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https://www.courtlistener.com/api/rest/v3/opinions/1583567/ | 682 F. Supp. 1200 (1987)
CORDIS CORPORATION, a Florida corporation, Plaintiff,
v.
SIEMENS-PACESETTER, INC., Patrick Kennedy, Wayne Cook, Bruce Stafford, Walter Garman, and Robert Hutchinson, Defendants.
No. 87-0398-CIV.
United States District Court, S.D. Florida, Miami Division.
December 14, 1987.
*1201 Lowell L. Garrett, Gary A. Dumas and James A. Gale, Morgan, Lewis & Bockius, Miami, Fla., for plaintiff.
Jay M. Levy, Hershoff and Levy, P.A., Miami, Fla., for defendants.
ORDER ON MOTION TO TRANSFER
HOEVELER, District Judge.
THIS CAUSE came for consideration upon a Motion by Plaintiff, Cordis, to transfer this action to the United States District Court for the Central District of California pursuant to 28 U.S.C. § 1404(a). This action is pending on Cordis' amended complaint against Defendants, Siemens-Pacesetter, Inc., Walter Garman, Patrick Kennedy, and Bruce Stafford, for Defendants' alleged violations of employment covenants not to compete against Plaintiff and not to disclose or misappropriate Plaintiff's confidential information and trade secrets.
Prior to the filing of this Motion to Transfer, Plaintiff voluntarily dismissed Wayne Cook and Robert Hutchinson as defendants pursuant to Fed.R.Civ.P. 41. Defendants contend that voluntary dismissal is ineffective to dismiss these individuals since, they contend, Fed.R.Civ.P. 41 contemplates only dismissal of an entire controversy. Harvey Aluminum, Inc. v. American Cyanamid Company, 203 F.2d 105 (2nd Cir.1953), cert. denied, 345 U.S. 364, 73 S. Ct. 949, 97 L. Ed. 1383 (1953); Philip Carey Manufacturing Company v. Taylor, 286 F.2d 782 (6th Cir.1961), cert. denied, 366 U.S. 948, 81 S. Ct. 1903, 6 L. Ed. 2d 1242 (1961). While that may be the rule in the Second and Sixth Circuits, that position is contrary to binding law in the Eleventh Circuit. Plains Growers, Inc., Fl. M.I. Co. v. Ickes-Braun Glasshouses, Inc., 474 F.2d 250 (5th Cir.1973); Oswald v. Scripto, Inc., 616 F.2d 191 (5th Cir.1980). Under the rules governing dismissal by notice under Fed.R.Civ.P. 41 and dismissal by motion under Fed.R.Civ.P. 21, dismissal against such of defendants as have not served an answer or motion for summary judgment is permitted even though the case might remain pending against other defendants. Plains Growers, 474 F.2d at 255. Accordingly, Defendants Hutchinson and Cook were properly dismissed from this action by Plaintiff's notice under Fed.R.Civ.P. 41.
There are two requirements Plaintiff must meet to succeed in its Motion to Transfer under 28 U.S.C. § 1404. First, the cause can only be transferred to another district where the action might have been brought. Second, the transfer must be warranted on grounds of convenience and interests of justice Van Dusen v. Barrack, 376 U.S. 612, 84 S. Ct. 805, 11 L. Ed. 2d 945 (1964); Windmere Corporation v. Remington Products, Inc., 617 F. Supp. 8 (S.D.Fla.1985).
Defendants contend that because this action could not have been brought against Hutchinson in California, the Central District of California is not a district where this action "might have been brought," and, therefore, this Court is without authority to transfer the case as it now stands. Defendants rely on Hoffman v. Blaski, 363 U.S. 335, 80 S. Ct. 1084, 4 L. Ed. 2d 1254 (1960) for support of their position. This court finds Defendants reliance on Hoffman is misplaced.
Hoffman v. Blaski, supra, involved two cases in which defendants, over which the transferee courts did not have in personam jurisdiction, consented to transfers and waived objections to venue. The United States Supreme Court held that the power to transfer actions could not be predicated upon the consent of defendants, but must depend on the transferee court being a forum where the suit might have been brought independently of the wishes of defendants. Id. In determining whether to transfer venue, a district court is not required to confine its venue consideration as to the facts as they existed at the time of the complaint. In Re Fine Paper Antitrust Litigation, 685 F.2d 810 (3d Cir. 1982). Thus, the fact that this action could *1202 not have originally been brought against Hutchinson in California is irrelevant since Hutchinson is not now a party to the action. See In Re Fine Paper Antitrust Litigation, supra; Wyndham Associates v. Bintliff, 398 F.2d 614 (2nd Cir.1968); cert. denied, 393 U.S. 977, 89 S. Ct. 444, 21 L. Ed. 2d 438 (1968); Hess Oil Virgin Islands Corp. v. UOP, Inc., 447 F. Supp. 381 (N.D.Okla.1978). The only question for this court is whether, at the present time, the Central District of California is a district where this action might have been brought as to all defendants now before the court. This question being affirmatively answered, the court holds that Plaintiff has satisfied the first requirement for transfer of venue under 28 U.S.C. § 1404.
The second requirement for transfer under 28 U.S.C. § 1404 is that the transfer must be for the convenience of the parties and witnesses, and in the interest of justice. The factors to be considered in determining the balance of convenience are: convenience of the parties; convenience of the witnesses; relative ease of access to sources of proof; availability of process to compel the presence of unwilling witnesses; and, public interest considerations. Gulf Oil Corporation v. Gilbert, 330 U.S. 501, 67 S. Ct. 839, 91 L. Ed. 1055 (1947); Windmere Corporation v. Remington Products, Inc., supra. In this case, the burden is on Plaintiff to establish the statutory factors for transfer to the Central District of California are present CES Publishing Corporation v. Dealerscope, Inc., 544 F. Supp. 656 (E.D.Pa.1982).
With respect to the convenience of the parties, the Central District of California is clearly a more convenient forum than the Southern District of Florida. Of the thirteen employees who accepted employment with Pacesetter, allegedly in violation of their employment covenants with Cordis, seven reside in California and five are parties to litigation with Cordis in the Central District of California. Moreover, three of the defendants in this case, Garman, Kennedy and Stafford, are also parties in an action to invalidate their respective employment covenants in the Central District of California.
With respect to the convenience of the witnesses and the availability of process to compel their testimony, the Central District of California is clearly a more convenient forum than the Southern District of Florida. Defendants themselves admit "all of the witnesses, whose testimony will be material and necessary on behalf of the Defendant, and all of the persons who witnessed the occurrence as alleged by Plaintiff, with the exception of one, reside in the State of California" (p. 2 Defendant Pacesetter's Motion to Transfer). Moreover, a regional sales director for Pacesetter, Nicholas Rutsis, has stated in an affidavit to this court that all decisions made by Pacesetter concerning the hiring and firing of salesmen are made at the Pacesetter's corporate headquarters in California (p. 2 Affidavit of Nicholas Rutsis). Since the injuries set forth in the complaint occurred in California and the persons who witnessed the occurrences alleged by Plaintiff are in California, the Central District of California is clearly a more convenient forum than the Southern District of Florida both in terms of convenience of the witnesses and the availability of process to compel their appearance.
Finally, it is in the interest of justice to transfer this action to the Central District of California. Because four related litigations involving these defendants and others are pending in the Central District of California, transfer of this case to California will result in more efficient pre-trial discovery, savings of time and money with respect to pre-trial and trial proceedings involving witnesses, avoidance of duplicative litigation, and avoidance of inconsistent results. Schneider v. Sears, 265 F. Supp. 257, 266-67 (S.D.N.Y.1967).
Defendants argue that in cases where a plaintiff seeks transfer of venue under 28 U.S.C. § 1404, the plaintiff must show a change of circumstances since the time the original action was filed such that would support transfer. Defendants further contend that in the absence of a change of circumstances subsequent to the filing of *1203 this action, Plaintiff's Motion to Transfer cannot be granted under 28 U.S.C. § 1404. In support of this position, Defendants cite James v. Daley & Lewis, 406 F. Supp. 645 (D.Del.1976); Ziegler v. Dart Industries, Inc., 383 F. Supp. 362 (D.Del.1974); Roberts Brothers, Inc. v. Kurtz Bros., 231 F. Supp. 163 (D.N.J.1964); Harry Rich Corporation v. Curtiss-Wright Corporation, 308 F. Supp. 1114 (S.D.N.Y.1969); Philip Carey Manufacturing Company v. Taylor, 286 F.2d 782 (6th Cir.1961). Of the cases cited by Defendants for the proposition that a change of circumstances is required when a plaintiff seeks transfer under 28 U.S.C. § 1404, only James and Harry Rich stand for this proposition and the authority upon which James and Harry Rich rely upon for their holding is misplaced. James v. Daley & Lewis, supra, cites Harry Rich, supra, and Harry Rich cites Roberts Brothers for support in holding that before a court will grant plaintiff's motion for a change in venue, plaintiff must first show a change in circumstances since the filing of his suit. James, 406 F.Supp. at 648; Harry Rich, 308 F.Supp. at 1118. However, Roberts Brothers makes no such holding. In Roberts Brothers, the court determined that transfer was not proper because it would not further the convenience of the parties and witnesses nor in the interest of justice; and, only after making that determination, as required under 28 U.S.C. § 1404, did the court make a passing reference regarding the absence of changed circumstances in that case. Roberts Brothers, 231 F.Supp. at 167. This is not to say that a court should not consider the existence or absence of changed circumstances in deciding whether transfer of venue is appropriate under 28 U.S.C. § 1404. However, we hold that there is no requirement under 28 U.S.C. § 1404 that a plaintiff seeking transfer of venue must show a change of circumstances since the time the original action.
Because Plaintiff has clearly met its burden of establishing that the Central District of California is a place where the action might have been brought, and that transfer both convenient and in the interest of justice, it is
ORDERED AND ADJUDGED that Plaintiff's Motion to Transfer this action to the Central District of California be GRANTED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1585431/ | 815 F.Supp. 1281 (1993)
Jane DOE, Plaintiff,
v.
GENERAL AMERICAN LIFE INSURANCE, CO., Defendant.
No. 91-1957C(5).
United States District Court, E.D. Missouri, E.D.
March 16, 1993.
*1282 David Campbell, St. Louis, MO, for plaintiff.
Ralph Hart, Associate, Kortenhof and Ely, St. Louis, MO, for defendant.
MEMORANDUM
LIMBAUGH, District Judge.
This matter is before the Court on the parties' cross-motions for summary judgment. The case was set for trial on September 21, 1992 and was actually presented to the Court on September 24, 1992. The parties agreed, in lieu of trial, to submit the entire case on the basis of the pending summary judgment motions, together with affidavits, responses, and additional documentary evidence. Both parties have objections to the submission of certain exhibits, mainly affidavits of the plaintiff and hospital personnel and deposition testimony of hospital personnel. Defendant strenuously objects to the expert deposition testimony (with attached exhibits) as inadmissible in an ERISA case. The exhibits and the objections raised are noted in the court record. After careful consideration of the objections raised and the caselaw cited in support, the Court determines that all evidence will be admitted. However, with respect to the affidavits of the plaintiff and the hospital personnel, and the deposition testimony of Dr. David L. Ohlms, *1283 the Court considers such evidence to have little significant impact upon the Court's final determination in this matter.
Courts have repeatedly recognized that summary judgment is a harsh remedy that should be granted only when the moving party has established his right to judgment with such clarity as not to give rise to controversy. New England Mut. Life Ins. Co. v. Null, 554 F.2d 896, 901 (8th Cir.1977). Summary judgment motions, however, "can be a tool of great utility in removing factually insubstantial cases from crowded dockets, freeing courts' trial time for those that really do raise genuine issues of material fact." Mt. Pleasant v. Associated Elec. Coop. Inc., 838 F.2d 268, 273 (8th Cir.1988).
Pursuant to Fed.R.Civ.P. 56(c), a district court may grant a motion for summary judgment if all of the information before the court demonstrates that "there is no genuine issue as to material fact and the moving party is entitled to judgment as a matter of law." Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 467, 82 S.Ct. 486, 488, 7 L.Ed.2d 458 (1962). The burden is on the moving party. Mt. Pleasant, 838 F.2d at 273. After the moving party discharges this burden, the nonmoving party must do more than show that there is some doubt as to the facts. Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986). Instead, the nonmoving party bears the burden of setting forth specific facts showing that there is sufficient evidence in its favor to allow a jury to return a verdict for it. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).
In passing on a motion for summary judgment, the court must review the facts in a light most favorable to the party opposing the motion and give that party the benefit of any inferences that logically can be drawn from those facts. Buller v. Buechler, 706 F.2d 844, 846 (8th Cir.1983). The court is required to resolve all conflicts of evidence in favor of the nonmoving party. Robert Johnson Grain Co. v. Chem. Interchange Co., 541 F.2d 207, 210 (8th Cir.1976). With these principles in mind, the Court turns to an examination of the facts.
On or about October 18, 1992 plaintiff was admitted to the Hyland Center[1] for chemical dependency treatment related to her use of cocaine. At the time of her admission, plaintiff was a member of the United Food and Commercial Workers Union, Local 88. As a member of Local 88, plaintiff was a participant in the Local 88 Health and Welfare Group Health Plan. This plan was issued to Local 88 by the defendant.
The health plan policy in question covers chemical dependency treatment for alcoholism, but contains a provision excluding treatment for "injury or sickness arising out of the use of: a) narcotics; b) hallucinogens; c) barbiturates; d) marijuana; e) amphetamines; or similar drugs or substances." Plaintiff's Exhibit 1[2] Local 88 Health and Welfare Group Health Plan, Policy No. MCP-4093, pg. 8E. This exclusion further notes that "[t]his exception shall not apply if the drug or substance was i) legally prescribed by a doctor, and ii) the amount taken by the insured individual did not exceed the usual amount that would be authorized by one doctor for the treatment of the medical condition for which it was prescribed."
At the time of her admission, plaintiff did not consult with the defendant as to coverage for her treatment for cocaine addiction. Plaintiff was told that her treatment was covered in a conversation with hospital personnel. *1284 Plaintiff further states that she consulted with an unnamed individual at Local 88 and was told her treatment was covered under the health plan.
In connection with the treatment administered to Ms. Doe, St. Anthony's Medical Center billed GENELCO, the plan's administrator. In error, the billing clerk used a code which indicated that the treatment was for alcoholism. In response to the bill and under the belief that Ms. Doe's treatment was for alcoholism, GENELCO paid the bill. Upon finding out that treatment was not for alcoholism, but rather for cocaine addiction, GENELCO requested and received reimbursement from St. Anthony's Medical Center for the payment it contended was made in error. St. Anthony's Medical Center has now turned to plaintiff Doe for payment of her hospital bill.
Plaintiff has filed suit, pursuant to the Federal Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et. seq., against defendant challenging the denial of benefits under the Local 88 health plan. 29 U.S.C. § 1132(a)(1)(B). She contends that 1) cocaine is not pharmacologically a narcotic, therefore not within the exclusion provisions of the plan; 2) Missouri law requires the defendant to provide coverage for cocaine addiction treatment; and 3) defendant is estopped from denying coverage because plaintiff detrimentally relied upon their initial assertion that her treatment was covered under the health plan. Defendant asserts that ERISA preempts all state law, including state law regarding construction of contracts and promissory estoppel. It further contends that under ERISA, contract terms are to be accorded their ordinary meaning as understood by a layperson, not specialized meaning provided by experts. Thus, defendant argues that an expert's testimony as to whether or not cocaine is pharmacologically a narcotic is irrelevant; what is relevant is the common understanding of most persons that cocaine is a narcotic or at least an illegal drug falling within the categories provided in Exclusion Clause 10.
It is clear that a challenge to a denial of benefits under 29 U.S.C. § 1132(a)(1)(B) is reviewed under a de novo standard "unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire and Rubber v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989); Farley v. Benefit Trust Life Ins., 979 F.2d 653 (8th Cir.1992); Finley v. Special Agents Mut. Ben. Assn., 957 F.2d 617, 619 (8th Cir.1992). The parties make no specific mention in their pleadings as to the applicable standard of review in this case, although the defendant makes a passing reference to this Court utilizing the "arbitrary and capricious" standard of review. This Court has carefully reviewed the entire health plan in question and although it appears that there may be some support for the defendant having authority to determine what treatment is "medically necessary" and entitled to benefits, it does not appear that any such discretion exists on the issue of exclusions. Furthermore, since the parties fail to address this issue, it is apparently undisputed that the defendant General American has no such discretion under the terms of the Local 88 health plan regarding the issue of exclusions. Therefore, this Court will review Exclusion No. 10 (the drug exclusion) de novo.
ERISA is a broad comprehensive regulation that preempts state laws relating to employee benefit plans unless the state law "regulates insurance, banking, or securities." 29 U.S.C. § 1144(a) and (b)(2)(A). This broad preemption applies to all state laws that have any direct or indirect relation to employee benefit plans even if the state laws were not designed specifically for that purpose. Shaw v. Delta Air Lines, 463 U.S. 85, 96-98, 103 S.Ct. 2890, 2899-2900, 77 L.Ed.2d 490 (1983); Brewer v. Lincoln Nat'l Life Ins., 921 F.2d 150, 153 (8th Cir.1990). State statutory as well as common law causes of action are preempted. Kanne v. Connecticut General Life Ins., 859 F.2d 96, 100 (9th Cir.1988).
In construing the drug exclusion clause de novo, the Court must look at the terms of the health plan without deference to either parties' interpretations. Bruch, 489 U.S. at 112, 109 S.Ct. at 955; Finley, at 619. *1285 Furthermore, the Missouri rule of construction that requires ambiguities to be construed in favor of the insured can not be used in interpreting the terms of the instant health plan. Delk v. Durham Life Ins., 959 F.2d 104, 105 (8th Cir.1992); Finley, at 619; Brewer, at 153-4. It is well-established in the Eighth Circuit that the Court must first attempt to resolve the ambiguity in the plan language by interpreting the language as would "an average plan participant". Brewer, at 154; 29 U.S.C. § 1022(a)(1). If the language remains ambiguous after applying the approach in Brewer, then the Court may consider extrinsic evidence as long as "the meaning derived does not amount to an oral modification but is instead a clarification of provisions already in effect." Farley, 979 F.2d at 657. Finally, if all else fails, and the ambiguity remains, the plan should be construed against the insurer. "As a matter of federal common law, a court construing plans governed by ERISA should construe ambiguities against the drafter only if, after applying ordinary principles of construction, giving language its ordinary meaning and admitting extrinsic evidence, ambiguities remain." Delk, at 106 citing DeGeare v. Alpha Portland Industries, 837 F.2d 812, 816 (8th Cir. 1988).
In the present case, the issue is whether cocaine falls within the exclusionary language contained in the policy. Since cocaine addiction is not specifically named as being covered under the policy nor is cocaine specifically listed in one of the five drug exclusion categories, the Court finds that on its face, the language contained in the drug exclusion clause is ambiguous.
However, the Court finds the ambiguity to be readily resolved when one examines the entire clause in the context as a layperson would commonly understand. The plaintiff urges the Court to rely upon the expert testimony of Dr. Ohlms as the primary source of factors to consider regarding the classification of cocaine as a narcotic or otherwise. However, as the Court pointed out in Brewer, "[i]t would be improper and unfair to allow experts to define terms that were specifically written for and targeted toward laypersons ... the terms should be accorded their ordinary, and not specialized, meanings." Id., at 154. Consequently, this Court need not be concerned with cocaine's "pharmacological" similarities or dissimilarities with narcotics, hallucinogens, barbiturates, marijuana, or amphetamines. What the Court must be concerned with is what the ordinary person understands cocaine to be and how that understanding relates to the clause in question.
Cocaine is a drug that is illegal to buy, sell, or possess in this country. In legal terms, it is referred to as a "controlled substance". The drug categories listed in the exclusion clause are all broad categories of drugs commonly considered to contain specific drugs that are illegal to buy, sell, or possess. However, the exclusion clause does recognize that within these categories are some specific drugs that although may be considered to be a "controlled substance" still can be legally prescribed. Of all the categories, "narcotics" is the broadest category since the term "narcotic" has come to have a generic meaning for drugs considered to be illegal. It is clear to this Court that this exclusion clause does not encompass a drug, which although technically falling within one of these categories, is legally prescribed and unfortunately becomes a source of addiction to the insured, e.g. Valium or Seconal. As far as this Court knows, and no evidence has been admitted to the contrary, cocaine is not a drug that is normally prescribed for any medically recognized purpose.
This Court finds that cocaine is commonly understood by laymen to be a "narcotic" that is not used for medicinal purposes. As such, this Court finds that plaintiff's treatment for cocaine abuse falls within the exclusionary language of the Local 88 health plan.
The Court further finds that Missouri's statutory laws regarding insurance coverage for chemical dependency, specifically § 376.779 R.S.Mo., is preempted by ERISA and is irrelevant to these proceedings. Furthermore, assuming arguendo, that § 376.779 was relevant to these proceedings, it is clear that the statute does not require that coverage for drug addiction be provided, only that it be offered as optional coverage under the main health insurance policy. See, *1286 Op.Atty.Gen. No. 74, Ahr, 6-21-82. Finally, § 376.779 does not provide for an independent cause of action.
Plaintiff's final claim is one of promissory estoppel. She asserts that since a representative of defendant told Hyland Center that her treatment was covered, that someone at Local 88 told plaintiff that her treatment was covered, and that defendant initially paid plaintiff's hospital bill (albeit undeniably under the mistaken belief that treatment was for alcoholism), defendant is now estopped from denying her benefits by claiming that her cocaine addiction treatment is excluded under the policy.
The courts are split as to whether there exists a federal common law doctrine of equitable or promissory estoppel under ERISA. See, Coonce v. Aetna Life Ins., 777 F.Supp. 759, 768-71 (W.D.Mo.1991) (citations omitted). In Cochran v. A.T. & T. Technologies, 753 F.Supp. 284, 288 (E.D.Mo.1991), this Court noted that the Eighth Circuit had approved the use of promissory estoppel in ERISA cases; however the Court neglected to further note that the Eighth Circuit's approval of the use of promissory estoppel was not a recognition of a federal common law doctrine of promissory estoppel but rather an application of Minnesota state law. This distinction is duly noted by Judge Whipple in Coonce. Coonce, at 769. This Court concurs with Judge Whipple's exhaustive analysis of the current split of authority on the question of whether a claim for equitable or promissory estoppel may be raised under ERISA. The Court also agrees with Judge Whipple's findings that the Eighth Circuit has yet to recognize a federal common law right of action for promissory estoppel under ERISA. Id., at 770. Judge Whipple went on to find that based upon Eighth Circuit caselaw, the facts of the case before him warranted finding a federal common law claim for equitable estoppel.
However, in the present case, the facts do not warrant a finding of a federal common law claim for promissory estoppel. The doctrine of promissory estoppel asserts that a party who makes a misleading representation to another party, who then reasonably relies upon the misrepresentation to his or her detriment, may not deny that representation. Farley, 979 F.2d at 659-60. There are four essential elements of promissory estoppel: 1) a promise; 2) detrimental reliance; 3) injustice can only be avoided by enforcement of the promise; and 4) the promiser should have or did in fact clearly foresee the precise action which the promisee took in reliance. Cochran, at 289 citing A.L. Huber & Son v. Jim Robertson Plumbing, 760 S.W.2d 496, 498 (Mo.App.1988). The defendant must have made a binding offer in the form of a promise, and the promise must be sufficiently definite and delineated to support a claim of detrimental reliance. Cochran, at 289 citing Burst v. Adoph Coors Co., 650 F.2d 930, 932 (8th Cir.1981) and Bower v. A.T. & T., 852 F.2d 361, 366 (8th Cir.1988).
Plaintiff's evidence in support of her claim of promissory estoppel consists of hearsay evidence regarding statements allegedly made to hospital personnel by a representative of defendant and a statement allegedly made to her by a representative of Local 88. Plaintiff offers no evidence that any representative of defendant personally and directly stated to her that her treatment for cocaine addiction was covered under the health plan in question. Plaintiff offers no evidence that anyone connected with the defendant made any type of statement to her that could reasonably be interpreted as representing that coverage was provided for her cocaine abuse treatment. Plaintiff offers no evidence that she obtained treatment for her cocaine addiction based upon statements or representations of defendant to her that her treatment was covered by the policy. The Court can find no evidence that defendant made a definite and specific offer to plaintiff that if she obtained treatment for her cocaine addiction, it would be covered under the Local 88 health plan. Under these circumstances, defendant General American is not estopped from enforcing the exclusion provisions of the policy.
The Court finds that no issue of material fact exists concerning the non-coverage of plaintiff's cocaine abuse treatment pursuant to the exclusionary language of the Local 88 health plan, and that defendant is entitled to judgment as a matter of law.
*1287 ORDER
In accordance with the memorandum filed herein this day,
IT IS HEREBY ORDERED that plaintiff's motion for summary judgment is DENIED and defendant's motion for summary judgment is GRANTED. Judgment is entered in favor of defendant and against plaintiff on the merits of plaintiff's complaint.
NOTES
[1] The Hyland Center is a specialized chemical dependency medical unit associated with St. Anthony's Medical Center. The pleadings refer to both interchangeably in regards to plaintiff's treatment.
[2] A majority of the exhibits in this case had been previously filed in an earlier action brought by plaintiff Jane Doe against defendant GENELCO, the health plan's administrator. That case, Cause No. 89-416(7) was tried before the Honorable Jean C. Hamilton and judgment was entered in favor of defendant GENELCO because it was not the proper party defendant. When plaintiff (re)filed her case in this Court against the present defendant, the parties refiled the exhibits that had previously been filed in Judge Hamilton's court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1645157/ | 994 So.2d 33 (2008)
STATE ex rel. Keith MOSLEY
v.
STATE of Louisiana.
No. 2008-KH-1817.
Supreme Court of Louisiana.
October 10, 2008.
This application is transferred to the Fifth Circuit Court of Appeal for consideration pursuant to the procedures outlined in that court's en banc resolution of September 9, 2008. See State v. Cordero, 08-1717 (La.10-03-08), 993 So.2d 203.
WEIMER, J., concurs in part and dissents in part for the reasons assigned in State v. Cordero, 08-1717 (La.10-03-08), 993 So.2d 203. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918696/ | 420 Pa. 481 (1966)
Flowers
v.
Green, Appellant.
Supreme Court of Pennsylvania.
Argued January 12, 1966.
March 22, 1966.
*482 Before BELL, C.J., MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.
*483 Gerald J. Cohen, for appellant.
Sheldon Tabb, with him Needleman and Needleman, for appellee.
OPINION BY MR. JUSTICE MUSMANNO, March 22, 1966:
This is a conventional personal injury case. The plaintiff was crossing a street when he was struck by an automobile driven by the defendant. The jury returned a verdict for the plaintiff and the defendant appealed, submitting various questions for review.
He argues he was entitled to a nonsuit on the basis that the plaintiff was guilty of contributory negligence since the plaintiff testified that he had advanced into a street seven or eight feet when the defendant's automobile, which later hit him, was 70 or 80 feet away. Whether the plaintiff acted as a reasonably prudent person was a question for the jury to determine. The defendant argues that the plaintiff should have continued to look both ways as he crossed the street. A pedestrian is not like Janus in Roman mythology, equipped with two pairs of eyes, permitting him to look in opposite directions simultaneously. He is required by law only to due care and prudence under the circumstances. The evidence does not reveal that he so violated the rule in this respect as to warrant the entering of a nonsuit. (Campbell v. Balis, 380 Pa. 245; Weidemoyer v. Swartz, 407 Pa. 282.)
At the termination of the defendant's case, the plaintiff called the defendant for cross-examination. The defendant complains this was improper. This procedure *484 is proper only as rebuttal if evidence adduced during the trial impels the plaintiff to reply through cross-examination of the opposing party. Whether the matter covered in cross-examination amounted to rebuttal or not was a matter in the sound discretion of the trial judge. In Schoen v. Elsasser, 315 Pa. 65, this Court said: "A litigant has the privilege of offering rebuttal testimony, and where the evidence proposed goes to the impeachment of the testimony of his opponent's witnesses, it is admissible as a matter of right. Rebuttal is proper where facts discrediting the proponent's witnesses have been offered: Wigmore on Evidence, 2d. edition, volume 4, page 20, section 1873. `For matters properly not evidential until the rebuttal, the proponent has a right to put them in at that time, and they are therefore not subject to the discretionary exclusion of the trial court'."
It is not apparent that the trial judge erred in his ruling on this point in the case.
During the cross-examination above adverted to, plaintiff's counsel asked many questions to which defendant's counsel objected, which objections were sustained by the court. The defendant argues that this persistence on the part of the plaintiff amounted to misconduct which should have called for the withdrawal of a juror and the declaration of a mistrial. This again was a matter which addressed itself to the sound discretion of the trial judge. In addition, defendant's counsel made no motion for the withdrawal of a juror. (Narciso v. Mauch Chunk, 369 Pa. 549.)
In cross-examining the defendant, plaintiff's counsel attempted to introduce depositions for the purpose of discrediting the defendant. The court excluded the depositions. Defendant's counsel argues that this constituted an attempt on the part of the plaintiff to impeach his own witness. The depositions, however, were not permitted by the court and it is not apparent that *485 the putting of questions which were overruled by the court prejudiced the defendant or caused a violation of the rule the defendant here propounds.
During the summations plaintiff's counsel argued that the failure of the defendant to testify in his own behalf could be construed as an inference against him. There is no indication that plaintiff's counsel exceeded the bounds of propriety and of legitimate argument in a closing speech. The law is not disposed to build fences around an attorney restricting him in covering the shot-up terrain of litigation in such way as he deems wise in the presentation of his final plea for justice to his client. Under the wary eye and the attentive ear of the presiding judge, lawyers do not often abuse this legitimate latitude of forensic expression. There is no indication that plaintiff's counsel did so in this case.
Finally, the defendant complains that he was denied an adequate opportunity to impeach the credibility of the plaintiff by introducing a police record to show that a Willie Bell who had been involved in a violation of criminal law and allegedly living at the plaintiff's address was the plaintiff himself. The court ruled that the defendant would be required to produce a police officer who would identify the plaintiff as the Willie Bell in question. The defendant, in this regard, was endeavoring to discredit the plaintiff by the introduction of criminal records in a civil case. We held in Keough v. Republic Fuel and Burner Co., 382 Pa. 593, that this was a matter falling within the sound discretion of the trial judge: "In the exercise of its discretion the trial court must view the various aspects of the trial and determine whether the probative value of the offer is outweighed by the risk that its admission will create substantial danger of undue prejudice or of misleading the jury, and must consider also *486 the remoteness of the convictions in question from the date of the offer."
The trial court did not abuse its discretion in this matter.
Judgment affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918698/ | 411 B.R. 626 (2009)
BETTY'S HOMES, INC., Appellant
v.
COOPER HOMES, INC., Appellee.
Civil No. 08-5231.
United States District Court, W.D. Arkansas, Fayetteville Division.
August 27, 2009.
*628 Stanley V. Bond, Fayetteville, AR, for Appellant.
Frank H. Falkner, Herbert Charles Rule, III, Rose Law Firm, Little Rock, AR, for Appellee.
ORDER
JIMM LARRY HENDREN, District Judge.
Now on this 27th day of August, 2009, comes on for consideration this cross appeal from the United States Bankruptcy Court for the Western District of Arkansas. The matter is fully briefed, and ripe for decision.
1. Appellant Betty's Homes, Inc. ("Betty's") is a homebuilder in Northwest Arkansas. Appellee Cooper Homes, Inc. ("Cooper") supplied building materials for a number of Betty's projects.
In July, 2006, Cooper advised Betty's that it was preparing to file materialman's liens on a number of Betty's properties, as a result of overdue accounts. Betty's, although in difficult financial circumstances, was able to draw down $200,000 on construction loans at Community First Bank to pay Cooper. The money was issued in the form of a cashier's check, and delivered directly to Cooper on August 1, 2006.
Eighty days later, on October 20, 2006, Betty's filed a Chapter 11 Voluntary Petition in the United States Bankruptcy Court for the Western District of Arkansas.
2. On November 28, 2007, Betty's filed a Complaint To Avoid Preference against Cooper, alleging that the $200,000 payment to Cooper was an avoidable preference, and seeking to have the monies returned.
Cooper answered, admitting receipt of the $200,000, but denying the other material allegations of the Complaint To Avoid Preference. Cooper then moved for summary judgment, contending that the payment was not a "transfer of an interest of the debtor in property," and therefore not an avoidable preference. It relied on the "earmarking doctrine," where by agreement a new creditor can pay off the debt of an old creditor, and the payment will not be considered a preference in bankruptcy so long as the transaction, viewed as a whole, does not diminish the estate of the debtor. In re Bohlen Enterprises, Ltd., 859 F.2d 561, 566 (8th Cir.1988).
*629 3. Summary judgment was denied, and the Complaint To Avoid Preference was tried on July 31, 2008. At trial, Jody Latham, CEO of Cooper, testified that as of August 1, 2006, Cooper was an unsecured creditor of Betty's, and that she had not sent a "ten day notice" (a lien notice) at that time, although "I had the right to."[1] She testified that on August 16, 2006, she sent out ten-day notices on 38 lots, and that liens were subsequently filed prior to Betty's filing bankruptcy.
The Bankruptcy Court held, inter alia:
* that Community First Bank was a secured creditor at the time of the transfer;
* that Cooper was not a secured creditor at the time of the transfer;
* that the $200,000 payment did not fall within the earmarking doctrine because it was not "simply a substitution of one creditor in a class for another creditor in the same class," citing In re International Ventures, Inc., 214 B.R. 590 (Bankr. E.D.Ark.1997);
* that Betty's was presumptively insolvent at the time of the transfer, pursuant to the rebuttable presumption of insolvency in 11 U.S.C. § 547(f);
* that, because Cooper presented no evidence to rebut the presumption, Betty's was insolvent on the date of the transfer, citing Armstrong v. John Deere Co., 90 B.R. 1006, 1009 (Bankr.D.N.D.1988); and
* that, notwithstanding the foregoing, because there was no evidence as to "the amount of unsecured debt or the actual or proposed distributions afforded to unsecured creditors," there was no evidence that Cooper received more by virtue of the transfer than it would have received in a Chapter 7 liquidation proceeding.
Since Betty's had the burden of proof on this element of a preference, the Bankruptcy Court denied its claim for preference. In re Betty's Homes, Inc. 393 B.R. 671 (Bkrtcy.W.D.Ark.2008).
4. Betty's appealed, contending that the Bankruptcy Court erred in finding there was not a preference. Cooper crossappealed, contending that the Bankruptcy Court erred in finding that the earmarking doctrine did not apply.[2]
5. This Court reviews the factual findings of the Bankruptcy Court for clear error. The legal conclusions are reviewed de novo. In re Racing Services, Inc., 540 F.3d 892, 897-98 (8th Cir.2008).
6. Betty's contends that the Bankruptcy Court's findings of fact are clearly erroneous because they are "internally inconsistent." Betty's describes this "inconsistency" as findingon the one handthat the transfer diminished Betty's estate; and findingon the other handthat the transfer was not a preference because there was no evidence that Cooper received more by means of the payment than it would have received in a Chapter 7 proceeding.
7. The Bankruptcy Code allows a trustee in bankruptcy to avoid as a preference
. . . any transfer of an interest of the debtor in property
(1) to or for the benefit of a creditor;
*630 (2) for or on account of an antecedent debt owed by the debtor before such transfer was made;
(3) made while the debtor was insolvent;
(4) made
(A) on or within 90 days before the date of the filing of the petition . . . ; and
(5) that enables such creditor to receive more than such creditor would receive if
(A) the case were a case under chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by the provisions of this title.
11 U.S.C. § 547(b).
The burden of proving the avoidability of a transfer rests with the trustee. 11 U.S.C. § 547(g).
8. The Court agrees with Betty's that it is inconsistent to find a debtor insolvent, and to find that a transfer diminishes the debtor's estate, but also to find that an unsecured creditor who receives the transfer does not receive more than it would in a hypothetical Chapter 7 proceeding. The fact that a debtor is insolvent means it cannot pay its debts in full: the Bankruptcy Code defines insolvent as a "financial condition such that the sum of such entity's debts is greater than all of such entity's property, at fair valuation." 11 U.S.C. § 101(32). A transfer that diminishes the estate leaves even fewer assets to distribute among creditors. It necessarily follows that an unsecured creditor who receives full payment of a portion of its claim will be in a better position than those who do not. Cf. In re Hoffinger Industries, Inc., 313 B.R. 812 (Bkrtcy. E.D.Ark.2004):
The law is generally well settled that unless creditors would receive a 100% payment, any unsecured creditor who receives a payment during the preference period is in a position to receive more than it would have received under a Chapter 7 liquidation.
313 B.R. at 827 (internal quotation marks omitted).
The Bankruptcy Court found that Betty's was insolvent on the date of the transfer, and that the transfer diminished the estate. Thus, unless there is merit to the cross appeal by Cooper, the Bankruptcy Court erred as a matter of law in finding that the $200,000 payment to Cooper was not a preference. Accordingly, the Court will examine the cross appeal.
9. In its cross appeal, Cooper contends that the $200,000 payment was not a preference because it was not a "transfer of an interest of the debtor in property." Cooper contends that the transfer falls within an exception to preference law known as "earmarking."
The earmarking doctrine is an offshoot of § 547. As explained in In re Bohlen,
[w]hen new funds are provided by the new creditor to or for the benefit of the debtor for the purpose of paying the obligation owed to the old creditor, the funds are said to be "earmarked" and the payment is held not to be a voidable preference.
859 F.2d at 565.
In order for earmarking to apply, the creditors must both be of the same class. The reason for this is easy to understand.
(a) If both the old and the new creditor are secured creditors, the transfer is a zero-sum transaction. There is no avoidable transfer (preference) "because the loaned funds never-become part of the *631 debtor's property. Instead, a new creditor merely steps into the shoes of an old creditor." In re Heitkamp, 137 F.3d 1087, 1089 (8th cir.1998). Put another way, "[t]here is no diminution, directly or indirectly, of the fund to which creditors of the same class can resort for payment of their debts." In re International Ventures, Inc., supra, 214 B.R. at 595.
(b) If the old creditor is a secured creditor and the new creditor is an unsecured creditor, earmarking does not apply. "[I]f the debtor transfers a security interest in return for the funds, the debtor has, by giving a security interest in exchange for the payment of an unsecured debt, transferred an interest in property." Id.
Community First Bank, which funded the payment of $200,000 to Cooper, was a secured creditor. If Cooper was an unsecured creditor, earmarking would not apply; but if Cooper was secured, earmarking would apply. Accordingly, the issue of whether Cooper was a secured creditor is pivotal.
10. Cooper argues that it was a secured creditor in reliance on In re Electron Corp., 336 B.R. 809 (10th Cir. BAP 2006), wherein the court held that a materialman who could have perfected its inchoate statutory lienbut had not done sowas a secured creditor for purposes of determining the avoidability of a transfer claimed to be preferential.
In re Electron Corp., which relied on Colorado law, is not necessarily dispositive, because property rights in bankruptcy proceedings are determined by reference to the law of the state where the property is located. Butner v. U.S., 440 U.S. 48, 99 S.Ct. 914, 59 L.Ed.2d 136 (1979). The Court, therefore, turns to Arkansas lien law to determine whether the In re Electron Corp. analysis applies to the case at bar.
Under Arkansas law,
[e]very . . . material supplier . . . who supplies . . . material . . . in the construction. . . of an improvement to real estate . . . upon complying with the provisions of this subchapter, shall have, to secure payment, a lien upon the improvement.. . .
A.C.A. § 18-44-101(a). This lien "date[s] from the time that the construction . . . first commenced." A.C.A. § 18-44-110(a).
Arkansas law permits perfection of a materialman's lien against an entity that acquired rights in the property before such perfection, and under 11 U.S.C. § 546(b)(1)(A), post-petition perfection of a lien is authorized if it is authorized under state law. See In re McCord, 219 B.R. 251, 252 (Bkrtcy.E.D.Ark.1998), wherein the Bankruptcy Court explained that:
[u]nder Arkansas law, every mechanic, laborer, or other persons who performs any work or furnishes material for building or for repairing any building by virtue of a contract with the owner or agent, has a lien upon the building, so long as the person complies with the requirements of the statute. The lien attaches to buildings or other improvements and is given preference, with some exceptions, to prior and subsequent liens, encumbrance, or mortgages. To comply with the statute, and thereby perfect the lien, the laborer or vendor must file a verified account of the amount owing and a description of the property with the clerk of the circuit court within 120 days after the work is performed or materials furnished. If a complaint is filed with the Circuit Clerk, that document suffices to perfect the lien. Once the lienor has substantially complied with the statute, the lien arises *632 and relates back to the time of the performance.
Thus, since Supershine filed a verified complaint with the Circuit Court within 120 days of the performance of its contract with the debtors, it complied with the mechanics' lien statute and, under Arkansas law, has a valid mechanics' lien. Bankruptcy Code section 546 not only preserves this lien, but also permits the post-petition perfection of this lien. The interest in the property arose and existed pre-petition, and because later perfection and relation-back is permitted under Arkansas law, section 546 also permits that perfection to be made and relate back to a prepetition date. The filing of the bankruptcy petition did not terminate Supershine's right to timely perfect its mechanic's lien.
219 B.R. at 252 (internal citations omitted).
The import of the foregoing authorities is that in Arkansas, a materialman's lien arises by statute on the date construction begins; it remains inchoate until it is perfected for expires by failure to timely perfect; and upon perfection, it relates back to the date construction began.
On the date of the $200,000 transfer in this case, Cooper had inchoate materialman's liens on several of Betty's propertiesas to which the time to perfect was running out but had not expired. No party contends that these liens were not later timely perfected. The filing of Betty's bankruptcy petition did not terminate Cooper's right to timely perfect its materialman's liens; and, upon perfection, the liens were not avoidable under the Bankruptcy Code.[3] Under the In re Electron Corp. analysis, this state of affairs places Cooper in the category of a secured creditor. That being the case, the transfer of $200,000 from Community First Bank to Cooper was a transfer from one secured creditor to anotherwhich falls within the parameters of the earmarking doctrine. It was, thus, not an avoidable transfer as defined in 11 U.S.C. § 547(b).
11. Although the foregoing analysis is not the basis upon which the Bankruptcy Court determined that no avoidable transfer had occurred, it is a well-established rule of law that the decision of a lower court may be affirmed if it reached the right resultalbeit for the wrong reason. Hendricks v. Lock, 238 F.3d 985, 987 (8th Cir.2001). The decision of the Bankruptcy Court is, therefore, affirmed.
IT IS SO ORDERED.
NOTES
[1] Cooper contends in its Brief that it had sent lien notices by late July, 2006 (page 7) but Latham's testimony does not support this contention.
[2] Cooper makes many arguments in its Brief suggesting that it disagrees with the Bankruptcy Court's finding that Betty's was insolvent on the date of the transfer in question, and with the Bankruptcy Court's evidentiary rulings. Since Cooper did not appeal on those bases, the Court will not address its arguments relating to them.
[3] This conclusion is borne out by the terms of the Confirmed Plan Of Liquidation Of Betty's Homes, Inc., which states, as to Class 3, Claims of Perfected Lien Claimants, that.
[a] Perfected Lien Claimant is a secured creditor of the Debtor who is not a Secured Mortgage Claimant and who perfected its lien in and to an asset of the Debtor by the filing of appropriate notices and documentation in the appropriate governmental office and according to Arkansas law on or before 12.08 PM Central Time on Friday, 20th October 2006. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918663/ | 242 Md. 102 (1966)
218 A.2d 24
BARLEY
v.
MARYLAND DEPARTMENT OF EMPLOYMENT SECURITY
[No. 74, September Term, 1965.]
Court of Appeals of Maryland.
Decided March 30, 1966.
The cause was argued before PRESCOTT, C.J., and HORNEY, MARBURY, BARNES and McWILLIAMS, JJ.
James J. Lombardi, with whom was Edward T. Conroy on the brief, for appellant.
James N. Phillips, General Counsel, Maryland Department of Employment Security, with whom were Thomas B. Finan, Attorney General, Bernard S. Melnicove, Special Assistant Attorney General, and Peter Skefas, Assistant General Counsel, Maryland Department of Employment Security, on the brief, for appellee.
BARNES, J., delivered the opinion of the Court.
The Referee of the Maryland Department of Employment Security (the Department) decided on September 16, 1964 that the appellant, Laura E. Barley (the claimant) was available *104 for work and had not applied for or accepted suitable work. He denied the claimant unemployment benefits from July 10, 1964 until the claimant became reemployed and earned at least ten times her weekly benefit amount of $38.00. The Department's Board of Appeals (the Board) on October 7, 1964 affirmed the Referee's decision and on December 11, 1964, the Circuit Court for Prince George's County (Bowie, J.) affirmed the decision of the Board. This appeal is from Judge Bowie's order.
The claimant, a 54 year old woman was employed by ACF Electronics (ACF) as a wireman or solderer for 13 years prior to her separation from employment by ACF for an indefinite period on April 3, 1964. At that time she had 13 years of union seniority by virtue of which she was entitled to recall under the union contract. At the time of her lay off, her wage rate was $2.68 an hour. She filed a claim with the Department for unemployment benefits on April 5, 1964, was classified as a solderer, and was awarded $38.00 a week for 13 weeks until July 10, 1964, the date of her disqualification.
The claimant was sent to the Department's Employment Service Office on July 10, 1964 to discuss a potential job at the Johns Hopkins Physics Laboratory, Consultants & Designers Department (C & D Laboratories). The wage rate at C & D Laboratories for wiring, assembling and welding training was $1.95 an hour. The wage scale began at a minimum of $1.75 with a maximum of $3.25 an hour.
The claim specialist's report, constituting a statement made and signed by the claimant on July 14, 1964, states in pertinent part as follows:
"I told the employer that interviewed me last Friday that I was waiting recall from my former employer. I spoke with personnel at A.C.F. Electronics and they said I was third on the list. They expect to call me by the end of the month. I was also asked what salary I had been receiving. I said $2.68 per hour and when I returned I would receive $2.75 per hour. I was told he could not match my salary that I had been receiving."
At the hearing before the Board's Referee, the Referee asked *105 the claimant if this statement "was the gist of what you were talking about?" to which the claimant replied: "Well, generalizing it, yes. Not word for word." She stated that she did not remember the conversation "word for word", but gave the following testimony before the Referee in regard to her recollection of the conversation with the representative of C & D Laboratories:
"He looked at my file and he said, `oh, another ACF,' and I said, `yes,' and he said `I see you are subject to recall.' I said, `yes, I am,' he said `when will you go back?' I said, `when, if and when I'm called, because I have seniority there, I hate to lose.' So he said * * * `what were your wages at ACF' and I told him what they were and what they would be when I went back."
The "Statement of the Employer" states "would have hired her, had she not been awaiting recall."
As we have indicated the Referee denied the claim, the Board and later the Circuit Court affirmed the denial of claim. We have concluded that the order of the Circuit Court should be affirmed.
The Unemployment Insurance Law appears in Code (1964 Cum. Supp.) Article 95A, §§ 1 to 23. By Section 7(h) the scope of judicial review on the facts is substantially limited as Section 7(h) provides in part as follows:
"In any judicial proceeding under this section, the findings of the Board of Appeals as to the facts, if supported by evidence and in the absence of fraud, shall be conclusive, and the jurisdiction of said court shall be confined to questions of law."
We have consistently applied this statutory provision. Judge Horney, for the Court, reviewed the prior Maryland cases and stated in Employment Security Board v. LeCates, 218 Md. 202, 207, 145 A.2d 840, 843 (1958):
"In unemployment compensation cases we have consistently held, as the law requires, that the findings of the Board as to the facts are conclusive, if there is *106 evidence to support such findings. The court's jurisdiction, in such cases, is specifically limited to questions of law. Mitchell, Inc. v. Md. Emp. Sec. Bd., 209 Md. 237, 121 A.2d 198 (1956); Md. Emp. Security Bd. v. Poorbaugh, 195 Md. 197, 72 A.2d 753 (1950); Tucker v. American S. & Ref. Co., 189 Md. 250, 55 A.2d 692 (1947); Brown v. Md. Unemp. Comp. Board, 189 Md. 233, 55 A.2d 696 (1947). See also Franke v. Unemployment Compensation Board of Rev. 166 Pa. Super. 251, 70 A.2d 461 (1950). In stating the material facts, the court should state as facts such evidence as is most favorable to the findings of the Board. Steamship Ass'n v. Unemp. Comp. Bd., 190 Md. 215, 57 A.2d 818 (1948); Tucker v. American S. & Ref. Co., supra. Moreover, in reviewing the facts, a court is confined to determining whether there is evidence to support the findings of the Board, and in the absence of fraud, that finding, as stated above, is conclusive."
As there is no fraud alleged or proved, the findings of fact of the Board's Referee, supported by evidence and adopted and affirmed by the Board, are conclusive upon us. The evidence most favorable to these findings of fact is reflected in the original statement by the claimant in the Claim Specialist's Report on Determination, set out above, and this statement indicates that the claimant stated to the representative of the prospective employer that she preferred to wait for recall from her former employer, ACF, and that the potential job was not diligently applied for or accepted by the claimant.
Article 95A, Section 6 sets forth the applicable law in regard to disqualification for benefits. It states in relevant part:
"(d) Failure to apply for or accept work; determination of suitable work. If the Executive Director finds that he failed, without good cause, either to apply for available, suitable work, when so directed by the Executive Director, or to accept suitable work when offered him, or to return to his customary self-employment (if any) when so directed by the Executive *107 Director. Such disqualification shall be effective from the date when the application for work was to have been made, or when he was notified that suitable work became available to him, or when directed to return to his customary self-employment by the Executive Director, whichever is later, and shall continue for not less than one or more than ten weeks immediately following thereafter or until such individual has become reemployed and has earnings therein equal to at least ten (10) times his weekly benefit amount.
"(1) In determining whether or not any work is suitable for an individual, the Executive Director shall consider the degree of risk involved to his health, safety, and morals, his physical fitness and prior training, his experience and prior earnings, his length of unemployment and prospects for securing local work in his customary occupation, and the distance of the available work from his residence.
"(2) Notwithstanding any other provisions of this article, no work shall be deemed suitable and benefits shall not be denied under this article to any otherwise eligible individual for refusing to accept new work under any of the following conditions: (A) If the position offered is vacant due directly to a strike, lockout, or other labor dispute; (B) if the wages, hours, or other conditions of the work offered are substantially less favorable to the individual than those prevailing for similar work in the locality; (C) if as a condition of being employed the individual would be required to join a company union or to resign from or refrain from joining any bona fide labor organization."
The determination of the facts in regard to whether or not a claimant has applied for available, suitable work or has accepted suitable work when offered to the claimant is especially within the expertise of the administrative officials administering the Unemployment Insurance Law, involving as it does many subtle considerations and nuances of fact which need *108 evaluation by those trained to make that evaluation. It would be a rare case indeed, which would justify a court in disturbing that administrative determination, and the case at bar is not one of them. The right of the claimant to wait for recall to her old job at ACF is clear, but she had no right to wait for what was only a hope of reemployment on July 14, 1964,[1] after 13 compensated weeks of unemployment benefits, without being disqualified when she did not diligently apply for or accept suitable work as determined by the administrative officials.
In our opinion, the type of work offered the claimant was "suitable." It was of the same general type of work she was accustomed to perform and indeed offered her training in a new, growing and related field of welding. The lower rate of wages for a person in training for the work of the prospective employer was not shown to be low or disproportionate to the rate for similar work in the community. Then too, the maximum rate for the new work at C & D Laboratories was substantially higher than the hourly rate she was receiving at ACF.
We consider the case of Lowell v. Maine Employment Security Commission, 159 Me. 177, 190 A.2d 271 (1963) to be closely in point with the case before us and we find the opinion of the majority of the Supreme Judicial Court of Maine to be persuasive. In Lowell the claimant was a woman, 57 years of age, who had been employed as a repairer in a local shoe manufacturing establishment until she was separated from her employment due to lack of work. She was paid on a piece work basis and received average weekly earnings of between $50 to $55. She filed her initial application for employment security benefits on April 2, 1961 and thereafter filed weekly claims. On May 18, 1961 the claimant was referred to a local shoe shop as a repairer at $1.25 an hour. She discussed the job with the prospective employer and indicated that she wanted to go back to her former employer. The prospective employer would *109 not employ the claimant when it was discovered that the claimant would not stay if offered work by her former employer. The Employment Security Act of Maine is quite similar to the Maryland Unemployment Insurance Law. The Maine Employment Security Commission disqualified the claimant from benefits and this action was affirmed, on appeal, by the Superior Court. In affirming the decision of the Superior Court, Chief Justice Williamson, for the Supreme Judicial Court of Maine, stated:
"There is nothing unusual in the situation here disclosed. The claimant simply did not choose to accept a job as a repairer without making known her intention to leave when a hoped for job at higher pay might become open within a few weeks. Under these conditions the Belgrade Shoe lost interest in the claimant and withdrew its offer of a job.
"No job is permanent, of course, in an absolute sense. Belgrade Shoe attached no condition to its offer of employment and doubtless would not have been surprised had the claimant given up a job as repairer to return to a former employer at a higher wage. This possibility is quite different from a condition attached to the proposed employment that the claimant presently plans to leave within a few weeks. Understandably the Belgrade Shoe did not wish to employ the claimant under these conditions." (Pages 273-274 of 190 A.2d).
After indicating that the claimant was "reasonably fitted" to the new job and that the work was "suitable", Chief Justice Williamson, continued:
"The rate per hour offered by Belgrade Shoe was less the claimant says than she expected to earn at piecework with Clark Shoe. There is no indication that the offered hourly wage was not in line with wages in the industry generally or that it was a depressed wage. The difference in estimated income was not so great as to make the repairer's job at Belgrade Shoe unsuitable for the claimant.
*110 "The claimant had been unemployed since March 24, 1961. The Belgrade Shoe job was refused on May 18, 1961. The hearing of the Appeals Tribunal, whose findings of fact were adopted by the Commission, was held on June 8, 1961. The claimant then had no more than a hope of employment in early July, not with Wood & Smith Shoe Co., her most recent employer, but with a former employer Clark Shoe." (Page 274 of 190 A.2d).
He then continued:
"The purpose of the Employment Security Act was well stated by Justice Brennan, then of the New Jersey Supreme Court and now of the Supreme Court of the United States in Krauss v. A. & M. Karagheusian, Inc., 100 A.2d at p. 281:
`The Unemployment Compensation Act provides social insurance, for the common good as well as in the interest of the unemployed individuals, against the distress of involuntary unemployment for those individuals who have ordinarily been workers and would be workers now but for their inability to find suitable jobs. [Cited cases omitted] The provisions for eligibility and disqualification are purposed to preserve the fund for the payment of benefits to those individuals and to protect it against the claims of others who would prefer benefits to suitable jobs. The basic policy of the law is advanced as well when benefits are denied in improper cases as when they are allowed in proper cases.'
"The claimant chose to refuse an offer of suitable work. The Commission so found on credible evidence. The penalty is disqualification for benefits under the Act." (Page 275 of 190 A.2d).
See also Farrar v. Director, 324 Mass. 45, 84 N.E.2d 540 (1949); Swanson v. Minneapolis-Honeywell Regulator Co., 240 Minn. 449, 61 N.W.2d 526 (1953); Goings v. Riley, Commissioner, 98 N.H. 93, 95 A.2d 137 (1953); Weiland v. Unemployment *111 Compensation Board of Review, 167 Pa. Super. 554, 76 A.2d 457 (1950); Haug v. Unemployment Compensation Board of Review, 162 Pa. Super. 1, 56 A.2d 396 (1948); Annotation, "Availability for work", under unemployment compensation statute, of claimant who undertakes to restrict willingness to work to certain hours, types of work, or conditions, not usual and customary in the occupation, trade or industry, 25 A.L.R. 2d 1077.
In our opinion the findings of fact by the Referee, adopted and confirmed by the Board, were supported by evidence and, based upon those findings, the Board acted properly in disqualifying the claimant from receiving benefits as set forth in the Referee's decision of September 16, 1964. The lower court properly affirmed the decision of the Board of October 7, 1964 affirming the Referee's decision.
Order affirmed, the appellant to pay the costs.
NOTES
[1] The claimant was reemployed by ACF on August 3, 1964, but this prospective reemployment was, of course, unknown to the claimant on July 10, 1964, the time of the interview with the representative of C & D Laboratories. The claimant, herself, stated that she would return to work at ACF "when, if and when I'm called * * *." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583543/ | 31 So. 3d 986 (2010)
Francis TOUCHET, Jr.
v.
Ernal J. BROUSSARD.
No. 2010-C-0380.
Supreme Court of Louisiana.
March 3, 2010.
*987 Anthony J. Fontana, Jr., APLC, Anthony Jerome Fontana, Jr., Abbeville, for Applicant.
Huval, Veazey, Felder, Aertker & Renegar, LLC, Bradford Hyde Felder, Lafayette, for Respondent.
VICTORY, J.[*]
We granted a writ in this election case to determine whether the automatic first offender pardon provisions of La. Const, art. IV, § 5(E)(1) and La. R.S. 15:572 enable a convicted felon to run for public office under La. Const, art. I, § 10(B)(1) before the expiration of 15 years from the completion of the sentence. After reviewing the record and the applicable law, we hold an automatic first offender pardon does not restore a felon's right to run for public office under La. Const, art. I, § 10(B)(1).
FACTS AND PROCEDURAL HISTORY
Francis Touchet, Jr. ("Touchet"), a duly qualified elector of District B, City of Abbeville, Vermillion Parish, Louisiana, filed a petition in the 15th Judicial District Court challenging the candidacy of Ernal J. Broussard ("Broussard") for a seat on the Abbeville City Council.[1] The election is scheduled for March 27, 2010. Touchet alleged that Broussard is a convicted felon who has not obtained a gubernatorial or presidential pardon and that fifteen years have not elapsed since defendant completed his sentence.
The facts are uncontested. On June 22, 2005, Broussard was charged with and pled guilty to one felony count of aiding and abetting an illegal gambling business in violation of 18 U.S.C. §§ 1955(a) and (2) in the case entitled United States of America v. Ernal Broussard, No. 05-60035, United States District Court, Western District of Louisiana.
Broussard was sentenced on April 27, 2006 to two years probation, six months home incarceration, and a fine of $5,000.00. His probation was terminated on December 14, 2007. Touchet alleges that by virtue of his felony conviction, Broussard is prohibited from running for public office for a period of 15 years pursuant to La. Const, art. I, § 10. La. Const, art. I, § 10(B) provides:
(B) Disqualification. The following persons shall not be permitted to qualify as a candidate for elective public office or take public elective office or appointment of honor, trust, or profit in this state:
(1) A person who has been convicted within this state of a felony and who has exhausted all legal remedies, or who has *988 been convicted under the laws of any other state or of the United States or of any foreign government or country of a crime which, if committed in this state, would be a felony and who has exhausted all legal remedies and has not afterwards been pardoned either by the governor of this state or by the officer of the state, nation, government or country having such authority to pardon in the place where the person was convicted and sentenced.
(2) A person actually under an order of imprisonment for conviction of a felony.
(C) Exception. Notwithstanding the provisions of Paragraph (B) of this Section, a person who desires to qualify as a candidate for or hold an elective office, who has been convicted of a felony and who has served his sentence, but has not been pardoned for such felony, shall be permitted to qualify as a candidate for or hold such office if the date of his qualifying for such office is more than 15 years after the date of the completion of his original sentence.
Broussard argues he is eligible to run for two reasons: (1) the crime of which he was convicted in federal court is not a felony under Louisiana law and therefore his conviction does not meet the requirements of La. Const, art. I, § 10(B)(1); and (2) although he was not granted a pardon by the governor or the President, he was granted an automatic pardon as a first offender pursuant to La. Const. art. IV, § 5(E)(1).[2] La. Const, art. IV, § 5(E)(1), which delineates the powers of the executive branch, provides:
The governor may grant reprieves to persons convicted of offenses against the state and, upon favorable recommendation of the Board of Pardons, may commute sentences, pardon those convicted of offenses against the state, and remit fines and forfeitures imposed for such offenses. However, a first offender convicted of a non-violent crime ... never previously convicted of a felony shall be pardoned automatically upon completion of his sentence, without a recommendation of the Board of Pardons and without action by the governor.[3]
*989 The trial court held a timely hearing pursuant to La. R.S. 18:1409 and rendered judgment disqualifying Broussard as a candidate for the office of councilman of District B, City of Abbeville. The trial court found that Broussard's Plea Agreement admitted his guilt of all the elements of the Louisiana felony offense of gambling as defined by La. R.S. 14:90. Further, the trial court found that La. Const. art. I, § 10 requires a pardon by the governor or the officer of the state, nation, government, or country having such authority to pardon, and that because Broussard did not receive such a pardon and because 15 years had not elapsed since the completion of his sentence, he was ineligible to run for public office. On appeal, the Third Circuit did not reach the constitutional issue of whether an automatic first offender pardon entitles a convicted felon to run for public office pursuant to La. Const. art. I, § 10(B), but reversed the trial court's judgment because the facts in the record did not prove Broussard committed a felony under Louisiana law for purposes of La. Const. art. I, § 10(B). Touchet v. Broussard, 10-188 (La.App. 3 Cir. 2/19/10), 31 So. 3d 1164, 2010 WL 572530. We granted plaintiffs writ application and set it for expedited argument and consideration. Touchet v. Broussard, 10-380 (La.2/24/10), 28 So. 3d 261.
DISCUSSION
First, we consider the appellate court's holding that Broussard's federal conviction does not constitute a felony under Louisiana law. La. Const. art. I, § 10(B)(1) disqualifies from candidacy a person who has been convicted under the laws of the United States of a crime which, if committed in this state, would be a felony. The court of appeal found the federal felony to which Broussard pled guilty is not equivalent to the felony proscribed by the state gambling statute set out in La. R.S. 14:90, which provides:
A.(1)(a) Gambling is the intentional conducting, or directly assisting in the conducting, as a business, of any game, contest, lottery, or contrivance whereby a person risks the loss of anything of value in order to realize a profit.
(b) Whoever commits the crime of gambling shall be fined not more than five hundred dollars, or imprisoned for not more than six months, or both.
(2) Whoever conducts, finances, manages, supervises, directs, or owns all or *990 part of an illegal gambling business shall be fined not more than twenty thousand dollars, or imprisoned with or without hard labor, for not more than five years, or both when:
(a) R.S. 14:90 is violated.
(b) Five or more persons are involved who conduct, finance, manage, supervise, direct, or own all or part of an illegal gambling business.
(c) Such business has been in or remains in substantially continuous operation for a period of thirty days or more or, if the continuous operation is for less than thirty days, has a gross revenue of two thousand dollars in any single day.
The Bill of Information charged Mr. Broussard with violating 18 U.S.C. § 1955(a) reciting:
From on or about October 1, 1998, until on or about October 1, 2003, the exact dates being unknown, in the Western District of Louisiana and elsewhere, the defendant, ERNAL J. BROUSSARD, and at least four or more other persons, did unlawfully, willfully and knowingly conduct, finance, manage, supervise, direct and own all or part of an illegal gambling business, or aid in and abet such activity, to wit: illegal gambling involving bookmaking in violation of the State Law of Louisiana, Revised Statute, Title 14, Section 90, said illegal gambling business was conducted during the period aforesaid and remained in substantially continuous operation for a period in excess of thirty (30) days, all in violation of Title 18, United States Code, Sections 1955(a) and 2.
On August 11, 2005, Broussard, his attorney and the Assistant United States Attorney entered into a written "Plea Agreement" wherein Broussard agreed to plead guilty to "Count 1 of the Bill of Information charging him with Aiding and Abetting an [il]legal Gambling Business in violation of Title 18, United States Code, Sections 1955(a) and 2" and to "admit to the court he is in fact guilty of the offense charged." Those parties also signed a "Stipulated Factual Basis for Guilty Plea," stating:
From on or about October 1, 1998, until on or about October 1, 2003, ... ERNAL J. BROUSSARD through his business Package Liquor Exchange ... cashed checks for Phillip Mazella, owner of M & M Consultants. Mr. Mazella operated an illegal gambling business, and the checks processed by Mr. Broussard were the result of the illegal bookmaking operation. Mr. Broussard was one of the primary check cashing businesses used by Mr. Mazella and millions of dollars flowed through his business. Mr Broussard was paid a fee for his services. The illegal gambling business employed and was conducted by four or more other persons. The illegal gambling business was in operation for over ten years and had revenues in excess of millions of dollars during the time period charged in the Bill of Information. The defendant ... was not licensed by the State of Louisiana as a money transmitting or check cashing business. Operating an illegal business involving bookmaking is a violation of Louisiana Revised Statute, Title 14, Section 90.
Finally, the Federal District Court Judge considered the elements of the federal offense before accepting Broussard's plea and read the following to him from the bench before accepting the plea:
In order for you to be found guilty in violation of Title 18, United States Code, Section 1955(a), the United States would have to prove the following essential elements beyond a reasonable doubt:
First: That you, along with four or more persons, knowingly conducted, financed, managed, supervised or owned all or *991 part of a gambling business as charged or aided and abetted such activity;
Second: That said gambling business violated the laws of the State of Louisiana. Bookmaking is against the laws of the State of Louisiana; and
Third: That said gambling business was in substantially continuous operation for a period in excess of thirty days and had a gross revenue of $2,000 or more in any one day.
In spite of the above elements, which clearly correspond to those found in La. R.S. 14:90, the court of appeal found that although the federal plea "is to a crime comparable to La. R.S. 14:90 which is a felony, the aided and abetted language qualifies the plea and limits it to the charge of aiding and abetting." Touchet v. Broussard, Op. at 1167, 31 So.3d at 1164. The court of appeal concluded that "Louisiana law does not contain an aiding and abetting statute comparable to the federal statute, and Mr. Touchet has pointed the court to no comparable Louisiana felony." Id. However, the court of appeal's ruling ignores a basic principle of Louisiana statutory criminal law that all persons who aid and abet in the commission of a crime are principals. See La. R.S. 14:24 ("All persons concerned in the commission of a crime, whether present or absent, and whether they directly commit the act constituting the offense, aid and abet in its commission, or directly or indirectly counsel or procure another to commit the crime, are principals"). Thus, it is unnecessary for La. R.S. 14:90, or any other criminal statute, to additionally contain any aiding or abetting provisions as those actors are already considered principals to the crime. For that reason, the court of appeal's judgment that aiding and abetting an illegal gambling business as delineated in the Bill of Information, Plea Agreement, and Stipulated Factual Basis is not a felony under Louisiana law was erroneous.[4]
Having resolved that issue, we must now consider the constitutional issue of whether the automatic first offender pardon provided by La. Const. art. IV, § 5 entitles a convicted felon to run for public office before the expiration of 15 years from the completion of his sentence pursuant to La. Const. art. I, § 10(B)(1). This section disqualifies from candidacy a person who has been convicted "within this state of a felony ... or who has been convicted under the laws ... of the United States ... of a crime which, if committed in this state would be a felony" and who "has not afterwards been pardoned either by the governor of this state or by the officer of the state, nation, government or country having such authority to pardon in the place where the person was convicted and sentenced." Broussard did not obtain a pardon from either the governor or the President. However, he argues he obtained an automatic first offender pardon under La. Const. art. IV, § 5(E)(1)[5] and *992 that pardon satisfies the requirements of La. Const. art. I, § 10(B)(1). Essentially, Broussard argues an automatic pardon has the same effect as a pardon granted by a governor or other authorized official, such as the President, for purposes of allowing him to run for public office before the expiration of 15 years from the completion of his sentence. Broussard also refers to La. Const. art. 1, § 20, which states in part that "[f]ull rights of citizenship shall be restored upon termination of state and federal supervision following conviction for any offense."
These constitutional provisions are to be interpreted using the following principles. First, "if one constitutional provision addresses a subject in general terms, and another addresses the same subject with more detail, the two provisions should be harmonized if possible, but if there is any conflict, the latter will prevail." Ocean Energy, Inc. v. Plaquemines Parish Government, 04-0066 (La.7/6/04), 880 So. 2d 1, 7. Secondly, the latest expression of the will of the people prevails over previously conflicting provisions. Pumphrey v. City of New Orleans, 05-979 (La.4/4/06), 925 So. 2d 1202, 1210. Thus, to the extent that La. Const. art. I, § 10, art. I, § 20, and art. IV, § 5 conflict, the above rules will be used to resolve the conflict.
The language found in La. Const. art. I, § 10(B) which disqualified from candidacy for public office a person who has been convicted of a felony was added in 1998 by constitutional amendment, as was the language removing the disqualification for a felon who has "afterwards been pardoned either by the governor of this state, or the officer of the state, nation ... having such authority to pardon ..."[6] Article I, § 20, restoring "full rights of citizenship" to convicted criminals who have served their sentence was in existence long before 1998. Further, Article 1, § 20 addresses rights of citizenship in general terms, while Article I, § 10(B) is specifically addressed to the right to run for and hold public office. To the extent these two provisions cannot be reconciled, as "full rights of citizenship" would include the right to run for public office, we find that the former provision has been restricted by the 1998 amendment to Article I, § 10, as the later and more specific provision must prevail.
Regarding Article I, § 10(B) and Article IV, § 5, these two provisions are not in conflict as Article I, § 10(B) is specifically limited to gubernatorial and presidential pardons and makes no mention of automatic first offender pardons. Further, the automatic pardon provision for first offenders was added to the 1921 Constitution by a 1968 amendment. See note 9, infra. When the pardon process was overhauled during the 1973 Constitutional Convention, the automatic pardon provision remained and was enacted in Article IV, § 5. Id.[7]*993 Not only was La. Const. art. I, § 10(B) enacted later than La. Const. art. IV, § 5(E), Article I is in the "Declaration of Rights" section of the constitution, Article IV, § 5 delineates the powers of the executive branch, and § 5(E)(1) grants to the governor the power to pardon.[8] Further, § 10(B) specifically addressed the right to run for public office and the provision allowing a convicted felon to run for office expressly applies only to a felon who "has not afterwards been pardoned either by the governor of this state or by the officer of the state, nation, government or country having such authority to pardon in the place where the person was convicted and sentenced." (Emphasis added). Had the people intended for felons who had been granted an automatic first offender pardon to be immediately qualified to run for office pursuant to La. Const. art. I, § 10 they could have said so, and they did not. Instead, a convicted felon is not forever prohibited from running for public office, he simply must wait 15 years from the completion of his sentence. La. Const. art. I, § 10(C).
This Court has previously compared the effect of the automatic first offender pardon with a full gubernatorial pardon. In State v. Adams, 355 So. 2d 917 (La.1978), the Court discussed the automatic first offender pardon in the context of habitual offender adjudications and held while it was clear that a full complete pardon by the governor precludes the use of a pardoned offense to enhance punishment, State v. Childers, 197 La. 715, 2 So. 2d 189 (1941), an automatic pardon does not preclude consideration of a first felony conviction in adjudicating a person as a habitual offender. Adams stated that while a pardon under La. Const. art. IV, § 5(E)(1) restores privileges as well as rights, "[t]hat does not mean, however, that the automatic pardon provision restores the status of innocence to the convict who has merely served out his sentence." 355 So.2d at 922. The Court reasoned:
"In State v. Lee, [171 La. 744, 132 So. 219 (1931)], we stated that "... the pardon restores the original status of the pardoned individual, i.e., a status of innocence of crime." 171 La. at 746, 132 So. at 219. We also quoted with approval a statement made by the United States Supreme Court in Ex parte Garland, [4 Wall. 333,] 71 U.S. 333, 380, 18 L. Ed. 366 (1866), that "... when the pardon is full, it releases the punishment and blots out of existence the guilt, so that in the eye of the law the offender is as innocent as if he had never committed the offense." 171 La. at 747, 132 So. 220.
A full pardon granted by the governor has presumably been given the careful consideration of several persons who have taken into account the circumstances surrounding the offense, and particular facts relating to the individual. We do not feel, however, that the delegates to the 1973 Constitutional Convention, in including this provision in the 1974 Constitution (or the legislature before them in proposing a similar amendment to Art. 5, § 10 of the 1921 Constitution, La. Acts 1968, No. 662, § 1), intended that service of one's sentence be the only prerequisite for restoration of the status of innocence. If the legislature had intended that a first offense *994 could not be relied upon for the enhancement of punishment, it could easily have said so."[9]
Id.
Relying on our reasoning in Adams that an automatic pardon pursuant to La. Const. art. IV, § 5(E)(1) does not have the same effect as a full gubernatorial pardon under that same provision, every appellate court that has considered the issue has held an automatic first offender pardon does not restore a convicted felon's right to run for office under La. Const. art. I, § 10(B). State ex rel. Moreau v. Castillo, 07-1865 (La.App. 1 Cir. 9/24/07), 971 So. 2d 1081, writ denied, 07-1900 (9/28/07), 964 So. 2d 349, cert. denied, Castillo v. Louisiana, 552 U.S. 1110, 128 S. Ct. 896, 169 L. Ed. 2d 748 (2008); Malone v. Tubbs, 36, 816 (La.App. 2 Cir. 9/6/02), 825 So. 2d 585, writs denied, 02-2322 (La.9/11/02), 824 So. 2d 1164 and 02-2448 (La.10/1/02), 826 So. 2d 1110; Cook v. Skipper, 99-1448 (La. App. 3 Cir. 9/27/99), 749 So. 2d 6, writ denied 99-2827 (La.9/30/99), 745 So. 2d 601. These courts further explained that the language of La. Const. art. I, § 10(B) requires that the pardon must be given by the governor or by the officer of the government having such authority and that because an automatic pardon requires no action, La. Const, art. I, § 10(B) was not referring to an automatic pardon. Id.[10]*995 That reasoning is in line with our reasoning today and is a correct interpretation of these constitutional provisions.
Broussard suggests statements made in this Court's opinion in Malone v. Shyne, 06-2190 (La.9/13/06), 937 So. 2d 343, cast doubt on the reasoning of the above cases and suggest this Court may be inclined to hold an automatic first offender pardon does restore a convicted felon's right to run for office. In Shyne, this Court decided in a 4-3 opinion that the governor has the authority to grant a pardon that restores collateral civil rights forfeited as a consequence of state law to a person convicted of a federal crime. The effect of an automatic pardon on the right to run for public office was not at issue in Shyne and thus any statements made in that case regarding the automatic pardon are dicta. In fact, twice in Shyne the majority stated that because there was no evidence to show whether Shyne was in fact entitled to an automatic pardon, the majority was expressly not considering the merits of that issue. 937 So.2d at 347, n. 1, and 353, n. 5.[11] Therefore, no statements in Shyne which have any effect on the issue we have decided today.
CONCLUSION
The Louisiana Constitution disqualifies from candidacy for public office those persons who have been convicted within this state of a felony, or convicted under the laws of the United States of a felony which would also constitute a felony under Louisiana law, unless that person has been pardoned by the governor or by the official having the authority to pardon in the place where the person was convicted and sentenced. La. Const. art. 1, § 10(B)(1). Absent a pardon, 15 years must elapse before a felon can seek public office. In this case, Broussard pled guilty to aiding and abetting an illegal gambling business in violation of 18 U.S.C. §§ 1955(a) and 2. The Bill of Information, Plea Agreement, and Stipulated Factual Basis all confirm that this crime constituted a felony under La. R.S. 14:90. The fact La. R.S. 14:90 does not specifically address aiders and abetters is immaterial, as all persons who aid and abet in the commission of a crime are considered principals under Louisiana law. La. R.S. 14:24. Further, the possibility Broussard obtained an automatic first offender pardon by virtue of La. Const. art. IV, § 5 does not allow him to run for office prior to the expiration of 15 years from the completion of his sentence, as La. Const. art. I, § 10(B)(1) specifically requires that the pardon be granted by the governor or the official having the authority to grant the pardon, such as the President. An automatic first offender pardon is different than a full gubernatorial or presidential pardon in that it does not restore the status of innocence and does *996 not preclude consideration of a first felony conviction in prohibiting a person from running for public office until the expiration of fifteen years from the completion of his sentence.
DECREE
For the reasons stated herein, the judgment of the court of appeal is reversed and the judgment of the trial court declaring that Ernal Broussard is disqualified as a candidate for the office of councilman of District B, City of Abbeville is reinstated.[12]
REVERSED; TRIAL COURT JUDGMENT REINSTATED.
NOTES
[*] Retired Judge Robert L. Lobrano, assigned as Justice ad hoc, sitting for Chief Justice Catherine D. Kimball.
[1] La. R.S. 18:1401(A) provides that "[a] qualified elector may bring an action objecting to the candidacy of a person who qualified as a candidate in a primary election for an office in which the plaintiff is qualified to vote."
[2] Broussard argued in the lower courts that the entire proceeding is void because of failure to add an indispensable party, and insufficiency in the service of process and the waiver of service of process. Both courts rejected these challenges and we will not address them again here.
[3] La. R.S. 15:572 provides further statutory requirements for the operation of an automatic pardon under the constitutional provision, providing as follows:
A. The governor may grant reprieves to persons convicted of offenses against the state and, upon recommendation of the Board of Pardons as hereinafter provided for by this Part, may commute sentences, pardon those convicted of offenses against the state, and remit fines and forfeitures imposed for such offenses. Notwithstanding any provision of law to the contrary, the governor shall not grant any pardon to any person unless that person has paid all of the court costs which were imposed in connection with the conviction of the crime for which the pardon is to be issued.
B. (1) A first offender never previously convicted of a felony shall be pardoned automatically upon completion of his sentence without a recommendation of the Board of Pardons and without action by the governor.
(2) No person convicted of a sex offense as defined in R.S. 15:541 or determined to be a sexually violent predator or a child predator under the provisions of R.S. 15:542.1 et seq. shall be exempt from the registration requirements of R.S. 15:542.1 et seq., as a result of a pardon under the provisions of this Subsection.
(3) Notwithstanding any provision of law to the contrary, no pardon shall be issued to a first offender unless that person has paid all of the court costs which were imposed in connection with the conviction of the crime for which the pardon is to be issued.
C. For the purposes of this Section, "first offender" means a person convicted within this state of a felony but never previously convicted of a felony within this state or convicted under the laws of any other state or of the United States or of any foreign government or country of a crime which, if committed in this state, would have been a felony, regardless of any previous convictions for any misdemeanors. Convictions in other jurisdictions which do not have counterparts in this state will be classified according to the laws of the jurisdiction of conviction.
D. On the day that an individual completes his sentence the Division of Probation and Parole of the Department of Corrections, after satisfying itself that (1) the individual is a first offender as defined herein and (2) the individual has completed his sentence shall issue a certificate recognizing and proclaiming that the petitioner is fully pardoned for the offense, and that he has all rights of citizenship and franchise, and shall transmit a copy of the certificate to the individual and to the clerk of court in and for the parish where the conviction occurred. This copy shall be filed in the record of the proceedings in which the conviction was obtained. However, once an automatic pardon is granted under the provisions of this Section, the individual who received such pardon shall not be entitled to receive another automatic pardon.
E. Notwithstanding any provision herein contained to the contrary, any person receiving a pardon under the provisions of Subparagraph (1) of Paragraph (E) of Section 5 of Article IV of the Louisiana Constitution of 1974 and this Section may be charged and punished as a second or multiple offender as provided in R.S. 15:529.1.
[4] The court of appeal apparently also found the federal gambling statute only requires four or more persons be involved, while the state statute requires five or more persons. However, the Bill of Information charged that "ERNAL J. BROUSSARD, and at least four or more other persons," engaged in the prohibited activity, the Stipulated Factual Basis stated that "[t]he illegal gambling business employed and was conducted by four or more other persons," and the federal judge's colloquy with Broussard before accepting his plea stated "you, along with 4 or more persons" were involved in the prohibited activity. Under any of the above statements, the number of involved parties equals at least five, as required by the Louisiana statute.
[5] We accept for the sake of argument today that the automatic first offender pardon provisions apply to federal convictions; however, in no way should this opinion be considered to agree with that argument because we expressly do not address it.
[6] The amendment was approved on October 3, 1998 and became effective November 5, 1998. Prior to the 1998 amendment, Art. I, § 10 provided:
Section 10. Every citizen of the state, upon reaching eighteen years of age, shall have the right to register and vote, except that this right may be suspended while a person is interdicted and judicially declared mentally incompetent or is under an order of imprisonment for conviction of a felony.
[7] A 1999 amendment to Article IV, § 5(E) only limited the crimes to which a automatic first offender pardon would apply. See Acts 1999, No. 1398 (inserting in subpar. (E)(1) "convicted of a non-violent crime, or convicted of aggravated battery, second degree battery, aggravated assault, mingling harmful substances, aggravated criminal damage to property, purse snatching, extortion, or illegal use of weapons or dangerous instrumentalities").
[8] Specifically, the governor's pardon power is limited to the following: "[t]he governor may grant reprieves to persons convicted of offenses against the state and, upon favorable recommendation of the Board of Pardons, may commute sentences, pardon those convicted of offenses against the state, and remit fines and forfeitures imposed for such offenses." La. Const. art. IV, § 5(E)(1).
[9] Under the 1921 Constitution, the governor had the authority to grant pardons and commutations of sentence upon the recommendation of the Lieutenant Governor, the Attorney General, and the judge who presided over the conviction. La. Const. of 1921, art. V, § 10. A 1968 amendment added an automatic pardon for first offenders. The 1973 Constitutional Convention entirely revamped the pardon process. Judge Helen Ginger Berrigan, Executive Clemency, First-Offender Pardons: Automatic Restoration of Rights, 62 La. L.Rev. 49 (2001). During the convention, a proposal from the Committee on the Executive Department gave the governor the complete and sole discretion to grant pardons and commutations of sentence. Id. (citing V Records of the Louisiana Constitutional Convention of 1973; Convention Transcripts at 577 (Aug. 3, 1973)). As soon as that proposal was introduced, another amendment was proposed by some who complained of past gubernatorial abuses of the clemency process, which provided that the gubernatorial power to grant clemency "may [be] restricted or limited" by the legislature. Id. (citing I Records of the Louisiana Constitutional Convention of 1973; Journal of Proceedings at 261 (Aug. 3, 1973); V Records of the Louisiana Constitutional Convention of 1973; Convention Transcripts at 582-83 (Aug. 3, 1973)). After that amendment was defeated, the next amendment, which was ultimately adopted, proposed the creation of a Pardon Board, provided that the governor could only grant pardons upon the recommendation of this newly created pardon board, and included the automatic pardon for first offenders from the 1921 Constitution. Id. (citing I Records of the Louisiana Constitutional Convention of 1973; Journal of Proceedings at 262, 265 (Aug. 3, 1973)). Another amendment to the Constitution passed in 1999 expressly stated that the governor could only pardon based upon a "favorable" recommendation from the Pardon Board. 1999 La. Acts No. 1401.
[10] This Court and other appellate courts have recognized the limited effect of an automatic pardon on other rights as follows: an automatic pardon does not prevent a person from being convicted of unlawful possession of a weapon on the basis of the first felony conviction, State v. Wiggins, 432 So. 2d 234 (La. 1983); does not alter the prohibition against certain sentence suspensions, State v. Derouin, 00-1150 (La.App. 3 Cir. 1/31/01), 778 So. 2d 1186; does not prevent the state nursing board from denying a nursing student's application to take the registered nurse's exam on the basis of a felony conviction, Davis v. State Bd. of Nursing, 96-0805 (La. App. 1 Cir. 2/14/97), 691 So. 2d 170, writ denied, 97-0689 (La.4/25/97), 692 So. 2d 1094; does not prevent the denial of professional licenses to persons with first offender pardons such as gaming employee permits, Eicher v. Louisiana State Police, Riverboat Gaming Enforcement Div., 97-121 (La.App. 1 Cir. 2/20/98), 710 So. 2d 799, writ denied, 98-0780 (La.5/8/98), 719 So. 2d 51; does not relieve a convicted sex offender from the registration and notification requirements, State v. Moore, 03-16 (La.App. 3 Cir. 5/14/03), 847 So. 2d 53, writs denied, 03-1480 (La. 12/12/03), 860 So. 2d 1150 and 04-2931 (La. 1/21/05), 893 So. 2d 55; and does not prevent restrictions on a person's driving license privileges. Dear v. State, 28,852 (La.App. 2 Cir. 10/30/96), 682 So. 2d 862.
[11] The other time the effect of the automatic pardon was mentioned by the majority was discussing the legislative history of art. 1, § 10 in order to determine whether the governor was authorized to issue a pardon for federal convictions. In that discussion, the majority quoted a statement "concerning at least one Louisiana legislator's understanding of the amendments" in which Representative Bruneau stated "because there is virtually an automatic pardon for first offenders under the constitution, the bill basically refers to second offenders and allows them to run after 15 years." 937 So.2d at 353. Not only was this statement dicta, the understanding of one Louisiana legislator is clearly insufficient to affect our views here. Ultimately, it is the language of the constitution which prevails.
[12] No application for rehearing of a decision of this Court in a case involving an objection to candidacy shall be entertained. La. Sup. Ct. Rule X, § 5(c). See also La. R.S. 18:1409(1). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584012/ | 427 So.2d 921 (1983)
Lester E. DAVIS, Plaintiff-Appellant,
v.
UNITED PARCEL SERVICE, INC., et al., Defendants-Appellees.
No. 82-507.
Court of Appeal of Louisiana, Third Circuit.
February 3, 1983.
Rehearing Denied March 22, 1983.
*922 Fuhrer & Flournoy, George A. Flournoy, Alexandria, for plaintiff-appellant.
Provosty, Sadler & deLaunay, Albin Provosty, Alexandria, for defendants-appellees.
Before GUIDRY, CUTRER and LABORDE, JJ.
CUTRER, Judge.
This appeal arises out of a malpractice suit by Lester E. Davis against Andrew Vallien, an attorney, wherein Davis alleged Vallien was negligent when he failed to file a workmen's compensation claim against his employer, United Parcel Service, Inc. (UPS), within the prescriptive period of one year. After a jury trial, judgment was rendered dismissing Davis' suit. Davis appealed. We affirm.
Lester Davis, while driving a truck in the course and scope of his employment for UPS, was injured in an intersectional collision on September 28, 1979, in the City of Natchitoches, Louisiana. Curtis Babbitt was the driver of the automobile which collided with Davis' truck. Dr. J.O. Trice happened to be a witness to the accident and rendered first aid to Davis at the scene. Davis was then taken to the emergency room of the local hospital where Dr. Trice examined Davis and treated him for his injuries which were of a minor nature and included lacerations of the left forearm, elbow, and one on the face near the left eyebrow. Also, Davis had sustained some contusions (bruises) of the head and knees. Dr. Trice also saw Davis on October 1 and October 8, 1979. This was the extent of the physician's treatment of Davis. Davis returned to work approximately two weeks after the accident.
A short time later Davis retained Vallien to represent him in his claims arising out of the accident. Vallien later made demands upon Babbitt (now deceased) and his alleged insurer, Aetna Life and Casualty Insurance Company (Aetna), for damages incurred by Davis. Being unable to effectuate a compromise of the demand for damages, Vallien filed a tort suit on behalf of Davis against the succession of Babbitt and Aetna. This suit was filed on September 26, 1980, within two days of one year prescription.
Following the filing of suit, Davis discharged Vallien and retained the services of his present attorney. After the discharge, Vallien received a check of $1,000.00 as an offer of compromise from Aetna. This check was transferred to Davis by Vallien but was apparently never negotiated. In June 1981, through the recommendation of his present attorney, the suit against Aetna was settled for $1,000.00.
In September 1981, Davis filed suit for workmen's compensation benefits against UPS and its compensation carrier, Liberty Mutual Insurance Company (Liberty Mutual), on the ground of facial disfigurement; and, in the alternative, filed the malpractice suit against Vallien and his insurer, Northbrook Insurance Company (Northbrook).
The trial court granted the motion for summary judgment filed by UPS and Liberty Mutual on the ground that Davis' disability ended by October 15, 1979, and he had been paid all compensation payments that were due, the final payment being made October 25, 1979. It was alleged that the workmen's compensation action against them had prescribed as approximately twenty-one months had elapsed since the last payment was made. Judgment was rendered dismissing the suit against UPS and Liberty Mutual.
After a jury trial, judgment was rendered dismissing Davis' malpractice suit *923 against Vallien and his insurer. Davis appealed.
Davis assigns several specifications of error. We have examined them and find three of them are meritorious. These errors emanate from jury instructions and "interrogatories" presented by the trial court and were of such substance that it will be necessary for this court to evaluate the evidence and decide the case and render judgment on the record. Gonzales v. Xerox Corporation, 320 So.2d 163 (La.1975).
The errors which we shall discuss are as follows:
(1) The trial court's erroneous charge pertaining to the burden of proof in a malpractice suit against an attorney; and
(2) The errors present in the "interrogatories" presented to the jury.
BURDEN OF PROOF
The trial court instructed the jury on the burden of proof as follows:
"[T]he plaintiff has the burden of proving the following elements by a preponderance of the evidence. He must demonstrate first that the loss, which he says he suffered, was, in fact, caused by the conduct of the defendant. Two, that the conduct of the defendant was below the standards, which I have told you are applicable to the defendant's conduct. And, three, that there was actual loss to the plaintiff. If you are satisfied that the plaintiff has established these three elements, then plaintiff is entitled to recover....."
Counsel for Davis objected on the ground that, once Davis established that Vallien allowed prescription to run on this compensation claim, the burden of proof shifted to Vallien to show that the compensation claim had no merit and/or would not have resulted in recovery.
The trial court's charge, as given, was the correct law at the time this case was tried (March 1982). The charge presented by counsel for Davis was not the law at that time. By coincidence, however, the Supreme Court, in the case of Jenkins v. St. Paul Fire and Marine Insurance Co., et al., 422 So.2d 1109 (La.1982), has changed the rule of burden of proof in this type of case. The rule in Jenkins is very similar to that submitted by counsel for Davis.
In making the change in the burden of proof the court, in Jenkins, stated as follows:
"[W]e granted certiorari to review that judgment. 399 So.2d 607. The grant was prompted to some extent by the concern over the `case within a case' approach used by the court of appeal in this case and by other courts in earlier decisions. Under that approach a plaintiff in legal malpractice litigation must prove not only that the attorney was negligent in handling the client's claim on litigation, but also that the claim or litigation would have been successful but for the attorney's negligence. See King v. Fourchy [47 La.Ann. 354], 16 So. 814 (La. 1895); Dyer & Stevenson v. Drew, 14 La.Ann. 657 (La.1859); Spiller v. Davidson, 4 La.Ann. 171 (La.1849); Toomer v. Breaux, 146 So.2d 723 (La.App. 3rd Cir. 1962); Lewis v. Collins, 260 So.2d 357 (La.App. 4th Cir.1972).
I.
"In the present case, the attorneys concede that they were negligent in not filing suit until two days after prescription had run.1 The remaining question is whether the client, after proving the attorneys' negligence, must also establish the validity of the underlying claim by proving that the attorneys' negligence caused him damages and by further proving the amount of the damages.
"Plaintiff contends that, once the client has established negligence on the part of the attorney, the burden should be placed on the negligent attorney to prove that the mishandled claim or litigation would have been unsuccessful.
"Causation, of course, is an essential element of any tort claim. However, once the client has proved that his former attorney accepted unemployment (sic) *924 and failed to assert the claim timely, then the client has established a prima facie case that the attorney's negligence caused him some loss, since it is unlikely the attorney would have agreed to handle a claim completely devoid of merit. In such a situation, a rule which requires the client to prove the amount of damages by trying the `case within a case' simply imposes too great a standard of certainty of proof. Rather, the more logical approach is to impose on the negligent attorney, at this point in the trial, the burden of going forward with evidence to overcome the client's prima facie case by proving that the client could not have succeeded on the original claim, and the causation and damage questions are then up to the jury to decide. Otherwise, there is an undue burden on an aggrieved client, who can prove negligence and causation of some damages, when he has been relegated to seeking relief by the only remedy available after his attorney's negligence precluded relief by means of the original claim...." Footnote omitted.)
1 In the lower courts, each attorney claimed that the client had established an attorney-client relationship with the other, who was solely responsible to file the suit timely. The jury found, however, that they were solidarily liable and that one could not recover over against the other. No such claims have been urged in this court.
The Jenkins case is clearly retroactive as this rule is procedural. The Jenkins rule, being retroactive, has the effect of rendering erroneous the instructions given by the trial court. As we have previously stated, the errors herein are such that we must decide the case on the record and, in doing so, we will bear in mind the Jenkins rule in evaluating the evidence.
"INTERROGATORIES" PRESENTED TO THE JURY FOR DETERMINATION
At the close of the jury charges, the trial court presented the following to the jury for their determination. (The jury "answered" as indicated.)
"INTERROGATORY NO. 1
We, the Jury, find that plaintiff has a serious permanent disfigurement of the face in the form of scars and that the scars are residuals from lacerations sustained in the work-related accident of September 28, 1979.
YES `Yes' NO ____
"(IF YOU ANSWER INTERROGATORY NO. 1 `YES', ANSWER INTERROGATORY NO. 2. IF YOU ANSWER INTERROGATORY NO. 1 `NO', DO NOT ANSWER ANY MORE INTERROGATORIES. HAVE THE FOREMAN SIGN THIS VERDICT FORM AND RETURN TO THE COURTROOM.)
"INTERROGATORY NO. 2 We, the Jury, find that defendant, Andrew Vallien, committed malpractice in failing to file a workmen's compensation suit within the time permitted by law to recover compensation for plaintiff because of a serious permanent disfigurement of the face.
YES ____ NO `No' "
Counsel for Davis properly entered objections to these "interrogatories."[1]
LSA-R.S. 23:1221(4)(p) provides, in pertinent part, "[w]here the employee is seriously permanently disfigured about the face or head ... the court may allow such compensation as is reasonable...." The jurisprudence of this and other circuits has consistently held that, for a scar to be compensable under R.S. 23:1221(4)(p); i.e., for an employee to be considered "seriously permanently disfigured," the scar complained of must be materially disfiguring and permanent in character. Karmazin v. Kaiser Aluminum & Chem. Corp., 374 So.2d 202 (La.App. 4th Cir.1979), (i.e., a facial scar which significantly mars the habitual facial *925 expression and is such as to attract attention); Lewis v. Orleans Parish Sch. Brd., 371 So.2d 328 (La.App. 4th Cir.1979), writ den., 373 So.2d 526 (La.1979), (well settled); Templet v. Travelers Insurance Company, 278 So.2d 805 (La.App. 1st Cir.1973), (well settled); Dykes v. North River Insurance Company, 270 So.2d 329 (La.App. 1st Cir. 1972), writ ref'd, 272 So.2d 375 (La.1973), (jurisprudence is settled); Addison v. Neeb Kearney & Company, 252 So.2d 471 (La. App. 4th Cir.1971), (scar complained of barely detectable even on close scrutiny; trial judge found no serious permanent disfigurement); Landry v. Liberty Mutual Insurance Company, 236 So.2d 235 (La.App. 3rd Cir.1970), (evidence does not show material disfigurement); Miller v. General Chemical Division, 128 So.2d 39 (La.App. 1st Cir.1961), (acid burns; disfigurement is serious and permanent, award justified); Ousley v. Employers Mutual Liability Ins. Co. of Wis., 121 So.2d 378 (La.App. 1st Cir. 1960), [cites Malone, Louisiana Workmen's Compensation § 283, pp. 362-363 (1951), re: requirement that injury be materially disfiguring and permanent in character.] Thus, the jurisprudence has developed rather precise factual standards to be used in determining if an employee is "seriously permanently disfigured" as required by the statute.
LSA-C.C.P. art. 1811, paragraph (A), provides that the trial court "[m]ay require a jury to return only a special verdict in the form of a special finding upon each issue of fact."[2] As we consider Interrogatory # 1, we find that the court failed to ask the jury to make a specific finding of fact with regard to whether Davis' scar is materially disfiguring. The jurisprudence cited above reflects that an employee is "seriously permanently disfigured" only when a finding is made that the employee is materially disfigured and the scar is permanent in character. The jury was not asked to make such a finding although it was correctly charged on this point. The charge in this regard was as follows:
"In order for a plaintiff to establish that a facial scar is compensable, he must prove that it significantly mars his habitual facial expression and is such to attract attention; slight or insignificant scarring which is not readily noticeable is not compensable.... Accordingly, if you find that plaintiff's face or head is seriously permanently disfigured, that is, he has scars on his face or head which were caused by lacerations sustained in the traffic accident on September 28, 1979, and that the scars significantly mar plaintiff's habitual facial expression and are such as to attract attention, you may award plaintiff up to sixty-six and two-thirds percent of the weekly wage he was making at the time of the accident for 100 weeks. However, if you find that plaintiff's face does have scars which were caused by the traffic accident on September 28, 1979, but that the scars do not significantly mar plaintiff's habitual facial expression and are not such as to attract attention, then you may not make any award to plaintiff." (Emphasis added.)
The charge correctly sets forth the most recent statement of the jurisprudential threshold necessary in order for a facial disfigurement to be compensable. As stated in Karmazin, supra, the scars must significantly *926 mar plaintiff's habitual facial expression and must be such as to attract attention. A less precise, but more frequently used, statement of the standard would have been to charge the jury that it must find the scar "materially disfiguring and permanent in character" before a finding of "serious permanent disfigurement" could be made. It is not the charge to the jury that is in error. The error is found in the interrogatory submitted to the jury.
The first finding ("interrogatory") submitted by the court to the jury only mentions a finding of "serious permanent disfigurement." It does not set forth a finding that the scarring must "significantly mar Davis' habitual facial expressions and are such as to attract attention." Without this threshold finding, the jury's findings do not necessarily support a verdict for either the plaintiff or defendant.
It may be argued that the jury's finding in Interrogatory # 2, which seeks a finding as to whether Vallien committed malpractice by not timely filing the suit, which was answered "No," amounts to a finding that the scars on Davis' face did not mar Davis' habitual facial expression and are not such as to attract attention. For us to arrive at this conclusion would require speculation. Speculation cannot serve as a basis for a judgment rendered pursuant to a jury finding. If special findings of fact are to be required of a jury, these findings must present a clear resolution of each issue arising in this suit; i.e., negligence, causation, and, if applicable, damages. The findings herein do not resolve these issues.
We conclude that the findings of the jury are such that they would not serve as a basis for judgment either for the plaintiff or the defendant. For these reasons we are unable to give the usual weight to the jury findings and it becomes our duty to review the evidence and to render a proper judgment in accordance with applicable law. Gonzales v. Xerox Corporation, supra. In doing so we will consider the evidence and apply the burden of proof rule enunciated in Jenkins, supra.
NEGLIGENCE OF VALLIEN
It is undisputed that Vallien failed to file a workmen's compensation claim on behalf of Davis. Vallien stated that, when he first saw Davis, soon after the accident, he found out that Davis had been paid two weeks workmen's compensation and that he had returned to his regular duties. He stated that he did not notice any scars on Davis' face. He made no inquiries of Davis in this regard. We note, however, that on January 28, 1980, four months post-accident, Vallien received a letter from Dr. Trice which stated that Davis had "some disfigurement with a small scar over the left forehead region." Vallien did not inquire any further into the comments made by the doctor.
In the case of Ramp v. St. Paul Fire and Marine Insurance Company, 263 La. 774, 269 So.2d 239 (1972), the court stated as follows:
"An attorney is obligated to exercise at least that degree of care, skill, and diligence which is exercised by prudent practicing attorneys in his locality. He is not required to exercise perfect judgment in every instance. However, the attorney's license to practice and his contract for employment hold out to the client that he possesses certain minimal skills, knowledge, and abilities....."
In this case, Vallien was on notice that Davis had some facial scar. Vallien owed Davis a duty to inform Davis of the disfigurement provision of the workmen's compensation statute and whether, in the opinion of Vallien, such statute would be applicable to the facts present. If Vallien felt that he would not have been successful in pursuing such a claim, he should not remain silent but he should so inform Davis and it would be Davis' decision whether he wanted to attempt the pursuit by employing another counsel or whether to abandon such claim upon the advice of Vallien. Vallien has the duty to inform his client of all possibilities and make recommendations thereon. If he fails to do this, he is not properly performing his duties in his representation of Davis. If he fails in this duty *927 by remaining silent and allows prescription to run, he is negligent and may be held liable for any losses to Davis that were caused by such negligence. Jenkins v. St. Paul Fire and Marine Insurance Co., supra. We conclude that Vallien was clearly negligent in this matter for not filing the claim, thus, the remaining question is whether such negligence caused any damages to Davis.
WHETHER SCARRING AND FACIAL DISFIGUREMENT WAS INCURRED BY DAVIS
Dr. Trice was the attending physician in this case. He saw Davis in the hospital emergency room on the day of the accident. He classified Davis' injuries as minor. He stated that Davis had a cut on his right forearm one and one-half inches in length. He had a cut one inch long in the lateral area of the left eye. Also, Davis had a small cut on the left elbow and contusions near the left eye and on the knees. The lacerations were sutured in the emergency room on September 29, 1979, and the sutures were removed on October 8th. Davis was released to go back to work on October 15, 1979.
Davis had some pre-existing scarring in the area of the forehead from childhood injuries. The only injuries that we are concerned with are the cut and/or contusions near Davis' left eye. Before trial, a deposition of Dr. Trice was taken by Davis' attorney. Before the deposition began Dr. Trice was shown three small scars near Davis' left eye. Two scars were near or in the eyebrow and one was lateral to the eye. It was suggested to Dr. Trice that these were the scars from cuts that the doctor had treated as a result of the accident. Dr. Trice did not have the hospital records that he had prepared when the treatment was rendered on the day of the accident. Without his notes he could not remember the exact nature of the injuries near Davis' left eye. He testified on deposition that the three scars near the left eye were related to the accident.
After the deposition and before trial, Dr. Trice examined the records he prepared and found that his deposition testimony was not correct. At trial Dr. Trice testified that, after reviewing his records, he found that Davis had incurred one cut, one inch long, lateral to the eye which he sutured. He stated that there was some contusion near the eye but that this would not cause scarring. We conclude that Davis had one cut, on the face, one inch in length, lateral to the left eye and which was sutured. The recovery was without incident. The lacerations left a minor scar. This brings us to a consideration of whether the scar is compensable under the workmen's compensation law.
Two attorneys, practicing in Natchitoches, Louisiana, were called to testify on behalf of Vallien. One of these testified that the scar from the one inch cut did not significantly mar Davis' habitual facial expression nor was it such as to attract attention. This testimony was as follows:
"Q. But, I'd like for you to specify for me, please sir, on what basis you reached your opinion that the scarring on this gentleman's face is not compensable?
"A. It, to me, does not fit the definition of the statute. I think, you know, it's a subjective thing. I might reach one opinion; you might reach one opinion; Mr. Provosty might reach one opinion; the Judge might reach one opinion, and it's a subjective thing, but I think you have to look at his age, the location of the scars, the prominence of them. He's Black. Fortunately it's not any keloid. He has no loss of pigmentation. You have to look real close, you know, to see them in their location. II've had, you know dealings with Black people, unfortunately, sometimes when they scar they have a loss of pigmentation; sometimes they have what they call a `keloid' which I always heard, referred to as a child, as `proud flesh' where a big bump comes up and sometimes you have to do "Z" plastic surgery on them and things like that. And, I'm sitting here right now and I can't even see the scars on the left side of his face, you know....." *928 A second attorney, called by Vallien, testified to the same effect. His testimony was as follows:
Q. What factors did you base your opinion on that this scar's not compensable?
"A. Well, principally, that it does not strike me as being serious material disfigurement that's apparent and noticeable. I don't think that it quite frankly falls within the scope and purpose of the Workmen's Compensation Act. And, I don't view that what I see as being the scars complained of by Mr. Davis falls within the definition of the cases which I examined."
On the other hand, two other attorneys were called by Davis. These two witnesses both stated that they felt that the scars were compensable. They were of the impression that the three scars near the left eye were caused by the accident. Their conclusions were not based upon the fact that only one scar emanated from the accident.
Davis testified that his scars embarrassed him and that he had people to ask him about them. He was not able to say whether those persons were referring to the previously existing scars or to the scar caused by the cut in the accident.
Davis' wife, when asked about the scars, stated as follows:
"Q. And, your opinion as his wife, do they detract from his appearance?
"A. Yes, they throw it off a little.
"Q. Uhare theyhas it beenhas it been brought to your attention in any way that these scars may be evident or noticeable to others?
"A. Yes.
"Q. And whathow was this done?
"A. How are they noticeable to others?
"Q. How did you know that the scarsthat the scars on his face were noticeable to others?
"A. I had a friend to ask me about them; how did he get them."
We note that she didn't differentiate between the prior scars and the scar received in the accident. There are no photographs of Davis' face in evidence. The only description of Davis' facial scar is that given by the witness first quoted above.
As we review the records, the testimony of all witnesses and documentary evidence, we find that Davis received one cut and some contusions on the face. The one inch cut was sutured and recovery was without incident.
The scar was hardly detectable upon viewing same. There was no protrusion or discoloration associated with the healing of the wound. We find that Davis is not seriously, permanently disfigured about the face. The scar does not significantly mar Davis' habitual facial expression and is not such as to attract attention of other persons. Vallien has met his burden of proving that Davis would not have been entitled to workmen's compensation for disfigurement of the face or head area. For these reasons we shall render judgment in favor of defendants Vallien and his insurer and against Davis dismissing Davis' case.
For the reasons set forth, the judgment of the trial court dismissing the plaintiff's suit is affirmed. Plaintiff-appellant is to pay all costs of this appeal.
AFFIRMED.
NOTES
[1] Following the trial judge's charges to the jury, he immediately sent them out for deliberations. He did not afford the attorneys an opportunity to make objections before deliberations began. This was error. LSA-C.C.P. art. 1793. The attorney for Davis entered his objection to the interrogatories at the first opportunity after the charge was finished. The trial court refused to consider same. The objection was timely under these circumstances.
[2] LSA-C.C.P. art. 1811(A) provides:
"A. The court may require a jury to return only a special verdict in the form of a special written finding upon each issue of fact. In that event the court may submit to the jury written questions susceptible of categorical or other brief answer, or may submit written forms of the several special findings which might properly be made under the pleadings and evidence, or may use any other appropriate method of submitting the issues and requiring the written findings thereon. The court shall give to the jury such explanation and instruction concerning the matter submitted as may be necessary to enable the jury to make its findings upon each issue. If the court omits any issue of fact raised by the pleadings or by the evidence, each party waives his right to a trial by jury of the issue omitted unless before the jury retires, he demands its submission to the jury. As to an issue omitted without such demand the court may make a finding; or, if it fails to do so, it shall be presumed to have made a finding in accord with the judgment on the special verdict." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584025/ | FREDERICK W. STRICKLAND AND CHERYL D. STRICKLAND
v.
AMERIQUEST MORTGAGE COMPANY.
No. 2009 CA 0463.
Court of Appeals of Louisiana, First Circuit.
October 23, 2009.
Not Designated for Publication
HANSAL M. HARLAN, Counsel for Defendant/Appellant, Ameriquest Mortgage Company.
JEFFERY T. OGLESBEE, SHERMAN Q. MACK, Counsel for Plaintiff/Appellee, Frederick Strickland and Cheryl Strickland.
Before: WHIPPLE, HUGHES, and WELCH, JJ.
WHIPPLE, J.
This matter is before us on appeal by defendant, Ameriquest Mortgage Company (hereinafter "Ameriquest"), from a summary judgment of the trial court in a declaratory judgment suit filed by plaintiffs, Frederick and Cheryl Strickland, wherein the court declared a mortgage on plaintiffs' property invalid and dismissed Ameriquest's reconventional demand. For the following reasons the judgment of the trial court is affirmed in part, reversed in part and remanded.
FACTS AND PROCEDURAL HISTORY
The pertinent procedural history and facts can be summarized as follows. This case involves an allegedly invalid mortgage on property owned by plaintiffs, Frederick and Cheryl Strickland, which they sought to have cancelled through this suit. In March 2005, the Stricklands' son, Stephen Strickland, donated to them an undeveloped tract of land in Livingston Parish ("the Bull Run property"). Thereafter, in June 2005, the Stricklands donated to Stephen a developed lot in Livingston Parish ("Lot 15-A"). The following month, in July 2005, Stephen and his wife Mary Ellen borrowed $60,000.00 from Ameriquest, to be secured by a mortgage on Lot 15-A. However, Ameriquest inadvertently prepared a mortgage on the Bull Run property (then owned by the Stricklands), rather than Lot 15-A (then owned by Stephen).
After Ameriquest refused to release the mortgage, the Stricklands filed the instant suit, wherein they sought a judgment declaring the mortgage on their property absolutely null given that they were not parties to the loan transaction with Ameriquest (and did not consent to the mortgage). Thus, the Stricklands sought to have the mortgage erased from the mortgage records.
Ameriquest answered and filed a reconventional demand against the Stricklands, and a third-party demand against Stephen and his wife Mary Ellen. Ameriquest acknowledged that while the body of the mortgage expressly (and correctly) described Lot 15-A, the attached plat described the Bull Run property. However, Ameriquest averred that Stephen and Mary Ellen, upon realizing that the loan to Ameriquest was potentially unsecured, had subsequently confected a sham loan, mortgage and dation en paiement of Lot 15-A to the Stricklands, in an attempt to prevent Ameriquest from seizing Lot 15-A to satisfy the unpaid loan Stephen and Mary Ellen made with Ameriquest.
Specifically, Ameriquest averred that less than six months after Stephen and Mary Ellen borrowed the $60,000.00 sum from Ameriquest, which loan they had agreed to secure by a mortgage on Lot 15-A, they also purportedly borrowed $50,000.00 from the Stricklands and granted the Stricklands a mortgage on Lot 15-A. However, according to the reconventional demand, Stephen and Mary Ellen never paid the Stricklands anything on that loan. According to Ameriquest, approximately two months later, on March 6, 2006, Stephen and Mary Ellen made the last loan payment to Ameriquest and did not make any further payments on the commercial loan thereafter. Stephen and Mary Ellen then dationed Lot 15-A to the Stricklands in satisfaction of the purported $50,000.00 loan. On the same day that the dation en paiement was recorded (and now that Lot 15-A was no longer in Stephen's name), counsel for the Stricklands, who was allegedly to have supplied these loan funds, wrote to Ameriquest and demanded that the mortgage on the Bull Run property be released, arguing that Stephen and Mary Ellen had no authority to grant a mortgage on property Stephen no longer owned.
Ameriquest averred that the mortgage on Lot 15-A granted to the Stricklands and the dation en paiement transferring Lot 15-A to the Stricklands were absolute or relative simulations and, thus, that Lot 15-A was still owned by Stephen. Accordingly, Ameriquest sought judgment annulling the mortgage and the dation en paiement of Lot 15A to the Stricklands as sham transactions entered into in derogation of Ameriquest's rights and interests.
On October 24, 2007, the Stricklands filed a motion for summary judgment, seeking cancellation of the Ameriquest mortgage on their properties, and a hearing on the motion was scheduled for February 6, 2008. Counsel for Ameriquest filed Ameriquest's opposition and supporting documentation one day later than the cutoff, and, therefore, the trial court disallowed the opposition and related evidence as untimely. The trial court then rendered judgment in favor of the Stricklands, releasing all encumbrances by Ameriquest against both Lot 15-A and the Bull Run property and dismissing, with prejudice, Ameriquest's reconventional demand against the Stricklands. The judgment also awarded the Stricklands $500.00 for attorney's fees. Notably, the judgment did not address or dismiss Ameriquest's third-party demand against Stephen and Mary Ellen Strickland.
On March 28, 2008, Ameriquest filed a motion for new trial pursuant to LSA-C.C.P. arts. 1972(1), 1972(2) and/or 1973 contending that the judgment was contrary to the law and evidence in that plaintiffs failed to carry their initial burden of proof and that Ameriquest had proof of newly discovered evidence. The motion was heard and denied by the trial court on July 7, 2008.[1]
From this judgment, Ameriquest appeals, contending the trial court erred in: (1) disallowing Ameriquest's opposition to the motion for summary judgment; (2) granting summary judgment dismissing Ameriquest's reconventional demand when the motion for summary judgment did not even address those claims; (3) granting summary judgment without the introduction of any evidence by the Stricklands; (4) denying Ameriquest's motion for new trial pursuant to LSA-C.C.P. art. 1972(1); (5) denying Ameriquest's motion for new trial pursuant to LSA-C.C.P. art. 1972(2); and (6) denying Ameriquest's motion for new trial pursuant to LSA-C.C.P. art. 1973.
DISCUSSION
Appellate courts review summary judgments de novo under the same criteria that govern the trial court's determination of whether a summary judgment is appropriate. Webb v. The Parish of St. Tammany, XXXX-XXXX (La. App. 1st Cir. 2/9/07), 959 So. 2d 921, 923, writ denied, XXXX-XXXX (La. 4/27/07), 955 So. 2d 695. A motion for summary judgment should only be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits, show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law. LSA-C.C.P. art. 966(B). The burden of proof remains with the movant. However, if the movant will not bear the burden of proof at trial, its burden on the motion does not require it to negate all essential elements of the adverse party's action, but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party's claim. Thereafter, if the adverse party fails to produce factual support sufficient to establish that he will be able to satisfy his evidentiary proof at trial, there is no genuine issue of material fact. LSA-C.C.P. art. 966(C)(2).
When a motion for summary judgment is made and supported as provided by law, an adverse party may not rest on the mere allegations and denials of his pleadings. His response, by affidavits or otherwise provided by law, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, will be rendered against him. LSA-C.C.P. art. 967; Robles v. ExxonMobile, XXXX-XXXX (La. App. 1st Cir. 3/28/03), 844 So. 2d 339, 341.
However, the law is also clear that the burden to present evidence in a motion for summary judgment does not shift to the party opposing the motion unless and until the moving party first presents evidence that no genuine issue of material of fact exists. Sharp v. Harrell, 99-0737 (La. App. 1st Cir. 5/12/00), 762 So. 2d 1119, 1122, writ denied, 2000-2458 (La. 11/3/00), 773 So. 2d 150. Moreover, when determining whether a "genuine" issue exists, courts cannot consider the merits, weigh the evidence, evaluate testimony, or make credibility determinations. Williams v. Storms, 2001-2820 (La. App. 1st Cir. 11/8/02), 835 So. 2d 755, 759. Moreover, because it is the applicable law that determines materiality, whether a particular fact in dispute is "material" for summary judgment purposes can be seen only in light of the substantive law applicable to the case. Dickerson v. Picadilly Restaurants, Inc., 99-2633 (La. App. 1st Cir. 12/22/00), 785 So. 2d 842, 844.
Ameriquest's Assignment of Error
Ameriquest first contends that the trial court erred in refusing to consider its memorandum and exhibits in opposition to plaintiffs' motion for summary judgment because the filing was one day late.[2]
Plaintiffs' motion for summary judgment was filed on October 24, 2007, and the matter was set for hearing on February 6, 2008. The parties do not dispute that Ameriquest's memorandum in opposition to the motion for summary judgment was due January 29, 2008. Counsel for Ameriquest explained at the hearing (and on appeal) that on the morning of January 29, 2008, he learned of the tragic death of his close friend, professional colleague, and co-counsel. Although counsel was able to complete his opposition memorandum, he was unable to timely file it with the district court that day, as the Clerk's office had closed its doors shortly before he arrived to file the memorandum.
For the reasons that follow,[3] we find that summary judgment, at least in part, was improvidently granted on plaintiffs' motion, and we find a remand is required in this matter. Accordingly, we pretermit discussion as to whether the trial court's refusal was an abuse of discretion under the attendant circumstances.[4]
Further, to the extent that Ameriquest argues that the summary judgment should be reversed on the basis that plaintiffs failed to formally introduce any evidence at the hearing on the motion, as set forth in assignment of error number three, we likewise decline to do so on this basis. Ameriquest contends that since the exhibits attached to plaintiffs' motion for summary judgment that were filed into the record were not offered and introduced into evidence at the hearing on the motion for summary judgment, they may not be considered.[5] Louisiana Code of Procedure article 966 does not contemplate the necessity of introducing items already filed in the record into evidence at the hearing on the motion for summary judgment. Johnson v. Slidell Memorial Hospital, 552 So. 2d 1022, 1023 (La. App. 1st Cir. 1989), writ denied, 558 So. 2d 571 (La. 1990). For a document to be considered on a motion for summary judgment, it must be filed into evidence at the hearing on the motion or filed into the record. Hopper v. Crown, 560 So. 2d 890, 892 (La. App. 1st Cir. 1990); cf. Boland v. West Feliciana Parish Police Jury, XXXX-XXXX (La. App. 1st Cir. 6/25/04), 878 So. 2d 808, 814, writ denied, 2004-2286 (La. 11/24/04), 888 So. 2d 231. Consequently, because the exhibits relied on by plaintiffs were properly filed of record, the trial court did not err in considering them when rendering its ruling.
Further, to the extent that Ameriquest challenges the summary judgment on the merits, we agree with the trial court that plaintiffs undisputedly were entitled to summary judgment annulling the mortgage affecting Lot 15-A as the parties conceded at oral argument. However, we do not find that on the record before us, the evidence, exhibits and documents submitted in support of plaintiffs' motion for summary judgment established their right to judgment in their favor, as a matter of law, dismissing, with prejudice, the claims and demands raised by Ameriquest in its reconventional demand. At a minimum, we find unresolved material issues of fact remain as they may affect the Bull Run property.
In its reconventional demand, Ameriquest contended that the mortgage and subsequent dation en paiement granted to plaintiffs over Property B (Lot 15-A) is an absolute or relative simulation, as it does not express the true intent of the parties. Ameriquest also contended that to the extent that plaintiffs provided any monies to Stephen and Mary Ellen Strickland under their purported loan, that amount was less than one-half of the fair market value of Property B (Lot 15-A) at the time of the dation en paiement, rendering the transfer of Property B (Lot 15-A) to plaintiffs subject to rescission for lesion beyond moiety.
In sum, on de novo review, we find that plaintiffs' filings do not address these claims, i.e., whether the purported transfers were lesionary or otherwise absolute nullities; nor do these filings establish their entitlement to judgment as a matter of law. Thus, on summary judgment, the burden never shifted to Ameriquest and the grant of summary judgment as to these claims was in error. See Sharp v. Harrell, 762 So. 2d at 1122. Accordingly, the portion of the trial court's judgment granting summary judgment as to Ameriquest's reconventional claims against plaintiffs is reversed.[6]
CONCLUSION
For the above and foregoing reasons, the March 10, 2008 judgment of the trial court is affirmed in part, and reversed in part, and the matter is remanded for further proceedings.[7] Costs of this appeal are assessed against the defendant/appellant, Ameriquest Mortgage Company.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
NOTES
[1] The record contains two judgments denying Ameriquest's motion for new trial. The first judgment was signed by the trial court on July 23, 2008, and filed July 17, 2008, and the second judgment was signed by the trial court and filed on July 28, 2008. To the extent that the trial court rendered two judgments that were identical in the relief granted, the second judgment rendered July 28, 2008, was superfluous and unnecessary and, consequently, is invalid. See State v. One (1) 1991 Pontiac Trans Sport Van. VIN #1 GMCU06D3MT208532. 98-64 (La. App. 5th Cir. 7/9/98), 716 So. 2d 446, 448. Thus, the motion for appeal correctly references the judgment signed July 23, 2008.
[2] The party opposing a motion for summary judgment may serve opposing affidavits, and if such opposing affidavits are served, the opposing affidavits and any memorandum in support thereof shall be served pursuant to Article 1313 at least eight days prior to the date of the hearing unless the Rules for Louisiana District Courts provide to the contrary. LSA-C.C.P. art. 966(B) and Louisiana Rules for District Courts, Rule 9.9(b). In Buggage v. Volks Constructors, XXXX-XXXX (La. 5/5/06), 928 So. 2d 536, the Louisiana Supreme Court reversed this court and reinstated the ruling of a trial court that had excluded a late-filed opposition and affidavit that was filed a few minutes before a summary judgment hearing. However, while noting that the time limitation established by LSA-C.C.P. art. 966B was mandatory, it nevertheless indicated a trial court has discretion as to whether or not to admit a late-filed affidavit. Rather than holding that untimely affidavits must be excluded by the trial court, the Court specifically stated that such affidavits "can" be excluded by the trial court, and noted that the trial court "acted within its discretion" in excluding the opposition. Buggage, 928 So. 2d at 536. Additionally, other courts of this state have also indicated that district courts have discretion, absent prejudice, to consider affidavits served after the time prescribed by LSA C.C.P. art. 966B. See James Construction Group, L.L.C. v. State, Department of Transportation and Development, XXXX-XXXX (La. App. 1st Cir. 11/2/07), 977 So. 2d 989, 999.
[3] Further, although we find summary judgment was improper, at least in part, to the extent that Ameriquest, in assignment of error number two, challenges the summary judgment and dismissal of its reconventional demand, as being in excess of the relief sought in plaintiffs' motion, we find no merit. Plaintiffs' motion specifically requests "Summary Judgment in their favor, releasing all encumbrances by Ameriquest against Movers' properties and dismissing Movers from the Reconventional Demand of Ameriquest."
[4] However, we observe that on remand, all parties should be allowed to fully present all claims and defenses.
[5] In connection with their motion for summary judgment, plaintiffs filed a memorandum in support and attached several exhibits thereto including: (a) a copy of the act of donation of Property A (the Bull Run Property) from Stephen and Mary Ellen Strickland to plaintiffs and the recording page identifying the recording information from the Livingston Parish Clerk of Court's Office; (b) a copy of the act of cash sale dated October 6, 1992, and accompanying act of correction evidencing Stephen Strickland's purchase of Property A (the Bull Run Property); (c) a copy of an act of cash sale dated April 21, 2005, recording page, and plat evidencing plaintiffs' subsequent sale of ten acres of Property A (the Bull Run Property) to Irian and Irma Smith; (d) a copy of an act of donation dated June 21, 2005, recording page, and plat evidencing plaintiffs' donation of Property B (Lot 15-A) to Stephen Strickland; (e) a copy of Ameriquest's mortgage dated July 15, 2005 to Stephen and Mary Ellen Strickland and recording page; (f) a copy of a check from plaintiffs to Stephen Strickland in the amount of $50,000.00; (g) a copy of a mortgage from Stephen Strickland to plaintiffs dated January 18, 2006, of Property B (Lot 15-A) and recording page; (h) a copy of the dation en paiement of Property B (Lot 15-A) dated April 14, 2006 from Stephen Strickland to plaintiffs and recording page; and (i) a copy of a letter from Ameriquest to Stephen Strickland dated September 21, 2006, informing him that they received notification that the legal description recorded with their mortgage was incorrect and that they had enclosed a Modification Agreement for his signature that would resolve the legal description issue.
[6] Because we find the trial court improperly dismissed Ameriquest's reconventional demand, we pretermit assignments of error numbers four, five and six, concerning the trial court's denial of its motion for new trial pursuant to articles 1972(1), 1972(2), and 1973 of the Code of Civil Procedure as moot, wherein Ameriquest contended, inter alia, that a new trial should have been granted based upon its discovery that Exhibit G to the Motion for Summary Judgment, which purported to be a certified copy of the mortgage of Lot 15-A by Stephen Strickland in favor of plaintiffs filed in to the public records, is not a copy of the original mortgage records, and, in fact, is a false document according to Robert Foley, a licensed document examiner, who attested to the forgery.
[7] Although the portion of the judgment granting summary judgment in favor of plaintiffs as to Ameriquest's reconventional demand is reversed, the judgment is affirmed in all other respects, including the trial court's award of attorney's fees in the amount of $500.00, plus court costs, which was not challenged on appeal. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583594/ | 728 N.W.2d 373 (2007)
2007 WI App 34
STATE EX REL. HEIMERMANN
v.
McCAUGHTRY.
No. 2005AP87.
Wisconsin Court of Appeals.
January 25, 2007.
Unpublished opinion. Reversed and remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2489434/ | 72 So. 3d 1129 (2011)
Patrick FRANKLIN, Appellant
v.
STATE of Mississippi, Appellee.
No. 2008-KA-01923-COA.
Court of Appeals of Mississippi.
March 1, 2011.
Rehearing Denied June 21, 2011.
Certiorari Denied October 27, 2011.
*1132 Julie Ann Epps, Canton, attorney for appellant.
Office of the Attorney General by Deirdre McCrory, Jackson, Ladonna C. Holland, Scott Stuart, Jackson, Stephanie Breland Wood, attorneys for appellee.
Before KING, C.J., GRIFFIS and ISHEE, JJ.
KING, C.J., for the Court:
¶ 1. Patrick Franklin was convicted in the Circuit Court of Tunica County for the murder of Derrick Taylor and sentenced to life in the custody of the Mississippi Department of Corrections (MDOC). Aggrieved, Franklin appeals raising six issues:
I. Whether the circuit court erred by denying his motion for a judgment notwithstanding the verdict (JNOV) or, alternatively, a new trial;
II. Whether the circuit court erred by overruling defense counsel's objection to the prosecutor's impeachment of Misty Boling with a prior inconsistent statement;
III. Whether the circuit court erred by not granting Franklin's motion for a new trial after Derrick Hughes had recanted his trial testimony;
IV. Whether the circuit court erred by failing to instruct the jury that a prior inconsistent statement is only admissible for impeachment purposes;
V. Whether the self-defense instructions were improper statements of the law; or, alternatively, whether defense counsel erred by failing to object to the jury instructions; and
VI. Whether the prosecutor made improper comments during his closing statement.
Finding no error, we affirm.
FACTS AND PROCEDURAL HISTORY
¶ 2. Taylor was killed on May 20, 2006. The following trial testimony reveals the details of that fatal night.
A. Misty Boling
¶ 3. On May 20, 2006, Misty Boling had a barbeque at her home. Franklin and Taylor were both present. Boling testified that everyone was having a good time, drinking and partying. At some point, Taylor began playing in Boling's hair, which she did not tolerate. Boling asked Taylor to stop, but he did not. Then, Franklin told Taylor to leave Boling along. Boling testified that she heard Franklin threaten Taylor, but she opined that the threat was made in jest. Boling testified that everyone continued to enjoy the party.
¶ 4. During Boling's direct examination, the prosecutor asked Boling whether she gave a prior statement to the police, stating that Franklin's threat appeared to be serious. Boling did not recall giving that statement. Then, the prosecutor also asked Boling if she knew the meaning of perjury. Defense counsel objected to this line of questioning, arguing that the prosecutor was not properly impeaching Boling. The trial court determined that Boling had become a hostile witness and allowed the prosecutor to impeach Boling with her prior *1133 statement. However, during a bench conference, the trial court ruled that part of Boling's prior statement, in which she stated that Franklin probably did kill Taylor, was speculative; and it was excluded.
¶ 5. After the bench conference, the State asked Boling to explain the statement that she had made to the police that Franklin told her that he was going to kill Taylor. Boling testified that she did not remember that statement because it happened so long ago. Boling recalled that Franklin had threatened to kill Taylor; however, she maintained that the threat was made in jest.
¶ 6. During cross-examination, Boling testified that Franklin and Taylor were not involved in a physical altercation. Boling stated that after Franklin told Taylor to leave her alone, everyone continued to enjoy the party.
B. Derrick Hughes
¶ 7. Derrick Hughes also attended Boling's barbeque. Hughes testified that he had seen Franklin and Taylor argue that night, and Franklin had left the barbeque after the argument. Hughes and Taylor stayed at the party a little while longer and left together, walking toward their respective homes. After arriving at his destination, Hughes saw Taylor walking toward his own home. Hughes heard a gunshot ten to fifteen minutes later.
¶ 8. The prosecutor asked Hughes whether he had seen Franklin with a gun earlier that evening, and Hughes responded that he did not recall seeing Franklin with a gun. The prosecutor presented Hughes with a prior statement that he had given to the police. In the prior statement, Hughes said that he had seen Franklin with a rifle earlier that night. Hughes did not recall making this statement. But Hughes stated that if it was in his statement to the police, then it must have been true.
¶ 9. During cross-examination, Hughes testified that he had given his statement to the police on May 24, 2006, a few days after the incident. Hughes testified that Taylor was intoxicated that night and had been in at least three altercations, one with a man named Lenario Davis (Lenario). Hughes testified that he did not see the fight between Taylor and Lenario. Hughes testified that Franklin and Taylor had simply argued that night, and they did not get into a physical fight. Hughes stated that he was not outside when the shooting of Taylor occurred. When asked about Franklin's gun use, Hughes testified that Franklin had several guns, and Franklin often practiced shooting his guns at his own home.
C. Immona Davis
¶ 10. Immona Davis (Immona), Lenario's sister, also testified that Taylor was intoxicated that day, and Taylor had been involved in several altercations with various people. Immona also testified that she had seen Franklin shoot Taylor.
¶ 11. Immona stated that she was standing on the corner with a group of friends when Taylor had walked toward them and fired a gunshot into the air. Immona testified that everyone began running and screaming. Then, Immona saw Franklin carrying a rifle and walking down the street toward Taylor. Immona testified that Franklin said, "You all don't have to run. I got this." According to Immona, Franklin fired his rifle at Taylor, shooting Taylor in the chest. Immona saw Taylor get up and fire another round into the air. Afterward, Taylor walked back to his home and collapsed under the carport. The prosecutor asked Immona whether Lenario had shot Taylor, and she responded no. Immona testified that Lenario had *1134 gone to their grandmother's house after his altercation with Taylor and was not in the area when the shooting occurred.
¶ 12. During cross-examination, Immona testified that she did not see the altercation between Lenario and Taylor. But she stated that Lenario stopped by the corner and told her what had transpired between him and Taylor. Immona testified that Lenario was arrested that night as a suspect in Taylor's death, and she had made a statement to the police that night. However, defense counsel presented a statement that Immona had given to the police, and it was dated May 24, 2006. Immona agreed that she loved her brother, and she did not want to see him in jail. But she maintained that Franklin had killed Taylor.
D. Lenario Davis
¶ 13. Lenario testified that on the night of May 20, 2006, he and two friends were walking in the neighborhood when Taylor began following and cursing them. Lenario stated that after Taylor had pushed one of his friends in the chest, they continued walking away from Taylor. However, Taylor persisted. Lenario testified that Taylor then began walking toward him and swinging his arms. According to Lenario, he punched Taylor in the mouth in self-defense, knocking Taylor to the ground.
¶ 14. Lenario testified that Taylor had jumped up and ran to his house. Afraid that Taylor was going home to get a weapon, Lenario went to his grandmother's house to hide. Lenario testified that he did not stop to talk to anyone on his way home. He stated that Brandi Sanders, a family friend, subsequently arrived at his grandmother's house and took him to another home. Lenario testified that when Taylor was shot, he was with Sanders. Lenario also stated that he was later arrested by the police as a suspect in Taylor's death.
E. Odell Harris
¶ 15. Odell Harris, a resident of White Oak, testified for the defense. Harris testified that he saw Franklin at 7:00 p.m. Harris testified that he had heard the shooting at approximately 9:30 p.m., but he did not witness the shooting.
F. Bridgett Davis
¶ 16. Bridgett Davis (Bridgett) is the mother of Immona and Lenario. Bridgett testified that she was at home reading when she heard gunshots. Then, Lenario's cousin came to her house and informed her that Lenario had been in a fight with Taylor. Concerned for Lenario's safety, Bridgett left to search for him. She found Lenario outside, talking to a group of people. Bridgett testified that she did not know whether Lenario was outside when the shooting had occurred. She also stated that she did not see Immona, and she did not look for Immona. In addition, Bridgett testified that Lenario was arrested that night as a suspect in Taylor's death.
G. The Investigation
¶ 17. Commander Eugene Bridges of the Tunica County Sheriff's Department responded to the scene. He found Taylor lying face down underneath his carport and holding a 12-gauge shotgun. Taylor was unresponsive. Commander Bridges contacted EMS. On the scene, EMS determined that Taylor had died of a single gunshot wound to the left side of his chest. Dr. Steven Hayne, the state's pathologist, confirmed Taylor's cause of death.
¶ 18. The police interviewed several witnesses on the scene, including Immona, Lenario, and Boling. Commander Bridges testified that Lenario was a suspect. But *1135 after interviewing other witnesses, Lenario was released. Commander Bridges testified that he also interviewed Franklin and had a search warrant issued for Franklin's residence. As a result, the police recovered four .22-caliber shell casings from Franklin's yard, which were submitted to the Mississippi Crime Laboratory. The police also recovered a wooden butt of a rifle, which was found next to an abandoned house on Franklin's street.
¶ 19. Lieutenant Shelia McKay of the Tunica County Sheriff's Department also testified. She responded to the scene at 11:30 p.m. Lieutenant McKay stated that she had performed a gunpowder-residue kit on Lenario at approximately 2:30 a.m. to 3:00 a.m. When asked whether Lenario had an opportunity to wash his hands before the gun-power residue kit was completed, Lieutenant McKay testified that she did not know.
¶ 20. Carl Fullilove, a forensic scientist for the Mississippi Crime Laboratory, examined the shell casings recovered in the investigation and determined that they were .22-caliber shell casings. He also examined the projectile recovered from Taylor's gunshot wound and determined that it was a .22-caliber bullet. Fullilove testified that there was no way to determine whether the bullet that had killed Taylor came from one of the four shell casings found in Franklin's yard, and there was no way to determine who had fired the bullet.
¶ 21. David Whitehead, a forensic scientist for the Mississippi Crime Laboratory, had examined Lenario's gunpowder-residue kit. He testified that the results were negative. On cross-examination, Whitehead testified that gunpowder residue remains on a person's hands for approximately four hours. He also testified that anything that person does, like washing their hands, can remove the gunpowder residue.
H. Verdict and Post-Trial Proceedings
¶ 22. The jury found Franklin guilty of deprave-heart murder, and he was sentenced to life in the custody of the MDOC. Thereafter, Franklin filed a motion for a JNOV or, alternatively, a new trial. Principally, Franklin argued that he should receive a new trial because Hughes had recanted his trial testimony.
¶ 23. Hughes filed an affidavit, stating that the police had promised to help him with a pending arson charge if he would testify that he had seen Franklin carrying a rifle. According to Hughes, Commander Bridges made the offer to him on the day of the trial during lunch, and Hughes maintained that he had only testified because he thought that he would be "taken care of."
¶ 24. During the hearing on the motion, Commander Bridges testified that he did not make any promises to Hughes. He further testified that because Hughes had a warrant out for his arrest, he had picked Hughes up to testify at Franklin's trial and kept Hughes in custody. Commander Bridges testified that he had taken Hughes to lunch with him to keep an eye on him, and Commander Bridges admitted that he had paid for Hughes's lunch. Ricky Isabel, a maintenance worker at the Tunica County Sheriff's Department, accompanied Commander Bridges and Hughes to lunch. Isabel testified that no one had made any promises to Hughes.
¶ 25. After hearing the arguments, the circuit court ruled that Hughes was not induced to testify and that there was no evidence proving that Hughes's trial testimony was false. The circuit court noted that the police had previously sought Hughes to testify in Franklin's trial, and *1136 Hughes could not be found. The circuit court also noted that due to Hughes's unreliability and the warrant out for his arrest, Commander Bridges did not want to let Hughes out of his sight. Thus, the circuit court determined that the lunch was not untoward. Accordingly, the circuit court denied Franklin's motions. Aggrieved, Franklin timely filed his notice of appeal.
ANALYSIS
A. JNOV or New Trial
¶ 26. Franklin argues that the circuit court erred by denying his motion for a JNOV or, alternatively, a new trial. The State argues that the evidence was sufficient to support a verdict of guilt.
1. Sufficiency of the Evidence
¶ 27. A motion for a directed verdict or a motion for a JNOV challenges the legal sufficiency of the evidence. See Bush v. State, 895 So. 2d 836, 843 (¶ 16) (Miss.2005). When ruling on a motion for a directed verdict or a motion for a JNOV, the circuit court must view all of the credible evidence consistent with the defendant's guilt in the light most favorable to the State. Id. at (¶ 17). This Court will not disturb the circuit court's ruling if "the evidence shows `beyond a reasonable doubt that [the] accused committed the act charged, and that he did so under such circumstances that every element of the offense existed; and where the evidence fails to meet this test it is insufficient to support a conviction.'" Id. at (¶ 16) (quoting Carr v. State, 208 So. 2d 886, 889 (Miss. 1968)). Thus, the Court must determine "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." Id. (citation omitted).
¶ 28. Franklin was charged with depraved-heart murder under Mississippi Code Annotated section 97-3-19(1)(b) (Rev.2006), which provides that:
(1) The killing of a human being without the authority of law by any means or in any manner shall be murder in the following cases:
(b) When done in the commission of an act eminently dangerous to others and evincing a depraved heart, regardless of human life, although without any premeditated design to effect the death of any particular individual[.]
Franklin argues that the State was required to prove that he had killed Taylor and that it was not done in self-defense. Franklin also contends that the evidence shows that he killed Taylor in self-defense; thus, the evidence is not sufficient to support his conviction.
¶ 29. Once the defendant claims self-defense, the State bears the burden to prove beyond a reasonable doubt that the defendant did not act in self-defense. McIntosh v. State, 749 So. 2d 1235, 1240 (¶ 17) (Miss.Ct.App.1999). "A successful self-defense argument requires that the jury believe that it was objectively reasonable for the defendant to believe he was in danger of imminent death or serious bodily harm." Livingston v. State, 943 So. 2d 66, 71 (¶ 13) (Miss.Ct.App.2006). Also, a homicide may be justifiable if found to be done in the defense of others. See Miss. Code Ann. § 97-3-15(1)(f) (Rev.2006). Thus, the question of whether a defendant acted in self-defense or in defense of others is a question for the jury to resolve. White v. State, 976 So. 2d 415, 420 (¶ 23) (Miss.Ct.App.2008) (citing Dubose v. State, 919 So. 2d 5, 7 (¶ 11) (Miss.2005)).
¶ 30. The State argues that evidence was presented to show that Franklin and Taylor had gotten into an altercation earlier *1137 that evening, which resulted in gunfire. For instance, Boling had testified that Franklin had jokingly threatened Taylor earlier that evening. However, in a prior statement given to the police, Boling said that Franklin's threat was serious. On the other hand, Franklin argues that evidence was presented to show that he had shot Taylor in self-defense and in defense of others. For instance, Immona had testified that Taylor had fired a gunshot in the air near a crowd of people. She testified that Franklin said: "You all don't have to run. I got this." Then, she stated that Franklin fired a gunshot at Taylor, hitting Taylor in the chest.
¶ 31. As the fact-finder, it is within the jury's province to consider this evidence and determine whether or not Franklin shot Taylor in self-defense. Webster v. State, 817 So. 2d 515, 519 (¶ 14) (Miss.2002). "[The appellate court] has restricted authority to interfere in the province of the jury verdict." Id. Based on the verdict, the jury resolved any conflicts in the evidence in favor of Franklin's conviction. Viewing the evidence in the light most favorable to the State, we find that a rational juror could have found that the State had proved the essential elements of the crime beyond a reasonable doubt. This issue is without merit.
2. Weight of the Evidence
¶ 32. Franklin argues that the verdict is against the overwhelming weight of the evidence. A motion for a new trial challenges the weight of the evidence. Bush, 895 So.2d at 844 (¶ 18). We will not disturb the circuit court's denial of a motion for a new trial unless "[the verdict] is so contrary to the overwhelming weight of the evidence that to allow it to stand would sanction an unconscionable injustice." Id.
¶ 33. Franklin contends that the evidence shows that he acted in self-defense. As previously mentioned, whether Franklin acted in reasonable self-defense was a question for the jury to decide. White, 976 So.2d at 420 (¶ 23). The jury resolved this issue in favor of Franklin's conviction. We find that the verdict is not against the overwhelming weight of the evidence.
¶ 34. In the alternative, Franklin argues that the evidence failed to support a finding that he was the shooter. Specifically, Franklin argues that Immona, Lenario's sister, was the only person who testified that he had shot Taylor, and Immona was a biased witness because her brother was also a suspect in Taylor's murder. Franklin also argues that Immona's, Lenario's, and Bridgett's testimonies were contradictory and unreliable. There was some inconsistency in Immona's, Lenario's, and Bridgett's testimonies regarding if or when Lenario had informed Immona about his altercation with Taylor. Franklin's argument attacks the credibility of the witnesses. As previously stated: "It is up to a jury to determine the credibility of witnesses and resolve conflicts in the evidence." Jenkins v. State, 995 So. 2d 839, 843 (¶ 13) (Miss.Ct.App.2008).
¶ 35. Based on the verdict, the jury resolved any conflicts in the evidence in favor of Franklin's conviction. We do not find that the verdict is against the overwhelming weight of the evidence. Accordingly, we will not disturb the judgment of conviction. This argument is without merit.
B. Boling's Prior Inconsistent Statement
¶ 36. Franklin argues that the circuit court erred by allowing Boling's prior inconsistent statement to be used as substantive evidence. The State argues that Boling's statement was properly used for impeachment purposes.
*1138 ¶ 37. A witness may be impeached by the party calling him or her if that party shows that he or she was surprised by the witness's testimony and that the witness has become hostile. See Hickson v. State, 512 So. 2d 1, 3 (Miss.1987). The prior inconsistent statement may be admitted for impeachment purposes only; it cannot be used as substantive evidence. Quinn v. State, 873 So. 2d 1033, 1039 (¶ 26) (Miss.Ct.App.2003).
¶ 38. During the trial, Boling testified that Franklin's threat to Taylor was made in jest. The prosecutor asked Boling whether she recalled telling him that Franklin's threat was serious. The State then began to impeach Boling with a prior statement that she had given to the police, stating that Franklin's threat to Taylor was serious. The defense objected to the State's impeachment of Boling arguing that: (1) the prosecutor questioned Boling about the statement without first letting her refresh her memory; (2) the prosecutor asked Boling if she knew what perjury meant, attempting to scare her; and (3) Boling's statement that Franklin probably did kill Taylor was based on speculation. The circuit court allowed the prosecutor to help Boling refresh her memory. Boling continued to maintain that she did not recall telling the prosecutor that Franklin's threat was serious. The circuit court ruled that Boling had become a hostile witness and allowed the State to impeach her. However, during a bench conference, the circuit court ruled that part of Boling's prior statement in which she opined that Franklin probably did kill Taylor was speculative, and it was excluded. The prosecutor was admonished to rephrase the question.
¶ 39. With the circuit court's assistance, the State asked Boling to explain what she meant in her statement to the police when she said that Franklin told her that he was going to kill Taylor. Boling was allowed to see her statement to refresh her memory. Then, she testified that she did not remember what she said in her statement because it had happened a long time ago. Boling recalled that Franklin threatened to kill Taylor; however, she insisted that the threat was made in jest.
¶ 40. Based on our review of the record, we find that the prior inconsistent statement was not used as substantive evidence of Franklin's guilt. The State showed that it was surprised by Boling's testimony, and the circuit court ruled that Boling had become a hostile witness. The circuit court properly excluded the speculative part of Boling's prior statement in which she said that Franklin probably killed Taylor. Thereafter, the State properly used Boling's prior statement to impeach Boling regarding her opinion as to the nature of Franklin's threat. Accordingly, we find that the circuit court did not err by allowing the State to impeach Boling. This argument is without merit.
C. Hughes's Recanted Trial Testimony
¶ 41. Franklin argues that the circuit court erred by not granting his motion for a new trial based on Hughes's recanted testimony and evidence that the police made improper inducements to Hughes in exchange for his testimony. The State contends that the police did not make any improper inducements in exchange for Hughes's testimony, and there is no evidence that Hughes's trial testimony was dishonest.
¶ 42. In Walls v. State, 735 So. 2d 1010, 1011 (¶ 2) (Miss.1999), the Mississippi Supreme Court held that:
A court will usually deny a new trial based on recanting testimony where it is not fully satisfied regarding the truthfulness of the testimony. The determination *1139 should be left to the sound discretion of the trial court and should not be set aside unless clearly erroneous. Recanting testimony has been shown to be extremely unreliable and should be approached with suspicion.
Id. (quoting Peeples v. State, 218 So. 2d 436, 439 (Miss.1969)). To warrant the grant of a new trial based on a witness's recanted testimony, Franklin had to prove that: (1) "the recantation was material," and (2) the evidence is such that the result would change if a new trial is granted Id. (citing Williams v. State, 669 So. 2d 44, 54 (Miss.1996)).
¶ 43. After Franklin's trial, Hughes executed an affidavit, stating that the police had promised to help him with his pending arson charge if he would testify in Franklin's case. According to Hughes, this promise was made during his lunch with Commander Bridges; in return, Hughes was supposed to testify that he saw Franklin with a rifle on the night of Taylor's death. However, during the trial, Hughes testified that he did not see Franklin with a rifle on the night of Taylor's death. The State impeached Hughes's testimony with a prior statement that he had given to the police in which he stated that he had seen Franklin carrying a rifle earlier that evening.
¶ 44. During the hearing on the motion for a new trial, Commander Bridges testified that, at the time, there was a warrant out for Hughes's arrest for arson. Thus, Hughes was taken into custody. Commander Bridges testified that previously, it had been difficult for the police to locate Hughes; and he thought that it was necessary to keep Hughes in his sight at all times, which is why he took Hughes to lunch. Commander Bridges and Isabel testified that no one had made any promises to Hughes. Based on this evidence, the circuit court had determined that no promises had been made to Hughes, and there was no evidence presented that Hughes's trial testimony was dishonest.
¶ 45. Franklin argues that the police improperly induced Hughes to testify that he had seen Franklin with a rifle. However, Hughes testified at trial that he did not see Franklin with a rifle, which is in direct opposition to the alleged testimony that the police asked of him. Hughes's testimony was impeached with a prior inconsistent statement, which was given to the police a few days after Taylor's death. Thus, we hold that there is no recanted testimony to consider, and the evidence supports the circuit court's ruling that Hughes did not receive any improper inducements from the police in exchange for his testimony. Accordingly, we hold that the circuit court did not abuse its discretion by denying Franklin's motion for a new trial. This issue is without merit.
D. Limiting Instruction
¶ 46. Franklin contends that the circuit court should have given a limiting instruction to the jury, stating that prior inconsistent statements could only be used for impeachment purposes and not as substantive evidence. Alternatively, Franklin argues that his trial counsel was ineffective for not requesting a limiting instruction to that effect. The State contends that the circuit court was not required to give a limiting instruction sua sponte.
1. Sua Sponte
¶ 47. The State impeached its witnesses, Boling and Hughes, with their prior inconsistent statements. Boling's impeached testimony concerned whether or not she thought Franklin's threat against Taylor was a serious threat, and Hughes's impeached testimony concerned whether or not he saw Franklin carrying a rifle on the day in question.
*1140 ¶ 48. As previously mentioned, a prior inconsistent statement may only be used for impeachment purposes and may not be considered as substantive evidence. Quinn, 873 So.2d at 1039 (¶ 26). The State used Boling's and Hughes's prior inconsistent statements to impeach them. The actual statements were not admitted into evidence.
¶ 49. If Franklin wanted a limiting instruction concerning Boling's and Hughes's impeached testimony, he could have requested one. A limiting instruction may be provided to the jury at the request of the party affected. Moss v. State, 977 So. 2d 1201, 1212 (¶ 23) (Miss.Ct.App.2007) (citing M.R.E. 105). The circuit court may give a limiting instruction upon its own motion. See id. at (¶ 24). However, the circuit court "is not obligated to sua sponte give a limiting instruction...." Id. Franklin's trial counsel did not request a limiting instruction regarding Boling's and Hughes's impeached testimony. "In the absence of such a request, a trial court cannot be held in error." Id. at (¶ 23) (finding that the circuit court did not err by failing to provide the jury with a limiting instruction regarding the defendant's prior convictions). Accordingly, we find that the circuit court did not err by failing to provide a limiting instruction regarding Boling's and Hughes's prior inconsistent statement. This argument is without merit.
2. Ineffective Assistance of Counsel
¶ 50. Issues of ineffective assistance of counsel are generally not reviewed on direct appeal. Shumaker v. State, 956 So. 2d 1078, 1084 (¶ 10) (Miss.Ct. App.2007). The Court may consider the ineffective-assistance-of-counsel claim if: "(1) the record affirmatively shows ineffectiveness of constitutional dimensions, or (2) the parties stipulate that the record is adequate to allow the appellate court to make the finding without consideration of the findings of fact of the trial judge." Id. (quoting Colenburg v. State, 735 So. 2d 1099, 1101 (¶ 5) (Miss.Ct.App.1999)).
¶ 51. Neither criterion has been satisfied in this case. Thus, we dismiss Franklin's claim of ineffective assistance of counsel without prejudice so that he may raise his claim in a properly filed motion for post-conviction relief, if he so chooses. See id. at (¶ 11).
E. Self-Defense Instruction
¶ 52. When reviewing a challenge to jury instructions, the instructions given must be viewed as a whole, and no one instruction should be reviewed in isolation. Richardson v. State, 911 So. 2d 1026, 1028 (¶ 7) (Miss.Ct.App.2005). Where the jury instructions given fairly announce the applicable law and create no injustice, no reversible error will be found. Id.
¶ 53. Franklin argues that there was plain error in the self-defense jury instructions, which requires reversal. In the alternative, Franklin argues that his trial counsel was ineffective for not objecting to the instructions. As previously stated, we dismiss Franklin's ineffective-assistance-of-counsel claims without prejudice so that he may file them in a properly filed motion for post-conviction relief. Shumaker, 956 So. 2d 1078 at 1084 (¶ 11).
1. Jury Instruction S-1
¶ 54. Franklin challenges three jury instructions: S-1, D-1, and S-6. First, Franklin argues that jury instruction S-1 constitutes reversible error because it failed to require the State to prove that Franklin did not act in self-defense. Jury instruction S-1 charged the jury that:
If you find from the evidence in this case beyond a reasonable doubt that:
*1141 (1) on or about May 20, 2006, Derrick Taylor, was a living human being, and
(2) the Defendant, Patrick Franklin, did unlawfully, willfully and feloniously act in a manner eminently [sic] dangerous to others and with a depraved heart, regardless of human life, kill and murder said Derrick Taylor by shooting him, and
(3) said act resulted in the death of Derrick Taylor, whether or not the Defendant had any particular premeditated design to effect the death of Derrick Taylor
then you shall find the Defendant, Patrick Franklin, guilty of murder.
If the State has failed to prove any one or more of the above elements beyond a reasonable doubt then you shall find the Defendant not guilty.
¶ 55. Jury instruction S-1 instructed the jury on the elements of depraved-heart murder, tracking the language of Mississippi Code Annotated section 97-3-19(1)(b). The Mississippi Supreme Court has held that "[w]here the instruction tracks the statutory language prescribing the elements of the crime, the Court finds it is permissible as adequately instructing the jury as to the elements of the crime." Gray v. State, 728 So. 2d 36, 61 (¶ 115) (Miss.1998). Because Franklin raised self-defense, the State also had to prove that Franklin did not kill Taylor in necessary self-defense. Ables v. State, 850 So. 2d 172, 174 (¶ 6) (Miss.Ct.App.2003) (citing Heidel v. State, 587 So. 2d 835, 843 (Miss.1991)). Relying on Boyles v. State, 223 So. 2d 651, 655-56 (1969), Franklin argues that jury instruction S-1 is erroneous because the words "and not in necessary self-defense" were not included in the jury instruction, omitting a necessary element of the crime.
¶ 56. In Harris v. State, 861 So. 2d 1003, 1013-16 (¶¶ 19-31) (Miss.2003), the Mississippi Supreme Court addressed a similar argument and jury instruction. The jury in Harris was given a depraved-heart murder instruction for each defendant, which read:
The Defendant, (name), has been charged in the indictment in this case with the crime of murder. If you find from the evidence in this case, beyond a reasonable doubt that the Defendant, (name), did on or about the 7th day of November, 1999, feloniously, willfully and unlawfully in Madison County, Mississippi,
1. Engage in an act eminently dangerous to others, or aid and assist in an act eminently [sic] dangerous to others; and that,
2. such act evinced a depraved heart, regardless of human life, although without any premeditated design to effect the death of any particular individual, and that
3. such act inflicted injuries to Ronnie Travis which caused his death, then you shall find the Defendant, (name), guilty of Murder as charged in the indictment.
If the State has failed to prove any one or more of the above listed elements, beyond a reasonable doubt, then you shall find the Defendant not guilty of Murder.
Id. at 1013 (¶ 19). The supreme court held that although the jury instruction did not include the language "without authority of law," the term unlawfully, which is a synonym, is "an acceptable substitute for the phrase `without authority of law,' specifically in the context of a depraved-heart murder instruction." Id. at (¶ 20). Accordingly, the supreme court found that the issue was without merit. Id.
¶ 57. In addition, the supreme court found that the failure of the depraved-heart *1142 murder instruction to include the phrase "not in necessary self-defense" was not reversible error where other jury instructions were given that properly instructed the jury on self-defense, one of which was specifically requested by the defendants. Id. at 1013-16 (¶¶ 21-30). The supreme court determined that: "If words and phrases with similar meaning are allowable for necessary phrases, such as `without authority of law,' they are equally allowable for phrases such as `not in necessary self-defense." Id. at 1015 (¶ 27). Accordingly, the supreme court held that:
It was not error to give an instruction that omits the words "not in necessary self[-]defense" when charging depraved[-]heart murder when the Court also instructs the jury in a separate instruction that the killing would be justified if committed by the defendant in the lawful defense of his own person. The instructions, when read in their entirety, properly instructed the jury that a killing may not be murder, that the killing could be justified in self[-]defense, the factors that must be considered when deciding if the killing was in self[-]defense, and that the burden of proof is always on the State. Considering the instructions as a whole, this Court finds that the jury was properly instructed.
Id. at 1015 (¶ 28).
¶ 58. In Franklin's case, other jury instructions regarding Franklin's theory of self-defense were given. For instance, jury instruction D-1, which was requested by Franklin, included the necessary elements of self-defense and specifically charged the jury that: "If, you, the jury finds that Patrick Franklin is justified in the killing of Derrick Taylor you will return a verdict of not guilty." Also, jury instruction C-25 charged the jury, in pertinent part, that:
[T]he Defendant in a criminal case has no burden of proof whatsoever. The State of Mississippi, on the other hand, must prove beyond a reasonable doubt that the Defendant committed the acts as alleged in the indictment.
Jury instruction C-7 charged the jury that the State bore the burden of proof at all times:
The law presumes every person charged with the commission of a crime to be innocent. This presumption places upon the State the burden of proving the defendant guilty of every material element of the crime with which he/she is charged. Before you can return a verdict of guilty, the State must prove to your satisfaction beyond a reasonable doubt that the defendant is guilty. The presumption of innocence attends the defendant throughout the trial and prevails at its close unless overcome by evidence which satisfies the jury of the defendant's guilty [sic] beyond a reasonable doubt. The defendant is not required to prove his/her innocence.
Reviewing the jury instructions given as a whole, we find that the jury was properly instructed regarding the State's burden to prove that Franklin did not act in self-defense.
2. Jury Instruction D-1
¶ 59. Second, Franklin argues that jury instruction D-1 erroneously shifted the burden of proof to the defendant. Jury instruction D-1 provides that:
The killing of a human being by the act, procurement or omission of another shall be justifiable when committed in the lawful defense of one's own person or any other human being, where there shall be reasonable grounds to apprehend a design to commit a felony or to *1143 do some great personal injury, and there shall be imminent danger of such design being accomplished. If, you, the jury, finds that Patrick Franklin is justified in the killing of Derrick Taylor you will return a verdict of not guilty.
The record reveals that Franklin requested jury instruction D-1 at trial. On appeal, "a defendant cannot complain of an instruction which he, not the State, requested." Parks v. State, 884 So. 2d 738, 746 (¶ 26) (Miss.2004) (quoting Harris, 861 So.2d at 1015 (¶ 24)). We hold that because Franklin, not the State, requested jury instruction D-1, Franklin may not now complain that the instruction was erroneous. This issue is without merit.
3. Jury Instruction S-6
¶ 60. Last, Franklin argues that jury instruction S-6 is improper because it failed to inform the jury that: "the test [for self-defense] is not whether or not the jury believes Franklin's actions were in fact reasonable, [but] whether a person in Franklin's situation would have believed his actions were reasonable. "The State argues that jury instruction S-6 is a correct statement of the law, and a similar jury instruction was upheld in Ellis v. State, 956 So. 2d 1008, 1014 (¶ 12) (Miss.Ct. App.2007).
¶ 61. Jury instruction S-6 reads as follows:
The Court instructs the jury that one who claims self-defense to his actions may not use excessive force to repel the attack, but may only use such force as is reasonably necessary under the circumstances. If you find from the evidence, beyond a reasonable doubt, that the Defendant, Patrick Franklin, caused bodily injury to Derrick Taylor by shooting him and that said shooting was a use of more force than was reasonably necessary under the circumstances of this case, then the defense of self-defense would not apply to this case.
Jury instruction S-6 addresses the law on self-defense with regard to the reasonableness of the defendant's actions. Under Mississippi law, "whether a defendant has `reasonable grounds' to fear imminent death or serious bodily injury is governed by an objective criterion. The defendant is judged not according to his own particular mental frailties but by a `reasonable person' standard." Hart v. State, 637 So. 2d 1329, 1339 (Miss.1994). Accordingly, we find that jury instruction S-6 cited the appropriate standard regarding reasonableness. This issue is without merit.
F. Prosecutorial Misconduct
¶ 62. Franklin argues that the prosecutor made several improper comments during his closing statement, which requires reversal based on the plain-error doctrine. The State argues that Franklin failed to object to any of these alleged improper comments at trial; thus, the issue is procedurally barred from review.
¶ 63. Franklin's trial counsel did not object to any comments made by the prosecutor during his closing statement. Thus, this issue is procedurally barred from our review. Brown v. State, 907 So. 2d 336, 340 (¶ 12) (Miss.2005). Despite this procedural bar, we find that there is no merit to Franklin's claims.
¶ 64. "Attorneys are granted wide latitude in making their closing arguments." Mosely v. State, 4 So. 3d 1069, 1076 (¶ 17) (Miss.Ct.App.2009) (citing Holly v. State, 716 So. 2d 979, 988 (¶ 33) (Miss. 1998)). When reviewing claims of prosecutorial misconduct during closing statements, the Court must determine "whether the natural and probable effect of the improper argument is to create unjust prejudice against the accused so as to result in a decision influenced by the prejudice *1144 so created." McGowen v. State, 859 So. 2d 320, 346 (¶ 91) (Miss.2003).
¶ 65. Franklin challenges three comments made by the prosecutor. First, Franklin contends that the prosecutor suggested "that there were other witnesses who were not called who substantiated the prosecution's theory," by stating that:
Then they went out and they talked to other witnesses. They found relatives. They found friends. They found unrelated people in the community, people who had been out there. They talked to everybody they could find and got statements from them. And you heard from some of those witnesses here.
When read in context, this comment is merely a summary of the police's investigation, which is allowed. Id. (finding that "[t]he purpose of a closing argument is to fairly sum up the evidence)." Thus, we find that this was not an improper comment.
¶ 66. Second, Franklin maintains that the prosecutor improperly vouched for Boling's credibility. The challenged comment reads as follows:
Who else did we here [sic] hear from? We heard Misty Boling, who told the truth in her statement when she didn't know what was going happen, when she didn't know she was going to be on that stand in front of him. And then she tried to back up. But that statement was down in writing. We know the defendant threatened Derrick Taylor and that she thought he meant it.
In this statement, the prosecutor was comparing Boling's trial testimony to her prior inconsistent statement. The law is clear that "[t]he prosecutor may comment upon any facts introduced into evidence, and he may draw whatever deductions and inferences that seem proper to him from the facts." Id. (citations omitted). We hold that the prosecutor was not vouching for Boling's credibility; instead, the prosecutor simply gave a summation of the evidence and inferred that Boling's trial testimony was false. Accordingly, we find that this comment was not improper.
¶ 67. Last, Franklin argues that the prosecutor improperly commented on the defense's failure to call witnesses and Franklin's failure to testify, and the prosecutor improperly shifted the burden of proof to Franklin. The prosecutor made the following statement regarding Franklin: "[t]hey picked up Lenario Davis and the defendant. What did they do after that? After that, they grilled them both, to use the vernacular. They interviewed them multiple times, multiple officers, different ways, and recorded those statements." We hold that this was not a comment on Franklin's failure to testify, but a summation of the police's investigation. Thus, it was not improper.
¶ 68. In another challenged comment, the prosecutor rhetorically asked the jury "who put a gun in the defendant's hand," noting that Immona and Hughes testified that Franklin had a gun. Then, the prosecutor stated the following:
Who else puts a gun in any other person's hand, the gun that killed Deck Taylor. Who? What evidence? Where? When? How? Where are they? Nowhere. Nowhere. What evidence do you have to contradict the [S]tate's case?
....
We built our case out of bits and pieces, like this right here. And we built it and we stacked it and we put on witness after witness until we built it up and now we've handed it to you. And it's up to the defense to knock it down. What have they given you to knock it down? Odell? Odell? The entire courtroom was in stitches when he got done testifying. He didn't see anything. We don't *1145 know what he saw. He doesn't know what he saw. That's it.
Then we put on Lenario Davis's mother and we had a 20-minute conversation about whether or not she checked Lenario for bullets or something.
....
This evidence is before you. Ask yourselves what is there that's knocked it down. I would suggest to youI would argue to you, ladies and gentlemen, that there is nothing, nothing. The State's case stands unassailed, intact. It's what you have.
¶ 69. Viewing the evidence in context, we hold that the prosecutor commented on Franklin's failure to put on a successful defense, which is appropriate. See Cox v. State, 849 So. 2d 1257, 1270 (¶ 45) (Miss. 2003). The prosecutor never commented that Franklin failed to call a particular witness or that Franklin failed to testify. Franklin's theory of defense was that: (1) he did not shoot Taylor; and (2) if he did shoot Taylor, it was done in self-defense. The prosecutor pointed out at least two witnessesImmona and Hughessaw Franklin with a gun; Immona actually saw Franklin shoot Taylor; and no one testified that anyone besides Franklin had shot Taylor. Additionally, the prosecutor noted that the defense's two witnessesOdell Harris and Bridgett Davisdid not see anything. The circuit court properly instructed the jury regarding the State's burden, and the prosecutor did not shift the burden of proof to Franklin in his closing argument. As previously stated, the State may properly comment on facts in evidence. McGowen, 859 So.2d at 346 (¶ 91). Accordingly, we find that the prosecutor's comments were not improper. This issue is without merit.
¶ 70. THE JUDGMENT OF THE CIRCUIT COURT OF TUNICA COUNTY OF CONVICTION OF DEPRAVED-HEART MURDER AND SENTENCE OF LIFE IN THE CUSTODY OF THE MISSISSIPPI DEPARTMENT OF CORRECTIONS IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO TUNICA COUNTY.
LEE AND MYERS, P.JJ., IRVING, GRIFFIS, BARNES, ISHEE, ROBERTS AND CARLTON, JJ., CONCUR. MAXWELL, J., CONCURS IN PART AND IN THE RESULT WITHOUT SEPARATE WRITTEN OPINION. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1585444/ | 24 So.3d 848 (2009)
Katrina WYMAN & Jason Wyman
v.
DUPEPE CONSTRUCTION, Monteforte's Roofing & Siding, Robert Monteforte, Bankers Insurance CO. & USAA Insurance.
No. 2009-C-0817.
Supreme Court of Louisiana.
December 1, 2009.
Elie Jones & Associates, Ernest Lake Jones, for applicant.
The Law Offices of Anthony Taormina, Anthony Santo Taormina, Metairie, Bienvenu, Foster, Ryan & O'Bannon, David Edward Walle, New Orleans, Kraft, Gatz, Lane, Benjamin, LLC, Walter Kay Jamison, III, Marjorie Briley Breaux, for respondent.
PER CURIAM.[*]
This matter involves a peremptory exception of prescription. The court of appeal correctly recognized the district *849 court committed an error of law when it dismissed Wyman II on the grounds Wyman I did not interrupt prescription. However, even though the appellate court properly determined Wyman II was prescribed on its face and the plaintiff failed to carry their burden of proof to show otherwise, it nevertheless erred when it failed to allow the plaintiffs an opportunity to amend their petition. When the grounds of the objection pleaded by the peremptory exception may be removed by amendment of the petition, "the judgment sustaining the exception shall order such amendment within the delay allowed by the court." La.Code Civ. Proc. art. 934. With particularity to the question at issue in the present case, when a court sustains an exception of prescription, it should permit amendment of the plaintiff's pleadings if the new allegations which the plaintiff proposes raise the possibility the claim is not prescribed, even if the ultimate outcome of the prescription issue, once the petition is amended, is uncertain. Reeder v. North, 97-0239 (La.10/21/97), 701 So.2d 1291, 1299; Whitnell v. Menville, 540 So.2d 304 (La.1989). Considering this well established jurisprudence, we find the court of appeal erred in failing to allow the Wymans an opportunity to amend their petition in Wyman II to allege facts which may possibly establish their claim is not prescribed. Thus, we affirm the judgment of the court of appeal, but amend the judgment to remand this case to the district court to allow the Wymans to amend their petition, if they can, in Wyman II within the delay allowed by the district court and to allege facts that would show their claim is not prescribed.
JUDGMENT AFFIRMED AS AMENDED; CASE REMANDED TO DISTRICT COURT.
NOTES
[*] Judge Benjamin Jones, of the Fourth Judicial District Court, assigned as Justice Pro Tempore, participating in this decision. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1589996/ | 972 So.2d 872 (2007)
LENNAR HOMES, INC., a Florida Corporation, and Silver Palm Holdings of Homestead, LLC, a Florida Limited Liability Corporation, Appellants,
v.
Manuel DORTA-DUQUE, Appellee.
No. 3D06-1373.
District Court of Appeal of Florida, Third District.
September 19, 2007.
Rehearing and Rehearing Denied January 30, 2008.
*874 Bilzin Sumberg Baena Price & Axelrod, Alvin D. Lodish and Allen J. Smith and Adam F. Haimo, Miami, for appellants.
Josephs Jack and Susan S. Lerner, Miami, for appellee.
Before GREEN, RAMIREZ, and CORTIÑAS, JJ.
Rehearing and Rehearing En Banc Denied January 30, 2008.
RAMIÑEZ, J.
Lennar Homes, Inc. and Silver Palm Holdings of Homestead, LLC, appeal to this Court the trial court's Final Declaratory Judgment and Final Judgment Ordering Specific Performance in favor of Plaintiff Manuel Dorta-Duque. We conclude that the trial court was correct in finding that Dorta-Duque was entitled to a declaratory judgment and to specific performance, based on the language of the subject Settlement Agreement, as well as the competent, substantial evidence presented at trial supporting the final judgment. Accordingly, we affirm and adopt in its entirety the trial court's succinct order as our own opinion.[1] The trial court's order reads as follows:
*875 FINAL DECLARATORY JUDGMENT AND FINAL JUDGMENT ORDERING SPECIFIC PERFORMANCE IN FAVOR OF PLAINTIFF MANUEL DORTA-DUQUE
This cause came before the court for a non jury trial on February 6 and 7, 2006, on plaintiffs claims for a declaratory judgment and for specific performance of the Settlement Agreement. The court, having conducted a two-day nonjury trial, finds that the plaintiff has met his burden of proving, by clear, definite, competent and satisfactory proof, his entitlement to specific performance of the Settlement Agreement and is thus, entitled to a declaratory judgment in his favor and to specific performance of the January 16, 2004, Settlement Agreement based upon the followings findings of fact and conclusions of law:
1. On September 25, 2002, Lennar entered into a Purchase and Sale Contract for numerous acres of real property located in Miami-Dade County, Florida with Manuel Diaz and Emilia Diaz (hereinafter, the Sellers).
2. This contract was contingent upon the satisfaction of numerous conditions. Before closing, Lennar required that the Sellers obtain a zoning change for the property so that Lennar could develop the property with single family residences and apartments. Lennar was not required to close with the Sellers until the zoning approval was final and after all appeals were exhausted.[1] Furthermore, the contract contained penalty provisions if the closing was delayed.
3. The Sellers applied for the zoning change and plaintiff Dorta-Duque, who owns the adjacent property, objected to and opposed the zoning change.
4. On December 19, 2003, the Board of County Commissioners adopted. Resolution No. Z-24-03 which approved the Sellers' request for the zoning change.
5. The applicable appeal period for review of that resolution expired thirty days after the Deceinber 19th adoption, *876 which, the parties agree, occurred on Tuesday, January 20, 2004.[2]
6. Plaintiff was the primary opponent of, the zoning change at the Community Council and County Commission hearings.
8. In an effort to resolve their differences relating to the zoning change, on Friday, January 16, 2004, Dorta-Duque and Lennar[3], entered into the Settlement Agreement which is the subject of this litigation. Pursuant to that agreement, Lennar agreed to lease and sell a portion of the property[4] it was purchasing to Dorta-Duque in exchange for Dorta-Duque, inter alia, agreeing not to pursue judicial review of the Commission's approval of the zoning application.
9. Both parties retained attorneys to represent their interests during the negotiation of the Settlement Agreement. This court finds that the Settlement Agreement was an arms-length transaction arrived at through fair negotiation between sophisticated individuals who were represented by counsel.
10. Following the execution of the Settlement Agreement, Dorta-Duque, performed all of his obligations, but, Lennar took the position that it was no longer obligated to perform. The parties disagree whether certain contingencies occurred which excused Lennar from its obligations. The contingencies in dispute are set forth in paragraph six of the Settlement Agreement. That paragraph provides:
6. In consideration of the execution of this Agreement, Dorta-Duque, on behalf of himself, his heirs, successors and assigns, agrees not to oppose, object to or interfere, whether directly or indirectly, with the efforts of Lennar to secure the approval of the Application and other approvals that are necessary for the development of the Property, provided Lennar is in compliance with the terms of this Agreement. Lennar's obligations under this Agreement are specifically subject to and contingent upon the approval of the Application and the expiration of the applicable appeal period without an appeal or action at law or equity having been filed by anyone. Moreover, in the event that an appeal is filed, Dorta-Duque shall not directly or indirectly assist (financially or otherwise) such party or parties in the prosecution of said appeal. Dorta-Duque has previously retained the services of Kent Harrison Robbins, Esq., to prepare, file and prosecute an appeal of the Application and other potentially available challenges to the Application and will continue to represent Dorta-Duque and, as his representative, will not file or pursue such an appeal or challenge. Further, Dorta-Duque has represented to Lennar, and Lennar has relied upon such representation, that Kent Harrison Robbins, Esq., has indicated to Dorta-Duque that if Dorta-Duque and Lennar execute this Agreement, Kent Harrison Robbins, Esq. will be ethically prohibited from representing *877 other affected parties in the filing and prosecution of such an appeal or challenges. Immediately following the execution of this Agreement, Dorta-Duque shall direct to stop work on such an appeal or challenge and shall further direct Kent Harrison Robbins, Esq. not to undertake the representation of any other potential appellant with regard to the Application or the development of the Property. For the purposes of this paragraph, the term appeal shall mean a jurisdictionally sufficient petition for writ of certiorari that is filed in accordance with the Florida Rules of Appellate Procedure which causes the circuit court to issue an order to show cause. For its part, Lennar represents to Dorta-Duque that upon the expiration of the appeal period, all conditions to the closing with Diaz would have been met and that Lennar has the ability to close on the purchase. [Emphasis added].
11. On the last day of the appeal period (January 20, 2004), at 3:48 PM, three property owners, who had appeared before the County Commission to object to the approval of the application, filed a Notice of Appeal with the Clerk of the Circuit Court.
12. It is because the notice of appeal was filed[5] that Lennar took the position that its obligations under the contract were excused.
13. The court finds that under paragraph six, Lennar was not excused from its obligations (to lease and sell the land to Dorta-Duque) unless (1) a jurisdictionally sufficient petition for writ of certiorari was filed prior to the expiration of the applicable appeal period which, in turn, (2) caused the circuit court to issue an order to show cause. No jurisdictionally sufficient petition for writ of certiorari was filed prior to the expiration of the applicable appeal period and it is undisputed that the court never issued an order to show cause.
14. The term "order to show cause" set forth in the agreement is not ambiguous, and the court rejects Lennar's claim that an April 29, 2004, case management order to respond issued by a clerk was the same thing as an order to show cause issued by the court. In this regard, the court considers Lennar's interpretation of the language of the settlement agreement to be unreasonable.
15. The experts for both parties agreed, and this court finds, that the April 29, 2004, clerk-issued case management order was not the same thing as an order to show cause issued by the court. Lennar's expert testified in deposition that the April 29th order would not even be the functional equivalent of an order to show cause if the court in some fashion had not directed its issuance. The clerk who issued the April 29th order testified that she did not consult with a judge before issuing that order, that she was not directed by a judge to issue the order and further testified that the order was only an "administrative case management order". Lennar's expert did not agree with Lennar's counsel's suggestion that the April 29th order had the "same legal effect" as an order to show cause.
16. Pursuant to the Settlement Agreement, Lennar's obligations were not excused unless an order to show cause was issued. Because an order to show cause was not issued, this court finds that Lennar's obligations were not excused.
*878 17. It is undisputed that that expiration of the applicable appeal period referred to in paragraph six of the Settlement Agreement occurred on January 20, 2004. A jurisdictionally sufficient petition for writ of certiorari, in accordance with the Florida Rules of Appellate Procedure, had not been filed by January 20, 2004[6]. Instead, only a notice of appeal was filed by that date. The parties' experts agree that the notice of appeal was not a jurisdictionally sufficient petition for a writ of certiorari and was not in accordance with the Florida Rule of Appellate Procedure 9.100.
18. Lennar takes the position that Florida Rule of Appellate Procedure 9.040(c) permits the circuit court's appellate division to later treat this improper remedy (notice of appeal) as if it seeks a proper remedy (petition for a writ of certiorari) and that therefore, this court must consider them to be the same. Rule 9.040(c) provides "[i]f a party seeks an improper remedy, the cause shall be treated as if the proper remedy had been sought; provided that it shall not be the responsibility of the court to seek the proper remedy". Clearly, the rule does `not state or imply that a notice of appeal and a petition for writ of certiorari are the same or that the terms are interchangeable. The agreement specifically required a timely filed jurisdictionally sufficient petition for writ of certiorari and not something else that might later be treated (by an appellate court) in a way that would allow a proper remedy to be adjudicated. Furthermore, the credible parol evidence[7] established that a jurisdictionally sufficient petition for a writ of certiorari was precisely what was contemplated and bargained for by the parties and not a mere notice of appeal.
19. The three attorneys who participated in the negotiations, Juan Mayol for Lennar, and Mark Starkman and Kent Harrison Robbins for Dorta-Duque, have testified that the qualifying language limiting "appeal" and defining it as a jurisdictionally sufficient petition for writ of certiorari was placed in the agreement because Dorta-Duque did not want to permit Lennar to get out of its deal with him if only a notice of appeal was filed.[8] Clearly, only the filing *879 of a petition for writ of certiorari would excuse Lennar from its obligations (if the petition caused the court to issue a rule to show cause).
20. Lennar's counsel, Mr. Mayol, testified that he did not think that any of the other property owners would file an appeal in time since the thirty day deadline was impending.[9] Both the agreement and the credible parol evidence make it clear that the parties intended to remain bound if no one filed a petition for writ of certiorari prior to the expiration of the applicable appeal period.
21. Having concluded that the contingencies under paragraph six did not occur to relieve Lennar from its obligation, and further, that Dorta-Duque performed his obligations under the Settlement Agreement, the court now considers Lennar's affirmative defenses.
22. The court finds that Lennar has failed to meet its burden of proving its affirmative defense of unclean hands. Lennar's attorney, Mr. Mayol, who was negotiating on Lennar's behalf, testified that Dorta-Duque did nothing wrong. No evidence was presented to support Lennar's defense of unclean hands. As the court stated earlier, the Settlement Agreement was an arms-length transaction arrived at through fair negotiation between sophisticated individuals who were represented by counsel.
23. Next, the court finds that Lennar has failed to meet its burden of proving the affirmative defense of laches. In order to prevail on the defense of lathes; Lennar had to prove the following by clear and convincing evidence:
(a) conduct on the part of Lennar giving rise to the situation upon which the complaint is based;
(b) the failure of Dorta-Duque, having had knowledge or notice of Lennar's conduct, to assert his rights by suit;
(c) lack of knowledge on the part of Lennar that Dorta-Duque would assert the right on which he based his suit; and
(d) injury or prejudice to Lennar if relief was accorded to Dorta-Duque.[10]
Mr. Dorta-Duque filed this lawsuit to enforce his claim in December 2004, three months after the closing of the property. The Settlement Agreement provided that Lennar "shall deliver the Buffer Property within three months following the purchase of the Property by Lennar or its successors or assigns from Diaz . . .". Lennar has failed to prove this affirmative defense.
24. Turning now to Lennar's defense, that the Settlement Agreement was void ab initio for a failure of a meeting of the minds,[11] the court finds that Lennar has failed to meet its burden of proof for this defense. Moreover, the court finds that there is clear, competent and satisfactory proof that the *880 contract contained definite terms and conditions which included the essential elements of a valid contract.[12]
25. The court also rejects Lennar's affirmative defense that the Settlement Agreement is not enforceable because of lack of consideration.[13] The court finds that Lennar has failed to meet its burden of proof for this defense. On the contrary, the court finds that there is clear, competent and satisfactory proof that the Settlement Agreement was supported by consideration. By the express terms of the Settlement Agreement, Mr. Dorta-Duque agreed to forbear enforcing his legal right to pursue judicial review of the approval of the Application in exchange for Lennar's promise to convey the Buffer Property to him under the terms and conditions of the Settlement Agreement.[14] Lennar's attorney, Juan Mayol, testified that the purpose of entering into the Settlement Agreement that day "was to prevent an appeal from being filed, obviously in this case by Manny, so that it would cause a delay on the transaction."[15] Mr. Mayol also acknowledged that Lennar could not have expected that this Settlement Agreement was going to guarantee that no delay from an appeal would occur.[16]
26. This court rejects Lennar's affirmative defense that the plaintiff has a sufficient and adequate remedy at law and is therefore not entitled to specific performance.[17] The court finds that Lennar has failed to meet its burden of proof for this defense. Moreover, the court finds that there is clear, competent and satisfactory proof that the plaintiff does not have a sufficient and adequate remedy at law.[18] The Settlement Agreement itself recites that the Buffer Property "is located directly east of Dorta-Duque's property." Mr. Dorta-Duque's uncontroverted testimony was that the Buffer Property was a unique piece of land, located as it was directly next to his house and farm business, and that he was extremely concerned that his agricultural activities would interfere with the adjoining neighbors that would buy Lennar's homes if there was not a Buffer in-between.[19] Moreover, it is also uncontroverted that Mr. Dorta-Duque cannot be restored to the status quo, having already given up his legal right to pursue judicial review of the approval *881 of the Application and the time for appellate review having expired.
27. The Defendants' remaining affirmative defenses are either without merit or are not true affirmative defenses but instead are legal arguments.
WHEREFORE, and by reason of the foregoing, this court enters a final declaratory judgment finding that Lennar was not excused from performing under the Settlement Agreement and further that the plaintiff, Manuel Dorta-Duque, is entitled to specific performance of the Settlement Agreement. Accordingly, the court orders the defendants, Lennar Homes, Inc., and Silver Palm Holdings of Homestead, LLC, to specifically perform and convey the Buffer Property within thirty days from the day of this final judgment to the plaintiff under the terms set forth for said conveyance in the Settlement Agreement.
CORTIÑAS, J., concurs.
GREEN, J. (dissenting).
This is an appeal from a final declaratory judgment ordering appellants, Lennar Homes, Inc., and Silver Palm Holdings of Homestead, L.L.C. (collectively "Lennar"), to perform under a settlement agreement made with appellee Manuel Dorta-Duque. Lennar's obligations to Dorta-Duque were contractually excused for the reasons more fully set forth below and the majority's holding to the contrary is, respectfully, erroneous as a matter of law. I, therefore, must dissent.
A. BACKGROUND
On September 25, 2002, Lennar executed a Purchase and Sale Contract for numerous acres of real property in south Dade County, Florida, with Manuel Diaz and Emilia Diaz ("Diaz"). Lennar's agreement to purchase this property was contingent upon, among other things, Diaz's ability to obtain a zoning change to permit Lennar to build residential homes on the property. If the closing on this property was delayed, the contract contained two significant penalty provisions for Lennar.[2]
Diaz applied for the appropriate zoning change with the Dade County Zoning Appeals Board. Dorta-Duque, who owns the property adjacent to Diaz's property, objected. The Community Zoning Appeals Board denied Diaz's request for a zoning change.
Diaz thereafter appealed this denial to the Miami-Dade Board of County Commissioners ("County"). After a hearing on December 19, 2003, the County adopted Resolution Z-24-03 ("Resolution") which approved Diaz's request for a zoning change. The adoption of this Resolution was over the "objection of Dorta-Duque and other neighboring property owners. The deadline for seeking appellate review of this Resolution in the Circuit Court Appellate Division was thirty days thereafter, or January 20, 2004.[3]
As Dorta-Duque was the leading opponent of the zoning change, Lennar negotiated with him in an effort to persuade him not to pursue an appeal of the Resolution. This negotiation culminated with the execution of a settlement agreement between Lennar and Dorta-Duque on January 16, *882 2004. This settlement agreement was the subject matter of the declaratory action below and the instant appeal.
According to the terms of the settlement agreement, Lennar agreed to set aside for purchase by Dorta-Duque a five (5) acre parcel of land adjoining Dorta-Duque's residence at a price considerably below market value. Lennar's obligation in this regard, however, was contingent upon no appeal being filed by anyone or any action at law or equity commenced by anyone. Specifically, paragraph six of the settlement agreement provided in relevant part that:
Lennar's obligations under this Agreement are specifically subject to and conditioned upon the approval of the application and expiration of the applicable appeal period without an appeal or action at law or equity having [sic] filed by anyone. . . . For purposes of this paragraph, the term appeal shall mean a jurisdictionally sufficient petition for writ of certiorari that is filed in accordance with the Florida Rules of Appellate Procedure which causes the circuit court to issue an order to show cause. For its part, Lennar represents to Dorta-Duque that upon the expiration of the appeal period, all conditions would have been met and that Lennar has the ability to close on the purchase.
Pursuant to the terms of the settlement agreement, Dorta-Duque never appealed the Resolution. However, on January 20, 2004, the last day of the appeal period, one of the other objecting neighboring property owners filed a pro se notice of appeal of the Resolution with the Appellate Division on behalf of the other objecting neighbors.[4]
B. APPELLATE PROCEEDINGS BEFORE THE CIRCUIT COURT
In response to the notice of appeal, a flurry of motions and pleadings were filed in the Appellate Division. Significantly a motion to dismiss the appeal for lack of jurisdiction was filed on behalf of the County and Diaz. The grounds for this motion were, among other things, that quasi-judicial decisions of administrative tribunals not subject to the Administrative Procedure Act are reviewable only by certiorari under Florida Rule of Appellate Procedure 9.100(c).[5] Before the court ruled on this motion, however, the appellants filed a petition for certiorari. The court denied the motion to dismiss. Thereafter, the clerk of the court issued a case management order directing Diaz and the County to respond to the petition. No order to show cause was ever issued by the Circuit Court.
After Diaz and the County filed their respective responses to the petition, a three-judge Appellate Division panel[6] reviewed the petition on the merits and issued a per curiam opinion denying the same. The Circuit Court mandate then issued.
The Appellate Division proceedings lasted six months. As a result of this delay, Lennar was required to pay approximately three million dollars in penalties and escalating costs to Diaz under the Purchase and Sale Agreement.
*883 Dorta-Duque demanded Lennar's full performance under the settlement agreement since he had fully complied with his obligation not to appeal the County's decision. When Lennar refused to comply, Dorta-Duque filed the declaratory judgment action below.
C. DECLARATORY JUDGMENT PROCEEDINGS
Dorta-Duque filed a two-count complaint against Lennar for declaratory relief and specific performance of their settlement agreement. In response, Lennar filed its amended answer and raised affirmative defenses. Lennar averred, among other things: (1) that its obligations to Dorta-Duque under paragraph six of the settlement agreement were contingent upon no appeal being filed during the applicable appeal period. Hence, since the neighboring property owners filed an appeal of the Resolution, Lennar had no obligation to Dorta-Duque; (2) that pursuant to Florida Rule of Appellate Procedure Rule 9.040(c), the notice of appeal filed by the neighboring property owners was accepted as a timely filed petition for writ of certiorari by the Appellate Division; (3) that by accepting the neighboring property owners' notice of appeal as a petition for writ of certiorari, the Appellate Division confirmed the jurisdictional sufficiency of the appeal; and (4) that Lennar's consideration for entering into the settlement agreement with Dorta-Duque was to avoid a time consuming appeal of the Resolution.
Both Dorta-Duque and Lennar agreed that there were no disputed issues of fact and that this dispute centered on the meaning of paragraph six of their settlement agreement. Both parties filed cross-motions for summary judgment. Although they argued that the language in paragraph six of the settlement agreement was unambiguous, the trial court denied both motions. The trial court found paragraph six to be ambiguous and determined that the trier of fact needed to hear and consider the specific facts surrounding the intent of the parties regarding this paragraph.
This case then proceeded to a two-day bench trial where parol evidence was admitted to ascertain the parties' intent of the following language contained in paragraph six of the settlement agreement.
Lennar's obligations under this Agreement are specifically subject to and conditioned upon the approval of the application and expiration of the applicable appeal period without an appeal or action at law or equity having [sic] filed by anyone. . . . For purposes of this paragraph, the term appeal shall mean a jurisdictionally sufficient petition for writ of certiorari that is filed in accordance with the Florida Rules of Appellate Procedure which causes the circuit court to issue an order to show cause.
(emphasis added). It was undisputed at the trial below that this agreement was reached by the parties and their respective counsel on the eve of the expiration of the applicable appeal period for the Resolution. It was also undisputed that the two principal attorneys responsible for the negotiation of this provision had very limited experience with appellate practice or procedure.[7]
It was established at the trial below that Dorta-Duque and Lennar knew during their negotiations that the other objecting property owners were planning to appeal the Resolution. Dorta-Duque also admitted that prior to signing the settlement agreement, he was made aware of the fact that if these property owners filed a notice of appeal, the Circuit Court had the authority *884 to treat it as a petition for writ of certiorari.[8] Dorta-Duque testified that he was concerned that he would lose the benefit of the bargain he had negotiated with Lennar if any of his neighbors filed an appeal or if Lennar itself caused a token appeal to be filed. Lennar's representative testified that Lennar's concern was the delay that any appellate review of the Resolution on the merits would cause.
In an apparent effort to address their respective concerns, the parties incorporated the following definition of appeal into paragraph six of the settlement agreement, which has now become the crux of their dispute:
For purposes of this paragraph, the term appeal shall mean a jurisdictionally sufficient petition for writ of certiorari that is filed in accordance with the Florida Rules of Appellate Procedure which causes the Circuit Court to issue an order to show cause.
Dorta-Duque took comfort in this language because, as explained to him, it meant that even with the filing of a petition for writ of certiorari accompanied with the proper appendix and transcript, the court would still have the authority to decide whether to advance the case forward.[9] Lennar took comfort in this language because it meant that Lennar would contractually be obligated to perform under the agreement with Dorta-Duque unless the Circuit Court Appellate Division reviewed the Resolution on the merits.[10]
Thus, both Dorta-Duque and Lennar crafted this definition of "appeal" in paragraph *885 six to ensure that Lennar would contractually be obligated to perform under the agreement unless the Resolution was reviewed on the merits by the Appellate Division.
Although it cannot possibly be disputed that the Resolution was in fact reviewed on the merits by the Appellate Division, the trial court (and now the majority of this panel) concluded that Lennar is nevertheless obligated to perform under the settlement agreement. Their reasoning appears to be, among other things, that Lennar was not excused from its performance because "no jurisdictionally sufficient petition for writ of certiorari was filed prior to the expiration of the applicable appeal period which, in turn, caused the Circuit Court to issue an order to show cause." See Op. at ___. With all due respect, such a holding is not only legally erroneous, but is logically irreconcilable with the decision of the Circuit Court Appellate Division.
D. ANALYSIS
Initially, I am constrained to point out a fundamental misunderstanding about the Circuit, Court's appellate certiorari jurisdiction to review the County's Resolution that has unfortunately permeated these proceedings from the inception of the settlement agreement up to, and including, this appeal. Throughout this entire proceeding, everyone involved has assumed that the Appellate Division's certiorari jurisdiction was discretionary in nature and that the issuance of the show cause order was a prerequisite for the court to entertain a review of the Resolution on the merits. Both such assumptions are incorrect as a matter of law.
The County's adoption of the subject Resolution, which approved Diaz's request for a zoning change, was quasi-judicial in nature. See Bd. of County Comm'rs of Brevard County v. Snyder, 627 So.2d 469, 474 (Fla.1993); Parker Family Trust v. City of Jacksonville, 804 So.2d 493, 497 (Fla. 1st DCA 2001). See also Am. Riviera Real Estate Co. v. City of Miami Beach, 735 So.2d 527, 527 (Fla. 3d DCA 1999); Grace v. Town of Palm Beach, 656 So.2d 945, 946 (Fla. 4th DCA 1995). As a result, pursuant to Florida Rule of Appellate Procedure 9.190(b)(3)[11], which governs *886 the proceedings below, the decision was reviewable by petition for writ of certiorari as a matter of right in the Circuit Court. "Although termed `certiorari' review, review at this level is not discretionary but rather is a matter of right and is akin in many respects to a plenary appeal." Fla. Power & Light Co. v. City of Dania, 761 So.2d 1089, 1092 (Fla.2000); City of Deerfield Beach v. Vaillant, 419 So.2d 624, 626 (Fla.1982). See, e.g., Haines City Cmty. Dev. v. Heggs, 658 So.2d 523, 530 (Fla.1995) ("in other words, in such review the circuit court functions as an appellate court and, among other things, is not entitled to reweigh the evidence or substitute its judgment for that of the agency."); see also Philip J. Padovano, Florida Appellate Practice, 161 (2d ed.1997) ("[t]he scope of review is actually more like a plenary appeal."). On this first tier mandatory review, the Circuit Court must determine (1) whether procedural due process has been afforded; (2) whether the essential requirements of law have been observed; and (3) whether competent substantial evidence supports the commission's judgment. Vaillant, 419 So.2d at 626.[12]
Thus, because certiorari review of the Resolution by the Appellate Division was not discretionary but mandatory, no order to show cause would ever be necessary or issued for that Court to review it on its merits. This critical principle was overlooked by the parties and their counsel in drafting the settlement agreement, the trial court below, and my colleagues in the majority on this appeal.
The language in the settlement agreement that defined a jurisdictionally sufficient petition for writ of certiorari as "one that causes the court to issue an order to show cause," therefore, had no legal effect. That is, once the remaining property owners timely filed their notice of appeal, which the court was authorized to properly treat as a timely filed petition for writ of certiorari, the court was obligated to conduct a plenary review of the Resolution on the merits. The court had no discretion to do otherwise.
It is clear both from the language of the settlement agreement and testimony of the parties themselves that Lennar's obligation to Dorta-Duque under the agreement was contingent upon there being no certiorari review on the merits of the Resolution. In drafting this agreement, however, the parties mistakenly believed that the issuance of an order to show cause was a prerequisite for the court to review the Resolution on the merits. Notwithstanding their mistake, the very contingency that excused Lennar's performance under the agreement actually materialized. On certiorari review, the Appellate Division reviewed and denied the County's Resolution on the merits and denied the petition. Even Dorta-Duque's own appellate expert at the trial below, to his credit, correctly conceded this fact.[13]
*887 The majority opinion's holding that Lennar was not excused from performance under the settlement agreement because "no jurisdictionally sufficient petition for writ of certiorari was filed prior to the expiration of the applicable appeal" respectfully makes absolutely no sense. If no "jurisdictionally sufficient petition for writ of certiorari was timely filed," on what authority then did the Circuit Court Appellate Division act to review and deny the Resolution on the merits? This is a question that the majority opinion leaves unanswered. Indeed, no one has ever asserted that the decision of the Circuit Court Appellate Division was a legal nullity.
In sum, once the notice of appeal was filed and the Circuit Court Appellate Division properly proceeded to review the County's Resolution on the merits by way of certiorari review, Lennar's contractual obligations to Dorta-Duque were extinguished. For all the foregoing reasons, the trial court's final judgment must be reversed and remanded with instructions to enter final judgment in favor of Lennar
NOTES
[1] Without citing any authority, the dissent states that because certiorari review by the Appellate Division was mandatory, no order to show cause would ever be necessary to review the Resolution on its merits. The dissent then concludes that in drafting the settlement agreement, "the parties mistakenly believed that the issuance of an order to show cause was a prerequisite for the court to review the Resolution, on the merits." See infra p. 886. If the dissent is correct, this would then be a case of mutual mistake. Had Lennar Homes ever claimed at any point mutual mistake in the execution of the contract, the proper procedure would have been for Lennar to seek rescission or reformation of the Settlement Agreement. Providence Square Ass'n, Inc. v. Biancardi, 507 So.2d 1366, 1369-70 (Fla.1987) ("A court of equity has the power to reform a written instrument where, due to a mutual mistake, the instrument as drawn does not accurately express the true intention or agreement of the parties to the instrument. . . . Notably, in reforming a written instrument, an equity court in no way alters the agreement of the parties. Instead, the reformation only corrects the defective written instrument so that it accurately reflects the true terms of the agreement actually reached.") (citations omitted); Barber v. Barber, 878 So.2d 449, 451 (Fla. 3d DCA 2004). A review of the record does not indicate that Lennar ever made such a claim in the trial court nor did Lennar raise this issue on appeal. Courts may not rewrite or add to the terms of a written agreement between parties. Jacobs v. Petrino, 351 So.2d 1036, 1039 (Fla. 4th DCA 1976). The trial court properly refused to do so when it concluded that the Settlement Agreement explicitly required a jurisdictionally sufficient petition for writ of certiorari. Instead, only a notice of appeal. was filed. Furthermore, the Agreement required an order to show cause to be issued by the court. An order to show cause was never issued.
[1] It is undisputed that the zoning approval became final, the appeals were exhausted and that Lennar and/or Silver Palm purchased the property.
[2] The thirtieth (30th) day fell on Sunday, January 18, 2004, and the following Monday, January 19, 2004, was a legal holiday.
[3] The other named defendant, Silver Palm Holdings of Homestead, LLC, is a successor or assign under the Settlement Agreement, and Lennar admits that Silver Palm is now the record title holder of the buffer property at issue in the Settlement Agreement. Throughout this order, the court refers to Silver Palm Holdings and Lennar collectively as "Lerman"
[4] This property was referred to as "buffer property" and was located immediately adjacent to Dorta-Duque's property.
[5] Lennar does not contend that any other action at law or equity was filed nor is there any evidence that such an action was filed.
[6] Rule 9.100(g), Fla. R.App. P. provides the requirements for a petition as follows: The caption shall contain the name of the court and the name and designation of all parties on each side. The petition shall not exceed 50 pages in length and shall contain (1) the basis for invoking the jurisdiction of the court; (2) the facts on which the petitioner relies; (3) the nature of the relief sought; and (4) argument in support of the petition and appropriate citations of authority. [Emphasis added]. It is undisputed that the notice of appeal sub judice did not comply with the requirements of Rule 9.100(g).
[7] The parties filed and argued cross motions for summary judgment and have taken the position that there are no material issues of disputed fact. Both parties agreed that the outcome of this case was to be decided by simply determining the meaning of paragraph 6 of the settlement agreement. Unfortunately, both parties interpret that paragraph differently and so, a predecessor judge denied the motions. This court considers the language in paragraph 6 of the settlement agreement to be clear and unambiguous and compels a final judgment in favor of Plaintiff and that the interpretation suggested by Lennar is not reasonable. However, Floyd v. Homes Beautiful Const. Co., 710 So.2d 177 (Fla. 1st DCA 1998), precludes the entry of a summary judgment in this situation and, thus, this court has considered parol evidence. See also, Mariner Cay Property Owner's Ass'n, Inc. v. Topside Marina, Inc., 714 So.2d 1130 (Fla. 4th DCA 1998); Miller v. Kase, 789 So.2d 1095 (Fla. 4th DCA 2001); Royal Am. Realty, Inc. v. Bank of Palm Beach & Trust Co., 215 So.2d 336 (Fla. 4th DCA 1968).
[8] Mr. Mayol testified that on January 16, 2004, he was aware that other property owners were threatening to file an appeal. Mr. Dorta-Duque testified similarly and stated he did not believe others were in a position to timely file a jurisdictionally sufficient petition for writ of certiorari and that he believed they would file a notice of appeal and so the settlement agreement was drafted to require more than the filing of a notice of appeal in order to excuse Lennar from performing.
[9] It is noteworthy that only a weekend and a legal holiday separated the day on which the settlement agreement was reached (Friday) and the expiration of the appeal period.
[10] See Nelson v. City of Sneads, Fl., 921 So.2d 760 (Fla. 1st DCA 2006); Van Meter v. Kelsey, 91 So.2d 327 (Fla.1956); and McIlmoil v. McIlmoil, 784 So.2d 557 (Fla. 1st DCA 2001).
[11] Lennar did not plead this affirmative defense but the court granted Lennar's ore tenus motion for leave to amend at the close of the case.
[12] Leopold v. Kimball Hill Homes, Florida, Inc., 842 So.2d 133, 136 (Fla. 2nd DCA 2003) ("In deciding whether there has been a meeting of the minds, courts look not to the agreement of two minds in one intention, but on the agreement of two sets of external signsnot on the parties having meant the same thing but on their having said the same thing").
[13] Lennar did not plead this affirmative defense either, but the court granted Lennar's ore tenus motion for leave to amend at the close of the case.
[14] Boymer v. Birmelin, 227 So.2d 358, 362 (Fla. 3rd DCA 1969) ("It is well recognized that forbearance to enforce a legal right may constitute consideration for a promise." "Consideration is supplied when the circumstances are such that it is reasonable to infer that forbearance was desired and sought by the promisor and forbearance by the promise follows").
[15] Trial transcript Day one at page 212.
[16] Trial transcript Day two at page 18.
[17] The court notes that paragraph eight of the Settlement Agreement expressly provided that the parties "shall have the right to seek any and all remedies available at law or in equity."
[18] Bell v. Alsip, 435 So.2d 840 (Fla. 4th DCA 1983) (pointing out that real estate is unique and reversing for entry of specific performance),
[19] Trial transcript Day one at pages 111-112.
[2] The first penalty provision, which commenced on February 1, 2004, required Lennar to pay Diaz monthly increasing interest payments on the purchase price. The second penalty provision, which commenced on April 1, 2004, provided that the purchase price for the transaction would increase monthly by an amount equal to 200 times the total number of approved homesites.
[3] The thirtieth day was actually January 19, 2004, but since that was a legal holiday, the deadline was extended until January 20, 2004.
[4] The other pro se appellants later signed an amended notice of appeal.
[5] Fla. R.App. P. 9.190(b)(3); Bd. of County Comm'rs of Brevard County v. Snyder, 627 So.2d 469, 474, (FIa.1993); Dade County v. Marca, S.A., 326 So.2d 183 (Fla.1976); Teston v. City of Tampa, 143 So.2d 473, 476 (Fla. 1962); Grace v. Town of Palm Beach, 656 So.2d 945, 946 (Fla. 4th DCA 1995); City of Ft. Pierce v. Dickerson, 588 So.2d 1080, 1081-82 (Fla. 4th DCA 1991); Walgreen Co. v. Polk County, 524 So.2d 1119, 1120 (Fla. 2d DCA 1988).
[6] Ironically, the trial judge below was a member of this appellate panel.
[7] Dorta-Duque, however, did have access to his appellate counsel, Kent Robbins, Esq., via speaker phone during these negotiations.
[8] Dorta-Duque acknowledged that his appellate counsel, Mr. Robbins, had informed him of this fact:
[Q] That day when you signed the deal, did you know from any source that the Court had the authority to turn that notice into appeal, that you knew it would be filed into a petition for writ of certiorari? Did you know that?
[A] Mr. Robbins had warned me of the fact, yes.
[Q] He did? He told you that before you signed the deal?
[A] Yes.
[9] Dorta-Duque testified as follows:
[Q] and why are you so sure? What recollection to you have?
[A] I remember him explaining what that meant and how that would help me.
[Q] And that's not something that came from Kent. Robbins or Mr. Starkman?
[A] Not that I recall sir.
[Q] And how did he tell that language would help?
[A] He explained that it wasn't just the filing of a writ of certiorari that would make this contact void, but it went further to explain that even if that had been filed on time with the proper appendix and transcripts, that it would still take a judge to order a certain thing.
. . . .
[Q] I think you indicated either yesterday or earlier that you just didn't want simply a piece of paper to be file, is that correct, and to stop Lennar's obligation under the deal?
[A] Yes.
[10] Lennar's representative, Mr. Seijas, testified as follows:
[Q] Now, it says subject to and conditioned uponthat Lennar's obligations, were subject to and conditioned upon. Was this a critical term of the settlement agreement for you, this term?
[A] I mean, it really was the heart of the agreement. For us the issue was is [sic] that there would not be an appeal. It would move forward within the courts and it would not be filed by anyone because, again, a delay was a delay.
. . . .
[Q] Well, let me ask you, when the "by anyone" was added, other than what you just testified to, was there any concern that he expressed to you that led to any other changes that he expressed to you and changes in the agreement?
[A] Well, yeah. And then at that point, again, I think there was a little bit of mistrust on both sides. His concern and he expressed back was that, yeah, but I have to make sure that you guys don't file some kind of piece of paper or anything, just an appeal that, doesn't move forward, that isn't heard, just to try to get out of this deal. So we have to make sure that this is a real appeal and that basically was what created that dialogue.
[Q] You became aware that a definition now of appeal was put in the settlement agreement? Were you aware of that?
[A] Yes. I remember that day Juan and Starkman working together, putting together some language, that would make it such that it was a situation where an appeal was filed and went and move forward and then through the courts, something that was a real delay to Lennar.
. . . .
[Q] Yesterday, Mr. Mayoland you were heretestified that at the time he was negotiating the settlement agreement on behalf of Lennar, that he might not have been as familiar with the Florida Rules of Appellate Procedure as well as he thought he was.
Now, there was nothing that prevented Lennar or Mr. Mayol from consulting with an appellate attorney during the course of negotiations of that settlement agreement, correct?
[A] Correct. I can tell you that we were all there discussing the intent of the agreement which the intent of the agreement was that if an appeal was filed and went through the process of the courts, that we no longerby anyonethat we no longer had the obligation to sell the property to Mr. Dorta-Duque, that the fact is that neither Mr. Mayol nor Mr. Starkman, neither one of them were, as you call, experts in appellate law or whatever that may be. But everyone was working together in what I thought was good faith to put on paper the agreement that Manny and I had said.
[11] Rule 9.190(b)(3) provides that "[r]eview of quasi-judicial decisions of an administrative body, agency, board, or commission not subject to the Administrative Procedure Act shall be commenced by filing a petition for certiorari in accordance with rules 9.100(b) and (c), unless judicial review by appeal is provided by general law." This. Rule does not reference the order to show cause provision in Rule 9.100(h) because it is inapplicable to the review of quasi-judicial decisions not subject to the Administrative Procedure Act.
[12] In contrast, on a "second tier" certiorari petition before the district court, that court is limited to determining whether procedural due process has been afforded and whether the circuit court applied the correct law. See Vaillant, 419 So.2d at 626. It is not allowed to determine whether the commission's decision was wrong as a matter of law.
[13] Dorta-Duque's expert witness, Joel Perwin, a prominent appellate attorney, testified:
[Q] My question was, Mr. Perwinagain, if my question is unclear, I apologize. My question was did the appellate division consider the merits of the petition for certiorari in this case?
[A] Yes. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918685/ | 47 N.J. 6 (1966)
218 A.2d 859
MARGARET BITTING AND ROBERT BITTING, HER HUSBAND, PLAINTIFFS-RESPONDENTS,
v.
DOUGLAS C. WILLETT, DEFENDANT-APPELLANT.
The Supreme Court of New Jersey.
Argued February 8, 1966.
Decided April 4, 1966.
*7 Mr. Burchard V. Martin argued the cause for appellant (Messrs. Taylor, Bischoff, Neutze & Williams, attorneys; Mr. Martin, of counsel and on the brief).
Mr. Morrey Lacktman argued the cause for respondents (Mr. S. Arthur Levy, attorney; Mr. Lacktman, of counsel and on the brief).
PER CURIAM.
Defendant appeals from a judgment of the Appellate Division remanding plaintiff's, Mrs. Bitting's, automobile accident claim for a new trial as to damages only. The jury had returned a per quod verdict for plaintiff, Robert Bitting, in the sum of $5,000 and for plaintiff, Margaret Bitting, his wife, in the sum of $10,000. Upon plaintiffs' *8 motion for a new trial as to damages only, the trial court decided that unless defendant agreed to an additur of $2,500 to the verdict of $10,000 for Mrs. Bitting, a new trial would be granted. Defendant consented to the increase but plaintiffs rejected it as inadequate whereupon the court entered an order dated December 11, 1963 denying the motion for a new trial.
On plaintiffs' appeal, the Appellate Division found that defendant's liability was clearly established, and determined that the appeal was upon the judgment of $10,000 as the trial court had not corrected its judgment of October 14, 1963 which had been entered on the jury's verdict to reflect the additur. It further determined that, as the plaintiffs refused to "accept an additur not reduced to an appealable order or judgment," it would be "unwise for us to fix an additive sum." It set aside Mrs. Bitting's award and remanded the cause for a new trial as to her damages only. It also held that the verdict of $5,000 in favor of Mr. Bitting was adequate. 89 N.J. Super. 196 (App. Div. 1965). We certified the cause upon petition of the defendant, 46 N.J. 216 (1966).
We agree with the Appellate Division that a new trial of all issues should be denied, and that the liability of the defendant was well-established and need not be submitted for determination. R.R. 4:61-1; Dahle v. Goodheer, 38 N.J. Super. 210 (App. Div. 1955), certif. denied 20 N.J. 534 (1956).
As to Mrs. Bitting's claim for pain, suffering and loss of income, defendant contends that, even if it may be said that the $10,000 award was so inadequate that a new trial is required, the award of $12,500 was more than ample. He contends that the Appellate Division should have corrected the oversight in the judgment of the trial court so that it reflected the $2,500 additur award and then should have reviewed the adequacy of a $12,500 judgment. Plaintiff contends that the Appellate Division properly refused to interfere with the $10,000 judgment, for when they rejected the amount of the additur as inadequate the trial court should have either *9 granted a new trial in any event or merely denied the new trial motion without additur as was done.
In Fisch v. Manger, 24 N.J. 66, 72 (1957) Mr. Justice Jacobs reviewed the history of additur procedure in this State and described additur as an order denying the plaintiff's application for a new trial on the condition that the defendant consent to an increase in the jury's award as specified by the trial judge. The option of accepting an additur rests with a defendant and if defendant accepts it, the judgment should reflect the added sum without regard to plaintiffs wish. The plaintiff may then accept the judgment as thus enlarged or may appeal. Although, here, the judgment erroneously did not reflect the increased figure, nonetheless the Appellate Division should have reviewed the trial court's finding that the additur was the proper disposition of the motion. The matter is remanded to the Appellate Division to that end.
We should not be understood to suggest that the Appellate Division could not, after such review, conclude that justice will be better served by a new trial as to damages only.
Remand, no costs.
For remandment Chief Justice WEINTRAUB and Justices JACOBS, FRANCIS, PROCTOR, HALL and SCHETTINO 6.
Opposed None. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918687/ | 421 Pa. 257 (1966)
Hufford Adoption Case.
Supreme Court of Pennsylvania.
Argued March 23, 1966.
April 19, 1966.
*258 Before BELL, C.J., MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.
Blair A. Griffith, for appellants.
Joseph M. Loughran, with him Loughran & Loughran, for appellee.
OPINION BY MR. CHIEF JUSTICE BELL, April 19, 1966:
On August 19, 1965, Wilbert H. Nichols and Margaret Nichols, his wife, filed petitions for the adoption of Harry Wilbert Hufford, William Lee Hufford and Robert Daniel Hufford. Petitioners are the maternal grandparents of these children, who are respectively five, seven and twelve years of age.
The respondent is Robert L. Hufford, who is the father of the children. His wife, Margaret Faye Nichols Hufford, who was the mother of the children, is dead. After hearing, the lower Court dismissed the petitions (three of which were later consolidated) for adoption, and the petitioners took this appeal.
*259 In Maisels Adoption Case, 395 Pa. 329, 149 A. 2d 38, the Court said (page 332): ". . . `Unlike custody cases, in adoption proceedings the welfare of the child is not material until either consent or abandonment as prescribed by the Adoption Act has been established.': Susko Adoption Case, 363 Pa. 78, 81, 82, 69 A. 2d 132; Bair Adoption Case, 393 Pa. 296, 299, 141 A. 2d 873; Ashton Adoption Case, 374 Pa. 185, 196, 97 A. 2d 368; Schwab Adoption Case, 355 Pa. 534, 50 A. 2d 504.
"Adoption being a creature of statute, the statute's provisions must be strictly complied with. In the absence of consent of a living natural parent those who seek to adopt a child under the age of eighteen years must prove to the satisfaction of the hearing judge that such natural parent has abandoned the child.
"`Abandonment', as defined by the statute, is `conduct on the part of a parent which evidences a settled purpose of relinquishing parental claim to the child and of refusing or failing to perform parental duties' and such conduct must be shown to have continued `for a period of at least six months' . . . ." Accord: Gunther Adoption Case, 416 Pa. 237, 206 A. 2d 61. See also, Smith Adoption Case, 412 Pa. 501, 194 A. 2d 919.
We have studied the record, but deem it unnecessary to detail the evidence. The father repeatedly kept in touch with his children as far as was reasonably possible, attempted repeatedly to contribute a portion of his pay to their support when he was working, and also often indicated his love and affection for them. We agree with the hearing Judge who found that the father had never consented to the adoption, and had not abandoned his children within the meaning of the Adoption Act.
Decree affirmed, each party to pay own costs. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918691/ | 218 A.2d 691 (1966)
TOWN OF WOODSTOCK
v.
Clarence E. CLEVELAND, Kenneth H. Atwood and Moses S. Chase, County Road Commissioners for Windsor County.
No. 1951.
Supreme Court of Vermont. Washington.
April 5, 1966.
*692 James Wright, Woodstock, for plaintiff.
Franklin S. Billings, Woodstock, for defendants.
Before HOLDEN, C. J., and SHANGRAW, BARNEY, SMITH and KEYSER, JJ.
HOLDEN, Chief Justice.
The selectmen of the Town of Woodstock in Windsor County seek a writ of prohibition against the road commissioners of that county to avoid an order for highway repair. The controversy centers on a judgment entered against the petitioner under 19 V.S.A. § 1336, for the repair of a road in the Town of Woodstock.
On November 3, 1965, three residents of that town complained to the county road commissioners concerning the insufficiency and state of repair on the Church Hill Road, setting forth that they had previously notified the selectmen of the Town of the state of disrepair of the highway but that no action was taken. After notice to the town the road commissioners examined the highway and heard the complaint on November 12, 1965. The selectmen appeared and protested the jurisdiction of the road commissioners, contending the road was not a public highway.
The record of the proceedings before the road commissioners, filed November 16 with the Windsor County Clerk, is alleged in the complaint. Among other things, it reports:
"The examination of the road convinced the commissioners that it is out of general repair. The sworn testimony at the court room hearing in the afternoon of November 12th indicated that Woodstock town officials have expended public funds in maintaining the road, both summer and winter, for many consecutive previous years, and the early part of 1965. Such testimony is proof to the commissioners that the road is a public town road or highway, and is a responsibility of the town as such."
The report concludes with an order requiring the Town of Woodstock to expend the sum of $500.00, weather permitting, within thirty days to accomplish the repairs found to be needed by the commissioners.
At the expiration of the time limited for these repairs the road commissioners ascertained that the town had failed to accomplish the improvements and maintenance required by their order. They also found that no appeal had been taken from their previous report. Thereupon, they *693 appointed an agent to execute the order upon giving a sufficient bond conditioned for the performance of his duties and ordered judgment against the Town of Woodstock in the amount of $500.00. The certificate to this effect was filed with the County Clerk with a judgment against the Town of Woodstock in favor of the road commissioners on January 12, 1966. It appears from the record that all of these proceedings were consistent and in compliance with the provisions of Sub-Chapter 8 of Chapter 9 of the Highway Law, 19 V.S.A. §§ 1331-1336.
19 V.S.A. § 1336, which provides for the entry of judgment, also provides that "the aggrieved party may appeal to the county court by filing with the county clerk within twenty-one days after judgment has been entered by said clerk, a notice of appeal * * *. The county court shall hear the appeal on questions of fact and law and render final judgment thereon. In case an appeal is not taken within twenty-one days after judgment the clerk shall issue execution therefor, returnable in thirty days from the date of such judgment. In such execution, the officer collecting the same shall be directed to pay the amount of such judgment to the agent appointed by the commissioners and the costs to the county clerk."
The remedy of prohibition is one of urgency and issues as a matter of discretion to meet the exigencies of the situation presented. It is directed against the unwarranted assumption of jurisdiction and is designed to secure order and regularity of judicial proceedings. The writ will not issue to correct errors of fact or law which are subject to review by right of appeal. Leonard v. Willcox, 101 Vt. 195, 204, 142 A. 762; Petition of Green Mountain Post No. 1, etc., 116 Vt. 256, 258, 73 A.2d 309; Petition of Raymo, 121 Vt. 246, 248, 154 A.2d 487.
The status of the highway in question, as public or private, was an essential jurisdictional fact. It appears from the report of the commissioners that this issue was a dominant consideration at the hearing before the road commissioners.
Apart from statutory provisions, a public way may be established by dedication and acceptance. Demers v. City of Montpelier, 120 Vt. 380, 384, 141 A.2d 676. Its character in such instance involves mixed questions of law and fact. Springfield v. Newton, 115 Vt. 39, 43, 50 A.2d 605. The report establishes that evidence was received which was addressed to the question of whether the highway was in fact a public highway. The road commissioners reported that the town has voluntarily assumed the burden of maintaining the road and keeping it in repair, summer and winter, over many consecutive years. These factors justify the conclusion that the town has recognized and accepted the public character of the road and that it is a town highway. The allowance of such repairs by the owner, unexplained and undisputed, is sufficient to establish a dedication. Springfield v. Newton, supra, 115 Vt. at 45, 50 A.2d 605.
Every court has the power to determine in the first instance its jurisdiction to entertain the proceedings brought before it. When the jurisdiction is dependent upon the existence of certain facts, its finding and adjudication of such facts without appeal is final. Thorp v. Porter, 70 Vt. 570, 572, 41 A. 657; see also In re Hanrahan's Will, 109 Vt. 108, 125, 194 A. 471.
The county road commissioners, acting in the present cause, constitute a tribunal exercising judicial powers. Town of Shrewsbury v. Davis, 101 Vt. 181, 187, 142 A. 91. If they were in error, review of the jurisdictional question was available in county court by appeal in the manner prescribed by 19 V.S.A. § 1336. On such appeal it would be the duty of the county court to decide this very question. Dunn v. Town of Pownal, 65 *694 Vt. 116, 118, 26 A. 484. Without appeal the report of the road commissioners is final. 19 V.S.A. § 1334. Town of Shrewsbury v. Davis, supra, 101 Vt. at 194, 142 A. 91.
Petition dismissed with costs. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2440531/ | 966 N.E.2d 610 (2008)
381 Ill. App. 3d 1152
359 Ill. Dec. 289
PRENDERGAST
v.
PRENDERGAST.
No. 2-07-0507.
Appellate Court of Illinois, Second District.
May 27, 2008.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583596/ | 427 So. 2d 1132 (1983)
Suzanne McCORD, Etc., Appellant,
v.
SENTRY PROTECTION, INC., Appellee.
No. 82-507.
District Court of Appeal of Florida, Fifth District.
March 16, 1983.
Steven Burrage of Robert D. Melton, P.A., Orlando, for appellant.
Harold E. Morlan, II of Baker & Hostetler, Orlando, for appellee.
COWART, Judge.
Can an owner who suffers a loss by burglary while a burglar alarm is malfunctioning recover the loss from the burglar alarm company whose negligence in performing an agreement to repair and maintain caused the malfunction of the alarm, or was the burglary an unforeseeable intervening criminal act breaking the chain of causation?
Plaintiff-appellant appeals a final order dismissing an action after plaintiff's second amended complaint was dismissed with prejudice. The dismissed complaint is in four counts: breach of contract, negligent repair, breach of implied warranty of fitness and breach of express warranty. The complaint alleges that plaintiff, owner of a lapidary shop having a burglar alarm that had been damaged by lightning, contracted with the defendant burglar alarm company to repair and maintain the burglar alarm; that in performance of such contract the defendant negligently made repairs leaving the alarm system defective and with a test light indicating that the alarm system was operational when, in fact, it was not; that while the burglar alarm system was so defective plaintiff suffered a loss and damages as the result of a burglary that would not have occurred, or that would not have resulted in plaintiff's loss, but for the defective burglar alarm. The defendant challenged the sufficiency of the complaint to state a cause of action citing Nicholas v. *1133 Miami Burglar Alarm Co., 339 So. 2d 175 (Fla. 1976), and Singer v. I.A. Durbin, Inc., 348 So. 2d 370 (Fla. 3d DCA 1977).
Both Nicholas and Singer involved claims by an owner against a security or burglar alarm company for damages resulting from a burglary but neither case involved a defect in the burglar alarm system alleged to have been the direct result of a breach of contract to repair and maintain the system. In Nicholas, the alarm company's agent allegedly failed, contrary to an alleged agreement, to notify the police when the alarm system functioned and relayed a "trouble signal." In Singer it was alleged that the alarm company contracted to, but negligently failed to, wire into the alarm system all windows of a home and the home was burglarized through an unwired window. In both Nicholas and Singer complaints were held to state a cause of action as against a motion to dismiss based on an argument that there is a general rule of law that a burglar alarm company whose system fails to function properly is not liable for a burglary loss. Nicholas and Singer refer to this "rule of law" but both held it inapplicable to the facts in those cases. The rule does appear to have been accepted in Nicholas v. Miami Burglar Alarm Co., 266 So. 2d 64 (Fla. 3d DCA 1972), rev'd in part, 339 So. 2d 175 (Fla. 1976), which cites with approval Nirdlinger v. American Dist. Teleg. Co., 245 Pa. 453, 91 A. 883 (1914), and the annotation at 165 A.L.R. 1254 (1946). The theory for the rule is given to be that a burglary is an unforeseeable intervening act breaking the chain of causation because the occurrence of the burglary at a particular time is unforeseeable and the defendant's negligence is purely speculative and dependent on several contingencies, and the proximate cause of the loss is not the negligence but the burglary. In short the rule is based on the theory that the defendant's negligence or breach of contract is not the proximate cause of the loss because the particular burglary that occurred is unforeseeable. The courts in Nicholas and in Singer recognized that the general rule that an intervening criminal act breaks the chain of causation is based on the premise that a person usually has no reason to foresee the criminal acts of another and both cases qualify the rule by saying that when the intervening criminal act, or the loss therefrom, is foreseeable, a defendant may be liable notwithstanding the intervening criminal act, citing Cooper v. I.B.I. Security Service of Florida, Inc., 281 So. 2d 524 (Fla. 3d DCA 1973), cert. denied, 287 So. 2d 95 (Fla. 1973). Neither Nicholas nor Singer stopped there but both went on to hold that the burglary in question was foreseeable. Nicholas said that the burglary and loss in that case was foreseeable as a result of the receipt of the ignored trouble signal while Singer found foreseeability more generally based on statistics showing the great increase in burglaries in Florida from 1973 to 1977.
Whatever the state of the development of the law and of burglar alarm equipment in Pennsylvania in 1914, this court has held that a specific violent criminal assault is foreseeable merely because prior criminal acts have occurred in the community and has upheld the liability of those who were not in the business of foreseeing criminal activity and protecting against it.[1] In statements of the supposed general rule of law that a burglar alarm company is not liable for a burglary if its equipment malfunctions, there is some indication that what was contemplated were "spontaneous" or unforeseeable malfunctions and not, as here, defects in the system alleged to have been directly caused by negligence or the breach of an agreement to repair and maintain the burglar alarm system. In any event, we hold that as between owners of property and burglar alarm companies who contract with them to provide, repair or maintain burglar alarms, the possibility of a successful burglary, and of loss resulting therefrom resulting from the negligent breach of a contractual obligation to provide, repair *1134 or maintain a burglar alarm, is reasonably foreseeable.
REVERSED.
COBB, J., and JOHNSON, CLARENCE T., Jr., Associate Judge, concur.
NOTES
[1] See, e.g., Orlando Executive Park, Inc., v. P.D.R., 402 So. 2d 442 (Fla. 5th DCA 1981), cert. denied, 411 So. 2d 384 (Fla. 1981). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583659/ | 31 So. 3d 788 (2010)
MITAR
v.
SCOTT.
No. 2D10-1046.
District Court of Appeal of Florida, Second District.
April 5, 2010.
Decision Without Published Opinion Habeas Corpus denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583678/ | 427 So. 2d 785 (1983)
Charles BLITCH, Appellant,
v.
STATE of Florida, Appellee.
No. 81-2443.
District Court of Appeal of Florida, Second District.
March 2, 1983.
*786 Sherman M. Brod, Tampa, for appellant.
Jim Smith, Atty. Gen., Tallahassee, and Charles Corces, Jr., Asst. Atty. Gen., Tampa, for appellee.
HOBSON, Acting Chief Judge.
Charles Wayne Blitch appeals an order adjudicating him guilty of second degree murder in accordance with a jury verdict and sentencing him to fifteen years imprisonment. We reverse and remand for a new trial because of the manner in which the trial court instructed the jury on the defense of excusable homicide.
The state charged appellant with the second degree murder of one Ira Scott, Jr., with a shotgun. At trial, the evidence clearly revealed that appellant killed Scott with a single shotgun blast. However, the evidence was in conflict as to whether appellant shot Scott accidentally or intentionally. Also, the evidence was in dispute as to appellant's state of mind when he pulled the trigger.
At the charge conference after the close of all the evidence, appellant's trial counsel requested the court to read parts 1 and 2 of the 3-part standard jury instruction on the defense of excusable homicide. The 3-part standard jury instruction on excusable homicide provides:
An issue in this case is whether the killing of [Scott] was
excusable.
The killing of a human being is excusable if committed by
accident and misfortune.
In order to find the killing was committed by accident and
misfortune, you must find the defendant was:
Give 1, 2 1. a. doing a lawful act by lawful meansand with usual care
or 3 as and
applicable
b. acting without any unlawful intent.
2. in the heat of passion brought on by a sudden provocation
sufficient to produce in the mind of an ordinary person
the highest degree of anger, rage or resentment that is
so intense as to overcome the use of ordinary judgment,
thereby rendering a normal person incapable of
reflection.
3. engaged in sudden combat. However, if a dangerous weapon
was used in the combat or the killing was done in a cruel
or unusual manner, the killing is not excusable.
The court expressly agreed with appellant's trial counsel that parts 1 and 2 applied to the case, but after closing arguments it failed to instruct the jury as promised. Instead, it read the introductory excusable homicide instruction, which is practically verbatim to the excusable homicide statute:
The killing of a human being is excusable and, therefore, lawful when committed by accident and misfortune, in doing any lawful act by lawful means with usual, ordinary caution and without any unlawful intent, or by accident or misfortune in the heat of passion upon any sudden and sufficient provocation or upon a sudden combat, without any dangerous weapon being used, and not done in a cruel or unusual manner.
At the conclusion of all the instructions, appellant's trial counsel advised the court that it had not read parts 1 and 2 of the standard jury excusable homicide instruction as agreed. The court, however, denied his renewed request for instructions on these two parts, surmising that its summary instruction was "sufficient."
*787 Appellant contends on appeal that the trial court's summary instruction on excusable homicide amounted to reversible error because he thinks in part that the instruction may have misled the jury. We agree.
In light of the sobering observation that, "[p]articularly in a criminal trial, the judge's last word is apt to be the decisive word," Bollenbach v. United States, 326 U.S. 607, 612, 66 S. Ct. 402, 405, 90 L. Ed. 350, 354 (1946), a judge's instruction on a theory of defense should not be equivocal, incomplete or confusing.
As appellant contends, the trial court's introductory instruction on the defense of excusable homicide may very well have been inherently misleading, because it appeared to inaccurately suggest that a killing can never be excusable if committed with a dangerous weapon. To explain, the jury could have easily misconstrued the instruction in the following manner:
The killing of a human being is excusable, and, therefore, lawful
[1] when committed by accident or misfortune, in doing any lawful act by lawful means with usual, ordinary caution and without any unlawful intent,
[2] or by accident or misfortune in the heat of passion, upon any sudden and sufficient provocation or upon any sudden combat,
without any dangerous weapon being used, and not done in a cruel or unusual manner.
Under such a plausible misconstruction, the jury would have readily reached the improper conclusion that the excusable homicide defense was not available to appellant since he killed Scott with a shotgun.
A reading of parts 1 and 2 of the complete standard jury instruction on excusable homicide, as requested by appellant's trial counsel and as promised by the court, would have effectively prevented the possibility of any confusion on the jury's part as to whether the excusable homicide defense is available to one who kills a person with a dangerous weapon.[1]
We are aware, of course, that the jury may not have been naively misled by the instruction given. However, we refuse to sustain appellant's conviction on such a fragile assumption.
Appellant raises several other points on appeal which we need not address in light of our decision.
Accordingly, we reverse and remand for a new trial.
REVERSED and REMANDED.
GRIMES and SCHEB, JJ., concur.
NOTES
[1] Even a reading of part 3 of the complete instruction, along with parts 1 and 2, would have sufficed in this case. Part 3 of the complete instruction unequivocally shows that, where one kills someone with a dangerous weapon, the excusable homicide defense is unavailable to him only if he had been engaged in sudden combat with the victim. (Here, appellant was not engaged in sudden combat with Scott when he shot him.) | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583630/ | 31 So. 3d 182 (2010)
JONES
v.
STATE.
No. 2D09-4366.
District Court of Appeal of Florida, Second District.
March 31, 2010.
Decision Without Published Opinion Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583712/ | 728 N.W.2d 853 (2007)
IN RE C.L.P.H.
No. 06-1831.
Court of Appeals of Iowa.
January 18, 2007.
Decision without published opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/626933/ | 675 F.3d 1241 (2012)
William B. ELLIOTT; Tommy J. Evaro; Andria J. Hernandez, Plaintiffs-Appellants,
v.
Susana MARTINEZ, District Attorney for the Third Judicial District of New Mexico, Defendant-Appellee.
No. 10-2213.
United States Court of Appeals, Tenth Circuit.
April 9, 2012.
*1242 David A. Streubel, Streubel Kochersberger Mortimer LLC, Albuquerque, NM, for Plaintiffs-Appellants.
Cody R. Rogers (T.A. Sandenaw, Jr., with him on the brief), Sandenaw Law Firm, P.C., Las Cruces, NM, for Defendants-Appellees.
Before HARTZ, EBEL, and HOLMES, Circuit Judges.
HARTZ, Circuit Judge.
Plaintiffs William B. Elliott, Tommy J. Evaro, and Andria J. Hernandez were all targets of investigations by the Doña Ana County grand jury. Under New Mexico law they were entitled to target notices that advised them of the right to testify before the grand jury. But the notices they received may not have complied with state law. They filed a civil-rights action under 42 U.S.C. § 1983 in the United States District Court for the District of New Mexico, alleging that District Attorney Susana Martinez violated their due-process rights under the Fourteenth Amendment to the United States Constitution. The district court granted the District Attorney's motion to dismiss on the ground that the New Mexico statute did not establish a liberty interest protected by the Fourteenth Amendment. Plaintiffs appeal. We have jurisdiction under 28 U.S.C. § 1291 and affirm because a statutory right to particular procedures is not a liberty interest under the Fourteenth Amendment.
I. BACKGROUND
Under New Mexico law a target of a grand-jury investigation is entitled to notice that he or she is a target unless a district judge finds that notification may result in flight, obstruction of justice, or danger to another person. See N.M. Stat. Ann. § 31-6-11(C) (2003). The notice must describe the alleged crime being investigated, the target's right to remain silent, and the target's right to counsel. Id. at § 31-6-11(C)(1), (2), (5), (6).[1] It *1243 must also advise the target of the right to testify before the grand jury on a date no earlier than four days in the future if the target is in custody (and ten days if the target is not). See id. § 31-6-11(C)(3), (4).
Plaintiffs were in custody at the Doña Ana County Detention Center when they received target notices. They allege that these notices were untimely. Elliott alleges that he received notice on February 24, 2010, at 10:38 a.m. for a grand-jury presentation on February 25 at 8:30 a.m. Evaro and Hernandez allege that they received notices on March 15, 2010, at 2:10 p.m. for grand-jury presentations on March 18 at 8:30 a.m.
Plaintiffs' amended complaint asserted a procedural-due-process claim, stating that violations of the statutory notice requirement denied them liberty interests protected by the Fourteenth Amendment. The District Attorney moved to dismiss the complaint for failure to state a claim. Plaintiffs responded that the grand-jury statute creates a liberty interest "because it limits a district attorney's official discretion and mandates that if an individual is the target of [a] grand jury, a particular outcome in the form of the required notice must follow." Aplt.App. at 29.
The district court granted the motion to dismiss. It said that the critical question was whether the notice statute created a liberty interest protected by the Due Process Clause of the Fourteenth Amendment, and that the answer to this question ordinarily depends on whether the statute places "`substantive limitations on official discretion'" by establishing "`"substantive predicates" to govern official decision-making, and, further by mandating the outcome to be reached upon a finding that the relevant criteria have been met.'" Id. at 52, Mem. Op. & Order Granting Def.'s Mot. to Dismiss Pl.'s Compl. (Order) at 3, No. 10-385 JP/ACT (D.N.M. Sept.9, 2010) (quoting Ky. Dep't of Corr. v. Thompson, 490 U.S. 454, 462, 109 S.Ct. 1904, 104 L.Ed.2d 506 (1989)). The court held, however, that even though the statute created an expectation that Plaintiffs would receive four days' notice, "a mere expectation of process" did not establish a protected liberty interest. Id. at 55, Order at 6. It relied in part on decisions by the Sixth and Ninth Circuits holding that notice requirements in state statutes do not create substantive interests subject to constitutional procedural protections. See James v. Rowlands, 606 F.3d 646, 649, 656 (9th Cir.2010) (plaintiff had no procedural-due-process claim when officials violated a *1244 state statute requiring them to notify him when they took his daughter into temporary custody); Pusey v. City of Youngstown, 11 F.3d 652, 656 (6th Cir.1993) (state statute created no liberty interest when it required the prosecutor to notify a crime victim of the time and place at which a guilty plea concerning the crime would be entered).
II. DISCUSSION
The Due Process Clause states, "No State shall ... deprive any person of life, liberty, or property, without due process of law." U.S. Const. amend. XIV, § 1. An alleged violation of the procedural due process required by this clause prompts a two-step inquiry: (1) whether the plaintiff has shown the deprivation of an interest in "life, liberty, or property" and (2) whether the procedures followed by the government in depriving the plaintiff of that interest comported with "due process of law." Ingraham v. Wright, 430 U.S. 651, 673, 97 S.Ct. 1401, 51 L.Ed.2d 711 (1977). The first step is the focus of this appeal.
A protected interest in liberty or property may have its source in either federal or state law. See Thompson, 490 U.S. at 460, 109 S.Ct. 1904 ("Protected liberty interests may arise from two sourcesthe Due Process Clause itself and the laws of the States." (internal quotation marks omitted)); Bd. of Regents of State Coll. v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972) (Property interests are not created by the Constitution but are created and defined by "an independent source such as state law."). The district court was correct in saying that a state-created interest is not protected by the procedural component of the Due Process Clause unless the interest is an entitlementthat is, unless the asserted right to property or liberty is mandated by state law when specified substantive predicates exist. See Roth, 408 U.S. at 577, 92 S.Ct. 2701; Thompson, 490 U.S. at 460, 462, 109 S.Ct. 1904. For example, if state law provides that a prison inmate is entitled to be released on parole when the inmate has not violated prison regulations for 10 years, then that interest in being released is a protected liberty interest: release is mandated when the substantive predicate (no violations for 10 years) is satisfied. The Due Process Clause would then require the state to provide a prisoner adequate proceduressay, notice and a hearing before prison officialsbefore it could hold him beyond 10 years on the ground that he had violated a prison regulation.[2] But the liberty interest in being released on parole would not qualify for due-process protection if there were no substantive predicates that mandated release, as when "there is no set of facts which, if shown, mandate a decision favorable to the [inmate]." Greenholtz v. Inmates of Neb. Penal & Corr. Complex, 442 U.S. 1, 10, 99 S.Ct. 2100, 60 L.Ed.2d 668 (1979).
Plaintiffs argue that the grand-jury statute creates an entitlement because it mandates notice to the grand-jury target when specified predicates (that notice will not result in flight, obstruction of justice, or danger to another person) are satisfied. But even if notice is an entitlement under state law, Plaintiffs have failed to state a due-process claim. That is because an entitlement is protected by the *1245 Due Process Clause only if it is an interest in life, liberty, or property; and not all entitlements are such interests. For example, often a prisoner's entitlements are not liberty interests. A state law may mandate when a prisoner can be segregated from the general prison population or otherwise subject to special conditions of confinement. But the Due Process Clause imposes no procedural constraints on a prison official in ordering special conditions of confinement unless the official "imposes atypical and significant hardships on the inmate in relation to the ordinary incidents of prison life." Sandin v. Conner, 515 U.S. 472, 484, 115 S.Ct. 2293, 132 L.Ed.2d 418 (1995). Any lesser hardship does not rise to the level of a deprivation of liberty for one whose freedom has already been lost through conviction of a crime. See id. at 484-86, 115 S.Ct. 2293.
What constitutes a liberty or property interest within the meaning of the Fourteenth Amendment is not always easy to determine. The concepts should not be given a narrow construction. "`Liberty' and `property' are broad and majestic terms ... [that] relate to the whole domain of social and economic fact." Roth, 408 U.S. at 571, 92 S.Ct. 2701. But they are not unlimited in scope. In particular, the protected interests are substantive rights, not rights to procedure. As the Supreme Court wrote in Olim v. Wakinekona, 461 U.S. 238, 103 S.Ct. 1741, 75 L.Ed.2d 813 (1983), "[A]n expectation of receiving process is not, without more, a liberty interest protected by the Due Process Clause." Id. at 250 n. 12, 103 S.Ct. 1741. "Process is not an end in itself," it explained. Id. at 250, 103 S.Ct. 1741. "Its constitutional purpose is to protect a substantive interest to which the individual has a legitimate claim of entitlement." Id. Thus, "an entitlement to nothing but procedure cannot be the basis for a liberty or property interest." Stein v. Disciplinary Bd. of Sup. Ct. of N.M., 520 F.3d 1183, 1192 (10th Cir.2008) (brackets and internal quotation marks omitted).
The line between substance and procedure is somewhat blurry. In this case, however, there is no question that the state statute creates a procedural right. As the Supreme Court has repeatedly said, "The core of due process is the right to notice and a meaningful opportunity to be heard." LaChance v. Erickson, 522 U.S. 262, 266, 118 S.Ct. 753, 139 L.Ed.2d 695 (1998). What Plaintiffs describe as a liberty interest is precisely that core of procedure: a right to notice from the grand jury and an opportunity to be heard by it. Plaintiffs' claim that the statute creates a liberty interest protected by constitutional procedural due process reflects a confusion between what is a liberty interest and what procedures the government must follow before it can restrict or deny that interest. They "collaps[e] the distinction between [the interest] protected and the process that protects it." Town of Castle Rock, Colo. v. Gonzales, 545 U.S. 748, 772, 125 S.Ct. 2796, 162 L.Ed.2d 658 (2005) (Souter, J., concurring).
We add one further observation to make clear that our conclusion is not the result of some inadequacy in Plaintiffs' briefing or a peculiarity of the state notice statute. What if state law required dismissal of the indictment and release from custody of a target who had been indicted without being provided the statutorily required notice? Is not release from custody a liberty interest? And would not that liberty interest be an entitlement protected by the Due Process Clause because it was mandated when required notice was not given? No. To be protected by procedural due process, an interest must be guaranteed by state law when specified substantive predicates exist. "[A] State creates a protected liberty interest by placing substantive limitations on official *1246 discretion." Olim, 461 U.S. at 249, 103 S.Ct. 1741 (emphasis added). The requirement that notice be given is not a substantive limitation, but a procedural one. Again, although the line between substance and procedure is not always clear, it is clear here. Notice is a matter of procedure, not substance. Procedural failures often mandate particular results, results that could easily be categorized as affecting property or liberty. To say that mandating such a consequence creates a liberty or property interest would constitutionalize much of local procedural law. One could "seek[ ] federal process as a substitute simply for state process." Town of Castle Rock, 545 U.S. at 772, 125 S.Ct. 2796 (Souter, J., concurring). The Supreme Court has rejected such a view of the Due Process Clause. In Olim, for example, regulations required the prison administrator to conduct a particular kind of hearing before transferring a prisoner. Olim, 461 U.S. at 242, 103 S.Ct. 1741. Presumably, a transfer could be invalidated upon a showing that no hearing had been conducted. But no liberty interest was created because there were no substantive limitations on the administrator's exercise of discretion. See id. at 248-51, 103 S.Ct. 1741. The requirement of a hearing was merely a procedural limitation.
The authority cited by the concurrence is not to the contrary. Pusey v. City of Youngstown, 11 F.3d 652 (6th Cir.1993), supports our view when it states, "`[A]n expectation of receiving process is not, without more, a liberty interest protected by the Due Process Clause.'" Id. at 656 (quoting Olim, 461 U.S. at 250 n. 12, 103 S.Ct. 1741). The issue in Pusey was whether an Ohio crime-victims' rights statute gave a victim a constitutionally protected right to notice of a hearing in the criminal proceedings against the perpetrator. The concurrence mistakenly suggests that the Pusey opinion turned on whether a particular outcome was mandated if notice was not given to the victim. But the opinion never addressed what the sanction would be for failure to give notice. Rather, it decided that no liberty interest was created because nothing the victim could say at the criminal proceeding would mandate a consequence for the perpetrator. See id.
More importantly, the concurrence so misreads Olim that one would think that the Supreme Court had affirmed, rather than reversed, the lower-court decision in that case, which took the same position as the concurrence here. The majority in Wakinekona v. Olim, 664 F.2d 708 (9th Cir.1981), held that the prisoner had a constitutionally protected liberty interest derived from state regulations that "condition[ed] prison [interstate] transfers ... upon a hearing by an impartial committee established by the prison administrator." Id. at 710. The court wrote that the regulations' "clear import is that a transfer will not be carried out absent a hearing directed to proof of the facts alleged in the notice received beforehand by the prisoner." Id. at 711. The Supreme Court's opinion never took issue with that interpretation of the regulations. (The concurrence somehow reads the Supreme Court's opinion as saying that a transfer could be effected without a hearing, but it relies on language in Olim saying only that the decision after the hearing is within the unfettered discretion of prison officials. See Op., (Ebel, J., concurring) at ___; Olim, 461 U.S. at 249, 103 S.Ct. 1741.) The Ninth Circuit rejected the proposition that "no procedural requirements can create a substantive liberty interest, unless the events which may cause a transfer are specified in those requirements." Wakinekona, 664 F.2d at 711-12. It held that the state "regulations create a justifiable expectation that a prisoner will not be transferred absent the specified procedures *1247 [and] consequently give rise to a constitutionally protected liberty interest." Id. at 711. What the Supreme Court did in Olim is to reject emphatically the view of the Ninth Circuit. To read Olim as support for the concurrence is misguided.
This is not to say that there is no role for procedural due process in the grand-jury context. We do not address here the unraised issue of what safeguards are constitutionally required before a grand jury can issue an indictment. All we say is that the state notice statute does not affect what is required by the Due Process Clause. "[W]hen a state establishes procedures to protect a liberty interest that arises from the Constitution itself[,] ... the state does not thereby create a new constitutional right to those procedures themselves, and non-compliance with those procedures does not necessarily violate the Due Process Clause." James, 606 F.3d at 657. Our holding is simply that the New Mexico law on which Plaintiffs hinge their argument creates no protected liberty interest.
III. CONCLUSION
We AFFIRM the judgment of the district court.
EBEL, Circuit Judge, concurring.
I concur separately to identify what, in my view, is a misapprehension of due process jurisprudence in the hypothetical situation contemplated in a paragraph near the end of the majority opinion. The state statute in the hypothetical, unlike the statute actually at issue in this case, would require automatic dismissal of an indictment and release from custody of a grand jury target if the target had not been provided the statutorily required notice. The majority opinion posits, in dicta, that even in that instance, there would be no liberty interest, created by state law and protected under the Due Process Clause. Respectfully, I disagree. In the hypothetical situation posed by the majority opinion, I would hold that a liberty interest in the statutorily mandated notice would exist if the statute required dismissal of the indictment and release from custody of the grand jury target whenever the state failed to afford such notice. Indeed, I believe that the crux of this case is that the New Mexico law calls only for notice and does not additionally mandate a particular outcome when that statutory directive is not followed.
The majority opinion earlier correctly recognizes that "a state-created interest is not protected by the procedural component of the Due Process Clause unless ... the asserted right to property or liberty is mandated by state law when specified substantive predicates exist." Maj. Op. at 1244. The opinion illustrates that proposition with the example of a prison inmate in a state whose law requires that the inmate be granted parole if the inmate has not violated prison regulations for ten years. The opinion accurately observes that in that instance, a "protected liberty interest" would arise since "release is mandated when the substantive predicate (no violations for 10 years) is satisfied."[1]Id. Then, perplexingly to me, the majority opinion dismisses a hypothetical situation not before the court and reaches a suggested result that I believe would be incorrect.
*1248 State-granted procedure can be protected under the Due Process Clause when non-observation of such procedure necessarily results in a particular substantive outcome.
Stated simply, "a State creates a protected liberty interest by placing substantive limitations on official discretion." Olim v. Wakinekona, 461 U.S., at 249 [103 S.Ct. 1741].... [T]he most common manner in which a State creates a liberty interest is by establishing "substantive predicates" to govern official decision-making, Hewitt v. Helms, 459 U.S., at 472 [103 S.Ct. 864], and, further, by mandating the outcome to be reached upon a finding that the relevant criteria have been met.
Ky. Dept. of Corr. v. Thompson, 490 U.S. 454, 462, 109 S.Ct. 1904, 104 L.Ed.2d 506 (1989).
Thompson thus recognizes two requisite prongs for state-created liberty interests: first, substantive requirements governing official decisionmaking; and second; mandatory outcomes that turn on the failure to meet those requirements. See id. In other words, when state law contains substantive predicates that supply "decisionmaking criteria which serve to limit discretion," id., and the law also contains "`explicitly mandatory language,' i.e., specific directives to the decisionmaker that if the regulations' substantive predicates are present, a particular outcome must follow," then "the State has created a liberty interest." Id. at 463, 109 S.Ct. 1904 (citing Hewitt, 459 U.S. at 471-72, 103 S.Ct. 864). These criteria are sensible because only upon their satisfaction would one have a "legitimate claim of entitlement" to the interest in question, as required for Fourteenth Amendment protection, as opposed to a mere "abstract need or desire" or "unilateral hope" for it. Id. at 460, 109 S.Ct. 1904 (internal quotation marks omitted) (citing Bd. of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972); Conn. Bd. of Pardons v. Dumschat, 452 U.S. 458, 465, 101 S.Ct. 2460, 69 L.Ed.2d 158 (1981)).
To illustrate, in Olim v. Wakinekona, the Supreme Court declined to recognize a constitutionally protected entitlement to a prisoner's right, afforded by prison regulations, to a particular kind of hearing before he could be transferred to another prison because his transfer fate did not depend on whether the hearing had occurred. 461 U.S. 238, 248-51, 103 S.Ct. 1741, 75 L.Ed.2d 813 (1983). Contrary to the presumption expressly made in the majority opinion about the facts of that case, Maj. Op. at 1246, the inmate in Olim could have been transferred regardless of whether the hearing occurred. See 461 U.S. at 249, 103 S.Ct. 1741 ("[T]he prison Administrator's discretion to transfer an inmate is completely unfettered. No standards govern or restrict the Administrator's determination."). Thus, as the state's failure to observe the statutorily guaranteed procedural right to a hearing had no mandatory bearing on its discretion to transfer the inmate, there were no substantive predicates the satisfaction of whose criteria mandated a particular outcome, so no constitutionally protected liberty interest arose. Id. at 249-51, 103 S.Ct. 1741.
Likewise, in a notice-based case factually comparable to this one, the Sixth Circuit declined to recognize a constitutionally protected entitlement to state-guaranteed notice because the state's failure to observe notice procedures did not, under state law, mandatorily trigger any substantive outcome. See Pusey v. City of Youngstown, 11 F.3d 652, 656 (6th Cir. 1993). In that case, where state law "extend[ed] procedural rights, notice, to crime victims," requiring prosecutors to notify victims of upcoming trials or plea hearings, the Sixth Circuit refused to recognize a liberty interest because the statute *1249 "fail[ed] `to protect a substantive interest to which the individual has a legitimate claim of entitlement'" given that the statute did not mandate a specific outcome in the event no notice had been given. Id. (quoting Olim, 461 U.S. at 250, 103 S.Ct. 1741). The court held that the law "d[id] not create a liberty interest here because it only provides that the victim has the right to be notified" and did not additionally "specify how the victim's statement must affect the hearing nor ... require a particular outcome based on what the victim has said." Id. at 656. Notably, the Sixth Circuit placed emphasized the language of the second prong of Thompson's liberty-interest standard, regarding mandatory outcomes, Thompson, 490 U.S. at 462, 109 S.Ct. 1904, signaling that its holding depended on the inconclusive consequence of not providing notice, not on the lack of substantive predicates under the first liberty-interest prong of Thompson. See Pusey, 11 F.3d at 656.
This rulethat liberty interests in procedure arise only when a statute imposes substantive requirements to govern official decisionmaking and, further, mandates a certain outcome as a consequence of noncompliance with those requirementsis the reason why I concur that, in this case, the New Mexico statute did not afford the appellants a liberty interest in the pre-indictment notice. The statute clearly requires a specific manner of notice to grand jury targets, such that New Mexico officials have no decisionmaking discretion regarding whether to give notice. See N.M.S.A. § 31-6-11(c). Critically, however, the statute permits a grand jury to return an indictment regardless of whether the target has received notice, as long as eight jurors find probable cause to indict him; hence no outcome is mandated if the notice criterion is not met. See N.M.S.A. § 31-6-10. This is analogous to the warden in Olim being able to transfer an inmate regardless of whether a hearing had occurred, for example, or to trials and plea hearings in Pusey proceeding unaffected by whether victims had received notice. Thus, since "an expectation of receiving process is not, without more, a liberty interest," Olim, 461 U.S. at 250 n. 12, 103 S.Ct. 1741 (emphasis added), the appellants' expectation of notice is not protected by the Due Process Clause.
But in the majority opinion's hypothetical, there would be "more," see id., namely, the guarantee of freedom upon failure to give the concrete, expectable, statutorily guaranteed notice. That is, in the hypothetical, New Mexico would mandate a particular outcome upon the non-observance of procedure that specifically limits official discretioni.e., officials would have no choice but to afford notice, or the indictment would be dismissed and the grand jury target releasedso a liberty interest in notice-or-freedom would arise. There would be both (a) substantive predicates regarding the guaranteed procedure (i.e., the state must give three days' notice to grand jury targets, as in the actual statute, presumably), and (b) a mandatory outcome flowing from nonobservance of said procedure (i.e., dismissal of the indictment and release of the target). See Thompson, 490 U.S. at 462, 109 S.Ct. 1904. Therefore, in the hypothetical, the first prong is met. The requirement to provide three days' notice to grand jury targets is clearly an objective, defined criterion that limits official discretion, in the same way that, as the majority opinion recognizes, "no violations [of prison regulations] for 10 years" is a "substantive predicate." Maj. Op. at 1244. The second prong is obviously met, too, in the hypothetical. Under the very premise of the hypothetical, dismissal of the indictment and release from custody are obligatory, absent notice.
I believe the majority opinion misinterprets "substantive" in this context when it *1250 emphasizes that "[t]he requirement that notice be given is not a substantive limitation, but a procedural one." Maj. Op. at 1246. The "substantive" in "substantive predicates" does not mean "non-procedural," but rather "concrete." That is, the phrase "substantive predicates" refers to "particularized standards or criteria [that] guide the State's decisionmakers," or the "objective and defined criteria" upon which a decisionmaker is "required to base its decisions" and without which a decisionmaker could "deny the requested relief" for any reason. Olim, 461 U.S. at 249, 103 S.Ct. 1741 (citations and internal quotation marks omitted, emphases added); see also Thompson, 490 U.S. at 462, 109 S.Ct. 1904 (characterizing substantive predicates as "decisionmaking criteria which serve to limit discretion").
Accordingly, the majority opinion is misguided when it underscores the word "substantive," Maj. Op. at 1246, in citing Olim's holding that the "prison regulations place no substantive limitations on official discretion," Olim, 461 U.S. at 249, 103 S.Ct. 1741, as though the Court's holding turned on some substantive/procedural dichotomy. Rather, the Court's ruling was based on the fact that "[n]o standards govern[ed] or restrict[ed] the Administrator's determination"that the prison official's discretion remained "unfettered" notwithstanding "the fact that the prison regulations require a particular kind of hearing." Id. at 249-50, 103 S.Ct. 1741. This is squarely contrary to the majority opinion's misunderstanding of Olim that "[p]resumably, a transfer could be invalidated upon a showing that no hearing had been conducted." Maj. Op. at 1246. Because, in Olim, the hearing was inconclusive to the inmate's transfer, and "[p]rocess is not an end in itself," the inmate had no "legitimate claim of entitlement" to the regulation-guaranteed interest such that it would merit constitutional protection. 461 U.S. at 250, 103 S.Ct. 1741.
Thus, I concur with the result and holding in this case that New Mexico did not create a liberty interest here because the state did not mandate a given result as a consequence of the state's failure to comply with the notice requirement. I concur only because of my disagreement with the example proffered in dicta in a paragraph near the end of the majority opinion.
NOTES
[1] In full, the relevant subsection reads:
A district attorney shall use reasonable diligence to notify a person in writing that the person is the target of a grand jury investigation. Unless the district judge presiding over the grand jury determines by clear and convincing evidence that providing notification may result in flight by the target, result in obstruction of justice or pose a danger to another person, the target of a grand jury investigation shall be notified in writing of the following information:
(1) that he is the target of an investigation;
(2) the nature of the alleged crime being investigated and the date of the alleged crime and any applicable statutory citations;
(3) the target's right to testify no earlier than four days after receiving the target notice if he is in custody, unless for good cause the presiding judge orders a different time period or the target agrees to testify sooner;
(4) the target's right to testify no earlier than ten days after receiving the target notice if he is not in custody, unless for good cause the presiding judge orders a different time period or the target agrees to testify sooner;
(5) the target's right to choose to remain silent; and
(6) the target's right to assistance of counsel during the grand jury investigation.
N.M. Stat. Ann. § 31-6-11(C) (2003).
[2] We note that even when state law establishes the protected interest, federal law (not state law) governs whether the procedures for depriving someone of the protected interest are constitutionally adequate. See Hulen v. Yates, 322 F.3d 1229, 1247 (10th Cir.2003) ("[O]nce the property right is established, it is purely a matter of federal constitutional law whether the procedure afforded was adequate."); James, 606 F.3d at 657 (same for liberty interest).
[1] In contrast, if the state "statute grant[ed] the parole board complete discretion in making parole decisions, [the statute would not] create a liberty interest." Wood v. Utah Bd. Of Pardons & Parole, 375 Fed.Appx. 871, 874 n. 3 (10th Cir.2010) (unpublished) (internal quotation marks omitted); see id. at 874 (recognizing that "[i]t is well established that, where a state provides a discretionary parole regime, prisoners do not have a liberty or property interest in parole"). | 01-03-2023 | 04-09-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/1012418/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
STUART M. SELDOWITZ,
Plaintiff-Appellant,
v.
OFFICE OF THE INSPECTOR No. 02-1850
GENERAL OF THE UNITED STATES
DEPARTMENT OF STATE,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Gerald Bruce Lee, District Judge; Welton Curtis Sewell,
Magistrate Judge.
(CA-99-1031-A)
Argued: October 31, 2003
Decided: February 3, 2004
Before MICHAEL, MOTZ, and TRAXLER, Circuit Judges.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Andrew Grosso, Washington, D.C., for Appellant. Rich-
ard Parker, Assistant United States Attorney, Alexandria, Virginia, for
Appellee. ON BRIEF: William M. Palmer, Boston, Massachusetts;
Theodore Allison, Washington, D.C., for Appellant.
2 SELDOWITZ v. OFFICE OF THE INSPECTOR GENERAL
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Appellant, Stuart Seldowitz appeals the district court’s orders
denying his motion to amend the complaint, denying his motion for
sanctions, and denying his motion for attorney’s fees. Finding no
reversible error, we affirm.
I.
This controversy is again before this court after our remand direct-
ing the district court to allow discovery on whether Seldowitz could
seek changes to internal review records compiled by the State Depart-
ment’s Office of the Inspector General. As the facts of this case are
thoroughly recounted in our previous decision, Seldowitz v. Office of
the Inspector General, No. 00-1142, 2001 WL 1742098 (4th Cir.
Nov. 13, 2000) cert. denied (Oct. 2, 2001), we will sketch them only
briefly here.
Seldowitz is a veteran Foreign Service Officer in the United States
Department of State. In 1990, the Office of Audits of the State
Department’s Inspector General reviewed travel vouchers submitted
by a delegation to the Nuclear Space Talks in Geneva, Switzerland.
Seldowitz and his wife were a part of this Geneva delegation. Based
on its review, the Office of the Inspector General ("OIG") investi-
gated Seldowitz for submitting a false claim against the United States
as a result of amounts claimed on his travel voucher. The findings of
the investigation were turned over to the United States Attorney’s
office for the Eastern District of Virginia, and in 1995, the United
States Attorney notified Seldowitz that he was contemplating a civil
prosecution under the False Claims Act. See 31 U.S.C.A. §§ 3729-33
(West 2003). After meeting with officials from the State Department,
the OIG, and the United States Attorney’s office to discuss the possi-
ble civil prosecution, Seldowitz entered into a settlement agreement
with the government.
SELDOWITZ v. OFFICE OF THE INSPECTOR GENERAL 3
Seldowitz later requested copies of his travel vouchers from the
National Finance Center and, in March 1998, after reviewing these
materials, he requested that the State Department records be amended
pursuant to the Privacy Act. See 5 U.S.C.A. § 552a (West. 1996 &
Supp. 2003). Specifically, Seldowitz requested that the records "be
amended in order to accurately reflect that Mr. Seldowitz properly
followed all Department procedures when submitting his voucher
requests." Seldowitz, 2000 WL 1742098 at *2 (internal quotation
marks omitted). The Office of Information Resources Management
responded that it would be improper to consider amending the records
because the Integrity Committee of the President’s Council on Integ-
rity and Efficiency was investigating a complaint filed by Seldowitz
regarding the OIG investigation.
On April 19, 1998, Seldowitz filed a complaint in the United States
District Court for the District of Columbia, and amended the com-
plaint on August 13, 1998.* Seldowitz alleged that the government
violated the Privacy Act by failing to maintain accurate records,
wrongfully threatening a False Claims act prosecution and coercing
a settlement, and improperly refusing to amend records. The records
Seldowitz sought to amend were: (1) the OIG records compiled while
the OIG was investigating Seldowitz for a possible False Claims Act
violation; (2) the records compiled by the OIG Office of Audits; and
(3) the OIG internal review records responding to allegations of OIG
misconduct regarding its investigation of the Geneva delegation’s
travel vouchers. The district court dismissed two counts on statute of
limitations grounds, and later granted summary judgment in favor of
the government as to all three sets of records that Seldowitz sought
to amend. Seldowitz appealed.
On appeal, this court affirmed the district court’s conclusion that
two of Seldowitz’s claims were barred by the statute of limitations.
We further affirmed the district court’s grant of summary judgment
as to the audit records and records of the investigation. However, we
reversed the district court’s grant of summary judgment on the inter-
nal records and remanded for discovery.
*The case was transferred to the United States District Court for the
Eastern District of Virginia on June 30, 1999.
4 SELDOWITZ v. OFFICE OF THE INSPECTOR GENERAL
II.
On remand, the district court directed discovery on the issues iden-
tified by this court. On October 18, 2001, Seldowitz filed a motion to
amend his complaint to add, as an additional count, an allegation that
he was improperly forced to accept a settlement to avoid possible lia-
bility under the False Claims Act. A magistrate judge granted Sel-
dowitz’s motion, but the OIG appealed that decision to the district
court. The district court reversed the magistrate judge’s decision and
denied the motion to amend because the proposed count exceeded the
limited scope of the case on remand and because the amendment
would be a nullity in that the proposed claim was barred by the appli-
cable statute of limitations.
During the proceedings that followed, Seldowitz conducted discov-
ery on the issues identified by this court in its remand. While discov-
ery was proceeding, Seldowitz noticed a deposition under Rule
30(b)(6) of the Federal Rules of Civil Procedure. According to the
notice, the deposition was to take place on February 15, 2002. Some
time before the deposition was to occur, counsel for the OIG informed
Seldowitz that she would be unable to attend because she was sched-
uled to appear before the district court on another matter. Despite
being informed of this fact and receiving a copy of the government’s
motion for a protective order under Rule 26(c) of the Federal Rules
of Civil Procedure, Seldowitz convened the deposition and incurred
the costs incident thereto.
On March 8, 2002, Seldowitz filed a motion seeking an award of
sanctions — equal to the cost associated with convening the deposi-
tion — under Federal Rule of Civil Procedure 37(d). Under question-
ing by the magistrate judge, however, Seldowitz confessed that he
convened the deposition despite his foreknowledge of opposing coun-
sel’s inability to attend and that he did so to make a point. Based on
these facts, the magistrate judge determined that sanctions were inap-
propriate. Upon review, the district court concurred, finding that
[t]he record demonstrates that the Defendant notified the
Plaintiff at least three times prior to the deposition date that
Defendant could not attend. Plaintiff never attempted to res-
chedule the date. There is no indication of bad faith or fault
SELDOWITZ v. OFFICE OF THE INSPECTOR GENERAL 5
on the Defendant’s part that caused Plaintiff harm. Any
financial injury incurred by the Plaintiff was purely by his
own design.
Supp. J.A. 397 (internal citation omitted).
Following discovery, a non-jury trial on the claims involving the
internal records was held. The district court entered an order for the
OIG, finding that, as a matter of fact, the Internal Review Records of
the Special Inquiry had been destroyed, and concluding that the Spe-
cial Inquiry Seldowitz sought to amend was not retrievable within a
"system of records" as that term of art is used in the context of the
Privacy Act. Thus, the court held that Seldowitz was not entitled to
amend any of the OIG’s records.
Seldowitz thereafter sought an award of attorney’s fees, arguing
that he "substantially prevailed" in the case below. The district court
denied Seldowitz’s motion, finding that Seldowitz
did not receive any relief for his claims under the Privacy
Act, nor did he receive the relief requested in his Amended
Complaint. [Seldowitz] sought to compel the amendment of
a record which contained the suggestion that he violated the
False Claims Act — he did not meet this objective as judg-
ment was for [the OIG]. [Seldowitz] received absolutely no
judicial relief on his Complaint.
J.A. 291.
III.
On appeal, Seldowitz contends that the district court erred by deny-
ing his motion to amend the complaint, denying his motion for sanc-
tions, and denying his motion for attorney’s fees. We have carefully
reviewed the record and considered the parties’ arguments, as set
forth in their briefs and as made at oral argument. For the reasons
given by the district court in its various rulings, we affirm the judg-
ment of the district court.
AFFIRMED | 01-03-2023 | 07-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1012562/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
WESTMORELAND COAL COMPANY,
INCORPORATED,
Petitioner,
v.
BOBBY R. COOK; DIRECTOR, No. 02-1917
OFFICE OF WORKERS’ COMPENSATION
PROGRAMS, UNITED STATES
DEPARTMENT OF LABOR,
Respondents.
On Petition for Review of an Order
of the Benefits Review Board
(01-864-BLA)
Submitted: October 1, 2003
Decided: February 17, 2004
Before LUTTIG, MOTZ, and GREGORY, Circuit Judges.
Reversed by unpublished per curiam opinion.
COUNSEL
Douglas Allan Smoot, JACKSON & KELLY, Charleston, West Vir-
ginia; Kathy Lynn Snyder, JACKSON KELLY, PLLC, Morgantown,
West Virginia, for Petitioner. Bobby R. Cook, Fenwick, West Vir-
ginia; Patricia May Nece, Barry H. Joyner, UNITED STATES
DEPARTMENT OF LABOR, Washington, D.C., for Respondents.
2 WESTMORELAND COAL CO. v. COOK
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Westmoreland Coal Company seeks review of the decision and
order of the Benefits Review Board affirming the administrative law
judge’s award of black lung benefits pursuant to 30 U.S.C. §§ 901-
945 (2000). Because our review of the record discloses that the ALJ’s
decision is not supported by substantial evidence, we reverse the
award of benefits.
We review decisions of the BRB to determine whether the BRB
properly found that the ALJ’s decision was supported by substantial
evidence and was in accordance with law. See Doss v. Dir., Office of
Workers’ Comp. Programs, 53 F.3d 654, 658 (4th Cir. 1995). In mak-
ing this determination, we conduct an independent review of the
record in deciding whether the ALJ’s findings are supported by sub-
stantial evidence. See Dehue Coal Co. v. Ballard, 65 F.3d 1189, 1193
(4th Cir. 1995). Substantial evidence is more than a scintilla, but only
such evidence that a reasonable mind could accept as adequate to sup-
port a conclusion. See Lane v. Union Carbide Corp., 105 F.3d 166,
170 (4th Cir. 1997). Subject to the substantial evidence requirement,
the ALJ has the sole authority to make credibility determinations and
resolve inconsistencies or conflicts in the evidence. See Grizzle v. Pic-
kands Mather & Co., 994 F.2d 1093, 1096 (4th Cir. 1993). An ALJ,
however, may rely only on a medical opinion that constitutes a rea-
soned medical judgment. See Freeman United Coal Mining Co. v.
Cooper, 965 F.2d 443, 448 (7th Cir. 1992).
To establish that he is entitled to black lung benefits in a case under
Part 718, a miner must prove: "(1) he has pneumoconiosis; (2) the
pneumoconiosis arose out of coal mine employment; (3) he has a
totally disabling respiratory or pulmonary condition; and
(4) pneumoconiosis is a contributing cause to his total respiratory dis-
ability." Milburn Colliery Co. v. Hicks, 138 F.3d 524, 529 (4th Cir.
WESTMORELAND COAL CO. v. COOK 3
1998). A claimant may establish the existence of pneumoconiosis by
means of (1) chest x-rays; (2) biopsy or autopsy evidence;
(3) invocation of the presumptions at 20 C.F.R. §§ 718.304 - 718.306;
or (4) medical opinion evidence. See 20 C.F.R. § 718.202(a) (2003).
In findings that are not challenged on appeal, the ALJ determined that
Cook failed to establish the existence of pneumoconiosis by x-ray evi-
dence, that there was no biopsy or autopsy evidence, and that the pre-
sumptions of 20 C.F.R. §§ 718.304 - 718.306 were not applicable to
Cook’s claim. Therefore, the only basis upon which Cook may estab-
lish that he suffers from pneumoconiosis is medical opinion evidence
pursuant to 20 C.F.R. § 718.202(a)(4) (2003).
In finding the medical opinion evidence sufficient to establish that
Cook suffered from pneumoconiosis, the ALJ relied primarily upon
the opinion of Dr. Walker, a chest surgeon who performed surgery on
Cook in August 1986. In his post-operative report, Dr. Walker noted
that "[a]t thoracotomy, the right lung was black. There were small,
palpable nodules throughout. The right lung fissures were approxi-
mately fifty percent fused. The lung was emphysematous." On Cook’s
discharge from the hospital following surgery, Dr. Walker’s final
diagnosis was a right parasternal hernia and pneumoconiosis. In addi-
tion to Dr. Walker, doctors Rasmussen, Diaz, and Aguilar also diag-
nosed pneumoconiosis. Doctors Fino, Zaldivar, and Hippensteel
concluded that Cook did not suffer from the disease, although Dr.
Zaldivar, in a supplemental report, acknowledged that "[t]he report
given by Dr. Walker that at the time of the thoracotomy the lungs
appeared black and there were palpable nodules may indicate that
coal workers’ pneumoconiosis might be present that is not seen radio-
graphically."
The ALJ concluded that Dr. Walker’s opinion, supported by the
opinions of doctors Rasmussen, Diaz, and Aguilar, and Dr. Zaldivar’s
comment, was sufficient to outweigh both the preponderance of x-ray
readings that were negative, and the contrary opinions of doctors
Fino, Zaldivar, and Hippensteel. The ALJ accorded great weight to
Dr. Walker’s opinion because Dr. Walker had served as the Chairman
of the West Virginia Occupational Pneumoconiosis Board and there-
fore possessed extensive experience in evaluating pneumoconiosis,
and more importantly, Dr. Walker had the exclusive opportunity to
physically observe and examine one of Cook’s lungs during surgery.
4 WESTMORELAND COAL CO. v. COOK
Our review of the record leads us to conclude that, although it is a
close question, the ALJ properly weighed the evidence and concluded
that it established that Cook suffered from pneumoconiosis.
A miner is totally disabled due to pneumoconiosis if the disease
is a substantially contributing cause of the miner’s totally
disabling respiratory or pulmonary impairment. Pneumoco-
niosis is a "substantially contributing cause" of the miner’s
disability if it:
(i) Has a material adverse effect on the miner’s respira-
tory or pulmonary condition; or
(ii) Materially worsens a totally disabling respiratory or
pulmonary impairment which is caused by a disease or
exposure unrelated to coal mine employment.
20 C.F.R. § 718.204(c)(1) (2003). If the presumption at § 718.304
does not apply, a claimant may establish the existence of a totally dis-
abling respiratory or pulmonary impairment by means of
(1) pulmonary function studies; (2) arterial blood gas studies;
(3) evidence of cor pulmonale; or (4) medical reports. See 20 C.F.R.
§ 718.204(b) (2003). Such evidence, however, only establishes dis-
ability "[i]n the absence of contrary probative evidence." Id. Thus, if
evidence of one type tends to establish disability, it must then be
weighed together with all other evidence relevant to the issue of total
disability for a determination as to whether the evidence, as a whole,
establishes a totally disabling respiratory or pulmonary impairment.
See Lane v. Union Carbide Corp., 105 F.3d 166, 171 (4th Cir. 1997);
Walker v. Director, Office of Workers’ Compensation Programs, 927
F.2d 181, 184-85 (4th Cir. 1991). The ALJ determined, and the BRB
affirmed, that the pulmonary function tests and arterial blood gas
studies did not establish the existence of a respiratory disability, and
the record in this case does not contain any evidence of cor pulmon-
ale. Therefore, Cook must demonstrate that he is totally disabled by
pneumoconiosis through medical opinion evidence.
Initially, we note, as the ALJ recognized, the objective testing did
not yield results that indicated the presence of a disabling respiratory
WESTMORELAND COAL CO. v. COOK 5
condition. In fact, the pulmonary function and arterial blood gas tests
in the record yielded measures of Cook’s respiratory capability signif-
icantly above the levels established by the regulations as indicating
total disability. Nevertheless, the ALJ concluded that the opinions of
Doctors Rasmussen, Diaz, and Aguilar that Cook was totally disabled
by puemoconiosis outweighed the contrary opinions of Doctors Zaldi-
var, Fino, and Hippensteel.
In addressing total disability, the ALJ stated:
The laboratory studies were non-qualifying, which lends
support to the physicians who conclude no total disability is
present. In contrast, however, the reports which conclude
Claimant is totally disabled are based on other tests, includ-
ing exercise stress tests as well as Dr. Diaz’s status as
Claimant’s treating physician. In this capacity, he had the
unique opportunity to examine Claimant on multiple occa-
sions. In addition, the physicians who concluded Claimant
is totally disabled also agreed pneumoconiosis was present.
That finding was firmly supported by Dr. Walker’s surgical
examination of the actual lungs, and, thus, their correct con-
clusion regarding the presence of pneumoconiosis lends
support to their conclusions regarding the miner’s pulmo-
nary capacity.
We find this analysis flawed in three significant respects. First, the
record contains no evidence of the "other" tests mentioned by the ALJ
as supporting the opinions of Doctors Rasmussen, Diaz, and Aguilar.
Rather, the ALJ interpreted Dr. Rasmussen’s discussion of the exer-
cise portion of the arterial blood gas tests as indicating that another
type of test was performed. This is factually incorrect, as the blood
gas tests uniformly yielded results that did not establish the existence
of respiratory or pulmonary disability. Second, the ALJ’s deference
to the opinion of Dr. Diaz based upon his status as Cook’s treating
physician is unwarranted. Our review of Dr. Diaz’s reports reveal that
they are not supported by objective reasoning or analysis, but merely
offer conclusory statements of his opinions and therefore do not con-
stitute reasoned medical opinions. We have previously cautioned
against such unwarranted deference to a treating physician’s opinion.
See Sterling Smokeless Coal Co. v. Akers, 131 F.3d 438, 441 (4th Cir.
6 WESTMORELAND COAL CO. v. COOK
1997). Third, the ALJ’s conclusion that because the doctors were cor-
rect in diagnosing pneumoconiosis, they must also be correct in opin-
ing that Cook is totally disabled, reflects a misunderstanding of the
distinct inquiries into the existence of the disease and whether the dis-
ease results in total respiratory disability that are required in adjudi-
cating black lung cases.
In addition to Dr. Diaz, the ALJ also relied on Dr. Aguilar, who
examined Cook in May 1986. Dr. Aguilar diagnosed pneumoconiosis,
pulmonary fibrosis and emphysema, atelectasis of the lower right
lung, and osteoarthritis of the spine and left shoulder. He opined that
Cook would be restricted to "sedentary or at least no more than very
light physical work." Dr. Aguilar conducted pulmonary function tests,
which did not yield values indicating respiratory disability. He also
noted that
I reviewed the pulmonary function tests performed by Dr.
Rasmussen in 1974 which showed minimal obstructive ven-
tilatory insufficiency with an estimated loss of functional
capacity between 50 and 60%. I expect that that loss may
have increased by this time, although the spirometry
obtained on May 14, 1986 does not bear this out.
We conclude that the ALJ erred in finding that this opinion demon-
strated that Cook was totally disabled by pneumoconiosis. Although
Dr. Aguilar acknowledged that he had reviewed past reports and that
he expected Cook’s pulmonary capacity to be diminished, Dr. Aguilar
failed to explain how, given the objective testing results that indicated
only mild obstruction, he concluded that Cook was restricted to light
sedentary work. Moreover, Dr. Aguilar’s report does not adequately
distinguish the relative contributions of the diagnosed respiratory con-
ditions and Cook’s osteoarthritis to his overall condition.
The last doctor on which the ALJ relied in reaching the total dis-
ability determination, Dr. Rasmussen, examined Cook in 1974, 1979,
and again in 1986. On April 12, 1974, Dr. Rasmussen conducted pul-
monary function and arterial blood gas tests on Cook, and reported:
This patient exhibited minimal ventilatory insufficiency,
moderate impairment in oxygen transfer, and an abnormal
ventilatory response with exercise.
WESTMORELAND COAL CO. v. COOK 7
This patient would appear to be incapable of performing
steady work beyond strictly light work levels. A numerical
estimate of the overall loss of functional capacity in this
case would be placed in the neighborhood of 50-60%.
On May 4, 1979, Dr. Rasmussen again conducted pulmonary func-
tion and arterial blood gas tests on Cook. Dr. Rasmussen reported
This patient exhibited minimal ventilatory insufficiency,
moderate impairment in oxygen transfer, an abnormal venti-
latory response with exercise, and an abnormal cardiovascu-
lar response with exercise.
This patient would appear to be incapable of performing
steady work beyond strictly light work levels. A numerical
estimate of the overall loss of functional capacity in this
case would be placed in the neighborhood of 65%.
Finally, on May 27, 1986, Dr. Rasmussen examined Cook, and
again conducted pulmonary function and arterial blood gas tests. In
the block labeled "Medical Assessment" on the examination report
form, Dr. Rasmussen stated "[t]his patient has moderate impairment
in respiratory functional capacity." He concluded that "[t]hese studies
indicate moderate impairment in respiratory functional capacity as
reflected by the obstructive ventilatory insufficiency and the impair-
ment in gas exchange at rest and during exercise." Notably, Dr. Ras-
mussen did not estimate the amount of reduction in Cook’s functional
capacity in this last report.
We conclude that the ALJ erred in giving Dr. Rasmussen’s opin-
ions probative weight on the question of that disability. First, none of
Dr. Rasmussen’s reports affirmatively state that Cook is totally dis-
abled from a respiratory standpoint. Further, contrary to Dr. Rasmus-
sen’s opinions in 1974 and 1979 that Cook had lost the majority of
his functional capacity and was restricted to only light work, Cook in
fact continued to perform very demanding physical labor in the mines
until he retired in 1986. Finally, Dr. Rasmussen also failed to explain
his conclusion that Cook was limited to light work given the objective
testing that demonstrated the absence of any respiratory disability.
8 WESTMORELAND COAL CO. v. COOK
With respect to the total disability inquiry, the ALJ’s reasoning was
based upon factual inaccuracies that resulted from an improper evalu-
ation of the medical opinions such that "no ‘reasonable mind’ could
have interpreted and credited the [medical opinions] as the ALJ did."
See Piney Mountain Coal Co. v. Mays, 176 F.3d 753, 764 (4th Cir.
1999). Because there remains no evidence upon which to base a find-
ing of entitlement to benefits, we reverse the award of benefits. We
dispense with oral argument because the facts and legal contentions
are adequately presented in the materials before the court and argu-
ment would not aid the decisional process.
REVERSED | 01-03-2023 | 07-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584042/ | STATE OF LOUISIANA,
v.
DOMINIQUE J. WISE.
No. 2009 KA 0975.
Court of Appeals of Louisiana, First Circuit.
October 23, 2009.
Not Designated for Publication
WALTER P. REED, District Attorney, Counsel for Plaintiff-Appellee, State of Louisiana.
KATHRYN W. LANDRY, Special Appeals Counsel, FRANK SLOAN, Louisiana Appellate Project, Counsel for Defendant-Appellant, Dominique J. Wise.
Before: PARRO, KUHN, and McDONALD, JJ.
KUHN, J.
Defendant, Dominique J. Wise, and co-defendant, Joshua M. Harris, were jointly charged by bill of information with possession of cocaine in violation of La. R.S. 40:967(C).[1] Defendant pled not guilty. Following a trial by jury, defendant was convicted as charged. Defendant moved for post-verdict judgment of acquittal and for a new trial. The trial court denied both motions and sentenced defendant to imprisonment at hard labor for five years. Defendant moved for reconsideration of the sentence which the trial court denied. Defendant now appeals. We affirm defendant's conviction and sentence.
FACTS
During the nighttime hours of May 13, 2008, St. Tammany Parish Sheriffs Office Deputy Julie Boynton was patrolling the area near Palm Drive and East Hillcrest Drive in Slidell. Boynton knew the area to be one where a high rate of criminal activity occurred. As she drove northbound on Palm Drive, Boynton observed a car parked in her lane of travel. There were no lights on and the vehicle was "blacked out." However, Boynton realized the vehicle's engine was running when she noticed smoke coming from the exhaust. Boynton decided to approach the vehicle to investigate. Once she turned around, Boynton noticed that the vehicle did not have a license plate. Boynton approached and tapped on the vehicle's window. The window was lowered and a huge cloud of smoke exited the vehicle. Based on her training and experience, Boynton was certain that the smoke was from burning marijuana. Boynton asked the driver, Harris, and the passenger, defendant, to exit the vehicle and produce identification. Defendant provided his identification, but Harris did not. Harris advised that his identification was on the driver's seat inside the vehicle. He responded affirmatively when Boynton asked for permission to retrieve it.
Boynton walked over to the opened driver's side door and looked inside. Harris's license was sitting on the seat. As she reached down to pick up the license, Boynton observed several small white rocks also sitting on the driver's seat. Suspecting that the rocks contained cocaine, Boynton seized them and conducted a field test. The test confirmed the presence of cocaine. Boynton secured the illegal drugs, read defendant and Harris their Miranda rights and placed them under arrest. Boynton then returned to search the vehicle. She found a larger white rock on the floor in the middle of the vehicle at the front of the console. This rock also tested positive for cocaine. No other drugs, drug paraphernalia or weapons were found during the search of the vehicle or the individuals. When Boynton questioned the men about the cocaine found inside the vehicle, both individuals indicated they knew nothing about it. According to Boynton, defendant and Harris admitted that they smoked marijuana but denied any knowledge of the existence of the crack cocaine rocks. Neither defendant nor Harris ever indicated that the illegal drugs belonged to the other.
The vehicle subsequently was determined to belong to Harris. Boynton testified that both men were arrested for possession because the larger rock found on the floorboard was within arm distance from both front seats and was visible from the front passenger seat of the vehicle.
ASSIGNMENT OF ERROR #1
In his first assignment of error, defendant asserts there was insufficient evidence to support the jury's finding that he possessed the cocaine found inside Harris's vehicle. Specifically, he contends the State failed to prove more than his mere presence in a place where the cocaine was found. He contends the evidence failed to show he had any knowledge of the cocaine or that he exercised dominion or control over it.
The standard of review for sufficiency of the evidence to uphold a conviction is whether, viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could conclude the State proved the essential elements of the crime and the defendant's identity as the perpetrator of that crime beyond a reasonable doubt. In conducting this review, we also must be expressly mindful of Louisiana's circumstantial evidence test, which states in part, "assuming every fact to be proved that the evidence tends to prove, in order to convict," every reasonable hypothesis of innocence is excluded. La. R.S. 15:438. State v. Wright, 98-0601, p. 2 (La. App. 1st Cir. 2/19/99), 730 So.2d 485, 486, writs denied, 99-0802 (La. 10/29/99), 748 So.2d 1157, and XXXX-XXXX (La. 11/17/00), 773 So.2d 732. When a conviction is based on both direct and circumstantial evidence, the reviewing court must resolve any conflict in the direct evidence by viewing that evidence in the light most favorable to the prosecution. When the direct evidence is thus viewed, the facts established by the direct evidence and the facts reasonably inferred from the circumstantial evidence must be sufficient for a rational juror to conclude beyond a reasonable doubt that the defendant was guilty of every essential element of the crime. Wright, 98-0601 at p. 3, 730 So.2d at 487.
On appeal, the reviewing court does not determine whether another possible hypothesis suggested by a defendant could afford an exculpatory explanation of the events. Rather, the court must evaluate the evidence in a light most favorable to the State and determine whether the possible alternative hypothesis is sufficiently reasonable that a rational juror could not have found proof of guilt beyond a reasonable doubt. State v. Mitchell, 99-3342, p. 7 (La. 10/17/00), 772 So.2d 78, 83.
La. R.S. 40:967(C), in pertinent part, provides, "[i]t is unlawful for any person knowingly or intentionally to possess a controlled dangerous substance as classified in Schedule II ..." Cocaine is a controlled dangerous substance classified in Schedule II. La. R.S. 40:964, Schedule II (A)(4).
To be guilty of the crime of possession of a controlled dangerous substance, one need not physically possess the substance; constructive possession is sufficient. Guilty knowledge is an essential ingredient of the crime of unlawful possession of an illegal drug. State v. Brisban, XXXX-XXXX, pp. 8-9 (La. 2/26/02), 809 So.2d 923, 929. The mere presence in the area where narcotics are discovered or mere association with the person who does control the drug or area where it is located is insufficient to support a finding of possession. Nevertheless, constructive possession may be found where the material is not in a person's physical possession, but is under his dominion and control. Brisban, XXXX-XXXX at p. 8, 809 So.2d at 929. The defendant can have constructive possession if he jointly possesses a drug that is in the physical custody of a companion, if he willfully and knowingly shares with his companion the right to control the drugs. State v. Harris, 94-0696, p. 4 (La. App. 1st Cir. 6/23/95), 657 So.2d 1072, 1075, writ denied, 95-2046 (La. 11/13/95), 662 So.2d 477.
A determination of whether there is "possession" sufficient to convict depends on the peculiar facts of each case. Factors to be considered in determining whether a defendant exercised dominion and control sufficient to constitute constructive possession include his knowledge that drugs were in the area, his relationship with the person found to be in actual possession, his access to the area where the drugs were found, evidence of recent drug use, and his physical proximity to the drugs. State v. Toups, XXXX-XXXX, p. 4 (La. 10/15/02), 833 So.2d 910, 913.
In State v. Bell, 566 So.2d 959 (La. 1990) (per curiam), both the driver and passenger were convicted of attempted possession of cocaine discovered in the driver's vehicle. The Louisiana Supreme Court affirmed the driver's conviction but reversed the passenger's conviction. The cocaine was discovered after the police officers approached the vehicle to ask the occupants to turn down their music. When they neared the vehicle, the police officers observed a package containing white powder among some cassette tapes on a plastic console between the front seats. Bell, 566 So.2d at 959.
The Louisiana Supreme Court acknowledged that, although a jury could have reasonably found Bell was aware of the contents of the package, a rational factfinder could not have concluded that Bell exercised control and dominion over the package or that he willfully and knowingly shared the right to control the package with the driver. The Bell court pointed out that there was no evidence that Bell exercised any control over the vehicle, that he had any other drugs in his possession on his person, that he appeared under the influence of narcotics, or that he had possession of any drug paraphernalia. Bell, 566 So.2d at 959-60.
In contrast, this court in State v. Ankrum, 573 So.2d 244 (La. App. 1st Cir. 1990), concluded the evidence was sufficient to support possession of cocaine convictions for all three occupants of a vehicle where cocaine was found. In Ankrum, the police officer received a tip that the defendants were in possession of cocaine. The tip described the defendants' vehicle and the general location of the vehicle. The police spotted the vehicle and started following the car in an unmarked police unit. After the rear seat passenger looked back and apparently recognized the police unit, the car accelerated and ran a stop sign. The officer activated his lights and siren, and a chase ensued during which the driver made several more traffic violations. Ankrum, 573 So.2d at 245.
The vehicle was ultimately stopped, and all of the occupants became involved in physical altercations with the officer. The car was later searched at the police station where a clear plastic bag containing marijuana was found on the front passenger seat and a clear bag of rock cocaine was found on the back right floorboard under papers and other "debris." This court noted that the cocaine was not "cleverly concealed or in any way out of reach of each defendant," and that the record supported a finding that all three defendants had constructive possession of the cocaine. This court affirmed the convictions, concluding that a rational trier of fact could have found beyond a reasonable doubt that each defendant had dominion and control over the cocaine and knowingly possessed it. Ankrum, 573 So.2d at 247.
After a thorough review of the record in this case, we are convinced the evidence presented, viewed in the light most favorable to the State, proved beyond a reasonable doubt, and to the exclusion of every reasonable hypothesis of innocence, that defendant constructively possessed the cocaine found in Harris's vehicle. The evidence presented supports the jury's verdict of possession of cocaine. The State sufficiently proved defendant's dominion and control over the cocaine recovered from the vehicle and that he knowingly possessed it. The evidence presented at the trial established that defendant had access to the area where the crack cocaine rocks were found. He was present inside the vehicle where the cocaine was found in plain view and well within his reach. Boynton testified that the larger rock could "absolutely" be viewed from the passenger seat. Also, evidence of recent drug use was introduced. The testimonial evidence clearly established that marijuana was being smoked inside the vehicle occupied by defendant and Harris. The smoke-filled vehicle was parked in the roadway with the lights off and the engine running. A larger rock was found on the floorboard near the console and several smaller rock particles were located on the front driver's seat. From this evidence, particularly the marijuana smoke and the smaller particles of cocaine found on the seat, it was not unreasonable for the jury to conclude either that defendant and Harris were inside the vehicle using marijuana and cocaine when Boynton arrived, or at the least, that defendant was aware of the cocaine inside the vehicle and he jointly exercised dominion and control over it. The jury obviously accepted Boynton's testimony that the larger rock was clearly visible from the passenger seat and rejected the defense theory that it was so dark that defendant was unaware of the presence of the cocaine.
In reviewing the evidence, we cannot say that the jury's determination was irrational under the facts and circumstances presented to them. See State v. Ordodi, XXXX-XXXX, p. 14 (La. 11/29/06), 946 So.2d 654, 662. The facts and circumstances of this case support the inference that defendant and Harris jointly possessed the cocaine. This assignment of error lacks merit.
ASSIGNMENT OF ERROR #2
In this assignment of error, defendant contends that the trial court erred in imposing an excessive sentence. Specifically, he claims the sentence imposed is unconstitutionally excessive considering his mere presence as a guest passenger in the vehicle where such a small amount of crack cocaine was found. He asserts the five year maximum sentence, on a nineteen year old, shocks the sense of justice and is "just plain wrong."
Article I, § 20 of the Louisiana Constitution prohibits the imposition of excessive punishment. A sentence is constitutionally excessive if it is grossly disproportionate to the severity of the offense or is nothing more than a purposeless and needless infliction of pain and suffering. State v. Dorthey, 623 So.2d 1276, 1280 (La. 1993). A sentence is grossly disproportionate if, when the crime and punishment are considered in light of the harm done to society, it shocks the sense of justice. State v. Hogan, 480 So.2d 288, 291 (La. 1985). Although a sentence may be within statutory limits, it may violate a defendant's constitutional right against excessive punishment and is subject to appellate review. State v. Sepulvado, 367 So.2d 762, 767 (La. 1979); State v. Lanieu, 98-1260, p. 12 (La. App. 1st Cir. 4/1/99), 734 So.2d 89, 97, writ denied, 99-1259 (La. 10/8/99), 750 So.2d 962. However, a trial court is given wide discretion in the imposition of sentences within statutory limits, and the sentence imposed by it should not be set aside as excessive in the absence of manifest abuse of discretion. State v. Lobato, 603 So.2d 739, 751 (La. 1992).
The Louisiana Code of Criminal Procedure sets forth items that must be considered by the trial court before imposing sentence. La. C.Cr.P. art. 894.1. The trial court need not recite the entire checklist of article 894.1, but the record must reflect that it adequately considered the guidelines. State v. Herrin, 562 So.2d 1, 11 (La. App. 1st Cir.), writ denied, 565 So.2d 942 (La. 1990). In light of the criteria expressed by article 894.1, a review of the individual excessiveness must consider the circumstances of the crime and the trial court's stated reasons and factual basis for its sentencing decision. State v. Watkins, 532 So.2d 1182, 1186 (La. App. 1st Cir. 1988). Remand for full compliance with article 894.1 is unnecessary if a sufficient factual basis for the sentence is shown. See State v. Lanclos, 419 So.2d 475, 478 (La. 1982).
For the crime of possession of cocaine, the defendant was exposed to imprisonment with or without hard labor for not more than five years, and a fine of not more than $5,000. See La. R.S. 40:967(C)(2). The trial court sentenced the defendant to the maximum sentence. This court has stated that maximum sentences permitted under a statute may be imposed only for the most serious offenses and the worst offenders, State v. Easley, 432 So.2d 910, 914 (La. App. 1st Cir. 1983), or when the offender poses an unusual risk to the public safety due to his past conduct of repeated criminality. See State v. Chaney, 537 So.2d 313, 318 (La. App. 1st Cir. 1988), writ denied, 541 So.2d 870 (La. 1989).
Our review of the record in this case reveals that the trial judge did not articulate his reasons for the sentence imposed. The record reflects that on March 5, 2009, when the matter came before the court for sentencing, the judge stated:
Mr. Wise, you were found guilty of possession of cocaine by a jury on January 7, 2009. Sentencing delays have passed. You're now being sentenced in accordance with the provisions of Code of Criminal Procedure Article 894.1.
At this time, I sentence you pursuant to Article 881.1 of the Code of Criminal Procedure to five years hard labor with the Department of Corrections with a recommendation of the Impact [P]rogram.
Failure of the trial court to comply with article 894.1 does not, in and of itself, render a sentence invalid. A reviewing court will uphold the sentence if the record supports the sentencing choice. See State v. Wilkinson, 99-0803 (La. App. 1st Cir. 2/18/00), 754 So.2d 301, writ denied, 2000-2336 (La. 4/20/01), 790 So.2d 631.
The record in this case reveals that defendant is classified as a first offender. Although the court imposed the maximum imprisonment sentence for this offense, in mitigation, the trial court considered the likelihood that defendant would be placed in the Impact Program. See La. R.S. 15:574.4.1. Eligibility for parole is an amelioratory factor which may be considered in gauging the excessiveness of a sentence. State v. Lombard, 501 So.2d 889 (La. App. 5th Cir.), writ denied, 506 So.2d 504 (La. 1987).
The court also indicated its willingness to reconsider the sentence, under La. C.C.P. art. 881.1, in the event defendant was not accepted into the Impact Program.[2] Under these circumstances, the sentence does not shock our sense of justice. Although the trial court did not articulate the sentencing factors considered, the sentence is supported by the record and, thus, remand for full compliance with article 894.1 is unnecessary.
For the foregoing reasons, we affirm defendant's conviction and sentence.
CONVICTION AND SENTENCE AFFIRMED.
NOTES
[1] The record reflects that Harris pled guilty to the charge. He is not a party to this appeal.
[2] La. R.S. 15:574.4.1(G)(1) provides, "If an offender is denied entry into the intensive incarceration program for physical or mental health reasons or for failure to meet the department's suitability criteria, the department shall notify the sentencing court, and based upon the court's order, shall either return the offender to court for resentencing in accordance with the provisions of the Code of Criminal Procedure Article 881.1 or return the offender to a prison to serve the remainder of his sentence as provided by law." Although the sentencing judge did not specifically indicate that he would reconsider the sentence, his reference to article 881.1. in conjunction with the recommendation of the Impact Program, suggests that he was following the guidelines set forth in La. R.S. 15:574.4.1(G)(1). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584008/ | 728 N.W.2d 275 (2007)
273 Neb. 148
STATE of Nebraska ex rel. UPPER REPUBLICAN NATURAL RESOURCES DISTRICT et al., relators,
v.
The Honorable DISTRICT JUDGES OF the DISTRICT COURT FOR CHASE COUNTY, Nebraska, respondents.
No. S-06-549.
Supreme Court of Nebraska.
March 2, 2007.
*277 Donald G. Blankenau and Jaron J. Bromm, of Blackwell, Sanders, Peper & Martin, L.L.P., Lincoln, and Joel E. Burke, Imperial, for relators.
No appearance for respondents.
HEAVICAN, C.J., WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.
GERRARD, J.
The relators, the Upper Republican Natural Resources District (Upper Republican NRD) and its board of directors, seek a peremptory writ of mandamus compelling the district court to vacate its previous orders compelling discovery of conversations that occurred during closed sessions convened under Nebraska's Open Meetings Act[1] where legal counsel was present. At issue in this case is whether the conversations in question are protected from discovery under the Open Meetings Act, the attorney-client privilege, or the state secrets privilege.
FACTS
The Upper Republican NRD is a natural resources district[2] and qualifies as a public body as defined in the Open Meetings Act.[3] In addition to its other duties, the Upper Republican NRD is responsible for formulating and adopting an integrated management plan in conjunction with the Nebraska Department of Natural Resources as provided by the Ground Water Management and Protection Act.[4]
On April 21, 2005, WaterClaim, a Nebraska nonprofit corporation, and several individual irrigators who reside within the boundaries of the Upper Republican NRD (collectively WaterClaim) sued the Upper Republican NRD and its then-existing board of directors (collectively the relators). WaterClaim's complaint alleged that the relators "knowingly engaged in repeated, intentional, and pervasive closed sessions at public meetings at which public policy was debated and discussed" in violation of the Open Meetings Act. WaterClaim *278 sought declaratory and injunctive relief.
As part of pretrial discovery, WaterClaim provided notice of its intention to depose the individual relators and Jasper Fanning, the manager of the Upper Republican NRD. The relators filed a motion to limit or terminate the depositions pursuant to Neb. Ct. R. of Discovery 26 (rev. 2001) on the basis that discussions held in a closed session are not subject to discovery because they are confidential and protected by the attorney-client privilege.
The depositions proceeded without a ruling on this motion. During the first deposition, counsel for WaterClaim inquired into the substance of the discussions that took place in closed sessions between the relators and legal counsel. Counsel for the relators instructed the deponents not to answer questions pertaining to discussions that occurred during closed sessions. The depositions were discontinued, and WaterClaim filed a motion to compel discovery.
The judge presiding over the case entered an order sustaining WaterClaim's motion to compel discovery and ordered the relators to appear for depositions and answer all questions posed with regard to the closed sessions. The judge explained that
[i]f the Court were to rule in the [relators'] favor on this matter, it would prevent any lawsuit, at any time, claiming a violation of the Open Meetings [Act] to move forward because all of the evidence involved in the violation of the Open Meetings [Act] was at the meeting held in private.
In denying the relators' claim of attorney-client privilege, the judge explained that the relators failed to present sufficient evidence to prove that this privilege applied.
The relators filed a motion to amend or modify the order and asked the court to interview the deponents in camera to determine whether their anticipated testimony was protected by the Open Meetings Act or attorney-client privilege. During the course of this litigation, the original judge retired and a second, newly appointed, judge took office. The second judge denied the relators' motion and ordered the deponents to answer WaterClaim's questions.
The relators were granted leave to file an original action in this court. The relators filed a petition for peremptory writ of mandamus, asking this court to direct the district court to vacate its orders sustaining WaterClaim's motion to compel discovery.
ASSIGNMENT OF ERROR
The relators assert that the district court erred in denying their motion for a protective order seeking to prevent disclosure of communications that occurred during closed sessions under the Open Meetings Act.
ANALYSIS
Our analysis begins with the well-settled principles governing actions for mandamus. Mandamus is a law action and is defined as an extraordinary remedy, not a writ of right, issued to compel the performance of a purely ministerial act or duty, imposed by law upon an inferior tribunal, corporation, board, or person, where (1) the relator has a clear right to the relief sought, (2) there is a corresponding clear duty existing on the part of the respondent to perform the act, and (3) there is no other plain and adequate remedy *279 available in the ordinary course of law.[5] In a mandamus action, the party seeking mandamus has the burden of proof and must show clearly and conclusively that such party is entitled to the particular thing the relator asks and that the respondent is legally obligated to act.[6]
In the present case, the relators argue that they are entitled to a writ of mandamus because the district court erred in denying their motion for a protective order seeking to prevent WaterClaim from acquiring information discussed during a closed session. In our determination of whether mandamus applies to an issue of discovery, we consider whether the trial court clearly abused its discretion in not issuing a protective order which limited the nature of the discovery.[7] Rule 26 sets forth the general provisions governing discovery in Nebraska. Rule 26(b)(1) states that "[p]arties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action . . . ."
The relators contend that the communications at issue in this case are privileged and not subject to discovery because the communications (1) are confidential and privileged under the Open Meetings Act, (2) are protected by the attorney-client privilege, and (3) are protected under the state secrets privilege.
OPEN MEETINGS ACTCLOSED SESSION
The relators first argue that pursuant to the Open Meetings Act, all communications during a validly convened closed session are privileged. Relating to closed sessions, the Open Meetings Act provides in part that
[a]ny public body may hold a closed session by the affirmative vote of a majority of its voting members if a closed session is clearly necessary for the protection of the public interest or for the prevention of needless injury to the reputation of an individual and if such individual has not requested a public meeting. The subject matter and the reason necessitating the closed session shall be identified in the motion to close.[8]
As an initial matter, with regard to our interpretation of public meetings laws, we have stated that public meetings laws are broadly interpreted and liberally construed to obtain the objective of openness in favor of the public.[9] Provisions permitting closed sessions and exemption from openness of a meeting must be narrowly and strictly construed.[10]
Insofar as the relators argue that all communications during a closed session are privileged, such argument is in error. We find no language in the Open Meetings Act that would support the assertion that the Legislature intended to create an absolute privilege for all communications occurring while a public body is in a closed session. Unlike other Nebraska statutes where the Legislature expressly created discovery privileges, the Open Meetings Act is notably silent in this regard.
For example, Neb.Rev.Stat. § 71-7903 (Reissue 2003), relating to peer review committees, provides that "[t]he proceedings, *280 minutes, records, and reports. . . are privileged communications which may not be disclosed or obtained by legal discovery proceedings . . . ." Another example is found in Neb.Rev.Stat. § 25-2933(a) (Cum. Supp. 2006), which states that "a mediation communication is privileged. . . and is not subject to discovery or admissible in evidence." As is evident from these, and other similar statutes,[11] when the Legislature intends to create a discovery privilege, it does so with clear and unambiguous language. In view of the fact that the Open Meetings Act contains no language relating to a closed session discovery privilege, we conclude that no such privilege exists in Nebraska.
Our conclusion is also based on the fact that if these communications were privileged solely because they occurred during a closed session, a private litigant would be left without the ability to challenge the validity of the public body's actions during a closed session. To determine whether a public body, in a closed session, has acted outside of its authority, a private litigant must have access to those communications by means of a legitimate discovery request. To conclude otherwise would, in essence, immunize a public body from any challenge relating to the propriety of its closed session.
We recognize that under certain circumstances, allowing a public body to enter into a closed session, away from the public view, serves to protect the public's interest. However, we do not conclude that granting a litigant access to communications of a closed session, by way of a limited, legitimate discovery request, will harm the public interest. In dealing with a discovery request relating to information from a closed session, a trial court may increase its supervision of the discovery process to ensure that sensitive or confidential information is protected through the creation of an appropriately tailored protective order.
Furthermore, our determination that there is no absolute discovery privilege for communications that occur during closed sessions does not necessarily mean that all communications during closed sessions are discoverable. All other recognized evidentiary privileges are still applicable. Thus, although there is no absolute privilege for closed session communications, to the extent the communications implicate other evidentiary privileges, such as the attorney-client privilege, the communications are protected.
We further note that our conclusion is in accord with the reasoning of cases from other jurisdictions that have addressed this issue. For example, in Springfield Local Sch. v. Assn. of Pub. Sch.,[12] the Ohio Court of Appeals explained that under Ohio's version of the Open Meetings Act, "there is no absolute privilege to be accorded discussions held in executive session" but "a trial court, in its discretion, may limit discovery." The court further stated:
Although these provisions [of the act] suggest a strong policy against public disclosure . . . the provisions protect only against access to the general public. They do not necessarily protect against disclosure in the course of litigation *281 upon a proper discovery request, if the information is otherwise discoverable.[13]
Thus, we conclude that there is no absolute privilege for communications made during a closed session. However, to the extent those communications implicate other recognized privileges, the communications are protected.
ATTORNEY-CLIENT PRIVILEGE
We must next determine whether the district court correctly refused to grant a protection order protecting the relators' communications that qualify under the attorney-client privilege. Nebraska's attorney-client privilege, Neb. Evid. R. 503(2),[14] provides in relevant part: "A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client (a) between himself or his representative and his lawyer or his lawyer's representative. . . ."
In support of their contention that the communications are protected by the attorney-client privilege, the relators submitted the affidavit of Fanning, the manager of the Upper Republican NRD. In his affidavit, Fanning testified:
During all closed sessions as referenced to by [Water Claim] in the past twelve months, one, if not both attorneys for the District were present and were advised and instructed on negotiation strategies. Further, the attorneys for the District advised the Board as to the possible implications of failing to meet the District's requirement as required by law including possible action in Court or in the interrelated water review board.
We find that this affidavit, although vague on the substance and context of the communications in the closed sessions, was sufficient to demonstrate that some of the communications at issue may be subject to the attorney-client privilege. Thus, the district court's determination that none of the communications qualified for the attorney-client privilege and its failure to perform a more thorough inquiry into the matter were in error.
In view of the facts surrounding the relators' request for a protection order, specifically, the testimony provided in Fanning's affidavit, we conclude that the district court had a ministerial duty to conduct a more extensive investigation into the relators' claim that the communications were protected by the attorney-client privilege. While the district court may not have been required to follow the procedures suggested by the relators, the court was obligated to facilitate some meaningful in camera review of the contested evidence in order to fully consider the relators' claim to the attorney-client privilege.
Accordingly, we conclude that a peremptory writ of mandamus should issue, directing the district court to vacate its orders compelling discovery and to allow the relators an opportunity to submit additional evidence for the purpose of clarifying which, if any, of the alleged communications qualify for protection under the attorney-client privilege.
STATE SECRETS PRIVILEGE
In their remaining argument, the relators assert that their communications are protected from discovery pursuant *282 to Neb. Evid. R. 509(1).[15] This section provides in relevant part:
The government has a privilege to refuse to give evidence and to prevent any public officer from giving evidence as to communications made by or to such public officer in official confidence when the public interest would suffer by the disclosure.[16]
We note that there is nothing in the record before us to suggest that this argument was raised to the district court. Accordingly, we will not address this argument as it was first presented in this mandamus action and a district court could not have had a ministerial duty to perform an act that it was not asked to perform.[17]
CONCLUSION
We determine, given the language of the Open Meetings Act, that there is no absolute privilege for communications made during a closed session. However, to the extent the communications implicate other recognized privileges, the communications are protected. We therefore conclude that a peremptory writ of mandamus shall issue, directing the district court to vacate its orders compelling discovery and to conduct an in camera review in order to evaluate whether the contested evidence is protected by the attorney-client privilege.
PEREMPTORY WRIT ISSUED.
NOTES
[1] Neb.Rev.Stat. § 84-1408 et seq. (Reissue 1999 & Cum. Supp. 2006).
[2] Neb.Rev.Stat. § 2-3201 et seq. (Reissue 1997 & Cum. Supp. 2006).
[3] § 84-1409.
[4] Neb.Rev.Stat. § 46-701 et seq. (Reissue 2004 & Cum. Supp. 2006).
[5] Crouse v. Pioneer Irr. Dist., 272 Neb. 276, 719 N.W.2d 722 (2006).
[6] State ex rel. Musil v. Woodman, 271 Neb. 692, 716 N.W.2d 32 (2006).
[7] State ex rel. Acme Rug Cleaner v. Likes, 256 Neb. 34, 588 N.W.2d 783 (1999).
[8] § 84-1410(1).
[9] Grein v. Board of Education, 216 Neb. 158, 343 N.W.2d 718 (1984).
[10] Id.
[11] See, Neb.Rev.Stat. § 44-154 (Reissue 2004); Neb.Rev.Stat. § 44-425 (Reissue 2004); Neb.Rev.Stat. § 44-1107 (Reissue 2004); Neb.Rev.Stat. § 71-1,202 (Reissue 2003); Neb.Rev.Stat. § 71-2048 (Reissue 2003).
[12] Springfield Local Sch. Dist. Bd. of Ed. v. Ohio Assn. of Pub. Sch., 106 Ohio.App.3d 855, 868, 667 N.E.2d 458, 467 (1995).
[13] Id. at 869, 667 N.E.2d at 467. See, also, Tausz v. Clarion-Goldfield Community Sch., 569 N.W.2d 125 (Iowa 1997); Gipson v. Bean, 156 Ariz. 478, 753 P.2d 168 (Ct.App.1987).
[14] Neb.Rev.Stat. § 27-503(2) (Reissue 1995).
[15] Neb.Rev.Stat. § 27-509(1) (Reissue 1995).
[16] Id.
[17] See State ex rel. AMISUB v. Buckley, 260 Neb. 596, 618 N.W.2d 684 (2000). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584079/ | 728 N.W.2d 254 (2007)
In re CHARGES OF UNPROFESSIONAL CONDUCT IN PANEL CASE NO. 23236.
No. A06-1400.
Supreme Court of Minnesota.
March 8, 2007.
*256 Allen I. Saeks, Minneapolis, MN, for Appellant.
Martin A. Cole, Director, Craig D. Klausing, Senior Assistant Director, Office of Lawyers Professional Responsibility, St. Paul, MN, for Respondent.
Considered and decided by the court en banc without oral argument.
OPINION
PER CURIAM.
This case presents the issue of whether a supervising lawyer has a duty to disclose to a client that another lawyer at the law firm, working on a matter for the client, had not been authorized to practice law for more than two years. This case also asks whether it is a violation of the Minnesota Rules of Professional Conduct for a law firm to bill a client at a contractually agreed upon rate for lawyer services when the lawyer provided these services during a time when the lawyer was not authorized to practice law.
The following facts were found by a panel of the Lawyers Professional Responsibility Board and are essentially undisputed. Appellant lawyer (hereinafter Appellant) was admitted to practice law in Minnesota in 1977 and currently is a shareholder in a Minneapolis law firm (hereinafter Law Firm). As a lawyer with the Law Firm, Appellant represented a government entity (hereinafter Client). Another lawyer in the Law Firm (hereinafter Restricted Lawyer) worked with Appellant in providing representation to the Client.
On August 27, 2002, Restricted Lawyer, who is not a subject of this disciplinary matter, was placed on CLE restricted status pursuant to Rule 12, Rules of the Minnesota Board of Continuing Legal Education, for failure to comply with Minnesota's CLE requirements.[1] Appellant was unaware of Restricted Lawyer's failure to comply with the CLE requirements or that he was not authorized to practice law. On January 21, 2005, Appellant learned of Restricted Lawyer's status and at that time the Law Firm notified Restricted Lawyer that he was prohibited from engaging in the practice of law or representing any person or entity on behalf of the Law Firm in the State of Minnesota. However, Appellant did not inform the Client of Restricted Lawyer's status. Appellant continued working with Restricted Lawyer as a "non-lawyer assistant" in a supervisory capacity. In late January 2005, the Human Resources Manager of the Law Firm removed the reference in the Law Firm's website that Restricted Lawyer was authorized to practice law.
In late February 2005, the Client discovered that Restricted Lawyer's profile had been changed on the Law Firm's website and that the website no longer indicated that Restricted Lawyer was licensed to practice law in Minnesota. On February 22, 2005, the Client contacted Appellant and asked why Restricted Lawyer's profile *257 had changed on the Law Firm's website. Appellant did not acknowledge that she was then aware that Restricted Lawyer had not been authorized to practice law for almost two and one-half years. Appellant told the Client that she would look into the matter and get back to the Client.
On February 23, 2005, Appellant telephoned the Client and for the first time acknowledged Restricted Lawyer's noncompliance with CLE requirements. However, Appellant did not tell the Client that Restricted Lawyer had been on involuntary restricted status and had not been authorized to practice law since 2002, a period during which Restricted Lawyer was providing legal services to the Client although not authorized to do so.
On April 13, 2005, Appellant submitted a statement for services rendered to the Client by the Law Firm. The statement included charges for work performed by Restricted Lawyer while he was not authorized to practice law, but neither the cover letter nor the bill stated that Restricted Lawyer was not authorized to practice law at the time the services were rendered. Moreover, Restricted Lawyer's services were billed at $205 per hour, the rate charged for work done by lawyers for the Client.
On July 14, 2005, the Client e-mailed Appellant and inquired about the time period that Restricted Lawyer was without a license and whether the Client was billed for Restricted Lawyer's time when he was not authorized to practice law. Appellant responded that Restricted Lawyer had been on involuntary restricted status since August 27, 2002, and sent the Client a second billing statement. In the second billing statement, Appellant removed all of the charges for time she had personally billed to the Client, eliminating accidental double billing for administrative time she had spent supervising Restricted Lawyer. However, the second billing statement continued to reflect a $205 per hour charge for Restricted Lawyer's services.
The Client objected to being billed for Restricted Lawyer's time while he was not authorized to practice law. Eventually, the Law Firm refunded to the Client all fees paid for Restricted Lawyer's time during the period he was not authorized to practice law. The Client then filed an ethics complaint with the Director of the Office of Lawyers Professional Responsibility.
After investigating the complaint, the Director concluded that Appellant had committed ethical violations of an "isolated and non-serious nature" and privately admonished Appellant for violating Minn. R. Prof. Conduct 1.4(b) by failing to inform the Client that Restricted Lawyer was not authorized to practice law and for violating Minn. R. Prof. Conduct 1.5(a) for billing the Client for Restricted Lawyer's time at the Law Firm's lawyer rate during the period that Restricted Lawyer was suspended from the practice of law.
Pursuant to Rule 8(d)(2)(iii), Rules on Lawyers Professional Responsibility (RLPR), Appellant demanded that the Director present the charges to a panel of the Lawyers Professional Responsibility Board for de novo consideration. The panel conducted a hearing and determined that Appellant had violated Rules 1.4(b) and 1.5 and that this violation warranted issuing an admonition. The panel further concluded that the decision of other lawyers in the Law Firm not to disclose the status of Restricted Lawyer's license did not impact Appellant's obligation to comply with the rules.
Findings made in lawyer discipline cases are reviewed under a clearly erroneous standard. In re Panel File Number 99-5, 607 N.W.2d 429, 431 (Minn. *258 2000); see also In re X.Y., 529 N.W.2d 688, 689-90 (Minn.1995) (noting that since admonitions are a form of attorney discipline, the clearly erroneous standard should be used to review findings). Great weight is given to the recommendations of the panel, but this court has the final responsibility for determining appropriate discipline for violations of the rules of professional conduct. In re Panel File Number 99-5, 607 N.W.2d at 431. Sanctions are imposed according to the unique facts of each case, and when considering appropriate sanctions for misconduct, "we weigh the following factors: (1) the nature of the misconduct, (2) the cumulative weight of the disciplinary violations, (3) the harm to the public, and (4) the harm to the legal profession." Id.
I.
Rule 1.4(b) states that "[a] lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation." Lawyers comply with Rule 1.4 when they provide their clients with "sufficient information to participate intelligently in decisions concerning the objectives of the representation and the means by which they are to be pursued." Rule 1.4 cmt. 1985; see also In re Keate, 488 N.W.2d 229, 234 (Minn.1992) (noting that Rule 1.4(b) imposes an affirmative duty on lawyers to explain to their clients how they intend to proceed in a matter).
Appellant argues that the Director erroneously disciplined her for failing to disclose that Restricted Lawyer was not authorized to practice law in that Appellant did not have an affirmative duty to disclose information to the Client that lawyers on involuntary restricted status are not themselves required to disclose under either the Minnesota Rules of Professional Conduct or the Rules on Lawyers Professional Responsibility. Appellant also asserts that the requirement under Rule 20, RLPR, that disciplinary proceedings be kept confidential[2] led her to reasonably conclude that she did not need to disclose Restricted Lawyer's license status to the Client.
The Director counters that under the circumstances of this case, the absence of a rule compelling disclosure is not determinative. Rather, this case concerns a lawyer's duty to disclose information that is reasonably necessary for clients to make informed decisions about their representation. The Director further notes that since Restricted Lawyer was not disciplined until September 2005 and Appellant disclosed that Restricted Lawyer was not authorized to practice law in February 2005, Appellant's Rule 20 argument is more of an afterthought than a rule she relied on to her detriment.
A lawyer on involuntary restricted status does not have the same mandatory disclosure obligations as those imposed upon lawyers who have been disbarred, suspended, or administratively suspended from practice. See Rule 26, RLPR (requiring disbarred, suspended, or lawyers on disability inactive status to inform their clients of their status); Rule 30, RLPR (requiring lawyers on administrative suspension to inform their clients of their status). The absence of such a rule does not mean that a lawyer's involuntary suspension from the practice of law for failure to comply with CLE requirements is not of interest to a client.
*259 Like a suspended or disbarred lawyer, a lawyer on involuntary restricted status may not engage in the practice of law. Rule 12(B), Rules of the Minnesota State Board of Continuing Legal Education. It is not unreasonable to assume that lawyers are typically retained because of their ability to practice law. In fact, a lawyer's authorization or lack of authorization to practice makes a significant difference in his or her ability to represent a client. See Minn.Stat. § 481.02, subd. 1 (stating that unlicensed individuals may not appear as attorneys in any action or proceeding in any court in the state, hold themselves out as competent or qualified to give legal advice or counsel, prepare legal documents, or engage in advising or counseling in law or acting as attorney or counselor at law) (2006). It is important for a client to know whether or not his or her lawyer is permitted to practice law. See In re Westby, 639 N.W.2d 358, 364, 365, 368 (Minn. 2002) (concluding that the lawyer had violated Rule 1.4(b) by failing to disclose to clients that she was suspended from the practice of law when she accepted retainers from clients, obtained a continuance for a matter, and helped clients prepare for hearings); see also Attorney Griev. Comm'n v. Cassidy, 362 Md. 689, 766 A.2d 632, 636 (2001) (concluding that under Maryland Rule of Professional Conduct 1.4(b), which mirrors Minn. R. Prof. Conduct 1.4(b), a lawyer's failure to disclose that he was suspended from the practice of law violated Rule 1.4(b) because the matter the client had contracted with the lawyer to complete could not be completed by an unlicensed attorney and had the lawyer informed the client of his suspension, the client could have "made the informed choice to seek another attorney.").
In this case, a three-member panel heard testimony from witnesses and reviewed numerous documents and came to the conclusion that Appellant's conduct in failing to explain to the Client that Restricted Lawyer was on CLE restricted status violated Rule 1.4(b). Under Rule 1.4 the "guiding principle" of communicating with a client is that "the lawyer should fulfill reasonable client expectations for information consistent with the duty to act in the client's best interests, and the client's overall requirements as to the character or representation." Rule 1.4 cmt.-1985.
Appellant testified that she did not disclose that Restricted Lawyer was not authorized to practice law to the Client in part because the work Restricted Lawyer had done while on involuntary restricted status had been "done in a way that [she] thought was professional," and that an opinion letter written by Restricted Lawyer while he was not authorized to practice law was an opinion that the Law Firm supported. However, the quality of Restricted Lawyer's work was not at issue for the Client. The Client testified that it felt it was important for the Client to know that Restricted Lawyer was not authorized to practice law because it had been told that services would be provided by a lawyer, when instead the services were provided by someone who was not authorized to practice law.
For the Client, Restricted Lawyer's CLE restricted status created a
whole bunch of red flags. What did this mean about different matters that he had handled? What did it mean about bond issues that he had been involved in? What did that mean about malpractice coverage for that firm? We also had concerns about how it is possible for a lawyer who is handling what are relatively complex matters [to be] unable to simply file a CLE affidavit? * * * We were very concerned about it.
Moreover, as a government entity, the Client had been using public money to *260 finance its legal work and the Client was concerned about how paying legal fees for a lawyer who was not authorized to practice law would impact the public's perception that the Client was responsibly spending public money. The Client felt that knowledge about Restricted Lawyer's status would have allowed the Client to make "some decisions about what [it] thought was in [its] best interest."
The record supports the panel's conclusion that the status of Restricted Lawyer's license was important to the Client. On January 1, 2004, the Client and the Law Firm entered into a contractual agreement for legal services that provided that Appellant and Restricted Lawyer would be the lawyers primarily responsible for providing services to the Client. During the entire period of that contract, Restricted Lawyer was not authorized to engage in the practice of law. As the Client testified, Restricted Lawyer's status raised a "whole bunch of red flags" and created concerns about the soundness of legal opinions rendered by the firm and violations of public trust. Therefore, under the circumstances presented in this case, we believe that the Panel properly concluded that Appellant had violated Rule 1.4(b).
Under Rule 12(D), Rules of the Minnesota State Board of Continuing Legal Education, transfer from restricted status to active status can easily be accomplished by notifying the Director of an intent to resume active status, submitting a $125 transfer fee, and completing the required number of CLE hours. Because transfer from involuntary restricted status to active status can be accomplished easily, it is possible that a lawyer could be placed on involuntary restricted status and immediately request a transfer to active status by submitting paperwork showing compliance with CLE requirements and the requisite fee. In such a situation, where the lawyer's time as a restricted lawyer is limited, it may not be necessary to inform the client because the impact on the client is likely to be minimal. But, those are not the facts presented in this case.
II.
Rule 1.5(a) states that "[a] lawyer's fee shall be reasonable." Appellant maintains she had a good-faith belief that the fee charged to the Client was reasonable because it reflected a deep discount in Restricted Lawyer's normal hourly rate and took into consideration the factors reflected in Rule 1.5(a). The Director acknowledges that the factors cited by Appellant are appropriate to consider when determining the reasonableness of a fee charged by a lawyer. However, in this case, the Director notes that Restricted Lawyer was not allowed to engage in the practice of law and therefore the Client should not have been charged for Restricted Lawyer's services at the same rate that the client would have been charged had Restricted Lawyer been authorized to practice law.
The Client and the Law Firm had a contractual agreement that the Client would be charged $205 per hour for services performed by lawyers. According to this agreement, any work performed by a paralegal would be billed to the client at $125 an hour. On January 21, 2005, when the Law Firm discovered that Restricted Lawyer was not authorized to practice law, the Law Firm prohibited Restricted Lawyer from engaging in the practice of law. Appellant testified that during the time she supervised Restricted Lawyer she treated his work just as she would have treated work performed by a senior paralegal. Yet, when Appellant submitted the April billing statement to the Client, Restricted Lawyer's services were billed at the contractual attorney rate of $205 per *261 hour. Although the $205 hourly rate negotiated by the Client was well below Restricted Lawyer's normal hourly rate of $355 per hour, Restricted Lawyer's normal hourly rate is not the relevant benchmark. At the time that Restricted Lawyer was providing services, he was not permitted to engage in the practice of law. In essence, Restricted Lawyer could function only as a paralegal. Given the clear language of the contract between the Client and the Law Firm, it is reasonable to conclude that Appellant should have billed Restricted Lawyer's services at a paralegal rate while he was not authorized to practice law; Appellant's failure to do so violated Rule 1.5(a). We hold that the panel properly concluded that Appellant violated Rule 1.5(a), and affirm that an admonition should issue.
Affirmed.
NOTES
[1] When a lawyer fails to comply with the state's CLE requirements, he or she is placed on involuntary restricted status pursuant to Rule 12, Rules of the Minnesota State Board of Continuing Legal Education. See also Rule 2(L), Rules of the Minnesota State Board of Continuing Legal Education. A lawyer on involuntary restricted status "may not engage in the practice of law or represent any person or entity in any legal matter or proceedings within the State of Minnesota." Rule 12(b), Rules of the Minnesota State Board of Continuing Legal Education.
[2] Restricted Lawyer was also under investigation by the Board for unauthorized practice and failure to cooperate with the Director. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583634/ | 728 N.W.2d 225 (2006)
BOLLMAN
v.
RUEHS.
No. 05-2105.
Iowa Court of Appeals.
December 13, 2006.
Decision without published opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583653/ | 31 So. 3d 375 (2010)
STATE of Louisiana
v.
Wayne WILSON.
No. 2010-KK-0774.
Supreme Court of Louisiana.
April 8, 2010.
Stay denied. Writ denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583655/ | 427 So. 2d 870 (1983)
Nora SIMS
v.
Obie G. SIMS.
Obie G. SIMS
v.
Nora Robert SIMS.
No. 82-C-2876.
Supreme Court of Louisiana.
January 21, 1983.
Denied.
DIXON, C.J., would grant the writ. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583654/ | 728 N.W.2d 268 (2007)
STATE of Minnesota, Respondent,
v.
Toyie Diane COTTEW, Appellant.
No. A06-785.
Court of Appeals of Minnesota.
March 20, 2007.
*269 Samuel A. McCloud, Carson J. Heefner, McCloud & Heefner, Shakopee, MN, for appellant.
*270 Lori Swanson, Attorney General, St. Paul, MN, and James P. Ratz, Aitkin County Attorney, Aitkin, MN, for respondent.
Considered and decided by STONEBURNER, Presiding Judge; TOUSSAINT, Chief Judge; and WRIGHT, Judge.
OPINION
WRIGHT, Judge.
Appellant challenges the district court's imposition of jail time and home confinement with electronic monitoring as intermediate sanctions for her probation violations, arguing that the district court failed to make the findings required by State v. Austin, 295 N.W.2d 246, 250 (Minn.1980), reaffirmed in State v. Modtland, 695 N.W.2d 602, 606 (Minn.2005). We affirm as modified.
FACTS
Appellant Toyie Cottew was convicted of fourth-degree driving while impaired, a violation of Minn.Stat. §§ 169A.20, subd. 1(1), .27 (2002). The district court sentenced Cottew to 90 days in jail, stayed the execution of the sentence, and ordered supervised probation for a term of two years. As conditions of Cottew's probation, the district court ordered Cottew to pay fines and fees totaling $1,065, obey all laws, and abide by the rules of probation.
On January 3, 2006, a probation-violation report was filed, alleging that Cottew had failed to pay her fines and fees and had failed to report to her probation agent as required. Cottew admitted these violations on February 6, 2006, at a probation-violation hearing. The district court ordered Cottew to serve 20 days in jail "in the nature of an executed sentence" but ordered the term of confinement reduced to ten days if Cottew paid the remaining $125 of her financial obligations before commencing her confinement. After observing that Cottew's two-year term of probation had expired on February 2, 2006, the district court discharged Cottew from probation and commuted the remainder of her sentence.
Cottew moved for reconsideration, arguing that the district court had not made the findings required by State v. Austin, 295 N.W.2d 246, 250 (Minn.1980), reaffirmed in State v. Modtland, 695 N.W.2d 602, 606 (Minn.2005). On reconsideration, the district court explained that it did not execute Cottew's sentence; rather, it imposed intermediate sanctions. Observing that the intermediate sanctions were consistent with those it had imposed for similar probation violations, the district court affirmed the sanctions but ruled that Cottew could serve half of her term of confinement at home with electronic monitoring. The district court granted Cottew's motion to stay its order pending the resolution of this appeal.
ISSUES
I. Was the district court required to determine that the Austin factors were satisfied when imposing intermediate sanctions of confinement for a probation violation?
II. Was the district court's imposition of the intermediate sanctions a correct application of Minn.Stat. § 609.135, subd. 1(a)(1) (2004), and Minn. R.Crim. P. 27.04, subd. 3(3)(b)?
ANALYSIS
I.
The district court imposed jail time and home confinement with electronic monitoring as sanctions for Cottew's probation violation without determining that the factors for probation revocation set *271 forth in State v. Austin, 295 N.W.2d 246, 250 (Minn.1980), reaffirmed in State v. Modtland, 695 N.W.2d 602, 606 (Minn. 2005),[1] had been met. Cottew argues that, in doing so, the district court committed reversible error. In Austin, the Minnesota Supreme Court established that a district court must satisfy the following three requirements before revoking probation and executing a stayed sentence: (1) designate the specific probation condition that the probationer has violated;[2] (2) find that the violation is inexcusable or intentional; and (3) find that the need for confinement outweighs the policies favoring probation. Austin, 295 N.W.2d at 250.
Here, the district court did not revoke Cottew's probation and execute her sentence. Rather, as clarified at the hearing on reconsideration, the district court imposed intermediate sanctions.[3] Cottew argues that this distinction does not relieve the district court from the obligation to make Austin findings before the intermediate sanctions of confinement are imposed. Whether Austin findings are required before a district court may impose intermediate sanctions of confinement is an issue of first impression, which requires us not only to examine the express holding of Austin, but also to consider whether the policy considerations that inform the Austin decision apply with equal force to the imposition of intermediate sanctions.
In Austin, the defendant pleaded guilty to burglary and aggravated assault. Id. at 248. The district court sentenced the defendant to concurrent terms of imprisonment for these offenses but stayed the execution and placed the defendant on probation for six years. Id. At a subsequent probation-violation hearing, the district court found that the defendant had failed to comply with the condition of his probation that required him to undergo drug treatment, revoked the defendant's probation, and executed the sentence. Id. at 249. On review, the supreme court observed that "[t]he purpose of probation is rehabilitation" and cautioned that probation revocation be employed as a last resort only after rehabilitation efforts have failed. Id. at 250. To this end, before probation may be revoked, the third Austin factor requires a finding that the need for confinement outweighs the policies favoring probation. Id. The supreme court recently reaffirmed this holding in Modtland and in doing so recognized the imposition of intermediate sanctions as an alternative to probation revocation. 695 N.W.2d at 606, 607-08 n. 3. The Modtland court observed that, when a district court determines that the third Austin factor has not been satisfied, the district court may respond by "alter[ing] the terms of the defendant's probationincluding imposition of intermediate sanctionsunder Minn.Stat. § 609.135 (2004)." Id. at 607-08 n. 3 (emphasis added).
Unlike probation revocation, which occurs when rehabilitative treatment or service is deemed futile, an intermediate sanction is imposed based on a district court's determination that the defendant is susceptible to rehabilitation through treatment *272 or the deterrence value of punitive accountability. See Minn.Stat. § 609.135, subd. 1(b) (defining "intermediate sanction" to include incarceration in local jail or workhouse, home detention, electronic monitoring, chemical-dependency treatment, mental-health treatment, counseling, community-work service, and work service in a restorative-justice program); Roberts v. United States, 320 U.S. 264, 272, 64 S. Ct. 113, 117, 88 L. Ed. 41 (1943) (recognizing that purpose of probation is to "provide an individualized program offering a young or unhardened offender an opportunity to rehabilitate himself without institutional confinement under the tutelage of a probation official and under the continuing power of the court to impose institutional punishment for his original offense in the event that he abuse this opportunity"); Developments in the Law: Alternatives to Incarceration, 111 Harv. L.Rev. 1863, 1956 (1998) (noting that most states' criminal statutes "explicitly state that the purpose of intermediate sanctions is to rehabilitate"). Limiting a district court's ability to impose an intermediate sanction of confinement to those situations when the probation violation was intentional or inexcusable, as the second Austin factor requires, would hinder the district court's ability to intervene when a probationer's excusable violations necessitate a rehabilitative response.
Indeed, confinement as an intermediate sanction may provide a necessary incentive or "wake-up call" to comply with a rehabilitative treatment or counseling regimen included in the probation conditions or to avoid antisocial activity and resume court-ordered conduct. The rehabilitative purpose of this confinement distinguishes it from the confinement resulting from an executed sentence addressed in the third Austin factor, which has as its primary purposes punishment and public safety by removing the defendant from society. See Minn. Sent. Guidelines cmt. III.C.04 (2006) (identifying punishment as a primary purpose of imprisonment). Admittedly, because of the nature of the probation violations and the timing of the hearingfour days after probation had expiredthe intermediate sanctions at issue here appear more akin to deterrence through punitive accountability than rehabilitation. But we do not read Austin to pertain to confinement other than that triggered by probation revocation and execution of the sentence.[4]Cf. State v. B.Y., 659 N.W.2d 763, 768-69 (Minn.2003) (revocation of extended-jurisdiction-juvenile probation and execution of adult sentence require application of Austin factors). Moreover, because intermediate sanctions are intended to effectuate the policies favoring probation, namely, rehabilitation, it would be illogical to require a district court to find that the need for confinement outweighs the policies favoring probation when imposing confinement in jail or home confinement with electronic monitoring as an intermediate sanction.
Intermediate sanctions, including confinement, are an alternative to an unwarranted *273 probation revocation. Modtland, 695 N.W.2d at 607-08 n. 3. Because the district court did not revoke Cottew's probation, the district court did not err by imposing intermediate sanctions without making findings regarding the Austin factors.
II.
We next consider whether the district court imposed the intermediate sanctions in a manner authorized by Minn.Stat. § 609.135 (2004) and Minn. R.Crim. P. 27.04. When a defendant is alleged to have violated conditions of probation imposed during a stay of execution of sentence, but the term of the stay has expired, a probation officer may seek initiation of probation-revocation proceedings within six months after expiration of the stay. Minn.Stat. § 609.14, subd. 1(b) (2004). Under these circumstances, the district court is authorized to "conduct a revocation hearing and take any action authorized under [Minn. R.Crim. P.] 27.04 at any time during or after the six-month period." Id. Here, the intermediate sanctions were imposed at a probation-revocation hearing held four days after the term of Cottew's probation expired. We, therefore, consider whether the district court's action was authorized under Minn. R.Crim. P. 27.04.
Rule 27.04 allows the district court to take one of two actions as a consequence of the defendant's probation violation when execution of the defendant's sentence has been stayed: (1) order execution of the sentence, or (2) continue the stay of execution and place the defendant on probation in accordance with Minn.Stat. § 609.135. Minn. R.Crim. P. 27.04, subd. 3(3)(b). Because the district court did not execute Cottew's sentence, the latter option applies.
Our analysis of whether the district court imposed the intermediate sanctions in accordance with the governing statutes and rule is complicated by the apparent conflict that exists between relevant provisions of section 609.135 and rule 27.04. Section 609.135, subdivision 1(a)(1), permits the district court to stay the execution of a sentence and "order intermediate sanctions without placing the defendant on probation." (Emphasis added.)[5] But rule 27.04, subdivision 3(3)(b), instructs the district court to "place the probationer on probation in accordance with Minn.Stat. § 609.135." (Emphasis added.) When a rule promulgated by the Minnesota Supreme Court, such as a rule of criminal procedure, conflicts with a statute, "the statute shall thereafter be of no force and effect" unless the statute relates to a matter of substantive criminal law, the rights of the accused, or other specified matters that are not at issue here.[6] Minn.Stat. § 480.059, subd. 7 (2006).
Section 609.135, subdivision 1(a)(1), relates to procedures governing the stay of imposition or execution of sentence. Because this statutory provision is procedural, section 609.135, subdivision 1(a)(1), has no force or effect to the extent that it conflicts with the requirements of rule 27.04, subdivision 3(3)(b), for imposing intermediate sanctions. Minn.Stat. *274 § 480.059, subd. 7. Therefore, the district court was required to place Cottew on probation when it imposed the intermediate sanctions. Minn. R.Crim. P. 27.04, subd. 3(3)(b); see also Minn.Stat. § 609.135, subd. 1(a)(2) (permitting district court to impose probation with conditions, including intermediate sanctions).
The district court erroneously concluded that, because Cottew's two-year probation term had expired, it was required to simultaneously impose the intermediate sanctions and discharge Cottew from probation. It is evident from the record that the district court intended to impose intermediate sanctions after the expiration of the probation term. To do so, it was required to place Cottew on probation and impose the intermediate sanctions of confinement as conditions of her probation. Minn. R.Crim. P. 27.04, subd. 3(3)(b); Minn.Stat. § 609.135, subd. 1(a)(2). Accordingly, to effectuate the district court's intent, we modify the district court's order to place Cottew on probation for the duration of the intermediate sanctions ordered by the district court.
DECISION
Because the findings mandated by State v. Austin, 295 N.W.2d 246, 250 (Minn. 1980), reaffirmed in State v. Modtland, 695 N.W.2d 602, 606 (Minn.2005), pertain to confinement resulting from an executed sentence following probation revocation, the district court did not err when it imposed intermediate sanctions of confinement without making Austin findings. But an intermediate sanction imposed after the original probation term has expired must be accompanied by an extension of probation. We, therefore, modify the district court's order and place Cottew on probation for the duration of the intermediate sanctions ordered by the district court.
Affirmed as modified.
NOTES
[1] Respondent State of Minnesota did not file a brief. We, therefore, decide this appeal on its merits, as required by Minn. R. Civ.App. P. 142.03.
[2] Cottew does not dispute and the record indicates that the district court designated the specific probation conditions that Cottew violated.
[3] The statutory definition of "intermediate sanction" includes, but is not limited to, "incarceration in a local jail or workhouse, home detention, electronic monitoring, [and] intensive probation." Minn.Stat. § 609.135, subd. 1(b) (2004).
[4] We observe, however, that the decision to impose any sanction, intermediate or otherwise, must be the product of the district court's judgment and sound discretion and not its will. See Burns v. United States, 287 U.S. 216, 222-23, 53 S. Ct. 154, 156, 77 L. Ed. 266 (1932) (observing that proper exercise of judicial discretion requires "conscientious judgment, not arbitrary action"); State v. Donnay, 600 N.W.2d 471, 473-74 (Minn.App. 1999) (stating that downward dispositional departure placing defendant on probation is within district court's sound discretion when defendant is amenable to probation or offense-related mitigating circumstances are present), review denied (Minn. Nov. 17, 1999). And to the extent that any sanction is challenged on this ground, the record will be reviewed to ascertain whether the district court abused its discretion.
[5] Section 609.135, subdivision 1(a)(2), provides the district court the alternative of placing "the defendant on probation with or without supervision and on the terms the [district] court prescribes, including intermediate sanctions when practicable."
[6] The other enumerated matters include: the prevention of crime, training, investigation, apprehension, and reports; privacy of communications; extradition, detainers, and arrests; judgment and sentence; special rules, evidence, privileges, and witnesses; the unanimity of verdicts; or writs of habeas corpus. Minn.Stat. § 480.059, subd. 7 (2006). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918693/ | 218 A.2d 394 (1966)
In re Philip R. NEWTON.
No. 1950.
Supreme Court of Vermont. Washington.
February 25, 1966.
*395 Hanford Davis, Brandon, for petitioner.
Louis P. Peck, Deputy Atty. Gen., for the State.
Before HOLDEN, C. J., and SHANGRAW, BARNEY, SMITH and KEYSER, JJ.
KEYSER, Justice.
This is a petition for habeas corpus in which the petitioner claims he is unlawfully confined in the House of Correction because the court denied him permission before imposing sentence to withdraw his plea of guilty and enter a plea of not guilty.
The deputy attorney general filed an answer to the petition on behalf of the warden. However, he conceded in open court on the return day that the material facts are substantially as represented in the petition. He also stated that our appointment of a commissioner to take evidence and make findings of fact was not necessary. Thus, as presented to us, there is no factual dispute and we must accept as true the facts stated in the petition.
The petitioner was brought into Addison County Court on July 9, 1964 charged with the crime of breaking and entering. Petitioner pleaded not guilty and was released on bail of $5000.00. He employed as his counsel at his own expense attorney Hanford G. Davis, Esquire.
Shortly after his arrest on July 9, 1964, petitioner was brought into Addison Municipal Court by the state's attorney on a *396 different charge. After this he was confined in the Veterans Hospitals in White River Junction, Vermont, and Togus, Maine, until December 1964.
In February, 1965, the presiding judge of Addison County Court conferred with the state's attorney and attorney Davis regarding the delay in trial of the case against the petitioner. The court indicated an insistence for an immediate disposition of the case. The state's attorney at that time expressed an intention to nol-pros the case and assented to the suggestion of petitioner's attorney that if such an entry was to be made that it be made then and there.
Following this conference attorney Davis advised petitioner that the charges had been dropped. This appeared later not to be true from a newspaper report of cases for trial at the next term of court. Upon inquiry to the state's attorney concerning this, attorney Davis was informed a nolle prosequi of the case in municipal court had been made but not the one in county court.
On July 16, 1965, petitioner was in court again. At that time another conference was held with the court by attorney Davis and the state's attorney, who succeeded the previous prosecutor in office. At that time petitioner's attorney suggested to the court that in view of all of the circumstances surrounding the case and since petitioner had been led to believe the case had been dropped, that if petitioner changed his plea from not guilty to guilty the sentence be suspended and petitioner placed on probation with the special condition that he support his family then a charge on the Town of Middlebury.
The state's attorney advised the court that on the facts stated he would not object to this action by the court. The presiding judge discussed the matter of probation with the assistant judges and they advised him they also would not object to this disposition of the case.
Immediately after this conference with the court attorney Davis told petitioner that if he changed his plea the sentence would be suspended and he would be placed on probation. He was also told that for this reason sentence might be for a longer term and warned petitioner that it would be absolutely necessary for him to find work and support his family. Attorney Davis, upon inquiry by his client, gave him absolute assurance that the possibility did not exist of his failing to receive a suspended sentence and probation.
At the conclusion of these conferences on July 9, the petitioner asked for and was granted permission to withdraw his plea of not guilty and make a plea of guilty.
Sentence was deferred pending a presentence investigation and report by the probation officer. The transcript shows the following colloquy between the court and the petitioner took place after the change of plea.
"The Court: * * * Mr. Newton, assuming when the time comes the court gives consideration to placing you on probation do you feel you can behave yourself and comply with the terms of probation?
Mr. Newton: Yes.
The Court: They tell me you have a wife and seven children. Do you think that you can keep yourself gainfully employed and support your family if the Court sees fit to place you on probation?
Mr. Newton: Yes, sir.
The Court: Do you have a job now?
Mr. Newton: I am working for my brother part-time.
The Court: You think you could keep out of trouble if the Court were to give you another chance?
*397 Mr. Newton: Yes, sir.
The Court: Of course you would have some incentive because if you got into trouble after being probated the probabilities are you wouldn't find it ncessary to look for a job for awhile."
The petitioner with his attorney was in court again on August 23, 1965, for sentence. Previous to imposition of sentence the court called attorney Davis and the state's attorney into the chambers for a conference. After this conference petitioner's attorney advised petitioner that because of his previous record the court could not in good conscience suspend the sentence and place him on probation.
Being thus informed the petitioner advised his attorney that he wanted to withdraw his plea of guilty and have a trial. Attorney Davis in open court moved that the petitioner be granted leave to withdraw his plea of guilty and re-enter a plea of not guilty so that he might have the opportunity to a jury trial. The transcript discloses that in stating the basis of petitioner's motion, attorney Davis explained to the court that he had not talked to the petitioner as to the facts relating to the complaint against him.
The court denied petitioner's request to change his plea, imposed a sentence of two to four years in the House of Correction and mittimus was issued.
We have recited the factual background at some length as they depict the unusual and exceptional circumstances involved in the case. And particularly the recital is all the more important and pertinent in light of the current enunciated constitutional doctrine of an accused's rights under the due process and equal protection clauses of the Constitution.
The petitionee by a motion to dismiss challenges the writ on the ground that habeas corpus is not available to the petitioner as a substitute for an appeal or writ of error.
"The normal and customary method of correcting errors is by appeal. The general rule is that the writ of habeas corpus will not be allowed to do service for an appeal. It is well settled that a writ of habeas corpus cannot be given the effect of a writ for the correction of errors and irregularities. In re Rickert, 124 Vt. 232, 235, 203 A.2d 602, and cases there cited.
In the Rickert case, supra, the petitioner, although having an appeal pending in this court, claimed in his petition that exceptional circumstances existed which entitled him to the writ. We denied the writ holding that the petitioner's remedy by appeal was adequate.
Again, in the Rickert case we said at pp. 235-236, 203 A.2d at p. 605:
"As stated by Chief Justice Hughes in Bowen v. Johnston, 306 U.S. 19, 27, 59 S.Ct. 442, 446, 83 L.Ed. 455, the rule which requires resort to appellate procedure for the correction of error `is not one defining power but one which relates to the appropriate exercise of power.' The rule is, therefore, `not so inflexible that it may not yield to exceptional circumstances where the need for the remedy afforded by the writ of habeas corpus is apparent. See Sunal v. Large, 332 U.S. 174, 180, 67 S.Ct. 1588, 91 L.Ed. 1982."
The petition in the case at bar is not to correct ordinary trial errors or irregularities. It does seek correction of the claimed error of the court denying petitioner's motion. The factual background is critical on whether the writ shall be granted or denied. This is a situation where facts relied on are dehors the record in the criminal case. As a result such evidence would not have been for consideration and review on appeal.
The ruling of the court denying petitioner's motion was an exercise of discretion. State v. Page, 112 Vt. 326, 332, 24 A.2d 346. We are concerned here with more than a mere breach of discretion, such *398 being a rather narrow area of the question raised because of the nature of the circumstances shown. The facts recited are sufficient to show that exceptional circumstances exist, and that the ruling was of constitutional dimension. This is not to mean in any sense that in every instance where a respondent's request to change his plea from guilty to not guilty is denied relief will be forthcoming by habeas corpus. This would be the exception, not the rule.
The situation her extends into the area of the petitioner's constitutional rights and justifies our consideration of the merits of the petition without further attention to petitionee's motion to dismiss. See Commonwealth ex rel. Wilson v. Banmiller, 393 Pa. 530, 143 A.2d 657, 658, 659; Fitzgibbons v. Hancock, 97 N.H. 162, 82 A.2d 769.
The petitionee cites In re Garceau, 125 Vt. 185, 187, 212 A.2d 633 as authority that habeas corpus is not the remedy. However, that case was not similar factually in any respect with this case. The Garceau case did not rest on the jury question or have constitutional overtones as here. Garceau made neither a timely nor an otherwise appropriate motion to strike his plea before or after sentence. Request for a jury trial was never asserted. Habeas corpus was not available to gain release from a commitment on a plea of guilty which was never previously challenged nor sought to have been withdrawn.
The remaining question is whether the trial court should have granted petitioner's request to change his plea to not guilty and for a jury trial.
Each case of necessity must depend upon its own facts and circumstances, and no hard and fast rule can be laid down that will fit every case. When an application is made to change the plea all doubts should be resolved in favor of a trial on the merits. State v. McAllister, 96 Mont. 348, 30 P.2d 821.
The court said in Fitzgibbons v. Hancock, supra, 82 A.2d at pp. 770-771: "Admittedly due process as therein required (Fourteenth Amendment) cannot be defined with precision, Bute v. [People of State of] Illinois, 333 U.S. 640, 648-649, 68 S.Ct. 763, 92 L.Ed. 986, nor are other decisions of much help since `each case depends on its own facts.' Uveges v. [Commonwealth of] Pennsylvania, 335 U.S. 437, 441, 69 S.Ct. 184, 186, 93 L.Ed. 127."
The petitioner first pleaded not guilty to the charge against him in county court. Following this the various events recited supra took place as a result of which attorney Davis felt convinced that his client would be placed on probation. The statements made to petitioner by his attorney and the action in court likewise convinced the petitioner that this would be the outcome if he changed his not guilty plea to that of guilty.
Whatever final action the court would take was indefinite or uncertain. However, in the mind of the petitioner, rightly or wrongly, but reasonably and in good faith, there was no doubt as to the outcome of the case. It is apparent petitioner changed his plea in full reliance on this understanding. This misapprehension appears to be the influencing factor which prompted the petitioner to change his plea from not guilty to guilty. The guilty plea was not made by advice of counsel for the reason that attorney Davis judged petitioner guilty of the crime charged as it appears counsel at that moment had not talked with the petitioner on this aspect of the case. Presented with this situation, the reason petitioner changed his plea to guilty might well have been to forestall a trial with a bad criminal record introduced against him if he testified and also to avoid a term of imprisonment.
"* * * [I]f the defendant was in fact induced to enter his plea of guilty because of the statements of his counsel relative to the sentence that would be pronounced, and would not have done so except for this assurance, then he ought to be permitted to change his plea. A case presenting these circumstances is that of *399 State v. Stephens, 71 Mo. 535." State v. McAllister, supra.
"Leave to withdraw a plea of guilty should be granted where it appears, among other reasons, that the plea was entered through misapprehension of the facts or the law, or where the ends of justice will best be served by permitting a plea of not guilty in its stead. (Citing cases)." People v. Moore, 342 Ill. 316, 174 N.E. 386, 387.
Where defendant pleaded guilty when led to believe that recommendations of state, fire marshal and assistant state's attorney with respect to probation would carry weight, though court explained to defendant effect in rendering plea, defendant should have been permitted to withdraw his plea. People v. Clavey, 355 Ill. 358, 189 N.E. 364.
The transcript of the court proceedings indicates two reasons for the court's denial of petitioner's motion to change his plea to not guilty.
The court remarked in denying the motion that if granted it would imply that it had made a "deal" as to sentence. It is abundantly clear that neither petitioner nor his counsel make any claim that a so-called "deal" was made with the court. Even if asserted, the record indisputedly refutes that such is the fact. We do not agree that granting the motion would have had any such overtone.
The court further said that before ruling it had reviewed petitioner's record which appears to be fraught with infractions of the law. This was apparently also a motivating reason for denial of the motion. No presumption of guilt attaches to the fact of the information. That accused may be found guilty upon a trial is not of itself sufficient reason to deny him the right upon a proper showing to withdraw his plea of guilty and enter a plea of not guilty, or to deny him a full opportunity to present through counsel such defense as he may have to the charge. People v. Jameson, 387 Ill. 367, 56 N.E.2d 790; People v. Moore, supra.
As appears from the record the court did not have before it for consideration in passing on the request to withdraw the plea of guilty any facts relating to the guilt or innocence of the petitioner. A factor to consider upon a motion to withdraw a guilty plea before sentence is the apparent guilt or innocence of the accused. State v. Tyson, 43 N.J. 411, 204 A.2d 864, 867. Petitioner's attorney did not present any information in this regard as he had no knowledge of the legal or factual issues involved.
In Commonwealth v. Scoleri, 415 Pa. 218, 202 A.2d 521 the court held at page 536: "The withdrawal of a plea of guilty is properly allowed * * * or (g) where because of very unusual circumstances, the Court believes that Justice will best be served by submitting the case to a jury."
In the interest of innocence, liberty and justice, every precaution must be taken to insure to the accused the fullest opportunity, advisedly, to present the merits of his defense. The very unusual facts in this case are persuasive that the petitioner's fundamental rights were not protected. The apparent reasons for the denial of the motion are not a sufficient basis for the deprivation of petitioner's constitutional rights. Considering the exceptional circumstances of the case, the motion to withdraw the plea of guilty should have been allowed.
In 1927 prior to the adoption of the Federal Rules of Criminal Procedure, the United States Supreme Court said in Kercheval v. United States, 274 U.S. 220, 224, 47 S.Ct. 582, 583, 71 L.Ed. 1009, "The court in exercise of its discretion will permit one accused to substitute a plea of not guilty and have a trial if for any reason the granting of the privilege seems fair and just."
The Federal Rules express a general policy approach affecting the right of an accused to withdraw his plea of guilty before sentence. The enactment by construction *400 in this area demonstrates a strong policy by the Federal courts in protecting constitutional rights. This is evident by two recent Circuit Court cases.
In Kadwell v. United States (9th Cir.), 315 F.2d 667 the court said at p. 670: "Accordingly, Rule 32(d) imposes no limitation upon the withdrawal of a guilty plea before sentence is imposed, and such leave `should be freely allowed.'" See also Pinedo v. United States (9th Cir.) 347 F.2d 142, 148 (1965).
And in United States v. Roland (4th Cir.) 318 F.2d 406, 409 (1963) the court held: "Under Rule 32 of the Federal Rules of Criminal Procedure, a motion to withdraw a plea of guilty may ordinarily be made only before sentence is imposed or while imposition of sentence is suspended. Such motions before sentence should be allowed with great liberality, * * *."
Writ of habeas corpus will issue to provide petitioner with the right to a jury trial consistent with the Vermont Constitution.
The petitioner is remanded to the custody of the sheriff of Addison County, bail to be fixed by Addison County Court and trial of said cause be had on a plea of not guilty. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918705/ | 90 N.J. Super. 530 (1966)
218 A.2d 422
HARRY ZABOTINSKY, PLAINTIFF,
v.
CEIL CONKLIN, DEFENDANT.
IN THE MATTER OF THE PROBATE OF THE ALLEGED WILL OF ANN SHORTELL.
Superior Court of New Jersey, Chancery Division.
Decided March 18, 1966.
*532 Mr. Martin Klughaupt, attorney for plaintiff.
Mr. Joseph J. Cappa and Mr. Carmine Vigorito, attorneys for defendant.
MATTHEWS, J.S.C.
This action was instituted by plaintiff Harry Zabotinsky seeking specific performance of a written contract under which he and decedent Ann Shortell agreed to execute reciprocal, nonrevocable wills. The specific performance action was consolidated with an action pending in the Passaic County Court, Probate Division, which sought to probate a paper writing purported to be the last will of Ann Shortell.
The testimony adduced at trial raises little dispute as to the facts existing in this matter. For a period in excess of 20 years prior to the date of her death, plaintiff and decedent resided together as husband and wife, although plaintiff had a living wife from whom he was not divorced. Plaintiff's wife and he had separated voluntarily more than 20 years ago, and plaintiff states that he has not seen her since. During the month of August 1954 plaintiff purchased certain real property, consisting of a house and lot in the City of Paterson, Passaic County, and placed title thereof in decedent's name. Thereafter, during the month of April 1960, plaintiff contracted to purchase an additional parcel of property, also consisting of a house and lot, in the same municipality. On the occasion of this purchase he and decedent conferred with an *533 attorney-at-law of this State and, as a result of the conference, the attorney was directed, at the request of plaintiff and decedent, to arrange to have title to the premises then to be purchased taken in decedent's name, and further, to prepare reciprocal wills for plaintiff and decedent under which each would inherit the estate of the other without the possibility of the families of either interfering with the testamentary scheme. Pursuant to these instructions, counsel prepared substantially identical wills for plaintiff and decedent under which each devised and bequeathed all of his or her property to the survivor of the two. In addition, he prepared a written agreement of even date with the wills, whereby plaintiff and decedent each agreed to execute simultaneously therewith a will which would not be changed or altered during the lifetime of the other without written consent. The wills and the contract were executed, and thereupon title to the second premises was taken in the name of the decedent.
On December 13, 1964 decedent was at the home of her sister, defendant Ceil Conklin, together with various other members of her family. Decedent was a widow and childless. During the course of the early evening decedent suddenly asked her sister for a piece of paper and a pen, declaring that she desired to write her will. There was only an envelope available. Taking the envelope, she wrote out a simple will on its face, and requested her niece and brother, who were present at the time, to witness the same. They did. This document is the paper that was offered for probate in the County Court action.
Approximately three hours after the execution of the writing just described, decedent was taken to Beth Israel Hospital in Passaic. She remained in the hospital until January 4, 1965, on which date she died, the cause of death stated on the death certificate being carcinoma of the bladder.
At her death decedent was possessed of some items of personal property and the two above-mentioned parcels of real property, known as 451 Eleventh Avenue and 447-449 Eleventh Avenue, Paterson.
*534 Initially, plaintiff seeks to enjoin the probate of the paper writing of December 13, 1964, which is alleged to be the last will of Ann Shortell. In the alternative he demands, if the writing is admitted to probate, that a trust be impressed for his benefit upon the estate of the decedent, both real and personal, in enforcement of the afore-mentioned agreement.
The testimony of the witnesses to the writing, the date of which has been fixed as December 13, 1964, satisfies me that the formalities of our Wills Act were observed at the time of its execution and, accordingly, that the writing should be admitted to probate as the last will of Ann Shortell. The fact that plaintiff seeks to enforce an agreement providing for reciprocal wills entered into by decedent and him does not bar the probate of this document; nor is probate to be denied if plaintiff's contention is sustained. See Minogue v. Lipman, 28 N.J. Super. 330 (App. Div. 1953); Tooker v. Vreeland, 92 N.J. Eq. 340, 342 (Ch. 1921), affirmed sub nom. Tooker v. Maple, 93 N.J. Eq. 224 (E. & A. 1921).
In opposing the claim for specific performance defendant argues that the contract sought to be enforced is unenforceable because of lack of consideration, and further, that considering the relationship which existed between plaintiff and decedent during her lifetime, enforcement should be disallowed as contrary to public policy.
Dealing first with the contention of lack of consideration, it is apparent that the authorities relied upon by defendant are not applicable to the factual situation before this court. There is no dispute but that a contract under which the parties thereto obligated each other to make reciprocal wills must be supported by consideration. However, the cases such as White v. Risdon, 140 N.J. Eq. 613 (Ch. 1947); Young v. Young, 45 N.J. Eq. 27 (Ch. 1889), and Duvale v. Duvale, 54 N.J. Eq. 581 (Ch. 1896), and other cases referred to, do not involve factual situations wherein the parties agreed to execute mutually reciprocal wills which were irrevocable during a lifetime of the other without consent.
*535 The controlling law in such circumstances is found in the oft-celebrated decision of Vice-Chancellor Backes in Tooker v. Vreeland, supra. There, a husband and wife entered into an oral agreement under which each agreed to dispose of their combined estates in the manner which they mutually agreed upon and which was set forth in mutual wills. In enforcing the agreement which had been violated by the wife after the death of her husband, the vice-chancellor observed:
"The law is well settled, and the proposition is not questioned, that if Mr. and Mrs. Tooker made a compact to dispose of their combined estates, the terms of which find expression in the mutual wills, the contract will be enforced in equity according to its established practice. * * *
That such a contract be enforceable it must be, like all other contracts specifically enforceable in equity, founded upon a valid consideration, certain and defined, equal and fair, and sufficiently proven * * *." (92 N.J. Eq., at p. 342)
After reviewing the testimony adduced before him and which, in his judgment, satisfied him of the existence of the agreement contended for, the vice-chancellor then stated:
"From this testimony, the truth of which is not challenged, it seems to me to be clearly and satisfactorily established that the wills grew out of, not simply the mutual desire of an aged and affectionate couple to gratify the other's wishes, but a solemn promise, an agreement a contract to be performed by the survivor. The consideration of the contract we readily find in the inducement held out by the one to the other to mutually testate, in the reciprocal gifts of the life estates, and the principal, if necessary, and the execution of the contract on the part of Mr. Tooker, by his unrevoked will at the time of his death. * * *
The disparity in the amounts of the estates involved does not militate against the conclusion I have come to that the mutual wills were the outcome of a contract. Equality of consideration is not essential to a binding obligation." (Ibid., at p. 345; emphasis added)
In the matter sub judice it is found that each of the parties to the agreement of April 18, 1960 covenanted to execute specifically identifiable wills which were in fact executed, and under which each agreed to leave his or her entire estate to the other; furthermore, each agreed that he or she would *536 not revoke that specific will without the consent of the other while the other party lived. The proof at trial established that plaintiff never revoked the will he executed pursuant to the agreement, and, in fact, that will exists to this present date. He has therefore fulfilled his part of the bargain. Without question, each party received a benefit under the agreement in the covenant of the other to will all of his or her property to the survivor. Each suffered the detriment of foregoing the right which each unquestionably had under the law, to revoke his or her will at any time. Thus, consideration flowed to each party in both directions under the agreement. This, in my judgment, is sufficient to support the enforcement of the agreement in question. Beyond this consideration however, the facts disclose without question, that plaintiff paid for the properties in question at the time of the purchase of each, and also maintained them, paying mortgages, taxes, water rents, insurance and repairs exclusively, and that decedent occupied one of them, rent-free for many years.
Some confusion seems to exist in this area of the law because many of our older cases have, on occasion, indiscriminately referred to cases involving contracts to make a will, involving the will of only one party thereto, with those situations where reciprocal wills are involved. An example of this misconception is found in the argument of counsel in this action. In those situations involving but a single will, the observations of Justice Dixon in Eggers v. Anderson, 63 N.J. Eq. 264 (E. & A. 1901) are appropos:
"From this mutability of wills it follows that if the whole scope of any arrangement is fulfilled by the mere making of a will, then nothing legally binding upon him who signs the instrument is contemplated, the obligatory force of a contract is not intended, and he remains at liberty to change his mind. The claims that a legal obligation is assumed must be supported by something beyond the consent to make a will." (at p. 267)
A discussion of this distinction may be found in 5 New Jersey Practice (Clapp, Wills and Administration), § 21, p. 72 et seq.
*537 Defendant also argues that I must consider the physical circumstances of the parties to this agreement in determining its validity. It is pointed out that unlawful cohabitation is an illegal consideration which cannot uphold the contract here at issue. The contract, she contends, is permeated with illegality and objectionable as contrary to public morals. In support of this position defendant cites such authorities as Richards v. Richards, 141 N.J. Eq. 579 (Ch. 1948); Drennan v. Douglas, 102 Ill. 341, 40 Am. Rep. 595 (Sup. Ct. 1882), and Yeiser v. Rogers, 19 N.J. 284 (1955). All of the cases cited by defendant have the same infirmity as those which she cited in support of her argument of failure of consideration when we consider the facts at hand. In Richards the court refused to enforce a promise to make a will for want of valid consideration, because the consideration there involved was an arrangement under which decedent was permitted to manage a hotel and tavern under his name, when in actuality the arrangement had been procured by plaintiff who, as the real party in interest, was ineligible to hold a liquor license because of conviction for crime. The arrangement was a bald attempt to contravene the law and, therefore, a clear violation of public policy.
In Drennan the consideration for the promise to make a will was extra-marital sexual intercourse.
In Yeiser v. Rogers, where plaintiffs sought to impress a trust on the estate of the decedent, relief was not allowed, since the court found that title had been placed in the name of decedent by plaintiff for the purpose of defrauding future creditors, primarily the Federal Government.
In each of these cases just referred to, the consideration supporting the alleged agreement to bequeath or devise was an illegal activity. The very compact sought to be enforced had its genesis in illegal conduct. Here, to the contrary, the relationship between the decedent and plaintiff, assuming it to be meretricious, was but incidental and actually irrelevant to the agreement in question. Perhaps it might be said that the agreement came about because the parties *538 lived together. It is not for a secular court to judge whether this relationship was sinful or not. What the law is interested in, under these circumstances, is whether a relationship illegal or contrary to public policy is so inextricably bound with the engagement under consideration so as to taint it fatally. While it might be said that the agreement here in question arose because of the actual relationships between decedent and plaintiff, I must regard that fact as coincidental and, in any event, irrelevant, since there is nothing to show that the agreement in question looks to that relationship to support its validity or existence.
Seeking to analogize plaintiff's status to that of Yeiser, in Yeiser v. Rogers, defendant also argues that plaintiff, in placing the properties which he purchased in the name of the decedent, sought to defraud his estranged wife of any rights therein. The absurdity of this argument is best answered by the observation that the wife, upon enforcement of the agreement, will have an inchoate dower interest in the properties in question, which is the most she could have obtained if plaintiff had taken the title in his name in the first place.
Plaintiff also seeks an order directing defendant to turn over to him two diamond rings which were the property of decedent, and which are in the possession of defendant. Defendant claims that the rings were given to her by her sister on December 13, 1964, shortly after the execution of the will and prior to decedent's entry into the hospital. There is nothing in the record to refute the testimony as to the gift. The testimony of the witness, who was a co-occupant of the semi-private hospital room with decedent, I find to be unconvincing. Plaintiff's demand for the return of the rings is, accordingly, denied.
I will sign a judgment admitting to probate as her last will the paper writing of Ann Shortell, the date of which has been established as December 13, 1964. Since there is no appointment of an executor thereunder, I name plaintiff as executor to serve on bond of $1,000. I have appointed plaintiff in this capacity, since the record discloses that he has paid all the *539 debts of decedent's estate, including medical and funeral bills. In addition, the judgment will provide that the assets of decedent's estate, both real and personal, after the payment of debts and taxes, are impressed with a trust in favor of plaintiff in specific enforcement of the contract entered into between decedent and him on April 18, 1960.
No costs to any party. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918709/ | 730 So.2d 1029 (1999)
STATE of Louisiana
v.
John L. MARTIN.
No. 97-KA-2904.
Court of Appeal of Louisiana, Fourth Circuit.
February 24, 1999.
*1030 Harry F. Connick, District Attorney, Suzanne S. Dickey, Assistant District Attorney, New Orleans, Louisiana, Counsel for the State.
Deborah K. Leith, Louisiana Appellate Project, Covington, Louisiana, Counsel for the Defendant.
Court composed of Judge ROBERT J. KLEES, Judge WILLIAM H. BYRNES III, and Judge CHARLES R. JONES.
BYRNES, Judge.
John L. Martin appeals his conviction for possession of cocaine with the intent to distribute for which he was sentenced to seven years at hard labor. We affirm.
STATEMENT OF THE CASE
Having been charged with possession of cocaine with the intent to distribute in violation of La. R.S. 40:967, Martin was released pursuant to La.C.Cr.P. art. 701. When he did not appear for arraignment, an alias capias was issued and Martin was arrested. He was arraigned on June 11, 1997, and a preliminary as well as suppression hearing was held. The trial court found probable cause and denied Martin's motion to suppress. After a jury trial on July 9, 1997, Martin was found guilty as charged. The trial court ordered a presentence investigation. On September 9, 1997, the trial court denied Martin's motion for new trial. Martin waived all delays and was sentenced to seven years at hard labor. The trial court denied Martin's motion for reconsideration of sentence, and Martin's appeal followed.
STATEMENT OF FACTS
On January 16, 1997, New Orleans Police Officer Joseph Lainez received a telephone call from a female who advised him of increased narcotics activity in the seven hundred block of South Gayoso. The female subject localized the activity to 714 South Gayoso, apartment number nine. On January 17, 1997, the officer set up surveillance of the apartment. He observed several people approach and enter the apartment but recorded only two. At approximately 8:15 a.m., a black male knocked on the apartment door. Martin opened the door and allowed the subject into the apartment. After a few seconds, the subject exited the apartment. *1031 About twenty-five minutes later, a black female knocked on the apartment door. The defendant Martin again opened the door and let the female enter. After a few seconds, the female exited the apartment. Prior to knocking on the door, the officer observed the female reach into her pants pocket for money.
The officer obtained a search warrant later that morning. Officer Lainez was assisted by Officers Powell, Burk and Nelson in the execution of the search warrant that took place at approximately 1:30 p.m. Upon entering the apartment, Officer Lainez observed that there were three adults (two men and one woman) as well as one child. The woman, later identified as Linda Vandraugh, was exiting the bathroom as the officers entered the apartment. Officer Lainez immediately went into the bathroom and discovered a crack pipe in the toilet. Martin was sitting on the bed, and another man, later identified as John Dantzler, was sitting on the sofa. When the officers pulled back the bedspread on the bed, they discovered thirty-nine individually wrapped rocks of cocaine. All three adults were arrested. Three hundred three dollars were found on Martin pursuant to a search after Martin's arrest. It was later determined that Martin resided at the apartment.
The parties stipulated at trial that Officer Joe Tafaro of the New Orleans Police Department Crime Lab would testified that he tested the substances found in Martin's apartment and the thirty-nine rocks tested positive for crack cocaine. The total net weight of the cocaine was 7.22 grams. The officer also would have testified that there was cocaine residue in the pipe.
Errors Patent
A review of the record for errors patent reveals none.
Assignment of Error No. 1
Martin contends that the trial court erred in denying his motion to suppress evidence and motion for new trial. Martin complains that the affidavit filed with the application for the search warrant did not set forth sufficient facts to establish probable cause.
A trial judge's decision to deny a motion to suppress will be afforded great weight and will not be set aside unless to do so is clearly mandated by a preponderance of the evidence. State v. Lee, 545 So.2d 1163 (La.App. 4 Cir.1989). In reviewing a denial of a motion to suppress, an appellate court is not limited to the evidence adduced at a suppression hearing, but may consider all pertinent evidence adduced at trial. State v. Green, 94-0887 (La.5/22/95), 655 So.2d 272; State v. Barra, 572 So.2d 1187 (La.App. 4 Cir.1990), writ denied, 575 So.2d 822 (La. 1991).
La.C.Cr.P. article 162 provides that a search warrant may be issued "only upon probable cause established to the satisfaction of the judge, by the affidavit of a credible person, reciting facts establishing the cause for the issuance of the warrant." The Louisiana Supreme Court has held that probable cause exists when the facts and circumstances within the affiant's knowledge, and those of which he has reasonably trustworthy information, are sufficient to support a reasonable belief that evidence or contraband may be found at the place to be searched. State v. Duncan, 420 So.2d 1105 (La.1982). The facts which form the basis for probable cause to issue a search warrant must be contained "within the four corners" of the affidavit. Id. A magistrate must be given enough information to make an independent judgment that probable cause exists for the issuance of the warrant. State v. Manso, 449 So.2d 480 (La.1984), cert. denied Manso v. Louisiana, 469 U.S. 835, 105 S.Ct. 129, 83 L.Ed.2d 70 (1984). The determination of probable cause involves probabilities of human behavior as understood by persons trained in law enforcement. State v. Hernandez, 513 So.2d 312 (La.App. 4 Cir.1987), writ denied, 516 So.2d 130 (La.1987).
In its review of a magistrate's finding of probable cause, the reviewing court must determine whether the "totality of circumstances" set forth in the affidavit is sufficient to allow the magistrate to make a practical, common-sense decision whether, given all the circumstances set forth in the affidavit before him, including the "veracity" and "basis of knowledge" of persons supplying *1032 hearsay information, there is a reasonable probability that contraband ... will be found in a particular place. And the duty of a reviewing court is simply to ensure that the magistrate had a "substantial basis for ... conclu[ding] that probable cause existed." Illinois v. Gates, 462 U.S. 213, 238, 103 S.Ct. 2317, 2332, 76 L.Ed.2d 527 (1983).
In the present case, Officer Lainez set forth the following circumstances in the affidavit filed with the application for search warrant:
FACTS AND CIRCUMSTANCES SURROUNDING THIS ORDER OF SEARCH ARE AS FOLLOWS:
ON THURSDAY, 1-16-97, FIRST DISTRICT NARCOTICS DETECTIVE JOSEPH LAINEZ, RECEIVED AN ANONYMOUS COMPLAINT AT THE FIRST DISTRICT STATION REGARDING NARCOTICS BEING DISTRIBUTED AT 714 S. GAYOSO STREET, APT. # 9. THE CALLER ALLEGED THAT A BLACK MALE, KNOWN AS "PLATT", ABOUT 50 YEARS OF AGE, WAS ENGAGED IN DRUG TRAFFICKING.
ON FRIDAY, 01/17/97, AT ABOUT 8:00 A.M., DETECTIVE LAINEZ CONDUCTED A SURVEILLANCE OF 714 S. GAYOSO STREET. DETECTIVE LAINEZ CONCEALED HIMSELF IN THE 700 BLOCK OF GAYOSO STREET WITH AN UNOBSTRUCTED VIEW OF 714 S. GAYOSO STREET.
ON FRIDAY, AT ABOUT 8:15 A.M., THE DETECTIVE OBSERVED A BLACK FEMALE, APPROXIMATELY 30 YEARS OLD, CLAD IN A BLACK SHIRT AND BLUE JEANS, ENTER THE FRONT DOOR OF 714 S. GAYOSO STREET (APT.-9). THAT BLACK FEMALE KNOCKED AT THE DOOR TO THE BUILDING AND WAS SHORTLY AFTER, ALLOWED ENTRY BY A BLACK MALE, WHO WAS APPROXIMATELY 50 YEARS OF AGE AND CLAD IN A BLUE LONG SLEEVE SHIRT. AFTER A SHORT PERIOD OF TIME, THE FEMALE EXITED THE APARTMENT AND HEADED EAST ON GAYOSO STREET TO TULANE AVENUE AND THEN UNKNOWN.
ON FRIDAY, 1/17/97, AT ABOUT 8:40 A.M. DETECTIVE LAINEZ OBSERVED A BLACK MALE, APPROXIMATELY 35 YEARS OF AGE, WHO WAS CLAD IN A MULTI-COLORED SHIRT AND BLUE JEANS, WALKED UP TO 714 S. GAYOSO STREET (APT.9) AND KNOCK AT THE DOOR. SHORTLY AFTER, A BLACK MALE, APPROXIMATELY 50 YEARS OF AGE ANSWERED AND ALLOWED THE VISITOR TO ENTER. THE VISITOR WAS ALLOWED ENTRY BY THE SAME BLACK MALE CLAD IN THE BLUE LONG SLEEVE SHIRT. A SHORT PERIOD OF TIME LATER, THE VISITOR EXITED THE APARTMENT AND HEADED WEST ON GAYOSO STREET TO PERDIDO STREET AND THEN OUT OF THE SIGHT [OF] THE DETECTIVE.
BASED ON THE ANONYMOUS COMPLAINT, ALONG WITH THE SURVEILLANCE CONDUCTED BY THE DETECTIVE, IT IS BELIEVED THAT ILLEGAL DRUG ACTIVITY IS BEING SECRETED FROM THE RESIDENCE OF 714 S. GAYOSO STREET, APARTMENT # 9.
At trial, Officer Lainez explained that the anonymous caller was a female who stated that she observed activity at the apartment on a regular basis, including days and nights. The officer also stated that during his surveillance he observed several people enter the apartment and leave a short time thereafter. He only mentioned two of the visitors to the apartment in his affidavit. At trial the officer related that he saw one of these visitors reaching for money out of her pants pocket before entering the apartment. However, the officer admitted on cross-examination that he did not see any drug transactions. The officer identified Martin at trial as the person who answered the door and granted entry to each visitor.
In State v. McDonald, 503 So.2d 535 (La. App. 4 Cir.1987), this Court held that vague allegations are not sufficient to establish probable cause for the issuance of a search warrant. In McDonald, this Court determined that the affidavit supplied by the police *1033 officers did not set forth sufficient facts to establish probable cause to issue a search warrant. The police officers stated in the affidavit that "an unidentified but reliable informant reported drug sales at a residence (without reporting his means of knowledge) and told police how the person gained entry (by a means not unique); and that several hours of surveillance showed heavy pedestrian traffic in and out of the house, including, during one hour, three persons who separately entered the residence by the reported method and stayed five minutes." McDonald, 503 So.2d at 536. In concluding that the issuing magistrate did not have a substantial basis for finding probable cause, this Court noted that: (1) the affidavit did not set forth the basis of the informant's knowledge; (2) there was no allegation that the informant gained information concerning narcotics transactions through his own personal knowledge; (3) the informant's allegations were not so detailed as to justify an inference of reliability; and (4) the informant's allegations were not corroborated by the officers' report of heavy pedestrian traffic (three people in one hour).
After the fact scrutiny by courts of the sufficiency of an affidavit should not take the form of a de novo review; a magistrate's determination of probable cause should be paid great deference by reviewing courts. Gates, supra, 103 S.Ct. at 2321. In McDonald, this court did not state whether it rendered its decision on the basis of a de novo review. This court did not state that it took into account that a magistrate's determination of probable cause should be paid great deference.
A reviewing court must take into account the "totality of the circumstances whole picture," giving deference to the inferences and deductions of a trained police officer "that might well elude an untrained person." United States v. Cortez, 449 U.S. 411, 418, 101 S.Ct. 690, 695, 66 L.Ed.2d 621 (1981); State v. Huntley, 97-0965 (La.3/13/98), 708 So.2d 1048, 1049. Citing Cortez, the Louisiana Supreme Court further noted that: "The court must also weigh the circumstances known to the police not in terms of library analysis by scholars, but as understood by those versed in the field of law enforcement." Huntley, supra, 708 So.2d at 1049. Deference should be given to the experience of the policemen who were present at the time of the incident; in reviewing the totality of circumstances, the officer's past experience, training and common sense may be considered in determining if his inferences from the facts at hand were reasonable. State v. Short, 96-1069 (La.App. 4 Cir. 5/7/97), 694 So.2d 549.
In the present case the tipster gave specifics about the drug activity. The caller provided a specific address and apartment number. The caller had seen a lot of activity both at day and night. The tipster described the person involved in drug activity as a black male, being the age of about fifty, who was known as "Plat." Officer Lainez's observations corroborated the caller's allegations. The person answering the door fit the description of a black male who was about the age of fifty. The officer saw several people entering and leaving the apartment in a suspicious manner after brief stays. He saw a female reaching for money. The officer stated that the subjects did not appear to be social visitors or "to be in an official capacity such as LP & L or a service person or something who had an official reason to be there." The officer testified that he previously had investigated over 200 drug transactions. From his past experience the officer believed the defendant was engaging in narcotic transactions. The officer's inferences from the facts at hand were reasonable. Reviewing the totality of the circumstances, the issuing magistrate had a substantial basis for finding probable cause to issue a warrant to search Martin's residence. The trial court properly denied Martin's motion to suppress evidence and motion for new trial. Further, the record contained sufficient evidence to support a conviction for possession of cocaine with the intent to distribute. In evaluating whether evidence is constitutionally sufficient to support a conviction, an appellate court must determine whether, viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the defendant guilty beyond a reasonable doubt. Jackson v. Virginia, 443 *1034 U.S. 307, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979). The reviewing court is to consider the record as a whole and not just the evidence most favorable to the prosecution; and, if rational triers of fact could disagree as to the interpretation of the evidence, the rational decision to convict should be upheld. State v. Mussall, 523 So.2d 1305 (La.1988). Additionally, the reviewing court is not called upon to decide whether it believes the witnesses or whether the conviction is contrary to the weight of the evidence. Id. The trier of fact's determination of credibility is not to be disturbed on appeal absent an abuse of discretion. State v. Cashen, 544 So.2d 1268 (La.App. 4 Cir.1989).
When circumstantial evidence forms the basis of the conviction, such evidence must consist of proof of collateral facts and circumstances from which the existence of the main fact may be inferred according to reason and common experience. State v. Shapiro, 431 So.2d 372 (La.1982). The elements must be proved such that every reasonable hypothesis of innocence is excluded. La. R.S. 15:438. This is not a separate test from Jackson v. Virginia, supra, but rather is an evidentiary guideline to facilitate appellate review of whether a rational juror could have found a defendant guilty beyond a reasonable doubt. State v. Wright, 445 So.2d 1198 (La.1984). All evidence, direct and circumstantial, must meet the Jackson reasonable doubt standard. State v. Jacobs, 504 So.2d 817 (La.1987).
In State v. Hearold, 603 So.2d 731, 735 (La.1992), the Louisiana Supreme Court provided factors which are useful in determining whether circumstantial evidence is sufficient to prove the intent to distribute a controlled dangerous substance:
These factors include (1) whether the defendant ever distributed or attempted to distribute the drug; (2) whether the drug was in a form usually associated with possession for distribution to others; (3) whether the amount of drug created an inference of an intent to distribute; (4) whether expert or other testimony established that the amount of drug found in the defendant's possession is inconsistent with personal use only; and (5) whether there was any paraphernalia, such as baggies or scales, evidencing an intent to distribute.
In State v. Cushenberry, 94-1206, p. 6 (La. App. 4 Cir. 1/31/95), 650 So.2d 783, 786, this court described the Hearold factors as "useful" but held that the evidence need not "fall squarely within the factors enunciated to be sufficient for the jury to find that the requisite intent to distribute."
In State v. King, 95-1648 (La.App. 3 Cir. 10/9/96), 683 So.2d 1228, the police proceeded to investigate, having received complaints of drug activity in the area. A team of officers parked two police units and walked into the area. The police observed a large group of individuals on the porch of a residence. A vehicle pulled up with its headlights out, and the officers suspected a drug transaction was taking place. When the police approached, the individuals ran away. An officer chased King into a nearby vacant lot where King discarded a plastic bag and then fell down. The police retrieved the plastic bag that contained 30 rocks and crumbs of cocaine.
The appellate court stated:
... King argues: 1) there was no testimony of actual or attempted distribution by the defendant; 2) the seized cocaine was all in a single plastic bag and not individually packaged for sale; 3) and 4) there was no expert testimony offered to show the amount of cocaine seized was or was not consistent with personal use; and 5) no other drug paraphernalia was found.
We note that the weight and volume of the cocaine is not in the record. The testimony and the documentary evidence sate that approximately thirty (30) "rocks and crumbs" were in the plastic bag discarded by the defendant. Obviously, the court does not have the fact finder's benefit of visual inspection. In these circumstances, we must defer to the jury's apparent decision that the amount of cocaine indicates an intent to distribute. This court has consistently held intent to distribute can be inferred form the amount of narcotics possessed. State v. Harmon, 594 So.2d 1054 (La.App. 3 Cir.), writ denied, 609 So.2d 222 (La.1992), writ denied, 623 So.2d 1326 (La.1993). It is well settled that the weight of the evidence is within *1035 the fact finder's discretion. We find no error in the jury's finding that the 30-rock quantity was enough to support the intent to distribute.
Id., 683 So.2d 1228.
In the present case expert testimony was unnecessary to establish that the substantial amount of cocaine found in Martin's possession was inconsistent with personal use. The officers found 39 individually wrapped pieces of cocaine, as well as a crack pipe in the apartment. Pursuant to a search after Martin's arrest, the police found $303 on Martin. It was later determined that Martin resided at the apartment. It was stipulated at trial that the pieces of cocaine tested positive for cocaine, and there was cocaine residue in the pipe. The state provided evidence of the substantial amount of cocaine found, other evidence of drug paraphernalia, as well as testimony of what appeared to Officer Lainez to be drug transactions in the manner that subjects arrived and left the apartment after brief periods of time. The officer testified that a female was reaching for money. The weight of the evidence is within the fact finder's discretion. We defer to the jury's determination that the amount of cocaine and other evidence indicate an intent to distribute. We find no error in the jury's finding that the evidence supported the conviction for possession with the intent to distribute cocaine.
Accordingly, the defendant's conviction and sentence are affirmed.
AFFIRMED.
JONES, J., DISSENTS WITH REASONS.
JONES, J., DISSENTING WITH REASONS.
The majority cites McDonald as legal authority for the proposition that vague allegations are not sufficient to establish probable cause for the issuance of a search warrant, and then, they proceed to ignore McDonald.
Clearly the record before us indicates that both the "tipster", who has absolutely no reliability evidenced in this record, nor Officer Lainez, ever testify that they saw narcotics at the residence in question, or that they stopped someone leaving this location who had bought drugs at this residence, prior to execution of the search warrant. The search warrant itself states only that "...it is believed that illegal drug activity is being secreted from the residence...", and this belief is not based upon any real facts.
Courts have an obligation to insure justice is done, and the majority herein very much denies this defendant justice. With the establishment of this standard for the issuance of a search warrant, no citizen in Louisiana is protected from unreasonable searches. For these reasons, I dissent. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918720/ | 730 So.2d 197 (1997)
Jason JONES
v.
KAPPA ALPHA ORDER, INC., et al.
2960663.
Court of Civil Appeals of Alabama.
December 5, 1997.
Rehearing Denied January 9, 1998.
*198 Rosemari L. Claibon and J. L. Chestnut, Jr., of Chestnut, Sanders, Sanders & Pettaway, P.C., Selma, for appellant.
J. Tutt Barrett of Dean & Barrett, Opelika, for appellee Kappa Alpha Order, Inc.
Randall Morgan and Doy Leale McCall III of Hill, Hill, Carter, Franco, Cole & Black, Montgomery for appellees Kappa Alpha Order-Nu Chapter, Scott Belcher, Emmette Barron, Parke Keith, Jr., John Parker, Jason Hard, and Brad Sauls.
James A. Rives and Joana S. Ellis of Ball, Ball, Matthews & Novak, Montgomery, for appellee Duncan Morris.
Robert G. Poole of Whittelsey & Whittelsey, P.C., Opelika, for appellee Emmette L. Barran III.
PER CURIAM.
Jason Jones appeals from a summary judgment entered in favor of the defendants Kappa Alpha Order, Inc. (the national organization); Kappa Alpha Order, Inc.Nu Chapter (local chapter/fraternity); Parke Keith, Jr., John Parker, Emmette Barran, Duncan Morris, Scott Belcher, Jason Hard, and Brad Sauls (individual KA members). The Supreme Court transferred this case to this court pursuant to § 12-2-7(6), Ala.Code 1975.
*199 The evidence, viewed in a light most favorable to Jones, suggests the following: On September 28, 1993, after being pursued and recruited by KA members, Jones became a pledge in the local KA fraternity at Auburn University. He was 18 years old at the time. The pledging process/initiation ceremony continued for an entire academic school year (September 1993 until June 1994). Jones testified that, before becoming a pledge, he had never been involved with a fraternity and had never heard of the term "hazing."
After Jones pledged, the KAs subjected him to numerous inappropriate hazing activities, which included the following: (1) the KAs made Jones dig a rather large ditch, which they filled with water, feces, urine, dinner leftovers, and vomit; (2) they forced Jones to get into the ditch on numerous occasions in the winter months and directed other pledges to dunk Jones in the ditch; (3) they forced Jones to eat "yerks" (a mixture of hot sauce, mayonnaise, butter, beans, etc.); (4) they told Jones that if anyone "puked" in the yerks, he would have to eat the yerks; (5) they subjected Jones to paddlings, which caused his buttocks to become swollen and to turn black and blue; (6) they forced Jones to get into a garbage can filled with urine, ice, and water; (7) they threw urine and feces on Jones; (8) they deprived Jones of sleep by forcing him to show up at the KA fraternity house at two o'clock in the morning; (9) on one occasion, at two o'clock in the morning, one of the individual KA members, who was intoxicated, began firing a pistol into the air; (10) they threw deer guts and blood on Jones; and (11) they pushed and kicked Jones down stairs during a ceremony referred to as the "gauntlet," causing him to suffer a broken right hand. We also note that another individual KA member initiated a fight with Jones, causing Jones to suffer a broken left hand. Jones was finally suspended from school as a result of failing grades.
On October 17, 1995, Jones filed a complaint against the national organization, the local chapter, and various individual KA members, alleging negligence and/or wantonness, in violation of § 16-1-23, Ala.Code 1975; negligent supervision; assault and battery; the tort of outrage; and conspiracy. Specifically, Jones alleged that he had suffered severe emotional distress, as well as physical injuries, as a result of the hazing activities. All the defendants moved for a summary judgment.
The trial court conducted a hearing on November 15, 1996, and entered a summary judgment in favor of the defendants on all claims, except the assault and battery claim. Regarding the assault and battery claim, the trial court determined that Jones had presented substantial evidence to indicate that Brad Sauls and Jason Hard, KA members, had committed an assault and battery against Jones. Regarding all other claims, the trial court determined that no genuine issue of material fact existed, based on its conclusion that Jones's "association with the fraternity was purely voluntary" and that he "could have stopped such activity at any time by merely resigning from the organization." The trial court made the summary judgment final pursuant to Rule 54(b), Ala. R. Civ. P. Jones filed a post-judgment motion, which the trial court denied.
Jones appeals from the summary judgment, but only as it relates to his claims alleging negligence.
On review of this summary judgment, we must decide whether a genuine issue of material fact exists. If no genuine issue of material fact exists, then we must determine whether the defendants were entitled to a judgment as a matter of law. We must view the record in a light most favorable to the plaintiff, as the nonmoving party, and we must resolve all reasonable doubts against the defendants, as the parties moving for the summary judgment. McClendon v. Mountain Top Indoor Flea Market, Inc., 601 So.2d 957 (Ala.1992).
At the outset, we note that neither this court nor the Alabama Supreme Court has previously recognized a cause of action for hazing. Jones, however, contends that his complaint states a negligence cause of action against the individual KA members, based on a violation of § 16-1-23, Ala.Code 1975. The individual KA members, on the other hand, contend that § 16-1-23 is a criminal statute and that it cannot be construed as creating a civil cause of action for negligence.
*200 Section 16-1-23 provides that the practice of hazing is a Class C misdemeanor. It defines "hazing" as "[a]ny willful action taken or situation created ... which recklessly or intentionally endangers the mental or physical health of any student." The section further provides that "[n]o person shall knowingly permit, encourage, aid, or assist any person in committing the offense of hazing, or willfully acquiesce in the commission of such offense."
It is well settled that the violation of a statute or an ordinance may constitute negligence. Keeton v. Fayette County, 558 So.2d 884 (Ala.1989).[1] In order to state a cause of action for statutory negligence, Jones must show the following: (1) that the statute was enacted to protect a class of persons to which Jones belonged; (2) that Jones's injury was the kind of injury contemplated by the statute; (3) that the individual KA members violated the statute; and (4) that the individual KA members' violation of the statute proximately caused Jones's injury. Fox v. Bartholf, 374 So.2d 294 (Ala.1979).
It is clear that Jones was in the class of persons the statute was designed to protect, i.e., college students. Furthermore, Jones's complaint alleges sufficient facts to establish that he suffered the kind of injuries the statute was designed to prevent, i.e., injuries by which the mental or physical health of any student is intentionally endangered. It is undisputed that the national organization had a strict policy against hazing and that the individual KA members apparently violated that policy. Thus, the only issue left for review is proximate causation.
The general rule of proximate causation is that "[l]iability will be imposed only when negligence is the proximate cause of injury; injury must be a natural and probable consequence of the negligent act or omission which an ordinarily prudent person ought reasonably to foresee would result in injury." Vines v. Plantation Motor Lodge, 336 So.2d 1338, 1339 (Ala.1976). Consequently, we conclude that Jones presented substantial evidence of proximate causation to warrant submitting his case to a jury.
Based on the foregoing, we conclude that Jones has stated a cause of action based on the doctrine of negligence per se, based upon a violation of § 16-1-23, Ala.Code 1975.
The trial court entered the summary judgment in favor of the individual KA members, based on its conclusion that Jones had voluntarily chosen to remain a pledge and that he could have resigned from the fraternity at any time. Jones, however, contends that he did not feel free to end his participation in the fraternity.
After carefully reviewing the facts of this case, we conclude that in today's society numerous college students are confronted with the great pressures associated with fraternity life and that compliance with the initiation requirements places the students in a position of functioning in what may be construed as a coercive environment. Thus, we believe that fair-minded persons in the exercise of impartial judgment could reasonably infer that Jones's decision to remain a pledge, under the circumstances, was, in fact, not voluntary.
We now address the issue whether Jones has stated a cause of action based upon ordinary, or common law, negligence. In Buchanan v. Merger Enterprises, Inc., 463 So.2d 121, 125-26 (Ala.1984), our supreme court stated:
"The threshold issue in determining whether a common law negligence action will lie is to determine whether the defendant owed a duty to a class of persons which included the [plaintiff]. The duty issue is essentially a public policy question, i.e., whether the law should impose a requirement on the defendant that it do or *201 refrain from doing some act for the safety and well-being of the plaintiff. See Prosser, Handbook of The Law of Torts § 206 (4th ed.1971)....
". . . .
"The ultimate test of the existence of a duty to use due care is found in the foreseeability that harm may result if care is not exercised."
Applying the Buchanan rule, this court must determine whether a legal duty exists under the facts and circumstances of Jones's case. In doing so, we again turn to § 16-1-23, Ala.Code 1975, the criminal statute that prohibits hazing. It seems both appropriate and logical to determine why our legislature enacted this statute.
The statute expressly prohibits "[a]ny willful action ... which recklessly or intentionally endangers the mental or physical health of any student." (Emphasis added.) The statute further states that "[n]o person shall knowingly permit, encourage, aid, or assist any person in committing the offense of hazing." (Emphasis added.) The language of this statute clearly tends to suggest that a social policy does exist for the purpose of protecting our society's youth from the imminent dangers associated with hazing. The ruthless and deplorable tactics associated with hazing are unwarranted and should not be condoned by our society.
The ultimate test that must be applied, however, is whether the injuries that Jones suffered were foreseeable injuries that could have been prevented in the exercise of due care. After reviewing the facts of this case, we conclude that it was clearly foreseeable that Jones would suffer the kind of injuries he suffered when the KA members subjected him to such humiliating mental and physical abuse. We also cannot turn our heads to the fact that the actions of the individual KA members could have caused more drastic, life-threatening, injuries.
Thus, while it is true that § 16-1-23 does not expressly create a civil cause of action, it is, nevertheless, a maxim of statutory construction that penal statutes such as § 16-1-23 are to be strictly construed. The terms "wilfully" and "knowingly" are said to denote an intention to produce the result that actually comes to pass and are said to be mutually exclusive with the term "negligence." Vick v. Tisdale, 56 Ala.App. 565, 324 So.2d 279 (1975); see also 23A Words and Phrases "Knowingly" (1967) and 45 Words and Phrases "Wilfully" (1970).
Based on the foregoing, we conclude that the individual KA members had a duty to refrain from violating the known and strict policy established by the national organization. Thus, based on § 16-1-23, which prohibits hazing, as well as the fraternity's strict policy against hazing, we conclude that the individual KA members had a legal duty to conduct a pledging process/initiation ceremony free from hazing tactics, and that civil liability may properly arise from a breach of that duty.
Jones next argues that the national organization and the local chapter should be held responsible for the actions of the individual KA members, based on a holding both of them had a duty to protect Jones from foreseeable harm.
First, we address the summary judgment entered in favor of the local chapter. In response to the motions for a summary judgment, Jones submitted deposition excerpts and his affidavit. They show that at least three of the individual KA members were officers of the local chapter. Belcher served as president of the local chapter for much of Jones's pledgeship period. According to Jones's testimony, Belcher had knowledge of the hazing incidents alleged in his complaint. In addition, Hard and Barran both served as vice presidents/pledge trainers, and, according to Jones's testimony, they arranged and witnessed many hazing events. For instance, Jones testified that Hard hit and pushed him and knocked him into walls, ordered him into the ditch on more than one occasion, and arranged the 2:00 a.m. meetings. Furthermore, many of the hazing events took place at or near the KA fraternity house.
The substantial evidence presented by Jones in opposition to the motions for summary judgment clearly raises a genuine issue of material fact regarding whether the local *202 KA chapter encouraged, authorized, or ratified the hazing activities alleged by Jones. Thus, as to the local KA chapter, the summary judgment must be reversed. See Rogers v. Flowers Specialty Foods, 621 So.2d 1339 (Ala.Civ.App.1993).
Regarding the national organization, it appears that Jones failed to present substantial evidence that it encouraged, authorized, or ratified the alleged hazing. It is well settled that "in the absence of authorization or ratification by its members, an association is not liable for intentional torts by a member or members." Rothman v. Gamma Alpha Chapter of Pi Kappa Alpha Fraternity, 599 So.2d 9, 10 (Ala.1992). Based on the foregoing, we conclude that the summary judgment was proper as to the national organization.
Accordingly, we affirm the summary judgment as it relates to the national organization; we reverse the judgment as it relates to the individual KA members and the local KA chapter; and we remand the case to the trial court for further proceedings consistent with this opinion.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
YATES and MONROE, JJ., concur.
ROBERTSON, P.J., and CRAWLEY, J., concur in the result.
THOMPSON, J., concurs in part and dissents in part.
THOMPSON, Judge, concurring in part and dissenting in part.
I would affirm the summary judgments as to the individual defendants and the local chapter; therefore, I must respectfully dissent from the majority opinion to the extent that it reverses the summary judgments as to those parties.
There is no civil cause of action for hazing, under present Alabama law. Although the Alabama legislature expressly created a civil cause of action for all felonious conduct by enacting § 6-5-370, Ala.Code 1975, anyone convicted of violating § 16-1-23 is guilty of a Class C misdemeanor. A civil cause of action for a violation of § 16-1-23 may not be created through § 6-5-370; therefore, we must look to the intent of the legislature in enacting § 16-1-23 to determine whether that section creates civil liability for a violation of the statute.
The legislature expressly stated that its intent in enacting § 16-1-23, Ala.Code 1975, was "[t]o prohibit hazing of any student of any school, college, university, or other educational institution in this state; to define the term hazing, to set criminal penalties for violating this act, and to deny state funding in certain instances." Ala. Acts 1981, Act No. 81-824. There is no mention of any intent by the legislature to create civil liability for hazing. The legislature could have created a civil cause of action under this statute, but it did not choose to do so. Section 16-1-23 never mentions the existence of civil liability for conduct that constitutes hazing; that section expressly provides only for criminal penalties for a violation of the statute.
I would also note that I agree with the trial judge's finding that Jones's participation in the fraternity activities was voluntary and that he could have halted his participation in fraternity activities at any time. I disagree with the statement in the opinion that reasonable minds could differ regarding whether, under these facts, Jones's decision to remain a pledge was voluntary. Jones's own testimony was that his choice to remain was voluntary, that he was never coerced by any member of the fraternity to remain in the pledge class, and that he knew that several members of his pledge class had quit the fraternity.
The main opinion concludes that the "great pressures associated with fraternity life" could place "students in a position of functioning in what may be construed as a coercive environment." 730 So.2d at 200. I do not agree with any conclusion that would, in essence, determine that peer pressure can totally absolve a college student of the responsibilities of his own decisions. The Supreme Court of Alabama quoted with approval the following from an opinion of an Indiana appellate court:
"College students and fraternity members are not children. Save for a very few legal *203 exceptions, they are adult citizens ready, able, and willing to be responsible for their own actions. Colleges and fraternities are not expected to assume a role anything akin to in loco parentis or a general insurer."
Rothman v. Gamma Alpha Chapter of Pi Kappa Alpha Fraternity, 599 So.2d 9, 11 (Ala.1992) (quoting Campbell v. Board of Trustees, 495 N.E.2d 227, 232 (Ind.App.1986) (emphasis added)).
Because I do not believe that a civil cause of action for hazing exists, I believe that the summary judgments in favor of the individual defendants should be affirmed. I also believe that in the absence of civil liability on the part of the individual fraternity members, the local chapter cannot be held liable pursuant to § 16-1-23, Ala.Code 1975, for the actions of its members. Also, as to the local chapter's liability, I believe that Jones failed to introduce any evidence tending to show that the chapter authorized, encouraged, or ratified the actions of its individual members; thus, it cannot be held responsible for any intentional torts of its members. See Rothman v. Gamma Alpha Chapter, supra.
The hazing alleged in this case may be prosecuted criminally pursuant to § 16-1-23. Further, other civil causes of action may also be available to Jones for this conduct; there is no need to judicially create a civil cause of action under § 16-1-23. I would emphasize that Jones's claim for assault and battery, related to his broken hand, is still pending in the trial court.
Although I do not condone hazing or the conduct alleged in this case, I believe that it is the function of the legislature, if it so chooses, to create a civil cause of action for hazing. I do not believe that it was the intent of the legislature in enacting § 16-1-23 to create civil liability for a violation of that statute; therefore, I would affirm the summary judgments in favor of the individual defendants and the local chapter. I concur in the affirmance of the summary judgment for the national organization.
NOTES
[1] Contrary to the dissent's contentions, the violation of a statute creates an action of negligence per se as long as the doctrine's requirements are met. There is no requirement that the legislature expressly create a civil cause of action for negligence per se to apply. See 57A Am.Jur.2d Negligence § 727 (1989) (stating that "[t]he negligence per se doctrine does not depend on the grant of a private right of action by the legislature."); see generally Alabama Power Co. v. Dunaway, 502 So.2d 726 (Ala.1987); Fox v. Bartholf, 374 So.2d 294 (Ala.1979) (cases applying the doctrine of negligence per se). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583747/ | 31 So.3d 1227 (2009)
In the Matter of the ESTATE OF Martha Thomas Kabbes BURNS, One and the Same Person as Martha Thomas Kabbes, Deceased:
John Clayton Kabbes, Appellant,
v.
John Baxter Burns, Appellee.
No. 2008-CA-00690-COA.
Court of Appeals of Mississippi.
July 28, 2009.
Rehearing Denied December 8, 2009.
Certiorari Denied April 1, 2010.
*1228 L. Breland Hilburn, Jackson, attorney for appellant.
J. Kevin Watson, Jackson, Charles Stephen Stack, attorneys for Appellee.
Before KING, C.J., BARNES and ISHEE, JJ.
ISHEE, J., for the Court.
¶ 1. On a Petition to Pay Escrow Funds filed by John Burns (Burns), the Chancery Court for the First Judicial District of Hinds County, over the objection of John Kabbes (Kabbes), found that funds held in the court registry in the amount of $47,858.74 were wrongful-death benefits. The chancery court found that an antenuptial agreement between Burns and Martha Kabbes Burns (Martha), the deceased, had no bearing on the settlement of the wrongful-death claim. Accordingly, the chancery court ordered the funds be turned over to Burns, who was a proper wrongful-death beneficiary.[1] Aggrieved by the chancery court's ruling, Kabbes appeals. He presents the following two issues for this Court to consider:
I. Whether the chancellor erred in finding that the proceeds in the registry of the court were wrongful-death proceeds.
II. Whether the chancellor erred in finding that the antenuptial agreement between Martha and Burns had no bearing on the settlement of the wrongful-death claim.
Finding no error, we affirm.
FACTS AND PROCEDURAL HISTORY
¶ 2. On July 18, 2002, Martha died in a one-vehicle accident in Alabama. At the time, she was married to Burns, and she had three children from a prior marriage-Kabbes, Carmen Goforth, and Lila Strode.
¶ 3. Following Martha's death, Kabbes filed suit on behalf of her wrongful-death beneficiaries against General Motors Company, Michelin North America, Inc., and Brakes Plus, Inc., d/b/a Scotty's Tire & Automotive. Pertinent to the present appeal, Michelin filed its answer and denied all the allegations. According to Michelin, the tire was not defective. Instead, Michelin contended that any problem with the tire was caused by underinflation or overloading of the vehicle, and the proximate cause of Martha's death was her failure to use a seatbelt and her act of opening the vehicle's door during the accident.
¶ 4. After extensive discovery, Michelin and the parties to the lawsuit engaged in *1229 settlement negotiations. They submitted a settlement agreement to the chancery court in which they recognized that Michelin's liability was doubtful and that any recovery from it was unlikely. The settlement agreement provided that Kabbes, Burns, and the two daughters would release all claims against Michelin, which, in return, agreed to pay a confidential sum. On June 30, 2004, the chancery court entered a decree approving of the settlement and ordering that any expenses arising from the death and the estate of Martha must be paid from the proceeds of the settlement.
¶ 5. On March 7, 2006, the chancery court ruled upon Kabbes's Petition to Pay Over Escrow Funds and entered an order finding that the remaining settlement proceeds on deposit in the court's registry, which totaled $47,858.74, were wrongful-death proceeds. Accordingly, the chancery court found that the antenuptial agreement between Martha and Burns had no bearing on settlement of the wrongful-death claim and that Burns had not waived his claim to payment of said funds. Kabbes filed a motion for reconsideration, which the chancery court denied. Kabbes then timely filed the present appeal.
STANDARD OF REVIEW
¶ 6. The determination of wrongful-death beneficiaries is a question of law, and this Court will review such a determination under a de novo standard. Gonzales v. Gray, 824 So.2d 558, 561(¶ 10) (Miss.2002) (citing Estate of Jones v. Howell, 687 So.2d 1171, 1174 (Miss.1996)).
DISCUSSION
I. Wrongful-Death Proceeds
¶ 7. Kabbes first argues that the chancellor erred in finding that the settlement proceeds held in the court's registry were wrongful-death proceeds. Kabbes argues that: (1) there was no wrong proven so as to qualify the settlement proceeds as wrongful-death proceeds, and (2) the chancellor lacked authority to find that the proceeds were wrongful-death proceeds because that was a fact issue for the jury to determine.
¶ 8. The cases cited by Kabbes in support of his argument are easily distinguishable from the present situation in that they all involve a wrongful-death case that was tried before a jury. He cites no case that holds that the proceeds from the settlement of a wrongful-death claim are not wrongful-death proceeds or that it is error to distribute the proceeds of a wrongful-death settlement to the wrongful-death beneficiaries.
¶ 9. The supreme court has long held that a "wrongful death action is not part of the estate of the deceased." Pannell v. Guess, 671 So.2d 1310, 1313 (Miss.1996) (citing Partyka v. Yazoo Dev. Corp., 376 So.2d 646, 650 (Miss.1979)). "The wrongful death statute creates a new and independent cause of action in favor of those named in the statute." Partyka, 376 So.2d at 650 (citing Hasson Grocery Co. v. Cook, 196 Miss. 452, 459, 17 So.2d 791, 792 (1944)). Pannell involved the settlement of a doubtful claim and determination of wrongful-death beneficiaries. Pannell, 671 So.2d at 1312. The supreme court found no merit to the appellants' claim that the chancery court should have held a hearing to determine how to divide the wrongful-death proceeds. Id. at 1314. According to the opinion, the case started out as a wrongful-death action, but no wrongful-death suit was filed because a settlement was reached with the driver's insurer. Id. at 1313. Nevertheless, the *1230 supreme court found no error with the distribution of the settlement proceeds to the wrongful-death beneficiaries provided for in Mississippi Code Annotated section 11-7-13 (Supp.1991). Id. at 1314. The supreme court stated that the wrongful-death statute provides that the proceeds shall be distributed equally among the wrongful-death beneficiaries. Id.
¶ 10. In Gonzales, 824 So.2d at 559(¶ 1), the supreme court also dealt with the settlement of a doubtful claim regarding a wrongful-death suit. The issue before the supreme court was whether Mississippi or Arkansas substantive law controlled the distribution of the wrongful-death settlement proceeds. Id. at 561 (¶¶ 9, 12). In a de novo review of the issue, the supreme court reversed the chancery court and found that the Mississippi wrongful-death statute was controlling as to the settlement of the doubtful wrongful-death claim. Id. at 560(¶ 6).
¶ 11. As shown in the previous cases, Mississippi courts have regularly distributed the proceeds of wrongful-death settlements to the wrongful-death beneficiaries. This has been the case even when the parties settled a doubtful claim. Therefore, we find no error with the chancellor's determination that the proceeds in the court's registry were wrongful-death proceeds. This issue is without merit.
II. Antenuptial Agreement
¶ 12. As pointed out by Kabbes in his brief, "[a]n antenuptial contract is just as enforceable as any other contract." Mabus v. Mabus, 890 So.2d 806, 818(¶ 53) (Miss.2003). The section of the antenuptial agreement, which Kabbes argues now bars Burns's recovery, states the following:
Each of the parties hereto agree that on the death of the other, the surviving party will not have and will not in any way assert any claim, interest, estate or title of any kind or nature whatsoever in or to any property, real, personal, or mixed, of which the other party may die seized and possessed. . . .
Kabbes argues that under the quoted provision, "Burns relinquished any right to recover many of the damages allowed pursuant to the Mississippi wrongful death statute." Burns does not dispute the validity of the antenuptial agreement. However, he argues that the chancellor was correct in holding that the antenuptial agreement had no bearing on the settlement because wrongful-death proceeds do not enter the deceased's estate, and they are distributed pursuant to the wrongful-death statute.
¶ 13. Regarding the nature of a wrongful-death claim, the supreme court has stated that "Mississippi's wrongful death statute creates a cause of action unknown to the common law, and we have held that the statute must be strictly construed. The wrongful death statute creates a new and independent cause of action in favor of those named therein." Estate of Jones v. Howell, 687 So.2d 1171, 1178 (Miss.1996) (citations omitted) "Mississippi's wrongful death statute, Miss.Code Ann. [section] 11-7-13, created a cause of action unknown to the common law. The wrongful death action is not part of the estate of the deceased, and only those individuals listed in the wrongful death statute may bring this independent cause of action." Pannell, 671 So.2d at 1313 (citations omitted). Accordingly, Burns is correct in his argument that the wrongful-death proceeds do not enter the estate of the deceased. However, it is not only the wrongful-death proceeds but the wrongful-death action itself that does not enter the *1231 estate. "[A] wrongful death suit is a derivative action by the beneficiaries, and those beneficiaries, therefore, stand in the position of their decedent." Carter v. Miss. Dep't of Corr., 860 So.2d 1187, 1192(¶ 17) (Miss.2003). Nevertheless, as stated by the supreme court, only the wrongful-death beneficiaries may bring a wrongful-death claim. While the action is derivative in that it is a claim for damages that could have been recovered by the deceased, the action itself arises upon the deceased's death and belongs to the wrongful-death beneficiaries. Therefore, the antenuptial agreement had no bearing on the wrongful-death claim or on the distribution of the proceeds received from settling that claim.
¶ 14. As for the expenses of the estate, Mississippi Code Annotated section 11-7-13 (Rev.2004) provides that "an amount, as may be recovered for property damage, funeral, medical or other related expenses shall be subject only to the payment of the debts or liabilities of the deceased for property damages, funeral, medical or other related expenses." Recognizing this, in the decree approving of the settlement, the chancellor provided that the petitioner, Kabbes, was authorized to pay any estate expenses and any approved attorney's fees from the proceeds of the settlement. Therefore, any claim that Burns's recovery should be reduced for such expenses is without merit.
¶ 15. Additionally, Kabbes argues that the antenuptial agreement should have precluded Burns from recovering any damages intended to compensate the deceased, such as lost wages and pain and suffering. However, when section 11-7-13 states that all wrongful-death proceeds "shall be distributed equally," it makes no distinction between proceeds attributable to the deceased or to her wrongful-death heirs. In applying section 11-7-13, the supreme court found that "the wrongful death statute does not provide that the lower court may conduct a hearing to determine how to divide the proceeds." Pannell, 671 So.2d at 1314.
¶ 16. In making his argument, Kabbes misconstrues the supreme court's analysis of wrongful-death benefits in River Region Medical Corp. v. Patterson, 975 So.2d 205, 208(¶ 10) (Miss.2007) (citing Long v. McKinney, 897 So.2d 160, 169 (¶¶ 32-33) (Miss.2004)). Kabbes argues that any damages "intended to compensate the decedent for her individual loss" damages for lost wages and the pain and suffering should be recovered by the estate. However, we can find no such holding in Patterson. In analyzing Patterson's claim, the supreme court stated the following:
"[T]here are several kinds of damages which may be pursued, and these damages are not due to the same claimants." "For instance, the estate is entitled to recover funeral costs and final medical expenses. The beneficiaries are entitled to recover for their respective claims of loss of society and companionship. The wrongful-death beneficiaries are entitled to recover the present net cash value of the decedent's continued existence." Assuming Thomas Patterson was a legitimate wrongful-death beneficiary, as we must do in giving him all reasonable inferences, he would then be entitled to recover for himself any loss of society and companionship he might prove, and to share equally in the damages which might have been recovered by Ms. Nettles, "had death not ensued."
Id. (internal citations omitted). The Patterson court concluded that the deceased's wrongful-death beneficiaries would share equally in all of the damages except those *1232 for loss of society and companionship. Id. at (¶ 11).
¶ 17. Therefore, the holding in Patterson is contrary to Kabbes's argument in that Patterson provides that the damages recovered from the claims attributable to the deceased are those that section 11-7-13 requires to be divided equally among the wrongful-death beneficiaries. Any damages awarded for medical or funeral expenses are attributable to the estate, and the chancellor provided for such in the decree approving the settlement. The only claims that were personal to the claimants were claims for loss of society and companionship. Such a claim is, by its very nature, personal to the claimant, and it would not be recoverable by the deceased's estate.
¶ 18. The chancellor had previously authorized Kabbes to pay estate expenses with the settlement award. With the claim belonging to the wrongful-death beneficiaries and no further damages passing to Martha's estate, we find no error with the chancellor's determination that the antenuptial agreement between Martha and Burns had no bearing on the disbursement of the settlement proceeds remaining in the court's registry. We find that this issue is without merit.
¶ 19. THE JUDGMENT OF THE CHANCERY COURT OF HINDS COUNTY IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLANT.
KING, C.J., LEE AND MYERS, P.JJ., IRVING, GRIFFIS, BARNES, ROBERTS, CARLTON AND MAXWELL, JJ., CONCUR.
NOTES
[1] Martha's children had already received their shares of the wrongful-death settlement proceeds. The amount remaining in the court's registry represented the amount attributable to Burns. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583763/ | 717 F.Supp. 1143 (1989)
FISCELLA & FISCELLA, a Virginia General Partnership, and Virginia Enterprises, Inc., Plaintiffs,
v.
UNITED STATES of America, et al., Defendants.
Civ. A. No. 89-522-N.
United States District Court, E.D. Virginia, Norfolk Division.
August 10, 1989.
*1144 Richard R. Nageotte, Nageotte & Borinsky, Woodbridge, Va., for plaintiffs.
Donald A. Carr, Acting Asst. Atty. Gen., Land and Natural Resources Div. and Letitia J. Grishaw, Asst. Chief, Environmental Defense Sec. U.S. Dept. of Justice, Land and Natural Resources Div., Washington, D.C., Henry E. Hudson, U.S. Atty., J. Phillip Krajewski, Asst. U.S. Atty., Norfolk, Va., for defendants.
MEMORANDUM OPINION AND ORDER
CLARKE, District Judge.
This matter comes before the Court on plaintiff Fiscella & Fiscella's Motion for a preliminary injunction. An evidentiary hearing was conducted, the parties have fully briefed the issues, and the matter is therefore ripe for disposition.
This action arises from a cease-and-desist letter issued by the United States Army Corps of Engineers (Corps) (Plaintiff's Ex. 8). Plaintiff Fiscella & Fiscella (Fiscella) is the owner of the Nelson Farms property located in the City of Hampton, Virginia. Plaintiff Fiscella has constructed roads and utilities in preparation for development and sale of Sections I and II of the Nelson Farms subdivision. Plaintiff Fiscella sold 50 lots to the plaintiff Virginia Enterprise, Inc. who constructed or partially constructed 50 single family residences.
On March 2, 1989 Nicholas Konchuba, an environmental scientist with the Corps, conducted an on-site inspection of the Nelson Farms property. Konchuba preliminarily concluded that the site contained wetlands, and that the construction work being conducted on the site constituted illegal filling activities. On March 3, 1989, Konchuba prepared an intra-office Initial Complaint Report which was forwarded to management within the Waterways Inspection Division. (Plaintiff's Ex. 9). The report summarized Konchuba's observations and determination that illegal filling activities were being conducted on wetlands. On June 30, 1989, some four months after Konchuba's report, the Corps issued the cease-and-desist order at issue in this case.
The cease-and-desist order provides in pertinent part:
A recent inspection ... has revealed the unauthorized fill of wetlands at your development site.... Your unauthorized filling project may be in direct violation of Section 404 of the Clean Water Act (33 U.S.C. § 1311 and § 1344)....
This letter constitutes formal notice to you to cease and desist any and all unauthorized activities in the waters and wetlands of Brick Kiln Creek, or other waters of the United States.
You are advised that work performed in violation of Section 404 of the Clean Water Act ... carries penalties of up to $25,000 per day for each day the violation occurs (33 U.S.C. § 1319(d)).
(Plaintiff's Ex. 8). The plaintiffs testified that after receiving the cease-and-desist order they terminated any construction or development on the site.
On July 11, 1989, the plaintiffs filed a Complaint and Petition for Temporary Restraining Order in this matter. The plaintiff predicates jurisdiction on the Federal Declaratory Judgment Act, 28 U.S.C. § 2201 and § 2202, and federal question *1145 jurisdiction pursuant to 28 U.S.C. § 1331. Plaintiffs allege that the Corps' assertion of jurisdiction over plaintiffs' real property under the Clean Water Act (CWA), 33 U.S.C. § 1251, et seq., creates an actual controversy within the meaning of the Declaratory Judgment Act. Plaintiffs also seek a preliminary injunction prohibiting the government from enforcing the June 30, 1989 cease-and-desist order.
This matter comes before the Court in an unusual procedural posture. The plaintiffs allege in their Complaint that to the best of their knowledge the Corps, prior to the issuance of the cease-and-desist order, never made any jurisdictional determination concerning the site. (Plaintiffs' Complaint ¶ 21). Furthermore, the testimony of Nicholas Konchuba and John Evans, environmental scientists from the Corps, reveals that a detailed wetlands delineation has not been conducted on the site. Therefore, the Corps' only assertion of jurisdiction in this matter is the cease-and-desist order informing plaintiffs that they may be in violation of the CWA.
The CWA is a comprehensive statute designed "to restore and maintain the chemical, physical, and biological integrity of the Nation's waters." 33 U.S.C. § 1251(a). Under 33 U.S.C. §§ 1311 and 1362, any discharge of dredge or fill materials into "navigable waters" or "waters of the United States" is forbidden unless authorized by a permit issued by the Corps pursuant to § 404, 33 U.S.C. § 1344. The EPA continues to carry ultimate responsibility for the concerns of the CWA, including determinations of what constitutes "navigable waters" for purposes of § 404. See Avoyelles Sportsmen's League, Inc. v. Marsh, 715 F.2d 897, 903 n. 12 (5th Cir.1983); 43 Op.Att'y Gen. No. 15 (Sept. 5, 1979). The term "navigable waters" is defined as "waters of the United States including the territorial seas." 33 C.F.R. § 328.1 (1988). The term "waters of the United States" means "wetlands adjacent to waters (other than waters that are themselves wetlands)...." 40 C.F.R. § 230.3(5)(7) (1988). For purposes of the § 404 permit program, "wetlands" are:
those areas that are inundated or saturated by surface or ground water at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions. Wetlands generally include swamps, marshes, bogs, and similar areas.
40 C.F.R. § 328.3(b) (1988). Finally, as it applies to the jurisdictional limits of the Corps' authority, "adjacent" means "bordering, contiguous, or neighboring." 33 C.F.R. § 328.3(c) (1988). The regulations further provide that "wetlands separated from other waters of the United States by man-made dikes or barriers, natural river-berms, beach dunes, and the like are `adjacent wetlands.'" Id.
The plaintiffs concede that the Nelson Farms site contains "wetlands" as that term is defined in the regulations. Plaintiffs take the position, however, that the Corps is without authority to assert jurisdiction over the site because it is not an "adjacent" wetland. The Corps argues that the structure and objectives of the CWA's enforcement scheme precludes pre-enforcement review of a cease-and-desist order. See, Hoffman Group Inc. v. EPA, 29 Env't. Rep. Cas. 1180 (N.D.Ill.1989). The plaintiffs counter that the issue of whether the site is an isolated or adjacent wetland is a "purely legal" issue capable of judicial resolution. See, A.O. Smith v. Federal Trade Commission, 530 F.2d 515, 521 (3d Cir.1976). While the Court is of the opinion that the question of adjacency is factual and not purely legal, the Court need not reach that issue as it otherwise lacks subject-matter jurisdiction to hear this matter.
The plaintiffs have alleged that this Court has jurisdiction pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, and 28 U.S.C. § 1331, the federal question statute. The Declaratory Judgment Act authorizes a federal court to give a declaratory judgment only with respect to "a case of actual controversy within its jurisdiction." 28 U.S.C. § 2201 (emphasis added). The Fourth Circuit in Delavigne v. Delavigne, 530 F.2d *1146 598, 601 (4th Cir.1976) found that, "It is axiomatic that the Act does not supply its own jurisdictional base, and where jurisdiction is lacking, declaratory relief should be denied." Citing Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 70 S.Ct. 876, 94 L.Ed. 1194 (1950). Thus, the remaining issue is whether Section 1331 provides the plaintiffs with access to the federal courts under the CWA.
A suit "arises under" federal law if federal law creates the cause of action. American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260, 36 S.Ct. 585, 586, 60 L.Ed. 987 (1916); City National Bank v. Edmisten, 681 F.2d 942, 945 (4th Cir.1982). In Middlesex County Sewerage Authority v. National Sea Clammers Assoc., 453 U.S. 1, 101 S.Ct. 2615, 69 L.Ed.2d 435 (1981), the Supreme Court addressed the issue of whether an implied right of action existed under the CWA. The Court began its analysis by noting that the CWA confers the right to sue on both government officials and private citizens. Id. at 13, 101 S.Ct. at 2622. The CWA authorizes the EPA administrator to respond to violations of the Act with compliance orders and civil suits. 33 U.S.C. § 1319. The administrator may seek civil penalties of up to $25,000 per day, as well as criminal penalties. 33 U.S.C. § 1319(c) and (d). Moreover, "any interested person" may seek judicial review in the United States Court of Appeals of the various actions of the administrator in establishing effluent standards and issuing discharge permits. 33 U.S.C. § 1369(b) (1989).
These enforcement mechanisms are supplemented by the citizens-suit provisions contained in 33 U.S.C. § 1365. Section 1365(a)(1) provides a cause of action against any person or governmental instrumentality "alleged to be in violation of ... an effluent standard or limitation under this chapter." This section provides a cause of action against one discharging pollutants into a waterway and therefore is of no assistance to the plaintiffs in the case at bar. See, City of Las Vegas v. Clark County, 755 F.2d 697, 703 (9th Cir.1985). Similarly, Section 1365(a)(2) provides a cause of action against the administrator where there is an alleged failure of the administrator to perform a nondiscretionary duty under 33 U.S.C. § 1313(d). Again, this provision of the statute does not provide plaintiffs with a cause of action. Id.
Finally, Section 1365 contains a savings clause which provides that, "Nothing in this section shall restrict any right which any person ... may have under any statute or common law to seek enforcement of any effluent standard or limitation or to seek any other relief...." 33 U.S.C. § 1365(e). The Supreme Court in Middlesex rejected the Court of Appeals argument that the Section 1365(e) savings clause coupled with Section 1331 provides an independent remedy for injured parties. Middlesex, 453 U.S. at 15-18, 101 S.Ct. at 2623-2625. The Court in Middlesex concluded that Congress intended to limit access to federal court to enforce the CWA to the express enforcement provisions of the Act which precludes suit brought under 28 U.S.C. § 1331 and 42 U.S.C. § 1983. Id. at 21, 101 S.Ct. at 2627. See, City of Las Vegas, 755 F.2d at 703. The Supreme Court in Middlesex explicitly held:
Both the structure of the [CWA] and [its] legislative history lead us to conclude that Congress intended that private remedies in addition to those expressly provided should not be implied. Where, as here, Congress has made clear that implied private actions are not contemplated, the courts are not authorized to ignore this legislative judgment.
Middlesex, 453 U.S. at 18, 101 S.Ct. at 2625. Therefore, even if plaintiff had alleged a cause of action under Section 1365(e), it would not provide this Court with subject-matter jurisdiction. Accordingly, the Court finds that the enforcement provisions of the CWA do not provide plaintiffs in the instant case with a cause of action, nor does the CWA afford plaintiffs an implied right of action.
Although the Court need not reach the issue, the Court also finds that plaintiffs' attempt to enjoin the Corps from asserting jurisdiction constitutes pre-enforcement review and encroaches on the duties *1147 and expertise of the Corps. This Court is of the opinion that pre-enforcement review is inconsistent with the enforcement scheme of the CWA. The Court finds the decision in Hoffman Group Inc. v. EPA, 29 Env't Rep. Cas. 1180 (N.D.Ill.1989) to be a correct interpretation of the CWA. In Hoffman, the plaintiffs brought an action seeking declaratory and injunctive relief from the enforcement of a compliance order issued by the EPA. The district court in Hoffman found that plaintiffs' Complaint challenged the factual determinations of the EPA in delineating wetland boundaries. The Hoffman court concluded that "Congress intended for judicial review of a compliance order to occur if and when the EPA seeks to enforce the order in district court under 33 U.S.C. § 1319(b)." Id. at 1183.
As a general rule, parties are required to exhaust administrative remedies before resorting to the courts. Deltona Corp. v. Alexander, 682 F.2d 888, 893 (11th Cir. 1982). The Eleventh Circuit in Deltona noted that,
The exhaustion rule serves a number of policies, including promoting consistency in matters which are within agency discretion and expertise, permitting full development of a technical issue and factual record prior to court review, and avoiding unnecessary judicial decision by giving the agency the first opportunity to correct any errors and possibly moot the need for court action.
Id. The circuit courts which have considered the issue have held that the agency should be given the first opportunity to consider a challenge to its jurisdiction. Id.
Despite plaintiffs' assertions to the contrary, the Court finds that the question of whether the Nelson Farms property is an adjacent or isolated wetland is a factual and not a purely legal issue. Plaintiffs argue that a contrary conclusion is warranted because the existence, not the extent, of agency jurisdiction is at issue in this case. See, Avoyelles Sportsmen's League, 715 F.2d at 906. The Court finds, however, that the existence of the Corps' jurisdiction in the case at bar is a factual issue properly left to the expertise of the agency. In the instant case, the Corps should be given the initial opportunity to consider the adjacency issue and develop a record for judicial review.
Finally, the Court finds that plaintiffs' attempt to seek pre-enforcement review of the Corps' jurisdictional decision not only encroaches on the Corps' expertise, but also, constitutes an attempt to make an end-run around the Administrative Procedures Act, 5 U.S.C. § 702. If plaintiffs were allowed to maintain this action, federal courts would always become embroiled in the intricacies of initially determining whether a site is a "wetland" or "adjacent wetland." These matters are properly left to the expertise of the Corps, the administrative agency chosen by Congress to make such determinations.
Accordingly, plaintiffs' Complaint and Petition for Temporary Restraining Order are DISMISSED with prejudice.
The Clerk is DIRECTED to send a copy of this Order to counsel for the plaintiffs and defendants.
IT IS SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3042912/ | United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 06-2176
___________
Reginald L. Dunahue, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the
* Eastern District of Arkansas.
Clarence Bass, Lt., Varner Unit, ADC; *
Latecia Strain, Varner Unit, ADC, * [UNPUBLISHED]
*
Appellee. *
___________
Submitted: June 21, 2007
Filed: July 2, 2007
___________
Before RILEY, MAGILL, and MELLOY, Circuit Judges.
___________
PER CURIAM.
In this 42 U.S.C. § 1983 action, Arkansas inmate Reginald Dunahue appeals the
district court’s1 entry of judgment in accordance with the jury verdict in favor of
defendants, arguing his trial attorney presented testimony and exhibits proving that
defendants’ treatment of him violated prison policy and the Eighth Amendment.
Dunahue did not, however, provide this court with a trial transcript or request one at
government expense. We therefore are unable to review the sufficiency-of-the-
1
The Honorable J. Leon Holmes, Chief Judge, United States District Court for
the Eastern District of Arkansas.
evidence issue he raises. See Fed. R. App. P. 10(b)(1) (discussing appellant’s duty to
order transcript); Meroney v. Delta Int’l Mach. Corp., 18 F.3d 1436, 1437 (8th Cir.
1994); Van Treese v. Blome, 7 F.3d 729, 729 (8th Cir. 1993) (per curiam); Schmid v.
United Bhd. of Carpenters & Joiners of Am., 827 F.2d 384, 385-86 (8th Cir. 1987)
(per curiam). Accordingly, we affirm. See 8th Cir. R. 47B.
______________________________
-2- | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1585740/ | 116 Mich. App. 103 (1982)
321 N.W.2d 855
CODY PARK ASSOCIATION
v.
ROYAL OAK SCHOOL DISTRICT
Docket No. 59793.
Michigan Court of Appeals.
Decided May 5, 1982.
Bernstein & Rabinovitz, P.C., for Cody Park Association.
Dell, Shantz, Booker & Schulte, for Royal Oak School District.
Teresa E. Schafer, City Attorney, for the City of Royal Oak.
Before: N.J. KAUFMAN, P.J., and BASHARA and R.I. COOPER,[*] JJ.
R.I. COOPER, J.
Defendant is a third-class school district which seeks to acquire and use a building and surrounding property as a vehicle repair facility, offices, and a place to park its fleet of approximately 20 school buses, 10 trucks, and 25 staff vehicles. The building and land in question have been owned by Oakview Cemetery Association which, in 1971, had obtained a special exception from the City of Royal Oak to erect a storage and maintenance building. The remainder of the land was leased to the city and used as a park. Plaintiff, Cody Park Association, seeks a permanent injunction to restrain the school district from making changes in the property without having first sought and secured the permission of the city, as required in the city's zoning ordinances. The school district thereafter sought a court determination that the school was not subject to the city's zoning ordinances; that the pertinent portion of *106 the ordinances were vague and contradictory and therefore void; and that Cody Park Association had no standing or capacity to sue and was not the real party in interest under GCR 1963, 201.2. The trial court denied the determinations sought by the school district pursuant to its motions for summary judgment and accelerated judgment. The City of Royal Oak was brought in as a party plaintiff.
The Michigan Supreme Court has provided guidance regarding the general question of whether a state agency has immunity from the effects of local zoning as follows:
"It has not been resolved with finality, whether our state or its agencies are inherently immune from local zoning ordinances."
"We hold today that the legislative intent, where it can be discerned, is the test for determining whether a governmental unit is immune from the provisions of local zoning ordinances." Dearden v Detroit, 403 Mich 257, 264; 269 NW2d 139 (1978).
In Dearden, the Michigan Department of Corrections was seeking to locate a half-way house in a residential area. The zoning board of appeals denied this requested use. In trying to ascertain the intent of the Legislature as to whether the Department of Corrections was or was not subject to local zoning ordinances, the Court observed the following statutory language regarding the Department of Corrections:
"Subject to constitutional powers vested in the executive and judicial departments of the state, the department shall have exclusive jurisdiction over the following: * * * (c) penal institutions * * *." MCL 791.204; MSA 28.2274. *107 The Court continued its analysis with the following determination:
"We read this language as a clear expression of the Legislature's intent to vest the department with complete jurisdiction over the state's penal institutions, subject only to the constitutional powers of the executive and judiciary, and not subject in any way to any other legislative act, such as the zoning enabling act." Dearden, supra, 265.
The Court also observed that there was a legislative intent to vest full power in the Department of Corrections to develop a unified and general system of state correctional institutions and that this general goal would have priority over local worries or anxieties should a correctional facility be placed in a community setting which might result in local zoning attempts trying to bar such a facility. Further, the Court also observed that the zoning enabling act did not disclose what effect a zoning ordinance would have on state agencies.
It is necessary to analyze the statutes pertaining to school districts in order to ascertain whether similar legislative intent exists on behalf of school districts, thereby exempting school districts from the effect of local zoning ordinances which might restrict the use and location of bus and vehicle maintenance and storage activities.
A careful review of the School Code of 1976, 1976 PA 451, MCL 380.201 et seq.; MSA 15.4201 et seq., and also articles 2, 3, and 4 of the School Code fails to disclose the same specificity found by the Michigan Supreme Court in the Dearden ruling, to-wit, that there is language showing a legislative intention that school districts would have exclusive jurisdiction. MCL 380.1141; MSA 15.41141 does exempt a school district from taxation. However, *108 this is a specific exemption pertaining only to taxes. MCL 380.250; MSA 15.4250 provides specific authority to a school board as follows:
"The board may:
"(a) Locate, acquire, purchase, or lease in the name of the school district site or sites within or without the district for schools, libraries, administration buildings, agricultural farms, athletic fields, and playgrounds, which may be necessary."
There is nothing in this authorization which indicates exclusive school district jurisdiction. Such language simply designates the proper authority by which schools, libraries, administrative buildings, etc., may be located and acquired, namely, the school board. In the same vein, MCL 380.1342; MSA 15.41342 authorizes the board of a school district to purchase, construct, or lease buildings necessary for the safe storage or maintenance and repair of school buses. The mere fact that the Legislature has specified the designated decision-making authority for such purposes cannot be extended to support an interpretation that such authority is exclusive and thus not subject to local zoning ordinances.
The defendant school district is not without recourse as to the effects of local zoning. It may appeal to the zoning board of appeals and, if it feels an improper decision has been rendered at that level, it has the further recourse of appealing to the circuit court. Such recourse is proper in situations such as that presented by the present case where there are competing interests between governing authorities. Although a school district is recognized as a state agency, nevertheless it is guided by local school boards. It cannot be said such a local school board should have greater or *109 lesser powers over local zoning ordinances unless such authority is specifically designated by the Legislature. A careful reading of the School Code fails to reveal such a legislative intent.
The school district's argument that the city's zoning ordinances are not enforceable because of ambiguities and conflicting terms also fails. The premises involved in the present litigation is zoned by the City of Royal Oak as a one-family residential zone. However, exception is made for publicly owned buildings, public utility buildings, telephone exchanges, transformer stations and substations, and gas regulator stations. In addition, however, these exceptions are not allowed to be accompanied by garages or maintenance buildings. Further, the exceptions listed must be presented for approval to the City Plan Commission and found to be not injurious to the surrounding neighborhood and to be in accord with the spirit and purposes of the zoning ordinance. Further, the ordinance does allow for the existence of public schools within the same one-family zone. The city ordinances also provide for "special exceptions", "for conditional uses" and "for permitted conditional uses". The section pertaining to permitted conditional uses does state that all such uses abide by all applicable regulations of the zone in which they are proposed to be located. The school district interprets this portion as being contradictory. This Court disagrees. The city prevails when it argues that this provision simply means that all permitted conditional uses must merely meet the requirement that said use comply with height, area, lot coverage, fencing, green space, and similar restrictions.
The school district argues that the Cody Park Association does not have standing as a real party *110 in interest. GCR 1963, 201.2 states that every action must be prosecuted in the name of the real party in interest. Sec. 201.3(3) states:
"A partnership, partnership association or any unincorporated voluntary association having a distinguishing name may sue or be sued in its partnership or association name, or in the names of any of its members designated as such or both."
The Cody Park Association in its pleadings clearly designates itself as an unincorporated voluntary association. Evidently the association membership consists only of a couple of property owners or users. A defendant is not harmed provided the final judgment is a full, final and conclusive adjudication of the rights in controversy that may be pleaded in bar to any further suit instituted by any other party. Kearns v Michigan Iron & Coke Co, 340 Mich 577; 66 NW2d 230 (1954). Certainly the joinder of the City of Royal Oak also has expanded the scope of interests that have been addressed in this litigation. The trial court is correct in its denial of the school district's motion for accelerated judgment by which the capacity and standing of the Cody Park Association to bring suit was challenged.
Affirmed. No costs, a public question being involved.
NOTES
[*] Circuit judge, sitting on the Court of Appeals by assignment. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1585805/ | 116 Mich. App. 72 (1982)
321 N.W.2d 849
PEOPLE
v.
MYSHOCK
Docket No. 55868.
Michigan Court of Appeals.
Decided May 4, 1982.
Frank J. Kelley, Attorney General, Louis J. Caruso, Solicitor General, Artis M. Noel, Prosecuting Attorney, and Leonard J. Malinowski, Assistant Attorney General, Prosecuting Attorneys Appellate Service, for the people.
Clinton C. House, for defendant.
Before: CYNAR, P.J., and M.J. KELLY and D.C. RILEY, JJ.
CYNAR, P.J.
On July 25, 1980, defendant was convicted by a Tuscola County Circuit Court jury of armed robbery in violation of MCL 750.529; MSA 28.797, and the use of a firearm in the commission of a felony in violation of MCL 750.227b; MSA 28.424(2). Defendant was sentenced to 20 to 40 years for the armed robbery and a consecutive 2-year term for use of the firearm. Defendant appeals as of right.
Defendant was arrested by the police on February 28, 1980. At the time defendant was arrested, the police knew only that defendant matched the superficial description of the robber, that his car had been seen in the vicinity of the robbery approximately ten minutes before the robbery, and that defendant had a criminal record of two prior robbery convictions. While this Court agrees with defendant that these facts present an extremely *74 close case, we find that probable cause existed to arrest defendant. Because probable cause did exist, we rule that the evidence found on the front seat of defendant's car was properly admitted at trial.
Defendant next argues that the derringer pistol found in his open suitcase which he had left at the residence of a friend should have been suppressed. We disagree. The trial court found the seizure of the gun to be proper, based on the plain view exception to the search warrant requirement. The trial court found the seizure justified due to "exigent circumstances", based on the theory that defendant may have returned to the apartment and removed the gun while the police were obtaining a warrant. The court stated that it would be unreasonable to require one of the officers to guard the evidence while another left the premises to obtain a warrant. Given the fact that defendant had been arrested and was in custody at the time of the discovery of the gun and the resident of the apartment was cooperating fully with the police it is clear that no exigent circumstances were present in the instant case.
We accept the trial court's findings of fact regarding the discovery of the gun. The officer who found it was properly on the premises with the consent of witness Joan Milford, a friend of the defendant. Defendant had left his suitcase in the bathroom. The suitcase was open and the handle of the gun was in plain view, projecting from beneath a sweater in the suitcase. There was, therefore, no unreasonable search.
There remains the problem of whether, under Michigan law, the seizure of the gun was proper. Defendant contends that certain limitations on the "plain view" exception to the warrant requirement mandate suppression of the evidence.
*75 Plain view issues arise in three factually distinct categories.[1] It is necessary to determine which category is applicable to this case prior to starting any analysis. The first category is where the police and the evidence or contraband are both located in a place open to the public. The police may promptly seize the evidence and, in so doing, do not infringe upon anyone's reasonable expectation of privacy.
The second category is when the police, from a justified vantage point, see evidence or contraband which is located in an area into which the police have no independent justification to enter. The officer may not enter and seize the articles merely because they have been seen. The police may enter the protected area if they obtain a search warrant, a valid consent, or if exigent circumstances exist.[2]
The final category, which is applicable in this case, is when the police justifiably intrude into an area where a person has a reasonable expectation of privacy and observe evidence or contraband. They may seize it without a warrant, provided the conditions of the doctrine of plain view, as set forth in Coolidge v New Hampshire, 403 US 443, 465; 91 S Ct 2022; 29 L Ed 2d 564 (1971), are met. The plain view doctrine requires: (1) prior justification for intrusion into the otherwise protected area; (2) the evidence is obviously incriminatory or *76 contraband; and (3) the discovery of the evidence is inadvertent.
In this case, the police were in Joan Milford's apartment with her consent. The trial court found that the derringer was in open view in the suitcase. The police knew that a derringer had been used in the robbery for which defendant was arrested. Therefore, the derringer in defendant's suitcase was obviously incriminating evidence. The final inquiry is whether or not discovery of the derringer was inadvertent.
Justice Stewart's plurality opinion in Coolidge did not define "inadvertent". There exist two theories as to what degree of expectation is required by the police for a discovery to be inadvertent.[3] One theory is that a discovery is inadvertent as long as the officers lacked probable cause to believe the evidence would be found. This narrow theory focuses on whether the police knew in advance the location of the evidence. United States v Bolts, 558 F2d 316 (CA 5, 1977). Under this theory, even if the police expected to find the evidence but did not know if it was present, the discovery was inadvertent. Id., 320. The Sixth Circuit in United States v Hare, 589 F2d 1291 (CA 6, 1979), using this theory, stated that inadvertent did not mean "unexpected" or "unanticipated".
The alternative theory, the expectation theory, is that if the police expected to find the evidence, the discovery was not inadvertent even if the police expectation is something less than probable cause. The Supreme Court, 1970 Term, 85 Harv L Rev 3, 245 (1971).
Michigan has not specifically chosen between *77 these theories. The case law language is often confusing and the focus has rarely been on the inadvertent requirement in Michigan plain view cases.[4] This panel is persuaded by the Sixth Circuit decision in Hare and adopts the narrow definition of inadvertent. The Hare Court noted that "[t]here are many times when a police officer may `expect' to find evidence in a particular place, and that expectation may range from a weak hunch to a strong suspicion". Hare, supra, 1294. Furthermore, if inadvertent is interpreted to mean "unexpected", absurd and unreasonable results may occur, id., 1295, as in this case where the police had consent to search but would be unable to seize incriminating evidence in open view which they had a hunch might be in the apartment. The Fourth Amendment only prohibits unreasonable searches and seizures. The seizure involved here is not unreasonable.
We find defendant's remaining arguments to be without merit. The log book of witness Tommy Lee Brown, a truck driver, was properly admitted under the business record exception to the hearsay rule. MRE 803(6).
Affirmed.
NOTES
[1] W.E. Ringel, Searches and Seizures, Arrests and Confessions, 1979 Supplement, § 8.2(a), pp 8-7 through 8-9.
[2] Michigan case law seems to suggest that exigent circumstances must always be present to use the plain view doctrine. People v Johnson, 104 Mich App 629, 635; 305 NW2d 560 (1981), and cases cited therein. This additional limitation, we contend, is from a misinterpretation of Coolidge v New Hampshire, 403 US 443, 466; 91 S Ct 2022; 29 L Ed 2d 564 (1971). The exigent circumstance requirement is combined with the plain view exception only where the police, from a justified vantage point, see evidence in an area where they have no independent justification to enter. Exigent circumstances give to the officers independent justification to enter the area.
[3] Comment, Criminal Procedure "Inadvertence": The Increasingly Vestigial Prong of the Plain View Doctrine, 10 Mem St U L Rev 399 (1980).
[4] See dicta in People v Murphy, 87 Mich App 461, 465; 274 NW2d 819 (1978). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/8304542/ | CROWNOYER, J.
The original bill in this cause was filed to have a judgment of the Circuit Court of Cannon County, in favor of the First State Bank and against I. C. Howeth, personally, and as administrator of R. B. Howeth, deceased, set aside on the grounds of fraud, accident and mistake, and to recover the amount that had been collected on said judgment.
On July 23, 1927, Eunice Mildred Finley (one of the heirs of R. B. Howeth, deceased), a minor, by her next friend, filed this bill in the Chancery Court of Cannon County to have an administrator ad litem appointed to properly represent the interests of the estate of R. B. Howeth, deceased; to have said judgment set aside on the grounds of failure of consideration and because I. C. Howeth forged the name of R. B. Howeth on the two notes to the bank, which bank fraudulently obtained a judgment on said notes in the Circuit Court against R. B. Howeth’s estate; to have said cause re-tried and to recover all moneys collected from the estate of R. B. Howeth, deceased, on said judgment.
The First State Bank became insolvent on or about August 8, 1923, and H. L. Grigsby, Superintendent of Banks for the State of Tennessee, was appointed receiver, hence he was made a defendant in this case.
Defendants, Jesse Davenport, First State Bank and H. L. Grigs-by, Receiver, filed demurrers to the bill, and later filed answers.
The court appointed Walter Hancock administrator ad litem for the estate of R. B. Howeth, deceased, and he filed an answer and a cross bill, making the First State Bank and H. L. Grigsby, Receiver, defendants to the cross-bill, in which he asked that said judgment be set aside and he asked for a recovery of the money collected, as prayed in the original bill.
Depositions were taken by both sides, and on January 8, 1930, the cause was heard upon the pleadings, proof and stipulations filed.
The Chancellor found and held that R. B. Howeth directed I. C. Howeth to sign his name to the two notes upon which judgment was rendered in the Circuit Court, and that R. B. Howeth was an *130accommodation surety for bis son, I. C. Howeth, who executed the notes to the bank for borrowed money and to cover overdrafts.
The Chancellor found that I. C. Howeth did not forge his father’s name to the two notes, that R. B. Howeth was an accommodation endorser, and there was no fraud on the part of the bank in obtaining the judgment in the Circuit Court.
The Chancellor dismissed the original bill and cross-bill, but rendered judgment against the defendant, I. C. Howeth, in the sum of $13,509.23 and the costs of the suit.
From the Chancellor’s decree the complainant and the administrator ad litem appealed to this court and have assigned errors, which are, in substance, as follows:
“The Chancellor erred in dismissing complainant’s bill and the cross-bill of the administrator ad litem:
“(1) Because there was no evidence to support the findings and the decree of the Chancellor.
“(2) Because the judgment in the Circuit Court against I. C. Howeth, administrator of the estate of R. B. Howeth, deceased, was based upon two notes, one for $3481.42, and the other for $5012.88, sued on, and the name of R. B. Howeth, deceased, nowhere appears on said two notes.
“ (3) Because the signature of R. B. Howeth to the two notes sued on, was forged, or was signed thereon without his authority or consent.
“(4) Because as to said note for $3481.42, if signed by R. B. Howeth, or if his signature was authorized, the same was attached to said note long after it had been executed, delivered and accepted by the bank, and he was merely an accommodation surety thereon, hence the note was executed by him without consideration and is not binding on his estate, and therefore the judgment based thereon was void.
“ (5) Because, as to the note for $5012.88, if signed by R. B. Howeth, or if his signature was authorized, the same was attached to said note long after it had been executed, delivered and accepted by the bank, and he was merely an accommodation surety thereon, hence the note was executed by him without consideration and is not binding on his estate, and therefore the judgment based thereon was void.
“ (6) Because the time of payment was extended many times after maturity of said notes and after the death of the accommodation surety, R. B. Howeth.
“(7) Because there was collusion between the First State Bank and I. C. Howeth to have the name of R. B. Howeth signed on said two notes and in extending the time of payment beyond the dates of maturity, without the knowledge and consent of R. B. Howeth, which released his estate.”
*1311. "We are of the opinion that there was not only evidence to support the decree of the Chancellor, but that the preponderance of the evidence was in favor of his decree.
I. C. Howeth was a merchant of Cannon County. His father, R. B. Howeth, was a well-to-do farmer of that county. I. C. Howeth had a bank account in the First State Bank of Woodbury in Cannon County.
Some time in the year 1918 I. C. Howeth acquired the morphine habit as the result of illness, and was a morphine addict. During the years from 1918 to 1923 he was to some extent under the influence or morphine, and it is claimed could not properly look after his affairs, which fact was well known in that community.
The bank was in the habit of permitting I. C. Howeth to overdraw his account and then requiring him to come in, and execute notes for the overdraft.
On February 15, 1920, a note of I. C. Howeth’s for $3481.42 fell due, and a note for this amount with $140 interest added to the face of it, making $3621.42, dated February 15, 1920, due in six months, was filled out and delivered to the bank, but was not accepted, and on June 28, 1920, I. C. Howeth signed this note and his father, R. B. Howeth, authorized I. C. Howeth to sign his name to said note as surety.
On June 28, 1920, I. C. Howeth executed another note to the bank, a new note, for $5012.88, due in ninety days. Hi's father, R. B. Howeth, was present and authorized I. C. Howeth to sign his name as surety to this note. The two notes thus executed were delivered to and accepted by the bank at that time.
When the $3621.42 note fell due on August 15, 1920, the time of payment was extended one year, on payment of interest, to August 15, 1921, and afterwards the time of payment was extended, on payment of interest, to August 15, 1922.
When the $5012.88 note fell due, on September 28, 1920, the time of payment was extended to December 30, 1922, on payment of interest.
R. B. Howeth died intestate in December, 1920, and I. C. Howeth qualified as his administrator.
In January, 1923, the bank brought suit on said notes in the Circuit Court of Cannon County against I. C. Howeth, individually, and as administrator of the estate of R. B. Howeth, deceased. No defense was made to said action and on February 12, 1923, judgment by default was entered for $9569.88 and $500 attorney’s fee.
The first assignment, that there is no evidence to support the decree, is not well made, as the trial in this court is de novo, but as above stated the preponderance of the evidence is in favor of the decree, and this assignment will be overruled.
*1322. Complainant’s assignment that the Chancellor erred in dismissing complainant’s bill and the cross-bill of the administrator ad litem because said judgment in the Circuit Court was based upon the two notes sued on and that the name of R. B. Howeth no where appears on said notes, is not well made and must be overruled.
It is undisputed that the signature of the surety on the two notes was intended for that of R. B. Howeth. It is contended for complainant that the name appears on the notes “B. B. Howeth.” The first initial in the first note looks as if it were a “B,” but in the second note it looks as if it is an “R.” But in both instances we can see that it could have been intended for an “R”; but as we view it this is entirely immaterial. There is no contention that it was the signature of another, but the claim is that because the signature of R. B. Howeth looks as if it was “B. B. Howeth” the judgment is therefore void.
Service of process was had on the proper party, the administrator of R. B. Howeth, deceased. At the trial the notes were exhibited to the court and it does not appear what other evidence was adduced at the trial in the Circuit Court, but no defense was made so far as the record shows that this signature was not executed by R. B. Howeth or that it was unauthorized. Judgment was entered on the notes against the estate of R. B. Howeth.
A misnomer must be pleaded in abatement or it is waived, and one is concluded by a decree rendered against him by a wrong name, if process was properly served upon him and he failed to plead the matter in abatement. Young v. South Tredegar Iron Co., 85 Tenn., 189, 2 S. W., 202; Maury County v. Lewis County, 1 Swan, 239; East Tenn. & Ga. R. R. Co. v. Evans, 6 Heisk., 609.
The fact that the other heirs of R. B. Howeth knew nothing of this suit in the Circuit Court until after it was ended, cannot affect the result. The administrator was the only necessary party, and they were not proper parties to the suit.
3. We are of the opinion that the weight of testimony is that the two notes were not forged, but that the name of R. B. Howeth was signed to them with his authority and consent.
This fact is testified to by both Preston and Davenport, and is denied by no one except I. C. Howeth, who states that he had no authority from his father to sign his name to the notes but that Preston and Davenport required him to sign it, but at another time he testifies that he does not remember anything about signing it; hence this assignment must be overruled.
4. The fourth assignment is that the note for $3621.42 was signed by R. B. Howeth long after its execution by I. C. Howeth and its acceptance by the bank, hence it is insisted that said note was signed by R. B. Howeth without consideration and was therefore not bind*133ing upon his estate. This contention is not well made and must be overruled.
Preston, cashier of the bank, and Jesse Davenport both testified that the note was executed by I. C. Howeth and It. B. Howeth at the same time, in their presence; and that I. C. Howeth signed R. B. Howeth’s name to both notes at his request and in his presence.
I. C. Howeth says he doesn’t remember signing his father’s name.
The bank records were introduced, which show the $3621.42 note, dated February 15, 1920, renewal of note due on that date, was registered on the bank’s records as of the date of March 27, 1920, and was given the serial number 3574. D. F. Williams, Clerk & Master, and also custodian of the bank’s books, testified that it was customary for the bank to register a note after its acceptance and payment of interest. From all of this, it is insisted that the bank had already accepted this note with the signature of I. C. Howeth alone, and that R. B. Howeth did not sign the note until June 28, 1920, and therefore his estate is not liable,, as there was no consideration for his signature. This contention is not well made, because both Preston and Davenport testified that the note was not actually accepted until after it was signed by R. B. Howeth. There is no testimony to the contrary except that herein cited. Hence we hold that the note was not accepted until after it was signed by R. B. Howeth and that this was a sufficient consideration, and that he became primarily liable on the note.
5. The assignment that the $5012.88 note was signed by R. B. Howeth after the execution and the acceptance of the same by the bank, is not well made and must be overruled. The weight of the testimony is that the signature of R. B. Howeth was authorized and signed on the date that it was delivered and that it was not accepted by the bank until after it was signed.
6. The assignment that the surety, R. B. Howeth, was released by the extension of time of payment of the notes without notice, is not well made, for the reason that an accommodation surety is primarily liable.
R. B. Howeth appears on the face of both notes to be a joint maker, but the extrinsic proof shows that he was an accommodation surety. This makes him primarily liable for the payment of the notes. Shannon’s New Code, sec. 3516a4; Gates v. Armstrong, 3 Tenn. App., 75.
“A person signing a note as maker, but shown by extrinsic evidence to have been an accommodation maker was primarily liable, and is not discharged by an agreement, although made without his knowledge or consent, between the holder and maker, for valuable consideration, to extend the time of payment.” Graham v. Shephard, 136 Tenn., 418, 189 S. W., 867; O’Neal v. Stuart, 281 Fed., 715; Reeder v. Bank, 2 Higgins, 713.
*1347. The assignment that there was collusion between the officials of the bank and I. C. IToweth to defraud the estate of R. B. Howeth, is not well made.
The weight of the testimony is that there was no fraud, collusion, or deceit, and this assignment must be overruled.
There is no proof that I. C. IToweth was a person of unsound mind. It is proven that he was a morphine addict, but it is not shown that his mind was affected. TIis mother, knowing that he was an addict, permitted him to be qualified as administrator of R. B. Howeth’s estate, and to attend to the business of that estate for seven years, without objection.
Complainant has failed to prove that she was prevented by fraud, accident, or mistake, from making a defense in the Circuit Court, and that she had a meritorious defense to said suit, and the Chancellor was not in error in dismissing her bill. Gibson’s Suits in Chancery, secs. 1206-7. We concur in the finding of the Chancellor as set out in his opinion and decree.
It results that all the assignments of errors must be overruled and the decree of the Chancellor affirmed. The cost of the cause, including the cost of the appeal, is adjudged against the appellants and the sureties on the appeal bond, for which execution may issue.
Faw, P. J., and DeWitt, J., concur. | 01-03-2023 | 10-17-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/1583707/ | 31 So. 3d 380 (2010)
STATE of Louisiana
v.
Terrance K. TODD.
No. 2009-KO-2170.
Supreme Court of Louisiana.
April 9, 2010.
*381 Denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583701/ | 31 So. 3d 5 (2009)
Pamela L. FERGUSON, Appellant
v.
Juanita H. LEWIS, Appellee.
No. 2007-CA-02237-COA.
Court of Appeals of Mississippi.
May 5, 2009.
Rehearing Denied November 24, 2009.
Certiorari Denied March 25, 2010.
Staci Bozant O'Neal, attorney for appellant.
Jack G. Moss, Raymond, attorney for appellee.
EN BANC.
*6 GRIFFIS, J., for the Court.
¶ 1. Pamela L. Ferguson ("Pamela") appeals the decision of the Hinds County Chancery Court which granted her mother, Juanita H. Lewis, visitation rights with Pamela's fifteen-year-old daughter, Kathryn.[1] Feeling aggrieved by this decision, Pamela appeals and asserts that: (1) the chancellor's decision granting visitation rights to Lewis is against the overwhelming weight of the evidence; (2) the chancellor abused his discretion in awarding Lewis overnight visitation rights and by disregarding Kathryn's wishes; and (3) the chancellor erred in concluding that Pamela had unreasonably denied Lewis visitation with Kathryn. Finding no error, we affirm.
FACTS
¶ 2. Kathryn was born on May 20, 1993, and resides with her natural mother, Pamela, in Madison, Mississippi.[2] On August 29, 2007, Lewis filed a petition with the chancery court for grandparents' visitation rights pursuant to Mississippi Code Annotated section 93-16-3(2) (Rev.2004). Thereafter, a hearing was held on the matter.
¶ 3. Lewis testified that she and Kathryn had a close relationship when Kathryn was younger and that Kathryn and Pamela even lived with her for a short while following the death of Kathryn's father. Lewis stated that Kathryn often spent the night at her house and that Pamela brought Kathryn to visit her approximately once a week.
¶ 4. According to Lewis, she purchased a home for Pamela and Kathryn in August 2006. The home was located across the street from Lewis's home. Lewis recalled that when Pamela and Kathryn first moved across the street, her relationship with Kathryn was good and that Kathryn visited her daily. Further, Lewis testified that she often sent food to Pamela and Kathryn. Lewis stated that her relationship with Pamela changed shortly after Christmas 2006. Lewis went to Pamela's house to retrieve her dishes that had accumulated at Pamela's house, but when she arrived, Pamela would not allow her to enter. Pamela instructed Kathryn to "get back." Lewis testified that Pamela threatened to call the police if she did not leave. Lewis recalled that from that point forward, Pamela cut off all communication with her.
¶ 5. Lewis also testified about an incident that occurred when she approached Kathryn at the mailbox outside of Kathryn's home. Lewis apologized to Kathryn for not seeing her, and she told Kathryn that Pamela would not allow them to see each other because Pamela suffers from a mental illness.[3] According to Lewis, Kathryn was not surprised upon hearing that Pamela was mentally ill. Sometime after this encounter, Pamela and Kathryn decided to move. Lewis stated that Pamela refused to tell her where they were moving, so she found out from one of the movers.
¶ 6. Pamela testified that she does not suffer from bipolar disorder and that she never told Lewis that she does. Pamela stated that she and Lewis have a history of conflict and that things escalated after Christmas 2006. Pamela said that shortly *7 before Christmas 2006, when she was ill with bronchitis, Lewis called her five or six times in one day. Pamela stated that during one conversation, Lewis accused her of being mentally ill and stated that she never wanted to speak to her again. Pamela testified that she then informed Lewis that she would no longer allow her to control her life. Pamela also testified that she refused to allow Lewis to have contact with Kathryn from that point forward. Pamela further testified that "Momma has had a pattern, if she can't control, she's out to destroy. I've seen her do it with my sister, with Rebecca, [and] with Sam.[4] And, you know, I just decided I'm 45 years old and I don't have to go through this." (Footnote added).
¶ 7. Pamela also testified that Kathryn has been on an emotional roller coaster ever since the mailbox encounter with Lewis, even though at one point Kathryn and Lewis had a close relationship. She testified that she does not feel that it is in Kathryn's best interest to have visitation with Lewis because of the emotional toll that contact with Lewis has on Kathryn.
¶ 8. According to Kathryn, Pamela and Lewis have a history of conflict. Kathryn explained that on one particular occasion when she and Pamela lived across the street from Lewis, they refused to allow Lewis to enter their home and Lewis attempted to force her way in. After she failed to gain entry, she threatened to call the police. Kathryn testified that she told Lewis that day that she did not want anything else to do with her.
¶ 9. Kathryn also testified about the mailbox incident. According to Kathryn, while she was checking the mail, Lewis approached and informed her that Pamela was mentally ill. Kathryn recalled Lewis asking her if she wanted Lewis to take Pamela to a doctor. Kathryn testified that she told Lewis that she did not.
¶ 10. Kathryn was also examined substantially by the chancellor. During this examination, Kathryn stated that she does not feel comfortable staying overnight at her grandmother's home. She stated that this is partly because of the incident when Lewis attempted to force her way into their home.
¶ 11. Following the hearing, the chancellor, against Kathryn's wishes,[5] awarded Lewis visitation, including overnight visitation. It is from this decision that Pamela now appeals.
STANDARD OF REVIEW
¶ 12. We employ a limited standard of review in reviewing a chancellor's decision. Stacy v. Ross, 798 So. 2d 1275, 1278(¶ 13) (Miss.2001). Therefore, we will not reverse a chancellor's findings unless the record indicates that "the chancellor abused his discretion, was manifestly wrong, or made a finding which was clearly erroneous." Id. (citing Bank of Miss. v. Hollingsworth, 609 So. 2d 422, 424 (Miss. 1992)). However, an appellate court reviews questions of law de novo. Id. (citing Zeman v. Stanford, 789 So. 2d 798, 802(¶ 12) (Miss.2001)).
ANALYSIS
Whether there is substantial evidence to support the chancellor's decision granting Lewis visitation rights with Kathryn.
*8 ¶ 13. Pamela raises three issues that are interrelated, as each of them challenge the appropriateness of the chancellor's grant of visitation rights to Lewis. Therefore, we recast the issues as one: whether there is substantial evidence to support the chancellor's decision granting Lewis visitation rights with Kathryn.[6]
¶ 14. The Mississippi Legislature has determined that a chancery court may "grant visitation rights with a minor child... to the grandparents of such minor child[.]" Miss.Code Ann. § 93-16-1 (Supp.2008). Mississippi Code Annotated section 93-16-3(2) and (3) (Rev.2004) provides:
(2) Any grandparent who is not authorized to petition for visitation rights pursuant to subsection (1) of this section may petition the chancery court and seek visitation rights with his or her grandchild, and the court may grant visitation rights to the grandparent, provided the court finds:
(a) That the grandparent of the child had established a viable relationship with the child and the parent or custodian of the child unreasonably denied the grandparent visitation rights with the child; and
(b) That visitation rights of the grandparent with the child would be in the best interests of the child.
(3) For purposes of subsection (3) of this section, the term "viable relationship" means a relationship in which the grandparents or either of them have voluntarily and in good faith supported the child financially in whole or in part for a period of not less than six (6) months before filing any petition for visitation rights with the child or the grandparents have had frequent visitation including occasional overnight visitation with said child for a period of not less than one (1) year.
Mississippi Code Annotated section 93-16-5 (Supp.2008) provides, in pertinent part, that:
... the court may, in its discretion, if it finds that such visitation rights would be in the best interest of the child, grant to a grandparent reasonable visitation rights with the child. Whenever visitation rights are granted to a grandparent, the court may issue such orders as shall be necessary to enforce such rights and may modify or terminate such visitation rights for cause at any time.
(Emphasis added).
¶ 15. According to section 93-16-5, the chancellor has discretion to award a grandparent visitation rights. Here, the chancellor did just that. The chancellor heard testimony, considered all the evidence offered, evaluated the demeanor or credibility of the witnesses, and then decided that Lewis should be given visitation rights.
¶ 16. Pamela argues that the chancellor did not conduct a proper analysis of the factors set out by the Mississippi Supreme Court in Martin v. Coop, 693 So. 2d 912, 916 (Miss.1997). In Martin, the supreme court announced factors that should be considered by chancellors when determining whether to grant grandparents' visitation rights:
1. The amount of disruption that extensive visitation will have on the child's life. This includes disruption of school activities, summer activities, as well as any disruption that might take place between the *9 natural parent and the child as a result of the child being away from home for extensive lengths of time.
2. The suitability of the grandparents' home with respect to the amount of supervision received by the child.
3. The age of the child.
4. The age, and physical and mental health of the grandparents.
5. The emotional ties between the grandparents and the grandchild.
6. The moral fitness of the grandparents.
7. The distance of the grandparents' home from the child's home.
8. Any undermining of the parent's general discipline of the child.
9. Employment of the grandparents and the responsibilities associated with that employment.
10. The willingness of the grandparents to accept that the rearing of the child is the responsibility of the parent, and that the parent's manner of child rearing is not to be interfered with by the grandparents.
Id.
¶ 17. Upon our review of the record, we find that the chancellor thoroughly analyzed each factor. The chancellor, in pertinent part, opined:
Juanita is Pamela's seventy-four-year-old natural mother, and [Kathryn], Pamela's fourteen-year-old daughter, is the subject of the relief requested. The [c]ourt took the testimony of five witnesses, including the parties, [Kathryn], Juanita's brother Shelton Holiday, and Rebecca Vaught, another of Juanita's grandchildren and [Kathryn]'s first cousin.
After living in the Jackson area from the time [Kathryn] was about three years of age, Pamela moved across the street from her mother, Juanita, in Raymond, Mississippi, in approximately November 2006, shortly after Pamela's father died. Everyone agrees that Juanita purchased the home for Pamela at a cost of over $200,000. The evidence is clear that, while the parties lived in such close proximity, [Kathryn] visited Juanita's house almost every day; however, the close proximity of the parties proved to be a considerable obstacle to their relationship, and shortly after Christmas 2006, Pamela refused to have anything to do with her mother and withheld [Kathryn]'s society from her as well. The record is not at all clear about what specific incident led to the breakdown in communication. Juanita testified that it followed an incident in which Pamela was very rude to her and that Pamela just froze her out of contact with her and [Kathryn] from that point on.
Everyone also agrees that [Kathryn] was, and is, the apple of Juanita's eye, and all parties acknowledge that they love each other very much. Pamela and [Kathryn] both say that Juanita is a very controlling woman, although there was very little clear and specific evidence in the testimony illustrative on this point. Juanita testified that she believed that Pamela is bipolar, though Pamela denies ever having been so diagnosed. In September 2007, Pamela abruptly sold the house Juanita had purchased for her and moved to Madison, Mississippi, refusing to tell Juanita where she and [Kathryn] were moving. Feeling aggrieved, Juanita says that she decided to ask for at least some portion of her money back from the sale of the house in Raymond, but that Pamela refused.
The [c]ourt took the testimony of [Kathryn] on the record in chambers. [Kathryn] was articulate and engaging for a *10 child her age, though the [c]ourt noted from her testimony that she was very much under the emotional and psychological influence of her mother, Pamela, almost to the point of being able to be said to have been brainwashed. Though she repeatedly expressed the belief that Juanita was attempting to control and undermine her mother and herself, she was not able to cite more than a couple of rather minor specific instances of behavior that led her to that conclusion. [Kathryn] expressed concern that Juanita's soul needed "salvation," although Juanita had testified that she was an active member of the Raymond United Methodist Church. There can be no other explanation for the child's belief in this regard than that Pamela had inculcated her with such a dubious notion.
The circumstances here present [sic] certainly seem to fit the requirements set forth in Section 93-16-3(2) and (3), Mississippi Code [Annotated] of 1972, as amended, and in Martin v. Coop, 693 So. 2d 912 (Miss.1997). There is no question that Juanita has established a viable relationship with [Kathryn], and the record is simply devoid of sufficient evidence of any contributory conduct by Juanita to justify Pamela's withholding of [Kathryn]'s company. The evidence shows that Juanita and her late husband, Pamela's father, have financially supported Pamela for much of [Kathryn]'s life. They bought her vehicles and a house valued at over $200,000. The [c]ourt specifically finds, then, that Pamela's conduct in denying Juanita the opportunity to see and visit with [Kathryn] constitutes an unreasonable denial and is not in [Kathryn]'s best interest.
The Mississippi Supreme Court has outlined, in Martin, a number of factors for this [c]ourt to consider in weighing the evidence taken on a grandparent visitation matter. A review of those factors in this case more than supports a finding by this [c]ourt that Juanita's rights should be enforced pursuant to the statute:
1. Amount of disruption extensive visitation will have on grandchild's life. Juanita and Pamela both live in the metropolitan Jackson area. [Kathryn] is home-schooled and Pamela does not work, so [hers] and Pamela's schedules are far more flexible than the average person's. Even if extensive visitation was being requested, it would appear that such would not be difficult to arrange; however, Juanita testified that she would be satisfied if [Kathryn] was allowed to visit in the summer and at Christmas.
2. Suitability of grandparent's home with respect to amount of supervision received by grandchild. Juanita lives alone in a large house in Raymond, Mississippi surrounded by acreage and the product of her hobby of growing flowers. [Kathryn] has spent many hours there and testified that she enjoyed riding with Juanita in her Club Car around the premises. Juanita testified that [Kathryn] has her own room at her house, and a cabinet in which she keeps the things with which she enjoys playing. [Kathryn] also indicated that she very much liked to visit with her "Uncle Shelton Lee," Juanita's brother who visits Juanita's house every day. There is nothing about Juanita's home that from the evidence would indicate it is not a completely suitable place for [Kathryn] to visit or that Juanita would not be available and expected to oversee such visits to whatever extent was required.
3. Age of grandchild. At fourteen (14) years of age, [Kathryn] is at a perfectly suitable age to visit a grandparent. *11 She needs no special attention, and Juanita is healthy and active and capable of providing for her what she needs.
4. Age and physical and mental health of grandparents. As already observed, Juanita is physically capable of providing for [Kathryn]'s needs when the child is at her home for visitation. Pamela alleged that Juanita is controlling and intrusive in her business, and the testimony seemed to indicate that Juanita had a somewhat difficult relationship with other family members. However, the evidence is simply not sufficient to conclude that Juanita lacks sufficient mental health and stability to visit with, love, and care of her grandchild.
5. Emotional ties between grandparents and grandchild. The emotional ties between Juanita and [Kathryn] were apparently closer at points prior to the trial of this matter. However, [Kathryn] admitted that she had visited regularly in Juanita's home and that she enjoyed such visits. This [c]ourt believes that whatever strains in that relationship now exist are largely the result of Pamela's efforts to pit herself and [Kathryn] against Juanita and to recruit [Kathryn] to her side in that battle. As a young and impressionable child and lacking mature independent judgment herself, it is understandable that [Kathryn] would adopt her mother's attitude. None of that acts to undo in so short a time the considerable emotional ties between Juanita and [Kathryn] which existed prior to the most recent split between Juanita and Pamela.
6. Moral fitness of grandparents. No allegation was made that Juanita is not morally fit to exercise her rights to visit with her grandchild, and no evidence of such was received or detected by the [c]ourt.
7. Distance of grandparents' home from grandchild's home. As has been noted hereinabove, Pamela and [Kathryn] live in the Jackson metropolitan area, as does Juanita. This factor should not be considered a detriment in any way to visitation between Juanita and [Kathryn].
8. Any undermining of parent's general discipline of grandchild. There was no testimony or other evidence that Juanita has undermined or attempted to undermine Pamela's discipline of [Kathryn]. Juanita acknowledged on cross-examination that she knew that Pamela did not allow [Kathryn] to watch television and that [Kathryn] had been allowed to watch some television while at her house. Such does not, however, constitute an interference with Pamela's general discipline, especially when Juanita testified further that she attempted to oversee such activity and to limit [Kathryn]'s viewing to only those type of shows of which she believed Pamela would approve.
9. Employment of grandparents and responsibilities associated with it. Juanita does not work, and this factor does not pose a problem with the exercise of her visitation with [Kathryn].
10. Willingness of grandparents to accept that rearing of [a] child is parent's responsibility and that parent's manner of childrearing is not to be interfered with. As mentioned above, Pamela and Juanita disagree on some aspects of child rearing, one of which is the child's opportunity to watch television. Although Juanita acknowledged letting [Kathryn] watch some TV, she did make reference to *12 her attempts to censor the specific shows the child watched. Juanita also testified that she thought it would be best if [Kathryn] was exposed to other children her age by attending a more traditional school setting; however, no evidence was received to indicate that she interfered in Pamela's decision to home-school [Kathryn]. There was simply no evidence that Juanita has made any real efforts to interfere with Pamela's parental autonomy.
On balance, it seems to the [c]ourt that Pamela is hyper-sensitive to Juanita's differing opinions and need for frequent contact with her and [Kathryn]. An honest discussion of these problems with Juanita, in the proper setting, would have been a better way of addressing such sensitivity rather than simply pulling up stakes and fleeing. Pamela owes much to Juanita and Juanita's deceased husband, Pamela's father. Juanita has extensive family in the Raymond, Mississippi[] area, including [Kathryn]'s aunts, uncles, and cousins. The [c]ourt finds that it is in [Kathryn]'s best interest that she maintain contact with this family and with Juanita, and Juanita's petition is well taken on the evidence adduced at trial and is granted.
At the conclusion of the trial, the [c]ourt granted Juanita's request for temporary relief and required [Kathryn] and Pamela to go out to eat with Juanita and Juanita's brother, Shelton, on the third Saturday of each month. The [c]ourt believes that for the time being that schedule is a good one to reestablish the trust in these relationships. However, as part of the permanent relief granted herein, the [c]ourt would add to that schedule the following: 1) [Kathryn] is to be delivered by Pamela to Juanita's residence by 4:00 p.m. on Christmas Eve each year, and [Kathryn] may be picked up from such visitation (in the event Pamela chooses not to stay) at 8:00 p.m.; and 2) [Kathryn] is to be delivered by Pamela to Juanita's residence by 6:00 p.m. on the second Saturday of June of each year and on the second Saturday of July each year, and allowed to visit for a period of one week on each such occasion, unless Juanita and Pamela agree on different weeks during the summer, or at another point in the year.
¶ 18. The chancellor's opinion accurately discussed the testimony that was offered. It is clear that the chancellor considered the testimony of both Kathryn and Pamela. However, the chancellor determined that it was in Kathryn's best interest to attempt to have a relationship with her grandmother.
¶ 19. Each member of this Court, if he or she had served as the chancellor, may have reached a different decision based on the facts presented. The difficulty here is compounded because the chancellor's decision requires a teenager to do that which she apparently does not want to do. It is often said that chancellors must have the wisdom of Solomon in domestic cases. It may also be said that chancellors must have much more wisdom than Solomon when dealing with teenagers. The chancellor here did not have a magic wand, and he was not gifted with the ability to mend "family fences." However, it is clear that the chancellor did what he thought was in the best interest of the child. The fact that we may have reached a different result does not support a reversal of the chancellor's decision. This Court did not have the benefit of looking at the witnesses, considering the interaction of the parties and witnesses, and considering the demeanor or credibility of the parties and the witnesses. In this case, we are reluctant to reverse the chancellor who was present and saw and smelled the "smoke of battle."
*13 ¶ 20. We conclude that this matter was within the discretion of the chancellor. Miss.Code Ann. § 93-16-5. The chancellor's discretion was broad, and this Court will not disturb the chancellor's findings unless the chancellor was manifestly wrong, abused his discretion, or applied an erroneous legal standard. Andrews v. Williams, 723 So. 2d 1175, 1177(¶ 7) (Miss. Ct.App.1998) (citing Sandlin v. Sandlin, 699 So. 2d 1198, 1203 (Miss.1997)). Based on the evidence presented, we cannot find that the chancellor was manifestly wrong, abused his discretion, or applied an erroneous legal standard. Glass v. Glass, 726 So. 2d 1281, 1284(¶ 11) (Miss.Ct.App.1998). Accordingly, the chancellor's judgment is affirmed.
¶ 21. THE JUDGMENT OF THE HINDS COUNTY CHANCERY COURT IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLANT.
KING, C.J., MYERS, P.J., BARNES, ISHEE AND MAXWELL, JJ., CONCUR. IRVING, J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY LEE, P.J., AND ROBERTS, J. CARLTON, J., NOT PARTICIPATING.
IRVING, J., Dissenting.
¶ 22. The majority finds that because of the wide discretion given to chancellors in matters of grandparent visitation, we, as an appellate court, must affirm the chancellor's decision to compel Kathryn, a child who will be sixteen years old on May 20, 2009, to have visitation with her maternal grandmother, Juanita H. Lewis. In my judgment, the record in this case demonstrates that the chancellor abused his considerable discretion. Therefore, I dissent. I would reverse and render the chancellor's decision.
¶ 23. Before delving into the facts, I should point out that, even if I am mistaken in my view that the chancellor erred in requiring Kathryn to have visitation with her grandmother, a portion of the visitation order crafted by the chancellor must be reversed, because the order requires Pamela Ferguson, Kathryn's mother, to share a meal with Kathryn and Juanita in the presence of one of Kathryn's maternal great-uncles on the third Saturday of each month, beginning October 20, 2007, and continuing on the third Saturday of each month thereafter. I know of no authority that empowers a chancellor to order the parent to participate in the visitation between the grandparent and grandchild.
¶ 24. I now turn to the specific reasons why I believe the chancellor, though well intentioned, erred. It is well settled law in this state that in all matters involving a minor child, the polestar consideration is always the child's best interest. In my judgment, the determination of what is in the best interest of a child must always be guided by the specific facts of each case, not by the view that in every situation the best interest of the child requires that there be a harmonious and cohesive extended-family relationship. It seems to me that it is this latter view, rather than the former, that guided the chancellor's deliberations.
¶ 25. Faced with a very articulate, intelligent, and focused child, the chancellor, in my view, decided that he had to find some way to discount the overwhelming and clear evidence of deep divisions and strong negative feelings attending Juanita, Pamela, and Kathryn's relationship which suggests that forcing visitation between granddaughter and grandmother just may not be in the grandchild's best interest. Therefore, the chancellor concluded that the grandchild, [Kathryn], was perhaps brainwashed. To be precise, the chancellor *14 stated: "[Kathryn] was articulate and engaging for a child her age. Though the Court noted from her testimony that she was very much under the emotional and psychological influence of her mother, Pamela, almost to the point of being able to be said to have been brainwashed."
¶ 26. Regarding the chancellor's conclusion that it could be said that Kathryn had been brainwashed, Pamela's attorney, in her motion for reconsideration, made a very poignant and, I believe, accurate observation:
The [c]ourt discounted [Kathryn's] religious beliefs as "brainwashing" and took issue with her beliefs concerning her grandmother. Whether [Kathryn]'s beliefs represent ultimate truth in the heavenly realms is inconsequential to the fact that she indeed believes what she spoke about to the [c]ourt in chambers. This [c]ourt took issue with [Kathryn] and engaged in a heated debate with the child in a manner that resembled hostile adversarial cross-examination. In the end, [Kathryn] remained resolute in her belief that her grandmother had acted to inflict emotional pain on her and at this time she did not wish to visit with her grandmother.
I should also point out that, in my view, the chancellor, as wise as he may be, and notwithstanding his noble and good intentions, is not qualified to make the determination that Kathryn is brainwashed. He is neither a psychologist nor a psychiatrist. I believe that such a determination is best left to the experts who are schooled in such matters. That the chancellor, as the majority put it, "smelled the smoke of battle" does not mean that he, by that experience, was transformed to an omniscient, four-star general. Nor does it obligate us to abdicate our oversight responsibilities as an appellate court.
¶ 27. As I stated in the beginning of this dissent, the record speaks more eloquently than anything I have said or could say further in support of my view that the chancellor abused his discretion. Therefore, rather than attempt to characterize the testimony that was before the chancellor, I quote Kathryn's in-chambers testimony, beginning with the direct examination by Pamela's attorney:
Q. [Kathryn], will you state your full name.
A. [Kathryn].
Q. How old are you?
A. Fourteen.
Q. When is your birthday?
A. May 20th, 1993.
Q. And do you understand why we're here at court today?
A. Yes. It's because of my grandmother. She has wrongly accused my family, has hurt everyone in my family.
Q. Well, let me ask you this: Do you havehow do you feel about seeing your grandmother right now?
A. Nervous[,] and I just don't know what to say.
Q. Why do you think you're nervous?
A. Because it's just so weird to see her after what she's done and how she's hurt my family.
Q. How doand I don't want to upset you.
A. Oh, no.
Q. What do you think she's done to hurt your family?
A. She has spoken lies about our entire family.
THE COURT: When you say your "entire family," who are you including?
THE WITNESS: My cousins, my aunt, my uncle, my momma, all those people. And by hurting them, I feel like she's hurt me.
*15 THE COURT: Okay. I'm sorry. Go ahead.
[PAMELA'S ATTORNEY]: That's okay.
BY [PAMELA'S ATTORNEY]:
Q. There's been testimony already about you seeing your momma at the mailboxI mean your grandmother at the mailbox.
A. That's right.
Q. Tell the judge what happened.
THE COURT: Excuse me. Do you want to come over here so you can see?
[JUANITA'S ATTORNEY]: I'm fine, Judge.
THE WITNESS: At the mailbox?
BY [PAMELA'S ATTORNEY]:
Q. Yes. Tell us about the visit at the mailbox.
A. All right. I was going to the mailbox one day, and my grandmother was driving by in the car. So I saw her, and she said, "Hey, [Kathryn], what are you doing?" And so I said, "I'm going to get the mail." And so somehow she kept on talking and talking and talking, and we got into a conversation, and she said, "You know, your mother is mentally ill. Do you need me to take her to the doctor?" And I said, "No," but I said, "Thank you, Grandmother. Thank you." Because she said she'd be willing to take her to the doctor. So that's what happened from there, and then she went home. So ...
THE COURT: What were you thanking her for?
THE WITNESS: I was just thanking her because she said she'd take Momma to the doctor. No, I didn't think she needed to go to the doctor, but I really didn't know what to say to her.
THE COURT: Okay.
THE WITNESS: So ...
BY PAMELA'S ATTORNEY:
Q. Did you cry after that visit?
A. I did cry in front of my mother. But Grandmomma's like, I would never hurt you, I'd never do anything wrong to you. But, see, she already has. She's already done the damage. I mean, if you hurt another family member, that's doing damage to somebody else. So that's pretty much that one little story.
Q. When did you become aware that your grandmother had conflicts with other members of your family?
A. When she tried to break in, and I've known it for a long time now. And
Q. You've known it for a long time now. How did you know for a long time?
A. Just I've known because Momma and Grandmomma weren't getting along and haven't really gotten along. And I could justsomethingI just could tell because when she tried to break into the house, she forced herself into the house, and she said she was going to call the police. And we had toI told her, "Grandmother, I want nothing to do with you," and we had to push her out of the house. She tried to force her way in. That's that's what she did.
Q. What was your grandmother saying when she was trying to force her way in?
A. She said, "I'm going toI'm going to call the police. I'm going to call the police." And she also was going to try to call a family that we're very, very close to, our spiritual family. She was going to call them and tell them that, you knowI don't know what she was going to call them and tell them. It was just crazy. That *16 she was calling the police on us or something is what she was probably going to call and tell them.
Q. [Kathryn], do you love your grandmother?
A. Yes, I love her very much, and I'm praying for her salvation. But this really concerns me. I mean, if she's hurting another family member, that is not good.
THE COURT: What do you mean when you say you're praying for her salvation?
THE WITNESS: I'm praying that she will come to know the Lord.
THE COURT: How do youshe goes to the United Methodist Church.
THE WITNESS: I know, but that doesn't make you a Christian.
THE COURT: It doesn't?
THE WITNESS: No.
THE COURT: What makes you a better Christian than your grandmother?
THE WITNESS: It's not a matter of making you a better Christian than your grandmother. She justwe need to continue to pray for her salvation in this area and sheand come to see that she'll know the Lord. Because what she has done, she has not
THE COURT: Why do you think she doesn't know the Lord?
THE WITNESS: Because shea Christian would not be acting this way.
THE COURT: Christians act awful.
THE WITNESS: Christians act awful, but the way she's acting is not right, and it's not appropriate behavior for anyone. Because normally a grandmother
THE COURT: But that doesn't make her not a Christian, does it?
THE WITNESS: Well ...
THE COURT: Just because you act awful makes you not a Christian?
THE WITNESS: Well, it justyour actions speak louder than words, and...
THE COURT: Do you think that you become a Christian or you maintain yourself as a Christian
THE WITNESS: No
THE COURT: by your actions alone?
THE WITNESS: you do not maintain yourself. You have got to ask the Lord into your heart and mean it and be sincere and truly mean what you say, and you need to live it out in what you do.
THE COURT: Right.
THE WITNESS: So ...
THE COURT: But if you don't do that, does that make you not a Christian? Do you have to be perfect to be a Christian?
THE WITNESS: No, you do not have to be perfect to be a Christian. No. That's not what it requires at all. Do you have a question?
[PAMELA'S ATTORNEY]: Did you have any more, Judge?
THE COURT: No.
BY [PAMELA'S ATTORNEY]:
Q. [Kathryn], do you thinklet me just ask this final question:
A. Okay.
Q. Do youright now do you want to have visitation with your grandmother?
A. No.
[PAMELA'S ATTORNEY]: I tender. That's all I have. He may have questions for you.
THE WITNESS: All right. Sir?
CROSS-EXAMINATION BY [JUANITA'S ATTORNEY]:
*17 Q. [Kathryn], you said that it hurts you because of what your grandmother has [sic] spoken lies [about].
A. Yes, sir.
Q. Okay. What kind of lies has your grandmother told?
A. She has spoken that my mother is mentally ill.
Q. On the one occasion at the mailbox. Is that right?
A. At the mailbox it was because Mom was mentally ill. She was saying
Q. No, wait a minute.
A. I'm sorry.
Q. She toldyour testimony is that she told you that your mother is mentally ill
A. Yes, sir.
Q. at the mailbox.
A. Yes, sir.
Q. And that waswhen was that?
A. I don't know how long ago that was.
Q. Well, it was long after Christmas, wasn't it?
A. Right. Yes, sir. It might have been before Christmas. I really don't know.
Q. Okay. You don't remember. You just know
A. I don't remember.
Q. it was when she was driving down the road
A. Yes, sir.
Q. and you were checking the mail?
A. Yes, sir.
Q. All right. And you think that's a lie?
A. Yes, sir, it is.
Q. Okay. All right. What other lies has she told that hurt you?
A. She's told my cousin that my cousin's fat. She has gotten in [sic] any way that she can
Q. Was that in your presence she told
A. She told my cousin that in my presence, yes.
Q. Who is your cousin, now?
A. My cousin's name is Rebecca, and she's 20 or 21.
THE COURT: Yeah, we met Rebecca a few minutes ago.
BY [JUANITA'S ATTORNEY]:
Q. Okay.
A. That's what she's done. She speaks different lies, various lies, to different numbers of people in my family.
Q. What other lies? What other lies has
A. Just everything she can think of. Anything and everything that she can think of.
Q. Everything she says is a lie?
A. Anythingno, but when she thinks of something bad to say about somebody, she'll tell them or she does it in private and doesn't do it in front of people, but you still know that she does it. So ...
Q. Okay. You've observed that, or is that something that somebody has told you?
A. I know that for sure.
Q. Okay. You know, whatshe told your cousin she was fat?
A. Yes.
Q. She told you that your mother was mentally ill?
A. Yes, sir.
Q. Okay. What other lies?
A. She has told my mother that she would give her property and
Q. You heard her tell her this?
A. I have.
Q. Okay.
*18 A. And she did give us the property, gave us this house, and then she got mad at something Momma said to herI can't remember what it was and she said she'd take the land away. So the thing with her is she was already upset by this time, and she told my cousin Rebecca and Karen that she would give them the land instead of giving us the land. So that was not right either.
Q. Okay.
A. There's just so many things I probably couldn't list them, but ...
Q. Okay. Was any of these things that your mother told you that [Juanita] said?
A. No.
Q. These are all things that you witnessed that your grandmother said?
A. Yes, sir. These are things that my grandmother said.
Q. Okay. That you heard your grandmother tell?
A. Yes, I heard my grandmother say this.
Q. Okay.
THE COURT: Where did youwhere were you when you were around your grandmother and these other people when you overheard these comments?
THE WITNESS: One time I was at the mailbox when she said my momma was mentally ill.
THE COURT: Right. We've heard that.
THE WITNESS: I was at the mall with my cousin [and] my grandmother when I heard that[.] [S]he said that my cousin was fat. I waswhere else was I? I can't really remember where all.
THE COURT: When she made comments about or representations about giving you property
THE WITNESS: Yes, sir.
THE COURT: or taking it away, where were you when you heard that?
THE WITNESS: I think I was at my house when she said that.
THE COURT: At your house in Raymond?
THE WITNESS: I was at my house in Raymond.
THE COURT: And your grandmother was over there?
THE WITNESS: Yes, sir.
THE COURT: And who else was present?
THE WITNESS: My momma and me. Nobody else.
THE COURT: Okay.
BY [JUANITA'S ATTORNEY]:
Q. When was that? Do you recall when that was?
A. I cannot remember when that was.
Q. Was that before Christmas or after Christmas or ...
A. I don't really remember right now.
Q. Okay. Well, that's fine. I'm notif you don't remember, you don't remember.
A. Yeah.
Q. You said you love your grandmother.
A. I do.
Q. You spent a lot of time with her when you were growing up
A. Yes, sir.
Q. didn't you?
A. Yes, sir.
Q. You went over to her house and spent the night?
A. Yes, sir.
Q. And rode the golf cart
A. I did.
Q. and flowers?
*19 A. I actually rode on the golf cart over at her house as a matter of fact.
Q. Did she ever let you drive it?
A. She did.
Q. Okay. All right. And you spent the night with her
A. Yes, sir.
Q. many times?
A. Yes, sir. When Granddaddy was alive, I did.
Q. Okay. And you went to Nashville with them during Christmas?
A. I did.
Q. Went to North Carolina with them?
A. I think so, yes.
Q. Okay. And did y'all have a good time?
A. I can't really remember us going to North Carolina.
Q. Okay. But you remember going to Nashville?
A. I think so.
Q. All right. Do you remember going to Vicksburg park?
A. I do remember going there.
Q. Okay. Do you remember going to eat out in Vicksburg at restaurants?
A. I remember that, yes.
Q. Okay. Do you remember going to Bible school?
A. I did go to Bible school several times with Granddaddy.
Q. Okay. And did you go to church with your grandfather and grandmother?
A. I did, yes, sir.
Q. Okay. Now, did all this suddenly stop when your grandfather died or what
A. It actually, I think, started when Granddaddy died.
Q. What started when Granddaddy died?
A. When she started saying my mother was mentally ill.
Q. Okay. So you think that'syou think she didn't talk bad about your mother until after Mr. Tip died?
A. Well, no. She did talk about her bad before Granddaddy died, but when she really started coming in saying she'd force her way into the house was after Granddaddy died.
Q. Okay. Well, that didn'tI mean, when she talked about your mother before your Granddaddy died, apparently that didn't bother you so much that you quit going over there, did it?
A. Well, no, I don't think it did as much, but
Q. Well, you were a little bit younger.
A. I was younger then, too, and I had my Granddaddy, and I was enjoying being with my Granddaddy. But then it justyou know, that happened. So...
Q. Well, but you still did things with your grandmother, too, after your grandfather died?
A. Yes, sir, I did.
Q. Okay. That wasn'tthat didn't cut you away from her
A. Oh, no. No.
Q. just because he passed away?
A. Oh, no. Unh-unh, no.
Q. Were you excited about moving to Raymond?
A. I was very excited. I thought we could be there, be by Grandmother. Since Granddaddy had died, we wanted to be there with her and help her and help the rest of the family.
Q. You've got a lot of other relatives
A. Yes, sir.
Q. that you visit with in Raymond when you're with your grandmother, do you not?
*20 A. Well, I actually don't. I visited my grandmother and Shelton Lee. And those were the two relatives I visited.
Q. I beg your pardon?
A. The two relatives that I visited were my grandmother and my uncle, Shelton Lee.
Q. Right.
A. So ...
Q. Okay. Did you enjoy visiting at your grandmother's house during Christmas holidays?
A. No, not at all.
Q. Not at all?
A. No.
Q. Never?
A. No. Notnot this year at all.
Q. No, I'm not talking about this year. I'm talking about in prior years.
A. Past years? Yes.
Q. Okay. It was just this year that
A. Yes, sir.
Q. that was unpleasant for you?
A. Yes, sir.
Q. And that was because your mother was sick or there was conflict between your mother and your grandmother?
A. Because there was conflict between my mother and my grandmother.
Q. Okay. It wasn't anything to do with you and your grandmother; it was your mother and your grandmother?
A. Yeah. And, actually, my momma was sick that day.
Q. Okay. Well, that'syou know, that's unfortunate. But she was ill
A. Right. She was sick.
Q. and she didn't want to eat with
A. Yeah. She didn't.
Q. didn't want to go over?
A. Unh-unh. (Negative)
Q. Okay.
[JUANITA'S ATTORNEY]: That's all I've got, Your Honor.
EXAMINATION BY THE COURT:
Q. Do you have a green thumb?
A. I like to go outside and plant flowers. I like to do that.
Q. So you know what that means?
A. Yes, sir.
Q. Did you help your grandmother garden?
A. I did some. I helped her prune the roses and stuff.
Q. Do you enjoy that kind of thing?
A. Well, I haven't now, but a long time ago I liked to help her. I'd ride around on the Club Car and help her. She would get the sprinklers out, and if she needed any help, I would help her digmaybe dig some stuff, rake some pine straw back there on the property by my aunt, stuff like that, in the fall. So ...
Q. I'm asking you do you enjoy doing that kind of thing. Not have you done it lately but
A. I do enjoy that. I like to plant flowers and stuff and rake.
Q. Do you like to be outwould you say that you like to be outside more or like to be inside?
A. I like to be outside when it's pretty so I can walk and stuff like that.
Q. I do too. Do youwhat is your favorite thing to do?
A. Read.
Q. Okay.
A. I love to read. History, biblical history.
Q. And you can do that wherever
A. Every day.
Q. you can take a book. Okay. What is your favorite subject?
*21 A. Spelling and reading and stuff like that. I don't like math as much. So...
Q. Okay. Let's see. At 14 you would be in the equivalent of seventh grade?
A. Well, in home-school, we really don't do grades, but I guess
Q. That's why I said the equivalent of.
A. The equivalent, yes, sir.
Q. You are passing through the subject area that a child might be expected to be exposed to in the seventh grade. Is that right?
A. I don't know.
Q. You don't know because you haven't been in the seventh grade.
A. I don't know since I haven't been in public school. I've been home-schooled, so ...
Q. I hadn't thought about that. So what kind of math is it that you do now?
A. I do multiplication, because math is really hard for me.
Q. Yeah.
A. And that's what I do everyday. I have a tract that I put in that I do everyday, a math tract. And I listen to a CD and I do it. So ...
Q. And then in English, are youwhat are you doing in the subject area of English?
A. In English? Let me think. I really don't know. I don't remember right now at this minute.
Q. Well, I mean, I know you're probably nervous
A. I'm trying to think.
Q. in here.
A. I just can't think of what we're doing in English right now.
Q. Is itwell, what about your literature studies?
A. Literature, we do all types of different literature studies. We do language arts and history. Language arts and history. We do old geography, new geography, Old World from A Beka.
Q. A Beka?
A. From A Beka home-schooling.
Q. Oh.
[PAMELA'S ATTORNEY]: It's a curriculum.
A. It's a curriculum that we do. Well, we actually use several different curriculums. We don't just stick to one; we use several different books, several different curriculums.
BY THE COURT:
Q. Can you remember very much about going to Jackson Academy?
A. I do. I was real little. I was in fivelet's see. Maybe I was six, or secondlet's see. First gradeno I think I was in first grade, or younger than that.
Q. Well, that was a long time ago. If you can remember that, that's doing pretty good.
A. My teacher was Ms. Benton and stuff. That's all I remember.
Q. That's when y'all first moved back to Mississippi, wasn't it?
A. Uh ...
Q. Or not long after. You were three years old when you moved back?
A. Well, yes, it had to beit was probably after.
Q. You don't remember much about Oklahoma City, do you?
A I really don't. I really don't. Other than it was during some of thesome bombing of something
Q. Oh, yeah.
A. during the war, and my daddy went down there to help them, so ... *22 He wanted to help the Big Brothers and Big Sisters or whatever that is called. And he did that.
Q. Do you remember your father?
A. I really don't.
Q. How did he die?
A. He died of a heart attack when I was threetwoI think two or three. I think I was two. I might not have been two. I might have been four or five. Right now I don't really remember.
Q. Yeah. Okay. When you go over to in times past when you've gone over to [Juanita's]
A. Yes, sir.
Q. What do you call her, by the way?
A. Grandmother, Grandmomma.
Q. Grandmomma. When you would go over to Grandmomma's house, what did you do if you stayed inside?
A. I would just go in there and watch TV with Grandmomma. And sometimes if Grandmomma was inside, I'd just stay in there and watch TV while she went out in the garden. If it was too hot, I would stay inside, and then she'd come in. And then if it was a pretty day, maybe we'd go back outside and then we'd work in the yard. And that's what we would do on a pretty day.
Q. And your uncle, Uncle
A. Shelton Lee?
Q. Shelton would come over sometimes. Right?
A. He did. He'd come over all the time in the morning.
Q. What did you like to do with Uncle Shelton?
A. I just liked to talk to him.
Q. Yeah.
A. He just came over a lot. He came over in the nighttime and watched TV with us, and then he'd go home. Sometimes he'd go out to eat with us and stuff. So that's what we did with him when he came over. He would come over to get his coffee in the morning. He came over there like, not first thing, but a few minutes after I'd wake up, he'd come over there and get coffee. That's what he liked to do.
Q. Do you drink coffee?
A. I don't. He'd drink it with my Grandmomma.
Q. Well, do youwhen is the last time you've seenwhat do you call him?
A. Uncle Shelton Lee.
Q. Uncle Shelton Lee? Boy, that's a mouthful.
A. I saw himwell, I saw him today, of course. But the last time I saw him was maybe right before we moved, because the last daythe day we were moving, the day we had the movers in, Grandmomma came, and she said that she was coming to check on us. And she exploded because Momma wouldn't tell her where we were going to move to. And she said, "Well, you're going to know Grandmomma's address, aren't you? You're going to know Grandmomma's address." Then she went out, was trying to ask all the movers where we were going to move to. Then she went out on the Club Car, and she left. And after that we had all of our stuffwe were trying to get all of our stuff moved out, and we were moved on that day.
Q. Did you think it odd in any way that your grandmother didn't know where you were moving to?
A. Well, not really. I knew she could find a wayI knew she could find a way to find out where we were moving to. I thought that maybe she could *23 go to somebody and find out where we were moving to.
Q. Well, if she was going to find out, why not just tell her?
A. Well, because of all the trouble that she's caused, I just wouldn't feel right telling her that.
Q. Well, I didn't mean you. I meant your mom.
A. My mom? She feels the same way about that, because we're justwe were ready andwe were tired of her doing this and we were ready for her to stop doing this, if there's any way.
Q. Doing what? I'm sorry.
A. Oh, that's okay. To stop the abuse, the spying. She came over on her Club Car and was spying on us. She'd come over on her Club Car in the morning. I would see her Club Car on our property that she said she was going to give us, on that property. She'd just be on it all day, all day, just spying and spying, and we just got tired of that.
Q. Just like riding around and around the house?
A. Just riding around and around in a circle on the land because she was trying to see what we were doing. Because she sentI don't know if she sent somebody over or something the day we moved in and was just watching the entire time they brought the stuff in. So ...
Q. What about Uncle Shelton Lee, now? Has he ever been up to see you at your new house?
A. He actually has not seen me since then. The last day I saw him was when we moved from that house.
Q. Did you enjoy his company?
A. I did, but I did not enjoy it that day at all because he washe was trying to be on her side and be
Q. No, I'm just talking about generally when things were okay.
A. Normally? Yes, when my grandfather was alive, I did enjoy him coming over. I had fun with him. He was my favorite uncle that I knew the best of all of them, so ...
Q. Well, what about having Uncle Shelton Lee up for dinner one night or something?
A. I don't think that would work because he isI love him very much. He's my favorite uncle. But he agrees with Grandmother in everything that she says and does. If she lies about somebody, he'll be like, "That's right, Nita. That's right." And he agrees with her, so I do not think that would be a very good idea. No, I do not want grandparents visitation rights.
Q. Well, he's not your grandparent.
A. No, but I don't want grandparents visitation rights.
Q. Okay. So you justyou just jumped to the ultimate question right there.
A. Okay. All right.
Q. So you don't want
A. Nothing
Q. to see your grandmother?
A. Nothing to do with them. Nothing to do with any of them, any of the relatives, any of her relatives that we're related to on that side. It's not my uncle or anything.
Q. You know, now, [Kathryn], I'm just having a little trouble understanding why you would have such a strong opinion. I'm not saying that you don't. I'm not questioning your feelings at all.
A. Oh, no.
*24 Q. I just am trying to understand why, why you do have such a strong feeling.
A. Just she's hurt me from what she said, and words hurt. So if she said something to my mommayou know, what you say to your momma can hurt the child because the child belongs to the mother; and if you love the mother, that can hurt the child, whoever the child may be. That willthat might hurt them because it's something that their grandmother's done.
Q. Would you say that it is because of ways that your grandmother has hurt your mother more than ways that she has hurt you that you feel that strongly that you don't want to see her?
A. I'm thinking it's been something she said to my grandmother, and she would hurt my mother, but I don'tshe would hurt me, but I don't think she would try to hurt me in the same way that she would hurt my mother. I don't think that's what her plan is at all.
Q. Okay. Well, of course, you're only 14. You know, everybody has different relationships
A. Yes, sir.
Q. with everybody else. My relationship with my child is not the same as the relationship my wife has
A. That's right.
Q. with my child. So everybody has to develop their own relationships. Can you ever see yourself having a relationship with your grandmother that doesn'tthat isn't affected by your mother's relationship with your grandmother?
A. I don't reallyno, I don'tfor right now, I don't see it going toward that at all; but if the Lord saves her and completely changes her from how she's been, I can see that maybe that mightthat might just happen. But, really, right now I have no idea because I just don't really know right now.
Q. Well, how would you know if the Lord made such a transformation?
A. Well, you can tell in their [sic] attitude.
Q. But, I mean, if you're never around her, how would you know?
A. I just ...
Q. Is she supposed to send you a card in the mail that says The Lord has transformed me. Now I'd like to see you?
A. No. If I had been spending time with her or decided to spend time with her again, which I don't really see happening right now, you would be able to tell by the way she acts, by the way she talks, the way she speaks, and just her actions would be completely different before she became a Christian.
Q. Okay. Well, let's just assumewell, first of all, she is a Christian.
A. No, she's not a Christian.
Q. Well, we
[PAMELA'S ATTORNEY]: She believes that she is.
THE WITNESS: Right.
BY THE COURT:
Q. we operate on a different premises on that, I guess.
A. Yes, sir.
Q. Because I don't let anybody tell me that I'm a worse Christian than they are.
A. Right.
Q. And vice versa. You know, you shouldn't do that either.
A. Yeah.
Q. That's not our place.
*25 A. No.
Q. That's God's place.
A. That's right.
Q. So you're judging your grandmother on the basis of what kind of Christian she is when that's not your role, nor is it any other living human being's role.
A. Yes, sir.
Q. Okay?
A. Yes, sir.
Q. All right. Now, here's my question:
A. Okay.
Q. If your grandmother experienced the kind of transformation in behavior that you're talking about you believe she needs to undergo, how would you know that she had unless you spend time with her?
A. Well, I don't know unless I spen[d] time with her. If I spend time with her, I'll know by her attitude, by her actions, how she speaks, how she thinks, how she acts.
Q. I know it, but how are you going to know all that if you're not around her?
A. I don't really know right now. I don't really know, unless somebody else was with her and they [sic] could tell
Q. Report back to you?
A. her actions were different. Yes, sir. And maybeI don't know if I should say would tell me, but ...
Q. Well, can you think of anybody whose word on that point you would trust to report back to you about your grandmother's change of disposition?
A. I can't really think of anybody right now.
Q. So the only way you're going to know is if you spend time around her. Right?
A. Yes, sir.
Q. That's what it looks like to me.
A. Yes, sir.
Q. Okay. If you spend time around her, then, under what circumstances would you like for it to be?
A. Well ...
Q. And what I'm asking you is like where, who all would be there, what would y'all be doing, that kind of thing.
A. We might be at her house. It would be her, my uncle, if things getif things got any better
Q. Yeah.
A. and things changed in attitude and action, how she acted and gave her life over to the Lord completely.
Q. Would you want to go to church with her and watch her walk down the aisle at the Methodist church to recommit herself to that way of life in order to be convinced about that?
A. Well, I don't think so.
Q. Would you want her to go to your church?
A. No, because once you give your life to Christ, you give it to Him and you don't just say that you're going to do it and then you act, you know, crazy. I mean, just why would somebody try to break into your house? That does not
Q. Well, that's in the past, now. I'm talking about if we're talking about a change in your grandmother.
A. Yes, sir.
Q. I'm looking forward not back.
A. Yes, sir.
Q. So I'm asking you how would you prefer to engage with your grandmother if she was willing to make this kind of change.
A. Well, I might spend time with her then. Church. When Granddaddy *26 was at church, he liked to talk to people, and he was a people person. He would introduce me to everybody at church. I had fun at church then. After Granddaddy died and Grandmomma just took me, I just didn't have any fun anymore because ...
Q. This is the Raymond Methodist Church?
A. The United Raymond [sic] Methodist Church that we went to.
Q. Okay.
A. Because I just didn't. I just feltI mean, without my Granddaddy, Granddaddy was the one that introduced me to everybody. He knew everybody and was talking to everybody, and so that made me feel welcome. But Grandmomma and him were absolutely opposite of each other and do not have the same personalities at all. So that was something else too.
Q. Well, it sure is too bad that he passed away.
A. Yes. I loved my grandfather very much.
Q. What do you think your grandfather might think about the present state of affairs?
A. Well, he's dead. He can'the can't think about anything, so ...
Q. Well, you don't know that, do you?
A. I mean, dead people
Q. He might be listening to us right now.
A. Dead people don't talk. I know that.
Q. I said what do you think he might think about the present state of affairs.
[PAMELA'S ATTORNEY]: If he were still alive today.
A. He wouldhe would tell my grandmomma to be quiet. And I'm serious. No, he would. I'm serious. He would tell her to be quiet.
BY THE COURT:
Q. Is he the only one that could have influence over your grandmother?
A. Probably so. And Shelton Lee. They bothshe gets information from him. And the only reason she was giving the property to my aunt and younger cousin was because she didn't want us having that house anymore. And so she was going to give us all the property that we had now, and she was going to give themI think she was going to give them the house we were living in. And then she was going to give us her house and ...
Q. Well, anyway
A. That didn't work out.
Q. Yeah. Well, would you be willing to spend the night at your grandmother's house and see for yourself whether she has experienced some sort of transformation of attitude?
A. I would not because I do not feel right being there in that house for some reason. And part of the reason is because what she's done recently, and that was not long ago at all.
Q. Uh-huh. (Affirmative) What is that?
A. In trying to break in the house.
Q. Oh, okay.
A. With what's going on with the property, saying that my momma was mentally ill. I mean, I just don't want to spend time with somebody that's going to do that.
Q. Okay. Have you ever spent the night at your Uncle Shelton Lee's?
A. I have not. I've always been over there at Grandmomma's and then he comes over.
Q. Does he have a wife and family?
*27 A. He actually is not married. So he comes over there with Grandmomma and talks to her, and they love to get out in the yard
Q. Right.
A. in the flowerbeds. That's their life. They love gardening, and he sells day lilies and she sells flowers and stuff. So theythey love to get out in the yard when it's pretty.
Q. Okay. All right. Well, let's see, now. Do you go to school on Saturdays?
A. No.
Q. Y'all don't do lessons on Saturday?
A. We don't. Sometimes if I need to catch up in something, I will, or I do. But every other day of the week we do school. Sometimes when people have holidaysI do take off for Christmas, but other times, if I really need to catch up in school, I'll be doing school while the other kids are doing their holidays at school, so ... And that doesn't bother me at all, because if I need to catch up, I need to catch up. So ...
Q. Typically what do you do on Sunday? You go to church every Sunday?
A. Go to church and sometimes we go out to eat with our friends. Some of them are out there in the lobby.
Q. Some of your friends are down here?
A. Some of our friends are in there talking.
Q. Which of your friends are here?
A. Debbie Ruhl, Robin Powell, Renee Adams, and Vicki Demoney.
Q. Are these all children your age?
A. No. These are my momma's friends. They're much older. No, they're not my age at all.
Q. All right. And where do all of those people live?
A. Debbie lives in Peach Orchard Drive. I think it's Peach Orchard. Robin lives
Q. Wait, wait, wait. Where is Peach Orchard Drive?
A. Peach
Q. Do they live close to you
A. I mean Peach Orchard Village.
Q. in Madison?
A. They're verythey're very close. That's why we moved there. We wanted to be by them. And Debbie is not far at all from the oldwhat was that place?pottery, that old pottery place, Paint It My Way. Robin is in Trace Ridge, in that neighborhood in Madison. Renee, I don't really remember where she is. And Vicki Demoney is in Madison, too, and she's not far from where we go to church at all. So it's kind of like they're all next to us, except Vicki's not as next to us as Debra and Robin, because Debra and Robin are on this side, and here we are (demonstrating), and they're one's maybe on the left and the right.
Q. Why are they down here today?
A. They're here to represent us and to support us and be here with us today.
Q. Do they know your grandmother?
A. They do. ReneeRenee doesn't and Vicki doesn't, but Robin and Debbie do, and they have talked to her before.
Q. Okay.
A. So they've met heractually, one of our friends that wasn't here today she had to workher hus[band]no, she gave my granddaddy a kidney. So she really became close.
Q. Oh, yeah. We heard about that. That's a very loving thing to do.
*28 A. Yes, it is. She gave her kidney, gave her gift of herself in giving that kidney to my grandfather. And then he just didn't make it and the kidney passed out. That's what happened.
Q. Was it from complications of that transplant that he died?
A. Yes, sir.
Q. Okay.
A. It was because the kidney didn't make it. The kidney failed. So that's how he died.
Q. How long will it be, how much longer will it be before you can drive?
A. I don't really know. We haven't set a year yet.
Q. When is youryou're going to be 15 next May 20th?
A. Yes, sir. So I really don't know when I'm going to get a driver's license or anything.
Q. Is that important to you?
A. Not really, because, I mean, I've got so much to do. I just.... It's not really. I haven't thought about it.
Q. It's not a priority with you
A. No.
Q. right now.
A. Not at all. Just getting this over with kind of is.
Q. Getting this right here over with?
A. Yes, sir. This over with.
Q. Well, what would you call "getting this over with" in a way that would please or satisfy you?
A. Well, I mean, it might notjust through harassment. I feel like it has been harassment. Has she been abusive? No, she's not been abusive. She's been abusive in words. She has not been slapping or kickingwell, she kind of did get aggravated and was kind of pulling on me, but it's not like she was slapping me or kicking me or anything like that.
Q. And "she," you're referring to your grandmother?
A. Grandmother. Grandmother did that. But just the way she's treated my family, the way she's spoken about my family and acted about my family and treated my family.
Q. Did you speak to your grandmother down here today?
A. I actually have not spoken to her today. I saw her coming in, but I actually haven't talked to her today. Actually, I haven't talked to her since we moved yet, so.... But I know she's in there. I saw her.
Q. Yeah. And you said you loved your grandmother.
A. I do very much. And just because I love her doesn't mean I want her to do this to me, because that's not that's not what a loving grandmother would do. Normally, if you were a loving grandmother, you would treat your grandchildren right, and you would love them and you would take care of them. And that's notthat's not the way she acts at all to me.
Q. Well, look, if you loved your grandmother
A. Yes, sir.
Q. and you hadn't seen her in nine months
A. Yes, sir.
Q. and you lived 40 miles apart
A. Yes, sir.
Q. and all of a suddenthis is a long question
A. Yes, sir.
Q. and all of a sudden you find yourself in the same building
A. Yes, sir.
Q. by the same room
*29 A. Yes, sir.
Q. and you profess to love her
A. Yes, sir.
Q. would you not want to speak to her?
A. No, sir. I just don't feel like I should at this point, and I don't think I should at any point. If it comes to be that she ever calls us, we would willingly be glad to come down there and take care of her, and
Q. I thought you wanted her to leave you alone.
A. I do.
Q. How is she supposed to know when to call you and when to leave you alone?
A. Well, just if she neededjust if she felt like she needed to at any time, she could call us, and we would be glad but we still would not let her control us and manipulate us and tell us what to do because that is not what a grandmother should do. That is not right any way for anybody, for any person.
Q. All right.
THE COURT: Well, I know everybody's glad that I can't think of anything else to ask you right now. Do either of you have any further questions for [Kathryn]?
[PAMELA'S ATTORNEY]: I don't
THE WITNESS: I don't think so.
[PAMELA'S ATTORNEY]: He's asking us.
THE COURT: I'm sorry. I'm asking the two lawyers do they have anything else they want to ask you.
[PAMELA'S ATTORNEY]: I don't have anything else.
[JUANITA'S ATTORNEY]: Do you have anything?
[PAMELA'S ATTORNEY]: (Shakes head negatively)
FURTHER CROSS-EXAMINATION BY [JUANITA'S ATTORNEY]:
Q. You made[Kathryn], you made one comment about your Uncle Shelton Lee.
A. Yes, sir.
Q. And correct me if I'm wrong.
A. Oh, yes, sir.
Q. Did you say that he lied or that he was taking your Grandmomma's side? Is that ...
A. He didn't liewell, I don't know what he did, but he did take sides with my grandmother the day we moved. He got aggravated because Momma told Grandmomma that "You cannot control me anymore and you cannot take over what I'm doing." So, of course, Shelton Lee got mad.
Q. Wait a minute, now. He got mad about what? What did Shelton Lee get mad about?
A. He got mad about what Grandmomma got mad about. And what Grandmomma got mad about is that she was not going to have control over us anymore.
Q. In other words, you think Shelton [Lee] wants your grandmother to have control over you? Is that what you're saying?
A. I don't thinkwell, yes, he probably does. Yes.
Q. All right.
A. Probably so.
[JUANITA'S ATTORNEY]: That's all I want to know.
FURTHER EXAMINATION BY THE COURT:
Q. Well, it seems to me I've learned from this that you love your grandmother.
*30 A. Yes, sir.
Q. That you don't really want to see her right now.
A. Yes, sir.
Q. But how youwhat kind of relationship you have with her in future years, especially as an adult, if she lives that long
A. Yes, sir.
Q. is going to be dependent upon whether you allow her to be part of your life in some way.
A. Well, I just don't see that happening right now.
Q. Well, when do you see that happening?
A. I really don't know, to tell you the truth.
Q. Would you be sad if your grandmother died
A. I would be very sad.
Q. next week?
A. but I justI'm just soshe has hurt me so much since that has happened, since we said, "No, you're not going to control our [lives] anymore." And I just don't see that happening anyanytime soon, no, sir.
Q. All right. Well, I doubt if your grandmother would want to have you down to her house or would want to see you if you didn't want to be there and if you didn't want to see her. Do youdo you think she would want to whether you wanted to or not?
A. Yes, sir, I do because I think that's what type of person she is. That is what type of person she is. I know that from being around her.
Q. What pleasure would there be in being able to see you if she knew you didn't want to?
A. There probably would not be any pleasure or there wouldn't be because, you know, what she's already done.
Q. She's a sadist [sic] or masochist [sic]?
A. No, she's not a Satanist, but
Q. Masochist. I'm sorry. Somebody that likes to inflict punishment or harm to themselves [sic].
A. Yes. She is causing all this harm.
Q. She may be. I don't know. I don't know your grandmother well enough to know. You know her better than I do. Okay. Well, it's a terrible situation. I'm very saddened by this.
A. Thank you.
Q. I'm sad for you and I'm sad for your grandmother.
A. Yes, I'm very sad for my grandmother.
Q. And I'm sad for your mother.
A. Thank you.
Q. All right. Well, I tell you what we'll dowere you in one of the witness rooms?
A. I was.
Q. By yourself?
[PAMELA'S ATTORNEY]: She was sitting on the bench.
THE COURT: Okay. Well, look, we'll let you go back out there to that. That middle door will put you right back out there. And I appreciate you talking to me today.
THE WITNESS: Thank you so much.
THE COURT: It's nice meeting you.
[JUANITA] [sic]: Nice to meet you.
THE COURT: You're a sweet little girl
THE WITNESS: Thank you.
THE COURT:and it's a pleasure meeting you.
THE WITNESS: Thank you.
*31 ¶ 28. In addition to Kathryn's testimony, it appears to me that Pamela gave testimony that was relevant to the issue of Kathryn's best interest. Therefore, I summarize the relevant portions of Pamela's testimony. Pamela testified that she does not suffer from bipolar disorder and that she never told Juanita that she does. Pamela stated that she and Juanita have a history of conflict and that things escalated after Christmas 2006. Pamela recalled that shortly before Christmas 2006, when she was ill with bronchitis, Juanita called her five or six times in one day. Pamela stated that during one conversation, Juanita accused her of being mentally ill and stated that she never wanted to speak to her again. Pamela testified that she then informed Juanita that she would no longer allow her to control her life. Pamela also testified that she refused to allow Juanita to have contact with Kathryn from that point forward. Pamela further testified that "Momma has had a pattern[.] [I]f she can't control, she's out to destroy. I've seen her do it with my sister, with Rebecca, with Sam.[7] And, you know, I just decided I'm 45 years old and I don't have to go through this." (Footnote added).
¶ 29. Pamela also testified that Kathryn has been on an emotional roller coaster ever since the mailbox encounter with Juanita, even though at one point Kathryn and Juanita had a close relationship. She testified that she does not feel that it is in Kathryn's best interest to have visitation with Juanita because of the emotional toll that contact with Juanita has on Kathryn.
¶ 30. It is well-settled law in this State that "the polestar consideration in child custody cases is the best interest and welfare of the child." Albright v. Albright, 437 So. 2d 1003, 1005 (Miss.1983). While this case involves an issue of a grandparents' visitation rights rather than an issue of parental custody, the best interest of the child remains the central focus. See Woodell v. Parker, 860 So. 2d 781, 788(¶ 28) (Miss.2003) (quoting Martin v. Coop, 693 So. 2d 912, 916 (Miss., 1997)).
¶ 31. The Mississippi Supreme Court has held:
Section 93-16-3(2)(b) requires the trial court in determining whether grandparents visitation should be granted to assess whether "visitation rights of the grandparent with the child would be in the best interest of the child." Miss. Code Ann. § 93-16-3(2)(b). There is no language in the statute suggesting that the custodial parent's opinion with regard to what is "in the best interest of the child" is to receive some sort of "deference" or that findings as to the fitness of a parent are to be made. However, under applicable case law, we find that "deference" is afforded to the opinion of a "natural parent" involved in a visitation dispute under this nature.
Woodell v. Parker, 860 So. 2d 781, 787(¶ 22) (Miss.2003) (emphasis added). Further, in Stacy v. Ross, 798 So. 2d 1275, 1280(¶ 23) (Miss.2001), the Mississippi Supreme Court also stated:
We view our statute as requiring no less than the Fourteenth Amendment in this regard. The determination whether parents are unreasonable in denying visitation in whole or part to grandparents is not a contest between equals. Parents with custody have a paramount right to control the environment, physical, social, and emotional, to which their children are exposed. See Plaxico v. Michael, 735 So. 2d 1036 (Miss.1999); McKee v. Flynt, 630 So. 2d 44 (Miss. 1993); Carter v. Taylor, 611 So. 2d 874 (Miss.1992); Ethredge v. Yawn, 605 *32 So.2d 761 (Miss.1992); White v. Thompson, 569 So. 2d 1181 (Miss.1990); Simpson v. Rast, 258 So. 2d 233 (Miss. 1972); In re Faust, 239 Miss. 299, 123 So. 2d 218 (1960). Interference with that right based upon anything less than compelling circumstances is not the intent of the visitation statute. Clearly, forced, extensive unsupervised visitation cannot be ordered absent compelling circumstances which suggest something near unfitness of the custodial parents.
(Emphasis added).
¶ 32. The chancellor granted the following visitation:
(1) On Saturday, October 20, 2007, and on the third Saturday of each month hereafter, the Respondent, Pamela L. Ferguson, and her minor child, [Kathryn], shall be available unto Petitioner, Juanita H. Lewis, for either the noon or evening meal, said meal to be provided by Petitioner, at Petitioner's expense, and said meal to be held in the presence of Shelton Lee Holiday, the maternal [great-]uncle of the minor, it being the intention of this order that [Kathryn], Pamela L. Ferguson, Juanita H. Lewis and Shelton L. Holiday shall share a meal on at least one weekend per month, at a location agreed upon by the parties.
(2) That the Respondent, Pamela L. Ferguson, shall deliver the minor child, Kathryn Ferguson, to the residence of Juanita H. Lewis by 4:00 p.m. on Christmas Eve (December 24th), beginning Christmas Eve, 2007 and at the same time and on the same day of each year thereafter. The said minor child may be picked up from such visitation (in the event that Pamela L. Ferguson chooses not to stay) at 8:00 p.m. that evening.
(3) That the Respondent, Pamela L. Ferguson, shall deliver the minor child, [Kathryn] Ferguson, to the residence of Juanita H. Lewis by 6:00 p.m. on the second Saturday of June each year and by 6:00 p.m. on the second Saturday of July each year and that Juanita H. Lewis shall be allowed to visit with said minor child for a period of one week on each occasion, unless Juanita H. Lewis and Pamela L. Ferguson agree upon a different weekly schedule during the summer months, or at another point in the year, beginning in June and July, 2008.
¶ 33. Taking into consideration the testimonies of both Kathryn and Pamela, I would find that substantial evidence does not exist on these facts to support the chancellor's findings that it is in Kathryn's best interest that visitation be granted to Juanita and "that Pamela's conduct in denying [Juanita] the opportunity to see and visit with Kathryn constitutes an unreasonable denial...." Accordingly, I would find that the chancellor abused his discretion and reverse the chancellor's judgment awarding grandparent visitation rights to Juanita and would render judgment in favor of Pamela.
LEE, P.J., AND ROBERTS, J., JOIN THIS OPINION.
NOTES
[1] To protect the identity of the minor child, she will be referred to by the fictitious name, "Kathryn." Kathryn was fourteen years old at the time that Lewis was granted visitation rights.
[2] Kathryn's natural father died when she was a toddler.
[3] Lewis also stated that Pamela admitted to her that she suffers from bipolar disorder.
[4] Rebecca and Sam are Lewis's grandchildren by her daughter, Karen.
[5] Prior to the examination by the chancellor, Kathryn testified that she did not want to have visitation with Lewis partly because Lewis often spoke lies about members of their family.
[6] The dissent also discusses a provision in the chancellor's order that Pamela share a meal with Kathryn and Juanita and concludes that there was no authority for this action. However, neither party raised this matter as an issue for this appeal. Accordingly, we decline to address this matter since it was not asserted as error by either of the parties.
[7] Rebecca and Sam are Juanita's grandchildren by her daughter, Karen. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918737/ | 730 So. 2d 546 (1998)
THE MISSISSIPPI BAR
v.
Winthrop G. GARDNER.
No. 98-BD-00345-SCT.
Supreme Court of Mississippi.
October 29, 1998.
Rehearing Denied February 18, 1999.
Michael B. Martz, Jackson, Attorney for Appellant.
Winthrop G. Gardner, Appellee, pro se.
EN BANC.
PITTMAN, Presiding Justice, for the Court:
¶ 1. This matter is before the Court en banc on a Formal Complaint filed March 9, 1998 by The Mississippi Bar seeking suspension of Winthrop G. Gardner's privileges for the practice of law in Mississippi under the provisions of the Rules of Discipline of the Mississippi Bar, Rule 13, providing for action based upon reciprocal discipline in the case of disciplinary action imposed in another jurisdiction. With the Complaint, the Bar has submitted certified copies of the Opinion and Decree of the Supreme Court of Louisiana in the matter styled In re: Winthrop G. Gardner, No. 97-B-1314, by virtue of which Attorney Gardner was suspended from practice in Louisiana for two years, with six months of that suspension deferred, and directing that after the completion of the active portion of the suspension Gardner be placed on two years probation, subject to conditions recommended by the hearing committee in that proceeding.
*547 ¶ 2. Attorney Gardner appeared seeking additional time to respond to the Complaint, and the Court granted an extension through July 25, 1998 for him to respond. However, no response to the allegations against him has been made.
¶ 3. Under the provisions of Rule 13, the certification of sanction imposed by the appropriate authority of another jurisdiction is conclusive evidence of the guilt of the offense or unprofessional conduct in which sanction was ordered, and the sole issue to be determined in the present proceeding is the extent of the final discipline to be imposed by this Court on the attorney. No further fact finding on the offense is required. Here, the Bar seeks only that Gardner be disciplined, but has expressed no view as to the nature or extent of discipline to be imposed. Gardner could have offered matters in mitigation of the offenses charged, and the Court in imposing penalty is not bound by findings of the Louisiana authority. The Court is at liberty to impose sanctions either less or greater than those imposed in Louisiana. See Mississippi Bar v. Pels, 708 So. 2d 1372 (Miss.1998); Mississippi Bar v. Felton, 699 So. 2d 949 (Miss.1997).
¶ 4. In the Louisiana proceedings the underlying facts were stipulated and involve several instances of conversion of clients funds, with accountants' studies concluding that between $10,000 and $30,000 of client and third party funds were unaccounted for. However, it was also found that, at the time of the hearing in Louisiana, albeit with unreasonable delay, all clients and third-parties had been repaid and that no one suffered any loss of funds. It was concluded that his conduct was at best gross negligence and at worst knowing misconduct. Initially, Gardner sought a disposition under that state's consent disciplinary procedure with two and one-half years suspension, one and one-half year deferred with two years probation. The Office of Disciplinary Counsel concurred, but the Louisiana Supreme Court declined the proposal and ordered a hearing. In re Gardner, 647 So. 2d 1103 (La.1994). The hearing committee found that Gardner had commingled and converted his clients' funds in at least fifteen instances.
¶ 5. Although the Louisiana decree is conclusive as to the facts underlying the offense, this Court considers disciplinary matters de novo and must judge each case on its own merits when it comes to the extent of sanctions. In judging each case, we look at the nature of the offenses, and the need to deter similar misconduct and to preserve the dignity of the profession, along with the mitigating and aggravating circumstances. Pels, 708 So.2d at 1375.
¶ 6. The commingling and misappropriation of clients' funds is a grave breach of professional duties, and has been held, under some circumstances, to justify disbarment. See Haimes v. Mississippi Bar, 601 So. 2d 851 (Miss.1992) (where the attorney misappropriated $6,500 of client trust funds, having been previously suspended for commingling funds); Reid v. Mississippi State Bar, 586 So. 2d 786 (Miss.1991) (mishandling of approximately $10,000 by overdrawing his trust account); Mississippi State Bar Ass'n v. Moyo, 525 So. 2d 1289 (Miss.1988) (where attorney converted approximately $8,000 along with soliciting a case and charging unconscionable fees).
¶ 7. In the present case, the fact that Gardner ultimately repaid the converted funds mitigates in his favor. The Louisiana Supreme Court noted that the Office of Disciplinary Counsel presented five aggravating factors: (1) prior disciplinary offenses, (2) pattern of misconduct, (3) multiple offenses, (4) vulnerable victims, and (5) substantial experience in the practice of law. By way of mitigation, five other elements were set forth: (1) absence of dishonest motive, (2) personal problems, (3) full disclosure to the disciplinary system, (4) prior reputation, and (5) remorse. We do not have before us the details underpinning these factors, and Gardner, having failed to respond to the complaint, provides us with little else in his favor.
¶ 8. Under the facts of this case, we deem it proper that Gardner be suspended from the practice of law in Mississippi for a period of one year; that he be reinstated to practice only upon petition under the provisions of Rule 12 of the Rules of Discipline of the Mississippi Bar; and that prior to reinstatement *548 he take the Multi-State Professional Responsibility Exam and achieve a score as provided for in Rule 12.5.
¶ 9. WINTHROP G. GARDNER IS HEREBY SUSPENDED FROM THE PRACTICE OF LAW IN ALL COURTS IN THE STATE OF MISSISSIPPI FOR ONE YEAR, SHALL BE READMITTED ONLY UPON PETITION UNDER RULE 12 OF THE RULES OF DISCIPLINE OF THE MISSISSIPPI BAR AND UPON TAKING THE MULTI-STATE PROFESSIONAL RESPONSIBILITY EXAM WITH A SCORE AS PROVIDED IN RULE 12.5.
PRATHER, C.J., SULLIVAN, P.J., and BANKS, McRAE, JAMES L. ROBERTS, Jr., SMITH, MILLS and WALLER, JJ., CONCUR. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/509671/ | 853 F.2d 894
57 USLW 2147, 7 U.S.P.Q.2d 1673
In re Patrick H. O'FARRELL, Barry A. Polisky and David H. Gelfand.
No. 87-1486.
United States Court of Appeals,Federal Circuit.
Aug. 10, 1988.
J. Bruce McCubbrey, Fitch, Even, Tabin & Flannery, of San Francisco, Cal., argued for appellant. Virginia H. Meyer, Fitch, Even, Tabin & Flannery, of San Francisco, Cal., was on the brief for appellant.
Harris A. Pitlick, Associate Sol., of Arlington, Va., argued for appellee. With him on the brief were Joseph F. Nakamura, Sol. and Fred E. McKelvey, Deputy Sol.
Before MARKEY, Chief Judge, and RICH and NIES, Circuit Judges.
RICH, Circuit Judge.
1
This appeal is from the decision of the United States Patent and Trademark Office Board of Patent Appeals and Interferences (board) affirming the patent examiner's final rejection of patent application Serial No. 180,424, entitled "Method and Hybrid Vector for Regulating Translation of Heterologous DNA in Bacteria." The application was rejected under 35 U.S.C. Sec. 103 on the ground that the claimed invention would have been obvious at the time the invention was made in view of a published paper by two of the three coinventors, and a publication by Bahl, Marians & Wu, 1 Gene 81 (1976) (Bahl). We affirm.
2
The claimed invention is from the developing new field of genetic engineering. A broad claim on appeal reads:
3
Claim 1. A method for producing a predetermined protein in a stable form in a transformed host species of bacteria comprising, providing a cloning vector which includes at least a substantial portion of a gene which is indigenous to the host species of bacteria and is functionally transcribed and translated in that species, said substantial portion of said indigenous gene further including the regulatory DNA sequences for RNA synthesis and protein synthesis but lacking the normal gene termination signal, and linking a natural or synthetic heterologous gene encoding said predetermined protein to said indigenous gene portion at its distal end, said heterologous gene being in proper orientation and having codons arranged in the same reading frame as the codons of said indigenous gene portion so that readthrough can occur from said indigenous gene portion into said heterologous gene in the same reading frame, said heterologous gene portion further containing sufficient DNA sequences to result in expression of a fused protein having sufficient size so as to confer stability on said predetermined protein when said vector is used to transform said host species of bacteria.
4
Illustrative embodiments are defined in more specific claims. For example:
5
Claim 2. A method for producing a predetermined protein in a stable form in a transformed host species of bacteria, comprising, providing an E. coli plasmid having an operator, a promoter, a site for the initiation of translation, and at least a substantial portion of the beta-galactosidase gene of the E. coli lactose operon, said substantial portion of said beta-galactosidase gene being under the control of said operator, promoter and site for initiation of translation, said substantial portion of said beta-galactosidase gene lacking the normal gene termination signal, and linking a heterologous gene encoding said predetermined protein to said beta-galactosidase gene portion at its distal end, said heterologous gene being in proper orientation and having codons arranged in the same reading frame as the codons of the said beta-galactosidase gene portion so that readthrough can occur from said beta-galactosidase gene portion into said heterologous gene in the same reading frame, said heterologous gene portion further containing sufficient DNA sequences to result in expression of a fused protein having sufficient size so as to confer stability on said predetermined protein when said vector is used to transform said host species of bacteria.
6
Claim 3. The method of Claim 2 wherein said E. coli plasmid comprises the plasmid designated pBGP120.
7
Although the terms in these claims would be familiar to those of ordinary skill in genetic engineering, they employ a bewildering vocabulary new to those who are not versed in molecular biology. An understanding of the science and technology on which these claims are based is essential before one can analyze and explain whether the claimed invention would have been obvious in light of the prior art.
I. Background1
8
Proteins are biological molecules of enormous importance. Proteins include enzymes that catalyze biochemical reactions, major structural materials of the animal body, and many hormones. Numerous patents and applications for patents in the field of biotechnology involve specific proteins or methods for making and using proteins. Many valuable proteins occur in nature only in minute quantities, or are difficult to purify from natural sources. Therefore, a goal of many biotechnology projects, including appellants' claimed invention, is to devise methods to synthesize useful quantities of specific proteins by controlling the mechanism by which living cells make proteins.
9
The basic organization of all proteins is the same. Proteins are large polymeric molecules consisting of chains of smaller building blocks, called amino acids, that are linked together covalently.2 The chemical bonds linking amino acids together are called peptide bonds, so proteins are also called polypeptides.3 It is the exact sequence in which the amino acids are strung together in a polypeptide chain that determines the identity of a protein and its chemical characteristics.4 Although there are only 20 amino acids, they are strung together in different orders to produce the hundreds of thousands of proteins found in nature.
10
To make a protein molecule, a cell needs information about the sequence in which the amino acids must be assembled. The cell uses a long polymeric molecule, DNA (deoxyriboneucleic acid), to store this information. The subunits of the DNA chain are called nucleotides. A nucleotide consists of a nitrogen-containing ring compound (called a base ) linked to a 5-carbon sugar that has a phosphate group attached.5 DNA is composed of only four nucleotides. They differ from each other in the base region of the molecule. The four bases of these subunits are adenine, guanine, cytosine, and thymine (abbreviated respectively as A, G, C and T). The sequence of these bases along the DNA molecule specifies which amino acids will be inserted in sequence into the polypeptide chain of a protein.
11
DNA molecules do not participate directly in the synthesis of proteins. DNA acts as a permanent "blueprint" of all of the genetic information in the cell, and exists mainly in extremely long strands (called chromosomes ) containing information coding for the sequences of many proteins, most of which are not being synthesized at any particular moment. The region of DNA on the chromosome that codes for the sequence of a single polypeptide is called a gene.6 In order to express a gene (the process whereby the information in a gene is used to synthesize new protein), a copy of the gene is first made as a molecule of RNA (ribonucleic acid).
12
RNA is a molecule that closely resembles DNA. It differs, however, in that it contains a different sugar (ribose instead of deoxyribose) and the base thymine (T) of DNA is replaced in RNA by the structurally similar base, uracil (U). Making an RNA copy of DNA is called transcription. The transcribed RNA copy contains sequences of A, U, C, and G that carry the same information as the sequence of A, T, C, and G in the DNA. That RNA molecule, called messenger RNA, then moves to a location in the cell where proteins are synthesized.
13
The code whereby a sequence of nucleotides along an RNA molecule is translated into a sequence of amino acids in a protein (i.e., the "genetic code") is based on serially reading groups of three adjacent nucleotides. Each combination of three adjacent nucleotides, called a codon, specifies a particular amino acid. For example, the codon U-G-G in a messenger RNA molecule specifies that there will be a tryptophan molecule in the corresponding location in the corresponding polypeptide. The four bases A, G, C and U can be combined as triplets in 64 different ways, but there are only 20 amino acids to be coded. Thus, most amino acids are coded for by more than one codon. For example, both U-A-U and U-A-C code for tyrosine, and there are six different codons that code for leucine. There are also three codons that do not code for any amino acid (namely, U-A-A, U-G-A, and U-A-G). Like periods at the end of a sentence, these sequences signal the end of the polypeptide chain, and they are therefore called stop codons.
14
The cellular machinery involved in synthesizing proteins is quite complicated, and centers around large structures called ribosomes that bind to the messenger RNA. The ribosomes and associated molecules "read" the information in the messenger RNA molecule, literally shifting along the strand of RNA three nucleotides at a time, adding the amino acid specified by that codon to a growing polypeptide chain that is also attached to the ribosome. When a stop codon is reached, the polypeptide chain is complete and detaches from the ribosome.
15
The conversion of the information from a sequence of codons in an RNA molecule into the sequence of amino acids in a newly synthesized polypeptide is called translation. A messenger RNA molecule is typically reused to make many copies of the same protein. Synthesis of a protein is usually terminated by destroying the messenger RNA. (The information for making more of that protein remains stored in DNA in the chromosomes.)
16
The translation of messenger RNA begins at a specific sequence of nucleotides that bind the RNA to the ribosome and specify which is the first codon that is to be translated. Translation then proceeds by reading nucleotides, three at a time, until a stop codon is reached. If some error were to occur that shifts the frame in which the nucleotides are read by one or two nucleotides, all of the codons after this shift would be misread. For example, the sequence of codons [ ...C-U-C-A-G-C-G-U-U-A-C-C -A...] codes for the chain of amino acids [ ... leucine-serine-valine-threonine-...]. If the reading of these groups of three nucleotides is displaced by one nucleotide, such as [ ...C-U-C-A-G-C-G-U-U-A-C-C-A...], the resulting peptide chain would consist of [ ...serine-alanine-leucine-proline...]. This would be an entirely different peptide, and most probably an undesirable and useless one. Synthesis of a particular protein requires that the correct register or reading frame be maintained as the codons in the RNA are translated.
17
The function of messenger RNA is to carry genetic information (transcribed from DNA) to the protein synthetic machinery of a cell where its information is translated into the amino acid sequence of a protein. However, some kinds of RNA have other roles. For example, ribosomes contain several large strands of RNA that serve a structural function (ribosomal RNA ). Chromosomes contain regions of DNA that code for the nucleotide sequences of structural RNAs and these sequences are transcribed to manufacture those RNAs. The DNA sequences coding for structural RNAs are still called genes even though the nucleotide sequence of the structural RNA is never translated into protein.
18
Man, other animals, plants, protozoa, and yeast are eucaryotic (or eukaryotic) organisms: their DNA is packaged in chromosomes in a special compartment of the cell, the nucleus. Bacteria (procaryotic or prokaryotic organisms) have a different organization. Their DNA, usually a circular loop, is not contained in any specialized compartment. Despite the incredible differences between them, all organisms, whether eucaryote or procaryote, whether man or mouse or lowly bacterium, use the same molecular rules to make proteins under the control of genes. In all organisms, codons in DNA are transcribed into codons in RNA which is translated on ribosomes into polypeptides according to the same genetic code. Thus, if a gene from a man is transferred into a bacterium, the bacterium can manufacture the human protein. Since most commercially valuable proteins come from man or other eucaryotes while bacteria are essentially little biochemical factories that can be grown in huge quantities, one strategy for manufacturing a desired protein (for example, insulin) is to transfer the gene coding for the protein from the eucaryotic cell where the gene normally occurs into a bacterium.
19
Bacteria containing genes from a foreign source (heterologous genes) integrated into their own genetic makeup are said to be transformed. When transformed bacteria grow and divide, the inserted heterologous genes, like all the other genes that are normally present in the bacterium (indigenous genes), are replicated and passed on to succeeding generations. One can produce large quantities of transformed bacteria that contain transplanted heterologous genes. The process of making large quantities of identical copies of a gene (or other fragment of DNA) by introducing it into procaryotic cells and then growing those cells is called cloning the gene. After growing sufficient quantities of the transformed bacteria, the biotechnologist must induce the transformed bacteria to express the cloned gene and make useful quantities of the protein. This is the purpose of the claimed invention.
20
In order to make a selected protein by expressing its cloned gene in bacteria, several technical hurdles must be overcome. First the gene coding for the specific protein must be isolated for cloning. This is a formidable task, but recombinant DNA technology has armed the genetic engineer with a variety of techniques to accomplish it.7 Next the isolated gene must be introduced into the host bacterium. This can be done by incorporating the gene into a cloning vector. A cloning vector is a piece of DNA that can be introduced into bacteria and will then replicate itself as the bacterial cells grow and divide. Bacteriophage (viruses that infect bacteria) can be used as cloning vectors, but plasmids were the type used by appellants. A plasmid is a small circular loop of DNA found in bacteria, separate from the chromosome, that replicates like a chromosome. It is like a tiny auxilliary chromosome containing only a few genes. Because of their small size, plasmids are convenient for the molecular biologist to isolate and work with. Recombinant DNA technology can be used to modify plasmids by splicing in cloned eucaryotic genes and other useful segments of DNA containing control sequences. Short pieces of DNA can even be designed to have desired nucleotide sequences, synthesized chemically, and spliced into the plasmid. One use of such chemically synthesized linkers is to insure that the inserted gene has the same reading frame as the rest of the plasmid; this is a teaching of the Bahl reference cited against appellants. A plasmid constructed by the molecular geneticist can be inserted into bacteria, where it replicates as the bacteria grow.
21
Even after a cloned heterologous gene has been successfully inserted into bacteria using a plasmid as a cloning vector, and replicates as the bacteria grow, there is no guarantee that the gene will be expressed, i.e., transcribed and translated into protein. A bacterium such as E. coli (the species of bacterium used by appellants) has genes for several thousand proteins. At any given moment many of those genes are not expressed at all. The genetic engineer needs a method to "turn on" the cloned gene and force it to be expressed. This is the problem appellants worked to solve.
II. Prior art
22
Appellants sought to control the expression of cloned heterologous genes inserted into bacteria. They reported the results of their early efforts in a publication, the three authors of which included two of the three coinventor-appellants (the Polisky reference8), that is undisputed prior art against them. Their strategy was to link the foreign gene to a highly regulated indigenous gene. Turning on expression of the indigenous gene by normal control mechanisms of the host would cause expression of the linked heterologous gene.
23
As a controllable indigenous gene, the researchers chose a gene in the bacterium E. coli that makes beta-galactosidase. Beta-galactosidase is an enzyme needed to digest the sugar, lactose (milk sugar). When E. coli grows in a medium that contains no lactose, it does not make beta-galactosidase. If lactose is added to the medium, the gene coding for beta-galactosidase is expressed. The bacterial cell makes beta-galactosidase and is then able to use lactose as a food source. When lactose is no longer available, the cell again stops expressing the gene for beta galactosidase.
24
The molecular mechanisms through which the presence of lactose turns on expression of the beta-galactosidase gene has been studied in detail, and is one of the best understood examples of how gene expression is regulated on the molecular level. The beta-galactosidase gene is controlled by segments of DNA adjacent to the gene. These regulatory DNA sequences (the general term used in Claim 1) include the operator and promoter sequences (specified in Claim 2).9 The researchers constructed a plasmid containing the beta-galactosidase gene with its operator and promoter. This gene (with its regulatory sequences) was removed from the chromosome of E. coli where it is normally found and was transplanted to a plasmid that could be conveniently manipulated.
25
Restriction endonucleases are useful tools in genetic engineering. These enzymes cut strands of DNA, but only at places where a specific sequence of nucleotides is present. For example, one restriction endonuclease, called EcoRI, cuts DNA only at sites where the nucleotide sequence is [...-G-A-A-T-T-C-...]. With restriction enzymes the genetic engineer can cut a strand of DNA at very specific sites into just a few pieces. With the help of "repair" enzymes, other pieces of DNA can be spliced onto the cut ends. The investigators found that the plasmid which they had constructed contained only two sequences that were cut by EcoRI. They were able to eliminate one of these sites that was unwanted. They were then left with a plasmid containing the beta-galactosidase gene with its regulatory sequences, and a single EcoRI site that was within the beta-galactosidase gene and close to its stop codon. They named this plasmid that they had constructed pBGP120.
26
The next step was to cut the plasmid open at its EcoRI site and insert a heterologous gene from another organism. The particular heterologous gene they chose to splice in was a segment of DNA from a frog that coded for ribosomal RNA. The frog gene was chosen as a test gene for reasons of convenience and availability. The new plasmid created by inserting the frog gene was similar to pBGP120, but its beta-galactosidase gene was incomplete. Some codons including the stop codon were missing from its end, which instead continued on with the sequence of the frog ribosomal RNA gene. The investigators named this new plasmid pBGP123. They inserted this plasmid back into E. coli and grew sufficient quantities for study. They then fed the E. coli with lactose. As they had intended, the lactose turned on transcription of the beta-galactosidase gene in the plasmid. RNA polymerase moved along the plasmid producing a strange new kind of RNA: Each long strand of RNA first contained codons for the messenger RNA for beta-galactosidase and then continued without interruption with the codons for the frog ribosomal RNA. Thus, there was readthrough transcription in which the RNA polymerase first transcribed the indigenous (beta-galactosidase) gene and then "read through," i.e., continued into and through the adjacent heterologous (frog ribosomal RNA) gene. Although the RNA produced was a hybrid, it nevertheless contained a nucleotide sequence dictated by DNA from a frog. The researchers had achieved the first controlled transcription of an animal gene inside a bacterium.
27
The researchers had used a gene coding for a ribosomal RNA as their heterologous test gene. Ribosomal RNA is not normally translated into protein. Nevertheless, they were obviously interested in using their approach to make heterologous proteins in bacteria. They therefore examined the beta-galactosidase made by their transformed bacteria. Patrick O'Farrell, who was not a coauthor of the Polisky paper but was to become a coinventor in the patent application, joined as a collaborator. They found that beta-galactosidase from the transformed bacteria had a higher molecular weight than was normal. They concluded that the bacteria must have used their strange new hybrid RNA like any other messenger RNA and translated it into protein. When the machinery of protein synthesis reached the premature end of the sequence coding for beta-galactosidase it continued right on, three nucleotides at a time, adding whatever amino acid was coded for by those nucleotides, until a triplet was reached with the sequence of a stop codon. The resulting polypeptide chains had more amino acids than normal beta-galactosidase, and thus a higher molecular weight. The researchers published their preliminary results in the Polisky article. They wrote:
28
[I]f the normal translational stop signals for [beta]-galactosidase are missing in pBGP120, in-phase translational readthrough into adjacent inserted sequences might occur, resulting in a significant increase in the size of the [beta]-galactosidase polypeptide subunit. In fact, we have recently observed that induced cultures of pBGP123 contain elevated levels of [beta]-galactosidase of higher subunit molecular weight than wild-type enzyme (P. O'Farrell, unpublished experiments). We believe this increase results from translation of Xenopus [frog] RNA sequences covalently linked to [messenger] RNA for [beta]-galactosidase, resulting in a fused polypeptide.
29
Polisky at 3904.
30
Since ribosomal RNA is never translated in normal cells, the polypeptide chain produced by translating that chain was not a naturally occuring, identified protein. The authors of the Polisky paper explicitly pointed out that if one were to insert a heterologous gene coding for a protein into their plasmid, it should produce a "fused protein" consisting of a polypeptide made of beta-galactosidase plus the protein coded for by the inserted gene, joined by a peptide bond into a single continuous polypeptide chain:
31
It would be interesting to examine the expression of a normally translated eukaryotic sequence in pBGP120. If an inserted sequence contains a ribosome binding site that can be utilized in bacteria, production of high levels of a readthrough transcript might allow for extensive translation of a functional eukaryotic polypeptide. In the absence of an independent ribosome binding site, the eukaryotic sequence would be translated to yield a peptide covalently linked to [beta]-galactosidase. The extent of readthrough translation under lac control will depend on the number of translatable codons between the EcoRI site and the first in-phase nonsense [i.e., stop] codon in the inserted sequence.
32
Id.
III. The Claimed Invention
33
Referring back to Claims 1 through 3, it can be seen that virtually everything in the claims was present in the prior art Polisky article. The main difference is that in Polisky the heterologous gene was a gene for ribosomal RNA while the claimed invention substitutes a gene coding for a predetermined protein. Ribosomal RNA gene is not normally translated into protein, so expression of the heterolgous gene was studied mainly in terms of transcription into RNA. Nevertheless, Polisky mentioned preliminary evidence that the transcript of the ribosomal RNA gene was translated into protein. Polisky further predicted that if a gene that codes for a protein were to be substituted for the ribosomal RNA gene, "a readthrough transcript might allow for extensive translation of a functional eukaryotic polypeptide." Thus, the prior art explicitly suggested the substitution that is the difference between the claimed invention and the prior art, and presented preliminary evidence suggesting that the method could be used to make proteins.
34
Appellants reduced their invention to practice some time in 1976 and reported their results in a paper that was published in 1978.10 During 1977 they communicated their results to another group of researchers who used the readthrough translation approach to achieve the first synthesis of a human protein in bacteria.11 Appellants filed an application to patent their invention on August 9, 1978, of which the application on appeal is a division.
IV. The Obviousness Rejection
35
The application was rejected under 35 U.S.C. Sec. 103. The position of the examiner and the Board is, simply, that so much of the appellant's method was revealed in the Polisky reference that making a protein by substituting its gene for the ribosomal RNA gene in Polisky (as suggested by Polisky) would have been obvious to one of ordinary skill in the art at the time that the invention was made.
36
The claims specify that the heterologous gene should be inserted into the plasmid in the same orientation and with the same reading frame as the preceding portion of the indigenous gene. In view of this limitation, the Sec. 103 rejection was based either on Polisky alone (supplemented by the fact that the importance of orientation and reading frame was well known in the prior art) or in combination with the Bahl reference which describes a general method for inserting a piece of chemically synthesized DNA into a plasmid. Bahl teaches that this technique could be used to shift the sequence of DNA inserted into a plasmid into the proper reading frame.
37
Appellants argue that at the time the Polisky article was published, there was significant unpredictability in the field of molecular biology so that the Polisky article would not have rendered the claimed method obvious to one of ordinary skill in the art. Even though there was speculation in the article that genes coding for proteins could be substituted for the ribosomal RNA gene and would be expressed as readthrough translation into the protein, this had never been done. Appellants say that it was not yet certain whether a heterologous protein could actually be produced in bacteria, and if it could, whether additional mechanisms or methods would be required. They contend that without such certainty the predictions in the Polisky paper, which hindsight now shows to have been correct, were merely invitations to those skilled in the art to try to make the claimed invention. They argue that the rejection amounts to the application of a standard of "obvious to try" to the field of molecular biology, a standard which this court and its predecessors have repeatedly rejected as improper grounds for a Sec. 103 rejection. E.g., In re Fine, 837 F.2d 1071, 1075, 5 USPQ2d 1596, 1599 (Fed.Cir.1988); In re Geiger, 815 F.2d 686, 688, 2 USPQ2d 1276, 1278 (Fed.Cir.1987); In re Merck & Co., Inc., 800 F.2d 1091, 1097, 231 U.S.P.Q. (BNA) 375, 379 (Fed.Cir.1986); In re Antonie, 559 F.2d 618, 620, 195 U.S.P.Q. (BNA) 6, 8 (CCPA 1977).
38
Obviousness under Sec. 103 is a question of law. Panduit Corp. v. Dennison Mfg. Co., 810 F.2d 1561, 1568, 1 USPQ2d 1593, 1597 (Fed.Cir.), cert. denied, --- U.S. ----, 107 S. Ct. 2187, 95 L. Ed. 2d 843 (1987). An analysis of obviousness must be based on several factual inquiries: (1) the scope and content of the prior art; (2) the differences between the prior art and the claims at issue; (3) the level of ordinary skill in the art at the time the invention was made; and (4) objective evidence of nonobviousness, if any. Graham v. John Deere Co., 383 U.S. 1, 17-18, 86 S. Ct. 684, 693-94, 15 L. Ed. 2d 545, 556-57, 148 U.S.P.Q. (BNA) 459, 467 (1966). See, e.g., Custom Accessories, Inc. v. Jeffrey-Allan Indus., 807 F.2d 955, 958, 1 USPQ2d 1196, 1197 (Fed.Cir.1986). The scope and content of the prior art and the differences between the prior art and the claimed invention have been examined in sections II and III, supra. Appellants say that in 1976 those of ordinary skill in the arts of molecular biology and recombinant DNA technology were research scientists who had "extraordinary skill in relevant arts" and "were among the brightest biologists in the world." Objective evidence of nonobviousness was not argued.
39
With the statutory factors as expounded by Graham in mind and considering all of the evidence, this court must determine the correctness of the board's legal determination that the claimed invention as a whole would have been obvious to a person having ordinary skill in the art at the time the invention was made. We agree with the board that appellants' claimed invention would have been obvious in light of the Polisky reference alone or in combination with Bahl within the meaning of Sec. 103. Polisky contained detailed enabling methodology for practicing the claimed invention, a suggestion to modify the prior art to practice the claimed invention, and evidence suggesting that it would be successful.
40
Appellants argue that after the publication of Polisky, successful synthesis of protein was still uncertain. They belittle the predictive value of the observation that expression of the transcribed RNA in Polisky produced beta-galactosidase with a greater than normal molecular weight, arguing that since ribosomal RNA is not normally translated, the polypeptide chains that were added to the end of the beta-galactosidase were "junk" or "nonsense" proteins. This characterization ignores the clear implications of the reported observations. The Polisky study directly proved that a readthrough transcript messenger RNA had been produced. The preliminary observation showed that this messenger RNA was read and used for successful translation. It was well known in the art that ribosomal RNA was made of the same nucleotides as messenger RNA, that any sequence of nucleotides could be read in groups of three as codons, and that reading these codons should specify a polypeptide chain that would elongate until a stop codon was encountered. The preliminary observations thus showed that codons beyond the end of the beta-galactosidase gene were being translated into peptide chains. This would reasonably suggest to one skilled in the art that if the codons inserted beyond the end of the beta-galactosidase gene coded for a "predetermined protein," that protein would be produced. In other words, it would have been obvious and reasonable to conclude from the observation reported in Polisky that since nonsense RNA produced nonsense polypeptides, if meaningful RNA was inserted instead of ribosomal RNA, useful protein would be the result. The relative shortness of the added chains is also not a source of uncertainty, since one skilled in the art would have known that a random sequence of nucleotides would produce a stop codon before the chain got too long.12
41
Appellants complain that since predetermined proteins had not yet been produced in transformed bacteria, there was uncertainty as to whether this could be done, and that the rejection is thus founded on an impermissible "obvious to try" standard. It is true that this court and its predecessors have repeatedly emphasized that "obvious to try" is not the standard under Sec. 103. However, the meaning of this maxim is sometimes lost. Any invention that would in fact have been obvious under Sec. 103 would also have been, in a sense, obvious to try. The question is: when is an invention that was obvious to try nevertheless nonobvious?
42
The admonition that "obvious to try" is not the standard under Sec. 103 has been directed mainly at two kinds of error. In some cases, what would have been "obvious to try" would have been to vary all parameters or try each of numerous possible choices until one possibly arrived at a successful result, where the prior art gave either no indication of which parameters were critical or no direction as to which of many possible choices is likely to be successful. E.g., In re Geiger, 815 F.2d at 688, 2 USPQ2d at 1278; Novo Industri A/S v. Travenol Laboratories, Inc., 677 F.2d 1202, 1208, 215 U.S.P.Q. (BNA) 412, 417 (7th Cir.1982); In re Yates, 663 F.2d 1054, 1057, 211 U.S.P.Q. (BNA) 1149, 1151 (CCPA 1981); In re Antonie, 559 F.2d at 621, 195 USPQ at 8-9. In others, what was "obvious to try" was to explore a new technology or general approach that seemed to be a promising field of experimentation, where the prior art gave only general guidance as to the particular form of the claimed invention or how to achieve it. In re Dow Chemical Co., 837 F.2d 469, 473, 5 USPQ2d 1529, 1532 (Fed.Cir.1988); Hybritech, Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1380, 231 U.S.P.Q. (BNA) 81, 90-91 (Fed.Cir.1986), cert. denied, --- U.S. ----, 107 S. Ct. 1606, 94 L. Ed. 2d 792 (1987); In re Tomlinson, 363 F.2d 928, 931, 150 U.S.P.Q. (BNA) 623, 626 (CCPA 1966). Neither of these situations applies here.
43
Obviousness does not require absolute predictability of success. Indeed, for many inventions that seem quite obvious, there is no absolute predictability of success until the invention is reduced to practice. There is always at least a possibility of unexpected results, that would then provide an objective basis for showing that the invention, although apparently obvious, was in law nonobvious. In re Merck & Co., 800 F.2d at 1098, 231 USPQ at 380; Lindemann Maschinenfabrik GMBH v. American Hoist & Derrick Co., 730 F.2d 1452, 1461, 221 U.S.P.Q. (BNA) 481, 488 (Fed.Cir.1984); In re Papesch, 315 F.2d 381, 386-87, 137 U.S.P.Q. (BNA) 43, 47-48 (CCPA 1963). For obviousness under Sec. 103, all that is required is a reasonable expectation of success. In re Longi, 759 F.2d 887, 897, 225 U.S.P.Q. (BNA) 645, 651-52 (Fed.Cir.1985); In re Clinton, 527 F.2d 1226, 1228, 188 U.S.P.Q. (BNA) 365, 367 (CCPA 1976). The information in the Polisky reference, when combined with the Bahl reference provided such a reasonable expectation of success.
44
Appellants published their pioneering studies of the expression of frog ribosomal RNA genes in bacteria more than a year before they applied for a patent. After providing virtually all of their method to the public without applying for a patent within a year, they foreclosed themselves from obtaining a patent on a method that would have been obvious from their publication to those of ordinary skill in the art, with or without the disclosures of other prior art. The decision of the board is
45
AFFIRMED.
1
Basic background information about molecular biology and genetic engineering, can be found in Alberts, Bray, Lewis, Raff, Roberts & Watson, The Molecular Biology of the Cell, 1-253, 385-481 (1983) [hereinafter The Cell ]; Watson, Hopkins, Roberts, Steitz & Weiner, The Molecular Biology of the Gene, Vol. 1 (4th ed., 1987) 3-502 [hereinafter The Gene ]. These standard textbooks were used to supplement the information in the glossary supplied by appellants. The description here is necessarily simplified and omits important facts and concepts that are not necessary for the analysis of this case
2
There are twenty amino acids: alanine, valine, leucine, isoleucine, proline, phenylalanine, methionine, tryptophan, glycine, asparagine, glutamine, cysteine, serine, threonine, tyrosine, aspartic acid, glutamic acid, lysine, arginine, and histidine
3
Proteins are often loosely called peptides, but technically proteins are only the larger peptides with chains of at least 50 amino acids, and more typically hundreds of amino acids. Some proteins consist of several polypeptide chains bound together covalently or noncovalently. The term "peptide" is broader than "protein" and also includes small chains of amino acids linked by peptide bonds, some as small as two amino acids. Certain small peptides have commercial or medical significance
4
Polypeptide chains fold up into complex 3-dimensional shapes. It is the shape that actually determines many chemical properties of the protein. However, the configuration of a protein molecule is determined by its amino acid sequence. The Cell at 111-12; The Gene at 50-54
5
The sugar in DNA is deoxyribose, while the sugar in RNA, infra, is ribose. The sugar and phosphate groups are linked covalently to those of adjacent nucleotides to form the backbone of the long unbranched DNA molecule. The bases project from the chain, and serve as the "alphabet" of the genetic code
DNA molecules actually consist of two chains tightly entwined as a double helix. The chains are not identical but instead are complementary: each A on one chain is paired with a T on the other chain, and each C has a corresponding G. The chains are held together by noncovalent bonds between these complementary bases. This double helical structure plays an essential role in the replication of DNA and the transmission of genetic information. See generally The Cell at 98-106; The Gene at 65-79. However, the information of only one strand is used for directing protein synthesis, and it is not necessary to discuss the implication of the double-stranded structure of DNA here. RNA molecules, infra, are single stranded.
6
Chromosomes also contain regions of DNA that are not part of genes, i.e., do not code for the sequence of amino acids in proteins. These include sections of DNA adjacent to genes that are involved in the control of transcription, infra, and regions of unknown function
7
See The Cell at 185-194; The Gene at 208-10
8
Polisky, Bishop & Gelfand, A plasmid cloning vehicle allowing regulated expression of eukaryotic DNA in bacteria, 73 Proc.Nat'l Acad.Sci. USA 3900 (1976)
9
The promoter is a sequence of nucleotides where the enzyme that synthesizes RNA, RNA polymerase, attaches to the DNA to start the transcription of the beta-galactosidase gene. The operator is an overlapping DNA sequence that binds a small protein present in the cell, the lactose repressor protein. The lactose repressor protein binds to the operator and physically blocks the RNA polymerase from properly attaching to the promoter so that transcription cannot proceed. Lactose molecules interact with the lactose repressor protein and cause it to change its shape; after this change in shape it moves out of the way and no longer prevents the RNA polymerase from binding to the promoter. Messenger RNA coding for beta-galactosidase can then be transcribed. See generally The Cell at 438-39; The Gene at 474-80
10
O'Farrell, Polisky & Gelfand, Regulated expression by readthrough translation from a plasmid-encoded beta-galactosidase, 134 J. Bacteriol. 645 (1978). The heterologous genes expressed in these studies were not predetermined, but were instead unidentified genes of unknown origin. The authors speculated that they were probably genes from E. coli that were contaminants in the source of beta-galactosidase genes. Id. at 648
11
Itakura, Hirose, Crea, Riggs, Heynecker, Bolivar & Boyer, Expression in Escherichia coli of a chemically synthesized gene for the hormone somatostatin, 198 Science 1056 (1977). A pioneering accomplishment of the Itakura group is that the gene was not from a human source, but instead was entirely synthesized in the laboratory using chemical methods. It is not clear whether the appellants communicated only the results reported in the Polisky publication or whether they communicated the complete claimed invention
12
The patent application indicates that chains as long as 60 amino acids were added, which is hardly a trivial length of polypeptide | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/509573/ | 853 F.2d 355
6 U.C.C. Rep. Serv. 2d (West) 1398
Kenneth WALKER, Plaintiff-Appellant,v.SEARS, ROEBUCK & CO., Defendant-Appellee.
No. 87-1438.
United States Court of Appeals,Fifth Circuit.
Aug. 29, 1988.
William A. Smith, Mark Alan Calhoun, Robert C. Brown, Calhoun, Gump, Spillman & Stacy, Dallas, Tex., for plaintiff-appellant.
F. Marianne Matthews, Joan G. Quinters, Matthews, Kroemer & Johnson, Dallas, Tex., for defendant-appellee.
Appeal from the United States District Court for the Northern District of Texas.
Before RUBIN, KING and WILLIAMS, Circuit Judges.
KING, Circuit Judge:
1
Plaintiff sued defendant for installing a faulty roof on plaintiff's home in March of 1982. Defendant filed a motion for summary judgment in which it urged that, because the Texas Deceptive Trade Practices Act has a two year statute of limitations, plaintiff's claim was time-barred. The district court agreed and granted defendant's motion; plaintiff appealed. We conclude that plaintiff's breach of an implied warranty claim, which was pleaded apart from and in addition to plaintiff's Deceptive Trade Practices Act claim, is governed by a four year statute of limitations and, therefore, was not time-barred. Consequently, we reverse the district court's judgment with respect to that claim. We agree with the district court, however, that plaintiff's Deceptive Trade Practices Act claim was time-barred; therefore, we affirm the judgment with respect to that claim.
I.
2
The underlying facts which bear upon the issues before us on appeal are undisputed. On March 12, 1982, Kenneth Walker ("Walker") entered into a written contract with Sears, Roebuck & Co. ("Sears") to replace the roof on Walker's home in Corsicana, Texas. The contract price for these services was $3,418.97. By early July, the new roof was installed. On July 24, however, a heavy rain fell in Corsicana--the first since the roof was completed--and water leaked into Walker's house. Walker informed Sears about the leaking roof; because he had been transferred to a new city by his employer and was hesitant to list the house for sale as long as the roof continued to leak, Walker also informed Sears that he was eager for the repairs to be made quickly. In response to Walker's requests, Sears on several occasions sent out roofers who attempted to repair the roof. In September 1982, Walker became convinced that the roofers had succeeded; consequently, he accepted a check from Sears for the water damage to the house's interior, had the damage repaired, placed the house on the market, and moved from Corsicana. As the next heavy rain soon demonstrated, however, the roof was not fixed. Walker, therefore, once again began his negotiations with Sears. When no further progress had been made by June 1983--and with the leaking roof adversely affecting his ability to sell the Corsicana residence--Walker took his house off the market. Although Sears apparently continued its efforts to correct the problem into 1985, it never succeeded in making the roof serviceable. Finally, in September 1985, Walker hired an attorney to pursue a claim against Sears.
3
In his attorney's first letter to Sears on Walker's behalf, the attorney gave notice of Walker's intent to seek multiple damages and attorney's fees from Sears under the Texas Deceptive Trade Practices Act ("the DTPA"). For approximately six months from the date of the first letter, Walker's attorney attempted to negotiate a resolution to Walker's claim with Sears without resorting to litigation. When no agreement had been reached by March 19, 1986, Walker--fearing that additional delay in bringing an action would cause his claim to be barred by limitations--filed suit against Sears in the 13th Judicial District Court of Navarro County, Corsicana, Texas. In his petition, Walker alleged, among other things, that by contracting with Walker, Sears represented that it would install Walker's roof in a workmanlike manner and impliedly warranted that the roofing materials and their installation would be merchantable, would be reasonably fit for their ordinary purpose, and would pass without objection in the trade. For Sears' failure to meet these and other obligations it owed to Walker, Walker sought actual damages of $25,670, remedial and punitive damages under the DTPA, and attorney's fees. On April 11, Sears removed the suit to the United States District Court for the Northern District of Texas on the basis of diversity of citizenship. Shortly thereafter, Sears filed an answer in which it asserted that Walker's claims were time-barred.
4
On November 3, 1986, Sears followed up on its statute of limitations defense with a motion for summary judgment; as Sears saw it, Walker's "causes of action" were barred because they were not brought within the two year time period in which the DTPA permitted them to be brought. In response, Walker "vigorously denied that his causes of action under the DTPA, misrepresentation, breach of warranty and unconscionable conduct theories" were time-barred. He argued that Sears' failure to properly install a water-tight roof on Walker's home constituted "a continuing breach of express and implied warranties of good workmanship." With respect to his DTPA claim, Walker made two arguments: (1) that because of Sears' "egregious course of dealing" with Walker, Sears should be equitably estopped from asserting its statute of limitations defense and (2) that because Sears continued its attempts to repair the roof into 1985 and because Walker's cause of action "ripened anew" with each and every attempt, the statute of limitations on the DTPA claim never began to run. Shortly after filing his response, Walker--with the district court's approval--amended his complaint to assert his equitable estoppel defense to Sears' limitations claim.
5
On December 10, 1986, the district court granted Sears, in a two page order, the summary judgment it had requested. In its order, the district court made several findings. First, the court recognized that pursuant to the DTPA's terms, all actions must be brought within two years after the consumer should have known that he had a cause of action; in this case, the court found, Walker knew he had a cause of action by at least September of 1983 and, therefore, his DTPA claim was time-barred when he filed it on March 19, 1986. Second, relying on Diamond v. Meacham, 699 S.W.2d 950, 953-54 (Tex.App.--El Paso 1985, no writ), the court found that "[n]ot only is [Walker's] DTPA cause of action barred, but his breach of warranty and his unconscionable conduct actions are also barred." The court then specifically rejected Walker's argument that Sears' failure to complete its repairs meant that Walker had a continuing cause of action until the repairs were made. And finally, with respect to Walker's equitable estoppel defense, the court found that it was "not persuad[ed]" by the summary judgment evidence Walker had filed in support of his argument concerning Sears' conduct.
6
Judgment for Sears was entered along with the order. Nine days later, Walker filed a motion for new trial. In his motion, Walker asserted that the district court's order granting summary judgment showed that the court was confused about exactly what Walker's claims were and the legal theories through which he had pursued those claims. In an attempt to dispel the court's confusion, Walker focused on the amended complaint. According to Walker, his amended complaint alleged two separate and independent theories of recovery: (1) a breach of warranty claim under the common law and the Uniform Commercial Code; and (2) a claim under the DTPA. In applying the DTPA's statute of limitations to his first claim, Walker alleged, the district court erred. Explained Walker, "The state courts in Texas, as well as the federal appellate courts applying Texas law, have strongly concluded that the four (4) year period of limitations of the Uniform Commercial Code, and that of common law, applies to actions for breach of warranty for defective products and services." Walker also expressed his dissatisfaction with the court's decision, made when Walker's claims were in summary judgment posture, that Walker's equitable estoppel argument was unpersuasive. Since the summary judgment evidence was clearly sufficient to create a fact question, Walker argued, the court had no power to determine on its own that estoppel was not established and, consequently, that estoppel was an unavailing defense to Sears' limitations claim. Despite Walker's arguments, the district court remained unconvinced that it had erred. Noting that "Plaintiff has brought no new arguments for the Court's consideration," the district court denied Walker's motion for new trial on May 15, 1987. Walker filed timely notice of appeal and now urges to us the arguments which failed him before the district court.1 We begin our consideration of these arguments by acknowledging the standards by which we will review the district court's judgment.
II.
7
On appeal, we evaluate a district court's decision to grant summary judgment by reviewing the record under the same standards which guided the district court. Brooks, Tarlton, Gilbert, Douglas & Kressler v. United States Fire Ins. Co., 832 F.2d 1358, 1364 (5th Cir.1987); Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir.1986). Consequently, we cannot affirm a summary judgment unless "we are convinced, after an independent review of the record, that 'there is no genuine issue as to any material fact' and that the movant is 'entitled to a judgment as a matter of law.' " Brooks, 832 F.2d at 1364 (quoting Fed.R.Civ.P. 56(c)). Under this standard, we must consider fact questions with deference to the nonmovant; when a fact question controls disposition on summary judgment, we must "review the facts drawing all inferences most favorable to the party opposing the motion." Reid, 784 F.2d at 578. We will decide questions of law, however, just as we decide questions of law outside the summary judgment context: de novo. Brooks, 832 F.2d at 1364. And because Walker's suit was removed to our federal forum based on the parties' diversity of citizenship, we sit as an Erie-court; therefore, we must settle this dispute by applying Texas law and ruling, to the best of our ability, as would the Texas courts. Id. at 1364, 1376.
8
In this case, the district court first held that as a matter of Texas law, the DTPA's two year statute of limitations controlled the viability of every claim that Walker pleaded. This pivotal ruling led the court to its three remaining conclusions: that the statute of limitations on Walker's claims began to run at least by September 1983, regardless of the fact that Sears continued to work on the roof; that Walker's claims were time-barred because he waited past September 1985 before he filed his lawsuit; and that Walker had no affirmative defense which would solve his limitations problem. We begin our review--bearing in mind the standards which we articulated above--with the court's initial holding. And our first step in determining whether the DTPA's limitations period applied to all Walker's claims is to determine exactly what claims Walker pleaded.
9
On this question, the parties disagree. Walker argues, pointing to paragraph four of his amended complaint, that he pleaded a breach of implied warranty claim2 arising out of his contract with Sears in addition to the DTPA claim which he set out in paragraph three.3 Sears, in response, agrees that Walker pleaded a DTPA claim but argues that Walker's attempt to plead implied warranties in paragraph four of his amended complaint was ineffective. The warranties which Walker alleged in paragraph four, Sears explains, are implied warranties which arise under Chapter 2 of the Texas Uniform Commercial Code ("the Code") with respect to the sale of goods. See Tex.Bus. & Com.Code Ann. Secs. 2.314, 2.315 (Tex. UCC) (Vernon 1968). However, Sears asserts, Walker's contract with Sears is a service contract and is not governed by the Code; therefore, Walker failed to successfully allege an implied warranty claim separate and apart from his DTPA claim. On at least one point we must agree with Sears: the provisions of the Code do not control Walker's action.
10
Chapter 2 of the Code applies only to transactions which involve the sale of goods. Tex.Bus. & Com.Code Ann. Sec. 2.102; Brooks, 832 F.2d at 1373; G-W-L, Inc. v. Robichaux, 643 S.W.2d 392, 394 (Tex.1982), overruled in part on unrelated issue in Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349, 354 (Tex.1987). At the very least, Walker's contract with Sears involved both the sale of roofing materials (which qualify as goods) and the rendition of installation services (which do not). The Texas Supreme Court has held that when a contract involves the sale of both services and materials, "the question [of whether Chapter 2 of the Code governs the transaction] becomes whether the dominant factor or 'essence' of the transaction is the sale of the materials or the services." Robichaux, 643 S.W.2d at 394; accord Montgomery Ward & Co. v. Dalton, 665 S.W.2d 507, 511 (Tex.App.--El Paso 1983, no writ). In determining the essence of Walker's transaction with Sears, we are guided by the Texas Supreme Court's analysis in Robichaux and the El Paso Court of Appeal's analysis in Montgomery Ward. In Robichaux, the supreme court reviewed a contract which provided that the defendant would " 'build, construct, and complete ... and furnish and provide all labor and material to be used in the construction and erection' " of a new house. Robichaux, 643 S.W.2d at 394. Based solely on the nature of the contract, the court concluded that "[c]learly, the 'essence' or 'dominant' factor of the transaction was the furnishing of labor and the performance of work required for constructing the house." Id. One year later, the Montgomery Ward court determined that the Texas Supreme Court's decision in Robichaux dictated the answer to the question before it: whether a written contract in which Montgomery Ward agreed to provide materials and services for the installation of a roof was governed by the Code. Following the Texas Supreme Court's lead, the appellate court held that "[T]he essence or dominant factor of the transaction before us was the furnishing of the labor to install the roof." Montgomery Ward, 665 S.W.2d at 511. Given the striking similarity between Walker's agreement with Sears in this case and the written contract at issue in Montgomery Ward, and given the Montgomery Ward court's reliance on Robichaux, we likewise conclude that the service component of Walker's contract with Sears was dominant; therefore, we agree with Sears that Walker did not plead a successful implied warranty claim under Chapter 2 of the Code. We do not, however, accept the conclusion Sears claims must flow from the success of its argument: that because Walker alleged a Chapter 2 implied warranty claim that must--because of the nature of the contract between Sears and Walker--fail, Walker actually alleged only a DTPA claim.
11
The Federal Rules of Civil Procedure require only notice pleading--that is, a " 'short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 102, 2 L. Ed. 2d 80 (1957) (quoting Fed.R.Civ.P. 8(a)(2)). The Rules also explicitly require that all pleadings "be so construed as to do substantial justice." Fed.R.Civ.P. 8(f). Consequently, in reviewing Walker's amended complaint we "reject the approach that pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and accept the principle that the purpose of pleading is to facilitate a proper decision on the merits." Conley, 355 U.S. at 48, 78 S.Ct. at 103. The question we answer, therefore, is not whether Walker's pleadings disclose an implied warranty claim which has been alleged with the utmost skill and precision, but whether Walker's pleadings reasonably put Sears on notice to defend against a breach of implied warranty claim arising from his contract with Sears. To that question, we answer "yes."
12
Read as a whole, Walker's amended complaint informed Sears that Walker's suit was based on a contract between Sears and Walker for the installation of a new roof. It also informed Sears that the premise of Walker's claim was that Sears, by improperly installing the roof, failed to live up to its obligations under that contract. Finally, it is clear from paragraph four of the amended complaint that the particular contractual obligations on which Walker intended to focus were the implied warranty obligations which arose from the contract as a matter of law. Walker's only misstep was in particularizing the Chapter 2 implied warranties, which apply only to the sale of goods, instead of the analogous implied warranty that in Texas accompanies a contract for the repair or modification of existing tangible goods or property--that the service will be performed in a good and workmanlike manner, see Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349, 354 (Tex.1987).4 Were we to hold Walker's amended complaint to a strict technical standard, we might conclude that this single misstep bars Walker from asserting his implied warranty cause of action; however, we have concluded that to do so on the facts of this case would not do substantial justice and would result in the type of unnecessarily narrow interpretation which the Supreme Court cautioned against in Conley. We have no doubt that in this case Sears has been adequately apprised of the true nature of Walker's implied warranty claim. We hold, therefore, that separate from his cause of action under the DTPA, Walker's amended complaint alleged that Sears breached an implied warranty which arose from the contract between Walker and Sears.
13
Having decided that Walker's amended complaint asserted these two separate causes of action, we are now ready to examine the district court's conclusion that like his DTPA claim, Walker's warranty cause of action is governed by the DTPA's two year statute of limitations. Sears argues, and the district court agreed, that the conclusion is required by the language of section 17.565 of the DTPA and the El Paso Court of Appeals' decision interpreting that language in Diamond v. Meacham, 699 S.W.2d 950 (Tex.App.--El Paso 1985, no writ). Section 17.565 is the DTPA's limitations section; it dictates that:
14
All actions brought under this subchapter must be commenced within two years after the date on which the false, misleading, or deceptive act or practice occurred or within two years after the consumer discovered or in the exercise of reasonable diligence should have discovered the occurrence of the false, misleading, or deceptive act or practice.
15
Tex.Bus. & Com.Code Ann. Sec. 17.565 (Vernon 1987) (formerly Tex.Bus. & Com.Code Ann. Sec. 17.56A). In Diamond, the El Paso appellate court examined the reach of this provision--and, Sears asserts, demonstrated the section's applicability to Walker's breach of warranty claim--when it made the following comments:
16
It has been suggested that the 1979 amendment found in Section 17.56A, Texas Deceptive Trade Practice Act, and which provides a two-year limitations, does not deal specifically with causes of action based on breach of warranty.... Brag, Maxwell, Longley, Texas Consumer Litigation, 2d Ed., sec. 2.12 (1983). Even so, the limitation provision states:
17
All actions brought under this subchapter must be commenced within two years....
18
This provision is a part of Subchapter E headed "Deceptive Trade Practices and Consumer Protection." That subchapter includes Section 17.50(a) which provides a cause of action for "(2) breach of an express or implied warranty." Since the limitation section includes "all actions brought under this subchapter," it must necessarily include actions such as this one under Section 17.50(a)(2) for breach of warranty. Brooks Fashion Stores, Inc. v. Northpark National Bank, 689 S.W.2d 937 (Tex.App.--Dallas 1985, no writ).
19
699 S.W.2d at 953-54. We do not agree with Sears or the district court that either section 17.565 or the quoted language in Diamond supports the result the district court reached in this case.
20
The question before the court in Diamond was straightforward: when a plaintiff pleads a breach of warranty action under section 17.50(a)(2) of the DTPA, is that action subject to section 17.565's two year limitations period? The question arose because section 17.565 contains ambiguous language. Although the first sentence of the provision begins by decreeing that "all actions" brought pursuant to Subchapter E must be brought within two years, the sentence ends by explaining that the two year limitations period is judged in relation to when the "false, misleading, or deceptive act or practice" occurred. Section 17.46(b) of the DTPA, of course, provides the Act's "laundry list" of false, misleading, or deceptive acts or practices, and section 17.50 of Subchapter E permits the consumer to recover for a laundry list violation; section 17.50 also, however, permits a consumer to recover for the breach of an express or implied warranty, an unconscionable action or course of action, and a violation of article 21.21 of the Texas Insurance Code--none of which are included in the DTPA's laundry list of false, misleading, or deceptive actions or practices. Because section 17.565's first sentence can be construed so that the section either does or does not apply to these non-laundry list claims, various commentators--including the one the El Paso court cited in Diamond--have suggested that courts should not apply section 17.565's two year limitations provision to DTPA claims based on warranty, unconscionability, and Insurance Code violation theories. See D. Bragg, P. Maxwell & J. Longley, Texas Consumer Litigation Sec. 2.12 (2d ed. 1983); M. Curry, The 1979 Amendments to the Deceptive Trade Practices-Consumer Protection Act, 32 Baylor L.Rev. 51, 77-78 (1980); but see R. Goodfriend & M. Lynn, Of White Knights and Black Knights: An Analysis of the 1979 Amendments to the Texas Deceptive Trade Practices Act, 33 Sw.L.J. 941, 1001 n. 344 (1979). When the court in Diamond held that section 17.565 applies to actions under section 17.50 for breach of warranty, therefore, the court was simply rejecting the interpretation urged by these commentators and adopting the interpretation which the Dallas court of appeals had already set out in Brooks Fashion Stores, Inc. v. Northpark Nat'l Bank, 689 S.W.2d 937, 942-43 (Tex.App.--Dallas 1985, no writ).
21
To say that Diamond supports Sears' position that Walker's contractual implied warranty claim is governed by the DTPA's two year limitation period is, therefore, to fail to understand the difference between the claim before the district court in Diamond and the claims Walker raised here. In Diamond, the plaintiff asserted only one claim: a DTPA claim for breach of an implied warranty. In this case, as we explained above, Walker alleged two distinct claims: a common law implied warranty claim based in contract and a DTPA claim based on Sears' misrepresentations (a laundry list violation) and unconscionable conduct, see supra note 3 and infra note 5. Because the claim before the court in Diamond was so different, Diamond cannot be read to support Sears' contention that section 17.565 applies not only to DTPA claims, but also to claims based on other theories of recovery which are joined in a lawsuit with DTPA claims.5 We have, in fact, found nothing in Texas law which supports Sears' contention. The language of section 17.565 does not support it; that section explicitly applies only to actions "brought under" the DTPA. No other language in the DTPA supports it; in fact, section 17.43 seems to refute it by providing that the DTPA's provisions "are not exclusive" and that its remedies "are in addition to any other procedures or remedies provided for in any other law." Tex.Bus. & Com.Code Ann. Sec. 17.43 (Vernon 1987) (emphasis added). And finally, the case law in Texas does not support it; we have found a number of cases in which plaintiffs have joined other causes of action with their DTPA claims and the Texas courts have, without comment, applied the DTPA's statute of limitations to the DTPA claims and non-DTPA statutes of limitations to those other claims. See, e.g., Johnston v. Barnes, 717 S.W.2d 164, 165-66 (Tex.App.--Houston [14th Dist.] 1986, no writ); Xarin Real Estate, Inc. v. Gamboa, 715 S.W.2d 80, 85 (Tex.App.--Corpus Christi 1986, no writ); Brooks, 689 S.W.2d at 940-45. The district court erred, therefore, in finding that the viability of Walker's implied warranty claim was determined by the DTPA's two year statute of limitations.
22
The remaining question, of course, is whether Walker's implied warranty claim was time-barred under the statute of limitations provision which did apply to it. To answer that question, we must first determine what the applicable statute of limitations provision was. The Texas Supreme Court concluded in Certain-Teed Prods. Corp. v. Bell that "a warranty which the law implies from the existence of a written contract is as much a part of the writing as the express terms of the contract, and the action to enforce such a warranty is governed by the statute pertaining to written contracts." 422 S.W.2d 719, 721 (1968); accord Conann Constructors, Inc. v. Muller, 618 S.W.2d 564, 566 (Tex.Civ.App.--Austin 1981, writ ref'd n.r.e.); W.R. Weaver Co. v. Burroughs Corp., 580 S.W.2d 76, 80 (Tex.Civ.App.--El Paso 1979, writ ref'd n.r.e.). Texas has never had a statute of limitations provision which expressly pertained to written contracts. During the time period relevant to Walker's action, however, a Texas statute did provide that actions for debt must be brought not later than four years after the cause of action accrued. See Tex.Rev.Civ.Stat.Ann. art. 5527 (Vernon Supp.1985) (repealed 1985, now codified at Tex.Civ.Prac. & Rem.Code Ann. Sec. 16.004 (Vernon 1986)). This statute is important because "[T]he phrase, 'actions for debt,' has been liberally construed to embrace actions for money damages for breach of contract, whether the contract was oral or written." Brooks, 689 S.W.2d at 941 (citations omitted). Consequently, a breach of contract action by Walker against Sears would have been subject to article 5527's four year statute of limitations, see id. at 942; under the Texas Supreme Court's decision in Certain-Teed, therefore, Walker's implied warranty claim was subject to that same limitations period. Accepting the district court's determination that Walker's cause of action accrued by at least September 1983, Walker's lawsuit, filed March 19, 1986, was timely with respect to the implied warranty claim. We agree with Walker, therefore, that the district court erred in dismissing his contractual implied warranty claim on statute of limitations grounds. We turn to Walker's DTPA claim.
23
With respect to this claim, Walker has two arguments. The first urges us to find that Walker actually filed his DTPA claim before the two year statute of limitations period ran; the second urges us to hold that even if Walker's DTPA claim was filed outside the period of limitations, a fact issue exists as to whether Sears should be estopped from asserting the limitations defense. After carefully considering these arguments, we find that we must reject them both.
24
Walker's first argument is premised on his characterization of Sears' obligation to Walker. Sears, Walker explains, was obliged to install a serviceable roof on Walker's home; therefore, its repeated failures to repair the roof constituted an ongoing and continuous breach of that obligation which prevented the statute from running. As support for the argument, Walker cites Brighton Homes, Inc. v. McAdams, 737 S.W.2d 340 (Tex.App.--Houston [14th Dist.] 1987, writ ref'd n.r.e.), Brown Found. Repair and Consulting, Inc. v. McGuire, 711 S.W.2d 349 (Tex.App.--Dallas 1986, writ ref'd n.r.e.), and Salais v. Martinez, 603 S.W.2d 296 (Tex.Civ.App.--El Paso 1980, no writ). The courts in these cases, Walker points out, were each faced with determining whether the proper measure of damages for a failure to repair is the cost of repair at the time the repair was attempted or the cost of repair at the time of trial. See Brighton Homes, 737 S.W.2d at 343; Brown, 711 S.W.2d at 353; Salais, 603 S.W.2d at 297. In resolving the question, each court recognized, as the Brighton Homes court explained, that:
25
At common law, when one isolated event does not cause all the damage to the property, but rather the total damage is the result of a continuing cause, actual damage is not determined immediately after the injury begins. Where there is a continuing cause of damage, measuring the damage immediately after the initial injury would be unduly restrictive and would not compensate plaintiffs fully for their injury....
26
737 S.W.2d at 343. The courts' concern about making plaintiffs whole led each court to one conclusion about the proper measure of damages. In the words of the Salais court, "The failure to repair was a continuing breach so that the cost of repair [at the time of trial] would be a proper measure of damages. The cause of action for failure to repair still existed so long as they were not made." 603 S.W.2d at 297. The relevance of these cases to his DTPA claim, Walker asserts, is clear: If Sears' failure to make repairs was a continuing breach for the purpose of determining damages, it was also a continuing breach for statute of limitations purposes. The district court therefore penalized Walker, Walker concludes, by not recognizing both the continuing nature of the breach and that because of the continuing nature of the breach, the statute of limitations on Walker's DTPA action was delayed.
27
The problem with Walker's argument is that it has apparently been rejected by all the Texas courts to consider it. As far as we can tell, the argument was first made to and considered by the Texas Supreme Court in 1907. See Fort Smith v. Fairbanks, Morse & Co., 101 Tex. 24, 27, 102 S.W. 908 (1907). In its opinion in Fort Smith, the supreme court said:
28
The Court of Civil Appeals held that the defendant's cause of action was for the original breach of warranty which occurred when the pump was found to be insufficient soon after its installation, on June 15, and that it was barred by limitation when defendant's first plea in recognition was filed November 11, 1904. One of defendant's contentions, in opposition to this view, is that the damage claimed as a result of the breach, the loss of the rice crop, accrued within two years before the plea was filed, and that his cause of action for that damage then arose. As to this, we agree with the Court of Civil Appeals that the original breach of the contract, if it were unaffected by the subsequent transactions, would have given a right of action at once, including the right to recover all such damages as proximately resulted, whether they had then accrued or not, and that limitation would therefore have run from the time of that breach.
29
101 Tex. at 27, 102 S.W. 908. Fifteen years after Fort Smith was decided, the Austin Court of Civil Appeals faced the same argument in Bishop-Babcock-Becker Co. v. Jennings, 245 S.W. 104 (Tex.Civ.App.--Austin 1922, no writ). In the course of rejecting the argument, that court set forth the Texas Supreme Court's holding in Fort Smith:
30
The holding was that the cause of action arose at the time of the breach, whether the damages had then accrued or not, and the Texas Supreme Court expressly approved the decision of the Court of Civil Appeals on that point. It was also there decided that the acts of the vendor's agents in undertaking to repair or remedy defects in the machinery, after installation and assurances given, would not affect the question of limitation, but that the statute was put in motion by the breach and discovery thereof, and was not interrupted by subsequent attempts to remedy the defects nor by assurances given.
31
245 S.W. at 105. The Bishop-Babcock court's synopsis of the supreme court's holding in Fort Smith was later adopted by the Galveston Court of Civil Appeals in Cooper-Bessemer Corp. v. Shindler, 132 S.W.2d 450, 452 (Tex.Civ.App.--Galveston 1939, no writ), and the Houston Court of Civil Appeals in Richker v. United Gas Corp., 436 S.W.2d 215, 218-19 (Tex.Civ.App.--Houston 1968, writ ref'd n.r.e). Just last year, the Dallas Court of Appeals cited Bishop-Babcock for the proposition that "[a]n unsuccessful effort to effect repairs in no way affects the question of limitations." See Muss v. Mercedes-Benz of North America, Inc., 734 S.W.2d 155, 159-60 (Tex.App.--Dallas 1987, writ ref'd n.r.e.). Given that all of the authority in Texas which we have located is contrary to Walker's argument, we hold that the district court was correct to reject Walker's continuing breach theory. Walker's DTPA cause of action, therefore, is time-barred unless we accept Walker's final argument that equitable estoppel is available to him on this record as a defense to Sears' limitation defense.
32
Walker's equitable estoppel defense is based on his contention that to induce Walker to delay taking legal action, Sears and its representatives made a series of promises--which they did not intend to keep--to pay, settle, or perform the contractual duties Sears owed to Walker. The district court, it will be remembered, rejected Walker's estoppel defense because it was "not persuaded" by the summary judgment evidence with which Walker supported it. Walker points out on appeal that the standard by which the court should have judged the evidence was whether it was sufficient to raise a fact question, not whether it persuaded the court. We agree with Walker that if the district court rejected the equitable estoppel defense because Walker failed to prove it at the summary judgment stage, the court erred. We have, therefore, evaluated the summary judgment evidence according to the proper standards; even judged by these proper standards, however, Walker's attempt to assert an equitable estoppel defense to save his DTPA claim is unavailing.
33
The Supreme Court explained in Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986), what it means to raise, through summary judgment evidence, a genuine issue as to a material fact which will defeat summary judgment. According to the Court, a material issue of fact is not raised if, looking at the summary judgment evidence, a directed verdict under Federal Rule of Civil Procedure 50(a) would be appropriate. The Court explained:
34
If the defendant in a run-of-the-mill civil case moves for summary judgment or for a directed verdict based on the lack of proof of a material fact, the judge must ask himself not whether he thinks the evidence unmistakably favors one side or the other but whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented. The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff. The judge's inquiry, therefore, unavoidably asks whether reasonable jurors could find by a preponderance of the evidence that the plaintiff is entitled to a verdict....
35
Anderson, 477 U.S. at 252, 106 S.Ct. at 2512. Walker's only chance of defeating summary judgment on the DTPA claim was by proving equitable estoppel.6
36
To determine whether summary judgment on that claim was appropriate, therefore, our inquiry is whether reasonable jurors could have found from the summary judgment evidence presented to the district court that Sears should be equitably estopped from asserting its statute of limitations defense. In Texas, equitable estoppel is proved when a party shows (1) that he was unaware of true facts; (2) that the other party, with actual or constructive knowledge of the true facts, materially misrepresented or concealed these facts intending that the party rely on the misrepresentation or concealment; and (3) that his reliance prejudiced him. Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929, 932 (1952); Perry Roofing Co. v. Olcott, 722 S.W.2d 538, 542 (Tex.App.--Fort Worth 1986), aff'd, 744 S.W.2d 929 (Tex.1988); Brooks, 689 S.W.2d at 945. If any element is missing, of course, the defense fails.
37
The summary judgment evidence from which we must find enough support for each element to present a jury question consists of the following documents: a series of inter-office reports made by a Sears employee detailing conversations with Walker from August 1983 to January 1984; a letter from Walker to Sears dated January 28, 1984; a letter from a Sears employee to Walker dated February 13, 1984; an affidavit from Paul Weyandt, a Sears employee, swearing to the accuracy of the information contained in Sears' letter and inter-office reports; Walker's DTPA demand letter to Sears; and four pages of deposition testimony given by Walker.7 Accepting Walker's testimony as true and reading the documents in the light most favorable to Walker, the following scenario emerges. Walker first informed Sears that the roof leaked in July 1982. Sears twice sent out roofers to repair the roof; after the roofers' second effort, all parties believed that the needed repairs had been made. Therefore, Sears tendered and Walker accepted a check to cover the damages which had occurred to that point. When Walker discovered that the roof was still leaking, Sears sent out a third set of roofers who, once again, apparently fixed the roof. At that time, Walker began negotiating his claim for additional damages with Sears. On September 2, 1983, a Sears representative asked Walker to submit a figure for which he would settle the claim; although the Sears representative says that Walker had not responded to his inquiry by February 1984, Walker claims that shortly after September 2, 1983, he suggested that $25,000 would compensate him for the additional damage he had suffered. The Sears employee, Walker then claims, asked Walker to document the figure. Walker either refused or failed to do so. In October 1985, Walker filed his DTPA demand letter.
38
Walker argues that this evidence is sufficient "proof" of the first two elements of equitable estoppel because from it, a reasonable jury could find that Sears both (1) knew and failed to tell Walker that the roof could not be fixed and (2) knew and failed to tell Walker that Sears did not intend to settle Walker's claim. We simply do not see how. The only evidence remotely related to the first point is the fact that three different roofers did not succeed in repairing the roof; without even knowing what was wrong with the roof, we do not think a reasonable jury could conclude simply from the fact that the roof was not fixed that Sears knew it could not be fixed. The only evidence related to the second point is that Sears did not settle the claim after Walker put forth the $25,000 figure. The evidence shows, however, that Sears tendered a check which Walker accepted to cover the earlier damage when the roof was apparently fixed; that a Sears representative admitted that Walker's "roof job was not originally handled in a professional manner which you could reasonably expect from Sears" and asked for an estimate of the additional damage; and that Walker failed to provide the requested documentation to support his $25,000 claim of damages. We do not think that a reasonable jury could conclude from this evidence that Sears had no intention of settling Walker's claim. Therefore, because Walker's summary judgment evidence was insufficient to raise a jury question concerning his equitable estoppel claim, we conclude that the district court correctly dismissed Walker's DTPA claim as time-barred.
III.
39
For the foregoing reasons, we agree with the district court's decision to dismiss Walker's DTPA claim as time-barred. We find, however, that the court erred in holding that Walker's contractual implied warranty claim is also time-barred. Therefore, we AFFIRM the district court's judgment with respect to Walker's DTPA claim, REVERSE the court's judgment with respect to Walker's contractual implied warranty claim, and REMAND for further proceedings consistent with this opinion. Each party shall bear its own costs.
1
Walker also urges one new argument: that the district court erred in failing to hold that Walker's DTPA claim was revived by a written acknowledgement of the justness of Walker's claim made pursuant to section 16.065 of the Texas Civil Practice and Remedies Code. Given that Walker never even suggested the possibility of a revival to the district court, we cannot see how the district court erred in failing to find one. We, of course, follow a general rule of not considering any issue which is raised for the first time on appeal unless "the issue is purely a legal issue and ... consideration is necessary to avoid miscarriage of justice." Citizens Nat'l Bank v. Taylor (In re Goff), 812 F.2d 931, 933 (5th Cir.1987). To determine whether Sears executed a written acknowledgement of the justness of Walker's claim would certainly take us beyond the realm of purely legal issues. Therefore, we do not address Walker's revival argument
2
Below, Walker also argued that his action against Sears was based on breach of an express warranty. During the oral argument before this court, however, Walker specifically disclaimed any intention to pursue recovery on an express warranty theory. Therefore, we do not determine whether the pleadings in this case asserted an express warranty theory
3
Paragraph three of Walker's amended complaint reads:
At the time of this transaction as described above, Defendant represented that Defendant's agents, servants or employees would install Plaintiff's roof in a workmanlike manner to Plaintiff's satisfaction. The representations by Defendant were false, misleading and deceptive in that Plaintiff's roof has leaked continuously since Defendant first attempted to work on the same. The roofing materials were of inferior quality, and the roof installation crews were inadequately trained with insufficient expertise to perform the task of installing Plaintiff's roof. The foregoing representations violate Sec. 17.46(b) of the Texas Deceptive Trade Practices--Consumer Protection Act in that they constitute representations that goods and services have characteristics, uses or benefits which they do not have and that said goods and services were of a particular standard, quality or grade when they were of another.
Paragraph four of the amended complaint reads:
Plaintiff would further show that at the time of Plaintiff's purchase of a new roof to be installed by Defendant, Defendant was a dealer in roofs and roofing materials and held itself out to the public as having knowledge or skill particular to that business. Accordingly, Defendant impliedly warranted that the roofing materials and their installation would be merchantable, that they would be reasonably fit for the ordinary purpose for which they were to be used and that both the roofing materials and services would pass without objection in the trade under the subject contract. However, this warranty was breached in that neither the roofing materials nor the roofing installation services were as warranted but rather were both defective in that Plaintiff's roof has leaked continuously since precisely the time that Defendant began working upon it.
Paragraph five of the amended complaint asserted Walker's unconscionability cause of action. Neither party disputes that the unconscionability cause of action arose under the DTPA.
4
This implied warranty was officially recognized by the Texas Supreme Court in Melody Home, a case decided one year after Walker filed his amended complaint in this case. In tracing the development of this implied warranty, the supreme court noted in Melody Home that since 1968, that court had recognized that "a builder/vendor impliedly warrants to a purchaser that a building constructed for residential use has been constructed in a good and workmanlike manner...." 741 S.W.2d at 352. Later in the opinion, the court also observed that a number of courts of appeals in Texas had already expressly or impliedly recognized that repair services also carry an implied warranty that they will be performed in a good and workmanlike manner. Id. In support of this latter contention, the court cited eight appellate court cases decided between 1962 and 1985 which applied the implied warranty to services ranging from brick patio construction and house repair to swimming pool installations and book printing. Id. at 352 n. 2. By finding that Walker in 1986 alleged a cause of action which was not officially recognized by the Texas Supreme Court until a year later, therefore, we are not holding that Walker's admittedly imprecise pleading gave Sears notice of a claim which did not exist in theory or practice at that time. The claim was both recognized and applied by the appellate courts years before Walker filed his amended petition
5
At various points in its brief on appeal, Sears seems also to argue that the district court used the DTPA's limitations period to judge the timeliness of Walker's implied warranty claim because that claim either (1) was brought under the DTPA or (2) only existed under the DTPA. We disagree. On the first point, the pleadings are clear. Walker did not plead his DTPA claim as a breach of implied warranty claim; instead, by alleging that Sears made "representations that goods and services have characteristics, uses or benefits which they do not have and that said goods and services were of a particular standard, quality or grade when they were of another," Walker specifically premised his DTPA claim on the violation of two provisions of the DTPA's laundry list. See Tex.Bus. & Com.Code Ann. Secs. 17.46(b)(5), (b)(7)
The sole support for Sears' second point comes from one sentence in Melody Home: "We hold that an implied warranty to repair or modify existing tangible goods or property in a good and workmanlike manner is available to consumers suing under the DTPA." 741 S.W.2d at 354. This sentence, Sears seems to argue, implies that the warranty does not exist outside of the DTPA. In making this argument, however, Sears overlooks a basic principle of law under the DTPA. As the Texas Supreme Court has explained, the DTPA "does not create any warranties; therefore any warranty must be established independently of the act." La Sara Grain v. First Nat'l Bank, 673 S.W.2d 558, 565 (Tex.1984); accord Melody Home, 741 S.W.2d at 355. In Melody Home, the supreme court recognized that the implied warranty to perform in a good and workmanlike manner arises by operation of law in contracts for the repair or modification of existing tangible goods or property; it also recognized that the warranty cannot be disclaimed. 741 S.W.2d at 353, 355. We cannot, therefore, agree with Sears' apparent thesis that a plaintiff can recover under the DTPA for a breach of the implied warranty recognized in Melody Home but cannot recover for the breach of that same warranty under a basic contract theory.
6
Actually, we think there is some question as to whether equitable estoppel continues to exist in Texas as a defense to a limitations claim under the DTPA in this situation. Prior to 1979, the DTPA did not contain its own limitations provision, and the Texas courts relied on other statutes and case law to determine the applicable limitations period. Brooks Fashion Stores, Inc., 689 S.W.2d at 942. As we discussed earlier, section 17.565 was enacted in 1979 and now limits the time in which a DTPA claim can be brought to two years. Section 17.565 also, however, contains the following language:
The period of limitation provided in this section may be extended for a period of 180 days if the plaintiff proves that failure timely to commence the action was caused by the defendant's knowingly engaging in conduct solely calculated to induce the plaintiff to refrain from or postpone the commencement of the action.
Tex.Bus. & Com.Code Ann. Sec. 17.565 (Vernon 1987). The question which this language raises, of course, is whether, by including in the statute of limitations provision a statutory defense which provides a specific and clearly defined remedy for the conduct about which Walker complains, the Texas legislature eliminated the equitable estoppel remedy which Walker is asserting. As has long been recognized in Texas, the legislature clearly had the power to substitute a legal remedy for the previously recognized equitable remedy. Rogers v. Daniel Oil & Royalty Co., 130 Tex. 386, 110 S.W.2d 891, 894 (1937). We see no need, however, to decide whether the Texas legislature exercised that power in this case; we have concluded that even if equitable estoppel remains a valid defense in these situations, Walker has failed to present sufficient evidence to support the defense past Sears' motion for summary judgment.
7
These documents do not represent all the summary judgment evidence which the parties provided the district court; however, they are the only documents relevant to the equitable estoppel question. The district court found that Walker knew or should have known that he had a potential cause of action by September 1983. Walker does not dispute the district court's conclusion on this point, and we have confirmed that the statute of limitations on Walker's DTPA claim began to run, as the district court concluded, by at least that date. Walker, therefore, had until September 1985 to bring his DTPA claim. The documents we examine to determine the viability of Walker's equitable estoppel defense include all documents which were either written before or, in the case of Walker's deposition testimony, discuss events which occurred before September 1985--the time in which Sears' action could have prevented Walker from asserting a viable DTPA claim | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1918716/ | 420 Pa. 504 (1966)
Slavinski Estate.
Supreme Court of Pennsylvania.
Argued January 6, 1966.
March 22, 1966.
Before BELL, C.J., MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.
*505 Fred T. Cadmus, III, with him William J.C. O'Donnell, and O'Donnell & O'Donnell, for appellant.
Joseph F. Harvey, with him MacElree, Platt, Marrone & Harvey, for appellee.
OPINION BY MR. JUSTICE JONES, March 22, 1966:
The essential facts of this controversy are set forth in the opinion of the court below.
"Katherine Slavinski, wife of Henry Slavinski and mother of Henry J. Slavinski, Jr., on July 6, 1955, in company with Henry Slavinski and Henry J. Slavinski, Jr., caused to be opened a savings account No. 9327 at Phoenixville Trust Company, Phoenixville, Pennsylvania with funds previously in her name alone in the following names, to wit: [The signature card provided]:
`TITLE OF ACCOUNT HENRY J. OR KATHERINE (14)
SLAVINSKI OR HENRY SLAVINSKI S.F. No. 9327
"`In receiving items for deposit or collection, this bank acts only as depositor's collecting agent and assumes no responsibility beyond the exercise of due care. All items are credited subject to final payment in cash or solvent credits. This bank will not be liable for default or negligence of its duly selected correspondents nor for losses in transit, and each correspondent so selected shall not be liable except for its own negligence. This Bank or its correspondents may send items, directly or indirectly, to any bank including the payor, and accept its draft or credit as conditional payment in lieu of cash; it may charge back any item at any time before final payment, whether returned or not, also any item drawn on this bank not good at close of business on day deposited.
"`AUTHORIZED SIGNATURE
(s) Katherine Slavinski (deceased)
*506
"`AUTHORIZED SIGNATURE
(s) Henry J. Slavinski
(s) Henry Slavinski
"`JOINT ACCOUNT PAYABLE TO EITHER OR
SURVIVOR
"`It is agreed and understood that any and all sums may from time to time stand on this account, to the credit of the undersigned depositors, shall be taken and deemed to belong to them as joint tenants and not as tenants in common, while both joint tenants are living, either may draw and in case of the death of either, this Bank is hereby authorized and directed to deal with the survivor as sole and absolute owner thereof.
"`It is especially agreed that withdrawals of funds by the survivor shall be binding upon us and upon our heirs, next of kin, legatees, assigns and personal representatives.
"`Payment to or on check of the survivor shall be subject to the laws relating to inheritance and succession taxes and all rules and regulations made pursuant thereto.
"`Witness our hands and seals this ______________ day of _______________________ 19 _______________ _______________________ (1) (s) Katherine Slavinski
Seal
(s) Henry Slavinski (2) (s) Henry J. Slavinski
Seal'"[1]Katherine Slavinski, a Chester County resident, died June 17, 1956, survived by her husband, Henry, a son, Henry J. and six other children.
Henry Slavinski died December 29, 1960, leaving to survive him, inter alia, the aforesaid son, Henry J. *507 Slavinski, Jr. who thereby became the sole surviving name on the savings account and the sole possessor of its funds.
On May 18, 1962, Raymond Slavinski, the executor of the estate of Henry Slavinski, petitioned the Orphans' Court of Chester County for a citation to require Henry J. Slavinski, Jr. to show cause why he should not account for all the funds under his control in the aforesaid savings account since July 6, 1955, and to enjoin him from making any further withdrawals from the said account. After a hearing, the court entered a decree dismissing the citation. From that decree, Raymond Slavinski, as executor of the Henry Slavinski Estate, and Richard J. Slavinski,[2] Administrator of the Katherine Slavinski Estate, have appealed to this Court.
Appellants' theory is that the name of Henry J. Slavinski, Jr., the appellee, had been included on this joint savings account on July 6, 1955, pursuant to a family agreement in which appellee had promised to use the account "to take care of Pop" who neither spoke nor read English. This agreement was evidenced in March 1959 when Henry Slavinski, appellee's father, surrendered the pass book to appellee immediately before entering the hospital for the express purpose of having appellee pay the expected hospital bills. Appellee never relinquished control of the pass book after that, even though his father recovered from that illness and lived until December 29, 1960, and even though his father and, later, his father's executor demanded its return.
The lower court based its decree in part upon the inadmissibility of certain parol evidence which, if received in evidence, would have established the absence of any donative intent on the part of appellee's mother, *508 Katherine Slavinski, in the creation of the joint account and the absence of any donative intent on the part of appellee's father, Henry Slavinski, in permitting appellee to take possession of the pass book. The court below stated: "We have taken occasion to review Amour Estate [397 Pa. 262, 154 A. 2d 502 (1959)] and are of opinion it completely justifies the exclusion of parol evidence in the instant estate inasmuch as the language on the signature card there involved and the language on the signature card here involved are substantially identical."
We do not agree with the court below that the instant signature card is as clear in revealing donative intent as that in Amour Estate, supra, because of the ambiguity here arising from the crossed out markings in front of the name of appellee's father, Henry Slavinski.[3] However, we need not determine that question because this parol evidence was clearly admissible for another reason. Appellee admitted in open court that the signature card did not reflect the entire or whole agreement between the parties: "By the Court: Q. What, if any, understanding was there between you and your mother, or between you and your mother and father, when your name was first added to this pass book? A. That was to take care of pop."
"By Mr. O'Donnell: Q. There is no doubt in your mind at that time [March 1959 when appellee's father first surrendered the pass book to appellee], this pass book was in your possession so that it would be a convenience in paying your father's bills for him, is that correct? A. That is correct."
. . .
"By the Court: Q. Was that in accordance with the understanding you had with your father, when he turned the pass book over to you? A. Yes."
*509 In addition thereto, a letter from appellee's counsel, Joseph F. Harvey, to William L. Cremers, Jr., then appellant Raymond Slavinski's counsel, dated April 10, 1959, (shortly after appellee's father's return from the hospital), was read into evidence at the trial: "Dear Bill: Henry Slavinski, Jr., has consulted me about your letter of April 2nd, 1959. Mr. Slavinski has the passbook, and he intends to keep it for the benefit of his father.
"As I understand the situation, this account was originally owned solely by the mother who, prior to her death, added the names of her husband and her son, Henry, Jr., the latter being added for the express purpose of preserving the account for the use and benefit of his father.
. . .
"I have advised Mr. Slavinski, Jr., that he is at least a half owner of this account, and he has advised me that he has and will use the funds only for the maintenance, support and benefit of his father . . . ." (Emphasis supplied).
Where a party, such as appellee, seeking to have a written agreement enforced according to its terms, admits in his own trial testimony that the agreement in writing did not fully and completely state the entire agreement between the parties, then parol evidence is admissible to explain and supplement such written agreement. Cf. Dunn v. Orloff, 420 Pa. 492, 218 A. 2d 314 (1966) and cases cited therein. ". . . `if the matter proposed to be shown by parol [evidence] is the subject of a covenant in the agreement, which is complete, such evidence to alter its terms cannot be received' (Cridge's Est., 289 Pa. 331, 338, 137 A. 455), unless it is admitted that the whole of the agreement is not set forth in the writing: Ward v. Zeigler, 285 Pa. 557, 132 A. 798.": Allinger v. Melvin, 315 Pa. 298, 304, 172 A. 712 (1934). (Emphasis supplied).
*510 The introduction of the parol testimony into evidence to explain the full understanding between the parties in adding the names to the savings account and in having appellee sign the card would have resulted in a record containing evidence sufficiently clear, precise and convincing to rebut the prima facie evidence of a valid inter vivos gift to appellee: Berdar Estate, 404 Pa. 93, 95, 170 A. 2d 861 (1961); Fenstermaker Estate, 413 Pa. 645, 648, 198 A. 2d 857 (1964). In refusing such parol evidence, the court below erred.
Decree vacated and remanded for proceedings not inconsistent with this opinion. Costs on appellee.
NOTES
[1] On the actual signature card there are additional marks which seem to indicate an endeavor to obliterate some writing in front of Henry Slavinski's name.
[2] Richard J. Slavinski intervened in this action on April 7, 1965, to support Raymond Slavinski's position.
[3] See footnote 1, supra. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/700201/ | 60 F.3d 831NOTICE: Eighth Circuit Rule 28A(k) governs citation of unpublished opinions and provides that no party may cite an opinion not intended for publication unless the cases are related by identity between the parties or the causes of action.
UNITED STATES of America, Appellee,v.JONES OIL COMPANY, Appellant.
No. 94-3191
United States Court of Appeals,Eighth Circuit.
Submitted: July 5, 1995.Filed: July 12, 1995.
Before FAGG, MAGILL, and BEAM, Circuit Judges.
PER CURIAM.
1
Jones Oil Company appeals the district court's1 denial of its motion for disclosure of the identities of confidential informants and complete disclosure of the contents of an affidavit. We affirm.
2
As part of an Internal Revenue Service (IRS) tax investigation of Terry and Patricia Jones and various business entities they owned (including Jones Oil), see Jones v. United States, 16 F.3d 979, 980 (8th Cir. 1994), the district court issued a search warrant for the business offices of Jones Oil based on the probable-cause affidavit of IRS Special Agent Steven L. Tinsley. The affidavit depended in large part on information obtained from confidential informants. Because of the need for confidentiality, the affidavit was sealed and Jones Oil was denied access to it.
3
Jones Oil subsequently filed a civil suit against the United States and certain individual agents, alleging, inter alia, that Tinsley had knowingly or recklessly included false information in his affidavit. To facilitate proving this claim, Jones Oil moved the district court to unseal Tinsley's affidavit. The district court allowed Jones Oil to receive the affidavit after it had been redacted so as not to reveal the identity of any confidential informant.
4
Jones Oil then moved for disclosure of the confidential informants' identities, and release of the unredacted Tinsley affidavit. After holding an in camera hearing, the district court denied the motion. Citing Roviaro v. United States, 353 U.S. 53 (1957), and United States v. Harrington, 951 F.2d 876 (8th Cir. 1991), the court concluded that Jones Oil had not met its burden of proving that disclosure of the evidence was material to its case. The court also sustained the government's objection to Jones Oil's attempt to introduce Tinsley's unfinished deposition at the hearing. This appeal followed.
5
We conclude the district court did not abuse its discretion in refusing to release the unredacted affidavit or otherwise disclose the identities of the confidential informants. See Harrington, 951 F.2d at 877 (standard of review). Jones Oil did not meet its burden to justify disclosure: it only speculated as to what the informants would testify if identified, and did not show that their testimony would be material to the determination of its civil suit. Cf. id. at 877-78 (criminal defendant bears burden of justifying disclosure by establishing materiality of evidence beyond mere speculation; evidence is material only if it has reasonable probability of affecting outcome of proceeding).
6
We also conclude that the district court did not abuse its discretion in not considering Tinsley's unfinished deposition. See United States v. Frayer, 9 F.3d 1367, 1373 (8th Cir.) (standard of review), cert. denied, 115 S. Ct. 77 (1994).
7
Accordingly, the judgment is affirmed.
1
The Honorable Warren K. Urbom, Senior United States District Judge for the District of Nebraska | 01-03-2023 | 04-17-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/238810/ | 230 F.2d 832
97 U.S.App.D.C. 282
George Bowie McCENEY, Robert S. McCeney, Catherine M.Kotrla, et al., Petitioners,v.DISTRICT OF COLUMBIA, Respondent.
No. 12755.
United States Court of Appeals District of Columbia Circuit.
Argued Oct. 21, 1955.Decided March 8, 1956.
[97 U.S.App.D.C. 283] Mr. Walter E. Barton, Washington, D.C., with whom Mr. Harvey C. Bickel, Baltimore, Md., was on the brief, for petitioners.
Mr. Henry E. Wixon, Asst. Corp. Counsel for the District of Columbia, with whom Messrs. Vernon E. West, Corp. Counsel, and Chester H. Gray, Principal Asst. Corp. Counsel, were on the brief, for respondent. Mr. Hymie Nussbaum, Asst. Corp. Counsel, also entered an appearance for respondent.
Before EDGERTON, Chief Judge, and FAHY and WASHINGTON, Circuit judges.
WASHINGTON, Circuit Judge.
1
This is a petition for review of a decision of the District of Columbia Tax Court. The question is whether the remaindermen of a testamentary trust are liable under Section 47-1601 of the District of Columbia Code, 1951, for District inheritance tax on the value of the trust corpus, after deducting the value of the life interests on a purely actuarial basis, when the corpus was subject to the possibility of invasion by the trustee for the benefit of the life beneficiaries.
2
The testatrix died November 1, 1952. Her will created a testamentary trust as to the entire residue of her estate. Petitioners are the remaindermen and also share, along with eight others who are life tenants, in specified portions of the trust income. The testatrix gave the trustee, who is one of the petitioners, the power in his sole conclusive judgment to invade corpus to the extent 'requisite or desirable under the then existing circumstances,' if the amounts payable to certain of the income beneficiaries, or any of them, 'supplemented by funds available to them from other sources, shall not be sufficient to meet the reasonable needs of such beneficiary or beneficiaries [97 U.S.App.D.C. 284] in their respective stations of life, including emergencies and protracted illnesses.'1 The trustee was admonished by the testatrix to 'be liberal in these respects,' and was not required to account 'therefor in respect to the interests of any other beneficiary or beneficiaries.' All the income beneficiaries in behalf of whom the invasion of corpus was authorized survived the testatrix and were living at the date of the hearing below.
3
The petitioners paid inheritance taxes on the transfers of the remainder interests to them, valued by deducting from the value of the trust property the value of the life estates computed on an actuarial basis without taking into account the possibility that corpus will be invaded for the benefit of the life beneficiaries. The Tax Court approved the assessment of tax computed on this basis.
4
Under Section 47-1602 of the District of Columbia Code,2 1951, the tax is to be paid only on the market value of the remainder interests as appraised by the assessor, and under Section 47-1607 of the District of Columbia Code, 1951,3 this value must be determined by finding the market value of the full property (not here in dispute) and then deducting the total value of the life interests at date of death determined as the Commissioners' regulations prescribe.
5
The regulations in effect on the date of death provided in Section 4(a) for a general method of valuing life interests by applying the American Experience Table of Mortality.4 In Section 4(d) they provided that where the life tenant has the right in his sole discretion to invade corpus for his own use, the corpus shall be taxed to the life tenant.5 However, on January 13, 1955, subsequent to the testatrix' death but before the Tax [97 U.S.App.D.C. 285] Court's hearing and decision in this case, Section 4(d) of the regulations was amended to include the following provision:
6
'(2) Where the corpus may be expended or consumed in whole or in part by any person or persons for the benefit of, or on behalf of, a donee for life or years, whether or not such donee for life or years shall personally have such right of invasion or use, the taxable value of the interest of the donee for life or years in such corpus shall be the value of the entire corpus, or of such part of the corpus as may be so expended or consumed, without reference to the method of determining the value of a life interest or of an estate for years as provided in subsections (a) and (b) of this section; and in such case the future interest in the corpus, to the extent to which the corpus may be so expended or consumed, shall be regarded as having no value for purposes of tax.'
7
This addition to the original regulation deals with the precise problem at issue here, as all parties agree. If then it may be applied to this case, concededly the remainder interests of the petitioners must be treated as having no value, since the entire corpus may possible be expended or consumed in whole for the benefit of certain of the life donees. Petitioners in their capacity as remaindermen would thus pay no tax.
8
The Tax Court declined to apply the amended regulation on the ground that it could not be applied retroactively. It is unnecessary in this opinion to pass on that question,6 for we think that the amended regulation does not carry out the mandate of the statute.
9
Section 47-1601 is explicit that the tax is to be paid on the 'market value' of the interest involved. This requires, we think, that the actual market value of the interest be determined as nearly as possible. Although Section 47-1607 provides that the value of the remainder interest is to be determined by subtracting from the value of the property the value of the life interests, determined in such manner as the Commissioners' regulations prescribe, this does not authorize the Commissioners to adopt regulations which result in disregarding the directive of the statute to tax only the market value to the interest. It is axiomatic that administrative rules must be consistent with the statute under which they are promulgated. See, e.g., Manhattan General Equipment Co. v. Commissioner, 1936, 297 U.S. 129, 134, 56 S. Ct. 397, 80 L. Ed. 394. And indeed Section 47-1618 of the D.C.Code, 1951, granting the Commissioners a general power to make rules and regulations for the administration of the inheritance tax chapter, so provides.
10
The present regulation-- Section 4(d)(2)-- purports to charge the life tenant with the tax on the value of the entire property which he may conceivably get, even though the possibility that he will take any part of the corpus, let alone the whole, may be negligible or remote, and to exempt the remainderman from any tax on his interest even though the possibility that he will receive some or all of the corpus may be strong or even a virtual certainty. We think the regulation is objectionable because it does not permit the facts bearing on the likelihood [97 U.S.App.D.C. 286] of invasion, and on the market values of the life and remainder interests, to be considered. Market value is a factual matter, and its determination requires a consideration of all pertinent facts. To be sure, there may be instances where the application of the present regulation would achieve the correct result. But this would be because the life interest in fact encompassed the totality of the gift and the remainder interest in fact was worthless, and not because the arbitrary fiat of the regulation was a reasonable implementation of the statute.
11
In the present case, the interest of the life tenants in the corpus of the trust, over and above their right to share in the income, was doubtless worth something, despite its contingent nature, and correspondingly the interest of the remaindermen in the corpus, also contingent, would seem to have a value in some amount. Cf. Lockard v. Commissioner, 1 Cir., 1948, 166 F.2d 409, 413; In re Hill's Estate, 2 Cir., 1952, 193 F.2d 724, 728. At least there is nothing in the record here to suggest that the interest of either class of beneficiaries was without value. The Tax Court, although it approved a tax on the remaindermen assessed on the full value of the corpus diminished only by the life tenants' interests (in the income) valued under Section 4(a) of the regulations, made no determination that as a matter of actual fact the remaindermen's contingent interest in the corpus had that full value, and that the life tenants' interest in the corpus had no value. Nor had any such determination been made initially by the Assessor. In the light of the statute the Tax Court's decision would be sustainable only if such a finding of fact had been made. Cf. District of Columbia v. Morris, 1946, 81 U.S.AppD.C. 356, 159 F.2d 13.
12
We recognize of course that it may not be possible to fix the market values of the type of interest involved here with complete certainty. But the statute requires that market values be at least approximated as closely as possible in the light of all available facts.7 We are unwilling to say that here an informed guess as to the possibility of invasion of corpus and the amount thereof will not be possible. The decedent set up a standard under which a fair estimate can be made. She authorized invasion only to meet the reasonable needs of the beneficiaries in their respective stations of life, including emergencies and protracted illnesses, taking into account funds otherwise available to them. Surely evidence relating to the ages, life expectancies, state of health, accustomed scale of living, economic circumstances, and other sources of income of the beneficiaries as of the date of death would permit a reasonable measurement of the possibility of invasion and its extent. Cf. In re Birdsall's Estate, 1941, 176 Misc. 619, 28 N.Y.S.2d 23; Industrial Trust Co. v. Commissioner, 1 Cir., 1947, 165 F.2d 142, 1 A.L.R. 2d 144; Bankers Trust Co. v. Higgins, 2 Cir., 1943, 136 F.2d 477; In re Hill's Estate, 2 Cir., 1952, 193 F.2d 724. Cf. also Ithaca Trust Co. v. United States, 1929, 279 U.S. 151, 154, 49 S. Ct. 291, 73 L. Ed. 647; Lincoln Rochester Trust Co. v. McGowan, 2 Cir., 1954, 217 F.2d 287; Commissioner v. Wells Fargo B. & U. Trust Co., 9 Cir., 1944, 145 F.2d 130; Commissioner of Internal Revenue v. Robertson's Estate, 4 Cir., 1944, 141 F.2d 855; Commissioner of Internal Revenue v. F. G. Bonfils Trust, 10 Cir., 1940, 115 F.2d 788; Estate of Schoonmaker v. Commissioner, 1946, 6 T.C. 404. The use of the word 'emergencies' should not introduce, construed in its context, an uncertainty not fairly measurable, as the Industrial Trust, Wells Fargo, Lincoln [97 U.S.App.D.C. 287] Trust and Schoonmaker cases indicate. Although the trustee was enjoined to be 'liberal' in invading corpus for the life tenants' benefit, the standard for exercise of his judgment was otherwise set and whatever allowance may be needed for this can be made in valuing the life tenants' interest in the corpus.8
13
The Tax Court relied on our decision in District of Columbia v. Vann, 1954, 95 U.S.App.D.C. 22, 217 F.2d 26, in which we affirmed per curiam a decision of the Tax Court. But we do not regard Vann as precluding a factual determination of the market value in this case. The District there was endeavoring, without a regulation so providing, to require a life tenant to pay the entire tax on property, even though remaindermen were named and there was no certainty that the trustee would invade corpus in any amount for the life tenant's benefit. There was no finding in that case, and no suggestion before us, that the value of the life interest was in actual fact any greater than the amount resulting from use of the actuarial method set out in Section 4(a) of the regulations which the Tax Court used. In the circumstances we approved the tax determined on that basis (the minimal basis).
14
The Commissioners have now undertaken to fix by regulation the 'value' of this type of remainder interest, and the remaindermen in this case were not given the benefit of it. While we think the present regulation is not in accord with the statutory provisions, the District in effect recognizes through it that remaindermen situated as are the present petitioners are entitled to some relief. Even though it may be said that the taxpayer-remaindermen failed to carry their burden of proof to show that the actual or reasonable value of their interests was less than that on which the Assessor levied the tax, we do not feel that it would be just and equitable to affirm here on that ground, in view of the statutory provisions and the fact that the regulations in effect at the time of the hearing purported to make proof of the value of the remainder interests unnecessary.9
15
It is our view that this case must be remanded for a finding as to the market value of the remainder interests. The tax should be assessed on the value, if any, so found. In this connection, the taking of further evidence will doubtless be necessary. If the life tenants should desire to intervene to protect their rights, their participation would seem to be desirable. If the Commissioners should wish to amend the existing regulations to cure the defects we find therein, we think it would be appropriate that the Tax Court hold this case in abeyance for a reasonable time to permit this to be done, and to consider the applicability of any such regulations to this case. Cf. Addison v. Holly Hill Fruit Products, 1944, 322 U.S. 607, 616-623, 64 S. Ct. 2115, 88 L. Ed. 1488; Hamilton Nat. Bank v. District of Columbia, 1946, 81 U.S.AppD.C. 200, 204-205, 156 F.2d 843, 847-848, certiorari denied, [97 U.S.App.D.C. 288] 1949, 338 U.S. 891, 70 S. Ct. 241, 94 L. Ed. 547.
16
Accordingly, we remand to the Tax Court for further proceedings not inconsistent with this opinion.
17
So ordered.
1
This power to invade corpus existed on behalf of seven income beneficiaries: the testatrix' brother and her three sisters, and the three remaindermen who are the testatrix' niece and two nephews. The trustee had no power to invade corpus on behalf of four life beneficiaries who were not blood relatives of the testatrix
2
The pertinent text of this section is as follows:
'The tax provided in section 47-1601 shall be paid on the market value of the property or interest therein at the time of the death of the decedent as appraised by the assessor or, in the discretion of the assessor, upon the value as appraised by the probate court of the District. * * *'
3
Section 47-1607 is as follows:
'In the case of any grant, deed, devise, descent, or bequest of a life interest or term of years, the donee for life or years shall pay a tax only on the value of his interest, determined in a manner as the Commissioners by regulation nay prescribe, and the donee of the future interest shall pay a tax only on his interest as based upon the value thereof at the time of the death of the decedent creating such interest. The value of any future interest shall be determined by deducting from the market value of such property at the time of the death of such decedent the value of the precedent life interest of term of years. * * *'
4
'Sec. 4(a). The taxable value of a life interest in any property shall be determined by multiplying 5% of the market value of the property (as of date of death of decedent), from which such life interest is to accrue, by the figure shown opposite the age of the beneficiary in the American Experience Table of Mortality appearing below. The age of the beneficiary to be used is his age on his birthday nearest the date of the death of the decedent. The taxable value of an annuity for life shall be determined in like manner, except that the annual payment shall be multiplied by the appropriate figure in the same table, instead of 5% of the value of the property from which the annuity accrues. If payments under an annuity are to be made oftener than once each year, the aggregate of such payments per year shall be considered the annuity payment for purposes of determining the taxable value thereof. * * *'
5
'Sec. 4(d). Where the life tenant has the right in his sole discretion to expend or consume the corpus, or a part thereof, for his own use, the tax on the corpus, or such part thereof, shall be imposed on the life tenant.'
6
If the amended regulation were valid, the holdings in Helvering v. Reynolds, 1941, 313 U.S. 428, 433, 61 S. Ct. 971, 85 L. Ed. 1438, and Manhattan General Equipment Co. v. Commissioner, 1936, 297 U.S. 129, 135, 56 S. Ct. 397, 80 L. Ed. 394, indicate that there would be no objection to applying it, even though the decedent had died before it was issued. There was no directly pertinent and explicit regulation in force at the time of her death, when the taxable transfers in this case occurred, which purported to provide a rule for valuing the type of interest involved here. Section 4(a) dealt with a straight life interest, not one accompanied by a power in the trustee or life tenant to invade corpus for the life tenant's benefit, and the original Section 4(d) was limited in terms to a life tenant's power to invade corpus on his own behalf
7
Where a statute imposes a tax on the value of an interest, certainty in its valuation is not required; a fair guess as to value will serve. In re Hill's Estate, 2 Cir., 1952, 193 F.2d 724, 728; see also Helvering v. Safe Deposit & Trust Co., 1942, 316 U.S. 56, 66-67, 62 S. Ct. 925, 86 L. Ed. 1266; Industrial Trust Co. v. Commissioner, 1 Cir., 1947, 165 F.2d 142, 1 A.L.R. 2d 144; Bankers Trust Co. v. Higgins, 2 Cir., 1943, 136 F.2d 477, 479
8
This case differs from Merchants National Bank of Boston v. Commissioner, 1943, 320 U.S. 526, 64 S. Ct. 108, 88 L. Ed. 35, and Henslee v. Union Planters National Bank, 1949, 335 U.S. 595, 69 S. Ct. 290, 93 L. Ed. 259, where the testators directed the trustees to be liberal in invading corpus in the one case for the beneficiary's 'happiness' and in the other for the beneficiary's 'pleasure.' Thus no standard was set by which the extent of the possible invasion could be reliably predicted and measured. Moreover, those cases dealt with claimed deductions from the Federal gross estate for bequests to charity, and thus were concerned with exemptions from tax, the right to which must be clearly shown. In the present case the statute requires that the value of the interest be determined for purposes of imposing a tax, not for a deduction
9
For cases in accord, in somewhat comparable situations, compare Helvering v. Safe Deposit & Trust Co., 1942, 316 U.S. 56, 63-67, 62 S.Ct 925, 86 L. Ed. 1266; Industrial Trust Co. v. Commissioner, 1 Cir., 1947, 165 F.2d 142, 1 A.L.R. 2d 144; but see Lockard v. Commissioner, 1 Cir., 1948, 166 F.2d 409, and Hughes v. Commissioner, 6 Cir., 1939, 104 F.2d 144 | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/823880/ | Order Michigan Supreme Court
Lansing, Michigan
September 24, 2012 Robert P. Young, Jr.,
Chief Justice
Michael F. Cavanagh
Marilyn Kelly
144609 Stephen J. Markman
Diane M. Hathaway
Mary Beth Kelly
Brian K. Zahra,
PEOPLE OF THE STATE OF MICHIGAN, Justices
Plaintiff-Appellee,
v SC: 144609
COA: 299576
Oakland CC: 2008-224217-FH
PETER ALLAN GRANAAS,
Defendant-Appellant.
_________________________________________/
On order of the Court, the application for leave to appeal the December 15, 2011
judgment of the Court of Appeals is considered, and it is DENIED, because we are not
persuaded that the questions presented should be reviewed by this Court.
I, Corbin R. Davis, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
September 24, 2012 _________________________________________
d0917 Clerk | 01-03-2023 | 03-01-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583790/ | 427 So.2d 60 (1983)
Elliott M. BAIN
v.
Nancy ANDERSON.
No. CA 0203.
Court of Appeal of Louisiana, Fourth Circuit.
February 3, 1983.
*61 Lucas F. Bruno, Jr. and James J. Grevemberg, New Orleans, for defendant-appellant.
Robert E. Kerrigan, Jr., Deutsch, Kerrigan & Stiles, New Orleans, for plaintiff-appellee.
Before REDMANN, SCHOTT and WILLIAMS, JJ.
SCHOTT, Judge.
This is an action by the purchaser of real estate against his vendor for a reduction in the purchase price because of defects he discovered in the property following his purchase. From a judgment in his favor for $1,960 to remedy three specific defects, $2,000 of attorneys' fees and $250 for an expert witness fee, defendant has appealed. The issues are whether plaintiff proved that the defects existed at the time of the sale and that they could not be discovered prior to the sale by a simple inspection of the premises, whether the record supports plaintiff's entitlement to attorney' fees, and whether the proper procedure was followed for the award of the expert witness fee.
Plaintiff, Elliott M. Bain, purchased this property from defendant, Nancy Anderson, on July 30, 1979, for $190,000. The property consisted of three buildings on a site between Hayne Boulevard and Kuebel Street in the City of New Orleans and contained 10 apartment units. Around August 22 plaintiff was advised by the tenants at 6209 and 6211 Kuebel Street that they had a problem at these units with water entering the rear of the apartments from an adjacent patio following heavy rainfall. Mr. and Mrs. Lewis, the tenants at 6209 Kuebel finally vacated their apartment following a heavy rain in September with resulting water in their bedroom. Sometime thereafter plaintiff was advised by his tenant at 6210 Hayne Boulevard that water was leaking into his apartment at a point where the ceiling met the rear wall. Plaintiff employed a contractor who determined that the leaking at 6210 Hayne Boulevard was caused by water accumulating on a wooden porch on the second floor and adjacent to the rear wall of the first floor apartment on Hayne Boulevard. The floor boards on this porch had buckled preventing the water from running away from the building and the absence of flashing between the porch and the building caused water to seep inside of the apartment. As to the seeping of water at the ground level into the rear of the apartments 6209 and 6211 Kuebel Street the contractor found this was caused by a combination of the patio slab adjacent to the building being on a slope toward, rather than away from, the building and a build up of the grassy area adjacent to this patio which caused water to run on to the patio rather than off the property. Remedial work would consist of installation of flashing and replacement of the floor boards at 6210 Hayne for $330, grading of the center courtyard or grassy area for $850, and replacing the slab for $780. The trial judge found that plaintiff had proved his case so as to be entitled to these amounts claimed, and that defendant was in bad faith in that she knew of the existence of these defects when she sold the property to plaintiff and failed to advise him of such, subjecting her to attorneys' fees.
The purchaser is entitled to a reduction in the price of the thing sold when it proves to be defective. LSA C.C. Arts. 2520, 2541, and 2542. However, the purchaser is not entitled to maintain such an action if the defect is one which he might have discovered by simple inspection. Art. 2521. Where some damage is apparent to a *62 purchaser it is his duty to make a further investigation in the manner of a reasonably prudent buyer acting under similar circumstances. Pursell v. Kelly, 244 La. 323, 152 So.2d 36 (La.1963). Where the seller knows of a defect and fails to disclose it to the purchaser the seller is liable for expenses, including "reasonable attorneys' fees" in addition to the reduction of the price. Art. 2545.
Prior to his purchase of the property plaintiff visited it only once and did not enter any of the apartments. The extent of his inspection of the inside was to look through some of the undraped windows from the outside. Defendant contends that had plaintiff made a simple inspection of the interior of the apartments he would have discovered the defects so that he is not entitled to recover for them. As to the leaking at 6210 Hayne Boulevard we agree with that contention. The record shows that there were water stains where the ceiling met the rear wall in that apartment and this would have been apparent to plaintiff had he taken the trouble to inspect the interior. Any reasonable purchaser who sees water stains on the ceiling of a room is put on notice of the presence of one or more leaks. Art. 2521 prevents his recovery for such a defect. Thus, the trial court committed manifest error in awarding plaintiff $330 to repair the buckled flooring on the back porch which was causing this problem and the judgment will be amended to delete this item.
As to the leaking or seepage into the rear of the apartments at 6209 and 6211 Kuebel as the result of the improper grade of the courtyard and the improper sloping of the patio, this was not a defect discoverable by simple inspection. While there was some evidence of stains on the floor board of the apartment at 6209 Kuebel, as well as an unpleasant odor from the carpeting in this apartment following rain, it seems clear that plaintiff could not discover this defect unless rain had occurred prior to his purchase and the time when he should have conducted his inspection. As long as there was no heavy rain the defects would not manifest themselves. Furthermore, the defect was not discoverable to an ordinary person inspecting the rear courtyard and patio. Defendant produced an expert who took elevations of the patio and these established that the patio was about an inch lower on the house side of the slab than on the courtyard side. Had plaintiff conducted his inspection at a time when water was standing on the low side of the patio adjacent to the apartments perhaps he may be said to have been put on notice as a reasonable buyer that a problem might exist but nothing in the record suggests that this opportunity was available to plaintiff before he made his purchase. We cannot conclude that the trial judge committed manifest error in his finding that these defects in the courtyard and patio were not discoverable by a simple inspection so as to entitle plaintiff to recover. Plaintiff is entitled to the award of $1,630 to cure these defects in the courtyard and the patio.
Defendant next contends that plaintiff is not entitled to attorneys' fees because he failed to prove that defendant knew of the defect and failed to disclose it to plaintiff before the sale. Plaintiff testified that Mr. Lewis told him he had on at least two occasions complained to defendant of water seeping into his apartment. Plaintiff further testified that after he wrote to defendant on August 22, advising her of this problem, she called him and told him that she had been informed of it but had not had time to rectify the problem before the sale. Defendant denied having any knowledge of the problem. The trial judge resolved this conflict of testimony in favor of plaintiff and there is no basis for this court to disturb this credibility call. Thus, plaintiff is entitled to attorneys' fees under Art. 2545. Defendant also takes issue with the quality of plaintiff's proof in support of the amount of attorneys' fees and argues that the amount awarded is excessive, especially considering the amount in relation to the principal amount of the claim. Plaintiff's attorney proffered his office records to show that some 22 hours of attorneys time had been spent on the case prior to the *63 trial which took another 6 hours, and defendant objected on the ground that the record was hearsay and that she was entitled to cross examine plaintiff's attorney as to the time. The trial judge ruled that all of the legal services were performed under the eye of the court and were readily subject to evaluation by reference to the record and he made the award of $2,000 on that basis. From our own examination of this record we cannot say that the award constituted an abuse of discretion on the part of the trial court. Next, we do not subscribe to defendant's view that an award of $2,000 for the attorneys' fee is necessarily excessive simply because the principal amount awarded was only $1,960. The legislature saw fit to penalize the bad faith seller by imposing attorneys' fees in such a case and that intention would be frustrated if a buyer would have to absorb the greater part of the attorneys' fee where a small amount is involved in the undisclosed defect. We are not persuaded that the attorneys' fees awarded in this case were out of proportion under the circumstances.
Finally, the defendant contends that the expert witness fee of $250 assessed against defendant was improperly awarded because she was entitled to a hearing on a contradictory rule to set this award. Defendant's position is not supported by R.S. 13:3666 which confers on the trial court the right to determine the fees of expert witnesses from the testimony adduced upon the trial of the cause without the necessity of a contradictory rule.
Accordingly, the judgment appealed from is affirmed but is amended to reduce the principal amount of the award to $1,630 with the award of $2,000 for attorneys' fees and $250 for the expert witness fee to remain intact. The costs of this appeal are divided between plaintiff and defendant, and all other costs are assessed against defendant.
AFFIRMED AND AMENDED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583851/ | 31 So.3d 189 (2010)
OHARA
v.
STATE.
No. 5D08-460.
District Court of Appeal of Florida, Fifth District.
March 23, 2010.
Decision Without Published Opinion Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918748/ | 218 A.2d 718 (1966)
STATE of Vermont
v.
ROCKDALE ASSOCIATES, INC.
No. 1190.
Supreme Court of Vermont. Windham.
April 5, 1966.
John P. Connarn, Atty. Gen., Montpelier, for plaintiff.
Thomas P. Salmon, John A. Lowery, Bellows Falls, for defendant.
Before HOLDEN, C. J., and SHANGRAW, BARNEY, SMITH and KEYSER, JJ.
SMITH, Justice.
An original information was brought before the Windham County Court on October 5, 1965 alleging that "Rockdale Associates, Inc., a Massachusetts Corporation, registered to do business in the State of Vermont, with a place of business in Westminster, in the County of Windham, did then and there, between twelve o'clock Saturday night, August 21, 1965, and twelve o'clock Sunday night, August 22, 1965, conduct a secular business in violation of Title 13, V.S.A. 3301, by then and there selling merchandise, to wit, one nightgown."
The defendant was arraigned on October 6, 1965 on the aforesaid information and entered a plea of "Not Guilty."
*719 The statute, which defendant is alleged to have violated is Title 13 V.S.A. § 3301 entitled "Sunday Business and Entertainment" and is quoted below:
"(a) A person shall not, between twelve o'clock Saturday night and twelve o'clock the following Sunday night, exercise any secular business or employment, except works of necessity and charity, nor engage in any dance, nor shall a person operate, promote or engage in any play, game, sport or entertainment, except winter and water sports, tennis, bowling, golf or horse shows during such hours which disturb the public peace or for which any compensation is received, directly or indirectly, except as follows:
(1) As otherwise provided in this chapter;
(2) Articles of food may be sold, served, supplied and delivered at any time of the day;
(3) Prepared tobacco, ice, sodas and soft drinks, ice cream, flowers, confectionery, souvenirs, antiques, baskets, newspapers, magazines, prescriptions, patent medicines, drugs, hospital supplies and locally made products may be sold and delivered, and real estate may be shown but not sold and fishing, hunting and other licenses may be sold at any time of the day;
(4) The sale of gasoline, grease, oil and other petroleum products to operators of motor vehicles, motorcycles, motorboats and aircraft may be made at any time during the day and making of repairs, including the sale of repair parts to motor vehicles, motorcycles, motorboats and aircraft so as to permit such vehicles to proceed under their own power and the towing of any such vehicle unable to proceed under its own power shall be permitted at any time during the day, but the sale of motor vehicles, motorcycles, boats, motorboats, outboard motors and aircraft is prohibited;
(5) The sale and rental of skiing, skating, golf, fishing, tennis, trap shooting, bowling, swimming and water skiing equipment, boats, motorboats and outboard motors, within ten airline miles of areas devoted to such sports shall be permitted at any time during the day but such sale shall not be permitted at any other place;
(6) The operation of any public utility which is subject to regulation by the public service board shall be permitted.
(b) Notwithstanding the provisions of this section, any secular place of business not otherwise prohibited by law may be operated between twelve o'clock Saturday night and twelve o'clock the following Sunday night if the natural person managing or in control of the management of the place of business conscientiously believes that the seventh day of the week or the period which begins at sundown on Friday night and ends at sundown on Saturday night should be observed as the Sabbath, and causes all places of business in Vermont which he manages or over which he has control to remain closed for secular business during the entire period of twenty-four consecutive hours which he believes should be observed as the Sabbath.Amended 1961, No. 273, eff. Aug. 1, 1961."
The States Attorney and the defendant requested the Windham County Court to pass the cause to this Court for determination of certain questions of law, before final judgment, upon a stipulated statement of facts, in accordance with the provisions of 12 V.S. A. § 2386. The request was granted and four questions have been certified to this Court by the Windham County Court for *720 our determination before the entry of judgment below:
"(1) Is VSA 3301(a) (3), excepting the sale of locally made products from the provisions of the act, null, void, and unconstitutional by reason of imposing an undue burden on Interstate Commerce in violation of Article I, Sec. 8, Clause 3 of the Constitution of the United State?
(2) Does 12 VSA 3301(a) (3) deny the Defendant equal protection of the law under the Fourteenth Amendment of the United States in permitting the sale of locally made goods?
(3) Does 13 VSA 3301(a) (5) deny the Defendant the equal protection of the laws under the Fourteenth Amendment creating preferred classifications and discriminating as to one group of retailers to the detriment of others?
(4) Are provisions of 13 VSA 3301(b) essentially religious in character, thereby constituting a law respecting an establishment of religion in violation of Article I of the United States Constitution made applicable to the States by the Fourteenth Amendment?"
Before considering any of the questions of law certified to us for our determination we must first determine what question, or questions, are raised by the substance of the proceedings below that are pertinent and inevitable in the disposition of the case presented.
"The statute providing for appeals before final judgment does not contemplate that abstract or formulated questions should be passed upon by us." Powers v. State Highway Board, 123 Vt. 1, 5, 178 A.2d 390, 393; In re Constitutionality of House Bill 88; 115 Vt. 524, 64 A.2d 169. Nor does this Court ordinarily consider the constitutionality of an act unless the disposition of the case in hand requires it. Chase v. Billings el al., 106 Vt. 149, 155, 170 A. 903; State v. Hall, 96 Vt. 379, 119 A. 884.
The information charges the defendant with selling one nightgown in that period of time between midnight on Saturday and midnight on Sunday. The agreed statement of facts states that the defendant sells "nonlocally manufactured products consisting of dry goods including wearing apparel." These facts, as well as the briefs of the parties, make it abundantly clear that defendant is charged with selling a nonlocally made product, but which product could legally have been sold if it had been made locally by virtue of 13 V.S.A. § 3301(a) (3).
The defendant asserts that this provision of 13 V.S.A. § 3301 is unconstitutional by reason of imposing an undue burden on Interstate Commerce in violation of Article I, Sec. 8, Clause 3 of the Constitution of the United States.
This part of 13 V.S.A. § 3301 allows the sale of locally made products on one day of the week, but forbids the sale of similar products made elsewhere. We think it evident that "locally made" as used in the statute was intended by the Legislature to apply to products of Vermont manufacture only. The enactments of the General Assembly are applicable to only this State, and it is the welfare of the inhabitants of Vermont which is the concern of the state legislative body, and not that of other states or localities.
This section of the Sunday Business and Entertainment law is not stated to be necessary for the health and safety of the people of Vermont, or their morals or necessary welfare, nor has the State so argued here. The plain purport of this section of the statute is to allow products of any nature, which are of local manufacture, to be sold exclusively on one day of the week within this State, but the sale of similar products, manufactured elsewhere than locally, is forbidden to be made. Whether or not so intended by the Legislature, the result is a protection of local manufacture against lawful *721 competition from other states for one day out of every seven.
"Protection of domestic laborers, manufacturers or merchants against the lawful competition from other states by means of discriminating regulations upon goods manufactured in other states, is an immediate interference with interstate commerce." In re Opinion of the Justices, 211 Mass. 605, 98 N.E. 334, 335; Polar Ice Cream and Creamery Co. v. Andrews, 375 U.S. 361; 84 S.Ct 378, 11 L. Ed. 2d 389; Scott v. Donald, 165 U.S. 58, 17 S. Ct. 265, 41 L. Ed. 632.
We, therefore, find that that part of 13 V.S.A. Sec. 3301(a) (3) reading "and locally made products may be sold and delivered," is in conflict with Article 1, Sec. 8, Clause 3 of the Constitution of the United States and of no force and effect.
It is apparent that our disposition of Question No. 1 which necessitates dismissal of the information, disposes of the case in hand. The other three questions certified, therefore, become abstract questions and need not be passed upon by us. Powers v. State Highway Board, supra. Chase v. Billings et al., supra. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918754/ | 242 Md. 198 (1966)
218 A.2d 191
COATES
v.
J.M. BUCHEIMER CO., INC., ET AL.
[No. 195, September Term, 1965.]
Court of Appeals of Maryland.
Decided April 5, 1966.
The cause was argued before PRESCOTT, C.J., and HORNEY, MARBURY, OPPENHEIMER and BARNES, JJ.
John F. Foley, Jr. and Samuel D. Hill, with whom were Buckmaster, White, Mindel & Clarke and Richard E. Zimmerman on the brief, for appellant.
Herbert L. Rollins, with whom were Glenn C. Michel and Mathias, Mathias & Rollins on the brief, for appellees.
HORNEY, J., delivered the opinion of the Court.
In this workmen's compensation case, the primary question presented is whether the trial court erred in granting the motion for a directed verdict in favor of the employer on the ground that the injury suffered by the employee did not arise out of and in the course of her employment. The employee (Ruth N. Coates) is the appellant and the employer (J.M. Bucheimer Co., Inc.) is the appellee. As usual, only the facts are different: the law has not changed.
The employee, who had been employed for about six months prior to her injury, operated a machine used in the manufacturing of leather goods. In her work as a "stitcher" it was *200 necessary for the employee to remain at a machine except when she had to get material.
At the time of the accident resulting in the injury the employer was constructing an addition to its plant and the existing loading dock was being extended along side of the new building. A roll-up door provided access from the existing plant to the loading dock and another doorway in the new building provided access to that part of the loading dock still under construction. Neither of these doors was normally used by the employee to enter or leave the plant.
On the evening of November 6, 1963, while the employee was working the 4:00 p.m. to 12:30 a.m. shift, she took her regular coffee break at 6:00 p.m., and went to the lounge in the building where she had been working for refreshments. During the "break" she talked with her foreman, discussing, among other things, the new lounge in the building under construction. The foreman asked the employee if she had seen the new lounge and, after she answered that she had not, she asked him if he would take her to see it, but he refused because of "what might be said". The employee then asked the foreman if she could go over and see it and the foreman replied "yes."
The employee went over to the closed roll-up door, raised it and went out onto the unlighted loading dock. She proceeded along the platform area in the dark for about seven or eight feet until she came to a doorway in the new building and as she attempted to step from the partially completed loading platform into the new building she fell and sustained the injury for which she seeks compensation.
At the hearing on the claim for compensation filed by the employee, the commission found that she "did not sustain an accidental injury arising out of and in the course of her employment" and disallowed her claim. The employee appealed to the circuit court requesting a jury trial. When, however, the appeal was heard, the trial court directed a verdict in favor of the employer against the employee at the conclusion of her case, and this appeal followed.
Code (1957), Art. 101, § 15, provides in pertinent part that "every employer * * * shall pay * * * for the disability * * * of his employee resulting from an accidental personal injury *201 sustained by the employee arising out of and in the course of his employment without regard to fault * * *." Although it was conceded by the parties that the employee sustained an accidental personal injury, the employee still had to show that the injury arose both "out of" and "in the course of" her employment in order to bring her claim for compensation within the operation of the statute. Pariser Bakery v. Koontz, 239 Md. 586, 212 A.2d 324 (1965); Department of Correction v. Harris, 232 Md. 180, 192 A.2d 479 (1963); Scherr v. Miller, 229 Md. 538, 184 A.2d 916 (1962); Perdue v. Brittingham, 186 Md. 393, 47 A.2d 491 (1946).
The words "out of" refer to the cause or origin of the accident, while the phrase "in the course of" refers to the time, place and circumstances under which it occurs. Rice v. Revere Copper & Brass, Inc., 186 Md. 561, 48 A.2d 166 (1946); Hill v. Liberty Motor & Engineering Corp., 185 Md. 596, 45 A.2d 467, 47 A.2d 43 (1946). Their meaning and effect, however, depend on the circumstances of each particular case. In the case at bar, the injury sustained by the employee arose neither out of nor in the course of her employment. Rather it resulted from the unrestrained curiosity of the employee.
This does not mean, of course, that every time an employee deviates from his immediate employment in order to satisfy his curiosity and an injury occurs that he will be precluded from receiving compensation under the statute. If the deviation is trifling and momentary it should be disregarded like any other inconsequential act of turning aside. The deviation in the instant case, however, was not inconsequential. In Robertson v. Express Container Corp., 99 A.2d 649 (N.J. 1953), where a deliberate excursion to a roof top during lunch time to see if a distant fire was still smoking was held not to arise "out of" or "in the course of" the employment, it was said at p. 651:
"Compensability in so-called `curiosity cases' depends largely on whether or not what the employee was doing at the time of the injury was a momentary or impulsive act or a deliberate and conscious excursion involving deviation from the usual place of employment, in this instance, from the place where petitioner was accustomed to eat her lunch."
*202 Nor was it error for the trial court to direct a verdict for the employer. We think the court, in assuming the truth of the evidence presented by the claimant and all inferences of fact fairly deducible from it (as the court was required to do), properly ruled that the evidence was legally insufficient to submit the question of whether the injury was compensable to the jury. Jewell Tea Co. v. Blamble, 227 Md. 1, 174 A.2d 764 (1961); Superior Builders, Inc. v. Brown, 208 Md. 539, 119 A.2d 376 (1956); Spencer v. Chesapeake Paperboard Co., 186 Md. 522, 47 A.2d 385 (1946). The question here was clearly one of law, not of fact.
Judgment affirmed; appellant to pay the costs. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918761/ | 107 N.H. 89 (1966)
HAMPTON & a.
v.
HAMPTON BEACH IMPROVEMENT COMPANY, INC. & a.
No. 5312.
Supreme Court of New Hampshire.
Argued November 2, 1965.
Decided March 30, 1966.
*90 Cooper, Hall & Walker and Upton, Sanders & Upton (Mr. Robert W. Upton orally), for the plaintiffs.
McLane, Carleton, Graf, Greene & Brown and Robert A. Raulerson (Mr. Raulerson orally), for the defendants.
LAMPRON, J.
The first three transferred questions pertain to the effect on the lease of the dissolution as a corporation of the lessee Hampton Beach Improvement Company.
This lease had its origin at a town meeting held in Hampton on April 24, 1897 for, among other purposes, "to see if the Town will pass any vote or votes relative to the leasing of any or the whole of the lower or Pines Marsh Beach to . . . parties who will open and improve the same for building purposes on some reasonable terms." These premises "were a narrow strip of undeveloped land consisting of barren sand dunes and marsh land. This land lay between the Atlantic Ocean on the East and large areas of salt marsh on the West." The following vote was adopted at that meeting. "Whereas the land owned by the town extending from the Island Path to the river mouth not being utilized and will not be for any town purpose nor yield any income to the town and whereas said land being so well located and so convenient for cottage purposes under the new system street railway travel it is capable of yielding a large income to the town and greatly increase its taxable property and whereas there are responsible parties ready and willing to lease and improve the same for the town's interest therefore resolve that the selectmen *91 be instructed to lease the same to the Hampton Beach Improvement Company at such rental and under such conditions as will be for the best interest of the town and for the most valuable improvement of said land."
As stated in the preamble to the lease, the company, which became the lessee, "submitted to the selectmen . . . its proposition. . . which is the same set forth and contained in the lease . . . which . . . seems to the selectmen to be for the best interest of the town and the most valuable improvement of said land." By its terms, this lease for 99 years executed April 1, 1898, almost one year after the vote authorizing it, obligated the company to pay an annual rental of $500; to construct and keep in repair at its own cost and expense cross streets between roads constructed by the town; to prohibit the sale of intoxicating liquors on the leased premises; to restrict the type of buildings to be erected on the street facing the ocean; and to "use its best efforts to lease lots of land from the leased premises and have cottages and dwelling houses erected thereon and bring taxable property into the town and improve said leased premises for the best interests of the town and will endeavor to have and maintain an orderly and respectable place there which shall be for the benefit and credit of said town." The lessor agreed to build and maintain a highway east of the leased premises. Without affecting its right to tax all buildings erected on the land, the town agreed not to tax the leased land or if taxed to pay said tax or if paid by the lessee it was to be deducted from the annual rent.
The following facts are agreed on by the parties. The company has constructed, maintained, and repaired at its own expense, fifteen cross streets between Ocean Boulevard, a highway constructed by the town east of the leased premises, and Marsh Avenue (now Ashworth Avenue) another highway constructed by the town west of the leased land. The company has entered into subleases with the result that "large, permanent and expensive improvements have been made and buildings erected so that at the present time, all of the land presently occupied by the company contains residential, commercial and other types of buildings. Since 1898, the company has expended substantial sums of money in developing the leased area, promoting the leasing of lots therein and the erection of buildings thereon, and the building and repairing of streets and sidewalks."
*92 The parties are also in agreement on the following facts. During the early years, the company had little, if any, profit from operations under the lease, but the profits since have greatly increased as has the value of the land under lease. "In the year 1898 the company had a net loss of $550.50 and in 1914 a loss of $1,950.99. Its net profits after taxes were $1,973.17, $4,654.12, $6,504.16, $10,680.34 and $17,129.25 for the years 1924, 1944, 1954, 1956 and 1962 respectively." "The fair market value of the land under lease, exclusive of additions and improvements made since the execution of the lease in 1898, is now not less than $300,000," while the leased premises occupy "less than two percent of the total area of the town" the assessed value of the property thereon represented $2,331,025 of the town's total valuation of $20,062,859 in the year 1962.
The lessee Hampton Beach Improvement Company was founded in 1897 as a voluntary corporation under the provisions of chapter 147 of the Public Statutes which, with specified exceptions, authorized such corporations to carry on "any lawful business." P. S., c. 147 s. 1, x. By virtue of Laws, 1919, c. 92 authorizing and regulating business corporations, this company could have voted to come within its provisions thereby obligating this company to make an annual return to the Secretary of State and to pay an annual fee. Ss. 36, 38. There is nothing in the record indicating that such a vote was ever taken by it.
Laws 1933 chapter 318 "repealed, revoked and annulled" the charters of "any corporation organized for profit before March 28, 1919 which had not made an annual return or paid a fee to the Secretary of State" with certain exceptions not material here. However under its section 3 "any such corporation may reinstate itself as a corporation within two years after the date that this act takes effect" by making formal application for reinstatement and by the payment of fees, if any, in arrears, "and the filing of annual returns required by law since January 1, 1926." The parties agree that the "company did not apply for reinstatement, possibly because not formally notified of the annulment of its charter. In ignorance of its dissolution the officers and stockholders of the company collected rents, executed subleases and in general exercised the rights and privileges of the company, as lessee, as though its charter had not been revoked and annulled and did not learn that the charter had been annulled *93 until the filing of this petition for declaratory judgment in 1955. The town did not learn of the repeal and annulment of the charter until informed by its counsel shortly before the petition was filed."
March 29, 1956 the intervenor, Hampton Beach Improvement Company, Inc. was organized as a business corporation in this state. Article 2 of its articles of agreement states in part as follows: "The objects for which the Corporation is established and the nature of the business to be transacted by it are as follows: To re-establish the corporate status of the Hampton Beach Improvement Company, a corporation duly organized under Chapter 147 of the Public Statutes of the State of New Hampshire in September, 1897 . . . . It is the desire, intention and purpose of the incorporators to re-establish the corporate identity of the aforesaid company and to have the new corporation carry on the same business and have the same purposes as the aforesaid company prior to its dissolution by statute."
It is agreed that "the individual defendants are or were the stockholders of the dissolved corporation, who claim to have succeeded to its rights as lessee under the lease." It is further agreed that as such sole stockholders they transferred "all their right, title and interest in and to the business, assets, rights, contracts, and any and all other property heretofore owned by the dissolved corporation to the Hampton Beach Improvement Company, Inc. in exchange for its capital stock." This latter corporation issued 40 shares of its stock in the same amounts and to the same stockholders who held stock in the old corporation at the time of its dissolution. These persons were members of the families of three of the original five persons to whom 40 shares of stock in the original corporation were issued.
I. The first three transferred questions read as follows:
"I. Did the revocation of the charter and dissolution of the Hampton Beach Improvement Company by Laws of 1933, Chapter 318, and the failure of the company to reinstate itself as therein provided terminate the lease?
"II. If the dissolution of the Improvement Company did not terminate the lease, did its stockholders upon dissolution succeed to the lease and the rights and privileges of the Improvement Company under the lease?
"III. Do the peculiar terms of the lease defining the relation between the town as lessor and the Improvement Company as *94 lessee create a relation of trust and confidence which precludes the assignment or transfer of the lease to a successor or assignee without the consent of the town?"
Setting aside question III for the present we advert to the first two questions. Laws 1933, chapter 319, by which the company's charter was revoked, provided in its section 4 that such a corporation shall "continue as a body corporate for the term of three years . . . for the purpose of . . . distributing its assets, including the disposition and transfer of all or any part of its property." This evidences a repudiation of the early common law rule "if it ever really was a rule" that all real estate held by a corporation at the time of its dissolution reverted to its grantors and all of its personal property vested in the sovereign for want of any other owner. 16A Fletcher, Corporations (Perm. ed.) s. 8134, pp. 295, 296; 19 Am. Jur. 2d, Corporations, s. 1657, pp. 1005, 1006. See Addy v. Short, 47 Del. 157; RSA 294:98.
We subscribe to the general rule that after the dissolution of a corporation its property passes to its stockholders subject to the payment of the corporate debts. DiPrete v. Vallone, 72 Rawle I. 137; Brooks v. Saloy, 334 Ill. App. 93, 99; Cummington Realty Associates v. Whitten, 239 Mass. 313, 325; 19 Am. Jur. 2d., Corporations, s. 1659, p. 1007. There being no specific provision in this lease for its termination on the dissolution of the lessee company, we hold that unless prevented by the principles contained in question III, to be hereinafter considered, the stockholders succeeded to the lease and to the rights and liabilities of the company in the leasehold estate. Cummington Realty Associates v. Whitten, supra; 16 A Fletcher, Corporations, (Perm. ed.) s. 8124, p. 279; 19 Am. Jur. 2d, Corporations, s. 1660, p. 1008. See Conn v. Company, 79 N. H. 450, 451; Annot. 147 A.L.R. 360, 362.
The answer to question I is "no" and the answer to question II is "yes." The lease did not terminate with the dissolution of the lessee company and the stockholders succeeded to the company's rights and privileges under the lease.
Turning now to question III, in the absence of a restriction on the right of assignment fixed by the parties themselves, a tenant under a lease for a definite term has, as an incident to his estate, the right to assign his leasehold interest in the demised premises without the consent of the lessor. Voudomas v. Bragg, *95 83 N. H. 270, 273. It is also true, as contended by the plaintiff, that "when rights arising out of a contract are coupled with obligations to be performed by the contractor and involve such a relation of personal confidence that it must have been intended that the rights should be exercised and the obligations performed by him alone, the contract, including both his rights and his obligations, cannot be assigned." 4 Corbin, Contracts, s. 865; Bethlehem v. Annis, 40 N. H. 34, 41; Tough v. Netsch, 83 N. H. 374, 378; Wetherell Bros. Co. v. United States Steel Co., 200 F.2d 761, 763 (1st Cir. 1952); Smith, Bell & Hauck v. Cullins, 123 Vt. 96; Perthou v. Stewart, 243 F. Supp. 655 (D. Ore. 1965). In such a situation the rights under a lease would not pass to the stockholders of the corporate lessee on dissolution even though they would carry on the business substantially in the same way in which it was carried on previously. 3 Williston, Contracts (Jaeger 3d ed.) s. 411A, p. 26.
The answer to question III must be found in the intent of the parties as revealed by the terms of the lease, the relation of the parties, the subject matter of the contract and all other surrounding circumstances. Perry v. Company, 99 N. H. 451, 453.
By its terms this ninety-nine-year lease was to the "lessee, its successors and assigns." They were to hold and enjoy the premises free from lawful eviction. All other covenants of the lessor ran to the "lessee, its successors and assigns." The "lessee, its successors and assigns" agreed to "use its best efforts to lease lots of land . . . and bring taxable property into the town." The "lessee, its successors and assigns" could be expelled by the town for failure to pay rent or observe other covenants in the lease. The use of the word "assigns" is not necessary to make a lease assignable. 1 Tiffany, Real Property (3d ed. 1939), s. 118, pp. 183, 184. However while the absence of words of assignability, such as successors or assigns, is not of itself controlling, it is some evidence that intention of the parties was against assignment. Smith, Bell & Hauck v. Cullins, 123 Vt. 96, 101. By the same token the use of such words in a lease, as is the case here, must be considered as some evidence that the parties intended it to be assignable. North Hampton District v. Society, 97 N. H. 219, 220.
The plaintiff makes the following argument in its brief in support of its contention that the lease, and the obligations and duties of the company are neither assignable nor delegable. "The *96 development of the leased premises required judgment, salesmanship and administrative ability which the lessee undertook to provide. The trust and confidence of the town of Hampton in the Hampton Beach Improvement Company is reflected in the terms of the lease which committed the development and improvement of the leased premises to the Improvement Company for a term of 99 years."
The long term of the lease is an ambivalent factor. If it reflected the confidence of the town in the five persons who originally constituted the company, it must have brought to mind also the fact that these five persons were not likely to live out its term and would normally be replaced by "successors and assigns." Furthermore "if a principal contracts with a corporation, he contemplates a changing personnel" especially where, as in this case, there is no evidence that the original stockholders could not sell their interests at anytime to anyone. Knudsen v. Torrington Company, 254 F.2d 283, 287 (2d Cir. 1958).
Nor can it be effectively argued that the town was relying heavily on the experience, credit and financial resources of Hampton Beach Improvement Company. Paige v. Faure, 229 N.Y. 114. As a matter of fact the company was only seven months old at the time of the agreement with a paid up capital of $1,000. It is agreed that the stockholders of the new corporation are the sole stockholders of the dissolved original lessee corporation. A majority of them "reside in Hampton and are members of the families of the original stockholders of the dissolved corporation." All stockholders of the dissolved corporation transferred "all their right, title and interest in and to the business, assets, rights, contracts, and any and all other property heretofore owned by the dissolved corporation to the Hampton Beach Improvement Company, Inc., in exchange for its capital stock."
In view of the language of the lease; its term of 99 years; the relatively short corporate existence and the not too impressive financial resources of the lessee when the lease was executed; the fact that the individuals who now have succeeded the original lessee most likely would have succeeded to the rights of the original corporation if its charter had not been revoked, we conclude that Hampton Beach Improvement Company, Inc. and its stockholders as the lessees are not such a change from the original lessee as to be beyond the contemplation of the town in executing *97 the lease. Knudsen v. Torrington Company, 254 F.2d 283, 287 (2d Cir. 1958). Nor can we see how the changes in the legal status of those who have continued in the performance of the covenants of the original lease have materially affected the agreement of the parties to the lease. Des Moines Blue Ribbon Distrib. v. Drewrys Ltd., 129 N.W.2d 731 (Iowa 1964).
We hold that the lessee's rights under this lease have been transferred from the Hampton Beach Improvement Company to its stockholders and by them to Hampton Beach Improvement Company, Inc. The answer to transferred question III is "no."
II. The remaining questions relate mainly to the validity of the following covenants in this lease. "And the said lessor covenants and agrees with the said lessee, its successors and assigns, that it will not tax said lands or any part thereof during the term of this lease, or if it does tax the same or any part of it, the amount of said tax shall be paid by said lessor, or if paid by said lessee, its successors and assigns, shall be deducted from the annual rent." These questions are as follows:
"IV. In view of the changes which have occurred since the execution of the lease as of April 1, 1898, and in particular the increased value of the leased premises, are the covenants relative to taxation and rent [$500 annually] now valid and binding upon the Town?
"V. [Are the above covenants about taxes] . . . invalid as an ultra vires and unconstitutional grant by the Town to the Hampton Beach Improvement Company, its successors and assigns, of a special exemption of the leased premises from taxation?
"VI. [Are the same covenants] . . . unconstitutional and invalid because in conflict with and repugnant to the constitutional rules of uniformity and equality governing the assessment and collection of property taxes in that they would exempt the lessee, its successors and assigns, from the payment of taxes on the leased premises and increase the burden of other taxpayers?
"VII. [Are the same covenants] . . . repugnant to, and in violation of the provisions of the Constitution of New Hampshire, and in particular Part I, Art. 12 and Part II, Art. 5, as a grant or donation by the Town to a private corporation?"
Certain aspects of these covenants and some of the above questions relating thereto were considered by this court in Hampton &c. Co. v. Hampton, 77 N. H. 373.
*98 The plaintiff has stated in its brief that "the sole purpose of the town in entering into the lease was the development and improvement of the large tract of undeveloped land at Hampton Beach suitable for residential and related uses." To accomplish this end it was provided in the lease that the company was to "use its best efforts to lease lots of land from the leased premises and have cottages and dwelling houses erected thereon and bring taxable property into the town and improve said leased premises for the best interests of the town" and "to have and maintain an orderly and respectable place there which shall be for the benefit of and credit to said town."
Under this lease the land which the town meeting of April 24, 1897 said was "not being utilized and will not be for any town purpose nor yield any income to the town" was divided by the lessee into blocks containing approximately 320 lots each of which, with few exceptions, contained approximately 5,000 square feet. These blocks were separated by fifteen cross streets constructed and thereafter maintained and repaired by the lessee at its expense. All of the land leased to the company now contains residential, commercial and other types of buildings which had a total assessed value in 1962 of $2,331,025 and the leased land has a value of not less than $300,000. It would be pure speculation to try to estimate what these values would be but for the lease. In 1962 the taxes received by the town on account of improvements made in the leased area, which is less than 2% of the total area of the town, exceeded $151,500 or approximately 10% of the town's total tax income. To say whether or not the selectmen of the town in 1898 would have entered into this agreement, or any lease, if they had been endowed with the faculty of then discerning the conditions which now exist would constitute conjecture. If by hindsight it is arguable that the lease has proved to be less advantageous to the town than the selectmen anticipated when it was given, this fact would furnish no basis in and of itself to declare the lease or any of its covenants null and void. Bourn v. Duff, 96 N. H. 194, 198; Fuller Enterprises v. Manchester Sav. Bank, 102 N. H. 117, 122. The answer to question IV is "yes."
The tax covenants in question viewed in the context of the lease as a whole, were intended, along with the covenant for rent, to establish a fixed price to be paid by the company to the town for the use of this land. No provision was made for *99 an increase in the annual rent of $500 if during the ninety-nine-year term of this lease this land should become more valuable as it is reasonable to assume both parties to the agreement expected it would. The same purpose prompted the agreement with respect to taxes. In order that the lessee would not be faced with increased yearly expenses if this land became taxed during that period, the town as part of the agreement undertook to pay such taxes. We see no reason to make a distinction in this respect between a tax imposed on the town as the owner or on the lessee as having an interest therein which was being created by the very lease entered into by the parties.
We agree today with what this court said in Hampton &c. Co. v. Hampton, 77 N. H. 373, 374 that this does not constitute an exemption in the nature of a gratuity but a matter of contract between the town as owner of the land and the lessee who was to serve as the means of developing it for the benefit of Hampton. Piper v. Meredith, 83 N. H. 107, 113. The town could not lawfully exempt the real estate from taxation but could validly contract with the lessee to pay any taxes as a consideration for the lessee's undertakings in the lease. We further hold that this agreement was within the power of the town and the authority of those acting for it. When town property is not required for public use, the town "is not compelled to let the property lie idle." Davis v. Rockport, 213 Mass. 279, 283; 10 McQuillin, Municipal Corporations (3d ed.) s. 28.42, p. 99. The town of Hampton could properly put its undeveloped property to reasonable use, by lease or otherwise (Sherburne v. Portsmouth, 72 N. H. 539; Piper v. Meredith, supra; Meredith v. Fullerton, 83 N. H. 124) and meet the expenses incidental to its contract with the lessee. Curtis v. Portsmouth, 67 N. H. 506. See also, Amoskeag Industries v. Manchester, 93 N. H. 335; deRochemont v. Holden, 99 N. H. 80, 82. The answer to question V is "no."
These covenants to save the lessee harmless from the governmental burdens of taxation were part of an agreement entered into between the town and the lessee to advance the interests of Hampton. The costs resulting to the town on account of these covenants constitute an expense of the town in carrying out its functions. They do not differ in legal effect from a payment made by the town to a contractor for services rendered to the town in the execution of its ordinary affairs. We fail to see how these covenants violate the constitutional rules of uniformity and *100 equality governing the assessment and collection of property taxes. Monadnock School District v. Fitzwilliam, 105 N. H. 487, 495, 496. See Curry v. United States, 314 U.S. 14, 18. The answer to question VI is "no."
In the performance of its obligations under this lease it is agreed that "since 1898, the company has expended substantial sums of money in developing the leased area, promoting the leasing of lots therein and the erection of buildings thereon and the building and repairing of streets and sidewalks." As previously stated herein, in 1962 the total assessed value of property in the leased area was $2,331,025. "The company [has] through its subleases and renewals . . . continually prohibited the sale of intoxicating liquors or the maintenance of a nuisance or disorderly houses on the premises and has used its best efforts to lease by lots all of the premises and cause the construction and erection of buildings and residences thereon. All of these efforts of the company have resulted in an orderly and respectable place or area which has been a benefit and a credit to the town of Hampton." During the early years of the lease the company had little, if any, profit from its operations. It had a net loss of $550.50 in 1898 and a net loss of $1,950.99 in 1914. Its net profit before taxes in 1924 was $2,025.80; in 1934, $2,273.41; in 1944, $5,986.25; in 1954, $9,384.30; in 1956, $15,140.02; and in 1962, $24,470.36. However our Constitution does not require that all parties to public contracts must operate at a loss. The test to be applied is whether the lease over its entire term will be primarily of benefit to private parties or whether it will serve mainly proper public purposes with incidental benefits to private parties. Opinion of the Justices, 99 N. H. 528, 530. We hold that the entire undertaking in its operation and results primarily was intended to and does serve the public interests of the town of Hampton although by its nature private parties will receive certain benefits from it. Consequently the expenditures or lack of revenue by the town which result therefrom are in the promotion of the general welfare of the town and are proper. Conway v. Water Resources Board, 89 N. H. 346, 350; Opinion of the Justices, 106 N. H. 237, 240. The answer to question VII is "no."
Remanded.
All concurred. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1585703/ | 108 Wis.2d 49 (1982)
321 N.W.2d 131
SCHROEDER, GEDLEN, RIESTER & MOERKE, a law partnership, by C. James Riester, partner thereof, Plaintiffs,
v.
Harold SCHOESSOW, Defendant,
Kenneth G. CARLSON, Russell D. Jones, and Eugenie Esser, Defendants-Third-Party Plaintiffs-Appellants-Petitioners,
CITY OF MEQUON, a municipal corporation organized under the laws of Wisconsin, Third-Party Defendant-Respondent.
No. 80-528.
Supreme Court of Wisconsin.
Argued March 3, 1982.
Decided July 2, 1982.
*50 For the defendants-petitioners there were briefs by Richard E. Reilly and Gimbel, Gimbel & Reilly of Milwaukee, and oral argument by Richard E. Reilly.
For the third-party defendant-respondent there was a brief by Robert A. Christensen, Nancy J. Sennett and Foley & Lardner of Milwaukee, and oral argument by Mr. Christensen.
Reversing and remanding 103 Wis.2d 380, 309 N.W.2d 10.
HEFFERNAN, J.
This is a review of a decision of the court of appeals, 103 Wis. 2d 380, 309 N.W.2d 10 (Ct. App 1981), affirming a judgment of the circuit court for Ozaukee county on March 20, 1980, J. TOM MERRIAM, Circuit Judge, Presiding.
The question posed in this case is whether summary judgment was properly granted to the city of Mequon dismissing a third-party complaint of certain aldermen who sought indemnification against the city for attorney fees incurred in contesting an order to show cause why they should not be found in contempt for failing to comply with a peremptory writ of mandamus directing them to vote to allow the connection of certain sewer extensions.
The circuit court held that the city, under sec. 895.46 (1), Stats.,[1] could only be liable for attorney fees under *51 circumstances where the city would be absolutely liable for the underlying civil judgment. It further held that the conduct of the aldermen in failing to comply with the writ of mandamus was "colored with criminal mis-conduct" or, at best, constituted an intentional tort, for which the city could not be liable.
The court of appeals in affirming followed a similar rationale, holding in essence that summary judgment was appropriate because, in addition to the reasons given by *52 the trial court, the aldermen were, as a matter of law, acting beyond the scope of their employment when they acted "contrary to the express order of the court." (103 Wis. 2d at 386)
We conclude that both the circuit court and the court of appeals erred in determining that the city was entitled to summary judgment as a matter of law. We conclude that both courts erred in respect to matters of law and, in addition, that there was an issue of fact that was required to be determined. Hence, we reverse and remand for additional proceedings.
The narrow question presented on this review is whether the trial court and the court of appeals, on appeal, properly determined that, as a matter of law, summary judgment dismissing a third-party complaint for attorney fees was appropriate.
This action for attorney fees has its origin in prior conduct of the common council of the city of Mequon and its aldermen.
A chronology of events shows that, in February of 1978, Ted Weissinger, a land developer, obtained the city of Mequon common council's approval of a concept plat for a proposed development. Subsequently, on May 2, 1978, the common council unanimously passed a resolution which provided that no new sewer extensions would be granted for developments in the area to be served by the Cedarburg Road Sanitary Sewer Trunk unless the sewer extensions were given the specific approval of the council following the recommendation of its committee on public works and the city engineer. That resolution indicated that additional extensions would be likely to result in the overflow of excess sewage into a river and into a low-lying area.
On September 5, 1978, Weissinger appeared before the common council inquiring whether it was the intent of the May 2 resolution to curtail sewer extensions to *53 his development, which had received concept plat approval in February. He pointed out that, even after the May 2 moratorium, he had continued to receive the assistance and cooperation of the city engineer's department and the planning department; and, accordingly, he assumed that the moratorium was not intended to apply to him. The city attorney gave the opinion that it was his belief that the moratorium did not apply to Weissinger's development.
The discussion that ensued indicated that at least some of the aldermen, following the initial plat approval, learned that underlying engineering data on which they based their approval had been predicated on dry-weather conditions and that subsequent experience had shown that, during wet weather between April and July, the system had not been able to handle the sewage and that over eight million gallons of raw sewage flowed into the Milwaukee River. Weissinger's request for explicit approval of sewer connections was referred to the committee on public works by a 4-3 vote of the aldermen. The aldermen who voted for this referral were Carlson, Jones, Esser, and Schoessow.
Weissinger forthwith commenced an action for mandamus in the circuit court for Ozaukee county to direct that the Mequon common council approve the sewer extensions. All seven of the members of the common council and the mayor were made respondents in the mandamus proceedings. On September 8, Judge Warren Grady issued an alternative writ directed to all the respondents ordering them on or before September 12 to grant Weissinger's sanitary sewer extensions or to show cause to the court why they had not done so.
The council met on September 12, and the discussion again indicated that the prior approval of the plat was predicated on the information available to them at that time, but that that information had been furnished on a *54 dry-weather basis and wet-weather problems which subsequently ensued had not been considered. On a roll call vote, the motion to approve the sewer allocations was defeated on a 4-3 vote. Aldermen Carlson, Esser, Jones, and Schoessow voted to deny approval.
On September 13, the city attorney moved to quash the alternative writ of mandamus on the ground that the council's decision was discretionary, rather than ministerial, and was therefore not a proper subject of mandamus. Judge Grady on September 19 issued a peremptory writ of mandamus commanding the common council to approve the sewer extensions to Weissinger's subdivision.
At a meeting following the service of the peremptory writ, a motion was made to approve the sewer extensions. Alderman Carlson moved to table the motion approving the extensions, pointing out that Alderman Schoessow, who had previously voted to deny the allocations, was out of the country, and he also suggested that the council obtain a stay of Judge Grady's ruling. The city attorney made no comment in respect to the possibility of obtaining a stay and stated that the council had no choice but to respond to the peremptory writ. The motion to table was defeated by a 3-3 vote. The principal motion to grant the sewer extensions failed to secure a majority, with Aldermen Carlson, Esser, and Jones voting against the motion. The mayor was not present at the meeting and, accordingly, was unable to break the tie.
On September 20, the president of the common council as acting mayor filed a return to the peremptory writ, stating that the common council at its September 19 meeting failed to approve of the sewer extensions. On the following day, Judge Grady ordered the three aldermen who voted against allowing the sewer extensions to show cause why they should not be cited for contempt. On that same day, these three aldermen apparently *55 were told by the city attorney that he would not represent them in any contempt proceedings and would not take an appeal from the peremptory writ of mandamus. At this time the dissenting aldermen contacted the law firm of Schroeder, Gedlen, Riester & Moerke to represent them.
On September 22, a hearing was held on the order to show cause, at which time the trial judge stated that failure to obey a peremptory mandamus constituted contempt. However, this statement was made not as a finding but as a legal generalization, and a careful scrutiny of those proceedings failed to reveal that any adjudication of contempt was made. During the hearing, however, the representative of the Schroeder law firm again asserted that the conduct of his clients, the dissenting aldermen, was discretionary and not ministerial and, hence, not amenable to mandamus. The court agreed to adjourn the hearing for the purpose of submitting evidence on that point. Accordingly, it appears that, at the close of the hearing on September 22, the circuit judge had not foreclosed his consideration of whether the conduct of the aldermen was discretionary or ministerial, nor had he made a finding of contempt. The hearing was adjourned until September 28.
The council met again on September 25, at which time Alderman Esser moved the adoption of a resolution authorizing and directing the appeal of the peremptory writ of mandamus and to appropriate funds to retain the Schroeder firm for that purpose.
That resolution recited that the city attorney had refused to represent the dissenting aldermen subsequent to the order to show cause why they should not be cited for contempt. Following discussion, the resolution was carried on a vote of 4-2. The next day, the mayor vetoed the resolution, because he believed that the resolution, by implication, directed that the city pick up the personal costs of any contempt proceedings. He stated that he felt *56 that was not a proper expense for the city to bear. He nevertheless urged the common council to authorize the appeal of this matter. A motion to override the mayor's veto failed to secure the necessary two-thirds vote.
Following the council meeting of September 25, the Schroeder firm filed notices of appeal from the peremptory writ which was entered on September 19 in the circuit court. One notice of appeal purported to be in behalf of the mayor and the entire common council of the city of Mequon and the other on behalf of Aldermen Carlson, Esser, and Jones. At the adjourned hearing of the circuit court proceedings, Judge Grady disallowed the filing on behalf of the entire council, because the city attorney, and not the Schroeder firm, was the only attorney of record for that body. Judge Grady, however, allowed the appeal on behalf of the three dissenting aldermen to stand.
The hearing on September 28 is significant in that the judge indicated that, were he to find the aldermen in contempt, he would proceed not under sec. 783.07, Stats. (formerly sec. 293.07), but under ch. 295, now renumbered as ch. 785. In other words, it is clear that the judicial proceedings for contempt were in contemplation of imposing a remedial sanction for the contempt which could be purged by compliance, not in contemplation of a punitive sanction for past conduct.
Additionally, after some discussion, which indicated that there was a possibility of satisfactorily reconciling the problems of the parties in the underlying mandamus proceedings, and after it was made clear that the dissenting aldermen had some rational basis for exercising their discretion not to permit the connections without some conditions:
"[The Court] feeling and thinking that perhaps maybe the door to compromise has been opened somewhat by statements of counsel here and these three Aldermen, I *57 will at this time withdraw temporarily my finding that these three are in contempt."
The record shows that, although the circuit judge talked in generalities about what circumstances would warrant the imposition of a finding of contempt, he at no time explicitly made such a finding. Moreover, in response to a direct question by counsel on whether there was a finding of contempt, the court stated, "[I have] withdrawn that ruling. It does not mean that I have found that they were not in contempt."
Accordingly, all that can be gleaned from the record is that the circuit court made no explicit finding of contempt, and to the extent that it is arguable that it was the judge's intention to make such finding, that finding was specifically withdrawn. Judge Grady's wisdom in so concluding those proceedings was vindicated when, under revised conditions, the common council of the city of Mequon on October 5 granted the sewer allocations to Weissinger and on October 9 the circuit judge, pursuant to stipulation entered into by Weissinger, the mayor, and the entire common council, explicitly dismissed the mandamus action and the contempt proceedings.
Accordingly, the record demonstrates that the mandamus action was dismissed, the peremptory writ was withdrawn, the contempt proceedings were dismissed without a finding that the three aldermen were in contempt, and Weissinger secured the sewer connections which he needed in order to have his development project proceed.
Although the council on October 5 agreed to the stipulation dismissing both the mandamus and the contempt actions, it failed to authorize payment of the bill of the Schroeder firm for legal services. Accordingly, the law firm commenced an action against the defendants, Aldermen Schoessow, Carlson, Jones, and Esser, seeking payment *58 of their professional services. Three of the aldermen, Carlson, Jones, and Esser, denied liability and filed a third-party complaint against the City of Mequon alleging:
"That at all times material to this third party claim, the Third Party Plaintiffs had been made parties to a legal proceeding, in their official capacity as Aldermen for the City of Mequon. That at all times pertinent to the cause of this legal proceeding, the Third Party Plaintiffs were acting in the scope of their official duties as Aldermen."
They also alleged that the city had been notified of their need for legal services and that the city attorney and the common council had refused to furnish such service. They demanded that payment be made pursuant to sec. 895.46(1), Stats. In response to those allegations, the city of Mequon admitted that, during all of these proceedings, the third-party plaintiffs had been made parties to the legal proceedings in their official capacity, and that they had been acting within the scope of their duties as aldermen.
As an affirmative defense, however, the city of Mequon alleged that it had not afforded legal counsel in the contempt proceedings because "[the] third party plaintiffs were guilty of serious intentional misconduct which could have, among other things, subjected them to criminal contempt charges and personal liability."
The action for attorney fees proceeded in the circuit court for Ozaukee county; and the city of Mequon, on the basis of the above-recited facts, which were submitted in affidavit form, moved for summary judgment. The circuit court for Ozaukee county, J. Tom Merriam, Circuit Judge, granted the city's motion and dismissed the third-party complaint. The appeal to the court of appeals and the subsequent review to this court are in respect *59 to the judgment dismissing the third-party complaint.
The only issue posed on this review is whether the three aldermen may be entitled to indemnification for their attorney fees under the provisions of sec. 895.46(1), Stats. Putting aside for the moment the question of whether there are any issues of fact which must be resolved, we address ourselves first to the legal question of whether public officers in the position of the aldermen may recover their attorney fees against the city. Reflecting the position of the city, the circuit court concluded that there could be no city liability for the attorney fees, because the failure to comply with the writ of mandamus was "colored with criminal mis-conduct" or, at best, constituted an intentional tort. The court of appeals pointed out that the statute requires that public officers be within the scope of their employment to recover according to the terms of sec. 895.46(1) and went on to hold that, as a matter of law, the aldermen were acting beyond the scope of their employment when they acted contrary to the express order of the court.
Bablitch & Bablitch v. Lincoln Co., 82 Wis. 2d 574, 263 N.W.2d 218 (1978), is the underpinning of the trial court decision. That case stands for the proposition that the statute, sec. 895.46(1), Stats. (then numbered sec. 270.58), when it referred to "litigation," showed the legislature intended to impose liability upon a governmental unit for attorney fees and costs only in civil cases.
We need not review in the instant case whether this court's interpretation of "litigation" was correctly applied in Bablitch to exclude payment for attorney fees and costs in criminal cases, because the instant case is clearly civil in nature, both in respect to the underlying mandamus action and the contempt proceedings.
Sec. 783.01, Stats., provides, "Mandamus is a civil action." Sec. 783.04 provides, "If judgment be for the *60 plaintiff, the plaintiff shall recover damages and costs." It is thus clear from the face of the statutes that a mandamus action is a civil action which, in part at least, partakes of the characteristics of a civil action for damages. A contempt proceeding may be either for civil or criminal contempt. Although the time and circumstances at which or under which a contemptuous act was allegedly performed may affect a determination of whether the contempt is civil or criminal, our contempt statutes make it clear that the nature of the proceedings must be changed depending on whether a remedial sanction or a punitive sanction is contemplated by the court.
Sec. 785.01(2), Stats., states:
"`Punitive sanction' means a sanction imposed to punish a past contempt of court for the purpose of upholding the authority of the court."
Sec. 785.01 (3), Stats., provides:
"`Remedial sanction' means a sanction imposed for the purpose of terminating a continuing contempt of court."
Sec. 785.04(1) (d), Stats., provides that a remedial sanction may be imposed to insure compliance with a prior order of the court.
The record clearly shows that it was the intent of Judge Grady, who presided at the contempt proceedings, that the sanction be of a remedial nature only; and, of course, had a punitive sanction been sought, a criminal procedure as outlined under sec. 785.03(1) (b), Stats., would have been required. As a prelude to a punitive sanction, the district attorney, the attorney general, or a special prosecutor appointed by the court would be required to issue a complaint and the matter would thereafter proceed under the criminal law as set forth in chs. 967-973, Stats. It is absolutely clear, then, that there was nothing in these proceedings which brought any of the conduct of the three aldermen within the rationale of *61 Bablitch & Bablitch, which held that it was not the intent of the legislature to furnish indemnification for attorney fees incurred in the defense of criminal proceedings. Both the mandamus action and the contempt proceedings were civil in nature.
The city has dragged a red herring across our juris-prudential path by asserting the relevancy of sec. 783.07, Stats.[2] That section provides that, when a public officer neglects to perform a duty enjoined by a writ of mandamus, the officer may be subject to a fine not to exceed $5,000 or imprisonment for a term not exceeding five years. The possible invocation of this statute came full blown from the city's counsel on this appeal. In none of the trial record is there the slightest intimation that, in the contempt proceeding, the judge was even considering the use of that statute. He was not interested in punitive sanctions but only remedial ones, which would insure that any contemnor, if contempt had actually been found, could have purged himself or herself of the contempt by compliance. He specifically disavowed the application of sec. 783.07, Stats. Furthermore, the case of State ex rel. Bautz v. Harper, 166 Wis. 303, 165 N.W. 281 (1917), leads to the conclusion that this statute, which first came into our laws in 1849, originated in an ancient parliamentary statute, 9 Anne, c. 20, and grew out of the common law remedy of action on the case in the event of a false return to a writ of mandamus. See discussion in Bautz, supra at 312. In any event, we find nothing in the annotations *62 to show that this statute has ever been utilized. Certainly its use was never contemplated in any of the present proceedings, and reference to it and reliance upon it by the city is inappropriate and has no support whatsoever in the record. Nothing in these proceedings cast an aura of criminality over any of the conduct of the three aldermen with whom we are concerned in this review.
The record shows that Judge Grady considered the "contempt" proceedings as part and parcel of the problem posed in the mandamus action. At the date of the initial return to the alternative writ, the city attorney appeared for the purpose of justifying, if possible, the actions of the aldermen on the ground that their failure to vote for the sewer connections was a discretionary act undertaken as part of their duties as legislators, was not ministerial, and therefore could not be compelled by mandamus.
Judge Grady made the finding, however, that their conduct was ministerial only and that the aldermen were not immunized from the writ of mandamus by virtue of the exercise of legislative discretion. After the peremptory writ issued, however, and the contempt order to show cause was issued, Judge Grady, apparently sensing the inadequacy of the city attorney's efforts to demonstrate at the earlier hearing that the aldermen's functions were legislative and not ministerial, decided, as a part of the contempt proceedings, that he would allow further evidence to be presented on that question. It is obvious, then, that in the contempt proceedings Judge Grady viewed the hearing as substantially a continuation of the exploration of the issues raised in the mandamus action. The second and final hearing, nominally on the matter of contempt, was devoted in the main to the question of whether the function of the aldermen in declining *63 to vote for the sewer extensions was ministerial or legislative.
All the attorney for Weissinger wanted was the passage of a resolution giving him the sewer extensions that his client desired, and all that Judge Grady wanted was a substantial compliance with the underlying writ of mandamus. Accordingly, it is apparent from a review of the record that criminality is simply not an issue. No criminal sanctions were ever contemplated. Moreover, no finding of contempt was ever definitively made; and to the extent that it was tentatively made or made in terms of a legal generalization, it was withdrawn by the contempt-proceeding judge almost immediately. Judge Grady, in the contempt proceedings, wisely reached the conclusion that the differences were reconcilable and accordingly suggested that there be a settlement. The upshot of this suggestion was the granting of the sewer extensions on conditions that were satisfactory to the dissenting aldermen, which resulted in the dismissal not only of the contempt proceedings but the underlying mandamus proceedings.
All of the proceedings, both as to the mandamus and alleged contempt, were handled by Judge Grady as civil actions. The Bablitch & Bablitch rule, which would deny compensation for attorney fees where a public officer seeks indemnification for fees necessary to defend a criminal action, is irrelevant.
We conclude that sec. 895.46(1), Stats., is designed, and was initially enacted, to provide indemnification to a public officer under the very circumstances of the instant case. Sec. 895.46(1) first came into the Wisconsin statutes by ch. 377 of the Laws of 1943. It was originally enacted as sec. 270.58 and provided:
"Where the defendant in any action, writ or special proceeding, except in actions for false arrest, is a public officer and is proceeded against in his official capacity *64 and the jury or the court finds that he acted in good faith the judgment as to damages and costs entered against the officer shall be paid by the state or political subdivision of which he is an officer."
That addition to the statutes, the records in the Legislative Reference Library demonstrate, arose from the then recent decisions of this court in State ex rel. Lathers v. Smith, 238 Wis. 291, 299 N.W. 43 (1941), and 242 Wis. 512, 8 N.W.2d 345 (1943). Those cases concerned a mandamus action brought by a highway contractor to compel Smith, the state treasurer, to honor an order of the state highway commission for the payment of certain extra work. A peremptory writ was entered, and it was this writ which Smith, the treasurer, appealed. It was found that the treasurer's duties were ministerial and not quasi-judicial and, accordingly, his conduct was amenable to the writ of mandamus. This court stated in the second Lathers case, where personal judgment was taken against him for damages and costs:
"This case is governed by the decision in the former appeal. The act of the appellant was determined not to be quasi-judicial in character, and although he was honest in his action, it was not within the scope of his authority. Under sec. 293.04, Stats., he is liable for damages and costs." 242 Wis. at 515.
In essentials, Lathers v. Smith is strikingly similar to the facts in the instant case. The writ was mandamus and the finding was that the conduct was ministerial only. It was because of the circumstances and holding in Lathers, similar to the circumstances in the present case, that the forerunner of sec. 895.46(1), Stats., was enacted in 1943.[3]
*65 The original purpose of the legislation following Lathers was to rectify a situation where a public official had acted outside his scope of authority but honestly. The statute, which was intended to rectify the holding of Lathers, imposed the requirement only that the officer be proceeded against in his official capacity and that he act in good faith. Because the finding of the court in Lathers was that Smith did not act within the scope of his authority and because the legislature in rectifying the holding in Lathers referred to "good faith" only, it is apparent that the legislature intended that "good faith" embrace the concept that a public officer who reasonably believed that he was acting within the scope of his authority was to be afforded protection.
Also, the statute as specifically enacted provided for protection of public officials in "any action, writ or special proceeding." (Emphasis supplied.) Here, in both the case of mandamus and the subsequent abortive contempt proceedings, the proceedings were commenced by what amounts to a writ a true common law writ in the mandamus action and a quasi-writ, the order to show cause for contempt. There is nothing in the subsequent legislative history to show that proceedings against a *66 public officer commenced by writ were not intended to continue to be included under the ambit of the statute.
The general trend of legislative modifications of the original statute demonstrates a legislative intention to broaden the protection afforded a public officer or employee. For example, ch. 576 of the Laws of 1957 included protection for town officers. Ch. 438 of the Laws of 1959 provided that reasonable attorney fees shall be paid by a political subdivision in false arrest cases. Deputy sheriffs who did not serve at the will of the sheriff were brought within the statute by ch. 499 of the Laws of 1961.
Chapter 603 of the Laws of 1966 amended the statute to provide reasonable attorney fees and costs for defending the action "[r]egardless of the results of the litigation . . . unless it is found by the court or jury that the defendant officer or employe did not act in good faith, when [the governmental unit] does not provide legal counsel to the defendant officer or employe." This 1966 amendment was at the instance of the Wisconsin State Employees Association, and the proposed amendment submitted to the bill drafting division of the Legislative Reference Library was drafted by the State Employees' representative, Attorney John Lawton. The only suggestion originally in the request for amendment was the provision to allow attorney fees and costs. The request also suggested, however, that it might be appropriate to "modernize language." Subsequent thereto, the bill drafting department struck from the existing legislation the word, "writ," and substituted in the proposed draft the word, "litigation," for the word, "action." The nature of these alterations would seem to indicate that the substitution of the word, "litigation," may not have been intended to have the substantive effect that was given to it by this court in Bablitch & Bablitch. It is clear, however, that "writ" is subsumed into language referring to actions, *67 and special proceedings are encompassed in the word, "litigation."
In 1973 the original language affording coverage to an employee when he "acted in good faith" was replaced by the language, "acting within the scope of his employment." Contrary to the assertions of the city, we cannot conclude that this change narrowed the coverage to be afforded to a state employee or officer. It is in fact a reference to the language of the second Lathers case; and we cannot conclude that the replacement language was intended by the legislature to offer less protection to an employee or officer than that afforded by "good faith."
Additional minor changes were made in 1975, 1976, and 1977. All these changes had the tendency to implement the legislature's intent to give added protection to public employees and officers.
Chapter 221, sec. 842, Laws of 1979, amended the statute to afford the state the opportunity to deny and contest the issue of its liability under this section and to require the cooperation of a defendant officer or employee. This last change appears to be the only narrowing of employee coverage following the initial passage of the basic statute in 1943.
The original sec. 270.58, Stats., was renumbered 895.45 in 1975 by the order of this court effective on January 1, 1976. That renumbering was altered by ch. 198 of the Laws of 1975 to the present statutory citation 895.46. The legislative chronology shows that the legislature has attempted to offer the broadest protection reasonably available to public officials and to public employees. The general spirit of the legislature's intent was recognized by this court in Larson v. Lester, 259 Wis. 440, 446, 49 N.W. 2d 414 (1951), when this court stated:
"It is our opinion that the language of sec. 270.58, Stats., is plain and unambiguous and requires no construction. The legislative history of this enactment discloses *68 that it was the intention of the legislature to make its scope as broad as possible, and it is our opinion that it did so when it covered defendants `in any action, writ, or special proceeding.'"
This court has uniformly followed a broad interpretation of the protection afforded by this statute.
Bablitch & Bablitch, of course, clarified the applicability of the protection afforded where the underlying action is criminal in nature; and in the case before us, we have no occasion to question that interpretation. It is apparent that the intent of the statute an intent which has been reiterated and amplified by the legislature was to protect public officials who were proceeded against in their official capacities and who acted in good faith.
We conclude that the legislature intended that public officials, faced with the litigation of the nature of that in the present case, were to be afforded the right of indemnification from the governmental unit. It is clear that, if the aldermen were in the course of their employment i.e., were in good faith in their belief they were acting in their function as elected legislators of the city of Mequon the city, under the provisions of sec. 895.46(1), Stats., is absolutely liable for the payment of any judgment against them for attorney fees and costs.
Sec. 895.46(1), Stats., provides that, in circumstances covered by that statute:
". . . the governmental unit, if it does not provide legal counsel . . . shall pay reasonable attorney fees and costs of defending the action, unless it is found by the court or jury that the defendant officer or employe did not act within the scope of employment." (Emphasis supplied.)
This statutory mandate is consistent with the language of Lester, supra at 446, which pointed out that the question *69 of good faith is one for the court or jury to determine. It is also consistent with the recent case of Cameron v. Milwaukee, 102 Wis. 2d 448, 307 N.W.2d 164 (1981). We emphasize, however, that the assumption of the statute is that employees or officers are acting within the scope of their employment, and what is required of a trial court is a specific finding that they did not act within the scope of their employment. The circuit court which tried the instant action for attorney fees failed to make any finding in respect to the scope of employment and relied only upon the Bablitch & Bablitch rule that indemnity is not available in a criminal proceeding. As we have pointed out, the entire underlying course of action, both in respect to the mandamus and the contempt, was civil only. Hence, the rationale of the circuit court is inappropriate. The court of appeals attempted to satisfy the lacuna in the record by holding as a matter of law that the council members were not acting within the scope of their employment.
Because of the conflicting inferences which were recognized by Judge Grady in respect to whether or not during the course of these proceedings the aldermen were properly exercising their legislative discretion, a conclusion as a matter of law was inappropriate and beyond the jurisdiction of the court of appeals. Were we to reach a conclusion as a matter of law on the basis of the incomplete record in respect to the "scope of employment" and the "good faith" of the aldermen and we believe the latter requirement on the basis of the legislative history is implicit in the question of whether public officials acted within the scope of their employment we would be inclined to conclude that the aldermen were acting within the scope of their employment. However, it is no more within our jurisdiction to reach that conclusion as a question of law under the revealed facts than it was for the court of appeals. Essentially, the remaining *70 question is one of fact that must be determined by the finder of fact.
We point out that the record unmistakably shows that the dissenting aldermen were concerned about problems of health, safety, and pollution with respect to the disposal of raw sewage. These are police-power considerations which as a matter of law may very well override even vested contractual rights which, in the absence of police-power considerations, would relegate subsequent conduct of the aldermen to a ministerial function. In determining whether or not the aldermen acted within the scope of their employment when they refused to acquiesce to the writ of mandamus, it is necessary to make a finding of fact that they acted, or did not act, in the good faith belief that the health and welfare of the community motivated their conduct. If such be the case, then it should be clear to the finder of fact that throughout the proceedings their function was legislative and of a discretionary nature, which could not be compelled by a writ of mandamus. Absent a finding supported by the evidence that the aldermen were not within the scope of their employment, a final judgment in the mandamus proceedings and the subsequent contempt could well be deemed as an improper infringement by the judiciary upon the legislative function of a substantially autonomous governmental unit. It should be recalled, however, that Judge Grady in the contempt proceedings wisely recognized this delicate balance of power, and rather than to pursue the proceedings for contempt, he urged a settlement; and this settlement resulted in the dismissal of both the mandamus and the contempt proceedings. Hence, because the matter was reconciled to the apparent satisfaction of all parties, and agreed to by the mayor and entire common council, there was no intrusion upon the legislative function of the aldermen.
The aldermen nevertheless incurred substantial expenses in advocating their point of view and, arguably at *71 least, in defending their discretionary legislative functions under the police power. The fundamental issue in the instant lawsuit remains: Were the aldermen, in their conduct during the course of the contempt proceedings, which, by the determinations of Judge Grady were substantially merged with the mandamus proceedings, within the scope of their employment. Because this crucial determination was not made by the trial court, summary judgment was inappropriate. This question of controlling importance remained at issue. We accordingly reverse the decision of the court of appeals, vacate the summary judgment, and remand the cause to the trial court for the purpose of making the finding explicitly required by the statute that the defendants did not act within the scope of their employment, if the facts can support such a finding. If the circuit court cannot make such finding, it would appear that the aldermen have the right under the statute to be indemnified.[4]
There are, of course, other issues which may potentially arise. For example, the statute only allows "reasonable attorney fees." The city by this decision is not precluded from raising that and other issues that may emerge in the course of the litigation. Our holding is limited to the determination that the three aldermen who seek indemnification *72 are not precluded from that remedy by the nature of the proceedings which underlie their claim.
By the Court.Decision of the Court of Appeals reversed and cause remanded to the Circuit Court, with directions for further proceedings.
CECI, J., took no part.
NOTES
[1] Sec. 895.46(1), Stats., pertinent to this review provides:
"895.46 State and political subdivisions thereof to pay judgments taken against officers. (1) (a) If the defendant in any action or special proceeding is a public officer or employe and is proceeded against in an official capacity or is proceeded against as an individual because of acts committed while carrying out duties as an officer or employe and the jury or the court finds that the defendant was acting within the scope of employment, the judgment as to damages and costs entered against the officer or employe in excess of any insurance applicable to the officer or employe shall be paid by the state or political subdivision of which the defendant is an officer or employe. Agents of any department of the state shall be covered by this section while acting within the scope of any written agreement entered into prior to the occurrence of any act which results in any action or special proceeding. Regardless of the results of the litigation the governmental unit, if it does not provide legal counsel to the defendant officer or employe, shall pay reasonable attorney fees and costs of defending the action, unless it is found by the court or jury that the defendant officer or employe did not act within the scope of employment. . . ."
The pleadings of the city acknowledge that, during all of the proceedings, the aldermen were within the scope of their employment. The city's only defense was that alleged as an affirmative defense that the conduct of the aldermen, though within the scope of their employment, was criminal in nature and, hence, as a matter of law under the rule of Bablitch, not within the purview of sec. 895.46(1), Stats. As demonstrated above, both the mandamus and contempt proceedings were civil in nature. Because both of these proceedings were dismissed, it is perhaps almost irrelevant for the trial court to make further findings. Scope of employment is conceded. Hence, it appears that all that remains to be done is to examine the reasons why the aldermen refused to comply with the peremptory writ. If their conduct was motivated by their legislative concern for the protection of the health and welfare of the community, and was not motivated by willfulness or caprice, their conduct was in good faith, was legislative and discretionary, and was not subject to mandamus.
The mandamus action, however, has been dismissed, and it is now too late to make specific findings in that action. Nevertheless, we feel that the city should have the opportunity to insist that evidence be considered which will or will not justify payment of attorney fees. In other words, as an element of the present action for attorney fees, the city has the burden of showing that the aldermen were not in good faith in asserting the legislative and discretionary prerogative.
[2] "783.07 Fine or imprisonment. Whenever a peremptory mandamus shall be directed to any public officer, body or board, commanding the performance of any public duty specially enjoined by law, if it shall appear to the court that such officer or any member of such body or board has, without just excuse, refused or neglected to perform the duty so enjoined the court may impose a fine, not exceeding $5,000, upon every such officer or member of such body or board, or sentence the officer or member to imprisonment for a term not exceeding 5 years."
[3] We note in passing that Smith's appeal was from the peremptory writ. In the instant case no appeal was taken from the peremptory writ until after the initiation of the contempt proceedings. The record demonstrates, however, that the contempt proceedings were brought within a few days of the issuance of the writ prior to the time that the right to appeal from the writ had run. The defendants could, of course, have asked for a stay; and, in fact, Alderman Carlson specifically suggested that there be a stay until such time as an appellate determination of the legality of the writ could be made. This suggestion fell on deaf ears as far as the city attorney was concerned. His response was merely that the aldermen were obliged to comply with the writ. We believe it comes with ill grace that the city, through its present attorney, should now assert that the appropriate remedy of the aldermen would have been to ask for a stay and then appeal, when the record clearly demonstrates that the city's official attorney, whose duty it was to represent the aldermen at the time, declined to give them legal assistance and specifically washed his hands of the dilemma which they, as nonlawyers, confronted.
[4] We recognize the procedural problem posed for the circuit court by the remand of this case. The mandamus and contempt actions presided over by Judge Grady were dismissed and are at an end. They cannot be revived. The circuit court which heard the summary judgment motion accordingly cannot rely even upon the tentative findings of Judge Grady. The necessary factual determinations in respect to "good faith" and "within the scope of employment" accordingly must be made ab initio by the circuit court (or jury), as must any other factual matters that may emerge. It would appear, however, transcripts of the testimony in both the mandamus and contempt actions, to the extent admissible, could be available to the court or jury to assist in the factfinding process. Findings in the prior proceedings cannot be used. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918787/ | 242 Md. 315 (1966)
218 A.2d 923
BOARD OF COUNTY COMMISSIONERS FOR PRINCE GEORGE'S COUNTY
v.
FARR, ET AL.
[No. 315, September Term, 1965.]
Court of Appeals of Maryland.
Decided April 26, 1966.
*317 The cause was argued before PRESCOTT, C.J., and MARBURY, OPPENHEIMER, BARNES and McWILLIAMS, JJ.
Lionell M. Lockhart, with whom were Harry L. Durity, Joseph S. Casula, James J. Lombardi, L. David Ritter, Jr. and Frank M. Kratovil on the brief, for appellant.
Blair H. Smith, with whom was Heiskell R. Gray on the brief, for appellees.
OPPENHEIMER, J., delivered the opinion of the Court.
The appellees, owners of three of the five parcels of land in Prince George's County between an apartment development and a community of single residences, duly petitioned for zoning reclassifications of their properties from residential to multiple-family, medium density residential. The Technical Staff of the Maryland-National Capital Park and Planning Commission recommended denial of the applications; the Commission disagreed, recommending approval; the Board of County Commissioners for Prince George's County, sitting as a District Council, denied the applications; and, on appeal, the Circuit Court reversed. On this appeal, the Council, the appellant, concedes that there have been substantial changes in the area since the adoption of the zoning map in 1949. The question is whether the decision of the Council to maintain the zoning line, despite the changes, was arbitrary and capricious.
The three lots consist of approximately 62,000 square feet and are situated on the north side of Oak Street, adjoining the limits of the Town of Cheverly. At the present time, only 12 feet of Oak Street is paved. The lots, with two others not here involved, are within the general area formed by the John Hanson *318 Highway, U.S. Route 50; the Landover Highway; Maryland Route 202; the clover leaf interchange; Oak Street and Magruder Avenue. The property in this general area, other than these five lots, has been reclassified to the Multi-Family Density or Commercial Zone. The area consisting of the five lots is bounded on two sides by low-rise apartments, on one side by a highway, to which there is no access from the lots, and on one side by single family residences located in Cheverly which is directly across Oak Street. The applications for rezoning, filed in 1963, were for reclassification from the R-55 Zone (One-Family, Detached Residential) to the R-10 Zone (Multiple Family, Medium-Density Residential), under which only high-rise apartments can be built.
The report of the Technical Staff on the applications was filed on May 13, 1964. It contains the zoning history of the three lots, the results of a field inspection, and the reasons for the recommendation that the applications be denied. The zoning history shows that previous requests for reclassification of two of the three lots (together with a request for the rezoning of another of the five lots, not presently involved) had been made in January 1963. The Technical Staff and the Commission recommended denial of these previous applications and the requests had been permitted to expire without further action. The field inspection showed that two of the lots presently involved are vacant, but that the third is improved by a modern, brick single-family residence.
The Technical Staff gave the following reasons for its recommendation that the present applications be denied:
"(1) The requested reclassifications are not in accordance with the land use proposed for the area by the Master Plan for Bladensburg-Defense Heights.
"(2) Available access is inadequate to serve higher density residential use.
"(3) Shopping facilities within the area are inadequate to serve the population which would be developed by increasing the residential density.
"(4) The changes which have occurred in the area are, without exception, oriented toward Landover Road and were partly justified on this basis. The subject *319 properties do not possess this geographic similarity and are clearly a part of the single-family residential area.
"(5) The requested reclassification would constitute `spot' zoning within an established, well-maintained single-family residential neighborhood."
The Planning Commission did not follow its Staff's recommendation, and recommended that the requests be granted, with the provision that enough ground be withheld to provide for a 70 foot right-of-way for Oak Street. As reasons for its recommendation, the Commission stated:
"1. Based on evidence of zoning and physical change (such as the interchange and the Hanson Arms Apartments) in the area, there is sufficient change in the character of the area to justify the request.
"2. Approval of the request will provide for a zoning pattern that can produce a more compatible land use pattern."
The Council held a hearing on August 19, 1964. At this hearing, the applicants showed that, since the adoption of the zoning map in 1949, ten applications for rezoning in the general area had been granted. However, the Bladensburg-Defense Heights Master Plan was adopted in 1960. Only three rezoning petitions had been granted since the adoption of the plan. These reclassifications, two of which were for commercial use, were of properties along or across Landover Road, not adjacent to the properties here involved. In addition to the ten reclassifications since 1949, the appellees list as material changes the completion of the John Hanson Highway, with interchange at Route 202, and of the dual highway from the John Hanson Highway to Old Annapolis Road, both of which took place in the fall of 1961. The completion of the highways admittedly was considered in the formulation of the Bladensburg Plan.
At the hearing, Mr. Ben Dyer, a professional land planner and Mr. James Walcroft, a realtor and appraiser testified on behalf of the appellees. Mr. Dyer stated that, in his opinion, the requested rezoning would complement the area and tend to fill in an area that is now surrounded on two sides by multi-family *320 use and on the third side to the east by a major highway. He referred to the availability of water and sewer and to the location of the properties within walking distance of recently constructed commercial stores and the proximity of three major shopping centers. He did not foresee any difficulty with traffic problems, especially in view of the proposed improvement of Oak Street. Mr. Walcroft testified that, in his opinion, there was need for additional multi-family units and that apartment development would enhance the value of the residential properties south of Oak Street.
Mr. George Bailey, the owner of a house in Cheverly "around the corner" from the properties, testified, in opposition to the granting of the applications, that Oak Street is overloaded with traffic even at the present time. Access to Route 202 for the present apartment development is through Magruder Avenue, which intersects Route 202. The erection of the proposed additional apartment house would increase the traffic on Magruder Avenue and at the intersection. He admitted that the erection of a traffic light at the intersection, for which funds have been provided, would be a material help. Mr. Ralph Wagner, another resident of Cheverly, owns a house directly across from one of the lots for which reclassification is sought. Oak Street, he testified, is not suitable for additional traffic. There is a problem now created by parked cars, which would be greatly intensified by the erection of the proposed high-rise apartment on this street. The Council permitted the report of the Technical Staff to be filed after the hearing, and, in due course, denied the applications, without findings or opinion. The applicants appealed.
The opinion and order of the Circuit Court was based on the record before the Council. In his oral opinion, Judge Dorsey found that the requested reclassification was not spot zoning. He said he felt that the natural place for the rezoning to stop in the area is along the highway shown in the plan. Relying upon Board of County Comm'rs of Prince George's County v. Oak Hill Farms, Inc., 232 Md. 274, 192 A.2d 761 (1963), he found the Council's action in denying the applications was arbitrary and capricious, and ordered it reversed.
In this appeal, the Council concedes that there were material *321 changes in the area since the adoption of the zoning map, and that the requested reclassifications would not constitute spot zoning. It contends, however, that there was substantial evidence to support the denial of the requested rezoning and that the action of the Council was not clearly erroneous and was at least fairly debatable. We agree.
In County Council for Mongtomery County v. Gendleman, 227 Md. 491, 498, 177 A.2d 687 (1962), Chief Judge Brune, for the Court, stated the principle which we find to be applicable to the present case, as follows: "Even if there were facts which would have justified the Council in rezoning the property, this would not of itself prove the denial of rezoning illegal. There is still the area of debatability, and one who attacks the refusal of rezoning must meet the heavy burden of proving that the action of the legislative body in refusing it was arbitrary, capricious or illegal." Chief Judge Brune said, further: "Zoning and rezoning do require the drawing of lines, and the legislative body may draw them subject to the same limitations as are applicable to other phases of the zoning process." It was held in that case that, on the record before the Council, its action in refusing to rezone the property involved was not beyond the field in which its action was fairly debatable. The Council "was not bound to extend that classification [commercial-office use] beyond the lot at which it had elected to stop."
In this case, the report of the Technical Staff, which was before the Council, pointed out that the requested reclassifications were not in accord with the land use advocated for the area by the Bladensburg-Defense Heights Master Plan. The adoption of a master plan does not take the place of the existing comprehensive zoning map adopted by the legislative body, but the plan nevertheless is a factor to be considered by the Council. See Board of County Comm'rs of Prince George's County v. Edmonds, 240 Md. 680, 687, 215 A.2d 209 (1965). The three departures from the master plan since its adoption were not shown to have directly affected the properties here involved, or to have vitiated the plan. There was substantial testimony before the Council, by adjacent property owners, in support of the conclusion of the Technical Staff that the available access to the properties is inadequate to serve the high *322 density use, if the proposed high-rise apartment were erected. The physical facts show that the properties involved can properly, although not necessarily, be regarded as part of the single-family residential area which they adjoin.
The appellees marshal the substantial testimony adduced on their behalf to show that the requested rezoning would be consonant with the development of the area and that there would be no difficulty with traffic problems. They emphasize the reclassification of the adjoining property on two sides of the lots involved for apartment use. But, as we pointed out in Baker v. Montgomery County Council, 241 Md. 178, 185, 215 A.2d 831 (1966), the rezoning of abutting property does not always warrant the rezoning of adjacent property. The court below was of the opinion that the natural place for the rezoning to stop in the area is beyond the properties involved. But this was the question for the Council's judgment. "As we have repeatedly emphasized, it is not for the courts to zone or rezone; the courts will not substitute their judgments for that of the expertise of the zoning officials." Pallace v. Inter City Land Co., 239 Md. 549, 556, 212 A.2d 262 (1965).
We have consistently held that the fact the zoning body, on the record before it, had the legal authority to grant the petition for reclassification if it had deemed such action proper, does not mean the action denying the application is to be reversed, when the decision is supported by substantial evidence and is not arbitrary or capricious. Mothershead v. Board of County Comm'rs of Prince George's County, 240 Md. 365, 214 A.2d 326 (1965); Sampson Bros., Inc. v. Board of County Comm'rs of Prince George's County, 240 Md. 116, 213 A.2d 289 (1965); and Pallace v. Inter City Land Co., supra.
Oak Hill Farms, supra, is not apposite. In that case, as the opinion makes clear, and as we have emphasized in subsequent decisions, the disapproval of the Technical Staff was based upon a tentative master plan which had not been adopted and there was no material evidence to support the Council's refusal to reclassify the property. Sampson Bros., supra, at 120, and Dal Maso v. Board of County Comm'rs of Prince George's County, 238 Md. 333, 340, 209 A.2d 62 (1965). Here, the master plan, with which the Council's decision was in accord, had been *323 adopted several years before the application, and there was substantial, material evidence before the Council to make its decision reasonably debatable.
Order reversed and case remanded for the entry of an order affirming the action of the Council; appellees to pay the costs. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918937/ | 106 B.R. 359 (1989)
In re CITRONE DEVELOPMENT CORP., Debtor.
Bankruptcy No. 87 B 20490.
United States Bankruptcy Court, S.D. New York.
October 25, 1989.
Sidney R. Turner, White Plains, N.Y., for debtor.
HOWARD SCHWARTZBERG, Bankruptcy Judge.
Sidney Turner, attorney for the former Chapter 11 debtor, Citrone Development Corp., seeks final compensation for his services *360 which were performed before the debtor was converted for Chapter 7 liquidation, pursuant to a motion made by the United States trustee. The Chapter 7 trustee has not completely administered this case and there is no clear picture as to what assets, if any, are on hand for distribution.
Sidney Turner's application relates back to a time before the debtor filed its Chapter 11 petition and includes services performed in connection with a state court foreclosure action commenced by a mortgagee bank against the debtor. A judgment of foreclosure was obtained by the mortgagee in the sum of approximately $2,400,000.00. The only asset in this estate is a shopping center which is encumbered by mortgages which arose out of the financing and construction of the shopping center, totalling approximately $2,500,000.00.
On October 13, 1987, three creditors filed with this court an involuntary petition against the debtor under Chapter 7 of the Bankruptcy Code.
On February 1, 1988, Sidney Turner was authorized by order of this court to represent the debtor. Accordingly, any compensable legal services performed by Turner cannot include any activities before February 1, 1988, the date of his retention.
On February 3, 1988, the debtor filed with this court a voluntary petition for reorganizational relief under Chapter 11 of the Bankruptcy Code. The debtor first proposed to form a new corporation and sell its shopping center to the new corporation. The creditors, who were offered stock in the proposed corporation, successfully objected to the proposal. The debtor then proposed to assign its sole asset to an insider corporation controlled by the debtor's principal in exchange for which the insider corporation would assume the debtor's mortgage. Once again the creditors successfully objected to the debtor's motion to accomplish this proposal.
By motion dated December 21, 1988, the United States trustee moved to convert this case for liquidation under Chapter 7 of the Bankruptcy Code because the debtor failed to file monthly operating statements and failed to comply with the United States trustee's operating guidelines. Additionally, the debtor did not file a plan of reorganization or a disclosure statement. In the absence of any progress in this case and the fact that the debtor had not taken any action to benefit its creditors in their voluntary Chapter 11 petition, this court granted the United States trustee's petition for conversion on January 20, 1989.
By motion dated January 30, 1989, Sidney Turner moved to be relieved as attorney for the debtor, which motion was granted by order of this court dated February 12, 1989.
For the period between February 1, 1987, when Sidney Turner was retained as attorney for the debtor, and February 12, 1989, when he was relieved at his own request, he appeared at several creditor's meetings and in this court in connection with the proposals to sell and assign the debtor's sole asset in the face of the mortgage foreclosure judgment. Had an order for relief been entered in connection with the original involuntary petition on October 23, 1987, the creditors would have been spared two years of delay in the enforcement of their rights. During the Chapter 11 period, the debtor did nothing tangible to benefit any of its creditors. The proposed sale of the debtor's corporation to a corporation controlled by its principal would not have advanced the interests of the creditors because they would simply have to chase another corporation for the debts owed by this debtor.
Neither the debtor nor its attorney performed the duties imposed under Chapter 11 or under the United State's trustee's operating guidelines in that no plan of reorganization was filed nor were monthly operating statements submitted. Hence, there was no forward movement towards any reorganization contemplated under Chapter 11 which might have a reasonable prospect of success.
In reviewing the posture of this case it is also clear that after payment of the so-called "burial expenses" imposed under 11 U.S.C. § 726(b), which have priority in a superseding Chapter 7 case over the subordinated *361 administrative expenses in the aborted Chapter 11 case, there will be relatively few remaining funds, if any, to satisfy the attorney fees with respect to the Chapter 11 case.
The trustee in bankruptcy objected to Sidney Turner's application on the ground that he failed to describe how his services benefitted the estate. The United States trustee did not appear because Sidney Turner failed to submit a copy of his application to the United States trustee before the hearing. No other parties in interest were given notice of the hearing, despite the requirement in 11 U.S.C. § 330(a) which requires notice "to any parties in interest and to the United States trustee."
The application in support of the $55,000.00 fee sought by Sidney Turner consists mainly of 19 pages containing a list of every telephone call he made or received in connection with this case. There is no description as to what subjects or issues were discussed or how these telephone calls had any significance in this case. Indeed, names are listed without any indication as to who these people are or what connection, if any, they had to this case. There is no listing of any litigation or adversary actions commenced, probably because there were none. There is no reference to any preferences recovered, fraudulent conveyances set aside, turnover proceedings commenced, claims objected to or assets recovered for this estate, probably because the answer would also be none. There were two motions involving the proposed sale and assignment of the debtor's sole asset, both of which were denied by the court following opposition by the creditors. The applicant also opposed a creditor's motion for relief from the automatic stay and a motion made by the United States trustee for conversion of the case. Some time was spent preparing the Chapter 11 petition and drafting a plan which was never filed. Some time was spent attending creditor's meetings. The bulk of the time for which compensation is sought related to the undetailed list of telephone calls.
DISCUSSION
It was not until 1973 that an attorney for a debtor in an aborted arrangement case under Chapter XI of the former Bankruptcy Act could receive compensation in the Second Circuit for service rendered to the debtor, notwithstanding the conversion of the case for liquidation. In re Casco Fashions, 490 F.2d 1197 (2d Cir.1973). The Court of Appeals ruled that the debtor's attorney could be awarded compensation out of the estate over the objection of the trustee in bankruptcy because:
what the attorneys for the debtor have accomplished along the lines indicated will diminish pro tanto the work that must be performed by the attorneys for the trustee, and failure to compensate them would constitute unjust enrichment of the creditors at the expense of attorneys working in good faith with the approval and at the direction of the bankruptcy court.
Id. at 1201-2. The court went on to state that attorneys for debtors whose arrangements were not accepted should be compensated at subnormal rates explaining that "certainly this should be true if the proposed arrangement was so unfair that creditors could not be expected to accept." Id. at 1204.
In order to be compensated for attorney's fees under the Bankruptcy Code, a debtor's attorney need not have achieved a confirmed plan of reorganization. Pursuant to 11 U.S.C. § 330(a), an attorney retained by a debtor whose retention was approved by the court may recover reasonable compensation for the actual, necessary services rendered, and by the value and time spent in performing the services in accordance with the cost of comparable nonbankruptcy legal services. In order to obtain compensation, the attorney must comply with Bankruptcy Rule 2016 and file with the court an application setting forth a detailed statement of the service rendered and the time expended. Unless the order of retention allows for compensation nunc pro tunc, the attorney may not recover for any services performed before the retention order was signed. In re Henry *362 F. Raab, Inc., 85 B.R. 293, 297 (Bankr.S. D.N.Y.1988).
The major portion of the Chapter 11 time spent by the attorney for the debtor in this case, before conversion to Chapter 7, is listed as telephone conversations with named individuals whose connection with this case is not specified. The substance of the conversations is also not specified nor is there any explanation as to how any telephone call advanced the debtor's interests in the case or contributed to the administration of the Chapter 11 issues. The failure to provide sufficient details to allow the court to perform its task of determining the nature and value of the time spent by the attorney for the debtor while engaged in those telephone conversations compels a conclusion that they are not compensable. In re Chicago Lutheran Hospital Association, 89 B.R. 719, 739 (Bankr.N. D.Ill.1988); In re Crawford Hardware, Inc., 82 B.R. 885, 888 (Bankr.S.D.Ohio 1987); In re C. & J. Oil Co., Inc., 81 B.R. 398, 403 (Bankr.W.D.Va.1987). An applicant for attorney's fees has the burden of presenting a carefully detailed application and supporting documentation. In re Meade Land & Development Co., Inc., 577 F.2d 858, 860 (3rd Cir.1978); In re S.T.N. Enterprises, Inc., 70 B.R. 823, 832 (Bankr. D.Vt.1987). Items such as meetings, conferences, correspondence, and telephone calls should identify the participants, describe the substance of the communication, explain its outcome, and justify its necessity. In re S.T.N. Enterprises, Inc., 70 B.R. at 833.
Apart from the listing of telephone conversations, the debtor's attorney attended approximately eight creditor's meetings pursuant to 11 U.S.C. § 341, attended hearings involving his two unsuccessful motions to sell or assign the debtor's sole asset, attended a creditor's motion for relief from the automatic stay, attended the United States trustee's motion to convert the Chapter 11 case, prepared a fee application and a motion to be relieved as counsel for the debtor. In addition to preparing the Chapter 11 petition, he spent time preparing and amending a plan of reorganization which was never filed. In reviewing these activities in light of the twelve so-called Johnson factors delineated in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974), it cannot be determined to what extent the debtor's former counsel performed legal services which benefitted the estate. Accordingly, the application must be denied, without prejudice to the submission of a detailed fee application which complies with 11 U.S.C. § 330 and Bankruptcy Rule 2016. Should the applicant submit another fee application in this case he must also comply with the requirement expressed in 11 U.S.C. § 330 and submit a copy of the application with proper notice in advance of any scheduled hearing to all interested parties, including the United States trustee, the debtor and those unsecured creditors who have appeared in this case, such as the three petitioning creditors who filed the involuntary Chapter 7 petition.
CONCLUSIONS OF LAW
1. This court has jurisdiction of the subject matter and the parties pursuant to 28 U.S.C. §§ 1334 and 157(a). This is a core proceeding in accordance with 28 U.S.C. § 157(b)(2)(A).
2. The fee application filed by the former attorney for the debtor is denied because it does not comply with the requirements of 11 U.S.C. § 330(a) and Bankruptcy Rule 2016. Such denial is without prejudice to a resubmission in compliance with the foregoing mandates.
It is so ordered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3034126/ | FILED
NOT FOR PUBLICATION FEB 26 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
RAFAEL BERNAL URTIAGA, No. 07-73487
Petitioner, Agency No. A095-190-491
v.
MEMORANDUM *
ERIC H. HOLDER Jr., Attorney General,
Respondent.
On Petition for Review of an Order of the
Board of Immigration Appeals
Submitted February 16, 2010 **
Before: FERNANDEZ, GOULD, and M. SMITH, Circuit Judges.
Rafael Bernal Urtiaga, a native and citizen of Mexico, petitions pro se for
review of the Board of Immigration Appeals (“BIA”) order denying his motion to
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
JTK/Research
reopen removal proceedings. Our jurisdiction is governed by 8 U.S.C. § 1252.
We dismiss in part and deny in part the petition for review.
In his motion to reopen, Bernal Urtiaga presented evidence that his wife was
pregnant with their third child, but did not claim that the new child would suffer
hardship. The remaining evidence presented with the motion to reopen concerned
the same basic hardship grounds as Bernal Urtiaga’s application for cancellation of
removal. We therefore lack jurisdiction to review the BIA’s discretionary
determination that the evidence would not alter the agency’s prior discretionary
determination that Bernal Urtiaga failed to establish the requisite hardship. See
Fernandez v. Gonzales, 439 F.3d 592, 600 (9th Cir. 2006).
Our conclusion that we lack jurisdiction to review the BIA’s denial of
reopening forecloses Bernal Urtiaga’s contention that the BIA failed to
meaningfully review and analyze the issues raised in the motion. See id. at 603-04.
Bernal Urtiaga’s remaining contentions are not persuasive.
PETITION FOR REVIEW DISMISSED in part; DENIED in part.
JTK/Research 2 07-73487 | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1546216/ | 40 B.R. 683 (1984)
In the Matter of PINE ASSOCIATES, INC., Debtor.
AETNA CASUALTY & SURETY CO., Plaintiff,
v.
Michael A. DAURIA a/k/a Michael A. D'Auria, Patricia C. Dauria a/k/a Patricia C. D'Auria, Defendants.
Bankruptcy No. 2-82-00440, Adv. No. 2-84-0049.
United States Bankruptcy Court, D. Connecticut.
May 17, 1984.
*684 Dean M. Cordiano, Day, Berry & Howard, Hartford, Conn., for plaintiff.
Raymond A. Garcia, New Haven, Conn., for defendants.
MEMORANDUM AND ORDER ON PLAINTIFF'S MOTION FOR REMAND OF REMOVED PROCEEDING
ROBERT L. KRECHEVSKY, Bankruptcy Judge.
I.
BACKGROUND
Pursuant to 28 U.S.C. § 1478[1] and Fed. R.Bankr.P. 9027,[2] Pine Associates, Inc. (debtor) filed an application for removal to this court of the above-captioned proceeding from a Connecticut superior court. This matter now comes before the court on plaintiff's, The Aetna Casualty & Surety Co.'s (Aetna), motion, styled an application, to remand.[3] Gleaned from the pleadings *685 and memoranda filed by the parties, the history behind the motion is as follows.
Debtor commenced its chapter 11 case in the bankruptcy court on May 12, 1982. Prior to the filing of the bankruptcy petition, debtor was an operating general construction contractor. Aetna, in connection with certain construction contracts, issued payment and performance bonds for debtor. Debtor's principal shareholders, Michael A. Dauria and Patricia C. Dauria (indemnitors), agreed to indemnify Aetna for any amounts it expended in connection with debtor's bonds. Allegedly because of debtor's unreasonable delay in performance, Aetna, as debtor's bonding company, paid monies to the Housing Authority of the Town of Windsor, the Housing Authority of the Town of Wethersfield and Mystic River Homes, Inc., all of whom had contracts with debtor for the construction of housing for the elderly. On November 1, 1982, debtor filed in the bankruptcy court an adversary proceeding against Aetna and its counsel, Gordon, Muir & Foley (GMF), alleging that it was damaged by Aetna and GMF in the bond-claims resolution process. That proceeding, pursuant to a motion by the debtor to revoke the reference, is currently pending in the District Court for the District of Connecticut subsequent to remand from the Court of Appeals for the Second Circuit. See Pine Associates, Inc. v. The Aetna Casualty & Surety Company, 733 F.2d 208 (2d Cir.1984).
On November 15, 1983, Aetna filed a proof of claim against the estate for $255,614.98, the amount Aetna alleges it paid out on the bonds relating to the three construction contracts discussed above. On January 16, 1984, Aetna filed suit in Connecticut state court against the indemnitors on their indemnity obligations relating to those same three construction contracts. Aetna commenced this action with an ex parte attachment of realty to secure a potential judgment of $255,615.00. The debtor, on February 9, 1984, filed the application which removed that proceeding to this court. Aetna moved for remand of the removed proceeding on February 24, 1984. On April 3, 1984, Raymond A. Garcia, counsel for the debtor, filed an appearance as counsel for the indemnitors "for the limited purpose of appearing in opposition to" Aetna's motion for remand.
II.
AETNA'S ARGUMENTS FOR REMAND
Aetna makes the following arguments (rephrased somewhat) in favor of remand: (a) the application for removal is defective because it is signed only by the debtor which is not a party to the removed proceeding; (b) the state-court proceeding is nonremovable because it does not "relate to" debtor's Title 11 case within the meaning of 28 U.S.C. § 1471(b)[4]; (c) the proceeding should be remanded because it is a "related proceeding" within the meaning of the Emergency Resolution for the Administration of the Bankruptcy System (Emergency Resolution) and pursuant to § (d)(3) of the Emergency Resolution[5] this court cannot enter a final judgment or make a dispositive order concerning this proceeding without the consent of the parties; (d) equitable considerations compel remand of a proceeding against a Title 11 debtor's indemnitors. These contentions will be separately addressed.
*686 III.
SUFFICIENCY OF THE REMOVAL APPLICATION
Section 1478(a) which governs removal to the bankruptcy court provides that "a party" may remove a proceeding. See 28 U.S.C. § 1478(a). Aetna argues that because debtor is not a named party to the state-court proceeding, debtor's removal application is fatally defective.
In Frankford Trust Co. v. Allanoff (In re Dublin Properties), 20 B.R. 616, 9 B.C.D. 350, 6 C.B.C.2d 1123 (Bkrtcy.E.D. Pa.1982), rev'd as to contempt order, 9 C.B.C.2d 92 (E.D.Pa.1983), a similar argument was presented to the court. In Dublin, two banks had secured state-court judgments against two of debtor partnership's general partners. As part of a postpetition consent judgment with debtor, the banks transferred their rights in the judgments to debtor. The two general partners subsequently filed petitions in state court against the banks to have those judgments marked satisfied, or, in the alternative, opened. The debtor removed the state-court proceedings to the bankruptcy court. Dublin Properties, 20 B.R. at 618-19, 9 B.C.D. at 350-51, 6 B.C.2d at 1124-26. When the general partners argued that the debtor's removal application was defective because debtor was not a named party to the removed proceedings, the court replied:
First, both banks, who are parties to the state court [sic] proceedings, have stated that they are in favor of the removal of those proceedings to the bankruptcy court. Second, since the debtor asserts that it is the real party in interest in the state court [sic] proceedings, as holder of a legal or equitable interest in the judgments, the debtor could have moved to intervene or to be substituted as a party in the state court [sic] proceedings. To hold that the debtor could not remove those proceedings to this court because it was not technically a party to those proceedings would be to exalt form over substance.
Dublin Properties, 20 B.R. at 621, 9 B.C.D. at 352, 6 C.B.C.2d at 1128 (emphasis in original). Accord Cincinnati Milacron Marketing Co. v. Ramirez (In re Wesco Products Co.), 19 B.R. 908, 8 B.C.D. 1364 (Bkrtcy.N.D.Ill.1982). But see First National Bank of Nevada v. Johnie T. Patton, Inc. (In re Johnie T. Patton, Inc.), 12 B.R. 470 (Bkrtcy.D.Nev.1981).
The indemnitors, who are parties to the removed proceeding, join the debtor and argue for removal and against remand. And under Connecticut rules of procedure, see Conn.Gen.Stat. § 52-102; Conn.Prac. Book § 85,[6] debtor could have intervened and been made a party in the state-court proceeding to contest its underlying liability to Aetna. In the light of the broad discretion which § 1478(b) reposes in the bankruptcy court to remand or not to remand removed proceedings, compare 28 U.S.C. 1478(b) ("remand . . . on any equitable ground.") with 28 U.S.C. § 1447(c) (case removed pursuant to 28 U.S.C. §§ 1441-44 remanded if "removed improvidently and without jurisdiction. . . ."), the narrow construction of § 1478(a) which Aetna urges is not persuasive. See Part VI, infra.
IV.
"RELATED TO" JURISDICTION
A proceeding can only be removed to the bankruptcy court if the proceeding is within the jurisdiction of the bankruptcy court. See 28 U.S.C. § 1478(a). Aetna argues that this proceeding is not within the subject-matter jurisdiction of this court because a proceeding against a Title 11 debtor's guarantor or indemnitor is not "related to" the Title 11 case within the meaning of 28 U.S.C. § 1471(b).
*687 This argument has previously been rejected by a bankruptcy court in this district in a similar situation. In Plessey Precision Metals, Inc. v. The Metal Center, Inc. (In re The Metal Center, Inc.), 31 B.R. 458 (Bkrtcy.D.Conn.1983) (Shiff, B.J.), the plaintiff had instituted a prepetition suit against debtor and its guarantor. When debtor removed the proceeding, plaintiff argued its claim against debtor's guarantor was not removable because the bankruptcy court lacked jurisdiction over that claim. Judge Shiff rejected plaintiff's argument, saying:
Although the scope of the jurisdiction conferred by the words "related to" found in 28 U.S.C. § 1471 has been subject to various interpretations, see generally, In re General Oil Distributors, Inc., 21 B.R. 888, 9 B.C.D. 392, 394-95 n. 13 (Bkrtcy.E.D.N.Y.1982), numerous bankruptcy courts have found jurisdiction where, as here, a nondebtor has sued a debtor's guarantor. See In re Bretano's, Inc., 27 B.R. 90, 10 B.C.D. 157 (Bkrtcy.S.D.N.Y.1983) [___, rev'd on other g'nds, 36 B.R. 90 (S.D.N.Y.1984) (Assuming jurisdiction, stay of suit against debtor's guarantor was improper)]; In re Maine Marine Midland Corporation, 20 B.R. 426 (Bkrtcy.D.Me.1982); In re Brothers Coal Co., Inc., 6 B.R. 567, 6 B.C.D. 1066 (Bkrtcy.W.D.Va.1980); In re Johnie T. Patton, Inc., 12 B.R. 470 (Bkrtcy.D.Nev.1981); In re Greeman Motors, Inc., 22 B.R. 1 (Bkrtcy.D.N.M. 1982); In re Hartley, 16 B.R. 777 (Bkrtcy.N.D.Ohio 1982). I find this line of cases persuasive and accordingly conclude that the cause of action against [guarantor] is "related to" the . . . bankruptcy case within the meaning of 28 U.S.C. § 1471.
Metal Center, 31 B.R. at 460. See also Cincinnati Milacron Marketing Company v. Ramirez, (In re Wesco Products Co.), 19 B.R. 908, 8 B.C.D. 1364 (Bkrtcy.N. D.Ill.1982) (Suit against corporate treasurer who signed dishonored corporate checks). But see Kash & Karry Wholesale, Inc., 28 B.R. 66, 10 B.C.D. 239 (Bkrtcy.D.S.C.1982). After a review of the cases, I concur with Judge Shiff's holding that a proceeding against a debtor's surety is "related to" the debtor's Title 11 case within the meaning of 28 U.S.C. § 1471(b). Therefore, this proceeding is removable under 28 U.S.C. § 1478(a).
V.
RELATED PROCEEDING
The Second Circuit in Salomon v. Kaiser (In re Kaiser), 722 F.2d 1574 (2d Cir.1983) and Pine Associates, Inc. v. The Aetna Casualty & Surety Co. (In re Pine Associates, Inc.), 733 F.2d 208 (2d Cir.1984), has held that since Northern Pipeline Construction Co. v. Marathon Pipeline Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982), invalidated only the exercise by the bankruptcy court of the full scope of the jurisdiction granted the district courts in 28 U.S.C. § 1471(b), district court jurisdiction under § 1471(a) and (b) remained unaffected. The provisions of 28 U.S.C. § 1478 also remain intact.
The post Marathon decisions, which hold that 28 U.S.C. § 1471 was not invalidated in its entirety, apply a fortiori in support of the continued vitality of 28 U.S.C. § 1478. . . . Because the removal provisions carry no constitutional infirmities independent of those connected with 28 U.S.C. § 1471, which have been temporarily alleviated by the Emergency Rule, I conclude that 28 U.S.C. § 1478 remains in force. Just as proceedings are now commenced in the bankruptcy court and then "referred" there by the district court, Emergency Rule ¶¶ (b), (c)(1), so too proceedings may be removed to the bankruptcy court in the context of the referral by the district court.
Metal Center, 31 B.R. at 461. Contra Net Realty Holding Trust v. Orange-Co., Inc. (In re Lumara Foods of America, Inc.), 28 B.R. 83, 7 C.B.C.2d 1263 (Bkrtcy.E.D.N.Y. 1983).
Although Aetna's argument is labeled jurisdictional, a reading of Aetna's brief reveals that Aetna does not challenge this court's jurisdiction under the Emergency *688 Resolution to entertain this proceeding. Rather, Aetna points out that under § (d)(3)(B) of the Emergency Resolution, this court cannot render a final judgment or dispositive order in this proceeding and, pursuant to § (e)(2)(B) of the Emergency Resolution,[7] the district court may reject the bankruptcy court's proposed judgment or order and conduct its own hearing on the matter. Therefore, Aetna argues, the matter should be remanded to the Connecticut superior court which has "undisputed jurisdiction to render a judgment in Aetna's action," Plaintiff's Memorandum of February 24, 1984 at 6, without the possibility of duplicate factual hearings. In some situations, the possibility of delay inherent in the scheme of the Emergency Resolution may indicate that a remand is appropriate. See In re Tremblay, 31 B.R. 200 (Bkrtcy.D. Vt.1983) (State-court action had been pending twenty months and had been scheduled for trial in the state court five months before decision on motion for remand). Here, however, the state-court action had been pending only since January 16, 1984 before it was removed to the bankruptcy court on February 9, 1984. Moreover, there are additional, weightier equities in the proceeding, discussed in Part VI of this opinion, infra, which counsel against remand.
VI.
EQUITABLE GROUNDS FOR RETENTION OR REMAND
The equities can favor a remand of a removed proceeding against a debtor's surety when there are no special circumstances mandating retention. See, e.g., Midlantic National Bank/Citizens v. Comtek Electronics, Inc. (In re Comtek Electronics, Inc.), 23 B.R. 449, 7 C.B.C.2d 540 (Bkrtcy.S.D.N.Y.1982) ("If a creditor can recover on its debts from some other source than the debtor's assets, the Bankruptcy Court usually will not prevent such efforts.") However, when the debtor is actively litigating in federal court what could be a defense to the principal obligee's claim and a remand would expose the surety to possible inconsistent judgments, the equities weigh against remand. Metal Center, supra. See also Moore v. Kovac (In re Seven Water Holes Corp., Inc.), 29 B.R. 18 (Bkrtcy.W.D.La.1983) (Underlying debt stipulated to; "[a]s the liability of the debtor is admitted there is no danger of conflicting judgments being issued by the state court and the bankruptcy court.").
In the adversary proceeding currently pending before the district court, see Pine Associates, Inc. v. The Aetna Casualty & Surety Co., supra, the debtor alleges misconduct on the part of Aetna and GMF. Aetna's alleged misconduct may or may not be a proper surety defense available to indemnitors in the state-court proceeding. If indemnitors cannot raise Aetna's alleged misconduct as a defense, they are likely to have to pay Aetna. Even if indemnitors can raise Aetna's alleged misconduct as a defense, they may not prevail and, again, they will likely have to pay Aetna. A finding on the misconduct issue favorable to Aetna would not be binding on debtor, however. See Metal Center, 31 B.R. at 461-63 (Postpetition judgment against guarantor favorable to principal obligee not binding on debtor). If debtor prevails on the misconduct issue in the pending adversary proceeding, Aetna's claim may be disallowed or offset pursuant to 11 U.S.C. § 553. If Aetna's claim is disallowed or offset, the indemnitors' claim for reimbursement would be disallowed. See 11 U.S.C. § 502(e).[8] Therefore, if this proceeding *689 is remanded to the state court, indemnitors may have to pay Aetna but be unable to participate in any distribution from debtor's Title 11 estate.
One more point remains to be addressed. The district court has yet to decide where in the federal system, district court or bankruptcy court, the adversary proceeding, Pine Associates Inc. v. The Aetna Casualty & Surety Co., will be heard. If that proceeding is finally tried in the district court, there are procedural devices available such that the instant proceeding will not be tried independently of the above adversary proceeding and prior to it. The indemnitors, therefore, need not be exposed to the same risk of inconsistent verdicts in separate trials within the federal forum as they would experience as a result of separate trials in the state and federal fora. Matters must be taken one step at a time, however, and it is now appropriate for this court to hold only that the instant proceeding shall not be remanded to the state court.
VII.
CONCLUSION
For the reasons discussed above, Aetna's motion for remand is denied. It is
SO ORDERED.
NOTES
[1] Section 1478 of Title 28 of the United States Code provides:
(a) A party may remove any claim or cause of action in a civil action . . . to the bankruptcy court for the district where such civil action is pending, if the bankruptcy courts have jurisdiction over such claim or cause of action.
(b) The court to which such claim or cause of action is removed may remand such claim or cause of action on any equitable ground. An order under this subsection remanding a claim or cause of action, or a decision not so remanding, is not reviewable by appeal or otherwise.
28 U.S.C.A. § 1478 (West 1984 Supp.).
[2] Fed.R.Bankr.P. 9027REMOVAL.
(a) Application.
(1) Where Filed; Form and Content. An application for removal shall be filed in the bankruptcy court for the district and division within which is located the state or federal court where the civil action is pending. The application shall be verified and contain a short and plain statement of the facts which entitle the applicant to remove and be accompanied by a copy of all process and pleadings.
. . . . .
(d) Filing in Non-Bankruptcy Court. Removal of the claim or cause of action is effected on the filing of a copy of the removal application with the clerk of the court from which the claim or cause of action is removed. The parties shall proceed no further in that court unless and until the claim or cause of action is remanded.
[3] (e) Remand. A motion for remand of the removed claim or cause of action may be filed only in the bankruptcy court and shall be served on the parties to the removed claim or cause of action. A motion to remand shall be determined as soon as practicable. A certified copy of an order of remand shall be mailed to the clerk of the court from which the claim or cause of action was removed.
[4] Section 1471(b) of Title 28 of the United States Code provides:
[T]he district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under Title 11 or arising in or related to cases under title 11.
28 U.S.C.A. § 1471(b) (West 1984 Supp.).
[5] The Emergency Resolution for the Administration of the Bankruptcy System as adopted by the District Judges for the District of Connecticut provides in relevant part:
(d)(3)(A) Related proceedings are those civil proceedings that, in the absence of a petition in bankruptcy, could have been brought in a District Court or a State Court.
. . . . .
(B) In related proceedings the Bankruptcy Judge may not enter a judgment or dispositive order, but shall submit findings, conclusions and a proposed judgment or order to the District Judge, unless the parties to the proceeding consent to entry of the judgment or order by the Bankruptcy Judge.
[6] Section 52-102 and Practice Book § 85 are identically worded and provide as follows:
Any person may be made a defendant who has or claims an interest in the controversy, or any part thereof, adverse to the plaintiff, or whom it is necessary, for a complete determination or settlement of any question therein, to make a party.
Conn.Gen.Stat.Ann. 52-102 (West 1960); Conn. Prac.Book § 85 (1982).
[7] Section (e)(2)(B) of the Emergency Resolution provides:
In conducting review, the District Judge may hold a hearing and may receive such evidence as appropriate and may accept, reject, or modify, in whole or in part, the order or judgment of the Bankruptcy Judge, and need give no deference to the findings of the Bankruptcy Judge. At the conclusion of the review, the District Judge shall enter an appropriate order or judgment.
[8] Section 502(e) of the Bankruptcy Code provides:
(1) [T]he court shall disallow any claim for reimbursement or contribution of an entity that is liable with the debtor on, or has secured, the claim of a creditor, to the extent that
(A) such creditor's claim against the estate is disallowed.
11 U.S.C.A. § 502(e) (West 1979). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583774/ | 31 So.3d 566 (2010)
Kendall Blake GASWAY, Plaintiff-Appellee,
v.
CELLXION, INC., Defendant-Appellant.
Nos. 44,637-WCA, 44,638-WCA.
Court of Appeal of Louisiana, Second Circuit.
January 27, 2010.
*569 The Smith Law Office by Linda L. Smith, for Appellants The Gray Ins. Co. and Cellxion, Inc.
Fischer & Associates by Mark K. Manno, Shreveport, for Appellee Kendall Blake Gasway.
Before STEWART, GASKINS and LOLLEY, JJ.
STEWART, J.
Defendants/Appellants, Cellxion, Inc. and the Gray Insurance Company (referred to jointly as "Cellxion"), are appealing a judgment rendered in favor of Plaintiff/Appellee, Kendall Blake Gasway. Gasway has filed an answer requesting additional attorney's fees for this appeal. For the reasons set forth below, we affirm the lower court's judgment as amended and award an additional attorney's fee.
FACTS
On April 24, 2004, Gasway was injured while working for Cellxion as a mechanical technician. On July 23, 2004, Dr. Marco Ramos, who is Gasway's employee's physician of choice, performed lumbar disc surgery on him.
A Functional Capacity Evaluation ("FCE") was performed on December 28, 2005, which revealed that Gasway could work at medium duty. Dr. Ramos agreed with these findings.
Cellxion hired Alice Rogers Bond, a vocational rehabilitation counselor, to identify suitable jobs for Gasway. In January of 2006, Ms. Bond identified three suitable jobs: (1) Caddo Parish Code Enforcement Inspector, (2) Allied Waste Customer Service Representative, and an (3) Alexandria X-Ray position. She also met with Dr. Ramos at a rehabilitation conference on March 21, 2006, where he approved four suitable jobs for Gasway: (1) Shreveport Housing Inspector, (2) Shreveport Warehouse Supervisor, (3) Manpower Shipping and Receiving Manager, and (4) Time Warner Dispatcher. Neither Gasway nor his counsel attended the conference. Ms. Bond mailed Gasway a notice for these jobs, which he received via certified mail on March 24, 2006.
In April of 2006, Bond identified an additional suitable job as a City of Shreveport Code Enforcement Inspector. Gasway interviewed for the Shreveport Code Enforcement position. Unfortunately, Gasway never received a response from the City of Shreveport.
In May of 2006, Ms. Bond identified a suitable job at Adesa Auto Auction. When Ms. Bond informed Gasway of the job at Adesa, he expressed concern because of his personal relationships with some of its employees. Ms. Bond testified that she was unsure of whether Gasway applied for that position.
On April 9, 2007, another rehabilitation conference was held. At this conference, Dr. Ramos restricted Gasway from working pending the results of an MRI. On May 3, 2007, Dr. Ramos reviewed the MRI results and noted that the MRI showed some improvement with the scar tissue. He did not comment on Gasway's work status.
Dr. Ramos and Dr. Carl Goodman, who is the doctor selected by Cellxion to provide the second medical opinion, recommended pain management for Gasway. Based on these recommendations, Gasway submitted a request for pain management to the insurance adjuster in February of 2008. At the time of trial in August of *570 2008, the adjuster still had not approved pain management.
Prior to May 23, 2006, wage benefits were paid to Gasway at the rate of $375.84, based on an average weekly wage of $563.75. The insurance adjuster reduced the benefits based upon certain jobs identified by Bond. Accordingly, wage benefits were reduced and paid at the rate of $342.80 per month, from May 23, 2006 to date. Cellxion asserted that there was an overpayment of supplemental earnings benefits from February 14, 2006 to May 23, 2006, for which it is entitled to a reduction and/or credit against any benefits that might be owed.
Gasway subsequently filed a Disputed Claim Form 1008, asserting that the reduction in benefits was improper. He sought to recover additional supplemental earnings benefits as a result of a miscalculation or underpayment of indemnity benefits from May 23, 2006 to date, temporary total disability benefits from April 9, 2007 through May 3, 2007, attorney's fees, and court costs. He also asserted that he was entitled to penalties for the underpayment, for the failure to pay TTD during April, and for the failure to approve the therapy without a second opinion.
The worker's compensation judge (WCJ) found that Gasway's Average Weekly Wage (AWW) was $563.76 with a corresponding monthly wage of $2,442.92. He also found that Gasway could not return to his pre-accident job because of his injuries and that the job at Adesa Auto Auction was the only suitable job for the purpose of reducing benefits. The WCJ determined that Cellxion failed to properly determine the Supplemental Earnings Benefits (SEB) rate and declared the SEB to be $704.17 per month based on the Adesa Auto Auction job which pays $8.00 per hour. Therefore, the monthly SEB should be $704.17, a difference of $361.37 per month from the $342.80 actually paid. Gasway was entitled to the underpayment of $361.37 per month since May 23, 2006, and legal interest on this amount from the date of judicial demand.
Gasway was also awarded medical treatment in the form of pain management. Dr. Ramos, who is Gasway's treating physician, restricted him from work pending the outcome of an MRI. The WCJ determined that Gasway was entitled to temporary total disability (TTD) benefits in the amount of $900.06 for April and May 2007.
After finding that Cellxion was arbitrary, capricious, and unreasonable in its underpayment of benefits, its refusal to approve pain management, and its failure to pay TTD benefits, the WCJ awarded Gasway $8,000.00 in penalties. The WCJ also awarded Gasway $12,500.00 in attorney's fees and $544.75 in court costs. Cellxion filed the instant appeal, urging six assignments of error.
LAW AND DISCUSSION
Supplemental Earnings Benefits (SEB)
In the first assignment of error, Cellxion contends that Gasway was not entitled to additional SEB benefits because it proved that Gasway was able to earn at least 90% of his pre-accident wages. In the second assignment, Cellxion argues that it is entitled to an award for the overpayment of SEB benefits from February 14, 2006 to date. These assignments are discussed together due to their similarity.
Factual findings in worker's compensation cases are subject to the manifest error or clearly wrong standard of appellate review. Banks v. Industrial Roofing & Sheet Metal Works, Inc., 96-2840 (La.7/1/97), 696 So.2d 551. In applying the manifest error-clearly wrong standard, *571 the appellate court must determine not whether the trier of fact was right or wrong, but whether the factfinder's conclusion was a reasonable one. Id. Where there are two permissible views of evidence, a factfinder's choice between them can never be manifestly erroneous or clearly wrong. Thus, if the factfinder's findings are reasonable in light of the record reviewed in its entirety, the court of appeal may not reverse, even if convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Sistler v. Liberty Mutual Ins. Co., 558 So.2d 1106 (La.1990).
The purpose of SEBs is to compensate the injured employee for the wage earning capacity he has lost as a result of his accident. Banks, supra. Under the provisions of La. R.S. 23:1221(3)(a), an employee is entitled to receive SEBs if he sustains a work-related injury that results in his inability to earn 90 percent or more of her average pre-injury wage. La. R.S. 23:1221(3)(a); Frye v. Olan Mills, 44,192 (La.App. 2 Cir. 4/8/09), 7 So.3d 201; Smith v. Bossier Parish School Board, 39,590 (La.App. 2 Cir. 4/6/05), 899 So.2d 747, writ denied, XXXX-XXXX (La.11/28/05), 916 So.2d 147. Initially, the employee bears the burden of proving, by a preponderance of the evidence, that the injury resulted in his inability to earn that amount under the facts and circumstances of the individual case. Id. Once the employee's burden is met, the burden shifts to the employer who, in order to defeat the employee's claim for SEBs or establish the employee's earning capacity, must prove, by a preponderance of the evidence, that the employee is physically able to perform a certain job and that the job was offered to the employee or that the job was available to the employee in his community or reasonable geographic region. Lee v. Heritage Manor of Bossier City, 41,858 (La.App. 2 Cir. 3/14/07), 954 So.2d 276; Banks, supra; Daigle v. Sherwin-Williams Co., 545 So.2d 1005 (La.1989). Actual job placement is not required. Banks, supra.
The method of determining the amount of an award of SEBs is provided in La. R.S. 23:1221(3)(a):
For injury resulting in the employee's inability to earn wages equal to ninety percent or more of wages at the time of injury, supplemental earnings benefits equal to sixty-six and two-thirds percent of the difference between the average monthly wages at time of the injury and average monthly wages earned or average monthly wages the employee is able to earn in any month thereafter in any employment or self-employment, whether or not the same or similar occupation as that in which the employee was customarily engaged when injured and whether or not an occupation for which the employee at the time of the injury was particularly fitted by reason of education, training, and experience, such comparison to be made on a monthly basis. Average monthly wages shall be computed by multiplying his wages by fifty-two and then dividing the quotient by twelve.
As stated above, the WCJ found that Gasway established his inability to earn 90% of his pre-accident wages. Even though the WCJ determined that Cellxion proved that Gasway could perform the duties required for the Adesa Auto Auction job, he found that the other jobs submitted failed to meet the criteria required by Banks, supra.
Gasway testified that has trouble sitting or standing for long periods of time. He also stated that he suffers from "sharp pains, jerks, and jolts to his nervous system." *572 He also feels radiating pain primarily in his right leg and occasionally in his left leg. Gasway's testimony is supported by medical records. We agree with the WCJ's finding that Gasway was credible. Gasway clearly established his inability to earn 90% of his pre-accident wages.
The Caddo Parish Code Enforcement Inspector position required a bachelor's degree in construction technology and/or a minimum of five years of experience directly related to construction inspection. The record does not indicate that he met either of those requirements. Mr. Gasway's educational background includes a high school diploma and approximately two years of college. His resume failed to indicate the requisite five years of experience directly related to construction inspection.
The position at Alexandria X-Ray had already been filled, and a representative at Allied Waste informed Ms. Bond that although the company had not filled the position yet, she felt that Gasway was overqualified for the position. However, she indicated that she would consider hiring him.
The Shreveport Housing Inspector position, the Shreveport Warehouse Supervisor position, and the Time Warner Dispatcher position, which were all approved by Dr. Ramos at the rehabilitation conference on March 21, 2006, were not available. Gasway received written notice for these jobs via certified mail on March 24, 2006, which is the same day that the hiring period for these jobs closed. Bond submitted Gasway's resume to the final job approved at the March 21, 2006 rehabilitation conference, which was the Manpower Shipping and Receiving Manager, but she never received any communication from the company.
When Gasway applied for the fifth suitable job as a City of Shreveport Code Enforcement Inspector, he never received a response from the City of Shreveport. In May of 2006, Ms. Bond identified a suitable job at Adesa Auto Auction. Even though Gasway expressed concern about this job because of his personal relationships with some of its employees, that does not deem the job unsuitable. Therefore, Cellxion adequately proved this job availability.
It was Cellxion's burden to show that the proposed jobs were available. The record shows that when Gasway was made aware of the proposed jobs, either the application time had expired, the application time was to expire that day, or Gasway was not qualified for the position. The only proposed job that was available and suitable was the Adesa Auto Auction job.
Based on the evidence presented, we conclude that the WCJ did not err in finding that the correct SEB rate for Gasway was $704.14, which was based on the Adesa Auto Auction job. Gasway is entitled to the underpayment of $361.37 per month since May 23, 2006, and legal interest on this amount from the date of judicial demand.
Cellxion was unable to prove that Gasway was able to earn at least 90% of his pre-accident wages. Therefore, Cellxion is not entitled to an award for the overpayment of SEB benefits from February 14, 2006 to date. The award of additional SEB benefits is affirmed.
Temporary Total Disability (TTD) Benefits
Cellxion asserts in the third assignment that Gasway was erroneously awarded TTD benefits in the amount of $900.06 *573 from April 9, 2007 to May 3, 2007 because he did not adequately establish his entitlement to those benefits by clear and convincing evidence. Cellxion contends that it showed that Gasway had wage-earning capacity.
A claimant is entitled to TTD benefits if he proves by clear and convincing evidence, unaided by any presumption of disability, that he is physically unable to engage in any employment or self-employment, regardless of its nature, including employment while working in pain. La. R.S. 23:1221(1); Read v. Pel-State Oil Company, 44,218 (La.App. 2 Cir. 5/20/09), 13 So.3d 1191; Morrison v. First Baptist Church of West Monroe, 44,189 (La. App. 2 Cir. 4/8/09), 7 So.3d 873. A claimant who can perform light duty work is not entitled to TTD benefits. Holden v. International Paper Co., 31,104 (La.App.2d Cir.10/28/98), 720 So.2d 442, writ denied, 98-2956 (La.1/29/99), 736 So.2d 834.
To prove a matter by clear and convincing evidence means to demonstrate that the existence of a disputed fact is highly probable, i.e., much more probable than its nonexistence. Id. A claimant may prove disability through medical and lay testimony. Read, supra.
At the April 9, 2007, rehabilitation conference, Dr. Ramos restricted Gasway from working pending the results of an MRI. On May 3, 2007, Dr. Ramos reviewed the MRI results and noted that the MRI showed some improvement with the scar tissue. He did not comment on Gasway's work status.
Dr. Ramos restricted Gasway from work between April 9, 2007 and May 3, 2007, which was the date on which Dr. Ramos reviewed the MRI results. Gasway was not to work in any capacity. The record does not include any medical opinion to the contrary.
We agree with the WCJ's determination that Gasway was entitled to TTD benefits in the amount of $900.06. Gasway should have been paid $375.84/week in TTD or $53.69/day, which comes to $1,127.49 over the 21 days. He was actually paid SEB of $324.80/month or $10.83/day, a credit of $227.43 over the 21-day period. The WCJ rightly awarded him the difference in the amount $900.06. The assignment of error is meritless.
Attorney's Fee Award/Penalties
In the fourth assignment of error, Cellxion alleges that Gasway was not entitled to an award of attorney's fees and penalties because it provided vocational rehabilitation services, it conducted a reasonable investigation, and it reasonably controverted this claim that resulted in their reduction of the SEBs. It further asserts that Gasway's counsel has failed to set forth a sufficient basis to allow such an award, given the narrow scope of the issues raised herein and the challenges to Gasway's wage-earning capacity through legitimate vocational rehabilitation services.
Penalties and attorney's fees may be awarded for failure to provide payment of indemnity or medical benefits. La. R.S. 23:1201(F); Moore v. Transmissions, Inc., 41,472 (La.App. 2 Cir. 9/27/06), 940 So.2d 694. It is a well-established jurisprudential principle that the determination of whether an employer is to be assessed attorney's fees and penalties is a question of fact and the WCJ's findings shall not be disturbed absent manifest error. Alford v. Acadian Ambulance Service, 96-639 (La.App. 3 Cir. 11/6/96), 682 So.2d 942.
*574 After finding the Cellxion was arbitrarious, capricious, and unreasonable in its underpayment of benefits, in its failure to approve pain management, and in its failure to pay TTD benefits, the WCJ found that Gasway was entitled to penalties in the amount of $4,000.00.
Cellxion erroneously based Gasway's reduction of SEB benefits on jobs that either had an expired application time or that he was not qualified for. Cellxion failed to pay Gasway TTD benefits even though Dr. Ramos clearly restricted him from working in any capacity pending the results of an MRI. Cellxion even refused to approve pain management for Gasway even though two doctors recommended it. We agree with the WCJ in determining that Cellxion was indeed arbitrary and capricious in its behavior. Gasway is entitled to penalties in the amount of $4,000.00.
Gasway asserts that his counsel spent at least 74 hours preparing for trial. Considering the number of depositions taken and the discovery necessary to prepare this matter for trial, we cannot say that the WCJ erred in awarding Gasway $12,500.00 in attorney's fees. This assignment of error is meritless.
Vocational Rehabilitation Records
In the fifth assignment, Cellxion asserts that Gasway is not entitled to recover costs for vocational rehabilitation records erroneously termed "medical records" and for deposition records, when the witnesses testified live at trial and the depositions were not introduced into evidence.
WCJ erroneously awarded Gasway $574.75 in cost and expenses because said amount included items which are not recoverable under Louisiana law pursuant to La. C.C.P. art. 1920. La. C.C.P. art. 1920 reads:
Unless the judgment provides otherwise, costs shall be paid by the party cast, and may be taxed by a rule to show cause.
Except as otherwise provided by law, the court may render judgment for costs, or any part thereof, against any party, as it may consider equitable.
Gasway's counsel submitted the following list of costs, with an attached affidavit, and copies of check stubs:
Filling fee $ 30.00
Copy of vocational rehabilitation records $ 75.00
Deposition of Alice Bond $267.75
Deposition of Brenda Guillot $172.00
_______
$544.75
Due to a mathematical error, the WCJ erroneously awarded Gasway $574.75 in cost and expenses when the costs actually totaled $544.75. Additionally, during oral argument at this court, Gasway's counsel conceded that the depositions of Alice Bond and Brenda Guillot were not submitted into evidence. Jurisprudence has established that copies of documents that are used privately by a party are not taxable as costs of the suit. Beattie v. Dimitry, 168 La. 81, 121 So. 581 (La.1929). Therefore, the costs of the two depositions, amounting to $439.75, must be reduced from Gasway's award.
Cellxion objects to the copies of vocational rehabilitation being recovered and misidentified as "medical records" because vocational rehabilitation services are not medical services and do not constitute medical records. The WCJ was not manifestly erroneous in determining that the vocational rehabilitation services constituted medical services.
Based on these findings, we order that the $574.75 awarded in costs and expenses be reduced to $105.00.
*575 Reduction in Benefits
In the sixth and final assignment of error, Cellxion asserts that it is entitled to a 50% reduction of any benefits awarded because Gasway failed to cooperate with vocational rehabilitation services.
When an employee has suffered a work-related injury, he is entitled to prompt rehabilitation services. La. R.S. 23:1226(A). The employer is responsible for selecting a licensed professional vocational rehabilitation counselor to evaluate the claimant in job placement or vocational training. La. R.S. 23:1226(B)(3)(a). If the employer refuses to provide these services, the claimant may file a claim for review; such claim must be heard on an expedited basis, as provided by La. R.S. 23:1224(B). The claimant must also accept rehabilitation, as set forth in La. R.S. 23:1226(B)(3)(c).
A plain reading of this provision shows that the 50% reduction hinges on the refusal to accept rehabilitation as deemed necessary by the WCJ. Freeman v. Chase, 42,716 (La.App. 2 Cir. 12/5/07), 974 So.2d 25. An order of rehabilitation by the WCJ, perhaps by the expedited process of La. R.S. 23:1224(B), is obviously required. Id.
Jurisprudence requires an "order of rehabilitation" from a WCJ before benefits can be reduced. There is no such order in the instant record. Therefore, this assignment of error is meritless.
Answer to Appeal
In his answer to the appeal, Gasway is requesting an award of additional attorney's fees for defending the appeal. He asserts that undersigned counsel has spent approximately 15 hours on this appeal and requests $3,000.00 in attorney's fees.
A worker's compensation claimant is entitled to an increase in additional attorney's fees to reflect additional time incurred in defending the employer's unsuccessful appeal. Frith v. Riverwood, Inc., XXXX-XXXX (La. 1/19/05), 892 So.2d 7. Taking into consideration the complexity of the case and the fact that the WCJ already awarded counsel a fee of $12,500.00 for its work at the trial level, we find an additional fee of $2,524.35 is warranted.
CONCLUSION
For these reasons, the judgment of the Office of Worker's Compensation is affirmed as amended. Gasway's award of $574.75 in costs and expenses is reduced to $105.00. The Judgment is further rendered in favor of Gasway for an additional attorney's fee in the amount of $2,524.35.
AFFIRMED AS AMENDED. ADDITIONAL ATTORNEY'S FEE AWARDED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583823/ | 728 N.W.2d 224 (2006)
TITUS
v.
STATE.
No. 06-0072.
Iowa Court of Appeals.
December 13, 2006.
Decision without published opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918772/ | 90 N.J. Super. 464 (1966)
218 A.2d 158
STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
JOHN S. MASON, DEFENDANT-APPELLANT.
Superior Court of New Jersey, Appellate Division.
Argued February 14, 1966.
Decided March 18, 1966.
*466 Before Judges CONFORD, KILKENNY and LEONARD.
Mr. Otto C. Staubach argued the cause for appellant (Mr. Lester Weiner (assigned counsel), attorney.)
Mr. Dominick A. Mirabelli, Assistant County Prosecutor, argued the cause for respondent (Mr. Leo Kaplowitz, Union County Prosecutor, attorney).
The opinion of the court was delivered by CONFORD, S.J.A.D.
This is an appeal from denial by the Union County Court of defendant's application for post-conviction relief sought under R.R. 3:10A, adopted by the Supreme Court effective January 2, 1964. Basically, defendant seeks to void his 1960 conviction for armed robbery because of the denial of his motion pending trial to dismiss the indictment on grounds of violation by the State of the Interstate Agreement on Detainers ("Interstate Agreement," hereinafter) to which New Jersey became a party April 18, 1958 by act of the Legislature. L. 1958, c. 12 (N.J.S. 2A:159A-1 *467 et seq.). Apart from the merits of defendant's position in that regard, he urges that post-conviction relief under R.R. 3:10A is an appropriate remedy because his earlier efforts to obtain appellate review of the 1960 decision against him were improperly rebuffed by this court as untimely and a 1962 attempt to secure post-conviction relief by means of habeas corpus was rejected on procedural grounds.
Defendant was indicted in Union County for armed robbery on July 2, 1958. While serving a term of imprisonment at the Green Haven State Prison at Stormville, New York, defendant received a letter dated January 7, 1959 from an assistant prosecutor of Union County requesting advisement as to whether he would "voluntarily consent to return to Union County for the purpose of arraignment and trial only in reference to Indictment No. 415 M-57 in which you and are charged with armed robbery * * *." It should be here noted that it is not claimed by the State that written request was made at that time to any authorities of the State of New York for temporary custody or availability of the defendant, or that any New Jersey court "approved, recorded or transmitted" any such request, both of which are required for the inception of a proceeding by a receiving jurisdiction under Article IV of the Interstate Agreement. (The significance of these observations will appear infra.)
On January 22, 1959 there was received in the office of the Union County Prosecutor a form document obviously prepared by the correctional authorities of New York State for use in proceedings under the Interstate Agreement. This was entitled "Inmate's Notice and request," subtitled "(Pursuant to the provisions of the Code of Criminal Procedure, Section 669b[1])," addressed to the "District Attorney" of Union County and the Superior Court "of Union County," dated January 20, 1959, signed by defendant, and it requested "that a final disposition be made of the following Indictment * * * now pending against him * * *," designating the then pending *468 indictment for armed robbery. Along with the described notice was enclosed a "Certificate of Inmate Status," signed by the warden of the New York prison and specifying six items of information concerning defendant (such as term of commitment under which prisoner is being held, time already served, etc.), all required to be so certified by Article III of the Interstate Agreement, that Article specifying the procedure to be followed when the provisions of the act are invoked by a prisoner.
On February 20, 1959 the prosecutor wrote to the warden of Green Haven Prison acknowledging receipt of an original and copy of the Inmate's Notice and Request and of the Certificate of Inmate Status "pursuant to provisions of Code of Criminal Procedure, Section 669-b," and advising that the originals of each had been filed in the office of the Clerk of Union County. The letter stated that the prosecutor would accept the offer of the defendant to voluntarily return for trial of the indictment provided he "expressly waives his extradition rights and consents to accompany an authorized agent of this State * * *." It closed with a request that such consent and waiver be forwarded pursuant to Article V of the Interstate Agreement. Respecting this communication, it is noteworthy that paragraph (e) of Article III provides that any request for final disposition by a prisoner under that article shall also be deemed to be a waiver of extradition with respect to any charge contemplated thereby; also that Article V of the act provides that in response to a request made under Article III or Article IV the appropriate authority in the sending state "shall offer to deliver temporary custody" of the prisoner to the appropriate authority in the receiving state.
On May 7, 1959 the warden of Green Haven Prison sent the prosecutor a formal offer to deliver temporary custody of the prisoner for purposes of "speedy and efficient" trial of the indictment "as requested by the prisoner in his notice forwarded to you January 20, 1959" and "pursuant to Article V" of the Interstate Agreement. There was also enclosed another *469 "Certificate of Inmate Status" dated May 6, 1959 and a waiver of extradition signed by the defendant.
On May 13, 1959 the prosecutor wrote to the warden of Green Haven Prison that he would accept temporary custody of the prisoner on or about June 18, 1959. On May 14, 1959 he inquired as to the earliest date the prisoner would be available. After receiving a response dated May 18, 1959 that the prisoner could be picked up any weekday, the prosecutor wrote the warden May 27, 1959 to the effect that "because of the crowded condition of our court calendar we could not conceivably accommodate Mr. Mason before the September Session of the court." On August 14, 1959 the chief Union County detective wrote the warden that defendant's case had been set for trial September 14, 1959 and that custody of him would be taken September 2, 1959. The warden was asked to ascertain from defendant whether he desired the New Jersey court to assign him counsel.
On August 28, 1959 defendant wrote the prosecutor that he no longer consented to extradition because of the lapse of 180 days from the date (January 20, 1959) of his request for disposition of the indictment. He was thereby apparently relying upon the same provisions of the Interstate Agreement he urges on this appeal. N.J.S. 2A:159A-3(a); 159A-5(c). Nevertheless, the New York authorities delivered custody to the prosecutor's representatives on October 10, 1959 at the prosecutor's request.
On October 23, 1959 defendant was arraigned and pleaded not guilty, and counsel was assigned to represent him. Defendant thereupon made a motion returnable January 18, 1960 to dismiss the indictment with prejudice by reason of failure of the State to try him within 180 days after his request under the Interstate Agreement in January 1959 that final disposition of the indictment be made. The record does not show what, if any, steps were taken by the State to set a trial date between October 23, 1959 and the filing of defendant's motion.
*470 For the better understanding of the basis for the denial by the Union County Court of defendant's motion and of the procedural steps in the matter thereafter, we now fill in the outline of the Interstate Agreement, portions of which have already been adverted to. This legislation has been the subject of discussion in previous decisions in this State, none of which are determinative of the meritorious questions now presented for adjudication. See State v. Masselli, 43 N.J. 1 (1964); State v. West, 79 N.J. Super. 379 (App. Div. 1963); State v. Chirra, 79 N.J. Super. 270 (Law Div. 1963); Carrion v. Pinto, 79 N.J. Super. 13 (App. Div. 1963). See also the comprehensive analysis of the background of the act in People v. Esposito, 201 N.Y.S.2d 83 (Cty. Ct. 1960).
Article I of the Interstate Agreement (N.J.S. 2A:159A-1) states its purpose and object as follows:
"The party States find that charges outstanding against a prisoner, detainers based on untried indictments, informations or complaints, and difficulties in securing speedy trial of persons already incarcerated in other jurisdictions, produce uncertainties which obstruct programs of prisoner treatment and rehabilitation. Accordingly, it is the policy of the party States and the purpose of this agreement to encourage the expeditious and orderly disposition of such charges and determination of the proper status of any and all detainers based on untried indictments, informations or complaints. The party States also find that proceedings with reference to such charges and detainers, when emanating from another jurisdiction, cannot properly be had in the absence of cooperative procedures. It is the further purpose of this agreement to provide such cooperative procedures."
It has been properly held that since the purpose of this statute is remedial, it should be accorded liberal construction in favor of prisoners within its purview. State v. West, supra, 79 N.J. Super., at p. 384; State v. Chirra, supra, 79 N.J. Super., at p. 277; People v. Esposito, supra, 201 N.Y.S.2d, at pp. 88-89. And Article IX states that: "This agreement shall be liberally construed so as to effectuate its purposes." But note the caveat in State v. Masselli, supra, as to situations wherein the prisoner "maneuvers to frustrate the effort *471 of the prosecution" to give him the benefit of the statute. 43 N.J., at p. 12.
As already indicated, the act contemplates that its machinery is invocable either by the prisoner, under Article III (N.J.S. 2A:159A-3), or by the prosecutor of a receiving state, under Article IV (N.J.S. 2A:159A-4). Time periods for consummation of such procedures by trial of the pending charges are set forth in the respective Articles, and sanctions relevant to the default asserted by this defendant are contained in Article V. Where the act is invoked by the prisoner, Article III (a) provides that "he shall be brought to trial within 180 days after" he causes to be delivered to the prosecutor and court the statutory notice and demand, "provided that for good cause shown in open court, the prisoner or his counsel being present, the court having jurisdiction of the matter may grant any necessary or reasonable continuance."
Under Article IV, where the appropriate officer of the receiving state invokes its provisions by the means specified in (a) thereof, (c) thereof provides that: "In respect of any proceeding made possible by this Article, trial shall be commenced within 120 days of the arrival of the prisoner in the receiving State," coupled with a proviso for empowering a grant of continuance by the court set forth in the same phraseology as contained in Article III as quoted above.
Article V(c) (N.J.S. 2A:159A-5(c)) sets forth the provision for sanctions relied upon by defendant as follows:
"(c) If the appropriate authority shall refuse or fail to accept temporary custody of said person, or in the event that an action on the indictment, information or complaint on the basis of which the detainer has been lodged is not brought to trial within the period provided in Article III or Article IV hereof, the appropriate court of the jurisdiction where the indictment, information or complaint has been pending shall enter an order dismissing the same with prejudice, and any detainer based thereon shall cease to be of any force or effect."
The only express provision for tolling the time periods specified in Articles III and IV is that stated in Article VI (N.J.S. 2A:159A-6): "[W]henever and for as long as the *472 prisoner is unable to stand trial, as determined by the court having jurisdiction of the matter."
I.
The trial court denied defendant's pretrial motion to dismiss the indictment with prejudice on the following grounds: (1) this was a proper case for a continuance by the court beyond the 180 days specified by the act; (2) the 120-day period after arrival in the receiving state was applicable, and that period had not expired when the motion was made; (3) trial is timely if had at any time before the return of the prisoner to the original place of imprisonment. We find none of these grounds to have merit.
As to that last stated, the reliance by the court was on the last sentence of N.J.S. 2A:159A-3(d), intended primarily to void all untried indictments in the receiving state for which detainers were lodged against the prisoner, if not tried before his return to the sending state, where he invoked Article III. Patently there is no intent thereby to undo or supplant the 180-day period prescribed by (a).
The 120-day period after arrival in the receiving state was not here applicable for the simple reason that the Interstate Agreement was not invoked by the prosecutor but solely by the defendant. The January 7, 1959 informal letter from the prosecutor to the prisoner neither referred to the Interstate Agreement, nor, as his been noted above, complied with the specific requirements of Article IV(a) of the act for bringing that Article into play. To hold otherwise would do patent violence to the precept for liberal construction of the statute in favor of prisoners. This conclusion is reinforced by the prisoner's disregard of the letter and institution of his own procedure under Article III of the Interstate Agreement on January 20, 1959, with the aid of the New York prison authorities, and with substantial compliance with the provisions thereof. It is noteworthy that on September 8, 1959, in replying to an inquiry about the history of this matter from the office of the counsel to the Governor, the prosecutor wrote: *473 "The above-mentioned prisoner * * * gave us a purported notice and certificate pursuant to N.J.S.A. 2A:159a-3 (sic) requesting final disposition of his case on January 22, 1959." (Emphasis ours)
It is clear to us that Article III(a) was here applicable, and it is obvious that the 180-day period specified therein had expired when the defendant's motion came on to be heard January 18, 1960, whether that period is deemed to have been incepted on January 22, 1959 or on May 7, 1959, when the warden of Green Haven Prison sent the prosecutor the formal tender of temporary custody.[2]
Nor can we accept the trial court's determination that the Interstate Agreement contemplates that the court in the receiving state may, notwithstanding the previous lapse of the 180-day period specified by Article III(a), extend that period by a "continuance." Once the 180-day period has expired without trial of the indictment (or previous grant of continuance thereof for good cause) the act in mandatory language dictates its dismissal "with prejudice." N.J.S. 2A:159A-5(c) (quoted above). As already noted, nothing can toll the running of the 180-day period except inability of the prisoner to stand trial if so determined by the court. N.J.S. 2A:159A-6. Certainly the August 1959 effort of the defendant by letter to the prosecutor to withdraw his previous consents to extradition, constructive and actual, could not have had that effect as a matter of law. It would be nugatory even if the 180-day period had not expired by then. In any event, it was not prejudicial to the prosecutor since (1) he ignored it and took custody of the defendant, and (2) the *474 180-day period had in fact already expired (see fn. 2, supra). The intervening court vacation and the crowded condition of the trial calendars may possibly have warranted a discretionary continuance of trial beyond the 180 days, if applied for before the expiration thereof, but those circumstances do not per se toll the running of the period.
To hold that the prosecutor may permit the 180-day period to expire, and then, at any time thereafter when the prisoner moves to invoke the sanction of dismissal, resist that application by a request for extension nunc pro tunc of the period, would be to eviscerate a vital element of the statutory scheme designed to effectuate its salutary policy. Cf. State v. Chirra; People v. Esposito, both supra. Strict enforcement of the literal terms of the statute in this regard visits no hardship on prosecutors, since they may make timely requests for necessary continuances, and at the same time it stimulates prompt and expeditious disposition of the class of indictments within the legislative concern.
We conclude that denial of defendant's motion to dismiss the indictment was error.
II.
We pass to consider whether procedural considerations preclude grant to defendant on this post-conviction application of the substantive relief he was erroneously denied in 1960. The oral ruling against defendant on January 18, 1960 was incorporated in a formal order entered the same day, and trial of the indictment began that day. A jury verdict of guilt was rendered February 3, 1960, and defendant was sentenced March 11, 1960 to a 5-7-year term of imprisonment, to commence upon expiration of the term he was serving in New York.
On February 28, 1960 the defendant drew (pro se) and signed a handwritten document on stationery of the Union County jail, where he was apparently confined awaiting sentence, headed "Notice of Appeal." This was addressed to "Clerk of Union County Court," with an indorsement noting *475 transmittal of copies to the prosecutor and the Attorney General. A copy thereof is stamped received by the prosecutor's office February 29, 1960 and by the Union County Clerk's office March 22, 1960. Moreover, the copy submitted to us bears a handwritten legend in writing different from the handwriting in the body of the notice of appeal: "Sent true copy to Clerk of Superior Court Appellate Division, Trenton, N.J. 3-22-60 W.M." (Upon inquiry we are informed that Wilbert Miles was a clerk in the office of the Union County Clerk at that time.) The body of the notice of appeal is directed to the denial of the motion for dismissal of the indictment and recites that the signer is without funds and is filing the notice as a pauper. For reasons not apparent in the records, this notice never fructified into a docketed appeal. (R.R. 1:2-8(a) required the clerk of the trial court to send a copy of the notice to the clerk of the appellate court for docketing.)
On June 6, 1960, on stationery of the New York prison at Stormville (Green Haven), the defendant wrote to the assignment judge of Union County, with notation of transmittal of copy to the clerk of the Superior Court, Appellate Division, styling his plea as that of a pauper, advising that he had filed a notice of appeal, and requesting that he be supplied without cost with copies of the "trial minutes, indictment, warrant" and "all other papers relative to his trial," as he needed same to "perfect an effective appeal." A judge of the Union County Court replied under date of June 7, 1960 advising defendant that his application should be made to the Appellate Division of the Superior Court. A formal (pro se) petition to this court for leave to appeal from the conviction as an indigent was sworn to June 28, 1960, filed July 5, 1960, and denied by order dated November 5, 1960 as having been filed out of time.[3] The clerk's file in that matter shows only the petition and order.
*476 Defendant's next step was to file an application for habeas corpus November 5, 1962. He was assigned counsel and the matter was heard in the Union County Court December 20, 1962. At the conclusion of the hearing the writ was dismissed on the sole ground that the defendant was improperly using habeas corpus to serve the function of an appeal which he had neglected to take in time. Successive applications for leave to appeal in forma pauperis from that ruling were denied by this court and by the Supreme Court as without merit. It does not appear that either court had before it in the detail described above the efforts of the defendant without aid of counsel to gain appellate review of the January 18, 1960 order of the county court and of the judgment of conviction. Nor, of course, did defendant have the aid of counsel in either of the last mentioned applications for leave to appeal in forma pauperis to the Appellate Division and the Supreme Court, respectively.
The current application for post-conviction relief, filed by defendant pursuant to R.R. 3:10A, was heard by a Union County Court judge December 18, 1964, defendant being represented by assigned counsel. After hearing, the petition was denied on the sole ground that it was barred by R.R. 3:10A-5, which provides that a prior adjudication upon the merits of any ground for relief in the proceedings resulting in the conviction shall be conclusive on the parties. Thus, defendant was held bound by the pretrial dismissal of his motion in 1960, his reliance then and now being upon the dismissal provisions of the Interstate Agreement discussed at length above.
If, however, defendant's efforts to appeal the trial court determinations in the conviction proceedings were improperly thwarted, R.R. 3:10A-5 could obviously not be fairly applied to bar his present effort to secure relief, under R.R. 3:10A-2 (a), for "substantial denial in the conviction proceedings of defendant's rights under the * * * laws of the State of New Jersey." While, to be sure, the post-conviction remedy may not be used as a substitute for direct appeal *477 from the conviction, State v. Smith, 43 N.J. 67, 74 (1964), that consideration does not apply if what is now determined to have been a timely appeal was at the time denied prosecution. We thus investigate whether the efforts at appeal made by defendant in 1960 should be deemed to have preserved his right to obtain the appellate determination he has been pressing for ever since.
The judgment of conviction of defendant entered March 11, 1960 (date of sentencing) was appealable within three months, or on or before June 11, 1960, R.R. 1:3-1(a), by filing a notice of appeal with the County Court, R.R. 1:2-8(a). Moreover, this court had the power to extend the time for appeal an additional 30 days on a showing of good cause. R.R. 1:27B(d). Interlocutory orders in criminal causes such as the order of January 18, 1960 denying the motion to dismiss the indictment were, in 1960, subject to discretionary review in the Appellate Division by leave of court applied for within ten days. R.R. 2:2-3(a); 3:5-5(b)(6)(a). (See R.R. 1:2-4(c)(1), as amended July 27, 1961, effective September 11, 1961.) The order of January 18, 1960 was, of course, reviewable in any event upon appeal from the final judgment of conviction.
As seen above, defendant on two occasions prior to June 11, 1960 did make attempts to appeal from the denial of his motion to dismiss the indictment, directly or indirectly. On both occasions he was incarcerated, indigent (or claiming so to be, with no indication of the contrary), and without legal representation or advice of counsel. On February 28, 1960 defendant sent a notice of appeal to the Union County Court which was stamped filed there March 22, 1960. Viewed as an attempted review of the order of January 18, 1960, it was technically ineffective because beyond ten days and not the subject of leave granted by this court. Viewed as an appeal from the judgment of conviction, it was premature. However, defendant's letter to the assignment judge of June 6, 1960 (still within the three-month appeal period) requesting leave to appeal in forma pauperis, and referring to his having filed *478 a notice of appeal, manifested objectively a continuing bona fide intention to prosecute an appeal which he thought was then already pending. Furthermore, had defendant had counsel to advise him, the petition for leave to appeal filed July 5, 1960 could have been validated as a timely appeal within the 30-day extension period allowable under R.R. 1:27B(d). Such an application would have merited favorable action under the circumstances.
It is the general rule that attempts to appeal within time by convicted defendants, particularly when incarcerated and not having advice or assistance of counsel, will be liberally appraised so as to save the right of review where reasonably possible as against objections of untimeliness. See Coppedge v. United States, 369 U.S. 438, 442, fn. 5, 82 S.Ct. 917, 8 L.Ed.2d 21 (1962); Lemke v. United States, 346 U.S. 325, 74 S.Ct. 1, 98 L.Ed. 3 (1953) (notice of appeal filed prior to judgment); Fallen v. United States, 378 U.S. 139, 84 S.Ct. 1689, 12 L.Ed.2d 760 (1964) (delivery of notice to prison authorities for mailing to court); Williams v. United States, 88 U.S. App. D.C. 212, 188 F.2d 41 (D.C. Cir. 1951) (same); O'Neal v. United States, 272 F.2d 412 (5 Cir. 1959) (appeal bond filed in District Court); Belton v. United States, 104 U.S. App. D.C. 81, 259 F.2d 811 (D.C. Cir. 1958) (letter written to District Court; appeal saved on collateral attack three years later); Pratti v. United States, 350 F.2d 290 (9 Cir. 1965) (receipt of notice by clerk of court sufficient although no payment of filing fee).
See also Ford v. State, 138 N.W.2d 116 (Iowa Sup. Ct. 1965) (appeal entrusted to prison officer will be saved where late filing because of wrongful omission by officer):
"[A]lthough the state has no duty to see that every convicted prisoner perfects an appeal * * * the courts of this state are alert to protect the right of an imprisoned defendant, acting in propria persona, to appeal from a judgment of conviction of crime where he diligently attempts to timely initiate and prosecute such an appeal."
Application of Gonsalves, 48 Cal.2d 638, 311 P.2d 483, 488 (Sup. Ct. 1957) (placing in prison outgoing mail of letter of *479 appeal which was never delivered); Keeton v. State, 278 Ala. 81, 175 So.2d 774 (Ala. Sup. Ct. 1965); Perez v. State, 143 So.2d 663 (Fla. App. 1962); Relf v. State, 267 Ala. 3, 99 So.2d 216 (Sup. Ct. 1957).
The Supreme Court of this State has heretofore, by informal directions to this court, indicated that where a substantial effort has been made by an incarcerated defendant to appeal a conviction within the time limited, including an application for leave to appeal in forma pauperis, jurisdiction over the appeal should be accepted. That view is in harmony with the authorities cited above. We deem it applicable here. Under all the attendant circumstances, and having in view the totality of defendant's actions in 1960 aimed at securing review of the denial of his motion to dismiss the indictment, we conclude that appellate jurisdiction should not have been rejected by this court in the matter as it was by the denial of the application for leave to appeal as an indigent because out of time.
The instant post-conviction proceeding is in the particular situation here manifested an eminently appropriate procedural vehicle by which to correct the injustice constituted by the erroneous denial of defendant's pretrial motion to dismiss the indictment pursuant to the provisions of the Interstate Agreement and of his right of appellate review thereof. The intervening habeas corpus proceedings do not stand in the way. The trial court's adjudication in that matter falls with our present determination that defendant did make adequate efforts to take an appeal. The subsequent denials of leave to appeal as an indigent by this court and the Supreme Court were, of course, not adjudications of the merits of any question. Moreover, see Lane v. Brown, 372 U.S. 477, 83 S.Ct. 768, 9 L.Ed.2d 892 (1963), which appears to hold that a state must constitutionally afford an indigent an effective appeal from a denial of postconviction relief without preliminary screening of the merits of the appeal where appeal without screening is available to a moneyed defendant.
*480 The judgment is reversed and remanded to the Union County Court with directions to set aside the conviction of the defendant as void, to dismiss the indictment with prejudice, and to make such supplementary orders as may be necessary. R.R. 3:10A-12. Assigned counsel shall continue to represent the defendant until these directions shall have been effectuated.
NOTES
[1] This is the New York counterpart of the Interstate Agreement.
[2] Although the tender should have accompanied the original request for final disposition by the prisoner, N.J.S. 2A:159A-5(a), the technical fault here is attributable to the New York warden, not the prisoner, see N.J.S. 2A:159A-3(c), and it will not be permitted to prejudice the prisoner's rights under the Interstate Agreement. See People v. Esposito, supra, 201 N.Y.S.2d, at p. 91. Were it material, therefore, we would hold that the warden's delay in forwarding the tender does not stop the running of the 180-day period from January 22, 1959, when the prosecutor received defendant's request.
[3] The appeal was required to have been filed within three months of March 11, 1960, the date of judgment on the conviction. R.R. 1:3-1 (a). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583799/ | 717 F. Supp. 1063 (1989)
Richard TORRE, Plaintiff,
v.
FALCON JET CORP., Defendant.
Civ. A. No. 88-4664.
United States District Court, D. New Jersey.
August 14, 1989.
Carolyn E. Wright-Bing, Arthur N. Martin, Jr., P.C., Newark, N.J., for plaintiff.
*1064 Gregory C. Parliman, Pitney, Hardin, Kipp & Szuch, Morristown, N.J., for defendant.
OPINION
WOLIN, District Judge.
This is an action filed by plaintiff Richard Torre charging defendant Falcon Jet Corporation with violating New Jersey's Conscientious Employee Protection Act (commonly known and hereinafter referred to as the whistle blower statute), N.J.S.A. §§ 34:19-1 to 34:19-8. Defendant now moves for summary judgment dismissing the complaint. The Court will grant the motion.
BACKGROUND
Plaintiff Richard Torre is an inspector of corporate aircraft employed by defendant Falcon Jet Corporation ("Falcon") at the company's facility in Teterboro, New Jersey. As an inspector, Torre is required to inspect aircraft to ensure compliance with safety regulations of the Federal Aviation Administration and Falcon. Torre is a member of Local 504 of the Transport Workers Union of America and his employment relationship with Falcon is governed by a collective bargaining agreement between Falcon and the Union.
On March 24, 1986, Torre was assigned to perform a routine inspection on a Falcon 50 Jet owned by Executive Air Fleet ("EAF"). During the course of the inspection, Torre received a direct order from his supervisor to perform the inspection of the aircraft without removing the "upper cowling" of the plane's engine. Torre believed that deleting this part of the inspection was an unsafe procedure, and he refused to complete the inspection unless he was allowed to do so properly. As a result of his noncompliance with the supervisor's order, Torre received a three-day suspension for insubordination. Torre's Union unsuccessfully grieved the matter.
Although it is not clear who contacted whom, in September 1986 Torre informed a representative of EAF that, though the inspection report had been signed, the March 1986 inspection had not been properly performed. Consequently, EAF contacted Falcon to discuss the company's inspection procedures. Falcon assured EAF that the inspection had been properly performed and that no misconduct had occurred.
On September 17, 1986, Falcon suspended Torre for five days for allegedly having made false and misleading statements to EAF. One week later, Falcon terminated Torre. Torre grieved his discharge through the Union, arguing that there was not just and sufficient cause to support the termination as required by the collective bargaining agreement, article 19, section 1. Torre asserted that the inspection had been improperly performed and that he had been wrongfully discharged for having communicated that to EAF.
The matter was grieved and went to arbitration in June 1987.[1] On August 14, 1987, the arbitrator issued an Award and Opinion concluding that just and sufficient cause existed under the collective bargaining agreement to warrant disciplinary action against Torre. The arbitrator, however, found termination to be too severe a penalty and modified the penalty to suspension without back pay, benefits or seniority from September 17, 1986 to the date of reinstatement. Neither party appealed the arbitrator's decision.
In August 1988, Torre brought this action asserting that his termination by Falcon constituted a violation of the New Jersey whistle blower statute.[2] Torre claims *1065 as damages the loss of his salary, benefits and seniority during the period of his suspension. Falcon now moves for summary judgment, contending that Torre's complaint is merely an attempt to modify the arbitrator's award and to obtain the remedies that he was denied in the arbitration proceeding.
In support of its motion for summary judgment, Falcon maintains that Torre's claim is governed by New Jersey's Arbitration Act, N.J.S.A. §§ 2A:24-1 to 2A:24-11, and is barred by that act's three-month statute of limitations.[3] Falcon contends that even if Torre's complaint is found to properly assert a claim under the whistle blower statute, Torre's claim is still barred by the one-year limitations period provided by § 5 of that statute, N.J.S.A. § 34:19-5.
Falcon further maintains that Torre's claim is barred by the election-of-remedies provision of the whistle blower statute, N.J.S.A. § 34:19-8.[4] In support of this contention, Falcon argues that because Torre elected to pursue his right to grieve and arbitrate his termination under the collective bargaining agreement and to accept the remedy of reinstatement provided by the arbitrator, he should be precluded from now pursuing alternative rights and remedies under the whistle blower statute. Finally, Falcon urges that the doctrines of res judicata and collateral estoppel bar the present cause of action because the issues before the Court have previously been considered and decided.
In his brief in opposition to the motion for summary judgment, Torre makes three arguments. First, Torre contends that his complaint is not governed by New Jersey's Arbitration Act because he does not seek to modify the arbitration award, but to be "made whole" by the whistle blower statute. Torre argues that the Arbitration Act does not apply where an employee seeks redress under the whistle blower statute subsequent to receiving an arbitration award, and that therefore his claims are independent and not subject to the doctrine of res judicata or collateral estoppel.
Second, Torre asserts that he has established a prima facie case of retaliatory discharge under § 3 of the whistle blower statute, N.J.S.A. § 34:19-3, and therefore is entitled to damages. Finally, Torre maintains that his complaint is not barred by the one-year limitations period provided by the whistle blower statute. Torre argues that because Falcon failed to post a notice of his rights under the statute as required by § 7 of the statute, N.J.S.A. § 34:19-7, he should not be penalized for being unaware of his rights and obligations to bring suit within one year of the incident at issue. Torre maintains that his claim for retaliatory discharge should be deemed actionable for one year from the posting of the statute on or about January 20, 1988.
In its reply brief, Falcon observes that the record does not contain the facts necessary *1066 to support Torre's equitable tolling argument. Falcon notes that Torre's argument that he first learned of the statute from a posting in January 1988 is not supported by any affidavit, deposition or other matter of record as is required by Fed.R. Civ.P. 56(e) to defeat a motion for summary judgment.
DISCUSSION
Although the parties have raised a host of issues, the Court can reduce the issues to two: (1) whether Torre's claim is barred by the doctrine of collateral estoppel; and (2) if not, whether his claim is time barred.
The collective bargaining argument entered into by Falcon and Torre's Union clearly provides that the purpose of the arbitration procedure is to settle "any and all disputes or grievances." Id. article 14, section 1. Counsel for Torre conceded at oral argument that the arbitrator was legally empowered in the initial arbitration proceeding to hear Torre's claim pursuant to the whistle blower statute. Torre argues, however, that he should be allowed to proceed with the instant action because his original claim was asserted under a different legal theory. Though conceding that the facts of the two claims may be the same, Torre contends that the issue presented to the arbitrator was narrower than the issue currently before this Court. Torre asserts that the question decided at arbitration was whether Falcon breached the collective bargaining agreement by wrongfully discharging Torre while the question presently before the Court is whether Torre has established a case of retaliatory discharge under the whistle blower statute.
If an issue was actually litigated and necessarily determined in an action, the doctrine of collateral estoppel precludes the parties from relitigating that issue in a subsequent action; relitigation of an issue is precluded only if the issue raised in the second action is identical to the issue decided in the first action. McLendon v. Continental Group, Inc., 660 F. Supp. 1553, 1561 (D.N.J.1987).
It is established that the findings of an arbitrator can have a collateral estoppel effect in a federal court proceeding. See Benjamin v. Traffic Executive Ass'n Eastern Railroads, 869 F.2d 107, 110 (2d Cir. 1989). Both federal law and New Jersey law appear to give estoppel effect to issues actually litigated in an arbitration proceeding, so long as the arbitration process was fair, the decision was reliable and no exception was provided. See Ivery v. United States, 686 F.2d 410, 413 (6th Cir.1982), cert. denied, 460 U.S. 1037, 103 S. Ct. 1428, 75 L. Ed. 2d 788 (1983); Nogue v. Estate of Santiago, 224 N.J.Super. 383, 385-86, 540 A.2d 889, 890 (App.Div.1988).
The Court finds that the arbitration proceeding decided the identical issue that is in dispute in this matter: whether Torre was wrongfully discharged for having informed EAF that Falcon had improperly performed an aircraft inspection. Torre, therefore, is collaterally estopped from bringing the current action. Alternatively, the matter is res judicata. See Goel v. Heller, 667 F. Supp. 144, 149-50 (D.N.J.1987).
Because the Court has decided that Torre's claim under the whistle blower statute is barred by the doctrine of collateral estoppel, it need not address the issue of equitable tolling; whether or not Torre's claim is timely, it is barred.
CONCLUSION
Because the issue in dispute in the case at bar is identical to the issue decided in the initial arbitration proceeding, was actually litigated in that proceeding, and was necessary to the ALJ's determination, Torre is collaterally estopped from relitigating that issue in the current action. The Court will therefore grant Falcon's motion for summary judgment.
NOTES
[1] Article 14, section 1 of the collective bargaining agreement between Falcon and Torre's Union provides that the purpose of the arbitration procedure is to settle "any and all disputes or grievances" not settled by the Field Board of Adjustment.
[2] Section 3 of the whistle blower statute, N.J. S.A. § 34:19-3, provides:
An employer shall not take any retaliatory action against an employee because the employee does any of the following:
a. Discloses, or threatens to disclose to a supervisor or to a public body an activity, policy or practice of the employer that the employee reasonably believes is in violation of a law, or a rule or regulation promulgated pursuant to law;
b. Provides information to, or testifies before, any public body conducting an investigation, hearing or inquiry into any violation of law, or a rule or regulation promulgated pursuant to law by the employer; or
c. Objects to, or refuses to participate in any activity, policy or practice which the employee reasonably believes:
(1) is in violation of a law, or a rule or regulation promulgated pursuant to law;
(2) is fraudulent or criminal; or
(3) is incompatible with a clear mandate of public policy concerning the public health, safety or welfare.
[3] The New Jersey Arbitration Act provides in part:
A party to the arbitration may, within 3 months after the award is delivered to him, unless the parties shall extend the time in writing, commence a summary action in the court [selected pursuant to N.J.S.A. § 2A:24-2] for the confirmation of the award or for its vacation, modification or correction. Such confirmation shall be granted unless the award is vacated, modified or corrected.
N.J.S.A. § 2A:24-7.
[4] The election-of-remedies provision provides:
Nothing in this act shall be deemed to diminish the rights, privileges, or remedies of any employee under any other federal or State law or regulation or under any collective bargaining agreement or employment contract; except that the institution of an action in accordance with this act shall be deemed a waiver of the rights and remedies available under any other contract, collective bargaining agreement, State law, rule or regulation or under the common law.
N.J.S.A. § 34:19-8. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583798/ | 728 N.W.2d 383 (2007)
IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant,
v.
James Franklin HALL, Jr., Respondent.
No. 06-1320.
Supreme Court of Iowa.
March 5, 2007.
*384 Charles L. Harrington and Laura M. Roan, Des Moines, for Complainant.
Donna Ruth Beary, Des Moines, for Respondent.
CADY, Justice.
The Iowa Supreme Court Attorney Disciplinary Board (Board) charged James F. Hall, Jr. with numerous violations of the Iowa Code of Professional Responsibility for Lawyers. The Grievance Commission of the Supreme Court of Iowa (Commission) found Hall violated the Code of Professional Responsibility. It recommended Hall be suspended from the practice of law for a minimum period of fifteen months. On our review, we find Hall violated the Code of Professional Responsibility, and we suspend his license to practice law indefinitely, with no possibility of reinstatement for twelve months.
I. Background Facts and Proceedings.
James F. Hall, Jr. is an Iowa lawyer. He was admitted to the practice of law in Iowa in 2002. Hall was raised in Des Moines, and enjoyed a variety of success in his life prior to practicing law. Hall was an exceptional multi-sport high school athlete and a one-time Olympic hopeful in track. He served in the United States Navy, and is a veteran of the Gulf War. He was the first member of his family to attend and graduate from college.
Hall began his legal career as a sole practitioner in Des Moines. Within a short period of time, he moved from Des Moines and began practicing law in Waterloo as a sole practitioner. The demands on his time were great, and he began, unknowingly at first, to exhibit signs of what would later be identified as depression and bipolar disorder. He also had little understanding of the intricacies of an office practice, or the need to fully train and supervise staff. He had no real mentor within the profession, and primarily associated with people that provided little professional guidance. There was evidence that some people he associated with used illegal drugs in his home. The confluence of these circumstances, as well as others, foretold the disaster that would lie ahead. This cataclysm eventually unfolded in an eight-count complaint filed by the *385 Board in 2006, and a hearing before the Commission that set forth the evidence largely supporting the complaint. Hall currently lives in Des Moines and practices with another lawyer in an office sharing arrangement.
Hall's office practice in Waterloo was marked by disorganization and, at times, chaos. On one occasion in 2005, Hall signed the names of two clients to their bankruptcy petitions after he had traveled to the federal courthouse in Cedar Rapids to file the petitions and discovered the signatures were missing. He did not obtain permission from the clients to sign their names, and did not understand he was not permitted to sign the petitions for his clients. See 11 U.S.C. § 110(e)(1) (2006) ("A bankruptcy petition preparer shall not execute any document on behalf of a debtor."). Hall then told conflicting accounts of the matter to the bankruptcy judge and later to the Commission.
Hall also neglected client cases on numerous occasions. Between 2003 and 2005, Hall neglected four separate cases after filing notices of appeal with this court. He repeatedly missed filing deadlines and received default notices from the clerk of court. On one occasion, his neglect resulted in the dismissal of the appeal. Hall also neglected a case involving a claim for wrongful discharge he undertook on behalf of a client named Marsha Lewis. After agreeing to handle the case, Hall made little or no effort to advance the client's claim. He also misrepresented the status of the case to the client and later failed to promptly turn over the client file after the client obtained new counsel. Similarly, Hall neglected a case on behalf of a client named Kristen Campbell after agreeing to represent the client on an insurance claim involving the death of her husband. He failed to return numerous phone calls from the client and did little or no legal work in the case. He also failed to turn over the client file after the client obtained new counsel. The papers in the file had not been returned to the client as of the date of the hearing before the Commission. Hall was unable to locate the file or the papers belonging to the client.
Hall maintained a trust account in his practice, but repeatedly mismanaged the account and failed to comply with trust account requirements. He did not maintain a proper ledger of deposits and withdrawals, and repeatedly used the account to deposit and withdraw personal funds. He also permitted a paralegal in his office to deposit and withdraw funds. In 2004, for example, Hall deposited the proceeds from a personal loan into the trust account, and then periodically used the account to pay a variety of business and personal obligations. Hall also deposited other personal funds into the trust account from time to time. At times, Hall used the trust account more for his personal dealings than for client matters. Nevertheless, there was no evidence he failed to maintain an adequate amount of personal funds in the account when he withdrew funds for personal matters.
Hall handled other financial matters in unorthodox ways. On two occasions, Hall was paid fees or advances from clients that were never deposited in the trust account. The Commission, however, found Hall had earned the fees by the time they were paid by the client. On another occasion in August 2004, Hall received a settlement check from an insurance company on behalf of a client in the amount of $3500. Instead of depositing the check in his trust account, Hall went to the bank with his client to negotiate the check. The fee arrangement apparently entitled the client to $2000. Hall deposited the check into his office account at the bank and paid his client $2000 in cash. A few days later, *386 Hall transferred $3000 from his trust account into his office account. When Hall's trust account was later audited by the Client Security Commission, Hall falsely told the auditor the $3000 that had been transferred from the trust account represented the settlement proceeds.
Finally, Hall repeatedly failed to respond to Board inquiries in response to the various complaints filed against him.
II. Board Complaint.
The Board charged Hall with multiple violations of the rules of professional responsibility. Count I involved the bankruptcy petitions and alleged Hall violated six separate provisions of the Code of Professional Responsibility, including DR 1-102(A)(4) (misrepresentation); DR 1-102(A)(5) (conduct prejudicial to the administration of justice); DR 1-102(A)(6) (conduct adversely reflects unfitness to practice); and DR 7-102(A)(5) (false statement of law or fact). Count II involved the neglect in the four appellate cases and alleged Hall violated four code provisions, including DR 6-101(A)(3) (neglect of a client's legal matter). Count III involved other cases of neglect, and alleged Hall violated ten separate code provisions, including DR 6-101(A)(3), DR 1-102(A)(5), and DR 2-110(A)(2) (return client papers). Counts V and VI involved the trust account violations, and alleged Hall violated code provisions including DR 9-102(A) (client funds required to be placed in trust account and a lawyer shall not deposit funds of the lawyer into the trust account); DR 9-103(A) (maintain ledger or record of client funds); DR 9-102(B)(3) (maintain complete records and render an accounting to client); and DR 1-102(A)(4). Count V also alleged misappropriation of client funds in violation of DR 1-102(A)(4). Count VIII involved the failure to cooperate with the Board in violation of DR 1-102(A)(5) and (6).
Count IV alleged Hall submitted an excessive fee claim in a case. Count VII alleged Hall used a controlled substance.
The Commission found the Board established the violations under Counts I, II, III, V, VI, and VIII. It found the Board failed to establish Counts IV and VII. It also found Hall did not misappropriate client funds as alleged in Count V. It recommended Hall be suspended from the practice of law for fifteen months. As a condition of reinstatement, the Commission recommended Hall undergo a mental health evaluation and disclose the name of a licensed attorney who would be willing to serve as a mentor to him to provide guidance following any reinstatement. It also recommended Hall attempt to locate and return the papers and records belonging to Kristen Campbell.
III. Scope of Review.
We review attorney disciplinary matters de novo. Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Bernard, 653 N.W.2d 373, 375 (Iowa 2002). We give the findings of the Commission weight, but are not bound by them. Id.
IV. Violations.
We agree with the findings and conclusions made by the Commission in its detailed report. In particular, the evidence showed Hall violated the provisions of the Code of Professional Responsibility as found by the Commission. He engaged in misrepresentation and conduct that adversely reflected on his fitness to practice law by signing his name to the bankruptcy petitions and later telling inconsistent accounts of his misconduct. This conduct violated the Code of Professional Responsibility, including DR 1-102(A)(6) and DR 1-102(A)(4). He neglected client matters *387 in violation of DR 6-101(A)(3) by his failure to comply with the rules of appellate practice in four separate cases. He also neglected client matters in two other cases, misrepresented the status of the cases to his clients, and failed to promptly return client papers. See Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Freeman, 603 N.W.2d 600, 602 (Iowa 1999) (obligation to turn over client papers to successor counsel). He also failed to respond to numerous notices from the Board in violation of the Code of Professional Responsibility. See Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Kallsen, 670 N.W.2d 161, 167 (Iowa 2003) (failing to respond in a timely manner).
It is clear Hall also maintained his trust account in violation of the requirements of DR 9-102. He used the trust account to deposit personal funds and to pay personal and business expenses. The commingling of his personal funds with his trust account violated DR 9-102(A) of the Code of Professional Responsibility. He also failed to maintain a proper ledger and other records to demonstrate compliance with the trust account requirements in violation of DR 9-103. To compound matters he knowingly misrepresented the nature of at least one trust account transaction to the Client Security Commission auditor in violation of DR 1-102(A)(4). See Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Mattson, 558 N.W.2d 193, 194 (Iowa 1997).
V. Discipline.
In determining the appropriate level of discipline, we focus on "the nature of the alleged violations, the need for deterrence, the protection of the public, maintenance of the reputation of the [Bar] as a whole, and the respondent's fitness to continue" to practice law. Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Walters, 646 N.W.2d 111, 113-14 (Iowa 2002). We consider both aggravating and mitigating circumstances. Id. In the end, we impose discipline based on the particular facts of each case. Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. McKittrick, 683 N.W.2d 554, 563 (Iowa 2004).
Our prior cases reveal the discipline we impose for neglect normally ranges from a public reprimand to a six-month suspension. Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Hohenadel, 634 N.W.2d 652, 655-56 (Iowa 2001). In this case, the neglect was visited on numerous clients, and was frequently compounded by misrepresentations to clients. The neglect also visited harm on clients. Hall further compounded his neglect by failing to turn over client files after termination of the attorney-client relationship.
Hall engaged in other acts of misrepresentation. He improperly signed his client's names on bankruptcy petitions in violation of federal law, and told conflicting stories of the account to minimize his culpability. Likewise, he misrepresented the circumstances of a suspicious transaction involving his trust account to an auditor from the Client Security Commission. Dishonesty, deceit, and misrepresentation by a lawyer are abhorrent concepts to the legal profession, and can give rise to the full spectrum of sanctions, including revocation. See Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Ackerman, 611 N.W.2d 473, 474 (Iowa 2000); Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Stein, 603 N.W.2d 574, 576 (Iowa 1999). An honest lawyer is essential to the legal profession. See Comm. on Prof'l Ethics & Conduct v. Bauerle, 460 N.W.2d 452, 453 (Iowa 1990). Generally, neglect combined with incidents of misrepresentation give rise to a lengthy suspension from the practice of law. Iowa Supreme Ct. Bd. of *388 Prof'l Ethics & Conduct v. Ruth, 656 N.W.2d 93, 100 (Iowa 2002).
The failure to comply with the trust account requirements is also a serious matter. We have said that the commingling of trust funds with personal or office funds is strictly prohibited. Iowa Supreme Bd. of Prof'l Ethics & Conduct v. Herrera, 560 N.W.2d 592, 594 (Iowa 1997). Moreover, the overall manner in which Hall operated the trust account was outrageously deficient. It reflected his overall approach to the practice of law, and revealed his general unfitness to be a lawyer at this time.
We have recognized the rigors of the practice of law and the difficulties that can be encountered by attorneys. See McKittrick, 683 N.W.2d at 563. These difficulties are multiplied exponentially for young lawyers who venture into the practice as sole practitioners. This factor, perhaps more than any other, may help explain the disaster Hall encountered in his practice of law. This also explains the recommendation by the Commission that Hall be required to identify and become associated with a lawyer to serve as a mentor and counselor before resuming his legal practice. Additionally, Hall struggled with burgeoning mental health issues. These matters contributed to his misconduct, and can ultimately serve to mitigate sanctions. See Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Sullins, 648 N.W.2d 127, 135 (Iowa 2002).
The scope and type of misconduct engaged in by Hallprofuse client neglect, repeated misrepresentations, trust account failures, failure to return client property, failure to respond to the Board, and general law office mismanagementhas been documented by us in a host of prior disciplinary cases, including our recent case of Iowa Supreme Court Attorney Disciplinary Board v. Joy, 2007 WL 543021, ___ N.W.2d ___ (Iowa 2007) (filed February 23, 2007) (listing similar cases). These cases reveal we generally discipline lawyers who engage in this misconduct by suspending them from the practice of law for a period between one and three years. Id. Of course, the point where the discipline ultimately falls within the range depends on the particular facts and circumstances as revealed in each case. In the end, this case can be distinguished from the others. Ultimately it seems to reveal less about an unethical lawyer than one who was confused, alone, and unprepared for the voyage he undertook, and quickly found himself well over his head in the dangerous and sometimes treacherous currents of the practice of law. Under all the circumstances, we conclude Hall should be suspended from the practice of law indefinitely, with no possibility of reinstatement for twelve months.
The conditions of reinstatement recommended by the Commission are reasonable, and will be considered upon any application for reinstatement by Hall. Moreover, we support the concept of mentoring for all new lawyers, especially those who have recently graduated from law school and choose to begin their careers as a sole practitioner. The lack of education and guidance on the intricacies of the practice of law is often, as in this case, a recipe for disaster for new lawyers. Consequently, all new lawyers who decide to engage in the practice of law as a sole practitioner would benefit immeasurably from a mentor, just as they would benefit from obtaining continuing legal education on office practices before opening a law office as a sole practitioner. The profession, and the public, would benefit by including such education in continuing legal education programs for new lawyers.
*389 VI. Conclusion.
We suspend Hall's license to practice law in Iowa indefinitely, with no possibility of reinstatement for a period of twelve months from the date of filing of this opinion. The suspension imposed applies to all facets of the practice of law as provided by Iowa Court Rule 35.12(3), and requires notification to clients as provided in Iowa Court Rule 35.21. The costs of this proceeding are taxed against Hall pursuant to Iowa Court Rule 35.25(1).
LICENSE SUSPENDED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584026/ | 717 F.Supp. 261 (1989)
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff,
v.
STATE OF VERMONT, STATE OFFICE OF the COURT ADMINISTRATOR, and State Department of Finance and Management, Defendants.
89 Civ. 170.
United States District Court, D. Vermont.
July 18, 1989.
Cheryl Kramer, Trial Atty., E.E.O.C., New York City, for plaintiff.
William B. Gray, Sheehey Brue Gray & Furlong, Burlington, Vt., for defendants.
OPINION AND ORDER
GAGLIARDI, Senior District Judge.
The complaint in this action brought by the plaintiff Equal Employment Opportunity Commission (hereinafter "EEOC") pursuant to the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. (hereinafter "ADEA") seeks, among other relief, a permanent injunction enjoining the defendants *262 State of Vermont, State Office of the Court Administrator and State Department of Finance and Management (hereinafter "Vermont") from pursuing any employment practice that discriminates because of age. Simultaneously with the filing of the complaint, the EEOC moved for a preliminary injunction enjoining Vermont from retiring Supreme Court Justice Louis Peck. Vermont was to retire Justice Peck on June 30, 1989, because of his age.
Vermont has cross-moved for summary judgment dismissing the complaint. The court, pursuant to Fed.R.Civ.P. 65(a)(2) and upon consent of the parties, has ordered that the trial of the action on the merits be advanced and consolidated with the hearing on the application for the preliminary injunction.
Facts
The following are the relevant facts agreed to by the parties.
1. The Vermont Supreme Court is the appellate court of last resort for the State of Vermont. It consists of five active members and hears appeals from the two state trial courts, the probate courts and various agencies of the state government.
2. Louis Peck is a duly appointed and confirmed member of the Vermont Supreme Court. On December 24, 1988, he reached the age of seventy years.
3. The Vermont Constitution provides:
All justices of the Supreme Court and judges of all subordinate courts shall be retired at the end of the calendar year in which they attain seventy years of age or at the end of the term of election during which they attain seventy years of age, as the case may be, and shall be pensioned as provided by law. The chief justice may from time to time appoint retired justices and judges to special assignments as permitted under the rules of the Supreme Court.
Vt. Const. ch. II § 35.
4. On September 21, 1981, Louis Peck received a gubernatorial appointment to the supreme court. The Vermont Senate, on January 22, 1982, confirmed that appointment. Pursuant to Vt.Stat.Ann. title 4 § 608 he was retained for a term of six years by vote of the Vermont General Assembly on March 31, 1987. On June 30, 1989, he was scheduled to be retired pursuant to the Vermont Constitution. His mandatory retirement will be based solely on his age and upon his occupation as an associate justice of the Vermont Supreme Court.
5. Justice Peck filed an age discrimination charge with the EEOC on May 10, 1989.
6. The EEOC issued letters of violation on May 18, 1989. Its attempt at conciliation failed, and on June 9, 1989, the EEOC filed the complaint in this case.
7. The State of Vermont, through the State Office of the Court Administrator and the State Department of Finance and Management, is responsible for the administration and enforcement of the retirement laws of the State of Vermont as they pertain to Justice Peck as well as the enforcement of Vt. Const. ch. II, § 35, as it pertains to justices of the supreme court and judges of all subordinate courts.
8. Pursuant to In re Constitutionality of House Bill 88, 115 Vt. 524, 64 A.2d 169 (1949) the Vermont Supreme Court does not give advisory opinions and rules only in circumstances where there is a case or controversy.
9. The Vermont Constitution provides:
The Supreme Court shall exercise appellate jurisdiction in all cases, criminal and civil, under such terms and conditions as it shall specify in rules not inconsistent with law. The Supreme Court shall have original jurisdiction only as provided by law, but it shall have the power to issue all writs necessary or appropriate in aid of its appellate jurisdiction. The Supreme Court shall have administrative control of all the courts of the state, and disciplinary authority concerning all judicial officers and attorneys at law in the State.
Vt. Const. ch. II, § 30. The supreme court, in exercising this administrative control and disciplinary authority, adopts and promulgates a code of judicial ethics as *263 well as rules and regulations for the administration and enforcement of the code. The supreme court also prescribes standards and adopts rules for the admission of persons to practice before the Vermont courts and adopts disciplinary rules for the enforcement of the Code of Professional Responsibility.
10. The Vermont Constitution provides:
The Supreme Court shall make and promulgate rules governing the administration of all courts, and shall make and promulgate rules governing practice and procedure in civil and criminal cases in all courts. Any rule adopted by the Supreme Court may be revised by the General Assembly.
Vt. Const. ch. II, § 37. Pursuant to this authority, the supreme court makes and promulgates rules of practice and procedure in the supreme court, superior courts, district courts, and probate courts of the State of Vermont.
11. In the exercise of its constitutional authority, the supreme court adopts administrative orders with respect to a wide variety of matters, including attorney representation on the judicial nominating board, the prompt disposition of criminal cases, procedures for the processing of traffic offenses, the terms of the superior courts and the assignment of superior and district court judges, and procedures for processing fish and game, boating and snowmobile violations.
12. Justice Peck is currently assigned to act as liaison between the trial courts of Windham, Lamoille and Washington Counties and the supreme court in its administrative capacity.
13. Pursuant to Vt.Stat.Ann. title 1 § 1, Justice Peck has been designated by the chief justice as a member and chairman of the Statutory Revision Commission.
Discussion
I
The issues in this case are whether or not the ADEA's prohibition of age discrimination in employment applies to appointed state-court judges, and, if so, whether or not its application to the states is prohibited by the tenth amendment. The only federal courts to pass on these issues are the First Circuit Court of Appeals and the District Court for the Eastern District of Virginia.[1] The First Circuit has concluded that appointed judges engage in policymaking, and that they are thereby excluded from the ADEA's protection.[2]EEOC v. Massachusetts, 858 F.2d 52 (1st Cir.1988). The District Court for the Eastern District of Virginia reached the opposite conclusion. In Schlitz v. Commonwealth of Virginia, 681 F.Supp. 330 (E.D.Va.1988), rev'd on other grounds, 854 F.2d 43 (4th Cir.1988) the court, denying the state's motion to dismiss, held that "[t]he plain language of the ADEA, however, makes it clear that appointed state judges are to be protected *264 from age discrimination in employment." Id. at 333. The action involved a state-court judge who was appointed by the Virginia Assembly to an eight-year term. The judge reached seventy years of age approximately three weeks before the end of his term and the Assembly refused to reappoint him. The judge argued that he was denied reappointment pursuant to Virginia law that required judges to retire at age seventy. In reversing the district court's denial of Virginia's motion to dismiss, based on the doctrine of legislative immunity, the Fourth Circuit noted that "the Commonwealth has made clear that as a result of the ADEA, its mandatory retirement law for judges is no longer being observed." Schlitz v. Commonwealth of Virginia, 854 F.2d at 45.
This court has given the First Circuit's decision the careful study and deference that it unquestionably deserves. NLRB v. American Fed'n of Television and Radio Artists, 234 F.Supp. 832 (S.D.N.Y.1964), aff'd, 351 F.2d 310 (2d Cir.1965). However, this court is not persuaded that appointed state-court judges are policymakers for the purposes of the ADEA.
II
The ADEA provides that "[i]t shall be unlawful for an employer to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age...." 29 U.S.C. § 623(a)(1). The term "employer" includes "a State or political subdivision of a State and any agency or instrumentality of a State or a political subdivision of a State...." Id. § 630(b)(2).
Congress expressly exempted certain public officials from the broad sweep of the ADEA's protections. The ADEA provides:
[t]he term "employee" means an individual employed by any employer except that the term "employee" shall not include any person elected to public office in any State or political subdivision of any State by the qualified voters thereof, or any person chosen by such officer to be on such officer's personal staff, or an appointee on the policymaking level or an immediate adviser with respect to the exercise of the constitutional or legal powers of the office. The exemption set forth in the preceding sentence shall not include employees subject to the civil service laws of a State government, governmental agency, or political subdivision....
Id. § 630(f).
Justice Peck was not "elected to public office in [Vermont] ... by the qualified voters thereof,"[3] nor was he chosen by an elected official to "be on such officer's personal staff." He is not an "immediate advisor" to an elected official. Justice Peck, as an appointed state-court judge, is exempted from the ADEA's protection only if he is "an appointee on the policymaking level...." If appointed state-court judges are not policymakers, then the ADEA's protections apply and the mandatory retirement provision of the Vermont Constitution must give way. U.S. Const. art. VI, cl. 2.
The word "policymaker", standing alone, is vague. A policy is "a projected program consisting of desired objectives and the means to achieve them." Webster's Third New International Dictionary. 1754 (1971). In that sense almost all persons, let alone most state government officials, can be characterized as policymakers. For the policymaker exemption to have any meaning, it must apply only to those appointed officials who are primarily policymakers.
The First Circuit concluded that judges are policymakers because "`policymaking' is indisputably a part of the function of judging to the extent that judging involves lawmaking to fill the interstices of authority found in constitutions, statutes, and precedents...." EEOC v. Massachusetts, 858 F.2d at 55, (quoting EEOC v. Commonwealth of Massachusetts, 680 F.Supp. 455, 462 (D.Mass.1988)). A judge's principal *265 activity is to decide cases between litigants involving questions of law in which there are no interstices or lacunae to fill. In any event, gap-filling by judges is really a form of lawmaking, not policymaking. Even in a vernacular sense, lawmaking is not the equivalent of policymaking. A law is
a rule or mode of conduct that is prescribed or formally recognized as binding by a supreme controlling authority or is made obligatory by a sanction (as an edict, decree, rescript, order, ordinance, statute, resolution, rule, judicial decision or usage) made, recognized, or enforced by the controlling authority.
Webster's Third New International Dictionary, 1279 (1971). Policies are guideposts for present and future conduct. Laws, whether judge-made or statutory, are mandatory standards of conduct. Of course, dictionary definitions do not control the outcome of this case. However, it is clear that policymaking and lawmaking are not the same thing. Policymaking implicates lawmaking and vice versa, but they are essentially different functions.
Vermont urges that its supreme court justices are policymakers in the literal sense because the court administers the Vermont judicial system. Assuming, arguendo, that such activity constitutes policymaking, Vermont has not shown that their supreme court justices' primary duties consist of court administration. Nor has Vermont shown which of those duties could conceivably be considered policymaking. If administration is not their primary duty, Vermont Supreme Court Justices are not in any meaningful sense policymakers for the purposes of the ADEA.[4]
The conclusion that the ADEA applies to protect appointed state-court judges from age discrimination is supported by the plain language of the ADEA. The ADEA's exemptions include elected officials as well as those whose power and job tenure emanate directly from elected officials. The EEOC has characterized these exemptions as follows:
[i]n exempting policymaking appointees, Congress realized the necessity of allowing elected officials complete freedom in appointing those who would direct state and local departments and agencies. These individuals must work closely with elected officials and their advisors in developing policies that will implement the overall goals of the elected officials. In order to achieve these goals, an elected official is likely to prefer individuals with similar political and ideological outlooks. Congress intended to allow elected officials the freedom to appoint those with whom they feel they can work best.
EEOC Decisions (CCH) ¶ 6725 (1983). Under the doctrine of separation of powers, appointed Vermont judges do not work closely with elected officials to implement such officials' policies because such activity is an executive, not a judicial function. See Vt. Const. ch. II, § 5. Unless "an appointee on the policymaking level" is mere surplusage, there must exist a category of appointees who are not exempted from the *266 ADEA's protection. The First Circuit's understanding of the activities that constitute "policymaking" makes it difficult to conceive of an appointed official who would not be considered a policymaker for purposes of the ADEA. If such were the correct result, Congress would not have qualified "appointee" at all.
III
The legislative history regarding section 630's exemptions supports the conclusion that the ADEA does not exempt appointed state-court judges from its protection. The Joint Explanatory Statement of Managers at the Conference on H.R. 1746 to Further Promote Equal Employment Opportunities for American Workers concludes:
[i]t is the intention of the conferees to exempt elected officials and members of their personal staffs, and persons appointed by such elected officials as advisors or to policymaking positions at the highest levels of the departments or agencies of State or local governments, such as cabinet officers, and persons with comparable responsibilities at the local level. It is the conferees [sic] intent that this exemption shall be construed narrowly. Also, all employees subject to State or local civil service laws are not exempted.
Joint Explanatory Statement of Managers at the Conference on H.R. 1746, 92d Cong., 1st Sess., reprinted in 1972 U.S.Code Cong. & Ad.News 2137, 2179, 2180.
Contrary to Vermont's argument that these exemptions should be read broadly to avoid infringing on state sovereignty, the conferees intended that the exemptions be construed narrowly. Id. The language "departments or agencies of State or local governments" further suggests that Congress did not intend the exemptions to extend to members of a separate branch of state government such as the judiciary. Departments and agencies are part of the executive branch of government. To find that an appointed state-court judge is a policymaker for purposes of the ADEA expands the ordinary meaning of the word and flies in the face of a narrow construction of that term. Given its detailed consideration of the ADEA's application to state officials, it is clear that Congress would have expressly exempted appointed state-court judges if it desired that result.
The fact that many states appoint at least some of their judges bolsters this conclusion.[5] It is logical to assume that members of Congress know how judges are selected in their own states. It follows from this assumption that if the members of Congress were concerned about the effect that the ADEA would have on the appointed judiciary, some mention of such concern would appear in the legislative history. However, there is no mention of the state judiciary in the legislative history of the ADEA.[6] While it is true that Congress often does not express itself directly, to assume that Congress meant to exclude appointed state-court judges from the ADEA's protections because they are "appointees on the policymaking level" seems manifestly illogical, especially in the context of the other exemptions listed in section 630(f).
IV
Vermont argues that application of the ADEA's protections to appointed statecourt *267 judges who would otherwise mandatorily be retired pursuant to state law violates the tenth amendment to the United States Constitution. In EEOC v. Wyoming, 460 U.S. 226, 103 S.Ct. 1054, 75 L.Ed.2d 18 (1983), the Supreme Court held that the extension of the ADEA's coverage to state and local governments is a valid exercise of the commerce power. Id. at 243, 103 S.Ct. at 1064. The tenth amendment imposes few external constraints on Congress' otherwise valid exercise of its commerce power. Garcia v. San Antonio Metropolitan Transit Auth., 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985). Garcia overruled National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976). The Supreme Court concluded in National League of Cities that "Congress may not exercise [the commerce power] so as to force directly upon the States its choices as to how essential decisions regarding the conduct of integral governmental functions are to be made." National League of Cities, 426 U.S. at 855, 96 S.Ct. at 2476. In overruling National League of Cities, the Garcia Court rejected "as unsound in principle and unworkable in practice, a rule of state immunity from federal regulation that turns on a judicial appraisal of whether a particular governmental function is `integral' or `traditional.'" Garcia, 469 U.S. at 546-47, 105 S.Ct. at 1015. The Garcia Court concluded,
[o]f course, we continue to recognize that the States occupy a special and specific position in our constitutional system and that the scope of Congress' authority under the Commerce Clause must reflect that position. But the principal and basic limit on the federal commerce power is that inherent in all congressional action the built-in restraints that our system provides through state participation in federal governmental action. The political process ensures that laws that unduly burden the States will not be promulgated. In the factual setting of these cases the internal safeguards of the political process have performed as intended.
Id. at 556, 105 S.Ct. at 1020. Under Garcia, application of the ADEA to appointed state-court judges does not threaten Vermont's independent existence. Vermont senators and representatives have participated in the consideration and promulgation of the ADEA. This court recognizes Vermont's general interest in determining the tenure of its judges. In that respect, Vermont "remain[s] free, under the ADEA to continue to do precisely what [it] is doing now, if [Vermont] can demonstrate that age is a `bona fide occupational qualification' for the job of [supreme court justice]." EEOC v. Wyoming, 460 U.S. at 240, 103 S.Ct. at 1062; 29 U.S.C. § 623(f)(1). The ADEA "requires the State to achieve its goals in a more individualized and careful manner than would otherwise be the case, but it does not require the State to abandon those goals, or to abandon the public policy decisions underlying them." EEOC v. Wyoming, 460 U.S. at 239, 103 S.Ct. at 1062. If Vermont cannot show age to be a bona fide occupational qualification for its appointed judges, the people of Vermont may choose to elect their judges and thereby exempt them from the ADEA's protections. In this case, Vermont's "discretion to achieve its goals in the way it thinks best is not being overridden entirely, but is merely being tested against a reasonable federal standard." Id. at 240, 103 S.Ct. at 1062.
The court concludes that the plain language of section 630(f) of the ADEA does not exempt appointed state-court judges from the ADEA's protection. The court finds that the legislative history of the ADEA supports that conclusion. The court notes that the EEOC's position is in accord with the plain meaning of the statute and with the intent of Congress. Even if the language of the statute were vague and the intent of Congress indiscernible, this court should defer to the EEOC's construction of the ADEA because its construction is reasonable. Chemical Manufacturers Assn. v. National Resources Defense Council, 470 U.S. 116, 126, 105 S.Ct. 1102, 1108, 84 L.Ed.2d 90 (1984).
Conclusion
For the foregoing reasons, Vermont's motion for summary judgment is hereby denied. *268 Plaintiff's application for a permanent injunction is granted to the extent that Vermont is enjoined from retiring Justice Louis Peck or any other appointed Vermont judge on the basis of age. As it appears that no other Vermont judges have mandatorily been retired in violation of the ADEA, so much of the EEOC's complaint that concerns retrospective relief for other employees, backpay, liquidated damages and prejudgment interest is dismissed.
So Ordered.
NOTES
[1] State courts of last resort have also ruled on this issue. In Matter of Madame Justice Juanita Stout, ___ Pa. ___, 559 A.2d 489 (1989), the Supreme Court of Pennsylvania held that the ADEA did not apply to appointed state supreme court judges because such judges engage in policymaking through administrative actions as well as through judging. The Supreme Judicial Court of Massachusetts has held that the ADEA does not preempt the mandatory retirement provision of that state's constitution, because Congress did not clearly express the intention that the ADEA was to apply to appointed state-court judges. Apkin v. Treasurer and Receiver General, 401 Mass. 427, 517 N.E.2d 141 (1988).
In the context of a decision by the Administrative Board of the Courts of New York (which board consists of the Chief Judge of New York and the Presiding Justices of the Appellate Division) that removed New York's appointed judges from the scope of the state's mandatory retirement rule, the New York Court of Appeals has held that distinguishing between appointed and elected judges for purposes of mandatory retirement does not violate equal protection. Diamond v. Cuomo, 70 N.Y.2d 338, 514 N.E.2d 1356, 520 N.Y.S.2d 732 (1987), appeal dismissed, ___ U.S. ___, 108 S.Ct. 2008, 100 L.Ed.2d 597 (1988).
The Vermont Attorney General has concluded that the ADEA's protections apply to appointed Vermont judges. See Mandatory Retirement of Vermont Judges and Justices, Op.Att'y Gen. 87-8 (Aug. 7, 1987). The EEOC has also issued an opinion letter that concludes that the ADEA applies to protect appointed state-court judges. See Op.Off.Legal Counsel EEOC-OL-7 (April 7, 1987).
[2] See 29 U.S.C. § 630(f) infra p. 264.
[3] A retention vote by the state assembly does not constitute an election by the qualified voters of a state. 29 U.S.C. § 630(f).
[4] The ADEA contains another exemption that arguably applies to Vermont Supreme Court Justices.
Section 631(c)(1) of the ADEA provides:
[n]othing in this chapter shall be construed to prohibit compulsory retirement of any employee who has attained 65 years of age and who, for the 2-year period immediately before retirement, is employed in a bona fide executive or a high policymaking position, if such employee is entitled to an immediate nonforfeitable annual retirement benefit from a pension, profit-sharing, savings, or deferred compensation plan, or any combination of such plans, of the employer of such employee, which equals, in the aggregate, at least $44,000.
29 U.S.C. § 631(c)(1).
Vermont has not offered evidence concerning Justice Peck's retirement benefits. However, even if Justice Peck were entitled to an aggregate of at least $44,000 in an immediate, nonforfeitable annual retirement benefit, this court concludes, based on parts I, II and III of this opinion, that Vermont Supreme Court Justices are not employed in a "high policymaking position" for purposes of the ADEA.
Nor are appointed Vermont judges on the "level" of policymakers, because judges' functions are completely different from appointed, executive policymakers' functions. See EEOC Decisions (CCH) ¶ 6725 (1983) infra p. 265.
[5] In the Virginia district court proceedings, Virginia apparently represented that ten states appoint their judges. Schlitz, 681 F.Supp. at 333. The parties in this case have made no specific assertions as to the number of states that appoint their judges. The court's own research indicates that twelve states appoint appellate judges on at least one level, and that a total of twenty-eight states appoint judges at some level. In Vermont, justices of the Supreme Court as well as judges of the Superior and District Courts are appointed. Probate judges and assistant judges are elected.
[6] The ADEA exemption clause is equivalent to that added to Title VII of the Civil Rights Act when that Act was made applicable to the states. 42 U.S.C. § 2000e(f). The legislative history of Title VII exemption clause indicates that Senator Ervin was concerned that, without such an exemption, the term "employee" could be construed as "including an elected official or a person chosen by the elected official to advise him as to his constitutional and legal duties." 118 Cong.Rec. § 4096 (1972) (Statement of Sen. Ervin). No reference to appointed state-court judges appears in the legislative history of Title VII. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584100/ | 427 So.2d 815 (1983)
W.L. GIEGER, Appellant,
v.
SUN FIRST NATIONAL BANK OF ORLANDO, Etc., Henrietta Gieger; Etc.; and J. Nolan Carter, Appellees.
No. 82-486.
District Court of Appeal of Florida, Fifth District.
March 9, 1983.
*816 Ronald L. Sims of Hoffman, Hendry, Stoner, Sims & Sawicki, Orlando, for appellant.
Patrick T. Christiansen of Akerman, Senterfitt & Eidson, Orlando, for appellee Sun First National Bank.
No appearance for appellees Gieger and Carter.
ORFINGER, Chief Judge.
On May 15, 1978, appellee Sun First National Bank of Orlando obtained a final judgment against Henrietta W. Gieger and W.L. Gieger, then husband and wife, in the amount of $24,193.17. To collect this debt, Sun Bank initiated garnishment proceedings against J. Nolan Carter and his wife as debtors of the Giegers. The Carter debt to the Giegers was in the form of a promissory note and second mortgage for $47,000 given to the Giegers as part of the purchase price for the Giegers' homestead property sold to Carter. Ultimately the trial court issued an order dissolving that writ of garnishment and on appeal this court affirmed, stating that the note and mortgage taken back by the Giegers was a "substitute homestead" for a reasonable time until the mortgage could be reinvested into a new homestead. Sun First National Bank of Orlando v. Gieger, 402 So.2d 428 (Fla. 5th DCA 1981).
Following the issuance of this court's mandate, appellant Sun Bank again obtained a writ of garnishment against J. Nolan Carter (but not his wife) as garnishee, which is now the subject of this appeal. The amount requested in Sun Bank's motion was $27,651.07.
The garnishee, J. Nolan Carter answered the writ stating:
That at the time of receiving this Writ of Garnishment and until Answering this Writ of Garnishment, the Garnishee herein, J. Nolan Carter, is obligated to W.L. Gieger and Henrietta Gieger, his wife, pursuant to that certain Note and Mortgage dated February 21, 1980... .
A copy of the note and mortgage was attached to the answer, indicating that the note was payable in monthly installments of $570.58 each. It was not claimed by any party that the monthly payments were in arrears. Based on this answer, Sun Bank filed a motion for judgment on the pleadings.
Thereafter, Gieger moved to dissolve the writ of garnishment, alleging as grounds therefor: (1) that the note and mortgage sought to be garnished constituted homestead property and thus was exempt from garnishment; (2) that the motion for judgment on the pleadings was overbroad because it sought a continuing garnishment and future payments on a negotiable instrument were not subject to garnishment; and (3) that he had assigned his interest in the note and mortgage to Ernest A. and Viola M. Zuidema (Zuidema) who were thus indispensable parties to the action. The documentation supporting the claimed "assignment" *817 was attached to the motion. After hearing, the trial court denied Giegers' motion to dissolve the writ, granted Sun Bank's motion for judgment on the pleadings and directed Carter, the garnishee, to "make payments due and to become due under the subject note and mortgage ..." to Sun Bank. Gieger appeals and we reverse.
Sun Bank contends that Gieger has no standing to appeal the garnishment order because his former wife Henrietta W. Gieger, the co-payee of the note, did not join in the motion to dissolve, nor does she appeal the order. Sun Bank relies on section 673.116, Florida Statutes (1981), which provides in part:
An instrument payable to the order of two or more persons:
.....
(2) If not in the alternative is payable to all of them and may be negotiated, discharged or enforced only by all of them.
This section does not apply here because Gieger is not trying to negotiate, discharge or enforce the note in this action. He is merely attempting to protect his claimed interest in the note from what he contends is a wrongful garnishment, and if he continues to have an interest in the note and mortgage, he has standing to try to protect it.
The record reveals that there was no assignment of the Carter mortgage to Zuidema. Instead, the Giegers pledged that mortgage to Zuidema as additional security for a debt owed by the Giegers to Zuidema, resulting from the purchase of a condominium unit from Zuidema by Mrs. Gieger.[1] The Giegers were still the owners of the Carter mortgage, subject only to the collateral pledge of the proceeds until Zuidema was paid off.
Generally, one has standing when he has a sufficient interest at stake in the controversy which will be affected by the outcome of the litigation. Sierra Club v. Morton, 405 U.S. 727, 92 S.Ct. 1361, 31 L.Ed.2d 636; General Development Corporation v. Kirk, 251 So.2d 284 (Fla. 2d DCA 1971). In this case, appellant contends that he not only has an interest, but is an aggrieved party injured by the lower court's ruling and that therefore he should be allowed to bring this appeal. See King v. Brown, 55 So.2d 187 (Fla. 1951). His potential injury, it is argued, will occur when the payments incident to the garnished note, which have been committed by a pledge agreement to the payment of the mortgage on Mrs. Gieger's new home, are diverted to pay off the Gieger's debt to Sun Bank. This is sufficient to give him standing.
We turn then to the contention that the writ of garnishment was overbroad insofar as it attempted to garnish future (not yet due) installments on the promissory note, because it required Carter, as payee, to pay to Sun Bank not only payments which were then due, but installment payments which would become due in the future. Sun Bank contends that Carter's answer to the writ of garnishment acknowledged that his debt was due, thus justifying the judgment on the pleadings, and that Gieger cannot dispute this answer. But, Sun Bank's contention is based on an incorrect premise, because Carter's answer merely acknowledged "... that at the time of receiving this writ ... and until answering ... this garnishee ... is obligated to W.L. Gieger and Henrietta Gieger ... pursuant to that certain note and mortgage dated February 20, 1980, true copies of which are attached hereto ..." (emphasis supplied). The attachment shows what is prima facie a negotiable promissory note in the principal sum of $47,000, payable to the Giegers in monthly installments of $570.58 each, including principal and interest at 8% per annum, until paid in full. Nowhere in any of the *818 pleadings was it alleged that the note was delinquent or that any payments were overdue.
The rule in Florida relating to garnishment of negotiable notes is as stated in Huot, Kelly & Co. v. Ely, Candee & Wilder, 17 Fla. 775 (1880), and quoted in Universal C.I.T. Credit Corp. v. Broward Nat'l Bank of Fort Lauderdale, 144 So.2d 844 (Fla. 2d DCA 1962), and Hollopeter & Post, Inc. v. Saenz, 133 Fla. 279, 182 So. 906 (1938):
The maker of a negotiable note should not be charged as garnishee of the payee while such note is current, unless it appears that the garnishee has it in his own possession and under his own control... . `The reason of this rule is founded upon the negotiable quality of such note. If the trustee could be charged in such a case, then it might happen that either a bona fide purchaser of the note must lose the amount of it, or the maker, without any fault on his part, be compelled to pay it twice. To avoid such a dilemma the rule was established.'
Although referring to the quoted portion as dictum, we have recognized it. See Coleman Music & Games Co., Inc. v. McDaniel, 411 So.2d 193 (Fla. 5th DCA 1981). This rule has never been changed in this jurisdiction.
The trial court was thus in error in ordering garnishment of future payments not due at the time the answer to the writ of garnishment was filed, or at the time the writ was served, or at any time between such times. See section 77.04, Florida Statutes (1981).
The final judgment is therefore reversed and the cause is remanded for further proceedings consistent herewith.
REVERSED and REMANDED.
COBB and FRANK D. UPCHURCH, Jr., JJ., concur.
NOTES
[1] The recorded instrument in question is headed up "Pledge Agreement." The body of the instrument clearly states that the Carter note and mortgage is pledged to secure payment of the debt from Gieger to Zuidema; that should the Carter mortgage go into default, Gieger would foreclose it; that should Gieger go into default on the Zuidema mortgage, Zuidema could foreclose on the collateral of the Carter mortgage. Thus it is clear that the Giegers retained ownership of the Carter mortgage, subject to this collateral pledge. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1585802/ | 108 Wis.2d 167 (1982)
321 N.W.2d 225
IN THE MATTER OF the ARBITRATION BETWEEN the WEST SALEM EDUCATION ASSOCIATION & Robert M. FORTNEY & the SCHOOL DISTRICT OF WEST SALEM:
Robert M. FORTNEY and the West Salem Education Association, Appellants,
v.
SCHOOL DISTRICT OF WEST SALEM, Respondent-Petitioner.
No. 80-1447.
Supreme Court of Wisconsin.
Argued April 26, 1982.
Decided July 2, 1982.
*168 For the respondent-petitioner there were briefs by Darrel A. Talcott of West Salem, and John Bosshard, Janet A. Jenkins, John H. Schwab, Jr., and Bosshard, Sundet & Associates, all of La Crosse, and oral argument by John Bosshard.
For the appellants there was a brief by James G. Birnbaum, Ellen M. Frantz, Daniel T. Flaherty, Gregory S. Bonney, James P. Gokey and Johns, Flaherty & Gillette, S.C., all of La Crosse, and oral argument by Mr. Birnbaum.
Amicus curiae brief was filed by Bruce F. Ehlke and Lawton & Cates of Madison, for Council 40, AFSCME, AFL-CIO, Professional Firefighters, of Wisconsin, AFL-CIO and Wisconsin Professional Police Association.
Amicus curiae brief was filed by James F. Clark, Michael J. Julka, and Isaksen, Lathrop, Esch, Hart & Clark of Madison, for Wisconsin Association of School Boards, Inc.
Affirming 104 Wis.2d 737, 313 N.W.2d 278.
DAY, J.
This is a review of an unpublished decision of the court of appeals reversing an order of the circuit court for La Crosse county, Honorable William L. Reinecke, Judge, which had vacated an arbitration award in favor of Robert M. Fortney and reinstated the decision of the West Salem School Board (hereinafter Board) to *169 discharge Mr. Fortney. The court of appeals remanded the case to the trial court with directions to issue an order confirming the arbitration award. We affirm the court of appeals.
[1]
The issue in this case is whether arbitrators appointed pursuant to a grievance procedure contained in a collective bargaining agreement could hold a de novo factual hearing to determine whether just cause existed for a school board to terminate a teacher, where the discharge decision was based on the findings and recommendation of a factfinder appointed by the Board. The Board argues that the arbitrator could only undertake a certiorari review of the record established at the hearing initiated by the Board and had no power to hold a de novo hearing. We hold that the arbitrators' interpretation of the collective bargaining agreement as permitting a de novo hearing is reasonable and does not unlawfully infringe upon the powers of the school board. We therefore affirm the decision of the court of appeals which reinstated the arbitrators' award.
Robert M. Fortney was employed as a teacher for the School District of West Salem from September, 1971, through August 20, 1979. In 1979, the Board received complaints by some students and parents that Mr. Fortney was making inappropriate statements in class. The Board investigated those complaints and, on March 5, 1979, informed Mr. Fortney that it proposed to discharge him. The Board appointed Attorney John Langer to conduct a fact finding hearing to determine whether the allegations against Mr. Fortney were true and, if so, warranted discharge. Mr. Fortney agreed to participate in the hearing, but informed the Board that he was specifically retaining his rights under a collective bargaining agreement (hereafter "agreement") which was then in effect between the School District of West Salem and the *170 West Salem Education Association (hereinafter the "Union").
Mr. Langer conducted fact finding hearings on May 30 and June 18, 1979, concerning eleven allegations of improper conduct by Mr. Fortney. On August 17, 1979, Mr. Langer issued findings of fact sustaining nine charges against Mr. Fortney and recommended that he be discharged. The school board adopted those findings and recommendations and discharged Mr. Fortney on August 20, 1979. That same day Mr. Fortney invoked his rights under the agreement and filed a grievance against the Board's action.
The parties agreed to waive the preliminary steps of the grievance procedure and selected arbitrators as provided in the agreement. This arbitration panel conducted hearings on October 22, 23 and 24, and November 27 and 28, 1979.
The arbitration panel interpreted the agreement as permitting a full factual hearing on the nine charges against Mr. Fortney that were found to have occurred by Mr. Langer and adopted by the Board as the basis for discharging Mr. Fortney. The arbitration panel further held that the Board was bound by the findings and recommendations upon which it based its discharge of Mr. Fortney and so limited proof to those matters. Forty-nine witnesses testified at the hearings conducted by the arbitration panel.
On April 2, 1980, the arbitration panel, by a vote of two to one, held that of the nine charges of misconduct against Mr. Fortney, three never occurred, three constituted proper teaching methods, and three, while reflecting poor judgment by Mr. Fortney, did not justify discharge. The arbitrators ruled that no just cause existed for Mr. Fortney's discharge and ordered him reinstated with back pay.
On May 9, 1980, the Board moved the circuit court for La Crosse county to vacate the award. On May 29, 1980, *171 Mr. Fortney petitioned the circuit court for La Crosse county to confirm the award. A hearing was held before Honorable William L. Reinecke. On July 11, 1980, Judge Reinecke overturned the arbitration decision and vacated the award on the ground that the arbitrators had exceeded their authority in conducting a de novo rather than a certiorari hearing as to whether just cause existed for the discharge. The court then reviewed the record and concluded that the Board's decision to discharge Mr. Fortney was supported by credible evidence and was not arbitrary and capricious. The court affirmed the Board's decision to discharge Mr. Fortney.
Mr. Fortney appealed to the court of appeals which reversed, holding that the arbitrators had acted within the scope of their authority, and remanded the case to the trial court with directions to confirm the arbitration award. The Board petitioned this court for review of the court of appeals decision. The petition was granted.
At issue in this case is whether the arbitrators exceeded their authority by interpreting the collective bargaining agreement to permit a de novo hearing on whether just cause existed to discharge Mr. Fortney, where a fact finding hearing had already been held concerning the propriety of the discharge. The arbitrators' decision should be vacated if that decision does not follow from the language of the collective bargaining agreement, is inconsistent with or violative of a statutory provision, or is incompatible with the United States or Wisconsin Constitutions. We hold that the decision and award is consistent with the collective bargaining agreement and applicable statutory and constitutional provisions and therefore affirm the court of appeals decision.
An arbitration award is presumptively valid and the court exercises only a supervisory role in reviewing an arbitration award. Professional Police Ass'n. v. Dane County, 106 Wis. 2d 303, 306-07, 316 N.W.2d 656 (1982). As *172 this court stated in Oshkosh v. Union Local 796-A, 99 Wis. 2d 95, 102-03, 299 N.W.2d 210 (1980):
"The law of Wisconsin favors agreements to resolve municipal labor disputes by final and binding arbitration. An arbitrator's award is presumptively valid, and it will be disturbed only where invalidity is shown by clear and convincing evidence. . . .
"The parties bargain for the judgment of the arbitrator correct or incorrect whether that judgment is one of fact or law."
Despite this policy of deference to arbitration decisions, a court may vacate the decision and award in cases of misconduct by arbitrators, where it evinces a perverse misconstruction of the collective bargaining agreement, or if it is illegal or violates strong public policy. Professional Police Ass'n. v. Dane County, 106 Wis. 2d at 308.
The Board argued before the trial court that the award should be vacated due to the misconduct of two of the arbitrators. The trial court found that no such misconduct occurred, and the Board neither appealed that ruling nor argued before this court that the award should be overruled due to any arbitrator's misconduct.
[2]
Because the arbitrator's power derives from the collective bargaining agreement, the decision and award must draw its authority from that agreement. Milwaukee Police Asso. v. Milwaukee, 92 Wis. 2d 145, 158, 285 N.W. 2d 119 (1979). The applicable provisions of the collective bargaining agreement are as follows:
"ARTICLE ONE: NEGOTIATION AGREEMENT. . . . C. BOARD SECURITY. It is recognized that the board has and will continue to retain the rights and responsibilities to operate and manage the school system and its programs, facilities, properties and activities of its employees; authorized by the State Statutes including but not exclusive of the following: . . .
*173 "21. The application of the above statutes, will not be used in any attempt to diminish employee rights under 111.70 (MERA).
"ARTICLE III [THREE]: GRIEVANCE PROCEDURE. . . . C. PROCEDURE. . . . 4. Level Four. If the decision of the Board is not satisfactory to the teacher or Welfare Committee, the grievance may be submitted to arbitration before an impartial arbitrator selected by the parties. The arbitrator to be selected in the following manner: The employer and the employee shall each appoint a member of the panel and shall notify the other of the name of his appointee to the Board within five (5) days of receipt of the written appeal. These two representatives shall meet in an attempt to select an impartial arbitrator. Failing to do so, they shall, within fifteen (15) days of the appeal request The Wisconsin Employment Relations Commission to submit a list of five names for their consideration. The employer and the employee representative shall determine by lot the order of elimination and thereafter each shall, in that order, alternately strike a name from the list, the fifth and remaining name shall act as the arbitrator.
"The arbitrator so selected will confer with the representatives of the Board and the Association and `hold hearings' promptly and will issue his decision on a timely basis. The arbitrator's decision will be in writing and will set forth his findings of fact, reasoning and conclusions of the issues submitted. The arbitrators will be without power or authority to make any decision which requires the commission of an act prohibited by law or which is violative of the terms of this agreement. Both parties agree to be bound by the award of the arbitrator and agree that judgment thereon may be entered in any court of competent jurisdiction.
"Each party shall bear the expenses of its legal representatives in this hearing. The fees and expenses of the arbitrator shall be shared equally by the parties." (emphasis added).
"ARTICLE SEVEN. WORKING CONDITIONS. . . . . D. TEACHER EVALUATION. . . . 3. No teacher shall be disciplined or reprimanded without just cause and approval of the administration."
*174 Pursuant to sec. 118.22 (2), Stats. 1977, school boards have the exclusive power to hire and fire teachers:
"118.22. Renewal of teacher contracts. . . . (2) On or before March 15 of the school year during which a teacher holds a contract, the board by which the teacher is employed or an employe at the direction of the board shall give the teacher written notice of renewal or refusal to renew his contract for the ensuing school year. . . . No teacher may be employed or dismissed except by a majority vote of the full membership of the board."
One of the purposes of the statute is to make it clear that hiring and firing of teachers cannot be done by school principals or superintendents but must be done by the school board.
[3, 4]
This power is not, however, wholly unrestricted. The decision to discharge must be made in a way which protects the teacher's constitutional right to due process. Hortonville Ed. Asso. v. Joint School Dist. No. 1, 87 Wis. 2d 347, 274 N.W.2d 697 (1979); Hortonville Ed. Asso. v. Joint Sch. Dist. No. 1, 66 Wis. 2d 469, 489-91, 225 N.W. 2d 658 (1975), rev'd on other grounds, 426 U.S. 482 (1976). Second, the power to discharge teachers, like other statutory duties of the Board pertaining to employment relations, may be limited by the provisions of a collective bargaining agreement entered into by the Board and a union representing teachers pursuant to the Municipal Employment Relations Act (MERA) secs. 111.70-111.77, Stats. 1977. Richards v. Board of Education, 58 Wis. 2d 444, 460a-460b, 206 N.W.2d 597 (1973).
The trial court correctly held that the fact finding procedure conducted by Mr. Langer sufficiently protected Mr. Fortney's constitutional due process rights. However, Mr. Fortney had additional rights under the collective bargaining agreement.
While school boards are vested by statute with the primary responsibility for school district management, see *175 chs. 118 and 120, Stats. 1977, they also have the power, pursuant to sec. 111.70, Stats., to limit their statutory powers by means of a collective bargaining agreement entered into with a Union composed of their employees.[1]*176 The Board entered into such an agreement with the Union.
Article One of the collective bargaining agreement reserved to the Board all of its statutory powers. However, Article I, clause 21, expressly states that the statutes outlining the Board's powers "will not be used in any attempt to diminish employee rights under § 111.70 (MERA)." While sec. 118.22 (2), Stats., is not among the statutory powers expressly reserved by the agreement, we conclude that the Board did not surrender its control over teacher employment by its failure to refer to that statute. Consistent with this, we conclude that, pursuant to clause 21, sec. 118.22 may not be used to diminish employes' rights under MERA.
MERA authorizes a municipal employer and a collective bargaining unit representing municipal employes to bargain and reach a binding agreement on "wages, hours and conditions of employment." Dismissal of employes, *177 and establishment of a grievance procedure pertaining thereto, was held by this court to be within the proper scope of collective bargaining in Richards, 58 Wis. 2d at 460a-460b.
Article Seven, section 6, clause 3, of the agreement between the Union and the Board states that a teacher will not be "disciplined" without "just cause and the approval of the administration." The arbitration panel, the trial court and the court of appeals all interpreted discharge of an employee to fall within the concept of "discipline." We agree with that interpretation.
The parties agree that the just cause standard is binding on the Board. The dispute is over who determines whether just cause exists. In entering into the agreement, the Board limited its statutory power to discharge teachers by agreeing it would only discipline a teacher "with the approval of the administration." It further agreed that it would not discipline or reprimand a teacher "without just cause."
The Board argues, and the trial court held, that this determination is exclusively reserved to the Board by sec. 118.22, Stats., and the collective bargaining agreement. While the discharged employee is entitled to file a grievance over the Board's action, review is limited to whether the Board's decision that just cause for discharge exists is supported by any credible evidence or was not arbitrary and capricious. According to the Board, such review is limited to the factual record relied upon by the Board in reaching the decision to discharge Mr. Fortney.
Mr. Fortney argues, and the court of appeals held, that if a teacher contends that just cause did not exist for his discharge, he is entitled to file a grievance pursuant to the procedures set forth in Article III of the agreement. An arbitration panel appointed pursuant to the grievance procedure must determine whether just cause for discharge existed in order to resolve the grievance. Because *178 the language in the agreement is vague and indefinite as to exactly what procedures should be used to arrive at that determination, it is within the province of the arbitration panel, as the interpreter of the contract language, to devise such procedures as it considers necessary to reach a decision, as long as those procedures are compatible with the contract language and do not violate the law. Mr. Fortney argues that the conclusion of the arbitration panel that a de novo factual hearing was required to determine whether just cause existed for the discharge is a reasonable one under the contract, violates no law, and therefore must be affirmed.
In Dehnart v. Waukesha Brewing Co., 17 Wis. 2d 44, 51, 115 N.W.2d 490 (1962), this court outlined the limited scope of judicial review of arbitration decisions:
"While this court may disagree with the interpretation of the contract reached by the arbitrator, we will not substitute our judgment for that of the arbitrator. The parties contracted for the arbitrator's settlement of the grievance and that is what they received.
"In United Steelworkers of America v. American Mfg. Co., 363 U.S. 564, 567, 80 Sup. Ct. 1343, 1346, 4 L. Ed. (2d) 1403, it is stated:
"`The function of the court is very limited when the parties have agreed to submit all questions of contract interpretation to the arbitrator. It is confined to ascertaining whether the party seeking arbitration is making a claim which on its face is governed by the contract. Whether the moving party is right or wrong is a question of contract interpretation for the arbitrator. In these circumstances the moving party should not be deprived of the arbitrator's judgment, when it was his judgment and all that it connotes that was bargained for.'"
[5]
Deference to arbitration decisions is particularly important in the area of public employment, where binding arbitration is set forth in MERA as an aid to labor peace. In Jt. School Dist. No. 10 v. Jefferson Ed. Asso., 78 Wis. *179 2d 94, 112-13, 253 N.W.2d 536 (1977), which involved an arbitration decision resolving a dispute between a school board and a teacher covered under a collective bargaining agreement, this court stated:
"The court has no business weighing the merits of the grievance. It is the arbitrators' decision for which the parties bargained. In Dehnart v. Waukesha Brewing Co., Inc., 17 Wis. 2d 44, 115 N.W.2d 490 (1962), this court adopted the Steelworkers Trilogy teachings of the court's limited function. The court's function is limited to a determination whether there is a construction of the arbitration clause that would cover the grievance on its face and whether any other provision of the contract specifically excluded it. . . .
"Our adherence to the Trilogy is in keeping with the strong legislative policy in Wisconsin favoring arbitration in the municipal collective bargaining context as a means of settling disputes and preventing individual problems from growing into major labor disputes. Secs. 111.70(3) (a) 5, 111.70 (6), Stats.; Local 1226 v. Rhinelander, 35 Wis. 2d 209, 216, 151 N.W.2d 30 (1967); Teamsters Union Local 695 v. Waukesha County, 57 Wis. 2d 62, 69, 203 N.W.2d 707 (1973)."
We therefore must uphold the arbitrators' decision as long as it is within the bounds of the contract language, regardless of whether we might have reached a different result under that language, and does not violate the law.
Collective bargaining agreements arrived at under MERA, and statutes related to matters contained in such agreements, are to be harmonized wherever possible. Professional Police Ass'n, 106 Wis. 2d at 316-17; Glendale Prof. Policemen's Asso. v. Glendale, 83 Wis. 2d 90, 103-04, 264 N.W.2d 594 (1978). We conclude that harmonizing the collective bargaining agreement provisions with the Board's power to discharge set forth in sec. 118.22 (2), Stats., leaves the Board with the exclusive right to discharge an employe, but requires that just cause exist for the discharge. If the employe contends there was no *180 just cause for discharge, he may process a grievance through the procedure contained in the agreement. If that grievance goes to arbitration, the arbitrators, under the terms of the agreement, may make an independent determination of whether there was just cause for the discharge, relying on whatever procedures they deem necessary to reach that determination. If the parties disagree with the procedure employed by the arbitrators, their remedy is to change the language of the agreement. In view of the broad powers of contract interpretation vested in arbitrators, their interpretation of the vague language governing arbitration procedure contained in this agreement should be upheld as the parties' bargain.
The Board and the trial court gave a great deal of significance to the fact that the Board authorized the fact finding procedure carried out by Mr. Langer prior to arriving at its decision to discharge Mr. Fortney. While such a procedure was sufficient to protect Mr. Fortney's constitutional right to due process,[2] it does not prevent Mr. Fortney from pursuing his additional rights under the collective bargaining agreement.
The agreement contains a step-by-step procedure for the processing of grievances. The proceedings conducted by Mr. Langer are not a substitute for those procedures. Mr. Fortney's counsel stated, in a letter to the Board, that while Mr. Fortney was willing to participate in the fact finding process conducted by Mr. Langer, he was expressly reserving his right to invoke the contractual grievance procedure if the Board took any action against him. When the subject of the "just cause" standard for discharge came up at the hearing, both Mr. Langer and counsel for the Board stated that the language of the agreement was irrelevant to that hearing. At the commencement of the hearing held June 18, 1979, Mr. Langer expressly stated:
*181 "I don't propose to construe this contract and apply the contract language at this point. I believe that's something that is a province of another tribunal."
We recognize that public policy militates in favor of maintaining a high degree of local control over educational decisions. Vesting broad authority in local school boards is a proper way of fulfilling this goal. Our decision in this case furthers that policy, recognizing and giving effect to provisions of a collective bargaining agreement voluntarily negotiated and agreed to by the Board and a Union representing employes of the local school district. While the Board is given certain powers in chs. 118 and 120, Stats., MERA also grants the Board the authority to modify those statutory powers, where a school board deems this to be advantageous in the maintenance of labor peace, by means of a collective bargaining agreement. Obviously, in the future, the Board may seek to modify the provisions at issue here through the collective bargaining process.
An argument that the arbitrators' decision should be vacated on constitutional grounds is urged upon us by the Wisconsin Association of School Boards, Inc., (hereinafter WASB) appearing as amicus curiae. This argument relies on our recent decision in Professional Police Ass'n. v. Dane County, 106 Wis. 2d 303, where we held that an arbitration decision will be vacated if it enforces a provision in a collective bargaining agreement which violates the Wisconsin Constitution, Professional Police Ass'n., 106 Wis. 2d at 315. WASB argues that Article X, sec. 1, of the Wisconsin Constitution reserves certain powers to school boards,[3] and that the collective bargaining agreement, as construed by the arbitrators, violates this provision, requiring that the decision be vacated.
*182 This case, however, is a far different one than was before this Court in Professional Police Ass'n. That case involved a constitutional provision providing for the office of sheriff. Prior decisions of this court held that the sheriff, under common law, had certain powers and duties in his relationship to the courts which were incorporated into the constitution. The sheriff cannot be divested of those powers and duties by statute. In Professional Police Ass'n., this court held that the common law powers and duties of the sheriff could likewise not be limited or abrogated by a collective bargaining agreement entered into by a county and a union representing deputy sheriffs. Professional Police Ass'n., 106 Wis. 2d at 315.
The provision at issue here, however, is not one which incorporates an ancient common law office, possessing defined powers and duties, into the constitution. Public instruction and its governance had no long-standing common law history at the time the Wisconsin Constitution was enacted. Furthermore, Article X, sec. 1, explicitly provides that the powers and duties of the school superintendent and other officers charged by the legislature with governing school systems "shall be prescribed by law." Because the constitution explicitly authorized the legislature to set the powers and duties of public instruction officers, Article X, sec. 1 confers no more authority upon those officers than that delineated by statute. Therefore, consistent with our holding that the arbitrator's decision and award violates no statutory provision relating to the powers and duties of the Board, we hold that it does not violate the Wisconsin Constitution.
[6]
In its petition for review the Board argues that when the arbitrators decided to hold a de novo hearing, they should have permitted the Board to bring in new charges against Mr. Fortney in addition to the charges that provided the basis for his discharge by the Board. This the *183 arbitrators refused to do. "The manner of conducting the arbitration proceeding after the arbitrator is selected and until the award is issued is left largely within the control of the parties and the arbitrator." Layton School of Art and Design v. WERC, 82 Wis. 2d 324, 343 n. 18, 262 N.W.2d 218 (1978).
We quote with approval the following language by the court of appeals in this case upholding the procedure adopted by the arbitrators:
"The arbitrators' limitation on the evidence to be introduced was reasonable. When the school board adopted the hearing examiner's findings, it made clear that Fortney's discharge was based on the nine charges found substantiated by the examiner, and that the other charges would not warrant discharge even if true. Evidence relating to other instances of misconduct was not relevant to the charges for which Fortney was discharged. The arbitrators acted reasonably in not permitting the school board to lodge new charges against Fortney at the arbitration hearing when they did not form the basis for his discharge." (Slip Op. at 12-13).
We hold that the decision of the arbitrators to limit the scope of the de novo hearing to the specific charges for which the Board discharged Mr. Fortney was proper under the contract.
In summary, we hold that the decision by the arbitration panel to conduct a de novo hearing as to whether just cause existed to discharge Mr. Fortney, limited to the charges upon which the Board issued its discharge decision, followed by the conclusion that no just cause existed, was within the arbitrators' authority. The arbitrators' decision did not reflect a perverse misconstruction of the terms of the collective bargaining agreement nor was it violative of any statutory or constitutional provision. We therefore affirm the Court of Appeals.
By the Court. The decision of the court of appeals is affirmed.
*184 WILLIAM G. CALLOW, J. (dissenting).
I disagree with the majority's determination that the arbitrators' decision to conduct a de novo hearing as to whether the Board had just cause was within the scope of the arbitrators' authority. Because I believe the only reasonable interpretation of the applicable statutes with the collective bargaining agreement limits the arbitrators' review to that record before the Board, I dissent.
Article X, sec. 1, of the Wisconsin Constitution provides that "[t]he supervision of public instruction shall be vested in a state superintendent and such other officers as the legislature shall direct; and their qualifications, powers, duties and compensation shall be prescribed by law." This section is implemented in part by sec. 118.22 (2), Stats., which provides: "No teacher may be employed or dismissed except by a majority vote of the full membership of the [school] board."
The parties agree that the collective bargaining agreement: (1) preserves the statutory right of the Board; (2) declares the arbitrators are without power to render a decision which calls upon the arbitrators to commit an act which is prohibited by law; and (3) limits the Board's actions by prescribing that "a teacher will not be `disciplined' without `just cause and the approval of the administration.'" Supra, at 177.
I agree with the majority's conclusion that "harmonizing the collective bargaining agreement provisions with the Board's power to discharge set forth in sec. 118.22 (2), Stats., leaves the Board with the exclusive right to discharge an employe, but requires that just cause exist for the discharge." Supra, 179 (emphasis added). I disagree, however, with the majority's conclusion that "the arbitrators, under the terms of the agreement, may make an independent determination of whether there was just cause for the discharge, relying on whatever procedures they deem necessary to reach that determination." *185 Id. In my opinion, such a construction of the collective bargaining agreement impermissibly substitutes the arbitrators for the Board rather than having the arbitrators review the sufficiency of just cause within the Board's exclusive power to discharge an employee on a finding of just cause.
The majority emphasizes the broad powers of contract interpretation vested in the arbitrators, id., at the expense of the broad control reserved by the School Board. See Hortonville Education Asso. v. Joint School District No. 1, 66 Wis. 2d 469, 498, 225 N.W.2d 658 (1975), rev'd., 426 U.S. 482, 496 (1976). The majority believes its decision recognizes and furthers the Board's control by giving effect to the collective bargaining agreement "voluntarily negotiated and agreed to by the Board." Supra, 181. The majority then concludes "[o]bviously, in the future, the Board may seek to modify the provisions at issue here through the collective bargaining process." Id. I submit that the majority incorrectly infers that the Board waived any limitation on the scope of the arbitrators' review by failing to specifically provide that the arbitrators' review was limited to an evaluation of the record considered by the school board. The Board, as an elected public body, is entitled to have its findings and actions viewed in light of a presumption of regularity and propriety. By deciding to determine the facts de novo, the arbitrators ignored this presumption and forced the Board to prove to the arbitrators that which should have been presumed.
The majority's approval of the arbitrators' de novo hearing severely undercuts the Board's exclusive power to discharge an employee and essentially turns over the Board's authority to the arbitrators. As the trial judge determined: "[The arbitrators] substituted [their] decision for that of the Board. This court finds such substitution *186 to be improper and constitutes a manifest disregard of the law."
The trial court drew a pertinent analogy to administrative law and the scope of judicial review of decisions of state administrative agencies:
"This court's finding regarding the proper function of the arbitrations herein is supported by the law governing review of decisions of state administrative agencies. That law clearly states that it is the public policy of this state that review of any agency's decision should not be a de novo review, but rather a review to determine whether the agency had a reasonable basis for finding as it did. The law also states that a court is not to substitute its opinion for that of the agency. Hence, review must be in a certiorari posture.
"Although this court is not here dealing with an agency of the state, this court believes that the laws stated above express the same public policy which should apply in this case. That policy, as expressed by the Legislature, is that courts should only have limited review of agency decisions. Similarly, arbitrators should have only limited review of the decisions of a school board."
The trial court then drew an analogy between the scope of the arbitrators' review of the Board's decision and the appellate review process with persuasive policy reasons for construing the processes the same:
"This Court is of the opinion that one rule that is adhered to regularly by appellate bodies, provides that the trial strategy chosen by counsel, whether in a civil or criminal case, is binding. When the counsel chooses to call or not call a witness, chooses to cross-examine or not cross-examine a witness, chooses to introduce an exhibit or not introduce an exhibit, he chooses a trial strategy. An appellate court will not remand a case for a trial de novo, and allow the counsel a new kick at the cat, when the reason for reversal is a choice of strategy. The attorney in such a case is stuck with his record and so it is here. There is no doubt that both parties to litigation would be better prepared to present their cases after receiving *187 an appellate decision on their initial efforts. It would be horrendous if in every appeal, the appellate court held a trial de novo and reconsidered the entire case to arrive at a new decision. In the instant case, counsel for the parties presented certain evidence to the factfinder, Attorney John Langer, and in so doing, chose a trial strategy. This court will not look beyond the record there made and the strategy there chosen and consider evidence which was not presented to the fact-finder but which was subsequently presented to the arbitration panel."
The Wisconsin Association of School Boards, Inc., in its amicus curiae brief, persuasively argues that a de novo fact finding arbitration hearing increases the possibility of protracted litigation and unnecessary expense. Providing for de novo review reduces the grievant's incentive to fully present his case to the Board which, of course, reduces the integrity of the proceedings before the school board.
The parties agree that the school board acted impartially and preserved all statutory rights. Any review of whether the Board had just cause to discharge Mr. Fortney must, of necessity, be based upon that evidence which was before the Board in its record. It is inconceivable to me how one can evaluate whether the Board acted with just cause if evidence and testimony not known by the Board is used to make that determination. While posthearing testimony may tend to support or contravene whether Mr. Fortney should have been discharged, this is something quite different from whether the Board's actions were taken with just cause. It is only the latter which is before the arbitrators on review.
Allowing, as was done in the instant case, posthearing submission of evidence defeats the very purpose of the original hearing and denies the Board an opportunity to reach a decision on a complete record. Expanding review of the Board's determination of just cause beyond the *188 parameters of that record which was before it contravenes notions of fundamental fairness to all parties involved. The majority's decision renders the Board's hearing a nullity. The arbitrators have been given more and broader powers than a circuit court, a clearly anomalous result.
The Wisconsin constitution and statutes clearly set forth a recognition of the importance attached to the authority of a school board to determine who shall teach our children. The importance of the Municipal Employment Relations Act, sec. 111.70, Stats., is also significant. Harmonizing the two statutes leads to the obvious conclusion that the Board and the Union have bargained for an arbitration review of the adequacy of the just cause for discharge determination made by the Board on the record before the Board. The majority opinion frustrates the Board's authority by permitting the arbitrators to decide the just cause issue on a record different from that available to and used by the Board in reaching its decision. Therefore, the arbitrators replace rather than review the Board. Accordingly, I dissent.
I am authorized to state that Justice LOUIS J. CECI joins in this dissenting opinion.
NOTES
[1] Applicable provisions of sec. 111.70, Stats., include:
"111.70 Municipal employment. (1) DEFINITIONS. As used in this subchapter:
"(a) `Municipal employer' means any city, county, village, town, metropolitan sewerage district, school district, or any other political subdivision of the state which engages the services of an employe and includes any person acting on behalf of a municipal employer within the scope of his authority, express or implied. . . .
"(d) `Collective bargaining' means the performance of the mutual obligation of a municipal employer, through its officers and agents, and the representatives of its employes, to meet and confer at reasonable times, in good faith, with respect to wages, hours and conditions of employment with the intention of reaching an agreement, or to resolve questions arising under such an agreement. The duty to bargain, however, does not compel either party to agree to a proposal or require the making of a concession. Collective bargaining includes the reduction of any agreement reached to a written and signed document. The employer shall not be required to bargain on subjects reserved to management and direction of the governmental unit except insofar as the manner of exercise of such functions affects the wages, hours and conditions of employment of the employes. In creating this subchapter the legislature recognizes that the public employer must exercise its powers and responsibilities to act for the government and good order of the municipality, its commercial benefit and the health, safety and welfare of the public to assure orderly operations and functions within its jurisdiction, subject to those rights secured to public employes by the constitutions of this state and of the United States and by this subchapter. . . .
"(2) RIGHTS OF MUNICIPAL EMPLOYES. Municipal employes shall have the right of self-organization, and the right to form, join or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in lawful, concerted activities for the purpose of collective bargaining or other mutual aid or protection, . . .
"(3) PROHIBITED PRACTICES AND THEIR PREVENTION. (a) It is a prohibited practice for a municipal employer individually or in concert with others: . . .
"4. To refuse to bargain collectively with a representative of a majority of its employes in an appropriate collective bargaining unit.
"5. To violate any collective bargaining agreement previously agreed upon by the parties with respect to wages, hours and conditions of employment affecting municipal employes, including an agreement to arbitrate questions arising as to the meaning or application of the terms of a collective bargaining agreement or to accept the terms of such arbitration award, where previously the parties have agreed to accept such award as final and binding upon them.
"(6) DECLARATION OF POLICY. The public policy of the state as to labor disputes arising in municipal employment is to encourage voluntary settlement through the procedures of collective bargaining. Accordingly, it is in the public interest that municipal employes so desiring be given an opportunity to bargain collectively with the municipal employer through a labor organization or other representative of the employes' own choice. If such procedures fail, the parties should have available to them a fair, speedy, effective and, above all, peaceful procedure for settlement as provided in this subchapter."
[2] See, Hortonville, 87 Wis. 2d at 397; Naus v. Jt. S.D. No. 1, Sheboygan Falls, 76 Wis. 2d 104, 111-12, 250 N.W.2d 725 (1977).
[3] "Article X. EDUCATION. Superintendent of Public Instruction. SECTION 1. [As amended Nov. 1902] The supervision of public instruction shall be vested in a state superintendent and such other officers as the legislature shall direct; and their qualifications, powers, duties and compensation shall be prescribed by law." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2440537/ | 966 N.E.2d 616 (2008)
381 Ill. App. 3d 1164
359 Ill. Dec. 295
PEOPLE
v.
WINSTON.
No. 4-07-0640.
Appellate Court of Illinois, Fourth District.
May 15, 2008.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583950/ | 717 F. Supp. 1090 (1989)
ATTORNEY GENERAL OF MARYLAND and State of Maryland
v.
Walter Robert DICKSON, et al.
Civ. No. PN-86-1128.
United States District Court, D. Maryland.
June 28, 1989.
*1091 *1092 *1093 J. Joseph Curran, Jr., Atty. Gen. of Maryland, and Peter V. Berns, Asst. Atty. Gen. of Maryland, for plaintiffs.
Daniel F. Goldstein and Andrew D. Freeman, Brown & Goldstein, Baltimore, Md., for defendants Walter Robert Dickson and Douglas Craig Dickson.
Stanley M. Dietz, Poolesville, Md., for defendant Haynes Lee Locklear.
Joseph P. Lamari, Rockville, Md., for defendant Carl R. Wells, Individually and doing business as S & W Auto Sales.
Robert A. Rohrbaugh, Rockville, Md., for defendant Marcus Garvey Guy.
OPINION
NIEMEYER, District Judge.
This case presents multiple questions relating to liability and damages arising from the "rolling-back" of the odometers of 355 used automobiles. The Attorney General of Maryland and the State of Maryland have sued Walter Robert Dickson and Haynes Lee Locklear for violations of the Motor Vehicle Information and Cost Savings Act, 15 U.S.C. § 1981 et seq. ("federal odometer Act"), and the Maryland Consumer Protection Act, Comm. Law Art., § 13-101 et seq., Md.Code. They contend that from 1981 through 1985 Dickson and Locklear, along with others, were involved in a scheme to roll back odometers of used cars and thereafter misrepresent their true mileage to purchasers.
The Attorney General and the State of Maryland have filed a motion for summary judgment on all counts of the complaint, seeking injunctive relief, civil fines, attorneys fees, and, on behalf of consumers, treble damages and restitution. Dickson filed a response in which he contends (1) that plaintiffs' proof fails to establish defendants' liability for altering the odometers of all 355 vehicles in question and fails to show the requisite intent to defraud; (2) that plaintiffs' claims are barred in whole or in part by applicable statutes of limitations; (3) that plaintiffs do not have the right to enforce the relevant statutes against all the transactions in question; and (4) that the damages claimed are excessive and duplicative. Dickson also filed a cross-motion for summary judgment. Locklear has failed to file any response to plaintiffs' motion for summary judgment.
Following a lengthy hearing on the pending motions, the parties submitted further exhibits, affidavits and memoranda. The decisions now made are based on the total record, including the record made by the parties in connection with earlier filed motions for summary judgment.
I.
BACKGROUND
In 1985, defendants Dickson, Locklear and others were indicted by a federal grand jury in Maryland and charged in a 34-count indictment with carrying out a scheme to defraud by rolling back the odometers of high-mileage vehicles and selling them with inaccurate lower odometer readings.
On March 11, 1986, Dickson pleaded guilty to Count VII of the indictment, which included allegations that from December 1981 through July 1985 Dickson had been involved in a scheme to defraud consumers by selling them vehicles with rolled-back odometers. Locklear, on the other hand, went to trial and was convicted *1094 on May 10, 1986, of fifteen counts of the indictment, which likewise charged him with scheming to defraud consumers by selling "rolled-back" vehicles. Locklear's conviction was affirmed on appeal. United States v. Locklear, 829 F.2d 1314 (4th Cir. 1987).
The complaint in this case, which was filed on April 9, 1986, and later amended, names Dickson, his son Douglas Craig Dickson, Locklear, Carl R. Wells (individually and doing business as S & W Auto Sales), and Marcus Garvey Guy as defendants and co-conspirators. In Counts I and III, respectively, the plaintiffs allege that the defendants altered the odometers of more than 300 motor vehicles in violation of § 1984 of the federal odometer Act and made false disclosures of the odometer readings of these vehicles in violation of § 1988. In Counts II and IV plaintiffs allege that the defendants conspired to violate §§ 1984 and 1988. Finally, in Count V plaintiffs allege that the defendants engaged in deceptive trade practices in violation of the Maryland Consumer Protection Act.
Under the federal odometer Act, plaintiffs pray for permanent injunctive relief to prevent future violations and, on behalf of the purchasers of the cars, demand treble damages and attorneys' fees. Under the Maryland Consumer Protection Act, plaintiffs seek restitution and civil penalties.
Judge Joseph Howard, to whom this case was originally assigned, entered a partial summary judgment in favor of plaintiffs and against Dickson on the issue of liability. The plaintiffs voluntarily dismissed the defendants Carl Wells and Marcus Guy, and the case proceeded to trial before a jury on the issue of liability alone against Douglas Craig Dickson and Locklear. The jury found in favor of Douglas Craig Dickson on all counts and in favor of Locklear on Counts III, IV and V. They found against Locklear on Counts I and II, which allege that he altered the odometer of over 300 used automobiles and engaged in a conspiracy to alter those odometers. No finding was made by either Judge Howard or the jury with regard to the identity and precise number of automobiles involved.
Thus only Dickson and Locklear remain as defendants, Dickson on all counts and Locklear on Counts I and II. The plaintiffs seek to impose liability and damages on both of these defendants for 355 automobiles identified in the papers supporting the plaintiffs' motion for summary judgment. Because defendant Locklear has elected not to respond to plaintiffs' motion for summary judgment, the arguments that are attributed to the defendants have been raised only by Dickson.
II.
NEXUS OF 355 VEHICLES TO THE CONSPIRACY
Dickson first argues that plaintiffs have failed to prove that he is liable for the violations alleged in connection with the 355 cars listed in plaintiffs' exhibits to their summary judgment motion. He suggests that Judge Howard's ruling on the issue of liability was based on his guilty plea to Count VII of the indictment (a single count of mail fraud), and that there has been no adjudication of his liability with respect to any car other than the one mentioned in that count.
Dickson's argument highlights the logistical difficulties presented by plaintiffs' instant motion. Judge Howard's ruling on plaintiffs' motion for partial summary judgment on the issue of liability established Dickson's participation in a conspiracy and his liability for violations of the federal odometer Act and the Maryland Consumer Protection Act. It did not establish, however, which vehicles were involved in the conspiracy and on how many occasions the statutes were violated. It must therefore still be determined whether the 355 vehicles listed in Exhibit 8A to the plaintiffs' motion have been sufficiently linked to the defendants.
Both defendants have been found liable for conspiring to violate the federal odometer Act. Judge Howard entered summary judgment on the issue of liability against Dickson and a jury found that *1095 Locklear violated 15 U.S.C. § 1984 (which prohibits the alteration of odometers) and that he participated in a conspiracy to violate that section. It is well established that members of a conspiracy are jointly and severally liable for the actions committed by their co-conspirators during the course of and in furtherance of the conspiracy. See, e.g., United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 253-54, 60 S. Ct. 811, 858, 84 L. Ed. 1129 (1940); Halberstam v. Welch, 705 F.2d 472, 481 (D.C.Cir.1983); Duval v. Midwest Auto City, Inc., 425 F. Supp. 1381, 1386, 1388 (D.Neb.1977), aff'd, 578 F.2d 721 (8th Cir.1978) (holding conspirators who violated federal odometer law jointly and severally liable for the acts of their co-conspirators). Therefore, both Dickson and Locklear will be held liable for violations of the federal odometer Act committed by members of their conspiracy during the course of and in furtherance of the conspiracy.
Dickson's argument that Judge Howard's partial summary judgment ruling on the issue of liability was limited to the single violation listed in Count VII of the indictment, and did not include a finding of involvement in a conspiracy, will not be sustained for two reasons.
First, the motion which Judge Howard granted was based on the entire complaint, which included allegations of Dickson's involvement in a conspiracy responsible for rolling back the odometers of over 300 vehicles. Plaintiffs had submitted carefully prepared documentation establishing Dickson's involvement in the conspiracy, and Dickson failed to challenge this documentation.
Second, Dickson's admissions made during his plea to Count VII of the indictment, upon which Judge Howard relied, encompassed more than the one vehicle referred to in that count. The first paragraph of Count VII of the indictment realleged the allegations in Count I dealing with Dickson's involvement in a scheme to defraud consumers by selling them vehicles with rolled-back odometers. Judge James Miller, who received Dickson's guilty plea, made it clear that these allegations were incorporated in Count VII and that defendant's guilty plea included a plea of guilty to these allegations. When granting plaintiffs' motion for summary judgment on the issue of liability, Judge Howard made it clear that he was treating Dickson's guilty plea as an admission of his involvement in a conspiracy to defraud:
[Dickson] pled guilty to Count seven of an indictment ... which charged him with violation of 18 U.S.C., Section 1341. This count expressly incorporated allegations of the defendant's direct and substantial involvement in an odometer rollback scheme. Defendant's voluntary guilty plea as to this count is treated as an admission by this Court.
After having requested the defendant to set forth material facts that controvert his prior admissions, the Court finds that no such facts were forthcoming.
Accordingly, pursuant to Rule 56, plaintiff's motion for partial summary judgment as to Defendant Walter Dickson's liability is granted. (Emphasis added.)
Dickson argues that even if an allegation of a conspiracy to defraud was included in the count to which he pleaded guilty, because the conspiracy was not an essential element of his plea, plaintiffs cannot rely on his guilty plea to establish liability as to the vehicles listed in the exhibits to the motion for summary judgment. He cites United States v. Wight, 819 F.2d 485, 487-88 (4th Cir.1987) as support for this argument. In Wight, the Fourth Circuit held that a defendant's guilty plea to a criminal information charging him with accepting $70,107 in gratuities through his government post did not estop him from contesting the amount of the gratuities in a subsequent civil case because the amount of money involved was not an essential element of the offense.
In this case, there has been no ruling that Dickson is estopped from contesting his involvement in a conspiracy. In fact, Judge Howard specifically stated that his ruling on Dickson's liability was not based upon any application of the doctrine of collateral estoppel; rather, he treated Dickson's *1096 guilty plea as an admission. Because Dickson did not come forward with facts to controvert that prior admission, Judge Howard entered summary judgment against him. Once again, on the motions currently before the Court, defendants have failed to present evidence that raises a genuine question of fact as to their involvement in the conspiracy.
Although the Court rejects Dickson's contention that he has not been found liable for being involved in a conspiracy, his contention that earlier rulings have not determined the specific vehicles that were involved in the conspiracy and the number of violations committed by the conspirators is well taken. The Court must determine at this time whether plaintiffs have linked the vehicles in question to defendants' conspiracy and thereby established each defendant's liability for the violations associated with each vehicle.
The record shows that beginning in 1981 Dickson, Douglas Dickson, Haynes Locklear, Carl Wells, and Marcus Guy entered into a conspiracy to roll back the odometers and misrepresent the actual mileage of over 300 vehicles. Generally, Locklear, doing business as Riggs Motors, bought high mileage used vehicles from dealers in Maryland and suburban Virginia and received a written mileage disclosure statement for each vehicle. Locklear then transferred the vehicles to one of the Dicksons or to S & W Auto Sales. At some point either Locklear or one of the Dicksons altered the odometers on the vehicles or had someone alter the odometers for them. Marcus Guy reset the odometers of many of the vehicles. One of the Dicksons would then obtain certificates of title for the vehicle, which falsely represented the vehicle's actual mileage, and then sell the vehicle.
Plaintiffs have gone to great lengths to link each of the 355 cars at issue with the defendants in this conspiracy. The Consumer Protection Division of the Office of the Attorney General has collected and submitted to this Court motor vehicle records and affidavits documenting the chain of ownership of the 355 vehicles. Christopher Waldt, an investigator with the Consumer Protection Division, has analyzed these records and prepared summary exhibits. Exhibit 8A to the motion for summary judgment lists all of the vehicles by record number and provides, with respect to each vehicle the following information: the mileage when the vehicle was allegedly acquired by defendants; the mileage when the vehicle was allegedly sold by the defendants; which of the alleged conspirators appear in the vehicle's chain of title; the state where the vehicle was titled before being sold; the state where the vehicle was titled by the consumer after the purchase; and the date of the purchase by the consumer. Exhibit 8B provides the identical information for 240 vehicles (of the 355 total) for which plaintiffs were able to obtain affidavits from the purchasers. Plaintiffs have also prepared a table summarizing some of the data from Exhibit 8A.
The table shows that the names of both Dickson and Locklear appear in the chain of title of 186 of the 355 vehicles listed in Exhibit 8A and that the chain of title of 111 of the remaining vehicles contains either Dickson's name or Locklear's name. In other words, 297 of the vehicles have in their chain of title either Locklear's name, Dickson's name, or both. Defendants are also implicated in the sale of the remaining 58 vehicles, even though their names do not appear in the vehicles' chains of title. Fifty-one of the remaining 58 vehicles have Douglas Dickson's name in their chain of title. Plaintiffs argue that Douglas Dickson's involvement implicates defendants because defendant Dickson admitted during his son's trial that he was involved with 99% of the cars which had Douglas Dickson's name in the chain of title.
Plaintiffs link the remaining seven vehicles to defendants in the following manner. Six of these seven vehicles have the name "Bledsoe" in their chain of title. This name, which appears in the chain of title of 15 of the 355 vehicles, was used by defendants to escape detection by the authorities. Moreover, those titles which used the name Bledsoe used addresses which were regularly used by Dickson for purposes of titling vehicles. The final remaining *1097 vehicle had the name S & W Auto Sales in the chain of title. S & W, which was the trade name used by Carl Wells, a named co-conspirator, also appears in the chain of title of 173 of the 355 vehicles in Exhibit 8A. Defendants have admitted that S & W is one of the instrumentalities they regularly used to escape detection.
In opposition to plaintiffs' motion for summary judgment, Dickson has filed a three-paragraph declaration which denies his involvement with most of the 355 vehicles. In the declaration, Dickson first states that he cannot remember most of the cars for which plaintiffs seek to hold him liable and that he cannot refresh his recollection because his records were destroyed by a fire at his home. Dickson then declares that he was not involved in a roll back conspiracy prior to May, 1985, and that prior to that date, he did not know that any car with which he was involved had had its odometer rolled back. Finally, Dickson asserts that as to those cars sold in or after May 1985, many were sold by others, outside of the conspiracy in which he was involved, without his participation in their purchase, sale, or odometer alteration.
The Court notes that Dickson denies liability only in a totally conclusory fashion. This is not surprising because his declaration is directly undermined by his own admissions of more specific criminal conduct from as early as 1981, in which he described rolling back about 100 odometers himself and redocumenting those rolled back by other co-conspirators. His declaration also fails to address the specific vehicle-by-vehicle documentation submitted by plaintiffs to which he offers no response. Thus, the Court concludes that the records of prior proceedings, which contain defendants' admissions, and the affidavits and exhibits filed by plaintiffs in support of their motion for summary judgment link the 355 vehicles in Exhibit 8A to the conspiracy alleged in the complaint and implicate defendants in that conspiracy.
Once a motion for summary judgment has been adequately supported, the nonmovants must come forward with more than conclusory denials. They must present evidence to demonstrate the existence of a genuine issue for trial:
Rule 56(e) itself provides that a party opposing a properly supported motion for summary judgment may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial.... [T]he plaintiff must present affirmative evidence in order to defeat a properly supported motion for summary judgment. This is true even where the evidence is likely to be within the possession of the defendant, as long as the plaintiff has had a full opportunity to conduct discovery.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256-57, 106 S. Ct. 2505, 2514-15, 91 L. Ed. 2d 202 (1986).
Neither Dickson nor Locklear has come forth with specific facts to show the existence of a genuine issue as to any material fact. Dickson's conclusory denial does not meet Anderson's standards for defeating a summary judgment motion.
Dickson's statement that he was unaware of all the transactions imputed to the conspiracy is of little moment. As a co-conspirator who knowingly participated in the conspiracy, he is imputed with the acts of his conspirators undertaken in furtherance of the conspiracy. Likewise, his statement that he could not recall the transactions without his records (which he claims were burned in a fire) does not raise a genuine issue of fact. The Court concludes that plaintiffs have amply demonstrated the connection between the conspiracy and the 355 motor vehicles that had rolled-back odometers and have amply demonstrated defendants' connection to this conspiracy.
III.
INTENT TO DEFRAUD
Section 1990a(a) of the federal odometer Act permits the Attorney General of Maryland to sue violators of the Act to enjoin future violations and to recover, on behalf of the victims, the amounts to which the *1098 victims would be entitled under § 1989. In order to establish liability under § 1989 plaintiffs must show that defendants violated the federal odometer Act with the intent to defraud. Defendant Dickson, noting that intent to defraud is a necessary element of plaintiffs' case, argues that plaintiffs cannot be granted summary judgment because no such evidence of intent to defraud has been produced.
Contrary to defendants' contention, the record contains ample evidence establishing an intent to defraud. At his rearraignment on March 11, 1986, in the course of pleading guilty to Count VII of the indictment against him, defendant Dickson admitted to the following statement of facts:
[Y]ou, W.R. Dickson, and Locklear, D.C. Dickson and Wells and other persons unlawfully, willfully, and knowingly devised and intended to devise a scheme and artifice to defraud and to obtain money and property by means of false and fraudulent pretenses, representations and promises as to the true mileage of used cars sold by you and others.
* * * * * *
[A]s a part of the scheme and artifice to defraud ... you [W.R. Dickson], Locklear, and D.C. Dickson would and did cause to be altered, reset and rolled back the odometers on hundreds of used cars ... so that the odometers reflected a substantially lower mileage than, in fact, was true.
* * * * * *
[I]t was further a part of the scheme and artifice to defraud that you [W.R. Dickson] and your son ... sold the used cars to private buyers. At the time ... the cars' odometers did not reflect, allegedly, the true mileage on the used cars, but rather reflected substantially lower mileage and ... you [W.R. Dickson] and your son made false representations to the private buyers at the time of the sale about the ownership history and prior use of the used cars. (Emphasis added.)
Later in the same dialogue with Judge Miller, Dickson testified under oath as follows:
The Court: And did you enter into a scheme and artifice to defraud purchasers of automobiles, used automobiles by, in effect, setting the mileage odometers back?
Mr. Dickson: Yes.
The Court: And you entered into the scheme as generally alleged in the first count of this indictment; is that right?
Mr. Dickson: That is correct.
* * * * * *
The Court: And you knew what you were doing when you were involved in this scheme; is that correct?
Mr. Dickson: Yes. (Emphasis added.)
When Judge Howard granted plaintiffs' motion for summary judgment against defendant Dickson on the issue of liability on April 7, 1987, he treated Dickson's plea to Count VII of the indictment, which "expressly incorporated allegations of the defendant's direct and substantial involvement in an odometer rollback scheme," as an admission which supported liability on all counts of the complaint, including allegations that "the alterations alleged ... were performed with the intent to defraud."
In addition to confessing guilt before Judge Miller during his rearraignment, the record shows that Dickson testified fully to the entire conspiracy at Locklear's trial. He described the arrangement pursuant to which 400-500 used vehicles were redocumented and thereafter transferred from Locklear to Dickson. Dickson admitted that he rolled back somewhat more than 100 vehicles and that he knew Locklear had rolled back 30-40% of the remainder of the 400-500 vehicles. He also described the involvement of his son, Douglas Dickson, as well as Carl Wells and Marcus Guy. He has not come forward now to dispute any of these admissions.
Even were the conclusion reached that this record amounted only to a showing of gross negligence or reckless disregard with respect to incorrect odometer readings when making disclosure statements, an inference of intent to defraud may be drawn. See, e.g., Ryan v. Edwards, 592 F.2d 756, 761 (4th Cir.1979); *1099 Tusa v. Omaha Auto Auction, Inc., 712 F.2d 1248, 1253-54 (8th Cir.1983); Nieto v. Pence, 578 F.2d 640, 642 (5th Cir.1978). Because Dickson was involved in a scheme to defraud, and because he knew that so many of the cars he sold had incorrect odometer readings, he acted, in the least, with reckless disregard with respect to the accuracy of the odometer readings on the 355 cars involved in this action.
An intent to defraud on the part of defendants can also be inferred from the fact that the odometer readings of the 355 vehicles changed while the vehicles were under the dominion of the conspirators. In Delay v. Hearn Ford, 373 F. Supp. 791, 796 (D.S.C.1974), the court explained:
All that is required of a purchaser before recovery will be allowed is that a change in the odometer reading has occurred and that the seller has failed to disclose the change. An intent to defraud arises from the proof of the foregoing in the absence of an explanation of the odometer change.
See also Shore v. J.C. Phillips Motor Co., 567 F.2d 1364 (5th Cir.1978); Bryant v. Thomas, 461 F. Supp. 613 (D.Neb.1978).
In this case, however, inferences are not needed to prove intent. The evidence is direct, admitted and uncontroverted.
IV.
SITUS OF THE VIOLATIONS
The federal odometer Act empowers the Attorney General of Maryland to sue only with respect to violations which "occurred" in the State of Maryland. 15 U.S.C. § 1990a(a). Although plaintiffs have established that both defendants altered the odometers of 355 vehicles in violation of 15 U.S.C. § 1984, the Attorney General can recover for only those violations which occurred in Maryland. Therefore, the situs of each violation must be determined.
Section 1984 of the federal odometer Act provides, in part:
No person shall ... alter or cause to be ... altered the odometer of any motor vehicle with intent to change the number of miles indicated thereon.
Each time the defendants altered an odometer a separate violation of the Act occurred. Therefore, for purposes of demonstrating where the violations of § 1984 occurred, the plaintiffs must show where each alteration took place.
The record does not document by direct evidence where each alteration took place. To make such a showing directly would ordinarily be an impossible task. It is not often that a criminal will permit a third-party observer to document his illegal activities extraordinary care is usually taken by the criminal to conceal his conduct. Only by inference and circumstantial evidence are matters such as these generally proved.
The Attorney General argues that one may infer from the totality of the facts in this case that the odometer alterations occurred in Maryland. He notes that the record shows that (1) Dickson admitted selling cars from, among other places, his home in Silver Spring, Maryland; (2) Locklear bought and sold cars under the name Riggs Motors operating in Chillum, Maryland; (3) Marcus Guy rolled back cars for Locklear in Chillum, Maryland; and (4) Dickson often had odometers rolled back in the parking lot of a Pantry Pride on Piney Branch Road in Maryland.
There is other evidence in the record from which one could infer that the odometers were altered in Maryland. Dickson has admitted that the conspirators hired Marcus Guy to roll back odometers. At Locklear's criminal trial, Guy testified that most of the cars he rolled back for Locklear were located at Locklear's home in Chillum, Maryland. Walter Dickson testified at Locklear's criminal trial that he often saw Guy working at Locklear's home and at Locklear's shop, Riggs Motors, also located in Chillum.
Dickson testified at his son's civil trial that Guy was the only technician he ever used to roll back odometers. He further testified that Guy would do the work wherever the vehicle had been left by Locklear. Locklear most often left the vehicles in a *1100 lot of a Pantry Pride on Piney Branch Road in Maryland. Some of the other places Locklear would leave the vehicles were Locklear's home and his place of business.
The specific evidence which places all the known roll back sites in Maryland, and the established facts that the defendants' residences and business were located in Maryland, as were the bases of operation of the co-conspirators, constitute circumstantial evidence that all the violations of § 1984 occurred in Maryland. Because there is no contradicting evidence the Court finds that all odometer alterations that have been shown occurred in Maryland.
To permit circumstantial evidence to prove that all violations of § 1984 occurred in Maryland is particularly acceptable here because the direct evidence implicates the defendants in 355 violations of § 1984, leaving open only the formal question of who will act as custodian for the claims and recoveries on behalf of the victims. In other words, defendants' liability would not be reduced if it turned out that some of the vehicles were altered outside of Maryland. The only outcome of such an eventuality would be that the claims for those vehicles would have to be brought by the Attorney General of another state.
Defendants have advanced no evidence to rebut the claim that the violations of § 1984 occurred in Maryland, nor have they suggested as a general matter that any cars were rolled back outside of Maryland. Their only contention, that the Attorney General has failed in his proof of situs, is therefore rejected.
Count II, which is based on § 1986 of the federal odometer Act, alleges that defendants conspired to violate § 1984. Section 1986 provides that "[n]o person shall conspire with any other person to violate section 1983, 1984, 1985, 1987, or 1988 of this title." Because the defendants conspired in Maryland to violate § 1984, the Attorney General of Maryland is empowered to sue to recover for violations of § 1986.
Counts III and IV, for which only Dickson has been found liable, are based respectively on (1) the failure to make accurate disclosure of mileage in violation of § 1988, and (2) conspiring to violate § 1988.
Section 1988 prohibits a transferor of a motor vehicle from making a false statement to a transferee in violation of rules adopted under the section, which are set forth at 49 C.F.R. § 580.1 et seq. These rules require that a transferor furnish the purchaser of a motor vehicle with a written statement disclosing accurate odometer information. If the state where the motor vehicle is registered makes adequate provision for disclosure of odometer information on certificates of title, the transferor is permitted to satisfy the disclosure requirements on the certificate of title. A violation of § 1988 therefore is the failure to make accurate disclosure, and the situs of the violation is where the inaccurate disclosure was made or where the sale was made without disclosure.
The record shows that a significant number of the 355 vehicles were titled to consumers in states other than Maryland, including Delaware, Massachusetts, Michigan, Pennsylvania, Virginia, and West Virginia. In some instances the state where the vehicle was titled upon purchase is not known. It is not known where the disclosures were made in these instances, and no reliable inference can be drawn from the evidence presented.
With respect to vehicles titled in Maryland, however, the Court can infer that the inaccurate disclosure or failure to disclose occurred in Maryland. The facts that the odometers on these vehicles were rolled back in Maryland, that the bases of operations of the conspiracy were in Maryland, and that the purchasers titled the vehicles in Maryland are circumstantial evidence that the failure to make accurate disclosure took place in Maryland. No evidence has been offered to the contrary. Thus, the claims of the Attorney General against Dickson on vehicles titled in Maryland are supported by the additional ground that he violated 15 U.S.C. § 1988. Claims on vehicles titled by purchasers in states other than Maryland have not been proved.
*1101 With respect to Count IV, the count alleging a conspiracy to violate § 1988, the violation did occur in Maryland because that is where the co-conspirators were located and where the conspiracy took place, notwithstanding the fact that some acts in furtherance of the conspiracy may have occurred outside of Maryland. The Attorney General of Maryland therefore is entitled to seek recovery against Dickson for violation of § 1986.
Count V of the amended complaint is based on the Maryland Consumer Protection Act, Comm. Law Art., § 13-303, Md. Code, which prohibits a person from engaging in any unfair or deceptive trade practice in the sale of consumer goods. Although the Act does not specify the connection that a deceptive practice must have with the State of Maryland to fall within the purview of the Act, there must be a substantial state interest in the conduct. To determine the interest of the state in conduct, the Court will ordinarily be guided by the rule that "unless an intent to the contrary is expressly stated, acts of the legislature will be presumed not to have any extraterritorial effect. See Chairman of Board v. Waldron, 285 Md. 175, 183-84, 401 A.2d 172 (1979) (quoting Sandberg v. McDonald, 248 U.S. 185, 195, 39 S. Ct. 84, 86, 63 L. Ed. 200 (1918)). The intent of the Maryland General Assembly with respect to the Maryland Consumer Protection Act was to "provide minimum standards for the protection of consumers in the State." Md. Com. Law Code Ann. § 13-103(a) (1983) (emphasis added). If conduct amounting to a violation occurs entirely in the state, it is obviously subject to state enforcement. If, on the other hand, the conduct takes place in part out of the state, the state interest would need to be determined from the specific conduct in this state or the impact that the conduct had on Maryland consumers.
Section 13-303 of the Maryland Consumer Protection Act enumerates an extensive list of practices, each of which amounts to a deceptive practice. Common to each practice is the notion that a deceptive statement is communicated to a consumer in the state. Thus, the practice of rolling-back is of itself insufficient to constitute a violation within the scope of the Act. There must be some form of communication to a consumer or potential consumer in the State.
While the Court has found that all "rolling-back" occurred in Maryland, the record does not specify for each transaction where the solicitation of the consumer occurred or where the sale took place. With respect to those transactions in which the vehicle was titled in the State, the Court concludes that the circumstantial evidence establishes, in the absence of evidence to the contrary, that the violation occurred in Maryland. On all other transactions, the record is insufficiently developed to enter summary judgment in favor of plaintiffs for violations of the Maryland Consumer Protection Act.
V.
STATUTE OF LIMITATIONS
On June 5, 1986, shortly after the complaint in this action had been filed, defendant Dickson filed a motion to dismiss, arguing that plaintiffs' claims were barred by the applicable statutes of limitations. In denying this motion on March 12, 1987, Judge Howard stated in an order that the court had determined that the applicable statute of limitations was tolled from running until plaintiffs discovered the existence of the alleged violations in September, 1985. However, the order stated:
To the extent that the affirmative defense of expiration of the statute of limitations may be viable as to specific claims of certain consumers who purchased automobiles from these defendants, the defendants may reassert this defense in an appropriate motion after discovery is complete, or during the damage phase at trial, assuming liability is established.
Defendants now reassert their argument that plaintiffs' claims under both federal and state law are either completely or partially barred by the statute of limitations.
*1102 Section 1990a(b) of the federal odometer Act states that an action under § 1990a (authorizing suits by state attorneys general) "may be brought within two years from the date on which the liability arises...." This two-year period, however, is subject to the discovery rule governing federal causes of action, which provides that statutes of limitation applicable to actions sounding in fraud begin to run either from the date the fraud is discovered or from the date that it could have been discovered in the exercise of reasonable diligence. See, e.g., Byrne v. Autohaus on Edens, Inc., 488 F. Supp. 276, 280 (N.D.Ill. 1980). The party seeking the benefit of the discovery rule bears the burden of proving that the circumstances warrant its application. See, e.g., Lukenas v. Bryce's Mountain Resort, Inc., 538 F.2d 594 (4th Cir. 1976); Clift v. UAW, 818 F.2d 623 (7th Cir.1987).
Although many vehicles were sold before April 9, 1984 (i.e. over two years before the complaint was filed), plaintiffs assert that they did not discover the alleged violations until September 1985 and argue that the running of the two-year limitation period was tolled until that time. Plaintiffs have filed the affidavit of Steven J. Cole, Chief of the Consumer Protection Division of the Office of the Attorney General, in support of their assertion that the Division did not discover defendants' scheme to roll back odometers until September of 1985. Although the affidavit stated that the Consumer Protection Division had received information about the scheme in July and September of 1985, it did not explicitly preclude the possibility that the Division had also received information about it prior to that time. However, at oral argument plaintiffs' counsel represented that, in fact, plaintiffs received no information about the conspiracy prior to July 1985.
Dickson argues that many of the alleged violations were discovered earlier than July 1985. In support of this argument, Dickson has filed a copy of the deposition of Eugene D. Frantz, an investigator with the Maryland State Motor Vehicle Administration, a division of the Maryland Department of Transportation. Frantz testified that he began an investigation of Douglas Dickson when he received a report from Trooper Samuel Summers of the Motor and Safety Enforcement Division of the Maryland State Police suggesting Dickson's involvement in odometer tampering. By November, 1983, Frantz had identified approximately 25 vehicles sold by Douglas Dickson which had had their odometers rolled back and had submitted a statement of charges against Douglas Dickson with the state's attorney's office in Frederick County. Dickson argues that the knowledge of the state trooper, the Motor Vehicle Administration investigator, and the state's attorney's office in Frederick County should be imputed to the Attorney General. He cites United States v. Kass, 740 F.2d 1493 (11th Cir.1984), as support for this argument.
In Kass, the United States brought suit against Dr. Kass to recover amounts the doctor had improperly received under the Medicare program. The overpayments had been made by Blue Shield of Florida, one of the carriers which administers the program. Blue Shield of Florida was contractually obligated to the Secretary of Health and Human Services to receive claims, review them to insure their reasonableness, determine coverage, and make payments from a Medicare trust fund. Blue Shield had reviewed the claims submitted by Dr. Kass and determined that he had over-utilized Medicare reimbursement. When, over six years later, the government brought suit against Dr. Kass, the doctor contended that the suit was barred because the government failed to bring suit within the six-year time period provided by the applicable statute. The court agreed, holding that Blue Shield was the government's agent and that the government knew or should have known of the improper payments when Blue Shield found out about them.
The instant case is distinguishable from Kass because none of those who knew of the alleged odometer rollbacks were acting as agents of the Attorney General's office. The Attorney General is the one charged with enforcement of both the federal odometer *1103 Act and the Maryland Consumer Protection Act. The persons who were aware of defendants' conduct did not report to the Attorney General and were not even in his department. The investigation in 1983 carried out by the state trooper and the MVA investigator was undertaken to prepare a report which was sent to the state's attorney's office in Frederick, Maryland, for a possible criminal proceeding. The knowledge imputed to the State's Attorney for Frederick County, who is not part of the Attorney General's operation, but rather an independent elected official, is not imputable to the Attorney General. In contrast, in Kass, Blue Shield was committed to act as the government's agent by contract. The parties' arrangement called for Blue Shield to administer every aspect of the claims procedure, from receiving the claims to making payment from the appropriate fund.
Because the Attorney General is first charged with knowledge of violations in the summer of 1985, this action, which was brought in April of 1986, is not time-barred under the federal odometer Act.
Dickson also argues that the complaint filed on April 9, 1986, did not toll the running of limitations because the allegations in the complaint were too general and failed to identify the particular vehicles for which the allegations are made. The complaint alleges:
For the period of time beginning on or before December 1981 and continuing thereafter, the defendants altered, reset or disconnected odometers; caused odometers to be altered, reset or disconnected; misrepresented the true mileages or enabled others to misrepresent the true mileages of more than three hundred (300) vehicles; and/or unlawfully conspired together in furtherance of these acts.
Not until the time of discovery did defendants receive the serial numbers and descriptions of the "more than 300 vehicles" involved. They contend that only on receipt of this discovery was the statute tolled.
The Court disagrees. The complaint adequately put defendants on notice of the allegations against them. The plaintiff had no obligation to set forth the details of each transaction in the complaint when they well could and did obtain all of the information in discovery. In these circumstances it is the filing of the complaint that tolls limitations and not the receipt of discovery that particularizes the complaint.
The limitation periods for bringing claims under the Maryland Consumer Protection Act differ with the relief requested. The Attorney General has requested both restitutionary relief and civil fines. The general period of limitations on Maryland state claims, which includes the claims for restitutionary relief, is three years. Cts. & Jud. Proc. Art., § 5-101, Md.Code. This period begins to run only when the plaintiff has actual knowledge of his cause of action or has knowledge that is implied from circumstances which ought to put a person of ordinary prudence on inquiry, thus charging him with notice of all facts that such an investigation would in all probability have disclosed if it had been properly pursued. Poffenberger v. Risser, 290 Md. 631, 431 A.2d 677 (1981). The contention cannot be properly made that claims for restitution are barred when knowledge of them is first chargeable to the Attorney General in the summer of 1985, and the instant suit was commenced in April 1986.
The limitations with respect to fines, however, is governed by Courts Art., § 5-107, Md.Code, which provides:
A prosecution or suit for a fine, penalty or forfeiture shall be instituted within one year after the offense was committed.
Dickson urges that the Court grant summary judgment in his favor on all requests for fines relating to vehicles which were sold over one year before this action was filed.
Plaintiffs first argue that their cause of action under state law is entitled to sovereign immunity against any limitations defense, citing Washington Suburban Sanitary Commission v. Pride Homes, Inc., 291 Md. 537, 539-540, 435 A.2d 796 (1981). *1104 While it is true that sovereign immunity would appear to protect the state against a limitations defense, that immunity can be waived by the legislature. See, e.g., Dunne v. State, 162 Md. 274, 159 A. 751 (1932). However, a court should hold that immunity from suit has been waived only when such a conclusion is a necessary and compelling implication of a legislative act. Id. at 288-89, 159 A. 751. The Court concludes in this case that such is the inference that must be drawn from § 5-107.
Section 5-107 states that a prosecution or suit for a fine shall be instituted within one year of the date of the offense. The fact that the statute refers to a "prosecution," which is almost always brought by a government, suggests that the legislature intended to waive the government's immunity to a statute of limitations defense in actions for fines. The argument that "prosecution" could be referring to private suits is undermined by the fact that the statute explicitly applies to both prosecutions and suits. That both prosecutions and suits are mentioned suggests that the legislature intended to include within the scope of the statute both criminal and civil actions for penalties, fines and forfeitures. See Nelson v. Real Estate Comm'n, 35 Md. App. 334, 370 A.2d 608 (1977) ("prosecution" refers to a criminal action) (dictum). The government's immunity is waived with respect to criminal proceedings for fines, and the statute offers no basis for suggesting that civil actions for fines should be treated differently. Therefore, this Court rejects plaintiffs' argument that their action for fines is entitled to immunity from a statute of limitations defense.
Plaintiffs also argue that if their action is subject to a statute of limitations defense, the relevant limitation is not the one-year limitation of § 5-107, which is applicable to fines, but the 12-year limitation of § 5-102, which is applicable to "specialties."
A "specialty," though never defined by the legislature, has been judicially defined as and is generally understood to be, "a legal instrument under seal." See General Petroleum Corp. v. Seaboard Terminals Corp., 19 F. Supp. 882, 883-84 (D.Md.1937). Plaintiffs contend that their action under the Maryland Consumer Protection Act is a "specialty by statute," a seldom-used term denoting a legislatively-created cause of action that did not exist at common law. The defendants, on the other hand, contend that despite volumes of statutory causes of action, no published Maryland case in almost 50 years (and almost no case published elsewhere) has found any statutory liability to be a specialty. The only published Maryland cases to find that statutory causes of action can be considered specialties were Sterling v. Reecher, 176 Md. 567, 6 A.2d 237 (1939); Mattare v. Cunningham, 148 Md. 309, 129 A. 654 (1925); and Ward v. Reeder, 2 H. & McH. 145 (1785). The Court agrees with the defendants that those cases would not be followed today by the Court of Appeals of Maryland. The more rational approach leads to the conclusion that the reference in the statute to "other specialties" was not intended to apply to every liability created by statute, many of which have their own limitations or assume a general three-year period. See Warnick v. Bethlehem-Fairfield Shipyard, Inc., 68 F. Supp. 857, 861-62 (D.Md. 1946). Accordingly, the one-year period will apply to the plaintiffs' claims for fines under the Maryland Consumer Protection Act.
The period of limitations for fines, penalties and forfeitures under § 5-107 begins to run from the date the offense "was committed," which is the standard adopted from limitations in criminal matters, rather than from the date the action "accrues." Thus, the period of limitations under § 5-107 begins to run when the offense, for which the fine is sought, is complete, regardless of whether the Attorney General had knowledge of the commission of the offense at that time. The offense is complete when each element has occurred. In this case each deceptive practice is an offense for which a fine is sought, and the latest date that can be urged for the occurrence of its deceptive practice is the date the sale was consummated with the consumer. *1105 Thus, the claims on all sales which were consummated more than one year before April 9, 1986, will be barred by the one-year period.
A review of the record discloses that 18 transactions were consummated within the period of limitations, and the claim for fines with respect to the others are barred. Thirteen (of the 18) vehicles were titled by the consumer in Maryland upon purchase.
VI.
REMEDIES
Plaintiffs seek $1,500 each for 355 violations of the federal odometer Act pursuant to § 1989(a), which provides:
Any person who, with intent to defraud, violates any requirement imposed under this subchapter shall be liable in an amount equal to the sum of
(1) three times the amount of actual damages sustained or $1,500, whichever is the greater; and
(2) in the case of any successful action to enforce the foregoing liability, the costs of the action together with reasonable attorney fees as determined by the court.
No actual damages have been claimed or proved, and plaintiffs affirmatively state that they do not seek recovery based on actual damage. The Court suspects that plaintiffs have chosen to request the statutory minimum recovery of $1,500 for each violation because of the logistical difficulty of proving actual damages for each of the 355 purchasers.
To deter odometer tampering, the Act provides remedies that assure not only that victims are compensated fully for any damage caused but also that violators are penalized by the trebling of the damage or, in the absence of damage, by awarding a minimum amount of $1,500. The Act also provides for reasonable attorney's fees.
When the victim proves no damage, he receives the minimum statutory amount of $1,500 as a penalty. Should he, however, prove damage in the action, whether under the Act or on a common law theory, he ought not to receive automatically the $1,500 penalty, but rather should receive a sum which is the damage trebled or $1,500, whichever is greater. In that circumstance, to avoid receiving compensatory damages twice, he could not recover under other theories of compensatory damage.
In this case, because damage has not been proved and because plaintiffs are claiming the statutory minimum of $1,500, the Court will award to the Attorney General $1,500 for each of the 355 violations for which claim is made as custodian for the victims, for a total of $532,500. Under § 1990a(a)(1), the Court will also make permanent the preliminary injunction entered earlier, and reasonable attorney's fees and costs will be awarded as provided by § 1989(a)(2).
Plaintiffs also make claim under Count V of the complaint for restitution and civil fines under the Maryland Consumer Protection Act, §§ 13-406(c)(2) and 13-410(a).
Section 13-406(c)(2) of the Consumer Protection Act allows a court to "enter any order of judgment necessary to ... [r]estore to a person any money or real or personal property acquired from him by means of any prohibited practice...." Plaintiffs assert that this section allows the Court to order defendants to return the full purchase price paid by each of the consumers who filed affidavits, without setoff or without return of the vehicle. In most of these instances the consumers have had the use of their vehicles for years. To give them back the gross purchase price as requested by plaintiffs without requiring return of the vehicle or without setoff would amount to a windfall. In some cases the vehicles have been resold by the consumers so that a return of the purchase price might even amount to a double return. Thus, to restore the purchase price to the purchasers without applying principles of restitution would be punitive.
While § 13-406(c)(2) does not explicitly require plaintiffs to tender back to defendants the benefits received by the consumers, it is apparent that the section is not intended to be punitive, but rather to restore victims to their position before the *1106 transaction. See Consumer Protection Division v. Consumer Publishing Co., 304 Md. 731, 776, 501 A.2d 48 (1985). Explaining the restitution remedy that may be imposed on the agency level under § 13-403(b), the Court of Appeals of Maryland in Consumer Publishing stated at 777, 501 A.2d 48:
[T]he plaintiff is generally required to disaffirm the contract and restore what he received under the bargain, or at least offer in good faith to restore it, before the defendant is required to restore what he received. [Citations omitted.] This requirement has been relaxed when the thing received by plaintiff is expected to be consumed, or from its very nature cannot be returned, or is worthless.
The restitution remedy under § 13-403(b) discussed in Consumer Publishing is the same remedy that is authorized in § 13-406(c) for entry by a court. State v. Andrews, 73 Md. App. 80, 85 n. 3, 533 A.2d 282 (1987).
It is also apparent from a review of the Consumer Protection Act itself that remedies provided by § 13-406 are for injunction and restitution and are not intended to be punitive. The penalties that were intended are provided in § 13-410 (civil penalty) and § 13-411 (criminal penalty). See Golt v. Phillips, 308 Md. 1, 12, 517 A.2d 328 (1986).
The Court therefore holds that the remedy provided in § 13-406(c)(2) is a remedy of restitution encompassing the accepted principles of restitution that require the plaintiffs to tender back what was received, if not consumed or worthless, and if "tenderback" is possible. Plaintiffs have not demonstrated these conditions to obtaining a restitutionary order. On the record before the Court, therefore, the motion for summary judgment will be denied on this request.
Section 13-410 of the Maryland Consumer Protection Act, under which plaintiffs claim civil fines, was amended effective July 1, 1985, to increase the maximum civil fine for each violation from $300 to $1,000. The plaintiffs have shown that four vehicles were titled in Maryland within the one-year limitations period and before July 1, 1985, when the maximum penalty was $300, and nine were titled in Maryland thereafter when the maximum became $1,000.
Dickson correctly notes that the decision whether to impose a fine under § 13-410, and if so, in what amount, lies in the discretion of the Court. See State v. Action TV Rentals, 297 Md. 531, 559, 467 A.2d 1000 (1983). Dickson argues that the Court cannot properly exercise this discretion without hearing the facts of the case. However, Dickson offers no support for this argument, and the Court can find no reason why discretion cannot be properly exercised at the summary judgment stage on the basis of this extensive record.
Dickson also argues that plaintiffs may not recover penalties under both federal and state law for the same odometer rollback, citing Bill Terry's Inc. v. Atlantic Motor Sales, 409 So. 2d 507, 509 (Fla.App. 1982). In Bill Terry's, a Florida Appeals Court ruled that an award of both treble damages and punitive damages for the same odometer rollback amounted to an excessive penalty. This policy against duplicative punishment has also appeared in anti-trust cases which have held that an award of treble damages is partially compensatory and partially punitive and therefore duplicative of a punitive damage award. See, e.g., SuperTurf, Inc. v. Monsanto Co., 660 F.2d 1275, 1283 (8th Cir. 1981); Thomas J. Kline, Inc. v. Lorillard, Inc., 674 F. Supp. 183 (D.Md.1987); Natural Design, Inc. v. Rouse Co., 302 Md. 47, 76, 485 A.2d 663 (1984); McDonald v. Johnson & Johnson, 722 F.2d 1370, 1381 (8th Cir.1984), cert. denied 469 U.S. 870, 105 S. Ct. 219, 83 L. Ed. 2d 149 (1984).
The instant case is distinguishable because plaintiffs are requesting a state law fine, as opposed to punitive damages for the victims under state common law. Under principles of dual sovereignty, a state in furtherance of its public policy may punish an individual for conduct that also gives rise to punitive remedies for victims under a separate federal statute. Cf., e.g., Abbate v. United States, 359 U.S. 187, 79 *1107 S.Ct. 666, 3 L. Ed. 2d 729 (1959). The Court therefore will permit the Attorney General to recover for consumers the $1,500 for each violation of federal law and at the same time recover civil penalties under state statutory law.
Considering the number of vehicles fraudulently sold by defendants, and the number of years defendants persisted in their scheme, the Court finds the conduct particularly egregious. Therefore, in its discretion, the Court will impose the maximum civil fines allowable. Applying the statute of limitations as discussed above and including only vehicles titled in Maryland, the Attorney General will be awarded a civil fine against Dickson of $10,200 without prejudice to a showing at trial that other transactions are subject of the Maryland Consumer Protection Act.
For the foregoing reasons a separate order will be entered granting in part and denying in part plaintiffs' motion for summary judgment and granting in part and denying in part defendant Dickson's motion for summary judgment.
ORDER
For the reasons given in the Opinion of this date, it is hereby ordered this 28th day of June, 1989, by the United States District Court for the District of Maryland that:
1. The motion of plaintiffs for summary judgment is granted in part and denied in part.
2. The motion of Dickson for summary judgment is granted in part and denied in part.
3. Partial summary judgment is entered in favor of the Attorney General of Maryland and against defendants Dickson and Locklear on Counts I and II of the complaint in the amount of $532,500, plus costs including reasonable attorneys fees.
4. Under Counts III and IV of the complaint, Dickson is liable to the Attorney General of Maryland for all of those vehicles (of the 355 total) that were titled in Maryland. This liability shall not provide additional amounts due to plaintiff but shall only provide additional grounds of liability against Dickson as to the vehicles titled in Maryland. With respect to all other vehicles, the motion of plaintiffs under Counts III and IV is denied.
5. Under Count V, plaintiffs are entitled to civil fines in the amount of $10,200 with respect to vehicles titled in Maryland on or after April 9, 1985. For the other vehicles titled in states other than Maryland on or after April 9, 1985, the plaintiff's motion for summary judgment is denied. For all vehicles titled before April 9, 1985, plaintiff's motion for summary judgment for civil fines is denied and Dickson's motion for summary judgment on the claim for fines is granted. Fines for these transactions are barred by the applicable statute of limitations.
6. Under Count V, plaintiff's motion for summary judgment to recover restitutionary award is denied.
7. The issues that are reserved for trial, therefore, are:
A. Plaintiffs' claims against Dickson under Counts III and IV with respect to vehicles not titled in Maryland;
B. Plaintiffs' claims against Dickson under Count V for fines with respect to the five vehicles titled after April 9, 1985 in states other than Maryland; and
C. Plaintiffs' claims against Dickson under Count V for restitution. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583959/ | 728 N.W.2d 224 (2006)
MOORE
v.
LUKASZEWICZ.
No. 06-0639.
Iowa Court of Appeals.
December 28, 2006.
Decision without published opinion. Affirmed in part, Reversed in part and Remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3041200/ | United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 06-2281
___________
United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the
* Eastern District of Arkansas.
Demario A. Howard, *
* [UNPUBLISHED]
Appellant. *
___________
Submitted: October 17, 2006
Filed: October 31, 2006
___________
Before MELLOY, BEAM, and BENTON Circuit Judges.
___________
PER CURIAM.
Demario Antoinette Howard appeals the denial of his motion for correction of
sentence. The United States agrees that plain error occurred because the judge's oral
pronouncement of sentence is not the sentence imposed in fact, and thus supports
Howard's appeal. See Hill v. United States ex rel. Wampler, 298 U.S. 460, 464-65
(1936); United States v. Tramp, 30 F.3d 1035, 1037 (8th Cir. 1994).
This court reverses and remands for sentencing consistent with the alternative
sentence ordered by the district court in the event that the federal sentencing
guidelines were unconstitutional or partially unconstitutional. See United States v.
Booker, 543 U.S. 220 (2005); 8th Cir. R. 47A.
______________________________
-2- | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1918756/ | 411 B.R. 889 (2009)
In the Matter of SCANWARE, INC., Debtor.
Rayonier Wood Products, L.L.C., Plaintiff
v.
Scanware, Inc. and Finscan, Oy, Defendants.
Bankruptcy No. 08-35848-rld. Adversary No. 08-6030.
United States Bankruptcy Court, S.D. Georgia, Statesboro Division.
February 25, 2009.
*891 James B. Durham, Durham, McHugh & Duncan, P.C., Brunswick, GA, for Plaintiff.
David W. Adams, Paul W. Painter, Ratterree & Adams LLP, R. Clay Ratterree, Drew K. Stutzman, Ellis, Painter, Ratterree and Adams LLP, Savannah, GA, J. Franklin Edenfield, Spivey, Carlton & Edenfield, P.C., Swainsboro, GA, Robert S. Glenn, Jr., Hunter Maclean Exley & Dunn, P.C., Savannah, GA, for Defendants.
MEMORANDUM AND ORDER ON PLAINTIFF'S MOTION FOR REMAND AND/OR FOR ABSTENTION AND ON DEFENDANT'S MOTION TO TRANSFER VENUE
LAMAR W. DAVIS, JR., Bankruptcy Judge.
FINDINGS OF FACT
Rayonier, a Delaware corporation with its principal place of business at 50 North Laura Street, Suite 1900, Jacksonville, Florida, operates a sawmill near Swainsboro in Emanuel County, Georgia. Complaint, Dckt.No. 9, Exhibit A, ¶ 1 (November 21, 2008); Debtor's Answer, Dckt.No. 9, Exhibit C, ¶ 1; FinScan's Answer and Cross Claim, Dckt.No. 9, Exhibit D, ¶ 1. FinScan, a Finnish company based in Espoo, Finland, designs and manufactures real time image processing software, cameras, and interface boards which are used for grading lumber when combined with other related equipment and systems. FinScan sells its software and equipment to various third parties. Affidavit of Jaakko Rihinen, Dckt.No. 10, Part 4, ¶ 2 (Dec. 22, 2008). Debtor, an Oregon corporation, purchases products from FinScan, Id., integrates them into stand-alone automated systems that Debtor builds, and sells this new system to lumber mills in order to grade lumber. See Motion to Remand, Dckt.No. 9, Exhibit A, pg. 14-17. Prior to acquiring a 100% ownership of Debtor in October 2007, FinScan held a minority interest in Debtor. Affidavit of Jaakko Rihinen, Dckt.No. 10. Part 4, ¶ 4.
In May 2006, Rayonier and Debtor entered into a contract (the "Contract") under which Debtor was to provide Rayonier, at its wood products facility in Emanuel County, a Planermill Trimmer Optimization System ("System"), a system which was intended to perform better than 95% on grade performance pursuant to Southern Pine Inspection Bureau and Timber *892 Products Inspection rules.[1]Motion to Remand, Dckt. No. 9. Exhibit C, pg. 2, ¶ 15; Exhibit A, pg. 13 & 19. This Contract also provides a choice of law provision that any dispute arising under and in connection with the Contract shall be litigated before the courts of Emanuel County, Georgia. Specifically, it provides that Debtor and Rayonier agree:
1) "not to seek a change of venue;"
2) not "to dismiss the action on the grounds of forum non conviens" (sic); and
3) "not to remove any litigation from that court to federal court."
Id., Exhibit A, pg. 26, ¶ 26. FinScan was not a signatory to the Contract and did not see the Contract until Rayonier served the summons and complaint upon FinScan in Finland in late September 2008. See Id., Exhibit A, pg. 22; Affidavit of Jaakko Rihinen, Dckt.No. 10, Part 4, ¶ 3. However, the Contract specifically identifies a FinScan product, the Boardmaster FS4NT software, and FinScan's user manual for the software was given to Rayonier with the System. Motion to Remand, Dckt. No. 9, Exhibit A, pgs. 11 & 29.
On June 17, 2008, Rayonier filed a complaint in the Superior Court of Emanuel County, State of Georgia, against Debtor and FinScan. Rayonier claims that both defendants breached the Contract when the System failed to perform "better than 95% on grade performance pursuant to SPIB and TPI inspections." Second, Rayonier claims that both defendants breached the warranty located in paragraph 1.1 of the contract which warranted the System would perform in accordance with the intended use and specifications in the Contract. Third, Rayonier argues that it notified the defendants that the System was defective and failed to meet the specifications set forth in the contract, thus properly rejecting the defective goods. Last, Rayonier claims FinScan breached its express warranty provided in the BoardMaster-GS4NT and -FS4NT User's Manual and also its implied warranty. Rayonier is asking for approximately $2 million in damages. Motion to Remand, Dckt.No. 9, Exhibit A.
Debtor has sold twenty-four lumber grading systems to lumber mills in North America. Three of those systems have generated claims: Rayonier, Interfor Pactific, Inc. ("Interfor") and Banks Lumber Co. ("Banks"). The latter two, each located in Oregon, are seeking $1 million in damages from Debtor. Affidavit of Herb Koenig, Dckt. No. 12, ¶ 4 (December 19, 2008).
Rayonier separately served Debtor in Oregon on August 8, 2008, and FinScan in Finland on September 29, 2008. Response, Dckt.No. 10, Part 1, pg. 6. Debtor filed its answer on September 15,2008. Motion to Remand, Dckt.No. 9. Exhibit C. FinScan separately filed its answer and filed a cross-claim for common law indemnity against Debtor on October 29, 2008. Id., Exhibit D. Thereafter, on October 29, Debtor filed Chapter 11 in the District of Oregon. Id., Exhibit E, and FinScan filed a Notice of Removal in this Court to remove the underlying state court case against both FinScan and Debtor pursuant to 28 U.S.C. § 1452(a). Notice, Dckt.No. 1, Part 2.
On November 21, 2008, Rayonier filed a motion to remand the underlying state court litigation to the Superior Court in *893 Emanuel County and/or for this Court to abstain from hearing the state court litigation. Motion to Remand, Dckt.No. 9. On December 19, 2008, Debtor filed a motion pursuant to 28 U.S.C. § 1412 and Federal Rule of Bankruptcy Procedure 7087 to transfer the venue of the removed action to the United States Bankruptcy Court for the District of Oregon, the court in which Debtor has filed its Chapter 11. Motion to Transfer Venue, Dckt.No. 11.
On December 12, 2008, in the Bankruptcy Court for the District of Oregon, the United States Trustee, Robert D. Miller, Jr. filed a Motion to Dismiss Debtor's Chapter 11 or convert it to Chapter 7. He alleged that at the meeting of creditors on December 2, 2008, Tyrell B. Vance and Herbert Koenig, the President and Vice-President of Debtor for the two months prior to the meeting, testified as the representatives of Debtor. The Trustee states that the representatives "did not have sufficient knowledge and understanding of the debtor's financial affairs, assets and liabilities to be able to fully answer questions arising from the debtor's bankruptcy schedules and statement of financial affairs," thus the meeting of creditors was continued to a later date. The Trustee also asserts that Debtor is not an operating business, its principal place of business was shut down pre-petition, its books, records and some miscellaneous office furniture and equipment are apparently located at the premises of its bookkeeper, Ken Davis, and at Mr. Vance's personal residence, it has no employees other than Mr. Vance and Mr. Koenig, and its assets consist primarily of cash in bank accounts, accounts receivable, possible preferences and fraudulent transfers. Finally, Trustee also points out that Debtor listed unsecured creditors totaling $5,224,018.45 and no secured or priority creditors. The Trustee argues that Debtor originally contemplated filing a Chapter 7, but "determined to file a Chapter 11 instead to control the defense of litigation brought against it by Rayonier," its largest unsecured creditor. Reply to Defendant's Responses, Dckt.No. 18, Exhibit A. Rayonier, Interfor Pacific, and Banks Lumber joined in the United States Trustee's Motion to Dismiss or Convert. Reply, Dckt. No. 21, Exhibits 2, 6, 7 (Feb. 2, 2009).
Three issues are presented based on the motions and timely replies filed by all Respondents. First, whether this Court has subject matter jurisdiction over the state law claims under 28 U.S.C. § 1452(a). Second, whether this Court should consider Rayonier's Motion to Remand and/or for Abstention first or Debtor's Motion to Transfer Venue. Third, whether the facts of this case warrant remand.
CONCLUSIONS OF LAW
1. Subject Matter Jurisdiction
When presented with a motion to remand or a motion to transfer the venue of a proceeding which has been removed from the state court, "the bankruptcy court must first evaluate whether the state court action was properly removed; that is, it must determine whether it has subject matter jurisdiction over the proceeding." Work/Family Directions, Inc. v. Children's Discovery Centers, Inc. (In re Santa Clara County Child Care Consortium), 223 B.R. 40, 44 (1st Cir. BAP 1998). "If there is a jurisdiction defect and the parties and the action are not properly before the Court, any action taken by the Court would be void." Aztec Indus., Inc. v. Standard Oil Co. (In re Aztec Indus.), 84 B.R. 464, 467 (Bankr.N.D.Ohio 1987); see Pacor, Inc. v. Higgins, 743 F.2d 984, 993 (3d Cir.1984) overruled on other grounds by Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 134-35, 116 S. Ct. 494, 133 L. Ed. 2d 461 (1995); George Junior *894 Republic in Pa. v. Williams, 2008 WL 763304, at *3 (E.D.Pa. March 19, 2008); Everett v. Friedman's, Inc., 329 B.R. 40, 41-2 (S.D.Miss.2005); Tallo v. Gianopoulos, 321 B.R. 23, 27 (E.D.N.Y.2005); Ni Fuel Co. v. Jackson, 257 B.R. 600, 607-09 (N.D.Okla.2000); Baxter Healthcare Corp. v. Hemex Liquidation Trust, 132 B.R. 863, 865 (N.D.Ill.1991); Lone Star Indus., Inc. v. Liberty Mut. Ins., 131 B.R. 269, 272 (D.Del.1991); Cornerstone Dental, PLLC v. Smart Dental Care, LLC, 2008 WL 907374, at *2 (Bankr.D.Idaho March 31, 2008)("there is case law that instructs courts facing such competing motions to first decide jurisdictional issues ..."); Frelin v. Oakwood Homes Corp., 292 B.R. 369, 376 (Bankr.E.D.Ark.2003); In re Grace Cmty., Inc., 262 B.R. 625, 629 (Bankr.E.D.Pa.2001) ("Jurisdiction is always a threshold issue; the better approach is to determine first if an action has been properly removed and if the court has subject matter jurisdiction."): In re Raymark Indus., Inc., 238 B.R. 295, 297-98 (Bankr.E.P.Pa.1999); Cook v. Cook, 215 B.R. 975, 978-79 (Bankr.E.D.Mich.1997); Seybolt v. Bio-Energy of Lincoln, Inc., 38 B.R. 123, 126-27 (Bankr.D.Mass.1984).
The removal of state court actions to a bankruptcy court is provided for in 28 U.S.C. § 1452(a), which states that "[a] party may remove any claim or cause of action in a civil action ... to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title." Section 1334(b), which delineates jurisdiction over bankruptcy proceedings, provides that "the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11." The district court may refer bankruptcy jurisdiction to the bankruptcy court pursuant 28 U.S.C. § 157(a). Thus, a party may remove a cause of action from state court to the bankruptcy court if it is an action arising under Title 11, or "related to" a case under Title 11.
In determining whether a cause of action is "related to" a case under Title 11, the Eleventh Circuit adopted the Third Circuit's test in Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir.1984).
'The usual articulation of the test for determining whether a civil proceeding is related to bankruptcy is whether the outcome of the proceeding could conceivably have an effect on the estate being administered in bankruptcy. The proceeding need not necessarily be against the debtor or against the debtor's property. An action is related to bankruptcy if the outcome could alter the debtor's rights, liabilities, options or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankruptcy estate.'
Miller v. Kemira, Inc. (In re Lemco Gypsum, Inc.), 910 F.2d 784, 788 (11th Cir.1990)(quoting Pacor, Inc., 743 F.2d at 994).
However, the Eleventh Circuit limited this "related to" jurisdiction by stating that
[o]verlap between the bankrupt's affairs and another dispute is insufficient unless its resolution also affects the bankrupt's estate or the allocation of assets among creditors. The mere fact that there may be common issues of fact between a civil proceeding and a controversy involving the bankruptcy estate does not bring the matter within the scope of § 1334(b). Judicial economy itself does not justify federal jurisdiction.
Id. at 789.
There is no question that the underlying state court action against Debtor *895 is at least "related to" Debtor's bankruptcy. A finding against Debtor would alter its rights, liabilities, options, and freedom of action and impact the administration of its bankruptcy estate. As a result, the claims against Debtor have properly been removed, and this Court has subject matter jurisdiction over the claims.[2]
For the foregoing reasons, I hold that this Court has subject matter jurisdiction over the removed action.
2. Motion to Remand vs. Motion to Transfer Venue
Courts are divided about the sequence for ruling on competing motions to transfer or remand. In re Grace Cmty., Inc., 262 B.R. at 628. Some courts find and Defendants argue that the bankruptcy court in which the bankruptcy is pending (usually referred to as the "home court") is in the best position to determine the issues underlying motions to abstain or remand. See Work/Family Directions, Inc., 223 B.R. at 49; Everett, 329 B.R. at 42; Bayou Steel Corp. v. Boltex Mfg. Co., 2003 WL 21276338, at *1 (E.D.La. June 2, 2003); Nelson v. First Lenders Indem. Co., 1998 WL 378376, at *1 (N.D.Miss. May 11, 998); Consol. Lewis Inv. Corp. v. First Na'l Bank, 74 B.R. 648, 651 (E.D.La.1987); Cornerstone Dental, PLLC, 2008 WL 907374. at *1; Philadelphia Health Care Trust v. Tenet Health Sys. Philadelphia, Inc. (In re Allegheny Health, Education and Research Foundation), 1999 WL 1033566, at *1 (Bankr.E.D.Pa. Nov. 10, 1999); Thomas v. Lorch, Wedlo, Inc. (In *896 re Wedlo, Inc.), 212 B.R. 678, 679 (Bankr.M.D.Ala.1996); Kinney Sys., Inc. v. Intermet Realty P'ship (In re Convent Guardian Corp.), 75 B.R. 346, 347 (Bankr.E.D.Pa.1987); Stamm v. Rapco Foam, Inc. (In re Stamm), 21 B.R. 715, 724-25 (Bankr.W.D.Pa.1982).
The theory underlying this argument "is often referred to as the `conduit' court theory because it treats the local bankruptcy court as a mere conduit with little role in determining where the removed lawsuit should be heard." Frelin, 292 B.R. at 380. These courts argue that the "home court" is "more familiar with the pending bankruptcy case and what may be required for its efficient administration." Furthermore, the "home court" "which would try the case can better evaluate all the interests involved, and determine its own expertise in the particular areas of the law which form the basis of the action, as well as its own scheduling and time constraints." The "conduit" court's "speculation on these matters would not be an adequate substitute for a knowledgeable determination based upon the actual facts and circumstances." Moreover, allowing the "home court" "to rule on the remand minimizes the potential conflicts which could arise due to differences in controlling authority between the Courts." In re Aztec Indus., Inc., 84 B.R. at 467; see George Junior Republic in Penn., 2008 WL 763304, at *5-6; Tallo, 321 B.R. at 28-9; Hohl v. Bastian, 279 B.R. 165, 177-78 (W.D.Pa.2002); Seybolt, 38 B.R. at 128.
Another line of case law holds that the bankruptcy court to which the state court lawsuit is removed (`the local bankruptcy court') has the right to decide a pending motion to abstain or remand before determining whether venue is proper in the home bankruptcy court. Frelin, 292 B.R. at 379; see Kim Littlefield, DMD. P.C. v. Orthodontic Ctrs. of Ill., Inc. 2007 WL 273766, at *2 (S.D.Ill. Jan. 26, 2007); Lemmings v. Second Chance Body Armor, Inc., 328 B.R. 228, 231 (N.D.Okla.2005); Ni Fuel Co., 257 B.R. at 611-12; Lone Star Indus., Inc., 131 B.R. at 272-73: Baxter Healthcare Corp., 132 B.R. at 867: Gabel v. Engra, Inc. (In re Engra, Inc.), 86 B.R. 890, 893 (S.D.Tex.1988); In re W.S.F.-World Sports Fans, LLC, 367 B.R. 786, 791 (Bankr.D.N.M.2007); In re Grace Cmty., Inc., 262 B.R. at 629; In re Raymark Indus., Inc., 238 B.R. at 299; Global Underwriting Mgmt., Inc. v. Chatham Underwriting Mgmt., Inc., 147 B.R. 601, 603 (Bankr.S.D.Fla.1992).
I adopt the latter holding because "this line of cases provide strong statutory and logical support for the proposition that the local bankruptcy court should decide 'whether any bankruptcy court should hear a proceeding before it determines which bankruptcy court should hear it.'" Frelin, 292 B.R. at 379 (quoting Lone Star Indus., Inc., 131 B.R. at 273). First, the District Court for the Southern District of Texas reasoned that
If removal were jurisdictionally appropriate only to the district where the debtor filed for bankruptcy, removal of proceedings pending in other districts with an eye towards transferring the removed proceeding to the district where the bankruptcy was filed would not be possible since removal under section 1452(a) is permissible only to the district where the action is pending. Such a result would be at odds with the aim of section 1452 of providing a procedural vehicle whereby a bankruptcy court can determine whether a proceeding should be heard by the bankruptcy court or should be remanded to the court from which it was removed.
In re Engra, Inc., 86 B.R. at 893.
Second, "the language of 28 U.S.C. § 1452(b) and § 1412 suggest a more active *897 role for the local bankruptcy court." Section 1412 provides that "the transfer of a case from a local bankruptcy court to a home bankruptcy court is discretionary rather than mandatory or automatic." Moreover, "the provision governing the remand of actions removed to federal court states that `[t]he court to which a claim or cause of action is removed* is the court that should determine whether to remand the matter to state court based on equitable grounds.' 28 U.S.C. § 1452(b)." In sum, "the language of both § 1412 and § 1452(b) support that this court has the responsibility to make the decision of whether to transfer the case to the home bankruptcy court or remand the matter to state court." In re AG Indus., Inc., 279 B.R. 534, 540 (Bankr.S.D.Ohio.2002)(internal citations omitted)(citing see SBKC Serv. Corp. v. 1111 Prospect Partners, L.P. (In re 1111 Prospect Partners, L.P.), 204 B.R. 222, 225-26 (Bankr.D.Kan.1996); Twyman v. Wedlo, Inc., 204 B.R. 1006, 1013-14 (Bankr.N.D.Ala.1996)). I therefore proceed directly to the remand/abstention analysis.
3. Discretionary Abstention and Equitable Remand
Remand to the court from which a claim for relief or cause of action has been removed is authorized by 28 U.S.C. § 1452(b), which allows this Court to remand the underlying state court litigation "on any equitable ground." Discretionary abstention is governed by 28 U.S.C. § 1334(c)(1), which provides a bankruptcy court may abstain from hearing a proceeding arising in or related to cases under title 11, when to do so is in the interest of justice, or in the interest of comity with state courts or respect for state law.
Discretionary abstention and equitable remand are "kindred statutes." Both favor "comity and the resolution of state law questions by state courts." Thus, the "factors suggesting discretionary abstention ... and mandatory abstention... provide ample equitable grounds for remand of a lawsuit to state court" and vice versa. St. Vincent's Hosp. v. Norrell (In re Norrell), 198 B.R. 987, 997-98 (Bankr.N.D.Ala.1996); see Hatcher v. Lloyd's of London, 204 B.R. 227, 232-33 (M.D.Ala.1997)("courts are in agreement that the factors applicable to [discretionary abstention, mandatory abstention, and equitable remand] are relevant in determining whether the court should exercise jurisdiction."); Borne v. New Orleans Health Care, Inc., 116 B.R. 487, 494 (E.D.La.1990)("[T]he considerations underlying discretionary abstention and remand are the same."); Cook v. Griffin, 102 B.R. 875, 877 (N.D.Ga.1989)("[I]t is clear that the provisions for mandatory abstention are strong factors suggesting equitable remand under § 1452(b)."); Thomasson v. AmSouth Bank, N.A., 59 B.R. 997, 1002 (N.D.Ala.1986)(The presence of facts supporting abstention, when coupled with related considerations of comity and preference for the resolution of state law questions by state courts, implied in section 1452(b), "tips the scales of equity in favor of remand ..."); In re Hilsman, 351 B.R. 209, 217 (Bankr.N.D.Ala.2006).
Therefore, "courts considering relief under these sections consider similar factors." These include: (1) the effect of abstention on the efficient administration of the bankruptcy estate; (2) the extent to which state law issues predominate over bankruptcy issues; (3) the difficulty or unsettled nature of the applicable law; (4) the presence of a related proceeding commenced in state court or other non-bankruptcy court; (5) the basis of bankruptcy jurisdiction, if any, other than 28 U.S.C. § 1334; (6) the degree of relatedness or *898 remoteness of the proceeding to the main bankruptcy case; (7) the substance rather than form of an asserted "core" proceeding; (8) the feasibility of severing state law claims from core bankruptcy matters to allow judgments to be entered in state court with enforcement left to the bankruptcy court; (9) the burden of the bankruptcy court's docket; (10) the likelihood that the commencement of the proceeding in bankruptcy court involves forum shopping by one of the parties; (11) the existence of a right to a jury trial; (12) the presence in the proceeding of non-debtor parties; (13) comity; and (14) the possibility of prejudice to other parties in the action. In re United Container LLC, 284 B.R. 162, 176-77 (Bankr.S.D.Fla.2002) (citations omitted); see In re Fulton, 2000 WL 33952875, at *3 (Bankr.S.D.Ga. June 29, 2000)(Davis, J.)(factors for discretionary abstention); Rentrak Corp. v. Cady (In re Cady), 1994 WL 16001762, at *3, n. 13 (Bankr.S.D.Ga. March 11, 1994)(Walker, J.)(same); Republic Reader's Serv., Inc. v. Magazine Serv. Bureau, Inc., (In re Republic Reader's Serv., Inc.), 81 B.R. 422, 429 (Bankr.S.D.Tex.1987)(same); In re Brooks, 389 B.R. 790, 794 (Bankr.M.D.Fla.2008)(factors for equitable remand); Hatcher, 204 B.R. at 233 (same).
Here, virtually every relevant factor points to remand/abstention. First, comity and respect for state jurisdiction are compelling considerations in this case. Debtor and Rayonier bargained for and agreed to litigate any disputes in the Superior Court of Emanuel County. If Debtor was acting as agent for FinScan when that choice of law provision was executed, FinScan could be bound as well. Regardless, because FinScan now owns 100% of Debtor and at the time of the contract, owned a minority share in Debtor, it was "closely related" and it is therefore "foreseeable" it would be bound.[3]See Lipcon v. Underwriters at Lloyd's London, 148 F.3d 1285, 1299 (11th Cir.1998). Debtor did not remove this action because it could not, and FinScan, which did remove this action, cannot invoke bankruptcy pre-eminence as to claims against it because it is not a debtor. Nor does Finscan have standing, merely because it filed a crossclaim against Debtor, to invoke bankruptcy pre-eminence as to claims against Debtor on Debtor's behalf.
Second, it is entirely feasible to permit the state law issues of liability and damages to be litigated in Superior Court. To the extent that Debtor is found liable, enforcement of the claim against it will remain in the hands of the home bankruptcy court, a result which satisfies the only federal interest in this case.
Third, as to the claims against FinScan, it is appropriate for them to be litigated in state court as well because no federal interest is implicated, the case was pending in the state court prior to the filing of Debtor's Chapter 11, and can be timely adjudicated there.
Fourth, both defendants have a right to a jury trial as to the claims asserted, a right that cannot be provided in this bankruptcy forum.
Finally, in light of the pending motion to dismiss or convert to Chapter 7 in the Bankruptcy Court for the District of Oregon, it is impossible to know whether that bankruptcy case will survive long-term. Without commenting on the validity of the forum-shopping assertions made by the Trustee in that case, the potential of a dismissal or conversion of that case is apparent. *899 The prospect, no matter how remote, of dismissal or conversion of that case removes even the few tenuous considerations that favor retaining this action in a bankruptcy forum. Thus, Factors 1, 2, 4, 6, 8, 11, 12, and 13 clearly call for abstention and remand.[4]
ORDER
Pursuant to the foregoing Findings of Fact and Conclusions of Law, IT IS ORDERED that this Court abstains from further consideration of this civil action.
IT IS FURTHER ORDERED that this action is remanded to the Superior Court of Emanuel County of the State of Georgia for adjudication in that forum.
NOTES
[1] The SPIB promulgates rules followed by the industry as to the grading of lumber. The TPI is a duly recognized organization that monitors and confirms compliance with industry standards. Sawmills must perform at 95% on grade or better to comply with industry standards.
[2] Rayonier argues that Pacor, Inc. requires that this Court remand the action against FinScan for lack of subject matter jurisdiction. In that case the plaintiff Higgins brought suit against Pacor, Inc. ("Pacor") in the Court of Common Pleas for damages allegedly caused by his work-related exposure to asbestos products manufactured by Johns-Manville Corporation ("Manville") and distributed by Pacor. Pacor filed a third party complaint impleading Manville which subsequently filed bankruptcy in the United States Bankruptcy Court for the Southern District of New York. The Court of Common Pleas severed the third-party complaint against Manville. Just as the Higgins-Pacor case was about to go to trial, Pacor removed the controversy to the Bankruptcy Court in the Eastern District of Pennsylvania and filed a motion for change of venue to the Southern District of New York in order to join it with the Manville bankruptcy. Pacor. Inc., 743 F.2d at 986.
Noting that "the jurisdiction of the bankruptcy courts to hear cases related to bankruptcy is not without limit," the Third Circuit concluded that for the bankruptcy court to act within its statutory and constitutional limits and for subject matter jurisdiction to exist, "there must be some nexus between the `related' civil proceeding and the title 11 case." Because neither of the parties in the case was the debtor in bankruptcy, the court questioned whether the action was "still sufficiently connected with the Manville bankruptcy estate, such that jurisdiction lies under 28 U.S.C. § [1334(b)]." Id. at 994.
The court concluded that the outcome of the Higgins-Pacor action would in no way bind Manville, but was "`at best, .... a mere precursor to the potential third party claim for indemnification by Pacor against Manville.... Any judgment received by the plaintiff Higgins could not itself result in even a contingent claim against Manville, since Pacor would still be obligate to bring an entirely separate proceeding to receive indemnification.'" Id. at 995.
In the present case, unlike Pacor, FinScan is an original defendant in the underlying state court action against whom relief is requested and not merely a third party defendant. The claims against FinScan are interlocking and overlapping the claims against Debtor, and Rayonier's claims against Debtor have not been severed from the claims against FinScan. See Hopkins v. Plant Insulation Co., 342 B.R. 703, 709-10 (D.Del.2006)(Court found "related to" jurisdiction existed in part because non-debtor's claims against another non-debtor were "factually interwoven" with the claims against the debtor.); In re Allegheny Health, Educ. and Research Found., 233 B.R. 671, 679-80 (Bankr.W.D.Pa.1999); Seybolt, 38 B.R. at 128.
[3] In fact, the user manual for the Boardmaster G54NT/FS4NT software displays FinScan's slogan as "what we see is what you saw." This same slogan is provided at the bottom of every single page of the contract between Rayonier and Debtor.
[4] In its reply in support of the Motion to Transfer Venue, Debtor argues that because "Rayonier has made the calculated choice to appear and actively litigate against both [Debtor] and FinScan in [Debtor's] bankruptcy proceeding in Oregon," that Rayonier "has recognized that the Oregon bankruptcy court is the appropriate and necessary place to be." Reply, Dckt.No. 21, pg. 1. I disagree. Rayonier has explicitly stated that it would rather litigate the underlying state court claims in the Superior Court of Emanuel County. While litigating these motions, it would be irresponsible of Rayonier to not also participate in Debtor's bankruptcy, especially a Motion to Dismiss which could give Rayonier relief from Debtor's bankruptcy entirely. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918760/ | 411 B.R. 484 (2008)
In the matter of R.J. GROOVER CONSTRUCTION, LLC, Debtor.
Robert J. Groover, Jr., Tina A. Groover, Debtors.
Builders Insurance Group, Inc., Movant.
v.
R.J. Groover Construction, LLC, Robert J. Groover, Jr. and Tina A. Groover, Respondents.
Nos. 08-40386, 08-40391.
United States Bankruptcy Court, S.D. Georgia, Savannah Division.
December 22, 2008.
*486 Richard C. E. Jennings, Law Offices of Skip Jennings, PC, Savannah, GA, for Debtor.
James L. Drake, Jr., Savannah, GA, for Debtors.
MEMORANDUM AND ORDER ON MOVANT'S MOTION FOR RECONSIDERATION OR IN THE ALTERNATIVE TO EXTEND TIME TO APPEAL
LAMAR W. DAVIS, JR., Bankruptcy Judge.
R.J. Groover Construction, L.L.C. ("L.L.C") and Robert J. Groover ("Groover"), as a joint petitioner with his wife, each filed for Chapter 11 on March 3, 2008. On April 8, 2008, Mrs. Annette Karp filed for relief from the automatic stay in both cases pursuant to 11 U.S.C. § 362(d)(1) to proceed with a property damage and personal injury action in state court naming both debtors as defendants. On May 21, 2008, Builders Insurance Group ("Builders") filed for relief from the automatic stay in both cases to proceed with a declaratory judgment action establishing whether L.L.C and Groover have valid insurance coverage. On July 1, 2008, this Court conditionally granted Mrs. Karp's motion for relief from the automatic stay. On August 12, 2008, a hearing was held on Builders' motion for relief from stay, and this Court entered an order on October 10, 2008 denying Builders' motion. On November 7, Builders filed a motion for this Court to reconsider its order or in the alternative extend the time for Builders to appeal the order. I now enter the following Findings of Fact and Conclusions of Law on Builders motion for reconsideration or in the alternative to extend time to appeal.
FINDINGS OF FACT
L.L.C, a Georgia limited liability company, is engaged in the business of building homes in Chatham County, Georgia. On November 20, 2002, L.L.C. entered into a residential construction contract with Mrs. Karp for the construction of a residence at 36th Terrace Lane, Tybee Island, Georgia, 31328. L.L.C. started construction in January 2003 and left the job site on October 28, 2003. Brief in Opposition, Case No. 08-40386, Dckt.No. 30, Exhibit A (May 2, 2008).
On August 28, 2003, L.L.C. obtained a commercial general liability policy from Builders. Having effective dates of August 28, 2003 to August 28, 2004, the policy (No. 445000000545) has limits of $1,000,000 per occurrence, $1,000,000 for personal and advertising injury, $2,000,000 in general aggregate, and $2,000,000 in products/completed operations aggregate. Brief in Opposition, Case No. 08-40386, Dckt.No. 30, pg. 32, Exhibit B.
On June 21, 2005, Mrs. Karp filed a complaint in state court against L.L.C and Groover. Mrs. Karp alleged six claims: negligent construction; breach of warranty; breach of the construction contract; breach of an implied contract to properly build the home; fraud; and attorney's fees. Brief in Opposition, Case No. 08-40386, Dckt.No. 30, Exhibit A (May 2, 2008). Mrs. Karp argued in the complaint that the two defendants "made several errors during the construction of the residence, including installation of base molding before the tile was installed, failure to leave space for master bedroom television *487 as contemplated by the building plans, installing the roof over the master bedroom in a manner that cause it to leak, etc." Id. Also, in the underlying litigation, Mrs. Karp pointed to mold and water intrusion, a problem which she argues makes the house uninhabitable. Brief in Opposition, Case No. 08-40386, Dckt. No. 30, pg. 2.
Builders was informed of Mrs. Karp's lawsuit, and both Debtors asked Builders to defend them in the underlying civil action and furthermore pay any and all sums within the policy limits asserted against them. Builders has reserved its rights under the insurance contract and is currently defending the above referenced civil action pursuant to the reservation of rights with respect to L.L.C. and Groover. Motion for Relief from Stay by Builders, Dckt.No. 42, pg. 3 (May 21, 2008).
On March 3, 2008, L.L.C. and Groover, with his wife, separately filed Chapter 11. On April 8, 2008, Mrs. Karp filed a motion for relief from stay in both bankruptcy cases "for purposes of proceeding with a property damage and personal injury action naming Debtor as a Defendant in Civil Action No. STCV05-01727 which was filed in the State Court of Chatham County, State of Georgia in June of 2005." Mrs. Karp asked that the stay be lifted to the extent insurance is available under the Builders insurance policy to satisfy a judgment in her favor. Motion for Relief from Stay by Annette Karp, Case No. 08-40386, Dckt. No. 18, pg. 1-3; Case no. 08-40391, Dckt.No. 30, pg. 1-3.
On May 21, 2008, Builders also filed a motion for relief from stay to file a "Complaint for Declaratory and Equitable Relief for a determination regarding its duties of defense and indemnity, if any, with respect to Mrs. Karp's claim. Builders argued
that no coverage is available ... for Mrs. Karp's claims. Mrs. Karp's claims do not trigger coverage under the policy because the claims do not give rise to an `occurrence,' and/or Mrs. Karp does not claim `bodily injury' or `property damage' as required by the policy. Additionally certain of Mrs. Karp's claims are specifically excluded by the policy. Motion for Relief from Stay by Builders, Dckt.No. 42, pg. 3.
On July 1, 2008, this Court granted Mrs. Karp's motion for relief, subject to the following conditions:
1) Annette Karp may proceed in the prosecution of her State Court action against Debtors to conduct and conclude discovery, engage in motion and pretrial proceedings, settlement discussions, and with trial of the case and appeal, if any, of the verdict.
2) Annette Karp is permitted to enforce any judgment only to the extent of applicable insurance coverage of the Debtors in these cases.
3) This authority is granted only for so long as a defense is provided to Debtors by Builders or other insurance, if any.
4) Should Builders deny coverage and cease to defend the State Court case, or should any declaratory judgment action be initiated by any party to determine the extent of insurance coverage, the relief afforded by this Order shall be stayed unless Annette Karp elects to underwrite the cost of litigation of that coverage issue at no cost to Debtors or the estate, and without the right to later assert any claim against Debtors or their estates.
Memorandum and Order on Motion for Relief From Stay by Annette Karp, Dckt.No. 73, pg. 13-14.
On October 10, 2008, this Court denied Builders' motion for relief from the automatic stay to proceed with a declaratory judgment action establishing whether *488 L.L.C. and Groover have valid insurance coverage. This Court denied the motion for the following reasons: (1) Builders' declaratory judgment action was not ready for trial; (2) denying Builders' motion "may well avoid duplicative litigation;" (3) there was no great prejudice to Builders if this Court' denied the motion for relief; and (4) granting relief from stay would not afford a complete resolution of the issues and could delay Debtor's reorganization efforts. Order, Case No. 08-40391, Dckt. No. 119; Case No. 08-40386, Dckt. No. 124.
Prior to October 10, 2008, The Honorable Hermann W. Coolidge had set an October 29, 2008, trial date in the underlying state court litigation. Annette H. Karp v. Robert J. Groover and R.J. Groover Construction, L.L.C., State Court of Chatham County, State of Georgia, Civil Action No. STCV05-01727. On October 27th, 2008, Judge Coolidge held a pretrial/settlement conference with the parties to the civil action. Mrs. Karp and her counsel, Brent Savage and Steven E. Scheer, attended the conference, and Alec T. Galloway attended the conference on behalf of Debtor. The adjuster for Builders was made available via telephone.
During that conference, the issue of insurance coverage was discussed. However, Mrs. Karp and her counsel were not aware that this Court had entered the Order denying Builders' motion to file a declaratory judgment action. Because of an inexplicable oversight by the staff of this Court, counsel for Mrs. Karp did not receive any notice from this Court that the order had been entered. Builders, however, had been served fifteen days earlier with a copy of that order. See HTML version of BNC Certificate of Mailing, Dckt.No.120 (October 12, 2008); Response to Builders' Motion to Reconsider, Dckt. No. 130, Exhibit A & B. Counsel for Mrs. Karp later learned of the entry of the of the Order through a telephone call with W. Jason Pettus, counsel for Builders, on Friday October 31, 2008. Response to Builders' Motion to Reconsider, Dckt.No. 130, Exhibit B.
Acting in justifiable ignorance of the fact that Builders' motion for relief from stay to litigate the coverage issue had been denied by this Court, Mrs. Karp and her counsel asked Judge Coolidge, with Builders' consent, to continue the underlying state court case until after either the insurance coverage had been resolved or this Court had denied Builders' motion for relief from stay. Response to Builders' Motion to Reconsider, Dckt.No 130, pg.1-3, Exhibit A & B (November 20, 2008). Had Mrs. Karp and her counsel known that this Court had already entered the order, they would have elected to proceed with the trial. Id., Exhibit A. After the pretrial/settlement conference, Builders filed a motion on November 7, 2008, for reconsideration or in the alternative, to extend the time to appeal this Court's order denying its motion for relief from the automatic stay.
CONCLUSIONS OF LAW
1. Motion for Reconsideration
Federal Bankruptcy Rule 9024 incorporates Federal Rule of Civil Procedure 60(b) ("Rule 60(b)") into bankruptcy proceedings. Rule 60(b) provides:
On motion and upon such terms as are just, the court may relieve a party ... from final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud ..., misrepresentation, or *489 other misconduct of an adverse parry; (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; or (6) any other reason justifying relief from the operation of the judgment.
Fed.R.Civ.P. 60(b)
Relief under Rule 60(b) may be granted "only upon an adequate showing of exceptional circumstances." In re Michael, 285 B.R. 553, 554 (Bankr.S.D.Ga.2002)(Davis, J.)(quoting Richards v. Aramark Servs., Inc., 108 F.3d 925, 927 (8th Cir.1997) (citations omitted)). "When interpreting Rule 60(b), a court should be mindful of the Rule's purpose construing it liberally while recognizing that it is no substitute for an appeal." Drake v. Dennis (In re Dennis), 209 B.R. 20, 25 (Bankr.S.D.Ga.1996)(Davis, J.) (citation omitted). "The movant bears the burden of showing that one of the grounds set forth in Rule 60(b) exists, and a decision whether to permit application of the rule is within the sound discretion of the presiding court." In re Michael, 285 B.R. at 555(citation omitted).
Builders has not asserted which of the above six grounds it is relying on. Instead. Builders makes the following arguments in support of its motion for reconsideration: (1) the State Court "has expressed it is not judicially economical to participate in a week long trial only to find out that [Mrs. Karp] cannot recover because there is no insurance coverage;" (2) "Mrs. Karp was the primary party objecting to Builders' Motion, not Groover"; (3) "allowing the declaratory judgment action could prevent duplicative litigation, if it is found that no coverage exists for Mrs. Karp's claims"; and (4) Builders will be subject to great harm since denying Builders ability to file a declaratory judgment action "places Builders in a position of denying coverage. This will only foster litigation." Motion, Dckt.No. 124, pgs. 4-5
These arguments do not justify a reconsideration of my previous order. First, even if Judge Coolidge had expressed his preference to permit the declaratory judgment action to proceed prior to trying the underlying state court litigation, a desire which Mrs. Karp's attorneys contend is not accurate, he would have made that preference known without any knowledge that this Court had already denied Builders' motion for relief from the automatic stay. As a result, this ground is frivolous.
Second, in determining whether to lift the automatic stay so a party may commence or continue litigation in another forum, most courts "balance the hardship to the [movant], if he is not allowed to proceed with his lawsuit, against potential prejudice to the debtor, debtor's estate and other creditors." In re Carraway Methodist Health Sys., 355 B.R. 853 (Bankr.N.D.Ala.2006). As a result, in the previous order, this Court had to balance the hardship to the debtor, the debtors' estates and other creditors regardless of whether a third party, or no party, files an objection.
Third, Builders' last two arguments have already been litigated and addressed in the previous order. A motion for reconsideration "is no substitute for an appeal." In re Dennis, 209 B.R. at 25. As a result of the foregoing, this Court denies Builders' motion for reconsideration.
2. Motion to Extend Time to Appeal
Under Federal Rule of Bankruptcy Procedure 8002(a), a notice of appeal must be filed within ten days of entry of the underlying *490 order. Builders did not file a notice of appeal during that time period. However, Rule 8002 provides for the possibility of extending that time period. First, under Rule 8002(c)(2), an extension may be granted for up to twenty days where the request is filed before the expiration of the deadline. This extension does not apply in the present case because the motion for extension was filed after the ten day period.
Second, Rule 8002(c)(2) further provides that within twenty days after the expiration of the ten day deadline, an extension can be granted upon a showing of "excusable neglect." Since this motion was indeed filed within that time period, this Court is left to determine whether Builders has established "excusable neglect" for his failure to file notices of appeal or to request an extension of the appeal period prior to the 10-day expiration. See In re Spiegel, Inc., 385 B.R. 35, 39 (S.D.N.Y.2008)(Party seeking extension of time in which to file notice of appeal from bankruptcy court order has burden of establishing excusable neglect).
In Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, the United States Supreme Court examined the standard of "excusable neglect" under Fed.R.Bankr.P. 9006(b)(1) and held that whether neglect can be considered "excusable" is an equitable determination, "taking into account of all relevant circumstances surrounding the party's omission." The Court specifically articulated the following factors to be among those relevant in this determination: (1) danger of prejudice to the debtor; (2) the length of delay and the potential impact on judicial proceedings; (3) the reason for the delay, including whether it was within the reasonable control of the movant; and (4) whether the movant acted in good faith. 507 U.S. 380, 395, 113 S. Ct. 1489, 1498, 123 L. Ed. 2d 74 (1993).
Although there is a split among courts, the majority of Circuit Courts have found that Pioneer's "excusable neglect" standard also applies to cases involving Rule 8002(c)(2). Thus, I adopt this finding. See In re Lang, 414 F.3d 1191; 1200 (10th Cir.2005); In re Pipco Fruit Co., 1997 WL 537511, at *1 (9th Cir. Aug. 27, 1997); Shareholders v. Sound Radio, Inc., 109 F.3d 873, 879 (3d Cir.1997); Christopher v. Diamond Benefits Life Ins. Co. (In re Christopher), 35 F.3d 232, 235-36 (5th Cir.1994); In re Cruey, 1994 WL 567918, at *l-2 (4th Cir. Oct. 18, 1994); Duncan v. Washington, 1994 WL 232397, at *2-3 (6th Cir. May 27, 1994); In re Shepherds Hill Dev. Co., 316 B.R. 406, 414-15 (1st Cir. BAP 2004).
Undoubtedly, Builders' counsel neglected to file a notice of appeal within the 10 day time period established by Rule 8002(a). Therefore, the issue here is whether Builders' neglect is "excusable" under the Pioneer standard. I hold that Builders' neglect is not excusable for the following reasons.
"[A]mong the factors enumerated in Pioneer, by far the most critical is the asserted reason for the mistake." Dimmitt v. Ockenfels, 407 F.3d 21, 24 (1st Cir.2005); Lowry v. McDonnell Douglas Corp., 211 F.3d 457, 463 (8th Cir.2000)(holding that "the excuse given for the late filing must have the greatest import."); see In re Kmart Corp., 315 B.R. 718, 723 (N.D.Ill. 2004) ("[T]he would-be appellant must demonstrate unique or extraordinary circumstances" that caused Builders to not file a notice of appeal in the time frame established by Rule 8002(a).); In re Davenport, 342 B.R. 482, 497 (Bankr.S.D.Tex. 2006)
Builders asserted the reason for its lapse was the fact that Builders' counsel assumed at that time that "[t]here was no *491 question the trial was going forward, and it would have concluded before the appeal would have even been docketed. Thus, the issue of seeking relief to initiate a declaratory judgment action was moot.'" After the notice period lapsed, Builders argues "a strange turn of events occurred the day before [the state court] trial" and the state court granted a continuance. Motion, Dckt.No. 124, pg. 7.
Builders' explanation does not warrant relief. Believing that the underlying state court litigation was going to occur on a specific date does not constitute a unique or extraordinary circumstance. The potential for delay in any court proceeding is entirely foreseeable, and the mere filing of a notice of appeal, in order to secure its right to appeal if the state court litigation was postponed, was entirely within the control of Builders. See In re Davenport, 342 B.R. at 503 (The attorney claimed that the failure to file a notice of appeal was due to the attorney's inability to cheek the status of the case, the attorney's presence in another trial, and the attorney's lack of staff. The court rejected this argument stating that "all of these factors were within the [attorney's] reasonable control" and thereby did not constitute excusable neglect.). Thus "[o]n balance, the Court finds that the non-movant's right to rely on the finality of the Court's Order after the 10-day appeal period has run is more compelling. Hence, a balancing of the equities favor the non-movant in this case." Pogge v. Niederer (In re Niederer), 1996 WL 33406609, at *3 (Bankr.C.D.Ill. Aug. 28, 1996).
In this case, filing of a notice of appeal, which is a simple form notice, in order to preserve Builders' appeal rights would have been the proper action if it wished to preserve the right to appeal in the event of a continuance. Making certain this Court had not ruled prior to advising Judge Coolidge otherwise, or revealing what Builders may have known but not shared with Karp's counsel, would have been in keeping with its professional obligation. The failure of Builders to do either of these illustrates that its neglect was not excusable. Indeed, either effort would have been less onerous to counsel, this Court, or the State Court of Chatham County than filing this tedious and verbose motion on dubious, if not entirely frivolous, grounds.
However, relying on In re Bli Farms, 294 B.R. 703, 706 (Bankr. E.D.Mich.2003), Builders asserts that if the other three Pioneer factors weigh in favor of granting the motion to extend, then this Court should grant Builders' motion regardless of the reason it gives for its neglect. I disagree. Even if, as Builders claims, there were no prejudice to Debtor and minimal delay that resulted from counsel's failure to file Builders' notice of appeal, "the excuse given for the late filing must have the greatest import." Lowry, 211 F.3d at 463; see United States, v. Toms, 372 F.3d 1159, 1162-63 (10th Cir.2004)(Although three of the four Pioneer factors weighed in favor of finding excusable neglect, the court found no excusable neglect because the reason for the delay was the most important factor and weighed heavily in favor of finding no excusable neglect.); see also In re Wechsler, 246 B.R. 490, 494-95 (S.D.N.Y.2000); In re Gardner, 2007 WL 1577862, at *2 (Bankr. N.D.Tex. May 31, 2007).
Builders establishes only that it made a voluntary election not to file a notice of appeal based on the erroneous assumption that the state court litigation would conclude before the appeal was finalized. Builders' argument is not sufficient to establish excusable neglect nor that the delay was beyond its control. It is also doubtful that Builders could establish good faith in light of the fact that the delay in *492 that proceeding which is now the excuse for seeking extraordinary relief here was foisted by Builders upon Mrs. Karp, her counsel, and Judge Coolidge, none of whom had full disclosure of the facts when the State Court continuance was granted.
ORDER
Pursuant to the foregoing Findings of Fact and Conclusions of Law, IT IS THE ORDER OF THIS COURT that Builders' Motion for Reconsideration or in the alternative To Extend Time to Appeal is DENIED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918799/ | 411 B.R. 169 (2008)
In re AMERICAN HOME MORTGAGE, HOLDINGS, INC., a Delaware Corporation, et al., Debtors.
No. 07-11047 (CSS).
United States Bankruptcy Court, D. Delaware.
October 31, 2008.
*170 Connolly Bove Lodge & Hurtz LLP, Jeffrey C. Wisler, Christina M. Thompson, Wilmington, DE, Attorneys for Northwest Trustee Services, Inc.
Young Conaway Stargatt & Taylor, LLP, James L. Patton, Jr., Robert S. Brady, Matthew B. Lunn, Margaret B. Whiteman, Wilmington, DE, Attorneys for the Debtors and Debtors in Possession.
Office of the United States Trustee, Joseph J. McMahon, Jr., Esquire, Wilmington, DE, Attorney for Roberta A. DeAngelis, Acting United States Trustee.
Blank Rome LLP, Bonnie Glantz Fatell, David W. Carickhoff, Jr., Wilmington, DE, and Hahn & Hessen LLP, Mark T. Power, Emmet Keary, New York, NY, Attorneys for the Official Committee of Unsecured Creditors.
OPINION[1]
CHRISTOPHER S. SONTCHI, Bankruptcy Judge.
INTRODUCTION
The issue before the Court is whether a professional retained under Section 327(a) of the Bankruptcy Code can nonetheless be reimbursed for expenses incurred by third-party vendors. The Court finds that the professional can recover those expenses, provided that the professional becomes obligated to pay the venders post-petition, i.e., the professional's obligation to pay the venders arose post-petition even if the work was performed pre-petition.
The category of things qualifying as "expenses" seems easily explainable when the word is considered in the context of its common, everyday use. However, the category of items that qualify as "expenses" is unclear within the context of the Bankruptcy Code. The Bankruptcy Code consistently uses the term "expenses," but leaves *171 it undefined. Moreover, several provisions of the Bankruptcy Code use the phrase "claims and expenses" in such a way as to raise the issue of whether the terms are different or one and the same.
The legal issues before the Court are (i) whether the terms "expense" and "claim" (as defined in section 101(5) of the Bankruptcy Code) are interchangeable; (ii) the types of "actual, necessary expenses" that qualify for reimbursement under section 330(a)(1)(B); and (iii) whether a professional retained under section 327(a) is able to recover pre-bankruptcy petition expenses incurred by third-party vendors.
The Court finds that the terms "expense" and "claim" are distinct and that, notwithstanding the ability of a party to have a claim for pre-petition expenses, the only "actual, necessary expenses" capable of reimbursement under section 330(a)(1)(B) are those expenses incurred post-petition. Thus, the Court finds that a retained professional is able to recover pre-bankruptcy petition expenses incurred by third-party vendors if the professional became obligated to pay the vendors after the petition was filed.
JURISDICTION
This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334. Venue of this proceeding is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409. This is a core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(A) and (O).
STATEMENT OF FACTS[2]
I. Factual Background
On August 6, 2007 (the "Petition Date"), American Home Mortgage and its affiliates (collectively, the "Debtors"), filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. Prior to the Petition Date, the Debtors were in the business of originating mortgage loans. The Debtors serviced these mortgage loans through American Home Servicing, Inc. ("AHM Servicing"). In the ordinary course of its business, AHM Servicing's business was involved in hundreds of foreclosure-related proceedings throughout the United States. To prosecute these foreclosures and perform other related services, AHM Servicing hired various professionals.
Northwest Trustee Services, Inc. ("Northwest Trustee") was among the professionals AHM Servicing hired pre-petition to perform foreclosures and other services. Northwest Trustee provides its services to AHM Servicing for a "flat fee" plus expenses. The expenses incurred in prosecuting a foreclosure ("Foreclosure Expense") vary according to state law. Foreclosure Expenses include, but are not limited to, title reports, mailing costs, recording costs, notice posting, service of process and publication. Northwest Trustee does not perform these services; it hires third party vendors to do the work for it.
In the foreclosure services industry, the standard practice is that Foreclosure Expenses are due from Northwest Trustee to the vendor providing the services only after the resolution of a foreclosure matter. A foreclosure matter is resolved upon a foreclosure sale, reinstatement, satisfaction, negotiated workout, termination by the servicer, or bankruptcy.[3] As the foreclosure process may span several months, *172 the time period between when an individual Foreclosure Expense is incurred by a vendor and the time when Northwest Trustee owes that vendor for the Foreclosure Expense (i.e., when the foreclosure is resolved) may span several months. The resolution of a foreclosure matter also allows Northwest Trustee to invoice AHM Servicing for both Northwest Trustee's flat fee and the Foreclosure Expenses.
Finally, the Debtors are directly reimbursed for Northwest Trustee's flat fee and Foreclosure Expenses upon the resolution of a foreclosure matter. That is, upon the resolution of a foreclosure, the party in possession of the real property at the conclusion of the matter (e.g., the mortgagee, the winning bidder at auction, etc.) pays the Debtors the balance of the mortgage plus the fees and expenses associated with the foreclosure.
Post-petition, the Debtors instructed Northwest Trustee to proceed with "business as usual." The Debtors also sought to retain Northwest Trustee so that it could continue to provide foreclosure services for the Debtors. Northwest Trustee understood that the Court would have to approve its retention and, if it were retained, it would have to file fee applications with the Court in order to get paid. Furthermore, Northwest Trustee understood that if it wanted to recover any amounts it invoiced the Debtors pre-petition, it would have to file a proof of claim. With input from Northwest Trustee, Debtors' counsel prepared an application to retain Northwest Trustee as a professional pursuant to section 327(e) of the Bankruptcy Code ("Retention Application"). With the Retention Application, the Debtors included a supporting affidavit. This affidavit did not contain any waivers, and none were requested.[4]
The Office of the United States Trustee ("OUST") raised an objection to the Retention Application. Debtors' counsel informed Northwest Trustee that in order to resolve the objection Northwest Trustee would have to provide additional disclosures and waive its pre-petition claim. Debtors' counsel, with input from Northwest Trustee, prepared and filed a supplemental affidavit, which included the following language: "[a]s of August 6, 2007, the Debtors owed Northwest Trustee $92,847.67 for prepetition services and fees.... Northwest Trustee hereby waives the Prepetition Fee against the Debtors." The $92,847.67 constituted the total due under Northwest Trustee's invoices issued to the Debtors for foreclosure services prior to the Petition Date. The OUST also requested that the Debtors retain Northwest Trustee under section 327(a) rather than section 327(e). The Debtors complied with this request. In mid-September, 2007, the Court approved the retention of Northwest Trustee. In the retention order, the Court found that Northwest Trustee was a disinterested person, that the Debtors could retain Northwest Trustee under section 327(a), and that Northwest Trustee "shall be deemed to have waived any and all prepetition amounts owed to them by the Debtors."
Thereafter, Northwest Trustee submitted invoices to the Debtors for Debtors' counsel to incorporate into fee applications. In early November, 2007, Northwest Trustee received a letter from Debtors' counsel that provided the foreclosure professionals *173 with guidelines on the fee application process. The following statements were highlighted in the letter: "Your prepetition course of dealing with the Debtors' [sic] determines the allocation and accrual of fees," and "Dates for expenses should be related to the dates in which your firm is entitled to reimbursement. Generally, this should be when your firm makes payment to third parties."
Subsequently, a disagreement arose between Debtors' counsel and Northwest Trustee over whether certain Foreclosure Expenses were prepetition claims. As a result, Northwest Trustee retained its own counsel to assist it with the fee application process.
II. Procedural Background
In mid-December 2007, pursuant to sections 330 and 331 of the Bankruptcy Code, Northwest Trustee filed monthly fee applications for August, 2007 through October, 2007 and a quarterly fee application covering the Petition Date through October 31, 2007. In mid-March 2008, Northwest Trustee filed monthly fee applications for November, 2007 through January, 2008, and a quarterly fee application for November 1, 2007 through January 31, 2008 (collectively, these applications constitute the "Fee Applications"). The Debtors filed limited objections to each Fee Application in which the Committee joined. These objections did not dispute the reasonableness of the fees requested in the Fee Applications or dispute that the expenses requested therein were both actual and necessary. Rather, the objections disputed Northwest Trustee's right to be reimbursed for certain requested expenses ("Disputed Expenses").
In mid-April, 2008, the Court convened a hearing on Northwest Trustee's quarterly fee applications and the limited objections. At the conclusion of that hearing, the Court took the matter under advisement and requested post-hearing briefing. The requested briefing is complete and this matter is ripe for decision.
LEGAL DISCUSSION
I. The Terms "Expense" and "Claim" (As Defined In Section 101(5) of the Bankruptcy Code) Are Distinct, Though It Is Possible For A Party To Have A Claim For Expenses
Section 330 of the Bankruptcy Code authorizes compensation for services and reimbursement of expenses for officers of the estate.[5] It also prescribes the standards on which the amount of compensation is to be determined.[6] The provision of section 330 relevant to the matter at hand is section 330(a)(1)(B), which reads: "After notice to the parties in interest and the United States Trustee and a hearing, and subject to sections 326, 328, and 329, the court may award to ... a professional person employed under section 327 ... reimbursement for actual, necessary expenses."[7]
It is significant that this section does not contain the word "claim." "Congress certainly knew how to use the word claim"[8] and could have used it in section 330(a)(1)(B). Moreover, the language of section 507(a) demonstrates an intention to distinguish between "claim" and "expense" because it provides that "[t]he following *174 expenses and claims have priority in the following order...."[9] If Congress intended both words to mean the same thing, then it would have used one word or the other, not both.
"Expense" is not defined in section 101 of the Bankruptcy Code. According to the canons of construction, the word should therefore be interpreted as taking its ordinary, contemporary, common meaning.[10] The Shorter Oxford English Dictionary defines "expense" as the "[b]urden of expenditure; the charge or cost involved or required for something; in [plural form], the charges etc. incurred by a person in the course of working for another or undertaking any enterprise; the amount paid in reimbursement."[11] In contrast, the Bankruptcy Code defines "claim" as follows:
(A) [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; or
(B) [a] right to an equitable remedy for breach of performance if such breach gives rise to a right of payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.[12]
The plain language of these definitions demonstrates there is a difference between the two terms. One can incur charges in the course of undertaking an enterprise without having a right to payment or an equitable remedy arise for breach of performance. Conversely, a right to payment or an equitable remedy can arise without it being about the charges or cost involved or required for something.
The Court also recognizes that a party in a bankruptcy case may hold a claim for expenses. The legislative history and case law have construed the term "claim" to be as broad as possible to allow "all legal obligations of the debtor, no matter how remote or contingent ... to be dealt with in the bankruptcy case."[13] Furthermore, "claims arise when ... services are performed."[14] If a business advances cash for a nearly insolvent client while performing services for that client, these expenses will be included within the "claim" the business may assert against the client's estate should the client file for bankruptcy. The business may only recover these expended funds by filing a proof of claim with the court.
The Court also notes that a party may be able to hold a claim for post-petition expenses. Section 101(5) does not say a "claim" must be for a pre-petition "right to *175 payment." Furthermore, if "claims arise when ... services are performed,"[15] parties performing post-petition tasks for the Debtor can assert a "right to payment" against the estate for their post-petition services. These parties may not be "creditors" as that term is defined in the Bankruptcy Code,[16] but they nevertheless have some sort of "claim" or argument that the debtor should pay them for their work.[17] These parties may not have to file proofs of claim with the Court, but they must at least file requests for payment in order to be compensated and recover their expenses.[18] Until the Court awards such payment, the party can only argue that they deserve to be paid for their expensesand such an argument would be that they have a "right to payment," or a "claim" for their services and expenses.
The OUST disagrees with this analysis. It argues that the Bankruptcy Code uses the terms "claim" and "expense" interchangeably. By way of example, the OUST cites section 1129(a)(9)(A). That section refers to a "claim of a kind specified in section 507(a)(2)." Section 507(a)(2) in turn refers to "administrative expenses allowed under section 503(b)." Included in section 503(b) are expenses for "compensation and reimbursement awarded under section 330(a)."
The OUST's analysis fails to note that a party may be able to hold a claim for post-petition expenses. This ability helps explain why section 1129(a)(9)(A)'s "claim of a kind" language refers to "administrative expenses" in section 507(a)(2). The section requires Chapter 11 plan proponents to demonstrate that the holders of administrative expense claims will be cashed out on the effective date of the plan or that the claims will be otherwise resolved on terms acceptable to the holder of the claim.[19] In some Chapter 11 cases, parties employed under section 327 seeking administrative expense status for their compensation and expenses will not get paid until the Court approves the reorganization plan. Until the plan is confirmed, these parties only have a "claim" or "right to payment" of their compensation and expenses. Administrative expenses have priority over most other claims,[20] so these claim holders must be paid in full or receive consideration that is sufficient to the claim holder. It is this administrative expense claim and not an intention to use the words "claim" and "expense" interchangeably that gives rise to section 1129(a)(9)(a)'s language.
II. The Only "Actual, Necessary Expenses" Qualifying For Reimbursement Under Section 330(a)(1)(B) of the Bankruptcy Code Are Those Incurred Post-Petition
Section 330(a)(1)(B) permits courts to reimburse the "actual, necessary expenses" of "a professional person employed *176 under section 327."[21] Section 327 only allows the employment of professional persons "that do not hold or represent an interest adverse to the estate, and that are disinterested persons."[22] To become disinterested, professionals need to waive their rights to any pre-petition claims they might have against the Debtorincluding claims for pre-petition expenses. Therefore, disinterested professionals can only recover post-petition expenses under section 330(a)(1)(B). As a result, section 330(a)(1)(B) contains a presumption that any professional seeking reimbursement under it will be doing so for post-petition expenses.
Section 503(b)(2) makes the same presumption. The section allows for administrative expenses that include compensation and reimbursement awarded under section 330.[23] Any professionals seeking an administrative expense allowance under it will have waived their rights to claims for pre-petition expenses. They can only seek an administrative expense allowance for post-petition expenses.
A result of this presumption is that section 507(a) distinguishes between pre-petition expense claims and post-petition expenses. Section 507(a) lays out the order of priority for certain claims and expenses.[24] The only "expenses" referred to in the section are the administrative expenses of a trustee allowed under paragraphs (1)(A), (2) and (6) of section 503(b)[25] and the administrative expenses allowed under section 503(b).[26] All other provisions of section 507(a) refer to "claims" of one kind or another.[27] If administrative expenses can only be sought for post-petition expenses, any expenses incurred pre-petition can only be recovered by filing a proof of claim.
Northwest Trustee argues, inter alia, that it is significant that Congress chose not to use qualifiers in section 330(a)(1)(B), such as those in sections 503(b)(1)(a)(i) and (ii), limiting recovery for wages, salaries, commissions, and benefits "rendered after the commencement of the case" or "attributable to any period of time after the commencement of the case."[28] However, the analysis above demonstrates that professionals seeking administrative expense allowance under section 503(b)(2) may only do so for post-petition expenses.
Furthermore, Northwest Trustee is not attempting to seek reimbursement under sections 503(b)(1)(a)(i) and (ii). These sections address situations where it is necessary to pay the wages, salaries, commissions, and benefits of a Debtor's employees as part of "the actual, necessary costs and expenses of preserving the estate."[29] Prior to bankruptcy, Debtors distribute wages and benefits to their employees on a continuous basis. As such, it is necessary to include the language "rendered after the commencement of the case"[30] and "attributable to any period of time occurring after the commencement of the case"[31] in order to distinguish post-petition salary payments explicitly made for the estate's *177 benefit from the type of pre-petition payments described above.[32]
Northwest Trustee also highlights that payment of a professional's pre-petition fees and expenses under section 503(b) is not "per se disallowed."[33] Northwest Trustee is correct, but it has expressly stated it is not seeking allowance of a claim under section 503(b)(1), or under any other section of the Bankruptcy Code. Therefore, the Court need not further address this section.
III. Northwest Trustee May Recover The Disputed Expenses Under Section 330(a)(1)(B) of the Bankruptcy Code
As discussed in the factual background above, the time period between when an individual Foreclosure Expense is incurred by a vendor and the point in time when Northwest Trustee owes that vendor for the Foreclosure Expense (i.e., the resolution of the foreclosure) may span several months. Northwest Trustee follows the standard foreclosure industry practice of paying Foreclosure Expenses to its vendors only after the resolution of a foreclosure matter. Moreover, in accordance with industry terms, neither the flat fee nor the Foreclosure Expenses are billed to, due from, or paid by the Debtors until the foreclosure matter is resolved.
The foreclosures at issue were commenced pre-petition but resolved after the Petition Date. It follows that the Debtors become obligated to pay Northwest Trustee for its expenses post-petition. Only then did Northwest Trustee pay money to its vendors that could be considered "expenses" for which the Debtors were obligated to compensate Northwest Trustee. The vendors may have completed their services pre-petition, but the Debtors did not become obligated to compensate Northwest Trustee for its expenses prior to the Petition Date since the foreclosures were incomplete. At the very least, the Debtors did not become obligated to pay Northwest Trustee for its expenses until Northwest Trustee actually made expenditures, i.e., until it paid its vendors.
The only party against whom a pre-petition claim arose is Northwest Trustee. Northwest Trustee was the sole party in privity with the third party vendors. As such, Northwest Trustee was the only party obligated to pay the vendors upon the pre-petition completion of their assigned tasks. The Debtors may have been beneficiaries of the contracts between the vendors and Northwest Trustee, but their status as beneficiaries is not enough to give the vendors rights to a pre-petition claim against the Debtors. The Debtors became obligated to pay Northwest Trustee only after the foreclosures were complete and the vendors were paid. Because these events occurred post-petition, Northwest Trustee did not have a contingent or unmatured pre-petition right to be reimbursed for its foreclosure costs. It had no pre-petition right to payment whatsoever.
A similar analysis was followed in the case of In re Montgomery Ward Holding Corp.[34] In that case, the debtor was obligated under a non-residential lease to reimburse *178 the landlord for all tax expenses attributable to the leased premises. The obligation to pay that reimbursement did not mature under the terms of the lease until after the entry of the bankruptcy order, although the landlord's liability for the taxes accrued in large part prior to the order. The landlord petitioned the bankruptcy court for payment in full of the Debtor's tax reimbursement obligations pursuant to the lease under section 365(d)(3) of the Bankruptcy Code. The Debtor took the position that all taxes attributable to a pre-petition period constituted unsecured claims. However, the Court held that an obligation arises under a lease for the purposes of Section 365(d)(3) when the legally enforceable duty to perform arises under that lease. Even though the landlord became legally obligated to pay the taxes prior to the petition date, it was not until the landlord submitted invoices to the Debtor that the Debtor became legally obligated to reimburse the landlord for the taxes.[35]
The Montgomery Ward court recognized that the landlord's legal obligations to the tax collector were separate from the Debtor's obligations to pay taxes to the landlord. The triggering of the tax collector's right to payment from the landlord did not obligate the Debtor to pay taxes to the landlord pre-petition. Instead, a subsequent event in connection with the lease agreement triggered this obligation. Similarly, the post-petition actions of Northwest Trustee triggered the Debtors' obligation to pay the foreclosure services firm.
The only Disputed Expenses of Northwest Trustee incurred pre-petition are (i) the mailing costs Northwest Trustee had to pay within thirty days of the monthly invoices issued by third party vendors, and (ii) the expenses "actually incurred" for those borrowers who reinstated their loans prior to the date of invoice to the Debtors. Since these expenses were paid pre-petition, they should be considered part of a pre-petition claim for expenses that Northwest Trustee could hypothetically assert against the Debtor. However, the Court finds that Northwest Trustee waived its right to these particular expenses, as will be discussed infra.
The Debtors disagree with this analysis. They argue that Northwest Trustee became obligated to reimburse the Disputed Expenses as of the dates identified on Northwest Trustee's invoices. Each date corresponds to days in which Northwest Trustee either ordered services or had services performed. Each date is also pre-petition. The Debtors also note that a witness for Northwest Trustee testified that the Debtors are required to pay for foreclosure expenses even in the event the Debtors replace Northwest Trustee prior to resolving a foreclosure matter.
The dates on Northwest Trustee's billing invoices are irrelevant. Even if the dates were published after "the vendor had done everything it needed to do in order to fulfill its obligations," with Northwest Trustee "only ... wait[ing] until the foreclosure[s] `complete[d]' to invoice the Debtors," the relevant parties to the contracts in question were Northwest Trustee and its third party vendors. There are no pre-petition claims the vendors can assert against the Debtors.
The fact that the Debtors were required to pay for the Disputed Expenses in the event the Debtors replaced Northwest Trustee prior to resolving a foreclosure matter is also irrelevant. If Northwest *179 Trustee had been replaced pre-petition, it would have needed to pay its vendors, and therefore the Debtors' obligation to pay would have arisen pre-petition. But this is not what has happened. Northwest Trustee is still employed by the Debtors and the foreclosures were completed post-petition. Therefore, Northwest Trustee's expenses were incurred post-petition.
The Debtors also argue that the Court's position confuses the concept of when an obligation is incurred with the concept of when payment is due for such an obligation. To support this, the Debtors analogize to In re Valley Media[36] and In re Jartran.[37]
The Valley Media case does not support the Debtors' arguments. In Valley Media, the Court found that a vendor was not entitled to an administrative claim when the goods that it provided to a debtor on consignment were sold post-petition. The Court reasoned that the vendor completed its performance (delivery of goods) pre-petition and the vendor could not elevate its claim because the vendor's right to payment (the sale of goods) occurred post-petition. However, the claimant in Valley Media completed all of its obligations to the debtor pre-petition. Northwest Trustee completed its foreclosures post-petition. The only parties that completed their obligations pre-petition were the third party vendors, and they are not seeking to elevate their claims to administrative expense status.
The Jartran case also provides no support for the Debtors' arguments. In Jartran, the debtor, through its agent, contracted with Donnelly to obtain national advertising placement from publishers of the Yellow Pages. The pertinent terms of the debtor's agreement with Donnelly were: (i) Donnelly would arrange for the placement of the debtor's ads with different publishers; (ii) at a time certain, but before publication of each ad, the placement would become irrevocable, and Donnelly would become solely liable to the individual publishers (the "Closing Date"); and (iii) Donnelly would issue the debtor an invoice after the advertisements themselves were published and the debtor and its agent were liable to Donnelly for payment.
The relevant issue before the court was whether Donnelly was entitled to administrative expense status for the ads for which the Closing Date occurred pre-petition (and for which Donnelly had fulfilled its obligation vis-à-vis the placement) but for which the publication occurred post-petition (i.e., for which Donnelly had not issued an invoice) (the "Gap Invoices"). The Seventh Circuit affirmed both the Bankruptcy Court and District Court and held that the services underlying the Gap Invoices were completed, and Donnelly's liability fixed, pre-petition. Therefore, Donnelly's claim for the Gap Invoices was a pre-petition general unsecured claim.
Jartran can be distinguished from the case at bar in several ways. First, the relevant Bankruptcy Code provision was Section 503(b), not Section 330(a)(1)(B). Second, the Jartran debtor had not retained Donnelly as a professional under Section 327(a). Third, the Jartran court noted that Donnelly did not allege that "Jartran, after the filing of the petition, requested that [Donnelly] continue work on ads for which the closing date had passed."[38] Here, the Debtors affirmatively *180 instructed Northwest Trustee to proceed as "business as usual." These statements were made post-petition, and as such were made by the debtor-in-possession rather than "AHM Servicing" as it existed prior to filing for bankruptcy. As noted by the Jartran court, "inducement of the creditor's performance by the debtor-in-possession is crucial to a claim for administrative priority in the context of the furnishing of goods or services to the debtor."[39] The court went on to say that,
"[T]he reason that inducement of the creditor's performance by the debtor-in-possession is crucial to a claim for administrative priority is rooted in the policies that gave rise to the creation of the priority. Thus, administrative priority is granted to post-petition expenses so that third parties will be moved to provide the goods and services necessary for a successful reorganization."[40]
Here, the Debtors' statements induced Northwest Trustee to continue providing services to the Debtors that were necessary for its reorganization. In the final analysis, Jartran actually ends up hindering rather than helping the Debtors' attempts to avoid paying Northwest Trustee's expenses.
Finally, it should be noted that the Debtors do not dispute Northwest Trustee's assertions that the Disputed Expenses meet the "actual" and "necessary" requirements of Section 330(a)(1)(B). The Court therefore finds that this requirement is met and that the parties cannot deny the requested award of reimbursement on this legal basis.
IV. Northwest Trustee Did Not Waive Its Rights To The Disputed Expenses, With Certain Exceptions
In the order approving its retention, Northwest Trustee waived "any and all prepetition amounts owed to them by the Debtors...."[41] The majority of the Disputed Expenses are post-petition expenses that may be reimbursed under section 330(a)(1)(B). It follows that the language of the waiver does not encompass these expenses and therefore Northwest Trustee could not have waived its rights to recover these expenses.
Nevertheless, the language of the waiver does include the mailing costs and the expenses "actually incurred" for those borrowers who reinstated their loans prior to the date of invoice to the Debtors. As discussed above, these expenses were paid pre-petition and should be considered part of a pre-petition claim for expenses. Since Northwest Trustee waived all pre-petition amounts owed to it by the Debtors, the Court finds that Northwest Trustee has waived its rights to these particular expenses. The Court further finds that Northwest Trustee's waiver of these expenses eliminates its status as a "creditor" of the Debtors.
For these reasons, the OUST's argument for judicial estoppel is unavailing. Judicial estoppel is available if it can be established that "first, the party in question must have adopted irreconcilably inconsistent positions; second, the party must have adopted these positions in `bad faith,' and third, there must be a showing that judicial estoppel is tailored to address *181 the harm and that no lesser sanction would be sufficient."[42]
Northwest Trustee has not adopted inconsistent positions. It can waive its rights to all pre-petition claims against the Debtor while simultaneously seeking repayment of its post-petition expenses. These positions were not adopted in bad faith because there is no evidence that Northwest Trustee's averments in its pleadings reveal its knowledge of a pre-petition claim. There also is no evidence of any attempts on Northwest Trustee's part to hide such pre-petition claims while applying to act as a professional under section 327. Finally, there is no harm resulting from Northwest Trustee's arguments or its position in the case.
V. Equitable Relief Is Unnecessary In This Case Because The Disputed Expenses Are Post-Petition Expenses Capable Of Reimbursement
In its brief, Northwest Trustee argues that if the Court finds that the Disputed Expenses were incurred pre-petition, then the equitable circumstances of this case warrant an award of reimbursement of the Disputed Expenses. However, equitable relief is unnecessary in this case because the Disputed Expenses are post-petition expenses capable of reimbursement under Section 330(a)(1)(B). Moreover, Northwest Trustee has not waived these expenses. It is therefore unnecessary to use the Court's equitable powers under Section 105(a) to grant relief to Northwest Trustee.
CONCLUSION
For the foregoing reasons, the Court finds that the terms "expense" and "claim" are distinct and that, notwithstanding the ability of a party to have a claim for pre-bankruptcy petition expenses, the only "actual, necessary expenses" capable of reimbursement under section 330(a)(1)(B) are those incurred post-petition. The Court finds that Northwest Trustee may recover the Disputed Expenses under section 330(a)(1)(B), with the exception of the mailing costs and the expenses "actually incurred" for those borrowers reinstating their loans prior to the date of invoice to the Debtors.
Counsel for Northwest Trustee is directed to submit an order under certification of counsel.
NOTES
[1] This Opinion constitutes the Court's findings of fact and conclusions of law, pursuant to Federal Rule of Bankruptcy Procedure 7052.
[2] The essential facts of this case are undisputed.
[3] Mailing costs are an exception to this general industry practice. Northwest Trustee is required to pay mailing costs within thirty days of a monthly invoice issued by the third party mailing vendor.
[4] While not a waiver, the affidavit did state that Northwest Trustee was continuing to review the Debtors' list of creditors, and that to the extent that the affiant, Mr. Hendricks (a Northwest Trustee employee), became aware of any additional connections or relationships that might have been relevant to Northwest Trustee's services rendered on behalf of the Debtors, he would file a supplemental affidavit.
[5] H.R.REP. No. 95-595, at 329-30 (1977), U.S.Code Cong. & Admin.News 1978, p. 5787.
[6] Id.
[7] 11 U.S.C. § 330(a)(1)(B).
[8] In re R.H. Macy & Co., Inc., 152 B.R. 869, 873 (Bankr.S.D.N.Y.1993).
[9] 11 U.S.C. § 507(a) (emphasis added).
[10] BedRoc Ltd., LLC v. United States, 541 U.S. 176, 184, 124 S. Ct. 1587, 158 L. Ed. 2d 338 (2004); Perrin v. United States, 444 U.S. 37, 42, 100 S. Ct. 311, 62 L. Ed. 2d 199 (1979).
[11] 1 Shorter Oxford English Dictionary 899 (6th ed.2007).
[12] 11 U.S.C. § 101(5).
[13] Senate Report at 22, 1978 U.S.Code Cong. & Admin. News 5787, 5808; see, e.g., Pennsylvania Dep't of Pub. Welfare v. Davenport, 495 U.S. 552, 558, 110 S. Ct. 2126, 109 L. Ed. 2d 588 (1990) (language of definition shows "Congress' broad rather than restrictive view of the class of obligations that qualify as a `claim' giving rise to a `debt.'"); United States Trustee v. First Jersey Securities, Inc. (In re First Jersey Securities, Inc.), 180 F.3d 504, 510 (3d Cir.1999) (citing legislative history to confirm that claim includes all legal obligation, no matter how remote or contingent).
[14] First Jersey, 180 F.3d at 511; see also In re Florence Tanners, Inc., 209 B.R. 439, 447 (Bankr.E.D.Mich. 1997); In re Investment Bankers, Inc., 136 B.R. 1008, 1018 (D.Colo. 1989), aff'd, 4 F.3d 1556 (10th Cir.1993).
[15] First Jersey, 180 F.3d at 511.
[16] See 11 U.S.C. § 101(10) ("The term `creditor' means . . . [an] entity that has a claim against the debtor that arose at the time of or before the order of relief concerning the debtor;... [an] entity that has a claim against the estate of a kind specified in section 348(d), 502(f), 502(g), 502(h) or 502(i) of this title; or... [an] entity that has a community claim.") (emphasis added).
[17] Whether or not courts choose to award these parties compensation and expenses is a different issue entirely, but this issue is not important to this analysis. The important fact is that a "claim" or something similar to a "claim" may arise if a party (whether employed under the Bankruptcy Code or not) performs services for a debtor post-petition.
[18] Fed. R. Bankr.P.2016(a).
[19] See generally 11 U.S.C. § 1129(a)(9)(A).
[20] See generally 11 U.S.C. § 507(a).
[21] 11 U.S.C. § 330(a)(1).
[22] 11 U.S.C. § 327(a).
[23] 11 U.S.C. § 503(b)(2).
[24] See generally 11 U.S.C. § 507.
[25] 11 U.S.C. § 507(a)(1)(C).
[26] 11 U.S.C. § 507(a)(2).
[27] See generally 11 U.S.C. § 507.
[28] 11 U.S.C. § 503(b)(1)(a)(i)-(ii).
[29] Id.
[30] Id.
[31] Id.
[32] For example, this language could have been intended to prevent the Debtor from distributing wages it owed to its employees prior to the Petition Date.
[33] See In re Trans World Airlines, Inc., 1993 WL 559245 (D.Del. 1993); Lebron v. Mechem Financial, 27 F.3d 937, 945 (3d Cir.1994); see also Randolph v. Scruggs, 190 U.S. 533, 23 S. Ct. 710, 47 L. Ed. 1165 (1903); 124 CONG. REC.H 11,094-95 (Sept. 28, 1978); 124 CONG. REC. S 17,411 (Oct. 6, 1978).
[34] Montgomery Ward, 268 F.3d 205 (3d Cir. 2001).
[35] Id. at 211. See also R.H. Macy, 152 B.R. at 873 (holding that, because "[t]here was no [tax] obligation for the Debtor to perform prior to the Petition Date," the "obligation" to pay taxes under section 365(d)(3) arose post-petition).
[36] In re Valley Media, Inc., 279 B.R. 105 (Bankr.D.Del.2002).
[37] In re Jartran, Inc., 732 F.2d 584 (7th Cir. 1984).
[38] Jartran, 732 F.2d at 586.
[39] Id. at 587 (emphasis in original).
[40] Id. at 588.
[41] Indeed, such a waiver was necessary for the Court to find Northwest Trustee to be a "disinterested party person." 11 U.S.C. § 101(14) ("The term disinterested person means a person that(A) is not a creditor..").
[42] Chao v. Roy's Constr. Inc., 517 F.3d 180, 186 (3d Cir.2008). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918827/ | 411 B.R. 706 (2008)
In re Valeri G. CARON, Debtor.
United States Trustee, Plaintiff,
v.
Valeri G. Caron, Defendant.
Bankruptcy No. 07-33796-rld7. Adversary No. 08-03065-rld.
United States Bankruptcy Court, D. Oregon.
December 2, 2008.
*707 M. Vivienne Popperl, Portland, OR, for Plaintiff.
*708 Michael A. Day, Portland, OR, for Defendant.
MEMORANDUM OPINION
RANDALL L. DUNN, Bankruptcy Judge.
This adversary proceeding was tried before me (the "Trial") on November 12, 2008. In its Complaint, the United States Trustee ("UST") sought to deny a discharge to the debtor, Valeri G. Caron ("Mr. Caron"), pursuant to Sections 727(a)(2)(B), (a)(3), (a)(4)(A), and (a)(5) of the Bankruptcy Code.[1]
During the Trial, I listened carefully to witness testimony and the arguments of counsel. Subsequent to the Trial, I have reviewed my notes from the Trial, the admitted exhibits and the Joint Pretrial Order Re United States Trustee's Complaint for Denial of Discharge ("Pretrial Order"), filed on October 30, 2008 (Docket No. 22). Based on my consideration of the evidence submitted at the Trial and the parties' arguments, I have come to a decision. The findings of fact and conclusions of law stated in this Memorandum Opinion constitute my findings and conclusions for purposes of Fed.R.Civ.P. 52(a), applicable in this adversary proceeding pursuant to FRBP 7052.
I find in favor of the UST and will deny a discharge to Mr. Caron pursuant to § 727(a)(3) of the Bankruptcy Code for the following reasons:
Factual Background
Mr. Caron emigrated to the United States from his native Kazakhstan in 1996. He is bilingual in English and Russian.
Mr. Caron attended high school in his native country, but attended college in the United States. He studied for two years at Pacific Union College and for a further two years at Travel International University of San Diego, where he obtained a degree in business consulting, import laws and logistics in 2002.
Thereafter, Mr. Caron has pursued an eclectic entrepreneurial career. He obtained a small business loan and purchased a beauty salon, "Hair in Time," in San Diego, while he was in college, that he ran for about two and a half years. He sold the beauty salon for approximately $76,000, paying off the business loan and netting approximately $26,000.
He moved to Oregon and worked for a while as a bus driver for Raz Transportation. Then he went into business with Michael Mitchell and IBD, Inc., a construction company. Mr. Caron's parents refinanced their home, and he and his parents loaned IBD, Inc. $127,378.12. Mr. Caron later discovered that Mr. Mitchell was embezzling money from the corporation. On or about September 26, 2005, Mr. Caron and his parents obtained a confession of judgment against Mr. Mitchell in the amount of $147,087.17 that was to be paid in installments. Mr. Mitchell paid the first installment of $35,000 when the confession of judgment was signed but has made no other payments. Mr. Caron listed a $100,000.00 judgment claim against Mr. Mitchell in his Schedule B. See Exhibit 1, at p. 14.
Meanwhile, Mr. Caron moved on. On August 19, 2004, Mr. Caron incorporated Royal Air Cargo, P.C., a trucking company ("Royal Air Cargo"). He was identified in filings with the Oregon Corporation Division as its president and registered agent. His partner in Royal Air Cargo was Vasiliy *709 Semeniakin. In the Pretrial Order, the parties have stipulated that Mr. Caron understood "what was involved in the day to day running of the trucking company, including supervision of the truckers who worked as independent contractors." Pretrial Order, Exhibit 1, at p. 2. The parties further have stipulated that Mr. Caron "knew and understood how the trucking company obtained orders, how it handled receipts and disbursements, obtained financing from its factoring company, and paid the truckers." Id. However, the books and records for Royal Air Cargo were maintained by Mr. Semeniakin's wife, Mariam. Mr. Caron testified that he received no documentation as to Royal Air Cargo's finances, and he never reviewed the books. However, Mr. Caron testified at his § 341(a) meeting that he refinanced a house and invested $119,000 in Royal Air Cargo. See Exhibit 3 at p. 18. Later, he borrowed an additional $60,000 from his parents to invest in Royal Air Cargo. See id.
On October 6, 2005, Mr. Caron and Mr. Semeniakin registered two additional businesses, Royal Air Cargo Freight, LLC, which was to function as a freight brokerage, and Royal Air Cargo Import Export, LLC, which was to conduct an import/export business. Mr. Caron attempted to import mineral and other bottled waters into the United States for distribution, but that venture proved unsuccessful.
By late 2006, Royal Air Cargo and its affiliated enterprises were experiencing grave financial difficulties. In December 2006, Mr. Semeniakin and his wife skipped town, leaving Mr. Caron holding the bag. The Semeniakins' present whereabouts are unknown. Royal Air Cargo's trucks were repossessed in January 2007. Mr. Caron testified at Trial that he attempted thereafter to liquidate the remaining inventories of the Royal Air Cargo enterprises; so, it is unclear from the record when Royal Air Cargo actually ceased operations. No Royal Air Cargo financial records were submitted in evidence, either for the period when Mrs. Semeniakin kept the books or thereafter. In his Schedule B, Mr. Caron listed a "business debt owed" from Mr. Semeniakin in the amount of $119,000.00 as an asset.
At his Rule 2004 examination, Mr. Caron testified that since December 1, 2007, he has been employed by CWF, Co., a clothing import business owned by his mother, Vera Caron ("Mrs. Caron"). See Exhibit 4 at pp. 4-5. According to Mr. Caron, CWF, Co. was formed in September or October 2007, and his mother was active in the business as a designer. See Exhibit 4 at p. 6. At her Rule 2004 examination, Mrs. Caron testified that she worked as a care giver, and she had not done any design work in the United States. See Exhibit 5 at p. 4. CWF, Co. has no store or other retail space, and the only funds contributed to CWF, Co. "consist of a few hundred dollars provided by Vera and Kenneth Caron [her husband] for the business registration fee." Pretrial Order, Exhibit 1, at p. 3. However, Mrs. Caron and her husband have been providing Mr. Caron with approximately $3,000 a month to cover his living/business expenses. See Exhibit 5 at pp. 8-9.
During the Trial and in the exhibits, there are limited references to Mr. Caron trying to start up a deli business in the spring and early summer of 2007 and to import medical equipment to the United States, but apparently neither enterprise has proved viable.
However, in addition, there are numerous references and exhibits concerning services performed by Mr. Caron to facilitate currency transactions for Russian friends, acquaintances and/or business associates. Mr. Caron testified during his *710 Rule 2004 examination that he invested some of the money he received and made payments back, but he also used it for business and personal expenses:
Some of the moneyI took it out from there and put in a money marketwell, again, it's a mess up, I tell you. I will be honest. It's a mess up because I kind of spread the money because we need for the company, and I would need for my personal use. I used his money for that, and we just wouldmoney went around.
Exhibit 4 at p. 73.
In his Schedule F, Mr. Caron lists undisputed debts to Feder Trikur in the amount of $15,000, to Slava Sinchuk in the amount of $4,000, and to Igor Smirnov in the amount of $20,000, without providing any address or other contact information. Ms. Tammy Combs, the UST's bankruptcy analyst with over twenty years' experience working with large and small businesses as an accountant, testified that the bank statements and financial records that were obtained for Mr. Caron reflected unexplained deposits to his accounts totaling $375,208.02. The only accounting of his currency transactions that Mr. Caron supplied was a two-page, handwritten listing of payments, prepared after the fact, with no dates of transactions and no real accounting as to who was paid and what the listing of transactions meant. See Exhibit 17 at pp. 2-3. Ms. Combs testified that she could not ascertain from the Exhibit 17 accounting when various funds were received, where they were held or how funds were repaid.
In his Statement of Financial Affairs, Mr. Caron listed income from employment or operation of a business of $1,200,000.00 for 2005, $1,600,000.00 for 2006, and $4,000.00 for 2007 up to the date of his bankruptcy filing. Yet, at his § 341(a) meeting, he testified that he did not have to file a 2006 income tax return because he made less than $10,000, explaining that the $1,600,000.00 figure he used in the Statement of Financial Affairs represented his estimate of Royal Air Cargo's gross income for the year. See Exhibit 3 at pp. 21 and 29. However, in a residential loan application that Mr. Caron signed on or about May 12, 2007, Mr. Caron stated that he was employed as the president of Royal Air Cargo, with gross income of $10,159.00 per month. See Exhibit 13 at pp. 1, 2 and 3.
Mr. Caron acknowledges that he has not kept track of money that he has borrowed from his parents, although he estimates he owes them approximately $280,000-$300,000, "something like that." See Exhibit 4 at p. 100. His parents do not keep track of his borrowings either. See Exhibit 5 at p. 16.
Ms. Combs focused her review and analysis of Mr. Caron's financial information and business transactions on the two-year period from September 2005 through September 2007, the month of Mr. Caron's bankruptcy filing. She testified that after reviewing and analyzing all of the documentation received from Mr. Caron with respect to his financial condition and business affairs, she could not reconstruct his business transactions for 2006 and 2007 and could not reconcile his income and expenses for that period. See Exhibit 25.
Jurisdiction
I have jurisdiction over this adversary proceeding as a core matter under 28 U.S.C. §§ 1334 and 157(b)(2)(J).
Discussion
I. Generally Applicable Legal Standards
In light of the Bankruptcy Code's objective to provide a "fresh start" for debtors overburdened by debts they cannot pay, I start from the proposition in *711 cases such as this that the provisions of the Bankruptcy Code providing for a denial of discharge are to be construed narrowly in favor of the debtor.
A denial of a discharge is an act of mammoth proportions, and must not be taken lightly. In light of this gravity, this Court and many others have stated that Section 727 must be construed liberally in favor of the debtor and against the objector.
In re Goldstein, 66 B.R. 909, 917 (Bankr. W.D.Pa.1986). See First Beverly Bank v. Adeeb (In re Adeeb), 787 F.2d 1339, 1342 (9th Cir.1986); Devers v. Bank of Sheridan, Montana (In re Devers), 759 F.2d 751, 754 (9th Cir.1985).
The party seeking to deny a discharge to the debtor generally bears the burden of proof. In re Johnson, 68 B.R. 193, 198 (Bankr.D.Or.1986). Since the Supreme Court's decision in Grogan v. Garner, 498 U.S. 279, 111 S. Ct. 654, 112 L. Ed. 2d 755 (1991), the burden of proof standard for denial of discharge actions under § 727 is preponderance of the evidence. Id. at 286-91, 111 S. Ct. 654.
The relatively lenient burden of proof standard compared with the consistent admonition to interpret the standards for denial of discharge strictly in favor of debtors creates a tension that informs the decision making of bankruptcy courts in § 727 cases. However, ultimately, in spite of whatever weight on the scale favors the debtor's discharge, a party seeking to deny the debtor a discharge under § 727 likely will prevail if the evidence establishes that it is more likely than not that the objecting party's case is justified.
II. Section 727(a)(3)
Section 727(a)(3) denies a discharge to a debtor who "has concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor's financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all of the circumstances of the case." Unlike many of the other discharge denial provisions of § 727, § 727(a)(3) does not require that the party seeking to deny the debtor a discharge establish that the failure to keep or maintain adequate financial records was "knowing" or "fraudulent." "What constitutes adequate books, documents, and records must be decided on a case-by-case basis, depending on the Debtors' business operations and sophistication." See In re Hirengen, 112 B.R. 382, 385 (Bankr. D.Mont.1989), and cases cited therein.
Most of the debtors who appear before me are not great record keepers. In fact, in many cases, debtors' failure to maintain clear and complete records is a factor driving their need to file for relief in bankruptcy. Consequently, § 727(a)(3) is not appropriately used as a trap to deny a discharge to consumer debtors or business operators who through inadvertence, lack of competence, or both, maintain less than pristine business records. However, the Bankruptcy Code does not condone a complete default in maintaining and preserving records from which basic information regarding a debtor's business and financial affairs can be obtained. As stated by the Ninth Circuit, most recently in Caneva v. Sun Communities Operating Limited Partnership (In re Caneva), 2008 WL 4791680 (9th Cir. Nov. 5, 2008), "the purpose of § 727(a)(3) is to make discharge dependent on the debtor's true presentation of his financial affairs." See Cox v. Lansdowne (In re Cox), 904 F.2d 1399, 1401 (9th Cir.1990) ("Cox I"), reiterated in Lansdowne v. Cox (In re Cox), 41 F.3d 1294, 1296 (9th Cir.1994) ("Cox II"). "`Creditors are not required to risk the *712 withholding or concealment of assets by the bankrupt under cover of a chaotic or incomplete set of books or records.'" Burchett v. Myers, 202 F.2d 920, 926 (9th Cir.1953), cited in Caneva, 2008 WL 4791680 (9th Cir. Nov. 5, 2008), and in Cox I, 904 F.2d at 1401.
The plaintiff in a § 727(a)(3) action bears the initial burden of proof to establish "(1) that the debtor failed to maintain and preserve adequate records, and (2) that such failure makes it impossible to ascertain the debtor's financial condition and material business transactions." Cox II, 41 F.3d at 1296, citing Meridian Bank v. Alten, 958 F.2d 1226, 1232 (3d Cir.1992). Once plaintiff makes such a prima facie case, the burden shifts to the debtor defendant to justify the inadequacy or nonexistence of the records. Id., and cases cited therein. See Caneva, 2008 WL 4791680 (9th Cir. Nov. 5, 2008).
III. The UST's Case
During the period from September 2005 through September 2007, Mr. Caron deposited large sums of money, totaling $805,187.22 according to Ms. Combs, in a number of different bank accounts. See Exhibit 25. From Mr. Caron's testimony and from the admitted exhibits, I find that some of those deposits represented income to Mr. Caron, but other deposits were of funds from his parents, either loaned to Mr. Caron or considered to be his parents' money held with joint access, and funds from individuals from Russia who did business with Mr. Caron in currency transactions. Other deposits were made of funds received from Mr. Caron's other business enterprises. These deposits apparently were commingled indiscriminately, without any accounting being provided. From his various accounts, Mr. Caron made a number of transfers and paid business as well as personal expenses. Mrs. Caron made withdrawals from Bank of America account no. 6832 totaling $39,468 during May and June 2007, some of which were used to make repairs to her home. Ms. Combs testified that her review of Mr. Caron's account statements showed $130,584.21 in account transfers and $375,208.02 in unexplained deposits.
Mr. Caron testified that he made numerous trips to Russia in 2006 and 2007 to further and explore business opportunities. He testified that he carried cash with him to cover his expenses. However, as stipulated by the parties in the Pretrial Order,
The only records of his travels in 2006 and 2007 which [Mr.] Caron provided to document his use of cash consist of photocopies of a jumble of invoices and receipts arranged haphazardly, some of which are wholly or partially illegible and from which no coherent transactional history may be determined.
Pretrial Order, Exhibit 1, at p. 8.
Ultimately, Ms. Combs testified that she could not reconstruct Mr. Caron's 2006 and 2007 business transactions from the documentation he provided, or otherwise. In particular, she could not trace or reconcile Mr. Caron's large currency transactions with Russian clients/customers/friends. There is no way from the evidence before me that I can determine what Mr. Caron's income and expenses were for 2006 and 2007. I find from the evidence presented that the UST has met its burden of proof to establish that Mr. Caron has not prepared and/or preserved adequate business records to make it possible to ascertain with any degree of accuracy Mr. Caron's financial condition and material business transactions during 2006 and 2007 leading up to his bankruptcy filing in September 2007.
*713 IV. Mr. Caron's Justifications
During the Trial, Mr. Caron and his counsel presented three justifications for the clear inadequacy of his business and financial records.
First, with respect to Royal Air Cargo and its related business enterprises, Mr. Caron testified that his partner's wife, Mariam Semeniakin, maintained the Royal Air Cargo books. He was not given access to Royal Air Cargo's financial records. According to Mr. Caron, financial records for Royal Air Cargo were kept by Ms. Semeniakin on her computer. When she and her husband disappeared in December 2006, her computer disappeared with her, leaving inadequate records to prepare tax returns.
I am concerned by the facts that the Royal Air Cargo trucks were not repossessed until January 2007, and Mr. Caron testified that he stored and disposed of Royal Air Cargo inventory thereafter. Yet, no records were presented in evidence with respect to financial transactions for the account of Royal Air Cargo during the period after the Semeniakins left town, when Mr. Caron was in control. I have no clear idea from the evidence presented as to when all Royal Air Cargo business activity ceased, and I note that as late as May 12, 2007, Mr. Caron signed a loan application stating that as president of Royal Air Cargo, his gross income was $10,159.00 per month. See Exhibit 13.
With all that said, if the financial activities of Royal Air Cargo and its affiliated enterprises were the only transactions in issue in this case, I might be inclined to find that adequate justification for Mr. Caron's lack of records for the Royal Air Cargo business was provided from the uncontradicted evidence of the absconding of his business partner, Mr. Semeniakin, and his record-keeping wife. However, Mr. Caron's business activities, particularly with respect to his currency transactions, encompassed large sums of money independent of Royal Air Cargo that cry out for further justification.
Mr. Caron's second justification argument is that he is not an accountant, and he ought not to be held responsible for his inadequate record-keeping in light of his lack of an accounting background. As I noted at the outset of the Discussion, most chapter 7 debtors who come before me are deficient record keepers, and their record-keeping problems often contribute to their need to seek bankruptcy protection. Section 727(a)(3) should not be used to deny discharge to the garden variety poor record keeper. However, my analysis as to the application of § 727(a)(3) is fact dependent in each case and focuses in large part on the relative business sophistication of the debtor whose discharge is challenged.
In this case, Mr. Caron obviously is intelligent, and he has an undergraduate degree in business consulting, import laws and logistics. He ran one small business that he bought during his student years in San Diego, and he ultimately sold that business, paying off his business loan and generating a profit of approximately $26,000. In spite of Mr. Caron's apparent bad judgment in selecting business partners thereafter, he has engaged in a number of different business enterprises and has substantial experience in working to put together export/import business transactions. While the evidence before me with respect to Mr. Caron's currency transactions with Russian clients who emigrated to the United States generally does not provide any clear record as to their timing, structure or terms, what is clear is that Mr. Caron handled tens of thousands of dollars in such transactions during the period from September 2005 up to his bankruptcy filing in 2007, and the after-the-fact purported accounting for such *714 transactions in Exhibit 17 is woefully inadequate.
One does not have to be an accountant to be able to prepare and maintain a ledger, showing 1) when and how much money was received from a particular customer, 2) how the funds were handled or invested, 3) when and how much money was repaid to each customer, and 4) how much compensation Mr. Caron received for his services. I find that a person as entrepreneurial as Mr. Caron would not perform such services for free. I further find the virtually complete lack of such records to be astonishing and ultimately not credible. Ms. Combs testified that she found $375,208.02 in unexplained deposits flowing into Mr. Caron's bank accounts. His lack of an accounting background does not provide a justification for his lack of financial records that would allow tracing of those deposits back to their sources, or to reconcile those deposits with Mr. Caron's disbursements. Of particular note in this regard is the evidence that $117,000 or $126,000 of funds from the sale of a Moscow apartment by Mr. Feder Trikur was transferred to Mr. Caron through a Seventh Day Adventist Conference account. See Exhibit 4 at pp. 60-61. I do not find credible the lack of adequate financial records to document Mr. Caron's currency transactions, and I find that his lack of an accounting background does not justify the lack of such records.
Finally, in closing argument, counsel for Mr. Caron suggested that the lack of financial records to document Mr. Caron's business transactions and his income and expenses might be "cultural." I note that Mr. Caron did not submit any evidence, in his testimony or otherwise, tending to indicate that an inability or aversion to maintaining business records was a part of Mr. Caron's cultural background. In the absence of any such evidence, I am unaware generally of any culture that conducts commerce without some means of recording business transactions. The practice of keeping records of business transactions goes back at least to pre-cuneiform script on clay tablets in ancient Sumer. See the entry on "Sumer" in Wikipedia. I find, based on the record before me, that Mr. Caron's cultural background as a Kazakh emigrant to the United States does not justify his failure to keep and preserve adequate financial and business records in this case.
Conclusion
Based on the foregoing findings, I conclude that the UST has presented adequate evidence to support its case under § 727(a)(3) to deny Mr. Caron a discharge for failing to keep and preserve adequate business and financial records to allow creditors and the chapter 7 trustee to ascertain and evaluate Mr. Caron's financial condition and material business transactions. I further conclude that Mr. Caron has not met his burden of proof to justify the lack of adequate business and financial records. Accordingly, the UST may present, and I will enter a judgment denying a discharge in chapter 7 to Mr. Caron pursuant to § 727(a)(3). Because I have concluded that Mr. Caron should be denied a discharge for failing to keep and preserve adequate business and financial records, I will not consider or rule on the UST's alternative causes of action to deny Mr. Caron a discharge under §§ 727(a)(2)(B), (a)(4)(A), and (a)(5).
Ms. Popperl should submit the judgment within ten (10) days after entry of this Memorandum Opinion.
NOTES
[1] Unless otherwise indicated, all chapter, section and rule references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and to the Federal Rules of Bankruptcy Procedure ("FRBP"), Rules XXXX-XXXX. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918840/ | 411 B.R. 142 (2009)
In re BALLY TOTAL FITNESS OF GREATER NEW YORK, INC., et al., Debtors.
Carrera Plaintiffs, Plaintiffs-Appellants,
v.
Bally Total Fitness of Greater New York, et al., Defendants-Appellees.
No. 09 Civ. 4250(JSR).
United States District Court, S.D. New York.
August 7, 2009.
*144 Craig Nathan Dee, Cullen and Dykman, LLP (Nassau), Garden City, NY, James M. Trush, Trush Law Office, Costa Mesa, CA, for Appellants.
Paul Joseph Coady, Winston & Strawn LLP, Los Angeles, CA, Paul Bradley O'Neill, Kramer, Levin, Naftalis & Frankel, LLP, New York, NY, for Appellee.
MEMORANDUM ORDER
JED S. RAKOFF, District Judge.
Plaintiffs Cesar Carrera, Kevin Lai, and Danna Brown (the "Carrera Plaintiffs"), on behalf of themselves and all others similarly situated, appeal from an order of the United States Bankruptcy Court (Lifland, B.J.), dated April 7, 2009 denying plaintiffs' motions to allow a class proof of claim, to grant class certification, and/or to lift the automatic stay. After careful consideration of the parties' briefs and arguments, the Court, by Order dated July 24, 2009, affirmed the Bankruptcy Court's order and also denied plaintiffs' request that this Court withdraw the reference to the Bankruptcy Court. This Memorandum explains the reasons for those rulings and directs the entry of final judgment.
The Carrera Plaintiffs commenced this action on December 30, 2005 by filing a wage and hour class action lawsuit against Bally Total Fitness Corporation and Bally Total Fitness of California in California state court (the "Carrera Action"). The Complaint in the Carrera Action asserts claims for failure to pay off-the-clock work, forfeiture of sales commissions, failure to provide mandated meal and rest periods, failure to provide timely itemized wage statements, failure to provide timely and accurate paychecks, and failure to reimburse business expenses. See docket no. 603, Ex. A. Plaintiffs' proposed class period extends from December 30, 2001 to December 3, 2008, and involves somewhere between 3,180 and 5,000 present and former employees who worked at approximately 65 Bally clubs in California. Docket no. 603 at 4; Pl. Mem. at 11 n. 6.
Prior to Bally's filing for bankruptcy, the Bally defendants in the Carrera Action moved to compel individual arbitration of plaintiffs' claims, based on a provision of plaintiffs' employment contract that purportedly requires plaintiffs to submit employment-related claims to arbitration and that requires disputes relating to one employee not to be submitted in the same proceeding as disputes relating to any other employee. See docket no. 636, Exs. A-C, Sections 1.1, 8.4; Declaration of Paul J. Coady ¶ 2. On April 29, 2008, the California trial court denied the motion. The Bally defendants promptly appealed, see docket no. 603, Ex. B, and the Carrera Action was stayed pending resolution of that appeal.
On December 3, 2008, debtors Bally Total Fitness Holding Corporation and its subsidiaries (collectively "Bally") petitioned for reorganization under Chapter 11 of the United States Bankruptcy Code. On January 23, 2009, the Bankruptcy Court entered an order establishing March 9, 2009 (the "Bar Date") as the deadline for filing proofs of claim against the Debtors. On approximately February 12, 2009, Debtors mailed notice of the Bar Date by first-class mail to, inter alia, all current Bally employees and all former employees *145 whose employment had terminated any time after January 1, 2004. Debtors also caused notice of the Bar Date to be published in the Chicago Tribune (Bally's headquarters is located in Chicago) and the national edition of USA Today. See docket nos. 608, 609.
On February 11, 2009, plaintiffs moved in the Bankruptcy Court to allow a class proof of claim, and on March 10, 2009, plaintiffs moved for class certification, or in the alternative, an order lifting the automatic stay so that the Carrera Action could proceed in California state court. On March 24, 2009, the Bankruptcy Court denied both motions, and on April 7, 2009, that Court issued a written order explaining the reasons for that determination. The instant appeal followed.
Turning first to plaintiffs' motions for a class proof of claim and/or for class certification, the Court notes that neither the Bankruptcy Code nor Bankruptcy Rules explicitly addresses class treatment of claims that become the subject of bankruptcy proceedings. Nor has the United States Supreme Court or the Second Circuit Court of Appeals directly addressed whether class treatment is available in the context of a bankruptcy. Nevertheless, several bankruptcy and district courts in this Circuit, as elsewhere, have concluded that class treatment may be permitted in bankruptcy proceedings when the proposed class was certified pre-petition, when the members of the putative class received adequate notice of the bar date, and when class certification will not adversely affect the administration of the case. See, e.g., In re Musicland Holding Corp., 362 B.R. 644, 654-55 (Bankr. S.D.N.Y.2007); In re Ephedra Prods. Liability Litig., 329 B.R. 1, 4-5 (S.D.N.Y. 2005); Bailey v. Jamesway Corp. (In re Jamesway Corp.), No. 95 B 44821, 1997 WL 327105, at *10-11, 1997 Bankr.LEXIS 825, at *35-36 (Bankr.S.D.N.Y.1997); In re Sacred Heart Hosp. of Norristown, 177 B.R. 16, 22 (Bankr.E.D.Pa.1995); In re Chateaugay Corp., 104 B.R. 626 (S.D.N.Y. 1989).
Here, no class was certified pre-petition, nor, indeed, did the Carrera Plaintiffs move for class certification during the three years their action was pending in California state court prior to Bally's filing for bankruptcy. Although this alone might have warranted denial of the plaintiffs' motions for class treatment, the Bankruptcy Judge also considered the requirements for class certification of a bankruptcy claim and found they were lacking in this case. In particular, the Bankruptcy Court found that in the context of the instant bankruptcy proceeding, class treatment was neither "superior to other available methods for fairly and efficiently adjudicating the controversy," nor that "the questions of law or fact common to class members predominate over any questions affecting only individual members." See Fed.R.Civ.P. 23(b)(3). In so concluding, the Bankruptcy Court did not remotely abuse its discretion.
Regarding plaintiff's failure to show the superiority of class treatment, it bears emphasizing that where, as here, a bankruptcy proceeding "consolidates all claims in one forum and allows claimants to file proofs of claim without counsel and at virtually no cost," In re Ephedra, 329 B.R. at 9, many of the perceived advantages of class treatment drop away. Individual creditors in bankruptcy proceedings "can participate in the distribution [of the estate] for the price of a stamp. They need only fill out and return the proof of claim sent with the Bar Date Notice," often avoiding discovery and fact-finding altogether. In re Musicland Holding Corp., 362 B.R. at 650 n. 8. Moreover, these small claims are commonly "deemed allowed," *146 without objection, under § 502(a) of the Bankruptcy Code, thus avoiding altogether the costs of discovery and fact-finding that, even in a class action, are considerable.
Although plaintiffs argue that only a class action can achieve a "deterrent" effect and that this is particularly valuable where the debtor will re-emerge after reorganization, it bears noting that, of the thousands of present and former Bally employees who received notice of the Bar Date, only a handfulindeed, seemingly only the three named plaintiffshave filed claims based on the allegations set forth in the Carrera Action, thus suggesting that the need for deterrence here, if any, is de minimis.
Plaintiffs further argue that class action treatment is superior because its practice of mailed notice is superior to "the usual bankruptcy notice by publication," (quoting In re Ephedra, 329 B.R. at 9). Here, however, it is undisputed that Bally mailed notice of the Bar Date by first-class mail to all current and former employees employed at any time after January 1, 2004. While a much smaller part of the putative class, namely, those former Bally employees whose employment ended between December 30, 2001 and January 1, 2004, received only notice by publication, this was still legally adequate, see, e.g., In re Musicland Holding Corp., 362 B.R. at 657; In re Jamesway Corp., 1997 WL 327105, at *8, 1997 Bankr.LEXIS 825, at *30; In re Sacred Heart Hosp., 177 B.R. at 22. And the fact that, as noted, only a tiny portion of those who received actual notice filed claims strongly suggests that the failure to give more than publication notice to this long-gone group of former employees is hardly a weighty factor in determining whether class action treatment is superior here.
Finally, in what comes close an ad hominem attack, plaintiffs twice assert that the able and experienced Bankruptcy Judge denied class action status here because, having been reversed 20 or so years ago when he held that class action treatment was not available in bankruptcy proceedings generally, he continued to persist in his erroneous views. Quite aside from the scurrilous nature of these slurs, they are without foundation, for on any fair reading it is clear that the Bankruptcy Court made its determination in the context of the facts of the particular case. For what its worth, moreover, if this Court had been called upon to determine the matter de novo, it would have agreed with the Bankruptcy Court in its determination that, in this particular case, plaintiffs have failed to demonstrate the superiority of class treatment.
Nor have plaintiffs demonstrated that the Bankruptcy Court abused its discretion in concluding that Rule 23's predominance requirement or its equivalent has not been satisfied. Generally speaking, "[c]lass-wide issues predominate if resolution of some of the legal or factual questions that qualify each class member's case as a genuine controversy can be achieved through generalized proof, and if these particular issues are more substantial than the issues subject only to individualized proof." In re Monster Worldwide, Inc. Sec. Litig., 251 F.R.D. 132, 136 (S.D.N.Y. 2008) (citation omitted). Here, in appealing, plaintiffs argue that their claims are based on what they allege are Bally's uniform policies and practices that will be proved with generalized proof. As the Bankruptcy Court noted, however, plaintiffs' claims also require individual analysis with respect to numerous legal and factual issues, including, inter alia, whether plaintiffs performed "hours worked" as defined under California law, whether Bally "suffered" off-the-clock work, whether each individual plaintiff's unpaid time is de minimis, *147 whether Bally compensated each class member for the work he or she allegedly performed, whether Bally reimbursed each plaintiff's business expenses, and whether each plaintiff's meal and rest period claims were justified. See Bankruptcy Order, 4/7/09, 402 BR. 616, 622. As the Bankruptcy Court observed, "the Court would have to engage in a series of highly disputed mini-trials for each class member to resolve [such] issues [], making class treatment untenable and implausible." Id. In light of the numerous questions of law and fact that require individualized proof, it is clear that the Bankruptcy Court did not abuse its discretion when it determined that plaintiffs had failed to show that general questions of law and fact predominated over the individual questions.
Turning to plaintiffs' alternative application to be relieved from the automatic stay, courts in the Second Circuit, when deciding whether pending litigation against a debtor should be permitted to continue notwithstanding the bankruptcy proceedings, consider and weigh the various factors set forth in In re Sonnax Industries, Inc., 907 F.2d 1280 (2d Cir.1990). The inquiry is committed to the sound discretion of the bankruptcy court, see id. at 1286, and is therefore reviewed for abuse of discretion.
Here, the Bankruptcy Court's analysis of the relevant factors was altogether sound. To begin with, the Carrera Action is nowhere near being ready for trial, because, even though substantial discovery has occurred, there is pending Bally's appeal from the lower court's denial of its motion for individualized arbitration, which would have to be resolved before the underlying action could further proceed. Moreover, as noted, the Carrera Plaintiffs have not yet moved in the California action for class treatment, and such would necessitate still further delay.
At the same time, it is clear that permitting plaintiffs to pursue their claims in California state court would unduly interfere with the reorganization process, and would risk causing "the Debtors to refocus their energies on litigation ... rather than emergence from Chapter 11." In re Northwest Airlines Corp., No. 05-17930, 2006 WL 2583647, at *2 (Bankr.S.D.N.Y. 2006); see In re Woodward & Lothrop Holdings, Inc., 205 B.R. 365, 376 (Bankr. S.D.N.Y.1997) ("a class action may `gum up the works' because until complete, the bankruptcy court cannot determine the entitlement of other creditors"). Indeed, a confirmation hearing on Debtors' plan of reorganization is already scheduled to be held a few weeks hence, and permitting relief from the stay at this stage would unquestionably call the feasibility of that plan into question. Further, lifting the automatic stay and permitting the Carrera Action to proceed as a class action would necessarily prejudice other creditors' interests by preserving the claims of class members who failed to assert timely claims. See, e.g., Jamesway, 1997 WL 327105, at *10, 1997 Bankr.LEXIS 825, at *35.
Although plaintiffs note that the Complex Litigation Panel of the Los Angeles County Superior Court (to which the Carrera Action is assigned) possesses the necessary expertise to resolve plaintiffs' claims, there is no indication that the Bankruptcy Court is not at least as well equipped to handle plaintiffs' claims, which do not involve any arcane or complicated questions of law. Plaintiffs also note that because the California state judge has presided over the Carrera Action for several years, the interests of judicial economy and expeditious resolution of litigation weigh heavily in favor of lifting the stay. As already discussed in the context of plaintiffs' motion for class certification, *148 however, bankruptcy provides the most expeditious and efficient path for the resolution of all creditors' claims.
As to the impact of the stay on the parties and the concomitant balance of harms, plaintiffs contend that the Bankruptcy Court's decision somehow demonstrates an indifference to the rights of all putative class members. The automatic stay is entered in the first place, however, to ensure that a debtor can efficiently reorganize, and "to preserve [debtor's] property for distribution or for use in reorganization of the debtor." In re Prudential Lines, Inc., 114 B.R. 27, 29 (Bankr. S.D.N.Y.1989). This rationale, together with plaintiffs' ability to individually pursue their claims in the instant action, demonstrate that the Bankruptcy Court did not err in concluding that the Debtors' resources were best spent focusing on the instant reorganization.
In short, upon consideration, nothing in the record demonstrates that the Bankruptcy Court abused its discretion, or "acted in an arbitrary and irrational fashion," Tesser v. Bd. of Educ., 370 F.3d 314, 318 (2d Cir.2004) (citation omitted), when refusing to lift the automatic stay.
Finally, plaintiffs also argue on this appeal, for the first time, that this Court should exercise its discretion to withdraw the reference to the Bankruptcy Court because this action is "non-core," bankruptcy courts are not permitted to hold jury trials in non-core matters absent consent, and plaintiffs are not willing to consent to a jury trial before the Bankruptcy Court. Plaintiffs fail to recognize, however, that core proceedings include, inter alia, "allowance or disallowance of claims against the estate," together with "other proceedings affecting the liquidation of the assets of the estate." 28 U.S.C. § 175(b)(2). Further, even if this action were not core, plaintiffs waived their ability to seek withdrawal of the reference when they filed a proof of claim and two motions before the Bankruptcy Court. See In re CBI Holding Co., 529 F.3d 432, 466-67 (2d Cir.2008) ("[f]iling a proof of claim against a bankruptcy estate triggers the process of allowance and disallowance of claims, and, therefore, a creditor who files such a claim subjects itself to the bankruptcy court's equitable jurisdiction in proceedings affecting that claim ... [A] creditor loses its jury trial right with respect to claims whose resolution affects the allowance or disallowance of the creditor's proof of claim").
Accordingly, for each and all of the foregoing reasons, the Court affirms the Bankruptcy Court's order denying plaintiffs' motions to allow a class proof of claim, certify a class action, and/or lift the automatic stay, and the Court also denies plaintiffs' motion to withdraw the reference to the Bankruptcy Court. Clerk to enter judgment.
SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918848/ | 411 B.R. 352 (2009)
In re NE 40 PARTNERS, LTD., Debtor.
Airport Boulevard Apartments, Ltd., Plaintiff,
v.
NE 40 Partners, Limited Partnership, et al., Defendants.
Bankruptcy No. 09-30478-H4-11. Adversary No. 09-03057.
United States Bankruptcy Court, S.D. Texas, Houston Division.
July 24, 2009.
*356 Amy Teresso Patton, DeConcini McDonald et al., Flagstaff, AZ, Dawn Guilliams, Williams Birnberg, Houston, TX, for Debtor/Defendants.
Guy Wade Caldwell, Barton East et al., James S. Wilkins, Willis & Wilkins, San Antonio, TX, Plaintiff.
Rogena Jan Atkinson, The Law Offices of RJ Atkinson LLC, Houston, TX, for Defendants.
MEMORANDUM OPINION ON: (I) DEFENDANT JOHN VATISTAS'S MOTION TO DISMISS PLAINTIFF'S THIRD AMENDED COMPLAINT; AND (II) PLAINTIFF'S EXPEDITED MOTION TO EXTEND TIME TO RESPOND TO DEFENDANT JOHN VATISTAS'S RULE 12(B)(2) MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION, AND REQUEST FOR DISCOVERY ON PERSONAL JURISDICTION ISSUES
[Adv. Docket Nos. 59 & 70]
JEFF BOHM, Bankruptcy Judge.
I. INTRODUCTION
The crux of the Plaintiffs complaint (the Complaint) in the suit at bar is that Raymond *357 Tiedje (Tiedje) orchestrated a scheme to defraud the Plaintiff out of funds that it invested in the construction of a sewer line. The majority of the defendants are entities Tiedje controls, the only exception being John Vatistas (Vatistas or the Defendant), an Arizona resident with a five percent share in one of Tiedje's corporations.
The suit at bar concerns an escrow agreement between the Plaintiff and Nebcan 40, Inc. (NE 40), a corporation Tiedje controls, for the payment of the costs of installing and constructing an upgraded sewer line, which the City of Houston (this City) required the parties to install. At the time the escrow agreement was entered into, the City had a program whereby it reimbursed contractors for most or all of the cost of building certain kinds of infrastructure, including the sewer line in question. The Plaintiff entered into the escrow agreement believing that Tiedje would make a good faith effort to secure such reimbursement, which would then be used to repay the Plaintiffs $500,000.00 contribution. The sewer was constructed using the escrowed money, and Airport/288 Associates, Ltd. (Airport/288), another entity Tiedje controls, applied for the reimbursement. The City eventually remitted $680,416.00 to Airport/288, but the Plaintiff has yet to receive any share of the reimbursement.
The Plaintiff alleges that: (1) Tiedje never intended to reimburse the Plaintiff; and (2) in an effort to avoid repaying the Plaintiff, Tiedje fraudulently transferred the funds among the other defendants named in this suitall of which, except Vatistas, were entities Tiedje controlled. Among those transfers was a $250,000.00 payment from Millennium Development Corp. (MDC), a Texas corporation that Tiedje controls, to Vatistas. The Plaintiff asserts that Vatistas knew the origin of the funds he received, and because he accepted the transfer, he is a party to the alleged fraud.
II. PROCEDURAL BACKGROUND
On May 21, 2009, Vatistas filed a Motion to Dismiss Plaintiffs Third Amended Complaint (the Motion to Dismiss). [Adv. Docket No. 59.] The Motion to Dismiss seeks to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction or, alternatively, under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted.[1] Asserting that Vatistas refused to respond to discovery requests, on June 8, 2009, the Plaintiff filed a Motion to Extend Time to Respond to the Rule 12(b)(2) Portion of Vatistas's Motion and Compel Discovery on the Issue of Personal Jurisdiction (the Motion to Extend). [Adv. Docket No. 70.] On June 9, 2009, the Plaintiff filed its Response to the Defendant's Motion to Dismiss (the Plaintiffs Response). [Adv. Docket No. 74.] Additionally, on June 9, 2009, Vatistas filed a Response to the Plaintiffs Motion to Extend (Vatistas's Response). [Adv. Docket No. 75.] On June 12, 2009, the Plaintiff filed a Response to Vatistas's Response (the Plaintiffs Final Response). [Adv. Docket No. 81.]
As discussed below, the Court concludes that it has personal jurisdiction over Vatistas and, accordingly, denies the Rule 12(b)(2) portion of the Motion to Dismiss. Therefore, the Motion to Extend is moot.
The Rule 12(b)(6) portion of the Motion to Dismiss addresses six of the eleven counts in the Complaint.[2] Count One relates *358 to common law fraud. Count Two relates to breach of fiduciary duty. Count Three relates to a fraudulent transfer. Count Four relates to civil conspiracy. Count Five relates to civil theft. Count Six relates to the imposition of a constructive trust. This Court will first address the Rule 12(b)(2) portion of the Motion to Dismiss and will then address whether any or all of the six counts should be dismissed pursuant to Rule 12(b)(6).
III. ANALYSIS
A. Subject Matter Jurisdiction and Venue
The Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 1334(b) and 157(a). This particular dispute is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (O), and the general "catch-all" language of 28 U.S.C. § 157(b)(2). See In re Southmark Corp., 163 F.3d 925, 930 (5th Cir.1999) ("[A] proceeding is core under section 157 if it invoices a substantive right provided by title 11 or if it is a proceeding that, by its nature, could arise only in the context of a bankruptcy case."); In re Ginther Trusts, No. 06-3556, 2006 WL 3805670, at *19 (Bankr.S.D.Tex. Dec.22, 2006) (holding that an "Adversary Proceeding is a core proceeding under 28 U.S.C. § 157(b)(2) even though the laundry list of core proceedings under § 157(b)(2) does not specifically name this particular circumstance"). Venue is proper pursuant to 28 U.S.C. § 1409.
B. The Rule 12(b)(2) portion of the Motion to Dismiss must be denied because this Court has nationwide personal jurisdiction.
Typically, a federal district court has personal jurisdiction over a defendant only if that defendant has "minimum contacts" with the court's forum state. See Intl. Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945). When a federal court's jurisdiction is challenged, "the plaintiff bears the burden of establishing the court's personal jurisdiction over the nonresident Defendant." Kevlin Servs., Inc. v. Lexington State Bank, 46 F.3d 13, 14 (5th Cir.1995). The Defendant has filed a motion to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), which applies to the bankruptcy courts through Federal Rule of Bankruptcy Procedure 7012(b). See Fed.R.Civ.P. 12(b)(2); Fed. R. Bankr.P. 7012.
While 12(b)(2) motions may be brought in bankruptcy court, the "minimum contacts" inquiry established in International Shoe does not apply in the same fashion. Bankruptcy Rule 7004(d) provides for nationwide service of process in adversary proceedings arising under Title 11 of the United States Code. Fed. R. Bankr.P. 7004(d). According to Bankruptcy Rule 7004(f), serving a summons in accordance with the other subsections of Bankruptcy Rule 7004 is sufficient to establish personal jurisdiction over a defendant in an adversary proceeding if personal jurisdiction is "consistent with the Constitution and laws of the United States." Fed. R. Bankr.P. 7004(f). In Busch v. Buchman, Buchman & O'Brien, Law Firm, the Fifth Circuit held that "[w]hen a federal court is attempting to exercise personal jurisdiction over a defendant in a suit based upon a federal statute providing for nationwide service of process, the relevant inquiry is whether the defendant has had minimum contacts with the United States." 11 F.3d 1255, 1258 (5th Cir.1994). Because Rule 7004(d) provides for nationwide service of *359 process, the bankruptcy courts have personal jurisdiction over defendants that have minimum contacts with the United Statesand not solely the forum state. See id.
Although Federal Rule of Bankruptcy Procedure 7004 is a procedural rule rather than a statute, courts have repeatedly interpreted that rule to endow bankruptcy courts with nationwide personal jurisdiction. See In re Enron Corp., 317 B.R. 701, 703 (Bankr.S.D.Tex.2004); In re North, 279 B.R. 845, 851 (Bankr.D.Ariz. 2002) (holding that the "`national contacts' test is generally applicable to adversary proceedings in bankruptcy court"); In re Charter Oil Co., 189 B.R. 527, 529-31 (Bankr.M.D.Fla.1995). Accordingly, when determining whether this Court has personal jurisdiction over the Defendant, the question is not whether he has minimum contacts with the state of Texas; rather, the question is whether he has minimum contacts with the United States, which, as an Arizona resident, he clearly does. See id. Therefore, this Court concludes that it has personal jurisdiction over Vatistas, and thus, the Defendant's 12(b)(2) motion to dismiss is denied. The Motion to Extend and the Responses thereto are thereby rendered moot, and this Court need not consider them.
C. The Motion to Dismiss under Federal Rules of Civil Procedure 12(b)(6) and 9(b) should be denied in its entirety.
"Motions to dismiss are viewed with disfavor and are rarely granted." Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 570 (5th Cir.2005) (quoting Shipp v. McMahon, 199 F.3d 256, 260 (5th Cir.2000)). The complaint must therefore be liberally construed in favor of the plaintiff. See Campbell v. Wells Fargo Bank, 781 F.2d 440, 442 (5th Cir.1986). When evaluating a 12(b)(6) motion to dismiss, courts must accept all factual allegations in the complaint as true. See Lormand v. U.S. Unwired, Inc., 565 F.3d 228 (5th Cir. 2009). However, courts should not accept as true conclusory allegations; or unwarranted deductions of fact. See Milofsky v. Am. Airlines, Inc., 404 F.3d 338, 341 (5th Cir.2005) (quoting Kane Enters, v. MacGregor (USA), Inc., 322 F.3d 371, 374 (5th Cir.2003)).
The Plaintiffs Complaint need only satisfy the liberal pleading standard set forth in Federal Rule of Civil Procedure 8(a) (Rule 8(a)), which requires merely a "short and plain statement of the claim showing that the pleader is entitled to relief in order to survive a 12(b)(6) motion. Fed. R.Civ.P. 8(a)(2). However, Federal Rule of Civil Procedure 9(b) heightens the pleading requirements for claims grounded in fraud, and mandates that the claimant must set forth the "who, what, when, where, and how" of the alleged fraud.[3]See Dorsey v. Portfolio Equities, 540 F.3d 333, 338-39 (5th Cir.2008); Hill v. Day (In re Today's Destiny), No. 06-3285, 2009 WL 1232108, at *6 (Bankr.S.D.Tex. May 01, 2009); In re Kilroy, 357 B.R. 411, 421 (Bankr.S.D.Tex.2006). With these standards in mind, this Court will address each cause of action in turn.
1. Count OneCommon Law Fraud
The elements of common law fraud are: (1) that a material representation was made; (2) the representation was false; (3) when the representation, was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker *360 made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury. In re FirstMerit Bank, 52 S.W.3d 749, 758 (Tex.2001).
The Plaintiff is required to plead common law fraud with particularity in accordance with Rule 9(b). However, Rule 9(b) specifically provides that "[m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed.R.Civ.P. 9(b); see also, e.g., Hill, 2009 WL 1232108 at *6 (acknowledging that "[t]he Defendant's state of mind ... may be generally averred" (citing Collmer v. U.S. Liquids, Inc., 268 F. Supp. 2d 718, 723 (S.D.Tex.2003))). "Although scienter may be `averred generally,' case law amply demonstrates that pleading scienter requires more than a simple allegation that a defendant had fraudulent intent. To plead scienter adequately, a plaintiff must set forth specific facts that support an inference of fraud." Tuchman v. DSC Comms. Corp., 14 F.3d 1061, 1068 (5th Cir.1994); see also Greenstone v. Cambex Corp., 975 F.2d 22, 25 (1st Cir.1992) ("The courts have uniformly held inadequate a complaint's general averment of the defendant's `knowledge' of material falsity, unless the complaint also sets forth specific facts that makes it reasonable to believe that defendant knew that a statement was materially false or misleading.") (emphasis in original); DiLeo v. Ernst & Young, 901 F.2d 624, 629 (7th Cir.) ("Although Rule 9(b) does not require `particularity' with respect to the defendants' mental state, the complaint must still afford a basis for believing that plaintiffs could prove scienter."). Thus, a plaintiffs general allegation that a defendant acted knowingly must be accompanied by some factual allegation that supports a reasonable inference that the defendant did, in fact, act knowingly.
The Defendant argues that because he has never had direct dealings with the Plaintiff, the Plaintiff may not prevail on its common law fraud claim against Vatistas. According to the Defendant, Vatistas himself must have made a fraudulent representation directly to the Plaintiff in order to incur liability for fraud.[4] This interpretation is unreasonably narrow. The standard set forth by the Texas Supreme Court in FirstMerit Bank requires only that "a material misrepresentation was made," not that each and every defendant made a material misrepresentation to the Plaintiff. See In re FirstMerit Bank, 52 S.W.3d at 758 (emphasis added). Indeed, Texas courts recognize a third-party cause of action for fraud where a defendant had knowledge of the material misrepresentations and profited thereby. See, e.g., Corpus Christi Area Teachers Credit Union v. Hernandez, 814 S.W.2d 195, 198-99 (Tex. App.-San Antonio 1991, no writ) ("Our courts have uniformly held that, where a *361 party, through fraud, obtains title to land, all those who participated therein or who received benefits therefrom are liable in damages to the party defrauded."). The Defendant's characterization of the elements of common law fraud is thus improper. While Rule 9(b) does require the Plaintiff to plead the elements of fraud with particularity, this requirement applies only with respect to the individual who allegedly made the fraudulent representation in this case, Tiedje.
The Plaintiff has certainly pleaded with particularity that Tiedje has committed common law fraud. The Plaintiff has specifically alleged that Tiedje harbored a grudge against the Plaintiff "for getting Tiedje, NE 40, and Airport/288 to agree that they would request the Oakmoor Property could be removed from MUD 404" and based on the "Plaintiffs insistence that the Utility Line be constructed in time for Plaintiffs apartment complex to open." [Adv. Docket No. 49, ¶ 73 & 74.] Based on these specific factual allegations, the Plaintiff alleges that Tiedje "form[ed] an intention, prior to the execution of the Escrow Agreement, not to pay Plaintiff the full $500,000.00, if anything, when the City Cost Reimbursement was received." [Adv. Docket No. 49, ¶ 75.] The Plaintiff has also pleaded with particularity the material representations that were allegedly made by Tiedje. Specifically, the Plaintiff alleges that Tiedje represented to the Plaintiff "that Plaintiff would receive all or part of the $500,000.00 from the City Cost Reimbursement, in order to induce Plaintiff not to take any action to contact the City to ensure that the funds would not be released without Plaintiff being paid," and that "Tiedje falsely represented that he had not decided what to do with the money received from the City, when in fact, he had already begun transferring the money from Airport/288 to MDC, and then to other Defendants." [Adv. Docket No. 49, ¶ 76.] These allegations are sufficient to satisfy Rule 9(b)'s requirement that the Complaint set forth particular facts that give rise to the Plaintiffs common law fraud claim.
Third-party common law fraud liability is based on a defendant's knowing participation in a fraudulent scheme. See, e.g., Crisp v. Sw. Bancshares Leasing Co., 586 S.W.2d 610, 615 (Tex.Civ.App.-Amarillo 1979, writ ref'd n.r.e.) ("[A]ll who participate are liable for the fraud, ... irrespective of proof that they shared in the profits, for the gravamen of the action is injury to plaintiff and not benefit to defendant."). Indeed, in Texas, third-party fraud liability may be incurred through "silent acquiescence for the fraudulent misrepresentations of a third party." Corpus Christi Area Teachers Credit Union v. Hernandez, 814 S.W.2d 195, 198 (Tex.App.-San Antonio 1991, no writ); see also Columbia/HCA Healthcare Corp. v. Cottey, 72 S.W.3d 735, 745 (Tex.App.-Waco 2002, no pet.) ("slight circumstantial evidence of fraud, when considered with the breach of a promise to perform, is sufficient to support a finding of fraudulent intent."). The Plaintiffs common law fraud case against Vatistas hinges on Vatistas's knowledge of Tiedje's alleged fraudthe facts of which, as discussed above, have been alleged with particularity. Thus, based on the relaxed standard for pleading a defendant's state of mind under Rule 9(b), the Plaintiffs Complaint need only allege facts that may allow the Court to reasonably infer that Vatistas had knowledge of the alleged fraud to pass muster under Rule 9(b). See Tuchman, 14 F.3d at 1068-69.
This Court concludes that the Plaintiffs allegation that Vatistas is an "insider" satisfies the Plaintiffs burden of alleging a fact from which this Court may reasonably *362 infer that Vatistas had the requisite knowledge to support a viable claim for third-party common law fraud. When determining whether an individual is an insider,[5] courts have generally focused on "(1) the closeness of the relationship between the transferee and the debtor; and (2) whether the transactions between the transferee and the debtor were conducted at arm's length." Browning Interests v. Allison (In re Holloway), 955 F.2d 1008, 1010-11 (5th Cir.1992) (citing cases). The Court finds that the Plaintiff has alleged sufficient facts which, if taken as true, suggest (1) that Vatistas; and Tiedje had a close relationship, and (2) that the transaction between them was not conducted at arm's length. Additionally, the Plaintiff has alleged that Vatistas actually knew the source of the funds it received. This allegation is supported by Tiedje's testimony at a prior hearing held on April 3, 2009, that Vatistas and he were "partners" in various joint ventures and that Vatistas accepted the $250,000.00 from Tiedje as payment on a note that had not yet come due.[6] Tiedje has also admitted in a written notice filed in another bankruptcy case pending before this Court, that he provided Vatistas with a 5% ownership interest in one of Tiedje's various entities as a "kicker" based on the fact that Vatistas has been Tiedje's private lender for approximately twenty years. Specifically, Tiedje admitted that "Mr. Vatistas has been a private lender to me for almost 20 years. To the best of my recollection, any and all ownership interest held by Mr. Vatistas have been in the form of a `kicker' or a `lender enhancement', based on loans to the particular entity(s)."[7] [Case No. 09-32395, Docket No. 63, Ex. 1.] Based upon these admissions, the Court has difficulty accepting the Defendant's argument that Vatistas accepted $250,000.00 without knowingor, at the very least, inquiring aboutthe source of the premature payment. The Plaintiffs allegation that Vatistas is an insider with actual knowledge of the agreement between Tiedje and the Plaintiff is sufficient to support a reasonable inference that Vatistas was a party to Tiedje's alleged fraud.
*363 Therefore, because the Plaintiff has pleaded with particularity that Tiedje made a material misrepresentation to the Plaintiff, and because the Plaintiff has alleged facts that, if true, are sufficient to support the Plaintiffs third-party common law fraud claim against Vatistas, the Motion to Dismiss should be denied as to Count One.
2. Count TwoBreach of Fiduciary Duty
Rule 9(b) generally "does not extend to claims of breach of fiduciary duty." United States v. Rivieccio, 661 F. Supp. 281, 290 (E.D.N.Y.1987) (emphasis added); see also Concha v. London, 62 F.3d 1493, 1502 (9th Cir.1995) ("[W]e have never applied Rule 9(b) in cases in which the plaintiffs allege a breach of fiduciary duty but do not allege fraud."); United States v. Kearns, 595 F.2d 729, 733 n. 18 (D.C.Cir. 1978) ("We note ... that the claim of breach of fiduciary duty would not appear to be a matter of fraud covered by [Rule 9(b)]...."). "Allegations of breach of fiduciary duty are not necessarily fraud allegations." In re Elec. Data Sys. Corp. "ERISA" Litig., 305 F. Supp. 2d 658, 672 (E.D.Tex.2004) (emphasis added). "However, courts have applied the heightened pleading standards of Rule 9(b) to ... breach of fiduciary duty claims that are predicated on fraudulent conduct." In re Westar Energy, Inc. ERISA Litig., No. 03-4032-JAR, 2005 WL 2403832, at *4 (D.Kan. Sept.29, 2005); see also Tigue Inv. Co. v. Chase Bank of Texas, N.A., No. Civ. A.3:03 CV 2490 N, 2004 WL 3170789, at *2 (N.D.Tex. Nov.15, 2004). "In such cases, particularity is only required to the extent that a plaintiff in fact alleges fraud." Tigue Inv. Co., 2004 WL 3170789, at *2.
Here, the claim for breach of fiduciary duty brought by the Plaintiff is not predicated on fraud; rather, it is predicated on the fiduciary duty that Tiedje allegedly owed to the Plaintiff arising out of their escrow agreement concerning their joint endeavor. "Joint venturers owe each other a duty of utmost good faith and scrupulous honesty in their mutual endeavor." Deauville Corp. v. Federated Dept. Stores, Inc., 756 F.2d 1183, 1194 (5th Cir. 1985) (citing Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256 (1951)). The Plaintiff has alleged that "the Escrow Agreement was also a trust agreement between the Plaintiff and NE 40" and that "[t]he Escrow Agreement was also a joint venture between Plaintiff, NE 40 and Airport/288 to provide financing for construction of the Utility Line, in addition to other factual allegations which, if taken as true, would place the Plaintiff and NE 40 in a partnership arrangement which, as a matter of law, gives rise to a fiduciary duty." [Adv. Docket No. 49, ¶ 83 & 84.] Thus, the Plaintiffs breach of fiduciary duty claim does not fall within the ambit of Rule 9(b) and is, instead, subject to the liberal pleading standard set forth in Rule 8(a)(2). The Plaintiff has satisfied this standard by providing; a short and plain statement of its claim against Vatistas.
However, to the extent that the Plaintiff's breach of fiduciary duty claim is grounded in fraud, this Court concludes that the Plaintiff has sufficiently pleaded facts in support of its fiduciary duty claim against Vatistas to satisfy Rule 9(b)'s more stringent pleading requirements.
First, the Defendant's argument that none of the defendants owed the Plaintiff a fiduciary duty is unavailing. The Defendant himself admits that "Vatistas is not privy to the relationship between the Plaintiff and NE 40 [one of the other the Defendants] and does not attempt to dispute [the existence of a fiduciary duty] at this point." [Adv. Docket No. 59, ¶ 32.] The Defendant may not argue that no *364 defendant owed the Plaintiff a fiduciary duty but then admit that he is unable to conclusively contradict the Plaintiffs assertion to the contrary.
Second, the Defendant's argument that the Plaintiff has failed to plead particular facts to state a claim for breach of fiduciary duty against Vatistas is also without merit. "It is settled as the law of this State that where a third party knowingly participates in the breach of duty of a fiduciary, such third party becomes a joint tortfeasor with the fiduciary and is liable as such." Kinzbach Tool Co. v. Corbett-Wallace Corp., 138 Tex. 565, 160 S.W.2d 509, 514 (1942); Baty v. ProTech Ins. Agency, 63 S.W.3d 841, 863 (Tex.App.-Houston [14th Dist.] 2001, pet. denied). Thus, the Plaintiffs breach of fiduciary duty claim hinges on the same question as did the common law fraud claim: did the Defendant have knowledge of the alleged fraudulent scheme out of which the alleged fiduciary duty arose? As discussed above, supra Part III.C.1, the Plaintiff has alleged sufficient facts to allow this Court to draw a reasonable inference that Vatistas had knowledge of Tiedje's alleged fraud. See Tuchman, 14 F.3d at 1068-69. The Plaintiff has alleged that Vatistas is an insider and that Vatistas had actual knowledge of the source of the funds transferred to him. Additionally, Tiedje has admitted to his longstanding and very close professional and business relationship with Vatistas. Accordingly, the Motion to Dismiss should be denied as to Count Two.
3. Count ThreeFraudulent Transfer[8]
The Defendant first argues that no fraudulent transfer claim may be brought against him under the Texas Uniform Fraudulent Transfer Act (TUFTA) because there is no debtor-creditor relationship between the Plaintiff and Vatistas. While it is true that only creditors may bring a fraudulent transfer claim under the TUFTA, it is the transferor, not the transferee, who must be indebted to the plaintiff. See Tex. Bus. & Com.Code § 24.005. Here, the Complaint specifically alleges that Tiedje was indebted to the Plaintiff when he conveyed the $250,000.00 to Vatistas. Accordingly, the Defendant's first argument has no merit.
The Defendant's other arguments are predicated on his assertion that Rule 9(b) applies to claims arising under TUFTA. "Rule 9(b)'s application is not limited to pure fraud claims. Rather, Rule 9(b) applies to any averment of fraud within a claim that has a fraud-based element." Hill, 2009 WL 1232108, at *6 (citing Lone Star Ladies Inc. Club v. Schlotzsky's Inc., 238 F.3d 363, 368-69 (5th Cir.2001)). The Defendant claims that because fraudulent transfer claims are inherently based on fraud, Rule 9(b) applies. This Court *365 agrees with the Defendant's ultimate conclusion that Rule 9(b) does apply to the fraudulent transfer claim in the suit at bar; however, the Court disagrees with the Defendant's blanket assertion that Rule 9(b) is applicable to all TUFTA claims.[9]
Given that Rule 9(b) applies to the TUFTA claim at issue, the Defendant argues that the Plaintiff's fraudulent transfer claim does not allege facts sufficient to establish the "who, what, when, where, and how" of the fraudulent act. The Defendant asserts that because the Plaintiff repeatedly lumps him in with "the other the Defendants," the Plaintiff has not pleaded the TUFTA allegation with sufficient particularity. Rule 9(b) exists to ensure that the Defendants have notice of the precise act or conduct that is being questioned as fraudulent so they have ample opportunity to defend their good name. Sharp v. Chase Manhattan Bank, N.A. (In re Commercial Fin. Servs., Inc.), 322 B.R. 440, 450-51 (Bankr.N.D.Okla.2003). The Plaintiff has provided a table of payments, including the dates of all the transfers, the amounts, and the payees. The Vatistas transfer is on the list. The Plaintiff has therefore established Vatistas's identity, his location, and his connection to Tiedje. The Court finds that these facts are sufficient to establish "who, what, when, where, and how" and to tender notice of the precise transaction over which the Defendant is being sued.
The Defendant also argues that the Plaintiff has failed to establish that the transfer was not for reasonably equivalent value as required by § 24.005(2) of TUFTA. Either of the following assertions made in the Plaintiffs complaint, if true, would be fatal to the Defendant's argument: (1) Vatistas was an insider (statement one); or (2) the transfers Tiedje made to the other the Defendants were not in the ordinary course of business (statement two). As discussed above, the Plaintiff has sufficiently alleged facts to support, and Tiedje has essentially admitted to, statement one. Thus, the Plaintiffs have pleaded its fraudulent transfer claims with sufficient particularity to satisfy Rule 9(b) and the Motion to Dismiss should be denied as to Count Three.
4. Count FourCivil Conspiracy
Civil conspiracy involves two or more entities working together to orchestrate an unlawful act that damages one or more separate parties. The Fifth Circuit has recognized that a civil conspiracy to commit a tort that sounds in fraud must be pleaded with particularity in accordance with Rule 9(b). See Castillo v. First City Bancorporation of Texas, Inc., 43 F.3d 953, 961 (5th Cir.1994). In the suit at bar, *366 the Plaintiff claims that Tiedje and Vatistas were co-conspirators in an alleged scheme to defraud the Plaintiff out of the reimbursement funds. Thus, the Plaintiffs civil conspiracy claim is grounded in fraud and must be pleaded with particularity pursuant to Rule 9(b). However, even though Rule 9(b) applies to the Plaintiffs civil conspiracy claim, "Rule 9(b) does not work to penalize a plaintiff merely because he was not privy to, and, therefore., cannot plead the details of, the inner workings of a group of defendants who allegedly acted in concert to defraud him." Kravetz v. Brukenfeld, No. 83 Civ. 5357(GLG), 1984 WL 2443, at *3 n. 9 (S.D.N.Y. June 29, 1984) (citing Robertson v. Nat'l Basketball Ass'n, 67 F.R.D. 691, 698 (S.D.N.Y.1975)). Rather, allegations supporting a claim for conspiracy to defraud need only be particular enough to give the defendants "fair notice of what the plaintiffs claim is and the grounds upon which it rests." Denny v. Barber, 576 F.2d 465, 469 (2d Cir.1978).
The Defendant argues that the complaint fails to allege three elements of a claim of civil conspiracy: (1) an unlawful act to be accomplished between Vatistas and any other person (argument one); (2) a meeting of the minds on such unlawful object (argument two); or (3) any unlawful act whatsoever involving Vatistas (argument three).
The first question raised by argument one is whether the Plaintiff adequately identified the unlawful act or acts that he alleges Vatistas and Tiedje conspired to commit. The Plaintiffs Response points to ¶ 134 of the Complaint, which states, "[t]he conspiracy of these the Defendants was to accomplish an unlawful, overt act, i.e. defraud the Plaintiff and fraudulently transfer the funds that belong to the Plaintiff." This Court has already concluded that the Plaintiff pleaded with particularity the unlawful acts the Defendant allegedly conspired to commitnamely, the scheme to defraud the Plaintiff and the $2:50,000.00 fraudulent transfer. Therefore, the answer to the first question is in the affirmative.
The second question raised by argument one is whether the unlawful act was orchestrated by two or more persons. The Plaintiff repeatedly pleads in the Complaint that Tiedje and Vatistas worked together to defraud him. However, a civil conspiracy charge may only be brought when the two or more persons are each distinct entities. Hinojosa v. Guidant Corp., No. C.A. C-05-399, 2005 WL 2177212, at *4-5 (S.D.Tex. Sept.7, 2005). Parent and subsidiary corporations, for example, are sometimes considered indistinguishably integrated, as are employers and employees. Id. The Plaintiff argues in its Response that because Vatistas is only an alleged lender and minor investor with some of the entities Tiedje controls, the two persons are sufficiently distinct.[10] This Court agrees. Accordingly, this Court concludes that argument one is without merit.
Argument two is also without merit. The Defendant disputes that the Plaintiffs contention that there was a "meeting of the minds" between Tiedje and Vatistas is insufficient to satisfy Rule 9(b)'s pleading requirements. This Court agrees that in order for a "meeting of the minds" to have occurred between two parties, each must have knowledge of the other's allegedly unlawful activities. See Firestone Steel Prods. Co. v. Barajas, 927 S.W.2d 608, 614 (Tex.1996) (holding; that a party "cannot agree ... to commit a wrong about which he has no knowledge"); Laxson v. Giddens, *367 48 S.W.3d 408, 410 (Tex.App.-Waco 2001, reh'g overruled) (holding that "meeting of the minds" requires knowledge of the course of action). However, as discussed above, see infra Part III.C.1, Rule 9(b) creates a relaxed standard for pleading a party's mental state and the Plaintiff need only allege facts sufficient to support a reasonable inference that Vatistas harbored the requisite mental state for civil conspiracy. Here, the Court has already concluded that the Plaintiff has satisfied the standard for pleading Vatistas's mental state pursuant to Rule 9(b). The Plaintiff specifically pleaded that Vatistas had knowledge of the source of the $250,000.00 payment and that Vatistas is an insider. Indeed, this latter allegation is supported by Tiedje's written stipulation discussed supra Part III.C.2. Therefore, argument two also fails.
Argument threethat the Plaintiff failed to allege that Defendant engaged in any unlawful actalso fails. Rule 9(b)'s heightened pleading standard does not apply to this particular inquiry; the question is merely whether the Plaintiff has made some allegation that the Defendant engaged in an unlawful act, regardless of whether such an allegation is supported by facts. Here, the Plaintiff has done so. The Complaint specifically alleges that Vatistas was complicit in Tiedje's scheme to defraud the Plaintiff. Thus, the Plaintiff has, in fact, alleged that the Defendant has engaged in an unlawful act and the Defendant's argument three is without merit.
In sum, the Motion to Dismiss should be denied as to Count Four.
5. Count FiveCivil Theft
Rule 9(b) generally does not apply to claims of civil theft; but rather only to claims of theft by deception. See, e.g., Germaine Music v. Universal Songs of Polygram, 275 F. Supp. 2d 1288, 1304 (D.Nev.2003) (determining that claims for civil theft by deception are generally subject to Rule 9(b)'s heightened pleading standard because such claims are grounded in fraud); Brown v. Kerkhoff, 504 F.Supp.2d. 464, 530 (S.D.Iowa 2007) (same). Here, the Plaintiff has alleged that Vatistas "participated in the fraudulent and unlawful receipt, appropriation, transfer, disbursement and/or retention of monies rightfully and lawfully belonging to Plaintiff." [Adv. Docket No. 49, ¶ 137.] More specifically, the Plaintiff has alleged that Vatistas committed civil theft pursuant to the Texas Civil Practice and Remedies Code Chapter 134. See Tex. Civ. Prac. & Rem.Code § 134.[11] Because this allegation does not amount to a claim for theft by deception, but, instead, is a typical cause of action for generic civil theft, the claim is subject to the liberal pleading standard set forth in Rule 8(a)(2) and the allegations quoted above satisfy that standard.
However, even if the heightened pleading standard set forth in Rule 9(b) does apply to the Plaintiffs civil theft claim, the Court concludes that the Complaint sets forth sufficient facts to satisfy Rule 9(b)'s standards. The Plaintiff pleaded five specific facts that support its contention that Vatistas intended to commit civil theft: (1) the transfers to Vatistas were not in the ordinary course of business; (2) Vatistas was aware that the source of the funds was the City cost reimbursement; (3) Vatistas was aware of the financial struggles of the Airport Boulevard *368 Estates when he received the transfer; (4) Vatistas was an insider; and (5) Vatistas actively participated in the fraud, the breach of fiduciary duty, and in the civil conspiracy. Though some of these "facts" are more akin to legal conclusions (specifically, fact 5), this Court nonetheless concludes that facts 2, 3, and 4the last of which is supported by Tiedje's own admission sufficiently allege that Vatistas was a party to civil theft. Accordingly, the Motion to Dismiss should be denied as to Count Five.
6. Count SixImposition of a Constructive Trust
The imposition of a constructive trust is an available remedy where there has been a showing of actual fraud or breach of fiduciary duty. See, e.g., Meadows v. Bierschwale, 516 S.W.2d 125, 128 (Tex.1974) ("Actual fraud, as well as breach of a confidential relationship, justifies the imposition of a constructive trust."). The Plaintiff has sought to impose a constructive trust based on the Defendant's alleged fraudulent conduct and based on the Defendant's alleged breach of fiduciary duty. [Adv. Docket No. 49, ¶ 108 & 109.] Thus, to the extent that the Plaintiffs constructive trust theory of recovery is grounded in fraud, it must be plead with particularity pursuant to Rule 9(b), but to the extent that its constructive trust theory is grounded in breach of fiduciary duty, the Plaintiffs allegations need only satisfy Rule 8(a)(2)'s liberal pleading standard. In re Prudential Ins. Co. of Am. Sales Practices Litig., 975 F. Supp. 584, 621 (D.N.J.1996) (determining that a plaintiffs constructive trust claim that "relies on essentially the same factual allegations that its fraud claims rest upon" is subject to the heightened pleading standard set forth in Rule 9(b)).
This Court has already concluded that the Plaintiff has sufficiently pleaded its cause of action for common law fraud as to Vatistas in accordance with Rule 9(b). See supra Part III.C.l. Additionally, this Court has also concluded that the Plaintiff has sufficiently pleaded its claim for breach of fiduciary duty in accordance with Rule 8(a)(2), and (to the extent that particular claim is grounded in fraud) Rule 9(b). See supra Part III.C.2. Thus, the Plaintiffs request for the imposition of a constructive trust withstands both the heightened pleading standard of Rule 9(b) and the liberal pleading standard of Rule 8(a)(2). As such, the Motion to Dismiss should be denied as to Count Six.
IV. CONCLUSION
For the reasons set forth above, the Motion to Dismiss should be denied in its entirety and the Motion to Extend should be dismissed as moot. An order consistent with this Memorandum Opinion will be entered on the docket simultaneously with the entry of this Memorandum Opinion.
NOTES
[1] Federal Rule of Bankruptcy Procedure 7012(b) applies Federal Rule of Civil Procedure 12(b) to adversary proceedings in bankruptcy court. Fed. R. Bankr.P. 7012(b).
[2] The other five counts alleged in the Complaint are not alleged against Vatistas.
[3] Federal Rule of Bankruptcy Procedure 7009 applies Federal Rule of Civil Procedure 9 to adversary proceedings in bankruptcy court. Fed. R. Bankr.P. 7009.
[4] This Court will apply Texas law in accordance with the parties' decision to do so in the escrow agreement giving rise to the dispute at bar. See [Docket No. 49, Exhibit 1]; see also Int'l Interests, L.P. v. Hardy, 448 F.3d 303, 306 (5th Cir.2006) (recognizing that "a federal court must follow the choice of law rules of the forum state" and that "[t]he Supreme Court of Texas has recognized that contractual choice of law provisions should generally be enforced"). Additionally, Texas law applies to the dispute at bar because the dispute arose in connection with the Plaintiff and Tiedje's joint venture to construct sewer lines in the state of Texas and because this suit involves the ownership of funds disbursed by the City of Houston, Texas. Neo Sack, Ltd. v. Vinmar Impex, Inc., 810 F. Supp. 829, 838 (S.D.Tex. 1993) ("[T]he rights and duties of the parties are determined by the local law of the state or country that has the most significant relationship to the transaction and the parties.").
[5] The Texas Uniform Fraudulent Transfer Act (TUFTA) provides four categories of people who qualify as an "insiders." Tex. Bus. Com. Code § 24.002(7). If the debtor is an individual, insiders may include "(i) a relative of the debtor or of a general partner of the debtor; (ii) a partnership in which the debtor is a general partner; (iii) a general partner in a partnership described in Subparagraph (ii) of this paragraph; or (iv) a corporation of which the debtor is a director, officer, or person in control." Id. While the list seems to immediately exclude Vatistas, courts have held that the requirements outlined in the TUFTA are illustrative, not exclusive. See Browning Interests, 955 F.2d at 1010-11.
[6] While the Plaintiff has not made any such allegations in its Complaint, this Court may properly take into account admissions; made by Tiedje in prior hearings when ruling on the Motion to Dismiss. See, e.g., Credit Alliance Corp. v. Idaho Asphalt Supply, Inc. (In re Blumer), 95 B.R. 143, 146 (9th Cir. BAP 1988) (acknowledging that "a bankruptcy judge may, but need not, consider evidence from a prior hearing in the same case").
[7] This Court may properly consider Tiedje's written filing in another bankruptcy case pending before this Court because such a filing is public record, of which this Court may properly take judicial notice. See, e.g., Missionary Baptist, 712 F.2d 206, 211 (5th Cir.1983) ("A court may take judicial notice of the record in prior related proceedings, and draw reasonable inferences therefrom."); Faulkner v. Kornman (In re Heritage Organization, L.L.C.), No. 06-3377-BJH, 2008 WL 5215688, at *26 n. 25 (Bankr.N.D.Tex. Dec.12, 2008) ("This Court may sua sponte take judicial notice of information in the docket...."); Frascogna v. Security Check, LLC, No. 3:07cv686 DPJ-JCS, 2009 WL 57102, at *4 n. 3 (S.D.Miss. Jan.7, 2009) ("The Court may take judicial notice of its docket.").
[8] At a hearing held on July 20, 2009, the Plaintiff's counsel acknowledged that Ben B. Floyd, the newly appointed Chapter 11 Trustee, will take over this particular claim as he, and only he, has standing to pursue this claim on behalf of the Plaintiff's Chapter 11 estate. See, e.g., In re MortgageAmerica Corp., 714 F.2d 1266, 1275 (5th Cir.1983) (acknowledging that Congress's passing of the Bankruptcy Code did not change the fact that "an action based on such a fraudulent transfer [is] vested in the trustee" (internal marks and citations omitted)). Indeed, the Fifth Circuit has; held that "a trustee, as the representative of the bankruptcy estate, is the real party in interest, and is the only party with standing to prosecute causes of action belonging to the estate once the bankruptcy petition has been filed." Kane v. Nat'l Union Fire Ins. Co., 535 F.3d 380, 385 (5th Cir.2008). Based upon the representations of Mr. Floyd's counsel at a hearing held on July 20, 2009, this Court presumes that the Trustee will be intervening to prosecute the causes of action belonging to the estate.
[9] The Defendant misconstrues the courts' consensus on the applicability of Rule 9(b) to fraudulent transfer claims. None of the cases the Defendant cites stands for the proposition that Rule 9(b) universally applies to claims arising under the TUFTA. See Brunswick Corp. v. Vineberg, 370 F.2d 605, 608-09 (5th Cir.1967); In re Sharp Intern. Corp., 403 F.3d 43, 56 (2d Cir.2005); Gen. Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1078-79 (7th Cir.1997). The actual position of most courts is that Rule 9(b) should be applied to claims of intentional fraud but not claims of constructive fraud. See id. Some courts have held that 9(b) is applicable to TUFTA claims of constructive fraud, see, e.g., In re Oakwood Homes Corp., 325 B.R. 696, 698 (Bankr.D.Del.2005), In re Chochos, 325 B.R. 780, 783 (Bankr.N.D.Ind.2005), but federal courts in Texas have generally restricted applicability to claims of intentional conduct. See, e.g., Alexander v. Holden Business Forms, Inc., No. Civ.A. 4:08-CV-614-Y, 2009 WL 1406242, at *2 (N.D.Tex. May 20, 2009); Ind. Bell Tel. Co., Inc. v. Lovelady, No. SA-05-CA-285-RF, 2006 WL 485305, at *1 (W.D.Tex. Jan. 11, 2006). As the fraudulent transfer claim in the suit at bar does allege actual intent, Rule 9(b) applies.
[10] The fact that the Plaintiff has alleged that Vatistas is an insider does not necessarily mean that Vatistas is not separate and distinct from Tiedje.
[11] Section 134.002 of the Texas Civil Practice and Remedies Code defines theft as unlawfully obtaining property as described by Chapter 31 of the Texas Penal Code. Intent is a material element of criminal theft, and thus, it is an element of the criminal offense's civil equivalent. See Tex. Pen.Code §§ 31.07 & 31.03. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583905/ | 427 So. 2d 645 (1983)
Margie M. DUBOIS
v.
LOUISIANA DEPARTMENT OF LABOR, OFFICE OF EMPLOYMENT SECURITY, State of Louisiana, Board of Review for the Office of Employment Security, Willie Dipaola, Jesse D. McClain, Russell Haberman; Vincent Falcone; and The Louisiana Department of Health and Human Resources.
No. 82-C-10.
Court of Appeal of Louisiana, Fifth Circuit.
February 7, 1983.
*646 Joel P. Loeffelholz, New Orleans, for Margie M. Dubois, plaintiff-appellee.
James D. Caldwell and Ann Metrailer, Jonesboro, for Louisiana Dept. of Health and Human Resources, defendant-appellant.
Before CHEHARDY, CURRAULT and DUFRESNE, JJ.
CHEHARDY, Judge.
Plaintiff Margie M. Dubois was employed by the Belle Chasse State School, an agency of the Louisiana Department of Health and Human Resources, as a secretary at a salary of $1,611 per month. Following her discharge she applied for unemployment compensation.
The initial determination of plaintiff's ineligibility to receive such compensation was based upon a finding that plaintiff was discharged for excessive tardiness without a valid excuse, had been warned prior to dismissal and was discharged for misconduct connected with her employment. This determination was made by the Louisiana Department of Labor, Office of Employment Security.
Plaintiff appealed the determination to an appeals referee of the Department. Following a hearing thereon, the referee upheld the determination of the Department, denying plaintiff benefits. Plaintiff then appealed the referee's decision to the Board of Review of the Department, which affirmed the referee's decision.
Plaintiff next appealed to the appropriate district court. Named defendants with which we are here concerned are the Louisiana Department of Health and Human Resources and the Administrator of the Office of Employment Security of the Louisiana Department of Labor. The Department of Health and Human Resources answered in the form of a general denial, but the answer of Herbert L. Sumrall, Administrator of the Office of Employment Security, answered praying that the decision of the Board of Review be reversed, thus espousing plaintiff's position.
The district court reversed the judgment of the Louisiana Board of Review upon a finding that there was "no legal evidence to support a finding that Margie M. Dubois was intentionally tardy for work," and rendered judgment in favor of plaintiff granting no disqualification for employment benefits, and awarding plaintiff all past benefits; the Administrator of the Louisiana Office of Employment Security was ordered to fix attorney's fees in the matter,[1] and the Department of Health and Human Resources was cast for all costs.[2]
Only the Department of Health and Human Resources has appealed. Plaintiff has answered the appeal requesting damages and attorney's fees for frivolous appeal.
In this court, appellant contends the judgment of the trial court should be reversed because it failed to properly apply the standard for judicial review in accordance with R.S. 23:1634.
Our judicial review, as provided in R.S. 23:1634, in matters of this kind, is confined to questions of law. The findings of the Board, as to the facts, if supported by sufficient evidence, and in the absence of fraud, are conclusive. Cox v. Lockwood, 373 So. 2d 246 (La.App. 4th Cir.1979); Benward v. Gerace, 370 So. 2d 660 (La.App. 4th Cir.1979); Cotton Bros. Baking Co., Inc. v. Bettevy, 367 So. 2d 1274 (La.App. 3d Cir. 1979); Dorsey v. Administrator, Louisiana Dept., Etc., 353 So. 2d 363 (La.App. 1st Cir. 1977).
Judicial review of the findings of the Board of Review does not permit the weighing of evidence, drawing of inferences, re-evaluation of evidence or substituting the views of the court for that of the Board of Review as to the correctness of the facts. Smith v. Gerace, 339 So. 2d 410 (La.App. 1st Cir.1976); Dunigan v. Admin. of Dept. of *647 Emp. Sec., 351 So. 2d 807 (La.App. 1st Cir. 1977).
At the hearing plaintiff testified on her own behalf and the employing unit was represented by the personnel director of the Belle Chasse State School and a consultant with the Unemployment Compensation Control System (UCCS).
The business records in the employee's file clearly reflect that she received 18 written statements from her immediate superior from August 5, 1980 to February 11, 1981. The first letter established plaintiff's duties and her hours, and the remainder relate to problems concerning her tardiness. Plaintiff received memos, counseling, personal discussions, reprimands, one 3-day suspension and one 5-day suspension. She was late 16 times in seven months.
While plaintiff does not deny she was tardy, she claims her tardiness was unintentional and amounted to only a few minutes on most occasions. The trial court found no legal evidence to support the claim that plaintiff was intentionally late for work.
We agree with the trial court's conclusion only because the testimony and documents presented by the personnel director as part of plaintiff's personnel file constitute hearsay evidence. Plaintiff's superior who wrote the letters, memos, reprimands, and suspensions was the one person fully acquainted with plaintiff's misconduct. He was not called upon to testify. It therefore appears that the Board's determination was based solely upon hearsay evidence.
In the absence of competent legal evidence appellant has not borne its burden of proving the discharge resulted from disqualifying misconduct. As stated in Hall v. Doyal, 191 So. 2d 349 (La.App. 3d Cir.1966):
"The courts have thus interpreted the requirement that the administrative findings be supported by `sufficient' evidence as requiring that the supporting evidence be `competent' testimony, not secondhand or hearsay. * * *" (Emphasis ours.)
For the reasons outlined above we adhere to the judgment of the trial court.
We do not, however, find merit in plaintiff's answer to the appeal. It is her position that inasmuch as the Louisiana Department of Labor, Office of Employment Security did not appeal, and subsequently paid the benefits as required by law, the only issue before the court, as far as the defendant Louisiana Department of Health and Human Resources is concerned, is the judgment for court costs, and that consequently since the costs amount to only $85, the appeal is frivolous.
A somewhat similar situation was presented in the case of Boudreaux v. La. Bd. of Review, Etc., 363 So. 2d 1258 (La.App. 4th Cir.1978), wherein the administrator of the Office of Employment Security joined the plaintiff and admitted there was merit to his claim.
The court said:
"* * * [A]doption of the plaintiff's cause on judicial review cannot terminate the claim. In addition to the employee and the administrator, the employer also has an interest in the outcome because a decision may affect his future unemployment compensation insurance rate. R.S. 23:1531 et seq."
While the case was reversed on other grounds, the Supreme Court acknowledged the interest of the employer in the litigation because of its contribution to the fund out of which such a claim would be satisfied. Boudreaux v. La. Bd. of Review, Etc., 374 So. 2d 1182 (La.1979); R.S. 23:1531 et seq.
The funding of this employer is set forth in R.S. 23:1552. Its appeal was neither frivolous nor limited to court costs, and plaintiff is not entitled to the award for frivolous appeal or attorney's fees which she seeks.
For the reasons assigned the judgment appealed from is affirmed.
AFFIRMED.
NOTES
[1] The administrator alone is vested by law with authority to fix attorney's fees when the claimant is declared by the court to be entitled to benefits. R.S. 23:1692.
[2] R.S. 23:1548 and R.S. 13:512(c) exempt the administrator from paying court costs in judicial review proceedings and the claimant is exempt from court costs under R.S. 23:1692. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583913/ | 728 N.W.2d 225 (2006)
IN RE S.K.
No. 06-1832.
Iowa Court of Appeals.
December 28, 2006.
Decision without published opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583920/ | 427 So.2d 306 (1983)
DePUY, INC. and St. Paul Fire & Marine Insurance Company, Appellants,
v.
Ruby V. ECKES and John Eckes, Her Husband, Appellees.
No. 82-1850.
District Court of Appeal of Florida, Third District.
February 22, 1983.
*307 Carey, Dwyer, Cole, Eckhart, Mason & Spring and Michael Spring, Miami, for appellants.
Horton, Perse & Ginsberg and Arnold Ginsberg; Hawkesworth & Schmick, Miami, for appellees.
Before HUBBART, NESBITT and BASKIN, JJ.
NESBITT, Judge.
The appellants seek review of an order striking their defenses and entering a default as to liability. We have jurisdiction pursuant to Florida Rule of Appellate Procedure 9.130(a)(3)(C)(iv).
In 1971, Mrs. Eckes underwent an operation to have a hip prosthesis implanted. In 1973, she allegedly sustained an injury caused by the breakage of the surgical device. The Eckes sent the broken pieces to an expert for testing; however, for some reason, one test, an electron microscopic examination, was not done. Subsequently, the Eckes filed suit against several parties, including the appellants, DePuy, Inc., who distributed the prosthesis, and their insurer, St. Paul Fire and Marine Insurance Co. The complaint was premised upon the theories of negligence, strict liability, and breach of implied warranty. The appellants answered the complaint admitting having sold the device, denying all other allegations, and raising several affirmative defenses.
Upon an agreed order not to destroy the fracture site, the plaintiffs turned the prosthesis over to the appellants. After extensive testing by appellants' expert, including an electron microscopic examination (the test not performed by the Eckes' expert), the pieces were mailed back to appellants' counsel, but the package containing the fracture site was missing. The plaintiffs filed a motion for sanctions supported by an affidavit of another of plaintiffs' experts. At an evidentiary hearing, the expert testified that he could not render an opinion without actual examination of the fracture situs. The trial court concluded that the plaintiffs would be unable to go forward in establishing liability without the critical piece of physical evidence. It therefore entered a default in favor of the plaintiffs on liability.
Florida Rule of Civil Procedure 1.380(b)(2)(C) authorizes the imposition of sanctions for failure to comply with discovery orders. The decisions under this rule clearly establish that the sanctions should be commensurate with the offense and the ultimate sanction should be visited upon a party only under exceptional circumstances. Santuoso v. McGrath & Associates, Inc., 385 So.2d 112 (Fla. 3d DCA 1980); Travelers Insurance Co. v. Rodriguez, 357 So.2d 464 (Fla. 2d DCA 1978); Herold v. Computer Components Inter-National, Inc., 252 So.2d 576 (Fla. 4th DCA 1971).
The appellants contend that the sanction was unwarranted because: (a) the loss of the prosthesis was not intentional; and (b) the plaintiffs had the opportunity to perform any necessary testing before sending *308 the evidence to the appellants' expert. We disagree.
Whether the prosthesis was destroyed in bad faith or accidentally is irrelevant in the present case. The evidence is unavailable for the plaintiffs' use and they have demonstrated an inability to proceed without it. The second argument of the appellant is equally untenable. While it is true that the plaintiffs had an opportunity to test the prosthesis prior to giving it to the appellants, the Eckes' failure to run a test does not relieve appellants of responsibility for the loss. When they procured the evidence for their inspection, the appellants did so subject to the plaintiffs' right to the return of the evidence. Having lost the prosthesis, DePuy and St. Paul Fire and Marine Insurance Company are now accountable for the ramifications of their act.
Because of the peculiar factual pattern, we find that the trial court was correct in striking the appellants' answer except insofar as the order sought to strike the affirmative defenses, we reverse. Upon the record before us, we fail to see how the loss of the prosthesis would prejudice the plaintiffs' ability to respond to the appellants' affirmative defenses.
Affirmed in part and reversed in part and remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583924/ | 427 So.2d 207 (1983)
FRIENDLY FORD and Liberty Mutual Insurance Company, Appellants,
v.
Kenneth HURRELL and the Division of Workers' Compensation, Appellees.
No. AJ-327.
District Court of Appeal of Florida, First District.
February 8, 1983.
Rehearing Denied March 16, 1983.
*208 Robert H. Gregory, Miami, for appellants.
Gene Flinn, Miami, for appellee Kenneth Hurrell.
SHIVERS, Judge.
The employer/carrier (E/C) appeal the order awarding claimant benefits for a 30% loss of wage-earning capacity, compensation for past medical bills and attorney's fees. We affirm in part and reverse in part.
Claimant sustained a compensable injury on May 13, 1976, to his left groin and testicle. The following day, claimant sought treatment from Dr. Nelson, who diagnosed claimant's condition as a left inguinal strain. Claimant continued to work for the E/C until September 7, 1976, when Dr. Nelson *209 put claimant in the hospital to treat him for rectal bleeding. At that time, an examination of claimant's spine was performed. The results of the examination indicated "no obvious deformities." During October of 1976, claimant consulted Dr. Mitzner, a chiropractor, for treatment for low back pains. Dr. Mitzner referred claimant to Dr. Johns, a neurosurgeon, who examined claimant and concluded that he was suffering from a herniated disc. Based on this finding, Dr. Johns performed surgery on claimant and, thereafter, discharged claimant with a 13% permanent partial disability of the body as a whole. In February of 1977, claimant filed a claim seeking temporary total disability (TTD) benefits, permanent total disability (PTD) benefits, payment of any unauthorized medical services, wage-loss benefits in excess of the anatomical rating, payment for future medical and nursing services, and attorney's fees. The E/C controverted the claim contending that any injury relating to claimant's back was not compensable and that the E/C were not responsible for the cost of claimant's medical treatment because claimant had failed to comply with the filing requirements set forth in section 440.13, Fla. Stat. (1979). The Deputy Commissioner (DC) found that claimant's back injury was compensable and that the E/C were responsible for the medical costs for treatment of that injury. The DC also found that claimant had suffered a 30% loss of wage-earning capacity and that claimant's attorney was entitled to an attorney's fee in the amount of $4,157.40. At the time of the claimant's injury, claimant's average weekly wage was $225 per week. In the succeeding years since claimant's injury, he has earned between $460 and $570 per week.
We first address the question of whether there is competent and substantial evidence in the record to support the DC's finding that claimant's back injury was causally related to his industrial accident on May 13, 1976. It is well established that a finding of a causal relationship must be based upon a reasonable medical probability. Scotty's, Inc. v. Jones, 393 So.2d 657 (Fla. 1st DCA 1981). In this case, Dr. Johns testified that claimant's back injury was causally related to his accident. Dr. Johns premised this conclusion on the medical history of claimant's back injury as related to him by claimant. In addition, Dr. Johns qualified his opinion as to causation by stating that if the symptoms of claimant's back injury had not manifested themselves until five months after the accident, it would be "unusual" for the back injury to be causally related to the accident. Appellant contends that since claimant did not seek treatment for his back injury until five months after the accident, Dr. Johns' testimony must be construed to mean that claimant's back injury was not causally related to his accident. We disagree.
Claimant never testified that he did not experience symptoms from his back injury until five months after the accident; instead, he merely testified that the problems with his back had not "concerned" him enough to seek medical treatment until five months after the accident. This statement is not inconsistent with Dr. Johns' medical opinion as to causation. Moreover, to the extent that Dr. Johns' opinion is premised on the fact that claimant experienced back discomfort immediately following his industrial accident on May 13, 1976, it is supported by a proper factual foundation. On this basis, we find that Dr. Johns' testimony is sufficient to support a finding of causation.
Turning next to the question of permanent partial disability benefits, we agree with the E/C's contention that the award of permanent partial disability benefits in the amount of 30% is not supported by competent and substantial evidence. In Walker v. Electronic Products & Engineering Company, 248 So.2d 161 (Fla. 1971), the Florida Supreme Court set forth eight criteria which should be considered when measuring a claimant's loss of wage-earning capacity. Although the DC appears to have commented on each of the criteria, we believe that he failed to give "great weight" to the wages claimant earned after the injury, as required by Walker. The record reveals *210 that at the time of claimant's injury his average weekly wage was $225 per week, that following his accident, claimant earned between $460 and $570 per week, and that he had no problem finding employment within his limitations. In view of these facts, we find that there is no competent and substantial evidence in the record to support a finding that claimant sustained a loss of wage-earning capacity in excess of his 13% anatomical rating. On this basis, we amend the DC's order to reflect an award of permanent partial disability benefits in the amount of 13%.
We also reverse the order awarding claimant payment for past medical bills on two grounds. First, we reverse the award of medical benefits on the ground that claimant failed to introduce into evidence the medical bills for which he sought compensation. In Decks, Inc. v. Florida v. Wright, 389 So.2d 1074 (Fla. 1st DCA 1980), this court held that medical benefits are not properly awarded when the medical bills are not introduced into evidence. In this case, the medical bills were proffered but were not introduced into evidence. Moreover, aside from the testimony of Dr. Johns, there was no direct testimony by any of the other physicians as to the amounts of their bills and to their causal relationship to the treatment rendered. Based on these facts, we remand the matter to the DC with instructions that the award of medical bills should be reinstated upon a showing of proper proof.
We also reverse the order awarding payment for past medical expenses on the ground that the DC never made a finding concerning the question of whether claimant had complied with the filing requirements set forth in section 440.13(1), Fla. Stat. (1981), even though the E/C affirmatively alleged claimant's noncompliance with this statute as a defense to the claim. Although the DC found that the medical benefits in question were necessary, he never made a finding as to whether claimant was in compliance with the filing requirements of section 440.13, and, if not in compliance, whether "good cause" existed for his noncompliance. A finding that medical treatment is necessary is not analogous to a finding of excusal for failure to comply with the filing requirements set forth in section 440.13(1). On this basis, we reverse the award of medical benefits and remand the matter for determination as to whether claimant submitted his medical bills as required by section 440.13(1), and, if not, whether there was prejudice to the E/C or whether "good cause" was shown. See Paradise Inn v. Hegedus, 389 So.2d 342 (Fla. 1st DCA 1980), and Jones v. Plantation Foods, 388 So.2d 590 (Fla. 1st DCA 1980).
In reversing the award of compensation for past medical benefits, we reject the E/C's contention that the award should also be reversed on the ground that claimant failed to file a claim for medical expenses. The claim letter dated February 17, 1977, from counsel for claimant to the Bureau of Workers' Compensation is clearly sufficient to serve as a claim for the medical benefits in question.
Based on our finding above, we must also reverse and remand the award of attorney's fees for a redetermination because that award is based, in part, on the total amount of medical benefits recovered by claimant. In reversing the award of attorney's fees, we reject the E/C's contention that this award should also be reversed on the ground that the DC erred in basing the award on a finding that claimant's counsel spent 50 billable hours on this case. The award of a reasonable attorney's fee and, more specifically, the determination as to the amount of billable time spent by counsel for claimant, was based on a modification of the billable time sheet which counsel for claimant introduced into evidence. This represents a proper method for calculating an award of attorney's fees. See generally Lee Engineering & Construction Co. v. Fellow, 209 So.2d 454 (Fla. 1968).
For the above reasons, the order is reversed and the matter remanded to the DC *211 for further proceedings consistent with this opinion.
REVERSED and REMANDED.
ROBERT P. SMITH, Jr., C.J., and THOMPSON, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/392887/ | 655 F.2d 901
Blue Sky L. Rep. P 71,536A. B. PARVIN, Plaintiff-Appellee and Cross-Appellant,v.DAVIS OIL COMPANY, Jack Davis, Marvin Davis, and PaulMessinger, Defendants-Appellants and Cross-Appellees.
Nos. 77-1663, 77-1664.
United States Court of Appeals,Ninth Circuit.
Nov. 26, 1979.Certiorari Denied April 14, 1980. See 100 S.Ct. 1654.
Peter M. Appleton, Los Angeles, Cal., for Parvin.
J. Edd Stepp, Jr., Los Angeles, Cal., for defendants-appellants and cross-appellees.
Appeal from the United States District Court for the Central District of California.
Before CHAMBERS and HUFSTEDLER, Circuit Judges, and FITZGERALD,* District Judge.
HUFSTEDLER, Circuit Judge:
1
Parvin sued Davis Oil Company ("DOC") for damages arising from three investment contracts that Parvin contended violated both California and federal securities laws. The district court initially dismissed the action finding that (1) the oil and gas lease interests were not securities under either California or federal law, (2) the transactions did not involve sufficient contacts with California to permit application of California law, and (3) the transactions were private offerings exempted from the registration requirements of the Securities Act of 1933. We reversed (Parvin v. Davis Oil Co. (9th Cir. 1975) 524 F.2d 112), and we remanded the cause to the district court to decide whether the securities qualified under the joint-venture exception to the California permit requirement and whether Parvin had the kind of access to information that would have appeared in the registration statement.
2
On remand, the district court found that these transactions failed to qualify under the joint venture exception under California law and that they failed to qualify under the private offering exception from the registration requirements under the Securities Act of 1933. The district court held further that DOC's failure to inform Parvin that the securities were not registered under either California or federal law constituted a violation of § 10(b) of the Securities and Exchange Act of 1934. Therefore, the district court decided that Parvin was entitled to the return of the money he had invested. The district court denied an award of prejudgment interest, exercising discretion that the court believed it had under applicable California and federal law.
3
DOC appeals from that portion of the judgment holding the joint venture exemption and the private offering exemption inapplicable. Parvin appeals from that portion of the judgment declining to award prejudgment interest.
4
Parvin is a retired California businessman who has had substantial experience with investment in oil and gas properties. DOC is a partnership composed of Jack Davis, Marvin Davis, and Jean Davis, which has its principal place of business in Denver, Colorado; it is engaged in oil and gas exploration. Parvin maintained a periodic social and business relationship with the Davises from the early 1960s until the beginning of this litigation. During 1968, DOC offered and sold to Parvin investments in three separate DOC oil and gas drilling programs, referred to respectively as the "Savoie," "Offset," and "Wildcat" programs.
5
The investors in the Savoie, Offset, and Wildcat leases were composed of three separate groups. Generally speaking, each group had been put together by a friend or a business associate of the Davises and was composed of that person and a number of his friends and business associates. Each member of the group signed an agreement with DOC that was identical with the agreement signed by everyone else, with the exception of the names of the parties, the percentages of their interests, the amounts of their payments, and the names of well prospects included. (Parvin himself was an exception to the extent that he did not execute a written agreement for the Savoie lease.)
6
The Davises never met with these investing groups, and there was no interaction between the different groups or their members. The Davises selected the leases to be invested in and the sites to be drilled. They also conducted both the exploration and the drilling. Under the terms of the agreement, the individual investors did have the right to receive daily drilling reports, final prints of all electrical surveys run, all core analyses, drill-stem test charts, completion reports and governmental and geographical reports. They also had free access to the derrick floor and to all information obtained in the course of drilling.
7
In the case of the Savoie lease, DOC drilled an unsuccessful well and none of the participants received any income from his interest in the project. The underlying oil and gas leases have, by their terms, expired. Parvin invested $15,000 in this project. DOC drilled four wells on the Offset project. Three of the wells were plugged and abandoned, and the leases underlying them have expired. The fourth well was sold to another company in 1969. Parvin paid DOC $92,651.78 and received a return of $2,008.67 on the Offset leases. Similarly, four wells were drilled under the Wildcat lease and three of the wells were plugged and abandoned. The fourth produced some oil for a time, but none recovered its costs. Parvin paid DOC $103,740.80 and eventually received a return of $4,422.71. If Parvin prevails under either California or federal law, he is entitled to rescind and to recover his investments, less the amount he has received.
8
* This action arose under the old California Corporate Securities Law (Cal.Corp.Code §§ 25000 et seq. (West 1954)), as amended as of January 2, 1969. Section 25100 of that law requires an issuer of a security, such as DOC, to obtain a permit before selling any security, unless it falls under one of the enumerated exemptions to that requirement. DOC argues that the joint venture requirement is applicable.
9
California courts have defined a joint venture as "an undertaking by two or more persons jointly to carry out a single enterprise for profit." (Stilwell v. Trutanich (1960) 178 Cal.App.2d 614, 3 Cal.Rptr. 285, 288.) The California courts traditionally look to the intention of the parties to determine whether a joint venture existed. (Holtz v. United Plumbing & Heating Co. (1957) 49 Cal.2d 501, 319 P.2d 617, 620; Stilwell v. Trutanich, supra.) Typically, the inquiry addresses four factors: (1) "a community of interest in the subject of the undertaking"; (2) "a sharing in profits and losses"; (3) an " 'equal right' or a 'right in some measure' to control the conduct of each other and of the enterprise"; and (4) "a fiduciary relation between or among the parties." (Id. at 288; Goldberg v. Paramount Oil Co. (1956) 143 Cal.App.2d 215, 300 P.2d 329; see Vicioso v. Watson (C.D.Cal.1971) 325 F.Supp. 1071.) Whether a joint venture exists rests primarily on the facts of the individual case. (Nelson v. Abraham (1947) 29 Cal.2d 745, 750, 177 P.2d 931; Spier v. Lang (1935) 4 Cal.2d 711, 716, 53 P.2d 138; Bank of California v. Connolly (1973) 36 Cal.App.3d 350, 364, 111 Cal.Rptr. 468, 478.)
10
On remand, the court below reexamined the evidence presented to it to determine whether a joint venture existed. It properly addressed, among other things, the control Parvin and the others exercised over the project. (See id.) By agreement, these investors were entitled to receive notices concerning the progress of the drilling, were afforded access to the drilling sites, and were allowed a voice in deciding whether to drill past the casing point. However, the court below looked beyond the written agreement "to all the facts and circumstances of the situation, including the subsequent conduct of the parties." It determined that those decisions most affecting the ultimate success or failure of the enterprise were to be made solely by DOC. The court below also found that the parties themselves never intended to create a joint venture. Both of these findings are supported by the record. Accepting these findings of fact, as we must (Fed. Rules of Civ. Proc. 52), we are compelled to affirm the court's determination that no joint venture existed, that the exemption is inapplicable, and that DOC should have sought a permit before selling the securities to Parvin. Parvin properly asserted his right to rescind the transactions.
II
11
Under California law, an award of prejudgment interest is governed by California Civil Code §§ 3287 and 3288. Section 3287(a) reads in relevant part: "Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day . . . ." Section 3288 provides: "In an action for the breach of an obligation not arising from contract, and in every case of oppression, fraud or malice, interest may be given, in the discretion of the jury." California courts have not always interpreted the two statutes consistently. In Nathanson v. Murphy (1957) 147 Cal.App.2d 462, 305 P.2d 710, the court held that whenever a noncontractual action arose, the question whether to award prejudgment interest lay in the discretion of the factfinder. DOC argues that this action to rescind the purchase of stock for failure to comply with the California Corporation Securities Act is treated as an action for fraud or for breach of implied warranty. (See also Pepitone v. Russo (1976) 64 Cal.App.3d 685, 134 Cal.Rptr. 709.) Because the court below declined to award prejudgment interest, DOC argues that we must affirm this portion of the judgment.
12
DOC has not taken into account the more recent California cases interpreting these statutes to require the awarding of prejudgment interest whenever the sum in question is capable of exact determination. In 1964, the California Supreme Court in interpreting section 3287 emphasized its reluctance to make mandatory awards of prejudgment interest turn on the form of the action. (Mass v. Board of Education (1964) 61 Cal.2d 612, 39 Cal.Rptr. 739, 394 P.2d 579.) In Tripp v. Swoap (1976) 17 Cal.3d 671, 131 Cal.Rptr. 789, 552 P.2d 749, the California Supreme Court expressly declined to limit § 3287(a) to contract actions. Moreover, the California Court of Appeals discussed the legislative history of §§ 3287 and 3288 at great length less than two years ago in Levy-Zentner Co. v. Southern Pacific Transportation Co. (1977) 74 Cal.App.3d 762, 794-98, 142 Cal.Rptr. 1, 22-25. It declared that "when sections 3287 and 3288 were adopted in 1872, the key distinguishing factor was not . . . whether the cause of action arose in tort or contract, but rather whether the damages were readily ascertainable." (Id. at 795, 142 Cal.Rptr. at 23.) It held that "prejudgment interest must be granted as a matter of right if, as a matter of law, damages are 'certain, or capable of being made certain by calculation.' " (Id. at 798, 142 Cal.Rptr. at 25. (footnote omitted).) Under California law, when the question of liability is open to dispute, but not the amount of damages, in the event that liability is found to exist, damages are considered "certain." (Esgro Central Inc. v. General Insurance Co. (1971) 20 Cal.App.3d 1054, 1060-61, 98 Cal.Rptr. 153, 157; Continental Bank v. Blethen (1970) 7 Cal.App.3d 178, 187, 86 Cal.Rptr. 485, 491.) Under King v. United Commercial Travelers (1948) 333 U.S. 153, 158, 68 S.Ct. 488, 92 L.Ed. 608, we are bound by Levy-Zentner unless there is pervasive evidence that the California Supreme Court would rule otherwise. Given both Tripp and Mass, we can see no such pervasive evidence, and DOC offers us none. We are well aware of the factors that would lead the lower court to decline to award prejudgment interest were it free to do so. However, California law requires awards of such interest as a matter of law, where, as here, the sum is certain.
13
As we read Mary Pickford Co. v. Bayly Bros. (1939) 12 Cal.2d 501, 86 P.2d 102, prejudgment interest should run from the time that the right to rescission arose, rather than the time the lawsuit was filed.
14
Because California law is dispositive, we do not reach any of the federal questions.
15
The cause is remanded to the district court to compute interest. In all other respects, the judgment is affirmed.
*
Honorable James M. Fitzgerald, United States District Judge, District of Alaska, sitting by designation | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/392901/ | 655 F.2d 976
UNITED STATES of America, Plaintiff-Appellee,v.TWENTY-FIVE 8MM FILMS, etc., Defendants,andWilliam D. Schmidt, Defendant-Appellant.
No. 79-3249.
United States Court of Appeals,Ninth Circuit.
Submitted Jan. 9, 1981.Decided Sept. 8, 1981.
William D. Schmidt, in pro. per.
Andrea Sheridan Ordin, Los Angeles, Cal., for plaintiff-appellee.
Appeal from the United States District Court for the Central District of California.
Before GOODWIN and ANDERSON, Circuit Judges, and GILLIAM*, District Judge.
PER CURIAM.
1
The only substantial issue in this appeal from a forfeiture of obscene merchandise is whether the government caused a fatal delay to occur in the forfeiture proceedings. In United States v. Thirty-Seven Photographs, 402 U.S. 363, 373-4, 91 S.Ct. 1400, 1406-07, 28 L.Ed.2d 822 (1971), the Supreme Court construed 19 U.S.C. § 1305(a) "to require intervals of no more than 14 days from seizure of the goods to the institution of judicial proceedings for their forfeiture and no longer than 60 days from the filing of the action to final decision in the district court...." This forfeiture consumed 75 days.
2
Fourteen days were lost because Schmidt filed a pro se claim for the seized property with the district court, but did not know that he had to serve a copy of his claim on the government. Accordingly, the government did not learn of Schmidt's claim until it moved for a default judgment. The district court concluded before trial that Schmidt's failure to serve the government delayed the forfeiture proceedings by fourteen days. At trial, three days were lost because of a holiday recess and because a juror became ill. When the court reconvened to receive the verdict, 75 days had elapsed between the time the government seized the property and the time the judgment of forfeiture was entered.
3
We are satisfied that Congress did not intend to frustrate forfeitures made under 19 U.S.C. § 1305(a) by reason of the passage of time if the delay was not caused by any fault of the government. United States v. 2,200 Paper Back Books, 565 F.2d 566, 573 (9th Cir. 1977). The fourteen days lost by the failure of the claimant to serve papers cannot be charged against the government. This leaves the government one day over the Thirty-seven Photographs 60-day limit. The three-day delay caused by juror illness and the holiday recess, however, would not have affected the Thirty-seven Photographs time limit but for Schmidt's failure to serve the government. Under these circumstances, the forfeiture proceedings were concluded within the Thirty-Seven Photographs time limit.
4
The judgment is affirmed.
*
The Honorable Earl B. Gilliam, United States District Judge for the Southern District of California, sitting by designation | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1584022/ | 717 F.Supp. 272 (1989)
Avelino LEONEN, et al., Plaintiffs,
v.
JOHNS-MANVILLE CORPORATION, et al., Defendants.
Civ. No. 82-2684 (CSF).
United States District Court, D. New Jersey.
July 5, 1989.
*273 Gavin and Gavin by Sandra F. Gavin, Haddonfield, N.J., for plaintiffs Avelino and Delores Leonen.
Horn Kaplan Goldberg Gorny & Daniels by Donald M. Kaplan, Atlantic City, N.J., for defendant Owens-Corning Fiberglas Corp.
McCarter & English by Andrew T. Berry, Newark, N.J., for defendants Owens-Illinois, Inc. and The Celotex Corp.
OPINION
CLARKSON S. FISHER, District Judge.
This litigation stems from the exposure of plaintiff, Avelino Leonen, to asbestos-containing products during his service in the Navy and also while employed at the New York Shipyard and the Philadelphia Naval Shipyard, and the injuries he suffered as a result of that exposure. The action was bifurcated, and a jury trial was commenced on the issues of defendants' liability and compensatory damages. At the completion of the first phase, judgment was entered for plaintiff in the amount of $25,000.00. This judgment was later amended to include $1500.00 in medical surveillance fees and an award of prejudgment interest. Although the court at first declined to award prejudgment interest for a seven (7) month period during which the trials of certain asbestos litigations were stayed by the United States Court of Appeals for the Third Circuit, the court amended its decision to include prejudgment interest for this period when, on a motion for reconsideration, documentation was submitted which showed that the instant suit was not among those actions stayed by the Third Circuit. A subsequent motion for a new trial, filed by the defendants, was denied by the court.
Trial in the punitive damage phase of the litigation commenced on January 23, 1989. On January 24, 1989, this court granted plaintiff's motion for a mistrial after counsel *274 for defendant Owens-Corning Fiberglass ("Owens-Corning") attempted to relitigate the presence of warnings on his client's products during the relevant time period, an issue already resolved in the liability phase of this litigation. At this time, no new trial date has been set.
The matter is presently before the court on motion of defendants The Celotex Corporation ("Celotex"), Owens-Illinois, Inc. ("Owens-Illinois") and Owens-Corning for summary judgment, pursuant to Fed.R. Civ.P. 56, dismissing plaintiff's punitive damages claim or, in the alternative, for a stay of the trial on punitive damages until the United States Supreme Court issues its decision in Kelco Disposal Inc. v. Browning-Ferris Indus., 845 F.2d 404 (2d Cir. 1988), cert. granted, ___ U.S. ___, 109 S.Ct. 527, 102 L.Ed.2d 559 (1988). This request has been rendered moot, however, by the issuance of the Browning-Ferris opinion on June 26, 1989. See ___ U.S. ___, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989). Defendants also request a stay of the trial until the Johns-Manville Settlement Vehicle may be joined as a defendant in the case.
Defendants move for summary judgment on the following grounds: 1) plaintiff's punitive damage claims must be dismissed as a matter of federal constitutional law under In re Asbestos Litigation, 829 F.2d 1233 (3d Cir.1987), cert. denied, ___ U.S. ___, 108 S.Ct. 1586, 99 L.Ed.2d 901 (1988); 2) New Jersey's standard for awarding punitive damages is constitutionally void for vagueness; 3) because the defendants have already been sanctioned with punitive damages in prior cases, an award of punitive damages in this case would violate the "fundamental fairness" requirement of the due process clause; 4) plaintiff's claim for punitive damages is barred by the double jeopardy clause of the fifth amendment; and 5) plaintiff's claim for punitive damages must be dismissed because his proofs are inadequate, as a matter of law, to support the necessary finding of deliberate, wanton and malicious conduct with knowledge of a high degree of probability of harm. Plaintiff opposes both the motion for summary judgment and the defendants' alternative request for a stay. Before turning to the merits of defendants' request for a stay, the court will address each of the contentions raised by defendants as a basis for dismissing plaintiff's punitive damage claims on summary judgment.
I.
Summary Judgment Standard
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment shall be granted:
if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Rule 56 directs the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party bears the ultimate burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Spangle v. Valley Forge Sewer Auth., 839 F.2d 171, 173 (3d Cir.1988).
The current standard for summary judgment requires that before judgment is entered as a matter of law, there be no "genuine" issue of "material" fact; however, the mere existence of some alleged factual dispute between the parties is an insufficient basis on which to deny a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). A fact is "material" only if it will affect the outcome of a lawsuit under the applicable law, and a dispute over a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id.
The burden of showing that no genuine issue of material fact exists rests initially on the moving party. Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d *275 Cir.1976), cert. denied, 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977). This requires only that the party seeking summary judgment "[inform] the district court of the basis of its motion, and [identify] those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, supra. Rule 56 does not require that the moving party support its motion with affidavits or materials which negate the opponent's claim; instead, this "burden may be discharged by `showing ... that there is an absence of evidence to support the nonmoving party's case.'" Celotex Corp. v. Catrett, 477 U.S. at 323-25, 106 S.Ct. at 2552-53.
Once a properly supported motion for summary judgment is made, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e);[1]Anderson v. Liberty Lobby, Inc., 477 U.S. at 248, 106 S.Ct. at 2510. There is no issue for trial unless the nonmoving party can demonstrate that there is sufficient evidence favoring the nonmoving party so that a reasonable jury could return a verdict in that party's favor. Anderson v. Liberty Libby, Inc., 477 U.S. at 249, 106 S.Ct. at 2510. The role of the court, however, is not "to weigh the evidence and determine the truth of the matter, but to determine whether there is a genuine issue for trial." Id. The court is mindful that, in deciding a motion for summary judgment, it must construe the facts and inferences therefrom in a light most favorable to the nonmoving party. Pollack v. American Telephone & Telegraph Long Lines, 794 F.2d 860, 864 (3d Cir.1986).
1. The Availability of Punitive Damages in Asbestos Cases Under Danfield
Defendants argue that plaintiff's punitive damages claim is constitutionally impermissible under the Court of Appeals for the Third Circuit's recent decision in In re Asbestos Litigation, 829 F.2d 1233 (3d Cir.1987), cert. denied, ___ U.S. ___, 108 S.Ct. 1586, 99 L.Ed.2d 901 (1988) (Danfield). In Danfield, the Court of Appeals upheld the District Court's finding that the New Jersey Supreme Court's decisions in Beshada v. Johns-Manville Prod. Corp., 90 N.J. 191, 447 A.2d 539 (1982), and Feldman v. Lederle Laboratories, 97 N.J. 429, 479 A.2d 374 (1984), precluding asbestos manufacturers from asserting a "state-of-the-art" defense in failure to warn/strict liability cases, but making this defense available to other types of manufacturers (i.e., drug manufacturers), withstood constitutional challenge on equal protection grounds. 829 F.2d at 1244.
In Beshada, plaintiffs sought to strike a state-of-the-art defense asserted by defendants, asbestos manufacturers, in a failure to warn/strict liability action. The New Jersey Supreme Court reversed the Appellate Division's denial of plaintiffs' motion, holding that in products-liability cases "culpability is irrelevant" because "strict liability focuses on the product, not the fault of the manufacturer," and thus, in failure-to-warn cases, the medical community's presumed unawareness of the dangers of asbestos is not a defense. 90 N.J. at 204, 447 A.2d 539. The court further held that a rule excluding the state-of-the-art defense, thus imposing liability for failure to warn of dangers which were undiscoverable at the time of manufacture, will advance the goals sought to be achieved by the law of strict liabilityrisk spreading, accident avoidance and simplification of the fact-finding process. 90 N.J. at 205-08, 447 A.2d 539. Significantly, the court in Beshada did not limit its holding to asbestos lawsuits, but made it applicable to all product liability cases.
*276 Two years later, in Feldman v. Lederle Laboratories, the New Jersey Supreme Court addressed this same issue in a case involving drug manufacturers, but reached a different result. The court, in an apparent contradiction of its earlier holding, held that in warning cases, conduct should be measured by the knowledge available at the time the manufacturer distributed the product. 97 N.J. at 452, 479 A.2d 374. Thus, the court allowed the drug manufacturers to assert a state-of-the-art defense, concluding that producers of pharmaceuticals only have a duty to warn about dangers of which they know or should know due to reasonably obtainable or available knowledge. Id. at 452-54, 479 A.2d 374. Despite this change in position, however, the court, in Feldman, expressly refused to overrule Beshada, but, instead, restricted it to "the circumstances giving rise to its holding." 97 N.J. at 455, 479 A.2d 374.
In Danfield, the New Jersey District Court consolidated all of the asbestos cases in this district for the purpose of addressing equal protection challenges to the Beshada/Feldman dichotomy brought by several of the defendants in the various cases before the court. 628 F.Supp. 774, 775 (D.N.J.1986), aff'd, 829 F.2d 1233 (3d Cir.1987), cert. denied, ___ U.S. ___, 108 S.Ct. 1586, 99 L.Ed.2d 901 (1988). The asbestos manufacturers argued that precluding the state-of-the-art defense in asbestos cases, but permitting it in actions involving other products, denied manufacturers of asbestos products the "equal protection of the laws" guaranteed them under the fourteenth amendment to the Constitution. Sitting en banc, the court concluded, in its majority opinion, that the state supreme court's decision to treat asbestos cases differently from typical products-liability cases bore a "rational relation" to a legitimate state purpose-easing jury confusion and the resulting prejudice to litigants, and expediting trial of the issuesand thus did not violate the equal protection clause.[2]Danfield, 628 F.Supp. at 779. On appeal, the Third Circuit affirmed the court's decision with regard to the equal protection challenge, and also rejected defendants' due process claims, raised for the first time in the Court of Appeals.
Defendants now argue that to allow plaintiff to proceed with his claim for punitive damages is violative of federal constitutional law under the Third Circuit's decision in Danfield. It is defendant's contention that the only ground upon which the Court of Appeals found the Beshada/Feldman classification to withstand an equal protection challenge was that New Jersey had a legitimate state interest in easing jury confusion and expediting trial of the overwhelming number of asbestos cases flooding the courts, and that streamlining these litigations through the elimination of the state-of-the-art defense was rationally related to this interest. Permitting plaintiff to proceed with a punitive damages trial in which evidence relating to defendants' knowledge or the availability of knowledge regarding the dangers of asbestos at the time of distribution must be introduced after plaintiff "chose" a simplified liability trial under Beshada, free of any evidence pertaining to conduct, defendants assert, removes the sole basis on which the Court of Appeals upheld the Beshada/Feldmandichotomy against the equal protection challenge.
Defendants rely heavily on a passage in Danfield in which the Court of Appeals addresses the impact a later decision by the New Jersey Supreme Court, Fischer v. Johns-Manville Corp., 103 N.J. 643, 512 A.2d 466 (1986), had on the state's interest *277 in simplifying asbestos litigation. In Fischer, the court held that plaintiffs are not barred under Beshada from seeking punitive damages in failure-to-warn/strict liability cases involving exposure to asbestos or asbestos products. 103 N.J. at 656, 512 A.2d 466. The fact that defendants are precluded from introducing conduct-related evidence in defense of their liability does not make this same evidence inadmissible as it relates to other aspects of the case, including punitive damages. Id. The majority in Danfield recognized that this decision "substantially undercut" the state's interest in simplifying asbestos cases, noting that "for all practical purposes what Beshada precluded from coming in the front door, Fischer allows in the back door." 829 F.2d at 1244.
In support of their contention that plaintiff in the instant matter is now barred from asserting a claim for punitive damages, defendants point to the following statements in Danfield:
... [T]he goal of simplifying asbestos litigation is eroded by the New Jersey decision to award punitive damages in these cases.
Although we find the Fischer case troubling, we once again acknowledge our limited function in reviewing cases of this type. We cannot overlook the fact that those plaintiffs who wish to avoid the cost of proving the foundation for an uncertain award of punitive damages still may take advantage of the simplified compensation claim Beshada makes available.
829 F.2d at 1244 (emphasis added). Defendants apparently construe the above statement to mean that any time an asbestos plaintiff, in a bifurcated trial, has the advantage of proving liability in the simplified manner permitted under Beshada, that plaintiff is then precluded from seeking an award of punitive damages. According to defendants, this result is mandated under Danfield because to permit a punitive damages trial with the requisite introduction of conduct-related evidence in a second proceeding virtually destroys the constitutional basis upon which the Beshada/Feldman classification was upheld.
Only when read in complete isolation from the remainder of the Danfield opinion can this passage support the result urged by defendants. Parts of an opinion, however, cannot be severed from the whole merely to further the interests of a party who seeks an interpretation beneficial to itself. In light of the remaining reasoning set forth by the Court of Appeals in upholding the Beshada/Feldman classification against constitutional challenge, reasoning which defendants carefully choose to ignore, the court finds defendants' argument unpersuasive.
First, the principal "legitimate state interest" found by the Third Circuit as underlying the Beshada/Feldman doctrine was the "suggestion" in Feldman that "these manufacturers knew the dangers of asbestos, and consequently, the state-of-the-art defense could not be sustained.[3]Danfield, 829 F.2d at 1241. The court found further support for this theory in the later Fischer decision, in which the New Jersey Supreme Court "determined that one manufacturer did know the hazards of asbestos by the 1930's and that other manufacturers could have gained similar knowledge through articles published at that time in scientific journals." Id. at 1242. Under these circumstances, the Court of Appeals found reasonable the state court's decision to preclude introduction of a defense which it had determined was unsustainable, as a matter of law.
Thus, simplification of the fact-finding process was not the only justification found by the Third Circuit for New Jersey's disparate treatment of asbestos manufacturers. In fact, there is much in the opinion which indicates that case management was only an added consideration used to buttress *278 the central justification for the different treatment of this class of defendants that the state-of-the-art defense should not be available to asbestos manufacturers because the hazards of their product were knowable to the industry at all relevant times. See Danfield, 829 F.2d at 1251 (Becker, J., concurring opinion). The majority noted that simplifying the fact-finding process could not be a determinative factor in the elimination of a substantive defense, regardless of the benefits which would ensue to victims seeking recovery. Danfield, 829 F.2d at 1243. Similarly, administrative convenience was recognized as an inadequate ground on which to base denying a defendant an exculpatory defense. Id.
Whatever criticism can be leveled at either the majority's finding that the New Jersey Supreme Court based its decision to treat asbestos manufacturers differently from other manufacturers with regard to the state-of-the-art defense, or its determination that the asbestos industry had information concerning the harmful effects of asbestos exposure available to it, or at the propriety of taking judicial notice of this fact without granting the parties an opportunity to be heard on this issue,[4] it cannot seriously be argued that simplification of the fact-finding process was the only basis upon which the court rejected the defendants' equal protection arguments. Even if it were the sole justification given by the majority for finding the Beshada/Feldman doctrine constitutional, the statement quoted by defendants merely evidences the majority's recognition that while an asbestos trial free of conduct-related evidence would be rare because plaintiffs can, under Fischer, seek punitive damages, the Beshada/Feldman holdings will streamline litigation of those asbestos suits in which the plaintiff seeks only compensatory damages. Danfield, 829 F.2d at 1244. It does not support the conclusion that only when a plaintiff opts not to seek punitive damages can he constitutionally utilize the simplified Beshada approach to obtain compensation. Such a ruling would be completely contrary to the decision in Fischer to allow plaintiffs in asbestos suits to seek punitive damages despite Beshada. 103 N.J. at 656, 512 A.2d 466.
The Beshada/Feldman/Fischer trilogy has been the subject of much attack; nonetheless, all three cases were reviewed by the Court of Appeals in Danfield and were found to withstand the constitutional challenge. They remain the law in this state. Hence, there is no basis under Danfield for closing the door on plaintiff's punitive damages claim.
2. The Void for Vagueness Doctrine
Defendants argue that New Jersey's standard for awarding punitive damages lacks adequate guidelines and, as such, is unconstitutionally void for vagueness. Specifically, they assert that the lack of adequate guidelines, coupled with jury bias against corporations, greatly increases the inherent "take from the rich, give to the poor" tendencies of juries and is violative of the due process clause of the fourteenth amendment. Plaintiffs contend, however, that the standard for an award of punitive damages in New Jersey is clear and certain and, in any event, is no different from that set forth by the United States Supreme Court in Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974), for the imposition of punitive damages in cases involving free speech issues. Furthermore, plaintiff argues that since defendants' conduct is commercial in nature and is not constitutionally protected activity, the standard for awarding punitive damages should be subject to a less stringent vagueness test.
The constitutional ban on vague laws is intended to invalidate statutory enactments which fail to provide adequate *279 notice of their scope and sufficient guidelines for their application. Papachristou v. City of Jacksonville, 405 U.S. 156, 162-63, 92 S.Ct. 839, 843-44, 31 L.Ed.2d 110 (1975); State v. Cameron, 100 N.J. 586, 591, 498 A.2d 1217 (1985). The prohibition against vague laws serves several purposesto ensure that those regulated by the law have proper notice of what is and isn't forbidden; to provide adequate standards for those who enforce the laws; and to protect basic first-amendment freedoms. Grayned v. City of Rockford, 408 U.S. 104, 108-09, 92 S.Ct. 2294, 2298-99, 33 L.Ed.2d 222 (1972).
Because both liberty and property are specifically protected by the fourteenth amendment against any state deprivation which does not meet the standards of due process, the void-for-vagueness doctrine is applicable to civil as well as criminal laws. Giacco v. Pennsylvania, 382 U.S. 399, 402, 86 S.Ct. 518, 520, 15 L.Ed.2d 447 (1966). The degree of vagueness tolerated under the Constitution, however, will depend in part on the nature of the enactment, and the determination of vagueness must be made in light of the contextual background of the particular law, with a firm understanding of its purpose. Village of Hoffman Estates v. Flipside, Hoffman Estates, 455 U.S. 489, 498, 102 S.Ct. 1186, 1193, 71 L.Ed.2d 362 (1982). In this regard, economic regulations are subject to a less strict vagueness test because their "subject matter is often more narrow, and because businesses which face economic demands to plan behavior carefully can be expected to consult relevant legislation in advance of action." Hoffman Estates, 455 U.S. at 498, 102 S.Ct. at 1193.
Defendants assert that the penal nature of punitive damages warrants a constitutional scrutiny of the underlying standard similar to that performed when criminal laws are reviewed under the void-for-vagueness doctrine. Plaintiff contends otherwise, arguing that defendants are involved in the commercial activity of selling a product, conduct which is not constitutionally protected, and urges the court to apply a less strict vagueness test in reviewing New Jersey's standard for awarding punitive damages. The court need not decide this issue, however, because it finds that the standard set forth by the New Jersey Supreme Court for awarding punitive damages passes constitutional muster even under the stricter vagueness test applied to criminal statutes and laws which interfere with the exercise of constitutionally-protected activities.
Defendants' attempt to equate the New Jersey standard for awarding punitive damages with the abstract "misconduct" and "reprehensible misconduct" standards rejected as too vague to meet due-process requirements under the fourteenth amendment by the United States Supreme Court in Giacco v. Pennsylvania, 382 U.S. at 404, 86 S.Ct. at 521, is perplexing. In Nappe v. Anschelewitz, Barr, Ansell & Bonello, 97 N.J. 37, 49, 477 A.2d 1224 (1984), the New Jersey Supreme Court recently reiterated its "commitment that punitive or exemplary damages can be awarded to punish aggravated misconduct by the defendant to deter him and others from repeating it"; however, in Nappe and in Fischer, supra, the state supreme court clearly articulated the type of "misconduct" required to support a punitive damage award (emphasis added). In Fischer, the court stated:
The type of conduct that will warrant an award of punitive damages has been described in various ways. The conduct must be "wantonly reckless or malicious. There must be an intentional wrongdoing in the sense of an `evil minded act' or an act accompanied by a wanton and wilfull disregard of the rights of another" ....
"[T]he requirement may be satisfied upon a showing that there has been a deliberate act or omission with knowledge of a high degree of probability of harm and reckless indifference to consequences." ... However one describes the conduct that will justify punitive damages, one thing is clear: "The key to the right to punitive damages is the wrongfulness of the intentional act."
103 N.J. at 655, 512 A.2d 466 (citations omitted).
*280 Under the void for vagueness doctrine, a law fails to meet the requirements of the due process clause only "if it is so vague and standardless that it leaves the public uncertain as to the conduct it prohibits or leaves judges and jurors free to decide, without any legally fixed standards, what is prohibited and what is not in each particular case." Giacco, 382 U.S. at 402-03, 86 S.Ct. at 520-21. The above standard does not leave it to a jury to decide what type of "misconduct" is needed before punitive damages may be assessed; rather, it clearly defines the kind of conduct which is sufficient to serve as a predicate for the imposition of punitive damages. Moreover, there is nothing vague or abstract about the terms employed by the state court in its definition. Terms and phrases such as "wilfull," "wantonly reckless," "intentional" and "deliberate act or omission with knowledge of a high degree of harm and reckless indifference to consequences" are certainly open to easy comprehension by the reasonable person or juror.
The United States Supreme Court's decision in Smith v. Wade, 461 U.S. 30, 103 S.Ct. 1625, 75 L.Ed.2d 632 (1983), puts to rest any question regarding the vagueness of this standard. In Smith v. Wade, a § 1983 defendant challenged the propriety of a punitive damage award grounded on a "recklessness or callous indifference" standard as based on too uncertain a standard to achieve deterrence rationally and fairly. 461 U.S. at 49, 103 S.Ct. at 1636. The Court clearly rejected defendant's vagueness argument, noting that it adopted the "recklessness" standard over a century ago in Milwaukee & St. Paul R. Co. v. Arms, 91 U.S. 489, 23 L.Ed. 374 (1876) for the precise reason that it would serve the need for adequate clarity in and fair application of punitive damage standards. Id. Furthermore, as plaintiff correctly points out, the Court employed similar language in setting the standard for the imposition of punitive damages in Gertz v. Robert Welch, Inc., an action which involved the issue of free speech, a constitutionally-protected activity. 418 U.S. at 349, 94 S.Ct. at 3011 (in defamation suits, punitive damages may not be assessed unless there is a showing of knowledge of falsity or reckless disregard for the truth). Like the standards approved by the Supreme Court in Smith v. Wade, supra, and Gertz, supra, the New Jersey standard implicates only conduct which is intentional or recklessly indifferent.
Thus, it is clear, under the New Jersey standard, that only conduct which is particularly egregious will justify an award of punitive damages. Fischer, 103 N.J. at 654-55, 512 A.2d 466. Nonetheless, the state supreme court has set forth additional guidelines to be followed by the jury in deciding whether a defendant's conduct is sufficiently egregious to justify an award of punitive damages. Courts hearing asbestos cases have been cautioned to instruct the jury to consider the following:
1. the seriousness of the hazard to the public;
2. the degree of the defendant's awareness of the hazard and of its excessiveness;
3. the cost of correcting or reducing the risk;
4. the duration of both the improper marketing behavior and its cover-up;
5. the attitude and conduct of the enterprise upon discovery of the misconduct; and
6. the defendant's reasons for failing to act.
Fischer, 103 N.J. at 672-73, 512 A.2d 466. These added factors serve to narrow further the standard by which jurors examine an asbestos manufacturer's conduct in determining whether to assess punitive damages against it.
Defendants also argue that once the jury has concluded that an award of punitive damages is appropriate, the standard fails to provide adequate guidelines to aid the jury in setting a reasonable amount. Hence, the jury has unfettered discretion to grant punitive damage awards which are excessive and unrelated to plaintiff's actual damages. It is true that the New Jersey Supreme Court has repeatedly declined to set a proportional relationship between compensatory and punitive damages. *281 Fischer v. Johns-Manville, 103 N.J. at 673, 512 A.2d 466; Nappe v. Anschlewitz, Barr, Ansell & Bonello, 97 N.J. at 50, 477 A.2d 1224. The state court's refusal to set a ratio between the amount of compensatory damages awarded and the amount of punitive damages awarded arises from the very nature of punitive damagesthey are assessed for purposes of punishment and deterrence and, thus, are determined "from the perspective of the defendant rather than of the plaintiff." See Fischer, 103 N.J. at 657, 512 A.2d 466 (quoting Cappiello v. Ragen Precision Indus., Inc., 192 N.J.Super. 523, 532, 471 A.2d 432 (App.Div. 1984)). To a lesser degree, punitive damages are also viewed as a means to compensate a plaintiff whose legal harm is immeasurable in a dollar amount. Nappe, 97 N.J. at 50-53, 477 A.2d 1224 (punitive damages may be assessed in the absence of compensatory damages in an action grounded on the intentional tort of legal fraud).
Nonetheless, the state supreme court does require that punitive damages bear some reasonable relationship to the actual injury in asbestos litigations. Levinson v. Prentice-Hall, 868 F.2d 558, 564-65 (3d Cir.1989); Fischer, 103 N.J. at 673, 512 A.2d 466. In addition, the Fischer court stated that the following considerations should guide the determination of an appropriate amount:
1. the willfulness of defendant's conduct in cases where compensatory damages are minimal;
2. the profitability of the marketing misconduct, where it can be determined;
3. the amount of plaintiff's litigation expenses;
4. the financial condition of the enterprise and the probable effect the judgment will have on it; and
5. the total punishment the enterprise will receive from other sources.
103 N.J. at 673, 512 A.2d 466. Finally, if an award of punitive damages is "manifestly outrageous" or "grossly excessive," a defendant may seek relief from the trial court, which is expressly authorized to consider prior punitive damages awards in deciding whether to reduce the award or order a new trial on the issue of punitive damages. Fischer, 103 N.J. at 670, 512 A.2d 466 (quoting Cabakov v. Thatcher, 37 N.J.Super. 249, 260, 117 A.2d 298 (App.Div. 1955)). Thus, contrary to defendant's assertions, jurors do not have unbridled power to "take from the rich to give to the poor" by awarding excessive amounts in punitive damages. Consequently, the court concludes that New Jersey's standard for awarding punitive damages is not void for vagueness.
3. The Fundamental Fairness Requirement Embodied in the Due Process Clause of the Fourteenth Amendment
Next, defendants point to the thousands of asbestos-related claims for compensatory and punitive damages which have been filed against them nationwide,[5] and assert that, as a result, plaintiff's punitive damages claim should be barred as a matter of law because subjecting a defendant to multiple assessments of punitive damages awards for a single course of conduct violates the fundamental fairness requirement of the due process clause of the fourteenth amendment. Moreover, defendants argue that, in this case alone, an assessment of punitive damages would not be proportional to their respective conduct because, under New Jersey law, defendants may be held liable for punitive damages on a joint and several basis. Last, defendants rely on the "overkill" theory to *282 further their fundamental fairness argument and assert that disastrous economic consequences will flow from repetitive awards of punitive damages. At the very best, defendants contend that the assets of asbestos companies will be depleted to the point that limited funds will be available to pay compensatory awards to future claimants, and at the very worst, defendants predict the inevitable demise, through bankruptcy, of these corporations.
In opposition, plaintiff argues that defendants' underlying premisethat defendants are being punished for a single course of conductis faulty. Instead, plaintiff contends that the proofs submitted at trial will show that defendants' conduct spanned decades, during which time they made repeated decisions to ignore the health hazards of asbestos and, thus, committed many egregious acts. Furthermore, plaintiff argues that the "overkill" consequences of multiple punitive damages awards are speculative at best and that this public policy argument is unsupported by any facts. Plaintiff urges the court not to adopt the reasoning that "one award of punitive damages is enough," because to do so would result in eliminating the deterrent effect punitive damages play in protecting consumer safety by allowing manufacturers to calculate their potential liability for this one award into their financial plans. Finally, plaintiff asserts that defendants' contention that the state of New Jersey imposes joint and several liability with regard to punitive damages is unsupported by New Jersey case law.
The court must reject, at the outset, plaintiff's contention that repeated decisions by asbestos manufacturers to ignore the health hazards created by their products constitute conduct which can be severed into separate acts merely because the conduct may have spanned several decades. Courts which have addressed the problems connected with the assessment of punitive damage awards in successive mass tort litigations, particularly in asbestos cases, have almost unanimously treated the conduct of asbestos defendants as the same act or series of acts. See In re School Asbestos Litigation, 789 F.2d 996, 1004-05 (3d Cir.), cert. denied, 479 U.S. 852, 107 S.Ct. 182, 93 L.Ed.2d 117 (1986); Cathey v. Johns-Manville Sales Corp., 776 F.2d 1565, 1571 (6th Cir.1985), cert. denied, 478 U.S. 1021, 106 S.Ct. 3335, 92 L.Ed.2d 740 (1986); Juzwin v. Amtorg Trading Corp., 705 F.Supp. 1053, 1061 (D.N.J.1989); Campbell v. ACandS, Inc., 704 F.Supp. 1020, 1022 (D.Mont.1989).[6] Thus, the court's consideration of whether an award of punitive damages in the instant case would violate the fundamental fairness requirement of the due process clause starts from the premise that, although defendants may have caused harm to innumerable plaintiffs, multiple awards of punitive damages subject them to repeated civil punishment for a single course of conduct.
The public policy concerns regarding the effect that multiple punitive damage awards may have on the future viability of the asbestos defendants and their ability to pay later compensatory damage claims had their birth in dicta from Roginsky v. Richardson-Merrell, Inc., 378 F.2d 832 (2d Cir. 1967). In Roginsky, the Second Circuit's denial of punitive damages to a plaintiff who suffered cataracts after ingesting a drug used to control cholesterol levels was based on a finding that there was insufficient evidence of misconduct to submit the issue of punitive damages to the jury; however, in dictum, Judge Friendly expressed concern that multiple recovery of punitive damages in mass tort cases like Roginsky may result in "overkill" and lead to the eventual demise of the defendant manufacturers, thus shutting the door on compensatory damage awards for subsequent *283 claimants, and ultimately violate the defendants' due process rights. 378 F.2d at 839-42.
Later cases have echoed Judge Friendly's policy concerns, while taking note of the due process problems implicated by permitting unlimited multiple awards of punitive damages against a defendant for injuries arising out of a single course of conduct. See In re School Asbestos Litigation, 789 F.2d at 1005 ("... powerful arguments have been made that, as a matter of constitutional law or of substantive tort law, the courts shoulder some responsibility for preventing repeated awards of punitive damages for the same acts or series of acts."); In re Federal Skywalk Cases, 680 F.2d 1175, 1188 (8th Cir.), cert. denied, 459 U.S. 988, 103 S.Ct. 342, 74 L.Ed.2d 383 (1982) (Heaney, J., dissenting) ("Unlimited multiple punishment for the same act determined in a succession of individual lawsuits and bearing no relation to the defendant's culpability or the actual injuries suffered by victims would violate the sense of `fundamental fairness' that is essential to constitutional due process."); In re "Agent Orange" Product Liability Litigation, 100 F.R.D. 718, 728 (E.D.N.Y. 1983) mandamus denied, 725 F.2d 858 (2d Cir.), cert. denied, 465 U.S. 1067, 104 S.Ct. 1417, 79 L.Ed.2d 743 (1984) ("There must ... be some limit, either as a matter of policy or as a matter of due process, to the amount of times defendant may be punished for a single transaction."); In re Northern District of California "Dalkon Shield" IUD Products Liability Litigation, 526 F.Supp. 887, 899-900 (N.D.Cal. 1981), rev'd on other grounds, 693 F.2d 847 (9th Cir.1982), cert. denied, 459 U.S. 1171, 103 S.Ct. 817, 74 L.Ed.2d 1015 (1983) ("A defendant has a due process right to be protected against unlimited multiple punishment for the same act ... simply because overlapping damage awards violate that sense of `fundamental fairness' which lies at the heart of constitutional due process.").
The defendants' fundamental fairness argument rests principally on the recent New Jersey District Court decision handed down in Juzwin v. Amtorg Trading Corp., 705 F.Supp. 1053 (D.N.J.1989). In Juzwin, the court addressed the precise issue before this courtwhether, in the context of mass tort litigation, subjecting defendant asbestos manufacturers to repeated assessments of punitive damage awards deprives them of the fundamental fairness required under the due process clauseand concluded that due process requires that a defendant's liability for punitive damages arising out of the same misconduct be limited. 705 F.Supp. at 1060-65. Hence, the court held that the initial assessment by a factfinder of the amount of punitive damages necessary to deter and punish a defendant's conduct bars all subsequent claims for punitive damages. Juzwin, 705 F.Supp. at 1065.
This court does not discount entirely the finding that due process requires that some limit be placed on the amount of punitive damages which can be awarded against a manufacturer for the same culpable conduct; nevertheless, it must reject the easy solution of having the first litigant who reaches the courthouse door preclude all subsequent punitive damages awards to later plaintiffs as producing a harsh and inequitable result. First, although the court agrees that fundamental fairness demands that some safeguards be present to protect defendants in mass tort litigations from the imposition of runaway and disproportionate punitive damage awards, the Juzwin decision cites no legal or equitable basis for allowing the first plaintiff who brings a claim to obtain punitive damages, and then, denying punitive damages, as a matter of law, to all those who follow. Even the Roginsky court, which sparked the concerns which defendants raise today, recognized the inequities inherent in such a solution:
We know of no principle whereby the first punitive award exhausts all claims for punitive damages and would thus preclude future judgments.... Neither does it seem either fair or practicable to limit punitive recoveries to an indeterminate number of first-comers, leaving it to some unascertained court to cry, *284 "Hold, enough," in the hope that others would follow.
378 F.2d at 839-40.
Second, this approach ignores the role that punitive damages play in promoting consumer safety by encouraging manufacturers to take steps to make their products safer. With respect to plaintiffs, punitive damages provide an incentive to bring suit against manufacturers who place unsafe products on the market with deliberate or reckless disregard for public safety, when a compensatory award for the harm caused would be outweighed by the skyrocketing costs of litigation. See Fischer v. Johns-Manville Corp., 103 N.J. at 658, 512 A.2d 466. From the defendants' perspective, a rule which would permit the recovery of only one punitive damages award, regardless of the countless number of plaintiffs who are harmed by defendant's tortious conduct, will serve to eliminate the deterrent effect punitive damages have. As with compensatory damages, manufacturers will then be able to predict, within certain limits, the amount of punitive damages which may result and factor this figure into a cost-benefit analysis when deciding whether to market a particular product. See Fischer v. Johns-Manville Corp., 103 N.J. at 664, 512 A.2d 466. Rather than remove dangerous products from the market, manufacturers may instead accept the risk of paying limited punitive damages. Neal v. Carey Canadian Mines, Inc., 548 F.Supp. at 376.
The Juzwin decision apparently was based, at least in part, on dissatisfaction with the alternative methods available to cope with the problems created by cumulative punitive damages awards in mass tort litigation. Based on the Third Circuit's holding, in In re School Asbestos Litigation, 789 F.2d at 1006, that it was unlikely that any class could be certified in the asbestos context for the purpose of determining awards of punitive damages, the court dismissed class certification as an available means of limiting the amount of punitive damages imposed on asbestos defendants. The court further found the defendants' option of submitting evidence of prior awards to the jury to persuade them to reduce their verdict by the amounts of the earlier awards to be an equally unattractive and unrealistic alternative in light of the possible prejudicial effect which this information may have on jurors. Nonetheless, while the court is aware that the latter solution lacks some appeal, it is certainly far more acceptable an approach than arbitrarily barring all but the first litigant at the courthouse door from an award of punitive damages.
The court fears that the Juzwin solution to the problem of multiple punitive damages awards in mass litigation is impracticable as well as arbitrary. It assumes that the first jury to award punitive damages will base the amount awarded on the overall harm caused to all the victims of asbestos inhalation and, thus, the asbestos manufacturers will be adequately punished for their misconduct by the size of the first award. This assumption is unrealistic, especially in New Jersey state courts and federal district courts sitting in diversity since, under the New Jersey standard for punitive damages, jurors must be instructed that, although they may take into account the overall seriousness of the hazard to the public, the punitive damage award should bear some reasonable relation to plaintiff's actual injury. Levinson v. Prentice-Hall, Inc., 868 F.2d at 564-65; Fischer, 103 N.J. at 673, 512 A.2d 466. On the other hand, even if a New Jersey jury were to ignore the mandate of the New Jersey Supreme Court and impose a punitive damage award which is the product of injuries to all present and potential plaintiffs, the Juzwin opinion provides no reason for allowing the first plaintiff in line to be the sole beneficiary of a windfall award which is based more on the harm caused to others than on his own injury.
Because of the vast numbers of asbestos personal injury and property damage suits which have been and are expected to be filed in state and federal courts throughout the country, it has been said that "the asbestos scene [presents an] unparalleled situation in American tort law." In re School Asbestos Litigation, 789 F.2d at 1000. The problems associated with *285 awarding exemplary damages in successive asbestos litigations are thus nationwide problems and call for a uniform solution. Resolution of this problem is better dealt with either by the federal legislature or through legislation on a state-by-state basis, with the proviso that all states adopt a uniform system for handling these claims, than on the judicial level.[7]Cathey v. Johns-Manville Sales Corp., 776 F.2d at 1569-70; Moran v. Johns-Manville Sales Corp., 691 F.2d 811, 817 (6th Cir.1982); Roginsky, 378 F.2d at 841; Fischer, 103 N.J. at 669, 512 A.2d 466; Seltzer, Punitive Damages in Mass Tort Litigation: Addressing the Problems of Fairness, Efficiency and Control, 52 Fordham L.Rev. 37, 56-57 (1983).
The record before this court does not indicate that the defendants in this action are in danger of having their due process rights violated, should the jury see fit to award plaintiff punitive damages. Thus far, it appears that Celotex has paid a total of $175,000.00 in punitive damages judgments, a figure which hardly seems excessive in light of the $15,500,000.00 in compensatory damages which Celotex asserts has been assessed against it to date. Owens-Corning has paid one punitive damages award, amounting to $1,200,000.00; again, an amount which cannot be labeled disproportionate to the $547,914,408.00 in compensatory damages which it asserts have been paid thus far. Moreover, although the affidavit submitted by Owens-Illinois is artfully worded, what the court can glean from it is that, while punitive damages in the amount of $2,000,000.00 have been assessed against it, none have actually been paid at this time. Finally, the defendants are adequately protected by available judicial controls if the jury decides to award excessive and greatly disproportionate punitive damages. It is thus unnecessary for the court to take the issue of the propriety of an award of punitive damages from the trier of fact.
Defendants also argue that any assessment of punitive damages in this case will violate their due process rights because, under New Jersey law, defendants may be held jointly and severally liable for punitive damages, thus permitting an award of punitive damages which may not be proportional to their conduct. In support of this contention, defendants rely on the decision by the New Jersey Appellate Division in State Dep't of Envtl. Protection v. Ventron Corp., 182 N.J.Super. 210, 440 A.2d 455 (App.Div.1981), aff'd as modified, 94 N.J. 473, 468 A.2d 150 (1983). Defendants' contention finds no support in New Jersey case law. Ventron involved the apportionment of the cost of cleanup and removal of mercury contaminants under the New Jersey Spill Compensation and Control Act. The court merely held that under general tort principles, damages for a total injury or loss (or compensatory damages) can be assessed against two or more tortfeasors whose wrong was a substantial factor in causing the injury and where the injury or loss cannot be subdivided and liability apportioned. Ventron, 182 N.J.Super. at 222, 440 A.2d 455. There is nothing in the decision which supports a finding that defendants are also jointly and severally liable for punitive damages in this state.
Finally, defendants raise several public policy concerns in an effort to persuade the court to deny plaintiff's request for punitive damages as a matter of law. Primarily, they argue that permitting cumulative damages awards in asbestos litigation will deplete their ability to pay future awards for compensatory claims, and may eventually *286 destroy the corporations. Plaintiffs argue that the forecast of excessive punitive damages awards leading to the defendants' demise is speculative at best and should not be credited by the court.
The court is cognizant of its role as a federal court sitting in diversity: whether these policy arguments present persuasive and valid concerns is a matter which should be decided by the New Jersey Supreme Court, and this court must work within the framework of New Jersey state decisions on these issues. Gogol v. Johns-Manville Sales Corp., 595 F.Supp. 971, 975 (D.N.J. 1984). In Fischer v. Johns-Manville Corp., the New Jersey Supreme Court addressed all of these arguments and found them to be an insufficient basis upon which to deny plaintiffs, in asbestos suits, the right to seek punitive damages. There, the asbestos defendants raised the identical "overkill" arguments advanced here, as well as some others, and the state court rejected them as speculative. 103 N.J. at 665, 512 A.2d 466. ("The amount of punitive damages and the determination that they would cause insolvency that could be avoided in their absence are so speculative as to foreclose any sound basis for judicial decision.")
Moreover, while the "overkill" argument is not entirely without merit, defendants have not proffered any factual documentation which would persuade the court to reject the reasoning in Fischer that defendants' fears are more speculative than real. There is nothing before the court which indicates that any of the defendants in this case are facing bankruptcy or that bankruptcy, if it should occur, will result more from the punitive damages awarded than the countless awards for compensatory damages. The court concludes that neither due process nor the policy concerns raised by defendants preclude the submission of the issue of punitive damages to a jury.
4. The Eighth Amendment's Proscription Against Excessive Fines
Defendants base their next constitutional claim on the eighth amendment.[8] They argue that the punishment meted out by permitting multiple awards of punitive damages in asbestos suits is disproportionate to the single course of conduct giving rise to the claims, and thus, is violative of the eighth amendment's prohibition against excessive fines. Plaintiff disputes the applicability of the eighth amendment to civil actions and, alternatively, argues that, even if the eighth amendment does protect defendants in civil suits from the assessment of fines which are disproportionate to their conduct, the conduct of the defendants in this case (marketing a product known to cause serious bodily injuries for decades) was particularly egregious, thus justifying the imposition of a severe penalty.
As noted earlier, on December 5, 1988, the Supreme Court granted certiorari, in Kelco Disposal, Inc. v. Browning-Ferris Indus., to decide whether the imposition of punitive damages which are 100 times greater than plaintiff's actual damages is violative of the eighth amendment. 845 F.2d 404 (2d Cir.1988), cert. granted, ___ U.S. ___, 109 S.Ct. 527, 102 L.Ed.2d 559 (1988). Subsequent to the filing of defendants' motion, the Supreme Court rendered its decision in Browning-Ferris, ___ U.S. ___, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989). The issue of the applicability of the eighth amendment to purely civil suits has been resolved. The Court unequivocally held that the excessive fines clause of the eighth amendment does not apply to punitive damages awards between private parties and, thus, does not act to restrict such awards where the government has not prosecuted the suit or cannot share in the recovery. Browning-Ferris, ___ U.S. at ___, 109 S.Ct. at 2915-2921. Defendants' argument cannot survive this decision. It is clear that the eighth amendment does not bar plaintiff's punitive damages claim.
5. The Double Jeopardy Clause of the Fifth Amendment
Finally, defendants contend that the imposition of punitive damages in this case is *287 barred by the double jeopardy clause of the fifth amendment. The fifth amendment to the Constitution provides, in part, "[N]or shall any person be subject for the same offense to be twice put in jeopardy of life or limb." It has been said that the guarantee against double jeopardy consists of three separate constitutional protections. "It protects against a second prosecution for the same offense after acquittal. It protects against a second prosecution for the same offense after conviction. And it protects against multiple punishments for the same offense." North Carolina v. Pearce, 395 U.S. 711, 717, 89 S.Ct. 2072, 2076, 23 L.Ed.2d 656 (1969).
Defendants argue that the protections of the double jeopardy clause are not limited to criminal proceedings. Rather, the proper inquiry is not whether the proceeding in question is labelled "criminal" or "civil," but whether the challenged sanction is punitive in purpose. Since punitive damages are designed to punish the wrongdoer and to deter others from like conduct, they are penal in nature. Thus, defendants argue that the imposition of multiple awards of punitive damages in successive litigations exposes them to double jeopardy, in violation of the fifth amendment.
This argument is foreclosed by the United States Supreme Court's recent decision in United States v. Halper, 490 U.S. ___, 109 S.Ct. 1892, 104 L.Ed.2d 487 (1989). In Halper, the Supreme Court held that the government cannot, under the double jeopardy clause, criminally prosecute a defendant, impose a criminal penalty upon him and then bring a separate civil action based on the same conduct and receive a judgment which is not rationally related to the losses suffered. 490 U.S. at ___, 109 S.Ct. at 1902. Thus, under certain circumstances, civil penalties do constitute punishment for the purpose of the double jeopardy clause, and the test urged by defendants for determining the applicability of the double jeopardy clause to civil proceedings is indeed the correct one in suits involving government-sought sanctions. See Halper, 490 U.S. at ___, 109 S.Ct. at 1901-02.
Nonetheless, in Halper, the Court expressly held that the "protections of the Double Jeopardy clause are not triggered by litigation between private parties." 490 U.S. at ___, 109 S.Ct. at 1903. Since the instant lawsuit is a purely civil action instituted by a private litigant to vindicate a private right, the punitive damages sought here do not fall within the purview of the fifth amendment's protection against double jeopardy. Consequently, the court finds that the defendants will not be subjected to double jeopardy by the imposition of punitive damages in this action.
II.
Defendants have moved, in the alternative, for a stay pending the Supreme Court's decision in Browning-Ferris Indus. v. Kelco Disposal, Inc., supra, and/or joinder of the Johns-Manville Settlement Vehicle as a defendant to this suit. First, defendants argue that a stay of this action pending the Supreme Court's decision in Browning-Ferris is warranted because that decision will substantially affect or dispose of the issue of punitive damages in this action and that plaintiff will not be prejudiced by the delay because he has already been compensated for his injuries. Defendants' request for a stay to await the Supreme Court's decision in Browning-Ferris, however, has been rendered moot by the issuance of that opinion just last week. Next, defendants argue that joinder of the Johns-Manville Settlement Vehicle is necessary to effect complete relief among the parties and to avoid duplicative litigation of the same issues, thus justifying a stay of this action until joinder is possible. Both arguments are completely meritless.
The power to stay a proceeding is committed to the broad discretion of the district court. Gold v. Johns-Manville Corp., 723 F.2d 1068, 1077 (3d Cir.1983); Bechtel Corp. v. Local 215, Laborers' Int'l Union, 544 F.2d 1207, 1215 (3d Cir.1976). This power is said to be "incidental to the power inherent in every court to control the disposition of the causes on its docket with the economy of time and effort for itself, for counsel, and for litigants." Landis v. *288 North American Co., 299 U.S. 248, 254-55, 57 S.Ct. 163, 165-66, 81 L.Ed. 153 (1936). To promote fair adjudication, the district court must weigh the competing interests of the parties and maintain an even balance. Landis, supra. The moving party, however, must demonstrate "`a clear case of hardship or inequity' if there is `even a fair possibility' that the stay would work damage on another party." Gold v. Johns-Manville Corp., 723 F.2d at 1075-76 (quoting Landis v. North American Co., 299 U.S. at 255, 57 S.Ct. at 166).
Defendants argue that this action should be stayed to allow them to join the Johns-Manville Settlement Vehicle, so that the jury can properly allocate Johns-Manville's portion of liability as a culpable joint tortfeasor, thus avoiding a second, duplicative trial by defendants to seek contribution from Johns-Manville. This argument is completely without merit. I am amazed that the defendants would have the temerity to make such an argument, in light of the fact that the liability phase of this litigation ended almost a year ago. Moreover, as defendants candidly admit (in support of one of the numerous other arguments raised in their motion), the Settlement Vehicle effectively precludes punitive damages claims against Johns-Manville (see Brief in Support of Defendants' Motion for Summary Judgment or Stay of Trial at 32). Thus, since there is no valid reason for joining the Johns-Manville Settlement Vehicle, there is no valid reason for staying this action for that purpose.
This lawsuit was commenced seven years ago and has tiredly dragged on since then. Plaintiff has a right to see a timely resolution of his cause of action. The defendants have not demonstrated that inconvenience, much less hardship, will result to them if it is allowed to proceed. As a result, the court finds that the balance of hardship weighs in plaintiff's favor. Further delay will not be tolerated.
Accordingly, for the reasons stated above, defendants' motions for summary judgment or, in the alternative, for stay of trial, are both denied. An order accompanies this opinion. No costs.
ORDER
This matter having been opened to the court on motion of the law firm of McCarter & English, by Andrew T. Berry, Esq., on behalf of defendants The Celotex Corporation and Owens-Illinois Corporation and the law firm of Horn, Kaplan, Goldberg, Gorny & Daniels, by Donald M. Kaplan, Esq., on behalf of defendant Owens-Corning Fiberglas Corporation, for summary judgment on plaintiff's punitive damages claim, pursuant to Fed.R.Civ.P. 56 or, in the alternative, for a stay of trial on this matter; and the court having carefully considered the papers submitted by counsel in support thereof and in opposition thereto; and for good cause shown,
It is on this 5th day of July 1989,
ORDERED that defendants' motion for summary judgment be and hereby is denied; and it is further
ORDERED that defendants' motion for a stay of the trial on plaintiff's punitive damages claim be and hereby is denied.
NOTES
[1] Fed.R.Civ.P. 56(e) provides, in relevant part: When a motion for summary judgment is made and supported as provided by this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleadings, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party.
[2] I authored a strong dissent, joined by Judges Lacey, Stern, Barry, Cohen and Cowen, on the ground that case management was an insufficient basis upon which to rebut a constitutional challenge. Danfield, 628 F.Supp. at 780-81 (dissenting opinion). Moreover, despite the rationale attributed to the state court opinions by the majority, my reading of these cases revealed a glaring absence of any articulation, by the state court, of a basis for its disparate treatment of asbestos defendants. Id. at 782-83. Finally, both the state court opinions and the District Court majority opinion in Danfield were bereft of any data substantiating their expectation that eliminating state-of-the-art defenses in asbestos cases will streamline these litigations and reduce jury confusion. 628 F.Supp. at 781.
[3] There was some disagreement between Judge Weis (majority opinion) and Judge Becker (concurring opinion) with regard to whether the Feldman court intimated that the harms from asbestos were actually known or were merely knowable because of available scientific data. Danfield, 829 F.2d at 1245-46 (Becker, J., concurring). Since constructive knowledge is sufficient to defeat the state-of-the-art defense, however, the result is the same.
[4] Judge Hunter, in his dissent to Danfield, found case management an insufficient basis for depriving one class of manufacturers of an exculpatory defense; the jury confusion rationale totally undermined by the Fischer decision; and precluding asbestos manufacturers from relitigating the "knowledge" question because the state supreme court took judicial notice of the knowability of asbestos harms without a full factual development of the issue to violate the defendants' due process rights. 829 F.2d at 1252-62.
[5] Defendants assert that, as of this date, punitive damages verdicts in excess of $2,000,000.00 have been assessed against Owens-Illinois, although no documentation has been submitted which would indicate how much of this amount actually has been paid. See Smith Affidavit, ¶ 6. In addition, counsel for Owens-Corning has attested that one punitive damages judgment, amounting to $1,200,000.00, has been paid on behalf of Owens-Corning. See Williams Affidavit, ¶ 5. Finally, Celotex attests, through its corporate comptroller, that approximately $10,000,000.00 in punitive damages have been returned against Celotex in asbestos-related bodily injury cases, and that two punitive damages judgments totaling $175,000.00 have been paid, thus far, on its behalf. See Sassone Affidavit, ¶¶ 4, 5.
[6] But see Neal v. Carey Canadian Mines, Ltd., 548 F.Supp. 357, 377-78 (E.D.Pa.1982), aff'd, Van Buskirk v. Carey Canadian Mines, Ltd., 760 F.2d 481 (1985) ("... the Court holds that, as a matter of law, since a product seller owes a separate duty to each individual who is a consumer or user of such a product to refrain from `outrageous conduct' and, if the defendant exhibits `outrageous conduct' towards a particular individual through deficiencies in that product which causes injury to that plaintiff, then its course of conduct cannot be characterized as `the same act' because it is separate and distinct to each individual plaintiff.").
[7] Although the Juzwin opinion also cries out for a legislative solution to this problem, the decision, if followed in this district, effectively accomplishes what the state supreme court has endeavored to avoiddeprive citizens of New Jersey of punitive damages awards which are currently available to citizens of other states in like situations. See Fischer, 103 N.J. at 666-67, 512 A.2d 466. Concern with denying their citizenry the benefits available to litigants in other jurisdictions has been a driving force in the refusal of many states to even set a cap on or a proportional ratio to claims for punitive damages. See In re School Asbestos Litigation, 789 F.2d at 1001; Jackson v. Johns-Manville Sales Corp., 781 F.2d 394, 405 (5th Cir.), cert. denied, 478 U.S. 1022, 106 S.Ct. 3339, 92 L.Ed.2d 743 (1986). There is no guarantee that other jurisdictions will follow Judge Sarokin's lead.
[8] The eighth amendment to the United States Constitution provides:
Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584051/ | 728 N.W.2d 223 (2006)
RODDA
v.
VERMEER MFG.
No. 05-1371.
Iowa Court of Appeals.
December 13, 2006.
Decision without published opinion. Reversed and Remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583956/ | 427 So. 2d 214 (1983)
RELIANCE ELECTRIC COMPANY, HAUGHTON ELEVATOR DIVISION, Appellant,
v.
Geraldine HUMPHREY, Appellee.
No. 81-1733.
District Court of Appeal of Florida, Fourth District.
February 9, 1983.
Rehearing Denied March 15, 1983.
Samuel Tyler Hill, Fort Lauderdale, and Edna L. Caruso, West Palm Beach, for appellant.
Ralph F. Pelaia, Jr., Fort Lauderdale, Larry Klein, West Palm Beach, and Birr, Bryant & Saier, P.A., Fort Lauderdale, for appellee.
HURLEY, Judge.
The issue is whether a violation of Section 399.02(6)(b), Florida Statutes (1981) (which requires proper maintenance of elevators), constitutes negligence per se. We hold that it does and, therefore, we approve the trial court's instruction to this effect and we affirm.
An instruction that a violation of a given statute is negligence per se is appropriate in two circumstances: (1) when the statute is of the "strict liability" type, i.e., "designed to protect a particular class of persons from their inability to protect themselves, such as one prohibiting the sale of firearms to minors." de Jesus v. Seaboard Coastline Railroad, 281 So. 2d 198, 201 (Fla. 1973); and (2) when the statute "establishes a duty to take precautions to protect a particular class of persons from a particular injury or type of injury." Ibid. See also, Florida Freight Terminals, Inc. v. Cabanas, 354 So. 2d 1222 (Fla. 3d DCA 1978); Hines v. Reichhold Chemicals, Inc., 383 So. 2d 948 (Fla. 1st DCA 1968).
Section 399.02(6)(b) falls squarely within the second category. It provides in pertinent part that:
The owner or his duly appointed agent shall be responsible for the safe operation and proper maintenance of the elevator, dumbwaiter, escalator, moving walk, endless belt man lift, or powered lift for sewage pump station after it has been approved by the division and placed in service. The owner or his agent shall make periodic inspections, maintain in proper working order all parts of the elevator installation, and make and be responsible for all tests and inspections which the division may require.
Elevators are commonplace. Indeed, in many buildings they provide the only reasonable mode of conveyance. Yet the passengers the class of individuals for whom the statute was enacted have no say in questions of maintenance, repair and other safety precautions. Thus, the task of making *215 elevators safe necessarily falls upon the owner or agent who is in a position to undertake proper maintenance. The proper execution of this duty is of paramount importance. Consequently, it is consistent with the body of law cited above to hold that a violation of this statute constitutes negligence per se.
AFFIRMED.
ANSTEAD, J., and SHAHOOD, GEORGE A., Associate Judge, concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1583947/ | 427 So. 2d 963 (1983)
MISSISSIPPI TELEPHONE CORPORATION
v.
MISSISSIPPI PUBLIC SERVICE COMMISSION.
No. 53997.
Supreme Court of Mississippi.
February 23, 1983.
Stennett, Wilkinson & Ward, Stanley Q. Smith, Gene A. Wilkinson, Sullivan, Hunt, Spell, Shackelford & Henson, William E. Spell, Jackson, for appellant.
Bennett E. Smith, Jackson, Hall, Callender & Dantin, Maurice Dantin, Columbia, for appellee.
Before BROOM, P.J., and ROY NOBLE LEE and PRATHER, JJ.
*964 PRATHER, Justice, for the Court:
This appeal involves the Public Service Commission's cancellation of a utility's certificate of convenience and necessity due to inadequate service. The Commission's decision was previously appealed to the Chancery Court of Greene County, but the Commission's decision was affirmed. On appeal to this Court, the Utility assigns as error the following:
(1) The Public Service Commission erred in proceeding against the Utility because the formal complaint was not verified as required by Rule 4C of the Utility Rules of Practice and Procedure.
(2) The Public Service Commission erred in combining two mutually exclusive administrative proceedings provided by Mississippi Code Annotated sections 77-3-1 through -89 (1972 and Supp. 1982) and sections 77-3-401 through -425 (1972).
(3) The Public Service Commission erred in canceling the Utility's certificate after a stay of the proceedings was granted, and without permitting the Utility to present its entire case in defense.
FACTS
Mississippi Telephone Corporation (the Utility) has for several years provided telephone service to portions of Greene and Wayne Counties. However, on November 2, 1979, the Mississippi Public Service Commission (the Commission) and the Attorney General's Office filed a formal complaint against the Utility for inadequate service. The complaint alleged that the Utility was not rendering service as provided for in Mississippi Code Annotated section 77-3-401 (1972), and that a hearing should be held to determine the inadequacy of service pursuant to Mississippi Code Annotated section 77-3-21 (1972).[1]
On January 31, 1980, the Utility filed its answer. In its answer the Utility placed all blame for its service record on the damage caused by Hurricane Frederic and on financial difficulties. Moreover, the Utility alleged that it had retained an engineering firm for the purpose of repairing and modernizing its facilities, and that it had contacted the Rural Electric Association (REA) in order to acquire a loan for necessary construction.
A hearing followed, in which the Commission heard testimony from both customers and expert witnesses. As a result of that testimony, the Commission entered its order of March 11, 1980. That order concluded that the Utility was not providing reasonably adequate service. In addition, the order listed several corrections for the Utility to make. Among those changes were requests to pursue a new construction plan offered by the Utility, to change the identity of management, and to submit a definite operating policy to the Commission with regard to repair service, new service, and disconnects for nonpayment. A subsequent order was entered on May 6, 1980, which extended the Utility's deadline for compliance with the earlier order to May 15, 1980. No appeal was taken from the March 11 or May 6 orders.
On December 11, 1980, the Commission filed a new complaint pursuant to section 77-3-407, and required the Utility to show cause why it should not forfeit its charter of incorporation and have its certificate cancelled for failure to comply with the March 11, 1980 order.
A hearing on this new complaint was begun on February 19, 1981. The Utility again raised by motion the first two assignments of error, namely, the non-verification of the November, 1979 complaint and the combination of two statutory procedures in the first hearing. Upon overruling both motions, the Commission heard the Commission's expert and lay witness testimony concerning the Utility's noncompliance with the March 11, 1980 order.
*965 At the conclusion of the Commission's proof, attorneys representing the Utility filed a motion seeking a stay of the proceedings. The basis for the motion involved a proposed divestiture from the Utility's current owner and manager, Mr. Miller, to a new five-member group for five years. Under this plan, Miller would still own the Utility but he would not have any influence in directing the management of the Utility. Since management problems were considered a major cause of the Utility's poor service record, it was apparently the Utility's counsel's belief that the divestiture would satisfy the Commission.
The requested stay of the proceedings was then granted "until further orders of the Commission." The record then states the following:
BY CMR. HAVENS:
One other thing, Mr. Chairman, let me make an inquiry to you as Chairman. I am under the impression that the motion that is sustained is a stay of these proceedings
BY CHMN. JOHNSON:
That's correct.
BY CMR. HAVENS:
That in any event that this agreement in its entirety should faulter, we can pick up the proceedings where we left off.
BY CHMN. JOHNSON:
I don't know.
BY MR. WILKINSON [Utility Counsel]:
That is correct.
BY MR. DANTIN [Commission Counsel]:
Yeah.
BY CHMN. JOHNSON:
It appears that both lawyers are in agreement on it.
On April 7, 1981, the Utility filed a petition for review of the divestiture by the Commission. The petition also requested that the Commission's decision in that regard be stated in an appropriate order. No further hearings were conducted, and no notice concerning additional matters was given to the Utility.
On June 2, 1981, the Commission entered a final order. The final order recited the Utility's failure to render reasonably adequate service as required by the Commission within a reasonable time. It further stated:
That the hearings, notice, and findings of failure to render adequate service, and specifications of particulars and establishment of reasonable time within which to correct said failure as contained in said orders comply with the requirements of section 77-3-21 of the Mississippi Code of 1972.
Finally, the order stated that the Utility's certificate of public convenience and necessity should be cancelled.
The Utility appealed from the final June 2, 1981 order, and it followed the appeal procedure provided in section 77-3-67 to the chancery court. On appeal, the chancery court affirmed the Commission's order of cancellation, but it remanded the cause back to the Commission for one correction. The Commission was ordered to provide a procedure for the certificated area to receive service during the period prior to final cancellation of the Utility's certificate.
LAW
I.
The first question considered is whether the unverified formal complaint of November 2, 1979, renders the Commission's orders null and void. This Court answers in the negative.
Admittedly, Rule 4C of the Utility Rules of Practice and Procedure of the Mississippi Public Service Commission provides that every complaint "shall be verified by at least one complainant or his attorney."[2] And, in a similar case, this Court required strict compliance with a legislative statute calling for verification. In Mitchell v. Tishomingo Savings Institution, 53 Miss. 613 (1876), we held that an answer in chancery must be verified by affidavit when required by statute, *966 and, if omitted, the answer may be treated as a nullity, and stricken from the files on motion.
In the case at bar, the Utility's counsel raised this issue by motion prior to any hearing. When this motion was discussed by the respective attorneys before the Commission, the Commission's attorney volunteered to amend the complaint so long as a continuance would not be granted to delay the proceedings. The Utility's counsel agreed. Nonetheless, a verification was never appended to the complaint, and the first hearing proceeded.
As a result of that first hearing, the Commission entered its order of March 11, 1980. And, no appeal was taken from that order. Instead, the Utility waited and appealed from the Commission's final order entered after the second hearing.
In our opinion, the Utility waived its previous objection by its later inconsistent action. The Utility should have raised the verification issue on an appeal following the Commission's first decision. It cannot wait until the Commission has rendered a second opinion, which is based in part on the Commission's first opinion, to appeal an issue concerning the first hearing only. Thus, the Utility is precluded from having this issue considered on appeal.
II.
The second issue presented to this Court is whether the Utility was denied due process by the Commission's simultaneous use of two statutory administrative procedures. We find that there was no denial of due process.
The Commission's position with regard to this assignment is that there are two compatible procedures for remedying inadequate service. The first procedure, passed in 1940 and requiring the petition of the Attorney General, applies only to domestic telephone and telegraph public service corporations. This procedure is found in sections 77-3-401 to -425 of the Mississippi Code Annotated (1972). Under section 77-3-401, the Commission is empowered to determine whether the corporation is providing in a reasonably adequate manner the public service authorized by its charter of incorporation. If the corporation is providing inadequate service, the Commission may order corrections to be made within a reasonable time. Miss. Code Ann. § 77-3-407 (1972). The ultimate penalty under this procedure, when corrections have not been made as required, is forfeiture of the charter of incorporation. Miss. Code Ann. § 77-3-411 (1972). Finally, appeal may be permitted in the Circuit Court of the First Judicial District of Hinds County. Miss. Code Ann. § 77-3-413 (1972).
The second procedure was passed in 1956 and applies to several types of utilities, including telephone and telegraph utilities. Miss. Code Ann. § 77-3-21 (1972). Under this procedure, the Commission must determine whether the Utility is rendering reasonably adequate service in any area covered by its certificate. And, if the Utility is not providing adequate service, the Commission may order the Utility to make corrections within a reasonable time. The ultimate penalty under this section is the revocation and cancellation of the Utility's certificate of convenience and necessity. Appeal under the section 77-3-21 procedure is to a chancery court. Miss. Code Ann. § 77-3-67 (Supp. 1982).
The Utility's position on this issue is that the two procedures are mutually exclusive.[3] In comparing these two statutory schemes, it can be easily seen that the Commission conducts the same type of hearings and considers the same kinds of factual issues. The only differences in the two procedures are the ultimate penalties and the intermediate courts of appeal involved.
*967 Although the Commission, at times, made reference to the Attorney General procedure, the Commission apparently conducted this matter solely through the section 77-3-21 procedure. All notices, hearings, findings of inadequate service, and orders for corrections followed the section 77-3-21 procedure. The only penalty imposed was that permitted by section 77-3-21. And, appeal was made to the chancery court.
In our opinion, the Utility has not been harmed or prejudiced in any way by the Commission's reference to both procedures. Moreover, we believe that the Commission was permitted to proceed under both statutory procedures.[4] Otherwise, the Commission could be forced under some circumstances, to conduct four hearings, instead of two, to determine whether customers were receiving inadequate service and whether the Utility had made requested corrections before the Commission could impose both penalties. That would obviously result in a waste of time and money for no legitimate reason. Therefore, we affirm the chancery court's finding of no error on this assignment.
III.
The appellant's principal contention is that the Utility was denied due process when its certificate was cancelled without reconvening the second Commission hearing after the stay was granted. We hold that due process of law was not afforded to the Utility.
The Constitutions of the United States and Mississippi require that no person may be deprived of his property except by due process of law. U.S. Const. Amend. XIV, § 1; Miss. Const. art. 3, § 14. And, an administrative body must protect such rights before depriving a person of his property. See also Delta Electric Power Association, supra (a certificate of convenience and necessity issued by the Commission is a valuable right which is entitled to protection by the courts). Such rights include the right to present evidence at a hearing. Love v. Mississippi State Board of Veterinary Examiners, 230 Miss. 222, 92 So. 2d 463 (1956).
After the granting of the stay by the Commission, the record reflects little beyond the Utility's filing of a petition to review the divestiture. At each meeting of the Commission after the February 19, 1981 partial hearing, an order was entered to the effect that the matter would be continued until the next regular meeting. These routine continuance orders did not provide for any notice to the Utility, or the Commission's attorney. No additional hearings were conducted.
The chancery court, in reviewing this issue, determined that the Utility sought special relief through the stay to accomplish two objectives: (1) the divestiture and (2) an intervention in the suit by the Telephone Management Corporation (the proposed five-member management). The chancellor then concluded that, having been granted the special relief and having failed to accomplish its two objectives, the Utility could not now complain of the Commission's failure to reconvene the hearing.
We disagree. Even if the proposed divestiture was deemed insufficient by the Commission, the Utility still had the right to offer other evidence, if any, showing compliance with the Commission's list of corrections. Since the Commission failed to permit the Utility its right to present evidence, we must reverse.
IV.
Our reversal is limited. There were no prejudicial issues raised by the appellant with regard to the Commission's March, 1980 order. As a result, that order finding that the Utility was not providing adequate service shall remain valid.
It is the second, February 19, 1981, hearing with which we are concerned. That *968 hearing was concluded without the benefit of hearing the Utility's side of these matters. Thus, the case is remanded to the Commission with the instructions that the Utility be granted the opportunity to present its case in defense and that all interested parties be given notice of that conclusion of the February 19, 1981 hearing.
AFFIRMED IN PART AND REVERSED IN PART. REMANDED TO MISSISSIPPI PUBLIC SERVICE COMMISSION.
PATTERSON, C.J., WALKER and BROOM, P.JJ., and ROY NOBLE LEE, BOWLING, HAWKINS, DAN M. LEE and ROBERTSON, JJ., concur.
NOTES
[1] The Utility responded first by filing several motions. The first motion requested a dismissal of this complaint for failure of the Commission or the Attorney General's office to verify its complaint. A second motion also sought dismissal for the Commission's failure to choose between two allegedly exclusive statutory procedures, namely, section 77-3-21 or section 77-3-401.
[2] The Commission is empowered by statute to promulgate reasonable rules and regulations which are necessary to carry out the regulation of Utilities. Miss. Code Ann. § 77-3-45 (1972).
[3] In Delta Electric Power Ass'n v. Mississippi Power and Light Co., 250 Miss. 482, 149 So. 2d 504 (1963), Justice Ethridge stated: "The statutory expression of one method for cancellation of certificates is justly to be construed as an exclusion of other methods." 250 Miss. at 507, 149 So.2d at 511. The appellant contends that this language renders the Commission's alleged use of two statutory schemes invalid. However, the two procedures provide for different penalties.
[4] We would like to call attention to our Legislature that there are two appeal routes from the same administrative agency, since a study of the Public Utility Laws is now being made by the Mississippi Legislature. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918774/ | 411 B.R. 427 (2008)
In re Ronald Marc CHERRY, Debtor.
No. 08-11992-BKC-RBR.
United States Bankruptcy Court, S.D. Florida, Broward Division.
November 19, 2008.
*428 Brian J. Cohen, Esq, Coral Springs, FL, for Debtor.
ORDER DENYING MOTION TO COVERT CASE TO CHAPTER 13 [D.E. 150]
RAYMOND B. RAY, Bankruptcy Judge.
THIS MATTER came before the Court for hearing on October 20, 2008, upon the *429 Motion to Convert Case to Chapter 13 (the "Motion to Convert") [D.E. 150], filed by the Debtor, and the objections thereto (collectively, the "Objections") [D.E. 158 and D.E. 161], filed by the Trustee and Sentra Securities Corporation, now known as AIG Financial Advisors, Inc. ("Sentra" or "AIG"). At the hearing, the Court considered the Debtor's oral testimony and trial exhibits (Ex. 1-8), as well as trial exhibits (Ex. A-T) offered by the Trustee and AIG. The Court also considered the contents of the case file [D.E. 1-170], with specific consideration given to the Motion to Dismiss Case Pursuant to 11 U.S.C. § 707(b)(3) [D.E. 47].
Having reviewed the above materials and being otherwise duly informed, the Court makes the following findings of fact and conclusions of law.
FINDINGS OF FACT
On February 21, 2008, the Debtor filed a chapter 7 bankruptcy petition. Sonya Salkin was appointed as the chapter 7 trustee. AIG as assignee is the major creditor. The Trustee filed an objection to the Debtor's discharge on July 15, 2008 (Adv. Case No. 2008-01444-RBR). AIG filed an objection to discharge on July 31. 2008 (Adv. Case No. 2008-1507-RBR). The Debtor filed the Motion to Convert in response to these adversary proceedings. Both the Trustee and AIG oppose the Motion to Convert.
The Debtor has worked in the insurance and securities industries for over thirty (30) years. On August 19, 1993, the Debtor formed Seniors Insurance Agency of South Florida, Inc. ("Seniors"), which sold securities, viatical health insurance, and other regulated products, as well as nonregulated insurance products. Regulatory requirements mandated that Seniors employees who sold securities maintained a securities license through a licensed broker who was a member of the NASD (now FINRA).[1]
From 1995 through April 30, 2003, the Florida Secretary of State listed the Debtor as the sole officer and director of Seniors. The Debtor's wife, Pamela Cherry ("Pamela"), was the Vice President of Seniors from May 2003 until May 2005, when she was deleted as an officer of the company. Since May 2005, the Debtor has been the sole officer and director of Seniors.
From August 2000 through May 2004, the Debtor maintained his securities license through Sentra, a broker-dealer and member of the NASD (now FINRA). The Debtor was a successful securities salesman at both Sentra and Seniors. Specifically, Sentra paid the following amounts to the Debtor as non-employee compensation for the years 2000-2004:
SENTRA 1099-MISC for 2000:
$673,725.49;
SENTRA 1099-MISC for 2001:
$1,416,690.08;
SENTRA 1099-MISC for 2002:
$923,232.17;
SENTRA 1099-MISC for 2003:
$600,384.62;
SENTRA 1099-MISC for 2004:
$264,237.68.[2]
The above amounts only reflect commission income the Debtor generated at Sentra for securities products. They do not *430 include commissions that the Debtor received during these years for insurance and other fixed products that Sentra did not process.
Seniors' tax returns for the tax years 2000 through 2005 reflect the following gross receipts for the years indicated (including both securities and insurance products):
-------------------------------------
Year Gross Receipts
-------------------------------------
-------------------------------------
2000 $2,074,621.00
-------------------------------------
2001 $1,924,842.00
-------------------------------------
2002 $2,295,004.00
-------------------------------------
2003 $1,282,754.00
-------------------------------------
2004 $1,135,464.00
-------------------------------------
2005 $ 425,369.00
-------------------------------------
Sentra discharged the Debtor in June 2004. In November 2004, Sentra commenced an arbitration proceeding with NASD Dispute Resolution wherein Sentra sought payment on a promissory note owed by the Debtor, and commission advances made to the Debtor. The arbitration was scheduled for hearing. The Debtor sought various postponements and delays from 2004 until February 25, 2008. On February 21, 2008, the Debtor filed a voluntary chapter 7 petition in an effort to stop the arbitration and discharge the above-referenced debt.
Just two months after Sentra commenced the NASD Arbitration proceeding, Pamela formed Cherry & Cherry, Inc. ("C & C"). C & C is a Florida corporation with its principal place of business in Broward County. Prior to February 2008, its principal address was 7124 N. Nob Hill Road, Tamarac, Florida 33321 (the "Nob Hill Office"), the same address and location used by Debtor's other company, Seniors.
Each member of Debtor's family, with the exception of him, has held a position at C & C as an officer or director. Pamela is the President, Treasurer, Director, and 50% shareholder of C & C. Justin A. Cherry ("Justin"), the son of the Debtor, is the Vice-President, Secretary, Director, and 50% shareholder of C & C. Jill Cherry ("Jill"), the daughter of the Debtor, was the Vice-President, Secretary and a Director of C & C at the time the Debtor filed his bankruptcy petition. Pamela, Justin, and Jill held these positions despite the fact the Debtor generated most of the commissions for C & C.
After Sentra terminated the Debtor, he and certain of his family members needed to locate another broker/dealer affiliation to enable them to continue their securities business. The Debtor and Justin subsequently entered into contracts with Independent Financial Group ("IFG"), an NASD/FINRA member firm in or about September 2004. However, due to the number of customer complaints filed against the Debtor and other matters, it took the Debtor approximately one year to obtain regulatory approval to transfer his securities license to IFG. He was approved to once again sell securities in Florida in or about July 2005. In the meantime, the Debtor sold insurance products to members of the public through Seniors or C & C.
Seniors has remained in business even after January 2005, but it did not conduct any new business. Since at least January 2007, Seniors' only income has been from renewals of insurance policies.
Seniors and C & C are engaged in substantially the same business. On March 31, 2005, Pamela wrote a letter to ECA Marketing, Inc. on Seniors' letterhead, to advise that Seniors was "changing our corporate name from Seniors ... to Cherry & Cherry, Inc.". On February 27, 2008, Equi-Trust Life Insurance Company wrote to Pamela (care of Seniors) confirming that Seniors' address had changed effective February 26, 2008. It was not until March *431 20, 2008 that Pamela wrote to EquiTrust to advise that Seniors is "inactive and has been changed to ... Cherry & Cherry Inc."
At the time C & C was created, all of Seniors' personnel became employees of C & C. Seniors' existing customers remained customers of the C & C employees that Seniors formerly employed.
C & C did not comply with certain corporate formalities. Stock certificates were never issued to any shareholders and no shareholders' meetings or board of directors' meetings have ever been held. The practices and procedures of C & C were the same as those of Seniors. C & C and Seniors also employed the same method for obtaining business and marketing. From January 2005 through late January or early February 2008, Seniors and C & C were located at the Nob Hill Office. C & C did not have its own lease for the Nob Hill Office; that office was leased by Seniors. At least until January 2008, Seniors and C & C utilized the same phone number. The letterheads of C & C and Seniors were used interchangeably.
C & C's corporate funds were routinely and consistently used to pay the Debtor's personal debts and expenses for no consideration, including the Debtor's cell phone, car payments, car insurance, car repairs, SunPass, life insurance payments, and attorneys' fees. C & C did not pay for the same personal debts and expenses of other family members. For example, C & C paid for the Debtor's attorneys' fees related to filing this bankruptcy, but did not pay Justin's attorney's fees related to a personal dispute. C & C also does not pay for Justin or Pamela's cellular phone, car payments, car repairs, or life insurance.
In a March 6, 2008 Broker Check Report filed with FINRA, the Debtor indicated that his current affiliation was as "an insurance agent, fixed life and annuities and health through Cherry & Cherry, Inc., President...." The Debtor claimed during his testimony that he signed this document in error, without first reading it.
The Debtor generated, from his own personal efforts, the following commissions in 2007, all of which were paid to C & C:
a. According to the commission statement generated by IFG, between January and December 2007, the Debtor generated $2,547,042.21 in total sales, which generated a commission of $150,318.93, plus $48,662.45 in commissions from overrides, for a total of $181,781.09.
b. The 1099-MISC issued by IFG to the Debtor indicates that the Debtor earned $171,296.92 in commissions in 2007.
c. The 1099-MISC issued by National Financial Partners indicates that the Debtor generated $11,581.69 in commissions in 2007.
d. The General Agent Statement of Account issued by United American Insurance Company indicates that the Debtor generated $10,684.43 in commissions in 2007.
e. Other commissions were generated by the Debtor, but he did not receive an individual 1099; rather, a 1099-MISC was issued to C & C. For example, a 1099-MISC was issued by American Investors Life Insurance Co., Inc. to C & C for $377,863.99 in commissions.
The Debtor's sales were indeed so substantial, that he won a nationwide contest and received a nine-day, fully paid trip to Switzerland for himself and Pamela.
However, the Debtor does not receive any of his commissions earned through his employment with C & C. He instead receives a small salary. The Debtor lists following income from his employment *432 with C & C in his statement of financial affairs:
-------------------------------------
Year Salary
-------------------------------------
-------------------------------------
2006 $30,457.00
-------------------------------------
2007 $28,597.00
-------------------------------------
January-March 2008 $ 7,800.00
-------------------------------------
CONCLUSIONS OF LAW
Pursuant to 11 U.S.C. § 109(e), the Debtor seeks to convert his pending chapter 7 case to one under chapter 13. § 109(e) provides in part that:
Only ... an individual with regular income and such individual's spouse, except a stockbroker or a commodity broker, that owe, on the date of the filing of the petition non-contingent, liquidated, unsecured debts of less than $336,900; non-contingent, liquidated, secured debts of less than $1,010,650 may be a debtor under Chapter 13 of this title.
AIG and the Trustee object to the conversion on the grounds that the Debtor: (a) lacks the regular income that § 109(e) requires, and (b) is attempting to convert is bad faith.
A. Regular Income
A Debtor must have "regular income" sufficient to make payments under a plan to convert a case to chapter 13. In re Donohue, 81 B.R. 714, 715 (Bankr. S.D.Fla.1987) (citing Tenney v. Terry (In re Terry), 630 F.2d 634 (8th Cir.1980)). A debtor must produce regular income through his own personal efforts. Stella v. Gov't Dev. Bank of P.R., 663 F.2d 326, 329 (1st Cir.1981).
According to his Second Amended Schedules [D.E. 170], the Debtor and Pamela have a combined average monthly income of $11,201.66. With monthly expenses of $4,385.92, the two have a monthly net income, on paper, of $6,815.74. This amount is sufficient to make the $6,804.91 monthly payments outlined in a proposed chapter 13 plan (the "Plan") [D.E. 170].
However, the Debtor and Pamela only produce a combined $4,701.66 in net monthly take home pay. Pamela produces the remaining $6,500 of their average monthly income via $3,500.00 in "regular income from operation of a business," and $3,000.00 listed under "other monthly income." The Debtor lists the latter contribution without further explanation, other than Pamela's statement in an affidavit that she will make the contribution to the household expenses. At the October 20, 2008 hearing, the Court had the following exchange with the Debtor on this issue:
THE COURT: Then what is the $3,000 family contribution that she is talking about, where is that coming from?
THE WITNESS: That's fromshe hadthat's from her own income that she has.
THE COURT: But you told me she hasn't got an income other than Cherry & Cherry?
THE WITNESS: That I know of, but I know she has income. I don't know where or what, we don't discuss that, sir. She's not a liar. If she said that she would, she will.
THE COURT: And Pamela Cherry is not here to testify today?
THE WITNESS: No, she is not.
THE COURT: And in her deposition is this covered?
MR. ZEENA: No, your Honor.
THE COURT: So I have no evidence to support the allegations contained in the statement of contribution and it's basically being impeached by your own documentation. All right. The witness may step down.
A non-debtor spouse's income must be sufficiently regular and stable to qualify as regular income of the Debtor. *433 In re Antoine, 208 B.R. 17, 19 (Bankr. E.D.N.Y.1997) (finding that gratuitous payments by family members do not, as a general rule, constitute `regular income' for purposes of chapter 13 eligibility requirements). The Debtor testified that Pamela had no income apart from C & C and could not identify the source of the additional $3,000.00 contribution. The Debtor did not list this contribution on his previous schedules [D.E. 19 and D.E. 34]. Pamela herself did not testify at the hearing. The Court thus cannot describe the $3,000.00 contribution as either regular or stable.
Additionally, Pamela has no duty to make this contribution. She is not jointly liable on any of the claims in this case, other than secured claims, and she is allegedly not dependent on the Debtor for her income. Without contributions from Pamela, the Debtor seems incapable of proposing a feasible plan.
Given the questions about the $3,000.00 contribution, the Court finds that the contribution cannot be classified as "regular income" under § 109(e). Without the benefit of this contribution, the Debtor cannot make regular plan payments.
B. Good Faith
A Chapter 13 plan must meet the nine criteria delineated in 11 U.S.C. § 1325(a). In particular, § 1325(a)(3) requires that a plan has been proposed in good faith.
The Eleventh Circuit has held that courts should consider the following list of relevant factors when determining whether a plan has been proposed in good faith:
(1) amount of debtor's income from all sources;
(2) living expenses of debtor and his dependents;
(3) amount of attorney fees;
(4) probable or expected duration of debtor's Chapter 13 plan;
(5) motivations of debtor and his sincerity in seeking relief under provisions of Chapter 13;
(6) debtor's degree of effort;
(7) debtor's ability to earn and likelihood of fluctuation in his earnings;
(8) special circumstances such as inordinate medical expense;
(9) frequency with which debtor has sought relief under Bankruptcy Reform Act and its predecessors;
(10) circumstances under which the debtor has contracted his debts and his demonstrated bona fides, or lack of same, in dealings with his creditors; and
(11) burden which plan's administration would place on trustee.
In re Kitchens, 702 F.2d 885, 888-89 (11th Cir.1983).
As stated, the Debtor's regular income is not enough to fund the Plan. The Debtor displayed a disturbing lack of knowledge concerning his own schedules and Pamela's contributions to the Plan. Finally, the Debtor has clear motivation for converting his case to chapter 13. Absent conversion, the Debtor risks the loss of his discharge and the dischargeability of the debt of his single largest creditor. Without a discharge, the Debtor may lose his securities license. Viewed in light of the Kitchens factors, these facts suggest that the Debtor is not seeking to convert his case to chapter 13 in good faith. See Kitchens, 702 F.2d at 888-89.
The Court may also examine the Debtor's pre-petition actions for evidence of a lack of good faith. Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365, 127 S. Ct. 1105, 1110-11, 166 L. Ed. 2d 956 (2007). The facts of this case indicate that the Debtor transferred his business (Seniors) *434 to certain family members in a manner designed to defraud Sentra. This behavior also illustrates a lack of good faith on the part of the Debtor.
CONCLUSION
The Court finds that the Debtor lacks the regular income to make sufficient to make payments under the Plan and is not attempting to convert his case to chapter 13 in good faith. Accordingly, pursuant to 11 U.S.C. §§ 109(e) and 1325(a)(3), it is
ORDERED that the Motion to Convert [D.E. 150] is DENIED.
NOTES
[1] The National Association of Securities Dealers, Inc. ("NASD"), now known as the Financial Industry Regulatory Authority, Inc. ("FINRA"), is the largest non-governmental regulatory for all brokers/dealers doing business in the United States.
[2] The $264,237.68 figure reflects approximately six months of compensation from Sentra to the Debtor. Sentra discharged the Debtor in June 2004. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918776/ | 730 So. 2d 1070 (1999)
Lori Seavers TEMPLETON
v.
Roger H. TEMPLETON.
No. 98 CA 2503.
Court of Appeal of Louisiana, First Circuit.
April 1, 1999.
*1072 Deborah P. Gibbs, Baton Rouge, for Plaintiff/Appellant, Lori Seavers Templeton.
Donna Wright Lee, Baton Rouge, for Defendant/Appellee, Roger H. Templeton.
Before: CARTER, C.J., SHORTESS, and WHIPPLE, JJ.
CARTER, C.J.
This is an appeal from a judgment rendered in a rule to change custody. The trial court issued a temporary custody plan which awarded each parent equal custodial periods with their four-and-a-half-year-old daughter. The trial court took other matters under advisement, including the issuance of a permanent custody plan. Lori Seavers, the mother of the child, appealed.
FACTUAL AND PROCEDURAL BACKGROUND
Lori Seavers and Roger Templeton were married on December 30, 1989, in Georgia. While Ms. Seavers and Mr. Templeton were living in Natchitoches, Louisiana, their only child, Bethany, was born in Shreveport on November 13, 1993. When Bethany was approximately one and a half years old, the family moved to Baton Rouge because Mr. Templeton had accepted a job as a minister in the Methodist Conference Office. Subsequently, in the summer of 1996, Mr. Templeton accepted a position as the minister at the University United Methodist Church. As a requirement for his new position, the family moved into the church parsonage, where they lived together until their physical separation two months later in August 1996. Mr. Templeton officially left the family home in the parsonage in September 1996.
Ms. Seavers filed a petition for divorce on October 9, 1996. In this petition, Ms. Seavers sought joint custody of Bethany and the designation as domiciliary parent, subject to reasonable "visitation" rights by Mr. Templeton. On October 18, 1996, Mr. Templeton and Ms. Seavers entered into a stipulated judgment through which they were awarded joint custody of Bethany, with Ms. Seavers being named domiciliary parent. The stipulated judgment awarded Mr. Templeton "visitation" with Bethany one to two nights during the week; an additional evening during the week; weekends; and equally shared holidays. It further provided Mr. Templeton with two two-week custodial periods each summer if Ms. Seavers moved out of state. The judgment expressly provided:
[T]he parties have entered into this stipulation with the understanding and acknowledgment that [Ms. Seavers] may move with Bethany out of state, even as far as Minnesota or Wisconsin. It is agreed by the parties that [Ms. Seavers] has significant and valid reasons for making such a move, should she ultimately do so. It is stipulated and agreed that should [Ms. Seavers] move out of state, that such a move shall not constitute a change of circumstances for purposes of modifying this custody agreement since such a move is specifically contemplated. However, it is stipulated and agreed that if [Ms. Seavers] moves out of state, although custody and the domiciliary designation will not be modified, that the visitation may be modified.
On April 22, 1997, Mr. Templeton filed a Rule to Show Cause Why a Divorce Should Not Be Granted and for Other Incidental Matters. In the rule, Mr. Templeton alleged that Ms. Seavers had announced her intent to move to Minnesota in June 1997, and take Bethany with her, and that Mr. Templeton was not agreeable to Bethany being moved. Mr. Templeton sought sole custody or joint custody with him being named domiciliary parent. In either case, Mr. Templeton asked that Ms. Seavers be allowed reasonable "visitation."
A judgment of divorce was rendered May 13, 1997. Subsequently, on May 30, 1997, the parties entered into another stipulated judgment wherein they agreed that Mr. Templeton and Ms. Seavers would have joint custody of Bethany, with Ms. Seavers being the primary domiciliary parent. Mr. Templeton agreed to the following "visitation" schedule: 1) a three week period in May and June 1997; a two week period in December 1997/January 1998; two weeks in April/May 1998; a four week period in July/August 1998; three weeks in December 1998; three *1073 weeks in April 1999; and six weeks in the summer of 1999; and 2) liberal "visitation" with Mr. Templeton, including visits by Mr. Templeton to Minnesota and weekend visits by Bethany to Louisiana for observation of special events. The stipulated judgment stated that Mr. Templeton understood that Ms. Seavers would be moving with Bethany to Minnesota at the end of May 1997; and that the parties agreed to reassess this custody and "visitation" situation without showing a change of circumstances within one year.
On August 25, 1997, Ms. Seavers filed a Rule to Set Child Support. In response, Mr. Templeton filed an Answer to Rule to Set Child Support and Rule to Change Custody on September 29, 1997. In this answer and rule, Mr. Templeton sought to be named primary domiciliary parent. He also alleged that if he were named primary domiciliary parent, he would waive any request for child support from Ms. Seavers. However, approximately one month later, on November 13, 1997, Mr. Templeton obtained a new attorney and filed a Rule for Change of Custody. In this rule, Mr. Templeton alleged that he should be named primary domiciliary parent because 1) the distance makes it difficult for Mr. Templeton to exercise "visitation" with Bethany as frequently as outlined in the October 22, 1996 stipulated judgment;[1] and 2) Ms. Seavers and Bethany were living with Ms. Seavers' parents, including Ms. Seavers' father who had molested Ms. Seavers as a child. Alternatively, Mr. Templeton requested an award of fifty-fifty shared custody because Bethany was not yet of school age. Contrary to his assertion in the September 1997 rule for custody change, Mr. Templeton specifically requested child support from Ms. Seavers in the event he was named primary domiciliary parent.
On June 2, 1998, the trial court rendered judgment continuing the award of joint custody, but ordering the parties to alternate equal custodial periods of Bethany through August 1999. The judgment set forth an interim custody plan which placed Bethany with each parent in alternating three-month intervals. Thus, pursuant to the judgment, Bethany would spend three months with Mr. Templeton in Baton Rouge, then spend three months with Ms. Seavers in Minnesota, commencing June 1, 1998. This alternating equal custody plan was to continue through August 1999. The judgment further provided that the trial court would render written reasons on the domiciliary parent designation issue, as well as a custody plan to be effective after August 31, 1999; and would render written reasons as to the issues of child support and the community property partition. To date, the trial court has not rendered written reasons on any of these other matters.
Ms. Seavers appealed the June 2, 1998 judgment and moved for a stay of the judgment and an expedited hearing. Mr. Templeton opposed the motion. A panel of this court issued an order denying the stay request, but granting the motion for an expedited hearing. Subsequently, Mr. Templeton filed a motion to dismiss Ms. Seavers' appeal, contending that the June 2, 1998 judgment was not a final appealable judgment. Ms. Seavers filed a Motion to Reconsider Request for Stay and/or Motion to Vacate Judgment and/or Motion to Convert Appeal into Writ Application. This court issued orders referring these motions to the merits.
MOTION TO DISMISS
In his motion to dismiss, Mr. Templeton asserts that because the judgment did not grant all of the relief prayed for by the parties, it is a partial judgment. Accordingly, to be appealable as a final judgment, the requirements of LSA-C.C.P. art. 1915[2] had *1074 to be met, namely, the parties had to agree that the judgment was a final judgment or the court had to designate the partial judgment as a final judgment after expressly determining that there is no just reason for delay. Because neither of these requirements was met, Mr. Templeton sought to have the appeal dismissed.
We agree that the June 2, 1998 judgment was a partial judgment and thus, not a final appealable judgment. We further agree that none of the prerequisites contained in LSA-C.C.P. art. 1915 were met in this case to cause the partial judgment to be a final appealable judgment. Accordingly, we grant Mr. Templeton's motion to dismiss the appeal.
However, in the interests of justice, we will exercise our supervisory jurisdiction and review this non-appealable judgment by granting Ms. Seavers' motion to convert the appeal into an application for supervisory writs. We find this action to be necessary under these particular facts where a five-year-old child is being transported some 1300 miles between Minnesota and Louisiana every three months, resulting in a very unstable situation for the child. Accordingly, we will rule on the merits of the application.
ASSIGNMENTS OF ERROR
In her brief, Ms. Seavers asserts eight assignments of error, most of which pertain to the issue of whether the trial court erred in temporarily modifying the custody plan to give each parent an alternating three-month visitation period with Bethany. The eight assignments of error can be classified into three categories. The first category addresses the change in the custody plan. Ms. Seavers argues that the trial court erred in the fifty-fifty custody award between parents who live in Louisiana and Minnesota when there was no testimony that this plan was in Bethany's best interest and where the court had no reasonable factual basis to justify the fifty-fifty custody arrangement; the trial court applied incorrect legal principles; and the trial court effectively reversed the decision of the domiciliary parent to send Bethany to kindergarten. The second category of assignments of error addresses the trial court's decision to exclude the testimony and records of Mr. Templeton's mental health professional, which testimony would have impeached Mr. Templeton's credibility at trial. The final category addresses the trial court's failure to render a decision on the various matters that it took under advisement at the conclusion of the trial.
TEMPORARY MODIFICATION OF JOINT CUSTODY VISITATION PLAN
In the May 1997 stipulated judgment pertaining to the custody of Bethany, the parties expressly agreed to joint custody, with Ms. Seavers being designated as the primary domiciliary parent. Although Mr. Templeton subsequently filed two pleadings respectively entitled "Answer to Rule to Set Child Support and Rule to Change Custody" and "Rule for Change of Custody," Mr. Templeton did not seek to terminate the joint custody designation. Rather, he sought a change in the primary domiciliary parent designation and an attendant modification to the "visitation" schedule.
The trial court in this case expressly found that "joint custody is in the best interest of Bethany" despite the fact that neither Mr. Templeton nor Ms. Seavers was seeking sole custody of Bethany. However, the trial court took the actual contested issues under advisement, one of which was whether the primary domiciliary parent status of Ms. Seavers should be changed. Then, without deciding whether there should be a change in the designation of Ms. Seavers as primary domiciliary parent, the trial court ordered Bethany, who was four and a half years old at the time of the trial, to spend three months at a time with each parent, alternating visits between Louisiana and Minnesota. Compliance with this order meant that Bethany would be unable to complete the kindergarten program in Minnesota in which she had been enrolled. We must now decide *1075 if this constituted error on the part of the trial court.
Joint custody does not necessarily mean a fifty-fifty sharing of time. Bercegeay v. Bercegeay, 96-0516, p. 4 (La.App. 1st Cir.2/14/97); 689 So. 2d 674, 676. Distance between the parents inherently tends to prevent an equal sharing of physical custody where the child is of school age. The courts have been willing to "split the child" only when the parents live a short distance from one another and the child is not required to attend different schools. Bercegeay, 689 So.2d at 676.
The trial court erred in implementing an interim custody plan that prevented Bethany from regularly attending and successfully completing the kindergarten program at her school in Minnesota. Although Bethany was not eligible to attend kindergarten in the fall of 1998 in Louisiana by virtue of her birth date, she had been approved to attend kindergarten in Minnesota.[3] Accordingly, Bethany was a child of school age with parents living 1300 miles apart. These factors prohibit equal sharing of physical custody, and it was error for the trial court to order an equal custody plan. This point is further demonstrated by the following facts.
In July 1997, Bethany was admitted in the preschool program at the River Hills Early Childhood Center (River Hills) in Minnesota. Melissa Hansen is a preschool teacher at River Hills. Bethany was in Ms. Hansen's combined three-and four-year-old class. Ms. Hansen testified that Bethany was shy and quiet when she first attended River Hills, but that after a few weeks, Bethany was clearly happy, talkative, and had made several close friends. Pursuant to River Hills' school policy and Minnesota education requirements, the teachers must test the children twice a year. Accordingly, they administered the Learning Accomplishment Profile Test to Bethany in February 1998. Bethany scored very well on the test, which results led to the recommendation that Bethany attend kindergarten at River Hills in the fall of 1998. When Bethany was told of the recommendation, she became very excited.
Jodi Soberg is a preschool and kindergarten teacher at River Hills. Ms. Soberg was Bethany's teacher when Bethany began attending River Hills in July 1997. According to Ms. Soberg, Bethany wanted to be with the teacher all the time when she first arrived at River Hills. However, as the year went on, Bethany began interacting with her peers and developed primary friendships with about five of her classmates. Ms. Soberg was one of the testers for Bethany's Learning Accomplishment Profile Testing. Ninety percent of Bethany's testing results were above the six-year-old level. It has been Ms. Soberg's experience that using this test has been an accurate predictor of how well a child will perform in kindergarten. Additionally, most of Bethany's primary friends in her preschool class were going to start kindergarten at River Hills in the fall of 1998. Consequently, Ms. Soberg was in agreement with the recommendation that Bethany attend kindergarten in the fall of 1998.
In March 1998, Ms. Seavers notified Mr. Templeton in writing about Bethany's assessment by River Hills and the teachers' recommendations that Bethany be enrolled in the kindergarten class in the fall of 1998. Ms. Seavers also sent Mr. Templeton a brochure about the kindergarten program. Mr. Templeton never voiced any objection to this decision made by Ms. Seavers as the primary domiciliary parent. Thus, Ms. Seavers enrolled Bethany in the kindergarten program at River Hills for the fall of 1998.
The trial court obviously disregarded the above facts when it imposed the interim fifty-fifty custody plan at the conclusion of the trial. By having to miss classes at River Hills for alternating three-month periods, Bethany could not successfully complete the kindergarten program that she had been enrolled *1076 in by Ms. Seavers as the domiciliary parent.
LSA-R.S. 9:335B(3) provides as follows:
The domiciliary parent shall have authority to make all decisions affecting the child unless an implementation order provides otherwise. All major decisions made by the domiciliary parent concerning the child shall be subject to review by the court upon motion of the other parent. It shall be presumed that all major decisions made by the domiciliary parent are in the best interest of the child.
As previously stated, Mr. Templeton did not object to Ms. Seavers' March 1998 decision to enroll Bethany in kindergarten for the upcoming school year, despite the fact that he had a rule to change custody pending. Although Mr. Templeton argued at the trial that Bethany was not old enough to attend kindergarten under Louisiana law, he did not present any evidence that Bethany's attendance in the 1998-1999 kindergarten program was not in her best interest. Thus, there was no evidence to rebut the presumption that this decision by Ms. Seavers, made with notice to Mr. Templeton, was not in Bethany's best interest. Therefore, it was error for the trial court to negate this decision under the facts of this case. For these reasons, we find that the trial court erred in imposing the temporary fifty-fifty custody plan.
Additionally, we are concerned about the trial court's action in making such a drastic change to the custody plan considering the trial court's decision to defer ruling on the primary issues of domiciliary parent status, child support and the community property partition. Although the modified custody plan was deemed "temporary" or "interim," the trial court's plan governed fifteen months of custodial periods. To date, the trial court has not rendered a decision on any of the primary issues which were taken under advisement. This interim order has caused a massive upheaval in the routine that Ms. Seavers had worked to establish with young Bethany for nearly a year in Minnesota. We cannot ignore the fact that Mr. Templeton originally consented to the move to Minnesota and worked out an extended custody plan that he believed would facilitate his relationship with Bethany despite the move. Nor can we ignore the timing of the filing of Mr. Templeton's rule to change custody. This rule was filed in immediate response to Ms. Seavers' rule to set child support. It is interesting to note that in the answer and rule to change custody, Mr. Templeton waived any claim to child support from Ms. Seavers if he were awarded primary custody of Bethany. However, in his subsequent rule to change custody filed with the assistance of a new attorney, Mr. Templeton specifically sought a child support award.
Finally, we note the lack of a factual basis to establish that the fifty-fifty interim custody plan imposed by the trial court was in the best interest of Bethany. The only expert testimony presented at the trial established that a plan such as the interim plan imposed by the trial court is not in the best interest of a child Bethany's age.
Marcia Cox, a clinical social worker, was accepted by the trial court as an expert in the field of child development and family systems. Ms. Cox testified that a fifty-fifty split custody schedule with a child Bethany's age would be inappropriate in the case because of the distance between Minnesota and Louisiana. Ms. Cox further noted the difficulty in a four-and-a-half-year-old changing schools back and forth, and Bethany's need for stability in her life. In Ms. Cox's professional opinion, it would be very confusing to a child who has moved 1300 miles away in a year and established a residence, to change residences again with a different domiciliary parent. Therefore, Ms. Cox would not recommend any other custody plan for a four-or five-year-old child traveling between Louisiana and Minnesota than the plan agreed to by the parties in the May 1997 stipulated judgment.
For these reasons, we vacate the judgment of the trial court ordering alternating equal three-month custodial periods with each parent in different states. We reinstate the joint custody plan contained in the May 1997 stipulated judgment until the trial court issues a ruling on the matters taken under advisement, including the issuance of a permanent custody plan. Because we have vacated *1077 the judgment on the grounds set forth above, we need not address Ms. Seavers' assignments of error which pertain to the exclusion of evidence offered by Mr. Templeton's mental health professional.
DE NOVO REVIEW AND RULING ON MATTERS TAKEN UNDER ADVISEMENT
Ms. Seavers further argues that the trial court violated LSA-R.S. 13:4207 by not rendering judgment on matters taken under advisement within thirty days from the time the case was submitted for decision. Accordingly, Ms. Seavers urges this court to conduct a de novo review and render judgment on the matters taken under advisement.
We agree that the trial court has violated LSA-R.S. 13:4207 by not rendering a decision within thirty days on the matters taken under advisement. However, we are not aware of any authority, and Ms. Seavers has not cited us any, which would allow us to conduct a de novo review and render judgment on these matters on this basis. Therefore, this assignment of error is without merit.
CONCLUSION
Accordingly, we grant Ms. Seavers' writ and vacate that part of the trial court judgment ordering the alternating equal custodial periods between Ms. Seavers and Mr. Templeton. We reinstate the "visitation" schedule contained in the May 1997 stipulated judgment. Finally, we remand the matter to the trial court for a decision on the domiciliary parent designation and the other matters that were taken under advisement. Costs of this appeal are assessed to Mr. Templeton.
APPEAL CONVERTED TO SUPERVISORY WRIT; WRIT GRANTED; JUDGMENT VACATED IN PART; MAY 1997 STIPULATED JUDGMENT REINSTATED; AND MATTER REMANDED.
NOTES
[1] The rule referred to the October 22, 1996 stipulated judgment, despite the fact that a modified visitation plan was outlined in the subsequent May 1997 stipulated judgment.
[2] LSA-C.C.P. art. 1915B provides in pertinent part as follows:
(1) When a court renders a partial judgment or partial summary judgment or sustains an exception in part, as to one or more but less than all of the claims, demands, issues, theories, or parties ... the judgment shall not constitute a final judgment unless specifically agreed to by the parties or unless designated as a final judgment by the court after an express determination that there is no just reason for delay.
(2) In the absence of such a determination and designation, any order or decision which adjudicates fewer than all claims or the rights and liabilities of fewer than all the parties, shall not terminate the action as to any of the claims or parties and shall not constitute a final judgment for the purpose of an immediate appeal.
[3] Minnesota law also imposes a minimum age requirement for kindergarten attendance. Pursuant to M.S. 120A.20, Subd. I., before a pupil can be admitted to any public school as a kindergarten pupil, the pupil must be at least five years of age on September 1st of the calendar year in which the school year for which the pupil seeks admission commences. However, this statute also allows any school board to establish a policy for admission of selected pupils at an earlier age. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1921234/ | 130 S. Ct. 541 (2009)
Cecil C. JOHNSON, Petitioner,
v.
Phil BREDESEN, Governor of Tennessee, et al.
No. 09-7839 (09A521).
Supreme Court of United States.
December 2, 2009.
STEVENS, J.
The application for stay of execution of sentence of death presented to Justice STEVENS and by him referred to the Court is denied. The petition for a writ of certiorari is denied.
*542 Statement of Justice STEVENS, with whom Justice BREYER joins, respecting the denial of certiorari.
Petitioner Cecil Johnson, Jr., has been confined to a solitary cell awaiting his execution for nearly 29 years.[1] Johnson bears little, if any, responsibility for this delay. After his execution date was set and on the day the Governor of Tennessee denied him clemency, Johnson brought this Eighth Amendment challenge under Rev. Stat. § 1979, 42 U.S.C. § 1983 to enjoin the State from executing him after this lengthy and inhumane delay. See Lackey v. Texas, 514 U.S. 1045, 1045-1046, 115 S. Ct. 1421, 131 L. Ed. 2d 304 (1995) (STEVENS, J., statement respecting denial of certiorari); see also Thompson v. McNeil, 556 U.S. ___, ___, 129 S. Ct. 1299, ___ L.Ed.2d ___ (2009) (same); id., at 1299, (BREYER, J., dissenting from denial of certiorari). Because I remain steadfast in my view "that executing defendants after such delays is unacceptably cruel," id., at 1300, I would grant the stay application and the petition for certiorari.
Johnson was tried and convicted of three counts of first degree murder in 1981. He continues to maintain his innocence. Complaint ¶ 9. There was no physical evidence tying Johnson to the crime. See Johnson v. Bell, 525 F.3d 466, 490 (C.A.6 2008) (Cole, J., dissenting). In 1992 a change in state law gave Johnson access, for the first time, to substantial evidence undermining key eyewitness testimony against him. Id., at 473. This evidence calls into question the persuasive force of the eyewitness' testimony, and, consequently, whether Johnson's conviction was infected with constitutional error. See Brady v. Maryland, 373 U.S. 83, 83 S. Ct. 1194, 10 L. Ed. 2d 215 (1963); Johnson, 525 F.3d, at 490 (Cole, J., dissenting). The merits of Johnson's Brady claim are not before us; we denied certiorari on this issue several months ago. No. 08-7163, 557 U.S. ___, ___ S.Ct. ___, ___ L.Ed.2d ___ (2009). But the constitutional concerns raised by Judge Cole's dissent only underscore my strongly held view that state-caused delay in state-sponsored killings can be unacceptably cruel. See Thompson, 556 U.S., at ___, 129 S.Ct., at 1300-01.[2] We cannot know as a definitive matter whether, if the State had not withheld exculpatory evidence, Johnson would have been convicted of these crimes. We do know that Johnson would not have waited for 11 years on death row before the State met its disclosure obligations. In short, this is as compelling a case as I have encountered for addressing the constitutional concerns that I raised in Lackey.
This case deserves our full attention for another reason. Johnson has brought his Eighth Amendment claim under 42 U.S.C. § 1983. More typically, such claims have been brought in habeas corpus. See, e.g., Thompson v. Secretary for Dept. of Corrections, 517 F.3d 1279, 1280 (C.A.11 2008) (per curiam); Allen v. Ornoski, 435 F.3d 946, 956-960 (C.A.9 2006); cf. Knight v. Florida, 528 U.S. 990, 998, 120 S. Ct. 459, 145 L. Ed. 2d 370 (1999) (BREYER, *543 J., dissenting from denial of certiorari) (discussing Lackey claim raised after state resentencing on successful habeas corpus petition). This case's posture raises two important questions: whether a Lackey claim is cognizable under §1983; and, if it is not, whether a second federal habeas petition raising a Lackey claim is a successive petition under 28 U.S.C. § 2244(b)(2). The Sixth Circuit agreed with the District Court's conclusion that a standalone Lackey challenge under §1983 is the "functional equivalent" of a habeas corpus challenge, App. to Pet. for Cert. B-9 (District Court opinion), and thus must proceed under 28 U.S.C. § 2244(b)(2)'s successive petition bar, see Allen, 435 F.3d, at 956-960. The resolution of these questions below poses a nearly insurmountable hurdle for those seeking to raise similar Eighth Amendment challenges.
In my view, these procedural questions are inextricably linked to the two underlying evils of intolerable delay. First, the delay itself subjects death row inmates to decades of especially severe, dehumanizing conditions of confinement. See Thompson, 556 U.S., at ___, 129 S.Ct., at 1299-1300 (STEVENS, J., respecting denial of certiorari); Lackey, 514 U.S., at 1046-1047, 115 S. Ct. 1421 (same); see also Furman v. Georgia, 408 U.S. 238, 288, 92 S. Ct. 2726, 33 L. Ed. 2d 346 (1972) (Brennan, J., concurring) ("[T]he prospect of pending execution exacts a frightful toll during the inevitable long wait between the imposition of sentence and the actual infliction of death"). Second, "delaying an execution does not further public purposes of retribution and deterrence but only diminishes whatever possible benefit society might receive from petitioner's death." Thompson, 556 U.S., at ___, 129 S.Ct., at 1300 (STEVENS, J., respecting denial of certiorari). In other words, the penological justifications for the death penalty diminish as the delay lengthens. Id., at 1300; Lackey, 514 U.S., at 1046-1047, 115 S. Ct. 1421. Thus, I find constitutionally significant both the conditions of confinement and the nature of the penalty itself.
In light of these coextensive concerns, I find it quite difficult to conclude, as the courts below did, that Johnson's § 1983 action is the functional equivalent of a habeas petition. Both the gravamen of petitioner's complaint and one of the central concerns animating Lackey is that the "method" of the State's execution of a death sentencea lengthy delay due in no small part to the State's malfeasance in this caseis itself unconstitutional. We have held that "method" of execution claims are cognizable under § 1983. Hill v. McDonough, 547 U.S. 573, 580, 126 S. Ct. 2096, 165 L. Ed. 2d 44 (2006); see also Nelson v. Campbell, 541 U.S. 637, 645-647, 124 S. Ct. 2117, 158 L. Ed. 2d 924 (2004). But a successful Lackey claim would have the effect of rendering invalid a particular death sentence, suggesting that Johnson's Lackey claim "directly call[s] into question the `fact' or `validity' of the sentence itself," Nelson, 541 U.S., at 644, 124 S. Ct. 2117. Were petitioner to prevail, it is true that the State will not be able to go forward in this case "by simply altering its method of execution," ibid. On the other hand, it is equally true that, had the State not carried out his sentence in this intolerably cruel manner, the State would have been quite free, as a constitutional matter, to "go forward with the sentence," ibid.
Although the Court of Appeals' treatment of Johnson's claim as a habeas challenge is a close question, its decision to apply § 2244(b)(2)'s successive habeas bar is not. The Sixth Circuit's decision has the curious effect of forcing Johnson to bring a Lackey claim prematurely, possibly *544 at a time before it is ripe.[3] Moreover, construing this claim as the functional equivalent of a habeas action also has the unfortunate effect of inviting further delay: A petitioner would be compelled to return to state court to exhaust his Lackey claim in the first instance under 28 U.S.C. § 2254(b)(1). For these reasons, I am persuaded that a Lackey claim, like a claim that one is mentally incompetent to be executed, should, at the very least, not accrue until an execution date is set. See Ceja v. Stewart, 134 F.3d 1368, 1371-1372 (C.A.9 1998) (Fletcher, J., dissenting); cf. Panetti v. Quarterman, 551 U.S. 930, 945, 127 S. Ct. 2842, 168 L. Ed. 2d 662 (2007).
When I first expressed my views in Lackey, I did not envision such procedural obstacles to the consideration of a claim that nearly three decades of delay on death row, much of it caused by the State, has deprived a person of his Eighth Amendment right to avoid cruel and unusual punishment. One does not need to accept the proposition "that the imposition of the death penalty represents `the pointless and needless extinction of life with only marginal contributions to any discernible social or public purposes,'" Baze v. Rees, 553 U.S. 35, ___, 128 S.Ct. at 1551 (2008) (STEVENS, J., concurring in judgment) (quoting Furman, 408 U.S., at 312, 92 S. Ct. 2726 (White, J., concurring)), in order to agree that the imposition of the death penalty on these extreme facts is without constitutional justification. Most regrettably, a majority of this Court continues to find these issues not of sufficient weight to merit our attention.
THOMAS, J., concurring.
Justice THOMAS, concurring in the denial of certiorari. In 1981, the petitioner in this case was convicted and sentenced to death for three brutal murders he committed in the course of a robbery. He spent the next 29 years challenging his conviction and sentence in state and federal judicial proceedings and in a petition for executive clemency. His challenges were unsuccessful. He now contends that the very proceedings he used to contest his sentence should prohibit the State from carrying it out, because executing him after the "lengthy and inhumane delay" occasioned by his appeals would violate the Eighth Amendment's prohibition on "cruel and unusual" punishment. See Ante, at 542 (citing Lackey v. Texas, 514 U.S. 1045, 1045-1046, 115 S. Ct. 1421, 131 L. Ed. 2d 304 (1995) (STEVENS, J., statement respecting denial of certiorari)).
It has been 14 years since JUSTICE STEVENS proposed this "novel" Eighth Amendment argument. Lackey, supra, at 1045, 115 S. Ct. 1421. I was unaware of any constitutional support for the argument then. See Knight v. Florida, 528 U.S. 990, 990, 120 S. Ct. 459, 145 L. Ed. 2d 370 (1999) (THOMAS, J., concurring in denial of certiorari). And I am unaware of any support for it now. There is simply no authority "in the American constitutional tradition or in this Court's precedent for the proposition that a defendant can avail himself of the panoply of appellate and collateral procedures and then complain when his execution is delayed." Thompson *545 v. McNeil, 556 U.S. ___, 129 S.Ct. at 1301 (2009) (THOMAS, J., concurring in denial of certiorari) (internal quotation marks and citation omitted). Petitioner cites no evidence otherwise and, for all his current complaints about delay, did not raise a Lackey objection to the speed of his proceedings in the 1999 habeas petition he filed 18 years into his tenure on death row. See ante, at 543-544, n. 3.
Undeterred, Justice STEVENS insists that petitioner's Eighth Amendment claim warrants relief. It does not, and Justice STEVENS' arguments to the contrary stand in stark contrast not only to history and precedent, but also to his own recent statement in Muhammad v. Kelly, 558 U.S. ___, 130 S. Ct. 541, ___ L.Ed.2d ___, 2009 WL 3642518 (2009) (slip op., at 1) (statement respecting denial of certiorari) decrying the "perversity of executing inmates before their appeals process has been fully concluded." In Justice STEVENS' view, it seems the State can never get the timing just right. The reason, he has said, is that the death penalty itself is wrong. McNeil, supra, at 1300 (statement respecting denial of certiorari) (citing Baze v. Rees, 553 U.S. 35, ___, 128 S.Ct. at 1546, 1551 (2008) (STEVENS, J., concurring in judgment)). But that is where he deviates from the Constitution and where proponents of his view are forced to find their support in precedent from the "European Court of Human Rights, the Supreme Court of Zimbabwe, the Supreme Court of India, or the Privy Council." Knight, supra, at 990, 120 S. Ct. 459 (THOMAS, J. concurring in denial of certiorari).
Eager to distinguish this case from Knight and all the other cases in which the Court has refused to grant relief on Lackey grounds, Justice STEVENS asserts that the petition here presents important questions regarding the proper procedural vehicle for bringing a Lackey claim that merit this Court's review. First, the procedural posture in which a Lackey claim arises does not change the fact that the claim itself has no constitutional foundation. Accordingly, the claim's procedural posture does not matter for purposes of merits relief; a Lackey claim would fail no matter how it arrived. In addition, Justice STEVENS concedes that the unusual contours of petitioner's Eighth Amendment claim are the reason the procedural questions in this case are difficult. Given that, our order in this case rightly adheres to our precedents denying relief on Lackey claims, however presented. Second, even if the procedural claims in this case had merit, they would not warrant review because Justice STEVENS admits that a "successful Lackey claim would have the effect of rendering invalid a particular death sentence," ante, at 543, and thus would "`directly call into question the "fact" or "validity" of the sentence itself,'" ante, at 543 (quoting Nelson v. Campbell, 541 U.S. 637, 644, 124 S. Ct. 2117, 158 L. Ed. 2d 924 (2004)). Accordingly, the Sixth Circuit plainly did not err in treating petitioner's § 1983 motion as "the functional equivalent of" a habeas petition. Ante, at 543. And for the reasons above, the panel's treatment of the petition as a second or successive petition would not, even if reversed, entitle petitioner to the merits relief he seeks.
At bottom, Justice STEVENS' arguments boil down to policy disagreements with the Constitution and the Tennessee legislature. Ante, at 542-543 ("`[D]elaying an execution does not further public purposes of retribution and deterrence but only diminishes whatever possible benefit society might receive from petitioner's death.... In other words, the penological justifications for the death penalty diminish as the delay lengthens." (internal quotation marks and citation omitted)). Such views, no matter how "steadfast[ly]" held, *546 ante, at 542, are not grounds for enjoining petitioner's execution or for granting certiorari on the procedural questions that attend his Lackey claim. As long as our system affords capital defendants the procedural safeguards this Court has long endorsed, defendants who avail themselves of these procedures will face the delays Justice STEVENS laments. There are, of course, alternatives. As Blackstone observed, the principle that "punishment should follow the crime as early as possible" found expression in a "statute, 25 Geo. II. c. 37," decreeing that "in case of murder, the judge shall in his sentence direct execution to be performed on the next day but one after sentence passed." 4 W. Blackstone, Commentaries *397. I have no doubt that such a system would avoid the diminishing justification problem JUSTICE STEVENS identifies, but I am equally confident that such a system would find little support from this Court. See Knight, 528 U.S., at 990 n. 1, 120 S. Ct. 459 (THOMAS, J. concurring). I thus concur in the denial of certiorari.
NOTES
[1] "Inmates who are under a sentence of death shall be single-celled and housed in a maximum security unit separate from the general population." State of Tennessee, Dept. of Correction, Administrative Policies and Procedures, Index # 506.14(VI)(B)(2) (2009), online at http://www.state.tn.us/correction/pdf/ 506-14.pdf (as visited Dec. 1, 2009).
[2] The possibility that there was constitutional error in Johnson's case is far from unique. See Root, Cruel and Unusual Punishment: A Reconsideration of the Lackey Claim, 27 N.Y.U. Rev. L. & Soc. Change 281, 312-313 (2002) (discussing error rates in capital trials) (citing J. Liebman, J. Fagan, & V. West, A Broken System: Error Rates in Capital Cases, 1973-1995, p. 5 (2000)).
[3] The State argues, and the courts below agreed, that Johnson should have brought his Eighth Amendment claim in the federal habeas proceeding he commenced in 1999. At that point in time, Johnson had been on death row for 18 years. This was one year longer than the petitioner in Lackey. Of course, by 1999, the Court had denied certiorari in Lackey and in Knight v. Florida, 528 U.S. 990, 120 S. Ct. 459, 145 L. Ed. 2d 370, which involved a 19-year delay. Therefore, when Johnson filed his federal habeas action, he had reason to believe that an 18-year delay was not long enough to trigger Eighth Amendment concerns and that any Lackey-based claim was premature. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918805/ | 421 Pa. 157 (1966)
Commonwealth ex rel. Cunningham, Appellant,
v.
Maroney.
Supreme Court of Pennsylvania.
Argued March 17, 1966.
April 19, 1966.
Before MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.
David B. Fawcett, Jr., with him Dickie, McCamey & Chilcote, for appellant.
*158 Edwin J. Martin, Assistant District Attorney, with him Robert W. Duggan, District Attorney, for appellees.
OPINION BY MR. JUSTICE ROBERTS, April 19, 1966:
In 1963, appellant was tried and convicted of murder in the second degree. Trial was by jury and throughout the proceedings appellant was represented by court appointed counsel. A post trial motion for a new trial was denied and appellant was sentenced to a term of imprisonment of 10 to 20 years. No appeal was taken.
On October 8, 1964, appellant filed a petition for a writ of habeas corpus in the court below challenging his conviction. Counsel was appointed and a hearing on the petition was held. On September 2, 1965, an order was entered denying the petition. From this order appellant appeals.
In his petition for habeas corpus, appellant raises a number of contentions. However, in light of the disposition we make, we find it necessary to consider but one.
Appellant contends that following his conviction and the denial of his motion for a new trial, he requested trial counsel to perfect an appeal to this Court, but that counsel failed to act upon such request within the time allowed by law. By reason of counsel's failure to perfect an appeal, appellant contends that he was deprived of his constitutional right to the assistance of counsel on appeal as set forth in the decision of the Supreme Court of the United States in Douglas v. California, 372 U.S. 353, 83 S. Ct. 814 (1963), and the decisions of this Court in Commonwealth ex rel. Branam v. Myers, 420 Pa. 77, 216 A.2d 89 (1966), Commonwealth ex rel. Robinson v. Myers, 420 Pa. 72, 215 A.2d 637 (1966), and Commonwealth ex rel. Stevens v. Myers, 419 Pa. 1, 213 A.2d 613 (1965).
*159 It is settled law since the decision in Douglas v. California, supra, that an indigent defendant is constitutionally entitled to the assistance of counsel on an appeal as of right. Moreover, it is equally settled that a necessary incident of that right is the assistance of counsel in the task of perfecting such an appeal. Commonwealth ex rel. Branam v. Myers, supra; Commonwealth ex rel. Robinson v. Myers, supra; Commonwealth ex rel. Stevens v. Myers, supra.
Appellant, having been convicted of murder, had an absolute right of appeal to this Court. Act of February 15, 1870, P.L. 15, § 1, 19 P.S. § 1186. However, the failure of appellant to take such an appeal within the time allowed by law will preclude the assertion of such right unless the failure to do so resulted from an unconstitutional deprivation of the assistance of counsel. Commonwealth ex rel. Robinson v. Myers, supra; Commonwealth ex rel. Stevens v. Myers, supra.
In denying appellant's claim for relief, the court below found that following the denial of appellant's motion for a new trial, counsel visited him at the Allegheny County Jail at which time the matter of an appeal was discussed; that counsel advised appellant that unless new evidence was uncovered there was no basis for an appeal; and that "relator accepted this advice and decided not to appeal. . . ." The court proceeded to find that appellant had acquiesced in the recommendation of counsel that no appeal be taken and concluded that appellant had thus waived his right to the assistance of counsel. With this conclusion we are unable to agree.
At the habeas corpus hearing, appellant testified that despite trial counsel's disinclination to pursue an appeal, he was desirous that such action be taken. Trial counsel, however, testified that although a desire to appeal had been expressed, appellant had not pressed the matter when informed of counsel's view that an appeal would be unavailing.
*160 In our view, trial counsel's testimony, taken in the light most favorable to the Commonwealth, will not support a finding of acquiescence sufficient to constitute a waiver.
Trial counsel testified that in response to appellant's inquiries with respect to an appeal, he informed appellant that no basis for an appeal was present absent the discovery of new evidence. In so informing appellant, trial counsel failed to apprise appellant of other grounds upon which an appeal could be predicated. By suggesting that an appeal would be fruitful only in the event that new evidence was uncovered, counsel may well have created the impression that only such circumstances would support an appeal, rather than, as we assume was intended, would offer a significant chance for appellant to prevail.
So long as a possibility of such misimpression exists, we are unable to conclude that appellant's acquiescence constituted an "intentional relinquishment or abandonment of a known right." Johnson v. Zerbst, 304 U.S. 458, 464, 58 S. Ct. 1019, 1023 (1938). Absent such abandonment, we are unable to find waiver of appellant's constitutional right to the assistance of counsel in the perfecting of an appeal.
The sentence imposed following appellant's conviction was the maximum permitted by law. Thus, a decision to forego appeal could not have been based upon the risk that a new trial, were defendant to prevail on appeal, would expose him to a harsher sentence. Under such circumstances, our conclusion that the probability that appellant's acquiescence in counsel's recommendations may have been based upon an inadequate appreciation of both the grounds and consequences of an appeal is strengthened.
Had appellant the funds with which to retain counsel, we do not doubt that he would have been able to indulge his grievances, real or fanciful, on appeal. Appellant *161 was entitled to no less. His conviction of a serious crime, and its accompanying serious penalty, provides added incentive to our efforts to ensure that by reason of indigency, he is not deprived of that measure of protection against error and injustice which those of ample means are able to secure by appellate review.
Accordingly, we hold that the order of the court below must be reversed and the record remanded with directions to enter an order consistent with this opinion and to transfer the record to the Court of Oyer and Terminer of Allegheny County. Upon such transfer, said court shall appoint counsel for the purpose of prosecuting an appeal. Upon motion of appointed counsel, this Court will permit an appeal to be docketed as if timely filed.
The order of the court below is reversed and the record remanded for proceedings consistent with this opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918852/ | 411 B.R. 434 (2009)
In re FRIEDLANDER CAPITAL MANAGEMENT CORP., Debtor.
Patricia A. Dzikowski, Plaintiff,
v.
Carolee Friedlander and Carolee Designs, Inc., Defendants.
Bankruptcy No. 03-32827-BKC-PGH. Adversary No. 05-03088-PGH.
United States Bankruptcy Court, S.D. Florida, West Palm Beach Division.
April 29, 2009.
*438 John L. Walsh, Esq., Ft. Lauderdale, FL, for Plaintiff.
Elisa R. Lemmer, Esq., Jodi E. Samuels, Esq., Martin Sosland, Weil Gotshal & Manges LLP, Miami, FL, for Defendants.
MEMORANDUM ORDER
PAUL G. HYMAN, Chief Judge.
This matter came before the Court for trial on August 27, 2008 and January 22, 2009. On May 23, 2005 Patricia Dzikowski, as trustee ("Trustee") for Friedlander Capital Management Corporation ("Debtor"), filed a Complaint to Avoid Fraudulent Transfers and for Monies Owed ("Complaint") against Carolee Friedlander ("Ms. Friedlander") and Carolee Designs, Inc. ("Designs") (collectively, "Defendants"). The Complaint asserts the following three counts that seek: 1) avoidance of the Debtor's alleged fraudulent transfers under 11 U.S.C. § 544 and Connecticut General Statute § 52-552e(a)(1); 2) avoidance of the Debtor's alleged fraudulent transfers under 11 U.S.C. § 544 and Connecticut General Statute § 52-552e (a)(2); and 3) to the extent that the transfer of money to Defendants is not a fraudulent transfer, repayment of the transfer as a loan that is owed to the Debtor. At trial, the Trustee only pursued counts two and three. Also, at trial, Defendants' counsel stated, and the Trustee did not argue otherwise, that the alleged fraudulent transfer at issue was to Ms. Friedlander and not Designs.
FINDINGS OF FACT
Burton G. Friedlander ("Mr. Friedlander") was the sole shareholder of the Debtor, a Connecticut corporation that managed a pooled investment fund ("Pooled Account"), and provided investment services and advice. On May 23, 2003, the Debtor filed a voluntary Chapter 7 petition. Mr. Friedlander also operated two hedge funds: Friedlander International Limited ("FIL"), a company incorporated in the Bahamas for which the Debtor was the investment manager, and Friedlander Limited Partnership ("FLP"), a limited partnership formed under the laws of Connecticut for which the Debtor was the general partner. Friedlander Management Limited ("FML"), a company incorporated in the Bahamas, was the manager of FIL. In December 2001, a United States District Court for the Southern District of New York appointed a receiver for FIL, FLP, and FML.
From 1994 through 2001, Mr. Friedlander solicited investments from individuals and entities which were deposited into the Pooled Account. Mr. Friedlander controlled the investment decisions and the movement of all funds in the Pooled Account. In early 1998, Mr. Friedlander began commingling the funds deposited into the Pooled Account with funds from FIL, FML, and FLP, as well as his personal funds, and used the commingled funds for personal expenses, including country club fees, personal legal fees, sailboat maintenance and dockage fees, and condominium fees. Additionally, in February 2000, Mr. Friedlander issued check number 164 for $29,766 from an account owned by Mr. Friedlander and Ms. Friedlander (the "Joint Account") to reimburse the Debtor *439 for purchasing Mr. Friedlander 2000 U.S. Open tennis tournament tickets.
In June 2003, the Securities and Exchange Commission (the "SEC") charged Mr. Friedlander with violations of federal securities laws stemming from his operation of the Pooled Account and the other hedge funds. Securities and Exchange Commission v. Friedlander, No. 01-CV-4596 (S.D.N.Y.). The same month, Mr. Friedlander was indicted for criminal violations of securities laws for the same conduct. United States v. Friedlander, No. 03-Crim-1172 (S.D.N.Y.). In May 2005, Mr. Friedlander plead guilty to one count of securities fraud relating to his operation of the Pooled Account. When pleading guilty, he stated, in part:
During the seven-year period, from 1994 to 2001, the funds of seven individuals and three entities were managed in a commingled pooled account. Beginning in 1996, I engaged in certain practices that operated to deceive investors whose money was maintained in the pool account fund. Specifically, I caused the investors to receive certain reports in the mail about their funds that I had reason to know were not accurate. These reports misrepresented the status and value of the investments.
Trial Tr. May 25, 2005 (Jt.Stip.Ex.3.) In May 2005, Mr. Friedlander paid restitution in the amount of $2,052,674.37 to the United States Attorney for the Southern District of New York for distribution to certain Pooled Account investors who did not otherwise receive a return on their investment. The restitution payment resulted in repayment of all sums due the Pooled Account investors.
Ms. Friedlander is Mr. Friedlander's second ex-wife, having divorced him in 2005, and was the sole shareholder of Designs, a Connecticut corporation that was sold prior to the Debtor's bankruptcy. At issue in this case, is the Debtor's alleged fraudulent transfer of $500,000 to Ms. Friedlander. On or about March 14, 2001, Mr. Friedlander withdrew $500,000 from the Debtor's account to provide Ms. Friedlander a one-month, interest-free loan, which was deposited into an account owned by Designs. On April 11, 2001, in order to repay the loan, Ms. Friedlander wired $500,000 from an account owned by Designs to the Joint Account. Thereafter, in April 2001, Mr. Friedlander transferred $50,000 from the Joint Account to the Debtor's account. The parties agree that in April 2001, Mr. Friedlander paid $374,680.22 of the remaining $450,000 to his first ex-wife to settle a family court judgment against him.
It is undisputed that Ms. Friedlander never withdrew funds from the Joint Account. It is likewise undisputed that except for the April 11, 2001 deposit of $500,000, Ms. Friedlander never deposited funds into the Joint Account. The parties agree that Ms. Friedlander believed that the $500,000 loan was from Mr. Friedlander and that Ms. Friedlander believed she repaid the loan when she deposited $500,000 into the Joint Account.
According to the docket and claims register for the Debtor's bankruptcy case, twelve proof of claims were filed in the Debtor's bankruptcy case, of which four were disallowed and one was withdrawn. The remaining seven claims consist of a landlord claim, a claim filed by the receiver appointed to FIL, a claim filed by the receiver appointed by FML, and four Pooled Account investor's claims. The parties agree that no documentation has been attached to the landlord claim to indicate prima facie validity of the landlord's claim for unpaid rent. The Trustee has objected to the claims filed by FIL and FML on the basis that the claims are unliquidated, and appear to include unspecified damages *440 which are not reimbursement for actual pecuniary loss. The parties agree that the four claimants who were Pooled Account investors have received restitution payments. At trial on August 27, 2008, the Trustee did not dispute the Defendants' attorney's statement that these four claimants received what the SEC and the United States Attorney determined to be full compensation.
CONCLUSIONS OF LAW
The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and 28 U.S.C. § 157(a). This is a core proceeding pursuant to § 157(b)(2)(H).
1. The Parties' Arguments
The Trustee seeks to avoid the Debtor's alleged fraudulent transfer pursuant to 11 U.S.C. § 544. "Section 544(b) of the bankruptcy code permits a trustee to stand in the shoes of a creditor to assert any state law claims that a creditor may have." Gaughan v. Cavan (In re Strasser), 303 B.R. 841, 846 (Bankr.D.Ariz.2004) (citations omitted). The Trustee asserts that the Debtor made a fraudulent transfer under Connecticut General Statute § 52-552e(a)(2) when Mr. Friedlander withdrew $500,000 from the Debtor's account to provide Ms. Friedlander a one-month, interest-free loan. Pursuant to § 52-552e (a)(2):
(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, if the creditor's claim arose before the transfer was made or the obligation was incurred and if the debtor made the transfer or incurred the obligation:
(2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor
(A) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction, or
(B) intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due.
Conn. Gen.Stat. Ann. § 52-552e (a)(2) (2005).
Defendants do not dispute the Trustee's assertion that the applicable statute of limitation is four years,[1] or that the Trustee's claim is timely brought. At trial, Defendants did not dispute that the transfer was made when the Debtor reasonably should have believed its debts were beyond its ability to pay as they became due. Nor did Defendants dispute that the transfer was incurred without the Debtor receiving a reasonably equivalent value. Instead, Defendants' defense is based upon the doctrine of reverse veil piercing. The Defendants assert that Ms. Friedlander's payment of $500,000 to Mr. Friedlander constituted repayment to the Debtor.
2. Theory of Reverse Veil Piercing
Corporate veil piercing is an equitable remedy. Under traditional veil piercing, a party attempts to pierce the corporate veil in order to hold the corporate shareholders liable for the actions of the corporation. Under reverse veil piercing, *441 a party attempts to pierce the corporate veil in order to hold the corporation liable for the actions of the shareholders.[2] Reverse veil piercing has been invoked in a handful of bankruptcy situations. See, e.g., Kendall v. Turner (In re Turner), 335 B.R. 140 (Bankr.N.D.Cal.2005)(advanced by trustee and creditors of shareholder's bankruptcy case to bring corporate assets into shareholder's bankruptcy estate); In re Schwab, 378 B.R. 854 (Bankr.D.Minn.2007)(invoked by individual debtor to exempt property interests technically owned by debtor's corporation). There is scant case law, however, regarding the use of reverse veil piercing to defend against a fraudulent transfer claim.
In one similar case, Knowles, the sole shareholder, director and officer of the debtor, KZL Livestock, Inc. ("KZL"), used funds from KZL's account to repay his personal loan with a bank. Barber v. Prod. Credit Servs. of West Cent. Ill. (In re KZK Livestock, Inc.), 221 B.R. 471, 474 (Bankr.C.D.Ill.1998). The KZL trustee brought suit against the bank to recover the alleged fraudulent transfer, arguing that there was a transfer of KZL's property for less than reasonably equivalent value. Id. at 474, 476. The bank conceded that repayment of the loan involved a transfer of KZL's property. Id. at 477. However, the bank argued that under the theory of reverse veil piercing, the bank's loan to Knowles constituted a loan to KZL and consequently, KZL received reasonably equivalent value for its transfer to the bank. Id. at 477.
Under Illinois law, the KZL court stated that the bank could establish it gave reasonably equivalent value through the theory of reverse veil piercing if it proved: 1) that there was a unity of interest between KZL and Knowles, and 2) recognition of KZL's separate existence would cause an injustice. Id. at 478. Upon conducting a factual analysis, however, the Court concluded that the bank failed to prove these elements. In re KZK Livestock, 221 B.R. at 479.
3. Choice of Law for Reverse Veil Piercing Analysis
State law governs the application of corporate veil piercing in the context of a bankruptcy transfer avoidance action. Energy Smart, Inc. v. Musselman (In re Energy Smart, Inc.), 381 B.R. 359, 379 (Bankr.M.D.Fla.2007); In re KZK Livestock, 221 B.R. at 478 (citing Pajaro Dunes Rental Agency, Inc. v. Spitters (In re Pajaro Dunes Rental Agency, Inc.), 174 B.R. 557 (Bankr.N.D.Cal.1994); Marquis Prods., Inc. v. Conquest Carpet Mills (In re Marquis Prods., Inc.), 150 B.R. 487 (Bankr.D.Me.1993)). Thus, as an initial matter, the Court must determine which state's law guides the Court's reverse veil piercing analysis. Defendants assert that Connecticut law applies. The Trustee contends that Florida law applies. Bankruptcy courts apply different approaches to choice of law issues. Because the result is the same under the three approaches discussed below, the Court declines to adopt a particular approach in this case.
A. Diversity Jurisdiction Approach
Under the diversity jurisdiction approach, bankruptcy courts borrow from the "law applicable in diversity cases to hold that the forum state's choice of law *442 rules are imposed on bankruptcy adjudications where the underlying rights and obligations are defined by state law." Marine Midland Bank v. Portnoy, (In re Portnoy), 201 B.R. 685, 697 (Bankr.S.D.N.Y. 1996) (citation omitted); In re Eagle Enters., Inc., 223 B.R. 290, 292 (Bankr. E.D.Pa.1998). In this case, the underlying rights and obligations are defined by state law because the Trustee seeks to avoid a fraudulent transfer under Connecticut law. Since Florida is the forum, under the diversity jurisdiction approach, Florida choice of law rules would determine the state law applicable to the Court's reverse veil piercing analysis.
As to Florida's choice of law rules, "[c]laims involving `internal affairs' of corporations, such as the breach of fiduciary duties, are subject to the laws of the state of incorporation." Chatlos Found., Inc. v. D'Arata, 882 So. 2d 1021, 1023 (Fla.App. 5th Dist.2004)(relying on Restatement (Second) of Conflict of Laws §§ 302 and 309)(internal citations omitted). The Restatement (Second) of Conflict of Laws § 302 provides:
(1) Issues involving the rights and liabilities of a corporation, other than those dealt with in § 301, are determined by the local law of the state which, with respect to the particular issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.
(2) The local law of the state of incorporation will be applied to determine such issues, except in the unusual case where, with respect to the particular issue, some other state has a more significant relationship to the occurrence and the parties, in which event the local law of the other state will be applied.
Restatement (Second) of Conflict of Laws § 302 (1971).
Reverse veil piercing involves the internal affairs of the Debtor, mainly the rights and liability of the Debtor. The parties have not established, and no facts on the record indicate that this is an unusual case where some other state has a more significant relationship to the occurrence and parties. Accordingly, under Chatlos Found., Inc. v. D'Arata and § 302 of the Restatement (Second) of Conflict of Laws, the local law of Connecticutthe state of incorporationapplies to the Court's analysis of Defendants' reverse veil piercing defense. 882 So. 2d at 1023.
B. Uniform Federal Common Law Approach
Under the uniform federal common law approach, a bankruptcy court applies federal, not forum state, choice of law rules. Lindsay v. Beneficial Reinsurance Co. (In re Lindsay), 59 F.3d 942, 948 (9th Cir.1995) (citations omitted). "In general, a bankruptcy court's choice of applicable law `requires the exercise of an informed judgment in the balancing of all the interests of the states with the most significant contacts in order best to accommodate the equities among the parties to the policies of those states.'" In re Segre's Iron Works, Inc., 258 B.R. 547, 551 (Bankr.D.Conn.2001)(quoting Vanston Bondholders Protect. Comm. v. Green, 329 U.S. 156, 162, 67 S. Ct. 237, 91 L. Ed. 162 (1946)). In this case, the Debtor and Designs were incorporated in Connecticut and the Trustee seeks to avoid a fraudulent transfer under Connecticut law. The Trustee presented no evidence to suggest that Florida has more significant contacts. Consequently, under the uniform federal common law approach, the Court resolves that the law of Connecticutthe state with the most significant contactapplies.
C. Hybrid Approach
Under a hybrid approach, courts first assess whether creation of federal common law, rather than application *443 of the forum state's law, is appropriate because "[t]he ability of the federal courts to create federal common law and displace state created rules is severely limited." Bianco v. Erkins (In re Gaston & Snow), 243 F.3d 599, 606 (2d Cir.2001). Before a bankruptcy court can create federal common law "`a significant conflict between some federal policy or interest and the use of state law must first be specifically shown.'" Id. at 606 (quoting Atherton v. FDIC, 519 U.S. 213, 218, 117 S. Ct. 666, 136 L. Ed. 2d 656 (1997)). The parties do not assert, and there is not, any significant conflict between federal policy or interest, and the use of state law. As a result, the same analysis under Florida's choice of law rules discussed under the diversity jurisdiction approach would follow, rendering Connecticut law applicable.
Therefore, under the three choice of law approaches discussed above, the Court concludes that Connecticut law governs the Court's reverse veil piercing analysis.[3]
4. Reverse Veil Piercing Under Connecticut Law
Connecticut law recognizes the reverse veil piercing remedy. Litchfield Asset Mgmt. Corp. v. Howell, 70 Conn. App. 133, 799 A.2d 298 (2002), overruled on other grounds by Robinson v. Coughlin, 266 Conn. 1, 9, 830 A.2d 1114 (2003). "Pursuant to Connecticut case law, however, a court may properly disregard a corporate entity if the elements of either the instrumentality rule or identity rule are satisfied." Id. at 310 n. 11. Reverse veil piercing is appropriate where the elements of one of the rules have been established and "when necessary to achieve an equitable result and when unfair prejudice will not result." Id. at 312. The applicable standard is a fair preponderance of the evidence. Id. at 310 n. 12.
A. Identity Rule
The identity rule requires that the proponent show
*444 that there was such a unity of interest and ownership that the independence of the corporations had in effect ceased or had never begun, an adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting the economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise.
Id. at 315. "There must be such domination of finances, policies and practices that the controlled corporation has, so to speak, no separate mind, will or existence of its own and is but a business conduit for its principal." Id.
In this case, Defendants proved by a preponderance of the evidence that there was such a unity of interest and ownership between Mr. Friedlander and the Debtor that the separate existence of the Debtor ceased. It is undisputed that Mr. Friedlander was the sole shareholder of the Debtor and that he controlled all investment decisions relating to the Debtor's Pooled Account. In early 1998, Mr. Friedlander caused the Debtor to cease investing the majority of funds deposited into the Pooled Account by investors. Instead, these funds were commingled with funds from FIL, FML, FLP, and Mr. Friedlander's personal funds. Mr. Friedlander used the commingled funds for unrelated business and personal expenses, including country club fees, personal legal fees, sailboat maintenance and dockage fees, and monthly condominium fees. Mr. Friedlander used only a small portion of the Debtor's Pooled Account funds to repay investors. Furthermore, in March 2001, Mr. Friedlander withdrew $500,000 from the Debtor's account to provide the loan to Ms. Friedlander. Then, in April 2001, when Ms. Friedlander deposited $500,000 into the Joint Account to repay the loan, Mr. Friedlander deposited only $50,000 into the Debtor's account and used $374,680.22 to pay his first ex-wife to settle a family court judgment. Thus, the Court finds that Mr. Friedlander had complete domination over the Debtor's finances.
Defendants also proved by a preponderance of the evidence that Mr. Friedlander exercised complete domination over the Debtor's policies and practices as its sole shareholder. Beginning in 1996, Mr. Friedlander caused the Debtor to make material misrepresentations and omissions concerning the value of the Pooled Account's assets. Specifically, Mr. Friedlander prepared and distributed to investors false financial reports purporting to detail the performance of each investor's Pooled Account investment. The reports misrepresented the status and value of the investments.
The Trustee asserts that the act of the Debtor issuing financial reports tends to show that Mr. Friedlander treated Debtor as a separate entity. The Court does not find this argument persuasive. While the issuance of false reports may superficially indicate the Debtor existed apart from Mr. Friedlander, the stronger inference is that Mr. Friedlander held such domination over the Debtor's policies and practices as to cause the Debtor to issue false reports.
The Trustee also argues that the lack of evidence of the Debtor's use of funds from the Joint Account tends to show that the Debtor existed apart from Mr. Friedlander. The Court does not find this argument persuasive or particularly relevant. Under Connecticut law, in order to establish reverse veil piercing, Defendants must prove that Mr. Friedlander had complete domination over the Debtor. Evidence that the Debtor exerted control over Mr. Friedlander, such as by the Debtor's use of the Joint Account, is not required.
Based on the foregoing, the Court concludes that Defendants have established *445 by a preponderance of the evidence that Mr. Friedlander had complete domination over the Debtor's finances, policies, and practices. There was such a unity of interest and ownership between Mr. Friedlander and the Debtor that the independence of the Debtor ceased and it was rendered a mere conduit for Mr. Friedlander's fraudulent scheme. Because Defendants established the elements of the identity rule, application of reverse veil piercing is appropriate if "necessary to achieve an equitable result and when unfair prejudice will not result." Howell, 799 A.2d at 312. Accordingly, if equity so requires, the Court will apply the doctrine of reverse veil piercing to disregard the Debtor as a separate corporate entity.
B. Reverse Veil Piercing is Necessary to Achieve an Equitable Result and Unfair Prejudice Will Not Result
Under Connecticut law, the guiding concept behind the reverse veil piercing doctrine is the need for the Court to "avoid an over-rigid preoccupation with questions of structure ... and apply the preexisting and overarching principle that liability is imposed to reach an equitable result." Id. at 312 (citations omitted). The court in In re KZK Livestock declined to apply the reverse veil piercing remedy, in part, because the "paramount principal of the bankruptcy laws is equality of distribution of the assets of the estate" and to permit a single creditor to retain a substantial payment while other creditors share in the remaining assets would be unfair. 221 B.R. at 479. In In re KZK Livestock, the bank asserted reverse veil piercing as a defense to retain repayment of a loan. Id. at 477. In this case, however, Ms. Friedlander asserts reverse veil piercing as a defense, to render payment already made to Mr. Friedlander repayment to the Debtor. Application of reverse veil piercing will only relieve Ms. Friedlander of paying an additional $450,000 to the Trustee; it does not permit her to retain a substantial payment. Moreover, the general loss suffered by the Debtor's creditors as a result of the estate not receiving $450,000, is outweighed by the hardship Ms. Friedlander will suffer if required to shoulder the entire burden of paying an additional $450,000.
Of the twelve proof of claims filed in the Debtor's bankruptcy case, seven remain. As to the four claimants who were Pooled Account investors, Defendants' attorney stated at trial, and the Trustee did not argue otherwise, that they received what the SEC and the United States Attorney determined to be full compensation as a result of the $2,052,674.37 in restitution provided by Mr. Friedlander in May 2005. The remaining three claims consist of: 1) a landlord claim, to which the parties agree that no documentation has been filed to indicate prima facie validity, 2) the claim filed by the receiver appointed to FIL, which has been objected to by the Trustee, and 3) the claim filed by the receiver appointed to FML, which has also been objected to by the Trustee.
The parties' concurred that Ms. Friedlander never withdrew funds from the Joint Account and, except for the deposit of $500,000 to repay the loan, Ms. Friedlander never deposited funds into the Joint Account. The parties agree that of the $500,000, Mr. Friedlander deposited $50,000 into the Debtor's account and applied $374,680.22 towards payment to his first ex-wife to settle a family court judgment. The parties likewise agree that Ms. Friedlander believed that she borrowed the $500,000 from Mr. Friedlander and repaid the loan to Mr. Friedlander.
Based on these considerations, the Court concludes that equity sides with Ms. *446 Friedlander. Therefore, the Court finds defensive application of reverse veil piercing appropriate because the elements of the identity rule are satisfied, application is necessary to achieve an equitable result, and unfair prejudice will not result. The Court lastly notes that this case does not implicate the primary policy basis for rejecting outsider reverse piercingprotection of the investor's expectations of limited liability exposure. Crespi, supra note 2, at 64; Howell, 799 A.2d at 312 n. 14. Mr. Friedlander was the Debtor's only shareholder. The Pooled Account investors did not purchase equity in the Debtor. The policy implicated in this case as to the investorsthe policy of protecting investors from securities fraudhas arguably been properly addressed by the SEC, the criminal indictment, and the restitution provided by Mr. Friedlander.
C. Elements of Instrumentality Rule Not Established
Having decided that Defendants established the elements of the identity rule, the Court need not reach the instrumentality rule to adjudicate the matter. However, because Defendants also contend that they established the elements of the instrumentality rule, the Court will briefly address Defendants' arguments. The instrumentality rule requires proof of three elements:
(1) Control, not merely majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; (2) that such control must have been used by the [principal] to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest or unjust act in contravention of [defendant's] legal rights; and (3) that the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.
Howell, 799 A.2d at 312 (citations omitted)(emphasis in original) (alterations added); Zaist v. Olson, 154 Conn. 563, 575, 227 A.2d 552 (1967).
While the Court concludes that Defendants established the first element, the Court finds that Defendants failed to establish the remaining elements. As to the second element, Defendants argue that Mr. Friedlander used Debtor to commit securities fraud upon the Pooled Account investors, in contravention of their legal rights. The investors, however, are not co-defendants in this proceeding. As to the third element, Defendants assert that Mr. Friedlander's control over the direction of the funds resulted in the initiation of this adversary proceeding against Defendants. The commencement of this adversary proceeding, however, is not itself an injury or unjust loss. Nor does it flow from the wrongful conduct asserted by Defendants under the second element. As a result, Defendants fail to establish injury or unjust loss as to them, and therefrom, proximate cause.
D. Full Repayment Defense
Application of reverse veil piercing renders Ms. Friedlander's payment of $500,000 to Mr. Friedlander, repayment to the Debtor. While the transfer of $500,000 from the Debtor's account to Ms. Friedlander potentially constitutes a technical fraudulent conveyance under Connecticut General Statute § 52-552e(a)(2), the Court finds that Defendants successfully established the defense of full repayment to the proper entity.
CONCLUSION
For the reasons stated above, the Court finds that under Connecticut law, Defendants *447 have established the elements of the identity rule by a fair preponderance of the evidence, and because reverse veil piercing is necessary to achieve an equitable result and unfair prejudice will not result, the Court disregards the Debtor's separate corporate existence and concludes that Ms. Friedlander's payment of $500,000 to Mr. Friedlander constitutes repayment to the Debtor. As to the first count, the Court also finds in favor of Defendants because the Trustee did not present argument or evidence in support of a fraudulent transfer under § 52-552e (a)(1).[4] The Court further finds that the Trustee presented no evidence to establish that Designs received either a fraudulent transfer or a loan from the Debtor.
ORDER
The Court, having considered the applicable law, the evidence presented at trial, the argument of counsel, the submissions of the parties, and being otherwise fully advised in the premises, hereby ORDERS AND ADJUDGES:
1. The relief sought in Count One is DENIED because the Trustee presented no evidence or argument on the matter.
2. The relief sought in Count Two is DENIED because the Debtor received full repayment for the transfer of funds.
3. The relief sought in Count Three is DENIED because no portion of the loan remains unpaid.
4. Pursuant to Federal Rules of Bankruptcy Procedure 9021, a separate final judgment shall be entered by the Court contemporaneously herewith.
NOTES
[1] "The applicable state law limitations period applies to actions brought under section 544(b)." 5 COLLIER ON BANKRUPTCY § 544.09 (15th ed. rev.2008). The statute of limitations "of four years contained in § 52-552j(2) applies to transfers made with constructive fraudulent intent under § 52-552e (a)(2)." Conn. Nat'l Bank v. D'Onofrio, 46 Conn.App. 199, 209, 699 A.2d 237 (1997).
[2] Reverse veil piercing has been divided into two types: 1) insider reverse piercing, which involves a controlling corporate insider seeking to disregard the corporation over the objections of a third party, and 2) outsider reverse piercing, which involves a third party seeking to disregard the corporation over the objections of the insider and the corporation. Gregory S. Crespi, The Reverse Pierce Doctrine: Applying Appropriate Standard, 16 J. Corp. L. 33, 37 (1990).
[3] The Trustee stated in its proposed memorandum of decision that the difference between Florida law and Connecticut law on the issue of reverse veil piercing appears negligible. The Court does not agree. While the Supreme Court of Florida has articulated an arguably similar traditional veil piercing standard as that applied in Connecticut, the relevant inquiry is whether Florida recognizes reverse veil piercing. See Aztec Motel, Inc. v. State ex rel. Faircloth, 251 So. 2d 849, 852 (1971) ("[C]ourts will look through the screen of corporate entity to the individuals who compose it in cases in which the corporation is a mere device or sham to accomplish some ulterior purpose, or is a mere instrumentality or agent of another corporation or individual owning all or most of its stock, or where the purpose is to evade some statute or to accomplish some fraud or illegal purpose").
The Third District Court of Appeal of Florida has recognized the reverse veil piercing remedy to the limited extent it is used "to hold the corporation liable for the debts of controlling shareholders where the shareholders have formed or used the corporation to secrete assets and thereby avoid preexisting personal liability." Estudios, Proyectos e Inversiones de Centro Am. v. Swiss Bank Corp., 507 So. 2d 1119, 1120 (3d Fla.App. 3 Dist.1987)(affirming in part lower court's decision to grant lender a writ of attachment securing corporate assets where controlling shareholder-guarantor created corporation and transferred his ownership of property to defraud personal creditors); Braswell v. Ryan Invs., Ltd., 989 So. 2d 38 (3d Fla.App. 3 Dist.2008)(denying reverse veil piercing remedy where the corporate act of taking title of asset preceded the existence of the claims and obligations sued upon). In this case, Defendants do not allege that they have a preexisting personal claim against the controlling shareholder, Mr. Friedlander. Nor do Defendants allege, and the evidence does not show, that Mr. Friedlander formed or used the Debtor to secrete assets to avoid preexisting personal liability. Consequently, under Florida law, the reverse veil piercing remedy is unavailable to Defendants.
[4] Section 52-552e(a)(1) provides:
(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, if the creditor's claim arose before the transfer was made or the obligation was incurred and if the debtor made the transfer or incurred the obligation: (1) With actual intent to hinder, delay or defraud any creditor of the debtor.
Conn. Gen.Stat. Ann. § 52-552e(a)(1). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/8304543/ | SENTER, J.
For convenience tbe parties will be referred to as in the court belong Louisville & Nashville Railroad Company, plaintiff, and Frazier & Crews, defendant.
The plaintiff sued the defendant, a firm in a Justice of the Peace court in Henry County, to recover the sum of $262.07, alleged undercharges due on ten shipments of hogs, shipped by Frazier & Crews from Paris, Tennessee, to East St. Louis, Illinois, during the months of February and March, 1927. The suit was dismissed by the Justice of the Peace at the cost of plaintiff, and plaintiff appealed to the Circuit Court, resulting in a directed verdict and judgment in favor of plaintiff for the sum of $262.07. A motion for a new trial by the defendants was overruled, likewise a motion in arrest of judgment by the defendants was overruled.
The appeal to this court in the nature of a writ of error is from the action of the court in overruling the motion for a new trial and in overruling the motion in arrest of judgment and rendering judgment, in favor of plaintiff.
The assignments of error are as follows:
“I. The court erred in directing a verdict in favor of plaintiff.
“II. The court erred in holding that the defendants understood at the time said livestock contracts were executed that said shipments would be sent over the Evansville route.
“III. There is no material evidence that shows that the plaintiff was entitled to prevail in this case.
“IV. It is not shown by a preponderance of the evidence that the plaintiff is entitled to prevail in this case.”
In the 'brief filed by appellant the question is made that because of the form of the judgment as appears on the Magistrate’s warrant, which was in the following language: ‘£ Case is dismissed by plaintiff’s attorney and plaintiff taxed with all costs for which execution may issue,” that the case then and there terminated and the Magistrate did not have any further jurisdiction of the parties, and could not, therefore, grant an appeal to the Circuit Court. It is further contended that the jurisdiction of the Justice of the Peace having terminated, the Circuit Court could not acquire jurisdiction by appeal, and that the Circuit Court was without jurisdiction, and the judgment of the Circuit Court therefore void.
We have quoted above the assignments of error, and there is no assignment based upon the action of the trial judge in overruling the motion for an arrest of judgment. However, appellant has cited authorities to support its contention with reference to the lack of jurisdiction after the order of dismissal by the Justice of the Peace.
This case was twice continued in the Circuit Court, and it does not appear that any question was made by the defendants as to the *389form of the judgment or as to the jurisdiction of the court. Immediately following the judgment on the Justice of the Peace warrant is the granting of the appeal to plaintiff, and the acceptance of the appeal bond. The Justice of the Peace had jurisdiction of the case at its inception and of the parties. The amount was within the jurisdiction of the Justice of the Peace, as was also the cause of action. The Circuit Court had concurrent jurisdiction with the Justice of the Peace. The defendants appeared in the Circuit Court and proceeded to the trial of the case on the issues without entering any objections to the jurisdiction of the Circuit Court.
In Campbell v. Railroad Co., 84 Tenn., 270, under the first and second headnotes, it is stated:
“1. Jurisdiction, Want of. Dismissal. The Supreme Court will not dismiss for want of jurisdiction of the subject-matter, unless exception has been taken below.
“2. Objection taken after Judgment. Where it is evident that an objection, taken after verdict and judgment, could have been cured if made before verdict and judgment, the Supreme Court will not reverse.”
The rule is stated in 35 C. J., Sec. 478, as follows:
“A general appearance in the appellate court confers jurisdiction over the person, and waives want of it, or defects in, the process, or in its service or return, in the Justice’s court, and irregularities before the Justice, but does not confer on the appellate court jurisdiction of the subject matter, except in those cases where, although the Justice had no jurisdiction, the appellate court has original or concurrent jurisdiction, and the ease is triable de novo.”
We do not think that the question can be raised for the first time after the return of the verdict and the rendition of the judgment, in any case where an amendment could have cured the defect (Campbell v. Railroad, supra; 16 Pick., 25).
As above stated, there is no assignment of error presenting this question, but if' the question was properly presented by proper assignment of error, we are of the opinion that it must be overruled for the reasons stated.
As to the merits of the case, it is disclosed by the record that the defendants shipped ten car loads of hogs from Paris to Bast St. Louis, during the months of February and March, 1927. No specific shipping instructions were given to the railroad company by the shipper, and no specific routing was directed by the shipper. The agent of the railroad company at Paris was introduced as a witness by the defendants, and he testified that these shipments were made from Paris by way of Evansville to East St. Louis, and *390that this was the usual and customary route, and the only feasible route. There is no denial but that the amount of undercharge in rate is correctly stated by the railroad company if the Evansville route and the rate applicable thereto should be charged. The whole contention of the defendants is based upon the claim that there is a route by the way of Louisville, Kentucky, that carries a 34c per hundred pound rate on hogs, and that this being the cheaper rate the shipments should have been routed by Louisville. The defendants offered as a witness Mr. Dunlap, who testified that he had investigated certain tariffs and that there was a route by Louisville which carried the 34c rate. However, the witness Howard, the agent of plaintiff and the witness for the defendants, testified that it was not a practical route because of the much greater distance, and that the Louisville route was never used for that reason. He also testified that the shipper understood that the shipments would be made by the shorter route to avoid unloading for feeding and watering.' If there are two routes equally practicable, in the absence of any instructions by the shipper, we think the railroad company would be required to route the shipment by the route carrying the cheaper rate. On the other hand, we think if there is but one usual and practical route, the railroad company should use that route, even though there is another route carrying a cheaper rate but an impracticable route for livestock.
In Post v. Railroad, 103 Tenn., 215, it is said:
“When no special instructions are given and assented to as to routes, the initial carrier may select the route or use that commonly employed by it to the point of destination named. The absence of special instructions given and acceded to amounts to an assent that the carrier’s usual course of business may be followed, and it may designate the route as its convenience may suggest.”
However, it is insisted by appellant that the question as to whether the Louisville route carried a cheaper rate, and was a feasible and practicable route, was one for the jury under the evidence. This contention is based largely upon the evidence of Mr. Dunlap. We do not think this contention can be sustained. Mr. Dunlap did not testify that the route by Louisville was a practical route for the shipping of livestock. He merely testified with reference to his understanding of the freight tariffs submitted to him for examination, and he figured from the tariffs so'submitted that there was a route by way of Louisville that carried the 34c per hundred pound rate. The uncontradicted evidence is that the distance from Paris to East St. Louis by the way of Evansville is 349 miles, and by Louisville over 500 miles, approximately 200 *391miles further. Mr. Howard, a witness for the defendants, and the agent of the plaintiff at Paris, on this- subject testified as follows:
“Q. Mr. Howard, what is it you said on direct examination with reference to the Louisville route, as to whether or not the railroad company considered that a route! Or what did you say? A. That they did not consider it a route from here to East St. Louis, Illinois, on business offered the Louisville & Nashville Eail-road Co.
“Q. Why didn’t they? A. It is considered the further and we have no rate applicable.
<!Q. Have you on file in your office any tariff recognized by the railroad company showing the proper rate from Paris to East St. Louis, Illinois, over the L. & N. by way of Louisville, Kentucky? A. You mean on stock?
“Q. Yes, sir. A. No, sir.
“Q. What is the shortest route from Paris to East St. Louis? A. By way of Evansville.
“Q. And that is the way these shipments were routed? A. Yes, sir.
“Q. How much further would it be by Louisville? A. I would judge 200 miles.
‘‘Q. Why hasn’t there been a rate fixed on livestock from Paris by way of Louisville to East St. Louis? A. Because the shortest route is by Metropolis and Evansville and that is why no other has been fixed.
THE COUET: What is the distance going by Evansville to East St. Louis? A. 349 miles.
THE COUET: And to go the other way it would have been over 500 miles? A. Yes, sir.
“Q. Plow much more? A. Approximately 200 miles, and of course that would necessitate having to feed and water them more.
“Q. Be worth more to have them that way, wouldn’t it? A. Yes, sir.”
We do not think there is any material conflict in the evidence, and that the evidence of Mr. Dunlap is not material under the un-contradicted facts as shown by the evidence to the effect that the shipments in question were routed in the usual and customary way, in routing same by Evansville. There is no conflict in the evidence on this question, and Mr. Dunlap’s evidence to the effect that there was another route which carried a lower rate, but which is shown to be an impracticable route, becomes immaterial.
We find no error in the action of the court and all assignments of error are overruled, and the judgment of the lower court is affirmed. Appellants and sureties on the appeal bond will pay the *392cost of this appeal. Judgment will be rendered here for the amount of the judgment below with interest since the date of its rendition, including the cost of this appeal, in favor of plaintiff below and against the defendants below and sureties on the appeal bond.
Heiskell, J., and Steele, Sp. J., concur. | 01-03-2023 | 10-17-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/1584224/ | 728 N.W.2d 224 (2006)
STATE
v.
RITCHIE.
No. 05-2074.
Iowa Court of Appeals.
December 28, 2006.
Decision without published opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584054/ | 728 N.W.2d 373 (2007)
2007 WI App 34
KOSSORIS
v.
ZEITELHACK.
No. 2006AP98.
Wisconsin Court of Appeals.
January 9, 2007.
Unpublished opinion. Affirmed, reversed and remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/360886/ | 586 F.2d 1117
58 A.L.R.Fed. 743
UNITED STATES of America, Plaintiff-Appellee,v.Jerry Wayne SEARP, Defendant-Appellant.
Nos. 77-5330, 77-5331.
United States Court of Appeals,Sixth Circuit.
Argued April 21, 1978.Decided Nov. 6, 1978.
Ron Parry, Jolly, Johnson, Blau & Parry, Newport, Ky., for defendant-appellant in both cases.
Patrick H. Molloy, U. S. Atty., James E. Arehart, Asst. U. S. Atty., Lexington, Ky., for plaintiff-appellee in both cases.
Before PHILLIPS, Chief Judge, MERRITT, Circuit Judge, and PECK, Senior Circuit Judge.
PECK, Senior Circuit Judge.
1
Jerry Searp has been convicted in federal court of participating in two bank robberies in Covington and Newport, Kentucky. The robberies, committed about two weeks apart, were both carried out by three persons wearing ski masks. Evidence tending to link the defendant to the robberies was discovered during a search of the home of defendant's mother, Goldie Sellers, and was introduced at both trials. Searp was found guilty of the two robberies, and on appeal challenges those convictions, arguing in part that the evidence seized during the search was inadmissible.
2
The day of the second robbery, Ronald Ploeger was arrested. He had approximately.$19,000 of the stolen money in his possession. The next day, during questioning, he implicated Searp and a codefendant, Robert Bell. Working together on the investigation, state police and FBI officers obtained arrest warrants and went to Searp's mother's house, where he frequently stayed, to make the arrest. Searp was not there (he had already fled the state), and Mrs. Sellers (his mother) refused to consent to a search of the house for evidence of the crime.
3
The police left, but immediately made application for a search warrant. A warrant was issued at 11:27 p. m., by a Kentucky county judge. The preprinted form commanded an "immediate" search by "any policeman of the Commonwealth" of Mrs. Sellers' residence, and was based upon probable cause to believe Searp had committed two violations of state law burglary of a bank and armed robbery and that evidence of those crimes would be found in Mrs. Sellers' home. The warrant was supported by an affidavit submitted by an FBI agent. It was promptly executed, the search beginning shortly before midnight and continuing into the early hours of the next morning. A small quantity of the stolen money, three ski masks, and a plastic sack similar to the one containing the money carried by Ploeger were seized.
4
Searp objected to the admission of the evidence found at his mother's home on the grounds that the police had violated Rule 41(c), Fed.R.Crim.P., which provides that a search warrant "shall be served in the daytime, unless the issuing authority, by appropriate provision in the warrant, and for reasonable cause shown, authorizes its execution at times other than daytime." The government argued that this was a state warrant and that the federal rules were inapplicable. There are no Kentucky statutes which mandate a particular procedure in issuing a warrant for a night search, so long as the search is reasonable within the meaning of the fourth amendment.
5
Assuming that the federal rules applied, the district court ruled that "under all the circumstances," the warrant complied with the federal rule requiring explicit authorization for a night search, since it ordered an "immediate search," and was issued late at night. The district court also ruled that Searp had standing to raise the issue of the legality of the search because he regularly stayed at his mother's house. The government has not challenged that ruling here.
I.
6
Our federal system has created many interesting legal problems, such as the one raised by this case, where State and federal law overlap. It is to the benefit of both sovereigns to permit and encourage cooperative law enforcement efforts between state police and federal agents. At the same time, the rules governing police conduct, beyond the requirements of the fourth amendment, are not always identical, giving rise to the problem here. Under what circumstances is evidence seized in conformity with state law, but in violation of federal statutory procedures, admissible in federal court?
7
An analogous situation existed until 1960 with regard to state searches conducted in violation of the fourth amendment. At common law, the admissibility of evidence was not affected by any illegality through which the evidence was obtained. 8 Wigmore, Evidence § 2183. In 1914, however, the Supreme Court ruled that evidence seized by federal officers in violation of the fourth amendment was not admissible in a federal criminal prosecution. Weeks v. United States, 232 U.S. 383, 34 S.Ct. 341, 58 L.Ed. 652 (1914). At the time, the fourth amendment was not considered to be applicable to the states; thus, a search which would have been illegal under federal law could be legally conducted by state officers, and any evidence seized could be handed over "on a silver platter" for use in a federal criminal prosecution. Id. at 398, 34 S.Ct. 341.
8
The obvious practical difficulties engendered by such a rule soon became a problem, and limitations on the doctrine were developed. The temptation to federal officers to use state police to evade the limitations of the fourth amendment was eliminated by the "participation doctrine." If federal agents had participated in an ostensibly state search or if state officers had acted on behalf of the United States, the legality of the search was tested by federal standards, and if the evidence had been seized in violation of the fourth amendment, it was inadmissible in a federal criminal prosecution.
9
For example, in Byars v. United States, 273 U.S. 28, 47 S.Ct. 248, 71 L.Ed. 520 (1927), a search warrant was issued by a state judge for state offenses and directed to state officers. While legal under the state law at that time, the warrant was inadequate under the fourth amendment because there was no allegation of the factual foundation supporting a finding of probable cause. After the state officer obtained the warrant, he requested that a federal officer accompany him, and evidence of a federal crime was discovered during the search. The Supreme Court ruled that the evidence was inadmissible in a federal prosecution, because of federal participation in the search:
10
(T)he federal prohibition agent was not invited to join the state squad as a private person might have been, but was asked to participate and did participate as a federal enforcement officer, upon the chance, which was subsequently realized, that something would be disclosed of official interest to him as such agent.
11
Id. at 32, 47 S.Ct. at 249. The participation doctrine was extended in Gambino v. United States, 275 U.S. 310, 48 S.Ct. 137, 72 L.Ed. 293 (1927), to searches conducted solely by state officers, but on behalf of the federal government, in the sense that the search was solely for evidence of a federal crime. In Lustig v. United States, 338 U.S. 74, 69 S.Ct. 1372, 93 L.Ed. 1819 (1949), the Court ruled that when a federal agent joined a state search in progress, even though he acted in good faith (i. e., without intent to avoid the limitations of the fourth amendment), and was not the moving force behind the search, the search was still to be judged by federal standards in determining the admissibility of evidence in a federal prosecution:
12
The decisive factor . . . is the actuality of a share by a federal official in the total enterprise of securing and selecting evidence by other than sanctioned means. It is immaterial whether a federal agent originated the idea or joined in it while the search was in progress. So long as he was in it before the object of the search was completely accomplished, he must be deemed to have participated in it. . . . Evidence secured through such federal participation is inadmissible.
13
Id. at 79, 69 S.Ct. at 1374.
14
With the decisions in Wolf v. Colorado, 338 U.S. 25, 69 S.Ct. 1359, 93 L.Ed. 1782 (1949), holding that the fourth amendment, through the fourteenth amendment, prohibits unreasonable searches and seizures by state officers, and Elkins v. United States, 364 U.S. 206, 80 S.Ct. 1437, 4 L.Ed.2d 1669 (1960), rejecting the silver platter doctrine and holding that evidence seized by state officers in violation of the fourth amendment is inadmissible in a federal criminal trial, all of this would have become merely an interesting historical footnote, were it not for the fact that the Federal Rules of Criminal Procedure had come into existence, and the exclusionary rule had been applied to their violation by federal officers. Mallory v. United States, 354 U.S. 449, 77 S.Ct. 1356, 1 L.Ed.2d 1479 (1957) (violation of Rule 5(a) requiring prompt arraignment). Rule 41 is of particular significance, because it governs the standards and procedures to be observed in conducting federal searches. Although the purpose of Rule 41 is the implementation of the fourth amendment, the particular procedures it mandates are not necessarily part of the fourth amendment. The states are not "precluded from developing workable rules governing arrests, searches and seizures to meet 'the practical demands of effective criminal investigation and law enforcement' in the States, provided that those rules do not violate the constitutional proscription of unreasonable searches and seizures." Ker v. California, 374 U.S. 23, 34, 83 S.Ct. 1623, 1630, 10 L.Ed.2d 726 (1963).
15
Thus the temptation to federal officers to take advantage of more lenient or more flexible state procedures in the course of conducting a federal investigation is still a reality. While it is important not to stifle cooperation between federal and state officers, we think it clear that federal officers, investigating a federal crime, must comply with the federal rules governing their conduct. The participation doctrine cases provide guidance here; when a federal officer has participated in a search in an official capacity, his or her conduct, and thus the legality of the search, is to be judged by federal standards.
16
In this case, the investigation into the bank robberies, which were simultaneously state and federal crimes, was a joint undertaking between the Kentucky police and the FBI from the beginning. According to the FBI agent who testified at the suppression hearing, "We work them together." Asked which agency initiated the investigation, he stated that it was "kind-of a simultaneous thing. We just kind-of did it together." An FBI agent was the affiant who swore to the facts supporting the issuance of the warrant, there were five FBI agents present at the search, and a federal agent directed the conduct of the search. This was a federal search for evidence of a federal crime conducted by federal officers. In such a case the fact that the search is also a state search cannot affect the federal agents' duty to comply with the federal rules.
II.
17
Rule 41(c)(1), Fed.R.Crim.P., provides that a search warrant "shall be served in the daytime, unless the issuing authority, by appropriate provision in the warrant, and for reasonable cause shown, authorizes its execution at times other than daytime." We cannot agree with the district court's ruling that these requirements were satisfied by the affidavit and warrant in this case. The federal Rule requires explicit authorization for a night search, and "reasonable cause shown" to the issuing magistrate justifying the unusual intrusion of a search at night. The Rule recognizes that there are times when a night search is necessary; if, for instance, execution would be impossible in the daytime or the property sought is likely to be destroyed or removed before daylight. The Rule requires only some factual basis for a prudent conclusion that the greater intrusiveness of a nighttime search is justified by the exigencies of the situation. The procedural requirements of the Rule ensure that the fact that a nighttime search is contemplated by the police is brought to the attention of a magistrate and that he or she consciously decide whether such a particularly abrasive intrusion is called for in a given situation. In this case, even if we were to accept the argument that the preprinted word "immediately" meant more than the phrase "forthwith," commonly used in warrants, and could suffice as explicit authority for a night search in a warrant issued at night, there is no record of any "reasonable cause shown" to justify a nighttime search. The affidavit contains no request for a night search, and discloses no facts which would justify such a search, particularly of a private home occupied by a lone woman who was not suspected of being a participant in the crime.
18
To hold under these circumstances that there has been compliance would eviscerate a federal rule intended to be a substantial protection against unnecessarily abrasive behavior by the police. In this case the fact that the preprinted warrant form used the word "immediately" would permit its circumvention by a happenstance. We must therefore disagree with the reasoning of the Eighth Circuit in United States v. Sturgeon, 501 F.2d 1270 (8th Cir.), Cert. denied, 419 U.S. 1071, 95 S.Ct. 659, 42 L.Ed.2d 667 (1974), although the facts of that case are strikingly similar to those here. A search warrant, based on state crimes, was obtained by two state police officers and two federal agents from a state judge. There was no explicit authorization for a night search, but the warrant was issued at night and the preprinted form stated that it was to be executed immediately. While there was no request for night-search authorization, the affidavits contained sufficient facts to justify such a warrant if one had been requested, thus making a stronger case for a finding of compliance than do the facts here. Based on all the circumstances, the Eighth Circuit held that the federal officers had adequately observed the requirements of the Rule. It seems to us that neither the letter nor the spirit of Rule 41(c) have been satisfied under these facts. The Rule is so constructed that it simply cannot be complied with by chance, because it requires, first, conscious recognition and consideration of the fact that an extraordinary search is contemplated, and, secondly, some record of that consideration in the affidavits and the warrant itself. We conclude that since this warrant lacked specific authorization for a night search, and the affidavit contained no supporting facts to show a particular need for a night search, Rule 41(c) has been violated.
III.
19
This does not end our inquiry, however. Under the circumstances of this case, we conclude that the application of the exclusionary rule is not warranted. While the police failed to comply with the procedural requirements of Rule 41(c), the search was nevertheless "reasonable," in the constitutional sense, because it was conducted pursuant to a valid state warrant, and met the requirements of the fourth amendment. Furthermore, the undisputed facts clearly show that this violation was not, and could not have been, a result of bad faith on the part of the officers involved, because there were circumstances clearly justifying a night search. Mrs. Sellers knew the police wished to search her home, to find evidence of a crime committed by her son, and while the house could have been placed under surveillance, only an immediate search could prevent the possible destruction of the evidence sought. We think it clear that even though a proper record was not made and a proper authorization was not obtained, any judicial officer would have authorized a night search under these circumstances. Indeed, the Kentucky judge here undoubtedly knew such a search would occur, since he was requested to and did issue the warrant in the middle of the night. Finally, the protection Rule 41(c) provides against frightening surprise searches was not necessary in this case, since it appears clear from the record that Mrs. Sellers knew the police had gone to obtain a warrant and would be returning to search the house.
20
While these considerations might seem to be inconsistent with the analysis in the preceding section of this opinion, we think it important to differentiate between the Right to be free from unnecessary and frightening intrusions by the State into our homes in the middle of the night and the Procedures which have been established to protect that right. In this case the defendant's interests have not been violated, though the procedures were not observed.
21
This does not mean, of course, that violation of the required procedures is unimportant; indeed the procedures are the only way to prevent infringements of individual rights. Rather, we hold that requiring suppression in all cases would be a remedy out of all proportion to the benefits gained to the end of obtaining justice while preserving individual liberties unimpaired.
22
We also note that indiscriminate application of the exclusionary rule to non-constitutional violations would likely result in grudgingly narrow rules, drawn as close to constitutional lines as possible, in order to avoid the loss of a conviction through an inadvertent police error. Broader rules, as broad as possible without unduly hampering necessary police investigations, should be encouraged. For instance, full-body searches after traffic arrests have been held to be constitutional. United States v. Robinson, 414 U.S. 218, 94 S.Ct. 467, 38 L.Ed.2d 427 (1973). Nevertheless, they are extraordinarily humiliating, and often unnecessary. A rule prohibiting them except after the observance of procedural safeguards would be desirable, but unlikely if legislators and the police know that even a good faith error, resulting in no prejudice to the defendant, nevertheless would result in suppression of evidence and loss of a conviction. Within reason, the courts must allow the police to police themselves.
23
There is relatively little law on the question of the use of the exclusionary rule to enforce statutory, as opposed to constitutional, requirements, though it has been firmly established that federal courts have the power, when necessary, to exclude evidence when statutory requirements have not been observed. In Mallory v. United States, 354 U.S. 449, 77 S.Ct. 1356, 1 L.Ed.2d 1479 (1957), an accused was not promptly arraigned in accordance with Rule 5(a), and a confession was obtained while he was being held. The Supreme Court held that the confession could not be admitted against the defendant at trial. A year earlier, exercising its supervisory powers, the Court enjoined a federal officer who had participated in an illegal search from testifying at a state trial, observing:
24
(The federal rules) are designed as standards for federal agents. The fact that their violation may be condoned by state practice has no relevancy to our problem. . . . The obligation of the federal agent is to obey the Rules. They are drawn for innocent and guilty alike. They prescribe standards for law enforcement. They are designed to protect the privacy of the citizen, unless the strict standards set for searches and seizures are satisfied.
25
Rea v. United States, 350 U.S. 214, 217-218, 76 S.Ct. 292, 294, 100 L.Ed. 233 (1956).
26
Since then, the exclusionary rule has been frequently applied to cases of violation of the federal rules, See, e. g., Navarro v. United States, 400 F.2d 315 (5th Cir. 1968), but there has been little discussion until recently of the policies underlying the use of the rule in such cases, or whether different considerations come into play than when the rule is being applied to violations of the fourth amendment.
27
For the most part, the federal rules are admirably clear in establishing the procedures which are to be followed in the course of a criminal investigation and trial, but Congress has provided little concrete guidance in determining how the rules are to be enforced, or what remedies are to be provided when they are violated. Thus, the sanctions are largely left to the sound discretion of the courts, based on what they deem "desirable from the viewpoint of sound judicial practice although in no-wise commanded by statute or by the Constitution." Cupp v. Naughten, 414 U.S. 141, 146, 94 S.Ct. 396, 400, 38 L.Ed.2d 368 (1973).
28
The use of the exclusionary rule to remedy statutory violations, as an exercise of the supervisory power, requires an exercise of discretion on the part of the court, and we conclude that the rule should not be applied to all cases in which there has been a violation of the rules by the police. Part of the difficulty in analyzing a problem of this sort is that by their nature, the Rules of Procedure blend constitutional limitations on police activity, procedural limitations designed to avoid constitutional violations, and purely administrative "housekeeping" regulations. The remedies, if any, for noncompliance with the rules must vary accordingly. In cases such as this one, in which a joint search has been conducted by both state and federal officers, relying on a state search warrant, we agree with the Fifth and Eighth Circuits that the use of the exclusionary rule should not even be considered unless the federal officers have violated a "Rule-embodied policy designed to protect the integrity of the federal courts or to govern the conduct of federal officers." United States v. Sellers, 483 F.2d 37, 43 (5th Cir. 1973), Cert. denied, 417 U.S. 908, 94 S.Ct. 2604, 41 L.Ed.2d 212 (1974); accord, United States v. Sturgeon, 501 F.2d 1270 (8th Cir.), Cert. denied, 419 U.S. 1071, 95 S.Ct. 659, 42 L.Ed.2d 667 (1974). For example, the courts have consistently refused to order suppression, in the absence of a clear showing of prejudice, in cases where the provisions violated were "ministerial," rules which did not implicate substantial enough rights to justify suppression. United States v. McKenzie, 446 F.2d 949 (6th Cir. 1971) (procedures for return of a warrant); United States v. Sturgeon, 501 F.2d 1270 (8th Cir.), Cert. denied, 419 U.S. 1071, 95 S.Ct. 659, 42 L.Ed.2d 667 (1974) (failure to designate federal magistrate for return). In United States v. Dudek, 530 F.2d 684 (6th Cir. 1976), a case involving a failure to make a proper Rule 41 inventory of items seized during a search, Judge Edwards, speaking for this Court, points out that most of these "ministerial" errors occur after the search, and are not designed to implement the fourth amendment.
29
Beyond these "housekeeping" provisions, however, the purpose and effect of the various rules vary widely. Therefore, the decision in this case is not intended to be read broadly; it applies only to violations of the procedural requirements governing special permission for night searches. In particular, it should be noted that both the decision and the analysis underlying it are inapplicable to violations of the procedures mandated by the constitution itself, such as the deceptively similar fourth amendment requirement that a neutral magistrate determine probable cause before a search may be conducted. Such procedures, as part of the Bill of Rights, are independent rights on their own, rather than merely being means to an end.
30
The night search provisions, while not of constitutional stature, are "designed . . . to govern the conduct of federal officers," Sellers, supra, at 43, and are "statutory conditions which explicate fundamental purposes of the Fourth Amendment." United States v. Murrie, 534 F.2d 695 (6th Cir. 1976). They are safeguards against abusive, arbitrary police actions, especially when, as illustrated by this case, the home of an individual not even suspected of any criminal activity may be searched for evidence of a crime. As the Supreme Court has recognized, night searches are peculiarly offensive. "It is difficult to imagine a more severe invasion of privacy than (a) nighttime intrusion into a private home." Jones v. United States, 357 U.S. 493, 498, 78 S.Ct. 1253, 1257, 2 L.Ed.2d 1514 (1958). Recently, Mr. Justice Marshall forcefully expressed the fundamental aversion our society feels toward such intrusions:
31
The idea of the police unnecessarily forcing their way into the home in the middle of the night frequently, in narcotics cases, without knocking and announcing their purpose rousing the residents out of their beds, and forcing them to stand by in indignity in their night clothes while the police rummage through their belongings does indeed smack of a " 'police state' lacking in the respect for . . . the right of privacy dictated by the U.S. Constitution."
32
Gooding v. United States, 416 U.S. 430, 462, 94 S.Ct. 1780, 1796, 40 L.Ed.2d 250 (1974) (Marshall, J., dissenting).
33
Nevertheless, the particular procedures mandated before a night search may be conducted are not part of the fourth amendment, and we conclude that suppression should not automatically result from any violation of the rules. A further inquiry into the actual search which occurred is permissible. The courts should be guided by the principle underlying Rule 52(a), Fed.R.Crim.P., which provides: "Any error, defect, irregularity or variance which does not affect substantial rights shall be disregarded." While this Rule was intended primarily as a codification of the familiar harmless error rule, an aid to defining the scope of appellate review of convictions, it is applicable both in letter and spirit to the courts generally. The Second Circuit has relied on it in refusing to suppress evidence seized during a night search conducted without specific authorization, when the search was of a motel room known to be empty, since its two former occupants were already in custody. United States v. Ravich, 421 F.2d 1196 (2d Cir.), Cert. denied, 400 U.S. 834, 91 S.Ct. 69, 27 L.Ed.2d 66 (1970).
34
When there has merely been a violation of the procedural rules governing night searches, suppression, with its attendant potential for a miscarriage of justice, is not justified when there was neither a possibility of bad faith conduct on the part of the police, nor prejudice to the defendant (in the sense that the search might not have occurred or would not have been so abusive if the requirements of the Rule had been observed). The test is met, and suppression would be required when, based on the facts and circumstances known to the police at the time application was made for the warrant, there is a reasonable possibility that permission for a night search would have been refused even if an appropriate request had been made.
35
In so deciding, we follow the lead of the Second Circuit, United States v. Burke, 517 F.2d 377 (2d Cir. 1975), which held:
36
(V)iolations of Rule 41 alone should not lead to exclusion unless (1) there was "prejudice" in the sense that the search might not have occurred or would not have been so abrasive if the Rule had been followed, or (2) there is evidence of intentional and deliberate disregard of a provision in the Rule.
37
Id., at 386-387. Accord, United States v. Dauphinee, 538 F.2d 1 (1st Cir. 1976). The Third Circuit has adopted a similar, but more restrictive "prejudice" test, requiring suppression "only when the defendant demonstrates prejudice from the Rule 41 violation . . . in the sense that it offends concepts of fundamental fairness or due process." United States v. Hall, 505 F.2d 961 (3d Cir. 1974).
38
Since we conclude that there was no potential in this situation for deliberate evasion of the limitations on night searches by the police, and that no substantial right of the defendant has been infringed, we affirm the decision of the district court admitting the evidence in question. The other issues raised by the defendant do not require discussion, being either without substantial merit, or clearly within the harmless error rule, Fed.R.Crim.P. 52(a). Accordingly, the convictions of appellant are affirmed.
39
MERRITT, Circuit Judge, concurring.
40
The opinion of the Court is thoughtful and clear, but considerations of federalism lead me in a different direction. I would hold that Rule 41 is not applicable to the state magistrate or the federal officer in this case.
41
Here a state magistrate issued a state search warrant to investigate a state crime. The search warrant runs in the name of the "Commonwealth of Kentucky." A state search warrant is very different from a federal search warrant. The power to issue the warrant comes from a different sovereign.
42
Rule 41 is designed to give federal and state magistrates the power to issue Federal search warrants for federal crimes, a power they do not have in the absence of statute. See United States v. New York Tel. Co., 434 U.S. 159, 175 n. 23, 179, 98 S.Ct. 364, 54 L.Ed.2d 376 (1977); United States v. Finazzo, 583 F.2d 837, 842-845 (6th Cir. 1977). Rule 41 is also designed to give directions to the magistrate in issuing the federal warrant and to give directions to the federal officer in the execution of the federal warrant. The Rule is not designed to give directions to a state magistrate in the issuance of a State warrant. It does not prohibit a state magistrate from issuing a state search warrant to an officer or citizen who is investigating a state crime, including a federal officer. Nor does it purport to regulate the conduct of officers, federal or state, in the execution of state search warrants.
43
There is no reason for us to say that a federal officer is acting unlawfully under Rule 41 when he executes a state search warrant, valid under state law and the Fourth Amendment, in a manner which is proper under state law and the Fourth Amendment. A federal officer is also a citizen of a state, and when he is acting under its laws, he is acting lawfully. He may execute state search warrants if state law permits. No federal law prohibits it.
44
Similarly, a state judge should not be held to act unlawfully when he issues a state search warrant which does not comply with Rule 41 but does comply with state law and the Fourth Amendment. I see nothing in Rule 41 to suggest that it was intended to preempt state law, as the majority opinion suggests, when a state judge issues a state search warrant for a state crime to a federal officer. We should hesitate to interfere with valid state rules of civil and criminal procedure. See Wilson v. U. S. Department of Agriculture, Food and Nutrition Service, 584 F.2d 137 (6th Cir. 1978).
45
On the other hand, if I thought that Rule 41 were applicable and the nighttime search in this case violated the Rule, I would not hesitate to apply the exclusionary rule. The integrity of the federal judiciary requires it, as does the need to hold federal officers to the dictates of the Rule when it governs. The Rule itself expressly requires suppression when it says "a person aggrieved by an unlawful search and seizure" is entitled to get his property back "and it shall not be admissible in evidence at any hearing or trial."
46
I agree with the Court that this nighttime search does not violate the Fourth Amendment, though the issue is troublesome. Exigent circumstances existed here which justified a nighttime search, and the Fourth Amendment has never been held to require absolutely that the search warrant itself deal with this question in advance. Although the nighttime search provision of Rule 41 probably states the better practice, I do not believe the Constitution condemns the procedures of Kentucky and other states that do not require advance clearance by a magistrate for nighttime searches. The reasonableness of a nighttime search may be reliably judged after the fact, as in any case where exigent circumstances are claimed to justify a departure from preferred search and seizure practice. There is, of course, always a danger that federal officers may resort to state warrants whenever it is more convenient or less burdensome than compliance with Rule 41. But there is not even a hint of purposeful evasion in this case, and I therefore fail to see any basis for criticizing the decision of the FBI to join state officers in their application for a state warrant from a state judicial officer in this fast-breaking investigation of a serious crime.
47
For these reasons, I concur in the result reached by the Court. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/2751145/ | No. 13-0892 Carol Kinsinger v. Todd Pethel
FILED
November 13, 2014
RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
Justice Ketchum, concurring, in part, and dissenting, in part:
I agree that Mr. Pethel should not be held in contempt. I disagree with our
holding that Ms. Kinsinger shall be granted a money judgment against Mr. Pethel in the amount
of $4,018.15, less any appropriate credits.
The doctrine of laches bars claims when a person unreasonably delays in asserting
a claim and the delay works to the disadvantage or prejudice the defendant. Grose v. Grose, 222
W.Va. 722, 671 S.E.2d 727 (2008). In finding that Ms. Kinsinger’s claim was barred by the
doctrine of laches, the circuit court’s order focused on her six-year delay in submitting an order
granting her a share of Mr. Pethel’s retirement benefits. However, the order failed to discuss
whether the delay caused any disadvantage or prejudice to Mr. Pethel.
Although no finding was made by the circuit court that there was not any
disadvantage or prejudice to Mr. Pethel, the majority opinion orders that a money judgment be
entered against Mr. Pethel. There is no evidence in the record to support this mandate. The case
should have been remanded to the circuit court for factual findings as to whether Ms. Kinsinger’s
delay caused any disadvantages or prejudice to Mr. Pethel. | 01-03-2023 | 11-13-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/672299/ | 26 F.3d 1143
307 U.S.App.D.C. 79
GOODMAN HOLDINGS; Anglo Irish Beef ProcessorsInternational, Appellants,v.RAFIDAIN BANK, Appellee.
No. 92-7246.
United States Court of Appeals,District of Columbia Circuit.
Argued Feb. 1, 1994.Decided June 24, 1994.Suggestion for Rehearing In BancDenied Sept. 7, 1994.
Appeal from the United States District Court for the District of Columbia (91cv02530).
Kenneth W. Starr argued the cause, for the appellants. On brief were David G. Norrell, Dawn P. Danzeisen and Samuel A. Haubold.
Edward L. Powers argued the cause, for the appellee. On brief was Brian T. Murnane. Arthur J. Levine entered an appearance.
Before: WALD, HENDERSON and RANDOLPH, Circuit Judges.
Opinion for the court filed by Circuit Judge KAREN LeCRAFT HENDERSON.
Concurring opinion filed by Circuit Judge WALD.
KAREN LeCRAFT HENDERSON, Circuit Judge:
1
Goodman Holdings and its subsidiary Anglo Irish Beef Processors International (Goodman), both Irish corporations, brought this action to recover payments due on letters of credit issued in their favor by Rafidain Bank (Rafidain) and Rasheed Bank (Rasheed), both of them branches of the Iraqi government. The district court dismissed the action for lack of subject-matter jurisdiction on the ground that Rafidain enjoys sovereign immunity from this suit under 28 U.S.C. Sec. 1604. Goodman appeals the dismissal asserting, as it did below, that Rafidain is deprived of its immunity here under the "commercial activity" and "direct effect" exceptions to statutory sovereign immunity, as set out in 28 U.S.C. Sec. 1605(a)(2). For the reasons set forth below, we conclude that Rafidain enjoys sovereign immunity and that the action was therefore properly dismissed.
2
The facts, as alleged by Goodman, are fairly simple. Between March 1986 and January 1990 Rafidain and Rasheed issued fourteen irrevocable letters of credit, redeemable in installments, to pay for meat purchased from and delivered by Goodman to three corporations owned by the Iraqi government. Between November 1987 and July 1990 thirteen installments were paid on the letters, mostly from accounts in United States banks. Since the Iraqi invasion of Kuwait in August 1990, however, no additional payments have been made and Goodman contends it is still owed $302,246,923 plus interest.
3
Goodman initially filed suit in England to recover the balance due on the letters but that action was stayed when Rafidain was subjected to involuntary liquidation in the English courts. Goodman then filed this action in October 1991. Rafidain moved to dismiss on three alternative grounds: lack of subject-matter jurisdiction, lack of personal jurisdiction and forum non conveniens. By memorandum and order filed December 16, 1992 the district court granted Rafidain's motion to dismiss for lack of subject-matter jurisdiction, concluding that Rafidain's sovereign immunity under 28 U.S.C. Sec. 1604 is unaffected by subsection 1605(a)(2)'s commercial activity and direct effect exceptions to that immunity. Goodman appeals the district court's dismissal on two grounds: (1) this action comes within each of the cited exceptions and (2) the district court erroneously deprived Goodman of discovery necessary to establish subject-matter jurisdiction. We reject both arguments.
4
First, we agree with the district court that, under the facts alleged, Rafidain as a branch of the Iraqi government enjoys statutory sovereign immunity from this action. The immunity statute provides foreign governments with blanket immunity from suit in United States courts, subject only to specific exceptions:
5
Immunity of a foreign state from jurisdiction
6
Subject to existing international agreements to which the United States is a party at the time of enactment of this Act a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607 of this chapter.
7
28 U.S.C. Sec. 1604. It is undisputed that Rafidain, as a branch of the Iraqi government, is a foreign state generally entitled to immunity under this section. Goodman contends, however, that this particular action comes within both the commercial activity and direct effect exceptions, set out in the first and third clauses of subsection 1605(a)(2). That subsection provides:
8
A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case--
9
. . . . .
10
(2) in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States; ....
11
28 U.S.C. Sec. 1605(a)(2). We find neither the first nor the third clause applicable here.1
12
Goodman first invokes the commercial activity exception, asserting this action is "based upon a commercial activity carried on in the United States by the foreign state," namely Rafidain's deposit of substantial funds in United States banks and its use of some of those funds to make payments due under the letters of credit. We disagree.
13
The Supreme Court recently had occasion to interpret the commercial activity exception in Saudi Arabia v. Nelson, --- U.S. ----, ---- - ----, 113 S.Ct. 1471, 1477-78, 123 L.Ed.2d 47 (1993). In that case Scott Nelson and his wife, American citizens, brought a tort action against the Saudi Government, which had recruited and hired Scott in the United States to work in a Saudi hospital. The complaint alleged that Saudi authorities later falsely imprisoned and assaulted Scott in retaliation for reporting safety threats in the hospital. The Court determined that, although the recruitment and hiring, which took place in this country, "led to the conduct that eventually injured the Nelsons, they are not the basis for the Nelsons' suit." Id. at ----, 113 S.Ct. at 1478. Rather, the Court concluded, Saudi Arabia's "torts, and not the arguably commercial activities that preceded their commission, form the basis for the Nelsons' suit." Id. at ----, 113 S.Ct. at 1478. In reaching its decision, the Court construed the phrase "based upon," as used in the commercial activity exception, very narrowly:
14
Although the Act contains no definition of the phrase "based upon," and the relatively sparse legislative history offers no assistance, guidance is hardly necessary. In denoting conduct that forms the "basis," or "foundation," for a claim, see Black's Law Dictionary 151 (6th ed. 1990) (defining "base"); Random House Dictionary 172 (2d ed. 1987) (same); Webster's Third New International Dictionary 180, 181 (1976) (defining "base" and "based"), the phrase is read most naturally to mean those elements of a claim that, if proven, would entitle a plaintiff to relief under his theory of the case. See Callejo v. Bancomer, S.A., 764 F.2d 1101, 1109 (CA5 1985) (focus should be on the "gravamen of the complaint"); accord, Santos v. Compagnie Nationale Air France, 934 F.2d 890, 893 (CA7 1991) ("An action is based upon the elements that prove the claim, no more and no less"); Millen Industries, Inc. v. Coordination Council for North American Affairs, 272 U.S.App.D.C. 240, 246, 855 F.2d 879, 885 (1988).
15
What the natural meaning of the phrase "based upon" suggests, the context confirms.... Congress manifestly understood there to be a difference between a suit "based upon" commercial activity and one "based upon" acts performed "in connection with" such activity. The only reasonable reading of the former term calls for something more than a mere connection with, or relation to, commercial activity.
16
Saudi Arabia v. Nelson, --- U.S. ----, ---- - ---- 113 S.Ct. 1471, 1477-78, 123 L.Ed.2d 47 (1993).2 Applying this construction here, we must reject Goodman's first jurisdictional argument. Goodman has at most established a "relationship" or "connection" between its claim and the domestic commercial activity alleged here--Rafidain's maintaining accounts in United States banks and paying Goodman from those accounts. Goodman has not shown, as the decision in Saudi Arabia requires, that the domestic commercial activity constitutes an "element[ ] of a claim that ... would entitle [Goodman] to relief under [its] theory of the case." As Goodman acknowledges, all it need prove to establish its claim is that Rafidain issued the letters of credit and dishonored a payment demand that conformed to the letters' requirements. See Brief for the Appellants at 7 n. 4; see also John F. Dolan, The Law of Letters of Credit p 9.02, at 9-6 (2d ed. 1991) ("It is well settled that an issuer that dishonors a beneficiary's conforming presentation has breached the credit engagement and must respond in damages."). Thus, the domestic commercial banking activities Goodman cites are legally irrelevant to its right of recovery under the letters of credit and, under Saudi Arabia, cannot form the "basis" for Goodman's suit so as to trigger the commercial activity exception to sovereign immunity.
17
Goodman next contends its suit comes within the "direct effect" exception in subsection 1605(a)(2)'s third clause because "the action is based ... upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States." While this argument presents a closer case, we conclude that it too must fail.
18
In Republic of Argentina v. Weltover, Inc., --- U.S. ----, 112 S.Ct. 2160, 119 L.Ed.2d 394 (1992), the Supreme Court considered the meaning of the phrase "direct effect" and defined it succinctly but clearly: '[A]n effect is 'direct' if it follows "as an immediate consequence of the defendant's ... activity." ' Id. at ----, 112 S.Ct. at 2168 (quoting Weltover, Inc. v. Republic of Argentina, 941 F.2d 145, 152 (2d Cir.1991)) (ellipsis by Court). Applying this construction, the Court then held that Argentina's rescheduling of the payment dates for certain of its bonds caused a direct effect in the United States so as to come within the exception where the bond payees "had designated their accounts in New York as the place of payment, and Argentina made some interest payments into those accounts before announcing that it was rescheduling the payments." Id. --- U.S. at ----, 112 S.Ct. at 2168. The Court reasoned: "Because New York was thus the place of performance for Argentina's ultimate contractual obligations, the rescheduling of those obligations necessarily had a 'direct effect' in the United States: Money that was supposed to have been delivered to a New York bank for deposit was not forthcoming." Id. The situation here is quite different. There has been no "immediate consequence" in the United States of Rafidain's failure to honor the letters. Neither New York nor any other United States location was designated as the "place of performance" where money was "supposed" to have been paid by Rafidain or to Goodman. Rafidain might well have paid them from funds in United States banks but it might just as well have done so from accounts located outside of the United States, as it had apparently done before.3 Thus, Rafidain does not lose its immunity under the direct effect exception. Cf. International Hous. Ltd. v. Rafidain Bank Iraq, 893 F.2d 8, 12 (2d Cir.1989) (payment on overdraft guaranties to Rafidain's New York bank account, at Rafidain's request, was not "direct effect" in United States because "[t]he benefit to Rafidain from such payments was at its situs in Iraq," "payment in New York City was not a contractual requirement" and New York bank's role "was that of a passive conduit indifferent to the nature or terms of the underlying transaction").
19
Finally, Goodman asserts that dismissal of the action was "premature" because many of its jurisdictional discovery requests of Rafidain and others remained unanswered at the time of dismissal. The Federal Rules of Civil Procedure generally provide for liberal discovery to establish jurisdictional facts. See Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 & n. 13, 98 S.Ct. 2380, & n. 13, 57 L.Ed.2d 253 (1978); Crane v. Carr, 814 F.2d 758, 760 (D.C.Cir.1987); Naartex Consulting Corp. v. Watt, 722 F.2d 779, 788 (D.C.Cir.1983). Nevertheless, the scope of discovery lies within the district court's discretion. Naartex, 722 F.2d at 788. Under the circumstances, we do not see what facts additional discovery could produce that would affect our jurisdictional analysis above and therefore conclude the district court did not abuse its discretion in dismissing the action when it did.
20
For the preceding reasons, the district court's dismissal for lack of subject-matter jurisdiction is
21
Affirmed.
WALD, Circuit Judge, concurring:
22
My colleagues base their finding that Rafidain's failure to honor Goodman's letters of credit had no "direct effect" in the United States in part on the fact that "[n]either New York nor any other United States location was designated as the 'place of performance' where money was 'supposed' to have been paid by Rafidain or Goodman." Majority Opinion ("Maj.Op.") at 82. I write separately to emphasize that, for an act to have a "direct effect" in the United States, there is no prerequisite that the United States be contractually designated as the place of performance. If, for example, the letters of credit had specified that money must be funnelled to Ireland through the United States, a breach of the letters of credit would have had an "immediate consequence" in the United States: money that would have been transferred to Ireland would have remained in New York accounts. Cf. Republic of Argentina v. Weltover, --- U.S. ----, ----, 112 S.Ct. 2160, 2168, 119 L.Ed .2d 394 (1992) (finding direct effect where "money that was supposed to have been delivered to a New York bank for deposit was not forthcoming"). Moreover, even absent a contractual provision mandating the involvement of U.S. banks, if the longstanding consistent customary practice between Rafidain and Goodman had been for Rafidain to pay Goodman from its New York accounts, the breach of the letters of credit might well have had a direct and immediate consequence in the United States. As the majority points out, see Maj.Op. at 83 n. 3, however, Goodman's complaint failed to allege such a longstanding and consistent practice; the complaint claims only that "[i]n the past, Rafidain has used ... funds on deposit at U.S. banks to effect payment to plaintiff Goodman Holdings in the United States on one or more of the letters of credit at issue in this action." Complaint p 6. Thus I agree with my colleagues that in this case there was no direct effect in the United States within the meaning of 28 U.S.C. Sec. 1605(a)(2), but I am uncomfortable with the reliance in their rationale on the lack of New York as a contractually designated place of performance.
1
Goodman does not rely on and we therefore do not address the second clause of the subsection
2
This court had earlier similarly construed the phrase "based upon," as used in the second clause of Sec. 1605(a)(2) which is not invoked here, to require that there be "a direct causal connection" between the domestic act and the foreign commercial activity or that the domestic act be "an element of the cause of action under whatever law governs his claims." Gilson v. Republic of Ireland, 682 F.2d 1022, 1027 n. 22 (D.C.Cir.1982) (citing Velidor v. L/P/G Benghazi, 653 F.2d 812, 820 (3d Cir.1981), cert. dismissed, 455 U.S. 929, 102 S.Ct. 1297, 71 L.Ed.2d 474 (1982), and Sugarman v. Aeromexico, Inc., 626 F.2d 270, 272-73 (3d Cir.1980))
3
For example, Rafidain's discovery admissions indicate that of the approximately $27,000,000 paid under the first letter, approximately $22,000,000 was paid from United States accounts. See Appendix at 37-41. Goodman's complaint alleges only that "[i]n the past, Rafidain has used [funds] on deposit at U.S. Banks to effect payment to plaintiff Goodman Holdings in the United States on one or more of the letters of credit at issue in this action." Complaint p 6 | 01-03-2023 | 04-16-2012 |
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