating evidence in violation of Eddings v. Oklahoma, 455 U.S. 104, 114, 102 S.Ct. 869, 876-77, 71 L.Ed.2d 1 (1982).
43
Edwards presented mitigating evidence through the testimony of two witnesses, his mother and Father Henry Shelton, a Catholic priest. Mrs. Edwards testified in some detail about her son's childhood, his upbringing, and the relationship she and Edwards' father had with their son. She testified that he was an attentive, supportive, loving child. The district court sustained the prosecutor's objections to questions designed to elicit direct statements Edwards made to his mother that he was sorry for his participation in the murder. The court also excluded Edwards' alleged statement to his mother that if his life were spared he would serve God the rest of his life.
44
Father Shelton testified that Edwards, who is Catholic, asked to see a priest in order to confess. Father Shelton testified that he was comfortable in Edwards' presence, that he had no fear of him, and that Edwards exhibited no hostility toward him. He testified that Edwards was gentle and soft spoken and that he sensed a "goodness" about Edwards. He testified further that based upon his two- to three-hour meeting with Edwards he believed that Edwards realized that he "messed up his life in the past and he was sorry for that and he wants to do something with his life in the future in a very constructive way. Not just for Leo but for others. I really feel that strongly." The only testimony that was excluded related to direct statements Edwards made to Father Shelton about the type of work Edwards wanted to do in prison if his life were spared.
45
Petitioner argues that the trial court applied the rules of evidence, particularly the hearsay rule, "mechanistically to defeat the ends of justice." Chambers v. Mississippi, 410 U.S. 284, 302, 93 S.Ct. 1038, 1049, 35 L.Ed.2d 297 (1973). The appellant relies on Green v. Georgia, 442 U.S. 95, 99 S.Ct. 2150, 60 L.Ed.2d 738 (1979) (quoting Chambers ), but it does not support his argument. In Green the Georgia trial court excluded a witness' testimony that Green's codefendant stated that he and not Green committed the murder. The Court, in reversing the Georgia Supreme Court, stated:
46
Regardless of whether the proffered testimony comes within Georgia's hearsay rule, under the facts of this case its exclusion constituted a violation of the Due Process Clause of the Fourteenth Amendment. The excluded testimony was highly relevant to the critical issue in the punishment phase of the trial ... and substantial reasons existed to assume its reliability.
47
Id. at 97, 99 S.Ct. at 2151-52 (citations omitted).
48
In Barefoot v. Estelle, 697 F.2d 593, 597 (5th Cir.), aff'd, 463 U.S. 880, 103 S.Ct. 3383, 77 L.Ed. 1090 (1983), we made the following comment about Green 's holding: "We think that Green is limited to its facts, and certainly did not federalize the law of evidence. It does, however, indicate that certain egregious evidentiary errors may be redressed by the due process clause."
49
We agree with the district court that unlike Green, the State of Mississippi's application of its hearsay rule to exclude the evidence proffered in this case was not unnecessarily limiting, nor did it operate to render Edwards' trial fundamentally unfair. The district court correctly rejected habeas relief on this claim.
E.
Edwards' Other Claims
50
We have also carefully reviewed Edwards' contention that the district court erred in rejecting relief on two additional claims: The trial court gave inadequate guidance to the jury on its option to return a life sentence and ineffective assistance of counsel. For reasons assigned by the district court in its careful opinion, we agree that relief was properly denied on these two claims. See Edwards, 595 F.Supp. at 1286, 1290.
IV.
51
For the reasons stated above, we affirm the judgment of the district court dismissing Edwards' petition for habeas relief and vacate the stay of execution entered by the district court.
52
AFFIRMED. STAY VACATED.
53
On Petition for Rehearing and Suggestion for Rehearing En Banc
PER CURIAM:
54
In his petition for rehearing, Leo E. Edwards contends that this court's decision directly conflicts with the United States Supreme Court's recent decision in Johnson v. Mississippi, --- U.S. ----, 108 S.Ct. 1981, 1985-87, 100 L.E.2d 575 (1988). Petitioner argues that Johnson requires that we vacate his sentence because of the erroneous admission of the misdemeanor conviction for carrying a concealed weapon in the sentencing phase of his trial. We disagree.
55
In Johnson, evidence of an earlier New York felony conviction for second degree assault with intent to commit first degree rape was admitted in the sentencing phase of the trial. This conviction was later vacated following the successful prosecution of post-conviction proceedings. In remanding Johnson's case to the Mississippi Supreme court for a new sentencing determination, the Supreme Court held: "It is apparent that the New York conviction provided no legitimate support for the death sentence imposed on petitioner. "It is equally apparent that the use of that conviction in the sentencing hearing was prejudicial." 108 S.Ct. at 1986-87. The Court further noted that: "Here the jury was allowed to consider evidence that has been revealed to be materially inaccurate." 108 S.Ct. at 1989 (emphasis added).
56
The Court's determination in Johnson that evidence of the earlier felony conviction was a material inaccuracy and operated to Johnson's prejudice at his sentencing hearing distinguishes Johnson from the instant case. We remain convinced that "considering the extent of Edwards" criminal record, it is inconceivable that the erroneously admitted misdemeanor conviction of carrying a concealed weapon affected the jury's decision. Panel op. at 211.
57
The application for panel rehearing is DENIED and no member of this panel nor judge in regular active service on the court having requested that the court be polled on rehearing en banc, (Federal Rules of Appellate Procedure and Local Rule 35) the suggestion for rehearing en banc is DENIED.
1
A more complete statement of the statistical data agreed to by the parties follows:
A. Venire, Pre-peremptory Strike Pool
Total-8591 Jurors (100%)
White-5355 Jurors (62.3%)
Black-3236 Jurors (37.7%)
B. Jury Composition--All Cases Studied
Total-3814 Jurors (100%)
White-2726 Jurors (71.4%)
Black-1090 Jurors (28.6%)
C. Jury Composition--Capital Crimes
Total-1932 Jurors (100%)
White-1440 Jurors (74.5%)
Black-492 Jurors (25.5%)
D. Jury Composition--Black Defendants
Total-2926 Jurors (100%)
White-2114 Jurors (72.2%)
Black-812 Jurors (27.8%)
E. Jury Composition--White Defendants
Total-627 Jurors (100%)
White-426 Jurors (68.3%)
Black-198 Jurors (31.7%)
F. Jury Composition--D.A. Peters as Prosecutor
Total-732 Jurors (100%)
White-524 Jurors (71.6%)
Black-208 Jurors (28.4%)
PROSECUTORS' PEREMPTORY STRIKES BY RACE
G. Total Prosecutor's Strikes
Total-2397 (100%)
White-496 (20.7%)
Black-1901 (79.3%)
H. Prosecutors' Strikes in Capital Crimes
Total-1575 (100%)
White-359 (22.8%)
Black-1216 (77.6%)
I. Prosecutors' Strikes with Black Defendants
Total-1851 (100%)
White-343 (18.5%)
Black-1508 (81.5%)
J. Prosecutors' Strikes with White Defendants
Total-388 (100%)
White-125 (32.2%)
Black-263 (67.8%)
K. Prosecutors' Strikes with D.A. Peters as Prosecutor
Total-574 (100%)
White-135 (23.5%)
Black-439 (76.5%)
2
See also Sullivan, Deterring the Discriminatory Use of Peremptory Challenges, 21 Am.Crim.L.Rev. 477 (1984); Note, 92 Harv.L.Rev. 1770 (1979)
3
For reasons advanced by the court en banc in United States v. Leslie, 783 F.2d 541, 549-61 (5th Cir.1986) (en banc), we also reject petitioner's claim that the state's racially based peremptory challenges violated rights secured to him by the sixth amendment
4
The state argues that the district court erred in declining to respect the Mississippi Supreme Court's determination that this claim, which was not raised on direct appeal, was procedurally barred under Mississippi law. The district court held that the procedural bar invoked by the Mississippi Supreme Court would not preclude consideration of Edwards' federal habeas claims because the Mississippi Supreme Court had established a practice of addressing the merits of issues raised on post-conviction petitions for writ of coram nobis in capital cases even if the issue had not been raised on appeal. Because the Mississippi Supreme Court departed from its usual practice in this case the district court, for reasons adequately stated in its opinion, correctly considered the merits of this claim. See Edwards, 595 F.Supp. at 1277-79
5
District Attorney Peters argued in rebuttal:
What's the other reason for not giving this defendant the death penalty? That, if he gets a life sentence for murder, why he'll be up there at Parchman and won't see daylight for ten years. Do you believe that? Do you believe they're going to put him in some hole and he isn't gonna see daylight for ten years? Or do you believe he's gonna go up there and watch television and live off the taxpayers' money for ten years? And get fed and housed and given all the conveniences of life. For what. For killing him (Mr. Peters holding up exhibit [of victim].
Trial transcript at 710.
6
The argument to which Edwards objects is as follows:
They'll never convince [the victim] [Edwards is] still in jail (Mr. Peters holding exhibit [of victim] up). They'll never convince his fiance [sic] he's still in jail. Nor his mother, nor his daddy, nor all of the people that can't get up here and testify for him.... So don't just say: "Putting him in jail is enough."
Trial transcript at 712-13.
7
Maynard v. Cartwright, --- U.S. ----, 108 S.Ct. 1853, 100 L.Ed.2d 372 (1988), just decided by the Supreme Court does not undermine this conclusion. In Maynard, the petitioner was sentenced to death following a finding by an Oklahoma jury of two statutory aggravating circumstances: "an especially heinous, atrocious, or cruel" murder and the defendant "knowingly created a great risk of death to more than one person." The Supreme Court determined that the first aggravating circumstance was invalid; the second remained unchallenged. The Court, however, instead of reinstating the death penalty, approved a remand of the case to the Oklahoma Court of Criminal Appeals. But the opinion makes it clear that the Court approved this remand because Oklahoma law was unclear on whether the sentence of death should be set aside if one of the aggravating circumstances was found invalid and others remained unchallenged. Consequently, the case was remanded to the Oklahoma court to determine as a matter of state law whether the sentence should be set aside. Unlike Oklahoma law, however, Mississippi law is clear that one invalid aggravating circumstance will not suffice to overturn a death penalty where other valid aggravating circumstances remain. Edwards v. State, 441 So.2d 84, 89, 92 (Miss.1983) | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/484297/ | 813 F.2d 191
Todd E. STERLING, Appellee,v.Glen A. FORNEY, W.R. Marsh, M.D., C.N. Sorensen, M.D. &Associates, P.C., Appellants.Todd E. STERLING, Appellant,v.Glen A. FORNEY, W.R. Marsh, M.D., C.N. Sorensen, M.D. &Associates, P.C., Appellees.
Nos. 85-2443, 86-1093.
United States Court of Appeals,Eighth Circuit.
Submitted Oct. 17, 1986.Decided March 10, 1987.Rehearing Denied April 3, 1987.
1
Joni R. Kerr, Omaha, Neb., for appellants.
2
James E. Schneider, North Platte, Neb., for appellees.
3
Before HEANEY and WOLLMAN, Circuit Judges, and LARSON,* Senior District Judge.
4
LARSON, Senior District Judge.
5
Plaintiff Todd E. Sterling filed this diversity action seeking damages against defendant physicians for negligent medical treatment which he received following an automobile accident. Prior to the commencement of the action, plaintiff entered into a settlement with the driver of the other vehicle involved in the accident and signed a release drafted by the driver's insurer. Defendants did not participate in any way in the settlement. Defendants nonetheless claim this release bars plaintiff's present action against them.
6
The district court bifurcated trial of the issues of liability and the effect of the release and settlement. After trial, the jury returned a verdict of $25,000 against the defendants, and the district court held as a matter of law that plaintiff's release and settlement with the other driver did not preclude his action against the defendant physicians. Both parties have appealed. Defendants urge that the district court misapplied Nebraska law in interpreting the release as a matter of law and in holding that defendants had presented insufficient proof that the earlier settlement provided full satisfaction for all of plaintiff's injuries. Plaintiff argues that the $25,000 jury verdict is inadequate as a matter of law, and requests a new trial on the issue of damages. We affirm.
7
In Scheideler v. Elias, 209 Neb. 601, 309 N.W.2d 67, 72 (1981), the Nebraska Supreme Court adopted the "modern rule" that an injured party's release of the original tortfeasor does not per se preclude a second action by the injured party against a physician if there has been less than full compensation recovered for the injured party's total injuries. In Scheideler, the plaintiff had signed a release which discharged the original tortfeasors and "all other persons ... who are or might be liable" and which acknowledged "full settlement and satisfaction of all claims of whatever kind or character" which he had against them. 309 N.W.2d at 70. The court nonetheless determined that plaintiff could maintain his action for medical malpractice against his treating physician, holding that whether the plaintiff had intended to release subsequent tortfeasors and whether he had received full payment and satisfaction for all his damages were questions of fact precluding a summary judgment against him. Id. 309 N.W.2d at 75.
8
Defendants' appeal in this case primarily raises questions about the proper application of Nebraska law in light of the Scheideler decision. The interpretation of state law by a district judge sitting in that forum is entitled to great deference unless it is "fundamentally deficient in analysis or otherwise lacking in reasoned authority." Firemen's Insurance Co. v. Bauer Dental Studio, Inc., 805 F.2d 324, 325 (8th Cir.1986); Dabney v. Montgomery Ward & Co., 761 F.2d 494, 499 (8th Cir.), cert. denied, --- U.S. ----, 106 S.Ct. 233, 88 L.Ed.2d 232 (1985); Kansas City Power & Light Co. v. Burlington Northern R.R., 707 F.2d 1002, 1003 (8th Cir.1983).
9
The release executed by the plaintiff in this case names only the original tortfeasor and states that it operates as a satisfaction against other parties only "for damages as a result of the accident." Defendant physicians have presented no persuasive reason for overturning the district court's judgment that this release could not apply to them, since they allegedly caused damages as a result of their medical treatment of plaintiff, not "as a result of the accident." Nor have defendants established that the district court's ruling concerning the lack of evidence of full satisfaction is "fundamentally deficient in analysis or otherwise lacking in reasoned authority." Accordingly, we affirm the district court's judgment concerning the effect of the prior release and settlement on the basis of the district court's opinion. See 8th Cir. R. 14.
10
Plaintiff has also appealed from the district court's judgment, alleging that the $25,000 jury award is inadequate and that a new trial on the issue of damages should have been granted. Inadequacy or excessiveness of a verdict is basically an issue for the trial court, which is in the best position to evaluate such a claim. We consider review only in those rare situations in which there is a plain injustice or a monstrous or shocking result. Hollins v. Powell, 773 F.2d 191, 197 (8th Cir.1985), cert. denied, --- U.S. ----, 106 S.Ct. 1635, 90 L.Ed.2d 181 (1986); Taken Alive v. Litzau, 551 F.2d 196, 198 (8th Cir.1977); Solomon Dehydrating Co. v. Guyton, 294 F.2d 439, 447-48 (8th Cir.), cert. denied, 368 U.S. 929, 82 S.Ct. 366, 7 L.Ed.2d 192 (1961). We do not believe that this is such a case, and accordingly, we affirm the district court's denial of plaintiff's motion for a new trial on this ground.
11
For all of the foregoing reasons, the judgment of the district court awarding plaintiff $25,000 in damages is affirmed.
*
The HONORABLE EARL R. LARSON, Senior United States District Judge for the District of Minnesota, sitting by designation | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1644814/ | 994 So. 2d 360 (2008)
Leonardo GOMEZ and Gylmar Developments, Inc., Appellants,
v.
GIBRALTAR PRIVATE BANK & TRUST COMPANY, a federal savings bank, Appellee.
No. 3D08-664.
District Court of Appeal of Florida, Third District.
September 17, 2008.
Rehearing Denied November 3, 2008.
George M. Evans, Coral Gables,; Kathleen M. Savor, Hollywood, for appellants.
Friedman & Frost and Paul D. Friedman, Miami, for appellee.
Before WELLS, SHEPHERD, and CORTIÑAS, JJ.
PER CURIAM.
Affirmed. See Puma Enters. Corp. v. Vitale, 566 So. 2d 1343 (Fla. 3d DCA 1990). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/279633/ | 392 F.2d 686
157 U.S.P.Q. 183
Giulio NATTA, Piero Pino, Giorgia Mazzanti and MontecatiniSocieta Generale Per L'Industria Mineraria eChimica (Now Montecatini Edison,S.p.a.), Appellants,v.John Paul HOGAN, Robert L. Banks and Phillips PetroleumCompany, Appellees.John Paul HOGAN, Robert L. Banks and Phillips PetroleumCompany, Appellants,v.Giulio NATTA, Piero Pino, Giorgia Mazzanti and MontecatiniSocieta Generale Per L'Industria Mineraria eChimica (Now Montecatini Edison,S.p.a.), Appellees.
Nos. 9694, 9695.
United States Court of Appeals Tenth Circuit.
March 21, 1968.
Richard B. McDermott, Tulsa, Okl., and L. Malcolm Oberlin, Bartlesville, Okl. (Boesche, McDermott & Eskridge, Tulsa, Okl., were with them on the brief), for appellants in 9695 and appellees in 9694.
Edward S. Irons, Washington, D.C. (Garrett Logan, of Martin, Logan, Moyers, Martin & Conway, Tulsa, Okl., and Mary Helen Sears, Washington, D.C., were with him on the brief), for appellants in 9694 and appellees in 9695.
Before BREITENSTEIN, SETH and HICKEY, Circuit Judges.
BREITENSTEIN, Circuit Judge.
1
The issues here presented relate to discovery and production of documents under Rule 34, F.R.Civ.P., in connection with interference proceedings in the Patent Office. The district court granted limited discovery and the contesting groups have each appealed.
2
On one side are Natta, Pino, and Mazzanti, and their assignee Montecatini. This group will be referred to as Montecatini. On the other, are Hogan, Banks, and their assignee Phillips Petroleum Company. This group will be referred to as Phillips.
3
The interference proceedings present the question of which party has the earliest patent date. After receiving an Italian patent, Montecatini applied for a patent in the United States. By virtue of 35 U.S.C. 104 and 119, it may not establish a date ealier than June 8, 1954, the date of its Italian patent application. Three groups contest the priority of the Montecatini claim. In the order of their assigned seniority they are E. I. duPont de Nemours & Co., Standard Oil Company of Indiana, and Phillips, all of whom hold under assignments and, under Patent Office practice, are referred to as junior parties. The junior parties have the burden of establishing by a preponderance of the evidence a date before that of Montecatini. Each junior party in turn submits its evidence and then the senior party, Montecatini, presents its rebuttal. The evidence of the juniors has been completed. In preparation for rebuttal Montecatini sought Rule 34 discovery under the permission of 35 U.S.C. 24. An appropriate proceeding was brought in the United States District Court for the District of Delaware against duPont, in the Northern District of Illinois against Standard, and in the Northern District of Oklahoma against Phillips. In the duPont proceedings discovery was allowed and the Court of Appeals for the Third Circuit affirmed. See In re Natta, 3 Cir., 388 F.2d 215. In the Standard proceedings, the district court denied discovery and the Court of Appeals for the Seventh Circuit reversed. See Natta v. Zletz, 7 Cir., 379 F.2d 615. We are concerned with the Phillips proceedings where the district court granted limited discovery. In the appeals before us, several questions are raised which were not mentioned in the decisions affecting duPont and Standard.
4
The first question is the appealability of the district court order. Because that order pleases none of the contestants, the parties are in agreement that it is appealable. The rule that jurisdiction is not conferred by consent makes it necessary that we make our own determination. The question is whether the order of the district court, styled 'Final Order to Produce,' is a final judgment from which an appeal will lie under 28 U.S.C. 1291.
5
An order for the production of documents is not ordinarily appealable.1 In Covey Oil Co. v. Continental Oil Co., 10 Cir., 340 F.2d 993, we recognized an exception where the order is collateral, fairly separable from the main litigation, and relates to a non-party who shows irreparable injury. In Alexander v. United States, 201 U.S. 117, 26 S. Ct. 356, 50 L. Ed. 686, the Court held that an order to testify and produce documents in connection with an antitrust proceeding was not final and appealable and that the determination of the validity of the order must await a contempt judgment for violation.2 Cobbledick v. United States, 309, U.S. 323, 60 S. Ct. 540, 84 L. Ed. 783, discusses the Alexander decision and says that it does not apply to a situation where a district court compels the testimony of a person who has refused to make disclosures before the Interstate Commerce Commission. The Court pointed out that the district court proceedings and order were complete and that the order was final and appealable. This places discovery proceedings in aid of action by an administrative agency in a different category from such proceedings in aid of a matter pending before a court. Here the proceedings before the district court have come to an end. The party affected should not be 'powerless to avert the mischief of the order.'3 In the circumstances presented a party should not be required to risk the hazard of punishment in order to obtain a determination of its rights.4 In our opinion the order in question is final and appealable.
6
Phillips attacks the jurisdiction of the district court to require the production of documents. The claimed statutory basis for jurisdiction is 35 U.S.C. 24 which provides:
7
'The clerk of any United States court for the district wherein testimony is to be taken for use in any contested case in the Patent Office, shall, upon the application of any party thereto, issue a subpoena for any witness residing or being within such district, commanding him to appear and testify before an officer in such district authorized to take depositions and affidavits, at the time and place stated in the subpoena. The provisions of the Federal Rules of Civil Procedure relating to the attendance of witnesses and to the production of documents and things shall apply to contested cases in the Patent Office.'
8
The argument that Rule 34 proceedings are not within the sweep of the statute does not impress us. We believe that the intent of Congress was to make available to parties to contested cases in the Patent Office the provisions of Rule 34. The statute refers to both the attendance of witnesses and the production of documents. It does not limit discovery to that permissible under Rule 45. The courts of appeals which have considered the question are in agreement that Rule 34 proceedings are within the compass of 24.5 We reach the same conclusion.
9
Phillips says that 24 contemplates initiation of discovery proceedings only by the issuance of a subpoena. None was issued here. Montecatini served notice of its Rule 34 motion on the clerk of an attorney for Phillips. Later the court clerk issued a summons which was served on an official of Phillips. The Third and Seventh Circuit Natta decisions upheld the initiation of proceedings by a Rule 34 motion but did not reach the jurisdictional question which Phillips raises.
10
The first sentence of 24 authorizes the initiation of the ancillary court proceedings by the issuance of a subpoena. The second sentence extends the application of the civil rules pertaining to the production of documents to Patent Office proceedings. The generality of the second sentence is not restricted by the particularity of the first. The contention that jurisdiction is not obtained until a subpoena is issued and that only then may a Rule 34 motion be presented glorifies form over substance. Such formalistic procedure performs no useful purpose.6 We see no reason for the issuance of a subpoena to an unneeded witness when the desired documents may be obtainable through the use of Rule 34. Section 24 gives to parties in Patent Office proceedings the right to secure documents in accordance with the provisions of the federal civil rules. The power of the federal courts to enforce that right is not dependent on any particular formalism of procedure.
11
Rule 34 provides that upon motion 'the court in which an action is pending' may order 'any party' to produce documents. Phillips says that there no action is pending in the district court and, hence, Rule 34 may not be invoked. Reliance is placed on Okun v. Kastner, D.R.I., 1 F.R.D. 599. In that case an application was made for the production of a document sought in connection with a Patent Office interference proceeding and the court denied relief on the ground that no action was pending. The case was decided before the 1952 amendment to 24 which provided that the federal civil rules pertaining to production of documents apply to contested cases in the Patent Office. Whatever may have been the law before the amendment, we believe that the Rule 34 requirement of a 'pending' action is satisfied by the pendency of the interference proceedings. The judicial relief sought is ancillary to the administrative proceedings and is a continuation of the controversy pending before the agency.7 To hold otherwise would thwart the congressional intent. The Patent Office has no authority to compel document production. The provisions of 24 give to the courts 'a jurisdiction designed to cooperatively complement Patent Office jurisdiction as an aid to the quest for truth.'8 In our opinion the pendence of the interference proceedings suffices to establish an action pending.
12
Phillips says further that Rule 34 applies only to production by a party to an action and that it is not a party. Phillips is not a party to the interference proceedings but it admits that it is the assignee of Hogan and Banks who are applicants before the Patent Office. As such, it is the real party in interest and may not hide behind its assignors. The discovery procedures may not be frustrated by the submission of the patent applications in the names of nominal parties. In the situation presented, Phillips comes within the purview of the phrase 'any party.'
13
Additionally, Phillips complains that no action was commenced by the filing of a complaint under Rule 4, F.R.Civ.P., and that there was no constitutionally adequate service of process. In its Natta decision9 the Third Circuit held that in a discovery proceeding pursuant to 24 there need be no filing of a complaint or service of summons. We agree. The controversy is formalized in the Patent Office and the discovery is ancillary. The motion for Rule 34 relief is sufficient to initiate court action.10 The service made on Phillips satisfies the requirements of due process.11 The notice was both reasonable and adequate.
14
The remaining issues relate to the duty of Phillips to produce specific documents. The parties stipulated as to the general character of documents requested. Phillips came forward with 68 documents which were inspected by the court in camera. Phillips also submitted an affidavit of one of its counsel identifying Phillips' personnel who authored or received the documents. As later noted, the trial court ruled on the individual documents. These were then sealed and transmitted to this court. We have examined the documents.
15
The first objection of Phillips is that a group of the documents are privileged communications because of the attorneyclient relationship. Montecatini argues that the privilege does not exist for a variety of reasons.
16
Montecatini says that there is no justification for the claim of privilege because of the 'full disclosure' provisions of the patent laws.12 We recognize that in patent proceedings the applicant must observe the highest degree of candor, honesty, and good faith. In our opinion this does not foreclose the assertion of a claim of privilege in a patent proceeding. The attorney-client privilege is designed 'to facilitate the administration of justice,'13 in order 'to promote freedom of consultation of legal advisors by clients.'14 We see no reason why this long-established principle should not be applied to patent cases. The public interest is in the development of the truth, both in patent proceedings and in ordinary litigation. The duty of full disclosure differs from the freedom of consultation with lawyers.
17
The decisions relied on by Montecatini are not to the contrary. In American Cyanamid Co. v. Hercules Powder Co., D.Del., 211 F. Supp. 85, and Zenith Radio Corp. v. Radio Corp. of Americe, D.Del., 121 F. Supp. 792, both discovery proceedings in connection with patent applications, the privilege is recognized in patent cases in appropriate circumstances. The same is true of United States v. United Shoe Machinery Corp., D.Mass., 89 F. Supp. 357, an antitrust case where the privilege question was raised in connection with communications stemming from the patent department of a large corporation. We agree with Phillips that an automatic waiver of the privilege does not occur when a patent controversy is presented.
18
The record contains no waiver of the privilege by Phillips. It undoubtedly gave information to its attorneys so that they could act on it in the preparation of papers used in the patent proceedings. The situtation is like that where a client gives general information to his lawyer so that the lawyer may prepare a complaint in any ordinary civil action. The fact that some of the information is thus publicly disclosed does not waive the privilege. The case at bar is different from that considered in Wilcoxon v. United States, 10 Cir., 231 F.2d 384, 385-386, cert. denied 351 U.S. 943, 76 S. Ct. 834, 100 L. Ed. 1469. That case related to the transmission of certain information with the intent that it be made public. No such intent appears here.
19
We find nothing in the record which intimates that Phillips channeled any papers into the hands of its lawyers for custodial purposes to avoid disclosure.15 The lawyers concerned in the claim of privilege are all identified in an affidavit which is not questioned by Montecatini. They are described as 'duly licensed attorneys at law who were in the employment of Phillips Petroleum Company' at pertinent times. They were house lawyers rather than outside counsel.16 In our opinion they are within the ambit of the confidential communication rule. The privilege does not depend on the number of clients that a lawyer has.
20
Another difficult question is what officers and employees of Phillips are in a position to speak for the company within the meaning of the word 'client.' We believe that the test is whether the person has the authority to control, or substantially participate in, a decision regarding action to be taken on the advice of a lawyer, or is an authorized member of a group that has such power.17
21
Some of the documents are communications from a lawyer to a member of the Phillips control group. Montecatini says that these are not within the privilege doctrine becasue it applies to communications to, not from, an attorney. Montecatini's reliance on 8 Wigmore, Evidence 2292 (McNaughton Rev.1961) p. 554, is misplaced. Reference is there made to communications 'by the client.' In the discussion which follows, Wigmore makes it clear that the reference is to differentiate between communications made by the client and those made by a third person. With reference to communications by the attorney to the client, Wigmore says (Id. 2320, p. 628): 'That the attorney's communications to the client are also within the privilege was always assumed in the earlier cases and has seldom been brought into question.'18 The recognition that privilege extends to statements of a lawyer to a client is necessary to prevent the use of the lawyer's statements as admissions of the client.
22
Phillips asserted the attorney-client privilege in connection with documents numbered one through thirteen. The trial judge examined them in camera and ruled on each. We adopt the same procedure. As to documents 4, 6, 11, and 13 the claim of privilege was denied and Phillips now does not press its objection.
23
The trial court held documents 2, 9, 10, and 12 to be privileged and Montecatini asserts error. Each of these is a letter from an attorney to a member of the Phillips' control group. Each gives advice and seeks a management decision. In our opinion they are privileged.
24
Phillips objects to the denial of privilege to documents 1, 3, 5, 7, and 8. These are variously entitled 'Memorandum,' 'Recommendation Sheet,' and 'Comments.' We find 3, 5, and 7 to be in essence statements of opinion by executives. One and 8 are addressed generally to the 'Patent Division' which is composed of both members and non-members of the control group. Documents available to persons who are neither lawyers nor control group members are not privileged. In regard to each group we believe that the trial court correctly applied the principles relating to the claim of privilege.
25
Phillips says that documents 14 through 67 are the work product of its attorneys and not subject to discovery. Hickman v. Taylor, 329 U.S. 495, 67 S. Ct. 385, 91 L. Ed. 451, announced the principle that discovery does not extend to require production of material assembled by an attorney in preparation for impending litigation. The principal limitation is that where the work product contains evidence assential to the preparation of an adversary's case and not otherwise available, production will be required in some circumstances. Id. at 329 U.S. 511, 67 S. Ct. 385, 91 L. Ed. 451. The trial court held that the documents were not within the work product doctrine becasue they were not prepared 'for possible litigation after a claim was recognized as having arisen.'
26
To support the reasoning of the trial court, Montecatini relies on Zenith Radio Corp. v. Radio Corp. of America, D.Del., 121 F. Supp. 792, 795, where it is said: 'Seldom, if ever, are patent department employees engaged in actual preparation for a trial of the required type.' This may be true but here some of the documents specifically refer to the interference proceedings. Nothing in Hickman v. Taylor suggests that the work product rule is limited to preparation for proceedings in a court of record. The rationale for the work product doctrine is the prevention of unnecessary interference with the work of an attorney. An attorney's work in the patent law fineld should be as much his own as it is in other areas of the law. The work product claim cannot be brushed saide on the theory that the documents were not prepared for use in litigation.
27
We shall not prolong this opinion by any lengthy discussion of contested documents. Many relate to tests and experiments. Phillips has a duty to disclose to the Patent Office all facts relating to the possible equities of the patent application.19 It cannot hide behind the work product doctrine the research, tests, and experimints which are pertinent to the patent application.
28
Our only trouble is with documents 16, 17, 18, and 20. These are handwritten notes. Such materials prepared by an attorney during his consideration of a legal problem are within the work product doctrine.20 The trouble is that, except for 17, they are not identified as having been written by any particular attorney. The author is not specified. Document 17 consists of handwritten notes of a named attorney. Its disclosure would invade the mental processes of an attorney working on a legal problem.
29
The order for production is affirmed for all documents except 17 which need not be producted. The costs will be equally divided between the parties.
1
Paramount Film Distributing Corp. v. Civic Center Theatre, Inc., 10 Cir., 333 F.2d 358, 361
2
See also United States v. Fried, 2 Cir., 386 F.2d 691, where it was held that an order denying a motion to quash an information subpoena in an Internal Revenue matter was not appealable
3
Perlman v. United States, 247 U.S. 7, 13, 38 S. Ct. 417, 62 L. Ed. 950
4
See Covey Oil Co. v. Continental Oil Co., 10 Cir., 340 F.2d 993, 996-997
5
In re Natta, 3 Cir., 388 F.2d 215; Natta v. Zletz, 7 Cir., 379 F.2d 615, 618; and Gladrow v. Weisz, 5 Cir., 354 F.2d 464, 468
6
See Gladrow v. Weisz, 5 Cir., 354 F.2d 464, 468, and Hickman v. Taylor, 329 U.S. 495, 505-506, 67 S. Ct. 385, 91 L. Ed. 451
7
See Rumsey v. George E. Failing Co., 10 Cir., 333 F.2d 960, 962; and 2 Moore's Federal Practice, 2d Ed., 1967 Supp. P5.06, p. 40
8
Natta v. Zletz, 7 Cir., 379 F.2d 615, 618
9
In re Natta, 3 Cir., 388 F.2d 215
10
See Cudahy Packing Co. v. National Labor Relations Board, 10 Cir., 117 F.2d 692, 694
11
See Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S. Ct. 652, 94 L. Ed. 865
12
See 35 U.S.C. 112, as amended, and Scott Paper Co. v. Marcalus Mfg. Co., 326 U.S. 249, 255, 66 S. Ct. 101, 90 L. Ed. 47
13
Radiant Burners, Inc., v. American Gas Ass'n 7 Cir., 320 F.2d 314, 322, cert. denied 375 U.S. 929, 84 S. Ct. 330, 11 .l.Ed.2d 262
14
Id. 320 F.2d at 318
15
See Colton v. United States, 2 Cir., 306 F.2d 633, cert. denied 371 U.S. 951, 83 S. Ct. 505, 9 L.Ed.2d. 499, an income tax prosecution where the lawyers made a blanket refusal to produce anything with relation to the income tax returns of the client
16
In United States v. United Shoe Machinery Corp., D.Mass., 89 F. Supp. 357, 360, the distinction between the two groups was stated thus: 'The type of service performed by house counsel is substantially like that performed by many members of the large urban law firms. The distinction is chiefly that the house counsel gives advice to one regular client, the outside counsel to several regular clients.'
17
City of Philadelphia v. Westinghouse Electric Corp., E.D.Pa., 210 F. Supp. 483, 485; American Cyanamid Co. v. Hercules Powder Co., D.Del., 211 F. Supp. 85, 88
18
See also 8 in 1 Pet Products, Inc. v. Swift & Co., S.D.N.Y., 218 F. Supp. 253, and cases there cited
19
Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806, 818, 65 S. Ct. 993, 89 L. Ed. 1381
20
Hickman v. Taylor, 329 U.S. 495, 511, 67 S. Ct. 385, 91 L. Ed. 451 | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/671851/ | 26 F.3d 133
NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.UNITED STATES of America, Plaintiff-Appellee,v.Jui Ho CHUNG, aka: Rey Ho Chung; aka: Michael Chung,Defendant-Appellant.
No. 93-50290.
United States Court of Appeals, Ninth Circuit.
Submitted May 24, 1994.*Decided June 7, 1994.
Before: HUG, D.W. NELSON, and FERNANDEZ, Circuit Judges.
1
MEMORANDUM**
2
Michael Chung appeals his 78-month sentence following his guilty plea conviction to conspiracy to launder money in violation of 18 U.S.C. Secs. 371, 1956(a)(1), and money laundering in violation of 18 U.S.C. Secs. 1956(a)(1), (a)(3).
3
Chung contends that the district court failed to comply with Fed.R.Crim.P. 32(c)(3)(D) by not attaching its written findings concerning a disputed matter with the presentence report.
4
Rule 32 requires the district court to make factual findings regarding any disputed issue or to make a determination that no such finding is necessary because it will not take the controverted matter into account at sentencing. Fed.R.Crim.P. 32. The court must make these findings on the record at the time of sentencing. See United States v. Castaneda, 16 F.3d 1504, 1512-13 (9th Cir.1994).
5
Here, the presentence report indicated that Chung's total offense level was 29. This level resulted in a guideline range of 87 to 108 months. Chung's plea agreement provided for a base level of 26. The record indicates that the district court sentenced Chung in accordance with the plea agreement, determined his offense level to be 27, and sentenced Chung to a term of 78 months. The court did not, however, specifically order that its finding regarding the total offense level be appended to the presentence report. See United States v. Fernandez-Angulo, 897 F.2d 1514, 1517 (9th Cir.1990) (en banc). Because the government agrees that the court's findings should be attached to the presentence report, we remand to the district court with instructions to transmit to the Bureau of Prisons a new copy of the presentence report with the required factual findings attached. See id.1
*
The panel unanimously finds this case suitable for decision without oral argument. Fed.R.App.P. 34(a); 9th Cir.R. 34-4
**
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
1
We do not address Chung's contention that his presentence report contains an incorrect social security number because Chung did not raise that issue at sentencing. See United States v. Starr, 971 F.2d 357, 362 n. 4 (9th Cir.1992) | 01-03-2023 | 04-16-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/499481/ | 836 F.2d 296
56 USLW 2373, Prod.Liab.Rep.(CCH)P 11,642
Roger N. PHELPS, Plaintiff-Appellant,v.SHERWOOD MEDICAL INDUSTRIES and Argyle Associates,Defendants-Appellees.
No. 86-3119.
United States Court of Appeals,Seventh Circuit.
Argued Nov. 2, 1987.Decided Dec. 17, 1987.
John M. Marnocha, Doran, Manion, Boynton, Kamm & Esmont, South Bend, Ind., for plaintiff-appellant.
James H. Pankow, Jones, Obenchain, Ford, Pankow, & Lewis, South Bend, Ind., for defendants-appellees.
Before CUMMINGS, CUDAHY and KANNE, Circuit Judges.
CUMMINGS, Circuit Judge.
1
This diversity strict products liability tort action for $2,000,000 presents various claims of error by the plaintiff involving the district court's giving and refusal to give several jury instructions tendered by the parties. Viewing the instructions provided by the court as a whole, United States v. Grier, 823 F.2d 177, 178 (7th Cir.1987), we hold that the charges to the jury concerning both the defendants' duty to warn as well as their defenses to negligence and strict liability accurately led the jury to a proper understanding of the relevant Indiana law. Because those instructions treated the issues fairly and accurately, we affirm the judgment for defendants.
2
It is important initially to set this products liability case in its proper perspective. In recent years, litigation dealing with the use and side effects of potentially dangerous products such as prescription drugs has increased considerably, creating a greater public awareness of the problems inherent in protecting consumers.1 Courts also have been deluged with claims of injury resulting from the use of defective medical devices. See, e.g., Terhune v. A.H. Robbins Co., 90 Wash.2d 9, 577 P.2d 975 (1978) (Dalkon Shield litigation). The medical-device industry is a multi-billion dollar enterprise; yet until recently, few medical-device cases were litigated. Foote, Loops and Loopholes: Hazardous Device Regulation Under the 1976 Medical Device Amendments to the Food, Drug and Cosmetic Act, 7 ECOLOGY L.Q. 101, 103 (1978). This is surprising, given that the public has been made aware of the problem for at least fifteen years. In 1970, a federal survey of the preceding ten-year period revealed some 512 deaths and 300 injuries connected with heart-valve implants, 89 deaths and 186 injuries from pacemakers, 47 deaths and a number of injuries from anesthesia machines, 28 deaths and 171 injuries from the use of catheters, more than 8,000 injuries caused by intrauterine devices (IUD)--this was before the most recent IUD revelations--more than 2,000 injuries associated with radiation equipment, and scores more injuries related to other devices. See Hearings on Medical Device Amendments Before Subcommittee on Health of the Senate Committee on Labor and Public Welfare, 93d Cong., 1st Sess. 877-878 (1973).
3
By definition in the Food, Drug and Cosmetic Act, a "medical device" includes the catheter at issue because it is--
4
an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which is--
5
(1) recognized in the official National Formulary, or the United States Pharmacopoeia, or any supplement to them,
6
(2) intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or
7
(3) intended to affect the structure or any function of the body of man or other animals, and which does not achieve any of its principal intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its principal intended purposes.
8
21 U.S.C. Sec. 321(h) (1970). However, plaintiff does not allege that this catheter was misbranded within 21 U.S.C. Sec. 352 for want of adequate labeling.
9
In the prescription drug area, which has been the focus of substantially more attention than the medical-device industry, manufacturers are required by law to warn the medical profession of all known dangers involved in the use of their products in order to prevent adverse drug effects. 21 C.F.R. Sec. 201.57 (1983).2 This requirement compels the physician to act as a "learned intermediary," advising his or her patient of the benefits as well as the inherent risks in the use of a particular product. By adequately warning the doctor, the manufacturer fulfills its duty and avoids any liability for failure to warn. See Reyes v. Wyeth Laboratories, 498 F.2d 1264 (5th Cir.1974), certiorari denied, 419 U.S. 1096, 95 S.Ct. 687, 42 L.Ed.2d 688.
10
The Illinois Supreme Court recently adopted this principle in Kirk v. Michael Reese Hospital and Medical Center, 117 Ill.2d 507, 111 Ill.Dec. 944, 513 N.E.2d 387 (1987), reversing 136 Ill.App.3d 945, 91 Ill.Dec. 420, 483 N.E.2d 906 (1985), thus joining the majority position regarding prescription drug warnings. A minority of jurisdictions, however, have held that the manufacturer's duty to warn extends beyond the prescribing physician to the consumer. See, e.g., Lindsay v. Ortho Pharmaceutical Corp., 637 F.2d 87 (2d Cir.1980); Lukaszewicz v. Ortho Pharmaceutical Corp., 510 F.Supp. 961 (E.D.Wis.1981), amended by 532 F.Supp. 211 (E.D.Wis.1981). Those cases requiring warnings to consumers have involved oral contraceptives: since the dispenser of those products may not be a physician (as in a clinic), the careful balancing of risks to the individual patient may not occur, and therefore an extended warning is appropriate.
11
There is a dearth, however, of reported decisions regarding the manufacturer's duty to warn physicians about dangers in the use of medical devices. This case concerns applying the principles of medical-device defect liability to the allegedly defective heart catheter used here. The essential facts, construed as favorably to the defendant (since it won a jury verdict) as the record permits, see Tippecanoe Beverages, Inc. v. S.A. El Aguila Brewing Co., 833 F.2d 633 at 634 (7th Cir.1987), are as follows: Plaintiff Roger N. Phelps, a resident of Indiana, underwent a single coronary artery bypass operation at Memorial Hospital in South Bend, Indiana, on May 18, 1983. During open-heart surgery, Dr. John Rubush inserted a catheter manufactured by the defendants, Sherwood Medical Industries and Argyle Associates ("Sherwood"),3 into the left atrium of Phelps' heart to monitor his post-operative condition. This catheter was held in place by a "purse-string" suture4 and pursued a serpentine path to the left atrial cavity.
12
After the surgery Nurse Lydia Vaught encountered some resistance in attempting to remove the catheter. The catheter broke and a portion remained inside Phelps' heart. Vaught then contacted Rubush's partner, Dr. Ross Gardner. Vaught later testified at trial that had she known the catheter was sutured to Phelps' pulmonary vein, she would not have tried to remove it. Dr. Rubush's deposition was read into evidence. He testified that before this surgery, he had heard of a similar breakage and that the suture to a patient's superior pulmonary vein and the catheter's routing might prevent removal of the catheter.
13
When Phelps learned about the breakage, he went to the Cleveland Clinic Foundation. After an examination, Dr. Bruce W. Lytle determined that the risks of removing the catheter remnant outweighed the risks of leaving it in his heart, stating: "Our conclusions are that we do not think that it is in the patient's interest to have anything done about this foreign body at this time" (Pl.Ex. 9).
14
Both sides produced demonstrative evidence and expert testimony at trial. Phelps contended that Sherwood was liable because its catheter broke upon Nurse Vaught's attempted removal. Phelps claims that this was due to an alleged defect in the catheter's inability to stretch before separating. Furthermore, he alleged that Sherwood failed to warn of this potential hazard. All these issues went to the jury, which ultimately found for Sherwood. On appeal, Phelps attacks the giving of five of Sherwood's instructions and the refusal of four of his proposed instructions. In reviewing the trial court's actions, some deference should be accorded to that court's interpretation of Indiana law. Rush Presbyterian St. Luke's Medical Center v. Safeco Ins. Co. of America, 825 F.2d 1204, 1206 (7th Cir.1987). Moreover, regarding Phelps' claims of erroneous instructions, the district court's judgment will not be overturned unless we are persuaded that the jury's understanding of the issues was seriously affected to Phelps' prejudice. Sherrod v. Berry, 827 F.2d 195, 203 (7th Cir.1987).
15
Probably the principal and most interesting issue pressed on appeal--the one that deserves the greatest attention--concerns Phelps' primary claim that Sherwood had a duty to warn users of the catheter "down-line" (defendants' terminology) from Dr. Rubush, the operating surgeon. Rubush was warned by the label on the container that the catheter was not to be removed while its needle was in place. Neither Phelps' counsel's brief nor his oral argument attacks the adequacy of that warning. Instead he contends that the trial court erred by instructing the jury in a strict products liability action under Indiana law that the "user" of the catheter employed in Phelps' open-heart surgery was Rubush so that he was the sole person entitled to a warning. At the close of the evidence, the district court gave portions of Sherwood's instructions numbers two and five and refused Phelps' tendered instruction number ten. The court instructed the jurors:
16
If you find from the evidence in this case that Doctor Rubush had knowledge, in his intended use of this Defendants' catheter, that there was danger of breaking of said catheter upon attempted removal because of the route and obstructions existent in the application of this catheter, then you are instructed that the Defendants had no duty to warn with respect to such potential properties since they were already known to the user, the operating surgeon. (Emphasis added) (Sup.App. 72-73).
17
The court further instructed the jury that:
18
In this case the user of the product is the operating surgeon, Doctor Rubush (Sup.App. 74).
19
The court thus limited Sherwood's duty to warn to Rubush as the "user" or consumer of the product. Phelps contends the duty extended at least to Nurse Vaught, who attempted to remove the catheter, and perhaps even to Phelps, whose body is unfortunately "using" the catheter to this day. He argues that there was no Indiana law supporting the district court's instruction and that a warning by Sherwood, if required, should have a broader scope and should not merely be limited to the "operating surgeon," Rubush. Sherwood responds that it had the duty to warn only Rubush, who, as a "learned intermediary," should then have passed on any potential dangers of catheter use to Vaught and Phelps. See Ortho Pharmaceutical Corp. v. Chapman, 180 Ind.App. 33, 388 N.E.2d 541 (1979); cf. Hoffman v. E.W. Bliss Co., 448 N.E.2d 277 (Ind.1983). Because the only effective warning to prevent the catheter's separation could arguably have been given to Rubush, who was required to read the instructions on the product's use, Sherwood claims that it did not breach any requisite duty by failing to warn either Vaught or Phelps of any possible hazardous consequences.
20
Initially this Court must examine Indiana strict products liability law in order to determine Phelps' burden of proof in his action for strict liability. In 1978, the Indiana legislature codified the doctrine of strict products liability in Indiana Code Sec. 33-1-1.5-3. Section 33-1-1.5-3 states:
21
Sec. 3. Codification and Restatement of Strict Liability in Tort. The common law of this state with respect to strict liability in tort is codified and restated as follows:
22
(a) One who sells any product in a defective condition unreasonably dangerous to any user or consumer or to his property is subject to liability for physical harm thereby caused to the user or consumer or to his property if that user or consumer is in the class of persons that the seller should reasonably foresee as being subject to the harm caused by the defective condition, and, if:
23
(1) the seller is engaged in the business of selling such a product, and
24
(2) the product is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.
25
(b) The rule stated in Subsection (a) applies although:
26
(1) the seller has exercised all possible care in the preparation and sale of this product, and
27
(2) the user or consumer has not bought the product from or entered into any contractual relation with the seller.
28
Ind.Code Sec. 33-1-1.5-3 (1983 Supp.). Thus, to establish liability on Sherwood's part, Phelps is required to demonstrate that Sherwood sold a "product in a defective condition unreasonably dangerous to any user." Ind.Code Sec. 33-1-1.5-3(a) (1983 Supp.). In Bemis Company, Inc. v. Rubush, 427 N.E.2d 1058, 1061 (Ind.1981), the Indiana Supreme Court explained that in order for a plaintiff to prevail in a products liability case under a theory of strict liability, he or she must establish that the allegedly defective product was dangerous in a way that an ordinary user of the product would not expect. The defect also "must be hidden and not normally observable, constituting a latent danger in the use of the product" before a manufacturer is liable under the Indiana product liability statute. Id. See also Bridgewater v. Economy Engineering Company, 486 N.E.2d 484, 489 (Ind.1985). Moreover, in J.I. Case Company v. Sandefur, 245 Ind. 213, 197 N.E.2d 519, 523 (1964), cited and quoted with approval in Bemis, 427 N.E.2d at 1062, the court stated that "[t]here must be reasonable freedom and protection for the manufacturer. He is not an insurer against accident and is not obligated to produce only accident-proof machines." Id. Under Indiana law, "[t]he emphasis is on the duty to avoid hidden defects or concealed dangers." Id. See generally Bishop v. Firestone Tire & Rubber Co., 814 F.2d 437, 440 (7th Cir.1987) (discussing Indiana law).
29
Under the present statute adopted in 1978, Indiana law defines "user" of a product as follows:
30
"User or consumer" means a purchaser, any individual who uses or consumes the product, or any other person who, while acting for or on behalf of the injured party, was in possession and control of the product in question, or any bystander injured by the product who would reasonably be expected to be in the vicinity of the product during its reasonably expected use.
31
Ind.Code Sec. 33-1-1.5-2 (emphasis added). This term is further explained by comment 1 to Restatement of Torts (Second) Sec. 402(A), which reads, in part, as follows:
32
User or consumer. In order for the rule stated in this Section to apply, it is not necessary that the ultimate user or consumer have acquired the product directly from the seller, although the rule applies equally if he does so. He may have acquired it through one or more intermediate dealers. It is not even necessary that the consumer have purchased the product at all. He may be a member of the family of the final purchaser, or his employee, or a guest at his table, or a mere donee from the purchaser. The liability stated is one in tort, and does not require any contractual relation, or privity of contract, between the plaintiff and the defendant.
33
"Consumers" include not only those who in fact consume the product, but also who prepare it for consumption; and the housewife who contracts tularemia while cooking rabbits for her husband is included within the rule stated in this Section, as is also the husband who is opening a bottle of beer for his wife to drink. Consumption includes all ultimate uses for which the product is intended, and the customer in a beauty shop to whose hair a permanent wave solution is applied by the shop is a consumer. "User" includes those who are passively enjoying the benefit of the product, as in the case of passengers in automobiles or airplanes, as well as those who are utilizing it for the purpose of doing work upon it, as in the case of an employee of the ultimate buyer who is making repairs upon the automobile which he has purchased.
34
Restatement (Second) of Torts Sec. 402(A), comment 1 (1977) (emphasis added). Further, a product is considered defective, pursuant to Indiana law, if the seller fails to:
35
[G]ive reasonably complete instructions on proper use of the product; when the seller, by exercising reasonable diligence, could have made such warnings or instructions available to the user or consumer.
36
Ind.Code Sec. 33-1-1.5-2.5(b)(2). By law, the catheter in this case could only be sold to physicians; thus Sherwood claims that only Rubush, and not Sherwood, should have warned either Vaught or Phelps, neither of whom was the "user or consumer."
37
Physician as User or Consumer. Should Rubush be considered a "consumer" or "user" of the catheter for purposes of this case? There are no reported Indiana cases directly on point, but Chapman holds that a prescription drug manufacturer need only warn the patient's physician and by analogy controls here (see supra, p. 301 and infra, p. 304). Similarly, in treating a physician as the "consumer" of a drug, the California appellate court in Carmichael v. Reitz, 17 Cal.App.3d 958, 95 Cal.Rptr. 381 (1971), concluded that a contraceptive drug, Enovid, was unreasonably dangerous to an extent beyond what would be contemplated by a physician with the ordinary knowledge common to the medical community. In Carmichael, a patient sued the treating physicians, medical clinic, and drug manufacturer for pulmonary embolisms and thrombophlebitis allegedly caused by the drug. The court in Carmichael concluded that "the prescribing doctor ... in reality stands in the shoes of the 'ordinary consumer' " (17 Cal.App.3d at 989, 95 Cal.Rptr. at 401), and the defendant drug manufacturer was not held strictly liable. See also Note, Oksenholt v. Lederle Laboratories: The Physician As Consumer, 79 Nw.U.L.Rev. 460, 476-479 (1984).5
38
Here Rubush stood in a similar position. He received the label warning from Sherwood and thus should certainly be considered as a "user" of the catheter. Rubush also fits into the Restatement's definition of "consumer" since he prepared and employed the catheter for ultimate "consumption" by Phelps. Even more significantly, he utilized the catheter for the purpose of surgery. This characterization of Rubush as "user" requires a discussion of his role as a "learned intermediary."
39
Physician as Learned Intermediary. Sherwood correctly contends that the intervention of a professional intermediary--here Rubush--affects its duty to warn of potential dangers of its catheter's use. Indiana courts have held that the "duty to warn of hazards associated with prescription drugs is part and parcel of the physician-patient relationship." Ingram v. Hook's Drugs, Inc., 476 N.E.2d 881, 886 (Ind.App.1985). The duty of the drug manufacturers is initially to warn of risks by alerting the doctors who then use their training to determine whether to prescribe the drug. See, e.g., Ullman v. Grant, 114 Misc.2d 220, 450 N.Y.S.2d 955 (1982); see also supra at p. 301.
40
In Chapman, the prescription drug manufacturer discharged its duty to warn by warning a patient's physician. 388 N.E.2d 541. The physician then had the duty to inform himself of the drug's propensities before using it on his patients. This "learned intermediary" exception has equal application to those cases concerning medical devices. Phelps tries here to distinguish the Indiana law regarding prescription drugs from situations involving medical devices. Yet this Court can find no principled basis for such a distinction. Applying Chapman and Ingram to this field, it was up to Dr. Rubush, the heart surgeon who, according to the evidence, knew the risks and benefits of this kind of catheter usage, to warn Phelps.
41
In judging Phelps' challenge to the particular jury instruction that Rubush was the "user" or "consumer" of the catheter (quoted supra, p. 300), it must be determined whether the instructions overall conveyed the "correct message" to the jury. Liquid Air Corp. v. Rogers, 834 F.2d 1297 at 1308 (7th Cir.1987). This Court's review reveals that the instruction given by the trial court comports with the general law of Indiana regarding both the duty to warn and the physician's role as a learned intermediary. Having concluded that Sherwood had no duty to warn users of the catheter other than Rubush, the operating surgeon, this Court may now consider Phelps' remaining claims, which merit a more summary treatment.
42
1. Sherwood attempted to avail itself of the "open and obvious" defense. As a matter of law in Indiana, an open and obvious danger bars an action under the Product Liability Act, Secs. 33-1-1.5-4, et seq. See Ruther v. Robins Engineering and Constructors, 802 F.2d 276, 278 (7th Cir.1986). The Indiana Supreme Court has stated that "to impose liability upon manufacturers, the defect must be hidden and not normally observable, constituting a latent danger in the use of the product.... [The manufacturer] has no duty to warn if the danger is open and obvious." Bemis, 427 N.E.2d at 1061; see also Posey v. Clark Equipment Co., 409 F.2d 560, 563 (7th Cir.1969). This is particularly true if the manufacturer has no reason to know of the use creating the specific hazard. Gonzales v. Volvo, 752 F.2d 295 (7th Cir.1985).
43
The facts developed at trial showed that the suturing of Sherwood's catheter to a patient presented the danger of separation. In his deposition, Rubush testified that he knew of this potential hazard: specifically the suture of the catheter to Phelps' pulmonary vein and its routing could obstruct its removal. Phelps, however, contends otherwise, viz., that the possible catheter breakage was not open and obvious.
44
While Sherwood would not be liable for obvious dangers associated with the risks of catheter use, it was bound to avoid any hidden defects or concealed dangers in its product. Dudley Sports Co. v. Schmitt, 151 Ind.App. 217, 279 N.E.2d 266, 274 (1972). The district court in this case gave an instruction which correctly stated this proposition of law. Phelps did not meet his requisite burden of proof in that he failed to present evidence during the trial that the catheter contained a defect that was "hidden and not observable." See Bishop, 814 F.2d at 442 (quoting Bemis, 427 N.E.2d at 1061). Because a reasonable jury properly instructed in Indiana law could infer that the danger of catheter breakage due to attempted removal after suturing and routing to the heart cavity was both open and obvious, Estrada v. Schmutz Manufacturing Co., Inc., 734 F.2d 1218, 1220 (7th Cir.1984), this Court holds that Sherwood did not have to warn Rubush of those dangers which he already knew.
45
2. An unforeseeable misuse of a product also bars an action under Indiana law. Such a defense to liability is contained in Indiana Code Sec. 33-1-1.5-4. See Ruther, 802 F.2d at 279. Phelps objected to the district court's misuse instruction, alleging that the record contained no evidence that the catheter was not used properly. Sherwood responded that its catheter was designed for general and variable therapeutic purposes but not specifically for the kind of use to which Rubush put it in open-heart surgery. Rubush evaluated Phelps' condition and sutured the catheter in a manner not intended by Sherwood. Because there was sufficient evidence of misuse, this issue properly went to the jury. Moreover, the jury was instructed properly on the misuse defense.
46
3. Phelps was not required to prove that the alleged defect he attributes to Sherwood was the sole cause of his injury; it would be sufficient under Indiana law if the defect, combined with other reasonable or foreseeable intervening forces, constituted a proximate cause of his injuries. Modification of the catheter, however, if unforeseeable, could constitute an efficient intervening cause of Phelps' injuries. Under Indiana law, Phelps could prevail under strict products liability theory only if he could demonstrate that the allegedly defective product reached him "without substantial alteration in the condition in which it is sold" and that his injuries were caused as a result of the defective product. Ind.Code Sec. 33-1-1.5-3 (1983 Supp.). The Indiana courts have held that "any change which increases the likelihood of a malfunction ... is a substantial change." Cornette v. Searjeant Metal Products, Inc., 147 Ind.App. 46, 258 N.E.2d 652, 657 (1970) (emphasis in original). See also E.Z. Gas, Inc. v. Hydrocarbon Transportation, Inc., 471 N.E.2d 316 (Ind.App.1984); Bishop, 814 F.2d at 443.
47
Sherwood asserted that its catheter was substantially altered by being connected to Phelps' heart with a "purse-string" suture, and that this method and routing of the catheter increased the likelihood of a malfunction such as the separation of the catheter's tubing upon any attempted removal. If the particular modifications were foreseeable and did not unforeseeably render the catheter unsafe, the alterations would be a non-intervening cause leading to Phelps' injury. Craven v. Niagara Machine and Tool Works, 417 N.E.2d 1165, on rehearing, 425 N.E.2d 654 (Ind.App.1981). Phelps asserts that the trial court should not have instructed the jury on intervening causes, but he had the burden of demonstrating that Rubush's use of sutures on the catheter and its routing did not increase the danger of separation. The evidence presented at trial, however, was uncontroverted that the catheter had undergone a substantial change from the time it left Sherwood's hands to the time of its separation. Since under Indiana law any change that increases the likelihood that a product will malfunction constitutes a "substantial change," this Court must hold that it was proper for the district court to instruct the jury on modifications of the catheter through Rubush's usage as an intervening cause which led to Phelps' subsequent unfortunate condition.
48
4. The jury was instructed on the "state of the art defense" provided in Indiana Code Sec. 33-1-1.5-4(b)(4):
49
Whenever the physical harm is caused by the plan or design of the product, it is a defense that the methods, standards, or techniques of designing and manufacturing the product were prepared and applied in conformity with the generally recognized state of the art at the time the product was designed or manufactured.
50
Phelps claimed that Sherwood's catheter was defective in both design and manufacture. In arguing that the court erred in giving its charge, he relies on a statement by the Indiana Court of Appeals: "The fact that a particular product meets or exceeds the requirements of its industry is not conclusive proof that the product is necessarily safe." Dudley Sports Co. v. Schmitt, 151 Ind.App. 217, 279 N.E.2d 266, 271 (1972). This case, however, antedates the state statute enacted in 1978 which specifically provides for the defense at issue, and was therefore inappropriate precedent for consideration here. While other Indiana cases relied on in this opinion involved pre-1978 causes of action, they were not preempted by the 1978 statute at issue in this matter.
51
5. The subject matter of Phelps' remaining proposed instructions regarding negligence, "environmental use" of the product, and strict liability were adequately covered in the court's various jury charges. "It is not necessary to give a proposed instruction 'where the essential points are covered in another instruction.' " Liquid Air Corp. v. Rogers, 834 F.2d 1297 at 1309 (quoting United States v. Hansen, 701 F.2d 1215, 1218 (7th Cir.1983)). Under Indiana law, a manufacturer is charged with the duty to anticipate what the environment will be like in which the product is to be used and what the foreseeable risks of such use are. Huff v. White Motor Corp., 565 F.2d 104 (7th Cir.1977); Newton v. G.F. Goodman, 519 F.Supp. 1301, 1306 (N.D.Ind.1981). The court here instructed that for liability of the manufacturer the catheter must be dangerous to an extent beyond that which would be anticipated or contemplated by the ordinary consumer with the ordinary knowledge of the purchasing community. The court also charged that a manufacturer is subject to liability for physical harm caused to a user if that user is in the class of persons that the seller should reasonably foresee as subject to the harm. Reviewing the proposed instructions tendered by Phelps, it is clear that the district court properly instructed on all phases of foreseeability in its jury charge on negligence.
52
Finally, Phelps contends that the trial court did not properly instruct the jury on the failure to warn under strict products liability. In Black v. Henry Pratt Co., 778 F.2d 1278 (7th Cir.1985), we explained that under Indiana law a manufacturer has a duty to warn of the dangerous condition of a product "only if [the product is] in fact defective and thus dangerous for the use for which [it] was supplied. '[There is no duty to warn] with respect to a product which is, as a matter of fact, not dangerous.' " Id. at 1283 (quoting American Optical Co. v. Weidenhamer, 457 N.E.2d 181, 187 (Ind.1983)). The Restatement (Second) of Torts provides that strict liability applies only where the product as sold is "dangerous to an extent beyond that which would be contemplated by the ordinary [person] who purchases it." Restatement (Second) of Torts Sec. 402(A), comment i. In Bemis, 427 N.E.2d at 1061, the Indiana Supreme Court stated that "[a]lthough the manufacturer who has actual or constructive knowledge of an unobservable defect or danger is subject to liability for failure to warn of the danger, he has no duty to warn if the danger is open and obvious to all [i.e., the ordinary user such as Rubush]." The court has also stated " '[t]here is no duty to warn just because a product might conceivably cause injury.' " American Optical Co. v. Weidenhamer, 457 N.E.2d 181, 187 (Ind.1983) (quoting 63 Am.Jur.2d 53, Products Liability Sec. 42). In Ragsdale v. K-Mart Corporation, 468 N.E.2d 524, 527 (Ind.App.1984), the appellate court stated that "[w]hether a defect or danger is open and obvious is an objective test, based upon what the user should have known [or observed]."
53
Sherwood only had a duty to warn of those dangers which it knew or should have known at the time it distributed its catheter. Cf. Woodill v. Parke, Davis & Co., 79 Ill.2d 26, 37 Ill.Dec. 304, 402 N.E.2d 194 (1980). The evidence presented at trial clearly established that the catheter, if properly routed and not sutured to an artery, was not dangerous. Phelps' proposed instructions on strict liability therefore need not have been given since Sherwood had placed a warning label on this item and Rubush had already learned of possible mishaps due to his intended usage.
54
Phelps fails to demonstrate that the court erred in either giving Sherwood's or refusing his own tendered instructions. The court appropriately adhered to the principles of Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, by applying the state law as declared by either the Indiana Supreme Court or the intermediate appellate court. Affiliated FM Ins. Co. v. Trane Co., 831 F.2d 153, 155 (7th Cir.1987). While the Indiana Supreme Court has not specifically passed on all the issues discussed in this opinion, there is no good reason to believe that the state's highest court would reject those decisions by the intermediate court, and consequently this Court may treat the Indiana Court of Appeals' decisions cited in this opinion as authoritatively stating the law of Indiana. See, e.g., Tippecanoe Beverages, 833 F.2d at 638-39.
55
AFFIRMED.
1
The majority of cases have involved the drug MER/29 (used in the treatment of high cholesterol), see, e.g., Roginsky v. Richardson-Merrell, 378 F.2d 832 (2d Cir.1967); the drug Aralen (used in the treatment of rheumatic arthritis), see, e.g., Hoffman v. Sterling Drug, Inc., 485 F.2d 132 (3d Cir.1973); and the drug Chloromycetin (used in the treatment of typhoid fever), see, e.g., Stottlemire v. Cawood, 213 F.Supp. 897 (D.D.C.1963). For two classic accounts of the prescription drug problem, see generally J. BLAKE, SAFEGUARDING THE PUBLIC: HISTORICAL ASPECTS OF MEDICINAL DRUG CONTROL (1970) (discussion of vast litigation of the late 1960's) and Rheingold, Products Liability--The Ethical Drug Manufacturer's Liability, 18 RUTGERS L.REV. 947 (1964) (comments on general principles of liability). For a comprehensive analysis of the problem of product misrepresentation, see Britain, Product Honesty is the Best Policy: A Comparison of Doctors' and Manufacturers' Duty to Disclose Drug Risks and the Importance of Consumer Expectations in Determining Product Defect, 79 NW.U.L.REV. 342 (1984) (adopting the model later demonstrated in M. SHAPO, THE LAW OF PRODUCTS LIABILITY (1987))
2
As far as we are advised, no comparable regulation governs medical devices
3
Sherwood has its principal place of business in Missouri, and Argyle, a division of Sherwood, has its principal place of business in New York. Diversity of citizenship is thus proper under 28 U.S.C. Sec. 1331. See Rush Presbyterian St. Luke's Medical Center v. Safeco Ins. Co. of America, 825 F.2d 1204, 1206 (7th Cir.1987)
4
This type of suture "is placed around [the catheter] to hold it in place, not tightly, but [to] hold it there so it doesn't get pulled out and so that [the physician] can easily dislodge it" (Rubush Dep. at pp. 14, 56)
5
Within the last several years an innovative theory of liability has been successfully maintained against manufacturers of drugs and medical devices. These manufacturers have been held liable to doctors for the economic and emotional injuries they suffered as a result of harm caused to their patients by the manufacturers' products. See, e.g., Conlee v. McGhan Medical, No. 81-4062 (Tex., Nuecas County District Court, Dec. 15, 1983) (Texas jury returned a $11.1 million award, including $10 million in punitive damages, against the manufacturer of inflatable breast prostheses, finding it liable for the mental anguish caused and income lost by a doctor who replaced forty-eight defective prostheses in his patients without charge); Kennedy v. McKesson Co., 58 N.Y.2d 500, 448 N.E.2d 1332, 462 N.Y.S.2d 421 (1983) (dental surgeon recovers damages from the manufacturer and installer of an anesthesia machine for the pecuniary expenses to his reputation and practice he suffered when a patient died during minor surgery); Oksenholt v. Lederle Laboratories, 294 Or. 213, 656 P.2d 293 (1982) (physician could maintain an action for misrepresentation against the drug manufacturer; elements of recoverable damages included lost earning capacity, lost income caused by harm to the physician's reputation and punitive damages); Runnels v. Astra Pharmaceutical Products, Inc., Nos. 218450 and 224532 (Cal., Sacramento County Superior Court, May 25, 1976) (plaintiff physician was entitled to damages for emotional distress and economic losses, including lost income and the settlement of the claim against him) | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/2406886/ | 385 S.W.2d 803 (1965)
Doris BERTRAM, Plaintiff-Respondent,
v.
Clifton WUNNING, Defendant-Appellant.
No. 31907.
St. Louis Court of Appeals, Missouri.
January 19, 1965.
Roberts & Roberts, Raymond R. Roberts, Farmington, for defendant-appellant.
Librach, Heller & Byrne, William P. Byrne, St. Louis, E. L. McClintock, Jr., Flat River, for plaintiff-respondent.
*804 DOERNER, Commissioner.
Defendant having admitted his liability for the accident which gave rise to this action, the sole issue submitted to the jury was the nature and extent, if any, of plaintiff's resulting injuries. The jury returned a verdict in favor of plaintiff for $5,000, on which judgment was entered, and after an unavailing motion for a new trial defendant appealed.
The principal points raised by defendant concern the admissibility of the testimony of plaintiff's attending physician regarding a hernia which developed subsequent to the accident, and the sufficiency of such testimony to establish a causal connection between the accident and the hernia. Dr. Frank Niesen, a surgeon, testified on behalf of plaintiff that he had examined her at the Incarnate Word Hospital in St. Louis on April 23, 1960, the day of the accident. He found that plaintiff had a large swelling on her head, difficulty in moving her neck in all directions, tenderness along her spine up in the cervical area, a large bruise on her chest, another on the abdominal wall, a swelling in the upper gastric area, and black and blue marks on her left arm and forearm. His diagnosis was that plaintiff was suffering from a concussion of the brain, a swelling of the scalp and arm, a possible swelling of the stomach, and a whiplash injury of the cervical spine. He stated, "* * * At that time I made a note that there was no, no hernia rupture." Plaintiff was discharged from the hospital on May 6, 1960. The doctor examined her at his office on May 13, 1960, and in his words his findings were, "Well, nothing positive as far as, that I could determine at that time. In other words everything had improved," which he then qualified by saying, "Except for one thing. I had here that the neck was difficult to turn to the right and left." On May 23, 1960, the doctor again saw plaintiff, at which time she complained of abdominal pains and was given a drug called Compazene, a mild sedative and a specific for nausea. He testified that plaintiff had suffered from nausea while in the hospital, which had caused him to have an x-ray made of plaintiff's stomach. Later the doctor said that nausea was frequently seen following a head injury.
Continuing on direct, Dr. Niesen testified that he examined plaintiff on July 19, 1960, and found a femoral hernia. He distinguished a femoral hernia from an inguinal hernia by stating that the "* * * blood vessels that go to the leg come out of the abdomen through a little opening called the Femoral Canal and there is an artery, a vein, a nerve in the little space and the hernia was in that area. * * *" After establishing by the doctor's testimony the causal connection between the accident and the conditions and injuries which the doctor had found present on his initial examination of plaintiff in the hospital, Mr. Byrne, counsel for plaintiff, then inquired:
"Q. Now, Doctor, assume, if you will further, that Mrs. Bertram, as I have already asked you, had a blow to her stomach; assume, if you will, Doctor, that in her hospital course (sic) she experienced pain and distension of her stomach; and assume further, if you will, that from the time that she was discharged from the hospital until, was it August you found the hernia, July 19th?
"A. 19th of July, 1960.
"Q. July 19th, 1960, at which time you found a hernia; I will ask you to state, Doctor, if you have an opinion based upon reasonable medical certainty as to whether or not the accident I have described in my previous question, is the competent producing cause of this hernia which you found present in Mrs. Bertram on July the 19th, 1960?
"A. It could be. I couldn't say.
"Q. All right. Thank you, Doctor.
*805 "BY MR. ROBERTS: Now, if the Court please, at this time I move that all testimony relative to the hernia be stricken for the reason that he says it could be and does not testify to it as a medical certainty and that was the question that was asked him and I move that all the testimony be stricken.
"BY MR. BYRNE: Q. May I ask you, Doctor, was that your opinion when you diagnosed the condition, was that your opinion based upon reasonable medical certainty that the accident caused this hernia?
"A. The only way I can answer that is, would be, I don't know if it's acceptable. It would be a percentage.
"BY MR. ROBERTS: Well, now, if the Court please,
"A. I would say it would be about a 90 per cent chance that it was caused by that and 10 per cent it wasn't.
"BY MR. BYRNE: Q. That's your best opinion based upon reasonable medical certainty, Doctor?
"A. That's the only way I could answer such a question. I don't know if that's acceptable.
"BY MR. ROBERTS: Now, if the Court please, again we move, based upon that testimony, that the entire testimony as to any hernia be stricken from the record and the jury instructed to disregard it.
"BY MR. BYRNE: May I go
"BY THE COURT: No, overruled at this time."
Thereafter, over the continued objection of defendant, the doctor described the hernia, the attending pain, and the operative repair, and expressed the opinion that the small nerves which are necessarily cut during the course of the operation "* * * probably won't regenerate."
On cross-examination the doctor testified that the abdominal swelling which he found on the first examination in the hospital was at and above the belt line. He stated that the plaintiff had not then complained of any pain in her groin, and that he had not found any bruises in the area where the hernia later developed. He was asked, "Q. Doctor, many things can cause hernias, isn't that true?" and answered, "Yes, sir." Inquiry was then made, "Q. Can you state, Doctor, and tell this jury as a medical certainty that this hernia was caused by the accident that Mrs. Bertram had?" to which he answered, "No, sir." Counsel for defendant then started to renew his motion to strike, whereupon the court interposed with the statement that the record might show the reinstatement and overruling of the motion. On further cross-examination the doctor testified that a hernia caused by a blow does not always or necessarily appear immediately; that it doesn't necessarily have to appear where the blow was received; and that a blow on or above the belt line can cause a hernia in the groin, including one which may gradually develop and appear some months later. He also stated that when he saw the plaintiff in his office on May 13, 1960 she felt much better in the abdomen, and that he found nothing positive at that time except some restriction of the neck.
At the close of the case the defendant offered Instruction No. A, the effect of which was to tell the jury that in arriving at its verdict it should not take into consideration the evidence relating to the hernia. The court refused to give the instruction, which refusal is likewise assigned as error.
The burden rested on plaintiff to show by substantial evidence the causal connection between the collision and the hernia, one of the alleged injuries for which recovery was sought. Berry v. Kansas City Public Service Co., 341 Mo. 658, 108 *806 S.W.2d 98; Skadal v. Brown, Mo., 351 S.W.2d 684. During the course of our judicial history our view as to what constitutes substantial evidence of cause and effect has undergone a radical change. Originally it was held that a doctor's opinion that the accident "might, could or would" produce a condition found on examination was sufficient; in fact, at that time a medical expert was not permitted to express an opinion that the trauma "did" cause the injury because, it was said, such an opinion would invade the province of the jury, whose duty it was to determine that ultimate fact. Taylor v. Grand Avenue Ry. Co., 185 Mo. 239, 84 S.W. 873; Glasgow v. Metropolitan Street Ry. Co., 191 Mo. 347, 89 S.W. 915; Roscoe v. Metropolitan Street Ry. Co., 202 Mo. 576, 101 S.W. 32. But in O'Leary v. Scullin Steel Co., 303 Mo. 363, 260 S.W. 55, 61, the Supreme Court pointed out that all that such an expert opinion amounted to was a mere possibility of cause and effect. With regard to the conflicting medical testimony present in that case the court remarked: "* * * It may be said the jury may decide which of the experts it will believe, and then find accordingly. The difficulty is that, after the jury has determined which expert it will believe and credits him, it comes to nothing, because what it has concluded to believe is merely that a certain thing `might or could' produce a stated result or condition. * * * On this record the jury might or could solve the problem solely by guessing. * * * The rule discussed in the preceding paragraph II should no longer be followed."
Having breached the prior rule by its holding in O'Leary that the causal connection between the accident and the injury might be shown by the expert's opinion that the one "did" cause the other, the Supreme Court completed its destruction of the old rule in Kimmie v. Terminal R. R. Ass'n of St. Louis, 334 Mo. 596, 66 S.W.2d 561. The critical issue in that case was whether the sarcoma or cancerous bone tumor which subsequently developed was caused by the accident. In answer to a hypothetical question plaintiff's medical experts expressed the opinion that plaintiff's fall "might, could or would" cause the condition from which plaintiff was suffering. On appeal the Supreme Court held that it was not improper to ask an expert witness if something might, could, or would produce a certain result, because "* * * An expert's view of possibility or probability is often helpful and proper," and "* * * Where there are other facts which tend to show an accident caused a certain condition, the assurance of an expert that it is scientifically possible is of some aid to the jury in determining what are reasonable inferences to be drawn from such facts. * * *" But as to the sufficiency of such evidence the court said: "* * * Assurance of possibility is not of itself, however, sufficient to make a submissible case, upon the issue of cause and effect, for a plaintiff who has the burden of proof upon that issue. * * *" To the same effect see Derschow v. St. Louis Public Service Co., 339 Mo. 63, 95 S.W.2d 1173; Franklin v. Kansas City Public Service Co., 239 Mo.App. 151, 186 S.W.2d 546; and Moore v. Glasgow, Mo. App., 366 S.W.2d 475.
No doubt there are situations in which causal connection reasonably may be inferred without the opinion of a medical expert. Bell v. S. S. Kresge Co., Mo.App., 129 S.W.2d 932; Moore v. Glasgow, supra. Evidence of an obvious wound, as a cut or bruise, or an immediate bleeding, would justify an inference by a layman that the injury was caused by the accident. Derschow v. St. Louis Public Service Co., supra. But under the circumstances attending this case it is clear that whether the accident of April 23, 1960 caused or contributed to cause the hernia first discovered on July 19, 1960, particularly in view of the initial and repeated examinations which failed to disclose such a disability, posed a question "for men learned in the science of medicine. * * *" Moore v. Glasgow, supra. No layman *807 could know or have any reasonable basis for an inference that plaintiff's hernia resulted from the accident. Kimmie v. Terminal R. R. Ass'n of St. Louis, supra; Derschow v. St. Louis Public Service Co., supra.
It will be noted that when first asked to express an opinion based upon reasonable medical certainty whether the accident was the competent producing cause of plaintiff's hernia Dr. Niesen answered, "It could be. I couldn't say." Pressed further, all he would say was that, "* * it would be about a 90 per cent chance that it was caused by (the accident) and 10 per cent it wasn't." However favorable such odds might seem in some game of chance, a trial is not such a game, and an award of damages cannot be allowed to rest upon speculation and conjecture of that character. Were we to accept such an answer as constituting substantial evidence of a causal connection between an injury and the accident, then what of the odds of 60 to 40? Or 55 to 45? All that such an answer amounted to, at best, was what the doctor first stated, that "It could be" that the hernia resulted from the accident. But if the doctor who was an expert in the field and who had treated plaintiff would not say with reasonable medical certainty that the hernia resulted from the accident, then certainly a jury composed of laymen would not be justified in making such a finding. State ex rel. Kansas City Public Service Co. v. Shain, 350 Mo. 316, 165 S.W.2d 428. As was said in O'Leary v. Scullin Steel Co., 303 Mo. 363, 260 S.W. 55, 61: "* * * On this record the jury might or could solve the problem solely by guessing. * * *"
The testimony that the hernia could have resulted from the accident may have been admissible to show a scientific possibility. Kimmie v. Terminal R. R. Ass'n of St. Louis, supra. But unlike Ketcham v. Thomas, Mo., 283 S.W.2d 642, there were no other facts here present which tended to show both that the accident caused the hernia and that negatived other possible causes. The doctor conceded, in fact, that many things could cause a hernia. And as noted, the rule is that expert testimony that a condition might or could have resulted from an accident, when standing alone and without other facts, is not substantial evidence from which a jury can find cause and effect. Kimmie v. Terminal R. R. Ass'n of St. Louis, supra; Hunt v. Armour & Co., 345 Mo. 677, 136 S.W.2d 312; Baker v. Kansas City Terminal Ry. Co., Mo., 250 S.W.2d 999; Ketcham v. Thomas, supra. The court therefore erred in refusing to give the withdrawal instruction requested by defendant. Franklin v. Kansas City Public Service Co., 239 Mo. App. 151, 186 S.W.2d 546. It must be assumed that the jury took the testimony regarding the hernia and the permanent disability (the unregenerated nerves) into consideration in assessing damages; and since such evidence must have considerably augmented the damages allowed, there is no basis for a remittitur. Kimmie v. Terminal R. R. Ass'n of St. Louis, supra; Franklin v. Kansas City Public Service Co., supra.
Defendant's final assignment is that the court erred in permitting plaintiff's counsel to argue and suggest damages and compensations for the first time in his closing argument. Of course, defendant had admitted liability, and it appears from the record that during the course of defendant's counsel's argument he conceded that plaintiff had suffered some bruises, so that for all practical purposes the only issue which remained for the jury to decide was the amount of damages to be awarded to plaintiff. The fact of the matter is that in his closing argument plaintiff's counsel never suggested any amount which the jury should return. All that he stated was that in filing a lawsuit a "price" must be named in the petition and that in the instant case a figure of $25,000 was "picked," but counsel added that the figure was only advisory, that the jury was not bound by it, that the figure to be awarded was up to *808 the jury, and that all that plaintiff asked was fair compensation. As stated, the jury returned a verdict for $5,000. In view of the wide discretion afforded the trial judge in ruling both the impropriety and prejudicial effect of argument of counsel, and the deference generally paid to his rulings by the appellate court, Votrain v. Illinois Terminal R. Co., Mo., 268 S.W.2d 838, 844, we would be loath to hold that under the peculiar circumstances here present the court committed prejudicial error. By way of a caveat, however, it should be noted that in Shaw v. Terminal R. R. Ass'n of St. Louis, Mo., 344 S.W.2d 32, 36, 93 A. L.R.2d 265, the Supreme Court warned, "* * * we consider it unfair and improper to permit plaintiff's counsel to do this for the first time in his closing argument, when defendant's counsel has made no argument as to amount. * * *"
Plaintiff has filed a motion to dismiss the defendant's appeal for failure to comply with Civil Rule 83.05(c), V.A.M.R. We find no such violation of the Rule as would justify dismissal.
For the reasons stated the plaintiff's motion to dismiss defendant's appeal should be overruled, the judgment should be reversed, and the cause should be remanded for a new trial on the issue of damages only. The Commissioner so recommends.
PER CURIAM.
The foregoing opinion by DOERNER, C., is adopted as the opinion of the court.
Accordingly, plaintiff's motion to dismiss defendant's appeal is overruled, the judgment is reversed and the cause remanded for a new trial on the issue of damages only.
RUDDY, P. J., ANDERSON, J., and FRANK D. CONNETT, Jr., Special Judge, concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/360983/ | 587 F.2d 252
UNITED STATES of America, Plaintiff-Appellee,v.Jessie P. BARNETT, Jr., Barnett & Sons Salvage, Ltd. andBilly D. Hicks, Defendants-Appellants.
No. 77-5811.
United States Court of Appeals,Fifth Circuit.
Jan. 8, 1979.
Grady F. Tollison, Jr., Mary Ann Connell, Oxford, Miss., for Barnett, Barnett & Sons, etc.
Charles S. Gibson, Dermott, Ark., for Hicks.
H. M. Ray, U. S. Atty., Alfred E. Moreton, III, John R. Hailman, Asst. U. S. Attys., Oxford, Miss., Barry Blyveis, Assoc. Chief Cnsl., Food & Drug Adminis., Rockville, Md., for plaintiff-appellee.
Appeals from the United States District Court for the Northern District of Mississippi.
Before COLEMAN, CLARK and RUBIN, Circuit Judges.
COLEMAN, Circuit Judge.
1
When Theodore Roosevelt was President of the United States, the misbranding and harmful adulteration of foods had become of such nationwide moment that Congress enacted the first Food and Drug Act, 1906.
2
Eight years later, in an appraisal of the Act, the Supreme Court said:
3
The statute upon its face shows, that the primary purpose of Congress was to prevent injury to the public health by the sale and transportation in interstate commerce of misbranded and adulterated foods. The legislation, as against misbranding, intended to make it possible that the consumer should know that an article purchased was what it purported to be; that it might be bought for what it really was, and not upon misrepresentations as to character and quality. As against adulteration, the statute was intended to protect the public health from possible injury by adding to articles of food consumption poisonous and deleterious substances which might render such articles injurious to the health of consumers. If this purpose has been effected by plain and unambiguous language, and the act is within the power of Congress, the only duty of the courts is to give it effect according to its terms. This principle has been frequently recognized in this court.
4
United States v. Lexington Mill Company, 232 U.S. 399, 409, 34 S. Ct. 337, 340, 58 L. Ed. 658 (1914).
5
At a later point in that opinion the Court said:
6
Congress has here, in this statute, with its penalties and forfeitures, definitely outlined its inhibition against a particular class of adulteration.
7
232 U.S. at 411, 34 S. Ct. at 340.
8
From time to time the Act has been amended in the light of new developments and with a view to more effectively protecting the general public from foods which may be harmful or which have been misbranded. We have no doubt that the various provisions of the Act are plain, that they suffer from no ambiguity amounting to impermissible vagueness, and that they do not violate the Constitution.
9
The grand jury for the Northern District of Mississippi indicted Jessie P. Barnett, Jr., Billy D. Hicks, and Barnett & Sons Salvage, LTD., for criminal violations of these statutes, as well as for a conspiracy to commit those violations.1
10
A jury convicted all three defendants on all six counts.
11
Hicks was sentenced to three years imprisonment on one count, with eligibility for parole after nine months; also to a fine of $1,000 and three years probation on each of the remaining counts, the periods of probation to run concurrently with each other.
12
On Count 1, Barnett was sentenced to imprisonment for six months and to pay one-half of the cost of prosecution; also to pay a fine of $1,000 and three years probation on each of the remaining counts, the periods of probation to run concurrently with each other.
13
Barnett & Sons Salvage Company, LTD., was fined $250 on each of the six counts.
14
All defendants have appealed. We affirm as to all.
15
The action began on September 1, 1975, when Hicks made an arrangement with the Planters Oil Mill, Inc., of Tunica, Mississippi, in which it was agreed that the Mill would receive cottonseed which had been poison-treated for planting purposes, process it into cottonseed meal, and deliver the meal to the railroad agent at Tunica for transportation to various customers in Interstate Commerce. It was further agreed that from this operation the cost of processing and shipping would first be deducted, after which the parties would split the profits, if any. Shipment of the treated seed To Planters began on September 2, contained in bags, marked "Poison-treated Do not use for food, feed, or oil".
16
In the meantime, Hicks had made a separate arrangement with Jessie P. Barnett, Jr., of Barnett & Sons Salvage Company, LTD., in which Barnett agreed that his Company would find buyers for the meal processed from the treated planting cottonseed.
17
On September 9, Barnett made a contract with Southern Feed Ingredients Company, a company which deals solely in components for animal feed, by which Barnett was to sell Southern 1,000 tons of cottonseed meal. The record is not clear as to whether Barnett knew initially that the meal was to be manufactured from treated seed, but there is no doubt that he soon learned of it. The serious aspect of this case is that Barnett never informed Southern at any time that the meal was to be processed from cottonseed which had been poison-treated for planting purposes.
18
At various times and on various dates, within the time period alleged in the indictment, Planters processed the treated cottonseed, loaded the resulting meal onto railroad cars, and consigned the cars to the railroad agent at Tunica. The bills of lading contained the warning, Fertilizer use only. Copies of those bills of lading were sent to Barnett & Sons and to Southern.
19
It was during this period that Mr. Barnett really stuck his hand in the fire by representing to Southern that the warnings appearing on the bills of lading were erroneous, that the meal was fit for animal feed. The invoices from Planters, sent to Hicks and to Barnett & Sons Salvage Company, LTD., bore the warning "Fertilizer, chemical or industrial use only". Not stopping at this, Planters notified both Hicks and Barnett & Sons, by certified letter, return receipt requested, that the Mill had begun consigning meal to the railroad agent and that "we want it fully understood that the products from these seed are only good for fertilizer, chemical or industrial use."
20
On the dates alleged in the indictments Southern directed the railroad agent to ship the meal to various customers, as therein charged.
21
Matters lost no time in coming to a head. One of Southern's customers complained "that the meal had a burned or dark color, and a burned smell". Southern then told Planters to send a sample of the meal to a laboratory in Memphis for analysis. On September 19 the samples were sent. On September 25, the laboratory reported that the samples contained "less than .01 parts per million" of Disyston. The report, however, did not indicate that any test had been conducted for mercury or for PCNB.
22
The customer also submitted samples of the meal to the state laboratory at Mississippi State University. On September 22, this laboratory notified the customer that the meal samples contained Disyston. The customer then recalled all of the meal that could be traced and shipped it back to Southern. It informed Southern of the situation and also informed Mississippi feed inspectors, as well as investigators for the Food and Drug Administration, that the meal was tainted.
23
The Food and Drug Administration investigators took samples of the meal at Planters, in Tunica, and from all places to which the meal had been shipped or at which could be found in transit. Tested by Food and Drug Administration laboratories, these samples revealed the presence of mercury, PCNB, and Disyston.
HICKS
24
Mr. Hicks complains first that the statutes in question are unconstitutional. We have already pointed out the holding of the Supreme Court in United States v. Lexington Mill Company, 232 U.S. 399, 34 S. Ct. 337, 58 L. Ed. 658 (1914).
25
We agree that, most assuredly, criminal statutes must fairly apprise those who are subject to them as to the conduct which is proscribed.2 Even so, "no more than a reasonable degree of certainty can be demanded", Boyce Motor Lines, Inc. v. United States, 342 U.S. 337, 340, 72 S. Ct. 329, 331, 96 L. Ed. 367 (1952).
26
We can attribute no merit whatever to the contention that the statutes left the defendants without fair warning that their acts were illegal. 21 U.S.C. § 331(a) prohibits the "introduction or delivery for introduction into interstate commerce of any food . . . that is adulterated . . . ." 21 U.S.C. § 342(a)(1) defines an adulterated food as one bearing or containing "any poisonous or deleterious substance which may render it injurious to health". 21 U.S.C. § 321(f) specifies that the term " 'food' means . . . articles used for food or drink for man or other animals . . . ."
27
Hicks testified that only by analysis could it be determined whether it would be safe to feed the meal. This does not help him. The cottonseed meal in this case was sold for feed prior to analysis and this was done with Hicks' knowledge. The facts, as previously stated herein, reflects the warnings received by Hicks that the product was unfit for animal feed.
28
Mr. Hicks complains that he was prejudiced by overly extensive expert testimony adduced on behalf of the government with reference to the harmful effects of mercury, PCNB, and Disyston. Our evaluation of the trial record, however, leaves us with the firm conviction that the rulings of the trial court on the materiality and relevancy of this testimony were well within its discretion, United States v. Grimm, 5 Cir. 1978, 568 F.2d 1136, 1138; United States v. Brown, 5 Cir. 1977, 547 F.2d 1264, 1266. Indeed, if Hicks thought that the extensiveness of the proof as to these rather indisputable facts would put the case out of focus, to his prejudice, he could easily have eliminated the hazard by merely stipulating the harmfulness, putting an end of the matter. On the other hand, if there was any doubt about it, the government was entitled to nail it down.BARNETT
29
Jessie P. Barnett, on his own behalf and that of Barnett & Sons Salvage, LTD., urges reversal of their convictions on the grounds of improperly admitted evidence, an allegedly improper notice of an evidentiary fact, insufficient evidence, and improper consideration of a pre-sentence report.
A. Admissibility of Evidence
30
Twelve railcars of meal were shipped from Planters. By the time the FDA could obtain samples for its tests, meal from three of these cars had been commingled with meal from other sources. Over objection, the District Court admitted samples from all twelve cars, including the three cars containing commingled meal. Barnett contends that the samples taken from the three commingled cars were irrelevant and the admission of the samples constitutes reversible error. We disagree.
31
This argument tries to slough off the fact that there were nine carloads of meal in which there had been no commingling and even as to the three in which there had been commingling, some of the meal had been processed from the Hicks-Barnett treated cottonseed. The samples from all twelve cars revealed the presence of the deleterious substances in question. Even if it was error to admit the samples from the three commingled cars, it was obviously harmless beyond a reasonable doubt and we need not pause for a prolonged discussion of this point.
B. Insufficient Evidence
32
Barnett maintains that due to his good faith reliance on the Barrow-Agee test that there was insufficient evidence of intent to commit a felony and therefore that his motion for judgment of acquittal should have been granted.
33
Viewed in the light most favorable to the government, Glasser v. United States, 315 U.S. 60, 62 S. Ct. 457, 86 L. Ed. 680 (1942), the facts simply do not support this argument. Barnett had received copies of bills of lading, invoices, and a letter from Planters, warning in unequivocal terms that the meal was not to be used for animal feed. Barnett assured Southern that the copies of bills of lading bearing the warning "Fertilizer use only" were in error and that the meal was good for feed use.
34
Moreover, the record shows that samples were not sent to Barrow-Agee for analysis until September 17, 1975, where they were received on September 19. The Barrow-Agee report was not issued until September 25, 1975. Barnett's assurance to Southern that the meal was safe for feed use took place prior to September 19. All twelve railcars had been shipped from Planters by the time the Barrow-Agee report was issued. Barnett could not have been relying on the Barrow-Agee report when he misled Southern because the report was not yet in existence.
35
The argument that Barnett acted in good faith cannot, on this record, be sustained.
36
C. Judicial Notice of the Absence of Tolerance Standards
37
At the close of the government's proof in rebuttal, and at the continued behest of the prosecution, the District Court told the jury:
38
Now, members of the jury, the court takes judicial notice that no regulations prescribed by any governmental agency provide for standards or tolerances relating to the presence of mercury, PCNB, and disyston as components, as allowable components, to be contained in cottonseed meal manufactured and intended to be used for animal feed, that there are no regulations on the subject that have been prescribed allowing the presence of these elements in cottonseed meal intended for consumption in animal feed.
39
On cross-examination of government witnesses, the defendants attempted to create the impression that there is a government-authorized tolerance level for mercury, PCNB, and disyston. They never proffered evidence of any such tolerances but they repeatedly cross-examined government witnesses as to whether there were such standards. At one point, pursuant to the government's request, the Court directed defense counsel to present the tolerance standards if they were available. Barnett's counsel responded that he only had "some notes" but wanted to ask some questions concerning tolerances "for the later testimony". The Court permitted him to continue.
40
At the conclusion of the expert testimony, the government moved the Court to take judicial notice of the absence of tolerances because "it has been made an issue of fact on some of the cross-examination." Barnett's counsel protested on the ground that "it was clear the (Environmental Protection Agency) does in fact have guidelines." The Court deferred ruling until it could examine the regulations. At the conclusion of the government's case-in-chief the government again moved the Court to take the desired judicial notice. An extended discussion ensued in chambers. The Court again deferred ruling. During a weekend recess the Court studied the statutes and regulations and, after the close of rebuttal proof for the government, gave the instruction as above quoted.
41
In the calmness of judicial review we do not understand exactly how the trial court allowed the government to prevail in this request that it take judicial notice. The defendants had offered no proof that the tolerance standards existed. There was nothing to rebut. The defense had a right to cross-examine the government witnesses in a search for evidence that such standards might exist, but this was far from establishing that they did exist. The defendants having wholly failed to establish the existence of any standards, it would seem hardly necessary that the Court should have entered the lists on the side of the government by informing the jury at the close of the evidence that, as a matter of fact, the standards did not exist. If the government thought that the failure of proof carried with it significantly adverse consequences, it should have had no real trouble producing a qualified witness, in chief, who could have testified that an examination of the Federal Register failed to reveal the existence of any such standards. All of this is especially true when it is remembered that it is not necessary for the government to prove a negative, See, e. g., Rogers v. United States, 8 Cir. 1966, 367 F.2d 998, Cert. denied, 386 U.S. 943, 87 S. Ct. 976, 17 L. Ed. 2d 874 (1967).3
42
We do not approve the procedure followed here, but, for several reasons, we decline to reverse these convictions on this point.
43
In the first place, there is not the slightest contention that What the District Court told the jury was incorrect. In the second place, the defendants provoked the situation by pursuing the point on cross-examination when they knew, or by investigation of the Federal Register should have known, there were no such tolerance standards. Lastly, it may be said that since the statement was true and the government was under no obligation to prove it in the first place, the error was harmless beyond a reasonable doubt.
D. Sentencing Procedure
44
The pre-sentence report contained information relative to a prior sale by Barnett of soybean meal which had been processed from beans that had been treated with mercury. A copy of the report was furnished to Barnett and counsel prior to sentence. The trial court thoroughly explored the subject matter of the report with Jessie P. Barnett, Jr. and his counsel. Barnett pointed out that there had been no conviction as a result of this incident, but he did not dispute the basic facts as reported. He claimed that the poisoned soybean meal had been mixed with untreated meal and thereafter shipped to a customer by a third party without Barnett's consent. Barnett said that he had fully cooperated with FDA investigators concerning the matter. Thereupon, the District Court announced that it would request the probation service to make a further investigation into the matter and would give further consideration to the sentence imposed on Count 1 should the Court learn anything "substantially different" within the next thirty days.
45
Barnett's counsel subsequently filed a motion for reduction of sentence. This motion was supported by affidavits to the effect that the earlier incident occurred through the unintentional and unauthorized intermingling of meal processed from treated beans, with meal processed from uncontaminated beans.
46
On December 27, 1977, the District Court denied the motion on the ground that there was "no basis in fact for the alteration" requested.
47
It is undisputed that the sentencing procedure followed by the District Court was in accordance with the requirements of Rule 32(c)(3)(A) of the Federal Rules of Criminal Procedure. Barnett contends, however, that F.R.Crim.P. 32(c) (3)(A) failed to accord Barnett those safeguards required as a matter of due process. Specifically, he says that "consideration of the unsworn accusations of a governmental investigative agent over Defendant's total denial of such accusations" contravenes the requirements of the Fifth Amendment to the United States Constitution; that anything less than a full evidentiary hearing constitutes a denial of due process.
48
These arguments must be rejected.
49
A sentencing judge "may appropriately conduct an inquiry broad in scope, largely unlimited either as to the kind of information he may consider, or the source from which it may come." United States v. Tucker, 404 U.S. 443, 446-47, 92 S. Ct. 589, 30 L. Ed. 2d 592 (1972). For example, in the landmark case of Williams v. New York, 337 U.S. 241, 69 S. Ct. 1079, 93 L. Ed. 1337 (1949), a state sentencing procedure whereby the judge considered information obtained "outside the courtroom from persons whom the defendant has not been permitted to confront or cross-examine" was found not to be constitutionally infirm. Id. at 245. Writing for the Williams Court, Mr. Justice Black observed that the information necessary for an
50
intelligent imposition of sentences would be unavailable if information were restricted to that given in open court by witnesses subject to cross-examination . . . (such considerations) admonish us against treating the due process clause as a uniform command that courts throughout the Nation abandon their age-old practice of seeking information from out-of-court sources . . . .
51
Id. at 250, 251, 69 S. Ct. at 1084.
52
The Williams Court, of course, did not hold that the sentencing judge's discretion is unlimited. A defendant has a right to "at least minimal safeguards to insure that the sentencing court does not rely on erroneous factual information", United States v. Espinoza, 5 Cir. 1973, 481 F.2d 553, 555; See United States v. Tucker, supra at 447, 92 S. Ct. 589; Townsend v. Burke, 334 U.S. 736, 740, 68 S. Ct. 1252, 92 L. Ed. 1690 (1948). Thus we have held that where a defendant disputes information considered in imposing a sentence, the defendant must be given "at least some opportunity to rebut that information", United States v. Espinoza, Supra at 556; See United States v. Ashley, 5 Cir., 555 F.2d 462, 466, Cert. denied, 434 U.S. 869, 98 S. Ct. 210, 54 L. Ed. 2d 147 (1977); Shelton v. United States, 5 Cir. 1974, 497 F.2d 156, 160. See also United States v. Rollerson, 5 Cir. 1974, 491 F.2d 1209, 1213; United States v. Battaglia, 5 Cir. 1972, 478 F.2d 854.
53
The right of rebuttal does not require that the sentencing hearing be transformed into a second trial. See United States v. Espinoza, supra at 558. See also United States v. Weston, 9 Cir. 1971, 448 F.2d 626, 633, Cert. denied, 404 U.S. 1061, 92 S. Ct. 748, 30 L. Ed. 2d 749 (1972). At a minimum it is sufficient if the sentencing judge affords the defendant an opportunity to "comment on any alleged factual inaccuracy." United States v. Brice, 5 Cir. 1977, 565 F.2d 336, 337; United States v. Hodges, 5 Cir. 1977, 547 F.2d 951, 952; United States v. Ashley, supra.
54
Barnett does not contend that he was not afforded an opportunity to rebut the information contained in the pre-sentence report. What he claims is that he "did rebut" it. He therefore argues that the right of rebuttal was insufficient; "anything less than a full evidentiary hearing constitutes a denial of due process". This argument, of course, is knocked from its feet by Williams v. New York, supra.
55
Reliance on Witherspoon v. Illinois, 391 U.S. 510, 88 S. Ct. 1770, 20 L. Ed. 2d 776 (1968); Mempa v. Rhay, 389 U.S. 128, 88 S. Ct. 254, 19 L. Ed. 2d 336 (1967); and Specht v. Patterson, 386 U.S. 605, 87 S. Ct. 1209, 18 L. Ed. 2d 326 (1967), is misplaced. These cases held that due process applied to the sentencing stage of a criminal proceeding, but this only begins the due process inquiry, for "(O)nce it is determined that due process applies, the question remains what process is due", Morrissey v. Brewer, 408 U.S. 471, 481, 92 S. Ct. 2593, 33 L. Ed. 2d 484 (1972), Cited in Gardner v. Florida, 430 U.S. 349, 358 n. 9, 97 S. Ct. 1197, 51 L. Ed. 2d 393 (1977).
56
As a matter of due process, a defendant about to be sentenced is not entitled to the same evidentiary protections, such as the right to cross-examine adverse witnesses in a sentencing proceeding, as are available in a trial on guilt or innocence.
57
In this case, Barnett was fully informed of the contents of the pre-sentence report. He was given every opportunity to state his version of the matter, and he did so. That is the end of it.
CONCLUSION
58
The judgments of the District Court, as to all appellants, are
59
AFFIRMED.
1
Count 2 charged that on or about September 12, 1975, all three defendants did knowingly, with intent to defraud and mislead, cause to be introduced into Interstate Commerce at Tunica, Mississippi, adulterated bulk cottonseed meal, a food, "which was adulterated in that it contained an added poisonous and deleterious substance, to-wit, mercury, which may have rendered it injurious to health, and contained unsafe food additives, to-wit, the fungicide PCNB (pentachloronitrobenzene) and the insecticide Disyston (O, O-diethyl S-(2-Enthylthio) ethyl) phosphorodiathioate, in violation of Sections 331(a), 333(b), 342(a)(1), 342(a)(2)(C), and 348 of Title 21, and of Section 2 of Title 18 of the United States Code"
Counts 3, 4, and 5 charged the defendants with committing the same offenses on September 19, 1975, and September 22, 1975.
Count 6 charged all defendants with knowingly, and with intent to defraud and mislead, offering for sale and causing to be offered for sale 1,000 tons of misbranded cottonseed meal processed from poison-treated cottonseed, theretofore shipped in Interstate Commerce to Tunica, Mississippi.
Count 1 charged a conspiracy to commit the offenses charged in the remaining counts.
2
United States v. Hawes, 5 Cir. 1976, 529 F.2d 472, 479; United States v. Insco, 5 Cir., 1974, 496 F.2d 204, 208
3
"The general principle, and we think the correct one, * * * is that it is not incumbent on the prosecution to adduce positive evidence to support a negative averment the truth of which is fairly indicated by established circumstances and which, if untrue, could be readily disproved by the production of documents or other evidence probably within the defendant's possession or control. (Cases cited.)"
Rossi v. United States, 1933, 289 U.S. 89, 91-92, 53 S. Ct. 532, 533, 77 L. Ed. 1051, 1052. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/710072/ | 72 F.3d 568
John D. TYLER, Appellant,v.The CITY OF MOUNTAIN HOME, ARKANSAS; Paul Doak,individually and in his official capacity as Chiefof the Mountain Home Police Department, Appellees.
No. 95-1146.
United States Court of Appeals,Eighth Circuit.
Submitted Sept. 13, 1995.Filed Dec. 26, 1995.
James G. Lingle, argued, Rogers, AR, for appellant.
Jeanette Denham, argued, North Little Rock, AR (Roger Morgan, Mountain Home, AR, on the brief), for appellee.
Before BOWMAN, ROSS, and JOHN R. GIBSON, Circuit Judges.
ROSS, Circuit Judge.
1
John D. Tyler brought this 42 U.S.C. Sec. 1983 action, claiming that the City of Mountain Home, Arkansas, and Paul Doak, Chief of the Mountain Home Police Department (appellees), wrongfully demoted him from his position as sergeant in the Mountain Home Police Department in retaliation for exercising his First Amendment right to speak on matters of public concern. The district court1 granted summary judgment in favor of appellees, concluding that the City's interest in maintaining discipline, morale, and a proper chain of command outweighed Tyler's interest in the speech at issue. We affirm.
I.
2
On August 23, 1992, Tyler, then a sergeant in the Mountain Home Police Department, wrote a letter on City of Mountain Home letterhead to Sgt. John R. Booker of the Baxter County Sheriff's Department, complaining that certain deputies in the Sheriff's Department violated a standing policy held by both the Police and the Sheriff's Departments which mandated that suspects with blood alcohol levels in excess of the legal limit were to be arrested. In Tyler's view, failure to detain the suspects not only violated established policy, but also the testing of suspects cost the city money, and the release of intoxicated drivers posed a threat to the public safety. In his letter, Tyler instructed that Sgt. Booker "advise all deputies under your command that this should not ever happen again. Not only does it cost the city for breath test tickets, mouthpieces, and other related items but it also [sic] a complete waste of the MHPD officer's time." Tyler sent the letter notwithstanding that Chief Doak had previously instructed that any letters sent on official stationery had to be cleared with Chief Doak first.
3
Following receipt of the letter, Sgt. Booker wrote to Chief Doak stating that Tyler's letter was "argumentative" and that failure to follow the chain of command in such matters could damage the good relationship between the Police and Sheriff's Departments. Sheriff Joe H. Edmonds also wrote a letter to Chief Doak in which he stated that "a letter of this magnitude from Sgt. Tyler could damage our good relationship." On September 29, 1992, Chief Doak demoted Tyler from sergeant to patrolman as a result of his failure to follow the chain of command in sending the complaint to Sgt. Booker. Tyler now alleges that his letter to Sgt. Booker was protected by the First Amendment and that the appellees violated his civil rights by demoting him.
II.
4
It is clearly established that "a State may not discharge an employee on a basis that infringes that employee's constitutionally protected interest in freedom of speech." Rankin v. McPherson, 483 U.S. 378, 383, 107 S. Ct. 2891, 2896, 97 L. Ed. 2d 315 (1987). However, the employee's freedom of speech is not unlimited. Rather, it is recognized that "the state, as an employer, has a legitimate interest in regulating the speech of its employees." Hamer v. Brown, 831 F.2d 1398, 1401 (8th Cir.1987); Pickering v. Board of Education, 391 U.S. 563, 568, 88 S. Ct. 1731, 1734, 20 L. Ed. 2d 811 (1968).
5
Courts addressing claims by public employees who allege retaliatory employment practices in violation of an employee's right to free speech must employ a two-step analysis. Kincade v. City of Blue Springs, 64 F.3d 389, 395 (8th Cir.1995). First, the court must determine whether the speech at issue can be "fairly characterized as constituting speech on a matter of public concern." Connick v. Myers, 461 U.S. 138, 146, 103 S. Ct. 1684, 1690, 75 L. Ed. 2d 708 (1983). Second, the court must consider whether the interest of the employee, as a citizen, in commenting on matters of public concern outweighs the interest of the state, as an employer, in promoting the efficiency of the public services it performs. Pickering, 391 U.S. at 568, 88 S.Ct. at 1734-35. Both of these questions are issues of law for the court to decide. Shands v. City of Kennett, 993 F.2d 1337, 1342 (8th Cir.1993), cert. denied, --- U.S. ----, 114 S. Ct. 880, 127 L. Ed. 2d 75 (1994).
6
It is undisputed in the present case that Tyler's letter is properly characterized as protected speech and that the demotion was a result of that letter. Accordingly, the only issue remaining for our review is a balancing of Tyler's right to free speech against the interests of the Mountain Home Police Department in fulfilling its responsibilities to the public. Factors relevant in weighing the competing interests of the employer and employee are whether the speech creates disharmony in the work place, interferes with the speaker's ability to perform his duties, or impairs working relationships with other employees. Id. at 1344; Kincade, 64 F.3d at 397.
7
It has been recognized that a police department has a more significant interest than the typical government employer in regulating the speech activities of its employees in order "to promote efficiency, foster loyalty and obedience to superior officers, maintain morale, and instill public confidence." Shands, 993 F.2d at 1344 (citations omitted). "Because police departments function as paramilitary organizations charged with maintaining public safety and order, they are given more latitude in their decisions regarding discipline and personnel regulations than an ordinary government employer." Tindle v. Caudell, 56 F.3d 966, 971 (8th Cir.1995). The public safety employer's determinations of both the potential for disruption as a result of the speech, as well as the employer's response to the actual or perceived disruption, are entitled to "considerable judicial deference." Shands, 993 F.2d at 1345.
8
Here, the district court found that an amicable working relationship between the two law enforcement agencies was important, especially given the size of the close community. The two departments depended on each other for various functions, such as the provision of breathalizer examinations. Sheriff Edmonds and Sgt. Booker both informed Chief Doak that a letter of this nature sent outside the chain of command could damage the good relationship between the two departments. Further, Tyler's failure to follow the chain of command called into question his working relationship with his superior officers and at least potentially impaired the police chief's ability to control the actions of his subordinates and maintain the discipline required by the department to insure public safety.
9
A showing of actual prejudice is not always required in the balancing process under Pickering. Tindle, 56 F.3d at 972; Shands, 993 F.2d at 1344. A public safety employer "need not allow events to unfold to the extent that the disruption of the office and the destruction of working relationships is manifest before taking action." Tindle, 56 F.3d at 972 (quoting Connick v. Myers, 461 U.S. at 152, 103 S.Ct. at 1692). Nothing in the record suggests that appellees' concern about maintaining chain of command and a close working relationship with the Sheriff's Department was unreasonable.
III.
10
Based on the foregoing, the judgment of the district court is affirmed.
1
The Honorable H. Franklin Waters, Chief United States District Judge for the Western District of Arkansas | 01-03-2023 | 04-17-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/595571/ | 980 F.2d 692
Earnest H. JACKSON, Administrator of the Estate of LenaRussell, Deceased, Plaintiff-Appellant,v.PLEASANT GROVE HEALTH CARE CENTER, Beverly CaliforniaCorporation d/b/a Pleasant Grove Health CareCenter, Defendants-Appellees.
No. 92-6163.
United States Court of Appeals,Eleventh Circuit.
Jan. 4, 1993.
J. Gusty Yearout, Don Lee Hall, Yearout Myers & Traylor, PC, Birmingham, Ala., for plaintiff-appellant.
Larry W. Harper, Brently Alan Tyra, Porterfield, Harper & Mills, P.A., Birmingham, Ala., for defendants-appellees.
Appeal from the United States District Court for the Northern District of Alabama.
Before BIRCH, Circuit Judge, JOHNSON, Senior Circuit Judge, and THOMAS*, Senior District Judge.
JOHNSON, Senior Circuit Judge:
1
Earnest H. Jackson appeals the district court's entry of judgment notwithstanding the verdict in favor Pleasant Grove Health Care Center ("Pleasant Grove") after a jury returned a verdict in favor of Jackson for $1.3 million.
I. STATEMENT OF FACTS
2
Jackson is the administrator of the estate of Lena Russell. From February 7, 1984, until January 12, 1985, Russell was an intermediate care patient at Pleasant Grove. When Russell was admitted to Pleasant Grove, she was 70 years old and had been diagnosed as suffering from schizophrenia, mental retardation and hypertension. She required assistance with daily activities and at times was confused and disoriented. While at Pleasant Grove, Russell repeatedly left her room, and on at least six occasions, Russell actually left the premises.
3
Sometime between 5:00 and 5:30 a.m. on the morning of January 12, 1985, Russell left Pleasant Grove. Although some of the exits at Pleasant Grove are equipped with alarms, no alarm sounded on the morning that Russell left. The Pleasant Grove staff noted Russell's absence at 5:30 a.m., and immediately began searching the premises. At 8:00 a.m., after determining that Russell was no longer on the grounds, they contacted the Pleasant Grove Police Department, who began searching for Russell. The Police Department was especially concerned because Russell was ill-dressed for the cold--the temperature that day only reached 33 degrees and Russell was wearing a thin cotton dress and a light sweater. Despite assistance from the local rescue squad and civil defense department, the Police Department was unable to locate Russell.
4
At 5:00 p.m. John Pope phoned the Police Department to report that he had seen an elderly woman wearing a cotton dress at the far edge of his backyard. The police asked Pope to go keep an eye on her until they arrived, but by the time he returned to his backyard, the woman had disappeared. A large woods lay between Pope's backyard and Pleasant Grove, which Pope described as "untamed." After Pope's call, the police focused on the area around Pope's backyard, searching through the rough wooded area and bringing in a dog to track Russell. Although the dog was able to pick up a scent, the track ended at a blacktop road. Russell was never found.
5
On September 5, 1985, Jackson filed a petition for presumption of death, but after a hearing at which both Jackson and Pleasant Grove presented evidence, the probate court denied Jackson's motion, finding that Jackson had presented insufficient evidence of Russell's death. Jackson filed a second petition for presumption of death on March 14, 1990. Relying on Alabama's presumption of death statute,1 the probate court granted this petition and on August 13, 1990, issued letters of administration to Jackson as representative of the Russell's estate.
6
On August 28, 1990, Jackson filed this wrongful death action against Pleasant Grove in state court on behalf of Russell's estate. Pleasant Grove removed the case to federal court on diversity grounds. Prior to trial Pleasant Grove filed a motion in limine to bar the expected testimony of Jackson's nursing home expert, Clay Dean. Pleasant Grove contended that Dean was not qualified to testify as to the standard of care for nursing homes because he was not a "similarly situated health care provider" as required by the Alabama Medical Liability Act (the "Liability Act").2 The district court denied the motion. During the course of trial, Pleasant Grove renewed its objection to Dean's expert qualifications twice, but each time the district court denied the motion.
7
After the jury returned a verdict awarding the plaintiff $1.3 million in damages, Pleasant Grove filed a motion for judgment notwithstanding the verdict ("JNOV") or, in the alternative, for a new trial. The district court granted Pleasant Grove's motion for JNOV, finding that Jackson's expert was not qualified under the Liability Act to testify as to the standard of care for nursing homes, and that his testimony had been improperly admitted. The district court held that when the expert's testimony was struck from the record, Jackson had failed to make out a prima facie case, and thus Pleasant Grove was entitled to JNOV. Alternatively, the district court held that the cumulative effect of Jackson's closing argument was overwhelmingly prejudicial, and thus warranted the granting of a new trial should the grant of JNOV be overturned on appeal.
II. STANDARD OF REVIEW
8
This Court reviews the grant of a motion for JNOV de novo, considering all the evidence "in the light and with all reasonable inferences most favorable to the party opposed to the motion." Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir.1969) (en banc). "[I]f there is substantial evidence opposed to the motion[ ], ... the motion[ ] should be denied and the case submitted to the jury." Id.
9
This Court generally reviews a district court's ruling on a motion for a new trial for abuse of discretion. When the district court grants the motion for a new trial, this Court's review is broader and the application of the abuse of discretion standard more stringent. Hewitt v. B.F. Goodrich Co., 732 F.2d 1554, 1556 (11th Cir.1984).
III. DISCUSSION
A. Pleasant Grove's motion for JNOV
10
To prevail in a wrongful death action against a nursing home such as Pleasant Grove, the Liability Act requires that Jackson establish (1) the appropriate standard of care, (2) that Pleasant Grove failed to comply with that standard of care, and (3) that Pleasant Grove's failure to comply proximately caused Russell's wrongful death. See Ala.Code § 6-5-542(2). The district court granted Pleasant Grove's motion for JNOV after finding that Jackson failed to establish (1) the appropriate standard of care and (2) that Pleasant Grove's failure to comply with the standard of care proximately caused Russell's death.
11
In cases that arise under the Liability Act, the plaintiff must ordinarily offer expert testimony as to the appropriate standard of care.3 Rosemont, Inc. v. Marshall, 481 So. 2d 1126, 1129 (Ala.1985); Parrish v. Spink, 284 Ala. 263, 224 So. 2d 621 (1969). At trial, Jackson offered the expert testimony of Clay Dean to establish the standard of care owed by Pleasant Grove to Russell. During the course of the trial, Pleasant Grove unsuccessfully challenged Dean's qualifications as an expert three times. Nevertheless, after the jury returned its verdict in favor of Jackson, the district court determined that it was error to have admitted Dean's testimony. Without Dean's testimony, Jackson had failed to establish the appropriate standard of care. Accordingly, the district court held that it was bound to grant Pleasant Grove's motion for JNOV.
12
The district court erred in excluding Dean's testimony when ruling on the motion for JNOV. This Circuit has never considered the propriety of a district court granting a motion for JNOV by ruling that certain evidence presented at trial is inadmissible. However, the three Circuits that have considered the issue have all held that such an action is error. See Douglass v. Eaton Corp., 956 F.2d 1339, 1343 (6th Cir.1992); Sumitomo Bank v. Product Promotions, Inc., 717 F.2d 215, 218 (5th Cir.1983); Midcontinent Broadcasting Co. v. North Central Airlines, Inc., 471 F.2d 357, 358-59 (8th Cir.1973). See also 21 Charles A. Wright and Kenneth A. Graham, Jr., Federal Practice and Procedure § 5041, at 228-29 (1977) ("The judge cannot grant a directed verdict or judgment notwithstanding the verdict by ignoring evidence he has admitted on the ground that the admission was error."). But see Aloe Coal Co. v. Clark Equipment Co., 816 F.2d 110, 115-16 (3d Cir.) (dicta finding these cases unpersuasive), cert. denied, 484 U.S. 853, 108 S. Ct. 156, 98 L. Ed. 2d 111 (1987).
13
We hold that a district court may not exclude previously admitted evidence when deciding a motion for JNOV. The rationale for prohibiting the district court from disregarding previously admitted evidence is reliance. If evidence is ruled inadmissible during the course of the trial, the plaintiff has the opportunity to introduce new evidence. However, when that evidence is ruled inadmissible in the context of deciding a motion for JNOV, the plaintiff, having relied on the evidence already introduced, is unable to remedy the situation. See Midcontinent, supra, 471 F.2d at 358-59. The course of proceedings below suggests that Jackson's reliance in this case was particularly great. Pleasant Grove challenged Dean's qualifications as a nursing home expert three times during trial. Three times the district court ruled that Dean was qualified. Had the district court ruled during trial that Dean's testimony was inadmissible, Jackson could have brought in another expert to testify as to the appropriate standard of care for nursing homes, thereby precluding Pleasant Grove's motion for JNOV.4
14
The district court also held that JNOV was appropriate because Jackson had failed to show that Pleasant Grove's negligence had proximately caused Russell's death. In making that determination, the district court stated it was bound by our opinion in Daniels v. Twin Oaks Nursing Home, 692 F.2d 1321 (11th Cir.1982). In Daniels, the plaintiff son brought a wrongful death action against a nursing home after his father disappeared from the nursing home. The plaintiff argued that the jury could infer that his father disappeared into the swamp next to the nursing home and died of natural causes. We held such an inference was not supported by the facts, and the connection between the disappearance and death by exposure were too tenuous to support an inference that the nursing home's negligence proximately caused the decedent's death. Daniels, supra, 692 F.2d at 1328.
15
Contrary to the district court's assertions, Daniels is not controlling. While the two cases are superficially similar, the facts in this case strongly support an inference of death by exposure. First, unlike the decedent in Daniels who disappeared in June, Russell disappeared in January. Second, the plaintiff in Daniels offered no evidence to support death by exposure; Jackson's expert testified that Russell would have died from exposure after two days. Third, the swamp into which the Daniels decedent may have disappeared was surrounded on three sides by an insurmountable fence, thus making it unlikely the decedent ever entered the swamp; Pleasant Grove was surrounded by a 3000 acre woods, much of it "untamed." These differences satisfy the concern we expressed in Daniels--that the evidence "support an explanation of the cause of death that is sufficiently articulated that the jury is not permitted to engage in an unallowable degree of speculation." Daniels, supra, 692 F.2d at 1328.5B. Pleasant Grove's motion for a new trial
16
In the alternative, the district court granted Pleasant Grove's motion for a new trial on the ground that the closing argument made by Jackson's counsel was filled with improper and prejudicial statements. Pleasant Grove objected eleven times to remarks made by Jackson's counsel during the course of the closing argument. The district court sustained ten of those eleven objections, each time giving curative instructions. Nevertheless, the district court found that the prejudice was so overwhelming that a new trial was required.
17
We cannot say that the district court abused its discretion in granting Pleasant Grove a new trial. Although the district court sustained ten of Pleasant Grove's eleven objections, and offered curative instructions in each instance, the cumulative effect of the remarks could have gone beyond the point of being curable. See McWhorter v. City of Birmingham, 906 F.2d 674, 678 (11th Cir.1990) (new trial may still be required even where curative instructions given). Based on our review of the record, we believe that point was surpassed in this case.
IV. CONCLUSION
18
The district court's order granting Pleasant Grove's motion for judgment notwithstanding the verdict is REVERSED. That portion of the district court's order granting Pleasant Grove's motion for a new trial is AFFIRMED.
*
Honorable Daniel H. Thomas, Senior U.S. District Judge for the Southern District of Alabama, sitting by designation
1
Ala.Code § 43-8-6 (1975) ("A person who is absent for a continuous period of five years ... is presumed to be dead.")
2
Ala.Code §§ 6-5-540 to -552 (Supp.1992)
3
The Liability Act requires that the expert witness be a "similarly situated health care provider" as that term is defined by the Liability Act. See Ala.Code § 6-5-548
4
Moreover, the rule does not leave the district court without alternatives. When the district court determines after a verdict is returned that certain evidence was erroneously admitted at trial, the district court may order a new trial. See Douglass, supra, 956 F.2d at 1344; Sumitomo, supra, 717 F.2d at 218; Midcontinent, supra, 471 F.2d at 358
5
Pleasant Grove unsuccessfully advances two other arguments in support of its motion for JNOV. First, Pleasant Grove argues that the statute of limitations bars this action. Alabama Code § 6-5-410 requires that all wrongful death actions be commenced within two years of the death of the decedent. Although Russell disappeared in 1985, she was not presumed dead until five years had passed. See Ala.Code § 43-8-6(c). Under this statute, Russell is presumed to have died in 1990, and thus Jackson's wrongful death action, commenced that same year, is timely. See Peak v. United States, 353 U.S. 43, 45, 77 S. Ct. 613, 614, 1 L. Ed. 2d 631 (1957) (in suit to collect on life insurance, statute of limitations runs from date of presumption not date of disappearance)
Pleasant Grove also argues that Jackson's claim is barred by res judicata. Because the probate court decided in 1985 that Russell had not died in 1985, Pleasant Grove argues that Jackson is now barred from arguing in this case that Pleasant Grove's negligence caused Russell's death in 1985. In those instances where Alabama courts have given the probate court's judgment preclusive effect, the cause of action being relitigated was identical to the cause of action before the probate court, and the probate court had jurisdiction to entertain the cause of action. See, e.g., Broughton v. Merchants National Bank of Mobile, 476 So. 2d 97, 101 (Ala.1985); Orton v. Cheatham, 293 Ala. 639, 309 So. 2d 94, 96-97 (1975). In contrast, the cause of action here is not identical, and the probate court did not have jurisdiction to entertain Jackson's wrongful death suit. See Wallace v. State, 507 So. 2d 466 (Ala.1987) (jurisdiction of probate court limited to those matters committed to it by statute). | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1555274/ | 775 F.Supp. 1373 (1991)
Michael J. HUTTON, Plaintiff,
v.
GENERAL MOTORS CORPORATION, Defendant.
No. CV-N-88-657-ECR.
United States District Court, D. Nevada.
October 8, 1991.
*1374 Larry Digesti, Reno, Nev., for plaintiff.
Richard W. Horton, Lionel Sawyer & Colling, Reno, Nev., for defendant.
*1375 ORDER
EDWARD C. REED, Jr., Chief Judge.
On July 14, 1988, plaintiff filed a complaint (document # 1A) in Nevada state court against defendant and various does alleging various tort causes of action. On December 16, 1988, defendant filed a Notice of Removal (document # 1) in this court, properly removing the case on the basis of diversity of citizenship and in conjunction with Congress' November 1988 amendment of 28 U.S.C. § 1441, providing that for purposes of determining diversity, doe defendants' citizenship shall be disregarded.
On November 4, 1988, before removing the case, defendant filed a Motion (document # 1H) for partial summary judgment. Plaintiff filed an opposition (document # 1Q) on December 12, 1988. Defendant filed a reply (document # 3) on December 29, 1988, and a Supplemental Memorandum of Points and Authorities (document # 17) on October 25, 1990. The motion is ripe for adjudication.
Facts
In April, 1969, plaintiff began working for defendant as a personnel clerk in Santa Fe Springs, California. In 1970, plaintiff received a promotion to senior personnel clerk and in 1973, was promoted to personnel investigator and transferred to Oakland, California.
Plaintiff received further promotions in 1975 and in 1979, when he became supervisor of Labor Relations, a mid-level management position. In summer, 1979, plaintiff's pregnant wife suffered a cerebral hemorrhage which rendered her permanently and totally disabled.
In October 1979, defendant closed its Oakland plant and moved its operations to Sparks. Defendant offered to transfer plaintiff to Sparks. Plaintiff alleges that defendant orally assured plaintiff that if plaintiff accepted the transfer, due to his wife's condition, he would not be transferred again. Plaintiff accepted the transfer, moved to Nevada, and began working for defendant in Sparks.
Over the next seven years, plaintiff worked for defendant in Sparks. During this period, defendant conducted an undercover investigation into drug dealings at defendant's Sparks plant. Defendant used plaintiff in this investigation, allegedly subjecting plaintiff and his family to danger.
On July 17, 1986, plaintiff allegedly was told that he could remain employed by defendant by accepting a transfer to divisional headquarters in Flint, Michigan. Plaintiff did not accept this transfer, even though, defendant alleges, plaintiff had requested transfer at an earlier date to another location in Michigan. Whether plaintiff was actually discharged or whether plaintiff actually "voluntarily resigned" is unclear. In stating the facts this way, we do not make any judgment as to whether plaintiff was constructively discharged. What is uncertain, from a factual standpoint, is whether plaintiff was fired or whether plaintiff took the initiative to terminate his employment with defendant.
Plaintiff's complaint alleges seven causes of action: (1) Express Contract; (2) Implied Contract; (3) Implied Covenant of Good Faith and Fair Dealings; (4) Intentional Infliction of Emotional Distress ("IIED"); (5) Negligent Infliction of Emotional Distress ("NIED"); (6) Defamation; (7) Punitive Damages. Defendant seeks summary judgment on all counts except (6).
Analysis
The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the facts before the court. Zweig v. Hearst Corp., 521 F.2d 1129 (9th Cir.), cert. denied, 423 U.S. 1025, 96 S.Ct. 469, 46 L.Ed.2d 399 (1975). The moving party is entitled to summary judgment as a matter of law where, viewing the evidence and the inferences arising therefrom in favor of the nonmovant, there are no genuine issues of material fact in dispute. Fed. R.Civ.P. 56(c); Semegen v. Weidner, 780 F.2d 727 (9th Cir.1985). Where reasonable minds could differ on the material facts at issue, summary judgment is not appropriate. See v. Durang, 711 F.2d 141 (9th Cir.1983).
*1376 The moving party bears the burden of informing the court of the basis for its motion, together with evidence demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Once the moving party has met its burden, the party opposing the motion may not rest upon the mere allegations or denials of his pleadings but must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).
In evaluating the appropriateness of summary judgment, three steps are necessary: (1) determining whether a fact is material; (2) determining whether there is a genuine issue for the trier of fact, as determined by the documents submitted to the court; and (3) considering that evidence in light of the appropriate standard of proof. Anderson, supra. As to materiality, only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes which are irrelevant or unnecessary will not be considered. Id. at 248, 106 S.Ct. at 2510. Where there is a complete failure of proof concerning an essential element of the nonmoving party's case, all other facts are rendered immaterial, and the moving party is entitled to judgment as a matter of law. Celotex, supra.
Summary judgment is not a disfavored procedural shortcut, but an integral part of the federal rules as a whole. Id. When faced with a motion for summary judgment, the material before the court "must be viewed in the light most favorable to the [non-moving] party," Adickes v. S.H. Kress and Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970), and it must appear to a certainty that the plaintiff would not be entitled to relief under any set of facts that could be proven under the allegations of the complaint. Halet v. Wend Investment Co., 672 F.2d 1305 (9th Cir.1982).
To its motion for summary judgment, defendant attached four exhibits. Exhibit 1 is a transcript of plaintiff's deposition from August 28, 1985. This deposition comes from a case brought by another person against defendant, called Norman v. General Motors. Exhibit 2 is a transcript of plaintiff's testimony given November 25, 1986, in the trial of Norman v. General Motors. Exhibit 3 is a transcript of plaintiff's testimony given December 1, 1986, in the trial of Norman v. General Motors. Exhibit 4 is an affidavit of the Area Personnel Director of defendant.
In his opposition, plaintiff asserts that defendant may not use Exhibits 1-3 in this case because of an agreement between plaintiff and defendant entered November 13, 1986 (Exhibit 1 of document # 1Q). The November 13, 1986 agreement provides that if plaintiff assists defendant in defending the suit by Norman against defendant:
5) It is further agreed that any statement or disclosures made by the contractor (plaintiff), during the performance of this Agreement, shall not be used in any proceedings which may arise between them.
In response, defendant asserts that this agreement is not binding. We agree with defendant that interpreting and giving any effect, if at all, to this provision is a matter for the court.
First, defendant argues that we should consider the exhibits because they are "highly damaging" to plaintiff. We are unpersuaded that such a fact merits our consideration of the exhibits. First, defendant offers no authority for its assertion.
Second, and more importantly, however, most, if not all, confidentiality agreements will contain highly damaging facts. In fact, the purpose of a confidentiality agreement is to prevent the party for whose benefit such information is given, to use the information against the informer. Defendant's argument, carried one step further, implies that Oliver North's grant of immunity for testifying before Congress should have been ignored because the testimony he gave was self incriminating.
*1377 Defendant cites Grumman Aerospace Corp. v. Titanium Metals Corp. of America, 91 F.R.D. 84 (E.D.N.Y.1981) as support for its assertion that confidentiality agreements are invalid absent court approval. The Ninth Circuit, however, has indirectly addressed the validity of confidentiality agreements. In United States v. Wellins, 654 F.2d 550 (9th Cir.1981), defendant attempted to exclude statements elicited from him by plaintiff on the grounds that defendant gave such statements pursuant to a confidentiality agreement. The court held:
Wellins also attempted to justify exclusion of material obtained ... based on a purported confidentiality agreement reached with the Government. The record is clear that such agreement occurred after Wellins was taken from the hotel and that evidence obtained prior to leaving the hotel is not, therefore, subject to suppression because of that agreement.
Id. at 554 n. 3. Thus, while the court refused to apply the agreement, it did so not because the agreement was unenforceable, but because the statements provided occurred before the parties entered the agreement. Consequently, the court implicitly found that confidentiality agreements are valid.
Further, in Matter of Wellins, 627 F.2d 969 (9th Cir.1980), the court found that in general, confidentiality agreements are enforceable. See, e.g., Id. at 971; United States v. Brooklier, 685 F.2d 1208, 1217 (9th Cir.1982) ("Statements made in confidence are not immune absent an unconditional promise of confidentiality ... The district court found that there was no binding agreement"). In our case, defendant made an unconditional promise of confidentiality. A binding agreement did exist because defendant did not challenge the validity of the agreement from a contracts law standpoint. Consequently, defendant's argument that we must reject the confidentiality agreement fails.
Defendant also argues that only confidential discussions between plaintiff and defendant were covered by the agreement. We disagree. The plain language of the provision quoted above indicates that the agreement covers any statement or disclosure made by plaintiff during the performance of the agreement. None of the language in the provision limits coverage to statements and disclosures made by plaintiff to defendant.
Finally, defendant concedes that plaintiff testified at trial after the parties entered the agreement. Defendant argues, however, that even if we do not consider plaintiff's trial testimony (Exhibits 2 and 3), we may consider plaintiff's deposition testimony (Exhibit 1) because plaintiff was deposed before the parties entered the agreement. This argument has merit.
Nothing in the agreement states or even implies that such agreement shall apply retroactively. Further, much of the language in the agreement refers to plaintiff's duty to attend and participate in the trial. That is, no mention is made of depositions. Finally, defendant promised to pay plaintiff a daily fee during the performance of the agreement. The agreement, however, does not state that plaintiff will be paid for the days he already spent helping defendant.
Consequently, we will consider the deposition testimony of plaintiff since plaintiff was deposed before the parties entered the agreement. We will not, however, consider the trial testimony of plaintiff because plaintiff testified after the parties entered the agreement. We proceed to the merits of each count.
Count 1 Express Contract
Count 1 of plaintiff's complaint is entitled Express Contract. The paragraphs in this count, however, do not state a claim for breach of contract, nor do they even allege a provision between plaintiff and defendant providing that plaintiff cannot be transferred out of Sparks. Plaintiff asserts that defendant "wrongfully attempted" to transfer plaintiff to Michigan, but does not allege that this attempt breached an express contract. This allegation appears to be an attempt to plead a tort action, not a contract action.
*1378 Plaintiff states in count 1 that defendant constructively and wrongfully discharged him. Construing this count in the light most favorable to plaintiff, we will assume that plaintiff alleges that a contract exists between plaintiff and defendant under which defendant could not transfer plaintiff out of Sparks.
Plaintiff has the burden of proving such a contract between plaintiff and defendant. Defendant points to plaintiff's deposition testimony, in which plaintiff stated that he did not have an employment contract with defendant. Defendant argues that this evidence is dispositive on whether plaintiff had an employment contract with defendant. We disagree. The relevant inquiry is the intent of the parties at the time plaintiff began his employment. Thus, plaintiff's statements do not preclude him from proving a contract.
Nonetheless, not only must plaintiff show that a contract existed, but that under such contract, he could not be transferred out of Sparks. Necessarily, this provision would have to arise at the time plaintiff was transferred from Oakland to Sparks. If such a provision exists, then the breach of such a provision would amount to a wrongful and constructive discharge.
Plaintiff bases his argument that a contract existed on the premise that employee and policy manuals of defendant were part of the employment contract. Plaintiff, however, does not allege that such manuals contain prohibitions of transfer. In his affidavit, plaintiff cites the relevant manuals, but does not state how they created a contract between plaintiff and defendant prohibiting transfers. Further, plaintiff did not attach such manuals to his opposition. Therefore, we have no evidence that such a provision existed. Consequently, plaintiff's argument that the policy manuals ensured plaintiff's avoidance of a transfer must fail because plaintiff has not submitted evidence showing a genuine issue of material fact.
Plaintiff also asserts, in his affidavit, that when he was transferred from Oakland to Sparks, he received "oral assurances" that he subsequently would not be transferred out of Sparks. Plaintiff states that he accepted the transfer to Sparks because of these oral promises. Plaintiff argues that the breach occurred when defendant forced plaintiff to transfer to Michigan or lose his job. Plaintiff does not state whether, factually, he resigned or was terminated. He states that he separated from his employment. In either case, if plaintiff's allegations are true, he has presented a triable issue as to wrongful discharge based upon an oral contract.
The key inquiry is whether defendant promised plaintiff that plaintiff would not be transferred out of Sparks. Going back to plaintiff's deposition testimony, plaintiff stated that he did not have an employment contract with defendant. Such statement, however, does not address whether defendant made the oral assurances outlined above. Thus, the only question is whether defendant's agent made such oral assurances to plaintiff.
Defendant does not dispute that such assurances were made. Nonetheless, some contracts must be in writing. In this case, the only argument that the alleged contract must comply with the Statute of Frauds, is that the alleged provision of no transfers cannot be performed within one year. Since we have this case on diversity, we look to state law to determine whether the contract must be in writing.
In this case, the parties allegedly entered the contract in Oakland, California. Cal. Civ.Code § 1624(a) (West Supp.1991) provides that "An agreement that by its terms is not to be performed within a year from the making thereof" must be in writing. If a contract can be performed within one year, the contract need not be in writing.
In this case, defendant allegedly promised not to transfer plaintiff out of Sparks if plaintiff accepted the transfer to Sparks. Once plaintiff accepted the transfer, he completed his performance. Defendant, however, could not complete performance as long as plaintiff was employed by defendant in Sparks. We must determine whether plaintiff could have completed his *1379 employment with defendant within one year. The answer, of course, is certainly. For example, plaintiff could have resigned his employment within one year of accepting the transfer to Sparks. Thus, § 1624(a) does not apply and the contract plaintiff alleges exists need not comply with the Statute of Frauds.
On this basis, only the trier of fact can determine whether defendant's agent promised plaintiff that if plaintiff accepted the transfer from Oakland to Sparks, defendant subsequently could not transfer plaintiff out of Sparks. Thus, defendant is not entitled to summary judgment on the alleged express oral contract. Defendant is entitled, however, to summary judgment on the alleged express written contract which supposedly arose from defendant's employee and policy manuals. Consequently, at trial, the only express contract plaintiff may prove is the oral contract.
If plaintiff can prove such a contract, he will be entitled to relief if the finder of fact also finds that defendant forced plaintiff to take the transfer or lose his job. Of course, if such a contract did not exist, defendant was entitled to force plaintiff to take the transfer or lose his job, only because plaintiff has not presented sufficient evidence here that an express contract other than the alleged oral contract existed.
Since plaintiff has not offered evidence or argument in support of his argument that he was not an "at-will" employee, except for the allegation that defendant promised plaintiff that he would not be transferred out of Sparks, we conclude that the only manner in which plaintiff can prove at trial that he was not an "at-will" employee is by proving the oral contract he alleges. That is, the only limit on defendant from discharging plaintiff, aside from illegal purposes, which plaintiff does not allege, is if defendant promised plaintiff that he would not be transferred out of Sparks.
Count 2 Implied Contract
Under Cal.Civ.Code § 1621 (West 1985), "An implied contract is one, the existence and terms of which are manifested by conduct." In this situation, as stated above, the only evidence plaintiff has presented indicating that defendant promised not to transfer plaintiff out of Sparks if he accepted the transfer to Sparks is the alleged oral contract. Plaintiff argues that an employment contract existed between plaintiff and defendant, but does not allege or offer evidence that, other than such oral assurances, defendant promised not to transfer plaintiff out of Sparks.
Specifically, plaintiff does not point to any conduct that defendant exhibited giving rise to a contract under which defendant could not transfer plaintiff out of Sparks. Further, while plaintiff's complaint states that defendant expressed to its employees the importance of continued employment, etc., plaintiff has not offered any evidence that the employee policy and manuals created an implied contract under which defendant could not transfer plaintiff out of Sparks. Consequently, defendant is entitled to summary judgment on count 2, Implied Contract.
Count 3 Implied Covenant of Good Faith and Fair Dealing
In his third claim for relief, plaintiff states that defendant breached its duty of good faith and fair dealing by wrongfully forcing plaintiff to transfer to Michigan or lose his job, in violation of defendant's employee handbook. Plaintiff also asserts that defendant, in bad faith, attempted to force out plaintiff, when plaintiff had cooperated with defendant to infiltrate a drug ring, placing plaintiff and his family in great physical danger.
Under Nevada law, every contract contains an implied covenant of good faith and fair dealing. K Mart Corp. v. Ponsock, 103 Nev. 39, 732 P.2d 1364, 1370 (1987). In this case, plaintiff's complaint indicates that defendant's breach of the covenant occurred when defendant allegedly forced plaintiff to transfer to Michigan or lose his job, in violation of a contract between plaintiff and defendant.
As we have stated, the only basis on which a contract might exist in this case is the alleged oral promise from defendant that if plaintiff accepted the transfer to *1380 Sparks, he would not be transferred out of Sparks. In United Fire Ins. Co. v. McClelland, 105 Nev. 504, 780 P.2d 193 (1989), the Nevada Supreme Court held:
Liability for bad faith is strictly tied to the implied-in-law covenant of good faith and fair dealing arising out of an underlying contractual relationship.... When no contractual relationship exists, no recovery for bad faith is allowed.
Id. 780 P.2d at 197. Thus, the only chance plaintiff has of recovering for breach of the implied covenant is if the finder of fact finds first that the alleged oral contract existed. That is, the only possible basis for this claim is if the finder of fact believes that defendant made the alleged promise to plaintiff.
This does not end the inquiry. In American Bank Stationery v. Farmer, 106 Nev. 698, 799 P.2d 1100 (1990), the Nevada Supreme Court considered the difference between "at-will" employees and "tenured" employees. The Court held:
We note that all employees in Nevada are presumed to be at-will employees. An employee may rebut this presumption by proving ... that there was an express or implied contract between his employer and himself that his employer would fire him only for cause.
Id., 799 P.2d at 1101-1102. In our case, based on the evidence before us, the only evidence that plaintiff was "tenured" was the alleged oral contract. In American Bank, the oral contract was a promise that the employee would be fired only for cause. A firing in any other manner presumably would be wrongful. In our case, the promise was that plaintiff would not be transferred out of Sparks. Thus, if accepting a transfer out of Sparks was a condition of continued employment, defendant could be liable for wrongful discharge.
In K-Mart, supra, the Nevada Supreme Court held that in certain circumstances, where contract damages would be insufficient, the plaintiff could state a cause of action for wrongful discharge under the implied covenant of good faith and fair dealing. The Court held:
[W]e now recognize a bad faith discharge case in this fact-specific instance of discharge by a large, nationwide employer of an employee in bad faith for the improper motive of defeating contractual retirement benefits.
Id., 732 P.2d at 1370. In our case, General Motors is a large, nationwide employer. Further, just as the retirement benefits of plaintiff in K-Mart arose because of a contract, the benefit of plaintiff in our case of not facing transfer out of Sparks arose because of a contract.
The Court continued, holding that a mere breach of a contract is not sufficient to give rise to tort damages. Id. Rather, tort remedies are appropriate when the defendant's "conduct goes well beyond the bounds of ordinary liability for breach of contract." Id. The Court then attempted to define the elements necessary to meet the "well beyond the bounds" test.
The kind of breach of duty that brings into play the bad faith tort arises only when there are special relationships between the tort-victim and the tort-feasor....
Id. For such a relationship to exists, there must be an element of reliance on the part of the victim arising because of a "superior-inferior power differential." Id., 732 P.2d at 1371. The Court concluded that in the employer-employee relationship, such a differential exists. Id. at 1372.
On the other hand, the Court instructed that one also must consider whether contract damages would hold the employer accountable for the specific type of misconduct and whether contract damages could make the aggrieved employee whole. Id., 732 P.2d at 1371. The Court found that in K-Mart, contract damages alone would render the employer totally unaccountable for its conduct:
After involving itself in a relationship of trust and special reliance between itself and its employee and allowing the employee to rely and depend on continued employment and retirement benefits, the company, to serve its own financial ends, wrongfully and in bad faith, breached the employment agreement.
*1381 Id., 732 P.2d at 1372. In our case, in accepting the transfer to Sparks, plaintiff specifically relied on the assurance that he would not be transferred out of Sparks. Defendant did not offer any good faith motive for forcing plaintiff to transfer or lose his job. Thus, we conclude that defendant is not entitled to summary judgment on this claim. We note with emphasis, however, that plaintiff's claim for breach of the implied covenant is wholly dependent on a finding by the fact finder that the oral contract plaintiff alleges exists, does in fact exist. If the finder of fact finds that such an oral promise was never made, defendant will be entitled to a directed verdict on this claim. If such a contract did exist, the finder of fact must determine whether plaintiff is entitled to tort damages, as well as contract damages.
Count 4 Intentional Infliction of Emotional Distress (IIED)
In Branda v. Sanford, 97 Nev. 643, 648, 637 P.2d 1223 (1981) and Star v. Rabello, 97 Nev. 124, 125, 625 P.2d 90 (1981), the Nevada Supreme Court recognized the tort of intentional infliction of emotional distress ("IIED"), or "Outrage," and set out its elements. To recover for IIED, a plaintiff must show (1) extreme and outrageous conduct by defendant; (2) defendant's intent to cause emotional distress or reckless disregard as to the probability of emotional distress; (3) plaintiff's severe emotional distress; (4) actual and proximate causation between defendant's conduct and plaintiff's emotional distress.
In his opposition, plaintiff states, "questions of fact remain whether GM negligently inflicted severe emotional distress by attempting to transfer plaintiff exposing his family to known threats of death and violence." Thus, it appears that plaintiff is not arguing the IIED cause of action. Nonetheless, we will address the claim.
As to the first two elements, given defendant's knowledge of the medical condition of plaintiff's wife and of the events plaintiff had gone through in relation to the drug investigation, we conclude that a finder of fact reasonably could determine that defendant's conduct was extreme and outrageous, with the intent to cause severe emotional distress or with reckless disregard as to the probability of emotional distress. Plaintiff however, has not presented any evidence other than the allegation in his complaint, which is insufficient on a motion for summary judgment, that he suffered severe emotional distress as a result of his termination. Consequently, defendant is entitled to summary judgment on IIED.
Count 5 Negligent Infliction of Emotional Distress (NIED)
Defendant also seeks summary judgment on plaintiffs' claim of NIED on the grounds that Nevada does not recognize a cause of action for NIED in this situation. "It appears that unless the plaintiff is a witness to defendant inflicting injury on a close relative of the plaintiff, and suffers physical injury as a result of the incident, plaintiff may not recover." Etchart v. Bank One, 773 F.Supp. 239, 244 (D.Nev. 3/15/91).
In this case plaintiff is not a bystander plaintiff, but a "direct victim" plaintiff, for which Nevada may not recognize an NIED cause of action. Further, no evidence exists indicating that plaintiff suffered a physical injury as a result of defendant's alleged negligent infliction of emotional distress.
Plaintiff apparently has abandoned the claim, as evidenced by his opposition, in which he does not discuss NIED. Nonetheless, we will address the issue. Nevada does not expressly recognize a cause of action for NIED on the facts of this case. On the other hand, Nevada has not rejected such a claim. We have previously determined that the Nevada Supreme Court would not recognize such an action. Id. We will, however, adapt our analysis from Etchart to the facts of this case.
Unfortunately, the Court has never squarely addressed whether a "direct victim" of defendant's wrongful conduct can sue defendant for damages resulting from severe emotional distress, in the absence of physical injuries. However, the Court has *1382 encountered cases where plaintiff has asserted the right to recover under an NIED type theory.
In Star v. Rabello, 97 Nev. 124, 625 P.2d 90 (1981), plaintiff alleged intentional infliction of emotional distress. The Court recognized a cause of action where plaintiff suffers emotional distress from witnessing the outrageous conduct of defendant cause injury to a close relative of plaintiff. In such a case, the Court held that plaintiff must show the defendant's conduct was violent and shocking. While the Court did not call this cause of action NIED, Star was the Nevada Supreme Court's first acknowledgement of an NIED type claim.
In Nelson v. City of Las Vegas, 99 Nev. 548, 665 P.2d 1141 (1983), the Nevada Supreme Court again encountered an NIED type situation. The Court held that a witness to a close relative being injured by defendant's outrageous conduct may recover from defendant for emotional distress if the witness suffers physical injury or illness as a result of the emotional distress. Id. at 555, 665 P.2d 1141. The Court noted the less extreme the outrage, the more appropriate it is to require evidence of physical injury. Id. Once again, the Court did not call this cause of action NIED. In any case, plaintiff in our case has not alleged physical injury.
In Smith v. Clough, 106 Nev. 568, 796 P.2d 592 (1990), the Nevada Supreme Court came closest to deciding whether a "direct victim" asserting NIED states a cause of action. In Smith, plaintiffs were gardening in their backyard and heard a loud crash from the front of their house. Upon examining the situation, they noticed that defendant, who had been drag racing, crashed her car into plaintiffs' home, causing extensive damage. Plaintiffs sued for NIED, claiming they were direct victims of defendant's negligence, and suffered severe emotional distress as a result of such negligence.
In finding for defendant as a matter of law, the Nevada Supreme Court held:
"We reject the [plaintiffs'] contention and decline the invitation to follow certain case law from other jurisdictions which they claim is in their favor ... We believe the better rule is to allow recovery only in cases which pertain to emotional distress arising from harm to another person ..."
Id., 796 P.2d at 593. The Court made this statement in addressing whether a plaintiff should recover for NIED when the emotional distress arises from defendant's harm to property. However, the Court acknowledged that the only NIED law in Nevada relates to the bystander situation. Id. This language indicates that the Nevada Supreme Court would not extend NIED beyond the bystander situation.
Also lending support to the argument against allowing plaintiffs to state a cause of action for NIED is plaintiffs' lack of physical injury. In Payton v. Abbott Labs, 386 Mass. 540, 437 N.E.2d 171 (1982), plaintiffs' mothers had ingested DES during pregnancy. Plaintiffs sought damages for emotional distress arising from the likelihood that they would have problems with their reproductive organs. No problems had yet manifested themselves, but plaintiffs had incurred costs and suffered traumatic experiences in being tested for various problems.
Plaintiffs asserted that defendants were negligent in marketing DES without testing it or putting a warning label on it. Plaintiffs alleged that defendants' negligence caused plaintiffs' emotional distress. Thus, this is a "direct victim" case, similar to the facts of our case. The Court held that to recover for NIED, the plaintiffs had to show evidence of physical harm resulting from the condition which caused the emotional distress. Since plaintiffs had not yet suffered physical harm, they lost.
Similarly, W. Prosser, W. Keeton, D. Dobbs, R. Keeton, D. Owen, Prosser and Keeton on Torts, Ch. 9, § 54, at 362 (5th ed. 1984) notes that in the direct victim scenario, a cause of action for NIED when no physical injury exists has been recognized in the following instances only: negligently transmitting a message over a wire regarding someone's death, negligently mishandling a corpse, negligently embalming a body, negligently shipping cargo, and negligently *1383 running over a body. No jurisdiction recognizes a cause of action for NIED in our fact scenario.
In our case, plaintiffs have not alleged physical harm resulting from defendant's alleged negligent conduct. Thus, under unanimous authority, they cannot state a cause of action for NIED. We conclude that in light of the Nevada case law on NIED and general case law on NIED, the Nevada Supreme Court would not recognize a cause of action for NIED in this situation.
Count 7 Punitive Damages
Since plaintiff has survived defendant's motion for summary judgment on at least one tort claim, plaintiff may be entitled to punitive damages. If the finder of fact believes that defendant is liable on Count 3, the finder of fact may award punitive damages if it believes that defendant acted with oppression, fraud or malice, express or implied. See Nev.Rev.Stat. Ann. § 42.005. This is ultimately a question for the finder of fact. Thus, defendant is not entitled to summary judgment on punitive damages.
IT IS, THEREFORE, HEREBY ORDERED that defendant's motion for partial summary judgment (document # 1H) is GRANTED as to the following counts: Count 2 (Implied Contract), Count 4 (Intentional Infliction of Emotional Distress), and Count 5 (Negligent Infliction of Emotional Distress). Defendant's motion for partial summary judgment (document # 1H) is DENIED as to counts: Count 1 (Express Contract), Count 3 (Implied Covenant of Good Faith and Fair Dealing), and Count 7 (Punitive Damages). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1555305/ | 775 F.Supp. 365 (1991)
Simon M. HARRISON, Plaintiff,
v.
BOARD OF COUNTY COMMISSIONERS FOR ADAMS COUNTY, COLORADO, et al., Defendants.
No. 90-C-27.
United States District Court, D. Colorado.
April 30, 1991.
*366 Marc Colin, Lakewood, Colo., for plaintiff.
Marlin Burke, Brighton, Colo., for defendants.
MEMORANDUM OPINION AND ORDER
CARRIGAN, District Judge.
Plaintiff Simon M. Harrison commenced this action for damages asserting claims under 42 U.S.C. § 1983 for alleged deprivations of a constitutionally protected property interest (first claim) and liberty interest (second claim). Defendants the Board of County Commissioners for Adams County and the Adams County Sheriff, Edward J. Camp, have moved for summary judgment. Plaintiff has responded by confessing judgment on the first claim and by opposing the motion as to the second claim.
The parties have fully briefed the issues and oral argument would not materially facilitate decision. Jurisdiction exists under 28 U.S.C. § 1331.
I. Facts.
Plaintiff was hired as a Adams County deputy sheriff in 1985. Prior to 1988, he was suspended without pay for "hacking" the sheriff department's computer system. He later was reinstated.
On October 7, 1988, Deputy Chief Penny Collins discharged the plaintiff for allegedly using excessive force on a prisoner. Plaintiff appealed that decision pursuant to the department's internal grievance rules. After a hearing, the hearing officer recommended that the decision to discharge the plaintiff "not be sustained." (See Defendants' brief, Ex. 2.) The hearing officer determined, however, that the plaintiff had violated one of the two personnel rules under which he had been charged. Id.
Collins appealed that decision to Adams County Sheriff Edward Camp. Camp disregarded the hearing officer's recommendation and discharged the plaintiff.
Camp notified the plaintiff of his decision by letter. In that letter, Camp erroneously stated that the plaintiff previously had been discharged for using excessive force and asserted that the plaintiff had admitted that his behavior was inappropriate. Camp further stated his opinion that the plaintiff had become a "vicarious liability" to the sheriff's department and that he should seriously consider some other profession. (See Defendants' motion, Ex. 4.)
After his discharge, the plaintiff was denied unemployment benefits. At a hearing on an appeal of that decision to the Colorado Division of Employment and Training, Camp and others stated that the plaintiff had violated department rules, that he was unqualified for his job and that he was ineligible for unemployment benefits for reasons other than his discharge.
Plaintiff commenced this action on January 5, 1990. As relief, he seeks reinstatement *367 to his former position, retroactive pay and compensatory damages.
II. Analysis.
Plaintiff's liberty interest claim is based on allegations that Camp's letter and the statements at his unemployment compensation hearing damaged his reputation and foreclosed future employment opportunities. Defendants argue that this claim must fail because the statements were neither published nor stigmatizing.
Summary judgment is proper if the pleadings, depositions and affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to 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). The party opposing a properly supported summary judgment motion may not rest upon the mere allegations of the complaint, but must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).
To succeed on a liberty interest claim, an employee must show that dismissal resulted from publication of information that was both false and stigmatizing. Wulf v. Wichita, 883 F.2d 842, 869 (10th Cir.1989) (quoting Asbill v. Housing Authority of Choctaw Nation, 726 F.2d 1499, 1503 (10th Cir.1984)) (emphasis in original).
"Publication," in the context of a liberty interest claim, is accorded its ordinary meaning "to be made public." Bishop v. Wood, 426 U.S. 341, 348, 96 S.Ct. 2074, 2079, 48 L.Ed.2d 684 (1976). Intragovernment dissemination of information related to a public employee's discharge, by itself, falls short of that definition. Asbill, 726 F.2d at 1503. Courts in the Tenth Circuit follow the United States Supreme Court's admonition in Bishop, 426 U.S. at 348, 96 S.Ct. at 2079, that a communication not made public cannot form the basis of a liberty interest claim. In this circuit, therefore, a plaintiff must show that the alleged stigmatizing information has been published. Allen v. Denver Public School Board, 928 F.2d 978 (10th Cir.1991); Wulf, 883 F.2d at 869; Rich v. Secretary of Army, 735 F.2d 1220, 1227 (10th Cir.1984); Jacobs v. Dujmovic et al., 752 F.Supp. 1516 (D.Colo.1990); Arvia v. Black, 722 F.Supp. 644, 647 (D.Colo.1989).
Moreover, the nature of the information published must have "the general effect of curtailing [the plaintiff's] future freedom of choice or action." Asbill, 726 F.2d at 1503 (emphasis in original). Mere reputational injury or allegations of speculative future harm to prospective employment relationships alone are insufficient to establish such a claim. Id.; Wulf, 883 F.2d at 870; Phelps v. Wichita Eagle-Beacon, 886 F.2d 1262, 1268-69 (10th Cir.1989); Setliff v. Memorial Hosp. of Sheridan County, 850 F.2d 1384, 1397 n. 18 (10th Cir. 1988).
Rather the stigmatization complained of must be entangled with some further interest, such as one's ability to obtain future employment. Paul v. Davis, 424 U.S. 693, 701, 709-710, 96 S.Ct. 1155, 1160, 1164-65, 47 L.Ed.2d 405 (1976); Allen, 928 F.2d at 981; Melton v. City of Oklahoma City, 928 F.2d 920, 926-27 (10th Cir.1991); McGhee v. Draper, 639 F.2d 639, 643 (10th Cir.1981). Absent that further "occupational" interest, a stigmatization claim does not rise to a constitutional level and is best pursued under state tort law. Davis, 424 U.S. at 710-712, 96 S.Ct. at 1165-66; Allen, 928 F.2d at 981; Colaizzi v. Walker, 812 F.2d 304, 307 (7th Cir.1987); McGhee, 639 F.2d at 643.
The instant plaintiff's second claim fails to meet a liberty interest claim's publication requirement. While Camp's letter may have contained incorrect statements, the plaintiff has not alleged or shown that the letter was disseminated outside the department. Likewise, there is no allegation that the statements made at the plaintiff's unemployment compensation hearing have been published beyond the privileged arena of that hearing.
Moreover, the plaintiff has failed to establish that the alleged stigmatization was entangled in some occupational interest, a *368 fact that could reveal the claim's constitutional dimension. See Allen, 928 F.2d at 981. Rather he merely alleges that his future employment opportunities may be harmed. Under controlling case law, such speculative allegations are inadequate to state a liberty interest claim. See, e.g., Asbill, 726 F.2d at 1503.
Relying on Brandt v. Board of Co-Op. Educational Services, 820 F.2d 41 (2d Cir. 1987), however, the plaintiff argues that the publication requirement is satisfied when allegedly stigmatizing information is placed, as here, in a discharged employee's personnel file. In Brandt, the plaintiff was a teacher who had been discharged for alleged sexual misconduct with his students. He asserted that a report of those allegations, placed in his personnel file, would be made available to prospective employers.
Finding that public dissemination of that clearly stigmatizing information certainly would foreclose the plaintiff's future employment opportunities, the Second Circuit held in Brandt that the plaintiff was entitled to a name clearing hearing. Id. at 46. That court determined, however, that relief under § 1983 would be available only if the plaintiff could prove that disclosure is inevitable. Id. Brandt thus stands for the proposition that actual publication is unnecessary to obtain a name clearing hearing when the harmful effect imminent dissemination of clearly stigmatizing information will have on a plaintiff can be assessed in advance of publication.
The Tenth Circuit has reached a similar conclusion. In Koerpel v. Heckler, 797 F.2d 858 (10th Cir.1986), the plaintiff was a physician whose eligibility for Medicare reimbursement was to be revoked because he allegedly had furnished substandard medical care. Federal law required that the reasons for the eligibility revocation be published. Eighty-five percent of the plaintiff's medical practice derived from treating Medicare patients. Plaintiff, asserting a liberty interest claim, sought to enjoin publication of the reasons for the revocation.
The question before the Koerpel court was whether federal question subject matter jurisdiction existed. The court noted that "cases in this circuit unfailingly require publication" and that the publication requirement had not been satisfied. Id. at 865. The court determined, however, that because the nature of the information to be disclosed was known and the effects of disclosure could be measured accurately, the "allegations of deprivations of liberty [were] sufficiently colorable to obtain the jurisdiction of the federal court." Id. at 866.
I conclude that the narrow exception to the publication requirement recognized by the Brandt and Koerpel courts is inapplicable here. As the cited case law clarifies, the exception is applicable only in circumstances where, to avoid the consequences of imminent dissemination of allegedly stigmatizing information, a plaintiff seeks a name clearing hearing and an order prohibiting the dissemination. That relief is not sought by the instant plaintiff. Rather he prays only for reinstatement to his former job, retroactive benefits and compensatory damages. (See Complaint, p. 10-11).
Further, there is an absence of evidence that, under controlling case law, the plaintiff's claim rises to a constitutional level. Plaintiff has not alleged, and the facts do not support the inference, that publication of the information in his personnel file is imminent. Nor are the harmful effects to the plaintiff of potential future dissemination of the information amenable to accurate measure. Under established precedent, the plaintiff has the burden to establish that the objectionable information would have the effect of "foreclos[ing employment] ... opportunities amounting to a deprivation of liberty." Board of Regents v. Roth, 408 U.S. 564, 573, 92 S.Ct. 2701, 2707, 33 L.Ed.2d 548 (1972).
Here, however, the department's hearing officer, after reviewing the allegations against the plaintiff, found that his actions did not warrant dismissal. The grounds for that conclusion were detailed in a lengthy, written memorandum that presumably *369 is in the plaintiff's personnel file. (See Defendant's brief, Ex. 2). Because the plaintiff, in pursuing future employment, could use that memorandum to explain the circumstances of his dismissal, any attempt to gauge in advance the effect the statements' dissemination might have on him would necessarily entail speculation and conjecture.
As noted, the plaintiff primarily takes issue with Camp's assertions that he twice had been fired for using excessive force and that he admitted wrongdoing. Despite the possibility that the plaintiff's reputation may be damaged by those statements, reputational damage alone is insufficient to state a liberty interest claim. Asbill, 726 F.2d at 1503.
Moreover, Camp has admitted in documents submitted to this court now public records that some of his statements were erroneous. Thus the extent to which those statements may damage the plaintiff in the future is entirely unclear. In these circumstances, it is clear that the plaintiff's claim is not cognizable under federal law. Allen, 928 F.2d at 981.
While the plaintiff may object that his discharge was unwarranted, Colorado law is clear that a sheriff may revoke the appointment of a deputy sheriff at his or her pleasure. Colo.Rev.Stat. § 30-10-506; Jackson v. Johns, 714 F.Supp. 1126 (D.Colo.1989); Seeley v. Board of County Commissioners, 771 P.2d 21 (Colo.App. 1989). For the above reasons, I conclude that the plaintiff has failed to establish a liberty interest claim.
Accordingly, IT IS ORDERED that the defendants' motion for summary judgment is granted, and the plaintiff's claims and action are dismissed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2745244/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-1221
GILBERTO MIGUEL GONZALEZ-HERRERA,
Petitioner,
v.
ERIC H. HOLDER, JR., Attorney General,
Respondent.
On Petition for Review of an Order of the Board of Immigration
Appeals.
Submitted: October 17, 2014 Decided: October 23, 2014
Before DUNCAN and WYNN, Circuit Judges, and DAVIS, Senior
Circuit Judge.
Petition dismissed by unpublished per curiam opinion.
John T. Riely, Rockville, Maryland, for Petitioner. Stuart F.
Delery, Assistant Attorney General, Mary Jane Candaux, Assistant
Director, Robbin K. Blaya, Office of Immigration Litigation,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Respondent.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Gilberto Miguel Gonzalez-Herrera, a native and citizen
of Mexico, petitions for review of an order of the Board of
Immigration Appeals dismissing his appeal of the Immigration
Judge’s decision denying Gonzalez-Herrera’s application for
cancellation of removal. We have thoroughly reviewed the
administrative record and Gonzalez-Herrera’s contentions and
conclude that we lack jurisdiction over the petition for review.
See 8 U.S.C. § 1252(a)(2)(B)(i), (a)(2)(D) (2012); Sorcia v.
Holder, 643 F.3d 117, 124-25 (4th Cir. 2011); Okpa v. INS, 266
F.3d 313, 317 (4th Cir. 2001). We therefore dismiss the
petition for review. We dispense with oral argument because the
facts and legal contentions are adequately presented in the
materials before this court and argument would not aid the
decisional process.
PETITION DISMISSED
2 | 01-03-2023 | 10-23-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/405355/ | 681 F.2d 230
29 Fair Empl.Prac.Cas. 172,29 Empl. Prac. Dec. P 32,833Wilbur L. LOVELACE, Appellant,v.SHERWIN-WILLIAMS COMPANY, Appellee.
No. 80-1879.
United States Court of Appeals,Fourth Circuit.
Argued Oct. 7, 1981.Decided June 15, 1982.
Samuel M. Millette, Charlotte, N. C. (Ernest S. DeLaney, III, DeLaney, Millette, DeArmon & McKnight, P. A., Charlotte, N. C., on brief), for appellant.
Harvey L. Cosper, Jr., Charlotte, N. C. (Golding, Crews, Meekins, Gordon & Gray, Charlotte, N. C., on brief), for appellee.
Before BRYAN, Senior Circuit Judge, and PHILLIPS and ERVIN, Circuit Judges.
JAMES DICKSON PHILLIPS, Circuit Judge:
1
The plaintiff sought damages from his former employer for an alleged violation of the Age Discrimination in Employment Act (ADEA). The plaintiff's claim, centered on his demotion from a position as store manager, was submitted to a jury which returned a verdict in his favor. Thereafter, however, the district judge granted the defendant's motion for judgment notwithstanding the verdict. The plaintiff appealed, and we affirm.
2
* In November 1978, Wilbur Lovelace, then age 55, was demoted from his position as manager of the larger of two Sherwin-Williams stores in Asheville, North Carolina. The store, which retails paint and related decorator and hardware products, was then one of approximately 1400 Sherwin-Williams stores across the nation and one of the two largest in an "Asheville district" consisting of sixteen stores in parts of North Carolina, Tennessee and Virginia. The manager of this district since 1974 had been R. L. Cardwell. Cardwell was in turn supervised by G. R. Davenport, the manager of a mid-south region consisting of 139 stores including the sixteen in the Asheville district.
3
At the time of his demotion, Lovelace had been employed by Sherwin-Williams for over 30 years and had managed the Asheville store for the past 23. It is undisputed that until late 1976 Sherwin-Williams was entirely satisfied with Lovelace's performance as manager. Lovelace introduced into evidence a January 1977 appraisal prepared by Cardwell which rated Lovelace's "overall performance" as of "high standard."1 With the exception of notations that Lovelace needed to work more closely with his staff and that Lovelace had responded negatively and vocally to a then-new compensation program for store managers, the appraisal was generally quite laudatory. Indeed Cardwell noted in the evaluation that Lovelace was "promotable now" and could function well as the district manager. Lovelace testified that he had in fact been offered, but had rejected, this latter job in 1974 before the position was awarded to Cardwell.
4
Lovelace also produced at trial sales and profit records for the stores in the district for the period from 1970 through 1978. These records showed that during this time the Asheville store's net sales increased every year but one (1975) and that the store showed a net profit every year but one (1977). In 1977, the store lost $5,000 on net sales of over $873,000.2 The same sales records also showed, however, that although the Asheville store's profits increased from 1970 to 1974, its profit trend was in unmistakable decline for the four following years. On this point, the defendant brought out that the same records showed that by 1978 the Asheville store's profit to inventory ratio and profit to total sales ratio were the lowest of any of the 29 similarly-sized stores in the mid-south region.
5
Lovelace also testified that in mid-1977 Cardwell began visiting the Asheville store much more frequently than in the past. Lovelace asserted that Cardwell simultaneously began a campaign of fault-finding and report-writing to provide support for the later demotion. Lovelace testified, for example, that Cardwell instructed him to complete store maintenance projects that were impossible given the available staff and complained about problems, such as customer complaints, that did not exist. Lovelace also testified that Cardwell created a morale problem among employees by speaking with them individually about store problems.
6
The defendant produced in rebuttal what the district court characterized as "overwhelming" evidence of a legitimate reason for Lovelace's demotion. Cardwell agreed that in mid-1977 he began visiting the Asheville store more frequently, for the purpose of discovering and treating the causes of the then-evident downward trend in profits. He testified that during these visits he saw unmistakable signs of what he considered to be poor organization and management. For example, he found employees unable to handle many business inquiries and generally unaware of national sales promotions in progress; store aisles usually cluttered and shelves often messy and inadequately stocked; items frequently not visibly priced; files and bulletin boards containing obsolete materials; books and records poorly maintained; overall housekeeping poor; and Lovelace with an "attitude" problem about undertaking proposed changes.
7
In August of 1977, Cardwell prepared a four-page action plan, introduced into evidence, calling for Lovelace to tackle these and other problems. Cardwell testified that a month later most of the problems had not been addressed and some had actually worsened. In January of the next year Cardwell prepared another action plan, requiring Lovelace to recommend plans to improve sales in two specific areas, equipment and art supplies, that had been particularly slow. Lovelace never prepared these recommendations. On another occasion, the company initiated a target account program known as "MAP," with every manager required to select 10 prospective accounts, to identify specific problems faced in selling each account, and then to make initial contact with each of the ten. Lovelace's report was submitted a month and a half late and simply listed ten potential customers without any discussion.
8
In the spring of 1978, Davenport asked Cardwell to rank comparatively, based on seven different criteria, each of the store managers in the Asheville district.3 Cardwell's opinion of Lovelace's performance had changed dramatically from that expressed in the January 1977 appraisal. Cardwell ranked Lovelace no higher than 12th in any of the seven categories and last overall.
9
Shortly thereafter Cardwell used one of his visits to the store to interview Lovelace's staff. Cardwell testified that he found the employees still unaware of sales promotions and generally unsure of their specific duties. He also heard repeated complaints about the store's disorganization and found employee morale dangerously low. One employee, newly transferred to the position of outside sales representative, was particularly upset that Lovelace would not train him for his new job, despite specific instructions from Cardwell to do so. This employee eventually requested a transfer from the store.
10
In early July, without notice to either Lovelace or Cardwell, the Asheville store was audited. Expenses were found to be $21,000 over budget and $54,000 greater than the year before. The report noted that internal operations needed the personal attention and follow-up of the store manager, as many of the problems found had been listed in the audit of the previous year. Cardwell testified that the audit findings reinforced his opinion that organization and management in the store were not improving.
11
Later that same month, Cardwell asked Davenport, to whom he had already mentioned problems in the Asheville store, to visit and observe the store's operations. Davenport, then in his mid-fifties, spent a full day studying the store and interviewing employees. He testified that he too found problems in supervision, housekeeping and merchandising, as well as widespread employee dissatisfaction. He discussed these problems briefly with Lovelace and soon thereafter addressed the three major problems in a letter. In this letter Davenport first criticized Lovelace's attitude and specifically his inability to accept suggestions and orders from his superiors. Second, Davenport indicated that organizational problems had reached a point that Lovelace risked losing total control of the store. Third, Davenport criticized Lovelace's failure to communicate with or train his staff. The letter concluded, "Bill, you must get control again of the Asheville store as we cannot wait for disaster to hit and then go to work to improve."
12
In October the outside sales representative at the store asked to be relieved of his position, largely because of dissatisfaction with Lovelace. Cardwell then talked with Davenport about using the opportunity to move Lovelace, still respected as a salesman with a good reputation in the community, into the sales representative position and replace him with a new manager. Cardwell wanted the replacement to be Laurence Atkins, then manager of a store in Waynesville, North Carolina. Cardwell had ranked Atkins first overall among all managers in his comparative ratings earlier that year.4
13
Davenport agreed to the change. He testified that he then made special arrangements to provide Lovelace with a salary well above the maximum scale for the outside sales representative position. He also authorized a bonus program that would allow Lovelace to earn a salary close to what he had received as manager. Lovelace was told of the change in November and quickly agreed to accept the new job. On December 1 Atkins officially took control. He was then 49 years old, six years younger than Lovelace and had recently undergone surgery for removal of a cancerous bladder. He was replaced at the Waynesville store by a man of 50, or one year older than himself. At the time of the change in Asheville, 6 of the 16 managers in the district were over 50.
14
Atkins testified at trial that on becoming manager he found problems at the store of the kind testified to by Cardwell and Davenport. He stated, for example, that many employees were unaware of their responsibilities and required retraining, that price listing guides and records were outdated, and that housekeeping and product organization were in disarray. Two other employees also corroborated the testimony of Cardwell, Davenport, and Atkins. One testified that he had repeatedly refused to serve as assistant manager under Lovelace, but was willing to accept the position once Lovelace was replaced.
15
In the months following his demotion, Lovelace twice asked for and received meetings with Cardwell and Davenport to discuss the reasons for his demotion. At each the two supervisors gave the same explanations offered at trial. At trial Lovelace offered explanations for most of these shortcomings about which his supervisors complained. In addition to denying morale or customer complaint problems, for example, Lovelace testified that the audit in 1978 was no worse than in past years when he was highly rated, that he had previously trained the outside salesman as an inside salesman and was not required to provide any additional training, and that he had not completed the MAP assignment because of other work requirements but that he did discuss the program with a different company official while on his vacation.
16
In 1979, Atkins' first year as manager, the store's profits doubled. As marketing representative, Lovelace led the district with sales of almost $350,000 but earned approximately $7,000 less than in 1978. He resigned in mid-1980.
II
17
The dispositive issue is the propriety of granting judgment n. o. v. for the employer-defendant in this ADEA jury case.5 Resolving it requires (a) identification of the substantive elements of the particular ADEA claim asserted, hence of the specific burdens of production put to test by the motion made in this case; (b) identification of the appropriate standard for assessing the evidence on a defendant's motion for directed verdict or judgment n. o. v. in this ADEA case; and (c) application of the appropriate standard to the particular evidence adduced in light of the production burdens borne.
A.
18
In identifying the essential elements and means of proof of an ADEA claim this circuit has heretofore drawn approvingly on Judge Campbell's analysis for the First Circuit in Loeb v. Textron, Inc., 600 F.2d 1003 (1st Cir. 1979). See Spagnuolo v. Whirlpool Corp., 641 F.2d 1109, 1113 & n.2 (4th Cir. 1981); Smith v. University of North Carolina, 632 F.2d 316, 334-35 (4th Cir. 1980); Smith v. Flax, 618 F.2d 1062, 1066 & n.3 (4th Cir. 1980). Loeb 's essential value lies in its guidance for transposing to the ADEA context the substantive elements and the corresponding proof scheme developed by the Supreme Court for circumstantially proving a "disparate treatment" claim of intentional race or sex discrimination under Title VII. In performing this useful service, the Loeb court in turn necessarily drew upon the line of then extant Supreme Court decisions which, starting with McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), had continued to elaborate and refine the substantive nature of the Title VII intentional discrimination claim and its means of proof by indirect or circumstantial evidence.6 Since Loeb was decided, the Supreme Court has once again spoken helpfully to the subject in Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1980).
19
Without attempting here a detailed exegesis of these primary authorities, we can now deduce from them and from general procedural doctrine the following principles related to the substantive elements of an ADEA claim and the sufficiency of the evidence required in a jury trial to survive a defendant's challenge by motion for directed verdict or judgment n. o. v.7
20
1. The substantive elements of the claim-without regard to attempted modes of proof-are (a) that an employee covered by the Act (b) has suffered an unfavorable employment action by an employer covered by the Act (c) under circumstances in which the employee's "age was a determining factor" in the action in the sense that " 'but for' his employer's motive to discriminate against him because of his age, he would not (have suffered the action)." Spagnuolo v. Whirlpool Corp., 641 F.2d at 1112 (citing to Loeb, 600 F.2d at 1019).
21
2. Where-as here, and ordinarily-coverage and unfavorable action are not disputed, the dispositive and only issue is the difficult, but narrow, motivational one: whether the employee "was (treated unfavorably) because of his age." Loeb, 600 F.2d at 1017. This may of course be proved under ordinary principles of proof by any direct or indirect evidence relevant to and sufficiently probative of the issue, see id. at 1018, without resort to any special judicially created presumptions or inferences related to the evidence.
22
3. But because of the comparable remedial purposes of the two Acts and the comparable difficulty under both of proving discriminatory motivation, the judicially created proof scheme for Title VII cases featuring a rebuttable factual presumption favoring claimants in the initial stages of proof is appropriate-properly adapted-for application in ADEA litigation. Smith v. Flax, 618 F.2d at 1066 n.3; Loeb, 600 F.2d at 1014-16; see also Burdine, 450 U.S. at 252 n.4, 258, 259, 101 S.Ct. at 1093 n.4, 1096, 1097 (comparable applicability suggested by citations to Loeb ).
23
4. As adapted for application to jury trial of an ADEA demotion8 case, this presumption-centered means of proof operates as follows: (a) Plaintiff may establish a "prima facie case" by evidence (i) that he was at the time of demotion "performing his job at a level that met his employer's legitimate expectations" and (ii) that following his demotion his employer sought someone to perform the same work. Loeb, 600 F.2d at 1014; see also Smith v. University of North Carolina, 632 F.2d at 332. (b) The effect of this "prima facie case" is that of a rebuttable factual inference or presumption which, if not rebutted, suffices at least to require submission of the motivational issue to the jury. See Burdine, 450 U.S. at 254, 255 & nn. 7, 8, 101 S.Ct. at 1094 & nn. 7, 8. (c) Having this effect, it necessarily has the further effect of shifting to the defendant the burden of producing evidence on the issue. Id. at 254, 101 S.Ct. at 1094. This burden "is to rebut the presumption by producing evidence that the plaintiff was (disfavored) ... for a legitimate, nondiscriminatory reason." Id. at 255, 101 S.Ct. at 1094. It is not a burden of persuasion, but is one that may be carried by "the introduction of admissible evidence" of an explanation that would be "legally sufficient to justify a judgment for the defendant." Id. at 254-55, 256-57, 101 S.Ct. at 1094, 1095-96. (d) The effect of a failure by the defendant to carry this burden of production is at least to require submission of the issue to the jury under a binding instruction in plaintiff's favor subject only to a credibility determination.9 (e) On the other hand, the direct effect of carrying the defendant's production burden is to "destroy( ) the legally mandatory inference." Burdine, 450 U.S. at 255 n.10, 101 S.Ct. at 1095 n.10. This "destruction" has two critical procedural consequences. First, it precludes, on this state of the evidence, a directed verdict or peremptory instruction subject to credibility determination in plaintiff's favor. See id. Second, it re-casts the dispositive motivational issue at "a new level of specificity." Id. at 255, 101 S.Ct. at 1095. That issue has now become narrowly whether, considering only the two reasons proffered by the opposing parties, the decision to demote claimant would not have been made but for defendant's motive to discriminate against him because of his age. See Wright v. National Archives and Records Service, 609 F.2d 702, 716 (4th Cir. 1979). As to this recast motivational issue, the plaintiff has once again the burden of production-now merged with the ultimate burden of persuasion on that issue which has never shifted. Burdine, 450 U.S. at 253, 256, 101 S.Ct. at 1093, 1095. (f) In consequence of this new production burden-and its corollary risk-the plaintiff must be given an opportunity directly to counter the defendant's evidence of the specific reason for the action with evidence that the reason given is "pretextual" or "not the true reason." Id. at 256, 101 S.Ct. at 1095. This may take the form of new evidence designed directly to attack the credibility of the defendant's specific explanation or simply to prove that, as against that specific reason, age is the "more likely" explanation. Id. Because destruction of the original presumption does not destroy the inherent probative force of evidence earlier introduced by the plaintiff to invoke it, that evidence too, as well as evidence elicited by the plaintiff in cross-examination, may be taken into account in determining whether plaintiff has carried this ultimate production burden. See id. at 255 n.10, 101 S.Ct. at 1095 n.10 (all such evidence proper for consideration by trier of fact in Title VII case). (g) The effect of carrying this ultimate production burden is to require submission of the motivational issue to the jury under proper instructions. The effect of a failure to carry it is to compel dismissal of the claim upon a proper motion for directed verdict or judgment n. o. v.
24
5. The net effect of all this upon the role of the trial judge in ruling upon an evidence sufficiency motion at the conclusion of all the evidence in the jury trial of an ADEA case10 can now be summarized. Though consideration and ruling on such a motion involves a unitary mental process, it will in logic address sequentially the different production burdens above described that are put in play by the evidence. (a) The first question is whether plaintiff's evidence may have carried the original production burden without need to invoke the McDonnell-Douglas presumption. This may have occurred, for example, through direct evidence of a stated purpose to disfavor because of age, or possibly through the cumulative effect of indirect evidence having sufficient probative force independent of the presumption's meager predicates to warrant submission of the motivational issue. Cf. Loeb, 600 F.2d at 1018. If this is the judicial assessment, inquiry of course ceases, no further production burdens are put in play, and the motion can be denied. If, on the other hand, the plaintiff's evidence fails even to support the unadmitted predicates of the presumption so that it may not be invoked to carry this original burden, inquiry similarly ends and the motion can be granted. (b) If the plaintiff's evidence supports the predicates of the presumption without regard to any additional probative force the evidence may have, inquiry must then proceed to whether the defendant has carried the production burden of rebutting the presumption by "admissible evidence" that is "legally sufficient" as justification. See Burdine, 450 U.S. at 255, 258, 101 S.Ct. at 1094, 1096; Loeb, 600 F.2d at 1016 & n.16. (c) If the defendant's evidence fails to carry this burden, inquiry ceases. The plaintiff is entitled at least to a peremptory instruction of liability subject only to a credibility determination.11 If, on the other hand, the defendant's evidence carries this burden so that the presumption's force is dispelled, inquiry must proceed to the plaintiff's reacquired production burden. (d) This burden relates again to the motivational issue but now as recast by the defendant's proffered explanation into the more specific form whether as between the plaintiff's age and the defendant's proffered reason, age is the "more likely." In assessing whether this recast burden of production has been carried, the court may properly consider plaintiff's evidence offered to establish the dispelled presumption along with any designed to show defendant's proffered explanation to be a pretextual one. If the burden is carried, the case is for the jury under proper instructions defining the motivational issue as ultimately framed at the "new level of specificity," id., created by the defendant's rebutting evidence. If this ultimate burden is not carried the defendant's motion should of course be granted, even though the plaintiff's original burden of production was carried by force of the presumption.12
25
The next problem is the standard by which the sufficiency of the evidence on the ultimate motivational issue is to be assessed, and to that we now turn.
B.
26
Reflecting a general difficulty encountered by all courts, see 9 C. Wright & A. Miller, Federal Practice & Procedure: Civil § 2524, pp. 545-47 (1971), we may not have been altogether consistent in our formulations of the standards by which evidence in civil actions is to be assessed for its sufficiency to support a jury verdict. See id. nn. 46, 48, 50. This may reflect no more than semantic lapses that have no demonstrable effect on results, or it may reflect the fact that different formulations are appropriate depending upon the nature of the factual issues and the nature of the evidence offered in their support that are being assessed. See generally Cooper, Directions for Directed Verdicts: A Compass for Federal Courts, 55 Minn.L.Rev. 903 (1971).
27
Be all that as it may, it is fortunate for our immediate purposes that some of our most careful formulations have been stated and applied in cases where, as here, the dispositive issue was one of causation-of which motive for challenged action is simply one species-and the evidence offered to prove it (all questions of credibility aside) was wholly circumstantial. In such cases the question of sufficiency goes simply to the reasonableness of drawing the necessary inference of causation from the indirect evidence, and on that specific matter there is in this circuit powerful precedent upon which we can with assurance draw. Three opinions command particular respect for the care and cogency of their analysis.
28
In Ralston Purina Co. v. Edmonds, 241 F.2d 164, 168 (4th Cir. 1957), Judge Sobeloff, finding insufficient the circumstantial (and opinion) evidence offered to prove the necessary causation in a products liability case, put it that only that evidence "which shows a 'probability' and not a mere 'possibility' " would suffice to allow jury consideration.
29
In Ford Motor Co. v. McDavid, 259 F.2d 261 (4th Cir. 1958), Judge Haynsworth, finding insufficient the circumstantial evidence of causation in a manufacturer's negligence case, expressed essentially the same thought. After conceding that "it is the province of the jury to resolve conflicting inferences from circumstantial evidence," he pointed out that "(p)ermissible inferences must still be within the range of reasonable probability, however, and it is the duty of the court to withdraw the case from the jury when the necessary inference is so tenuous that it rests merely upon speculation and conjecture." Id. at 266.
30
Again, in Wratchford v. S. J. Groves & Sons Co., 405 F.2d 1061, 1066 (4th Cir. 1969), Judge Haynsworth, this time finding conflicting inferences of the cause of personal injury "equally probable," hence for jury resolution, nevertheless again emphasized "reasonable probability" as the proper test of sufficiency of circumstantial evidence to support the necessary inference. "The relevant question ... is ... whether a jury might reasonably conclude from the evidence that (the necessary) inference was more probable than the (sole conflicting) inference...." Id. at 1066. Or, more succinctly, "if the inference sought to be drawn lacks substantial probability, any attempted resolution of the question may well lie within the area of surmise and conjecture," id., so that the issue should not be submitted for jury consideration.
31
This emphasis, where causation is dispositive, upon "probability," "reasonable probability," "substantial probability" rather than mere "possibility" as the proper test simply bespeaks the special danger that in a matter so generally incapable of certain proof jury decision will be on the basis of sheer speculation, ultimately tipped, in view of the impossibility of choosing rationally between mere "possibilities," by impermissible but understandable resort to such factors as sympathy and the like. It is of course precisely to guard against this danger that the burden of producing rationally probative evidence-and the corresponding risk of nonproduction-is placed upon claimants and subjected to the ultimate jury control devices of directed verdict and judgment n. o. v. See Brady v. Southern Railway Co., 320 U.S. 476, 480, 64 S.Ct. 232, 234, 88 L.Ed. 239 (1943) (to guard against "the mischance of speculation over unfounded claims"); Galloway v. United States, 319 U.S. 372, 395, 63 S.Ct. 1077, 1089, 87 L.Ed. 1458 (1942) (to insure that "speculation be not allowed to do duty for probative facts"). The special danger in the causation context invites and justifies the special emphasis.
32
We are therefore satisfied that the test of evidentiary sufficiency expressed and applied in these cases turning on proof of physical causation is the appropriate one to apply to the dispositive motivational cause issue in ADEA jury cases. To its application in the instant case we now turn.
C
33
As indicated in Part II A, the logical starting point in ruling upon the defendant's motion for judgment n. o. v. is to consider whether claimant may have carried his original production burden on the motivational issue without need for resort to the McDonnell-Douglas presumption with all its ensuing complexities. This might have been done either by direct evidence, see Spagnuola v. Whirlpool Corp., 641 F.2d at 1113; Loeb, 600 F.2d at 1014 n.12, or by indirect evidence whose cumulative probative force, apart from the presumption's operation, would suffice under the controlling standard to support as a reasonable probability the inference that but for claimant's age he would not have been demoted. See Loeb, 600 F.2d at 1017 & n.18.
34
There was no direct evidence here as there was, for example, in Spagnuola, and claimant does not seem seriously to suggest that there was.
35
Neither was there sufficient indirect evidence independent of the presumption's force, taking into account all that adduced by both direct and cross-examination and for whatever specific purpose offered. See Burdine, 450 U.S. at 255 n.10, 101 S.Ct. at 1095 n.10.
36
Taken all together, the evidence came, in summary, only to this. At age 55-mid-way the protected age group-after working for defendant for 30 years and managing its Asheville store for 23 of those years, claimant was relieved as store manager in late 1978, replaced by a fellow employee who, at 49, was only six years younger, and demoted to a lower paying job as sales representative.13 Until late 1976 his employer had been entirely satisfied with his performance as manager, as evidenced by a January 1977 official appraisal. From 1970 through 1978, while he was store manager, the employer's records revealed that the store's net sales increased every year but one (1975) and a net profit was realized every year but one (1977), although the same records showed that beginning in 1974 the store's profit trend was steadily downward and that by 1978 its profit to inventory and profit to total sales ratio were the lowest in his region.14 In mid-1977 higher management began more frequent visits to the store and finding more fault with claimant's management of the store; in claimant's view, began to create morale problems among employees by discussing store problems and began requiring correction of deficiencies whose existence claimant would not then or later concede. Conspicuous by its absence from plaintiff's attempted proof was any substantial evidence, see Houser v. Sears, Roebuck & Co., 627 F.2d 756, 758 (5th Cir. 1980), that the employer was engaged in a general youth movement of which the claimant may have been one victim.15
37
Assessed independently of the presumption, we are satisfied that this circumstantial evidence does not suffice to support as a reasonable probability the inference that but for claimant's age he would not have been demoted. Without benefit of the presumption, age simply exists on this evidence as one of any number of possible reasons-including poor business judgment by the employer, see Loeb, 600 F.2d at 1012 n.6; Bishop v. Jelleff Associates, 398 F.Supp. 579, 593 (D.D.C.1974)-for the demotion. On this basis to find age a determinative cause could only be by outright conjecture and not by any rational assessment of probabilities. Inquiry must therefore proceed to the effect of the presumption.
38
The first question here, of course, is whether the presumption was invoked. Because the predicate of replacement is not in dispute, the only necessity was to show, under the adapted McDonnell-Douglas scheme, that at the time of his demotion claimant was "performing his job at a level that met his employer's legitimate expectations." See Loeb, 600 F.2d at 1014. On this, we have serious reservations. The burden of production as to this predicate is also of course upon the claimant. We think it important to hold employee-claimants in discharge, demotion, reassignment, and like cases to the burden of showing that performance at the requisite level of employer expectations continued to a time reasonably close to the time of the challenged employer action. The presumption is rationally supportable only to the extent this is done, since its effect is to create a mandatory inference-one justifying judgment-if not dispelled, Burdine, 450 U.S. at 254, 101 S.Ct. at 1094, that with performance established as satisfactory, there is no reasonable explanation for the challenged action but age discrimination. Cf. International Brotherhood of Teamsters v. United States, 431 U.S. 324, 358 n.44, 97 S.Ct. 1843, 1866 n.44, 52 L.Ed.2d 396 (basis of inference in Title VII case). The rationality, hence fairness, of this inference obviously decreases as the time gap between last proven satisfactory performance and challenged employment action lengthens. Here, the time lag was almost two years. As common experience in such matters teaches, and as the full record reveals the case here to have been, a great deal can happen to alter things in such a time. We think it a very close question whether on this basis the presumption was effectively triggered. Solely for purposes of this appeal, we can assume that it was and proceed to the next stage of assessment: whether defendant carried its burden to dispel the mandatory presumption.
39
The question here is simply whether the defendant has "introduc(ed) ... admissible evidence" of a "legitimate nondiscriminatory reason" that is "legally sufficient to justify a judgment for the defendant." Burdine, 450 U.S. at 254-55, 256-57, 101 S.Ct. at 1095-96. There is no doubt that this relatively modest burden was carried. The defendant offered evidence-internally consistent, corroborated by a number of witnesses perfectly positioned to have knowledge of the relevant facts, through testimony that was in minimal terms not manifestly incredible-that claimant was demoted in the exercise of a reasonable business judgment that he was no longer performing at the level of the employer's legitimate expectations. Though the district court indeed characterized this evidence as "overwhelming," it was only necessary to determine as a matter of law that it was legally admissible, that it was not intrinsically unworthy of acceptance, and that the reason as advanced was a legitimate one. Cf. Loeb, 600 F.2d at 1011-12, n.5.
40
At this point in the assessment the probative force of the presumption had been completely dispelled. The evidence that sufficed to invoke it, though still in the case, had now only its intrinsic, unaided force as support for the necessary inference. That necessary inference had now, however, been recast in a more narrow form, at a "new level of specificity," Burdine, 450 U.S. at 255, 101 S.Ct. at 1095, through the defendant's commitment, forced by the presumption, to a specific reason. The ultimate motivational issue has now become whether, considering only age discrimination and the defendant's proffered reason as possible explanations, discrimination is the "more likely." Id. at 256, 101 S.Ct. at 1095. The plaintiff's new production burden has correspondingly become whether, as between only these two proffered reasons, the circumstantial evidence supports as a reasonable probability the inference that but for claimant's age he would not have been demoted.
41
We are satisfied that at this stage in the assessment the claimant's still wholly circumstantial evidence, unaided now by any presumptive force, no more sufficed to support the necessary inference as against the defendant's specifically advanced explanation than it sufficed to support it in the absence of any proffered alternative. The evidence for assessment at this stage is the same as that assessed preliminarily to determine whether it sufficed, independently of the presumption, to make a prima facie case. Where, as here, the employer's proffered reason for the challenged action is unacceptable performance, any evidence designed to show the proffered reason pretextual is of a piece with and inseparable from evidence offered to invoke the presumption by showing essential "qualification." See Burdine, 450 U.S. at 255, n.10, 101 S.Ct. at 1095, n.10; Loeb, 600 F.2d at 1014. Indeed, at this stage, though the range of possible reasons before the court has been reduced to only two, theoretically lessening claimant's burden to establish substantial probability of the necessary one, see Wratchford v. S. J. Groves & Sons Co., 405 F.2d at 1066, the burden has in fact been made more difficult to the extent the facts underlying the employer's specifically advanced explanation (as opposed to the explanation itself) stand essentially unrefuted. See Smith v. Flax, 618 F.2d at 1066-67.
42
Here, that is the case. The essential facts underlying defendant's articulated reason-the critical record indicia of unchecked and steady decline in performance results for at least the final two years of claimant's tenure as store manager and his refusal, for whatever reason, during that critical period to admit or to take corrective action specifically suggested by his employer-were not essentially refuted despite the opportunity to do so by way of showing the reason based upon them to be pretextual. Claimant's evidence on this score consisted essentially of offering his own opinion that corrective action was not needed and of pointing to other favorable performance indicia, while not refuting the validity of the unfavorable indicia nor their manifestly greater significance in evaluating his most recent performance; to testifying that his employer's fault-finding only commenced in the late stages of his tenure as store manager16 rather than demonstrating that no fault existed; and to the expression of his own opinion that his performance continued to meet reasonable expectations.
43
Taken all together-whether offered directly to establish the "qualification" predicate of the original presumption or to show defendant's proffered explanation of his demotion to be pretextual-claimant's evidence did not suffice to allow a jury to infer that age discrimination was a determinative factor in this demotion. Though age discrimination is undoubtedly a possibility in any case of this kind, and though its easy concealment is a constant danger in attempts to vindicate this statutory right, a jury may nevertheless not be allowed to infer it from evidence that does no more than suggest it as a possibility.
44
In addition to the bare facts that after a long period of unquestionably satisfactory and better performance this claimant at age fifty-five was demoted and replaced by a man six years younger, there is only the most meager evidence that might raise the theoretical possibility to the level of such substantial probability that a jury could rationally infer it as a determinative cause. There is the fact that the claimant himself held and expressed the opinion that his performance remained satisfactory notwithstanding the unrefuted indicia from business records that it was not. This, we have held, simply cannot in fairness be ascribed any significant probative force where the self-serving opinion is not corroborated by more objective ones. Smith v. Flax, 618 F.2d at 1067. There is the further fact that the employer did in the latter stages of claimant's tenure begin increasingly to find specific fault with his performance, and to suggest specific corrective measures. From this claimant argues that the jury could and should be allowed to (and possibly in this case did) infer a deliberate contrivance to set up claimant's demotion. Again, this is obviously a possibility, but the leap of inference required is simply too large to allow in logic and fairness. To accept it a jury would have to lay aside the unrefuted evidence that problems did exist and infer instead a deliberate scheme carried out carefully over a period of around two years, involving the extensive, venal efforts of several people and having as its final object only the demotion, not the outright discharge, of a single employee at the end of this extended plot. Such a leap of inference could only be by rank speculation and not by any rational processes of inference.
45
When, as is proper, the unrefuted basic facts underlying the employer's proffered explanation of the demotion are taken into account in assessing the reasonableness of the necessary inference, we are satisfied that the district court properly granted judgment n. o. v.
46
AFFIRMED.
47
ALBERT V. BRYAN, Senior Circuit Judge, concurs in the result.
1
The "high standard" rating is the second highest of four, falling below "excellent" and above "standard." The appraisal stated that Lovelace handled the $800,000 operation and staff of eleven with apparent ease, was able to make the "hard decisions," and had "no problems" in supervising. Special note was made of Lovelace's selling ability
2
Lovelace testified that he was never able to pinpoint the causes of this loss. The sales records show that every store in the district suffered a decrease in profits that year, although only one other store actually lost money
3
These criteria were retail sales ability, sales ability and account development, gross profit, operations and internal control, store appearance, personnel handling, and business planning
4
The January 1977 appraisal of Lovelace notes that Lovelace himself recommended Atkins as a potential replacement as manager in Asheville
5
The district court granted judgment n. o. v. on the general basis that the evidence was insufficient to permit the jury to find age discrimination. The full details of that assessment are not revealed on the record, but we review the sufficiency of the evidence under the same standard and independently of that assessment. 9 C. Wright & A. Miller, Federal Practice & Procedure: Civil § 2524 (1971)
The trial judge intimated some concern that perhaps no violation was established as a matter of law because the evidence showed that the claimant was not replaced by a person outside the protected age group. Defendant conceded on oral argument that on current authority this does not constitute an independent basis for the judgment. See, e.g., McCorstin v. United States Steel Corp., 621 F.2d 749, 753-54 (5th Cir. 1980); Loeb v. Textron, Inc., 600 F.2d 1003, 1012-13 (1st Cir. 1979). We agree that this is not an essential legal element of the ADEA claim, and do not rely upon it. Whether the absolute and relative ages of claimant and replacement may be factually relevant to the discrimination issue is, however, a different matter. See note 13, infra.
6
Principally, Board of Trustees of Keene State College v. Sweeney, 439 U.S. 24, 99 S.Ct. 295, 58 L.Ed.2d 216 (1978); Furnco Construction Corp. v. Waters, 438 U.S. 567, 98 S.Ct. 2943, 57 L.Ed.2d 957 (1978); International Brotherhood of Teamsters v. United States, 431 U.S. 324, 97 S.Ct. 1843, 52 L.Ed.2d 396 (1977)
7
The process must be one of deduction just as was the First Circuit's process in Loeb where the undertaking was to transpose the proof scheme devised for the orderly assessment by trial judges of evidence in a Title VII bench trial into guidelines for submitting an ADEA case to the jury under appropriate instructions. Our undertaking is to transpose the bench trial proof assessment scheme, as adapted for jury submission in Loeb, into principles controlling evidence sufficiency rulings in the ADEA jury trial context. We have not previously had occasion to address it systematically with benefit of Burdine 's most recent clarification of the bench trial principles. Loeb, decided before Burdine, and directly concerned with jury instruction problems, only alluded briefly to the related problem in dictum. 600 F.2d at 1016. Justice Powell's opinion for a unanimous Court in Burdine offers the clearest conceptual guidelines yet provided for making proper transposition of McDonnell-Douglas proof scheme principles from the bench trial context to rulings on evidence sufficiency in the ADEA jury trial, and we rely mainly on its analysis
8
For purposes of this analysis, demotion, discharge, refusal to promote and like actions affecting employees in place are essentially of a piece. They differ most critically from the refusal to hire decisions for which the McDonnell-Douglas presumption was originally devised in relation to the "basically qualified" predicate for the prima facie case. This has created a rather difficult problem of adaptation. See Loeb, 600 F.2d at 1013, 1014 (adapting to discharge claim)
9
This much is implicit from Justice Powell's analysis in Burdine, 450 U.S. at 254, 101 S.Ct. at 1094 ("If the trier of fact believes the plaintiff's evidence, and if the employer is silent in the face of the presumption, the court must enter judgment for the plaintiff because no issue of fact remains in the case."). Whether under any circumstances a directed verdict for plaintiff rather than merely a peremptory instruction dependent upon credibility determination would be appropriate we need not now consider. See Loeb, 600 F.2d at 1015; and see generally 9 C. Wright & A. Miller, Federal Practice & Procedure: Civil § 2535 (1971) (directing verdict for party having burden of persuasion)
10
Of course, in an appropriate case, where the evidence failed even to invoke the presumption, directed verdict would be appropriate at the conclusion of claimant's case-in-chief. See Loeb, 600 F.2d at 1016
11
See note 9, supra
12
It is at this point that one of claimant's main contentions on appeal fails. The contention is that once the prima facie case has originally been established, the case must of necessity be submitted to the jury. This is simply wrong as a matter of fundamental procedural principle. See Houser v. Sears, Roebuck & Co., 627 F.2d 756 (5th Cir. 1980)
13
As indicated, see note 5, an ADEA claim involving replacement by another does not require as a matter of law proof that the other was outside the protected age group. But absolute and relative ages of the claimant and his replacement have obvious relevance in assessing whether a factual inference of age discrimination is permissible. We agree with the First Circuit that
Replacement of a 60 year old by a 35 year old or even a 45 year old within the protected class would be more suggestive of discrimination than replacement of a 45 year old by a 42 year old within the protected class or a 39 year old outside it.
Loeb, 600 F.2d at 1013 n.9.
14
Though it is axiomatic that in ruling on this motion, courts are to consider the evidence in the light and with all inferences most favorable to the party opposing the motion, they should do so on the basis of all the evidence, not just that favorable to the non-mover. See Grooms v. Minute-Maid, 267 F.2d 541, 543 (4th Cir. 1959); Simblest v. Maynard, 427 F.2d 1, 4 (2d Cir. 1970); Boeing Co. v. Shipman, 411 F.2d 365, 374-75 (5th Cir. 1969) (en banc)
Particularly where, as here, unfavorable evidence (the low performance indicia) derives from unchallenged documentary sources relied upon in other respects by the non-mover, it is particularly appropriate to take it into account in assessing the reasonableness of the inference for which the non-mover seeks support in those sources.
15
Circumstantial evidence of a general "youth movement," or of a policy to get rid of older employees first in a general workforce reduction, or of a general plan to turn over management periodically to infuse "new blood," has obvious inferential force. See Smith v. Flax, 618 F.2d at 1066 (potential probative force recognized)
Claimant here adduced some evidence apparently designed to show a general youth movement or a calculated pattern of more favorable treatment for younger store managers. But, as in Flax, where a similar effort was made, the "testimony was conclusory and lacked specific factual examples," id.
The case of a 40-year old manager in defendant's Knoxville store was cited. Though that store lost money every year from 1971 to 1977, this manager was not demoted. But the evidence revealed that he did not become manager until 1977 and that the store produced its first substantial profit in eight years in the following year.
Again, in evidence which claimant did not see fit to bring forward in brief or appendix on this appeal, two other older store managers testified, as claimant's witnesses, about encounters with Cardwell. One, 55 years old, suggested that Cardwell overcompensated for this manager's health problems and created morale problems by interviewing his employees privately. The other, 61 years old, testified that in August 1978, Cardwell told him that new pressures were being put on store managers, that some-including Lovelace-were considering or being considered for moves to sales jobs with less pressure, and that this manager might want also to consider such a move.
Against whatever inference these isolated episodes were designed to create, there was the undisputed fact that at the time of claimant's demotion nearly half of the managers in the Asheville district were over 50 years old and fully a quarter of those in the mid-south region were older than claimant. It is perhaps understandable on this basis why claimant did not press any significance for this testimony on appeal.
16
The inferential force of this particular evidence must of course be measured against the undisputed fact that it was during this period that for the first time in claimant's tenure there was apparent cause for great concern with his performance | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/410371/ | 692 F.2d 172
Anne M. MAKUC, et al., Plaintiffs, Appellants,v.AMERICAN HONDA MOTOR CO., INC., et al., Defendants, Appellees.
No. 82-1725.
United States Court of Appeals,First Circuit.
Oct. 21, 1982.
Louis Kerlinsky, Springfield, Mass., for plaintiffs.
Karl L. Gollub, David H. Sempert, Cornell & Gallub, Boston, Mass., for appellees.
Before CAMPBELL, BOWNES and BREYER, Circuit Judges.
MEMORANDUM AND ORDER
1
Two notices of appeal have been filed seeking review of the district court's order dismissing one of the defendant's below. In addition the second notice of appeal seeks review of the district court's refusal to enter judgment under Rule 54(b) F.R.Civ.P. To the extent that the notices seek review of the dismissal they are premature because judgment has not yet been entered under Rule 54(b).
2
The question of review of the denial of a Rule 54(b) motion is more difficult. While Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 437, 76 S.Ct. 895, 900, 100 L.Ed. 1297 (1956) suggests that the district court's actions with regard to a Rule 54(b) motion are reviewable for abuse of discretion we think that, in context, that holding is limited to cases in which the motion is granted. Indeed, we are unaware of any cases in which a court of appeals has reviewed the denial of a Rule 54(b) motion though there are a number of cases where the granting of such motions has been reviewed. See, e.g., Brunswick v. Sheriden, 582 F.2d 175 (2nd Cir.1978) and Zangardi v. Tobriner, 330 F.2d 224 (D.C.Cir.1964). Indeed, as we have previously noted, we are not aware of cases where mandamus powers have been applied to require the granting of a 54(b) motion. In re Bromley-Health Modernization Committee, 448 F.2d 1271 (1st Cir.1971).
3
Drawing a distinction between the appealability of granting such a motion and of denying the same does not create a contradiction. Indeed, it would seem wholly consistent with the purposes of the rule and the finality doctrine embodied in 28 U.S.C. Sec. 1291.
4
When a Rule 54(b) motion is granted the normal policy against piecemeal review is stretched. Were a district court to improvidently grant such a motion it would permit appellate jurisdiction where no jurisdiction was intended. Quite naturally the appellate courts will review such orders to determine their correctness for if they are erroneous the reviewing court lacks jurisdiction.
5
On the other hand, when the district court denies a 54(b) motion, the policy against piecemeal review is preserved. Indeed, allowing appellate review of the denial of a 54(b) motion would go a long way towards enshrining piecemeal review, the very opposite of the policy the rule is intended to support. See Notes of the Advisory Committee to the 1946 Amendment to Rule 54. To be sure, such review would be limited to determining whether an abuse of discretion had occurred; but in today's litigious world, where dockets are readily increasing, we cannot say that the addition of appeals of this character would not impose significant additional burdens both upon courts and opposing litigants. The order, moreover, is obviously interlocutory and thus not subject to review itself under 28 U.S.C. Sec. 1291 unlike an order granting a Rule 54(b) motion which, by definition, creates an appealable judgment under 28 U.S.C. Sec. 1291.
6
Since we know of no clear precedent to the contrary and since we believe the general policy strongly supports it, we hold that the denial of a Rule 54(b) motion is not generally appealable. Since the other underlying order referred to in the notices of appeal is not appealable absent the granting of the Rule 54(b) motion, the appeal is dismissed. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/480559/ | 807 F.2d 359
Fed. Sec. L. Rep. P 92,987, 21 Fed. R. Evid. Serv. 1283Silvia L. ADALMAN; George S. Allen; Bernard Ansher; IreneB. Ansher; Laurence Banyas; J. Frank Belford, Jr.; GraceC. Belford; Juan M. Cameron; Nora L. Cameron; Dale AnnCooke; Dennis D. Donahue; Gretchen J. Donahue; Stanley H.Engle; Marilyn J. Engle; Harry Feinberg; Douglas S.Goodwin; John F. Griffin; Ridgway M. Hall, Jr.; AnneHarken Hall; Donald V. Kane; Lois Jean Kane; Samuel J.Floyd, Jr.; Malcolm R. Lovell, Jr.; Celia C. Lovell;Warren L. Miller; O/G Recovery Partners, a MarylandPartnership; Richard A. Slifer; Kristine R. Slifer;Gifford Weary and Robert K. Weary, Jr., Appellees,andGerald J. Bowes and Luther C. Dilatush, Plaintiffs,v.BAKER, WATTS & CO., a Maryland Partnership, Appellant.Edgar M. BOYD; N. Clark Moran; Paul Berghaus; B-WResources, Inc., a Maryland Corporation and ScottW. Williams, Defendants,v.JULIA M. WALSH & SONS, INC.; Henry T. Donaldson; Thomas D.Walsh; Douglas R. Bevers and Elkins & Co., aDivision of Prudential Bache Securities,Inc., Third-Party Defendants.Silvia L. ADALMAN; George S. Allen; Bernard Ansher; IreneB. Ansher; Laurence Banyas; J. Frank Belford, Jr.; GraceC. Belford; Juan M. Cameron; Nora L. Cameron; Dale AnnCooke; Dennis D. Donahue; Gretchen J. Donahue; Stanley H.Engle; Marilyn J. Engle; Harry Feinberg; Douglas S.Goodwin; John F. Griffin; Ridgway M. Hall, Jr.; AnneHarken Hall; Donald V. Kane; Lois Jean Kane; Samuel J.Floyd, Jr.; Malcolm R. Lovell, Jr.; Celia C. Lovell;Warren L. Miller; O/G Recovery Partners, a MarylandPartnership; Richard A. Slifer; Kristine R. Slifer;Gifford Weary and Robert K. Weary, Jr., Plaintiffs,andGerald J. Bowes and Luther C. Dilatush, Appellants,v.BAKER, WATTS & CO., a Maryland Partnership, Appellee.Edgar M. BOYD; N. Clark Moran; Paul Berghaus; B-WResources, Inc., a Maryland Corporation and ScottW. Williams, Defendants,v.JULIA M. WALSH & SONS, INC.; Henry T. Donaldson; Thomas D.Walsh; Douglas R. Bevers and Elkins & Co., aDivision of Prudential Bache Securities,Inc., Third-Party Defendants.
Nos. 85-1964(L), 85-1965.
United States Court of Appeals,Fourth Circuit.
Argued March 3, 1986.Decided Oct. 31, 1986.
1
John Henry Lewin, Jr. (Thomas F. O'Neil, III, Geoffrey R. Garinther, Venable, Baetjer & Howard, Baltimore, Md., David S. Cupps, Joseph D. Lonardo, Vorys, Sater, Seymour & Pease, Columbus, Ohio on brief), for Baker, Watts & Co.
2
Gerson B. Mehlman (Wilbur D. Preston, Jr., John M. Belferman, Whiteford, Taylor & Preston, Baltimore, Md., on brief), for Gerald J. Bowes and Luther C. Dilatush.
3
David Machanic (John A. Ritchie, Joan L. Loizeaux, Pierson, Ball & Dowd, Washington, D.C., on brief), for Appellees.
4
Before HALL and SPROUSE, Circuit Judges, and MICHAEL, United States District Judge for the Western District of Virginia, sitting by designation.
5
MICHAEL, District Judge.
6
This case presents for resolution several issues which have arisen out of the use of the so-called "tax shelter".
I. FACTS
7
The controversies evolved from the relationships between Baker, Watts & Company, a Maryland investment banking partnership (hereinafter Baker, Watts), and Superior Petroleum, Inc. (hereinafter Superior), a closely-held Ohio corporation engaged in drilling for gas and oil in Ohio. In early 1981, certain partners, employees and counsel for Baker, Watts bought one-third of the outstanding stock of Superior, and two of the Baker, Watts personnel became members of the five-member board of directors of Superior. At that time, Baker, Watts was also the largest contributor of funds to finance Superior's drilling activities.
8
Subsequently, in the spring of 1981, Baker, Watts undertook to serve as the dealer-manager for a private offering of limited partnership interests in a tax shelter investment which was denominated "Superior Drilling Partners No. 81" (hereinafter the Partnership), in which Superior was a general partner. Under the agreement, Baker, Watts would offer and sell in interstate commerce, on a best-efforts basis, limited partnership interests in the partnership. In its capacity as a dealer-manager, Baker, Watts entered into soliciting dealer agreements with two securities dealers, Julia M. Walsh & Sons (hereinafter Walsh) and Elkins & Co. (hereinafter Elkins), in which both agreed to use their "best efforts" to find investors to purchase the limited partnership interests.
9
In preparation for the selling effort, Baker, Watts prepared a lengthy Confidential Offering Memorandum, which served essentially as a prospectus for the offering. The document was furnished to all investors, either directly from Baker, Watts, or through the soliciting dealers. Baker, Watts stringently required Walsh and Elkins to use only the Offering Memorandum in soliciting investors. Walsh and Elkins were directed to make no representations of any sort concerning the offering other than those representations contained in the Offering Memorandum. The Memorandum contained a number of references to Baker, Watts as an "affiliate" of the general partner, Superior. The Memorandum provided that each limited partnership interest would be sold for $75,000, half to be paid in cash, and the other half in the form of promissory notes secured by letters of credit. This permitted the investors to defer payment of half the purchase price while realizing immediately income tax deductions permitted for this type of investment.
10
Thirty-one investors purchased interests worth a total of $1,702,500 during the course of the private offering, which opened on March 9, 1981, and closed on June 1, 1981. Nineteen of these investors purchased their interests through the soliciting dealers, Walsh and Elkins, and ten investors purchased their interests through Baker, Watts. Unfortunately for the rosy expectations of the parties, Superior ran into financial difficulties in the spring of 1982, and these problems were magnified by the untimely death of Superior's president in June of 1982. These events brought the Partnership into receivership in June of 1982, and the Clinton Oil Company took over operation of the Partnership, though it ultimately proved to be unprofitable. The letters of credit of the various investors were called in December 1982, thus effectively terminating the Partnership and resolving the matter of payment for the interests which had been purchased by the investors.
11
In April of 1983, the investors as a group filed suit against Baker, Watts and several others, alleging violations of numerous state and federal securities laws, and seeking rescission of the original investment contracts and restitution. All counts were eventually dismissed by stipulation, except those counts which charged violations of Sec. 12(2) of the Securities Act of 1933, 15 U.S.C. Sec. 77l(2), and Maryland Corporations and Associations Code Sec. 11-703(a)(1)(ii). The core of these remaining counts focused on the allegation that those persons listed in the Offering Memorandum as being "associated" with Baker, Watts negotiated with, and eventually sold their stock in Superior, to Anthony Biondi, Superior's president, such negotiation being carried on during the offering period, with the sale to Biondi occurring shortly after the close of the offering period. This information was never disclosed to any of the individual investors or to the soliciting dealers at any time before the offering was closed. In fact, an employee at Baker, Watts who was responsible for the Partnership's gas and oil investments and who handled negotiations for the sellers of Superior stock, Hugh Grady, stated at trial that he had not revealed the negotiations between the "affiliates" and Superior because he felt that disclosure of this information would have an adverse, and likely fatal, effect on the offering.
II. ISSUES PRESENTED
12
The issues presented for resolution on appeal are as follows:1. Did the District Court err in instructing the jury that Baker, Watts was a "seller" as to all plaintiffs within the meaning of Sec. 12(2) of the Securities Act of 1933?
13
2. Did the District Court err in refusing Baker, Watts permission to call an expert witness to testify concerning the Superior stock sale, under the circumstances of this case?
14
3. Did the District Court err in its determination of the plaintiff's damages by disregarding the tax benefits received by the plaintiffs as a result of their investment in the limited partnership?
15
4. Did the District Court err in its rulings and in its instructions to the jury on the issue of causation?
16
5. Did the District Court err in directing a verdict against two plaintiffs, Bowes and Dilatush?
III. DISCUSSION
17
A. The District Court's instruction that Baker, Watts was a "seller" within the meaning of Sec. 12(2)
18
The court below found as a matter of law that Baker, Watts was a seller within the meaning of Sec. 12(2) "with respect to all of the plaintiffs in this case, whether they purchased from Baker, Watts or through other broker/dealers." Section 12(2) of the Securities Act of 1933 reads in pertinent part as follows:
19
Any person who ... offers or sells a security ... by the use of any means or instruments of transportation or communication in interstate commerce or of the mails, by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statement, in the light of the circumstances under which they were made, not misleading (the purchaser not knowing of such untruth or omission), and who shall not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of such untruth or omission, shall be liable to the person purchasing such security from him who may sue either at law or in equity in any court of competent jurisdiction, to recover the consideration paid for such security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if he no longer owns the security.
20
15 U.S.C. Sec. 77l(2) (emphasis added). In applying this section to the present case, it is obvious that a determination of who "sells a security" requires a determination of whether an entity is a "seller" of securities under the Act. The circuit courts, however, have diverged in their attempts to define who is and is not a "seller" under the Act.
21
Much of the courts' inquiries into this matter have focused on the concept of "privity of contract". Two circuits have required that liability under Sec. 12(2) as a "seller" must be premised upon strict privity between the buyer and seller, so that a plaintiff may sue only his immediate seller. See, Sanders v. John Nuveen & Co., Inc., 619 F.2d 1222, 1226 (7th Cir.1980); Collins v. Cignetics Corp., 605 F.2d 110, 113 (3rd Cir.1979). However, this Circuit has taken a broader view of the statute, and has allowed a plaintiff to sue a defendant under Sec. 12(2) where that defendant is a "significant participant" in, or one who "proximately caused", a sale of securities. See, e.g., Admiralty Fund v. Jones, 677 F.2d 1289, 1294 (9th Cir.1982). In Lawler v. Gilliam, 569 F.2d 1283, 1287-88 (4th Cir.1978), we fully considered this issue, and held that the status of the entity as a "seller" of securities should be determined by whether the entity was a "substantial factor" in the sale of the securities.
22
In most of the decisions on this issue, suit was commenced against the broker-dealers. Here, however, plaintiffs seek to establish that Baker, Watts, the dealer-manager of the Partnership, was a "seller" of the securities. We pause to note that although the "substantial factor" test has been applied almost exclusively to broker-dealers, nothing in law or logic indicates that this test should not likewise be applied to a dealer-manager in the position of Baker, Watts.
23
Baker, Watts sought to resolve this issue in its favor in a pre-trial motion for summary judgment. 599 F.Supp. 749. The court below denied that motion, stating that:
24
Baker, Watts was the exclusive agent for the purpose of finding investment subscribers, and organized the entire offering; it had total responsibility for selecting other soliciting dealers who were authorized to offer and sell the unit under a fee-sharing management with it. Baker, Watts alleges that those plaintiffs who purchased through other dealers were induced to buy, not by its actions, but by statements and negotiations made by the soliciting dealers. Whether its activities were a "substantial factor" in causing plaintiffs to purchase through dealers such as Walsh is a question of fact which remains in dispute. The extent of its involvement in those negotiations must await resolution by the trier of fact.
25
In Lawler, applying a "substantial factor" test, we found that the definition of "seller" only excludes those persons "who execute an unsolicited order or whose minor role in the transaction shows they have no causal connection with it ..." 569 F.2d at 1287. We perceive no legal reason why the "substantial factor" test should not likewise be used in determining a dealer-manager's status as a "seller", and we hold that such a "substantial factor" test is appropriately applied to determine a dealer-manager's status as a "seller". The record below thoroughly documented the activities of Baker, Watts' participation in and management and direction of the sale of these securities. Baker, Watts did not perform merely mechanical actions of an underwriter or broker. First, Baker, Watts, was clearly an affiliate of the issuer, and it put the entire limited partnership offering together. In addition, of considerable importance under the "substantial factor" test, Baker, Watts ensured that it alone would control any and all information communicated to potential investors through its strict requirement that the broker-dealers use only the Offering Memorandum prepared by Baker, Watts in soliciting investors.
26
As shown in the pertinent part of the Soliciting Dealer Agreement between Baker, Watts and Walsh, dated 9 March 1981 Baker, Watts required of Walsh adherence to the following strictures in selling the interests:
27
1. Solicitation Material. In soliciting subscriptions for the Units you are authorized to use only the Confidential Memorandum furnished to you by the Dealer Manager, and you agree not to publish, circulate or otherwise use any other solicitation material or advertisement without the prior written approval of the Dealer Manager. Neither you nor any other person shall make any representations or furnish any information in connection with the offering or sale of the Units other than those contained in the Confidential Memorandum.
28
Furthermore, Baker, Watts determined the terms and conditions of the sales, acted as the administrator and holder of the letters of credit, and was paid a consulting fee for these services. In the face of these facets of Baker, Watts' participation in and management and control of the selling arrangements, we cannot accept Baker, Watts' contention that it had no significant role in soliciting the various sales implemented through the dealers.
29
Significantly, no evidence was ever offered below to contradict the evidence of Baker, Watts' involvement in the sales save for some self-serving, conclusory statements made by certain Baker, Watts personnel. Because no contradictory evidence of any weight existed, the court below found as a matter of law that Baker, Watts met the "substantial factor" test. The court instructed the jury after the close of evidence that "Section 12(2) applies to any person who offers or sells a security. I instruct you that Baker, Watts is a seller with respect to all of the plaintiffs in this case whether they purchased from Baker, Watts or through other broker/dealers." While this charge represented a change from the court's ruling on Baker, Watts' motion for summary judgment, it was obviously based upon a complete review of all the evidence at the close of the trial.
30
We thus find that, based upon the affirmative evidence before the court concerning Baker, Watts' role in the arrangement of the Partnership, and the sale of limited partnership interests, and the lack of any meaningful contravening evidence, the court below did not err in applying the "substantial factor" test, or in finding that Baker, Watts was in fact a "seller" within the meaning of Sec. 12(2).
31
B. The District Court's refusal to allow a Baker, Watts expert witness to testify
32
In considering this assignment of error, we begin by stating the issue as it is stated in the briefs. The appellant states this issue as follows:
33
Did the district court err in refusing to permit Baker, Watts & Co., to call an expert witness after ruling, sua sponte, that another witness, who had been identified in the pretrial Order, could not testify as an expert?
The appellee states this issue as follows:
34
The District Court Did Not Err In Refusing To Permit Baker, Watts To Call An Expert Witness Under the Circumstances That Occurred At Trial.
35
The slightly varying statements of this issue thus deal implicitly with the discretion of the court below to refuse the offer of an expert witness, and in fact much of the briefs of the parties deals with the issue of discretion, the timing of the proffer of the excluded expert, and similar matters bearing on the exercise of discretion. Consideration of the record, however, reveals a deeper question which must engage the attention of this court, as well as the issue of proper use of trial court discretion. This deeper question was not dealt with in the briefs or in oral argument of the case before this court.
36
From the discussion, supra, it is obvious that the omission from the Confidential Memorandum of the information about the negotiations for sale by Baker, Watts personnel of their stock to Biondi was a crucial factor, if not the crucial factor, in the plaintiffs' case. Flowing from that was the question whether the omitted information was "material" to the investment decision, as that question is discussed infra.
37
In the effort to defeat the plaintiffs' case, Baker, Watts tendered Mr. Timothy Casgar as an expert witness to testify as to his conclusion that the applicable law did not require the disclosure of the omitted information. From the record, it is apparent that Baker, Watts intended to call Professor James Cheek and Mr. Casgar, the latter of whom had been legal counsel to Baker, Watts and to the partnership, to testify, as expert witnesses, that there existed no legal requirement that the negotiations between Baker, Watts personnel and the president, Mr. Biondi, of Superior be disclosed.
38
The analysis is somewhat diverted from what we consider to be the deeper question by the ruling of the court below that it would not permit Casgar to testify as an expert witness because Casgar was "an individual who is involved in the litigation." This statement was made by the court to counsel during the first trial below, which ended in a mistrial. The trial court further indicated that Baker, Watts could obtain an independent expert witness who could be deposed by plaintiffs following the mistrial and before the retrial began.
39
As it developed, Dr. Cheek, described as an "attorney[s] with experience with disclosure documents under the securities laws," was not able to be present to testify at either the trial or the retrial. Casgar remained as the only expert witness as to the disclosure requirements of the securities laws listed by Baker, Watts, as included in the Pre-Trial Order.
40
Thus is presented the deeper issue raised in the record in this case, though stated only by inference in the Statement of the Issue by the parties, and, as noted, not dealt with in the briefs and arguments of the parties. That is, to what extent may the parties call expert witnesses, lawyers in this case, to testify to the jury as to what the applicable law may mean, and what the applicable law does or does not require?
41
While this case turns on the applicability and meaning of the securities laws, the issue as just stated obviously has a far broader reach than securities cases. If such experts are to testify to the meaning and applicability of securities laws, what line is to be drawn to exclude tort lawyers from offering their expert opinions to the jury as to the meaning and applicability of the laws governing tort litigation? Examples of this sort could be multiplied across the gamut of litigation.
42
The analysis here begins with the proposition that under our system it is the responsibility--and the duty--of the court to state to the jury the meaning and applicability of the appropriate law, leaving to the jury the task of determining the facts which may or may not bring the challenged conduct within the scope of the court's instruction as to the law.
43
Under circumstances involving domestic law, this court can conceive of no circumstances which would shift this burden from the court to the jury, where the jury judgment would be influenced, if not made, on the basis of expert witness testimony which would undoubtedly follow the usual pattern of conflicting expert opinions. Permitting such testimony as to legal conclusions gives cogent meaning to the "apprehensions that jurors will turn to the expert, rather than to the judge, for guidance on the applicable law." 3 Weinstein and Berger, Weinstein's Evidence, 704-14 (1985).
44
There are cases, particularly those involving foreign law, where the court may receive and consider the opinions of experts in that foreign law, usually practitioners in that law, as to the meaning and applicability of that law to a controversy pending in one of our courts. There, however, the significant difference is that such expert witness evidence is presented to the court--not to the jury--to aid the court in formulating its charge in the relatively rare such cases in which a jury is involved. No factors favoring such use of experts, e.g., problems of translation, or understanding of the requirements of a different legal system, are presented in this case.
45
The proffer of expert opinion in many cases raises problems difficult of resolution by the trial court, where the line must be drawn between proper expert evidence as to facts, the inferences to be drawn from those facts, and the opinions of the expert, on the one hand, and testimony as to the meaning and applicability of the appropriate law, on the other hand. While sometimes difficult to discern that line, especially in the heat of trial, it nonetheless must be drawn.
46
In this case itself it appears that Mr. Casgar's testimony on cross-examination on matters other than the omission of the stock sale negotiations may well have verged on transgression into Casgar's offering to the jury his opinion as to the governing law. Casgar testified that "What an investor relies on is going to be up to him--I'm not sure what that is. Legally the offering is made through the offering memorandum." (emphasis added). While this involves a relatively minor point, it emphasizes the difficulty of drawing the appropriate line. This answer was, however, in cross-examination, and no effort to strike or modify the answer was made.
47
Perhaps the case most nearly on point to this case is Marx & Co., Inc. v. Diner's Club, Inc., 550 F.2d 505 (2nd Cir.1977) cert. denied 434 U.S. 861, 98 S.Ct. 188, 54 L.Ed.2d 134 (1977), which involved something of the same fact pattern as in the case before us, in that Marx involved securities law, though in a case brought under Sec. 10(b) of the Securities Exchange Act of 1934.
48
In Marx, a plaintiff's witness was qualified as an expert in securities law. The issues there related to the construction of a contract between the parties and the validity of certain defenses advanced by Diner's justifying its performance under the contract. The expert, one Friedman, was permitted to testify fully on both these issues, over the vigorous objection of counsel for the defendant, based principally on the argument that certain of the opinions of Friedman stated "a legal conclusion."
49
The record in Marx is somewhat more instructive than the record in this case since Friedman was permitted to testify fully as an expert, stating legal conclusions, evidencing clearly the vice of opening this gate to the admission of testimony of experts as to legal conclusions.
50
In Marx, the court cogently delineates permissible and impermissible areas for testimony from the securities laws expert, saying:
51
We hold that the District Court erred in permitting Friedman, an expert witness called by plaintiffs, to give his opinion as to the legal obligations of the parties under the contract.... Friedman was qualified as an expert in securities regulation, and therefore was competent to explain to the jury the step-by-step practices ordinarily followed by lawyers and corporations in shepherding a registration statement through the SEC....
52
Mr. Friedman gave expert testimony that six to eight weeks was all that should have been necessary to effectuate a registration statement because 'much of the work going into it had already been done' in the preparation of a proxy solicitation filed by the surviving corporation in a merger. This testimony concerned the practices of lawyers and others engaged in the securities business. Testimony concerning the ordinary practices of those engaged in the securities business is admissible under the same theory as testimony concerning the ordinary practices of physicians or concerning other trade customs: to enable the jury to evaluate the conduct of the parties against the standards of ordinary practice in the industry. (citations omitted).
53
In the case at bar, however, witness Friedman's objectionable testimony did not concern only the customary practices of a trade or business. Rather, he gave his opinion as to the legal standards which he believed to be derived from the contract and which should have governed Diners' conduct. He testified not so much as to common practice as to what was necessary 'to fulfill the covenant' [of the contract]....
54
See Marx, supra at pps. 508, 509 (emphasis in original).
55
Perhaps the most trenchant statement on this point is also drawn from Marx, where the court states,
56
The basis of expert capacity, according to Wigmore (Sec. 555) may 'be summed up in the term "experience" '. But experience is hardly a qualification for construing a document for its legal effect when there is a knowledgeable gentleman in a robe whose exclusive province it is to instruct the jury on the law....
57
In this case, Mr. Casgar was listed as a proposed expert witness in the Pre-Trial Order as "an attorney with experience with disclosure documents under the securities laws." So far as this description goes, Casgar might well have been qualified to testify as an expert under the guidelines set out above, absent any other disqualifying factor, dealing with "the step-by-step practices ordinarily followed by lawyers and corporations" in activities regulated by the securities laws. However, the record reveals clearly what the defendants sought to elicit from Casgar. Well before Casgar was proffered as an expert witness, the following colloquy between defendants' counsel and the court took place:
58
MR. CUPPS: What I'm saying is I did not want to be met with an objection to adducing ... opinion evidence from him on the ground that I haven't disclosed that he would express such statements in the pre-trial order.
59
....
60
He is not a retained expert. He will express his opinion, of course.
61
THE COURT: No, he will not.MR. CUPPS: As a lawyer, Judge.
62
Joint App., p. 468.
63
Casgar was called and testified at length as a fact witness concerning the entities forming a limited partnership, the functions of a dealer-manager, etc., but began explaining legal terms, specifically the difference between a contract and an option, when the examination along these lines was ended by the court, saying:
64
... I will allow him to testify factually at what was done and why it was done but I will not allow him to give any opinion that it wasn't legally required or wasn't material or whatever else it may be....
65
Joint App., p. 685.
66
The efforts to have Casgar testify at trial as to legal requirements, rebuffed by the court, by no means ended the matter. In the Appellant's Reply Brief, at page 11, dealing with the exclusion of that portion of Casgar's testimony, it is stated:
67
Expert opinion would have been helpful to the jury because, in the absence of something more tangible than Biondi's vague overtures about acquiring stock, securities practice and legal requirements may not have called for disclosure of these inchoate transactions.
68
(emphasis added).
69
The Reply Brief cites two cases, Greenfield v. Heublein, Inc., 742 F.2d 751 (1984), cert. denied, 469 U.S. 1215, 105 S.Ct. 1189, 84 L.Ed.2d 336 (1985) and TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 96 S.Ct. 2126, 48 L.Ed.2d 757 (1976), for the proposition that some information may not be of such nature as to require disclosure, but these cases are inapposite to the issue here, as to whether Casgar may testify to legal conclusions.
70
From beginning to end, it is obvious that Appellants proffered Casgar as an expert witness to testify in substantial part to the meaning and applicability of the securities laws to the transactions here, giving his expert opinion on the governing law. This flies squarely in the face of the precedent--and the logic of that precedent--set out in Marx, supra.
71
Thus, the court sustains the action of the court below in excluding the testimony of Casgar as an expert, though as indicated the court's reasoning on this point differs in some degree from the reasoning of the trial court in excluding that testimony.
72
Application of revised Rule 704(a) of Fed.R.Evid. does not change this conclusion. That rule provides that "testimony in the form of an opinion or inference otherwise admissible is not objectionable because it embraces an ultimate issue to be decided by the trier of fact." (emphasis added).
As the annotation to Rule 704(a) notes:
73
The abolition of the ultimate issue rule does not lower the bars so as to admit all opinions. Under Rules 701 and 702, opinions must be helpful to the trier of fact, and Rule 403 provides for exclusion of evidence which wastes time. These provisions afford ample assurances against the admission of opinions which would merely tell the jury what result to reach, somewhat in the manner of the oath-helpers of an earlier day....
74
In earlier days, the proscription of testimony on the "ultimate issue" was, in the commoner fact patterns, based on the conclusion that such testimony "usurped the province of the jury." Rule 704(a) removes that proscription, but it should not, and does not, permit the expert witness to usurp the province of the judge.
75
We conclude that such evidence as that proposed to be adduced from Casgar as an expert is not admissible, and thus falls within the bar imposed by the "otherwise admissible" language of Rule 704(a). See Marx, supra, at 512, where the court stated,
76
[r]ecognizing that an expert may testify to an ultimate fact, and to the practices and usages of a trade, we think care must be taken lest, in the field of securities law, he be allowed to usurp the function of the judge....
77
Turning now to the other issues raised in connection with the refusal to allow Baker, Watts to call an expert, the court below notified counsel for Baker, Watts during the first trial, which, as noted, ended in a mistrial, that it would not permit Casgar, "an individual who is involved in the litigation", to testify as an expert witness. At that time, the court also indicated that Baker, Watts could obtain an independent expert witness and allow him to be deposed by the plaintiffs following the mistrial, and before the retrial.
78
On retrial, the court below maintained its position, and would not accept Casgar as an expert witness, though he was allowed to testify at length as a fact witness concerning the negotiations and why they took place. For the reasons indicated above, the exclusion of expert testimony from Casgar as to legal conclusions is affirmed here.
79
At the time of the second trial, which began on 6 May 1985, Baker, Watts did not immediately tender an independent expert. Rather, Baker, Watts produced that independent expert on 15 May 1985, just at the conclusion of trial testimony, and had identified that independent expert to plaintiff's counsel on 13 May 1985. However, the court refused to permit the independent expert to testify, both because he had not been listed in any of the pre-trial orders, and, more importantly, had not been identified to plaintiff's counsel until 13 May 1985. The court below further indicated that had this last expert witness been made available to the plaintiffs for deposition shortly after the 29 April 1985 ruling regarding Casgar, the court would have allowed the witness to testify. The record does not reveal any reason for Baker, Watts' failure to identify the independent expert between 29 April 1985 and 13 May 1985.
80
A trial court's discretion to exclude evidence on the ground that it is outside the scope of its pre-trial order is broad, and in this case, the failure to identify to the plaintiff's counsel the independent expert until 13 May 1985 is a significant factor upon which the trial court's discretion is to be exercised. Generally, such rulings will not be reversed unless the trial court has clearly abused its discretion. See U.S. v. Koziy, 728 F.2d 1314 (11th Cir.1984); Hodges v. U.S., 597 F.2d 1014 (5th Cir.1979). In neither of these cases, however, was the fact pattern as to the time of disclosure of the independent expert even remotely similar to the fact pattern in this case. Several factors must be weighed in analyzing whether the exercise of discretion in these cases on the part of the trial judge is proper, those factors include, but not being limited to,
81
1. the surprise to the party against whom the witness was to testified,
82
2. the ability of the party to cure that surprise,
83
3. the extent which allowing the testimony would disrupt the trial,
84
4. the explanation for the party's failure to name the witness, and
85
5. the importance of the testimony.
86
See Koziy, supra, at 728 F.2d 1320-21. Murphy v. Magnolia Electric Power Association, 639 F.2d 232, 235 (5th Cir.1981); Meyers v. Penneypack Woods, 559 F.2d 894, 904 (3rd Cir.1977).
87
Under the first factor, it is difficult to conclude that Baker, Watts' tender of an independent expert could have caused a great deal of surprise to the plaintiffs. The manner in which the case evolved, and particularly the various colloquies between counsel and the court concerning Mr. Casgar put the plaintiffs on notice that it was possible that an independent expert would be testifying at some point in the Baker, Watts case.
88
The second factor presents more difficulty. The independent expert witness was tendered only on 15 May 1985, although he had been identified to the plaintiffs' counsel on 13 May 1985, 15 May 1985 being very near the close of the second trial. Even though counsel for the plaintiffs may have anticipated that such an independent expert would be tendered at some reasonable time after 29 April 1985, Baker, Watts' failure to identify that independent expert until 13 May 1985 could well have limited plaintiffs' abilities to counter that expert's testimony. The background and qualifications of both Cheek and Casgar were known to plaintiffs' counsel, but that appears not to have been true as to the independent expert.
89
Under the third factor, there is nothing in the record to indicate that allowing the testimony of the independent expert would have disrupted or delayed the trial.
90
Under the fourth factor, nothing in the record explains, satisfactorily or otherwise, Baker, Watts' failure to name the independent expert witness before 13 May 1985. This is damaging to Baker, Watts' arguments here in light of the colloquies which had occurred previously between Baker, Watts' trial counsel and the court.
91
In dealing with the fifth factor, it is important to bear in mind the holding of the court stated supra, to the effect that an expert witness would not be permitted to testify so as to state a conclusion of law, or the meaning and applicability of the securities laws to the facts in this case. Mr. Casgar was permitted to testify as a fact witness extensively on the practices of the trade and profession, and on the manner in which a transaction such as this was put together. Having previously indicated that Casgar's testimony was properly limited to this area, the testimony of the independent expert witness would likewise be so limited. Considering the length of Casgar's testimony, as revealed in the joint appendix, it is reasonable to assume that the testimony of the independent expert, delimited as noted above, would have been simply cumulative. It might be argued that the cumulative effect would be helpful, in that Casgar was "an individual who is involved in the litigation," so that his testimony might be felt by the jury to be perhaps less credible. However, from detailed review of the joint appendix, it appears that there was little or no controversy concerning the admissible portions of Casgar's testimony. In other words, there was not any serious conflict from any other witness concerning Casgar's admissible testimony. Where additional testimony might well be desirable to bolster the credibility of a witness whose testimony has been controverted, there is far less reason to cumulate the evidence where the testimony of the first witness had not been controverted in any substantial matter, as was the case here.
92
Consequently, we cannot conclude that the trial court abused its discretion in denying the use of the independent expert witness, both because that witness had not been disclosed to plaintiffs' counsel until two days before the actual tender of the witness very close to the end of the trial, and because the testimony of that independent expert witness would have been cumulative of the uncontroverted admissible testimony of Mr. Casgar.
93
As a consequence of this analysis of the five factors indicated in Koziy, supra, the court concludes that the trial court did not abuse its discretion in rejecting the evidence of the independent expert witness.
94
One minor point should be further explicated here. The court below indicated as a reason for preventing the testimony of Casgar as an expert witness the fact that he was "an individual who is involved in the litigation." This court is aware of no authority, nor has any been advanced, indicating that simply because a person has such involvement he is necessarily precluded from qualification as an expert. In other fact situations, where the proposed expert witness might be so involved, opposing counsel could well attack the credibility of that witness as to his admissible evidence, not only with evidence contravening that which the witness had given, but also in argument to the jury. Here, however, as stated supra, there was little or no contravening of Casgar's admissible testimony. Consequently, there was little or no reason to argue credibility of Casgar to the jury. Such questions of credibility, of course, usually go to the weight to be given to the offered testimony, and not to the admissibility of the expert witness testimony.
95
C. The District Court's determination of the plaintiff's damages
96
Section 12(2) plainly indicates that a plaintiff may attempt to recover the consideration he paid for a security, "less the amount of any income received thereon". The court below instructed the jury to disregard "any tax benefits the plaintiffs may have enjoyed as a result of the investment in these partnership interests."
97
Very few cases have dealt with the question of offsetting a damage award in the securities cases with tax benefits received by a plaintiff. We take time now to discuss briefly these cases. In Austin v. Loftsgaarden, 675 F.2d 168 (8th Cir.1982), the plaintiffs brought a securities fraud action against the organizer of a partnership in a real estate tax shelter. At trial, the defendant attempted to show that the plaintiffs were, in fact, money ahead by virtue of the tax benefits they had received, even though the investment itself had failed. The jury found the defendant liable for violation of Section 12(2), and awarded damages to the plaintiff. On appeal, the Eighth Circuit affirmed the liability findings, but set aside the damages award, holding that the District Court erred in "refusing to allow proof of any economic benefits received by plaintiffs on account of the investment and in failing to instruct the jury that the damages award must be reduced by any value shown to have been received by plaintiffs." 675 F.2d at 181. The Court also held that Sec. 12(2) "implicitly" incorporates the principle of "actual damages" and that "income received", as used in the statute, should be construed to include tax benefits bargained for and received in a tax shelter investment. "[I]n a private securities fraud action involving an investment structured and marketed as a tax shelter, where a rescissory measure of damages is applied, evidence of any benefit derived by the plaintiff/investor via tax savings must be permitted." Id. at 183-84 (emphasis added).
98
The Ninth Circuit reached a contrary result in Burgess v. Premier Corporation, 727 F.2d 826 (9th Cir.1984). There, investors in a tax shelter arrangement brought suit under Sec. 10(b) of the 1934 Act, and the same issue arose. The jury found in favor of the plaintiffs, and the court awarded rescission damages. On appeal, the defendants argued that the tax benefits which the investors enjoyed should be deducted from the damage award. The court there noted the Austin decision, but refused to follow it, holding instead that deduction of the tax benefits under these circumstances would be inappropriate, since subtracting tax benefits from a damage award would place an unfair burden on taxpayers generally.
99
The analysis of the court in Burgess is set out in the following quotation, at p. 838,
100
At first appearance it seems inequitable to award the doctors $496,128 (their pretax out of pocket loss) when their after tax out of pocket losses are estimated at only about $157,000; but to simply subtract the tax benefits from damages would place an unfair burden on taxpayers generally. Specifically, the doctors would only be returned to their original position by maintaining their claimed tax losses in addition to the out of pocket losses awarded. Such a result leaves the government bearing the cost of defendants' fraud. A better result is to set damages equal to the doctors' losses exclusive of tax benefit. The doctors will not receive a double benefit from this measure of damages because under the tax benefit rule, their prior tax benefits will be disallowed. Although this court cannot directly disallow the prior tax benefits because plaintiffs' tax liabilities are not directly before us, we presume that the IRS will do its duty if the doctors should actually recover on their judgments and thereafter fail to file amended returns as required by law.
101
In dealing with the Austin decision, the Burgess court went on to say, at p. 838, as follows:
102
The Eighth Circuit in Austin v. Loftsgaarden, 675 F.2d 168 (8th Cir.1982), did allow tax benefits to be offset against damages in a securities fraud arising from a real estate tax shelter....
103
While we agree that consideration of tax consequences is relevant for certain purposes, we decline to make the government the banker for fraudulent tax shelter activity. Judge Hardy's analysis in Western Federal Corp. v. Davis, 553 F.Supp. 818, 820 (D.Ariz.1982), is correct in discerning that the economic benefit by way of tax deductions is illusory because amended returns will have to be filed under the tax benefit rule. Mertens Law of Federal Income Tax, Sec. 7.37.
104
Lastly, the Second Circuit has considered the issue in a case somewhat analogous to the case at bar, Salcer v. Invecon Equities Corp., 744 F.2d 935 (2nd Cir.1984). That action proceeded on an allegation of fraud concerning a tax shelter investment under Sec. 10(b) of the 1934 Act. The court held that civil damages, under the language of Sec. 28(a) of the 1934 Act are limited to "actual damages on account of the fact complained of." The court indicated that the reference to "actual damages" in Section 28(a) in fact meant "compensatory damages" and reached the conclusion that a plaintiff could not recover under Sec. 28(a) more than his net economic loss.
105
Of the three cases cited above, only Austin proceeded under Sec. 12(2) of the 1933 Act. In both Burgess and Salcer, the plaintiffs alleged fraud under Sec. 10(b) of the 1934 Act. In contrast to Sec. 10(b), Sec. 12(2) of the 1933 Act at issue here, specifically indicates that the recovery may be for the consideration paid for the security with interest thereon, "less the amount of any income received thereon". In light of the different structure and language of the 1933 and 1934 Acts, illustrated by Sec. 28(a) of the 1934 Act, both Burgess and Salcer bear only indirectly on the question to be resolved here, though the Burgess court analysis on this issue is instructive in considering the same question where it arises under Sec. 12(2) of the 1933 Act. Allowing the setting off of the tax benefits against the plaintiffs' award in this case would create precisely the problem stated and resolved in the Burgess court discussion, i.e., in order to be made whole, the plaintiffs would maintain their previously taken tax losses, to the detriment of the government, leaving "the government bearing the costs of defendant's fraud."
106
Further, we disagree with the Eighth Circuit's holding in Austin for an additional reason, since, in this court's view, it inappropriately broadens the meaning of "income received", and thus impermissibly extends the scope of the statute beyond that which the language or legislative history of Sec. 12(2) would support. We can find no adequate support for the Austin court's conclusion that the term "income received" was intended by Congress to include any "economic benefits" and "any value shown to have been received by plaintiffs." 675 F.2d at 181. We thus follow in our decision here the maxim that the ordinary meaning of statutory language must control, absent some clear evidence of a contrary legislative intent.1
107
Had Congress intended such a broad construction as that employed in Austin, we believe it would not have used the phrase "income received" and instead would have used language encompassing any benefit received, monetary or otherwise. It is true that income may exist in the form of an "economic benefit", or some "value" to the plaintiffs, but in the normal use of the word "income", the "benefit received" concept is much broader than "income received". If the generally accepted definition of "income received" is to be followed, as we find it must, absent some indication by Congress to the contrary, we thus believe that tax benefits should not be considered in determining the amount of plaintiffs' damages under Sec. 12(2). Rather, the limitation on plaintiffs' recovery under a rescission theory in this case would be the consideration paid for the security, plus accrued interest, less the amount of any income actually received thereon. The court below thus correctly computed the amount to be charged against Baker, Watts and appropriately did not consider the asserted tax benefits.
108
D. The District Court's Instruction on the issue of causation
109
The trial court below instructed the jury that Baker, Watts misrepresented or omitted a fact which could be material in its Confidential Offering Memorandum. Further, the jury was charged that an omitted fact is material under Sec. 12(2):
110
if there is a substantial likelihood that it would have assumed actual significance in the deliberations of a reasonable investor or that its disclosure would be viewed by a reasonable investor as having significantly altered the total mix of information available. If you find that a reasonable investor would attach importance to the omitted fact in making an investment decision, then you may find that the omitted fact was material.
111
Finally, the judge instructed the jury that the plaintiffs did not need to prove that they had actually relied upon the omission.
112
Under Section 12(2), plaintiffs need not prove that they relied upon defendant's alleged misstatement or omission. See, e.g., Sanders v. John Nuveen & Co., Inc., 619 F.2d 1222, 1225 (7th Cir.1980); Johns Hopkins Univ. v. Hutton, 422 F.2d 1124, 1129 (4th Cir.1970). In Johns Hopkins, for example, the defendants argued that their representations to the university did not cause it to invest, but rather that the university relied on its own advisers and their information. This court, however, rejected that argument, which we found to be "an impermissible attempt to introduce reliance upon the misrepresentations and omissions as a necessary element of Sec. 12(2)." 422 F.2d at 1129. Similarly, the Fifth Circuit has held that "a causation test should not be read into Sec. 12(2). A plaintiff does not have to prove that the sale would not have occurred absent the misrepresentation or omission." Hill York Co. v. American International Franchises, 448 F.2d 680, 696 (5th Cir.1981).
113
In Johns Hopkins, the court went on to hold that, as a matter of law, the plaintiffs had established "sufficient causal relationship" between the defendant's violation and the injury. The court held that the University did not need to prove also that the misrepresentation or omission had a "decisive effect" on the decision to purchase. This language is essentially dictum in the Johns Hopkins opinion, but has been used by Baker, Watts to support its argument that in this Circuit, a Sec. 12(2) plaintiff must prove some causal relationship between the defendants' violations and the plaintiff's purchase.
114
If we accept the argument of Baker, Watts in this respect, it is clear from the record that the Confidential Offering Memorandum was intended to be instrumental in affecting the sale of Partnership units. The Memorandum served as a sort of prospectus, was the only document to be used in soliciting investors, and was provided to each investor.
115
Baker, Watts' argument on this point distills down to the proposition that each of the plaintiffs in this case had to demonstrate, by a preponderance of the evidence, that the omissions were material to his or her decision. However, under Johns Hopkins, this argument is "an impermissible attempt to introduce reliance upon the misrepresentations ..." 422 F.2d at 1129.
116
Based upon the facts elicited at trial, and upon the jury's finding of the "materiality" of the omitted facts, we find no error in the court's ruling on this issue below.
117
E. Alleged errors with respect to Plaintiffs Bowes and Dilatush
118
At trial, neither Mr. Bowes or Mr. Dilatush testified, joining a number of other plaintiffs who likewise did not testify. Those plaintiffs who did testify at trial asserted that they had no knowledge of the defendant's misrepresentation or omission, thus complying with the doctrine of Johns Hopkins. See also Junker v. Krory, 650 F.2d 1349, 1359 (5th Cir.1981). The charge to the jury asserted that the plaintiffs had to prove "they did not know of misrepresentations ... prior to the time of their purchase or during the time of the offering". No distinction was made in that portion of the charge between those plaintiffs who testified and those who did not testify.
119
Further, there exists evidence in the record from which an inference could be drawn as to the knowledge of the non-testifying plaintiffs. The record reflects that only two of the Baker, Watts personnel knew of the negotiations for the sale of the stock to Biondi, and both of them testified that they had intentionally told no one about the negotiations. Thus, if the jury accepted the witnesses' testimony, the inference is strong that neither Bowes nor Dilatush, nor any of the other plaintiffs, non-testifying or not, had knowledge of the misrepresentations or the omissions at the time of their investments.
120
Secondly, the court below apparently misperceived the record in concluding that neither Bowes nor Dilatush had invested in the partnership interest. In fact, the record discloses that each had invested in the partnership, one having invested $75,000 and the other $150,000. However, the court entered a directed verdict against Bowes and Dilatush, thus barring any recovery by them against Baker, Watts.
121
Since we perceive no sustainable basis for such disparate treatment of plaintiffs Bowes and Dilatush, the action of the court below in granting a directed verdict as to these two plaintiffs is reversed.
IV. CONCLUSION
122
For the reasons set forth above, we sustain the court below in its finding that Baker, Watts was a seller within the meaning of Sec. 12(2), we affirm the court below for its refusal to permit Baker, Watts to call an expert witness as to the legal implications of non-disclosure, we affirm the court in its decision to disregard the tax benefits received by the plaintiffs as a result of their investment in the limited partnership, we affirm the court on its rulings as to causal relationship, and we reverse the court on its direction of a verdict against Bowes and Dilatush.
123
Because of the conclusions set out here, we remand the case for such further proceedings as may be consonant with this opinion.
124
AFFIRMED in part; REVERSED in part and REMANDED for further proceedings.
1
At the time of preparation of this opinion, Austin had been granted certiorari, sub nom. Randall, et al. v. Loftsgaarden, et al. On 2 July 1986, the Supreme Court decided the case, reversing the Austin opinion, holding that the language "any income received thereon" did not encompass "tax benefits" received by the plaintiff-investor. Randall, et al. v. Loftsgaarden, et al., --- U.S. ----, 106 S.Ct. 3143, 92 L.Ed.2d 525 (1986) (Brennan, J. dissenting) | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1553521/ | 238 B.R. 239 (1999)
In re Gina OSTROFF, Debtor.
Bankruptcy No. 99-10795.
United States Bankruptcy Court, D. Rhode Island.
July 13, 1999.
Christopher Lefebvre, Law Office of Claude Lefebvre & Sons, Pawtucket, RI, for debtor.
Marc Wallick, Wallick & Paolino, Warwick, RI, for Nynex Information Resources.
ORDER GRANTING MOTION TO AVOID JUDICIAL LIEN
ARTHUR N. VOTOLATO, Bankruptcy Judge.
Heard on the Debtor's motion to avoid a judicial lien of Nynex Information Resources ("Nynex"). The undisputed facts are as follows: On March 5, 1999, Gina Ostroff filed a petition under Chapter 7. The property, which is encumbered by two mortgages totaling $103,000, is valued at $90,000, leaving a negative equity of $13,000. On top of this are the Nynex judicial lien in the amount of $8,495, and the Debtor's claimed exemption in the amount of $16,150 (11 U.S.C. § 522(d)(1)).
At issue is whether the Debtor may avoid a judicial lien on her principal residence, where mortgages and consensual liens exceed the market value of the property. If able to exercise discretion, we would say that with no equity in the property, and with no present exemption available to the Debtor to be impaired, that lien avoidance should not be allowed. However the amendments to Section 11 U.S.C. § 522(f), as unequivocally enunciated by Congress in the Bankruptcy Reform Act of 1994, 108 Stat. 4106, 4132, Pub.L. No. 103-394, answer this question in the affirmative.
Under Section 522(f):
*240 Notwithstanding any waiver of exemptions . . . the debtor may avoid the fixing of a lien on an interest of the debtor in property to the extent that such lien impairs an exemption to which the debtor would have been entitled under subsection (b) of this section, if such lien is(A) a judicial lien. . . .
11 U.S.C. § 522(f)(1). The statute then provides a "simple arithmetic test" to determine whether an exemption is impaired. See H.R. 835, 103rd Cong., 2nd Sess. (1994), 1994 U.S.C.C.A.N. 3340:
a lien shall be considered to impair an exemption to the extent that the sum of
(i) the lien;
(ii) all other liens on the property; and
(iii) the amount of the exemption that the debtor could claim if there were no liens on the property;
exceeds the value that the debtor's interest in the property would have in the absence of any liens.
11 U.S.C. § 522(f)(2)(A).
This test was part of Congress's attempt to clarify the issue of when an exemption is impaired, and to create consistency in the growing conflict among courts addressing this question. See 108 Stat. 4106, 4132, Pub.L. No. 103-394, H.R. 5116, § 303 (1994). The House Report accompanying the amendment makes clear that the amendments are intended to overrule decisions involving several scenarios.
The first is where the debtor has no equity in a property over and above a lien senior to the judicial lien the debtor is attempting to avoid, as in the case, for example, of a debtor with a home worth $40,000 and a $40,000 mortgage. Most courts and commentators had understood that in that situation the debtor is entitled to exempt his or her residual interests, such as a possessory interest in the property, and avoid a judicial lien or other lien of a type subject to avoidance, in any amount, that attaches to that interest. Otherwise, the creditor would retain the lien after bankruptcy and could threaten to deprive the debtor of the exemption Congress meant to protect, by executing on the lien. Unfortunately, a minority of court decisions, such as In re Gonzalez, 149 B.R. 9 (Bankr.D.Mass.1993), have interpreted section 522(f) as not permitting avoidance of liens in this situation.[1]The formula in the section would make clear that the liens are avoidable.
H.R.Rep. No. 835, 103rd Cong., 2nd Sess. (1994), § 303 (emphasis added). Since the amendments were clearly designed to permit debtors to avoid judicial liens in situations where the sum of the non-judicial liens equals or exceeds the value of the property, pre-amendment decisions holding otherwise are not useful, and postamendment rulings to the contrary would be in direct conflict with the mandatory provisions of the statute.[2]
Applying the formula to the instant case, Nynex's lien is avoidable in its entirety.[3]
Enter judgment consistent with this Order.
NOTES
[1] We do not agree with Congress's reference to Gonzalez, nor to its relevance, because in Gonzalez the mortgages did not exceed the value of the property. While Congress's criticism of Gonzalez is puzzling at best, the legislative intent is clear that even in cases involving no equity, judicial liens should be avoidable in their entirety.
[2] A search for post-amendment cases addressing this issue reveals nothing.
[3] The sum of (i) the targeted judicial lien ($8,495), (ii) all other liens ($103,000), and (iii) the Debtor's exemption ($16,150)is $127,645which exceeds the value of the property ($90,000) by $37,645. See East Cambridge Sav. Bank v. Silveira (In re Silveira), 141 F.3d 34, 38 (1st Cir.1998). Since the Debtor's exemption is impaired in the amount of $37,645, id., and since Nynex's lien only totals $8,495, it is avoided in its entirety. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553526/ | 238 B.R. 214 (1999)
In re Neil Anthony SAINT JOHN, Debtor.
Kenneth Renick, Esq., Plaintiff,
v.
Neil Anthony Saint John, Defendant.
Bankruptcy No. 98-36211-BKC-SHF. Adversary No. 99-3049-BKC-SHF-A.
United States Bankruptcy Court, S.D. Florida, West Palm Beach Division.
August 25, 1999.
*215 Charles I. Cohen, Boca Raton, FL.
Michael Bakst, Palm Beach, FL.
MEMORANDUM OPINION
STEVEN H. FRIEDMAN, Bankruptcy Judge.
THIS CAUSE came to be heard at trial on July 14, 1999, on Plaintiff's Complaint Objecting to Dischargeability of Debt. Plaintiff seeks to deny the dischargeability of an obligation due by the Defendant in the amount of $9,563.40, pursuant to 11 U.S.C. § 523(a)(2)(A). The indebtedness represents attorney's fees and costs due Plaintiff by Defendant incurred in the course of Plaintiff's rendering of legal services in representing the Defendant in his state court divorce proceeding. The Court, having carefully considered the evidence and argument presented at trial, finds that the obligation owed by Defendant is fully dischargeable.
In May 1997, Defendant contacted Plaintiff for the purpose of obtaining legal representation in the Defendant's divorce proceeding pending in the Palm Beach County Circuit Court. Commencing in May 1997, and continuing for a period of approximately one and one-half years, Plaintiff represented Defendant in the hotly contested divorce proceeding. During the course of Plaintiff's representation, Defendant incurred attorney's fees exceeding $21,000.00, together with expenses exceeding $2,800.00. The unpaid portion of attorney's fees and expenses equals $9,563.40.
At the outset of Plaintiff's legal representation of Defendant, Plaintiff recognized *216 that Defendant was an individual of modest means, whose employment status was uncertain. From May, 1997, when Defendant initially retained Plaintiff, through May, 1998, Defendant was employed as a commissioned salesman by Artec Systems ("Artec"), a computer software manufacturer. As of May 1997, Defendant was earning approximately $2,000 per month. From May 1997 through October 1998 (immediately prior to Defendant's state court divorce trial), Defendant remained current in payment of Plaintiff's periodic billings, but only with financial assistance from his relatives. Defendant's relatives advanced fees to Plaintiff to the following extent:
George St. John (debtor's father) $3,000.00
Raymond J. Lauring (debtor's
uncle) $4,000.00
John N. Saint (relationship not
established) $8,000.00
Michael St. John (debtor's
brother) $2,000.00
In addition to the foregoing, Defendant paid attorney's fees to Plaintiff directly in the amount of $5,000. All of the above-referenced payments were issued between May 6, 1997 and October 13, 1998. With the above-described payments to Plaintiff, Defendant had become current on his obligation to Plaintiff as of October 15, 1998, just prior to the commencement of the divorce trial set for October 19-20, 1998.
The key factual and legal issues raised by the instant dispute derive from discussions between Plaintiff and Defendant occurring immediately prior to the commencement of the divorce trial. Plaintiff alleges that he advised Defendant, immediately prior to the state court divorce trial, that he needed a substantial retainer in order to proceed with his representation of Defendant at trial. In response, Defendant allegedly assured Plaintiff that full payment of the attorney's fees would be paid. More specifically, Plaintiff contends that Defendant assured him that he would ask his family members for additional funds to pay Plaintiff's attorney's fees. Plaintiff contends that Defendant's alleged assurances that he would seek advances from relatives to pay Plaintiff's additional attorney's fees were false when made by Defendant, and that Defendant had no intention of asking his relatives for further advances. Plaintiff further alleges that Defendant did not make such requests of his relatives, thereby warranting a determination that the unpaid attorney's fees are non-dischargeable pursuant to 11 U.S.C. § 523(a)(2)(A).
Plaintiff argues that his contentions as to the false representations by Defendant are corroborated by Defendant's action of consulting with bankruptcy counsel during the pendency of the divorce proceeding. Defendant acknowledges that approximately twothree weeks prior to the October 19, 1998 divorce trial, Defendant conferred with his bankruptcy counsel. This act purportedly establishes that Defendant had neither the intention nor the ability to pay Plaintiff's attorney's fees immediately prior to the commencement of the trial, when Defendant allegedly assured Plaintiff that the additional fees would be paid. Plaintiff thus contends that, had Defendant made Plaintiff aware of the prospective bankruptcy filing, Plaintiff would not have continued with his representation of Defendant and would not have been willing to advance expenses, and continue to provide legal services, on behalf of Defendant.
In order for a bankruptcy court to determine that a particular debt is non-dischargeable because of a debtor's false representation, a creditor must prove the following elements:
the debtor made a false statement with the purpose and intention of deceiving the creditor; the creditor relied on such false statement; the creditor's reliance on the false statement was justifiably founded; and the creditor sustained damage as a result of the false statement.
In re Johannessen, 76 F.3d 347, 350 (11th Cir.1996). A creditor has the burden of proving each element of Section *217 523(a)(2)(A) by a preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 111 S. Ct. 654, 112 L. Ed. 2d 755 (1991). Plaintiff has failed to meet his burden as to two of these elements. First, Plaintiff has failed to prove that Defendant made a false statement with the purpose and intention of deceiving Plaintiff. Second, Plaintiff has failed to prove that he justifiably relied on Defendant's statement.
Upon completion of an unsuccessful mediation conference on Friday, October 15, 1998, Plaintiff allegedly told Defendant that it would cost $10,000 to proceed with the trial scheduled to begin on Monday, October 18, 1998. Defendant allegedly assured Plaintiff that he would borrow the money from his relatives to pay the Plaintiff's fees. Plaintiff contends that this representation was false when made, and points to the fact that Defendant consulted bankruptcy counsel during the pendency of the divorce proceeding. The Court finds little correlation between the consultation of bankruptcy counsel and the assurance by Plaintiff that he would seek a loan from his relatives. At the point that the assurance was made, the Court finds that Defendant did not make such assurance with the intent to deceive.
Defendant contends that Plaintiff did not justifiably rely on Defendant's representation. The standard of justifiable reliance requires the creditor to act appropriately according to his individual circumstances. In re Vann, 67 F.3d 277, 284 (11th Cir.1995). This standard leaves the "fresh start policy of the Bankruptcy Code intact while fraudulent debtors are precluded from profiting from their misdeeds." Id. Focusing on the circumstances as they existed at the time that Defendant assured Plaintiff relating to the $10,000, the Court finds that Plaintiff was not justified in relying on Defendants representation. During the course of their relationship, Plaintiff received $24,000 in fees from Defendant and/or his relatives. Further, on September 28, 1998, Defendant's uncle, Raymond Lauring, paid Plaintiff $4,000 to be applied against the attorney's fees and expenses incurred by Plaintiff. On October 13th, George St. John, the Defendant's father, paid Plaintiff $3,000 to be applied against the attorney's fees and expenses incurred by Plaintiff. Thus, as of October 15, 1998, and immediately prior to the October 18th commencement of the two-day divorce trial, Plaintiff was holding a credit balance equal to $3,235.62. Although Plaintiff contends that he advised Defendant of his unwillingness to proceed to trial without an additional $10,000 retainer, and asserts that he continued with his representation of Defendant through trial solely based upon Defendant's assurances of his ability to raise additional funds from his family members, the Court rejects Plaintiff's contention. Plaintiff had received payments in excess of $20,000 for attorney's fees together with reimbursement of all expenses as of October 15, 1998. Plaintiff knew, throughout the course of his representation of Defendant, that Plaintiff was required to rely upon the generosity of his relatives to defray Plaintiff's legal bills. The Court does not find as credible Plaintiff's contention that, but for Defendant's assurances as to the willingness of his relatives to defray future fees and expenses, Plaintiff would have withdrawn in his representation of Defendant through trial. On the eve of the divorce trial, Plaintiff held a credit balance of over $3,200 as to Defendant's account. Throughout the course of the litigation, Defendant always had been able to raise sufficient funds to pay Plaintiff's bills. Notwithstanding the specter of a bankruptcy filing, this Court finds that there was no reliance by Plaintiff upon Defendant's assurance of future payments on the eve of trial. The Court further finds that any representation by Defendant that he would request future financial assistance from his relatives was not false, as Defendant previously demonstrated an ability to raise the funds necessary to pay the fees and expenses due Plaintiff.
*218 Defendant has sought an award of attorneys' fees from Plaintiff under 11 U.S.C. § 523(d), on the basis that the position asserted by Plaintiff was not substantially justified. The Court finds that an award of attorney's fees in favor of Defendant under the referenced provision is not warranted.
Contemporaneously, this Court shall enter a final judgement in accordance with Bankruptcy Rule 9021 determining that the $9,563.40 obligation due Plaintiff by Defendant is dischargeable. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553520/ | 238 B.R. 697 (1999)
In re Richard A. LUMAN, Debtor.
Nicole A. Luman, Plaintiff,
v.
Richard A. Luman, Defendant(s).
Bankruptcy Nos. 98-3067, 97-35070.
United States Bankruptcy Court, N.D. Ohio.
April 14, 1999.
*698 *699 *700 *701 Edward L. Snyder, Holland, OH, for plaintiff.
Raymond L. Beebe, Toledo, OH, for defendant.
MEMORANDUM OPINION AND DECISION
RICHARD L. SPEER, Chief Judge.
This cause came before this Court upon the Complaint to Determine Dischargeability filed by the Plaintiff-Creditor. The matter was originally scheduled for trial. However, it was subsequently agreed by the Parties that as the matters addressed by the Plaintiff's Complaint were primarily issues of law, the outcome of the case could be resolved by the Court based upon the briefs and stipulation of facts submitted by the Parties. Each of the Parties has now filed their arguments, and has had the opportunity to respond to the comments made by the opposing counsel. This Court has now reviewed these briefs and the arguments and exhibits contained therein, as well as the stipulation of facts, and the entire record of the case. Based upon that review, and for the following reasons, the Court finds that the Debts enumerated in this opinion are nondischargeable pursuant to 11 U.S.C. § 523(a)(5).
FACTS
This is an adversarial proceeding brought by the Plaintiff, Nicole A. Luman (hereinafter Plaintiff), pursuant to Bankruptcy Rule 7001(6), against her former husband, Richard A. Luman (hereinafter Debtor), the latter of whom filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code. The purpose for the Plaintiff's action is to prevent the Debtor from receiving a discharge on certain joint credit debts which the Debtor was ordered to completely assume pursuant to the Parties' divorce decree. Specifically, the Plaintiff contends that the Debtor's sole assumption of these debts was in the "nature of support," and thus the debts should be excepted from discharge under § 523(a)(5) of the Bankruptcy Code. The Debtor, however, asserts that § 523(a)(5) is not applicable because his assumption of the credit card debts was strictly in the nature of a property settlement. The Parties have stipulated that § 523(a)(15), which in certain circumstances excepts from discharge those debts not covered by § 523(a)(5), is not applicable in this case. In addition, the Parties have stipulated that the information contained in their divorce decree is correct. In making the determination of what outcome is appropriate, the Court finds the following information, provided by the Parties, germane to the case at bar.
The Parties to this action were married on July 6, 1991, and one child was born as issue from the marriage. However, after approximately six years of marriage the Parties, because of mutual incompatibility, sought and obtained a divorce in the Common Pleas Court of Wood County, Ohio. No alimony was awarded to either Party with the divorce decree specifically stating that "neither party shall owe the other party any spousal support." (Final Judgment Entry of Divorce at 3). In addition, the state court specified that this provision was non-modifiable. Id. However, the *702 state court did make the following allocation of the Parties' marital property.
The Plaintiff was awarded the marital home, out of which the Plaintiff currently operates a business. The equity in this property at the time of the divorce was Nineteen Thousand One Hundred Thirty-three and 77/100 Dollars ($19,133.77). (The Plaintiff recently sold the house to her mother and stepfather under a lease-back arrangement. The Plaintiff, however, netted only Eight Thousand Four Hundred Twenty-nine and 73/100 Dollars ($8,429.73) from the sale. Apparently, this lower figure is the result of the mother and stepfather's cancellation of some premarital debts incurred by the Plaintiff). In addition, the state court awarded the Plaintiff other personal property such as a computer, an automobile, and a bank account having a combined value of approximately Eight Thousand Four Hundred Forty-three Dollars ($8,443.00). However, the quid pro quo for being awarded the foregoing assets was that the Plaintiff was required to assume and hold harmless the Debtor from any debts or liabilities arising therefrom. The Plaintiff was also required to completely assume a joint credit card debt incurred by the Parties during their marriage in the amount of Nine Thousand Five Hundred Seventy-three and 10/100 Dollars ($9,573.10). The state court, after factoring in this debt allocation, ascertained the net distribution to the Plaintiff to be Sixteen Thousand Three Hundred Sixty-six and 89/100 Dollars ($16,366.89). On the other hand, the Debtor received the following allocation of the marital assets.
The Debtor was awarded his entire interest in a Public Employees Retirement System account (PERS) and a deferred compensation plan having a combined approximate worth of Thirty-three Thousand Five and 10/100 Dollars ($33,005.10). In addition, the Debtor was also awarded an interest in two bank accounts having at the time of the Parties' divorce a balance of Two Thousand Four Hundred Eighty and 09/100 Dollars ($2,480.09). However, the state court also required the Debtor to assume the Parties remaining credit card debts, and it is the assumption of these debts which constitutes the underlying dispute between the Parties. Specifically, the state court required the Debtor to assume the following joint credit card debts which had been incurred by the Parties during their marriage.
CREDIT CARD AMOUNT
Discover Card $ 1,636.88[*]
Glass City Federal Credit Union Visa $ 4,984.19
First USA Visa $ 5,202.50
Wachovia Credit Card $ 5,283.20
Travelers Bank Credit card $ 3,344.96
__________
Total $20,451.73
The reason given by the state court in the divorce decree for this debt allocation was that it was "intended to equalize the total property/debt division and takes into account the award of no spousal support." (Final Judgment Entry of Divorce at 4). After figuring in the foregoing debt allocation, the state court found the net distribution to the Debtor to be Fifteen Thousand Thirty-three and 46/100 Dollars ($15,033.46).
In terms of the Parties present financial situation, currently both the Plaintiff and the Debtor, who are in their middle 30's, are employed, and have submitted to the Court that their respective incomes and expenses are as follows: The Debtor, who works as a Deputy Sheriff with the Wood County Sheriff's Office, has a monthly income of Two Thousand Three Hundred Twenty-four and 80/100 Dollars ($2,324.80). However, after deductions for payroll taxes, deferred compensation, and child support payments for the Parties' daughter and a daughter by another relationship, the Debtor's take home pay is reduced to Nine Hundred Fifty-five and 08/100 Dollars ($955.08) per month. On the other side of the equation, the Debtor states that he has One Thousand Five *703 Hundred Twenty-seven and 50/100 Dollars ($1,527.50) in monthly expenses, which includes a rental payment of Seven Hundred Fifty Dollars ($750.00) per month. Thus, the Debtor's budget exhibits a net shortfall of Five Hundred Seventy-two and 42/100 Dollars ($572.42) per month.
By comparison, the Plaintiff, who is self employed and is the residential parent of the Parties' child, shows an income of approximately One Thousand Seven Hundred Sixty-six and 50/100 Dollars ($1,766.50) per month, based upon her gross income figures for the year 1996. However, the financial figures provided by the Plaintiff to the Court also show that the Plaintiff has monthly expenses of roughly Two Thousand Two Hundred Fourteen and 55/100 Dollars ($2,214.55), leaving her a short fall of well over Four Hundred Forty-eight and 05/100 Dollars ($448.05) per month considering that no deductions for taxes were taken into account for her gross income figure.
In support of her claim that the Debtor's assumption of the foregoing credit card debt was actually in the nature of support, and thus is excepted from discharge under § 523(a)(5), the Plaintiff has represented to the Court that if the Debtor is granted a discharge on the foregoing credit card debts, she would be unable to afford the payments on those debts. Further, according to the Plaintiff, if this were to occur there would then exist a distinct possibility that the creditors of such debt could potentially interfere with her business, which in turn would affect the Plaintiff's ability to support herself and her child. The Debtor, however, disputes the Plaintiff's inability to pay the credit card debts at issue, and points out that the Plaintiff has failed to present any evidence tending to show that any creditors will commence collection activities against her. In addition, the Debtor asserts that § 523(a)(5) is not even applicable because the state court did not intend to create a support obligation by requiring the Debtor to assume the Parties' credit card debts. Specifically, the Debtor directs the Court's attention to the language of the Parties' divorce decree in which it was stated that no spousal support was to be awarded to either party, and that such a provision was non-modifiable. According to the Debtor this language clearly exhibits a lack of intent by the state court to treat the Debtor's assumption of the credit debts as support. Moreover, the Debtor asserts that the state court's failure to place a "hold harmless" provision in the section of the divorce relating to the Debtor's assumption of the credit card obligations, also exhibits a lack of intent by the state court to make the assumption of such debts in the nature of support.
LAW
11 U.S.C. § 523. Exceptions to Discharge
(a) A discharge under section 727, 1141, 1228[a] 1228(b), or 1328(b) of this section does not discharge an individual debtor from any debt
(5) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement, but not to the extent that
(B) such debt includes liability designated as alimony, maintenance or support, unless such liability is actually in the nature of alimony, maintenance, or support[.]
DISCUSSION
This Court has jurisdiction to hear and determine all core proceedings. Under 28 U.S.C. § 157(b)(2)(I), a core proceeding encompasses any determination regarding the dischargeability of particular debts. *704 Therefore, based upon the Parties' pleadings, this case is a core proceeding.
The Plaintiff brings her Complaint to Determine Dischargeability under § 523(a)(5) which excepts from a bankruptcy discharge those debts contained in a divorce decree or separation agreement which are for the maintenance and support of the debtor's child or former spouse. This is in contrast to debts arising from a property settlement which are not encompassed within § 523(a)(5)'s exception to discharge. Ramsey v. Hiller (In re Hiller), 44 B.R. 764, 767 (Bankr.N.D.Ohio 1984). Of course, as might be expected, it is not always entirely clear from the divorce decree or separation agreement as to whether the assumption of the debt was for maintenance and/or support, or was instead simply a division of the parties' marital assets. For example, a periodic payment made from one spouse to another, even if being paid to equalize the distribution of property awarded in the divorce, obviously also frees up funds for the non-debtor spouse to use for other purposes, including necessary support. Thus, as is so often the case when a marriage ends, this Court is called upon to make a determination as to whether the debts jointly incurred by a couple during their marriage are thereafter dischargeable by only one of the parties after the marriage has ended. However, such a situation necessarily places this Court in the very difficult position of having to balance two important, but very diametric, public policy concerns. Namely, the strong public policy concern of giving deserving debtor's a fresh start, versus the equally as strong public policy against permitting debtors to discharge their support obligations to their former dependents.
A non-debtor spouse who seeks to hold a debt nondischargeable under § 523(a)(5) must, at a minimum, establish that the following three elements are met:
(1) the debt(s) must have arisen "in connection" with a separation agreement, divorce decree, or other order of a court of record;
(2) the underlying debt(s) must actually be owed to the former spouse or child; (3) the debt(s) owed to the former spouse must actually be in the "nature of alimony or support."
In this case, the Plaintiff and the Debtor do not contest the applicability of the first and second elements of § 523(a)(5). Accordingly, the Court will only concern itself with the final requirement of § 523(a)(5). In undertaking this analysis, the Court notes that as with other nondischargeability provisions under § 523(a) of the Bankruptcy Code, the burden of proving the elements of the statute, by a preponderance of the evidence, is placed upon the party contesting the dischargeability of the debt.[1]Grogan v. Garner, 498 U.S. 279, 111 S. Ct. 654, 112 L. Ed. 2d 755 (1991); Gibson v. Gibson (In re Gibson), 219 B.R. 195, 199 (6th Cir. BAP 1998) (citing Long v. Calhoun (In re Calhoun), 715 F.2d 1103, (6th Cir.1983)); Henderson v. Henderson (In re Henderson), 200 B.R. 322, 324 (Bankr.N.D.Ohio 1996). However, unlike the other nondischargeability provisions under § 523(a) which are construed narrowly, the nondischargeability provision of § 523(a)(5) is given a broad construction so as to promote the Congressional policy that favors enforcement of obligations for spousal and child support. In re Jones, 9 F.3d 878 (10th Cir.1993); Rouse v. Rouse (In re Rouse), 212 B.R. 885 (Bankr. E.D.Tenn.1997).
The third element of § 523(a)(5), which is the most heavily litigated requirement of the statute, requires that the debt owed to the former spouse must actually be in the "nature of alimony or support," *705 Long v. Calhoun (In re Calhoun), 715 F.2d 1103, 1107 (6th Cir.1983). In making the determination of whether an obligation is actually in the nature of support, the Sixth Circuit Court of Appeals has directed this Court to analyze the situation under federal bankruptcy law, not state law. Id. However, this does not imply that state law is completely irrelevant to a § 523(a)(5) analysis. For example, the actual underlying debt is created by state law as the "federal bankruptcy courts are obviously not empowered to create an obligation to support where it did not previously exist." Id. In addition, a bankruptcy court may look to the factors enumerated by the pertinent state law governing spousal support and asset division, as well as the findings of fact made by the state court issuing the divorce decree for guidance in making its decision. Forsdick v. Turgeon, 812 F.2d 801 (2nd Cir.1987).
Under Federal Law a four-part formula is used to determine whether payments by a debtor are actually in the nature of support, or instead should be classified as a property settlement. This formula, which is known as the Calhoun test, can be summarized as follows:
(1) the intent of the state court or the parties was to create a support obligation;
(2) the support provision has the actual effect of providing necessary support;
(3) the amount of the support provision is not so excessive as to be unreasonable under traditional concepts of support; and
(4) if the amount of support is unreasonable, how much of it should be characterized as nondischargeable for purposes of federal bankruptcy law
Calhoun, 715 F.2d at 1109-11; Singer v. Singer (In re Singer), 787 F.2d 1033 (6th Cir.1986). Starting with the first factor from above, and considering that the Parties' obligations arose from the state court divorce decree and not from a separation agreement, the threshold issue in this case becomes whether it was the state court's intent to create a support obligation. If it was not, then the inquiry immediately stops and the credit card debts at issue are dischargeable.
In the instant case, the state court issuing the divorce decree did not label the Debtor's assumption of the Parties' credit card debts as alimony or support payments. To the contrary, the state court specifically stated that no alimony was to be awarded to either party, and that such a provision was non-modifiable. However, under federal law the language contained in a divorce decree is not dispositive of the issue as to whether the state court issuing the divorce decree intended to create a support obligation.[2] Instead, under federal law, the actual substance of the divorce decree prevails over its form, and thus when making a factual determination as to the intent of the state court issuing the divorce decree, this Court, along with other bankruptcy courts, has generally considered any relevant evidence, including those factors employed by the state courts.[3]See, e.g., Hodges v. *706 Martin J. Holmes & Assc. (In re Hodges), 139 B.R. 846, 848 (Bankr.N.D.Ohio 1991).
Examples of such relevant factors specifically delineated by the Sixth Circuit Court of Appeals include: (1) the disparity of earning power between the parties; (2) the need for economic support and stability; (3) the presence of minor children; and (4) marital fault. Singer v. Singer (In re Singer), 787 F.2d 1033, 1035 (6th Cir. 1986). Additional relevant factors specifically put forth by this Court include: (1) the nature of the obligations assumed; (2) the structure and language of the parties' agreement or the court's decree; (3) whether other lump sum or periodic payments were also provided; (4) the length of the marriage; (5) the age, health and work skills of the parties; (6) whether the obligation terminates upon the death or remarriage of the parties; (7) the adequacy of support absent the debt assumption; and (8) evidence of negotiations or other understandings as to the intended purposes of the assumption. See, e.g., Friedrich v. Friedrich (In re Friedrich), 158 B.R. 675, 678 (Bankr.N.D.Ohio 1993); see also O.R.C. § 3105.18(C)(1).
When applying the foregoing factors to the instant case, it is clear that some factors cut in favor of the Debtor. For example, the lack of a large disparity in the Parties' earning power, the relatively short length of the Parties' marriage, the young age and good health of the Parties, the failure of the obligation to terminate upon the death or remarriage of the Plaintiff, and the lack of evidence concerning the negotiations or other understandings between the Parties all point to the dischargeability of the Debtor's credit card obligations.
Moreover, the Court also finds that one of the most important and dispositive of the above factors does not benefit either Parties' case. Specifically, the Court holds that the factor concerning the actual structure and language of the state court's divorce decree does not cut in favor of either Parties' position. See Long v. West (In re Long), 794 F.2d 928, 931 (4th Cir.1986) (holding a court should start its analysis by looking to the language of the agreement or divorce decree). This conclusion is based upon the Court's analysis of the language contained in the Parties' divorce decree governing the Debtor's assumption of the credit card debts, which states that the assumption was "intended to equalize the total property/debt division and takes into account the award of no spousal support." Specifically, the Court notes that the grammatical structure of this clause does not reveal whether the state court actually intended the Debtor's assumption of the debts to serve as support because the word "intended" in this clause does not necessarily modify the portion of the clause pertaining to spousal support. Instead, the only information this Court has concerning the spousal support portion of the above clause is that the failure of the state court to award spousal support was at least a factor when it allocated the marital credit card debts to the Debtor. Unfortunately, it remains unclear exactly how much of a role the lack of a spousal support award played in the state court's decision. For example, "taking into account the award of no spousal support" does not automatically imply that such a factor actually affected the outcome of the state court's decision, or necessarily suggest that the state court meant for such an award to provide support to the Plaintiff. On the other hand, an equally plausible reading of the clause is that the debt assumption was actually meant to provide support. Further confusing the issue is the fact that the state court specifically stated that no spousal support was to be awarded to either party. Thus, at best, this Court finds the structure and language of the Parties' divorce decree to be ambiguous as to whether the state court intended to provide the Plaintiff with support by requiring the Debtor to assume the credit card debts. In fact, this ambiguity is best illustrated by the fact that both the Debtor and the Plaintiff have *707 asserted in their briefs to the Court that the language of the divorce decree is beneficial to their respective positions.
Notwithstanding the foregoing analysis, the Court finds that two of the above enumerated factors concerning the state court's intention cut distinctly in favor of the Plaintiff's position, and for the following reasons this Court holds that the establishment of these factors is sufficient for this Court to make a finding that the state court intended for the Debtor's assumption of the Parties' credit card debt to provide support to the Plaintiff.
The first factor beneficial to the Plaintiff's position concerns the actual nature of the obligation assumed by the Debtor. As explained supra, the state court made it very clear that it was allocating a majority of the Parties' marital credit card obligations to the Debtor in order to equalize the property division made between the Plaintiff and the Debtor. In other words, the quid pro quo for the Debtor retaining his retirement accounts and all the monies contained therein, was his obligation to relieve the Plaintiff from a large portion of the unsecured debt incurred by the Parties during their marriage. However, this Court is very cognizant of the fact that the Debtor's retirement accounts are exempt property, and thus the Debtor will be entitled to maintain these accounts after he receives his bankruptcy discharge. See O.R.C. § 2329.66(A)(10)(a). Consequently, if the Debtor is granted his discharge on the credit card accounts, he would have effectively reformed the state court divorce decree to provide that he receive the greater portion of the marital assets, while at the same time imposing upon the Plaintiff all of the marital debts. Of course, such a concern in and of itself is not enough to deny the Debtor's discharge on the credit card debts at issue. However, when considering the following two precepts, it is clear to this Court that the Debtor's assumption of the credit card debts was intended for support: First, the state court was keenly aware that the Debtor was a prime candidate for a bankruptcy filing. In fact, the state court specifically stated that both Parties' would be on a "thin budget" after the divorce. (Magistrate's Decision at 5). Second, most state courts, and there is no reason to suspect the Common Pleas Court of Wood County, Ohio is any different, realize that support obligations arising from a divorce are nondischargeable in bankruptcy. Consequently, as this Court finds it incredulous that the state court would have intended the Debtor to retain a majority of the marital assets while at the same time imposing upon the Plaintiff all of the marital debts, this Court holds that the state court, given the nature of the obligations assumed by the Debtor, intended such obligations to be in the nature of support. See, e.g., Conner v. Conner, 170 Ohio St. 85, 162 N.E.2d 852 (1959) (upholding an award of alimony to the wife where the division of joint property in connection with the parties' divorce was approximately 37½% to the wife and 62½% to the husband).
Two additional considerations reinforce this holding. First, had the state court wanted to make a strict distribution of the Parties' property, it could have simply allocated the Parties' credit card debts equally while at the same time requiring the Debtor to turn over one-half of the marital portion of his retirement accounts to the Plaintiff. However, the state court did not do this, and instead took into consideration the equities of the situation. Second, the state court, by awarding to the Debtor the full value of his retirement accounts, was in essence providing what would amount to be future support to the Debtor. However, by doing this it was taking such future support away from the Plaintiff. Thus, it seems credible that in return for the Debtor receiving such future support, the state court would have also intended that the Debtor pay some present support to the Plaintiff in the form of an expense abatement.
*708 The second factor, which is beneficial to the Plaintiff's position concerns the actual need for economic support. In fact, in most instances once this factor is established, the state court is conclusively deemed to have intended for the payment of the debt to have been in the nature of support. For example, this Court, following the Sixth Circuit Court of Appeals' decision in Singer v.. Singer (In re Singer), 787 F.2d 1033, 1035 (6th Cir.1986), held that, "[i]rrespective of how it is labeled, a court may presume that a so-called property settlement is intended for support when the circumstances of the case indicate that the recipient spouse needs support." Nofziger v. Zuccarell (In re Zuccarell), 181 B.R. 42, 44 (Bankr. N.D.Ohio 1995); see also Friedrich v. Friedrich (In re Friedrich), 158 B.R. 675, 679-80 (Bankr.N.D.Ohio 1993); Northcutt v. Northcutt (In re Northcutt), 158 B.R. 658, 662-63 (Bankr.N.D.Ohio 1993).
In this Court's estimation, it seemed readily apparent to the state court that the Plaintiff had an actual need for economic support as the Plaintiff's ability to support herself was in very large part contingent upon the Debtor's assumption and payment of the credit card debts at issue. In fact, as previously pointed out, the state court specifically noted that both Parties after the divorce would "be on thin budget. . . ." (Magistrate's Decision at 5). Furthermore, when one combines this with the fact that the Plaintiff is the residential parent of the Parties' child, the Plaintiff's need for financial support, in the form of the Debtor's assumption of the credit card debts, becomes even more readily apparent. See Chapman v. Chapman (In re Chapman), 187 B.R. 573 (Bankr.N.D.Ohio 1995).
The Debtor, however, argues that the lack of a "hold harmless" clause for the credit card debts in the divorce decree demonstrates a lack of intent by the state court to make such debts in the nature of support. Although, the Court agrees that a "hold harmless" provision in a separation agreement or divorce decree is strong evidence of an intent to create a support obligation, the lack thereof does not necessarily indicate that the underlying obligation is not in the nature of support. For example, this Court has on more than one occasion held that a "hold harmless" provision is only one factor, among all the other present in the case, used to ascertain whether the underlying debt(s) was actually in the nature of support. Shimp v. Shimp (In re Shimp), 59 B.R. 553, 555-56 (Bankr.N.D.Ohio 1986) (citing Conrad v. Conrad (In re Conrad), 33 B.R. 601 (Bankr.N.D.Ohio 1983)). Accordingly, based upon the foregoing analysis, the Court holds that sufficient evidence has been presented to meet the Plaintiff's burden of proving by a preponderance of the evidence that the state court intended to create a support obligation by requiring the Debtor to assume both his and the Plaintiff's credit card debts.
Nevertheless, merely establishing that the state court intended to create a support obligation does not mean that the debt is per se nondischargeable. Instead, this Court must now examine the second element of the Calhoun test which necessitates that the support provision have the actual effect of providing necessary support. Calhoun, 715 F.2d at 1109. This analysis is known as the "present needs" test.[4] In making this determination, the Sixth Circuit Court of Appeals in Calhoun directs this Court to "look to the practical effect of the discharge . . . upon the [non-debtor] spouse's ability to sustain daily needs." Id. In other words, "[i]f without the loan assumption the [non-debtor] spouse could not maintain the daily *709 necessities of life, such as food, housing and transportation, the effect of [the] loan assumption may be found in the nature of support for purposes of the Bankruptcy Act." Id. (internal quotations omitted). However, in undertaking this analysis, substance must prevail over form. Id. Thus, a bankruptcy court must also necessarily look at the actual nature of the individual loan to see if there is a real possibility that the creditors will seek redress against the non-debtor spouse on such debts. For example, discharging the debtor on a joint debt secured by collateral such as an automobile, is unlikely to have much of an effect on the non-debtor spouse's ability to meet their daily needs when the secured creditor may simply seize the automobile in at least partial satisfaction of the debt. Id. However, at the opposite end of the spectrum are the general unsecured debts in which the creditor's only hope of recovery, after the debtor-spouse files for bankruptcy, is to obtain a monetary judgment against the non-debtor spouse, and thereafter levy on their assets.
In the Plaintiff's brief to this Court, the Plaintiff contends that there is a very real possibility that the creditors of the debt at issue could initiate action against her and her business if she is forced to assume the credit card debts on her own. On the other hand, the Debtor asserts that no real evidence has been presented tending to show that the creditors of the debt at issue are about to initiate any action against the Plaintiff. In other words, the Debtor argues that in order for the Plaintiff to demonstrate that there exists a real possibility that the creditors of the debt at issue will initiate collection activities against her, it must be shown that such an action is about to occur.
Although, the Court agrees that evidence tending to show that an imminent collection action is about to be commenced against the Plaintiff would be helpful to her case, this Court declines to adopt a per se rule that such evidence is absolutely needed. In this Court's judgment, to do otherwise would be highly inequitable to the non-debtor spouse. This is because the Court's adoption of the Debtor's argument would leave the non-debtor spouse in limbo until such a time as a creditor is about to commence collection activities against them. However, during the interim period between the debtor's bankruptcy discharge and the institution of collection activities against the non-debtor spouse, which could last for a considerable period of time, many adverse events could occur to the non-debtor spouse. For example, interest and other penalties could be accumulating on the debt for which the non-debtor spouse may or may not be solely liable. Consequently, this Court espouses the view that the better approach is to have the non-debtor spouse demonstrate that there exists a real possibility that the creditors of the joint debt will initiate collection activities against him or her, instead of requiring a demonstration that collection activities are about to occur. In the instant case, the Court finds that the Plaintiff has met this burden given the fact that, (1) the debts at issue are unsecured, and (2) a relatively large amount of money is currently owing on the credit card debts (i.e., over Twenty Thousand Dollars ($20,000.00)). See Chapman v. Chapman (In re Chapman), 187 B.R. 573, 576 (Bankr. N.D.Ohio 1995). Consequently, this Court must simply ascertain, pursuant to the "present needs" test, whether the Debtor's discharge on the credit card debts could affect the Plaintiff's ability to provide for the daily needs of herself and the Parties' child.
From the evidence presented to the Court it seems clear that the Plaintiff is barely getting by. According to the financial figures provided to the Court, which the Debtor does not contest, the Plaintiff has a shortfall in her occupation income versus her monthly expenses of well over Four Hundred Fifty Dollars ($450.00) per month. Hence, it seems clear to the Court that any increase in the *710 Plaintiff's monthly expenses could have dire consequences on the Plaintiff's ability to provide for the basic necessities for herself and her child. See Chapman, 187 B.R. at 576. Accordingly, the Plaintiff has demonstrated to the satisfaction of this Court that the second element of the Calhoun has been satisfied.
The third step of the Calhoun test requires the Court to examine whether the amount of the now determined support provision is so excessive so as to be manifestly unreasonable under the traditional concepts of support. Calhoun, 715 F.2d at 1110. The purpose for this element is to prevent a debtor from effectively contracting away their right and opportunity for a fresh start under the Bankruptcy Code. This analysis is normally made by inquiring into whether the debt assumption substantially exceeded the debtor spouse's present and foreseeable ability to pay the support, as viewed from the time the debt was assumed. (In addition, if the equities of the case require, the Court may also consider the debtor's relative financial position at the time the debtor's bankruptcy petition is filed.) Id.; In re Plaugher, 37 B.R. 760 (Bankr.N.D.Ohio 1984); In re Miller, 17 B.R. 773 (Bankr.N.D.Ohio 1982). In other words, this Court is to ask whether it is feasible that a state court could have ordered the Debtor to pay support payments in the amount of the debt assumption that was actually awarded. As the Court in Calhoun stated,
[w]e emphasize that the nature of this final inquiry as to whether the loan assumption would constitute an excessive degree of support beyond that which any state court would reasonably allow given the parties' relative circumstances, is a limited one. It is not intended that the Bankruptcy Court sit as a "super-divorce" court. Rather, the purpose of such inquiry is to ensure that the degree of support represented by the loan assumptions . . . does not clearly exceed that which might reasonably have been awarded as support by a state court after an adversarial proceeding.
715 F.2d at 1110.
Under Ohio law a major factor concerning the amount of support to be awarded is the payor's ability to pay. See e.g. Coffman v. Coffman, 76 Ohio App. 330, 62 N.E.2d 302 (1945). In making a determination of whether the payor-spouse does have the ability to pay, state courts generally consider two factors; the first, and most important of which is the Debtor's income. See O.R.C. § 3105.18(C)(1)(a). In the case sub judice, the Debtor represented to the Court, through his bankruptcy schedules, that his income was Two Thousand Three Hundred Twenty-four and 80/100 Dollars ($2,324.80) per month or Twenty-seven Thousand Eight Hundred Ninety-seven and 60/100 Dollars ($27,897.60) per year. However, the Debtor has reported an annual income of as high as Thirty-two Thousand Dollars ($32,000.00) per year, and it was this figure that was used by the state court in the Debtor's divorce proceeding. Thus, for purposes of this analysis, the Court finds that Thirty-two Thousand Dollars ($32,000.00) per year is a more reliable figure.
In light of this annual income, the Court does not view the Debtor's debt assumption of Twenty Thousand Four Hundred Fifty-one and 73/100 Dollars ($20,451.73) as manifestly unreasonable, especially when considering that the Plaintiff is the residential parent of the Parties' child.
The second factor this Court must consider regarding the Debtor's ability to pay the support payments, are the Debtor's reasonable expenses. As previously noted, the Debtor has expenses of One Thousand Five Hundred Twenty-seven and 50/100 Dollars ($1,527.50) per month, causing the Debtor to sustain a shortfall of approximately Five Hundred Seventy Dollars ($570.00) per month. However, this shortfall was also based on the Debtor's lower income figure of just under Twenty-eight Thousand Dollars ($28,000.00) per year. *711 However, after imputing to the Debtor Four Thousand Dollars ($4,000.00) more per year as gross income, the Debtor's monthly income, after figuring in a 25 percent decrease for taxes and other withholdings, increases by Two Hundred Fifty Dollars ($250.00) per month. In addition, the Court questions a Seven Hundred Fifty Dollar ($750.00) per month rental payment for a single individual. Moreover, some other expenses listed in the Debtor's bankruptcy schedules raise the skepticism of this Court, such as an expenditure for cable television. Thus, considering the extra income imputed to the Debtor and the ability of the Debtor to lower some of his expenses, this Court considers it feasible that the Debtor could actually experience a positive cash flow, if he is not already doing so, which could then be used in payment of the credit card debts. This is especially true given the fact that the Debtor has already received a discharge on his other unsecured debts. Consequently, pursuant to the third prong of the Calhoun test, the Court finds that the support order issued by the state court was not manifestly unreasonable under the traditional concepts of support given the Debtor's income and reasonable expenses. See Chapman v. Chapman, (In re Chapman) 187 B.R. 573, 575 (Bankr.N.D.Ohio 1995). (The Court will not address the last prong of the Calhoun test which simply requires the Court to lower the support obligation if it finds that the support award was manifestly unreasonable under the third prong of the Calhoun test. Calhoun, 715 F.2d at 1110; Friedrich v. Friedrich (In re Friedrich), 158 B.R. 675, 678, 679 (Bankr.N.D.Ohio 1993)). Accordingly, the Court holds that the credit card debts assumed by the Debtor in the Parties' divorce decree were actually in the nature of alimony and support, and thus the debts are nondischargeable under 11 U.S.C. § 523(a)(5).
In summary the Court finds that the Plaintiff has established by a preponderance of the evidence that the elements contained in § 523(a)(5), including the requirements specifically delineated by the Sixth Circuit Court of Appeals in Long v. Calhoun (In re Calhoun), 715 F.2d 1103 (6th Cir.1983), have been satisfied. In reaching this conclusion, the Court has considered all of the evidence, exhibits and arguments of counsel, regardless of whether or not they are specifically referred to in this opinion.
Accordingly, it is
ORDERED that the credit card debts, assumed by the Defendant, Richard A. Luman, pursuant to the Plaintiff's and the Defendant's Divorce Decree entered on November 3, 1997, by the Court of Common Pleas, Wood County, Ohio, Case No. 96-DR-257, be, and are hereby, determined to be NONDISCHARGEABLE pursuant to 11 U.S.C. § 523(a)(5).
NOTES
[*] This amount only represents one-half the balance of the credit card debt. The Plaintiff is responsible for paying the other half.
[1] The Debtor in his briefs to the Court has implied that the Court must view the facts of this case in the light most favorable to the Debtor. However, as this case does not come before the Court upon the Plaintiff's motion for summary judgement, this is an incorrect statement of law.
[2] However, in a couple of recent decisions the Sixth Circuit Court of Appeals has considerably limited its holding in Calhoun so as to require a bankruptcy court to give great deference to the label a state court attaches to an obligation when it specifically designates the obligation as support. Sorah v. Sorah (In re Sorah), 163 F.3d 397 (6th Cir.1998); see also Fitzgerald v. Fitzgerald (In re Fitzgerald), 9 F.3d 517, 521 (6th Cir.1993). For example, the Court in Sorah stated that when an award is designated as support and has all the indicia of a support obligation, it should be conclusively presumed to be a support obligation. However, when the situation involves the debtor spouse's assumption of a debt which is not specifically labeled as support, as is the situation in this case, all the tenets set out in Calhoun are still applicable.
[3] Indeed, Ohio law itself generally recognizes that the issues of spousal support and a division of the martial assets are inextricably intertwined and take into account many of the same factors. O.R.C. §§ 3105.171 and 3105.18; see also 4 Collier on Bankruptcy ¶ 523.11[6], at 523-82 (15th ed.1998).
[4] The Sixth Circuit Court of Appeals recently ruled in Fitzgerald v. Fitzgerald (In re Fitzgerald), 9 F.3d 517 (6th Cir.1993) that the "present needs" test is no longer applicable when the state court specifically denotes an obligation as support, and the obligation was intended to serve as support. However, the "present needs" test is still applicable when a court ascertains whether the assumption of a debt is in the nature of support. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553559/ | 238 B.R. 247 (1999)
In re Judi Anne Marie CAVALIERE, Debtor.
Bankruptcy No. 99-10270 B.
United States Bankruptcy Court, W.D. New York.
August 20, 1999.
*248 Robert Cooper, Rochester, NY, for F.C.C. National Bank.
Dale C. Robbins, Jamestown, NY, for Debtor.
CARL L. BUCKI, Bankruptcy Judge.
As the holder of a claim arising from an allegedly fraudulent use of a credit card, F.C.C. National Bank objects to confirmation of a Chapter 13 plan on the ground that the debtor did not propose the plan in good faith. For the reasons stated herein, this objection is overruled.
On January 21, 1999, Judi Ann Marie Cavaliere filed a petition for relief under Chapter 7 of the Bankruptcy Code. Included on her schedule of unsecured debts was an obligation in the amount of $6,417.67 to First Card, whose proper name is F.C.C. National Bank. Prior to the time set for discharge, however, F.C.C. commenced an adversary proceeding to determine the dischargeability of its claim. Specifically, F.C.C. contended that the obligation was nondischargeable under 11 U.S.C. § 523(a)(2)(A), in that it was obtained by false pretenses, a false representation, or actual fraud. Rather than to answer F.C.C.'s complaint, the debtor instead converted her Chapter 7 case into a proceeding under Chapter 13 of the Bankruptcy Code. In her plan, Cavaliere now proposes a distribution of five percent to all unsecured creditors, including F.C.C. National Bank. Contending that under these circumstances the plan fails to satisfy the good faith requirement of 11 U.S.C. § 1325(a)(3), F.C.C. now asks the Court to deny confirmation.
Upon completion of a Chapter 13 plan, a debtor obtains a discharge that is more comprehensive than that accorded under Chapter 7. Section 523 of the Bankruptcy Code identifies eighteen categories of debt that are excepted from discharge either in Chapter 7 or when, under circumstances of hardship, the court grants a discharge in Chapter 13 despite the failure to complete plan payments. In contrast, completion of a Chapter 13 plan will entitle the debtor to the benefits of an enhanced order of discharge that extends to all but five categories of debt. As set forth in 11 U.S.C. § 1328(a), the only debts excepted from the enhanced discharge are claims arising from the cure of certain secured obligations; debts "for restitution, or a criminal fine, included in a sentence on the debtor's conviction of a crime"; and debts of the kinds specified in paragraphs (5), (8), and (9) of section 523(a). Thus, the completion of a Chapter 13 plan will operate generally to discharge fifteen of the eighteen categories of debt that would not be dischargeable in Chapter 7. Among these are obligations of the type described in paragraph 2 of section 523(a), such as those for which F.C.C. National Bank had sought a determination of nondischargeability.
The filing of a petition under Chapter 7 will effect a bundle of legal consequences, implicating both the rights and responsibilities of the debtor. Among the rights accorded to a Chapter 7 debtor is a nearly absolute right to convert to Chapter 13. Pursuant to 11 U.S.C. § 706(a), a debtor may convert a case under Chapter 7 "to a case under Chapter 11, 12, or 13 of [Title 11] at any time", if the case had not previously been converted to Chapter 7 from Chapters 11, 12, or 13. Section *249 706(a) further provides that any waiver of the debtor's right to convert a Chapter 7 case is unenforceable. As a Chapter 7 debtor, Cavaliere now seeks only to exercise her right to convert, and thereby to enjoy the benefits of Chapter 13.
In Chapter 13, Ms. Cavaliere will derive benefits no greater than those to which she would have been entitled had she filed for relief under Chapter 13 ab initio. Unquestionably, these benefits will include the privilege of an enhanced discharge upon completion of plan payments. That benefit is attributable, however, not to some exercise of bad faith, but to the conversion rights that section 706(a) expressly grants to anyone who originally sought relief under Chapter 7. Accordingly, despite insinuations that certain debts might have been nondischargeable in Chapter 7, this Court will find that Cavaliere's plan satisfies the requirements of 11 U.S.C. § 1325(a)(3), in that it is proposed in good faith and not by any means forbidden by law.
In opposing confirmation, the counsel for F.C.C. National Bank has cited cases involving the so-called "Chapter 20," that is, a Chapter 13 case filed after the debtor had already secured a discharge under Chapter 7. See In re Keach, 225 B.R. 264 (Bankr.D.R.I.1998), In re Oliver, 186 B.R. 403 (Bankr.E.D.Va.1995), and In re Jahnke, 146 B.R. 830 (Bankr.E.D.Cal. 1992). Such instances are distinguishable, in that they can potentially represent an effort to derive conjunctively the benefits of both Chapter 13 and Chapter 7, and thereby to avoid the full impact of the burdens attributable to each of these respective chapters. Here, Cavaliere seeks only the benefits of Chapter 13. By her conversion, she foregoes the different privileges of Chapter 7, and in the process, accepts as to all of her creditors the obligations of her proposed plan.
The present case is closely analogous to the facts presented to the Bankruptcy Appellate Panel for the Ninth Circuit in In re Street, 55 B.R. 763 (9th Cir. BAP 1985). In that case, the debtor converted from Chapter 7 to Chapter 13 only after the bankruptcy court had rendered a judgment determining that a claim in the amount of $30,000 was nondischargeable under section 523(a)(4) of the Bankruptcy Code. Emphasizing that the debtor had merely exercised his absolute right to convert, the appellate panel concluded that the conversion did "not render the Chapter 13 manipulative of the Bankruptcy Code." Surely, the argument of F.C.C. National Bank is even less compelling with respect to Ms. Cavaliere's plan. Any assertion of nondischargeability is yet unproven. Thus, for Cavaliere, Chapter 13 works not to avoid a debt that is acknowledged to be nondischargeable in Chapter 7, but to avoid the costs of litigation with respect to that issue. In the view of this court, such is a proper use of Chapter 13 and one which the debtor may properly employ in good faith.
Based upon the foregoing, this Court overrules the objection of F.C.C. National Bank to the confirmation of the Chapter 13 plan of Judi Ann Marie Cavaliere.
So ordered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553558/ | 238 B.R. 727 (1999)
In re Deneen A. GREEN, Debtor.
Deneen A. Green, Plaintiff,
v.
Sallie Mae Servicing Corporation and Great Lakes Higher Education Corporation, Defendants.
Bankruptcy No. 98-3295. Related No. 98-34947.
United States Bankruptcy Court, N.D. Ohio.
June 18, 1999.
*728 *729 *730 Cherrefe A. Kadri, Toledo, OH, for plaintiff.
Sallie Mae Svc. Center, c/o Loan Svc. Center, Lawrence, KS, for defendant.
Lloyd J. Blaney, Madison, WI, for defendants.
Lloyd J. Blaney, Madison, WI, for defendants.
MEMORANDUM OPINION AND DECISION
RICHARD L. SPEER, Chief Judge.
This cause comes before the Court after a Trial on the Plaintiff/Debtor's Complaint to Determine the Dischargeability of a Student Loan Debt owed to the Defendants. At the Trial, the Parties were afforded the opportunity to present evidence, and any arguments that they wished the Court to consider in reaching its decision. This Court has now reviewed the arguments of counsel, the evidence presented at Trial, as well as the entire record in the case. Based upon that review, and for the following reasons, the Court finds that the Plaintiff's repayment of the Student Loan Debt would constitute an undue hardship, and therefore the Plaintiff is entitled to have her Debt to the Defendants discharged pursuant to 11 U.S.C. § 523(a)(8).
FACTS
The Plaintiff/Debtor in this action, Deneen A. Green (hereinafter Ms. Green), attended Kent State University from 1991 to 1995, majoring in sociology. To help Ms. Green finance her education, Ms. Green obtained financial aid in the form of a Stafford Subsidized Student Loan, in all incurring over Twenty-five Thousand dollars ($25,000.00) in educational debt. However, soon after graduating from Kent State, Ms. Green began to encounter financial difficulties, which eventually resulted in Ms. Green filing for relief under Chapter 7 of the United States Bankruptcy Code. In her Bankruptcy Petition, which was filed on November 9, 1998, Ms. Green listed the educational debt she incurred at Kent State along with another Twenty-three Thousand Three Hundred Ninety dollars ($23,390.00) in unsecured debt. Ms. Green, however, did not list any secured or priority obligations in her bankruptcy schedules. At the time of Ms. Green's bankruptcy petition, Ms. Green had made three payments on the student loan debt of approximately Six Hundred dollars ($600.00). However, due to interest and other charges that had accrued since the note first became due, the total outstanding balance on the obligation stood at Twenty-nine Thousand One Hundred Seventy-two dollars ($29,172.00).
Thereafter, on December 4, 1998, Ms. Green brought an adversary action in this Court against the Defendants, Sallie Mae Servicing Corporation and Great Lakes Higher Educational Corporation, the latter of whom as the purported assignee of Ms. Green's student loan note handled all of the legal aspects of this case (hereinafter Great Lakes), seeking to have the debt *731 discharged under § 523(a)(8) on the basis that excepting the loan from discharge would impose upon her an undue hardship. More precisely, Ms. Green asserts that she does not have the ability to pay the student loan debt because of a psychological disorder which makes it extremely difficult for her to obtain, and thereafter retain, any full-time and permanent employment. Great Lakes, although conceding that Ms. Green does not have the present ability to pay her student loan debt, asserts that it is too early to grant a hardship discharge as Ms. Green may be able to obtain, at some point in the future, permanent and full time employment, thereby giving her the ability to repay the debt. On May 12, 1998, this Court held a trial on the matter at which time the following factual information was presented to the Court:
Ms. Green is twenty-seven (27) years of age and in generally good physical health. In addition, Ms. Green is currently single with no dependents and lives alone.
While a student at Kent State University, Ms. Green began to experience psychological problems, and in 1996, Ms. Green was formally diagnosed as having a condition known as bipolar disorder, which is commonly referred to as manic depression. This condition is serious enough to cause Ms. Green to experience auditory hallucinations, and on at least two separate occasions Ms. Green's condition became so acute that she had to be hospitalized, the most recent episode occurring during March and April of 1998. At the present time, Ms. Green's psychological condition is under control through the use of various medications which have been prescribed to her; however, according to Ms. Green's own testimony, these medications make it very difficult for her to think clearly, which in turn makes it difficult for her to perform her job duties.
Since graduating from Kent State University in 1995, Ms. Green's employment history has been sporadic. The evidence presented at trial reveals that Ms. Green has only been employed on a temporary basis, and in no job has Ms. Green managed to rise beyond an entry level position. In fact, just recently Ms. Green was laid-off from a job assignment with the Ohio Bureau of Employment Services (OBES), and quit a job with the Burger King Corporation. Further, evidencing Ms. Green's sporadic employment history are Ms. Green's income tax returns for the past two years which show a gross income of only Three Thousand Two Hundred Eleven and 21/100 dollars ($3,211.21) for the year 1997, and a gross income of only Eight Thousand Eight Hundred Fifty-seven dollars ($8,857.00) the year 1998.
At the present time, Ms. Green is employed, but only works about twenty (20) hours per week as a sales clerk earning $5.25 per hour. Thus, Ms. Green's current gross monthly income is approximately Four Hundred Fifty dollars ($450.00). However, on the other side of the equation, Ms. Green testified that after taking into account the discharge she received from this Court on her other unsecured debts, that the following itemized list accurately reflects her current monthly expenses:
Rent $350.00
Telephone $ 35.00
Food $100.00
Clothing $ 15.00
Laundry $ 20.00
Medical $ 85.00/including medication(s)
Gas $ 30.00
Entertainment $ 15.00
Auto Ins. $ 70.00
Renter Ins. $ 10.00
Life Ins. $ 8.00
_______
Total $738.00
In addition, Green, if not granted a hardship discharge in this proceeding, will be obligated to pay an additional Two Hundred Fifty-three and 89/100 dollars ($253.89) per month, for a period of twenty (20) years, on the student loan debt at issue.
However, notwithstanding the difficulties Ms. Green has encountered in finding and then retaining full-time permanent employment since graduating from Kent State University, Ms. Green testified that she continues to actively pursue possible *732 employment opportunities. In support of this assertion, Ms. Green introduced into evidence recent letters that she has sent to potential employers as far away as Georgia, along with the corresponding rejection letters that she has received in return. In addition, Ms. Green testified that she is currently registered with a temporary employment agency to do clerical work, but has yet to receive a work assignment. Finally, Ms. Green testified that to help supplement her income, she is presently attempting to collect unemployment insurance and SSI, but does not yet know if she will be eligible for either.
All exhibits offered by the Plaintiff into evidence were received by the Court without objection.
LAW
The Bankruptcy Code, as amended by the Bankruptcy Reform Act of 1994, provides in pertinent part:
11 U.S.C. § 523. Exceptions to discharge
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt
(8) for an educational benefit overpayment or loan made, insured or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution, or for an obligation to repay funds received as an educational benefit, scholarship or stipend, unless excepting such debt from discharge under this paragraph will impose an undue hardship on the debtor and the debtor's dependents;
DISCUSSION
Under 28 U.S.C. § 157(b)(2)(I), a determination as to the dischargeability of a particular debt is a core proceeding. Thus, this matter is a core proceeding.
The bankruptcy laws of the United States were promulgated on the basis of providing a fresh start to the honest but unfortunate debtor, and to effectuate this goal a presumption is afforded to the honest debtor that all debts are dischargeable. Brown v. Felsen, 442 U.S. 127, 128, 99 S. Ct. 2205, 2207, 60 L. Ed. 2d 767 (1979), quoting, Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S. Ct. 695, 699, 78 L. Ed. 1230 (1934); Gleason v. Thaw, 236 U.S. 558, 562, 35 S. Ct. 287, 289, 59 L. Ed. 717, 719 (1915) (nondischargeability should be confined to those plainly expressed). However, for reasons of public policy, Congress chose to exclude certain types of debts from the umbrella of a bankruptcy discharge notwithstanding that the unfortunate debtor had the sincere intention of repaying the debt at the time it was incurred. Specifically relevant to this case is that in 1976, as part of the Education Amendments of 1976.[1] Congress decided that, with a certain few exceptions, loans incurred for the purpose of financing a higher education would be excepted from a bankruptcy discharge. This restriction on the dischargeability of student loans was subsequently carried over to the Bankruptcy Code by the Bankruptcy Reform Act of 1978.[2]
The underlying policy basis for excepting student loans from a bankruptcy discharge was the perceived need to rescue the student loan program from insolvency, and to also prevent abuse of the bankruptcy system by students who finance their higher education through the use of government backed loans, but then file bankruptcy petitions immediately upon graduation even though they may have or will soon obtain well-paying jobs, have few *733 other debts, and have no real extenuating circumstances to justify discharging their educational debt. See Report of the Commission on the Bankruptcy Laws of the United States, H.R.Doc. No. 93-137, 93d Cong., 1st Sess., Pt. II 140, n. 14 (1973); Law v. Educational Resources Institute, Inc. (In re Law), 159 B.R. 287, 291 (Bankr. D.S.D.1993); Raymond L. Woodcock, Burden of Proof, Undue Hardship, and Other Arguments for the Student Debtor Under 11 U.S.C. § 523(A)(8)(B), J.C. & U.L. 377, 381-84 (1998). However, notwithstanding these policy concerns, Congress also realized that not all student debtors abused the bankruptcy system, and that some student debtors were in true need of bankruptcy relief. Thus, Congress determined that an absolute bar to the dischargeability of student loan debts would be too harsh, and also unnecessary to effectuate the foregoing policy goals. Consequently, unlike other types of debt, such as alimony and child support for which a debtor cannot at all receive a bankruptcy discharge, Congress permitted student loan debts to be discharged if the debtor could demonstrate extenuating circumstances. Specifically, Congress provided that a debtor who finances his or her higher education may seek to receive a bankruptcy discharge on an educational loan if the debtor can demonstrate that excepting the debt from discharge would impose an "undue hardship" on the debtor and the debtor's dependents.[3] 11 U.S.C. § 523(a)(8).
The phrase "undue hardship," however, is not actually defined by the Bankruptcy Code, and thus to actually determine if a situation presents an undue hardship, the courts have fashioned and endorsed a variety of tests.[4] Foremost among the tests employed by the bankruptcy courts to determine when a given set of circumstances will constitute an undue hardship under § 523(a)(8) is the test first developed by the Second Circuit Court of Appeals in Brunner v. New York State Higher Educ. Serv. Corp., 831 F.2d 395 (2nd Cir.1987), where the Court held that a debtor may only receive a hardship discharge on his or her student loans if all of the following factors are established:
*734 (1) the debtor cannot maintain, based on current income and expenses, a `minimal' standard of living for herself and her dependents if forced to repay the loans;
(2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period; and
(3) the debtor has made good faith efforts to repay the loans.
These factors have become to be known as the Brunner test, and in Cheesman v. Tennessee Student Assistance Corp. (In re Cheesman), 25 F.3d 356 (6th Cir.1994), and Tennessee Student Assistance Corp. v. Hornsby (In re Hornsby), 144 F.3d 433 (6th Cir.1998), the Sixth Circuit Court of Appeals found it appropriate for a bankruptcy court to utilize this test to determine if the factual circumstances of a case present an issue of undue hardship.[5] Nevertheless, the Sixth Circuit Court of Appeals has declined to officially adopt this test or any other specific test, and instead considers it appropriate for a bankruptcy court to consider other relevant factors depending on the unique circumstances of each individual case. Id. at 437; Rice v. United States (In re Rice), 78 F.3d 1144, 1149 (6th Cir.1996). Therefore, in accordance with the above-mentioned decisions rendered by the Sixth Circuit Court of Appeals, this Court will apply the Brunner test to the case at bar; however, where and if appropriate, the Court will also take into account extraneous factors which are not specifically delineated in the Brunner test. In undertaking this analysis, the Court notes that since the issue of undue hardship is an affirmative defense to the issue of nondischargeability, it is the Debtor, Ms. Green, who bears the burden to establish, by a preponderance of the evidence, that the circumstances of her case constitute an undue hardship. Dolph v. Pennsylvania Higher Education Assistance Agency (In re Dolph), 215 B.R. 832, 837 (6th Cir. BAP 1998); Gammoh v. Ohio Student Loan Comm'n (In re Gammoh), 174 B.R. 707, 710 (Bankr.N.D.Ohio 1994).[6]
The first prong of the Brunner test requires a determination of whether the debtor is "capable of paying the loan[ ] while maintaining a minimal standard of living." Cheesman, 25 F.3d at 359. In this case, Great Lakes does not contest that this requirement is satisfied, given the fact that Ms. Green currently has at least Seven Hundred Thirty-eight dollars ($738.00) in monthly expenses, exclusive of the student loan payment, while only having a gross monthly salary of approximately Four Hundred Fifty dollars ($450.00). Additionally, this Court, upon taking its own evaluation of the situation, agrees with this assessment, noting that none of Ms. Green's expenses seem extravagant or unnecessary. For example, Ms. Green only listed a monthly food budget of One Hundred dollars ($100.00) per month which seems very low to the Court. Furthermore, the Court also observes that Ms. Green currently has no exempt assets which could be liquidated to repay the student loan. See Dolph, 215 B.R. at 836.
The second part of the Brunner test requires a showing that there exist additional circumstances which show that the debtor's financially distressed state of affairs will persist for a significant part of the repayment period. Mitchell v. U.S. Dep't Education (In re Mitchell), 210 B.R. 105, 108 (Bankr.N.D.Ohio 1996). It is this prong of the Brunner test which ensures *735 that the financial hardship the debtor is experiencing is actually undue. See Muto v. Sallie Mae (In re Muto), 216 B.R. 325, 330 (Bankr.W.D.N.Y.1996). Not surprisingly then, it is this prong of the Brunner test that provides the major contention between the Parties, with Great Lakes asserting that it is too early to grant Ms. Green a hardship discharge given the fact Ms. Green's job search efforts may eventually bear fruit, thereby providing her with the ability to pay the student loan debt. On the other hand, Ms. Green contends that it is unlikely that her financial situation will ever change significantly for the better, given the fact that her psychological condition makes it very difficult, if not impossible for her to find and then retain any full-time employment.
In order to decide the merit of these arguments, two issues must be resolved: First, does Ms. Green's psychological condition actually impair her ability to work; and if it does, will this situation likely persist for a significant portion of the student loan repayment period?
Addressing the first issue, it must be first stated that the Court accepts the view that bipolar disorder, although a treatable illness, can in severe enough cases affect a person's ability to obtain and thereafter retain employment. See Leatherwood v. Houston Post Co., 59 F.3d 533 (5th Cir. 1995) (bipolar disorder may impair the ability of an individual to perform their job duties); Doherty v. United Student Aid Funds, Inc., 219 B.R. 665 (Bankr. W.D.N.Y.1998) (bipolar disorder may present circumstances sufficient to discharge a student loan under § 523(a)(8)); Taylor v. Phoenixville School Dist., 174 F.3d 142 (3rd Cir.1999) (bipolar disorder is a disability under the ADA). Thus, in terms of the first issue, the task for the Court is simply to gauge the seriousness of Ms. Green's psychological condition as it relates to her employability.
The facts of this case clearly show that Ms. Green currently maintains a part-time job, and has for short intervals in the past maintained full-time jobs. However, Ms. Green also presented evidence showing that her psychological condition is serious enough to cause her auditory hallucinations, and to also require her confinement to a hospital on at least two separate occasions. In addition, she also testified that the medication(s) she now takes to keep her condition under control, although beneficial, causes her not to be able to think clearly; a fact which this Court partially observed while she was giving her trial testimony. Consequently, while the Court does not find that Ms. Green is entirely unemployable, the Court, given the foregoing considerations, holds that Ms. Green has met her burden to establish that her psychological disorder is severe enough to significantly impair her present ability to maintain full-time permanent employment.
Thus, having determined that Ms. Green's mental condition currently impedes her employability, the Court must now ascertain whether Ms. Green's psychological disorder will likely impair her ability to work for a significant portion of the student loan repayment period. However, as pointed out by the bankruptcy court in Kraft v. New York State Higher Educ. Servs. Corp. (In re Kraft), 161 B.R. 82, 86 (Bankr.W.D.N.Y.1993), the difficulty with this analysis is that it is by its very nature speculative as it requires a court to predict future events.
The Parties in this case did not present any expert testimony as to Ms. Green's future prognosis. In the absence of such testimony, this Court finds, under the circumstances that exist in this case, that the next best indicator of Ms. Green's future ability to obtain, and thereafter maintain full-time employment comes from trends that have occurred in Ms. Green's past,[7] and with this principle in mind a few matters in Ms. Green's case stand out to *736 the Court: First, since graduating from college and being diagnosed with bipolar disorder, Ms. Green's employment history has been very erratic, this fact being clearly evidenced by Ms. Green's inability over the past couple of years to earn any meaningful amount of income. Second, Ms. Green as recently as last year was hospitalized for her mental disorder, and the medication(s) Ms. Green takes to keep her condition under control limit her ability to perform essential job functions. Next, Ms. Green has presented to the Court evidence showing that she has made many attempts to obtain full-time permanent work, but has so far been unsuccessful in this endeavor. Finally, Ms. Green's own testimony exhibits doubts in her ability to obtain permanent and full-time employment so as to enable her to repay her student loan obligation.
Upon examining these past trends in toto, the Court finds that Ms. Green will likely continue to experience problems in finding and then retaining full-time permanent employment, and thus Ms. Green's financial difficulties will in all probability persist for a significant portion of the student loan repayment period. Supporting this finding is the case of Doherty v. United Student Aid Funds, Inc. (In re Doherty), 219 B.R. 665, 671 (Bankr.W.D.N.Y. 1998), where the bankruptcy court addressing the issue of bipolar disorder and the dischargeability of student loan debts, conducted an in-depth analysis of the disease and stated as follows:
judicial notice [is taken] that the most probable near-future for a debtor who suffers from a diagnosed and treated manic-depressive disorder is maintenance of the status quo.
Accordingly, the Court holds that Ms. Green has met her burden of demonstrating that the second prong of the Brunner test is satisfied.
The final part of the Brunner test requires an examination of whether the debtor made a good faith effort to repay the loan. Good faith is, of course, both intangible and subjective, and thus to determine its existence requires a court to examine the debtor's actions. In the context of a hardship discharge under § 523(a)(8) all of the following factors have been considered relevant to the determination of whether the debtor did, or did not, act in good faith:
(1) whether the debtor attempts to repay the debt;
(2) the length of time after the student loan becomes due that the debtor seeks to discharge the debt;
(3) the percentage of the student loan debt in relation to the debtor's total indebtedness;
(4) the debtor's attempts to find suitable employment.
In re Cheesman, 25 F.3d at 360; In re Mitchell, 210 B.R. at 109; Taylor v. Illinois Student Assist. Com. (In re Taylor), 198 B.R. 700, 704 (Bankr.N.D.Ohio 1996). Applying these factors to the instant case, the Court finds that Ms. Green did, in fact, make a good faith effort to repay the loan. Specifically, the Court notes the following: (1) she made three installment payments, totaling approximately Six Hundred dollars ($600.00), on the student loan debt; (2) she did not immediately seek to discharge her student loan obligation after it became due; (3) the student loan debt incurred by Ms. Green only constitutes Fifty-five percent (55%) of her total unsecured indebtedness; and (4) the evidence presented at Trial demonstrates that she has made repeated, albeit unsuccessful, attempts to find suitable employment. Accordingly, the Court holds that the circumstances of Ms. Green's case satisfy all the three parts of the Brunner test. However, before concluding, one final issue not considered by the Brunner test must be addressed.
The legislative history of § 523(a)(8) indicates that the very nature of an undue hardship discharge is the notion that the circumstances imposing the financial hardship upon the debtor must *737 occur from factors beyond the reasonable control of the debtor. Matter of Roberson, 999 F.2d 1132, 1136 (7th Cir.1993), citing Report of the Commission on the Bankruptcy Laws of the United States at 140 n. 16 (1973). For example, a self imposed financial hardship, such as buying an expensive car, would clearly not constitute a hardship deserving of a bankruptcy discharge. In this case, the Court, after researching the issue of bipolar disorder, concurs with the view articulated by the bankruptcy court in Doherty, which stated:
Bipolar disorder is believed to be of genetic origin [and] is related to the sufferer's neurochemistry. It is not self-induced. Rather, `we know that . . . bipolar disorders are associated with chemical changes in the brain and are therefore just as organic as any other disease.'
219 B.R. at 670 (Internal citations omitted). Thus, the Court finds that granting Ms. Green a discharge on account of her mental condition will not go against the Congressional intent of excepting most student loans from a bankruptcy discharge.
In conclusion, the Court, given the totality of circumstances of this case, finds that Ms. Green has met her burden of demonstrating, under the Brunner test, that she is entitled to a hardship discharge under § 523(a)(8). In reaching the conclusion found herein, the Court has considered all of the evidence, exhibits and arguments of counsel, regardless of whether or not they are specifically referred to in this opinion.
Accordingly, it is
ORDERED that the student loans of the Plaintiff, Deneen A. Green, to the Defendants, Sallie Mae Servicing Corporation and Great Lakes Higher Education Corporation, be, and are hereby, determined DISCHARGEABLE pursuant to 11 U.S.C. § 523(a)(8).
NOTES
[1] See Pub.L. No. 94-482 § 439(A), 90 Stat. 2081, 2141 (codified as amended at 20 U.S.C. § 1087(3) (1994)).
[2] On November 26, 1978, the President signed the Bankruptcy Reform Act of 1978, Public Law 95-598. Title I of the Reform Act, codified as Title II, U.S.C., became effective October 1, 1979.
[3] Originally, the Bankruptcy Code of 1978 provided that student loans could also be discharged if the loan first became due more than five years before the filing of the bankruptcy petition. In 1990 Congress extended this time period to seven years. However, in 1998 Congress entirely eliminated this exception to nondischargeability so that as of October 8, 1998, undue hardship is the only basis on which a student loan may be discharged. Higher Education Amendments of 1998, Pub.L. No. 105-244, 122 Stat. 1837 (codified as amended in 11 U.S.C. § 523(a)(8)).
[4] Essentially four different tests have been developed by the bankruptcy courts to determine whether a given set of factual circumstances presents an issue of undue hardship. The first test is the Johnson Tripartite Test where the court developed a three-prong test consisting of (1) a mechanical test of income and expenditures, (2) a good faith test, and (3) a policy test, to determine the dischargeability of a student loan debt. Pennsylvania Higher Education Assistance Agency v. Johnson (In re Johnson), 5 B.C.D. 532 (Bankr.E.D.Pa.1979). The second test is known as the Brunner test, and is explained more fully in the body of this Opinion. The third test is called the Bryant Poverty Level Test and employs the Federal Poverty Guidelines to determine if a debtor is entitled to an undue hardship discharge. Bryant v. Pennsylvania Higher Education Assistance Agency (In re Bryant), 72 B.R. 913 (Bankr.E.D.Pa.1987). The final test employed by the courts under § 523(a)(8) is essentially a totality of the circumstances test whereby the courts scrutinize each case individually and then determine, based upon all the factors present in the case, whether the debtor is entitled to an undue hardship discharge. See, e.g., Ford v. Tennessee Student Assistance Corp. (In re Ford), 151 B.R. 135, 138-40 (Bankr.M.D.Tenn.1993); Johnson v. USA Funds, Inc. (In re Johnson), 121 B.R. 91, 93 (Bankr.N.D.Okla.1990). In some past cases this Court has applied the Johnson Tripartite Test. See, e.g., Taylor v. Illinois Student Assist. Com. (In re Taylor), 198 B.R. 700, 704 (Bankr.N.D.Ohio 1996). However, given the Sixth Circuit Court of Appeals' recent disapproval of the policy test contained therein, the Court declines to utilize the Johnson Tripartite Test. Tennessee Student Assistance Corp. v. Hornsby (In re Hornsby), 144 F.3d 433, 437 n. 5 (6th Cir.1998).
[5] In addition, the Bankruptcy Appellate Panel for the Sixth Circuit has applied the Brunner test. Dolph v. Pennsylvania Higher Educ. Assistance Agency (In re Dolph), 215 B.R. 832, 836 (6th Cir. BAP 1998).
[6] It should be noted, however, that the creditor bears an initial burden to prove the actual existence of the student loan debt, and that the loan is owed to, insured by, or guaranteed by a governmental agency or nonprofit institution. Halverson v. Pennsylvania Higher Education Assistance Agency (In re Halverson), 189 B.R. 840 (Bankr.N.D.Ala.1995). In this case, there is absolutely no dispute that Great Lakes has met its burden of proof with respect to this issue.
[7] See Cheesman, 25 F.3d at 360 (a person's good faith efforts to change their employment situation, does not thereby automatically denote that the person's situation will change). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/864689/ | IN THE SUPREME COURT OF MISSISSIPPI
NO. 2002-CT-00087-SCT
LORI NICHOLS
v.
DAVID WAYNE FUNDERBURK
ON WRIT OF CERTIORARI
DATE OF JUDGMENT: 12/21/2001
TRIAL JUDGE: HON. JACQUELINE ESTES MASK
COURT FROM WHICH APPEALED: ITAWAMBA COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANT: ANGELA NEWSOM SNYDER
JOHN DAVID WEDDLE
ATTORNEY FOR APPELLEE: PRO SE
NATURE OF THE CASE: CIVIL - DOMESTIC RELATIONS
DISPOSITION: AFFIRMED - 09/23/2004
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
EN BANC.
CARLSON, JUSTICE, FOR THE COURT:
¶1. Lori Nichols filed a complaint against David Wayne Funderburk for paternity, child support and
equitable division of property. The Itawamba County Chancery Court entered a final judgment declaring
David as the natural father of the two children, granting custody of the children and child support to Lori
and denying Lori's request for equitable division of property. Lori appealed the chancellor's decision to the
Court of Appeals which affirmed the judgment of the chancellor. See Nichols v. Funderburk, 2002-
CA-00087-COA, 2003 WL 22481017 (Miss. Ct. App. 2003). Lori's motion for rehearing was denied,
and we granted her petition for writ of certiorari. Finding that the chancellor was correct in finding that there
was no partnership formed between Lori and David and no property acquired through joint efforts, we
affirm the judgments of both the Court of Appeals and the Itawamba County Chancery Court.
FACTS
¶2. In approximately 1989, when Lori Nichols was sixteen years old and David Wayne Funderburk
was twenty-five years old, the couple began living together. During their cohabitation, which lasted until
2001, two children were born. Lori and David never married.
¶3. In 1989 David purchased a house, with the deed listing him and his mother as joint owners. David
paid the monthly mortgage, and all of the bills were in David’s name except for the cable. In 1991 David’s
father turned over the family business to David (Home Town Deli), and David took out a $25,000 loan to
remodel the restaurant. David leased the business the first seven years, and he began operating the
restaurant the last three years. Under David’s management, the restaurant was open every Thursday,
Friday and Saturday night. Lori began working for David one year after he started managing the restaurant.
David claims he paid Lori $500 per week; however, Lori argues she was only paid $240 per week. All
of David’s employees were paid in cash. In 1997 David’s mother gave him an apartment complex (The
Mustang Apartments).
¶4. Although Lori claims she was David’s business partner, both parties testified that neither David nor
his parents ever intended for Lori to have a major role in their family businesses. David and Lori had
separate checking accounts. Lori was not authorized to write checks on any of David’s personal or
business accounts. Most importantly, Lori's name was never added to the title of any of David’s property.
In 2001 when the couple separated, Lori left the home and took one-half of the furniture.
2
¶5. On June 5, 2001, Lori filed a complaint for paternity, child support and an equitable division of
property against David. Finding David to be the natural father of the two children, the chancellor awarded
primary custody to Lori and ordered David to pay $425 per month in child support. The chancellor,
however, denied Lori's request for an equitable distribution of property finding there was "no legal remedy
existing at this time to compensate her for the 14 years that she chose to cohabitate [sic] without the benefit
of marriage." The Court of Appeals, on a 5-5 decision, affirmed the chancellor, finding insufficient evidence
that the parties acquired property through their joint efforts. Nichols, *4. The court distinguished prior
Mississippi case law finding the couple to have never held themselves out to be married. Id. at *3. The
court determined that Lori was compensated weekly for her services as an employee of the restaurant. Id.
at *5. The court also held that even though Lori may have managed the restaurant and contributed to the
business of the apartment complex, she did not own those assets nor did David ever intend for her to be
his business partner in those endeavors. Id. at *4. Therefore, the Court of Appeals held that Lori was not
entitled to any division of property. Id. at *5.
¶6. Then-Judge Lee, joined by then-Presiding Judge King and Judges Myers and Thomas and by
Judge Bridges in part, dissented arguing that although the chancellor acknowledged Lori's contributions to
the restaurant, his single point of contention was that Lori's name was not on the title to the restaurant
business. Id. at *8. Judge Lee determined that the chancellor erred in concluding that Lori's weekly pay
precluded her from qualifying as a partner in David's business. Id. Judge Lee argued that although David
paid the monthly mortgage payments on the home, Lori purchased all the furniture and took care of the
house, which appreciated in value during their cohabitation from $16,000 to $55,000. Id. at *7-8. Judge
3
Lee further determined that "[t]he evidence and testimony showed that Lori was an integral part of the
restaurant's operation for many years, so much so that I find her efforts were 'joint' with those of David as
to entitle her to equitable distribution of proceeds from the sale of the business." Id. at *8.
DISCUSSION
¶7. This Court's standard of review regarding determinations of a chancellor is well-established.
This Court will reverse a chancellor only when he is manifestly wrong. Hans v. Hans, 482
So. 2d 1117, 1119 (Miss. 1986); Duane v. Saltaformaggio, 455 So. 2d 753, 757
(Miss. 1984). A chancellor's findings will not be disturbed unless he was manifestly wrong,
clearly erroneous or an erroneous legal standard was applied. Tinnin v. First United
Bank of Miss., 570 So. 2d 1193, 1194 (Miss. 1990); Bell v. Parker, 563 So. 2d 594,
596-97 (Miss. 1990). Where there is substantial evidence to support his findings, this
Court is without the authority to disturb his conclusions, although it might have found
otherwise as an original matter. In re Estate of Harris, 539 So. 2d 1040, 1043 (Miss.
1989). Additionally, where the chancellor has made no specific findings, we will proceed
on the assumption that he resolved all such fact issues in favor of the appellee. Newsom
v. Newsom, 557 So. 2d 511, 514 (Miss. 1990). The chancellor's decision must be upheld
unless it is found to be contrary to the weight of the evidence or if it is manifestly wrong.
O.J. Stanton & Co. v. Mississippi State Highway Comm'n, 370 So. 2d 909, 911
(Miss. 1979).
In re Estate of Johnson, 735 So. 2d 231, 236 (Miss. 1999). See also Madison County v.
Hopkins, 857 So. 2d 43, 47 (Miss. 2003); Adoption of C.L.B. v. D.G.B., 812 So. 2d 980, 985 (Miss.
2002). However, the chancery court's interpretation and application of the law is reviewed under a de
novo standard. Tucker v. Prisock, 791 So. 2d 190, 192 (Miss. 2001); In re Carney, 758 So. 2d
1017, 1019 (Miss. 2000).
¶8. Lori argues that the Court of Appeals did not properly apply Mississippi case law which would
have allowed for a division of property to award Lori a fair share of the assets accumulated during the
couple's relationship. Lori contends that Mississippi precedent allows for equitable division of property
4
in cohabitation cases where one of the cohabitants contributes not only domestically, but also through labor
directly related to the business or property acquired during cohabitation. The couple's home was
purchased in 1989, the year the cohabitation began. The family restaurant was purchased in 1991 and was
operated by David in 1997. The apartments were purchased in 1999. Lori contends that she contributed
domestically to the couple’s home which significantly appreciated in value during their relationship. Lori
also played a significant role in managing the family restaurant and occasionally worked at the apartment
complex.
¶9. The Court of Appeals found that unlike all other cohabitation cases in Mississippi, Lori and David
never married nor did they ever maintain that they were married. Nichols at *3. The court found that the
couple "merely chose to cohabit without the benefit of marriage." Id. at *5. The court further held that
David did not intend for Lori to have any ownership interest in either the restaurant or the apartments as
evidenced by his paying her for services rendered. Id. This was also evidenced by testimony of both
parties. Lori testified that while she believed she was David’s business partner, David had informed her
that he and his parents did not want her to have anything to do with their family businesses. Therefore, he
never intended to add her name to any of the deeds. Lori also testified that there were never any written
agreements between herself and David regarding the businesses. Lori stated that she believed there to be
some type of marriage between David and her because they lived together and had children. However,
Lori also testified that she was content with her situation because she had known for several years that
David was never going to marry her.
¶10. Equitable division of property is a concept of our marital and domestic laws. A marital relationship
may be created in conformity with applicable law, Miss. Code Ann. §§ 93-1-1 to -25 (Rev. 1994 & Supp.
5
2003). Mere cohabitation does not vest marital rights. Pickens v. Pickens, 490 So. 2d 872, 875 (Miss.
1986). This Court has recognized an exception for equitable division of property where there was a
marriage or the appearance of a marriage when no legal marriage actually existed. See id. at 875; Taylor
v. Taylor, 317 So. 2d 422, 423 (Miss. 1975).
¶11. In Pickens, this Court determined that a woman was entitled to equitable distribution for domestic
services rendered. The Pickenses were once married, but chose to continue living together after they
divorced. This Court held that:
Where parties such as these live together in what must at least be acknowledged to be a
partnership and where, through their joint efforts, real property or personal property, or
both, are accumulated, an equitable division of such property will be ordered upon the
permanent breakup and separation.
490 So. 2d at 876. In Taylor, this Court again held that a putative wife was entitled to the equitable
distribution of property upon separation. This Court held that:
The facts in this case demonstrate without question that the chancellor did what a decent
regard for the sensibilities of humanity demanded. These people lived together and shared
the vicissitudes of life for eighteen years. The separation cast her adrift just as surely as if
she had been his lawful wife. The chancellor appears to have decided that the strict letter
of the law ought not to require him to ignore that he was dealing with human beings.
317 So. 2d at 423. In each of these cases, the couples had all either been married or contended to have
married. In the case sub judice, Lori and David never married or purported to have married.
¶12. The chancellor correctly relied upon the legal standard of Davis v. Davis, 643 So. 2d 931 (Miss.
1994). In Davis, this Court determined that Elvis Davis was not entitled to an equitable distribution of her
companion's business because she never participated in his business. Her companion also lavishly showered
Elvis with gifts and did, in fact, propose marriage, but Elvis refused. At the time of the complaint, Elvis was
6
living in a new home and driving a new car, all purchased by her previous companion. Here, Lori was paid
for her services rendered at David’s restaurant as he paid all of his other employees. David never intended
to marry Lori, and she was aware of his decision. Lori was also aware that David never intended to make
her a partner in his business ventures. Therefore, the chancellor and the Court of Appeals were correct in
finding that there was no evidence that Lori and David entered into a partnership or acquired assets through
their joint efforts.
CONCLUSION
¶13. The Court of Appeals and the chancellor were correct in finding that Lori and David's relationship
was more comparable to the relationship in Davis than those in Taylor and Pickens. When a man and
woman cohabit without the benefit of marriage, they do so at their own peril insofar as resolving real and
personal property disputes upon their separation. In this instant case, because the facts do not support a
finding of Lori and David entering into a partnership or acquiring assets through their joint efforts, we find
that Lori is not entitled to any distribution of property solely owned by David. Therefore, we affirm the
judgments of the Court of Appeals and the Itawamba County Chancery Court.
¶14. AFFIRMED.
SMITH, C.J., WALLER AND COBB, P.JJ., EASLEY, GRAVES, DICKINSON AND
RANDOLPH, JJ., CONCUR. DIAZ, J., NOT PARTICIPATING.
7 | 01-03-2023 | 04-27-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/865016/ | IN THE SUPREME COURT OF MISSISSIPPI
NO. 2005-IA-01494-SCT
DOROTHY ROSE, ADMINISTRATRIX OF THE
ESTATE OF KIMBERLY ROSE, DECEASED
v.
DR. N. A. BOLOGNA AND DR. JOHN A.
MARASCALCO
DATE OF JUDGMENT: 07/14/2005
TRIAL JUDGE: HON. LARRY O. LEWIS
COURT FROM WHICH APPEALED: BOLIVAR COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANT: ELLIS TURNAGE
ATTORNEYS FOR APPELLEES: DENISE WESLEY
WHITMAN B. JOHNSON, III
CLINTON M. GUENTHER
TOMMIE G. WILLIAMS
NATURE OF THE CASE: CIVIL - MEDICAL MALPRACTICE
DISPOSITION: REVERSED AND REMANDED -10/12/2006
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
EN BANC.
SMITH, CHIEF JUSTICE, FOR THE COURT:
¶1. In November of 2004, Dorothy Rose, administratrix of the estate of Kimberly Rose,
filed suit in the Circuit Court of the Second Judicial District of Bolivar County alleging that
the negligence of several healthcare providers, including Doctors N.A. Bologna and John A.
Marascalco, resulted in Kimberly Rose’s wrongful death. Drs. Bologna and Marascalco filed
separate motions to sever the claims and transfer venue to the respective counties where they
allegedly provided negligent care in accordance with Miss. Code Ann. Section 11-11-3(3)
(Rev. 2004). The circuit court determined venue was not proper in Bolivar County as to Drs.
Bologna and Marascalco. Therefore, the circuit court granted the motions to sever the claims
and transfered the severed claims against Drs. Bologna and Marascalco to the counties of
proper venues. Aggrieved by the circuit court’s ruling, Rose then filed her petition for an
interlocutory appeal, which this Court granted. See M.R.A.P. 5.
FACTS
¶2. On March 14, 2002, Kimberly Rose arrived at the Total Health Care Clinic in Bolivar
County with symptoms of illness including swelling of her hands and eyes, lower extremity
edema, and white patches on her skin. In addition to two followup visits, Kimberly eventually
returned to the clinic with complaints of headaches and diarrhea. In the meantime, Dr. Bologna
treated Kimberly at his office in Washington County for her dermatological symptoms. Also,
after a referral by the Total Health Care Clinic, Kimberly received treatment from Dr.
Marascalco at his office in Grenada County.
¶3. Kimberly was subsequently examined by a different doctor who eventually diagnosed
her illness as scleroderma. Shortly thereafter Kimberly was admitted to the Northwest Rankin
Regional Medical Center due to her illness. Tragically, three days after being admitted to the
hospital Kimberly went into cardiac arrest and efforts to resuscitate her were unsuccessful.
An autopsy was performed, and the cause of death was determined to be purulent pericarditis
secondary to scleroderma with a contributory cause of bronchopneumonia.
¶4. Dorothy Rose, administratrix of the estate of Kimberly Rose, then filed suit in Bolivar
County alleging Total Health Care Clinic, the nurse who treated Kimberly at the Total Health
Care Clinic, Dr. Bologna and Dr. Marascalco were negligent in failing to diagnose scleroderma
2
in a timely manner.1 Pursuant to Miss. Code Ann. Section 11-11-3 (3), both Dr. Bologna and
Dr. Marascalco filed separate motions to sever the claim and transfer venue to the county
where the alleged negligent services were rendered.2 The circuit court considered the motions
and eventually granted both, thus severing the claim and transferring venue as to Drs.
Marascalco and Bologna. Rose’s petition for interlocutory appeal was granted and is now
presently before this Court.
ANALYSIS
¶5. In cases pertaining to a motion for a change of venue, this Court has repeatedly applied
the abuse of discretion standard of review. Austin v. Wells, 919 So. 2d 961, 963- 64 (Miss.
2006) (citing Wayne Gen. Hosp. v. Hayes, 868 So. 2d 997, 1002 (Miss. 2004); see also
Christian v. McDonald, 907 So. 2d 286, 287-88 (Miss. 2005); Stubbs v. Miss. Farm Bureau
Cas. Ins. Co., 825 So. 2d 8, 12 (Miss. 2002); McCain Bldrs., Inc. v. Rescue Rooter, LLC, 797
So. 2d 952, 954 (Miss. 2001); Donald v. Amoco Prod. Co., 735 So. 2d 161, 180 (Miss.
1999)). “A trial judge’s ruling on such an application ‘will not be disturbed on appeal unless
it clearly appears that there has been an abuse of discretion or that the discretion has not has
not been justly and properly exercised under the circumstances of the case.’” Hayes, 868 So.
2d at 1002 (quoting Guice v. Miss. Life Ins. Co., 836 So. 2d 756, 758 (Miss. 2003)).
1
Other parties named as defendants in the suit included Dr. William McArthur and John
Does 1 through 5. However, these parties have no bearing on the Court’s analysis in the case
at bar. Therefore, this Court’s mention of the presence of these parties is limited to this
footnote.
2
Dr. Bologna examined Kimberly at his office in Washington County, and Dr.
Marascalco examined Kimberly at his office in Grenada County.
3
¶6. Today, this Court is presented with a question of proper venue, where the alleged
negligent care of multiple doctors, performed in different counties, combined to ultimately
cause the death of Kimberly Rose. The doctors allege that the issue of transfer of venue
hinges on this Court’s interpretation of the recently amended venue statute, Miss. Code Ann.
Section 11-11-3(3) (Rev. 2004), which governs the appropriate venue of a medical malpractice
action. Section 11-11-3(3) provides in pertinent part:
Notwithstanding subsection (1) of this section, any action against a licensed
physician . . . . for malpractice, negligence, error, omission, mistake, breach of
standard of care or the unauthorized rendering of professional services shall be
brought only in the county in which the alleged act or omission occurred.
This Court has previously stated “[s]tatutory interpretation is a matter of law which this Court
review de novo.” Wallace v. Town of Raleigh, 815 So. 2d 1203, 1206 (Miss. 2002) (citing
Donald v. Amoco Prod. Co., 735 So. 2d 161, 165 (Miss. 1999)).
¶7. Rose argues the circuit court erred in granting the doctors’ motion to sever the case and
transfer venue as to each doctor to separate counties. Rose claims that M.R.C.P. 20(a) and 82
(c) are silent and/or conflict with Miss. Code Ann. Section 11-11-3. Therefore, the rules
control as a matter of law.
¶8. We conclude that both Rose and the doctors are incorrect. The case at bar is clearly
a wrongful death case as noted by Rose in her First Amended Complaint, filed November 22,
2004 wherein in paragraph 1 Rose states: “This civil action seeks monetary damages for
defendants’ negligence which caused the November 1, 2002, wrongful death of Kimberly Rose
(Rose).” Thus, the arguments and cited statutes and rules upon which both Rose and the doctors
rely do not address the dispositive question governing the case sub judice. In our view the case
4
at bar is governed by this Court’s decision in Long v. McKinney, 897 So. 2d 160 (Miss. 2004),
where the Court noted that “Thus, all claims in wrongful death litigation must, by definition,
arise out of a distinct, litigable event.” Id. at 173. This is not a Rule 20 permissive joinder case
nor a Rule 82(c) case, but instead is a Rule 19 compulsory joinder case and clearly governed
by Mississippi Code Ann. Section 11-7-13, which states that “there shall be but one (1) suit
for the same death which shall ensue for the benefit of all parties concerned.” The comment
to Rule 19 states: “Compulsory joinder is an exception to the general practice of giving the
plaintiff the right to decide who shall be parties to a law suit; although a court must take
cognizance of this traditional prerogative in exercising its discretion under Rule 19, plaintiff’s
choice will have to be compromised when significant countervailing considerations make the
joinder of particular absentees desirable.” Miss. R. Civ. P. 19 cmt. In Long, the Court
concluded, “We can think of no lawsuit brought before our judiciary more qualified for
compulsory joinder provided under Rule 19, than a suit for wrongful death. We therefore hold
that, in wrongful death litigation, all claims shall be joined in one suit.” Id. at 174. In the
majority opinion written by Justice Dickinson, the Court in Long further held that
“Consolidation of suits presupposes that there are two suits to consolidate. Because we hold
that wrongful death claims must be brought in a single suit, there cannot be two suits to
consolidate.” Id.
¶9. Our wrongful death statute dates to 1857 and has historically resulted in issues among
litigants and attorneys concerning control of the litigation, joinder, and consolidation. For a
complete history of the statute see Appendix A to Long. Id. at 179. The confusion yet
remains in the case at bar. This Court is ever mindful of our duty or authority not to legislate.
5
The Legislature clearly made major reforms in various statutes during recent sessions which
included passing Mississippi Code Ann. Section 11-11-3(3). However, it is equally clear that
the wrongful death statute , Section 11- 7-13, was not considered concerning events and
multiple defendant doctors such as what we have before us now, when these changes in various
statutes where made. But for the fact that this is a wrongful death claim, the trial court might
very well have been correct in transferring venue. Adhering to the precedent of Long and
determining that Section 11-7-13 applies, we conclude that there cannot be three separate
lawsuits for the wrongful death of Kimberly Rose proceeding to trial in Bolivar, Washington
and Grenada counties. The case was filed in Bolivar County, and venue for a wrongful death
claim is proper for Bolivar County. We thus find the trial court erred.
CONCLUSION
¶10. For the reasons stated above, we find that the trial court erred in severing and
transferring the doctors’ cases to Washington and Grenada Counties. Therefore, we reverse
the trial court’s order severing the plaintiff’s case against Drs. Bologna and Marascalco and
transferring the venue as to those two claims, and we remand this case to the Bolivar County
Circuit Court for further proceedings consistent with this opinion.
¶11. REVERSED AND REMANDED.
WALLER AND COBB, P.JJ., DIAZ, EASLEY, CARLSON, DICKINSON AND
RANDOLPH, JJ., CONCUR. GRAVES, J., CONCURS IN RESULT ONLY.
6 | 01-03-2023 | 04-27-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2807828/ | - 97 -
Nebraska A dvance Sheets
291 Nebraska R eports
IN RE INTEREST OF JAHON S.
Cite as 291 Neb. 97
In re I nterest of Jahon S., a child
under 18 years of age.
State of Nebraska, appellee, v.
R eon W., appellant.
___ N.W.2d ___
Filed June 12, 2015. No. S-14-1049.
1. Juvenile Courts: Appeal and Error. An appellate court reviews juve-
nile cases de novo on the record and reaches its conclusions indepen-
dently of the juvenile court’s findings.
2. Parental Rights: Proof. Under Neb. Rev. Stat. § 43-292 (Cum. Supp.
2014), in order to terminate parental rights, the State must prove, by
clear and convincing evidence, that one or more of the statutory grounds
listed in this section have been satisfied and that termination is in the
child’s best interests.
3. ____: ____. In addition to proving a statutory ground, the State must
show that termination is in the best interests of the child.
4. Constitutional Law: Parental Rights: Proof. A parent’s right to raise
his or her child is constitutionally protected; so before a court may ter-
minate parental rights, the State must also show that the parent is unfit.
5. Parental Rights: Presumptions: Proof. There is a rebuttable presump-
tion that the best interests of a child are served by having a relationship
with his or her parent. Based on the idea that fit parents act in the best
interests of their children, this presumption is overcome only when the
State has proved that the parent is unfit.
6. Parental Rights: Statutes: Words and Phrases. The term “unfitness”
is not expressly used in Neb. Rev. Stat. § 43-292 (Cum. Supp. 2014),
but the concept is generally encompassed by the fault and neglect sub-
sections of that statute, and also through a determination of the child’s
best interests.
7. Constitutional Law: Parental Rights: Words and Phrases. In the
context of the constitutionally protected relationship between a parent
and a child, parental unfitness means a personal deficiency or incapac-
ity which has prevented, or will probably prevent, performance of a
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Cite as 291 Neb. 97
reasonable parental obligation in child rearing and which caused, or
probably will result in, detriment to a child’s well-being.
8. Parental Rights. The best interests analysis and the parental fit-
ness analysis are fact-intensive inquiries. And while both are sepa-
rate inquiries, each examines essentially the same underlying facts as
the other.
9. ____. Although incarceration alone cannot be the sole basis for terminat-
ing parental rights, it is a factor to be considered.
10. Parental Rights: Abandonment. Although incarceration itself may be
involuntary as far as a parent is concerned, the criminal conduct causing
the incarceration is voluntary.
11. ____: ____. In a case involving termination of parental rights, it is
proper to consider a parent’s inability to perform his or her parental
obligations because of incarceration.
12. Parental Rights. Children cannot, and should not, be suspended in fos-
ter care or be made to await uncertain parental maturity.
Appeal from the Separate Juvenile Court of Douglas County:
Christopher K elly, Judge. Affirmed.
Joseph L. Howard, of Dornan, Lustgarten & Troia, P.C.,
L.L.O., for appellant.
Donald W. Kleine, Douglas County Attorney, Amy
Schuchman, and Jennifer Chrystal-Clark for appellee.
Heavican, C.J., Wright, Connolly, Stephan, McCormack,
Miller-Lerman, and Cassel, JJ.
Stephan, J.
Reon W. and P’lar’e S. are the parents of Zanaya W.,
Mileaya S., Imareon S., and Jahon S. The separate juvenile
court of Douglas County terminated P’lare’s parental rights to
all four children and Reon’s parental rights to Zanaya, Mileaya,
and Imareon. Both parents filed timely appeals. We affirmed
the terminations in In re Interest of Zanaya W. et al.1 In a
separate proceeding, the same court terminated Reon’s paren-
tal rights to Jahon, the youngest of the four children. This is
Reon’s direct appeal from that order.
1
In re Interest of Zanaya W. et al., ante p. 20, ___ N.W.2d ___ (2015).
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IN RE INTEREST OF JAHON S.
Cite as 291 Neb. 97
BACKGROUND
As noted in our opinion in In re Interest of Zanaya W. et al.,
the three older children were adjudicated as children within
the meaning of Neb. Rev. Stat. § 43-247(3)(a) (Reissue 2008)
and placed with their father, Reon, after they were removed
from the custody of their mother, P’lar’e. But in March 2013,
the children were removed from Reon’s custody when the
Department of Health and Human Services (DHHS) learned
that Reon was incarcerated on pending criminal charges. On
July 9, Reon pled guilty to a charge of possession of marijuana
with intent to deliver, a Class IIIA felony. On September 10, he
was sentenced to imprisonment for 3 to 5 years.
Jahon was born in November 2013, while Reon was serv-
ing his prison sentence. Two days after his birth, an ex parte
order for emergency temporary custody was entered and he
was placed in the custody of DHHS. When he was 4 days old,
Jahon was placed with the same foster parents who care for his
three older siblings, and he remained in that placement with
his siblings at the time of the termination hearing.
In September 2014, the State filed a supplemental petition
to terminate Reon’s rights to Jahon. As grounds, it asserted
he had substantially and continuously or repeatedly neglected
and refused to give necessary parental care and protection to
Jahon and his three older siblings. Reon personally appeared
in the juvenile court with counsel on October 28 and entered a
denial to the supplemental petition. A termination hearing was
held immediately thereafter. Although Reon was present with
counsel, he did not testify or offer any evidence.
The State called two witnesses. The first was the foster par-
ent with whom Jahon and his siblings had been placed. She
testified that Jahon was placed with her in December 2013 and
that his three siblings had been placed with her since April
2013. All four children were in her care at the time of the
hearing. She testified that while the children were in her care,
Reon had sent several letters to each of them, including Jahon,
but had not visited with them in person or by telephone. She
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testified that Reon had been incarcerated during the entire time
that Jahon had been placed with her.
The second State witness was Janece Potter. She testified
that she had served as the family permanency specialist for
Jahon and his three siblings and had worked with them and
their parents from August 2012 through March 2014, when she
took a different position. Potter testified that after they became
state wards and were removed from the custody of their
mother, Zanaya and Mileaya were placed with Reon in March
2011 and that Imareon was placed with Reon in August 2012.
Potter testified that while the children were placed with Reon,
she checked on them one or two times each month and had
no concerns about their well-being other than an observation
that the house was “cluttered.” But in 2013, Potter learned that
Reon had been incarcerated in 2012 and that during his incar-
ceration, the children were cared for by Reon’s mother. Reon
had not reported this incarceration to Potter; she learned of it
from another source. On March 29, 2013, Reon was arrested
for possession of marijuana with intent to deliver and the
three children were removed and placed in foster care. While
incarcerated for this offense, Reon was charged with physically
assaulting another inmate.
Potter visited with Reon at the correctional facility where
he was incarcerated in April 2013. They discussed the fact that
drugs had been found in his home, and he reported that he had
been smoking an ounce of marijuana a day but denied selling
it. Potter stated that Reon was unable to participate in review
hearings or receive services during his incarceration.
In January 2014, Potter assumed case management respon-
sibilities for Jahon. She prepared a court report and case plan
for a review hearing held in March. The report noted that
Jahon’s needs for safety, health, and well-being were being
met in his foster home and that DHHS was working on an
alternative permanency plan of adoption. The report noted
that no services had been ordered for Reon, who was still
incarcerated. Potter stated that she had been unable to meet
with Reon since September 2013 because he had been placed
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in isolation. At some point, she learned this was because he
had been charged with the assault of another inmate. In March
2014, Potter recommended that a motion to terminate parental
rights be filed with respect to all of the children, including
Jahon, because of the length of time that the cases had been
open and the lack of progress that Reon had made with Jahon
and his older siblings.
Potter testified that in her conversations with Reon, he never
accepted responsibility for his actions or for how they affected
his children. Reon told Potter that he had been employed at the
correctional facility but that he either had quit or was fired.
He also told her that when released, he planned to move to
Florida, where his mother lived. When she asked him if he
would be cooperative with DHHS upon his release, he replied
that he would participate in services but would not cooper-
ate and “would make it very difficult.” Potter testified that
she had determined Reon’s projected release date to be in
September 2015.
Potter testified that in her opinion, termination of Reon’s
parental rights was in the best interests of Jahon. She based
her opinion on the fact that Jahon had been in foster care for
“100 percent of his life” and was in need of care, which Reon
could not provide due to his incarceration. She stated that Reon
had not been able to make any progress toward reunification
with Jahon “[d]ue to being incarcerated” and would not make
any such progress during the additional year that she believed
his incarceration would continue. She further stated that Jahon
would be at risk of harm if returned to Reon and that Reon
was not in a position to care for a child because of his incar-
ceration. She also noted that Jahon’s siblings had been in foster
care for a significant amount of time.
On cross-examination, Potter acknowledged that she had
assisted Reon in gaining custody of the three older children
before his arrest. As late as February 2013, she believed that
placement of the children with Reon was appropriate, and she
wrote in a court report that Reon was able to meet the needs
of his children by utilizing informal supports and community
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resources while seeking full-time employment. At that time,
she recommended that the permanency objective for the chil-
dren should be family preservation with Reon. Potter further
acknowledged that at that point, Reon had been voluntarily
participating in services from the juvenile court, and she sup-
ported placing the children in his custody. In a case plan for
the three older children which was in effect from July 30 until
December 29, 2013, during the time that Reon was incarcer-
ated, Potter listed “[s]trategies” which included Reon’s obtain-
ing certain evaluations and programming while “in jail” and
participating “in supervised visitation when he is released
from jail.” She was asked how Reon could be expected to
work toward reunification or provide support when no services
were being provided to him, and she responded, “I’m not sure.
There’s not a lot you can do when you’re in jail.”
On redirect examination, Potter testified that she supported
Reon’s reunification with his three older children only while
she remained unaware of his daily marijuana use and the
criminal charges which resulted in his conviction and incar-
ceration. She stated that after learning that information, she no
longer thought that Reon could provide proper parental care
and support.
In an order entered on October 29, 2014, the separate juve-
nile court terminated Reon’s parental rights to Jahon. It found
that the ground for termination specified in Neb. Rev. Stat.
§ 43-292(2) (Cum. Supp. 2014) had been met and that it was
in the best interests and welfare of Jahon that Reon’s parental
rights be terminated. The court did not state its reasoning with
respect to the best interests finding.
On November 12, 2014, Reon’s counsel filed a motion to
reconsider, in which he noted that at the termination hear-
ing, there was evidence that Reon was incarcerated “and was
not going to be paroled for another year.” The motion recited
that Reon’s incarceration “was a material factor . . . in the
Court’s decision to terminate his parental rights” and urged
reconsideration, because “[o]n November 2, 2014, Reon . . .
was paroled and is no longer incarcerated.” At a hearing held
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on November 18, Reon’s counsel advised the court that Reon
had been paroled, was living in a “halfway home,” and was
employed. No evidence was received. The juvenile court over-
ruled the motion, explaining that its decision was not based
solely on Reon’s projected release date of September 24, 2015.
Reon perfected this timely appeal.
ASSIGNMENTS OF ERROR
Reon assigns that the juvenile court erred in (1) finding his
parental rights should be terminated pursuant to § 43-292(2)
and (2) finding termination was in Jahon’s best interests. He
does not assign error with respect to the juvenile court’s ruling
on his motion to reconsider.
STANDARD OF REVIEW
[1] An appellate court reviews juvenile cases de novo on the
record and reaches its conclusions independently of the juve-
nile court’s findings.2
ANALYSIS
[2] Under § 43-292, in order to terminate parental rights,
the State must prove, by clear and convincing evidence, that
one or more of the statutory grounds listed in this section
have been satisfied and that termination is in the child’s best
interests.3 Reon first argues that the State failed to prove the
existence of a statutory ground for termination of his parental
rights to Jahon. As noted, the State sought termination under
§ 43-292(2), which authorizes termination when the parent
has substantially and continuously or repeatedly neglected
and refused to give the juvenile or a sibling of the juvenile
necessary parental care and protection. Because we affirmed
the juvenile court’s decision in case No. S-14-550 terminating
Reon’s parental rights to Zanaya, Mileaya, and Imareon on
2
In re Interest of Nedhal A., 289 Neb. 711, 856 N.W.2d 565 (2014); In re
Interest of Samantha C., 287 Neb. 644, 843 N.W.2d 665 (2014).
3
In re Interest of Nicole M., 287 Neb. 685, 844 N.W.2d 65 (2014); In re
Interest of Angelica L. & Daniel L., 277 Neb. 984, 767 N.W.2d 74 (2009).
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IN RE INTEREST OF JAHON S.
Cite as 291 Neb. 97
this same ground, which Reon did not contest in that case, the
juvenile court in this case correctly determined that the same
statutory ground for termination existed as to Jahon.4
[3-8] Reon also challenges the finding that termination of
his parental rights was in Jahon’s best interests. In addition to
proving a statutory ground, the State must show that termina-
tion is in the best interests of the child.5 A parent’s right to
raise his or her child is constitutionally protected; so before a
court may terminate parental rights, the State must also show
that the parent is unfit.6 There is a rebuttable presumption that
the best interests of a child are served by having a relationship
with his or her parent. Based on the idea that fit parents act in
the best interests of their children, this presumption is over-
come only when the State has proved that the parent is unfit.7
The term “unfitness” is not expressly used in § 43-292, but
the concept is generally encompassed by the fault and neglect
subsections of that statute, and also through a determination of
the child’s best interests.8 In the context of the constitutionally
protected relationship between a parent and a child, parental
unfitness means a personal deficiency or incapacity which has
prevented, or will probably prevent, performance of a reason-
able parental obligation in child rearing and which caused,
or probably will result in, detriment to a child’s well-being.9
4
See, In re Interest of Sir Messiah T. et al., 279 Neb. 900, 782 N.W.2d 320
(2010); In re Interest of Hope L. et al., 278 Neb. 869, 775 N.W.2d 384
(2009).
5
See In re Interest of Kendra M. et al., 283 Neb. 1014, 814 N.W.2d 747
(2012).
6
Id.; In re Interest of Ryder J., 283 Neb. 318, 809 N.W.2d 255 (2012).
7
Id. See, also, Troxel v. Granville, 530 U.S. 57, 120 S. Ct. 2054, 147 L. Ed.
2d 49 (2000).
8
In re Interest of Kendra M. et al., supra note 5; In re Interest of Hope L.
et al., supra note 4.
9
See, In re Interest of Nicole M., supra note 3; In re Interest of Kendra
M. et al., supra note 5; Uhing v. Uhing, 241 Neb. 368, 488 N.W.2d 366
(1992).
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IN RE INTEREST OF JAHON S.
Cite as 291 Neb. 97
The best interests analysis and the parental fitness analy-
sis are fact-intensive inquiries. And while both are separate
inquiries, each examines essentially the same underlying facts
as the other.10
In this case, there is evidence of Reon’s lack of parental
fitness in that he chose to use and sell marijuana during a
time when he was the sole custodial parent of Jahon’s three
older siblings, thereby placing the children at risk of harm.
As a result of this conduct, he was incarcerated at the time of
Jahon’s birth and for the first year of his life, making it impos-
sible for him to be present in Jahon’s life or provide him with
care and support. There is evidence that Reon was incarcerated
in December 2012, also at a time when he was the sole cus-
todial parent of Jahon’s three older siblings. Further, there is
evidence that Reon was charged with assaulting another inmate
during his 2013 incarceration.
[9-11] Although incarceration alone cannot be the sole basis
for terminating parental rights, it is a factor to be considered.11
And we have noted that although incarceration itself may be
involuntary as far as a parent is concerned, the criminal con-
duct causing the incarceration is voluntary.12 Thus, in a case
involving termination of parental rights, it is proper to consider
a parent’s inability to perform his or her parental obligations
because of incarceration.13
In In re Interest of DeWayne G. & Devon G.,14 we con-
cluded that termination of an incarcerated father’s rights was
in the best interests of his two sons when he had never cared
for them prior to his incarceration and when one son had been
in foster care for more than 4 years and the other for 2 years.
10
In re Interest of Nicole M., supra note 3; In re Interest of Kendra M. et al.,
supra note 5.
11
In re Interest of Ryder J., supra note 6; In re Interest of DeWayne G. &
Devon G., 263 Neb. 43, 638 N.W.2d 510 (2002).
12
In re Interest of Kalie W., 258 Neb. 46, 601 N.W.2d 753 (1999).
13
In re Interest of DeWayne G. & Devon G., supra note 11.
14
Id.
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IN RE INTEREST OF JAHON S.
Cite as 291 Neb. 97
We reached this conclusion despite the father’s testimony that
he was scheduled for parole approximately 3 months after the
termination hearing.
Although it appears from the record that Reon may have
been paroled within a month following the termination hear-
ing, there is no basis for concluding that he is prepared to
be a parent to Jahon. His past criminal actions demonstrate
voluntary conduct that prevented him from functioning as a fit
parent. The only evidence as to his future ability to parent is
that he does not intend to cooperate with DHHS and “would
make it very difficult” for that agency to reunify him with his
children. Further, there is evidence that Reon refuses to accept
responsibility for his criminal actions and how they affected
his children.
[12] Children cannot, and should not, be suspended in fos-
ter care or be made to await uncertain parental maturity.15 As
a result of decisions made by Reon which adversely reflect
upon his parental fitness, Jahon has been in foster care for
his entire life, and there is no basis on this record to con-
clude that permanency could be achieved in the foreseeable
future if Reon’s parental rights remain intact. We therefore
conclude that the separate juvenile court did not err in find-
ing that termination of Reon’s parental rights was in Jahon’s
best interests.
CONCLUSION
For the foregoing reasons, we affirm the judgment of the
separate juvenile court terminating Reon’s parental rights
to Jahon.
A ffirmed.
15
In re Interest of Walter W., 274 Neb. 859, 744 N.W.2d 55 (2008). | 01-03-2023 | 06-12-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/865441/ | IN THE SUPREME COURT OF MISSISSIPPI
NO. 2007-KA-00499-SCT
JOE SOLOMON PRUITT
v.
STATE OF MISSISSIPPI
ON MOTION FOR REHEARING
DATE OF JUDGMENT: 03/07/2007
TRIAL JUDGE: HON. PAUL S. FUNDERBURK
COURT FROM WHICH APPEALED: MONROE COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANT: OFFICE OF INDIGENT APPEALS
BY: BENJAMIN A. SUBER
ATTORNEY FOR APPELLEE: OFFICE OF THE ATTORNEY GENERAL
BY: LA DONNA C. HOLLAND
DISTRICT ATTORNEY: JOHN R. YOUNG
NATURE OF THE CASE: CRIMINAL - FELONY
DISPOSITION: AFFIRMED - 07/24/2008
MOTION FOR REHEARING FILED: 04/23/2008
MANDATE ISSUED:
EN BANC.
WALLER, PRESIDING JUSTICE, FOR THE COURT:
¶1. The appellant’s motion for rehearing is denied. The previous opinions are withdrawn
and these opinions are substituted therefor.
¶2. Joe Solomon Pruitt appeals from his conviction on a charge of armed robbery in the
Circuit Court of Monroe County, Mississippi, alleging a Batson violation in the selection of
the jury. Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986). Finding
the trial court correctly found no purposeful discrimination, we affirm.
FACTS
¶3. Loomis Fargo fired Alonzo Jones from employment as a delivery driver. Jones
recruited his friend Joe Solomon Pruitt and James Person to rob the Renasant Bank in
Smithville, Mississippi, one of the banks on his former route. Jones knew the layout of the
bank, the Loomis delivery schedule, and that two women staffed the bank during the day.
Approximately a week after Jones was fired, Pruitt, Jones, and Person drove from Memphis,
Tennessee, to the Renasant Bank in Smithville on the Loomis delivery day. Pruitt and
Person, masked and gloved, entered the bank and forced the two employees to place the
bank’s cash into a backpack and a sack. Pruitt was armed with a handgun. Pruitt and Person
left the bank and entered the car, where Jones waited. As they were leaving, a dye pack in
Person’s sack exploded, filling the car with smoke. He tossed the bag out the car window,
and they fled back toward Memphis.
¶4. At a four-way stop near Fulton, Mississippi, a sheriff’s deputy saw the bank robbers
and followed them as they entered Highway 78. Next, a state trooper spotted them on the
highway and crossed the median to tail them, along with the deputy. Jones exited the
highway at the next exit. He discovered the exit had no outlet, and he stopped the car beside
a wooded area. The three men left the car and fled into the woods. After wandering around,
they came across a shed next to a white house, where they hid and slept. The following day,
they tried to leave in a second car, which became stuck in a ditch. They returned to the white
house and asked the resident for assistance. The resident’s son was attempting to free the
vehicle when law enforcement officers arrived at the house and surrounded it. The bank
2
robbers surrendered. Some of the stolen cash was found hidden inside a couch in the house
where the robbers were apprehended.
DISCUSSION
¶5. Pruitt argues one issue on appeal.1
WHETHER THE TRIAL COURT ERRED IN ACCEPTING THE
RACE-NEUTRAL REASONS GIVEN BY THE STATE AFTER A
BATSON OBJECTION REGARDING THREE JURORS.
¶6. Pruitt’s only issue raised on appeal is a challenge to the sufficiency of the State’s race-
neutral reasons for peremptorily striking three African-American members of the venire.
After the circuit court struck some members of the venire for cause and held a brief
discussion about the number of peremptory strikes available to each side, the court stated the
following: “If you will, I will be in chambers. As soon as you get a jury selected, I want to
– I want to seat the jury promptly at twelve o’clock, noon.” The court then recessed.
¶7. After the recess, the court came back on the record with the question, “All right. Do
we have a jury yet?” Pruitt immediately raised a Batson challenge, stating that the State had
struck three African-Americans on the first panel of the venire: jurors 1, 2 and 14. Batson,
476 U.S. at 96-98. The State responded by stating that it tendered the panel with four
African-Americans among the twelve jurors and volunteered its reasons for the peremptory
strikes. The circuit court ruled:
1
After briefing concluded, Pruitt filed a brief on his own behalf. We will not address
the issues raised in Pruitt’s brief because they are procedurally barred. M.R.A.P. 28(a)(3);
Sumrell v. State, 972 So. 2d 572, 574-75 (Miss. 2008).
3
[T]hat the . . . there is not a – or was not a pattern of discrimination by the
State in Striking Jurors 1, 2, and 14. . . . There is no pattern of discrimination
established to even require the State to give race-neutral reasons. However,
they have given what the Court considers race-neutral reasons for these strikes.
The Court does not see these reasons as pre-textual, not race-based. . . . So the
defendant’s motion is overruled.
The jury consisted of five white males, two white females, one African-American male, three
African-American females, and one female juror whose race was not identified for the
record. Two white males served as alternates.
¶8. This Court reviews a trial court’s ruling on a Batson challenge with great deference
and will not overturn the trial court’s ruling unless it is clearly erroneous or against the
overwhelming weight of the evidence. Flowers v. State, 947 So. 2d 910, 917 (Miss. 2007).
See also Batson, 476 U.S. at 98 n.21; Chisolm v. State, 529 So. 2d 630, 633 (Miss. 1988);
Lockett v. State, 517 So. 2d 1346, 1352 (Miss. 1987). When addressing a Batson challenge,
a trial court employs a three-step procedure: (1) the defendant must make out a prima facie
case by showing that the totality of the relevant facts gives rise to an inference of
discriminatory purpose; (2) once the defendant has made out a prima facie case, the burden
shifts to the State to explain adequately the racial exclusion by offering permissible,
race-neutral justifications for the strikes; and (3) if a race-neutral explanation is tendered, the
trial court must then decide whether the opponent of the strike has proved purposeful racial
discrimination. Johnson v. California, 545 U.S. 162, 168, 125 S. Ct. 2410, 2416, 162 L. Ed.
2d 129, 138 (2005). The burden remains on the opponent of the strike to show that the
race-neutral explanation given is merely a pretext for racial discrimination. Hicks v. State,
4
973 So. 2d 211, 219 (Miss. 2007) (citing Berry v. State, 802 So. 2d 1033,1042 (Miss.
2001)).
¶9. Pruitt argues the State’s reasons for striking the three jurors were pretexts for racial
discrimination. The State responds by arguing the reasons are immaterial because the trial
court ruled Pruitt failed to make a prima facie showing of purposeful discrimination. In the
alternative, the State argues the reasons offered by the prosecutors are race-neutral and
demonstrate no pretext for racial discrimination. We will examine each of the State’s
arguments.
¶10. This Court must first determine whether the issue of Pruitt establishing a prima facie
case was dispositive. In Hernandez v. New York, a plurality opinion, the United States
Supreme Court considered “the proper application of Batson.” Hernandez, 500 U.S. 352,
355, 111 S. Ct. 1859, 114 L. Ed. 2d 395 (1991). The defendant made a Batson objection; the
State volunteered its race-neutral reasons before the trial court ruled on whether the
defendant had established a prima facie case; and the trial court rejected the defendant’s
challenge. Id. at 356-58. The Supreme Court explained that with regard to the Batson three-
step procedure, “where the [State] has done everything that would be required of him if the
[defendant] had properly made out a prima facie case, whether the [defendant] really did so
is no longer relevant.” Id. (citing U. S. Postal Serv. Bd. of Governors v. Aikens, 460 U.S.
711, 715, 75 L. Ed. 2d 403, 103 S. Ct. 1478 (1983)). The Supreme Court specified that:
[o]nce a prosecutor has offered a race-neutral explanation for the peremptory
challenges and the trial court has ruled on the ultimate question of intentional
5
discrimination, the preliminary issue of whether the defendant had made a
prima facie showing becomes moot.
Hernandez, 500 U.S. 352 at 359.
¶11. The State argues that Hernandez is inapplicable to the case at hand because in
Hernandez, the trial court never ruled on whether the defendant had established a prima facie
case. In the case at hand, the trial court did rule that Pruitt had not established a prima facie
case. While this distinction is accurate, it does not render Hernandez inapplicable. Under
the same facts as the case at hand, this Court has either effectively or explicitly followed the
Hernandez procedure.
¶12. In Foster v. State, this Court effectively followed Hernandez. Foster, 639 So. 2d
1263, 1279-1280 (Miss. 1994). In Foster, the trial court ruled that the defendant had failed
to establish a prima facie case, required the State to give race-neutral reasons and found that
there was no intentional discrimination. Id. at 1279-80. Foster noted that the trial court had
ruled that the defendant had failed to establish a prima facie showing of discrimination. Id.
at 1279. However, this Court declined to review the trial court’s ruling on the defendant’s
prima facie case. Id. Instead, this Court proceeded to address the State’s race-neutral
reasons and the trial court’s ruling on the ultimate question of intentional discrimination.2
Id. at 1279-80. Foster did not cite Hernandez, but in accord with Hernandez, it declined
to address the trial court’s determination of whether the defendant had established a prima
2
Foster found that the trial court had implicitly ruled that the reasons given by the
State were sufficiently race-neutral. Foster, 639 So. 2d at 1280.
6
facie case, focusing on the propriety of the trial court’s ruling with regard to the ultimate
question. Id. at 1279-80.
¶13. In Manning v. State, this Court explicitly followed Hernandez. Manning v. State,
726 So. 2d 1152 (Miss. 1998), overruled on other grounds by Weatherspoon v. State, 732
So. 2d 158, 162 (Miss. 1999). In Manning, the trial court ruled that the defendant had failed
to establish a prima facie case, required the State to give race-neutral reasons, and found that
there was no intentional discrimination. Id. at 1182. On appeal, this Court held that whether
the defendant had established a prima facie case was moot under Hernandez, since the State
had offered race-neutral reasons and the trial court had ruled on the ultimate question of
intentional discrimination. Id. at 1182-83. Like Foster, Manning declined to address the
issue of whether a prima facie case has been established. Id. at 1183-84.
¶14. In the case at bar, the State offered a race-neutral explanation for its peremptory
challenges, and the trial court ruled on the ultimate question of intentional discrimination.
Therefore, in accordance with our precedent, which follows the Hernandez procedure, we
decline to address whether the defendant established a prima facie case and proceed to
address the propriety of the trial court’s ruling on the ultimate question.
¶15. Pruitt raised a Batson challenge, questioning three strikes exercised by the State. The
State offered reasons for each strike. The State explained that it struck juror number one
because her jury form indicated that she had short-term employment, lived in a high-crime
area, was a single mother, and according to one of the law enforcement officers, had a
relative who had been prosecuted in that county. The State struck juror number two based
7
on information from one of the law enforcement officers that this juror had a relative who
had been recently prosecuted. The State struck juror number fourteen because she had short-
term employment and one of the law enforcement officers informed the prosecutor that the
State had prosecuted two of the juror’s relatives. The State also noted that it tendered four
African-American jurors.
¶16. Pruitt argued that the State’s reasons included several of the five indicia of pretext this
Court listed in Lynch v. State. 877 So. 2d 1254, 1272 (Miss. 2004). The indicia of pretext
for use in analyzing race-neutral reasons under Batson are:
(1) disparate treatment, that is, the presence of unchallenged jurors of the
opposite race who share the characteristic given as the basis for the challenge;
(2) the failure to voir dire as to the characteristic cited; . . . (3) the
characteristic cited is unrelated to the facts of the case; (4) lack of record
support for the stated reason; and (5) group-based traits.
Id. Pruitt argued that no juror was questioned at voir dire about the characteristic for which
she was struck. Pruitt also argued that there is a lack of record support for whether the State
examined the officers’ allegations that these jurors were related to individuals formerly
prosecuted in that county. Finally, Pruitt argued that living in a high-crime area was a group-
based trait.
¶17. As the State asserts, each of its reasons previously has been held by this Court to be
race-neutral. Reasons this Court has accepted as race-neutral include being single with
children, having short-term employment, and having a friend or family member charged with
a crime. Magee v. State, 720 So. 2d 186, 188-89 (Miss. 1998). The Court also has held that
“living in a ‘high crime’ area” is an acceptable, race-neutral reason. Lynch v. State, 877 So.
8
2d 1254, 1271-72 (Miss. 2004). This Court has cautioned, however, that previous opinions
holding reasons to be race-neutral should not be construed to hold those reasons to be
automatically race-neutral in any other case. Lockett v. State, 517 So. 2d 1346, 1353 (Miss.
1987). Thus, this Court will examine each reason which Pruitt argued was pretext.
¶18. Concerning the issue of whether a juror living in a high-crime area is pretext,
precedent holding this as a race-neutral reason previously has been sufficient to affirm the
trial court’s decision. Baldwin v. State, 732 So. 2d 236, 243-44 (Miss. 1999). Further
indicating there was no intentional discrimination involved in striking this juror, the
additional reasons cited—short-term employment and single motherhood, which were
unchallenged by Pruitt—also have previously been held to be race-neutral. Magee, 720 So.
2d at 188-89.
¶19. With regard to Pruitt’s argument that the record lacked support that the jurors were
related to persons prosecuted by the county, this Court has held that “[a]lthough lack of
record support is one indication of pretext . . . the basis for the prosecutor’s strike need not
be in the record.” Manning v. State, 765 So. 2d 516, 519 (Miss. 2000) (citing Thorson v.
State, 721 So. 2d 590, 597-98 (Miss. 1998) (prosecutor acting in good faith may offer a
race-neutral reason supplied to him by a third party)). This Court has stated:
[w]e decline to set any limits on the prosecutor's use of any legitimate
informational source heretofore or hereafter available as to jurors.
Furthermore, the prosecutor does not have to question a juror in open court
about such information before using it as a racially neutral ground to make a
peremptory strike, as long as the source of the information and the practice
itself are not racially discriminatory.
9
Snow v. State, 800 So. 2d 472, 482 (Miss. 2001) (quoting Brown v. State, 749 So. 2d 82, 87
(Miss. 1999) (citing Lockett, 517 So. 2d at 1352)). See also Flowers v. State, 947 So. 2d
910, 925 (Miss. 2007). Accordingly, Pruitt’s arguments concerning lack of record and failure
to voir dire are insufficient to overcome the deference we give to the trial court with regard
to its ruling on a Batson challenge.3
¶20. Relying on Hatten v. State, 628 So. 2d 294 (Miss. 1993), the dissent argues that the
trial court erred because it did not make specific findings in connection with its ruling on the
State’s reasons. Batson, the case which originally defined the three-step analysis required
in a jury-discrimination challenge, did not articulate a particular means of accomplishing the
3
The dissent cites Snyder v. Louisiana, 128 S. Ct. 1203, 1209, 170 L. Ed. 2d 175
(2008), as clearly supporting the proposition that an appellate court should not defer to a trial
court which did not make specific findings of fact on the record for each race-neutral reason
proffered. This is a generalization and overstatement simply not found in Snyder. In Snyder,
“the Supreme Court rejected the State’s argument that the prosecutor’s peremptory challenge
was validly based on a prospective juror’s nervousness for the reason that the record did not
reflect whether the trial court, in allowing the challenge, had noted, recalled or made a
determination as to the juror’s demeanor.” Haynes v. Quarterman, 526 F.3d 189, 199 (5 th
Cir. 2008). The Supreme Court did not defer to the trial court because of the nature of the
reason. “[D]eterminations of credibility and demeanor lie ‘peculiarly within a trial judge’s
province.’” Snyder, 128 S. Ct. at 1208 (citing Hernandez, 500 U.S. at 365). Without a trial
court determination on the record, the Supreme Court could not presume that the trial judge
credited the prosecutor’s assertion that the juror had exhibited the demeanor suggested.
Snyder, 128 S. Ct. at 1209.
The dissent quotes the Supreme Court’s note that “deference is especially appropriate
where a trial judge has made a finding that an attorney credibly relied on demeanor in
exercising a strike.” Id. (emphasis added). From this narrow statement, there is no inference
that the Supreme Court was prohibiting or even discouraging deference in all cases in which
the trial court fails to make specific findings for each proffered reason. In fact, the Supreme
Court reiterates its position that “in the absence of exceptional circumstances, we would
defer to [the trial court].” Id. at 1208 (citing Hernandez, 500 U.S. at 365). The dissent
misstates the Supreme Court’s analysis in Snyder.
10
third step. Batson, 476 U.S. at 98 (“The trial court then will have the duty to determine if the
defendant has established purposeful discrimination.”). The Supreme Court has not since
required trial courts to employ any specific process in carrying out steps two and three of the
Batson procedure. On the contrary, in addressing a Batson claim, the Supreme Court has
stated, “[w]e adhere to the proposition that a state court need not make detailed findings
addressing all the evidence before it.” Miller-El v. Cockrell, 537 U.S. 322, 347, 123 S. Ct.
1029, 154 L. Ed. 2d 931 (2003). A number of courts have used this statement to reject the
argument that a trial court must make specific findings of fact regarding the proffered race-
neutral reasons. See e.g., State v. Frazier, 115 Ohio St. 3d 139, 152 (2007) (while more
thorough findings would have been helpful, “the trial court is not compelled to make detailed
factual findings to comply with Batson”); Lamon v. Boatwright, 467 F.3d 1097, 1101 (7th
Cir. 2006) (where a trial court failed to make findings on each proffered reason, it is
sufficient if the appellate court can infer from the record that the trial judge engaged in the
step-three inquiry); Messiah v. Duncan, 435 F.3d 186, 198 (2d Cir. 2006) (“As long as a trial
judge affords the parties a reasonable opportunity to make their respective records, he may
express his Batson ruling on the credibility of a proffered race-neutral explanation in the
form of a clear rejection or acceptance of a Batson challenge.”)
¶21. Moreover, in Burnett v. Fulton, this Court held that “[t]he trial judge was not required
to state on-the-record ‘specific explanations’ for accepting race-neutral reasons for striking
a juror.” Burnett, 854 So. 2d 1010, 1016 (Miss. 2003). In Burnett, “[a]lthough the [trial]
judge allowed the reasons to stand, he did not make ‘specific explanation’ on the record.”
11
Burnett, 854 So. 2d at 1013. This Court cited Hatten for the proposition that “trial court
judges should make on-the-record factual determinations of race-neutral reasons in cases
involving Batson challenges.” Burnett, 854 So. 2d at 1014 (citing Hatten, 628 So. 2d at
298) (emphasis added). However, this Court explained that “[t]he trial judge need only have
submitted to the court [sic] a basis in fact so as to permit a reasonable judgment to be made
that the reason is not contrived.” Burnett, 854 So. 2d at 1016 (citing Hatten, 628 So. 2d at
299). This Court declared:
[w]here a trial judge fails to elucidate such a specific explanation for each
race-neutral reason given, we will not remand the case for that Batson-related
purpose alone. This Court is fully capable of balancing the Batson factors in
cases such as this one. Continued remand of such cases only wastes the trial
court’s limited resources and acts to further delay justice.
Burnett, 854 So. 2d at 1016. Accordingly, in the case at bar we find the trial court’s ruling
sufficient for review.
¶22. As this Court has recognized the reasons given for striking each of these venire
members as a race-neutral explanation, we find no clear error in the trial court’s ruling. See
Baldwin, 732 So. 2d at 243-44. Considering that “the ultimate burden of persuasion
regarding racial motivation rests with, and never shifts from, the opponent of the strike,”
Purkett v. Elem, 514 U.S. 765, 768, 115 S. Ct. 1769, 131 L. Ed. 2d 834 (1995), we have
examined the evidence put forth by Pruitt at trial and find that Pruitt failed to meet his
burden.4 The trial court's denial of Pruitt's Batson challenge is affirmed.
4
The dissent justifies reversal partially by comparing the length of employment of
juror number fourteen who was stricken with that of white venire persons. This comparison
12
¶23. As an addendum to this opinion, we must take exception to the trial court’s actions
in directing the lawyers to select the jury outside its presence. The fact that the peremptory
strikes portion of the jury selection was not held on the record posed significant problems in
consideration of this appeal. According to the rules for circuit court, “Constitutional
challenges to the use of peremptory challenges shall be made at the time each panel is
tendered.” URCCC 4.05B. The application of this rule requires, at the time the peremptory
strikes are made, the presence of the judge to rule on any challenge, and the court reporter
to record the arguments and rulings.
CONCLUSION
¶24. Pruitt failed to show under Batson that the State intentionally discriminated in
exercising its peremptory strikes. Therefore, we affirm his conviction.
¶25. CONVICTION OF ARMED ROBBERY AND SENTENCE OF THIRTY-FIVE
(35) YEARS, WITH FIVE (5) YEARS SUSPENDED, WITH CONDITIONS, IN THE
CUSTODY OF THE MISSISSIPPI DEPARTMENT OF CORRECTIONS,
AFFIRMED. THE APPELLANT SHALL BE PLACED UNDER POST-RELEASE
SUPERVISION UPON RELEASE FROM THE TERM OF INCARCERATION FOR
A PERIOD OF FIVE (5) YEARS.
SMITH, C.J., EASLEY, CARLSON, DICKINSON, RANDOLPH AND LAMAR,
JJ., CONCUR. DIAZ, P.J., DISSENTS WITH SEPARATE WRITTEN OPINION
JOINED BY GRAVES, J.
was not presented by Pruitt during trial. This Court has specifically declined to consider
arguments of pretext upon which the trial court has had no opportunity to rule. Flowers v.
State, 947 So. 2d 910, 921-22 (Miss. 2007) (citing Evans v. State, 725 So. 2d 613, 632
(Miss. 1997)). To do otherwise would be in violation of our long-standing rule that issues
not presented to trial court are procedurally barred, and any error is waived. Flowers, 947
So. 2d at 922.
13
DIAZ, PRESIDING JUSTICE, DISSENTING:
¶26. Because the trial court erred in overruling Pruitt’s Batson challenge with respect to
two African-American prospective jurors and committed reversible error by not making an
on-the-record factual determination of whether the State’s proffered reasons were non-
pretextual, I dissent.
¶27. The State’s race-neutral reasons for striking Juror Number 14, Mary Louise McMillan,
were that she had a history of short-term employment and that she was related to individuals
who had been prosecuted. Regarding the State’s first reason for striking McMillan, two
indicia of pretext are present in the record. First, the State accepted two white jurors who
indicated on their juror cards that they had been employed by their present employer for six
weeks and one year, respectively, but struck McMillan, who indicated on her juror card that
she had been employed by her present employer for six months. Mack v. State, 650 So. 2d
1289, 1298 (Miss. 1994) (stating that “presence of unchallenged jurors of the opposite race
who share the characteristic given as the basis for the challenge” is an indicium of pretext).
Second, the State did not ask McMillan any questions about her employment history. Id.
(stating that “failure to voir dire as to the characteristic cited” is an indicium of pretext).
Because there were unchallenged jurors of the opposite race who had also been employed
for a short period of time, and the State failed to conduct voir dire as to this reason, I find that
this reason was pretextual.
¶28. As for the State’s second reason for striking McMillan, there are also two indicia of
pretext. First, the State did not question McMillan about her alleged relationship with
14
individuals who had allegedly been prosecuted. Second, the record reflects that the State
obtained this information about McMillan from a law enforcement officer; the assistant
district attorney stated that he had “concerns via Officer Shumpert, that [McMillan] [wa]s
related to persons that have been prosecuted.”
¶29. The State also struck Juror Number 2, Tracy Lagrone, because the prosecutor had
been told by a law enforcement officer that she was possibly related to an individual who had
been prosecuted by the same district attorney’s office. The State’s explanation of the reason
for striking Lagrone was as follows:
Tracy Lagrone, once again, one of the law enforcement officers expressed
concern that she is related to one of our supervisors here whose son we have
prosecuted in the very recent past. . . . In any event, the reason that we made
that strike was because of concern that she was related to the supervisor whose
son we had prosecuted.
Despite having “concerns” about McMillan and Lagrone being related to individuals who
had been prosecuted, the State never directly asked McMillan or Lagrone during voir dire
whether they were related to such individuals.5 Accordingly, the State failed to conduct voir
dire as to McMillan’s and Lagrone’s alleged relationships to these unidentified individuals
who had allegedly been prosecuted. See Mack, 650 So. 2d at 1298 (“The failure to voir dire
usually comes into play when the prosecutor expresses some suspicion or uncertainty about
the true situation involving the juror, such as when he ‘believes’ that the juror is related to
5
During voir dire the State did ask whether any of the venirepersons had a relative or
close friend who had “ever been arrested or charged with a felony,” but the record does not
reflect whether McMillan or Lagrone raised their hands.
15
a criminal.”). “‘[T]he State’s failure to engage in any meaningful voir dire examination on
a subject the State alleges it is concerned about is evidence suggesting that the explanation
is a sham and a pretext for discrimination.’” Miller-El v. Dretke, 545 U.S. 231, 246, 125 S.
Ct. 2317, 2328, 162 L. Ed. 2d 196 (2005) (quoting Ex parte Travis, 776 So. 2d 874, 881
(Ala. 2000)). Moreover, there is no support in the record for this supposedly race-neutral
reason. Accordingly, the State’s “failure to conduct voir dire [and the lack of record support]
must weigh against the state in an evaluation of” whether this reason for using a peremptory
strike against McMillan and Lagrone was a pretext for racial discrimination. Mack, 650 So.
2d at 1298.
¶30. Of course, these two indicia of pretext must be “viewed . . . in light of the relative
strength of the prima facie case of discrimination.” Id. Even though Pruitt’s prima facie case
is not strong, I conclude that the trial court clearly erred in overruling Pruitt’s Batson
challenges to the strikes of McMillan and Lagrone. The State did not examine McMillan or
Lagrone about their alleged relationships to individuals who had allegedly been prosecuted,
give them an opportunity to respond to these allegations, or produce any evidence of such
relationships. Moreover, the State did not provide this information to Pruitt’s attorney prior
to or during voir dire, which prevented his attorney from evaluating the veracity of these
allegations. The cumulative effect of all of this necessitates a finding that the trial court’s
ruling that this explanation for the strikes of McMillan and Lagrone was not a pretext for
racial discrimination was Batson error. See Howell v. State, 860 So. 2d 704, 766-68 (Miss.
16
2003) (Graves, J., dissenting).6 Accordingly, the trial court committed clear error in
overruling Pruitt’s Batson challenge with respect to McMillan and Lagrone.
¶31. The trial court also committed reversible error, in my judgment, by not making any
factual findings regarding the race-neutral reasons proffered by the State for striking
McMillan and Lagrone. This Court has held that when considering a Batson challenge, a trial
court must “make an on-the-record, factual determination, of the merits of the reasons cited
by the State for its use of peremptory challenges against potential jurors.” Hatten v. State,
628 So. 2d 294, 298 (Miss. 1993). The trial court must also “give . . . [a] ‘clear and
reasonably specific’ explanation for [its] ruling.” Id. at 299. “Mere broad conclusions at the
end of the Batson process will not suffice.” Gary v. State, 760 So. 2d 743, 748 (Miss. 2000).
Moreover, the United States Supreme Court has recently stated that when reviewing a trial
court’s ruling on a Batson challenge, an appellate court should not defer to the trial court if
6
Justice Graves stated in Howell:
Allowing the State to present uncorroborated facts and information to the court
in support of its peremptory challenge of black jurors after the voir dire
process has been completed denies [the defendant] the basic fairness
guaranteed under the Constitution and rewards the State for failure to ask any
relevant questions of [the stricken venirepersons].
Id. at 767-68 (emphasis in original). I also agree with Justice Graves that there should be a
“require[ment] [that] the party attempting to exercise the peremptory strike . . . question the
person who is the object of that strike, before it may challenge them.” Id. at 768.
17
it did not make “specific finding[s] on the record” regarding each of the prosecutor’s
explanations for its strikes. See Snyder v. Louisiana, 128 S. Ct. 1203, 1209, 170 L. Ed. 2d
175, 182 (2008) (“[D]eference is especially appropriate where a trial judge has made a finding
that an attorney credibly relied on demeanor in exercising a strike. Here, however, the record
does not show that the trial judge actually made a determination concerning Mr. Brooks'
demeanor. The trial judge was given two explanations for the strike. Rather than making a
specific finding on the record concerning Mr. Brooks' demeanor, the trial judge simply
allowed the challenge without explanation.”); cf. id. at 1213 (Thomas, J., dissenting).
¶32. The majority essentially argues that the trial court was not required to make any
findings of fact regarding the State’s race-neutral reasons for its strikes against African-
American venirepersons. The only case it can cite in support of its argument is Burnett v.
Fulton, 854 So. 2d 1010 (Miss. 2003). Burnett involved a complete mischaracterization of
Hatten and thus was wrongly decided. The Burnett Court interpreted the Hatten Court’s
holding to be merely admonitory when it clearly was not: “[W]e today decide it necessary that
trial courts make an on-the-record, factual determination, of the merits of the reasons cited by
the State for its use of peremptory challenges against potential jurors. This requirement is to
be prospective in nature.” Hatten, 628 So. 2d at 298 (emphasis added). The Burnett Court
failed to recognize how essential it is that trial courts make on-the-record factual
determinations when ruling on Batson challenges. If a trial court does not make findings of
fact, it is extremely difficult for us to determine why the court ruled the way it did, and
therefore whether that ruling should be upheld. See id. (“Obviously, where a trial court offers
18
clear factual findings relative to its decision to accept the State's reasons for peremptory
strikes, the guesswork surrounding the trial court's ruling is eliminated upon appeal of a
Batson issue to this Court.”); Burnett, 854 So. 2d at 1017 (McRae, P.J., dissenting) (“How
are we to review the trial judge's findings of fact regarding the proposed race-neutral reasons
when no specific findings are made?”). Accordingly, Burnett should be overruled, and we
should continue to adhere to our holding in Hatten.
¶33. A trial court certainly does not “need [to] make detailed findings addressing all the
evidence before it.” Miller-El v. Cockrell, 537 U.S. 322, 347, 123 S. Ct. 1029, 154 L. Ed. 2d
931 (2003). But, contrary to the assertions of the majority, a trial court does need to make
some factual findings regarding the race-neutral reasons given for each strike. In this case,
the trial court simply did not make any findings of fact. It gave the following explanation for
its ruling:
[T]hey have given what the Court considers race-neutral reasons for these
strikes. The Court does not see these reasons as pre-textual, not race-based.
Therefore, jurors, as I understand it, of the African-American race that were
tendered by the State; Jurors 4, Ethel Lee Haynes; Juror 9, Barbara Michelle
McDonald; Juror 12, Tommy L. Griffin, and Juror 15, Shirley Ann Braylock.
So the defendant’s motion is overruled.
Clearly, the trial court did not give a “clear and reasonably specific” explanation of its ruling
with respect to the strikes of McMillan and Lagrone; indeed, the court’s ruling is based on
nothing more than its ipse dixit. Unlike the trial court in Hatten, it “merely accept[ed] the
specific reasons given by the prosecution at face value, . . . [instead of] consider[ing] whether
they were contrived.” Hatten, 628 So. 2d at 299. Because of the trial court’s failure to make
19
an on-the-record factual determination of whether the State’s reasons were non-pretextual, we
should, at the very least, remand this case for a hearing and findings in accordance with
Hatten. See, e.g., Johnson v. State, 754 So. 2d 1178, 1180 (Miss. 2000) (remanding for a
hearing in accordance with Hatten). However, I would hold that the trial court’s failure in
this case to make an on-the-record factual determination constitutes reversible error.
¶34. “Hatten does not require literal truth in the reason proffered. It only requires that there
be some basis in fact sufficient to allow the court to make a reasonable judgment that it is not
contrived.” Snow v. State, 800 So. 2d 472, 480-81 (Miss. 2001). Because the court did not
determine whether the State’s allegations that McMillan and Lagrone were related to
individuals who had been prosecuted had some basis in fact, there is no way to determine if
its judgment that these allegations were not contrived was reasonable. When a prospective
juror is struck based on information received from outside sources, the trial court has a duty
to probe the reliability of this information:
While we do not hold today that our trial judges should conduct a ‘mini-
hearing’ within a Batson hearing each time a peremptory challenge is exercised
based on information gained from outside sources, we do depend on the trial
courts to exercise caution to ensure that peremptory challenges based on
information from outside sources is credible and supported by on-the-record
factual findings to this effect and that a complete record is made on this issue.
If in doubt about the validity of outside information, the trial court should do
what is necessary to ensure the proposed reasons are non-pretextual. This may
include questioning the outside source on the record.
Brawner v. State, 872 So. 2d 1, 12 (Miss. 2004). The trial court in this case did not make any
effort to determine whether the information the assistant district attorney received from the
law enforcement officers about McMillan or Lagrone was true. The trial court’s failure to
20
make any factual findings regarding this outside information, in my judgment, requires
reversal. See Bounds v. State, 688 So. 2d 1362, 1367 (Miss. 1997), overruled on other
grounds by Brown v. State, 890 So. 2d 901, 913 (Miss. 2004) (reversing and remanding for
a new trial because of failure to comply with Hatten); Bogan v. State, 811 So. 2d 286, 288
(Miss. Ct. App. 2001) (same).
¶35. For the foregoing reasons, I would reverse the judgment of the trial court and remand
this case for a new trial.
GRAVES, J., JOINS THIS OPINION.
21 | 01-03-2023 | 04-27-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/865442/ | IN THE SUPREME COURT OF MISSISSIPPI
NO. 2007-CA-00532-SCT
SHARON PARKER AND ALINE WHISENANT
v.
HARRISON COUNTY BOARD OF SUPERVISORS
AND WILFRED E. ROSS
DATE OF JUDGMENT: 02/26/2007
TRIAL JUDGE: HON. LISA P. DODSON
COURT FROM WHICH APPEALED: HARRISON COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANTS: GEORGE W. BYRNE, JR.
ATTORNEY FOR APPELLEES: KAREN J. YOUNG
NATURE OF THE CASE: CIVIL - PERSONAL INJURY
DISPOSITION: AFFIRMED - 07/31/2008
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE SMITH, C.J., CARLSON AND DICKINSON, JJ.
CARLSON, JUSTICE, FOR THE COURT:
¶1. Aggrieved by the Harrison County Circuit Court’s entry of a judgment of dismissal
pursuant to a grant of summary judgment for failure to comply with the notice provisions of
the Mississippi Tort Claims Act, Sharon Parker and Aline Whisenant appeal to us. Finding
no error, we affirm.
FACTS AND PROCEEDINGS IN THE TRIAL COURT
¶2. On July 2, 2003, Sharon Parker was operating a motor vehicle in a westerly direction
on Highway 90 in Biloxi, and Aline Whisenant was a passenger in Parker’s vehicle. When
Parker stopped her vehicle due to the heavy traffic, it was rear-ended by a vehicle driven by
Wilfred E. Ross, a Harrison County employee who was driving a county vehicle in the course
and scope of his employment at the time of the accident.
¶3. On March 12, 2004, Parker and Whisenant filed their Complaint for Damages in the
Circuit Court for the Second Judicial District of Harrison County, wherein they sought
damages in the sum of $750,000 and $500,000, respectively, against the Harrison County
Board of Supervisors.
¶4. On August 17, 2005, the Harrison County Board of Supervisors and Wilfred E. Ross
filed their motion for summary judgment asserting that the plaintiffs failed to comply with
the provisions of the Mississippi Tort Claims Act (MTCA), and more specifically, section
11-46-11, in that the plaintiffs did not give Harrison County ninety days’ notice to either
admit or deny the claims prior to filing their lawsuit. See Miss. Code Ann. § 11-46-11 (Rev.
2002). The defendants further asserted that the automobile accident occurred on July 2,
2003, and that the certified notice of claim was given to the Board on January 16, 2004.1 The
complaint was filed on March 12, 2004, and the defendants were served with process and a
copy of the complaint shortly thereafter, approximately fifty-six (56) days after the County’s
receipt of the certified notice of claim.
¶5. Additionally, the defendants’ motion for summary judgment asserted the statutory
exemptions under Mississippi Code Annotated Section 11-46-9(1)(d) (Rev. 2002), which
states in pertinent part:
1
The certified claim letter actually was sent to Wilfred Ross on January 7, 2004.
According to the Board minutes, Harrison County received notice on January 16, 2004.
2
(1) A governmental entity and its employees acting within the course and
scope of their employment or duties shall not be liable for any claim:
...
(d) Based upon the exercise or performance or the failure to
exercise or perform a discretionary function or duty on the part
of a governmental entity or employee thereof, whether or not the
discretion be abused.[2 ]
¶6. On January 16, 2007, the plaintiffs filed their Opposition to Defendant’s Motion for
Summary Judgment, asserting that the Board was notified of the plaintiffs’ claim as early as
July 14, 2003, through Walt Warren of Associated Adjusters, representing Harrison County’s
insurer. Specifically, the plaintiffs assert that Warren, on behalf of the Board, contacted the
plaintiffs on July 14, 2003, concerning the plaintiffs’ claim and requested signed medical
authorization forms so Warren could obtain the plaintiffs’ medical records relating to the
injuries allegedly sustained in the motor vehicle accident. Furthermore, the plaintiffs assert
that on August 12, 2003, the plaintiffs’ initial counsel communicated with Warren that he
sought to resolve at that time the issue of the plaintiffs’ property-damage claim, reserving the
issue of the plaintiffs’ injuries and medical treatment for subsequent disposition. In fact, the
Board settled the plaintiffs’ property-damage claim in August 2003.
¶7. In further support of their Opposition to Defendant’s Motion for Summary Judgment,
the plaintiffs set out that they retained different counsel, who mailed a certified claim letter
to the Board on January 7, 2004, reasserting the claims already made by the plaintiffs in July,
2003. Thus, the plaintiffs claim that as of January, 2004, the Board had more than ninety
2
Even though section 11-46-9 has since been amended, section 11-46-9(1)(d) has been
unaffected by the amendments.
3
days after receipt of notice in which to investigate their claim and either to admit or to deny
the plaintiffs’ claims prior to the filing of their lawsuit.
¶8. On January 26, 2007, a hearing was held on the defendants’ motion for summary
judgment in the Circuit Court for the Second Judicial District of Harrison County, Judge Lisa
P. Dodson presiding. At the conclusion of the hearing, Judge Dodson took this matter under
advisement, and on April 4, 2007, she entered an Order Granting Summary Judgment with
Findings of Fact and Conclusions of Law. Because she dismissed the plaintiffs’ case for
failure to comply with the notice provisions of section 11-46-11, Judge Dodson chose not to
address the issue of whether the defendants were immune from suit pursuant to section 11-
46-9(1)(d). Aggrieved by the trial court’s grant of summary judgment and entry of a
judgment of dismissal in favor of the Harrison County Board of Supervisors and Wilfred E.
Ross, Parker and Whisenant appealed to this Court.
DISCUSSION
¶9. The standard for reviewing a trial court’s grant of summary judgment is well-settled.
We are required to apply a de novo standard of review. Progressive Gulf Ins. Co. v.
Dickerson & Bowen, Inc., 965 So. 2d 1050, 1052 (Miss. 2007) (citing Price v. Purdue
Pharma Co., 920 So. 2d 479, 483 (Miss. 2006)). As stated in Mississippi Rule of Civil
Procedure 56(c), “the trial court must view all the evidence . . . in the light most favorable
to the non-moving party; and, upon this consideration, if the moving party is entitled to a
judgment as a matter of law, the motion should be granted; otherwise, it should be denied.”
Lumberman’s Underwriting Alliance v. City of Rosedale, 727 So. 2d 710, 713 (Miss. 1998)
4
(citing Sanford v. Federated Guar. Ins. Co., 522 So. 2d 214 (Miss. 1988)); Southern Farm
Bureau Cas. Ins. Co. v. Brewer, 507 So. 2d 369, 370 (Miss. 1987); Brown v. Credit Ctr.,
Inc., 444 So. 2d 358, 362 (Miss. 1983).
¶10. Briefly stated, Parker and Whisenant assert that en route to the grant of summary
judgment, the trial court erred (1) in failing to find that they had substantially complied with
the notice provisions of Mississippi Code Annotated Section 11-46-11, and (2) in
retroactively applying this Court’s more recent decisions to their case.
¶11. For the sake of today’s discussion, we restate and combine the relevant issues.
I. WHETHER THE PLAINTIFFS FAILED TO COMPLY WITH
THE NINETY-DAY NOTICE REQUIREMENT AS SET OUT IN
MISSISSIPPI CODE ANNOTATED SECTION 11-46-11(1).
II. WHETHER THE PLAINTIFFS FAILED TO COMPLY WITH
THE NOTICE CONTENTS REQUIREMENT AS SET OUT IN
MISSISSIPPI CODE ANNOTATED SECTION 11-46-11(2).
¶12. The plaintiffs, Parker and Whisenant, contend that they substantially complied with
the notice provisions of Mississippi Code Annotated Sections 11-46-11(1) & (2) (Rev. 2002)
by giving the Board at least ninety days’ notice by providing it with the sufficient
information required pursuant to statute. While the plaintiffs recognize that “strict
compliance” with certain provisions of the MTCA is now required to maintain a suit under
the MTCA, they assert that at the time they filed suit, “substantial compliance” with the
notice statute was all that was required.
5
¶13. On the other hand, the Board 3 asserts that the plaintiffs failed to comply with the
ninety-day notice requirement as set out in Mississippi Code Annotated Section 11-46-11(1)
(Rev. 2002). In addition, the Board asserts that the plaintiffs failed to substantially comply
with the notice provision when they failed to provide written notice that contained all seven
categories of information outlined in Mississippi Code Annotated Section 11-46-11(2) (Rev.
2002).
¶14. Since the disposition of Issue II – whether the plaintiffs failed to substantially comply
with the notice provision when they failed to provide written notice that contained all seven
categories of information outlined in Mississippi Code Annotated Section 11-46-11(2) –
controls the outcome of this appeal, we need not discuss Issue I – whether the plaintiffs
provided the requisite ninety days notice for filing suit as set out in Mississippi Code
Annotated Section 11-46-11(1).4
¶15. The MTCA outlines a specific procedure which a claimant must follow in order to file
a claim against a government entity. The statute states in relevant part:
Every notice of claim required by subsection (1) of this section shall be in
writing, and shall be delivered in person or by registered or certified United
States mail. Every notice of claim shall contain a short and plain statement of
the facts upon which the claim is based, including the circumstances which
brought about the injury, the extent of the injury, the time and place the injury
3
For the sake of today’s discussion, we will refer to the defendants/appellees, the
Harrison County Board of Supervisors and Wilfred E. Ross, collectively, as “the Board.”
4
Section 11-46-11(1) states in pertinent part that “that ninety (90) days prior to
maintaining an action thereon, such person shall file a notice of claim with the chief
executive officer of the governmental entity.”
6
occurred, the names of all persons known to be involved, the amount of money
damages sought and the residence of the person making the claim at the time
of the injury and at the time of filing the notice.
Miss. Code Ann. § 11-46-11(2) (Rev. 2002).
¶16. The plaintiffs claim that they complied with this statute at least three times before
filing suit. First, the plaintiffs assert they had contact with Warren at Associated Adjusters,
the Board’s insurer, in July of 2003. The plaintiffs contend they informed Warren of their
claim, signed medical release forms, and settled a property damage claim. Second, the
plaintiffs assert that their first attorney wrote a letter on August 12, 2003, notifying Warren
at Associated Adjusters of his representation of the plaintiffs. This letter stated:
I am writing to advise of our representation of the above named clients with
regard to an automobile accident occurring on July 2, 2003 in Biloxi,
Mississippi. It is my understanding that our clients were passengers in a
vehicle that was rear-ended by a vehicle operated by an agent of the county.
Please resolve the property damage claim with them directly, and we will
monitor the medical progress.
I thank you for your acceptance of this letter.
Third, the plaintiffs assert that on January 7, 2004, the plaintiffs’ new attorney sent a letter
to Wilfred Ross, and this letter was received and placed in the Board’s minutes on January
16, 2004. This letter stated:
Please be advised that the undersigned represents Ms. Sharon Parker and Ms.
Aline Whisenant in connection with the motor vehicle accident of July 2, 2003
in Biloxi, Mississippi, when your vehicle rear-ended their car on Highway 90.
Please forward a copy of this letter to your insurer and your employer and
request that they contact me immediately relative to this matter.
7
¶17. Based on these letters, the plaintiffs assert that they substantially complied with
section 11-46-11(2). The plaintiffs cite City of Pascagoula v. Tomlinson, 741 So. 2d 224,
226 (Miss. 1999), for the proposition that “notice that is filed within the [requisite] period,
informs the municipality of the claimant’s intent to make a claim and contains sufficient
information which reasonabl[y] affords the municipality an opportunity to promptly
investigate the claim satisfies the purpose of the statute and will be held to substantially
comply with it.” Id. at 226 (quoting Carr v. Town of Shubuta, 733 So. 2d 261, 263 (Miss.
1999)).
¶18. However, in a later case, South Cent. Reg’l Med. Ctr. v. Guffy, 930 So. 2d 1252,
1257-58 (Miss. 2006), this Court stated:
Pursuant to Miss. Code Ann. § 11-46-11(2), there are seven required
categories of information which must be included. The seven required
categories are as follows: (1) the circumstances which brought about the
injury; (2) the extent of the injury; (3) the time and place the injury occurred;
(4) the names of all persons known to be involved; (5) the amount of money
damages sought; (6) the residence of the person making the claim at the time
of the injury; and (7) the claimant’s residence at the time of filing the notice.
See Miss. Code Ann. § 11-46-11(2). The language of Miss. Code Ann. § 11-
46-11(2) clearly states that “every notice of claim shall contain a short and
plain statement” addressing these seven categories of information or facts upon
which the claim is based and this “shall be in writing.” See Miss. Code Ann.
§ 11-46-11(2). As such, the language contained in Miss. Code Ann. § 11-46-
11(2) is mandatory.
With respect to the seven required categories of information, the failure to
provide one of the seven categories is failure to comply. Thus, the term
“substantial compliance” in this context is rendered meaningless. Either the
written notice complied with Miss. Code Ann. § 11-46-11(2) by disclosing all
seven required categories of information, or it did not comply with the statute
by failing to disclose all seven required categories of information. The
wording, “substantial compliance” with the requirements of Miss. Code Ann.
8
§ 11-46-11(2), contained in many of this Court’s opinions regarding the
application of Miss. Code Ann. § 11-46-11(2) causes confusion and needs to
be addressed by this Court today in order to provide direction and clarity to the
courts and the bar. See, e.g., Fairley, 871 So. 2d at 716; Gale v. Thomas, 759
So. 2d at 1158; McNair v. Univ. of Miss. Med. Ctr., 742 So. 2d at 1080; Carr
v. Town of Shubuta, 733 So. 2d at 263; Reaves ex rel. Rouse v. Randall, 729
So. 2d at 1240.[5 ]
The confusion has arisen in the discussion of Miss. Code Ann. § 11-46-11(2),
as to how much information is required by this Court under each of the seven
categories to comply with Miss. Code Ann. § 11-46-11(2). As a practical
example, the first category requires notice of the “circumstances which
brought about the injury.” In order to comply with this requirement, the notice
need not disclose every single fact, figure and detail, but rather the substantial
details, in order to comply with the requirements of Miss. Code Ann. § 11-46-
11(2). But, the failure to provide any of the seven statutorily required
categories of information falls short of the statutory requirement and amounts
to non-compliance with Miss. Code Ann. § 11-46-11(2). However, where
some information in each of the seven required categories is provided, this
Court must determine whether the information is “substantial” enough to be
in compliance with the statute. If it is, the result is “compliance,” not
“substantial compliance” with the requirements under Miss. Code Ann. § 11-
46-11(2).
930 So. 2d at 1257-58 (emphasis in original).
¶19. Guffy recognized that “[t]he standard employed by this Court requires substantial
compliance with the notice requirements of the MTCA,” but determined that this Court does
not even reach the issue of whether a plaintiff substantially complied with the statute if all
seven categories of information are not contained in the notice letter. Guffy, 930 So. 2d at
5
The full citations to the cases are Fairley v. George County, 871 So. 2d 713, 716
(Miss. 2004); Gale v. Thomas, 759 So. 2d 1150, 1158 (Miss. 1999); McNair v. Univ. of
Miss. Med. Ctr., 742 So. 2d 1078, 1080 (Miss. 1999); Carr v. Town of Shubuta, 733 So. 2d
261, 263 (Miss. 1999); and Reaves ex rel. Rouse v. Randall, 729 So. 2d 1237, 1240 (Miss.
1998).
9
1255, 1258. While the plaintiffs here argue that since Guffy was not decided until after they
filed suit, and as such should not be applied retroactively today, the plaintiffs are mistaken.
Because this Court handed down Guffy while this litigation was ongoing between the parties,
we find Guffy controlling.6 See Thompson v. City of Vicksburg, 813 So. 2d 717, 721 (Miss.
2002) (retroactive application of judicially articulated rulings applied to cases awaiting trial);
see also Anderson v. Anderson, 692 So. 2d 65, 70 (Miss. 1997) (change in the law applied
retroactively to the case pending review on appeal).
¶20. None of the above communications meet the notice requirements of section 11-46-
11(2). In regard to the plaintiffs’ initial conversation with Warren at Associated Adjusters,7
verbal communication is not sufficient under the statute. Miss. Code Ann. § 11-46-11(2)
(Rev. 2002) (“Every notice of claim required by subsection (1) of this section shall be in
writing”). Holmes v. Defer, 722 So. 2d 624, 628 (Miss. 1998) (section 11-46-11 “requires
written notice to the chief executive officer of the governmental entity against which a claim
is being brought”).8
6
Guffy was decided via an interlocutory appeal on the Hospital’s petition filed with
us after the trial court’s denial of the Hospital’s motion to dismiss. Guffy, 930 So. 2d at
1254.
7
In addition, Associated Adjusters is not the “chief executive officer of the
governmental entity.” Miss. Code Ann. § 11-46-11(1) (Rev. 2002). As such, Associated
Adjusters is not the proper party to receive notice under the Mississippi Torts Claims Act.
8
Holmes was overruled on other grounds by Carr, 733 So. 2d at 266 (“Lumpkin,
Holmes and Carpenter are hereby overruled to the extent that they require strict compliance
rather than substantial compliance.”). See Carpenter v. Dawson, 701 So. 2d 806 (Miss.
1997); City of Jackson v. Lumpkin, 697 So. 2d 1179 (Miss. 1997).
10
¶21. Furthermore, the August 2003 letter and the January 2004 letter clearly do not comply
with the requirements of Mississippi Code Annotated Section 11-46-11(2). Without even
addressing the scant information contained in the letter of August 12, 2003, there was
absolutely no information in that letter, as required by the statute, concerning the extent of
the plaintiffs’ injuries; the names of all persons known to be involved; the amount of money
damages sought; the residence of the persons making the claim at the time of the injury; and
the plaintiffs’ residence at the time of filing the notice. The letter of January 7, 2004, is
likewise devoid of these same five categories of information.9
¶22. Thus, we find that Judge Dodson did nor err when she found that “[n]either of
Plaintiffs’ letters provided information in each of the seven (7) categories and, therefore,
neither constitutes a notice as required under the statute.” With this finding having been
made, Judge Dodson found that “it is clear that there is no genuine issue of material fact in
this case and that Defendants are entitled to judgment as a matter of law.” See Brown, 444
So. 2d at 362, and its progeny.
¶23. Since we have found that the trial court did not err in granting summary judgment on
the section 11-46-11(2) issue, we find there is no reason to discuss the issue of whether the
9
We in no way through dicta wish to imply that the other two categories of
information (the circumstances which brought about the injuries, and the time and place the
injuries occurred) were sufficient in today’s case, but because of the plaintiffs’ total failure
to provide the required information in the other five statutory categories, we need not discuss
whether this information was “substantial enough.” Guffy, 930 So. 2d at 1258.
11
plaintiffs strictly complied with the ninety-day-notice requirement set out in section 11-46-
11(1). See Univ. of Miss. Med. Ctr. v. Easterling, 928 So. 2d 815, 819-20 (Miss. 2006).
CONCLUSION
¶24. For the reasons stated, the judgment of dismissal entered consistent with the grant of
summary judgment by the Circuit Court of the Second Judicial District of Harrison County,
in favor of the Harrison County Board of Supervisors and Alfred E. Ross, and against Sharon
Parker and Aline Whisenant, is affirmed.
¶25. AFFIRMED.
SMITH, C.J., WALLER, P.J., DICKINSON, RANDOLPH AND LAMAR, JJ.,
CONCUR. GRAVES, J., DISSENTS WITHOUT SEPARATE WRITTEN OPINION.
DIAZ, P.J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED IN PART
BY GRAVES, J. EASLEY, J., NOT PARTICIPATING.
DIAZ, PRESIDING JUSTICE, DISSENTING:
¶26. I do not read Section 11-46-11 as requiring that a plaintiff’s case be dismissed if he
or she does not comply with the notice-of-claim provisions; nor do I think that dismissal is
the appropriate remedy for a plaintiff’s noncompliance. I believe this Court should select a
less punitive remedy that is more consonant with the humanitarian purpose of the MTCA.
Therefore, I respectfully dissent.
¶27. This Court has held that if a plaintiff fails to strictly comply with the notice-of-claim
requirements of Mississippi Code Section 11-46-11, the proper remedy is dismissal of the
plaintiff’s suit. S. Cent. Reg’l Med. Ctr. v. Guffy, 930 So. 2d 1252, 1258-59 (Miss. 2006)
(failure to comply with contents requirement of subsection (2)); Univ. of Miss. Med. Ctr. v.
12
Easterling, 928 So. 2d 815, 819 (Miss. 2006) (failure to comply with ninety-day notice
requirement of subsection (1)). I agree that we should require strict compliance with the
notice-of-claim requirements, but I do not agree that a plaintiff’s suit should be dismissed if
he or she does not strictly comply with these requirements.
¶28. First of all, the statute contains no language mandating that a plaintiff’s suit be
dismissed if he or she does not comply with the statutory notice requirements. Cf. Cmty.
Hosp. of Jackson v. Goodlett ex rel. Goodlett, 968 So. 2d 391, 399 (Miss. 2007) (Diaz, P.J.,
dissenting) (“There is absolutely no language in either Section 11-1-58 or Section 15-1-36
which provides that the remedy for noncompliance is dismissal.”). This Court has simply
read that remedy into the statute. Cf. id.
¶29. Second, requiring that a claimant’s suit be dismissed if Section 11-46-11 was not
strictly complied with runs counter to the purpose of the MTCA, which is “to allow for the
orderly administration of legitimate claims against governments for . . . tortious conduct . .
. .” Carr v. Town of Shubuta, 733 So. 2d 261, 263 (Miss. 1999); see City of Pascagoula v.
Tomlinson, 741 So. 2d 224, 228 (Miss. 1999) (“[T]he dismissal of a lawsuit based on a
failure to comply with the waiting period is . . . contrary to the purposes of the Legislature
in enacting the Tort Claims Act.”), overruled by Easterling, 928 So. 2d at 819. The purpose
of Section 11-46-11's notice -of-claim requirements “is to give the governmental entity an
opportunity to investigate the claim and notifying the appropriate agencies or officials of
dangerous conditions or inappropriate conduct to allow for corrective or remedial measures,
as well as to permit or encourage amicable settlement with the citizenry and/or prepare a
13
defense to the claim.” Carr, 733 So. 2d at 263 (citations omitted). Section 11-1-46 was not
enacted with the intent to bar valid claims.
¶30. Third, the dismissal of a plaintiff’s suit based on his or her attorney’s negligent failure
to provide the governmental entity with ninety days’ notice or a notice of claim including
every single one of the seven pieces of information enumerated in Section 11-46-11 (2) is
too harsh a remedy. See, e.g., Goodlett, 968 So. 2d at 399 (Miss. 2007) (Diaz, J., dissenting);
Caldwell v. N. Miss. Med. Ctr., Inc., 956 So. 2d 888, 896-97 (Miss. 2007) (Diaz, P.J.,
dissenting); Arceo v. Tolliver, 949 So. 2d 691, 698-704 (Miss. 2006) (Graves, J., dissenting).
“[D]ismissals should be granted only when less drastic alternatives have been considered and
such lesser sanctions would not serve the best interest of justice.” Dinet v. Gavagnie, 948
So. 2d 1281, 1285 (Miss. 2007) (citing Wallace v. Jones, 572 So. 2d 371, 376-77 (Miss.
1990)). Dismissal is certainly a drastic remedy in this case, since Harrison County was made
aware through its insurance adjuster, Walt Warren, of the plaintiffs’ personal-injury claims
at least six months before the plaintiffs filed suit.
¶31. There are other remedies that we might choose that do not infringe Mississippians’
federal and state constitutional rights of access to court. See U.S. Const. amend. XIV, § 1;
Miss. Const. of 1890 art. 3, §24 (“All courts shall be open; and every person for an injury
done to him, in his land, goods, person or reputation, shall have a remedy by due course of
the law, and right and justice shall be administered, without sale, denial, or delay”); Miss.
Const. of 1890 art. 3, §25 (“No person shall be debarred from prosecuting or defending any
civil cause for or against him or herself, before any tribunal in the state, by him or herself,
14
or counsel, or both”); Miss. Const. of 1890 art. 3, § 31; Caldwell, 956 So. 2d at 896 (Diaz,
P.J., dissenting). Other states have chosen to adopt an alternative remedy for a plaintiff’s
failure to provide proper pre-suit notice to a defendant. Id. For example, in California, non-
compliance with a statutory notice provision results in the plaintiff’s attorney being
sanctioned instead of dismissal of the plaintiff’s suit. See Cal. Code. Civ. Proc. § 365
(“Failure to comply with [notice requirements in professional negligence actions] shall not
invalidate any proceedings of any court of this state, nor shall it affect the jurisdiction of the
court to render a judgment therein...failure to comply with such provisions by any attorney
at law shall be grounds for professional discipline”). Sanctioning attorneys for their failure
to comply with the pre-suit notice requirements is a more appropriate remedy than dismissal:
it provides for enforcement of the notice provision against the person responsible for giving
notice – the attorney – without impairing the plaintiff’s ability to seek redress in our courts
of law. See Caldwell, 956 So. 2d at 896-97 (Diaz, P.J., dissenting).
¶32. With respect to the ninety-day notice requirement, we could opt to reinstitute the
procedure whereby the governmental entity is allowed to request that the trial court issue an
order staying the case until the ninety-day waiting period expires. E.g., Tomlinson, 741 So.
2d at 228. But whatever remedy is selected, it must be one more proportionate to the conduct
we are trying to deter than dismissal.
¶33. Accordingly, I would reverse the trial court’s grant of summary judgment and remand
this case for further proceedings.
GRAVES, J., JOINS THIS OPINION IN PART.
15 | 01-03-2023 | 04-27-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/865464/ | IN THE SUPREME COURT OF MISSISSIPPI
NO. 2007-CA-00045-SCT
JOE M. BOWEN
v.
BETTY CAROL BOWEN
DATE OF JUDGMENT: 12/07/2006
TRIAL JUDGE: HON. SANFORD R. STECKLER
COURT FROM WHICH APPEALED: HARRISON COUNTY CHANCERY COURT
ATTORNEY FOR APPELLANT: CLEMENT S. BENVENUTTI
ATTORNEY FOR APPELLEE: THOMAS WRIGHT TEEL
NATURE OF THE CASE: CIVIL - DOMESTIC RELATIONS
DISPOSITION: AFFIRMED - 05/22/2008
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE SMITH, C.J., CARLSON AND DICKINSON, JJ.
CARLSON, JUSTICE, FOR THE COURT:
¶1. Joe and Betty Bowen were granted a divorce on the ground of irreconcilable
differences. Unable to agree upon an equitable division of property, the Bowens filed a
consent to adjudicate all other disputes in the Chancery Court for the First Judicial District
of Harrison County. Aggrieved by the chancellor’s judgment on these remaining issues, Joe
Bowen appealed to this Court. Finding no error, we affirm the chancellor’s judgment.
FACTS AND PROCEEDINGS IN THE TRIAL COURT
¶2. Joe M. Bowen (Joe) and his first wife, Donna Bowen (Donna), divorced in February
1986. During their marriage, Joe and Donna had purchased the Bay View Marina in Bay St.
Louis in Hancock County. Upon their divorce, Joe paid Donna one-half of the appraised
value of the marina, which was $200,000, to acquire Donna’s interest.
¶3. Joe and Betty Carol Rhoades (Betty) began dating and cohabiting in May 1986. Joe
and his brother Don owned the Bay View Marina in partnership as J & D Enterprises. Joe
and Betty lived in rental homes until Joe built a residence at the marina sometime between
1993 and 1994. After about nine years of cohabiting, Joe and Betty married on November
22, 1995. Joe and Don operated the business at the marina at the time of the marriage, with
Joe owning eighty percent of the business and Don owning twenty percent. At the time of
the marriage, Joe and Don were attempting to sell the marina for $1,000,000. In December
1996, the marina sold for the asking price of $1,000,000. Don was paid $200,000 cash, while
Joe received $200,000 cash and a promissory note in the amount of $600,000.00. The note
provided for 180 payments of $5,280.84 each, at an interest rate of 8.25%. The principal
balance at the date of trial was $367,219.08. Joe and Betty had been married about thirteen
months before the sale of the marina.
¶4. After the sale of the marina, Joe purchased a home where he and Betty lived until
September 1998. Joe then purchased a home in Long Beach, titled in both his and Betty’s
names, where the couple lived until their separation on May 1, 2003.
2
¶5. Betty filed her complaint for divorce in the Chancery Court for the First Judicial
District of Harrison County on May 27, 2003, and requested a no-fault divorce, or, in the
alternative, a divorce on the ground of habitual cruel and inhuman treatment. On June 19,
2003, Joe filed his answer, stating that the parties should be granted a divorce on the ground
of irreconcilable differences.
¶6. On June 20, 2003, Betty filed a financial statement pursuant to Uniform Chancery
Court Rule 8.05 wherein she stated: (1) that her net monthly income totaled $1,099; (2) that
her monthly expenses totaled $2,775; and (3) that her liabilities totaled approximately
$11,000 in unpaid medical bills. Betty’s financial statement did not specify the total value
of all assets. Also on June 20, 2003, Joe filed his financial statement, wherein he stated: (1)
that his net monthly income totaled $5,423.66; (2) that his monthly expenses totaled
$3,092.80; (3) and that his liabilities included $43,000, the remaining balance on the
mortgage of the marital home. Joe’s financial statement also did not specify the total value
of all the assets.
¶7. On July 2, 2003, the chancellor entered a temporary order enjoining the parties from
disposing of the assets. This order stated that the parties were to have joint use of the marital
home, but that Joe would pay the note, taxes, and insurance on the residence. Joe was also
to pay Betty’s expenses and insurance. Both Joe and Betty were granted the use of their
respective vehicles, although Joe was to pay the notes, taxes, and insurance on both vehicles.
3
¶8. On November 20, 2003, Betty filed a motion for temporary relief wherein she alleged
that Joe was not paying what he was ordered to pay and also requested a temporary
restraining order barring Joe from disposing of the assets.
¶9. On January 8, 2004, the chancellor entered a nunc pro tunc temporary order, wherein
he ordered that Joe not dispose of the assets, granted Joe use and possession of the marital
home, ordered Joe to pay the bills in his financial declaration and Betty’s medical insurance,
ordered Joe to pay Betty temporary alimony in the amount of $1,828 monthly, and granted
the parties the use of their respective vehicles. Joe also was ordered to pay $1,828 for the
month of December in monthly installments of $300 until paid in full.
¶10. On January 21, 2004, Betty filed a motion for citation for contempt, wherein she
alleged that Joe had not complied with the nunc pro tunc order, failing to pay all monies
owed her. On February 20, 2004, Betty filed another motion for citation for contempt, again
alleging that Joe had not complied with the nunc pro tunc order, failing to pay all monies
owed her. On June 29, 2004, Betty filed a motion for contempt and for sanctions, again
alleging that Joe failed to comply with the nunc pro tunc order and failed to answer
discovery.
¶11. On February 22, 2005, Joe filed another Rule 8.05 financial statement, wherein he
stated:(1) that his net monthly income totaled $5,532.30; (2) that his total monthly expenses
were $3,252; and (3) that his total liabilities included $43,000, the balance owed on the
mortgage of the marital home. Again, Joe did not specify the total value of his assets.
However, he listed the following: (1) a joint checking account with his son Mark containing
4
a balance of $5,442.46; (2) a joint checking/savings account with son Alan containing a
savings balance of $7,337.49 and a checking balance of $1,427; (3) four Stifel, Nicolaus &
Co., Inc. accounts containing a total of $110,971.55; and (4) a Scottrade, Inc. account
containing 100 shares of Hancock Holding Company. Also on February 22, 2005, Joe and
Betty filed a consent to adjudicate, agreeing to sign all documents for a divorce on the ground
of irreconcilable differences and allowing all other issues to be decided by the chancellor.
¶12. On February 22, 2005, Chancellor Sanford R. Steckler presided over a hearing. Joe
testified that he had suffered a stroke and could not remember details well; that he had not
disposed of any assets, specifically his accounts, because he had paid the court-ordered
monies to Betty out of the accounts; that from the date Betty moved in with him, she had
made very little money at her jobs and that he had supported her financially, as he made
much more money than she did; that during the thirteen months of marriage that he owned
the marina, Betty did not have an outside job and assisted him by working there, including
answering the telephone, taking notes, and working with the gas hoses; and that during that
year, he “did the same things that she did” and additionally worked with the boats and helped
the mechanic with repairs.
¶13. Steven Lee Rhoades (Steven), Betty’s son, testified that he previously had worked at
the Bay View Marina for Joe;1 that construction had begun on the marina at the time Joe
1
After the sale, the marina was renamed Pelican Cove Marina. Steven began working
at the marina in October 1989 and continued working there after the sale. He was employed
there at the date of trial.
5
bought it and had continued until the time of sale because Joe was “continuously trying to
improve aspects of the facility;” that Betty “occasionally” had visited a casino, but he had
no knowledge of Joe giving Betty money with which to gamble; and that he, Joe, and Don
had done “basically all of” the construction work improving the marina and that Betty had
picked out flooring and designed the living quarters.
¶14. According to Lorrie Bradley (Lorrie), Betty’s daughter, Betty’s memory had
deteriorated and Betty had injuries, arthritis, and fibromyalgia; she (Lorrie) helped care for
Betty; during the time Joe and Betty were cohabiting, as well as during the time of the
marriage, Betty did the housecleaning, laundry, and brought lunch to the marina; Betty
infrequently went to casinos; she did not know whether Betty’s casino visits occurred during
cohabitation or during marriage; and Joe once took the money that Betty had won from
gambling.
¶15. Betty testified that she had held a number of jobs over the years but had never earned
more than $12,000 per year in her lifetime; that she was paid for washing boats at the marina;
that her pay came directly from customers or was billed by the marina, but she earned no
salary, and Joe did not ask her to do any other tasks than wash the boats at the marina; that
she had no assets and no retirement funds, that she also took numerous prescription drugs,
and that she had suffered two strokes and one heart attack. When questioned by Chancellor
Steckler concerning when Joe purchased the stock, Betty stated that Joe “bought a lot of
stock during the time that he and I were living together.” Betty also stated that Joe’s Stifel
Nicolaus accounts were purchased before the marriage and she did nothing to contribute to
6
the accumulation of those assets “other than working for [Joe],” and that the accounts were
created “anywhere between the late ’80s, ’90s, and probably still up till today.” The
chancellor then recessed the hearing until a later date.
¶16. On April 21, 2005, Joe filed a motion for substitution of counsel, which Chancellor
Steckler granted. On May 16, 2005, Joe, by and through counsel, filed a motion for a
continuance to allow Joe’s new counsel more time to review the case. The chancellor heard
and denied this motion on May 17, 2005.
¶17. On May 20, 2005, the hearing resumed. During the testimony of Michael Rhoades
(Michael), Betty’s son, Joe’s counsel objected to Michael’s testimony concerning asset
accumulation during cohabitation. Chancellor Steckler overruled the objection, stating that
“[c]ourts in Mississippi view the acquisition of assets during cohabitation prior to marriage
[in] the way you would decide the assets of a partnership.” Michael stated that after Joe and
Betty married, Joe had added three floor levels to the west side of the building at the marina,
including the residence and a new store where Betty worked; and that the three stories were
added in 1998 or 1999, which was after the marina was sold.
¶18. The hearing was again recessed and resumed on May 23, 2005, at which time Betty
resumed her testimony via cross-examination. Betty stated that Joe had done all of the
construction work on the marina, but some work had been done prior to the marriage and
some work had been done subsequent to the marriage; that during the thirteen months of
marriage that Joe owned the marina, Joe had completed the boat dock, storage shed, and the
living quarters; that she had assisted Joe in laying tile and refinishing cabinets in the living
7
quarters; that she had no knowledge of the amount of money in Joe’s retirement accounts and
she did not know if those accounts were acquired prior to the marriage; that Joe had included
her lawn care services at the marina on his income tax returns; that when she had gambled
with her children, they had given her the money to spend at the casinos; that when she had
gambled with Joe, he had given her money to spend and he had taken the winnings; that she
was in the early stages of Alzheimer’s disease and had memory problems; that she and Joe
had lived at the marina prior to and during the marriage and her work at the marina did not
change after she married Joe; that Joe had never shown her any documentation revealing
when he purchased his accounts and she did not know when he bought them; and that she did
not have total recall as to when the buildings were erected at the marina.
¶19. Victoria Frisbie testified that Betty was currently an employee of her business, the
Carpet Furniture Deal, and that Betty was going to be terminated because she could no longer
interact with customers and fellow employees appropriately due to her memory problems.
¶20. Rivers Singleton testified that he opened a boat brokerage business in the Bay View
Marina in 1990 and ran the business for about a year. Singleton testified that the buildings
at the marina were about ninety percent finished in 1991. However, Singleton also stated that
he believed Joe and Betty married in 1990.
¶21. Charles Benvenutti (“Benvenutti”) Joe’s certified public accountant, testified that he
had handled Joe’s financial affairs since 1987; that through 1992, there were $242,759.53
in capital improvements to the property; that in 1993, $7,000 of construction was done on
the buildings; that in 1994, $4,000 was invested in the buildings; that at the end of 1994, a
8
total of $253,786 had been spent; that in 1995, the partnership was closed out; that Joe’s
personal income tax return for 1996 showed that his cost basis, plus expenses of the sale of
the marina, was $243,000, which included the cost of the land; that he could not tell from
Joe’s personal tax returns whether substantial improvements to the property were made in
1995; that the largest source of income at the marina was dry boat storage, with the next
largest being sales of gas and fuel, then repairs, and finally sales of snacks; that income was
also generated by putting boats into the water; that the buildings and the land had constituted
about ninety-three percent of the value of the marina at the time of the sale; that assets had
composed the rest of the value; that there was no goodwill value; that Joe and Betty’s 1997
joint income tax return reflected that they split the income from the Stifel Nicolaus funds,
which was customary to save money on taxes, even though the income was all Joe’s; that he
(Benvenutti) could not tell from Joe and Betty’s 2003 tax returns whether the accounts
belonged to Joe or Betty; that his records reflected that there were no capital improvements
to the marina in 1995 or 1996; and that an April 14, 1994, financial statement prepared for
the People’s Bank for a loan against the marina valued the land and improvements to the
marina at $1,000,000.
¶22. Joe testified that he had used his mechanical engineering degree and purchased the
marina in 1971; that he had bought adjoining property and changed the design and operation
of the marina; that he had built three buildings at the marina; that the first building had been
completed before his divorce from his first wife, Donna; that the second and third buildings
had been in the process of being constructed; that all services the business offered were
9
available with the completion of the first building; that boat storage was the most profitable
aspect of the business, generating sixty-five-to-seventy percent of the gross income and
eighty-five-to-ninety percent of net profits; that the second building was completed between
1987 and 1988, and all of the boat storage space was completed with the second building;
that he believed Betty’s boat-cleaning business was in operation during the marriage; that
prior to the marriage, Betty had no specific duties or hours at the marina; that he did not
remember Betty assisting him by laying tile, but she instead had swept the floor and handed
him tools; that he had never had a joint bank account with Betty, and none of Betty’s money
from her other jobs had ever gone into his accounts; that he did not remember what year his
profit-sharing plan was started and he could not say how much money was in his retirement
plan prior to the marriage in 1995; that the money that went into the retirement plan was from
Joe’s salary and profits at the marina; and that he had given Betty $130,000 over a period
of six to seven years for her to invest for their retirement, but that Betty had told him the
money “evaporated.” Joe further testified that the “biggest majority” of the assets in the
Stifel Nicolaus and Scottrade accounts had been acquired before the marriage; that he
“didn’t make any investments during the marriage because the money went to” Betty instead
to invest for their retirement, and he did not know what had happened to money; that he had
never taken Betty’s winnings at the casino, but he did pay taxes on her winnings; that he had
given Betty money pending the court proceedings to pay her health insurance because the
court ordered him to pay her health insurance, but Betty had failed to pay her premiums and
her policy was canceled; that Betty did not have specific assignments at the marina, but
10
instead she had simply acted on her own, doing what she thought needed to be done; that in
the thirteen months during the marriage that he owned the marina, Betty had continued doing
the work around the marina that she had done during cohabitation; and that Joe’s tax returns
in 1995 reflected he paid taxes on $10,770 that Betty had won at a casino. Also, when asked
whether he had provided discovery information concerning when the accounts had been
acquired and how much money was in these accounts, Joe testified that he believed he had
collected the necessary documentation with his original attorney concerning the Stifel
Nicolaus and Scottrade accounts.
¶23. Betty again testified, stating that Joe had never given her approximately $130,000 and
that she had nothing left from her gambling winnings.
¶24. On October 25, 2005, Joe filed a motion for modification and other relief, asking the
trial court to reduce his temporary monthly payments to Betty because Hurricane Katrina had
damaged the Bay Marina and destroyed the marital residence. Joe, upon request by the new
owners of the Bay Marina, and without consulting Betty, had reduced the amount paid on the
note to interest only due to their difficulty with cash flow. The record does not reveal that
the chancellor ever ruled on this motion.
¶25. On December 6, 2005, the chancellor entered a judgment of divorce, finding, inter
alia, that Joe and Betty were married on November 22, 1995, after about nine years of living
together, and separated on May 1, 2003. The chancellor further stated:
8. Now, in retrospect, the Court sees two older citizens, who have health
problems, who have memory problems, and who come before the court
requesting more help than the court can give. The parties did not produce
11
enough documentary evidence to be of much assistance to the Court with
respect to their respective earnings and accumulation of assets during
cohabitation before and after marriage. Having read the evidence, my notes,
the briefs of the parties, and particularly the cases of Ferguson, Hemsley, and
Bunyard, the Court finds that certain equitable adjustments have to be made
because assets were acquired during marriage, others were co-mingled, and
Mrs. Bowen had a reasonable expectation that they were merging everything
together to last both of them the rest of their lives. The Court further finds that
Joe Bowen owned the marina prior to the marriage. However, during the
marriage he used income from the marina operations and from other sources
to improve the marina substantially, and Mrs. Bowen did give some assistance
in helping to make the improvements. Joe also devoted much of his own time,
labor and talent to the marina improvements during the marriage. It is the
opinion of this Court that the improvements and increased value of the marina
resulting from those improvements made during the marriage are marital
assets.
The chancellor granted Joe and Betty a divorce on the ground of irreconcilable differences,
and awarded Betty one-half of the insurance proceeds from the marital home which was
destroyed in Hurricane Katrina; ownership and possession of the vehicle she drove; and ten
percent of each of Joe’s financial accounts. The chancellor furthered ordered Joe to pay
Betty $430 per month in rehabilitative alimony for five years, to pay Betty’s outstanding
medical bills, and to pay $2,000 of Betty’s attorney’s fees.
¶26. On December 15, 2005, Betty filed a motion to reconsider, stating the chancellor
either improperly relied upon the information in Joe’s post-hearing motion or, in the
alternative, simply failed to grant Betty enough alimony to meet her needs. Joe filed his
response on February 24, 2006.
¶27. On September 14, 2006, Betty filed yet another motion for citation for contempt and
other relief, alleging that Joe did not meet his financial obligations pursuant to the judgment
12
of divorce. Betty filed a corrected motion for citation for contempt and other relief on
October 19, 2006, correcting errors in the previous filing.
¶28. On December 7, 2006, Chancellor Steckler entered an order granting Betty’s motion
to reconsider, specifically stating that no changes in the parties’ circumstances due to
Hurricane Katrina were considered. Additionally, the chancellor found that Betty “was
entitled to share in the increased value of the marina resulting from the improvements made
during the marriage.” The chancellor addressed the Armstong factors,2 finding: (1) that Joe’s
financial statement did not adequately disclose the value of his investments, including the
marina, and that both parties’ living expenses were approximately $3,000 per month; (2) that
both parties were in poor health; (3) that Joe had the funds to meet his monthly expenses
while Betty did not; (4) that the marriage had lasted a total of ten years; (5) that no children
had been born of the marriage; (6) that at the time of the divorce, Joe was 71 years old and
Betty was 65 years old; (7) that the parties had had a modest living arrangement during the
marriage and that, at the time support was set, Joe’s monthly gross income was $5,190 after
paying temporary alimony to Betty, while Betty’s gross monthly income was $3,297,
including temporary alimony; (8) that the court had received no evidence of tax
consequences of the support decree; (9) that no fault or misconduct of the parties had been
considered because the parties entered into a consent to adjudicate on the ground of
irreconcilable differences; (10) that Betty had gambled; and (11) that Betty could not be
2
Armstrong v. Armstrong, 618 So. 2d 1278, 1280-81 (Miss. 1993).
13
compensated for the period of cohabitation. The chancellor found that Betty was “entitled
to lump sum alimony in the amount of $60,000.00, an amount equal to ten percent of Joe’s
mortgage note of $600,000.00.” Joe was to pay thirty payments of $2,000 each until paid in
full.
¶29. The chancellor also awarded Betty half of the equity in the marital home or insurance
proceeds from any damage due to Hurricane Katrina, and he further found that Betty had a
partial ability to pay her attorney’s fees due to the equitable distribution of property, and thus
awarded her $2,000. All other provisions of the judgment of divorce previously entered but
not discussed in the order, including ordering Joe to pay Betty’s outstanding past medical
bills and to give Betty ten percent of his financial accounts, remained in full force and effect.
¶30. Joe then timely filed his Notice of Appeal.
DISCUSSION
¶31. We must consider five issues: (1) whether the chancellor erred in determining that
the promissory note from the sale of the marina was marital property; (2) whether the
chancellor erred in his characterization of the IRA and stock brokerage accounts as marital
assets; (3) whether the chancellor erred in calculating the percentage of the promissory note
as a marital asset; (4) whether the chancellor erred in failing to give Joe credit for payment
of temporary rehabilitative alimony and prior lump-sum alimony payments; and (5) whether
the chancellor erred in making no adjustment for dissipation of marital assets from Betty’s
gambling. As we discuss these issues, they will be restated for the sake of clarity.
14
¶32. “This Court employs a limited standard of review of property division and distribution
in divorce cases.” Owen v. Owen, 928 So. 2d 156, 160 (Miss. 2006) (quoting Reddell v.
Reddell, 696 So. 2d 287, 288 (Miss. 1997)). “This Court has repeatedly stated that the
chancellor's division and distribution will be upheld if it is supported by substantial credible
evidence.” Id. (quoting Carrow v. Carrow, 642 So. 2d 901, 904 (Miss. 1994)); see Owen I,
798 So. 2d at 397-98). “The ‘chancery court has authority, where equity demands, to order
a fair division of property accumulated through the joint contributions and efforts of the
parties.’” Id. (quoting Savelle v. Savelle, 650 So. 2d 476, 479 (Miss. 1995)); see also
Hemsley v. Hemsley, 639 So. 2d 909, 914 (Miss. 1994). “This Court will not substitute its
judgment for that of the chancellor ‘even if this Court disagrees with the lower court on the
finding of fact and might [arrive] at a different conclusion.’” Id. (quoting Owen I, 798 So.
2d at 397-98; Richardson v. Riley, 355 So. 2d 667, 668 (Miss. 1978)).
¶33. “In Carrow, 642 So. 2d at 904, citing Bell v. Parker, 563 So. 2d 594, 596-97 (Miss.
1990), this Court stated that the chancellor’s findings will be upheld unless those findings
are clearly erroneous or an erroneous legal standard was applied. However, the Court will
not hesitate to reverse if it finds the chancellor’s decision is manifestly wrong, or that the
court applied an erroneous legal standard.” Id.; see Sandlin v. Sandlin, 699 So. 2d 1198,
1203 (Miss. 1997); see also Carrow, 642 So. 2d at 904; Bell, 563 So. 2d at 596-97.
I. WHETHER THE CHANCELLOR ERRED IN DETERMINING
THAT THE PROMISSORY NOTE FROM THE SALE OF THE
MARINA WAS MARITAL PROPERTY.
¶34. Joe argues that the record lacks substantial evidence to show that the promissory note
15
was a marital asset. Further, Joe argues that the trial court made findings of fact in its
original judgment of divorce and in its order granting the motion to reconsider that are not
supported by the evidence. Specifically, Joe cites certain findings by the chancellor:
1. Joe Bowen used income from his marina operations and other sources
to improve the marina substantially during the marriage.
2. Mrs. Bowen gave some assistance during the marriage in helping to
make improvements to the marina project.
3. An increased value of the marina resulted from improvements made
during the marriage.
4. Joe’s financial declaration did not disclose his investments or the value
of the marina.
5. The parties did not provide enough documentary evidence to be of
much assistance to the court regarding respective accumulations of
assets during cohabitation, before and after marriage.
¶35. Joe argues that “Betty presented no testimony to show any increase in the value of the
Bay View Marina from the date of the marriage, November 22, 1995, to the date of the sale
in December of 1996.” The property was on the market before the marriage at the price of
$1,000,000; the property sold for the listing price. Joe’s tax returns do not reflect any capital
improvements during 1995 or 1996; Joe completed the capital improvements in 1994. Thus,
according to Joe, the chancellor’s finding that Betty was entitled to ten perecent of the
promissory note due to improvements in the property during the thirteen months that Joe and
Betty were married before the sale of the marina is clearly erroneous and is arbitrary and
capricious.
¶36. On the other hand, Betty argues that Chancellor Steckler did not award her a portion
of the promissory note; instead, he awarded Betty “lump sum alimony in the amount of
$60,000.00, an amount equal to 10% of Joe’s mortgage note of $600,000.00.” (Emphasis
16
added). Betty further argues that the chancellor found that she made some contributions to
the marina that entitled her to this lump-sum alimony. Additionally, Betty states that
“[w]hether family use or commingling or simply her contribution to the increase of value in
the marina, [she] acquired an equitable interest in the marina and promissory note.”
¶37. Joe, in his reply brief, argues that it is apparent that the chancellor created marital
property from separate property in order to wrongly compensate Betty for the period of
cohabitation.
¶38. Where a party commingles non-marital assets or uses them for familial benefit, those
assets become marital assets. Johnson v. Johnson, 650 So. 2d 1281, 1286 (Miss. 1994).
Clearly, after the marriage, Joe and Betty lived and worked at the marina. Thus, the
chancellor did not err in finding that Betty was entitled to share in the benefit of the marina
note. This issue is without merit.
II. WHETHER THE CHANCELLOR ERRED IN HIS
CHARACTERIZATION OF THE IRA AND STOCK
BROKERAGE ACCOUNTS AS MARITAL ASSETS.
¶39. Next, Joe argues that the chancellor erred in granting Betty a ten percent interest in
his accounts where the chancellor did not specifically find that the accounts were marital
property. Further, Joe argues that the trial testimony clearly shows that he made no
contributions to the accounts during the marriage and that Betty never made any
contributions to the accounts. Additionally, no evidence was presented at trial as to any
increase or decrease in the value of the accounts throughout the marriage. Thus, according
17
to Joe, the chancellor erred as no evidence substantiated equitable distribution of the
accounts, because the accounts were titled solely in Joe’s name and were never commingled.
¶40. Betty argues that, contrary to Joe’s argument in this appeal, Joe testified that “[t]he
biggest majority of it was before the marriage” when asked whether the accounts were
accumulated before or during the marriage. Further, Joe failed to answer and supplement
discovery questions concerning the accounts.
¶41. The chancellor decides whether an asset is marital or non-marital utilizing the
Hemsley factors. Johnson v. Johnson, 650 So. 2d 1281, 1287 (Miss. 1994). Marital
property is defined as “any and all property acquired or accumulated during the marriage.”
Domestic services and economic services have equal value. Hemsley v. Hemsley, 639 So.
2d 909, 915 (Miss. 1994). Assets classified as marital property are equitably divided
utilizing the Ferguson 3 factors, taking into account the parties’ non-marital assets. Johnson,
650 So. 2d at 1287.
¶42. “Where there is conflicting testimony, the chancellor, as the trier of fact, is the judge
of ‘the credibility of the witnesses and the weight of their testimony, as well as the
interpretation of evidence where it is capable of more than one reasonable interpretation.’”
Sproles v. Sproles, 782 So. 2d 742, 747 (Miss. 2001) (quoting McKee v. Flynt, 630 So. 2d
44, 47 (Miss. 1993); Rainey v. Rainey, 205 So. 2d 514, 515 (Miss. 1967)). Thus, the
3
Ferguson v. Ferguson, 639 So. 2d 921 (Miss. 1994).
18
chancellor acted well within his discretion, based upon the evidence presented, in
determining that Betty was entitled to a portion of the accounts. This issue is without merit.
III. WHETHER THE CHANCELLOR ERRED IN CALCULATING
A PERCENTAGE OF THE PROMISSORY NOTE AS A
MARITAL ASSET.
¶43. Joe argues that Betty would be entitled to share in any increase in the value of the
marina which occurred only during the thirteen months of marriage in which he owned it.
Further, Joe argues that he owned the marina for twenty-five years prior to selling it, and he
was married to Betty for only a little more than a year of that time period. Joe also points out
that the face value of the note at the time of the order granting the motion to reconsider was
far less than the original face value of $600,000. Accordingly, Betty is entitled only to one-
half of one twenty-fifth interest of the current value of the marina note, and the chancellor’s
finding that Betty was entitled to ten percent of the face value of the marina note is
unsupported by the evidence.
¶44. Again, the chancellor did not award Betty a portion of the promissory note as a marital
asset. Rather, the chancellor awarded Betty lump-sum alimony in the amount of $60,000.
This issue is without merit.
IV. WHETHER THE CHANCELLOR ERRED IN FAILING TO
GIVE JOE CREDIT FOR PAYMENT OF TEMPORARY
REHABILITATIVE ALIMONY AND PRIOR LUMP-SUM
ALIMONY PAYMENTS.
¶45. Joe argues that the chancellor was clearly erroneous in failing to give him credit for
temporary rehabilitative alimony payments paid between December 2003 and December
19
2005 and lump-sum alimony payments paid between December 2005 and December 2006.
Further, Joe argues that the chancellor’s use of the face value of the marina note rather than
the diminished value from the payments is arbitrary and capricious. Joe directs this Court
to Ory v. Ory, 936 So. 2d 405 (Miss. Ct. App. 2006).
¶46. Joe fails to direct this Court to case law stating that temporary support should be
considered in equitable distribution; therefore, this issue is procedurally barred. Parker v.
Parker, 929 So. 2d 940, 945 (Miss. 2005) (citing Jones v. Howell, 827 So. 2d 691, 702
(Miss. 2002)). Further, as discussed supra, the chancellor awarded lump-sum alimony rather
than a portion of the note as a marital asset; thus, the chancellor was free to exercise his
discretion in equitable distribution, which was not arbitrary and capricious. This issue is
without merit.
V. WHETHER THE CHANCELLOR ERRED IN MAKING NO
ADJUSTMENT FOR DISSIPATION OF MARITAL ASSETS
FROM BETTY’S GAMBLING.
¶47. Joe argues that the chancellor erred by failing to make an adjustment to Betty’s award
after finding that Betty had gambled. However, the chancellor did not find that Betty wasted
or dissipated the marital assets; he simply found that she gambled. Again, the chancellor, as
the trier of fact, determines the weight and credibility to assign the evidence. Sproles, 782
So. 2d at 747. Thus, this issue is without merit.
CONCLUSION
¶48. For the foregoing reasons, the judgment of the Chancery Court for the First Judicial
District of Harrison County is affirmed.
20
¶49. AFFIRMED.
SMITH, C.J., WALLER AND DIAZ, P.JJ., DICKINSON, RANDOLPH AND
LAMAR, JJ., CONCUR. GRAVES, J., CONCURS IN RESULT ONLY. EASLEY, J.,
DISSENTS WITHOUT SEPARATE WRITTEN OPINION.
21 | 01-03-2023 | 04-27-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/865466/ | IN THE SUPREME COURT OF MISSISSIPPI
NO. 2006-KA-02149-SCT
GREGORY SMITH a/k/a JR.
v.
STATE OF MISSISSIPPI
DATE OF JUDGMENT: 11/30/2006
TRIAL JUDGE: HON. ROBERT WALTER BAILEY
COURT FROM WHICH APPEALED: LAUDERDALE COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANT: BENJAMIN A. SUBER
ATTORNEY FOR APPELLEE: OFFICE OF THE ATTORNEY GENERAL
BY: STEPHANIE B. WOOD
DISTRICT ATTORNEY: BILBO MITCHELL
NATURE OF THE CASE: CRIMINAL - FELONY
DISPOSITION: AFFIRMED - 06/26/2008
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE WALLER, P.J., DICKINSON AND LAMAR, JJ.
LAMAR, JUSTICE, FOR THE COURT:
¶1. In the Circuit Court of Lauderdale County, a jury found Gregory Smith guilty of
capital murder, and he was sentenced to life imprisonment without the possibility of parole.
Smith filed a motion for judgment notwithstanding the verdict and a motion for a new trial,
both of which the trial court denied. Smith appeals.
FACTS
¶2. In the early morning hours of May 29, 2004, Jeremy Scott was shot four times in the
head in the Meridian home of relatives. A 911 call was placed around 2:49 a.m., to which
the Meridian Police Department (“MPD”) responded shortly thereafter. Scott died from the
gunshot wounds to the head.
¶3. Assigned to investigate the murder one year after it occurred, Detective Andy Havard,
MPD criminal investigator, learned from Scott’s mother that Scott had purchased a cell
phone about two weeks before he was murdered. The detectives subpoenaed the cell phone
records for calls made from Scott’s phone from 2:45 a.m. on May 29, 2004, through the next
three days. Because the phone was used post-mortem, the detectives concluded that persons
in the house during or after Scott’s death took his phone. Through investigation related to
the phone records, the detectives determined that Anthony Evans, Lewis Thomas Green, and
Gregory Smith were suspects.
PROCEDURAL HISTORY
¶4. A grand jury in Lauderdale County indicted Evans, Green, and Smith for armed
robbery and capital murder. The trial court granted Evans’s request for severance from his
codefendants. Smith also filed a motion for severance. However, the motion was neither
noticed for a hearing nor ruled on by the trial court.
¶5. At the joint trial of Smith and Green, six witnesses testified. Jason McElhenney, a
former MPD criminal investigator, testified about his observations at the scene of the crime.
Dr. Steven Hayne, a pathologist who performed an autopsy on Scott, described Scott’s
gunshot wounds and opined as to Scott’s cause of death. Bernice Collins, former live-in
girlfriend of Green, testified that Evans, Smith, and Green were regularly together. She said
that she was with Smith and Green until about 1:00 a.m, less than two hours before the
2
murder, and that when she saw Green again around 5:00 a.m., Green told her Evans was with
him. MPD Officer Joe Hoadley, initially the lead detective on the case, testified about his
investigation, which did not lead to the identification of any suspects. Detective Havard
testified about the fruits of his investigation, which included his interrogation of Smith and
Green. Another MPD criminal investigator, Detective J.C. Boswell, who assisted Havard
in the interrogation of Smith and Green, also testified about statements made by Smith and
Green during their respective interrogations.
¶6. Detectives Havard and Boswell testified that they interrogated Smith on three
occasions: December 8, 2005; December 13, 2005; and February 9, 2006. On each
occasion, Smith was incarcerated on other charges. Smith’s apparent knowledge of the
murder expanded with each interview, culminating in his confession during the February 9
interview. Detective Havard testified that Smith stated in the final interrogation that he and
Green had been at the scene of the crime, and that he had been a lookout. According to
Havard, Smith said they had gone in to commit robbery. Smith also said Green had shot
Scott. The State entered disc recordings of Smith’s interrogations as well as transcripts of
those recordings. Green objected numerous times to the testimony regarding Smith’s
statements on the grounds of confrontation and hearsay. The trial court eventually granted
Green a continuing objection.
¶7. Detectives Havard and Boswell testified that they had interrogated Green on two
occasions: October 27, 2005, and March 2, 2006. Green also was interrogated while in
custody on other charges. At the first interrogation, Green denied knowing anything about
3
the murder. At the second interrogation, which, according to the detectives, lasted about
forty-five minutes, the detectives began to record Green’s interrogation; however, after the
detectives played for Green the portion of Smith’s interrogation in which Green was named
as an accomplice, Green requested that the recorder be stopped, and the detectives complied.
After this request, the detectives testified that Green admitted he and Smith had been present
at the murder. Detective Havard testified that Green stated that he and Smith had gone to rob
Scott and that Green had had a gun. Detective Havard further testified that Green said he had
searched the house while Smith had watched the front door, and Green said he had heard
three to five shots fired while he was searching the house. According to the officers, Green
also said he had taken drugs and money from the house. Green told the officers that Smith
had a chrome handgun, and that a small gun like a .380-caliber and a long handgun had been
involved. Smith objected numerous times to the officers’ testimony regarding Green’s
statements on the grounds of confrontation and hearsay. The trial court overruled each
objection.
¶8. After the State rested, the trial court called each defendant individually and explained
to him his right to testify or not testify. Each defendant declined to testify, and neither put
on any evidence. After a three-day trial, both Smith and Green were convicted of capital
murder and sentenced to life imprisonment without the possibility of parole.
¶9. Smith filed post-trial motions, which were denied. Smith appeals his conviction.1
1
Green also appealed but later moved to withdraw his appeal, and that motion was granted
by order of the Court dated June 5, 2008.
4
DISCUSSION
¶10. Smith raised two issues on appeal: (1) Whether Smith was irreparably and unfairly
prejudiced by the admission of character evidence of prior bad acts, including prior arrests,
charges, bond hearings, and other unrelated crimes; and (2) whether Smith was denied a fair
trial due to the trial court’s failure to sever the trials of Smith and Green. Further, Smith
implicitly avers a Confrontation Clause violation in his severance issue where he argues “[a]
separate trial was necessary to ensure a fair determination of Smith's guilt or innocence
without Green's hearsay and confrontational statements.” Rule 28(a)(3) of the Mississippi
Rules of Appellate Procedure states: “A statement shall identify the issues presented for
review.” The rule also says “the court may, at its option, notice a plain error not identified
or distinctly specified.” M.R.A.P. Rule 28(a)(3). Under the plain-error doctrine, we can
recognize obvious error which was not properly raised by the defendant on appeal, and which
affects a defendant’s “fundamental, substantive right.” See Debrow v. State, 972 So. 2d 550
(Miss. 2007) (recognizing as plain error that the admission of evidence of defendant’s blood
alcohol content was in violation of his Sixth Amendment right to confrontation); Sanders
v. State, 678 So. 2d 663, 670 (Miss. 1996) (quoting Gray v. State, 549 So. 2d 1316, 1321
(Miss. 1989) (“It has been established that where fundamental rights are violated, procedural
rules give way to prevent a miscarriage of justice”)). Plain-error review is properly utilized
for “correcting obvious instances of injustice or misapplied law.” Newport v. Fact Concerts,
453 U.S. 247, 256, 101 S. Ct. 2748, 69 L. Ed. 2d 616 (1981). Because we find that a
violation of the Confrontation Clause is a violation of a “fundamental, substantive right,” we
5
also will address whether Green’s statement, which implicated Smith, violated Smith’s right
to confrontation, as provided by the Sixth and Fourteenth Amendments to the United States
Constitution, and if so, whether such error requires reversal.2
I. Whether the Trial Court Committed Reversible Error in
Admitting Character Evidence or Prior Bad Acts about Prior
Arrests, Charges, Bond Hearings, and Other Unrelated Crimes.
¶11. Smith argues that the trial court erred when it admitted character evidence through
Smith’s own statements concerning prior arrests, charges, bond hearings, and other unrelated
crimes. The State responds that Smith is procedurally barred from raising as error the
admissibility of his statements as character evidence since he did not specifically object on
that ground in the trial court.
¶12. This Court reviews the trial court's decision to admit or exclude evidence under an
abuse of discretion standard of review. Jones v. State, 962 So. 2d 1263, 1268 (Miss. 2007)
(citing Jones v. State, 904 So. 2d 149, 152 (Miss. 2005)).
¶13. This Court has held “[a]n objection must be made with specificity, and failure to
articulate the grounds for objection constitutes a waiver of the alleged error.” Ross v. State,
954 So. 2d 968, 987 (Miss. 1973). Further, we have held that “an objection on one or more
2
Smith objected to the confrontation error in trial court. To Detective Havard’s testimony as
to what Green said of Smith’s involvement in the murder, Smith stated:
[Smith’s Counsel]:Your Honor, we are going to object to anything – the same basis
Mr. Stephenson had. I realize the Court has already overruled those objections, but
it’s definitely confrontational and also hearsay.
Court: Yes, sir. I understand. Overruled.
6
specific grounds constitutes a waiver of all other grounds.” Spicer v. State, 921 So. 2d 292,
316 (Miss. 2006) (quoting Conner v. State, 632 So. 2d 1239, 1255 (Miss. 1993), overruled
on other grounds by Weatherspoon v. State, 732 So. 2d 158, 161-62 (Miss. 1999); Morgan
v. State, 741 So. 2d 246, 253 (Miss. 1999) (citing Stringer v. State, 279 So. 2d 156, 158
(Miss. 1973)). This Court noted in Morgan that an objection cannot be enlarged in the
reviewing court to embrace an omission not complained of at trial. Morgan, 741 So. 2d at
253 (citing McGarrh v. State, 249 Miss. 247, 276, 148 So. 2d 494, 506 (1963)); Stringer,
279 So. 2d at 158-59. This Court cannot find that a trial judge committed reversible error
on a matter not brought before him or her to consider. Montgomery v. State, 891 So. 2d 179,
187 (Miss. 2004); Stringer, 279 So. 2d at 158.
¶14. When Smith’s statements were offered into evidence, Smith joined an objection made
by Green on the grounds of hearsay and the right to confrontation. Smith failed to object on
the ground he raises on appeal – improper character evidence. Smith waived any argument
concerning character evidence when he failed to raise it in the trial court.
II. Whether the Trial Court Committed Reversible Error in Not
Severing the trials of Gregory Smith and Lewis Green.
¶15. Smith also asserts that the trial court committed error by failing to sever the trials of
Smith and codefendant Green. The State argues that since Smith filed a motion for severance
but never set the motion for hearing, this assignment also is procedurally barred.
¶16. Uniform Rule of Circuit and County Court Practice 9.03 places in the discretion of
the trial judge the grant or refusal of severance of defendants in cases not involving the death
7
penalty.3 This Court has held that, even when a defendant has a right to a separate trial from
that of a codefendant, “this right, as any other fundamental and absolute right, can be
waived.” Smith v. State, 724 So. 2d 280, 307 (Miss. 1988). Uniform Rule of Circuit and
County Court Practice 2.04 states:
It is the duty of the movant, when a motion or other pleading is filed, including
motions for a new trial, to pursue said motion to hearing and decision by the
court. Failure to pursue a pretrial motion to hearing and decision before trial
is deemed an abandonment of that motion; however, said motion may be heard
after the commencement of trial in the discretion of the court.
This Court has repeatedly held that “it is the responsibility of the movant to obtain a ruling
from the court on motions . . . and failure to do so constitutes a waiver.” Evans v. State, 725
So. 2d 613, 708 (Miss. 1997) (quoting Johnson v. State, 461 So. 2d 1288, 1290
(Miss.1984)). “Issues not brought before the trial court are deemed waived and may not be
raised for the first time on appeal.” Tate v. State, 912 So. 2d 919, 928 (Miss. 2005) (citing
Wilcher v. State, 479 So. 2d 710, 712 (Miss. 1985)).
¶17. We find no record of a ruling by the trial court on Smith’s motion for severance nor
any evidence that the motion was noticed for hearing by the defendant. By failing to pursue
a hearing or ruling on the motion from the trial court, Smith effectively abandoned the
motion and waived this issue for appeal.
III. Whether the Trial Court Committed Reversible Error in
Admitting Green’s Statement Against Smith.
3
Although this is a capital murder case, the State did not seek the death penalty.
8
¶18. This Court reviews de novo a Confrontation Clause objection. See Hayden v. State,
972 So. 2d 525, 535-36 (Miss. 2007) (citing Baker v. State, 802 So. 2d 77, 80 (Miss. 2001)).
¶19. The United States Supreme Court has noted:
[there] are few subjects, perhaps, upon which this Court and other courts have
been more nearly unanimous than in the expressions of belief that the right of
confrontation and cross-examination is an essential and fundamental
requirement for the kind of fair trial which is this country's constitutional goal.
Lee v. Ill., 476 U.S. 530, 540, 106 S. Ct. 2056, 90 L. Ed. 2d 514 (1986) (quoting Pointer v.
Texas, 380 U.S. 400, 405, 85 S. Ct. 1065, 13 L. Ed. 2d 923 (1965)). The right to
confrontation:
(1) insures that the witness will give his statements under oath -- thus
impressing him with the seriousness of the matter and guarding against the lie
by the possibility of a penalty for perjury; (2) forces the witness to submit to
cross-examination, the ‘greatest legal engine ever invented for the discovery
of truth’; (3) permits the jury that is to decide the defendant's fate to observe
the demeanor of the witness making his statement, thus aiding the jury in
assessing his credibility.
Lee, 476 U.S. at 540 (quoting California v. Green, 399 U.S. 149, 158, 90 S. Ct. 1930, 26 L.
Ed. 2d 489 (1970)). “[The] truthfinding function of the Confrontation Clause is uniquely
threatened when an accomplice's confession is sought to be introduced against a criminal
defendant without the benefit of cross-examination.” Lee, 476 U.S. at 541.
¶20. In Crawford v. Washington, the United States Supreme Court held that testimonial
statements of witnesses absent from trial can be admitted, in accordance with common law,
only where the declarant is unavailable and the defendant had a prior opportunity to cross-
examine. Crawford v. Washington, 541 U.S. 36, 68, 124 S. Ct. 1354, 1364, 158 L. Ed. 2d
9
177 (2004) (emphasis added). The Supreme Court distinguished nontestimonial hearsay
from testimonial hearsay. Id. Nontestimonial hearsay is subject to evidentiary rules
concerning reliability rather than being subject to scrutiny under the Confrontation Clause.
Id. However, testimonial hearsay must be filtered by the Confrontation Clause. Id. at 53.
¶21. The Court declined in Crawford to define “testimonial” statements, but noted that the
term, at a minimum, includes “prior testimony at a preliminary hearing, before a grand jury,
or at a former trial; and to police interrogations.” Id. at 68 (emphasis added). Subsequently,
the Court addressed the need to “determine more precisely which police interrogations
produce testimony.” Davis v. Washington, 547 U.S. 813, 822, 126 S. Ct. 2266, 165 L. Ed.
2d 224 (2006). In Davis, the Court further distinguished statements made in response to
police interrogations, explaining that:
[s]tatements are nontestimonial when made in the course of police
interrogation under circumstances objectively indicating that the primary
purpose of the interrogation is to enable police assistance to meet an ongoing
emergency. They are testimonial when the circumstances objectively indicate
that there is no such ongoing emergency, and that the primary purpose of the
interrogation is to establish or prove past events potentially relevant to later
criminal prosecution.
Davis, 547 U.S. at 822. Accordingly, the statements made during police interrogation in the
present case are unquestionably testimonial and thus would be admissible only if the
declarant was unavailable and the defendant had a prior opportunity to cross examine. See
Crawford, 541 U.S. at 52, 68.
¶22. Crawford cites Bruton v. United States, 391 U.S. 123, 126, 88 S. Ct. 1620, 1622, 20
L. Ed. 2d 476 (1968), for the proposition that the admission of a codefendant’s statement
10
against a defendant without the opportunity to cross-examine the codefendant is a violation
of the Confrontation Clause. Crawford, 541 U.S. at 57. Following Bruton, this Court has
held that “the prosecution should not offer, and the trial judge should not admit, in evidence,
incriminating statements of a codefendant (implicating the defendant) during the state’s case-
in-chief, since it could not be known whether the codefendant would testify after the state
rested.” Clark v. State, 891 So. 2d 136, 140 (Miss. 2004) (quoting Brown v. State, 340 So.
2d 718, 721 (Miss. 1976)).
¶23. The trial court allowed the introduction of Smith’s and Green’s statements based on
the reliability test set forth in Seales v. State, 495 So. 2d 475 (Miss. 1986). In Seales, at the
joint trial of the defendants, out-of-court statements of each defendant made to officers while
in police custody were admitted into evidence in the State's case-in-chief, relying on the Ohio
v. Roberts, 448 U.S. 56, 66, 65 L. Ed. 2d 597, 100 S. CT. 2531 (1980), “indicia of reliability”
test. Under this test, the statement of a nontestifying codefendant was admissible when the
declarant was unavailable and the statement bore adequate “indicia of reliability.” Seales,
495 So. 2d at 480. Roberts held that reliability is sufficient “where the evidence falls within
a firmly rooted hearsay exception” or is shown to contain “particularized guarantees of
trustworthiness.” Roberts, 448 U.S. at 66. Seales, in following Roberts, determined that the
admission of the statements in that case was not reversible error, stating “‘particularized
guarantees of trustworthiness’ are present, that is, that the statements corroborate one another
on the core details of the crime.” Seales, 495 So. 2d at 479. Analogizing Seales to the case
11
at hand, the trial court found the statements reliable since “both Defendants, basically,
corroborated each others’ story, generally, until you get to who the shooter was.”
¶24. However, Seales and Roberts are in conflict with Crawford as they relate to the
admissibility of testimonial statements. Crawford held that the Roberts reliability test, i.e.,
whether it falls under a “firmly rooted hearsay exception" or bears "particularized guarantees
of trustworthiness,” strays unacceptably from the original intention of the Confrontation
Clause. Crawford, 541 U.S. at 60. The unpardonable vice of the Roberts test is “its
demonstrated capacity to admit core testimonial statements that the Confrontation Clause
plainly meant to exclude.” Id. at 63. The Court found that, under the test laid out in Roberts,
trial courts continued routinely to admit accomplice confessions implicating the accused and
other sorts of plainly testimonial statements. Id.
¶25. As to the Roberts test, the Supreme Court concluded that the admission of statements
upon a mere finding of reliability failed to meet the core concerns of the Confrontation
Clause and failed to protect against paradigmatic confrontation violations. Id. at 60.
[w]here testimonial statements are involved, we do not think the Framers
meant to leave the Sixth Amendment's protection to the vagaries of the rules
of evidence, much less to amorphous notions of “reliability.”. . . Admitting
statements deemed reliable by a judge is fundamentally at odds with the right
of confrontation. To be sure, the Clause's ultimate goal is to ensure reliability
of evidence, but it is a procedural rather than a substantive guarantee. It
commands, not that evidence be reliable, but that reliability be assessed in a
particular manner: by testing in the crucible of cross-examination.
Id. at 61.
12
¶26. Crawford holds that when dealing with testimonial evidence, a finding of reliability
does not create an exception to the Confrontation Clause. Crawford, 541 U.S. at 61. “Where
testimonial statements are at issue, the only indicium of reliability sufficient to satisfy
constitutional demands is the one the Constitution actually prescribes: confrontation.” Id.
at 68-69 (emphasis added). We overrule Seales and its progeny 4 to the extent that they allow
admission of testimonial statements when found to be reliable under the “indicia of
reliability” test in the absence of cross-examination. We decline to address the applicability
of Seales to nontestimonial statements.
¶27. The trial court admitted the statements and attempted to address any confrontational
issues by giving a cautionary instruction. With regard to Green’s statements, jury instruction
C-16 stated:
[t]he court instructs the jury that statements attributed to Lewis Green have
been admitted into evidence. The court instructs the jury that you are to
disregard any such statement regarding Gregory Smith and his alleged
involvement in an armed robbery and murder that is the subject of this trial.
You are further instructed to disregard any other statement attributed to Lewis
4
The applicable progeny of Seales includes Harrington v. State, 793 So. 2d 626 (Miss.
2001) (finding after examination of an alleged confrontation clause error that the statements were
inadmissible since they did not satisfy the Roberts reliability test as set out in Seales); Smith v.
State, 754 So. 2d 1159 (Miss. 2000) (same); Williams v. State, 667 So. 2d 15, 21 (Miss. 1996) (if
the statement bears particularized guarantees of trustworthiness so that “the test of
cross-examination would be of marginal utility,” the statement is admissible at trial); Johnson v.
State, 512 So. 2d 1246, 1254 (Miss. 1987) (“ if the trial court determines at a suppression hearing
prior to trial that the statements contain ‘particularized guarantees of trustworthiness’ . . . that is, that
the statements corroborate one another on the core details of the crime,” then the statement is
admissible); Mitchell v. State, 495 So. 2d 5, 9 (Miss. 1986) (the Bruton presumption against
admission of a co-defendant's statement against a defendant without the opportunity to
cross-examine the co-defendant may be rebutted so as to meet Confrontation Clause standards if it
is supported by a showing of particularized guarantees of trustworthiness).
13
Green regarding Gregory Smith as evidence in this case against Gregory
Smith. You are not permitted to use any statement attributed to Lewis Green
in regard to Gregory Smith as evidence in this case against Gregory Smith.
¶28. The United States Supreme Court has rejected a jury instruction as a cure for the
violation of the Confrontation Clause, explaining:
A defendant is entitled to a fair trial but not a perfect one. It is not
unreasonable to conclude that in many such cases the jury can and will follow
the trial judge's instructions to disregard such information. Nevertheless, . . .
. there are some contexts in which the risk that the jury will not, or cannot,
follow instructions is so great, and the consequences of failure so vital to the
defendant, that the practical and human limitations of the jury system cannot
be ignored. Such a context is presented here, where the powerfully
incriminating extrajudicial statements of a codefendant, who stands accused
side-by-side with the defendant, are deliberately spread before the jury in a
joint trial. Not only are the incriminations devastating to the defendant but
their credibility is inevitably suspect, a fact recognized when accomplices do
take the stand and the jury is instructed to weigh their testimony carefully
given the recognized motivation to shift blame onto others. The unreliability
of such evidence is intolerably compounded when the alleged accomplice, as
here, does not testify and cannot be tested by cross-examination. It was against
such threats to a fair trial that the Confrontation Clause was directed.
Bruton, 391 U.S. at 135-36 (internal quotations and citations omitted). Bruton found the
jury instruction insufficient to cure a Confrontation Clause violation and reversed the
petitioner’s conviction because of “substantial risk that the jury, despite instructions to the
contrary, looked to the incriminating extrajudicial statements in determining petitioner’s
guilt.” Bruton, 391 U.S. at 126. This Court has followed Bruton. See e.g., Harris v. State,
861 So. 2d 1003, 1022 (Miss. 2003) (citing Bruton for the proposition that “where a
codefendant's statement is introduced at a joint trial which powerfully implicates the
defendant in a crime, a jury instruction or redactions which naturally suggest the defendant's
14
name has been removed is not sufficient protection of the defendant's right to confront his
accuser where the codefendant does not take the stand and subject himself to
cross-examination by the defendant”).
¶29. In accordance with Bruton, this Court continues to hold that a violation of the
Confrontation Clause by admission of a codefendant’s out-of-court statement which
implicates the defendant in a crime cannot be cured by the granting of a cautionary
instruction such as the ones entered in this case.
¶30. Having determined that neither through establishment of reliability under Roberts and
Seales, nor through the issuance of a jury instruction, were Green’s statements properly
admitted, we must finally determine whether, as the State asserts, the Confrontation Clause
violation was harmless error. See Delaware v. Van Arsdall, 475 U.S. 673, 674, 106 S. Ct.
1431, 89 L. Ed. 2d 674 (1986) (vacating and remanding the case for harmless-error analysis
where, though the trial court committed a Confrontation Clause violation, the Delaware
Supreme Court erred “when it [rejected the state’s argument and] declined to consider
whether [the trial court] ruling was harmless in the context of the trial as a whole”).
¶31. The United States Supreme Court has explained that “a defendant is entitled to a fair
trial but not a perfect one,” for there are no perfect trials. Brown v. United States, 411 U.S.
223, 231, 93 S. Ct. 1565, 36 L. Ed. 2d 208 (1973) (quoting Bruton, 391 U.S. at 135 (quoting
Lutwak v. United States, 344 U.S. 604, 619, 73 S. Ct. 481, 97 L. Ed. 593 (1953))). While
“there are some constitutional rights so basic to a fair trial that their infraction can never be
treated as harmless error,” Chapman v. California, 386 U.S. 18, 23, 87 S. Ct. 824, 17 L. Ed.
15
2d 705 (1967), “most constitutional errors can be harmless.” Neder v. United States, 527
U.S. 1, 8, 119 S. Ct. 1827, 144 L. Ed. 2d 35 (1999) (citing Arizona v. Fulminante, 499 U.S.
279, 306, 111 S. Ct. 1246, 113 L. Ed. 2d 302 (1991)). The Supreme Court has recognized
a limited class of fundamental constitutional errors, “structural errors,” that are not subject
to harmless-error analysis and require automatic reversal. Neder, 527 U.S. at 7 (citing
Fulminante, 499 U.S. at 309). However, for all other constitutional errors, reviewing courts
must apply harmless-error analysis in order to determine whether the error was harmless
“beyond a reasonable doubt.” Neder, 527 U.S. at 7 (citing Chapman, 386 U.S. at 24). “[A]n
otherwise valid conviction should not be set aside if the reviewing court may confidently say,
on the whole record, that the constitutional error was harmless beyond a reasonable doubt.”
Van Arsdall, 475 U.S. at 681. Once the constitutional error has been established, the burden
is on the State to demonstrate the error is harmless beyond a reasonable doubt. Fulminante,
499 U.S. at 296.
¶32. Although this Court did hold in McCulloch v. State, 194 Miss. 851, 855, 13 So. 2d
829 (Miss. 1943), that “[t]he violation of a constitutional right can not be harmless error,”
the United States Supreme Court later explained in Chapman the applicability of harmless-
error analysis to constitutional violations. In accordance with Chapman, this Court has
recognized that the admission of statements made by a non-testifying defendant in violation
of the Confrontation Clause can be harmless error. Clark, 891 So. 2d at 141; Bynum v.
State, 929 So. 2d 312, 314-15 (Miss. 2006) (finding beyond a reasonable doubt that the trial
court's error in admitting the co-defendant's statement was harmless). Clark followed Brown
16
v. United States, which held that admission into evidence of a statement made by a non-
testifying codefendant – a Bruton error – is harmless where “[t]he testimony erroneously
admitted was merely cumulative of other overwhelming and largely uncontroverted evidence
properly before the jury.” Brown, 411 U.S. at 231; Clark, 891 So. 2d at 141. See Haynes
v. State, 934 So. 2d 983, 991 (Miss. 2006) (This Court has held “errors involving a violation
of an accused’s constitutional rights may be deemed harmless beyond a reasonable doubt
where the weight of the evidence against the accused is overwhelming.”)
¶33. The State asserts that in the present case the facts constituting the elements of murder
committed during the commission of a robbery were established by overwhelming evidence
and through the use of proper means; thus, the error of admitting Green’s statements was
harmless. Smith was charged with capital murder committed during the commission of a
robbery. Mississippi Code Annotated § 97-3-19(2)(e) (Rev. 2006) defines capital murder as:
(2) The killing of a human being without the authority of law by any means
or in any manner will be capital murder in the following cases:
....
(e) When done with or without any design to effect death, by any person
engaged in the commission of the crime of . . . robbery . . . or in any attempt
to commit such felonies . . . .
(emphasis added). The underlying crime charged in this case was robbery. The elements of
robbery are: “(1) felonious intent, (2) force or putting in fear as a means of effectuating the
intent, and (3) by that means taking and carrying away the property of another from his
person or in his presence.” Walker v. State, 913 So. 2d 198, 223 (Miss. 2005) (quoting
Caldwell v. State, 481 So. 2d 850, 853 (Miss. 1985)).
17
¶34. The State argues that the facts constituting the elements of murder committed during
the commission of a robbery were established by overwhelming evidence and through the
use of proper means.
¶35. Outside of Green’s erroneously admitted statements, the only evidence that ties Smith
to the crime are the statements Smith made during his interrogation which was presented to
the jury through the disc recordings and transcripts of those interrogations. While we have
determined that Smith’s statement would have been inadmissibile against Green, it is
admissible against Smith himself. “[W]hile Crawford certainly prohibits the introduction of
a codefendant's out-of-court testimonial statement against the other defendants in a
multiple-defendant trial, it does not signal a departure from the rules governing the
admittance of such a statement against the speaker-defendant himself, which continue to be
provided by Bruton, Richardson [v. Marsh, 481 U.S. 200, 107 S. Ct. 1702, 95 L. Ed. 2d 176
(1987)], and Gray [v. Maryland, 523 U.S. 185, 188, 118 S. Ct. 1151, 140 L. Ed. 2d 294
(1998)].” United States v. Ramos-Cardenas, 524 F.3d 600, 609-10 (5th Cir. 2008). See also
United States v. Rodriguez-Duran, 507 F.3d 749, 768-70 (1st Cir. 2007) (under Crawford,
in a joint trial, even though a defendant’s statement is inadmissible against codefendants, it
can be admissible as to him); Bruton, 391 U.S. at 127 (“[Bruton’s codefendant’s] oral
confessions were in fact testified to, and were . . . legitimate evidence against [his
codefendant] and to that extent [were] properly before the jury during its deliberations”).
¶36. Smith told Havard and Boswell during interrogation that he went to the house where
Scott was murdered in order to commit robbery, that he acted as the lookout, that Green shot
18
Scott, and that he received some of the stolen money. We note that Smith made no effort to
suppress his own statements and the only objection made to the introduction of his statement
was his joining Green’s objection on the grounds of hearsay and confrontation. No objection
was made which would challenge either the truthfulness, or the voluntariness, or the
reliability of Smith’s statements. Smith’s confession was the most probative and damaging
evidence admitted against him, and it constituted direct evidence of the facts related to
Scott’s murder. Smith’s own statements concerning his participation in the robbery and
murder of Scott were uncontradicted and unchallenged. Therefore, we find that the evidence
in the record was overwhelming and was sufficient to support the jury’s verdict, and that the
introduction of Green’s statement was harmless beyond a reasonable doubt.
CONCLUSION
¶37. We find that the issues of character evidence and severance are procedurally barred.
Further, even considering the violation of Smith’s constitutional right under the
Confrontation Clause, we find that the trial court’s admission of Green’s statement was
harmless error. Accordingly, we affirm the judgment convicting Smith of capital murder and
the resulting sentence.
¶38. COUNT I: CONVICTION OF ROBBERY BY USE OF A DEADLY WEAPON,
AFFIRMED. APPELLANT RECEIVED NO SENTENCE ON COUNT I, THAT
OFFENSE BEING ENCOMPASSED IN COUNT II. COUNT II: CONVICTION OF
CAPITAL MURDER AND SENTENCE OF LIFE IMPRISONMENT IN THE
CUSTODY OF THE MISSISSIPPI DEPARTMENT OF CORRECTIONS,
AFFIRMED. THIS SENTENCE IS CONSECUTIVE TO ANY OTHER SENTENCE
AND THIS APPELLANT SHALL BE ELIGIBLE FOR PAROLE, BUT UNDER
47-7-3 MCA, THIS SHALL BE WITHOUT PAROLE CONSIDERATION.
19
SMITH, C.J., WALLER, P.J., EASLEY, CARLSON, DICKINSON AND
RANDOLPH, JJ., CONCUR. GRAVES, J., DISSENTS WITH SEPARATE
WRITTEN OPINION JOINED BY DIAZ, P.J.
GRAVES, JUSTICE, DISSENTING:
¶39. The majority finds that the trial court’s admission of Smith’s non-testifying co-
defendant’s statement was in violation of Smith’s right to confrontation, and then finds that,
while the admission of such evidence did violate Smith’s constitutional right to
confrontation, the error was harmless. In light of the lack of evidence in the instant case, I
cannot agree with the majority’s determination that the violation of Smith’s constitutional
right to confrontation was mere harmless error. Therefore, I respectfully dissent.
¶40. Such a violation of a defendant’s constitutional right to confrontation is considered
harmless error only when “testimony erroneously admitted was merely cumulative of other
overwhelming and largely uncontroverted evidence properly before the jury.” Brown v.
United States, 411 U.S. 223, 231, 93 S. Ct. 1565, 36 L. Ed. 2d 208 (1973) (emphasis added).
Furthermore, “[h]armless errors are those ‘which in the setting of a particular case are so
unimportant and insignificant that they may, consistent with the Federal Constitution, be
deemed harmless, not requiring the automatic reversal of the conviction.’” Bynum v. State,
929 So. 2d 312, 314 (Miss. 2006) (citing Chapman v. California, 386 U.S. 18, 22, 87 S. Ct.
824, 17 L. Ed. 2d 705 (1967)). Brown is an example of such an instance.
¶41. In Brown, the defendants were charged with and convicted of transporting stolen
goods and of conspiracy to transport stolen goods in interstate commerce. Brown, 411 U.S.
20
at 224. The trial court erred in admitting police testimony as to statements made by a
co-defendant implicating the defendant in the crimes charged, even though these statements
were made out of the defendant's presence. Id. at 230-31. Despite the Bruton error, the
evidence which was properly before the jury could be considered overwhelming. Bruton v.
United States, 391 U.S. 123, 126, 88 S. Ct. 1620, 1622, 20 L. Ed. 2d 476 (1968). In Brown,
stolen merchandise which was seized from a co-conspirator’s store was received in evidence.
Police-officer eyewitnesses testified and fully described their observations of defendants
leaving the warehouse from which the goods were stolen while the defendants were in
possession of stolen goods; twenty photographs of the crime in progress were admitted into
evidence; and incriminating testimony was given by the owner of the service station, from
whom petitioners had rented trucks used in the thefts. Also, five witnesses testified they had
seen petitioners unloading boxes from a truck late at night and carrying the boxes into the co-
conspirator’s store, where the stolen goods were seized. Id. at 226.
¶42. In the instant case, Scott’s cause of death was established by the testimony of Dr.
Hayne. However, evidence of the remaining elements of the crime of which Smith was
convicted were supplied solely by the statements of the defendants. Detective Havard
testified that he determined that Smith was a suspect through cellular phone records of the
victim. These phone records were never entered into evidence. There was no testimony
from any witness which tied Smith to the phone. There was no evidence that Scott’s cellular
phone was ever recovered. Further, no evidence was presented from any eyewitnesses at the
crime scene. No persons who actually collected evidence or performed any evidentiary tests
21
were called as witnesses. Four .380-caliber shell casings were found near the body, but were
never matched to a particular gun. Absolutely no physical evidence was presented to connect
Smith to the crime.
¶43. Absent the statements of Smith and Green, there was no evidence – direct or
circumstantial – which tied Smith to the murder. Therefore, it cannot be found that the
statement was “merely cumulative of other overwhelming and largely uncontroverted
evidence properly before the jury,” when the only evidence offered before the jury which
linked Smith to the crime were the two statements. Brown, 411 U.S. at 231. As the majority
concedes, the severability issue is inextricably linked to the violation of Smith’s
constitutional right to confront the witnesses against him. “Smith implicitly avers a
confrontation violation in his severance issue where he argues ‘[a] separate trial was
necessary to ensure a fair determination of Smith's guilt or innocence without Green's hearsay
and confrontational statements.’” If, as the majority finds and I agree, the admission of
Green’s statement violated Smith’s right to confrontation, then it follows that Smith’s
statement was admitted in violation of Green’s right to confrontation.
¶44. While Smith does not have proper standing to raise the constitutional rights of his co-
defendant Green, this Court would be remiss to ignore that the two defendants were, in fact,
tried together. Smith’s statement was unquestionably inadmissible against Green. See
Bruton, 391 U.S. at 126; Clark v. State, 891 So. 2d 136, 140 (Miss. 2004) (quoting Brown
v. State, 340 So. 2d 718, 721 (Miss. 1976)); Harris v. State, 861 So. 2d 1003, 1022 (Miss.
2003) (citation omitted). It is impossible to extricate what happened at the trial and apply
22
it as if Smith were tried separately from Green. He was not. Smith’s statement simply was
inadmissible at Green’s trial. Unfortunately, Green’s trial was also Smith’s trial. The
majority relies on Smith’s own statement, which also was erroneously admitted at trial in
violation of Green’s right to confrontation, to find that the erroneous admission of Smith’s
non-testifying co-defendant was “harmless beyond a reasonable doubt.” Hence, the majority
is ignoring what actually occurred during the trial. Furthermore, the majority’s opinion is
inconsistent with the United States Supreme Court holding in Brown that such violations of
a defendant’s constitutional right to confrontation are considered harmless error only when
“testimony erroneously admitted was merely cumulative of other overwhelming and largely
uncontroverted evidence properly before the jury.” Brown, 411 U.S. at 231 (emphasis
added). Neither the statement of Green nor that of Smith was “properly” before the jury, as
required by Brown.
¶45. Admittedly, had the cases been severed, Smith’s statement would have been
admissible against Smith. But there was a joint trial of Green and Smith. A finding that the
admission of the statements of both Green and Smith violated their respective co-defendant’s
constitutional right to confrontation further evidences the fact that the violation of Smith’s
right to confrontation cannot be considered harmless error. If the erroneously admitted
statements had not been offered at trial, the only evidence that the prosecution would have
offered would have been the testimony of Dr. Hayne.
23
¶46. For the foregoing reasons, I would reverse Smith’s conviction of capital murder and
remand the case for a trial at which Smith would be permitted, in accordance with his
constitutional rights, to confront all witnesses against him, consistent with this opinion.
DIAZ, P.J., JOINS THIS OPINION.
24 | 01-03-2023 | 04-27-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1360096/ | 606 S.E.2d 443 (2005)
STATE of North Carolina
v.
Milas Kennedy HUDGINS, Defendant.
No. COA03-1485.
Court of Appeals of North Carolina.
January 4, 2005.
Attorney General Roy Cooper, by Special Deputy Attorney General Hal F. Askins and Assistant Attorney General Patricia A. Duffy, for the State.
L. Jayne Stowers, Winston-Salem, for defendant-appellant.
*444 GEER, Judge.
Defendant Milas Kennedy Hudgins appeals from his conviction of habitual driving while impaired and driving while license revoked. Because the evidence at trial supported an instruction on the defense of necessity, we hold that the trial court erred in failing to give such an instruction. We accordingly *445 reverse defendant's convictions and remand for a new trial.
Facts
The State's evidence tended to show the following. In the early evening hours on 3 September 2002, Joe Austin and a friend were standing next to Austin's house when they heard "something coming off the hill real fast" and saw a white Toyota pickup truck barreling down a steep hill behind Austin's house. The Toyota hit an old truck cab that Austin had parked on the hill and another vehicle parked in front of the house and came to rest in Austin's driveway. Austin ran to the truck and saw defendant lying on top of Benny Maney on the floorboard with defendant on the driver's side and Maney on the passenger side. Austin testified that the truck was still running, and his friend reached in and turned it off. Austin ran to his house and told his wife to call an ambulance. About fifteen minutes later, before the ambulance arrived, defendant got out of the truck and started walking toward his house.
When Trooper Rocky Dietz of the North Carolina Highway Patrol arrived, Austin told him that defendant had left to walk to his house. Dietz went to defendant's house, where defendant answered the door. Dietz noticed that defendant had a strong odor of alcohol coming from his person. Dietz asked defendant if he had been in a motor vehicle accident, and defendant replied that he had not, but agreed to accompany Dietz to the accident scene. Dietz placed defendant in his patrol car and administered Miranda warnings.
At the accident scene, Austin identified defendant as the person he had seen in the driver's seat of the truck, and defendant apologized to Austin for what had happened. Dietz placed defendant under arrest and transported him to the Yancey County Sheriff's Department, where he informed defendant of his Intoxilyzer rights and administered an Intoxilyzer test. The test indicated that defendant had a breath alcohol concentration of .26.
Toward the end of the State's case-in-chief, the trial court admitted into evidence State's Exhibit 6, consisting of defendant's record of convictions for violations of motor vehicle laws, a notice of an alcohol-related suspension of defendant's North Carolina driver's license, and defendant's DMV driver's record. Following admission of this evidence, defendant was arraigned outside the presence of the jury on the charge of habitual driving while impaired. Defendant then admitted having three prior convictions involving impaired driving within the past seven years and confirmed that he had signed a stipulation that his license was revoked on the date of the accident. The signed stipulation was admitted into evidence as State's Exhibit 7. At that point, the State rested.
Defendant offered evidence that he began drinking at approximately 1:00 p.m. on 3 September 2002 and drank six or seven beers over the course of the afternoon. His friend Benny Maney picked him up in a white Toyota pickup truck to take him to Maney's house for supper. Denise Sturgill, the fiancee of defendant's brother, testified that she saw defendant get into the passenger side of Maney's truck. According to defendant, he was still riding as a passenger when the two men stopped on the side of the road to examine a dead tree and decide how best to cut it down for wood. Maney's truck was parked on the unpaved shoulder of the road, facing traffic. Defendant looked back and saw that the truck was rolling. He ran to the truck, jumped in the passenger door, slid over to the driver's side, and unsuccessfully tried to stop the truck by pumping the brakes. Maney followed through the passenger side and pulled the emergency brake, but the truck just rolled faster. Defendant testified that the truck was traveling on the wrong side of the road with defendant attempting to steer although the truck's power steering was not working. As they approached a sharp curve, defendant saw an oncoming car and steered the truck across the road to the opposite bank. According to defendant, the truck went over an embankment, then hit Austin's truck cab and a parked car and headed straight towards Austin's house. Defendant testified that he "tried to do the best [he] could to keep from hitting that house below [them]." The truck came to rest in Austin's driveway. Defendant testified that had he *446 not jumped in the truck and ultimately steered it down the driveway, it would "have went right through [the] house."
Defendant "busted [his] head over the windshield coming down through there" and "was kind of addled." After the ambulance came and took Maney to the hospital, defendant got out and waited a time for the state trooper to come, then returned to his house. Trooper Dietz arrived about ten minutes later.
The jury convicted defendant of driving while impaired ("DWI") and driving while his license was revoked ("DWLR"), but found him not guilty of displaying a fictitious license plate. He was sentenced to 120 days imprisonment on the DWLR conviction and 19 to 23 months for a habitual DWI conviction based on his stipulation to the prior DWIs. From his convictions and sentences, defendant appealed to this Court.
I
At trial, defendant requested the following jury instruction on the defense of necessity:
I instruct you that North Carolina recognizes the defense of "necessity." A person is excused from criminal liability if he acts under a duress of circumstances to prevent some serious event from happening, and if he has no other acceptable choice. The law ought to promote the achievement of higher values at the expense of lesser values and sometimes the greater good for society will be accomplished by violating the literal language of the criminal law. If you find that [defendant] had no other acceptable way in which to prevent possible injury to occupants and property damage and only drove to steer the truck away from houses, the defense of necessity requires you to find him not guilty.
Defendant contends that it was reversible error for the trial court to refuse to give his requested instruction on the defense of necessity.
"A trial court must give a requested instruction if it is a correct statement of the law and is supported by the evidence." State v. Haywood, 144 N.C.App. 223, 234, 550 S.E.2d 38, 45, appeal dismissed and disc. review denied, 354 N.C. 72, 553 S.E.2d 206 (2001). Even in the absence of a request, "[f]ailure to instruct upon a substantive or `material' feature of the evidence and the law applicable thereto will result in reversible error...." State v. Ward, 300 N.C. 150, 155, 266 S.E.2d 581, 585 (1980). Any defense raised by the evidence is deemed a substantial feature of the case and requires an instruction. State v. Smarr, 146 N.C.App. 44, 54, 551 S.E.2d 881, 888 (2001), disc. review denied, 355 N.C. 291, 561 S.E.2d 500 (2002).
For a jury instruction to be required on a particular defense, there must be substantial evidence of each element of the defense when "the evidence [is] viewed in the light most favorable to the defendant...." State v. Ferguson, 140 N.C.App. 699, 706, 538 S.E.2d 217, 222 (2000), disc. review denied, 353 N.C. 386, 547 S.E.2d 25 (2001). "Substantial evidence" is evidence that a reasonable person would find sufficient to support a conclusion. State v. Vause, 328 N.C. 231, 236, 400 S.E.2d 57, 61 (1991). Whether the evidence presented constitutes "substantial evidence" is a question of law. State v. Earnhardt, 307 N.C. 62, 66, 296 S.E.2d 649, 652 (1982).
A. Availability of Necessity Defense in DWI Prosecution
As an initial matter, the State asserts that the defense of necessity is inapplicable to a DWI prosecution, arguing that DWI is a strict liability offense to which there are no common law defenses.[1] The only case the State cites for this proposition, State v. Rose, 312 N.C. 441, 323 S.E.2d 339 (1984), involved a challenge that the statute was unconstitutionally vague, id. at 442, 323 S.E.2d at 340, and fails to support the State's argument. The State also points to N.C. Gen.Stat. § 20-138.1(b) (2003), which provides that "[t]he fact that a person charged with violating this section is or has been legally entitled to use alcohol or a drug is not a defense to a charge under this section." N.C. Gen.Stat. § 20-138.1(b). This provision does not establish a *447 strict liability offense; it simply provides that legal use of alcohol or drugs does not justify driving while impaired.
The State's argument cannot be reconciled with decisions of this Court indicating that common law defenses are available in DWI prosecutions. This Court recently held that "[i]n appropriate factual circumstances, the defense of entrapment is available in a DWI trial." State v. Redmon, ___ N.C.App. ___, ___, 596 S.E.2d 854, 858 (2004) (remanding for new trial for failure to instruct on defense of entrapment). This Court has also implicitly acknowledged that the defense of duress would be appropriate in a DWI trial. See State v. Cooke, 94 N.C.App. 386, 387, 380 S.E.2d 382, 382-83 (emphasis omitted) ("The trial court was correct in refusing to instruct the jury on the defense of coercion, compulsion or duress as there was no evidence that defendant faced threatening conduct of any kind at the time the officer saw him driving while intoxicated."), disc. review denied, 325 N.C. 433, 384 S.E.2d 542 (1989).
Moreover, courts in other jurisdictions have specifically held that the defense of necessity is available in a DWI prosecution. See, e.g., People v. Pena, 149 Cal. App. Supp. 3d 14, 22, 197 Cal. Rptr. 264, 269 (1983) (duress/necessity defense was available to a defendant charged with misdemeanor driving under the influence); Stodghill v. State, 881 So. 2d 885, 889 (Miss.Ct.App.) ("[Defendant's] decision to drive after drinking may be excused as necessary."), cert. denied, 883 So. 2d 1180 (2004); State v. Shotton, 142 Vt. 558, 562, 458 A.2d 1105, 1107 (1983) (in DWI prosecution, trial court erred in not instructing the jury on the defense of necessity). We likewise hold that the defense of necessity is available in a DWI prosecution.
B. The Need for a Jury Instruction on Necessity
This Court has explained, with respect to the defense of necessity, that "`[a] person is excused from criminal liability if he acts under a duress of circumstances to protect life or limb or health in a reasonable manner and with no other acceptable choice.'" State v. Thomas, 103 N.C.App. 264, 265, 405 S.E.2d 214, 215 (1991) (quoting State v. Gainey, 84 N.C.App. 107, 110, 351 S.E.2d 819, 820 (1987)), disc. review denied, 329 N.C. 792, 408 S.E.2d 528 (1991). Our Supreme Court long ago restricted the necessity defense to situations where "a human being was thereby saved from death or peril, or relieved from severe suffering." State v. Brown, 109 N.C. 802, 807, 13 S.E. 940, 942 (1891).
Because of this limitation on the defense, defendant's requested instruction was not a correct statement of the law to the extent it suggested that the defense was available for attempts to prevent "serious events" or possible property damage. A trial judge is not, however, "relieved of his duty to give a correct ... instruction, there being evidence to support it, merely because defendant's request was not altogether correct." State v. White, 288 N.C. 44, 48, 215 S.E.2d 557, 560 (1975). See also State v. Black, 34 N.C.App. 606, 608, 239 S.E.2d 276, 277 (1977) ("[T]he trial judge is not relieved of his duty to give a correct instruction merely because defendant's request was not altogether correct."), disc. review denied, 294 N.C. 362, 242 S.E.2d 632 (1978).
The question before this Court is, therefore, whether defendant presented substantial evidence to support the defense of necessity. A defendant must prove three elements to establish the defense of necessity: (1) reasonable action, (2) taken to protect life, limb, or health of a person, and (3) no other acceptable choices available. Thomas, 103 N.C.App. at 265, 405 S.E.2d at 215. In this case, defendant offered evidence that he jumped into the moving truck and steered it to prevent the truck from hitting another car or Austin's house and harming someone.
Although the State argues that defendant's testimony was "an elaborate fabrication," that argument presents a question of credibility that is solely within the purview of the jury. "All defenses presented by the defendant's evidence are substantial features of the case, even if that evidence contains discrepancies or is contradicted by evidence from the state. This rule reflects the principle in our jurisprudence that it is the jury, not the judge, that weighs the evidence." *448 State v. Norman, 324 N.C. 253, 267, 378 S.E.2d 8, 17 (1989) (internal citation omitted).
The State also appears to argue that there was only a risk of property damage, rendering the defense inapplicable. Defendant's evidence, if believed, presented the prospect in the absence of defendant's actions of a truck barreling down a steep hill in the wrong lane of a public road, creating a substantial risk of physical harm to other drivers or the occupants of the nearby house. The fact that defendant and Maney were themselves safely out of harm's way, as the State argues, is irrelevant if the jury believed that defendant's actions were necessary to protect others. See State v. S. Ry. Co., 119 N.C. 814, 821, 25 S.E. 862 (1896) (recognizing that a necessity defense may be available where "it was necessary ... in order to preserve the health or to save the lives of the crew ..., or relieve them from suffering"); Haywood, 144 N.C.App. at 234-35, 550 S.E.2d at 45 (instruction on necessity proper where defendant testified that he had participated in sexual assaults to prevent the other defendant from hurting the victim).
Whether jumping into the truck to attempt to stop the vehicle was reasonable under the circumstances and whether defendant had any other acceptable options were questions for the jury. The State argues that because Maney could have jumped into the truck, there was no need for defendant to get behind the wheel. It was, however, up to the jury to decide whether the situation involved a split second decision in an emergency situation that rendered defendant's actions reasonable and necessary.
In sum, because the record contains substantial evidence of each element of the necessity defense, the trial court should have instructed the jury on that defense. Failure to instruct on a defense raised by the evidence is reversible error. Ward, 300 N.C. at 155, 266 S.E.2d at 585. Accordingly, defendant is entitled to a new trial.
II
Defendant also contends that admission of State's Exhibit 6 during the State's case-in-chief violated N.C. Gen.Stat. § 15A-928(c)(1) (2003), as well as Rules 402 and 403 of our Rules of Evidence. We address defendant's argument because of the possibility of repetition on retrial.
N.C. Gen.Stat. § 15A-928 (2003) governs the method of proof of previous convictions in superior court when the fact that the defendant has been previously convicted of an offense raises an offense of lower grade to one of higher grade and thereby becomes an element of the latter. It applies to prosecutions for habitual DWI, State v. Scott, 356 N.C. 591, 593, 573 S.E.2d 866, 867 (2002), and provides:
(c) After commencement of the trial and before the close of the State's case, the judge in the absence of the jury must arraign the defendant upon the special indictment or information, and must advise him that he may admit the previous conviction alleged, deny it, or remain silent. Depending upon the defendant's response, the trial of the case must then proceed as follows:
(1) If the defendant admits the previous conviction, that element of the offense charged in the indictment or information is established, no evidence in support thereof may be adduced by the State, and the judge must submit the case to the jury without reference thereto and as if the fact of such previous conviction were not an element of the offense.
N.C. Gen.Stat. § 15A-928 (emphasis added). "The purpose of this procedure is to afford the defendant an opportunity to admit the prior convictions which are an element of the offense and prevent the State from presenting evidence of these convictions before the jury." State v. Burch, 160 N.C.App. 394, 397, 585 S.E.2d 461, 463 (2003)
In this case, the trial court admitted State's Exhibit 6, listing defendant's prior convictions, before arraigning defendant on the habitual DWI charge and giving him an opportunity to stipulate to those prior convictions. This procedure contravened the purpose of N.C. Gen.Stat. § 15A-928(c) to "insure that the defendant is informed of the previous convictions the State intends to use and is given a fair opportunity to either *449 admit or deny them or remain silent." State v. Jernigan, 118 N.C.App. 240, 244, 455 S.E.2d 163, 166 (1995).
With respect to the DWLR charge, defendant argues that because defendant signed a stipulation that his license was revoked on the date of the offense and that he knew his license had been revoked, the admission of State's Exhibit 6 violated Rules 402 and 403 of our Rules of Evidence. As a leading commentator has observed, "a stipulation or admission by the defendant cannot limit the State's right to prove all essential elements of its theory of the case." 2 Kenneth S. Broun, Brandis and Broun on North Carolina Evidence § 198 (6th ed.2004). See also State v. Jackson, 139 N.C.App. 721, 732, 535 S.E.2d 48, 55 (2000) (the trial court's decision to allow evidence of defendant's prior felony conviction, notwithstanding defendant's tendered stipulation, did not violate Rule 403), rev'd in part on other grounds, 353 N.C. 495, 546 S.E.2d 570 (2001). Nevertheless, the State offers no justification for admission of defendant's prior convictions, as opposed to just the license suspension, on the DWLR charge.
Due to our disposition of this case, we need not consider whether the jury "probably would have reached a different verdict" had State's Exhibit 6 not been admitted. State v. Walker, 316 N.C. 33, 39, 340 S.E.2d 80, 83 (1986). Upon retrial, however, these errors should be avoided. We decline to address defendant's remaining contentions on appeal since we believe it is unlikely that any errors that occurred will be repeated.
New trial.
Judges HUDSON and THORNBURG concur.
Judge THORNBURG concurred prior to 31 December 2004.
NOTES
[1] The State does not contend that the defense is unavailable in a DWLR prosecution. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/865761/ | IN THE SUPREME COURT OF MISSISSIPPI
NO. 2008-KA-01877-SCT
CHARLIE DEMEKO LONG a/k/a MEKO
v.
STATE OF MISSISSIPPI
DATE OF JUDGMENT: 10/14/2008
TRIAL JUDGE: HON. C. E. MORGAN, III
COURT FROM WHICH APPEALED: GRENADA COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT: ROSS R. BARNETT, JR.
JAMES T. McCAFFERTY, III
LESLIE S. LEE
ATTORNEY FOR APPELLEE: OFFICE OF THE ATTORNEY GENERAL
BY: JEFFREY A. KLINGFUSS
DISTRICT ATTORNEY: DOUG EVANS
NATURE OF THE CASE: CRIMINAL - FELONY
DISPOSITION: AFFIRMED - 05/06/2010
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE GRAVES, P.J., DICKINSON AND CHANDLER, JJ.
GRAVES, PRESIDING JUSTICE, FOR THE COURT:
¶1. Charlie Demeko Long was convicted of one count of possession of cocaine with the
intent to sell and one count of sale of cocaine in the Circuit Court of Grenada County. Long
was sentenced as a habitual offender to life imprisonment on each count, to be served
consecutively in the custody of the Mississippi Department of Corrections. Long’s post-trial
motion was denied and he filed this appeal. We find that the issues raised by Long are
without merit and that his conviction should be affirmed.
FACTS
¶2. On March 4, 2008, confidential informant Wesley Rogers made a drug buy from
Charlie Demeko Long for the Grenada Police Department. Officer Mark Beck testified that
both Rogers and his vehicle were searched and outfitted with audio and video recording
equipment prior to the buy. Rogers telephoned Long and arranged the purchase of $80 worth
of crack cocaine. The pair agreed to meet at Spain’s Supermarket. Five officers in two
surveillance vehicles followed Rogers to Spain’s. At Spain’s, Rogers exited his vehicle and
got into a white Toyota Camry owned by Lakendal Barnes, Long’s girlfriend. The video
recording and still photographs show Rogers handing the person in the white Camry the $80
and the person handing Rogers what proved to be 0.7 grams of crack cocaine. The face of
the person in the car cannot clearly be seen on the video recording. However, Rogers
testified that Long was the person in the car who had sold the crack cocaine to Rogers.
Further, the recording shows that the seller was wearing a gold watch and ring on his left
hand, and that there was a yellow key chain on the keys in the ignition and a cell phone in
his lap. Officers removed similar items from Long upon his arrest. Rogers testified that he
had observed Long sell drugs some fifteen to twenty times.
¶3. On March 18, 2008, Barnes was driving the white Camry with Long as a passenger
when she was stopped for a seatbelt violation. Barnes testified that, when she was pulled
over, Long attempted to pass her some drugs, but she refused. Officers searched the car and
located 4.8 grams of crack cocaine under the passenger seat. Upon the officers’ discovery
of the drugs, Long attempted to flee. Barnes testified that she previously had observed Long
cutting up large amounts of drugs, selling drugs, and counting large sums of money. Barnes
2
identified Long as the person on the videotape selling drugs to Rogers, although she was not
present in the car at that time.
¶4. Long was charged with possession of cocaine with intent to sell and one count of sale
of cocaine in the Circuit Court of Grenada County. Barnes also was charged with possession
in connection with the crack cocaine found under the passenger seat of her car. After a trial
in which Long, assisted by counsel, briefly represented himself, Long was convicted on both
counts and sentenced as a habitual offender to life imprisonment on each count, to be served
consecutively in the custody of the Mississippi Department of Corrections. Long’s post-trial
motion was denied and he filed this appeal.
ANALYSIS
I. Whether the verdict was against the overwhelming weight of the evidence.
¶5. This Court reviews a trial court’s denial of a motion for new trial under an abuse-of-
discretion standard. Dilworth v. State, 909 So. 2d 731, 737 (Miss. 2005). “A greater
quantum of evidence favoring the [S]tate is necessary for the [S]tate to withstand a motion
for a new trial, as distinguished from a motion for J.N.O.V.” Id. (quoting Pharr v. State, 465
So. 2d 294, 302 (Miss. 1984)). “Accordingly, we defer to the discretion of the trial judge,
and ‘[w]e will not order a new trial unless convinced that the verdict is so contrary to the
overwhelming weight of the evidence that, to allow it to stand, would be to sanction an
unconscionable injustice.’” McClendon v. State, 945 So. 2d 372, 385 (Miss. 2007) (quoting
Groseclose v. State, 440 So. 2d 297, 300 (Miss. 1983)). This Court has further said:
However, the evidence should be weighed in the light most favorable to the
verdict. A reversal on the grounds that the verdict was against the
overwhelming weight of the evidence, unlike a reversal based on insufficient
3
evidence, does not mean that acquittal was the only proper verdict. Rather, as
the “thirteenth juror,” the court simply disagrees with the jury’s resolution of
the conflicting testimony. This difference of opinion does not signify acquittal
any more than a disagreement among the jurors themselves. Instead, the
proper remedy is to grant a new trial.
Dilworth, 909 So. 2d at 737.
¶6. Long asserts that a reasonable juror could not conclude beyond a reasonable doubt
that he possessed and sold cocaine. Long further asserts that the State’s case was “based
almost entirely upon the testimony of apparent criminals” Wesley Rogers and Lakendal
Barnes. He cites Mister v. State, 190 So. 2d 869 (Miss. 1966), as authority for reversing the
verdict. However, Mister is easily distinguished.
¶7. In Mister, this Court held that the verdict was against the overwhelming weight of the
evidence where the State’s case was based solely on the testimony of a witness who was not
an accomplice but was in a related situation and his “testimony contained material
inconsistencies, was unreasonable in major respects, and, by his own admission, was
impeached to some extent.” Mister, 190 So. 2d at 871.
¶8. Long does not even assert that the testimony of either Rogers or Barnes contained
material inconsistencies, that it was unreasonable in major respects, or that it was impeached.
Further, Long has failed to establish that the verdict is so contrary to the overwhelming
weight of the evidence that to allow it to stand would be to sanction an unconscionable
injustice. Both Long and the State presented evidence. The jury weighed the evidence and
determined that the State proved beyond a reasonable doubt that Long was guilty. Therefore,
this issue is without merit.
II. Whether the trial court erred in admitting evidence of prior bad acts.
4
¶9. Long asserts that the trial court erred in allowing the district attorney to put on
testimony of Rogers that he had witnessed fifteen to twenty cocaine sales by Long. Long
cites Burrell v. State, 727 So. 2d 761 (Miss. Ct. App. 1998), as authority. However, as
discussed below, Burrell does not support Long’s assertion. In Burrell, the trial court found
that a confidential informant’s testimony that he had purchased drugs from Burrell on
previous occasions was admissible to show identity, “not for the purpose of ‘identifying [the
appellant] just as Freddie Burrell,’ but for ‘identifying him as Freddie Burrell who sells
drugs.’” Id. at 767 (emphasis original). The Court of Appeals found that the testimony was
impermissible prior-bad-acts testimony, noting that there was no need to establish intent, as
the distribution of illegal drugs had indeed taken place. The Court of Appeals further found
that the trial court had erred in failing to give a limiting instruction, stating:
“Even when other-crimes evidence is admissible under M.R.E. 404(b), it must
pass through the ‘ultimate filter’ of M.R.E. 403.” . . . When Rule 404(b)
evidence is admitted and an objection to the admission is overruled, that
objection is to be considered an invocation to the right of a Rule 403 balancing
analysis by the court. . . .
Burrell, 727 So. 2d at 768-69.
¶10. Rule 403 of the Mississippi Rules of Evidence allows for the exclusion of certain
relevant evidence and states that:
Although relevant, evidence may be excluded if its probative value is
substantially outweighed by the danger of unfair prejudice, confusion of the
issues, or misleading the jury, or by considerations of undue delay, waste of
time, or needless presentation of cumulative evidence.
Miss. R. Evid. 403. However, such evidence may be admissible pursuant to Rule 404, which
provides, in relevant part:
5
Evidence of other crimes, wrongs, or acts is not admissible to prove the
character of a person in order to show that he acted in conformity therewith.
It may, however, be admissible for other purposes such as proof of motive,
opportunity, intent, preparation, plan, knowledge, identity, or absence of
mistake or accident.
Miss. R. Evid. 404(b).
¶11. In the instant case, the trial court considered Rogers’ testimony regarding Long’s prior
bad acts pursuant to the Rule 403 balancing test outside the presence of the jury and found
that the evidence was admissible. Specifically, the trial court found:
Okay. Well, of course, this matter, according to the Defendant’s
wishes, has not been severed where possession with intent and sale are both
counts that are against him in this particular case. The State can’t prove the
entire case with one witness. The case law is clear that this testimony is
admissible where one of the charges is that he was possessing drugs with the
intent, with the intent to sell them. But it is limited by the fact that it must pass
the 403 test, and then there must be a limiting instruction to the jury.
The court finds that the probative value in this case outweighs the
prejudicial effect, and the court is going to allow it. But it will grant a limiting
instruction that limits the consideration of this to the count that it is a
possession count. Now should this not be all tied together at the end, you can,
you may have another motion.
That limiting instruction was given, as Instruction 11 included the following language: “You
are not, however, under any circumstances, to consider any evidence of alleged prior cocaine
sales in reaching a verdict as to the charge of Sale of Cocaine as charged in Count I of the
indictment, or for any other purpose not specifically authorized by this instruction.”
¶12. Long has failed to establish that the trial court erred in admitting Rogers’ testimony.
Accordingly, we find that this issue is without merit.
III. Whether black potential jurors were systematically and unconstitutionally struck
from the jury.
¶13. Long’s entire argument on this issue is as follows:
6
The transcript of the jury selection indicates that the jury was selected
from an initial panel of 32 persons, 20 of whom were white, and 12 of whom
were black. The prosecutor used his peremptory challenges to strike six jurors,
four of whom were black, to which defense counsel objected. . . . The
prosecution’s behavior strongly suggests an unconstitutional systematic
exclusion of African-Americans from the jury below, which would have had
a discriminatory effect on Mr. Long, an African-American, in violation of
[Batson], and in violation of applicable federal and state constitutional
provisions. For that reason, if for no other, this case should be reversed and
remanded.
¶14. Under Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986), a
defendant must establish a prima facie case of purposeful discrimination as follows:
To establish such a case, the defendant first must show that he is a member of
a cognizable racial group . . . and that the prosecutor has exercised peremptory
challenges to remove from the venire members of the defendant's race. Second,
the defendant is entitled to rely on the fact, as to which there can be no dispute,
that peremptory challenges constitute a jury selection practice that permits
"those to discriminate who are of a mind to discriminate." . . . Finally, the
defendant must show that these facts and any other relevant circumstances
raise an inference that the prosecutor used that practice to exclude the
veniremen from the petit jury on account of their race.
Batson, 476 U.S. at 96 (citations omitted). However, as this Court has acknowledged, this
test was somewhat modified by the U.S. Supreme Court in Powers v. Ohio, 499 U.S. 400,
111 S. Ct. 1364, 113 L. Ed. 2d 411 (1991).
In that case the Supreme Court held that Powers, a white, had standing to
challenge the exclusion of black jurors on the grounds that the equal protection
right of the juror to serve was protected by Batson. Powers, 499 U.S. at 406,
111 S. Ct. 1364. Essentially, this means that step three above becomes the
pivotal inquiry to determine a prima facie case, as this Court recognized in
Davis v. State, 660 So. 2d 1228, 1240 (Miss. 1995), cert. denied, 517 U.S.
1192, 116 S. Ct. 1684, 134 L. Ed. 2d 785 (1996). Specifically, the pivotal
question is whether the opponent of the strike has met the burden of showing
that proponent has engaged in a pattern of strikes based on race or gender, or
in other words “the totality of the relevant facts gives rise to an inference of
discriminatory purpose.” Batson, 476 U.S. at 94, 106 S. Ct. 1712.
7
Randall v. State, 716 So. 2d at 587 (Miss. 1998). Pursuant to the third step, “this Court has
examined the number of strikes on a particular class, the ultimate ethnic or gender makeup
of the jury, the nature of questions asked during the voir dire, and the overall demeanor of
the attorney.” Id. (citing Coleman v. State, 697 So. 2d 777, 786 (Miss. 1997); Davis, 660
So. 2d at 1263 (Banks, J., concurring); Mack v. State, 650 So. 2d 1289, 1299 (Miss. 1994),
cert. denied, 516 U.S. 880, 116 S. Ct. 214, 133 L. Ed. 2d 146 (1995)). “Additionally, ‘[t]he
[opponent of the strike] may also rely on the fact that peremptory challenges constitute a jury
selection practice that permits those to discriminate who are of a mind to discriminate.’” Id.
(citing Batson, 476 U.S. at 80, 106 S. Ct. at 1714)).
¶15. Once the defendant has established a prima facie case of discrimination, the burden
shifts to the State to provide a race-neutral reason for each strike. Batson, 476 U.S. at 97.
The trial court then makes a determination of whether the defendant has established
purposeful discrimination. Id. at 98. This Court has held that, in reviewing a Batson claim,
we will not overrule a circuit court unless the record indicates the decision was clearly
erroneous or contrary to the overwhelming weight of the evidence. Flowers v. State, 947 So.
2d 910, 917 (Miss. 2007). See also Thorson v. State, 721 So. 2d 590, 593 (Miss. 1998).
¶16. In the instant case, the trial court found that Long, who is African-American, did not
establish a prima facie case for racial discrimination and overruled the Batson challenge
without requiring the State to provide race-neutral reasons for the strikes.
¶17. The record indicates that from the initial thirty-two jurors, the trial court struck five
African-American jurors for cause, jurors 8, 12, 21, 24, and 29. The trial court also struck
juror 35, a white male. Juror 1 was excused. In the first round of jury selection, the State
8
used peremptory challenges on jurors 13 (white female), 16 (white female), 17 (black female)
and 18 (black male). The State tendered jurors 2 (white male), 3 (white male), 4 (white
male), 5 (black female), 6 (white male), 7 (white male), 9 (white female), 10 (white female),
11 (white male), 14 (white female), 15 (black female), and 19 (white female). Long used all
six of his peremptory challenges in the first round on jurors 2 (white male), 3 (white male),
4 (white male), 6 (white male), 7 (white male), and 9 (white female).
¶18. In the second round, the State challenged jurors 23 (black female), and 28 (black
female). The State accepted 20 (white female), 22 (black female), 25 (white male), 26 (white
female), 27 (white male), and 30 (white female). With regard to the alternate, Long
challenged juror 31 (white male), and juror 32 (white female) was tendered.
¶19. In summary, the final jury consisted of jurors 5 (black female), 10 (white female), 11
(white male), 14 (white female), 15 (black female), 19 (white female), 20 (white female), 22
(black female), 25 (white male), 26 (white female), 27 (white male), and 30 (white female).
¶20. The transcript of the jury selection indicates that the following exchange then
occurred:
BY [Long’s Counsel]: Okay. Your Honor, I am quite certain that Mr.
Long is unfamiliar with the case of Batson v. Kentucky, and I am just noticing
here that the challenges by the State, S-1 is a white female. S-2 is a white
female. S-3 is a black female. S-4 is a black male. S-5 is a black female and
S-6 is a black female. So we have I guess 75 percent – well I better refrain
from doing that. I think we have four out of six that are African-American,
and so therefore, I think it would be incumbent for Mr. Long to invoke his
rights under Batson and inquire if there are race neutral reasons for these
challenges.
BY THE COURT: Let me see your list.
[Note: The Court Reporter furnished her jury list to the Court, and there
was a long pause while the Court reviewed the race designations of the jurors.
The jury list is included in the Circuit Clerk’s record on this appeal.]
9
BY THE COURT: Let the record reflect that on the panel there are –
out of the first 32, which would include going through the alternate selection,
there are 20 white people and 12 black people on the panel. On the jury that
was tendered that we have just selected, there are nine whites and three blacks.
The State exercised all of its peremptory challenges, two of which were on
white females, four of which were on black. One, I believe, was a male and
the other three were black females. The Court finds that that does not make
a prima facie case for racial discrimination in this case. Therefore, the Batson
challenge is overruled.
¶21. Although the State was not required by the trial court to provide a race-neutral reason
for each strike, this Court may consider the record as a whole in determining whether the trial
court’s decision was clearly erroneous or contrary to the overwhelming weight of the
evidence. As stated previously herein, the standard established by this Court requires such
an analysis. See Flowers v. State, 947 So. 2d at 917; Thorson v. State, 721 So. 2d at 593.
¶22. The State accepted two African-American jurors and challenged two white and two
African-American jurors, Jessie Burt and Kevin Ellis, in the first round. Long used all six
of his peremptory challenges against white jurors in the first round. The State then accepted
one African-American juror and struck two African-American jurors in the second round.
The record establishes that, during voir dire, Jessie Burt said that her son recently had been
convicted of a drug offense and sent to prison. However, Burt also indicated that her son’s
conviction and incarceration would not affect her performing her duty in Long’s case. Also
during voir dire, Kevin Ellis said that he was a teacher’s assistant at the alternative school
and had worked with Long when he was as a student there. Ellis also said that he knew some
of Long’s family, was a close friend of Long’s aunt and could not be fair and impartial. Ellis
later indicated that he could be fair. The responses of Burt and Ellis during voir dire would
be sufficient race-neutral reasons for the State to strike them from the venire. Therefore,
10
these two strikes should not be considered as evidence of any intent by the prosecutor to
discriminate. The record does not specifically indicate any race-neutral reasons the State
may have had for striking the two African-American jurors in the second round.
¶23. Pursuant to the Batson standard stated above, Long established that: (1) he is a
member of cognizable racial group; and (2) that the prosecutor has exercised peremptory
challenges to remove from the venire members of Long's race. However, Long has failed to
establish that the “facts and any other relevant circumstances raise an inference that the
prosecutor used that practice to exclude the veniremen from the petit jury on account of their
race.” Batson, 476 U.S. at 96. Neither Long nor the record establishes that the prosecutor
engaged in a pattern of strikes on the basis of race or gender. Moreover, neither Long nor
the record establishes that the decision of the trial court was “clearly erroneous or contrary
to the overwhelming weight of the evidence.” Flowers, 947 So. 2d at 917. For these
reasons, we find that this issue is without merit.
IV. Whether the sentence violated Long’s constitutional rights.
¶24. Long asserts that two consecutive life sentences for possession and sale of cocaine as
a habitual offender are disproportionate to the offenses and constitute cruel and unusual
punishment.
¶25. Long was sentenced as a habitual offender to two life terms pursuant to Mississippi
Code Section 99-19-83, which states:
Every person convicted in this state of a felony who shall have been
convicted twice previously of any felony or federal crime upon charges
separately brought and arising out of separate incidents at different times and
who shall have been sentenced to and served separate terms of one (1) year or
more in any state and/or federal penal institution, whether in this state or
11
elsewhere, and where any one (1) of such felonies shall have been a crime of
violence shall be sentenced to life imprisonment, and such sentence shall not
be reduced or suspended nor shall such person be eligible for parole or
probation.
Miss. Code Ann. § 99-19-83 (Rev. 2007). Long previously had two drug convictions and
a conviction for attempted aggravated assault.
¶26. In White v. State, 742 So. 2d 1126 (Miss. 1999), this Court said:
As a general rule, a sentence that does not exceed the maximum period
allowed by statute will not be disturbed on appeal. Wallace v. State, 607 So.
2d 1184, 1188 (Miss. 1992). However, a sentence that is “grossly
disproportionate” to the crime committed is subject to attack on Eighth
Amendment grounds. Id.
The elements for evaluating proportionality are:
(1) The gravity of the offense and the harshness of the penalty;
(2) Comparison of the sentence with sentences imposed on other criminals in
the same jurisdiction; and
(3) Comparison of sentences imposed in other jurisdictions for commission of
the same crime with the sentence imposed in this case.
Id. at 1135 (citing Solem v. Helm, 463 U.S. 277, 292, 103 S. Ct. 3001, 77 L. Ed. 2d 637
(1983) (a criminal sentence must not be disproportionate to the crime for which the defendant
is being sentenced)). White further states:
When a “threshold comparison of the crime committed to the sentence
imposed leads to an inference of ‘gross disproportionality’” the proportionality
analysis of Solem is used. Hoops v. State, 681 So. 2d 521, 538 (Miss. 1996)
(quoting Smallwood v. Johnson, 73 F.3d 1343, 1347 (5th Cir. 1996)). One
seeking to prove a sentence violative of the Eighth Amendment carries a heavy
burden. See Stromas, 618 So. 2d at 123. Although White’s sentence is
severe, the Solem proportionality analysis is not implicated in this case. See
id.
White, 742 So. 2d at 1136. See also Harmelin v. Michigan, 501 U.S. 957, 965, 111 S. Ct.
2680, 115 L. Ed. 2d 836 (1991) (“. . . Solem was simply wrong; the Eighth Amendment
contains no proportionality guarantee.”)
12
¶27. Long relies heavily on White for the proposition that the trial court failed to exercise
the discretion allowed by the Legislature. Specifically, Long asserts that the trial court
exercised no discretion because there is no indication in the record that it seriously
considered the alternative of concurrent sentences rather than consecutive sentences.
However, Long does not offer any authority to support this proposition. Also, White
involved a sentence enhancement for sale of cocaine within 1,500 feet of a church pursuant
to Mississippi Code Section 41-29-142, which is not the enhancement in the instant case.
See Miss. Code Ann. § 41-29-142 (Rev. 2009). Further, White specifically distinguished
habitual-offender status under Sections 99-19-83 and 99-19-81 1 from a case such as White’s,
where the trial court properly could exercise discretion.
Only when a defendant has been convicted of a felony or federal crime twice
previously and sentenced to two separate terms of one year or more has the
Legislature removed any element of judicial discretion and mandated the
defendant be sentenced to the maximum term of imprisonment allowed. Miss.
Code Ann. §§ 99-19-81 to -83 (1994).
White, 742 So. 2d at 1137. However, this Court also has said:
The fact that the trial judge lacks sentencing discretion does not necessarily
mean the prescribed sentence meets federal constitutional proportionality
requirements. Notwithstanding § 99-19-81, the trial court has authority to
review a particular sentence in light of constitutional principles of
proportionality as expressed in Solem v. Helm. That authority is a function of
the Supremacy Clause. U.S. Const. Art. VI, cl. 2; Bolton v. City of Greenville,
253 Miss. 656, 666, 178 So. 2d 667, 672 (1965). . . .
Our approval of the sentence in this case should not be taken to intimate
that reduced sentences for habitual offenders might become the rule. Solem
v. Helm does not represent a de facto grant of sentencing discretion, but,
rather, ties proportionality to the three-step analysis outlined therein.
1
Section 99-19-81 provides that a habitual offender twice convicted of a felony shall be
sentenced to the maximum term for such felony. Miss. Code Ann. § 99-19-81 (Rev. 2007).
13
Clowers v. State, 522 So. 2d 762, 765 (Miss. 1988) (this Court affirmed the trial court’s
reduction of maximum sentence for forgery on the basis that it was disproportionate and
cruel and unusual punishment).
¶28. In the instant case, Long argues that there is no indication that the trial court evaluated
the proportionality of the sentence to sentences imposed for similar offenses in the trial
court’s jurisdiction and in other jurisdictions. However, Long fails to establish that a
threshold comparison of the crime committed to the sentence imposed leads to an inference
of gross disproportionality. White, 742 So. 2d at 1136. Notwithstanding Long’s failure to
make this initial showing to warrant a Solem analysis, Long fails to address all three of the
required factors set out above. Long alludes to the first Solem factor, but completely fails
to address factors two and three. Therefore, Long’s claim is procedurally barred. See Willis
v. State, 911 So. 2d 947, 951 (Miss. 2005). Even if Long’s claim was not procedurally
barred, this Court previously has found that a defendant convicted of possession of a
controlled substance may be sentenced to life without the possibility of parole as a habitual
offender. See Wall v. State, 718 So. 2d 1107, 1114-15 (Miss. 1998); see also Oby v. State,
827 So. 2d 731, 734-35 (Miss. Ct. App. 2002).
¶29. Long also cites Ashley v. State, 538 So. 2d 1181 (Miss. 1989), for the proposition that
the trial court was required to engage in a proportionality analysis under the Eighth
Amendment. However, for the reasons stated previously herein, Long is mistaken.
¶30. In Ashley, Clyde Ashley was convicted of burglary as the result of the shoplifting and
in-store consumption of two cans of sardines and breaking into a house to steal the money
to pay for the sardines. Ashley, who had prior convictions for burglary and attempted
14
robbery, was sentenced to life imprisonment as a habitual offender. In analyzing Ashley’s
sentence, this Court noted that even the district attorney acknowledged the undue harshness
of a life sentence for “Ashley’s great sardine caper.” Id. at 1185. This Court vacated
Ashley’s life sentence and remanded for an additional sentencing hearing consistent with
Solem, 463 U.S. 277. Ashley, 538 So. 2d at 1185.
¶31. In the instant case, Long fails to make a clear argument. In addition to the previously
mentioned arguments, Long appears to be making a proportionality argument based on his
receiving consecutive rather than concurrent life sentences. However, Long fails to explain
how a consecutive sentence is disproportionate, considering that Section 99-19-83 mandates
life without parole. Long then asserts that the trial court had a duty under Ashley to
determine whether Long’s prior conviction for attempted aggravated assault involved actual
violence prior to sentencing him under Section 99-19-83. However, in Ashley, this Court
found that attempted armed robbery is a crime of violence. Id. at 1185.
¶32. Long also cites McQueen v. State, 473 So. 2d 971, 973 (Miss. 1985), for the
proposition that there may be cases where it is not clear whether a conviction was for a crime
of violence. In McQueen, this Court relied on authority from other jurisdictions, which
found that “violence” and “force” are synonymous. Id. at 972-73. This Court held that the
phrase “crime of violence” was not unconstitutionally vague, but acknowledged that there
may be cases in which the application of the statute would not be clear. McQueen, 473 So.
2d at 973. However, this Court further affirmed the trial court, finding that attempted rape
was a crime of violence.
15
¶33. Clearly, attempted aggravated assault is a crime of violence. Assault is defined in
Black’s Law Dictionary as: “Any willful attempt or threat to inflict injury upon the person
of another, when coupled with an apparent present ability so to do [sic], and any intentional
display of force such as would give the victim reason to fear or expect immediate bodily
harm, constitutes an assault.” Black’s Law Dictionary 114 (6th ed. 1990).
¶34. Long’s sentence was in the statutory range, it was mandatory, and he has failed to
establish that his sentence is grossly disproportionate to his crime. Therefore, the trial court
did not err in sentencing Long to two consecutive terms of life imprisonment.
CONCLUSION
¶35. For the reasons stated herein, we affirm the judgment of conviction of one count of
possession of cocaine with the intent to sell and one count of sale of cocaine in the Circuit
Court of Grenada County and the sentences, as a habitual offender, to life imprisonment on
each count to be served consecutively in the custody of the Mississippi Department of
Corrections.
¶36. COUNT I: CONVICTION OF SALE OF COCAINE AND SENTENCE, AS A
HABITUAL OFFENDER, OF LIFE IMPRISONMENT IN THE CUSTODY OF THE
MISSISSIPPI DEPARTMENT OF CORRECTIONS. AFFIRMED. COUNT II:
CONVICTION OF POSSESSION OF COCAINE WITH INTENT TO SELL AND
SENTENCE, AS A HABITUAL OFFENDER, OF LIFE IMPRISONMENT IN THE
CUSTODY OF THE MISSISSIPPI DEPARTMENT OF CORRECTIONS,
AFFIRMED. SENTENCE IN COUNT II TO BE SERVED CONSECUTIVELY TO
THE SENTENCE IN COUNT I.
WALLER, C.J., LAMAR, KITCHENS AND PIERCE, JJ., CONCUR.
RANDOLPH, J., CONCURS IN PART AND IN RESULT WITH SEPARATE
OPINION JOINED BY CARLSON, P.J., DICKINSON AND CHANDLER, JJ.
RANDOLPH, JUSTICE, CONCURRING IN PART AND IN RESULT:
16
¶37. I concur with the Majority’s analysis of Issues I, II, and IV. I write separately only
to address the Majority’s analysis of Issue III, the Batson issue. See Batson v. Kentucky,
476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986). While I agree with the Majority’s
conclusion that Long’s argument is without merit, I find the attending analysis to go
unnecessarily beyond Long’s lack of a prima facie showing of purposeful discrimination.
¶38. Long had the burden of showing that the “facts and any other relevant circumstances
raise an inference that the prosecutor used that practice to exclude the veniremen from the
petit jury on account of their race.” Batson, 476 U.S. at 96. Long’s prima facie presentation
was simply that the State had exercised four of its six peremptory challenges on African-
American jurors. The circuit court concluded that this showing was insufficient for purposes
of establishing a prima facie case of racial discrimination. Stated otherwise, Long failed to
satisfy his burden of providing enough evidence to permit the circuit court to infer the fact
at issue, i.e., purposeful discrimination. The Majority ostensibly agrees, and finds that this
prima facie case ruling was not clearly erroneous or contrary to the overwhelming weight of
the evidence, stating:
Long has failed to establish that the “facts and any other relevant
circumstances raise an inference that the prosecutor used that practice to
exclude the veniremen from the petit jury on account of their race.” Batson,
476 U.S. at 96. Neither Long nor the record establishes that the prosecutor
engaged in a pattern of strikes on the basis of race or gender.
(Maj. Op. at ¶ 23). Thus, no further inquiry or analysis is required.
¶39. Notwithstanding that conclusion, the Majority unnecessarily delves into a race-
neutral-reason discussion in paragraph 21. As Long never established a prima facie case, no
burden was placed upon (or shifted to) the State to provide a race-neutral reason. See
17
Flowers v. State, 947 So. 2d 910, 917 (Miss. 2007) (quoting McFarland v. State, 707 So.
2d 166, 171 (Miss. 1997)) (“the party who objects to the peremptory strike ‘must first make
a prima facie showing that race was the criteria for the exercise of the peremptory strike’”)
(emphasis added); Thorson v. State, 721 So. 2d 590, 593 (Miss. 1998) (“[a] Batson
challenge . . . should proceed as follows: First, the defendant must establish a prima facie
case of discrimination . . . .”) (emphasis added); Batson, 476 U.S. at 97. The Majority
recognizes such analysis is superfluous, stating “[a]lthough the State was not required by the
trial court to provide a race-neutral reason for each strike, this Court may consider the record
as a whole in determining whether the trial court’s decision [on whether Long had
established a prima facie case of purposeful discrimination] was clearly erroneous or contrary
to the overwhelming weight of the evidence.” (Maj. Op. at ¶ 21). Indeed we “may,” but for
what purpose?
¶40. Under Batson, the State was not required to address race-neutral reasons and,
therefore, this Court should decline to offer race-neutral reasons not within the record before
this Court. Accordingly, I concur in part and in result.
CARLSON, P.J., DICKINSON AND CHANDLER, JJ., JOIN THIS OPINION.
18 | 01-03-2023 | 04-27-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/865843/ | THE SUPREME COURT OF MISSISSIPPI
NO. 2007-CT-00418-SCT
FLAGSTAR BANK, FSB
v.
CALVIN AND JAMIE DANOS, INDIVIDUALLY
AND AS GUARDIANS AND NEXT OF FRIENDS OF
LAURA MATHERNE, A MINOR, GAVIN DANOS, A
MINOR AND MARISSA DANOS, A MINOR
ON WRIT OF CERTIORARI
DATE OF JUDGMENT: 03/12/2007
TRIAL JUDGE: HON. R. I. PRICHARD, III
COURT FROM WHICH APPEALED: LAMAR COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANT: CAMILLE HENICK EVANS
ATTORNEY FOR APPELLEE: CATHERINE H. JACOBS
NATURE OF THE CASE: CIVIL - OTHER
DISPOSITION: THE JUDGMENT OF THE COURT OF
APPEALS IS REVERSED AND THE
JUDGMENT OF THE CIRCUIT COURT OF
LAMAR COUNTY IS REINSTATED AND
AFFIRMED - 08/19/2010
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
EN BANC.
CARLSON, PRESIDING JUSTICE, FOR THE COURT:
¶1. Calvin and Jamie Danos, individually and as guardians and next friends of Laura
Matherne, a minor, Gavin Danos, a minor, and Marissa Danos, a minor (the Danoses), filed
a petition for writ of certiorari after the Court of Appeals reversed the Lamar County Circuit
Court’s judgment entered in their favor against Flagstar Bank, FSB (Flagstar), and rendered
judgment in favor of Flagstar. Having granted certiorari, we now reverse the judgment of
the Court of Appeals, and reinstate and affirm the judgment entered by the Circuit Court of
Lamar County.
FACTS AND PROCEEDINGS IN THE TRIAL COURT
¶2. A full account of the factual background and procedural history of this case is set forth
in Flagstar Bank, FSB v. Danos, 2008 WL 5064953, **2-5, ¶¶5-14 (Miss. Ct. App. Dec
2, 2008). We set out here only those facts and the procedural history necessary to address
and decide the issues before us.
¶3. On March 22, 2004, the Danoses filed suit against Flagstar and other defendants.1
Flagstar was a nonresident corporation not doing business in Mississippi, and thus with no
agent in the state to receive service of process. The Danoses attempted service of process
by certified mail with “restricted delivery, return receipt requested” to Albert Gladner, the
registered agent for Flagstar, at a post office box in Troy, Michigan. The restricted-delivery
summons was signed for, returned, and filed with the Lamar County Circuit Court on July
13, 2004. The signature on the receipt was illegible. The docket entry reads: “Summons
returned–certified mail as to Flagstar Bank signed for 4-15-04 by ?, filed.” Attached to a
subsequent pleading was a letter dated April 26, 2004, from Robert K. Fleming, the
operations coordinator for Flagstar’s legal department in Troy, Michigan, addressed to
Catherine Jacobs, counsel for the Danoses. The letter stated: “Flagstar Bank, FSB (Flagstar)
1
By mid-September 2006, all defendants except Michael Burks and Flagstar had been
dismissed from this lawsuit.
2
is in receipt of the summons regarding the above referenced matter. The loan account was
sold on November 16, 2001 to Chase Manhattan. You may contact them at the following
address and phone number listed below.” An address for Chase Manhattan Mortgage, Inc.,
followed. On September 11, 2006, the Danoses filed an application for entry of default as
to Michael Burks, with the customary accompanying affidavit of the plaintiffs’ attorney,
resulting in the circuit clerk filing an entry of default on the same day. However, the
Danoses never filed an application for entry of default against Flagstar due to its failure to
answer the complaint; thus, there was no clerk’s entry of default against Flagstar.
¶4. On September 25, 2006, the trial judge entered a default judgment against Flagstar.
The judgment read as follows:
DEFAULT JUDGMENT
THIS CAUSE having come before the Court for trial on the merits, and
the clerk having called the docket, and on three different occasions called the
Defendant, Flagstar Bank FSB, and said Defendant failed to answer or appear,
it is therefore
ORDERED and ADJUDGED that Default Judgment be and is hereby
entered against the Defendant, Flagstar Bank FSB and in favor of the Plaintiffs
pursuant to Rule 55(b) of the Mississippi Rules of Civil Procedure. It is further
ORDERED and ADJUDGED that the hearing on damages be and is
hereby set over to September 29, 2006 at 11:00 A.M. at the Lamar County
Courthouse in Purvis, Mississippi.
The hearing to assess damages was held on September 29, 2006. Flagstar was not present,
nor did it have counsel present. At the conclusion of the hearing, the trial judge, on the same
day, entered a judgment for damages in the amount of $500,000 against both Flagstar and
Burks.
3
¶5. On October 11, 2006, an attorney filed a notice of entry of appearance as counsel for
Flagstar, and on November 15, 2006, the attorney filed a motion to set aside the default
judgment and for additional relief. Flagstar claimed that the Danoses’ service on it as a
nonresident corporation with no Mississippi registered agent was flawed; thus, good cause
existed to set aside the judgment. Flagstar argued that the Danoses had attempted to serve
Flagstar by mailing a certified letter, restricted delivery requested, to Gladner, the registered
agent for Flagstar, at a post office box in Troy, Michigan. The chief legal counsel for
Flagstar submitted an affidavit stating that the registered agent for service of process upon
Flagstar was Gladner. Flagstar’s attorney swore that the return receipt attached to the
summons did not bear the signature of Gladner, but instead it was signed by Romeo Pena,
a mail clerk whose job was to deliver the mail and who was not an authorized agent for
service of process. Flagstar’s attorney stated that he was familiar with Pena’s signature.
Flagstar’s attorney further stated that the return receipt was marked “Restricted Delivery” for
Gladner, and Pena had no authority to sign the receipt on Gladner’s behalf. Flagstar
reasoned that, because it had not received valid service of process, the judgment of the Lamar
County Circuit Court was void.
¶6. Additionally, Flagstar argued that the Danoses did not follow the provisions of
Mississippi Rule of Civil Procedure 55(a) in obtaining the default judgment, because they
failed first to apply to the clerk for an entry of default, to support that application by affidavit
or otherwise, and then to seek a default judgment from the trial court only after entry of the
clerk’s default. Thus, Flagstar argued, the trial court’s entry of a default judgment was faulty
4
due to its failure to follow the mandatory requirements of Rule 55. Finally, Flagstar argued
that the default judgment should be set aside because the bank had a colorable defense to the
merits of the Danoses’ complaint.
¶7. The trial court denied the motion to set aside default judgment and in a memorandum
opinion explained its reasons for previously having entered the default judgment:
[T]he defendant failed to appear for a trial on the merits, and that on three
different docket calls, the defendant had failed to appear, or make any
announcements. After entry of the judgment, and consistent with M.R.C.P. 55,
this Court held a hearing on damages, where the defendant also failed to
appear.
The trial court found no merit in Flagstar’s claim of lack of jurisdiction because of
inadequate service of process, stating only that “[w]hile the defendant raises numerous other
issues relating to service and prejudice, this Court deems them to be without merit.” The trial
court likewise found no merit in Flagstar’s argument that the default judgment was void for
failure to first secure the entry of the clerk’s default, ruling that neither an application for
default nor a clerk’s entry of fault was required in this case. The trial court stated, “M.R.C.P.
55(b) expressly allows for a default to be taken if a party fails to appear at the trial. Here, the
record reflects, that the defendant failed to appear at three docket calls, trial and at writ of
inquiry on damages.”
¶8. The trial court rejected Flagstar’s contention that default judgments are not favored
and should be set aside when certain factors are shown. The trial court’s order stated:
[T]his Court does not adopt the position advocated by the defendant in regards
to liberally setting aside default judgments. Setting aside defaults as
envisioned by the plaintiff [sic] would become merely a perfunctory request.
5
Moreover, failure to uphold default judgments would not foster the important
judicial policy of finality of judgment.
The trial court did not address whether Flagstar had a colorable defense to the action.
¶9. Aggrieved by the trial court’s denial of its motion to set aside the default judgment
and judgment awarding damages, Flagstar appealed to us, and we assigned this case to the
Court of Appeals.2
PROCEEDINGS IN THE COURT OF APPEALS
¶10. The Court of Appeals reversed the trial court’s judgment denying Flagstar’s motion
to set aside the default judgment, and rendered judgment in favor of Flagstar for lack of
jurisdiction. A majority of the Court of Appeals found that, because Flagstar was an out-of-
state corporation, Mississippi Rule of Civil Procedure 4(d)(4)3 was to be followed. Citing
Brown v. Bristol-Myers Squibb Co., 2002 U.S. Dist. LEXIS 27445, *8-12 (S.D. Miss. 2002),
the majority noted: “If service is attempted by certified mail upon a corporation under Rule
4(c)(5), but is delivered to a person not designated to receive process under Rule 4(d)(4),
then the process fails.” Thus, the majority found that, because the Danoses did not make an
2
Michael Burks did not appeal from the trial court’s judgment entered against him;
therefore, the only parties to today’s appeal are Flagstar and the Danoses.
3
Rule 4(d)(4) provides in pertinent part:
Service by sheriff or process server shall be made as follows:
. . . (4) Upon a . . . foreign corporation . . . by delivering a copy of the
summons and of the complaint to an officer, a managing or general agent, or
to any other agent authorized by appointment or by law to receive service of
process.
6
affirmative showing that the mailroom clerk who signed for the summons was in fact the
registered agent for service of process for Flagstar, the service of process was void.
¶11. The dissent disagreed, opining that the Court of Appeals’ majority had misconstrued
Mississippi Rules of Civil Procedure 4(c)(5) and 4(d)(4). Based on the dissent’s
interpretation of Rule 4(c)(5), process was deemed complete when the certified letter was
signed for and picked up by the mailroom clerk. The dissent reasoned that Rule 4(c)(5) does
not address whether someone other than the registered agent for service of process for a
corporation may sign for a certified letter addressed to the registered agent. According to the
dissent, because Flagstar is not a natural person, the Danoses were not required, under Rule
4(c)(5), to mark the envelope for restricted delivery. Therefore, the fact that the mailroom
clerk signed for the certified letter, which was marked restricted delivery to Gladner, was
inconsequential to the effectiveness of the process on Flagstar. Finally, the dissent found that
Rule 4(c)(5) required only that the certified letter be properly addressed to Flagstar’s
registered agent for service of process, who was Gladner. Flagstar, 2008 WL 5064953,
**10-12, ¶¶32-37 (Irving, J., dissenting).
¶12. Aggrieved by the Court of Appeals’ judgment, the Danoses filed a motion for
rehearing, which the Court of Appeals denied; therefore, the Danoses filed a Petition for Writ
of Certiorari, which we granted on June 11, 2009. After reviewing the record, this Court, by
order entered on December 3, 2009, directed the parties to supplement the record with the
transcript of the March 12, 2007, hearing concerning the entry of the default judgment
against Flagstar. Likewise, the Court permitted the parties to file simultaneous supplemental
7
briefs, if desired, and the parties thereafter submitted supplemental briefs. However,
concerning the purported transcript of the March 12, 2007, hearing, Rhonda Wetzel, the court
reporter, provided a letter to this Court stating that the hearing in question had been
conducted in Judge Prichard’s chambers and was off the record. On December 28, 2009,
Flagstar filed a motion to deem the appellate record complete.
DISCUSSION
I. WHETHER SERVICE OF PROCESS WAS EFFECTED ON
FLAGSTAR.
¶13. The critical issue addressed by the Court of Appeals was whether the plaintiffs
sufficiently complied with Rule 4(c)(5) so as to effect service of process on the defendant
Flagstar.4 The majority of the Court of Appeals answered this question in the negative,
adversely to the plaintiffs. The majority based its decision on its finding that the person who
signed for the summons was not Gladner, but a mail clerk, whose authority to receive the
4
Rule 4(c)(5) provides:
Service by Certified Mail on Person Outside State.
In addition to service by any other method provided by this rule, a summons
may be served on a person outside this state by sending a copy of the
summons and of the complaint to the person to be served by certified mail,
return receipt requested. Where the defendant is a natural person, the
envelope containing the summons and complaint shall be marked “restricted
delivery.” Service by this method shall be deemed complete as of the date of
delivery as evidenced by the return receipt or by the returned envelope marked
“Refused.”
Miss. R. Civ. P. 4(c)(5).
8
summons on behalf of Flagstar was not established to be in compliance with the mandate of
Rule 4(d)(4). Respectfully, we think otherwise, and find Rule 4(d)(4) to be inapplicable on
these facts.
¶14. The comment to Rule 4(c)(5) states:
The Rule 4(c)(5) procedure supplants the circuitous procedures available to
obtain in personam jurisdiction against nonresidents. E.g. Miss. Code Ann.
13-3-63 (1972). However, the criteria for subjecting nonresidents to the
jurisdiction of Mississippi courts are those established by the legislature.
¶15. Because Flagstar is a foreign corporation not doing business in the state, and thus has
no registered agent in the state, Mississippi Code Section 13-3-57, Mississippi’s Long-Arm
Statute, controls for purposes of jurisdictional intent. Miss. Code. Ann. § 13-3-57 (Rev.
2002). However, the statute is silent with regard to service of process, in that it provides,
“Service of summons and process upon the defendant shall be had or made as is provided by
the Mississippi Rules of Civil Procedure.” Id.
¶16. As the Court of Appeals’ dissent pointed out, Rule 4(c)(5) is silent with regard to
whether someone other than the registered agent for service of process for a corporation may
sign for a certified letter addressed to the registered agent. So too are the statutes. What is
clear, however, from the standpoint of the efficacy of service of process on a foreign
corporation by way of certified letter, is that the letter must be properly addressed to the
person authorized to receive process on behalf of the corporation and actually delivered to
that address. That was done in this case, as it is clear from the record that the letter was
properly addressed and that it reached its destination. Cf. Pointer v. Huffman, 509 So. 2d
9
870, 873 (Miss. 1987) (after discussion on issue of whether constable had authority under
statute to serve process in name of sheriff, “[t]here being no dispute as to the fact of service
and notice to the defendant . . . . , this Court finds no reversible error in the trial judge’s
[holding that service of process was valid]”). In today’s case, Robert K. Fleming, the
operations coordinator for Flagstar’s legal department, admitted to having received the
process.
¶17. Further, we agree with the Court of Appeals’ dissent that the Danoses’ attempted
service on Flagstar with “restricted delivery” does not in-and-of-itself render the attempted
service invalid. This is a requirement born out of Mississippi Code Section 13-3-63, which
governs service of process on nonresident motorists. Miss. Code Ann. § 13-3-63 (Rev.
2002). The Danoses were not required to send the letter restricted delivery; the fact that they
went the extra step should not be viewed as noncompliance with Rule 4(c)(5).
¶18. For the reasons stated, based on the facts revealed in today’s record, we find that
service of process was proper in this matter. To hold otherwise would work an illogical
burden on plaintiffs who have no control over a corporate defendant’s internal operating
procedures, such as how mail rooms are run.
¶19. Because the Court of Appeals found that the default judgment must be set aside due
to the trial court’s lack of jurisdiction to enter the judgment because of defective process, the
Court of Appeals, understandably, did not address the three-prong balancing test grounded
in our law to determine the propriety of the trial court’s refusal to set aside the default
judgment. We thus turn now to this issue.
10
II. WHETHER THE TRIAL COURT ERRED IN DENYING
FLAGSTAR’S MOTION TO SET ASIDE THE DEFAULT
JUDGMENT.
¶20. Flagstar appropriately filed a motion to set aside default judgment pursuant to
Mississippi Rule of Civil Procedure 60(b). Without doubt, Mississippi Rule of Civil
Procedure 55(c) is available to seek relief from a clerk’s entry of default, while Rule 60(b)
is reserved for those occasions when a party seeks relief from the trial court’s entry of a
judgment by default. American States Ins. Co. v. Rogillio, 10 So. 3d 463, 467 (Miss. 2009).
Here, at least as to Flagstar, the circuit clerk entered no default, but instead, the trial court
entered a default judgment pursuant to Mississippi Rule of Civil Procedure 55(b).
¶21. Mississippi Rule of Civil Procedure 60(b) states in pertinent part:
(b) Mistakes; Inadvertence; Newly Discovered Evidence; Fraud, etc. On
motion and upon such terms as are just, the court may relieve a party or his
legal representative from a final judgment, order, or proceeding for the
following reasons:
(1) fraud, misrepresentation, or other misconduct of an adverse
party;
(2) accident or mistake;
(3) newly discovered evidence which by due diligence could not
have been discovered in time to move for a new trial under Rule
59(b);
(4) the judgment is void;
(5) the judgment has been satisfied, released, or discharged, or
a prior judgment upon which it is based has been reversed or
otherwise vacated, or it is no longer equitable that the judgment
should have prospective application;
(6) any other reason justifying relief from the judgment.
Miss. R. Civ. P. 60(b).
11
¶22. Although Flagstar does not specify what subsection of Rule 60(b) applies to justify
granting relief from the judgment entered against it, much of Flagstar’s focus throughout the
life of this case has been on whether it was effectively served with process. Such an
assertion would justify relief from the judgment pursuant to Rule 60(b)(4). Additionally,
Rule 60(b)(6) is always available for an aggrieved party to seek relief from a judgment. This
Court has stated that “Rule 60(b)(6) ‘stands as a grand reservoir of equitable power to do
justice in a particular case when relief is not warranted by the preceding clauses, or when it
is uncertain that one or more of the preceding clauses afford relief.’” Porter v. Porter, 23 So.
3d 438, 450 (Miss. 2009) (quoting Briney v. United States Fid. & Guar. Co., 714 So. 2d
962, 969 (Miss. 1998)) (citations omitted).
¶23. Thus, in today’s appeal, Flagstar argues that the trial court erred when it failed to
apply properly the three-prong balancing test in ruling on Flagstar’s Rule 60(b) motion to set
aside default judgment. In Rogillio, this Court reiterated the equitable factors to be
considered by the trial courts in determining whether a default judgment should be set aside.
Those three factors are:
(1) the nature and legitimacy of the defendant’s reasons for his default, i.e.,
whether the defendant has good cause for default, (2) whether [the] defendant
in fact has a colorable defense to the merits of the claim, and (3) the nature and
extent of prejudice which may be suffered by the plaintiff if the default
judgment is set aside.
Rogillio, 10 So. 3d at 468 (citing H & W Transfer & Cartage Serv., Inc. v. Griffin, 511 So.
2d 895, 898 (Miss. 1987)). See also Guar. Nat’l Ins. Co. v. Pittman, 501 So. 2d 377, 388
(Miss. 1987).
12
¶24. Flagstar’s motion to set aside the default judgment is thirty pages in length, including
exhibits. The first eleven pages of the motion are devoted to addressing the specific reasons
to support Flagstar’s motion as they relate to the three-prong balancing test. In the motion,
Flagstar focuses its attention on the good-cause and colorable-defense factors. We recite
here portions of the trial judge’s memorandum opinion and order denying Flagstar’s motion
to set aside default judgment:
On September 21, 2006, this Court entered a Default Judgment against the
defendant, pursuant to M.R.C.P. 55(b).[5 ] The basis for the Judgment was that
the defendant failed to appear for a trial on the merits, and that on three
different docket calls, the defendant had failed to appear, or make any
announcements.[6 ] After entry of the judgment, and consistent with M.R.C.P.
55, this Court held a hearing on damages, where the defendant also failed to
appear.
...
The crux of the defendant’s argument is that good cause exists to set aside and
that a clerk’s entry of default is required. While the defendant raises numerous
5
Although the default judgment was dated September 21, 2006, the actual date of
entry of the default judgment was September 25, 2006.
6
The docket reflects, inter alia, the following filings (and these documents likewise
appear in the record before us): February 10, 2005, Notice of Cases on Trial Calendar,
stating the trial docket (including this case) would be set on March 14, 2005, at 8:00 a.m.;
March 25, 2005, Notice of Pre-Setting for Trial, stating that this case was pre-set for trial
at 9:00 a.m. on September 14, 2005, and that announcements could be made at docket call
on September 12, 2005, at 9:00 a.m.; September 19, 2005, Notice of Pre-Setting for Trial,
stating that this case was pre-set for trial at 9:00 a.m. on March 22, 2006, and that
announcements could be made at docket call on March 13, 2006; March 27, 2006, Notice
of Pre-Setting for Trial, stating that this case was pre-set for trial at 9:00 a.m. on June 20,
2006, and that announcements could be made at docket call on June 12, 2006; June 24,
2006, Order Granting Motion for Continuance and setting trial for September 19, 2006, at
9:00 a.m.; and July 14, 2006, Notice of Pre-Setting for Trial, stating that this case was pre-set
for trial at 9:00 a.m. on September 19, 2006, and that announcements could be made at
docket call on September 11, 2006.
13
other issues relating to service and prejudice, this Court deems them to be
without merit.
...
In Hartford v. Underwriters Insurance Co. v. Williams [sic],7 the Mississippi
Supreme Court held that a defendant seeking relief under Rule 60(b)(6) must
prove good cause, a colorable defense, and that setting aside will not prejudice
the plaintiff.
The defendant’s chief argument regarding good cause is that the record is void
as to any entry of default. However, as cited by the plaintiff in their response,
M.R.C.P. 55(b) expressly allows for a default to be taken if a party fails to
appear at the trial. Here, the record reflects, that the defendant failed to appear
at three docket calls, trial and at the writ of inquiry on damages. In addition,
the official comments to Rule 55, while [sic] read as follows, “when a
defaulting party has failed to appear, thereby manifesting no intention to
defend, he is not entitled to notice of the application for a default judgment
under this rule.” See, Official Comments to M.R.C.P. 55(b). Thus, it is clear
that neither an application or a clerk’s entry of default was needed in light of
the facts.
¶25. Additionally, in his Memorandum Opinion and Order, the trial judge discussed the
fact that, pursuant to Mississippi Rule of Civil Procedure 55(b), he had authority to enter a
default judgment once a defendant failed to appear on the trial date. The trial judge also
acknowledged Flagstar’s argument that Mississippi law does not favor default judgments and
that trial courts should liberally set aside default judgments upon request. In response to that
argument, the trial judge opined that such an approach of setting aside a default judgment
simply upon request would be “perfunctory,” eliminating the necessity for performing the
three-part balancing test set out by this Court, and that there existed an important judicial
policy concerning finality of judgment.
7
It appears that the trial court was referring to Hartford Underwriters Insurance Co.
v. Williams, 936 So. 2d 888 (Miss. 2006).
14
¶26. In Rogillio, the trial court found that the default judgment had been entered properly.
Rogillio, 10 So. 3d at 466. The basis for this conclusion, however, was that “the failure of
the defendant to respond to the complaint was not due to accident or mistake, nor any
conduct of the plaintiff or plaintiff’s counsel, but to poor business practices of the defendant
and complete inattention to the complaint.” Id. Thus, as the trial court stated, “[t]he court
finds there is no showing of good cause.” Id. Therefore, in Rogillio, the trial court
apparently considered only the “good cause” prong in deciding to deny the defendant’s
motion to set aside the default judgment.
¶27. Notwithstanding the trial court’s apparent failure to apply the proper test in Rogillio,
however, this Court thus engaged in its own three-prong balancing inquiry on appeal. We
stated that “[i]n deciding whether to set aside a default judgment, the trial court must
consider [the three-prong balancing test].” Rogillio, 10 So. 3d at 468. Just before that,
however, and in the same breath, we explained that “this Court applies a three-prong
balancing test when determining whether a trial court properly decided a motion to set aside
a default judgment.” Rogillio, 10 So. 3d at 467-68 (emphasis added). Hence, we employed
the test in Rogillio and found that the trial court had not abused its discretion in denying the
defendant’s motion to set aside the default judgment. Id. at 476-77.8
8
This Court reviews a trial court’s decision regarding a motion to set aside a default
judgment for an abuse of discretion. Rogillio, 10 So. 3d at 467 (citing Guar. Nat’l Ins. Co.
v. Pittman, 501 So. 2d 377, 388 (Miss. 1987)).
15
¶28. Rogillio thus stands for the proposition that the trial court must employ the three-part
balancing test when deciding whether to set aside a default judgment, and this Court must
strike the same balance when determining whether the trial court abused its discretion in
making that decision. While we are satisfied from the totality of the record, including the trial
judge’s memorandum opinion and order, that the trial judge applied the required three-prong
balancing test, we will conduct the Rogillio analysis ourselves to determine if the trial court
abused its discretion in denying Flagstar’s motion to set aside the default judgment.
¶29. The Rogillio test includes a “good-cause” prong, a “colorable-defense” prong, and a
“prejudice” prong. Id. at 468 (citing H & W Transfer, 511 So. 2d at 898). The trial court’s
order stated the correct test as follows: “a defendant seeking relief under Rule 60(b)(6) must
prove good cause, a colorable defense, and that setting aside will not prejudice the plaintiff.”
A. Good Cause
¶30. The trial court’s memorandum opinion and order in today’s case pointed out that “the
crux of the defendant’s argument is that good cause exists to set aside.” (Emphasis added.)
Thereafter, the trial court’s order engaged in a substantial analysis regarding the “good-
cause” prong and found Flagstar’s arguments to be without merit. The “good-cause” prong,
however, does not pertain to “good cause” to set aside the default judgment. Rather, the
“good-cause” prong refers to whether the defendant can show “good cause” for its default.
Rogillio, 10 So. 3d at 468. Flagstar never presented facts in its Motion to Set Aside specific
to its reasons for default. The only facts Flagstar presented to the trial judge pertained to
“good cause” to set aside the default judgment.
16
¶31. We note that in Flagstar’s Motion to Set Aside, its principal reasons for “good cause”
to set aside were (1) that service of process was ineffective, and (2) that the default judgment
was void because the Danoses had failed to apply for an entry of default. However, the only
argument presented by Flagstar that could apply toward “good cause” for the default was that
service of process was improper. We addressed that argument in Issue I and found service
of process was effected on Flagstar. See supra Issue I. Thus, this prong weighs in favor of
the Danoses.
B. Colorable Defense
¶32. A trial court confronted with a motion to set aside a default judgment likewise must
consider whether the defaulting defendant has a colorable defense to the merits of the
plaintiff’s claim. Rogillio, 10 So. 3d at 469. Admittedly, this Court has held that the
“colorable-defense” prong is the most important factor. With regard to that prong, we have
held that “[i]f any one of the three factors in the balancing test outweighs the other in
importance, this is the one.” Rogillio, 10 So. 3d at 469-70 (citing Bailey v. Ga. Cotton
Goods, 543 So. 2d 180, 182 (Miss. 1989)); see also Stanford v. Parker, 822 So. 2d 886, 888
(Miss. 2002) (quoting Allstate Ins. Co. v. Green, 794 So. 2d 170, 174 (Miss. 2001) (stating
that this Court has “encouraged trial courts to vacate a default judgment where ‘the defendant
has shown that he has a meritorious defense’”)).
¶33. Flagstar made several principal arguments regarding “colorable defenses” in its
motion to set aside the default judgment. First, Flagstar argued that service of process was
deficient. The trial court’s order denying the motion states that “the defendant raises
17
numerous other issues relating to service . . . [but] this Court deems them to be without
merit.” (Emphasis added). Thus, it could be said that the trial court considered the
“colorable-defense” prong, insofar as defective service of process is a “colorable defense,”
but found Flagstar’s arguments thereunder to be lacking.
¶34. However, Flagstar also argued as a “colorable defense” that it could not be held liable,
as a matter of law, for the injuries complained of by the Danoses. A short explanation of the
background facts is required to understand this contention. The Danoses’ complaint asserted
liability based on the fact that several agents of the defendant mortgage holders had
“submitted false and erroneous information to their principles [sic]” and thus to the Danoses,
the consumers. The complaint alleged, inter alia, that Chris Shirley and Amerigo Mortgage
were agents of Flagstar. To be liable for the acts of a disclosed principal, the agent must
have acted outside the scope of his agency and would incur no individual liability absent
fraud or other equivalent conduct. Rosson v. McFarland, 962 So. 2d 1279, 1288 (Miss.
2007); see also Harrison v. Chandler-Sampson, Co., Inc., 891 So. 2d 224, 227-31 (Miss.
2005). However, the trial court granted summary judgment to Shirley, finding that no
genuine issues of material fact existed as to his liability.9 Thus, Flagstar’s agent, who
provided the sole basis for its alleged vicarious liability, was dismissed from the case. Since
there is a valid argument that no agency relationship existed between Flagstar and the other
defendants in the case that would have served as the basis for vicarious liability otherwise,
9
The order granting summary judgment to Shirley was included as an exhibit in
Flagstar’s motion to set aside the default judgment.
18
this certainly could be deemed to be a “colorable defense” to the Danoses’ claims against
Flagstar.10 Thus, this prong would appear to weigh in favor of Flagstar.
¶35. However, notwithstanding our finding on this factor, we note that this Court addressed
the availability of a colorable defense in Pointer v. Huffman, 509 So. 2d 870, 874 (Miss.
1987), and stated:
Pointer also testified concerning his defense to Huffman’s claim. The
existence of a colorable defense on the merits “is a factor which should often
be sufficient to justify vacation of a judgment entered by default.” Guaranty
National Ins. Co. v. Pittman, 501 So. 2d at 388 . . . .
...
The gist of Huffman’s claim is the failure of Pointer to include worker’s
compensation coverage in an insurance package. However, the testimony of
Pointer indicates there is an important factual issue which goes to the very
heart of Huffman’s claim. Mr. Pointer’s testimony indicates a colorable
defense in that Huffman voluntarily chose not to include worker’s
compensation insurance within his insurance package. The resolution of that
factual issue in favor of Pointer would negate the presence of any basis of
liability.
To be sure, [Pointer] could have been more diligent in his actions to defend
this suit. The trial court, in the exercise of his discretion, so held, and this
Court finds no abuse of this discretion.
Pointer, 509 So. 2d at 876.
C. Prejudice
10
Flagstar also argued in its motion to set aside the default judgment that it did not
hold the mortgage on the home, which is the basis of this suit, when the allegedly fraudulent
acts leading to the lawsuit occurred. If this is true, then it would appear that Flagstar cannot
be held liable to Danos under the note. This undoubtedly would be a “colorable defense”
to the Danoses’ claim, and certainly would be a factor to have been considered by the trial
court.
19
¶36. Lastly, when confronted with a motion to set aside a default judgment, the trial court
must consider and balance any prejudice the plaintiff would suffer if the default was set
aside. Rogillio, 10 So. 3d at 468. Here, the trial court’s order stated that the “defendant
raises numerous other issues relating to . . . prejudice [but] this Court deems them to be
without merit.” In the introductory paragraph of his Memorandum Opinion and Order, the
trial judge stated that he had “reviewed the motion [to set aside default judgment],
memorandums [sic] in support, exhibits, as well as conducted a hearing.” Thus, it is readily
apparent from this language that, prior to issuing his ruling, the trial judge had considered,
inter alia, Flagstar’s motion to set aside default judgment with the attached exhibits, and the
Danoses’ response to the motion, with exhibits attached to the response. Although the trial
court did not specifically discuss the “prejudice” prong in its order, the Danoses did present
facts in their response to Flagstar’s motion to set aside indicating that they would suffer
prejudice if the default judgment were set aside. Specifically, the Danoses argued that, due
to their “substantial discovery, lengthy investigations, and many motions,” substantial
prejudice would result if “they are forced to once again engage in lengthy and costly
discovery to prepare this case for trial.” Additionally, the trial court, in its memorandum
opinion and order, stated that “[i]t is also important to note, that [t]his case is approximately
three years old.” The trial court also stated that it saw no need to set out a lengthy factual
recitation “[g]iven the exhaustive factual background detailed in the Court’s Memorandum
Opinion and Order, on Allstate’s Motion for Summary Judgment.”
20
¶37. In sum, notwithstanding the attention appropriately devoted to the colorable-defense
assertion in any case concerning issues of setting aside default judgments, in the end, of
significant import, based on the facts and circumstances peculiar to the particular case before
us today, is the following: As early in the life of this civil proceeding as April 22, 2004,
Flagstar’s legal department operations coordinator mailed a letter addressed to the Danoses’
counsel stating, inter alia, “Flagstar Bank, FSB (Flagstar) is in receipt of the summons
regarding the above referenced matter.” (Emphasis added). This unequivocal admission
by Flagstar meant that it had received the summons with the following caveat:
NOTICE TO DEFENDANT
THE COMPLAINT WHICH IS ATTACHED TO THIS SUMMONS IS
IMPORTANT AND YOU MUST TAKE IMMEDIATE ACTION TO
PROTECT YOUR RIGHTS.
Within thirty (30) days from the date of receipt of this Summons and
Complaint, you are required to mail or hand deliver a copy of a written answer
either admitting or denying each allegation in the Complaint to CATHERINE
H. JACOBS, ATTORNEY AT LAW, 425 PORTER AVENUE, OCEAN
SPRINGS, MS 39564.
You must also file the original of your answers with the Clerk of the Circuit
Court within a reasonable time thereafter.
¶38. The facts of this case are similar to those found in Guaranty National Insurance
Company v. Pittman, 501 So. 2d 377 (Miss. 1987), wherein this Court affirmed the trial
court’s denial of a motion to set aside a $400,000 default judgment entered after a hearing
to assess damages in a case involving an unliquidated claim for damages incurred by the
plaintiff due to an automobile accident. In so doing, this Court opined that “[a]ssuming that
[the defendant] could count to thirty and had some rudimentary familiarity with the Julian
21
calendar, the summons instructed him that his answer was due on December 12, 1984.” Id.
at 386-87. Thus, we are satisfied in today’s case that the operations coordinator in Flagstar’s
legal department, through simple arithmetic, easily could have calculated that, in order to
protect Flagstar’s interests in this litigation commenced by the Danoses by assuring that a
default judgment would not be entered against it, regardless of Flagstar’s opinion as to the
merits of the Danoses’ assertions against Flagstar, responsive pleadings were required to be
filed by May 22, 2004. Instead, the record reveals that Flagstar, throughout the history of
this litigation, rolled the dice on its claim that the Danoses had failed to effect legal process
upon it such that a lawful judgment could not be entered against it. See Sartain v. White, 588
So. 2d 204, 208 (Miss. 1991).
¶39. Likewise, we find applicable to today’s case that, although the Court, in Pittman,
found the defendant had made a substantial showing that the defendant had a colorable
defense on the merits of the plaintiff’s claim, this Court stated:
In the final analysis, this case presents the questions whether we accord any
meaning to a defendant’s Rule 12(a) duty to answer a final judgment entered
after the defendant had been fully advised of his peril. It may be that people
will miss fewer trains if they know the engineer will leave without them rather
than delay even a few seconds. Although we are not about to inaugurate a
policy of entering irrevocable defaults where no answer has been filed by the
thirty-first day, we are equally resolved that people know that the duty to
answer must be taken seriously. At some point the train must leave. That
point had been reached in the case at bar on February 6, 1985.[11 ]
Pittman, 501 So. 2d at 388-89.
11
This was the date of the trial court’s entry of a default judgment as to liability and
final judgment awarding damages after a hearing to assess damages.
22
¶40. In today’s case, Flagstar’s train left the station on September 29, 2006, the date the
trial court entered the judgment against Flagstar in the amount of $500,000.
¶41. Simply put, it is not the duty of the members of this Court to determine what decision
we would have made had we been the trial judges in this case. Instead, as already noted, our
solemn responsibility is to review the trial judge’s refusal to set aside the default judgment
in this case by considering the record before us and applying the abuse-of-discretion standard
of review. Having done so, we are unable to fairly conclude that the trial court exceeded its
authority or abused its discretion in refusing to set aside the default judgment entered against
Flagstar.
¶42. Finally, in briefly addressing Justice Pierce’s separate opinion wherein he suggests
in ¶69 that we remand for a determination of damages based on an apportionment of fault
between Flagstar and Michael Burks under Mississippi Code Section 85-5-7 (Rev. 1999), we
note that the record does not reveal that Flagstar ever presented this issue to the trial court.
Thus, we need not consider this issue, which has been raised for the first time on appeal.
Alexander v. Daniel, 904 So. 2d 172, 183 (Miss. 2005) (citing Triplett v. Mayor &
Alderman of Vicksburg, 758 So. 2d 399, 401 (Miss. 2000)).
CONCLUSION
¶43. For the reasons discussed, we find that the trial court did not abuse its discretion in
refusing to set aside the default judgment. Therefore, the judgment of the Court of Appeals
is reversed, and the Lamar County Circuit Court’s order denying the motion to set aside
default judgment filed by Flagstar Bank, FSB, is reinstated and affirmed.
23
¶44. THE JUDGMENT OF THE COURT OF APPEALS IS REVERSED AND THE
JUDGMENT OF THE CIRCUIT COURT OF LAMAR COUNTY IS REINSTATED
AND AFFIRMED.
GRAVES, P.J., AND KITCHENS, J., CONCUR. RANDOLPH, J., CONCURS
IN PART AND IN RESULT WITH SEPARATE WRITTEN OPINION JOINED BY
LAMAR, J. DICKINSON AND PIERCE, JJ., JOIN IN PART. DICKINSON, J.,
DISSENTS WITH SEPARATE WRITTEN OPINION. PIERCE, J., CONCURS IN
PART AND DISSENTS IN PART WITH SEPARATE WRITTEN OPINION JOINED
BY WALLER, C.J. CHANDLER, J., NOT PARTICIPATING.
RANDOLPH, JUSTICE, CONCURS IN PART AND IN RESULT:
¶45. I concur in part and in result.
¶46. Mississippi Rule of Civil Procedure 4(c)(3)(A) provides:
A summons . . . may be served upon a defendant of any class referred to in paragraph
. . . (4) of subdivision (d) of the rule by mailing a copy of the summons . . . to the
person to be served. . . .
¶47. Mississippi Rule of Civil Procedure 4(d)(4) requires “delivery of a copy of the summons .
. . to an . . . agent authorized by appointment . . . to receive service of process.”
¶48. I would add to the plurality opinion only that the summons and complaint must be
properly addressed to the person authorized to receive process on behalf of the corporation
and actually delivered to that person at that address. The defendant confirmed that the
requirements were met.
LAMAR, J., JOINS THIS OPINION. DICKINSON AND PIERCE, JJ., JOIN
THIS OPINION IN PART.
DICKINSON, JUSTICE, DISSENTING:
¶49. The plurality of justices’ analysis of the service-of-process issue (“Plurality”)
incorrectly finds service of process on Flagstar was proper. Importantly, the Plurality makes
24
no finding that the mail clerk, Pena, was authorized to accept process for Flagstar. But
because “Robert K. Fleming – the operations coordinator for Flagstar’s legal department –
admitted to having received the process” from some source, the Plurality finds it was
perfected.
¶50. This is contrary to this Court’s decision in Hyde Construction Co. v. Elton Murphy-
Walter Travis, Inc.,12 wherein process was served on Carter, an employee of a corporation
who, in turn, delivered it to the president. This Court held:
The delivery of the process to Carter for delivery to Hyde was not personal
service on the corporation. . . . The fact that process was delivered to the
president later the same afternoon did not make the service personal. Hyde’s
knowledge was without avail. Without service in the manner provided by law,
it is ineffectual.13
¶51. For the past half-century, Hyde – which was not cited by the Plurality – has been good
law.
¶52. I also dissent to the following holding from the Plurality:
What is clear, however, from the standpoint of the efficacy of service of
process on a foreign corporation by way of certified letter, is that the letter
must be properly addressed to the person authorized to receive process on
behalf of the corporation and actually delivered to that address.14
12
Hyde Constr. Co. v. Elton Murphy-Walter Travis, Inc. 227 Miss. 615, 86 So. 2d
455 (Miss. 1956).
13
Id. at 458.
14
Plur. Op. at ¶ 16. The Plurality understandably cites no authority for its new two-
prong test, and the second prong – which simply allows the process to be delivered to “that
address,” rather than an actual person authorized to receive it – is not to be found in the law.
25
(Emphasis added.)
¶53. So according to the Plurality, valid service of process may be obtained on a foreign
corporation, even in a case where the undisputed facts establish that the process never
reached any person authorized to receive it and no person associated with the defendant was
aware of the lawsuit. Indeed, according to the plurality’s view of “efficacy of service of
process,” all that is necessary is that process be properly addressed and delivered to the
building, or anyone who happened to be in or around it. The Plurality fails to consider that
most corporations are small businesses, and many (such as small farms) are operated out of
a home. Thus, under today’s Plurality opinion, process may be perfected by delivery to a
landscaper found watering plants at the address of the defendant. Also, according to the
Plurality’s holding as recited above, so long as the postman (or postwoman) drops the
process in the correct mailbox, or hands it to a customer seated in the defendant’s waiting
room, the defendant is properly served – even though for a variety of reasons the process may
never be seen by anyone authorized to receive it.
¶54. I find this view of service of process repugnant to the principles of justice and
fairness, and inconsistent with due process of law. For the reasons stated herein, I
respectfully dissent.
PIERCE, JUSTICE, CONCURRING IN PART AND DISSENTING IN PART:
¶55. The plurality’s opinion in this case is shocking. Although Flagstar’s general counsel
committed a monumental error that in baseball terms can be compared to Bill Buckner’s
26
1986 game-six World Series error, I cannot justify upholding a $500,000 default judgment
when there is absolutely no basis in the law for doing so.
¶56. I fully concur with the plurality that Flagstar was properly served under the specific
facts of this case. But I cannot concur with the plurality’s analysis and disposition regarding
Issue II. Because this Court consistently has found the “colorable-defense” prong of the
three-part Rogillio test to be the most important,15 I believe the default judgment against
Flagstar should be set aside. Accordingly, I dissent in part.
I.
¶57. I do not think the plurality or the trial courts struck the Rogillio equilibrium correctly,
because each gave insufficient consideration to the weightiest element, Flagstar’s “colorable
defenses.” When the Rogillio balance is properly struck, the evidence before the trial court
and this Court shows that the default judgment entered against Flagstar should have been set
aside. Again, because the “colorable-defense” prong is the most important element of the
Rogillio test, Flagstar’s defenses likely would have required the trial court to set aside the
default judgment. But nowhere in the trial court’s order denying Flagstar’s motion to set
aside the default judgment are these defenses mentioned. And since the trial court failed to
15
See American States Ins. Co. v. Rogillio, 10 So. 3d 463, 470 (Miss. 2009); Greater
Canton Ford Mercury, Inc. v. Lane, 997 So. 2d 198, 204 (Miss. 2008); Capitol One
Services, Inc. v. Rawls, 904 So. 2d 1010, 1016 (Miss. 2004); Stanford v. Parker, 822 So.
2d 886, 889 (Miss. 2002); Allstate Ins. Co. v. Green, 794 So. 2d 170, 174 (Miss. 2001);
Bailey v. Ga. Cotton Goods, 543 So. 2d 180, 182 (Miss. 1989).
27
have an on-the-record hearing, we are left without a transcript of the hearing on the motion
to set aside. Thus, we cannot assume that the trial court considered these defenses at all.
¶58. Nevertheless, the plurality goes forward, as it should, with its own application of the
three-prong standard. I agree with the plurality’s analysis regarding the “good-cause” prong
of the balancing test. But I believe the plurality’s opinion incorrectly shifts the appropriate
weight afforded by this Court away from the “colorable-defense” prong and thus takes the
Court in a different direction. The facts of this case do not warrant such a shift in the law.
Flagstar’s Colorable Defenses
¶59. The plurality’s opinion mentions additional colorable defenses presented by Flagstar
that were not considered by the trial court and that establish a strong defense to the Danoses’
claims. First, the plurality notes that Flagstar could not be held liable, as a matter of law, for
the injuries complained of by the Danoses. The plurality recognizes that:
To be liable for the acts of a disclosed principal, the agent must have acted
outside the scope of his agency and would incur no individual liability absent
fraud or other equivalent conduct. Rosson v. McFarland, 962 So. 2d 1279,
1288 (Miss. 2007). See also Harrison v. Chandler-Sampson, Co., Inc., 891
So. 2d 224, 227-31 (Miss. 2005). However, the trial court granted summary
judgment to Shirley, finding that no genuine issues of material fact existed as
to his liability.16 Thus, Flagstar’s agent, who provided the sole basis for its
alleged vicarious liability, was dismissed from the case. Since there is a valid
argument that no agency relationship existed between Flagstar and the other
defendants in the case that would have served as the basis for vicarious
liability otherwise, this certainly could be deemed to be a “colorable defense”
to the Danoses’ claims against Flagstar.
16
The order granting summary judgment to Shirley was included as an exhibit in
Flagstar’s motion to set aside the default judgment.
28
Plur. Op. at ¶ 34.
¶60. Yet despite finding that Flagstar could not have been held liable to the Danoses, the
plurality goes on to state “this [colorable-defense] prong would appear to weigh in favor of
Flagstar.” Plur. Op. at ¶34 (emphasis added). The plurality’s conclusion on this issue does
not afford the “colorable-defense” prong its appropriate weight. I believe it to be clear that,
because Shirley was granted summary judgment, Flagstar could not have been held
vicariously liable to the Danoses and that such a finding weighs heavily in favor of Flagstar.
¶61. Additionally, Flagstar argued in its motion to set aside the default judgment that it did
not hold the mortgage on the home when the allegedly fraudulent acts leading to the lawsuit
occurred. As the plurality notes, if this fact is true, then Flagstar cannot be liable to the
Danoses under the note. Beyond question, this would be a “colorable defense” to the
Danoses’ claim, and should have been considered by the trial court as well.
¶62. Thus, this prong of the three-part test substantially outweighs the other two.
Prejudice to the Danoses
¶63. It is well-established that the “colorable-defense” prong “is a factor which often
should be sufficient to justify vacation of a judgment entered by default.” Guar. Nat’l Ins.
Co. v. Pittman, 501 So. 2d 377, 388 (Miss. 1987).17 But the plurality’s opinion seems to turn
on whether the Danoses would suffer prejudice if the default were set aside. In weighing
“prejudice,” the plurality notes that “[a]lthough the trial court did not specifically discuss the
17
See also Bryant, Inc. v. Walters, 493 So. 2d 933, 937 (Miss. 1986); Int’l Paper Co.
v. Basila, 460 So. 2d 1202, 1204 (Miss. 1984).
29
‘prejudice’ prong in its order, the Danoses did present facts in their response to Flagstar’s
motion to set aside indicating that they would suffer prejudice if the default judgment were
set aside.” Plur. Op. at ¶ 36. The Danoses further argued that they agreed not to oppose or
appeal Shirley’s and Amerigo’s summary judgment motions, only in exchange for Shirley’s
and Amerigo’s testimony at trial that Shirley had acted as an agent for Flagstar. The plurality
finds these arguments outweigh the “most important” factor of the three-part standard, the
“colorable-defense” prong. I cannot join such a finding.
¶64. The arguments asserted by the Danoses are spurious, and clearly lack enough merit
to outweigh Flagstar’s colorable defenses. Rather, the Danoses should bear the consequences
for allowing Shirley and Amerigo out of the case, because they should have known that
letting Shirley out of the case would simultaneously let Flagstar out as well.
¶65. Because Flagstar had no liability to the Danoses under the law and presented such to
the trial court, I would find that the trial court abused its discretion in not setting aside the
default judgment. Accordingly, I would reverse and render as to Issue II.
II.
¶66. Alternatively, and in light of the plurality’s decision to uphold the default judgment,
I would note that the trial court’s judgment and damage award of $500,000 is not supported
by the evidence and amounts to plain error. And because the damage award in this case is
so grossly disproportionate as to be contrary to common logic, it should be overturned. See
Greater Canton Ford Mercury, Inc. v. Lane, 997 So. 2d 198, 206 (Miss. 2008), reh’g
denied Jan. 8, 2009. (“This Court has stated that ‘damage awards are only overturned when
30
the trial judge has abused his discretion or in exceptional cases where such awards are so
gross as to be contrary to right reason.’”)
¶67. This Court has held that “damages awards must be supported by evidence, and such
evidence must be reflected in the record if it is to be affirmed on appeal.” Rich by and
through Brown v. Nevels, 578 So. 2d 609, 617 (Miss. 1991). Further, the record on appeal
should reflect how the trial court calculated damages. Lane, 997 So. 2d at 206.
¶68. The record before this Court reveals that neither the complaint nor the exhibits
submitted at the September 29, 2006, hearing provided a factual basis for the amount
awarded by the trial court.18 The trial court clearly abused its discretion by holding Flagstar
and Michael Burks responsible, jointly and severally, for a $500,000 judgment when no such
amount had been substantiated by the evidence, nor were the damages properly apportioned
among the defendants. Before, we have not hesitated to vacate a judgment where the record
is devoid of a factual basis for the amount of damages. See Lane, 997 So. 2d at 206; Nevels,
578 So. 2d at 617.
¶69. Although I would set aside the default judgment as mentioned above, I would note
that the plurality, in upholding the default judgment, in essence has blindly permitted an
18
The Complaint submitted by the Danoses requested “the Court enter judgement
[sic] for the plaintiffs and against the defendants for actual and punitive damages in an
amount to be determined by a jury at the trial of this cause and for any and such other and
further relief as the Court deems appropriate.” The evidence submitted at the hearing on
damages consisted of: prescription drug receipts, a deed of trust, the real estate contract, the
seller’s disclosure statement, pictures of the damage, medical bills, testimony from the
Danoses and two credit reports. Virtually none of the evidence presented at the damages
hearing was connected to Flagstar.
31
award which is virtually devoid of substantiation. See Nevels, 578 So. 2d at 617. Further,
the trial court found Flagstar and Michael Burks jointly and severally liable to the Danoses,
yet failed to assign a percentage of fault to either defendant. The statute applicable at the
time of the suit required that the trial court apportion fault between the two defendants. See
Miss. Code Ann. 85-5-7 (Rev. 1999).19 Since the trial court failed properly to apportion fault
between Flagstar and Michael Burks, the plurality should, at least, remand for a proper
determination on the issue of damages.
WALLER, C.J., JOINS THIS OPINION.
19
The pertinent language of Mississippi Code Section 85-5-7 read as follows:
Except as may be otherwise provided in subsections (6) and (8) of this section,
in any civil action based on fault, the liability for damages caused by two (2)
or more persons shall be joint and several only to the extent necessary for the
person suffering injury, death or loss to recover fifty percent (50%) of his
recoverable damages.
Miss. Code Ann. § 85-5-7 (2) (Rev. 1999).
32 | 01-03-2023 | 04-27-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/865853/ | IN THE SUPREME COURT OF MISSISSIPPI
NO. 2006-DP-00441-SCT
TERRY PITCHFORD
v.
STATE OF MISSISSIPPI
DATE OF JUDGMENT: 02/09/2006
TRIAL JUDGE: HON. JOSEPH H. LOPER, JR.
COURT FROM WHICH APPEALED: GRENADA COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT: ALISON R. STEINER
RAY CHARLES CARTER
ATTORNEY FOR APPELLEE: OFFICE OF THE ATTORNEY GENERAL
BY: PATRICK JOSEPH McNAMARA, JR.
DISTRICT ATTORNEY: DOUG EVANS
NATURE OF THE CASE: CRIMINAL - DEATH PENALTY - DIRECT
APPEAL
DISPOSITION: AFFIRMED - 06/24/2010
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
EN BANC.
DICKINSON, JUSTICE, FOR THE COURT:
¶1. Terry Pitchford and an accomplice killed a store-owner in Grenada County during the
course of an armed robbery. Pitchford was indicted, tried, and convicted of capital murder,
and the jury found that he should be executed by lethal injection. He appeals, raising for our
review seventeen issues. Because we find no reversible error, we affirm the conviction and
sentence.
BACKGROUND FACTS AND PROCEEDINGS
¶2. On the morning of November 7, 2004, Walter Davis and his son entered the
Crossroads Grocery, where they discovered the body of the owner, Reuben Britt. They
immediately called 911, and Grenada County Sheriff’s Department Investigator Greg Conley
responded.
¶3. During his initial investigation at the scene, Investigator Conley observed that some
of Britt’s wounds appeared to have been made by a projectile, and others by pellets,
suggesting to Investigator Conley that two different weapons were involved. Missing from
the store were a cash register, some cash, and a .38 caliber revolver loaded with “rat shot.”
Also during his initial investigation, Investigator Conley received information suggesting that
a vehicle owned by Terry Pitchford matched the description of the car used by Britt’s
assailants, and that Pitchford had been part of a previous attempt to rob the Crossroads
Grocery.
¶4. At Pitchford’s home, Conley found a car matching the description of the one involved
in the homicide at the Crossroad’s grocery. After a search of the vehicle produced the
missing .38 caliber revolver, Pitchford was taken into custody.
¶5. On November 7 and 8, 2004, Investigator Conley and Investigator Robert Jennings
of the local district attorney’s office interviewed Pitchford. During those interviews,
Pitchford confessed that he and Eric Bullins had gone to the store with the intention of
robbing it. Pitchford stated that Bullins had shot Britt three times with a .22 caliber pistol,
and that he (Pitchford) had fired shots into the floor. Pitchford also confessed that he had
attempted to rob the same store a week and a half prior to the murder on November 7.
2
Pitchford also confessed his role in the murders to fellow inmates Dantron Mitchell and
James Hatchcock.
¶6. On January 11, 2005, the Grenada County Grand Jury indicted Pitchford for capital
murder. After he was appointed counsel, he was arraigned on February 9, 2005, and jury
selection commenced on February 6, 2006. Of the 350 registered voters of Grenada County
who were summoned to a special venire, 126 returned jury questionnaires and appeared upon
their summonses. Of these, forty were African-American, eighty-four were Caucasion, one
was Hispanic, and one did not provide race information.
¶7. The trial judge (without objection from either party) excused certain jurors for
statutory cause and other reasons unrelated to the case. At that point, the venire stood at
ninety-six, of which thirty-five were African-American, and sixty-one were white.
Following voir dire by the attorneys, the trial judge (without objection from either party)
struck fifty-two prospective jurors for cause and three others for reasons not disclosed in the
record, leaving thirty-six white persons and five African-Americans in the venire.
¶8. The attorneys were allowed to exercise strikes only on the twelve lowest-numbered
members of the venire. Each time a strike was exercised, the next lowest-numbered juror
joined the twelve potential jurors subject to peremptory strikes. The State exercised seven
peremptory strikes, and Pitchford exercised twelve. The persons who replaced the nineteen
strikes, plus the original twelve, resulted in thirty-one potential jurors subject to peremptory
strikes by the attorneys.
¶9. Of the thirty-one potential jurors subject to peremptory strikes, Pitchford struck twelve
whites and no African-Americans. Thus, there were nineteen potential jurors – fourteen of
3
whom were whites and five of whom were African-Americans – subject to the State’s
peremptory strikes. Although the State was allowed twelve peremptory strikes, it exercised
only seven – three whites and four African-Americans.
¶10. Following jury selection, the case proceeded to trial, and on February 8, 2006, the
jury found Pitchford guilty of capital murder. On February 9, the case proceeded to the
penalty phase, at which the jury imposed a sentence of death by lethal injection. Pitchford
filed a motion for a new trial on February 17, 2006, which was denied. He timely filed his
notice of appeal.
STANDARD OF REVIEW
¶11. We review death-penalty appeals under a heightened standard of review. As we have
previously stated,
[t]he standard for this Court's review of an appeal from a capital murder
conviction and death sentence is abundantly clear. On appeal to this Court,
convictions upon indictments for capital murder and sentences of death must
be subjected to “heightened scrutiny.” 1
Additionally, we have stated that “what may be harmless error in a case with less at stake
becomes reversible error when the penalty is death.” 2 Bearing in mind our standard of
review, we shall now proceed to analyze Pitchford’s assignments of error in the order in
which he presented them.
I. WHETHER THE JURY SELECTION PROCESS WAS
CONSTITUTIONALLY INFIRM AND REQUIRES REVERSAL OF
PITCHFORD’S CONVICTION AND SENTENCE OF DEATH.
1
Loden v. State, 971 So. 2d 548, 562 (Miss. 2007) (quoting Balfour v. State, 598 So. 2d 731,
739 (Miss. 1992)).
2
Id. (quoting Irving v. State, 361 So. 2d 1360, 1363 (Miss. 1978)).
4
¶12. In his first assignment of error, Pitchford makes three arguments, which we shall
address in turn.
A. Whether The State Discriminated On The Basis Of Race In Its
Peremptory Strikes In Violation of Batson v. Kentucky.
¶13. Citing Batson v. Kentucky,3 Pitchford asserts the State exercised its peremptory
strikes in a racially discriminatory manner.4 In Batson, the United States Supreme Court
held that the State of Kentucky was prohibited from racially discriminating through its
exercise of peremptory strikes.5 Building on Batson, the Supreme Court later stated that the
Constitution forbids striking even a single juror for a discriminatory purpose.6 For purposes
of analyzing a claim of discrimination in jury selection, Batson and its progeny have
established a three-step inquiry for courts to follow.
¶14. First, the party objecting to the peremptory strike of a potential juror must make a
prima facie showing that race was the criterion for the strike. Second, upon such a showing,
the burden shifts to the State to articulate a race-neutral reason for excluding that particular
juror. Finally, after a race-neutral explanation has been offered by the prosecution, the trial
court must determine whether the objecting party has met its burden to prove that there has
3
476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986).
4
The record of the racial make-up of the venire is not well-preserved. Much of the
information upon which we must rely comes from handwritten notations on jury lists which are
included in the record. Some of the notations are illegible and, although substantially similar, the
information on the jury lists does not match the information recited in Pitchford’s brief.
5
Id. at 82-84.
6
Snyder v. Louisiana, 552 U.S. 472, 128 S. Ct. 1203, 1208, 170 L. Ed. 2d 175 (2008)
(internal citations omitted).
5
been purposeful discrimination in the exercise of the peremptory strike, i.e., that the reason
given was a pretext for discrimination.7
Prima facie showing
¶15. As stated, a trial court faced with a Batson challenge must determine whether the
defense 8 has made a prima facie showing that race was the criterion for the prosecution’s
strike. This Court has held that the required prima facie showing can be made by
demonstrating that the percentage of the State’s peremptory strikes exercised on members
of the protected class was significantly higher than the percentage of members of the
protected class in the venire.9
¶16. Pitchford points out in his brief that the State used only seven of its peremptory
strikes, four of which removed African-Americans from the venire. As a result, only one
African-American remained on the jury of fourteen (twelve jurors and two alternates). This,
Pitchford argues, is incompatible with the fact that, in 2006, African-Americans made up
approximately forty percent of Grenada County’s population. In that regard, the following
exchange occurred at trial:
MS. STEINER: Allow us to state into the record there is one of 12 – of
fourteen jurors, are non-white, whereas this county is
approximately, what, 40 percent?
7
Flowers v. State, 947 So. 2d 910, 917 (Miss. 2007) (citations omitted).
8
Although we use the defense as an example, a Batson challenge may be brought by the
prosecution if it suspects that the defense has exercised a peremptory strike based on the race (or
other protected classification) of the prospective juror.
9
Strickland v. State, 980 So. 2d 908, 916 n.1 (Miss. 2008) citing Flowers, 947 So.
2d at 935.
6
MR. BAUM: The county is 40 percent black.
THE COURT: I don’t know about the racial makeup, but I will note for
the record there is one regular member of the panel that
is black, African American race.
In his motion for a new trial, Pitchford stated the following:
The state was allowed to use all of its peremptory challenges to remove all but
one African-American from the jury resulting in a jury composed of less than
10% African-American citizens selected from a county with nearly a 45%
African-American population.
Although Pitchford’s counsel made these assertions, he presented the trial judge no evidence
of the racial makeup of Grenada County. And regardless of the racial makeup of Grenada
County, we are persuaded that the record supports the trial court’s finding of a prima facie
showing of discrimination.
¶17. The racial makeup of the venire subject to the State’s peremptory strikes 10 was
fourteen whites (seventy-four percent), and five blacks (twenty-six percent). Thus,
statistically speaking,11 if all other factors were equal, the State’s peremptory strikes should
approximate these percentages, resulting in the state striking either one or two African-
10
We do not refer to the entire venire responding to their jury summonses, but rather to the
members of the venire who were actually subject to the State’s decision to keep or strike, that is, the
first twelve presented to the State, plus the seven who replaced the State’s seven strikes. Those
nineteen veniremen were the only members of the entire venire against whom the State could
possibly have discriminated. The racial makeup of the members of the venire who were never
considered for peremptory strikes is not relevant to the inquiry.
11
For purposes of analyzing the prima facie showing, we recognize that a cold statistical
analysis will determine only whether the percentage of the State’s peremptory strikes of African-
Americans was significantly higher than the racial makeup of the venire. However, we fully
recognize that, in the real world, there may be many legitimate reasons for the percentage imbalance.
Indeed, once a statistical imbalance is established, the State is allowed to explain its reasons for each
strike.
7
Americans.12 However, the State used fifty-seven percent of its peremptory strikes on
African-Americans. Stated another way, the State used fifty-seven percent of its peremptory
strikes (four out of seven) to remove African-Americans from a venire comprised of twenty-
six percent African American and seventy-four percent white. While the difference in these
percentages is not so great as to constitute, as a matter of law, a prima facie finding of
discrimination, it is sufficient for a trial judge – who was “on the ground” and able to observe
the voir dire process, and in the exercise of sound discretion – to so find.
¶18. We cannot say the trial court abused its discretion in finding that Pitchford made a
prima facie case of discrimination. A prima facie case, however, is nothing more than a level
of suspicion the trial judge finds significant enough to merit further inquiry.
Race-neutral reasons – pretext
¶19. Because the trial judge was persuaded that Pitchford had demonstrated a prima facie
case of discrimination, he then required the State to provide its race-neutral reason for each
peremptory strike exercised on an African-American. The four black jurors struck by the
State were: Carlos Fitzgerald Ward, Linda Ruth Lee, Christopher Lamont Tillmon, and
Patricia Ann Tidwell. On appellate review,
we give great deference to the trial court's findings of whether or not a
peremptory challenge was race-neutral . . . . Such deference is necessary
because finding that a striking party engaged in discrimination is largely a
factual finding and thus should be accorded appropriate deference on appeal
. . . . Indeed, we will not overrule a trial court on a Batson ruling unless the
12
26% x 7 = 1.8.
8
record indicates that the ruling was clearly erroneous or against the
overwhelming weight of the evidence.13
Carlos Ward
¶20. As to its race-neutral reasons for striking Ward, the prosecutor stated:
We have several reasons. One, he had no opinion on the death penalty. He
has a two-year-old child. He has never been married. He has numerous
speeding violations that we are aware of. The reason that I do not want him
as a juror is he is too closely related to the defendant. He is approximately the
same age as the defendant. They both have never been married. In my
opinion he will not be able to not be thinking about these issues, especially on
the second phase. And I don’t think he would be a good juror because of that.
¶21. In Lockett v. State,14 this Court included an appendix of “illustrative examples” of
race-neutral reasons upheld by other courts which includes age and marital status. The trial
judge found the State’s proffered race-neutral reason acceptable. We cannot say the trial
judge abused his discretion.
Linda Ruth Lee
¶22. In stating its race-neutral reason for striking prospective juror Lee, the prosecutor
stated:
S-2 is black female, juror number 30. She is the one that was 15 minutes late.
She also, according to police officer, police captain, Carver Conley, has mental
problems. They have had numerous calls to her house and said she obviously
has mental problems. . . .
13
Lynch v. State, 877 So. 2d 1254, 1270 (Miss. 2004) (quoting Walker v. State, 815 So. 2d
1209, 1214 (Miss. 2002)).
14
517 So. 2d 1346, 1356-57 (Miss. 1987).
9
¶23. That a juror “obviously has mental problems” was clearly a race neutral reason. The
trial judge found the State’s proffered race-neutral reason acceptable. We cannot say the trial
judge abused his discretion.
Christopher Lamont Tillmon
¶24. The State proffered the following reason for exercising a peremptory strike against
Tillmon:
S-3 is a black male, number 31. Christopher Lamont Tillmon. He has a
brother who has been convicted of manslaughter. And considering that this is
a murder case, I don’t want anyone on the jury that has relatives convicted of
similar offenses.
¶25. This Court has recognized a juror’s (or family member’s) criminal history to be a race-
neutral reason for exercising a peremptory challenge. 15 The trial judge found the State’s
proffered race-neutral reason acceptable. We cannot say the trial judge abused his discretion.
Patricia Anne Tidwell
¶26. The State proffered the following reason for striking Tidwell:
S-4 is juror number 43, a black female, Patricia Anne Tidwell. Her brother,
David Tidwell, was convicted in this court of sexual battery. And her brother
is now charged in a shooting case that is a pending case here in Grenada. And
also, according to police officers, she is a known drug user.
¶27. The trial judge found the State’s proffered race-neutral reason acceptable. We cannot
say the trial judge abused his discretion.
Pretext
¶28. Pitchford argues on appeal that the State’s proffered race-neutral reasons were a
pretext for discrimination. Pitchford points out that some of the reasons the State proffered
15
Lynch v. State, 877 So. 2d 1254, 1271-72 (Miss. 2004).
10
for its strikes of blacks were also true of whites the State did not strike. Although Pitchford
devoted a considerable portion of his brief and oral argument before this Court to his pretext
argument, he did not present these arguments to the trial court during the voir dire process
or during post-trial motions.
¶29. This Court has held that, “[i]f the defendant fails to rebut, the trial judge must base his
[or her] decision on the reasons given by the State.” 16
¶30. As stated, Pitchford provided the trial court no rebuttal to the State’s race-neutral
reasons. We will not now fault the trial judge with failing to discern whether the State’s
race-neutral reasons were overcome by rebuttal evidence and argument never presented.
¶31. Pitchford also argues that the totality of the circumstances shows that the State’s
peremptory challenges were exercised in a discriminatory manner. Pitchford points out the
fact that the State used only seven of its twelve peremptory challenges, striking four of five
blacks on the panel, but only three of thirty-five whites. Pitchford points out that, even
though the State had five available peremptory strikes, it failed to strike whites who shared
similar characteristics to some of the blacks who were struck for cause.
¶32. We find this to be Pitchford’s attempt to present his pretext argument in another
package. As already stated with respect to each of the four African-Americans struck by the
16
Berry v. State, 802 So. 2d 1033, 1037(Miss 2001); Manning v. State, 735 So. 2d 323, 339
(Miss. 1999) (“It is incumbent upon a defendant claiming that proffered reasons are pretextual to
raise the argument before the trial court. The failure to do so constitutes waiver.”); Woodward v.
State, 726 So. 2d 524, 533 (Miss. 1997) (“In the absence of an actual proffer of evidence by the
defendant to rebut the State’s neutral explanations, this Court may not reverse on this point”).
11
State, Pitchford failed to provide any argument concerning pretext during the Batson
hearing.17 We will not entertain those arguments now.
B. Whether The Trial Court Otherwise Deprived Defendant Of A Jury
Comprised As Required By The Sixth And Fourteenth Amendments.
¶33. As to this assignment of error, Pitchford makes two arguments: first, that the death
qualification process, itself, so disproportionately impacts black jurors that it amounts to a
violation of the Equal Protection Clause; and second, that the trial judge improperly removed
for cause jurors who were properly qualified.
¶34. The State asserts that this entire line of argument is procedurally barred because
Pitchford failed to raise a contemporaneous objection when the jurors were excused.
Pitchford contends, however, that he preserved the issue by objecting prior to the court’s
releasing any of the individuals identified as Witherspoon-ineligible.18 We find that
Pitchford is correct, and that this issue was properly preserved for appeal.
Racial Discrimination as a result of death-qualification process.
¶35. At the conclusion of voir dire, the trial court excluded thirty of the thirty-five
prospective black jurors for cause. The record reveals that most (and Pitchford alleges in his
brief that all) were excluded because they were philosophically unable to consider imposing
a sentence of death. Pitchford argues that the disproportionate exclusion of blacks for cause
17
We agree with Presiding Justice Graves’s argument that – in adjudicating the pretext issue
– the trial judge must look at the totality of the circumstances and all of the facts. However those
circumstances and facts do not include arguments not made by Pitchford’s counsel.
18
See Witherspoon v. Illinois, 391 U.S. 510, 88 S. Ct. 1770, 20 L. Ed. 2d 776 (1968) (State
may not exclude jurors for cause because of general objections to the death penalty or expressed
conscientious or religious scruples against its infliction).
12
“creates a prima facie case that the Equal Protection Clause has been violated.” In other
words, Pitchford argues that, in general, the percentage of African-Americans who oppose
the death penalty is higher than the percentage of whites.
¶36. This Court, addressing a similar argument, has held that “a defendant has no right to
a petit jury composed in whole or in part of persons of his own race.” 19 The gist of the
holdings in these cases is that – in the context of the right to a trial by a jury of one’s peers
– one’s peers are not determined by one’s race, so this argument has no merit.
¶37. Pitchford also argues that the trial judge’s questioning and exclusion of four panel
members was error. Pitchford argues that Witherspoon does not require exclusion of
prospective jurors who cannot impose the death penalty.
¶38. Although Witherspoon does not address the issue, the following clear language from
a subsequent case does:
Witt held that “the proper standard for determining when a prospective juror
may be excluded for cause because of his or her views on capital punishment
. . . is whether the juror's views would 'prevent or substantially impair the
performance of his duties as a juror in accordance with his instructions and his
oath.' " 469 U.S. at 424, 105 S. Ct. at 852 (quoting Adams v. Texas, supra, 448
U.S. at 45, 100 S. Ct. at 2526). Under this standard, it is clear from Witt and
Adams, the progeny of Witherspoon[,] that a juror who in no case would vote
for capital punishment, regardless of his or her instructions, is not an impartial
juror and must be removed for cause.20
19
Underwood v. State, 708 So. 2d 18, 28-29 (Miss. 1998) (quoting Pinkney v. State, 538 So.
2d 329, 346-47 (Miss. 1988), vacated on other grounds by Pinkney v. Mississippi, 494 U.S. 1075,
110 S. Ct. 1800, 108 L. Ed. 2d 931 (1990).
20
Morgan v. Illinois, 504 U.S. 719, 728-29, 112 S. Ct. 2222, 119 L. Ed. 2d 492 (1992). See
also Grayson v. State, 806 So. 2d 241, 254 (Miss. 2001) (strike for cause proper where potential
juror’s viewpoint on the death penalty “[w]ould prevent or substantially impair the performance of
his duties as a juror in accordance with his instructions and his oath”) quoting Adams v. Texas, 448
U.S. 38, 45, 100 S. Ct. 2521, 65 L. Ed. 2d 581 (1980)).
13
¶39. Although the four jurors in question indicated on their questionnaires that they could
not impose the death penalty under any circumstances, Pitchford points out that, during voir
dire, defense counsel asked these prospective jurors some variation of “could you consider
both, not could you vote for one. Could you consider, think about both and make a decision
as to which one you wanted to vote for,” to which they answered in the affirmative.
However, the trial judge later undertook voir dire of those four panel members and asked
them “Can you consider the death penalty or would you not be able to consider it,” to which
each of the four replied that they could not consider it.
¶40. We find Morgan to be directly on point. The trial judge did not commit error by
striking for cause the jurors who indicated they could not impose the death penalty.
C. Whether the Trial Court Erred in Precluding the Defense From
Questioning Prospective Jurors Concerning Their Ability to
Consider Mitigating Evidence.
¶41. Pitchford next argues that the trial court improperly prevented him from asking
potential jurors whether they would consider specific mitigating factors. During voir dire,
the following exchange occurred:
DEFENSE: . . . Mr. Pitchford is 19, just turned 19, I think, or maybe 20. I’m
getting old. Does anybody here who thinks what happened to
you, if anything, or during your lifetime before you got charged
with a crime should not count in deciding whether you receive
life or death?
STATE: Your Honor, I object again because we are getting into the jury
deciding on mitigators and aggravators at this point. And this is
definitely not proper.
¶42. The trial judge informed Pitchford’s counsel that, while he would be allowed to ask
questions as to whether the jurors would be able to consider the mitigating factors presented
14
by the court, he would not be allowed to get into specifics. Pitchford’s counsel responded,
“I certainly don’t intend to do that,” and continued his voir dire of the jury.
¶43. Voir dire of a jury “is conducted under the supervision of the court, and a great deal
must, of necessity, be left to its sound discretion.” 21 Pitchford now argues that it was error
for the trial court to preclude his questions concerning the kinds of mitigation evidence he
planned to introduce.
¶44. Pitchford cites no authority directly supporting this proposition. He cites Abdul-Kabir
v. Quarterman,22 Penry v. Johnson,23 Tennard v. Drake,24 and Smith v. Texas,25 each of
which is inapposite. Although these cases discuss the type of mitigation evidence that may
be presented to a jury and how it should be instructed for sentencing, they say nothing of the
defendant’s right to conduct voir dire.
¶45. In Trevino v. Johnson,26 the United States Court of Appeals for the Fifth Circuit
addressed an argument almost identical to the one presented by Pitchford. The Court stated:
Trevino . . . argues that the trial court erred in refusing to allow him to inquire
during voir dire whether three prospective jurors were able to consider youth
as a potentially mitigating factor. Trevino contends that youth is a "relevant
mitigating factor of great weight," Eddings v. Oklahoma, 455 U.S. 104, 116,
102 S. Ct. 869, 71 L. Ed. 2d 1 (1982), and that under Morgan v. Illinois, 504
U.S. 719, 112 S. Ct. 2222, 119 L. Ed. 2d 492 (1992), the trial court's refusal
21
Foster v. State, 639 So. 2d 1263, 1274 (Miss. 1994) (quoting Morgan, 504 U.S. at 729).
22
550 U.S. 233, 127 S. Ct. 1654, 167 L. Ed. 2d 585 (2007).
23
532 U.S. 782, 121 S. Ct. 1910, 150 L. Ed. 2d 9 (2001).
24
542 U.S. 274, 124 S. Ct. 2562, 159 L. Ed. 2d 384 (2004).
25
550 U.S. 297, 127 S. Ct. 1686, 167 L .Ed. 2d 632 (2007).
26
168 F.3d 173, 182-83 (5th Cir. 1999).
15
to allow him to question the jurors regarding youth violated his due process
rights.
...
This circuit has previously stated that Morgan only "involves the narrow
question of whether, in a capital case, jurors must be asked whether they would
automatically impose the death penalty upon conviction of the defendant."
United States v. Greer, 968 F.2d 433, 437 n.7 (5th Cir.1992) (internal
quotation marks omitted); see also United States v. McVeigh, 153 F.3d 1166,
1208 (10th Cir.1998) ("[W]e have held that Morgan does not require a court
to allow questions regarding how a juror would vote during the penalty phase
if presented with specific mitigating factors. Other courts have issued similar
rulings, holding that Morgan does not require questioning about specific
mitigating or aggravating factors.") (citation omitted); United States v.
McCullah, 76 F.3d 1087, 1113 (10th Cir.1996) (finding that Morgan only
requires questioning during voir dire regarding whether jurors would
automatically impose the death penalty, and it does not require specific
questioning regarding mitigating factors), cert. denied, 520 U.S. 1213, 117 S.
Ct. 1699, 137 L. Ed. 2d 825 (1997); United States v. Tipton, 90 F.3d 861, 879
(4th Cir. 1996) (finding it was not an abuse of the trial court's discretion to
refuse to allow detailed questioning during voir dire concerning specific
mitigating factors), cert. denied, 520 U.S. 1253, 117 S. Ct. 2414, 138 L. Ed.
2d 179 (1997), and cert. denied, 520 U.S. 1253, 117 S. Ct. 2414, 138 L. Ed. 2d
179 (1997), and cert. denied, 520 U.S. 1253, 117 S. Ct. 2414, 138 L. Ed. 2d
179 (1997). After applying the AEDPA-mandated standard of review to these
state-court findings and conclusions, we cannot say that Trevino has made a
substantial showing of the denial of a constitutional right on this issue. We
therefore decline to issue Trevino a [certificate of appealability] on this issue.27
¶46. We agree with this interpretation of Morgan, that is, a trial court is not required to
allow questions regarding how a juror would vote during the penalty phase, if presented with
specific mitigating factors. Thus, we find no merit in this assignment of error.
II. WHETHER THE TRIAL COURT DENIED DEFENDANT HIS
CONSTITUTIONAL RIGHT TO PRESENT A FULL, COMPLETE AND
ADEQUATELY DEVELOPED DEFENSE AND/OR TO HAVE HIS COUNSEL
RENDER CONSTITUTIONALLY EFFECTIVE ASSISTANCE IN DOING SO
27
Id.
16
¶47. Under this assignment of error, Pitchford argues he should have been granted
continuances, and that the trial court erred in refusing to delay the sentencing proceedings
so that a necessary mitigation witness could be present to testify.
A. Continuances
¶48. We use an abuse-of-discretion standard in reviewing a trial court’s decision to grant,
or refuse to grant, a continuance.28 We will reverse a trial court’s decision only where
manifest injustice would result.29
January 19, 2006, 30 request for continuance – ineffective assistance of counsel
¶49. In March, 2004, the trial court appointed Ray Baum to represent Pitchford. Ray
Carter joined the defense team in June 2005. The trial, which originally was set for July 13,
2005, was rescheduled to begin on January 9, 2006, and then continued again to begin on
February 6, 2006.
¶50. Pitchford filed a motion for yet another continuance, alleging inter alia that his
attorneys needed still more time to interview members of his family who lived in California
as possible mitigation witnesses. Pitchford’s counsel argued they needed more time to
analyze his psychiatric evaluation, which had been performed at the Mississippi State
Hospital in Whitfield. On January 19, 2006, the trial court denied the motion.
¶51. Pitchford now argues that his failure to obtain the continuance caused his counsel to
render ineffective assistance of counsel throughout the trial. He argues that “the result of the
28
Stack v. State, 860 So. 2d 687, 691-92 (Miss. 2003).
29
Simmons v. State, 805 So. 2d 452, 484 (Miss. 2002).
30
The transcript erroneously labels this hearing as having occurred on January 9, 2006.
17
denial of the continuance comes in the cumulative effect of numerous lesser weaknesses that
an attorney would have if he had not been required by erroneous trial court rulings to make
Hobson’s choices about how to allocate his preparation.” Specifically, he claims his failure
to obtain a continuance resulted in the following instances of ineffective trial counsel: (1)
his counsel was unprepared to begin his opening statement; (2) his counsel was disorganized
at the guilt-phase jury-instruction conference; (3) his counsel failed to object to leading
questions by the State. Pitchford also argues that, as a result of the lack of the continuance,
he was unable to have his own expert analyze a court-ordered psychiatric evaluation from
the Mississippi State Hospital at Whitfield, and his counsel was unable to interview witnesses
from his paternal family in California. He claims these family members might have been
able to contribute to his mitigation defense.
¶52. Pitchford was represented at trial by three attorneys: Ray Baum, Ray Charles Carter,
and Alison Steiner. Carter and Steiner continue to represent Pitchford on this direct appeal.
This Court has stated that “it is absurd to fantasize that [a] lawyer might effectively or
ethically litigate the issue of his own ineffectiveness.” 31 Also, because most of these claims
of ineffective assistance of counsel necessarily will involve evidence outside the record, they
are more appropriately presented in a petition for post-conviction relief.
¶53. So for these reasons, we decline to address Pitchford’s issues involving ineffective
assistance of counsel, but hold that he may bring them in a properly-filed petition for post-
conviction relief. However, without foreclosing Pitchford’s right to raise the issue of
31
Lynch v. State, 951 So. 2d 549, 551-52 (Miss. 2007) (quoting Read v. State, 430 So. 2d
832, 838 (Miss. 1982).
18
ineffective assistance of counsel in a subsequent post-conviction-relief proceeding, we shall
address Pitchford’s claim that the trial judge abused his discretion by denying the January
19 motion for a continuance.
¶54. As of the trial date, Ray Baum had served as Pitchford’s counsel for more than a year,
and Ray Carter had been working on the case for more than eight months. In cases where
counsel had even less time to prepare, we found no error on similar claims.32 So we hold
today that the trial judge did not abuse his discretion by denying Pitchford’s motion for
continuance.
Unavailable mitigation expert
¶55. Pitchford’s second argument is that, even though no continuance was requested, the
trial court committed plain error by failing to continue the beginning of the penalty phase.
Prior to the start of the penalty phase of the trial, Pitchford retained the services of a mental-
health expert, Dr. Rahn Bailey. However, Dr. Bailey, who was under subpoena for a trial
in Texas, was not available to testify at the start of the penalty phase on February 8, 2006.
Counsel for Pitchford contacted the trial judge and advised him of the scheduling conflict.
The trial judge called the court in Texas and confirmed that Dr. Bailey was under subpoena
there. The following morning, Pitchford’s counsel advised the court that Dr. Bailey was
available but that he would not be called to testify.
¶56. Pitchford now argues that “although there was no express request for a continuance
made . . . the trial court was made fully aware that the Defendant desired to present the
testimony of Dr. Rahn Bailey,” and the failure of the trial court to continue the trial amounted
32
See e.g. Ruffin v. State, 992 So. 2d 1165, 1175 (Miss. 2008).
19
to plain error because of the prejudice that Pitchford’s defense suffered from the lack Dr.
Bailey’s testimony.
¶57. This argument is frivolous and without merit. The trial court cannot be held to err on
an issue not presented to it for decision.33 Counsel not only failed to ask for a continuance,
he advised the trial court that the witness was available, but would not be called to testify.
A trial court has no duty to sua sponte second-guess decisions by defense counsel. This issue
has no merit.
III. PROSECUTORIAL MISCONDUCT
¶58. Pitchford next claims the prosecutor engaged in misconduct that deprived him of his
rights under the Fifth, Sixth, Eighth, and Fourteenth Amendments to the United States
Constitution and Article 3, Sections 14, 26, and 28 of the Mississippi Constitution. This
Court has stated that, “Where prosecutorial misconduct endangers the fairness of a trial and
the impartial administration of justice, reversal must follow.” 34
¶59. Pitchford argues the prosecutor intentionally violated the Rules of Evidence in order
to present misleading or inflammatory evidence to the jury, and made improper appeals to
the jury at both the guilt and sentencing phases of the trial. Pitchford also claims the
prosecutor used near-leading or misleading questions on its own witnesses, coached
witnesses, interjected information into the responses from witnesses, and rested its
33
McCurdy v. State, 511 So. 2d 148, 150 (Miss. 1987).
34
Goodin v. State, 787 So. 2d 639, 645 (Miss. 2001) (citing Acevedo v. State, 467 So. 2d 220,
226 (Miss. 1985)).
20
arguments on facts not in evidence or inferences too attenuated from the facts which were
in evidence.
¶60. The State argues that Pitchford did not object to these alleged improprieties at trial or
in his motion for a new trial. Thus, the State argues, the claims are procedurally barred on
direct appeal. While Pitchford admits no contemporaneous objections were made, he points
out that his motion for a new trial included the following assignment of error:
The Court allowed the district attorney to improperly argue during the penalty
phase closing that their job was to go back there and vote for the death over
defendant’s objection.
¶61. Even had he not included this item in his motion for a new trial, Pitchford clearly
objected to the prosecutor’s “in the box” comments at trial. Pitchford also objected at trial
to the prosecutor’s comments that Walter Davis and his son may have been killed if they had
arrived at the store any earlier; the prosecutor’s questioning of Dominique Hogan as to the
nature of her relationship with Pitchford; and the prosecutor’s questioning of Pitchford’s
sister about the “problems he got in at school” and the time frame of his father’s illness. So
Pitchford properly preserved these allegations of misconduct for appeal.
¶62. Pitchford argues the prosecutor misrepresented the facts in closing argument by
suggesting that Bullins voluntarily turned himself in and confessed, and that Pitchford was
the man who fired the shots which killed the decedent. Specifically, the prosecutor stated
to the jury: “[Bullins] went to the sheriff’s department the same morning of the murder and
he admitted it.” According to the record, however, Investigator Conley testified only that he
“talked to” Bullins. While arguably inconsistent with the facts, the prosecutor’s statement
did not rise to the level necessary to “[endanger] the fairness of [the] trial and the impartial
21
administration of justice,” as required by Goodin.35 Thus, this assignment of error has no
merit.
¶63. Pitchford also complains that the prosecutor improperly stated during closing
arguments that
[Pitchford and Bullins] both shot [Britt]. It doesn’t matter which one shot with
which gun. That hasn’t got anything to do with this case. I think because it
was his .22, he probably had it but that doesn’t matter. All we have got to
prove is that they went in that store together to rob it and they killed him.
¶64. Pitchford claims because the statement – he “probably” had the .22 – has no
evidentiary basis in the record, this constitutes improper vouching for snitch witnesses. But
the trial judge properly instructed the jury as to accomplice liability, and we find the
prosecutor’s statement was not outside his theory of accomplice liability. So this allegation
of misconduct has no merit.
¶65. Pitchford next points out that the prosecutor stepped outside the bounds of evidence
when he argued that the gun found in Pitchford’s car was Britt’s gun. But Marvin Fullwood
testified that he had given Britt that exact gun approximately two years before the trial. Also,
Investigator Conley testified that he had recovered the same gun from Pitchford’s car, so the
prosecutor’s statement was not outside the bounds of evidence, and this allegation of
misconduct has no merit.
¶66. Pitchford argues he is entitled to a reversal of his conviction because the prosecutor
proclaimed to the jury during closing argument that Pitchford was a“habitual liar.” Pitchford
argues the statement impermissibly spoke to his general character and was an indirect
35
447 So. 2d at 645.
22
comment on his failure to testify, violating his Fifth-Amendment rights. In its brief, the State
responds:
During his closing argument, Pitchford . . . attacked the prosecution witnesses
extensively as liars and [offered] testimony they could not be trusted or relied
upon. The defense attack on the honesty of the prosecution witnesses invited
the response tendered by the prosecution and was not error.
The State’s “if Pitchford did it, we can do it” argument has no merit.
¶67. First, regardless of whether either party “opened the door,” Pitchford’s counsel had
every right to attack and question the credibility of witnesses who had testified for the
prosecution. Pitchford did not testify at trial, and had he not given statements to police on
November 7 and 8, 2004, Pitchford’s argument might indeed have merit. However, because
his statements to police were before the jury, the prosecutor’s attack on Pitchford’s
credibility was not inappropriate.
¶68. Pitchford argues the prosecutor should not have alluded to the possibility that
Pitchford might have killed Walter Davis and his son, had they arrived on the scene right
after the murder while Pitchford was still in the store. Pitchford characterizes this
speculation as an attempt to incite prejudice and fear in the jury.
¶69. According to the record, the following exchange took place during closing argument:
Mr. Evans: The Davis’s walked in there at 7:27. We would of had two
more dead people –
Mr. Carter: Your Honor, I object to that.
Mr. Evans: – if he had walked in there earlier.
Mr. Carter: Your Honor, how can – he cannot say that.
Mr. Evans: Your Honor, that is something that the jury can clearly see from
the facts.
The Court: He can make things that are reasonable inferences and has a
right to comment on the evidence as he sees a reasonable
23
inference to be. And it’s up to the jury to determine the facts.
So I’ll overrule the objection.
¶70. This Court has held that the closing arguments may include inferences drawn from the
evidence presented.36 However, the fact that a particular inference may be drawn from the
evidence does not per se suggest that the inferences properly may be presented to the jury.
Rubenstein does not stand for the proposition that a prosecutor may present inappropriate
inferences, even those that fairly may be drawn from the evidence.
¶71. While one fairly might infer from the evidence in this case that – had they arrived
earlier – Walter Davis and his son might have been killed, that inference certainly is not
admissible in the prosecution of Pitchford for the murder of Reuben Britt. After-the-fact
speculation as to whether Pitchford might or might not have committed additional murders
is no evidence whatsoever in the prosecution of this case. The trial judge should have
sustained the objection to the prosecutor’s inappropriate statement. However, in the context
of this case, with the overwhelming evidence of guilt presented to the jury, we find this
inappropriate statement, and the trial judge’s incorrect ruling, to be harmless error. This
Court will deem harmless an error where “the same result would have been reached had [it]
not existed.” 37
¶72. Pitchford complains that, during the penalty phase, the prosecutor asked Dominique
Hogan, the mother of Pitchford’s child: “Isn’t it a fact that y’all were doing a lot of fighting?”
Hogan answered in the negative. The prosecutor then asked, “Were y’all going with other
36
Rubenstein v. State, 941 So. 2d 735, 779 (Miss. 2006).
37
Tate v. State, 912 So. 2d 919, 926 (Miss. 2005) (quoting Burnside v. State, 882 So. 2d
212, 216 (Miss. 2004)).
24
people at the time?” Again, Hogan answered in the negative. Pitchford’s counsel objected,
stating the prosecution had no basis for asking such questions. The trial judge required the
prosecutor to demonstrate a good-faith basis for asking the questions. The prosecutor
produced Pitchford’s psychological evaluation, which provided the good-faith basis for the
question. Because the prosecutor demonstrated a good-faith basis for the questions, and
further, because Pitchford shows no endangerment of the trial’s fairness as required by
Goodin,38 this allegation of misconduct has no merit.
¶73. The prosecutor cross-examined Pitchford’s sister and mother about Pitchford’s
behavior as a child and youth. Pitchford complains that, during the cross-examination they
testified to prior bad acts. However, his sister testified on direct that she would receive
phone calls from teachers when he “got in trouble” at school. Furthermore, his mother
testified that, after his father’s death, Pitchford “started having problems at school.” Both
witnesses opened the door as to the nature of the problems Pitchford had at school, so this
allegation of misconduct has no merit.
¶74. Pitchford claims that the prosecutor – when questioning his sister about their father’s
death – made inappropriate, inflammatory remarks, as follows:
Q: Now, you said it was hard on him because his daddy only had about a
month before he died.
A: Yeah. Yes. Yes.
Q: Okay. At least he did have a month, didn't he?
A: Yes, he did.
Q: That is better than somebody just being murdered and their family not
–
38
787 So. 2d at 645.
25
Mr. Carter: Your Honor, that is an absolutely improper question and he
knows it.
The Court: I'll overrule the objection. . . .
Q: Him having about a month before his daddy died is a lot better than a
family that doesn't have any time, that family member is just shot down
and murdered, isn't it?
A: I agree.
¶75. Pitchford cites numerous cases in support of his argument that these statements had
an inflammatory effect. The crux of their holdings can be summed up as follows:
There can be no graver proceeding than when a human being is put on trial for
his or her life. The right to a fair trial includes the right to a verdict based on
the evidence and not extraneous prejudicial happenings in and around the
courtroom.39
¶76. The State responds to this issue minimally, arguing only that Pitchford’s objection at
trial was too general. We find the prosecutor’s question was an improper attempt to incite
the jurors’ emotions and anger. It had no proper basis, and the objection to the question
should have been sustained. However, we find the answer to the question was both obvious
and already known to the jurors. Thus, we find the error was harmless.
¶77. Pitchford next claims the prosecutor instructed the jury to consider the “heinous
atrocious, and cruel” aggravator during the sentencing phase without the proper limiting
instruction or evidentiary support. Mississippi Code Section 99-19-101(5)(h) allows the
heinous, atrocious, or cruel nature of the crime to be considered as an aggravating
circumstance.40 The complained-of language during the prosecution’s closing is as follows:
39
Fuselier v. State, 468 So. 2d 45, 53 (Miss. 1985).
40
Miss. Code Ann. § 99-19-105 (5)(h) (Rev. 2007).
26
Y’all saw the autopsy photographs. There is not much of a place that you
could touch on his body that didn’t have some gunshot wound on it. Brutal.
This is the ultimate crime. This is the type of crime that the death penalty is
for. This is the type of person that the death penalty is for, somebody that
could commit a crime like that.
The prosecutor made this statement in the course of describing the events surrounding the
crime, as they happened. Immediately prior to these statements, the prosecutor described
Pitchford’s previously-thwarted attempt to rob the store, and immediately following these
statements, he discussed testimony which had revealed that the decedent had pleaded for
mercy before being killed. We find the prosecutor’s statement was not a call for the jury to
consider the heinous, atrocious, and cruel nature of the crime as an aggravating factor, but
rather was part of the “story” of the crime as the State perceived it. So this allegation of
misconduct has no merit.
¶78. Pitchford claims the prosecutor instructed the jury that they were “in the box” to give
Pitchford the death penalty. Pitchford mischaracterizes the prosecutor’s statements during
closing argument. The complained-of exchange is as follows:
I am not going to mince words with you up here. I am going to tell you
just like I told you on voir dire. I am asking for the death penalty because the
ultimate crime deserves the ultimate punishment. That is what we have got
here.
I am not going to sit up here and quote the Bible. . . . I think it is absurd
to sit up here and try to confuse y’all with that. Y’all know what you are here
for. The law is clear in this state. The death penalty is an appropriate
punishment.
If you’ll remember, when y’all were sitting out here, I asked everybody
in the panel –
Mr. Carter: Your Honor, I object. They are not here to give death. They are
here to deliberate and go back there and make a decision on life
without possibility of parole or death. They are not here for
death. . . .To say that is improper.
27
The Court: Mr. Evans did not make that comment. So I’ll allow him to
proceed with his argument. Overrule the objection.
....
As I told y’all when y’all were sitting out here, the important question
that I asked y’all about that was this. And if any of y’all had answered this
differently, you would not be here because this is a case where the death
penalty is an appropriate punishment. If the law authorizes imposition of the
death penalty and the facts justify it, could you give the death penalty? And
the only ones that answered that they couldn’t are gone. They are not here
today. The law authorizes it because the judge has instructed you that the law
authorizes it. The facts justify it because you have heard the facts. You have
heard the testimony. You’ve seen the evidence. . . .The facts justify the death
penalty in this case.
These closing remarks, read in context, clearly demonstrate that the prosecutor did not
instruct the jury that they were there only to give the death penalty. Instead, he used his
closing argument to persuade the jurors that -- from the prospective of the State -- the facts
and the law together justified imposition of the death penalty, and each of the jurors had
indicated that, in an appropriate case, they could impose the death penalty. So this allegation
of prosecutorial misconduct has no merit.
¶79. Pitchford next claims the prosecutors “skirted their ethical obligations to see that the
defendant [was] accorded procedural justice,” and he claims such prosecutorial misconduct
is incurably prejudicial and requires reversal of his sentence. However, as previously stated,
given the overwhelming evidence of guilt, the statements we find inappropriate were
harmless. Thus, this issue has no merit.
IV. IMPROPER DISPLAYS OF EMOTION FROM NONTESTIFYING
AUDIENCE MEMBERS
28
¶80. Pitchford’s next assignment of error is that the jury was improperly influenced by
displays of emotion from the victim’s family. He claims two incidents served to prejudice
his defense.
¶81. The first incident occurred following the State’s direct examination of James
Hathcock. Pitchford’s counsel approached the bench and objected, claiming “family
members are in the back of the courtroom crying out loud, loud enough for everybody in the
courtroom to hear.” The trial judge stated, “There have been no outbursts of any kind . . . .
I have heard some sniffling going on . . . ,” which he compared to sniffling as if one had a
cold. Pitchford’s counsel concluded the discussion with: “Well, Your Honor, we would just
ask if it becomes any worse than it is that the Court excuse the jury temporarily and just tell
the family that they should control it to the extent they can.”
¶82. The second incident occurred during the penalty phase of the trial. Defense counsel
approached the bench and informed the trial judge that some members of the audience were
talking during questioning. Specifically, defense counsel claimed that – after he objected to
a question as improper – someone in the audience said “no, it is not.” The trial judge said
he did not hear anything but nevertheless admonished members of the audience to refrain
from commenting or making any noise.
¶83. Pitchford also makes a vague argument, citing no specifics, that the State made
inflammatory appeals to the passion of the jury. We find the incidents – to the extent they
29
are documented in the record – were minor. Furthermore, Pitchford failed to request a
curative instruction to the jury.41 Accordingly, we find no error with this issue.
V. PERMITTING THE JURY TO HEAR INFORMANT TESTIMONY
¶84. Pitchford’s next argues the trial court improperly allowed the testimony of James
Hathcock and Dantron Mitchell, both of whom had been incarcerated with Pitchford.
Alternatively, he argues that the trial court erred by failing to give a requested cautionary
instruction concerning informant testimony.
¶85. Hathcock and Mitchell both testified that Pitchford had confessed his role in the
murder. They also denied receiving any promises or hope of reward in exchange for their
testimony, although charges against Hathcock eventually were dropped.42
Testimony
¶86. Pitchford argues the testimony of the jailhouse “snitches” should have been excluded
because “evidence from these witnesses was so unprobative and so prejudicial that Miss. R.
Evid. 403[43 ] require[d] its exclusion.” The State responds that Pitchford waived this issue
41
See e.g., Bell v. State, 631 So. 2d 817 (Miss. 1994) (no prejudice after mother of victim
shouted “He cold blooded killed my child” and judge gave curative instruction).
42
Q: Do you know what happened to those charges or that case? You got any
idea what happened on that?
A: I was told it was dropped.
Q: Okay. Who told you that?
A: Justin. The guy. It was him I was with. He stole $3,000 from his daddy.
He gave me 500 of it to shut my mouth and like an idiot, I took.
Q: That was dropped you said.
A: Yes, sir.
43
“Although relevant, evidence may be excluded if its probative value is substantially
outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by
considerations of undue delay, waste of time, or needless presentation of cumulative evidence.”
Miss. R. Evid. 403.
30
because he failed to raise it in the trial court. Pitchford responds that he did raise the issue
in the trial court by way of his pretrial motion to exclude the testimony as unreliable under
this Court’s holdings in McNeal v. State,44 and Dedeaux v. State.45 Pitchford states“the
weighing process required by Rule 403 is no different from that required under
McNeal/Dedeaux.” 46 We disagree.
¶87. The “reliability of testimony” is unrelated to Rule 403's balancing test. A completely
true statement may be excluded under Rule 403 if “its probative value is substantially
outweighed by the danger of unfair prejudice.” Although Pitchford did raise in the trial court
the issue of reliability, he did not raise a Rule 403 objection. Thus, the issue is procedurally
barred.47
Cautionary instruction
¶88. Pitchford next argues that the trial court erred by refusing to issue a cautionary
instruction. He requested the following instruction:
I instruct you that the law looks with suspicion and distrust on the testimony
of a witness who has acted as an informant for the government. The law
requires the jury to weigh testimony of an informant with great care and with
caution and with suspicion.
44
551 So. 2d 151 (Miss. 1989).
45
87 So. 664 (Miss. 1921).
46
McNeal and Dedeaux, while commenting on the unreliable nature of informant testimony,
particularly testimony given in exchange for a reduced sentence, do not provide for a weighing
process.
47
Walker v. State, 913 So. 2d 198, 227 (Miss. 2005) (a trial court will not be held in
error on a matter not presented to it for decision).
31
Although the trial court did not give the instruction requested by Pitchford, it did give the
following instruction:
The Court instructs the jury that the law looks with great suspicion and distrust
on the testimony of an alleged accomplice or informant. The law requires the
jury weigh the testimony of an alleged accomplice or informant with great
care, caution and suspicion.
Pitchford also requested, but was denied, the following instruction:
The Court instructs the jury that the testimony of an informant who provides
evidence against a defendant for pay (or other benefit), must be examined and
weighed by the jury with greater care than an ordinary witness. You the jury
must determine whether the informant’s testimony has been affected by
interest or prejudice against the defendant.
¶89. Pitchford argues the instruction given was deficient because it lumped accomplice and
informant testimony together and “ignored evidence before it that at least one informant had
received a benefit.” Indeed, this Court has not viewed informant testimony favorably.48
However, this Court has upheld the denial of a cautionary instruction based partly on the fact
that an informant did not receive any preferential treatment for his testimony.49 Still, where
the informant did receive a benefit, the jury should be instructed to regard such testimony
with “caution and suspicion.” 50
48
Gray v. State, 728 So. 2d 36, 72 (Miss. 1998).
49
Rubenstein v. State, 941 So. 2d 735, 767 (Miss. 2006); Manning v. State, 735 So. 2d 323,
335 (Miss. 1999).
50
Moore v. State, 787 So. 2d 1282, 1287-88 (Miss. 2001).
32
¶90. This Court has stated, “jury instructions are within the sound discretion of the trial
court.” 51 A court may refuse an instruction if it “is covered fairly elsewhere in the
instructions.” 52
¶91. We find Moore inapplicable to the facts of this case and, thus, no cautionary
instruction was necessary. Mitchell and Hathcock both testified that they were not promised,
and did not receive, any favorable treatment in exchange for their testimony.53 Pitchford
argues that Hathcock did receive a benefit, because his charges were dropped at a later date,
although there was no evidence that this was because of his testimony.
¶92. In any case, as required by Moore,54 the trial court granted a cautionary instruction
that advised the jury to view informant testimony with caution and suspicion. Thus, we find
no error.
VI. FAILURE TO GRANT A MISTRIAL AFTER WITNESS TESTIFIED TO
INADMISSABLE AND PREJUDICIAL MATTERS
¶93. Pitchford’s next assignment of error is that the trial court should have declared a
mistrial after a State witness improperly testified to prejudicial and improper matters during
cross-examination. As Pitchford’s counsel was cross-examining James Hathcock, who had
testified that Pitchford had confessed the crime to him in jail, the following occurred:
Q: Are you and Pitchford good friends? Were y’all good friends?
51
Rubenstein v. State, 941 So. 2d 735, 787 (Miss. 2006) (citing Goodin v. State, 787 So. 2d
639, 657 (Miss. 2001)).
52
Thorson v. State, 895 So. 2d 85 (Miss. 2004) (citing Heidel v. State, 587 So. 2d 835, 842
(Miss. 1991)).
53
Rubenstein, 941 So. 2d at 767.
54
787 So. 2d at 1286-288.
33
A: We lived close to each other for a little while.
Q: Did y’all become real good friends where you would tell him your
secrets?
A: Not really.
Q: Okay. And yet you want us to believe that he felt comfortable enough
with you to tell you that he killed somebody.
A: Well, he was selling me dope.
¶94. After this exchange, the jury was excused and Pitchford immediately moved for a
mistrial, which the trial court refused to grant. The State previously had disclosed to the
defense the fact that Pitchford had sold drugs to Hathcock. The trial judge instructed the jury
to totally disregard the statement and made each juror affirm that he or she would disregard
it.
¶95. A trial court “must declare a mistrial when there is an error in the proceedings
resulting in substantial and irreparable prejudice to the defendant’s case.” 55 This Court
reviews a trial court’s decision on a motion for a mistrial under an abuse-of-discretion
standard. 56
¶96. The witness’s statement was clearly improper. However, the trial court took
immediate and appropriate steps to cure any prejudicial effect. Furthermore, “it is presumed
that jurors follow the instructions of the court. To presume otherwise would be to render the
55
Parks v. State, 930 So. 2d 383, 386 (Miss. 2006).
56
Id.
34
jury system inoperable.” 57 Thus, we conclude that the trial court did not abuse its discretion
by failing to grant a mistrial.58
VII. FAILURE TO SUPPRESS EVIDENCE OBTAINED THROUGH A
WARRANTLESS SEARCH OF DEFENDANT’S AUTOMOBILE
¶97. Pitchford argues the .38 caliber revolver used in the shooting and later discovered in
his car should have been suppressed as the product of an illegal search. After receiving
information that Pitchford had been involved in a previous attempt to rob the store,
Investigator Conley went to Pitchford’s home, where, in the driveway, he spotted a vehicle
matching the description of a vehicle seen by witnesses at the store prior to the robbery. A
tag search revealed that the car was titled to Pitchford and his mother, Shirley Jackson.
¶98. Conley asked for permission to search the vehicle. Pitchford consented orally, but
refused to sign a consent form, while Jackson signed the consent form. Conley (the only
witness to testify at the suppression hearing) testified that, after Jackson had signed the
consent form, Pitchford stated “momma, it’s something in the car. It’s something in the car.”
Investigator Conley testified that Pitchford never withdrew his oral consent.
¶99. Investigator Conley searched the vehicle and discovered the revolver. Pitchford
moved the trial court to suppress the evidence, claiming he did not consent, and that the
search was illegal. The trial court denied Pitchford’s motion to suppress, finding that Conley
had consent to search the vehicle and, alternatively, that Investigator Conley properly could
have executed a warrantless search because of exigent circumstances.
57
Chase v. State, 645 So. 2d 829, 853 (Miss. 1994) (quoting Johnson v. State, 475 So. 2d
1136, 1142 (Miss. 1985)).
58
See, e.g., Yarborough v. State, 911 So. 2d 951, 956-58 (Miss. 2005).
35
¶100. Pitchford admits that he initially consented to the search. However, he claims he
withdrew his consent. As evidence of the withdrawal, he points to the following trial
testimony from Investigator Conley: “Pitchford was – when I went to search the car he
started getting kind of angry, so I had him detained and moved to the side of the house.”
This testimony came during the trial, but was not provided during the suppression hearing.
Also, Pitchford did not offer any proof concerning his demeanor during the search, as
described by Investigator Conley, nor did he inform the trial judge that Investigator Conley
had him detained and moved to the side of the house. We will not hold the trial judge in
error for failure to suppress evidence based on testimony and evidence not given at the
suppression hearing.
¶101. Both the United States and Mississippi Constitutions guarantee citizens the right to
be secure in their persons, houses, and possessions against unreasonable and warrantless
searches and seizures.59 “While the warrant clauses of these provisions express the general
rule that law enforcement must procure a warrant based on probable cause before engaging
in a search, the rule has several exceptions. . . . Voluntary consent eliminates the warrant
requirement.” 60
¶102. Pitchford argues that, because the search was conducted over his objection, the
evidence should be suppressed. He cites Randolph v. Georgia,61 in which in the United
59
U.S. Const. amend IV; Miss. Const. art. 3, § 23.
60
Moore v. State, 933 So. 2d 910 (Miss. 2006) (citing Morris v. State, 777 So. 2d 16, 26
(Miss. 2000)).
61
547 U.S. 103, 126 S. Ct. 1515, 164 L. Ed. 2d 208 (2006).
36
States Supreme Court held that a warrantless search of a shared dwelling, over the express
refusal of consent by a physically present resident, cannot be justified as reasonable as to
him, based on consent given to police by another resident. However, because we find
Pitchford consented to the search and never withdrew his consent, we need not explore the
issue addressed in Randolph.
¶103. We find this issue has no merit.
VIII. FAILURE TO SUPPRESS STATEMENTS GIVEN TO LAW ENFORCEMENT
AFTER DEFENDANT’S ARREST
¶104. In his eighth assignment of error, Pitchford asserts that the trial court should have
suppressed five statements he made to police officers after his arrest because the statements
were taken in violation of his Fifth, Sixth, and Fourteenth Amendment rights.
¶105. Following a pretrial hearing, the trial court denied Pitchford’s motion to suppress the
statements, stating: “The Court finds not only beyond a reasonable doubt but beyond any
doubt whatsoever that these statements were freely and voluntarily given.” Pitchford
renewed his objection to the introduction of his statements during trial, and the trial court
again overruled the objection.
¶106. A criminal “defendant may waive effectuation of [the right to remain silent and the
right to the presence of an attorney], provided the waiver is made voluntarily, knowingly and
intelligently.” 62 A criminal defendant who challenges the voluntariness of the waiver has a
62
Miranda v. Arizona, 384 U.S. 436, 444, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966).
37
due process right to a reliable judicial review of whether the confession was, in fact,
voluntarily given.63
¶107. The trial court’s duty is quite clear on this issue. A trial judge must review the totality
of the circumstances, and make a factual determination of whether the defendant
intelligently, knowingly, and voluntary waived his or her rights.64 Furthermore, the court
must determine whether, under the totality of the circumstances, the accused was adequately
warned.65 The long-standing rule in this state is that the burden of proving the voluntariness
of the confession is on the State.66
¶108. The officers who interrogated Pitchford testified he was offered no reward, and he was
not threatened or coerced, and that his statement was voluntarily given. Such testimony
creates a prima facie case of voluntariness.67 However, when the defendant produces
evidence that his waiver and confession were not voluntary, the State must produce evidence
to directly rebut the defendant’s claims.68
¶109. The standard of review for such a determination has been stated by this Court:
63
Powell v. State, 540 So. 2d 13 (Miss. 1989) (citing Jackson v. Denno, 378 U.S. 368, 377,
84 S. Ct. 1774, 1781, 12 L. Ed. 2d 908, 915 (1964)).
64
McGowan v. State, 706 So. 2d 231, 235 (Miss. 1997) (quoting Neal v. State, 451 So. 2d
743, 756 (Miss. 1984)).
65
Layne v. State, 542 So. 2d 237, 239 (Miss. 1989) (citing Jones v. State, 461 So. 2d 686,
696-97 (Miss. 1984) and Edwards v. Arizona, 451 U.S. 477, 486, 101 S. Ct. 1880, 1885, 68 L. Ed.
2d 378, 387 (1981)).
66
Lee v. State, 236 Miss. 716, 112 So. 2d 254, 256 (1959).
67
Id. at 255-256.
68
Id. at 256.
38
Findings by a trial judge that a defendant confessed voluntarily, and that such
confession is admissible are findings of fact. Such findings are treated as
findings of fact made by a trial judge sitting without a jury as in any other
context. As long as the trial judge applies the correct legal standards, his [or
her] decision will not be reversed on appeal unless it is manifestly in error, or
is contrary to the overwhelming weight of the evidence.69
¶110. Pitchford admits that the State obtained a written Miranda waiver prior to his first
statement. However, he insists he gave no waiver prior to his next three statements. This
Court has said:
Invocation of the right to counsel is a rigid, prophylactic rule which prohibits
further questioning until an attorney is made available or the defendant
knowingly and voluntarily waives his [or her] right. On the other hand,
invocation of the right to silence concerns whether an officer scrupulously
honors a defendant's right to cease questioning for a reasonable time, after
which questioning may resume if the defendant knowingly and voluntarily
waives this right.70
¶111. At the hearing on the motion to suppress, Investigator Conley provided the following
testimony concerning the three statements he took from Pitchford on November 7, 2004:
Q: I want to hand you back Exhibit 5 for identification and ask if you can
tell the Court what this is.
A: This is a Miranda Rights form.
Q: Is that the same rights form that you used to advise this defendant,
Terry Pitchford, of his rights?
A. Yes, sir.
...
69
Davis v. State, 551 So. 2d 165, 169 (Miss. 1989) (citing Frost v. State, 483 So. 2d 1345,
1350 (Miss.1986)).
70
Chamberlin v. State, 989 So. 2d 320, 334 (Miss. 2008) (citing Edwards v. Arizona, 451
U.S. 477, 101 S. Ct. 1880, 68 L. Ed. 2d 378 (1981), and Neal v. State, 451 So. 2d 743, 755 (Miss.
1984)).
39
Q: Did you advise him of all the rights on that form?
A: Yes, sir.
Q: Did it appear to you that he understood those rights?
A: Yes, sir.
Q: Why did it appear to you that he understood those rights?
A: Because he told me he did.
Q: And once you advised him of those rights, did he, in fact, sign that form
and the waiver stating that he did not wish to have an attorney and he
wanted to discuss the case with you?
A: Yes, sir.
...
Q: I believe he made three statements to you that day; is that correct?
A: Yes, sir.
Q: And on each of those taped statements before you started interviewing
him did you go back into the fact of asking him if he understood the
rights that you had previously advised him?
A: Yes, sir.
Q: And on each occasion did he tell you that he did?
A: Yes, sir.
Q: Did it appear to you that he did?
A: Yes, sir.
Q: On any of those statements did you use any pressure or coercion to get
him to talk to you?
A: No, sir.
40
Q: Did you hold out any hope of reward or make him any promises?
A: No, sir.
¶112. In light of Officer Conley’s testimony, we cannot say the trial court’s findings as to
these statements were in error or contrary to the overwhelming weight of the evidence, as
required by Davis.71 Pitchford argues that, because the officers did not obtain a written
waiver before Statements 2 and 3, there was no voluntary waiver. However, he cites no
authority supporting this proposition. The record supports the trial court’s findings that,
under the totality of the circumstances, Pitchford voluntarily and intelligently waived his
privilege against self-incrimination under Layne.72
¶113. Pitchford argues that, when he gave the first three statements on November 7,
Investigator Conley made several false representations regarding the evidence against him.
He admits that misrepresentations, in and of themselves, do not render his statements
involuntary. However, he contends that such misrepresentations were components of
improper psychological coercion leading up to the two statements he gave on November 8,
2004.
¶114. On November 8, Robert Jennings was scheduled to give Pitchford a polygraph exam.
Jennings testified that, “after a short period of time, [Pitchford] agreed to take a polygraph
test. So after Investigator Conley left out of the room, I, again, went back through the same
rights. I put a checkmark by each one marking [sic] sure that he understood it.” Pitchford
71
551 So. 2d at 169.
72
542 So. 2d at 239.
41
argues that, because he did not sign the waiver portion of the Miranda form, the waiver of
his rights was not voluntary and intelligent. Jennings testified that, after advising Pitchford
of his Miranda rights and reading the waiver and consent form to him, Pitchford “started
crying and he stated that he had been up all night praying.” Jennings reminded him that he
was there to take a polygraph test, and said “if you lie to us, we are going to know whether
or not you are lying about any of this.” At that point, Pitchford began to tell Jennings the
chain of events that occurred the morning Britt was murdered.
¶115. Officer Conley stepped into the room, at which point Pitchford “quit talking.” Conley
asked Pitchford, “do you understand what your rights are,” and Pitchford said “yes.” Conley
then asked, “is it your own free will to make a statement?” Pitchford again responded “yes.”
¶116. Jennings testified that, when Conley walked into the room, Pitchford reverted to his
previous story. He said, “It was kind of obvious that maybe he was not going to talk freely
in front of Conley.” After Conley stepped back out of the room, Pitchford “told the entire
chain of events, which we started from a week and a half prior to right on up to the actual
morning of the actual murder and robbery.”
¶117. Jennings testified that neither he nor Conley made threats to Pitchford or held out any
hope of reward in order to entice him to give the statements. He also testified that Pitchford
clearly understood his Miranda rights, and there was no indication that he did not freely and
voluntarily waive those rights.
¶118. Pitchford asserts that Jennings and Conley created the “‘perfect storm’ of
unconstitutional psychological coercion” by threatening to give Pitchford a polygraph exam,
misrepresenting the reliability of the polygraph test, and telling Pitchford that anything said
42
was just between the two of them (i.e., Pitchford and Jennings). However, the record reveals
that Pitchford volunteered to take the polygraph exam, and Jennings testified that he did not
threaten Pitchford through misrepresentations of the polygraph’s accuracy, but simply
indicated to him that the purpose of a polygraph exam -- which he agreed to take -- was to
determine truthfulness. Finally, Jennings admitted telling Pitchford that his confession was
“between you and I,” but only “after he had given the entire statement.”
¶119. Based on this record, we cannot say that the trial court’s ruling regarding these two
November 8 statements was against the overwhelming weight of the evidence. The court
said:
[I]t’s the understanding of the Court that the fifth statement was a continuation
of the fourth statement. It was just a situation where Officer Conley was no
longer in the room. I think it could have very easily been called statement
four. For whatever reason they were transcribed at different times and
considered five different statements. But nevertheless, he was properly
Mirandised, Mirandised [sic] before the statement was given.
¶120. The trial judge applied the correct legal standards, his decision was not manifestly in
error, and this issue has no merit.
IX. ADMISSION OF EVIDENCE CONCERNING PRIOR BAD ACTS
¶121. Pitchford next argues the State improperly introduced evidence of a prior crime.
Pitchford was indicted for two crimes: (1) capital murder of Rubin Britt in the course of
armed robbery, and (2) conspiracy to commit a crime arising out of his previously thwarted
attempt to rob Britt’s store. The charges were not consolidated into a multicount indictment,
nor were they consolidated into a single trial.
43
¶122. Citing Mississippi Rules of Evidence 404(b) and 403, Pitchford moved to exclude this
evidence. The Court allowed Pitchford’s counsel to reserve his objection. During a bench
conference at trial, the prosecutor requested a Rule 403 balancing test. The trial court ruled
as follows:
As I understand from the motions last week, approximately a week before this
alleged crime occurred there was a plan where Mr. Pitchford and others were
present intending to go in and rob the . . . Crossroads Grocery. And somehow
that plan was thwarted. And a week later the exact same crime was allegedly
committed. That seems to me to be under the heading of plans, preparation,
motive and the – and admissible as evidence. And so the Court finds that to
be highly probative. And the probative value would substantially outweigh
any prejudice. So that is testimony the Court will allow.
¶123. Pitchford concedes that evidence of other crimes may be admissible under Rule
404(b) in order to show intent, preparation, plan, or knowledge, or where necessary to tell
the complete story so as not to confuse the jury. However, Pitchford disputes the trial court’s
ruling that the probative value of the evidence outweighed its prejudicial effect.
¶124. The two evidentiary rules at issue are as follows:
Other Crimes, Wrongs, or Acts. Evidence of other crimes, wrongs, or acts
is not admissible to prove the character of a person in order to show that he
acted in conformity therewith. It may, however, be admissible for other
purposes such as proof of motive, opportunity, intent, preparation, plan,
knowledge, identity, or absence of mistake or accident.73
and
Although relevant, evidence may be excluded if its probative value is
substantially outweighed by the danger of unfair prejudice, confusion of the
issues, or misleading the jury, or by considerations of undue delay, waste of
time, or needless presentation of cumulative evidence.74
73
Miss. R. Evid 404(b) (emphasis added).
74
Miss. R. Evid. 403.
44
¶125. As an initial matter, we note that this Court has, in previous cases, erroneously
implied that Rule 404(b) exceptions are not subject to Rule 403 analysis.75 Today, we clarify
those cases and hold that Rule 404(b) exceptions are, indeed, subject to a Rule 403 balancing
test.
¶126. The trial court found the evidence admissible under Rule 404(b). Furthermore, the
trial court conducted a Rule 403 balancing test, and found “the probative value would
substantially outweigh any prejudice.”
¶127. A trial court “must exercise sound discretion in determining whether the proffered
evidence is relevant under Miss. R. Evid. 401 and even if relevant, whether such relevant
evidence is admissible applying the Miss. R. Evid. 403 criteria.” 76 Furthermore, this Court
has held “that the admission of evidence is well within the sound discretion of the trial court,
subject to reversal on appeal only if there be an abuse of that discretion.” 77
¶128. We cannot say the trial court abused its discretion in admitting the evidence under
Rules 404(b) and 403 . The trial judge should have stated that he found the evidence was
admissible because “the probative value [was] not substantially outweighed by the danger
of unfair prejudice,” 78 rather than “the probative value would substantially outweigh any
prejudice.” But even though the trial judge did not utter the “magic words” of Rule 403, he
75
See Jenkins v. State, 507 So. 2d 89, 92 (Miss. 1987), and its progeny, Burns v.
State, 729 So. 2d. 203, 222 (Miss. 1998) (quoting Parker v. State, 606 So. 2d 1132, 1136-37
(Miss. 1992), overruled on other grounds by Goff v. State, 14 So. 3d 625 (Miss. 2009)).
76
Eckman v. Moore, 876 So. 2d 975, 985 (Miss. 2004).
77
Id. at 984 (citations omitted).
78
Miss. R. Evid. 403.
45
clearly performed a Rule 403 analysis and thus did not abuse his discretion in admitting the
evidence,79 and this assignment of error has no merit.
X. EXPERT TESTIMONY
¶129. Pitchford’s next assignment of error is that the trial court erroneously allowed the jury
to hear opinions from Dr. Steven Hayne, who was tendered by the State – without objection
– as an expert in the field of forensic pathology. Dr. Hayne performed the autopsy on
Reuben Britt and testified he had been shot up to three times with a hand gun containing rat
shot, and five times with small-caliber rounds, consistent with a .22 caliber weapon. Dr.
Hayne also testified that it would not be inconsistent with the decedent’s wounds for him to
have been shot one to four times with the .38 caliber weapon recovered from Pitchford.
¶130. Relying on Edmonds v. State,80 Pitchford argues Dr. Hayne’s testimony concerning
the gunshot wound was outside his area of expertise. In Edmonds, Dr. Hayne provided
opinions outside his area of expertise when he testified that the trigger of the murder weapon
was likely pulled by two persons, rather than one.81
¶131. The issue before us today is distinguishable from Edmonds. Dr. Hayne is clearly
qualified to provide opinions as to the nature and number of wounds, and whether those
wounds are consistent with a .22 caliber cartridge or a .38 caliber ratshot cartridge. Such
79
See, e.g., Tate v. State, 20 So. 3d 623, 639 (Miss. 2009).
80
955 So. 2d 787 (Miss. 2007).
81
Id. at 792.
46
testimony falls squarely within the expertise of a forensic pathologist.82 We find this issue
has no merit.
¶132. The second argument Pitchford advances concerning Dr. Hayne is that he should not
have been allowed to testify at all because the State failed to show he was “qualified as an
expert by knowledge, skill, experience, training, or education.” Pitchford argues that Dr.
Hayne’s testimony should have been excluded because he incorrectly testified that he was
“the state pathologist for the Department of Public Safety Medical Examiner’s Office.”
Pitchford also argues, based on a newspaper article, that the number of autopsies performed
each year by Dr. Hayne “established that the methods he employed were not in conformity
with the accepted methods of the profession.”
¶133. Pitchford made no objection to these concerns at trial, and so they are procedurally
barred. And even if they weren’t, this Court recently addressed a nearly identical argument
in Wilson v. State 83 and stated:
Wilson argues that the record reveals Dr. Hayne testified that his position was
that of “Chief State Pathologist for the Department of Public Safety” for the
State of Mississippi. Wilson correctly points to the fact that there is no such
position in Mississippi. According to Wilson, this fact coupled with the
criticism Dr. Hayne has received from this Court, should lend itself under
heightened-scrutiny review to a finding by this Court that Wilson's due process
rights were violated by Dr. Hayne's testimony.
...
We agree with the State that Wilson cites no authority, other than newspaper
articles, to support his proposition that we should set aside Wilson's death
sentence merely because Dr. Hayne testified in this case. Thus, this Court is
82
See, e.g. Holland v. State, 705 So. 2d 307, 341 (Miss. 1997) (“Thus, in Mississippi, a
forensic pathologist may testify as to what produced the injuries in this case. . . .”).
83
21 So. 3d 572, 588-89 (Miss. 2009).
47
not duty-bound to discuss this issue based on a procedural bar. However,
procedural bar notwithstanding, we look briefly to this issue.
...
. . .Taken to its logical end, Wilson's argument would mean that this Court
should adopt a per se rule that testimony by Dr. Hayne in any case renders the
verdict in that case invalid. This argument is simply untenable. Any new
evidence that could be developed for the purpose of impeaching Dr. Hayne's
findings should be presented in later post-conviction-relief proceedings.
¶134. We find no merit in Pitchford’s challenge to Dr. Hayne’s qualifications or his
testimony in this case.
XI. JURY INSTRUCTIONS
¶135. Pitchford’s eleventh assignment of error is that the trial court erroneously excluded
several of his jury instructions and included several of the State’s jury instructions. This
Court has stated, “jury instructions are within the sound discretion of the trial court.” 84
¶136. Pitchford claims instructions D-9 and D-10 – both of which were cautionary
instructions concerning informant testimony – were erroneously excluded. We have
discussed these instructions in Issue V supra.
¶137. Pitchford also complains that the trial court refused his proposed instruction, D-30.
However, the record reveals that Pitchford’s counsel withdrew the instruction. We will not
hold the trial court in error for failing to give a withdrawn instruction.
¶138. Pitchford complains that the State’s proposed instructions S-1, S-2A, and S-3 – which
were given to the jury as Instructions 2, 3, and 4 – failed to give any guidance to the jury as
to what it should do if it failed to find any of the requisite elements of capital murder and
84
Rubenstein v. State, 941 So. 2d 735, 787 (Miss. 2006) (citing Goodin v. State, 787 So. 2d
639, 657 (Miss. 2001)).
48
armed robbery beyond a reasonable doubt. Instructions 2 and 4 both clearly stated that the
jury could not find Pitchford guilty if it did not find that he had committed every element of
the crimes beyond a reasonable doubt. Instruction 3 also provided that, in order for the jury
to find Pitchford guilty, it had to consider the evidence and find beyond a reasonable doubt
that he had committed the elements of the crime of robbery. The instructions at issue clearly
required the jury to find Pitchford guilty of each element of the crime, beyond a reasonable
doubt, so this assignment of error has no merit.
¶139. Pitchford next complains that the trial court improperly rejected his proposed
instruction D-18, which is as follows:
I instruct you that the law looks with suspicion and distrust on the testimony
of an alleged accomplice. The law requires the jury to weigh the testimony of
an alleged accomplice with great care and with caution and suspicion.
¶140. Jury Instruction 6, which was presented to the jury, is as follows:
The Court instructs the jury that the law looks with suspicion and distrust on
the testimony of an alleged accomplice or informant. The law requires the jury
to weight the testimony of an alleged accomplice or informant with great care,
caution and suspicion.
Pitchford complains that Instruction 6 included both accomplices and informants in the same
instruction. While it is true that “[a] defendant is entitled to have his theory of the case
presented in the jury instructions,” 85 the entitlement is limited. The court may refuse an
instruction if it “is covered fairly elsewhere in the instructions.” 86 The trial court was within
85
Thorson v. State, 895 So. 2d 85, 107 (Miss. 2004) (citing Heidel v. State, 587 So. 2d 835,
842 (Miss. 1991)).
86
Id.
49
its discretion in denying D-18 as being “fairly included elsewhere,” so this assignment of
error has no merit.
¶141. Pitchford also complains that his instruction D-34 was improperly denied by the trial
court. D-34, as proposed, is as follows:
Each fact which is essential to complete a set of circumstances necessary to
establish the defendant’s guilt must be proved beyond a reasonable doubt. In
other words, before an inference essential to establish guilt may be found to
have been proved beyond a reasonable doubt, each fact or circumstance on
which the inference necessarily rests must be proved beyond a reasonable
doubt.
¶142. The trial court denied this instruction as repetitive, saying, “I think this is like the third
time too that I have had this instruction . . . maybe not the exact wording, but it’s very close
to others that I’ve already looked at.” The judge continued: “The S-instructions [sic]
already telling them what they must prove. And unless the state has proved all those
elements then, beyond a reasonable doubt, they can’t convict on -- based on other
instructions already given.”
¶143. Pitchford argues that the instruction was necessary because Sandstrom v. Montana 87
requires that the jury not “make more than one leap from what is proven beyond a reasonable
doubt to what is inferred.” However, the Supreme Court clearly laid out the issue in
Sandstrom:
The question presented is whether, in a case in which intent is an element of
the crime charged, the jury instruction, “the law presumes that a person intends
the ordinary consequences of his voluntary acts,” violates the Fourteenth
87
442 U.S. 510, 99 S. Ct. 2450, 61 L. Ed. 2d 39 (1979).
50
Amendment's requirement that the State prove every element of a criminal
offense beyond a reasonable doubt.88
¶144. Unlike the issue in Sandstrom, no legal presumptions operate against Pitchford. So
Sandstrom is inapplicable and this assignment of error has no merit.
XII. MITIGATION-PHASE ARGUMENTS AND EVIDENCE
¶145. Pitchford’s next assignment of error is that the trial court improperly disallowed
mitigation evidence that would have allowed him to avoid the death penalty. Pitchford points
to three instances.
Effect of Pitchford’s death on his child
¶146. The defense attempted to solicit testimony from Dominique Hogan, the mother of
Pitchford’s two-year-old son, about the effect Pitchford’s death would have on the child. The
trial court sustained the State’s objection to the evidence.
¶147. This Court has held that “[e]vidence of a criminal defendant’s death and the effect it
would have on the life of his family is not relevant and is properly excluded since such
evidence does not impact on the defendant’s character, the record, or the circumstances of
the crime.” 89 Pitchford cites expansive language in Tennard v. Dretke 90 for the proposition
that the exclusion of this testimony violated his rights under the Eighth Amendment.
88
Id. at 512.
89
Jordan v. State, 786 So. 2d 987, 1020 (Miss. 2001) (citing Wilcher v. State, 697 So. 2d
1123, 1133-34 (Miss. 1997)).
90
542 U.S. 274, 124 S. Ct. 2562, 159 L. Ed. 2d 384 (2004).
51
Tennard held “[a] State cannot preclude the sentencer from considering ‘any relevant
mitigating evidence’ that the defendant proffers in support of a sentence less than death.” 91
¶148. However, as we held in Jordan, how the death of a defendant will impact others is
simply not relevant as mitigating evidence, and nothing in Tennard contradicts this. This
argument has no merit, and the trial judge committed no error by excluding this irrelevant
testimony.
Videotape
¶149. Pitchford also wanted to produce a “day-in-the-life” video of himself and his son
interacting. However, the jail where Pitchford was incarcerated awaiting trial refused to
allow Pitchford to produce the video, as it was against jail policy. Pitchford filed an ex-parte,
pretrial motion asking the Court to order the Sheriff to allow Pitchford to produce the video.
The trial judge refused to grant the motion, stating at the hearing, “I’m not going to override
the policy of the jail. If they want to voluntarily let you in and film that and then – I’d
consider it at the appropriate time whether I would admit something like that . . . . But I’m
not going to start micro-managing the jail and tell them how to they need to operate it.”
¶150. Pitchford argues now that “it was reversible error for the trial court to prevent this
evidence from being obtained.” However, Pitchford cites no authority for the proposition
that the trial judge was required to compel its production. Pitchford was advised by the court
that if he was able to make such a video, it would rule on the admissibility of such evidence
91
Id. at 285 (citations omitted) (emphasis added).
52
at the proper time. As Pitchford has presented no relevant authority in support of his
argument, it is dismissed.92
Family’s reaction to father’s death
¶151. Pitchford’s next argument is that the trial court erred by refusing to permit him to put
into context the mitigation evidence about how he reacted to his father’s illness and death.
He wanted to introduce information about how the family unit as a whole reacted by eliciting
testimony from his brother and mother. The proffered testimony from Pitchford’s brother,
which the trial court refused to allow, was as follows:
Q: Okay. How old were you when your dad died?
A: Ten years old.
Q: What effect – how did it make you feel?
A: I was just – I was lacking somebody in my life.
STATE: Objection, Your Honor. Your Honor, that has nothing to do
with what we are here for today. I have tried not to object but
this trial is not on what sentence their father should get. It is on
what sentence this defendant should get. I would ask that any
mitigation relate to this defendant and not something –
DEFENSE: It is going to relate, Your Honor. It is going to directly towards
the defendant.
STATE: He also asked how this witness felt, which has absolutely
nothing to do with the defendant.
THE COURT: I’ll sustain.
¶152. The proposed testimony from Pitchford’s mother, which the trial court refused to
allow, was as follows:
92
Brawner v. State, 947 So. 2d 254, 269 (Miss. 2006).
53
Q: And you remember when Terry’s father died; is that correct?
A: Yes.
Q: And how did that affect Terry? Before you answer that Miss Jackson,
what kind of relationship did Terry and his dad have?
A: They had a real close relationship. Terry’s a twin. And he had – it was
the last twin, the kids that he had. His daddy was 57 years old, and he
was so proud of those twin boys that he had had. He always said that
there is nowhere in the world that I can go that I can’t take my boys.
And when he was diagnosed with kidney cancer, Dr. Armstrong sent
him to Oxford, Mississippi. And he told me –
STATE: Your Honor, I object. What her and her husband –
DEFENSE: Your Honor –
STATE: – talked about is not relevant
DEFENSE: – mitigation –
STATE: May I finish my objection, Your Honor? What her and her
husband talked about is not relevant on mitigation for this
defendant.
...
COURT: Well, I think you just at this point need to restate your question.
And I mean – she was getting into an issue of how – what Dr.
Armstrong said and how it affected her and Mr. Jackson.
DEFENSE: Yes, sir. I understand that. I don’t think I asked that.
¶153. Because the testimony did not relate to “defendant’s character, the record, or the
circumstances of the crime,” 93 the trial court properly excluded it.
XIII. PRESENTATION OF IMPROPER MATTERS TO JURY DURING PENALTY
PHASE
93
Jordan, 786 So. 2d at 1020.
54
¶154. Pitchford’s next assignment of error is that the trial court erred by allowing improper
evidence during the penalty phase of the trial. He points to three instances of purported error.
Victim-impact testimony
¶155. Pitchford’s first argument is a general allegation, without a citation to the record, that
the court permitted the jury to hear victim-impact testimony beyond the scope allowed by the
law. Payne v. Tennesee abolished the per se rule against victim-impact testimony, subject
to the limitation that “[i]n the event that evidence is introduced that is so unduly prejudicial
that it renders the trial fundamentally unfair, the Due Process Clause of the Fourteenth
Amendment provides a mechanism for relief.” 94 Pitchford also cites Randall v. State 95 for
the proposition that members of the victim’s family were permitted to give evidence about
the decedent beyond that which “was relevant to the crime charged.” After reviewing
testimony of Nettie Britt (the decedent’s wife) and Kim Lindley (his daughter), we find
nothing to support Pitchford’s argument.
Hearsay
94
501 U.S. 808, 825, 111 S. Ct. 2597, 115 L. Ed. 2d 720 (1991).
95
806 So. 2d 185, 225 (Miss. 2001).
55
¶156. During the course of her testimony, Nettie Britt was allowed, over objection by the
defense,96 to read a letter 97 written by her great-niece. Pitchford argues that this violated his
Sixth Amendment right to confront a witness against him under Crawford v. Washington.98
¶157. The United States Supreme Court has not yet ruled on whether Crawford extends to
the sentencing phase of a trial. While we are aware of federal authority that the Sixth
Amendment does not apply at sentencing proceedings,99 this Court’s precedent holds
otherwise.100
96
MR. CARTER: Your Honor, I want to object to the reading of this letter. It essentially lets
somebody else testify who is not even here. And based on that and based on the fact that I haven’t
even seen the letter, I don’t know if anything is in there that is objectionable. . . .
[Mr. Carter was then allowed to read the letter]
97
The letter contained an affectionate description of her memories of “Uncle Bubba”
(Reuben Britt).
98
541 U.S. 36, 124 S .Ct. 1354, 158 L. Ed. 2d 177 (2004).
99
The Fifth Circuit concluded that the Sixth Amendment does not apply, even in capital
cases. U.S. v. Fields, 483 F.3d 313, 324-339 (5th Cir. 2007) (“we conclude that the Confrontation
Clause does not operate to bar the admission of testimony relevant only to a capital sentencing
authority’s selection decision”); U.S. v. Mitchell, 484 F.3d 762, 776 (5th Cir. 2007) (citing United
States v. Navarro, 169 F.3d 228, 236 (5th Cir.1999) ("[T]here is no Confrontation Clause right at
sentencing . . . . "). Other federal appellate courts considering this matter have reached the same
conclusion. See e.g., United States v. Stone, 432 F.3d 651, 654 (6th Cir. 2005) (“Because
Crawford was concerned only with testimonial evidence introduced at trial, Crawford does not
change our long-settled rule that the confrontation clause does not apply in sentencing
proceedings”); United States v. Luciano, 414 F.3d 174, 178-80 (1st Cir. 2005) (“Nothing in
Crawford requires us to alter our previous conclusion that there is no Sixth Amendment
Confrontation Clause right at sentencing.”); United States v. Martinez, 413 F.3d 239, 242-43 (2d
Cir. 2005) (“[Crawford] provides no basis to question prior Supreme Court decisions that expressly
approved the consideration of out-of-court statements at sentencing.”).
100
See Lanier v. State, 533 So. 2d 473, 488 (Miss. 1988) (state and federal constitutions
guarantee a defendant the right to confront witnesses against him during the sentencing phase of a
trial); see also Wilson v. State, 21 So. 3d 572, 586-87 (Miss. 2009).
56
¶158. The Confrontation Clause of the Sixth Amendment of the United States Constitution
provides that, “In all criminal prosecutions, the accused shall enjoy the right . . . to be
confronted with the witnesses against him.” 101 Article 3, Section 26 of the Mississippi
Constitution also provides that, “In all criminal prosecutions, the accused shall have a right
. . . to be confronted by the witnesses against him.”
¶159. In Lanier, the defendant was found guilty of capital murder.102 During the sentencing
phase, the trial court allowed the prosecution to cross-examine a defense witness with a letter
written by two doctors from the Mississippi State Hospital at Whitfield.103 The prosecutor
was not impeaching the witness with the letter, but rather was using the letter to “suggest that
others (more competent that the witness) disagreed with the witness’ conclusion -- for the
purpose of disproving the witnesses conclusion.” 104 The letter was neither entered into
evidence nor discussed during the guilt phase of the trial.105
¶160. On appeal, Lanier alleged that the use of the letter was a violation of the Confrontation
Clause of the Sixth Amendment.106 This Court held “[t]he right of a criminal defendant . .
. to cross examine the witnesses against him is at the heart of the confrontation clause.” 107
The Court further held that
101
U.S. Const. amend. VI.
102
Lanier, 533 So. 2d at 476.
103
Id. at 486.
104
Id. at 487.
105
Id.
106
Id.
107
Id. at 488.
57
the manner in which the State utilized the Whitfield letter afforded Lanier no
opportunity to cross-examine the conclusions of the several doctors. The letter
as previously noted was obviously violative of our hearsay rules. But, over
and about the fact that the letter was in the present case was inadmissible
hearsay, the confrontation clause acts so as to even restrict proof which under
our evidence rules would be classified as ‘admissible hearsay.’108
¶161. In this case, the trial court erred in allowing Nellie Britt to read the letter written by
her great-niece. Just as in Lanier, Pitchford had no opportunity to cross-examine the author
of the letter. However, after carefully reviewing the contents of the letter, in light of the
totality of the evidence presented during the sentencing phase, we conclude that the error was
harmless.
State arguments
¶162. Pitchford’s third argument is that the trial court improperly allowed the State to make
a statement. After the State had finished its case during the penalty phase, the following
occurred as the defense attempted to make an opening statement:
MR. CARTER: I want to make an opening before I do it. It should only
take two or three minutes. It is perfectly fine for Mr.
Evans to put his witness on the stand. I am not waiving
mine.
MR. EVANS: I am not waiving mine.
MR. CARTER: I have a right to do it. It will only take me two or three
minutes before I call a witness.
MR. EVANS: I am not waiving anything. It is my understanding that
nobody asked for an opening statement.
MR. CARTER: I am asking for one.
THE COURT: I’ll give you two minutes.
MR. EVANS: I’d like to do mine when he gets through then, Your
Honor.
MR. CARTER: You waived it.
MR. EVANS: No, I haven’t. I wasn’t given an opportunity.
...
108
Id. (citing Lafave and Israel, Criminal Procedure § 23.3(d,877) (1985).
58
THE COURT: If you give one, you are going to give it before he goes
forward with his. After the defense gives an opening
statement – well, I mean what I’m saying is procedurally
the State goes first on opening statements. So if the
defense wants to make an opening, then the State wants
to. Then you can.
MR. CARTER: Let me just say for the record that we object to Mr. Evans
at this point making an opening statement as he has
already called witnesses and put on his case and did not
make one. Now, he has a right to make a closing
statement, just as I do. But he does not have a right to
make an opening statement after he called all witnesses
and rested.
THE COURT: Well, it’s my opinion that, that when neither side asked
for an opening statement when this Court proceeded, I
considered that it was waived. I’ve never seen opening
statements at this phase of the trial.
MR. CARTER: I do them in every case, Your Honor.
THE COURT: Well, I have never seen it.
MR. EVANS: I’ve never seen it either.
THE COURT: So I considered it waived. But in fairness to the
prosecution, if the defense wishes to make one, then I
think the prosecution has a right to make one.
¶163. Pitchford argues that this was error and an abuse of discretion, citing McFadden v.
Mississippi State Board of Medical Licensure.109 In McFadden, which involved an appeal
from an administrative hearing, this Court stated:
Dr. McFadden also suggests that because there were no opening arguments in
this case this somehow contributed to the alleged denial of his due process
rights. First, it should be noted Dr. McFadden made no contemporaneous
objection to the Board's decision to waive opening statements. Second,
opening statements are often waived in cases where there is already a general
understanding of the issues to be addressed. Therefore, we conclude this
argument is without merit.110
109
735 So. 2d 145, 160 (Miss. 1999).
110
Id.
59
We find McFadden inapposite to this matter. As Pitchford has presented no relevant
authority in support of his argument, it is dismissed.111
XIV. WHETHER THE SENTENCING PHASE INSTRUCTIONS WERE
DEFICIENT.
¶164. Pitchford’s fourteenth assignment of error is that Sentencing Instruction 1 did not
expressly inform the jury that, even though it might find the aggravating factors outweighed
the mitigating circumstances, it could nevertheless sentence him to life. He claims the trial
court should not have refused his proposed instruction DS-7, which stated:
You may find that death is not warranted even if there are one or more
aggravating circumstances and not a single mitigating circumstance. You are
not required to find any mitigating circumstances in order to return a sentence
of life imprisonment. Nor does the finding of an aggravating circumstance,
require that you return a sentence of death. You, as a juror, always have the
option to sentence Pitchford to life imprisonment, whatever findings you may
make.
¶165. As stated above, “jury instructions are within the sound discretion of the trial
court.” 112 On review, jury instructions should be read together, taken as a whole, and no one
instruction should be taken out of context.113 A defendant is entitled to have his theory of the
case presented in the jury instructions.114 But the entitlement is limited, and the court may
111
Brawner v. State, 947 So. 2d 254, 269 (Miss. 2006).
112
Rubenstein v. State, 941 So. 2d 735, 787 (Miss. 2006) (citing Goodin v. State, 787 So. 2d
639, 657 (Miss. 2001)).
113
Thorson, 895 So. 2d at 107 (citing Heidel v. State, 587 So. 2d 835, 842 (Miss. 1991)).
114
Id.
60
refuse an instruction if it “incorrectly states the law, is covered fairly elsewhere in the
instructions, or is without foundation in the evidence.” 115
¶166. Sentencing Instruction 1 reads, in pertinent part:
[T]o return the death penalty, you must find the mitigating circumstances –
those which tend to warrant the less severe penalty of life imprisonment
without parole – do not outweigh the aggravating circumstances – which tend
to warrant the death penalty . . . . If none of the aggravating circumstances are
found to exist, the death penalty may not be imposed . . . . If one or both of the
. . . aggravating circumstances are found to exist beyond a reasonable doubt,
then you must consider whether there are mitigating circumstances which
outweigh the aggravating circumstances . . . . If you find from the evidence
that one or more of the . . . elements of mitigation exists, then you must
consider whether it (or they) outweigh(s) or overcome(s) any aggravating
circumstances you previously found. In the event that you find that the
mitigating circumstance[s] do not outweigh or overcome the aggravating
circumstance, you may impose the death sentence. Should you find the
mitigating circumstance(s) outweigh or overcome the aggravating
circumstances, you shall not impose the death sentence.
¶167. The instruction does not require the jury to impose the death penalty, even should it
find the aggravating factors outweighed the mitigating circumstances. The instruction
merely informs the jury that, should it find “the mitigating circumstance[s] do not outweigh
or overcome the aggravating circumstance, [it] may impose the death sentence.” The trial
court’s use of the term “may” – while not the strongest language to make the point – was
sufficient to convey to the jury that it was not required to impose the death penalty, even
should it find the aggravating factors outweighed those submitted in mitigation.
¶168. Furthermore, this Court has specifically held, “a defendant is not entitled to an
instruction that the jury may return a life sentence even if the aggravating circumstances
outweigh the mitigating circumstances or if they do not find any mitigating
115
Id.
61
circumstances.” 116 Based on the trial court’s instruction and our precedent, we find this
argument has no merit.
¶169. Pitchford also asserts that the trial court erred in failing to give four of his proposed
sentencing instructions, which are as follows:
DS-8: The Court instructs you, the jury, that if you cannot, within a reasonable
amount of time, agree as to punishment, the Court will dismiss you and impose
a sentence of imprisonment for life without the benefit of parole.
DS-13: I have previously read to you the aggravating circumstances which the
law permits you to consider. These are the only aggravating circumstances
you may consider. However before you may consider any of these factors you
must find that factor is established by evidence beyond a reasonable doubt.
DS-15: If you the Jury chooses [sic] to sentence Mr. Pitchford to life
imprisonment without the possibility of parole, Mr. Pitchford will never be
eligible for parole. Further, his life sentence without possibility of probation
or parole cannot be reduced or suspended.
¶170. The Supreme Court of the United States has said, “as a requirement of individualized
sentencing, a jury must have the opportunity to consider all evidence relevant to mitigation,
and that a state statute that permits a jury to consider any mitigating evidence comports with
that requirement.”117 The Court also pointed out that:
while the Constitution requires that a sentencing jury have discretion, it does
not mandate that discretion be unfettered; the States are free to determine the
manner in which a jury may consider mitigating evidence. So long as the
sentencer is not precluded from considering relevant mitigating evidence, a
capital sentencing statute cannot be said to impermissibly, much less
automatically, impose death.118
116
King v. State, 960 So. 2d 413, 442 (Miss. 2007) (citing Holland v. State, 705 So. 2d 307,
354 (Miss. 1997), Hansen v. State, 592 So. 2d 114, 150 (Miss. 1991), Goodin v. State, 787 So. 2d
639, 657 (Miss. 2001), Foster v. State, 639 So. 2d 1263, 1301 (Miss. 1994)).
117
Kansas v. Marsh, 548 U.S. 163, 171, 126 S. Ct. 2516, 165 L. Ed. 2d 429 (2006).
118
Id.
62
¶171. Pitchford correctly argues that DS-8 complies with the letter of Mississippi Code
Section 99-19-103.119 Still, the trial court was within its discretion to deny the instruction,
reasoning, “[t]his would indicate to the jury that a certain deadline was going to be set for
them and after that they couldn’t – that the case would be taken away from them.” We will
not hold the trial court in error for refusing the instruction.
¶172. The trial court refused DS-13 as cumulative, stating,
[The jury] has already been instructed that they are cautioned not to be swayed
by, among other things, prejudice. . . . [The jury instruction] also tells them
what factors they have to use. And so I don’t think they need to be told what
factors they don’t have to use since they have already been told which factors
they do have to use.
¶173. The trial court was within its discretion to deny DS-13 as “covered fairly elsewhere”
under Thorson.120
¶174. As to DS-15, the trial court held: “S-1A already tells them that it’s either life without
parole or death penalty. So [the jury] is aware of that. And I don’t see that DS-15 needs to
be given. It’s already been, been given once.” Pitchford nevertheless argues that, without
a more specific instruction, the jury was left to speculate as to whether he actually would be
sentenced to spend the remainder of his natural life behind bars.
¶175. This Court has said a trial court’s “failure to include the statutorily required
sentencing option of life without the possibility of parole constitutes reversible error.” 121
Here, however, the trial court clearly included an instruction that Pitchford could be
119
See Miss. Code Ann. § 99-19-103 (Rev. 2007).
120
895 So. 2d at 107.
121
Rubenstein, 941 So. 2d at 793 (emphasis added).
63
sentenced to “life imprisonment without parole.” Thus, we find the trial court was within its
discretion to deny DS-15, as it was “fairly covered elsewhere” under Thorson.
¶176. Pitchford complains that two critical instructions – one regarding a verdict of life
without parole, and the other concerning what the jury was to do in the event it was unable
to agree unanimously on a sentence – were on a separate page from the instructions
concerning a possible death sentence. He claims this possibly suggested to the jury that
death was the preferred sentence.
¶177. The trial court, responding to this argument, evaluated the form of the instructions and
found that, “[i]t is not in the least bit suggestive they are to do one over the other.” We agree,
and find no merit to this argument.
¶178. Finally, Pitchford argues that the trial court erred in failing to allow the mitigating
factor – “Mr. Pitchford had mental health problems as a child that were never treated” – to
be considered by the jury. When presented with this argument, the trial court stated, “The
fact is we don’t have any doctor that has testified to that. We don’t have anything in the
record that at all supports that Pitchford had any mental health problems.”
¶179. We will not hold the trial court in error for refusing to submit a mitigating factor to
the jury which was not grounded in the evidence. Thus, this issue has no merit.
XV. WHETHER THE DEATH PENALTY VIOLATES THE CONSTITUTION OF
THE UNITED STATES.
¶180. Pitchford next argues that his death sentence must be vacated because it violates the
Constitution of the United States.
Baze v. Rees
64
¶181. Pitchford first argues that his execution by lethal injection would be in violation of the
Eighth Amendment prohibition against cruel and unusual punishment, based on Baze v.
Rees.122 This argument repeatedly has been rejected by this Court. As we recently stated in
Goff v. State:
On April 16, 2008, the United States Supreme Court decided Baze v. Rees,
upholding the State of Kentucky's lethal-injection protocol as not being
violative of the Eighth Amendment. Baze v. Rees, --- U.S. ----, 128 S. Ct.
1520, 170 L. Ed. 2d 420 (2008). In so doing, Chief Justice Roberts's plurality
opinion announced the standard which we must use to determine whether our
method of execution violates the Eighth Amendment. Id. The Supreme Court's
plurality found that cruel and unusual punishment occurs where lethal injection
as an execution method presents a “substantial” or “objectively intolerable risk
of serious harm” in light of “feasible, readily implemented” alternative
procedures. Id. at 1531, 1532. However, the analysis was focused on the
manner of lethal injection, and did not question the validity of lethal injection
or the constitutionality of the death penalty as such. Id. at 1537. The Baze
Court held: Kentucky has adopted a method of execution believed to be the
most humane available, one it shares with 35 other States . . . [which] if
administered as intended . . . will result in a painless death. The risks of
maladministration . . . such as improper mixing of chemicals and improper
setting of IVs by trained and experienced personnel -- cannot be remotely
characterized as “objectively intolerable.” Kentucky's decision to adhere to its
protocol despite these asserted risks, while adopting safeguards to protect
against them, cannot be viewed as probative of the wanton infliction of pain
under the Eighth Amendment. Baze, 128 S. Ct. at 1537.
For “the disposition of other cases uncertain,” Justice Roberts clearly stated
that “[a] State with a lethal injection protocol substantially similar to the
protocol we uphold today would not create a risk that meets [the ‘substantial
risk’] standard.” Id. at 1537 (emphasis added).
If differences exist between Mississippi's execution protocols and those used
in Kentucky, then, the inquiry is whether Mississippi's lethal-injection protocol
meets Constitutional muster in light of this recent Supreme Court decision.
The Fifth Circuit, when considering inmate Dale Leo Bishop's
Eighth-Amendment challenge to Mississippi's lethal-injection procedures,
recently announced that “Mississippi's lethal injection protocol appears to be
122
553 U.S. 35, 128 S. Ct. 1520, 170 L. Ed. 2d 420 (2008).
65
substantially similar to Kentucky's protocol that was examined in Baze.”
Walker v. Epps, 287 Fed. Appx. 371, 2008 WL 2796878, 2008 U.S. App.
LEXIS 15547 at [*13] (5th Cir. Miss. July 21, 2008). We agree with the Fifth
Circuit's analysis, and hold that Bennett's Eighth Amendment challenge to the
lethal injection protocol in Mississippi is without merit.123
¶182. Based on our reasoning in Goff, we hold this argument has no merit.
Failure to Include Aggravating Circumstances in Indictment
¶183. The indictment against Pitchford stated that
on or about the 7th day of November 2004, in Grenada County, Mississippi
and within the jurisdiction of this Court, while acting in concert with another
or while aiding, abetting, assisting or encouraging another, did willfully,
feloniously, intentionally, without authority of law and with or without the
deliberate design to effect death, kill and murder Reuben Britt, a human being,
while engaged in the felony crime of ARMED ROBBERY, as set forth in
section 97-3-79 of MISS. CODE ANN. and in violation of section 97-3-19 (2)
(e) MISS. CODE ANN. as amended, and against the peace and dignity of the
State of Mississippi.
¶184. Relying on Apprendi v. New Jersey124 and Ring v. Arizona,125 Pitchford argues that
the indictment failed to charge all elements necessary to impose the death penalty. This
Court repeatedly has held that “these cases have no application to Mississippi’s capital
murder sentencing scheme.” 126 As this Court recently stated:
This Court repeatedly has rejected this type of argument. We have held that
Apprendi and Ring address issues wholly distinct from the present one, and
in fact do not address indictments at all. The purpose of an indictment is to
furnish the defendant with notice and a reasonable description of the charges
against him so that he may prepare his defense. An indictment is required only
123
Goff v. State, 14 So. 3d 625, 665-66 (Miss. 2009) (quoting Bennett v. State, 990 So. 2d
155, 160-61 (Miss. 2008)).
124
530 U.S. 466, 120 S. Ct. 2348, 147 L. Ed. 2d 435 (2000).
125
536 U.S. 584, 122 S. Ct. 2428, 153 L. Ed. 2d 556 (2002).
126
Hodges v. State, 912 So. 2d 730, 775 (Miss. 2005).
66
to have a clear and concise statement of the elements of the crime with which
the defendant is charged.
Under Mississippi law, the underlying felony that elevates the crime to capital
murder must be identified in the indictment along with the section and
subsection of the statute under which the defendant is being charged. In
addition, “[o]ur death penalty statute clearly states the only aggravating
circumstances which may be relied upon by the prosecution in seeking the
ultimate punishment.”
When Goff was charged with capital murder, he was put on notice that the
death penalty might result, what aggravating factors might be used, and the
mens rea standard that was required.127
¶185. Pitchford argues this Court’s previous holdings are clearly erroneous in light of
Kansas v. Marsh 128 because, according to Pitchford:
[O]n the way to reaching its conclusion the Court compared the Kansas
scheme to the Arizona scheme and found them essentially the same.
Mississippi’s scheme is indistinguishable from Kansas. Thus the position that
Ring v. Arizona has no application to Mississippi’s scheme, is incorrect.
¶186. We find Marsh doesn’t apply and this argument has no merit.
Dual use of robbery as capitalizer and aggravator
¶187. Pitchford next urges this Court to revisit its prior holdings allowing the use of an
underlying felony to both elevate the crime to capital murder and to act as an aggravating
circumstance.129 After reviewing the matter, we find no compelling reason to reverse our
position on this matter and, thus, we decline to do so.
Enmund And Tison
127
Goff, 14 So. 3d at 665 (citations omitted).
128
548 U.S. 163, 126 S. Ct. 2516, 165 L. Ed. 2d 429 (2006).
129
See e.g. Ross v. State, 954 So. 2d 968, 1014 (Miss. 2007) (“The use of the underlying
felony as an aggravator was not error.”).
67
¶188. Pitchford’s final assignment of error on this issue is that the verdict returned against
him violates the holding in Enmund v. Florida 130 and Tison v. Arizona.131 These cases hold
that the death penalty may not be imposed on a defendant who aids and abets, but who did
not commit the murder, unless the defendant attempted to commit the murder, intended that
the murder take place, or understood that lethal force would, or might, be used in the
commission of the underlying felony.
¶189. The jury unanimously found that Pitchford actually killed Reuben Britt, attempted to
kill Reuben Britt, intended the killing of Reuben Britt, and contemplated that lethal force
would be employed. Pitchford argues that the testimony showing he personally killed,
attempted to kill, or intended to kill Reuben Britt was admitted in error, namely the testimony
discussed in Issues V and IX, supra. As previously discussed, however, we found no error
with respect to those issues and so this argument has no merit.
XVI. W HETHER THE DEATH SENTENCE IN THIS CASE IS
CONSTITUTIONALLY OR STATUTORILY DISPROPORTIONATE.
¶190. This Court is required by statute to perform a proportionality review when reviewing
the imposition of a death sentence. Mississippi Code Section 99-19-105(3) states:
(3) With regard to the sentence, the court shall determine:
(a) Whether the sentence of death was imposed under the influence
of passion, prejudice or any other arbitrary factor;
(b) Whether the evidence supports the jury's or judge's finding of a
statutory aggravating circumstance as enumerated in Section
99-19-101;
130
458 U.S. 782, 102 S. Ct. 3368, 73 L. Ed. 2d 1140 (1982).
131
481 U.S. 137, 107 S. Ct. 1676, 95 L. Ed. 2d 127 (1987).
68
(c) Whether the sentence of death is excessive or disproportionate
to the penalty imposed in similar cases, considering both the
crime and the defendant. . . .132
¶191. Pitchford submits neither argument nor evidence that the sentence of death was
imposed under the influence of passion, prejudice, or any other arbitrary factor. After
reviewing the record in this appeal, we cannot say the record establishes that Pitchford’s
death sentence was imposed under the influence of passion, prejudice, or any other arbitrary
factor.133
¶192. Furthermore, we find there was sufficient evidence to support the jury’s finding of the
statutory aggravating circumstance enumerated by Mississippi Code Section 99-19-101(d)
(“The capital offense was committed while the defendant was engaged, or was an
accomplice, in the commission of, or an attempt to commit, or flight after committing or
attempting to commit, any robbery. . .”).
¶193. Pitchford argues that the death penalty would be disproportionate in this case. He
argues that, under the evidence to support the conviction, the admissible proof shows that
“Mr. Pitchford was a willing participant in a robbery, but that his co-defendant initiated the
fatal conduct in an act of panic when he saw the decedent with a gun and Mr. Pitchford only
inflicted separate, non-lethal injuries.” He also argues that the death penalty would be
disproportionate in this case because Pitchford’s accomplice, Eric Bullins, who was sixteen
years old at the time of the crime, accepted a plea of manslaughter and is serving a sentence
of forty years.
132
Miss. Code Ann. § 99-19-105(3) (Rev. 2007).
133
See Miss. Code Ann. § 99-19-105(3)(a) (Rev. 2007).
69
¶194. Taking at face value Pitchford’s claim that he fired the .38 weapon loaded with rat
shot at Reuben Britt only after Bullins fired the “lethal” shots from the .22 weapon, we
nevertheless find Pitchford’s argument without merit. After comparing the facts of this case
with factually similar cases in which the death penalty has been imposed, we find the death
sentence in this case is neither excessive nor disproportionate. This Court has upheld the
sentence of death for murder committed in the course of a robbery.134 In Bishop v. State,135
this Court found:
The record shows that, after Gentry had been hit in the head with the hammer
for the first time, Bishop chased after him and brought him back. When Bishop
saw Gentry hit with the hammer he knew deadly force was being used. When
he ran Gentry down and held Gentry as he was being struck by Jessie, he
became more of a principal in the crime. A jury could have easily found that
Bishop killed, intended to kill, or at least contemplated that deadly force would
be used. This case is not like a robbery where someone is killed on impulse.
Bishop took an active role in the killing.136
¶195. This Court further found that Bishop’s involvement was enough to justify the death
penalty, even if the actual killer did not receive it.137 Similarly, even accepting as true
Pitchford’s version of the robbery, he took an active role in the killing when he shot Reuben
Britt with the .38 pistol. Bullins’s successful plea negotiation does not make the death
penalty in this case constitutionally or statutorily disproportionate.
134
See, e.g., Doss v. State, 709 So. 2d 369, 401 (Miss. 1996) (holding conviction and sentence
appropriate where a grocery store clerk was shot and killed during the course of a robbery); Cabello
v. State, 471 So. 2d 332, 350 (Miss. 1985).
135
812 So. 2d 934 (Miss. 2002).
136
Id. at 948-49.
137
Id.
70
XVII. WHETHER THE CUMULATIVE EFFECT OF THE ERRORS OF THE
TRIAL COURT MANDATES REVERSAL.
¶196. Pitchford argues that the cumulative effect of errors mandates reversal. This Court
may reverse a conviction and/or sentence based upon the cumulative effect of errors that
independently would not require reversal.138 After a thorough review of the record and
briefs, we do not find the cumulative effect of the individual errors denied Pitchford a
fundamentally fair trial, so this issue has no merit.
CONCLUSION
¶197. We affirm the conviction and sentence in this case.
¶198. CONVICTION OF CAPITAL MURDER AND SENTENCE OF DEATH BY
LETHAL INJECTION, AFFIRMED.
WALLER, C.J., CARLSON, P.J., RANDOLPH, LAMAR, CHANDLER AND
PIERCE, JJ., CONCUR. GRAVES, P.J., DISSENTS WITH SEPARATE WRITTEN
OPINION JOINED BY KITCHENS, J.
GRAVES, PRESIDING JUSTICE, DISSENTING:
¶199. “[V]oir dire [often] has become an exercise in finding race-neutral reasons to justify
racially motivated strikes. As Justice Marshall predicted, ‘[m]erely allowing defendants the
opportunity to challenge the racially discriminatory use of peremptory challenges in
individual cases will not end the illegitimate use of the peremptory challenge.’” Howell v.
State, 860 So. 2d 704, 766 (Miss. 2003) (Graves, J., dissenting) (quoting Batson v.
Kentucky, 476 U.S. 79, 105, 106 S. Ct. 1712, 1727, 90 L. Ed. 2d 69 (1986) (Marshall, J.,
concurring)). In the instant case, peremptory challenges were used to exclude African-
138
Jenkins v. State, 607 So. 2d 1171, 1183-84 (Miss. 1992); Hansen v. State, 592 So.
2d 114, 153 (Miss. 1991).
71
Americans from the jury. Therefore, I disagree with the majority’s finding that the State did
not discriminate on the basis of race during jury selection. Because I would reverse the trial
court pursuant to Batson, I respectfully dissent.
¶200. Under Batson, a party who objects to a peremptory strike must establish a prima facie
case of purposeful discrimination as follows:
To establish such a case, the defendant first must show that he is a member of
a cognizable racial group . . . and that the prosecutor has exercised peremptory
challenges to remove from the venire members of the defendant's race. Second,
the defendant is entitled to rely on the fact, as to which there can be no dispute,
that peremptory challenges constitute a jury selection practice that permits
"those to discriminate who are of a mind to discriminate." . . . Finally, the
defendant must show that these facts and any other relevant circumstances
raise an inference that the prosecutor used that practice to exclude the
veniremen from the petit jury on account of their race.
Batson, 476 U.S. at 96 (citations omitted). However, as this Court has acknowledged, this
test was somewhat modified by the U.S. Supreme Court in Powers v. Ohio, 499 U.S. 400,
111 S. Ct. 1364, 113 L. Ed. 2d 411 (1991).
In that case the Supreme Court held that Powers, a white, had standing to
challenge the exclusion of black jurors on the grounds that the equal protection
right of the juror to serve was protected by Batson. Powers, 499 U.S. at 406,
111 S. Ct. 1364. Essentially, this means that step three above becomes the
pivotal inquiry to determine a prima facie case, as this Court recognized in
Davis v. State, 660 So. 2d 1228, 1240 (Miss. 1995), cert. denied, 517 U.S.
1192, 116 S. Ct. 1684, 134 L. Ed. 2d 785 (1996). Specifically, the pivotal
question is whether the opponent of the strike has met the burden of showing
that proponent has engaged in a pattern of strikes based on race or gender, or
in other words “the totality of the relevant facts gives rise to an inference of
discriminatory purpose.” Batson, 476 U.S. at 94, 106 S. Ct. 1712.
Randall v. State, 716 So. 2d at 587 (Miss. 1998). Pursuant to the third step, “[t]his Court has
examined the number of strikes on a particular class, the ultimate ethnic or gender makeup
of the jury, the nature of questions asked during the voir dire, and the overall demeanor of
72
the attorney.” Id. (citing Coleman v. State, 697 So. 2d 777, 786 (Miss. 1997); Davis, 660
So. 2d at 1263 (Banks, J., concurring); Mack v. State, 650 So. 2d 1289, 1299 (Miss. 1994),
cert. denied, 516 U.S. 880, 116 S. Ct. 214, 133 L. Ed. 2d 146 (1995)). “Additionally, ‘[t]he
[opponent of the strike] may also rely on the fact that peremptory challenges constitute a jury
selection practice that permits those to discriminate who are of a mind to discriminate.’” Id.
(citing Batson, 476 U.S. at 80, 106 S. Ct. at 1714)).
¶201. Once the defendant has established a prima facie case of discrimination, the burden
shifts to the State to provide a race-neutral reason for each strike. Batson, 476 U.S. at 97.
The trial court then makes a determination of whether the defendant has established
purposeful discrimination. Id. at 98. The Fifth Circuit Court of Appeals has explained this
portion of the test as follows:
The “shifting burden” described in the Batson framework is one of
production only. The ultimate burden of persuasion always lies with the party
making the claim of purposeful discrimination. At the second stage of the
Batson framework where the party accused of discrimination must articulate
a race-neutral explanation for the peremptory challenges – the issue is merely
the facial validity of the explanation. “Unless a discriminatory intent is
inherent in the . . . explanation, the reason offered will be deemed race
neutral.”
U.S. v. Bentley-Smith, 2 F.3d 1368, 1373 (5th Cir. 1993) (quoting Hernandez v. New York,
500 U.S. 352, 360, 111 S. Ct. 1859, 114 L. Ed. 2d 395, 396 (1991)). With regard to the third
stage of the Batson framework, where the trial court must determine whether the defendant
has established purposeful discrimination, the Fifth Circuit said:
In a typical peremptory challenge inquiry, the decisive question will normally
be whether a proffered race-neutral explanation should be believed. See
United States v. Johnson, 941 F.2d 1102, 1108 (10th Cir. 1991). There will
seldom be any evidence that the claimant can introduce – beyond arguing that
73
the explanations are not believable or pointing out that similar claims can be
made about non-excluded jurors who are not minorities.
Bentley-Smith, 2 F.3d at 1373-74.
¶202. This Court has held that, in reviewing a Batson claim, we will not overrule a trial
court unless the record indicates the decision was clearly erroneous or contrary to the
overwhelming weight of the evidence. Flowers v. State, 947 So. 2d 910, 917 (Miss. 2007).
See also Thorson v. State, 721 So. 2d 590, 593 (Miss. 1998).
¶203. This Court has specified five indicia of pretext for use in analyzing a proffered race-
neutral reason for peremptory strikes:
(1) disparate treatment, that is, the presence of unchallenged jurors of the
opposite race who share the characteristic given as the basis for the challenge;
(2) the failure to voir dire as to the characteristic cited; . . . (3) the
characteristic cited is unrelated to the facts of the case; (4) lack of record
support for the stated reason; and (5) group-based traits.
Lynch v. State, 877 So. 2d 1254, 1272 (Miss. 2004) (citations omitted).
¶204. In the instant case, Pitchford objected as follows:
We would object on the grounds of Batson v. Kentucky that it appears
there is a pattern of striking almost all of the available African-American
jurors. They have tendered one African-American juror out of the five that
have thus far – four that have thus far arisen on the venire. As we had noted
previously, due to the process of cause challenges, particularly death
qualification challenges, this is already a disproportionally white jury for the
population of this county. And we make a Batson challenge. It appears to be
a pattern of disproportionately challenging African-American jurors.
¶205. The State used four of seven peremptory strikes against African-Americans on the
venire. Thus, only one African-American out of fourteen jurors, including alternates, was
seated on Pitchford’s jury in Grenada County. Based on this, the trial court correctly found
74
that Pitchford had established a prima facie case for racial discrimination and required the
State to provide race-neutral reasons for the strikes.139 The State then offered these reasons:
MR. EVANS (District Attorney): Yes, sir. S-2 is black female, juror
number 30. She is the one that was 15 minutes late. She also, according to
police officer, police captain, Carver Conley, has mental problems. They have
had numerous calls to her house and said she obviously has mental problems.
Juror number S-3 –
THE COURT: That would be race neutral as to – as to that juror.
MR. EVANS: S-3 is a black male, number 31, Christopher Lamont
Tillmon. He has a brother that has been convicted of manslaughter. And
considering that this is a murder case, I don’t want anyone on the jury that has
relatives convicted of similar offenses.
THE COURT: What was his brother’s name?
MR. EVANS: I don’t even remember his brother. He said that he had
a brother convicted of manslaughter.
THE COURT: On that jury questionnaire?
MR. EVANS: Yes, sir.
THE COURT: I find that to be race neutral. And you can go forward.
MR. EVANS: S-4 is juror number 43, a black female, Patricia Anne
Tidwell. Her brother, David Tidwell, was convicted in this court of sexual
battery. And her brother is now charged in a shooting case that is a pending
case here in Grenada. And also, according to police officers, she is a known
drug user.
THE COURT: During voir dire, in fact, I made a notation on my notes
about her being kin to this individual. I find that to be race neutral.
MR. EVANS: Juror number 5 is juror number 48 on the list, a black
male, Carlos Ward. We have several reasons. One, he had no opinion on the
death penalty. He has a two-year-old child. He has never been married. He
has numerous speeding violations that we are aware of.
The reason that I do not want him as a juror is he is too closely related
to the defendant. He is approximately the age of the defendant. They both
have children about the same age. They both have never been married. In my
opinion he will not be able to not be thinking about these issues, especially on
the second phases. And I don’t think he would be a good juror because of that.
139
Since the prosecutor offered an explanation for the peremptory challenges and the trial
court ruled on the ultimate question of intentional discrimination, the issue of whether Pitchford
made a prima facie showing of discrimination is moot. Hernandez v. New York, 500 U.S. 352, 359,
111 S. Ct. 1859, 114 L. Ed. 2d 395, 396 (1991) (citing United States Postal Serv. Bd. of Governors
v. Aikens, 460 U.S. 711, 715, 103 S. Ct. 1478, 1482, 75 L. Ed. 2d 403 (1983)).
75
THE COURT: The Court finds that to be race neutral as well. So now
we will go back and have the defense starting at 37.
¶206. When the jury was seated, counsel for Pitchford renewed the Batson objection and
stated:
MS. STEINER [defense counsel]: At some point the defense is going
to want to reserve both its Batson objection and a straight for Tenth
Amendment racial discrimination.
THE COURT: You have already made it in the record so I am of the
opinion it is in the record.
MS. STEINER: I don’t want to let the paneling of the jury go by
without having those objections.
THE COURT: I think you already made those, and they are clear in the
record. For the reasons previously stated, first the Court finds there to be no
– well, all the reasons were race neutral as to members that were struck by the
district attorney’s office. And so the, the Court finds there to be no Batson
violation.
And then as to the other issues, the Court has already ruled that based
on prior rulings from the United States Supreme Court and the State of
Mississippi that jury selection was appropriate.
As I say, they are noted for the record.
MS. STEINER: Allow us to state into the record there is one of 12 – of
fourteen jurors, are non-white, whereas this county is approximately, what, 40
percent?
MR. BAUM [defense counsel]: The county is 40 percent black.
THE COURT: I don’t know about the racial makeup, but I will note for
the record there is one regular member of the panel that is black, African-
American race.
¶207. On appeal, Pitchford asserts that the State’s race-neutral reasons are pretextual for
each of the four African-American jurors who were struck. Further, Pitchford asserts that
the State accepted white venire members who shared the characteristics of the jurors who
were struck.
Linda Ruth Lee
76
¶208. The State said that Lee was struck because she was fifteen minutes late, “has mental
problems,” and police had made numerous calls to her house, according to Police Captain
Carver Conley. However, Conley was not called to testify. Further, the State did not
introduce any evidence to prove the claims of her having “mental problems” or of police
having numerous calls to her house. The State also failed to define “mental problems” as it
pertains to Lee’s alleged inability to serve as a juror. With regard to Lee being fifteen
minutes late, the record establishes that several jurors were late returning from lunch during
voir dire. The trial court inquired why Lee was the last of the late jurors to return and she
indicated that she had to walk to the courthouse. During the challenges for cause, the State
tried unsuccessfully to get the trial court to strike Lee for cause for being fifteen minutes late.
In denying the State’s request, the trial court said:
She indicated – and if anybody was having to walk from their house to
the courtroom in this weather today, she indicated – ordinarily I would but
when I asked her she said she was having to walk. And that’s – you know, I
guess we all assume everybody has got a way to ride now but she didn’t. So
I feel like that she explained the reason why she was late to the satisfaction of
the court that I do not believe it would be appropriate to strike her for cause.
In fact, she is trying real hard to be here and fulfill her civic duty as a juror.
¶209. There is nothing in the record to support the State’s proffered race-neutral reasons for
striking Lee. Further, the trial court specifically found that Lee being fifteen minutes late
returning to the courthouse in what was apparently inclement weather was an insufficient
reason to strike her. The characteristics cited are unrelated to the facts of the case. The
majority states, “[t]hat a juror ‘obviously has mental problems’ was clearly a race neutral
reason.” (Maj. Op. at ¶ 23). I note that these alleged “mental problems” were not
sufficiently obvious to compel the trial court to strike Lee for cause. The State never brought
77
up any “mental problems” or police calls prior to or during voir dire. The State did not
individually voir dire Lee or ask any specific questions related to these reasons. The State
also did not disclose any of this information obtained outside of the voir dire process prior
to the Batson hearing. In Mack v. State, 650 So. 2d 1289, 1299 (Miss. 1994), this Court
indicated that the prosecutor may not withhold such information. “That is not to say,
however, that the prosecutor may, with impunity, withhold information concerning a
prospective juror which impacts upon the juror's ability to be fair and impartial.” Id. This
Court also said:
The failure to voir dire usually comes in to [sic] play when the
prosecutor expresses some suspicion or uncertainty about the true situation
involving the juror, such as when he “believes” that the juror is related to a
criminal, or has been involved in some activities which might engender a
negative attitude toward the defendant. This factor is closely related to the
lack of an evidentiary basis. Here, the fact that Mitchell was unemployed was
reflected in the jury questionnaire. The prosecutor was not acting on a mere
suspicion. Still, voir dire on this issue may have revealed an explanation for
this status which would not have been consistent with assumptions regarding
the stability and community values of the unemployed. The failure to conduct
voir dire must weigh against the State in an evaluation of the bona fides of the
proffered reason.
Mack, 650 So. 2d at 1298.
¶210. Because Pitchford has met the burden of establishing pretext based on the indicia set
out previously herein, I would find that the trial judge’s acceptance of the State’s race-neutral
reason for striking Lee is clearly erroneous. Further, as stated by the majority, the U.S.
Supreme Court reiterated in Snyder v. Louisiana, 552 U.S. 472, 128 S. Ct. 1203, 170 L. Ed.
2d 175 (2008), that the Constitution prohibits striking even a single juror for a discriminatory
78
purpose. Therefore, Pitchford’s conviction should be reversed and remanded for a new trial.
Nevertheless, I will briefly discuss the remaining jurors.
Christopher Lamont Tillmon
¶211. The State said that Tillmon was struck because he said on his jury questionnaire that
he had a brother who had been convicted of manslaughter. While this is an acceptable race-
neutral reason, the questionnaire also indicated that Tillmon is an employed college graduate
who previously worked for a correctional facility, and who strongly favored the death
penalty. Further, the record indicates that the State did not voir dire Tillmon on this reason.
Also, white venire members with family members who had felony, albeit nonhomicide,
convictions were accepted by the State.
Patricia Anne Tidwell
¶212. The State said that Patricia Anne Tidwell was struck because her brother was
convicted of sexual battery and was charged in a shooting case. The State also said that
Tidwell is a known drug user. While Tidwell’s questionnaire did indicate her brother had
been convicted of sexual battery, the State offered no evidence of Tidwell’s brother being
charged in a shooting case or of Tidwell being a known drug user. The record indicates that
the State did not individually voir dire Tidwell or ask any specific questions regarding any
of these reasons. The record also indicates that white venire members with family members
who had been convicted of crimes were not challenged.
Carlos Ward
¶213. The State said that Carlos Ward was struck because he had no opinion on the death
penalty, had a two-year-old child, had never been married, and had numerous speeding
79
violations. Specifically, the State said that Ward was “too closely related to the defendant”
because of shared characteristics. However, the record indicates that the State accepted
numerous white venire members sharing the characteristics given as the basis for the
challenge. The record also indicates that the State did not individually voir dire Ward on any
of the proffered reasons. With regard to his opinion on the death penalty, Ward did not
indicate during voir dire that he had any issue with it, but merely circled no opinion, which
was the middle of five choices on the jury questionnaire The jury questionnaire specifically
excludes traffic violations, and the State introduced no evidence of any speeding violations.
There is also nothing in the record to establish that the State sought information regarding
traffic violations on other jurors. Further, Ward indicated he was employed and had finished
two years of college at the time he completed the questionnaire.
¶214. Although the record before this Court establishes that the trial court’s decision
accepting the State’s race-neutral reasons for excluding African-Americans from the jury was
clearly erroneous, the majority states that it “cannot say the trial judge abused his discretion”
with regard to each juror. (Maj. Op. at ¶¶ 21, 23, 25, 27). Rather than address the merits of
this issue, the majority discusses moot aspects of the issue, as stated previously herein, and
then cites various cases for the erroneous proposition that Pitchford somehow waived his
Batson objection by not rebutting the State’s proffered race-neutral reasons.
¶215. The majority finds that “[a]lthough the appellant devoted a considerable portion of his
brief and oral argument before this Court to his pretext argument, he did not present these
arguments to the trial court during the voir dire process or during post-trial motions.” (Maj.
Op. at ¶ 28). Further, the majority finds since the “appellant provided the trial court no
80
rebuttal to the state’s race-neutral reasons” that “[w]e will not now fault the trial judge with
failing to discern whether the state’s race-neutral reasons were overcome by rebuttal
evidence and argument never presented.” (Maj. Op. at ¶ 30). Finally, the majority dismisses
Pitchford’s argument regarding the totality of the facts as an “attempt to present his pretext
argument in another package” and finds that Pitchford “failed to provide any argument
concerning pretext during the Batson hearing.” I disagree for several reasons.
¶216. Black’s Law Dictionary defines pretext as: “Ostensible reason or motive assigned or
assumed as a color or cover for the real reason or motive; false appearance, pretense. . . .”
Black’s Law Dictionary 1187 (6th ed. 1990). Based on the very definition of pretext,
Pitchford made a pretext argument by virtue of his Batson objection. When Pitchford
attempted to reassert his objection, the trial court correctly found that the objection was
already on the record.
¶217. To reiterate, “[o]nce the defendant makes a prima facie showing, the burden shifts to
the State to come forward with a neutral explanation for challenging black jurors.” Batson,
476 U.S. at 97. “The prosecutor therefore must articulate a neutral explanation related to the
particular case to be tried. The trial court then will have the duty to determine if the
defendant has established purposeful discrimination.” Id. at 98. In other words, once
Pitchford made a prima facie showing, the burden shifted to the State to rebut the prima facie
showing with a race-neutral explanation as to each juror. Id. at 97-98. Pitchford may rebut
the State’s evidence, but there is no requirement under Batson that Pitchford must then rebut
the rebuttal before the trial court. Pursuant to Batson, once the State offered race-neutral
reasons to rebut the prima facie showing, the trial court then made a determination that
81
Pitchford had not established purposeful discrimination. This Court is reviewing the trial
court’s decision to determine whether it is clearly erroneous or contrary to the overwhelming
weight of the evidence. Flowers v. State, 947 So. 2d 910, 917 (Miss. 2007).
¶218. I do not dispute the language in the cases cited by the majority regarding the basis for
the trial court’s decision. However, the suggestion that this Court cannot review the trial
court’s decision under the totality of the relevant facts is contrary to the applicable law. An
analysis of the cases cited by the majority for the waiver proposition is illuminating. The
majority quotes Manning v. State, 735 So. 2d 323, 339 (Miss. 1999), for the following: “It
is incumbent upon a defendant claiming that proffered reasons are pretextual to raise the
argument before the trial court. The failure to do so constitutes waiver.” (Maj. Op. at ¶ 29
n. 16). Manning cites Mack v. State, 650 So. 2d 1289, 1297 (Miss. 1994), which cites
Whitsey v. State, 796 S.W.2d 707 (Tex. Crim. App. 1989), for this proposition. However,
Whitsey, which is not binding authority on this Court, makes no such finding.
¶219. The trial and hearing on the motion for new trial in Whitsey occurred prior to the
Batson decision. Whitsey, 796 S.W.2d at 710. Following the Batson decision, the Texas
Fourteenth Court of Appeals remanded for a Batson hearing. The trial court found that the
defendant did not rebut the State’s explanations, did not prove by a preponderance of
evidence that the State had engaged in purposeful discrimination, and was not denied the
equal protection of the law by the prosecutor’s use of his peremptory challenges. Id. at 712.
The Fourteenth Court of Appeals affirmed. Id. On appeal, the Court of Criminal Appeals
of Texas reversed, finding that the defendant had established that the prosecutor had
82
exercised peremptory challenges based solely on race and that the defendant had been denied
due process in the jury selection process. Whitsey, 796 S.W.2d at 716.
¶220. In the instant case, the majority also cites Woodward v. State, 726 So. 2d 524, 533
(Miss. 1997), for the following: “In the absence of an actual proffer of evidence by the
defendant to rebut the State’s neutral explanations, this Court may not reverse on this point.”
(See Maj. Op. at ¶ 29 n. 16). Woodward is quoting Sudduth v. State, 562 So. 2d 67, 71
(Miss. 1990), which cites Davis v. State, 551 So. 2d 165, 172 (Miss. 1989), for this holding.
However, Davis is relying on the inapplicable, pre-Batson cases of Jones v. State, 306 So.
2d 57, 58 (Miss. 1975), and Pennington v. State, 437 So. 2d 37, 39 (Miss. 1983). Both
Jones and Pennington involved issues regarding a trial court’s refusal to permit the appellant
to make an offer of proof to preserve testimony. Jones, 306 So. 2d at 58; Pennington, 437
So. 2d at 39. Woodward also cites Bush v. State, 585 So. 2d 1262, 1268 (Miss. 1991), which
says the defendant “is allowed to rebut the reasons” offered by the State. Bush, 585 So. 2d
at 1268.
¶221. Pitchford preserved the issue for appeal by making a Batson objection. The trial court
properly found that he had established a prima facie case and required the State to provide
race-neutral reasons. The trial court then made its determination, and Pitchford appeals that
determination. Pitchford is not attempting to present an issue that was not first presented to
the trial court. The majority cites no authority to establish that Pitchford should be precluded
from relying on evidence contained in the record and presented to the trial court during voir
dire, as opposed to extraneous evidence. Therefore, Pitchford has not waived this issue.
83
¶222. Further, an issue concerning a defendant’s right to a fair trial and a prospective juror’s
right not to be excluded on account of race cannot be ignored pursuant to a procedural bar.
The United States Supreme Court has recognized the significance of this issue. In Powers
v. Ohio, 499 U.S. 400, 111 S. Ct. 1364, 113 L. Ed. 2d 411 (1991), the Court said:
We hold that the Equal Protection Clause prohibits a prosecutor from using the
State's peremptory challenges to exclude otherwise qualified and unbiased
persons from the petit jury solely by reason of their race, a practice that
forecloses a significant opportunity to participate in civic life. An individual
juror does not have a right to sit on any particular petit jury, but he or she does
possess the right not to be excluded from one on account of race.
Id. at 409. The Court further said: “The jury acts as a vital check against the wrongful
exercise of power by the State and its prosecutors. Batson, 476 U.S. at 86, 106 S. Ct., at
1717. The intrusion of racial discrimination into the jury selection process damages both the
fact and the perception of this guarantee.” Id. at 411. “Both the excluded juror and the
criminal defendant have a common interest in eliminating racial discrimination from the
courtroom.” Id. at 413.
The statutory prohibition on discrimination in the selection of jurors, 18 U.S.C.
§ 243, enacted pursuant to the Fourteenth Amendment's Enabling Clause,
makes race neutrality in jury selection a visible, and inevitable, measure of the
judicial system's own commitment to the commands of the Constitution. The
courts are under an affirmative duty to enforce the strong statutory and
constitutional policies embodied in that prohibition.
Id. at 416.
¶223. For the reasons stated herein, I would find that the trial court’s decision was clearly
erroneous. Because I would reverse the trial court pursuant to Batson, I respectfully dissent.
KITCHENS, J., JOINS THIS OPINION.
84
APPENDIX
DEATH CASES AFFIRMED BY THIS COURT
Goff v. State, 14 So. 3d 625 (Miss. 2009).
Wilson v. State, 21 So. 3d 572 (Miss. 2009).
Chamberlin v. State, 989 So. 2d 320 (Miss. 2008).
Loden v. State, 971 So. 2d 548 (Miss. 2007).
King v. State, 960 So. 2d 413 (Miss. 2007).
Bennett v. State, 933 So. 2d 930 (Miss. 2006).
Havard v. State, 928 So. 2d 771 (Miss. 2006).
Spicer v. State, 921 So. 2d 292 (Miss. 2006).
Hodges v. State, 912 So. 2d 730 (Miss. 2005).
Walker v. State, 913 So. 2d 198 (Miss. 2005).
Le v. State, 913 So. 2d 913 (Miss. 2005).
Brown v. State, 890 So. 2d 901 (Miss. 2004).
Powers v. State 883 So. 2d 20 (Miss. 2004)
Branch v. State, 882 So. 2d 36 (Miss. 2004).
Scott v. State, 878 So. 2d 933 (Miss. 2004).
Lynch v. State, 877 So. 2d 1254 (Miss. 2004).
Dycus v. State, 875 So. 2d 140 (Miss. 2004).
Byrom v. State, 863 So. 2d 836 (Miss. 2003).
Howell v. State, 860 So. 2d 704 (Miss. 2003).
Howard v. State, 853 So. 2d 781 (Miss. 2003).
i
Walker v. State, 815 So. 2d 1209 (Miss. 2002). *following remand.
Bishop v. State, 812 So. 2d 934 (Miss. 2002).
Stevens v. State, 806 So. 2d 1031 (Miss. 2002).
Grayson v. State, 806 So. 2d 241 (Miss. 2002).
Knox v. State, 805 So. 2d 527 (Miss. 2002).
Simmons v. State, 805 So. 2d 452 (Miss. 2002).
Berry v. State, 802 So. 2d 1033 (Miss. 2001).
Snow v. State, 800 So. 2d 472 (Miss. 2001).
Mitchell v. State, 792 So. 2d 192 (Miss. 2001).
Puckett v. State, 788 So. 2d 752 (Miss. 2001). * following remand.
Goodin v. State, 787 So. 2d 639 (Miss. 2001).
Jordan v. State, 786 So. 2d 987 (Miss. 2001).
Manning v. State, 765 So. 2d 516 (Miss. 2000). *following remand.
Eskridge v. State, 765 So. 2d 508 (Miss. 2000).
McGilberry v. State, 741 So. 2d 894 (Miss. 1999).
Puckett v. State, 737 So. 2d 322 (Miss. 1999). *remanded for Batson hearing.
Manning v. State, 735 So. 2d 323 (Miss. 1999). *remanded for Batson hearing.
Hughes v. State, 735 So. 2d 238 (Miss. 1999).
Turner v. State, 732 So. 2d 937 (Miss. 1999).
Smith v. State, 729 So. 2d 1191 (Miss. 1998).
Burns v. State, 729 So. 2d 203 (Miss. 1998).
Jordan v. State, 728 So. 2d 1088 (Miss. 1998).
ii
Gray v. State, 728 So. 2d 36 (Miss. 1998).
Manning v. State, 726 So. 2d 1152 (Miss. 1998).
Woodward v. State, 726 So. 2d 524 (Miss. 1997).
Bell v. State, 725 So. 2d 836 (Miss. 1998).
Evans v. State, 725 So. 2d 613 (Miss. 1997).
Brewer v. State, 725 So. 2d 106 (Miss. 1998).
Crawford v. State, 716 So. 2d 1028 (Miss. 1998).
Doss v. State, 709 So. 2d 369 (Miss. 1996).
Underwood v. State, 708 So. 2d 18 (Miss. 1998).
Holland v. State, 705 So. 2d 307 (Miss. 1997).
Wells v. State, 698 So. 2d 497 (Miss. 1997).
Wilcher v. State, 697 So. 2d 1087 (Miss. 1997).
Wiley v. State, 691 So. 2d 959 (Miss. 1997).
Brown v. State, 690 So. 2d 276 (Miss. 1996).
Simon v. State, 688 So. 2d 791 (Miss.1997).
Jackson v. State, 684 So. 2d 1213 (Miss. 1996).
Williams v. State, 684 So. 2d 1179 (Miss. 1996).
Davis v. State, 684 So. 2d 643 (Miss. 1996).
Taylor v. State, 682 So. 2d. 359 (Miss. 1996).
Brown v. State, 682 So. 2d 340 (Miss. 1996).
Blue v. State, 674 So. 2d 1184 (Miss. 1996).
Holly v. State, 671 So. 2d 32 (Miss. 1996).
iii
Walker v. State, 671 So. 2d 581 (Miss. 1995).
Russell v. State, 670 So. 2d 816 (Miss. 1995).
Ballenger v. State, 667 So. 2d 1242 (Miss. 1995).
Davis v. State, 660 So. 2d 1228 (Miss. 1995).
Carr v. State, 655 So. 2d 824 (Miss. 1995).
Mack v. State, 650 So. 2d 1289 (Miss. 1994).
Chase v. State, 645 So. 2d 829 (Miss. 1994).
Foster v. State, 639 So. 2d 1263 (Miss. 1994).
Conner v. State, 632 So. 2d 1239 (Miss. 1993).
Hansen v. State, 592 So. 2d 114 (Miss. 1991).
*Shell v. State, 554 So. 2d 887 (Miss. 1989), Shell v. Mississippi, 498 U.S. 1 (1990)
reversing, in part, and remanding, Shell v. State, 595 So. 2d 1323 (Miss. 1992) remanding
for new sentencing hearing.
Davis v. State, 551 So. 2d 165 (Miss. 1989).
Minnick v. State, 551 So. 2d 77 (Miss. 1989).
*Pinkney v. State, 538 So. 2d 329 (Miss. 1989), Pinkney v. Mississippi, 494 U.S.
1075 (1990) vacating and remanding Pinkney v. State, 602 So. 2d 1177 (Miss. 1992)
remanding for new sentencing hearing.
*Clemons v. State, 535 So. 2d 1354 (Miss. 1988), Clemons v. Mississippi, 494 U.S.
738 (1990) vacating and remanding, Clemons v. State, 593 So. 2d 1004 (Miss. 1992)
remanding for new sentencing hearing.
Woodward v. State, 533 So. 2d 418 (Miss. 1988).
Nixon v. State, 533 So. 2d 1078 (Miss. 1987).
Cole v. State, 525 So. 2d 365 (Miss. 1987).
Lockett v. State, 517 So. 2d 1346 (Miss. 1987).
iv
Lockett v. State, 517 So. 2d 1317 (Miss. 1987).
Faraga v. State, 514 So. 2d 295 (Miss. 1987).
*Jones v. State, 517 So. 2d 1295 (Miss. 1987), Jones v. Mississippi, 487 U.S. 1230
(1988) vacating and remanding, Jones v. State, 602 So. 2d 1170 (Miss. 1992) remanding for
new sentencing hearing.
Wiley v. State, 484 So. 2d 339 (Miss. 1986).
Johnson v. State, 477 So. 2d 196 (Miss. 1985).
Gray v. State, 472 So. 2d 409 (Miss. 1985).
Cabello v. State, 471 So. 2d 332 (Miss. 1985).
Jordan v. State, 464 So. 2d 475 (Miss. 1985).
Wilcher v. State, 455 So. 2d 727 (Miss. 1984).
Billiot v. State, 454 So. 2d 445 (Miss. 1984).
Stringer v. State, 454 So. 2d 468 (Miss. 1984).
Dufour v. State, 453 So. 2d 337 (Miss. 1984).
Neal v. State, 451 So. 2d 743 (Miss. 1984).
Booker v. State, 449 So. 2d 209 (Miss. 1984).
Wilcher v. State, 448 So. 2d 927 (Miss. 1984).
Caldwell v. State, 443 So. 2d 806 (Miss. 1983).
Irving v. State, 441 So. 2d 846 (Miss. 1983).
Tokman v. State, 435 So. 2d 664 (Miss. 1983).
Leatherwood v. State, 435 So. 2d 645 (Miss. 1983).
Hill v. State, 432 So. 2d 427 (Miss. 1983).
Pruett v. State, 431 So. 2d 1101 (Miss. 1983).
v
Gilliard v. State, 428 So. 2d 576 (Miss. 1983).
Evans v. State, 422 So. 2d 737 (Miss. 1982).
King v. State, 421 So. 2d 1009 (Miss. 1982).
Wheat v. State, 420 So. 2d 229 (Miss. 1982).
Smith v. State, 419 So. 2d 563 (Miss. 1982).
Johnson v. State, 416 So. 2d 383 (Miss.1982).
Edwards v. State, 413 So. 2d 1007 (Miss. 1982).
Bullock v. State, 391 So. 2d 601 (Miss. 1980).
Reddix v. State, 381 So. 2d 999 (Miss. 1980).
Jones v. State, 381 So. 2d 983 (Miss. 1980).
Culberson v. State, 379 So. 2d 499 (Miss. 1979).
Gray v. State, 375 So. 2d 994 (Miss. 1979).
Jordan v. State, 365 So. 2d 1198 (Miss. 1978).
Voyles v. State, 362 So. 2d 1236 (Miss. 1978).
Irving v. State, 361 So. 2d 1360 (Miss. 1978).
Washington v. State, 361 So. 2d 6l (Miss. 1978).
Bell v. State, 360 So. 2d 1206 (Miss. 1978).
*Case was originally affirmed in this Court but on remand from U. S. Supreme Court,
case was remanded by this Court for a new sentencing hearing.
vi
DEATH CASES REVERSED AS TO GUILT PHASE
AND SENTENCE PHASE
Ross v. State, 954 So. 2d 968 (Miss. 2007).
Flowers v. State, 947 So. 2d 910 (Miss. 2006).
Flowers v. State, 842 So. 2d 531 (Miss. 2003).
Randall v. State, 806 So. 2d 185 (Miss. 2002).
Flowers v. State, 773 So. 2d 309 (Miss. 2000).
Edwards v. State, 737 So. 2d 275 (Miss. 1999).
Smith v. State, 733 So. 2d 793 (Miss. 1999).
Porter v. State, 732 So. 2d 899 (Miss. 1999).
Kolberg v. State, 704 So. 2d 1307 (Miss. 1997).
Snelson v. State, 704 So. 2d 452 (Miss. 1997).
Fusilier v. State, 702 So. 2d 388 (Miss. 1997).
Howard v. State, 701 So. 2d 274 (Miss. 1997).
Lester v. State, 692 So. 2d 755 (Miss. 1997).
Hunter v. State, 684 So. 2d 625 (Miss. 1996).
Lanier v. State, 684 So. 2d 93 (Miss. 1996).
Giles v. State, 650 So. 2d 846 (Miss. 1995).
Duplantis v. State, 644 So. 2d 1235 (Miss. 1994).
Harrison v. State, 635 So. 2d 894 (Miss. 1994).
Butler v. State, 608 So. 2d 314 (Miss. 1992).
Jenkins v. State, 607 So. 2d 1171 (Miss. 1992).
vii
Abram v. State, 606 So. 2d 1015 (Miss. 1992).
Balfour v. State, 598 So. 2d 731 (Miss. 1992).
Griffin v. State, 557 So. 2d 542 (Miss. 1990).
Bevill v. State, 556 So. 2d 699 (Miss. 1990).
West v. State, 553 So. 2d 8 (Miss. 1989).
Leatherwood v. State, 548 So. 2d 389 (Miss. 1989).
Mease v. State, 539 So. 2d 1324 (Miss. 1989).
Houston v. State, 531 So. 2d 598 (Miss. 1988).
West v. State, 519 So. 2d 418 (Miss. 1988).
Davis v. State, 512 So. 2d 129l (Miss. 1987).
Williamson v. State, 512 So. 2d 868 (Miss. 1987).
Foster v. State, 508 So. 2d 1111 (Miss. 1987).
Smith v. State, 499 So. 2d 750 (Miss. 1986).
West v. State, 485 So. 2d 681 (Miss. 1985).
Fisher v. State, 481 So. 2d 203 (Miss. 1985).
Johnson v. State, 476 So. 2d 1195 (Miss. 1985).
Fuselier v. State, 468 So. 2d 45 (Miss. 1985).
West v. State, 463 So. 2d 1048 (Miss. 1985).
Jones v. State, 461 So. 2d 686 (Miss. 1984).
Moffett v. State, 456 So. 2d 714 (Miss. 1984).
Lanier v. State, 450 So. 2d 69 (Miss. 1984).
Laney v. State, 421 So. 2d 1216 (Miss. 1982).
viii
DEATH CASES REVERSED
AS TO PUNISHMENT AND REMANDED
FOR RESENTENCING TO LIFE IMPRISONMENT
Reddix v. State, 547 So. 2d 792 (Miss. 1989).
Wheeler v. State, 536 So. 2d 1341 (Miss. 1988).
White v. State, 532 So. 2d 1207 (Miss. 1988).
Bullock v. State, 525 So. 2d 764 (Miss. 1987).
Edwards v. State, 441 So. 2d 84 (Miss. l983).
Dycus v. State, 440 So. 2d 246 (Miss. 1983).
Coleman v. State, 378 So. 2d 640 (Miss. 1979).
ix
DEATH CASES REVERSED AS TO
PUNISHMENT AND REMANDED FOR A NEW TRIAL
ON SENTENCING PHASE ONLY
Rubenstein v. State, 941 So. 2d 735 (Miss. 2006).
King v. State, 784 So. 2d 884 (Miss. 2001).
Walker v. State, 740 So. 2d 873 (Miss. 1999).
Watts v. State, 733 So. 2d 214 (Miss. 1999).
West v. State, 725 So. 2d 872 (Miss. 1998).
Smith v. State, 724 So. 2d 280 (Miss. 1998).
Berry v. State, 703 So. 2d 269 (Miss. 1997).
Booker v. State, 699 So. 2d 132 (Miss. 1997).
Taylor v. State, 672 So. 2d 1246 (Miss. 1996).
*Shell v. State, 554 So. 2d 887 (Miss. 1989), Shell v. Mississippi, 498 U.S. 1 (1990)
reversing, in part, and remanding, Shell v. State 595 So. 2d 1323 (Miss. 1992) remanding for
new sentencing hearing.
*Pinkney v. State, 538 So. 2d 329 (Miss. 1989), Pinkney v. Mississippi, 494 U.S.
1075 (1990) vacating and remanding, Pinkney v. State, 602 So. 2d 1177 (Miss. 1992)
remanding for new sentencing hearing.
*Clemons v. State, 535 So. 2d 1354 (Miss. 1988), Clemons v. Mississippi, 494 U.S.
738 (1990) vacating and remanding, Clemons v. State, 593 So. 2d 1004 (Miss. 1992)
remanding for new sentencing hearing.
*Jones v. State, 517 So. 2d 1295 (Miss. 1987), Jones v. Mississippi, 487 U.S. 1230
(1988) vacating and remanding, Jones v. State, 602 So. 2d 1170 (Miss. 1992) remanding for
new sentencing hearing.
Russell v. State, 607 So. 2d 1107 (Miss. 1992).
Holland v. State, 587 So. 2d 848 (Miss. 1991).
Willie v. State, 585 So. 2d 660 (Miss. 1991).
x
Ladner v. State, 584 So. 2d 743 (Miss. 1991).
Mackbee v. State, 575 So. 2d 16 (Miss. 1990).
Berry v. State, 575 So. 2d 1 (Miss. 1990).
Turner v. State, 573 So. 2d 657 (Miss. 1990).
State v. Tokman, 564 So. 2d 1339 (Miss. 1990).
Johnson v. State, 547 So. 2d 59 (Miss. 1989).
Williams v. State, 544 So. 2d 782 (Miss. 1989); sentence aff'd 684 So. 2d 1179
(1996).
Lanier v. State, 533 So. 2d 473 (Miss. 1988).
Stringer v. State, 500 So. 2d 928 (Miss. 1986).
Pinkton v. State, 481 So. 2d 306 (Miss. 1985).
Mhoon v. State, 464 So. 2d 77 (Miss. 1985).
Cannaday v. State, 455 So. 2d 713 (Miss. 1984).
Wiley v. State, 449 So. 2d 756 (Miss. 1984); resentencing affirmed, Wiley v. State,
484 So. 2d 339 (Miss. 1986), cert. denied Wiley v. Mississippi, 479 U.S. 1036 (1988);
resentencing ordered, Wiley v. State, 635 So. 2d 802 (Miss. 1993) following writ of habeas
corpus issued pursuant to Wiley v. Puckett, 969 So. 2d 86, 105-106 (5 th Cir. 1992);
resentencing affirmed, Wiley v. State, 95-DP-00149, February 13, 1997 (rehearing pending).
Williams v. State, 445 So. 2d 798 (Miss. 1984). *Case was originally affirmed in this
Court but on remand from U. S. Supreme Court, case was remanded by this Court for a new
sentencing hearing.
xi | 01-03-2023 | 04-27-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/865945/ | IN THE SUPREME COURT OF MISSISSIPPI
NO. 2009-CT-00699-SCT
BARRY GREGG
v.
NATCHEZ TRACE ELECTRIC POWER
ASSOCIATION AND ELECTRIC POWER
ASSOCIATIONS OF MISSISSIPPI WORKERS’
COMPENSATION GROUP, INC.
ON WRIT OF CERTIORARI
DATE OF JUDGMENT: 04/14/2009
TRIAL JUDGE: HON. JOSEPH H. LOPER, JR.
COURT FROM WHICH APPEALED: WEBSTER COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT: ANGELA TURNER LAIRY
BENNIE L. TURNER
ATTORNEY FOR APPELLEES: AMY K. TAYLOR
NATURE OF THE CASE: CIVIL - WORKERS’ COMPENSATION
DISPOSITION: REVERSED AND REMANDED - 06/09/2011
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
EN BANC.
CHANDLER, JUSTICE, FOR THE COURT:
¶1. Barry Gregg filed a petition to controvert concerning a work-related injury to his back
that he sustained at his job as a serviceman with Natchez Trace Electric Power Association
(Natchez). Gregg claimed that the injury had rendered him permanently partially disabled
because, due to a pole-climbing restriction imposed after the injury, he was no longer able
earn on-call compensation. After a hearing, an administrative law judge found Gregg had
sustained no permanent disability. The Workers’ Compensation Commission (Commission)
adopted the findings of the administrative law judge. Gregg appealed to the Circuit Court
of Webster County, which affirmed the order of the Commission. Then, Gregg appealed to
the Court of Appeals, which affirmed the decision of the circuit court. Gregg v. Natchez
Trace Electric Power Ass’n, 2010 WL 2280588, at *5 (Miss. Ct. App. June 8, 2010).
¶2. This Court granted Gregg’s petition for certiorari to consider whether the Commission
erred by denying permanent partial disability benefits. We reverse and remand to the
Commission for a hearing on the issue of lost wage-earning capacity.
FACTS
¶3. Gregg worked as a serviceman for Natchez. On July 21, 2004, he sustained an
admittedly compensable injury to his lower back while lifting a tool belt. Gregg had surgery
on his back, and his treating physician determined that he had reached maximum medical
improvement on May 2, 2006. He returned to work on December 15, 2006, with a ten
percent anatomical disability rating and a permanent climbing restriction.
¶4. At a hearing before an administrative law judge, Gregg testified that his preinjury job
duties had consisted of restoring power, turning power on and off, climbing poles, and
climbing ladders and hooking up service. He stated that his preinjury duties had required
climbing and some heavy lifting. Gregg and his supervisor testified that he also had
performed on-call service calls. Gregg was on call every other week for a seven-day period.
He received a flat rate of one hour of time-and-a-half pay for each day he was on call,
whether or not he actually performed any service calls that day. Gregg also automatically
2
received two hours of time-and-a-half pay for each on-call service call that he performed,
plus additional hourly pay if the time exceeded two hours.
¶5. After the injury, Gregg returned to work as a serviceman; his supervisor testified that
other members of Gregg’s crew performed any climbing that was required on the job. Both
Gregg and his supervisor testified that, because Gregg could no longer climb, he was taken
off the on-call list. Gregg claimed that he was permanently partially disabled because, due
to the climbing restriction, he was no longer able to earn on-call compensation after the
injury as he did before the injury.
¶6. Gregg’s preinjury average weekly wage was $840.21, including on-call compensation,
and his post-injury average weekly wage was $891.21, without on-call compensation. Gregg
testified that the reason his post-injury earnings exceeded his preinjury earnings was that his
base pay as a serviceman had increased due to cost-of-living raises. He testified that, because
he was taken off the on-call list, he was no longer eligible to earn on-call compensation in
addition to his base pay. Gregg argued that, but for the injury, he would receive
compensation for on-call duties in addition to his base pay, as he did preinjury. Therefore,
Gregg argued, his wage-earning capacity had decreased due to the injury.
¶7. The administrative law judge found that Gregg had failed show any permanent
disability as a result of the injury. The full Commission, with one commissioner dissenting,
adopted the decision of the administrative law judge. Gregg appealed to the circuit court,
which affirmed the order of the Commission. The Court of Appeals affirmed the decision
of the circuit court.
STANDARD OF REVIEW
3
¶8. This Court’s review of a decision of the Workers’ Compensation Commission is
limited to determining whether the decision was supported by substantial evidence, was
arbitrary and capricious, was beyond the scope or power of the agency to make, or violated
one’s constitutional or statutory rights. Short v. Wilson Meat House, LLC, 36 So. 3d 1247,
1250 (Miss. 2010) (quoting Public Employees' Ret. Sys. v. Dearman, 846 So. 2d 1014, 1018
(Miss. 2003)). The concept of substantial evidence overlaps with the arbitrary-and-
capricious standard, such that a decision that is unsupported by substantial evidence is
necessarily arbitrary and capricious. Id. at 1251. Because the Commission is the ultimate
fact-finder and judge of the credibility of the witnesses, this Court may not reweigh the
evidence before the Commission. Id. (quoting Barber Seafood, Inc. v. Smith, 911 So. 2d
454, 461 (Miss. 2005)).
¶9. This Court affords de novo review to the Commission’s application of the law.
Natchez Equip. Co., Inc. v. Gibbs, 623 So. 2d 270, 273 (Miss. 1993). “The legal effect of
the evidence, and the ultimate conclusions drawn by [the Commission] from the facts . . . are
questions of law, especially where the facts are undisputed or the overwhelming evidence
reflects them.” Cent. Elec. Power Ass’n v. Hicks, 236 Miss. 378, 388-89, 110 So. 2d 351,
356 (1959). "[W]hen the agency has misapprehended a controlling legal principle, no
deference is due, and our review is de novo." ABC Mfg. Corp. v. Doyle, 749 So. 2d 43, 45
(Miss. 1999).
DISCUSSION
¶10. Under the Workers’ Compensation Law, “compensation shall be payable for disability
. . . of an employee from injury . . . arising out of and in the course of employment, without
4
regard to fault . . . .” Miss. Code Ann. § 71-3-7 (Rev. 2000). “‘Disability’ means incapacity
because of injury to earn the wages which the employee was receiving at the time of injury
in the same or other employment, which incapacity and the extent thereof must be supported
by medical findings.” Miss. Code Ann. § 71-3-3(i) (Rev. 2000). “Disability” comprises (1)
an actual physical injury; and (2) loss of wage-earning capacity. I. Taitel & Son v. Twiner,
157 So. 2d 44, 46 (Miss. 1963).
¶11. The claimant bears the burden of proof of disability and its extent. Am. Potash &
Chem. Corp. v. Rea, 228 So. 2d 867, 868 (Miss. 1969). This is not a simple comparison of
the preinjury wage with the post-injury wage. Karr v. Armstrong Tire & Rubber Co., 216
Miss. 132, 137, 61 So. 2d 789, 792 (1953). “The benefits are figured on a percentage of
applicant's average weekly wages at the time of the injury as compared to ‘his wage-earning
capacity thereafter in the same employment or otherwise.’” Id.
¶12. A rebuttable presumption of no loss of wage-earning capacity arises when the
claimant’s post-injury wages are equal to or exceed his preinjury wage. Gen. Elec. Co. v.
McKinnon, 507 So. 2d 363, 365 (Miss. 1987). This presumption is rebutted by
evidence on the part of the claimant that the post-injury earnings are unreliable
due to: increase in general wage levels since the time of accident, claimant's
own greater maturity and training, longer hours worked by claimant after the
accident, payment of wages disproportionate to capacity out of sympathy to
claimant, and the temporary and unpredictable character of post-injury
earnings.
Id. (emphasis added). “[A]ny factor or condition which causes the actual post-injury wages
to become a less reliable indicator of earning capacity will be considered.” Id.
5
¶13. In the decision adopted by the Commission, the administrative law judge observed
that Gregg makes more money after the injury than he earned before the injury. The
administrative law judge found that Gregg had shown that he was permanently restricted
from climbing. In her decision, the administrative law judge stated:
The claimant suffered an admittedly compensable injury in the form a
[sic] back injury and was temporarily and totally disabled from the date of July
21, 2004 to and through the date designated and stipulated to be the date of
maximum medical improvement, namely May 2, 2006.
Lay and medical testimony indicate that the claimant was ultimately
returned to full duty with singular description and/or restriction of “no
climbing” later specified to be “no pole climbing” which could indeed have
been a part of serviceman work for the power company. However, lay
testimony was replete with references that such “pole climbing” is not required
for the discharging of all pertinent duties relative to the claimant's current
employment. He is in no danger of losing his job because of this permanent
restriction and, further, it has no impact on his wage earning potential. Ergo,
all factors considered, the claimant has suffered no [loss of] wage earning
capacity and none is found.
The Court of Appeals affirmed the Commission’s decision on the basis of the presumption
that, because Gregg earns more after his injury than he earned before the injury, Gregg had
failed to prove that the climbing restriction had caused a loss of wage-earning capacity.
Gregg, 2010 WL 2280588, at *4.
¶14. The Court of Appeals found that Gregg had failed to rebut the presumption of no loss
of wage-earning capacity that arose, because his post-injury wages exceeded his preinjury
wages, including on-call compensation, by approximately $50 per week. Id. The Court of
Appeals affirmed the finding of no loss of wage-earning capacity, reasoning that, because
Gregg earned more money post-injury without on-call compensation than he had earned
preinjury with on-call compensation, he had incurred no loss of wage-earning capacity. This
6
reasoning ignored the fact that Gregg had proven he was no longer eligible to earn on-call
compensation because of the climbing restriction imposed due to the injury.
¶15. The Court of Appeals held that Gregg’s own testimony was the only evidence before
the Commission that showed that Gregg was no longer eligible to earn on-call compensation
due to the injury. Gregg, 2010 WL 2280588, at *4. The Court of Appeals stated: “[Gregg’s]
weekly wage increased, and Gregg’s testimony failed to show both that he could not earn
[on-call compensation] and also that he could not perform the duties of a serviceman with
his climbing restriction.” Id. Contrary to this finding of the Court of Appeals, the record
reflects undisputed evidence that Gregg’s post-injury wages at Natchez would have been
higher but for the climbing restriction, because he could not earn on-call compensation post-
injury. The following testimony is taken from Gregg’s cross-examination of the employer’s
representative:
Q. Now Mr. Gregg has testified this morning that when he was working as a
service man, he sometimes was on call for approximately seven days per week
at a time; is that correct?
A. That’s correct.
Q. And he told us that when he was on call, if he received a call, he was
compensated two hours overtime for the call assuming that it required two
hours or less time to service it; is that correct?
A. That’s correct.
Q. And if it took six hours, he got six hours overtime?
A. That’s correct.
Q. Now he has told the Court that since he has been on this climbing
restriction by his doctor, he’s not on call any longer; is that correct?
7
A. That’s correct.
Q. So whatever overtime he was generating from being on call, he’s not
eligible for that now; is that correct?
A. He’s not eligible for that time, but there is – sometimes if he’s not on call
a week at a time like he was, but there are some times I might call him for
special things.
Q. That might be a certain occurrence or emergency where he may be called
out and get some overtime, is that what you’re telling me?
A. That’s right.
Q. He has, I believe, testified that he estimated he probably got two calls
during this seven-day period that he was on call, which would result in,
approximately, four hours of overtime during that period. Would you disagree
with that?
A. No, not really . . . .
Thus, Natchez admitted that Gregg was no longer eligible to earn on-call compensation due
to his work-related injury.
¶16. But for the climbing restriction imposed by his work-related injury, Gregg now could
earn an amount over and above his regular wages through steady on-call compensation by
being on-call every other week, as he had been preinjury. Because he had earned one hour
of on-call compensation for every day he was on call, and he had been on call at least
fourteen days per month, Gregg would have earned at least fourteen hours of on-call
compensation in addition to his base pay but for the injury. Therefore, although Gregg’s
regular wages increased post-injury, his post-injury income would have been higher but for
the climbing restriction, because he could no longer augment his regular wages with steady
on-call compensation. The record evidence supporting this conclusion is undisputed.
8
Therefore, the Commission erred by finding that the injury “ha[d] no impact on his wage-
earning potential.”
¶17. The Commission erred by considering Gregg’s higher wage post-injury as
determinative of no lost wage-earning capacity. All of the evidence before the administrative
law judge showed that Gregg had rebutted the presumption of no lost wage-earning capacity.
We reverse and remand this case to the Commission for further development of the evidence
concerning Gregg’s wage-earning capacity.
¶18. REVERSED AND REMANDED.
WALLER, C.J., CARLSON AND DICKINSON, P.JJ., RANDOLPH,
KITCHENS AND PIERCE, JJ., CONCUR. LAMAR, J., CONCUR IN RESULTS
ONLY. KING, J., NOT PARTICIPATING.
9 | 01-03-2023 | 04-27-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/865946/ | IN THE SUPREME COURT OF MISSISSIPPI
NO. 2009-KA-00752-SCT
LARRY SETZER
v.
STATE OF MISSISSIPPI
DATE OF JUDGMENT: 04/07/2009
TRIAL JUDGE: HON. ROBERT P. CHAMBERLIN
COURT FROM WHICH APPEALED: DESOTO COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANT: T. SWAYZE ALFORD
ATTORNEY FOR APPELLEE: OFFICE OF THE ATTORNEY GENERAL
BY: JOHN R. HENRY, JR.
DISTRICT ATTORNEY: JOHN W. CHAMPION
NATURE OF THE CASE: CRIMINAL - FELONY
DISPOSITION: AFFIRMED - 02/17/2011
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE CARLSON, P.J., RANDOLPH AND KITCHENS, JJ.
KITCHENS, JUSTICE, FOR THE COURT:
¶1. Larry Setzer appeals his convictions of two counts of manslaughter by culpable
negligence in violation of Mississippi Code Section 97-3-47, and one count of driving under
the influence (DUI), resulting in permanent injury, in violation of Mississippi Code Section
63-11-30(5). Finding that the trial judge did not err by denying Setzer’s motion to suppress
the results of his blood test, we affirm.
Facts and Procedural History
¶2. On the evening of April 17, 2007, Larry Setzer was driving east in a Ford F-250
pickup truck on Goodman Road in Southaven, Mississippi. As Setzer approached the traffic
light at the intersection of Goodman Road and Airways Boulevard, his vehicle collided with
a stationary Buick Park Avenue passenger car in the north turn lane of east Goodman Road.
The pickup pushed the car into the intersection, causing a four-vehicle collision on the west-
bound side of Goodman Road. Before coming to its final resting place, the Buick struck a
Dodge Intrepid automobile in the south turn lane of west Goodman Road, which caused the
Dodge to collide with an 18-wheeler (an over-the-road tractor with trailer in tow) in the
inside lane of west Goodman Road. The Ford pickup truck overturned onto its passenger
side and slid into the 18-wheeler before coming to a complete stop.
¶3. Setzer was the only occupant of the Ford pickup truck. As a result of the accident, he
suffered two broken teeth, a head injury, a neck sprain, lacerations to his right elbow, and
abrasions to his abdomen, back, chest, and neck. The Buick was occupied by its driver,
Glyness Lannom, and passengers Phillip Bieselin, Jacob Lannom, and Zachary Lannom.
Bieselin was left partially paralyzed, and Jacob and Zachary Lannom perished as a result of
injuries they suffered in the collision. Glyness Lannom suffered serious injuries as a result
of the collision. The driver of the Dodge suffered minor injuries that were treated at the
scene of the accident. The driver of the 18-wheeler suffered no injuries.
¶4. Southaven Police Officer Jordan Jones was in charge of investigating the accident.
After interviewing witnesses and viewing the physical evidence at the scene, Officer Jones
found Setzer as he was being treated in a Southaven Fire Department ambulance. Officer
2
Jones testified that the ambulance was still at the scene of the accident, that he was in
uniform when he approached Setzer, that he advised Setzer of his Miranda rights in
accordance with Miranda v. Arizona, 384 U.S. 436, 467-68, 86 S. Ct. 1602, 16 L. Ed. 2d
694 (1966), that he asked Setzer for his account of the accident, and that Setzer did not
appear to be injured. Officer Jones said that Setzer appeared angry, aggressive, and
uncooperative with the medical personnel who were attempting to treat him in the
ambulance. Additionally, Officer Jones testified that Setzer had bloodshot eyes and slurred
speech, which Officer Jones deemed to be indicators of intoxication. Officer Jones then
administered a portable breath test to Setzer, which resulted in a reading of 000, ruling out
the presence of alcohol. Setzer attributed his bloodshot eyes and slurred speech to his
injuries.
¶5. Setzer was transported from the accident scene to Baptist Memorial Hospital-DeSoto,
a distance of approximately one mile. Officer Jones followed the ambulance to the hospital,
located Setzer in a private room of the emergency department, reintroduced himself to Setzer,
and advised Setzer of his Miranda rights for a second time. Officer Jones testified that
Setzer verbally acknowledged that he understood his Miranda rights. Setzer testified at the
trial; however, Setzer gave no testimony with regard to whether he recalled Officer Jones’s
advising him of his Miranda rights or whether Setzer had acknowledged and waived those
rights.
¶6. While at the hospital, a nurse drew a blood sample from Setzer for investigative
purposes. At the time of the blood collection, Setzer was not under arrest. Additionally, the
record is clear that Setzer never gave written consent for blood to be drawn for crime
3
laboratory analysis. However, Officer Jones was adamant that Setzer twice gave Officer
Jones verbal consent for the blood draw. Teresa Windham, the nurse who extracted the
blood from Setzer, testified that she did not recall whether Setzer had given his consent for
the blood draw, but added that she would not have drawn Setzer’s blood at the request of the
Officer Jones without consent from Setzer.
¶7. Officer Jones took the blood sample to Officer Jeff Logan, who still was at the
accident scene. The blood sample was sent to NMS Labs to be tested. The report generated
by NMS Labs said that Setzer’s blood had tested positive for alprazolam 1 in the amount of
73 ng/mL. The NMS Labs report also said that the therapeutic range for alprazolam is 10-50
ng/mL.
¶8. On November 17, 2007, Setzer was indicted for two counts of DUI resulting in death
and one count of DUI resulting in permanent injury, in violation of Mississippi Code Section
63-11-30(5) (Rev. 2004).
¶9. On October 21, 2008, Setzer filed a motion to suppress all testimony and evidence
regarding the sample of blood drawn from him, alleging that he had not consented to the
blood draw, that he had not been under arrest at the time of the blood draw, that the State had
not secured a search warrant for the blood draw, and that no probable cause and no exigent
circumstances had negated the search-warrant requirement.
1
Alprazolam is also known by the brand names Niravam and Xanax. U.S. National
Library of Medicine, http://www.ncbi.nlm.nih.gov/pubmedhealth/PMH0000807 (last visited
Feb. 15, 2011).
4
¶10. On February 12, 2009, the State offered to reduce the charges against Setzer. On
February 13, 2009, the State proceeded against Setzer upon a bill of information, charging
Setzer with two counts of culpable negligence manslaughter under Mississippi Code Section
97-3-47, and one count of DUI assault under Mississippi Code Section 63-11-30(5). On that
date, Setzer filed his “waiver of right to grand jury procedure and petition to proceed on
information.” 2
¶11. Following a pretrial hearing, the trial judge denied Setzer’s motion to suppress. The
court held that, based on the evidence before it, Officer Jones “had probable cause to believe
that Setzer had committed the crime of DUI causing death and/or injury and that exigent
circumstances existed which authorized his attempt to obtain a blood sample without a
warrant.” Additionally, the trial court held that, based on the testimony of Officer Jones and
Nurse Windham, “Setzer knowingly and voluntarily consented to the drawing of the blood
sample.”
¶12. The State and Setzer also entered into a stipulation of facts. In that stipulation, Setzer
agreed to waive the exercise of his right to a trial by jury and his right to confront witnesses
against him; however, Setzer reserved his right to appeal the trial court’s denial of his motion
to suppress evidence of the blood draw. The stipulation summarized the evidence that the
State would offer at trial, and agreed that the evidence would be sufficient to meet the State’s
burden of proof.3 In addition to the testimony of the eyewitnesses to the accident and Officer
2
The charges in the indictment were committed to the inactive files on February 17,
2009.
3
The stipulation provided that the State would offer testimony from eyewitnesses to
the accident as well as testimony from Nurse Windham, a toxicologist from NMS Labs, and
5
Jones, the stipulation of facts provided that the State would offer the testimony of Robert
Camp, a limousine driver, who had observed Setzer driving in an erratic manner prior to the
wreck. However, Setzer did not stipulate that the blood drawn and later tested was obtained
with his consent or taken based on probable cause.
¶13. At the conclusion of a bench trial4 on February 13, 2009, the trial judge found Setzer
guilty of two counts of manslaughter by culpable negligence and guilty of one count of DUI
causing death or permanent bodily injury. Setzer was sentenced to serve fifteen years in the
custody of the Mississippi Department of Corrections on count one; fifteen years, suspended,
on count two, to run concurrently with the sentence for count one; and ten years’ post-release
supervision on count three. Additionally, Setzer was ordered to pay a $1,000 fine, $100 to
the Crime Victims’ Compensation fund, court costs, and $17,512.20 to the Office of the
Attorney General. Aggrieved, Setzer appealed.
Issue
¶14. Setzer asks this Court to determine whether the trial court erred in denying his pretrial
motion to suppress evidence of the blood test. Setzer maintains that he did not consent to the
collection of a blood sample, that the State lacked probable cause to collect the blood sample,
and no exigent circumstances were present which would have negated the requirement for
a search warrant.
Standard of Review
Officer Jones.
4
Setzer waived his right to trial by jury.
6
¶15. “A circuit court judge sitting without a jury is accorded the same deference with
regard to his findings as a chancellor, and his findings are safe on appeal where they are
supported by substantial, credible, and reasonable evidence.” Trinity Mission Health &
Rehab of Holly Springs, LLC v. Lawrence, 19 So. 3d 647, 649 (Miss. 2009) (quoting Par
Indus., Inc. v. Target Container Co., 708 So. 2d 44, 47 (Miss. 1998)). “[W]e will not
overturn findings of fact where they are supported by substantial evidence in the record
unless there was abuse of discretion by the trial judge or the findings were manifestly wrong
or clearly erroneous.” Morley v. Jackson Redevelopment Auth., 874 So. 2d 973, 975 (Miss.
2004). Moreover, “[t]his Court can reverse a trial court’s denial of a motion to suppress
only: if the incorrect legal principle was applied; if there was no substantial evidence to
support a voluntary, knowing, and intelligent waiver of Miranda rights; and if the denial was
a result of manifest error.” Scott v. State, 8 So. 3d 855, 861 (Miss. 2008).
Discussion
¶16. “The right of the people to be secure in their persons, houses, papers, and effects,
against unreasonable searches and seizures, shall not be violated.” U.S. Const. amend. IV.
“The people shall be secure in their persons, houses, and possessions, from unreasonable
seizure or search.” Miss. Const. art. 3 § 23. “A search made without warrant and not
incident to a lawful arrest is not illegal per se, but if the fruits of the search are to withstand
the exclusionary rule, the search must have been predicated on probable cause.” McDuff v.
State, 763 So. 2d 850, 854 (Miss. 2000) (quoting Hailes v. State, 268 So. 2d 345, 346 (Miss.
1972)). Moreover, “[t]he degree of intrusion necessary in the taking of a blood sample is
sufficient to require the presence of probable cause. The Fourth Amendment prohibition
7
against unreasonable search and seizure applies when an intrusion into the body – such as
a blood test – is undertaken without a warrant, absent an emergency situation.” Cole v. State,
493 So. 2d 1333, 1336 (Miss. 1986) (quoting Schmerber v. Cal., 384 U.S. 757, 770-71, 86
S. Ct. 1826, 1835-36, 16 L. Ed. 2d 908, 919-20 (1966)). However, this Court has upheld the
collection of a blood sample, absent the suspect’s arrest or consent, where probable cause
existed for the search. Gibson v. State, 503 So. 2d 230, 233 (Miss. 1987).
¶17. Setzer contends that, based on the totality of the circumstances, it is clear that he did
not consent to the collection of his blood for the purpose its being used in the State’s
prosecution of him. Setzer made a similar argument in support of his motion to suppress.
In that motion, Setzer averred that “[a]t the time the State seized Defendant’s blood,
Defendant was not under arrest, he did not consent to his blood being taken, no warrant had
been secured by the State, and the State’s discovery provides no evidence of probable cause
that Defendant was under the influence or that an exigent circumstance existed that negated
the requirement for a warrant.” The trial court denied Setzer’s motion to suppress, and in its
written order found that:
a. Officer Jones properly responded to an automobile accident involving four
(4) cars within his jurisdiction;
b. The officer determined that a serious accident had occurred and, upon
viewing the scene closer, noted two (2) children who, based upon his
experience, appeared to be deceased. He also noted another passenger who
appeared to be seriously injured;
...
d. From his investigation, Officer Jones determined that the defendant’s
vehicle had rear-ended the victim’s vehicle and pushed it through the
intersection;
...
8
f. Officer Jones observed at this time that the defendant appeared angry,
aggressive and uncooperative. Officer Jones stated that he observed bloodshot
eyes and slurred speech which he deemed to be indicators of intoxication;
g. Officer Jones offered the defendant a portable breath test which the
defendant took and passed, ruling out the presence of alcohol;
h. Testimony was presented as to the difficulty in time of obtaining a warrant
and the fact that blood intoxication evidence would dissipate over time;
i. Officer Jones went to defendant Setzer’s room in the Emergency Room at
Baptist-Desoto hospital to request consent to draw Setzer’s blood. Officer
Jones once again read Mr. Setzer his Miranda rights and Setzer said he
understood these rights. Defendant Setzer did consent to the drawing of his
blood.
j. Officer Jones obtained the services of E.R. nurse, Teresa Windham, to draw
the blood. Officer Jones stated he received consent again from Mr. Setzer in
the presence of nurse Windham. Nurse Windham testified that she did not
remember the officer asking for consent in her presence but did state that she
would not have drawn the blood if the defendant had refused.
¶18. The trial court, relying on the rationale of Longstreet v. State, 592 So. 2d 16 (Miss.
1991), held that, based on these facts, Officer Jones “had probable cause to believe that
Setzer had committed the crime of DUI causing death and/or injury and that exigent
circumstances existed which authorized his attempt to obtain a blood sample without a
warrant.” Additionally, the trial court found that Setzer “knowingly and voluntarily
consented to the drawing of the blood sample.”
¶19. Regarding Setzer’s allegation that he had not consented to the blood draw, the trial
judge was challenged with determining the credibility and veracity of the witnesses before
him. See Mohr v. State, 584 So. 2d 426, 431 (Miss. 1991). Officer Jones testified that Setzer
twice gave him verbal consent for the blood draw. Windham, the nurse who extracted the
blood from Setzer, testified that she did not recall whether Setzer gave consent for the blood
draw, but added that she would not have drawn Setzer’s blood at the request of Officer Jones
without consent from Setzer. Although Setzer argues that he never signed a consent form,
9
this Court has never held that written consent is required for a blood draw. Therefore, based
on the testimony before the trial court, we cannot say that the trial judge erred in finding that
Setzer had consented to the drawing of a sample of his blood.
¶20. Further, in Longstreet, 592 So. 2d at 18, this Court held that “blood searches which
are based upon probable cause are not illegal.” In this case, Setzer’s vehicle collided with
a stationary vehicle as he approached a traffic signal. Officer Jones had considerable reason
to believe that Setzer was intoxicated. Specifically, Officer Jones observed Setzer’s being
uncooperative with medical technicians who were attempting to treat him at the scene of the
accident, and he testified that Setzer had slurred speech and bloodshot eyes. Consistent with
the decision in Longstreet, the trial court did not err in holding that Officer Jones had
probable cause to believe that Setzer had committed the crime of DUI causing death or
injury. See also Wilkerson v. State, 731 So. 2d 1173, 1176 (Miss. 1999) (“Where the state
is justified in requiring a blood test to determine the alcoholic content in a suspect’s blood,
and the test has been performed, the state is entitled to the benefit of the test results.” (citing
Longstreet, 592 So. 2d at 21)); Green v. State, 710 So. 2d 862, 865 (Miss. 1998) (“[A]s long
as there is probable cause to believe that the person is impaired by some substance . . . the
results of the blood alcohol concentration tests are admissible.”); Whitley v. State, 511 So.
2d 929, 931 (Miss. 1986) (blood-alcohol test was admissible where officer had probable
cause to arrest Whitley and charge him with manslaughter); Cole v. State, 493 So. 2d 1333,
1335 (Miss. 1986) (“A search made without warrant and not incident to a lawful arrest is not
illegal per se, but if the fruits of the search are to withstand the exclusionary rule, the search
must have been predicated on probable cause.”); Ashley v. State, 423 So. 2d 1311, 1313
10
(Miss. 1982) (“At that time there existed probable cause for arrest and also probable cause
to search appellant by requiring him to submit to the withdrawal of blood from his body to
be tested.”).
Conclusion
¶21. The trial court did not abuse its discretion in finding that Officer Jones’s actions were
supported by probable cause and in finding that Setzer had consented to the search, as those
findings are supported by substantial, credible, and reasonable evidence. Trinity Missions,
19 So. 3d at 649. Moreover, the trial court did not apply an incorrect legal standard to this
case. Scott, 8 So. 3d at 861. Thus, the convictions and sentences are affirmed.
¶22. COUNT I: CONVICTION OF CULPABLE NEGLIGENCE MANSLAUGHTER
AND SENTENCE OF FIFTEEN (15) YEARS IN THE CUSTODY OF THE
MISSISSIPPI DEPARTMENT OF CORRECTIONS, AFFIRMED. COUNT II:
CONVICTION OF CULPABLE NEGLIGENCE MANSLAUGHTER AND
SENTENCE OF FIFTEEN (15) YEARS SUSPENDED, AFFIRMED. COUNT III:
CONVICTION OF DUI CAUSING PERMANENT BODILY INJURY AND
SENTENCE OF TEN (10) YEARS TO BE SERVED AS POST RELEASE
SUPERVISION, WITH CONDITIONS, AFFIRMED. SENTENCES IN COUNTS I
AND II SHALL RUN CONCURRENTLY.
WALLER, C.J., CARLSON AND GRAVES, P.JJ., DICKINSON, RANDOLPH,
LAMAR, CHANDLER AND PIERCE JJ., CONCUR.
11 | 01-03-2023 | 04-27-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1537407/ | 797 A.2d 1287 (2002)
369 Md. 165
Darrin Bernard RIDGEWAY
v.
STATE of Maryland.
No. 102, Sept. Term, 2001.
Court of Appeals of Maryland.
May 8, 2002.
Arthur A. DeLano, Jr., Asst. Public Defender (Stephen E. Harris, Public Defender, on brief), Baltimore, for petitioner.
Shannon E. Avery, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen. of Md., on brief), Baltimore, for respondent.
Argued before BELL, C.J., ELDRIDGE, RAKER, WILNER, CATHELL, HARRELL, and BATTAGLIA, JJ.
BATTAGLIA, Judge.
We are tasked to clarify the scope of authority that Maryland Rule 4-345 vests in the trial court to correct illegal sentences. The petitioner, convicted of two counts of first degree assault and three counts of reckless endangerment, was initially (and erroneously) sentenced for five counts of first degree assault. Having been advised of the error, the trial judge recalled the parties, vacated the sentences for three of the first-degree assault charges and imposed sentences for three reckless endangerment counts. The petitioner requests that this Court consider whether the actions taken by the trial court were legal pursuant to Rule 4-345.
I. Background
At 4:00 a.m. on July 22, 1998, the petitioner, Darrin Bernard Ridgeway, discharged a twelve-gauge shotgun three times into a mobile home in Laurel, Maryland. Two individuals, Richard Morgan Kinney and Beth Hanning, were struck in the legs as they slept. Three young girls also were present in the trailer home at the time of the shooting; although terrified *1288 by the shotgun blasts, they were not injured in the attack.
The petitioner alleged that the shooting was in retaliation for a kidnaping and assault initiated a few weeks earlier by three men, known to him as Man, Shawn and Pete, who accused the petitioner of stealing Seven Thousand Dollars worth of crack cocaine from them. The petitioner reported the assault to the Howard County Police Department on July 11, 1998, and explained to the authorities that his assaulters were involved in a drug distribution organization. The petitioner also gave additional information about several other people involved in the selling of crack cocaine, including disclosing to police officials that one of the victims, Richard Morgan Kinney, often allowed the three men to use his trailer home and car for the distribution of drugs.
During the interim between the assault allegedly inflicted upon the petitioner and the petitioner's attacks on the trailer home and its occupants, the petitioner stayed with two friends who ultimately testified that he informed them of his intention to kill the men who had kidnaped and threatened him. The friends also testified that the petitioner came to them after the shootings of July 22, 1998 and informed them of his actions, specifically that the petitioner fired a shotgun through the front door of an apartment that he believed the three men used, and then went to Kinney's trailer and fired three times into it.
Among other related charges, the petitioner was indicted for five counts of first degree assault and five counts of reckless endangerment related to the two adults and three children in Kinney's trailer home. On October 27, 1999, following a jury trial in the Circuit Court for Howard County, the petitioner was convicted of two counts of first degree assault (for the assault on Richard Morgan Kinney and Beth Hanning) and three counts of reckless endangerment (one for each girl in the vicinity of the shotgun blast).
At the subsequent sentencing hearing on April 20, 2000, the trial judge imposed consecutive sentences on five counts of first degree assault. The judge stated, in relevant part:
All right, sentence is as follows: As to count one, Mr. KinneyI'm satisfied that Mr. Kinney was in the drug business. He associated with drug people and, uh, that's how Mr. Ridgeway knew him and knew about his trailer. But even Mr. Kinney, even Mr. Kinney is entitled to be protected from being shot down in the middle of the night. So as to count one, the sentence is five years in the Department of Corrections. Now we get to all the innocent people. Count five, as to Beth Ann Hanning, the sentence is ten years, that sentence to run consecutive to the count one. As to nine, as to count nine, that's as to little Erica Kirkbirde, the sentence is ten years in the Department of Corrections, that sentence to run consecutive to count five. Sentence is as to count thirteen, count thirteen is little Erica Tyler-Thornburg, the sentence is ten years to run consecutively to the sentence imposed in count nine. As to count seventeen, that's little ... Danielle Tyler-Thornburg... the sentence is ten years in the Department of Corrections, that sentence to run consecutive to the sentence imposed in count thirteen. And as to count twenty-two, the malicious destruction of property, the Court will suspend the imposition of sentence generally. The Court regards the other counts as to second degree and reckless endangerment as merged. Total of forty-five years to be served in the Department of Corrections. *1289 After the sentence was imposed, the petitioner was advised of his post-trial rights and the parties were excused. Upon discovering a discrepancy between the verdict sheet and the commitment record, the clerk's office notified the trial judge of the error. Three hours after the parties were dismissed, the trial judge recalled the parties to correct the apparent error.[1] The court had imposed sentences for the first degree assault charges with respect to each of the children who were in the trailer when the petitioner shot into the trailer home. The jury, however, had acquitted the petitioner of these charges. The court explained that it regarded "the imposition of sentence in a count for which Mr. Ridgeway was found not guilty to be an illegal sentence." Therefore, to correct the illegal sentence, the court struck the three ten-year consecutive sentences for first degree assault upon the young girls and imposed three five-year consecutive sentences for each count of reckless endangerment for the young girls. Defense counsel noted an objection to any re-sentencing on the reckless endangerment counts.
The petitioner appealed his sentences on the reckless endangerment counts to the Court of Special Appeals arguing that the new sentences amounted to an increase from zero years to five years for each count in violation of Rule 4-345. The Court of Special Appeals disagreed and affirmed the sentences imposed by the Circuit Court. See Ridgeway v. State, 140 Md.App. 49, 779 A.2d 1031 (2001). The petitioner sought, and we granted, a writ of certiorari to consider the propriety of the trial judge's imposition of five-year sentences for each of petitioner's three reckless endangerment convictions after the vacatur of the prior ten-year sentences for each first degree assault.
II. Discussion
A court's revisory power with respect to the sentencing of a criminal defendant is provided in Maryland Rule 4-345, which states in part:
(a) Illegal sentence. The court may correct an illegal sentence at any time.
(b) Modification or reductionTime for. The court has revisory power and control over a sentence upon a motion filed within 90 days after its imposition (1) in the District Court, if an appeal has not been perfected, and (2) in a circuit court, whether or not an appeal has been filed. Thereafter, the court has revisory power and control over the sentence in case of fraud, mistake, or irregularity, or as provided in section (e) of this Rule. The court may not increase a sentence after the sentence has been imposed, except that it may correct an evident mistake in the announcement of a sentence if the correction is made on the record before the defendant leaves the courtroom following the sentencing proceeding.
The dispute in this case, and the decisional issue before this Court, is whether the trial judge's correction of the petitioner's sentence was pursuant to subsection (a) or subsection (b) of Rule 4-345. This distinction is of obvious significance because, as the Rule itself states, an illegal sentence may be corrected at any time, while correcting *1290 a mistake in a sentencing order that results in an increased sentence may only occur "before the defendant leaves the courtroom following the sentencing proceedings." Rule 4-345(a) and (b).
The petitioner argues that when the trial court recalled the parties after the initial sentencing hearing, it was modifying a "mistake in the announcement of a sentence" pursuant to subsection (b) of the Rule. The petitioner claims that he was, in essence, sentenced to zero years of imprisonment for the three reckless endangerment convictions initially, but that his sentence was increased to a total of fifteen years after the court's recall of the parties. Because the petitioner had left the courtroom following the initial sentencing proceeding, the Rule, the petitioner claims, prohibited the subsequent increase in the sentence.
The State argues, and the Court of Special Appeals agreed, that subsection (b) was inapplicable under the circumstances of this case because when the trial court recalled the parties, it was correcting an illegal sentence pursuant to subsection (a) rather than modifying the petitioner's sentence pursuant to subsection (b).
We agree with the State and affirm the judgment of the Court of Special Appeals. The sentences for the three first degree assault convictions were illegal and properly vacated pursuant to subsection(a) of Rule 4-345. A court cannot punish a defendant for a crime for which he or she has been acquitted. Thus, the court's re-sentencing on the reckless endangerment counts was not to correct a mistake, but rather, it was to correct this illegal sentence.
As we have oft stated, the legality of a sentence may be determined at any time, even on appeal. See Rule 4-345(a); see also State v. Kanaras, 357 Md. 170, 183-84, 742 A.2d 508, 516 (1999); State v. Griffiths, 338 Md. 485, 496, 659 A.2d 876, 882 (1995); Matthews v. State, 304 Md. 281, 288, 498 A.2d 655, 658 (1985) (quoting Walczak v. State, 302 Md. 422, 427, 488 A.2d 949, 951 (1985)). In Walczak v. State, 302 Md. 422, 488 A.2d 949 (1985), we explained that, "when the trial court has allegedly imposed a sentence not permitted by law, the issue should ordinarily be reviewed on direct appeal even if no objection was made in the trial court. Such review and correction of an illegal sentence is especially appropriate in light of the fact that Rule 4-345(a) ... provides that `[t]he court may correct an illegal sentence at any time.'" Id. at 427, 488 A.2d at 951. Thus, the trial court's actions were well within its authority as prescribed by Rule 4-345(a). In fact, had the trial court not acted to correct the illegal sentence, the Court of Special Appeals and this Court would have similar authority to correct the petitioner's sentence by vacating and remanding to the trial court for resentencing.
The petitioner incorrectly attempts to apply our holding in State v. Sayre, 314 Md. 559, 552 A.2d 553 (1989), to the circumstances in his case. The factual basis for the Sayre holding is exemplary of that which was intended to be prohibited under subsection (b), and a brief discussion of the differences will assist in distinguishing and clarifying the factual predicate for rulings pursuant to subsections (a) and (b). The defendant in Sayre was convicted of assaulting a prison guard; at sentencing, the trial court inadvertently sentenced the defendant to serve a five-year sentence "concurrent with," rather than "consecutive to," the sentences he was already serving. Id. at 560-61, 552 A.2d at 553-54. The prosecutor informed the court of the mistake within moments of the initial sentencing; the court thereafter re-called the defendant to modify the sentence to run "consecutive to" any term he was presently serving and explained that it had "meant to say consecutively" when the *1291 sentence was first imposed. Id. at 561, 552 A.2d at 554.
Because, with respect to a modificationand particularly an increaseof a legal sentence, it is not always possible "to distinguish between an inadvertent slip of the tongue and a true change of mind," id. at 564, 552 A.2d at 555, and because we were "unwilling to allow a procedure that [would] permit an inquiry of the sentencing judge's subjective intent," id. at 565, 552 A.2d at 556, we held that "once sentence has been imposed, there can be no inquiry into intention or inadvertence" under Rule 4-345(b). Id.[2]
Contrary to the case at hand, it is clear that the Sayre sentencing court attempted to correct a mistake or a "slip of the tongue" rather than correct an illegal sentence because, quite simply, the original sentence was not illegal. Thus, the trial court in Sayre was bound by Rule 4-345(b) and not Rule 4-345(a). See Sayre, 314 Md. at 561-62 n. 1, 552 A.2d at 554 n. 1. In the case sub judice, however, the trial court erroneously sentenced the petitioner for crimes for which he was not convicted; additionally, the reckless endangerment convictions were erroneously merged with non-existent first-degree assault "convictions."
We digress momentarily to comment on an argument primarily made to and addressed by the Court of Special Appeals regarding the petitioner's contention that the failure to sentence the petitioner on the reckless endangerment counts amounted to a sentence of zero years. We agree with our colleagues in the intermediate appellate court that the failure to sentence for the reckless endangerment count, or the merger of that count with the first degree assault count, does not amount to a sentence of zero years for reckless endangerment. See Ridgeway, 140 Md.App. at 61, 779 A.2d at 1038. Again, in the case at bar, the trial judge initially merged the reckless endangerment counts with the first-degree assault charges, of which the defendant was not convicted. The merger of petitioner's charges is unlike the situation with which we were presented in Fabian v. State, 235 Md. 306, 313, 201 A.2d 511, 515 (1964), where the defendant was convicted on three counts involving a warehouse break-in but the judge only sentenced him on one of those counts. We held that the failure to impose a sentence on the two counts may be treated as a suspended sentence for purposes of allowing the defendant to appeal those convictions. Id. The trial court in the case sub judice did not suspend sentence on the reckless endangerment counts altogether, nor did it sentence the petitioner to zero years for those counts; rather the record in this case unequivocally shows that the trial court (1) erroneously imposed a sentence based on the acquitted first-degree assault counts and (2) erroneously, and arguably impossibly, merged the reckless endangerment convictions with the counts of first-degree assault, for which the petitioner was acquitted. It is patently obvious that the court's initial sentences constituted illegal sentences and not merely a mistaken pronouncement of a legal sentence. Thus, Rule 4-345(a) is the applicable provision, as the sentencing court's decision to recall the parties was unequivocally and necessarily to correct the illegal sentence. The petitioner's subsequent sentences for the *1292 reckless endangerment counts were legally imposed. We affirm the judgment of the Court of Special Appeals.
JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED WITH COSTS.
WILNER, J., concurs and files a separate opinion, in which RAKER, J., joins.
WILNER, Judge, concurring, joined by RAKER, J.
I concur in the result. I write separately because, although the Court reaches the right result, it has not adequately addressed the issue actually raised by the petitioner.
As a result of shooting into the trailer occupied by five personstwo adults and three childrenRidgeway was charged with five counts, each, of first degree assault, second degree assault, attempted first degree murder, and reckless endangerment, and two counts of malicious destruction of property (one over $300 and one under $300). With respect to the two adults, the jury convicted him of first and second degree assault and reckless endangerment. As to the three children, the jury acquitted him of the assaults and convicted only of reckless endangerment. It also convicted of malicious destruction of property under $300. Notwithstanding the acquittals on three of the first and second degree assault charges, the court imposed five consecutive sentences for first degree assaultfive years with respect to the male adult victim and ten years each with respect to the female adult and the three children. The court suspended imposition of sentence on the malicious destruction of property conviction and said that it regarded the other counts of second degree assault and reckless endangerment as merged.
When apprised that Ridgeway had been acquitted of the assault charges with respect to the children, the court struck the sentences imposed on those counts as illegal and entered consecutive sentences of five years each on the reckless endangerment convictions. In this appeal, Ridgeway construes the court's initial action as a merger of the reckless endangerment convictions into the assault convictions and thus as a deliberate decision not to impose any sentence on the former. From that, he argues that, when the court later imposed the five-year sentences, it was effectively increasing the sentences from zero to five years, which, under the circumstances, Maryland Rule 4-345(b) forbids.
This Court finds no error in the reckless endangerment sentences, and I agree with that conclusion. It reaches that result, however, by treating the entire matter as simply the correction of illegal sentences. In so doing, it inappropriately collapses two different issues into one. Certainly, the striking of the three sentences imposed for assaulting the children represented the correction of illegal sentences. One cannot impose a sentence upon a charge of which the defendant was acquitted. That left the court with three reckless endangerment convictions for which no sentence had yet been imposed. To the extent that the court had previously announced a merger of those convictions, no such merger could lawfully have occurred as to the three counts involving the children, as there were no assault convictions into which they could be merged. That is a simple point, but it is one that should be made, as it lies at the heart of Ridgeway's argument. At that point, the court could, if it wished, have declined to enter any sentence on the reckless endangerment convictions. It was not compelled, as part of correcting the illegal sentences imposed on the assault convictions, to do anything with respect to the reckless endangerment convictions. The imposition of lawful sentences upon those three reckless endangerment *1293 convictions, therefore, was not part of or justified by the correction of any illegal sentence but was simply the act of entering initial sentences upon convictions for which no sentences had yet been imposed. That is why the sentences are lawfulthe same as if the court had initially deferred imposing sentence on those convictions.
Judge RAKER has authorized me to state that she joins in this concurring opinion.
NOTES
[1] The trial judge indicated that some of the confusion may have resulted from the fact that the charges on the verdict sheet were reversed from the order in which the counts appeared in the indictment. The counts in the indictment were grouped with respect to each victim, beginning with all charges for assault, reckless endangerment, etc. against Kinney and progressing to the charges against Hanning and the three young girls. The counts in the verdict sheet, however, were grouped with respect to each crime and progressed from the least severe charges to the most severe charges, irrespective of the victim against whom the crime was perpetrated.
[2] At the time of the Sayre decision, Rule 4-345(b) provided that a "court may modify or reduce or strike, but may not increase the length of, a sentence" once it has been imposed. See Sayre, 314 Md. at 560, 552 A.2d at 553. The Rule was thereafter amended, in 1992, to permit a limited opportunity for a sentencing judge to correct the pronouncement of a sentence, provided that the error was corrected on the record before the defendant left the courtroom. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1554568/ | 36 So.3d 31 (2009)
Lenzie GILL
v.
Mary Jones COBERN.
1070450.
Supreme Court of Alabama.
October 23, 2009.
Jerry M. Blevins, Montgomery, for appellant.
T. Randall Lyons and G. Baron Coleman of Webster, Henry, Lyons & White, P.C., Montgomery, for appellee.
PER CURIAM.
Lenzie Gill appeals from the trial court's dismissal of his claims against Mary Jones Cobern. We reverse and remand.
*32 Facts and Procedural History
On January 3, 2006, Gill and Viola Belser sued Mary Jones Cobern and Progressive Halcyon Insurance Co., Inc. ("Progressive"), seeking damages resulting from an automobile accident that occurred on or about May 1, 2004. Against Cobern Gill alleged negligence, negligence per se, recklessness, and wantonness, and against Progressive he alleged breach of contract and bad faith. Belser asserted against Cobern a claim of loss of consortium. On February 22, 2006, Progressive filed its answer, and on March 8, 2006, Cobern filed her answer. On January 26, 2007, Gill, Belser, and Progressive filed a stipulation of dismissal pursuant to Rule 41(a), Ala. R. Civ. P., dismissing without prejudice the claims against Progressive. The trial court granted the stipulation of dismissal on February 1, 2007. On February 2, 2007, the trial court entered an "order setting case for trial and scheduling order," setting a pretrial conference for July 13, 2007, and trial for July 23, 2007.
On July 13, 2007, Gill and Belser's attorney failed to appear at the pretrial conference and, as a result, the trial court dismissed their action for want of prosecution. Nothing in the record indicates that Cobern moved for a dismissal; the trial court made only an entry in the case-action summary, which stated:
"Defense counsel present. Plaintiff failed to appear for pre-trial conference. Case dismissed for want of prosecution."
Because it did not otherwise specify, the trial court's dismissal of the case was with prejudice. Rule 41(b), Ala. R. Civ. P. ("Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule ... operates as an adjudication upon the merits."). On July 30, 2007, Gill and Belser filed a motion to alter, amend, or vacate the trial court's judgment, requesting that the action be reinstated. Gill and Belser argued that the failure of their attorney to appear at the pretrial conference was not willful, but the result of a calendaring error. The motion was denied by operation of law. Gill appealed.
Discussion
Dismissal of an action is governed by Rule 41(b), Ala. R. Civ. P., which states, in pertinent part:
"For failure of the plaintiff to prosecute or to comply with these rules or any order of court, a defendant may move for dismissal of an action or of any claim against the defendant. Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule ... operates as an adjudication upon the merits."
Concerning the application of Rule 41(b), this Court in Riddlesprigger v. Ervin, 519 So.2d 486 (Ala.1987), held as follows:
"Rule 41(b) has been construed to mean that a trial court has the inherent power to dismiss a cause for want of prosecution or for failure to comply with court rules or orders. Ryder Int'l Corp. v. State, 439 So.2d 162 (Ala.Civ.App.1983). Accord, Link v. Wabash R.R., 370 U.S. 626, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962). Such a dismissal is generally considered to be within the sound discretion of the trial court and will be reversed on appeal only for an abuse of that discretion. Whitehead v. Baranco Color Labs, Inc., 355 So.2d 376 (Ala.Civ.App.1978). It need only be determined, upon appellate review of a trial court's action under Rule 41(b), whether the ruling is supported by the evidence. Strickland v. National Gypsum Co., 348 So.2d 497 (Ala.Civ.App.1977); Nettles v. First Nat'l Bank, 388 So.2d 916 (Ala.1980).
". . . .
*33 "As this Court has heretofore observed:
"`In Alabama, and many federal courts, the interest in disposing of the litigation on the merits is overcome and a dismissal may be granted when there is a clear record of delay, willful default or contumacious conduct by the plaintiff. Smith v. Wilcox County Board of Education, 365 So.2d [659] at 661 [Ala. 1978]. See, e.g., Boazman v. Economics Laboratory, Inc., 537 F.2d 210 (5th Cir.1976); Pond v. Braniff Airways, 453 F.2d 347 (5th Cir.1972). Willful default or conduct is a conscious or intentional failure to act. Welsh v. Automatic Poultry Feeder Co., 439 F.2d 95 (8th Cir.1971). "Willful" is used in contradistinction to accidental or involuntary noncompliance. No wrongful motive or intent is necessary to show willful conduct.'
"Selby v. Money, 403 So.2d 218, 220 (Ala.1981)."
519 So.2d at 487-88. Further, this Court has held that "[b]ecause the trial judge is in the best position to assess the conduct of the plaintiff and the degree of noncompliance, his decision to grant a motion to dismiss for failure to prosecute will be accorded considerable weight by a reviewing court." Jones v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 604 So.2d 332, 341 (Ala.1991).
In Cabaniss v. Wilson, 501 So.2d 1177 (Ala.1986), the plaintiffs' attorney failed to appear at a hearing on a motion for a summary judgment. At the hearing, counsel for the defendants orally moved to dismiss the plaintiffs' complaint with prejudice under Rule 41(b), Ala. R. Civ. P., for failure to prosecute. The trial court granted the defendants' Rule 41(b) motion, dismissing the plaintiffs' complaint with prejudice. Subsequently, the plaintiffs filed a motion to alter, amend, or vacate the judgment, claiming that the summary-judgment hearing was "inadvertently left off the calendar of plaintiffs' counsel...." 501 So.2d at 1179. The trial court denied the plaintiffs' motion, and the plaintiffs appealed. 501 So.2d at 1179-80.
Applying the well established rules concerning the review of a trial court's dismissal with prejudice of a plaintiff's claims, this Court held that the conduct of the plaintiffs' attorney did not appear to be willful or contumacious because "the failure of the plaintiffs' attorney to appear in court [at the hearing on the summary-judgment motion] was allegedly inadvertent on his part." 501 So.2d at 1181. Because there was no evidence to support the trial court's dismissal with prejudice, this Court reversed its order dismissing the plaintiffs' claims and remanded the cause for further proceedings.
As was the case in Cabaniss, the record here does not reveal the presence of "extreme circumstances" sufficient to warrant the "harsh sanction" of a dismissal with prejudice. See Selby v. Money, 403 So.2d 218, 220 (Ala.1981). Although Cobern argues on appeal that many other factors could have affected the trial court's ultimate decision to dismiss Gill's action with prejudice, the record clearly indicates that the trial court dismissed Gill's action on the sole basis that Gill's attorney did not appear at the pretrial conference. In Gill's motion to alter, amend, or vacate the trial court's judgment, Gill's attorney alleged that his absence was the result of a calendaring error and that it was not the result of willful or contumacious conduct. The motion alleged that Gill's attorney also represented Gill in an action filed in the federal court against Progressive, an original party in the present case, and that Gill's attorney deleted the pretrial conference in this action from his calendar on the mistaken belief that it pertained to the action filed in federal court. No brief in opposition to Gill's motion was filed, and *34 the motion was denied by operation of law 90 days after it was filed. See Rule 59.1, Ala. R. Civ. P. Nothing in the record indicates that Gill's attorney was engaged in "willful" delay or "contumacious conduct."[1] Therefore, we hold that the trial court erred in dismissing Gill's action with prejudice.
Conclusion
Based on the foregoing, we conclude that the trial court's order of dismissal is not supported by the evidence and that the trial court exceeded its discretion in dismissing Gill's action with prejudice. We therefore reverse the order of the trial court and remand this cause for proceedings consistent with this opinion.
REVERSED AND REMANDED.
COBB, C.J., and WOODALL, SMITH, PARKER, and SHAW, JJ., concur.
NOTES
[1] Cobern argues that the fact that Gill referred to the trial court's scheduling order only seven days before the scheduled pretrial conference in his July 6, 2007, motion for continuance of trial proves that "any inadvertent deletion from [Gill's attorney's] calendar is not the only reason he missed the pre-trial conference." Cobern's brief, at 17. However, the mere fact that Gill referenced the scheduling order seven days before the pretrial conference does not show that Gill's attorney acted willfully or contumaciously in being absent from the pretrial conference. In fact, Gill's attorney stated in Gill's motion to amend, alter, or vacate the trial court's judgmentwhich was unopposedthat he missed the pretrial conference as a result of a calendaring error. Cobern's allegation, based solely on the fact that Gill's attorney referenced the scheduling order seven days before the pretrial conference, is nothing more than pure speculation. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1555315/ | 36 So.3d 901 (2010)
Andres ORTIZ, Appellant,
v.
STATE of Florida, Appellee.
No. 4D08-3602.
District Court of Appeal of Florida, Fourth District.
June 9, 2010.
Carey Haughwout, Public Defender, and Christine Geraghty, Assistant Public Defender, West Palm Beach, for appellant.
Bill McCollum, Attorney General, Tallahassee, and Heidi L. Bettendorf, Assistant Attorney General, West Palm Beach, for appellee.
WARNER, J.
Appellant, Andres Ortiz, appeals his convictions for organized scheme to defraud and first degree petit theft. Because the state failed to prove the value of the checkbook stolen as alleged in the information, we reverse the conviction for first degree petit theft, rejecting the state's contention that the jury could consider the total amount on deposit in the bank account as the value of the checkbook. On all other issues we affirm.
The state charged Ortiz with engaging in an organized scheme to defraud, burglary *902 of a dwelling, and petit theft. As to petit theft, the information alleged that Ortiz stole a checkbook belonging to the victim. The state proved at trial that Ortiz entered the victim's home, took her checkbook, and then cashed several forged checks totaling $725. Appellant claimed that the alleged victim gave him the checks as payment for roofing work and a car he sold to her. The cashing of the forged checks constituted the proof of an organized scheme to defraud. At trial, the jury found Ortiz guilty of organized scheme to defraud and of first degree petit theft but acquitted him of burglary.
Ortiz moved for a judgment of acquittal of first degree petit theft. See Fla. R.Crim. P. 3.380(c); see State v. Stevens, 694 So.2d 731, 733 (Fla.1997). He argued that the state failed to prove the value of the checkbook that was stolen. In denying the motion, the trial court reasoned that the value of the checkbook was the value of the entire checking account. Ortiz appeals the denial of the motion for judgment of acquittal and his resulting conviction for first degree petit theft.
The standard of review for the denial of a motion for judgment of acquittal is de novo. Pagan v. State, 830 So.2d 792, 803 (Fla.2002).
To establish the commission of a first degree petit theft, the state is required to prove that the property stolen is valued at $100 or more, but less than $300. § 812.014(2)(e), Fla. Stat. Where the state fails to prove that the stolen property is worth at least $100, a conviction for first degree petit theft must be reduced to second degree petit theft. See K.W. v. State, 13 So.3d 90, 92 (Fla. 3d DCA 2009) (reducing theft conviction to second degree petit theft where state failed to prove the value of the stolen cell phone exceeded $100).
The standard jury instruction on theft defines "value" as follows:
"Value" means the market value of the property at the time and place of the offense, or if that value cannot be satisfactorily ascertained, the cost of replacement of the property within a reasonable time after the offense.
If the exact value of the property cannot be ascertained, you should attempt to determine a minimum value. If you cannot determine the minimum value, you must find the value is less than $100.
In the case of a written instrument that does not have a readily ascertainable market value, such as a check, draft, or promissory note, the value is the amount due or collectible.
See Fla. Std. Jury Instr. (Crim.) 14.1 (emphasis added).
Relying on the portion of the jury instruction pertaining to theft of a written instrument, the trial court concluded that the jury could consider the value of the entire checking account in determining the value of the checkbook. Likewise, on appeal the state argues the amount in the checking account represented the greatest economic loss the victim could suffer by virtue of the loss of her checkbook. However, the state specifically alleged the theft of the checkbook. The state did not prove a value of the checkbook itself.
The Third District confronted an analogous situation in S.P.S. v. State, 801 So.2d 951 (Fla. 3d DCA 2001), involving the value of stolen phone cards with a face value of $99.99 each. Those cards were usable only if they were first activated at the checkout counter. Because the defendant did not check out, the cards were not activated. The Third District reasoned that an unactivated phone card "is worth nothing more than the nominal value of the materials contained in the card itself." Id. at 951.
Similarly, in this case there was no testimony establishing the fair market value *903 of the victim's stolen checkbook itself. Furthermore, because there was no testimony establishing that the checkbook contained anything other than blank checks, there was no "amount due or collectible" with respect to the blank checks inside the checkbook. Instead, the blank checks in the checkbook were worth only the paper they were written on. While the theft of a checkbook may potentially lead to the commission of still other crimes, this does not affect the value of the stolen checkbook itself. Id. at 952 ("That the situation may have involved the potential commission of still other crimes does not affect the value of the property stolen under section 812.014(2), Florida Statutes (2000), which is the only issue before us."). In fact, Ortiz was charged with and convicted of organized fraud for cashing the forged checks. Because the state failed to prove that the checkbook was worth more than $100, we reverse Ortiz's conviction for first degree petit theft.
We reject Ortiz's other contention that the court erred in denying his motion for mistrial for a comment on Ortiz's right of silence. A trial court's ruling on a motion for mistrial is reviewed under an abuse of discretion standard. See Cole v. State, 701 So.2d 845, 853 (Fla. 1997). Based upon our review of the trial transcript, we cannot conclude that the court abused its discretion.
We affirm Ortiz's conviction for organized fraud and reverse his conviction and sentence for first degree petit theft, directing the court to enter a judgment of conviction and sentence for second degree petit theft.
DAMOORGIAN and LEVINE, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2739933/ | United States Court of Appeals
For the Eighth Circuit
___________________________
No. 14-1268
___________________________
Rhonda Harris
lllllllllllllllllllll Plaintiff - Appellant
v.
Carolyn W. Colvin, Commissioner of Social Security
lllllllllllllllllllll Defendant - Appellee
____________
Appeal from United States District Court
for the Western District of Missouri - Kansas City
____________
Submitted: September 19, 2014
Filed: October 6, 2014
[Unpublished]
____________
Before COLLOTON, BOWMAN, and SHEPHERD, Circuit Judges.
____________
PER CURIAM.
Rhonda Harris appeals from the order of the District Court1 granting summary
judgment to the defendant in Harris’s Title VII action against her former employer,
1
The Honorable Scott O. Wright, United States District Judge for the Western
District of Missouri.
the Social Security Administration (SSA). After careful review, we conclude that
Harris’s placement on a Performance Assistance Plan in August 2009 was not an
adverse employment action within the meaning of Title VII so as to support her claim
of racial discrimination. See Clegg v. Ark. Dep’t of Corr., 496 F.3d 922, 926 (8th Cir.
2007) (“An adverse employment action is a tangible change in working conditions
that produces a material employment disadvantage.” (citations to quoted cases
omitted)). In any case, SSA presented a legitimate, nondiscriminatory reason for its
action, and Harris did not present sufficient evidence of pretext. See Gibson v. Am.
Greetings Corp., 670 F.3d 844, 854 (8th Cir.) (explaining that pretext must be
demonstrated with evidence that raises a genuine doubt about the legitimacy of an
employer’s motive), cert. denied, 133 S. Ct. 313 (2012). Regarding Harris’s retaliation
claim, we conclude that she failed to present sufficient evidence that she engaged in
protected conduct. See Guimaraes v. SuperValu, Inc., 674 F.3d 962, 978 (8th Cir.
2012) (stating that a plaintiff must demonstrate, inter alia, that “she engaged in
protected conduct” in order to prove a prima facie case of retaliation). Finally, to the
extent Harris asserted a hostile-work-environment claim, we conclude that she failed
to present any evidence that the alleged harassment was racially motivated. See
Malone v. Ameren UE, 646 F.3d 512, 517 (8th Cir. 2011) (stating that an employee
must demonstrate, inter alia, “unwelcome race-based harassment” in order to prove
a hostile-work-environment claim).
We affirm, and we deny SSA’s pending motion.
______________________________
-2- | 01-03-2023 | 10-06-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/1553565/ | 238 B.R. 224 (1999)
HAEMONETICS CORP.
v.
Theresa DUPRE.
Nova Biomedical Corporation
v.
Theresa Dupre.
Nos. Civ.A. 97-CV-11474-RGS, 97-CV-11475-RGS.
United States District Court, D. Massachusetts.
July 23, 1999.
*225 Richard D. Bickelman, Lawrence R. Holland, Deutsch, Williams, Brooks, DeRensis, Holland & Drachman, P.C., Boston, MA, for Plaintiffs.
Peter J. Muse, Charles A. Dale, III, Quincy, MA, Hanify & King P.C., Boston, MA, for Defendant.
MEMORANDUM AND ORDER FROM AN APPEAL OF AN ORDER OF THE UNITED STATES BANKRUPTCY COURT
STEARNS, District Judge.
Haemonetics Corporation and Nova Biomedical Corporation (Nova) appeal a decision of the Bankruptcy Court discharging civil conspiracy claims against Theresa Dupre, a debtor. The appellants are former employers of Theresa's husband, Paul Dupre. In November of 1994, Paul Dupre was indicted by a federal grand jury for embezzling $264,104.90 while employed as Nova's Payroll Supervisor and $656,274.31 while later employed as Haemonetics' System Administrator for Human Resources.[1] In 1994 and 1995, Haemonetics and Nova, respectively, filed civil actions in the Superior Court against Paul and Theresa, alleging a civil conspiracy. On May 10, 1995, Paul plead guilty to fourteen counts of wire fraud.[2]
On December 18, 1995, while motions for summary judgment were pending in the Superior Court, Theresa Dupre filed a Chapter 7 bankruptcy petition. Haemonetics and Nova countered with adversary proceedings claiming an exception from discharge under section 523(a) of the Bankruptcy Code.
Section § 523(a)(2)(A) of the Code states:
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt . . .
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the *226 debtor's or an insider's financial condition
Section 523(a)(6) states:
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt . . .
(6) for willful and malicious injury by the debtor to another entity or to the property of another entity.
The Bankruptcy Judge (William Hillman) consolidated the cases and held a two day trial.[3] On May 22, 1997, Judge Hillman held that the conspiracy claims were dischargeable. On June 30, 1997, Nova and Haemonetics filed this appeal. The appellants do not quarrel with Judge Hillman's findings of fact. Rather, they contend that his ruling is "utterly illogical" in light of these findings. On July 6, 1999, this court heard argument on the appeal.
FACTS
Judge Hillman found the following facts. Theresa and Paul Dupre were married in 1988. They have two minor children. Theresa holds a Bachelor of Science degree in Business Administration from Stonehill College where she took courses in accounting, investment, management, and economics. She later received a masters degree from Bentley College in computer information systems. Theresa Dupre has been employed at Analog Devices since 1986. She is presently a senior systems administrator.
From 1988 to 1994, Theresa and Paul earned combined yearly wages ranging from $53,000 to $65,000. During this time frame, Paul Dupre supplemented the couple's income by systematically embezzling nearly a million dollars from Nova and Haemonetics. The embezzled funds were deposited into six joint accounts maintained by the Dupres in six different banks.[4] Paul and Theresa also owned five joint securities' investment accounts.[5] The Dupre's home computer was equipped with Quicken money management software. Paul and Theresa used Quicken to keep track of the family's investments and finances. Regarding the Quicken program, Judge Hillman found as follows.
At her meeting of creditors held pursuant to 11 U.S.C. § 341(a) Theresa was specifically asked if she had deleted any programs from the computer. She responded in the negative. In fact, as she testified before me, she had deleted Quicken and two other programs from the computer just prior to the meeting of the creditors. She also testified that the purpose of the deletions was to make room in the computer for certain children's programs, but I find as a fact that she deleted Quicken in an attempt to conceal the family's financial affairs from her creditors.
I further find that Theresa was aware that her husband was providing funds for various accounts far in excess of his earnings. I find also that she was aware of the extent to which those cash infusions and of expenditures went beyond their disposable earnings from wages. Without giving all of the particulars upon which I make that finding, I point to the amount of cash in bank accounts overseas; the extent of an investment in a restaurant in Ireland; the amount of cash used to purchase real estate; and the totality of checks which Theresa signed on the accounts into which embezzled funds were deposited and for at least some of which she maintained the check registers. Her testimony that she only wrote checks at Paul's direction is contradicted in many particulars by other facts in the record and is not credible.
*227 Theresa and Paul's joint tax return for 1992 listed securities trading totaling $1,500,000, resulting in a net gain of $35,209. In 1993, $2,964,786 in securities trading resulted in a net loss of $175,692. Judge Hillman concluded:
I find as a fact that Theresa was intimately familiar with the amount of funds coming into the household in excess of earnings and of the use to which those funds were put. Her attempts to appear unsophisticated in the financial dealing is belied by the detailed nature of her testimony with respect to various transactions, the extent to which she managed or administered those dealings, and her participation in various activities resulting in or from the expenditure of the excess funds, all against a background of her specialized education on the collegiate and master's level.
Haemonetics and Nova argued to Judge Hillman that their claims against Theresa "ar[o]se from a civil conspiracy in which she participated with Paul to convert or otherwise deprive them of their property [and/or] the willful and malicious injury she caused their property." They thus had the burden of proving that Theresa knowingly conspired with Paul and that she engaged in wilful and malicious acts of conversion. Otherwise, as Judge Hillman noted, "[l]acking a tort the [appellants] lack a debt, and hence judgment must enter for Theresa."[6]
Analyzing the facts under section § 876 of the Restatement (Second) of Torts (1979),[7] Judge Hillman found the conspiracy claims dischargeable. He held that:
[t]here is not an iota of evidence that Theresa acted in concert with Paul in the act of converting Plaintiffs' funds. Her liability cannot be based on § 876(a).
Turning to the latter alternative of the Restatement, I have reviewed the evidence and can find neither direct evidence of Theresa's knowledge of the source of the funds, nor circumstantial evidence from which I could make a determination by a preponderance of the evidence. As a result, I find that she did not know that Paul's conduct constituted a breach of duty. Further, I find no support for the conjunctive element, the giving of substantial assistance or encouragement to Paul to embezzle.[8]
DISCUSSION
The parties, citing Williams v. Poulos, 11 F.3d 271, 278 & n. 11 (1st Cir.1993), agree on the applicable standard of review.
Insofar as the parties are challenging determinations made by the [lower] court prior to and in conjunction with the bench trial, our standard of review is familiar. Claimed errors of law are, of course, reviewed de novo. . . . Findings of fact, however, will not be set aside unless they are demonstrated to be clearly erroneous. . . . The clearly erroneous *228 standard also ordinarily applies when we review a trial court's resolution of mixed questions of law and fact. . . . In such situations, however, we are obligated to determine whether the court's resolution was infected by legal error. . . . And, "`if a trial court bases its findings upon a mistaken impression of applicable legal principles, the reviewing court is not bound by the clearly erroneous standard.'". . . . In a recent case, we explained our review standard for mixed questions in a slightly different manner: "The standard of review applicable to mixed questions usually depends upon where they fall along [a] degree-of-deference continuum: the more fact dominated the question, the more likely it is that the trier's resolution will be accepted unless shown to be clearly erroneous."
A civil conspiracy can take one of two forms. In its first manifestation, "the wrong [is] in the particular combination of the defendants rather than in the tortious nature of the underlying conduct. . . . [A]nother form of civil conspiracy, reflected in the Restatement (Second) of Torts § 876 (1977), derives from `concerted action,' whereby liability is imposed on one individual for the tort of another." Kurker v. Hill, 44 Mass.App.Ct. 184, 188, 689 N.E.2d 833 (1998).[9] As the Appeals Court observed, "[k]ey to this [latter] cause of action is a defendant's substantial assistance [to another], with the knowledge that such assistance is contributing to a common tortious plan." Id. at 189, 689 N.E.2d 833. Knowledge and participation (or assistance, to use the Restatement terminology) are conceptually distinct. Knowledge that another is committing a tort does not confer liability. Knowledge coupled with participation or assistance, however, does.
As proof of Theresa's knowledge, appellants point to her deletion of the Quicken program (which they plausibly cite as evidence of conscious of guilt),[10] her awareness of the fact that she and Paul were spending well in excess of their combined wages,[11] her financial sophistication and involvement in the management of the family's finances,[12] and her acknowledgment that she had access to and at least occasionally reviewed the monthly bank statements.[13]
This last factor is especially compelling. Statements from the New Bedford Institution for Savings, for example, show two transfers into the couple's account in late 1992 from "Haemonetics" in the amounts of $40,493.90 and $23,737.83, at a time when Paul's yearly income was only $33,186.30.[14]*229 A 1994 bank statement from the Crescent Credit Union shows a similar "payroll" deposit in the amount of $40,625.30[15] from Haemonetics. (Paul's 1994 pre-resignation earnings at Haemonetics were only $23,263.77). Given Theresa's admitted access to the bank statements and her extensive check writing, it defies belief that she would have been unaware that Paul was transferring money into the accounts that had been stolen from Haemonetics and Nova. Few people write checks (much less on six different accounts) without monitoring the balance. Fewer still would be so lucky to write as many checks as Theresa did (in excess of $100,00 worth in 1992) without ever registering an overdraft. Moreover, the Quicken program, which Theresa used to track family income and expenses, would have required her to identify the source and the amount of the deposits to the accounts. In sum, I am persuaded that the evidence could lead a reasonable person to only one conclusion, that Theresa not only knew that the accounts contained sums far in excess of the couple's income (as Judge Hillman found) but that she also knew that the excess funds had been stolen, in all probability from Haemonetics and Nova.[16] Thus I am persuaded that Judge Hillman's ultimate finding that Theresa did not know that the funds were illicit is clearly erroneous and contradicted by his subsidiary findings.
It is not sufficient, of course, to merely show knowledge on Theresa's part. The evidence must also establish that Theresa was a participant in the scheme to convert the appellants' funds. Judge Hillman seemed to be the view that appellants were required in this regard to show that Theresa assisted Paul in the actual embezzlement to establish liability on her part. This, I believe, reflects a misunderstanding of the theory on which the appellants' case is based. The scheme alleged involved not one, but two conversions of the pilfered funds. The first conversion was the embezzlement itself for which appellants concede Paul bears the sole responsibility. The second conversion, and the one appellants seek to pin on Theresa, was the use of the money by the couple to support their extravagant lifestyle. While embezzlement was the driving logic of the alleged scheme, it was not its defining or sole object.[17]
Seen in this light the issue becomes one of Theresa's liability under section 523(a)(6) (and not section a(2)(A) which would apply more appropriately to Paul). To fall within the exception of § 523(a)(6), a debtor must be shown to have "willfully and maliciously" injured the property of another. That a conversion is an "injury" to property is not disputed. But the meaning of the phrase "wilful and malicious," which obviously speaks to the debtor's state of mind, was a fair subject of debate prior to Kawaauhau v. Geiger, 523 U.S. 57, 118 S. Ct. 974, 140 L. Ed. 2d 90 (1998).[18] The Supreme Court held in Geiger, that as used in section (a)(6), the *230 phrase means more than an intentional act leading to an injury. As the Court observed, because "`wilful' in (a)(6) modifies the word `injury,' . . . a deliberate or intentional injury, [and] not merely a deliberate or intentional act that leads to injury" is required. Id. at 61, 118 S. Ct. 974. In making this distinction, Justice Ginsburg noted that "the (a)(6) formulation triggers in the lawyer's mind the category `intentional torts,' as distinguished from negligent or reckless torts. Intentional torts generally require that the actor intend `the consequences of an act,' not simply `the act itself.'" Id. at 61-62, 118 S. Ct. 974, citing Restatement (Second) of Torts § 8A, Comment a, p. 15 (1964).[19]
The common law tort of conversion does not fall neatly into either of Justice Ginsburg's categories because the conduct it reaches spans both. At common law, a defendant who is shown to have exercised dominion over a plaintiff's property is liable for the resulting conversion, even where she reasonably and innocently believes that the property is her own. See Row v. Home Savings Bank, 306 Mass. 522, 525, 29 N.E.2d 552 (1940). At the other end of the spectrum, common law conversion encompasses torts, like embezzlement, that are also prosecutable as crimes. See Commonwealth v. Ryan, 155 Mass. 523, 30 N.E. 364 (1892).
Under Geiger, the debtor must thus be shown not only to have intended to exercise control over the plaintiffs' property, but to have done so intending the consequent injury to the plaintiffs' interest in the property. Here the record demonstrates that Theresa knew that the excess funds in the joint accounts were stolen. She nonetheless wrote checks on these funds.[20] Her intent was to convert the embezzled money to her own (and to Paul's) use, thereby permanently depriving the true owners (Haemonetics and Nova) of their money. Her conduct clearly satisfies Geiger, and hence the appellants' claims against her are not dischargeable.
ORDER
The May 22, 1997 Order of the Bankruptcy Court is VACATED. The case is hereby REMANDED to the Bankruptcy court with the instruction that judgment be entered for the appellants.
SO ORDERED.
NOTES
[1] Paul Dupre embezzled from Nova from July of 1987 until he left the company in March of 1990. During his tenure at Nova, he was twice promoted. Paul left Nova to work at Haemonetics where he embezzled money until he resigned in July of 1994 to manage a variety store in Norton, Massachusetts.
[2] Paul served approximately eighteen months in prison.
[3] The appeals in the district court have also been consolidated.
[4] Some of the money was deposited in a seventh account held solely in Paul's name.
[5] Appellants state that this is a mistake and that, in fact, the uncontroverted evidence established six such accounts at different firms.
[6] For appellants to prevail, they were required to prove a "debt" within the meaning of the Bankruptcy Code. A "debt" is defined by the Code as a "liability on a claim." 11 U.S.C. § 101(12). A "claim" is a "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured." 11 U.S.C. § 101(5)(A). Tort liability is a debt within the definition of the Code.
[7] § 876. Persons Acting in Concert
For harm resulting to a third person from the tortious conduct of another, one is subject to liability if he
(a) does a tortious act in concert with the other or pursuant to a common design with him, or
(b) knows that the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself,. . . .
[8] Judge Hillman recognized that "Paul's conviction of embezzlement unquestionably constitutes actual fraud and conversion. . . . Were Paul the debtor in this case, the plaintiffs would have a strong case for nondischargeability against him under either clause of § 523 relevant here. The critical issue is whether, Paul's malfeasance can be attributed to Theresa."
[9] Massachusetts has not adopted section 876 of the Restatement, although it "has been cited in the appellate decisions and, in some instances, has provided the basis for recovery." Kurker, supra at 189, 689 N.E.2d 833. See also Kyte v. Philip Morris, Inc., 408 Mass. 162, 167, 556 N.E.2d 1025 (1990). A number of Massachusetts cases discussing civil conspiracy also cite common law definitions of conspiracy that are less demanding than the Restatement with regard to a showing of participation. See Potter Press v. C.W. Potter, Inc., 303 Mass. 485, 492, 22 N.E.2d 68 (1939) ("One may be held a member of an illegal conspiracy and responsible for all its doings, although he was not aware of its entire scope, or all its details, or the identities of all its members, and although his own share in its activities was small, did not begin until its activities were well under way, and was actuated by motives very different from those of his fellow conspirators").
[10] That an inference of consciousness of guilt can be drawn from the destruction of evidence is well-recognized in the law. See Koonce v. Commonwealth, 412 Mass. 71, 74 n. 4, 587 N.E.2d 220 (1992).
[11] Judge Hillman did not find, as appellants appear to argue, that Theresa knew that their expenditures greatly exceeded their legitimate income. He only found that she knew that their expenditures and investments "went beyond their disposable earnings from wages."
[12] Judge Hillman specifically found that "Theresa was intimately familiar with the amount of funds coming into the household in excess of earnings and of the use to which those funds were put."
[13] All but the last factors figure in Judge Hillman's subsidiary findings.
[14] In her deposition, Theresa conceded that "there w[ere] occasions when I saw the [New Bedford Institution for Savings] statements."
[15] This deposit is one of many appearing on the Crescent statements that clearly name Haemonetics as their source. The deposits range from as little as $163.54 to as much as $1819.41, and appear on a weekly, sometimes daily, basis.
[16] At the very least, Theresa's conduct in this regard could be said to portray "a conscious course of deliberate ignorance." United States v. Littlefield, 840 F.2d 143, 147 (1st Cir.1988).
[17] Judge Hillman is certainly correct that Paul's malfeasance cannot be imputed to Theresa by virtue of their married state. Despite appellee's suggestion to the contrary, see Brief, at 20-25, I do not understand appellants to be making such a feckless argument. The issue is not whether Theresa is Paul's wife, but whether knowing of his malfeasance, she participated in a scheme to convert the money that he had stolen.
[18] See Printy v. Dean Witter Reynolds, Inc., 110 F.3d 853, 858-859 (1st Cir.1997).
[19] An excellent discussion of the effect of Geiger on § 523(a)(6) case law appears in In re Slosberg, 225 B.R. 9, 16-21 (Bankr.D.Me. 1998).
[20] Even if one takes the Restatement view that Theresa's participation in the scheme had to be "substantial," the number and amounts of the checks that she wrote clearly satisfies this test. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2631320/ | 249 P.3d 623 (2011)
170 Wash.2d 1024
RAINIER VIEW COURT HOMEOWNERS ASS'N, INC.
v.
ZENKER.
No. 85171-9.
Supreme Court of Washington, Department II.
February 2, 2011.
Disposition of Petition for Review Denied. | 01-03-2023 | 11-01-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2857954/ | Hernandez
IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-91-088-CV
JOSE HERNANDEZ,
APPELLANT
vs.
LIONEL R. MENO, STATE COMMISSIONER OF EDUCATION
IN HIS OFFICIAL CAPACITY, AND
DALLAS INDEPENDENT SCHOOL DISTRICT,
APPELLEES
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT
NO. 458,299, HONORABLE PAUL R. DAVIS, JR., JUDGE PRESIDING
After the Dallas Independent School District ("DISD") Board of Trustees
("Trustees") demoted appellant Jose Hernandez from principal to classroom teacher, Hernandez
appealed the decision directly to the Texas Commissioner of Education ("Commissioner"). See
Tex. Educ. Code Ann. § 11.13(a) (1991 & Supp. 1992). The Commissioner denied Hernandez's
appeal of the Trustees' actions, and Hernandez sought judicial review in the district court of
Travis County. The district court denied Hernandez any relief, and this appeal followed.
FACTUAL AND PROCEDURAL BACKGROUND
This case involves the administrative proceedings of a local school board together
with an interpretation of Section 11.13(a) of the Texas Education Code. During Hernandez's
fourth year of a five year contract with the DISD, the Assistant Superintendent recommended that
Hernandez's employment contract as an elementary school principal be terminated. In response
to that recommendation, Hernandez requested a hearing before the DISD Administrative Council
Hearing Panel ("Administrative Panel"). The Administrative Panel granted Hernandez's request,
and six days of full evidentiary hearings followed to consider the allegations of mismanagement
of funds and sexual harassment.
Nearly three months after the conclusion of the hearings, Hernandez received notice
of the Administrative Panel's recommendations. Instead of outright termination, the
Administrative Panel recommended that Hernandez be demoted from principal to classroom
teacher and that he not be considered for any administrative or other similar position within the
DISD for a period of five years. Under local school district policy, Hernandez had "ten working
days" after receiving notice of the Administrative Panel's recommendations to "request, in
writing, to the General Superintendent, that a hearing before the [Trustees] be scheduled" in order
to appeal those recommendations.
Hernandez received notice of the Administrative Panel's recommendations on June
20, 1987. The "ten working day" limit allegedly expired on Friday, July 3, 1987. In accordance
with local school district policy, Hernandez typed a letter requesting a hearing before the Trustees
in order to appeal the Administrative Panel's recommendations. The letter was marked for
"Overnight Delivery," but was mistakenly sent by first class mail on Wednesday, July 1, 1987.
Consequently, the General Superintendent did not receive Hernandez's appeal until Monday, July
6, 1987. It is undisputed that Hernandez's notice of appeal was mailed and postmarked on
Wednesday, July 1, 1987, well before the "ten working day" limit expired, but was actually
received one working day after expiration.
On August 13, 1987, the Trustees met to decide if Hernandez should be granted
a hearing, even though his notice requesting an appeal of the Administrative Panel's
recommendations was not timely received. In a letter dated August 17, 1987, the Trustees
notified Hernandez of their decision to grant him a hearing. The hearing was to be based on the
substantive recommendations of the Administrative Panel and not on the timeliness issue.
However, the letter also stated that the Trustees would, procedurally, "hold in abeyance [their]
decision on the issue of timeliness of appeal." The Trustees commenced a full evidentiary hearing
on August 24, 1987, which continued on September 3 and 9, 1987. This was the second set of
full evidentiary hearings concerning Hernandez's case held at the local level.
On October 1, 1987, nearly a month after the completion of the full evidentiary
hearings, the Trustees met and took four separate and independent votes regarding Hernandez's
appeal, three substantive and one procedural. In votes one and two, they upheld the
Administrative Panel's findings with respect to the mismanagement of funds and sexual
harassment allegations. In vote three, they affirmed the Administrative Panel's recommendation
that Hernandez be demoted from principal to classroom teacher with the modification that the
probationary period of his consideration for any administrative or other similar position be
reduced from five to two years if he completed a DISD Management Training Program. In vote
four, they decided that, procedurally, Hernandez's original appeal of the Administrative Panel's
recommendations to the Trustees was not timely received. Finally, the minutes of the Trustees'
October 1, 1987, meeting concluded with a statement that, consistent with their actions, the
findings would be written and presented for the Trustees to adopt within thirty days.
On October 23, 1987, Hernandez filed his appeal of the Trustees' October 1, 1987,
actions with the Commissioner under the authority of Section 11.13(a) of the Texas Education
Code. Specifically, Hernandez appealed the Trustees' decision to demote him from principal to
classroom teacher, as well as the substantive basis for their decision. Hernandez's formal appeal
to the Commissioner did not address the timeliness issue.
On November 10, 1987, after Hernandez had filed his appeal, the Trustees issued
their written decision. They ruled that Hernandez's appeal of the Administrative Panel's
recommendations failed procedurally due to untimely filing and, in the alternative, failed on the
substantive merits of the case.
Almost a year later in October, 1988, a hearing officer appointed by the
Commissioner issued a Proposal for Decision recommending to the Commissioner that
Hernandez's appeal of the Trustees' "actions" be denied on procedural grounds. The hearing
officer's recommendation was based, not on the substantive merits of Hernandez's appeal, but on
the timeliness of Hernandez's notice of appeal to the Trustees. The Commissioner followed the
hearing officer's recommendation and denied Hernandez's appeal.
Hernandez sought judicial review of the Commissioner's decision in the district
court. He argued that the Commissioner failed to perform his statutory duty to provide a hearing
on the substantive actions upon which Hernandez appealed. See Tex. Educ. Code Ann.
§ 11.13(a). The district court, after reviewing the evidence and hearing oral argument, denied
Hernandez any relief.
DISCUSSION AND HOLDING
The Texas Education Code does not provide a standard of review for the
Commissioner's decisions. See Tex. Educ. Code Ann. §§ 11.13(c), 21.207(b) (1991 & Supp.
1992). Pursuant to Section 19(e) of the Administrative Procedure and Texas Register Act
(APTRA), when the law does not define the scope of judicial review, the court
shall reverse or remand the case for further proceedings if substantial rights of the
appellant have been prejudiced because the administrative findings, inferences,
conclusions, or decisions are:
(1) in violation of constitutional or statutory provisions;
(2) in excess of the statutory authority of the agency;
(3) made upon unlawful procedure;
(4) affected by other error of law;
(5) not reasonably supported by substantial evidence in view of
the reliable and probative evidence in the record as a whole;
or
(6) arbitrary or capricious or characterized by abuse of
discretion or clearly unwarranted exercise of discretion.
Tex. Rev. Civ. Stat. Ann. art. 6252-13a (Pamph. 1992); see also City of League City v. Texas
Water Comm'n, 777 S.W.2d 802, 805 (Tex. App. 1989, no writ).
Hernandez brings a single point of error complaining that the district court erred
in upholding the Commissioner's decision denying Hernandez's appeal of the Trustees' October 1,
1987, actions based on procedural grounds without holding a hearing and rendering a decision on
the substantive merits, pursuant to Section 11.13(a) of the Texas Education Code.
TEXAS EDUCATION CODE
Section 11.13(a) reads, in its entirety, as follows:
(a) Except in cases of student disciplinary actions under Section 21.301 or
21.3011 of this code, persons having any matter of dispute among them arising
under the school laws of Texas or any person aggrieved by the school laws of
Texas or by actions or decisions of any board of trustees or board of education
may appeal in writing to the commissioner of education, who, after due notice to
the parties interested, shall hold a hearing and render a decision without cost to the
parties involved, but nothing contained in this section shall deprive any party of
any legal remedy.
Tex. Educ. Code Ann. § 11.13(a) (emphasis added).
Hernandez is a person aggrieved by the substantive actions of the Trustees during
their October 1, 1987, meeting, who appealed, in writing, to the Texas Commissioner of
Education. The Trustees' actions included substantive rulings on the allegations of
mismanagement of funds and sexual harassment, and on the modification of the Administrative
Panel's demotion recommendation. Finally, their actions included a procedural ruling that
Hernandez had not given timely notice of appeal to the Trustees.
Under Section 11.13(a) of the Texas Education Code, the Commissioner must grant
a hearing to any person aggrieved by an action of a board of trustees, who appeals pursuant to that
section. The Trustees' separate and independent votes on October 1, 1987, constituted "actions"
within the meaning of Section 11.13(a), thereby allowing Hernandez an opportunity to appeal any
one, or all of them, to the Commissioner.
WAIVER OF THE PROCEDURAL ISSUE
Hernandez argues that the Commissioner must hold a hearing and render a decision
based on the substantive merits of his appeal. We agree. When the Trustees held "in abeyance
[their] decision on the issue of timeliness of appeal," but granted Hernandez a three-day full
evidentiary hearing on the substantive recommendations made by the Administrative Panel, they
waived their procedural right to dispose of Hernandez's appeal based on the timeliness issue.
This Court has stated that a waiver takes place when the party possessing the right
"(1) is aware of that right and (2)(a) expressly relinquishes it or (2)(b) acts in a manner
inconsistent with, or fails to act in a manner consistent with, an intent to claim the right." PGP
Gas Prods. Inc. v. Reserve Equip., 667 S.W.2d 604, 609 (Tex. App. 1984, writ ref'd n.r.e.)
(citing Alford, Meroney & Co. v. Rowe, 619 S.W.2d 210, 213-14 (Tex. Civ. App. 1981, writ
ref'd n.r.e.)). The Trustees expressed their awareness of the right to dismiss Hernandez's appeal
based on the timeliness issue in their August 17, 1987 letter to Hernandez, but then acted in a
manner inconsistent with an intent to claim this procedural right.
Although the Trustees specifically stated in the August 17, 1987, letter that they
held "in abeyance [their] decision on the issue of timeliness of appeal," they also stated, in the
same letter, that they were granting Hernandez a hearing. The hearing was to be based on the
substantive recommendations of the Administrative Panel, yet the Trustees attempted to retain the
right to dispose of Hernandez's appeal on procedural grounds. Moreover, after the conclusion of
the actual hearings, the Trustees modified one of the Administrative Panel's substantive
recommendations, and then attempted to deny Hernandez's appeal due to untimely filing. Were
we to hold that the Trustees did not waive the timeliness issue, and allowed the Commissioner to
dismiss Hernandez's appeal on this procedural aspect, then Hernandez would have no method by
which to appeal the modification decision of the Trustees. We hold that the Trustees waived their
right to dispose of Hernandez's appeal on procedural grounds after modifying and rendering a
decision on the merits. (1)
Because we conclude that the Trustees waived the procedural issue of timeliness
and that the Commissioner acted in contravention of his statutory mandate under Section 11.13(a)
of the Texas Education Code, we reverse the judgment of the district court and render judgment
that the proceeding be remanded to the Commissioner for the purpose of holding a hearing on the
substantive merits of Hernandez's appeal.
Mack Kidd, Justice
[Before Chief Justice Carroll, Justices Aboussie and Kidd]
Reversed and Rendered
Filed: March 18, 1992
[Publish]
1. 1 We note that this interpretation of the waiver rule is consistent with at least one prior
decision of the Commissioner, even though that decision is not binding authority on this
Court. See Bacon v. Galveston Indep. Sch. Dist., Comm'r of Educ. Decision, Docket No.
276-R3-586 (November 26, 1991) (where the Commissioner held that the Galveston ISD
Board of Trustees waived any challenge to the timeliness issue by voting on the merits of
Bacon's grievance). | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2107052/ | 970 A.2d 486 (2009)
ESTATE OF FITTIPALDI.
No. 2612 EDA 2007.
Superior Court of Pennsylvania.
February 9, 2009.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/584534/ | 966 F.2d 914
UNITED STATES of America, Plaintiff-Appellee,v.James Clayton BELL, Defendant-Appellant.
No. 91-1338.
United States Court of Appeals,Fifth Circuit.
July 2, 1992.
Jonathan Nelson, Gould, Broude & Nelson, Fort Worth, Tex. (Court-appointed), for defendant-appellant.
Frank D. Able, Asst. U.S. Atty., Marvin Collins, U.S. Atty., Fort Worth, Tex., for plaintiff-appellee.
Appeal from the United States District Court for the Northern District of Texas.
Before GOLDBERG, JONES, and DeMOSS, Circuit Judges.
GOLDBERG, Circuit Judge:
1
Following a plea of guilty to an information charging him with misprision of a felony, James Clayton Bell appeals the denial of his pretrial motion to dismiss the indictment based on speedy trial grounds. The government contends that Bell's plea was unconditional, waiving all non-jurisdictional defects in the trial court proceedings, including his speedy trial claim. We agree with the government and therefore do not reach Bell's speedy trial claim.
I.
2
It is well settled that by entering a plea of guilty, a defendant ordinarily waives all non-jurisdictional defects in the proceedings below. United States v. Barrientos, 668 F.2d 838, 842 (5th Cir.1982); see United States v. Easton, 937 F.2d 160, 161-62 (5th Cir.1991) (failure of United States Attorney to sign indictment was a non-jurisdictional defect that the defendant waived by pleading guilty), cert. denied, --- U.S. ----, 112 S.Ct. 906, 116 L.Ed.2d 807 (1992). In the Fifth Circuit, a speedy trial violation is a non-jurisdictional defect waived by a guilty plea. See United States v. Broussard, 645 F.2d 504, 505 (5th Cir.1981) ("The entry of a knowing and voluntary guilty plea waives all non-jurisdictional defects in the proceeding. This disposes of the speedy trial claim."); accord United States v. Bohn, 956 F.2d 208, 209 (9th Cir.1992) ("A defendant's guilty plea waives all non-jurisdictional defect claims. The right to a speedy trial under the Speedy Trial Act is non-jurisdictional"); United States v. Pickett, 941 F.2d 411, 415-17 (6th Cir.1991) (same); Lebowitz v. United States, 877 F.2d 207, 209 (2d Cir.1989) (same); United States v. Andrews, 790 F.2d 803, 810 (10th Cir.1986) (same), cert. denied, 481 U.S. 1018, 107 S.Ct. 1898, 95 L.Ed.2d 505 (1987); United States v. Yunis, 723 F.2d 795, 796 (11th Cir.1984) (same). But see Acha v. United States, 910 F.2d 28, 30 (1st Cir.1990) (noting that the First Circuit has not spoken on the issue).
3
A defendant wishing to preserve a claim for appellate review while still pleading guilty can do so by entering a "conditional plea" under Rule 11(a)(2) of the Federal Rules of Criminal Procedure.1 See Pickett, 941 F.2d at 416-17 (defendant waived Speedy Trial Act claim because he did not enter a conditional plea under Rule 11(a)(2)). Such a plea must be in writing and must identify those case-dispositive pretrial issues that the defendant is preserving for appeal. Pickett, 941 F.2d at 416; United States v. Yasak, 884 F.2d 996, 999 (7th Cir.1989); United States v. Carrasco, 786 F.2d 1452, 1454 (9th Cir.1986). Failure to designate a particular pretrial issue in the written plea agreement generally forecloses appellate review of that claim. See United States v. Hausman, 894 F.2d 686, 689 (5th Cir.) ("Hausman's valid guilty plea waived his due process claim because it was not preserved in the plea agreement and did not rise to the level of a jurisdictional challenge."), cert. denied, --- U.S. ----, 111 S.Ct. 92, 112 L.Ed.2d 64 (1990).
4
The conditional plea is also contingent upon the government's consent and the court's approval. Yasak, 884 F.2d at 999; Carrasco, 786 F.2d at 1454. The government and the court are free to reject a conditional plea for any reason or no reason at all. Yasak, 884 F.2d at 999. In essence, they have absolute "veto power over entry of such a plea." United States v. Fisher, 772 F.2d 371, 374 (7th Cir.1985). A defendant thus has "no enforceable 'right' to enter a conditional plea." Id., quoted in United States v. Daniel, 866 F.2d 749, 751 (5th Cir.1989). "Neither legislative history nor case law indicates that a criminal defendant is entitled to enter a conditional plea." United States v. Davis, 900 F.2d 1524, 1527 (10th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 155, 112 L.Ed.2d 121 (1990). Accordingly, neither the district court nor the government has any obligation to advise the defendant of the availability of a conditional plea. Daniel, 866 F.2d at 751; United States v. Frazier, 705 F.2d 903, 908 n. 8 (7th Cir.1983).
5
Although a conditional plea must ordinarily be in writing, evidencing the government's consent and the district court's approval, variance from this formality can be excused by an appellate court. Rule 11(h), Fed.R.Crim.P. ("Any variance from the procedures required by this rule which does not affect substantial rights shall be disregarded."); United States v. Fernandez, 887 F.2d 564, 566 n. 1 (5th Cir.1989) ("The non-compliance with Rule 11(a)(2) or the failure to document compliance may thus be seen as excused by Rule 11(h)."). In Fernandez the defendant pled guilty and sought to appeal an adverse pretrial ruling. Although the government conceded that the defendant had reserved her right to appeal the issue, there was no written plea in the record identifying the issues that were preserved for appeal and nothing to indicate that the district court had approved such a plea. We nevertheless excused the absence of a court-approved written conditional plea and addressed the merits of the defendant's appeal. We observed that Rule 11(a)'s requirement of court approval is designed to insure that the pretrial issues reserved for appeal are case-dispositive and can be reviewed by the appellate court without a full trial. Fernandez, 887 F.2d at 566 n. 1. In Fernandez, as in the case at bar, the defendant sought to appeal a pretrial matter that satisfied these requirements.
6
In Yasak the Seventh Circuit also found a valid conditional plea despite the absence of a writing. Postulating that the transcript of the plea hearing amounted to "a writing of sorts," the court was satisfied that "Rule 11(a)(2)'s intent and purpose [had] been fulfilled." The transcript of the plea hearing demonstrated that the government assented to a conditional plea and the district court accepted it. Yasak, 884 F.2d at 1000.
7
These cases illustrate that an appellate court can pardon the informalities of a conditional plea so long as the record demonstrates that the spirit of Rule 11(a)(2) has been fulfilled--that the defendant expressed an intention to preserve a particular pretrial issue for appeal and that neither the government nor the district court opposed such a plea. When the record is ambiguous as to whether the plea is conditional or unconditional, however, the appellate court may question the voluntariness of the plea. See Carrasco, 786 F.2d at 1455 (vacating plea because "[t]he exchanges in the courtroom between counsel and those between counsel and the court were ambiguous," and the defendant "reasonably could have believed that her plea was conditional, based on both previous discussions with the assistant U.S. attorney and the ambiguous exchange in the courtroom"). But if the record contains no manifestation of a reservation of appellate rights, the plea is presumptively unconditional, and an appellate court may not reach the merits of the defendant's appeal.
II.
8
The transcript of the plea proceedings establishes that Bell pled guilty to an information charging him with a single count of misprision of a felony, carrying a maximum statutory penalty of 3 years incarceration, below the sentencing guideline range applicable to Bell. In exchange for that plea of guilty, the government dismissed the pending indictment, which charged Bell with possession of a firearm by a convicted felon, an offense with a maximum statutory penalty of 10 years incarceration. No other agreements between Bell and the government are apparent from the transcript of the proceedings.2
9
Before accepting the plea, the district court engaged Bell in the requisite Rule 11 colloquy, advising him of the nature of the charges, the maximum sentence that could be imposed, the right to a speedy and public trial by jury at which the government would have to prove him guilty beyond a reasonable doubt, and the right to have counsel defend him at that trial. (R.2 at 7-8) Bell stated that he understood his rights, had had ample time to discuss the matter with his attorney, understood that by pleading guilty he would be waiving his right to a trial, and that he was pleading guilty voluntarily. (R.2 at 12-13) Bell's counsel opined that the plea was voluntary. (R.2 at 13-14). The district court did not expressly advise Bell that by pleading guilty he would be waiving his right to seek appellate review of the denial of his speedy trial motion, but neither Rule 11 nor our decisional law commands the district court to offer that warning.3 The district court later sentenced Bell to 3 years incarceration.4
10
Bell's plea of guilty appears to be unconditional in all respects. The record contains no indicia of a plea conditioned on a right to appeal pretrial matters, much less one complying with the formalities of Rule 11(a)(2). Contrast Fernandez, 887 F.2d at 566 n. 1; Yasak, 884 F.2d at 1000. There is no written agreement evidencing Bell's intention to preserve for appellate review the denial of his speedy trial motion, no express acquiescence by the government, and no statement by the district judge approving a conditional plea.
11
Furthermore, it is clear that Bell profited from entering a plea of guilty. As part of the plea agreement, the government dismissed the indictment which charged him with possession of a firearm by a convicted felon, a felony that carries a maximum statutory penalty (10 years) exceeding the sentencing guideline range applicable to Bell. Had he been convicted of the firearm offense the district court would have been constrained to sentence him within the guideline range, a sentence that, even at the low end of the range, would have exceeded the 3 year sentence Bell received by pleading guilty to the misprision offense. It is plain, therefore, that Bell got the benefit of his plea bargain: he minimized his potential exposure to 3 years incarceration. See Fisher, 772 F.2d at 374 (recognizing that government generally will not consent to a conditional plea "without exacting a price"); Frazier, 705 F.2d at 908 (court was "unwilling to read into the bargain a never-stated right to appeal" because the defendant reduced his maximum exposure from five to two years imprisonment).
12
We decline to entertain Bell's suggestion that he pled guilty in the mistaken belief that he preserved his appellate rights. From all indications in the record, Bell's plea was voluntary, knowing, and intelligent, and not conditioned on the reservation of appellate rights.5 To the extent that his challenge to the plea would necessitate consideration of evidence outside of this record, a direct appeal from the conviction is not the proper avenue for raising such a claim. See United States v. Jennings, 891 F.2d 93, 96 (5th Cir.1989) (affirming the district court judgment without prejudice to the defendant's right to bring a claim under 28 U.S.C. § 2255 in which he could contend that he waived his speedy trial rights unknowingly).
III.
13
The judgment and conviction are AFFIRMED.
1
In its entirety, Rule 11(a)(2) provides:
Conditional Pleas. With the approval of the court and the consent of the government, a defendant may enter a conditional plea of guilty or nolo contendre, reserving in writing the right, on appeal from the judgment, to review of the adverse determination of any specified pretrial motion. A defendant who prevails on appeal shall be allowed to withdraw the plea.
2
The plea agreement is memorialized in the "Factual Resume" provided to Bell and his counsel and was read aloud at the plea proceedings
3
We note that the preferred practice is for the district court to advise the defendant that by pleading guilty he waives his right to appeal non-jurisdictional pretrial issues. See, e.g., Davis, 900 F.2d at 1525-26 n. 1 (district court explained to the defendant that "one of the consequences of pleading guilty was the preclusion of appellate review of suppression rulings"); Fisher, 772 F.2d at 373, 375 (district court admonished defendant that by pleading guilty, "he waived 'the right to appeal from or complain of any prior adverse rulings or actions in this case.' "); cf. Laycock v. State of New Mexico, 880 F.2d 1184, 1188 (10th Cir.1989) (plea agreement indicated that defendant was waiving appellate rights)
4
Because the maximum statutory penalty for the misprision offense (3 years) fell below the sentencing guideline range applicable to Bell, considering the relevant offense level and Bell's criminal history, the guideline sentence applicable to Bell became the statutory maximum 3 years
5
Two months before the plea proceedings, Bell filed a motion for continuance indicating that he was not waiving the speedy trial claim that had been litigated previously in the district court. Bell suggests that by virtue of that filing, he manifested his intention to enter a conditional plea. A plea of guilty operates as a waiver of all pretrial issues, however, even those that the defendant has properly preserved up to the point of the plea. Thus, that filing, in and of itself, does not confute the unconditionality of the plea | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1975281/ | 1 B.R. 64 (1979)
In re ENDECO, INC., formerly aka Environmental Development Corporation of North Dakota, aka EDC, Inc., Lincorp, Cavalier Estates, Inc., Environmental Development Corp., Inc., E.D.C., Inc., Debtors.
Bankruptcy No. 73-183. Nos. W73-109, W73-116, W73-114 and W73-115.
United States Bankruptcy Court, D. North Dakota, Southwestern Division.
August 28, 1979.
*65 William Yuill, Fargo, N.D., for James H. Herzog, former trustee.
Alice K. Olson, Fargo, N.D., for James McMerty, Successor Trustee.
James R. Britton, and Gary Annear, Fargo, N.D., for United States Government.
James L. Lamb, Grand Forks, N.D., for Argonaut Insurance Co.
H. Patrick Weir, Fargo, N.D., for secured banks.
FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER
JACOB DIM, Referee and Special Master.
On the 27th day of August, 1979, the above entitled matter came on for hearing before the Honorable Jacob Dim, Referee and Special Master, pursuant to petitions for compensation and expenses filed on April 10, 1979 by Mr. James H. Herzog, former Trustee in the above matters.
Mr. James McMerty, Successor Trustee, in opposition to said petitions, sought a denial of the same and sought to recover such fees and expenses, inter alia, as had been previously paid or received by said James H. Herzog.
Also appearing in opposition to Mr. James H. Herzog's petitions and seeking a return of commissions paid to said former trustee, James H. Herzog, were the United States Government, Argonaut Insurance Company, secured banks and stock holders.
*66 Mr. William Yuill, Attorney at Law, appeared for James H. Herzog. Alice K. Olson, Attorney at Law appeared for James McMerty, Successor Trustee and Mr. McMerty appeared in person. James R. Britain, United States Attorney and Gary Annear, Assistant United States Attorney appeared for the United States Government. James L. Lamb appeared as attorney for Argonaut Insurance Company. H. Patrick Weir appeared as attorney for the secured banks. Mary Cahill of Norman E. Mark Court Reporter Service reported this matter.
The Court being advised in the premises, having heard the stipulations of the parties, the evidence introduced at said hearing together with all of the files, records and proceedings in the above entitled matter makes the following:
FINDINGS OF FACT
1. On September 20, 1973 Endeco, Inc. filed a petition seeking relief under Chapter X of the Bankruptcy Act. On October 10, 1973 Lincorp, Cavalier Estates, Inc. and Environmental Development Corp., filed petitions seeking relief under Chapter X of the Bankruptcy Act.
2. On September 24, 1973, James H. Herzog was appointed Trustee in the Endeco, Inc., file. On October 10, 1973, James H. Herzog was appointed Trustee in the Lincorp, Cavalier Estates, Inc. and Environmental Development Corp., cases.
3. On March 15, 1974 an Order was entered authorizing the following monthly payments of compensation as to said Trustee, conditioned upon his filing quarterly reports and after a hearing on said quarterly reports:
Number Name Allowed per month
W73-109 ENDECO, INC. $3,000.00
W73-114 CAVALIER ESTATES, INC. $1,000.00
W73-115 ENVIRONMENTAL DEVELOPMENT $ 750.00
CORP.
W73-116 LINCORP, $ 500.00
4. That the amounts of the compensation authorized by Court Orders paid to Mr. James H. Herzog from September 21, 1973 to November 22, 1976 was $108,510.00.
That in addition Mr. Herzog paid himself compensation without Court Order of an additional $495,450.00.
That an additional $106,700.00 was paid to Mr. Herzog as compensation without Court Order.
That the total of the compensation paid to Mr. Herzog as shown above has been stipulated to be $710,660.00 (of which $603,960.00 is shown on Exhibit 1 attached to the Brief submitted by Lyle W. Kirmis, Attorney at Law).
5. That in addition, Mr. Herzog received up to November 22, 1976 expenses in the amount of $7,466.01.
6. That on April 10, 1979 James H. Herzog filed fee petitions as follows:
Number Case Compensation Expenses
W73-109 ENDECO, INC. $360,203.75 $11,481.04
W73-114 CAVALIER ESTATES, $ 61,017.50 $ 113.60
INC.
W73-115 ENVIRONMENTAL DEVELOPMENT $ 27,303.75 8.00
CORP.
W73-116 LINCORP, $ 21,866.25 -0-
7. That said fee petitions were opposed as above stated.
8. That the above reorganization matters were and are complex and involved cases.
9. That in testimony before the Grand Jury, James H. Herzog testified that he estimated the net worth of Endeco in November, 1973 to be $5,500,000.00, of Cavalier Estates to be $579,000.00, of Environmental Development Corp. to be $447,000.00 and Lincorp to be $338,400.00.
That he testified that shortly prior to December 12, 1978 the value of Endeco was $2,100,000.00, Cavalier Estates to be approximately $244,000.00, Lincorp to be $123,000.00 and Environmental Development to be a deficit of $65,000.00 (See Stockholders Exhibit A), showing a substantial depreciation of assets during Mr. James H. Herzog's tenure.
10. On December 12, 1978 James H. Herzog was indicted, inter alia, for embezzling funds from said corporations.
*67 11. On March 13, 1979 said James H. Herzog did plead nolo contendere to Count 1 of the said indictment which charged him with "knowingly and fraudulently did appropriate to his own use monies in excess of $300,000.00 belonging to said bankrupt estates, which came into his charge as Trustee." The Court found Mr. James H. Herzog guilty of this embezzlement.
12. Mr. James H. Herzog under Count 2, did plead guilty to embezzlement of $30,000.00; to Count 3 did plead guilty to embezzlement of $40,000.00; under Count 5 did plead guilty to embezzlement of $15,000.00 and to Count 7 did plead guilty to embezzlement of property upon which no monetary value was placed (See Trustee's Exhibit # 1).
13. Introduced into the evidence were all of the files and records in the above entitled Chapter X cases.
14. James H. Herzog resigned as Trustee of the above entitled matter on December 12, 1978.
15. Mr. James McMerty was appointed Successor Trustee on December 15, 1978.
16. On August 6, 1979 the Honorable Jacob Dim was appointed Referee and Special Master to hear and determine the above matters of compensation relating to James H. Herzog.
17. Due notice of the above matter was mailed to creditors and other parties interested in the above matter.
18. That said James H. Herzog, former trustee, as a fiduciary, was guilty of a breach of trust as it relates to the above named corporations.
CONCLUSIONS OF LAW
1. Pursuant to Section 241 of the Bankruptcy Act "The judge may allow reimbursement for proper costs and expenses incurred . . . in a proceeding under this chapter . . . (3) by the trustee. . . ." (Chapter X) See Rule 10-215(a) and (c).
Bankruptcy Act in Comment to said Rule states that subdivision d supercedes section 48(e) of the Act. This is in error in as much as 48(e) states as follows:
"e. Withholding Compensation. The court may, in its discretion, withhold all compensation from any receiver, trustee, attorney, or any other person who has been removed from office or dismissed because of the unlawful sharing of fees or for any other cause."
The comment is in error in that it would eliminate the Court's discretion to withhold compensation from a trustee for any other cause than the unlawful sharing of fees. This has not been eliminated by the passage of the rule.
2. A trustee in Bankruptcy is a fiduciary and is subject to the highest standard of conduct to those to whom he is obligated to said trust.
3. Rule 9(k) of the Local Rules of the Bankruptcy Court for the District of North Dakota provides as follows:
(k) The trustee shall be held accountable for any unusual delays in the administration of an estate under his trusteeship, due to causes within his control, and for any unwarranted expense incurred, and for any loss to the bankrupt estate and any damage to property sustained through such delay, and in the discretion of the referee, the fees of the trustee may be disallowed in whole or in part on account of such delay and unwarranted loss or expense.
4. A trustee in Bankruptcy in a reorganization case or any Bankruptcy case who embezzles from said estate, forfeits, as a matter of law, any commissions or fees and expenses which he may have earned. The standard is set as a deterrent to wrong doing. James H. Herzog committed embezzlement in the above entitled matter and he must therefore forfeit such commissions, fees and expenses as he may have earned as Trustee.
I further find in my discretion that said embezzlement works as a forfeiture of any such fees, commissions or expenses earned or claimed by Mr. Herzog. "Trustees in bankruptcy are public officers and officers *68 of a court, and the officers of a court, like public officers generally, must show clear warrant of law before compensation will be owing to them for the performance of their public duties." Callaghan v. Reconstruction Finance Corp., 297 U.S. 464, 56 S. Ct. 519, 80 L. Ed. 804 (1936); where a trustee abuses his trust it is proper to deny him compensation. James H. Herzog abused his trust in the above entitled matter. (In the matter of Stillwell, 12 F.2d 205 (6th Cir. 1926).)
5. A trustee in Bankruptcy in a reorganization case or any other case who embezzles must remit to the Bankruptcy estate as a matter of law any and all fees, commissions or expenses received by him whether paid by Court Order or self help as a penalty to the estate for his wrong doing. See Callaghan v. Reconstruction Finance Corp., supra; In the matter of Perelstine, 44 F.2d 62 (3rd Cir. 1930) which holds it is well established law that a trustee or receiver who is unfaithful to the trust, forfeits all right to compensation. As an incident to (the) embezzlement he is not entitled to any commissions.
6. A trustee in Bankruptcy in a reorganization case or any Bankruptcy case who embezzles from the estate in his charge is subject to a civil suit to recover the sums or property embezzled or appropriated by him or their value plus interest and it is this particular Court's duty to order the trustee to return the sums so embezzled or the property appropriated by said trustee.
7. A trustee who embezzles from an estate which is in his charge and who commits other indiscretions is subject to a civil suit for negligence, improprieties and other abuses of trust including damages for conflict of interest.
8. That the Successor Trustee, James McMerty is entitled to a judgment against said James H. Herzog in the amount of $718,126.01.
9. That the Successor Trustee, James McMerty, is entitled to a turnover order, ordering James H. Herzog to turnover to James McMerty, Successor Trustee, such monies or properties in addition to the compensation and expenses to be turned over which belong to the above estate and which are now in the hands of said James H. Herzog or his representatives.
10. That the above relief herein ordered is cumulative and not alternative and that the criminal charge against Mr. Herzog was additionally cumulative and was to satisfy society for violating one of its rules and was not in satisfaction of the relief to which these estates are entitled.
11. That the memorandum attached hereto is hereby included and made a part of these conclusions of law.
NOW THEREFORE IT IS ORDERED,
1. That James H. Herzog, former trustee in the above entitled estates, is not entitled to any commissions, fees or expenses by reason for his defalcations therein and his fee applications filed herein on April 10, 1979 for compensation in the amount of $470,391.25 and for expenses in the amount of $11,602.64 are denied.
2. That the compensation and expenses heretofore paid to said James H. Herzog by reason of Court Order or self help in the total amount of $718,126.00 shall be returned and remitted by the said James H. Herzog to the above estate forthwith and James McMerty, Successor Trustee herein is entitled to a judgment in favor of said estates against James H. Herzog, former trustee, in the above amount for the defalcations in the above matter by the said James H. Herzog.
3. That said James H. Herzog shall forthwith turnover to the Successor Trustee, James McMerty, any and all property now in the hands of said James H. Herzog or his representatives and in the event said property is not turned over, James McMerty, Successor Trustee, shall have the right to trace said property and recover the same.
4. That the civil suit now pending in another court by the Successor Trustee, James McMerty, against James Herzog, former trustee, may continue seeking to recover damages for negligence, abuse of trust, conflict of interest or such other matters as said Successor Trustee, James McMerty, in *69 his discretion may wish to pursue against the said James H. Herzog for the breach of his fiduciary trust.
MEMORANDUM
There is an historic maxim of equity that a fiduciary may not receive compensation for services tainted by disloyalty or conflict of interest. Embezzlement is such a taint, and includes deprivation of compensation. The Supreme Court has stated on more than one occasion that the general statutory authorization in the Bankruptcy Act for "reasonable" compensation for services "necessarily implies loyal and disinterested service in the interest of those for whom the claimant purported to act." Even the trading of stock in contravention of the statute requires at least the denial of any application for past compensation then pending and the disallowance of all future compensation and forfeits any claim to reimbursement for expenses and the fact that they have already been paid under approval of the court does not necessarily preclude their recoupment. Wolf v. Weinstein, 372 U.S. 633, 183 S. Ct. 969, 10 L. Ed. 2d 33 (1963); Woods v. City National Bank and Trust Co., 312 U.S. 262, 61 S. Ct. 493, 85 L. Ed. 820 (1941).
Certainly embezzlement is a much greater disloyal service than the trading of stock and is an actual evil and not an innocent one and requires the denial and forfeiture of compensation to one who holds a fiduciary position. The standard of conduct for fiduciaries must be held "at a higher level than that trodden by the crowd." Mr. Justice Cardozo.
A thorough search of the case law not only by the Court but by all counsel involved has disclosed no case in which a fiduciary who has embezzled has been allowed compensation for his service, nor has any case been found which allows said fiduciary to keep any compensation previously paid to him.
Let judgment be entered accordingly. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/732313/ | 103 F.3d 273
UNITED STATES of Americav.Raymond RYBAR, Jr., Appellant.
No. 95-3185.
United States Court of Appeals,Third Circuit.
Argued Sept. 13, 1995.Decided Dec. 30, 1996.
James H. Jeffries, III (argued), Greensboro, NC, for Appellant.
Bonnie R. Schlueter, Mary Beth Buchanan (argued), Office of United States Attorney, Pittsburgh, PA, for Appellee.
Before: SLOVITER, Chief Judge, and ALITO, Circuit Judge, and RENDELL, District Judge.*
OPINION OF THE COURT
SLOVITER, Chief Judge.
1
Appellant Raymond Rybar, Jr. was convicted following a conditional guilty plea to two counts of violating 18 U.S.C. § 922(o), which makes it "unlawful for any person to transfer or possess a machinegun." On appeal, he argues that the district court erred in rejecting his challenge to that provision as beyond Congress' commerce power and as violating the Second Amendment. Neither challenge is persuasive. Every court of appeals that has considered a challenge to § 922(o) under the Commerce Clause has upheld the constitutionality of the provision. See United States v. Beuckelaere, 91 F.3d 781 (6th Cir.1996); United States v. Kenney, 91 F.3d 884 (7th Cir.1996); United States v. Rambo, 74 F.3d 948 (9th Cir.), cert. denied, --- U.S. ----, 117 S. Ct. 72, 136 L. Ed. 2d 32 (1996); United States v. Kirk, 70 F.3d 791 (5th Cir.1995)1; United States v. Wilks, 58 F.3d 1518 (10th Cir.1995); United States v. Pearson, 8 F.3d 631 (8th Cir.1993), cert. denied, 511 U.S. 1126, 114 S. Ct. 2132, 128 L. Ed. 2d 863 (1994). Nor has Rybar presented any authority in support of his Second Amendment argument. We examine each claim in turn.I.
FACTS AND PROCEDURAL HISTORY
2
On April 4, 1992, Rybar, a federally licensed firearms dealer, attended a gun show in Monroeville, Pennsylvania, and had in his possession a Chinese Type 54, 7.62-millimeter submachine gun, serial number 2052272, which he offered to sell to Thomas Baublitz, who paid him and to whom he transferred possession. The next day, April 5, 1992, Rybar again visited the Monroeville gun show, this time in possession of a U.S. Military M-3, .45 caliber submachine gun, serial number 216831, which he offered to sell to Baublitz, who paid him for it and to whom he transferred possession.
3
A grand jury indicted Rybar on two counts of unlawful possession of a machine gun in violation of 18 U.S.C. § 922(o)(1) (Counts I and III), and two counts of unlawful transfer of an unregistered firearm in violation of 26 U.S.C. § 5861(e) (Counts II and IV). Rybar moved to dismiss the indictment on the ground that both statutes were unconstitutional. While the motion was pending, the court was informed that Rybar was prepared to plead guilty.
4
At the hearing on the change of plea, the district court first ruled on the pending motion. The court granted the motion to dismiss Counts II and IV. The court held that insofar as 26 U.S.C. § 5861(e) criminalizes the transfer of an unregistered machine gun, it is unconstitutional because
5
[a]fter Congress enacted Title 18 of the United States Code Section 922(o), registration of machine guns is no longer possible. Thus defendant has been charged in the indictment with failing to perform an act, registration of two machine guns, that is prohibited by law. This violates notions of fundamental fairness as guaranteed by the Due Process Clause of the Fifth Amendment. Further, this Court finds that Section 5861(e) is no longer a valid taxing statute with respect to machine guns, because the government currently does not register and tax such machine guns.
App. at 16-17.2
6
The court denied Rybar's motion to dismiss Counts I and III. The court held that § 922(o) was "a valid exercise of the authority granted to Congress under the Commerce Clause" and was compatible with Second Amendment protections "because this defendant's possession of a machine gun was not reasonably related to the preservation or efficiency of a well-regulated militia." App. at 16.
7
The court then proceeded to the change of plea portion of the hearing. After the court fully informed Rybar of his rights, Rybar agreed to the facts as summarized by the government, i.e., that he approached Baublitz on both occasions and offered to sell him the machine guns described, and that Baublitz paid him on both occasions and took the machine guns. Rybar corrected the prosecution's statement that he received a total of $1,300 for the machine guns, and stated instead that he received a total of $600 for both machine guns. App. at 31-32 (Hearing Transcript, Jan. 9, 1995).
8
Rybar had agreed to plead guilty to all four counts of the indictment, i.e., the two counts of possession and the two counts of transfer of an unregistered machine gun, and although the court had just dismissed Counts II and IV, Rybar attested to the entire agreement at the court's request. Id. at 27-29. Rybar then entered a conditional guilty plea to the two remaining counts, preserving for appeal the disputed constitutionality of 18 U.S.C. § 922(o). At the sentencing hearing several months later, the district court sentenced Rybar to eighteen months imprisonment, the minimum sentence under the applicable guideline range, ordered three years of supervised release to follow, and imposed a special assessment of $100.00.
9
The district court had jurisdiction under 18 U.S.C. § 3231, and we have jurisdiction pursuant to 28 U.S.C. § 1291. Our review of a district court's determination of the constitutionality of a statute is plenary. Dyszel v. Marks, 6 F.3d 116, 123 (3d Cir.1993).
II.
DISCUSSION
In its entirety, § 922(o) reads:
10
(1) Except as provided in paragraph (2), it shall be unlawful for any person to transfer or possess a machinegun.
11
(2) This subsection does not apply with respect to--
12
(A) a transfer to or by, or possession by or under the authority of, the United States or any department or agency thereof or a State, or a department, agency, or political subdivision thereof; or
13
(B) any lawful transfer or lawful possession of a machinegun that was lawfully possessed before the date this subsection takes effect.
14
18 U.S.C. § 922(o) (1994).
15
"Machinegun," in turn, is defined in 26 U.S.C. § 5845(b), part of the National Firearms Act, as
16
any weapon which shoots, is designed to shoot, or can be readily restored to shoot, automatically more than one shot, without manual reloading, by a single function of the trigger. The term shall also include the frame or receiver of any such weapon, any part designed and intended solely and exclusively, or combination of parts designed and intended, for use in converting a weapon into a machinegun, and any combination of parts from which a machinegun can be assembled if such parts are in the possession or under the control of a person.
17
See 18 U.S.C. § 921(a)(23) (1994).
18
The statute prohibits only those instances of possession and transfer of machine guns not lawfully possessed before its enactment date--May 19, 1986; machine guns lawfully possessed before that date are left unaffected. See 18 U.S.C. § 922(o)(2)(B) (1994); Pub.L. No. 99-308 § 110(c), 100 Stat. 449, 461 (1986).
19
As in the district court, Rybar urges the unconstitutionality of § 922(o) on two grounds. He argues: (1) that the provision outstrips Congress' regulatory authority under the Commerce Clause and (2) that it offends his Second Amendment right "to keep and bear arms."
A.
Commerce Clause
20
Rybar relies primarily on the Supreme Court's recent opinion in United States v. Lopez, 514 U.S. 549, 115 S. Ct. 1624, 131 L. Ed. 2d 626 (1995), in support of his Commerce Clause challenge. In Lopez, the Court invalidated the Gun-Free School Zones Act of 1990, which made it a federal offense "for any individual knowingly to possess a firearm at a place that the individual knows, or has reasonable cause to believe, is a school zone." 18 U.S.C. § 922(q)(2)(A) (1994). A "school zone" was defined as "in, or on the ground of, a ... school" or "within a distance of 1,000 feet." 18 U.S.C. § 921(a)(25) (1994). The decision generated six separate opinions, with five justices supporting the Court's holding that the statute exceeded Congress' authority under the Commerce Clause.
21
On behalf of the majority, Chief Justice Rehnquist reviewed the Court's Commerce Clause decisions dealing with the extent of Congress' power, stating that § 922(q) "neither regulates a commercial activity nor contains a requirement that the possession be connected in any way to interstate commerce." 514 U.S. at ----, 115 S. Ct. at 1626. In summarizing the earlier cases, he observed that in Perez v. United States, 402 U.S. 146, 150, 91 S. Ct. 1357, 1359-60, 28 L. Ed. 2d 686 (1971), the Court had identified three broad categories of activity that Congress may regulate under its commerce power: (1) "the use of the channels of interstate commerce;" (2) "the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities;" and (3) those activities "that substantially affect interstate commerce." Id., 514 U.S. at ---- - ----, 115 S. Ct. at 1629-30.
22
He quickly disposed of the first two categories as inapplicable to § 922(q), and stated that if that statute were to be sustained it would have to be as a regulation of an activity that substantially affects interstate commerce. It failed that test because "by its terms" the statute prohibiting possession of a gun in a school zone had "nothing to do with 'commerce' or any sort of economic enterprise," id. at ---- - ----, 115 S. Ct. at 1630-31, nor was it "an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated." Id. at ----, 115 S.Ct. at 1631. Furthermore, § 922(q) contained "no jurisdictional element which would ensure, through case-by-case inquiry, that the firearm possession in question affects interstate commerce." Id.
23
Justice Kennedy, joined by Justice O'Connor, concurred, outlining what they perceived as the majority's "necessary though limited holding." Id. at ----, 115 S.Ct. at 1634 (Kennedy, J., concurring). From his survey of the Supreme Court's efforts to chart the limits of the Commerce Clause, Justice Kennedy extracted two relevant "lessons" from the past decisions: the inadequacy of using "content-based distinctions," such as that between "direct" and "indirect" effects on commerce, to define those limits, and the importance of maintaining the "practical conception" of the commerce power that had been forged out of the Court's precedents. Id. at ----, 115 S.Ct. at 1637. Most significantly, Justice Kennedy observed that where an enactment under the Commerce Clause bears only a tenuous connection to commerce, courts should inquire whether it "seeks to intrude upon an area of traditional state concern." Id. at ----, 115 S.Ct. at 1640. Justice Kennedy went on to observe that "here neither the actors nor their conduct have a commercial character, and neither the purposes nor the design of the statute have an evident commercial nexus." Id. at ----, 115 S.Ct. at 1640. He was concerned that § 922(q) foreclosed states from crafting independent solutions to the guns-in-schools problem, id. at ----, 115 S.Ct. at 1641, and concluded that, "[a]bsent a stronger connection or identification with commercial concerns," § 922(q)'s intrusion into education "contradict[ed] the federal balance" and was therefore invalid. Id. at ----, 115 S.Ct. at 1642. Justice Thomas also filed a separate concurrence.
24
The principal opinion for the four dissenters was authored by Justice Breyer, who emphasized the following three basic principles: (1) local activities may be regulated under the Commerce Clause where they "significantly affect interstate commerce"; (2) these local activities must be considered cumulatively in viewing their effect on interstate commerce; and (3) the court's inquiry is limited to whether Congress could have had a rational basis for concluding the regulated activity sufficiently affected interstate commerce. Id. at ---- - ----, 115 S. Ct. at 1657-58 (Breyer, J., dissenting). He stated, inter alia, that Congress could have had a rational basis for concluding that the "widespread" and "extremely serious" problem of guns in and around schools had a substantial effect on interstate and foreign commerce because it "significantly undermines the quality of education in our Nation's classrooms," id. at ----, 115 S.Ct. at 1659, thereby reducing the pool of skilled workers available to businesses, diminishing industrial productivity, and eroding global competitiveness. Id. at ---- - ----, 115 S. Ct. at 1659-61.
25
Justices Stevens and Souter, both of whom joined Justice Breyer's dissent, each wrote separately as well. Justice Stevens emphasized the multiple links he perceived between firearms possession in schools and interstate commerce. Id. at ----, 115 S.Ct. at 1651. Justice Souter emphasized the highly deferential judicial review in Commerce Clause cases, criticized as "highly formalistic" the Court's early conceptions of "commerce," and analogized the majority's insistent distinction between "commercial" and "noncommercial" activity to the Court's Lochner era substantive due process approach. Id. at ---- - ----, 115 S. Ct. at 1651-54.
26
Rybar forwards all of the reasons given by the Lopez majority, many in haec verba, as equally determinative of the invalidity of Congress' prohibition of machine guns. He contends that § 922(o)'s proscription of machine gun transfer and possession can be upheld only as regulation of an "activit[y] that substantially affect[s] interstate commerce." Brief of Appellant at 14 (quoting Lopez, 514 U.S. at ----, 115 S. Ct. at 1630). He argues that § 922(o) fails this "substantial effect" test, since its attempt to reach mere intrastate gun possession has only the most tenuous links to interstate commerce and would blur past any principled limit on the commerce power. Finally, Rybar invokes the same federalism concerns expressed in Lopez, arguing that Pennsylvania's own regime of machine gun regulation makes relevant the Court's observation in Lopez that "[s]tates possess primary authority for defining and enforcing the criminal law." Id. at ---- n. 3, 115 S. Ct. at 1631 n. 3 (quoting Brecht v. Abrahamson, 507 U.S. 619, 635, 113 S. Ct. 1710, 1720-21, 123 L. Ed. 2d 353 (1993)).
27
Before we examine the particular statute at issue here, it may be helpful to set forth the principles governing the standards by which we review such a challenge. As Justice Kennedy observed in his concurrence in Lopez, while Congress enjoys "extensive power and ample discretion to determine [the] appropriate exercise [of its Commerce Clause authority]," the courts, for their part, must observe "great restraint" before determining "that the Clause is insufficient to support an exercise of the national power." Id. at ----, 115 S.Ct. at 1634 (Kennedy, J., concurring). Our examination of the scope of legislative prerogative respecting exercise of the Commerce Clause power is twofold, and "relatively narrow." Hodel v. Virginia Surface Mining & Reclamation Ass'n, Inc., 452 U.S. 264, 276, 101 S. Ct. 2352, 2360, 69 L. Ed. 2d 1 (1981). We must first determine whether Congress could rationally conclude that the regulated activity substantially affects interstate commerce. Lopez, 514 U.S. at ---- - ----, 115 S. Ct. at 1629-30.3 If we decide that it could, "the only remaining question for judicial inquiry is whether 'the means chosen by [Congress] [are] reasonably adapted to the end permitted by the Constitution.' " Virginia Surface Mining, 452 U.S. at 276, 101 S.Ct. at 2360 (quoting Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241, 262, 85 S. Ct. 348, 360, 13 L. Ed. 2d 258 (1964)); accord Preseault v. Interstate Commerce Comm'n, 494 U.S. 1, 17, 110 S. Ct. 914, 924-25, 108 L. Ed. 2d 1 (1990).
28
In Lopez the government had conceded that neither § 922(q) nor its legislative history contained any express findings regarding the effects on interstate commerce of gun possession in a school zone. 514 U.S. at ----, 115 S. Ct. at 1631. Chief Justice Rehnquist commented that the Court's ability to evaluate the legislative judgment as to the effect of gun possession on interstate commerce would have been aided by the existence of congressional findings, and declined to consider findings accompanying prior firearms legislation because the previous legislation did not address the subject matter of § 922(q) or its relationship to interstate commerce. The prohibition of firearm possession in a school zone effected by § 922(q) " 'plow[ed] thoroughly new ground and represent[ed] a sharp break with the longstanding pattern of federal firearms legislation.' " Id. at ----, 115 S.Ct. at 1632 (quoting approvingly from the Court of Appeals decision).
29
The majority thus proceeded to determine, without the aid of Congress' views, whether possession of a firearm in a school zone does in fact substantially affect interstate commerce. The government had argued that such possession may result in violent crime, which can be expected to affect the national economy in two ways: (1) the costs of violent crime are spread throughout the population through the mechanism of insurance; and (2) violent crime reduces the willingness of people to travel to unsafe areas. The government had also contended that the presence of guns in schools threatens the learning environment, resulting in a less productive citizenry and adverse effects on the nation's economic well-being. Id.
30
The Lopez majority rejected these arguments because it saw no boundaries, commenting that under the government's theories it would be "difficult to perceive any limitation on federal power, even in areas such as criminal law enforcement or education where States historically have been sovereign." Id. In response to Justice Breyer's dissent, which argued that "Congress ... could rationally conclude that schools fall on the commercial side of the line," id. at ----, 115 S.Ct. at 1664 (Breyer, J., dissenting), Chief Justice Rehnquist characterized such analysis as "equally applicable, if not more so, to subjects such as family law and direct regulation of education," id. at ----, 115 S.Ct. at 1633. He continued,
31
We do not doubt that Congress has authority under the Commerce Clause to regulate numerous commercial activities that substantially affect interstate commerce and also affect the educational process. That authority, though broad, does not include the authority to regulate each and every aspect of local schools.
Id. He added:
32
The possession of a gun in a local school zone is in no sense an economic activity that might, through repetition elsewhere, substantially affect any sort of interstate commerce. Respondent was a local student at a local school; there is no indication that he had recently moved in interstate commerce, and there is no requirement that his possession of the firearm have any concrete tie to interstate commerce.
33
Id. at ----, 115 S.Ct. at 1634. The Chief Justice concluded by declining "to pile inference upon inference" in order "to convert congressional authority under the Commerce Clause to a general police power of the sort retained by the States." Id.
34
Nonetheless, the Lopez majority emphasized that "Congress normally is not required to make formal findings as to the substantial burdens that an activity has on interstate commerce." Id. at ----, 115 S.Ct. at 1631. The Court commented only that such findings might have special relevance where they would aid judicial evaluation of "the legislative judgment that the activity in question substantially affected interstate commerce, even though no such substantial effect was visible to the naked eye." Id. at ----, 115 S.Ct. at 1632.
35
In any event, in our analysis of § 922(o) we find that, unlike the situation in Lopez, there are legislative findings to aid judicial evaluation of the effect of machine guns on interstate commerce. While these findings did not accompany the passage of § 922(o), the subject matter of § 922(o) is sufficiently similar to that of the other legislation accompanied by these findings so as to be a reliable statement of the rationale for Congress' authority to pass § 922(o). Congressional findings generated throughout Congress' history of firearms regulation link both the flow of firearms across state lines and their consequential indiscriminate availability with the resulting violent criminal acts that are beyond the effective control of the states. Thus, § 922(o) does not "plow new ground," as the Lopez majority said § 922(q) did. Id. at ----, 115 S.Ct. at 1632. Rather than represent a "sharp break" in pattern, which concerned the Lopez Court, it continues in the stream of prior legislation.
36
The National Firearms Act of 1934, the first major federal statute to deal with firearms, required all persons engaged in the business of selling "firearms" (including machine guns) and all firearm owners to register with the Collector of Internal Revenue, subjected all firearm sales to a special tax, and required that they be accompanied by written order forms. The statute made it illegal to move a firearm in interstate commerce without payment of the tax, or to possess a firearm transferred in contravention of the tax and form requirements. Pub.L. No. 474, §§ 2-6, 48 Stat. 1236, 1237-38 (superseded by Internal Revenue Code of 1939). Although the 1934 statute was enacted under the taxing power, four years later Congress used the commerce power to regulate firearms with the passage of the Federal Firearms Act of 1938. Pub.L. No. 785, 52 Stat. 1250 (1938) (repealed 1968). All subsequent federal firearms legislation was enacted under the commerce power.
37
In the Federal Firearms Act of 1938, Congress required firearm manufacturers and dealers to obtain federal licenses before engaging in interstate commerce, permitted such licensees to ship firearms interstate only to other licensees and to persons with state-required permits, mandated that licensees keep permanent records of firearm transactions, and prohibited the interstate movement of firearms by or to fugitives or persons indicted or convicted of violent crimes, or if the firearms were stolen or had altered serial numbers. Id. §§ 2-3, 52 Stat. at 1250-52.
38
In 1968, Congress decided additional federal legislation was needed, and enacted the more farreaching Omnibus Crime Control and Safe Streets Act ("Omnibus Act"), based upon its findings of an extensive interstate commerce in firearms and the need for adequate federal control over such traffic. Because Rybar places much emphasis on the absence of congressional findings accompanying the passage of § 922(o), the congressional findings supporting the enactment of the Omnibus Act, one of its statutory predecessors, are significant:
39
[T]here is a widespread traffic in firearms moving in or otherwise affecting interstate or foreign commerce, and ... the existing Federal controls over such traffic do not adequately enable the States to control this traffic within their own borders through the exercise of their police power;
40
....
41
... only through adequate Federal control over interstate and foreign commerce in these weapons ... can this grave problem be properly dealt with, and effective State and local regulation of this traffic be made possible;
42
....
43
... the United States has become the dumping ground of the castoff surplus military weapons of other nations, and ... such weapons, ... imported into the United States in recent years, has contributed greatly to lawlessness and to the Nation's law enforcement problems;
44
... the lack of adequate Federal control over interstate and foreign commerce in highly destructive weapons ... has allowed such weapons and devices to fall into the hands of lawless persons, ... thus creating a problem of national concern....
45
Pub.L. No. 90-351, § 901(a), 82 Stat. 197, 225-26 (1968) (current version at 18 U.S.C. §§ 921-928 (1994)).
46
The 1968 Omnibus Act, which incorporated nearly every provision of the Federal Firearms Act, additionally required federal licenses for all persons in the firearms business, regardless of whether the commerce in which they were engaged was interstate. With respect to all firearms except for shotguns and rifles, the Omnibus Act channelled all interstate traffic through licensees and prohibited licensees from transferring them to persons under 21 or living out-of-state. With respect to heavy firearms, including machine guns, the Act prohibited licensees from selling or delivering them without first receiving affidavits from local law enforcement confirming the intended use as lawful, and forbade unlicensed persons from transporting them in interstate commerce without specific Treasury authorization. And with respect to all firearms, the Act prohibited their importation without Treasury authorization, proscribed their sale where their possession or purchase would contravene local law, and declared them subject to forfeiture when involved in violations of its provisions. Id. §§ 922-924, 82 Stat. at 228-33.
47
Later the same year, federal controls over interstate and foreign commerce in firearms were strengthened by the passage of the Gun Control Act of 1968, which extended restrictions similar to those Congress had already applied to handguns to most transactions involving rifles and shotguns, added broader coverage of transactions in ammunition, tightened restrictions on deliveries and sales of heavy firearms, including machine guns, and prohibited interstate movement of firearms by or to unlawful drug users or adjudicated mental defectives. Pub.L. No. 90-618, § 922, 82 Stat. 1213, 1218-21 (1968) (current version at 18 U.S.C. §§ 921-928 (1994)).
48
As with the earlier Omnibus Act, the legislative findings supporting the Gun Control Act emphasized the connection between the increasing rate of crime, the growing use of firearms, and interstate firearms traffic. The House Report explained:
49
The principal purpose of H.R. 17735, as amended, is to strengthen Federal controls over interstate and foreign commerce in firearms and to assist the States effectively to regulate firearms traffic within their borders.
50
....
51
The increasing rate of crime and lawlessness and the growing use of firearms in violent crime clearly attest to a need to strengthen Federal regulation of interstate firearms traffic.
52
The subject legislation responds to widespread national concern that existing Federal control over the sale and shipment of firearms [across] State lines is grossly inadequate.
53
Handguns, rifles, and shotguns have been the chosen means to execute three-quarters of a million people in the United States since 1900. The use of firearms in violent crimes continues to increase today. Statistics indicate that 50 lives are destroyed by firearms each day. In the 13 months ending in September 1967 guns were involved in more than 6,500 murders, 10,000 suicides, 2,600 accidental deaths, 43,500 aggravated assaults and 50,000 robberies. No civilized society can ignore the malignancy which this senseless slaughter reflects.
54
H.R.Rep. No. 1577, 90th Cong., 2d Sess. 6-7 (1968), reprinted in 1968 U.S.C.C.A.N. 4410, 4411-13.
55
The Report attaches a letter from the Attorney General which states, inter alia:
56
By recognizing the Federal responsibility to control the indiscriminate flow of firearms and ammunition across State borders, this bill will give States and local communities the capacity and the incentive to enforce effectively their own gun control laws. Once enacted into law, it will insure that strong local or State laws are not subverted by a deadly interstate traffic in firearms and ammunition.
57
Id. at 19, 1968 U.S.C.C.A.N. at 4425.
58
Thus, by the time Congress passed the 1986 Firearms Owners' Protection Act ("FOPA"), Pub.L. No. 99-308, 100 Stat. 449 (current version at 18 U.S.C. § 921-928 (1994))--of which § 922(o) is a part--it had already passed three firearm statutes under its commerce power based on its explicit connection of the interstate flow of firearms to the increasing serious violent crime in this country, which Congress saw as creating a problem of "national concern."
59
It is therefore not surprising that when Congress again turned its attention to firearms in 1986, it focused, inter alia, on the hazards of machine guns and the desirability of their control. See H.R.Rep. No. 495, 99th Cong., 2d Sess., 2, 7 (1986), reprinted in 1986 U.S.C.C.A.N. 1327, 1328, 1333 (describing proposed machine gun restrictions as "benefits for law enforcement" and citing "the need for more effective protection of law enforcement officers from the proliferation of machine guns"); id. at 4, 1986 U.S.C.C.A.N. at 1330 (describing machine guns as "used by racketeers and drug traffickers for intimidation, murder and protection of drugs and the proceeds of crime"); see also 132 Cong. Rec. 9,602 (1986) (statement of Sen. Kennedy) ("The only thing that has changed about the machine gun situation since the 1968 act ... is that machine guns have become a far more serious law enforcement problem.").
60
The fact that the findings accompanying prior firearms legislation were not reiterated with the passage of § 922(o) is not controlling, as evidenced by a long line of Supreme Court cases. See Fullilove v. Klutznick, 448 U.S. 448, 502-03, 100 S. Ct. 2758, 2787, 65 L. Ed. 2d 902 (1980) (Powell, J., concurring) (describing "information and expertise that Congress acquires in the consideration and enactment of earlier legislation" as sufficient where "Congress has legislated repeatedly in an area of national concern"); Maryland v. Wirtz, 392 U.S. 183, 190 n. 13, 88 S. Ct. 2017, 2020 n. 13, 20 L. Ed. 2d 1020 (1968) (confirming, where Congress had earlier passed related legislation with relevant findings, that subsequent provisions "were presumably based on similar findings and purposes with respect to the areas newly covered"); see also Preseault v. Interstate Commerce Comm'n, 494 U.S. 1, 19, 110 S. Ct. 914, 925-26, 108 L. Ed. 2d 1 (1990) (suggesting a "history of congressional attempts" in a particular area as basis for heightened deference to legislative judgment); cf. Turner Broadcasting Sys., Inc. v. Federal Communications Comm'n, 512 U.S. 622, ----, 114 S. Ct. 2445, 2471, 129 L. Ed. 2d 497 (1994) (Congress not obligated "to make a record of the type that an administrative agency or court does"); Perez v. United States, 402 U.S. 146, 156, 91 S. Ct. 1357, 1362, 28 L. Ed. 2d 686 (1971) (Congress need not "make particularized findings in order to legislate"); Katzenbach v. McClung, 379 U.S. 294, 299, 85 S. Ct. 377, 381, 13 L. Ed. 2d 290 (1964) (no formal findings necessary).
61
Unlike the Lopez opinion which may be read to cabin Congress' commerce power to enact § 922(q) regulating guns in a local school zone, the dissent does not challenge Congress' power to enact § 922(o). Instead, the dissent would require as a condition of upholding § 922(o) either that Congress make findings that there was a link between the subject matter being regulated--here the transfer or possession of a machine gun--and its effect on interstate commerce or that "Congress or the Executive assemble[ ] empirical evidence documenting such a link." Dissent at 287; see also id. at 292-93.
62
We know of no authority to support such a demand on Congress. While the dissent writes in the name of "constitutional federalism," it recognizes that even Lopez abjures such a requirement, 514 U.S. at ----, 115 S. Ct. at 1631, referred to in Dissent at 293, but overlooks that making such a demand of Congress or the Executive runs counter to the deference that the judiciary owes to its two coordinate branches of government, a basic tenet of the constitutional separation of powers. Nothing in Lopez requires either Congress or the Executive to play Show and Tell with the federal courts at the peril of invalidation of a Congressional statute.
63
As the Supreme Court has recognized, Congress enacted the federal gun laws because "it was concerned with the widespread traffic in firearms." Huddleston v. United States, 415 U.S. 814, 824, 94 S. Ct. 1262, 1268, 39 L. Ed. 2d 782 (1974). It intended "to halt" unregulated "mail-order and interstate consumer traffic in these weapons," id., and "to insure that ... weapons could not be obtained by individuals whose possession of them would be contrary to the public interest," id. at 825, 94 S.Ct. at 1269. Having attempted regulation through registration and licensing and incrementally extended the coverage of earlier statutes, and having in 1968 decided to ban possession of firearms by felons because it "constitutes ... a burden on commerce or threat affecting the free flow of commerce," see United States v. Bass, 404 U.S. 336, 345-46 n. 14, 92 S. Ct. 515, 521 n. 14, 30 L. Ed. 2d 488 (1971) (quoting Omnibus Act of 1968, § 1201, 82 Stat. at 236), it was a natural progression for Congress to decide in 1986 that the growth in crime and destruction caused by machine guns had expanded to the point that justified banning the possession and transfer of post-1986 machine guns. There was no reason for Congress to believe that traffic in machine guns had any less connection with interstate commerce than did the possession of a firearm by a felon, and Congress' intent to regulate possession and transfer of machine guns as a means of stemming interstate gun trafficking is manifest.
64
In suggesting that this case is like Lopez, where the Court found that possession of a gun in a local school zone had an insubstantial effect on interstate commerce, the dissent disregards a significant distinction. The statute at issue in Lopez attempted to regulate possession of guns only inside school zones--a discrete area unlikely to have a meaningful aggregate effect on commerce. By contrast, the regulation effected by § 922(o) is not limited to possession "on one's own property," Dissent at 291; it regulates possession of a class of firearms--machine guns--in a much more dispersed and extensive area. Congress could reasonably have concluded that such a general ban of possession of machine guns will have a meaningful effect on interstate commerce that would be more substantial than the effect of banning possession within school zones.
65
Moreover, the concerns expressed by the majority in Lopez, particularly by the concurring opinion of Justice Kennedy, about federal intrusion into local schools, an area traditionally left for the overview and regulation by states, are not presented by § 922(o). Unlike the conclusion in Lopez that "possession of a gun in a local school zone is in no sense an economic activity that might, through repetition elsewhere, substantially affect any sort of interstate commerce," 514 U.S. at ----, 115 S. Ct. at 1634, it is evident from § 922(o) that "possession and transfer" of a machine gun is an economic activity that Congress could reasonably have believed would be repeated elsewhere and thereby substantially affect interstate commerce. The potentiality for repetition by Rybar himself of transactions such as those that were the subject of this indictment is evidenced by the uncontested facts set forth in the Presentence Investigation Report. Rybar was a licensed federal firearms dealer, had been authorized to manufacture firearms, including machine guns, and operated a steel and firearms business from his home. After the confiscation of the two machine guns, federal agents determined that Rybar had 16 National Firearms Act weapons registered to him.4
66
The dissent presses us to find a commercial or economic component of possession of a firearm. The response can be found in the dissenting opinion itself. Certainly Congress did not enact § 922(o) in response to the hypothetical situation posed by the dissent by which the possessors of machine guns converted them from semiautomatic weapons or retained them from days of government service. Instead, as the dissent acknowledges, we may infer, at least in most situations, that such possession follows an unlawful transfer. See Dissent at 290-91. We may also assume that Congress was not concerned about the noncommercial transfer from father to son or sister to sister, and thus the unlawful transfer will undoubtedly have had a commercial or economic component. It follows that in 1986 when Congress prohibited possession and transfer of a machine gun, it could well have contemplated that the economic activity regulated, at least in the aggregate, substantially affects interstate commerce.
67
Although Rybar would have us view machine gun possession as a purely intrastate phenomenon, Supreme Court cases have long sustained the authority of Congress to regulate singular instances of intrastate activity when the cumulative effect of a collection of such events might ultimately have substantial effect on interstate commerce. See, e.g., Hodel v. Virginia Surface Mining & Recl. Assn., Inc., 452 U.S. 264, 277, 101 S. Ct. 2352, 2360-61, 69 L. Ed. 2d 1 (1981); Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241, 258, 85 S. Ct. 348, 357-58, 13 L. Ed. 2d 258 (1964); Wickard v. Filburn, 317 U.S. 111, 125, 63 S. Ct. 82, 89, 87 L. Ed. 122 (1942); United States v. Wrightwood Dairy Co., 315 U.S. 110, 119, 62 S. Ct. 523, 526, 86 L. Ed. 726 (1942); see also Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219, 232, 68 S. Ct. 996, 1004, 92 L. Ed. 1328 (1948).
68
Just as the Court in Wickard sustained the regulation of wheat intended wholly for home consumption because it was connected to an overall interstate market which it could depress, 317 U.S. at 128-29, 63 S.Ct. at 98-91, and the Court in Perez sustained the regulation of purely intrastate loansharking because in the aggregate such local loansharking substantially affected interstate commerce, 402 U.S. at 154, 91 S.Ct. at 1361-62, so also § 922(o) can be sustained because it targets the possession of machine guns as a demand-side measure to lessen the stimulus that prospective acquisition would have on the commerce in machine guns. It follows, and we hold, that the authority of Congress to enact § 922(o) under the Commerce Clause can be sustained under the third category identified by the Supreme Court: as a regulation of an activity that "substantially affects" commerce.
69
The same approach was followed by the Seventh Circuit which, in sustaining § 922(o) over a Commerce Clause challenge, stated that the statute was "best analyzed" under the third category. United States v. Kenney, 91 F.3d 884, 889 (7th Cir.1996). The court reasoned that § 922(o) was "recognizable as 'an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated,' " id. at 890 (quoting Lopez, 514 U.S. at ----, 115 S. Ct. at 1631), and therefore more comparable to the wheat-growing scheme in Wickard or the anti-loansharking law in Perez than the Gun-Free School Zones Act in Lopez.
70
Kenney held that "there is a rational basis to regulate the local conduct of machine gun possession, including possession resulting from home manufacture, to effectuate § 922(o)'s purpose of freezing the number of legally possessed machine guns at 1986 levels, an effect that is closely entwined with regulating interstate commerce." Id. The court also determined that, in view of prior congressional findings and enactments concerning firearms and "the serious problems associated with interstate trafficking in firearms," § 922(o) "was not novel but incremental," id., and thus justified "deference to Congress's accumulated institutional expertise," id. at 891.
71
Although we need not address whether § 922(o) is also sustainable under the other two categories of Congress' commerce powers cited by Chief Justice Rehnquist in Lopez, we note that other courts of appeals have relied on those categories in rejecting challenges to § 922(o). Their underlying reasoning provides additional support to our holding that § 922(o) regulates an activity that substantially affects interstate commerce.
72
In sustaining § 922(o), the Courts of Appeals for the Fifth, Sixth and Ninth Circuits viewed § 922(o) as a regulation of "the use of the channels of interstate commerce," the first of the three categories of activity reachable under the commerce power, Lopez, 514 U.S. at ----, 115 S. Ct. at 1629. See United States v. Beuckelaere, 91 F.3d 781 (6th Cir.1996); United States v. Rambo, 74 F.3d 948 (9th Cir.), cert. denied, --- U.S. ----, 117 S. Ct. 72, 136 L. Ed. 2d 32 (1996); United States v. Kirk, 70 F.3d 791 (5th Cir.1995), reh'g en banc granted, 78 F.3d 160 (5th Cir.1996). The court in Kirk noted that the statute applied only to machine guns not lawfully possessed before May 1986, and thus functioned principally to prohibit "the introduction into the stream of commerce [of] machineguns" illegally obtained after that date. 70 F.3d at 796. It characterized § 922(o) as a "necessary and proper measure" to permit readier interdiction of, and depress demand for, prohibited machine gun transfers, and likened it to federal regulation of controlled substances as "essential to effective control of the interstate incidents" of traffic in particular commodities. Id. at 796-97.
73
The Ninth Circuit in Rambo observed that, "[b]y regulating the market in machineguns," § 922(o) "effectively regulate[s] the interstate trafficking in machineguns." 74 F.3d at 952. Echoing the Fifth Circuit's analysis in Kirk, the Rambo court reasoned that, because there could be no unlawful possession without first an unlawful transfer, § 922(o)'s regulation of possession "regulates commerce" itself. Id. at 951-52. Unlike § 922(q), which regulated possession of weapons "in a specific geographic area" rather than any market in weapons, § 922(o) "prohibits the possession of all machineguns illegally transferred." Id. at 952.
74
Similarly, the Sixth Circuit in Beuckelaere characterized the statute as regulating the "extensive, intricate, and definitely national market for machineguns" acquired after May 19, 1986, 91 F.3d at 784 (quoting United States v. Hunter, 843 F. Supp. 235, 249 (E.D.Mich.1994)), and emphasized the statute's links to interstate commerce. It observed that "illegal possession of a machinegun cannot occur without an illegal transfer," and stressed Congress' prior findings concerning the interstate flow of firearms and the resulting threats to local law enforcement. 91 F.3d at 784-85.
75
The Beuckelaere court also held § 922(o) sustainable under the second category of Congress' commerce power, reasoning that machine guns are "things in interstate commerce." The court observed that, like narcotics, machine guns are items "which flow across state lines for profit by business entities and hamper local and state law enforcement efforts." Id. at 785.
76
That court relied on the Tenth Circuit's earlier decision in United States v. Wilks, 58 F.3d 1518 (10th Cir.1995), which had upheld § 922(o) under the second commerce category. The Wilks court characterized machine guns as commodities "bound up with interstate attributes" and thus readily distinguished from the "purely intrastate" objects of § 922(q)'s prohibition. Id. at 1521. The court observed that § 922(o) was "consistent" with earlier firearms legislation "because it merely regulates the movement of a particular firearm in interstate commerce," id. at 1521 n. 4, surveyed prior congressional findings concerning the interstate flow of weapons and its attendant dangers, and concluded that § 922(o) represented a valid attempt to control the interstate movement in machine guns, id. at 1521-22.
77
Whatever the category relied on, it is telling that each of our sister circuits has found that the regulation of machine gun transfer and possession comes within Congress' power to legislate under the Commerce Clause. That uniform result confirms the observation made in United States v. Bell, 70 F.3d 495, 497 (7th Cir.1995), that, for criminal defendants, "[i]t appears that United States v. Lopez has raised many false hopes," and that challenges based on Lopez "[a]lmost invariably" fail. See, e.g., United States v. Orozco, 98 F.3d 105 (3d Cir.1996) (rejecting challenge based on Lopez to Drug-Free School Zones Act, 21 U.S.C. § 860(a)); United States v. Bishop, 66 F.3d 569 (3d Cir.1995) (rejecting challenge to car-jacking statute).
78
Finally, we deal with Rybar's argument that § 922(o) is deficient because it lacks a "jurisdictional element," the term used to refer to a statutory clause (such as "in or affecting interstate commerce") that limits application of the statute to those instances where the particular machine gun transfer or possession is shown to be related to interstate commerce. Although the Lopez Court noted the lack of a jurisdictional element in § 922(q) and observed that such an element "would ensure, through case-by-case inquiry, that the firearm possession in question affects interstate commerce," 514 U.S. at ----, 115 S. Ct. at 1631 (emphasis added), it did not state, as it easily could have, that such a statutory feature was essential.
79
In its discussion of this issue, the Court contrasted § 922(q) with former 18 U.S.C.App. § 1202(a) (prohibiting felons from "receiv[ing], possess[ing], or transport[ing] in commerce or affecting commerce ... any firearm"). In United States v. Bass, 404 U.S. 336, 92 S. Ct. 515, 30 L. Ed. 2d 488 (1971), the Court had construed the ambiguous scope of the jurisdictional element in former § 1202(a) to apply to possession of firearms in order to avoid a constitutional issue. However, rather than making it a sine qua non, the Bass decision merely signified that a statute's inclusion of a jurisdictional element is a condition sufficient to establish its validity under the Commerce Clause. We find no basis in either Bass or Lopez for Rybar's claim that inclusion of such language is a necessary condition. See Kenney, 91 F.3d at 887 ("We have rejected the argument that Lopez requires federal criminal statutes to contain a jurisdictional element.").5
80
We thus join the five other circuits in rejecting the Commerce Clause challenge to Congress' authority to enact § 922(o).
B.
Second Amendment
81
As an independent basis for his argument that § 922(o) is unconstitutional, Rybar relies on the Second Amendment of the Constitution, which provides: "A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed." U.S. Const. amend. II.
82
In support, Rybar cites, paradoxically, the Supreme Court decision in United States v. Miller, 307 U.S. 174, 59 S. Ct. 816, 83 L. Ed. 1206 (1939), where the Court upheld the constitutionality of a firearms-registration requirement against a Second Amendment challenge. Rybar draws on that holding, relying on the Miller Court's observation that the sawed-off shotgun in question had not been shown to bear "some reasonable relationship to the preservation or efficiency of a well regulated militia." Brief of Appellant at 24-25; Miller, 307 U.S. at 178, 59 S.Ct. at 818. Drawing from that language the contrapositive implication, Rybar suggests that because the military utility of the machine guns proscribed by § 922(o) is clear, a result contrary to that reached in Miller is required, and the statute is therefore invalid under the Second Amendment.
83
Rybar's reliance on Miller is misplaced. The language Rybar cites is taken from the following passage:
84
In the absence of any evidence tending to show that possession or use of a "shotgun having a barrel of less than eighteen inches in length" at this time has some reasonable relationship to the preservation or efficiency of a well regulated militia, we cannot say that the Second Amendment guarantees the right to keep and bear such an instrument. Certainly it is not within judicial notice that this weapon is any part of the ordinary military equipment or that its use could contribute to the common defense.
85
307 U.S. at 178, 59 S. Ct. at 818.
86
We note first that however clear the Court's suggestion that the firearm before it lacked the necessary military character, it did not state that such character alone would be sufficient to secure Second Amendment protection. In fact, the Miller Court assigned no special importance to the character of the weapon itself, but instead demanded a reasonable relationship between its "possession or use" and militia-related activity. Id.; see Cases v. United States, 131 F.2d 916, 922 (1st Cir.1942) (susceptibility of firearm to military application not determinative), cert. denied, 319 U.S. 770, 63 S. Ct. 1431, 87 L. Ed. 1718 (1943). Rybar has not demonstrated that his possession of the machine guns had any connection with militia-related activity. Indeed, as noted above, Rybar was a firearms dealer and the transactions in question appear to have been consistent with that business activity.
87
Nonetheless, Rybar attempts to place himself within the penumbra of membership in the "militia" specified by the Second Amendment by quoting from 10 U.S.C. § 311(a):
88
The militia of the United States consists of all able-bodied males at least 17 years of age and, except as provided in section 313 of title 32, under 45 years of age who are ... citizens of the United States....
89
Rybar's invocation of this statute does nothing to establish that his firearm possession bears a reasonable relationship to "the preservation or efficiency of a well regulated militia," as required in Miller, 307 U.S. at 178, 59 S.Ct. at 818. Nor can claimed membership in a hypothetical or "sedentary" militia suffice. See United States v. Hale, 978 F.2d 1016, 1020 (8th Cir.1992), cert. denied, 507 U.S. 997, 113 S. Ct. 1614, 123 L. Ed. 2d 174 (1993); United States v. Oakes, 564 F.2d 384, 387 (10th Cir.1977), cert. denied, 435 U.S. 926, 98 S. Ct. 1493, 55 L. Ed. 2d 521 (1978); United States v. Warin, 530 F.2d 103, 106 (6th Cir.), cert. denied, 426 U.S. 948, 96 S. Ct. 3168, 49 L. Ed. 2d 1185 (1976).
90
Rybar boldly asserts that "the Miller Court was quite simply wrong in its superficial (and one-sided) analysis of the Second Amendment." Brief of Appellant at 27. As one of the inferior federal courts subject to the Supreme Court's precedents, we have neither the license nor the inclination to engage in such freewheeling presumptuousness. In any event, this court has on several occasions emphasized that the Second Amendment furnishes no absolute right to firearms. See United States v. Graves, 554 F.2d 65, 66 n. 2 (3d Cir.1977); Eckert v. City of Philadelphia, 477 F.2d 610 (3d Cir.), cert. denied, 414 U.S. 839, 843, 94 S. Ct. 89, 104, 38 L. Ed. 2d 74, 81 (1973). Federal attempts at firearms regulation have also consistently withstood challenge under the Second Amendment. See, e.g., Hale, 978 F.2d at 1020; Warin, 530 F.2d at 108; United States v. Three Winchester 30-30 Caliber Lever Action Carbines, 504 F.2d 1288, 1290 n. 5 (7th Cir.1974); United States v. Johnson, 497 F.2d 548, 550 (4th Cir.1974); Cases, 131 F.2d at 923. We see no reason why § 922(o) should be an exception.
III.
CONCLUSION
91
In light of the foregoing, we reject Rybar's challenge to the constitutional validity of 18 U.S.C. § 922(o) and will affirm the district court's judgment of conviction.
ALITO, Circuit Judge, dissenting:
92
Was United States v. Lopez, 514 U.S. 549, 115 S. Ct. 1624, 131 L. Ed. 2d 626 (1995), a constitutional freak? Or did it signify that the Commerce Clause still imposes some meaningful limits on congressional power?
93
The statutory provision challenged in this case, the portion of 18 U.S.C. § 922(o) that generally prohibits the purely intrastate possession1 of a machine gun, is the closest extant relative of the statute struck down in Lopez, 18 U.S.C. § 922(q)(1)(A), which made it a federal offense knowingly to possess a firearm in a school zone. Both are criminal statutes that regulate the purely intrastate possession of firearms. Both statutes, departing from the mold of prior federal criminal statutes governing firearms possession, lack a jurisdictional element,2 that is, they do not require federal prosecutors to prove that the firearms were possessed in or affecting interstate commerce. Compare, e.g., 18 U.S.C. § 922(d). And in passing both statutes, Congress made no findings regarding the link between the intrastate activity regulated by these laws and interstate commerce. If Lopez does not govern this case, then it may well be a precedent that is strictly limited to its own peculiar circumstances. That may be what the majority here would like, see Maj. Op. at 283 (citation omitted) ("challenges based on Lopez '[a]lmost invariably' fail"), but our responsibility is to apply Supreme Court precedent. That responsibility, it seems to me, requires us to invalidate the statutory provision at issue here in its present form.
94
This would not preclude adequate regulation of the private possession of machine guns. Needless to say, the Commerce Clause does not prevent the states from regulating machine gun possession, as all of the jurisdictions within our circuit have done. See Del.Code Ann. tit. 11, § 1444 (1995); N.J.Stat.Ann. § 2C:39-5a (West 1995); 18 Pa.Cons.Stat.Ann. § 908 (1996); V.I.Code Ann. tit. 14, § 2253 (1994). Moreover, the statute challenged here would satisfy the demands of the Commerce Clause if Congress simply added a jurisdictional element--a common feature of federal laws in this field and one that has not posed any noticeable problems for federal law enforcement. In addition, as I explain below, 18 U.S.C. § 922(o) might be sustainable in its current form if Congress made findings that the purely intrastate possession of machine guns has a substantial effect on interstate commerce or if Congress or the Executive assembled empirical evidence documenting such a link. If, as the government and the majority baldly insist, the purely intrastate possession of machine guns has such an effect, these steps are not too much to demand to protect our system of constitutional federalism.
I.
95
In Lopez, the Supreme Court identified "three broad categories" of legislation permitted under the Commerce Clause: (1) regulation of "the use of the channels of interstate commerce," (2) regulation and protection of "the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities," and (3) regulation of "activities that substantially affect interstate commerce."3
96
514 U.S. at ---- - ----, 115 S. Ct. at 1629-30.
97
The majority in this case quite properly focuses its analysis primarily on the third of these categories--Congress's power to regulate those "activities that substantially affect interstate commerce"--because this is plainly the category under which 18 U.S.C. § 922(o) must be analyzed. But panels in the Fifth, Sixth, Ninth, and Tenth Circuits have tried to shoehorn 18 U.S.C § 922(o) into the first or second categories, and the majority cannot bring itself to acknowledge these courts' errors. Therefore, without embracing or repudiating the reasoning of these other courts, the majority writes:
98
Whatever the category relied on, it is telling that each of our sister circuits has found that the regulation of machine gun transfer and possession comes within Congress' power to legislate under the Commerce Clause. That uniform result confirms the observation made in United States v. Bell, 70 F.3d 495, 497 (7th Cir.1995), that, for criminal defendants, "[i]t appears that United States v. Lopez has raised many false hopes," and that challenges based on Lopez "[a]lmost invariably" fail.
99
Maj. Op. at 283. This approach requires me to discuss the first two categories and explain why I believe they are clearly inapplicable here.
II.
100
Regulation of the channels of commerce. As the majority notes (Maj. Op. at 283), panels in the Fifth, Sixth, and Ninth Circuits have upheld 18 U.S.C. § 922(o) as a regulation of "the use of the channels of interstate commerce." Lopez, 514 U.S. at ----, 115 S. Ct. at 1629. See United States v. Beuckelaere, 91 F.3d 781, 783 (6th Cir.1996); United States v. Rambo, 74 F.3d 948, 951-52 (9th Cir.), cert. denied, --- U.S. ----, 117 S. Ct. 72, 136 L. Ed. 2d 32 (1996); United States v. Kirk, 70 F.3d 791, 796 (5th Cir.1995), reh'g en banc granted, 78 F.3d 160 (5th Cir.1996). However, these courts seem to me to have fundamentally misunderstood the first category set out in Lopez.
101
To illustrate the meaning of this category, Lopez quoted a sentence from Caminetti v. United States, 242 U.S. 470, 37 S. Ct. 192, 61 L. Ed. 442 (1917), in which the Court upheld the constitutionality of the so-called White Slave Traffic Act, which prohibited the interstate transportation of women for prostitution or other immoral purposes. The sentence from Caminetti that was partially quoted in Lopez was as follows:
102
The transportation of passengers in interstate commerce, it has long been settled, is within the regulatory power of Congress, under the commerce clause of the Constitution, and the authority of Congress to keep the channels of interstate commerce free from immoral and injurious uses has been frequently sustained, and is no longer open to question.
103
Lopez, 514 U.S. at ----, 115 S. Ct. at 1629, citing Caminetti, 242 U.S. at 491, 37 S.Ct. at 196-97. Lopez also cited United States v. Darby, 312 U.S. 100, 114, 61 S. Ct. 451, 457, 85 L. Ed. 609 (1941), where the Court wrote:
104
Congress, following its own conception of public policy concerning the restrictions which may appropriately be imposed on interstate commerce, is free to exclude from the commerce articles whose use in the states for which they are destined it may conceive to be injurious to the public health, morals, or welfare, even though the state has not sought to regulate their use.
105
In support of this statement, the Darby Court cited (id.), among other cases, Champion v. Ames, 188 U.S. 321, 23 S. Ct. 321, 47 L. Ed. 492 (1903) (the "Lottery Case"), which upheld a law prohibiting the interstate shipment of lottery tickets, and Hipolite Egg Co. v. United States, 220 U.S. 45, 31 S. Ct. 364, 55 L. Ed. 364 (1911), which sustained a law banning the interstate shipment of adulterated food. Thus, it seems clear that the first category of Commerce Clause authority outlined in Lopez concerns Congress's power to regulate, for economic or social purposes, the passage in interstate commerce of either people or goods.
106
The statute at issue in this case, 18 U.S.C. § 922(o), would fall within this category if it barred the interstate shipment of machine guns, but of course that is not what it does. Instead, it goes much farther and reaches the wholly intrastate possession of machine guns. I therefore agree with the Seventh Circuit, which, while sustaining 18 U.S.C. § 922(o) under the third Lopez category, candidly acknowledged that it did not fall within the first. United States v. Kenney, 91 F.3d 884, 889 (7th Cir.1996); see also Beuckelaere, 91 F.3d at 787-88 (Suhrheinrich, J., dissenting); Kirk, 70 F.3d at 799 (Jones, J., dissenting).
107
In holding that 18 U.S.C. § 922(o) falls within the first category, the Fifth, Sixth, and Ninth Circuits reasoned chiefly as follows. This statute, while generally banning the private possession of machine guns, does not apply to machine guns lawfully possessed prior to its enactment in 1986. See 18 U.S.C. § 922(o)(2)(B). Therefore, "there could be no unlawful possession under section 922(o) without an unlawful transfer." Kirk, 70 F.3d at 796. Accordingly, "the limited ban on possession of machineguns must be seen as a necessary and proper measure meant to allow law enforcement to detect illegal transfers where the banned commodity has come to rest: in the receiver's possession. In effect, the ban on such possession is an attempt to control the interstate market for machineguns by creating criminal liability for those who would constitute the demand-side of the market, i.e., those who would facilitate illegal transfer out of desire to acquire mere possession." Id.; see also Beuckelaere, 91 F.3d at 783; Rambo, 74 F.3d at 951-52.
108
There are numerous flaws in this analysis. First (but least important), it is not true that every possession criminalized by 18 U.S.C. § 922(o) must be preceded by an "unlawful transfer." A lawfully possessed semiautomatic weapon could be converted by its owner into an automatic. See Kenney, 91 F.3d at 889. The statute may also reach a person who initially possesses a machine gun lawfully pursuant to 18 U.S.C. § 922(o)(2)(A), which permits possession under governmental authority, but who exceeds the scope of that authority or retains possession after it has terminated. Second and more important, this reasoning seems to confuse an unlawful transfer with an interstate transfer. Even if it were true that every possession made illegal by 18 U.S.C. § 922(o) were preceded by an unlawful transfer, it would not follow that every such possession is preceded by an interstate transfer, and Congress's authority under the first Lopez category concerns the passage of people and goods in the channels of interstate commerce. Third, insofar as the Fifth, Sixth, and Ninth Circuits justified 18 U.S.C § 922(o) as an attempt to suppress an interstate market by banning purely intrastate possession, their arguments fall within the third Lopez category, i.e., Congress's authority to regulate an intrastate activity (intrastate possession) that has a substantial effect on interstate commerce (the interstate market). The Seventh Circuit recognized this point when it wrote:
109
[A]lthough it may be true that Congress must regulate intrastate transfers and even mere possessions of machine guns in aid of its prerogative of preventing the misuse of the channels of interstate commerce, the regulation still regulates much more than the channels of commerce. This rationale is therefore an aspect of Congress's broader power to regulate things "affecting" interstate commerce; we must look further, in light of Lopez, to confirm the existence of a rational and substantial basis underlying its power to do so.
110
Kenney, 91 F.3d at 889.
III.
111
Regulation of activities that threaten the instrumentalities of interstate commerce or persons or things in interstate commerce. In Lopez, the Court wrote that "Congress is empowered to regulate and protect the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities." 514 U.S. at ----, 115 S.Ct at 1629. The Court cited two cases involving the exercise of this power. The first, Houston, E. & W. Tex. Ry. v. United States, 234 U.S. 342, 34 S. Ct. 833, 58 L. Ed. 1341 (1914), (the "Shreveport Rate Cases") in which the Court upheld the regulation of intrastate railroad rates on the theory that this regulation was needed to protect "the security of [interstate] traffic," "the efficiency of the interstate service," and "the maintenance of conditions under which interstate commerce may be conducted upon fair terms and without molestation or hindrance." Id. at 351, 34 S.Ct. at 836. The second Southern Ry. v. United States, 222 U.S. 20, 32 S. Ct. 2, 56 L. Ed. 72 (1911), upheld federal safety regulations as applied to trains and railroad cars travelling intrastate on a railroad line that was a highway of interstate commerce. The Court reasoned that the "absence of appropriate safety appliances" from the intrastate trains and cars was "a menace," not only to those trains and cars, but also to those moving in interstate commerce. Id. at 27, 32 S.Ct. at 4. See United States v. Bishop, 66 F.3d 569, 597-98 (3d Cir.1995)(Becker, J., concurring in part and dissenting in part).
112
In addition to these two cases, the Lopez Court cited two statutes that had been listed in Perez v. United States, 402 U.S. 146, 150, 91 S. Ct. 1357, 1359-60, 28 L. Ed. 2d 686 (1971), as falling within this category of congressional authority. See Lopez, --- U.S. at ----, 115 S. Ct. at 1629. The statutes were 18 U.S.C § 32, which, at the time of Perez, made it a crime to damage or destroy an aircraft that was used in interstate commerce, and 18 U.S.C. § 659, which criminalizes thefts from interstate shipments.
113
Based on the Lopez Court's description of this second category of congressional authority and on the examples that it provided, it is apparent that this authority reaches threats to "the instrumentalities" of interstate commerce, i.e., the means of conveying people and goods across state lines, such as airplanes and trains. This power also reaches threats to people and goods travelling in interstate commerce, such the theft of goods moving interstate and the setting of rates that could affect interstate trade.
114
Title 18 U.S.C. § 922(o) would fall within this second Lopez category if Congress had banned the intrastate possession of machine guns in order to prevent them from being used to damage vehicles travelling interstate, to carry out robberies of goods moving in interstate commerce, or to threaten or harm interstate travellers. However, there is no indication that Congress passed 18 U.S.C. § 922(o) for any of these reasons; and neither the government, the majority in this case, nor any of the other courts of appeals have adduced any evidence that this statute is needed for any of these purposes. Thus, I agree with the Seventh Circuit that 18 U.S.C § 922(o) "appears to be an ill fit in the second" Lopez category. Kenney, 91 F.3d at 889.
115
Although the Sixth and Tenth Circuits upheld 18 U.S.C. § 922(o) under this second category, I find their reasoning elusive. Both courts stressed that machine guns travel in interstate commerce. See Beuckelaere, 91 F.3d at 784 ("Machineguns travel in interstate commerce, posing a threat to local law enforcement, which has a disruptive effect on interstate commerce."); United States v. Wilks, 58 F.3d 1518, 1521 (10th Cir.1995) ("machineguns ... by their nature are 'a commodity ... transferred across state lines for profit by business entities' ")("[t]he interstate flow of machineguns ... is interstate commerce"). But how these assertions show that 18 U.S.C § 922(o) can be sustained under the second Lopez category, I am at a loss to understand. Those machine guns that are actually travelling in interstate commerce may be regulated under the first Lopez category, i.e., Congress may ban them from the channels of interstate commerce altogether or restrict their admission. However, machine guns that are simply possessed intrastate and are not travelling in interstate commerce may not be regulated under the first Lopez category, and as previously explained, unless they are menacing interstate commerce, they do not fall within the second category either.
116
Accordingly, I think it is clear that "if [18 U.S.C. § 922(o) ] is to be sustained," it cannot be under the first or second Lopez categories, but "must be under the third category as a regulation of an activity that substantially affects interstate commerce." Lopez, 514 U.S. at ----, 115 S. Ct. at 1630.IV.
117
Regulation of activities that substantially affect interstate commerce. I come now to the crux of this case, viz., whether 18 U.S.C. § 922(o) can be upheld in its present form and on the present record on the ground that the purely intrastate possession of machine guns substantially affects interstate commerce. As I understand its opinion, the majority advances two separate theories, and I will address each separately.
A. The majority writes:
118
Just as the Court in Wickard [v. Filburn, 317 U.S. 111, 63 S. Ct. 82, 87 L. Ed. 122, 125 (1942),] sustained the regulation of wheat intended wholly for home consumption because it was connected to an overall interstate market which it could depress, 317 U.S. at 128-29 [63 S.Ct. at 90-91], and the Court in Perez [v. United States, 402 U.S. 146, 156, 91 S. Ct. 1357, 1362, 28 L. Ed. 2d 686 (1971),] sustained the regulation of purely intrastate loansharking because in the aggregate such local loansharking substantially affected interstate commerce, 402 U.S. at 155-57 [91 S.Ct. at 1362-63], so also § 922(o) can be sustained because it targets the possession of machine guns as a demand-side measure to lessen the stimulus that prospective acquisition would have on the commerce in machine guns.
119
Maj. Op. at 281-82. In other words, the majority argues in effect that the private, purely intrastate possession of machine guns has a substantial effect on the interstate machine gun market.
120
This theory, if accepted, would go far toward converting Congress's authority to regulate interstate commerce into "a plenary police power." Lopez, 514 U.S. at ----, 115 S. Ct. at 1633. If there is any sort of interstate market for a commodity--and I think that it is safe to assume that there is some sort of interstate market for practically everything--then the purely intrastate possession of that item will have an effect on that market, and outlawing private possession of the item will presumably have a substantial effect. Consequently, the majority's theory leads to the conclusion that Congress may ban the purely intrastate possession of just about anything. But if Lopez means anything, it is that Congress's power under the Commerce Clause must have some limits. Cf. Charles Fried, Foreword: Revolutions?, 109 HARV.L.REV. 13, 36-37 (1995).
121
The Lopez Court of course recognized the potential sweep of Wickard, on which the majority's theory is chiefly based, and the Lopez Court sought to place reasonable limits on that theory. Observing that Wickard represents "perhaps the most far reaching example of Commerce Clause authority over interstate activity," the Court noted that Wickard "involved economic activity in a way that the possession of a gun in a school zone does not." 514 U.S. at ----, 115 S. Ct. at 1630. The Court then added:
122
Section 922(q) is a criminal statute that by its terms has nothing to do with 'commerce' or any sort of economic enterprise, however broadly one might define those terms. Section 922(q) is not an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated. It cannot, therefore, be sustained under our cases upholding regulations of activities that arise out of or are connected with a commercial transaction, which viewed in the aggregate, substantially affects interstate commerce.
123
514 U.S. at ---- - ----, 115 S. Ct. at 1630-31 (footnote omitted).
124
The activity that the Lopez Court found was not "economic" or "connected with a commercial transaction" was a type of intrastate firearm possession, i.e., the possession of a firearm (including a machine gun) within a school zone. At issue here is another type of purely intrastate firearm possession, i.e., the purely intrastate possession of a machine gun. If the former must be regarded as non-economic and non-commercial, why isn't the same true of the latter? Is possession of a machine gun inherently more "economic" or more "commercial" than possession of other firearms?4 Is the possession of a firearm within a school zone somehow less "economic" and "commercial" than possession elsewhere--say, on one's own property?5 If there are distinctions of constitutional dimension here, they are too subtle for me to grasp. It seems to me that the most natural reading of Lopez is that the simple possession of a firearm, without more, is not "economic" or "commercial" activity in the same sense as the production of wheat in Wickard and that therefore such possession cannot be regulated under the Wickard theory. Cf. United States v. Bishop, 66 F.3d at 601-02 (Becker, J., concurring in part and dissenting in part).
125
B. The majority's second theory appears to be that Congress could have rationally concluded that the purely intrastate possession of machine guns increases the incidence of certain crimes--the majority specifically mentions violent crime, racketeering, and drug trafficking--that are of "national concern." See Maj. Op. at 280-81. In order to bring this case within the third Lopez category, it is not enough to observe that violent criminals, racketeers, and drug traffickers occasionally use machine guns in committing their crimes and that these crimes have interstate effects. Rather, there must be a reasonable basis for concluding that the regulated activity (the purely intrastate possession of machine guns) facilitates the commission of these crimes to such a degree as to have a substantial effect on interstate commerce.
126
I take this theory very seriously, but my problem with it is that it rests on an empirical proposition for which neither Congress, the Executive (in the form of the government lawyers who briefed and argued this case), nor the majority has adduced any appreciable empirical proof.
127
I would view this case differently if Congress as a whole or even one of the responsible congressional committees had made a finding that intrastate machine gun possession, by facilitating the commission of certain crimes, has a substantial effect on interstate commerce. But despite the resources at their command to investigate questions such as this, neither Congress nor any of its committees did so, and indeed Congress never even identified the source of constitutional authority under which 18 U.S.C. § 922(o) was enacted. Of course, Congress is not obligated to make findings. "But to the extent that congressional findings would enable us to evaluate the legislative judgment that the activity in question substantially affected interstate commerce, even though no such substantial effect was visible to the naked eye, they are lacking here." Lopez, 514 U.S. at ----, 115 S. Ct. at 1632.
128
Likewise, the Justice Department, which has been litigating the constitutionality of 18 U.S.C. § 922(o) in courts across the country, has not brought to our attention any studies or reports by federal law enforcement agencies or others that establish that the purely intrastate possession of machine guns has a substantial effect on interstate commerce.
129
Without assistance from Congress or the Executive, the majority has combed the legislative history of federal firearms legislation going back more than a half century, but in my view the majority has not found anything of significant value for present purposes. The majority cites congressional findings made in connection with prior firearms legislation concerning the problems resulting from the interstate movement of firearms. See Maj. Op. at 279 (emphasis added) (findings that "link both the flow of firearms across state lines and their consequential indiscriminate availability with the resulting violent criminal acts that are beyond the effective control of the states"); Maj. Op. at 279 (emphasis added) ("findings of an extensive interstate commerce in firearms and the need for adequate federal control over such traffic"); Maj. Op. at 280 (emphasis added)(findings emphasizing "the connection between the increasing rate of crime, the growing use of firearms, and interstate firearms traffic )"; Maj. Op. at 281 (connection between "the interstate flow of firearms [and] the increasing serious crime in this country"). However, the question here is not whether the interstate flow of firearms substantially affects interstate commerce; rather, the question is whether the entirely intrastate possession of machine guns has such an effect, and none of the findings noted above speak to that question. Indeed, Congress had no occasion to consider that question when it made those findings, since none of the laws in connection with which those findings were made reached purely intrastate possession without requiring proof in court of a jurisdictional link.
130
The remaining underpinnings of the majority's analysis are three snippets from a committee report and one comment made on the floor of the Senate. The committee report, H.R.Rep. No. 495, 99th Cong., 2d Sess. (1986), reprinted in 1986 U.S.C.C.A.N. 1327, concerned a bill, H.R. 4332, 99th Cong., 2d Sess. (1986), that lacked any provision similar to 18 U.S.C. § 922(o). Instead, H.R. 4332 dealt with machine guns by providing (sec. 11) for enhanced penalties for defendants who used or carried a machine gun during and in relation to a federal drug trafficking offense or a federal crime of violence. See 18 U.S.C. § 924(c). This provision did not raise any new Commerce Clause problems, because the statutes creating the underlying federal drug trafficking offenses or crimes of violence had presumably been enacted pursuant to one of the federal government's delegated powers (whether the Commerce Clause or some other provision). Accordingly, the committee had no need to consider the general question of the relationship between machine guns and interstate commerce, much less the specific question of the relationship between intrastate machine gun possession and interstate commerce, and there is no indication that the committee explored either of these topics.
131
Not surprisingly, however, since H.R. 4332 provided for enhanced penalties in certain cases involving machine gun use, the committee did mention machine guns, and it is upon these fleeting references that the majority relies. The first reference, which appears in a portion of the report captioned "BENEFITS FOR LAW ENFORCEMENT" simply summarizes the enhanced penalty provision. H.R. Rep. 495, supra, at 2, 1986 U.S.C.C.A.N. at 1328. This statement obviously has nothing to do with interstate commerce.
132
The next reference concerns another bill, H.R. 3155, 99th Cong., 1st Sess. (1985), entitled the "Racketeer Weapons and Violent Crime Control Act of 1985," that contained a provision (sec. 3(b)) very much like 18 U.S.C. § 922(o). The report states that this bill would have "prohibited the transfer and possession of machine guns used by racketeers and drug traffickers for intimidation, murder and protection of drugs and the proceeds of crime." H.R. Rep. 495, supra at 4, 1986 U.S.C.C.A.N. 1330. I do not think that it is reasonable to conclude based on this brief statement that the committee looked into the question and found that there was a substantial link between the conduct prohibited by that bill (the intrastate possession of machine guns) and interstate commerce. After all, the committee did not recommend adoption of the prohibition on intrastate possession contained in H.R. 3155.
133
The final reference in the committee report concerns "the need for more effective protection of law enforcement officers from the proliferation of machine guns and high-powered 'assault-type' weapons that are increasingly being used by criminals." H.R. Rep. 495, supra at 7, 1986 U.S.C.C.A.N. at 1333. This statement, which lumps together machine guns and assault weapons, says nothing about interstate commerce or particular types of crimes that have substantial interstate effects; and since the committee did not recommend banning the private, intrastate possession of machine guns, the committee presumably felt that the needs of law enforcement would be met by the more limited machine gun provision that it favored. Viewing all three of the statements in the committee report together, I do not think that it is reasonable to conclude that the committee considered or drew any conclusions concerning the relationship between intrastate machine gun possession and interstate commerce.
134
Nor do I see any value for present purposes in the last bit of congressional material unearthed by the majority, a statement made by Senator Kennedy in a colloquy concerning 18 U.S.C. § 922(o). Voicing opposition to a proposal to "grant amnesty to people who now possess machineguns outside the law," Senator Kennedy stated: "The only thing that has changed about the machine gun situation since the 1968 act, and the limited amnesty granted then, is that machine guns have become a far more serious law enforcement problem." 132 Cong. Rec. 9,602 (1986). This observation by a single member of Congress says nothing about interstate commerce or crimes having substantial interstate effects.
135
In sum, we are left with no congressional findings and no appreciable empirical support for the proposition that the purely intrastate possession of machine guns, by facilitating the commission of certain crimes, has a substantial effect on interstate commerce, and without such support I do not see how the statutory provision at issue here can be sustained--unless, contrary to the lesson that I take from Lopez, the "substantial effects" test is to be drained of all practical significance.6 As Lopez reminded us, the "constitutionally mandated division of authority [between the federal government and the states] 'was adopted by the Framers to ensure protection of our fundamental liberties.' " Lopez, 514 U.S. at ----, 115 S. Ct. at 1626, quoting Gregory v. Ashcroft, 501 U.S. 452, 458, 111 S. Ct. 2395, 2400, 115 L. Ed. 2d 410 (1991). See also Lopez, 514 U.S. at ---- - ----, 115 S. Ct. at 1638-39 (Kennedy, J., concurring). And even today, the normative case for federalism remains strong. See Steven G. Calabresi, "A Government of Limited and Enumerated Powers": In Defense of United States v. Lopez, 94 Mich.L.Rev. 752, 756-790 (1995). Out of respect for this vital element, we should require at least some empirical support before we sustain a novel law that effects "a significant change in the sensitive relation between federal and state criminal jurisdiction." United States v. Bass, 404 U.S. 336, 349, 92 S. Ct. 515, 523, 30 L. Ed. 2d 488 (1971).
*
Honorable Marjorie O. Rendell, United States District Judge for the Easter District of Pennsylvania, sitting by designation
1
On March 5, 1996, the Fifth Circuit granted a rehearing en banc. See United States v. Kirk, 78 F.3d 160 (5th Cir.1996)
2
Because the government has not appealed this aspect of the court's ruling, we do not comment on the district court's analysis
3
In Virginia Surface Mining, 452 U.S. at 276, 101 S.Ct. at 2360, the Court had framed the question merely as whether the activity regulated "affects interstate commerce," without the adverb "substantially" that was added by the Lopez majority. See also Hodel v. Indiana, 452 U.S. 314, 324, 326, 101 S. Ct. 2376, 2383, 2384, 69 L. Ed. 2d 40 (1981)
4
Therefore, looking at the totality of the activity with which Rybar was charged, it was more than "the purely intrastate possession of a machine gun," see Dissent at 291, and he was certainly not one who was simply in "private possession of machine guns," see Dissent at 287
5
Because Rybar interposed a facial challenge to § 922(o) there was no occasion for the district court to consider whether, in fact, these two machine guns had passed through interstate commerce. We note but do not rely on the fact that although Rybar was authorized to manufacture firearms, including machine guns, the very nature of the machine guns he possessed and sold to Baublitz, one of which was a U.S. military machine gun and the other described as a "Chinese Type 54" machine gun, suggests interstate traffic
1
Title 18 U.S.C. § 922(o) also applies to transfers of machine guns. However, the defendant in this case pled guilty to two counts of the indictment charging only possession, and thus the constitutionality of the transfer provision is not before us here
2
See United States v. Lopez, 2 F.3d 1342, 1347 (5th Cir.1993), aff'd, 514 U.S. 549, 115 S. Ct. 1624, 131 L. Ed. 2d 626 (1995)
3
The court wrote:
[W]e have identified three broad categories of activity that Congress may regulate under its commerce power.... First, Congress may regulate the use of the channels of interstate commerce. See, e.g., [United States v. Darby, 312 U.S. 100, 113-15, 61 S. Ct. 451, 457, 85 L. Ed. 609 (1941); Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241, 256, 85 S. Ct. 348, 357, 13 L. Ed. 2d 258 (1964) ] ('[T]he authority of Congress to keep the channels of interstate commerce free from immoral and injurious uses has been frequently sustained, and is no longer open to question.' ) (quoting Caminetti v. United States, 242 U.S. 470, 491, 37 S. Ct. 192, 197, 61 L. Ed. 442 (1917)). Second, Congress is empowered to regulate and protect the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities. See, e.g., Shreveport Rate Cases, 234 U.S. 342, 34 S. Ct. 833, 58 L. Ed. 1341 (1914); Southern R. Co. v. United States, 222 U.S. 20, 32 S. Ct. 2, 56 L. Ed. 72 (1911)(upholding amendments to Safety Appliance Act as applied to vehicles used in intrastate commerce); [Perez v. United States, 402 U.S. 146, 150, 91 S. Ct. 1357, 1359, 28 L. Ed. 2d 686 (1971) ] ("[F]or example, the destruction of an aircraft (18 U.S.C. § 32), or ... thefts from interstate shipments (18 U.S.C. § 659)"). Finally, Congress' commerce authority includes the power to regulate those activities having a substantial relation to interstate commerce, [NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 37, 57 S. Ct. 615, 624, 81 L. Ed. 893 (1937) ], i.e., those activities that substantially affect interstate commerce. [Maryland v. Wirtz, 392 U.S. 183, 196 n. 27, 88 S. Ct. 2017, 2024 n. 27, 20 L. Ed. 2d 1020 (1968).]
4
See United States v. Bishop, 66 F.3d at 587 n. 27 ("The dangerousness of the object is not the source of Congressional power; the connection to interstate commerce is.")
5
The majority does not explain why possession of a firearm within a school zone is less "commercial" or "economic" than possession elsewhere--because it plainly is not. (If someone drives through a school zone with a firearm in his possession, does that person quickly cease to engage in a "commercial" activity on entering the zone and then quickly begin on leaving?) Instead, the majority argues that a general ban on the possession of machine guns may reasonably be viewed as having a greater effect on interstate commerce than a ban on the possession of all firearms within certain limited areas (school zones). See Maj. Op. 282. But this argument says nothing about the "commercial" or "noncommercial" character of firearms possession
6
The majority's suggestion (Maj. Op. 281) that my analysis "requires either Congress or the Executive to play Show and Tell with the federal courts" is simply wrong. The Supreme Court has recognized the importance of congressional findings. See, e.g., Lopez, 514 U.S. at ----, 115 S. Ct. at 1632. Indeed, in United States v. Bass, 404 U.S. 336, 92 S. Ct. 515, 30 L. Ed. 2d 488 (1971), where the Court construed ambiguous language in a felon-in-possession statute to require proof that the possession was connected with interstate commerce, the Court wrote: "In light of our disposition of the case, we do not reach the question whether, upon appropriate findings, Congress can constitutionally punish the 'mere possession' of firearms." Id. at 339 n. 4, 92 S. Ct. at 517 n. 4
With respect to the Executive, it is a litigant seeking to persuade us that there is a reasonable case to be made for the proposition that the intrastate possession of machine guns substantially affects interstate commerce. There is nothing improper or unusual about asking a litigant to point to support for its position, whether in the form of evidence in the record or legislative facts that can be judicially noticed. Such assistance would have been particularly valuable here, since the Executive is in a far better position than we are to determine whether there is a reasonable empirical case to be made for the proposition it is advancing. Without congressional findings or empirical support, it is not possible for appellate judges, who are not experts on firearms, machine guns, racketeering, drug trafficking, or crime in general, to verify in any intellectually respectable way that there is a reasonable case to be made for the proposition that the intrastate possession of firearms substantially affects interstate commerce. | 01-03-2023 | 04-17-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/1537429/ | 142 B.R. 47 (1992)
In The Matter of PRATT GENERAL CONTRACTORS, INC., Debtor.
O'CONNOR LUMBER COMPANY, INC., Plaintiff,
v.
PRATT GENERAL CONTRACTORS, INC., BayBank Connecticut, N.A., Defendants.
Bankruptcy No. 2-90-00062, Adv. No. 2-91-2027.
United States Bankruptcy Court, D. Connecticut.
June 11, 1992.
Elizabeth O. Fitzpatrick, Sachs, Berman, Rashba & Shure, P.C., New Haven, Conn., for plaintiff.
Daniel S. Blinn, Pepe & Hazard, Hartford, Conn., for debtor-defendant.
Alexander Rostocki and Clifford J. Grandjean, Sorokin, Sorokin, Gross, Hyde & Williams, Hartford, Conn., for BayBank Connecticut, N.A., defendant.
MEMORANDUM AND ORDER RE: CROSS MOTIONS FOR SUMMARY JUDGMENT
ROBERT L. KRECHEVSKY, Chief Judge.
I.
Issue
The dispositive issue in this core adversary proceeding is whether a subcontractor *48 of the debtor-general contractor is entitled to the imposition of a constructive trust on an account receivable, secured by a mechanic's lien, due the debtor from the owner of the property where the subcontractor furnished materials. The issue is presented for ruling upon cross motions for summary judgment filed by the debtor and the subcontractor.
II.
Background
Pratt General Contractors, Inc., the debtor, filed a chapter 11 petition on January 11, 1990. O'Connor Lumber Company, Inc. (O'Connor), the subcontractor, brought a complaint on February 15, 1991 against the debtor and BayBank Connecticut, N.A., the holder of a security interest in the debtor's accounts receivable. The complaint requested a declaratory judgment that any funds due the debtor under the debtor's claim against a property owner, secured by the debtor's mechanic's lien, are impressed with a constructive trust for the benefit of O'Connor to the extent of monies due O'Connor from the debtor (First Count), and that O'Connor is subrogated to the rights of the debtor pursuant to Conn.Gen. Stat. § 49-33(f) (Second Count).
The debtor had been the general contractor under a contract for the construction of apartments, executed on January 31, 1987, with Hawkstone Developers, Inc., the owner of property in Derby, Connecticut. On July 21, 1989, the debtor recorded and perfected a certificate of mechanic's lien against the Derby property, pursuant to Connecticut mechanic's lien statutes, asserting an unpaid balance of $1,223,208 due under the construction contract.[1] O'Connor, retained by the debtor as a subcontractor, furnished materials for the apartment construction project. On June 1, 1989, O'Connor recorded its own certificate of mechanic's lien on the Derby land records, but the debtor asserts, and O'Connor does not deny, that the lien was not perfected and does not, in any event, now represent a valid or enforceable encumbrance. While the amount of the debt claimed by O'Connor is disputed by the debtor, for the purpose of this ruling some amount is deemed unpaid. The debtor's action to foreclose its mechanic's lien, commenced on October 26, 1989, is presently pending in state court. O'Connor's single memorandum of law, submitted both in opposition to the debtor's motion and in support of its own motion for summary judgment, makes no reference whatsoever to the Second Count of its complaint (which count is hereby deemed abandoned), but rests solely on the claim that constructive trust doctrine applies to the money due the debtor from the property owner based on the relationship between the debtor and O'Connor.
III.
Discussion
A.
O'Connor contends in its memorandum that "[a]n agency relationship between Pratt and the Subcontractors arose as a result of Pratt's efforts to get paid by the Project Owner. . . . [A]ny monies recovered by Pratt . . . must be held in trust for O'Connor. . . . An equitable trust or constructive trust is the appropriate mechanism in this case to prevent unjust enrichment to Pratt at the expense of the Subcontractors." O'Connor Memorandum at 6-7. O'Connor further asserts that "[t]he courts have never directly addressed the issue of imposing a constructive trust over proceeds of a construction project held by a bankrupt general contractor who has failed to pay its subcontractors." Id. at 8. Contrary to this assertion, several courts have addressed the issue, as defined by the record in this proceeding, and, as hereinafter noted, have generally decided the issue adversely to O'Connor's position.
B.
This court, in Marwin Production Systems, Limited v. The Pratt & Whitney Company, Inc. (In re The Pratt & Whitney Company, Inc.), 140 B.R. 327 (Bankr. D.Conn.1992), appeal docketed, recently *49 surveyed the doctrine of constructive trusts under the Bankruptcy Code in general, and Connecticut constructive trust law in specific, as follows:
[The Second Circuit has ruled that] Bankruptcy Code § 541(b)(1) excludes from the bankruptcy estate property of others held by the debtor in trust at the time of the filing of the petition; that a constructive trust thereby confers on the trust beneficiary an equitable interest in the trust property superior to that of a bankruptcy trustee; and that state law is to be consulted to determine whether to impose a trust on property. . . .
. . . Connecticut courts have observed that constructive trusts "arise when the legal title to property is obtained by a person in violation, express or implied, of some duty owed to the one who is equitably entitled, and when the property thus obtained is held in hostility to his beneficial rights of ownership, . . . [I]t is not indispensable that the conventional relation of trustee and cestui que trust, or even any fiduciary relation, should exist between the original wrongdoer and the beneficial owner. . . ." Further, a constructive trust arises "against one, who by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds legal title to property which he ought not, in equity and good conscience, hold and enjoy. [I]t is unnecessary to find fraudulent intent for the imposition of a constructive trust . . . [where there is] unjust enrichment of the grantee through his unconscionable retention of the trust res." (Citations omitted.)
Marwin emphasized that the application of constructive trust doctrine will not be justified to relieve creditors from their own actions or inactions in failing to protect their interests, and that "[i]mposition of constructive trust must include a consideration of the relative equities between the proposed trust beneficiary and other creditors." (Citation omitted.) Id.
C.
Connecticut mechanic's lien statutes provide comprehensive and well-defined protection for subcontractors, as well as for general contractors, against nonpayment for improvements they have made to property, by permitting all persons furnishing materials or rendering services to file mechanic's liens against such property, capable of being foreclosed in the same manner as a mortgage. See Conn.Gen.Stat. §§ 49-33 through 49-36; H & S Torrington Assoc. v. Lutz Eng'g Co., Inc., 185 Conn. 549, 553, 441 A.2d 171 (1981) ("A subcontractor's right to claim a lien against a property owner with whom he is not in privity was `created because the subcontractor has furnished material or labor to or for the contractor which has gone into the owner's building.'"); Seaman v. Climate Control Corp., 181 Conn. 592, 596, 436 A.2d 271 (1980) (Where mechanic's liens have been filed by original contractor and subcontractors, "[i]f the contract price which the owner agreed to pay the original contractor is insufficient to cover all the liens, claimants other than the original contractor are to be paid first, and, if necessary, on a pro rata basis. General Statutes § 49-36.").
The rulings in jurisdictions providing mechanic's lien protection apparently similar to that of Connecticut are uniform that where the subcontractor had the opportunity to obtain a mechanic's lien, but failed to do so, the subcontractor was not entitled to the additional protection of a constructive trust imposed on contractor monies received or due from the property owner. See Wachovia Bank v. American Bldg. Consultants, Inc. (In re American Bldg. Consultants, Inc.), 138 B.R. 1015 (Bankr. N.D.Ga.1992) (no constructive trust available to subcontractors on funds paid by an owner to a contractor where the subcontractor has not taken steps timely to secure a valid mechanic's lien); T. Brady Mechanical Serv., Inc. v. F.E. Moran, Inc. (In re T. Brady Mechanical Serv., Inc.), 129 B.R. 559, 563 (Bankr.N.D.Ill.1991) ("If [subcontractors] failed to use available means to protect themselves, that does not make it *50 equitable for them to take money that would otherwise benefit the unsecured creditors."); Gorman v. Florida Wholesale Carpet, Inc. (In re Listle/Shreeves Corp.), 20 B.R. 421, 423 (Bankr.M.D.Fla. 1982) (where debtor-general contractor had not paid subcontractors who could have but did not file subcontractor mechanic's liens, subcontractors had no claim against funds due debtor from property owner as no true fiduciary relationship created between parties and no basis to impose constructive trust). See also Sequatchie Concrete Serv., Inc. v. Cutter Lab., 616 S.W.2d 162, 166 (Tenn.Ct.App.1980) ("Since this Court is unable to find authority establishing a construction fund trust in the absence of an explicit state builders trust fund statute, a prior agreement between the parties for direct payment to the subcontractor or the possession of a valid or inchoate mechanics lien by the subcontractor, we hold that [the subcontractor] is not entitled to have the funds [of debtor-contractor] held in trust for it."). Cf. In re Null's Serv., Inc., 109 B.R. 301, 305 (Bankr.W.D.Tenn.1990) ("Since Tennessee does not statutorily provide for a constructive trust for the benefit of suppliers, the court finds no basis for granting the suppliers a legal or equitable interest in the funds on that basis."); Heckathorn Constr. Co., Inc. v. Bass Mechanical Contractors, Inc. (In re Bass Mechanical Contractors, Inc.), 84 B.R. 1009, 1019 (Bankr.W.D.Ark.1988) (payments made to general contractor not held in trust for suppliers who may be entitled to liens on project); Hickey v. Thomas G. Gallagher, Inc. (In re H & A Constr. Co., Inc.), 65 B.R. 213, 217 (Bankr.D.Mass.1986) (Trustee of debtor-contractor can recover payments made to subcontractors within preference period because a debtor-creditor relationship only existed between the parties, not a trust or fiduciary relationship); Carey Elec. Contracting v. First Nat. Bank of Elgin, 74 Ill.App.3d 233, 30 Ill. Dec. 104, 109-10, 392 N.E.2d 759, 763-64 (1979) (Subcontractors who executed lien waivers were not entitled to constructive trust because "mere allegations that one businessman simply trusted another to fulfill his contractual obligations is certainly not enough.").
Two holdings primarily relied upon by O'Connor are distinguishable in that they both involved joint-check payments by the owner to the contractor and subcontractor, In re Inca Materials, Inc., 880 F.2d 1307 (11th Cir.1989); Mid-Atlantic Supply, Inc. v. Three Rivers Aluminum Co., 790 F.2d 1121 (4th Cir.1989). A third cased cited by O'ConnorGeorgia Pac. Corp. v. Sigma Service Corp., 712 F.2d 962 (5th Cir. 1983)actually ruled that an owner who issued joint checks payable to a debtor-contractor and a subcontractor, as requested by the debtor, is insufficient, by itself, to invoke a constructive trust in favor of the subcontractor.
IV.
Conclusion
In light of the case-law doctrine in Connecticut establishing the factors justifying the imposition of a constructive trust; the failure of the record to disclose unjust enrichment, actual or constructive fraud, unconscionable conduct or breach of a fiduciary duty by the debtor; the lack of any Connecticut authority, decisional or statutory, applying constructive trust doctrine to general contractor-subcontractor relationships per se; the availability to Connecticut subcontractors of adequate mechanic's lien procedures to protect their rights to payment; the extensive, reasoned and convincing case authority denying the application of constructive trust doctrine in other jurisdictions with seemingly comparable statutory mechanic's lien systems, I conclude that the debtor's motion for summary judgment should be granted, the cross-motion of O'Connor be denied, and that judgment enter dismissing the adversary proceeding on the merits. It is
SO ORDERED.
NOTES
[1] A bond has since been substituted by the present property owner for the mechanic's lien. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/866102/ | PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
CENTRAL TELEPHONE COMPANY OF
VIRGINIA, a Virginia Corporation;
UNITED TELEPHONE SOUTHEAST,
LLC, a Virginia Limited Liability
Company; EMBARQ FLORIDA, INC.,
a Florida Corporation; UNITED
TELEPHONE COMPANY OF INDIANA,
INC., an Indiana Corporation;
UNITED TELEPHONE COMPANY OF
KANSAS, a Kansas Corporation;
UNITED TELEPHONE COMPANY OF
EASTERN KANSAS, a Delaware
Corporation; UNITED TELEPHONE No. 12-1322
COMPANY OF SOUTHCENTRAL
KANSAS, an Arkansas Corporation;
EMBARQ MISSOURI, INC., a Missouri
Corporation; EMBARQ MINNESOTA,
INC., a Minnesota Corporation;
UNITED TELEPHONE COMPANY OF
THE WEST, a Delaware
Corporation; CENTRAL TELEPHONE
COMPANY, a Delaware Corporation;
UNITED TELEPHONE COMPANY OF
NEW JERSEY, INC., a New Jersey
Corporation;
2 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
CAROLINA TELEPHONE AND
TELEGRAPH COMPANY, LLC, a
North Carolina Limited Liability
Corporation; UNITED TELEPHONE OF
OHIO, an Ohio Corporation;
UNITED TELEPHONE COMPANY OF
THE NORTHWEST, an Oregon
Corporation; THE UNITED
TELEPHONE COMPANY OF
PENNSYLVANIA, LLC, a
Pennsylvania Limited Liability
Corporation; UNITED TELEPHONE
COMPANY OF THE CAROLINAS LLC, a
South Carolina Limited Liability
Corporation; UNITED TELEPHONE
COMPANY OF TEXAS, INC., a Texas
Corporation; CENTRAL TELEPHONE
COMPANY OF TEXAS, a Texas
Corporation,
Plaintiffs-Appellees,
v.
SPRINT COMMUNICATIONS
COMPANY OF VIRGINIA, INC., a
Virginia Corporation; SPRINT
COMMUNICATIONS COMPANY L.P., a
Delaware Limited Partnership,
Defendants-Appellants.
VERIZON; FEDERAL COMMUNICATIONS
COMMISSION,
Amici Curiae.
CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 3
Appeal from the United States District Court
for the Eastern District of Virginia, at Richmond.
Robert E. Payne, Senior District Judge.
(3:09-cv-00720-REP)
Argued: January 29, 2013
Decided: April 29, 2013
Before NIEMEYER, DUNCAN, and FLOYD,
Circuit Judges.
Affirmed by published opinion. Judge Duncan wrote the opin-
ion, in which Judge Niemeyer and Judge Floyd joined.
COUNSEL
ARGUED: Timothy J. Simeone, WILTSHIRE & GRANNIS,
LLP, Washington, D.C., for Appellants. Michael J. Lockerby,
FOLEY & LARDNER, LLP, Washington, D.C., for Appel-
lees. Scott H. Angstreich, KELLOGG, HUBER, HANSEN,
TODD, EVANS & FIGEL, PLLC, Washington, D.C., for
Amicus Curiae Verizon. ON BRIEF: Christopher J. Wright,
Rachel W. Petty, WILTSHIRE & GRANNIS, LLP, Washing-
ton, D.C., for Appellants. Jennifer M. Keas, Benjamin R. Dry-
den, FOLEY & LARDNER, LLP, Washington, D.C.; Bradley
D. Jackson, FOLEY & LARDNER, LLP, Madison, Wiscon-
sin, for Appellees. Michael E. Glover, Edward Shakin, Curtis
L. Groves, VERIZON, Arlington, Virginia; Joshua D. Bran-
son, KELLOGG, HUBER, HANSEN, TODD, EVANS &
FIGEL, PLLC, Washington, D.C., for Amicus Curiae Veri-
zon. Peter Karanjia, Deputy General Counsel, Jacob M.
Lewis, Associate General Counsel, Laurel R. Bergold, Coun-
sel, FEDERAL COMMUNICATIONS COMMISSION,
4 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
Washington, D.C., for Amicus Curiae Federal Communica-
tions Commission.
OPINION
DUNCAN, Circuit Judge:
Pursuant to the provisions of the Telecommunications Act
of 1996, 47 U.S.C. §§ 151 et seq., Sprint Communications
Company of Virginia, Inc., and Sprint Communications Com-
pany L.P. (collectively "Sprint" or the "Sprint Defendants")
entered into interconnection agreements with nineteen incum-
bent local exchange carriers (collectively "CenturyLink" or
the "CenturyLink Plaintiffs") providing for the mutual
exchange of telecommunications traffic. When Sprint began
to withhold payments under the agreement, CenturyLink
brought a breach of contract claim in federal district court.
After rejecting Sprint’s threshold argument that its jurisdic-
tion was limited to reviewing determinations by State utilities
commissions, the district court entered judgment in favor of
CenturyLink on the merits. The district court judge subse-
quently also concluded that a belatedly discovered financial
interest in CenturyLink held in a managed Individual Retire-
ment Account did not require his recusal. Sprint appeals all of
the district court’s rulings; for the reasons that follow, we
affirm.
I.
A.
Prior to the Telecommunications Act of 1996 (the "1996
Act"), telephone service within a local calling area was pro-
vided by an incumbent local exchange carrier ("ILEC") oper-
ating as a state-licensed monopoly. The purpose of the 1996
Act was to create competition within these local telephone
markets.
CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 5
At the core of the 1996 Act is a requirement that ILECs
"interconnect" their facilities and equipment with competitive
local exchange carriers ("CLECs"), such as Sprint, for the
mutual exchange of traffic. Defined as "the linking of two net-
works for the mutual exchange of traffic," 47 C.F.R. § 51.5,
interconnection allows CLEC customers to call ILEC custom-
ers and vice versa. While the carriers may reach agreement
through arbitration or negotiation, the product of the process
is an interconnection agreement (an "ICA"), which must
include "a detailed schedule of itemized charges for intercon-
nection and each service or network element included in the
agreement." 47 § 252(a)(1).
B.
A brief description of the corporate relationship between
Sprint and CenturyLink, and the latter’s organizational parent-
age, provides necessary background for our consideration of
the recusal issue. We then set out the underlying facts and
procedural history of the appeal before us.
When Sprint sought negotiation of the ICAs at issue in
April 2004, it and the nineteen companies that comprise the
CenturyLink Plaintiffs were wholly owned subsidiaries of
Sprint Corporation.1 The CenturyLink Plaintiffs were a part of
Sprint Corporation’s local telephone division. In May 2006,
Sprint Corporation spun off the CenturyLink Plaintiffs, which
then formed a separate company known as Embarq Corpora-
tion ("Embarq"). In July 2009, CenturyTel, Inc.
("CenturyTel") acquired Embarq and its subsidiaries. The
resulting entity began doing business as "CenturyLink."
Between 2004 and 2005 Sprint and CenturyLink executed the
nineteen ICAs that are the subject of this dispute, and which
were approved by the appropriate State commissions.2
1
We distinguish between Sprint (or the Sprint Defendants), the defen-
dant in this case, and Sprint Corporation, of which the former is a part.
2
The parties stipulated below that each ICA contains terms that are
materially the same as the terms contained in the Master Interconnection
6 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
Some general information about telecommunications traffic
provides context for our discussion of the issues in this case.
There are three ways to place a call: landline, wireless, and
Voice-over Internet Protocol ("VoIP"), which, as its name
suggests, relies on the internet to originate voice communica-
tions. See Vonage Holdings Corp. v. Nebraska Pub. Serv.
Comm’n, 564 F.3d 900, 902 (8th Cir. 2009) ("VoIP is an
internet application used to transmit voice communication
over a broadband internet connection."). Likewise, a call
placed through any of these three formats can be classified
into three categories of traffic, depending on the locational
relationship of those speaking: local,3 long distance intrastate,4
and long distance interstate. The facts giving rise to the under-
lying dispute revolve around the ICA’s compensation struc-
ture for these three categories of traffic.
In assessing the appropriate compensation for a local, long
distance intrastate, and long distance interstate call, the rele-
vant metrics are where a call originated and where it terminated.5
This determination is often referred to in the telecommunica-
tions industry as the "jurisdictionalizing" of a call. All the
calls at issue in this case originated on Sprint’s network and
were terminated by one of the CenturyLink Plaintiffs on its
local network.
Agreement for the State of Virginia (the "Virginia ICA") executed
between Sprint and Central Telephone Company of Virginia, which is one
of the CenturyLink Plaintiffs. J.A. 316. Thus, when considering Centu-
ryLink’s breach of contract claim, we refer to each of the ICAs at issue
simply as "the ICA," and, when discussing the ICA, we look to the provi-
sions of the Virginia ICA found in the J.A. at 710-86.
3
Local calling areas—also known as Local Access and Transport Areas,
or LATAs—were formed in 1984 following the breakup of AT&T. They
do not necessarily follow existing state, province, or area code borders.
4
A long distance intrastate call originates and terminates within the bor-
ders of a state, but travels from one LATA to another.
5
A carrier "terminates" a call by routing it from another carrier to a cus-
tomer in its own network.
CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 7
The ICA first addresses local traffic. In salient part, the
ICA defines local traffic as traffic "that is originated and ter-
minated within Sprint’s local calling area." J.A. 718. The ICA
applies to local traffic a practice known as "Bill & Keep" or
"reciprocal compensation." As § 38.1 of the ICA explains,
"[u]nder Bill and Keep, each Party retains the revenues it
receives from end user customers, and neither Party pays the
other Party for terminating Local Traffic which is subject to
the Bill and Keep compensation mechanism." J.A. 744. In
brief, no payments exchange hands for the termination of
local traffic.
By contrast, the ICA provides for "access charges"6 for the
two categories of long distance traffic discussed above: intra-
state and interstate. Under the ICA, the applicable access
charge depends on the category of long distance traffic.
All three categories of traffic—local, long distance intra-
state, and long distance interstate—travel across "trunks." See
47 C.F.R. § 69.2(x) (defining "trunk" as including "transmis-
sion media such as radio, satellite, wire, cable and fiber optic
cable means of transmission"). The parties stipulated below
that Sprint delivers some traffic to CenturyLink via local
interconnection trunks, and other traffic by way of Feature
Group D ("FGD") trunks. J.A. 315. FGD trunks carry long
distance traffic only. Id. at 316. FGD trunks attach to local
interconnection trunks, and thus enable long distance traffic to
be terminated on one of CenturyLink’s local networks.
The dispute in this case only involves VoIP traffic, which
travels over FGD trunks (for a long distance call) and over
6
A carrier typically pays an access charge when a long distance call
originating from its own network is terminated on the local network of
another carrier. See 47 C.F.R. § 69.2(a). The FCC defines "access charge"
as a "fee charged subscribers or other telephone companies by a local
exchange carrier for the use of its local exchange networks." See FCC,
Glossary of Telecommunication Terms, available at http://
transition.fcc.gov/glossary.html.
8 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
local interconnection trunks.7 Section 38.4 of the ICA
addresses the compensation system for the termination of
VoIP traffic: "Voice calls that are transmitted, in whole or in
part, via the public Internet or a private IP network (VoIP)
shall be compensated in the same manner as voice traffic (e.g.
reciprocal compensation, interstate access and intrastate
access)." J.A. 746.
Sprint paid CenturyLink access charges for VoIP traffic as
set out in § 38.4 from the time of the execution of the ICAs
between the parties in 2004 and 2005 until June 2009. At that
point, Sprint began filing written disputes with CenturyLink.
Although the nature of Sprint’s objections changed, its core
contention appeared to be twofold: (1) that the ICA did not
apply to long distance VoIP traffic that traveled over FGD
trunks; and (2) that CenturyLink had billed Sprint at an
improperly high rate for VoIP traffic since May 1, 2007.
Instead of following the Dispute Resolution Procedure
established in the ICA, Sprint unilaterally reduced the rate for
termination of VoIP-originated traffic. It demanded that Cen-
turyLink apply Sprint’s recalculated rate going forward and
remit portions of previous payments made by Sprint which
Sprint deemed to be in excess of what it should have paid.
Sprint withheld payments for both VoIP and non-VoIP traffic,
although no dispute concerning the latter existed.
C.
In November 2009, CenturyLink filed a complaint in the
United States District Court for the Eastern District of Vir-
ginia alleging one count of breach of contract based on the
7
CenturyLink’s breach of contract claim only concerns long distance
VoIP traffic, i.e., VoIP traffic that traveled over FGD trunks before Centu-
ryLink terminated it on a local network. Sprint’s counterclaim, which we
describe in the next section, concerns whether certain VoIP traffic is prop-
erly deemed local or long distance.
CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 9
facts recounted above. Sprint moved to dismiss CenturyLink’s
complaint for lack of jurisdiction due to failure to exhaust
administrative remedies, or, alternatively, to stay the case
under the doctrine of primary jurisdiction. Sprint also filed a
counterclaim alleging, inter alia, that CenturyLink breached
the North Carolina ICA (the "NC ICA") by billing Sprint for
local traffic not subject to access charges.
The district court denied Sprint’s motion to dismiss in a
lengthy opinion. It concluded that it had federal question
jurisdiction under Supreme Court and circuit precedent inter-
preting the 1996 Act. It then decided that the 1996 Act
imposed no requirement for CenturyLink to exhaust its reme-
dies before a State commission. Finally, it declined to stay the
case under the doctrine of primary jurisdiction, which allows
a court to refer a case within its jurisdiction to an administra-
tive agency.
The district court conducted a bench trial on CenturyLink’s
breach of contract claim during August and September 2010.
It subsequently entered judgment in favor of CenturyLink,
and issued a memorandum opinion setting out findings of fact
and conclusions of law. The district court concluded that "in
refusing to pay the access charges as billed, Sprint breached
its duties under the ICAs, which clearly included paying
access charges for VoIP-originated traffic according to the
jurisdictional endpoints of the calls." Cent. Tel. Co. of Va. v.
Sprint Commc’ns Co. of Va., Inc., 759 F. Supp. 2d 789, 792
(E.D. Va. 2011). Central to the district court’s decision was
its finding that § 38.4 of the ICA operated to apply the com-
pensation regime for local, long distance intrastate, and long
distance interstate traffic to VoIP calls.8 Although the district
8
In reaching this conclusion, the district court relied on, inter alia, the
prepared direct testimony submitted to the Florida Public Service Com-
mission by James R. Burt, Director of Regulatory Policy for Sprint Corpo-
ration, in 2004. Explaining Sprint’s interpretation of language identical to
§ 38.4 in the ICA at issue in this case, Mr. Burt observed:
10 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
court did not find the relevant portions of the ICA to be
ambiguous, it noted that if ambiguity existed, it would be con-
strued against Sprint as the drafter of the ICA.9 The district
court then awarded CenturyLink $23,376,213.76, which con-
sisted of damages under the breach of contract claim and pre-
judgment interest.
The second phase of the litigation, the bench trial on
Sprint’s counterclaim, took place over two days in December
2010. Unlike CenturyLink’s breach of contract claim, which
focused on long distance VoIP traffic, Sprint’s counterclaim
alleged that CenturyLink had improperly charged it for local
VoIP calls.10 Recognizing that the ICA’s "Bill and Keep" pro-
vision did not provide for access charges for local traffic, the
district court rejected Sprint’s argument that the ICA did not
permit CenturyLink’s use of the Billing Telephone Number
("BTN") method for determining whether a call should be
deemed local. Under the BTN method, a carrier classifies a
call as local or nonlocal for billing purposes based on a
unique account number that is assigned to a specific facility.
Sprint contended that CenturyLink was required to use
another method for "jurisdictionalizing" a call known as the
It is Sprint’s position that a VoIP call that originates or terminates
on Sprint’s network should be subject to the jurisdictionally
appropriate inter-carrier compensation rates. In other words, if
the end points of the call define the call as an interstate call, inter-
state access charges apply. If the end points define the call as
intrastate, intrastate access charges apply. If the end points define
the call as local traffic, reciprocal compensation charges apply.
J.A. 694.
9
The district court found as a factual matter that "the dominant influence
that Sprint employees outside the company’s local telephone division
wielded respecting the ICAs’ terms, for all practical purposes, made Sprint
the singular drafter. . . ." Cent. Tel. Co. of Va., 759 F. Supp. 2d at 804.
Sprint does not challenge this factual finding on appeal.
10
We provide here only a cursory description of the facts relevant to
Sprint’s counterclaim, and discuss them in more detail infra in III.B.
CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 11
"Calling Party Number" or "CPN." CenturyLink used BTN
throughout the period in dispute, in part because at the time
the parties executed the NC ICA, CenturyLink did not have
the software in place to use the CPN method. See J.A. 490-91.
The district court found that the NC ICA did not specify a
method for identifying local calls, but instead incorporated by
reference a telecommunications industry publication that
explicitly permitted use of the BTN method. Alternatively, the
district court again construed any ambiguity in the NC ICA
against Sprint as the drafter.
D.
By May 10, 2011, the district court judge had presided over
both bench trials, had ruled on Sprint’s jurisdiction motion,
had entered judgment for CenturyLink on its breach of con-
tract claim, including the issuance of an accompanying 50-
page memorandum opinion, and had begun drafting the opin-
ion on Sprint’s counterclaim. On that date, as the district
judge was preparing his financial disclosure for financial year
2010, he discovered that he had owned eighty shares of Cen-
turyLink in a managed Individual Retirement Account
("IRA") during the time he presided over this case.
Fund managers made decisions to buy and sell stocks in the
IRA, which at any given time held shares in as many as 200
companies, without input from the judge. The fund managers
initially purchased shares in Embarq, which subsequently
converted into forty-seven shares in CenturyTel following its
acquisition of Embarq. The fund managers’ subsequent pur-
chases of CenturyTel stock in October 2009 and March 2010
brought the district court judge’s total holdings up to eighty
shares, which represented between 0.52% and 0.81% of the
value of the IRA. In July 2010, the district court judge had
filed his 2009 financial disclosure form, which reflected that
the IRA held eighty shares in CenturyTel.11 Because Century-
11
In June 2010, the name was changed to CenturyLink. To minimize
confusion, we refer to "CenturyLink shares" throughout.
12 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
Tel was not a party to this case, the computerized system used
to identify potential conflicts did not register any conflict. J.A.
139-40.
As soon as the district court judge discovered that his IRA
owned shares in CenturyLink, he initiated a conference call to
inform the parties. He explained the situation, and stated that
he was "not qualified under the canons of ethics to sit as a
judge in this case." J.A. 129. He then noted: "I don’t know
that there’s any alternative but for me to vacate the orders that
I’ve entered in the case and recus[e] myself and hav[e] the
case reassigned to some other judge to make a decision." J.A.
130. Counsel for CenturyLink requested time to research the
recusal and vacatur issues before the judge took any action.
Hearing no objection from counsel for Sprint, the district
court judge gave CenturyLink one week to conduct research
and, if desired, file a brief.
On May 16, 2011 CenturyLink moved for the district court
judge to divest from CenturyLink, or, in the alternative, to
recuse without vacating any of the previous orders and opin-
ions. In the interval between the conference call and the filing
of CenturyLink’s motion, the district court judge conducted
additional research, and came to the conclusion that his earlier
statements rested on a misinterpretation of the ethical rules.
He therefore had the parties agree to a briefing schedule to
address the recusal issue. He also directed the IRA fund man-
ager to sell the shares of CenturyLink immediately, which
was done on May 17, 2011.
After considering briefing from the parties, the district
court judge concluded that (1) his statements during the con-
ference call did not constitute recusal; (2) allowing briefing of
the recusal issue as a response to CenturyLink’s request was
permissible; and (3) neither relevant subsection of the statu-
tory provision governing recusal, 28 U.S.C. § 455, required
recusal or vacatur. He issued a written opinion on the recusal
issue on December 12, 2011, and, on the following day, a sep-
CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 13
arate opinion in which he ruled in favor of CenturyLink on
the merits of Sprint’s counterclaim.
Sprint’s appeal followed.
II.
This appeal raises questions of federal and state jurisdiction
under the 1996 Act, and also implicates a decision of the Fed-
eral Communications Commission (the "FCC"). We therefore
requested the FCC to submit an amicus brief.12 We incorpo-
rate the FCC’s views in our discussion as appropriate.
Sprint advances two reasons why the district court should
not have reached the merits of this case. It first argues that the
district court had no authority under the 1996 Act to interpret
and enforce an ICA because its role is limited to reviewing a
State commission determination, and no such determination
occurred here. It further contends that the district court judge
should have recused himself and vacated all orders and judg-
ments issued in the case. Before considering each argument,
we briefly describe pertinent parts of the 1996 Act.
A.
Section 252 of the 1996 Act requires carriers to submit
their proposed ICA to the applicable State commission, which
"shall approve or reject the agreement, with written findings
as to any deficiencies." 47 U.S.C. § 252(e)(1) If a State com-
mission fails to approve or reject a proposed ICA within
ninety days of an ICA adopted by negotiation or within thirty
days of an ICA adopted by arbitration, the ICA is deemed
12
Specifically, we asked the FCC to address the effect our decision
might have on parallel proceedings pending before the FCC and its posi-
tion, if any, on whether disputes over ICA provisions must be presented
to a State commission before they are subject to review in a federal district
court.
14 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
approved. § 252(e)(4). By contrast, if the State commission
fails to "carry out its responsibility under [section 252] in any
proceeding or other matter under [section 252]," the FCC
must preempt the State commission and assume whatever
responsibility it otherwise possessed. § 252(e)(5). The 1996
Act does not define what constitutes a "responsibility" for
purposes of § 252(e)(5).
Section 252(e)(6) provides for review of State commission
actions in two distinct ways. First, when the FCC preempts a
state commission under section 252(e)(5), section 252(e)(6)
makes the FCC proceeding and any judicial review of that
proceeding the "exclusive remedies for a State commission’s
failure to act." Second, section 252(e)(6) provides that "[i]n
any case in which a State commission makes a determination
under this section, any party aggrieved by such determination
may bring an action in an appropriate Federal district court to
determine whether the agreement or statement meets the
requirements of section 251 of this title and this section."
B.
Sprint urges us to read the 1996 Act as permitting only
State commissions to interpret and enforce ICAs in the first
instance. In Sprint’s view, because no State commission con-
sidered the ICA dispute before the district court did, the dis-
trict court lacked authority to do so. Sprint first argues the
1996 Act contains a statutory exhaustion requirement. Even if
the text and structure of the 1996 Act do not mandate initial
State commission consideration, Sprint contends that we
should impose such a requirement as a prudential matter. Both
arguments raise legal questions, which we review de novo.
See Cavalier Tel., LLC. v. Va. Elec. & Power Co., 303 F.3d
316, 322 (4th Cir. 2002). We begin with the former.
1.
In considering whether the 1996 Act bestows on State com-
missions the exclusive responsibility to interpret and enforce
CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 15
ICAs in the first instance, it is useful to begin by identifying
what is not at issue in this case. Following the Supreme
Court’s decision in Verizon Maryland, Inc. v. Public Service
Commission of Maryland, 535 U.S. 635 (2002), and our deci-
sion in Verizon Maryland, Inc. v. Global NAPS, Inc., 377 F.3d
355 (4th Cir. 2004), it is clear that a federal court has jurisdic-
tion to interpret the terms of interconnection-related compen-
sation provisions in an ICA under 28 U.S.C. § 1331. Sprint
does not argue otherwise. Instead, Sprint contends that
although the 1996 Act confers federal question jurisdiction
over the dispute in this case, it restricts federal courts to
reviewing initial determinations made by State commissions.
Sprint’s argument assumes that a State commission has the
authority to interpret and enforce an ICA. Interestingly, noth-
ing in the 1996 Act’s text so provides. Nonetheless, every cir-
cuit to have considered the question has concluded that a State
commission does have such authority. See Core Commc’ns,
Inc. v. Verizon Pa., Inc., 493 F.3d 333, 342–44 (3d Cir. 2007);
Sw. Bell Tel., L.P. v. Pub. Util. Comm’n, 467 F.3d 418, 422
(5th Cir. 2006); E.SPIRE Commc’ns, Inc. v. N.M. Pub. Regu-
lation Comm’n, 392 F.3d 1204, 1207 (10th Cir. 2004); Iowa
Network Servs., Inc. v. Qwest Corp., 363 F.3d 683, 691–92
(8th Cir. 2004); BellSouth Telecomms., Inc. v. MCImetro
Access Transmission Servs., Inc., 317 F.3d 1270, 1277 (11th
Cir. 2003) (en banc); MCI Telecomms. Corp. v. Ill. Bell Tel.
Co., 222 F.3d 323, 337–38 (7th Cir. 2000); Sw. Bell Tel. Co.
v. Brooks Fiber Commc’ns of Ok., Inc., 235 F.3d 493, 497
(10th Cir. 2000).13 The FCC has as well. In re Starpower
Commc’ns, LLC, 15 F.C.C.R. 11277, 11280 (F.C.C. 2000).
13
Although the Ninth Circuit in Pacific Bell v. Pac-West Telecomm, Inc.
did not directly address this question, it used language suggesting that a
State commission had the authority to enforce an ICA. See 325 F.3d 1114,
1126 (9th Cir. 2003) ("It is clear from the structure of the Act, however,
that the authority granted to state regulatory commissions is confined to
the role described in § 252—that of arbitrating, approving, and enforcing
interconnection agreements." (emphasis added)).
16 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
Although we have yet to address this issue,14 we need not do
so here because we reject Sprint’s more particularized claim
that a State commission must interpret an ICA before a fed-
eral district court can do so.
We begin with the text of the 1996 Act. Just as there is no
statutory text granting State commissions the authority to
interpret and enforce the provisions of ICAs, there is similarly
none granting them the exclusive authority to do so in the first
instance. See Core Comm’cns, 493 F.3d at 340 ("[T]he [1996]
Act is simply silent as to the procedure for post-formation dis-
putes."). Congress could have made review by a State com-
mission in the first instance an exclusive remedy; it used this
very phrase when discussing the review of an FCC preemp-
tion action. See 47 U.S.C. § 252(e)(6) ("In a case in which a
State fails to act as described in [§ 252(e)(5)], the proceeding
by the [FCC] under such paragraph and any judicial review of
the [FCC]’s actions shall be the exclusive remedies for a State
commission’s failure to act." (emphasis added)). But Con-
gress did not do so.
Notwithstanding the 1996 Act’s textual silence on this
point, Sprint argues that language in § 252(e)(6) requires a
State commission to make a "determination" before a federal
district court can act. Specifically, Sprint points to the follow-
ing: "In any case in which a State commission makes a deter-
mination under this section, any party aggrieved by such
determination may bring an action in an appropriate Federal
district court. . . ." § 252(e)(6). We disagree. The plain import
of this language is to provide for federal court review of a
State commission’s decision to approve or reject a proposed
ICA.15 This conclusion is reinforced by the fact that the 1996
14
In an unpublished opinion, we have reviewed a State commission’s
interpretation of an ICA without commenting on that State commission’s
authority to interpret the ICA. See dPi Teleconnect LLC v. Owens, 413 F.
App’x 641, 644-45 (4th Cir. 2011).
15
We note that section 252(e) is entitled "Approval by State commis-
sion." It is therefore appropriate to interpret the language of § 252(e)(6) in
light of the section’s overall purpose of providing guidance concerning the
approval process for an ICA.
CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 17
Act precludes such review by state courts. See § 252(e)(4)
("No State court shall have jurisdiction to review the action
of a State commission in approving or rejecting [an ICA]
. . . .").
Nonetheless, Sprint seeks to rely on cases that interpret
"determination" in § 252(e)(6) to include a State commis-
sion’s post-formation interpretation or enforcement of an
ICA. See e.g., Bellsouth Telecomms., 317 F.3d at 1277; Sw.
Bell Tel. Co. at 497 ("We next conclude that the district court
had jurisdiction to review the decision of the [Oklahoma Cor-
poration Commission] interpreting the Interconnection Agree-
ment."). Sprint’s reliance is misplaced. In recognizing that a
federal court’s authority to review State commission actions
includes the authority to review a State commission’s inter-
pretation or enforcement of an ICA provision, these cases nei-
ther explicitly nor implicitly hold that parties must bring a
dispute concerning an ICA to a State commission in the first
instance. Rather, they simply acknowledge that where parties
make a State commission the first stop for interpreting or
enforcing a provision in an ICA, the language of § 252(e)(6)
provides that it need not be the last stop.16
What Sprint terms its "structural" argument—that the struc-
ture of the 1996 Act gives State commissions "plenary author-
ity" over the interpretation of an ICA in the first instance, and
limits federal courts to a reviewing role—merely repackages
16
For example, although Sprint characterizes the Eleventh Circuit’s en
banc holding in BellSouth Telecommunications as imposing the type of
initial State commission consideration it advocates in this case, this char-
acterization is inaccurate. Instead, the en banc court, reversing a panel
decision holding that the State commission in Georgia lacked authority
under the 1996 Act to interpret an ICA, concluded that "the Georgia Pub-
lic Service Commission has the authority under federal law to interpret
and enforce the interconnection agreements at issue between the parties
and that its determination is subject to review in the federal courts." 317
F.3d at 1279. The Eleventh Circuit simply did not decide whether the 1996
Act requires a State commission to interpret an ICA in the first instance.
18 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
the same textual argument. Just as Sprint cannot ground its
textual argument in any text, neither can it point to any struc-
tural features of the 1996 Act indicating that Congress
intended to mandate initial State commission consideration.
Nor does Sprint’s vague appeal to "cooperative federalism"
advance its argument. As we have observed, adhering to the
1996 Act’s policy of cooperative federalism requires close
attention to the role that Congress (and the FCC) has actually
assigned to State commissions. See BellSouth Telecomms.,
Inc. v. Sanford, 494 F.3d 439, 449 (4th Cir. 2007) ("States’
continuing exercise of authority over telecommunications
issues forms part of a deliberately constructed model of coop-
erative federalism, under which the States, subject to the
boundaries set by Congress and federal regulators, are called
upon to apply their expertise and judgment and have the free-
dom to do so." (emphasis added)). Here, neither the plain text
of the 1996 Act nor its structure evince congressional intent
to place exclusive authority to interpret an ICA in the first
instance in a State commission.
Sprint further contends that even if the text and structure of
the 1996 Act do not require initial State commission consider-
ation, deference to the FCC’s Starpower decision should lead
us to construe the statute as imposing such a requirement.17 In
Starpower, the FCC considered whether to preempt the Vir-
ginia State Corporation Commission ("Virginia Commis-
sion") when the Virginia Commission took no action on a
disputed issue arising from an ICA. The FCC concluded first
that the Virginia Commission had the authority to interpret
and enforce an ICA, and then decided that preemption was
proper because "a state commission’s failure to ‘act to carry
out its responsibility’ under section 252 can in some circum-
17
We agree that where, as here, Congress has not spoken directly to a
particular question in the legislative text, it is appropriate to defer to a per-
missible construction of that statute by an administrative agency. See FDA
v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132 (2000); Chev-
ron v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843-44 (1984).
CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 19
stances include the failure to interpret and enforce existing
[ICAs]." Starpower, 15 F.C.C.R. at 11280 (emphasis added).
There is some support for Sprint’s argument that Starpower
advocates initial State commission consideration of ICA pro-
visions. In Core Communications, the Third Circuit purported
to apply Chevron deference to the FCC decision’s in Star-
power. 493 F.3d at 338-39. In what it acknowledged to be a
"broad" reading of Starpower, that court interpreted the
FCC’s observation that a State commission’s responsibility
under § 252(e)(6) can "in some circumstances include the fail-
ure to interpret and enforce existing [ICAs]," Starpower, 15
F.C.C.R. at 11280, as conferring an exclusive authority on
State commissions to resolve disputes over ICAs in the first
instance. Core Commc’ns, 493 F.3d at 342.
In its amicus brief in this case, however, the FCC disputed
that it had taken such a position in Starpower, describing the
Third Circuit’s interpretation as "incorrect."18 FCC Amicus
Br. at 15. The FCC agrees that Starpower gives State commis-
sions the responsibility to interpret and enforce an ICA "when
asked to do so" by the parties, but emphasizes that the deci-
sion "does not hold that state commissions are the only enti-
ties with that responsibility." Id. Moreover, the FCC argues
that reading the Act to grant exclusive authority to State com-
missions to interpret and enforce ICAs would be "inconsistent
with the broad adjudicatory authority that [other sections] of
the [1996] Act confer on the FCC and federal district courts."
Id. at 11. Finding this interpretation of the proper allocation
of decisional authority between federal courts and State com-
missions consistent with our reading of the 1996 Act, we
decline Sprint’s invitation to follow the Third Circuit and
accord Chevron deference to a position the FCC did not take.
18
Verizon also submitted an amicus brief arguing that the district court
had authority to adjudicate CenturyLink’s claims in the first instance
under the 1996 Act. Neither Verizon’s nor the FCC’s amicus brief took
a position on the merits of the dispute between Sprint and CenturyLink.
20 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
Accordingly, we hold that the 1996 Act does not require a
State commission to interpret and enforce an ICA in the first
instance.
2.
Sprint next argues that even if the 1996 Act does not man-
date initial State commission consideration, we should none-
theless impose this step as a prudential exhaustion
requirement. Sprint contends that State commissions neces-
sarily bring a level of expertise to the consideration of inter-
connection issues that federal courts lack. Where, as here,
Congress has legislated no explicit exhaustion requirement,
we are nonetheless "guided by congressional intent in deter-
mining whether application of the [exhaustion] doctrine
would be consistent with the statutory scheme." Cavalier Tel.,
303 F.3d at 322 (quoting Patsy v. Bd. of Regents of Fl., 457
U.S. 496, 501 n.4 (1982)). Cognizant of the "virtually unflag-
ging obligation" to exercise that jurisdiction which we pos-
sess, Colorado River Water Conservation District v. United
States, 424 U.S. 800, 818 (1976), we must use our sound judi-
cial discretion to "balance the interest of the individual in
retaining prompt access to a federal judicial forum against
countervailing institutional interests favoring exhaustion,"
Cavalier Telephone, 303 F.3d at 323 (quotation and citation
omitted). Here, that balance tips against imposing an exhaus-
tion requirement.
An exhaustion requirement would neither align with con-
gressional intent nor serve one of the exhaustion doctrine’s
core purposes. As we have noted, the purpose of the 1996 Act
was to introduce the benefits of competition into the local
telecommunications market. An exhaustion requirement exists
in part to promote efficiency. See Woodford v. Ngo, 548 U.S.
81, 89 (2006) ("Claims generally can be resolved much more
quickly and economically in proceedings before an agency
than in litigation in federal court."). The goals of competition
and efficiency would only be disserved by a requirement that
CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 21
the underlying merits of a dispute between Sprint and Centu-
ryLink be considered by multiple individual State commis-
sions with the attendant risk of disparate interpretations and
dispositions. Nor are we persuaded that State commissions
necessarily possess superior expertise to resolve such dis-
putes. Congress certainly did not agree, as it expressly pro-
vided for the FCC to act when a State commission has failed
to do so, and for federal courts to review such disputes in any
event. For these reasons, we conclude that neither the text of
the 1996 Act nor prudential considerations compel federal
deference to State commissions in the first instance.
C.
In its second challenge to the district court’s authority to
decide the merits of this case, Sprint argues that the district
court judge’s discovery of a financial interest in CenturyLink
required recusal and vacatur of all opinions and orders already
issued. We review a district judge’s recusal decision for abuse
of discretion. Newport News Holdings Corp. v. Virtual City
Vision, Inc., 650 F.3d 423, 432 (4th Cir. 2011).
Sprint advances two arguments under the judicial recusal
statute, 28 U.S.C. § 455. First, in Sprint’s view, recusal here
was mandatory because the district court judge knew that he
had a "financial interest in . . . a party to the proceeding."
§ 455(b)(4). Alternatively, Sprint argues that the district court
judge should have recused himself because "his impartiality
might reasonably be questioned." § 455(a). We consider each
in turn.
1.
Relying in part on the Federal Circuit’s decision in Shell
Oil Co. v. United States, 672 F.3d 1283 (Fed. Cir. 2012),
Sprint contends that the 2009 financial disclosure form that
the district court judge completed in July 2010 established
knowledge of his financial interest in CenturyLink before he
22 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
took any significant action in this case. See Appellant’s Br. at
50. Generally, a "financial interest" is "ownership of a legal
or equitable interest, however small . . . in the affairs of a
party." § 455 (d)(4). And "it is well-established that the own-
ership of stock constitutes a ‘financial interest’" for purposes
of § 455(b)(4). Shell Oil, 672 F.3d at 1289.
Sprint’s argument, however, fails to distinguish between
direct ownership of securities and ownership of securities in
a common investment fund over which a judge exercises no
management responsibilities. The judicial recusal statute spe-
cifically carves out the latter situation from the definition of
a "financial interest": "Ownership in a mutual or common
investment fund that holds securities is not a ‘financial inter-
est’ in such securities unless the judge participates in the man-
agement of the fund." § 455(d)(4)(i). Congress created this
exception to enable judges to hold securities without risking
recusal across a broad range of cases. See New York City Dev.
Corp. v. Hart, 796 F.2d 976, 980 (7th Cir. 1986) ("When
Congress amended § 455 in 1974, it designed § 455(d)(4)(i)
as a safe harbor, a way for judges to hold securities without
needing to make fine calculations of the effect of a given suit
on their wealth."). Moreover, the operation of § 455(d)(4)(i)
is "mechanical": "Just as § 455(b)(4) requires disqualification
when there is any financial interest, however small, so
§ 455(d)(4)(i) eliminates any inquiry into the size of the likely
effect of a decision on the value of securities held through a
mutual fund." Id. (citation omitted).
The safe harbor exception created in § 455(d)(4)(i) applies
here. J.A. 514. Although the recusal statute does not define
"common investment fund," the core elements, which include
assets held together in trust in order to provide "satisfactory
diversification" and a "reduction of administrative expenses,"
see 26 C.F.R. § 1.408–2(b)(5)(ii); see also Federal Tax Coor-
dinator ¶ H-12205 (2d.), 1997 WL 511225 (defining "com-
mon investment fund" as "a tax-exempt group trust created to
provide a diversification of investments or a reduction of
CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 23
administrative expenses" "into which IRA assets may be com-
mingled"), are found here. The record demonstrates that the
district court judge held the CenturyLink shares in an IRA
"along with the assets of many others who hold similar
accounts." J.A. 514. The record also indicates that
"[d]ecisions to buy and sell stocks in the IRA were made by
the fund managers without input from the presiding judge."
J.A. 128. Thus, the shares at issue here were held in a com-
mon investment fund in whose management the district court
judge did not participate.19 Accordingly, the district court
judge’s ownership of shares in CenturyLink does not consti-
tute a "financial interest" in CenturyLink for purposes of
§ 455(b). See Hart, 796 F.2d at 980 ("Because the underlying
assets are not a ‘financial interest’ of the judge it is unneces-
sary and inappropriate to inquire how a case might affect the
value of the fund’s assets.").
2.
Sprint alternatively argues that § 455(a) required recusal
because the district court judge should have known about his
interest in CenturyLink, and a reasonable observer would
ascribe such knowledge to him and call into question his par-
tiality. We note at the outset that a judge whose conduct has
satisfied the § 455(d)(4)(i) safe harbor will almost certainly
have complied with § 455(a) by acting in a reasonable and
impartial manner. See Hart, 796 F.2d at 980 (noting that using
§ 455(a) as a "back door . . . inquiry into the substantiality of
the effect on the value of assets" held in a managed fund is
inappropriate, and holding that "[a] reasonable person would
not question the impartiality of a judge who holds nothing but
19
If the judge learned that fund managers had purchased stock in a com-
pany which had a case before him, he could instruct the fund managers to
sell that stock. See J.A. 128 n.3. This sensible practice, which the district
court judge employed here soon after learning of his IRA’s ownership of
stock in CenturyLink, does not amount to participation in the management
of the IRA so as to remove the protection of § 455(d)(4)(i)’s safe harbor.
24 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
well diversified mutual funds"). Even if one could imagine a
scenario where § 455(d)(4)(i) applies but a judge’s partiality
might reasonably be questioned, such a scenario is not present
here. Given the small number of shares the district court judge
held, the fact that the CenturyLink shares only came into his
portfolio after a series of mergers about which he was
unaware, and, as we have noted, that he held the shares in an
IRA managed by others, a reasonable observer would have no
cause to question his impartiality. His prompt action to inform
the parties of his stock when he learned of it, and to divest
from CenturyLink shortly thereafter further supports this con-
clusion.
The district court judge did not violate the recusal statute,
and therefore did not abuse his discretion in deciding that nei-
ther recusal nor vacatur was appropriate.
III.
Having concluded that the district court properly reached
the merits of this case, we now consider whether it decided
them correctly. Sprint raises two challenges. First, Sprint
asserts that the district court misconstrued the ICA as apply-
ing to long distance VoIP traffic. Second, it contends that
CenturyLink impermissibly billed Sprint for local calls. When
reviewing a district court’s judgments after a bench trial, we
accept factual findings unless they are clearly erroneous and
examine conclusions of law de novo. Plasterers’ Local Union
No. 96 Pension Plan v. Pepper, 663 F.3d 210, 215 (4th Cir.
2011).
As the district court did, we apply Virginia law to Centu-
ryLink’s breach of contract claim, Cent. Tel. Co. of Va., 759
F. Supp. 2d at 797 n.4, and North Carolina law to Sprint’s coun-
terclaim.20 To succeed on a breach of contract claim, the
20
As relevant to this case, the applicable North Carolina and Virginia
contract principles are substantively alike. Moreover, because an ICA is
a "creation of federal law," Verizon, Md., 377 F.3d at 364, we also look
to our own precedent.
CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 25
plaintiff must prove by a preponderance of the evidence that
a legally enforceable obligation existed between it and the
defendant; that the defendant breached that obligation; and
that the plaintiff incurred damages as a result of the breach.
See Sunrise Continuing Care, LLC v. Wright, 671 S.E. 2d
132, 135 (Va. 2009) (citation omitted); Birtha v. Stonemor,
N.C., LLC, 727 S.E.2d 1, 9 (N.C. Ct. App. 2012). Both Centu-
ryLink’s claim and Sprint’s counterclaim implicate the first of
these elements. We interpret a contract as written and, when
its terms are clear and unambiguous, we construe the contract
"according to its plain meaning." City of Chesapeake v. States
Self-Insurers Risk Retention Grp., Inc., 628 S.E. 2d 539, 541
(Va. 2006); State v. Philip Morris USA Inc., 685 S.E.2d 85,
90 (N.C. 2009).
Where ambiguities arise, however, the "basic contract law
principle contra proferentem counsels that we construe any
ambiguities in the contract against its draftsman." Maersk
Line, Ltd. v. United States, 513 F.3d 418, 423 (4th Cir. 2008);
Station Assocs., Inc. v. Dare Cnty., 501 S.E.2d 705, 708 (N.C.
Ct. App. 1998) rev’d on other grounds, 513 S.E.2d 789 (N.C.
1999). Finally, a settled rule of contract interpretation allows
consideration of the "practical construction put by the parties
upon the terms of their own contract." First Nat. Exch. Bank
of Roanoke v. Roanoke Oil Co., 192 S.E. 764, 771 (Va. 1937);
see also id. ("No rule for the construction of written instru-
ments is better settled than that which attaches great weight
to the construction of the instrument by the parties them-
selves." (citation omitted)); Century Commc’ns, Inc. v. Hous.
Auth. of Wilson, 326 S.E.2d 261, 264 (N.C. 1985). Armed
with these principles, we turn to Sprint’s arguments.
A.
Sprint first argues that the ICA does not apply to long dis-
tance VoIP traffic carried over FGD trunks. In its thorough
opinion on CenturyLink’s breach of contract claim, the dis-
trict court explained how local calls are subject to "Bill and
26 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
Keep" reciprocal compensation under § 38.1 of the ICA,
while the ICA set out specific access charges for intrastate
long distance and interstate long distance traffic. In the district
court’s view, § 38.4 of the ICA, which provides that "[v]oice
calls that are transmitted, in whole or in part, via the public
Internet or a private IP network (VoIP) shall be compensated
in the same manner as voice traffic (e.g., reciprocal compen-
sation, interstate access and intrastate access)," J.A. 746,
applied that existing compensation regime to VoIP traffic.
On appeal, instead of directly challenging this interpreta-
tion of the ICA, Sprint argues that the ICA’s "plain language"
only covers interconnection of local networks, of which FGD
trunks are not a part.21 Thus, under Sprint’s view, the compen-
sation regime set out in § 38.4 does not apply to VoIP traffic
carried over FGD trunks. Appellant’s Br. at 35. The "plain
language" which Sprint cites includes provisions that (1)
define the scope of the ICA as relating to the establishment
of "Local Interconnection," § 2.1; (2) set out guidance for the
"Local Interconnection Trunk Arrangement," § 37; and (3)
define the "Physical Point of Interconnection" as "the physical
point that establishes the technical interface, the test point,
and the operational responsibility hand-off between CLEC
and Sprint for the local interconnection of their networks,"
§ 1.55, see Appellant’s Br. at 35. But given that federal law
defines interconnection simply as "the linking of two net-
works for the mutual exchange of traffic," 47 C.F.R. § 51.5,
and nothing in the ICA defines it otherwise, none of these
provisions advances Sprint’s position. Simply put, the ICA is
ambiguous as to whether local interconnection includes or
excludes long distance VoIP traffic carried over FGD trunks.
This ambiguity,22 along with the parties’ previous course of
21
Sprint acknowledges that FGD trunks connect long distance networks
to local networks. See Appellant’s Br. at 37 (quoting J.A. 86).
22
Whether language in a contract is ambiguous is reviewed de novo as
a question of law. Eure v. Norfolk Shipbuilding & Drydock Corp., Inc.,
561 S.E.2d 663, 667 (Va. 2002).
CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 27
dealings, compels us to reject Sprint’s argument. The district
court found, and Sprint does not challenge, that it drafted the
ICAs at issue here. Had Sprint intended to exclude FGD
trunks from the scope of the ICA, a simple provision stating
that the established compensation framework for VoIP traffic
in § 38.4 did not apply to any VoIP traffic traveling on FGD
trunks would have accomplished this goal. Instead, Sprint’s
argument seeks to cobble together a handful of other ambigu-
ous provisions—and ignore the language of § 38.4—to sup-
port the proposition that VoIP traffic over FGD trunks is
excluded from the ICA’s coverage. As the district court
observed, "only so much can be gained from Sprint referenc-
ing other provisions in the ICAs, but ignoring the one provi-
sion, Section 38.4, that speaks directly to the issue in
dispute—compensation for termination of VoIP-originated
traffic." Cent. Tel. Co. of Va., 759 F. Supp. at 801. Because
we are required to construe ambiguity against the
drafter—here, Sprint—we conclude that the ICA must be read
to apply to VoIP traffic carried over FGD trunks.
The parties’ own longstanding "practical construction" of
the ICA bolsters our conclusion. See First Nat. Exch. Bank of
Roanoke, 192 S.E. at 771. Sprint paid the CenturyLink plain-
tiffs for VoIP traffic carried over FGD trunks in accordance
with § 38.4 from the execution of the ICAs in 2004 and 2005
until June 2009. Although the fact that the parties were for
some of this time both part of Sprint Corporation may explain
Sprint’s reluctance to challenge this arrangement until the
CenturyLink Plaintiffs split off from Sprint Corporation in
May 2006, it does not explain Sprint’s continued payments
until June 2009. The district court’s unchallenged factual
findings, however, offer an explanation: "In the summer of
2009, Sprint, like many companies at the time, embarked on
company-wide cost-cutting efforts. Notably, during this time
period, Sprint launched a coordinated effort to contest access
charges on VoIP-originated traffic with other carriers across
the telecommunications industry." Cent. Tel. Co. of Va., 759
F. Supp. at 796. Sprint’s change in strategy does not undo the
28 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
parties’ shared interpretation of the ICA over a number of
years. When viewed in conjunction with the ambiguity in the
ICA’s coverage of VoIP traffic over FGD trunks, the parties’
course of dealing reinforces our conclusion that the district
court did not err in entering judgment for CenturyLink on its
breach of contract claim.23
B.
Sprint also challenges the district court’s ruling on its coun-
terclaim, which alleges that CenturyLink improperly billed it
for local traffic under the NC ICA. Sprint does not dispute
that the calls are covered by the ICA, but instead contends
that CenturyLink wrongly identified the calls as intrastate
long distance, using an impermissible method. Specifically, in
Sprint’s view, the plain terms of the NC ICA disallowed Cen-
turyLink’s use of the Billing Telephone Number (the "BTN")
method. We disagree.
As noted above, the "Bill & Keep" compensation
regime—under which neither party pays the other—applies to
local traffic, whereas the ICA requires Sprint to pay the appli-
cable access charges for intrastate long distance traffic. Thus,
while no charge would apply to a call deemed local, Sprint
would have to pay access charges for any traffic deemed
intrastate long distance. Moreover, there are at least two dif-
ferent methods for determining whether a call is deemed
local. The BTN method identifies traffic as local or nonlocal
for billing purposes based on a unique account number that is
assigned to a specific facility. By contrast, the "Calling Party
Number" or "CPN" method identifies the actual originating
location of the call in question. In some instances, traffic that
23
We fail to understand how Sprint’s additional contention that Centu-
ryLink’s interpretation of the ICA "seeks to circumvent a longstanding,
industry-wide dispute" about treatment of VoIP traffic, Appellant’s Br. at
32, aids its argument. That an interpretation would avoid such a dispute
would seem to counsel in favor of, not against, it.
CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 29
the BTN method identifies as intrastate long distance—and
therefore subject to access charges—the CPN method would
identify as local.
The crux of the question, then, is whether the ICA estab-
lishes a method for determining when a call is properly con-
sidered local and when it is not. We must therefore determine
whether the ICA required CenturyLink to use the CPN
method instead of the BTN method it actually used.
In its comprehensive opinion, the district court identified
the relevant provisions of the NC ICA at issue. First, § 1.40
defines local traffic under the NC ICA as traffic "that is origi-
nated and terminated within Sprint’s local calling area." J.A.
795. Importantly, the text of the NC ICA "does not prescribe
a specific method of ‘jurisdictionalizing’ traffic as local (sub-
ject to ‘Bill and Keep’) or non-local (subject to the applicable
access charges) for billing purposes." J.A. 164. Instead, § 42.1
provides that "[e]ach Party shall calculate terminating inter-
connection minutes of use based on standard AMA recordings
made within each Party’s network, these recordings being
necessary for each Party to generate bills to the other Party."
J.A. 830. Section 1.6 of the NC ICA defines "AMA" as "Au-
tomated Message Accounting," and notes that "AMA format
is contained in the Automatic Message Accounting document
published by Telcordia as GR-1100-CORE which defines the
industry standard for message recording." J.A. 792. The par-
ties do not dispute that the industry manual known as the Tel-
cordia GR-1100-CORE permits use of the BTN method.
Both Sprint and CenturyLink invoke the express language
of the NC ICA in support of their respective positions. Sprint
claims that § 1.40’s definition of traffic that "is originated and
terminated within [a] local calling area," J.A. 795, required
CenturyLink to use the Calling Party Number or "CPN"
method to jurisdictionalize the originating and terminating
points of a call. According to Sprint, application of the CPN
method to the calls at issue would transform them from long
30 CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT
distance into local calls. And to construe the NC ICA as per-
mitting the BTN method, Sprint contends, would lead to
absurd results—akin to treating a cab ride that began and
ended in Richmond but traveled along Interstate 95 as "origi-
nating" anywhere along that highway, even as far afield as
Portland, Maine. CenturyLink, by contrast, argues that § 42.1
in conjunction with § 1.6 incorporated by reference the indus-
try standard set out in the Telcordia GR-1100-CORE docu-
ment, and therefore explicitly permitted use of the BTN
method. The district court credited the latter view. So do we.
Sprint’s argument that the NC ICA disallowed use of the
BTN method suffers from an insurmountable flaw: the NC
ICA nowhere explicitly so provides. As the district court
observed, Sprint’s reliance on the definition set out in § 1.40
overlooks the more rudimentary question of how a carrier can
determine where a call has originated and terminated. At the
time the parties agreed to the NC ICA, CenturyLink only had
the capability to use the BTN method, and although the CPN
method existed, no provision in the NC ICA required that
CenturyLink adopt this method at any point in the future.
Sprint’s argument that the NC ICA only incorporated the Tel-
cordia document for the purpose of calculating minutes, see
Appellant’s Br. at 47-49, finds no grounding in the text of the
relevant provisions. Accordingly, we agree with the district
court’s conclusion that the NC ICA permitted CenturyLink to
identify the origination and termination points of calls using
the BTN method, and therefore to bill Sprint at the applicable
access charges for those calls identified as nonlocal under that
method.
At best, Sprint’s arguments render ambiguous the propriety
of the BTN method for identifying calls as local under the NC
ICA. But as we explained in the context of CenturyLink’s
breach of contract claim, Sprint must do more than identify an
ambiguity in a contract it drafted. In the face of ambiguity, we
construe the relevant provisions of the NC ICA against Sprint
and in favor of CenturyLink.
CENTRAL TELEPHONE COMPANY OF VIRGINIA v. SPRINT 31
IV.
For the reasons discussed above, we affirm.
AFFIRMED | 01-03-2023 | 04-29-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1537463/ | 167 Conn. 396 (1974)
HARRY S. GAUCHER, JR., ADMINISTRATOR (ESTATE OF WENDELL H. CAMP)
v.
ESTATE OF WENDELL H. CAMP ET AL.
Supreme Court of Connecticut.
Argued October 2, 1974.
Decision released December 24, 1974.
HOUSE, C. J., SHAPIRO, LOISELLE, MACDONALD and BOGDANSKI, JS.
Berkeley Cox, Jr., for the appellant (plaintiff).
Myles J. Laffey, with whom was Herbert A. Lane, for the appellees (defendants).
HOUSE, C. J.
This is an appeal by the plaintiff from a judgment of the Superior Court sustaining the defendant's plea in abatement.
*397 The facts in the case are not in dispute. The plaintiff, Harry S. Gaucher, Jr., was appointed by the Mansfield Probate Court to administer the intestate estate of Wendell H. Camp. Subsequently, a will executed by Camp was found and it was admitted to probate by the Mansfield Probate Court on January 22, 1973. The executrix named in the will having declined to serve, the Hartford National Bank and Trust Company was appointed administrator with the will annexed. The plaintiff, Gaucher, purporting to be the administrator of Camp's estate and claiming to be aggrieved by the decree of the Probate Court admitting the will and appointing the bank as administrator c. t. a., appealed to the Superior Court pursuant to § 45-288 of the General Statutes.[1] The bank, appearing specially, filed a plea in abatement to the plaintiff's appeal on the ground that the interest of the plaintiff did not appear in his motion for appeal from probate as required by § 45-293 of the General Statutes[2] and that he was not an aggrieved person as required by § 45-288 of the General Statutes. The Superior Court sustained the plea in abatement and the plaintiff has appealed to this court from its judgment.
The primary issue raised by the plea in abatement and on this appeal is whether the plaintiff was *398 aggrieved and was thus entitled to appeal to the Superior Court the decision of the Probate Court admitting and allowing probate of the will of the deceased. Central to this issue is the question of whether, in the present case, the decree of the Probate Court appointing the bank as administrator with the will annexed operated as an implied revocation of the prior appointment of the plaintiff as administrator. The Superior Court decided that it did and the plaintiff has assigned that finding and conclusion as error.
The Probate Court had statutory authority to admit the will to probate and to revoke the prior order granting intestate administration. General Statutes § 45-188.[3] While there was no express revocation of the earlier decree naming the plaintiff administrator, such a revocation is, as the court found, implicit in the probate decree admitting the will to probate and appointing an administrator c.t.a. See Johnson v. Brewn, 277 Mo. 392, 210 S.W. 55; In re Estate of Brinckwirth, 266 Mo. 473, *399 181 S.W. 403; In re Estate of Suskin, 214 N.C. 219, 198 S.E. 661; Waltz's Appeal, 242 Pa. 167, 88 A. 974; Kern's Estate, 212 Pa. 57, 61 A. 573; 31 Am. Jur. 2d 74, Executors and Administrators, § 109; note, 65 A.L.R. 2d 1201, 1203-6; note, 8 A.L.R. 175, 177; 33 C.J.S., Executors and Administrators, § 78 (d). The logic of the situation in this case compels this conclusion although, of course, it would have been not only proper but better practice and would have obviated any possible confusion if the Probate Court had expressly revoked the earlier appointment of an administrator of the then apparently intestate estate. There can obviously be only one administration of the same estate in the same jurisdiction at the same time. Terry's Appeal, 67 Conn. 181, 186, 34 A. 1032. In view of the express provisions of § 45-188 of the General Statutes,[4] there can be no doubt of the power of the Probate Court to revoke its earlier appointment of the plaintiff as administrator, and the record adequately discloses that the plaintiff had notice of the hearing on the admission of the decedent's will and the court's decree.
Prior to the enactment of what is now § 45-188 of the General Statutes, there existed some doubt as to the extent of the power of the Probate Court in cases where during the settlement of an apparently intestate estate it was discovered that the deceased had in fact left a will. Since the court had already appointed an administrator of the intestate estate, it was questionable whether the court could upon discovery of the will revoke the letters of administration which had been granted to the administrator and proceed with the settlement of the estate under *400 the newly discovered will. See Delehanty v. Pitkin, 76 Conn. 412, 56 A. 881; Terry's Appeal, supra; Ames's Appeal, 39 Conn. 254, 258. Any doubt was set to rest and the power of the Probate Court to revoke any order or decree granting letters of administration and to proceed with the settlement of the estate under the will was clarified by the adoption of chapter 117 of the Public Acts of 1911 which is now General Statutes § 45-188.
We find no error in the court's conclusion that the probate decree admitting the will to probate and granting administration with the will annexed implicitly revoked and effectively terminated the prior intestate administration of the plaintiff.
The Superior Court further concluded that the plaintiff, having been removed as administrator, had no pecuniary interest entitling him to appeal; that he had no legal duty or right to appeal from the admission to probate of the will on behalf of the heirs; that he was not an "aggrieved person" as required by statute; General Statutes § 45-288; and that since he was not an aggrieved person, the Superior Court had no jurisdiction over the appeal. It was on the basis of these conclusions, all of which were attacked by the plaintiff, that the court sustained the defendant's plea in abatement.
In order to prosecute an appeal from a Probate Court, it is necessary that the plaintiff be aggrieved within the meaning of § 45-288. Aggrievement as a concept of standing is a practical and functional one designed to assure that only those with a genuine and legitimate interest can appeal an order of the Probate Court. "[T]he frequent statement that a plaintiff, to be aggrieved, must have a pecuniary interest; Kerin v. Goldfarb, [160 Conn. 463, 280 A.2d *401 143]; Williams v. Houck, 143 Conn. 433, 437, 123 A.2d 177; Ciglar v. Finkelstone, 142 Conn. 432, 434, 114 A.2d 925; Weidlich v. First National Bank & Trust Co., 139 Conn. 652, 656, 96 A.2d 547; is too narrow to deal with the various types of cases presented by appeals from probate. See O'Leary v. McGuinness, 140 Conn. 80, 98 A.2d 660; Spencer's Appeal, 122 Conn. 327, 332-33, 188 A. 881; ... 1 Locke & Kohn, ... [Conn. Probate Practice] § 188." Hartford Kosher Caterers, Inc. v. Gazda, 165 Conn. 478, 338 A.2d 497. "In determining whether an appellant has a grievance ... the question is whether there is a possibility, as distinguished from a certainty, that some legally protected interest which he has in the estate has been adversely affected." O'Leary v. McGuinness, 140 Conn. 80, 83, 98 A.2d 660. The Superior Court found not only that the administrator, after having been removed, had no pecuniary interest in the estate but also that he had no duty to represent the heirs in the matter. In these circumstances, and since the interest of the plaintiff was not stated in the motion for appeal, nor was it apparent from the face of the proceedings and records that the motion was in compliance with the provisions of § 45-293 of the General Statutes, the Superior Court was without jurisdiction to hear his appeal. Exchange Buffet Corporation v. Rogers, 139 Conn. 374, 376-77, 94 A.2d 22. The mere allegation that he was aggrieved without supporting factual statements as to the particular nature of his aggrievement was insufficient. Fitzhugh v. Fitzhugh, 156 Conn. 625, 626, 239 A.2d 513; Sacksell v. Barrett, 132 Conn. 139, 43 A.2d 79.
It is well settled that once a party's authority to act as an administrator has been revoked, he cannot, *402 by reason of having held that position, appeal the admission to probate of a will. Avery's Appeal, 117 Conn. 201, 206, 167 A. 544; see also 33 C.J.S., Executors and Administrators, § 85 (j). The words of the Washington Supreme Court in Cairns v. Donahey, 59 Wash. 130, 133-34, 109 P. 334, as quoted with approval in Avery's Appeal, supra, 205-6, are apt: "We fail to understand how the administrator has any interest in the subject matter of this appeal, or how he is injuriously affected by the final order entered. He has no interest in the estate other than for compensation that may be due him." This court went on to say: "However, this appeal is taken in a representative capacity only and we cannot recognize any duty and right in the appellant to contend, by appeal, against the will, on behalf of heirs who so far as appears were quite capable and competent to protect themselves had their interests dictated such a course." Avery's Appeal, supra, 206.
We find no error in the conclusions of the Superior Court that the plaintiff was not an aggrieved person as required by statute and that the court had no jurisdiction over the appeal. Accordingly, the court properly sustained the defendant's plea in abatement.
There is no error.
In this opinion the other judges concurred.
NOTES
[1] "[General Statutes] Sec. 45-288. APPEALS FROM PROBATE. Any person aggrieved by any order, denial or decree of a court of probate in any matter, unless otherwise specially provided by law, may appeal therefrom to the superior court for the county where such court of probate is held, but he shall give bond, with sufficient surety to the state, to prosecute such appeal to effect."
[2] "[General Statutes] Sec. 45-293. INTEREST OF APPELLANT TO BE STATED. In each appeal from probate or from the doings of commissioners, the interest of the appellant shall be stated in the motion for appeal, unless such interest appears on the face of the proceedings and records of such court of probate."
[3] "[General Statutes] Sec. 45-188. PROCEDURE IF WILL IS FOUND AFTER PARTIAL SETTLEMENT. When it appears to any court of probate, during proceedings before it for the settlement of the estate of a deceased person as an intestate estate, that such deceased person left a will, such court shall have power to revoke any order or decree granting letters of administration upon such estate and any other order or decree made by such court in the settlement of such estate as an intestate estate, and such court may thereafter proceed with the settlement of such estate under such will, upon notice to all parties in interest as required in the settlement of testate estates; but the acts already done in good faith by the administrator of such estate in the settlement thereof shall be deemed valid to the same extent as if such letters had not been revoked. If an inventory and appraisal have been returned to the court by such administrator, no further inventory or appraisal shall be required, except of property not embraced in such inventory, and, if an order limiting the time for the presentation of claims against such estate has been passed and published, no further time shall be required to be given for presentation of such claims."
[4] See footnote 3, supra. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1537467/ | 31 Md. App. 85 (1976)
355 A.2d 515
JAMES DANIEL BECKETTE
v.
STATE OF MARYLAND.
Nos. 798 and 799, September Term, 1975.
Court of Special Appeals of Maryland.
Decided April 1, 1976.
*86 Harold Buchman for appellant.
James G. Klair, Assistant Attorney General, with whom were Francis B. Burch, Attorney General, Sandra A. O'Connor, State's Attorney for Baltimore County and Thomas J. O'Connell, Assistant State's Attorney for Baltimore County on the brief, for appellee.
GILBERT, J., delivered the opinion of the Court.
On June 3, 1975, James Daniel Beckette, appellant, was convicted, on indictment number 49907, by a jury, in the Circuit Court for Baltimore County, of daytime housebreaking, assault and the use of a handgun in the commission of a felony. Appellant was also convicted, on June 13, 1975, on indictments number 50711 and number 51183, by a jury presided over by Judge Marvin J. Land, in the Circuit Court for Baltimore County, of rape, use of a handgun in the commission of a felony, daytime housebreaking, assault with intent to rape, and assault. The terms imposed upon appellant as a result of both trials aggregate forty years.
Appellant has appealed all judgments of the circuit court. For purposes of clarification in discussing the facts and applicable law, we shall assign to the appeal from the judgment entered on the June 3, 1975, conviction the *87 indictment number 49907, and indictment numbers 50711 and 51183 shall refer to the appeal from the judgments entered in the court presided over by Judge Land. We shall treat each appeal separately within the confines of this opinion.
Indictment No. 49907
The evidence disclose; that an intruder unlawfully gained entrance into the home of the prosecutrix and her husband while the prosecutrix's husband was away at work. The intruder climbed the stairway to a second floor bedroom where the prosecutrix was reclining on her bed. The room was well lit from sunlight. The prosecutrix pulled her knees to her chest in an effort to ward off the intruder who was armed with a revolver. The intruder climbed onto the bed, stifled the prosecutrix's screams and pressed himself against her upraised legs. The woman told the intruder that if he would leave she would not report the matter to the police, and the intruder left the house. The police were called, and a subsequent investigation brought about the appellant's apprehension. The prosecutrix made a positive judicial identification of the appellant as the intruder. Appellant denied all knowledge of the offense and interposed a defense of alibi. Superimposed upon the alibi was the testimony of several character witnesses who testified to the appellant's good reputation for truth and veracity. One of the character witnesses was the appellant's former attorney in this case. The scope of the State's cross-examination of the witness, over objection, has led to the appellant's first contention in this appeal.
I
"The court erred in permitting the State to impeach the testimony of appellant's former attorney concerning appellant's character by introducing a letter written by the attorney to the appellant in the course of his employment as appellant's counsel in an entirely unrelated civil matter."
*88 We do not agree that the letter was written by the attorney "... in the course of his employment ... in an entirely unrelated civil matter."
The lawyer, who had represented appellant in this case prior to the time that the present counsel entered his appearance, struck his appearance in accordance with Md. Rule 125. Attached to the motion to strike the appearance of counsel was a carbon copy of a letter from then counsel to the appellant. The letter read, in pertinent part:
"Re: Legal representation; criminal and domestic matters
Dear Mr. Beckette:
In accordance with the Maryland Rules of Procedure, Rule 525,[[1]] you are herewith advised of my intention to strike my appearance from any and all of your cases in which I have been your attorney. Said Motion to Strike Appearance will be filed with the Circuit Court of [sic] Baltimore, [sic] County on or after Monday, February 3, 1975.
I regret that this action has become necessary, Jim, but it has. You have repeatedly sought my advice and counsel in these matters, and then acted in total disregard of the advice given. I find that I have no control over you or the case(s) and their development or resolution. Specifically, you have consistently withheld information from me, material to a criminal case defense. You have given me false information on occasion...."[[2]] (Emphasis supplied).
Nevertheless, even if we assume that the letter was written on an "unrelated civil matter," that fact does not affect our *89 disposition. An attorney's obligation to respect the confidences of his client, with rare exceptions[3] not here applicable, continues after the termination of the lawyer's services and even survives the death of the attorney or the client. Md. Rule 1230, Appendix F, "Code of Professional Responsibility" § EC4-6; Moore v. Bray, 10 Pa. 519 (1849); 3 Wharton's Criminal Evidence § 560 (13th ed. C. Torcia 1973). Of course, the privileged communication status may be waived only by the client. The waiver may be either expressed or implied. McCormick's Handbook of the Law of Evidence § 93 (2d ed. E. Cleary 1972); 3 Wharton's Criminal Evidence § 561 (13th ed. C. Torcia 1973); 8 J. Wigmore, Evidence § 2327 (McNaughton rev. 1961).
Patently, the question in the case at bar is: Did the calling of the former lawyer by appellant as a character witness, posing to him an interrogatory which sought the attorney's personal opinion of appellant's "... reputation for truthfulness and veracity," and receiving a favorable answer thereto, open the door for the use of the attorney's letter as the basis of impeachment? We think it did. We explain why we so believe.
There can be no question but that appellant's former attorney was the one who made a matter of public record the accusation that appellant had furnished the attorney with "false information." The filing in the court of a copy of the letter containing the accusation placed the information within the purview of the public. Court files, unless sealed by order of the court, are properly viewable by any person. Md. Ann. Code, Courts and Judicial Proceedings Article § 2-203; Perlman v. United States, 247 U.S. 7, 38 S. Ct. 417, 62 L. Ed. 950 (1918); Ex parte Uppercu, 239 U.S. 435, 36 S. Ct. 140, 60 L. Ed. 368 (1915). See also Annot., 175 A.L.R. 1260, § 3 (1948) (Restricting access to judicial records); 66 Am.Jur.2d Records and Recording Laws § 15 (1973); 20 Am.Jur.2d Courts § 62 (1965). In this case, however, the disclosure that appellant had on occasion furnished his erstwhile counsel *90 with false information was also communicated by the then attorney to Judge Raine, to the appellant's employer, and to the Pre-trial Release Division of the circuit court. The communication took the form of a carbon copy of the attorney's letter to appellant being directed to each of the above named. We are compelled to deduce that appellant was fully aware, or should have been, that the letter's content was known to the prosecution. Notwithstanding that knowledge, appellant elected to call his former lawyer as a character witness. The transcript disclosed the following:
"Direct Examination.
By Mr. Buchman:
Q. How long have you known him?
A. I have known Mr. Beckette since I was about twenty-one, which would be about fifteen years.
Q. Did you at one time earlier represent him in these proceedings?
A. Yes, and other proceedings.
* * *
Q. As a result of your acquaintance with Mr. Beckette, have you been able to form any opinion as to his reputation for truthfulness and veracity?
A. Yes.
Q. What is your opinion?
A. I would say yes, Mr. Beckette is truthful.
Q. Would you believe him under oath?
A. Yes, sir.
Q. Have you formed an opinion of his reputation in the community as a peaceful law-abiding person?
A. Yes, sir. I have had an opportunity to do that since we worked together [in] the Essex Council, and I would say his character is *91 generally peace-loving, and he is an upstanding character in the community.
* * *
Cross Examination
By Mr. O'Connell [Assistant State's Attorney]:
Q. I believe you were also at one time Mr. Beckette's attorney, is that correct?
A. Yes, sir.
Q. Did you have occasion one time to send him correspondence, particularly January 26th, 1975?
Mr. Buchman: Your Honor, I would object to a confidential communication between client and lawyer.
The Court: I don't know what he is getting at. Overruled. What is the answer ...?
A. (By the witness) I don't remember it.
Mr. O'Connell: May we approach the Bench? It would probably save a lot of trouble.
The Court: All right.
* * *
(Conference at the Bench.)[[4]]
The Court: Read back the last question.
(Whereupon, reporter read back the following question:
Question: Did you have occasion one time to send him correspondence, particularly January 26th, 1975?)
The Court: There was an objection made, and overruled.
*92 A. (By the witness) The answer is, Your Honor, I don't remember. I sent him correspondence. I could have sent correspondence on that date.
Q. (By Mr. O'Connell) In addition, ... did you file a motion to strike your appearance in this case?
Mr. Buchman: Objection.
The Court: Overruled.
A. Yes.
Q. Along with that, did you file a letter dated January 26th, 1975, addressed to Mr. James Daniel Beckette?
Mr. Buchman: Objection.
The Court: Overruled.
A. Yes.
Q. I believe you just testified that Mr. Beckette has been a truthful man, is that correct?
A. Yes.
Q. Did you not in that letter
Mr. Buchman: I object to the question he is about to ask.
The Court: Does the question
Mr. Buchman: It refers to something
The Court: Finish the question.
Q. Did you not on January 26th, 1975 state to Mr. Beckette
Mr. Buchman: Again, Your Honor, I object.
Mr. O'Connell: I quote
The Court: Wait a minute he has raised an objection. The basis of your objection as we discussed at the Bench is privileged communication between lawyer and client?
Mr. Buchman: Yes.
The Court: I think he lost that when he testified as to his reputation in the community where he lives. Overruled. Finish the question.
Q. (By Mr. O'Connell) Did you not also state to Mr. *93 Beckette, `You have given me false information on occasion.'?
A. Yes.
Mr. O'Connell: I have no further questions.
Mr. Buchman: Your Honor, I object and move that the question and answer be stricken.
The Court: Overruled.
Redirect Examination
By Mr. Buchman:
Q.... did that refer to his relationship with his wife?
A. Yes.
Q. Nothing to do with this case?
A. No.
Q. You had asked him to be sure that he stayed away from his wife and he violated that instruction part?
A. Yes, and at that time I represented him in a domestic situation between him and his wife.
Q. And he did not follow your instructions with respect to this domestic situation?
A. No." (Emphasis supplied).
It is the witness's testimony, based upon his acquaintance with appellant which led to the witness's forming and expressing an opinion as to appellant's truthfulness, that allowed the State to cross-examine the witness for the purpose of impeachment. Recently, in Taylor v. State, 28 Md. App. 560, 346 A.2d 718 (1975), cert. granted, February 3, 1976, and Brown v. State, 29 Md. App. 1, 16, 349 A.2d 359, 368 (1975), we pointed out that the common law rule was "vastly broadened" by Courts Art. § 9-115. In Taylor we said:
"... No longer is a character witness prevented from speaking of specific acts or precluded from demonstrating a basis of knowledge leading to his own independent opinion." 28 Md. App. at 568.
*94 This is true because Courts Art. § 9-115 modifies the common law and permits the introduction of character evidence grounded on personal knowledge, and deletes the limitation that such evidence be confined to the accused's reputation in the community.
Under the peculiar circumstances of this case, once the appellant made the tactical decision to call his former lawyer to the stand as a character witness and to have him testify on personal knowledge as to the appellant's truthfulness and veracity, he implicitly waived the client-attorney privilege relative to confidentiality that had existed between the accused and the former attorney. The confidentiality was dubious as it had already been reduced to a mere myth by the attorney's prior letter to the client, a copy of which, as we have said, was filed in the court and otherwise distributed. The State, having acquired through lawful means, the public record, the knowledge that the former lawyer was withdrawing from this case partially because of his having been furnished "false information" by the accused, was not prevented from utilizing that information to attack the witness's credibility. We think it would be an absurdity to hold that the State could not, under the circumstances, attempt to impeach testimony by the witness that the witness thought the appellant to be a truthful person and believable under oath, when the witness declined to represent appellant because, inter alia, appellant had furnished the witness, former counsel, with false information. We perceive no error by the trial judge in overruling the appellant's objections to the testimony. Appellant cannot have it both ways. He cannot call the former attorney as a character witness and then preclude the impeachment of the witness based on a matter that has been made part of a public record. We make clear that in this opinion we deal solely with the permissive cross-examination under the facts of this case. We are not to be construed as holding that a letter, similar to the one in the case sub judice, filed in a court, and otherwise publicly distributed, entitles the State to call the former lawyer as its witness for the purpose of impeaching the accused's *95 credibility. We do not reach that issue, and we expressly do not decide it. The case of Harrison v. State, 276 Md. 122, 345 A.2d 830 (1975), relied upon heavily by appellant, is inapposite. The unusual factual posture of the instant case is readily distinguishable from Harrison's holding.
II
Appellant next challenges the trial judge's advisory jury instructions. He asserts:
"The court erred in instructing the jury that the defendant who raises the defense of alibi has the burden of going forward with evidence sufficient to generate a reasonable doubt that he was present at the crime."
The judge instructed the jury:
"... [T]he defendant in this case has asserted the defense of alibi. This means that he could not have committed the offense with which he is charged because he was not at the place where the alleged crime took place at the time of its commission. With regard to this defense, once the State has introduced evidence otherwise sufficient to place the defendant at the scene of the crime, the defendant has the burden of going forward with evidence sufficient to persuade you that a reasonable doubt exists as to whether or not he was present at the crime. If you find from the evidence that the defendant has met this burden, you must find the defendant not guilty." (Emphasis supplied).
Appellant's counsel took timely exception. The trial judge remarked that his instruction did not shift the burden of proof to the appellant. The judge stated, "For the record, further, so that we will understand each other, that instruction is taken from Robinson versus State, 20 Md. App. 450 [, 316 A.2d 268 (1974), cert. denied, 272 Md. 747 (1974),] directly from that case."
*96 As we see it the judge misconstrued Robinson. In Robinson, we said:
"We think the sound view to be that an alibi is not an affirmative defense, placing any burden upon a defendant beyond the self-evident one of attempting to erode the State's proof to a point where it no longer convinces the fact finder beyond a reasonable doubt. Proof of an alibi, like any other defense testimony, is simply a means of controverting the State's effort to establish criminal agency." 20 Md. App. at 459.
The quoted except from Robinson simply points out the practical effect of an alibi defense on the State's case. It is not and was never intended to be a "blueprint" for a "patented" jury instruction. In this connection, we think it well to restate what Judge Digges wrote in State v. Grady, 276 Md. 178, 186, 345 A.2d 436, 440 (1975):
"... [W]e suggest that it is not always appropriate to quote from appellate decisions in jury instructions since the language employed in a particular opinion may not adequately inform jurors of their responsibility." (Citations omitted).
See also Blizzard v. State, 30 Md. App. 156, 351 A.2d 443 (1976), wherein we stated that the underlying reasons for a jury instruction need not be communicated to that body. In addition, we discussed the difficulty that may arise when the phrases of "... appellate opinions are `lifted' and turned into jury instructions." 30 Md. App. at 168.
Shortly after Robinson, we, in Jackson v. State, 22 Md. App. 257, 263, 322 A.2d 574, 577 (1974), cert. denied, March 5, 1975, opined:
"... An alibi defense ... merely requires an accused to go forward with such exculpatory evidence as he may wish to present for the trier of fact to consider in determining whether the State has met its burden [of proving the defendant guilty beyond a reasonable doubt]. The trial judges are *97 cautioned not to instruct that an accused has the `burden of proof' of establishing alibi because such an instruction is wrong. Moreover, an instruction that places the `burden' upon an accused to prove by a preponderance of the evidence his alibi, may effectively erode the only defense available to an accused, and thus, cause him to stand naked and defenseless before the State's accusation."
We further said in Jackson that it is for the trier of fact to determine whether the alibi evidence, "... considered and weighed on the same scale as all other evidence ... creates a reasonable doubt of the defendant's guilt." 22 Md. App. at 264. Subsequently, in Grady v. State, 24 Md. App. 85, 329 A.2d 726 (1974), we restated the holdings of Robinson and Jackson. The Court of Appeals, affirming our decision, said in State v. Grady, supra:
"... In sum, under the Federal Constitution, as well as the law of Maryland, the burden is on the State to prove all elements of the alleged crime and to do so beyond a reasonable doubt; hence, the defendant does not have to establish his alibi, not even by a minimal standard of proof. `Evidence of alibi should come into a case like any other evidence and must be submitted to the jury for consideration of whether the evidence as a whole on the issue of presence proves the defendant's guilt beyond a reasonable doubt.' Smith v. Smith, 454 F.2d 572, 578 (5th Cir.1971), cert. denied, 409 U.S. 885 (1972)." 276 Md. at 182.
We deem it advisable to counsel trial judges against injecting into jury instructions any assertion that a defendant carries a "burden of going forward with evidence sufficient to persuade ... [the jury] that a reasonable doubt exists as to whether or not... [a defendant] was present at the crime." Such an instruction, in our view, may mislead the jury into thinking that a defendant carries a burden of proving his alibi beyond a reasonable doubt. The State carries the "burden of proof," not the appellant. Referring to the going forward with evidence establishing an alibi as a *98 "burden" serves to confuse, not enlighten, and this should be avoided. An alibi is no different than other evidence offered by a defendant. It must be overcome by the State's proof beyond a reasonable doubt.
Because we believe a fair reading of the instruction in this case would lead the jury to believe that the appellant carried the burden of eroding the State's proof through the presentation of "evidence sufficient to persuade ... [the jury] that a reasonable doubt exists," we conclude that the judgment must be reversed.
Having so held it is unnecessary for us to reach the third issue presented by appellant as that question may not arise anew at a retrial.
Indictments No. 50711 and 51183
Appellant was, as we have already noted, also convicted by a jury in the Circuit Court for Baltimore County of rape, housebreaking and the use of a handgun in the commission of a felony.
On appeal to this Court, appellant's counsel candidly admits that he has "... carefully scrutinized the record of the trial proceedings, [and] ... is unable to discover any reversible error."
Under Anders v. California, 386 U.S. 738, 87 S. Ct. 1396, 18 L. Ed. 2d 493 (1967), and Tippett v. Director, 2 Md. App. 465, 235 A.2d 314 (1967), whenever an appeal is presented to us in such a posture, we are required to examine fully the record of the proceeding. We have, in the instant case, reviewed the suppression hearing, the voir dire, the transcript of the trial, including evidentiary rulings, as well as the trial judge's jury instructions. We have searched the record in its entirety in order to find anything that is "arguable on the merits" and we discover no such issue. This appeal is, as counsel noted, wholly frivolous.
Judgment on Indictment No. 49907 reversed.
Case remanded for a new trial.
Judgments on Indictments 50711 and 51183 affirmed.
NOTES
[1] The letter from the attorney to the appellant refers specifically to Md. Rule 525 as authority for withdrawal from the case. Rule 525, however, is concerned with audits. It has no application, whatsoever, to the case at bar. What was obviously meant by counsel was Rule 125.
[2] As far back as 1651, Sir Alan Patrick Herbert, in Jacula Prudentum, recorded a proverb that one should, "Deceive not thy physician, confessor, nor lawyer."
[3] See 3 Wharton's Criminal Evidence § 557 (13th ed. C. Torcia 1973) (examples of some of the exceptions to the general rule).
[4] The transcript does not disclose at what point the bench conference ended. We infer that the conference was not recorded and that the judge's instruction to "Read back the last question" occurred before the jury after the conference had ended. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1537469/ | 167 Conn. 67 (1974)
MARY HOYE LYNCH, EXECUTRIX (ESTATE OF MARY B. HOYE), ET AL.
v.
TOWN OF WEST HARTFORD
Supreme Court of Connecticut.
Argued June 6, 1974.
Decision released August 27, 1974.
HOUSE, C. J., SHAPIRO, LOISELLE, MACDONALD and BOGDANSKI, JS.
*68 James E. Heffernan, Jr., with whom, on the brief, were Richard P. Heffernan and Joseph A. Hourihan, for the appellant (defendant).
Palmer S. McGee, Jr., for the appellees (plaintiffs).
BOGDANSKI, J.
This is an appeal by the defendant, the town of West Hartford, from a reassessment of damages for its condemnation of land for redevelopment purposes. The plaintiffs are the Hoye family which owns the land and Henry Porter who owns a thirty-foot-wide right of way across the land. The plaintiffs applied to the Superior Court for a review of the statement of compensation in the amount of $53,300 filed by the town. The matter was referred to Hon. Raymond E. Baldwin, state referee, who held a hearing and assessed damages in the amount of $195,000 to the Hoye family and $51,800 to Porter. From the judgment rendered for the plaintiffs, the town has appealed to this court. Only the award to the Hoye family is in dispute in this appeal.
For purposes of this appeal, the finding may be summarized as follows: The Hoye family owned approximately 2.67 acres of land consisting of three adjoining parcels, identified as parcels 1, 2 and 3, at the eastern end of Rose Avenue in the southwest section of West Hartford. The town of West Hartford *69 recognized that Rose Avenue terminated at the beginning of the Hoye family property by erecting a sign stating "End of Street" and by describing the property in the statement of compensation as "beginning on an iron pin at the terminus of Rose Avenue" and as "running ... across the terminus of Rose Avenue." Parcel 1 was bounded on the north by Piper Brook, on the west by land of others, on the south by Rose Avenue, and on the east by parcel 2 and by land of others north of parcel 2. Parcel 3 was bounded on the west by the eastern terminus of Rose Avenue and by land of others lying south of Rose Avenue, on the north by parcel 2 and by land of others to the east of parcel 2, on the south by land of others, and on the east by Piper Brook. The Porter right of way, which the Hoye family had granted Henry Porter's predecessor in interest, began at the terminus of Rose Avenue and extended across the northwest portion of parcel 3 along the southern boundary of parcel 2 to property owned by Porter on which a shopping center was located. Parcel 2 was bounded on the south by parcel 3, on the west by parcel 1, and on the north and east by land of others. The southwest corner of parcel 2 thus was located at the point of intersection of the eastern end of Rose Avenue, the southern boundary of parcel 1, and the northern boundary of parcel 3.
The referee found that parcel 2 had access to Rose Avenue only through parcels 1 and 3. On January 21, 1971, as part of the Piper Brook urban renewal project, the town of West Hartford took parcels 1 and 3, approximately 2.23 acres, leaving the Hoye family with parcel 2. The purpose of the project was to increase the amount of industrial land available in the town.
*70 From 1960 until the taking the entire Hoye family tract was used for construction purposes. Parcels 2 and 3 were zoned for general industrial uses. An industrial garage building, specially designed and built for the repair and maintenance of heavy roadbuilding and construction equipment, was located on parcel 2. At each end of the building was a large overhead door designed to permit construction equipment to be driven directly through the garage for servicing. Parcel 3 was unimproved land on which large equipment, such as power shovels and bulldozers, could be positioned so that they could be driven through the garage. Parcel 3 was also used for the storage of materials and supplies. As a result of the loss of parcel 3, the limited amount of Hoye family land remaining south of the industrial building did not permit the maneuvering of large vehicles, thus preventing the use of the building for their maintenance and repair.
Even though parcel 1 was zoned residential, it had been used since 1960 for the storage of supplies and equipment without objection by the town. Located also on parcel 1 was a residence and a one-car detached garage, occupied and used by a Hoye family employee who served as a caretaker of the premises.
In 1961 the Hoye family had applied for a zone change for parcel 1 from residential to industrial. At that time the town's plan of development showed that the future use of parcel 1 should be residential. When the application came before the town council for consideration, at least three councilmen stated that parcel 1 should be rezoned industrial, but the council denied the application. The referee found that the reason for the denial was the residential *71 classification in the plan of development and the need to protect other residential properties on Rose Avenue. In 1963, however, the town amended its plan of development by reclassifying the entire area around Rose Avenue, including parcel 1, from residential to industrial. The referee concluded that on the basis of the reclassification and the openly industrial use to which parcel 1 had been put, there was a reasonable probability that an application filed after 1963 for a change of zone for parcel 1 from residential to industrial would have been granted. The referee found that the "highest and best use of Parcel 1 was as a caretaker's residence and storage area in conjunction with the use of the entire 2.67 acre parcel for carrying on the business of a heavy construction contractor." He concluded that the value of parcel 1 should be appraised in light of the reasonable probability that an application for a change of zone to industrial would have been granted.
The referee found that in view of its size, location and improvements, the highest and best use of the entire Hoye family property at the time of the taking was for the business of a heavy construction contractor such as the Hoye family had previously conducted. An area of between two and three acres was necessary for that business in order to store equipment and supplies and to permit the operation of the specialized repair and maintenance garage. Although parts of parcels 1 and 3 were below the Piper Brook flood-plain level, that area could still be used for the storage of construction materials impervious to temporary water exposure. The referee concluded that after parcels 1 and 3 were taken, parcel 2 was greatly diminished in value, in part because it no longer had access to a public highway *72 and was cut off from public utilities, and in part because it was now so limited in area that it could not be used for the repair of heavy construction equipment.
Although parcel 2 may have been cut off from Rose Avenue as a consequence of the taking, the town proposed at an indefinite time in the future to relocate Shield Street along its western boundary. The relocating of Shield Street was dependent for its completion on the relocation of Piper Brook, which meanders through the area. The appraiser who testified for the town conceded on cross-examination that he could not say when, if ever, the relocation of Shield Street would be completed.
Three appraisers testified as to the damages incurred by the Hoye family, which they calculated as the difference between the value of the property before the taking and the value of the property after the taking. The referee concluded that the value of the property before the taking was $252,574.50; that the value after the taking was $57,583.00; and that the damages sustained by the Hoye family amounted to $194,991.50, which he rounded off to $195.000.00.[1]
*73 In this appeal, the town has assigned and briefed four claimed errors: (1) that the referee erred in finding that there was a reasonable probability that a request for a zone change for parcel 1 would have been granted; (2) that he erred in calculating the pretaking value of the Hoye family land by applying a uniform value per square foot to the entire tract; (3) that he erred in concluding that parcel 2 was cut off from Rose Avenue; and (4) that he erred in refusing to take into account the enhancement in the value of parcel 2 to be expected from the relocation of Shield Street and other eventual improvements. The town's other assignments of error, which are numerous, have not been briefed and are treated as abandoned. Multiplastics, Inc. v. Arch Industries, Inc., 166 Conn. 280, 282 n.1, 348 A.2d 618.
The owner of land taken by condemnation is entitled to be paid just compensation. Conn. Const. art. I § 11. If the taking is partial, the usual measure of damages is the difference between the market value of the whole tract with its improvements before the taking and the market value of what remained of it thereafter. Severance damages to the parcel remaining are thereby included. Meriden v. Ives, 165 Conn. 768, 773, 345 A.2d 13; Connecticut Printers, Inc. v. Redevelopment Agency, 159 Conn. 407, 414, 270 A.2d 549. The "fair market value" is the price that the trier reasonably thinks would result from fair negotiations between a willing seller and a willing buyer. The valuation should ordinarily be based on the "highest and best" possible use of the land. Connecticut Printers, Inc. v. Redevelopment Agency, supra, 411-13.
The probability of a favorable zone change is an element which might influence the price which a *74 purchaser in a voluntary transaction would pay. Accordingly, Budney v. Ives, 156 Conn. 83, 239 A.2d 482, held that where a zone change is reasonably probable as of the taking date, its probability may properly be considered in determining the fair market value of property taken by eminent domain. The trier must determine the value of the property as zoned on the taking date, taking into account the likelihood of a zone change, and not as if the property had already been rezoned. Budney v. Ives, supra, 88-89.
The existence of a reasonable probability of a zone change is a question of fact for the trier. In Budney the property owners actually had an application pending before the town zoning commission on the taking date, and there was testimony from the town planner and the commission chairman that the application would have been granted but for the taking. In the present case the town emphasizes that no application for a zone change was pending, and that no current member of the West Hartford town council or town plan and zoning commission testified as to the probability of a zone change had an application been made. While the factual situation here may not be as compelling as in Budney, there is nonetheless sufficient evidence to support the referee's conclusion that a change of zone for parcel 1 from residential to industrial would have been reasonably probable had it been sought. As the referee found, parcel 1 had been used openly and without objection for industrial purposes, and the reason for the 1961 denial of a zone change had been eliminated in 1963. Moreover, two appraisers testified that in their opinions a change of zone application after 1963 would have been granted.
*75 The fact that parcel 1 had been devoted to an unlawful use after 1961 did not prevent the trier from considering the probability that the legal prohibition would have been removed had that been requested. See 4 Nichols, Eminent Domain (Rev. 3d Ed.) §12-3143.
The town also argues that the referee's valuation of the Hoye family land prior to the taking by using a uniform price of $1.50 per square foot was improper because a significant portion of parcels 1 and 3 was below the established Piper Brook flood-plain level and hence different from the rest of the tract in adaptability and topography. The town claims in its brief that "[w]here different segments of a parcel are susceptible of valuation on the basis of differing highest and best uses, it is error to attribute an overall or average unit of value to the entire parcel." 4 Nichols, op. cit. § 12-314, pp. XX-XXX-XX-XXX. The principle is sound but not pertinent, since the referee did not find this to be a case in which segments of a tract of land had different highest and best uses.
The three appraisers who testified valued the land at $224,776, $215,500, and $79,390 respectively. Two of the appraisers, F. G. Brennan and J. F. Mulready, valued the Hoye family property on the basis that its highest and best use was as a single tract devoted to the construction business previously carried on by the Hoye family. Brennan compared the land with four nearby properties which had recently been sold and after making various adjustments for relevant differences concluded that the land had a pretaking value of $1.85 per square foot. He arrived at the figure of $215,500 for its total *76 value. Mulready analyzed three comparable sales, made adjustments he deemed appropriate, and found that the land had a value of $2.00 per square foot, except for approximately 16,000 square feet located on parcel 1 which he valued at $1.50 per square foot because of its lower elevation. He concluded that the total value of the land was $224,776. The third appraiser, K. G. Kaffenberger, valued the three parcels individually, rejecting the view that their highest and best use was as a single property devoted to the heavy construction business. He concluded that the land was worth $79,390 at the time of taking.
"No one appraisal method was controlling on [the referee].... He had the right to accept so much of the testimony of the experts and the recognized appraisal methods which they employed as he found applicable.... The exercise of this right would be reviewable only if it were apparent that `the referee misapplied or overlooked, or gave a wrong or improper effect to, any test or consideration which it was his duty to regard.'" Stanley Works v. New Britain Redevelopment Agency, 155 Conn. 86, 99, 230 A.2d 9. The referee appraised the Hoye family land at $174,724.50. Having reasonably concluded, on the basis of the evidence before him, that the highest and best use of the entire Hoye family property was in the heavy construction business to which it had been put, the referee was entitled to reject the appraisal of Kaffenberger based on a contrary assumption and to disregard irrelevant variations in terrain in adopting a uniform valuation for the land prior to the taking. The low elevation of portions of parcels 1 and 3 did not render those areas unsuitable for use in the construction business because it did not prevent the storage there of some *77 construction materials. The referee was, therefore, not required to devalue portions of the Hoye family property on the basis of their elevation.
The town also argues that after the taking, parcel 2 was not without access to a public highway because the right of way extending from Rose Avenue along the southern boundary of parcel 2, which had been granted to Henry Porter's predecessor, had in fact been dedicated to the general public; that dedication, the town argues, will continue in existence so long as Rose Avenue itself does. The town's contention is based on testimony, not incorporated in the referee's finding, to the effect that in order to obtain a permit in 1950 to build the structure on parcel 2, the then owner, John R. Hoye, was required to show frontage on an approved or accepted street; that parcel 2 had such frontage over a paper street of record; and that the extension of Rose Avenue was paved over that paper street of record by Hoye according to town specifications. The thirty-foot-wide extension was later granted as a right of way to Henry Porter's predecessor in title in order to provide access to a shopping center on adjoining land. The town does not argue that it ever formally accepted the Rose Avenue extension in accordance with statutory requirements;[2] see General Statutes § 13a-48; nor does the town allege compliance with the requirements of General Statutes § 13a-71, pertaining to the layout of highways less than fifty feet in width by private persons. See Thompson v. Portland, 159 Conn. 107, 266 A.2d *78 893. But the town claims that a dedication to the public resulted when the acts of Hoye in obtaining permission to construct the building on parcel 2 and the Rose Avenue extension were followed by acceptance by the unorganized public which used the extension to reach the property of Porter.
A common-law dedication is "the devotion of property to a public use by an unequivocal act of the owner, manifesting an intention that it shall be accepted and used presently or in the future." 11 McQuillan, Municipal Corporations (3d Ed. Rev. 1964) § 33.02, p. 628. Its essential elements are the owner's intention to dedicate, which may be either express or implied, and an acceptance of the dedication by the public. Usually the public acceptance is established by proof of "a general user of the property by the public for a period long enough to indicate that the public is acting on the basis of a claimed public right resulting from the dedicatory act or acts of the owner." 11 McQuillan, op. cit. § 33.50, p. 761; Wamphassuc Pt. Prop. Owners Assn. v. Public Utilities Commission, 154 Conn. 674, 681, 228 A.2d 513; Whippoorwill Crest Co. v. Stratford, 145 Conn. 268, 271, 141 A.2d 241; LaChappelle v. Jewett City, 121 Conn. 381, 386-87, 185 A. 175. "[M]ere permission on the part of the owner to the public to use the land as a way, without more, will not constitute an intention to dedicate, since a temporary right to use a private way is in the nature of a mere license, revocable at pleasure, and does not in any sense establish the requisite intent. Accordingly, mere permissive use of land as a street or the like, where the user is consistent with the assertion of ownership by the alleged dedicator, does not of itself constitute a dedication nor demonstrate a dedicatory intention." 11 McQuillan, op. *79 cit. § 33.32, pp. 710-11. The existence of an intent to dedicate and of acceptance by the public is a question of fact for the trier. Whippoorwill Crest Co. v. Stratford, supra, 272.
The referee's refusal to find a dedication to the public in this case cannot be disturbed. There was a near total absence of evidence from which he could have so found. No question of an estoppel to deny dedication is present in this case. In light of the continued and explicit nonacceptance by the town, the construction of the building on parcel 2 and the Rose Avenue extension can hardly be said to constitute evidence of an intent to dedicate. Such an intent was negatived by the subsequent grant of a right of way over the highway supposedly already dedicated to the public. Moreover, the public use of the right of way to reach the Porter property was permissive and not in the nature of a claim of right. The town simply failed to make out a case of dedication before the referee, and that failure cannot be remedied on this appeal.
The town's final argument does not merit extended discussion. The town asserts that the referee erred in failing to take into account the enhancement in value to parcel 2 which would result from the general improvement in conditions to be brought about by the contemplated urban renewal project, and, in particular, by the future relocation of Shield Street along its western boundary. The three appraisers who testified as to the posttaking value of parcel 2 appraised it at $23,100, $20,000, and $57,250. The latter figure was offered by the appraiser who testified on behalf of the town. The referee concluded that the posttaking value of parcel 2 was $57,583, a figure higher than any obtained *80 by the appraisers. Moreover, the uncertainty attending the expected date of the Shield Street relocation was a significant element for the referee to weigh on the issue of enhancement. "Ultimately, the determination of the value of the land depended on the considered judgment of the referee, taking into account the divergent opinions expressed by the witnesses and the claims advanced by the parties." Bennett v. New Haven Redevelopment Agency, 148 Conn. 513, 516,172 A.2d 612.
There is no error.
In this opinion the other judges concurred.
NOTES
[1] The referee calculated the pretaking value as follows:
Dwelling ............................. $ 10,000.00
Garage ............................... 750.00
Industrial Building................... 62,000.00
Land ................................. 174,724.50
Paving, gas pump, tanks............... 5,100.00
____________
$ 252,574.50
He calculated the posttaking value as follows:
Industrial Garage ..................... $ 38,500.00
Land ................................ 19,083.00
_____________
$ 57,583.00
[2] In fact, the town conceded that it did not ever accept the Rose Avenue extension, and that this fact was communicated to the general public by the "End of Street" sign posted until the taking date at the terminus of Rose Avenue. The town also states that the sign served to protect it from liability. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/866109/ | PURSUANT TO INTERNAL REVENUE CODE
SECTION 7463(b),THIS OPINION MAY NOT
BE TREATED AS PRECEDENT FOR ANY
OTHER CASE.
T.C. Summary Opinion 2013-33
UNITED STATES TAX COURT
SEQUARE K. DANIEL-BERHE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 27211-11S. Filed April 29, 2013.
Sequare K. Daniel-Berhe, pro se.
Whitney N. Moore, for respondent.
SUMMARY OPINION
KERRIGAN, Judge: This case was heard pursuant to the provisions of
section 7463 of the Internal Revenue Code in effect when the petition was filed.
The decision to be entered is not reviewable by any other court, and this opinion
shall not be treated as precedent for any other case. Unless otherwise indicated, all
-2-
section references are to the Internal Revenue Code (Code) in effect for the year in
issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.
We round all monetary amounts to the nearest dollar.
Respondent determined a Federal income tax deficiency of $14,161 and a
section 6662(a) penalty of $2,832 for 2008. The issues for our consideration are (1)
whether petitioner is entitled to deductions claimed on Schedule A, Itemized
Deductions, for unreimbursed employee business expenses of $57,315 for 2008, (2)
whether petitioner is entitled to Schedule A deductions for other miscellaneous
expenses of $2,916 for 2008, and (3) whether petitioner is liable for the section
6662(a) accuracy-related penalty for 2008.
Background
Some of the facts have been stipulated and are so found. Petitioner resided in
California when he filed the petition.
During the 2008 tax year petitioner lived in Los Angeles, California, and was
a part-time instructor, teaching at five different colleges and universities in the
greater Los Angeles area. Petitioner taught various engineering courses at each of
these institutions, often driving to more than one school per day to teach class.
Petitioner was not entitled to any reimbursement by any of his employers for
business-related expenses.
-3-
Petitioner drove approximately 85,000 to 95,000 miles per year commuting to
and from home and from college to college. In 2008, petitioner drove a 1993 Ford
Explorer which averaged approximately 12 miles per gallon of gas.
Respondent concedes that petitioner is entitled to a deduction for parking fee
expenses of $137 for 2008. In 2008 petitioner paid $450 to the Long Beach City
College and East Los Angeles College bookstores.
Petitioner filed timely his Form 1040, U.S. Individual Income Tax Return, for
2008. On August 29, 2011, respondent issued petitioner a notice of deficiency,
determining a Federal income tax deficiency of $14,161 and a section 6662(a)
penalty of $2,832 for 2008. Respondent disallowed Schedule A deductions of
$57,315 for unreimbursed employee expenses and $2,916 for miscellaneous other
expenses. Petitioner reported the following amounts of unreimbursed employee
business expenses:
Expense Amount
1
Vehicle $46,593
Parking fees and transportation 712
Overnight travel 1,791
Other business 8,219
Miscellaneous 2,916
Total 60,231
1
Petitioner claimed the standard mileage rate for 85,491 business miles.
-4-
The remaining Schedule A miscellaneous expense deduction of $2,916 was
attributed to legal fees, investment expenses, financial advice, and
seminars/workshops.
Discussion
Section 162(a) allows a taxpayer to deduct all ordinary and necessary
expenses paid or incurred in carrying on a trade or business. An ordinary expense is
one that commonly or frequently occurs in the taxpayer’s business, Deputy v. du
Pont, 308 U.S. 488, 495 (1940), and a necessary expense is one that is appropriate
and helpful in carrying on the taxpayer’s business, Welch v. Helvering, 290 U.S.
111, 113 (1933). The expense must directly connect with or pertain to the
taxpayer’s business. Sec. 1.162-1(a), Income Tax Regs. A taxpayer may not
deduct a personal, living, or family expense unless the Code expressly provides
otherwise. Sec. 262(a).
Deductions are a matter of legislative grace, and a taxpayer must prove his or
her entitlement to a deduction. INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84
(1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). To that end,
taxpayers are required to substantiate each claimed deduction by maintaining
records sufficient to establish the amount of the deduction and to enable the
-5-
Commissioner to determine the correct tax liability. Sec. 6001; see also Higbee v.
Commissioner, 116 T.C. 438, 440 (2001).1
Whether an expenditure is ordinary or necessary is a question of fact.
Commissioner v. Heininger, 320 U.S. 467, 475 (1943). Generally, the performance
of services as an employee constitutes a trade or business. O’Malley v.
Commissioner, 91 T.C. 352, 363-364 (1988); sec. 1.162-17(a), Income Tax Regs.
The employee must show the relationship between the expenditures and his or her
employment. See Joseph v. Commissioner, T.C. Memo. 2005-169. For such
expenses to be deductible, the taxpayer must not have the right to reimbursement
from his or her employer. See Orvis v. Commissioner, 788 F.2d 1406, 1408 (9th
Cir. 1986), aff’g T.C. Memo. 1984-533.
Normally, the Court may estimate the amount of a deductible expense if a
taxpayer establishes that an expense is deductible but is unable to substantiate the
precise amount. See Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930);
Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985). This principle is often
1
Sec. 7491(a)(1) provides an exception that shifts the burden of proof to the
Commissioner as to any factual issue relevant to a taxpayer’s liability for tax if (1)
the taxpayer introduces credible evidence with respect to such issue, sec.
7491(a)(1); and (2) the taxpayer satisfies certain other conditions, including
substantiation of any item and cooperation with the Government’s requests for
witnesses and information, sec. 7491(a)(2); see also Rule 142(a)(2). We note that
there is no basis to shift the burden to the Commissioner under sec. 7491(a).
-6-
referred to as the Cohan rule. See, e.g., Estate of Reinke v. Commissioner, 46 F.3d
760, 764 (8th Cir. 1995), aff’g T.C. Memo. 1993-197.
I. Employee Business Expenses
A. Car and Truck Expenses
Certain expenses specified in section 274 are subject to strict substantiation
rules. No deductions under section 162 shall be allowed for “listed property”, as
defined in section 280F(d)(4), “unless the taxpayer substantiates by adequate
records or by sufficient evidence corroborating the taxpayer’s own statement”. Sec.
274(d)(4). Listed property includes passenger automobiles and other property used
for transportation. Sec. 280F(d)(4)(A)(i) and (ii).
To meet the heightened substantiation requirements, a taxpayer must
substantiate the amount, time of use, and business purpose of the expense. Sec.
274(d); see also sec. 1.274-5T(b)(6), Temporary Income Tax Regs., 50 Fed. Reg.
46016 (Nov. 6, 1985). To substantiate by adequate records, the taxpayer must
provide both an account book, a log, or a similar record, as well as documentary
evidence, which are together sufficient to establish each element of an expenditure.
Sec. 1.274-5T(c)(2)(i), Temporary Income Tax Regs., 50 Fed. Reg. 46017 (Nov. 6,
1985). Documentary evidence includes receipts, paid bills, or similar evidence.
Sec. 1.274-5T(c)(2)(iii), Temporary Income Tax Regs., 50 Fed. Reg. 46019 (Nov.
-7-
6, 1985). To substantiate by sufficient evidence corroborating the taxpayer’s own
statement, the taxpayer must establish each element by the taxpayer’s statement and
by direct evidence, such as documentary evidence. Sec. 1.274-5T(c)(3)(i),
Temporary Income Tax Regs., 50 Fed. Reg. 46020 (Nov. 6, 1985).
Notably, section 274(d) overrides the Cohan rule. Boyd v. Commissioner,
122 T.C. 305, 320 (2004); sec. 1.274-5T(a), Temporary Income Tax Regs., 50 Fed.
Reg. 46014 (Nov. 6, 1985) (flush language) (noting that section 274 supersedes the
Cohan rule). Therefore, this Court is precluded from estimating any expenses that
are covered by section 274(d).
Under section 262(a), no deduction is allowed for any personal, living, or
family expenses. The taxpayer must demonstrate that the expenses in issue were
different from or in excess of what he or she would have spent for personal
purposes. Sutter v. Commissioner, 21 T.C. 170, 173 (1953). The expenses of daily
commuting are generally not deductible because they constitute personal expenses
under section 262. Fausner v. Commissioner, 413 U.S. 838 (1973); sec. 1.262-
1(b)(5), Income Tax Regs. However, the costs of going between jobs or job
locations is generally deductible under section 162(a). See Fausner v.
Commissioner, 55 T.C. 620 (1971); see also Steinhort v. Commissioner, 335 F.2d
-8-
496, 503-504 (5th Cir. 1964), aff’g in part and remanding T.C. Memo. 1962-233;
Heuer v. Commissioner, 32 T.C. 947, 953 (1959), aff’d, 283 F.2d 865 (5th Cir.
1960); Rev. Rul. 55-109, 1955-1 C.B. 261.
During his testimony petitioner submitted into evidence a mileage log which
was created after the 2008 tax year. Petitioner claimed he drove 88,820 miles
related to business travel in 2008. Corroborative evidence used to support a
taxpayer’s reconstruction of expenditures “‘must have a high degree of probative
value to elevate such [a] statement’ to the level of credibility of a contemporaneous
record.” Larson v. Commissioner, T.C. Memo. 2008-187, slip op. at 11 (quoting
section 1.274-5T(c)(1), Temporary Income Tax Regs., 50 Fed. Reg. 46016 (Nov. 6,
1985)).
Respondent concedes that petitioner drove 4,970 miles between various job
locations during 2008, for which he is entitled to claim a deductible mileage
expense.2 However, petitioner did not meet his burden in proving that the remaining
2
Respondent concedes that petitioner was entitled to claim a deductible
mileage expense of $2,485 and we assume respondent calculated this deduction by
multiplying 50 cents per mile times 4,970 miles. However, for 2008 the applicable
standard mileage rates were provided in Rev. Proc. 2007-70, sec. 2.01, 2007-2 C.B.
1162, 1163, and Announcement 2008-63, 2008-2 C.B. 114. Rev. Proc. 2007-70,
supra, was effective for transportation expenses incurred on or after January 1,
2008. Rev. Proc. 2007-70, supra, was modified by Announcement 2008-63, supra,
(continued...)
-9-
mileage was not a commuting expense or other personal expense. See generally
Fausner v. Commissioner, 413 U.S. 838; secs. 1.162-2(e), 1.262-1(b)(5), Income
Tax Regs. In addition, petitioner did not adequately substantiate the remainder of
his car and truck expenses, and so he is not entitled to a deduction for these
expenses, as discussed below.
We find the mileage summary to be insufficient under section 274(d) because
the mileage amounts were not entered at the time the vehicle was used. Petitioner
testified that the mileage log he presented at trial was prepared “after [he] was
approached by the IRS”. Outside of the syllabi petitioner presented, we are unable
to determine for what purpose petitioner was traveling to and from the various
schools outside of class time. Petitioner provided no evidence to corroborate entries
in the mileage log for random trips to the schools other than testimony that he made
various trips to prepare for the semester. We are unable to verify whether these
trips were for business or were personal. See Gilliam v. Commissioner, T.C.
Memo. 1986-90; cf. Freeman v. Commissioner, T.C. Memo. 2009-213;
2
(...continued)
for transportation expenses paid or incurred on or after July 1, 2008. Under Rev.
Proc. 2007-70, supra, taxpayers were entitled to 50.5 cents per mile, and under
Announcement 2008-63, supra, taxpayers were entitled to 58.5 cents per mile.
Petitioner is allowed a mileage deduction for 4,970 miles computed on the basis of
the applicable mileage rate during the time he actually drove the 4,970 miles. See,
e.g., Harris v. Commissioner, T.C. Memo. 2012-312, at *9-*11.
- 10 -
Lopkoff v. Commissioner, T.C. Memo. 1982-701. Therefore, petitioner is entitled
to a mileage expense deduction for 4,970 miles driven in 2008.
Furthermore, petitioner’s commuting expenses do not qualify for an exception
to the general rule of nondeductibility for such otherwise personal commuting costs.
There is an exception for travel expenses between a taxpayer’s residence and
temporary work locations outside of the metropolitan area where the taxpayer lives
and normally works. See Schurer v. Commissioner, 3 T.C. 544 (1944). A work
location is temporary if it is realistically expected to last (and does in fact last) for
one year or less. Bogue v. Commissioner, T.C. Memo. 2011-164, slip op. at 24;
Rev. Rul. 99-7, 1999-1 C.B. 361. Petitioner was teaching at several different
institutions in an effort to secure full-time employment at one of them. Each
semester petitioner had to travel to the various schools to request a part-time
teaching position, and there was no guarantee that he would receive an offer to
teach courses at the same college. Petitioner’s work was temporary because he was
employed semester by semester.
- 11 -
Over the years, a number of courts added an additional requirement that the
temporary worksite be distant from the area where the taxpayer lives and normally
works. See Dahood v. United States, 747 F.2d 46, 48 (1st Cir. 1984); Kasun v.
United States, 671 F.2d 1059, 1061 (7th Cir. 1982); Epperson v. Commissioner,
T.C. Memo. 1985-382. Petitioner worked and lived in the same metropolitan area,
and therefore we find that petitioner’s commuting expenses do not qualify for the
exception to the general rule of nondeductibility. We hold that petitioner’s
commuting expenses were nondeductible. See Bogue v. Commissioner, T.C.
Memo. 2011-164; see also Aldea v. Commissioner, T.C. Memo. 2000-136.
B. Parking Expenses
Petitioner claimed a deduction for parking expenses of $712 for 2008. As
stated above, expenses related to passenger automobiles, including expenses for
parking fees and tolls, are subject to the stringent substantiation requirements of
section 274(d). Respondent concedes that petitioner is entitled to a deduction for
parking fees of $137.
Petitioner testified that the remaining $575 in parking fees consists of metered
parking costs at various schools where he taught. Petitioner argues that these
expenses were incurred at the beginning of each semester before parking was
allowed on the schools’ campuses; however, he did not offer any evidence other
- 12 -
than his testimony to corroborate these expenses. Therefore, we are unable to
determine for what purpose petitioner was traveling to and from the various schools
outside of class time, whether these amounts were actually paid, and that these
amounts were not for personal purposes. Petitioner may deduct parking expenses of
only $137 for 2008.
C. Overnight Travel Expenses
Petitioner reported overnight travel expenses of $1,791 for 2008. Petitioner
submitted a summary of business expenses which includes a list of conferences and
seminars he attended in 2008. Petitioner claimed that he traveled outside the Los
Angeles area to attend these conferences. However, petitioner provided no
evidence or testimony to corroborate these expenses; we cannot be sure whether he
actually attended work-related conferences or was traveling for personal purposes.
See Boltinghouse v. Commissioner, T.C. Memo. 2007-324, slip op. at 19.
Therefore, petitioner may not deduct any overnight travel expenses for 2008.
D. Office Expenses
Petitioner reported business expenses of $8,219. Respondent agrees that
petitioner spent $450 on books at the East Los Angles College and Long Beach City
College book stores. However, petitioner submitted no documentation to show the
business nature of these books. Petitioner offered no evidence or testimony
- 13 -
regarding the business nature of the remaining payments or identifying items that
were purchased.3 Therefore, petitioner may not deduct any office expenses for
2008.
II. Miscellaneous Expenses
Petitioner claimed a deduction for miscellaneous expenses of $2,916 and
indicated that these expenses were for “legal fees, investment expenses, financial
advice, seminars/workshop [sic]”. A deduction is allowed for ordinary and
necessary expenses paid by a taxpayer during the year for the production or
collection of income, subject to the 2% floor of section 67(a), under section 212.
Section 212 allows a taxpayer to deduct ordinary and necessary expenses paid or
incurred for the production or collection of income or for the management,
conservation, or maintenance of property held for the production of income.
Petitioner offered no credible evidence to substantiate these legal fees, nor did he
provide evidence or testimony proving that these fees were incurred for the
production or collection of income. Therefore, petitioner may not deduct any of
these miscellaneous expenses for 2008.
3
Petitioner did submit receipts for payments made to certain cellular
telephone, cable television, and Internet service providers; however, he failed to
submit any evidence showing that these expenses were business related rather than
personal.
- 14 -
III. Section 6662(a) Penalty
Under section 7491(c), the Commissioner bears the burden of production
with regard to the section 6662(a) penalty. This means that the Commissioner must
produce sufficient evidence indicating that a penalty is appropriate. Once the
Commissioner meets this burden, the taxpayer must come forward with persuasive
evidence that the Commissioner’s determination is incorrect. See Rule 142(a);
Higbee v. Commissioner, 116 T.C. at 446-447.
Respondent determined a section 6662(a) penalty of $2,832 for 2008.
Respondent contends that petitioner is liable for the accuracy-related penalty on
alternative grounds: (1) the underpayment is attributable to negligence or disregard
of rules or regulations within the meaning of section 6662(b)(1); or (2) there was a
substantial understatement of income tax within the meaning of section 6662(b)(2).
Only one accuracy-related penalty may be applied with respect to any given portion
of an underpayment, even if that portion is subject to the penalty on more than one
of the grounds set out in section 6662(b). Sec. 1.6662-2(c), Income Tax Regs.
Negligence includes any failure to make a reasonable attempt to comply with
the provisions of the internal revenue laws and is the failure to exercise due care or
the failure to do what a reasonable and prudent person would do under the
- 15 -
circumstances. Sec. 6662(c); see also Neely v. Commissioner, 85 T.C. 934 (1985);
sec. 1.6662-3(b)(1), Income Tax Regs. Negligence also includes any failure by the
taxpayer to keep adequate books and records to substantiate items properly. Sec.
1.6662-3(b)(1), Income Tax Regs.
Although petitioner maintained a large amount of documentation, he did not
keep sufficient books and records to meet the requirements of section 274(d) with
respect to his car and truck, parking, overnight travel, office, and miscellaneous
expenses. To substantiate the expenses that respondent did not concede, petitioner
provided a mileage log (which was not maintained contemporaneously with his
travel) and a summary of seminars he attended and syllabi for classes he taught, and
he otherwise offered testimony at trial. The remainder of petitioner’s documentation
was not admitted into the record. For the remaining expenses, petitioner failed to
offer evidence that he actually incurred these expenses. We find that petitioner
acted negligently under the circumstances by failing to substantiate most of his
disallowed deductions. Respondent has therefore met the burden of production as
to negligence.
The accuracy-related penalty does not apply with respect to any portion of the
underpayment for which it is shown that the taxpayer had reasonable cause and
acted in good faith. Sec. 6664(c)(1). The determination whether a taxpayer acted
- 16 -
with reasonable cause and in good faith is made on a case-by-case basis, taking into
account all pertinent facts and circumstances. See sec. 1.6664-4(b)(1), Income Tax
Regs. The most important factor is the extent of the taxpayer’s efforts to assess his
or her proper tax liability. See id.
An honest misunderstanding of fact or law that is reasonable in the light of the
experience, knowledge, and education of the taxpayer may indicate reasonable
cause and good faith. See Noz v. Commissioner, T.C. Memo. 2012-272, at *41-
*42. Petitioner’s testimony established that he attempted to comply with the law.
Petitioner submitted large amounts of receipts and other documents that he had
collected, many of which were not admitted into the record. Petitioner made a
good-faith effort to keep records and document his expenses, but his efforts were
not enough. Petitioner seems to have a genuine misunderstanding of the law
regarding which expenses could be deducted, and he proved to be a credible
witness. Therefore, we hold that petitioner made a good-faith effort to accurately
assess his income tax liability, and he acted reasonably under the circumstances.
Petitioner is not liable for the section 6662(a) penalty for 2008.
- 17 -
To reflect the foregoing,
Decision will be entered
under Rule 155. | 01-03-2023 | 04-29-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2745246/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-1757
DORA L. ADKINS,
Plaintiff - Appellant,
v.
BANK OF AMERICA, N.A.,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (1:14-cv-00563-GBL-JFA)
Submitted: October 21, 2014 Decided: October 23, 2014
Before SHEDD, DUNCAN, and FLOYD, Circuit Judges.
Dismissed by unpublished per curiam opinion.
Dora Adkins, Appellant Pro Se. Nathaniel Patrick Lee,
MCGUIREWOODS, LLP, Tysons Corner, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Dora L. Adkins appeals the district court’s order
dismissing her civil action alleging claims related to the
foreclosure of her home. We have reviewed the record and find
no reversible error. Accordingly, we deny leave to proceed in
forma pauperis and dismiss the appeal for the reasons stated by
the district court. Adkins v. Bank of Am., N.A., No. 1:14-cv-
00563-GBL-JFA (E.D. Va. July 18, 2014). We dispense with oral
argument because the facts and legal contentions are adequately
presented in the materials before this court and argument would
not aid the decisional process.
DISMISSED
2 | 01-03-2023 | 10-23-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/1644837/ | 994 So. 2d 310 (2008)
HUNTER
v.
STATE.
No. 2D08-3308.
District Court of Appeal of Florida, Second District.
September 19, 2008.
Decision without published opinion. Belated App.dismissed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1537448/ | 797 A.2d 84 (2002)
144 Md. App. 144
Robert DAVIS
v.
STATE of Maryland.
No. 2744, September Term, 2000.
Court of Special Appeals of Maryland.
May 1, 2002.
*86 Stacy W. McCormack, Asst. Public Defender (Stephen E. Harris, Public Defender, on the brief), Baltimore, for Appellant.
Kathryn Grill Graeff, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen. and Patricia Jassamy, State's Atty. for Baltimore City, on the brief), Baltimore, for Appellee.
Argued before MURPHY, C.J., KRAUSER and LEONARD L. RUBEN (Retired, specially assigned), JJ.
*85 MURPHY, Chief Judge.
In the Circuit Court for Baltimore City, the Honorable William D. Quarles convicted Robert Davis, appellant, of possession of marijuana with intent to distribute. The State's evidence, seized from appellant's residence during the execution of a search warrant issued by the Honorable Kathleen M. Sweeney of the District Court of Maryland for Baltimore City, was sufficient to prove him guilty of that offense. *87 Appellant does not argue to the contrary. He does argue, however, that the State's evidence was acquired in violation of his Fourth Amendment right to protection from unreasonable searches, and he presents a single question for our review:
Whether the trial court erred in denying the appellant's motion to suppress all evidence during the execution of the "no-knock" warrant issued in this case.
For the reasons that follow, we shall answer "no" to this question and affirm the judgment of the circuit court.
Background
Prior to trial, appellant filed a motion to suppress the evidence on the grounds that (1) the no-knock provision in the search warrant was invalid,[1] and (2) the search warrant lacked probable cause. Judge Quarles denied that motion in an oral opinion that included the following findings and conclusions:
Okay. Pending ... are the motions of the defendants for suppression of evidence. The motion is based on the contention that the warrant executed in this case lacked probable cause, and that the entry to effect that warrant was unconstitutional because it was a no-knock entry.
The warrant was issued on February 4 of the year 2000 by a district court judge. The warrant itself contains a section detailing the experience of the affiants, Police Officer Christopher O'Ree and Police Officer Jonathan Brickas. And the warrant, as I said, contains their experience, which includes several hundred arrests for narcotics violation, in excess of seventy warrants done, and further details training in undercover and uniform capacities.
The warrant recites the information received from a confidential source relating to marijuana sales in the 5100 block of Park Heights Avenue. The source details knowledge of persons known to it as "Meatball" and "Biggie" who are, respectively, defendants Robert Davis and Damont Adams.
It is alleged in the warrant that they maintained an apartment at 4011 Boreman Avenue on the second floor, where they stored marijuana. And it is also alleged that a black two-door Nissan Sentra is used for the transport of such marijuana.
The police, in the affidavit, recite their knowledge of the 5100 Block of Park Heights Avenue as an area known to them and others for its high level of marijuana sales. The officers recite their observations of the defendants in the 5100 block of Park Heights Avenue. The defendant's admission that they had operated a black Nissan Sentra, which the affiants also observed in the driveway of theobserved the defendants drive away in the Nissan.
The confidential source also provided information with respect to the interior of the Boreman Avenue address, which information was verified by the affiants. The confidential informant, who is discussed in the affidavitthe information relating to the reliability of that informant is detailed. And that reliability includes the seizure of substantial amounts of narcotics and firearms and cash.
The affiants, relying on their experience and training, state their belief that they are likely to encounter firearms in the Boreman Avenue address and request *88 permission for a no-knock entry, which permission was granted.
A probable cause involves the determination of sufficient facts to show an interconnectedness between a crime, a criminal act, and a location. The warrant sufficiently describes the connection between the defendants and the location and the allegations of marijuana dealing, and thus meets the rudiments of probable cause.
Somewhat more vexing is the consideration whether the warrant itself provides say a sufficient basis for a no-knock entry. The cases, which have been discussed by the defense, and reviewed by the Court, largely involve situations in which law enforcement officers were confronted with situations which post entry were determined either to rise to level of exigency permitting no-knock entry or failed to meet that standard, and thus requires suppression.
No cases were found in which the issue presented was, in this context, in which there was pre-raid approval for a no-knock entry on a set of facts which essentially recite the officer's general and specific experience in law enforcement, from which they extrapolate the need, as they see it, for a no-knock entry. It is, of course, well-settled in search and seizure law that the issuing judge is permitted to rely upon the experience of law enforcement officers and the conclusions which reasonably flow from that experience in making the probable cause determination.
I see no reason to depart from that pattern when the examination is not the presence or absence of probable cause, but is instead the existence of exigencies meriting a no-knock entry. It is, in any event, a close question for the Court.
However, crediting the affiants' experience which involves hundreds of narcotics arrest, extensive training, and considerable experience in narcotics law enforcement, I cannot conclude that their conclusion with respect to the likeliness of firearms on the property is an irrational one.
Accordingly, I find that the agents, the police officers, acted appropriately in reliance upon the no-knock authority given by the warrant and conclude that the motion to suppress be denied.
Appellant preserved the suppression issue for our review by proceeding on an "agreed statement of facts" dictated into the record by the prosecutor.[2]
*89 Standard for Issuing a "No-Knock" Warrant
Appellant first contends that Judge Quarles failed to apply the proper standard of review to Judge Sweeney's issuance of the search warrant at issue in this case.[3] We disagree. From our review of Richards v. Wisconsin, 520 U.S. 385, 117 S. Ct. 1416, 137 L. Ed. 2d 615 (1997), we are persuaded that, when the suppression hearing court reviews the issuing judge's decision to include a no-knock entry provision in the search warrant, the suppression hearing court should uphold that provision as long as the warrant application provided the issuing judge with a substantial basis for concluding that there existed a reasonable suspicion that, under the circumstances in which the warrant was to be executed, the knock and announce requirement would be dangerous to the executing officers or would result in the destruction of the items described in the search warrant.[4]
*90 In Richards v. Wisconsin, supra, the United States Supreme Court held that, when determining whether to suppress evidence seized by law enforcement officers who executed a search warrant without announcing their authority and purpose,
... in each case, it is the duty of a court confronted with the question to determine whether the facts and circumstances of the particular entry justified dispensing with the knock-and-announce requirement. In order to justify a "no-knock" entry, the police must have a reasonable suspicion that knocking and announcing their presence, under the particular circumstances, would be dangerous or futile, or that it would inhibit the effective investigation of the crime by, for example, allowing the destruction of evidence. This standardas opposed to a probable cause requirement strikes the appropriate balance between the legitimate law enforcement concerns at issue in the execution of search warrants and the individual privacy interests affected by no-knock entries. This showing is not high, but the police should be required to make it whenever the reasonableness of a no-knock entry is challenged.
Richards, 520 U.S. at 394-95, 117 S. Ct. 1416 (1997) (citations omitted). In Richards, although the law enforcement officers did not have no-knock authorization in the search warrant, they proceeded to enter without knocking and announcing based upon observations that they made when they arrived on the scene of the premises to be searched.
Subsequent to Richards, this Court has considered two cases in which we were asked to order suppression of evidence seized as a result of no-knock entries: Wynn v. State, 117 Md.App. 133, 699 A.2d 512 (1997), rev'd on other grounds, 351 Md. 307, 718 A.2d 588 (1998) and Lee v. State, 139 Md.App. 79, 774 A.2d 1183, cert. granted, 366 Md. 246, 783 A.2d 221 (2001). In each of those cases, the search warrant did not include a no-knock provision, and the suppression hearing court accepted the testimony of the law enforcement officers who explained why they believed it was necessary to serve the warrant without announcing their purpose and authority. In each case, we applied Richards, affirming the judgment in Wynn, and reversing the judgment in Lee on the ground that "[t]he record is bare of any evidence of exigent circumstances that could possibly eliminate the constitutional necessity to knock and announce." Lee, 139 Md.App. at 91, 774 A.2d 1183.
In Dashiell v. State, 143 Md.App. 134, 792 A.2d 1185, No. 1182, September Term, *91 2001 (2002), we rejected the contention that officers serving a "no-knock" warrant had no right to conduct a pre-search pat-down of the persons on the premises when the warrant was served. Although that case did not involve a challenge to the "no-knock" provision in the search warrant, Judge James Eyler explained that "the nature of drug trafficking" compounded "the degree of danger present at [the scene of the search]," stating:
Persons associated with the drug business are prone to carrying weapons. See Ybarra [v. Illinois], 444 U.S. [85] at 106[, 100 S. Ct. 338, 62 L. Ed. 2d 238] (Rehnquist J., dissenting) ("[F]irearms are as much `tools of the trade' as are most commonly recognized articles of narcotic paraphernalia") (quoting United States v. Oates, 560 F.2d 45, 62 (C.A.2 1977)); Whiting v. State, 125 Md.App. 404, 417, 725 A.2d 623 (1999) (nexus between drugs and guns); Banks v. State, 84 Md.App. 582, 591, 581 A.2d 439 (1990) ("[O]ne who is involved in distribution of narcotics, it is thought, a factiori, would be more prone to possess, and/or use, firearms, or other weapons, than a person not so involved."). The connection of guns and drugs exposes officers to greater risks when confronting suspects who deal drugs. See [Michigan v.] Summers, 452 U.S. [692] at 702[, 101 S. Ct. 2587, 69 L. Ed. 2d 340] (even where "no special danger to the police [was] suggested by the evidence in this record, the execution of a warrant to search for narcotics is the kind of transaction that may give rise to sudden violence.... The risk of harm to both the police and the occupants is minimized if the officers routinely exercise unquestioned command of the situation."); People v. Broadie, 37 N.Y.2d 100, 112, 371 N.Y.S.2d 471, 332 N.E.2d 338 (N.Y.1975) ("Because of their illegal occupation, however, drug traffickers do often commit crimes of violence against law enforcement officers"). In the application for the search warrant, affiants stated they were keenly aware through their training and experience "that individuals in the distribution of controlled dangerous substances ... carry all types of weapons which puts the officers in danger during the execution of search and seizure warrants."
143 Md.App. at 134, 792 A.2d at 1196.
Due to the preference that searches be conducted pursuant to warrants issued by judicial officers, officers who obtain a search warrant have the benefit of (1) the good faith exception to the exclusionary rule, (2) a more deferential standard of review by the suppression hearing court,[5] and (3) the presumption *92 that the affidavit does establish probable cause for the search. Herbert v. State, 136 Md.App. 458, 485-494, 766 A.2d 190 (2001). This preference should be equally applicable to "no-knock" warrants.
If at the time he or she is applying for a search warrant, a law enforcement officer believes that the circumstances under which the warrant will be executed justify dispensing with the knock and announce requirement, the officer should seek no-knock authorization from the warrant issuing judge. If the judge is satisfied that the request for a no-knock entry is reasonable, the judge should include in the warrant a mandate that, in substantially the following form,[6] provides:
Good cause being shown therefor, the executing law enforcement officers are authorized to enter the premises to be searched without giving notice of their authority and purpose.
Moreover, when they apply for no-knock authorization in a search warrant, law enforcement officers do not have to include in the affidavit the kind of search scene case-specific, particularized circumstances of exigency that they would have to establish during the suppression hearing if they did not have a no-knock provision in the warrant and made the no-knock entry determination on their own.[7]
In the case at bar, the affidavit at issue included the following statements:
Based on information provided from an extremely reliable confidential source of the detailed information on "Meatball" and Damont Adams marijuana sales and storage in 4011 Boarman Ave. The corroborated information of the source. Your Affiant believes that "Meatball" and Damont Adams are storing large amounts of marijuana in 4011 Boarman Ave. Your Affiant prays of the issuance of a search and seizure warrant for the address of 4011 Boarman Ave., the vehicle known as a two door Nissan Sentra tag # FXF894, a black male known as "Meatball" and Damont Adams for violations of the Maryland C.D.S. laws.
The prior experience of Your Affiant indicates that narcotic/drug dealers/users have, carry and use Firearms to protect their operations. This protection is both from the Police and other drug dealers/users who may try to seize the drugs or moneys gained from the operation. These Firearms include handguns, rifles and shotguns. These weapons allow the drug dealer/user to operate freely and openly, also enabling them to retaliate against anyone they fell [sic] threatened by. The possession of these weapons is an extension of the narcotic operation and/or conspiracy being conducted. Due to the nature of the evidence your Affiant is seeking to seize in this investigation, specifically Article *93 27 Section 275-302 of the Annotated Code of Maryland. Your Affiant must gain entry quickly and safely into the dwelling. If entry is stalled or delayed the controlled dangerous substance can easily and quickly be destroyed. Therefore, Your Affiant will attempt to gain entry by the rush or No-Knock forced entry. This will enable the Entry Team to recover the evidence intact and provide members of the entry team with a margin of safety from weapons, which may be on the scene.
The affidavit also stated that large amounts of drugs had been seized as a result of information supplied by the source, that several people resided in the dwelling, and that co-defendant Adams had several previous arrests for drug violations. We therefore hold that (1) Judge Sweeney had a substantial basis for concluding that the affidavit established reasonable suspicion to believe that the executing officers needed to gain entry without knocking and announcing, and (2) Judge Quarles applied the correct standard of review.
Good Faith Exception
Assuming arguendo that the affidavit did not establish the need for a no-knock provision in the search warrant, we are persuaded that the good faith exception to the exclusionary rule applies to the entry in this case. Thus far, Maryland courts have only applied the good faith exception to search warrants later deemed to be invalid as lacking probable cause. We are persuaded, however, that the good faith exception is equally applicable to no-knock provisions in search warrants.
Under the good faith exception, "evidence seized under a warrant subsequently determined to be invalid may be admissible if the executing officers acted in objective good faith with reasonable reliance on the warrant." McDonald, 347 Md. at 467, 701 A.2d 675. "The exclusionary rule was designed to deter police misconduct rather than to punish the errors of judges and magistrates." West v. State, 137 Md.App. 314, 351, 768 A.2d 150, cert. denied, 364 Md. 536, 774 A.2d 409 (2001)(quoting Connelly v. State, 322 Md. 719, 728, 589 A.2d 958 (1991)). The Court of Appeals in McDonald further stated:
The Supreme Court in Leon did not suggest that evidence obtained under an invalid warrant is always admissible, but cautioned that "suppression of evidence obtained pursuant to a warrant should be ordered only on a case-by-case basis and only in those unusual cases in which exclusion will further the purposes of the exclusionary rule." The Court held that "in the absence of an allegation that the magistrate abandoned his detached and neutral role, suppression is appropriate only if the officers were dishonest or reckless in preparing their affidavit or could not have harbored an objectively reasonable belief in the existence of probable cause."
347 Md. at 468, 701 A.2d 675 (citations omitted).
There are four situations in which the good faith exception does not apply, and the exclusionary rule remains the appropriate remedy:
(1) if the magistrate, in issuing a warrant, "was misled by information in an affidavit that the affiant knew was false or would have known was false except for a reckless disregard of the truth," or
(2) "in cases where the issuing magistrate wholly abandoned his judicial role... [so that] no reasonably well trained officer should rely on the warrant," or
(3) in cases in which an officer would not "manifest objective good faith in relying on a warrant based on an affidavit so lacking in indicia of probable cause as to *94 render official belief in its existence entirely unreasonable," or (4) in cases where "a warrant may be so facially deficienti.e., in failing to particularize the place to be searched or the things to be seizedthat the executing officers cannot reasonably presume [the warrant] to be valid."
McDonald, 347 Md. at 468-469, 701 A.2d 675 [citations omitted].
Appellant argues that this is a case in which the affiant-officers simply could not have an objective, good faith reliance on the no-knock authorization because no reasonable law enforcement officer would reasonably believe that the information in the affidavit justified excusing the knock and announce requirement. From our review of the affidavit at issue, we disagree.
Other courts have applied the good faith exception to cases involving the issuing of a no-knock search warrant. See United State v. Tisdale, 195 F.3d 70 (2nd Cir. 1999); United States v. Carter, 999 F.2d 182 (7th Cir.1993); United States v. Moland, 996 F.2d 259 (10th Cir.1993); United States v. Moore, 956 F.2d 843 (8th Cir. 1992); United States v. Gonzalez, 164 F. Supp. 2d 119 (D.Mass.2001); United States v. Rivera, 2000 U.S. Dist. Lexis 7997 (D. Maine 2000); United States v. Brown, 69 F. Supp. 2d 518 (S.D.N.Y.1999); United States v. Tavarez, 995 F. Supp. 443 (S.D.N.Y.1998); State v. Van Beek, 591 N.W.2d 112 (N.D.1999); State v. Eason, 245 Wis. 2d 206, 629 N.W.2d 625 (2001). We agree with those decisions.
Application of the good faith exception to a "no-knock" warrant is entirely consistent with our holdings in Dashiell v. State, supra, and Herbert v. State, supra. Thus, even if we had concluded that Judge Sweeney should not have authorized a no-knock entry in this case, we would not reverse appellant's conviction. Suppressing evidence under these circumstances would not serve the purpose of the exclusionary rule, which is designed to deter police misconduct rather than to punish police for the errors of judges and magistrates. When the police officers follow the proper course of conduct by seeking a no-knock search warrant, the good faith exception applies. Appellant's motion to suppress was properly denied.
JUDGMENT AFFIRMED; COSTS TO BE PAID BY APPELLANT.
NOTES
[1] Although the warrant itself did not expressly provide for a no-knock entry, we accept the parties' agreement that a no-knock provision was included in the warrant because the warrant "incorporated by reference" the affidavit presented in support of the warrant.
[2] The prosecutor provided Judge Quarles with the following agreed upon facts:
During the month of February 2000, Officers O'Ree and Brickas of the Northwestern District Drug Enforcement Unit conducted an investigation into Robert Davis, also known as "Meatball," and Damont Adams, also known as "Biggie," selling marijuana in the 5100 block of Park Heights Avenue.
Information received resulted in the Honorable Judge Sweeney issuing a search and seizure warrant for the black male known as "Meatball," Damont Adams, and a black Nissan Sentra, tag number FXF 894, and the address of 4011 Boreman Avenue. The warrant was signed on February 4, 2000.
On February 5, 2000, at approximately 7:40 a.m., armed with a warrant, Officers O'Ree, Brickas, Hyde, Lane, German, Geddes, and Sergeant Oxier, executed the warrant. Force was used to gain entry. Once inside the location, on the second floor, front left bedroom, was the defendant Robert Davis, also known as "Meatball," and the defendant Damont Adams, also know as "Biggie." In the basement was a Lawrence Van Sorty, and in the second floor, rear left bedroom, was Doris Van Sorty.
Once all the occupants were secured, an orderly search of the dwelling was conducted. Recovered from the second floor, left front bedroom, that is the bedroom where the defendants were, was a loaded 25 caliber Titan semi-automatic handgun, serial number 249016, loaded with seven cartridges.
Recovered from the dresser was a box of 25 caliber and 410 gauge ammunition. On the dresser was a note pad which the officers believed, based on their expertise and training in the field of narcotics, to be a tally sheet, photo identification of Robert Davis, paperwork, two sets of keys, photos of the defendants, and $270 in U.S. currency.
In a top dresser drawer were numerous new empty ziplock bags, commonly used to package marijuana for street sales. In the bottom drawer of the dresser was H & R 410 shotgun, serial number B374718.
Recovered from the refrigerator, which was in the bedroom, was a large ziplock bag containing 60 ziplock bags with green plant material suspected to be marijuana. Recovered from a cabinet was another large ziplock bag containing nine ziplock bags containing a green plant material suspected to be marijuana. Recovered from the center console of the vehicle, and that was the vehicle that the officer had a warrant for, that was FXF 894, they recovered numerousthey recovered a ziplock bag containing numerous empty ziplock bags commonly used to package marijuana. Also recovered from the basement was a 22 caliber revolver and a 12-gauge shotgun.
Believing that the defendants, based on their training and experience in the field of narcotics, believing that the defendants were working as a team to possess with the intent to distribute marijuana on the streets of Baltimore with a handgun, they were arrested.
Over appellant's objection, the State introduced (1) the drug analysis establishing that the suspected drugs were marijuana; and (2) a copy of the firearms analysis on the Titan, serial number 249016, establishing that the gun was test-fired and it was operable and met the definition of a handgun. The statement of facts continued:
Officers Brickas and O'Ree observed the defendants on two to three separate occasions within the preceding days in the area of the 5100 block which is a notorious high drug area specifically for marijuana sales. And that they were seen in the vehicle with the tag number FXF 894. And that would be the State's case, Judge.
[3] When reviewing a motion to suppress, we examine only the record of the suppression hearing and not that of the trial. Lee v. State, 139 Md.App. 79, 84, 774 A.2d 1183 (2001), cert. granted, 366 Md. 246, 783 A.2d 221 (2001); Wynn v. State, 117 Md.App. 133, 165, 699 A.2d 512 (1997), rev'd on other grounds, 351 Md. 307, 718 A.2d 588 (1998). We will accept the facts as determined by the suppression hearing judge, unless those facts are clearly erroneous. Id. In making the ultimate conclusionary determination of the validity of the search, we must make our own independent constitutional appraisal by reviewing the law and applying it to the facts of the case. Id.
[4] As to the suppression hearing court's review of the issuing judge's determination that the affidavit establishes probable cause for the issuance of a search warrant, this Court has stated:
A close question of probable cause (or the admissibility of information from an informant bearing on probable cause) might be submitted to twenty fair and knowledgeable judges with ten finding one way and ten finding the opposite way and none of them being unreasonable or clearly erroneous. What happens when such a ruling comes to us, or to a suppression hearing judge, for review? Do we simply monitor the system for "error" (which is the basic, though limited, appellate function)? Do we extend due deference to any reasonable conclusion arising out of the gray area or broad discretionary range as something not "clearly erroneous" or a "clear abuse of discretion," even where we ourselves might have concluded otherwise from the same ambiguous predicate? Or do we make a de novo determination on these issues?
... Illinois v. Gates [462 U.S. 213, 103 S. Ct. 2317, 76 L. Ed. 2d 527 (1983)] leaves no room for doubt that reviewing courts, at the appellate level or at the suppression hearing level, have no business second-guessing the probable cause determinations of warrant-issuing magistrates by way of de novo determinations of their own. Unless the finding of the magistrate in this regard is "clearly erroneous" or represents "a clear abuse of discretion," it is unassailable. Illinois v. Gates [supra] makes it equally beyond dispute that this is not a change in the law, but a declaration of preexisting law.
Ramia v. State, 57 Md.App. 654, 658-659, 471 A.2d 1064, cert. denied, 300 Md. 154, 476 A.2d 722 (1984).
[5] In McDonald v. State, 347 Md. 452, 701 A.2d 675 (1997), the Court of Appeals stated:
We review the judge or magistrate's decision to issue a search warrant to determine whether there was "a substantial basis for concluding that the evidence sought would be discovered in the place described in the application and its affidavit." State v. Lee, 330 Md. 320, 326[, 624 A.2d 492] (1993); see Birchead v. State, 317 Md. 691, 701 [, 566 A.2d 488] (1989); see also Potts v. State, 300 Md. 567, 572[, 479 A.2d 1335] (1984). In this regard, we observed in Birchead:
The judge's task is simply to make a practical, common-sense decision whether probable cause exists; however, his action cannot be a mere ratification of the bare conclusions of others.
317 Md. at 701[, 566 A.2d 488] (quotation marks and citations omitted). The Supreme Court, in Illinois v. Gates, 462 U.S. 213, 236[, 103 S. Ct. 2317, 76 L. Ed. 2d 527] (1983), reiterated this standard of review, explaining "that after-the-fact scrutiny by courts of the sufficiency of an affidavit should not take the form of de novo review." The judge's determination that probable cause exists is entitled to great deference. Id. at 237[, 103 S. Ct. 2317]; see also United States v. Leon, 468 U.S. 897, 914[, 104 S. Ct. 3405, 82 L. Ed. 2d 677]; Lee, 330 Md. at 326[, 624 A.2d 492].
Id. at 467, 701 A.2d 675 (parallel citations omitted).
[6] The recommended provision appears in § 690.35 (Forms 6 & 7) of the 1971 edition of West's McKinney's Forms for the (New York) Criminal Procedure Law.
[7] Dispensing with the search scene case-specific particularized circumstances of exigency for law enforcement officers seeking no-knock authorization from a judicial officer serves the public interest. It is more beneficial for law enforcement officers to seek no-knock authorization in a search warrant, rather than make their own independent on-the-scene determination of whether to enter without knocking and announcing. If law enforcement officers had to make an identical showing of exigency regardless of whether they received no-knock authorization in the search warrant, there would be no incentive to seek judicial authorization prior to entering without knocking and announcing. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/347685/ | 559 F.2d 1040
Ella Weese Watson BOSSARD, Individually and asAdministratrix of the Estate of Donald Bossard,and Genieveve Bossard and Bertha LeeBossard, Plaintiffs-Appellants,v.EXXON CORPORATION, Defendant-Appellee,Lamar Labauve, Tom Wolfe, Joseph Labauve, and DeltaLaboratories, Defendants.
No. 76-1364.
United States Court of Appeals,Fifth Circuit.
Sept. 23, 1977.
John F. McKay, Baton Rouge, La., for plaintiffs-appellants.
E. Burt Harris, John F. Reid, New Orleans, La., for Exxon.
Andrew J. Bennett, Jr., Baton Rouge, La., for Delta Lab., et al.
David W. Robinson, Baton Rouge, La., for Fidelity & Casualty Co.
Appeal from the United States District Court for the Middle District of Louisiana.
Before GEWIN, RONEY and HILL, Circuit Judges.
PER CURIAM:
1
The plaintiffs' decedent worked for an independent contractor, Port Allen Marine, employed by defendants to clean a barge of petroleum fumes and residue. In 1975 he was asphyxiated while working inside a barge tank. Plaintiffs sued defendants for negligence under the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C.A. § 905(b) (Supp.1977). The trial court dismissed the complaint on motion, basing its ruling on the similarity between this case and Hess v. Upper Mississippi Towing Corp., Civ.No. 74-115 (M.D.La. October 21, 1975), in which defendants prevailed on a directed verdict. The appeals were argued together. We affirm the dismissal of this case largely on the basis of our reasoning in affirming Hess, 559 F.2d 1030 (5th Cir. 1977). See also Parson v. Amerada Hess Corp., 422 F.2d 610 (10th Cir. 1970); Cf. Uglem v. Foss Launch & Tug Co., 541 F.2d 1378 (9th Cir. 1976) (no seaworthiness recovery).
2
This appeal raises certain questions not presented in Hess. First, the plaintiffs argue dismissal under Fed.R.Civ.P. 12(b)(6) was improper, because they stated a claim upon which relief could be granted. The argument misstates the nature of the district court's decision. Both the language of the rule and the law of this Circuit indicate that when a trial court takes into consideration depositions and other information outside the pleadings, as was done here, the grant of a motion to dismiss is to be treated as summary judgment under Fed.R.Civ.P. 56. Herron v. Herron, 255 F.2d 589 (5th Cir. 1958). See Wright & Miller, Federal Practice and Procedure § 1366 & n.67 (1971). Plaintiffs have not demonstrated any prejudice or lack of notice sufficient to establish an exception. Consequently the case does not turn on the failure to state a claim, but on whether the plaintiffs have produced a material issue of fact which, if proved, would entitle them to relief as a matter of law. Fed.R.Civ.P. 56.
3
Part IV of the Hess opinion deals with the shipowner's liability for open and obvious dangers on board the vessel. The gas in the tank which asphyxiated the plaintiffs' decedent was such a danger. It was one of the conditions that Port Allen Marine was hired to correct. While, under Restatement (Second) of Torts §§ 343, 343A (1965), as interpreted in Gay v. Ocean Transport & Trading Ltd., 546 F.2d 1233 (5th Cir. 1977), the shipowner is potentially liable for injuries caused by such dangers if the danger cannot be appreciated by invitees or cannot be avoided, neither circumstance applies to this case. Port Allen Marine and Bossard knew of the danger. See Gulf Oil Corp. v. Bivins, 276 F.2d 753, 756-758 (5th Cir.), cert. denied, 364 U.S. 835, 81 S. Ct. 70, 5 L. Ed. 2d 61 (1960).
4
The plaintiffs assert a ground for liability not mentioned in Hess. They allege the defendants breached two sets of federal regulations, so that a material issue of fact with respect to their negligence exists. Neither set of regulations, however, applies to the facts of this case. The Coast Guard regulations, 46 C.F.R. 35.01-1 (1976), pertain to precautions taken when riveting or welding a barge tank and do not apply to cleaning. The safety and health regulations for longshoremen, 29 C.F.R. 1915.11-12 (1976), impose duties on Port Allen Marine, but not on the shipowner. Brown v. Mitsubishi Shintaku Ginko, 550 F.2d 331 (5th Cir. 1977); see generally 90 Harv.L.Rev. 1041 (1977).
5
AFFIRMED. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/730841/ | 101 F.3d 925
12 IER Cases 495
Ann K. STEHNEY, Appellant,v.William J. PERRY, Secretary of Defense; J. MichaelMcConnell, Director, National Security Agency/CentralSecurity Service; Lee Hanna, Former Chief of ManagementServices, National Security Agency/Central Security Service;Jeanne Zimmer, Chief of Management Services, NationalSecurity Agency/Central Security Service; The Institute ForDefense Analyses, Center For Communications Research, aDelaware Corporation; David M. Goldschmidt, Director, TheInstitute for Defense Analyses, Center for Communications Research.
No. 96-5036.
United States Court of Appeals,Third Circuit.
Argued Aug. 8, 1996.Decided Dec. 3, 1996.
Stephen Z. Chertkof, (argued), Kator, Scott & Heller, Washington, D.C. and Frank Askin, Constitutional Litigation Clinic, Rutgers Law School, Newark, New Jersey, for Appellant.
Freddi Lipstein, (argued) Barbara L. Herwig, United States Department of Justice Appellate Staff, Civil Division, Washington, D.C., for Federal Appellees.
Keith P. Jones, (argued), Hill Wallack, Princeton, New Jersey, for Appellees, the Institute for Defense Analyses and David M. Goldschmidt.
Before: MANSMANN and SCIRICA, Circuit Judges and DIAMOND, District Judge.*
OPINION OF THE COURT
SCIRICA, Circuit Judge.
1
The National Security Agency revoked Ann Stehney's security clearance after she refused to submit to a polygraph examination. As a result, the Institute for Defense Analyses terminated her employment. Alleging constitutional and statutory violations, Stehney sought a writ of mandamus and other appropriate relief. The district court dismissed her suit under Fed.R.Civ.P. 12(b)(1) and 12(b)(6) and Stehney now appeals.
I. Facts and Procedural History
2
Ann Stehney is a mathematician. In 1982, she left a tenured position at Wellesley College to work for the Institute for Defense Analyses at the Center for Communications Research in Princeton, New Jersey. The Institute is a private think tank that conducts cryptological research--the making and breaking of secret codes--as a contractor for the National Security Agency, an agency within the Department of Defense that gathers and protects intelligence information related to national security. To conduct this research, Institute employees like Stehney require access to classified information. Before granting access, NSA conducts a thorough background investigation of each person and makes "an overall common sense determination." DCID 1/14, Annex A.1 The NSA background investigation includes a review of personal history, criminal, financial and medical records, and at least one interview. NSA must ensure that access to classified information is "clearly consistent with the national security," and "any doubt concerning a person's continued eligibility must be resolved in favor of the national security." NSA/CSS Reg. 122-06.
3
In 1982 NSA investigated Stehney and granted her a security clearance. NSA is authorized by statute and regulations to use polygraph examinations as part of its investigations, see 29 U.S.C. § 2006(b) and DCID 1/14 Annex A, and since 1953 has used polygraphs in all investigations of NSA employees. Dep't. of Defense, The Accuracy and Utility of Polygraph Testing 11 (1984).2 But in 1982 when Stehney was hired by the Institute, NSA did not ask her to take a polygraph examination because it believed that requiring polygraph examinations might impede recruitment by NSA contractors. Shortly after Stehney was hired, the Department of Defense changed this policy and authorized use of polygraph examinations for all persons with access to classified information, including contractor employees.
4
In 1989, Stehney signed a Contractor Employee Advisory Handout informing her that she was "subject to an aperiodic review" of her security clearance, that review would be conducted with the aid of a polygraph examination, and that "[f]ailure to consent to an aperiodic polygraph examination may result in denial of continued access" to classified information.3
5
In 1992, NSA asked Stehney to submit to a polygraph examination. Stehney refused because she believes polygraph examinations are scientifically unsound and inherently unreliable. NSA revoked Stehney's security clearance because she refused to take the polygraph examination. Shortly thereafter, the Institute terminated Stehney's employment because she no longer possessed a security clearance.
6
After exhausting administrative remedies, Stehney filed suit in the United States District Court for the District of New Jersey against Secretary of Defense William J. Perry, two current and one former NSA administrators, the Institute for Defense Analyses, and its director David Goldschmidt. Stehney's complaint alleged that: NSA failed to follow its binding agency regulations during the security clearance revocation process (Count 1); NSA deprived her of a constitutionally protected interest without due process of law (Count 2); NSA's requirement that she submit to a polygraph examination violated the Fourth Amendment (Count 3); NSA's policy of exempting certain mathematicians from the polygraph requirement denied her equal protection under the law (Count 4); NSA's and the Institute's policies requiring polygraph examinations violated New Jersey employment law (Count 5); and the Institute's failure to assist Stehney in securing an exemption from the polygraph requirement in the same manner it assisted similarly situated male employees violated New Jersey anti-discrimination law (Count 6). Stehney sought a writ of mandamus and other appropriate relief to require NSA to reinstate her clearance or reconsider its revocation and to require the Institute to reinstate her employment.
7
The district court dismissed Count 1 under Fed.R.Civ.P. 12(b)(1) because Stehney lacked standing, her suit was barred by the political question doctrine and by sovereign immunity, and because she had not met the requirements for a writ of mandamus under 28 U.S.C. § 1361. The district court dismissed Stehney's constitutional claims in Counts 2, 3, and 4 under Fed.R.Civ.P. 12(b)(6) for failure to state a claim for which relief can be granted. The court dismissed Count 5 because her state law claim was preempted by federal law and declined to exercise supplemental jurisdiction over Count 6 because all federal claims had been dismissed. Stehney v. Perry, 907 F.Supp. 806, (D.N.J.1995). Stehney now appeals the dismissal of Counts 1, 2, 4, 5, and 6.
II. Jurisdiction and Standard of Review
8
We have jurisdiction under 28 U.S.C. § 1291. Although we typically review mandamus decisions for abuse of discretion, we review non-discretionary elements de novo. See Arnold v. BLaST Intermediate Unit 17, 843 F.2d 122 (3d Cir.1988). The remaining issues on appeal are subject to plenary review. Hutchins v. I.R.S., 67 F.3d 40, 42 (3d Cir.1995) (dismissal for standing subject to plenary review); State of New Jersey v. United States, 91 F.3d 463, 466 (3d Cir.1996) (dismissal of political question and dismissal pursuant to Fed.R.Civ.P. 12(b)(6) subject to plenary review); Blanciak v. Allegheny Ludlum Corp., 77 F.3d 690, 694 (3d Cir.1996) (dismissal for sovereign immunity subject to plenary review); Coleman v. Kaye, 87 F.3d 1491, 1497 (3d Cir.1996) (jurisdiction questions subject to plenary review); Susan N. v. Wilson School Dist., 70 F.3d 751, 763 (3d Cir.1995) (dismissal for preemption subject to plenary review).
III. Threshold Issues
A. Standing
9
The district court dismissed Stehney's claim that NSA failed to follow its regulations in revoking her security clearance because it found that she lacked standing. Because Stehney was no longer employed at the Institute, the district court observed she no longer possessed the "need to know" classified information, a prerequisite for security clearance. Nor did the district court believe the Institute was under an obligation to rehire Stehney even if her security clearance were restored. In these circumstances, the district court concluded her claim was based on speculation "about what a third-party might do in hypothetical future circumstances," and therefore insufficient to establish standing and to warrant an effective remedy. Stehney, 907 F.Supp. 806, 815-16. We disagree.
10
In Greene v. McElroy, 360 U.S. 474, 79 S.Ct. 1400, 3 L.Ed.2d 1377 (1959), an employee was dismissed from a private company because of the revocation of his government security clearance. The Supreme Court found the plaintiff had standing to challenge the security clearance decision: "We note our agreement ... that petitioner has standing to bring this suit.... Respondents' actions, directed at petitioner as an individual, caused substantial injuries, and were they the subject of a suit between private persons, they could be attacked as an invasion of a legally protected right to be free from arbitrary interference in private contractual relationships." Greene v. McElroy, 360 U.S. at 493 n. 22, 79 S.Ct. at 1412 n. 22 (citations omitted).
11
Greene is factually indistinguishable from this case. Stehney too has suffered a substantial injury--loss of her employment. She too was fired because of the government's allegedly arbitrary interference in her private contractual relationship with the Institute. Of course, we recognize that Greene was decided in 1959 and since then, the Supreme Court has clarified the test for standing. We will look, therefore, at the recently articulated standard.
12
The Supreme Court established a three-part test for Article III standing in Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982): "Art. III requires the party who invokes the court's authority to show that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant, and that the injury fairly can be traced to the challenged action and is likely to be redressed by a favorable decision." Id. at 472, 102 S.Ct. at 758 (internal quotations and citations omitted). See also Allen v. Wright, 468 U.S. 737, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984) (applying Valley Forge test); Schering Corp. v. Food and Drug Admin., 51 F.3d 390, 395 (3d Cir.) (same), cert. denied, --- U.S. ----, 116 S.Ct. 274, 133 L.Ed.2d 195 (1995).
13
The current standing test also includes non-constitutional elements. As the Court noted: "Even when a case falls within these constitutional boundaries, a plaintiff may still lack standing under the prudential principles by which the judiciary seeks to avoid deciding questions of broad social import where no individual rights would be vindicated and to limit access to the federal courts to those litigants best suited to assert a particular claim." Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99, 99 S.Ct. 1601, 1608, 60 L.Ed.2d 66 (1979). These non-constitutional prudential considerations "require that: (1) a litigant assert his [or her] own legal interests rather than those of third parties; (2) courts refrain from adjudicating abstract questions of wide public significance which amount to generalized grievances; and (3) a litigant demonstrate that her interests are arguably within the zone of interests intended to be protected by the statute, rule, or constitutional provision on which the claim is based." Wheeler v. Travelers Ins. Co., 22 F.3d 534, 538 (3d Cir.1994) (internal citations and quotations omitted; citing and quoting from Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 804, 105 S.Ct. 2965, 2970, 86 L.Ed.2d 628 (1985); Warth v. Seldin, 422 U.S. 490, 499-500, 95 S.Ct. 2197, 2205-06, 45 L.Ed.2d 343 (1975); and Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 475, 102 S.Ct. 752, 760, 70 L.Ed.2d 700 (1982)).
14
Application of these standards demonstrates that Stehney possesses standing. Stehney's loss of her security clearance and job, an alleged result of NSA's revocation of her security clearance in disregard of agency regulations and her rights to due process and equal protection, constitutes sufficient injury for standing purposes and can be traced to defendants' conduct. See Greene v. McElroy, 360 U.S. 474, 493 n. 22, 79 S.Ct. 1400, 1412 n. 22, 3 L.Ed.2d 1377 (1959) (plaintiff who lost private sector job when government revoked his security clearance has standing to bring suit against government alleging due process violations in revocation process; government's actions were "directed at" plaintiff and "caused substantial injury"). Her injury is also likely to be redressed by a favorable decision, because NSA would undoubtedly conduct a new review of Stehney's clearance if ordered to do so.
15
Stehney has also satisfied the non-Article III prudential standing requirements. She is asserting her own rights and not those of a third party. Violation of constitutional and regulatory rights is not an "abstract" or "generalized grievance." Finally, as the target of NSA regulatory action, Stehney's interests fall within the zone of interests protected by the constitutional and regulatory provisions on which her case is based.
16
Moreover, the Supreme Court and lower federal courts have on several occasions allowed private sector and government employees to bring suit against the government for claims arising from the security clearance process. See, e.g., Cafeteria and Restaurant Workers Union, Local 473, AFL-CIO v. McElroy, 367 U.S. 886, 81 S.Ct. 1743, 6 L.Ed.2d 1230 (1961); Dorfmont v. Brown, 913 F.2d 1399 (9th Cir.1990), cert. denied, 499 U.S. 905, 111 S.Ct. 1104, 113 L.Ed.2d 214 (1991); Dubbs v. C.I.A., 866 F.2d 1114 (9th Cir.1989); Chesna v. United States Dept. of Defense, 850 F.Supp. 110 (D.Conn.1994). Like these plaintiffs, Stehney asserts NSA violated her constitutional rights and failed to follow its own regulations in revoking her clearance. She is entitled to an adjudication of her claims on the merits. For these reasons, we hold that Stehney has standing.
B. Political Question Doctrine
17
Even if Stehney possessed standing, the district court found her mandamus claim raised non-justiciable political questions. Stehney, 907 F.Supp. at 816.4
18
In Department of Navy v. Egan, 484 U.S. 518, 526-29, 108 S.Ct. 818, 823-25, 98 L.Ed.2d 918 (1988), a civilian employee of the Navy was denied a security clearance. The question presented was whether the Merits System Protection Board, a body that reviews Civil Service employment decisions, had statutory authority to review the substance of the underlying decision to revoke the security clearance. The Supreme Court held that it did not. "The grant of a security clearance to a particular employee, a sensitive and inherently discretionary judgment call, is committed by law to the appropriate agency of the Executive Branch." Id. at 527, 108 S.Ct. at 824. "The President, after all, is the 'Commander in Chief of the Army and Navy of the United States.' U.S. Const., Art. II, § 2. His authority to classify and control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to occupy a position in the Executive Branch that will give that person access to such information flows primarily from this constitutional investment of power in the President and exists quite apart from any explicit congressional grant...." Id. at 529-30, 108 S.Ct. at 824-26 (citations omitted). The Court recognized that review of security clearance decisions raises problems of institutional competence. "Certainly, it is not reasonably possible for an outside nonexpert body to review the substance of such a judgment and to decide whether the agency should have been able to make the necessary affirmative prediction with confidence. Nor can such a body determine what constitutes an acceptable margin of error in assessing the potential risk." Id. at 529, 108 S.Ct. at 825.
19
While Egan held only that the Merits System Protection Board lacked the competence and authority to review security clearance decisions under its authorizing statute, the courts of appeals have consistently held that under Egan, the federal courts may not review security clearance decisions on the merits. See Brazil v. U.S. Dept. of Navy, 66 F.3d 193, 197 (9th Cir.1995) (no judicial review of merits of security clearance decisions under Title VII), certainties, --- U.S. ----, 116 S.Ct. 1317, 134 L.Ed.2d 470 (1996); Becerra v. Dalton, 94 F.3d 145 (4th Cir.1996) (same); Guillot v. Garrett, 970 F.2d 1320, 1325 (4th Cir.1992) (no judicial review of the merits of security clearance decisions under the Rehabilitation Act of 1973); Dorfmont v. Brown, 913 F.2d 1399 (9th Cir.1990) (no judicial review of merits of security clearance decisions); Jamil v. Secretary, Dept. of Defense, 910 F.2d 1203, 1206 (4th Cir.1990) (same); Hill v. Department of Air Force, 844 F.2d 1407, 1413 (10th Cir.) (same), cert. denied, 488 U.S. 825, 109 S.Ct. 73, 102 L.Ed.2d 49 (1988). These decisions are based on grounds of institutional competence, separation of powers and deference to the Executive on national security matters. Thus, the federal courts may not "second guess" the lawful decision of an agency like NSA to terminate a person's access to classified information.
20
The district court held that Egan supported the conclusion that there was "a textually demonstrable constitutional commitment" of the issue of access to classified information to the Executive Branch in Art. II of the United States Constitution and that judicial review of these decisions violated the separation of powers. On this basis, the court declined to adjudicate Stehney's claims. Stehney, 907 F.Supp. at 816-17 (citing Baker v. Carr, 369 U.S. 186, 217, 82 S.Ct. 691, 710, 7 L.Ed.2d 663 (1962)). If Stehney had asked for review of the merits of an executive branch decision to grant or revoke a security clearance, we would agree. But not all claims arising from security clearance revocations violate separation of powers or involve political questions. Since Egan, the Supreme Court and several courts of appeals have held the federal courts have jurisdiction to review constitutional claims arising from the clearance revocation process. Webster v. Doe, 486 U.S. 592, 603-04, 108 S.Ct. 2047, 2053-54, 100 L.Ed.2d 632 (1988); Dorfmont v. Brown, 913 F.2d 1399, 1402 (9th Cir.1990); Jamil v. Secretary, Dept. of Defense, 910 F.2d 1203, 1209 (4th Cir.1990); Dubbs. v. C.I.A., 866 F.2d 1114, 1120 (9th Cir.1989); National Fed'n of Fed. Employees v. Greenberg, 983 F.2d 286, 289-90 (D.C.Cir.1993). The courts also have power to review whether an agency followed its own regulations and procedures during the revocation process. Service v. Dulles, 354 U.S. 363, 77 S.Ct. 1152, 1 L.Ed.2d 1403 (1957); Sampson v. Murray, 415 U.S. 61, 94 S.Ct. 937, 39 L.Ed.2d 166 (1974); Doe v. Casey, 796 F.2d 1508 (D.C.Cir.1986), aff'd in part and rev'd in part, Webster v. Doe, 486 U.S. 592, 108 S.Ct. 2047, 100 L.Ed.2d 632 (1988); Jamil v. Secretary, Dept. of Defense, 910 F.2d 1203, 1208; Hill v. Department of Air Force, 844 F.2d 1407, 1412 (10th Cir.1988); Drumheller v. Department of Army, 49 F.3d 1566, 1570-73 (Fed.Cir.1995). See also Webster v. Doe, 486 U.S. 592, 602 n. 7, 108 S.Ct. 2047, 2053 n. 7, 100 L.Ed.2d 632; Dubbs v. C.I.A., 866 F.2d 1114, 1121 n. 9.
21
Stehney has not asked for a review of the merits of NSA's revocation decision. Rather, she asserts NSA violated her constitutional and regulatory rights in revoking her clearance. Therefore, we cannot agree with the district court that the political question doctrine precludes review of her claims. Accordingly, to the extent that Stehney seeks review of whether NSA complied with its own regulations or violated her constitutional rights, we believe she presents a justiciable claim.
C. Sovereign Immunity
22
The district court also found that the United States had not consented to be sued for failure to follow Defense Department or NSA security-clearance regulations and, therefore, Stehney was barred from bringing suit by the doctrine of sovereign immunity. Stehney, 907 F.Supp. at 819-20. But in Service v. Dulles, 354 U.S. 363, 77 S.Ct. 1152, 1 L.Ed.2d 1403 (1957), the Supreme Court held that the government could be sued for failure to follow its own regulations. Similarly, in Webster v. Doe, 486 U.S. 592, 603-05, 108 S.Ct. 2047, 2053-55, 100 L.Ed.2d 632 (1988), the court held that federal courts had jurisdiction over constitutional claims brought by a CIA ex-employee discharged for security reasons.
23
It is true that "[a]bsent a waiver, sovereign immunity shields the Federal Government and its agencies from suit." F.D.I.C. v. Meyer, 510 U.S. 471, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994) (citing Loeffler v. Frank, 486 U.S. 549, 554, 108 S.Ct. 1965, 1968-69, 100 L.Ed.2d 549 (1988) and Federal Housing Admin., Region No. 4 v. Burr, 309 U.S. 242, 244, 60 S.Ct. 488, 490, 84 L.Ed. 724 (1940)). But the Administrative Procedure Act, 5 U.S.C. §§ 701-706, contains a waiver of sovereign immunity applicable to this case. Section 702 provides in part:
24
A person suffering legal wrong because of agency action, or adversely affected or aggrieved by an agency action within the meaning of a relevant statute, is entitled to judicial relief thereof. An action in a court of the United States seeking relief other than money damages and stating a claim that an agency or an officer or employee thereof acted or failed to act in an official capacity or under color of legal authority shall not be dismissed nor relief therein be denied on the ground that it is against the United States or that the United States is an indispensable party. The United States may be named as a defendant in any such action, and a judgment or decree or decree may be entered against the United States.
25
Stehney's claim in count 1 falls within the scope of § 702 because she seeks non-monetary relief--a review of her access to secured information--for a legal wrong caused by agency action. The district court disagreed because it believed that 5 U.S.C. § 701(a) renders § 702 inapplicable in this case. Section 701(a) provides:
26
This chapter applies, according to the provisions thereof, except to the extent that--
27
(1) statutes preclude judicial review; or
28
(2) agency action is committed to agency discretion by law.
29
The district court held that under § 701(a)(1), a statute, 50 U.S.C. § 835, precluded judicial review.5 Stehney, 907 F.Supp. at 820. It is true that § 835 shields NSA employment decisions, including security clearance decisions affecting persons "employed in, or detailed or assigned to" the NSA, from APA challenge. Doe v. Cheney, 885 F.2d 898, 904 (D.C.Cir.1989); 50 U.S.C. § 831. But Stehney was employed in the private sector by an NSA contractor, and was not "employed in, or detailed or assigned to" NSA. Thus, § 835 is not applicable. If Congress intended to shield security clearance decisions affecting NSA contractor employees from APA review, it would have used language to that effect. See Pub.L. 100-180 § 1121(d) (statute authorizing Department of Defense to conduct polygraph examinations as part of counter-intelligence program distinguishes between a "person employed by or assigned or detailed to the National Security Agency" and "an employee of a contractor of the National Security Agency").
30
The district court also held that under § 701(a)(2), NSA security clearance decisions are "committed to agency discretion by law," and are not reviewable. Stehney, 907 F.Supp. at 820. But whether or not security clearance decisions are committed to NSA's discretion, the agency must still follow its own regulations and may be sued for failure to do so. Service v. Dulles, 354 U.S. 363, 371-73, 77 S.Ct. 1152, 1156-58, 1 L.Ed.2d 1403 (1957) (though statute granted agency "absolute discretion" regarding employee discharge decisions, agency must still comply with its own regulations, and court has jurisdiction to consider claims that it did not do so; claim not barred by sovereign immunity); Accardi v. Shaughnessy, 347 U.S. 260, 268, 74 S.Ct. 499, 503-04, 98 L.Ed. 681 (1954) (though government board has discretion to make deportation decisions, board must still follow its own regulations governing exercise of its discretion; claim not barred by sovereign immunity); Sampson v. Murray, 415 U.S. 61, 71, 94 S.Ct. 937, 943-44, 39 L.Ed.2d 166 (1974) (citing with approval ruling of Service v. Dulles ); Doe v. Casey, 796 F.2d 1508, 1519 (D.C.Cir.1986) (agency subject to suit for failing to follow its own regulations), aff'd in part and rev'd in part on other grounds, Webster, 486 U.S. 592, 108 S.Ct. 2047, 100 L.Ed.2d 632 (1988); Hondros v. United States Civil Serv. Comm'n, 720 F.2d 278, 293 (3d Cir.1983) (§ 701(a)(2) does not prohibit judicial review of agency compliance with statutes or regulations). See also Webster v. Doe, 486 U.S. 592, 602 n. 7, 108 S.Ct. 2047, 2053 n. 7, 100 L.Ed.2d 632.
31
Nor does § 701(a)(2) preclude judicial review of constitutional challenges to an agency's exercise of discretion. Webster v. Doe, 486 U.S. 592, 108 S.Ct. 2047, 100 L.Ed.2d 632 (1988); Hondros, 720 F.2d at 293. In Webster v. Doe, the Supreme Court held that even if a statute grants an agency absolute discretion precluding judicial review of the merits of agency decisions, the federal courts may still consider constitutional challenges arising from the exercise of discretion, at least absent clear congressional intent to preclude such review. The court noted that this "heightened showing" is required "to avoid the 'serious constitutional question' that would arise if a federal statute were construed to deny any judicial forum for a colorable constitutional claim." Webster, 486 U.S. at 603, 108 S.Ct. at 2053-54. Since there is no statute expressly precluding judicial review of colorable constitutional claims arising from NSA's security clearance procedure, sovereign immunity does not preclude judicial review of Stehney's constitutional claims. For these reasons, count 1 is not barred by sovereign immunity.
IV. The Merits
32
Although Stehney has standing and her claims are not barred by sovereign immunity or the political question doctrine, we will affirm the dismissal of Stehney's claims on the merits.
A. Count 1: Denial of Mandamus Relief
33
The district court ruled that even if Stehney possessed standing and her count 1 claim were not barred by the political question or sovereign immunity doctrines, it could not grant an injunction in the nature of mandamus under 28 U.S.C. § 1361. "It is not disputed that the remedy of mandamus is a drastic one, to be invoked only in extraordinary situations." Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 34, 101 S.Ct. 188, 189-90, 66 L.Ed.2d 193 (1980).6
34
Stehney could have challenged NSA's alleged violations of her constitutional rights or NSA's failure to follow its own regulations under the Administrative Procedure Act. See, e.g., Webster v. Doe, 486 U.S. 592, 603-04, 108 S.Ct. 2047, 2053-54, 100 L.Ed.2d 632 (1988); Dubbs v. C.I.A., 866 F.2d 1114 (9th Cir.1989); Mangino v. Department of Army, 818 F.Supp. 1432, 1438 (D.Kan.1993); 5 U.S.C. § 706(2). Since this alternative was available to Stehney, grant of a writ of mandamus would be improper.
35
B. Count 1: NSA's Compliance with Regulations
36
Even if Stehney had properly framed her claim that NSA failed to comply with its own regulations as a suit under the Administrative Procedure Act, we would affirm dismissal of count 1 under Fed.R.Civ.P. 12(b)(6) because she alleges no facts constituting a failure to follow the regulations.
37
Stehney alleges, and we accept as true for the purposes of this appeal, that NSA revoked her security clearance solely because she refused to take a polygraph examination in violation of two specific agency regulations: DCID 1/14 §§ 5 and 12. DCID 1/14 § 5 provides:Criteria for security approval of an individual on a need-to-know basis for access to SCI follow:
38
a. The individual must be stable; trustworthy; reliable; of excellent character, judgment, and discretion; and of unquestioned loyalty to the United States.
39
b. The individual requiring access to SCI must also be a U.S. citizen.
40
c. The individual's immediate family must also be U.S. citizens....
41
d. Members of the individual's immediate family and any other persons to whom he or she is bound by affection or obligation should neither be subject to physical, mental, or other forms of duress by a foreign power or by persons who may be or have been engaged in criminal activity, nor advocate the use of force or violence to overthrow the Government of the United States or the alteration of the form of Government of the United States by unconstitutional means.
42
Stehney asserts NSA failed to comply with § 5 because it revoked her security clearance for failure to take a polygraph examination, not because she failed to meet the criteria for access to classified information enumerated in the regulation.
43
Stehney also contends NSA violated DCID 1/14 § 12, which provides in part:
44
When all other information developed on an individual is favorable, a minor investigative requirement that has not been met should not preclude favorable adjudication.... The ultimate determination of whether the granting of access is clearly consistent with the interests of national security will be an overall common sense determination based on all available information.
45
Stehney asserts that § 12 requires NSA to make determinations on a "whole person" standard, which precludes NSA from revoking a security clearance solely because one investigative requirement--submission to a polygraph examination--was not met.
46
DCID 1/14 §§ 5 and 12 must be read in context with DCID 1/14 as a whole and in conjunction with other relevant Department of Defense and NSA security clearance process and polygraph regulations, which establish a detailed and coherent scheme for regulating access to classified information. DCID 1/14 §§ 7(e) and 8(d) authorize, and NSA/CSS Reg. No. 122-06 § VI(10) requires, the use of polygraph examinations as part of the security clearance background investigation process. DCID 1/14 Annex A provides, in part:
47
Failure to Cooperate: Failure to provide required security forms, releases, and other data or refusing to undergo required security processing or medical or psychological testing will normally result in a denial, suspension, or revocation of access.
NSA/CSS Reg. No. 122-06 provides, in part:
48
Refusal to consent to, or unsatisfactory completion or evaluation of any aspect of the programs and procedures listed in Section VI, when implemented as a requirement for continued access, may result in adverse personnel/administrative actions such as denial of continued access to NSA/CSS protected information and spaces, limitations or denial of additional accesses and/or security courier privileges, denials of TDY/PCS assignment, and/or termination of employment.
49
DoD Reg. 5210.48-R, Ch. 1(A)(5) states, in part:
50
Persons who refuse to take a polygraph examination in connection with determining their continued eligibility for access ... may be denied access, employment, assignment, or detail....
51
These regulations establish that DCID 1/14 §§ 5 and 12 notwithstanding, refusal to take a polygraph examination constitutes sufficient grounds for revocation of a security clearance. For these reasons, we cannot agree that NSA's actions violated the agency's own regulations. Stehney has not stated a claim in count 1 for which relief may be granted, and the count was properly dismissed.
C. Count 2: Due Process
52
Stehney contends NSA deprived her of a constitutionally protected interest without due process of law. Finding she had no protected property or liberty interest, the district court also ruled that in any event, Stehney had received all the process that was due. Stehney, 907 F.Supp. at 819-21.
53
In Department of Navy v. Egan, 484 U.S. 518, 108 S.Ct. 818, 98 L.Ed.2d 918 (1988), the Supreme Court stated that "it should be obvious that no one has a 'right' to a security clearance." Id. at 528, 108 S.Ct. at 824. Since that time, every court of appeals which has addressed the issue has ruled that a person has no constitutionally protected liberty or property interest in a security clearance or a job requiring a security clearance. Jones v. Department of Navy, 978 F.2d 1223, 1225-26 (Fed.Cir.1992); Dorfmont v. Brown, 913 F.2d 1399, 1403-04 (9th Cir.1990); Jamil, 910 F.2d 1203 (4th Cir.1990); Doe v. Cheney, 885 F.2d 898, 909-10 (D.C.Cir.1989); Hill v. Department of Air Force, 844 F.2d 1407, 1411 (10th Cir.1988).7
54
But even if Stehney possessed a constitutionally protected liberty or property interest, the procedure used to revoke Stehney's security clearance was sufficient to satisfy due process. At least for that reason, her due process count was properly dismissed.
55
In her complaint, Stehney asserts NSA denied her due process by failing to allow her to confront witnesses against her; failing to provide her with information collected during her 1989 reinvestigation; and denying her the opportunity to present live testimony at a hearing. When measured against her claim that her security clearance was revoked solely because she failed to submit to the polygraph examination, these allegations cannot constitute a denial of due process. The right to confront live witnesses, review information from prior investigations, or to present live testimony would have not have improved the fairness of the revocation process. Stehney received advanced notice of her security clearance revocation and an opportunity to present documents and arguments against revocation. She also received three administrative appeals. Where a security clearance is denied or revoked because the subject of a background investigation refuses to comply with investigation procedures required by agency regulation, no more process is mandated. Therefore, count 2 was properly dismissed.
56
On appeal, Stehney asserts two other claims under the rubric of due process. First, she alleges the clearance revocation procedures followed by NSA were not authorized by Congress or the President.8 Yet Stehney fails to identify specific NSA procedures which she believes were not authorized. Instead, her claim rests entirely on the assertion in her brief that her case presents facts analogous those in Greene v. McElroy, 360 U.S. 474, 79 S.Ct. 1400, 3 L.Ed.2d 1377 (1959).
57
In Greene, the Department of Defense revoked a security clearance on the basis of confidential information without providing the clearance holder an opportunity to confront the accusing witnesses at a hearing. The Supreme Court held that absent express authorization from the President or Congress the Department could not rely on a summary procedure that provided virtually no due process protections. Stehney asserts that revocation of her security clearance without an evidentiary hearing is equally invalid absent express Presidential or Congressional approval. But this case is distinguishable from Greene in critical respects. Stehney asserts she was denied a clearance because she refuses to comply with a routine background investigation procedure--the polygraph examination--that was expressly authorized by Congress. See 29 U.S.C. § 2006(b)(2). In these circumstances, NSA does not need express authorization from Congress or the President to revoke a security clearance without a hearing.
58
Stehney also contends NSA's use of a polygraph is a "random and arbitrary process" equivalent to flipping a coin. Although not stated explicitly, the thrust of her argument seems to be that regulations requiring a polygraph test violate substantive due process. But nothing in the record indicates that this claim was raised in the district court. For this reason, it is waived on appeal. Venuto v. Carella Byrne, Bain, Gilfillan, Cecchi & Stewart, P.C., 11 F.3d 385, 393 (3d Cir.1993); Frank v. Colt Industries, Inc., 910 F.2d 90, 100 (3d Cir.1990).
59
Even though we do not decide this issue, we note that if Stehney's position were to prevail, national security agencies could easily be foreclosed from using polygraph examinations. The government contends that polygraph examinations are a useful investigatory tool not only because they assist in distinguishing between truthful and deceptive persons, but because they induce examinees to make more comprehensive disclosures that are useful in an investigation. For this reason, use of polygraph examinations for national security clearance investigations would appear to possess a rational basis sufficient to withstand substantive due process scrutiny. See Anderson v. City of Philadelphia, 845 F.2d 1216 (3d Cir.1988) (use of polygraph for preemployment screening by city police does not violate equal protection or substantive due process; in absence of scientific consensus, reasonable administrators could conclude that polygraph testing can distinguish between truthful and deceptive persons with greater accuracy than chance, and it was rational for administrators to conclude that use of polygraph examinations results in fuller, more candid disclosure).
D. Count 4: Equal Protection
60
Stehney contends NSA's exemption of "world class mathematicians" from its polygraph requirement, but not her, violates her constitutional right to equal protection because there is no rational basis for this distinction. The district court dismissed this claim. Stehney, 907 F.Supp. at 823-24. We agree.
61
As we have noted, there is no fundamental right to a security clearance. See Department of Navy v. Egan, 484 U.S. 518, 528, 108 S.Ct. 818, 824, 98 L.Ed.2d 918 (1988) ("It should be obvious that no one has a "right" to a security clearance.") Nor are "non-world class mathematicians" a protected class for equal protection purposes. NSA's policy "must be upheld against equal protection challenge if there is any reasonably conceivable state of facts that could provide a rational basis for the classification." F.C.C. v. Beach Communications, Inc., 508 U.S. 307, 313, 113 S.Ct. 2096, 2101, 124 L.Ed.2d 211 (1993). NSA exempts a small number of internationally renown mathematicians from its polygraph requirement to facilitate their recruitment for temporary consulting positions. United States Government memorandum, "Security Processing for IDA Professional Staff Members and World Class Mathematicians", JA 46. As the district court aptly observed:
62
In light of the recognized potential for "lost talent when suitable individuals refuse to participate in a polygraph examination", see Redefining Security, A Report to the Secretary of Defense and the Director of Central Intelligence, Joint Security Commission (February 28, 1994) ... it is hardly irrational to think that there may be rare and singular circumstances where the unique talents of an especially gifted cryptologist expert may be so important to the protection of national security--and needed so desperately and immediately--that the interest in procuring his or her services outweighs the increase in security risks occasioned by foregoing a polygraph on a one-time basis.
63
There is a rational basis for NSA's classification. Stehney's equal protection claim was properly dismissed.
64
Stehney also claims NSA's polygraph exemption for world class mathematicians, though facially neutral, has an indirect discriminatory effect on women. But a facially neutral policy does not violate equal protection solely because of disproportionate effects. Instead a plaintiff must allege that a classification was adopted " 'because of,' not merely 'in spite of' its adverse effects upon an identifiable group." Personnel Adm'r. of Massachusetts v. Feeney, 442 U.S. 256, 27172, 99 S.Ct. 2282, 2292, 60 L.Ed.2d 870 (1979). "Proof of ... discriminatory intent or purpose is required to show a violation of the equal protection clause." Village of Arlington Heights v. Metropolitan Housing Dev. Corp., 429 U.S. 252, 265, 97 S.Ct. 555, 563, 50 L.Ed.2d 450 (1977). Stehney did not allege that the facially neutral exemption from the polygraph requirement was adopted with the intent to discriminate against women, and so her claim was properly dismissed.
65
E. Count 5: New Jersey Employment Law Violation
66
New Jersey law provides "a cause of action for wrongful discharge when the discharge is contrary to a clear mandate of public policy." Pierce v. Ortho Pharmaceutical Corp., 84 N.J. 58, 72, 417 A.2d 505, 512 (1980). Under New Jersey law, an employer commits a misdemeanor if it requests an employee to take a lie detector test as a condition of employment.9 Relying on this statute as evidence of New Jersey's public policy, Stehney contends she has a state law cause of action for wrongful discharge against NSA and the Institute. The district court held the New Jersey anti-polygraph statute was preempted by a federal statute, the Employee Polygraph Protection Act (EPPA), 29 U.S.C. § 2001-2009. Stehney, 907 F.Supp. at 824-25.10 We agree.
67
In English v. General Electric Co., 496 U.S. 72, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990), the Supreme Court held state law may be preempted in three circumstances:
68
First, Congress can define explicitly the extent to which its enactments preempt state law.... Second, in the absence of explicit statutory language, state law is pre-empted where it regulates conduct in a field that Congress intended the Federal Government to occupy exclusively.... Finally, state law is pre-empted to the extent that it actually conflicts with federal law. Thus, the Court has found preemption where it is impossible for a private party to comply with both state and federal requirements, or where state law stands as an obstacle to the accomplishment of the full purposes and objectives of Congress.
69
English, 496 U.S. at 78-79, 110 S.Ct. at 2274-75 (internal quotations and citations omitted).
70
Application of these standards demonstrates the New Jersey statute is preempted by federal law.
71
As a threshold matter, we note NSA was never Stehney's employer. Furthermore, the Employee Polygraph Protection Act, 29 U.S.C. §§ 2001-2009, exempts NSA from coverage under the New Jersey statute. Sections 2006 and 2009 of the Act provide that states may not regulate or prohibit the federal government from requiring employees of NSA contractors to take polygraph examinations.11 Stehney was an employee of a contractor to NSA, and falls within the scope of the Act's preemption provisions. For that reason, the New Jersey polygraph statute is preempted to the extent it may prohibit NSA from administering a polygraph examination to a person in Stehney's position. No public policy can flow from a preempted statute. Stehney therefore has no state law action for wrongful discharge against NSA.
72
The preemption analysis with respect to the Institute is different. The Institute was Stehney's employer and thus falls within the scope of the New Jersey polygraph statute. Moreover, the explicit language of 29 U.S.C. § 2006(b)(2)(A)(iii) applies only to actions by the federal government, and does not expressly preempt state regulation of private sector NSA contractors. Nevertheless, it is clear that the New Jersey statute is preempted when applied to private sector NSA contractors, for it comprises "an obstacle to the accomplishment of the full purposes and objectives" of federal law. Were the courts to give effect to the New Jersey polygraph law in this context, it would undermine the clear purpose and objective of 29 U.S.C. §§ 2006 and 2009--to shield use of polygraph examinations by the federal government for national security purposes from state regulation. It would also, incidentally, prevent any New Jersey employer from serving as an NSA contractor, an impermissible state interference with exclusive federal responsibility in matters of national security.
73
F. Count 6: New Jersey Anti-Discrimination Law
74
After dismissing counts 1 through 5, the district court declined to exercise supplemental jurisdiction over the remaining state law claim pursuant to 28 U.S.C. § 1367. This decision is committed to the discretion of the district court. Growth Horizons, Inc. v. Delaware County, Pa., 983 F.2d 1277, 1284-85 (3d Cir.1993). Because all federal claims were correctly dismissed and the district court found that dismissal of the remaining state claim would not be unfair to the litigants or result in waste of judicial resources, we see no abuse of discretion.
V. Conclusion
75
For the foregoing reasons, we will affirm the judgment of the district court.
*
The Honorable Gustave Diamond, United States District Judge for the Western District of Pennsylvania, sitting by designation
1
DCID 1/14 is a directive issued by the Director of Central Intelligence governing personnel security standards and procedures controlling eligibility for access to classified information. DCID 1/14 was issued under Section 102 of the National Security Act of 1947 and Executive Order 12333, and became effective January 22, 1992
2
The polygraph measures changes in blood pressure, pulse, respiration and electrodermal activity (perspiration on fingertips) in reaction to questions asked during the interview. The changes, which are recorded on pen registers, provide indications of stress or anxiety that might not otherwise be apparent to an interviewer. When stress reactions appear on a subject's polygraph chart, the examiner asks follow-up questions with the instrument turned off to try to determine possible reasons for the reactions. The subject is encouraged to volunteer information that may help identify factors that may have caused the reactions. If necessary, further interviews with the polygraph may be conducted to clarify or narrow unresolved issues. Dep't. of Defense Reg. 5210.48-R, Ch. 1
3
In reinvestigation examinations, the polygraph interview is limited to counterintelligence questions focusing on espionage, sabotage, deliberate damage to government information systems, deliberate disclosure of classified information, and undisclosed contracts with foreign nationals. NSA/CSS Reg. 122-3 § IV. This policy prohibits inquiry into an individual's thoughts, beliefs or conduct not relevant to national security. Relevant questions are reviewed with the examinee before the polygraph is activated
4
Under the political question doctrine, the federal courts decline to adjudicate certain types of cases because of constitutional or prudential concerns regarding separation of powers, institutional competence, or the maintenance of the judiciary's authority. In Baker v. Carr, 369 U.S. 186, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962), the Supreme Court noted that the doctrine embraces six distinct categories of cases, involving either: (1) "a textually demonstrable constitutional commitment to a coordinate political department"; (2) "a lack of judicially discoverable and manageable standards for resolving it"; (3) "the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion"; (4) "the impossibility of a court's undertaking independent resolution without expressing lack of the respect due to coordinate branches of government"; (5) "an unusual need for unquestioning adherence to a political decision already made"; or (6) "the potentiality of embarrassment from multifarious pronouncements by various departments on one question."
5
50 U.S.C. § 835 provides: "Subchapter II of chapter 5, and chapter 7, of title 5, shall not apply to the use or exercise of any authority granted by this subchapter."
6
The Supreme Court stated the requirements for granting a writ of mandamus in Allied Chemical:
In order to insure that the writ will issue only in extraordinary circumstances, this Court has required that a party seeking issuance have no other adequate means to attain the relief he desires, and that he satisfy the "burden of showing that [his] right to issuance of the writ is 'clear and indisputable.' " Allied Chemical Corp. v. Daiflon, Inc., 449 U.S. 33, 35, 101 S.Ct. 188, 190, 66 L.Ed.2d 193 (1980) (internal citations omitted): court cites to and quotes from Kerr v. United States Dist. Ct. for N. Dist. of Cal., 426 U.S. 394, 96 S.Ct. 2119, 48 L.Ed.2d 725 (1976); Roche v. Evaporated Milk Ass'n, 319 U.S. 21, 63 S.Ct. 938, 87 L.Ed. 1185 (1943); Bankers Life and Cas. Co. v. Holland, 346 U.S. 379, 74 S.Ct. 145, 98 L.Ed. 106 (1953); United States ex rel Bernardin v. Duell, 172 U.S. 576, 19 S.Ct. 286, 43 L.Ed. 559 (1899).
7
These decisions appear to be in tension with the Supreme Court's assumption in Cafeteria and Restaurant Workers Union, Local 473, AFL-CIO v. McElroy, 367 U.S. 886, 81 S.Ct. 1743, 6 L.Ed.2d 1230 (1961), that a private sector worker who loses employment because of revocation of a security pass possesses a constitutionally protected interest warranting due process protections
8
It is not clear that this claim falls within the scope of due process at all. See Greene, 360 U.S. at 493, 79 S.Ct. at 1411-12 (declining to reach due process argument; deciding case on "narrower" ground of "authorization")
9
N.J.Stat.Ann. § 2C:40A-1 provides: "Any person who as an employer shall influence, request or require an employee to take or submit to a lie detector test as a condition of employment or continued employment, commits a disorderly persons offense."
10
The district court also ruled that the New Jersey statute was preempted by Article I § 8 and Article II § 2 of the United States Constitution. We do not reach this issue
11
§ 2009 of the act provides, in part:
Except as provided in subsections (a), (b), and (c) of section 2006 of this title, this chapter shall not preempt any provision of any state or local law ... that prohibits lie detector tests or is more restrictive with respect to lie detector tests than any provision of this chapter.
§ 2006(b)(2) provides, in part:
(2) Security
Nothing in this chapter shall be construed to prohibit the administration, by the Federal Government, in the performance of any intelligence or counterintelligence function, of any lie detector test to--
(A)(i) any individual employed by, assigned to, or detailed to, the National Security Agency, the Defense Intelligence Agency, the Central Imagery Office, or the Central Intelligence Agency,
(ii) any expert or consultant under contract to any such agency,
(iii) any employee of a contractor to any such agency.... | 01-03-2023 | 04-17-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/227959/ | 191 F.2d 949
ROWLEYv.UNITED STATES.
No. 14353.
United States Court of Appeals Eighth Circuit.
October 31, 1951.
William R. Hirsch, St. Louis, Mo., for appellant.
William J. Costello, Asst. U. S. Atty., St. Louis, Mo. (Drake Watson, U. S. Atty., St. Louis, Mo., on the brief), for appellee.
Before GARDNER, Chief Judge, and WOODROUGH and RIDDICK, Circuit Judges.
GARDNER, Chief Judge.
1
This appeal is from an order denying a motion of defendant (appellant) to vacate a sentence of imprisonment imposed on him December 29, 1950. On December 22, 1950, an information was filed against defendant in three counts, for violation of the National Stolen Property Act, Sec. 2314, and Section 2(b), Title 18 U.S. Code. The first count charged that defendant "unlawfully, wilfully, knowingly and feloniously, and with unlawful and fraudulent intent, did transport and cause to be transported in interstate commerce, to-wit, from the City of St. Louis, in the State of Missouri, within the Eastern Division of the Eastern Judicial District of Missouri, and within the jurisdiction of the Court aforesaid, to the City of San Francisco, in the State of California, a certain falsely made, forged and counterfeited security, to-wit, a certain falsely made, forged and counterfeited Bank of America travelers cheque in the amount of Fifty Dollars ($50.00), bearing number A-4535743, and signed `Lenn E. Allen'; that said security was then and there, as defendant well knew, false, forged and counterfeit, in that the purported signatures of Lenn E. Allen appearing upon said cheque were false, forged and counterfeit, contrary to the terms and provisions of Section 2314 and Section 2(b), Title 18, United States Code." The second count is identical with the first except that the number of the cheque differed from that given in the first count. The third count is substantially the same as the first except that the cheque therein described was for $100 instead of $50, and purported to be a travelers cheque of the American Express Company.
2
On December 26, 1950, defendant filed a motion to dismiss alleging that the information on its face showed that the Bank of America travelers cheques were neither falsely made, forged, nor counterfeited. This motion was denied. Defendant on December 29, 1950, entered a plea of guilty to each of the three counts and was sentenced to a term of four years on each count, such terms to run concurrently. On January 27, 1951, he filed a motion to vacate the sentence on the ground that "The record on its face, including the United States' exhibits, shows that this court has no jurisdiction of the defendant because said record shows that the securities herein were neither falsely made, forged, altered or counterfeited, and the court erred in not dismissing the information." This motion was overruled and defendant prosecutes this appeal from the order overruling his motion. He seeks reversal on the same grounds urged in his motion to vacate the sentence.
3
It is said in appellant's brief that the cheques were stolen from a bank in Iowa. They were duly signed and issued but they bore the name of no payee on the line therefor in the upper left hand corner of the instruments, nor were they endorsed, the line therefor in the lower right hand corner of the instruments being blank. After they came into the possession of the defendant in the State of Missouri he inscribed in his own handwriting on the blank line in the upper left hand corner of the instruments the name "Lenn E. Allen." According to the information they were transported by him in interstate commerce after this alteration.
4
The information is couched in the language of the statute. Section 2314, and Section 2(b), Title 18 U.S. Code. The Act does not define forgery but according to Blackstone's definition, which is cited by defendant, it may be defined as "The fraudulent making or alteration of a writing to the prejudice of another man's rights." The information in effect charges that after these securities came into the hands of the defendant he altered them by inserting in the blanks, in his own handwriting, the fictitious name "Lenn E. Allen." This was done with the manifest intent to defraud and he thereafter transported them in interstate commerce. The travelers cheques were payable to order when countersigned by Lenn E. Allen. The obligation created by the issuance of the cheques as against the bank issuing them was complete when the checks were issued even though they required the signature of the one to whom issued and they constituted a security within the purview of the statute. Pines v. United States, 8 Cir., 123 F.2d 825. The information charged a Federal offense and defendant pleaded guilty to the offense so charged and he can not now be heard to say that he in fact did not commit any offense. The instruments were materially altered and given vitality and it is well settled that the crime of forgery may be committed by the signing of a fictitious or assumed name, provided, of course, that the instrument as so completed is made with intent to defraud. United States v. Turner, 7 Pet. 132, 8 L. Ed. 633; Maloney v. State, 91 Ark. 485, 121 S.W. 728; People v. Campbell, 160 Mich. 108, 125 N.W. 42, 34 L.R.A., N.S., 58; State v. Warren, 109 Mo. 430, 19 S.W. 191; State v. Larson, 39 S.D. 120, 163 N.W. 566.
5
As the information charged a Federal offense the court had jurisdiction and if on trial the proof failed to show a Federal offense that question could be raised by motion for acquittal, which if denied could be reviewed on appeal. The case of Martyn v. United States, 8 Cir., 176 F.2d 609, is strongly relied on by defendant but in that case the information affirmatively showed that it did not charge a Federal offense. In that case the information itself showed that the checks were not forgeries. They were completed instruments drawn by the party who purported to sign them upon a bank actually existing. The instruments might have been proof of the offense of obtaining money under false representations but the instruments as described were not forgeries.
6
But there are procedural reasons why the order appealed from must be affirmed. It is universally held that a motion to vacate a sentence or an application for writ of habeas corpus may not be resorted to as a substitute for an appeal. In an opinion of this court, Keto v. United States, 189 F.2d 247, 251, handed down after the motion in this case had been determined by the trial court, the broad question of proper procedure in cases involving motion to vacate sentence was considered with a view of determining for future guidance the controlling principles. We there held that after conviction a sentence is not open to collateral attack on the ground that the information or indictment on which it was based was defective; that such a motion may be urged on such grounds as might be available in a habeas corpus proceeding but that a judgment invulnerable to attack by habeas corpus is likewise invulnerable to attack on motion to vacate judgment. After reviewing many authorities we said: "The rule, then, is that the sufficiency of an indictment or information is not open to collateral attack after conviction unless it appears that the circumstances are exceptional, that the questions raised are of `large importance', that the need for the remedy sought is apparent, and that the offense charged was one of which the sentencing court manifestly had no jurisdiction."
7
In this case there are no such exceptional circumstances as to warrant collateral attack on the indictment or information after conviction.
8
The order here appealed from is therefore affirmed. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/2857965/ | BOND V. ERS
IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-91-203-CV
DORIS C. BOND,
APPELLANT
vs.
EMPLOYEES RETIREMENT SYSTEM OF TEXAS,
APPELLEE
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT
NO. 471,573, HONORABLE JOSEPH H. HART, JUDGE PRESIDING
Doris C. Bond, appellant, applied to the Employees Retirement System of Texas
(ERS), appellee, for occupational disability retirement benefits. The ERS denied Bond's
application, and she sought judicial review of that decision pursuant to the Administrative
Procedure and Texas Register Act (APTRA), Tex. Rev. Civ. Stat. Ann. art. 6252-13a, § 19
(Pamph. 1992). The trial court upheld the administrative decision, and Bond perfected this
appeal. We will affirm the judgment of the trial court.
BACKGROUND
The facts of the case are undisputed. Bond was employed as a nurse with the Texas
Department of Corrections (1) at the Ramsey II Unit in Rosharon, Texas. On February 28, 1986,
her supervisor told her to attend a staff meeting on what would have been her day off. Bond
drove to the meeting and parked her truck in the parking lot of the Ramsey II Unit. The weather
was stormy that day, and as Bond got out of her truck in the parking lot, a strong gust of wind
caused the truck door to strike her right knee and leg. As a result, Bond's knee was severely, and
likely permanently, injured.
Thereafter, Bond applied to the ERS for occupational disability retirement benefits.
On consideration of her application, the Employees Retirement System Medical Board certified
that Bond was disabled. On review by the executive director of the ERS, however, Bond's
application was denied on the basis that her disability was not within the statutory definition of
"occupational disability," i.e., that it did not directly result from an inherent risk or hazard
peculiar to her duties arising from and in the course of her employment with the Texas
Department of Corrections. Bond sought judicial review of that administrative decision, and the
trial court upheld the denial of her claim. In two points of error, Bond asserts that the decision
of the ERS is not supported by substantial evidence.
DISCUSSION
The Employees Retirement System is established and governed by Tex. Gov't Code
Ann. §§ 810.001-815.507 (Pamph. 1992). In that statute, the legislature has defined
"occupational disability" to mean a "disability from an injury or disease that directly results from
a specific act or occurrence determinable by a definite time and place, and directly results from
an inherent risk or hazard peculiar to a duty that arises from and in the course of state
employment." § 811.001(12). In this case, there is no dispute that Bond suffered an injury that
directly resulted from a specific act or occurrence determinable by a definite time and place. The
only issue is whether Bond's injury directly resulted from an inherent risk or hazard peculiar to
a duty that arose from and in the course of her state employment.
We begin our analysis by reviewing the statute itself. The primary goal of statutory
construction is to effectuate the intent of the legislature. Harris County Dist. Attorney's Office
v. J.T.S., 807 S.W.2d 572, 574 (Tex. 1991). We must search for that intent in the language of
the statute. See Seay v. Hall, 677 S.W.2d 19, 25 (Tex. 1984). The legislature did not define the
phrase "inherent risk or hazard peculiar to a duty." Nor does a survey of the legislative history
of the statute shed any light on the meaning of the phrase. Therefore, in construing the statute,
we will apply the ordinary meaning of the terms therein. See Hopkins v. Spring Indep. School
Dist., 736 S.W.2d 617, 619 (Tex. 1987); Tex. Gov't Code Ann. § 311.011(a) (1988).
Reading the language of the statute, we conclude that the legislature clearly
intended to limit the scope of "occupational disability." First, in order to constitute an
"occupational disability," the employee's injury must directly result from a risk or hazard inherent
in a duty of the employee that arises from and in the course of his or her state employment.
Second, the inherent risk or hazard must also be peculiar to such a duty. The term
"inherent" is ordinarily defined to mean "involved in the constitution or essential character of
something; belonging by nature or settled habit." G. & C. Merriam Co., Webster's Third New
International Dictionary 1163 (1969). Therefore, a duty of the state employee must by its nature
give rise to the risk or hazard from which the injury results. The term "peculiar" is ordinarily
defined to mean "tending to be characteristic of one only; distinctive; different from the usual or
normal; singular; special; particular." Id. at 1663. Thus, the risk or hazard must also be
particular to or distinctively characteristic of a duty arising from and in the course of the person's
state employment. With these definitions, therefore, and our determination that the legislature
intended to limit the scope of "occupational disability," we now turn to the facts of the present
case.
As stated above, Bond's supervisor told her to attend a staff meeting on what would
have been her day off. Even assuming arguendo that by driving to work and exiting her truck to
attend a staff meeting, Bond was fulfilling a duty arising from and in the course of her state
employment, we conclude that Bond's disability is not an "occupational disability" as that term
is defined in the statute. There is no evidence in the record that the risk of injury from high wind
was particular to or distinctively characteristic of Bond's duty to attend a staff meeting. This was
not a case in which Bond was injured while working with patients as a nurse. See, e.g.,
Employees Retirement Sys. v. Hill, 557 S.W.2d 819 (Tex. Civ. App. 1977, writ ref'd n.r.e.).
Rather, Bond's injury resulted from a risk to which all persons in the vicinity of the storm were
exposed. There is no evidence that Bond was exposed, by virtue of her duty to attend a staff
meeting, to a risk different from that experienced by every other person who entered or exited
their car that day. We conclude, therefore, that Bond's injury did not directly result from a risk
or hazard peculiar to a duty arising from and in the course of her employment as a nurse with the
Texas Department of Corrections.
CONCLUSION
Based on our foregoing discussion, we hold that substantial evidence supports the
ERS's conclusion that Bond's disability was not an "occupational disability" as that term is defined
in the statute. Therefore, we overrule Bond's points of error and affirm the judgment of the trial
court.
J. Woodfin Jones, Justice
[Before Justices Powers, Jones and B. A. Smith; Justice Powers not participating]
Affirmed
Filed: March 11, 1992
[Publish]
1. Now the institutional division of the Texas Department of Criminal Justice. | 01-03-2023 | 09-05-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/8304429/ | *222Me. Justice Dyer
delivered the opinion of the Court.
This cause comes to this Court by the grant of certi-orari. The sole issue on this appeal is the nature of the estate created by the following item in the Last Will and Testament of Mary Rachel Watson, deceased:
I will, devise and bequeath unto my brother, L. T. Peebles and my sister, Margaret Peebles, jointly and equally all the estate, property and effects, both real and personal, of which I may die the owner, including any insurance that at that time, be in existence upon my life.
In case of the death of either of the above-named de-visees or legatees I will and direct that the survivor of them shall take the one-half of which the deceased may *223be the owner at the time of the death of the one so dying.
This Will executed on February 4, 3939, was duly admitted to probate on February 1, 1958, upon the death of the testatrix on December 31,1957. The devisees, L. N. Peebles and sister, Margaret Peebles, went into posession of this property holding same as devised by the Will until the death of L. N. Peebles, intestate, on December 9,1958. L. N. Peebles was survived by his widow, Mrs. Gertrude Peebles and one child, Mary Lynn Peebles Odie, respondents in this Court, who contend under the terms of the Will the property was devised to L. N. Peebles and Margaret Peebles, as tenants in common, and that Mary Lynn Peebles Odie takes, by inheritance, her father’s interest subject to the rights of his widow. Margaret Peebles, petitioner in this Court, contends the Will created in this property a right of survivorship between her and her brother, L. N. Peebles, and that she as surviving devisee would take her brother’s interest in the property. Thus the issue is made.
Respondents cite and rely upon T.C.A. section 64-107, which is as follows:
In all estates, real and personal, held in joint tenancy, the part or share of any tenant dying shall not descend or go to the surviving tenant or tenants, but shall descend or be vested in the heirs, executors, or administrators, respectively, of the tenant so dying, in the same manner as estates held by tenancy in common.
Under the holdings in McLeroy v. McLeroy, 163 Tenn. 124, 40 S.W.2d 1027 (1931); Jones v. Jones, 185 Tenn. 586, 206 S.W.2d 801 (1947); and Runions v. Runions, 186 Tenn. 25, 207 S.W.2d 1016, 1 A.L.R.2d 242 (1948), *224we do not think the statute (64-107) is applicable to the case at bar.
In McLeroy v. McLeroy, supra, the holdings of this Court in regard to T.C.A. section 64-107 is that where an instrument creates an estate in joint tenancy, nothing else appearing, the right of survivorship as an incident thereto is abolished by the statute; but where the instrument by express words or necessary implication manifests an intention to create an estate with a right of survivorship, then this statute has no application.
In Jones v. Jones, supra, this Court, citing McLeroy v. McLeroy, supra, and Tiffany, Real Property (3d ed) Volume 2, Section 418, stated:
It is true at common law where the attributes of a technical joint tenancy resulted by operation of law, and not necessarily from the expressed intent of the parties, the unities of time, title, interest, and possession must have been present in order that the special estate be created. By section 7604 of Williams * Code the most important characteristic of joint tenancy— survivorship — has been abolished in this State, but under our holdings the statute does not abridge the right of the owner of property to expressly provide for survivorship by deed. Survivorship' must now result from the terms of the grant rather than by operation of law.
Since the enactment of the Code section above referred to, the common-law unities requisite to joint tenancy have become academic as applied to that estate, a tenancy in common resulting if no contrary intent is expressed, whether or not the unities are present. When the intent to establish an estate by survivorship *225is clear, the existence or nonexistence of the unities becomes immaterial upon the idea that the rule fails where the reason fails. 185 Tenn. at 591, 206 S.W.2d at 803.
In Runions v. Runions, supra, the husband by deed conveyed a one-half undivided interest in a tract of land to his wife. The deed contained the following language: “It is intended to convey the property herein described so that we hold the same as tenants by the entirety.”
Upon the death of the husband the issue was made as to the extent of the ownership of the wife (widow) under this deed. This Court found this deed created neither a common law joint tenancy nor a tenancy by the entirety since the four unities of interest, time, title and possession were not present, but did create a tenancy in common since such required only a unity of possession. The issue then was whether this deed creating a tenancy in common either by express words or necessary implication manifested an intention to create an estate with the right of survivorship. The Court held under the language in the deed copied above in this opinion the grantor manifested a clear intention to create a right of survivor-ship, which annexed to a tenancy in common violates no rule or statute or common law. It should be noted that the deed in the Bunions case was executed and delivered prior to the enactment of T.C.A. section 64-109', allowing direct conveyances between husband and wife to create tenancies by the entireties,
Under the three cases first above cited it is clear T.C.A. section 64-107 has no application where the instrument creating the estate either by express language *226or necessary implication manifests an intention to create a right of survivorship.
In the case at bar the decision will turn upon the construction of the language of the Will to determine if the testatrix either by express language or necessary implication manifests an intention to create a right of sur-vivorship. The basic canon of will construction is stated in Hamilton National Bank v. Touriansky, 197 Tenn. 245, 271 S.W.2d 1, (1954), as follows:
The settled rule is that the intention of the testator, as gathered from the language of the will, must be given effect if it can be done without contravening some rule of property or some fixed rule of law or public policy.
The item of the Will above copied contains two sentences. Under the first sentence it is clear that the testatrix devised her estate jointly and equally to her brother and sister. It is immaterial whether the language of this first sentence be construed to create a joint tenancy or a tenancy in common since the result is the same. The testatrix can, by express language or by necessary implication, create in the property devised a right of survivorship which brings us to the difficult language of the second sentence.
The language used in the second sentence “in case of death” admittedly refers to the death of one of the devisees. The respondents insist the reference here to death of devisee means death during the life of the testatrix, and the gift over by survivorship would only take effect upon such occurrence.
We think the intention of the testatrix expressed by the language of this second sentence can be determined *227by asking one question: Upon the death of a devisee just what property will the surviving devisee take? The testatrix answered this question by stating a survivor will “take the one-half of which the deceased may be the owner at the time of the death of the one so dying. ’ * This language negates the testatrix was referring to the death of a devisee during her lifetime. A deceased devisee would not be the owner of any of this property during the lifetime of the testatrix. In order to give effect to this language used by the testatrix as we are required to do, the language by necessary implication requires a construction that testatrix intended to create a right of survivorship between the two devisees and we so hold.
The judgment of the Court of Appeals is reversed and the cause remanded to the Chancery Court of Benton County for further orders or proceedings made necessary by this opinion.
BuRNett, Chief Justice, and ChattiN, CresoN and Humphreys, Justices, concur. | 01-03-2023 | 10-17-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/1556370/ | STATE OF LOUISIANA,
v.
WILLIAM THURMAN.
No. 2009 KA 1627.
Court of Appeals of Louisiana, First Circuit.
March 26, 2010.
Not Designated for Publication
SCOTT PERRILLOUX, District Attorney, A. BRADLEY BERNER, Assistant District Attorney, Amite, Louisiana, Counsel for Appellee, State of Louisiana.
PRINTICE WHITE, Baton Rouge, Louisiana, Counsel for Defendant/Appellant, William Thurman.
Before: DOWNING, GAIDRY and McCLENDON, JJ.
McCLENDON, J.
Defendant, William Thurman, was charged by bill of information with one count of aggravated burglary, a violation of LSA-R.S. 14:60. He entered a plea of not guilty.[1] Following a jury trial, defendant was found guilty of the responsive offense of simple burglary, a violation of LSA-R.S. 14:62. He was sentenced to twelve years at hard labor. The state then filed a habitual offender bill of information against defendant, alleging that he was a third-felony habitual offender. Following a hearing, defendant was adjudged a second-felony habitual offender. The court vacated the previously imposed sentence and sentenced him to twenty-four years. Defendant now appeals, designating the following assignments of error:
1. It was a violation of defendant's speedy trial rights to resentence him as a habitual offender over a year after his original sentencing.
2. The trial court committed manifest error in resentencing defendant as a habitual offender after sentencing him for simple burglary.
3. The trial court committed manifest error in not conducting a hearing on the motion to quash.
4. Defendant's conviction and sentence were in violation of the constitutions of the United States of America and the State of Louisiana; specifically, trial counsel's representation during defendant's trial was of such low caliber that it amounted to no representation at all.
5. The original sentence of twelve years imposed herein is wholly and totally illegal and unconstitutional, based on the premise that it was not imposed by the trial judge.
6. The habitual offender sentence is wholly and totally illegal and unconstitutional, based on the premise that the predicate conviction is constitutionally infirm.
7. The verdict is contrary to the law and evidence.
For the following reasons, we affirm the conviction, habitual offender adjudication, and sentence.
FACTS
The victim, Bonnie Ferrara Shelton, testified at trial. She was familiar with defendant because he had been friends with Leroy, her ex-husband. She separated from Leroy in October 2001. Shelton denied having any type of relationship with defendant in 2001 and estimated that she was in his presence only three times that year. She also denied selling drugs to defendant or anyone else.
According to Shelton, on December 16, 2001, at approximately 5:00 a.m., she was awakened by someone calling her name, knocking on her bedroom window, and beating on her door. She recognized defendant's voice and opened her side door. Defendant stated, "Leroy owes me money, pills, I need some money." Shelton told defendant that she did not have any money and asked him to leave. Defendant told her that he was not going anywhere and put his foot in the door to keep her from closing it. Shelton turned to go to her bedroom to get a telephone, and defendant and another man, who had his face covered by a towel, entered Shelton's home. Defendant shoved her down on her bed, and the other man, identified as Ronald Baker, began punching her. Shelton testified that Baker punched her first, but she then felt multiple blows at the same time. Shelton begged for her life and urinated on herself. After she was beaten for approximately ten minutes, the men stopped for a short time, but then beat her again. During the attack, Shelton saw Baker point to the victim's purse and saw defendant take the purse and walk out of the bedroom. Defendant told Shelton, "[D]on't call the law or we will come back and kill you."
The defense claimed that the offense was "a dope deal gone bad," that Shelton had invited defendant to her home, and that Baker was the only individual who had beaten Shelton. The defense presented the testimony of Geraldine A. Stewart, defendant's mother.
Stewart claimed that on December 16, 2001, at approximately 1:15 a.m., Shelton called her and stated that she (Shelton) had invited defendant to her home to pick up thirty dollars. According to Stewart, Shelton stated she used the money to pay a bill before defendant arrived, and he got mad and brought some guy with him that beat her up. Stewart also claimed that Shelton constantly flirted with defendant and told him to come by her house.
HABITUAL OFFENDER ADJUDICATION
In his first assignment of error, defendant argues that the habitual offender process was completed untimely in violation of his constitutional right to a speedy trial.
Although the habitual offender law, LSA-R.S. 15:529.1, does not prescribe a time within which a habitual offender bill of information must be filed, the Louisiana Supreme Court has determined that the district attorney must file the habitual offender bill within a reasonable time. Relying on the language of the statute regarding the filing, as opposed to the completion of the habitual offender proceeding, the supreme court has held that LSA-R.S. 15:529.1 does not allow an indefinite time in which the district attorney may file the multiple offender bill once the necessary information is available. State v. Muhammad, 03-2991, p. 14 (La. 5/25/04), 875 So. 2d 45, 54. The determination of whether the hearing is held within a reasonable time hinges on the facts and circumstances of the specific case. Muhammad, 03-2991 at p. 14, 875 So.2d at 55.
The United States Supreme Court has set forth four factors for courts to consider in determining whether or not a defendant's right to a speedy trial has been violated. Those factors are the length of the delay, the reasons for the delay, the accused's assertion of his right to speedy trial, and the prejudice to the accused resulting from the delay. While these factors are neither definitive nor dispositive in the context of a habitual offender proceeding, they are instructive. Muhammad, 03-2991 at pp. 14-15, 875 So.2d at 55.
In the instant case, defendant was convicted of simple burglary on October 22, 2003. Sentencing was set for November 5, 2003. At the hearing on November 5, 2003, the state indicated that it would be filing a habitual offender petition against defendant and moved that sentencing be continued. The defense requested immediate sentencing. The court sentenced defendant to twelve years at hard labor.
On December 10, 2003, the state filed a habitual offender bill of information against defendant. The minutes reflect that the next hearing, on January 14, 2004, which the state alleges was arraignment on the habitual offender bill, was continued, on motion of the defense, to February 10, 2004. On February 10, 2004, defendant denied the allegations of the habitual offender bill of information, and the motion date was set for May 5, 2004.
At the habitual offender hearing on May 5, 2004, the defense moved that the court hold the hearing but take the matter under advisement to allow the defense to move to quash the habitual offender bill. The state presented testimony and introduced exhibits into evidence in support of the habitual offender bill. The court set the matter for July 7, 2004, and gave the state and the defense thirty days to submit memoranda.
On July 7, 2004, the matter was continued to September 8, 2004. On September 8, 2004, defendant filed a motion to quash. Therein, he set forth that he had already been sentenced; a final sentence could not be amended to be more onerous for a defendant; the proceeding was barred by the concept of double jeopardy; and "[a]n Habitual Offender proceeding must take place before or as a part of sentencing." The court adjudged defendant a second-felony habitual offender and deferred sentencing to November 3, 2004. The November 3, 2004 sentencing was continued, on motion of the defense, to November 30, 2004. On November 30, 2004, the court vacated the original sentence and sentenced defendant to twenty-four years.
The habitual offender bill of information was filed against defendant within a reasonable time and there was no violation of his habitual offender "speedy trial" rights. Defendant was notified of the state's intent to pursue habitual offender proceedings against him at the time of the initial sentencing, i.e., prior to serving any sentence in the matter. The state filed a formal habitual offender bill approximately one month later. The habitual offender hearing was conducted less than six months later, and the ruling on defendant's habitual offender status was delayed upon specific request of the defense. Defendant's first complaint against the habitual offender proceeding was by an untimely motion to quash, filed approximately ten months after defendant was given notice of the state's intent to pursue habitual offender proceedings against him.
Defendant claims "there is no argument that [defendant] has been prejudiced by the undue delay of his resentencing." He cites the fact that the state chose to move forward with the original sentencing even though it intended to pursue habitual offender proceedings against him. Defendant's claim, however, is contradicted by the record. At the initial sentencing hearing, the state moved that the matter be continued because it would be filing a habitual offender bill, but the defense moved for immediate sentencing. Further, the fact that defendant was sentenced on the underlying offense prior to being sentenced as a habitual offender does not, in and of itself, establish prejudice. The habitual offender law specifically contemplates that habitual offender sentencing will follow sentencing on the underlying offense. See LSA-R.S. 15:529.1D(1)(a) ("If, at any time, either after conviction or sentence") and LSA-R.S. 15:529.1D(3) ("and shall vacate the previous sentence if already imposed"). Prejudice in connection with the right to speedy trial outside of the habitual offender context is assessed in light of the interest against preventing oppressive pretrial incarceration, the interest in minimizing anxiety and concern of the accused, and most importantly, the interest in limiting the possibility that the defense will be impaired. Barker v. Wingo, 407 U.S. 514, 532, 92 S. Ct. 2182, 2193, 33 L. Ed. 2d 101 (1972). Defendant's claim of prejudice is inadequate.
Defendant relies upon State v. Reaves, 376 So. 2d 136 (La. 1979), arguing that the court therein found that a delay of less than four months violated the defendant's right to a speedy trial. Reaves was arrested and charged on January 27, 1979, with the possession of a single marijuana cigarette. He was released on bail. He pleaded not guilty and trial was set for February 9, 1979. The trial date was continued "[f]or reasons that do not appear in the record" to March 5, 1979, and then to March 15, 1979. On March 15, 1979, the state moved to continue the matter because its key witness failed to appear, allegedly due to illness. The matter was reset for April 6, 1979. On April 6, 1979, the witness again failed to appear, and the court's effort to have the sheriff bring him to court immediately was unsuccessful. The state again moved to continue the matter, but the court refused. The state responded by nol-prossing the bill and, on the same day, filing a new bill charging the defendant with the same offense. On April 18, 1979, at arraignment on the new bill, the defendant moved to quash, asserting violation of his speedy trial rights. The trial court granted the motion, and the state appealed. Reaves, 376 So.2d at 137.
The court in Reaves found no error in the trial court's ruling. Reaves, 376 So.2d at 139. Applying the Barker factors, the court found that the weight to be ascribed to the length of the delay and the reason for the delay depended on the seriousness and complexity of the offense. The court found that since the case involved only a simple misdemeanor, the constitution would tolerate relatively brief delays. Additionally, the court found that the state had not been diligent in attempting to locate its key witness for at least two of the trial dates. Reaves, 376 So.2d at 138. The court excused the defendant's failure to move for speedy trial sooner because at each postponement, the trial was reset for a fairly near date. Reaves, 376 So.2d at 139. The court also relaxed the necessary showing of prejudice, finding that the requirement of prejudice for a misdemeanor was not as stringent as for a more serious or violent crime. Id.
Reaves is distinguishable from the instant case. The holding in Reaves was heavily influenced by the fact that the offense involved was a misdemeanor possession of a single marijuana cigarette. The offense in this case was far more serious than the offense before the court in Reaves. Thus, even under Reaves, defendant would be required to make a greater showing here under the Barker factors than the defendant in Reaves. Further, Reaves involved the defendant's right to speedy trial following arrest and prior to trial, rather than, as in the instant case, following conviction and prior to the completion of habitual offender proceedings. The risk of prejudice, i.e., the interest against preventing oppressive pretrial incarceration, the interest in minimizing anxiety and concern of the accused, and the interest in limiting the possibility that the defense will be impaired, is greater following arrest and prior to trial than following conviction and prior to the completion of habitual offender proceedings.
This assignment of error is without merit.
HABITUAL OFFENDER SENTENCING
In his second assignment of error, defendant argues that the trial court violated his right against double jeopardy by sentencing him and then "resentencing" him as a habitual offender. He concedes that the jurisprudence does not support his argument, but urges this court to reconsider the issue because the issue "has not been decided for quite some time."
Under Louisiana's habitual offender law, a bill of information alleging that a defendant is a recidivist does not charge a new crime but merely advises the trial court of circumstances, and seeks enhanced punishment following a defendant's most recent conviction. The enhancement of the penalty for habitual offenders convicted of a new felony only addresses itself to the sentencing powers of the trial judge after conviction and has no functional relationship to the innocence or guilt of the instant crime. Thus, a ruling at a multiple offender hearing is not a definitive judgment but merely a finding ancillary to the imposition of sentence. State v. Dorthey, 623 So. 2d 1276, 1278-79 (La. 1993) (citations omitted).
Furthermore, because the hearing is not a trial, legal principles, such as res judicata, double jeopardy, the right to a jury trial, and the like, do not apply. Louisiana's habitual offender statute is simply an enhancement of punishment provision. It does not punish status and does not on its face impose cruel and unusual punishment. Dorthey, 623 So.2d at 1279 (citations omitted).
The trial court did not violate defendant's right against double jeopardy by sentencing him as a habitual offender. Double jeopardy does not apply in the habitual offender context. See Dorthey, 623 So.2d at 1279. Defendant offers no authority to challenge the holding of Dorthey and thus provides no support for his argument.
This assignment of error is without merit.
FAILURE TO CONDUCT HEARING ON MOTION TO QUASH
In his third assignment of error, defendant argues that the record "appears silent" as to a hearing being held on the motion to quash. The record shows that, at the beginning of the habitual offender sentencing hearing on November 30, 2004, the court addressed the motion to quash, listened to the arguments of the state and the defense, and ruled against defendant.
This assignment of error is without merit.
INEFFECTIVE ASSISTANCE OF COUNSEL
In this assignment of error, defendant argues pro se that trial counsel rendered ineffective assistance because he (a) failed to object to other crimes evidence when Shelton testified that defendant stated "Leroy owes me money, pills, I need some money"; (b) failed to object to Shelton's "expert" opinion that she recognized defendant's voice; (c) failed to object to prosecutorial misconduct by the state in its opening statement when it sought sympathy from the jury by stating, "[a]s you can imagine, the state of mind [Shelton] was in, at that point in time, lying on her bed, two men had just entered her home, and had beaten her"; (d) failed to conduct a minimum investigation into the matter; and (e) failed to object to the admission into evidence of two photographs of Shelton because the record does not indicate that the photographs depicted her on the day of the offense.
A claim of ineffective assistance of counsel is generally relegated to post-conviction proceedings, unless the record permits definitive resolution on appeal. State v. Miller, 99-0192, p. 24 (La. 9/6/00), 776 So. 2d 396, 411, cert. denied, 531 U.S. 1194, 121 S. Ct. 1196, 149 L. Ed. 2d 111 (2001).
A claim of ineffectiveness of counsel is analyzed under the two-pronged test developed by the United States Supreme Court in Strickland v. Washington, 466 U.S. 668, 104 S. Ct. 2052, 80 L. Ed. 2d 674 (1984). In order to establish that his trial attorney was ineffective, the defendant must first show that the attorney's performance was deficient, which requires a showing that counsel made errors so serious that he was not functioning as counsel guaranteed by the Sixth Amendment. Secondly, the defendant must prove that the deficient performance prejudiced the defense. This element requires a showing that the errors were so serious that the defendant was deprived of a fair trial; the defendant must prove actual prejudice before relief will be granted. It is not sufficient for the defendant to show that the error had some conceivable effect on the outcome of the proceeding. Rather, he must show that but for the counsel's unprofessional errors, there is a reasonable probability the outcome of the trial would have been different. Further, it is unnecessary to address the issues of both counsel's performance and prejudice to the defendant if the defendant makes an inadequate showing on one of the components. State v. Serigny, 610 So. 2d 857, 859-60 (La.App. 1 Cir. 1992), writ denied, 614 So. 2d 1263 (La. 1993).
Assignment of error 4(a) is not subject to appellate review. Defense counsel's decision not to object to the challenged testimony may have been strategic. Testimony that defendant claimed that Leroy owed him money and pills was consistent with the defense at trial that Shelton invited defendant to her home as part of a conspiracy with defendant to sell drugs. Allegations of ineffectiveness relating to the choice made by counsel to pursue one line of defense as opposed to another constitute an attack upon a strategy decision made by trial counsel. State v. Allen, 94-1941, p. 8 (La.App. 1 Cir. 11/9/95), 664 So. 2d 1264, 1271, writ denied, 95-2946 (La. 3/15/96), 669 So. 2d 433. The investigation of strategy decisions requires an evidentiary hearing[2] and, therefore, cannot possibly be reviewed on appeal. Further, under our adversary system, once a defendant has the assistance of counsel, the vast array of trial decisions, strategic and tactical, that must be made before and during trial rest with an accused and his attorney. The fact that a particular strategy is unsuccessful does not establish ineffective assistance of counsel. State v. Folse, 623 So. 2d 59, 71 (La.App. 1 Cir. 1993).
Assignment of error 4(b) is without merit. Trial defense counsel did not perform deficiently in failing to object to the alleged "expert testimony" from Shelton. She was not testifying as an expert. Further, defendant's identity as one of the people who entered the victim's home was not at issue. Defendant did not dispute that he entered Shelton's home, and Shelton clearly saw his face and recognized him because he had been Leroy's friend.
Assignment of error 4(c) is also without merit. Trial defense counsel did not perform deficiently in failing to object to the challenged portion of the opening statement. The state did not commit prosecutorial misconduct. Rather, consistent with LSA-C.Cr.P. art. 766, the state set forth the nature of the evidence by which it expected to prove the charge. Moreover, even when the prosecutor's statements and actions are excessive and improper, credit should be accorded to the good sense and fair-mindedness of the jurors who have seen the evidence and heard the arguments. See State v. Bridgewater, 00-1529, pp. 31-32 (La. 1/15/02), 823 So. 2d 877, 902, cert. denied, 537 U.S. 1227, 123 S. Ct. 1266, 154 LEd.2d 1089 (2003).
Assignment of error 4(d) is not subject to appellate review. Decisions relating to investigation, preparation, and strategy cannot possibly be reviewed on appeal. State v. Lockhart, 629 So. 2d 1195, 1208 (La.App. 1 Cir. 1993), writ denied, 94-0050 (La. 4/7/94), 635 So. 2d 1132.
Assignment of error 4(e) is also without merit. Contrary to defendant's claim that the record does not indicate that the photographs in question depicted Shelton on the day of the offense, the record indicates that she specifically testified that the photographs fairly and accurately depicted her on the day of the offense.
This assignment of error is without merit.
ILLEGAL ORIGINAL SENTENCE
In his fifth assignment of error, defendant argues pro se that the original sentence, which was later vacated in connection with the habitual offender proceedings, was illegal because it was imposed by the state rather than by the court. Defendant relies on the transcript of the original sentencing which sets forth the prosecutor's name rather than "the court" next to the sentence. The minutes, however, indicate that the court, rather than the state, sentenced defendant. We pretermit consideration of this issue because error, if any, in the original sentencing was rendered moot when the original sentence was vacated.
This assignment of error is without merit.
HABITUAL OFFENDER PREDICATE OFFENSE
In his next assignment of error, defendant argues pro se that the record does not indicate that he was either convicted or pleaded guilty to predicate #1, his alleged January 9, 1995 guilty plea, under Twenty-first Judicial District Court Docket #71338, to possession with intent to distribute a schedule I controlled dangerous substance. The record indicates that in connection with the habitual offender proceedings, the state introduced into evidence documentation concerning predicate #1. That documentation included a minute entry indicating that defendant pleaded guilty to the challenged predicate offense.
This assignment of error is without merit.
SUFFICIENCY OF THE EVIDENCE
In his last assignment of error, defendant argues pro se that Shelton's account of the incident should be viewed with great suspicion because, even though she claimed she had urinated on her bed during the alleged attack, after the alleged attack, she went to the store instead of showering or changing clothes; because the initial investigative report did not corroborate injury to her eyes; and because she did not indicate that the owner of the store reacted to her injuries when he saw her after the alleged attack.
In reviewing claims challenging the sufficiency of the evidence, this court must consider "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, 319, 99 S. Ct. 2781, 2789, 61 L. Ed. 2d 560 (1979). See also LSA-C.Cr.P. art. 821B; State v. Mussall, 523 So. 2d 1305, 1308-09 (La. 1988).
Simple burglary is the "unauthorized entering of any dwelling, ... with the intent to commit a felony or any theft therein, other than as set forth in R.S. 14:60." LSA-R.S. 14:62A. After a thorough review of the record, we are convinced that a rational trier of fact, viewing the evidence presented in this case in the light most favorable to the state, could find that the evidence proved beyond a reasonable doubt, all of the elements of simple burglary and defendant's identity as the perpetrator of that offense. The verdict rendered against defendant indicates the jury accepted the testimony offered against defendant and rejected the testimony offered in his favor. As the trier of fact, the jury was free to accept or reject, in whole or in part, the testimony of any witness. State v. Johnson, 99-0385, p. 9 (La.App. 1 Cir. 11/5/99), 745 So. 2d 217, 223, writ denied, 00-0829 (La. 11/13/00), 774 So. 2d 971. On appeal, this court will not assess the credibility of witnesses or reweigh the evidence to overturn a fact finder's determination of guilt. State v. Glynn, 94-0332, p. 32 (La.App. 1 Cir. 4/7/95), 653 So. 2d 1288, 1310, writ denied, 95-1153 (La. 10/6/95), 661 So. 2d 464. Moreover, when there is conflicting testimony about factual matters, the resolution of which depends upon a determination of the credibility of the witnesses, the matter is one of the weight of the evidence, not its sufficiency. State v. Lofton, 96-1429, p. 5 (La.App. 1 Cir. 3/27/97), 691 So. 2d 1365, 1368, writ denied, 97-1124 (La. 10/17/97), 701 So. 2d 1331. Further, we cannot say that the jury's determinations were irrational under the facts and circumstances presented to them. See State v. Ordodi, 06-0207, p. 14 (La. 11/29/06), 946 So. 2d 654, 662. An appellate court errs by substituting its appreciation of the evidence and credibility of witnesses for that of the fact finder and thereby overturning a verdict on the basis of an exculpatory hypothesis of innocence presented to, and rationally rejected by, the jury. State v. Calloway, 07-2306, pp. 1-2 (La. 1/21/09), 1 So. 3d 417, 418 (per curiam).
This assignment of error is without merit.
CONVICTION, HABITUAL OFFENDER ADJUDICATION, AND SENTENCE AFFIRMED.
NOTES
[1] Ronald Baker was also initially charged by the same bill of information with the same offense. The bill was later amended as to Baker, to charge him with one count of theft, a violation of LSA-R.S. 14:67. Baker was not tried with defendant and is not a party to this appeal.
[2] Defendant would have to satisfy the requirements of LSA-C.Cr.P. art. 924, et seq., in order to receive such a hearing. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1560400/ | 945 A.2d 297 (2008)
AMERICAN EXPRESS BANK, FSB
v.
Cory JOHNSON.
No. 2007-222-Appeal.
Supreme Court of Rhode Island.
April 14, 2008.
*298 Joseph Rothemich, Esq., Coventry, for petitioner.
Raymond Ripple, Esq., Providence, for respondent.
Present: WILLIAMS, C.J., GOLDBERG, FLAHERTY, and SUTTELL, JJ.
OPINION
Justice SUTTELL, for the Court.
The defendant, Cory Johnson, appeals from the Superior Court's entry of summary judgment in favor of the plaintiff, American Express Bank, FSB (American Express), for $928,028.64, plus interest and costs. This case came before the Supreme Court pursuant to an order directing the parties to appear and show cause why the issues raised in the appeal should not be summarily decided. After considering the parties' arguments and memoranda, we are satisfied that cause has not been shown. Accordingly, we shall decide the appeal at this time. For the reasons stated in this opinion, we affirm the judgment of the Superior Court.
Facts and Procedural History
This case stems from defendant's zealous use of an American Express Business Platinum Card Account (the account). The account was opened in August 2005 in the names of Mr. Johnson and Mixitforme.com, a now-defunct business that specialized in selling discounted small electronics to consumers on the internet. According to the account statements, defendant used the credit card to purchase more than supplies and inventory for the business. Indeed, the statements reflect charges for stays in luxury villas and hotels, shopping sprees in Beverly Hills, California, private yacht charters, exotic car rentals, and international flights. Mr. Johnson disputed various charges, however, and the February 2006 statement contained the notation: "Your disputed charge is under review. There is no need for you to pay the disputed amount of $204,926.74 at this time." The specific charges that defendant disputed or his rationale for disputing those charges, however, is not in the record. On May 17, 2006, American Express filed this action against defendant to recover the sum of $947,126.81, plus costs and fees, alleging breach of contract, account stated, and unjust enrichment.[1]
*299 American Express filed a motion for summary judgment that was heard on February 12, 2007. At the hearing, defendant acknowledged liability for any amounts legitimately charged to the account, but argued that he should not be held responsible for the entire amount because he contested more than $200,000 of the charges on the account. The defendant filed an affidavit with the court stating that he disputed several of the charges on the account with American Express, but he failed to make any specific statements about which charges he was disputing. Based on the evidence at hand, the trial justice granted American Express's motion for summary judgment on the issue of liability and scheduled another hearing on the issue of damages.
At the second hearing on American Express's motion for summary judgment, defendant again failed to provide any additional information on the disputed amount. The defendant alleged that he was unable to produce a record of the charges he was contesting because once American Express canceled the account, defendant no longer had access to the account online.[2] The trial justice reasoned that "[i]f there is a dispute as to the accuracy of the [account] records, it shifts the burden to the defendant to poke holes in the amount stated * * * in those records" and that "[o]ther than coming forward and saying I don't owe that much, what [defendant] failed to do is come forward and say I specifically don't owe this amount." As a result, the trial justice granted plaintiffs motion for summary judgment for $928,028.64,[3] and on April 17, 2007, judgment was entered in favor of American Express.
On appeal, defendant argues that the trial justice erred in granting American Express's motion because defendant's affidavit presented an issue of material fact that precluded the entry of summary judgment.
Standard of Review
This Court reviews the granting of a motion for summary judgment on a de novo basis. DiBattista v. State, 808 A.2d 1081, 1085 (R.I.2002). "[W]e will affirm a summary judgment if, after reviewing the admissible evidence in the light most favorable to the nonmoving party, we conclude that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law." Lucier v. Impact Recreation, Ltd., 864 A.2d 635, 638 (R.I.2005) (quoting DiBattista, 808 A.2d at 1085). "Moreover, `a litigant opposing a motion for summary judgment has the burden of proving by competent evidence the existence of a disputed issue of material fact and cannot rest upon mere allegations or denials in the pleadings, mere conclusions or mere legal opinions.'" Tanner v. The Town Council of East Greenwich, 880 A.2d 784, 791 (R.I.2005) (quoting Lucier, 864 A.2d at 638).
Discussion
The defendant argues that the trial justice erred in granting American Express's motion for summary judgment because defendant disputed charges on the account with American Express before the account was closed. The defendant contends that the instant case is analogous to the factual situation in Visconti & Boren *300 Ltd. v. Bess Eaton Donut Flour Co., 712 A.2d 871, 872 (R.I.1998). In Visconti the Superior Court entered summary judgment in favor of the plaintiff law firm on a book-account claim after the plaintiff submitted invoices concerning the amount that the defendant owed. Id. The defendant objected on the grounds that genuine issues of material fact precluded summary judgment because the defendant's affidavit avowed that several specific charges submitted by the plaintiff were for legal representation that was negligently performed. Id. On appeal, this Court reversed the decision of the trial court and held that sufficient factual issues existed with regard to the invoices and the amount in dispute. Id. Mr. Johnson submits that the instant case mirrors Visconti because he stated in his affidavit that he had disputed numerous charges that never had been resolved. We disagree. Unlike the affidavit that the defendant submitted in Visconti the affidavit submitted by Mr. Johnson in the instant case consists of a mere conclusory statement that he had disputed numerous unspecified charges. He did not specify which charges he had challenged, nor did he come forward with evidence of the amount he alleged to be in dispute.
We believe this case to be more analogous to the facts underlying our opinion in Egan's Laundry & Cleaners, Inc. v. Community Hotel Corporation of Newport, R.I., 110 R.I. 719, 297 A.2d 348 (1972) (Egan's Laundry). In Egan's Laundry, the plaintiff filed a complaint to collect on a book account for laundry services rendered to the defendant. Id. at 720, 297 A.2d at 349. The defendant filed a reply that generally denied owing the amount stated in the plaintiffs book account. Id. at 720-21, 297 A.2d at 350. This Court stated that there exists "an affirmative duty on the adverse party to set forth facts showing that there is a genuine issue of fact that will be resolved at trial. Such party must act diligently and in good faith to rebut the evidence presented in support of the motion, and he may not save his evidence until the day of trial." Id. at 723, 297 A.2d at 351 (citing Gallo v. National Nursing Homes, Inc., 106 R.I. 485, 488, 261 A.2d 19, 21 (1970)).
Here, the defendant's affidavit fails to specify the charges he is challenging, the reasons he is challenging them, and the amounts he is disputing. An unsupported statement that the defendant has disputed some of the charges is insufficient to defeat the plaintiffs motion for summary judgment. As we said in Egan's Laundry, 110 R.I. at 723, 297 A.2d at 351, "the bald assertion that [factual issues] do exist is insufficient to place the [defendant] beyond the reach of summary judgment."
Conclusion
For the reasons stated in this opinion, we affirm the judgment of the Superior Court and remand the papers to the Superior Court.
Justice ROBINSON did not participate.'
NOTES
[1] The parties agree that the final account balance, excluding the disputed charges, was $928,068.64 because a credit of $19,058.17 was placed on the account after plaintiff filed its complaint.
[2] Mr. Johnson represented that the disputed charges were entered electronically.
[3] Although the written judgment was entered for $928,028.64, we note that at the hearing the trial justice granted judgment in the amount of $928,068.64. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3033155/ | United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 03-1510
___________
United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the District
* of Nebraska.
Sebastian Zarasua-Galvan, *
* [UNPUBLISHED]
Appellant. *
___________
Submitted: December 5, 2003
Filed: December 15, 2003
___________
Before WOLLMAN, FAGG, and MORRIS SHEPPARD ARNOLD, Circuit Judges.
___________
PER CURIAM.
Sebastian Zarasua-Galvan (Zarasua) challenges the sentence the district court1
imposed upon his guilty plea to illegally reentering the United States after deportation
following a conviction for an aggravated felony, in violation of 8 U.S.C. § 1326(a)(2)
and (b)(2). On appeal, counsel has filed a brief under Anders v. California, 386 U.S.
738 (1967), arguing the district court clearly erred in assessing criminal history points
for a 1992 Nebraska sentence because an interpreter was not provided for any of the
1
The Honorable Richard G. Kopf, Chief Judge, United States District Court for
the District of Nebraska.
underlying proceedings. Mr. Zarasua, however, cannot collaterally attack his prior
sentence based on the absence of an interpreter. See U.S.S.G. § 4A1.2, comment.
(n.6) (Guideline and commentary do not confer upon defendant any right to attack
collaterally prior conviction or sentence beyond any such rights otherwise recognized
in law); United States v. Jones, 28 F.3d 69, 70 (8th Cir. 1994) (per curiam)
(Guidelines “simply preclude[d]” defendant from collaterally attacking state
conviction in federal sentencing proceeding, as he identified no law conferring right
to attack earlier convictions; Constitution requires federal courts to permit such
collateral attack only when defendant asserts state court violated defendant’s right to
appointed counsel).
Upon reviewing the record independently under Penson v. Ohio, 488 U.S. 75
(1988), we have found no nonfrivolous issues. Accordingly, we affirm. We also
grant counsel’s motion to withdraw.
______________________________
-2- | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1301980/ | 768 N.W.2d 62 (2009)
2009 WI App 56
STATE
v.
CARL.
No. 2008AP933.
Court of Appeals of Wisconsin.
March 31, 2009.
Unpublished opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1105757/ | 718 So. 2d 434 (1998)
John Edward ANDERSON
v.
Cynthia C. OLIVER, Liberty Mutual Insurance Company and Assicurazioni Generali S.P.A.
No. 98-C-0755.
Supreme Court of Louisiana.
May 8, 1998.
Denied. The result is correct.
MARCUS, J., not on panel.
LEMMON, J., concurs. The Louisiana Uninsured Motorist Statute does not apply when the policy was neither delivered or issued for delivery in this state. La.Rev. Stat. 22:1406D(1). | 01-03-2023 | 10-30-2013 |
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